Nobia AB (publ)

Thank you, everyone, for calling in this morning to Nobia's Q1 results presentation. The presentation today was by our president and CFO, Mr. Kristoffer Ljungfeldt, and our CFO, Mr. Henrik Skogsfors. And with those words, please, Kristoffer, the floor is yours.

Thank you, Tobias. Good morning, everybody, and thank you for joining. Let's start off with some key highlights for the quarter. In Q1, we're moving into a positive EBIT compared to a year ago and are taking a lot of important steps in the right direction, even if our core markets remain soft. To lift up a few positives, we have done really well in generating cash in the period, which increased by almost half a billion Swedish crowns compared to the same period last year. Cash flow from our operating activities was positive, whereas we normally have a negative cash flow in Q1 due to seasonality. And that is a testimonial to our efforts of driving improved working capital and liquidity, which is one of our main focus areas across all our business units. I'm also pleased that we see continuous improvement in gross margins across the group for the fifth quarter. The gross margin came in at 38.6%, which is the highest gross margin since Q1 2018. And we will continue to mix up to mass premium and strengthen productivity to improve further going forward. Thirdly, we're materializing the savings up and about the plant that we have communicated and from the cost of programs that we launched last year. In the quarter, we released 70 million savings and the total cost of programs have now generated over half a billion Swedish crown savings the last one and a half to two years. Finally, and as a consequence of the above mentioned, we continue to make good progress in the Nordic profitability where we steadily strengthen our EBIT margin through the improved consumer sales, gross profit and execution of our cost programs. With regards to the market then, the recovery continues in the consumer market in all our geographies, especially in Denmark and Sweden. We also experience growth in the mass premium segment, which is most of our brand's play and which is positive for us. On the other hand, the product market continues to be soft and we do not expect any significant increase during 2025. But the rate of the decline is gradually tipping off. And in markets where consumers have been strong for a while now, like Denmark, for example, we're starting to see much more activity with builders and tradesmen. Organic growth came in at minus 6%. The Nordics was flat, while the UK had an organic decline of 12%, but a negative 3% on a like-for-like store basis. In the Nordics, the consumer sales is starting to trend positively, which proves that our strategy of pulling resources into this mass premium consumer segment is working. With stronger average order values in consumer, we also mitigated the volume decline in the product business. In the UK, we are building our order books in the quarter for dispatch during Q2, Q3. And as we have exited a large number of stores, according to our strategy, we have fewer distribution points and lower sales, but the store closures will drive large cost savings throughout the next coming quarters, which Henrik will come back to as well. Operating income came in at 16 million with a margin of 0.6%. And again, the improvements was related to the progress in the Nordic. However, profitability declined in the UK, where we took this extra marketing costs to drive sales during the important winter test period. And therefore, we did not get the full impact of the cost savings this quarter, but expect to get the full savings from Q2 and onwards. Let me also add that we do not see any direct impact from the trade barriers as we do not export nor import anything from either US nor China. If anything, we could be slightly helped by a weaker dollar, but that is marginal. We also have not seen any change in the consumer buying behaviors as of now, but we will of course continue to monitor the situation closely. That goes without saying. So if we move into the next slide, please. So the kitchen market development in the Nordic region, and as I just mentioned, we continue to see a recovery in the consumer market, which we believe is driven by a slight recovery of housing transactions and a pent-up demand for home renovations. We have continued positive momentum and improved footfall and design appointments. And we also foresee that various government grants in house renovations will support the demand for kitchens. We expect consumer growth to gradually also improve our business with tradesmen, where we in some markets can see more activity, as mentioned earlier. In markets with higher interest rates, like Norway and UK, we experience recovery in the consumer segment. but at a lower rate than in the rest of the markets. As for the product market, we still experience volume decline in Norway, Finland, and the UK, but in Denmark and Sweden, it is tapering off in the quarter. Judging from how things start, as I said, we expect the product market to remain soft until the end of 2025. Then if we move over to the UK, it's quite similar to the Nordics with a recovery in the consumer segment. while the product market remains soft. On a positive note in the UK, housing transactions have started to increase and mortgage rates have fallen since a year ago. It should also be mentioned as a positive that some major UK lenders have eased mortgage affordability rules to enable additional borrowing for home renovation as well. And we are also positive that more governmental-backed property developments are coming about and can therefore see some increased activity in that segment as well. So let's shed some light on our strategic priorities, which you have seen before, but we will reiterate these and give you an update on where we're at. First of all, maximizing cost efficiency. We remain steadfast to do this in current environments, and we are very pleased with the new organizational setup with the centralized operation where we can still extract the scale benefits that we get in the group for local competitiveness. We have had good impact from the cost reduction initiatives of that, and savings have now surpassed the 500, it's up to 550 million, and we have run red savings of just another 100 million to materialize during the rest of the year. To realize the full Nordic potential, the next point here, we have come a far bit to strengthen Nordic supply chain. And I believe that that team has done really well over the last 12 months. And now we have an important transition from Tidahom to Jönköping in front of us, which is progressing according to plan and we set some lights on that as well. Also in the quarter now to strengthen our Finnish business. and lower our fixed cost base, we decided in April to close the Finnish factory to supply instead the products from Erlgud in Denmark. And the Danish product range is very well suited for the Finnish market, so we also expect to be able to gain some market share with this setup over time. It's been a month in its making, and even though It is always hard to see some good colleagues leave. I'm really pleased about the progression made by our Finnish and Danish colleagues. In the quarter, in Q2, sorry, we will take a cost of roughly or exactly 6 million euros for sure and expect savings of about 4 million euros per annum for this move. Finally then, the transformation of the UK business is progressing progressing as planned although the underlying market and especially the product market is definitely challenging once we do this transition. And also the product market is giving us quite high under absorption into our supply chain in the UK. We continue to close the old store formats that are very capital intent and replace them with smaller city center stores for the mass premium consumer. moving into what we call the asset-light model, as we have talked about many times, and which is an important pillar of our strategy. We have also had some good progression with our new partnerships that are coming along nicely, especially those with the builder-merchant and franchisee. And we are consolidating the brand Commodore into the magnet business as of now, which is proceeding according to plan. We have also now exited the most unprofitable stores that were up for lease renewal. So we believe we're in a considerably better cost position now than a year ago. Our efforts to drive sales and consumer with higher average order values definitely is the right strategy. And we see good development in front of us and have seen good development in the consumer sales for the last 12 months. Then let's move to the next slide and talk more about Jönköping and the state-of-the-art future-oriented factory we have there. It's extremely exciting what we're about to accomplish in the new factory in Jönköping. The majority of the machine part is now in place, and we are every day making huge progression in the connectivity between systems and machines. Kitchen, sorry, component manufacturing and distribution of the same throughout the noise supply chain has been more or less completed, and we are now optimizing those flows across the network. The next big step, which we have started now in Q2, is to industrialize the frontal manufacturing and to have the frontals assembled together with the kitchens and consolidation of the kitchen order. Then there will be the next important step to deliver the fully assembled and fully consolidated kitchens directly to end consumers. And that's something that we are ramping up now. And we're in the midst of ramping it up, and we do that in parallel to the other steps, starting from May. As planned, we expect that the transfer of the Mamadou volume will be completed during this year. I should also mention here that the investments remaining in 2025 amount to about 200 million capex before we're done, and a 350 million cash flow impact of the same. With that, I hand over to Henrik to talk more about the financials by region.

Very good. Thank you, Christoffer. As you have highlighted, Christoffer, We are pleased to see the gross margin improvement and increased profitability for the Nordic region. Organic growth was flat compared to the first quarter last year. Despite continued pressure on our overall volumes in the product market, we achieved significant improvement in the yesterday average. Everything increased by 86 million to 109 million, which is equivalent of a 5.9 percentage point improvement to 7.5 percent. This improvement reflects the impact of several initiatives, including cost reduction efforts, improved supply chain productivity, and as communicated in previous calls, the continued emphasis on the consumer segment. These actions show tangible results and is a positive step forward. Our average order values in North increased, supported by the continued shift in the sales mix between professional and consumer products, which help offset some of the pressure on overall volumes. Our gross margin improved by 2.7 percentage points, reaching 36.6 in the quarter, despite the decline in the volumes and higher on costs from the ramp up in Jönköping. The improvement is driven by operational efficiency gains in the Nordic supply chain, The favorable sales mix across countries, segments, and products, with consumer sales performing better than the product size. Both gross margin and also gross profit increased year-over-year, together with cost savings in selling and admin expenses. On back of the cost of programs and the ongoing cost discipline, improved the adjusted EBIT from 23 million last year to 109 million this year. The EBIT margin increased to 7.5%. A continued very strong performance in Denmark was a major contributor, helped by market share gains in consumer sales. Norway and Sweden also saw a gradual margin improvement, supported by higher average order values, operational efficiencies, and lower FD&A. Finland continues to be a difficult market, and we are actively working to adjust our cost structure. As part of this broader effort, we communicated in early April, and as Christoffias mentioned, we have made a decision to close our Naspel plant in Finland and move the manufacturing to our Danish factory in Ölgård. This is a step intended to increase the profitability in Finland. In the Nordics, in the quarter, we took 22 million as items affecting comparability, primarily related then to the Nordic supply chain, and in particular, the transition to our new factory in Jönköping. So if we go over to the next slide, please, UK. The UK market continues to reflect the same underlying dynamics as we have seen in the Nordics, growth in the consumer segment offset by declines in the professional segment. in the UK declined by 12% in the quarter. If we adjust for the store closures, sales declined 3% year-over-year. The consumer segment continued to show growth, but was more than offset by double-digit decline in the project and the trade segment. Despite the supply chain under-absorption caused by the professional volume decline, Gross margin improved by 0.4% at this point to 41.3. This was driven by a more favorable sales mix and continued impact from our already initiated cost-out initiatives. On a current adjusted basis, SD&A decreased by approximately 12 million. Our cost reduction efforts implemented last year are delivering plant savings although these have been partially offset by inflationary pressures and increased spending on online lead generation during the quarter to drive the very important sales in the winter period. EBIT for the quarter came in at negative 53 million compared to negative 11 last year. The impact from the sales decline, despite the improvement in gross margin, caused the drop in EBIT in the quarter. We are confident that the savings from the cost-out programs here in 2024 will continue to contribute to a lower cost base during the coming quarter. If we go over to the next slide, please, the financial position. We are pleased with the strength in cash flow during the first quarter. Cash flow from operating activities was positive 28 million compared to negative 258 last year. Likely higher EBT was supported by improvement in working capital. The lower sales in UK resulted in a positive impact on account receivable. The cable increased on back of timing compared to last year. As previously communicated, we are intensifying our focus on operational excellence through the not now so new operational structure that we implemented in August last year. A key component of this is our ongoing initiative to reduce inventory balance. These efforts positively impacted the cash flow in the quarter, primarily driven by UK and Denmark, which also offset the planned inventory increase in Jönköping during the ramp-up phase for the new factory. So on an overall basis, our inventory levels have decreased by 10% year-over-year. The operating cash flow, including investments, amounted to negative 85 million compared to negative 574 last year, as Christoffer mentioned earlier. Of these, investments in the quarter remain related to the machinery for the factory in Jönköping, total 139 million, down from 324 last year. The net debt excluding leasing and pension obligations and also IFRS 16 decreased year over year by approximately 0.4 billion to just short of 2.5 billion SEK. And those are of course driven by the measures that we took last year. We did a divestment of the subsidiaries in Austria and the Netherlands. We did the sale and lease back of the property building in Jönköping. and the rights issue in April last year. The net debt increased by $241 million compared to the end of the fourth quarter last year. The quarterly increase is primarily related to the enormous decimality of cash flow during the first quarter and continued investment in Jönköping. That was all for me, so over to you again, Christoffer, and next slide, please.