Nobia AB (publ)

Good day and thank you for standing by. Welcome to NoBR Q3 Report 2025. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 and 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Christopher Longfelt, CEO. Please go ahead.

Good morning, everybody, and thank you all for joining. We start with some key highlights for the quarter. And similar to our last quarter, we continue to improve operating performance and strengthen our EBIT and cash flow, despite soft product markets. And even on these historical low levels, we have demonstrated that we can operate above 8% in the Nordic region, also on a rolling 12-month basis. With regards to group net sales in the quarter, it declined organically by 3%, driven by volume decline in the product segment in both regions. and especially in the UK, which also led to further underabsorption in our supply chain. However, and on a positive note, we had growth in Region North for the first quarter since Q3 2022, which concludes a period of 11 consecutive quarters of decline in the Nordics. Also, our continued growth in the consumer segment is promising, and we are encouraged by the growth in store visits and kitchen design appointments. We also continue our mix up to higher value products and therefore improved average order values, which also strengthen gross margins. Gross margin of 38.6% in the quarter is one percentage point above last year, primarily driven by improvements in UK, but also supported by improved average order values in the Nordics. Gross margin was then negatively impacted by the under absorption in supply chain across both regions. We continue to generate savings from our cost-out programs, including the store closure programs in the UK. We recorded another quarter with large improvements, and the total savings from the programs now exceeds 650 million Swedish kronor. Having said that, the year-on-year effects will taper off from here, and we do not rule out that we have to introduce further cost initiatives as long as the market remains soft. Operating cash flow came in at 102 million SEK. We are pleased with that improvement versus last year. And this is something we have worked very consistently with over the past 12 months. So it's good to see that we get solid traction on our initiatives. On October 21st, we inaugurated Nova Park in Jönköping. And it was really a pleasure to see the huge interest in this new facility. We had over 1,000 customers visiting us over two days. And on the day, we also launched two new important trademarks, which I will come back to. And these trademarks also underline our commitment to product innovation and design for the future through this site. As we pre-announced last week, we made a 1.9 billion non-cash impairment of our UK operations, which mainly refers to intangible assets. And we are continuing our efforts to transition to more asset-light operating models in the U.K., but we will also look for further strategic options for the U.K. operations. And Robert will come back here a little bit later on the impairment. Let's move to the next slide, slide number three, which is the kitchen market development in the Nordic region. So the gradual recovery Consumer sales continues, and we are encouraged by the latest stats of housing transactions, growing consumer confidence in general, and government grants that support home renovation, especially in Sweden. However, the consumer market only represents about 20% of our volume. With regards to the product market, where we have about 80% of our volume, we experienced another soft quarter in Q3, and it is clearly so that housing starts have not yet increased materially. We are, however, seeing higher levels of activity in areas such as meeting with architects and quote revisions, et cetera, but it will take some time before this materializes into firm kitchen sales. In addition, we believe there is starting to be a significant demand across many parts of the Nordics, which should eventually translate into growth in this segment. Next slide, please, slide number four. The kitchen market in the UK. In the UK, we have a similar pattern to the Nordics, where we're seeing some signs of optimism in the consumer segment. However, the product segment remains particularly soft in the UK. We believe that high interest rates continue to burden house and starts and home renovation as many homeowners choose to delay projects until financing conditions improve. It's also an ongoing uncertainty around government-backed initiatives, particularly for high-value purchases and for residential property developers. And overall, we believe this has led to more cautious market in Q3, even though we believe the underlying demand remains. Let's move over to strategic updates, slide number five. We start on the top again. Very good return on our cost of programs carried out the last couple of years, which together have rendered savings north of 650 million. But given where the market is and our commitment to the leverage, we will continue to rationalize from where we are today with strong cost discipline. And again, we do not rule out that we need to take some larger steps also in the coming quarters to reduce costs. As stated already, we have had good improvements in working capital and We are very pleased that our initiatives for the last 12 months have started to pay off. With regards to realizing Nordic potential, we need to streamline our supply chain, which is well underway. We successfully closed our Finnish factory in the quarter, well ahead of long-term planning, which will start to generate savings already in Q4. We are looking to close down processes in Tidaholm as we are transferring volume gradually to the new factory in Jönköping. And we also expect to start to generate savings from the new optimized K2020 platform as we go live in Norge Park. With regards to transforming UK, we continue to transition to an asset-light model by closing the large non-performing stores consolidate supply chain and sign up partners to distribute our magnet products and it's absolutely critical to get into this new operating model and We believe that the team has done a really good job over the course of the last year Although there is still a lot more to be done foremost it has been challenging to exit parts of the store network and it has been taking longer than we were expecting and And we have now exited roughly one third of the store space, but we still need to do more to get into the desired model. Given these challenges coupled with soft market conditions and therefore prolonged financial recovery, we are impairing 1.9 billion Swedish crowns related to the UK business. And again, we have initiated further strategic reviews to strengthen profitability. Take slide number six, please. The successful consolidation is ongoing in the Nordics, and as I referred to earlier, we closed the Finnish factory in Nastola in the quarter and took another important step on this consolidation journey. Apart from the cost benefits by doing this, we also introduced a more competitive product range by using the HTH range. which the Finnish consumers have appreciated a lot, and it has also been important to our B2B customers. These products will be delivered from Denmark. Some of the B2B customers in Finland also have Nordic presence, so it makes a lot of sense for HTH to provide the same products and service levels across the entire Nordics to these customers. And again, we believe this transition will generate savings of about 40 million SEK annually. If we move into the next slide, please, the ramp-up of Nobia Park, the new Nordic manufacturing facility in Jönköping. First of all, I'd like to thank our customers and suppliers that participated in the inauguration of the new site. It was a very important day for Nobia where we had the chance to showcase the latest manufacturing capabilities in the kitchen industry, but also showcase our new products with outstanding quality fit, fill, and finish, and also world-class sustainability credentials, which you know is with really incredible performance and sustainability credentials. And PrimeShell is the latest technology for selling products, sealing products against moist breakage. And we have already begun to distribute these products features across the entire Nordic network and will continue to do so in a larger scale the coming year. As we currently have NOBIA Park to manufacture and distribute components to about 30% of the network. So we have in a way already established this site as a central hub for NOBIA. With regards to food kitchen assembly and distribution for Mabedal, we are in the midst of ramping up production, with the first assembled kitchen being manufactured and distributed in August. There is, of course, a great deal of training and fine-tuning underway as we work toward industrial scale in this process over autumn, so that we can, or NOGA Park can effectively offload production from Tida Home, which is the current site for Mabedal. Can we ask you, Robert, new on the job, to update us on the regions?

Yes. Thank you, Kristoffer. So moving on then to page eight, starting with the Nordic region in the third quarter. And as highlighted by Kristoffer, we are pleased to see a positive, although small, organic sales growth in the quarter of 1%. versus minus 11% the corresponding quarter last year. In the quarter the average order value increased supported by the continued shift in the sales mix between consumer and professional products which helped offset some of the pressure on overall volumes. Looking at the individual countries in the Nordic region we saw continued strong performance in Denmark supported by strong and profitable mix across B2C, trade and social housing. In Norway, we saw a modest sales growth of 1%, while Sweden saw a northwardly margin improvement, supported by higher average order values, operational efficiencies and lower SG&A costs. Looking at the gross margin then, it improved a bit, 36.7 versus 36.6, explained by the positive segment mix and also the cost out activities despite them under absorption and higher depreciation in the supply chain network. Looking at last year it came in roughly flat at 219 million SEK versus 288 the corresponding quarter last year where inflationary pressure were mitigated by cost out activities. Adjusted EBIT came in a bit lower than last year, 99 million versus 104, primarily related to lower gross profit caused by lower nominal sales levels. On the currency adjusted basis though, EBIT in the Nordics came in flat compared to last year. And then final remark on this slide, during the quarter we recorded 39 million as items affecting comparability, primarily related to the Nordic supply chain and particularly then the transition to our new factory in Jönköping. If we then move to next slide, slide number nine, looking at the UK region, the UK market continues to reflect the same underlying dynamics as we've seen in the Nordics, i.e. growth in the consumer segment offset by declines in the professional segment. Organic sales in the UK declined by 7% in the quarter. If we adjust for the store closures, sales decline was actually 4% year over year. The consumer segment continued to show growth, but this was more than offset by double digit declines in both the trade and project segments. Despite the supply chain under absorption caused by the professional volume decline, gross margin actually improved by 280 basis points to 40.8. This was driven by favorable sales mix and continued impact of our cost out initiatives. If we look then at the SG&A on a currency adjusted basis, it decreased by approximately 41 million SEC. Non-carriage adjusted, it decreased by 66 million. Our cost reduction efforts implemented last year are delivering planned savings. Looking at EBIT then, EBIT for the quarter came in at 2 million compared to minus 49 million last year. Despite the uplift in gross margin, the gross profit value declined on back of the sales decline, which however was mitigated by the lower SG&A in the quarter. As previously announced, and as Christopher mentioned in his opening slide, in the quarter we recorded a non-cash impairment of the UK operation amounting to 1.9 billion SEK, largely related to intangible assets, which are then included, this item is included in the items affecting comparability. 0.3 billion SEK is recorded in region UK, and 1.6 billion SEK is recorded in Greece. With that, we move to the next slide, slide number 10, looking at our financial position. In the quarter, we're pleased with the strengthening cash flow. Cash flow from operating activities was positive, 182 million, compared to negative, minus 20 million last year. And this was then supported by an increased EBITDA of 53 million and then reduced seasonal impact from working capital. As previously communicated, a key component of our focus on operational excellence is our ongoing initiative to reduce inventory balances. These efforts positively impacted cash flow, primarily driven by the UK, but also in the Nordics, offsetting then the planned inventory increase in Jönköping during the ramp-up phase of the new factory. Overall, our inventory levels have decreased by 11% year-over-year, or 128 million SEK. If we look at the operating cash flow, including investments, it amounted to 102 million SEK compared to a negative minus 154 million last year. Of this, investments in the quarter, mainly related to machinery for the factory in Jönköping, totaled 83 million. which is down from 138 million last year. Finally, then, if we look at net debt, excluding leasing and pension obligations, it increased year over year by approximately 325 million SEK to 2,645,000,000. Compared to the end of the second quarter, net debt increased by 146 million SEK. As mentioned in the second quarter call, in July we received an additional 70 million SEK from the buyer of the factory building in Jönköping. And as Christopher said, there is approximately 40 million SEK outstanding before we have received full payment for the building we divested last year. With that, I hand over, I return to you, Christopher, for going through slide number 11.