Swedencare AB (publ)

Welcome to the presentation of SwedenCare's year-end reports, led by our CEO, Håkan Lagerberg, and CFO, Jenny Graflind. And we are pleased to have North America's CCO, Brian Nugent, joining us with a presentation during today's webinar. And as usual, we will have a Q&A after the presentation, so please raise your hand if you have any questions. Over to you, Jenny and Håkan.

Thank you very much, Emma. Håkan Lagerberg here, and Jenny in a snowy Malmö. Yes, Q4 2025, a disappointing end of the year when it comes to profitability, and I'm very displeased with myself for not being able to predict this. There were lots of uncertainties coming in at the very end, but I apologize, and we are doing everything we can to improve our internal processes and forecasting. Double-digit growth, happy with that, 11%, but of course I expect it a bit higher also when it comes to the organic growth, but overall we're happy as long as it's double-digit. The lower profitability mainly caused by one-off, but of course we have gone through everything in detail and lots of follow-ups and action plans with the group companies that under-delivered. Lots of focus on profitability going into 2026, and we should never have a quarter like this going forward. We have also made some organizational improvements end of last year and beginning of this year, and I will be happy to present those later on in coming quarterly reports. We presented our new long-term financial targets. I will come back to that later in the presentation. The board has proposed a dividend of 0.28 SEC per share, an increase compared to last year, and we will also come back to that with the financial targets. But, summarizing the end of the quarter when it comes to sales, of course, not all gloom. We're very happy that NatureVet really has taken off, 33% growth in the quarter, albeit the The quarter last year, Q4, was a weak quarter for NatureVet. But overall, we have 15% on a yearly basis for NatureVet. And as many of you know, the first half year was slow, dependent on the rebranding. So we're happy that we're tracking at really high growth numbers for NatureVet. Further back off, continues to grow high double digits, 17% organic growth, 29% year on year, a bit lower in Q4, and that was mainly caused by, as many of you know also, the bit lumpiness in the international sales. So some larger international orders came in. are delivering now in Q1. But overall, we are very happy with 17% growth also for the quarter. Looking at the different channels, it's online, continue to grow a lot. Pet retail also solid, including the big box retailers there. And also when we look at our branded products, products in the VET channel group, but a soft quarter for contract manufacturing, especially for liquid dermatology. And I'm coming back to that later on. Some explanations of the profitability hit in Q4 that was more of a one-off. Higher marketing cost on Amazon related to the transition of NatureVet and brand protection will still have some impact in this first half year, but basically getting better month by month. One important thing is that we have – started to implement the transparency program for the major native excuse here in Q1, and that will have a big impact on that. And Brian Nugent will later on describe that more in detail. We had an ERP implementation in NatureVent. The cost interruptions affected gross margin and volumes. No impact going forward. We're very happy with the ERP system as is right now. It started functioning really well end of Q4 and no issues now in Q1. So we're happy with the transition, but of course the implementation caused more problems and took longer time than we expected. Marketing spend to support the big box partners. Of course, we knew that was coming. And we have continued, let's say, implementing marketing spend. And we have seen results in increased sales, as you saw. But there was not enough, let's say, control of the actual marketing spend. And going forward, we will definitely have better control on the spend. in 2026. Also, as you see on the picture here, we're very happy with the actual display campaign that we have launched in Walmart over 2,000 stores. We are in the ordinary shelves in 1,400 stores. expanded to 600 more now in January. So we're happy with that. We're not happy with the outcome of the actual cost for the campaign. Not a big hit for the quarter, but still, there were some unexpected costs for delivering and setting that up. But all in all, happy with the outcome. I will come back to that. Also, one of our pet retail-focused brands, Vetworthy, also have been launching second half year of 25. And the outcome we're happy with, but not the actual cost for it. So going forward, definitely spend will be aligned with sales growth going forward. Also, we ended up with some higher inventory write-offs than for the other quarters. And we, like in 2024, we had a very average write-off, nothing exceptional. And that is also what we expect going forward into 2026. Jenny, over to you.

Yes. Some financial highlights. So revenue for the quarter amounted to $682 million. So for the quarter, it was a 3% growth, which 11% was organic. We had a negative 12% of currency impact for the quarter, and 4% was acquired growth. The large currency impact is coming from the stronger crown against the USD, which is the largest currency for the group. However, both the euro and the pound has also weakened quarter by quarter in 2025. The acquired growth came from Summit, which we acquired in April. So for the full year 2025, the net revenue amounted to $2.7 billion. This is compared to $2.5 billion last year. So we had an organic growth of 9% for the full year. The operational growth margin is at 56.8%. There are two main reasons for the lower margin. I can mention a little bit of it. First of all, additional write-offs this quarter compared to other quarters when it comes to growth. Inventory. This partly is due to discontinued product lines or products. For example, human products that we don't focus so much on anymore. There was some acquired inventory that we have to write off. And then Wellissue is one of the brands which will be focusing much more on Nature by Sweden Care in 2026. The second reason is this low margin display campaign that you just saw the picture of, of Walmart. So these two together, these two reasons have an impact of about 1.5 percentage points. So otherwise, we would have been slightly above 58%, which is the level that we have been at for the last, I would say, two years. The external cost is increasing, as we have mentioned before, with the growth of Amazon. There's costs which are directly linked to these sales. However, in addition, this quarter there was also the significant marketing initiatives in connection with the big box launch. And there's also additional marketing costs linked to Black Week, which occurs in Q4. Personal cost is stable in line with the percentage of sales for the full year of 2025. So as a result, operational EBITDA amounts to $109 million for the quarter. This is a decrease of 25% compared to Q4 last year and a margin of 15.9%. For the full year 2025, operating EBITDA is $511 million and a margin of 19%. Cash and our net at EBITDA. Our net at EBITDA is at 2.9% at year end. This is an increase both compared to a year ago due to the acquisition that we made in Q2 this year and it's also an increase compared to Q3 due to the fact that we had a lower EBITDA this quarter. Our cash conversion was at 41% for the quarter. There was only very minor changes to the working capital in the quarter. However, we have made larger tax payments this quarter, which is impacting this operating cash flow. During the quarter, we have repaid $65 million on our external long-term loans. And for the full year, we have repaid $233 million. With the cash pool structure that we have in place, it's complete in the U.S., and we also have good progress in Europe, we are able to operate with a lower cash level. So we have been able to reduce this by $83 million during the year. So instead of having a large operating cash, we can now use it to decrease our debt level, which is, of course, resulting in lower financing costs. Our CapEx is below 2% for net sales, both for the quarter and for the full year. Rolling four quarters. As you can see, the revenue for the rolling 12 months is increasing. However, both the operating EBITDA and the EBITDA has decreased due to this weaker profitability that we have in Q4. In 2025, the majority of the difference between the reporting EBITDA and the operational EBITDA is the fair market adjusted that we have made with acquired inventory for Summit. That amounts to 48 million for the year. Product and brand split. These graphs are not, so the graphs and the amounts are not adjusted for acquisition or currency. However, as you can see, we have added a line below the graphs for organic growth because it's more of a fair comparison if everything has been basically a large negative currency impact this year. So, if we look to the left, you can see that there's a double-digit growth in nutraceuticals, partly due to the good private label sales. We also have good growth in dental, 23% organic, mainly product back-off, but there's also good improvements in both the toothpaste and the dental wipes. We get a decline in topicals. This is mainly linked to the decrease that we have in contract manufacturing business. We'll come back to that. In pharma, that has the largest increase in growth, which is due to the acquisition of Summit, but it has a decline in organic growth due to the delayed pharma projects. If you look on the right to the brand list, there's the same thing here. Grass is not currency-adjusted, but the organic one is, of course, currency-adjusted. So NatureVet, Plakoff, NutriVet, and Rilis are the fastest-growing brands in this group for the quarter. All have above 50% organic growth. Contract manufacturing has decreased due to this weaker web channel and delayed pharma projects. Note, however, that the internal revenue in our manufacturing facility has increased with about 15% for the quarter. So when we move and we increase production in-house, this supports the other segments, but it affects the production segments, organic growth, negative because it's eliminated on a group level. Private label has also had good growth this quarter with larger orders at the end of the year. And the reason why other has strong growth but low organic is that the growth is coming from Summit. Now over to Oka.