Scandic Hotels Group AB (publ)

Thank you, and good morning, everyone, and thank you for joining Scandic's presentation of our first quarter of 2023. As mentioned, my name is Jens Mathisen. I'm the CEO of Scandic, and I'm here together with Åsa Virén, our CFO, and together we will, of course, take you through this first quarter, but please jump into page two. First of all, I am very, very pleased to present a strong start to the year. Demand from corporate and leisure has been good with increasing prices, and we are operating our hotels with high efficiency. Current booking situation is good, and with today's news of the launch of ScandiGo, we are also accelerating our growth journey ahead. So all in all, this is a very strong start to the year. Looking at the numbers, Net sales reached 4.5 billion Swedish kronor, which is an increase of 66% compared to Q1 last year and just over 11% higher than it was in Q1 2019. We also delivered a strong result of 170 million SEK, which was 407 million SEK higher than in 2022 and slightly higher than in 2019. During the quarter, demand from corporate and leisure was good. I would like to highlight that the demand for meetings and events was on a historically high level for first quarter, which is very promising and a promising start of the year. The occupancy rate in the first quarter was 53.5% compared with 39.1% last year. Also, please, of course, remember that last year was impacted negatively and affected by the pandemic restrictions in our markets. Room rates are on continued high levels on all markets, and we see a positive development of REFPA driven by rates. So we report a REFPA of 626 Swedish kronor compared with 395 in Q1 last year. The free cash flow in the quarter improved and was stronger than expected and we have a very solid financial situation that creates flexibility and enables us also to execute on our strategy. Of course, also we'll give you more details on this later in the presentation. We run our operations well with a sharp focus on efficiency that pays off. I'm very satisfied also how we work commercially to meet the demand. We have a strong first quarter now behind us. And I think also with strengthening financing, we are picking up the pace in Scandic's development. Today, we also announced that we are launching Scandic Go, a new brand with a strong offering in the fast-growing economy segment. And I, of course, will give you some more details about that later in the presentation. But please turn to page three. where you can see the quarterly adjusted EBITDA development since the beginning of 2021. Adjusted EBITDA increased to 170 million Swedish in Q1 compared with minus 237 million in the first quarter last year. And we also delivered an adjusted EBITDA margin of 3.8% compared with a minus of 8.7% last year. The overall performance was mainly driven by high efficiency and cost control in combination with good demand and increased prices. I'm also happy that all markets delivered a positive adjusted EBITDA in the quarter and that actually all our 10 hotels that we opened in 2022 are performing well and are all contributing positively to Scandic's group results. Please turn to page four. Here you know this graph. Here you can see the monthly market occupancy in the Nordic countries. The wholesale market has had a good start to the year with increasing demand throughout the quarter. And the demand was good from both corporate and leisure. And as I also mentioned, demand from meetings and events was on a historically high level for a first quarter. Domestic travel in our markets continued to be strong, well above 19 levels. and inter-Nordic and European travel is at good levels, in line with 2019. We also note that intercontinental travel is picking up quite well and continues to improve strongly month by month, mainly driven by more guests from the USA and from China. So overall, demand for hotel stays and visits is good, and there's more potential for market recovery especially from intercontinental travelers. So 2023 seems to be a strong year for the travel industry, which of course is very satisfying. Please turn to page five. This you also know, this is market data for average room rates for the Nordic markets, Sweden, Norway, Finland, and Denmark. It's indexed to the corresponding month, 2019. We continue to see rising room rates well above 19 levels. Scandic's average room rate was around 12 to 15% above 2019 levels in the first quarter. And based on the current booking situation, we expect prices to continue to improve in the second quarter. The big question is, of course, how much can prices continue to increase? But despite macro headwinds in the short term, we see no signs of a weakening of the market. So good demand from leisure travelers and corporate, with particularly increasing demand from meetings and events, should continue to drive prices as well. Please turn to page six. Here you can see the market REFPA development index also to the corresponding month of 2019. All markets are above 19 levels, with Norway continuing to be the strongest market. Scandic's Rev Power for the first quarter was 626 Swedish, compared with 395, as mentioned in the beginning, in 2022, versus 599 in 2019. Please note that we also had close to 4% more rooms at the end of this quarter, the first quarter, compared with the end of the first quarter of 2022, and just over 8% more rooms than in the first quarter of 2019. Please turn to page 7. We continue to strengthen our position in Germany, and on the 1st of March, we opened Scandic Frankfurt Hafenpark, which is located in a prime location, just a few minutes walk from the European Central Bank in Frankfurt. Scandic Frankfurt Hafenpark, which has 505 hotel rooms, 14 conference rooms, and an event space of up to 570 people, is a fantastic addition to our portfolio in Germany. The hotel has been designed to accommodate many types of events and meetings, The timing of the opening is good, with a strong demand for meetings, and I'm very pleased that we already have had very good booking levels from the beginning. As for all our hotels, sustainability is also a central part of the new hotel in Germany, in Scandic Frankfurt Hafenpark. So this hotel aims to be certified by the Nordic Swan Ecolabel when this labeling is introduced in Germany later this year. So this is now our sixth hotel in the German market, and we now have 2,150 rooms in Germany. Please turn to page eight. This was the pipeline at the end of the quarter. As we mentioned before, we have a strong focus on growing the pipeline. With the launch of ScandiGo and our improved financial position, we now have a high pace to ensure growth while optimizing the portfolio. So we continue to work a lot with the portfolio. Since the previous quarter, as mentioned, we opened Scandic Frankfurt Hafenpark with 505 rooms. And we also announced plans to exit five smaller hotels with a total of 731 rooms. So as we already are on the note of speaking about our pipeline and focus on growth, please turn to page nine for today's announcement about Scandic Go. We are very happy at Scandic and proud to finally talk to you about Scandic Go, which will be launched after the summer. We are now taking a position in the economy segment, the fastest growing segment in the industry. By launching Scandic Go, we aim to, over time, establish and take a leading position in the segment in our markets. Scandic Go has been in the works for quite some time. since it was postponed during the early stages of the pandemic. This is a strategic investment for Scandi, and we have utilized the time carefully to continue to improve and build on the concept, as well as adapting to a new market situation. I'm confident that we have announced a brand and concept that shows our clear objective to boost our growth rate. attract a new generation of hotel guests as well as adding more hotels to our pipeline. ScandiGo is a new brand with a sustainable, smart and lean offer in the fast-growing economy sector and it's a perfect complement to Scandi's full-service offering that broadens the addressable market. This means also great growth potential as the economy segment represents only about 5% of the hotel market in the Nordic countries compared to about 15% in the rest of Europe. With a high share of room revenue and less food and beverage, Scandico will also support higher margins and be more capital efficient than the average Scandic hotel. We have a target to assign between 1,000 and 1,500 new rooms per year on average and to establish a leading position within the segment. Our first Scanly Go Hotel opens now in September in central Stockholm on Uplandsgården. And with that, I would like to pass over the word to our CFO, Åse Breen, who will take it to our financials.

Thank you, Jens, and good morning, everyone. If we then please turn to page 11 for our financials. Starting off with the financials for the quarter, as Jens mentioned, we report a strong first quarter with increased net sales and improved results. Net sales increased by 66% to 4.5 billion SEC compared to the first quarter last year. We also deliver a strong result with an adjusted EBITDA of 170 million SEC, which is 407 million SEC higher than in the first quarter last year and also slightly higher than in 2019. The adjusted EBITDA margin increased to 3.8% compared to minus 8.7% in the first quarter last year. The result was mainly driven by higher net sales and an increased efficiency. All markets contributed with a positive adjusted EBITDA in the quarter, and it is satisfying that our sharp focus on efficiency and cost control keeps paying off. The adjusted EBITDA excluding one-offs improved to 2.9% compared to minus 12.5% in the first quarter of last year. This quarter included one-offs of 18 million SEK for compensation related to housing for refugees in Norway, and an additional 23 million SEK in compensation for a delayed opening of a new hotel. The total run-off in the first quarter last year was 128 million SEK. In Q2, we expect run-offs with a positive adjusted EBITDA effect of around 20 million SEK, and this is related to continuing housing for refugees in Norway. If we then turn to page 12, A look at our cash flow. The free cash flow improved to minus 356 million SEC compared to minus 997 million SEC in the first quarter last year. The cash flow was better than expected, mainly driven by higher net sales and a stronger result and an underlying positive development of working capital. Working capital was negatively impacted by the previously communicated repayment of variable rent debts for 2022 of $450 million. A further approximately $270 million in rent debts are expected to be paid in 2023, mainly during the second quarter. Excluding the effects of repaid rent debt, the development of working capital was positive mainly driven by increased operating liabilities. We can continue to page 13. As Jens mentioned, our financial position has strengthened during the last quarters. At the end of the quarter, net debt corresponded to 1.2 times adjusted EBITDA, rolling 12 months. This was in line with the debt level at the end of 2022, and an improvement compared with year-end 2019, where the net debt adjusted EBITDA amounted to 1.7 times. At the end of the first quarter, net debt amounted to 3.4 billion SEK, including 1.5 billion related to the convertible bond and 880 million related to deferred VAT payments and social security contributions in Sweden. excluding the convertible bond net debt in relation to adjusted EBITDA amounted to 0.6 times. Our available credit facility amounted to 3.4 billion SEK and total available liquidity amounted to 2.2 billion SEK at the end of the quarter. And as we communicated in the previous quarter, we completed a refinancing in beginning of this year. And as you all are aware of, we have the convertible bond with conversion price at 43.36 SEC that matures in October next year with a potential dilution of 41.5 million shares. And then if we turn to page 14, here you can see the net financial items and impact from IFRS 16. Including IFRS 16, the reporting financial net was minus 522 million. And if we exclude IFRS 16, the financial net was minus 91 million SEK. Non-cash convertible interest was 40 million. And ultimately, cash financial items amounted to minus 47 million SEK. With that said, please turn to page 15. Jens, I'll hand it back to you for some final comments.

Thank you, Åsa, and we can jump to page 16 for some concluding remarks. We are very optimistic about the market development in general and in short term and despite macroeconomic headwinds, we see no signs of a weakening in the market. People continue to prioritize meetings and traveling, whether for business or pleasure. Based on the current bookings, We should expect good demand in line with last year for the spring and upcoming month. We expect occupancy levels for the second quarter to be on par with second quarter last year, but at higher room rates. We also expect a good quarter for meetings and events and continued high efficiency in our operations overall. We have a great momentum, as you also can hear, in Scandic. So we really look forward to an exciting year of 2023. With that, I would like to take the opportunity also to thank all our team members for a good first quarter. And thank you all for participating here. But over to you, operator, for the Q&A session.