Good morning, everyone, and welcome to Europris second quarter presentation. We are gathered at Sparebanken 1 Markets today, so thank you for hosting this event. If anybody wants a free lunch, you are welcome to join us for the presentation at lunch as well. I'm Espen Eldal, CEO of Europris, and joining me today, I have CFO Stina Byre, who will present the financial details, and IRO Trine Engløkken, and she will manage the Q&A session at the end of the presentation. It's very nice actually to see we have a live audience here in the summer weather in Oslo, so very welcome to you. We will start with questions afterwards from the live audience, and then we will take questions from the web, but feel free to type in the questions as we speak.
Today, it's actually one year ago since we presented the acquisition of ÖoB and our plans for how Europris should become a Nordic retail champion. One year down the road, I can confirm that we are still in the making, but we have made good progress on the integration plans we have in Sweden. During this first year, we have focused on established joint sourcing, testing the key commercial elements of Europris in the ÖoB stores, and preparing the organization in Sweden for a full modernization of the store base. I'm pleased to see that we have made good progress on the integration plan. It's also good to see that the increased focus management has put in Sweden has not come at the expense of continued profitable growth in Norway. If we look at the results for the second quarter, we have delivered a very strong second quarter.
We have sales growth in both markets, good cost control, and that has contributed to an increased EBIT for the group. The timing of Easter has a significant impact on the numbers, and to evaluate the underlying performance, you should look at the first half to make a good comparison for the group. If we look at the first half here, still the acquisition of ÖoB is affecting the comparable numbers, and Stina will explain that in more detail during the financial review. I will highlight the segment Norway, which is comparable, and the sales growth was 6.9% for the first half year, and combined with good cost control, that has contributed to a solid EBIT increase of 16.1% for the first six months. Talking about segment Norway, they are continuing the positive trend we have reported for the past few quarters.
The sales growth for the Europris chain has been very healthy. It's driven by volumes following increased footfall to the stores. We have also continued to develop the commercial elements of Europris, seasons and campaigns, and the sales growth was exceptionally strong during Easter. Towards the end of the first quarter, we re-upgraded the home and interior category, and sales have developed very well during the second quarter. This is an important category for us to grow, as this is a high margin category and also important to drive new customers to the stores. Last year, we initiated a focus on improving flow of goods and service levels in the stores, and I'm really proud to say that the stores in Norway actually have never looked better than they do right now.
We have increased the inventory level, but that has been important in order to support the high sales growth. On the cost side, we have improved efficiency at the central warehouse in Moss without compromising on the service level to the stores. Retail statistics for the first half are not yet published, but statistics per May show that Europris has outperformed the retail market in Norway and taken new market shares. All in all, it's a very solid performance of Norway in the first half year. If we look to Sweden, the ÖoB integration is progressing to plan, and we have achieved several milestones in the quarter. We have upgraded three of the non-food categories with the same conceptual and visual elements and the same spacing as Europris, and we are gradually introducing the same product range as in Europris stores.
This is the first step in the modernization of ÖoB, and the customers are responding well to the changes. We see high sales of these categories, and we also see a positive gross profit impact from the sales mix, but the basket size remains unchanged, leaving us with limited impact on the total figures for ÖoB. It is clear that the category modernizations are not enough to revitalize ÖoB as a shopping destination, but it's an important first step. We need a full remodeling of the stores in order to create a more inspiring and attractive shopping environment and get new customers to visit the stores as well. We are also working on harmonization of IT systems, and in the second quarter, we went live with a new ERP system in Sweden. On June 18, we opened the first fully remodeled ÖoB store in Uddevalla.
The store is now fully aligned with the Europris concept, and non-food product categories are close to 100% aligned with Europris. The project was very well planned and very well executed by the ÖoB team in close collaboration with the category and the concept team in Europris. We have received very positive feedback from existing and new customers. It's too early to conclude, but the results so far provide confidence in this last but very important step in the modernization journey of ÖoB. We see high sales from both footfall and the basket size, and we see an improved gross profit from product mix as a result of higher non-food sales. Everything that we want to see in the turnaround process, we are seeing from this store.
This is very encouraging, of course, and the remodeling will now be tested at three more stores in 2025 before we plan for a rollout across the store base. When we presented the ÖoB plan a year ago, we had three key pillars in the turnaround process. The first step in the plan for ÖoB was the category harmonization and joint sourcing, and this work is well underway and will be close to finalized during 2026. The second step is to improve the customer experience, and by this, we mean a full remodeling of the stores. The first test is now live, and more will follow in 2025 before we plan for a full rollout in 2026 and 2027 with up to 40 stores per year. The third pillar in the turnaround plan is to strengthen the execution across the value chain.
We are introducing the Europris concept for seasons and campaigns in ÖoB, and we are working to harmonize IT systems in order to allow us to better collaborate and share best practice across the two concepts. With the results we have seen from category modernizations and remodeling of the stores now in the second quarter, we remain very confident in our long-term target for ÖoB on delivering NOK 5 million in sales in 2028 with the 5% EBIT margin. With that, I will leave the floor to Stina to give the financial details.
Thank you, Espen. Good morning, everyone. Before I start, I would like to highlight two things. First, as the group closed the acquisition of ÖoB in May last year, reported figures for the group and for segment Sweden are not comparable between the years. Second, as Espen mentioned, the timing of Easter also impacted the second quarter figures in a positive way, and attention should primarily be on the performance for the full first half. I will start with segment Norway. In the second quarter, sales were NOK 2.7 billion. This is an increase of 11.7%. The Europris chain had a like-for-like growth of 11.8%, positively impacted by the timing of Easter. When Easter is late and also combined with good weather, normally this is very good for sales as it also kickstarts the spring and summer season, and we witnessed this this year.
Adjusting for the divestment of Lunem, the pure players had sales growth of 2.3%. Lekekassen had growth in Norway, but decline in Sweden and Denmark. Strikemekka had growth in all markets. If we exclude impact from unrealized currency, then the gross margin was down by 1 percentage point. The timing of Easter impacted the product mix with a higher share of sales both from consumables and from campaigns. In addition to good cost control, the timing of Easter also gave scale effects, and the OpEx to sales ratio declined by 1.7 percentage points. It was a strong second quarter with an EBIT of NOK 457 million, up by 28.9%. For the first half, segment Norway had sales of NOK 4.7 billion, a growth of 6.9%, and the Europris chain had a like-for-like growth of 6.1%. This was mainly due to higher footfall, underlining the relevance of the concept.
The sales uplift was also a result of operational improvements. We have enhanced service levels and ensured well-stocked shelves in the stores. Adjusting for the divestment of Lunem, the pure players had a sales growth of 2.8%. Excluding impact from unrealized currency, the gross margin showed a growth of 0.5 percentage points, and the OpEx to sales ratio improved by 0.6 percentage points. This was related to good cost control and operational improvements in the value chain. We have had higher efficiency at the logistics center following previous investments in hardware and software, and also due to our reorganization. All in all, it has been a solid first half with an EBIT of NOK 535 million, up 16.1%, and a lift in the EBIT margin of 0.9 percentage points.
I would like to remind you that the reported figures for segment Sweden include the full second quarter this year, but only May and June last year. Looking at the sales development in local currency and for the full second quarter both years, then the ÖoB chain had a like-for-like growth of 4.7%. Obviously, this was positively impacted by the timing of Easter, but we also saw results from strengthened execution of promotional activities. It is too early to evaluate any lasting effects, but the categories that were upgraded in the second quarter showed good development and also improved the product mix, as these categories have margins that are higher than the chain average. The pilot store has also shown promising results in the first few weeks that it has been open after the full remodeling.
The segment had an EBIT loss of NOK 34 million for the second quarter this year. Reported figures include the full first half this year, but again only May and June last year, so you cannot compare the figures between the years. Looking at the sales development for the full first half both years and in local currency, the ÖoB chain had a like-for-like sales decline of 0.9%, and this was driven by lower footfall. As I mentioned, we have taken measures to improve promotional sales, and these sales showed strong development, but at the expense of other products, and the overall basket size has remained relatively stable. For the first half this year, the segment had an EBIT loss of NOK 149 million.
To sum up the second quarter, group figures include one additional month with ÖoB and was positively impacted by the timing of Easter, and group sales therefore showed a significant increase. ÖoB had a dilutive impact on the gross margin, and this was somewhat compensated by unrealized currency effects, where we had a gain this year compared to our loss last year, with a total impact on the margin change of 0.7 percentage points. EBIT for the group was NOK 423 million, higher than last year, as significant growth in Norway more than offset loss in Sweden. For the first half, four additional months with ÖoB this year naturally impacted the top line growth, but it also had a dilutive impact on the gross margin and the OPEX to sales ratio.
The gross margin decline was mainly explained by the inclusion of ÖoB, and also 0.5 percentage points of the decline was related to unrealized currency loss this year compared to unrealized gain last year. EBIT for the first half was NOK 386 million, down from last year, as growth for segment Norway was more than offset by loss in Sweden. A lower net profit was due to segment Sweden. Also, we had financial effects last year related to the ÖoB transaction and from interest rate swaps, where the group had an unrealized loss this year compared to an unrealized gain last year. These two elements combined explained a pre-tax decline compared to last year of NOK 55 million. I will comment on the year-to-date figures. Cash from operating activities was negative with NOK 40 million this year compared to positive with NOK 208 million last year.
This was explained by more negative development for net working capital, and that was due to timing of accounts payables and also the inventory development. To boost sales, inventories in stores have been increased, and in addition, we have made strategic purchases ahead of price increases from suppliers. We also have higher inventories in Sweden to support future growth in non-food categories. Net cash from financing activities was less negative this year, as more of the credit facility in Sweden has been drawn upon. A dividend of NOK 573 million was paid in May. Net debt was NOK 5.3 billion or NOK 1.8 billion excluding lease liabilities, and cash and liquidity reserves were NOK 1.1 billion. Before I hand it back to Espen, I would like to share the happy news that the group's science-based climate targets have been officially approved.
This is an important milestone for the group, and the next step will be to develop a transition plan to ensure we deliver on these targets. We will do our part, but we also recognize that we cannot do this on our own, and we need to work with suppliers and partners to reach our ambitions. Thank you.
Thank you, Stina. I will present the outlook, but before I look at that, I will actually take a look back, and that is because on 19th of June, it was 10 years since Europris was listed on Oslo Stock Exchange and our IPO. During the IPO, when we traveled out and met investors, one of the key slides we showed the potential investors was the growth story of Europris. Every year since the first store was opened back in 1992, we have delivered sales growth in Europris, even when adjusting for acquisitions. This is a part of the very proud history of Europris, and the culture in Europris is very much sales-driven. This is, of course, an important part of the history, but this also serves as a motivation going forward because no one wants to be the one who misses this streak.
In the first years after the listing in 2015, we went through a modernization program of the stores, and we accelerated the category upgrades. This is very similar to the process we are undergoing in Sweden at the moment with ÖoB. In Norway, the reward came during and after the pandemic when several new customers experienced smart shopping at low prices with Europris. Our shareholders have also been rewarded, and after 10 years as a listed company, we have delivered a total shareholder return of 218%, assuming reinvestment of dividends. This is an average return of 12.3% per year compared to the UCBX index of 10% in the same period. This is now also part of the Europris history, and I will return to the outlook.
Europris has a very strong concept and a solid market position in Norway, and this has allowed us to outperform the market in the first half of the year. Retail statistics for both Norway and Sweden show very strong sales in 2025, and we believe that with lowered interest rates and also a real wage growth in both countries, this should support continued positive development in the consumer sentiment. The international geopolitical climate remains tense and uncertain, and during these circumstances, we can only focus on what we can influence ourselves, and we hedge interest rates, we hedge electricity, we hedge the currency, and of course, we also have fixed rate agreements for freight and also fixed allocation for containers from Far East on the boats.
The integration of the ÖoB is progressing according to plan with promising results from the category upgrades and the first pilot store we have remodeled, and we remain confident in our long-term target for profitable growth in Sweden. With that, I will invite Stina back on stage, and we will open up for questions. We'll start with questions from the audience live here in Oslo if we have any. The journalists might, of course, have their session afterwards.
Morning, thank you. Perhaps you could elaborate on the potential for new stores in Norway. It seems like you're aiming for 11 this year, which is up, if I'm reading that correctly, up from 9, so it seems like increasing the potential. Perhaps elaborate on this year, and if possible for the next couple of years, what are the potential for new store openings, please?
We said that we should open on average around five new stores every year. Last year, we opened one, so of course, it's a significant uplift this year. We have, I believe, eight in the pipeline for this year. We have opened five up until now, and the additional two we have put in the pipeline is for the year onwards, so it's not in 2025. I believe that we can continue to open around five new stores in Norway for several years to come. We are opening a few city stores, and we believe that for the full version of Europris stores, there's still a potential to have around 320 stores or something, so let's see, but we have a good runway still for opening new stores.
We go to questions from the web. The first one comes from Ole Martin Westgaard , DNB Carnegie, and the first questions are related to Norway. Can you please provide the mix on your like-for-like growth in Norway between volume and price?
For the first half, it's primarily footfall that drives the sales growth. The basket is relatively stable, slightly up, but little impact from basket year to date.
What was your consumable and private label share in Q2, and how does this compare to last year?
It's been a higher share of consumables, which is impacted by the timing of Easter. If we look year to date, it's still a slight increase in consumables, around 1% up compared to last year. The private label share is slightly down in the second quarter. Easter is impacting, so if we look year to date, then it's roughly the same private label share.
How do you see the development in purchasing prices from Asia?
We see a slight decrease in the purchasing prices from Asia. We see that there's available capacity at the factories, and some raw material prices have also come down. We are positive on the outlook on the price development from Asia.
Over to Sweden, can you provide an estimate of the Easter effect on sales in Sweden?
It's difficult to give the exact figure. We don't know that business as well as we know the Norwegian business, but it was definitely an Easter impact. If again you look at the year-to-date figures, the chain was like-for-like down with 0.9%, so the gain in the second quarter was not offsetting completely the loss in the first quarter.
You have still low gross margins in Q2 in Sweden despite stating that there was no impact from clearance sales. How should you think about the gross margin development going forward, and how was the gross margin in Sweden on your pilot store relative to the overall Swedish margin?
If we look at the reported figures in Swedish kroner, then the gross margin was actually up in the second quarter for segment Sweden, and it is flat year to date. We are on a modernization journey. We are taking steps, but for now, we don't necessarily see that it adds on top, so I think we will still see that this transformation journey we have will take time.
How should you think about the OPEX base in Sweden? Is Q2 a representative figure, or is there still a high level of project and ERP costs?
No, the level of ERP costs was about the same as last year. It was higher in the first quarter, but in the second quarter, it was not that big a difference. We will have also other projects going forward with other IT projects as well. I think roughly normal, but we're still building up, finding our way, and also with all the projects we will do ahead, especially in 2026 and 2027, that will impact, so it's still difficult to find the run rate. That's still some years out.
The next question comes from Håkon Fuglu, SEB. Was the Easter sale more or less than normal in Norway and Sweden?
I would say we have given a range in our appendix in the analytical guidelines, and it was in the high range. It's difficult to exactly say what is the Easter effect. You don't know really why the customers come to the stores, but sales of Easter products was on the high side, so I would say it's in the high level of the interval we have given.
What was the dilutive effect from Easter sale in gross margins in Norway?
Again, it's difficult to quantify exactly what was what, but look at the year-to-date figures. You will see that the segment Norway had a growth in its gross margin of 0.5%, so I think that's more relevant than the second quarter isolated.
What was the FX hedge gain in NOK for Norway?
We had a loss year to date of NOK 20 million and a gain of NOK 9 million last year, I believe. Trine, do you remember? Yeah.
Thank you.
There is a 0.6% decline year to date for segment Norway based on that.
The next question comes from Petter Nyström, ABG. ÖoB showed a solid improvement from Q1. You mentioned full store remodels and upgrades as a key to hitting your targets. Were these included in your original plan, and do you have a rough CapEx estimate?
Yeah, they were included in the original plan. It's always been a plan that we should start sharing the same non-food concept and integrate these categories, and of course do the full remodeling of the store. We are doing the tests now, and we will come back. We believe that we have sufficient CapEx with the NOK 300 million we have presented earlier on, and we will come back with more figures on the CapEx needs and also the OpEx and sales effects from the modernizations when we have finalized the test stores.
Thank you.
That was all questions. I wish everyone a nice summer, and for the live audience, you should bring your Dubai chocolate home before you leave. Thank you.