Good morning, everyone. Special welcome to the audience here in the room, and a special thank you for Pareto for hosting today's event, which is the presentation of the fourth quarter and full year results of Europris. Joining me on stage today, I will have CFO Stina Byre, who will give you the financial details. At the end of the presentation, there will be a Q&A which will be managed by our IR officer Trine Engløkken. Okay, let's start with the highlights. Europris is very satisfied with the development in the fourth quarter, where we see strong sales development in a tougher retail environment. We had strong comparable figures from last year, which was positively affected by COVID restrictions.
While with this year was impacted more by a cautious consumer environment due to in the high inflation as we have seen recently. Total sales increased by 6.8% and adjusted for acquisitions, the growth was 4.8%. like-for-like sales for the Europris chain was 3.3%. As expected, the gross margin declined from last year's record high 50%, mainly due to less positive effects from the freight agreement and an unrealized loss on currency hedging contracts. We had good cost control with OpEx to sales ratio of 20.4% and EBITDA was NOK 760 million, and net profit was NOK 422 million. As Stina will give you more details on the financials in just a few minutes.
With strong sales in the fourth quarter, 2022 ended up as another solid year for Europris. We increased sales on top of the record high sales in 2021, dominated by COVID restrictions, which was positive for the sales development of Europris. The gross margin remained strong, even though that the tailwind we had from the freight agreement eased out throughout the year. EBITDA for the year was NOK 2.05 billion and net profit was just about NOK 1 billion for the total year. The reduction in net profit was 5.5% from the record year 2021. We maintain our strong financial position and cash and liquidity reserves was NOK 1.9 billion at the year-end. All in all, we are very satisfied with the development in 2022.
The strong performance was also reflected in the dividend, and the board of directors proposed a total dividend of NOK 3.75 per share. The ordinary dividend is increased by 10% to NOK 2.75 per share. Due to the extraordinary good results in another year, positively impacted by COVID, the board proposes an additional dividend of NOK 1 per share. I think, over the past three years, we've seen a very solid development within Norwegian retail, but the effects has been very mixed among the different sectors, and the impact on the different years has also been different for the various sectors in the markets. I'm sure that you're tired of seeing me talking about this, you know, these three-year stack numbers looking back to 2019.
I think I can promise that today will be the last time I show a three-year slide looking back to 2019. In order to evaluate the performance we've had over the past years, it is important to look at the longer perspective. The straight two-year sales development shows that the total market has increased by 17.2% over the three-year period. Historically, that is actually a quite strong performance of the market. The shopping centers has a growth of 12%, groceries by 12.7%. Variety retail, which is, you know, the winning sector in retail, has grown by 19.7%, and Europris has a growth of 30.2%. The COVID effects are beginning to wane.
Within the fourth quarter, the figures are more comparable, even though we saw positive COVID effects in December 2021. In the fourth quarter, Europris chain had a growth of 5.1%, and that compares to 0.1% growth for the shopping centers. The stores in the shopping centers, they had a decline in sales of 1.3%. Overall, I think that coming out of the pandemic, washing out the COVID effects, the performance of Europris actually remains very strong in the current market. The consumers have lifted their focus on low price, and that is, of course, beneficial for a low price retailer like Europris.
If you thought that, you know, the three per year perspective was long, I will actually take you through an even longer perspective on looking even 30 years back. Europris celebrated 30 years in last year. Since we opened the first store in 1992, we have had sales growth every year. 2022 was not an exception. It was another year with sales growth. It's, you know, looking at the past few years, it's obvious that Europris has benefited from the sales boost throughout COVID pandemic. You know, even though it was hard to handle that high growth in such a short period. The growth itself actually came quite easy. We didn't have to work that hard for it.
In 2021 and the beginning of 2022, you've heard me talking about, you know, what we have done during the pandemic in order to maintain these high sales levels as we come out of the pandemic. I truly believe that Europris has come out of the pandemic as a stronger company. We've spent the time wisely during the pandemic. We have worked extremely hard and dedicated on maintaining the good position we have taken in the market. Since 2019, we have added more than 1 million members to our customer club, and we use the data we get to drive traffic and increase shopping frequency. We have upgraded several important product categories in order to improve the customer experience and also to drive growth.
We've strengthened our online presence by acquisitions of market leading online retailers in selected categories. We have prepared a new strategy plan which we presented to the market on the capital markets update in December. All these actions have contributed. You know, we are prepared for continued success, and we have actually established on a much higher level on sales wise than where we were before the pandemic. With that, I will leave the floor to Stina for more of the financial details.
Thank you, Espen. I will take you through the financial performance in the fourth quarter. We are very pleased with the sales development. Group sales were north of NOK 3 billion, an increase of 6.8%. If we exclude the structural growth from the acquisition of Strikkemekka, the growth was 4.8%. For the Europris chain, the like-for-like growth was 3.3%. Many companies started hard Christmas discounting as early as in the beginning of October, many customers front-loaded their purchases, this affected the sales development of October and November positively. Despite of this, and the fact that we were following a strong December in 2021 after COVID restrictions were again re-implemented, the chain still managed to have total sales growth also in December.
We have made a deliberate shift in our direct marketing leaflet to focus on low price consumables needed in everyday life. This proved very successful driving sales, driving traffic to stores and affecting the sales development positively. When it comes to higher value seasonal items, they had a sales decline. They only constituted a very small amount of total sales and had very limited impact on the total sales development. E-commerce sales were NOK 425 million, constituting 14% of group sales. The fourth quarter is the main quarter for Lekekassen. They had strong growth in both Sweden and Denmark, while in Norway, sales did not reach up to the record level set in 2021. Strikkemekka is the main revenue contributor in the Strikkemekka group. They had sales growth for the fourth quarter.
When it comes to online sales from Europris, the fourth quarter is rather small, and the development here was also affected by lower sales of higher value seasonal items. The gross margin came in at 45.5%, a decline of 4.5 percentage points. A lower gross margin was expected, and this is mainly due to higher costs for inbound freight. Negative effect on unrealized currency hedging impacted with -1.3 percentage points. Higher share of campaign sales and higher share of low price consumables also had a slight negative impact. OpEx was NOK 619 million, an increase of 4.1%. The main driver behind this is the structural growth and also seven more directly operated stores.
The OpEx to sales ratio was 20.4%, a decline of 0.5 percentage points. For the fourth quarter, the EBITDA was NOK 760 million, a decline of 8% compared to the record level set in the fourth quarter of 2021. For the full year, EBITDA was almost on par with the record year, 2021. If we exclude structural growth, it was 3% lower. Net change in cash was negative with NOK 106 million compared to positive with NOK 30 million in 2021. The explanation behind this is mainly from higher inventory value, and this is from higher purchase prices and also from a higher volume of seasonal summer items. In addition, there was timing differences for accounts payable and other accrued expenses.
Net debt was north of NOK 2.6 billion, an increase of NOK 200 million. If we exclude lease liabilities, it was NOK 626 million, an increase of NOK 100 million. We have a solid financial and financial position with cash and liquidity reserves of NOK 1.9 billion. With that, I hand it back to Espen.
Thank you, Stina. I ended my introduction today by talking about the capital market updates we had back in December last year, I think it's fair to pick up that point again. At that event, which we called from good to great, we presented our strategy plan, given the success we've had, it will be more of the same, but it will be better. We have also added a fourth element to our strategic initiatives. We will continue to strengthen the price and cost position. We will continue to improve the customer experience, we will continue to work on driving customer growth.
The fourth element we have added is about acting responsibly, and the main ingredient in this strategic initiative is about taking a much more committed step towards sustainability for Europris, and it's also about how Europris can you know, work together with the local communities around our stores, becoming the local hero in the retail sector. On the following slides, I will give a little bit update on what we have made progress on during the fourth quarter on the strategic plan. We have upgraded the toys category, and after the acquisition of Lekekassen, we got access to better brands and products within this category. Together with the experts in Lekekassen, we have developed a full new range for Europris in combination with the private labels we already had.
In addition, we have redesigned and improved the layout of the store. All in all, these results are very positive. We see sales growth well above the chain average for this category in the fourth quarter after we opened the new shop in shop for toys. That is the exact same effect as we have seen over the last couple of years with all the categories we have upgraded. We see this initiative with doing category and concept upgrades that drives sales and also drives profitability in the stores. The current financial environment is also quite challenging and has made us shift campaign focus from seasonal items and also higher value non-food items towards consumables with low price points.
As Stina explained, this has driven sales mix towards more consumables, groceries, and it has been a key traffic driver to our stores in this period. We have done this to drive sales growth in a quite difficult market. We have adapted, and we have seen the positive effects we've gained from shifting the campaign focus. Another important traffic driver is of course the digital communication with the growing membership base we have in the Mer customer club. We're starting to use the data and more personalized content, and we see that the customers that are exposed to personalized content, they get a higher engagement rate, and we also see a higher basket value with these customers.
We also see that personalized communication directly from the local store of the consumers drives more traffic and brings more loyal customers. The marketing is also getting, you know, getting more digital, that's important for driving traffic. I'm not saying that, you know, the physical leaflet is dead, but we are preparing and becoming less dependent of the physical leaflet as a marketing tool. Of course, on the customer traffic, new stores will continue to be an important traffic driver for Europris also in the years ahead. In November, we opened a new store in Nittedal, just outside of Oslo, the sales results has been actually beyond our expectations. Extremely good results. It's a good proof that we still have room for more Europris stores in the greater Oslo area.
In 2022, we opened a total of six new stores, and we have a pipeline of nine new stores for 2023 and the years beyond, of which two are subject to planning permissions, and one store was actually successfully opened this week in Froland, outside of Arendal. On the sustainability side, Europris has decided to commit to reach net zero emissions by 2050 in line with the Paris Agreement and Science Based Targets. For Europris the biggest footprint for carbon is in the indirect emissions, which is called the scope 3. To solve this issue, we need the whole industry to work together. In Europris, we believe not only we have to, but, you know, we really want to participate and take part in this important project for the society.
We are starting up, mapping up a lot of initiatives in order to make a good action plan to reach these targets. We have already started quite a few projects. Our private label for cleaning, Effekt, has been certified as eco-friendly with Svanemerket. In close collaboration with Norgesgruppen, we are using electric ferries to transport goods across the Oslo fjord. In addition to that, we are also using electric trucks for distribution goods to the stores in the Oslo area. We're also exploring solar panels at the roof on our head office and also going to install that at the roof on the central warehouse in Moss. We have launched several initiatives in order to reduce waste and increase our recycling ratio.
It's a lot of things going on, and we are moving in the right direction. Our application to the science based targets has been approved, and we are currently in the mapping phase, which will last at least until the end of next year. Over the past year, we have increased the focus on sustainability in the chain by putting a lot of focus on management training. If we want to make a change, we need our managers to learn how to do it and why they should do it. We put a lot of efforts into training managers, and we have also introduced a sustainability week with training for all employees across the chain. I think it's important to raise awareness, you know, give more competence to people, so they are able to take the right decisions.
This is really lifting our discussions on sustainability within Europris and moving us in the right direction. Looking at a short summary and an outlook, well, I said, you know, a couple of slides ago that I shouldn't show these, you know, three-year stack slides anymore, we're actually showing one more. It will be the last time. It's worth looking at the journey we've been through over the past three years. Since 2019, the CAGR growth, sales growth for Europris has been 13%, and it has been profitable growth all the way. The CAGR growth for our net profit has been 39% in that period. Of course, that proves that scale makes a difference in our kind of business.
We have taken several actions in order to improve our gross margin, making us confident that we will see a higher gross margin now than what we saw in the years before the pandemic. On the outlook itself, I believe that Europris is well-positioned with a relevant product offering in what I would call the tougher economic environment. We saw more challenging economics for the consumers, I think at least for the Norwegian audience, you cannot avoid to see the price focus that are in the press and among the politicians and the consumers these days. In such an environment, it helps to be in the low price sector of the market. It helps to be expected to be the price leader in the market. We have a well-recognized concept for low price with a footprint across Norway.
We have strong campaigns and a broad range of everyday products that everybody needs. In the current market environment, we are confident that Europris will play an important role, and we offer value for money for the consumers, and that we are well-positioned to continue to take market shares. I think, with that, we will open up for questions. Stina will join me on stage for the questions. We will start with the audience here in the room. Trine will hand out the mics. We will continue with the questions from the web.
Yes, hello. Joakim Øvstaas from Pareto Securities. Congrats on a fantastic quarter. I was wondering if you could elaborate a bit on your expectations for both OpEx and IFRS depreciation in terms of CPI adjustments of rent, and other inflation impacting OpEx, and also on your sort of plans or whether you are taking any specific actions to mitigate this cost inflation.
Yes. We have rent, most of our rents are CPI adjusted with effect from the November rate in 2022. That will of course impact, and sorry, you had a very long question. The start of the question again was?
Just in terms of regular OpEx and what sort of inflation you expect there.
We have that CPI adjustment hit hitting us, and then most of our employees are on collective agreements that will have an effect from the second quarter. We don't, of course, know the outcome of that one yet. We haven't initiated any major cost improvements as you can see. We have good sales and we haven't launched any extraordinary things. Of course, we always have attention to our OpEx and have a focus on keeping them as low as possible. We monitor the situation, of course, continuously. If we need to do any kind of larger things than what we already are doing, we will look into that.
Hopefully we will stay relevant, and consumers will understand that it's a good place to go, and, hopefully we'll not have a need for that, as we have seen many other companies in the media lately.
Thank you.
Håkon Fuglu, SEB. Looking at your like-for-like growth of roughly 3% for Q4, I'm assuming that we're seeing some volume declines. How are you working on mitigating those in the future? How will that impact also the gross margins?
You. Obviously, you see the growth you have these days, that is price driven. That is, you know, for all retail. And it not necessarily has a big impact on the margins, but we've seen that the price, you know, the consumers are becoming more price conscious and, you know, they are looking more for low prices. With, you know, the campaign machine that Europris are, you know, with these offers, this attracts attention. Of course, we sell a little bit more on the goods we see on the campaigns. That will have a negative impact on the margin, and then you just have to work smarter on the rest of your assortment. It's about, you know, how you do your product placement.
This is a lot of the retail detail you do in the stores. I think, you know, we are very well positioned on the sales side, but of course, I do not expect, you know, volumes to boost this year. It will be a tough year where you have to fight for your share of the consumer's wallet, but we are very relevant in terms of the low price position. If we maintain that share or even increase that share, it will be on lower volumes, but it will be a great achievement for Europris.
Thank you. I also have a follow-up there in terms of sort of product mix because you're talking about larger share of consumables than you've previously seen. How will that affect margins?
It hasn't been an enormous shift. It's some percentage points difference. It has a slight impact, but it's not the main driver behind the development now. If it kind of stays within a certain range, it will not hurt the margins significantly. Of course, if the picture were to change dramatically, then it could have a larger impact, of course.
Thank you.
We take the questions from the web. The first question is from Peder Strand. The sales growth is described in the report as inhomogeneous as consumers buy more cheap items. At the same time, there's an inventory build-up of just under 20% compared to December 31 last year. One would assume that the product categories have built up differently over the period. How much of the current inventory is unfit for this market environment?
You know, it's a good question regarding the inventory. Inventory in our stores is very healthy. Actually, we have less items on stock in the like-for-like stores this year by the end of 2022 than we had a year ago. The volumes are managed perfectly, but we have a little bit too many Christmas trees on stock, and we have a little bit too much garden furniture. You know, we are a seasonal retailer, and you know, it's only Christmas once a year, and it's only summer once a year. It takes time to clear out this inventory. We have got rid of all the inventory that we have of products that are not going to continue in the next season.
It's good inventory, it's sellable, and that's, you know, we are very satisfied with that. On the central warehouse, we also see a good development in the base assortment in the inventory, but of course, too much summer seasonal items. That is what drives the higher inventory in combination with the higher prices we've seen. It's a, it's the price increase that is the big issue for the inventory. It's healthy inventory, and we have enough of goods to sell on the consumables.
The next question comes from Ole Martin Westgaard. Actually, six questions. I start with the first one. How was the consumable share in Q4?
It was a little more than 50%.
Number two. How has the trading been so far in Q1?
We're not going to give any figures for the start of the year, but I can say that we are satisfied with the start of the new year. Basically, I think we gave a good outlook saying that, you know, we are fit for the current environment, and we see no change in that. We have not seen any significant change in the start of this year compared to what we saw towards the end of 2022. We are satisfied with the start, and we will come back with the numbers when we present the first quarter.
Number three: How should we think about the impact of freight costs on margin in the coming quarters?
Well, it obviously takes the inventory turn to come around before it starts to have effect. As we have a higher number of seasonal items still left, you should also expect that, also for the second quarter, you will have effect from the old agreement. It will gradually wash in.
Can you comment on how the like-for-like growth in 2022 was split in terms of volume, price, and basket?
For the full year, the basket was slightly below. We had price increase, but that was a little bit more than offset by a volume decline.
How would you view the competitive landscape for consumables?
I think it's just about, you know, reading the papers these days. It's a tough environment. It's a great attention to the market by the media and also the politicians. The consumers are, you know, hunting for low prices. I think it's an environment where you have to offer, you know, an edge. You have to be on the low price sector or you have to be in the more, you know, winning service sector. I think it's a tough environment going out there and I think many retailers will have a very troubled year in 2023. If you are focused, if you have a clear position on price, I think you will be among the winners.
The last one from Ole Martin is: Can you provide an update on the latest development for ÖoB?
There has basically been no development on ÖoB since the last time we reported. The status is that we have not agreed on the option period and the option strike price, and that will be settled by an arbitration which is scheduled for the later part of the third quarter this year.
There is three questions from Petter Nystrøm. The first one: Interest costs were NOK 49 million in Q4 and NOK 40 million excluding unrealized loss. Is the NOK 40 million representative of coming quarter, or does it include any special effects?
Doesn't include any special effects. Going forward, of course, it depends on how much is drawn on RCF and things, but no special effects. It's important when you look at the interest rate costs in estimates that you kind of take out the effect from the interest rate swap and look at that as a starting point.
Seems like you're planning to open eight stores in 2023. That is higher than the guidance. Any special reason for this? Good store availability?
We don't see any increased store availability actually, but, you know, we're taking the opportunities we get. We have a strong pipeline, and some of the stores are still subject to planning permission. Let's, you know, see what will be the total number when we are end the year. We are satisfied with the pipeline and let's see if it's going to be six or if it's going to be eight. You know, let's wait and see.
The last one: how do you see Easter seasonality affect Q1 sales this year versus last year?
I believe Easter comes a little bit earlier this year. I'm not sure you will have the full effect that we guide on as Easter effect, but some of it will likely go into the first quarter this year as opposed to the second quarter last year.
That was the last question.
Well, thank you.