Good morning, everyone, and welcome to this presentation of Axfood's report for the third quarter. My name is Klas Balkow, and with me today I have our CFO, Mr. Anders Lexmon. We know it's a busy reporting day today, but of course, Anders and I, we truly think this report is the most important one for you. Let's now move on to the report, and I ask you to turn to page number two. Here we have our agenda. We will guide you through our key ratios for the quarter as well as our financial position. I would also like to give you a brief update on our progress on our strategic agenda, including also a progress update on our new logistics center in Bålsta outside Stockholm. After that, we will end this conference with a Q&A session as always.
Let's now turn page to number 3. Here you have an overview of Axfood. We have a clear house of brand structure with common logistics and sourcing that create economy of scale. I'm glad to share with you that we have, in this report, reached somewhat of a new milestone. For the first time, we can report over 50 billion SEK in net sales for the rolling 12 months. Please go to next page, number 4. Before we get into the key ratios, I would like to highlight the essence of the report. First, we continue with our strong sales growth, particularly, I would say, within Willys. We continue therefore also to gain market shares. Thanks to improved performance in all our operating segments, we report a solid profit. Also excluding the IFRS 16 effect, we actually beat last year's record quarter.
I also want to address that the outcome of this report includes efforts and investments made for continued profitable growth for the future. I will obviously come back to all these parameters as we move on, but please now turn to page number 5. Let's now go into our key ratios where I will guide you through our group and segment performance for the third quarter. Please next page, number 6. We'll start with our sales numbers. I'm pleased to report the net sales growth for the group of 5.7% to a total of SEK 12.7 billion. With a like-for-like sales growth of 7%, Willys continues to outperform the market. It's also pleasing to see that all our segments have contributed to our sales growth in this quarter. Please turn to page number 7.
If we then look our comparison when we're coming into our store sales, our sales development on our stores and online show a total growth of 6.7% compared to the market growth of 3.5%. Both these numbers are supported by higher food inflation, and the newly published preliminary numbers from SCB indicates that food price inflation for the period January to September was 2.9%. In this, we obviously note that the weak Swedish krona versus EUR has driven some price inflation, particularly in the fruit and vegetable category. Please turn to page number 8. Here we can compare the online market with our performance since food online based on Svensk Dagligvaruhandel noted a 29.6% growth for the third quarter, while in Axfood we report the 38% online growth. Also in this channel, we grow faster than the market. Please now go to page number 9.
Here we go into the ratios for our profits. Our operating profit came in at 715 million SEK and totaled 672 million SEK if I exclude the IFRS effect. Clearly, this is mainly driven by strong like-for-like growth and the fact that all our four operating segments has improved their operating profit. This year's outcome includes costs related to the implementation of the centralized logistical solution for home deliveries in Stockholm. We clearly have some burden on this, but on the other hand, it's fair to say that last year we had higher logistical costs due to the warm and dry summer, something that we did not note this year. Finally, I also would like to comment on why central costs, if you have looked into the report, has increased in this quarter.
The major part is explained by an increased level behind the efforts that we are now putting into our business development. We are clearly implementing more tools and we have improved our digital work tools and methods. All this is aimed to contribute to our profitable growth. We also start to see several effects out of this already now. Let's now move into our segments, and I ask you to turn to page 10. We'll start with Willys. As I stated early on, Willys shows really strong like-for-like growth. With more customers, higher average tickets, and increased online sales, Willys noted a 7% like-for-like growth. In comparing this to versus last year, we have five more stores in Willys network, and we continue also to roll out our online offer to more stores.
In the quarter, we've added five more stores to total 75 stores with our online offer. Including this, Willys grew in total 8.3% for the quarter. With the positive like-for-like and the stable gross margin and maintained good cost control, Willys improved the operating profit to SEK 455 million. Operating profit, excluding the IFRS 16 effect, was SEK 430 million versus last year, SEK 385 million. Beside the obvious fact that our larger store format continues to attract customers, it is indeed pleasing that Willys' smaller formats, Willys Hemma and also Eurocash, shows really healthy growth. Another affirmation of Willys' progress is that Willys recently was awarded for being the fastest growing brand in the word-of-mouth category for the young customer group made out of 18 to 34-year-olds. Let's now turn to page number 11. We'll go now into the Hemköp segment.
Hemköp came in with the store sales growth in line with the market. Store sales grew by 3.4% and 2.1% in like-for-like. Our franchise stores continue to outperform the market, now also including the Östenssons chain with nine more stores as of September 1st. The somewhat softer like-for-like development is mainly explained by slow growth in our group-owned stores. For me, it's clear that the positive performance of our franchise stores shows that Hemköp concept and brand are meeting customer needs and expectations. We still have more to do. I commented that last quarter, we still have more to do in our group-owned stores and going forward, we put all efforts to continue to focus on revitalizing our stores and furthering strengthening the Hemköp brand.
The operating profit for Hemköp was SEK 67 million and SEK 57 million excluding the IFRS 16 effect, versus last year's SEK 54 million. The improvement in this quarter is mainly explained by an improved gross margin behind somewhat lower campaign activity. Please turn to next page 12, and we'll now move into the Axfood's Snabbgross segment. Snabbgross, as you know, meets very high comps. The growth rate for the quarter of 4.2% should be put in perspective out of the comparable numbers. It's also in line with the growth in the market as we see right now. Growth is supported by strong online sales also in Axfood Snabbgross. The improved operating profit of SEK 58 million or SEK 56 million excluding IFRS 16 effect versus last year, SEK 45 million, is explained by good growth and somewhat lower campaign intensity.
Please turn to page number 13. The final segment, Dagab. It is pleasing to see yet another stable performance for Dagab. We have a sales growth of 6.3%, which is driven by increased store sales for all our concepts. In this quarter, as I mentioned in Hemköp, we have the contribution of Östensson's nine stores, who is now included in the Hemköp franchise as of September 1st. The improved operating profit of SEK 182 million or SEK 177 million excluding the IFRS 16 effect versus last year, SEK 170, is mainly explained by our good growth. Also to the fact that we, last year, had a higher logistical cost due to the warm and dry summer, which then has partly been offset by high cost due to implementation of the Stockholm dark store as well as that we continue to develop Urban Deli and Apohem.
With this, as a start, I please ask you to turn to page number 14 and I hand over to our CFO, Mr. Anders Lexmon.
Thank you, Klas. Let's turn to page 15. Let me first sum up the first nine months. We see that net sales show the growth of 5.6% compared to last year, and our like-for-like sales within the Axfood Group stores were up 5.2%. We see that even in the first nine months, we gain market shares. The operating profit summed up to SEK 1,801,000,000. IFRS 16 had a positive effect on operating profit with SEK 129,000,000. On the operating margin by 0.3 percentage points, which means we have an operating margin well above our long-term goal of 4%. Page 16. Our cash flow for the first nine months was minus SEK 742 million compared to minus SEK 293 million last year. As you can see on the slide, we have quite big effect here in the working capital during Q3.
That's an effect of a negative calendar effect at the end of September. We had in the first and second quarters, we also in the third quarter had an IFRS 16 effect that affects both amortization of debt and operating cash flow with the same amount, SEK 1,075,000,000. We have a zero effect on the total cash flow in that sense. We also had lower impact on net investment this year. That is explained by a divestment of an asset hold for sale with approximately SEK 100,000,000 that we did in the first quarter this year. Share repurchase and dividend payouts was in line with last year. Let's turn to page number 17. Our CapEx amounted to SEK 688,000,000 this year compared to SEK 599,000,000 last year. The increase was mainly attributable to higher investments in our retail operation.
This year, we both have more establishments of new stores and higher refurbishment pace in existing stores, both in Willys and in Hemköp. We also had some higher IT investments this year, also due to store establishments, but also infrastructure related to common IT systems. In the wholesale operation, Dagab had some lower investments, mainly due to the major investment in the warehouse in Jönköping last year. Let's then turn to page 18. The development of net working capital on a rolling 12-month base continued to improve despite the negative calendar effect we had in the third quarter this year. The decrease is significant both in SEK and as a % of sales.
It's mainly improvements in accounts payable that you can see in the right side of the picture that is contributing. We see that we continue to have a positive effect from our supply chain financing program, even in the third quarter. Let's change page to page 19. The development of net debt show a very similar picture compared to recent years' third quarters. If we exclude the effect from IFRS 16, we had a net receivable position slightly below last year. Also, the receivable position was affected by the calendar effect in the working capital that I mentioned before. If we include IFRS 16, we increased our net debt with approximately SEK 5.4 billion at the end of September. The equity ratio dropped to approximately 24%. If we exclude the IFRS 16 effect, the equity ratio was in line with last year.
Even though the equity ratio decreased due to IFRS 16, we are well in line with our long-term goal of 20% at year-end. We change to page 20. The development of our capital employed is also very stable. If we exclude IFRS 16 effect, we had a capital employed level of SEK 4.7 billion and a ROCE above last year with 44.6%. We continue to have high capital efficiency with increased earnings, but with a big effect of IFRS 16. With that, Klas, turn on to you again.
Thank you, Anders. Let me now end up this part of the presentation by providing a brief update on our strategic agenda. Let's move to page number 22. As you're all familiar with, Axfood's strategic progress consists of a range of six strategic areas, and that each of the area consists of a number of well-defined priorities. Today, I'll take the opportunity to make some comments on our progress within three of our strategic areas. We'll talk about our customer meeting, expansion, and finally, but not least important, our supply chain. Please turn to page number 23. Now first, let me address some progress within our customer meeting. I'll have to say that we are progressing well in line with our plan within our priorities to strengthening our digital customer meeting.
We also are rolling out our concepts to our store, our new concepts, and clearly developing our customer program for increased relevance. We see positive results from our accelerated efforts in our introduction of more data-driven analysis and work methods within our customer meeting. Let me give you some more information in just one but important part in this work. Let's turn to page number 24. I have to say, our journey of changing towards a more data-driven way of working and within greater automation that we have focused on for some time is beginning to yield some concrete results. One example can be seen in the activities that we have carried out to increase the share of more relevant and personalized customer offer experience for the more than four million members of our customer programs. This is driving sales at a low contact cost.
As we move forward, we will continue to intensify our efforts and invest in system support to increase internal efficiencies, as well as the perceived quality and impact of our customer meeting. Regardless of when, where, and how our customers choose to shop. Please turn to page 25, heading in to our priorities within expansion. For 2019, our priorities are set out to open up 5 to 10 new stores. We plan to expand our online and establish online in the pharmacy market. As you know, we have launched Apohem earlier this year. I have to say, even if it's early days, we see really good progress from all these efforts. Let me also give you an overview of our store and online presence as of end of Q3. Please turn to next page 26.
On this slide, you can see that in the numbers that we are concluding that we are well in line with our expansion ambitions for this year. New stores are being opened according to our plans, and Willys have expanded its online offer with another 19 stores as of starting of the year as of September 30th. In addition to new group-owned stores within Hemköp, we have now, as I commented earlier, welcomed the retailer Östenssons with nine more stores as new franchise members in the Hemköp chain. Besides this, the level of conversion from group-owned stores to franchise stores is in line with last year. Please turn to page number 27. Let me end up the comments on our strategic agenda to talk about our supply chain.
As I would like to address our progress for developing a modern, highly automated and sustainable logistics center for store and online logistics, which will be strategically located in Bålsta, just outside Stockholm. Please turn to page 28. Let me first give you a brief overall recap of this large investment and program. The logistics center of more than 100,000 square meters will be environmentally certified and one of the largest and most modern facilities in Europe for distribution of both groceries to stores as well as e-commerce customers. We will have approximately 60% of our volumes will be coordinated as a logistics center will replace six of our existing warehouses. The investment will give us also the flexibility to meet future needs and is adapted to expansion plans with higher delivery reliability, better delivery quality, and also the opportunity to expand our assortment.
What is then the status? The status regarding our building, to remind you, we made a letter of intent that we signed with the logistics property developer NREP Logicenters to locate the logistics center in Bålsta, northwest of Stockholm. In July, we signed a long-term lease with NREP in accordance with the letter of intent. We are pleased to share with you that the building permit was approved on September 3rd. Also glad if you will be out there that you can see that the land preparations has already started. If I then should sum up the financial impact on this investment. A year ago, in October 2018, we estimated the investment in automation to be in the range of SEK four million to SEK 600 million over a four-year period.
In March this year, we communicated that we have selected automation solution within Witron, entailing an estimated annual investment need in the higher range of SEK 400 million-SEK 600 million during the 4-year period. I would like to share with you is also that the final agreement are to be denominated in EUR, so the investment will be affected by the movement in the Swedish krona versus the EUR. With the current krona development, we expect the investment to be somewhat higher during the 4-year period than earlier communicated. The most important though, there are no change in the overall assessment going forward. The cost level for the new automized logistics center, including the new lease and higher depreciation, will be in line with our current cost level at full operation. It is estimated that the cost level will decrease as Axfood continue to grow.
Final comment on this, we are basically as we speak, in final negotiations with Witron, and we will provide more information once all agreements and details are in place. Let's now turn to page 29. We are now moving into the outlook for 2019. I please ask you to turn to page 30. If we look at our outlook for our planned CapEx 2019, we will be in the lower range of SEK 1.5 billion-SEK 1.6 billion, which includes SEK 600 million for the automation of the new logistics center. Please now turn to page 31, and we are now coming to the end part of our presentation. Before we go into the Q&A session, let me just summarize our quarter with the following. We report the strong sales with all segments contributing.
Based on this morning's market data, it's clear that we continue to gain market shares. We also report an improved performance within all our operating segments. We are clearly seeing proof of that our investments for future profitable growth are paying off. Let's now go into the Q&A session, so I ask you to turn to the next page. With this, I hand over to the operator to moderate this session. Please, moderator.
Thank you, sir. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad. The first question is from Gustaf Sundström at SEB. Please go ahead.
Thanks, operator. Good morning, guys. If I might start with the CapEx question. Could you please give us the number in euros that you have signed commitment to? Or if you prefer, what exchange rate you used when you referenced the EUR 600 million per year. Thanks.
That's a very good relevant question. Just so you know, and I'll share with you that we have not signed Witron yet, that's the part that will be in EUR. We'll be in the upper range of EUR 600. We will do the signage in EUR and we are in final discussions. Soon as we have signed, we will come back to you and give you the numbers in EUR. You will have that clearly. We'll come back with the details about all of this when we are there. The only thing that I wanted to send out today is that we are in good progress. We are in this range. We will also be signing in EUR. As we all have noted, the SEK has been weakening, which affects the final investment.
Is it a fair assumption then that the date that you communicated SEK 600 million is a date where we should look at the EUR-SEK exchange rate or?
That's the-
Just put something in our model.
Yeah. When we first went out with this a year ago, we had our direction and then the euro has been strengthening significantly since then.
Okay. Turning to Willys, if I recall correctly, previous management used to talk about 4% margin as a sort of a ceiling for Willys. Obviously, Willys has flown by that number quite extensively. Do you see a stage where you start to see your branding as the most price competitive basket for Willys being challenged if margins continue to expand? I noticed that online excluding private label sales, Willys does not strike me as particularly cheap at the moment versus peers. Thanks.
Well, not sure what you're referring to there, but for us, the most important data we're looking at that is our price position in the market, and we keep that very tight. That is to make sure that we are keeping our promise to have the best price for a food bag in the market. That is clear, and we continue to drive that. Of course, with the growth that we're seeing right now, and as you know, when we are having this kind of like-for-like numbers within our stores, we get a good economy of scale that made the numbers look better. That is included for the whole segment I should comment, which also includes Willys' formats, but also Willys Hemma and Eurocash.
Okay. Looking at Hemköp, it seems like you're calling a quarter of negative volumes in the stores. Are you at all looking at some type of plan for optimizing floor space within the Hemköp brand at the moment?
Well, for us, it's kind of a mixed picture. If you look at our franchise stores, we are really performing well, but we still have what we talked about in Q2 as well. The group-owned stores is not where I want them to be. We are working on that. There are some stores that is not performing where we want them to be, and that is somebody who's also related to traffic in that area. Of course, part of looking at the store concept is also to look at locations obviously. Overall, our focus right now is to continue, and we see positive progress on that, where we are investing in our stores. We're also investing in our brands and in the concept in Hemköp, and that will take some time, but I think we are on a good path there.
Okay. Final one from me then on the supply chain financing program. Are you seeing a continuation of that positive impact you've had for the past few years also going forward, or are we approaching a stage where most of that effect is taken?
We work hard with it of course, and it's a little bit hard to say how the future will develop in that case. I think we will see a little bit slower pace here than we have.
But still a positive-
Still a positive.
development. Okay, great.
Yeah.
Thanks. That's all from me. Thank you, guys.
Thank you.
Our next question is from Niklas Ekman from Carnegie. Please go ahead.
Thank you. First, a question on Willys. Could you elaborate a little bit on your thoughts on why Willys is performing so strongly at the moment? Any particular measures that you've done, do you think that you have benefited significantly from, for instance, immigration maybe more than other players? Do you think that inflation being quite high right now is playing in your favor? Or what are your thoughts on the quite exceptional performance by Willys at the moment?
Hi, Niklas. For me, I think we are making good progress within Willys in several parameters. We have looked into the range within Willys and made some slight, as you always do, some improvement there. Clearly also, we have an upgraded program to upgrade our stores, and we are seeing very positive effects out of that, where we continue with our low prices, but also improving the store appearance. Also Willys is very good in operations. It's well-operated stores in general. In addition, obviously, the rollout of online as strengthening the brand, then also reaching out to more customers who is now seeing or experiencing Willys as well as you've seen that we've increased somewhat our communication as well for Willys. We've increased our marketing investments, and we're getting a good payoff on that.
Okay, excellent. The adverse question, I guess, for Hemköp and your wholly owned stores. Do you think that there's any kind of problem there with the price positioning? Anything that you think needs to be addressed, or why are these wholly owned stores underperforming?
No. Obviously we've changed some stores where we moved to franchise. We made some changes in the mix, if you look at the total sales numbers. Also, it's clearly Hemköp and Hemköp's brand and Hemköp's perception in the market. If you look at our total number and also particularly our franchise stores, they are really doing good. We have a good concept. There are clearly some stores within group owned that we want to see a better improvement. Some of that is related to new competition open up, but also some of that is related to some locations, and some of that is also internal that we need to improve. It's a work in progress to strengthen also our group owned. From a concept or from a brand and from a position point of view, we have a strong position with Hemköp.
We are meeting the customers in a different way, but the price position is there. It's clear on that.
Okay. Thanks. Also if you could provide a comment in general here about the competitive environment. Are you seeing any changes? Have you seen Coop getting its act together? Any initial thoughts on Netto being acquired by Coop on the one hand could be maybe positive for you, while on the other hand, Lidl expanding its rollout pace might be negative. Any thoughts in general here about the competitive environment and any changes you've seen there?
Well, the difficult part, Niklas, of course, is that I don't see any of these numbers that you relate to, but I can relate to the overall market. From that perspective, I think the number speaks by itself in terms of that we are performing good in terms of the overall market. Regarding the Coop and the Netto operation, it's well out there in terms of they have now converted, I think, three or four stores, and we'll follow that and see how that goes. Right now, if I look at the overall market development, we are making healthy progress.
Excellent. Finally, just a quick one on CapEx. Just to be clear, you are talking about SEK 1.5 billion-SEK 1.6 billion in CapEx for this year. You had SEK 688 million in the first nine months. Are you looking at a massive uptake here in Q4? What is this related to?
No, I think, as I mentioned, I hope you heard that we'll be in the lower range of that SEK 1.5 to SEK 1.6. As always, we tend to have some higher investment levels in the end of the year. Also to point out that around SEK 600 out of these investments is related to the optimization project. We still plan on that will happen in this year.
Excellent. Thank you for taking my questions.
Thanks.
Thank you. Next question is from Fredrik Ivarsson at ABG. Please go ahead.
Thank you, operator. Good morning, guys.
Morning.
Few questions from me as well. First, if I got you correctly, you rolled out online to 90 new stores in Willys but no one in Hemköp. I'm a bit curious on that. Is that because profitability in Hemköp has been under pressure lately, you have to be more cautious on cost here in contrast to Willys? Maybe if you can start talking a bit on that.
It's a good question. We stated that fairly early when we went into this calendar year that focus moving forward in terms of online rollout will be. We focus on Willys. That is nothing to do with that we don't want to roll out more in Hemköp. In Hemköp, we have seen some other priorities in terms of how we want to roll out. We've had 18 stores rolled out fairly early. We were earlier with that. We are now working with these 18 stores to drive the model. We also are now moving into the dark store and getting that efficient, which is very much related also to the Hemköp operation in the Stockholm area. Also Willys, of course. There are more Hemköp stores impacted on that. It is more related to our internal priorities.
We're also looking into to work with our franchise stores to see how this model will work out for them. It is more been of a slowdown in terms of rolling out more until we have sorted out the overall plan and also the other priorities we have.
That's clear. Thank you. A follow-up on that because you mentioned obviously the dark store and how that's sort of pressuring costs. You also mentioned lower distribution costs, and I wonder if, are the high costs related to the dark stores sort of offset by the lower distribution cost?
There are so much partly. Last year, we had some higher logistical costs due to, as you know, the dry and warm summer last year. It had some impact, I think, for all of us in this market in terms of higher logistical costs. We haven't seen that this year. On the other hand, we're clear with that before the summer, we open up our common dark store with Willys, Hemköp and Mat.se, and that is an area that we want to do to make sure that we reduce environmental impact and so forth. It's also when we're combining all these three brands, there's been some investment into it, and it also takes time to get it up in full efficiency. It's clear that it also is increasing our cost at this stage.
Thank you. Short last one from me, if I may. On private label, I see the level of private label sales hasn't really increased in Hemköp over the last few years. Have you sort of reached a level where you think you will stand going forward? Do you still aim to increase that share?
I think we are making, over the years, some progress, but we still see opportunities on that. We have a little bit different profile in Hemköp versus Willys, therefore, we have somewhat lower private label share in Hemköp at this stage, there are still opportunities. Again, it really comes back also to how we have more fresh foods and more other products that is related that is not private label brands in the same aspect as we have in Willys, therefore, somewhat lower share.
That's clear also. Thank you. That's all from me.
Thanks.
Next question is from Daniel Schmidt at Danske Bank. Please go ahead.
Yes, good morning, Klas and Anders.
Morning.
Morning. Just a couple of questions, starting with Hemköp. You write that the gross margin improved in the quarter, partly due to less campaign intensity. Could you give us any guidance on how that's going to sort of develop in Q4? Put it this way, was there a very high campaign intensity in Q4 last year?
One thing that we had last year, I don't know, you probably don't remember, but we do. Hemköp celebrated 60-year anniversary last year. With that, we invested to celebrate that with our customers as well. A major part of that is related to this.
You saw that sort of normalize in Q4 last year then, so that was an entirely a Q3 event?
The 60 year was entirely a Q3.
Yeah, I don't know what month it was. Okay.
No. It was August, September.
Yeah. Okay, good. Then sort of a follow-on on Hemköp, and you've seen this trend for a long time now between wholly owned stores and franchise stores. Is there any sort of discussion within the management team that you would be a little bit more radical and accelerate sort of the conversion of wholly owned stores to franchise stores looking into next year and the year after?
I think we have the benefit of having a mix of good franchisers as well as good group-owned stores. If you look some year back, we'll see that we sometimes have group-owned stores performing better versus the franchise. At this stage and over now some time, we see the franchise stores developing better. It's clear, and I have been clear about this, that we need to work more and improve our performance in our group-owned stores. Some of that is also clearly related to some stores that seem impacted by some lower traffic in that area where they are located in. We need to work on that obviously. Overall, we also need to work on strengthening the Hemköp brand and to make sure that Hemköp has its position that we want to have.
We are there in several areas, but we are also not there in all areas. We have a clear plan to change this. Some of that takes time, and we're working on it clearly with Hemköp management team.
Yep. Okay. It's going to be a continuous case-by-case.
Yeah
evaluation. Just finally, nitty-gritty question on the Witron signing and the Bålsta warehouse direction. Would you, at the stage when you sign, are you going to hedge that amount, or are we going to live with a situation where the euro is going to have an impact on CapEx every quarter and the guidance and so on? How should we view that?
No. Maybe Anders, you can fill in, but the overall part here, which I think I understand your question and we are now in the final phase, and as soon as we have set the contract, and we are clear about that we are contracting it in euros obviously we will hedge. We will then give you further details and more details around how the hedging will look like. I don't know if you want to fill in something.
No, I don't.
Okay.
Thank you then. Thank you, guys. That's all for me.
Thanks. Have a good day.
You too.
Thank you. A reminder that if you want to ask a question, you will have to press zero one on your telephone keypad. The next question is from Nicolas Guzman at Handelsbanken. Please go ahead.
Yes, hi. I was wondering about the group costs. You mentioned that they're higher because of a bigger effort into business development. Should we expect a higher cost level on the group costs going forward as well?
Yeah, we are doing some clear investments in particularly our business development and driving that. Obviously, it will change by quarter by quarter somewhat due to depending on some of the projects. Overall, it will be a higher level going forward.
Okay. Thank you. On this combined dark store, are you in any way shifting costs from the retail divisions, i.e. Willys and Hemköp to Dagab, when you're doing this combination of the brands?
Overall, that's not the plan. Obviously, the brands are taking their fair share cost out of this. It is not a shift, but obviously remind you of that Mat.se is in the Dagab segment. Obviously they are having their cost in Dagab.
Yeah. You're not sort of portioning out the increased costs, the total increase in costs for Dagab from this combined dark store to the different divisions fully?
No, they are taking it. Today, if you look at it, when you are picking it in the store, you're having the cost in the store. They have their costs today, and we are moving that. They are obviously reducing their cost from the store, but they're also then being charged internally then from Dagab for the dark store cost that they have related to their brand.
Okay. Thank you very much.
The next question is from Gustaf Sundström at SEB. Please go ahead.
Thank you. Just a quick follow-up. I was wondering if you have started to look into the second leg in your automation investment program. If I recall correctly, you will cover about 60% of your market with this new investment, that would leave, I guess 40% to the future or are you happy with that setup or?
Right now, that's where it's enough chunk to take, if I may express myself a bit open. Right now, the focus now is to make this big program for 60% of the volume. Then we'll take it from there in terms of moving forward. Right now, we are only focusing on this.
Okay. Thank you.
I remind you that if you want to ask a question, you will have to press zero one on your telephone keypad. Once again, if you would like to ask a question, you will have to press zero one on your telephone keypad. There are no further questions at this time. Please go ahead, speakers.
I'll just sum up with saying thank you for listening, and thanks for the questions, and see you soon. Bye.
Bye.