Earnings Call: Q1 2021

Apr 22, 2021

Thank you, and good morning. This is the Ax Food First Quarter 2021 Telephone Conference. And with me today are Charles Balco, our President and CEO and Anders Lexmann, our CFO. In the Investors section of our website, you will find the presentation for today's call, which is intended to be viewed in conjunction with our prepared commentary. We encourage you to follow along with that presentation. After our prepared commentary, we will be taking questions. A recording of this call will be made available on the Akstut website. And with that, I will now turn the conference call over to you. Claus, please go ahead. Thanks, Alex. And let me also, of course, welcome you to the presentation Genovax Foods' Intrimium Report for the Q1 2021. And on Page 2 of the presentation, you can see our agenda for today. I will first talk about the recent market developments and then give you a summary of the Q1's performance for Axwood. Anders will then provide you with an update of our financial position. I will then continue the presentation and talk about our progress with our strategic agenda by highlighting some of our current initiatives. Then we'll conclude the presentation with the outlook for 2021 before we open up for questions. So let's get going and start. So please go to the next page, Page 3. And most of you have probably seen this slide before, but Just as a quick reminder about who we are for those of you who don't follow us on a daily basis. Axfood is a leading food retailer in Sweden with a clear house of brands, strategy and a vision to be leading in good and sustainable food. During the 12 month period Ending on March 31, sales amounted to almost SEK 54,000,000,000 and we have more than 11,000 employees in the group. And together, we engage with approximately 4,500,000 customers every week at more than 300 Groupon stores and online. So let's now go to Page number 4. Let me start by just a quick reflection that during the pandemic, it's never been clearer that Axfood, as a large food retailer, has a very important role and responsibility to keep stores, warehouses and transports operating to be able to provide good and sustainable food for everyone. At the business, we have delivered and shown strength by handling an exceptional situation and maintaining product supply. And this should and can be credited to the outstanding engagement that our employees throughout the group have demonstrated to serve our customers during this extraordinary time. In addition to employees in our stores, which have worked Hard to keep pace with customers' changed shopping behaviors. Employees in our logistics operation has shown exceptional results to support. I must say I'm very proud of what we have together achieved. But let's now turn to Page number 5 and go through some of the market developments during this quarter. And we are now on Page 6. During the Q1, demand The Swedish food retail market remains strong, still impacted by consumers' chain shopping behaviors during the pandemic. However, now we have started to face higher comps, and this quarter compares to the Q1 last CEO that was impacted by consumers hoarding of groceries in the early phase of the pandemic. In addition, This quarter had a negative calendar effect of approximately 0.5 percentage points. Last year was, as you all know, a leap year, and the negative effect One less calendar day was only partly offset by a positive calendar effect from Eastern this year. And growth in the online segment was again exceptionally high. Mile must also say that demand within food retail in general remained high. The situation continued to be challenging for certain segments of the market, including for certain businesses with exposure to the cafe and restaurant market, cross border shopping in Central City Locations. Let's now turn to Page number 7. And the chart on this slide shows monthly growth rates year on year for the Swedish food retail market adjusted for inflation and calendar effects. As you can see, growth slowed down considerably in March this year on the back of the high comps from the hoarding last year. And adjusted for inflation and calendar effects, growth in March 2020 was almost 12%, as you know and see a considerably higher level than in any other month. Let's now go to Page number 8. And the chart on this slide shows monthly growth rate year on year for the online segment. And online growth has been exceptionally high and exceeded 100% during the 12 month period to March. In the Q1 this year, Sales in the online channel accounted for approximately 7% of total food retail sales, and this compares to slightly more than 3% in the Q1 of 2020. Let's now move on to Page number 9. And in the online segment of the market, growth is considerably stronger for the Click and Collect option than for home delivery. The growth rate of Click and Collect has, in the past year, been approximately 3x as high as the growth rate of home deliveries. And this trend has clearly continued also during the Q1 this year. In this quarter last year, Sales through home deliveries accounted for slightly less than twothree of total online sales. But with the strong growth in Click and Collect throughout the past year, Click and Collect is now clearly larger in terms of share of the online segment. As the market growth rate indicates, Click and Collect is very appreciated by our consumers. Let's now continue the presentation and move away from the market update, and please Turn to Page number 10. And I would now like to walk you through Axwood's performance during the Q1. So we'll go directly to Page 11. In all, total store sales for Axwood grew 2.4% during the Q1, a considerably lower growth rate than what we have seen during prior quarters. And as I mentioned before, in addition to a negative calendar effect, This quarter is compared with the quarter 1st year a year ago that was dramatically affected by hoarding. Our growth rate in store sales includes also the headwind from Eurocash, which had a negative effect on our store sales growth of more than 2 percentage points. Let's now go to Page number 12. Looking then at online. We continue to develop Our presence and expanded to more stores and locations, and once again, we outperformed the market. For the first time ever, in an isolated quarter, our online Sales to consumers was higher than SEK 1,000,000,000 and our growth amounted to a full 139%. And online growth for the market was also high at 128%. Let's now move to Page number 13. And before I walk you through the segments, I would like to comment on the group's overall sales development. Consolidated net sales for Axwood grew by 1% during the Q1 and amounted to SEK 13,200,000,000. The negative effect from the hoarding a year ago was approximately minus 4 percentage points. In addition to this was the calendar effect and also worth commenting that the inflation rate was very low at 0.6%. We continue to see a good growth for Villis, but that was also offset in large part by a sharp drop in sales for Eurocash of more than 80%. We have weak sales for certain Groupon CPIP center based hemp chip stores that negatively impacted the hemp chip segment, While sales for snub grows decreased as a result of lower demand in the cafe and restaurant market, snub grows outperforms of the market is continuing. Please turn now to Page number 14. Looking at profit. Our group profit and profitability was higher in the Q1 despite considerably lower like for like sales versus prior quarters and a significant negative result for Eurocash. With a sharp drop in sales for Eurocash, Its operating profit was negative and amounted to minus SEK52 1,000,000. Our group operating profit increased 4% to SEK565 1,000,000 and the operating margin expanded slightly to 4.3%. The increase in profit and profitability for the group comes mainly from good cost control and a higher operating profit for Dogen. But also remember that the gross margin for the group was lower in the prior year period as a result of the unfavorable product mix that arose in connection with the consumers hoarding of groceries during the initial phase of the pandemic. Let's now move to Page number 15. And then looking at the development of each segment, and I would like to start up with Villis. Villas continued to strengthen its position and grow faster than the market also during the Q1. But for your cash, The situation was as difficult as before in the stalled cross border trade. Total sales growth for the segment amounted to 3.2 with a like for like growth of 0.4%. Operating profit decreased somewhat to SEK340 1,000,000 And the margin was lower at 4.3%. But good like for like sales for the Village stores was offset by the significant negative result for Urcash and higher staff costs associated with our online sales. Let's now go to Page number 16 and the performance of Hemshopper. Our total store sales growth amounted to 0.8% and like for like growth was 0.5%. While the franchise stores grew faster than the overall market, sales for the Groupon stores were negatively impacted by conversions and a continued weak performance in the city center based stores as a result of low levels of customer traffic during the pandemic. And as a reminder, our group owned Hemshaft stores have higher share of stores at central locations in larger cities than our franchise stores, a majority which are located near residential areas. I'd also like to comment that the mini marts in the Tempo chain continue their to the development and showed strong growth of 7.8% during the quarter. Looking at profit. The operating profit for Hemship decreased only Slightly and amounted to SEK 59,000,000. However, the operating margin was a little bit higher at 3.8%. Lower sales were compensated by an improved sales mix and low single digit one off gains related to restructuring of the store network. Please now go to Page number 17. And let's turn to Snaggloss. Klansgrove's 1st quarter sales declined by 5.3% in total and 7.9% like for like as a weakness in the restaurant market continued. The market decline was, however, more severe than the sales decline for Snubgroze at an estimated 29%. So consequently, Snagros outperformed the market once again with an increase in its customer base. But due to the negative development in our like for like sales, Snagro's operating profit decreased in the quarter and amounted to SEK 14,000,000. The operating margin was 1.9%. But I would like to continue a bit with Snabrogro. So please go to Page number 18. Since its launch, the all new membership based store concept, Snablos Club, has been well received. Snagno's Club gives consumers the opportunity to shop for the same food product as restaurants and cafes, including groceries, food products, household goods and gain access to unique and attractive price assortment in bulk packages along with some personalized special offers. For business customers, the store works like any other Snub goes in addition to allowing these customers to join the membership club and benefit from the unique offerings. The first Navios Club store in Stockholm that opened up in November last year has attracted more than 6,000 members. And recently, we announced that an additional two stores will be open up in the coming year, 1 in Sodertelje and 1 in Ghebde. Let's now go to Page number 19 and the operating performance for the DOG AB segment. Dagab's Q1 was once again a quarter in which earnings improved considerably, and Dagab continues to deliver set partly by lower sales to service trade, Snaglios and Eurocash. Our operating profit for DAGAVE increased significantly in the quarter by more than 30 And the operating margin was 1.8%, up from 1.4% in the prior year period. The positive development is explained mainly by increased efficiency. And capacity utilization was high and productivity was improved both for Store and the E Commerce Logistics. But in addition, work on increasing the efficiency in our dark store contributed to higher productivity and a more Transport and warehouse costs to meet the high demand in connection with the hoarding and also certain costs related with the closure of the dark store in Malmo. Let's now move to Page number 20. And with that, I would like to hand over to our CFO, Mr. Anders Lexmann, who will present our financial position. Anders, please go ahead. Thank you, Claus. And then turn to Page 21. Looking at the cash flow For Q1, we continue to show higher operating costs compared to last year, mainly due to high efficiency, like Lars mentioned, in DAGA in the DAGA operation and despite continued challenges for Eurocash and Snaggloss. We have a negative deviation of SEK 242,000,000 net working capital compared to last year. This is mainly explained by the Strong net working capital performance in Q1 2020, which was boosted by high account payables following the higher sales rate related to the pandemic. Further, we can see a negative deviation in loans raised compared to Q1 last year. Last year, a drawdown of SEK 200,000,000 was made on our RCF as a precaution to mitigate the uncertainty related to COVID. No loans were raised in this quarter. The AGM decided the total dividend for 2020 to SEK 7.50 per share, an increase of SEK0.25 per share compared to last year. SEK3.75 per share was paid out in Q1, The same amount as last year and the rest will be paid out in September. To summarize, the total cash flow for the Period amounts to minus SEK 353,000,000, a negative deviation of SEK433,000,000. Next, Page 22. Total investments for the Q1 amounted to SEK 292,000,000 and was slightly higher than last year. The investments in our retail operations was overall in line with 2020, where new stores were up due to higher pace in acquisitions and establishments. And refurbishments was down due to some lower pace. The investments in our wholesale operation increased with SEK 10,000,000 mainly due to higher refurbishments in Snambrios. The investments in our joint operations was up SEK 9,000,000 mainly due to IT investments in SAP Greg. Next Page 23. In the Q1, we have further decreased our net working capital compared through sales from minus 3.4 percent to minus 3.6%. We have continued our focus on working capital with improved payment terms on accounts payables. Our SCF program also helps us increase the accounts payable. And At the same time, our inventories and accounts receivables was on stable levels. Next, Page 24. Looking then at the development of net debt. At the end of Q1, we, in fact, had a net receivable position of SEK 782,000,000 if we exclude IFRS 16, and that's the dark staple in the chart. The net debt increased as a consequence of the dividend paid in March. The net debt increased despite a positive development of Net Working Capital. The net debt to EBITDA ratio remains at the 1.0 level in spite of the dividend paid out in Q1, thanks to the positive EBITDA development. And the equity ratio was 18.4%, an improvement of 0.7 percentage points compared to Q1 last year. Next, Page 25. The capital employed increased with approximately SEK 100,000,000 compared to last year Q1 and mainly due to the strong profit. The return on capital employed increased also debt due to an higher running 12 month profit. And to sum up, we can conclude that Axle continue to invest in the future and at the same time have a strong cash flow and a solid financial position. And by that, Claus, that's the end of my part. So I hand over to you again. Thanks, Anders. Now I would like to talk about some of the strategic initiatives that we are focusing on. So if you please turn to Page 27 of the presentation. And we are pursuing a strategy of growth promoting and efficiency enhancing priorities to become the market leader in good and sustainable food. And I'm sure many of you have already are already familiar with how we work with our 6 strategic focus areas, and you can see them here on this slide. And today, I would like to highlight the initiative within some of these areas. So please go to Page number 20 And in parallel with our continuous work on improving the day to day operational logistics, We are also continuing to work on developing the logistics of the future and product flows. In Bolstad, Work is advancing on our new highly automated logistical center. Walls and the ceiling for 70% of the total frame has now been installed. And as a reminder, the logistical center, which is planned to be in full operation in 2023 will be one of the largest and most modern of its kind in Europe for distribution of groceries, both for stores and e commerce customers. Also, a pilot test of the group's new transport management system is in progress. And during the Q1, the pilot was expanded to also include, in addition to store deliveries, include online orders. The new system will optimize our transports, create a better overview of transport flows, manage flows to customers and e commerce consumers and offer improved order tracking. The system will be implemented gradually and will eventually be integrated with a new logistical center in Bolstad 2023. We are now on Page 29. And today, we are announcing that we will be moving our fruit and to a new, larger and more efficient warehouse in Lanskyona with good opportunities for future expansion and automation. The new warehouse, which is planned to be fully operational at the end of 2022, As a prime location and infrastructure and will enable a future automation solution. The warehouse will be environmentally certified And compared with the warehouse space in Helsinki Boy, its area will be twice as large with more than 37,000 square meters. And in addition, there will be room to grow with a potential expansion area of approximately 8,000 square meters. And this investment should be seen as part of our long term ambition to build the strongest logistical structure for the future and contribute to improving our customer offer and customer meeting. An efficient, sustainable and dynamic logistical operation with an attractive and efficient Assortment is a central part of our work. Let's now turn to Page number 30. We're also continuously working on modernizing and upgrading our stores. And currently, a new check Out systems and payment terminals are being rolled out. The new modern point of sale solution will lead to lower operating and maintenance costs with long expected useful life. This new solution will be will streamline the shopping process and support multiple payment methods. The rollout is expected to be completed already by end of this year. Let's now go to Page 31. And I would like to comment, one of our family members within the group is the online pharmacy, Oppoheme. Oppoheme is an e commerce challenger, a full scale retail pharmacy. In addition to prescription drugs, Oppoheme offers some 11,000 items. Balchem's growth last year was very strong and amounted to a full 2 55% compared to the year before. The company's market position improved and progress was made in increasing efficiency in operations. With the new IT platform, improved and optimized website and very high customer review ratings, Aperham is well positioned to continue now to grow and take the next step. Also, with this move to Axfood expanded dark store in Stockholm, the company will have space for continued growth and potential for synergies with our food retail concept. And as you may have seen, recently, we were first in Sweden to launch co deliveries of groceries and prescription drugs together with MAPtop Essien. Let's now move to Page 32. And our activity in the area of sustainability remains high in all parts of our operations. And I would like to reflect over a few achievements we have made. We are working relentlessly to reduce our carbon footprint, and emissions in our own operations declined by 76% between the base year 2,009 to 2020. We have now raised our level of ambition to achieving net zero emissions by 2,030. Transports between warehouses and stores are the part of our own operation that have the largest carbon footprint. And the vehicle fleet is therefore being gradually changed over to being entirely fossil To date, approximately 60% of our previous diesel powered trucks have been replaced with vehicles that can be run on fossil free fuels. The ambition set for the year end is that the corresponding share will be 75%. And reducing food waste is another priority area for us. And in 2020, we saw a decrease in all store chains to a record low level. With smart solutions and creativity, including technical tools, clearance sales of products nearing their best before dates and cooperation with suppliers and charity organizations. We are well on track to achieving our target to cut food waste in half by 2025. We also strive to make it easier for the consumers to make sustainable choices. And One way we do this by offering a broad assortment of products that are produced in sustainable way and through offerings and campaigns in stores. An important key ratio for us is the share of sales of sustainable label products. And here too, we see a clear improvement towards our goal of 30% of total sales by 2025. With that, I would like you to turn to Page 33, And let's now turn into the outlook. So please again turn Page to number 34. And before the outlook, I'd like to comment that we are still in an exceptional time due to the COVID-nineteen pandemic, And there's still a lot of uncertainty. People continue to consume a lot of food at home. But as I said before, starting from this quarter, the market faces high comps as we had similar situation a year ago with some variations from quarter to quarter. While the food retail market in general benefits as well as the cafe and restaurant market continues to be very weak. In all, we believe these dynamics will persist as long as the pandemic is ongoing. Let's now move to Page 35 and look at our outlook. And our outlook for the year is unchanged. We plan for capital expenditures in the range of SEK 1,800,000,000 to SEK 1,900,000,000. This estimate includes an investment of SEK 585,000,000 and automation solution for our new Logistical Center in Bolstad as well as SEK115,000,000 investment in land in connection with the facility to secure further expansion possibilities. And in terms of expansion, we plan to establish 5 to 10 new stores, and we also continue the online rollout by adding more stores and locations for our e commerce to consumers. With that, please turn to Page 36. And I would like to sum up the presentation, stating that Axo delivered, I would say, a solid Q1 with growth despite high comps. We have higher earnings and improved profitability. The Villas chain and Hemshipped franchise stores continue to grow more than the market, and DOGA once again showed At the same time, we continue to focus on developing our business and have taken large steps in the area of sustainability. Our financial position is strong, and the activity level within the organization is very high with sights set on the long term. And with that, please turn to Page number 37. And I would like to hand over to the operator again to open up the line for questions. Thank you. The first question is from Fredrik Iverson of ABG. Your line is now open. Thank you. Hi, Charles Anders and Alexander. A few questions from my side. Firstly, I want to talk a little bit about the mix effect that you've seen during this pandemic. Obviously, your gross margin is Holding up very impressively. I think it's gone on an all time high in any Q1, even though last year was Impacted by the hoarding, as you said, plus. But can you talk a little bit about that and what you expect in terms of mix effect going forward? That's my first question. Well, the we are more and I think it's fair to say, if you compare it with last year, as I pointed out, That the hoarding impacted very much our mix and where we saw Some of the more of the low margin products was selling a lot, and we are more at the more normal levels. We also can point out that our private labels continue to make good progress that is Supporting. And I also pointed out food waste program as an example. That is also an area where we are continuing to improve. So there are many small steps. In addition, I would like to comment that I think we mentioned it a few years ago that we are more data driven at this stage. We have invested a lot in our systems and analytics. And with that, we can also And drive the range and assortment of the campaigns in a more efficient way and try to drive that forward. Now looking forward, it's difficult to state, but that's more of the key reasons on the healthy levels we are at. Thanks. That's clear and sounds reassuring. Second question on food price inflation. Is these load levels we see now worrying to you guys? I guess we were down at 0% in Feb. And I guess, you said 0.6% for the full quarter. And if we look at the Comps in terms of food price inflation, I think it accelerated throughout the summer last year. So if you could talk a little bit about your expectations on the food price inflation and whether that might be worrying to you guys. Difficult to forecast, of course, but as you see, we currently have seen an effect, obviously, of the strength On the currency, you have some time lag on that, and I think that's what we are looking at. So it depends a bit, obviously, where the currency is moving. And But I think we'll be surprised if we don't go back to normal inflation rates over time. Excellent. That's all my questions. Thanks. Thanks. The next question is from Mikaela Ekman of Carnegie. Your line is now open. Thank you. And maybe a follow-up there on inflation because raw material prices Are rising very strongly elsewhere. This is nothing you're seeing to any larger extent in food retail. Is that the case? Well, not any on normal levels at this stage, but we are also Somewhat difficult to compare. We had the drought that the year there was at some point in time. And so and you still see Some inflation in some of the fruits and vegetables. We are also facing, as you know, some challenges with the imports from Asia due to Freit and so forth. So but that is what for us to see at this stage. Okay. Thanks. And another question on Norway. What's the or the Norwegian border, what's Status at the moment. I assume it's been closed throughout the quarter or there and that it's still closed. Do you have any indications when this could start to reopen again? I wish I could say that, but I think we are in close contact with our Norwegian friends And follow this obviously closely. We are getting all these clear signals that Norwegians are eager to Start to come over to Sweden again to shop and many of them also have Summerhouse is here and so forth. So I think the best guess would be that when we see The vaccine is starting to help and to sort out and to get The virus to get in control, I hope and think that then the borders will open up as soon as we see the that defect is coming in. And Dennis, so when is that? We it's good progress Good. But a bit of the progress here, as you see, in Sweden, the same is for Norway. So but expected not before the summer is my take out of it at least. Yes, yes, that sounds fair. And just in general on the kind of the impact here from the pandemic, What do you see here in terms of online growth? You mentioned here that online has now grown very strongly to 7% of the market. Post pandemic here, do you think there's we're going to see a bit of a reversal here? Or are you convinced that this is going to continue to grow from the current base. I think that's also A good question. And there are several, I think, drivers in this. I think, first of all, which I think, As I pointed out in the report is that the Click and Collect option is continuing to, call It outperformed the home deliveries in that. Both are growing fast, but click and collect option seems to be something that now the consumers in Sweden is in of Global Hov. Many consumers have now seen the benefits out of that, and And they will continue to shop online. But we also hear a lot of consumers who are eager to come back to the stores. There are a lot of inspiration there, a lot of positive things to be in the stores. And we also continue to have Eldry, who's been More or less forced to not be in the stores, so to speak. So and as all the reports in the market is also Flagging that we continue to have a very strong pandemic wave. So many is trying to or they are Obviously, following the restrictions. So I think you will have many consumers will come back, But also I'm sure that there are consumers who appreciate the online shopping will continue to do that as well. And so but if the growth rate will be what we're seeing now, maybe most likely slowing down. Yes. Yes, that's fair enough. And finally, a question on DOGAB, which obviously has been very strong here in the past Couple of quarters in terms of earnings growth. Do you attribute any of this to the Strong heat from home trend here, suggesting that some of this could be temporary and maybe could reverse as things start to normalize and maybe volumes come down or is it I mean, in the presentation here today, you talked mainly about efficiency. But when things normalize, do you think Dagam could also start to see profits coming down a little bit? Well, It is efficiency. And now obviously, DAGA benefits from volume as well, but I think it's clear to say that we've had a kind of dramatic shifts in the volumes, and that That has been negatively affected when you don't get to stabilize business. Now we are more on the stable trend. Clearly, the Work we've done on our dark stores operations has improved a lot. We are even if we are not in the Automatic solutions yet. We have still worked on to improve that with the tools that we have. So I don't think that it has any major things with the pandemic CEO. Volume, obviously, but also hard work to continue to Drive efficiency and productivity in the system. And again, online has improved significantly during this period. That's very clear. Thanks for taking my questions. Thanks, Niklas. The next question is from Benoit Schmidt of Bank of Bank A couple of questions from me then. And coming back to the Norwegian border, Klas and Anders. And you're right that Eurocash generated a loss of EUR 52,000,000 in Could you just give us the contribution in Q1 last year from your cash to start with? Well, we don't release that. We release the overall total, but it's I can say as much as that. The earnings in the normal year is more related to Q2 2 in Q3. So it's more like going flat business or a 0 business in the soft CEO. And then we have the earnings in the summer period for the that Benefits for the full year. So basically, it was more like a normal we lost last year, we lost the Last couple of weeks in March in Eurocash. So the delta is there around 50 versus last year. Yes. Okay. Okay. Good. And could you set some Light on your work in Hampshire when it comes to you've introduced this sort of Ratification program that is a bit unique, I think, when it comes to groceries in Sweden at least, where you're gratifying Buying purchases of organic food and so on. And I think you started doing it by end of last year. Any reflections And only very positive. CEO. We got some good PR on it because there were some consumers who misunderstood the program that you didn't get Points on meats and all that, but that obviously you do. So it's just that you're getting extra rewards for shopping sustainable. So positive reactions, good inflow on new loyal members. So that is on a healthy track. Then Hemschept, we are and I think it's worth pointing out, I think Hampshire is doing a good performance in this quarter, but it should be reflected that we are very much well Position in some of the larger city locations, which have seen 40%, 50% traffic drop. So obviously, that hurts a lot. Yes. But it sounded like when you did this by the end of last year, it was It's really a way for you to strengthen the profile of Hemshad, which has been a bit lost, I think, over the years. And Maybe it's still sort of overshadowed by the fact that you're hurting a lot in some locations, but the underlying trend and the underlying response at least has been very So if I get you right. That's absolutely right. And as you can see, so if you look at if we exclude some of the worst stores in the worst locations, The hemp shop is doing a good performance. So now we have a long term approach to Hampshire and working also to we are refurbishing our stores. We are now rolling out also more Click and Collect solutions to hemp shop stores, etcetera. So it's an ongoing work. Yes. And then jumping on to the online growth and maybe more the profitability or the lack Stability. And I think you said last time that it sounded, Anais, like you were closing the gap between Big losses and maybe breakeven even though you're making losses. And we continue to see this trend when it comes to Click and Collect, Which is better for your economics? Could you give us an update on that? I think it's more or less the same answer, Daniel. We obviously, we are pleased to see that the click and collect option He's continuing to grow fast and continue to have a high growth, which is if I look at it, we are Getting really close to the gap there with our financials. But then if you see the total Customer interaction that we have, these consumers, they shop both online and in store and they also tend to shop more As a whole when they shop in omni structures, so looking at customer value is increasing in that perspective. Now Still the overall online with the dark store operation and with the home deliveries and so forth is It's still not a profitable business, but as we are taking good steps in reducing the hurt here, as You'll see it in the report partly. So but it is a going work. We need to continue now to Work with the program that we have in our logistics with the automation parts. That is crucial. But obviously, we are a couple of years away from that. But if you look ahead, and it's of course very hard to say, but with the To mention that you have in front of you that will make picking and packing even more efficient, of course. You still need to see a change in consumer behavior when it comes to the generosity of free deliveries In order to get profitability in this business, you think? I do believe and I stated that many times that We think transparency is important, and we are very transparent with Billys, as you know, and So in terms of that, if you want grocery bags sent to you at home, it is a costly And with the low margins that we have in this industry, that needs to be paid in some way in the business model. Now you can take that in price on the products, And you see several players do that. And you will still have consumers who want Pay for that, obviously, pay a premium for it. But I think also if you compare that to the value trend and the low price Trend that is also a trend that is clear in the market. There will be many consumers who will who would like to You know, shopwear is most value, and that will be some that would most likely be in the stores. So transparency will I think will be coming up in this part. Yes, Finally, Claus and Anders, the lowering of social costs for younger employees, I think you said around EUR 16,000,000 in impact for this quarter. Is that a relevant number for the coming quarters? Yes, Daniel, I would say it's fair to assume that. Yes. Okay. Thank you, guys. That's all for me. Thanks, Magnus. The next question is from Gustavo Gheus of FAB. Your line is now open. Thank you. Good morning, guys. Thanks for taking my questions. If I can come back to DOGA, which is has a remarkable Earnings growth year over year and everything after the comps are probably favorable, but still compared to history margin seems to have Stabilized at a much higher level. Could you sort of elaborate a bit on internally What do you see the potential here? Are you close to sort of the maximum here in terms of efficiency with all sorts aligning? Or It's the further potential here and perhaps connected to it, if you could talk a little bit about the news today about the new warehouse For vegetables, if Gustav has a material efficiency gains to margins, you can't when I'll ramp up. Good question, Thanks, Gustav. And I think we are getting back to more normal levels. And we also, As looking forward, we are, as you know, investing a lot at this stage in efficiency measures. The transport management system will improve and support That's now talking about the new fruit and vegetable warehouse. Clearly, it's a good Business case on that as well, where we are expanding the space, which will gives Opportunity for us to we are it's already now we are in a tight warehouse today. So and when you are too tight, are not getting the efficiency gains you want to have. So that will open up. And as I pointed out as well, it gives opportunities for us for also further going to automation in parts of that area. It will not be anything near Volstad, but in parts of it, that would also support Further efficiency gains when we come to that cycle. Okay. Sort of a picky question, but Minorities, there's quite a step change in the past 2 quarters. Just wondering sort of what's The dynamics behind this and do you think it's prudent to extrapolate sort of the €30,000,000 per quarter that has been recently rather than the SEK 30,000,000 per year, which has been prior to those 2 quarters or never a bit of that would be helpful. Thanks. Now Gustaf, the only minority we have is for Eurocash. And The difference there is only connected to Eurocash. Okay. All right. Finally, on online, coming back to that, you mentioned Click and Collect more Profitable and growing more, but if we isolate inner city stock going to us, inner city government, do you see the same trend there? Or is it more home delivery driven there, I guess that is the growth in, I can collect more of a function of the rolling out online in more and smaller cities. Thank you. Well, on the spot here, I have not looked at it Recently, but obviously, Click and Collect is more growing outside where you have As well for us, we have Matto Tessie in Stockholm and Gothenburg, and there are also other players that only focus on. So there are different Competition there as well. And outside, there's more click and collect driver. But I can also see, If you look at the operations that we have in, let's just example, Stockholm, we have and as well as Gothenburg, it's a full speed on Click and Collect as well for the consumers in these 2 largest cities. But I cannot answer On the spot here, exact the differences. The next question is from Magnus Raman of Kepler Cheuvreux. Perhaps I can start with tying in on Gustave's last question there. In terms of you have stated a couple of times here that market The data suggests that customers prefer Click and Collect. But did you make any survey among your customers? And to find out If the reason behind this difference in growth is driven by perhaps lack of delivery alternatives outside maybe cities as mentioned here or Perhaps delivery slots in the cities, if it's driven by the customer's perception of the delivery charge for home delivery Or if it is, in fact, that consumers altogether find Click and Collect to be more convenient, that's my first question. No, we absolutely have Done that. And consumers confirm that click and collect option is something that they appreciate because then they can be more flexible on Picking up the goods. But also, for sure, it's a price it's a value game as well for the consumers in terms of how they look at it. One should remember that grocery cost For an average family, it's a high cash outlay, and it's an important part of the economics. So On a frequent basis, obviously, there are a lot of gains here to reduce that cost. So it is really appreciated from a cost perspective, but also from a convenience perspective. Right. That's great. That's really clear. Then on Eurocash, I mean, assuming you elaborated a little bit about last year's Eurocash Profits and taking those sort of suggestional numbers into calculation suggests that Group operating profit growth would perhaps have been a full 13% to 14% year on year instead of the 4% we report now. So it's Definitely a material question here, but and I know you strongly believe in recovering border trade post the pandemic. I mean, you even opened a new Stor here as well. But do you could you at least share your view if you expect any change driven by Lowered excise duties, the scrap sugar tax and so on in the eagerness to shop from Norwegian customers. Well, we have as yourself point out, we are confident With the Boardershop, and obviously, there are many areas that also can influence Historically, it's also been currency rates. But one should remember, it's not that long ago that Some of the taxes were increased in Norway. And even before that, we had a very good of Business in the Cross Border Trade. So even if in some areas, some of these taxes are planned to be reduced. If you look at it, price point difference is still very, very attractive to come to Sweden and Shaw. Great. And I think I maybe also want to add is not only Not only that, it's also a shopping experience as well that many Norwegians are appreciated to come to Sweden for the experience of shopping here. Shopping in our beautiful stores in our beautiful township, yes, right. Exactly. And there's a lot Yes, yes, true. And obviously, particularly right now, if you look at the West Coast, there are many Norwegians who is eager to come to their summerhouses, etcetera. Yes, yes, sure. Then you mentioned the construction of the bovine continued on track. But did you alter any plans in terms of the capacity split online with the store side following the strong uptake we see now in penetration? We have already in that plan to have that As I said, when we are construction this, we have a very large flexibility within the system. So And obviously, we follow this. And then it's more about how many lanes we should build up on the online, but The structure in terms of the automation is there. So we come later, I guess, that decision? No, I think we are well on track. But I mean but obviously, we are following it closely. And that's partly what we can do is So if we continue to see a massive growth on online, we can just add few lanes to the picking stations. So Yes, that's what I meant. You don't choose the lanes now. No, no. You're right. Exactly. And also I just wanted to ask if you could share which company you collaborate with building this new transport management system that you mentioned? Descartes. Okay. Thanks. And then a final one for me. This new fruit and vegetable warehouse in Landscrunnap. Could you perhaps elaborate on the total Mentor in the split of the year. Is there any material effect on 2022 CapEx, do you believe? Well, at this stage, it's a rental that we are building this or a rental agreement. So there are Since it's in this announcement, it's a manual warehouse. If we go into automation, we'll come back to that part of the investments. But again, it's more of parts of the operation that will be optimized, but at this stage, it's rental. Great. Thank you very much. Thanks. The next question is from Mikael Skokman of Handelsbanken. Your line is now open. Hi. Yes, good morning. Good morning. I would like to return to the discussion about There and CEO and charging properly for online. So based on my estimate, your online share is Higher than your overall market share. And you continue to grow faster than the market online, but You're still losing money online. So I mean, one could argue that it's up to you, Axwood, who are That you are in the best position in making the first move in trying to make the online market more rational, if you will, in terms of pricing. I think you're right that no, but I think you're right in a way. But I also must say, look at Villis and look at any others. We have started already From the beginning, to be transparent, we have a clear fee structure for both Click and Collect and Home deliveries. So We are all there. Well, if you're still losing money, you're not really there yet, but Well, as I said, we are getting better and better, particularly on the Click and Collect solutions. But obviously, It is a market that is competitive out there as well, and we need to be in balance with that as well. So as there are no further questions, I hand back to the speakers. Well, with that And I thank you all for a good Q and A session, and thanks for listening, and I wish you a good day. Thanks a lot. Thank you. Thank you.