Welcome to the Bilia Q1 report for 2024. For the first part of the conference call, the participants will be in listen-only mode. During the questions-and-answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to Head of Investor Relations, Carl Fredrik Ewetz. Please go ahead.
Thank you very much for that, and thank you for the introduction. Welcome to Bilia's first quarter results presentation with CEO Per Avander, CFO Kristina Franzén, and I, Carl Fredrik Ewetz. We also have our Deputy CEO Stefan Nordström in the room. Good results, we'll say, in line with the company collective consensus and operational EBIT 3% above consensus. The agenda today: Per will start with the current situation in the car industry and go through the numbers. Kristina will dive into our financial situation, and I will conclude with an outlook for the coming quarter. So let's start, and I'll leave the word to Per Avander.
Okay, thank you very much, Carl Fredrik. We go to the current market situation in the car industry. There is a very good and strong demand in the service business, especially for body and paint shops with quite long booking times. The fleet business has still a stable demand for new cars in Sweden. The private consumers are more wait-and-see and instead use cars. The order intake on new cars in Belgium and Luxembourg had a good year 2023, but now we see a little bit lower demand for all brands. In Norway, we see and feel signs of better business climate. The demand for new cars is growing. Good booking times in workshops. The consumer index is better from month to month, and there is a discussion about lower interest rates in the end of this quarter.
The demand for used cars is on a good level in Sweden and Norway, and we see higher prices for all cars except fully electrical vehicles. I'm still aware we will see a lack of used cars in stock this summer because we deliver too few new cars in the car industry. We see a lower interest in fully electrical vehicles. Not in Norway, 90% of all new cars still are electrical. Many governments removed the climate bonus. They are still really expensive and luxury, and the development for range charging is fast, but there is a need and demand for a cheap car, and maybe it will come in the end of this year. Okay, we go to the next slide, Carl Fredrik. Net turnover decreased organically by 6%, explained by low deliveries of new cars, especially in Sweden and Norway.
We report a result of SEK 333 million with a margin of 3.6%. We had better earnings in Western Europe and lower in Sweden and Norway compared to the last year. Remember that Easter was this year in the end of March and cost many working days. In Norway, 3.5 days, and in Sweden, three days in March. I will come back to Norway on the slides for service and car business. On this slide, you can see the quarter one profitability from 2020 to 2024 in each country. In the middle, we have Norway and the challenging situation. On the left-hand side, you can see Sweden, which has a stable situation. On the right-hand side, you can see Western Europe and the positive development year-over-year. Take the next one. We go over to the important service business.
As I mentioned, there is still a good demand in the service business in all countries. We have an organic growth of 8%, a really, really strong figure. We report a profitability of SEK 281 million compared to SEK 297 million last year. There are a few reasons why we report a slightly lower result. As I mentioned, less working days due to Easter. We had less to do in our delivery workshops in Sweden, Norway, due to fewer new cars to deliver compared to the last year. As I mentioned, last quarter, we implemented a new workshop concept for Volvo in Sweden and started up a new dismantling and body and paint shop in Norway. The margin in Norway is below our target. Improvement activities are in place, and we start to see some results. The car business.
Deliveries of new and used cars adjusted for divested and acquired operations were 18%, respectively 2% lower compared to quarter one last year. For the car business, we reported a result of SEK 76 million compared to SEK 158 million last year. Low underlying deliveries of new cars is one reason for the low result, especially Norway with a drop of 57%. In the used car business, we reported a result of SEK 69 million compared to SEK 82 million last year. Norway and Western Europe reported better profitability. The order intake of new cars adjusted for acquired operations was 13% higher compared to the last year. In Norway, we see and feel a little bit better business. The order intake in quarter one was 50% better, but bear in mind last year was really weak.
But in March, we sold a little bit over 900 new cars, which is a really strong figure in a historical perspective. And the order backlog of new cars on a normal level increased under the quarter with 300 units. Go over to Kristina.
Yeah. Thank you, Per. So let's then turn into our financial position. During the first quarter, we did generate a strong operational cash flow of SEK 400 million, which was some SEK 700 million higher compared to last year. Cash flow has been and will continue to be an important focus area for us. We have, during the quarter, expanded our operations by acquisition of businesses. We have added three facilities for Jaguar and Land Rover, two located in Sweden and one in Norway. We have also expanded our XPENG business by taking over four facilities from the importer, two located in Sweden and two located in Norway. Finally, we have bought out the last 10% minority shareholding in our operations in Belgium and Luxembourg, and going forward, this operation is fully owned by Bilia.
This, together with the payment of the last installment of last year's dividend, resulted in a utilization of our credit facilities of just below SEK 1.4 billion out of our total credit limit of SEK 2.3 billion. During the first quarter, we also renewed our credit facilities with the banks at similar conditions that we had on the previous credit limit. The length of the renewed credit facility is three years with a possible extension by one plus one year, so in total, five years and a maturity in March 2029. Our net debt increased by some SEK 200 million, and the relation to EBITDA was 1.5 x. It was an increase by 0.2 x compared to the end of 2023 but remains on a solid level, well below our target of 2.0 x.
The proposed ordinary dividend to today's annual general meeting is SEK 6.60 per share to be paid through four installments. The proposed dividend is lower in SEK per share compared to last year. However, it corresponds to around 64% of the earnings per share that we reported in 2023. This is a dividend proportion that is in line with the previous years. It is above the target to distribute at least 50% of the earnings per share and is also in line with the operational cash flow that was generated by us in our operations during last year. So, Carl Fredrik, with that, I think we move over to.
Thank you for that. Outlook for the coming quarter, starting with the service business. Even in a high-interest-rate environment, our customers continue to service and repair their cars, and we see that continue in Q2. We have continued to see good booking times ahead across the business. An early Easter meant fewer working days in Q1, and we will see them coming back in Q2. As Per mentioned earlier, some of the improvements activities in Norway we have implemented have started to show a small effect. I'll come back to Norway in a second. In Q1, the service business represented 76% of our operating profit. In the used car business, we foresee activity remaining on good levels in the coming quarter. To repeat what we have said last quarters, consumers choose to keep their old cars or buy cheaper used cars.
When it comes to prices for used cars, we see a touch higher prices at a stable level during the coming quarter. Still, we could see some reduction in prices for certain models. When it comes to new cars, like we said in the outlook for the first quarter, private customers have been restrained or in a wait-and-see mood. Until we see a rate cut, the majority of private customers will remain on the sidelines. We believe we can sense a small glimpse of light in the private market compared to last quarter. Also, bear in mind that when we see a rate cut, there is a big pending demand among especially private customers. In addition to that, we're likely to see an acceleration of more campaigns from different car manufacturers due to a lower financing cost in, for example, private leases.
We see order intake from fleet customers continue at a stable level. No trend shift here. And it's also fleet customers ordering the majority of EVs at the moment. Moving over to Norway, conditions are perceived to be slightly better, especially in relation to new cars. We consider us to be well-positioned with historically low inventory levels associated with both new and used cars. At the same time, like I said earlier, cost reductions and improvement activities have been implemented, which are successfully materializing. We also expect a continued good market situation for used cars in the quarter. However, the new cars business is expected to be demanding in terms of results in the coming quarter as a result of still relatively low delivery volumes, which we hope can improve during the second half of the year.
Moving over swiftly to acquisitions, we foresee the activity level in the M&A market to continue, perhaps slightly slower in Q2 with clearly higher financing costs compared to one or two years ago. Like we said before, we want to be part of the ongoing consolidation, but at the same time, remain financially strong would any unexpected happen. That finalizes our fourth quarter presentation, and we can open up for questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Simen Aas from DNB Markets. Please go ahead.
Good morning, guys. So I have a few questions for you. I'll start with the first one. So encouraging to see that the order intake now actually went positive, at least driven by Norway recovering here following seven quarters with negative growth here. Do you think this is a turning point, or is this mainly reflecting our recovering in our very weak Norwegian market? I also see that you specified that Sweden and Western Europe is still negative, but do you expect this figure to be negative for the group again in Q2, or should we expect positive order intake here for the remainder of the year? So that's my first.
Yeah. We see in Norway it will be a little bit better and better. If we go back, one year ago, it was really, really bad order intake in Norway. So as I said, be careful because what I said in March, a little bit over 900 cars is a really good figure for us. It's 11,000 new cars in the Norwegian market. It's really good if you look in the past. But we see it's slightly better and better. And you can see we delivered not so many cars, and it's the same for all in the car industry in Norway. So therefore, we can see we will have a lack of used cars. And when you have a lack of used cars, the customers start to buy new cars.
If we can have a little bit lower interest rate, so we have a little bit more better campaigns for private leasing in Norway, we see better and better months over months.
But I think also we can see that the campaign from the manufacturer has improved. So the activities from all the manufacturers are also higher in Norway now compared to last year. So perhaps if we add that as well.
Because when they had a lack of components and the demand was higher than the production, today it's the total, the opposite. So for us as a dealer, it's a really good phenomenon when they start to reduce the price with really good campaigns.
It's a positive trend, I think we can say that, if nothing else happens, it will improve.
Okay. That's clear. And then just on that same topic there, could you just give us sort of an update on so you have introduced a few new brands this year and some M&A, and how is sort of that developing? And a more detailed question maybe, but how has the reception of the EX30 been for the Volvo brand in the Nordics?
I didn't really hear what was the first question, Stefan?
Yeah. So it was you have extended your partnership with XPENG, etc. Yeah. And new brands and Nissan, if I'm not mistaken, how has that went so far?
Yeah. Yeah. If you start with Nissan in Sweden, it's a little bit complicated because they changed 1st of January this year to be a pilot for agency model. So it's not easy to have in place the administration system for the salesman and everything. So I would like to say the order intake is not so high for the moment for Nissan and for the rest of dealers in Sweden. If we go over to XPENG, the order intake is much better in Norway compared to Sweden because the market is much bigger in Norway. And now we will launch the G6, the SUV now, with the right price both in Sweden and Norway. So we see the order intake will increase a lot this summer, I guess. And the last question was.
So the EX30 reception?
Yeah. Yeah. Not the right level when we are talking order intake in Sweden, but much better in Norway. In Norway, we have a really, really good price. Compared to Sweden, it's SEK 100,000 lower price in Norway compared to Sweden. But now, as Stefan mentioned here, we have a campaign now with a really good private leasing in Sweden. So let us see what happens now with the price over SEK 5,000 per month for private leasing. It's a really good price.
Yeah. Okay. That's very clear. And thank you. But okay. And then interesting to see that Western Europe actually had the highest earnings in your car business in this quarter with a 4.2% margin. So is it one-offs in this, or is this sort of the trend that you expect to be on for the remainder of this year?
What we can see is that BMW is a strong brand both in Belgium and Luxembourg. They are number one when you're talking market share in Belgium of all brands, bigger than Volkswagen. And they are number two in Luxembourg after Volkswagen. And we can see BMW AG in Munich, they put a lot of effort into Belgium and Luxembourg market. So we have a really strong position there, and we have the right brands, we can say.
Yeah. And in Luxembourg, we're also situated in our new, big, fine, nice site. So I think we have a really, really good position in Luxembourg market. And when you combine it with the things Per mentioned, that they are number two in the total market and have a really strong position. So I think that is really helping this.
The fact has been that the trend there is. There's no change. We should expect that to continue then going forward as well.
I think we have a common goal together with BMW to continue to be number one in Belgium. We will do our part in that, and they will do their part. To be the number one premium brand in Luxembourg is the same. We will fight for that every day.
Yeah. Okay. That's very clear. And then just one final housekeeping question on the end there. So the financial cost was actually pretty high in this quarter. Could you just give us some indication on a good run rate for the remaining quarters of this year, just to get that figure somewhat correct?
Yeah. And as you saw then, I mean, the reason for the higher finance costs or finance debt is the increased interest rate, right? So I would expect that that would be sort of the run rate going forward.
Okay. That's very clear. Okay. Thank you. I will leave the line open for all the questions. Thank you, guys.
Thank you, Stefan.
Thank you.
The next question comes from Mats Liss from Kepler Cheuvreux. Please go ahead.
Yeah. Hi. Thank you. Well, a couple of questions. First, on service there in Sweden, I mean, I saw the EV there improved year over year, and I guess that's in spite of lower new car deliveries. And also, I mean, you mentioned the Easter impact in Sweden as well. Could you give some flavor there why you are sort of improving? Seems a good.
Yeah. One reason is we have had really good booking times. We have in the biggest subsidiary company, Bilia Personbilar AB, the Volvo and Nissan business, we have put in and employed more mechanics because you may remember, Mat, we talked many years ago about we have empty lifts in our workshops. So there are more mechanics today. Therefore, it's really good conditions for long booking times.
Yeah. And also. As Per mentioned before, quick changing in the system with the process workshop, we see that coming in place now in some of our workshops when we made the change.
We changed the concept, do you remember?
Yeah. We talked about that when we go back a couple of quarters. And now we see in some of the sites there, it's working now.
Great. And the outlook going forward seems quite confident. I mean, you mentioned the Easter impact, long lead times in the body shops and so on. Should we expect it to, well, is the trend momentum improving, or is it sort of a normal seasonal improvement in the second quarter? I guess you have service to be implemented after the winter season and ahead of the driving season and so on.
Yeah. Yeah. As you know, we have a winter long time this year. So many customers, they wait with changed tires to April. And what we see with body and paint shops, as I mentioned today, that it's a long booking time, and we try to employ more body mechanics and paint mechanics. So it's a really good situation in Sweden.
Yeah. But I would say the booking times in Sweden is good. The booking times in Norway is good. The booking times in Western Europe is also good. So I think now the office says, "Then you have one party seasonality." I think we have managed the majority of the winter tire change, not all yet, but a majority of them, I think, is done. We still have a bit left, but then it's good booking times in both service and body shop.
Yeah. And then we have acquisition we have done, often with a lower margin. But we have thought about it, the business excellence team, a centralized team. They help the new companies into Bilia with the right processes and concept, and it goes better and better.
Yeah. We have some new coming in.
Yeah. Yeah. Yeah. Yeah.
And so on. Yeah. So then.
Good. Then, moving to Norway there. I mean, the Norwegian market is somewhat soft still, but what about the market shares you have? Do you see opportunities now? I mean, you mentioned the new Volvo offering there. Will it sort of, do you expect to gain some share?
Yeah. I think we can take some market shares with XPENG. Now we took over Kristiansand, and we took over directly from XPENG two outlets in Oslo area. So we built up our network in Norway now with XPENG. And XPENG is a really good business for us. If you take our other brands, stable market shares for Toyota, often over 10%. Stable market shares for Volvo, 6%-7%. And we were a little bit slow with campaigns, you can say, for BMW. But now we have right pricing to the market. One example is the smallest SUV we have, BMW X1. It's lower than NOK 500,000. So we are under the limit for VAT now. So we have strong campaigns as well from BMW.
Okay. Great. Thank you. I guess that's all from me. Thanks a lot.
Thank you, Mats.
The next question comes from Andreas Lundberg from SEB. Please go ahead.
Good morning. Thank you. But for the used car, used car margin were down, and the gross margin was down despite decent pricing. What was the reason for that?
It was a really good quarter for Norway and a stable quarter for Western Europe. And we had a drop in Sweden. And it was our biggest subsidiary company, Volvo Nissan, because we could see all dealers except Bilia, they built up a stock of used cars in the end of last year. So it was 14,000 used cars in stock for Volvo dealers in Sweden, and normally it's 10,000. And so when we started in January, many started a lot of campaigns, you can see from Blocket. And it's transparent pricing today. So when one dealer starts with a campaign for XC60, for example, everybody has to follow that. So the price declined a little bit in January and in February. Now, much more stable market. And we can see, for instance, that the petrol and diesel engine is increasing the price now.
Stable margin in March, but not in the beginning of January and the half of February. It was one reason. Another, it was we stopped selling Renault and put in Nissan instead. We sold out a lot of demonstration cars. And many of them, it was fully electric Megane in Bilia in Sweden. And it cost a lot of money to change them, to sell them, and put in Nissan instead. And we had a lot of rental cars in Hertz. So we changed them there as well. And it cost a lot of money when we changed for Nissan. There are some reasons in the beginning of this year in Sweden.
Thank you. And what about the is it perhaps a write-down of residual values? Any things you've taken there? Any effects of these cuts on EV pricing on your residual values?
Yeah. You have to be careful with residual values when you're talking fully electrical cars today because nobody knows what the price will be in the future. You have seen Tesla, they're changing the price up and down a lot. We can see for our brands as well, Mercedes-Benz today, it's much lower price today if we compare one year ago for fully electrical cars. You have to be careful to have residual values for fully electrical vehicles.
But when we see the question, we have nothing now because when we take the residual values for Mercedes, it's Mercedes taking the residual values. BMW is taking the residual values. And Toyota is taking the residual values. So out of that perspective, it's only when we talk about the Volvo, and that's so far quite small volume when we come to electric vehicles so far. But you need to be careful, but nothing now.
It's limited volumes from Volvo.
And it doesn't impact them in any way during the first quarter. That is what you had a little bit in mind, perhaps.
But maybe you have read in the newspaper that finance company like Santander, ALD, and the other, they are really frustrated because they have a lot of residual values for Tesla, and it's really costly for them.
As Stefan said, we have much less of those type of risk in our balance sheets compared to what we had like 10 years ago or eight to 10 years ago.
Of your commitment on residual values, how much is related to EV cars?
That's a very good question.
If I guess it's only maybe 1%, not 1%.
I can check that.
Yeah. But it's not so many cars.
All right. So.
Yeah. Yeah. Yeah.
It's not a significant part.
Gotcha. And also, last question on the Volkswagen deal you recently made here in Sweden or Stockholm. Can you give more flavor on what you have done so far and what are your intentions with Volkswagen in Sweden? Thank you.
Yeah. It's the east side of Stockholm, Haninge, and it's Skoda in Nacka. So we cover the east side of Stockholm. So we will be a bigger part with Volkswagen, Audi, Cupra, and Skoda in the future. So we double our volumes now. We had Norrköping, Nyköping since one year ago. So we hope we can acquire more in the future so we can be bigger for Volkswagen, Audi. And it's a really strong brand. And as you can see in the newspaper, they put a lot of effort for fully electrical vehicles. But in the same time now, they launch Tiguan, Passat with plug-in hybrids with diesel engines. So they are over all sorts of engines, you can say now. So it's a really strong brand for us.
We hope we can put in our centralized business excellence team in the workshops and help them with a little bit better processes and concept in the future. And for us, it's really good to have two different companies now. So we can start to find some synergies now as well.
And they're very strong on light commercial vehicles as well. A market share Volkswagen has around 30% over time. So that is really also interesting.
And then we originally said we had an expected takeover date, the 2nd of April. That would actually be the 2nd of May due to a little bit later decision from the competition authorities. So we are not yet there. It will be within short.
Next week.
Yeah.
Would you say, Volkswagen, is it easier, more difficult, or the same compared to other brands to integrate in your business?
No, it's not more difficult. But what we say now, it's better for us to build up a sort of a cluster because it's a big brand. So together, the four brands and five brands with light commercial vehicles, so they are 25% together. So maybe it's better to build up a sort of a cluster for Volkswagen, Audi, SEAT, Skoda, and light commercial vehicles. So that's what we are thinking about in the future, instead to integrate 100% into Bilia. So we built up a cluster for these brands.
All of the Volkswagen network in Sweden, how much is run by themselves? Do you know their intentions on the retail side? Thank you.
Din Bil owners is Porsche Holding, and Porsche Holding took over the importer side as well now in Södertälje. Din Bil, of the total retail, they are around 40%, 40%-45%. But it's many smaller family companies, and they are a little bit late into the consolidation, we can see. You have other big family companies, Tovek, but many, they have business in two, three different cities, and they have a turnover of a little bit over EUR 100 million, up to EUR 200 million.
Cool. Thank you so much, guys.
Thank you, Andreas.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you for that. Thank you for listening. Please revert to us. Would you have any further questions. Have a good day. Thank you very much.
Bye-bye.
Bye-bye.
Thank you.