Welcome to the Bilia Q3 report for 2026. 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 IR, Carl Fredrik Ewetz. Please go ahead.
Thank you for the introduction, and welcome to Bilia's third quarter results presentation with CEO Per Avander, CFO Kristina Franzén and I, Carl Fredrik Ewetz. We are happy to present a good set of figures, strong cash flow, and an even more solid financial position than last quarter. Here is our agenda. Per will start with the current situation in the industry, followed by Q3 numbers, then Kristina will go through the financial situation, and I will conclude with our outlook. Let's start. I leave the word to CEO Per Avander.
Thank you, Carl Fredrik. The improvement in demand that we saw in the Swedish new car market in quarter one, quarter two, continued in quarter three. Demand from private customers for new cars is also higher than both last quarter and last year. In Norway, we had a strong finish in quarter four last year, driven by changes in the tax situation. As a result, order intake was weak in January and February this year. We are now seeing a similar trend, with order intake improving ahead of the tax changes coming into effect at the end of 2026. In Western Europe, demand remains stable throughout the quarter. Many of our brands have strong campaigns with attractive discounts and competitive private leasing offers. This contributes to a push market environment across all our markets. Demand for used cars remains somewhat weak in Sweden and Western Europe.
However, prices for fully electric used cars have stabilized at healthy levels, which has supported demand. In Norway, there are still many used cars available, but our own inventory remains well-balanced, both in Norway and in our other markets. We continue to see good demand in our service business, reflected in healthy workshop booking levels. This was despite several years of lower new car sales and the export of young used cars in Sweden. With the Swedish car market in 2025 almost 20% below the 10-year average, the vehicle stock is aging, which continues to support demand for service and maintenance. Net turnover was somewhat higher compared to last year. We report a strong result of SEK 380 million, with a margin of 3.8%, compared to SEK 310 million last year. We had higher profitability in Sweden and Norway, coming mainly from our service business.
In Western Europe, we report a stable result. Earnings per share was SEK 2.02, slightly lower than last year because it was impacted by a tax-free gain on sale of properties in Sweden. On this slide, you can see the quarter three profitability from 2020 to 2026 in each of our countries. On the left-hand side, you can see the strong performance in Sweden. In the middle, you can see Norway, performing better since a few years ago. On this waterfall chart, you can see the different business areas. As you can see, we continue to improve the earnings in the service business significantly. In addition, I would like to highlight that we perform well in new cars related to Sweden. We are moving over to the important service business, where we report the best quarter three ever.
Our service business represented 73% of the earnings in the quarter, and we improved the result and the margin. We report a result of SEK 293 million, compared to SEK 233 million in the same period last year, and the margin increased from 10.2% to 12%. The main reason for this is improvement of profitability in Sweden and Norway, a rise especially from our workshops. We also had a positive organic growth in the group of 3.6%. There are several reasons why we report a higher result in Sweden and Norway. One is higher efficiency. Another is more deliveries of new cars affect our delivery workshops. And the third is our car dismantling business performed well. The order intake on new cars, adjusted for new car brands, was 27% higher compared to quarter three last year.
As I mentioned, we have seen better activity in all our countries, especially in Norway, mainly driven by our new brand, XPENG. For the Car Business, we reported a result of SEK 99 million, compared to SEK 81 million last year. The profitability for cars was related mainly to Sweden. For used cars, we report a result of SEK 55 million, compared to SEK 68 million last year. As I mentioned in the beginning, the stock of used cars is on a good and balanced level in all our countries. The lower earnings related to Norway due to a lower gross margin related to a large supply of used cars in the market, where the price level was impacted by high price competition for new cars during the quarter.
The lower demand of used cars in Sweden is due to attractive private leasing offers for new cars. As we said in quarter two, prices of fully electric cars have stabilized, and we can now see slightly increased demand. We have increased our underlying backlog for new cars by approximately 6,100 units compared to last year, and today we have 18,600. This is from a historical perspective at a really high level. As we mentioned in quarter one and quarter two, some of our brands have launched interesting new EV models with long range, attracting a lot of interest from our customers. Examples are the Volvo EX60 and BMW iX3, which has been well-received in the market. Over to Kristina and the financial situation.
Thank you, Per. For the third quarter, we reported a strong operating cash flow of SEK 479 million generated by the underlying business. This cash flow was broadly in line with the corresponding period last year, adjusted for the SEK 303 million payment that we did receive last year for the sale of properties in Sweden. As highlighted in previous presentations, cash flow remains a key focus area for us and will continue to be so going forward. Our net financial expense amounted to SEK 78 million during the quarter, an improvement of SEK 7 million compared to last year, primarily due to currency effect and lower interest expense on borrowings. For the first nine months, the improvement amounted to SEK 33 million, reflecting again both lower interest expenses but also a higher income from associated companies.
At the end of the quarter, net debt, excluding IFRS 16 liabilities, amounted to just below SEK 2.2 billion, which was slightly below the level we had at year-end. Net debt to EBITDA, again excluding IFRS 16, was 1.2x , thereby improving from 1.3x , both at the end of the second quarter and at year-end 2025. We therefore remain comfortably within our financial target of maintaining a leverage ratio below 2.0x . At quarter end, we used approximately SEK 610 million of our committed credit facilities. Total committed facilities now amount to SEK 3.1 billion following the signing of an additional SEK 800 million facility during the third quarter. This further strengthens our financial flexibility and provides additional liquidity headroom to support future growth opportunities. During the quarter, we also paid SEK 138 million in dividends to our shareholders.
The total dividend for 2026 of SEK 6 per share is being paid in four equal installments. We have now made two installments with the fourth and final payment scheduled for January 2027. I would say in summary, our financial position remains strong, supported by solid cash generation, moderate leverage, and good liquidity. With that, I will hand over to you, Carl Fredrik.
Thank you for that, Kristina. Moving to our service business, as Per highlighted, our service business accounted for 73% of our operating profit in Q3, underlying its resilience and importance to the group. Our Swedish operations showed a margin of 14.2% in the quarter, exceeding our margin target of 14%. As always, we continue to work on improvements across the service business, and this is to make sure our operation is efficient, profitable, combined with the best possible service experience for our customers. Supported by our current order book, the fundamentals for the service business remain good for the next quarter. Moving over to the Car Business. We expect demand for used cars to remain on the weaker side in the coming quarter. Positively, the used EV market in Sweden and Western Europe seem to have normalized, with prices stabilizing at levels that better reflect underlying supply and demand.
This has improved customer confidence in buying fully electric used vehicle. Our used car inventories are at healthy levels. Looking at new car sales, demand from corporate customers has remained consistently stable, and we expect this trend to continue. Overall, we see that strong campaigns, attractive discounts, and competitive private leasing offers from many of our brands will continue to support demand in the coming quarters. A number of new generation electrical vehicles models are being introduced with extended driving ranges, which are expected to broaden customer appeal and contribute positively to volumes in the coming quarter. Looking at the overall market, the markets are still very difficult and we continue to see an industry very much under pressure. We remain humble in our outlook but are encouraged by our ability to continue outperforming the market through disciplined execution, a strong customer focus, and the dedication of our employees.
We believe we can continue to perform well compared to the overall market. We remain focused on strengthening profitability and operational performance across the entire group. The efficiency program launched last year continues to progress according to plan and is expected to deliver the benefits previously communicated. Just to highlight, on May 21st next year, we will host a Capital Markets Day here in Stockholm, where we intend to provide a more comprehensive view of Bilia's strategic direction going forward and our priorities for long-term shareholder value. During the day, we will, as always, have on display the latest car and truck models from most of Bilia's brands. Please save the date for this event. This is the May 21st, 2027. This finalizes our third quarter presentation, and we can now 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 Andreas Lundberg from SEB. Please go ahead.
Thank you, and good morning, everyone. If I start with the outlook on, you say certain improvements for the car operation. Do you mean that the underlying demand from customers, and do you mean improvements versus recent quarters or versus last year? Do you include the order backlog in this? Thank you.
Let's see, Andreas. Your question was that for the demand in the Car Business, if we see that the demand will increase quarter-over-quarter or year-over-year, right? That was your question, Andreas, right?
Yeah.
Yeah. We see that in Sweden and Norway, but what I tried to tell that there will be a peak now in Q4 this year because the change of VAT in the end of this year. We will have the same phenomenon next year in the Norwegian market, with maybe a little bit lower Q1 in the demand for new cars. But here in Sweden, we see a stable increasing quarter after quarter. We have a lot of good private leasing activities for the moment now for many of our brands. We see a little bit positive for the future. What we have told you before, that Western Europe, really stable market volume in Luxembourg.
On the order backlog side, you said it's historically high number, which is true. How do you think about timing of that, and how does it look for certain models or brands when it comes to deliveries? Thank you.
I think the order stock is on a very high level. We know that there will be a slight delay in deliveries when it comes to some of the Volvo car brands. The EVs, some would be pushed a little bit forward. We normally say that the order stock would be delivered in a three- to six-month period. It might be a little bit longer now. I think we will-
Little bit different in Norway.
Yeah, that's true.
Because the VAT changing. For many brands in the Norwegian market, we will have a peak of deliveries in Q4, except some Volvo models. Maybe you have read that in the newspapers. They are delayed.
Yeah. So perhaps it's still a six months period in average.
Yeah.
Yeah.
Okay. Cool. In the service business, you mentioned the dismantling business. Could you update me or us on how that business is progressing? Or if this is a poor improvement, or have you seen a good trend over time, sort of saying?
Yeah. The profitability development quarter-over-quarter or year-over-year trends.
Yeah. There is a lot of regulation in the market for the moment. We guess it will be better and better in our dismantling business, both in Sweden and Norway.
Can you tell me how big... Sorry.
No, I think the interest is clear there from the market. From the insurance companies that want to have more used parts in the repair shops. I think that's contributing to a more long-term development.
Yeah.
Right. How big is this business, can I ask?
It's not big from a turnover point of view, but it's essential from a strategic direction and also contributing well to profitability within the service business.
Yeah. And really stable business, you can say.
Yeah. Also not so dependent, of course, on changes in the economic environment. So it contributes to stability in the service business.
Mm-hmm. One department we have, we are really close Volvo, and take over their classic spare parts. They are new for older cars, and we sell them in Sweden and many countries in Europe.
Thanks. Would you say that most of this business goes to your own workshops, or do you sell the products externally?
Give me the hand like that.
I would like to say that mostly it is external, but we use it often in our body and paint shops because, as Kristina mentioned here, the insurance company, they will see a percentage of used spare parts when we repair cars for our customer.
Most we sell to other workshops and as I mentioned now, new spare parts for older Volvo cars.
It is of course an area for growth both internally but also to external workshops.
Yeah.
It is clearly interesting for the future.
Cool. Lastly, your financials look quite strong. How would you rank your capital allocation priorities from here? Thank you.
Let's see if I followed that question. You mean priorities from-
Capital allocation.
from capital allocation.
Okay. That is a good question. I think, as usual, we would look at possible acquisition opportunities to grow the business. We would of course look into having a stable leverage ratio, right?
If there will be other opportunities to sort of use the cash, that would also be looked into, right?
Okay. What kind of M&A would you prefer?
Type? Yeah, we have said that more Volkswagen business because we are quite small in Sweden. We are 4%-5% of the total sales and our policy is to be up to 10%-15% when we take in a new brand in Sweden and Norway. So maybe more there. Many brands, they are struggling with the profitability, and often when they are a private company, they have seen multiple in the past and like to have the same now. So it is not easy to acquire company for the moment now. Another area is the truck business we have. We are 7%-8% of the total sales in Sweden, and there we hope we can have a growth in the truck business. A really stable and good business for us. A third is what we have talked about now, Andreas, the dismantling business.
Maybe we can acquire more in Sweden and Norway there.
As always, we do it with a lot of carefulness.
Yeah
Of course, to select the right companies at the right point in time.
Okay. Thank you so much. That concludes my questions.
Thank you, Andreas.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you very much for listening. Lots of reports going on today, so feel free when time allows to get back to us and have a nice day and weekend. Bye.
Bye.