Hello and welcome to the Byggmax conference call. Throughout the call, all participants will be in listen only mode, and afterwards there'll be a question and answer session. Just to remind you, this conference call is being recorded. Today, I am pleased to present Mattias Ankarberg, CEO. Please begin your meeting.
Thank you. Welcome everybody to this conference call. As usual, it is myself, Mattias, and our CFO, Helena, who will take this call, and we will talk to a presentation that's available on our website. I will start with the business update and then Helena will cover the financials. Starting on page two in our presentation, we had a very good quarter, a really good strong start to the year. We are now facing quite the exceptional comparable numbers from last year's COVID period, particularly during the first half of last year. Despite that, we continue to grow quite well. 14% sales increase in total and 1% positive like-for-like.
The market has clearly stabilized at a good level, and we continue to take market share, which is very positive. Gross margin continued to increase for us and cost control was really strong. Continues to be driven by acquisitions and new stores, but also in this quarter, specifically through some external factors around electricity prices and currency. We have, of course, our eyes on supply situation for quite some time, but now particularly so with a horrible and tragic war in the Ukraine causing even more disruptions. We have been fortunate to so far continue to have a manageable situation with good supply overall. Byggmax does not have any suppliers from Russia, Belarus or the Ukraine. Operating profit measured as EBITDA decreased somewhat to -SEK 4 million in the quarter compared to +SEK 7 million last year.
For those of you who know us, that's a new level which is clearly well above all years prior to 2021. On page three. It's been a good quarter, but it's also been a really busy quarter for us. Quite a lot of things have happened. We have focused on upgrading our store portfolio to our Store 3.0 concept at a record high pace. We now end the quarter with 81% of the store portfolio upgraded. We opened two new stores. We made a small acquisition of a Danish e-commerce company, and we also have launched a new and quite ambitious agenda to the climate challenge. All of these points we will go through in a few minutes.
On page four, before we jump into the details, it's perhaps more important than ever to underline the fundamental competitive position of Byggmax these days, which is the low price position or the discount position, particularly in these times of inflation and general higher price environment. We see that consumers are more price aware and do price comparison more than ever, which typically benefits discounters across all the retail categories. We have had a very strong low price position for many years. We continue to have that, and we have started to get as this year starts, experience in different countries, comparing products in DIY and construction materials. We continue to be awarded and win the awards for the best prices in the market. This is an important part as we move into 2022 of course.
We also continue on page five to take market share from the market. We have data from external institutes now since 2020, Norway and Sweden for the Nordic Consumer DIY market, the B2C market, which is what we compare ourselves before. There are actually two important points on this page. The first one is that the market, which increased a lot during COVID and remained flat all in all last year, has now clearly stabilized at a new level, which is clearly higher than before the pandemic although not as high as during the pandemic. This was the case during the second half of last year, and this is clearly the case now in the first quarter.
The market decreased a little bit this quarter, -2% to -4%, but still at the level that before the pandemic. The second point is, of course, that Byggmax continues to take quite a lot of market share. This is in local currency. We grew by 13% in the quarter, which is continuing to outperform the market quite strongly, which we are of course very happy about. This growth or this outperformance comes from the growth initiatives that we are executing. On page six, these are outlined. We are mainly focusing on organic growth, and we have three clear growth initiatives to drive that which we have been executing now for a few years, all of them.
The first one is the store upgrades, where we move to what we call Store 3.0, a new concept with more product categories, more everyday DIY, so-called product categories, and also a new store format which has a better quality experience. The second part is e-commerce, where we extend our online range quite a lot and provide new or better, more convenient shopping alternatives for the consumer. Third one is new stores. There are still quite a lot of locations in the Nordic countries that don't have a low price alternative, and we try to open in those places. Lastly, we do add on M&A when we find a suitable candidate, so to speak. We are looking for companies that fit our low price, low cost model in terms of and provide opportunities in terms of geographical or category growth.
On page seven, we can see that all these four initiatives continue to deliver for us and continue to contribute to our growth also in Q1 2022. The store upgrades we know add about 6% of sales per store. We have, as mentioned in the beginning, moved very fast to upgrade stores this quarter. We have now at 81% of the store portfolio upgraded. It was 46% a year ago. That's providing good results for us. E-commerce has been a good driver for us for several years. The e-commerce sales declined a little bit compared to the same quarter last year, but this is for natural comparables reasons.
If you look at Byggmax's brand of e-commerce sales, which is the big part, it decreased by 10% on the back of +90 last year. More, maybe importantly and specifically, if you look at the countries where we had stores in lockdown last year, of course, the only consumer option was to shop through e-commerce. In those countries, in our case, Denmark and Norway, e-commerce declined compared to last year, but it's still at the second highest level ever. In the countries where stores were open in Q1 last year, Sweden and Finland, e-commerce continued to grow from us. We continue to see, as we've done now for several quarters, that the fastest growth is coming from combining stores and e-commerce, and particularly collect at store or click and collect, as it's called by different companies.
Overall, good continued good progress from e-commerce, but a little bit strange comparables due to lockdowns in some countries last year. Store expansion, in this case, referring to our organic store expansion, continues to be a good addition for us. Drives 3 percentage points sales in the quarter. Two new stores open so far, planning 15 for the year. Four new will come now during Q2. Acquisitions do play a role, and now particularly the less seasonal Right Price Tiles adds quite good sales in Q1. We also made another acquisition of a small Danish e-commerce player, this quarter, announced in February and included in the business as of first of January. I thought on the next page, I would introduce our latest acquisition briefly.
It is again a Danish e-commerce business operating with particularly two brand sites, one called BygMax, similar to or very similar to us, and another brand operating also particularly in Denmark, but a much smaller site, e-bygstore. It is a 20-year-old company founded by two individuals with the idea to offer a wide range of DIY products at the best prices and have grown basically from zero to DKK 93 million in these 20 years, organically, profitably, and always with very high customer satisfaction, have built a very wide range of 125,000 products available for selling through online particularly, which is quite wide range compared to players in our industry and compared to ourselves. We entered Denmark just over a year ago.
This is, of course, a very nice addition to our Danish entry, as this gives very good opportunities to strengthen our position within e-commerce and in a lot of assortment categories. Also, of course, that the brand is similar makes integration easier going forward. In terms of financials, DKK 93 million in sales last year at about 6% EBITDA. The acquisition is structured based on an enterprise value of max DKK 45 million, DKK 38 million up front, and then an additional maximum DKK 7 million based on an earn-out performance in 2022. Those are the latest friends joining the Byggmax Group. With that, I conclude the sort of business part of this Q1 presentation. I'd like to mention a few things about our new climate agenda before turning over to Helena and the financials.
We held an investor update event just late March, on March 28, which is available on our website in terms of video and presentation, where we also announced our new agenda to try to contribute to tackling the climate challenge. Just briefly on this, we tackle this through two main initiatives, where the first one is to do what we can to minimize emissions, greenhouse gas emissions in our own operations and across the value chain. We have some quite ambitious targets. I'll get back to them in a second. The second part, which is maybe less usual, and I think interesting also from a business perspective, is that we see opportunities in circular products.
We are launching something we call Byggmax Green Ventures, which is an initiative to develop and manufacture and sell circular products that fits our offer and then that has a positive climate benefit and also products that can generate sales and profits. And in all, we hope and believe that these two initiatives together can sort of do more good than harm. We see a potential to have what we call a positive climate impact, which means that the climate benefits from the circular products should exceed the remaining emissions. First, as a first step, our own emissions in our own operations, and hopefully, secondly, the emissions from the entire value chain. A few comments or details on these two initiatives on the next two pages.
Firstly, regarding the targets for emissions and our actions to minimize emissions on page 10, I'd like to introduce that by just saying a few words about how we thought about setting these targets and taking these actions because we selected a few principles that we think make sense for us. Firstly, we adhere to what we call or what is called in the climate community first things first approach, which means that or the mitigation hierarchy, which means that it's important to first focus on the emissions within your own operations, so-called Scope 1 and 2, because that is your own responsibility, so we put extra focus on that. We also would like to make sure that all actions we take impact our own value chain. We will not make any climate compensations.
We will not buy any carbon credits, and we will make no external offsets. Of course, we would like to be data-driven and validated, and we are using the Greenhouse Gas Protocol, the world's most established standard for GHG accounting, and we adhere to the methodology and target process set by the Science Based Targets initiative. We have set three targets. The first one regards our own emissions, so-called Scope 1 and 2, where we have a very ambitious target to reduce emissions by 90% in just over five years, 2027. That is a new target. The second target regards our emissions from transportation, which is an existing target, so we maintain that, which is to reduce by 70% by 2030.
The last one is a target to reduce emissions across the entire value chain, where we have a net zero target to reach net zero value chain emissions by 2040, which is also new. Again, all of this is and we have already started to take actions on each and more information and quantified metrics around this are available in the investor update on our website. The second initiative is perhaps, again, a little bit more unusual or also maybe more interesting, where we try to make a difference by investing in circular products that fit with our own offer, which we call Green Ventures.
We've actually already made the first investment in a company, a startup company called MoreWood, which is two founders from the DIY and home improvement industry, which have an idea to produce timber beams out of scrap from cross-laminated timber constructions, which is today burned for heat. We act as a part owner and the first customer for the business with an option to become a majority owner if we like. It has the potential to avoid a lot of greenhouse gas emissions if successful, and we expect the first products in our stores and e-commerce already this autumn. We really look forward to this.
It is a completely circular product which has better technical characteristics than the existing product today and will be retailed at the same price as the existing product today. Very interesting first step for us. We are looking at three more investments already as we're currently evaluating during spring, and hope to get back to further steps within this area within not too long. That was a little bit extra on the climate agenda since that is very fresh and new to us. With that, we hand over to Helena to take us through the financial parts of the Q results.
Thank you. Yes. Let's focus on the financials, and I start with the sales and the store portfolio development in the first quarter. On sales, we continued to have a growth momentum in the quarter. As mentioned, despite extreme comparables, we had a growth of 14.4% and like-for-like sales grew by nearly 1% or 0.8. It is strong contribution from the acquisitions. We have acquired Norwegian Right Price Tiles and BygMax, and they added 9.4% in the quarter. Also, we have contribution from our growth initiatives new stores with 2.8%. If we look to the sales by geographic, we can see that we had strong sales outside Sweden, driven both by the M&A and also by organic strong growth.
We have a currency impact of 1.7% in the quarter. If we look to the right on the page, we have the store portfolio and the channel development. In the first quarter, we have opened two new stores in Sweden, Sveg and Hultsfred. We have activities also going in the first weeks of April, where we have continued with relocations and opening 1 new store in Norway. It is also high activity in the store portfolio to improve our upgrading of stores to Store 3.0 to the high season. As mentioned. Hello? Can you hear me?
Your line went silent there for a moment.
Is it okay?
Yep, you're back now. I can hear you.
Okay. Sorry about that. I think there was something with the line for a short moment. We were speaking about the store portfolio development in the first quarter. We spoke about the upgrading and the portfolio development and also share of the e-commerce has a stable and a strong position where we had 25% of sales and still have seen a good positive impact from the combination of online and our stores offers. In all, our growth initiative store upgrades, new stores and eCom including our add-on acquisition have all contributed to the growth in the first quarter. Moving on to page 13 where we have the profit and loss statement.
We have the strong net sales increase in a small quarter amounting to SEK 1,275.71 million. It is a strong gross margin increase to 35.5%. Again, in a small quarter the acquisition of Right Price Tiles has a positive impact on the gross margin in the period as they have a more stable sales curve. Cost control continues, and we see increased cost related to new stores, upgrades and acquisition, and the negative cost impact is driven by electricity costs and foreign exchange rates differences. Performance on EBITDA decreased slightly to SEK -4 million but is well above the year prior to the pandemic. Moving on to page 14, looking into cash flow and net debt.
We have a strong cash flow from operating activities of SEK 257 million in the quarter. It's a slight decrease from previous years. It is the growth initiatives and the price increases that has made changes to inventory and to some accounts payable in the quarter. We have a solid balance sheet with a net debt position of SEK 792 million, and it's a quarter with high activity of investments in our growth initiatives and the acquisition in total of SEK 157 million versus SEK 114 million the year before.
Moving, Emil.
Thanks, Helena. I will conclude with just a few remarks on the trend versus targets and the outlook for 2022. On page 15, we have our financial targets which were updated just over a year ago, March last year. We can see now one year in that we are trending above the levels we have set out. Starting with the sales, we have a target to reach SEK 10 billion in 2025, and we are making very good progress to get there now at the rolling twelve sales of SEK 7.8 billion, up from SEK 7 billion one year ago. We have a target of an operating margin or an EBITA margin of 7%-8%. We're currently at 11.3%, so clearly above there also.
We have a leverage target of net debt excluding IFRS 16. It's important to say, so excluding the leases over EBITA of being below 2.5. As Helena said, we have a strong balance sheet and are currently at 0.8x. Dividend is targeted to be 50% of net income and the board's current proposal to the AGM is 4 SEK per share which would be equivalent of 39%. We also since last year always have a CO2 target that we talk about whenever we talk about financial targets. We have now moved from one target to track as commented before. We have updated this last part, and we are on track to reach this target so far.
That was the review of the quarter one, and then lastly, the outlook for 2022. We are moving full steam ahead. We have a positive market outlook in the sense that the DIY market will be larger post the pandemic than before, and which we now clearly see several quarters in a row is happening. We also now even more strongly see an accelerating shift to discount as we are in a higher price environment or an inflationary environment. We from our side have never had this kind of high activity level for growth. We're operating at the record high growth activity where we again upgrade the store portfolios to faster extent than we've ever done. We are building out our e-commerce offer faster than before.
We aim for 15 new stores this year and we look for add-on acquisitions where it fits in, and we've started the year with adding the Danish e-commerce business to Byggmax. Then lastly, something I think personally feel is also important and positive too is that we have now launched our updated agenda to tackle the climate challenge with executing already actions to reduce own emissions and hope to have the first own circular products in stores and e-commerce already this autumn 2022. That summarizes, or sorry, that concludes the presentation part of this conference call, and we now turn to operator to manage questions.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name's announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Karl Sandlund of Carnegie. Please go ahead. Your line is open.
Thank you. Hi, Mattias and Helena. Two questions from my side. The first one is on the comparison you're facing here in Q2 and maybe more detail on a like-for-like.
Hello?
It looks like Karl's line just dropped. I don't know if he had bad reception. Yes, he's disconnected. Okay. Once again, if there are any further questions, please dial zero one on your telephone keypads now. Okay, we just had one further question come through. That's from the line of Magnus Angenfelt of Sjölund. Please go ahead. Your line is open.
Hi, Mattias and Helena. Two questions, if I may. Could you just explain why you haven't got any problem with the sourcing in the Right Price Tiles? Because I think that is coming from Ukraine. Am I correct?
Hi, Magnus. That is not. Right Price Tiles is sourcing private label, but it's not coming from the Ukraine. It's coming from particularly Spain and Italy. There are some chemicals that go into some sort of paints and some sorts of tiles that sometimes come from the Ukraine. That's maybe what you have picked up on, but there are other ways to find those. The product supply is coming from Southern Europe.
I got you. Thanks. Just out of curiosity, regarding the latest acquisition, BygMax, how are you to handle this acquisition and integrate this? Is this matched with your online strategy to have those in Denmark, or are they going to operate in parallel tracks to your presence? I mean, it's just missing one letter. Otherwise, it's very
Yeah, exactly. Very convenient integration exercise. Just add the letter. In all seriousness, we will integrate this into the Byggmax business, but now there is first an earn-out period this year. Our plans with both the previous Danish acquisition, Lavpristræ, but also this one, is to use them as entry points or sort of stepping stones into Denmark. As we know, retail is detail, and Denmark is a country which, like any other, has its local preferences. We think it's a really good way to start to acquire something which is already successful and growing. We have been able to develop the previous acquisition quite nicely in the last year when we were the owner, given our strengths and combining with them.
We will let the earn-out period pass, and then we will integrate this into Byggmax.
Great. Thanks.
If we have operator on the line, if you would like to manage further questions, if there are any. Have we lost the operator? Seems like we have lost the operator. Technical difficulties today, I guess. Since we are not managing the questions from our side, I guess it's difficult to take questions. If somebody can open the line, we will hang on the line here for another 30 seconds just to make sure. All right. We thank everybody who's dialed in, and we conclude this conference call. As usual, information is available on our website, and we try to be available for those investors and analysts that have questions throughout the day. Feel free to reach out if you have anything. Thank you. Bye-bye.