Hello all, and a warm welcome to the Byggmax Group's interim report for the second quarter of 2022. My name is Lydia, and I'll be your operator today. If you'd like to ask a question at the end of the presentation, you may do so by pressing star followed by one on your telephone keypad. It's my pleasure to now hand you over to our host, Mattias Ankarberg, CEO of Byggmax Group. Please go ahead when you're ready.
Thank you, Lydia. Welcome everybody to this conference call. We will, as usual, walk through a presentation that's available on our website. I will go through a business update, and the market side, and then Helena will go into financials, and after that, we'll move into Q&A. Overall, and speaking of, page two in our presentation, this is a good quarter in line with our own expectations. We continue to perform at a level clearly above the level where we were before the pandemic. We are, as you may be aware, facing tough comparables in this quarter with, not just one but two, exceptional factors that also contributed to a so-called reverse profit warning due to last year. We'll come back to those comparables.
All in all, we are coming out of this second quarter with yet another quarter of market share growth with an operating profit almost double to what it was before the pandemic and in this environment, very pleased to be a discounter. Looking at the summary financials on page two, net sales for the quarter decreased by 10% to just above SEK 2.5 billion. There are then again exceptional comparables from the peak of the COVID-19 pandemic, which we'll come back to, and like-for-like decreased 17% on the back of that. E-commerce continues to be a strength for us and accounted for just over 20%, 21% sales for the group.
The focus or prioritized categories for us in our growth initiatives continue to perform really well and actually had several all-time high sales records in those categories and also in Byggmax's branded e-commerce. Again, as indicated for many quarters now, we continue to take market share. We have a very strong gross margin. It is below last year's exceptional level, which we will come back to, but clearly the second-best gross margin we've ever had. We continue to be really focused on cost control, and we execute that also in this quarter. What is maybe slightly different from previous quarters is that the supply situation is now better. It's been sort of manageable for us before, but now it's good.
It's also supported by a decision we made to operate with higher inventory during the high season, which you will see, of course, and it's reflected in the numbers. We have the favorable situation not to sell perishable goods, so the inventory will of course normalize, and we expect it to do so by year end. That is a difference maybe compared to previous quarters. All in all, EBITA of SEK 254 million compared to SEK 456 million last year, an EBITA margin of exactly 10%. Again, an EBITA that almost doubled before the quarters during the pandemic. On page four or sorry, three, key events. This is a quarter for us, which is high season. There's been a high operational focus.
We said in Q1 that we aim to be more ready than ever for this high season with more upgraded stores, well invested before e-commerce and well-stocked inventory, and we have executed on that. We have also done a couple of other things during the quarter. We opened four new stores, three in Sweden and one in Norway, and we've also relocated four stores during the quarter. For the last 12 months, we've been really active, record activity on store upgrades, and we now are 89% of the portfolio upgraded to our last concept, Store 3.0, which makes a big difference compared to the 49% last year.
This is in July, after the second quarter, we opened our first store in a more compact format, where we take the broad Byggmax's offering and put it into a much smaller physical space, in the retail park outside Örebro, which is one of the biggest retail parks in Sweden. On the next page, importantly, in this market environment, we are very pleased to be a discounter. It's of course, fundamental part of our business idea, and we have a very simple pricing strategy to always offer the best price at every single product. And that's been a real strength for us, of course, also in this environment. We also continue to be recognized for this by external surveys or independent surveys. A big stronghold for us, which we continue to solidify in this market.
That's also helped us to outperform the market. If we dig into the numbers on the market side compared to our performance, we can see two trends that are continuing. The first one is that the market is clearly below the pandemic level, but clearly above the pre-pandemic level. In numbers, it's a bit more sort of exceptional or wider ranges now in Q2 because we are now facing the peak of the COVID-19 pandemic. Market is down by around 15%-20%, which corresponds to a market increase of 6%-8% versus 2019 or the period before.
The second trend that's continued now since these public numbers for the market started arriving by June 2020 is that Byggmax has taken market share every single quarter. They will continue to do so now with a -10% reported compared to the -15% to 20% for the market. Digging in a little bit more to the market development then the, you know, commenting on some specific factors, which is usually of interest. We could say that it is a continued good market, but of course, the consumer situation is different now with the inflationary environment we are in and macro uncertainty. We could see that the product connected to the home still as an industry performed better than before the pandemic. The market is still positively impacted by the role of the home and the higher prices, of course.
April was a cold and wintry month throughout the Nordics, which meant the later start of many outdoor projects. There is a negative weather effect in the quarter from the winter in April. There is a more hesitant and also more price conscious consumer, and the latter part of course benefits us more than previously. We could see that particularly products connected to bigger investments for the home are declining compared to the very high peak for last year. We're talking about products connected to projects such as pool or greenhouse or inventory. That is six-figure investments typically for a consumer in Swedish currencies.
That is the market situation for Q2, basically continuing a market above the pre-pandemic but not that the pandemic and Byggmax continues to take market share. Leaving the market and moving on to our initiatives and the reasons for the market share gains, and is on the next page. Our agenda for those of you who follow us know that it's been fairly constant for three years now. We are executing clear growth initiatives, and we particularly form the organic growth. We have four growth initiatives that we've been running now for quite a while. The first one is the store upgrades, which I commented on earlier. We've come quite far on now. This is initiative that adds 6% sales per store on average, and we're doing two things.
We're adding or introducing new categories and strengthening a lot of categories, but also a new store concept which has a better customer experience and a better quality experience. Second part is e-commerce, where we worked a lot to extend our online exclusive assortment and make a number of improvements to the customer experience for e-commerce, which is also continuing to perform well. We do open new stores, as commented, and then we have selectively done some add-on acquisitions that fit our discount model and our category and country focus. Those are constant. On the next page, a couple of comments on how these initiatives are continuing to perform. We are of course pleased with the performance also in Q2.
If we take the store upgrades first, which is the big push we've done in the last year, moving to 89% now, we have seen clear positive effects from that. We do have, you know, all-time high sales in the second quarter in several product categories which are introduced or strengthened in the Store 3.0 assortment. We call them smaller project categories. That is less investments than the bigger ones. For example, all-time high sales in the quarter in garden, in paint, in flooring, and in storage. Very pleased about that. E-commerce continues to perform well. It's an opportunity for us to continue to, you know, meet more customers and expand the offer.
We see that we continue to grow the Byggmax's brand of e-commerce in Sweden and Finland and Norway not because it was impacted by store closures during COVID last year, but continued e-commerce growth despite very tough comparables in both Sweden and Finland, which we're very pleased about. Growth contributors are the extended online assortment really helps. We at several quarters now see that the strongest effects come from combining online and stores. For example, we see the fastest growth of all from click and collect or buy online pickup in store. New stores, four new stores in the quarter, adds about 3 percentage points of sales for the quarter. We continue to open stores in white spots. We targeted to open 15 new stores for the year.
Acquisitions also contribute, the less seasonal Right Price Tiles is the bigger one, and it impacts therefore a bit less during the high season for Byggmax than it does in Q4 and Q1, but still a 4 percentage point contribution from the acquisitions also in Q2. Good progress and good contributions from all our growth initiatives during the quarter. We also launched a new and quite ambitious climate agenda just recently in March this year. I wanted to provide a brief update on that before we move into the financials. There are two components to our agenda.
As a recap, the first one is to we have a very ambitious plan to minimize our emissions, our carbon emissions, both in our own operations by 90% in five years, but also to work towards what we call the net-zero value chain in 2040. That's the one half. The other half is that we believe there is a big customer demand and actually a big business opportunity for circular products or more climate-friendly products. We have decided to participate in the development of those. We have what we call Byggmax Green Ventures that actively supports and invest in companies that manufacture and develop these kind of products.
In all, we hope that this agenda together can enable us to do more good than harm and combine a low price offer with a high ambition climate agenda. As a quick update on the first Byggmax Green Ventures on the next page, it's progressing according to plan and the first investment done is in a Swedish startup run by two very experienced gentlemen in this industry from various positions in various countries and roles. The aim is to produce timber beams, which is an important part for us, out of cross-laminated timber scraps that would otherwise be burned for heat.
The idea is to create new timber beams out of this scrap, avoid burning for heat and avoid a lot of greenhouse gas emissions, and actually create products that have better technical capabilities than the existing products on the market. We expect to have the first products in store and e-commerce this autumn during 2022, and are in parallel looking at more investments at the same time. Quite excited about actually bringing this to the market within hopefully the next quarter. Before handing over to Helena to cover the financials for the quarter, I wanted to provide a brief sort of context for the quarter.
As mentioned in the beginning, we have some pretty exceptional comparables and the so-called reverse profit warning last year, and I wanted just to walk you through what the history looks like. Step by step, we could say that we obviously had COVID-19 peak impacting Byggmax sales positively during both 2020 and 2021. Over two years, like-for-like sales increased 51%. That is like-for-like between 2021 and 2019 during this peak. Now that is followed in Q2 by a decrease of 17%. Sales is still 42% higher in total than it was in 2019. That was one exceptional impact from the COVID-19 pandemic last year.
The second impact came from on the gross margin, and last year the prices for timber increased faster towards the consumer than the input goods prices increased throughout our inventory. We had commented last year that we had a positive effect on gross margin of about 150 basis points from what we call front-loaded consumer prices. Looking beyond that, the gross margin continues to improve year-on-year, but it is clearly below last year's exceptional level. Summing up, EBITA is then clearly below last year, but still close to double compared to the period before the pandemic. The EBITA margin is below last year at 10%, but also clearly above the 7.4% before the pandemic in 2019. Just a little bit of context before Helena is now leaning a bit more deeper into the financial outcome for the second quarter.
Yes. We are on page 11 moving into the details on the financials, starting on the sales development in the quarter. As mentioned, we have a negative like-for-like in the quarter versus extreme comparables. Working in the other direction is the contribution from new stores adding 2.6% to sales in the quarter. We have four new stores open in this quarter, and we have nine new stores contributing in the last 12-month period. We also have contribution from our M&A. We have the acquired Right Price Tiles and BygMax A/S, the e-com business we acquired in the beginning of this year, and they add 3.9% to the sales. Also a smaller positive currency impact of 0.8%.
In all, we see this sales quarter, a new market situation with more cautious and price conscious customers, but also some sales impact seen from the cold and delayed outdoor projects in April. Although we still have good progress in the smaller projects and the decrease is mainly seen on the more costly, bigger projects part. Also looking into the store portfolio, it's quite an active quarter. We have four new stores, but a little bit more unusual is the high number of relocations. We have four store relocations in this quarter. We have now reached 89% of our store portfolio upgraded to our modern low price concept, and we aim to have all our stores upgraded ahead of high season 2023.
If you continue on next slide, we have the P&L table for the quarter, where we have an EBITA margin of 10% and an EBITA amounting to SEK 254 million. It's a clear shift down versus extreme pandemic Q2 quarters. Performance is primarily weakened by the lower sales and lower gross margin. On the cost side, we have kept a continuous focus on cost control. Efficiency in store portfolio remains, although not full compensation for the macro increase on electricity and foreign exchange, and this in combination with some store relocation costs. We consider this a good quarter in a new, more hesitant market. Moving on to cash flow on the next page 13. Cash flow from operating activities amounts to SEK 280 million for the quarter.
This is down versus the same period last year, mainly due to working capital movements in combination with the lower performance. Inventory, as Ankarberg mentioned, very high levels. We have inventory of SEK 1,881 ,000. This is driven by new stores acquisition price effect, but also the strategic decision to mitigate delays. This is based on the last year experiences. Inventory is forecasted to be reduced and reach more balanced levels within the next quarters. We looking at net debt, we have a net debt at SEK 891 million, a shift versus last year, but well within target. This is driven by the increased inventory levels again, but also investment in growth activities, higher contribution to shareholders and M&A activities in two cases. Yes.
Thank you, Helena. Summing up with two more pages from my side. Firstly, our position versus our financial targets on page 14, and we continue to make very good progress towards the target. If we take them one by one, we have a sales target to reach SEK 10 billion by 2025. We now are at a rolling 12 of SEK 7.5 billion. Again, now we have met the toughest sales peak from the COVID period, and we have very good performing sales growth initiatives that we are continuing to execute towards the SEK 10 billion. We have a target of having an EBITA margin of 7%-8%.
We are currently rolling above at 9%, which is then again down in the quarter compared to last year, but also continue to move towards that target in a way that we feel confident about. We have a leverage target to stay below 2.5x net debt EBITA, excluding IFRS 16 effect. We're currently at 1.1, as Helena covered. Dividend target to pay out 60% of net income. We paid out 39% this quarter or SEK 6.4 per share, and has also done some buybacks during last autumn. We have some very ambitious climate target, carbon dioxide target, both for own operations and for the value chains and which are in line with the Science Based Targets initiative targets, and we are so far on track to move towards those. Last page and a few forward-looking comments.
A couple of things that are constant and a couple of things are important. Overall, we can now see that the market, if we start there, continues to be at a level which is clearly above the pre-pandemic levels, but not just the pandemic levels. We also clearly see that Byggmax continues to perform at a much higher level than before the pandemic, which we're very pleased about. We also continue to see that we take market share in yet another quarter. Looking forward, we are very pleased to be a strong low price player or a discount player in this high inflationary environment. We believe that gives us a position that is more relevant than ever in these times.
Secondly, we have growth initiatives that we have executed for several years that are well performing and enable us to set new sales records in some categories and in e-commerce, and we very much look forward to continue to execute those. Then thirdly, we are quite excited about the climate agenda. It is of course a very long-term theme and something we are passionate about and believe will have good impact over time for our company and for our brand. That is the situation from Byggmax. With that, we hand over to operator to manage questions.
Thank you. If you'd like to ask a question to the team, please press star followed by one on your telephone keypad now. To withdraw your question, it's star followed by two, and when preparing to speak, please ensure your device is unmuted locally. That's star followed by one to ask a question. Our first question today comes from Carl Deijenberg from Carnegie. Your line is open.
Thank you, operator. I actually just had one question, and that is on the planned store expansion here in the second half of 2022. You talked earlier about four new openings here in Q2, and I'm just curious if you could share what you're planning for Q3, Q4 also, if you could.
Yeah, absolutely. We have a target. Well, maybe as a backdrop, we could say that in over the last two, three years, we have shifted from a large focus on store expansion to a large focus on store upgrades and e-commerce growth. That has been quite simple for us. We have a target to open 15 new stores this year. As the performance continues to be strong and as there are several towns or locations that do not have a low price offer, we are still looking forward to open those. There are some landlord issues on specific spots because of their ability to secure supply to actually enable the construction. Potentially some are pushed in time over the calendar year.
We continue long-term with opening stores in white spots, but mainly focusing on the store upgrades and the e-commerce part.
Okay, very well. That was all for me. Thank you.
Thank you. As a reminder, if you'd like to ask a question, please press star followed by the number one on your telephone keypad now. The next question today comes from Bertrand Faure of Pascal Investment Advisers. Please go ahead.
Yes. Hi, good morning. Just one quick question for me also on the inventories. I think you mentioned twice in the presentation that your plan is to reduce inventories by year-end. If I'm not mistaken, you stand at approximately 25% of the last 12 months revenues. Can you give us a sense as to what is your internal target for year-end as the amount of inventories on balance sheet at that point in time?
Yeah, sure. I can start, and then Helena can add to it. Maybe just some context on there also if there is sort of new listeners in. I mean, we operate within products that are not perishable goods, and we are a very seasonal company, and typically we adapt inventory to a certain level. Of course, as many companies, we have been, you know, impacted by supply chain challenges for the last two quarters. The couple of years, sorry. This quarter we took a bit different approach, as communicated already in Q1, that we were gonna run with higher inventory into the high season, which we are now, and then decrease the inventory level at a later stage. That is an active decision we have done.
Typically you would see, you know, inventory levels go up towards the end of the year, but this year we will see them go down yearly from the level we are at now, and probably approaching last year's level by end of year.
Okay. Very clear. Thank you very much.
Thank you. Next, we have a question from Dennis Petersson, who is a private investor. Your line is open, Dennis.
Hello. I have actually two questions. The first one is also an inventory question. As I can see from the P&L, the cost of goods sold hasn't decreased as much as the turnover. Is that due to inflation or is it that you have, as you mentioned, taken some cost for a higher inventory level? Can we then expect some costs to decrease during Q3? The second question is regarding the store upgrade. How much do you expect costs to come down when you have updated all stores to 3.0? Thank you.
Thank you, Dennis. I'll try to answer the first one and then I'll ask Helena to answer the second one. Yeah, you are right that you know COGS has a different development than sales. I mean, the difference between the two is the gross margin. As mentioned earlier, you know, it's been a continuous good gross margin development for several years for us. Last year we had a very positive effect of timber prices increasing faster to the consumer than the cost. That is the reason why you see those effects that you were mentioning. If you would account for that, you would continue to see an improved gross margin year-over-year. The second question regarding the cost of store upgrades, I will hand over to Helena.
Yes. We have only a few store upgrades left, as you mentioned. I would say that the main difference will be on the CapEx side. There is some cost on the P&L, and we have both sort of personnel working with store upgrades and some other costs in the store upgrading. The main focus will be the CapEx number going down after they're finalizing all the portfolio to upgraded modern stores.
Okay. Thank you.
As a final reminder, it's star followed by the number one to ask a question today. We have no further questions in the queue, so I'll hand the call back to Mattias for any closing remarks.
Thank you very much, Lydia, and everybody. Wish you a good summer and look forward to speaking to you again at the Q3 call.
This concludes today's call. Thank you very much for joining. You may now disconnect your-