Hello and welcome everyone to the Byggmax Interim Report Q1 2025. My name is Becky, and I'll be your operator today. During the presentation, you can register a question by pressing star followed by one on your keypad. If you change your mind, please press star followed by two. I'll now hand over to your host, Karl Sandlund, CEO of Byggmax, to begin. Please go ahead.
Thank you, thank you very much. Again, welcome to this conference call where we will present the Byggmax Group's report for the first quarter of 2025. As you heard, I'm Karl Sandlund, the CEO of Byggmax, and with me is also Helena Nathhorst, our CFO. As usual, the presentation is available on our website, and we will try to guide you to the correct page during this call. I will start with a brief business update, and after that, Helena will walk you through the Q1 financials. As you heard, once the presentations are finished, we will open up the floor for any questions from you. With that, I think we start. Let's go to page number two in the presentation.
As you see, we started the first quarter of 2025 like how we concluded 2024, with increased sales compared to the year before and with a strong gross margin. Together, this meant that we continued to improve our profitability. Our net sales increased by 7.2% compared to the first quarter last year, and like for like sales is up 7.6%. We have more customers, and we see that categories related to larger indoor projects developed in a positive way during the quarter. The sales development was quite similar in Sweden and in the rest of Norway, so quite similar sales in those two different areas. We have a high gross margin in the quarter, and several reasons for this. One is that demand had been filtered towards products with high margin.
Another fact is that our financial stability has enabled us to really optimize purchasing terms, both when it comes to order placement and payment. In addition, we see that improvements within our e-comm when it comes to freight and logistics impact the margin positively. The first quarter of the year is part of our low season, and it is always one of our smallest of the year. However, profitability continued for the fourth consecutive quarter to improve, and the EBITDA is SEK 39 million better than the same quarter last year. As you have seen also last year, in addition to improved results, we continued to strengthen the balance sheet. We reduced our net debt and leverage. Net debt over EBITDA was 1.8 at the end of the quarter, down from 3.2 the same time a year ago.
Overall, our efforts to build a strong platform paid off, which enabled us to have full focus ahead, and we are well prepared for a new high season. Before getting into more details, on slide three, we had an overview for those who may not know us that well. We were founded back in 1993, and today we have 211 stores across four Nordic markets. We have a strong selection of products for home renovation and maintenance, primarily for consumers. We offer everything from building materials, paint, tiles, flooring, and more. We have an in-store assortment, which is enhanced by smart online solutions, where we provide an even wider range, but also home delivery of heavy building materials and customized products.
We are a true discount retailer, and of course, offering the best prices requires maintaining the lowest possible cost, which is something that's really part of our DNA. Also in our store design, which not only keeps operational costs low, but also ensures efficient shopping experience, which our customers highly appreciate. In addition to the Byggmax brand, we have Right Price Tiles in Norway, focusing on tiles and bathrooms, and Skånska Byggvaror, which offers products , such as conservatories and greenhouses. Actually, part of our DNA is our culture and values. We have a very, very high employee engagement, something that enables us to quickly drive change and make improvements, true strength for our organization and also a key driver for our customer satisfaction.
On page four, you see that we size-wise, is a SEK 6 billion company. We delivered SEK 272 million in EBITDA the last four quarters and EBITDA margin of 4.5%. We have a very efficient business model with high cash generation, and this is seen in a strong cash flow, SEK 751 million, from operating activities, in the last four quarters. We really believe in the combination of online and stores, and we have a successful mix of the two. Currently, we have about 90% of our total sales through our online sales channels. On page five, you have some macro context.
As you have heard us saying before, after a steep decline in 2022 and a challenge in 2023, we began to see improvement of macro factors during last year, 2024, with inflation back to more normal levels and also reduced interest rates. This has resulted in gradual improvement in consumer sentiment. It is encouraging to see that house transactions develop in the right direction and that real rates just seem to show an upward momentum because those are historical drivers for renovation projects. Overall, I always say that customer behavior showed a more typical pattern in Q1. We have more customers than last year. They are returning to the physical stores, and we see the largest growth during late afternoon and weekends.
As mentioned in the beginning, we also experienced that the customers to a greater degree bought products in categories related to larger projects in the quarter. We, of course, followed this development carefully to position ourselves in the best possible way. Page six. Those of you who know us know that over these two past years, we have focused on a couple of areas, primarily to strengthen the balance sheet, to secure operational excellence, and to continue to improve our customer offering. This focus has really established a strong foundation to build for. We have managed to reduce our costs from an already low level, and we have strengthened our balance sheet significantly. This enables us to have full focus ahead in all parts of the organization.
We have operational flexibility needed to meet the high season and growing demand. From this foundation, we continue to work toward our long-term targets. We have a clear roadmap where we will secure a strong customer focus with continuous improvement and enhancement of our offering. We will make sure to capitalize on the commercial investments made. More and upgraded stores have significantly amplified our revenue potential. Finally, we are a discount retailer, and efficiency is an important part of us and our DNA. We will continue to leverage our cost position and secure scale in stores and logistics. During Q1, all our employees have made their outlooks to really prepare for the coming high season.
On the next couple of slides, we will show you some examples of the efforts made in Q1 to be prepared for the future. Start with page seven, inventory and availability of products. You know that optimizing inventory has been a key focus area for us for a long time. Later, we have analyzed entire assortments to ensure even more detail than before, the right inventory level for each and every product. This has resulted that we have been able to increase the levels for the most important products while we have reduced products with lower demand. We have put a lot of effort into securing a smart buildup of inventory for the season, resulting in good product availability and well-stocked stores, actually better than before.
Even though our total inventory level is lower than last year, our actual assortment is at a higher level than it was a year ago. Page eight illustrates how we have prepared our stores for the season because, as always, we aim to improve our store experience. We want to accomplish the checkout. The last couple of years, we have implemented more self-service stations. This makes the experience more efficient and frees up time for our staff to focus on the customers instead. Those checkout areas have been further enhanced with improved functionality and visualization to make things even easier for our customers. In addition, ahead of this season, almost half of the stores have been rearranged to better visualize our assortment.
The store layout and customer flow have been changed, and we work with lower store shelves to make it easier for the customers to navigate and find products. Again, everything to secure a smooth and easy shopping experience for the customers. Also during this time of the year, we welcome any new employees to our stores, to our company. To further improve that introduction and also make sure that we can assist our customers even better, we have implemented a new training program or app. Going forward, all employees, both new and existing, will use this app to continuously stay up to date with assortment and offer. A lot of efforts to secure that our stores are in best possible shape.
It is truly encouraging to see that we continue to maintain a very high customer satisfaction in the stores. Ahead of the coming season, we also have a range of new products that will be introduced. See page nine for some examples. We continue to develop our modular houses software. We have added more options, and customers can choose both types of design, but they can also add lofts, foundation, isolated metal sandwich roofing. Together with possibilities for garage doors and glass panels, it really widens the intended use of the houses. We have also expanded our private label range of greenhouses and conservatories, with several new products ready for this season. Finally, branding and visual identity of some of the private label products have been updated to modernize both look and feel.
Overall, the aim is to create an attractive offering, of course, and also to further reinforce the price perception. Before handing over to Helena and financially, just a few words on e-comm on page number 10. We continue to widen our made-to- order offering online. The latest addition is a new subtype for garden buildings. The made-to- order offering now covers paint, doors, windows, sun canopies, and more. It is an example of how to use strength in different parts of the group in a good way. Another example of utilizing group synergies is Denmark, where we have merged some of our sites. By doing so, we increase efficiency while being able to provide strong customer support. Finally, we have also made changes to the logistics or last mile delivery.
We have a new setup to secure better control of transportation flows. The aim is to improve our planning capabilities and also to increase efficiency. This has resulted in improved freight results. With better control over resource utilization, we also strengthen our ability to efficiently handle increased volumes going forward. To sum up, our efforts during the quarter have really focused on laying the groundwork for the upcoming peak season, from continuing to strengthen our customer offering to ensuring well-stocked stores while leveraging our cost position and economies of scale. With that, over to Helena and more Q1 financially.
Thank you, Karl. Good morning, everyone. We are now on slide 11, where I will start with an overview of sales and profitability development over recent quarters.
We delivered another quarter of top-line growth, with sales increasing by 7.2% compared to Q1 last year. The growth was driven by both Sweden and our other Nordic markets. At the end of Q1, we operated 211 stores, the same number as last year, meaning nearly all of the growth was organic. It is also worth noting that we faced the negative currency effect of 0.7%, primarily due to the rate in NOK . This marked our second consecutive quarter of sales growth and our fourth consecutive quarter of improved profitability, a clear sign that our strategy is delivering results in a demanding market environment. On next slide, as mentioned, we continue to improve the availability in stores through strict inventory management, with prioritized volume on key products. This has helped us to better meet customer demand and contributed to the increase in sales in this quarter, one of our smaller quarters.
Of course, gross margin continued to strengthen, supported by efficient sourcing, a favorable product mix, and well-executed e-commerce logistics. Altogether, we have delivered profitable growth through increased sales while also improving gross margin. On slide 13, EBITDA improved by SEK 39 million in the quarter, as illustrated on this slide. The improvement was driven by a mix of higher sales volumes and gross margin improvement supported by continued cost discipline. Volume growth contributed SEK 25 million, gross margin improvement SEK 10 million, and other revenues contributed with SEK 9 million, mainly from fixed assets, disposals, and currency effects related to inventory ordering. On the cost side, we have remained disciplined. Our cost structure is defined to support scalability. Efficiency improvements in both stores and administration have allowed us to scale as volume grows. On the store portfolio inflation, the store portfolio rent is accounted for as depreciation under IFRS 16.
The inflation has been offset by moderate investment levels, and the depreciation is lower by SEK 2 million versus the same period last year. EBITDA improved to minus SEK 109 million and negative margin of 11.7%, a margin improvement of 5.4 percentage points. As said, this is our fourth consecutive quarter of profitability improvement, underlining that we are delivering not just growth, but profitable growth, even in this challenging environment. We have, in addition, continued to generate a strong cash flow that is presented on page 14. Cash flow from operating activities over the last 12 months amounted to SEK 751 million, reflecting an improved profitability, effective working capital management, and disciplined investment. In this quarter, we increased inventory levels in preparation for peak season while maintaining efficient use of supplier payment terms. This resulted in a controlled impact on working capital movement.
We continue to invest prudently while ensuring operational readiness. Our strong cash generation supports our financial position and provides us with the flexibility to act when opportunities arise. The sustained, strong cash generation remains a key strength. Finally, on slide 15, we have the net debt position. We have sustained decrease in net debt. Our net debt to EBITDA ratio improved significantly to 1.8x , down from 3.2x last year, well below our financial target of 2.5x . This marks a substantial improvement and reflects the impact of focused execution and disciplined capital allocation. We also maintain strong long-term relations with our banks. We are well within our leverage target. As of Q1, we had SEK 700 million in available committed credit facilities, providing us with flexibility going forward. With that, I hand it back to Karl before we move on to our questions.
Thank you, Helena. Please move to slide 16, our key messages again. We continue to increase both sales and profitability in the first quarter of 2025. Sales was up more than 7% in the quarter. As you heard, in addition, we strengthened our balance sheet, and leverage ratio is now down to 1.8 from 3.2 last year. Last year, strategic efforts have really secured a strong platform, which enables us to have full focus ahead. We have the operational flexibility to meet a growing demand. This is exemplified by well-stocked stores and the ability to optimize purchasing and replenishment. Going forward, we will continue to improve our customer offering. We will strive to capitalize on our commercial investments and drive volume in our store network. We will leverage our cost position and logistics efficiency.
During this, the first quarter of the year, we have put a lot of effort throughout the entire organization to make sure that we are ready for the peak season. We are well prepared, and our highly motivated employees, they are already ready to welcome more customers to the discounts ahead. With that, thank you for your attention. We are now happy to take your questions. Let's open up the floor.
Perfect. Thank you. If you wish to ask a question, please press star followed by one on your telephone keypad now. If for any reason you want to remove your question from the queue, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question is from Benjamin Wahlstedt from ABG. Your line is now open. Please go ahead.
Thank you very much. Good morning. I was wondering, what are your thoughts on market growth in Q1? We know January and February grew by an average of 9%, according to Sweden's statistics. Is that a likely level for March as well, do you think?
Good morning, Benjamin. When it comes to the market growth, we haven't seen the statistics for March so far. I guess it will be ready in a couple of weeks. We had an Easter last year that might impact some of the categories. I'm not sure. You know, it's a small quarter. I wouldn't say that the different months of the quarter differ too much when it comes to the underlying market.
Perfect. Thank you. I was also wondering about your other income, other operating income, which grew by almost SEK 10 million year-on-year. I was wondering if you could give some additional color on what drove this change, please.
Yes. This is some fixed asset disposals that are accounted for as under revenues. Then we have the current impact in this quarter, where this quarter is, we are not that exposed to purchasing from euro and dollar. This quarter, before high season, we have quite a material volume coming in. That is the revaluation of those invoices.
Perfect. Thank you. Your gross margin improved year-on-year again. Could you give us a rough idea of what part of the improvement is operational, what part is early purchasing, and what part is cash discounts, please?
As I said, the gross margin is driven by several factors. One, just to repeat them. One is that our financial stability has enabled us to really optimize the purchasing terms, both when it comes to order placement and payment. We have ordered and paid early, and we have built stock of our own important products. Furthermore, demand in the quarter has been more weighted towards the high-margin product than usual. Finally, in addition, we have made improvements to e-commerce rate, where we have insourced the control tower and thereby have a better optimization of the last mile transfers. Multiple factors are contributing to that outcome. The exact, it's hard to say the exact allocation between those three.
Those three are the main drivers behind the higher margin.
Perfect. Thank you. That was actually quite a good segue to my final question. In the CEO statement, you mentioned a better consumer demand or a better mix driven by consumer demand. I was wondering what products are you referring to here, please? That has heard better in this quarter than previously, please.
We're still during the quarter, as we mentioned, that we have a positive development of the indoor renovation project. That's one part of it. We also saw that the rather warm and mild weather also resulted in a lower sales of energy products. I guess those two are the main, you know, when it comes to demand tilted towards high-margin products.
Perfect. Thank you. That's all from me for now.
Thank you.
Thank you. Our next question comes from Niklas Ekman from Carnegie. The line is now open. Please go ahead.
Thank you. Yes. Just two questions from [Ian] Firstly on expansion. You have no store openings now. What do you see in terms of future potential? I'm thinking more when the market kind of normalizes, when you see consumption resuming. Are you expecting to resume store openings and to what magnitude? Are you looking at coming back to where you were in terms of expansion, kind of pre-COVID levels, or are you pretty pleased with the portfolio that you have today?
Thank you, Niklas. Our operating strategies remain unchanged. We will continue to drive profitable growth and aim to outpace the market. Store probably is one of the levers to secure this. The pace of number of new stores varies both with market conditions, but also where we are in our cycle when it comes to the store portfolio. As I said, right now, at the moment, we see a slower rate of store openings. We see also a significant potential to increase volume and sales within our existing store network, which is a priority right now.
Our ambition is to make sure that even more customers have convenient access to an affordable, a low, a discount retailer when it comes to building materials, i.e., more Byggmax stores. We actually will open, I guess we will send out more information within short, a new store in Stockholm during Q2. In Q1, we are also opening a new showroom, a co-located showroom, Byggmax in a, in a, sorry, it's called the Skånska Byggvaror Showroom in the Byggmax store in Örebro. It is not that it is completely still, but we continue to strengthen our store network.
Very clear. Thank you. Second question is on M&A. You have done a few acquisitions in the past decade. First of all, which of these would you argue, in hindsight, has been the most successful? Secondly, what do you see in terms of further M&A potential? Is that a key strategy for you as well?
Thank you. I think the M&A acquisitions we made during 2020 to 2022 followed a clear strategy. They should either add the geography, market, or categories, product categories. Those were, you know, well thought through strategic investments that strengthen our overall customer offering. We are pleased with them. When it comes to, you know, future growth, I mean, we will secure to maintain continued profitable growth. We have some different levers for this, where one is, of course, to have a high customer focus and develop our resource map. Another is to continue to enhance our sales channels, making sales both in stores and in our e-com channels very smooth and efficient. Three, we have expansion, optimization of the store portfolio.
Number four is, you know, also to make selective add-on acquisitions. This is four levers we have to secure future growth. M&A is not, you know, a separate growth strategy, but an integrated part of tools that we can use, if we find it, you know, attractive, for securing profitable growth going forward.
Very good. Thank you very much.
Thanks.
Thank you. As a reminder, to ask a question, it is star followed by one on your telephone keypad. Our next question comes from Egil Dahl from Vevlen Gård. The line is now open. Please go ahead.
Hello. Karl and Helena. My question is, about new products and mix and also customer demand. In your presentation, you have, you are mentioning, modular buildings, pergola and greenhouses. Of course, these are expensive products. What are your expectations for Q1, Q2, and Q3 for these products? How is that affecting margins? Also, do you see in general how the development of the basket, customer basket? Thank you.
Thank you, Egil. As you mentioned, we have a couple of interesting products used in the portfolio. Of course, you know, when looking at the total sales, those will not have a large effect on sales during this high season. It shows that we all the time try to improve the assortment, to find new things, to make sure that we have news in the product portfolio, and also, you know, making sure to have attractive also private label things. I would say it is more, you know, to make sure that we always stay relevant when it comes to customer demand and so on, rather than having a huge effect during the quarter to come.
When it comes to customer demand, as we mentioned, right, we saw during Q1 that we saw a positive effect when it comes to demand for the a little bit larger renovation projects indoor, which was good to see. I guess that, you know, more house transactions and lower inflation also reduced interest rates in Sweden, maybe not in Norway so far. It's also, you know, traditional drivers for demand going forward. Of course, it's always hard, you know, predict the future, right? We need to really stay on top of things and make adjustments to the market conditions.
Thank you, Karl. And also your expectations for the general baskets, going forward.
The general basket, meaning a size of basket or, or?
Yeah, yeah, exactly. The customer, basket size.
No, but, you know, I think it's hard to tell. It's hard to predict the future. So, you know, I won't give you, you know, an exact answer on that or on the forecast. But I think, you know, the important thing for us is to always, you know, adjust and adapt to the existing market. I think that is something that we have shown that we have really been able to do during the last two years or so, right? The market has changed a lot. We have been able to adjust and adapt and see the fourth consecutive quarter of increased profitability.
Thank you very much.
Thank you.
Thank you. Our next question is from [Efthimios Langham] from SB1 Markets. Your line is now open. Please go ahead.
Hi there. Hi, Helena, and Karl. I just wanted to ask a question about your strategic inventory buildup. Is this something that you've moved earlier now this year compared to previous years? I was wondering if that's driven by expectations that the high season in Q2 is moved earlier in the quarter given a relatively mild weather?
Thank you [Efthimios] We always build up inventory for the high season. You know, Q2 and Q3 is where we have the highest demand for our core product. During the first months of the year, it's always about building up the inventory to the right level. What we've been able to do this year, due to the financial stability that we have secured, is that we have been able to build up earlier. We have also paid earlier, which has a good effect when it comes to our purchasing terms. I would say that, you know, we always build up this time of the year, but thanks to the strong financial stability that we have, we can do it in a more optimal way.
We have put a lot of attention throughout the entire organization to make sure that we order the right product at the right time and also make sure that we have the best purchasing terms for this. That is one thing. The other thing is that we have even more detail than before looking at the inventory, the stock level of each and every product to make sure that we have a lot of product, so that we are well stocked with a lot of product in our stores when it comes to the product that we foresee a high demand now during the, when we see the high season coming and the more outdoor project season.
I would say, you know, it's not about, you know, total demand necessarily, but broader and optimization to the strong financial position that we have.
Okay.
We can always adjust for going forward because we, you know, we take order every day.
Yes. Yes. That makes sense. Thank you very much. We do hear, though, from competitors of yours in Norway that the sales have started very strong in second quarter and accelerated from March. It is good to have a nice inventory ahead of this season. Just on that as well, have your suppliers announced any price increases now from April 1? Is that something that you've communicated?
No, we haven't communicated anything about us. I guess that, you know, prices go up and down when it comes to being in the scheduled time, but it's not the normal. We haven't communicated anything especially around this year.
Okay. Thank you. That has all to me. Thank you very much.
Thank you.
Thank you. We currently have no further questions, so I'll hand back to Karl for closing remarks.
Thank you a lot for participation and also for your questions. With that, we wish you a happy Easter and a wonderful spring. If not before, we are looking forward to meeting you again after our second quarter of 2025. Thank you.
This concludes today's call. You may now disconnect your line.