Hello, everyone, and thank you for joining the Byggmax interim report Q3. My name is Molly, and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad, and if you change your mind, please press star followed by two. I will now hand you over to your host, Karl Sandlund, CEO, to begin. Please go ahead, Karl.
Thank you very much. Thank you all for joining us today as we present Byggmax Group's interim report for the third quarter of 2026. As you heard, I am Karl Sandlund, CEO, and with me is also Helena Nathhorst, our CFO. The presentation can be found on our website as usual, and we will guide you to the relevant sections during the call. I will start with a brief business update before moving on to Helena and the review of the financials. As always, as you heard, we will conclude with a Q&A session. We start with the presentation with an overview that you can find on page number two. The third quarter is important to us. It is part of our high season, where we have a very strong focus on operations, and performance has been robust throughout the full season.
As you already might have seen, we continue to improve our profitability in the quarter. In addition to that, we further strengthen our financial position. Sales, looking into the quarter, was 7.1% higher than last year, and increased revenue in combination with a continued high gross margin resulted in an improved profit. We see that the growth is driven by volume. We have more customers and larger baskets, and several of our core categories developed positively. To mention a few, timber products related to energy efficiency and insulation, as well as garden, as a few examples. In addition to the improved result, we have continued to strengthen our financial position and also with investments in organic growth, increased inventory levels and ordinary dividends to our shareholders. Cash flow from our operations has further reduced net debt compared to last year.
Therefore, as you might have seen, the board of directors has decided to exercise the authorization granted by the AGM and initiate repurchase of own shares. I will come back more both to the financials and give a bit more details about this share buyback program in just a minute. Again, a quarter with strong performance, profitability and financial position. This secures a solid foundation as we are continuing to develop Byggmax and transformation to enhance customer value and to further support long-term profitable growth. Before we continue into the quarter in more details, slide three. It is just a brief overview for those who might be less familiar with us. We at Byggmax was founded in 1993. We have today 210 stores across four Nordic markets.
We serve primarily consumers with a clear focus on building materials for home maintenance, with easy access and a high product availability in our stores. In addition to the Byggmax brand, we operate Right Price Tiles in Norway, which is focused on tiles and bathroom. We also have Skånska Byggvaror offering products such as conservatories and greenhouses. As a foundation, we are built for fast and easy shopping, and our drive-in concept makes it convenient to purchase heavy building materials, while our efficient eCom enables customers both for lower basket volumes for click and collect, but also for home delivery. At the core of our model is the commitment to the best price. We are low price. This is enabled by large-scale purchasing as well as very highly efficient operating models across the entire organization. As usual, a brief update on the macro environment.
You find it on slide number four, where we see that consumer conditions are gradually stabilizing, although with differences. Sweden is showing the clearer improvement. Consumer confidence rose in the quarter, and housing activity has also strengthened. In other Nordics, the picture is a little bit more mixed, with consumer confidence still lower, and in addition, inflation remains slightly higher than in Sweden. For us, this is in our sales figures, with Sweden showing the highest growth in the quarter, while local currency sales outside of Sweden also grew, but at a little slower pace than in Sweden. But overall, it's very encouraging to see strong consumer optimism is translating into higher sales activity. Turning to our priorities for the third quarter, starting on slide number five.
Well, as mentioned, operational execution is our foremost priority during the peak season because, as you know, activity in our second and third quarters are almost twice the level seen in the winter quarters, which places significant demand on staffing, logistics, deliveries, and so on. I think we have managed this very well during this season. Beyond operational delivery, we have placed particular emphasis on strengthening the in-store customer experience. So this is reflected in a strong Net Promoter Score, which was at 56 in September. We see that our initiatives to enhance logistics and supply, both to our stores but also very critical customers, are also gaining traction, where we have further reduced the incidents of stockouts with a particular focus on our larger stores. We have also deliberately increased our inventory levels somewhat over the summer and heading into fall.
Supported by our strong financial position, we can invest selectively in availability where it has commercial impact, while of course applying discipline, demand-led inventory management to protect our overall working capital. At the same time as we are focusing on operational execution, we continuously refine and develop our customer proposition. You see some examples on slide number six, where we most recently, for example, have renewed our flooring offering. We have since long had a strong position in flooring through both a curated in-store range, but also complemented by a broader assortment online. Now with the renewed range, we see that we have further sharpened the assortment to even better reflect customer demand, and we can offer affordable flooring across all key categories.
Ahead of the summer season, we also expanded our decking offering with the introduction of a premium range, broadening this assortment in a prioritized category for us. We see that more customers are moving away from standard decking and choosing either our premium decking or wider boards for their outdoor spaces. Then finally, we continue to see positive effects from the improvements made to our e-commerce proposition. The e-commerce channel again grew faster than other channels during the quarter, and the customers clearly value our ability to deliver heavy building materials directly to their homes or for click and collect in the stores. We are now taking the next steps on our journey, and you see that on slide seven. Our profitability and strong financial position provide a very solid foundation.
With this foundation in place, we are entering the next phase of our development, where we will build on our operational strength by becoming even more customer-focused and commercially driven across the value chain, from assortment and purchasing to the in-store experience. We aim to strengthen our position in building materials, but also to become more relevant by meeting a wide range of homeowners' needs. The ambition is to expand our customer base and also to drive profitable growth through assortment development and further strength and sales effectiveness in our stores and online channels. At the same time, we will maintain strong cash generation and prioritize our resources towards areas with the highest potential. To deliver on these ambitions we have, we are focusing on four areas.
First, we will strengthen our understanding of customer needs and purchasing journeys, and the launch of our customer program is one important step enabling us to offer more relevant assortment and more targeted communication. Second, we will continue to develop our customer offering based on the customer needs, and this includes complementing existing range, but also to evaluate selected adjacent opportunities and improving how the offer is presented and activated across our sales channels. Third, while our in-store operations are a clear strength, we see further potential to become even more customer-oriented and commercially effective. This means improving how we support customers in store, enhancing customer experience, but also strengthening conversion and increasing the average basket size. Finally, these initiatives will be supported by the continued use of AI and other new tech.
We have already, as mentioned before, seen positive effect in selected areas, and we see further opportunities to support our store teams to streamline admin processes and also to deliver better customer experience. Taken together, this initiative represents a gradual transformation in how we create value and drive profitable growth going forward. With that, over to Helena and our financials.
Thank you, Karl. I will take you through the financial development in the quarter, our cash flow, and our capital structure. Let me start, as usual, with a slightly longer-term perspective before turning to the quarter. We are on slide eight. The chart illustrates the earnings progress we have delivered over recent years. While rolling 12-month sales have remained broadly stable, the rolling 12 months EBITA margin has increased from around 3% two years ago to 6.4% today. This margin expansion reflects the work we have done to strengthen gross margins and improve cost efficiency across the business. The progress is action driven rather than driven by recovery in the market, and it gives us a stronger starting point as we now focus even more on commercial development and profitable growth, as just described by Karl. Turning to the quarter and the EBITA bridge on slide nine.
Sales increased by 7.1%, including a positive currency effect of 1.5 percentage points. Like-for-like sales increased by 5.1%, and growth was primarily volume driven. Gross profit increased by SEK 48 million. Gross margin was 37.2%, close to last year, meaning that the margin remained at a very strong historic level. Higher purchasing volumes triggered increased supplier bonuses and supplier cash discounts, and it helped to offset a weaker underlying product margin development in the quarter. OpEx increased by SEK 26 million, a higher increase of 8.3%. Around 40% of the increase relates to currency effects. The remaining increase primarily reflects sales driving investments in marketing, IT, and the in-store customer offer, including the renewed flooring range that Karl described earlier. Personnel costs remained well controlled in the quarter. Overall, this means that the EBITA increased by SEK 24 million to SEK 296 million, and the EBITA margin improved to 14.2%.
On slide 10, we have the cash flow. The cash flow from operating activities on a rolling 12-month basis was SEK 765 million. This is lower than last year because we have increased working capital through higher inventory levels. This is a deliberate choice. Strong availability has supported the high season, reduced out-of-stock situations, and also positioned us well for autumn and winter season. We will continue to balance inventory levels against demand and capital efficiency. Investment levels remain selective and disciplined. CapEx increased modestly, mainly reflecting investments in our ERP upgrade and other IT capabilities that support future automation and AI. Even after this increase, CapEx remains below historic levels. Our financial position remains very strong, as seen on slide 11. Net debt, excluding IFRS 16, amounts to SEK 70 million at the end of the quarter, compared with SEK 196 million a year ago.
Net debt to EBITA was 0.1x , down from 0.4x last year and well below the covenant limit. Net debt naturally varies over the year due to seasonality and due to inventory buildup ahead of high season. However, our leverage remains low, and we have substantial covenant headroom and unutilized credit facilities. Before I hand back to Karl, we are on slide 12. Against this strong position and background, the board has decided to initiate a share buyback program of up to SEK 60 million. The program starts on October 26th and may continue until the 2027 annual general meeting. The program will be carried out in accordance with MAR and safe harbor regulation. An independent investing firm will manage the repurchases on Nasdaq Stockholm and make all decisions on the timing of the purchases independently of Byggmax.
This program complements our dividend policy and reflects the strength of our balance sheet and cash generation while maintaining financial flexibility to invest in the group's growth strategy. The board will continue to evaluate the capital structure over time. The board's long-term ambition is to use share repurchases alongside dividends as part of a balanced approach to capital allocation. With that, I will hand back to Karl for a short summary before we open up for questions.
Thank you very much, Helena. Please move to slide 13. Well, as you heard, we delivered a very solid Q3, 7.1% sales growth, an EBITA margin of 14.2%, and a very robust financial position. As you heard Helena say, also as a result, the launch of a share buyback program. As we move forward, our immediate priority is to mobilize the next phase for our transformation. We have built a strong operational foundation, and we would now use that strength to become even more customer focused and more commercially effective. We will sharpen our commercial execution across the full value chain from how we develop and source our offer to how we present, activate, and sell it in stores and online. This is about turning customer insight into better choices and a stronger execution because the direction is clear.
Preserve strength that defines Byggmax, aim to drive profitable growth and build a stronger company for customers, employees, and shareholders. This concludes our presentation, and thank you for your attention so far, and now we welcome your questions.
Thank you, Karl. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask a question, please ensure that your device is unmuted locally. Our first question is from Benjamin Wahlstedt at ABG Sundal Collier. Benjamin, you are now live.
Thank you and good morning. I have two shorter questions for you this morning. First of all, do you think it's fair of me to assume that your growth in this quarter is more broad-based than previously. I am thinking you are now commenting on large project demand improving after speaking about smaller projects in recent quarters, or am I reading too much into that comment?
Well, thank you, Benjamin. I think you are right. As mentioned, we see especially in Sweden that market condition improved during the quarter with housing activity, consumer confidence, and so on. We have seen during the quarter a broader growth across categories. Yes, I would say that would be correct during the quarter.
Thank you. Secondly, I want to ask about OpEx inflation. I was wondering if you could give us a rough idea of the share of the OpEx step-up that is related to, let us call it IT costs or costs of a more recurring nature, and what is another marketing campaign or stuff like that you can essentially cancel?
Helena, I do not know if you want to try to answer that.
I would say quite a lot of the cost, obviously, some part of it is the volume driven related, so that is recurring. But the IT project is more volatile as well. It is between different quarters that could be increased. The majority and marketing obviously is definitely not really recurring yet. It is an action driven and the flooring department is also a specific decision. To a material part, currency is difficult to predict, but a material part of the increase is driven by decisions and not to the full extent recurring.
Thank you. Is it possible to give us an indication of the magnitude of, for example, IT projects? You note that they are recurring, would you say Q3 2026? Is that a sort of a high-cost quarter or somewhere in the middle, or how should we think about that?
Well, currency, as I mentioned, I quoted the quite material impact from transaction translation this quarter, and I would say that maybe, I don't know, SEK 2 million, SEK 3 million of the cost base has been things that will be recurring.
All right. Perfect. Thank you very much. That is all I had for you today.
Thank you.
Thank you.
Thank you very much, Benjamin. Our next question comes from Niklas Ekman at DNB Carnegie. Niklas, you are now live.
Thank you, and good morning as well. I am just noting here that it has been a few quarters now with quite soft sales growth, but strong margin expansion, and Q3 seems to be a little bit of the opposite. You have much better like-for-like growth, but your gross margin is lower, the higher OpEx is increasing. I am just curious what to read into this, and at least for the coming quarters. Is this shift here mainly due to comparisons and currency effects, or would you say that this is a deliberate shift from your end towards more of a return to growth, and as a result, should we maybe expect a little less upside on gross margin and cost control in coming quarters and maybe more from sales growth?
Thank you, Niklas. Maybe Helena can add anything more on the cost side if I try to start with the sales side. Well, as mentioned, sales in this quarter was driven by more customers and higher volume. Also, as mentioned, we see a broader demand, a broader growth across the categories. That led to a slightly lower underlying product margin from a pure mix effect perspective. Still, you should remember that last Q3, the gross margin we had back then, I think it was the all-time high of a Q3, and now we are 0.2 percentage point from that. So it is still a very high margin. But of course, product mix effect can have effect on the overall gross margin, even though we have the same margin per product. So it is more of a basket effect rather than anything else.
It is always hard to try to predict that kind of margin because it depends on the demand from different categories. So I think it is hard to say that. But as we have said before, when we have more volume in larger projects, then it tends to have a little bit lower margin than in the smaller ones. When it comes to OpEx, I do not know if you answered, or if it is anything else, Helena, to add on OpEx going forward.
No, but I will emphasize that cost control and scalability is still the business model. Obviously, some increase that is volume related, but it is more action-driven increases. As mentioned on the call, we do some actions on commercializing the stores, but in a controlled way, I would say that it should be.
Okay. Very clear. Thank you. You mentioned here earlier, a focus on a wider product assortment. Can you just tell us here what this implies in a store? How many SKUs does a typical Byggmax store have today, and what will this change imply? Will it be a marked increase in number of SKUs, for instance?
Thank you again. Well, as mentioned, we aim to both strengthen our position when it comes to the building materials, but also to be more relevant to more customers in more occasions. By using smart customer insights and really try to understand our customers, we aim to continuously improve or renew parts of our assortment. Of course, the core will be the core. All the time try to see how we can renew ourselves when it comes to this. The flooring department, I think, is a very good example during this quarter. A typical Byggmax store today has, depending on store concept, around 3,000 SKUs. I am not saying that we will expand that massively. It is also about all the time trying to renew the assortment and so on.
We do not have a target on number of products, but all the time try to be relevant and see how we can continuously make an assortment, make an offer that is even more attractive to our customers.
Very clear. Thanks. Just a final question. I note that your store base has been quite stable in the last three years, and year to date, you have actually net closed one store. Now you are also announcing new contracts. It seems like you are aiming for a return to net openings in 2027. Is that a deliberate choice now? Are you seeing more focus on store expansion going forward, and where would these stores be? What kind of potential do you see?
Well, thank you. Our overall overarching strategy remains unchanged. We will continue driving profitable growth, where the pace of new stores varies with market conditions. Our overall strategy is an ambition for even more customers to have convenient access to an affordable building materials retailer, more Byggmax stores. That said, we also have significant potential in increasing volume of sales within our existing store network, and that is also a priority. So far, we have said that we have announced three more stores for next year, and I hope that we can find more attractive locations to build an even stronger store network. We have a foundation with several pillars when it comes to the growth. One is optimizing the store portfolio, but we have also potential in our existing store network and in our eCom channels.
But as you said, at least three more stores for next year.
Very clear. Thank you for taking my questions.
Thank you.
Thank you, Niklas. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. To unregister a question, please press star followed by two. We will now pause briefly for any final questions to be registered. We currently have no further questions, so I'll hand back to Karl for closing remarks.
Well, thank you a lot for your time, your attention, and for your questions. If not before, we really look forward to connecting when we have our fourth quarter report. Thank you.
This concludes today's call. Thank you for joining. You may now disconnect your lines.