Good morning, everyone, and welcome to Humble Group's presentation for the third quarter of 2025. Many thanks for taking the time and calling in on this presentation. My name is Noel Abdayem, and I'm the new Acting CEO of Humble Group. With me today, I have the Group CFO, Johan Lennartsson.
Good morning, everyone.
For those of you who don't know me from before, I am the founder of the Humble Co., which is part of the group, and I have been part of Humble for many, many years, not only in the management team but also as part of the board. I know the group inside out, and I have had a long relationship with many of our entrepreneurs. To those of you calling in for the first time, welcome and thank you for joining the Humble journey. There will be a Q&A at the end of this presentation. Let's dive into the quarter. The third quarter marks a clear step forward for Humble Group, where we can see resilience and a solid organic growth, with revenue reaching almost SEK 2.1 billion.
We are delivering a strong cash flow generation, and I must say that I am proud to be part of a group that consistently delivers impressive growth numbers, and this quarter is not an exception. We've seen steady growth across all our key segments, which really demonstrates the strength of our business model, even in a challenging market environment. It shows that our diversified structure, our strong local teams, and our focus on long-term innovation, service, and brand building are working. Despite external headwinds, we continue to deliver solid results, and we are building a stronger foundation for sustainable growth ahead. Profitability and cash flow remain key priorities for us, and we have taken some steps in the right direction. Our financial position continues to strengthen, but we are not where we want to be yet, and we are fully committed to improving further.
Let's dig a bit deeper into the numbers. Over to you, Johan.
Thank you, Noel. Our net sales for the quarter amounted to nearly SEK 2.1 billion, and we can happily conclude that our last 12 months' figures passed an internal milestone of SEK 8 billion this quarter. The sales in the quarter corresponded to a total growth of 10% organically, and we had a negative currency impact of -3%. The underlying growth was mainly shown in our Nordic Distribution segment, where we had a strong demand for our customer offering. The segment grew their net sales by SEK 86 million for the quarter. We also saw a strong increase in sales of our confectionery products in the Future Snacking segment, which grew net sales by SEK 40 million, comprising a total growth of 17%.
Looking at the Sustainable Care segment, the overall net sales development decreased by 1%, but please bear in mind that we had a negative currency impact here of -5%, meaning that the underlying organic growth for this segment was 4% for the quarter. Looking at Quality Nutrition, we see that we have a fine recovery from previously some tougher periods in Q4 last year and especially Q1 this year, but we now start to see that orders are being a little bit more normalized, and we look forward to what we can achieve in the fourth quarter. Looking at the profitability, our gross profit amounted to SEK 636 million for the quarter, corresponding to an increase of SEK 28 million versus last year. The gross margin decreased to 30.4% from 31.2% in the same quarter last year.
The overall margin development was mainly impacted by a negative currency impact of, in total, SEK 22 million for the quarter, and this comes from we have a natural currency exposure in the Quality Nutrition segment, where we have an exposure towards the Australian dollar, where we had a negative impact of SEK 8 million, and we also have another natural exposure in the Sustainable Care segment, where we have our largest group company, Solent, a U.K.-based retailer company, where we had a negative gross profit impact of -SEK 12 million. Moreover, we also saw that we had a little bit unfavorable product mix in one of our strongest growing segments, Nordic Distribution, which led overall to a challenge to maintain the gross margin that we had in the previous quarter last year.
The bottom line is, we see this as a temporary mix effect and not a structural change in the underlying profitability of the group. If we continue looking at the underlying profitability, the adjusted EBITDA for the quarter amounted to SEK 143 million, corresponding to an EBITDA margin of 6.8%. We have previously invested heavily in sales and marketing in order to support our top-line growth, and this has also shown results leading to increased sales, but this has also had a negative contribution on the quarter with an increase in these investments of SEK 22 million. To be clear, we are not satisfied with the overall margin and profitability development. By saying that, going forward, we shift our focus from top-line investments to increasing margin expansion and trying to do our best in order to increase the profits from our subsidiaries, including also our hero brands.
That being said, we will still invest in marketing, but we will increase our focus to ensure that we have a satisfying return from the investments that we are doing. Previously, during the quarter, we've also communicated that we launched an efficiency program. We recognize the cost provision of SEK 52 million during the quarter. This includes also a provision for severance pay to the former CEO of SEK 12 million, but our expectation is that this efficiency program will contribute to the profitability in the next coming months, next 12 months, with around SEK 80 million.
Thank you, Johan. Let's talk a bit more about our segments. Starting off with Future Snacking, we continue to see a strong net sales growth, driven by an increased demand from our customers, and the profitability is developing well and in line with our expectations. Our arena confectionery business is performing strongly, and our main focus ahead is to fully utilize all available production capacity. We believe that the global Swedish candy trend is here to stay, and we want to make sure that we capitalize on it. At Gräns, which is one of our main production facilities for candy, we have finalized the lease agreement for the new factory. This is a really exciting project that will form the foundation for a significant increase in our candy production capacity, and we expect the new factory to be up and running by mid-2026.
We have already started discussions to fill up the new capacity, and it feels very promising. If we dig a bit into our brands in the segment, the True company continues to expand its product range, and the rollout of the True Dates is going according to plan, with strong traction in Scandinavia, Germany, and many other European markets. We have also received our first listings in the U.S. at the popular chain Sprouts and have a very interesting dialogue going on with some of the leading retailers in the U.S. I must say that I'm impressed of our ability to grow in the U.S. without spending a fortune on marketing. Next up is our Sustainable Care segment, where the net sales were in line with the previous quarter.
We're finally starting to see a recovery in the UK, where sales have been somewhat slower in earlier quarters due to challenging market conditions, but we are now back in line with previous years, which feels great. Combined with the strong cost control, this has contributed positively to the overall profitability for the quarter, and we continue to drive product innovation to regain our growth. Our licensing business, where we partner up with international brands, is also growing well and continues to deliver solid and satisfying results. We've also seen new product launches from the Humble Co., where the product range has expanded and the new rebranding is driving increased consumer engagement. Finally, the partnership with Bablana, which we first announced at the Capital Markets Day about a year ago, has now turned into reality.
We have already launched a few product lines within oral care and are happy to announce that our diapers have just hit the shelves at Dagab in Sweden, which includes popular retailers such as Hemshab, Willys, and City Gross. I really think that it's fantastic that we managed to replace some of the world's strongest brands with our innovations. If we continue to the Quality Nutrition segment, we have delivered a strong underlying growth, with net sales up 11% in the quarter. The gross profit was, however, negatively affected by currency movements, and we did also increase our marketing spend during the period. Initiatives that have not yet shown full results, and we are currently evaluating and adjusting these marketing investments moving forward.
Our drink line has not yet reached its full potential, which is, of course, disappointing, but the goal is to have production fully up and running by early 2026, and we are finalizing negotiations with many brands that want to move their production into Humble Group. On a positive note, we continue to see strong momentum in the sports nutrition category, particularly within the production of bars and protein powders. Finally, we have the Nordic Distribution segment, where we continue to see a strong demand, and our work with solid cost control has developed the profitability and kept the margin stable. Looking ahead, our company, Priwab, has signed a new warehouse contract, which will enable us to expand even faster, starting January 2026. For those of you who are not familiar with Priwab, it is one of our largest distribution companies, with more than SEK 2 billion in annual sales.
Thank you, Noel. Looking a bit about our cash flow for the quarter, we are happy to see that the quarter is one of our absolute strongest quarters in the company history, and we are satisfied with the overall cash flow development from the operations that amounted to SEK 195 million compared to SEK 142 million in the previous quarter. We continue to focus on improving our net working capital, especially to optimize the inventory levels in order to reduce cash from our warehouses, and we think there is a lot more to do here. We're not satisfied with the current levels, but we also see this as a long-term development project that we continue to focus on internally.
On the other positive side, the short-term liabilities had a positive cash flow impact by SEK 20 million, despite the fact that we repaid tax deferrals of SEK 45 million in the quarter, and adjusted for this repayment of taxes, the cash flow from operations amounted to SEK 240 million compared to SEK 142 million the previous year. Speaking of strong cash flows, this had also a positive contribution to our leverage that came in on 2.7 x adjusted EBITDA, excluding any impacts from leasing. We have spoken about the leverage before, but we are continuing to focus on this downward trend, but we also want to highlight that we expect some negative impact in the following quarters, as we have a few announced corpus investments that will have a negative impact on the overall leverage development.
Overall, as communicated earlier, we have a strong demand in our products and currently investing in production equipment in order to get the new facility at Grahns Konfektyr up and running, and we have also invested in a new additional bar production line in Australia. Both these capital investments are ongoing as we speak, and we expect them to be finalized during the second quarter next year.
Thank you, Johan. Finally, let's look ahead to what's next for Humble Group. As the new Acting CEO, my focus and mission are crystal clear. We need to become more profitable, and we will continue to drive organic growth, just as we have done before for a long time, but in a more efficient way within all of our existing companies. The management team is working closely with all portfolio companies, and we are doing a deep dive into what we can improve and how we can become even sharper. We are also working hard to strengthen our financial position, where we are aiming to reduce leverage toward our financial goals over time and maintain a strong cash flow generation.
I will make sure that we deliver on our SEK 80 million efficiency program that we announced a few weeks ago, and it will be a central focus for us in the upcoming weeks. More than SEK 50 million of this has already been set off for this quarter. On top of that, we will continue to streamline the group through selected strategic initiatives and potential divestments, and we have already started evaluating several opportunities as part of our ongoing structural review, with the aim to create a more focused, profitable, and long-term sustainable group. I am very excited about the road ahead, and I am, together with my team, committed to delivering value to all of our customers, partners, and shareholders. Thank you all for listening in, and a big thank you to all of our entrepreneurs for your hard work. Without you, we are nothing.
We will now open up for the Q&A.
Thank you, Noel, and I'm going through the questions that we've received so far. If you have any questions, please just send them in. First of all, the first question I see here is from Victor at DM Beckanegge. What happened to the margin in the Quality Nutrition? The margin declined 9% year on year to - 2.5%, and I think I can reply to that one. Mainly, we've seen some challenges in the profitability in our Australian part of the business, where we had really strong comparatives last year. Here are some of the marketing activities that we've invested in, where we haven't really seen the full potential or the full output for it yet. Please also bear in mind that we've had some FX headwinds in this segment, and we've also increased the marketing spend for the quarter.
This is something that we are now reviewing as we speak to see how we can take a turn on that going forward. Also, please bear in mind that the unadjusted numbers in the report also include cost provisions that hit the overall profit, so reviewing the profitability should be in what we refer to as the adjusted profitability targets. Forward. Yeah, Noel, maybe a little bit about the next question is about the U.S. acting CEO.
I got a question here. How long I will remain as CEO and how I balance my new role as the Acting CEO with many of our other engagements. What I want to say is that my full focus right now is my role at Humble Group, and it's important to mention that Humble is one of my largest holdings, and it's extremely important to me that we do what's best for the group. I don't have a fixed time limit. I will be here as long as needed, and it's up to the board to decide on the appointment of the new CEO. They have, however, initiated a recruitment process, but we are not stressing anything. I'm here as long as needed. We have another question that came in here, how the launch of the new website, SwedishCandy.com, has been received. It's been received well, I would say.
We've managed to obviously get the strongest IP on the market, not only on the domain but also on the social media accounts, and we just started sales a few days ago. For those who are interested to see how we work, you can check out TikTok or any other channels. Another question that came in is if we see a potential of working with any major American influencer, and I would say as of now, we're working with micro-influencers, and we want to make sure that we can see the results of our investments before we look at potential larger partnerships.
Thank you, Noel. Thank you all for writing so many questions, and we're just going to try to capture them all. One next question from Victor at DM Beckanegge is related to the efficiency program. We're highly communicated from SEK 35 million to SEK 52 million, but expected savings remain the same. Yes, here we can just conclude on after we communicated about the efficiency program, we had also a change of CEO, and this was a decision taken in September, but with a postponed announcement. There is a cost related to the former CEO of SEK 12 million recognized in the third quarter. That is the difference that you see in the numbers, but from the previously communicated numbers, there are no major differences from what we see today.
Also looking at the question from Linus at Nordea, the Future Snacking, we had a strong organic growth with an adjusted EBITDA margin that declined to 11.6% from 13%. What drove the margin compression? Here we can say, in general, we had a strong quarter for the Future Snacking, but we've invested into marketing and sales activities to make our brands to give them the full potential plan. We also had a minor negative currency impact, but not very big, but that's the main explanation why we have a little bit lower margin in this quarter. Let's see what else we have. Noel, maybe you would like to elaborate a little bit on the insights from the U.S. market.
Absolutely. As of now, when we look at the Future Snacking arm of the business, we are focusing on getting listings for our true dates mainly, and we're happy to announce that the perception of the product that we have developed is great, and we are about to launch with some of the major U.S. retailers in the upcoming months. We can't mention them yet, but we will, of course, get out with the info when we can. Worth mentioning, because I see a lot of questions coming in here about the Swedish Candy trend, is that we already do quite a lot of business to the U.S. market. Many of the websites and many of the retailers that actually sell the Swedish Candy today buy something from Humble, and it can either be directly through one of our distributors or directly through one of our factories.
We are targeting the U.S. for the Swedish Candy market, and it's going well.
Thank you, Noel. Another question from Linus here is if we can share some details on the headcount reductions and organizational changes from the efficiency program and if we can expect some divestments. Very briefly, there are no major changes from what we already communicated in headcounts. It's around 70 FTEs that are affected from these changes. Some changes are already executed, and we're working on making sure, as Noel said, to deliver the full potential for the coming 12 months. In terms of divestments, Noel, would you share some thoughts on what we are thinking there?
We are looking at potential divestments. I won't mention any type of specific company as of now, but our focus is to streamline the group and make Humble Group a bit more understandable to understand moving ahead.
Thank you, Noel. Question from Mustafar. What kind of M&A activities can we expect going forward?
I would say that we are still looking at M&A activity and potentials, but moving ahead, I think bolt-ons makes more sense for us, where we can integrate the M&A target fastly into our current structure. We are in both a divestment mode, but we are, at the same time, looking at new opportunities as well, where we feel that we have a clearer focus and can get better investment results.
Thank you, Noel. Question from Serge here at Agria Capital. Can you share your expectations for the fourth quarter and the upcoming Christmas season in terms of demand and organic growth and the margin outlook? In general, it's very early on to say a little bit how we foresee the fourth quarter in the coming quarter, but generally, it is our strongest quarter historically, so we are excited to see where we will end up. That's basically what we can say right now. There are a lot of questions coming in, so we're just trying to get them published, all of them. Let's see how we acquisitions. Let's see if we can get it here as well. Just a few last questions. We saw we got one from the Moose here as well, planning acquisitions in 2026.
I think Noel has already replied to that one, but one from Anders here as well. You mentioned that you're evaluating marketing investments in the Quality Nutrition. Are you also evaluating the size of the market investments in Future Snacking?
We are, with the mindset of becoming more profitable, we need to make sure that we look at the marketing investments that historically had been done and moving ahead will be done. I believe that many of our companies have reached the size where they can still grow nicely without having to spend too much marketing money. This is a discussion that is ongoing with each single company, and I think that we can extract some fast results from that activity moving ahead.
Thank you, Noel. I think we have covered most of the questions that are coming in today. There are a lot of questions from you, and we appreciate your engagement. Yeah, do you want to have some final words, Noel?
Thank you all for calling in. As mentioned, we are all very excited about the road ahead, and thank you for your support.
Thank you so much for listening in today.