Welcome to Midsona Q3 Report 2026 presentation. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the speakers, President and CEO Henrik Hjalmarsson and CFO Niclas Lundin. Please go ahead.
Good morning, everybody, and welcome to the presentation of Midsona's third quarter 2026. My name is Henrik Hjalmarsson, I'm the President and CEO, and with me I have Niclas Lundin, CFO. We'll spend the coming 20 minutes or so going through an overview of the quarter, as well as a deep dive into the financials by Niclas, after which there will be plenty of time for questions. For those of you who are new to us, just a quick introduction to Midsona. We're a European natural and healthy food group. We are positioned in categories with clearly structurally growing demand, driven by health and sustainability trends. We combine a strong local brand platform with a scalable group of European brands. And we have a vision to become a leading European player within natural and healthy foods.
We've got sales of roughly SEK 3.6 billion the last 12 months, with a 4.3% EBIT margin, roughly 700 employees in seven European countries and 50 owned brands. Starting then with a summary of the third quarter, I thought we'd use the boxes here on the right-hand side to go through the overview of the quarter. Total sales grew by 1.7% in the quarter, driven then largely by the acquisition of Risenta in Sweden that we completed earlier in the year. Total organic growth, however, was a - 3.7%, driven mainly by a sales decline in contract manufacturing, where we're consistently optimizing for improved profitability, but also partially by owned consumer brands, which declined by 0.2% organically, then mainly driven by the development in Division North, and I'll come back to that.
If we continue right, EBIT margin was stable year-over-year, leading to an EBIT growth of SEK 1 million to SEK 46 million. That was fueled by a gross margin expansion by 0.3 percentage points to 29%, which in turn then was driven by a better mix, however, with a slightly negative net price–cost arbitrage, which I'll also come back to in a little bit. The EBIT was also negatively impacted by increased investments in marketing and a one-off credit loss in the Nordics. The investments in marketing, however, is clearly in line with our strategy to fuel our brands for continued profitable growth. Finally, then cash flows continued to improve to SEK 57 million , an improvement by SEK 9 million year-over-year, which then led us to a net debt to adjusted EBITDA of one, a considerable improvement versus the same time last year.
If we look then briefly at the year-to-date numbers, the first three quarters of the year, we have seen continued strength and profitability and growth in our own consumer brands. Net sales has a 2.1% decline year-to-date organically, however, again, driven mainly by contract manufacturing, partially linked to the fire in Spain that we had during last year, but also continuously optimizing our contract manufacturing business to drive margin. However, that has been mitigated by growth in our own consumer brands, which have grown by 0.7% organically so far in the year. If we look on the profit side, EBIT has strengthened considerably first nine months by SEK 25 million to SEK 111 million, which corresponds to an EBIT margin growth of 0.9 percentage points to 4.1%.
That, again, driven by a gross margin expansion, which is driven mainly by mix, partially then the growth in own consumer brands and a decline in contract manufacturing, but also through improved overhead efficiency, partially linked to the cost-saving program that we launched at the back end of last year. Although we also seen in the first nine months have increased investments in marketing, which then has a slight negative impact on our EBIT short term, but is very good and in line with our strategy for the longer term. Cash flow also, first nine months, clear improvement versus last year, and again, leaves us in a very good position in terms of our balance sheet. Looking then briefly at the development in the different divisions in the third quarter. Starting with the Nordics, where we saw an organic sales growth of -3%.
However, owned consumer brands growing considerably then at or growing positively at 1.9%. The negative organic sales growth largely driven by a decline in contract manufacturing. Gross margin slightly down by 0.1 percentage points, temporarily pressured by rising prices for transport and packaging, which is yet to be recovered in prices to customer and consumer. Hence a slightly reduced EBIT margin, partially then linked to the gross margin, but also with increased investments in marketing and the one-off credit loss that we saw in the Nordics, however, partly mitigated by overhead cost savings linked to the cost-saving program. Looking then at Division North, where we had a tough quarter in the third quarter with weak sales and organic change of -10.3%, driven largely by own consumer brands, but also own B2B brands, which have lost some of the transition momentum.
Gross margin saw a decline, mainly then driven by a negative mix move as we had a more negative sales development for own consumer brands than we did for contract manufacturing, and a consequential EBIT margin decline, mainly then related to a lower fixed cost coverage or a negative operational leverage development as we saw a sales decline in the quarter. Lastly, in Division South, with a more positive development, continuing the year-over-year profit improvements with organic sales increasing by 10.2%, largely driven by licensed brands, but also some of the own brands developing strongly and more profitable contract manufacturing in France. Own consumer brands in total came in flat year-over-year. However, it is fueled by continued strong growth in French grocery trade, while we have some more challenges in the French health food store business.
And a materially improved gross margin driven by continued efficiency improvements, but also improved sales mix. Looking instead at it from a portfolio perspective by category, starting with the organic products where we had a total organic sales development of -2%. However, we did see growth in our own consumer brands, where the marketing and innovation initiatives and the investments we are doing in our brands is paying off for several brands with strong organic growth. I will come back to one such example in a little bit. However, also with some challenges, particularly in Division North, but we should also recognize that the unusually hot summer in continental Europe has impacted the total category negatively with actually total industry-wide negative growth numbers at least the first half of the quarter as consumer habits have been impacted by the heat wave.
The brand growth is still not enough to compensate for contract manufacturing development. We are partially impacted by the fire in Spain, but also the previously alluded to optimization for profit. Looking at health foods, we saw an organic growth at -7%, which is driven by the optimization of contract manufacturing. On the branded side, we saw a mixed picture with several brands performing well, such as Friggs, I will come back to that, while some brands face challenges. And we have seen the Risenta brand off to a strong start as a fairly new part of the group and contributing to structural growth. Lastly, on the consumer health side, an organic sales growth of -3% with some key brands lagging behind on growth plans that requires additional focus to drive the implementation of the strategy and the growth trajectory. Again, I will come back to that.
And some brands being negatively impacted on the top-line perspective by a conscious optimization for profit. Just to make one example of the initiatives we are doing on the consumer health side, gathering our strong consumer health proposition with our strongest brand, Friggs, bringing supplements to the masses. So launching a new range, and this is just a few examples of mass market-focused, relatable product, very much in line with the popular and growing niches. So, focusing on very popular and highly growing products, like for example, creatine, but in a very approachable format, chewable tablets, and under the mainstream and very approachable brand Friggs. Launching this into the grocery trade, so approaching getting access to the mass market, with a very positive initial receipt, both from customers and from consumers.
So we are excited by the opportunities that this launch starts to open up, bringing trendy products into a more approachable and mass market format. I also thought I would relate back to the point I made about the strong growth that we see in parts of the organic portfolio, where we are doing a very good job leveraging a strong local position. So the Helios brand in Norway is a good example, where we have over the past two years achieved strong growth in combination with increased profitability, thanks to successfully leveraging clean eating interest and trends with agile and innovation and marketing plans and very disciplined omni-channel execution. So really proving that the logic and structure of the strategy is right and when successfully implemented, drives strong results.
I'm also pleased to see that whilst we're pleased with the profit improvement of SEK 1 million in the quarter and we're pleased with the strengthened cash flows, underlying, we're not happy with the total progress we're making in the quarter, and our ambitions are considerably higher than the growth that we achieve in the quarter. Structurally, we're still happy to see that we are, in a longer term perspective, making clear progress towards our targets with a material improvement on both the organic growth of our own consumer brands, our EBIT margin, as well as our leverage over the past couple of years. With that said, a few points on our short-term priorities to continue that trajectory and accelerate it even further. First of all, and most obviously, looking at turning around the development in the Division North after a tough quarter.
Accelerating improvement, with a focused revamp of our brand proposition, as well as a cost overlook to continue to optimize the business. We are working on accelerating the strategy implementation on the consumer health portfolio. I mentioned one example of this just a little while ago, but we see a material improvement to accelerate the growth in this category with a strong starting point that we have. Lastly, make sure that we maintain the positive momentum on several brands. Again, I mentioned one of those, Helios, just recently. We have several strong brands in the organic and health portfolio, where we also have a positive development that we want to continue to accelerate. With that, I'm going to hand over to Niclas, who's going to take you through the details of the financials.
Thank you, Henrik. Let me start with a financial summary for the quarter. Net sales were up by SEK 15 million , including Risenta impact of SEK 40 million. Adjusting for currency impact, totally organic growth came in at -3.7%. In line with Henrik's earlier comments, total gross margin improved by 0.3 percentage points, mainly from improved sales mix, with a gradual and deliberate shift from sales of lower profit contract manufacturing to higher profit owned consumer brands. In consequence, EBIT improved by SEK 1 million with an unchanged EBIT margin of 5.0%. Apart from the increased gross margin, we saw a clear positive impact on EBIT from the cost reduction program initiated in 2025. This was, however, partly offset by increased sales and marketing initiatives, as well as a larger bad debt provision in Norway.
The financial net continued to improve versus last year, this quarter with SEK 9 million to SEK +2 million , which during this quarter mainly was driven by positive FX effects. We also see the longer-term positive impact from more favorable conditions in the new financing agreement, as well as lower indebtedness. Net result landed on SEK 39 million , taking net IAC of SEK +1 million into consideration. IAC during the quarter was mainly made up by received insurance compensation related to business interruption insurance in Spain, SEK +7 million , and costs related to a fraud incident, SEK -5 million . This incident has led to a further reinforcement of the internal control environment, and we hope that most of the loss will be covered by the group's insurance. This is, however, not yet reflected in the accounts.
Cash flow from operating activities came in at SEK 57 million , which was an improvement of SEK 9 million versus last year. About 1/3 of the improvement was related to the P&L, and 2/3 were related to changes in working capital. The quarter ended with a leverage of 1.0 x, a substantial improvement versus last year, where we stood at 1.6x. Moving over to the sales development for the quarter. As already mentioned, net sales increased by SEK 50 million , equivalent to 1.7%. Structural growth from Risenta contributed SEK 40 million and FX effects an additional SEK 8 million . In consequence, the organic sales development was negative, with SEK - 33 million, equivalent to -3.7%.
It is worth noting that 90% of the organic sales decline is referable to contract manufacturing and business to business sales, that is parts of our business where we have taken a strategic decision to phase out and gradually replace contracts with low profitability. This development for contract manufacturing and business to business is also visible in the graph on the right, where we see a double-digit organic decline for both contract manufacturing and business to business. Our contract manufacturing business showed a decline in Division Nordics and Division North respectively, mainly related to the discontinued low profit contracts. But in Division South, contract manufacturing sales increased, mainly related to new and more profitable contracts in France. The B2B branded business in Germany is still under transition to focus on profit over volumes.
In Q3, we saw a positive effect on margin, however, volumes of new, more profitable contracts were not enough to compensate for the replaced old contracts. The license business declined by 2.2%, mainly referable to certain consumer health brands in the Nordics offering seasonal products. To round off net sales analysis, our own consumer brands came in with a slightly negative organic growth of -0.2% for the quarter. Besides a few exceptions, in particular related to Division North, we generally see good sales development for our larger prioritized brands, most of them within our organic product range. There is also good progress for our largest brand, Friggs, within the health food category.
In line with what Henrik previously touched upon, on a rolling 12-month basis, organic growth of our own consumer brands portfolio has improved by 3.7 percentage points versus Q3 last year. Let us head over to the quarterly EBIT development compared to last year. Higher volumes and improved gross margin jointly resulted in SEK 4 million more gross profit. This improvement, including impact of Risenta and FX adjusted, was mainly driven by a favorable sales mix. Sales, marketing, and administration expenses increased by SEK 7 million net, also including Risenta impact. We now see the full effect of our cost reduction program for 2025. This positive impact was, however, largely offset by increased investments in direct sales and marketing activities to facilitate future profitable growth.
OpEx in Q3 were also negatively impacted by a bad debt provision of SEK 3 million related to a customer in Norway going into reconstruction.
The majority of other income of SEK 2 million came from sale of equipment. The FX effect from translation and revaluation was SEK 2 million compared to last year. To conclude, EBIT landed on SEK 46 million, which was an improvement by SEK 1 million, with an unchanged EBIT margin of 5.0%. On the right-hand side table, we illustrate the quarterly and the rolling 12 EBIT development during the last two years, and it is encouraging to see the gradual improvement. We are rolling 12 EBIT increasing to SEK 158 million this quarter end, which is SEK 36 million higher than by the end of September last year. Consequently, rolling 12 EBIT margin has improved from 3.3% to 4.3%. Let us continue to the quarterly cash flow.
In Q3, we saw a continued buildup of inventory, partly seasonal, however, on a substantially lower level than in Q2 and much in line with Q3 last year. Receivables increased during the quarter, in part due to higher sales volumes and following the same seasonal pattern as in 2025. This negative working capital impact was partly offset by an increase in payables, in part related to renegotiated and improved supplier credit terms. To summarize, the operating cash flow landed at SEK 57 million, an improvement by SEK 9 million versus last year. As previously mentioned, about 1/3 of the improvement was related to the P&L, and 2/3 were related to changes in working capital.
The right-hand side illustrates the cash flow trend, displaying an increase of rolling 12 operating cash flow by SEK 68 million compared to Q3 2025, up to SEK 254 million.
We are approaching the end of the financial review, summarizing our cash and debt situation. The quarter ended with SEK 789 million in available cash, an increase of SEK 44 million versus last quarter, and SEK +133 million versus Q3 last year. Available cash now represents 22% of the last 12 months sales, which is a very healthy level. Finally, let us look at the net debt situation. In Q3, IFRS 16 related debt was increased by some SEK 30 million related to new rental contracts, taking IFRS 16 related net debt to SEK 132 million. Despite this increase, total net debt decreased by SEK 60 million to SEK 301 million during the quarter.
This means a continued historically low net debt in relation to adjusted EBITDA, including Risenta pro forma effect of 1.0 x, and equivalent to 0.7 x excluding IFRS 16 effects.
The current leverage is well within our financial target, establishing our strong financial position going forward. That rounds off the financial review, and back to you, Henrik.
Yes. Thank you very much. With that, we will open up for questions. Over to you, operator.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Alice Beer from ABG Sundal Collier. Please go ahead.
Hi, Henrik and Niclas. Thank you for the presentation. Can you hear me?
Yes.
Yes, Alice.
Great. You've said that packaging and transport costs are rising and that raw materials could follow this autumn. How much of the price increases you need have been accepted by retailers, and how long a lag should we expect before prices catching up?
Yeah. Hi, Alice. Good question. That varies a bit by geography, in all fairness, and most of those negotiations or discussions are actually ongoing right now. But if we look at the situation as it stands now, we remain, let's say, fairly optimistic to get coverage for what we see so far. However, we should recognize that given the unusually hot summer, and given the geopolitical situation, there is a risk that we will see more inflation coming through as the full impact on harvests after this. We're in the harvest period still, is seen. So far, we're quite optimistic in getting through what we see to protect the margins, but partially that remains to be seen as we see the impacts on the rest of the harvests.
Okay, great. Thank you for the clarity. Moving on then to, on contract manufacturing in the Nordics. How much of this low margin volume has led to exits, and how much of the fixed costs in the production facilities can you adjust and when?
Yeah. I think there is less and less to do, where that has been a conscious strategy over the past year or so to both do the thorough analysis and also the optimization of the portfolio. There might be some small parts still to optimize, but less so than what we've seen here in the past couple of quarters. We have done some good fixed cost optimization. In all fairness, we also have to recognize that even from a fixed cost coverage perspective, some of the contracts we've exited were questionable in terms of their marginal contribution. What I'll add is there is an important piece of the puzzle here. This relates particularly to one manufacturing site in the Nordics, and that is also the manufacturing site where we are moving in the Risenta production.
The Risenta production insourcing is part of the solution, and the optimization of this puzzle. Basically, very simply put, we are exiting low margin contract manufacturing business to give room for production of our own consumer brand in the shape of Risenta.
Great. Thank you. You talked about more transformative alternatives for Spain. Is the divestment being actively marketed, and what's the book value and run rate loss attached to the Spanish operation?
No, marketing of the business is not actively pursued, and when we talk about more longer-term transformative alternatives, I think here and now we're very committed to drive the business into profitable growth, positive cash flows. Longer term, actually, the fullest broad spectra of alternatives are available in terms of upping the investment levels further to accelerate the growth in a The vast majority of what we manufacture and market in Spain is tofu and tempeh, and that is a category on a European basis that's growing very rapidly. But there could also be all the way to parts divestment alternatives. But there's nothing actively marketed at this point. And I think the second question, we can't really answer off the top of our head, so we'll have to come back separately on that.
Okay, fair. Moving on to the brand portfolio review. How many of the tail brands are candidates? What share of sales do they represent, and what impairment risk sits on the brand intangibles?
Sorry, can you repeat that? We lost you for a second. Can you repeat, please?
Yeah, of course. On the brand portfolio review—
Yep
—how many of the tail brands are candidates, and what share of sales do they represent? Is there any impairment risks that sits on the brand intangibles?
I think that it's a bit too early to give a quantified response to your question. We are in a very structural shareholder value generation or capital allocation optimization perspective, reviewing the full breadth of the business. There are some potential tail brands that might be, how should I say, easier to execute from that perspective, but they will not have material impact, at least in the short term. They will have longer term positive impact on our profitability, otherwise we wouldn't take action, but they won't have material short-term impact, neither on the balance sheet nor on the income statement, I would say. But that perspective might change as we deepen the analysis, and then we'll have to come back to that during the next quarter.
Okay, great. Marketing spend is flagged as a margin drag again. What is the sequential increase, and when do you expect the volume payback?
Yeah. The sequential increase here in percent is, I would say, material if you look at the percent of marketing spend. In percent in terms of margin impact is not that material. We are talking about actually less than, well, less than 0.1 percentage points in total in the quarter. So it is impacting margin, but not that material in the quarter. We do expect to establish a new level, that is, it has gradually increased a bit, and we expect it to continue to gradually increase a little bit more before we believe that we reach a level where it is sustainably driving profitable growth for our brands. It is not like we are expecting a doubling from the current level or anything like that.
We expect another marginal increase, and could be of the order of, say, upwards of another 0.1 percentage points or so, in terms of, or maybe even. Actually, sorry, a bit more than that. Yeah. A bit more than that. Probably another half percent maybe, or something like that we would expect to see.
Okay. Just a final question from me. Q4 is seasonally the largest quarter, but Christmas volumes are being rationalized. What is the expected revenue impact of that in Q4 2026 versus Q4 2025?
Yeah. Specifically the Christmas volumes, we do not expect material impact versus we saw last year. We did see an impact last year. We are not expecting to see that material further impact this year. We do not think. Obviously, I think in terms of that, turning around that question, if you look at the trajectory specifically then on the own brand development, we expect to maintain and accelerate the momentum on the brands to have a good position. The key answer to your question in terms of assessing the outcome will be how quickly we can stabilize and then turn around the development, particularly for Division North then on the sales side. But we do not expect the material year-over-year impact on the Christmas volume side versus last year.
Okay. I understand that this might, just to follow up, be hard to answer, but how quickly can you do that? What is the sort of base case? Are we talking? Is it possible to see that effect in a quarter, or should we think more like a year?
I think we can see, if you start from the bottom, we can see quite quick. This was new news, obviously, that we did lose some listings in one mainstream retail operator that was quite important to us in the business here in the third quarter. If we start from the bottom, we can quite quickly start to adapt the cost base and take action to stabilize and improve the profit development. When it comes to, then we can also do what I would call tactical commercial initiatives on both the own brand side, but also on the contract manufacturing side. But to get sort of a strong full, that will stabilize the development. To get a full strong momentum swing is something that will take quarters rather than months.
Okay, great. Thank you. Very helpful for me.
There is a lot to be done from the bottom up of the P&L, if you will, to compensate and mitigate for the development even before the full impact of that will kick in.
Great. Perfect.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Okay. Thank you very much everybody for listening in and thereby we close this conference. Thank you. Bye-bye.
Bye-bye.