Okay, let's start. Welcome to the presentation of Q4 and 2024. It has been a quite tough year, I must say, with a very tough market. I saw, for example, that the index was down in Sweden, was down in Q4 again, and it's for 12 quarters in a row. And that has actually never happened in the 27 years we have been public for 26 or whatever it is. So, so I'm surprised because the economy don't take off at all. The only place we can see geographically are stronger is the U.S., partly Canada. Canada can also depending on that we still have quite more market shares, but I would say that Sweden is probably the most depressed country as we see it in, in Europe, followed by Germany. We maybe see also small positive or get small positive signs in, in the U.K..
I will not go through this. Nothing new has happened, and I will talk more about new establishment later on. The only thing I can comment here because I guess some, it's a lot of people that wonder what's happened with the duties and with Trump and all these things. You can say I can't say that we foresee those things, but we did know that it will be unstable. I'm very happy we opened up the sourcing office in Alexandria in Egypt. We are well prepared now there, and Alexandria is also handling the North Africa, which means that we can switch production quite quick. I'm not so scared of that.
Of course, it can be that we have containers on the way home and if they put in a duty, from day one or next week, while we have goods on the sea, we can have a hit. But for the longer term, I'm not worried at all about those things. And we are very used to handle it, I must say, because all this time we have New Wave, it has been quota-free, it has been Swedish quotas or U.K quotas and E.U. quotas and the duties up and down depending on how they classify the countries and so on. And we are so well spread out today, so within half a year or something, we can switch to any country.
I hope he don't put high duties on all countries, but if he do even that, you can say that doesn't will change anything either because then it's equal for all suppliers. That will means that the consumer will pay it in the end. Yeah, nothing new here. Not here yet. Here is one very important part. We will go much more heavily into Canada and also increase what you can say organic in one way establishment. James Harvest, Printer Active Wear, the second biggest brands we have on corporate or promo wear, will establish a stock as soon as possible in Montreal, where we already have a company, but we don't have James Harvest, Printer Active Wear there. It will be active from Q4 in best case and Q1 worst case. That's depending on the lead times.
It's as usual that we can't sell things we don't have on the corporate side. Then the second launch in Canada is ProJob that we establish, also a warehouse and, or we have the warehouse, we establish the stock and the sales team and so on in Toronto. And that's probably a little bit longer lead time on the work wear than on the promo wear. So that's probably Q1 2026. We will go in full with Craft Team wear in Canada and with own stocks. Today we sell a little in Canada from the U.S. stocks, but first of all, we see big opportunities in Canada. And second of all, we need a local stock there. You can say some of the competitors, for example, on corporate or promo in Canada have up to three distribution centers.
So to run Canada from the U.S. is not possible. But we have very, very positive reactions in Canada regarding the team wear as well as we have in U.S. So I hope it will start showing in the figures from second half of this year in the U.S. already. And we have already signed quite many clubs. We also are looking to and will, but I can't say which quarter, set up another distribution center for Cutter & Buck. That company developed very, very well, but we have still a lousy service in the southern U.S. So most probably it will be in Texas. It's not decided yet, but we're looking for facilities and so on. It's still like this that it happened most things otherwise on the Craft side and the launch in the U.S. is actually the interest is over my expectations.
It's very, very few clients that are not really interested in distributing Craft. So I'm very happy for that. It's also a market that are worth much more than in Europe. It's most of it is organized in private clubs and schools. And for example, a soccer player in the U.S. are more or less forced to buy. We can have other negative comments about that in one way, but they are more or less forced to buy all equipment and they are worth roughly double in buying for individual than a Swedish normal football club, for example. So it's a huge market. Otherwise everything is going more or less as planned on the team wear. We still continue to invest in team wear and really grow.
The last national team was the Swedish table tennis team that we signed yesterday, six-year agreement with. And that also I'm very happy for because table tennis is now growing very quick in Sweden, for example. And there, of course, thanks to Olympic games. So they will play and compete in Craft over the coming six years. And there you have the table tennis guys. And you can also see it, for example, now on that the interest has increased a lot because more or less every club have a queue for young people that want to come in and play. All clubs in Stockholm this time, no, Ängby SK, Spårvägens, Hammarby, they have all a lot of young people in a queue that want to train. And that's, of course, a really big pity in one way that that it's not space for everybody.
You can also notice it, for example, on television where I think it's the first time since Waldner that actually SVT was sending. The last one was Singapore Smash, I think if I remember correctly. So I'm very happy for that agreement. Yeah, not so much to say. Yeah, Gifts & Home Furnishings, it's nothing new. We are still fighting. It's toughest area for us. I was not, of course, happy with last year. Here we have the same problem, you can say, as we have on the sports side. It's a decreasing sales among all the clients. So there we will have to fight. The quarter, we increased 3%. In one way, I don't think I should be CEO if I'm happy with 3%.
On the other side, to make 3% in this market, I think is very, very strong. And we continue to take market share all the time. The promo sales channel is up 5%, operating result SEK 56 million, less than last year, which I think is a very, very good result, under those circumstances that we also continue to invest in the markets and especially Germany and U.S. that continue with the warehouses, optimizations and so on. So we don't slow down, those investments. And operating margin 16.4%. Also I must say I'm not happy with, but, again, under the circumstances. Sales we have discussed increase. Yeah, that's all said already. Operating segment, you can say promo was up, that Sports & L eisure is up 6% is quite fantastic in a market that are down, down, down, down, down. So there I'm very happy.
Gifts and home furnishing a little bit down. If you look at the areas, U.S. 3% up, Sweden 6% down. I think it's two reasons for Sweden. The one is again the market and the economy. The second reason is that we have much more difficult to grow or defend the sales in a country with so big market shares as we have here. It's actually much easier for us if you look in other countries where we have much smaller market shares. Central Europe +5%. I'm very happy with that. Also rest of Nordic countries is +8%, which I think is a very strong number. That's especially Norway that have a very good growth.
Finally, you can say the investments that we did inside skiing in Norway where we took the biathlon team, the cross-country team, and Nordic Combined finally pays off in sales. It took a longer time than I thought, but it's not the easiest market in the world on skiing because you have so many Norwegian brands in it. Now people start to think Craft is Norwegian and that's very good. Southern Europe -4% and finally other countries, which is Canada and trading, +38%. And there I've said in every report that the trading business is very up and down. It's a few big orders. Sometimes they come in one quarter, sometimes the next quarter. So it looks very good, but it's not as good as it looks.
Another quarter when it's not good, it can be better than it shows because we have it in order but not delivered. As we see then, the U.S. is the biggest market for us today. If you look at the gross margin 50%, there I'm quite happy actually, even if it's lower than last year. I think it's very, very, very stable. Or to have 50% in this market I think is really good. I was a little bit afraid that it could have been lower because I've, as I said, both I think in Q1, Q2 and Q3 reports, we have a price pressure down, especially on the basics. Basics is, as you know, a huge business for us with t-shirt, polos, sweatshirts and so on. So there I'm quite, quite, satisfied.
Otherwise external cost, I think it's under really good control, both the external and personal costs. If we look at what the inflation have been the last one, two years, I think it's good control. I'm very happy for the warehouses we already have done with automation and the warehouses that are in progress, for that because that's one way to really increase efficiency. It comes down in operating profit then on 462 and a significantly lower financial costs, 27.6% versus 38.1%. It's down, if I count quick, nearly around 25%. The profit per share then on 2.6. Here I think I have already mentioned most things, but you can say that Q4 was actually a bit stronger compared with the quarters before.
So, for example, again, I'm very happy with the sports leisure and those figures. And it also show that I think Craft is also in a long term in a very good way. Cash flow, SEK 413 million, no, sorry, SEK 545 million, which is also I think good. And if we look at the cash flow for the year, yeah, we will do later. The balance sheet again, extremely strong. We had a goal to have an equity ratio on 30% before the financial crash. And after our experience there, we raised it up to 40%. And today we are, I think on 60%, what is it, Lars, 63.7% or something. Yeah. And SEK 7.2 billion in own capital. And this of course gave us the possibilities to continue to look after acquisitions and hopefully do some acquisitions.
I think I get questions about that every interview. That why haven't anything happened. The answer is quite simple. We haven't found any that we really think is attractive enough, and we should absolutely not go around and buy companies just to show growth. I mean, when we acquire, we do it and should live with it for the long term. We must also see the possibility to grow them both in sales and profit, but I, yeah, I don't know how many do you think we have looked at the last two years. We are on 100, 200, 100. So more than I can count quick in my head at least, and sooner or later I hope it comes up, something, and it's good to have the financial muscles to do it.
And also, of course, now when we build up new stocks and new logistics in U.S. and Canada, we have a very, very safe financial situation and are able to do that. And there of course, I can say already now that the cash flow will of course be affected in Q4 or Q1 negatively. And our stock will increase when we go in and do those things in Canada and U.S. So it's not a surprise for anybody. January, December, more or less, sales in line with prior year. And also in both channels. Here is not so much comment. Here is then clearly US, the biggest market now with 2% growth. And you can say Sweden. I mean, it's still a little bit better than it was in Q4 if you look at the year. But otherwise it's very, very similar.
And here you can see other countries comes down with -1% when it was +38% in Q4. So it's very, very much up and down in this trading business. 49.4% gross margin. Same comments that I am on the quarter. I think it's good. And an operating result on 1 point, nearly SEK 1.3 billion, which feels quite good. I mean, if we have said four or five years ago that we should do 13.2% in a bad economy, no one had believed it. And now we're delivering that in bad times. So I'm quite positive to what we can do in a little bit better economy. Yeah, there is not so much to comment actually. Cash flow on the year, one nearly SEK 1.3 billion. It means that we take out the whole profit actually as free cash flow from operating.
Investing is mainly two things. It's automation of warehouses that continue. I think the next one to be operative is the Netherlands. Yes. That's the next one. Yeah. We go for it also in Germany and France more or less at the same time. The other thing that starts costing some money is that we change ERP system. So we have the cost to implement a new one, but it's still not in operation. So we have also cost for the old one. Yeah. October, December then, despite the market, we managed to increase a little bit. As I said, today I'm happy for 3% growth, I shouldn't be here, but I'm still happy for it in one way. That's according to the market. Yeah, more or less I think most have been said here.
And, about the future, I feel safer than ever. We have a very good organization. We have managed to keep up service and keep up the investment during those tougher markets, which is still a lot of opportunities, actually in all areas excluding gifts and home furnishing that are more difficult than the others. It's possibilities also there, but it's not so many or so big that it can be on Craft or on corporate. Strong balance sheet. And we continue to look at acquisitions. So that's basically that. And now you're welcome to ask questions.
[Foreign language]
Thank you, Magnus Råman, Kepler Cheuvreux. I have a few questions. We could start perhaps with what you write in the report here about the teamwear initiatives, the investments. You expect some revenue, you write in the second half of 2025.
Yeah.
Perhaps if you can help us just understand sort of the size of that. And then, you write that we should have to wait a bit longer for a positive operating profit contribution. It's a bit longer. Would that be 2026 or should we look into 2027?
On the team wear side in the U.S., it will definitely. They are there to promise profit 2026. How much the sales effect is very, very difficult to say because it's still like this that we have quite or very low stocks in the U.S. and we're building them up now. But the profit 2026 on Craft team wear in the U.S., I promise. The interest has been actually over our expectations there. Germany is another story. There, there, I think we will have to wait a little bit more because it's so also so depressed in the economy there.
That's very clear. Great. Maybe, flipping to another promise that you provided, you, you, after acquiring Tenson, you expected to reach SEK 500 million revenue. I think, believe you just, you, you said 2025 first, and then when we had the capital markets day, it was pushed to 2026. What, what's your projection now? What year do you think you would reach that target?
I think we still have a chance to do it 2026. And, and, if we don't, it's, I don't think it will be below SEK 400 million at least. So, so it's, but it's also very, it's more difficult to predict on the sports retail because one big chain can change the whole picture and, and you never know what season you get them. So for example, if we get into sport in Germany to sign off, we can be over those SEK 500 million. If not, we have a problem to reach it. It's much more, I have to say, easier to predict the corporate side there. There we have nearly 50,000 resellers in Europe and mostly small, and you can see the trend all the time. And on the retail, it's totally opposite. It's a few chains. I mean, if you look at the market here, it's XXL, Intersport, Stadium, and a bit of SGN Group that are team sport. That's, I would guess 85% of the volume there.
Speaking of which, could you mention if you have made any gains or wins on that side, on the retail side in terms of contracts for Craft shoes?
I think the last one that will take it up now is XXL. But I don't remember which season. Is it for spring? Probably. It's probably for the spring or latest fall. I'm not 100% sure of.
And how about internationally? Or do you see a path where you first gain traction in the Nordics and it's bound later internationally?
I paused that question in the next report, Magnus, because the inselling for next season is right now. So we actually don't know.
Great. Okay. And then I will leave it to other questions as well. But just one more, on the tariffs here. You mentioned then opening up a procurement office in Alexandria. I presume that, would procurement there have been cheaper? You would have done that already before. Could you help us understand what's the price difference? How much more expensive, tariffs set aside, would procurement there be compared to China?
It's not so much more expensive in Egypt because it's totally duty-free to the U.S. and in China you had duties on even before Trump changing or tried to changing so the buying prices is not affected so much, and then we also, I mean, we shouldn't forgot, you know, North Africa, Bangladesh, China, Vietnam, India. I mean, we source in so many countries. But the duty, I think the old duty on China from the beginning on textile was up to 26% in some materials at least, but it doesn't worry me at all.
What can happen is that we have, as I said, a couple of containers or volume on the sea on the way home, and he changed the rules from today to until tomorrow. Then we can't do anything. I mean, then we have to pay the duty that are when it's arrived. But yeah, no one knows, I think.
But I guess that it's true that you've been saying before that in America, they don't have much of local sort of textile, what do you call it, textile industry, right? But I guess that competitors have different sourcing footprints where some competitors already source from other locations than China.
Absolutely.
There should be a different, there should be a major sort of difference shakeup in competitive price competitive power if such a tariff.
I guess you can say that it depends on what product you're talking about because it's totally different in different product groups. If you take cotton products, they produce a lot of cotton in the U.S. and most of them send it to Mexico or Bolivia or, yeah, South America and then back again. And then it has been duty-free all the time when it's made of American cotton. If you look at jacket, polyester, and functional garment like craft, it's hardly any production in South America. It's very, very much basic cotton. And yeah, I think it's the best answer I can give you. But again, it's nothing that worries me. It can be again that it hit one month or two months or so on. But that's it. And then we have to live with that.
And then of course also we have the possibility on duties that comes into most of the suppliers to raise the prices as well.
Thank you.
[Foreign language]
Mats Pellbäck Scharp. Sorry, English.
No problem.
No problem. Regarding the warehouses you mentioned, you're supposed to open in Netherlands, France, and Germany. How do you take care of your lessons learned from Canada, etc.? Can you?
First of all, we are not opening new warehouses there. It's old warehouses that get automated.
Okay. So you develop them.
So it's not any new construction, so to say.
Okay.
So sorry, France. Yes.
France is a new solution. Okay. Will you have the same solution then in Canada?
We have two systems now.
Yeah, we are working with two solutions.
Okay.
AutoStore is one and Hai Robotics is the other one.
Okay.
And Netherlands is the first time we really go sharp with Hai R obotics and test that.
Yeah.
Otherwise we have AutoStore in all existing.
Okay. Good. The next question is the ERP system you mentioned.
That I posed to the guy behind you.
I'm a little bit curious about that because ERP can be huge or it can be smooth?
Yeah.
Yeah. How far are you? It proceeds as planned.
The implementation of the new ERP, it proceeds as planned. The first implementation will be now in May, in the Netherlands. But we have put quite much resources in order to be as safe as possible in the transition. So no worries, today at least.
Okay. Thank you.
Thank you, Andreas Lundberg, SEB. What kind of working capital slash inventory do you need for, well, coming years now and pushing more into the U.S. and Canada?
US and Canada, I would estimate that we need to build up when everything is there then, Printer teamwear on both sides and so on, SEK 500 million roughly. But of course that also depends on the sales. So we, you can say that the stocks were built up from day one, it will be approximately SEK 400 million. Then of course if the sales are not coming, we are not reordering as fast as we do, if not, so something around there. If it goes like I hope, I hope we need much more than that within two years.
Given the setup now with more automation and so forth, what kind of inventory levels or inventory ratios do you foresee? Let's see, two, three years out.
That will not change, because of that. What really changes is that we will be even better on service and supply our clients and it will go faster and we will deduct the personal costs. So it's not less capital tied up.
Okay. And on the fixed capital side, what do you foresee for the, you know, coming two years?
Lars, what is it we increase there?
I think we have planned now next year at least for two. Sorry. Yes. We have planned now for two additional AutoStores in next year. So that is approximately some SEK 60 million. And then of course it depends on how much you, we are going to aggregate from that or take on new countries. But I would say that we, let's say that we are on the line that we have this year approximately or a little bit less than this year in total investment.
It depends also a little bit if we find. We're also looking into Eastern Europe, where we are quite small. No, we are very small there. And they're also looking to establish the corporate business that can maybe be added on both on stock value and investment plan.
Thank you, Magnus here. Just a few follow-ups here. Firstly, on the questions about the inventory position, you mentioned here SEK 300 million just to start.
SEK 3,400.
SEK 3,400 just to start, if I took you right, and then climbing up to SEK 500 million or north.
Hopefully more.
Yeah, exactly. So how much is visible now in the inventory position as of end of Q4?
We don't know that because we are just placing the order and we don't know the lead times. So hopefully, if I could wish something, it should all be in place in Q4, but that will not happen because the lead times are too long.
But what you're saying is that in the inventory position as of end of Q4, it's not much of value?
And I, again, Magnus, I can't answer because it depends on what lead times we get on building up a proof of Craft teamwear and corporate in Canada. My hope is that it's in place in Q4 because that means that we really can start selling in Q4. But as the lead times are right now, I would say that the main part of it will be Q1. But we try everything we can to get it faster. As big a stock as we have in Q4, as more positive you can be about the year after.
Right. Then on the profitability, you mentioned here for this full year at an achievement to reach 13.2% EBIT margin considering the weak market conditions. And then in the CEO letter, you've been mentioning possible weakness in the market for the coming one or two quarters, i.e., H1 this year, but expect then a demand recovery in H2. If we would assume that there would be no demand recovery in H2, so we would have a similar situation throughout 2025, would you say that you would be satisfied with a similar sized margin then? Or satisfied is not the right word, but it would be reasonable to expect a similar sized margin.
If it's no improvement at all in the economy, I think it's realistic to be around the same. But as you said yourself, I would not be satisfied at all with it. Got it. That's clear. Thank you. And then just also on this quarter with the other countries, it was an increase of about SEK 65 million in sales. And is that all trading orders or some Canada? It's also Canada that are growing. But the main part always there if it's when it's up and down, the main part of the ups and downs are trading. Right. So also then the main part of the 3% growth in Q4 year-on-year growth is the trading orders. Yeah, but it could have been Q3 or Q1. So it's very hard to predict.
I mean, the biggest order we still have had there was Costco, for example, some years ago that ordered 400,000 Polo piqués on one order. And if we deliver them in Q1 or Q2, it's a huge difference. So it's growth included in Canada, but the main part I would say is trading business that's up and down.
That's interesting. Perhaps one final on this, because many investors I speak to are curious when I relay what you say about Amazon and Costco placing these massive trading orders with you. Could you perhaps elaborate to make us understand why these massive global players place trading orders with New Wave Group?
Because we have an extremely great sourcing operation in Asia.
Is it price or is it sustainability? Is it price only or is it your ability to secure sustainability factors?
Sustainability, quality, price. It's a lot of different factors. It's, and there, of course, different clients are different. Some of them have very, very high demands on sustainability and are prepared to pay a bit more for it. Other clients want to pay less, but it should be okay in a sustainability point of view. And there you can say that you can have, yeah, you know, all those classifications with OEKO-TEX and organic and not organic and so on. But we see a clear trend to that it's going to more and more sustainability. But it's a huge price difference. I mean, if you take a product from the Cottover collection, I would say it's 30%, at least 30%-40% more expensive to produce than a t-shirt that are still okay. But in, for example, non-organic now. So it's very, very different. And most often it's American.
Most often it's the American companies have a higher demand than Europe, which sounds in my ears, and I think it's a little bit strange if you see what's politically going on in the U.S. compared with Europe, but companies are more aware of it.
Very interesting. And just one final, final. You mentioned here you signed many clubs now in the American initiative and team wear. Could you help us understand a little bit what clubs are these? How many youths are enlisted in these clubs? What sports? How does a contract length look like and so on?
I don't know the exact answer because I can't follow every club. But I know the biggest one we have signed now is 3,000 players. And the length on the agreement is most often always three to five years.
Is it soccer that 3,000?
All clubs are going after all kinds of clubs. Track and field, tennis, soccer. The main part so far has been soccer, but we will of course also go to table tennis or to track and field. We are already doing, and it's easy to say what we are not doing there. We are still not doing baseball, American football, because we don't have anything for them. Thank you. We have one question that has been sent into us.
What will you do to improve gifts and home furnishings?
Everything. No, but first of all, we work quite hard to get a better gross margin. We have cut down costs quite heavily in the biggest one, that's Orrefors, Kosta Boda, mainly the fourth quarter, and it's still not in effect, all of it. Help me if I'm wrong, but I think I'm right. And.
Can you repeat what he said?
I beg your pardon?
Can you repeat what he said?
Yeah. He said that it will have the cost cuttings we have done has full effect from March next year.
And then it's of course a lot of activities to try to improve sales. But that's in all companies whether they are doing good or bad.
[Foreign language]
Precis. That was all we had. Thank you. Thank you very much.