Good day and thank you for standing by. Welcome to Nobia investor update conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded, and I'd like to hand the conference over to your speakers today, Mr. Kristoffer Ljungfelt, CEO, and Mr. Robert Belkic, CFO. Please go ahead.
Thank you very much, and good morning to all of you, and welcome to this investor update with Nobia. Together with our board, our main shareholders, and our lenders, we are today announcing a comprehensive program designed to strengthen Nobia's position as the number one kitchen company in the Nordics. These initiatives will not only cement our number one position in our core market but also lay an exceptionally strong foundation for long-term growth and success. So let me jump into the presentation with the first slide. Again, this initiative, we will consolidate our business and our resources around our home market in the Nordics, where we have a portfolio of extremely strong brands with structurally high margins and well-invested production footprints centered around the state-of-the-art manufacturing facility, as we call Nobia Park in Jönköping.
Through the solid support and backing from our owners and lenders, we will also enhance our financial position, lowering our leverage and cut our lending costs, which again will help us focusing on delivering on our strategy and operational excellence in the Nordics. Consequently, we can announce the following actions today: the divestment of our U.K. operations to Alteri Partners, a fully guaranteed rights issue of new shares amounting to approximately SEK 1.5 billion , which is also a testimony of our main shareholders' commitment and belief in the strategy that we put forth, amendment and extension of the revolving credit facility with incumbent lenders to improved terms, which Robert will explain later on. We will also launch a new cost initiative and research initiative to ensure that the organizational structure is aligned with the needs of the business going forward.
Can we take the next page, please? So we will, by this, strengthen the focus on our core, the Nordic kitchen market. This market is structurally attractive, with a projected market recovery and expected growth in the coming years. We are the leading kitchen specialist in this market, with exceptional brands and extremely strong dealer networks that have been in partnership with us over generations. With the brand HTH, we have a pan-Nordic kitchen specialist with high market shares in a profitable capital-light franchise model. With the brands Marbodal, Sigdal, and Invita, we have country-leading brands with impressive partnerships in the construction industry developed over decades. With Norema, uno form , and Superfront, we have tactical kitchen brands with strong potential in the market. Over the last years, we have also invested in a unified, focused, and scalable Nordic platform designed to drive competitiveness and deliver strong financial results.
In October last year, we inaugurated Nobia Park. It's the group's automated state-of-the-art manufacturing facility that underpins the leading position in the market and in B2B in the Nordics, and it enables a new cost level for all our volumes. We have harmonized the product range with positive impact on both product design, sustainability, and performance, and thereby we have also enabled consolidated sourcing across the Nordics. Despite market turbulence the last couple of years and a very soft construction market, we have improved EBIT margin from 3% in 2023 to 6% the last 12 months of this year, or sorry, of 2025, obviously, if we are excluding the U.K., which serves as a good base for future potential. If excluding the U.K., we can also demonstrate a consistent EBIT margin above 10% under normalized market conditions.
Now I will happily hand over to Robert to show you some light on the U.K. divestment and our new financing agreement. Please go ahead, Robert.
Thank you, Kristoffer. Yeah, so looking at U.K. then and the divestment of the U.K. operations, as you are aware of, U.K. is a market with strong brands but also high operational risk. Historically, we have had a clear agenda to convert U.K. to an asset-light operating model. However, it requires a large capital requirement to rebuild the store network, and a turnaround in a challenging market environment also demands a high degree of central resources and management involvement. We also see limited synergies with the Nordics. U.K. is largely a separated operation following the Nobia decentralization and the Brexit-related changes. Also, U.K. today has a lot of localized supply contracts following Brexit. If we zoom into the transaction then, the new purchase price will be due. The buyer assumes the obligations related to the leased retail network amounting to a gross liability of SEK 746 million.
The transaction may result in a consideration related to the buyer's future performance and successful turnaround related then to the U.K. operations. And Nobia finally then will retain the defined benefit pension plan reported in the U.K., which is recognized as a net asset value of SEK 80 million , so no change compared to today. If we move to the next slide then, and looking at our financial position and looking at the rights issue, the rights issue is amounting to approximately SEK 1.5 billion . It's fully guaranteed by the main shareholders, and it's expected to be completed during Q1 2026.
Looking at our improved financial terms then, we have refinanced our existing revolving credit facilities amounting to SEK 2.5 billion with our current lenders, including then an extended tenor of three years, significantly reduced margins, and also then a normalized market-based covenant structure, including then net debt to EBITDA and interest cover. If we then look at the financial profile, on a pro forma basis, leverage will improve significantly and bring down net debt to more normalized levels. We will also experience a resilient funding structure and credit profile going forward when we operate the business efficiently, also in the recession, and then finally, we'll also see a large reduction in the interest cost.
If we move then to the next slide and looking then at the indicative timetable for the share rights issue, and this is then for your reference and your reading, it's a lot of dates and a lot of actions happening between 11th of February and 12th of March 2026. But if we are to single out one single date and one single event, it's the extraordinary general meeting then, which is expected to be held at 18th of February in 2026. So with that, I hand over to Kristoffer again.
Thank you, Robert. So let me convey a little bit how these important changes will unleash the full brand potential, as we call our strategy, through a dedicated Nordics kitchen business. If you go to slide number eight, please. The Nordics stand out as an attractive kitchen market with strong recovery prospects. And the slide in front of you is displaying housing starts in all Nordic countries between 2019 and out to 2027. And even though it's somewhat a busy slide here, it gives a good reference to the decline that has been, but also recovery that is expected among the Nordics markets. Historically, housing starts convert into kitchen sales within 12-18 months, suggesting that improved volumes will start to materialize by 2026, following almost three years now of negative market growth.
So with our high market shares in B2B and the strong relationships we have built up over a very long time with the builder and the customers, we believe we hold a strong position in an attractive market that is now on the path of recovery. Take the next one, please. As you know, we are the leading multi-brand kitchen specialist in the Nordics, and we are very well positioned to drive market share in the mass premium kitchen market with brands like HTH, Marbodal, Sigdal, and Invita, and an extremely solid customer base and franchise base. The mass premium is our core, where we will make further push for market gains. However, and in addition, by capitalizing on the group scale, we're also dipping our toes into adjacent segments of the market where we have large opportunities over time with brands such as Superfront, Norema, and uno form.
The next slide, please. We're building our future on three strategic priorities and two enablers. As alluded before, we have extremely strong presence and performance with our pan-Nordic brand HTH. We will strengthen this proposition further and continue to roll out franchise stores in the Nordics. We will also gradually introduce HTH products in Nobia Park, primarily for the Swedish and Norwegian market, to enjoy all the benefits with automated manufacturing will bring. We will capitalize on our country-leading brands, Marbodal, Sigdal, and Invita, with strong customer intimacy in B2B, and make sure that we are properly prepared to capture market growth and expand the key account base with more builders and tradesmen. We will realize the potential of a consolidated Nordic supply chain network with conversion cost improvements and the large number of benefits for design, quality, lead times, etc.
We are drastically reducing complexity with the divestment of U.K. We also have a harmonized product range and decentralized operating entity, all of which in total will enable faster and more accurate decision-making in a simplified business model, which will be one of our core enablers. As another enabler then, which we have already discussed, is that we see a stabilized market after years of decline, and on the back of the leading indicators, we might even see signs of recovery coming through. Next page, please. So we are moving from a highly fragmented manufacturing to a harmonized Nordic supply chain with manufacturing centered around the state-of-the-art manufacturing in Nobia Park. Our investment in this site creates a new foundation for Nobia to grow from, combining cost efficiency, mass customization at scale, superior quality, and sustainability.
We would also enjoy lower conversion costs in this site versus our legacy sites due to the automation and harmonized processes. And we have also enabled the harmonization of the product range once we have centralized this manufacturing. So let's move to the next chapter, which is looking at the financial pro forma for this business when excluding the U.K. operations. And we should be now at slide number 13, please. This slide is excluding the U.K. but incorporating the full group cost. And with this, we can demonstrate the business that consistently delivered an EBIT margin of about 10% between the years 2015 to 2021. Though in recent years, the market has faced significant challenges, including sharp climbs in demand, substantial inflationary pressure, and a cost of living crisis that has heavily impacted margins.
Since 2023, we have successfully improved margins despite this continued volume shortfall across all markets and segments. As we transition into the new Nobia structure, we are confident in our ability to drive further margin improvements supported by our policy and disciplined operational excellence. Take the next one, please. So the slide in front of you should illustrate the CapEx profile here for the Nobia Group, excluding the U.K. And between 2015 and 2020, Nobia maintained capital expenditures at approximately 2%-4% of net sales. Following the 2019 decision to develop and consolidate the new supply chain structure, Nobia entered an investment cycle with a significant spike coinciding with a sharp market downturn. As we exit this investment cycle, as you can see from the slope of the curve, we expect capital expenditures to return to historical levels.
With now a fully invested supply chain, strengthened margins, and an improved financial position, we believe we are well positioned again to deliver significantly stronger cash generation in the years ahead, and the last slide in this section, please, slide 15. This one shows the net debt development leverage for the total group, and this time it's including U.K., and it's showing this over the last 10 years then. And as you can see, between 2015 and 2021, we operated with very low leverage and even maintained a net cash position. However, in recent years, again coming back to the turbulent market, the lower earnings and temporarily high capital expenditures, this has resulted in net debt level that is high relative to our profitability, so today we operate with a net debt of approximately SEK 2.6 billion from Q3 with a leverage of 6.8.
The proposed rights issue of SEK 1.5 billion will, of course, significantly improve this position and put the financial position in a much better space also in terms of the different terms that we can get at the basis of this. This will also help us to bring us closer to our financial targets and then enable the considerably lower interest rates cost in the years ahead. Financial targets. We remain committed to our financial, sorry, it's next slide here, so slide number 16. We remain committed to our financial targets and are confident that the major actions now underway will significantly strengthen our financial position. We expect to deliver growth above markets, supported by our exceptionally well-positioned brands and the state-of-the-art supply chain. By focusing solely on our core Nordic markets, where we have our strength, we aim to consistently achieve profitability above 10%.
The proposed rights issue will also improve our leverage, and with a stronger balance sheet, our ability to generate solid returns with lower interest costs will increase markedly. Ultimately, we believe these initiatives will eventually, and over time, enable us to resume our dividend payments in line with our financial targets. So over to the last slide of this presentation, it's a summary, and the summary again is that we have very big news from Nobia today, where we again will reiterate that we consolidate our resources and business around our profitable Nordic operations and our fantastic brands and our great business units. We will also put ourselves in a considerably stronger financial position, creating this strong foundation for long-term growth and success, so consequently, again, I will reiterate that we have divested our U.K. operations to Alteri Partners.
We are getting ahead of the rights issue of new shares, approximately SEK 1.5 billion, backed and fully guaranteed by our main shareholders. We have amended and extended our revolving credit facilities with incumbent lenders, and we have launched an initiative to ensure that the organizational structure is aligned with needs of the business going forward, and with that, we are taking any questions that might be. Over to you.
A reminder. To ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. There may be a short pause as we wait for attendees to register their questions. We will now take our first question from the line of Marcela Klang from Handelsbanken. And please go ahead.
Good morning, and thank you for taking my questions. I have a couple of questions. You mentioned in the announcement new covenants related to the new lending facility. Can you give us any more details regarding the covenants that you will be operating under when it's the new loan agreement? Is it standard type of covenants or any kind of temporary as you had before?
Yeah. Hi, Marcela. No, I can comment on that. No, as we're expressing in the deck, we're now, I mean, with the new financing in place, we also have, I mean, we have normalized the whole structure also then including normal and market-based covenants. So we will not have any temporary covenants, which was the case historically. Instead, we will have the two covenants that are in scope. It's net debt to EBITDA and interest coverage ratio. So those are the two ones which are, yeah, market practice ones.
You also disclosed the levels.
No, the levels we will not disclose. We have not disclosed them historically and will not disclose them going forward but stressing once again, they are normalized and market-based.
Okay, thank you. Could you also give us a little bit more details on the remaining cash outflows related to Jönköping and also maybe discuss the group costs going ahead? Will you be downsizing any kind of joint functions after the divestment of U.K.?
Yeah. So hi, Marcela. We will come back to you also in the Q4 release in February to give you more details on this. But in essence, regarding the investment in Jönköping, we have about SEK 200 million left over time. Not necessarily that everything will fall into next year. That's including also some double line costs that we will have regarding this project. Can you please remind me on the second question? Sorry. The group cost, right?
The group cost, yes.
Structuring program that we do. We believe that we will get a run rate benefit of consolidating further functions, etc., to the magnitude of SEK 80 million run rate. This is partially also due to the fact that the U.K. operations take over some of the group resources as well, obviously. But also here, Marcela, we will come back with more details when we meet in February.
Thank you. I also mentioned that you wrote in the press release that there may be a consideration related to the buyer's future performance and successful turnaround. Can you give us any more details regarding that?
Yes. We believe that we're very happy with the transaction, should be said. We also believe that Alteri has the opportunity now to focus on U.K. and the business there while we strengthen our focus on the Nordics. By that, they also take over our lease commitment, SEK 750 million. A lot of that is related to the store network that we have been discussing for a long time. There is a possibility for us, or we will get a potential upside on the future value of that business to the magnitude of 20%. Again, we believe that Alteri is the right owner to do that transformation now.
What type of time frame are we talking about here? When will you get more visibility on any kind of future upside?
We believe this should be seen as an option. We don't have any time frame on that. It will now be up to Alteri to continue with the transformation and the great initiatives we have in place there. And we strongly believe that they will be the right owner for that transformation. However, it's no time bar on that percentage.
Understood, and the final question, more of a curious side. You were mentioning operational flexibility ahead. What type of near-term strategy are you focusing on in the Nordics? What would you need operational flexibility for? I'm thinking maybe some project sales, B2B initiatives, anything like that.
Yeah. I mean, we have a lot still to do in the Nordic market. And first of all, we're putting a lot of emphasis on our strong brand in the mass premium segment. And they are extremely strong with the B2B segment as well. So we will push ahead with that, take market shares, capitalize on the fantastic supply chain now. But in addition, there are other segments within the Nordics that we only have dipped our toes in. And they are quite large and profitable as well. And we have the opportunity to use some of our more tactical brands into those segments. We can use our tactical brands by also capitalizing on the one supply chain, the one strong Nordic supply chain that we have now. There's a lot of opportunities.
Thank you. That was my final question. And we are looking forward to hear more about these new segments and opportunities in the future. I'll get back in line. Thank you.
Thank you.
Thank you. We will now take our next question from Sofia Sörling from DNB Carnegie. Please go ahead, Sofia.
Hi, Sofia here from DNB Carnegie. Can you hear me?
Yep. Hi, Sofia.
Great. Thank you. Okay. So I have a couple of questions about the divestment of the U.K. operations. So just first of all, can you give some more details on this exit process? You mentioned it will be finalized during the first half of 2026. But yeah, what does Nobia need to do here and what is expected to have been done perhaps already in Q1 this year?
Yes. Obviously, it's a big chunk of our business that is being divested. So there will be a lot of activities around this. However, I think we already have come quite far with it. There's always risk in getting the closing in place. But we have basically two main conditions remaining here. One, which is the pension scheme, which we are transferring to Nobia. And the other one is regarding the financial regulation in U.K., which we are well ahead with. Apart from that, it's more kind of operational things, getting the teams in line, etc., for this new structure. So I think I shouldn't say that it comes without a risk, but I would say that we're comfortable about the position we're in, that we can also come to closing.
Okay. And yeah, that leads to my second question, actually. If you would highlight if you see any risk or what type of risk do you see with this divestment?
Again, coming back to, there is always a risk of getting to closing, of course. Otherwise, we don't foresee any kind of major risks with this. I think we've had a good conversation with the buyers as well. We rather see it as a derisking and refocusing on our Nordic performance and our Nordic business.
All right, and yeah, I could definitely see why you now want to make an exit in the U.K., and you are quite confident that the buyer will make good work here with your operations in the U.K., but what is the argument for the buyer? What do they see as potential in your U.K. operations that they could do that you couldn't, if I can ask it like that?
Yeah. Well, first of all, they are also confident in the strategy that we put forth about the asset-light model. And they're going to push ahead with that. They have done turnarounds before in the U.K. They know the market very well. They know people there. They have a good team with the team we have. But we have, as Nobia, not been the right owner to do such a complicated transition. And again, we really want to focus on our Nordic strong performance and strong business. They have managed with this type of transformations before. So we are confident that they are the rightful owner.
Okay. Great. Thank you and then two questions on the remaining business in the Nordics, so how do you view the yeah, you have a great state-of-the-art production facility now in Jönköping. How do you view the potential overproduction capacity now, and also in combination, how do you view or do you expect to grow ahead? Is it only within the Nordics, or do you look outside the Nordics as well, and are you only expected to do that organically?
Yeah. A lot of questions in the same question. But first of all, it should be said that when the market was normalized in the Nordics, we didn't have any spare capacity. We have, for a number of years, been very tight on capacity. So we are very happy that once the market will come back, we have a chance to grow not only with the market, but also grow market shares because that will be the availability now. The primary focus will definitely be the Nordics. I mean, this factory is here to support our brands, to grow and to drive market share. Again, dipping toes in adjacent segments in the Nordics. But Nordics is our core focus.
Then, of course, if there are people external or outside of Nordics that would want to buy something from, let's say, HTH coming from this factory, we will have a serious look at that, of course, as well. But right now, right here, the capacity will be used for the Nordic business.
Okay. Thank you. That was all my questions.
Thank you.
Thank you. As a reminder, if you wish to ask a question now, please press star one and one on your telephone keypad. Should any further questions, I'll now turn the conference back to Kristoffer for closing comments.
Okay. Thank you all very much for taking your time today. Such an important day for Nobia and with a great prospect of the future. So thanks again. And we hope to see you on the 5th of February where we announce our quarter four results. Thank you.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.