Welcome to the Nobia Capital Markets Day. Thank you everyone for joining us today. I am Tobias Norrby, Head of Investor Relations here at Nobia. We are really looking forward to spending the next couple of hours with you presenting the Nobia Group and the opportunities we see in our Tomorrow Together strategy. Before we start, just a couple of practicalities. Health and safety is, of course, always important, so please make sure you know the safety routines for wherever you are located. Questions, we will round off the day with a Q&A session. If you, during the presentations, want to post a question in advance of the Q&A session, please click the blue Q icon in the top right corner of your screen to post your question. Please provide your name and who you are addressing the question to.
Alternatively, you can join the live Q&A session following the presentations by telephone and ask your question then. You will find the necessary details on nobia.com/ir. We have a great lineup for you today. You will hear our President and CEO, Jon Sintorn, taking us through an introduction of Nobia and the Tomorrow Together strategy. Kristoffer Ljungfelt is our CFO. He will guide you through the kitchen market and some key group financials before Ole Dalsbø and Dan Carr walks you through our two largest regions, the Nordics and the U.K. respectively, and some of their important initiatives within our strategy. We have Cecilia Forzelius, EVP of People and Culture, discussing a few important elements of people engagement and sharing some thoughts on the rationale for the new organization we launched last year.
Ola Carlsson is the EVP of Product Supply or the group's supply chain, and he will reveal how we work to realize structural efficiency, including the new highly automated Nordic factory we are to build in Jönköping. Almost last but not least, we have Amanda Jackson and Dan Josefsberg, who will tell you all about our pursuit for kitchen industry design leadership and how we will take sustainability to the next level. Finally, our CEO, Jon Sintorn, will conclude the day with some additional growth initiatives we see before letting you know how he sees Nobia a few years from now. Well, here you have it, the full program.
Again, just to repeat, to post a question during the presentations, click the blue Q icon, or if you prefer to join the live Q&A at the end by telephone and ask your question then, you will find all of the details on our website, nobia.com/ir. I hand over the word to Jon Sintorn.
Hello, and welcome to Nobia's Capital Markets Day. We are really excited today to tell you about our strategy, a strategy which we call Tomorrow Together. I really like to be in my kitchen, and you probably do as well. We know that people spend a lot of time in the kitchen cooking, socializing, studying, and now even work. The kitchen is a good place to be in. The kitchen business is a good place to be in. Kitchens have purpose in our lives.
Just a kitchen, some might think, but you know, we know a kitchen is so much more than a kitchen.
It's a space for life where everyone is welcome. For some, a wait for something new.
For others, a place for new ideas. Someone might get a higher heart rate.
Another, a lower.
New acquaintances.
Reunions.
Sometimes it's a circus.
Sometimes a room to unwind. Late-night dates.
Early morning coffees.
It's where old memories are shared.
New flavors introduced.
For big hearts.
For broken hearts. It's a space for many emotions, many scenes where kitchens from our brands set the stage.
A stage for hundreds of millions of laughs and for thousands of tears. Just a kitchen, many might think.
You know.
We know.
We're designing kitchens for life.
For all life's twists and turns.
That's what we design for.
Today.
For tomorrow. We have a responsibility for all the millions of people that choose a kitchen from one of Nobia's brands.
A responsibility to design beautiful kitchens that people fall in love with.
To design, make, and deliver kitchens with as little impact on our planet as possible.
For generations to come.
We make kitchens, many might think. you know.
We know.
All of us who work within Nobia know we design kitchens.
For life.
Now I'm going to give you a brief overview of Nobia. In 2020, we had net sales of SEK 12.7 billion at the 4.6% margin. We organized in three regions within seven countries. We have 6,000 employees, very strong local brands, and 14 production units. We were founded in 1996, and from early days having Marbodal, HTH, and Sigdal in the portfolio. Only a few years later, Magnet was added in the U.K. We were IPO'd back in 2002, and then multiple acquisitions during a period of time. From 2010 to 2015, we divested several unprofitable businesses and really strengthened our balance sheet, put us in a strong financial position. EBIT was surpassed, big milestone to us, surpassed 10% by 2016. Another big milestone for us is the investment on the new factory in Jönköping. Today, we start working on delivering on our strategy Tomorrow Together.
Our sales is split into three main sources of revenue. The 12.7 is split into kitchen furniture at 64%, appliances, worktops, and other at 30%, and then installation and services at 6%. What we do is 450,000 kitchens per year, 5.3 million cabinets per year, and that adds up to between four and five kitchens per minute in the group. We are organized in three regions where the U.K. constitutes about 37% of revenue, the Nordics about 53% of revenue, and Central Europe 10% of revenue. We leverage on our brands in all the three segments where we play. We're playing in consumer, trade, and projects with well-known and high consideration brands. That has, from the consumer side, a positive effect on the business-to-business trade and projects respectively.
We have built strong relationships with our customer base over the years, and mass customization and consolidation of customer-specific orders at scale, that's really something that we do well. We address three segments of the market through mainly four sales channels. The segments are project, trade, and retail. Fairly evenly split, but leaning a bit towards projects. By sales channels, dealers, in-house project sales, franchise stores, and our directly operated stores at 40%. Those stores are mainly in the U.K. The purpose of today's event and this presentation is to talk about our strategy and the years to come. However, with the very special circumstances that we all have been through during 2020, I believe it deserves a few comments as well on the COVID-19 situation. We've had predominantly second quarter last year, temporary factory closures in the U.K. and in Central Europe.
We've had temporary store lockdowns in all regions. Construction sites, however, have been mostly open and some, but fairly limited supply chain disruptions. On the positive note, we can see that there is a strong underlying market with the stay-at-home trend and home refurbishment, and we have seen a change in customer behavior where a lot of customers have been moving rapidly into digital interaction and connection with us. With this brief overview of Nobia, I'm sure you're more keen to get more details about the market and financials. I will hand over to Kristoffer Ljungfelt, CFO.
Thank you very much, Jon. I will take you through why we believe the kitchen industry is a great place to be in, and then go through the Nobia financials. The kitchen market is very attractive to be in. It is a large addressable market for European kitchen players. There are positive macro trends that we believe will fuel this market up and above GDP for the future. Thirdly, it is a profitable industry with healthy margins if you play it well, as you will see from the Nobia financials later on in this chapter. Looking at the markets where Nobia is present, it has been sold approximately 2.5 million kitchens per year. The majority of that is sold directly to the consumers or via tradesmen, while about 1/3 is sold via construction companies and property developers.
The total value of these 2.5 million kitchens is roughly SEK 85 billion if you include appliances and other kitchen necessities like sinks, taps, and so forth. The markets in Region Nordic, the Netherlands, and Austria are quite similar, with the majority of kitchens sold via retail directly to end consumers. In the U.K., however, a large portion of kitchens are sold via trade, which is also a channel that has increased considerably the last decade. Trade is also an important channel in other countries, but to a lesser extent and included in the B2C numbers for that very reason. There are several trends that indicate a strong development for the kitchen market going forward. I would like to highlight five of these trends and will then double click on all of them. These are demographics, urbanization and household composition, property prices, home improvements, and customization. Demographics.
Looking back 20 years, and it's clearly so that the population is aging. not only that, the aging population is also becoming wealthier. This is a trend that will continue for the future, as statistics show that by 2040, almost 30% of the population in the Nobia addressable market is above 65 years old. This is good for the industry, as an affluent aging population is an important source of income and will drive value in the kitchen industry. Urbanization is another strong trend that will increase the demand for new housing. For the last 70 years, all countries where we are present have experienced rising urbanization, with the only exception being Austria. As the world continues to urbanize, the demand for city center dwellings and suburban housing will grow, creating opportunities for the kitchen industry.
At the same time, the composition of the households have changed, and there is an ever-increasing demand of dwellings catered for smaller housing, leading to growing volume of kitchens. As property prices grow, there is a growing willingness for people to invest in their homes and property developers to continue to develop available land. The kitchen industry will take advantage of these growing investments in homes, both new and existing. It will also capitalize on the rising number of housing transactions as mobility triggers kitchen purchases. The kitchen is an increasingly visible part of the home, and we spend more time and resources on home improvements than ever before. Research suggests that consumers prefer to have a kitchen that is integrated with a dining and living room, and thus plays an important part in the design of your home.
For that reason, the kitchen also becomes an important design piece in itself. This, coupled with willingness to spend more of our disposable income on home improvements in general, will drive value for the kitchen market. Consumers are increasingly dictating what they want as we are moving into the age of me. As societies are more informed, more diverse, and its citizens seek opportunity to express their individuality, it will no longer be enough to deliver white boxes for all. As kitchen specialists, we can customize products at scale by offering design solutions and colors that are suited for individual needs to which consumers are willing to pay. A recent study from Deloitte found that one in five consumers who expressed an interest in personalized products are willing to pay a 20% premium. For the furniture business, the numbers were even greater.
42% of the respondents were interested in customized products, and roughly half of those were willing to pay 20% or more for customization. Again, being able to offer customization at scale is a win-win for the consumer and for Nobia. All in all, we believe these trends will speak in our favor and that the kitchen market has a strong long-term outlook, both in terms of volume and value, with the potential over time to outperform GDP by roughly 1% - 3%. Let's now move over to the Nobia financial highlights. As you will see from the following slides, Nobia has a strong market position in the market where we are present.
We have, over the last years, delivered solid cash flows, even despite the COVID pandemic, and have as a result created a strong balance sheet, which has set a good foundation as we enter the new strategic period. On top of that, we also signed a new facility agreement of SEK 5 billion with Nordea and Handelsbanken back in December 2020 to safeguard any financial requirements going forward. Looking at the market shares and volume, Nobia has a solid market share in the countries where we are present. In the Nordics, we have a combined market share of approximately 25%, especially driven by a very strong position in the B2B segment with a market share of 55%. Market shares in the Nordic B2C market is approximately 15%, which we consider to be low given the strong brands we have in this region.
One of the major strategic themes is to grow in this space, which Ole Dalsbø will talk more about later. In the U.K., we have a fairly large share in the fragmented retail market, with 20% market share. On the other hand, if we look at trade and project markets, we believe there are large opportunities to capture shares with the Magnet brand, something Dan Carr will address later in this presentation. On this chart, you see the historic top line and EBIT margin development for the Nobia group. As you can see, our long-term target of 10% EBIT margin was reached in 2016 after some years with optimization of our strong business units, but also divestments of unprofitable business in Central Europe. In June 2016, after the Brexit referendum, we were heavily impacted by currency headwinds as the British pound dropped significantly.
On top of it, a bullish U.K. market before the referendum. Turned somewhat negative, putting pressure on prices and discounts. The strengthening of the euro has been a challenge also in the Nordics, as basically all our direct material purchases are denominated in euro. We estimate the strengthening of the euro has eroded more than two percentage points of our EBIT margin since 2016. Having said that, we also had operational issues across our two largest regions, which burdened the margins as well. The run rate of eight plus percent is not something that live up to our own expectations and standards, something we are addressing with the new strategy. As we entered 2020, we got severely impacted by the corona lockdowns in basically all countries, but especially so in the U.K., where we were forced to temporarily close our factories and all our stores.
Losses in the U.K. last year was, however, mitigated by strong improvements in the Nordics, and especially so during the second half of 2020. In the Nordics, we had had good run up until 2017, when we reached close to 15% margin. We fell back to some extent the following years, driven by currency headwind, operational issues, and softer markets in Sweden and Norway. However, on a positive note, the second half of 2020 was a strong period for the Nordics, taking us back almost to the 2017 run rate despite the difficult corona situation. Over to the U.K. In the U.K., we're operating with lower margins than in the Nordics, mainly driven by channel mix between own stores, franchisees, and builder merchants. It is also fair to say that the price pressure in the retail segment has been intense over time.
However, the market structure does not suggest that the margin differential between the Nordics and U.K. should be that large. As a result, we believe there is great potential to lift the margin in the U.K. permanently, which again, Dan Carr will address in the U.K. section. As previously mentioned, corona had a major impact on our U.K. business. As we do not produce to stock, but rather produce to order, a forced close down of our manufacturing facilities have an extremely negative impact on sales and profitability. 2020 ended with losses in the U.K. of about SEK 250 million. Cash flow. Back in 2010 and 2011, Nobia was sitting on a large unprofitable businesses. By divesting those businesses and instead focus on our well-performing brands and push for continuous working capital improvements, we have generated solid cash flow ever since 2013.
With a stable cash flow, we have also been able to acquire healthy and strong-performing businesses like Bribus, Commodore, and CIE. I think it's fair to say that the structure of Nobia is fundamentally different and considerably stronger today than what it was in 2010. With our stable cash flow and profitable business units, we have a solid financials and created the opportunity and room for profitable investments also going forward. With strong cash flow came also solid balance sheet, on this slide expressed as financial net debt. As you can see, our financial leverage came down also considerably up until 2017. At that point, we decided to increase dividends to shareholders and also had the opportunity to acquire Bribus, which has been a highly successful acquisition for the group. After strong cash flow in 2020, we are today close to debt-free again, and again creating opportunities for the future.
In December last year, we signed a facility agreement of SEK 5 billion with Handelsbanken and Nordea, which replaced the SEK 2 billion we had from before. This facility will provide even greater financial maneuverability when we enter the new strategic period. With that, I'd like to conclude that the kitchen market is a great place to be in with positive macro trends. Nobia has a strong financials through solid cash flow and strong balance sheet that can support future investments in the business. Now, over to you again, Jon.
Thank you, Kristoffer, for that update on markets and financials. Let's move on to the strategic plan. In the Tomorrow Together strategy, we have lined up a lot of things to do. Very clear initiatives for growth, efficiency, and for people engagement with sustainability and design at the center. Before going into these initiatives in further detail, let's take half a step back and reflect on some of the long-term trends affecting our business. We were looking at four macro trends: urbanization, digitalization, personalization, and sustainability. To stay competitive with these trends going on, that will mean investments in new areas. Hence, we will leverage group scale to enhance local competitiveness, share the resources. Also, those trends combined with what we are good at today. Through that, we have crafted a recipe to win. We will build our businesses around strong consumer brands.
We will further develop our unique mass customization capabilities. Today, and even more so tomorrow, excellent customer responsiveness will be key. Delivering on our initiatives, we strive to achieve the company goals. To be the customer's preferred choice, a reputation as a truly responsible company, and an attractive company to work for, partner with, and invest in. Now, let's look at what we're going to do. We have several initiatives for growth. We have a huge opportunity to grow our business in the trade segment in the U.K. As Kristoffer just mentioned, it's a big market, so with an improved proposition and focus, we can gain a lot of share. In many markets, our strongest foothold is within the project business, and we will continue to develop to keep and reinforce our leading positions.
In the Nordics, we can further leverage on our strong brands in the consumer segment by revitalizing retail. Geographical expansion will be selective. There is an interest and demand for Scandinavian design in more markets. Through our international HTH brand, we will be looking at opportunities, for example, in the Northern Germany and Benelux. We believe that digital and data excellence really can drive our business through better engagement with our customers. Look at 2020. We saw a huge shift in consumer behavior using digital. That gives a lot of confidence to even further develop and invest in this area. Using our scale, we can drive structural efficiency. We are building the largest, most modern kitchen factory in the Nordics, or even Europe, enabling us to mass customize in an efficient way, taking that to the next level.
Among many things, it will give improved product cost, lead times, and improved sustainability impact. On the back of the regional organization, and not least the new factory, we have an opportunity to align our product platform for scale and harmonize our business processes. Obviously, will our brands have some unique products and customer propositions, but we have a massive opportunity to reduce complexity by harmonizing and working together. The transformation journey we are embarking on will both engage and require engaged and empowered people. We will be working on a collaborative culture with the Tomorrow Together goals as shared purpose and direction. We will be very ambitious to ensure winning capabilities to drive the business and the strategic agenda. There's a lot of transformational stuff to be done at the same time as we're running our business. Here, diversity aspects really come into play.
Diversity in gender, ethnicity, but also transformative competence from outside our industry. Through our new organizational setup, we delegate many of the central functions and consolidate a lot of the local functions to a regional level. This enables the respective management team to be fully accountable and take both short and long-term business decisions in order to run our business at the same time as we are implementing this new strategy. The four macro trends, the trends of sustainability, digitalization, and personalization, and urbanization, has a major impact on society as a whole and to us as a company. We will lead the industry through reduced environmental footprint and give our customers beautiful and purposeful design.
We used to be more scattered. Now we're increasingly drawn to urban areas. We used to be oblivious to the limits of our planet. Now it's all we talk about. We used to accept what was chosen for us. Now, in the age of me, we expect companies to adapt to our preferences. New technologies used to take decades to reach large-scale adoption. Now it takes just a few years. Kitchens used to fulfill their purpose behind the scenes. Now they're a design piece, serving as the center stage for life at home. Our way of life and what matters to us has changed. Today, we demand homes with smart functionalities, personalized features, and an emphasis on design, all with an ever-increasing focus on sustainability. These new demands on home life mean more kitchen dreams to fulfill. That's where we come in.
At Nobia, we design spaces that make kitchen dreams come true. To do that well, we have articulated our recipe to win. We care about our customers and respond to their evolving needs. Like them, we deeply care about our impact on the planet. We deliver customization at scale, from the smallest kitchen to the largest construction project. We inspire consumers through beautiful and purposeful design and elevated experiences because strong consumer brands power our business. Looking forward, we have laid out a plan to drive profitable growth by catapulting trade, revitalizing retail, reinforcing project leadership, and pursuing selective geographical expansion.
To facilitate this journey, we will substantially increase our focus on people engagement with programs to create empowered and accountable people, excellent and inspirational leaders, continuous communication and dialogue, and develop winning capabilities. We will also implement major structural efficiency initiatives like manufacturing footprint transformation, product platform alignment, and business process harmonization. We will leverage group scale wherever it makes sense to increase local brand competitiveness. That's how we will become our customers' preferred choice, build our reputation as a truly responsible company, be an attractive group to work for, partner with, and invest in, and achieve our ambition of becoming a sustainability and design leader. We call this strategy Tomorrow Together. Nobia, for kitchen lovers.
My name is Ole Dalsbø, and I am the Head of the Nordic region. In the Nordic, we are well-positioned for profitable growth with EBIT margin over 15%. We have a strong brand awareness and brand preference with leading local brands in each market where we play. We have an extensive distribution network. We are the market leaders in the professional segment, and we have an opportunity to improve our position in the consumer segment. Revitalize retail is prioritized initiatives in our Tomorrow Together strategy. We are organized to get scale benefits with our new regional organization, which also allows for brands and people to work together, and to a greater extent, take advantage of being a part of Europe's leading kitchen group. Let me start by providing an overview over the region. Region Nordic generates SEK 6.8 billion in revenue in 2020.
Business to business accounts for 2/3 of the business and business to consumer, 1/3. If you look country by country, Denmark constitutes 43% of sales, followed by Sweden 25%, Norway 19%, and Finland 13%. HTH is our biggest brand with a stronghold in Denmark, but with strong position in all Nordic countries. HTH is highly recognized for its Danish design and is a value asset also in some market outside the Nordic. In each market, we also have on top of HTH, strong local brands, Marbodal in Sweden, Sigdal and Norema in Norway, Invita in Denmark, and Petra and A la Carte in Finland. Our market position in the Nordic country is strong. We are market leaders in the large professional segment with long-lasting relations with the largest contractor companies. We have a top of mind brands in all countries.
In business to consumer, we are strong, but we have significant opportunity to grow. We have the strongest kitchen specialist distribution channel with 200 specialized stores, primarily franchise, but also own stores. We have a complementing dealer network with over 400 outlets, like builder merchants, electro chains, et cetera, to increase the reach. Let us move on to our organization. We have moved from four countries to one regional organization. This will allow us to get scale effect, improving structural efficiency in production and harmonization processes across the region. Equally important, it will enable collaboration between countries and brands to develop our ways of working and learn from each other. We have created four commercial units. The first unit is international brands, including HTH and uno form, with focus on growing across all Nordic countries.
Our second unit is local jewel brands, including Marbodal in Sweden, Sigdal in Norway, and Invita in Denmark. Here, the focus is on building a leading position in each respective market. The third unit, channel brands, help us to effectively target larger retail chains and dealer networks. We have kept Finnish brands as a separate unit as it requires special attention and full transformation. Let us move into the strategic priority of the region. We have an ambition to be the leader in sustainability and design, and I'm sure that our new kitchen concept will create customer value and drive sales. When it comes to the structural efficiency, we are accelerating the transformation of the Finnish business to improve margins, and I'm very pleased about the new factory in Jönköping, which our customer will love, and which we will bring mass customization to completely new levels.
The Nordic organization is in place, and we are working on harmonization processes across the region. The regional approach will allow us to get more out of the commercial investment we are making. I want to highlight two specific areas when it comes to growth. We are the market leader in the business to business, and our strategic initiative reinforced project leadership will help us to further develop our business. Secondly, even though we have a strong position in business to consumer, we have significant growth potential in this segment. We even believe it is one of the greatest growth opportunity we have in the group. Let me show you more details about how we want to revitalize retail. Revitalize retail will accelerate growth and increase business to consumer market share. I want to share some of the specific initiatives we are taking on to achieve this.
We will continue launching relevant products, work more with the kitchen design concepts, and increasing the design content to grow value and average order value. We have had mass success with some of the recent launches and have very strong future pipeline. Dan will talk more about this later on. We want to continue taking advantage of our scale by rolling out best practices, tools, and system across the region. We are accelerating our digitalization efforts. Customer behaviors is changing rapidly. We are quickly adapt to the new environment and are offering virtual solution to our customer. We are digitalizing relevant parts of the customer journey. This will create a better customer experience and make us more efficient and effective in sale. We are optimizing our store network by improving existing store formats, launching new store concept, and increasing our coverage where relevant.
Let me showcase these initiatives in more details, starting with our design concepts. Our recent design concept have been launched with great success. Jordnära färger, launched with Marbodal in 2019, has generate a lot of interest and sales. Nordic Spirit, launched with the HTH, has exceed sales expectation with 50%. We are follow up this success with the new Nordic Creation and Nordic Nature design concepts. Let's move on to another revitalize retail theme. Working together as a group and region has allowed us to step up our ambition. We have create vision for the future consumer experience to identify what steps of the customer journey that we want to digitalize, but also where we want to change our ways of working to create better customer experience. We are launching a sales excellence effort with focus on improving conversion into our store network.
Being one region has made it simpler for us to collaborate across borders, and we have stepped up our efforts to share and deploy best practices between brands. We have accelerated our digitalization efforts, automation, systems, and tools. This is not just to improve the customer experience, but also to improve the effectiveness and efficiency of our salespeople. Finally, let us share some of the initiatives we are undertaking in our store network. I said earlier, we have a very strong retail network in the Nordic, with over 200 specialist kitchen stores. Over the last few years, we have converted many of our own stores to franchise stores. The franchise model has great flexibility and drives local entrepreneurship. Today, the vast majority of our stores are franchise, but some are also Nobia-owned. Our network gives us good control over the customer experience and brand positioning.
It also facilitates successful launching of our new design concepts. Physical showrooms are still important. The complex buying process and the price tag of a kitchen makes showrooms and face-to-face integration with a specialist essential in the buying process. The showrooms are complemented with digital tools, facilitating remote design and service option. The ongoing pandemic has changed customer behaviors, and to some extent accelerated digitalization. We have embraced this change and have set up solution for online meeting. We are also working on developing our store network and experimenting with new formats. One such example are satellite stores with a smaller format. Digital tools and advanced solution allow us to have smaller stores in central location. We have, for example, launched a number of satellite stores with Sigdal, and we are now opening small format Marbodal flagship store centrally in Stockholm.
We see potential to further extend our network and are always looking into covering white spots with several store openings planned for the coming years. We also work with developing our store concept to better serve our customers. I want to share a short film that showcase our new HTH store concept that we are rolling out across our network. The concept is, of course, adapting to the size and format of each store. The store concept showed in the film is from our largest store in Denmark. Let me conclude by summarizing. We are well-positioned for profitable growth. We have a strong brand position, we have an extensive distribution network, we are the market leaders in the professional segment, and we have a great opportunity to improve our position in the consumer segment. Finally, we are organized to get scale benefits with our new regional organization.
Thank you from me, from the Nordic, and now I will hand over to Dan.
Thank you, Ole. My name's Dan Carr, and I'm heading up the U.K. region. I'm going to tell you a little bit more about the plans that we have. In the U.K., we have developed plans that we believe will transform our business and take profitability to double-digit levels. The backdrop of uncertainty around Brexit that we've seen since 2016 is now removed. Our input materials and finished goods can be imported without tariffs, the pound is strengthening, and much of the consumer confidence drag related to Brexit will go. The Magnet brand is a key asset for Nobia. It's one of the most valuable in the kitchen market. We believe that we can leverage this brand strength further across the three main segments of the market.
The U.K. trade market is one of the largest profit pools available to us, and we have potential for huge growth in this segment. We also see some key opportunities to improve the customer journey and create efficiencies by taking the digital advancements that we made in 2020 and propelling those further. We have a strong foothold in the U.K. market, with representation in the three main segments, projects, trade, and directly to the homeowner in retail. Magnet represents two-thirds of the business in the U.K., and the other brands are used as tactical businesses for specific sectors. With the Gower business, we are able to utilize the builder merchant and DIY channels via our long-term partnership with Travis Perkins. Through Commodore and CIE, we capture the mid and high end of the project market in London and the southeast of England.
With Magnet, we have a nationwide presence through our own network of 200 stores. Here, we can win in local markets, reaching homeowners, trade, and property developers across the U.K. Let me tell you about our key strategic initiatives in Region U.K. Accelerating growth with the Magnet brand is at the center of our plans to reach double-digit profitability. Magnet is a powerful brand that ranks top for awareness among kitchen specialists, and a brand with a long heritage in the U.K. market. We believe that there is scope to strengthen the Magnet position further still, and to drive profitable growth by utilizing its power across retail, trade, and projects. The trade segment in particular represents a very important opportunity for us. Through our network of stores, we provide trade with kitchens from local stock, and also with quality joinery products.
We are making focused improvements to how we meet the trade customer's specific needs, and we will catapult growth in this segment. We believe that digital and data excellence can propel our business through better engagement with our customers. In 2020, we saw enormous shifts in consumer behavior with digital. Our own experience with customers online gives us confidence to push hard in this area, with the aim to pioneer digital in the sector. We are also working with several initiatives to increase efficiency. We are rationalizing our product portfolio, fully utilizing the group K 2020 platform, and having Darlington as our center of excellence for this. We have already exited the products that were unique for the social housing market in order to use the group platform instead. This has resulted in a SKU reduction of more than 30% in Darlington production.
We continue to regionalize support functions from the previously independent businesses, and we have recently combined the project sales forces to really rally behind the Magnet brand. In order to ensure our success, we have strong plans with people engagement. Kitchens are a local business, and locally empowered people working in a winning framework will deliver our success. We have re-organized our commercial setup in order to enhance competence, increase accountability, and get resources behind our growth opportunities with Magnet. We deeply believe that a fresher, more diverse set of perspectives will drive new thinking, better collaboration, and stronger connections with our customers. Finally, taking a leading position with sustainability and design will be at the core of our strategy in the U.K. market.
I personally believe that enriching the Magnet proposition with Scandinavian design expertise and helping our customers to live more sustainably will secure Magnet in an extraordinarily strong position in the market. Our growth plans will be focused on our largest opportunities and where we can optimize on our assets by making full use of the Magnet power brand with the store network's national reach, by catapulting growth in the trade segment, and by leading in digital and data excellence. Let's take a deeper look. We have a fantastic opportunity to capitalize on our existing assets and leverage further in our three segments. We will use the strong Magnet brand to serve trade, retail, and projects in the way that HTH does in Denmark. The model has proven profitable credentials. To strengthen the position of the Magnet brand further by leading in sustainability and design, we will utilize group initiatives.
Using group standard product gives us access to the fantastic new kitchen concepts that you will see when Dan Josefsberg presents later. To be the homeowner's desired choice, we will deliver an intuitive buying experience, offer the highest standards in design expertise, and facilitate connections to the best trade professionals. To win with trade, we must aim to be the preferred partner, using our national reach to ensure that we provide great local relationships, great products, and great levels of convenience. To the property developer, Magnet has a unique position. We can offer a branded product that adds value to a new home. We can also offer developers delivery flexibility, local availability of replacement parts, and a showroom experience for the end customer, all by utilizing the expertise and assets that we already have in place.
As Kristoffer mentioned earlier, trade is an attractive market segment, and we have scope for significant share gain. We know that Magnet has a strong pull with the homeowner, and we want trade to benefit from this too, creating a virtuous circle where Magnet connects two groups who need each other. We have a strong asset in our store network through which we can reallocate our resources to focus on improvements for trade. When I consider the future of the store network, there are two key questions I ask. Is an online-only journey the future for kitchens? Well, I believe that we can enhance our customer journey online, but a final visit to the store for fit, feel, and finish will still be desired. Secondly, do we need more stores? For consumers, probably not. Should we have more distribution points for trade? Almost certainly yes.
Since 2019, we have taken a targeted approach to acquire new trade customers with a stronger proposition and by adding dedicated trade business developer resource into the local markets. The results were encouraging towards the end of 2019, when sales of kitchens to trade increased with strong double-digit percentage. This gives us further confidence to push even harder from here. Our focus on strengthening the trade proposition in Magnet is intense. Our ability to mass customize means that we can create more value for trade, too. Happier end customers mean trade can make more money with our product. In being a great partner to trade, we will be proactive in helping them build their businesses. Trade can use our assets, our showrooms, our local stock, and our in-store experts. Success in the trade segment is reliant on being highly responsive to the customer's needs.
Trade have told us that they need products that are even easier and faster to fit. We have responded and built this requirement into our new range, developing products that will save trade time and improve the quality of fit and finish. Convenience is an absolute priority in this segment. For a trade customer, this means quick delivery times and locally available stock. We will leverage our store network to have product available across the U.K. when trade need it. Our supply chain will now control inventory profiles and replenishment to ensure that product is reliably available and efficiently used.
During 2020, we have really accelerated our digital transformation efforts in the U.K. to accommodate the sudden and rapidly changing customer behavior. In such a short space of time, people with very little experience of making major purchases digitally became much more comfortable with extending the use of technology in their lives. When COVID-19 broke out and stores closed, we quickly adapted and transitioned into remote selling using video meetings. We also initiated development of a new digital tool, which enables a more virtual and omni-channel experience. This tool, called My Project, is in essence a logging in area, which is shared by customer and sales staff, and which digitalizes many activities that were previously performed in-store, on the phone, and via email. Results from these efforts have been very encouraging, with a 170% uplift in booked appointments and over 50,000 accounts created in the new digital tool.
We have really strong reasons to believe that our plans will take us sustainably to an EBIT margin above 10%. We will follow a proven model for Nobia and leverage the Magnet brand in three key segments. We will focus resources and capitalize on our existing assets to catapult trade growth. We will propel our growth by taking a leading position with digital. Thank you. Next, we will hear from Cecilia about our plans for people and culture.
Thank you so much, Dan. I will guide you further into the people engagement area. In 2020, we implemented a new organizational structure. We had three main drivers behind making that decision. The first one was obviously that society in general and customer behavior, in particular, are constantly changing and evolving, and we want to make sure that we have the best organizational setup and operating model to meet the expectations of our customers, our partners, and the people working for us. As a second driver, we did a deep dive to identify our key success factors to be able to develop as an organization. In an organizational health survey that we conducted, two of the key findings were a need to remove inefficiencies and also a potential to speed up decision-making and to make room for more customer-centric decisions.
The outcomes of the survey has of course provided important input for our Tomorrow Together strategy and the way we've designed our organizational setup is to structurally enable ourselves to deliver on the strategy. We have established three strong commercial regions, the Nordics, U.K., and Central Europe. Within these regions, the units will focus completely on selling, marketing, and servicing our customers to drive profitable growth. We have also formed a Group Product Supply as a profit and loss area alongside the commercial regions. They will work closely together to make sure we fulfill the customer promises and expectations. Group functions are set up to support major initiatives which are of group-wide interest. That could be within digital transformation, within sustainability, and sourcing. The main benefits of this new structure are faster business decisions with a strong group backend.
We will ensure local accountability close to the customer, creating room for local business entrepreneurs, enable transformative investments on group level to realize structural efficiency, process harmonization and competence centers of excellence, and of course, a much wider range of career paths. People engagement is one of the four building blocks heading up our Tomorrow Together strategy. We want to be an attractive company to invest in, partner with, and to work for, and for that, we need the right organizational structure as well as the right people. We have four focus areas that will be key for us to deliver on in order to reach our strategic targets. A collaborative culture with shared purpose and direction where we believe that one of the benefits of being part of Nobia is the potential to actually leverage on best practices and collaboration across the group.
We provide direction and invite our people in shaping the how of the strategy. We want to make sure that we have winning capabilities on board. We want to build and grow the workforce of tomorrow with a diversity of thinking and ideas. We have come some ways. We will make sure to continue to drive the diversity agenda even stronger going forward. We believe that we can shift the perception of the Nobia brand to become an even more attractive company to work for. We also make sure that we invest in continuous learning and room to grow to ensure that we have the right capabilities today as well as for the future. We want to foster authentic and inspirational leaders. The transformation ahead of us will require good leadership with managers running both the everyday business and driving a change agenda.
We want to ensure that we secure the leaders of tomorrow using a mix of hiring, promoting, and training. We have an ambitious agenda and set of frameworks, tools, and trainings that will support our leaders in the transformation. The last focus area is engaging and empowering our people, and all in all, I can say we have a very ambitious people engagement agenda to ensure we bring all our 6,000 employees on our journey. Thank you so much, and with that, I welcome Ola to present Product Supply.
My name is Ola Carlsson, I'm responsible for Product Supply within the Nobia Group. I'm here to tell you about how we will support the Tomorrow Together strategy for the group. We have identified a lot of important initiatives to enable growth for the group, as well as generating substantial cost savings. We will do that through a group-wide organization to leverage scale. We'll do it by harmonizing the products. We'll do it by accelerating the sourcing saving. Furthermore, we are building a new state-of-the-art factory in Jönköping. In addition to that, we support group-wide growth initiatives. Before we move into the actual strategy, I want to present who we are in product supply. We are responsible for product management, R&D, operations, and sourcing within the Nobia Group. We operate 14 production facilities, whereof three of larger scale.
We have one in Sweden, Tidaholm, one in Ølgod, Denmark, and the last large factory we have is in Darlington, U.K. Most of our production is make to order, which means that we ship directly to the end customer or to a build site for trade or projects. We produce at large scale, in a normal year, around six million cabinets, with equivalents to five kitchens every minute. We have more than 600 suppliers, mainly in Europe, we have a yearly turnover or purchase of direct materials of SEK 5 billion. In addition to that, we spend SEK 800 million on outbound transportation. We operate two basic product platforms across the group, approximately half of the employees in Nobia works for product supply. That was a short introduction. Let's now move into the strategy. We have a lot of key initiatives to support the Tomorrow Together strategy.
If we start first with sustainability, we have now third-party approved Science-based targets that we want to comply with. Those are really ambitious targets. We have redirected our product development efforts for a more sustainable living, and we have a few initiatives also around growth acceleration. We want to increase our capability in mass customization. We want to be faster with new products to the markets. Finally, we have several initiatives to support the growth of trade in U.K. On the people side, we put health and safety very high on the agenda, and we have a zero accident vision for the group. Finally, on the structural efficiency initiatives, I'll go a bit deeper into these three, the first being the new factory in Jönköping. I'm confident that this will be the most modern factory in Europe in the kitchen industry.
It will enable strong growth in the Nordics and Central Europe by increasing the capacity with 50%. We will have mass customization capabilities to cater for the individual preferences that are increasing in the market. We will achieve cost leadership through high levels of automation. It facilitates also for specialization and consolidation over time. It will be industry leading in terms of sustainability. We will reduce our conversion cost with more than 40% in this factory. The new factory will take over the production that is today done in the Tidaholm facility. In addition to that, we will transfer also the production of HTH-branded kitchens that are sold in Sweden, Norway, and Finland from Ølgod to the new factory in Jönköping. That will enable us or free up capacity to geographically expand the HTH business into Germany and Netherlands and maybe other markets in Central Europe.
You can see from the driving distances on this slide that Ølgod is well-positioned to supply to those markets. If we look at the financials of the new factory, it will generate run rate savings of SEK 300 million a year from 2024. If we look at the investment itself, you would have SEK 2 billion of investments in machinery. You would have another SEK 1.5 billion estimated for the building. Fully utilized, that with on top of the run rate savings, it would create more than half a billion value as a consequence of increased sales. The groundworks has already started. The construction is planned to be started somewhere in the middle of this year, and we are starting the ramp-up of production in 2023.
Full-scale production will be in 2024. If we look at the cash-out profile of the investment, it's basically over the coming three years, with a peak in 2022. The accumulated cash out will be SEK 3.7 billion, which might be reduced down to SEK 2.2 billion, with a potential sell and leaseback of the factory building. Important initiative that we're driving in Product Supply is product harmonization. We are developing a new and optimized platform, which we call K 2020, which will be the new platform for Nobia. In a first step, to be introduced in the Nordics, and in a second step in U.K. We are harmonizing our range to drive efficiency in the whole value chain. We are 75% through this project in the Nordics, and it will be fully completed before the new factory starts its production.
Once finalized, it would give us the ability to introduce new products much faster than today. It will enable us to get a larger scale of purchase and buying power towards our suppliers. It will enable the new factory to become efficient, and we can also rebalance our production capacities when needed in Nordics. In U.K., we have a lot of initiatives to support the commercial plan. We will introduce K 2020, and we will convert Darlington to an excellent center of panel manufacturing assembly in U.K. We will enhance our mass customized capabilities, and we will change our distribution model so that we support the trade growth. That would give the tradesmen better availability of products, either immediately from warehouse in the stores or with short lead times from the factories. We also want to enhance our capabilities in direct deliveries, both to projects and to trade sites.
Finally, we will expand capacity in Darlington to cater for growth. Finally, some initiatives related to sourcing. The new K 2020 platform will, as I said, leverage scale and give better purchasing power. On top of that, we are consolidating our supply base, and we are driving a value engineering program across the group to enhance and increase sourcing savings. All in all, a lot of initiatives to cater for growth, to reduce cost that will put Nobia in a much more competitive position in the coming years. Thank you. With that, I hand over to Amanda.
Okay. Thank you. In a moment, Amanda Jackson and myself will be talking about our sustainability and design leadership ambitions. Before we do that, I would like to give a brief introduction to the subject. As you've seen before today, sustainability and design leadership sits at the heart of Nobia's Tomorrow Together strategy. Why is that? Why do we think sustainability and design is so important, and why is it such a core part of our strategy? Well, we believe that it's really relevant to our customers. It's very important, and it provides a source of competitive advantage. If we start talking about sustainability first, sustainability is becoming one of the most important questions of our time, and we feel that we have both the obligation and the opportunity to shape the agenda in this area as the industry or one of the industry leaders.
When it comes to design, for us, design is all about creating desirability. Desirability through providing beautiful and purposeful kitchens that speak to the hearts and minds of our customers. We also believe that sustainability and design go extremely well together because our belief is that you cannot achieve great design without thinking about sustainability, and it's hard to make big sustainability achievements without building sustainability into your product design. Therefore, at the heart of our strategy, we have both design and sustainability working together, reinforcing each other. Now I will hand over to Amanda Jackson, who will talk about our achievements and plans in the sustainability area. Amanda.
Thank you very much, Dan. Well, I'm going to tell you a bit about our sustainability management. We strive to work with sustainability throughout the value chain, even though our degree of influence varies along the value chain. A value chain perspective on sustainability helps us to identify how we can best manage our impact and create maximum value. Our approach is to integrate our sustainability management into our daily business and operations, and I'm going to give you three examples of what this means in practice throughout the value chain. Let's start with the product development part. In our product development process, sustainability is a key focus area, and we use a scorecard to evaluate design, material, and functionality of all our new products from a sustainability perspective. This enables us to continuously improve the sustainability credentials of our products.
If we then move to our manufacturing, we work with both environmental management systems and health and safety systems, but we also work with a two-folded climate strategy focusing on energy efficiency and transition to renewable energy. We now have 100% renewable electricity in all production units on all markets. Let's look at the user phase. We know that a large part of the environmental footprint occurs in the user phase. Hence, we work to both enable and inspire a more sustainable living in the kitchen, both in terms of energy and water-saving products, but also related to eco-label products. One key focus area of our prior sustainability strategy was to strengthen the systematic sustainability approach throughout the value chain, and that is what I've just showed you now.
Now I would like to move a bit further and look into some highlights of the results that we have achieved so far. We have 100% renewable electricity in all our production units and in all owned stores. 100% of the wood waste from our manufacturing goes to material or energy recovery today. Also, 47% of the net sales in Norway and Sweden comes from eco-labeled products. During 2019, we reduced our CO2 emissions, so-called Scope 1 and 2 emissions, by 25%. We do have a program for responsible sourcing, and within this program, we have 294 suppliers, and this is equivalent to 99% of our direct material spend. The vast majority of our suppliers are integrated into this program today. We are of course, very pleased to see that our efforts are recognized externally.
Hence, I would like to briefly show you some of the awards and recognitions that we've received over the last years. We've had top rankings in the sustainable company ranking, and that's called Hållbara bolag in Swedish. That's a ranking of OMX-listed companies based on their sustainability performance and sustainability management. We've also had a top ranking in the Walking the Talk report, which reviewed the large cap companies in Nasdaq Stockholm. We've also received the British Safety Council's Sword of Honor, and that is actually one of the most prestigious securities awards in the U.K. for health and safety. We received this for our health and safety management within Nobia U.K. We've also scored full pot or full in the World Wildlife Fund Timber Scorecard, and this is actually a scorecard looking into how we manage sustainable forest and sourcing wood from sustainable forests.
That was a few examples of the awards that we've seen. we've obviously done a lot, but we have a lot more to do. what I would like to do now is to present to you our new sustainability strategy. Our new sustainability strategy is just launched, and it is focusing on achieving sustainability leadership by further raising our ambitions in four different focus areas or pillars, as we call them. The first one is sustainable materials and circular economy. Within this pillar, we will focus on the promotion of wood from sustainable forestry or sustainable sources. We will strive to reduce the impact from plastic, and we will collaborate to enable a more circular material flow and contribute to a more circular economy. The second pillar of our new sustainability strategy is focusing on inspiring sustainable living.
Within this pillar, we will focus on design for sustainable living and how to enable our customers to reduce the carbon footprint in the kitchen. Thirdly, the third pillar of our new sustainability strategy is focusing on nurturing a sustainability culture. Within this pillar, we will focus on strengthening the sustainability culture, both in our own business and operation, but also at our suppliers. We will strive to reach further out in the supply chain to promote the respect for human rights and environmental management even further out in our supply chains. Last but not least, we have a pillar concerning climate action. Reducing greenhouse gas emissions is the fourth pillar of our new sustainability strategy.
Within this pillar, we will strive to reduce the greenhouse gas emissions from our value chain to contribute to the limiting of global warming to well below 1.5 degrees, so in line with the Paris Agreement. I would just like to dig a bit deeper into two of these pillars of our new sustainability strategy to give you more flavor and a bit more details in relation to ambitions and targets. Let's start with the pillar on climate action or greenhouse gas emissions, as we call it. What we've done here is that we have adopted a science-based target to reduce our CO2 emissions in line with what the latest climate science says is needed to prevent the worst impact of climate change.
We're going to reduce the CO2 emissions from operations and owned transportation, and this is called Scope 1 and 2 then, by 72% by 2026, from a 2016 base year. Furthermore, we shall collaborate with our suppliers of sourced goods to reduce their carbon footprint, both from production and from usage. At least 70% of our suppliers, based on emissions, shall have science-based targets by 2025. That's the ambitions and the targets that we do have within that pillar. If we then move to the second one, which is related to inspiring sustainable living. Within this area, we strive to help our consumers to reduce their carbon footprint in the kitchen. We're going to do this by transitioning our portfolio of cooling and cooking appliances to higher energy efficiency levels.
We shall also continue to expand our eco-labeled product range, and we will focus on design. Our new kitchen products shall be designed to enable customers to live a more sustainable life in the kitchen, because we believe that design for sustainability is key within our new sustainability strategy. with that, I would like to say thank you, and I would like to introduce my colleague Dan back again.
Thank you, Amanda. Thank you very much. First of all, the kitchen is often one of the largest investments that you make in your home. It's a big-ticket item. It's something that you will live with for a long time, and as such, aesthetics and the function of the kitchen becomes very important. Moreover, we spend more and more time with friends and family in the kitchen, and over 50% of people say that they socialize with friends in the kitchen. Our job is to design a welcoming space, a space where people want to spend their time entertaining guests. It's also where many of us spend our working days these days.
During the corona pandemic, of course, many people are working from home, and in a recent survey, 90% of HR leaders plan to allow employees to continue to work from home, at least partially, after the pandemic is over. That calls for kitchens that are designed for working in and spending a lot of time in. We have a big job to do here to make these kitchens purposeful for all the people who are going to continue to work from home. The kitchen is also a very visible part of the home. It's been so, it's been a trend for quite some time, and it's a trend that we see will be very strong going forward as well. In a survey among kitchen store professionals, the question was asked, what will the kitchen be like in 20 years?
80% of kitchens in the future, let's say in 20 years, will be open kitchen solutions onto the dining room and living room. As the kitchen becomes more visible, more open to the rest of the home, the role of design will play an even more important role going forward. We also know that design matters to consumers. When we look at the correlation between brand liking and known for design, brands known for design, we can see that there is a very strong correlation. That, in essence, means that the more a brand is known for design, the more liked that brand is by consumers. That gives us further confidence that design is really an area to invest in. When you look at our brands, and it's been said before today by Ole and Dan Carr, we have very strong brands in the market.
Many of them are known for design, but of course, we have a lot more to do in this area. 2020 has been an exciting year for us. During 2020, we have really filled our pipeline with new, exciting design concepts for the years to come. We have also launched a number of really high-performing kitchen concepts, design concepts, and this has been talked about before. We launched Nordic Spirit, we launched Jordnära colors, and we also very recently in HTH launched Nordic Creation. These are three really good examples of great design and conceptualization. I think when we get the design right and the conceptualization right, we can really get great results in the market, which we've seen from these three launches. Okay, so how do we then do it? How do we work with design within Nobia?
We have defined six principles that will help us guide our work going forward and to help us achieve our design goals. Intentional, holistic, supporting, uncomplicated, balanced, and unique. I will very briefly touch upon each one of these. Intentional means that we design with a purpose. It's not designed by accident. It's really designed with a purpose. When we have a clear purpose, when we have a clear intention, the concept and the design becomes authentic, and it gives a lot of room for storytelling, which is important from a communication point of view. Holistic for us means two things. First of all, it means that we don't launch individual components like a front door or a handle or a worktop.
It means that we launch complete concepts, comprehensive concepts to the market where one plus one is three. It also means that we work with complexity in mind, with a whole range in mind. Adding a new concept also means that we need to take away something to replace an old platform or an existing platform. It's also important for us that our new design concepts work well with the current range to allow for more design variation. Supporting is very much about sustainability, supporting sustainable living, as Amanda talked about. Using materials, thinking about how we design the kitchens, and making them stand the test of time. We need to design things that people can keep in their homes for a very long time from a sustainability point of view. Very important. Uncomplicated. We are designing for all our brands.
When we create design concepts, they should work across all our brands. As such, they cannot be too cluttered. They cannot be too complicated. They need to be rather clean in their design language to work across our entire portfolio of brand. That's what we mean by uncomplicated. Balanced means that we balance emotion and function, and this is really important to us. To create desirability, you need both, and for us, it's about the one not happening at the expense of the other. We need to strike the right balance between these two. Of course, unique. Unique is extremely important. When we bring new design to the market, we of course want to bring newness to the market, something that consumers haven't seen before, something that stands out, and something that is differentiated from competition.
These are our six design principles, how we work with design within Nobia. To put these principles into action, I want to share with you an example. During this year, later this year, in a couple of months' time, we will be launching our big design concept for 2021. It's called Nordic Nature, and we've really, in the development of Nordic Nature, in the design of Nordic Nature, put these principles to action. Intentional with a mid-tone warm oak-inspired wooden concept. We've created a concept which is really inspired by Nordic nature. It's holistic. It really has design potential with our entire portfolio, and it's also a new platform that replaces an existing platform. It is supporting sustainable living through FSC-certified wood, and there is more to come when it comes to sustainability credentials into Nordic Nature. It's also uncomplicated.
We have identified, we have designed a few very distinct elements that carry the whole concept, and that is really important for us. It's balanced with both functional and tactile visual elements. Finally, it is unique. We are bringing newness to the market through details such as rounded corners, fluted wood, and fluted glass. Finally, I would like to share with you a film that describes and brings to life how we worked with the design of Nordic Nature, all the way from inspiration to final product.
When we embarked on developing our new concept for 2021, we sought inspiration. We found that inspiration in the beautiful scenic Nordic fauna. It all begins with nature, how we interact with it, how we relate to it, how it shapes us, how it functions, creates perfect calming designs, its colors, and light. How it polishes its surrounding and cleanses our environment. How it ages with grace. The Nordic Nature is our inspiration. How did we take this inspiration to design? Starting with how we view nature in the Nordics. We worked with the frame to highlight the materials based on the natural aging process of Nordic wood. Our material choices range from naturally bleached to naturally aged. With inspiration from Nordic muted colors, we added complementary colors found in the winter season. Inspired by how nature smooths, we added rounded forms and matte finishes.
Nature is also full of textures, which inspired us to work with rib and fluted patterns. By observing how nature functions, we added new technical features. We also considered how we cultivate nature to find inspiration for tactile knobs and handles. We are now introducing our new concept for 2021: Nordic Nature. Nordic Nature is based on a new thin frame, beautiful warm oak finishes, a floating worktop, and a new solid oak handle. We added fluted wood to accentuate the clean lines and long length handles. The round details create a softness, and the new plinth has an integrated air purifier. We have also designed a new linear light to help you set the feeling you prefer. The thin frame creates distinction. The fluted glass creates depth. Finishes have a natural look that invites touch with rounded, easy-on-the-eye details.
We have edited a few of our key components to allow for countless ways to design your kitchen, which allows you to extend our products into the rest of your home. Introducing the new concept: Nordic Nature.
Thank you, Amanda and Dan. Nordic Nature, what a product. Amazing. We are really excited to bring that one to market, and it's coming to a store near you very soon. We do have additional growth opportunities, M&A being one. I think you have seen so far into the presentation that we have a lot of organic growth opportunities. M&A will be a part of our strategy, but it has to fit our model. Other growth opportunities are grow with our existing brands, ewe and Bribus, as well as selective geographical expansion through establishing HTH in new markets. Let's look at Bribus and ewe to start with. Bribus in the Netherlands, strong momentum since the acquisition, is really realizing synergies and expanding its presence in other segments, starting now.
ewe in Austria has completed its turnaround and is targeting a profitable growth in the retail segment, and also introducing Danish design products from uno form. Moving on, we know that there is a demand and interest in Scandinavian design in more markets. Through our international brand, HTH, we can, in an asset-light franchise model, reach, for example, Northern Germany and the Benelux. That presents an interesting additional growth opportunity for us, capitalizing on the strong brand of HTH. Now time for summary and financial targets. Five years from now, we envision a significantly different Nobia from today. We have gained retail market share in the Nordics through new design concepts, evolution of the retail network, and improved sales excellence. Our segment mix has shifted towards a larger share of more profitable and repeatable U.K. trade business.
In Central Europe, we have selectively established our HTH brand and grown our footholds in Austria and the Netherlands. We have vastly improved and optimized store network better connected to our digital channels for a seamless customer experience. We are substantially more digitally mature in terms of customer and colleague experience, internal processes, and data. Our brands have benefited from a continuous stream of beautifully designed and conceptualized product launches, and our manufacturing footprint is fundamentally transformed, including the largest, most automated, and environmentally friendly kitchen factory in the Nordics or even Europe. We are an attractive employer because we have a dynamic company taking sustainability very seriously and creating opportunities for people to grow. Our financial targets are a 3% - 5% annual organic growth, above 10% EBIT margin, a leverage of maximum 2.5 net debt to EBITDA, and above 40% dividend of net profit.
In the course of these presentations, you've heard the totality of our Tomorrow Together strategy. You've heard about the opportunities and the initiatives, really concrete ones, that we're going to drive in the area of growth, structural efficiency, and people engagement, with sustainability and design leadership at the center. I am really looking forward to this journey. The management team is looking forward to this journey. We hope that you are looking forward to this journey. It's going to be very exciting to bring this company to the next level. With that, thank you very much for listening, and it's time for Q&A. Thank you.
Hello, and welcome to Nobia 2021 CMD Q&A session call. To ask a question, press zero one on your telephone keypad. Now, please go ahead and start the Q&A session.
Good afternoon, everyone, and thank you for joining us today, and a very warm welcome to the Nobia Capital Market Day 2021. I really hope you enjoyed the presentations during today. Now we are live here from our Stockholm office, from the kitchen in our Stockholm office. With me, I have Ola, Jon, and Kristoffer. We are going to do our best to answer all of your questions. I'm going to do like this. We're going to start with some questions that we have received in advance, and then we will let everyone from the telephone audience post their questions. A few questions to kick off with. Several questions around the financial targets, the revised targets that we published today. How about we start with a general comment around that announcement?
Yes.
With regards to the financial targets, we didn't really change the financial targets, but we revised them to make them a little bit more contemporary, mirroring this plan. Looking at leverage, for example, for the financing piece. In terms of growth. Our growth ambition hasn't changed, but we want to mirror more the organic opportunities that we have outlined in this plan, and that's why we're moving into the 3%-5% organic growth target. In terms of the profitability, we want to show and be above 10% and prove that we can be that consistently, and that's the reasoning behind these financial targets.
Maybe a little follow-up on that one, given the fact that we are aiming for 15% margin in the Nordics and double digits in the U.K., doesn't 10% numbers sound a bit conservative?
Well, when you put it that way. As I said, I think, first of all, above 10%, and I think we shall prove that we can be consistently above 10% before moving forward.
Good. Also, we have a few questions around savings in the supply chain that we were discussing and our new factory we are building in Jönköping. We can start up with a few comments to clarify that, the SEK 500 million and the SEK 300 million of savings that we're aiming for by 2025, full effect.
Yeah. basically, the SEK 300 million, and maybe Ola, later on, you want to shed some light on that as well. The SEK 300 million comes from the new manufacturing site, and it's a positive cash flow effect that we will see. On top of that, there will be some depreciation, of course, of the machinery, and that calculation is based on the fact that we will sell and lease back the building, which is not yet decided, as you know. The rest of the SEK 200 million will come from sourcing savings, and maybe you can shed some more light on it, Ola.
Yes.
There's basically two key components of that, one being the K 2020 project where we harmonize our products and get better sourcing leverage, and the other part comes from the just recently launched value engineering program that we run across the Nobia group.
Good. a question on the U.K. on the current trading situation, with retail stores being closed due to the COVID-19 restrictions. How's that impacting us?
I think everybody knows that having closed stores has an impact, but we really don't comment on the quarter at this point.
Over to Finland, a question. Why do we treat our Finnish brands separately?
Well, in Finland, we have a good project business, but we also have challenges in terms of profitability, so we're addressing it separately to increase the profitability. We would like to increase the average order value and looking at the go-to-market strategy in order to gain a much better market share for the business to consumer, the consumer business.
Good. Another popular topic, raw materials. Seems to be some input, some price pressure in the market.
Yeah.
How are we seeing that?
Yeah. Again, I can start, and maybe Ola, you help me fill in here. It's true that we see upward pressure on the sheet materials and the MDF boards. We have started a lot of negotiations on it, both with our suppliers but also with our customers. As you know, and we have communicated many times, we believe and our strategy is really that the consumers will have also to pay the burden for increasing sheet materials. Within that, we will need to increase our prices to cover for that. We believe that the effect over time will be equal to Nobia, but there will be some lag in it as well as of today. We believe that probably, we see these increases in sheet material prices from end of Q2, after summer, something like that so w e still have ample time to work with it, so to say.
Good. Thank you. Then another question around our financial targets, the growth rate of between 3% - 5%, how do we see that playing out in our three different regions?
If the question is, where do we have the biggest opportunities for growth? That's the way I try to answer the question. Well, I think as Dan Carr was outlining, we have a great opportunity in growing in the U.K. trade market. I think the U.K. region is the biggest growth opportunity, followed by the Nordics in terms of value in money. In percentage, probably the Central Europe.
Yeah. Thank you. A question on HTH, going into Germany, Benelux, that part of Europe. Do you see any specific challenges in doing that?
Well, obviously, putting a brand into a marketplace, there is a lot of stuff we need to do. One of them is to find the right entrepreneur and the franchise people that we need in order to carry this brand onto the ground and meet the customers.
Good. Talking about the franchise model, there's a question about that. In the Region Nordic, we utilize the franchise model to a large extent. In the U.K. we don't. Why is that?
The reasoning behind that is you need a certain scale in order to be really efficient and good at running a big network by owned stores, and we don't really have that scale in the Nordic countries, whereas we do in the U.K. Either which way, we need to meet our customers in a good way with nice stores and a good proposition and all of that, regardless whether that's franchise or owned stores.
Good. Do we see any opportunities to expand internationally with some of our construction customers that we already have?
Yes.
Another question.
To some extent, absolutely. We have a few examples of that already.
Also on Central Europe, margin potential for that region. How should we see that?
We think it is fair to say that the margin differential between Central Europe and Nordic should not be very big in the long run. Today, we are operating in Central Europe of +10%. I think we hit 11% last year. Of course, we have the ambition to be the same level as the Nordics, but it will take a much longer time to get there, and probably not within the strategic period.
Thank you. A question on our Region Nordic. What marketing resources, capabilities, and channels are we putting behind the Revitalizing Retail Initiative?
Yeah, well, if I start on the cost side, it's a lot about the focus here as well, right? We're trying to pull some of the expenses we have already into more of that. Will it lead to higher investments in the stores? Some CapEx will be spent in the stores, but we don't foresee that there would be any large increase in cost, rather reprioritization of the cost that we already have. Also we have already invested quite a bit in the new concepts, and not the least, as you have seen from the numbers as well, for you that have tracked our performance in Denmark, where we launched new concepts very successfully and in new stores. It's fair to say that we have already invested in this area, so it's not something completely new to us.
We're going to complete that journey, and it will still take a little bit of time to do that across the entire Nordics.
Good. Now, operator, please, can we open up for some questions from the telephone audience?
Thank you. Ladies and gentlemen. Our first question comes from the line of Mattias Holmberg from DNB. Please go ahead. Your line is open.
Thank you, everyone, and thanks for taking my questions. First, getting back to the margin target, just to clarify, should we consider the 10% to be sort of a floor so that you should deliver above 10% consistently throughout the cycle, or is it 10% on average over a cycle?
Above 10% on average.
Okay. I'm also a bit curious about your ambitions to expand your B2C market here in the Nordics. Have you identified which competitor or which segment of the market that you believe you will be able to capture these customers from?
Yes, we have, and we did some trials a few years back to also find opportunities within the low-entry segments. We are slightly moving away for that. It will be more of an economy plus and premium minus type of segment, which we believe is a stronghold that we can have, and that's also where we can see a large potential to grow, actually. Especially so, again, coming back to what we have already seen with the new stores, with the new product concepts, that's where we believe we take share right now as well. That's a good place to be in for us. I don't know if you'd like to comment or-
No.
It's-
I agree, with some of the design and concepts that we're now putting to the market, we can leverage even more on the strong brands that we have in meeting the consumer.
Yeah.
Even more so with those.
Again, the very low-end entry flat pack market, we're not going to address as such.
Great. Finally from me, on the plan to expand with HTH in Germany and the Netherlands, how do you think about building brand recognition in these regions? I can only imagine it will be quite costly to do this through traditional marketing. Any insights on this?
Well, obviously you need to spend some money into getting known by the customer, but we're taking this on a step-by-step approach. It's going to be quite asset light, and then we're going to introduce, let's say, up to 20 stores selectively in the next couple of years on a step-by-step approach.
That's all from me. Thank you.
Our next question comes from the line of Victor Hansen from Nordea. Please go ahead.
Hi. Thank you for the presentation. My first question, so you removed the M&A component from your financial target, but still highlight M&A as a growth potential ahead. I'm wondering how should we think about M&A in the coming years? Will it primarily be minor bolt-ons with clear sourcing synergies? Are you looking at any specific segment or country perhaps?
Yes. As you said, M&A will continue to be a part of our strategy going forward, but we'd like to highlight again the organic opportunities, and I think you've seen in the presentation that there is a lot of organic opportunities that we have that we will have focus on. Again, with that said, there will be M&A opportunities, and that will be an important part, but it has to fit our model to contribute and support the realization of this strategy. There will be M&A on top of the organic ambitions that we have.
Okay. Regarding the U.K. double-digit margins, if you could provide some flavor on that. I'm wondering, is there a timeline for when this can be achieved, and what will drive the margin? Is it the sales mix effect from an increased share in trade? Is it the digitalization efficiency gains or possibly the manufacturing consolidation to Darlington that will be the main driver for the U.K. EBIT margin?
I can start, and then you can fill in maybe. the double-digit margin we target to be within the strategic period, of course, not to put a specific date on it. We're going to get there both through driving growth, capitalizing on the Magnet brand, as Dan was talking about earlier today. we have a lot of opportunity to grow within the trade segment as we believe, which is a healthy margin for us already today. On top of that, we are also doing efficiency savings. Ola mentioned his savings, which also has to do with the harmonization of the range, getting U.K. on the K 2020 platform will also drive efficiency gains.
Also Dan Carr in his presentation mentioned how we utilize the sales force collectively now instead of having a separate bucket of sales force and to really form the region, which will also bring some efficiency savings, and has already done so with the Rixonway merger with Magnet. there are many different items that will get us there, but I think the ones I mentioned now are the core ones. You mentioned digitalization, which is also an extremely important part. We believe we can become more efficient in the store network that we have in U.K., and we know it's a high SG&A and high fixed cost in that network. With digitalization, we can probably improve that, both in terms of growth, but also in terms of efficiency and cost. it's hugely important.
We have seen the big trends now where we have started with the online sales, which actually is something that the customers are getting acquainted to, which is very good for us. I know that was a long answer, but-
It's a big question.
It's a big question.
Yeah. Yeah, it's an important-
An important one, obviously. I mean, it's a real opportunity for us in the U.K.
Yeah.
Yeah. I appreciate that answer. The final one, looking into the distant future, could you provide some color on the long-term potential from consolidating your manufacturing footprint once the Jönköping factory is completed? You have a lot of factories right now.
That's true. Now, first of all, I would like to say that this investment, which is an investment both in efficiency and capacity, is mainly targeting to enable growth. we are not doing this to consolidate our manufacturing footprint. That said, there might be opportunities in the future if that growth is not achieved, then of course we would look at our footprint and see what we can do. again, primarily we're doing this to enable growth in the Nordics and Central Europe.
Thank you very much. That's all from me.
Our next question comes from the line of Julius Rapeli from SEB. Please go ahead.
Hi, it's Julius from SEB. Thanks, guys, for taking my question. One follow-up question on the M&A market, and perhaps do you see this as an opportunity to enter into the Northern Germany market? Maybe could you discuss a bit the differences in market characteristics between your current markets and the Northern European/Benelux markets? Thanks.
Okay, the first part of your question in M&A, I think it's fair to say that back in the days, you could see M&A as a prime driver for this company to build the size of the company where it's at-
Now, I think the next phase of this company is looking into these organic opportunities as we have outlined in this plan, supported with, let's call it selective or relevant M&A to support realization of this strategy. I think that's the main basis of things. We have, let's call it, the beachhead in the Netherlands with an acquisitions that we can build our business from, adding HTH brand and developing that business from that platform. We have also a concept with franchisees and as a strong consumer concept coming from HTH that we're going to build organically in Northern Germany. Any comments on any pipeline on those sorts of things, we're not making, but let's say it's not the main strategy to do lots of acquisitions in Germany in order to take that market or take on that market, I should say.
Okay. Thanks. Maybe the follow-up on that one, if you could discuss the main differences in regards to market characteristics in the German market compared to, for instance, the Nordic markets, if there is any?
Well, I think there is. I think it's fair to say that there's quite a few, five or six or so, really large player on the manufacturing side, Nobilia being one or maybe the best well-known producing at large scale. Then they have a distribution. They don't have their own distribution, but going through retailers and whatnot to different channels. I think that's really the market characteristics in Germany as a whole. I do believe, or we know from research, there are, let's call them large pockets, where Scandinavian design and the kitchen specialist model is very relevant, and that's the target we're looking for. That will be more similar than to the market characteristics of the Nordic countries. Germany as a whole has a different characteristics than the Nordics. The pockets are large enough for us to deem them interesting.
I think to add to that, it's fair to say that the same macro trends that we see with customization, the value of-
Absolutely.
-being able to customize at customer's choice, it's also happening in Germany, and that's why we see this potential as well.
Yeah.
Okay, perfect. Thanks. If I may ask another question. You mentioned the transformation in Finland, and then also you touched upon the subject that you had previously or historically divested some margin dilutive parts in your group. Is divestment of the Finnish operations an alternative for you guys?
Can you repeat the question, please? I didn't hear. If
Is a divestment.
If divestment of the Finnish operations would be an alternative for you.
I think we have strong assets and a lot of capabilities. Our first plan A, so to speak, and our first priority is to work with the business. There's a lot of good stuff that we can do there in order to bring it to the level where we want it to be.
All right. Thanks. That's all from my side.
We have a question from the line of Hjalmar Ek from Lannebo Fonder. Please go ahead.
Hello. Just one question from my side. I understand the cost savings and your sourcing effects in the new investment, but given that it's a large investment and that it gives you a lot of new capacity, could you maybe talk a little bit about incremental margins as you grow into that factory and potential bottlenecks and how you view that?
Yeah. Where to start? As Ola was alluding to, if we were to fully utilize the factory, that would generate another half a billion profitability for the company. Of course, we need to get there with new customers, et cetera. I don't know how else I should answer that question. Maybe if you pose it a little bit differently so I understand better what you're after.
Sure. For example, say that you would give me your growth target, it would take quite a lot of time to grow into that capacity. How smooth over the time would you say that those savings could be? Is that very back-end loaded where you would get leverage on your fixed costs once you are fully operational there or at capacity or? Yeah.
Okay. I better understand. No, with the current volume we're putting into the factory, we will see those savings come through right away, basically. In the run rate will happen in 2024 with a full year effect in 2025 on those SEK 300 million. On top of that, you have the growth opportunity, which could add another SEK 0.5 billion in profitability, and that is to come later, so to say, or something we could start to work with already now in a way. It's intentional to come at a later stage.
Okay. That's very clear. Thank you.
We have a question from the line of Kenneth Toll Johansson Carnegie. Please go ahead.
Yeah. Thanks. You talked a lot about the Nordics and also the U.K., but you didn't speak so much about Central Europe. Will you also introduce the new measurement platform, the K 2020, in Central Europe? What are you doing to increase margins there, please?
Yeah.
If I start maybe with the platforms. It's quite a big project to introduce a new platform, and we are well advanced in the Nordics to develop this platform and implementing. The next stage will be U.K. This is quite far out, but of course our long-term aim is to operate with one platform within the group.
Yeah.
Okay, great. Thanks.
Did you have additional question there, Kenneth, or?
Thank you.
Oh, okay.
There are no further audio questions registered, so I hand back to the speakers.
Okay. If we don't have any further questions, then we will round off. Thank you so much for watching us today, and we report Q1 numbers on April 28th. If not before, hope to see you then. Thank you.
Thank you, everybody.
Thank you.