Welcome to the presentation of Swedencare's Q1 report led by our CEO, Håkan Lagerberg and CFO, Jenny Graflind. We are pleased to have our CCO of Europe, Laszlo Varga, joining us with a presentation during today's webinar. As usual, we will have a Q&A after the presentations, so please raise your hand if you have any questions. Over to you, Jenny and Håkan.
Thank you so much, Emma. Warm welcome for our Q1 2026 presentation. We had a solid quarter, starting the year good. Double-digit growth, improved gross margin, compared to Q4 and 2025, and increased profitability as we expected and communicated with our pre-call earlier this year. Margins and sales still impacted by NaturVet Amazon project, the takeover. It is improving month by month. We target that the normalized levels will be in H2 2026. The other issues we had in Q4 are mitigated, and we're happy that we could deliver that as we also communicated. Strong momentum, especially in Europe and production segments with 20% organic growth. In different growth groups, pharmas, we have been waiting for both development and manufacturing, had a fantastic quarter. Dental, including Dental Month, in U.S. predominantly, but it has been presented in Europe as well in some markets.
Really strong demand for dental products and also online overall of our brands continue to grow faster than we do in other segments. ProDen PlaqueOff continue to outperform 33% organic growth and NaturVet 14%. The NaturVet brand is really starting to take off now with our online sales on Amazon, so we're really happy to see that. Coming back to the international turmoil, no visible effects as of yet in demanding markets or for us when it comes to any getting products. Of course, transportation costs a bit higher but not a major impact on us. As you all know, we have our local manufacturing in Europe and in the U.S., so not so much affected by Middle East and Asia. Happy to see that. Over to you, Jenny, about the financials.
Yes. Revenue for the quarter amounted to SEK 650 million. This was a 1% growth. 11% was organic growth. We had a -14% currency impact, and we had a 4% acquired growth. The acquired revenue came from Summit Vet. This was acquired in April last year. From Q2, it will be reported in organic growth. The currency impact is mainly coming from the US dollar, but also euro and pound has all weakened against the crown during the quarter. As you can see on the top right, the organic growth of 11% is double compared to what we had last year in Q1, when we achieved 5%, as well as the third consecutive quarter with the double-digit growth. Like Håkan said, this was in line when we communicated on the update call.
Operating gross margin is a strong 59.7%, stronger than Q4 and also for the full year 2025 and in the higher span of the corridor where we have communicated we'd like to be with 58%-59%. The high gross margin is partly coming from the product mix. For example, like Håkan said, we had strong growth in PlaqueOff with 33% growth, and this we have, of course, stronger margins, and we have a lower share of private label this quarter. It's also due to the strong growth we have in Europe. Europe is the segment where we have the highest margin. Summit Vet, which we did not have last year, also contribute to a higher gross margin. The external cost is quite stable.
It's higher than it was in Q1 last year, because we have moved the NaturVet Amazon in-house since then, which has external cost linked to those Amazon sales. As we have mentioned before, when we grow in Amazon, there is additional costs which are linked to the sales. In addition to that, in Q1, Swedencare always participates in several trade shows, which also has a higher cost. Personnel cost is slightly down if you compare to Q1 last year and also last quarter and for the full year 2025. Partly this is due to the FX. It's more important, I think, to look at the percentage of sales, and we have the same percentage as we had last year. Operational EBITDA and reported EBITDA, because there was no adjustments between operational and reported this quarter, amounts to SEK 128 million for the quarter.
This is an increase of 3% compared to last year and a margin of 19.6%. This is a small increase to last year when the margin was 19.4%, as well as better than last year as we promised. Net debt to EBITDA, this is 2.8 and has decreased by 0.1 since last quarter. The increase that you can see in Q2 last year is due to the acquisition of Summit Vet, and in Q4 it was up due to the decreased EBITDA. Our cash conversion for the quarter was 51%, and this is mainly due to higher inventory value at close, together with some larger tax payments we had to do this quarter, which impacted the operating cash flow.
During the quarter, we have repaid SEK 50 million on our external long-term loans, and our CapEx remains at 2% of net sales for the quarter, which is in line with what we had last year. The rolling four quarters. On the left chart, you can see that the rolling 12-month trend has not really changed much this quarter because it was very similar to Q1 last year, and that was due to this negative currency impact. On the right-hand side, you can see the trend of all the Q1s for the last five years. Here you can see that there's no adjustments between the reported and the operating EBITDA. Back to Håkan to speak about the sales per segment.
Yes. Thank you so much. North America, our biggest segment, SEK 371 million, a -10% growth due to currency, organically grew 5%. The highlights or important factors to mention, NaturVet on Amazon, as I talked about previously. Now we have almost 50% of all the SKUs in Transparency program, which means that we, after 30 days, and the other sellers selling on Amazon, selling out their inventory, we will be the only seller on Amazon. That has a huge impact both on sales and also when it comes to us being able to invest a bit more in the marketing programs that we know have an effect. That's a big step forward and as I said, month by month, we see an impact of primarily this Transparency program helps us with that. It increases month by month.
Looking forward to having that settled by end of Q2 so that we are all aligned in our sales on Amazon. We also have rebuilt the commercial leadership for NaturVet, so we're excited about that. Met with Kristy for the first time live at Global Pet in March. Not, let's say, major changes, but I do think that it will have a good impact for the year when it comes to the sales for NaturVet. Another big milestone for NaturVet is that they passed the SQF certification. It's a strict certification process that is, I would say, food grade. It's not so common that people producing supplements for pets have this certification. It is starting with the bigger retailers and the big box players that we try to get into.
It's very important to have that, and the team made an excellent effort at the shorter period than normal to get this passed. It was a very tight schedule for us because it was a requirement from a major club customer that's put on, or awarded us with a big private label contract. It was very crucial that we attain this one, and I'm happy to say that we passed it. Our private label, after all-time high in Q4, that's a big part of the organic growth not being double-digit for our branded products. We see growth for basically all of our brands. Looking at the vet side in North America, bouncing back a bit, but still affecting more in our production segment than in our North American sales. Our branded products are doing quite well.
The main topic for us is that our new CeraGuard line that I presented last time, it definitely outperforms market, both branded and private label solutions, and the private label solution has just started to have an effect on us, and I expect more impact in Q2 and onwards. Lots of trade shows, as always, both veterinary trade shows and pet retail. We also started with a couple of product launches in Q1, and there's more to come in Q2. Looking at Europe, continuing this very strong growth, 38% growth in sales, organically at 21%. Laszlo will present a bit more about Europe, specifically some products that's been very successfully launched. All companies in Europe deliver organic growth. Dental and Amazon outperforming the others. We continue to have really strong, specifically in U.K., a really, really strong market for us.
Also looking on the veterinary side in Europe, Italy has had an excellent quarter. Speaking about Amazon, of course, U.K. continues to over-deliver. Now in Q1, we have done the final stages to handle all of the Amazon sales on EU8 going forward. We expect a strong 2026 for rest of Europe sales on Amazon. Same story here as in U.S., that the branded are really outperforming stronger than the private label, and trade shows and product launches in Europe as well. Rest of the world, we put that in the European segment, and that's really encouraging to see that it's picking back up with really strong growth. China is back on track, coming back to normal numbers that we had pre-COVID. That's taken longer to bounce back in China, but it's really nice to see. Finally, the production segment, 9% growth, organically 23%.
Pharma is really kicking off as we all have been waiting for. It almost doubled compared to Q1 2025 organically, both in manufacturing and in development. That's also good to see. Same there, that we do expect pharma to have a really strong year and the coming years. We are really pushing that and have strong interest from the market. The weak derma demand, as we talked about in our call one month ago, it is what it is, a weak Q1, but increasing in Q2 with the orders and expect growth for the full year. It is coming back, but it's been a tough quarter for our liquid derma manufacturing in the U.S. In Europe, really strong in European contract manufacturing.
As you know, we've been building out in the U.K. and also in Ireland, specifically for the soft chews, and that continues to show a high demand. We are increasing basically month by month, improved and increased capabilities, both organizational-wise, capabilities and organization in pharma in North America and in Europe when it comes to manufacturing, both in U.K. and Ireland. We have started a big project with facility upgrade expansion for the dermatology and supplements in Florida. Currently we have two sites. We will merge those two into one in a state-of-the-art derma facility. We're leaving the old derma facility that's been used for a long time. Also when it comes to two different, let's say, CapEx items that we have invested in the old one, we can move those with us and then, of course, build out those.
That has also a big effect on manufacturing lead times when it comes to liquids. We're looking forward to that, and that will be finished the second half of 2026. Over to you. Or, I'm sorry, I thought this was coming later. Sorry. Yeah, priorities 2026, basically the same as we presented last time. Continue our strong growth trajectory, focusing on present main market, but also looking into newer markets in Asia and South America. South America have had a really strong 2025, and that continued in Q1 2026. We are opening up new markets there with partners. Enhance operational efficiencies. That's really where we're on all of our manufacturing sites. We see that we keep on improving and both in lead times and also from a cost perspective, that we optimize it. Online strengthening. We continue to focus on Amazon and other platforms, as you know.
However, we are also increasing our D2C sales from our own websites, and that will also be a priority going forward for a couple of our brands. When it comes to M&A, it feels like it's picking up a bit in the market. We are looking at some potential targets, but do not expect us to be overly active in the M&A market because we do feel that with the setup we have currently is really a base to build from. We're looking and see if there's an opportunity, but not very actively, I would say. Over to Laszlo.
Thank you, Håkan. I'm going to share a little bit about some of the activities and projects that we have done in Europe and looking forward on how we're going to keep building this strong momentum. As mentioned, we've had a good organic growth in Q1 versus Q2. The main growth drivers have been the dental products and online sales, both our own online sales and sales together with our customers and partners. We have built an in-house excellence to support both the brand awareness and building the brand, together with direct sales. One of the big moves we did last year was moving in our vendor accounts to seller accounts. Maintaining these ourselves, and we've seen very positive growth on those. Still early stages and looking forward to the rest of 2026, we see that the strong growth momentum will continue in our online markets.
We've also had good growth within the veterinary sector, which we are also looking to implement, first online and then also into the physical veterinary clinics later in the year. Another big project was our innovation and new brand relaunches and brand development. If we go to the next slide. ProDen PlaqueOff Crème for Cats launched late Q1 this year. Cats is a big segment, and it's been a little bit underrepresented when it comes to health and healthcare. Cats tend to hide their suffering a little bit better than dogs. But we know that a majority of older cats suffer from some sort of dental disease. This is the segment, when it comes to cat food and cat supplements, that's growing the fastest in pet care. Cats are more selective eaters, and the palatability is more sensitive than dogs, it poses some challenges.
If you click one more time. To meet this, we have a good offering of oral health supplements for cats, and Crème really targets and supplements and adds the additional benefits, meeting the. It's a little bit fun, it's a treat. It has the same active ingredients, the A.N ProDen, and the palatability is really strong. The benchmark when it comes to palatability for cats and cat supplements is around 70%- 75%. With independent testing that we did, we got a nine out of 10, which is really promising. We started with a selective rollout in this first phase and have had a stronger than anticipated early response and then building on the broader launch that is planned later in the year. For the soft chew formats, is one of those formats that we see a strong possibility and strong growth in Europe.
It has been the dominant format in the U.S. for the last couple of years. Now we're seeing the same movement in Europe and usually trends start in the U.S. when it comes to pet care and is adapted by the European market. We see it in the U.K. , U.K. is adapting faster to the format. We have a good growth momentum. We've also seen a positive development in the limited online launch we did last year. We've taken some learnings from that launch and are now preparing and doing a full-scale European launch this year. The products will be presented at Interzoo in May. Again, here we have focused on making some improvements to the products, but also worked a lot with the palatability. What we want to aim for is a best-in-class palatability in the soft chew formats.
Here we also did independent testing and received a very, very strong palatability acceptance, between 97% and 100% on the chews tested. We've also done a refreshed branding, and the look and feel that has been met very positively in the U.S., where it was launched last year in fall. Our initial responses and discussions with some of the larger pet retail chains and Zooplus that we've been working with NaturVet by Swedencare is also very positive. We're really looking forward to the launch at Interzoo in a month from now, less than a month. As you can see.
I just wanted to point out that even with the limited launch we did, there was a nice growth momentum, and we see that there is a demand for soft chews in Europe, and we believe that this updated and refreshed product will be well positioned for that growth momentum we see in soft chews. Thank you. Another interesting pilot we launched late last year was to see if we could utilize the strength that we have internally. We have the full value chain, all the way from R&D to meeting the customers in the market through both our own channels and close partner channels, and wanted to test faster from idea to launch product. The pilot we launched in December in a single market in Europe.
As you can see, the results there on the growth, it's been a very positive growth results and we see how it's contributing to the overall growth too. Based on this initial success, we're going to roll it out to more markets in Europe. One of the things that we also anticipated and was hoping for is that when we launch it and get a good growth momentum in the online channel, is that it's going to attract interest from the retail side. We're already in discussions. We've already listed this first pilot project with one pet retail customer and are in discussions with several more launching. We are now scaling up this model based on these initial successes and have a target of a minimum of 10 new products to be launched during the remainder of 2026.
We don't think that all of the products will be as successful, but we aim for at least 25% of the products to reach the success where we integrate it into the product portfolio and do a full broader launch of it. The target there is a positive contribution both to revenue and profitability. The next products are already in the pipeline, and we hope to launch them late Q1 or in Q2. To summarize the European market, we're standing strong. We have good building blocks. The overall underlying growth of the pet market is good in Europe. Also, the shift towards the online segment is moving very strong in Europe, and we have good channel excellence, both in the Amazon segment, but also general online marketing and brand building. We're well-positioned to capture this shift towards the online segment.
Together with the new product launches, both in existing brands and in product innovation, that's going to contribute to a continued growth in the rest of the year, and also introduction of existing brands, for example, some of our vet products, veterinary products, and vet consumer products in new European markets, utilizing the different strengths that we have in the channels and in Europe. I look forward to continued healthy momentum in Europe in 2026 and beyond.
Thank you, Laszlo. Yeah, to sum it up, Swedencare's financial targets that we presented Q4 last year, we would like to focus on the two top ones. What you can expect from us 2026 and onwards is that we do expect to deliver annual double-digit growth organically, and why we are confident that we can grow faster than the market growth is our online efforts and skill, and pharma segment really taking off now as expected. We have opened up a new channel with the FMCG or big box retailers, a big opportunity for us in the U.S., not only for the brand that we have launched, NaturVet, we also see potential to launch other brands that we have into that channel. Product portfolio expansion, we continue to utilize the offering that we have within the group.
We have done lots of things, but there are a lot more to be done when looking at the different portfolios that we have and where we see openings within our different brands. Also, of course, innovation. We have a continued pipeline, like Laszlo said. We do expect that we will be able to launch several innovations under different brands the coming years. Also pricing opportunities. As I said, we are making investments which create efficiencies in the manufacturing side, and also for a couple of our brands, we do feel that we have the potential to perhaps have a couple of percentage more possibilities to increase price compared to competition. Coming back to the profitability, we have a target of 26% EBITDA, and we do expect us to, on an annual basis, to continue to improve that.
That's really built from increased gross margin, scalability in OPEX. We have lots of opportunities there. Synergies and efficiencies and rationalizations as we are looking to where we can optimize our organization, and coming back to pricing opportunities there as well. Lastly, the pharma division really will be one of the main drivers for growth and profitability within our group. They have the possibility to outperform many of the others in our group. We would like to highlight, if anyone's missed it, that we will, for the first time, have a capital market day in Stockholm on June 2. There will be speakers from the group and also our incoming chairman will be present. We will have a couple of hours or more in-depth when it comes to our business strategy and financial targets.
It will be lots of interesting presentations there from our group leaders. Finally, I would like to mention that Håkan Svanberg, our sitting chairman, will today, when we have our annual meeting, leave the board, and I would like to highlight and thank him a lot. This Swedencare, as it looks today, wouldn't have been possible without him. He was the one that founded Swedencare, and me and Johan Bergdahl was part of that from the beginning. But Håkan has been instrumental, and we couldn't have done it without him. Thank you so much, Håkan.
By that, we are open for questions. The first one comes from Adrian. Please go ahead.
Hi, guys. It's Adrian Elmlund here from Nordea. I hope you can hear me.
We can hear you.
Yeah, very well. Okay. A few questions from me, please. Firstly, just noted that sales in North America was up 5% organically, right? I think this is even despite a rather easy comp from last year. Could you perhaps give us a number on how much this private label sales did affect the North American segment in the quarter? What drove the decline in it, and what should we expect for the remainder of the year?
I don't have the actual number here, but as I said, we came from a record quarter when it comes to private label in North America in Q4. Of course, private label customers, they normally order twice or sometimes 3x-4x a year. Since it was a record quarter, lots of the demand was pushed into Q2. That was the main difference. Also remember that we were in discussions with our Amazon partner starting in Q1 last year, and that led up to a very strong, let's say, buying from that partner in Q1 last year. That also affected our, let's say, even though, as you said, it was not so strong, but it was a big order from that partner that we had, and now it's internal sales. That's the main factor.
Yeah, what you can expect is a, let's say, stronger three quarters compared to Q1 for North America. We do expect all of our segments when we look at it on an annual basis. We do expect that all our segments will be growing double-digit in 2026.
Perfect. Okay, thank you. Another question here regarding the SQF certification. You said that allowed you to land this major private label contract, right?
Yeah.
Is this contract that you're alluding to a completely new one that you haven't commented on before, or is this in line with expectations looking back from last year?
Oh, it's a new contract, and it's a big contract. Yeah, we landed it in Q1, but with the prerequisite that we would pass the SQF.
When is it due?
Oh, it will be a, let's say, a rolling project. The first deliveries in that project will be in Q2.
Perfect. Thank you. Another question here, Håkan, regarding just a clarification statement. I think you said that the private label issue, if you will have an impact in Q2 as well. Did I misunderstand it, or what did you mean?
No, then I said something wrongly, because we do think private label will come back to, let's say, normal demand in Q2. In U.S., it was really due to the very strong Q4 when it comes to private label. In Europe, it's not as important in Europe, but still, it was weaker than Q4 in Europe as well. We expect it to bounce back in Q2.
Okay, thanks. Perfect. Maybe that was my fault. Lastly, a question here for Laszlo. What is the go-to market route here launching NaturVet in Europe? Is this exclusively on Amazon and Zooplus, or am I misunderstanding? Could you give any flavor on the revenue ramp-up that you expect here? We saw a rather nice chart that you show there, but we don't have the numbers on sales. Do you have any comments with regards to the margin profile of this launch?
Yes. I'll take it backwards. The margin profile is in line, slightly better, I would say, than the gross margin that we have as a company. It's completely in line with that. When it comes to expectations, we do not communicate that when it comes to how big share it will be. We are in discussions with a couple of the major pet retail companies in Europe, both traditional brick-and-mortar and online. The go-to market is a broad launch. We did the initial limited launch was purely online, together with Zooplus and select Amazon markets. Then the purpose here was to get a better understanding of the consumer and the market, give it a good momentum with targeted campaigns. We've seen what works, and we also seen what hasn't worked and made improvements there.
With the launch at Interzoo, we will start with U.K. markets, and Pan-European online. Then depending on what type of agreements we finally come to in conclusion with the discussions that we have, the target is a broad European launch in all channels by the end of the year.
Right. Just a quick follow-up, if that's fine. Do you have any larger X day when you're ramping up, or is this just purely gradual, if you will?
It's gradual. When it comes to Amazon and the online segment, where we control it will be a launch from day one, so to say. Then, the rest is depending on the various discussions that we're in. We are planning to do several touchdowns depending on when the different launches appear in the different channels.
Perfect. Thank you very much. That was all from me.
Thank you, Adrian. Your next question comes from Christian. Please go ahead.
We can't hear you, Christian.
Yeah. Good morning. Can you hear me?
Hey.
Good. Thank you for taking my questions. I have a couple. The first one is regarding nutraceuticals. Given that NaturVet grew 14% organically in Q1, do you anticipate nutraceuticals to reach double-digit growth for a full year despite the slow start to the year?
Yes, we do.
Okay, great. The second question is regarding the gross margin that came in close to 60% in Q1. I think this is the highest level that you have reached in a single quarter in the last six years. How should we think about the sustainability of this level going forward? Are there any structural drivers that could push it even higher?
Yes, it's a high one. We have communicated that we like to be at 58%-59%, and that's where we are keeping for this year.
Yeah, the higher was partly due to.
The strong growth in Europe.
Strong growth in Europe. We have higher growth margin in Europe than North America, for example.
Okay. Excellent. External costs represented 75% of net sales in Q1, and you had some elevated sales and marketing costs in the quarter. How should we think about this ratio evolving as with the remainder of the year?
Well, we are expecting, like we said, strong growth in Amazon, and Amazon will bring up the external cost. It's not going to follow the pace of Amazon, but it will be increased as Amazon is growing more than the rest of the group.
Okay, great. Thank you. That's all from me.
Thank you. Your next question comes from Adela. Please go ahead.
Thank you. Just a follow-up on the NaturVet and then Amazon transition. I'm sorry if you already mentioned, but are you able to quantify the impact that you had on the margins in Q1, and also, how much of this headwind should we expect in Q2 and going into the second half of the year?
We haven't really quantified it because it is very difficult to really read out. I would say that it has, as I said and wrote, it's improving month by month. It's both linked to actual sales growth and with that comes a better margin. Finally, what we are targeting now in Q2 is that we will be able to put on our, let's say, marketing and sales programs, because we only put them on when we see the return on the investment is good. I would say that expect the Amazon sales for NaturVet to improve over the quarter and will be normalized by Q3. We don't want to communicate the actual impact. You will have to see that when we report it.
Okay, thank you. Maybe on the good growth that you had in the production, how much of this would you say is driven by actual structural demand versus just timing effects?
I would say that's structural demand. We do expect both pharma and our EU manufacturing has really strong demand going forward. As I also said that we had a weak liquid derma quarter dragging down the numbers for the U.S. That is normalizing in Q2, looking at the order situation right now. We expect a strong manufacturing growth for the year.
Okay. Thanks a lot.
Thank you. That concludes our Q&A session. Back to you guys for any closing comments.
Yep. Thank you for the interest. We would like to highlight that we have decided to continue the feature that we had now in Q1. We will have a pre-call for Q2 update June 17 at 3:00 P.M., and we will send out a press release one week before confirming this. We have the Q2 report being released on July 22. Thank you so much.
Thank you. Bye