Good morning. Welcome to the Synsam AB conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing Star then Zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask question, you may press Star then One on your telephone keypad. To withdraw your question, please press Star then Two. Please note that this event is being recorded. I would now like to turn the conference over to the speakers. Thank you. Please go ahead.
Thank you. Good morning, everyone. My name is Martin Daniels, I'm the Deputy CEO and Chief Innovation Officer at Synsam. I'm joined with Per Hedblom, CFO at Synsam. We will go through the results presentations for Q4 and full year 2022. We will go through a business update, a financial deep dive, and then open up for Q&A. If we go into a sort of a high-level summary of Q4 and 2022, as we have said before, we are experiencing a slightly weaker market, and in that market, we've been able to show strong growth and increasing market shares. Our nominal growth in Q4 was 10.3%, and that breaks down into organic growth of 6.8%. Also on the margin, we're at 19.6%, which is slightly below the target.
For the full year, the numbers are 10.6% on the organic growth and 22.8% on the EBITA margin. During the year, we have, as you've seen from the numbers driven a lot of growth, i t has come at a slightly lower margin. During the year, we have initiated a cost and restructuring program to strengthen the EBITA to be in line with the Synsam financial targets. We will come back to that more in the details on the financial deep dive. In terms of impact, that program is expected to deliver SEK 102 million impact in 2023 and SEK 129 million in 2024, and that's all compared to the baseline of 2022.
Promising to say in quarter four, we saw the subscription business being stronger than ever with a record increase in the number of subscribers, approximately 33,000 subscribers being added in that single quarter, which is more than ever. Also paired with a churn rate which is lower decreasing compared to previous quarters. So in these turbulent times, consumers are more attracted and more prone to go into subscription model, which is strong for Synsam business model. As you've seen, the gross margin during the quarter has strengthened compared to Q3. We've had the discussion earlier during 2022 around the impact from gross margin. We're seeing at the same time that customers tend to choose more affordable price points.
Our offering, which spans everything from low entry price points to premium price points, can capture that consumer demand. Also, our price guarantee ensuring that customers feel comfortable and assured that coming to Synsam is a good option and a good deal. As we've communicated in the Capital Markets Day, we have launched the Synsam EyeView initiative, which has the purpose of increasing our capacity in terms of optical services, improving the accessibility, reducing lead times or waiting times for customers wanting to do eye exams in our stores. It also reduces the need for and the cost associated with consultants, which we've been partly needing to have in our system. If we go into more details and we start with the market.
We have seen during the year and also in Q4, the market and the consumer environment being characterized by a lot of uncertainty. Of course, the war and the overall macroeconomic turbulence globally and also in the Nordics affecting consumers' activity. However, it is important to note that the optical retail business is a medically driven business and the need to ensure eye health and good vision is a non-cyclical demand, medically driven, so that underlying consumer demand is there regardless of where we are in the economic cycle and that's important to note. Of course, the high inflation contributes to more awareness on the pricing and also the price point that consumers select, as well as a need or desire to distribute that fairly high one-off investment into a installment or a distributed payment.
This is where the subscription of course, with all the benefits comes a lot into play and meets this consumer demand. We're also seeing as we've seen during the year, consumers being more thorough in their purchasing process, taking a bit more time, being a bit more considerate and that is, of course, affecting the overall situation. We're seeing that being transparent and clear on the customer offering, the price points, the benefits that we deliver to consumers are even more important in uncertain times. That is on the overall market situation, where we are at. In that situation, in that overall macroeconomic environment, we're very happy to see that consumers and our employees continue to go into the subscription model to a larger extent.
During this quarter, we saw an increase of lifestyle subscription sales of over 20%, and this is again across all segments where we're seeing strong growth. Connecting it back to the overall market situation, the benefits of sub-subscription is even more attractive and has more value in these uncertain times. We're seeing during the quarter, and also during the year that the share of total net sales has increased during 2022 accounting to 50% and in Q4, trading at an even higher level of 53% of net sales. That creates stability for us.
If we double click, as we mentioned, the inflow of new subscribers counted to 33,000 and as you see on the right-hand side, churn is at a stable and actually slightly lower level than it's been during the last 12 months. In addition to the lifestyle subscription, which can be a combination of glasses and lenses, we also have pure contact lens subscription offering, which historically as we've communicated, has been a market that's gone to a large extent online, and we're continuing to recapture market share in this product category and continuing to drive growth in this segment at a +30% level compared to 2021.
Of course, this has a slight mix, negative mix, effect on the gross margin because this is a slightly lower gross margin compared to regular spectacles. Wrapping up on the sort of business update, we have during 2022 in September launched Jämtö, the first house brand collection made in Sweden in Östersund from our own factory. Very proud to say with a couple of months of sales data that it's been a very successful launch, actually the best launch ever in terms of house brands in Synsam. If you compare it to premium brands in that price point and actually, even at the lower price point than Jämtö delivers twice as much sales efficiency rotation compared to its own brands.
This is a very strong testament internally and also externally to say that we can design, manufacture, and be able to sell these products at a very high rotation rate. Also important by doing this, we've also seen that we reduce now the CO2 emissions with 30% compared to a similar product being produced in Asia. This is of course beneficial for us in a lot of different aspects. With that, summarizing the key points from the business side before we deep dive into the financials, again, strong growth and the growing market share across the four geographies in a weaker consumer market.
We have seen a slightly lower EBITDA margin as an impact of this rapid growth, and we're addressing that with a cost and restructuring program, which is launched during 2022 and where we're starting to see the impact already now in Q1 2023. The subscription model being a strong driver for us. We had a record quarter in Q4, and we are seeing also that the wide range of solutions that we offer, with affordable solutions being more important in this market than we're seeing also that we can drive a lot of traffic with the price guarantee creating safety for our customers.
Lastly, the Synsam EyeView, eye view concept, being implemented in first stage in 2022 is, more so in 2023, going to give us more capacity and improve the accessibility and reduce waiting times for consumers. So with that, I hand over to Per to go through the financial development.
Thank you Martin. As mentioned, we had in the market situation a strong growth in Q4. In nominal terms, 10.3%. Organic 6.8% below our financial targets. In the weaker market, a strong growth. That organic growth is quite different. We're gonna see that in a few minutes between different countries. Gross margin lower than Q4 last year, as Martin mentioned, sequentially from compared with Q3, we have increased gross margin. As you may recall, we had effects of increase in prices from vendors and so forth, which we had not adjusted we had not taken action during the summer.
We took action, and that took effect from Q4, and we have seen those effects materializing in Q4, giving high gross margin Q3 but lower than Q4 last year. Earnings per share. We did have a higher net income in the quarter, but since there is the average number of shares after IPO and so forth was lower last year than this year, that's why we have lower earnings per share for the quarter. If you look at the full year, we have a real strong development regarding sales in this market. 30% nominal, 10.6% within our financial targets for the year in such a market that we've experienced. Like-for-like 6.7%. Gross margin somewhat below last year, but still an environment where we've seen increase in prices.
Also taking into account, we look at that gross margin, the mix effect, for example, which Martin mentioned. Although not large effects, such mix effects also impact gross margin. EBITDA margin is indeed lower than our financial target for the medium term, and we are taking action. I mean, it's been costly to grow as much as we've done this year in such a market, and we're looking at our cost base which I will get back to in a few minutes as well. Earnings per share, of course, increased for the year compared to last year, SEK 2.19 per share.
If you look at the impact of our cost reduction program, I mentioned we are taking action to improve EBITDA margin. This was communicated already at our Capital Markets Day a month ago. We have in our plans to reduce operating costs to withstand cost increases, to have reduction of SEK 102 million in 2023, growing to SEK 129 million in 2024, as these will materialize starting in Q1 2023 and then growing per quarter. We will have SEK 33 million in Q3 and Q4 effect of these cost reductions, to meet the cost increases in our OpEx.
Important to mention is that this cost program has been fine-tuned in a way that it should not affect our consumers or our growth. That's a very important characteristics of this program. Going to the details of Q4, a lot of numbers have already been mentioned. I want to deep dive into the cost development, and these are factors we have mentioned before, but we want to underline them anyway. Our store expansion with 37 new stores in 2022 and of course, larger expansion in 2021 as well. Lot of stores being in the ramp-up phase give higher OpEx, and that's according to plan that we should have 90 new stores, 2021 and 2023.
37 is good for the long term but has affected, of course, our OpEx during 2022 and in Q4 2022. The optician shortage where we are taking action, as we described before and which Martin mentioned as well, has of course impacted us in Q4 as well with higher costs. Costs, we choose not to save on opticians, rather when there is lack of opticians, this is often a cost increase rather than, rather than not being able to meet customer demand. Then of course, we have the startup of our production facility, which we launched successfully in August. One of the results is the Jämtö collection, which has been very successful, but of course, the startup has increased OpEx, and then we have inflation.
Therefore, we have started these programs. Of course, we have an eye on EBITA margin, and we want to increase the EBITA margin. That's important for us. To be able to implement this cost program with effects in 2023 and 2024, we have taken costs of such of SEK 34 million, which directly or indirectly have been needed, required to create a base for implementing the program. These SEK 34 million, which we have taken in Q4 2022, should not appear in subsequent quarters. Want to mention again the strengthening of gross margin compared to the third quarter. That's important. We keep very close eye on the gross margin.
Longer term, we have delivered growth for a number of years, and we are continuously increasing our market share and improving our position, as we mentioned, at a cost in 2022. We, as we mentioned several times before in this call, are taking action to improve and strengthen our EBITA margin. We are not satisfied with 23% or 22.8%, to be exact. We want to increase that number. That's for sure. Cash flow, somewhat lower cash flow from operating activities, and the quarter for the year. That's important. We have 2 effects we should mention. One is the increase in inventory.
That's an effect of larger stores, more stores, where we have chosen to have a broad assortment for our customers, and that's important to drive sales. We also had safety stock, and we're keeping a close eye on what kind of safety stock we will need. That was introduced during the pandemic and been in place also since the war started. We're looking at now what are the risks for supply chain disruptions, what safety stock do we really need to be able to fine-tune that stock as well. That has consumed cash. Then, we have invested significantly, during 2022 and in the fourth quarter.
That has been the store expansion, upgrades of stores primarily, and as well as the implementation of our production facility in 2022, where we had investments significantly in mostly in 2022, somewhat in 2021. Cash flow-wise, also want to mention that in financing activities, as you recall, we had a dividend of SEK 255 million in 2022. We also bought back shares of SEK 47 million, so that's roughly SEK 300 million, which has affected our cash position and of course affecting net debt, which has increased from SEK 2,390 million to SEK 2,969 million in 2022. The dividend and the buyback is one component. The leasing liabilities have increased by SEK 199 million, and then we have currency effects of SEK 65 million.
One can say that the dividend, the buyback, the lease liabilities, and this currency effect is the main components of the increase in net debt. Of course, we're looking at how we could fine-tune and improve our cash flow. That's the cash flow we have now for fourth quarter and 2022. I mentioned the varying organic growth and results for the different countries. One can say that it's Sweden and Finland which delivers regarding organic growth in Q4. Sweden and Finland, Sweden is within our financial targets for the group. Sweden is within our financial targets. Finland has exceeded significantly, of course, with 32.6% in Q4. Finland is also growing strongly also like-for-like with 10.1% in Q4, 11 for the year total.
Strong growth in Sweden and Finland. Denmark has faced a tough market situation. We believe we're taking market share, although we have a negative organic growth in Q4 in Denmark. Affecting the whole group, of course. Positive for the year, lower than our targets. Also in Norway, we had lower growth in Q4 and for the year in total. We have different situations, Sweden, Finland, Denmark, Norway. Also from a result perspective, we have basically a similar profitability in absolute terms MSEK in Sweden. Look at both the Q4 and for the full year. Finland, roughly same. I mean, we opened a lot of new stores. A decrease of SEK 2 million is not significantly given number of stores in Finland. Of course, they are all in all.
A lot of stores are in the ramp-up phase. We see a lower profitability in Norway for the year and for the quarter. Denmark, basically in SEK terms, close to same level as last year. Since we had negative growth that has impacted actually our EBIT in the fourth quarter for Denmark. If you look at the map, you can see that we are now 50 stores in Finland, and have grown our store network according to plan as we record 90 stores between 2021 and 2023 was target. We see our view is that we're gonna reach our target, which we have communicated. We now have 536 stores in the group.
That's an increase, significant increase from last year, and 503 of these are directly owned. 16 new stores in Q4, which is a large amount in 1 quarter. That's also because we had a pause in new store establishments during Q3, as you may recall. So that's why a lot of these, that, new establishments were implemented in Q4. With that, I will open up for questions. Thank you.
Thank you very much. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our rosters. Again, if you have a question, please press star then one. The first question comes from Ajay Nandal with Citi. Please go ahead.
Hi Per. Hi Martin. I have two questions, please. First one is on the consumer behavior. Now, you referred to the Danish market, which saw a like-for-like decline in the Q4. Is that something specific to Denmark or have you seen something similar happening in the other rest of the markets, probably with a lag? In that context, if you could give some color on the Q1 trading, that will be very helpful. Thank you.
Yeah. Yeah, we can. Let's start with that.
Yeah.
The first question. Yeah. In general, as, you know, as Per mentioned, Denmark is seeing on the market side a tougher overall market environment. We've seen that during the year and during the Capital Markets Day. We also showed data that we have from the Danish market showing that it had a negative growth overall year to date, Q3, which was the data we had. In that market, we've been able to. Even though we don't have market data for Q4 yet, we believe that we continue also in Q4 to take market share. There is a slightly more negative market overall in Denmark compared to the other markets.
We're not seeing any, you know, evidence that that would transfer to the other markets as, i.e., that Denmark would be ahead of the other markets in terms of consumer sentiment. It's overall a more negative overall market in Denmark compared to the other countries. Per, do you want to add something?
Denmark is... I agree. We have seen Denmark, it's quite specific. And the I mean, we mentioned before, in the Q3 that there's a sort of, people are very careful when the wallet is thinner, how you might say.
Mm-hmm.
They tend to trade down somewhat. It's important for us, and we, I think we've been successful to adapt to consumer needs to ensure that we can offer them affordable products. It's important not just to raise prices to become expensive. We need to be affordable. We need to be there for the customers at all times. Regarding trading, We haven't communicated specific trading in the report, but we said in the Capital Markets Day that specifically sales had started well in January. As of 20th of January, we saw that the sales development was positive. That we said 20th of January in our press release, that's what we can say right now. The...
Yeah we cannot give any further guidance on Q1 at this stage.
Thank you. My second question is on the growth versus margin strategy. 2022 was clearly a year where you delivered double-digit organic growth while the EBITDA margins came in below your midterm expectations.
Yes.
Will it be fair to assume that, if you are targeting sort of your midterm target, in 2023, probably you would be, that will be managed by bringing down the growth expectations maybe towards the lower end of the guidance range?
How should I put it? It's important to note, this is quite important, that sometimes, It's not like that these are in conflict. It's not always that growth and EBITDA margin are in conflict. During 2022, we have driven growth, and that has had a cost for sure But it's important not to drive down growth voluntarily because growth in our business result in good EBITDA, everything else being equal. We should try not to lower growth too much. That being said, while we look at all our projects and our cost base, we will be extra careful with taking on costs. Our aim is to not sacrifice growth, but instead reduce costs which are not growth-dependent. That's our strategy.
Our aim is of course, to get back to our targets. That's why we have a target. We will try not to sacrifice growth in 2023 for the sake of EBITDA margin. If we see conflict between these two, of course, we will be very careful when taking on extra costs. Otherwise, we think we can reduce the cost base without reducing growth too much.
Then just adding what you already know on top of that cost reduction program, we of course have a number of initiatives or units in ramp-up.
Of course, the production facility where we're growing in volumes now in 2023, the recycling outlet business, which is a lot of new stores, also in ramp-up, and of course the total number of stores added during 2022, which is above the average, if you can say, that we've communicated on a yearly basis. Maybe not a direct answer to your question, but that.
Thank you. Thank you
Was that a satisfactory answer to your question at this stage?
Yeah. That was very helpful. Thank you. Thank you.
Thank you. This concludes our questions and answer session. I would like to turn the conference back over to speakers for any closing remarks.
Okay, t hanks for listening in. With everything that's in the pipeline for 2023, we are looking forward to a good 2023. See you next time for the Q1 results. Thank you.
Thank you.