Good morning, everyone. Maybe before I start the comments on the financial statement, just a quick comment about the importance of the size of the car park and how it was affected by the new car registrations. We think it is important information. We are saying that the car park is getting older, but I think it is good to make a deep dive and to see why it is getting older. When we go back a little bit into the historic results, in 2019, the amount of registrations of new cars was around 13 million cars per year. Then there was a drop in the years 2020 through to 2022, down to around 9 millon- 10 million. At the end of 2025, new registrations in Europe amounted to 10.8 million. Still, the car park is not, we could say, replenishing with the pace it had back into 2019.
This is actually good information for the aftermarket, that the car park is growing and it is getting slightly older. That is why the need for aftermarket still exists, and the market is not changing rapidly, as some people would expect. Coming back to the results. In the first half of 2026, group revenue increased to 11.4 billion złoty and gross margin increased to 30.1%. The EBITDA amounted to approximately 860 million złoty, and the net profit amounted to approximately 500 million złoty. The improvement in profitability, this is what we would like to emphasize, was primarily due to a strong sales growth, and the recovery in the gross margin. We believe that this improvement in the gross margin is, let us say, structural, and it is reflecting the scale, efficiency, and increasing effective utilization of our infrastructure.
When we talk about this structural change, we mean a sustainably higher gross margin resulting from better pricing, more favorable purchasing terms, an improved product mix, and a greater scale. If we look at the operating costs, the costs are growing in nominal terms at a pace similar to sales growth. This does not mean that we are not pursuing cost optimization initiatives. The benefits of these actions are partly offset by the increasing scale of our business and investments required to support further growth. A good example is investment in eCat, which is our top-of-the-market solution for catalog for ordering the spare parts, or a new initiative related to extension of our distribution network. All these drive our costs, so these optimizations are not visible. What we can say that had we not done these optimizations, the costs would have grown faster than the sales.
Regarding operating cash flows, it is another area of improvement. Operating cash flows reaching 790 million złoty compared to 564 million złoty a year earlier, so an increase of more than 40%. What we would like to comment here is this improvement in operating cash flow generation was driven mainly by higher EBITDA, and with EBITDA to operating cash flow conversion reaching around 92%. Of course, it is not a guideline for upcoming quarters because it is subject to too many factors. However, it is also worth to note that the changes in the working capital also had a positive impact on operating cash flows in quarter one and quarter two. It was mainly due to favorable terms negotiated to stocking of the newly open warehouse in Romania and increasing inventory levels in Bulgaria and Croatia.
But we are now in quarter two, gradually returning to a more normal situation in which the increase in inventories is higher than the increase in the trade payables. If we look at quarter two alone, so in quarter 2 2026, change in the inventories, the increase was 238 million złoty, while the increase in trade payables amounted only to 120 million złoty. If we look at our net debt to EBITDA, we also see quite a big improvement. Our leverage decreased from the level slightly below 2- 1.76, and we can expect further improvement due to two factors: growing EBITDA supporting it, and also the fact that we are at the, I would say, latest phase of our big investment program in logistics.
We, of course, expect further new initiatives, but they should not be to such a big extent as it was when the program initially related to our biggest warehouses in Poland. Krzysztof, now I pass my voice to you.
Yeah, I will as well a little bit deep dive in international growth and our business model. I would like to pause on one element of these results that is particularly important from our perspective. Sales generated by our foreign distribution companies reach approximately 6.5 billion Polish złoty and increased by more than 19% year-to-year. Over the last 12 months, we opened 28 new branches outside Poland. We do not view this simply as a low base effect. Across successive markets, we are replicating the model we previously built in Central and Eastern Europe: market entry, then local distribution after the development of partner networks, progressively deeper integration into the Inter Cars ecosystem, and ultimately, increasingly effective access to professional workshops. In Western European markets, we are at an earlier stage of this process.
We can say that 17 markets on the Central Eastern Europe gave us a guideline and the proof of the concept. Building local networks, logistic capabilities, and the workshop relationships take time, but this is a path we have already successfully followed across many other markets. Nowadays, this year, we opened the first location in Wuppertal in Germany. We need to build every land, many relations with the customers, our future free partners for the distribution contracts. But this first location giving us now the possibility to build the value proposition for the German garages with our knowledge from the other markets. Each of the markets have some specific topics you need to solve: wait, how you finance the training or the tools or equipment.
All this we try to now build based on the relationship, from one side, to prepare the possibility to scale the distribution contracts with our partners in Germany. The second, the ecosystem for the garage on these markets. About the investment and financing and the balance sheet now, Piotr
Yes. In the first half of 2026, the group acquired property, plant and equipment, and intangible assets with the total value of approximately 300 million złoty. A significant part of these expenditures related to the new logistic center in Stęszew. Just to remind you, Stęszew is the completely new warehouse, which is built by Inter Cars and will be fully owned. So we both buy the walls. It's not a leased warehouse. It's been built. This is the investment of approximately 685 million złoty, and the launching of this warehouse is planned for the first quarter of 2027. So the current spend on this warehouse is around slightly below 190 million złoty. So you can expect that the remaining part of the expenditure will be spent in the second half of 2026. We expect, as I mentioned before, next investments into the logistics.
Probably the next one will be located in Bulgaria, extension of the existing warehouse and the robotization of this warehouse, but the extent of the investment will be much smaller in subsequent years. I think what is also worth noting in quarter two 2026 is the new financing agreement, which was signed in May 2026, which provides financing of a totaling 4 billion złoty. I would say this is a completely financing without any securities. The syndicate consists of eight banks. Within this financing, we've managed to renegotiate the contract completely, and we extended the tenors. So RCF, which previously had a tenor of one year, now has been extended to three years, and the term loan, which previously had a tenor of three years, has been extended to five years.
I would like to mention also that the bank margins were negotiated down despite the extension of the tenors. So now let's pass to the, I would say, the information about the sales dynamics and what we can expect. I think one comment from my side is that we cannot treat the What we can say is that demand is still high. The growth in June, for example, of 18% was quite outstanding. But it should not be treated as a guidance for the upcoming months because, for example, of the seasonality of the sales. So what we can say that when we look at these results, it's more of a confirmation of a strong business momentum rather than the guidance for subsequent months. I will now pass the voice to Krzysztof.
Yeah. From a business perspective, what matters more than any single month is the demand in our key markets remains healthy, and the international part of the group continues to grow faster than the domestic business. Our priority remains profitable growth and appropriate return on the capital deployed. If I were to summarize the first half in four points, first, we continue to grow faster than the most large European players. Second, sales growth has been accompanied by a clear improvement in the quality of earnings and the cash generation. Third, international markets are playing an increasingly important role as we scale a model that has already proven successful in our more mature markets. Fourth, we continue to invest in future growth while maintaining a prudent balance sheet.
This leaves us well positioned to continue executing our strategy in the coming periods, while remaining cautious about extrapolating the performance of individual months. We, of course, see the last weeks as a new risk which materialized with the petrol and as well oil. Everything we as well looking to our scenario, how we can mitigate the risk and how adjust the prices and availability for our customers and sources we can deliver the goods. But we can summarize that this instability give us most of the market players the focus on internal topics, not to decrease the pricing, and thinking how sustainable develop the results in the company, which I think as well will support our growth from the bottom and top line. This is the summary. We can switch now to this session Q&A.
You can put it on our emails, or on chat, or you can unmute the microphone and pass the question directly to us. Thank you very much.
Because we don't have any question on chat, so please, you can unmute and please, Callum, unmute yourself, please. Hello.
Thank you. No, good results. I just had a couple of questions. The first was regarding breaking down sales growth, maybe getting some look through into what volumes did and into what kind of pricing is done as well. I know pricing was positive in Q1. It would just be interesting to hear what you guys have to say about how that has progressed throughout the year. My second question would just be about the branch growth. Obviously, that has been accelerating. I am just curious, how much visibility you guys have, how far you plan out your rollout of new branches, and if, I am not expecting you necessarily to give any guidance on that, but just how we should think about that number going forward. Thank you.
Okay, Callum, I can answer that. If you look that it was even we can summarize 30 locations and we compare it to 650, the change is not high. If we switch directly to the German topic, the first is not the opening now the locations, but much more to have these B2B contracts to build the scale and build the knowledge of the future partners for our distribution contracts, because we work then based on our concept, which we develop on the 17 markets already. If we look for the size, the mix of the size of the products is the same as it was. Of course, based on the seasonality is a little bit changing.
Based on the pricing, one product group as a oil is, as a lubricants generally, was a little bit in the, we could say pressure because of the question mark about the availability. Some base of the lubricants is not available. It is why the price of these lubricants were affected, and as well we increase the prices for our customers. But it is less than 9% of our revenues are the lubricants, which is not a big topic, and as well on the demand, we do not see big influence. Of course, can be some delay that some customers will think to postpone some checkup, but on the end, for the big companies, I think we see much more trend of the consolidation, and the new locations is not the case which today giving us this growth.
If we compare the same surface of what we had, the organic growth is on the same pace, which generally for sure, big topic will be in the future German market, that for sure is the space for 300 or maybe 400 locations. But in Poland, it gave us 10 years to build the first, the good access to the market that we knew partners in each region, each town, and then we can choose the partner for the franchiser concept. If we compare this, the German market is two times bigger than Polish markets, and compared to Slovakia or the Czech, which is one-fourth of our markets, if we opened in the past the first location in the Czech, it was like additional location outside the Poland. Germany is a big market. We need to be prepared.
We have nice growth on the same pace as growth of the main market, and we believe that for sure we can be in the top four players there. This is our momentum, which we as well try now to use for the B2B contracts, understanding the markets, what I explained during our, this transcript and as well the message we wanted to share. Thank you. William?
William?
Hi, guys. Well done on a great performance so far this year. A couple of questions. This was a bit more market-based or on a longer-term theme, but one of the trends I have noticed is LKQ's performance, particularly in Europe and Eastern Europe, has been poor. Seems to very contrast to yourselves. It would be good if you could just comment, I think they have had various different management turnarounds or attempted strategic changes. Could you just comment on what they have been doing as a company for the last two-three years in your markets? Why does it seem like they have struggled? Do you think that-
I am sorry, but I could not comment competitor. I can comment our results. We see that their results are not performing well. This I can comment.
Sure. But do you think you can continue to take market share from them? I guess that is the key question.
I don't think so that we take market share only from them. We take the market share because we are focused on the garage. This I can say what we are doing. We are focused on the supply the garage and all around this garage as an ecosystem. We believe even in the future, it will be some idea that you will have the service agents, I don't know, big fleets like Uber, Lyft, which in the United States are stronger and more powerful. They will have the fleets or they own the fleets, or they will use the, we could say, they leverage for the drivers to receive the service. But still, on the end, it's like with the surgery. For the car maintenance, you need the garage. The garage replace and repair the cars up to the time that we can repair the car.
The most important in this field will be that you have the link to the garage and enough the mechanics which can take care about the garage. Why? Our focus is the training for the garage, giving them the best availability and as well the tools like diagnostic connection with our e-Catalog to have the smooth solution. Our strategy and narrative is the saving time, powering progress, saving time for all employees and partners the same, the garage to then invest into the future or reduce the cost. This is something what we have. We have the friends there in LKQ because they belong to the same buying group. I think that the guys in Europe, what they are doing is based on some additional strategy delivered by the group. The questions you need to pass to them because they need to explain for me.
I'm not there and I'm not with them.
No problem. Yeah.
We can say we are direct focus on the garage, and this is our, I could say, main strategy everywhere. Today, it is based on a deep, we could say, development on 17 markets from our 22 markets. Some of the markets we have, like U.K., because it was a Brexit and we had some customers, B2B customers, not the garage. If you need the custom duty and so on, then we established the company. Similar case was Norway outside the EU, but some customers, and it was easy for even custom to have the company, but it is not based on our logistic path. For logistic path, the biggest importance for us is our neighborhood, is Germany, and we build the same system. The first, the tools and solutions for B2B. The second layer is then with the Partners will accept our distribution contract.
They will switch to our tools, to our IT, to our stock, and we will go with the value proposition to the garage, and we would like to be in top 4. What it means that I respect LKQ in all markets they are present. Only one comment as well, which I can add, that in Europe you have two peers on the, I could say, size. It is Inter Cars and Parts Holding Europe, which growing on similar percentage with the big volumes. They have more merchant acquisition because organic growth for half a year, it was what I remember, 6% altogether, around 10. We have around 12. But these companies, even what we hear from our suppliers, are on similar concept, and they are winning market. About the others, the good question is to pass them directly because for me it is difficult what they tell.
My calculations are based what we are doing the best and how we need to improve Inter Cars.
Krzysztof, I think referring to what you said, that we are focusing on our customers. I think if you look also on our part, how we deal with our partners, with our suppliers, is that we treat this relationship in a very strategic way. We just want not to be just a customer for the supplier, but we want to develop a long-term relationship. And suppliers support our growth across multiple markets. And I think a good example of this could be that, for example, with some of our suppliers, we have signed a long-term contract, yes, where the supplier is profiting from the long-term growth of Inter Cars and we also profiting from this. So I think this is what we do, what we focus mostly on, right? But it is difficult for us to comment.
Yeah
what our competitors are not doing, yeah? But this is
Yeah
our approach. Yes, and I think it is bringing the benefits. Yes.
Great. Thanks for those details. My other question, or my other area of questioning is on your top line growth and margin performance. Can you just describe, one, the contribution of lubricants and the dislocation in lubricant pricing there, the contribution to the sales growth and margin performance so far this year? Also, can you just touch on, I understand, is there a kind of an inventory element there where you would have held Companies like yourselves hold a certain inventory of lubricants and oils, and as these kind of dislocations continue, is there potential for shortages to emerge in the market as a whole? Then just as a follow-up to that, are you seeing any other pockets of kind of dislocation or inflation as these energy cost pressures continue to build in the wider economy?
Are there any parts of your offering that you're starting to see price increases or inflation in? That would be great if you could comment on those points.
Okay.
I will try to tackle the first two. William, maybe a good example of the strategic partnership with supplier is that so far we do not see any limitations in the supply of oils. And sometimes we hear from the market that some smaller distributors have a little bit of issue with supply of oils. I am not saying that we are securing for the supplies despite the situation, but for some suppliers, we have this strategic role. And we are very well positioned because of this. Coming also back to your previous questions, I think the answers I know on the previous presentation in Polish, we have been asked the same questions. Oils contribute to less than 9% of our total turnover.
They are important from the point of view of the margin is increasing drastically, but they are not that important in terms of the gross margin development in the first half of 2026 or any quarters, due to the share of this segment in the total sales. It is slightly less than 9% of total sales.
Okay, great.
I hope this answers your question.
And just on that final question, are there any other kind of lubricants or something that had an immediate impact?
Do we see any other products or segments?
When the conflict began, are you starting to see in the catalog? Yeah, exactly.
Yeah, but generally, you know that as well, I can comment it that from the time of the COVID, the supply chain still is not coming to the situation that peer by peer or as a supplier, they had 96.5% to 97% of the availability of their goods, and lead time was one week. Nowadays, it is more complex. Why we did this, what Piotr did, and I think this is we do not using the tenders, we do not maximize the leverage of the suppliers to have only few because if you want to deliver to the garage as a one-stop shop, you need the product.
On the end, brand is important, but tier 1 brand, if I would have the belt from the brand 1 or the timing belt from the brand 2 or brand 3, the most important on the garage level will be that I will have this belt on the quality tier 1 supplier. This is the answer that we have this availability because we try to do the supply chain not in one directions. We buy in Europe, we buy in South America, in North America and Middle East and Asia. Of course, as well Europe, because as well, even Poland is quite a big market of the producers of the automotive parts.
This is the solution that on a long run, for sure, if we look that it will be more and more difficult to find the petrol, and we know that from the oil, it's as a raw materials, you can do a lot of the topics as well, the rubber to metal goods. It can be the issue, but based on this, that I think still is over distribution on the market and from other side is consolidation. This is like in bad times, it's a little bit easier for big companies than normally because it's less pressure now on the discounts or the low pricing. Everybody think how to solve the issue and deliver the mobility. Based on this, I see that we monitor products group by the products group.
When we see that even supplier of us changing SAP system or another system, we know that for sure it will be for a quarter the issue with the availability, and we try to arbitrage this stock from another source. This is the way how we think.
Great. Thanks, guys. Good luck with the rest of the day. We don't get in touch.
Callun, do you have any question? Yes.
Yes, sir. I had one quick question to add. You guys touched on the capital investment. Obviously, you guys have done a lot and Poznań at the moment is a big project, and you mentioned Bulgaria. I just wondered if you can give any more color on how you see that capital cycle tapering off. Are there any other notable projects that you would want to bring attention to, or are those what you see guys investing over the next couple of years?
I think this is the only one in the pipeline. This investment should be around €50 million. Yes. So there will be probably some smaller ones, but so far we cannot announce them.
Cool. No, thank you.
Not major ones, I would say.
That sounds-
There is always some investment level in our case. In the past, it was more or less on the level of amortization.
Cool. Thank you.
Do you have any more questions? If not, I will remind you that the record will be published on our investor webpage. I would like to also invite you to our next meeting after third quarter result. Thank you very much for today, and please be welcome on the next presentation. Also the presentation-
Thank you very much.
is also uploaded on the webpage.
Thank you very much, guys. Have a nice day. Bye-bye.
Thank you. Bye-bye.
Thank you very much. Bye-bye.