Good morning, welcome to Tokmanni's third quarter result presentation. My name is Mika Rautiainen and first I will be presenting the highlights of the third quarter and then we'll dig deeper to the key figures of the third quarter. Today I will be presenting the result all by myself and next time, which is basically the fourth quarter result presentation on the 10th of February next year, Tokmanni's new CFO, Mr. Tapio Arimo, will be joining me, supporting me and helping me with the presentation. Tapio will start officially in Tokmanni during the second half of November. Let's start with the presentation. Revenue increased. Cost increases were causing problems for Tokmanni during the third quarter. Actually, we were quite happy about the revenue growth of 5.3% and like-for-like growth of 2.1% during the third quarter. The total was EUR 295 million. In this situation where basically customer confidence is on a very low level, and buying power is also like smaller compared to previous year, so this was from our perspective a good result and we're, like I said, quite happy about it. On the other hand, the comparable gross profit was EUR 97.9 million, EUR 2.8 million better compared with last year, but the gross margin percentage was lower, clearly lower, 33.2% compared to previous year's 34%. Since we were able to grow the sales and also the gross margin euros, as you can see, when the EBIT was approximately 10% lower, 23.5 compared with previous year, it was because of the costs. Tokmanni's EBIT during the third quarter was basically 8% of revenue compared with previous year's 9.3%. Cash flow during the third quarter was - EUR 3.6 million. This is mainly due to the higher inventory level, which was basically causing the negative cash flow. Earnings per share, EUR 0.27 compared with previous year's EUR 0.32. Some of the highlights from the third quarter. First of all, the customer visits. We're very happy about the 3% growth with the customer visits. Even the comparable customer visits were on the positive side. Obviously in this situation where the buying power and the consumer confidence is clearly on the lower level, we were very happy that Tokmanni was able to invite more customers to our stores. Obviously the customer behavior was focusing more on the low prices and offers and also groceries. This is quite understandable in this situation and Tokmanni's price level in Finland is on a well on a very good level, so obviously the customers they've noticed that Tokmanni can offer the lowest price level in Finland. This was our target and we could see some results out of it. Costs basically all of them were increasing and that's why the result was lower compared with last year. The value of inventories was at a very high level. I'll come back to this a little bit later to explain a little bit like why and how. A couple of positive things from the third quarter. Parco, Miny and Arki 360°, the Tokmanni new private label ranges, the launch and the sales were very successful with these three new private label ranges during the third quarter. We also basically launched Tokmanni Klubi, the Tokmanni customer loyalty program was launched in August 2021. We had the first year anniversary this year August and the actions were very positive and we're able to reach or get actually more than 1.6 million members to Tokmanni Club, which is from our point of view a very very good achievement even much higher than we expected. That was very positive highlight from the third quarter as well. The key figures for the three first quarters of 2022 revenue growth 2.6%. Like-for-like revenue for stores decreased by 0.6%. Last year the nine months were very successful sales-wise. Like-for-like growth last year, for the first 9 months, 7% and the total was 8.2%. In this current situation, we're still quite okay with this revenue level. Comparable gross profit was EUR 278.5 million, slightly better compared to last year, but the gross margin 33.6% was clearly lower compared with last year. Comparable EBIT amounted to EUR 50 million. As you can see, the difference is quite clear compared with last year, EUR 15.2 million. On the other hand, the third quarter was like the smallest difference compared with last year from the three first quarters of this year. Cash flow was negative EUR 5.8 million. This is due to the high inventory level plus the lower result from the first nine months. Earnings per share, EUR 0.59 compared with previous year's EUR 0.80. Now, this is the graph of the market share. As you can see, the last quarters, it's been a pretty tough fight with the market share. We're happy that we were able to gain market share again during this third quarter and hopefully will continue like this during the coming quarters. Let's dig deeper with the key figures. First of all, the revenue. As you can see from the graphs, we have been able to grow revenue with all quarters and even the nine-month periods. Obviously this has been always our target as well. Now we've been spending quite some time with analyzing the effects of the pandemic. If we take the pandemic, which was basically supporting Tokmanni revenue during the last two years, it's pretty systematic growth, and we basically aim to continue with the same growth phase also during the coming quarters. Basically during this third quarter, the sale of groceries, as already mentioned, was overemphasized. In Finland, the second quarter was weather-wise very bad. Basically, the summer season started only the second half of June, and that's why it was quite difficult with outdoor furniture and barbecue product groups during the second quarter. Tokmanni is the market leader in Finland with garden. After a very difficult second quarter, we were quite happy to see a real nice sales growth with outdoor furniture and barbecue products during the third quarter. On the other hand, the sale of toys, swimming pools, hot tubs, actually, you know, like with a higher ticket price, higher unit price products, especially with the swimming pools, hot tubs, the sales were basically stopping almost totally. Also home storage products, the development was negative during the third quarter. Gross profit and margin, already mentioned, that euro-wise, we were able to improve the gross margin level, but the margin was lower. Basically, it was affected because customers focus on the campaigns and offers and also the fact that the sales mix was much stronger on groceries instead of non-food products. This is coming from the customer behavior. Then Tokmanni's own actions basically were Tokmanni Club's one year anniversary. We definitely invested in different kind of positive actions and offers for our customers, and we were able to reach very good results out of it. It was pretty much like an investment on the member level, which is over 1.6 million at the moment. On the other hand, we wanted to secure the lowest price level in Finland, especially when the customers' purchasing power has been weakening for months now. Yeah, obviously, it shows with the margin. On the other hand, according to our customer studies, we have been basically winning some customer confidence due to the low price level. Obviously, with the higher buying prices and with inflation, it's very difficult to keep the low price image. According to our studies, we've been doing as well as we can in this situation. A couple of words about our private labels and the labels managed by Tokmanni. Actually, the percentages are a little bit lower during the third quarter and the nine months. This is mainly due to the labels managed by Tokmanni. Our private labels have actually been doing very well, but the labels managed by Tokmanni includes all the COVID-19 related products. For example. Well, the biggest is the facial masks. This year we haven't been selling almost at all facial masks during the third quarter and during the last year's third quarter, the sales were the biggest ever. Whether it's the tests facial masks, the sales have been very low during the third quarter, so it has its effect on the percentage. But the private labels are doing very well and that's, of course, something we're very happy. A couple of examples. Here is the Miny, as we call it here in Finland. This is the new lifestyle brand of Tokmanni. We have by the end of this year approximately 20 shop-in-shops in Tokmanni stores. Actually, now we have three standalone stores as well, just to try it out. Yesterday, we opened the third standalone store. The target group is young ladies. We've been very successful with this, and we're very happy about it. Also in the shop-in-shop operations it's been very, very successful. It's a new target group for Tokmanni, so that's why it's extremely interesting tryout. This is Arki 360°. It's healthcare products, vitamins and so on. We launched this in August and definitely in Finland the fall time is basically the best timing for this kind of products. It's been very successful. We're very happy about it, the launch. Obviously people are extremely careful about their healthcare, so this is with the lowest price level in the market. This seems to be, at least in the beginning, very successful. One more, Parco, which is our new outdoor furniture private label. As said, we had a very difficult spring season due to the fact that there was no warm weather at all during the springtime. That's why we're very happy to basically it was like more than 20% sales growth with outdoor furniture during the third quarter, with this, for example, the Parco private label and some other Tokmanni private labels in, for example, the barbecue product groups. The operating expenses, as mentioned already, all expenses were increasing during the third quarter. Still, we were able to keep the level 19.2% of revenue on a quite good level. Yeah, compared with last year's 19%. This is mainly due to the fact that with the personnel expenses, it was like 10.7% of revenue compared last year's 11%. Take into consideration the salary increases that we have in the retail business in Finland, plus the sick leaves mainly due to COVID-19. This was managed very well with the sales and supply chain team. If we then talk about obviously the it was higher, on the higher level, the personnel expenses, but there were also, like, new stores bringing new expenses. Considering, taking into consideration all these issues, this was on a quite good level, the personnel expenses. Basically one of the biggest increases was caused by the rents. Our rental agreements are connected with consumer price index and that's why unfortunately we were facing quite a lot of increases with the rent levels. Now we, of course, negotiate our rental agreements yearly, at least maybe one-fourth of the rental agreements. In this situation, the rental costs especially were increasing quite a lot, as well as the other real estate costs and electricity. Now, with electricity, we're hedging these costs quite well. Even with the hedging, it's additional cost from electricity as well. Marketing costs were increasing due to the paper prices and printing costs, and already mentioned, the personnel cost. Still, on a pretty good level. Anyway, we were not able to get enough gross margin euros to cover all the higher costs during the third quarter. This was basically the cause of the lower level of EBIT, EUR 23.5 million, so approximately 10% lower level during the third quarter. As you can see, after six months, the worst development was basically during the first quarter and the second quarter, and now we're already getting closer to the previous year's level. For Tokmanni, basically the last 12 months, they've been quite difficult. Actually, the fourth quarter during 2021 was already on a lower level compared to 2020. This basically tells us that we are getting back on track with both a revenue and EBIT development level. If we talk about the balance sheet and especially the inventories level, which was high. On a high level, so far, EUR 332.3 million, almost EUR 60 million higher than last year. Obviously the biggest difference comes from higher purchase prices. Then of course, the Christmas season is the most important season, most important quarter, the fourth quarter for Tokmanni. When we were basically making the orders for the fourth quarter, that was by the end of January this year, beginning of February. Basically, we were in middle of very heavy pandemic times those months. To make sure that we succeed well with the Christmas season, we decided to basically invite all the products, all the seasonal products to Finland before the end of September. This was the second issue which was causing the very high level of inventories. Obviously, as mentioned before, we were also during the last two years of the pandemic. We've been having like a buffer with different product groups in our inventories due to the difficulties or problems with the supply chain. The buffers have been there for two years now and already during the second quarter and especially during the third quarter. Now also in October, we have started to get rid of the buffers. We basically expect to reach like a normal level by the end of this year. Normal level of Tokmanni inventories. Obviously this has all to do with also the success with Christmas season. At the moment it looks as if the inventories we are able to reach like a normal level by the end of this year. As mentioned, the operating cash flow was negative EUR 5.8 million due to the higher inventory level and of course the lower EBIT. The interest bearing debts were EUR 458.3 million. This is including the EUR 100 million in non-current corporate bonds and loans from the financial institutions. Then there is like EUR 70.5 million with current corporate bonds and loans. This is due to the construction of the new Tokmanni DC in Mäntsälä, Finland. Of course, the higher inventory level. Now, the remainder of the liabilities are mainly lease liabilities reported under IFRS 16. The ratio of the net debt to comparable EBITDA was 2.7. The target, the long-term target is 3.2. This is clearly under the target level. That is even though, even for example, with the background, this is a quite okay level for the net debt compared to EBITDA. The net capital expenditure EUR 11.4 million compared to last year's EUR 9 million during the third quarter. The capital expenditure is higher during the construction of the new DC. Well, during the nine months it's been EUR 20 million higher. Well, the timing of the new DC or let's put it this way, I'll take a couple of steps backwards. Tokmanni's distribution center or logistical center is located in Mäntsälä, Finland. At the moment, we do have some external warehouses as well, especially with the high inventory level. Basically, this current DC was built in 2008, so it's been quite a lot of development with Tokmanni compared to today and 2008. To get rid of the external warehouses, we started this year the new distribution center construction work. We were supposed to get the first part of this new DC in one year's time in fall 2023. Everything has been developing very well with this new DC, and the first part or the first section of the DC, we're able to start using by the end of spring next year. We're very happy about this development because it will definitely bring some efficiencies with the Tokmanni supply chain. Of course, this year, also next year, there will be more, or higher, capital expenditure as informed already earlier, approximately EUR 60 million, Tokmanni's historically biggest investment. It will be approximately EUR 60 million in total. Other capital expenditure included expansion of the store network, renovating stores, and developing digital services. Capital expenditure into 2022 is expected to be around EUR 18 million-EUR 20 million, excluding the construction work, or construction of the new DC. As you can see from the graphs, the net capital expenditure is pretty much on the normal level, excluding the warehouse, the new DC. About the year 2022 outlook, Tokmanni expects the revenue to be at the previous year's level and comparable EBIT in euros is expected to be EUR 90-EUR 110 million in 2022. Obviously, the forecast includes these elements of the uncertainty, which are pretty well known in Europe at the moment. That was Tokmanni's third quarter result presentation. Thank you, and now it's time for questions. Operator, please, do we have any questions? Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We'll take our first question. Please go ahead. Good morning. Can you hear me? Yes. Loud and clear. Good. It's good. It's Nicklas Skogman from Handelsbanken. I have a couple of questions, please. The first one would be on your decision to keep the guidance unchanged given the development in the first nine months. Basically, you know, to reach the high end of the guidance, you need to grow by 48% in Q4 and, you know, given that the profit declined by 10% in Q3, that seems a little bit like a difficult one. Please, talk me through your thinking around the guidance. Yes, it obviously was, or it is, a very good question. Now as I mentioned already before, it's the last 12 months which have been the most difficult for Tokmanni. The fourth quarter last year was already from our point of view a little bit soft. It was actually a lower result compared with 2020. The first quarter was the most difficult one and the difference compared with the previous year was the biggest. It was the biggest difference on a negative side when it comes to EBIT development. The second quarter as well, but during the second quarter it was quite a lot about the, let's say, the seasonal issues which were causing some problems. We were still lagging the previous year's results, but we're quite confident with the fourth quarter. I don't know whether it's a smart thing or not, but we've been analyzing this quite a lot. Telling you the truth, in this situation where basically it is all about the buying power and consumer confidence, it's very, very difficult, of course, to estimate how the fourth quarter will be. On the other hand, from our perspective, the Christmas season and the fourth quarter is always. It's always been a very good season for Tokmanni. For example, or let's say if we compare with the product offer from Christmas season compared with the spring season, the spring season is usually more like high ticket price products. Now, for Christmas it's also a lot of lower price products like starting from Christmas chocolate, candles, seasonal lights, Christmas decoration and things like this. It's slightly different. As said, I don't know whether it's smart or not, but we're very confident with the Christmas season and take into consideration the soft figures from 2021 during the fourth quarter. Hopefully, this was a little bit like helping you to understand our thinking. That helps a bit for sure. It's just that, you know, even at the low end you would still be up 25% versus Q4 2019, while the Q3 you just reported was just up 7% versus 2019. But what we'll see I can see how you mean with the sort of lower ticket items things being sold over Christmas. Is it sort of you have pretty good momentum in terms of sales. You did not mention in this release any pressure on the gross margin from freight costs or not passing on costs fully to consumers. It was really only sort of the mix effects and the campaigns. Are you sort of have you pushed through these the cost increases to consumers now? Well, yes. It's first of all, it's my personal opinion, but we've been investing during the last 12 months on the price image. It's been very, very difficult because there is quite a lot of price increases in the market, so it's difficult to keep the low price image when the prices are getting higher. But according to our customer studies from the last months, we've been well, quite successful with that and this is basically we can see that that we've had the best price level for customers in Finland and but there is also some room to maneuver, so to speak, at the moment. On the other hand, that will support us quite well. When it comes to freight costs, it's more like domestic freight costs, and they were on a higher level already a year ago. When it comes to outbound, for example, we have very good contracts. Actually during the pandemic we've had pretty good contracts. So, we're not that worried about the freight costs. With well, electricity higher electricity costs in Finland are, you know, like everybody's talking about it. The customers, the households are. Companies, especially companies with almost 200 stores, they have to talk about the electricity costs. We've been, of course, hedging the electricity costs, but still it will affect approximately 0.2 percentage points, compared to the yearly revenue. It will be higher 0.2% points this year. In a way, from our perspective, it's higher but it's not dramatic. Okay, interesting on the electricity costs. The 0.2%, is that sort of for the full year, has that been impacting the whole year or is that something you've seen now in Q3, so it's actually more than that if you isolate it to a quarter? I'm not quite sure whether I got it, but obviously, as you know, it's all about how the electricity price will look in the future and during the coming months. It's all about, for example, weather conditions in the Nordics and so on. Yeah, it will be still a little bit of a surprise, like what will happen, but we'll see. If prices stay at this level next year, how much would the impact be of on revenue, in percentage of revenue next year, approximately? Well, obviously it's pretty difficult to estimate the situation next year, but let's put it this way, our hedging policy is better secured in 2023 compared with 2022. Okay. Lower prices or more of your usage secured? Yeah. Well, when it comes to usage, I just have to point out our solar energy, which is nowadays already. Now, talking about solar energy in Finland, by the end of October might sound a little bit funny, but still it's already more than 10% of our total consumption, which is quite good. Obviously the usage will be starting from next March until next October. We're not going to the details when it comes to the next year electricity costs because there are so many issues related to that. Like I said, our hedging policy is better secured next year compared to this year. Okay. Maybe I'll follow up afterwards on that one. You mentioned that rents have already started going up because of the CPI, i.e. the inflation link. Is that happening gradually now, or 'cause in at least here in Sweden, it's basically using the October inflation rate, which is then applied at the beginning of next year. Does it work sort of more gradually with your rent? Yes. We were seeing higher rental costs already last year, fourth quarter. It's like a development. We have maybe one-fourth of the rental agreements are being renegotiated yearly, so obviously we try to get back to the reasonable level with the higher rents. Still it's causing higher rents. It's been doing that already from the fourth quarter last year. It's like because the rental agreements are, you know, like every single of our 200 agreements are, you know, like it's like different timing, so it's all the time, it's continuous work with this. We're facing higher costs. On the other hand, we're facing like negotiations where we're able to negotiate it, the rental agreements or the rental cost slightly lower because, yeah, there is no actually anything else but the index causing the higher cost. That's why it's not that difficult to negotiate those to be a little bit more reasonable. All right. Good. I'm thinking if it's sort of inflation-linked, and inflation has really only started to increase in the past, I don't know, 6 to 9 months, then there should perhaps be an even bigger hit in 2023 from higher rents. Um- that are linked to CPI. It will be on a high level, but there won't be like a big hit. According to our calculations, we already faced the biggest hit. Now, obviously, the level will be on a higher level, but the increase with the current level won't get that much higher anymore. This is, of course, according to our calculations, but that would appear to be on a quite confident level. Okay. Thank you. Those were all my questions. Thank you, Niklas. Once again, as a reminder, to ask a question, press star one. Okay, seems there are no more questions, so let's go back to the studio. Okay. Thank you very much. Thank you all, and we'll talk next time in the beginning of February after the fourth quarter. Thank you very much and bye-bye.