Good morning, and welcome to the Bilia Q3 2022 Earnings 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 a question, you may press star and one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Carl Fredrik. Please go ahead. Thank you very much, and good morning, and welcome to Bilia's Q3 presentation. This morning we release a stable set of figures, actually third best quarter result ever. We can jump to the next slide, which is the agenda. We have current market environment, and we're talking about the group results, and a little bit on financial positions, M&A, and finally, we'll finish off with the outlook for the next quarter. Here to present are our CFO, Kristina Franzén and Per Avander, CEO, and myself. I leave the word to Per Avander. Okay. Thank you very much, Carl Fredrik. Next slide, please. The current market situation, in an overall perspective in the car industry and, still the demand in the service business is stable in all our countries. We are in Sweden, Norway, Luxembourg and Belgium. It's a record of high order backlog on both for Bilia, but I guess it's the same for all brands and all the dealers in Europe for the moment. We have a little bit weaker demand for new cars. If you go back some quarters, we had strong sales in Q1. Q2, it was little lower if you compare to 2020 and 2021. Now, for the moment, we see weaker week after week. Often when we have a recession, often the fleet business is really stable. The customers there, they take leasing contracts three years, and then they buy a new car. The private consumer, they are a little bit more hesitating for the moment now. Let us see what happen. I'll come back to that later on in the presentation here. We have had lack of used cars, but really stable margins, still. We see now, week after week, increasing of stock of used cars in all our countries. That's a normal phenomenon I can say. Often we have lack of used car in August, and we build up the stock of used cars through December. There is a consolidation in the car industry. We acquire some companies, but a competitor or colleague, you can say, Hedin Bil, they acquire every month. The big dealer, they will be bigger in the future. The economic conditions, interest rates, inflation, increasing. Let us see what happen with the energy prices in the end of this year. I read in the newspaper today that it will be a hard and tough winter this year. Let us see what the energy prices will be this winter. Please, go on. Next slide. We report an operating profit of SEK 334 million compared to SEK 482 million last year. Net turnover decreased SEK 800 million, and we divested business in what we call big Oslo. In middle of Sweden, we have Skaraborg Region. It's a Volvo business. We sold it in the beginning of this year and in the Oslo area first of July. I think we can go to the. No, not to the next slide, Carl Fredrik. Go to the right-hand side, so you can see in historical perspective the profitability. Now it is a bit more normalized. It's we talk about Norway here. It was a peak in the pandemic. We sold huge amount of new cars despite the showrooms was closed. The customer, they have to contact us online in a telephone call first and book the meeting, but we sold a lot. We had the peak two years, 2020 and 2021. If you look the trend here, you see it's as strong as Carl Fredrik said, it's the third best quarter ever, Q3. Go to next slide, Carl Fredrik. As we said, a little bit weaker in the Norwegian market. Here we have a slide of the consumer confidence. If you look at the left-hand side, you can see the red circle there. It's 2008 and the Lehman Brothers crash. It was not so deep negative in the business in Norway at that time, -10%, you can see. If you go to the other side here, you can see it's really deep now. It's the interest inflation. We can't see the same as we saw 14 years ago when we're talking Norway and the Norwegian market. Next slide, please. We have an earning of 3.5% in Norway. The service business declined a little bit. We'll come back to the next slide of that. The same here on the right-hand side, you can see in the perspective of 5 years, it's a strong performance as well in the Norwegian market. We have the peak what I talked about in Norwegian market. I think we can go to the next directly to the service business. We have the divestment of the Volvo business in Oslo. Oslo, two big outlets, Fornebu and Økern, and the smaller one is Lillestrøm, but it's a big business. In the past, when we had the business in Oslo, we had a contract with Polestar. We have talked about that in other quarterly telephone conferences. Polestar, we delivered a lot of Polestars last years. So now we only have a service contract. There we have Volvo business, but not in Oslo area because we are not in the Oslo area anymore. Delivery workshops. In the biggest outlets, we have separated our workshops in service workshops and delivery workshops. The tempo in the delivery workshops is that it has been very low because we don't have so many new cars to deliver. We have not a record, but close to record backlog of new cars still in Norway. We have a really high energy cost as well in our workshop business. In Sweden, really stable earnings. If we take out the business we have sold, so we are in the same level in profitability with the last year in Q3. We are a little bit happy on that. We often show you the organic growth in the service business, and now we have 4%. From the first nine months, we have zero. We see a little bit better and better demand. In all recession I have been in, the customers still, they repair their cars and they do a service. It's important for our customers. Next slide, please. Yeah, we have a record backlog, close to 30,000 new cars. We hope we can start to deliver a little bit better in Q4 now. But we are really humble. It's a little bit different between our manufacturers. Some information we can get, yeah, we see the light in the tunnel, but some others say, we have lack of components still. We delivered 8% less new cars and 27% used cars in the quarter. We have had, as we told, a lack of used cars, mainly in Sweden, and in Benelux area. If you look at the profitability in the used cars, in historic perspective here as well, SEK 112 million is a really good result and stable margins we see for the future. What I told in the first slide here, the order intake, it was down 48%, mainly related to Norway. Norway was 80%. If we take off the big Oslo, the Volvo business there, it was 55% lower in order intake in the Norwegian market. We turn to slide number nine on the financial position. At the end of the Q3, we continue to report a low ratio for our net debt/EBITDA. It was 0.4x compared to our target of 2.0x. It continues to reflect that we have a very strong financial position for our business, even though the ratio was slightly higher compared to what we presented for the Q2, where it was on a very low level of 0.2x. The slight increase we have in the ratio is partly explained by a negative operating cash flow for the Q3 of some SEK 130 million, which was caused by working capital increases primarily related to inventories and other liabilities. That has, in its turn, been partly compensated by the Proceeds that we received from sale of businesses during the Q3, which amounted to some SEK 250 million. If we look at the first nine months, we have in total received cash from proceeds of divested businesses of some SEK 800 million, while we at the same period also have made buyback of shares amounting to some SEK 525 million. It means that by the end of the Q3, we had a net debt taking out the IFRS 16 liabilities amounting to some SEK 750 million, which was an increase by slightly 180 million compared to the year end last year. All in all, a low level in terms of the ratio and the net debt. It meant that we, at the end of the Q3, still had around SEK 150 million available at our banks as a receivable. We did not utilize our available credit limits at the bank amounting to SEK 1.5 billion. Just a small reminder to say that the yearly dividend of SEK 8 per share is then paid beginning from this year on a quarterly basis, meaning that so far, at the end of the Q3, two payments have been made and there are two remaining that will come during the Q4 and the Q1 next year. I think we move to slide number 10, and I hand over to you, Carl Fredrik. Thank you. M&A in the quarter. As Per mentioned, there is an ongoing consolidation in our industry. We want to be part of this, and we have a clear strategy. We are of course humble in the current economic environment with lower valuation, higher financing costs, and we'll deploy our balance sheet if we do not feel it's a really good fit for Bilia. We made four acquisitions in the quarter. We have acquired a small tire company called Däckat. This is in line with our strategy to grow within Mobility Care, our new business area, independent from our car retail structure. In this area, we continue to look for strategic targets to grow. In addition to this, we have acquired two truck service businesses in northern Sweden. This will enable us to develop our truck operations for Mercedes-Benz in the important and fast-growing area in northern Sweden. This is specifically Gällivare, Kiruna region, and Skellefteå. Last but not least, we have in the quarter signed an agreement to acquire Söderbergs Personbilar located in Norrköping and Nyköping. Hereby, we are expanding the Bilia family with five new brands, Volkswagen, Audi, Škoda, Fiat, and Cupra. The takeover will take place end of December this year. That's the M&A in the Q3 I leave it to you, Per, to highlight outlook for this quarter. Yeah. Next slide, please. It's the outlook for Q4. When we are or go into a recession, often I got the question about what happened in the car industry. We can see the consumer confidence is really low. I show Norway, but it's low as well in Sweden, Belgium, and Luxembourg. The fleet business, what I have seen, I've been in the car industry for many years, the bank crisis, the IT, and Lehman Brothers. The fleet business is quite stable, and the service business as well stable. But the private, in the past when we had a recession, they moved from to buy a new car to used car. Today, bear in mind that 58% of all private consumers take a private leasing. I'm not sure what will happen this time if, when the contract is often 36 months, if the customer after that go for a new used car or take a new private leasing because the monthly cost is increasing because the interest rates. We are not sure for the moment, but the two of the three here is quite stable. What I told in another slide about the availability of new cars, what we can hear in our forecast for Q4, we see it can be a little bit better, but we are humble. Something can change very fast here. If we start to deliver more new cars, it's really good for our delivery workshops, and we can get used car little bit higher level into our stock. Sweden is the third best country in Europe for the moment now when we are talking about electric cars. If we take fully electric pure electric cars, plug-in hybrids and hybrids like Polestar, around 65% of all cars we sell now is. Now I talk the car industry, but in Bilia it's little bit higher. So the battery is here to stay in the Swedish. But little bit more luxury pure electrical vehicles over SEK 700,000. The government took a decision to take off the support we had in the past. Let us see what happen with pure electric vehicles. Many of the manufacturers now they try to have a price little bit under SEK 700,000. Norway the government took a decision 2025 we will sell zero of petrol and diesel engines. If you go back three, four years all people in Norway said it's impossible. Today everybody say yes they will reach the target. Today around 80% of all new cars is fully electric. They change the taxation system yearly the government. Something happened the last year. We sold a lot of plug-in hybrids and then they took off some of the support for plug-in hybrids. The customer moved this year to more pure electric vehicles. I see 2025. It's only some years we will see only fully electric new cars in the Norwegian market. Mobility Care, I touched upon it a little bit earlier. It's an area where we want to grow. We have, as I said in the quarter, made an acquisition. We will continue to look at interesting targets within, tires. We're also looking at obviously glass, that we can do quite a lot to repair, et cetera. This is a really interesting area independent from our retail car structure. Focus still and in line with the strategy that we've said in the CMD, in May. Kristina? Yes. Given the current economic uncertainty that we are all well aware of and that we have touched base on earlier in this meeting, we did during the summer launch the cost-saving initiative to prepare the organization for the tougher times that we're now moving into. In addition to this activity during the summer, we are now working on the next phase in our cost-saving process. We have identified further cost-saving activities that will be possible to launch during the coming quarters based on how the economic development will turn out going forward. In other words, we feel that we are well prepared to actually take on the further actions that might be needed going forward. That's where we are in that aspect. Next slide. That's the end of the presentation. I guess we open up for questions. Nikos? Thank you, sir. We will now begin the question and answer session. To ask a question, you may press star and 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 questions have been unaddressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our rosters. Thank you. The first question comes from the line of Mats Liss from Kepler Cheuvreux. Please go ahead. Yeah. Hi. Thank you. A couple of questions. First, looking at the, well, inflationary pressure that you indicate there and you have, well, the leasing liabilities, for existing leasing. Could you say something if they are affected by the, well, potential increase now in rents for your facilities? Of course. Let's see. Rental cost. Let's see if I followed your question, Mats, there. Because you said leasing, is that the facilities you have in mind, or? Yes. I just Okay. I mean, do you see a sort of, well, demand for increased rents or sort of maybe 9%-10% due to the inflation? Yeah. I mean, our rentals are in most of the cases adjusted by sort of an index following inflation. I mean, for the next year, 2023, there will be adjustments of the rentals in accordance with those agreements. Okay. Great. Then, I mean, you mentioned that, well, you expect some recessionary scenario and consumer confidence are low, especially in Norway, I guess. Then you mentioned the fleet sales is important in all your markets, I guess. Is it a similar situation in, well, in Norway and Sweden there? Do you have a similar amount of fleet sales? Yeah. We have a little bit lower amount of fleet sales in the Norwegian market if you compare to the Swedish market. In the past, we could see private leasing, the willingness to take expensive cars for private leasing in Norway is much higher in a normalized market. If you compare to Sweden, if a car costs monthly SEK 10,000 in Sweden, it's not easy to have a private leasing. In Norway it was not the problem in the past. Now the customer, they hesitate a little bit in Norway, what we can see. Therefore the order intake is low. Bear in mind, Mats, it was a really high order intake 2021 and 2020 in the Norwegian market. So it's tough to compare with the two years we have had in the past now. The market is low, yes. Great. I guess looking at service part of the business, I see that you have a pretty good organic growth in Sweden actually. Do you feel that you are sort of gaining market share or is it sort of a, well, pent-up demand now following of everything and so on? Could you? I mean, you had a 5.7% underlying growth in the Q3. We are working hard with the third owner of a car. Often, we are really good with the first and the second owner of the car, and it means cars up to six years old. We've been better and better for the older cars mainly in Sweden. As we are talking in the service business, we have included tires and dismantling business as well into the figures we have now. We had them last year as well. When we acquire a tire business or rim repair company, it starts not with a high tempo from the beginning. I'm really curious what will happen this tire season. I guess we will do it better now in Q4 if you compare to the beginning of Q2, when we had the tire season. When we acquire a company, it takes time to have the company up and running in our tempo. It's a little bit different, what would you say? Mix. The mix. Yeah, yeah. Yeah. Good. Good. I mean, coming back to car fix again, sorry. You mentioned record high order backlog, and I guess even if orders are down year-over-year, it seems that I mean, it's only sort of consumer confidence or is it also that you have this long lead times? I mean, if you order a new Volvo, it's sort of get it. Yeah. Well. It's a lack of semiconductors and components. If you have a really bad order intake, it will be shorter and shorter the delivery time for the customer. Some of our models today, it can be up to one year. Therefore I also say that what I said in the presentation the customer hesitate to wait one year now with interest rate increasing, the energy prices increase. They hesitate a little bit. We hope and the forecast from Mobility Sweden now is a little bit over 80,000 units for Q4 in the Swedish market. It's higher if you compare with the other quarters this year. Okay, great. Finally, just about the Q4 you mentioned previously may pick up a bit. You have also made some acquisitions, and could you just indicate if there are or the potential impact from those? Will there be any or is it more to be expected next year? Mm-hmm. Yeah. Let's see. You mean the acquisitions that will come in the Q4? That is what you had in mind, Mats, right? Yeah. I mean the Volvo and Volkswagen. The Volkswagen, as I think Carl Fredrik said, that will take over by the end of the quarter. There will not be any effect in the income statement coming from those. While for the M Bilar Group, the BMW dealer, the takeover is planned for the 1st of November. You will have two months of income statements included in the Q4. Mm-hmm. If we have time for more in the future. If you talk about the Q4, right, there is nothing else, I mean, that will come in there, because it's so close. We are in the middle of it. When it comes to acquisitions for next year, right? I mean, we are, as Carl Fredrik pointed out earlier, I mean, looking into what could be of interest for us, but of course with a little bit more of carefulness perhaps given the uncertainty in the economic environment. Still, Mats, it's a lot for sale in all of our countries. We have room to acquire more. As Kristina said here, in the environment we are in now, maybe we are a little bit careful. Okay. Thank you very much. Thank you. Thank you. Again, if you have a question, please press star and one. The next question comes from the line of Andreas Lundberg from SEB. Please go ahead. Yeah, thank you, and good morning, everyone. You touched upon private leasing customers, Per, that you are uncertain how they will act now. Could you perhaps share with us what the ones where agreements actually have expired in the last, let's say, two quarters, what have those people done? That's my first question. I think you have in mind, if we can really see that the ones with the private leasing, Andreas, are actually, if they are deciding to take on a new- Yeah. I got the question from Dagens Industri Television. If customer terminate the contract for private leasing and I and our deputy managing director, we have every Friday a meeting with our subsidiary companies managing directors and listen what happened for each brand we have in our portfolio. Still we can't see. The customer, they waited for the car cars between 6-12 months, so they take out the car they have signed for. We can't see it. What we can see now because we don't deliver so much new car yet, as you have seen in Q3 now. Therefore, we prolong the private leasing contracts as well with the customer. I don't know still what happened if a customer say, I don't sign for a new contract, instead, for buy a used car instead, and pay the car with a bank loan or something like that. I can't give you direction for it for the moment. It's a bit early, yeah. I guess it is 10,000 kronor question for all in the car industry for the moment. Yeah. A A little bit early to tell, I think. Yeah. You haven't seen anything so far. Is that what you're saying? No. No, we haven't. Yeah. Okay. On future year to used cars, profitability is still very, very high. What do you think will happen there now if new car deliveries can take off, or could you perhaps share with us if there are any structural improvements that have taken place in the recent years? Yeah. We have had a high record margin many quarters now. If we will get more cars into our stocks, I guess the margin will go down a little bit. On the other hand, what I said, if the private consumers go more for used cars, we have a really good demand for used cars. Still we see a stable and a robust margin. Are you still there, Andreas? Sorry, I was muted. Okay. No, sorry. Have you done anything internally, so to say, in the last two years to improve the used car business structurally? Yeah. The Bilia Outlet business. In the past, older cars, other brands, for instance, if we are in a showroom for BMW and the customer has Audi, we sold it to brokers directly with a low margin. Today, we always call our purchase department in Bilia Outlet, and they take care of all cars, the outlets for the new car business don't want to have in their stock. They take a decision, auction, or we sell them in their showroom, the Bilia Outlet. Therefore, I guess we have a little bit better profitability, if you compare to how we worked a couple of years ago. I think you touched upon that you are, say, normally or typically building up inventory used cars in the later parts of the year. Is this solely dependent on new car deliveries? Or how can you find cars without that? Many different ways. The purchase department, they can buy cars from Blocket and FINN.no in Norway. In Norway, we import cars from Europe. So we buy sometimes, but I said, Blocket and FINN.no is we buy cars directly from private person. So we find different ways to fill up our showrooms for used cars. Given the weak Swedish krona, I know you are focusing on your market, so to say, your domestic market. Are you still seeing that other players are? Focusing or prioritizing selling cars outside of the Nordics. Thank you. Yeah, it's easy to sell to Europe from Sweden now, but we don't like it. We don't like to have the car in our areas where we are because it's a service customer in the future. We don't like to sell them out from Sweden. I know some competitors that sell a lot to Europe for the moment. We had a board meeting in our Porsche company, and they said we can have an empty showroom of used car if we want. We can sell 100% to Europe because they have so many calls from Europe to buy their Porsches. We like to have them in our markets. We have a long-term customer in our service business. Yeah. It's a short-term advantage but long-term. No, no. It's not good for us. We keep the long-term strategy. Mm-hmm. And hold on to that. Lastly, on your recent this Söderbergs Personbilar acquisition, Volkswagen, etc., what's the market share for that business and what's your agenda with this brand going forward? What we have heard, they are around 2.5% of the total sales for Volkswagen and Audi in Sweden. They are quite small, but the turnover is SEK 1 billion. Often the family companies they are in the size what we acquire now. M Bilar is a bit higher turnover, but not so much. We see it as a start to learn about the Volkswagen and Audi business together with the importer in Södertälje. This is the first step we can take. Oh, thank you so much. Mm-hmm. Thank you. Thank you, Andreas. Thank you. As there are no more questions, this concludes our question and answer session. I would like to turn the conference back to Mr. Carl Fredrik for any closing remarks. Over to you. Thank you very much for listening to our Q3 presentation. If you would have any further questions, feel free to contact us and have a lovely day. Thank you very much. Bye-bye. Bye-bye. Bye-bye. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.