Welcome to the Embellence Group Q4 conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now I will hand the conference over to the speakers, CEO Olle Svensk and CFO Karin Lidén. Please go ahead. Thank you, and welcome to the presentation of Embellence Q4 report of 2022. My name is Olle Svensk, and together with me today presenting, I've got Karin Lidén, who is our newly appointed CFO, started first of January. On next slide. I will never miss an opportunity to tell you a little bit who we are. I mean, we are a company that acquire, own, and develop strong brands in interior decoration. We are now, I would say, an international group. We have 60% of our revenue is outside the Nordics. We are not e-commerce, as that has been discussed in some forums, but we sell to retailers, design hubs, and architects and designers around the world. Moving on to the highlights of Q4. Needless to say, we experienced a fast slowdown in the Nordics with almost 24% unchanged and even actually an underlying growth in Europe and a growth in the rest of the world. The growth in rest of the world is, of course, driven by the add-on acquisition of Artscape. Net sales came in on SEK 176.9 million, which is more or less on the same level as last year. The slowdown in Nordics was compensated by the add-on acquisition of Artscape. EBITDA reached SEK 14.7 million or the adjusted EBITDA, SEK 22 million. During the quarter, we, as we spoke about in the Q3 report, we have now implemented a major cost out program in the Nordics. This is estimated to have an annual savings effect of around SEK 9 million in this year, 2023. Generally, we see a slowdown in consumer demand while it remains pretty solid or even growing, I would say, in hospitality. The growth that we can record in EU is actually coming from this segment. We have strong development in the U.K., in Italy, and some other European markets. The strong focus on inventory management that we talked about in Q3 that continues, and we adjust our production rates to the demand that we see. Just as in Q3, we will continue to prioritize cash flow over short-term profitability gains going forward as well. Last but not least, the board of directors for the company proposes a dividend of 80 Swedish öre per share, which corresponds to 31% of the net profit for the year. Over to you, Karin. Thank you, Olle. As Olle said, net sales in the fourth quarter amounted to SEK 176.9 million, which is up 1.7% compared to last year. The organic growth was down -16.9%, primarily following the weaker customer demand in Nordics, but compensated by Artscape acquisition. Adjusted EBITDA for the period amounted to SEK 22 million, or 8.3% of sales. Main reasons for the reduced margin relates to the lower demand in Nordics and higher cost for input material, as well as the utilization of the factories in Nordics. Operating cash flow was SEK 16 million, relatively robust due to the earnings, but also thanks to improvement in the working capital. Net sales for the full-year was SEK 720 million, and that represents a growth of 11%. Adjusted EBITDA ended at 103 million SEK or 14.3%. Similar to the quarter, the main reasons are the same with a lower demand and higher cost for input material and factory utilizations. The operating cash flow for the year was 108 million SEK, and this is better than last year when it was 62 million SEK. Despite the limited growth in operating result, we have actively managed working capital to achieve this operating cash flow. Over to the next slide. In this slide, you see the quarterly sales over the last two years. Quarter four is on par with the same quarter as last year, and the rolling 12 development is increasing to SEK 720 million at the end of the year. The adjusted EBITDA margin has decreased during the second half of the year as a result of the increasing cost for input material, lower utilization of the factories, also a return to a more normal activity level in sales and marketing, primarily in the Europe organization. Share of premium was 67%. Looking at the net debt, it continues to decrease, just as it has decreased quarter by quarter. We also need to remember that part of the debt is denominated in US dollars, so there are and there will continue to be fluctuations related to the currency revaluation also going forward. The EBITDA to net debt ratio was 2.1 at the end of the year. If we look at the first segment of our three segments, Nordics, it represents 39% of the total sales in the period. There was soft customer demand, and the net sales declined to SEK 69 million in the quarter. The adjusted EBITDA was SEK 8 million, and that corresponds to a margin of around 12%. The main reason for a lower EBITDA margin is the sales development combined with the higher costs and a lower cost absorption in the Nordic factories. We have prioritized, just as Olle said previously, cash flow over the short-term result, and we slowed down production in quarter four to meet the reduced demand. On a full-year basis, sales in Nordics was SEK 294 million, adjusted EBITDA margin was 12%. In the end of the year, we implemented a cost-saving program which lowers the operating costs with SEK 9 million on a yearly basis for the company, and we will start to see those savings from January 2023. If we look at the second segment, Europe, we see we have 34% of total net sales. Europe has a different customer mix with a larger share of hospitality and professional buyers, also showed a more stable sales in quarter four. The total sales in Europe ended at SEK 61 million, and that is on the same level as last year, despite the negative influence we still have from stopping deliveries to Russia. A positive sales mix contributes to a higher gross margin, while a return to a more normal level of marketing activities, cost higher operating costs. Sales for the full-year was also in line with 2022. It was also in line with last year and ended at SEK 242 million. Looking at the profitability, we see an improvement both in terms of amount and in adjusted EBITDA margin, which ended at 17%. This means that Europe is now the most profitable segment for the company this year. If we continue with the final segment, Rest of World, we now have a larger share of sales. 27% of the total sales comes from Rest of World, primarily thanks to the Artscape acquisition. Total sales in the quarter ended at SEK 47 million, and Artscape acquisition contributed with SEK 28 million. We saw a bit of a weaker organic sales development, we also need to remember that we had an exceptionally strong 2021 Q4 where we had a large stock order for the US in the end of the year. The adjusted EBITDA is SEK 5.7 million, and that is entirely driven by the increased sales. The reported sales for the year was SEK 184 million, and the adjusted EBITDA margin was 15%. Both have increased significantly during the year. When reviewing our development in relation to our financial targets, the net sales reached SEK 720 million for the year, a growth of 11% compared to prior year. We have an aim to obtain an EBITDA margin above 15%. During 2022, we managed to reach 12.3% or adjusted 14.3%, despite the difficult demand situation we're in in the Nordics. From a leverage point of view, we should stay below 2.5% net debt to EBITDA, and we are well in line with that target end of December this year. According to the dividend policy, Embellence should pay a dividend corresponding to between 30%-50% of net profit for the period. In line with this, Embellence Group suggests to pay 80 Swedish öre in dividend, and that is the same level as last year and also in line with the policy. It stands for 31% of the net earnings. Now over to you, Olle, for a summary. Thank you. Yeah. Trying to sum up the year then. Challenging consumer demand in Northern Europe, especially evident there you know, the second half of the year, the latter part of the year. We continue to focus on cost control and the program that was implemented here in Q4, we expect to have SEK 9 million of savings that will start to kick in beginning of this year, as Karin said. Summarizing last year, we reached a revenue of SEK 720 million with what I would call a healthy adjusted EBITDA margin of 14.3%. The list is of course long what we achieved last year, but some of the key elements here. Acquisition of Artscape in March last year. A further internationalization of the Group, where now Europe and Rest of the World represents 60% of Group revenue. Last but not least, we can see that we have an underlying organic growth in Europe and in Rest of the World. If you take into consideration the situation with Russia that Karin mentioned before, and our sales stop there. Further price increases will be implemented and have been implemented beginning of this year to mitigate the pressure that we are when it comes to direct material. The focus on 2023 is of course to capture growth where we can find it and where we can see it, and we do see it in the hospitality segment and in certain geographies as well. Besides that, we will continue to focus on profitability to have a stable cash flow and continue to have a strong balance sheet in the world that we're living in right now. Overall, I would say that premiums is going better for us, Europe is better, and hospitality is better. Where we see challenges, it's the Nordics, it's more of a mid-market and also in the consumer. All right. Thank you very much. That was all with regards to the presentation. Now we are eager to hear your questions. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Kari Rinta from Handelsbanken. Please go ahead. Yes. Thank you. Thanks for taking my questions. Firstly, about these cost savings, you say that they will start to kick in from the first quarter. Firstly, is this on an annual basis, will you have SEK 9 million lower costs on a full-year basis? Should we expect a gradual ramp-up during the year, or is this you expect full impact already from the first quarter? We have full impact. I mean, as we write in the report, we have reduced staff primarily in Sweden, and these cost savings of SEK 9 million is for a full-year saving, and they will start in January and will continue because we are not replacing. We are not replacing or hiring people now. These cost savings are permanent and as an annual of SEK 9 million. All right. Perfect. Net financials, it seems that there were again some FX related revaluations in the, in net financials. Should we expect this to continue, or should we, going forward, expect that the reported net financials will be similar to the, to the ones that you report on your cash flow statement? I mean, the net financials we report in Swedish krona, and we have part of the loan that was used to finance the Artscape acquisition is denominated in US dollars. As long as we have that loan in our balance sheet, we will have currency fluctuations in the net financial items. Okay. Then about the Nordics, you mentioned that in Europe you have more hospitality, but can you give us a rough split? For the Nordics, how much is hospitality versus consumer? Then maybe in the consumer, how much is new build versus renovation? Okay. In the Nordics, I would say that hospitality is a very limited part. What we do have in the Nordics is supply to municipality and construction company. Not for a new build, but for renovation, that represents a third of the revenue, more or less. It's not hospitality, which when I talk about that, like hotels and so on. Your second question was how much There was new build versus renovation. I think you already answered it. Yeah. A new build, I mean, I normally when I get that question, we are very little exposed to new buildings and new dwellings. I mean, in a good month, it's at max 5%, and then I'm probably a bit too generous. We have very little exposure to production and new construction. All right. Finally, the outlook comments, the focus on balance sheet and cash flow. At what level of net debt to EBITDA would you be comfortable again to make an acquisition maybe in the same magnitude as in Artscape? Do we need to see a clearly lower net debt to EBITDA, or are you still looking? Are you still willing to pull a trigger if you find something interesting? Yeah, there were several good questions there, Kari. I mean, we are in continuous dialogue, and we are looking, and we are being approached. What is, I think, happening, yeah, as I at least speak in our industry, is that the valuation expectations need to go down a little bit. Some of the companies that we have been in contact with have had certain expectation that has been based on the 2021 result. We will continue to acquire company. We are not trigger-happy, we will do it when we see that there is a good fit and a reasonable valuation. With regards to the headroom in our net debt, I mean, we think we should be mindful right now with how the situation is, not to increase our debt too much. I don't want to. I sound like a politician now. I realize that, but it might happen, but I wouldn't expect it to happen tomorrow. All right. Then finally, these price increases that you mentioned in the repo-report, are they broad-based, or are they more for certain geographies, for certain product segments? No, they are broad-based. We're, They are. Any sort of ballpark magnitude of these price increases? Are they single digit, double digit? I would look very close to a single-digit number in the middle. All right. Very well. Thank you very much. Yeah, you're welcome. The next question comes from Johan Högberg from Aktiespararna. Please go ahead. Good morning. Just a few quick questions from me. Yeah. First, can you give any indication on how destocking has affected the organic sales compared to, so to say, real consumer demand? It's a good question. We saw that started already in Q3, actually. It does continue now, but I wouldn't dare to give any number there right now. If you look at the Nordic market, can you give a little bit more flavor on the development and regarding your performance compared to your competitors? I mean, first of all, I would say that this industry has a lack of external data. We don't have any market data to give an estimation of the Nordics. What I would expect that we are probably not developing neither, you know, better or worse than the competition right now. The little we pick up from the market, we hear numbers that are greater, decreases that we have and some that are less. I would say that we are probably in the same situation as others. We are not gaining market share and not losing. Okay. Thank you. On the cost side, can we expect more cost cuts going forward if the demand keeps deteriorating? Yes. Yes. In what Are that mostly in the Nordics, would you say? Yeah. I would say it's mainly related to the Nordics. As we mentioned here in the report, we actually see a pretty good development in Europe, especially. We also expect US to continue to be good for us. It's rather the Nordics. Okay. Can you say anything on how demand has developed in the beginning of 2023 compared to Q4 2022? No, not really. I mean, we have January, we are now a bit into February. I would say that January was very strong, while February has been a bit higher. January was just surprisingly strong. It's, as I've said before, it's a little bit like walking on thin ice now. You don't know how strong it is and how much it will hold. Yeah, that's the situation right now. Okay. Thank you. That's all from me. Yeah. You're welcome. The next question comes from Benjamin Wahlstedt from ABG Sundal Collier. Please go ahead. Good morning. One more question on the cost savings program. Could you elaborate on who gets cut, so to speak? Any department that's hit more heavy than others? It's both coming from the production. Both production facilities, both in Dalarna, where we weave the Pappelina rugs, but also here in Borås, where we produce the wallpaper. But in addition to this, also in Boråstapeter as a brand that where they have done a reorganization and thereby been able to reduce headcount. It comes, it's in different areas, I would say, or in all areas. We don't expect any material operational impact then perhaps, except for maybe a slightly lower max capacity in production. Correct. Correct. Yeah. Perfect. Then I have a question on the continued cost inflation. If we could have any additional flavor on that, where do you expect this cost inflation to stem from? If we look at the production that we have in Sweden, it seems like we are in some kind of a plateau here right now. We don't see that increasing. At the same time, a large part of the inflation in this country overall, but also the cost pressure we have is related to the currency as we purchase with Swedish crowns mainly in euro, and that is continuing to be really tough for us. I would say that we are on a plateau, some minor increases here and there, overall, we are right now in kind of in a plateau. Perfect. Perfect. Also your gross margins were very strong in this quarter. Is it possible to sort of split this up into what is just a bigger share of Europe sales and any additional flavors on why we might see this super strong gross margin would be helpful, please. It is a combination of the regional mix exactly as you say there, Benjamin. I mean, we have a higher share of Cole & Son and Wall&decò, which is healthy for our gross margins. Nordic has a relatively lower share, so that helps. Mm-hmm. It sits in the product mix partly, but in the brand mix as well, and geographical mix. Yeah. Perfect. Just to continue on that note, I noticed that the Nordics has a lower share of premium in this quarter sequentially. Any comment on that? No, I don't. I mean, it. The relative number is not changing. That's not much. I can't recall now. Yeah. It changed from 32 maybe to 29. generally Yeah there is lower consumer demand out there, and it also kicks in here. Yeah. That, at that time, and I mentioned before, sales to the construction or the mid-level products that we sell to real estate companies and construction companies is relatively higher as well. Coming back to a question we received here from Kari, that sales is relatively okay, still, but it's the consumer demand that is dropping. Yeah. Perfect. Then maybe one final question from me. Within the Europe segment, is there any sales here of sort of like a one-off nature? I'm thinking, maybe a larger product or a larger project sale than you normally see or anything like that? No. No. No. Perfect. Those were all my questions. Thank you very much. Thank you. Thank you, Benjamin Wahlstedt. There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions. All right. Thank you very much to listening in. As we said in the beginning here, we believe that we have continued healthy profitability despite the current headwind we have in the Nordic demand. Thank you all for listening in and for all the good questions.