Good morning, and welcome to the Midsona Q3 2022 earnings call. All participants will be in a listen only mode. Should you need assistance, please signal for a conference specialist by pressing Star and 0 on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then 1 on your telephone keypad. To withdraw your question, please press Star and then 2. Please note this event is being recorded. I would now like to turn the conference over to Peter Åsberg. Please go ahead, Sir. Thank you so much, and welcome to today's call. Midsona is facing some difficult times and as we have been very hard hit by cost inflation. I'm of the opinion that we do have solid plans for the future and that we, both the management and the board, are 100% committed to turn this situation around. This is what I will dedicate most of my presentation towards today. We turn to page 2. Before we continue, I just want to make you aware that this presentation may contain forward-looking statements and that such statements are based on current expectations and are subject to both risk and uncertainties. Please go to page 3 in the presentation. This is a summary of the main events for the quarter. I think it's important to state that we do see a relatively solid demand for our conventional brands like Friggs, Earth Control, Gainomax, and Svebar. Sales was strong to very strong in the quarter. For organic products, it was more of a mixed bag of results. Our brands did show slight declines in sales, while our demand for organic private label products were very strong in the quarter. One of the most important things for us is to continue to implement price increases, and we have done so during the quarter. They have supported a gradual improvement month by month in the quarter, both in sales and in EBITDA profits. Also, our effort to lower the cost base yielded very good results. Since we started to implement our cost reduction program in the spring of 2022, white-collar staff has been reduced by approximately 10%, in what I would say is a relatively short timeframe. Still, the EBITDA result is down before one-off items from SEK 80 million last year to SEK 50 million this year. While the measures that we have taken have improved the situation, the cost inflation unfortunately has continued. I would say that raw material prices have stabilized somewhat, and the summer harvest season actually looks quite decent. Those of you who have followed us might remember that the last harvest season in 2021 was quite poor. Instead, what has hit us is very unfavorable exchange rates. It's mainly the strengthening of the dollar against all relevant currencies for us. We have been hit by soaring energy prices and also price increases from third-party suppliers. What this means is that we're in the process of implementing further and significant price increases. We'll see some effect already in quarter four, but the better part of the impact will be in quarter one, 2023. We have also decided to expand our cost savings program. We announced a cost-saving program of SEK 40 million in the spring, and we are well, or I would even say ahead of track on that program. We decided to expand that to SEK 60 million instead. Also, as a result of lower profit generation and a higher WACC, a weighted average cost of capital, the board has decided to write down goodwill in divisions North and South. Finally, the board has also decided to propose the new rights issue, which will be fully guaranteed by our main owner, the largest shareholder, Stena Adactum. I will update you more on the details of that later in the presentation. Let's go to page number 3. Sorry, page number 4. This is a financial summary of the items that I've already discussed. We're having a growing net sales, and as you can see, our main issue has been the eroding gross margin, and therefore it's so important to continue to drive our price increase agenda. The net result is of course very negative, and that is due to the fact that we have done the write-downs in Divisions North and South. We did achieve a free cash flow in the quarter of SEK 22 million compared to SEK -8 million the previous quarter. We are turning to page number 5. I must say that we're of course taking the situation very seriously, and we're now taking forceful action to manage our current challenges. As I've already mentioned, the by far most important one is to restore the gross margin via price increases. We're now in the process of implementing significant price increases across all parts of our business in all geographies, and we feel confident that we will push through on the price increases we are planning for. Those actions will have some effect already in quarter four, but a very strong positive effect in quarter one 2023, all else equal. We're expanding the cost savings program. We have reduced headcount by 10% already. We are looking at further headcount reductions, but also other cost-saving measures. As mentioned, after a relatively speaking weak start in the quarter, we have seen gradual sales improvement, with support from price increases. Also, while some consumers might look to lower price point, we still see a wish to consume healthy and sustainable products. As said, we have also taken measures to strengthen the balance sheet by a new rights issue. We turn to page number 6. that we have 3 commercial areas, organic products, conventional brands, and consumer health. A lot of our focus now is on the organic part of the portfolio. Private label is growing at very healthy rates, but of course, the most important thing for us is to grow our brands. A key action for us is to be able to create value to customers and consumers in this new environment, via good marketing and good sales efforts. Turn the page. It's of course important to continue to drive innovation also during difficult times. One of our best-selling products in Friggs is the Friggs Sea Salt, and we have now just launched a twin product, the Friggs Sesame Sea Salt, and first signs are very good with good sales for the product. We turn page again. Sports nutrition has been a major growth area for us during the last few quarters, and the strong trend continued also in quarter three. Gainomax was growing by 19% and Svebar by 12%. We've also done some launches in the quarter that we're quite excited about. Those happened quite late in the quarter, so the sales effect of those launches were relatively minor in this quarter three. We have good hopes that they will contribute on a major basis in quarter four and forward. It's the Gainomax BCAA series of health drinks and also a new Svebar popcorn variant. We turn the page again. The board has proposed a rights issue of approximately SEK 600 million, subject to approval of an extraordinary general meeting planned to be held on November twenty-fourth. The purpose of this is to repay long-term loans of about SEK 350 million, but also to increase the financial flexibility to the company. The subscription price has been set to SEK 825 both for A and B shares, and we are now proceeding with the process, step by step. We are happy that the largest shareholders in Stena Adactum have committed to fully guarantee the rights issue. I think that this is a good proof of their belief in the company, and that's something that we will do everything that we can to live up to. I turn to Max Bokander, the CFO, for the financial review. Thank you, Peter. I would like you to be on page 11, the financial summary. As Peter already mentioned, the net sales for the quarter landed on SEK 944 million, and the EBITDA landed on SEK 50 million. This was lower than last year, but I would like to highlight it's SEK 60 million better than previous quarter. The net result of -SEK 478 million includes the negative impact from the write-down of goodwill, as Peter mentioned before, but it also includes a write-down of a low-utilized and high-energy-consuming production line in Germany. I now ask you to turn to page 12, where I will walk through the net sales development. The net sales growth for the quarter was 5.7%. The structured growth was at 3.6%, and currency added 3.5%. The organic growth was slightly negative, driven by the weaker sales of organic product portfolio through the grocery trade sales channel. Now please turn to page 13. The EBITDA for quarter three last year was SEK 80 million, but including pro forma Vitality, the comparable EBITDA was SEK 85 million. The negative effect from the time lag between cost increases and our price increases towards our customers continued during quarter three. Further, during this quarter, the gross margin was also negatively impacted by the slightly adverse mix when private label outperformed the sales of our own brands. Additionally, the stronger US dollar and euro also had a negative transactional impact on the gross margin. These combined resulted in a total SEK -40 million effect compared to last year, which is basically the driver for the negative trend versus last year. However, I would like to remind you that the EBITDA was improved versus previous quarter and that we see positive effects from our product protection plans. With that, I ask you to move to page 14. The net cost for labor and marketing reduced with SEK 30 million compared to last year. This was strongly supported by our ongoing restructuring program that now are implemented with a rolling twelve effect on SEK 37 million versus previously communicated SEK 40 million, and now we initiating additionally SEK 20 million. So in total, it should be SEK 60 million. The savings were partly offset by cost increases and inflation in items like outbound freight, higher cost for insurance, et cetera. I now ask you to turn to page 15. The free cash flow landed on SEK 22 million for the quarter compared to -SEK 8 million last year. We see the cash flow being strong, having in mind seasonality effect, where we, during quarter three, build inventory for the Christmas days. Now I would like you to turn to page 16. We ended the quarter with SEK 434 million in available cash, representing 11% of the latest 12 months net sales. Here, I also like to highlight that we extended our finance agreement with our banks. With that, I would like to hand back to you, Peter Åsberg. Thank you, Max. We go to the last page of the presentation, which is page number 17, which is about the priorities for 2022. Of course, those priorities will mainly remain also for 2023. The most important thing is that we're 100% convinced that we will turn this around. The turnaround so far has been slower than expected because we've been plagued by continued cost inflation. We have done a lot to increase our prices to cover for mainly raw materials. As described in the presentation, we have been hit hard by FX inflation, to some extent energy, and this is what we now have to price for. We feel very confident that we actually will push through those price increases. We do have a growth agenda and, as said, demand for our products are stable. We do continue to see demand for healthy and sustainable food, and we will continue to drive our brand portfolio. We are implementing forceful cost-saving measures, and we have been very successful with those so far. Considering the situation, we are now upping the program and going from cost saving target of SEK 40 million to SEK 60 million. To strengthen the balance sheet and also to achieve more financial flexibility, the board is proposing a new rights issue, which has been fully backed by our main shareholder, Stena Adactum. With that, I thank you for listening, and I open up for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Thank you. Our first question comes from Johan Dahl at Danske Bank. Please go ahead. Good morning. Thanks for taking my questions. Just Peter, you talked about the trading down effect, et cetera. I think it seems like somewhat of a perfect storm. First, you had the weak overall performance before heading into this inflationary environment for organic produce, people preferring vegan, et cetera. Now you've got the trading down effect. When you lay of the land there, a long-term perspective of your brands, what makes you so convinced that this is still a growth area for you guys? What we have seen from, to some extent, consumer behavior, but also a lot of consumer research is that the interest in eating healthy and sustainable food remains. This is something that I feel very convinced about. I would say that for our conventional brands, sales have been good. For the organic, it has, as said, been more a mixed bag of result. Where we have been hit mostly is in healthy stores down in Germany, France, and Spain, where demand has been quite weak, to be honest. Looking at the grocery trade, I see that the customers and consumers are still interested. I think it's also about making our brands relevant in a new environment and provide value with different means. From my point of view, I'm convinced that people will continue to eat healthy and sustainable foods. Of course, consumers are having a difficult time right now, and they are clinging on to their wallets and their money. I would say that sales is very slightly down on organic brands. It's not a lot. We have seen a little bit of a gradual pickup during the late summer and autumn also. I have good hopes still that there will be demand for our products in the future. Very importantly, it's not a major drop that we're seeing. It's very light so far. We will also do further price increases, which will of course give some room for organic growth considering that or assuming that we are at least to some extent keeping volumes up, which I think we will. All right. If we were to just look at volumes in its own, take out the price inflation, which is running at double digits right now, I guess. But what would a an interval be in terms of volume that deliveries from its own in Q3? I don't have a precise figure on that I can give you, but it is as you say, down as you expected. It's not down double digits, but it's down mid-single digits, I would say, to a little bit higher than that. That's about where we are right now. Of course, what we have to do now, which is also part of our cost savings program, is to adapt cost accordingly. As I said, we have had very high demand for private label, so this means that has had a counteracting effect also. Got you. You wrote in the report also that you're dropping some distribution agreements in next year. What's the reason behind that and why is that happening? It's smaller ones that do expire. It's nothing that is major. I mean, the major one was the one that we announced in quarter two, which was the HRA contract. The reason for that was due to the fact that they have been sold and the new buyer has their own distribution sales force in the Nordic countries, and then the whole of Europe for that matter. Just a final question. The proceeds from the rights issue, you talk about amortizing debt, et cetera. You've announced cost savings so far, roughly 1.5% of sales. Is it fair to assume that the remaining part will be spent to accelerate cost savings in the company? Or how should we view it? Sorry, can you repeat that? Because I don't, I'm not sure that I got the question. No. I mean, you're ramping up the cost savings program to SEK 60 million. representing roughly 1.5 percentage points of sales. Given how things swing in this type of environment, you could argue that that's. A fairly small number in terms of cost savings. What I'm wondering is the remainder of the rights issue, is the purpose to get financial flexibility to be more aggressive on cost savings in the group? That's one of the things that we will do. We will also look at selective investments in brands to be able to drive more growth. What we're not focusing right now is to do new acquisitions, I would say. Our main focus now is to fix operations, the current operations. Again, I mean, the main focus is to drive through price increases and hopefully that we see less of cost inflation in the future, which I'm quite convinced that we will. Thanks a lot. Thanks. Thank you. Your next question comes from Niklas Kalinowski from ABG Sundal Collier. Please go ahead. All right. Thank you for the presentation, Peter and Max. A few questions, starting with the financing. You mentioned in the report that you have extended the financing agreement with your lenders until September 2025 at similar terms. To the extent that you can discuss this, could you please give us some further details regarding the extended financing agreement with the lenders? We will not go into details of it. Basically, what we have agreed upon is that we will need to amortize the loans with minimum 350 million SEK. We have the same covenants as before, but one more additional regarding liquidity. We have continuously the leverage and also interest or financial net, and then additional liquidity. I think as Max said, I mean, the main thing is that it's similar terms, and we are very happy that it's extended a further year because that also of course gives financial flexibility and muscle in this quite difficult time. All right. That sounds great. Just a little bit of a follow-up, I guess, on the repayment of the credit facility there, of at least SEK 350 million. How do you determine the amount that you will repay to the lenders, potentially in excess of SEK 350 million? Is there a potential to repay more or is it basically just SEK 350 million? Is there some form of leverage ratio to benchmark against in order to assess how much potentially extra you could repay? What we would like to achieve is financial flexibility here. What we have committed to is to Amortize the term loans with SEK 350 million. We have a rolling credit facility that we have utilized. Of course, to minimize the costs of financials, we will keep the rolling credit facility, but release some of what we have utilized or most of it. The ambition is to have a minimum 15% of net sales as liquidity available. All right. Excellent. Just a couple of questions on the cost side. In the report, you write that you will renew your energy contracts in the upcoming winter months. Historically, have you had fixed-term energy contracts, or were they variable, so to speak? Is there any way to quantify the impact from the higher energy costs during Q3? It is depending on country and to some extent, depending on production facility, what type of energy that we're using and what type of contract that we have had. It has been a mix of both variable contracts and fixed contracts. I cannot give or I won't give you an exact figure on what the impact is, but the plan is to truly price that difference in the price revision window that we have in our beginning 2023. All right. Just a final question on the accelerated cost savings program. It's more of a question of a clarifying nature. You write that you're expanding the cost savings program to save an additional SEK 20 million on an annual basis. Does this SEK 20 million relate to the reduction of admin staff and hiring of staff in production units rather than temporary hires, or will this SEK 20 million come from something else? If so, from where would that be? I think that's a good clarification. We mentioned SEK 60 million, and you and all also asked if that was material enough or not. The SEK 60 million in total are within sales and admin expenses. What we have not considered here is that of course, within gross margin and the cost of goods sold and the production and warehouse expenses, there are other savings on top of this to keep the gross margin and the flexibility towards volume variances. These are only within sales and admin expenses. All right. Excellent. Thank you very much. That was it for me. Thank you. Once again, if you do wish to ask a question, please register by pressing star then 1 on your telephone. Thank you. As we are showing no further questions at this time, that will conclude our conference for today. Thank you all for participating. You may now disconnect your lines. Thank you. Thank you. Thank you.