Good day and thank you for standing by, and welcome to Nobia Q2 Report 2023 conference call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question, you will need to press star one one on your telephone. I would now like to hand the conference over to the Head of Investor Relations, Tobias Norrby. Please go ahead. Thank you, and welcome everyone to this presentation of Nobia's Q2 results, and apologies for this small delay. We had some technical issues. The presentation today will be conducted by Mr. Jon Sintorn, our CEO, and Mr. Henrik Skogsfors, our CFO. With that short introduction, I hand over to you, Jon. Thank you, Tobias. Hello, everyone, and thank you for joining the call today. For the second quarter-- There we go. First slide. For the second quarter, on a high level, we see market demand further soften, with macro fundamentals hampering consumer as well as the project segment. The organic growth in the quarter come in at minus 13% for the group. An exception was our operations in the Netherlands that delivered growth, but here you should remember that we had a cybersecurity incident in June last year, holding back some sales then, but even net of that, a good momentum there. Some positive notes are our price increases that continue to compensate for inflationary pressure, and that our restructuring program that was launched earlier this year is fully on track in terms of actions and the related saving and efficiencies are being realized. There is the soft market, rendering a significant volume drop that has impact on earnings. EBIT for the second quarter came in at SEK 83 million, excluding SEK 22 million of items affecting comparability, versus SEK 212 million, last year, second quarter. The cost savings we have realized so far are at SEK 70 million in the second quarter and SEK 100 million year-to-date. In the UK, we have two factories, reduced and simplified overhead resources, and we are evolving the way we conduct business in the UK. The project business there is reduced in size by exiting unprofitable segments and contracts, price adjustments, making the remaining parts financially healthy, and that is going well. In the trade and retail segment, we drive more sales in less premium part of the market and higher average order values. We're seeing some results. Costs are coming down, a larger share of higher value kitchens are being sold, therefore, the margin is up, even though gross profit is not because of the volume drop. I said at the capital markets update in March, we are to optimize the store network by reducing size of our own stores, we are exploring and piloting opportunities to sell through asset-like models, such as franchise and other partnerships. The construction of the new Nordic factory in Jönköping continues to progress according to plan. We have started utilizing some of the machinery for kitchen component manufacturing to support the Nordic supply chain, in the autumn, we will have serial production of flat packs. As per the plan, by the end of 2024, we will produce and consolidate full kitchen orders in that factory. Operating cash flow for the quarter was lower, but there are some timing effects, working capital changes in both the second and already in the first quarters. Looking at the year to date, June provides a better view. We do have a situation where our sector's economic downturn coincides with the temporarily elevated investment levels that we have due to the new factory, and that has resulted in an increased leverage. Already at the time for the decision by the end of the investment decision at the very end of 2019 to invest in a new plan, we anticipated a large outflow in the period 22 and not least, 23 and 24. Also that the sale and leaseback of the building was addressed as an alternative. We had then, and have now, a good support from our banks and have adjusted. Now adjusted terms for our funding facilities to reflect the current macro and market conditions. As we have communicated before, we are also actively pursuing with the sale and leaseback and divestment of certain assets, like sale and leaseback of the Jönköping factory and the divestment of the factory in Dewsbury, UK. As a final highlight, I am very happy to announce that Henrik Skogsfors, previously Head of our Group Business Controls and Accounting, and has been an acting CFO for the past six months, now he has been appointed our permanent CFO, and I really much look forward to continue work closely with you, Henrik. With that, over to you. No, to the next slide. Kitchen market development. I'm gonna spend a little bit more time on this slide than we have done in previous calls. Let's start with the Nordic market. As we can see, there is a softer consumer and market, and we've seen for some time, and also project market decline as housing starts decrease and housing completions taper off. Let me stay on more Nordic market situation a little bit longer. If we, on basis on, let's call it market development, not the year-on-year sales or invoice sales, but on the market development during the second quarter, we do have some data that suggests that overall, it varies a little bit from market to market, obviously. Overall, it seems like, and I'm knocking at wood, and I'm careful, that the consumer demand seems to flatten out. We've had significant, obviously, decreases since some time, but it seems like it's flattening it out. In, in the project market, also a bit different, but starting with... I should put it this way: starting with Denmark, where overall demand was the first one out to soften and then followed by the other countries. It seems like, at least we have some data that suggests, that the market in itself in Denmark is flattening it out, and that goes both for consumer and projects. It doesn't mean that our sales in the second quarter flatten out, but the market development. In Sweden, which is probably hit the most in the project business on the back of housing starts and so on, we anticipate in the course of the second half, that effect will roll out, so to speak, that gradually we will see a lesser decrease of that market. Those are some reflections on the Nordic market. It's a, it's a tough environment, obviously, that is true, but on a year-on-year effect, gradually, the decrease should taper off. That's knock on wood, who knows about the future? In the UK, the retail market is clearly softer in terms of volume. It has been softer. Trade, on par or flattish with last year, a little bit down, but it's a better resilience overall in the trade market, and the project market remains weak. We have exited unprofitable segments and so on. In terms of our Magnet project business, that business is performing better now than it did before, and enhanced market share in that market is very low for us. Not as exposed to the more grim market circumstances as other sectors. We're looking into Austria and Netherlands, across the board in Europe, retail market has been soft, but as said, that's predominantly related to Austria. In Netherlands, the Netherlands project market is or has been so far stable and also a good order book. That was a few remarks with regards to the market and the market development. As for direct material, obviously a big lever in our profitability. Inflationary pressure on direct material is still high, but it stayed off. Sequentially, we are down from the peak fourth quarter of 2022. We are down from Q4 2022, but the year-on-year effect, second quarter last year versus the second quarter of this year, we have a slight increase in direct material price. With that said, in negotiations that we have and thing, and the interactions that we have, and the requirements that we put forward, and as demand on the customer side is much lower now than last year, there is a decline in material prices, and shall gradually have a positive impact on us starting with the next quarter and the following quarter, and so on. We see a positive trend in this area. For the second quarter this year, the total loan cost for material, energy, and transport was approximately SEK 40 million in Q2, and half of that was direct material, and half was energy and transport. With that, over to you, Henrik. Thank you, Jon. Let's start with Nordic for the second quarter of 2023. The organic growth came in in the quarter at negative 17%. The price realization was good across the board and continued to support our top line. However, burdened by the volume decline, which was noticeable in all countries and in segments. The largest decline in sales was in retail, with somewhat smaller drop in trade and projects. We had negative development in all countries, in Nordics, with the largest decline in sales coming from Denmark, followed by Sweden. The gross margin declined by 3%, 3.8 percentage points to 31.8%. The primary reason behind the drop in gross margin is related to the decline in sales, as well as the negative mix effect from revenue streams. Sales is declining more in the consumer segment compared to the professional segment. On the positive side, as Jon just mentioned, we see sequential improvement in direct material impact. However, we still had negative impact in the year-over-year comparison compared to the second quarter last year, in addition to higher transport costs as well as higher energy bills. As mentioned in the quarterly report, we have taken SEK 19 million as items affecting comparability in the second quarter in the Nordics. The costs are related to supply chain and transition for Tidaholm and Jönköping. The savings from the restructuring cost program communicated in January is approximately positive SEK 15 million in the second quarter. In summary, EBIT of SEK 102 million, compared to SEK 248 last year. The main driver behind the lower result is the volume decline and the negative sales mix. Over to Region UK. Organic growth was negative 16%. As in the Nordics, the UK kitchen market was soft in the quarter. In addition to a soft market, Region UK had slightly fewer trading days, for example, King's Coronation, compared to previous year, in addition to us leaving low-margin parts of the project segment, which had impact on our top line. The latter had a negative top-line impact of around SEK 75 million in the quarter. Retail was very soft, while trade was and is more resilient. In line with our UK transformation strategy, where we aim for the higher average order value segment, we are glad to see that the gross margin increased to 42.4%, up from 41.2% last year. Higher average order values on back of a shift to more premium products, which is in line with our transformation strategy. Examples are higher paint to order ranges, widening the ranges of premium white goods like Miele and Smeg, have, together with normal price adjustments, increased the average order value. The average order value mitigated effect from higher year-on-year direct material cost. Despite the improved gross margin, the absolute gross profit declined in the quarter on back of lower volumes. Savings on the restructuring and cost program benefited the quarter by approximately 40 million SEK, slightly better and ahead of our plan, which is the primary driver behind the lower selling and administration cost in the quarter. UK delivered an EBIT loss of 11 million SEK, compared to positive 14 last year. Over to the next slide, please, Tobias. Portfolio Business Units came in on a solid 40% growth, primarily, as you mentioned, on back of the cybersecurity incident in June last year that stopped production and shipment. However, even if we would adjust for the incident previous year, Portfolio Business Units would have showed growth, however, low single digits. The market in Austria continues to be challenging, and Austria show a small sales decline compared to previous year. The project in London is still a challenge. However, as mentioned in the last call, we are moving in the right direction, partly because we have the new structure in place. Also, because we notice positive signs like order intake upticks. The gross margin improved to 31.3% from 26.3%. This is, of course, primarily due to the last year being heavily affected by the cyber incident. Please note that also here, adjusted for the incident, gross margin went higher. EBIT for the region was SEK 36 million, compared to SEK 9 million last year. The main driver behind the improvement is the net. In addition to a slightly lower loss in Commodore and CIE, which were hampered by lower operating profit in Austria. Next slide, please. Financial position. First, we have a good relationship with our core banks. As Jon said, we have adjusted the terms for the funding facilities to better reflect the current macro and market conditions. Cash flow. Small positive cash flow from inventory, mainly an effect of prior year inventory increase, in addition to all entities having lower inventory current year, partly by hampered negative translation effects on back of the weak Swedish krona. The reason why working capital is much lower than last year is the timing effect from first quarter, as we mentioned in the Q1 call. A better reference point is to view the year-to-date cash flow. All in all, cash flow from operating activities came in at 66 million SEK, compared to 694 million SEK last year. The operating cash flow, including investments, amounted to minus 276 million SEK, where the investments in the quarter are primarily related to the construction of the factory in Jönköping, and the investments in the quarter amounted to 342 million SEK. Net debt, excluding leasing and pension debt, increased by 439 million SEK in the quarter to 2,505 million SEK. The increase in net debt is according to plan, as we continue to build the factory. The increase in net debt, in combination with the decline in EBITDA, resulted in a leverage of 4.8, which is in line with our own internal expectations. The fact that economic downturn coincides with our planned high investment level has resulted in an increase in leverage. As communicated at the capital markets update, as well as in the Q1 call, we are fully committed to reduce leverage and explore different leverage reduction options, such as the sale stack or assets. We can confirm that there is broad interest, and we are now in active discussions. We also classified in the balance sheet and items. Asset held for sale. Asset held for sale, sorry for that. That's the Dewsbury property, and the plan is that that will be sold during second half of 2023. Over to you, Jon. Thank you. As the last slide, looking at priorities going forward, let's start with the current business operational ones, the four first bullet point. To even further intensify our sales activities, turning every stone in this market circumstance, and drive conversion and a lot of commercial activities in order to drive offline as much as possible. We will continue to do capacity adjustments on top of the ones we already have to continue to mirror the demand situation. A big lever for us, the direct material price reduction, that should step by step come into play second half of this year on a year-on-year basis. Obviously continue and do more in the execution of our cost out program, which are delivering on plan so far, and we are even doing a bit more. Secondly, obviously, leverage reduction. As I mentioned, there is the sale and leaseback of Jönköping, the divestment of Dewsbury, and other activities. Continue to deliver, according to plan, to be able to produce full kitchen orders by the end of 2024 in the Jönköping factory, which is the main pillar of our strategy. With that, thank you very much, and over to Q&A. Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star one one on your telephone. We are now taking the first question. The first question from Victor Hansen, from Nordea. Please go ahead. Your line is open. Yes, thank you. Hi, Jon, Henrik, and Tobias. A couple of questions here from my side. The first one, your organic sales was down 13%. I'm wondering what the year-on-year pricing effect is? We, as you know, Victor, we don't really communicate, exactly how much that one is. We can also say that, you can also notice that the volumes are down. We have significant volume decline, which means that, we have said that our pricing is up. Yeah. Yeah, okay. Second here, would you say that you have a fair price cost balance here in the quarter, or do you see a further need to raise prices? Or perhaps is it more likely that you will need to lower prices, to stimulate demand and increase your utilization rates? Fundamentally, we're looking for a higher average order value by just having strategy, making sure that we address the Nordics and the UK, which we can call the best premium segment. There we will maintain pricing as the best possible. On an individual transaction basis, there may or may not be smaller rebates. I think, but we believe we can sustain, overall, we can sustain the pricing level. Also, we will need to get the direct material down because the direct material situation does not reflect the demand situation, and that's the key lever for us at this point. Yeah. Okay. Next question here. By selling Dewsbury, how much cash can that give you, and how much will it increase your rental costs annually? Sorry, can you repeat the last part of the sentence please, Victor? Yeah. How much would your rent costs increase annually if you sold Dewsbury, and also, how much cash you would receive? Oh, that's, it's a pre-hold. We are selling the Dewsbury factory. Yeah. We have exited unprofitable, this profitable deteriorating the profit segment of the project business, we are selling the Dewsbury factory. we are- Closing it. We are the owner of that factory. Closing. And, Okay, great. ... I think, we, there's no impact on rent, but I think we have also communicated that when we had quarterly, both in the Q1 call, but also in the capital markets update. Yeah. Okay. You mentioned here having adjusted the financing terms with your banks, and I'm wondering here, were you given more headroom in terms of covenants, or what are the effects from this? Any flavor here would be interesting. As we said in the call, we have adjusted, so it's reflecting the market development and the market outlook. Yes, we have adjusted terms with our core banks. I think it's fair to say, when the original agreement was set in place, it had, you know, took into account that the major outflows of the cash would be around about this time and the year, following year. That was already set, now understanding and seeing all the macro situations and what not, it's been fairly adjusted to reflect and mirror that situation. Yeah. Okay. Okay, final question here, then. On your backlog, you haven't stated any levels, but should we expect a clear decline in your backlog and thus lower sales sequentially going into Q3? What can you tell us about your backlog and the delivery timing in it? Your backlog, I presume that you mean order book? Yeah, exactly. Okay. Sometimes the backlog means delayed order in operational terms, but the order book. Your question again, if the order book? Okay, if you can tell us the delivery timing of your order books. Now, if we, if we compare with the very difficult and challenging supply chain situation that we had in the big parts of last year and also into this year, we had and a different demand situation also, we obviously have much longer lead times in the Nordic factories. That situation with long lead times is not in effect now. We have shorter lead times for both consumer and project business. Yeah. Okay. I would guess that your book-to-bill is below one, and, yeah. Uh, we're going to- Book-to-bill, that your orders are below your sales levels. I would guess, I would assume that. I don't have the data, but I would assume that. Just if your order book is significantly lower now, and if sales will be significantly lower in Q3 and ahead due to this. On the year-on-year effect, the bulk of the decline has been. We had a larger order book coming into this year than we have now. I think that's fair, that's fair to say. I was trying to elaborate a little bit, judging from the second quarter, not forward-looking, but judging from the, so-called the patterns for the second quarter, it seems on the consumer basis, flatting out. Yeah. Okay, thank you very much. Thank you for your question. I will interrupt it here. Sorry. There, as I said, there's based on some patterns in the second quarter, not being forward-looking here, because to be mindful of that, the decrease, the year-on-year decrease, I think we've seen the worst, the second quarter. Gradually it will take off. If that's the answer your question. Okay, great. Thank you. Thank you for your question. We are now taking the next question. The next question from Rasmus Engberg from Handelsbanken. Please go ahead. Your line is open. Yes. Hi, good afternoon. Can you just explain what it means that you have... Does it mean your negotiation with your bank? Are you paying more in interest rates now, and but you are allowed to do, to have a higher net debt to EBITDA and other measures? Is that what you're telling us? What we're telling is that, yes, on your questions and higher interest rates, it depends. We have, as all other customers have, we have, you know, based on fiber, most cases in Sweden. Depending on fiber, which we cannot control, then we have, depending on the leverage level, we have different add-ons on the margin, getting to the total interest we pay on our funding facilities. Okay. Does that answer your question, Rasmus? Yeah, I think it does. Okay. Given the material worsening in demand that we have seen, is it your opinion that, say, lease back, and dispose of some factories that you do not use, is that enough to bring down leverage to a reasonable level? Are you also thinking about potentially raising equity? To your first question, as management, we are using the tools and activities that are available for us, which is things like finally back divestment of the factory, facing investment of the remaining machinery in Jönköping and other things in order to work on the balance sheet. And that we do, and we are mindful, and we are preparing. We have different stages of activities when they can materialize if needed to materialize. We have enough activities here and now, and a good support with the bank, so we can manage the situation in a good way here and now. But obviously, we need to be prepared and mindful and look at things. That's clear, and I think that everybody understands that. Mm-hmm. In terms of the, right, share rights issue, that's obviously not a question for management, but for the owners, the shareholders. Yeah. It's not ours, but it's nothing we work on. I was just thinking that, I mean, the, the real estate market as such, which, say, lease back would somehow be a part of, is a bit subdued as well. Just mindful that, there are other alternatives as well. The worst thing, I guess, would be to sell the factory and still do a right, rights issue, would kind of be with a bit of a waste in the current environment, I was thinking. Back to the capital market update that you, you, had this, spring. We talked a bit there about the U.K., reaching profitability this year. Is that still doable, or how do you see that going forward? I'm not sure whether we typically give forecasts for the future, but I think it's fair to say that the... I put it this way: the actions we already have introduced in terms of cost savings, in change of business model, in the focus on Magnet and the proposition that we developed last, previous year, last year, are selling more of the mass premium product and those sorts of things, and addressing the central cost. Let's say that the market circumstance was not as bleak as it is today, because it's been a significant drop, not least in the consumer segment in the UK. If that situation had not been, you know, if it wasn't this, then, you know. We would have been profitable today. In that sense, we have a volume challenge, at the moment. The things, the measures we put in place. We will do more. Absolutely, we will do more, the measures we put in place, we can earn, you know, you can see if they work. Yeah, very good. Just a final question. Can you give us an update roughly on in the second quarter, what your interest rate cost was roughly so we can sort of make some sort of assumption going forward? Well, I think we have that in the, in the quarterly report. Okay. How much? I said the financial item. Okay. You mean talking about the interest rate level? Are you talking about the interest rate level? Yes, yes, exactly. Yeah, we don't, we don't share that information. Okay. Right. Okay. Thanks. Thank you for your question. We are now taking the next question. Please stand by. The next question from Sophia Serling for Carnegie Investment Bank. Please go ahead. Yes, thank you. This is Sophia from Carnegie. Can you hear me? Yes. Yes. Great. Thank you. Hi. My first question is about this investment, or the leaseback assets or the sale leaseback assets. You mentioned in your previous communication that it could basically just take only 12 weeks in order to sell the asset. That has been more than 12 weeks now. What is the reason for this? Has it been more difficult, would you say, than you previously expected, or is that you don't prioritize to actually make this sell? What is the reason for not selling the assets for this date? That's my first question. Thank you. No, it is progressing well. It's a complex transaction, obviously. Yeah, it has nothing to do that we don't have interest, et cetera, in the factory. It's more that we are not fully ready with the factory, and there is a lot of things to sort out. That's why it takes time. Okay. It would have been different if everything was just ready, so you have the key and hand over the keys, then it's a 2012 week. There's a lot of things to discuss and agree for the completion of the factory. All right. Your new outlook on when you will be able to sell this asset, is that within 12 weeks from now or within six months, or what is your guidance there? Or what do you think? We're not giving guidance, and I believe we said a typical project, your plan would be something around 12 weeks, and we didn't specify when that process is so started and so on. All right. My second question is about the remaining investment spend on this factory. Could you please repeat again, what is the remaining total investment in this factory? Please also split the remaining part into land and building, i.e., the sale leaseback assets, and what is the remaining part in other assets, such as machine or project cost? We have, so far, we have invested around SEK 2.1 billion invested in the factory. As we have communicated earlier, the total investment is, around SEK 3.5 billion. Yes. The main remaining, so to say, investment CapEx, is related to the machinery. We still have some, as mentioned just recently, that we are still completing. Office building. Office building and stuff like that, is still remaining, but the majority of the investment remaining are for the machinery. Okay. Is all this already agreed that you can't, like, limit the remaining spend in machinery, or is it that you need to complete this total spend? Obviously, quite a lot has been committed because we are progressing according to plan, and it's a big project to get all the lines, machinery up and running, and you see one end of the corner, you have the saw and expander machinery and now a paint shop being installed and a final assembly line and so on, actually three. One example is phasing, looking at the demand situation, yeah, you know, with some, the next couple of two years or so, we'll probably not be much higher than we had last year, if I put it that way. We can postpone things like, a third final assembly line, and there is some automation which will not be necessary at this moment in time because of capacity, need and those sorts of things. There is absolutely something to do in terms of phasing when we. The bulk still needs to take place because we're building a full infrastructure for the factory. The bulk, the major, the main, biggest, the bulk of it will be committed, but there is absolutely some room to maneuver as well. All right. Okay. My last question is about this cost for transition to the new factory. I think you raised or recognized about SEK 19 million in the Nordic sense. Is this something that you expect will continue in Q3 and Q4 with roughly SEK 20 million in transition cost? It's hard to tell, to be exact, but around about those numbers could be. Okay. All right. Thank you. Thank you. Thank you for your question. There are no further question at the moment. As a reminder, if you wish to ask a question, please press star one one on your telephone. There are no further question at this time. I will hand back the conference for closing remarks. Very good. Thank you, everyone, for calling in today, and talk to you next time on November second for the third quarter report. That conclude- Thank you. ... the conference for today. Thank you for participating. You may hang up.