Axfood AB (publ) (AXFO) Earnings Call Transcript & Summary

Hello, everyone, and a warm welcome to the Axfood Capital Markets Day 2021. We've been looking forward to this day for a long time. We look forward to telling you more about how we're building a platform for continued growth. My name is Alexander Bergendorf, and I am Head of Investor Relations at Axfood. And today, you'll have the opportunity to hear more about us on our different operations with a number of representatives from our senior management and the ones who are presenting today, Klas Balkow, CEO; Anders Lexmon, CFO; Thomas Evertsson, who is the CEO for Willys; Simone Margulies, CEO for Hemköp, Eva Pettersson, CEO of Snabbgross; Nicholas Pettersson, CEO of Dagab; and Carl Stenbeck, Director of Strategy and Business Development at Axfood. And as you may know, in October, we entered into a partnership with City Gross. And so you'll also have the opportunity to hear on this venue by CEO of City Gross telling you more about their operations. The agenda of the afternoon can be seen in this slide. First of all, Klas is going to give us an overview of Axfood, talking about how we develop and how we'll be building value as we move forward. Then presentations on Willys, Hemköp, Snabbgross and City Gross. After that, we'll have a Q&A session. That will be the first of a total of 2 Q&A sessions during the afternoon, and those who are available under the first Q&A sessions are Klas, Thomas, Simone, Eva and Anders. During the Q&A, we'll be taking questions both via the phone and the web. If you'd like to put a question via the web, do this throughout the broadcast. And then via the phone, you can ask them live. We'll get back to you with more details on that. After a brief break, we'll then start the second part of our Capital Market Day. We're talking about our strategic cooperation with Mathem announced only this Tuesday. And we'll be looking more in depth at our investments in logistics and the integration process with Bergendahls Food. And then a financial update before it's time for Klas to conclude today's presentation with a few final words. And then as a very last element of the day, the second Q&A with Klas, Anders, Nicholas and Carl available to answer your questions. Now with this brief introduction, I'd like to give the floor to our President and CEO, Klas Balkow.

Thank you, Alex. And I'd like to also take the opportunity to welcome you to our Capital Market Day. Together with some of my senior management colleagues, I will be giving you an extensive overview of what's happening within Axfood. And I hope that you will leave this event with a more in-depth understanding of us and what we'd like to achieve as we move forward. Within our group, the pace of development right now is very high. We're creating a platform, which will strengthen our group and give us possibilities to continue, provide sustainable, profitable growth for many years ahead. And to try and sum up the current journey, I'd like to do it in 4 bullet points. Throughout the year, we've grown and developed at a high pace, and we have a strong position today. We've gained market shares. And, in the future, we also have identified major opportunities to continue to challenge and grow more rapidly than the market. We need to be very efficient in all elements of the chains, and therefore, we secure this through extensive investments, investing in the base for a national-wide logistics platform of the highest caliber to develop, an even more sustainable, efficient and competitive supply of product. Over the years, we've also developed our group by acquiring companies. We wrote history in October, when it comes to food retail, by concluding the acquisition of Bergendahls Food and the partnership with City Gross, a very exciting and positive deal, creating and providing preconditions to allow us to grow and be stronger in the market together. But we also have an ambitious agenda in the area of sustainability, and it is a fundamental importance if we want to remain a relevant player in this business. Our sustainability work is extensive. It characterizes everything we do in the group and with long-term sustainable decisions, we can grow and create new business opportunities. Let me begin from the foundation. We are a family of different distinctive concepts in collaboration. And our vision is to be leaders in good sustainable food with value for money. And I would like to take this opportunity to present to you the new focus, the aim of our group, more quality of life for all. This is what we'd like to contribute with for society as a whole and for every individual we meet today and in the future. How do we go about achieving this? We have a number of bold targets we are geared towards. We want to grow by making the most of the opportunities entrenched in the varying needs of humans and meeting them with our distinctive concepts. By 2030, we will be Sweden's most inclusive food player. We will also challenge and show the way forward to reduce the footprint in terms of climate in the value chain when it comes to food. And by 2030, we'll be the strongest force towards a sustainable food Sweden. And we'll contribute to better public health and good food habits for everyone by increasing knowledge and making it easier to make healthy choices, by 2030, we have contributed to creating a healthier Sweden. And finally, will challenge usual patterns and habits through innovative solutions, enhancing efficiently and value for us and the world around us. But 2030, we lead the development towards the simplest and best experience surrounding food. But we also have a strategy, which deals with the trends in the market, with 6 strategic areas of focus, customer meeting, customer offering, expansion, the path, the journey of the products, working methods and our people. We have a strategic framework. We have a corporate culture built to purpose, and we have well-entrenched core values, which can offer good sustainable food at a good price, make a difference and create value to all our stakeholders. We've had a good pace of growth throughout the years, a growth pace which has been more than that of the market. We've had an average annual net growth of approximately 5% over the past 10 years. And if we look in the earnings per share, the situation is even better. There, we've seen an 8% growth per year on average. But we've also been able to -- this way, to give our investors an excellent direct return through extensive dividends. But we are a unique family of companies, and we have a presence in all the segments of the market with concepts, which attract all different types of consumers. The markets we are present in are large, stable, and they are growing. And our main market, of course, is food retail, but we can also be funding food service and in restaurants, and we also have a presence in pharmacies. And behind the subsequent steps, we serve through our logistics and purchasing in Dagab all these brands and Axfood centrally also provide services through an extensive IT structure. In addition to being a strong player in relation to consumers, we're also a strong player in wholesale with customers in many different segments. Through Dagab, we deliver to many of the major chains in food retail and service and convenience and also to restaurants and cafes. And we are also suppliers to pure e-commerce players, where we see many of the new players in the market have come in over the past few years with quick commerce, for example, rapid delivery or unmanned stores. Our offering is broad and Dagab is a stable and competitive partner, creating extensive value for their customers. But let me also say that the market we are currently in is a changing one. And here, I'd like to mention, in particular, 4 very clear trends. We and our customers have ever higher demands on the environment and sustainability to be assured and the interest in health and well being most of our consumers is growing up and price awareness is also growing up amongst customers. And our measurements show that value for money is the second most important feature when consumers look for at the quality. We're operating in a highly competitive market. All major players are focusing even more on food and investing more in price. And at the same time, the food retail is developing. Meal service concept, price comparisons, recipes, home delivery, in certain selected categories, the products we buy less often are gaining volume and more are trying to get in -- more players trying to get into food retail. There's a sector convergence. Preconditions are also changed by accelerating digitalization in our ecosystems for products and services. Growth of e-commerce has been significant. Digital tools growing -- increasing in stores, customers are expecting rapid access to products and services and can pay more if it's a value-added situation and new payment means providing new access to data. In addition, there's also a number of societal challenges linked to food when we and the industry can contribute and have an impact for a positive change. Food to an ever-growing population without an increased footprint or reduced biological diversity is one of the biggest, most urgent challenges we're faced with. And at the same time, we know that 1 suite in 4 is running the risk of becoming ill or dying too early in lifestyle illnesses due to their food habits. So this is a very clear link between health and food, and that's placing ever higher demands on food stakeholders. We need to be a part of the change. Some of these trends, which I've just mentioned, have also accelerated during the pandemic. The trends, in particular, within digitalization, health and sustainability and value for money have been strengthened as a consequence of the pandemic and have become even more important than before. In this rapidly changing world around us, we are well positioned in the market. It gives us a good basis to continue to grow. We have competitive concepts, which clearly collaborate. We have a strong technical platform and skills and competence in data and analytics. And in e-commerce, our market share is higher than our total share in -- share in the total market. And we have a clear ambition to be leaders in sustainability. And finally, we also have the leading position in the low-price segment with Willys. And add to that, our attractive in-house private labels, which means that we can secure a very distinctive, effective product assortment. We are determined to continue to grow more rapidly than the market, and we will do this both physically in stores and online. We have a broad presence of stores across the country. But there are still some locations in attractive areas where we are not represented. Therefore, we will step up the pace of establishment over -- for new stores in the next years. There's a clear demand for our concepts and that demand we intend to meet. In e-commerce, we've grown considerably over the past years, and we intend to continue to that presence online. New stores gives us a scope for the e-commerce offering with collection in store. We believe in the strength of channels that co-function, omnichannel and the strength of seeing the entire -- the full picture. We want to give the consumer the best customer meeting regardless of where they choose to buy from us in any of our concepts. Furthermore, it's on our ambition to be leaders when it comes to a sustainable food system, which takes a stance, inspires and can give guidance for good sustainable food by seeing the full picture and seek improvements within the framework of the limits of this planet, we will contribute to a more sustainable development. Our sustainability work is, of course, an integrated part of our business with 3 clear areas: the food, the environment and people. Work is done on a systematic way strategically with key ratios and targets linked to Sweden's environmental targets and the UN SDGs. First and foremost, the food is the core, the heart of everything we do. And because the food's impact in the environment and on humans is so extensive, it's important that production methods and consumer patterns are developed. Here, for example, we work with sustainability label products and a varied product assortment. We also work actively to reduce food waste, which is an enormous waste of resources when food, which is farmed, process, transport and then packaged is discarded thrown away. Production of food contributes with great impact on the environment, stress on water, land exploitation, more missions threatening the biodiversity. And in our environmental work, we focus on greenhouse gas emissions, sustainable materials and sustainable farming. Three areas -- the third area is people, health, equality, diversity and working conditions are factors which impact how people feel their well-being. And we have a responsibility for human rights to be respected throughout our value chain, and we work to create good working conditions and social conditions for both our own people as for the people who work in food production. An additional offering of healthy products is an important component in improving consumers' health. We do, of course, have a lot left to do in the area of sustainability. But let me, nevertheless, hold for a moment and reflect on what we've achieved so far. If you look at the period from 2009 to '20, we reduced our emissions of greenhouse gases by as much as 76%. Some of that achievement is linked to reduced emissions from transports because about 2/3 of Dagab's vehicles are using fossil fuels today. We've used the ratio of sales from sustainable goods, and we've also reduced our food waste. In addition, if we look to all our leaders, we have an even distribution between men and women. This is just a few examples of what we've managed to do, and what we'll continue to do to drive this development. Now I'll outlined that our direction as a group. And of course, the enabling factor at our operations and our concepts in the Axfood family. So let me continue in our program and come into the different areas of operations. Because our model is built on having a distinctive concept where we can, at the same time, use the force we have in the collaboration in the Axfood family, we have touched upon the fact with the shared purchasing logistics company, and we also work with the joint IT digital development within Axfood. Let me start with our portfolio where we have our smaller companies, the development companies. Here, we work with innovation and development within our most important growth areas, where we have the potential to develop the future bigger platforms. Mat.se is the online food store, where customers find purchase list, recipes that gives inspiration, and they also have access to unique climate database that makes it easy to buy sustainably. Earlier this week, we made public that Mat.se will join forces with Mathem. And as a part of that Axfood will be the second largest owner of Mathem. I will get back to this. I'll describe more about the logics around this business, and you'll also get to meet Carl Stenbeck, who is in charge of our development companies. You will also have the opportunity to ask him questions and ask me questions about this or other questions you might have about our development companies because we also are part owners in Apohem together with Novax, and we own today just over 50% of the company. This is a challenger in the market, and it's a rapidly growing online pharmacy, where customers can order over-the-counter and prescription medicine. Urban Deli has 4 stores in stock on the combination of a food haul and a restaurant that is easily accessible where you have healthy food. And then we have made tax free, that the everyday hero offering readymade grocery bags with the recipes, where you have a better food world, where more and more people cook food with selected products. And now let us talk about the other companies, we should listen to the CEOs of Willys, Hemköp and Snabbgross as well as Anders Wennerberg, who is the CEO of City Gross, where we have a minority ownership, but we'll start with Willys and Thomas Evertsson.

2020 was an exceptional year for food retail. Because of the pandemic, consumption was moved from restaurants to schools and the travel to the home. And this was the behavior that meant larger purchasing with fewer visits. And this benefited bigger stores. And this was a concept where people wanted to buy a lot in one go, and that was appropriate for release Willys. Willys had double-digit growth and double the pace compared to the market last year. And as a fact, already before the pandemic started, we had some very, very successful years. Since 2016, Willys had an exceptional growth, some years at double the pace compared to the market. And this year as well, with extremely high like-for-like numbers that we had to reach, we had a positive growth, and, at the same time, we also outdid the market. One of the reasons why we were so successful these last 2 years is that Willys and the image of Willys have changed. We still have discount prices. The cheapest bag of groceries is still in our offering, but we're no longer this niche discount chain, but have many other values as well and not just the discount prices, which means that we appeal not just a narrow target group, but many, many suites. And we see that when we see surveys of Swedish households and how many households that actually purchased something with us in the last 3 months. And this tells us that we have moved from reaching about 40% of the Swedish households 8 years ago, and today, we are over 50%. And about 3 years ago, in addition to this, we outdated our main competitor. And as a matter of fact, today, we are in that concept in the Swedish market that reaches the biggest proportion of Swedish households. And of course, this expansion and the outcome of this is that we have more stores, and we have a presence in more places today than 8 years ago, but this is also a result of us having a more multifaceted brand. If we look at food retail, for example, we have moved the farthest when it comes to sustainable brands and what consumers feel are the most sustainable products. And Willys is now among the top 5 and the strongest brands in food retail. And we have with us there, for example, Systembolaget. The 2021, we also came to be the brand that climbed the highest when it comes to the highest valued brand in Sweden. And this tell us that Willys is reached by more people, liked by more people, and we're now liked with the heart and not just with the wallet. And Willys -- well, we have the best of 2 words. We have the low prices, and, at the same time, we also have a broad assortment, a varied assortment that is well on par with other supermarkets. And this is uncertain by having lower cost than competitors and also frequent price surveys. And this is a unique concept and something that gives us an excellent position where we are liked by price hunters and gourmets alike. But Willys, today, is more than just these low prices. We invest a lot in our physical stores. And today, we have a modern and updated concept with attractive stores, and we have invested a lot in e-commerce, but also in other digital services like for example, self-checkouts, self-scanning and most recently, Scan & Go, where we have self-scanning with a mobile phone. Today, we also have a very clear sustainability profile. And in many areas, as a matter of fact, we're well ahead when it comes to comparing us with other actors in the sector. In all stores, we have labeling from the Swedish Society for Nature Conservation as a good food choice, which means that we have many products in our assortment that have a good environmental choice. Labeling. Our loyalty program, Willys Plus, is another key, another explanation to our successes. In 2013, this program was launched and it was then the first digital loyalty program in the market, and we could start from the beginning with everything being done digitally, which meant 2 things. This formed the basis for us being able to communicate digitally more cost efficiently with a very broad range of customers. And, at the same time, through this membership are being linked to the debit card of the customer, we also had very quickly, very high proportion of registered sales, which means that we have a lot of good data, good insight about our customers, insight that we can use to create even more relevance for the customers and, thereby, have a basis for loyalty and customer traffic in physical stores and online alike. This year, we also passed another milestone where we saw over 3 million members in the program. And today, 8 years after launch, still today, we have some 1,000 new customers joining the loyalty program every day. We believe in the combination of physical stores and e-commerce. And even if we today focus a lot on expanding our e-commerce, we spend as much focus on investing and developing our physical stores. Every year, we modernized some 20 to 25 stores. And in addition to that, we opened several new stores. Right now, we have many store locations that are prepared. And, today, we have some 25 new locations where we have started or we are about to open during the period 2020 to 2024, and we're working on even more store locations. Another explanation for this strong growth in the last few years that is e-commerce. E-commerce with food, as we all know, has seen a very strong growth and this accelerated during the pandemic. We have found a concept for our e-commerce that is really effective in the market. It's based on 3 important cornerstones, the same low prices online as in the store, with the cheapest grocery bag online as well. That is number 1. Number 2, a transparent and easy model, where we charge for the pick and the home deliveries, but we do not hide these prices in the assortment. And we also offer Click & Collect and home deliveries, but we focus on our Click & Collect offering. We have spent a lot of effort on creating something that is easy for the customer and that is also effective for us. The Click & Collect solution, where we have our automated stations where the customer can park, just enter a code and then without any manual handling from us just collect your grocery bags on your way home from the job, to school or other activities. And we're far ahead with the rollout of Willys collect. Some 120 of our stores have these collect stations today, and we are ahead of our competition because they have more manual Click & Collect solutions. Our Click & Collect offering is popular, it's a very flexible solution, you do not have to wait for delivery and the price is a lot lower. A majority of more than 75% of our customers do choose the Click & Collect solution today and gives it very high rating when it comes to customer satisfaction. And Willys e-trade has outgrown the market. In this pandemic year of 2020, we had our decentralized Click & Collect solutions with picking in the store. And with this concept, we could quickly expand our capacity to receive this increase of customers. And we think that we'll breakeven with e-commerce this year. Profitability within e-commerce is difficult. It's difficult for all actors. And particularly, the last mile is difficult because it requires automation and the higher willingness to pay from consumers, but we have focused on Click & Collect and that offering, which means that the majority of our sales is there. And in combination with us also charging fees for the picking and the home deliveries, well, we can reach breakeven. In addition, we are an omnichannel actor. We can see the entire customer regardless of whether to customer shops physically or online. I would like to conclude with quickly looking at 2 other concepts. Willys Hema, Willys home, where we have our small stores and also Eurocash, where we have the order shopping. Let's start with Willys Hema. We have some 50 stores from North to South. And with Willys Hema, we can have a presence where you do not have the room for a regular Willys store, but we can compete in this very important supermarket segment we see that there is potential for growth with trends like urbanization, convenience and an increased need for complementary shopping, which is something we see as an add-on to an increase in e-commerce. And Eurocash. Eurocash, it has been difficult for Eurocash during the pandemic because many of the customers, the Norwegians, they were behind closed borders. And we still have a certain level of uncertainty because Norway has implemented new restrictions these last few weeks, but we have made use of the time. We have invested in concepts. We have invested in stores, and we have strengthened our starting position, waiting for borders to open up again. During the pandemic, we actually also started a new store in Långflons in Värmland because the Norwegian customers will be back. We're convinced those short periods of times where borders have been opened, we have seen that Norwegian customers have found their way back across the border in spite of tax reductions in Norway. There's still an incentive that is interesting. Prices might differ up to 25% and even more on certain products and certain segments. But Norway, just like more than just the lower prices, they also appreciated the journey as such as the shopping experience, the assortment that is very different from what they have at home. So to summarize, we have a very clear concept that is appreciated by more and more consumers. The brand is getting stronger and stronger. We have an aggressive investment plan with modernizations and new establishments. And we also have a strong position online with a clear and competitive offering. And year-on-year, we have outperformed market growth, and our objective is to continue like that. Thank you.

The Hemköp chain, we have 2 brands, Hemköp and Tempo. I'm going to tell you about who we are, our long-term objectives, and what we've been doing over the past year to achieve those goals. First, I thought I'd tell you about Hemköp. Hemköp is a supermarket chain in growth. We are in the part of food retail that we call traditional food retail, 53% of food retail can be found here. We have 200 stores in a mix of franchise stores and group-owned stores. We believe in optimizing every marketplace based on its unique local location. So we adopted with a unique ownership structure. We have between 400 up to 4,000 square meters in terms of our size and the assortment is between 10,000 and 12,000 products. We have a clear pandemic effect if we look back. A variation in customer behaviors and rapid growth in locations near residential areas, but in city centers, we've lost some turnover. Over the years, however, we've outperformed the market. And in particular, outperformed our competitors. We've also seen an excellent period where, in spite of the pandemic, we've been able to perform much better than our main competitors. We've worked actively over the years with clear efficiency improvements with campaigns, price, assortment and stores, and we've seen excellent development in our profitability. In Hemköp, we have a clear store structure. We are in markets with clear population growth, and we performed better than our franchisor in the markets where we see growth. We have a presence where people move and live in these active flows. We have a mix of franchise stores and group owned stores, and the store managers and the franchise store are often in smaller locations. And we tend to see our own group owned stores having slightly larger surfaces. We want to expand in both these areas in the future. Over the years, we've put together our new strategy, now in the last year, in particular, for 2025, with a clear ambition to be the best in every local market. And we've also defined our purpose. Our aim is to make life easier for all those who love food and who want to eat well every day. Enjoying good food every day includes sustainability, a health and a value for money perspective. You cannot have good food eating well every day unless it's good for your health, unless it's good for the climate and for your wallet. In our strategy, we've defined 4 focus areas within which we work strategically and tactically to deliver against our long-term plan. Our first area of priority is that we want to have the best customer meetings in the market. There we've identified that we need to have an attractive concept and a strong and distinctive customer meeting. We want to have an attractive, appealing customer offering, focusing on fresh produce and meal solutions and good price perception. Thirdly, a strong omnichannel experience. And that's a clear position in e-commerce. And the fourth area is to continue to be a leader in sustainability. I'd like to tell you a little bit more about our focus areas, what our thinking looks like and what we've done over the past year. Having the best customer meeting in the market involves having inspiring store concepts. Over the year, we have developed a new store concept for Hemköp. We want to create a warm and inspiring atmosphere. We want to clarify our positionings in perishable food, such as deli, meat, dairy and fruit and vegetables. We also want to simplify for the customers. We have a clear customer journey through the store with optimized flow and self-checkout being simplified so that you can check out quickly and easily. With the new format, we want to build a modern and inspiring ambience with the choice of colors and bright wood. And we have 10 updated stores with the new concept in addition with 40 modernized stores. And we have a long-term plan with a high pace of modernization so that we can gradually revamp all our stores into the new concept. With meal kit solutions, we create new value. We have 3 leading concepts, 3 terms: innovation, simplicity and scalability so that we can offer this through as many stores as possible. We work in 3 areas: first, the packed ready meals, where we've rolled out a new offering, both in private labels and other brand levels in all our stores. This means that we grow more rapidly than the market in this segment, and we're gaining market shares. We're also overperforming in relation to our share because of thanks to this ready meal concept. Secondly, we've developed a concept of fresh sandwiches and salads prepared in store. Today, we have this up and running in a number of selected stores, and we want to scale it up to many more of the stores next year. And the final area has to do with warm and cold meals prepared in store as well. Here, we have a concept and store design to be able to offer this. We have it in a select number of stores today, and we're going to be rolling it out into many more in the next year in our digital customer meeting. And by working in an omnichannel, our loyalty club is very important. We launched club Hemköp last year, a new modern CRM platform we can use. It makes it possible for us to work with the personal customer journeys, and we also are unique because we work with sustainability. We use the club as a platform for our sustainability work. We give guidance to our customers towards more sustainable choices. In a playful way, we help them to change their habits a little bit. 1.7 million members in the club with excellent growth, new members, and we've seen a very clear increase of loyal customers, with more than 70% of our customers who are active members of the club. We reward all our actions, but we reward twice those who make sustainable choices. We'll continue to develop the club with customized customer journeys to enhance loyalty, but also using it as a basis for new sustainability initiatives. So we've accelerated our rollout in e-commerce in the last year. When we came in, in 2020, we had 19 stores that offered this option. And now, at the end of the year, we are at 31. Both our store managers and franchise stores and group owned, we believe in home delivery and Click & Collect. And it's the collecting in store where we've seen the biggest growth in the last year. We have the same position in e-commerce as we do in our physical stores. We focus on fresh goods and value for money. We continue a high pace of expansion in e-commerce in the next year, and we'll continue to develop our customer meeting to raise the experience even further. Rolling out e-commerce in a store, so that we're now at 17 instead of 19 at the beginning of the year is the basis for a clear growth and there's a real goal to collect in-store as well, both in '20 and '21, we've grown much more than the market. We work with a broad agenda and sustainability, something which is really part of our DNA. Under an umbrella, we call one bite at a time, [Foreign Language]. Together with our customers one step at the time, we move towards a more sustainable food chain. in club Hemköp, this is our platform for involving our customers, making more sustainable choices. In the umbrella [Foreign Language], one bite at a time, we work with communication to give guidance to customers on more sustainable choices. This will be further rolled out next year and in all our channels. Assortment development is an important part of our sustainability efforts. Here, we work with only MSC labeled fish in our deli section. We only sell fair trade roses and organic bananas. We work actively to have more sustainability label products. And we are the first in Sweden selling green salmon with using circular feed in the farming of the salmon. We also try to halve our food waste by 2025 according to our plan. We work through at the value chain, and we also work with dynamic pricing against -- towards customers to be able to sell off products that are about to expire, and an ambitious agenda based on our establishment to try and reduce the consumption of electricity and to work on cooling. We have a name for 2030 to be climate neutral in our cooling facilities, and we have a high pace of renewal of our cooling equipment in stores. Plastic is another part of our sustainability agenda, which is important. We try to reduce the use of plastic both at product level and from a consumption perspective in our different chain links. We also have a new cooperation and collaboration on social collaboration. We're together with the charity SOS Children's villages. We give support to their work. I'd also like to say a few words about Tempo. Tempo is our mini-mart format to be the good neighbor. That's the ambition. We have a position to have a close personal customer meeting and a customer offering to go with it. 130 stores or so with only store managers and owners who run this between 300 and 500 square meters of surface in store with up to 4,500 products, just under SEK 2 billion in net sales with excellent growth and new stores coming in to Tempo. Only this year, we've welcomed more than 7 stores into the Tempo brand. Now with clear changes in customer patterns over the past year with strong growth, where we outperform our main competitors in terms of growth, we've been quickly to refocus our customer offering and experience in stores and online. We have a clear strategy in place with a long-term plan focused on 2025, a new organization in place from this year and also with the new operational model to work within. We'll continue to expand physical store network, both with the group-owned stores and franchise stores, and we've successfully launched a new loyalty program, club Hemköp, where we'll continue to develop our personalized, customized customer journeys and build loyalty. We have a high pace of expansion in e-commerce. We're growing stronger than the market, and we'll continue to have a high pace of expansion over the next year. And we've also developed our customer offering in meal concepts and fresh produce, and we'll continue to scale this up and develop it further. Now an eventful year lies behind us. We have a strong plan for the future in Hemköp and Tempo. We focus on growing in the market in the upcoming years.

Snabbgross has a unique position in the market. Snabbgross is Sweden's most available restaurant wholesaler, with 27 Cash & Carry stores across Sweden. All of them have good opening hours, 7 days a week. And in addition, they also offer e-commerce in all stores. Our personnel has a close dialogue with our customers where our priorities to customer groups are restaurants, cafe and fast food. Net sales for September this year on a rolling 12-month basis is SEK 3.6 billion. And over the same period, we had a result of operating profit of SEK 176 million. In our assortment, we have some 12,000 items and the sales share of the private label of around 10%. Last year, we launched our own private label for restaurant kitchens, [indiscernible], and we have that done, and we will be working with new launches of new articles and new categories. Snabbgross has a very successful history of growth. Between 2016 and 2021, we had an average growth net sales of 5%. 5 years ago, Snabbgross had 22 stores across the country, or and 2017, we established new stores in Helsingor in seafront. And last year, we added stores in [indiscernible] shopping and [indiscernible]. In August this year, we have also opened a store in [indiscernible]. And next year, we will add 2 new stores when we established stores in [indiscernible] and [indiscernible]. The 2 largest stores in Snabbgross are in Arsta in Stockholm and in Partihallarna in Gothenburg, our e-commerce was launched already in 2011. Snabbgross growth has some 78,000 active corporate customers. Around 75% of our sales go to prioritized customer groups of restaurants, cafe and fast food, other sales go to a large customer base, more than 50,000 active customers. And among those, we have corporate customers and associations. On average ticket value in the store is around SEK 1,800. And on e-commerce, the average is a lot higher, around SEK 11,000. As I've already said, we offer e-commerce in all our 27 stores and sales in e-commerce is around 20% of total sales in Snabbgross. Snabbgross has accessibility, which has been a success factor during the pandemic, with existing customers and new customers that have come to the store to shop for the day in uncertain COVID times. Given restrictions and uncertainties about sales the next few days, restaurants were afraid to place large orders in advance. And that is also something we see from the drop in e-commerce during COVID. And between 2019 and September 2021, we have gained market shares responding to around 3.9 percentage points rolling 12-month basis in the private food service market. Over this period, the number of unique customers have gone up with 8%. One year ago, midst of the second wave of the COVID pandemic, we opened up a new concept, a Snabbgross Club. The time for this launch, this new concept wasn't the best, but it turned out to be a success nevertheless. Snabbgross Club is the result of work that was started already in 2019, inspired by big international actors like Costco and Sam's Club. In Snabbgross Club, we also offer consumers to come to us and shop directly from the restaurant wholesaler. With Snabbgross Club, we cover a void in the Swedish food retail market. We have found a unique position where we can offer consumers as well a unique affordable restaurant assortment. Membership is SEK 299 a year after a free trial period of 3 months. And the target group are those who like food and cooking, the big family, that wants to stock up for a party or just for everyday living, and the consumers, they have found us. Sales to consumer has gone according to plan. We see higher average tickets than the traditional food retail. And, today, we have some 16,000 registered members in our 2 concept stores, one being Enebyängen that was opened in November 2020, and Södertälje that was opened August. The next planned store will be in [indiscernible] and will open during the first 6 months of 2022. And we see great opportunities with Snabbgross Club in the future, and we do have the ambition to establish more new stores in the next few years. And existing Snabbgross stores with the right preconditions and with the right locations will also be converted to fit this new concept. And Snabbgross Club starts with the same basis as a regular Snabbgross store, and our corporate customers, they're welcome to shop at both concepts. Today, we have e-commerce that is offered only to corporate customers. Bigger corporate customers, they are offered discounts and special corporate customers can shop from different selected product categories that are not available for consumers. In both concepts, we offer a restaurant assortment that is affordable, where we have many nonperishable and perishable products from several continents. We also have beverages, nonfood range that is adapted for restaurants and takeaway customers. Our ambition is to be the cheapest restaurant wholesaler in Sweden. And on top of that, we have campaigns with good prices and focused theme days where we have excellent offerings. And in addition to this, we also have more segmented customer offerings. In Snabbgross Club, we have also added on a more consumer-adapted assortment to meet the needs of the private consumer. We also have membership campaigns and discount services to -- that we offer to selected partners. And the ambition is that you should be able to have earned what you paid in the membership only after a few purchases. And let me now stop with the focus -- end with the focus areas for the next 3 years, our ambition is to establish 1 to 2 new stores every year and modernize and improve the existing stores. Next year, we're establishing stores in [indiscernible] and [indiscernible]. And in addition, we're moving into new premises in [indiscernible] and in [indiscernible]. And we continue to broaden and develop our assortment as well, and we're going to defend the position as the most affordable restaurant wholesaler in Sweden. Digitalization is also a very important development area where we see new opportunities. And with the launch of Snabbgross Club, we also have a new modern tool for our customer programs where we can segmentize our offerings even further. And we see opportunities for continued profitable e-commerce growth. And of course, we're going to continue to develop our Snabbgross Club concept, where we see a lot of potential and many opportunities by focusing on these areas where we have new existing customers that decide that they want to shop with Snabbgross and Snabbgross Club.

I'm Anders Wennerberg, CEO of City Gross. Today, I'm in our store in Hässleholm. And I thought I'd tell you about our business idea, our concept and our thoughts for the future. I look forward to meet you in Stockholm, but now you will get a greeting from this corner down here in the South instead. In City Gross, we love food. We give everything for our customers. It's been an important part of us ever since the company has been building up since 1993. Every week, we reach out to 1.5 million customers through our 42 stores across the country and also through our e-commerce, where the online stores get their products from the nearest shop. We have 1.3 million pre-owned members, preuse the name of our loyalty program, our members' club, very appreciated by our customers. At City Gross, we combine the attractiveness of fresh deli and food halls with hypermarket efficiency, and we offer our customers high quality at low price through the broadest product range in Sweden. What this means in detail, I thought I'd tell you a little bit more but in my presentation. We are 2,800 people employed, with a net sales of SEK 9.7 billion in the last year. Before we look into the future, let me briefly tell you about our history. It's almost 100 years since Mikael Bergendahls started to import margarine, coffee and cheese in Hässleholm. Through the years, the operations developed. But it wasn't until 1993 that the doors were opened to Sweden's first City Gross store. City Gross was a part of the Hässleholm-based warehouse and logistics company, Bergendahls food back then. 30 years later, we now operate 42 stores across the country, and we are still part of the Bergendahl Group. But now with a new strong partner, Axfood and Dagab, and our head office is still located here at home in Hässleholm. 13.3% of the hypermarket segment is covered by City Gross today. Our main competitors are Ica Maxi and Stora Coop. Here, we see a great opportunity. Challenging our competitors with our generous offering of fresh produce and highly affordable prices in both colonial and special. I come from previous leading positions in both Ica Maxi and Stora Coop. So I have a good understanding of what it takes to really enter into the arena to fight for -- first of all, the second place. We see this as a realistic goal. It's a real driver for me. And we want the most satisfied food customers in Sweden. That's our vision. We're a fresh food hall, and a hypermarket in the -- under the same ceiling. We inspire to passion for food like a whole end of market with good prices. We have the right knowledge on site in the stores. We have trained fresh food heroes, mastering the craftsmanship of artisanal products who can offer really high quality in our raw materials and products. We train our stuff ourselves. We have training premises here in Hässleholm, both for meat, fish, deli, bakery and cooking. We also offer a wide range of Swedish food stuffs, a product range, which differs from north to south because we've adapted it to what can be locally produced and offered. We've always been very strong in suppliers of locally produced goods and that is something that is needed to be noted in the market. And thanks to our new cooperation with Axfood and Dagab, we see great potentially in some of our weaker areas such as purchasing logistics and computer IT and data systems. In our long-term strategy, there are 5 areas in particular we see major shifts needed to take the next step for us. It's about where we're coming from, the position we have amongst customers and the new opportunity offered together with Axfood and Dagab to make the most of and maximize new opportunities through that cooperation in years to come. The basic pillars in our strategic house is our values. They characterize the way we work and run our business idea to new levels. We want to be result-driven, inclusive, customer-focused and responsible. In our offering, there are 4 areas that -- where we try to stand out a little bit extra. But, at the same time, it must be very easy to make good choices in your everyday life when you come to us. We invest in Swedish fresh meat cut in store. We have trained butchers in-store. Customers can ring a bell in the store and ask to get what they want. We offer as many as 250 cuts. So we sell the entire animal. With competitive prices, both in colonial and special, our customers have the opportunity to -- a really good deal. We have a clear strategy to work with good campaigns and bargains very appreciated by our customers. In our bakeries, on a daily basis, we bake bread, cakes, biscuits from the ground. And you can see as a customer, when we create the cakes and roll chocolate balls by hand, you'll find fresh tasty bread throughout. And over the years, we've also invested in our fruit and veg department. We have trained green grocers. They're highly skilled in handling the products. They can inspire customers who want to try -- would like to turn new products or just learn a new way of preparing their favorite vegetable. And to ensure that we really deliver in all stores every day, we ask a number of customers via e-mail if we live up to their expectations. This is one of our most important tools of steering in terms of the performance of our stores. A sustainable food retail sector begins with us. We help our customers from sustainable everyday life, but we also take responsibility for our own operations, and we see great benefits when we want to make the most of our new cooperation with Axfood and their market-leading position in this area. We work actively to avoid food waste. That's one of our most important area. Through the waste stations where we've avoided having to throw away fruit and veg, which is fully edible. Our aim is to get down to 1% of food waste in our stores, and we are well underway in 2021. We ended up at 1.48%. Our packaging, skin pack for meat and fish, extend sustainability and shelf life up to 10 days and helps us to reduce our meat waste by 44%. That's what we've seen over the past 2 years. In the autumn, we invested as a senior partner in Save The Children. It's something which is very warm and close to our hearts. As a family-owned company, it's important to support an organization that will help children whenever they need it, both in Sweden and the rest of the world. During the year, we've mounted solar panels on 3 of our stores in [indiscernible], [indiscernible] and [indiscernible]. This is a cooperation with Sweden Energy and Castellum. Solar panels is an environmentally friendly additional source for us, and they produced most of their electricity during the summer, the same period when our stores consume the most. So it's a perfect combination for us. It's important to be able to offer our customers Swedish products and materials of high quality. So over the past 3 years, we will step up the provision of Swedish products by 10%. It's about sourcing locally, products produced just outside the town, building long-term relationship with suppliers so that they and our Swedish farmers can feel safe in investing in those products and working with a long-term perspective. The net sales for City Gross was SEK 9.7 billion over SEK 1 million during the past year, a total sales development of 3.5% compared to the previous year with 2 new stores. For our comparable stores, we ended up at 2.2% and e-commerce share is 4.9%. It was a very special year for food retail. As the corona pandemic had a great impact, sales went up, and we were encouraged to work from home and many social events and occasions were canceled. We bought extra, and we invested more money in having good meals at home. So we've seen incredibly strong numbers from when the pandemic past the first year up until now. And the graph shows clearly had different events during the pandemic had a direct impact on ourselves if you look at this. The sales of months compared to the previous year on comparable stores is the numbers we're seeing here. And we're very proud of ourselves. And according to ACNielsen's official reporting over the past 5 years, we've had the best development in the hypermarket segment. As I mentioned earlier, our e-commerce share is at 4.9%. And in the past year, our purchase patterns have changed considerably. E-commerce has seen an explosive growth during 2021. In handpicked grocery shopping, we went up by 200%. And we've outperformed the market for 20 consecutive months in spite of not offering home delivery. E-commerce rests on 2 large legs, hand picked groceries, including catering and meal kits. We offer the same fare prices online as in stores and compare that to some other players who will add up to 10% in e-commerce channels. Over the year, we've emphasized greatly raising of quality further in production, and we've invested in training our people so that they can handpick and pack correctly so that the customer will feel that this is done with care and of great high-quality. As commerce develops, innovative solutions will have an ever more important significant role, and we're always working to provide even better offerings to our customers. And Axfood, as a new corporation partner, will here as well, give us an opportunity to develop our e-commerce offering more rapidly. So what happens in City Gross moving forward? Over the past 5 years, our aim is to grow by approximately 15 new stores. And with access to Dagab logistics and warehouse centers, new opportunities open up to us to grow further north as well. There are several cities and towns, which have become more interesting now than they used to be. We have some white parts on the map in cities where we can open up more City Gross outlets, and we have long extensive dialogue with players in the market. It's important for us to provide and offer the best experiences in the market at City Gross. We want our people and our employees to enjoy going to work, to enjoy being at work. We want everyone to feel motivated to contribute with their skill, their experience and their ideas. Over the past 2 years, we focused entirely on what I call basics. Now it's time for the next step. And with this brief presentation, I've tried to give you a first insight into what City Gross is, and what we want to represent. And with those words, I hope to meet you soon again. Thank you.

And I hope that with these presentations, you now have a good insight in some of our companies. And I do think that now is a good opportunity to open up for a Q&A session so that we can answer your questions about our different concepts. And to be very clear, we will have a second Q&A session later on this afternoon where we're going to focus on the transaction with [indiscernible], our work within logistics and our financial outlook for 2022. For the Q&A session, you can either call 1 of the phone numbers that you see on the screen or you can write your questions into the text comments.

And with me here, I have and we say welcome to Thomas Evertsson, Willys; Simone Margulie,s, [ Hemköpskedjan ]; and Eva Pettersson from Snabbgross. We also have [indiscernible], the CEO for City Gross with us via link from [indiscernible]. And let's see. Do we have a first question? [Operator Instructions] And we have a question from Daniel Schmidt at Danske Bank.

Hello. Can you hear me?

Yes, hi.

I do have a few questions. If we start with Thomas, Willys and Klas as well, of course. And well you have had a press release before this day as well and you talked about break-even for the online business, we didn't really [indiscernible] that you expected to breakeven towards the end of the year. And I have to say that, that's quite impressive considering what it's looked like with many other different actors. And of course, this also reflects your mix. But also what you've talked about, the transparency in how you charge, et cetera. So with this mix, do you think that this will stay? Will there be any changes? Something that will be to your advantage, disadvantage if you're at breakeven now? What should we expect to see? And what should we think about the profitability development this part of this year next?

Well, of course, that's very, very difficult to predict what the e-commerce development will be like in the next few months because that's very closely linked to the development of the pandemic. But you mentioned the breakeven. And as a matter of fact, that's not towards the end of the year, but for the full year of 2021. And I do not want to present any forecasts for 2022 because we have way too much uncertainty in how the e-commerce part will develop.

But is it reasonable to believe that you will be even more efficient in your e-commerce the next few years compared to what you have been doing? And now you're investing in Bålsta and what do you think about 2023? Will you be even more efficient by then? And that could pave the way for making some money even?

Well, I do not want to make any predictions, but you mentioned Bålsta and that is where we can add to the mix automation. And automation is a very important mix in creating profitability for e-commerce. Right now, we have manual handling of the picking within the e-commerce. You have created scale in different ways. And you've also touched upon that with this is one and the same platform is 120 stores. Well, we're going to build more stores and that will help the scale. And you also touched upon this with what would happen with e-commerce in the future? And I have been very, very clear saying that no one knows but we are determined to offer what the customers want. And with volumes, we get scale efficiencies. And then, of course, what underpins that, we're going to talk about that with automation, for example. That will be the next session.

And another question, if I continue with Willys and with Thomas, perhaps also linked on to what Anders said towards the end because you had a graph talking about the development of City Gross and Anders talked about City Gross having had the best development in this hypermarket segment, and I think that you excluded Willys. But anyway, -- and that was what you could see in October, but has it been more sluggish for the hypermarket concept the last few months if you compare it to other parts of what you do?

Anders, do you want to comment?

Yes, I can comment. And I think that we have had 2 amazing years within the hypermarket segment when it comes to sales. And that is because of the premises with the services that we have, the space we have, combined with COVID restrictions. And in October, November, of course, we see record sales. But overall, we are very happy with the sales that we have seen. And I have to say that the hypermarket segment, for us, is something that is well defined, but we also have the discount segment where we have Willys, where stores are somewhat smaller compared to what we have with City Gross.

And then just to conclude with Hemköp. You launched as the first actor, I believe, double points in your loyalty program for sustainable choices. And you touched upon that in the presentation as well. But could you say something about how that has been received and what attention this has gained? Is it what you've hoped for?

Well, we launched Club Hemköp last year, and the reception was very positive. Our ambition is to step this up. And we see that we have higher loyalty amongst our customers. And with the sustainability initiatives that we have launched, we also see that they have gained a lot of attention, that they are worth the double with the digital receipts, for example, and what we have done. And now when we give a bonus for organic choices, we see that, that has a good effect as well. So we're very, very happy with this. But you should also understand that this is something we're working with long term. We continue to develop components and also looking at different platforms and sustainability initiatives.

Well, this is perhaps something you do to distinguish yourself in the market because that might have been a problem that you've had, that you haven't had this unique profile, but now perhaps you've created it.

Yes, that is what we think we are now making it clear what our stance is within sustainability, and we also work with communication. We work with this bit by bit, [ toga for toga ] and that is also to strengthen our position within sustainability.

See if we have any further questions. There are no further questions right now for our speakers in the phone conference. We also have the common section. Alex is reading there, Alex. Anything? Any questions there?

Thank you, Klas. Yes, we do have some questions through the web template. The first question is for Eva. What about Costco's introduction into the Swedish market, Costco versus Snabbgross Club, et cetera? Any thoughts?

We're following that introduction with great interest, of course, at the same time, we have our concept. But we did look at Costco when we created Snabbgross Club, of course, because there's a membership feature. You pay your membership fee, but we focus on our setup, and we're mainly focused on food, of course. So we have a concept, which will allow us to grow in many parts of the country. So there are some differences and some affinities.

Thank you. And from Magnus Råman, Kepler Cheuvreux. And here's the question. How do you assess the competition from your main competitor, ICA? When the ICA [indiscernible] AF acquired it, will there be a change with the new structure?

I don't think anyone here can answer that question. I think you'd have to put that question to ICA, but I'll answer it as best I can. We focus on what we do. And I've been very clear in saying that we focus on our development, making our investments, following our plans even if we are listed. ICA has made another choice, and we'll have to see where that takes them.

And another question from Magnus. You're giving guidance to say that Willys will break-even this year, and we've already touched upon this, mainly in e-commerce that was mentioned. But how many additional years do you expect to have to wait until the e-commerce doesn't impact the margin in a particular reason?

As an omnichannel player like we are, we offer our customers both to shop in our physical stores and to shop online. We can see in that position the customers who start e-shopping with us, they continue to also buy from us in our physical stores. So they invest more of their money out of their budget, their household budget than they used to before they started shopping online. So that's good news. So we look at the profitability of that customer as a whole. But if you look at it strictly limited to e-commerce, I do believe, as I mentioned earlier, what we see is it's an important component. But to a great extent, it's about your offering. If you're going to send products to a consumer, depending on how far you're going to stretch it, how far the vehicle goes and the density in that area, I think we're only at the beginning of that journey in an industry which isn't quite mature yet. So we're learning every day to improve a little bit further. And one of the most important elements in being able to reach a breakeven is the focus on picking and collecting in-store. Every month, every quarter, we've improved. We're fine tuning small details, which, taken together, bring us to a level, which is quite good as we see it right now.

I have 1 more question, in fact, on this topic from Niklas Ekman at Carnegie. And he's wondering about profitability as well. He's asking if it's the same for Click & Collect and home delivery. Do the fees that you charge to consumers, do they cover the costs? What's the situation?

No. Well, of course, in the activities we have in Click & Collect, we have a better margin, and we have a less good margin in home delivery. There's nothing surprising there. It's the sum total of the offering from Willys that will break-even.

And a question -- another question from Niklas at Carnegie to you Anders. What's your perspective? You're operating in the hypermarket segment, ICA MAXI and Stora Coop are you competitors? What about competing with Willys, for example? What's your perspective there?

We try to focus on what we do, just as Klas mentioned earlier, and our nearest competitors in hypermarket stores are ICA MAXI and Stora Coop mainly. So I try to stand out to make a mark with fresh produce, meat and fish and deli and catering in-store and full-scale bakery in-store. So I think we are quite complementary. We move in different markets, different segments, I would say.

You can add, Anders, that we are neighbors more or less in some areas, and it benefits all of us, and it's a clear confirmation of the fact that we are complementary.

A question on sustainability from Anders, any further investment in vegetarian or vegan food considered perhaps more sustainable, Klas?

Yes. Permanent development on new protein and new sustainable offerings. It takes time, however, for consumers to change their favorite recipes, et cetera. So we've embarked on the journey. We're working on launching new products. The most recent one is [indiscernible], where, together with an entrepreneur, we've -- we're now offering cashew based -- cashew nut-based raw material to produce a meat-like product. We continually develop new products and we do everything we can to get the consumers to try it out and adopt these offerings. Excellent. We'll keep going.

We have more questions. So let's keep going, Simone. This is a question for you. [indiscernible] we've heard about profitability online? And what about Hemköp?

Well, we're lagging behind Willys something. We have focused this year and the last year on expanding e-commerce. In 2020, we had 19 stores offering this and this year 31, both our own stores and franchise stores. And we do focus on this expansion, and we want to find a good mix with home deliveries and collect in store.

Thank you. And then a question from ABG and Fredrik Ivarsson and that is for Thomas. When -- or you talked about increased penetration. And what has happened since 2013? And what have you seen in terms of expansion? And what can we say about like-for-like your growth?

Well, scientifically, we can only say that both these things have contributed, but we cannot increase penetration solely by increasing the number of stores or locations. It's about building a brand that people enjoy more and more. But if you're new to a location, well, then, of course, it's a good idea to set up a store with a good offering. But it's an interaction, expanding and developing the brand, but to assign proportions to these 2 different components, it's impossible.

Another question from Fredrik is, when you modernize a store, and I guess this is basically for all of you, what impact does that have on sales? Can you measure that effect on modernizing a store, and do you see an effect in sales? And perhaps that is something for the 3 of you.

Well, I can start. If we go back a number of years in time, we could see that it did have quite an impact if we invested in something. But we saw a negative impact because -- well, we had what we refer to as the [indiscernible] project, transplanting hearts and lungs. And that was a big project, and that had a negative impact. But today, we're more careful because the consumers, they do not like things when you cannot find what you want to buy. So we're more careful today, and we have improved there. But then the impact that refurbishing has, well, that depends on the change. It's like when buying a new car, is it just a facelift to a more modern model? Or do you change to another brand altogether? So it depends on what we're talking about. And the Hemköp stores have also been modernized, right? And has that had an impact on sales. Well, we have our new concept that was introduced last year and we have modernized a number of stores. And during that particular refurbishment period, it's difficult. We have a dip. But then once we're done, we see that we have a nice growth in those stores that have been modernized with the new concept.

And Eva about the club the typical consumer in Snabbgross Club, who is that consumer and what's the segment in the market? And could you tell us a bit more?

Well, it's a bit difficult to be very exact about this consumer and what the consumer looks like because we opened up during COVID. So we haven't really had these big parties where you want to buy in bulk. But what we have seen is that this has been very popular among large families that like food, that enjoy shopping at good prices. And we also know that many people have been working from home, studying from home. So big families that enjoy food and also have a car so that it's easy to get to us to do that bulk shopping.

And then a question about food waste and perhaps for you, Klas. Is it possible to quantify the financial savings of reducing food waste? I'm sure you can answer it, too. But Klas first.

Well, we are going to get back to some of the financial developments and the development we've seen during these historic few past years, where food waste clearly has reduced and had an impact on the gross margin. So it's -- we'll get back to that.

Now we have a few more questions, with lots of questions in the web broadcast. And you can also dial in if you'd like to ask your question yourself. I'll remind everyone of that. And if we don't have time for everyone, we'll answer them afterwards. Yes, of course. Now let's see. A question from Gustav Hagéus at SEB on the updated margins. But I think we can keep that one for the second Q&A when Anders Lexmon is with us. But he also has a question, same person, which is this: You mentioned that there are some places where you don't have a presence with a physical store, and you see some growth opportunities. But if everyone thinks that way, including all the competitors, combined with migratory movement across to e-commerce. Is there a danger of an over-establishment of the number of physical stores in the market.

I can go first. Of course, for us, where before these deals we had a market share of about 20%. We do see a potential to gain more of a market share. We think that as far as we're concerned, it's 80% left to fight over as it were. And we have excellent distinctive concept where we come into markets even when there are other stores, we bring a new concept, and we stand a chance to gain market share. So as far as we're concerned, it's about seeing great growth potential in a number of places and venues where we don't have a presence right now.

And then question for you, Thomas, from Gustav, its on profitability and e-commerce again. He's wondering about how you allocate costs, of course, when you calculate profitability. Can you tell us a bit about what you mean by break-even? And on the topic, cost allocation and whether you expect any cannibalism from stores to online, if that impacts your margin in any way moving forward? We've already talked about profitability online, but perhaps you might be able to comment a little bit further.

Well, the ratios and how they develop, we've seen over only over the past few months, how e-commerce, some months, have shown a positive trend, others -- other months negative trend. It's really very difficult to surmise the guess. What was the first question? Oh, the allocation, that's right. We've really tormented ourselves in that allocation. We've done it by the book. It's not a business on the margin, not about margins. We allocate costs and revenues in our physical stores. We've done the very same in online.

Thank you. I think that was all from the webcast. Thank you. Thank you very much for all those questions and further questions over the phone as well. I think we've all earned a break. We're going to break for 15 minutes, and then we'll get underway with the next session, and there's going to be a count down here, so you won't miss it. See you in a few moments. Now we'll have a break. [Break]

Welcome back. I hope that you had the opportunity to have a cup of coffee or something. We're now going to start the second half of today's Capital Markets Day, and we're going to talk some more in depth about the transaction that we made public last Tuesday. And we're going to talk about what we do to develop the logistics of the future and our financial development as well and also the outlook for 2022. We are then going to conclude with another Q&A session, with a focus on those components. But let's start with the news that came Tuesday. In brief, it's about Axfood starting a strategic collaboration and becoming the second biggest owner in MatHem in that [indiscernible] the e-commerce actor MatHem is merging with [indiscernible]. We divest Mat.se, which corresponds to 12% of our e-commerce. And in return, we get 16.5% of MatHem. And that will create better opportunities for growth and synergies. And together, MatHem and Mat.se will become a stronger, more efficient unit. At the same time, we signed a long-term delivery and collaboration agreement with the Axfood purchasing and logistics company, Dagab. And through this agreement, we can become a strong, stable partner to the new MatHem. And now I'm going to say welcome to Carl Stenbeck, the Axfood's Strategy and Business Development Manager who's also in charge of our development companies. Welcome. Carl, you have been part -- you've been very much involved in this deal. But before we start to talk about that, you're working a lot with digital developments and e-commerce in general. Do you want to comment on what we see in the market.

Well, as everyone knows, e-commerce has grown enormously the last year, not least due to the pandemic. And today, we can say that about half of it is Click & Collect and the other one, the other 50% is home deliveries. And this is interesting. Sometimes we talk about Omnichannel, [indiscernible] , et cetera. But we see that we have sales within omnichannels, and we also see that customers who start with e-commerce, well, they will shop a lot more, and we see additional sales as well. So we see strength in the programs that we have at Willys where we have some 5 million members in total. And a lot is happening. We see a lot of developments, having to do with home deliveries, collaborations, and we think that this will continue. And we have also seen this with Mat.se, and this is very exciting. But why this merger?

Well, with this transaction, Axfood will get an ownership part in the biggest pure e-commerce actor, and we think that there are big synergies to be had between Mat.se and MatHem with the technological platform, and that will be good for both of them, for example. And this is very exciting. And we see that the consideration on a cash and debt-free basis is [ SEK 6.8 million ], and that is about 6.5% that you get an ownership part. And we can also say that this is a transaction that has been -- to be approved by the Competition Authority. So what will happen next? Well, what will happen immediately after Christmas is that we will send in an application to the Swedish Competition Authority, and they will look at it. And we expect that -- well, once that has been done, then the transaction can be completed.

What do you think will it be approved?

Well, of course, we believe that it will be approved. Otherwise, we wouldn't have gone ahead with the transaction. So we hope and believe that it will. That will be very exciting, and you will be here for the Q&A sessions. It will be possible to ask and call questions about this transaction and also about other development companies that we have. So thank you. And then we're going to continue with our program. And we're now going to talk about other investments that we do within logistics, and that is quite a bit as a matter of fact. And here, I would like to say welcome up here to Nicholas Pettersson, who is the CEO of Dagab. Nicholas, this is -- I hope that everyone can see this slide because this is a new logo type that you have for Dagab. And that could signify that something has happened. And if we look at Dagab, we actually have 3 different components that have been merged. And that is what we see in this new logo type. Could you describe this journey?

Well, to be brief. This was something that was necessary because of the requirements that we have in the number of brands we have in Axfood. And also the fact that the world is moving a lot faster, we needed to change, and we need to become more agile. So this was necessary.

And I suspect that while the journey has not come to an end, yet, you will continue, right? And what do you think about what has happened thus far? Have you seen that this has been appreciated.

Well, I think we see that through sales and also what we see the development that we have. And for example, that Willys is the most recommended store in Sweden, that is a sign that we have a good collaboration between Willys and Dagab. So that is 1 component. And I think that this is proof that we're doing the right thing with merging these 3 components.

And well, another question, your not done, you're going to continue your journey. And why don't you tell us a bit?

Definitely, I will. We could say that Dagab and Axfood, we're now in a situation where we haven't worked on the journey, and that journey will continue. And today, we can manage large complex projects, and we have an organization that is moving all the time. And then, of course, you can think about what this will lead to, where are we headed? And of course, we want to be a smart distribution center with a flow that's a smart efficient for stores and e-commerce alike. And we want to have an attractive assortment that is distinctive for the different brands that we have and for the different partners that we have. And we wanted to cherish this. We wanted to have a portfolio where we have these distinctive food concepts, and we also want to be in this green transition where we see today that we can have a sustainable food bag, grocery bag. And this is something that we want to continue with where we need to work with a strong brand also as an employer where we work with inclusion and with good leadership capabilities. And what is the objective with the change that you're doing? Well, it is about Dagab moving from being a support company to becoming something that is even more successful, complete supplier for all of Axfood's brands. And in order to get there, what is required? Well, we focus on 2 things: digitally and data-driven working methods and also a high degree of optimization in our business. These are the 2 components that we already have and where we are going to continue to invest heavily in the next few years. And talking about digitalization and digital working methods. I would also like to say that we have our customer-centric work method that is called [indiscernible]. And this is a necessary tool for us to be able to make the right decisions about negotiating prices, deciding on what assortment to have and also campaign products. And this is a great example as to how our data-driven working methods can strengthen what we do through high competitiveness. And through high quality in customer data we can help the value chain, and we can be more proactive in our decision-making processes. And this is what is typical for such a complete data-driven supplier today. But that is not enough. We have also invested in something called NLM. That's a new system for assortment, price, campaign, forecasts, how to handle seasonal fluctuations, for example? And we're halfway through. We're working together with SAP to deliver a new merchandise system, and we'll be first in the world to make use of these solutions. And the solution will be fully operational next year, but certain components have already started to be used. And by changing to this system, we'll have a system that is better adapted for digital, agile, data-driven working method. And one example as to how to work more efficiently is that we can distinguish assortments based on Axfood's different brands and positions in the market, we'll be much more effective in doing this, and that is an important component. We can support [indiscernible] and Hemköp in their future developments and plans, for example. But it's also a very good tool to use when we have data-driven negotiations with suppliers. And we have started a very offensive journey into automation. In 2025, our entire logistics platform should be finished and should be operational for many years ahead, then we will have invested in new platforms for logistics. We have a [indiscernible] and [indiscernible], that will be key premises for many years onwards for Dagab. And this is a journey that started in an [indiscernible] already in 2019, and it will be completed with our new highly automated e-commerce warehouse in Gothenburg in 2025. And by doing this, we will have created the framework for something that is efficient, flexible and supportive, logistics that can serve Axfood for many years ahead. And the biggest investment in this journey is the new logistics center in Bålsta. And you know that this is a project started in 2019. The project has been running well due to all the turbulence. Next year, we'll have the premises ready and then we're going to start with the ramping up with the nonperishables, and then we will have it fully operational in 2023. And Bålsta should be stressed, is a logistics center that is quite unique and it's evident that -- it's evidence that Axfood there go their own way and also evidence is showing the market position that Axfood has in the Swedish market. And this is Bålsta. I'm going to show you what it looks like. And we have a layout that has been created, where we have in one and the same building different picking processes for stores and for e-commerce. And we create by having this benefits of scales, improved customer offering where we can have a high degree of service and also have opportunities to optimize transport and staffing and also to reduce waste, which is very important because we want to reduce our environmental footprint. We'll have a new omnichannel warehouse where we combine different temperatures, dry goods, cool, freezers. And that way we can also optimize the scales and transport emissions compared to having several different places with different temperatures. And the order is placed through [ sequencing ] in a specific order based on the road planning, and we have a high degree of automation in Bålsta in all warehouse processes, for deliveries, warehousing, picking and sending the merchandise off, which means that it's very flexible. And this is why Bålsta is kind of flexible. And this way, we can also balance production at the same time as we can have efficient consolidation opportunities between different picking processes in these premises. And the simulations tell us that we'll have a high degree of efficiencies in stores and e-commerce as well. And that is thanks to this higher degree of automation and not the least because of the flow when it comes to freezers. And here, we are the first in automizing the way we do. And here, one example is that we have a solution where we do not have to use artificial ice. And that way, we can save money, and we can also improve the working environment for our coworkers, and not least, we reduce our environmental footprint this way. We have other investments as well, and they run according to plan. Towards the end of the next year, we'll have our new warehouse in [ Kiruna ] for fruit and vegetables, and we'll complete this with automation in 2023, and we're ahead of schedule with this project. In 2023, we're also going to have the build-out on the modernization and the automation of the warehouse in [ Backåkra ] that will be completed. And that way, we'll have additional extra capacity in the southwestern parts of Sweden, which is needed. And to conclude, we'll also have the new automated e-commerce warehouse in Gothenburg that will be completed in 2025. Then we will be able to reuse all the lessons that we have from Bålsta, and we'll be able to make a carbon copy of that functionality, which means that we can have the same customer offering and the same customer meeting for all Axfood e-commerce customers in the Stockholm [indiscernible] area and in the Greater Gothenburg area, so 4 million consumers. And to link all of these investments together, what we invest into logistics. We have talked about this before that we have invested in a new transport management system. Through this system, we get an overview of all our transports to warehouse and to all our e-commerce consumers. And this is an important part of improving the efficiencies and also to improve the customer meeting that we have within e-commerce. And with the efficiencies throughout the value chain, that is actually the most important part. And this is a project that is well underway, and it will be rolled out before Bålsta opens up. And by having a big delivery fleet that is linked to this transport management system. Well, that means that we are a big procurer when it comes to transport, and we can impact function, innovation, working environment, sustainability. And we basically control the value chain, which means that we are very interesting as a partner to collaborate with. And that allows us to test and experiment with what fits us. And Klas touched upon this. Back in 2017, we decided on a clear strategy, saying that we wanted diversity in our fleet. And that means that, 2025, we shouldn't have one vehicle type or one fuel type that should make up more than half of all the vehicles and to invest in electricity and electrical trucks, that is also part of the diversity strategy. And for us being successful, we have, today, 4 hybrid trucks with batteries that are charged when you drive on the highway and then you can use electricity when driving in urban areas. In last summer, we also had the [indiscernible] fully electric vehicle that was introduced. And this is something that is appreciated by the driver and also the surrounding because the transport, if you deliver to urban areas, for example, that might be something that disturbs people living there. And this is also something that reduces emissions, which means that it has a positive impact on air quality when we invest in these vehicles. And we use green electricity to charge these vehicles. And we have a reduction of around 40 ton per year that we can reduce the carbon dioxide emissions per vehicle. And electrification is a necessity and this transition, of course, is to happen everywhere, but the transports are key. Infrastructure, there we see that there's no opportunity today to have this rapid transition. Technology develops quickly, but investments in power grids, charging stations, et cetera, does not develop at the same pace. So without political decisions, we need innovation and collaborations amongst the purchasers and the executors of transports and also those who manufacture the trucks and that is a collaboration we have started together with Scania. And to conclude, let me also mention the integration that we're doing with [indiscernible]. And this is something that is ongoing at full pace. And the work is ongoing at a good pace, and we are working towards the objective where we'll have 1 company where we can ensure that we have the future synergies that we have promised. And the future organization and what it will look like with the assortment support, logistics, et cetera, that is an analysis that will be carried out next year. And warehouses and offices and customer home will be converted to the Dagab IT environment in April next year. And then after that, we'll have a conversion of the City Gross stores in the Axfood store infrastructure. And this is a big job that has been initiated also with EMV. And next year, we're going to start with phasing that in. And that means that the brands [indiscernible] and budget, they will be replaced with [indiscernible] and Eldorado and that will happen second half of 2022. In addition to that, we have also started negotiations for purchasing. This was done in October, and we expected this to be done in Q1 2022. And then, of course, we'll also work with harmonizing and creating 1 assortment for Axfood customers, including City Gross. And that being said, well, I think I'm done with my presentation. And over to you, Klas.

Thank you, Nicholas. I don't think there's any doubt about the pace of your development. On the last part of your presentation, I was just thinking the integration with Bergendahls. There's a lot of investment in their warehouse facilities in Hässleholm and future facilities. What's been the greatest challenge in the current phase in your view?

Well, we are 2 separate companies with good values as the basis both family-owned, very much characterized by family ownership, but they've progressed to different points. They need to get to know each other, they need to communicate, but we're well underway as I see it. But with humans and communication and different levels of progress, but it's well functioning.

Anything that surprised you that was better than expected?

Well, Anders commented on what's important to City Gross, and it's very clear in warehousing as well. They have a very good offering in some ways where we have not progressed as much in Axfood. We have a lot to learn. So I'm surprised by some of the knowledge in fresh foods and on special goods, we haven't done very much there in Axfood at all. So we can really learn and grow and use it in Axfood's other activities.

Yes. And you're here as one of the panelists for the Q&A, so we'll see you in a few moments. Thank you very much. Now we come to the next part of this session, and I'm going to welcome Anders Lexmon, our CFO, who's going to talk us through the financials and our financial development. Anders?

Thank you very much, Klas. I'm going to split this in 2 parts. First, historically, where are we coming from? And then looking forward a little bit and see in the near future, what the situation is like. Let's start by looking at the development for our financial targets, growing more with the market, earning more than 4% in store and solidity of over 20%. And the year we've delivered, and we've been able to do this, thanks to strong operational cash flow in our operations, together with the fact that we have managed to free up a great deal of capital in our operating capital. So we've been in working capital. So we've had a high level of investment in stores, in investments and in IT. And this is something we've been able to do also very much over time without any major levels of debt. We have a strong balance sheet, and we've been able in combination to offer high levels of dividend. And we have an example here. If you look at Axfood's development compared to 7 competitors where we see that we have developed since 2015 with an annual growth of 5.4% compared to 2.4% for the peer group. And we're also up in earnings per share on average 7.1% since 2015 compared to 3% in the peer group. And what's the reason why we've been able to uphold this margin? Well, we touched upon this. Klas had a question to answer earlier in the Q&A session. And if you look at our reported gross margin, we see that from 2016, we've gone from 14.3%, up to 16.1%. And partly explain through the fact that we have stepped our EMV private label component from 27.4% to 30.9%. We've also stepped up our ability to focus on data. Nicholas mentioned this with AX -- for example, we're better at controlling with campaigns and assortment towards customer. So we've sharpened the activity, and this has boosted our gross margin. And then by way of conclusion, what you discussed earlier, we've been successful in reducing our waste from 1.8% to 1.3% during this period, in fact. If we then look at how our working capital has developed. We've freed up money in absolute cash, but we've gone from minus 2% in 2017 to minus 4%. So relatively speaking, during this period, we've freed up approximately SEK 1 billion in capital, which we've been able to use to invest in our operations and keep a stable balance sheet and steady dividends. We have a supply chain and financing program in place, about SEK 250 million currently. That's one reason. And what we see now that we're bringing in Bergendahls Food into the operation, we're going to have a dilution of this because Bergendahls Food's entire sales is based on liquid sales. So there's going to be a dilution to the tune of 1% approximately. In addition, we have an impact on the fact that the new UTP rules will enter into force having a full impact as of next year. If we look at return on capital employed, historically speaking, we've been at a high level over 40% with the new IFRS 16 rules for reporting. This has reduced somewhat at a lower level. And now when we come into an investment phase, both with the acquisition of Bergendahls and a higher pace when it comes to automation-related investments, the indebtedness will go up somewhat. And you can see this by the end of September, we went up on those numbers linked to the acquisition of Bergendahls, as I mentioned. If we look at our pace of investment historically, we have total investments over the past few years, which have been impacted by the automation investments in 2019 and now in 2021. But if you take them out and look at the underlying investments are somewhere between SEK 900 million and SEK 1 billion. And in relation to net sales were at very stable levels of approximately 1.9% to 2%. And if you look at depreciation, they have also as a result of IFRS 16, gone up considerably. But on underlying, we're at a very constant level of approximately 1.5%. Let's have a look at the dividend history. Over the past 10 years, we have enhanced earnings dividend per share from SEK 3 to SEK 7.50, 150%. This means an annual increase in dividends of 10%. Our aim, our policy is to pay out in excess of 50%, and we've been able to stick to that very firmly. We're somewhere between 70% and 100% of the year's results. If we look at the yellow part here between 4% and 6% direct yield. If we look at the major areas of investment that we're currently involved in and for the future, we'll continue to invest in our stores, both when it comes to revamping, rebuilding and newly established stores. We continue to invest in IT, as Nicholas touched upon, both IT and the SAP environment, but also IT in our stores networks and, of course, also about investing in logistics operations and in Bergendahls, which we acquired. If you have a look more in depth at the automation investments, we have, in all SEK 305 million. A majority of that is linked to BÃ¥lsta, SEK 240 million. We also have investments in automation at the e-commerce warehouse in Backa, SEK 48 million. And then the high storage warehousing Backa and in automation in SEK 14 million. Why investing in automation? We see opportunities to be more cost efficient, of course. We've made the assessment that already as of 2024, when both is in full operation, we will have the same cost level as we have today. And as of 2025, when we've ramped up all staff fully compared to today's level, we should be able to reduce our cost by SEK 200 million to SEK 300 million. And as we increase volume in BÃ¥lsta and have the remainder of our automation investments come into place in a taboo and Landskrona, we see that from 2027, we should be able to reduce our costs compared to today's level, somewhere to the tune of between SEK 300 million and SEK 400 million. And this is illustrated quite well. If you look at this graph, on the thin line, you see the cost rate today. And the slightly -- the dotted line in bold shows where we've been at in our logistics operations if we had continued to invest only in existing solutions. And the blue -- green one, of course, shows the development of the cost rate that we see when we come into BÃ¥lsta more automation. Costs will go up a little bit next year linked to BÃ¥lsta. We will have the structural costs coming in next year. But when the warehouse has been ramped up. We see an improvement in the cost rate level compared to today. And we make the assessment that as of 2027/'28 or so, we'll be able to reduce the cost rate. We expect a reduction of between 0.3% and 0.5%. Let's look more in depth at the BÃ¥lsta investment. I mentioned that we have a commitment of SEK 240 million in automation. At the end of this year, we will have invested SEK 100 million. We have SEK 140 million left. Another EUR 100 million (sic) [ SEK 100 million ] will come in next year. And when this is fully in place, we'll start the write-offs. There's IT and various components, but an assessment of the average write-off time for this automation investment is 15 years. And we expect to be able to begin to write off halfway through 2023. And this is also going to be brought into the balance sheet and according to IFRS 16 and our evaluation right now is that it's about SEK 2.8 billion that will be brought into the balance sheet and that will be done in Q2 next year. And I've already touched upon this that we will need to have these structural costs having to do with the conversion from having 6 old warehouses to what we're moving into. And the estimate is that about SEK 220 million will be what we will to use next year, and the bulk of that will be during the second half of the year. And then if we look at Bergendahls in some more detail, this is an activity that has sales of about SEK 10 billion and a profit of SEK 90 million EBIT, just over 1%. And this, of course, is something that will have a dilution effect, bringing this into the Axfood Group and that will be about 0.5 percentage points. We also estimate that we will have to have get cost synergies and that up until 2025 of SEK 200 million, and we do see a positive effect already from last year. If we discount those structural effects, we will -- the structure is having in -- when we do the integration. And in Q4 this year, it will be another SEK 20 million, that will be converted for the full year 2021, an will be acquisition integration costs of about SEK 90 million. And we also see another SEK 120 million that we will have as integration costs next year, and we will also invest in IT adaptations in this business, and that will be about SEK 110 million. We have also communicated that we're going to have write-downs of old IT systems and also be brought into the acquisition balance sheet so that will not have a dilute effect because of that. And if we look at what we bring into the balance sheet, we have a preliminary analysis and it will be about SEK 1 billion in goodwill, and we will have another the SEK 600 million in material assets, customer relationship contracts, et cetera, where we have a break down period of 8 years, so some SEK 40 million per year. If we then look at debt, we have -- this has been very low. If we remove the light green bars, where we see the effect of this, we have net debt, and that is what we see when entering into the Bergendahls acquisition and moving on to a more intense investment phase that it will go up. And here, we have this revolving credit facility that we signed 2019, SEK 3.5 billion, and we are reducing about SEK 1.5 billion when acquiring Bergendahls. And we also have taken the opportunity to extend this up until November 2026. And in order to strengthen our balance sheet so that it can remain to be strong and continue with the high degree of a good cash position, we have plan for rights issue next year. And then if we look at 2022, to summarize what we see for next year, we will have structural costs linked to BÃ¥lsta and to the integration of Bergendahls and that will be around SEK 340 million. And we will be investing about SEK 2.6 billion, SEK 2.7 billion and SEK 1.3 billion roughly refers to BÃ¥lsta, and the bulk of that has to do with automation. And we're also going to invest some SEK 100 million in the new warehouse in Landskrona. Most of that will be for automation as well. And as I've already said, we're also going invest around SEK 110 million in IT adaptations having to do with the Bergendahls acquisition. When it comes to store establishments next year we expect to see 8 to 13 new stores, which is somewhat higher rate than what we've had before. And if we adjust for those investments in BÃ¥lsta and the integration with Bergendahls, then underlying, we are at around SEK 1.5 billion in existing IT and logistics. And that being said, Klas, I think I'm done.

Thank you, Anders. I hope that you, through these various presentations now have a clear impression of what we expect ahead of us. Now by way of conclusion, I'm going to say a few words about the long-term financial targets of the Axfood Group. We've previously had targets of growing more rapidly than the market and have a solidity of at least 20% at the end of the year, and those targets remain in place. But today, we revise our profitability goal. And we raised the target for long-term operating margin to at least 4.5% instead of as previously at least 4%. As you have seen, we have a lot that's happening in our group. We believe very strongly and firmly in our investments. We're including Bergendahls Foods in our books. As Anders mentioned, there's going to be a dilution of the operating margin for the group. We'll have some additional costs as well linked to the fact that next year, we'll begin the transition to our new high automated logistics center in both sets out of Stockholm, which will also impact the margin. And with the current investments in logistics, together with the development in our chains, we're laying good preconditions for increased profitability over time. And this means that we now feel secure in raising the long-term operating margin target for profitability. In addition, we also have targets for sustainability. And you can see them here in front of you. They are the ones we focus on, in particular, at group level. For sustainability, we're going to reduce electricity consumption and get to a net zero emissions by 2030 in our own operations. We've started the process to have a climate target approved by science-based target initiative, SBTI. And even if we already had publicly published climate targets, we're now taking the next step. We're stepping up the rate of sustainability label products, a share of our sales. And outside of the environment, we also have objectives for diversity and the equality and to keep the sick leave levels down. We work on a broad basis of sustainability and are careful to follow up and measure the development in many different areas. With those words, I thought that we could now open up once again for a Q&A session to answer your questions. [Operator Instructions]

Nicholas Pettersson, Anders Lexmon. And I think we'll be focusing on a few issues that have been presented, in particular in the second session. So I'll start by asking if we have any questions waiting for us. [Operator Instructions] Daniel Schmidt of Danske Bank has the first question. I hope you can hear me.

I have a few questions mainly for Anders, but also to Klas, of course. I looked at the slide you showed on cost developments on this over the next few years and where it goes up a little bit and then turns down as of 2025 onwards. How should we think when we look at this? You're saying that you're going to get to a margin of 4.5% at least. But in the shorter perspective, the margin will be a little bit lower. Over a certain period of time, I understand that it's going to be perhaps even below 4% for some time, if I've understood the press release correctly. Is this to be interpreted as both 2022 and '23, looking at the graphical illustration you showed as Anders?

Well, I can start, Daniel, to be clear. We've reported the impact for the logistics investments where, yes, we have a number of nonrecurring cost items, which will primarily come in next year. And as we ramp it up gradually by 2024, we'll be in line with the current situation -- current level. And hopefully, fairly rapidly depends on the growth and the development, of course, where we see -- we expect to see a major improvement, and we've also quantified these components now. But it is correct in the sense that if you look at next year, as Anders mentioned, there's going to be a dilution impact of about 0.5% of Bergendahls and then the nonrecurring items. So in the short term, we'll have an impact on those items, but that's primarily under 2022.

But I just looked at the graph Anders showed that the cost development looked to be above the expected level 2023 as well. And then it will come down after 2023.

Yes. As you will have seen, we're going to be -- we're not going to do a complete break in 2022 from one to the other. We're going to uphold operations when we work with double warehousing for facilities for a certain period. So it's the impact of the fact that we haven't transitioned fully yet.

And a question then to Carl or Mat.se, perhaps Mat.se saw losses. And now sold to Mathem. Does this mean that you suddenly lay off people? Are you going to -- how many people are we talking about in the -- amongst the employees? How many have they been?

Well, that's the big question. We've been asked it already a number of times, but pure e-commerce operators like Mat.se, for example. There's no doubt that this has not been a profitable business in that sense. But we have a continuous development. And if you look at the peers, you can see where the development is it's been negative on the operating margin. But what's happening now is that it's very important to be clear and say that the employees Mat.se component. That's being transferred. But the pick and collect and transit warehouse and are combined with Willys and Hemköp., that belongs to Dagab, those components remain. And that's, of course, the operational part which is -- it's the operational part that's transferred. Okay. Well, perhaps it's relevant to look at Mathem's operating margin then if you want to do an estimate for Mat.se.

Final question for Anders or question for Anders at least. If you combine the parts SEK 200 million in cost synergies from Bergendahls Food's acquisition up to 2025 and then from there additional efficiency and logistics from the investments you're making in Landskrona and BÃ¥lsta and Gothenburg between SEK 200 million and SEK 300 million. I think you've stated that it's only really cost synergies when it comes to the Bergendahls acquisition. Is there anything you could say on the top line synergies? It's always more difficult to forecast, of course.

Well, of course, we have an ambition and hope and you heard Anders talk about that from City Gross. And now we will become a strategic partner of the City Gross. And as they develop and grow then we will also get those volumes in the underlying layers and there is a potential there. And same thing goes for other components, we can continue to develop and that will create scale. And on the cost side and cost synergies.

Well, that is one thing, but you haven't really said much apart from that, well, purchasing perhaps though talking scale, but you haven't really mentioned Hässleholm and what we'll mention there?

Well, right now, we're working with integrations. We're going to link the Hässleholm warehouse with what we have elsewhere, and we have the IT investments that are being done. And then Nicholas can help out, perhaps, but Hässleholm will be [indiscernible] Hässleholm, that will become one component in the warehousing that we have, and we'll continue with optimizations that we have this in Landskrona, and we'll have to wait and see what happens with those developments.

And I can add on to what I said before. We are analyzing the business right now, and we'll have to get back to you next year perhaps when we're done with that analysis.

So there's nothing that you can say that has happened when it comes to personnel. So if anything will happen, it's next year?

Well, as I've said, we have 2 different companies that are going to merge into 1. Now we need to learn to -- we need to get to know each other, understand each other's cultures, different working methods that we have that we need to analyze and look at, but the idea is that will be 1 company.

Do we have more questions? No more questions. So I'll hand back over to you. Then I think we have Alex looking at the comments. So do we have any written comments or questions?

Yes, absolutely. We have a few questions that have been sent in, and I'll ask them. And I'll start with Karl Apohem and that investment, what has happened, how are they doing?

Well, the pharmacy sector has grown and Apohem has grown as well. We gained market share, and we are happy with what we have seen in the last 12 months. We have also invested a lot so that we can grow even more. We have a new warehouse, and we're very happy with that, the technical platform that we have. So we see growth, then we're happy.

And then we have a question from Fredrik Ivarsson ABG, Mathem, they're working together with Kronanpharmacy today and what will happen there?

Well, generally speaking, Carl, you can add to what I'm saying, but last Tuesday, we made this merger public, and it has to be approved by Swedish competition authorities. And Mat.se and Apohem are collaborating and Mathem is collaborating with another partner of course, this will be for the new company or the new big Mathem to decide on what will happen in the future.

And then another question from Fredrik. Are you looking at expanding into new product groups, not pharmacy and food, but something else?

Well, I think I need to be clear, and I thought I was earlier today, we are now in markets that are very relevant, interesting and also where a lot is happening in food retail, not the least, also restaurant food service and pharmacy. And we want to continue to be to relevant and there is markets where we have a presence and that is what we are going to continue, and that is what we're looking at right now.

Another question from Fredrik about food price inflation. Do you think that this will compensate for higher purchase prices that you can see today?

Well, you have to look at this from a historical perspective. And our sector is a low-margin sector after all. And over time, costs will be reflected in what we see going to the consumer over time. That is what we have seen historically, and I don't expect not to change. We'll have to wait and see. But yes, raw materials are going up electricity process, et cetera, that is the phase we're in, and we have to wait and see for how long it will continue.

move on to financial questions. Start with Gustav Hagéus at SEB, who is asking about our updated raised margins target. How does that compare to the previous target before you started to adapt the numbers to IFRS 16? Anders?

We talked a little bit about the margin impact, and there's a dilution effect because of Bergendahls. We also see a positive impact linked to our investments in logistics and to Bergendahls as a deal. That's what we're seeing.

If you look at this historically, we've achieved our long-term financial targets, also the 4% with some assistance from IFRS. But as Anders mentioned, now we have a clear dilution part with Bergendahls, but also not least. We see very clear impact of the investments we're making. And that's why today, we're showing the -- with clarity and forced that moving forward, we believe we can raise our long-term operating general target.

Thank you, and it's [indiscernible] at Carnegie asking about the SEK 340 million in nonrecurring expenditure. Is that how they're going to be booked as nonrecurring item? Or how will you report them?

Yes, they will impact comparability. That's how they will be reported.

And then a question at mat.se. How integrated is Mat.se with Willys and Hemköp. Are there any costs involved in the fact that they go into Mathem?

Mat.se, we have our own platform, but we share warehouse on Mat.se and Willys and Hemköp. They shared part will be transferred and the storage facility will remain in place. So there are some costs, but well, it's hard to comment on any cost should I say, but it's quite a clear point, nevertheless, to distinguish.

Now let's see a question from Daniel Schmidt at Danske Bank. Can you update us on the customer flows on the border shops in October, November? What's the situation now with Norway having stricter restrictions again on the border.

Well, Daniel, I rarely comment on things that have happened after we've closed a quarter Q3. And now we're in Q4. But because I did comment on this in October when we presented Q3 that it was a very positive situation with open borders. And as Thomas mentioned earlier today, there was a high flow very happy faces customers coming back to us shopping in our stores. But of course, it's enough to go and look at the border over the past few days or a week or so with the introduction -- the reintroduction of restrictions, it has become more difficult to cross the border, there's more testing and various elements that have an impact on us as well. So cross-border flows are going down.

And then a question from Daniel Ovin at Nordea. And we've already talked about profitability in e-commerce, of course. And for the various concepts that we have and in general terms. And here's a question. Is there a danger, generally speaking, that the margin in stores will drop when some of the sales move online and the stores are stuck with a lot of fixed costs. There is seen in other segments. What about food retail?

Well, all of this, I believe, has to do with the fact that we need to adapted to the reality around us and without commenting on our figures, The Food Retail Index has been published with the figures for the market. And what we see now is that we see growth rates for the market in general. Now we see e-commerce going down. and the growth is up in physical stores instead. So it's switching back and the e-commerce today is about 5% of the total. And of course, this depends on where things will go over time, and it's difficult to predict, but we are kind of convinced that we will continue to have a big proportion of the shopping done in our physical stores, even if -- as a consumer shop online, about 2/3 of what you buy, you actually buy in a physical store, you do the bulk shopping online, and then you go to a physical store. And even if people go to e-commerce, to do some shopping, they will continue with the physical stores. And well, we'll have to wait and see what happens with current developments. And what we've seen today is that it's headed in the right direction. E-commerce is still a small part, but will get bigger with automation, and then we'll also have a better profitability.

And the final question, which is for Nicholas. We have seen many disruptions in supplies. And we've heard a lot about transports, et cetera. And how has Dagab managed this? And what impact has it had last year?

Well, it is a good question. And of course, this has had an impact -- We have had to work extremely hard and also have had to be very careful with forecasts, and we have had to ensure that we secure products that are seasonal, perhaps and in the past, perhaps we had 4 similar products to offer a consumer. Perhaps today, we only have 3 but we have been able to maintain a high degree of efficiency, good assortment in spite of difficult circumstances. But the world around us is turbulent and it's difficult to say anything about when this will stop. If someone had asked me at beginning of the COVID pandemic, then I would have expected it to be well a few turbulent weeks, but not 2 years or 2.5 and there is an imbalance in the market, definitely.

Actually, we had one more question. No, we have asked that question that was food price inflation, then we're done with the questions.

Thanks for keeping excellent track, Alexander. Thank you for all the questions. And thank you analysts for joining me in answering the questions. Let's see. Now thank you for taking part in the Axfood Capital Market Day 2021. Today, we've looked more in depth into future investments. the foundation for a long-term profitable sustainable growth. We've outlined how our different store concepts are strengthening their positions, how the extents investments in logistics and automation now will lead to cost savings and an efficient logistics platform for many years ahead, these are investments and the focus which means that we can now raise our long-term profitability target. And finally, I'd just like to mention now when it's close to Christmas, that a lot of very good initiatives are taking place to help out in various parts of the group. In several places, we cooperate with local NGOs like the Salvation Army, Stockholm Stadsmission Charity or Church of Sweden, stores give leftover food, which can no longer be sold, but which is fully -- quality possibilities to buy food at reduced cost. We've worked with Stockholm Stadsmission Charity for a long time. We donate surpluses that we have of food from our stores and our warehouses, and Willys have also donated store design features and equipment to social economy stores in Sweden today. There are various stores who are putting together a Christmas food giving out to local NGOs and Hemköp works with the SOS Children's Village and Willys with say the children. And with that small Christmas greeting, I'd like to conclude for today. I'd like to wish all those to party today and who listen afterwards, very well, I'd like to wish you all happy holidays and happy New Year. Thank you to all.