Byggmax Group AB (publ) (BMAX) Earnings Call Transcript & Summary

My name is Sanna, Head of Marketing at Byggmax, and I will take you through this live session. Let's start with some housekeeping rules. As you can see, there is a field where you can write questions. Don't worry, your question is not public. Only I can see them. So ask away. We'll try to answer them all in the end during the Q&A. With me, I have Mattias, CEO; and Helena, CFO. Mattias, what are we going to talk about today?

Well, we're going to talk about Byggmax, of course. We're going to talk about our position today. We're going to talk about the trends that are impacting us. We're going to talk about the ambitions that we have going forward. And we're also going to present some news.

Exciting. What kind of news?

There are 3 main pieces of news today: firstly, we are updating our financial targets to better reflect the growth ambitions that we have; secondly, we are today presenting a new store format to take Byggmax to basically closer to customers' homes, to retail parks and neighborhood shopping centers; and then thirdly, we are also presenting the next set of initiatives to drive e-commerce growth for the next couple of years.

And Helena, what are you sharing with us today?

I will talk about the financials, the strong 2020 and also our growth initiatives.

And the agenda for today looks like this. We'll start with a summary and updated targets. And then we'll move on to the 3 big trends. After that, we'll do some number crunching. It's time for financials. And then Mattias will talk more about the way forward. And at the -- in the end, we'll do the Q&A. So once again, ask questions. Mattias, over to you.

Thank you, Sanna. And we'll start with a summary of where we are and where we're going, including the new financial targets. So Byggmax was founded just over 25 years ago with an idea to bring a new concept to the market: to bring building materials for consumers at the lowest possible prices that didn't exist at the time. Of course, a lot of things have changed since then, but there are still fundaments in that idea also now today at the present level. Today, we phrase the idea a bit differently. We call it: everybody has the right to a fantastic home. And as you can see from these pictures, that idea is still quite relevant. These pictures are pictures from our customers' own social media accounts during last year 2020. What do we mean by the idea: everybody has the right to a fantastic home? Well, we mean that to provide that, you need to have the best prices that Byggmax has, the right assortment, a quick and easy experience and also a caring approach. And we try to have a caring approach to, of course, the customers, but also our colleagues and the world around us. And one of the reasons why this business model, this idea is still so relevant today is that the discount trend is so strong. And you may know this, but discount is a sort of phenomenon across countries and retail categories where low price or discount players are taking market share. In Sweden and in all the Nordic countries that we are present, Byggmax has a really strong discount position. And you should see in this graph, we are perceived to have, by far, the best prices. Recent numbers also sort of support this trend. These are the most recent numbers from Swedish market, where you could see that in the last year, the number of discount stores increased by 7%, when all other stores decreased by 7%. Today, we are, of course, a much bigger company. Let's take a look at some quick basic facts. We turned SEK 6.8 billion last year. We are in 4 markets now. We entered Denmark just here in January, and we operate 2 segments. Byggmax, which bears the name of the group, represents over 90% of the sales for the group and is, by far, of course, the biggest segment. We had 169 Byggmax stores at the end of 2020, and we had e-commerce representing 20% of the group sales in 2020. As mentioned, we are the #1 in terms of price position in the Nordic markets, and we are also ranked #1 in terms of sustainability in 2020 by the sustainable brand index. We also had a really strong 2020. Our sales increased by 29%, and e-commerce increased particularly strongly by 50% last year. And let's take a look at the journey to get here to where we are today because it's really been a journey. And I think there are several things that are worth pausing on and reflecting on a little bit before we move forward. There are both positive things and some challenges that have now been resolved. But let's start with the positive highlights. I think, although I was completely before my time, we entered Norway in 2007, has become really successful for us. We were early with e-commerce also in 2007. And maybe on the other side of things, as some many DIY projects, things don't always get right the first time, I think we did not do our homework when we entered Finland in 2008. Several things that have now been corrected. And also, there was a period just before I joined where the company was, at the time, really focused on acquisitions and in early 2016 acquired 2 companies, of which the biggest one is Skånska Byggvaror. And that turned out not to be a great idea, basically, for 2 reasons: one of all -- or first of all, it hasn't been great financially; and then secondly, it sort of moved the spotlight away from Byggmax and the potential there was to develop Byggmax. And now we had a record 2020. And of course, we, as everybody in the industry, have sort of benefited from the so-called stay-home effect in 2020. There's been a pandemic. People have been much more at home, and they have done more home improvement. But one of the biggest points today is to show you and to talk about that at least part of this performance is actually from Byggmax own work: repositioning and initiatives. And fortunately for us, we have just received public data on the market development. For those of you who follow us, you know that we have lacked good data on the DIY industry. And we are active in the consumer segment, so the B2C of the DIY. And there has not been data. But just as it happened, at the same time, 2 countries' industry associations released data simultaneously almost. So starting up with Sweden, the industry association, Byggmaterialhandlarna, released numbers to say that the B2C DIY market increased by 19% in 2020. And just around the same timing, Norwegian trade or retail industry association released B2C DIY numbers from Norway that pinned the market at 20% growth in 2020. Byggmax Group increased sales in local currency by 32% in 2020. You may have heard me say 29% before, and there was a 3% negative currency effect in 2020. So 2, of course, huge conclusions from this page. One of all is that it has been a super strong market growth, a real boost in 2020, but also a big market share gain for Byggmax in 2020. So what is it that we have done? What is it that we are doing? And what is the potential left in that? Well, let's start with what has been accomplished. First of all, let's go back to the Capital Markets Day we had when I was new. It was June 2017. I said that there was a lot of potential in Byggmax, but I also said that before we could get to growth, there were some things that needed to be fixed, that it was going to take about 2 years. It took 2 years, and now it's fixed. So let's just knock that off the list. What have we done? Well, there are some things on the list that are worth to comment on. First of all, we have turned around Skånska Byggvaror. It's been a journey, but now there are 10 consecutive quarters of profit growth and many quarters of really strong sales growth as well. Secondly, we have turned around Byggmax Finland. That's also been a journey. First, we shrank it, then we got to the profitability, and now it's also growing really nicely. We've done a lot of work on what we call tech platforms or IT. And basically, we have upgraded or changed every major component of a retail tech platform in the last 3, 4, 5 years. We have changed supply systems, ERP, POS, online. So it's been a lot of work. But now we are operating with modern platforms and can look forward. And last but not least, we have clearly reduced net debt over this period of time, cut it in just over half. So that has been on the fixing side of things. Check. What are we doing to grow? Well, we are doing a lot of things. And to summarize what we're trying to do, before I describe what it is we are doing, we believe strongly in discount and in DIY, and you will see today why that is. But we believe you need to make sort of a modern concept relevant to today's DIY-ers. So we are trying to do what we call modern discount for today's DIY-ers. There are fewer people that completely change or renovate a roof or a bathroom, but people do a lot of other things: garden, painting, storage, what have you. And there's a lot of opportunities in that. So we are trying to make a couple of changes and focus on a few things, and we will speak more about them during the day. But just to summarize it, what we're trying to do is basically shift from offering building materials to offer home improvement projects. Building materials is important for many of those projects, but not all, but we would like to focus on home improvement projects for the customers. We want to offer a quality experience. We would like to have a great price but also to have a quality experience. We would like to combine the best of the discount stores and of e-commerce. And we will still very much focus on offering the lowest price in the market. And for those of you who have followed us, you know there's been a lot of work that are -- is connected to this. We have developed over the last 2, 3 years 3 new store formats, a garden department, a complete e-commerce rehaul, changed branding, even logo. So there's been a lot of work going on to get to growth. And how is that going? Well, pretty well, I think, is the answer. We have more customers. We have happier customers. And we're also relevant for the DIY-ers we have today. You may remember that I said just before that we grew at 32% in 2020. And here are examples of a good, sizable and important categories that are clearly growing faster, relevant for today's DIY-ers. So we grew by 50% in lighting; 40%, 50%, 70% on paint, storage, tools, et cetera; garden, 70%. So that all confirms where we're heading. For those of you that also have followed us, you know that in our quarterly reports, we talk about some specific initiatives. And the way we have been doing this growth effort is through 3 main initiatives. And we have reported on them, I think, every quarter for the last 2 years. So the 3 ones are store upgrades, e-commerce and store expansion or new stores. Let's take them one by one. Store upgrades is our initiative to move the stores from the previous concept to the new concept that I was talking about before. We call it Store 3.0 at Byggmax. Store 3.0 means a wider assortment with more relevant products, as per the last page, and also a better experience with a better store layout, the better store experience in general. We can see that when we upgrade stores or convert stores from the old concept to a Store 3.0, sales like-for-like has increased by 6 percentage points. Those stores outperformed the others by 6 percentage points. E-commerce has been a really big focus area for us as well. I will talk more about that later today, but let's just say that we now have a really strong momentum, given all the things we have done, and sales increased by 50% last year. New stores is still relevant to us. There are still -- just going back to the -- one of the first pages I showed that the discount store segment is actually growing, there are still white spots on our map, and there are still stores that don't have a Byggmax or a low price offer. So when we do the math and summarize the impact of these initiatives in 2020 and add it up, we can see that it represents 8 percentage points growth above and beyond the market, which actually accounts for the majority of the outperformance versus the market. And one of the good news about these initiatives is that we're not finished. There's more to do in these initiatives. And I'll come back to that soon also. Another point today is to say we're actually now presenting some news that add to the future potential, some new initiatives, if you like. And they are 3, and they are between already live to live in a year's time, basically. And very quickly, the 3 are that we have entered Denmark. We did it in January. The second is a new store format meant to take Byggmax to retail parks closer to customers' home. And the third one is the next wave of e-commerce growth. And I will go through these more in detail later today. When we summarize where we are in terms of potential, what's left from the things we have already been driving for a while and what do we believe about the new initiatives, we see a sales potential of SEK 4 billion to SEK 5 billion. And let me walk you through it because it's a good chart to keep top of mind during this presentation. And we've divided up into the 3 different initiatives. So on the left-hand side, you have the store upgrades. And then let's go to details. As of December 31, 2020, 39% of our store portfolio was upgraded to Store 3.0. We would like to get to 100%. If we then take the 6% sales uplift multiplied by the average sales per store for Byggmax, we get to SEK 200 million in sales potential. So that's that one. The middle one is that we see an opportunity to grow to 280 stores with initiatives we have right now. Some of you may have heard me say 240 before. 240 is with the current store formats or concepts that we have in the markets we have been in, but with Denmark and the new store format, we take it to 280. That's around SEK 3 billion, give or take. E-commerce is also a really big opportunity for us, which we will speak more about today. And one way to show the potential is to show that today, we have 50,000 SKUs online, and we see an opportunity to go to 150,000. And adding also new market Denmark into this, that's a potential of about SEK 1.5 billion. So the sales potential is clearly there. And with that, as sort of a background or context, the Board has decided to update the financial targets for the group. And I'll go through some of the comments and details around that right now and more in detail later on. But I think there are 2 things worth to point out already now. The first and perhaps the most important change is the changed sales target. Remember I said before that -- I said in 2017 that this company has potential and can grow, but there were some things that needed to be fixed first. And now we have phrased, I think, the target more clearly as SEK 10 billion in sales by 2025, which is an important change. The profitability and the dividend targets are not changed. They remain the same as before. But we introduced also 2 more targets: one is leverage target to reflect that we want to take responsibility for the balance sheet; and another one is not a financial target but a sustainability target to reflect that we want to take responsibility for the world around us. And I'll go through these in more detail at the end of the session today when you'll have the opportunity to see the drivers behind what is going to make the difference here. And with that, I turn back to Sanna.

Thank you, Mattias, and it's time to talk about the big 3 trends, and we'll start with the discount trend. We met with a real expert, Johan Davidson from Svensk Handel, who will share his insight. [Presentation]

So discount and low prices is sort of in Byggmax DNA. We have been offering the lowest prices in the markets we're operating in for basically since the start. And we used to being recognized for it and awarded for it. And behind me is a recent award from just last week when we were awarded the lowest prices in Sweden for DIY project. But today's consumers, as we heard from our expert Johan, would like more. Low prices is a great starting point, but the customers also want to have a quality experience. We phrase it perhaps a little bit spiced up, so to speak, that modern discount feels like premium. We think it reflects the line we're thinking about here that we should offer both great prices and the quality experience. And I think the classical experience sort of example -- classical example but still very relevant is, to me, IKEA. When you go to IKEA, you know that you will have good prices, but you also have good product information. There is a good store experience. There's a really genuine sustainability work. You typically get a little bit of a nice surprise. So Byggmax is trying to move in a similar direction, still offering the best prices but to offer a good quality experience. And let's take an example to try to explain what I'm talking about. On the left-hand side here, you have a flooring department for a new Byggmax store in 2017. It has really big and important products at very good prices, very nicely so, but not more than that. On the other side, on the right-hand side, you have a new store and the flooring department in -- 2 years later, at the end of 2019. Here, you still have the most important products at the best prices, but you have a wider selection. There are more brands. There is better product information. There's a better store experience. And it can be maybe a little bit hard to see, but at the bottom here, there are samples to bring home to see how it works with your current home or the ideas that you have at the moment. So still best prices, but a better experience. And to try to give you some more flavor of what we mean, I brought a colleague and we went to one of our newer stores in Uppsala, just North of Stockholm. [Presentation]

And let's look at the results of this change in terms of position. And as alluded to earlier, we are more relevant in more categories. But we are also actually appreciated more and more by more and more consumers. And we are, as I said before, used to winning awards for having the lowest prices, but now we're winning other types of awards as well. So let's look at some numbers. There's actually 10 percentage point development, improvement in Net Promoter Score in the last 2 years among Byggmax customers. That's a lot, 10 percentage points in customer satisfaction, so to speak. There's also more customers -- consumers in the Nordics who think that they are sort of willing or could consider shopping at Byggmax as an option. 4 percentage point more considered Byggmax to be a relevant alternative, which is also a pretty big number. And again, awards from lowest prices still remain, but now we also get rewards for the best DIY chain in Norway, in general, by the Norwegian Consumer Council or the best paint, our private label paint, by another independent survey. So that concludes our view on the discount trend and how it impacts Byggmax and what we're doing to benefit from it. And with that, I turn over to Sanna.

Thank you, Mattias. And let's move on to the second trend. E-commerce is growing, and the landscape is changing. The world's largest e-commerce player, Amazon, is opening up physical stores and brick-and-mortar stores is opening up online. These days, people might not even agree what e-commerce is. Let's see what e-commerce is for Byggmax.

Thank you. So as we already described, we are doing really well in e-commerce at the moment, and sales are increasing well. But we thought we'd take the opportunity now to give a bit of a broader picture of what e-commerce is to us. So I'll talk about 3 things. First of all, what e-commerce means to Byggmax? Secondly, I'll give you some more numbers and data around our e-commerce business. And lastly, I'll talk about how we achieved those numbers. So let's start with a really big picture. What we are trying to do with e-commerce is sort of to take and extend the diversion of the Byggmax concept into the digital world, if you like. What do I mean by that? Well, the idea, the business idea of everybody having the right to a fantastic home is still the foundation. We believe that the best prices are absolutely relevant online, maybe even more so. We would like to offer the right assortment, not just any assortment. Although it's wide, we would like to have it pre-selected. It should be a good, quick and easy shopping experience, an e-commerce experience. And we also would like to show that we care. Actually, one thing that we don't care so much about is how and when the customers shop. We try to provide many different alternatives for the customers to basically suit their needs, pick how they would like to shop. This is also an area where we have done a lot of work over the last 2 years, invested a lot, technology, site design, deliveries, bigger assortment, et cetera. So we'll talk about some of that today and then also about what is to come. And perhaps the most important point you need to remember about e-commerce at Byggmax is that it's a real opportunity for us and not a threat. And this may be a bit different than from other retailers. And why is that? Well, to understand that, we have to sort of go back to the Byggmax starting point. And we, again, are a discounter that are used to having just a few products or few SKUs in store to offer all you need for the most common home improving projects. With e-commerce, we can offer a lot of assortment, a lot of products. And we would like to be what we call relevant for all home improvement projects. And that opportunity is actually pretty big. We can look at our numbers here and say that today, we have just over 50,000 SKUs online with Byggmax. A competitor here in Sweden has 150,000. And if we look at the world's biggest DIY player, Home Depot, they have over 1 million SKUs online. So that's a big number and a big opportunity for us. Let's look at the numbers as they stand right now. So this is Byggmax's branded e-commerce 2020. Sales was SEK 650 million, 50% growth, as already commented on. That breaks down into orders and average order value, or AOV. Orders increased by 72% to 239,000, whereas the average order value actually decreased a bit by 13% because we sold more things of sort of smaller goods and smaller value. This number, SEK 650 million, represents 11% of the Byggmax segment's sales, just above the market average of 9% in 2020. Again, 50,000 SKUs available online, and those online exclusive SKUs represented about half of the e-commerce growth. We also get the question sometimes, are you profitable in e-commerce? And the answer is, yes, it's absolutely profitable. Profitability is also improving, but still it is below the total average. So now we talked about the what. Let's talk about the how. And let's talk about the how from a customer point of view. And I think we have all seen many complicated charts trying to describe digital business models or e-commerce models. But we made a really simple one, but we think it still serves the purpose. So 5 components that we are working really hard on to provide the best customer offer for online experience in DIY for Byggmax. We already talked about product, how that's an important opportunity for us to continue to increase to provide a wider assortment and more projects. We talked about price. I think by now, I have mentioned best price many times and that we are a price leader, and we think it's really important, perhaps even more increasingly important online over time as well. And then there are 3 other areas where we at Byggmax maybe thinking about things a little bit differently and have actually been doing maybe even more work in the last 2 years. And they are the site, the website, where we would like to offer the customer a bit of a different experience than many others do. We are talking about deliveries, which is really important to us at Byggmax. We actually consider deliveries to be part of the customer proposition, part of the offer, and that means a few things that we'll come back to in a minute. And then infrastructure, and already talked about how we have upgraded the technology, but actually, we've also done a lot of work to provide a good physical infrastructure, which sets the foundation for a lot of the things that we are seeing the results of right now. So overall, we're trying to sort of build here kind of a platform for quick and easy e-commerce shopping of a wide assortment at the best prices. And now I thought I'd walk through these 3, a little bit darker boxes here, and tell you the Byggmax version of how we do things. And let's start with the site. And instead of me showing another PowerPoint page, why don't you and I, Sanna, have a look at the e-commerce site. [Presentation]

Right. Let's take the next part. Deliveries. And I mentioned before that we think deliveries should be part of the customer proposition, actually, part of the offering, so to speak. What do I mean by that? Well, let's back off to what we commented on earlier. We know that DIY-ers actually want to spend their time doing projects. I think all of us want to fix things when we're in the mood for fixing things, not spend the time visiting the store or actually not waiting for our e-commerce orders. So we would like to take responsibility for that at Byggmax, and we are trying to approach this in 2 steps. So first of all, what we've been doing lately, well, recently for the last 2 years or so, is to introduce many new opportunities in terms of deliveries, delivery options. And the second part I'll get back to when we talk about the way forward and the new e-commerce growth initiatives later on. But we see that introducing new delivery options helps more customers and more customer needs, so to speak. So I'll try to give some detail on this, and this is probably going to be one of the more detailed, maybe the most detailed page I'll go through today. And I will also try to make 2 points on 1 page, which is always a bit tricky. But let me walk you through it and see if we can get there. So this chart shows the number of e-commerce orders at Byggmax. On the left-hand side, 2019; on the right-hand side, 2020. And you may remember that the total increased by 72%, which I mentioned before. If we slice this and take it step-by-step, we can see that starting at the bottom, what we call large goods, so bulkier products, Byggmax traditional core of sort of heavier building materials, terraces, sheet materials, those kind of things, orders for that increased by 42% -- sorry, 45% in 2020. Very good, of course. Very happy about that. Some new delivery options actually impacted that, too. We have introduced express options, choose your day, flexibility, et cetera. Then we look at the next section, which is the online exclusive assortment, that -- those orders increased by 54%. Partly why those are growing faster is because we've added assortment back to the previous point around product. Then we have 2 other ones. The home delivery of what we call small goods. So now that we have a broader assortment relevant for more types of needs, we realized we have newest products that we could send in different ways and then there were some unmet customer needs. So quite simple, but we introduced sending parcel to pickup point offer, which is very much alive in other types of retail categories but not so much in DIY. So -- and that went from, well, almost nothing because we started, to, not a lot but 9,000 orders in 2020 and still, of course, a very good growth. And then the big thing that has really grown the fastest and is becoming very substantial is Collect at Store, where we looked at other industries in retail and said that, that needs to be a good customer offer also in DIY. We introduced that in I think it was 2018. And it's grown really fast, and today, it represents 18% of all orders in 2020, growing, as you can see, much faster than the other delivery options. So what we're trying to illustrate here is basically 2 main points. First of all, when we introduced new delivery options, we meet new customer needs and we get new sales. So that helps sales. And the other part is to say that we are delivering really well in terms of performance for e-commerce of the historical core, the large products. But actually, all the other things are growing even faster, which is another example of how Byggmax in 2020 is becoming much more relevant for more types of customers. So the last point I'd like to make around e-commerce is maybe also slightly complicated, but the point is to try to describe to you how we achieve this and still be a low-cost, low-price operator. And part of that is due to the infrastructure that we are building. I'll skip go through the details on tech and just note that we are now on a modern tech platform that we are happy about and can continue to develop. But there's also a lot of work going on, on the physical infrastructure. And what we have done is to try to think about our store network in, I guess, slightly different way and do a lot of changes and upgrades to have what we now call multipurpose stores, so they can do several things for the customer. And if we walk through some examples, I mentioned before, if we start with the left-hand side that we ship the heavy building materials from our stores, the reason for that is efficiency. It's hard to send a complete terrace project around Sweden or Norway and get economics in that. But if you send it a couple of kilometers from the nearest store, that's a good business. So the store in that respect works as a fulfillment center and serves all the customer orders of heavy and bulky goods. If we look on the other side of this graph, you can see that it serves as a pickup point. As mentioned before, the Collect at Store is growing really fast. So the customers are also using locations these days to pick up products that they have ordered online. Showrooming is becoming even more important. And this flooring sample, I think, is, again, a good example of really fast growth, 3x in the last year. And then actually, just having a store helps e-commerce. So when we open a new store, we see that e-commerce in that geography, in that geographical area, increases by an average 15%. So what we're trying to show you in maybe a bit more complicated charts in this section around e-commerce is basically 3 things. First, yes, we have a strong sales momentum. Sales increased really well last year, 50%. Secondly, it's a big opportunity for us to continue to grow. And thirdly, we are tweaking our store network to actually support the e-commerce business to make the best out of both stores and e-commerce. And with that, we conclude the e-commerce part, and I'll turn to Sanna.

And you come here, Mattias. Come. You're going to have a chat with me now. So Mattias, all this talk about the retail death, physical stores are closing down and online stores are taking over, how can Byggmax stores and e-commerce coexist?

Well, I think 2 main parts to the answer. Firstly, as we saw in one of the earliest charts, this retail death has not been the case for the discount segment. The discount stores have actually increased, while other stores have decreased. And the second part, I think the answer goes back to what I just described just recently that actually, we see that stores and e-commerce are supporting each other, e-commerce growth because we have stores, and I didn't go through it, but actually, stores are also growing because we have e-commerce.

But what about profit?

Yes. So profitability in e-commerce is lower than for the stores. The reason is the product margin is lower. But it is still profitable. And it is a slightly different business model also that ties up less inventory. So net working capital is much better. So it is profitable. It's improving, but it is still below what the stores deliver.

And this year's online shopping has really exploded. Has it been the same for Byggmax?

Yes. Of course, the sales was really strong. I think it's also really interesting to dig into some e-commerce data. I think we have a lot of new customers at Byggmax e-commerce in 2020. We saw, particularly during spring, that I think, as in other industries, the sort of elderly generation discovered e-commerce much more than they had done before. And a lot of things have really, I think, sort of almost leaped forward for e-commerce in 2020.

And what do people buy online? Is it the same as they do in store? Or...

Yes, it's a good question. In total, I'd say, it's more similar than different. So people buy a lot of different things online. And then there are some categories where we have a much wider selection of products online that we don't have in stores. And of course, they are overrepresented online. So garden is one example with a lot of garden equipment and tools and all kinds of varieties around that, all kinds of sort of bathroom products. Flooring is another example. But actually, people are shopping most things online these days.

Thank you, Mattias. If you want to know more, a friendly reminder, keep sending in questions. We'll go through them all in the end, hopefully, during the Q&A. And now it's time for the third and last trend: the home.

So let's talk about the home and home improvement. And we'll start off by talking about the home improvement market or the DIY market. And I think if you should remember one thing from this section is that it's a really big market, basically. But we'll share a few more things than just that fact. But we can see, as you may know, that home improvement in DIY is really dear to the Scandinavians. Actually, Scandinavians or in the Nordics, have the highest DIY spend per capita of any country in Europe. There are several reasons for that. Among them are that we have high taxes in all the Nordic countries. So it's expensive to use craftsmen. Many own multiple houses. There's a permanent house and summerhouse or maybe winter house. And there's also been a long tradition of doing DIY, which goes back to how we build things in lumber, timber-based constructions, et cetera. If you ask consumers why they do DIY, it's basically money and pleasure, you could speak. Just some recent data to give some more highlights on that. When you ask them specifically why they do it, the #1 criteria that comes up is to save money. It's cheaper to do it that way than to use crafts and something else. But also, 2 other really important factors is I get it the way I want it. The outcome is the way I would like it to be. I have control. That's a really important factor. And also that it's fun. And these are multiple-choice questions, but there's big commitment around both those factors. The market is a little bit difficult to pin down in terms of public data as we talked about before. We are happy that we now are starting to receive some publicly reported figures on the B2C market. But let me try to walk you through it. I will do it in a couple of steps. If you think about it in sort of circles or bigger and bigger scopes, the smallest one, the [ tightest ] one is sort of Byggmax historical core, building materials to consumers. That is about SEK 75 billion market in 2020 across the Nordic countries. If we take a slightly wider definition, which is DIY, and there you have things like garden included, it's SEK 120 billion in the Nordics in 2020. And if we take the widest definition of the business we're in, home improvement, and there we include things like kitchen and white goods and some other things, it's even bigger, SEK 300 billion. And by that definition, home improvement is the second biggest retail category on the planet. When we ask consumers, not only why they do DIY but also what store or what outlet or what channel they would like to buy from? What is important when they purchase things within DIY? There are 3, I think, insights that come out. First of all, price value is the #1 consumer criteria in DIY, clearly. The second one is the proximity of the store location. We talked about it before. People want to fix their projects, get it done, not spend time in the store. And the last one is, of course, digital, which is increasing a lot. This is also a category where there is quite high involvement. And there's actually also a category where we believe there are maybe some misunderstandings about the consumer that all the DIY-ers would be old or everybody is doing -- outsourcing things to contractors, et cetera, which is clearly not the case. So let's just look at some statistics and then some trends around that. 75% of all Scandinavians say that they built something last year, which is slightly higher than 70% in 2019. If you ask people about, do research on sort of emotional connections or why they do things, what emotions they relate to it, the #1 thing that comes up in terms of emotional connection is, 70% say they would like to do projects because it creates a better home for themselves and their family, which is a very nice thing to say and maybe shows a little bit of the Scandinavians' love for their home but is also clearly a high engagement piece. Only 1 in 10 of all consumers always use contractors, get things fixed. I think -- and it's actually been decreasing. It's a little bit less than 10% now. And the average age of the Swedish DIY-er is 46 years old, just a tad above the average age of the IKEA consumer. But then this market has also been changing. Consumers have been changing behavior, not just now during the pandemic but for a couple of years. And I think there are some important things to highlight. First of all, there's been a tendency to sort of, what we call, do the fun part. That means that there are fewer people today who are -- either have the ambition or the competence or maybe the acceptance from the insurance company to completely redo a bathroom or do a roofing project. But people do more smaller projects. They do garden work, they do painting, they fix the garage, there's a storage to be fixed, et cetera. And there is also a trend to do part of the projects and then to outsource other parts to a craftsman. Another really important and clear trend is that some consumers don't feel that they may get fooled, may get cheaper if they use craftsman, and they don't like that experience. I think the whole price transparency with e-commerce has really helped that. And there is, therefore, a trend towards what the industry calls BIY, buy it yourself, consumers buying the material, but then letting contractors do the installation or the actual work. And then as we've talked about already today, there is also clearly a shift to value. It's been going on for a while with a discount trend. And in DIY, it's been particularly stronger with the younger consumers. And of course, digitalization and e-commerce. And if we look at Byggmax' position in this market, and this is actually also quite an important point to make. We have a very clear position and a bit of a unique position, I would say. And again, this market is a little bit wide or varying in its definition. But if we look at it from a scale, on the one side, you have more what's called hard DIY or building materials. And on the other side, you have more DIY or even home improvement, let's call it, DIY home and interiors. Byggmax is selling things along all of this scale. But the 2 -- the main part we're selling, the traditional core is in the building materials side. And the 2 main competitor groups that we have are what we call the trade players and the big box players. The trade players are mainly focused on serving B2B, so construction companies or craftsman. They are really good with service, logistic solutions, et cetera. They are competent around their assortment and the projects, but they are, for a consumer, highly priced, sort of expensive. And the way they work is they do individual pricing towards the B2B customers. So Byggmax edge versus the trade players is clearly price. And then there are the big box players. And there are many. There are all over Europe, North America and in many more countries, actually, and they vary a little bit by market, but the biggest ones that we have in Sweden where I'm staying today is Bauhaus and Hornbach. And they have basically a one-stop shop, a very wide range of products, and also, not always but often, have a really low price. They mainly serve consumers, but also B2B players. And that is an offer that many people like, not all, because it's a bit big and time-consuming, but many like it. But the advantage for Byggmax is that the big-box players only have a handful of stores. They are not in so many locations, whereas Byggmax has, as you may know, 169 stores across the Nordics. So we have 2 clear competitive blocks, and we have sort of 2 clear competitive advantages versus those 2. As we continue to grow, we will, of course, discover new competition and meet new competitors along the way. That is the competitive landscape. And then to be a little bit forward looking on this last trend, we have noted several interesting things that have sort of been accelerating during the pandemic year 2020. And I think I'll go through them quickly. Firstly, we see that the home is having a bigger role in consumers' lives. Obviously, people have been staying much more at home during 2020 and that led to more home improvement work. But I think there is now almost, I think, a consensus that the home will be more important also after the pandemic, probably for 2 reasons. First of all, at least some people will be working at least some of the time from home. I think that's all studies basically point to that. And secondly, this vacation trend also seems strong with people that have bought summer houses and boats and pets and what have you. So the home is just increasing in terms of role in people's lives. And actually, the second thing we see accelerating is that the home is also an area where consumers are willing to spend. So it's increasing in terms of share of wallet as well. We can see that obviously in home improvement, but other things have also increased really strongly, like furniture and housing prices. And obviously, not all categories have had really good growth during this year. Another trend, which I think is one of the more exciting one is that we also see a new generation of the DIYers coming up. It's seen across Europe. I think the biggest company in our industry, Home Depot, put it really nicely in the last quarterly report when they put some data in that shows that consumers, millennials that have been doing home improvement work are now coming back and trying to do more and more bigger projects. And we see the same at Byggmax, whereas particularly from sort of the autumn and onwards that younger customers have been the one driving the sales growth. And then we've also already talked about discount accelerating and e-commerce accelerating as 2 really important trends. And to give you some more flavor around trends related to the home, we sat down with 2 more experts to hear their views.

2020 was an interesting year from a research perspective, of course, from what's happening in the home improvement market. I mean the market was booming. What we see in the data is that people have been doing more home improvement jobs than ever. Last but not least, people were doing more projects themselves instead of hiring a professional. So the engagement is enormous. And not only that, it's also that they're spending more time, thinking about the jobs, they're spending more time orientating on home improvement projects. And also, they kind of like it more. It doesn't really matter what we are testing when it comes to learning new skills, a group of millennials is always the most enthusiastic. There is a lot of interest among the millennials, which has always been the case. But now in the last year, we've seen that they've really picked up the brush and really started to do home improvement jobs and that they have a positive opinion about that. So I think the factor of millennials not being capable of jobs, and that would lead to a more do-it-for-me market. I think we made a shift on that last year. And that is something that we can profit from in the future. So the millennials are becoming a bigger audience for the DIY retailers in the next years. I don't have a crystal ball, of course. But we did ask consumers if they intend to do more home improvement than they did in the past year, and they're slightly positive about that. And we clearly see that spending more time at home leads to more home improvement.

[Foreign Language]

So Mattias, what do you think? Do you think this trend will increase?

Well, I think 2020 was a pretty exceptional year. And of course, a year that tragic pandemic that we hope will go away as soon as possible. But I think in terms of home improvement market, it was also quite exceptional. People were really home and had the time to do home improvement work. We believe that the market will be -- because the home will be more important after the pandemic, we believe that the market after the pandemic will be bigger than it was before the pandemic, but not as big as during the pandemic, if that makes sense. So better than 2019, but below 2020 in terms of market size.

It feels like people have been renovating like crazy this last year. Aren't people done? Are they done?

Yes. We get that question sometimes, maybe mainly from people who are not sort of DIYers themselves. But no, we don't see the numbers at all. And actually, we are we're tracking this quite closely. And we have actually a public report coming out soon, where we will share some insights on the DIY consumers in the Nordics. But we can see in the numbers that consumers are just as eager or planning to do just as much home improvement work in 2021 as they were planning to do in 2020.

Thank you, Mattias. Now let's move on to what you've all been waiting for, time for financials.

My presentation will cover 3 areas: our growth initiatives, cost efficiency and our financial position. For Byggmax, 2020 is a year with record sales and market share gains. The market in 2020 was very strong as a consequence of people spending more time and money on their homes during the pandemic. The market, as Mattias mentioned, growed by 20%, but at the same time, Byggmax grew by 32%. There are many factors leading to us, growing more than the market, but we have calculated that some of the main contributors to strengthening our position is what we call our initiatives. So let's talk about the financial aspect of these initiatives. The initiatives are store upgrades, e-commerce and new stores. If we start with the store upgrades, we aim to have all of our stores upgraded by 2023. At year-end 2020, we had upgraded 66 stores, which corresponds to 39% of our store portfolio. Why do we think it's so important to upgrade our stores in such a short period? As we saw in the film, we can see that the upgraded and the updated assortment is appreciated by our customers. The upgraded stores have a stronger gross margin from the mix of products and a higher product mix covering a broader spectrum of the do-it-yourself projects. The investment in the upgrade is low. It's SEK 1 million per upgraded store. And so what is the achievement of the upgrades? We see a 6% growth in our upgraded stores versus the other stores. Our next initiative is e-commerce. We have in previous years invested in our platform, and current CapEx is low in this area for us. We can accelerate our e-commerce and have economic upscales on our platform. This is an area where we have high ambitions. And we will continue to grow with broadening our assortment and having adopted delivery options to our customers. Our e-commerce has lower margins and gross margins than stores. Hence, it will impact our gross margin over a period when the share of business of the e-commerce will grow, although we will still have a profitable e-commerce business that remains. And as a result of the e-commerce initiatives, we have received a profitable growth of e-commerce of 50% sales in 2020. Our last category of initiatives is new stores. We constantly work with elaborating on our store portfolio and being a discount there, there are still some white spots on the map. We currently see a potential of further 200 -- portfolio of 280 stores. We now have 4 markets: Sweden, Norway, Finland and Denmark, which we ended in 2021. Invest in new stores, drive OpEx, while profitability and maturity is at -- reached at a later state. We have calculated that new stores contribute profitability approximately after 2 years, and the same maturity is reached after 3 years. New stores have contributed with 4% to 5% sales growth in the last year, and opening a new store is a CapEx of SEK 4 million to SEK 6 million depending on store format. And the result of this initiative is further 10 stores opened in 2020. So these are our initiatives. We see that store upgrades, e-commerce and new stores contribute and drives growth and is appreciated by our customers. We'll continue to work with these initiatives, and we see that they have more to give in the years to come. Our next topic is cost efficiency. Byggmax has the lowest OpEx in the industry. We have said this before, and it still holds. If we compare Byggmax, average OpEx as a relation to sales in 2017 to 2019 compared to peers in the Nordics and in the rest of Europe, Byggmax has the lowest OpEx in the industry. And how is this achieved? We have a strong culture of cost consciousness. We strongly -- we continue to invest in efficiency, renovating savings through modernizing the way we work. A good example is the development of our direct store costs. That is in -- if we look at the period between 2016 and 2020, we can see that we have constantly driving efficiency projects and keeping the costs flat despite inflation and index regulations in this period. Also, we realized scale effects as provided in 2020 OpEx. In 2020, sales grew by 20% year-on-year while OpEx grew by 10%. Most of our cost increase is related to growth initiatives. If we look at the like-for-like sales in 2020 and the increase in our cost in 2020, we can see that the increase is mainly driven by new stores and growth initiatives. We have now talked about the growth initiatives and the cost efficiency. Let's go into our next topic, the financial position. 2020 is sales growth and scale effects. 2020 is all about records. We have record net sales of SEK 6.8 billion, a growth of 29%. We have a negative currency effect of 3 percentage points. We have record gross margin of 32.6%. Gross margin was further strengthened by product mix improvements and volume. We also had record EBITA, increased by 160% and margin doubled to 10.4%, proving strong scale effects in the period. In addition to a strong performance in 2020, we have, over the last 5 years, generated strong cash flows. Between 2016 and 2020, we generated cash flows from operating activities of SEK 1.9 billion. When analyzing cash flow, it's worth pointing out that seasonality from high and low season as seen in the graph. We have -- even though growth could somewhat mitigate the seasonality, cash flow will continue to peak in Q2 going forward. The strong cash flow gives us a good headroom for further growth investments. We've had a CapEx spend of SEK 800 million in the last 5 years. We have an average CapEx of SEK 160 million per year during this period. Our maintenance CapEx is low. It's approximately SEK 38 million per year. CapEx is driven by our growth initiatives and store upgrades. We see that our initiatives add to sales growth, and we will continue to invest since they have more to give. We will invest in upgrades, e-com and new stores going forward. We also have a strong balance sheet. We have strengthened our balance sheet and net debt position in the last years. We have reduced the debt from SEK 1.2 billion to SEK 467 million at year-end 2020. We have the net debt-to-EBITDA ratio, which we have as a financial new target. And this also follows some of the cash flow seasonality pattern. The ratio peaks in Q4 and Q1 where we have a ratio in the period of 3.2 and down today to 0.6x. Our financials allows for operational flexibility, organic growth and dividend in line with our financial targets.

[Audio Gap] presentation. It's your turn now to come and have a chat with me. Welcome.

Thank you.

So Helena, it seems like you've been with the Byggmax for ages, but it has only been 1 year and what a year. What do you think people doesn't understand about Byggmax?

It is a cost-conscious organization, but also a very business-minded. There is a lot of experienced people and high creativity for developing new formats and analyzing categories. There's a lot of energy, and we have a lot of fun.

You mentioned that the sales from the new concept generated 6% per store. But how can you be so sure?

We measure everything at Byggmax. We have upgraded and non-upgraded stores, and we can measure all the way down to each product in the cold store and in any part of the store, the sales.

Thank you, Helena. We will be back later for the Q&A. So remember, sending questions. Don't forget it. And now it's time to look ahead and learn more about the way forward. Mattias? Take it away.

Thank you. Now let's talk about the way forward. I hope we're all warmed up because at least this is my favorite part of the presentation. And I have to say probably the part where I missed the most having a live audience, but I hope we will catch up for it at some point. When we talk about the way forward, let's just remember that sort of point of departure for us at Byggmax is this idea of everybody having the right to a fantastic home. The home is really dear to the Nordic consumers' hearts. And we have seen that it's highly relevant also in 2020. What you hopefully have learned during this afternoon is that we, as a company, are in a really good spot at the moment. We have a really strong position. I think it's been maybe overly clear that we are really positive about the discount trend, and we are a clear price leader in the market we operate in. We are also a cost leader. And we are the lowest cost operator in our industry, which is important to us. We also have a bit of a special business model and that we are really successful with stores, as we have seen discount stores still work and grow. And we're also perhaps even more successful, at least recently in online in e-commerce. We are exposed to favorable trends. We believe that the discount will continue to grow, and we've heard it from experts. We believe that the home is more relevant after the pandemic than before. I think many facts and experts substantiate that. And e-commerce will also speak to our favor because we can offer a much broader assortment and be relevant for more customers. We also now have, to Helena's point before, a strong balance sheet that allows for us to focus on growth going forward. And in addition to being in a really good position, we also have a strategy that is creating really good results. We've fixed the old mishaps, as we call them, so that's now behind us. But much more importantly, the approach we now take to modernize the discount, to have a modern discount for today's DIYers really drives market share gains, and we're really happy to see that. We also have particularly strong momentum in e-commerce and strong scale effects. Again, to Helena's point that when we see good organic sales growth, we get a really good leverage and really good profitability increase. So that's the point of departure. And then a last point that is worth to just revisit before we talk about the priorities in the future is this potential that we have identified. There is clear potential left from the things that we already have been working on now for 18 months plus. That is SEK 3 billion out of these SEK 4.5 billion. So -- and those SEK 3 billion are continuing to upgrade this portfolio, Store 3.0, grow with the existing format in the existing countries and grow with e-commerce. And then on top of that now, we have the new initiatives related to Denmark and new store format and further e-commerce growth. That takes it to SEK 4 billion to SEK 5 billion. So what then is our priorities and what is the ambition level and how are we thinking about that? And we have summarized it in a very simple page in 3 points that are sort of core to us, and we would like to stay on for a second. So first of all, our number one priority is to drive profitable growth, profitable organic growth even. We are on a good trend. We would like to continue to move towards being a modern discount offer for today's DIYers, would like to continue to take market share in the Nordic DIY industry and would like to continue to combine great discount stores with a really strong e-commerce. And actually, almost every word here is kind of important for us when we try to describe this. We believe that we have to drive the growth. We don't think that -- expect anything to come, every year an increase like 2020. We believe that the home is more important going forward, but that the market in '21 is below 2020. So we'll have the ability to drive the growth with our initiatives. We would like to do it profitably, and we would like to focus on organic growth. So that's number one. Number two is to continue to generate a lot of cash, significant cash and shareholder returns, as we call it. And Helena went through it nicely, I think, to show that we are very cash generating. We now have the ability and the balance sheet to be also providing a good dividend payout in the coming years. And then thirdly, we'd like to continue to sort of explore growth opportunities connected to the Byggmax business. And those 2 phrasings are also kind of important. We would like to develop. Just as we've done in the last couple of years, we introduced the garden department, the new store formats and changed the e-commerce and delivery options, et cetera. So sort of continued to expand the circle. But it's important too is that it's connected to our core Byggmax business. We believe that most of these sort of newer ideas will be organic, but there could also be some acquisitions involved. But then with the sort of purpose in mind to drive organic growth going forward, like we have done in Denmark, which I will show you soon, we made an acquisition in order for us to be more ready to drive organic growth after that acquisition. So this is the ambition. We have, on that last, point 3, continue to expand the circle of Byggmax and test new things, 3 new initiatives that we would like to talk about today. I'll go through them now one by one. They range from sort of already live in Denmark to live within a year. And the 3 again are the entry into Denmark, a new store format and further e-commerce growth. So I'll take them one by one. We'll start with Denmark. Why Denmark, I guess, is the first question. Well, Denmark is a really good fit for Byggmax. It is a good-sized DIY market. It has price conscious consumers, very much so, which I think other retailers have both suffered from and benefited from. For us, we actually think it's a good thing, that it is a big discount segment. There is a good product overlap. So there are quite some similarities between the assortment in particularly Sweden and Denmark. So we have a lot to bring. And it's also competitors that we know. So there's a good match between the Danish market and sort of the Swedish market. And then also just operationally, for us, it's a good fit. We have warehouse structures on the West and Southern parts of Sweden. So we are able to serve Denmark through those. And we hope that the borders will be open in not too long, and then it's, of course, an easy way to just connect operationally by crossing the bridge. So that's very nice. And then I can -- if that was why Denmark, then let's talk maybe a minute also about how Denmark. And here we choose sort of a 2-step approach. First of all, we made an acquisition, announced just before Christmas, of a small, very similar company to Byggmax, called let's summarize it, NLT, Næstved Lavpristræ, operate 4 stores around Greater Copenhagen area on Zealand and pretty good e-commerce business. 30% of their sales is e-commerce. Very good match with Byggmax in terms of product categories and also actually in terms of culture. Not that big, DKK 125 million, and a good history of like-for-like growth and good profitability. So that's a good stepping stone for us to get in, to be locally relevant and to have something to build on that we then can upgrade and expand to. And then separately, we have, of course, more to offer with the Byggmax modern sort of offer in those categories. So we will also now, just in the coming weeks, open a big MAX branded Danish e-commerce site, offering a wider variety of products for the Danish customers. And then moving forward, we will grow just the way we have been growing in the last couple of years with the 3 initiatives: we will upgrade the stores; we will open new stores; and we will for sure focus on growing with e-commerce. And we believe there is potential here to have around 20 Byggmax stores and a significant share of e-commerce business. So that's Denmark. The second point is a new point. And for those of you who have been fans of Byggmax, you know that we have done several format developments over the last couple of years. We introduced a new format to serve small towns, where we had needed to sort of push the boundaries for cost efficiency even further, to make it even more strict down Byggmax, so to speak, in terms of offer, to be able to serve -- profitably serve a smaller catchment area. We developed the garden department. We developed a big format store, where we have rolled the garden department into and also the Store 3.0. So there's a lot of history of us upgrading. And now we are moving forward with 3 formats, a format for small towns, a regular format and a large-format that -- and both the last 2 include a garden department these days. This year, which I'm presenting now, is sort of then format number four, a new format. And we call it Byggmax Compact. The idea is to move closer to customers' homes and to move to retail areas, retail parks, as is the common term, or neighborhood shopping centers as some say. Today, we have a good assortment for many home improvement projects, and we will, of course, tweak it a little bit more for this format. But the big thing here is to take a typical big size, large-format Byggmax site of 10,000, 12,000 square meters, get it down to 4,000 square meters by a lot of work for -- to say the least, and then put that in a retail park close to other retailers. We believe that will give us access for other types of shopping destinations and be even more close to where customers live. We will still offer drive-in, a cold storage and a warm store, and we will have opportunity to do all of this indoors. We are currently in discussions with a couple of different landlords. We are a bit fortunate that when other physical retailers struggle, we may get some opportunities. So -- and we expect to have the first Byggmax Compact opened by the early 2022, so in about a year's time. And the third new -- news on the growth initiative side is the next wave of e-commerce growth. And this goes back to what I was talking about on the e-commerce block, the e-commerce section about our ambitions going forward. So there are 3 things I'd like to highlight here that we are doing. First of all, we talked about the site and our content and how we would like to offer, how-guides and the context of the project for the customers. So we will launch over 200 projects, filled with content during this year, how-to-guides, instruction, shopping list, et cetera. We have actually already launched just 2 weeks ago, the first 80 projects during now -- during Q1 2021. The second part goes back to growing the assortment, where we believe we can have a much bigger assortment going forward, and we will add both brands and private label. And I think you could summarize it to say that you should expect to see a bigger assortment on Byggmax sites going forward. And you should particularly expect to see the first private label ranges within garden furniture and bathroom already now here during the second quarter of 2021. And then the third part, which I tried to focus a lot on also on the e-commerce part is around deliveries, where we believe that this is part of the customer offer when it comes to e-commerce. And I also mentioned that we're taking a 2-step approach to this. The first step we've taken is to offer many more delivery options for the customers. And that has served us well, as you may remember from the charts. The second step we're taking now is that we would like to take sort of responsibility for the full delivery offer for the customer. And this is done in other retail categories. So what I mean with this is that if a product, you should, as a customer, know where your delivery is. If it gets delayed, you will get notified. If it gets early, which actually happens, you'll get notified. And if there is anything, in any case, you can kick it out through track and trace. And this is quite common in several other parts of e-commerce, but not in DIY. So we are the first in the Nordics to launch. We call it proactive track and trace. And we have actually already launched now in Q1 2021 for a subset of products, and we expect to have this rolled out by Q3 2021. And we think it's -- feel really nicely from sort of a Byggmax customer promise perspective to be able to take the full responsibility for the deliveries to the customer. So those are the 3 news. And then I think maybe some of you are sitting, watching this and saying these guys are talking about big trends. They're talking about what's going on in 2020, and they haven't mentioned sustainability much at all. And I think just a couple of words on that. It is obviously, perhaps the biggest trend of our time, it is something that is really important to us at Byggmax. We, as we like to phrase it, combine low prices with high sustainability ambitions. We have done quite a lot, but there is definitely much more to do. But this is a 2-hour digital event. You have to prioritize what to talk about. Sustainability is a major topic, and we just decided to not go into much detail into that today. Moving then towards wrap up on the way forward section and connecting these 2 financials. What does this mean for our financials and for our targets? Let me provide a little bit more detail on the financial targets than I did in the beginning, in the summary section. So there are, I guess, 3 types of changes here. There's new targets, there's changed targets and there are constant targets. Let's walk through it. First of all, I said as before, that this business has potential to grow, but there were some things that needed to be fixed. And now we see that the growth is coming, of course, from the market, but also through market share gains, as you have seen. And we have the actions to continue. We have set the sales target or the Board has set sales target to reach SEK 10 billion in sales by 2025. We expect that the market will be better than 2019, but below 2020, but then we have a lot of initiative to execute to get there. In terms of profitability, we measure this as EBITA, and we have an unchanged or a constant target versus before. It's still 7% to 8%. We have been higher than that in 2020. We were over 10%. But we believe with the market which is below the exceptional 2020 and some further growth investments that still being able to reach 7% to 8% EBITA should be doable, and that is our target. We're also introducing a target for leverage or for the balance sheet. And this is measured as net debt divided by EBITDA. And for the technical details, that maybe Helena can go through in more detail, but it excludes sort of IFRS 16, so the lease commitments. And it's based on rolling 12 months on EBITDA. And this is set to be below 2.5 multiple, which is we're clearly better than that already now, but we were higher before. And this we feel management gives us good room to maneuver to both invest in organic growth initiatives and to be able to pay dividends going forward. And that takes us to dividend. And that target remains at 50% of net income. And the Board has already proposed to the AGM here in May that there will be a dividend of SEK 2.75 per share for 2021. The last target that we have included is actually not the financial target, but it's an externally communicated as of now. And it's a target regarding sustainability. We have chosen a target. We could, of course, have many targets, and it's a really broad area, but we've chosen a target that connects to carbon-dioxide emission reductions. And more specifically, we have chosen target that concerns transportation. We have actually already come really far when it comes to many of our own direct CO2 emissions. We are buying renewable energy. We have LED lights in the stores, we are, for the vast majority, electric forklifts, et cetera. But CO2 emissions is perhaps our biggest negative impact if you map us versus UN 17 goals, and transportation is a big area. So we have set the goal to reduce CO2 emissions from goods transport measured as per ton per kilometer by 70% by 2030 compared to the 2010 level, and we were at 32% decrease now at the end of 2020. So those are the financial targets that hopefully, the background of today's presentations give some more color to how we will achieve these. And as a summary then, the investment into Byggmax can be summarized into 5 main points. First of all, we are the leader -- the discount leader in a quite lively and attractive DIY market. We are clearly having the #1 price position within hard DIY. We have the lowest cost in the industry. The home is becoming more important, and discount is just growing. So that's a really nice position for us. The strategy we're taking to move towards modern discount for today's DIYers is clearly driving market share gains and profitable growth. We are successful both with our discount stores and with e-commerce, which is a great strength for us. We have a journey, target to reach SEK 10 billion by 2025, and we have initiatives that can take us there. The proven initiatives we've been working on for 18-plus months have more to give. And then we already have identified 3 new ones, of which one is actually already live to add to that. And then lastly, financially and importantly, we are generating a lot of cash flow that allows us to fund organic growth and pay dividends for the future. So that was the summary and the wrap-up. And with that, we turn to the Q&A session, and I will take it to Sanna to lead us through it.

Thank you, Mattias. So thank you for a great presentation. It's time for the Q&A. We've gotten plenty of questions. But let's start with a guest with an outside perspective. We've asked one of the analysts that's following Byggmax who's going to join us live over a link. Hi, and welcome, [ Andreas. ]

Yes. Hi, there. Can you hear me?

We can hear you.

Great. So just -- yes, sorry.

I assume you have some questions for us?

Absolutely, but I will speak to a few to let the others in as well. If I start then, I mean, you touched upon it perhaps a little bit, Mattias, but what would you say has changed during your time as CEO compared to when you started to make you believe in this SEK 10 billion sales target by 2025?

Well, I think, [ Andreas ], that's -- I think I would mention 3 things in particular. I think when I joined at the end of '16, I think there were still quite a few areas where we were not happy and not performing. That was sort of actually decreasing growth for us, Skånska Byggvaror and Finland, et cetera, where we had to shrink, and that took a while and also hurt us profitability-wise, and that's been fixed. That's one. I think the second one, maybe the more important one, is that there weren't any or that many at least clear growth initiatives that drove organic growth in the Byggmax business, focus has been elsewhere for a while. And I think like-for-like had suffered, as you may know. And now I think, well, we have 3 clear initiatives that we could all sort of put numbers on and allocate capital towards. So I think that is a really important point for us. And then, of course, as a retailer and the consumer, I would almost say, nerd, it's really nice to see also that sort of given market share and more customer groups, et cetera, taking on. But we now have our own organic growth initiatives that we can invest in. I think that is perhaps the most important one. And then thirdly, I mean, the market is always hard to have a crystal ball on as the experts say. But I think everything speaks for that the home is becoming more important going forward. So it should, all else equal, be more positive than where it was at the time when I joined.

And perhaps a clarification there. I think you said that new stores could bring up to SEK 3 billion in sales, is that correct? And if so, were you basing that on a 2020 store sales average or?

Yes, between SEK 2.5 billion and SEK 3.5 billion. We'd looked at actually a little bit forward looking. So we believe the market will be a little bit not as strong as in 2020. So we took it down a bit when we looked at the average sales per store. We are, of course, internally modeling that a bit differently depending on store format. But around SEK 2.5 billion to SEK 3.5 billion. And it's important, maybe if I should provide some more color on that, to say, 240 is the number where we have an identified location target list, it is based on the existing store format in the existing countries. And then there's another 40 which we believe in, and we have now done our mapping around Denmark and around potential of the Compact format.

Okay. And then a couple on -- you didn't talk a lot about the short term, which I think could interest some people out there. And given that you now are meeting more challenging comparables already in the first quarter, how would you say that you have experienced the market so far in 2021?

Yes. No, I think you're completely right. We are meeting an exceptional year. And we're not expecting a market as strong. And already, I think Q1 was 23% growth last year. So it's pretty strong comparables. We see a very good market still now in the first months of 2021. I think the stay-home effect, if we want to call it that still, sort of really peaked in April-May 2020. It's been sort of in a gradual decline from then on. Weather effects have been okay, a little bit worse than last year, but not that bad. Spring seems to be coming now, we hope. So I think there's still a very good market out there at the start of 2021.

Okay. And another very hot topic at the moment is raw material prices, which has moved meaningfully, at least on the timber side. How are you tracking that? And what do you think will be the implications for you and for the industry?

An important one. So I'll try to elaborate a bit about that one then. Factually, first, you're completely right, raw material prices have gone maybe not bananas, but really increased. Timber, definitely, including so. We are -- and then actually also on the sort of freight side, we are lucky if we start there that we don't have a big exposure to Asia. It's a very small part of our flow, but we are impacted by raw material prices. And I think this industry has shown, over the last 3, 4 years that I've been here, that raw material prices and currency effects are actually passed on to the end consumers. And we are a bit lucky this time because the raw material prices started to come up already during the autumn. So I think all the players out there started to see that and increased consumer prices in good time. So hopefully, everybody sort of has aligned and be back to the same profit margins here by high season was our thinking. And that clearly is happening. So to summarize, we see that, yes, raw material prices are up, but consumer prices are up in a sort of equivalent way, which means that the product margin is not hurt from it, at least so far. And we'll see how it continues.

Thank you so much, [ Andreas ], for your question and your time. So let's move on to your questions. Are you guys ready?

Yes.

Yes. Okay. There has been lockdowns in Denmark and Norway. Are you impacted?

Yes. There has been lockdowns. We are impacted, but not that bad, I think, is the honest answer. We were not impacted all of last year in terms of lockdowns. Now let's see and help me walk through it. Denmark was in lockdown January and a bit into February, but it's super small, 4 stores out of -- of us. And then Norway has had very local decisions and restrictions. But as of just a couple of days ago -- and sorry, one more thing about Norway is that when the Norway do lockdowns for DIY stores, Click & Collect is still allowed and professionals are still allowed. So we have had since a couple of days lockdowns now in Norway impacting half of our Norwegian store fleet, 20-plus stores. So -- and the numbers is actually not that bad. Of course, it's not great. But Norway is 20%, half of it is impacted. It's a couple of weeks now. And actually, we have a -- our Click & Collect offer seems really strong because it makes up for quite a good portion of what the store normally would sell, not all of it, but quite a lot. So it has impacted us now, but not very much.

And what is your view on competition? Is the landscape changing?

It is changing. It's, I think, compared to other retail industries where I've worked changing not so fast. But -- and I think it's been changing mainly on sort of the B2B side, where there's been some consolidation, which haven't impacted us that much. I think if you look back the last 2, 3 years, 2 or 3 things have happened, consolidation. I think some of the -- basically all of the big-box players have been focused a little bit more on the craftsman on the B2B side, so picked that up. And then, of course, I think the thing that everybody was waiting for was when Amazon entered and what was going to happen, et cetera. And I think so far, we -- I mean, we have very little exposure to those kind of categories where Amazon typically is in book and electronics, et cetera, but maybe some. But so far, we've seen very little impact, just as I think, most competitors had.

You're not worried?

Not for now. I think I don't want to be the one that underestimates Amazon. But I think as of now, we don't see any activity in our categories basically.

Okay. And how will Byggmax fast e-commerce growth affect your profitability? I think that's one question for you, Helena.

Yes. Right, e-commerce has lower margins and over time, if this share of business will increase, obviously, we'll have an impact. But we are planning on growing on both areas. So we still will have a profitable e-commerce, but an impact will occur over time as the business grows.

Do you want to add something, Mattias?

No, I think you put it nicely. It's a growth area for us. It will add profit, but probably decrease profitability in percent.

And what is the potential, your goal in Denmark going forward?

Well, Denmark is exciting. We have done a sort of map, I guess, you could call it, plan for Denmark. And we have -- initial plan is really focused on e-commerce, launching Byggmax's own branded e-commerce site quite soon. But we also, of course, would like to continue with the combination of stores and e-commerce. So we see potential about 20 stores in Denmark in addition to the e-commerce business.

And another question for you, Mattias. Take a sip of water, maybe because this is a long question. So it's going to take some time.

Okay. Hope I remember all the details.

Yes. The balance sheet target of 2.5x EBITDA is well above current debt. Are you planning for M&A activities and what targets?

Good. And as you said, a slightly longer question. Let me see if I could divide that up. And Helena, you have to help me here. But yes, there is now a target to have a leverage of maximum 2.5x. It's measured as what we call it excluding IFRS 16, so excluding the effect of the lease commitments. And we had 0.6, I believe, at the end 2020, so clearly much lower. I think it gives us a couple of interesting opportunities. First of all, of course, we have funds to focus a bit more organic growth now that we have things that we see that work. We are not, per se, focused on M&A for the sake of M&A. But as with Denmark, it could be a means to sort of faster end, so to speak. There are ambitions that we have within both geographies within e-commerce and within certain product categories where sort of bolt-on M&A could be a faster way there. So that could be it. Yes.

And what about your market outlook in 2021? Is it better than 2019? Or...

Yes, we believe it will be clearly better than 2019, but we also believe -- that said maybe before that it will not be as strong as in the exception of 2020.

All right. Well, that's everything. So thank you, Helena, and thank you, Mattias, and thank you for all your questions. And if you didn't get your question answered, we will get back to you by e-mail, and all material will be available tomorrow at the latest at our web page. So thank you for watching.