Nobia AB (publ) (NOBI) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Nobia Q2 Report 2026 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jesper Gylling Olsen, Group CEO. Please go ahead.

Good morning, and welcome. Since stepping into the CEO role 6 weeks ago, I am still new in this position, but I'm not new to Nobia. Through my years with HTH, I have firsthand seen the strength of our brands, the dedication of our people and the opportunities that emerge when we work together with focus and urgency. Over the past weeks, I've spent time across the business, listening, learning and engaging with colleagues, customers and partners. My conviction is stronger than ever. Nobia has valuable assets, leading brands and significant potential. Today, I will share my initial observations, our Q2 performance and how we are progressing on the priorities that will strengthen Nobia and create long-term value. Let's get started. Highlights from Q2. The Nordic kitchen market remains challenging with demand continuing at a low level and customers remaining cautious. While we are encouraged by the positive development in both Sigdal and HTH, we are not yet seeing a stable market rebound on the horizon. With that said, we are seeing signs of stabilization through disciplined cost control and a continued focus on operational efficiency, we have made progress in improving margins and strengthen our underlying performance. Our business-to-consumer segment continues to lag behind 2025. We although believe this is primarily driven by macroeconomic factors as larger renovation projects remain subdued and consumers take a longer consideration time before starting their renovations. Despite the weak market environment, our adjusted gross margin improved during the quarter. This was driven by a favorable average order value, a healthy product mix and a lower production cost. The improvement in gross margin has translated into a stronger adjusted EBIT, demonstrating the benefits of our ongoing efficient initiative and commercial disciplines. As you know, we are continuing the consolidation of our Nordic operations to create a more effective business structure, a key milestone during Q2 was the transfer of all stores in Finland to HTH. Finland is now fully integrated as a commercial business unit within HTH, allowing us in the future to leverage the strength of the HTH brand and operating model. During 2026, we will invest in refurbishing the Finnish stores network to ensure a consistent and compelling customer experience across the market. The kitchen market looking... Now handing over to Robert.

Yes. Thank you, Jesper. Looking at the financial performance in the quarter and starting with net sales then, we reported net sales of SEK 1.498 billion versus SEK 1.513 billion same corresponding quarter last year. That then translates into reported -- negative reported growth of minus 1% and also then negative organic growth of minus 1%. As Jesper alluded to, we had a huge improvement of the adjusted gross margin. It improved with 310 basis points to 39.8% versus 36.7%. Looking at the SG&A in absolute terms, it was pretty much flat, only a slight increase. With regards to the percentage, SG&A in relation to sales, there was an increase in the SG&A percentage of 0.4 percentage points, 25%. Looking at the adjusted EBIT then, a substantial increase with SEK 40 million -- SEK 128 million versus SEK 88 million in the same corresponding quarter last year. And that then translates into an EBIT -- adjusted EBIT margin of 8.5% versus 5.8% the same corresponding quarter last year. On the cash flow, we had cash flow from operating activities amounting to SEK 129 million versus SEK 236 million same corresponding quarter last year. I'll share some more details around these numbers in the performance -- financial performance section a couple of slides ahead. So handing back to you, then Jesper.

Apologize, Robert, for being too fast. But in my eager, then we move forward to the kitchen market. Looking at the market, conditions remain challenging. The Nordic kitchen market continues to be volatile and vulnerable conditions, where housing starts remaining at low levels across Denmark, Sweden and Norway, with only small indications that the market decline is moderating in some areas. In Finland, the market remains under pressure, and we continue to see weaker demand. However, the actions we have taken to strengthen our commercial business model provide a solid platform as the foundation for developing long-term profitability. The business-to-business -- sorry, the business-to-consumer segment remains soft as consumers continue to be cautious about larger renovation projects. In this environment, strong trusted brands matters more than ever. Housing transactions volumes remain relatively low across the Nordic. However, there are some encouraging signs. House prices continues to increase in several markets, supporting household balance sheets and consumer confidence. Going forward, our strategic priorities restore a customer-centric approach. First and foremost, we must restore a truly customer-centric approach. Customer trust has been tested in the last years, most visible through the transition from Teter Hull to Novia Park. Let me be clear. Product quality remains high, and our teams continue to deliver kitchen that meet our standards. However, we need to improve the entire customer journey and experience in the value chain. Restoring reliability is, therefore, our #1 priority. Before anything else, we must ensure that customers can trust us to deliver consistently and predictably. Two, reset the operating model -- we need to reset our operating model. As I mentioned earlier, the Nordic kitchen market remains volatile and vulnerable. Our ambition is to create an operating model that delivers profitable EBIT quarter after quarter regardless of market circumstances. That means focusing relentlessly on the factors we control as structure, cost management, pricing discipline, operational excellence, including optimizing of productivity. Three, create a unified Nordic supply chain. We will continue the transformation towards a unified Nordic supply chain. Nobia Park is central to this ambition. Product quality is strong, but the ramp-up in volume and automization has progressed more slowly than planned. We are now reviewing the ramp-up plan to accelerate progress while carefully managing the parallel wind down at Teterhall. Getting Nobia Park to stable, reliable and efficient output is the single biggest operational lever we have for improving margins, strengthen our competitiveness and creating long-term value. Four, strengthen our commercial focus. Finally, we will sharpen this. During the second quarter, we completed the transition of all Finnish stores into HTH commercial business unit structure. The refurbishment into a full HTH environment will continue throughout the year. HTH is a strong example of what we want to achieve across the group. It is a trusted brand, a scalable model and a proven contributor to profitability. That experience reinforces a key lesson in challenging markets, our portfolio of strong brands matter more than ever. We see considerable untapped potential within our existing portfolio, and our priority is to be disciplined and create growth by positioning our brands more effectively within existing markets and brand by brand, improving sales, market share and EBIT. Reaching production excellence. We must continue to increase volumes and ensure that all automization solutions perform as intended. This is critical to improving productivity, increasing output and achieving the cost efficiency that underpins our long-term competitiveness. We are already taking action to increase production capacity and improve operational performance. In parallel, we have initiated an assessment of Nokia Park to identify the remaining bottlenecks and determine how we can address them as quickly as possible. Once that work is completed, I will provide a further update. Throughout this process, delivery to our customers remain our highest priority. We will pursue a controlled and disciplined ramp-up, leverage the strength of our manufacturing network to safeguard delivery performance and volume availability while reducing cost as rapidly as possible. We are building a simpler, more efficient and more integrated Nordic supply chain that will strengthen our competitiveness, support margin improvement and create a stronger Novia for the years ahead. Now handing over to Robert.

Yes. Thank you, Jesper. So looking at the financial performance in the second quarter of 2026 in more detail then. And starting with the financial highlights then. We already alluded to the improved gross margin improvement in the quarter, improvement of 310 basis points, which was then predominantly the explanatory factors behind that improvement is a favorable -- a very favorable average order value. We have had a very nice mix in the B2B impacting positively and also a very thorough cost control in the quarter. We had the only negative impact in the gross margin was then, of course, related to the price increases coming from the turbulence we have in the Middle East. If we look at items affecting comparability, we had in total, SEK 58 million items affecting comparability in the quarter. SEK 45 million of those was then related to Nobia Park, the transition between Tidaholm and Jönköping. So SEK 45 million effect in cost of goods sold and a total effect of SEK 58 million when we look at the totality of items affecting comparability. The deviation there is between the SEK 45 million and the SEK 58 million is mainly related to restructuring costs. In an update on the cost savings program. As you recall, we announced a huge cost savings program in Q4 of 2025 with anticipated annual savings of SEK 80 million on a run rate basis as per Q3, Q4. We're tracking and trading very good on that cost savings program. And in the second quarter of 2026, we had a stand-alone saving of -- in the quarter of SEK 10 million on a run rate basis already today and running at SEK 40 million versus the SEK 80 million target that we have. If we move to the next slide then, please. Looking at the financial position then and starting with the cash flow from operating activities, we had a little bit of a weaker quarter in the second quarter when it comes to cash flow, and that was mainly driven then by an unfavorable change in the working capital where we had a timing effect between Q1 and Q2. As you recall, Q1 was a strong quarter for us cash flow-wise and working capital-wise. And we experienced a little bit of a backlash of that very nice development in Q1 now when summarizing Q2. If we look at the investments then in the quarter, investments in Norbia Park amounted to SEK 87 million, and the remaining investments are then estimated for the full year of 2026 for Q3 and Q4 around SEK 70 million. If we look at the financial net debt, the net debt on a year-on-year basis has had a substantial decrease then, of course, and explained then by the rights issue that we concluded end of March of 2026. And then a final observation then from the balance sheet, we have a substantial decrease in the lease liabilities. And that's, I mean, explained then by the U.K. divestment concluded in first quarter. So year-on-year comparison is a huge decrease in the lease liabilities compared to last year. With that, I hand back to you, Jesper, for concluding remarks.