Synsam AB (publ) ($SYNSAM)

Welcome, everyone, to Synsam Group's Q&A session as we released the interim report for the first quarter 2026 this morning. My name is Frida Leim, and I'm the Head of Investor Relations at Synsam Group and the moderator of this Q&A today. I'm joined by our CFO, Per Hedblom; and our CCO, Jimmy Engstrom. Those of you watching this live, you're welcome to ask your question in the chat, and we will try to answer as many questions as possible. We have also our analyst from Citi joining us. I would like to welcome and hand over to Giang from Citi. Hi, Giang, and welcome with your questions.

Hi, Frida, and hi, everyone. Thanks for having me back on again. So as you know, I always start with the current trading environment question. But I feel it's even more relevant this time with the effect of the Middle East conflict. So the question is, would you say you saw negative impacts on customer behaviors in Q1? And how has it been trending in April and maybe the first week of May in terms of the sentiment?

Well, we -- I mean, there's been a cautious consumer environment quite a long time now. And in the start of the first quarter, it was quite cautious actually. Some improvement at the end of the quarter, we would say, if you look at the development during the quarter. To what extent the sentiment then in March, I would say, has been affected by the Middle East. We can't really tell. But of course, there is a cautiousness among consumers. And trading, I mean, we can't comment on trading, but March was, as we said, somewhat better than January, February.

Okay. That's helpful. I know this is not a trading color, but in general, what is your assessment at this stage for the full year in terms of where do you think the cautiousness among consumers are heading?

No, really, I mean, at the start of the year, we had some hopes that consumer sentiment would improve. I would say, right now, we can't comment really. It's difficult to say anything about consumer sentiment during the year.

Okay. I appreciate. There's a lot of volatility still out there. So I want to spend a little bit on Denmark specifically, very good performance. Can you maybe elaborate on the changes to the Lifestyle program that you mentioned in the release? And specifically, when did that start in the quarter? And do you expect to see similar magnitude of benefit to sales growth for the rest of the year?

Yes. Okay. So this is a technical aspect. It's -- I mean, we didn't change the -- it didn't change the offering towards consumers, but rather how we handle in our books the prolongings from 1st of January. So that has a positive technical impact on growth and a technical impact negative on gross margin. And that is -- we will see an effect also in Q2, Q3 and so forth technically from this. But the most important thing about Denmark, I would say, we do have a positive growth regardless of this technical aspect in Q1. And our program of improving Denmark is continuing.

Understood. So the way I understand is that in Denmark, you've got probably around 1 point of underlying growth. And then on top of that, you have 370 basis points of the benefit from the technical changes to the buybacks. So the question is, going forward for the coming 3 quarters, assuming similar magnitude from the technical changes, what do you expect the underlying demand in Denmark to look like? Do you expect the trajectory to continue being positive from here?

We don't expect anything really, and our efforts focus on growth and profitability in Denmark.

Okay. Got it. I want to move on to the cost side of things. This is again back to the whole Middle East conflict topic. I saw in the release that it was mentioned that Synsam is seeing higher costs given rising inflation. Can you maybe provide a little bit more details around what type of costs are you seeing impacted? How much increase are you seeing? And how much was the impact in Q1? If you could quantify that, please?

I mean -- well, we have mentioned, I mean, that we do have some effects of store openings. We have a ramp-up period of 2 years for store openings that has an impact, for example, on Finland and Norway, somewhat in Sweden as well, of course. And then, of course, there is a sort of an inflation aspect, but not on the large magnitude, I would say. So I mean, we do have cost programs in place to ensure that we keep cost in check. This quarter, the costs were somewhat higher. Do you want to add, Jimmy, to that?

No. I mean we have had some years now with, of course, less than ideal macroeconomic environment and the inflation was high and then it came down. And now there are sort of a new situation. But in regards to Q1, sort of the recent sort of events in the Middle East, I would say, is no direct impact really.

Okay. And maybe still on that topic, is there anything you can comment on whether, at this point, you're seeing pressures from your suppliers and also within your own manufacturing and your store network? How are you seeing the cost of energy or electricity? Are you guys hedged for the year? How did that work?

I mean, of course, there are increased transportation costs and so forth, but we don't hedge against such costs. Do you want to add, Jimmy?

No, exactly. I mean, flight transports, I would say, that is the one that has seen sort of more of a sort of an instant effect. But typically, we transport by shipping, and we only fly things in when absolutely necessary. But otherwise, I think it's early days, as we all know, in this. And how it will develop, we'll, of course, follow. But when regards to Q1, that was sort of the only impact we could see from this specific Middle East conflict.

I want to touch upon the sales mix and general discounting campaigns. So I noticed that Sweden delivered very good profitability, and you called out the sales mix specifically in the release, but there wasn't any mention of mix in other regions. So anything you could comment on that? And are you seeing the same, less or more discounting or campaigns in different regions?

Well, I think we mentioned -- we do mention mix in Norway, I think. We had a small increase in gross margin compared to last year. So there, we have some mix effect. In Finland, we do mention that we have continued reduced discounts. So that we mentioned actually in the report. Can you repeat the question, please?

Yes. How do you, in general, see that trending through the year and especially on the discounting front because of consumer sentiment concerns?

I mean, we try not to do forecasts, but we can describe in general how we work. And I mean, this industry is, to a large extent, affected by discounts and always been. But I mean, when we look at the impact of weak consumer sentiment, we historically have seen an impact on trading down lower ASP rather than necessarily gross margin.

Okay. That is clear. So putting all of that together, we have concerns around consumer sentiment, yet there's still some underlying growth in the business. We have questions around inflation impact. Do you see the likelihood of margin progression for the better through the remainder of the year, considering all the different headwinds and tailwinds we have? Or do you think that there's a greater likelihood of protecting the margins at its current level through the rest of the year?

How should I put it? I mean, we can all talk about ambition. Our ambition is to have an EBIT margin of 12% to 15% in the medium term. And we are at 12% now. So of course, ambition is to increase that. A clear ambition, I would say. That being said, the consumer sentiment and macro environment is, of course, changing day by day. So we take all action we can to improve growth and profitability.

Okay. And for the corporate cost or other and central functions costs, in this quarter, you reported a positive SEK 7 million figure. Can you help us understand what's that on the EBITDA level? Can you help us understand what are the drivers behind this plus SEK 7 million? And for the rest of the year, how should we think about modeling this line?

I must say it's a positive effect. I mean, we -- some components of this is, of course, the cost program we've been performing. We continuously work to become more efficient, and that is paying off. That's one part. And also our factory Östersund, Frösön is gradually improving its profitability, which also helps us. A lot of different components, but these are the 2 important ones.

Do you expect -- if that's the case, do you expect to see a little more positive values through the rest of the year, given that you're talking about benefits of improvements in manufacturing?

We have said we're going to double capacity -- double the output, rather, in 2026 compared to 2025, 200,000 frames, I believe we said. And that gives the opportunity to increase profitability in the factory specifically. Also with our cost programs, we have an ambition to manage cost centrally. So that could help us. Yes.

Okay. And I guess around the topic of cost programs and inflation headwinds and whatnot, hypothetically, if you were to see higher-than-expected pressures from the current backdrop, would you consider the pace of your new store rollout in order to help alleviate some of the pressures to help with profitability? Would that be one of the considerations?

We have a plan regarding store rollout, and that is not affected really by short-term effects. So we will act upon the opportunities we see in the market for opening up new stores. We have said 90 for the period '24 to '26, meaning somewhat fewer in '26, which you can see now the first half, well, if you take the Q1 and Q2 together. But that being said, we will act on opportunities if we see more opportunities opening up, then maybe more establishments, but not as a response to the macro environment or consumer sentiment really. I do want to highlight one thing in this quarter, we look at growth and everything. And the Lifestyle subscription, I mean, we need to highlight that. I mean, we have a customer -- growth in customer base of 7.2%. 7.5% is the goal medium term, but we are almost at that goal in a quarter with cautious consumers. And we do want to highlight that aspect that the subscription is performing well in this quarter. And that needs to be said, I would say. And I think -- I mean, adding to that, we should also remember, I mean, what our business really is, is to sort of treat one of the most common health problems, vision correction needs. That, of course, means that consumers, they do take care of the vision regardless. And then when there are more cautious environments, of course, it might impact that you trade down a little bit. But still, you need to take care of your eyes. And that, I think, is always important to keep in mind.

Yes, that makes sense. I mean, that's the beauty of being within the health care space. And I suppose the Lifestyle subscriptions comes into play specifically when there is consumer cautiousness around. I suppose that really ends my list of questions on that very positive note. So thank you, everyone.

Could I add one detail, though? Of course, there's been a lot of thoughts around our cash flow and amortization of leasing debt, which -- that amortization increased now in Q1. And that is -- I mean, we have some increases in the number of stores, et cetera. But I would say the large increase from Q1 last year is, to a large extent, a temporary effect, if I'm going to look forward. I need to highlight that. That was not the question, but I think an important piece of information.

Great. Thank you, Giang. So it's time to wrap up. But before we do so, Per and Jimmy, anything additionally that you would like to add?

No. But I think -- I mean, we can summarize that we do deliver increased profitability in the quarter, both in absolute terms and also in all margin measures. And a strong development on net income, growing by more than 50%. The organic growth and like-for-like were delivering regardless of the sort of cautious consumer market and also that we're delighted to see that we have a positive organic and like-for-like growth in all markets in the quarter.

Thank you so much, Per and Jimmy, and thank you to all of you watching this slide. If you have a question you have not received an answer as of today, please e-mail the question to the e-mail address below and we'll make sure you get an answer. I think -- I'll say thank you, and see you next time.