Midsona Stock

Welcome to Midsona Q2 Report 2026 presentation. [Operator Instructions] Now I will hand the conference over to the speakers, President and CEO, Henrik Hjalmarsson; and CFO, Niclas Lundin. Please go ahead.

Good morning, everybody, and welcome to this presentation of Midsona Second quarter and first half year results. My name is Henrik Hjalmarsson, I am the President and CEO. And with me, I have Niclas Lundin, CFO. We're going to spend the coming 20, 25 minutes with me going through an overview of the second quarter and first half year. And Niclas then going through a bit more of the details. And after this, as usual, there will be plenty of time for questions.

But starting with a brief introduction to us, for those of you who might be new to us. So we are a European natural and healthy food group, roughly SEK 3.6 billion revenue last year in 7 geographies in Europe, roughly 700 employees and 50 owned brands. We're well positioned in categories with structurally growing demand driven by an increasing interest in health and sustainability with a good combination of strong local brands as well as a stable European platform with scalable European brands. And we have a vision to become a leading European player within natural and healthy food.

First, I thought I'd start with an overview of the second quarter. Starting here in the top left-hand box on the right-hand side with sales. So sales grew by SEK 5 million to SEK 870 million, an organic decline of 1.2%. The organic decline is driven mainly by contract manufacturing and as a result of the fire in our Spanish operation at the start of the third quarter last year, as well as, in general, more selective contract manufacturing activities. Very importantly, we saw an accelerated growth of our own consumer brands that grew by 2.3% organically in the quarter, proving that the strategy that we've set is paying off and the fourth consecutive quarter of organic growth on our own consumer brands.

If we then go to the bottom left-hand side and look at our gross margin, we saw a continued gross margin improvement with our own consumer brands, growth driving a positive mix that is driving a 1.2 percentage point increase of gross margin. In combination then with the cost saving program, giving impact in terms of lower overheads. However, partially offset by very important increased investments in marketing for profitable -- long-term profitable growth.

We saw an improved EBIT by SEK 16 million to SEK 20 million as well as an improved EBIT margin by 1.6 percentage points to 2.3%. In the quarter, cash flow strengthened by SEK 17 million to SEK 22 million despite the negative impact from the takeover of the inventory connected to the Risenta brand that we took over from the 1st of June which meant that we closed the quarter with a net debt to adjusted EBITDA of 1 flat, a considerable improvement versus last year, leaving us with a strong balance sheet, both in terms of the resilience, but also to be able to capitalize on strategic opportunities.

Jumping then to a summary of the first half year. The story line is pretty much the same. Again, a slight negative organic sales development of minus 1.2% but also again driven by a decline in -- a conscious decline in contract manufacturing as well as an impact from the fire in the Spanish operation. The -- as I mentioned, the organic growth of our own consumer brands accelerated in the second quarter means that we've got a 1.2% organic growth of own consumer brands in the first half year, offsetting then some of the decline on mainly contract manufacturing.

Gross margin in growth by 1.1 percentage points, again driven by mix, production efficiency and good price management. And then in combination with the cost saving program, delivering an improvement in EBIT of SEK 24 million to SEK 65 million and an improvement in EBIT margin of 1.4 percentage points to 3.7%. Cash flow improved by SEK 16 million to SEK 56 million, positively impacted by the insurance settlement in Spain in the first quarter and negatively impacted by the acquisition of the recent inventory here during the second quarter.

If we look then a bit at the highlights by division, starting with Division Nordics. So in Nordics, we saw an organic sales growth of 0.5% with the own consumer brands in healthy growth, partially then as a spillover from the first quarter, where we saw slightly less growth on the old consumer brands, partially linked then to the shift of a launch window from the first to the second quarter.

Gross margin strengthened in the Nordics by 0.7 percentage points, driven by mix but also a healthy continued production and logistics efficiency. And in combination, that means that we saw a considerably improved EBIT margin and fueled by the gross margin improvement as well as cost savings. But as I mentioned before, partially then offset by conscious investments in marketing activities, to drive our long-term profitable growth.

Looking then at Division North, we saw a weak sales quarter with an organic sales development of 3.7% negative, mainly then driven by our own consumer brands in the quarter. Positively, our own business-to-business brands transition continued well with the sales stabilizing and profitability continuing to improve. And the gross margin improved in the quarter despite a slightly negative segment mix then driven by the weaker development of our own consumer brands. but mainly driven by the improvements in production and logistics efficiency.

Looking at Division South, we saw an organic sales decline of 7%, driven by the lower contract manufacturing activities in Spain, which is completely linked to the fire that we saw at the start of the third quarter last year. Pleasingly, our own consumer brands grew by 6.6% with a continued strong growth in French grocery trade. And we also saw a materially improved gross margin driven by continued efficiency improvements as well as a more positive sales and segment mix.

If we look then instead at the portfolio by product group, starting with the organic products, we saw a total organic sales development of the organic assortment of minus 1%. And driven then mainly by contract manufacturing and again, to a not insignificant degree linked to the fire in the Spanish business. Our own organic brands continued in growth, albeit Division North in the quarter then being the negative exception.

But in general, showing that the marketing and innovation activities that we put in place across the group is delivering both organic growth but also improved profitability. And despite that growth, as I mentioned, not sufficient to offset the development on contract manufacturing than linked to the fire in Spain.

Looking at health foods, we saw an organic growth of 3%, driven by the larger brands. This is partially then a recovery after a weaker first quarter. And as we mentioned in the report for the first quarter, partially then linked to the shift of a launch window. But this -- the growth that we see is a clear link to the strategy that we set and the investments we're doing in growth, both in terms of innovation as well as in marketing, such as for rigs, which I'll come back to in a little bit. And contract manufacturing in continued decline on the Health Food side, but a very conscious result of a more selective approach as we optimize for profits.

And then lastly, on the Consumer Health side, a sales decline of 9% organically, so a fairly weak sales quarter, mainly linked to a weak seasonal performance on a number of seasonal products earlier in the quarter, more linked to the back end of the flu season and later in the quarter, partially also linked to a weak start to the mosquito season.

We also have pockets of conscious optimization for profit in the consumer health products portfolio, which is partially impacting the top line performance and linking into portfolio, a slight follow-up on an example that I mentioned during the first quarter presentation, which is the launch of protein cakes under the Friggs brand.

So a new range capitalizing on a strong protein trend, one of the fastest-growing trends in the market. offering a natural and protein-rich product with 23% protein based on lentils and peas. This has been rolled out during the second quarter. We -- very positively received, both on the customer side as well on the consumer side. And as we can see here on the top right-hand side, healthy growth in the quarter supporting clearly our overall on consumer brands growth in the quarter. And we've also supported this quite materially in terms of marketing activities, both supporting the launch as such, but also driving the long-term brand equity of the Friggs brand.

A few words on the gross margin development in the second quarter, starting with -- or first of all, very pleasingly seeing that we've got a gross margin growth in all 3 divisions. Starting with the Nordics, as I mentioned, partially before, so an improved product mix with a higher share of own consumer brands and then in combination with good net price management is sufficient both to offset the slight negative impact that we've seen on transportation and partially on packaging as a result of the development in the Middle East and the impact that has helped on energy prices.

But overall, also supported by a continued healthy production and logistics efficiency. Division North then, not as positive with an 0.3 percentage point growth, partially as a result of a negative sales mix with a weaker development on our own consumer brands. But the expansion is then supported by continued improved production and logistics efficiency as well as a continued improvement of the B2B, the B2B business in terms of strengthened margins.

And then lastly, Division South with a considerable improvement in gross margin with a material positive impact from sales mix with a decline in contract manufacturing activity and healthy growth on our own consumer brands and this substantial positive mix impact is sufficient to also offset a somewhat weaker production logistics efficiency as we're continuously scaling up capacity to meet the demand.

I thought I'd take the opportunity to also briefly link the performance of the quarter back to the -- to our strategy and the 3 strategic levers for value creation. The first one being then to invest behind selective power brands, where we're prioritizing investments behind selected brands where we see the biggest potential in order to strengthen the brand's competitiveness and long-term profitable growth.

And one clear example here in the quarter is the progress we're making on the Friggs brand with the launch of the protein cakes, but also the marketing investments we're driving and where we're also seeing a clear payoff in terms of a healthy growth. We're also continuing to leverage our strong local positions with good progress on our local organic brands, strengthening growth as well as profitability in the quarter than Division North being the one exception.

And lastly, cost and capital efficiency, where already several times mentioned, improved production and logistics efficiency as one driver of the across-the-board improvement of our gross margin in the quarter. And I think looking at this in a slightly longer perspective, it's positive to see looking here over the past few years. Starting with the organic growth on our own consumer brands, where we're targeting a growth of above 5%, that whilst we clearly have some work to do, we have made material progress over the past years, going from a negative 3.3% organic growth rate in an annual pace to a positive 2.2%.

And doing the same comparison on our EBIT margin, we've taken that over the same period from 0.8% to 4.4%. And while doing this, strengthen our cash flows and considerably strengthen our balance sheet, and as I mentioned before, now at a net debt to adjusted EBITDA leverage of 1.0. So made some clear progress towards our targets, whilst obviously recognizing that we have some work ahead of us to continue to deliver those improvements to meet the targets that we have set.

And then very briefly, our short-term priorities for the quarter to come, very much in line with what we saw for this quarter, in the sense of continuing to ensure the focused implementation of our strategy to accelerate profitable growth, investing behind our strongest brands, leveraging our strong local positions.

Secondly then, more tactically leveraging the growth momentum that we have on our own consumer brands, now 4 quarters in a row and showing healthy brand growth -- on brand growth here in the quarter. So continuing that to take both innovation and marketing initiatives to fuel that continued growth. And lastly, getting the final pieces of the puzzle in place in terms of the long-term profitable growth plan for the Spanish business.

With that, I'm going to hand over to Niclas, who is going to take you through the finances in a bit more detail please.

Thank you so much, Henrik, and hello, everyone. Let me start with the financial summary for the quarter. Net sales was up by SEK 5 million, including recent impact of SEK 11 million. And adjusting for currency impact, the total organic growth rate came in at minus 1.2%.

And in line with Henrik's earlier comments, gross margin developed well during quarter 2 in all our divisions. Total gross margin improved by 1.2 percentage points and was positively impacted by improved efficiency, price increases and a good sales mix, where our own consumer brands developed well.

In consequence, EBIT improved by 1.8 percentage points, equivalent to SEK 16 million. And apart from increased gross margin, we saw a positive impact on EBIT from the cost reduction activities initiated in 2025. This was, however, partly offset by increased sales and marketing initiatives.

Net financing costs continued to improve versus last year, this quarter with SEK 5 million, driven by the more favorable conditions in the new financing agreement as well as lower indebtedness. Net results landed on SEK 12 million including an additional SEK 4 million in costs related to the factory fire in Spain, classified as items affecting comparability.

Moving on to cash flow from operating activities. It came in at SEK 22 million and although negatively impacted by continued seasonal buildup of inventory as well as onetime effect related to acquisition of Risenta finished goods. This was an improvement of SEK 17 million compared to last year.

As Henrik mentioned earlier, the quarter ended with a leverage of 1.0, a substantial improvement versus last year. Now moving over to the sales development for the quarter. And as already mentioned, net sales increased by SEK 5 million, equivalent to 0.5%. Structural growth from Risenta explains SEK 11 million and FX translation an additional SEK 3 million. So the organic sales development was negative with minus SEK 10 million, equivalent to minus 1.2%.

Now let's shift focus to the right hand side of the slide on to the graph. And although overall negative organic growth, we were glad to see the increasingly good traction of our own consumer brands showing organic growth of 2.3% in the quarter with our larger prioritized brands as top performers. And as Henrik previously mentioned, on a rolling 12-month basis, organic growth of our consumer brands has improved by 4 percentage points versus Q2 last year.

The business-to-business branded business in Germany is still under transition to focus on profit over volumes. And in Q2, new more profitable contracts replaced old contracts with less profitability, leading to net sales in line with last year with continued positive effects on margin.

License business declined by 1.7%, mainly referable to certain consumer health brands in the Nordics. And finally, our Contract Manufacturing business showed a decline in all our divisions, mainly related to discontinued less profitable contracts within the Nordics as well as effects from the fire in Spain in July last year.

So let's hand over to the quarterly EBIT development compared to last year. Lower volumes resulted in SEK 1 million less contribution but this was offset by a clearly higher gross margin of 1.2 percentage points, improving profit by SEK 14 million. This improvement, including the impact of Risenta, which was in line with expectations, was driven by lower staff costs, improved efficiency, less scrap, pricing and a good sales mix.

Sales, marketing and administration expenses were down a further SEK 1 million net, including recent impact, also in line with expectations. We now see the full effect of our cost reduction program from 2025. But this positive impact was, however, largely offset by increased investments in direct sales and marketing activities in order to facilitate future profitable growth. The FX effect from translation and revaluation was SEK 2 million compared to last year. And to conclude, EBIT landed on SEK 20 million with a 2.3 percentage margin, an improvement of 1.8 percentage points or SEK 16 million versus last year.

And on the right-hand side, we illustrate the quarterly and the rolling 12 EBIT development during the last 2 years, and it's encouraging to see the gradual improvement. We're rolling 12 EBIT increasing to SEK 157 million by this quarter end, which is SEK 48 million higher than by the end of June last year. And consequently, rolling 12 EBIT margin has improved from 3.0% to 4.4%.

Let's continue to the quarterly cash flow. And in Q2, we saw a continued buildup of inventory, which is partly seasonal. Inventory levels were also impacted by purchase of finished goods related to the Risenta acquisition. Accounts receivables came down to more normal levels after the payment delays we experienced in Q1. However, this positive working capital impact was partly offset by a decrease in payables.

And to summarize, operating cash flow ended at SEK 22 million, an improvement by SEK 17 million compared to last year. And the right-hand side graph illustrates the cash flow trend displaying an increase of rolling 12 operating cash flow by SEK 65 million compared to Q2 '25 to SEK 245 million.

So we're approaching the end of the financial review, summarizing our cash and debt situation. The quarter ended with SEK 745 million in available cash. And worth mentioning versus Q1 is that Q2 cash wise has been impacted by dividend, SEK 32 million as well as the first payments related to the recent acquisition, SEK 42 million.

Available cash represents 21% of the last 12 month sales, which is a very healthy level continues. Right-hand side, net debt increased to SEK 370 million, including the IFRS 16-related debt of SEK 101 million. This means a continued historically low net debt in relation to adjusted EBITDA and including recent a pro forma effect of 1.0x. The current leverage is well within our financial target, establishing our strong financial position going forward. And that rounds off the financial review. So back to you, Henrik.

Okay. Thank you very much, Niclas. And with that, we will open up for questions. Operator, please.

[Operator Instructions]. The next question comes from Alice Beer from ABG Sundal Collier.

Just starting off, could you quantify how much the shift in the launch window in the Swedish market affected sales? Just trying to get a better understanding of the underlying developments in consumer brands, excluding this timing effect.

Thanks, Alice. Yes. I think it's -- in all fairness, it's very hard to isolate that effect, with -- particularly with the dynamics going on in the market and also the investments we're making for growth. So we'd be guesstimating a bit too much to be comfortable giving a real number. It is an impact, and we are seeing that in the strengthening of the consumer brands growth.

But another way to phrase it is that we don't see that as the only reason behind the strengthening of the growth on own consumer brands from Q1 to Q2. So that was not -- that shift does not explain the full strengthening, but there are also -- we also see a general positive momentum. But hard to give an exact number.

Okay. Fair. Moving on then on the marketing spend. Selling expenses rose in Q2 behind priority brands are described as gradually driving sales? What's the expected marketing spend run rate for H2? And what organic growth rate do you expect that investments will we start paying back the EBIT line rather than just in the gross margin?

Yes. So we do expect our -- to answer the second question first. We do expect a continued positive development of the growth of our own consumer brands and that the marketing spend is part of that. We don't expect a -- in terms of group profitability, we don't expect a material increase versus the levels that we've seen in Q2. So at about a level or slightly even below the relative level that we saw in Q2, which is slightly higher than the level we saw in Q1 is what we're expecting going forward.

Okay. And then on the North Europe was rather soft on consumer brands and you blame this on the changes partly on changes in promotional campaign patterns. Is this a timing issue that reverses in Q3, Q4 or a reset in promotional intensity that sort of lowers the run rate for the rest of the year?

No. I think there are 3 impacts. One is that the early and quite severe heat wave that we saw, we typically see those in Continental Europe, but we typically see them in July and August rather than in June. That had a slight negative impact on consumer behavior. We did see an overall slightly lower promotional pressure and then we saw a promotional timing shift. But that effect actually was slightly positive in Q1. So we don't see that materially reversing in Q3 and Q4. We obviously expect the momentum of the brand performance to improve, but we're not expecting a material impact to the reversal of our promotion timing.

Okay. Perfect. Moving on to Risenta then. I mean there is entire product equipment handover, set for Autumn 2026. What are the expected one-off costs or distribute disruptions to Nordic margins during that integration window and thus the SEK 130 million annual sales guidance for Risenta? I assume any cross-selling into existing distribution? Or is this a stand-alone run rate?

Yes. So to answer the second question, first, the SEK 130 million assumes fairly limited cross-selling or basically now, to be fair. So it's pretty much a run rate business performance. We do expect a longer-term opportunity or upside on that, but not to be materialized this year given that the focus will be on a robust integration, including the supply chain side.

There will be some one-off costs related to recent and the move in quarter 3 and 4 which is whilst we expect the basis of the business case that we also shared at the timing of the press release, i.e. run rate sale of roughly SEK 130 million and a gross margin slightly below our average level. We don't expect that to convert -- we do expect that to convert into a positive EBIT contribution for the rest of the year but a positive EBIT contribution on a slightly lower level than we'll see in average during next year because some one-off costs, but we do still expect a positive EBIT contribution for the rest of the year.

Okay. And then just a final question for me or really 2 questions in one. But looking at the contract manufacturing, First, is there more this sort of pruning still to come? Or has the book already been cleaned up to the point where sales should stop declining? And then secondly, what has done look like? I mean once the low-margin contracts are done, this contract manufacturing settled as a smaller but stable part of the business? Will it start growing again? Or will it just keep shrinking as a structural trend?

Yes. So good question. I think what we should remember in terms of the contract manufacturing is that the majority decline we've seen on contract manufacturing actually relates to the fire -- so -- and that effect will obviously phase out during the third quarter as the fire occurred at the very start of the third quarter last year. When it comes to the pruning work that's been going on, our expectation is that the majority of that has been done. The biggest impact of that has actually been in the Nordics and the biggest impact has been on the health food side in the Nordics.

There is -- we are optimizing capacity, I would say, particularly in Division South. So there could be some pruning or optimization left to do. But -- the majority of that has already been done. So what we'll see here during the third quarter and definitely fourth is that -- the effect from the Spanish fire will be phased out, and we have done the majority of the pruning that we're expecting to do at least for sort of for this space. I think the next step will be if we need to release or not if but when we need to release further capacity to allow for the consumer Brands growth.

[Operator Instructions]. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much for listening in, everybody. And we wish you all a fantastic summer. Goodbye, everybody.

Welcome to Midsona Q1 Report 2026 presentation. [Operator Instructions] Now I will hand the conference over to the speakers, President and CEO, Henrik Hjalmarsson; and CFO, Niclas Lundin. Please go ahead.

Good morning, everybody, and welcome to this presentation of Midsona's First Quarter 2026 Results. My name is Henrik Hjalmarsson. I am the President and CEO. And with me, I have Niclas Lundin, CFO. I'm going to spend the coming 10, 15 minutes going through the highlights of the first quarter, after which Niclas will go through a bit of the details on the financials. And there will be plenty of time to ask questions at the end.

But first of all, for those who are new to Midsona, a brief introduction. So we are a provider of good for you and good for the world, mainly food products, most of which are plant-based and/or vegetarian and many are natural and organic. We are present and divided in 3 divisions: the Nordics in Sweden, Norway, Finland and Denmark; Division North in Germany; and Division South, which is France and Spain, and had a bit more than SEK 3.6 billion of revenue last year, headquartered in Malmö and listed on the Stockholm Stock Exchange since 1999.

With that, let's start with a brief summary of the first quarter. And actually, looking at the table on the right-hand side, starting in the top left-hand corner, sales. Sales in the quarter was 1.3% down organically, mainly driven by contract manufacturing and licensed brands, however, partially offset by organic growth within our own consumer brands, which grew in the quarter by 0.1%. We saw a continued negative sales impact from the fire in Spain, which is then visible in the contract manufacturing decline. Going one box down, looking at gross margin, we saw a healthy gross margin growth, up 1.2 percentage points to 29.8%, driven by both mix, pricing as well as production efficiency.

And together with the impact from the cost saving program, which is contributing to lower overall cost levels, as we can see in the top right-hand corner, EBIT margin grew by 1.1 percentage points to 5.0%, which then means that EBIT came in SEK 8 million higher than the same quarter last year at SEK 45 million.

Cash flow was obviously supported by the previously announced insurance settlement in Spain, but at the same time, negatively impacted by an inventory build to support launches in the second quarter as well as to mitigate some of the supply risk linked to longer transportation lead time from the ongoing conflict in the Middle East, but also temporary negative impact on receivables that we expect will normalize during Q2. And all in all, that meant that the net debt-to-adjusted EBITDA came down considerably from 1.5x last year to 0.9x this year.

Looking then at the performance and the highlights in the divisions, starting with Division Nordics. In the Nordics, we saw an organic sales decline of 3.3%, which was driven then by the timing of launch window into Swedish trade as well as promotional timing, but partially also due to conscious optimization for profit, particularly within contract manufacturing within Health Foods. This was, however, partially mitigated then by a continued strong sales growth on our own organic brands.

We saw a strength in gross margin with both positive net price impact as well as a good mix, and a materially improved EBIT margin then, supported by the implementation of the cost saving program, which led to improved overhead efficiency. And all in all then an EBIT growth of 15% year-over-year. Looking at Division North, we saw an organic sales growth of 4.2%, very much fueled by a good growth of our own consumer brands. Our own B2B brand, however, is impacting sales development negatively with a negative organic sales development, but that is a conscious effect of a transition to a more profitable assortment and business model that we're in the midst of implementing. Gross margin weakened somewhat with a worsened mix within contract manufacturing that is not fully mitigated by the improved segment mix with, as I mentioned, the growth on our own consumer brands.

Looking at the Division South, we saw an organic sales decline of 5.9%, but then mainly driven by the lower contract manufacturing volumes in Spain following the fire in Spain in the middle of last year. Our own consumer brands grew by 2.9% with a continued strong growth in the French grocery trade, and we saw materially improved gross margin driven by continued efficiency improvements as well as then an improved sales mix with a good growth on our own consumer brands.

Looking at it from the portfolio perspective, starting with the organic products, where we saw -- on organic products, saw an organic growth that continued at 5.5%, very much with our own organic brands driving the growth with a strong performance in the quarter, really showing that the marketing and innovation initiatives that we have taken in the organic portfolio is basically paying off across all geographies. We saw a somewhat weaker growth of Contract Manufacturing, but that, again, is partially impacted by the fact that we have terminated contract manufacturing agreements out of Spain following the fire, but also obviously impacted by the B2B sales transition in Germany.

Looking at Health Foods, we saw an organic sales development of minus 12.3%, partially impacted then by the move of launch window as well as promotional timing. And as I mentioned, a conscious sales planning decline on contract manufacturing as we optimize that portfolio for profit.

And lastly, on the Consumer Health Products side, we saw an organic sales decline of 6.3%, partially as a consequence here also of optimizing for profit, which impacted certain brands negatively, but we also suffered some customer service challenges on some brands in the quarter, which temporarily impacted our ability to grow with demand, but this is something that we expect to come to terms with during the second quarter.

Speaking then of the portfolio, just a couple of words on one exciting launch that we announced at the back end of the first quarter going into the second quarter, which is a range extension of Friggs tapping into the protein trend, launching protein cakes in our well-known and established flavors. High protein is one of the fastest-growing trends in the healthy snacking space. And with these new protein cakes in our well-known flavors, we're tapping into the trend of snacks that combine taste, convenience and function. It's a natural and protein-rich product with 23% protein based on lentils and peas, which are naturally high in protein. And we are in the process of launching and rolling these products out and making sure that we achieve strong launch visibility with media, digital challenge, PR, et cetera. And we're very excited to see this product roll out across the geographies in the Nordics.

A few words on our gross margin. Starting with Nordics, where we saw a gross margin expansion by 1.1 (sic) [ 1.7 ] percentage points, partially then driven by a good net price management, which together with fairly stable raw material costs, then drove the margin expansion. We also saw, in the quarter, an improved product mix with a higher share of sales of our own consumer brands that also contributed positively. We saw a small negative impact from higher transport costs as a result of higher fuel costs, but in the end, not that material on an overall level and happy to see an improvement of the gross margin in the Nordics in the quarter.

Looking at Division North, the sales segment mix, on the one hand, continued to impact positively with good growth on our own consumer brands and a reduction in parts of the less profitable B2B sales. However, this was not sufficient to mitigate the negative product mix development in contract manufacturing, as well as some spot purchasing raw materials that we had to do at higher prices to be able to fulfill commitments that have been made. We did pleasingly see a continued improvement of the production efficiency in the quarter, which also partially helped to recover that negative impact.

And lastly, then looking at Division South, we saw a materially positive impact from sales mix with the growth in our own consumer brands, while contract manufacturing declined linked to the fire in Spain. We also saw an improved production efficiency which, in combination with a better mix, then achieved a material improvement of the gross margin at 4.5 percentage points in the quarter.

I also just wanted to take the opportunity to mention a few words on the restructuring program. We talked about this in the context of the fourth quarter report.

As mentioned then, we finalized the union consultations in the fourth quarter and fully implemented the program here during the first quarter. So as we exit the first quarter, we are fully implemented. Our estimate in terms of run rate savings remains at approximately SEK 20 million, which was what we communicated earlier. And as also communicated earlier, the cost to achieve was somewhat lower than communicated with the original announcement of the program at less than SEK 10 million. We did see the majority of this in quarter 4, but as Niclas will come back to, there were some effects also in the first quarter.

I also wanted to take a minute to just mention a few words about the refined strategy for profitable growth that we launched in conjunction with the annual report that we published a couple of weeks ago. This very much builds on the updated strategy that we launched a couple of years ago. However, as a fairly new incoming CEO, it's natural to look at the long-term value drivers and evaluate any tweaks we might have to do, and we have done some refinements of the strategy to make sure that it helps us towards our financial targets.

In practice, that means that our 3 pillars or gears, as you can see in the middle of the arrow on the top, have been clarified a bit. The first one then being to invest behind selected power brands, and what we mean by that is that we're really prioritizing investments into the selected brands where we see considerable potential for profitable growth, and that we will strengthen competitiveness with focused product development, marketing and sales execution, really making sure that we tap into the stronger brands where we have potential to make material steps forward, achieving growth that will have an impact on the group's results.

The second gear here is to leverage our strong local positions. And what we mean by that is to innovate and support the local brands to really win and thrive in the prevailing market environment. In practice, we act with quite a broad portfolio of local brands, which face somewhat different competitive environments, also different consumer behaviors and different channel structures. And making sure that we approach those with agile plans that can tap into that potential is important. We will also then leverage the local ownership and decision-making, making sure that we make swift decisions close to the customer and consumer to win in the channel.

And third then is to continue to drive cost of capital efficiency. So making sure that we tap into operational excellence, continuous improvement and ensuring a lean overhead structure to help us drive margin, but at the same time, drive the margin expansion with efficient and effective sourcing as well as a clear and focused approach to design to value. And then lastly, very importantly, to continue to drive for stronger cash generation with improved supply chain planning and steering.

Also just a couple of words on the short-term priorities. Obviously, ensuring that we continue the focused implementation of the refined strategy to accelerate the growth towards our financial targets, continuing the margin expansion while improving the organic growth, most importantly in the first step of our own consumer brands. We will continue to leverage the growth momentum. We have a number of quarters now with growth on our own consumer brands, although it was modest in the first quarter, and we'll continue to leverage that and most notably, the healthy and strong growth we have on our own organic brands to continue the growth momentum going forward. And then lastly, making sure that we define the right long-term business model and production structure for a profitable business recovery in Spain, which is something that we'll come back to here later in the year.

With that, I'm going to hand over to Niclas, who's going to take you through some of the details of the financials. Niclas, please.

Thank you, Henrik. Let me start with the financial summary for the quarter. Net sales declined by 4.7%, where currency had a negative impact of minus 3.4% and the organic growth rate was minus 1.3%. The gross margin improved by 1.2 percentage points and was positively impacted by improved efficiency, price increases and a good sales mix, where our own consumer brands, especially within the organic product range developed well. In consequence, EBIT (sic) [ EBIT margin ] improved by 1.1 percentage points, equivalent to SEK 8 million.

Apart from the increase in gross margin, we saw a positive impact on EBIT from the cost reduction activities initiated in 2025. The net financing costs continued to improve versus last year, this quarter with SEK 3 million, mainly driven by the more favorable conditions in the new financing agreement. Our net result landed on SEK 82 million and was positively impacted by the insurance compensation of SEK 57 million following the factory fire in Spain last year. Cash flow from operating activities came in at SEK 34 million. This was in line with last year, however, lower than what could be expected considering the insurance compensation received, and the increase was mainly due to increase in net working capital. The quarter ended with a leverage of 0.9x, which was a substantial improvement versus both last year and year-end.

Now moving over to the sales development for the quarter. And as already mentioned, net sales declined by 4.7%, or in absolute figures, SEK 44 million, where currency explains SEK 32 million, and the organic sales development was negative with SEK 12 million, equivalent to 1.3%. Although we saw overall negative organic growth, we were glad to see the organic product range performing really well with organic growth of 5.5%.

Looking at the right side of this slide, our own consumer brands continue to grow, although at a somewhat slower pace than last quarter. Organic growth landed on 0.1% with our larger prioritized brands as top performers. The business-to-business branded business in Germany is still under transition to focus on profit over volumes and continue to decline in sales as a result, however, with positive effects on margin. Our licensed business declined by 2.2%, mainly referable to Consumer Health in the Nordics. And finally, our private label business continued to show good growth for North Europe, but the lower sales in Spain following the fire led to an organic decline for the group as a whole.

Now let's have a look at the quarterly EBIT development compared to last year. Lower volumes resulted in SEK 5 million less contribution, but this was offset by a clearly higher gross margin of 1.2 percentage points, increasing gross profit by SEK 11 million. This improvement was driven by improved efficiency, pricing and a good sales mix. Sales and administration expenses was down a further SEK 1.8 million net in large due to the cost reduction program from 2025 and taking implementation costs into consideration. Our cost savings initiatives were fully implemented during Q1, and we expect full P&L impact from Q2 and forward. The FX effect from translation and revaluation was SEK 0.6 million compared to last year. And as a summary, our EBIT landed on SEK 45 million with a 5.0% margin, our third consecutive quarter with EBIT on or above the SEK 45 million mark.

Moving over to the quarterly cash flow. And as you can see from the graph to the left, cash flow from the P&L statement was substantial, impacted by the insurance compensation received. This cash contribution was, however, largely offset by a working capital increase. The increase in working capital was mainly driven by inventory and accounts receivables. And if we start with inventory, the buildup was for several reasons. It was partly due to seasonality, partly to safety measures connected to the Middle East crisis and partly due to delay of launch windows within the trade. Accounts receivables were unusually high at quarter end. However, we expect a normalization during the second quarter. And to summarize, cash flow landed SEK 34 million, which was more or less in line with last year.

And then moving over to my final slide, summarizing our cash and debt situation. Our quarter ended with SEK 804 million in available cash, which represents 22% of the last 12-month sales. Net debt declined to SEK 264 million, which contributed to the historically low net debt in relation to EBITDA quota of 0.9x. This is well within our financial target and confirms our strong financial position going forward.

And with this, I hand back to you, Henrik.

Thank you very much, Niclas. So in summary, a quarter with strengthened gross margin, strengthened EBIT margin, weak growth of our own consumer brands, mainly driven then by our own organic brands.

And with that, I hand back to the operator for questions.

[Operator Instructions] The next question comes from Alice Beer from ABG Sundal Collier.

Just starting off with a couple of questions on the gross margin and raw material prices. Firstly, could you quantify how much higher raw materials weighed on the margin in Q1?

Raw material prices in the first quarter were fairly stable and did not have a material impact on the gross margin. And that is, in our case, partly visible then in the gross margin improvement, what we refer to as the net price improvement, where we've been able to effectively take slightly more price out than we've had cost pressure coming in.

Okay. Great. And then following up on that. Looking back at 2022, when raw material prices last spiked, it was sort of a perfect storm with commodity inflation, energy costs, FX and these fixed price private label contracts you're in. I know that neither of you were with the company at the time, but could you give us some color of how much of the margin pressure at that time came from what? What I want to know is really that in the event that a similar situation would occur now, will your now lower share of private label contracts or different SKUs for brands sort of cushion the blow from higher prices?

So typically, yes, the pricing on our own brands is more within our control than pricing on contract manufacturing or licensed brands, typically. The second one is, a key driver of the margin dilution at the time was a relative long period from the movement on inbound price until price was taken into the market. And our perspective is that should there be a similar situation again, we stand much better equipped to act quicker. But let's be clear and state that we are not seeing any of those effects at the moment. However, I think general consensus in the industry is that should we have a protracted and escalating conflict in the Middle East, that will eventually result in inflationary pressures on food, which will impact not just us but the entire industry.

Yes. Okay. Great. And just last follow-up there. Could you tell us what proportion of your organic raw material contracts now are fixed and variable going into H2? And sort of at what oil or gas prices levels start to materially pressure your gross margins?

Yes. That is a very good question, which is very difficult to give a specific answer to. Typically, raw material is contracted based on harvest period. And typically, the coverage is until the next harvest period. However, given the wide array of organic products that we sell, and given how heterogeneous the origin of these products is, it's very difficult to answer that question in actually in a meaningful way. So typically, we have a number of months of coverage depending on the different harvest periods for the different products, and that will be at the oil price that was prevalent at the time that the contract was made.

Okay. Great. Moving on then, the report says that the long-term plan for Spanish operations will be established in H1. You don't really give an indication of which way you're leaning. Could you give us a sense of realistic scenarios, full rebuild, partial rebuild or permanent closure? And what are the key decision criteria there?

I think the key criteria for decision is going to be, one -- I guess the key driver is going to be capital and resource/focus allocation versus the opportunity. And what that means in practice is that we're assessing the opportunity for a long-term profitable business given the market situation and the competitive landscape. And against that backdrop and the competitive advantages that we have in the market, we will make an assessment and a decision based on how much capital and resource/focus that we think is appropriate to capture that. And at the moment, to be clear, the full spectrum for outcomes is still on the table. So the full range that you indicated before is still on the table.

All right. Moving on then, you flagged that the Q1 softness in Swedish Health and Consumer Health is part of a timing issue due to the shifted launch window. Could you quantify how much revenue was effectively pushed from Q1 into Q2, and give us any confidence that those sales are secured rather than the risk of being lost delayed further?

Yes. We want to be a bit cautious there and actually not quantify exactly how much it is, because we actually won't know that until we have seen the impact of that launch window fully. So we feel very comfortable that there is an impact, but we'd rather not quantify it in detail. we feel fairly comfortable, as I said, that with the launches that we have in that pipeline, one of which then is the protein cakes that we showed a little bit earlier that, that will be a strong period for us, but exactly how big remains to be seen here during April and May.

Okay. Fair enough. And then just a final question for me. It might also be hard to answer, but you've said that the Risenta acquisition will be margin accretive. But given that the brand is being acquired without its own production infrastructure and will be integrated into your existing facilities, could you give us a clear sense of what the expected EBIT margin is for Risenta once fully integrated and what the integration costs and time line will look like?

Yes, that was lots of questions in one. So we expect it to be EBIT margin accretive, and that means that the margin on an isolated basis will then be fairly strong in relation to what we have. But a strong driver of that is that we already possess a large part of the infrastructure and overhead cost that is required to operate the business. The gross margin of the business at current is slightly below our average gross margin the way it looks right now. But the EBIT margin accretiveness will be healthy, as I said, because it's integrated into a platform that already has a lot of the elements that are required to operate the brand.

If you look at the time line, we're expecting to do a move towards the end of the third quarter or early in the fourth quarter of the production facility. But we obviously take over marketing and sales and the rights to the brand from the 1st of June and have a temporary service agreement with the current owner for manufacturing of the products until we have the opportunity to do the move and integration. So we expect it to be fully integrated, including the production by the end of the year.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much for listening in. I encourage you to go on our website, midsona.com, and read our recently published annual report, as well as follow us on LinkedIn for news and updates. Thank you very much and have a great day. We hereby close the conference.

Welcome to Midsona Q4 Report 2025 presentation. [Operator Instructions]

Now I will hand the conference over to the speakers, President and CEO, Henrik Hjalmarsson; and CFO, Max Bokander. Please go ahead.

Good morning, everybody, and welcome to this presentation of Midsona's Fourth Quarter and Full Year 2025 results. My name is Henrik Hjalmarsson, I am the President and CEO. And with me, I have Max Bokander, Group CFO. We'll spend the coming 25 minutes or so going through an overview of the fourth quarter as well as a summary of 2025 with a deep dive into some of the financials, after which time, there will be plenty of time for questions.

So with that, and just a brief overview of Midsona, for those of you who might be new to us. So we are a leading European healthy and organic food business, marketing and selling mainly plant-based vegetarian and in many cases, natural and organic products across 4 -- sorry, apologies, 3 divisions: Nordics; as well as Division North, mainly consisting of Germany then; and Division South, France and Spain, where Nordics is clearly the biggest with 64% of revenue; North Europe, 25%; and South Europe, 11%. We're headquartered in Malmö, Sweden, and we've been listed on the Stockholm Stock Exchange for more than 25 years.

First then, a summary of the fourth quarter. And let's start with the top left-hand box on the right-hand side, where we can see that net sales in the quarter grew modestly at 0.7% organically, however, slightly down in actual terms, driven by currency. This organic growth was driven very pleasingly with -- by our growth in our own consumer brands, which grew healthily at plus 5.9%. We saw that organic growth in our own consumer brands across all 3 divisions. And we achieved a total growth despite then a lingering negative impact on volumes from the fire in the Spanish operations that we saw earlier in the year.

The profitability grew with an increase by 1.3 percentage points in EBIT margin to 5%, corresponding to an EBIT growth of SEK 11 million to SEK 47 million. The gross margin in the quarter was slightly down, mainly driven by the timing of promotion costs and the customer rebates. But with a material, particularly overhead efficiency improvement, we then grew the total profitability of the business. We saw improved cash flows in the quarter, growing by SEK 43 million to SEK 141 million, leading to a net debt to adjusted EBITDA of 1.1, down from 1.6 at the same time last year.

If we summarize all of 2025, again, starting on the top left-hand box on the right-hand side, we saw modest organic sales decline in the full year. Positively, again, the -- our own consumer brands contributed positively with an organic growth of 1.4% in the year, a trend that we saw accelerated in the third and fourth quarter. However, negative impact with a bit weaker quarters earlier in the year as well as the impact of 2 discontinued licensed brands and the fire in Spain then led to a slight negative organic growth for the full year.

Profitability grew slightly by 0.3 percentage points to an EBIT margin of 3.7%, corresponding to an EBIT growth of SEK 5 million to SEK 133 million for the full year. Gross margin, again, slightly down for the full year, mainly driven by a negative sales mix as well as a partially negative production efficiency, particularly early in the year, but then compensated by improved overhead efficiency supporting then the EBIT margin growth.

Again, cash flows for the full year remained strong, SEK 87 million up to SEK 229 million, which means then that we leave the year with a healthy balance sheet with a 1.1x leverage as well as improved underlying business performance with the EBIT growth of SEK 5 million. And the Board then proposes a dividend, 10% above the dividend of last year at SEK 0.22 per share.

If we look a bit at the highlights for the fourth quarter by division, starting with the Nordics. In the Nordics, we saw an organic sales growth of 0.7%, which was clearly driven by our own consumer brands, which grew organically at 6.2% in the quarter. We saw a continued strong sales development of our own organic brands, which I'll come back to in a little bit. But also pleasingly in the fourth quarter, after a more challenging third quarter for the Health Food brands, we now saw them back in growth after the change of our business model from direct to central distribution. We saw a somewhat weaker gross margin in the quarter, driven by mix and promotional costs, however, mitigated then by strengthened cost efficiency to strengthen the EBIT margin.

If we look at Division North, ever so slight organic growth of 0.1%, but also in the case of Division North fueled then by the growth of our own consumer brands, which grew by 3.3%. However, our own business-to-business brands had a quite a material organic decline, but that's also a part of a plan to move to a more focused value-added HoReCa proposition with a stronger profitability profile, and that transition is ongoing. The gross margin weakened in Division North, where we saw then the biggest aspect of the timing of promotion cost, the customer rebate, which was despite an improved cost control, not fully offset.

Looking at Division South, we saw an organic sales decline of 3.1%, which was largely driven by the lower contract manufacturing volumes in Spain following the fire, as we have announced before. However, pleasingly, again, also for Division South, our own consumer brands grew by 6.4% organically with a particularly strong growth in the French grocery trade. We saw a materially improved gross margin, which was driven by improved efficiency as well as sales mix, and I'll come back to that a little bit later.

Looking then again -- or sorry, instead through the lens of the portfolio, starting with our organic products, where we saw an organic growth in the organic portfolio of 3.2%, which then pleasingly, again, driven by our own organic brands, which grew by 7.8% in the quarter, really showing that the marketing and innovation initiatives that we have taken in the organic portfolio is paying off in terms of stronger engagement with our customers and bigger uptake with our consumers. We saw a somewhat weaker growth on the contract manufacturing side, partially then impacted by the fire in Spain, and also, as I mentioned before, on our business-to-business brands in Germany.

If we look at the Health Foods segment, we're back in organic growth after a weaker third quarter. The new business model for one of our brands going from direct to central distribution in the Nordics is now fully implemented and contributing positively in the quarter. However, we have a negative impact on Health Foods through lower contract manufacturing sales as we work on optimizing our contract manufacturing proposition to improve profits.

And then lastly, looking at the Consumer Health products. We saw an organic sales decline of 6.8%. Some lingering negative impact from the discontinued distribution of a licensed brand, we saw a bigger impact from -- we've had over the year 2 discontinued licensed brands, and we saw a bigger impact in the third quarter. This has continually worn off in the fourth quarter. I think we expect that to be fully phased out during the first quarter. We also saw a weak start to the flu season, which impacts a quite broad part of the assortment we have, which are remedial products aimed at remedying flu or flu-like symptoms.

I thought I'd take the opportunity to share a couple of points around the development of products and brands for growth and how we work with that. Starting here on the left-hand side with Friggs, which is obviously one of the most important and largest brands in the group. Here, we have a very strong position, mainly in the Nordics, as a strong driver of the healthy snacking segment, where corn cakes is a very important part. A big part of that is to create continuous excitement in the category and also among our products, and doing that by revitalizing the offering to new and local taste preferences. And in conjunction with the fourth quarter, we launched a new range with paprika flavoring, which was really an exciting one and which came off to a strong start at the -- towards the end of the year.

The second example here in the middle is from our certified organic beauty range under the Urtekram beauty brand, where we are on a very exciting considerable growth journey internationally, leveraging strong positions on digital and e-commerce. Here we launched a new range called the Nordic Berry range, which leverages our strong Nordic heritage and the natural origin, and this was received very well by our partners around in Europe.

And the third one then, an example of how we've worked continuously with strengthening our organic assortment across the Nordics, where one of the things we've done is to focus our efforts. And as you can see, has had a good impact with a material improvement in the revenue per item in the fourth quarter. This not only enhances the impact on shelf and in-store, but also obviously, with a slightly narrower but more focused assortment with higher revenue per item drives the improved supply chain efficiency. So pleasing to see.

A few words on our gross margin development, starting with the Nordics where we saw a slight decline of the gross margin in the fourth quarter. So -- and that's despite the fact that we saw a healthy product mix and margin management continued as well as production efficiency that contributed positively. However, that was not sufficient to fully offset a somewhat more negative category mix and somewhat increased promotional cost.

In Division North, we saw a somewhat larger negative impact. This is despite the fact that sales mix continued to impact as did actually channel mix impacted positively with growth of our own consumer brands. However, the time -- in a year-over-year comparison, the timing of promotion cost and customer rebates impacts the margin development in the quarter negatively compared to the fourth quarter of 2024. Part of this negative development, pleasingly was offset by improvements in production efficiency, but not sufficient to grow the margin.

In the South, we saw the opposite development with a material strengthening of the gross margin with a positive sales mix impact and with strong growth in our own brands, but also materially improved production efficiency, particularly in France, but also in the remaining operations in Spain.

I take the opportunity to just share a few words in terms of an update on the restructuring program that we launched in conjunction with the third quarter report during the fourth quarter, which is then has the ambition of contributing to our margin target and continuing our profitability enhancement targeting a SEK 20 million run rate in annual savings. So I'm pleased to say that the program is on track and in line with ambitions. The union consultations were finalized in the fourth quarter. And the majority of the implementation work was also finalized during the end of the fourth quarter, spilling slightly into the start of the first quarter this year.

We still expect run rate savings of approximately SEK 20 million, and we still expect to be fully implemented by the end of the first quarter this year. However, we have been able to execute this with slightly lower costs than we originally assumed. And we think that the total onetime cost to achieve the program will remain less than SEK 10 million.

And lastly, before handing over to Max, a few words on our short-term priorities, obviously, making sure that we get full implementation and impact from the restructuring program continues to be a short-term priority for us to make sure we achieve that impact in full run rate by the end of the quarter. We have a good opportunity to leverage the growth momentum on our own consumer brands and to continue the focused product and marketing initiatives investing to fuel continued growth. And following the fire in the beginning of the third quarter in our Spanish operations and a good work with stabilizing the business by the local team, we are now in the process of setting the long-term business model and production structure for a profitable business recovery.

And with that, I will hand over to Max, who will take you through the details of the financials.

Thank you, Henrik. I will start with the financial summary for the quarter. The net sales declined by 2.9%, but this is fully explained by the negative impact from the currency. And excluding this effect, there was a small organic growth of 0.7%. The gross margin was negatively impacted by timing of customer discounts, but underlying the gross margin was stable. EBIT, however, improved with SEK 11 million, driven by improved efficiency throughout the full organization. The net financing costs continued to improve versus last year and this quarter with SEK 4 million, driven by the more favorable conditions in our new financing agreement. The net result landed on SEK 33 million and was negatively impacted by SEK 6 million of restructuring costs. The cash flow from operating activities improved with SEK 43 million, and the quarter ended with a leverage on 1.1x, which is an all-time low for Midsona.

Moving over to sales development for the quarter. As already mentioned, the net sales declined by 2.9% or in absolute, SEK 28 million, but the FX translation explains SEK 34 million. And the organic sales development was positive with SEK 6 million, and this despite the smaller operations in Spain following the fire.

Extra positive as we see it, our strategic and our own brands grew very strong during the quarter with 5.9%. The business-to-business branded business in Germany is still under transition to focus on profit over volumes and continued to decline as a result. However, with positive effects on margin. Our private label business continued to show good growth for North Europe, but the lower sales in Spain following the fire led to an organic decline for the group as a total. The license business declined with 16.2%, mainly driven by one distribution agreement that was discontinued from January 2025.

Now explaining the quarterly EBIT development compared to last year. The organic sales were, in this case, labeled as volume resulted in SEK 2 million higher contribution, but this was offset by a slightly lower gross margin, driven by the timing of customer discounts. Improved efficiency throughout the full organization resulted in SEK 30 million lower sales and admin expenses. And the FX translation effect and revaluation effect on operating assets and liabilities had a negative SEK 1 million effect. And as a summary, the EBIT landed on SEK 47 million with a 5% margin. We have higher ambitions than this. But as a small note and if we compare with our historical performance, we need to go back to quarter 1 2021 to find a quarter with a higher absolute EBIT.

Moving over to the cash flow. As you can see from the graph to the left, the cash flow was positively released -- impacted by release of working capital, mainly driven by inventory that landed on a 10% lower level than same time last year. This despite us improving service level throughout the year. And as a summary, the cash flow landed on SEK 141 million.

Finally, moving over to our cash and debt situation. We ended the quarter with SEK 781 million in available cash, which represents 22% of our last 12-month sales. And as already mentioned, the net debt in relation to EBITDA landed on 1.1x, well within our financial target, and as already mentioned, an all-time low for Midsona.

With this, I hand back to you, Henrik.

Thank you very much, Max. So with that, we open up for questions. So I hand back to the operator, please.

[Operator Instructions] The next question comes from Alice Beer from ABG Sundal Collier.

Just starting out, could you help us break down the EBIT growth in terms of these improved efficiencies? You talked about the restructuring program and the sales mix and centralized distribution and B2B sales, what are the main drivers? And are there any temporary improvements that should not be extrapolated?

So I think the key drivers that you see, you pretty much summarized it actually. So there is some positive effect -- some early positive effect partially from parts of restructuring program. However, that will materially increase going into this year. There is, however, a fairly strong positive impact in the Nordics from the shift from direct to central distribution, which has allowed us to improve the cost efficiency on the sales side quite materially.

And then I think also, you see the result of a continued focused effort on improving the general efficiency throughout the organization that we worked a lot on across the third and fourth quarter. There are no material onetime effects in the -- in that sort of ongoing cost structure. But obviously, saying that there are always some swings up and down in seasonality impact of the underlying cost.

Okay. Great. And then for the full year, you've mentioned high raw material prices that have not yet been passed on. And as we know, Sweden will lower its VAT on food in April, and supermarkets will have a lot of pressure to decrease prices. Are you worried about cost inflation in conjunction with the supermarkets hesitate to accept higher prices?

Not -- I will answer that in 3 ways. So one, obviously -- in general, we work towards a consolidated customer landscape, which is obviously where we invest a lot of time and energy in building strong demand among consumers. But -- and in that sense, price is always a topic that we spend a lot of time and energy on.

I don't have a general concern, larger than normally on that front, I would say, with the exception of some specific raw materials, obviously, with the heterogeneous portfolio of our style, there are always pockets of products and raw materials that see temporary surges due to -- can be local, for example, local weather or climate phenomena. So there are some specific pockets but not a -- in general, a bigger concern than normal.

Okay. Great. And then you mentioned further clarifying your priorities and actions. Can we expect updated targets in the near term?

We're not expecting to update our financial targets in the near term. However, quite naturally, for me now being in role a bit more than 6 months as CEO, taking my view on the strategy that we set in place a few years ago and being clear about how we can drive value from that is quite natural. And so that's something that we are working on in the organization.

Okay. And you also talked about opportunities for structural growth. Can you tell us anything about capital allocation or what your priorities are in terms of possible M&A?

I think the take on that from -- so far is to say that, obviously, Midsona, as it looks today, is the result of a material number of acquisitions over the past 20 years. Our focus over the past couple of years and at the moment is to make sure that we maintain a stronger organic momentum and that we can maintain that organic momentum. However, I think it's pleasing to see that we are gradually building both the stability of the organic platform as well as the headroom in the balance sheet to also go in on -- in a potential inorganic journey. But there are no details on that to share at this point.

Okay. Got it. And what would you say are your most important initiatives for organic growth in 2026?

Continuing to -- that there are continuing -- it's effectively to continue some of the positive momentum that we've seen here in Q3 and Q4. So the -- leveraging the very strong position and -- in conjunction with the material consumer opportunities that we see on healthy snacking, particularly with the Friggs brand, and also continuing the very positive journey that we see on our organic brands. I shared some examples of that development across the Nordics. I also mentioned that we have a very positive development on the grocery trade side in France with one of our organic brands. So those will be the key priorities, and that's where we will focus our investments for growth as well.

All right. And just one final question for me then. Licensed brands in the Nordics grew minus 19% in the quarter. When can we expect the impact to become more neutral as comps get lighter?

So as Max also mentioned, the one remaining material license brand loss that has impacted us negatively during the year, one part of that was phased out in early fourth quarter. The second part of that is phased out in early now in the first quarter. So that will help that materially.

And secondly, if we expect a -- how should I say, somewhat phased but normal flu season, we would expect part of the slow start to that flu season to recover into the first and second quarters. So that would also help that. But we will see -- start to see a recovery of that here in the first quarter, if nothing else, thanks to the reduced impact of the lost distributor brands.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

With that, thank you very much for listening in, and I wish you all a great rest of the day and a fantastic weekend when you get there. Thank you very much.

Welcome to the Midsona Q3 Report 2025 presentation. [Operator Instructions]

Now I will hand the conference over to the speakers. President and CEO, Henrik Hjalmarsson; and CFO, Max Bokander. Please go ahead.

Good morning, everybody, and welcome to this presentation of Midsona's Third Quarter 2025 Results. My name is Henrik Hjalmarsson. I'm the President and CEO. And with me, I have Max Bokander, CFO. We will spend the coming 20 minutes or so going through an overview of the third quarter as well as by Max, a bit more details on the financials, after which time, there will be plenty of time for questions.

But before we go into this, just a few words on Midsona for those of you who might be new to us. We are one of the European leaders within the space of food. It's good for you and good for the world, with a mission to provide healthy food for people and planet. Most of our products are plant-based and vegetarian and many are natural and organic.

We have organized in 3 divisions, with Nordics being the largest with almost 2/3 of revenues covering the 4 big Nordic countries, Sweden, Denmark, Finland and Norway. Second biggest is Division North, which mainly covers Germany. And lastly then we also have operations in France and Spain in Division South with 11% of the revenues. We're headquartered in Malmö, Sweden and listed on the Stockholm Stock Exchange since 1999.

So with that, jumping into the highlights of the third quarter 2025, where the overarching story is a good step in the right direction. As you can see in the graphs on the right-hand side, looking at the top right-hand pink box, we saw a good margin growth in the quarter by 1.5 percentage points to 5%. And obviously, then also a good strengthening of the EBIT by SEK 13 million to SEK 45 million. This was driven by strength in gross margin, improved efficiency and good cost control.

The gross margin improvement by 0.7 percentage points came from better mix, both on a category level and product level for the group, but also continued pricing activities. And then EBIT growth was then further supported by continued good overhead cost control across all the divisions.

In net sales, however, we saw a slight decline, but as I'll come back to later, that was impacted by the fire in Castellcir in Spain, which we previously announced. We saw a decline of 0.4 percentage points organically. But very pleasingly, our own brands were in growth supported very much by our own organic brands, which I'll come back to.

And it's also pleasing to see that the sales trajectory really illustrates that the commercial initiatives we're taking or paying off with both customers and consumers. As you can see on the bottom right-hand part, the cash flow was stable in the quarter, which means that the leverage net debt to adjusted EBITDA was improved by 0.4x to 1.6x, which means we exit the quarter with a stable financial position.

Looking instead the first 9 months. So despite the -- a good step in the right direction in quarter 3, the first 9 months is a bit more gloomy following the performance in Q1 and Q2. So we've seen a slight net sales decline for the first 9 months positively contributed by our own organic brands and private label, however, negatively impacted by the change to a business model of one of our Health Foods brands from direct distribution to central distribution, which we also talked about in our Q2 report, as well as 2 discontinued license brands that have impacted us.

The EBIT margin is down for the first 9 months by 0.1 percentage points to 3.2%, which is obviously disappointing. So the gross margin for the first 9 months has been impacted negatively by sales mix and efficiency, and we haven't been able to fully compensate that with cost reductions to support EBIT margin growth. Cash flow, however, robust, almost doubling year-to-date and again leaves us in a stable financial position.

Looking a bit at the highlights of the 3 divisions, starting with Division Nordic and focusing then on the third quarter. On the sales development side, we saw a fairly weak organic sales development. However, very much attributed to 2 specific drivers, where one is the discontinuation of the 2 license brands that I mentioned before, and that's an impact that will gradually phase out during the fourth quarter, but also remaining effect from the change of the business model for the Health Foods brands that we mentioned before.

However, very pleasingly, we see a healthy growth of our own organic brands of 9% organic growth in the quarter, really showing that the product and brand activities that we're putting in place and the plans for executing are having good effect with consumers and customers. We also saw strength in gross margin in the quarter then driven mainly by price mix.

Looking at Division North, we saw a material improvement of results driven by both healthy sales growth, but also better efficiency. So own brands grew by 7.9% organically, with strengthened positions on both organic food and organic beauty, very pleasingly to see. We also saw a healthy growth on private label with new business won that's continuously impacted.

And on Division South, obviously, sales impacted by the fire in Castellcir in Spain, but own brands are in good organic growth at 8.5%, which is also, again, very pleasing to see. Production efficiency obviously impacted negatively by the fire, but compensated by good mix management. And whilst we see an improvement of the EBIT margin, it's obviously still at a very disappointing level, and there are several actions ongoing to improve with rapid effect.

Looking instead then at the portfolio perspective, in the third quarter, starting with our organic products. Overarching, we saw a good organic growth of 7.8%. And very pleasingly, then if you look specifically on our own brand portfolio on organic, we saw an even better growth trajectory there with 8.2% organic growth, again showing that our actions to develop the assortment and brands is paying off with both consumers and customers. We also saw a continued good growth for private label that is also contributing positively.

On Health Foods, however, it was a little bit linear picture with an organic decline of 7.5%. And to come back to that, that is mainly impacted by the change in business model for one of our brands going from direct to central distribution, that is in the shift over a transformation period then impacting the top line sales negatively. But we've also stopped a number of unprofitable private table contracts on the Health Foods side, which is also then impacting the total growth negatively.

On the Consumer Health side, we saw an organic decline of 12.5%, but referring back to the 2 discontinued licensed brands, that is the main impact that is impacting that. Our own brands has a slightly more positive development, although they are also impacted by sales timing with higher sales earlier in the year.

Looking at the gross margin development, I think it's first very pleasing to note that we have gross margin growth in all 3 divisions, albeit ever so slight in Division South. But if we start by look at the Nordics, the overall story here is that we see good product mix and good price management that's supporting the margin growth, despite a slight negative category mix and also a slight negative efficiency. We also see that we've been continuously good at optimizing the private label exposure mix, which is also impacting positively in the quarter.

In North, obviously, with 2 percentage points strengthening of the gross margin and material strengthening with a positive sales mix impact where we see a strong growth on our own consumer brands, and also in the shift from more unprofitable B2B sales to better profitability contract manufacturing or as we also call them private label contracts, which is also impacting positively.

We also see that the efforts that we've previously mentioned in terms of increasing capacity has really paid off with both increased output but also very pleasingly improved efficiency, which is also supporting the gross margin growth.

In South, a slight growth of 0.1 percentage points. Then obviously, as I mentioned before, negatively impacted by the fire in Castellcir in Spain, which is temporarily impacting negatively. However, then compensate the sales mix, both from a category perspective and also from a product perspective.

I also want to take the opportunity to just say a few words about the fire in the Castellcir plant in Spain that we mentioned already in conjunction with Q2 report. As we mentioned then, we saw a fire early morning on July 7 erupt in the plant, thanks to swift action locally. I'm very pleased to note that the fire was fairly contained and most importantly, that no one was hurt.

The fire, as we communicated before, directly that impacted production corresponding to roughly SEK 75 million of sales, which is also then partially visible in our top line for the quarter, obviously. The plant is covered by property damage and business interruption insurance, and we have since early July, worked closely with the insurance company to ensure we get a payment of insurance settlement as soon as possible.

I'm very impressed with how well the Spanish Midsona team managed to get the business up and running again, which I think is a big part of the reason why we've also been able to reasonably protect the sales as well as gross margin in the quarter. But sales, marketing and administration were up and running the same day. The non-impacted part of the plants were up and running within almost hours, more than days.

We've been able to serve customers with available products, both contract manufactured products as well as licensed brands, but we also achieved in-house production of some of the lost capacity in the remaining parts of the facility within a couple of weeks. And during the quarter, also achieved incremental capacity of some of the products with contract manufacturers.

And we're now basically working on short term, adapting the cost base to the new available capacity, but also very importantly, to set the long-term plan for the brand assortment and supply chain to support a long-term profitable Spanish business.

I also wanted to take the opportunity to briefly comment the news yesterday that we're launching a restructuring program to accelerate margin improvement. So whilst it's obviously pleasing to note a margin improvement in the third quarter, our long-term ambitions for our margins is considerably higher than what we're delivering at the moment.

The key driver of that arguably will be a continued profitable growth and strength in gross margin but an optimized cost structure is also going to be an important element in achieving our margin ambitions. Therefore, we've launched the restructuring program to accelerate margin improvement where we're targeting SEK 20 million in run rate savings.

We have -- we'll start consultations shortly with the unions, obviously, and working on the details together with them, and we have the ambition to set the final details and get full run rate impact by the first quarter of next year. And we're expecting roughly SEK 15 million of execution costs to achieve these savings.

So summarizing then, our focus going forward briefly, obviously, one priority will be to make sure we get a successful implementation of the restructuring program to support margin growth. We're also going to leverage the growth momentum, the good growth momentum we have on our organic brands to support the margin improvement but also as a platform for growth in health foods and consumer health.

And thirdly, obviously, continuously focus on achieving a stable operation in Spain. Again, I want to iterate how I'm pressed I am with the local team and how quickly they managed to get the business up and running, but we need to continue that work, but also execute action plan for rapid profit improvement in Division South as a whole.

So with that, I'm going to hand over to Max, who's going to take you through more of the details on the financials. Max, please.

Thank you, Henrik. I will start with the financial summary for the quarter. The net sales declined by 2.6% with a negative impact from currency and the fire in Spain. The gross margin, however, improved from favorable mix, price management and improved efficiency in production and warehouse. The EBIT improved with SEK 30 million from improved gross margin and cost control. .

The net financing costs continues to improve versus last year. This quarter with SEK 6 million, driven by the more favorable conditions in our new earlier communicated financing agreement.

The net result, however, landed on minus SEK 50 million and was negatively impacted by the write-offs related to the fire in Spain. The items affecting comparability landed on minus SEK 45 million, whereof SEK 49 million were related to write-offs, SEK 7 million-plus from insurance payments that we have received and other costs landed on were included with SEK 3 million.

The cash flow from operating activities improved with SEK 6 million versus last year and the quarter ended with a leverage on 1.6x.

Moving over to the net sales development for the quarter. As already mentioned, the net sales declined in absolute terms, SEK 24 million, but translation effect explains SEK 21 million of it, and organic sales decline was modest SEK 3 million. However, as communicated earlier, the fire had impacted our production capacity and approximately SEK 75 million in annual sales value indicating a theoretical SEK 19 million quarterly impact. With that in mind, the sales could be seen as a growth.

For our own consumer brands on the right side here, you see the organic growth was 0.7%, with a strong development for several of our organic brands that in total grew 8.2%. For our own business-to-business brand in North Europe to focus on profit before volumes continue and the sales declined with 14.6% or 14.7%.

Our private label business continued to show strong growth this quarter with 10.5% and North Europe continues to be the driver, and this quarter, they grew with 25.1% while South Europe now show 35% lower sales following the reduced production capacity after the fire in Spain. The license business declined with 16.2%, mainly driven by discontinued distribution agreements earlier communicated on the Nordic market.

Now explaining the EBIT development, the organic sales decline, or in this case labeled as volume, resulted in SEK 1 million lower contribution but this was more than offset by the improved gross margin that resulted in SEK 6 million higher contribution.

The tight cost control during the quarter resulted in SEK 6 million lower sales and admin expenses and furthermore, the FX effect from translation and revaluation of operating liabilities and receivables was SEK 2 million favorable versus last year. And as a summary, the EBIT improved with SEK 13 million or 40% versus last year.

Moving over to the quarterly cash flow. As you can see in the graph on the left side, the cash flow was seasonally negatively impacted by working capital, but less so than last year. And as a summary, the cash flow landed on SEK 48 million, an improvement with SEK 6 million versus last year.

Moving over to my final slide and our cash and debt situation. We ended the quarter with SEK 656 million in available cash, which represents 18% of the net -- last 12 months net sales. And as already mentioned, the net debt in relation to EBITDA landed on 1.6x, well within our financial targets.

And with that, I hand back to you for some closing comments, Henrik.

So in summary, the third quarter was a step in the right direction with a considerably strengthened EBIT margin to 5% and emerging positive signs, most notably with strong growth on our own organic brands showing that the actions we're taking and the plans we're setting for our brands and our products is paying off with consumers and customers.

And with that, I'll hand back to the operator for questions.

[Operator Instructions] The next question comes from Alice Beer from ABG Sundal Collier.

Congratulations on the good quarter. Just firstly, on the restructuring program, when do you think the timing will occur for the implementation costs? Will that all be taken in Q1 '26? And will that be included as NRIs?

So we think that the majority of the costs will be taken in Q4 and potentially some in Q1. We think that the majority of the cost will be items affecting comparability, but not necessarily all of it.

All right. Great. And other than reducing admin costs, what are your plans for reaching the margin targets? Because currently, you're a bit far off. Do you think that this will be enough if demand improves?

So this restructuring program in itself is not sufficient to get us to the margin targets, obviously. In addition to that, there are 2 key drivers. I would say the most important one is continued profitable growth of the assortment. And what I mean by that is that we see further opportunity to strengthen the margin of our portfolio, not the least through mix. But very importantly, then to see continued strong growth of our own brands, which has been a positive driver in that regard. And that's going to be the key driver.

But secondly, we're also continuously reviewing our production and logistics footprint, and looking for opportunities to further improve our efficiencies over a strategic horizon, I would also expect there to be some potential impact from that to support us towards that margin target.

Okay. Great. And then maybe more of a detailed question, but you commented in the report on higher raw material prices and some shortages, how much should this affect the gross margin? And will you be able to adjust prices in Q4 to offset this?

Yes, the exact impact of that in the financials is not immediately available, so I can't really answer that. But yes, the -- continuously our plan and structure is always to gradually adjust prices to that unless there is some sort of specific one-off effect, and that's also the case here. So that will gradually taken out towards customers.

Okay. Great. And then on the Nordics, you said that previously terminated distribution agreements for 2 licensed brands also had an impact this quarter, but this effect will be phased out in the fourth quarter. Could you elaborate on that and the effect in Q4?

The exact impact in Q4 is a little bit difficult because it depends a little bit on sales timing as one thing is sales out of store, another one is our sales into store. But what we expect is that by mid-Q1, it will be fully phased out. And that will start occurring already from the start of Q4 and gradually phase out by then.

Great. And then on the market outlook, you commented on some positive signs in the market and some high interest in your products. Could you elaborate on that and your outlook for 2026?

So we're starting to see -- and we try to be quite cautious in our communication, but we are starting to see slightly more positive overall consumer signs in terms of our assortment, not material in any sense yet, but at least painting a slightly more positive picture on the horizon.

In addition to that, we're also seeing more micro trends related to our products, which are very much focused on health and well-being, such as, for example, clean eating, just to take one example, in some of our geographies that has also impacted the interest in our products positively. So on balance, the outlook is still uncertain, but at least we can say that it's looking a little bit more positive than it did if we look back a couple of quarters.

Perfect. That sounds good. And just a final question. Are you planning on investing in rebuilding the facility fully in Spain? Or did you move the production capacity that was lost in the fire to existing factories? What I'm really looking for here is whether there will be some CapEx in 2026 to rebuild Spain?

We're actually not in a position to give a sort of a detailed answer to that yet. We are busy working on -- well, first of all, we're busy making sure that the operation we have currently is a profitable and robust business. So that's the #1 priority. And the second priority is actually to set, as I also think I mentioned, to set that long-term plan. And when we set that long-term plan, we will also set the right production footprint to support that. But a key priority in that will be to set a long-term plan, which creates good long-term profits and also achieves the right balance of return on capital that we invest to achieve that plan.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay. Thank you very much for your interest and for listening in to the Q3 report. We close this conference there. Thank you very much.