Swedencare Stock

Welcome to the presentation of Swedencare's half year report, led by our CEO, Hakan Lagerberg, and CFO, Jenny Graflind. And we are pleased to have NaturVet's CEO, Geoff Granger, joining us with the presentation during today's webinar. And as usual, we will have a Q&A after the presentation. So please raise your hand if you have any questions. Over to you, Jenny and Hakan.

Thank you, Emma. Good morning, and welcome to the Q2 presentation of Swedencare. Jenny and I are in Malmö, Sweden, a bit cloudy today, and Geoff is out in California joining us later. Q2, we had a solid quarter that showed resilient growth and strong cash generation despite a volatile market. Europe and Production segments delivered standout organic growth, while North America was disappointing, but is expected to, as previously communicated, strengthen in H2 and as delayed launches, online and big box initiatives scale up.

Organic growth was 7% under our goal and as we communicated, what we expected, but still better than market. Operational EBITDA, same as ordinary EBITDA, was SEK 129.4 million with a 19.3% margin and operating cash flow improved to SEK 78 million. Looking at our 3 segments, the growth profile is clearly mixed. Europe and production were really strong with organic growth of 19% and 25%, respectively, while North America was down 3% organically due mainly to delayed FDMC or big box launch deliveries and temporary effects in the U.S. veterinary channel. However, the North American segment would have been around middle single digit without this, and that is still not where we should be. So improvements to come.

Export markets delivered their strongest quarter to date with China rebounding sharply. End of quarter, I visited China, and we are planning to widen the production offering of ProDen PlaqueOff and are also looking at the opportunities to launch more brands there. The interest is high, but the regulatory framework for imports is complicated, and we are now in discussions with potential manufacturing partners to facilitate new brand launches. ProDen PlaqueOff had another exceptional quarter and delivered more than 30% growth.

Pharma delivers as expected, high growth numbers, both in manufacturing and in development, and the activity level is high for the years to come. Strategically, the quarter also moved the business forward with new offerings, product offerings under many of our brands and cooperations and product launches. Interzoo was also an important event, of course, it's every second year, the biggest trade show in the world. So new market is opening up for ProDen PlaqueOff. Of course, new smaller markets since we're already present in plus 60 countries, but really nice to see new opportunities there. And for other group brands, some big opportunities are in discussions with the relevant distributors.

We also had the first Capital Markets Day and strengthened the visibility around the group's priorities in the coming years, and we are grateful that the event was fully attended and lots of interesting discussions with participants. We had a new Board elected at the AGM, including Thomas Eklund as new Chairman, providing continuity with refreshed governance.

The message is that the group is still growing organically above market, 9% first half year. Cash generation is improving, and we have been working hard to prepare for a better and stronger second half year. Over to you, Jenny.

Yes, some financial highlights. So revenue amounted to SEK 670 million for the quarter. This represents 4% growth. 7% was organic growth, and we had a negative 3% of currency impact. It's the first quarter since 2019, where we don't have any acquired growth because the most recent acquisition, Summit Vet has been part of the group now since Q2 last year, so it's included in the organic growth. The currency impact is coming from the dollar, euro and pound, which has all weakened against the crown compared to the second quarter of this year. As Hakan said, we did expect another quarter with double-digit growth, and this is also what we communicated on our pre-close call on the June 17. And that was based on the information we had at that point.

However, some unexpected things happened in the last month and mainly in the second half of that month, including a delayed order from the new big box customers. And that resulted in that we came in at 7%, and that's the same level as we were in Q2 last year. As Hakan mentioned, the year-to-date organic growth is 9%. Our reported gross margin is 61%. There is no adjustments this quarter between operating and reported gross margin or EBITDA. This is the strongest gross margin we have had since 2020. It came in stronger than expected, driven by continued stronger growth in Europe, where margins are higher compared to the other segments as well as some inventory buildup. And of course, Summit Vet also contributed with a record quarter and also strong margins.

The external costs have increased compared to last quarter. We continue to have strong growth on Amazon, both in the U.S. and in Europe, and that contributed to higher sales-related costs. In addition to that, it's been an enhanced marketing initiatives this quarter, mainly online with Prime Day, for example, which occurred in June this year. Last year, it was in July. But also we have had product launches and intensified efforts to grow the NaturVet Amazon account and also win back some bestseller badges on Amazon. Personnel cost is stable. However, it did include SEK 3 million of severance costs for the quarter, mainly for the final step of the reorganization that we had at NaturVet.

Operational EBITDA, same as the reported EBITDA as there's no adjustments, amounted to SEK 129 million for the quarter. This is an increase of 5% compared to last year and a margin of 19.3%. Again, this is below the expectations, and that's mainly impacted by the lower sales. However, it's a small increase compared to last year when the margin was 19.0%. And net debt to EBITDA has increased to 3.1. This increase is due to the expected earn-out payment that we are planning for Summit Vet, which is included in the calculation from this quarter because this payment is now due within the next 12 months. It also is impacted by the dividend payout that we did this quarter of SEK 44 million.

Our cash conversion increased to 60% for the quarter. It's mainly higher inventory value at the close, which impacted the operating cash flow for the quarter. During the quarter, we have also started the Vetio South expansion. Hence, CapEx was 4% of sales for the quarter and year-to-date, it still remains at 3%. Regarding our loans, we repaid SEK 5 million on our external loans this quarter. And in total, we have paid -- repaid SEK 55 million year-to-date. Rolling 4 quarters. On the left, you can see the rolling 12 months trend for which you can see revenues up slightly, but impacted by the negative currency impact and also an improvement of the reporting EBITDA. On the right-hand side, you can see the trend of the Q2. So you can see that there's no change between the reported and operating EBITDA this quarter.

Turning to North America. This remains the group's largest segment, representing 55% of total net revenue and had a minus 3% organic growth. The key point is that the decline is not a broad loss of competitiveness. We knew that North America would be our weakest segment this quarter. In May, we noted basically for the first time in many months, a softer consumer demand. It was both in pet retail and online affecting all brands. However, June bounced back nicely. And even though the turmoil in the Middle East is back and gas prices rising, we have not seen any new weakness in early July. So hopefully, May was a bump in the road and not coming back.

The major factor why we came in, minus territory was, as we said, the private label launch delivery to a new big box customer was delayed because of substantially -- substantial quality controls implemented by the customer, but performed by a third party just before ship out. Production was approved and by the end of the quarter, but the shipment couldn't move out in current quarter. Second, the merger of the 2 largest U.S. veterinary distributors led to lower inventory levels during the discovery process. We knew about that, but we still had and expected some bigger POs than was delivered in the quarter. Hopefully, that process will end soon.

As said, we are expecting a stronger second half year and when it comes to both sales growth and profitability for North America. There are important positives also. ProDen PlaqueOff remained very strong even with a weaker May also for ProDen. New private label veterinary delivery started to leading partners, albeit with smaller shipments than expected. These are expected to continue to grow month by month going forward. The NaturVet sales reorganization was completed and Amazon sales badges have been restored for a couple of NaturVet products and also Pet MD took back some lost badges.

This has been a very hard work for our online team in the U.S. And from now on, we should be able to focus on more cost-efficient and growth-oriented marketing programs online, primarily on Amazon, where we have worked hard to claw back market share. So the interpretation is that Q2 was a weak North American quarter, but the underlying channel work is in place for a stronger second half, especially online. All the new big box partners, they continue -- the ones we started last year, continue to grow, and we take market share from others and veterinary partnerships, together with a bounce back in the traditional pet retail with a partly new sales team at NaturVet.

Europe was one of the clear strengths in the quarter, as said, 90% (sic) [ 19% ] organic growth, and the region now represents 25% of group net external revenue and, of course, handles more than 90% of the group's internal manufacturing. The growth was broad-based. The majority of companies in the European segment delivered double-digit growth. Dental was the fastest-growing product group, fueled by Amazon mainly, while export sales to distributor market also contributed strongly. China was an important highlight, as said, sales during the quarter exceeded last year's full year level. Operationally, this was also a high activity quarter. NaturVet by Swedencare was launched in Europe with online just started and deliveries to pet retailers will start in Q3. Worth noting is that we are very happy to announce that the leading pet retailer in the U.K. will be launching the full line in Q3.

The Amazon transition was completed across all European markets, and that has also had an effect on our profitability with the buildup of this operation. And going forward, we expect it to contribute at the same level as the group. Veterinary brands continue expanding our present and into new markets. Looking at the different regions, U.K., Italy and Nordics and export markets were the champions this quarter. The main takeaway for Europe is momentum. Europe is combining strong demand, channel execution, digital expansion and pharma growth with Summit Vet. And with Summit Vet, we are also expecting second half year to be able to launch soft chews with pharma products. And that will be completely unique to the market. So we're expecting a nice demand for that. And also, Europe will continue to lead the group's organic growth profile going forward.

The Production segment delivered the highest organic growth in Q2, 25%, and the segment accounted for 20% of group net revenue. Growth was mainly driven by contract manufacturing in Europe and strong pharma manufacturing and development in Vetio North. This performance is particularly impressive because demand in dermatology remains softer than expected. In other words, the segment is growing strongly despite some weakness in one major area. As said, the demand picture is strongest in the EU and North America pharma, supported by both existing customers and new customer inquiries. That is why we are investing in additional capacity and organization. The pipeline also supports the outlook with coming quarters and years, new go-lives are expected to contribute to the ramp-up. Lastly, the AniVatio-Vetio U.K. partnership is another example of how the production platform is becoming more strategically relevant. The takeaway is that production is moving from a mere support function to a growth engine and could also lead to new branded partnership, providing a strong foundation for the coming years. Over to you, Geoff.

There we go. Sorry about that. All right. You can hear me -- go to the next slide. Perfect. All right. So evolving in a hypercompetitive space. Good morning. I'm Geoff Granger, CEO of NaturVet. I've segmented today's overview into 3 sections. First, I'll share an overview of our key accomplishments over the past year. Second, I'll provide an overview of our key learnings from the latest U.S. pet supplements market and category insights. And lastly, I'll walk you through how we are actively integrating these key learnings into our go-forward strategic approach.

Go to the next slide. That all starts with culture. So starting with our key accomplishments over the last 12 months. Of course, it all starts with culture. Our core strategic framework is comprised of 4 pillars: culture, revenue growth, EBITDA growth and cash flow discipline. But it's no accident that we lead with culture as we know that unless we have a talented and engaged team, we'll never achieve our financial aspirations. So Swedencare conducted a global employee survey the month before I started back in middle of '23. And the results for those survey happened to come through the week -- my first week, and I was able to review it.

And the results at that point were not quite what we want them to be. They were at a 33 employee Net Promoter Score compared to total Swedencare at about 41 -- we quickly identified the biggest opportunities that came out of the survey, and we implemented new standards and processes aimed at addressing these opportunities over the following year. And in early 2025, a new survey was conducted and our employee Net Promoter Score improved by 20 points to a 53 from a 33 to 53 with anything 50 or above, especially in a manufacturing environment considered to be excellent. And our current employee Net Promoter Score ambition is now 70, which is considered to be world-class. So that's our aim. Additionally, over the last year, we've significantly improved our executive leadership.

About a year ago, we hired a new Chief Operations Officer with 25-plus years of experience across the manufacturing, aerospace and industrial sectors. Erik Thomas is our first operations lead, who is Lean Six Sigma certified. -- key efficiency certification, bringing with him years of proven expertise driving efficiency through systematic process improvements and waste reduction. And in March of this year, just a few months back, we recruited Kristy Murphy, our new Chief Revenue Officer, with 30-plus years of pet industry expertise across sales and marketing. So she leads all things sales and marketing for us. Kristy extensive leadership experience across large and midsized and start-up organizations, specifically in the pet space. And she's -- what's really exciting is she's built enduring pet retailer partnerships, relationships over the last 30-plus years, which we will, of course, leverage.

Go to the next slide. Next, we needed to make some significant pivots to position the NaturVet brand for meaningful and sustained future growth. About a year ago, we launched a completely refreshed NaturVet brand, all new packaging informed by exhaustive consumer insights and key retailer input. And we did this in around 6 months, something that's really traditionally a 12- to 18-month undertaking. And the rebrand really was table stakes for not only maintaining our brand in legacy accounts, but it was a must for expanding into new channels of retailers. And on that note, we significantly expanded the NaturVet distribution in the back half of last year.

We launched Natur-Vet Supplements in the #1 U.S. pet retailer, PetSmart, approximately 1,500 locations. We had some other categories in NaturVet -- excuse me, PetSmart but we never had core supplements, and we do now and continue to expand. We expanded -- we expanded into the #1 U.S. pharmacy chain, CVS, in approximately 1,100 stores. And we introduced our brand in the #1 overall U.S. retailer, Walmart, in approximately 1,700-plus locations. And starting around that same time in Q3 of last year, we launched really our first ever 360-degree NaturVet marketing campaign, supported by celebrity influencer and veterinarian endorsements and activating across social, digital and influencer media. Up to that point, we really did not have a marketing organization. We are not actively marketing. So you really could say within the past year is the first time we've truly marketed the brand.

If you go to the next slide. And lastly, within key accomplishments, so through the implementation of our first fully integrated ERP system in Q4 of last year and our recent completion of SQF facility certification, we're ensuring that our operation is efficient, competitive and prepared to support increased scale. The implementation of Acumatica, our ERP system last October, it's going to increase our efficiency. It's going to reduce costs, and it's going to enable us to make real-time data-driven decisions and have visibility we had not had up to that point. And our recent SQF certification, Safe Quality Food is allowing facility certifications, allowing us to expand into a major club retailer, which Hakan had alluded to a number of times, which is happening this month with a private label program. And that sets us up for further expanded market access across both private label and of course, NaturVet brand as well.

So go to the next slide. So we did a lot over the last 12 months. However, while we've been making significant strides to drive meaningful and sustained growth in the NaturVet brand, the U.S. Pet Supplements category has become increasingly competitive and fragmented. And as we look to evolve our approach, we're pivoting our strategic direction to address the biggest opportunities that we've identified through the latest insights. Total category came in shy of $3 billion last year and is forecasted to grow around 6% to 8% over the next couple of years. This is a category that was up double digits in '24 and '25. It's still up, but it's tightening, and there's a lot of competition. And I know we alluded earlier just a hypercompetitive category environment. So a lot of work to do. E-commerce remains the dominant channel with over 80% of total market volume with Amazon alone, about 70% of that total channel. The food, drug, mass, club channel is driving the highest year-over-year growth rate, approaching over -- approaching 20% growth with Walmart growing even faster and approaching around 50% of the total channel share.

The Pet Specialty channel, over time, is the most mature channel. And over time, it's generally flat to down versus prior year with a lot of brand expansion and a finite amount of shelf space within the brick-and-mortar space. The brands that are growing are focusing marketing spend on fewer SKUs. -- higher conversion content and leveraging Amazon as a primary marketing channel, which is kind of a consistent theme. I'll touch on it in a few times. The consumer is looking for new products that mirror human trends, the cat consumer specifically -- and cat is disproportionately growing versus dog -- much smaller volume, but the growth rate is higher. Cat consumer is looking for an expanded assortment of cat-specific solutions. And it's imperative that legacy products are being regularly updated to address consumer demand for key factors like trending ingredients, higher active levels, natural preservatives and high palatability. So while the innovation is often the fun and exciting part of it, the core assortment is where the meat of the volume is, right? So we got to continue to make that part of the assortment relevant.

So lots of learnings. So what do we do about it? So if we go to the next slide, let's start with the e-commerce channel. We're going to specifically focus on what we're doing around Amazon. Amazon is the biggest portion of our business. So it's essential that we're maximizing the platform as we continue our push for meaningful and sustained growth. We transitioned the management of our Amazon business to PetMD about a year ago, a U.S.-based Swedencare subsidiary with a lot of proven success scaling brands on Amazon. They're great partners.

However, as a result of our distribution expansion, bringing in folks that weren't quite abiding by our map, we got them under control now, but distribution expansion, and map pricing change at the beginning of this year and rogue seller proliferation, we did experience a significant decline in MAP compliance across the market, which did directly impact Amazon performance. Additionally, the rebranding and the repackaging push resulted in temporary inconsistent site experience. Resulting in a combination of old and new packaging. So some growing pains coming from the big changes that we made. But over the last quarter, we've put a number of processes in place to get our Amazon business back on track through renewed discipline around MAP enforcement enenrolling key SKUs in the Amazon Transparency program to effectively address rogue sellers and a storefront refresh with a focus on ensuring that we're leading with our new packaging and messaging.

These actions have resulted in a significant reduction in MAP violations, allowing us to consistently secure the buy box and bestseller badges. We were talking about that earlier on our key products. And as we've seen over the last 60 days or so, we're now seeing steady consumption growth on Amazon. Our priorities moving forward to further fortify MAP enforcement, continued expansion of transparency across the portfolio, but we have transparency on around 80% of the volume already, which is great. And then creating a best-in-class site experience to leverage Amazon as that primary marketing channel and ultimately driving performance improvement, not only in Amazon, but across all channels. So as I always say, as goes Amazon kind of goes your total business. So that's really where we're focusing on e-commerce.

If you go to the next slide. Walmart is our primary focus as we push to gain a foothold in the food, drug, mass club channel. As noted earlier, we launched an approximately 1,700 Walmart locations in the second half of last year and even secured a temporary 2,000 location end cap for Q1 of this year. So they believe in us, and they're giving us access. However, despite the significant distribution expansion, the weekly consumption for Walmart continues to lag our original targets, right? We're seeing growth, obviously, but it's not quite where we need it to be. And it's imperative that we get on a steady path of regular week-over-week improvements and making meaningful inroads in a growing Food, Drug, Mass & Club channel.

So we're currently hyper-focused on Walmart marketing activation to drive short- to midterm performance improvement. We recently turned on full funnel top to bottom marketing for Walmart with the objective to increase not only awareness, but to drive consideration and ultimately usage purchase, right? To date, the tactics we've deployed kind of overall focused on driving general awareness, not always include the necessary calls to action and haven't always been focused on a handful of hero items, keeping the message simple. And that's all required to improve consideration and ultimately that usage. And we're doing that now specifically with Walmart We've been doing in the last couple of months.

So for the first half to date, we've delivered 80 million-plus targeted impressions around Walmart activation with the most success coming from targeted digital display, Walmart Connect and then over-the-top streaming content. And now we're also able to benchmark our performance across the different marketing funnel segments. And since initiating the latest round of Walmart-focused activations, we've gone from lagging our competition across the key benchmark across the different parts of the funnel, awareness, consideration and usage. And now we're exceeding competitor average awareness and consideration by 100 basis points and usage by 200 basis points. So where we've chosen to focus and alter our strategy, we're seeing a win. And you'll see in a moment, I'll kind of talk about how we're going to then kind of blow that out in a larger way.

Now a tangible sales impact that can take 6 months, give or take, to materialize in a meaningful way, but we've already seen significant run rate improvement in those -- in 3 of the 4 featured hero items because, again, a big part of this is also what we're doing is focusing on that handful of items and not just focusing on general categories. So we're seeing movement. The data is telling us we're doing the right things. Ultimately, the volume needs to come. Go to the next slide. So now that we're starting to see success with how we're activating at Walmart, we're looking to scale the approach to other key accounts with a focus on, again, driving brand clarity with a single unified message, focused on a handful of hero items, reducing the friction from awareness to usage through that full funnel top to bottom approach. continuing to transform our Amazon footprint into a best-in-class experience, leveraging the platform as that primary marketing channel and again, driving brand growth beyond just Amazon by doing that because a lot of people start on Amazon, right?

Holding ourselves accountable to measurable KPIs that have met will deliver our growth aspiration. I'll be honest with you, when we launched marketing in the last year, we had KPIs, we're hitting those KPIs, but it wasn't translating into the levels of revenue growth that we were -- that we needed. And so anything we do going forward, if we achieve a KPI that directly connects to -- is going to directly connect to us achieving our growth aspiration. And then lastly, filling the void as a partner of influence for the categories -- the category continues to be confusing and difficult to navigate. And we still have an opportunity to partner with key retailers to improve the consumer experience while also preserving and growing our brand. So it's really this idea of thought leadership, which we've been doing for the last couple of years, and I think we've been winning there, and we have an opportunity to continue that.

If you go to the next slide. Here we go. Okay. Talk about pet specialty. So as noted earlier, pet specialty has been, again, the most mature channel, and it's really the weakest performing channel over time in the pet supplements category. However, the category remains disproportionately meaningful to us, to NaturVet. Because it drives just shy of 40% of our volume. Again, that's where we grew. That's where we started, versus only around 13% of the total market. So we're underpenetrating the other channels, right? So while we push to capture share across e-commerce and Food, Drug, Mass & Club, it's also imperative that we're protecting our position in pet specialties as well and being extremely surgical around where we choose to invest in the channel.

So our focus here is to reestablish ourselves as a category authority through revitalized assortments, category thought leadership and private label partnerships. And I include private label here, even though this is a NaturVet conversation, I include private label in the conversation here as we see it as a natural path to strengthening our current partnerships and opening the door for the NaturVet brand with new partners. And ultimately, we need to determine which pet specialty retailers we can scale and disproportionately invest in and where we need to reduce investments because of retailers making decisions that are driving down their share and their overall importance to the channel.

Next slide. All right, products. So when it comes to our product portfolio, everything we're doing is directly informed by consumer insights. The two new platforms that we're launching this year, dual action and targeted care supplementation are directly inspired by key human space trends with dual action featuring combined solutions that address relevant need states like immunity, longevity, inflammation, gut health and allergy. And targeted care is positioned as a more humanized approach to addressing core need states, featuring relevant solutions focused on muscle health.

So it's not hip and joint, it's muscle health, right? Beauty care -- it's not skin and coat, it's beauty care -- and then expanding where we're playing in dental health. And our new expanded cat-specific solutions offering was developed in response to the disproportionate growth we're seeing in the cat segment. and direct insights that tell us that cat supplement continue to tell us. This is not a revelation, but cat supplement consumers are looking for solutions that are uniquely formulated for cats. And these are actually solutions that were dog and cat combined solutions we've had in the assortment for a while. We basically took those formulas and created cat-specific formulas and reformulated them and made them more appropriate for felines.

And beyond new products, our core assortment revitalization initiative ensures we're staying ahead of our competition through ongoing formulation and palatability enhancements. As I said earlier, the innovation part is the fun part, the exciting part, but you've got to make sure you're appropriately evolving your core assortment along the way to remain relevant and to remain competitive as that is where the meat of the volume is. And unlike years past, where we are managing our assortment updates 1 year at a time, we're currently in the process of fortifying our long-term product strategy leveraging new third-party insights resources and mapping out our vision for the next 5 years and beyond.

And lastly -- last slide, lastly, but certainly not least, we're continuing to transform our operations to support our growth journey. Starting this year, we're piloting automation on our production lines, and that's going to improve efficiency, increase capacity and ultimately reduce costs. And based on the success of this year's pilot program, we'll be looking to expand automation deployment in '27 and beyond. And as noted at the top of the presentation, our new Chief Operations Officer is certified in lean manufacturing processes and has to date completed lean training for his entire manufacturing team. This has driven transformations in our production planning and manufacturing processes, reducing excess inventory and improving cash flow.

Additionally, and last, we've rolled out -- we've rolled our purchasing group into our operations team. They were -- so the folks purchasing the raw materials and packaging on, they really weren't directly tied to our operations team, which is odd. So we rolled them into our ops team. We did that last year, and we transitioned them to a centralized supply chain function with a focus on strategic raw material sourcing and long-term supplier agreements. It's going to drive cost savings. already is driving cost savings, improved payment terms, optimizing working capital and probably just as important or maybe most important, driving supply predictability, which is key. And we're doing all this within a stringent supplier governance framework so that we can ensure we're building partnerships with best-in-class resources and exiting transactional relationships that do not support our financial and operational imperatives. So -- this concludes my segment for today's presentation. Thank you for giving me the opportunity to provide all of you with an update on our growth journey. And now I will pass it back to Hakan and Jenny for questions.

Thank you, Geoff. And by that, we are open for questions. And your first one comes from Adela.

Firstly, on the development in North America. I believe, Hakan, you mentioned earlier there that you would have been somewhere closer to mid-single-digit organic growth had you not had this big delay. Can we confirm that, that is the case? And if that was the case, then I would assume that your organic growth would have been closer to 12% versus 7% in Q2?

Yes, I would -- yes, low to mid. I wouldn't -- so it would have been double digit.

Okay. I see. And also, I guess, your visibility as we move forward here, you say that this specific order will be delivered in Q3. But at the same time, I mean, we do have to be cognizant of the fact that there has been some volatile quarters, and this isn't the first time where revenues is being -- are being delayed into -- further into the year. So I guess, are you doing anything specifically from a group level to have better control over [ to post ]? Or yes, what's your view on that?

Yes, absolutely. It's very frustrating, of course. And we've been working hard with forecasting and have monthly updates, but probably need to have even more frequent updates when it comes to this and perhaps have a bit more margin when we present our expectations.

Okay. And then lastly, on margins, gross margins did perform well in Q2. You saw expansion also in the operational EBITDA, but it was slightly below expectations. Now in Q3 and -- yes, let's say, starting with Q3, you were above 20%. And I guess, how do you feel about managing that level, especially with maybe your Amazon-related costs being a tad higher in Q2 than implied?

Yes, I can start. Yes, we definitely expect margin going up Q3 going forward, and it's absolutely related to our Amazon costs. Actually, both in Europe and the U.S. As I said, we've been building up for the transition in Europe. That's a smaller part of the margin contribution, but that has also been at a lower level than what we expect going forward. And primarily for the U.S., we definitely have invested in the clawbacks of the bestseller badges, et cetera. And we do see improvements -- have seen improvements over the quarter, but we really had to push to get those in. And now that we have them, we can transform the investments to more, let's say, campaigns that we know are more connected to ROI and improvement in margins.

So I would say Amazon is the biggest contributor to the margin uptake Q3 and going forward. But also -- but we've also had, I mean, a couple of -- as I said, as we said under the production segment, the softness of the dermatology sector has been complicated for us when it's kind of hitting our margin as well. And we are working very hard and have connections with all of our customers and our own internal brands. The summer is a good year for those kind of products. So with our new veterinary partnerships, market picking up and the inventory level as low, we do expect the dermatology sector to improve going forward as well. And that will be also a main contributor for us improving our margins.

No, I think you covered it.

Okay. I see. But -- okay. So I guess then we should think of this expanded other external costs profile to be the result of maybe front-loading investments in H1 and those shouldn't be recurring in H2?

Exactly.

Your next question comes from Adrian.

Yes, perfect. I think I have 3 questions. Just firstly, like touching again here on the revenue visibility going in the second half of the year. My question is basically, like do you have any larger orders now scheduled for Q3 and Q4 that have a similar risk of delay that might be supposed to be in the back end of Q3 that could be pushed into Q4 or similar?

No, not the scale like this one. And we are actively working with both partners and our internal organization to push, let's say, the -- to have a more equal delivery schedule going into a quarter. So we are actively working with that. So no, we don't have a major order that is scheduled for the last month of the quarter in Q3.

Okay. Perfect. Very clear. Second question is basically on the rogue sellers on Amazon. Could we have any update on that?

Yes. As Geoff said, that has improved a lot, and that's a combination of the -- our products going into having transparency. That means that we are the only one that can ship in those unique SKUs. And also what Geoff alluded to, perhaps I should clarify that a bit because the Europeans are not that used to the map pricing. That's actually sort of a recommended price that sellers are not allowed to go under when selling our products on the market. And there has been a couple of especially some new collaborations with bigger partners undercutting specifically on their own online web shops.

And even though that's very small in volume, that make conflicts and problems with the algorithms of Chewy and more importantly, Amazon. So that really makes it problematic with keeping the MAP pricing on Amazon and Chewy. So that's really a hard work from the -- specifically the new team that has come on board on [ NaturVet ]. They have really had great success with our major partners in following our map pricing, and we've seen improvements last part of this quarter. So going forward, we don't expect any major problems with the rogue sellers or -- but MAP pricing is a constant, let's say, issue that we're working with. So better communication with our partners, we can avoid those kind of conflicts.

Okay. Finally, my final question, I think, is for you, Geoff. Regarding here the sort of flagged or the increased competition on Amazon, if you will. I think you touched on this in your presentation, but perhaps I missed some of it, but could you be more specific about where the competition is increasing? Like are you losing ground? Is it primarily volumes or pricing pressure? And kind of what are you doing here to address this? Are you...

Yes, sorry. Go ahead. No, I'm sorry. Please finish.

Are you risking being in a pricing war against competitors? Is this like you need to outspend them on marketing or anything?

No, it's not a pricing war. And you noticed a lot of what I concentrated on was marketing. And I'll clarify, it's not just an Amazon thing. It's an overall thing. And the reason I emphasize Amazon a lot is as goes Amazon, goes everything. Because people use Amazon as a primary marketing channel to go on there and research the brand. So if we're losing buy boxes and bestseller badges, that puts us at a disadvantage as people are researching our brand. It is not a price war. We have an opportunity -- so again, a lot of the brands that are doing success are digital native brands that launched over the last, let's say, 10 to 12 years. And they went heavy on social media and they went heavy on the dot-com pure-play sites. And honestly, it's a bit of a catch-up exercise with them.

And as I said, we really have not truly marketed within our organization until around a year ago or so, and we're fine-tuning that. And so I think it is an awareness and it is not only an awareness factor, but it's going to that next level and getting compelling call to actions out there and telling tighter stories. So I think a lot of it is marketing. And that's part of why we brought our new Chief Revenue Officer in because she has a significant background in marketing. She's already brought in some folks who have worked with her multiple tours of duty to help turn businesses around. And so our focus is on driving awareness and relevance and driving people to usage and purchase. So I believe it is a marketing challenge, and that's what we're all over right now. Hopefully that helps.

And also worth noting is the brand change. I mean that's a major impact when transforming the brand when it comes to Amazon sales with different look and feel of products. That's really a project that we probably underestimated the complexity and the impact it would have.

Your next question comes from Johan.

A follow-up on the FDMC order. Does the delay have any impact on -- or any potential impact on your pipeline, potentially delaying further projects, pushing them further out, et cetera?

No, no. The whole order was more or less done by, I mean, third week of June. So it was waiting to be shipped out. So it doesn't affect our manufacturing schedule.

Very clear. And then a question on the merger -- or the U.S. veterinary distributor merger here. At what point do you expect these 2 distributors to sort of normalize inventory levels? And what's your revenue exposure to these 2 accounts?

We expect to have a decision or they expect to have a decision on approval, I think, the second half-year. I don't know exact month when they need to get that decision. But I think it -- I mean, the inventory levels are expected to pick up already in Q3 due to the fact that we see the sell-out numbers of the product that we are supplying. So -- but it's -- but of course, our -- let's say, our agreements with those partners is that they should at least have, let's say, 90 days of inventory at hand, and they were down to like 30 days. So it's, of course, different kind of setup if we need to ship small orders all the time compared to shipping larger orders.

So we expect both from the, let's say, inventory rebuild up, but also that the partnerships for all of the -- for these programs is actually -- it's replacing another supplier for these kind of products. So of course, they are selling out the old inventory and resupplying with ours. So it's a gradual process, but I wouldn't like to say numbers, but it's significant volumes definitely from 2027 going forward. But it's already this second half year will be a lot higher volumes than we've had this first half year. So I would say it's -- we're not talking about hundreds of thousands of dollars. It's a $1 million range and upwards.

Got it. Very clear. And then a final one, maybe on the Amazon Prime Day, which fell in June this quarter versus July last year. What was the sort of incremental cost impact of that timing shift here in Q2?

You mean how much it was? I can't say how much it was, but it's two things that impact it. First of all, you have the cost in June instead of July, but you also have the result of the Prime Day because you kind of invest in 1 month and then the sales will follow in the future as well. So we expect the investment that we did for Prime Day in June to also have a positive effect in July.

Yes. So essentially lower cost than in Q3 as you took them in Q2, but also better sales contribution given your marketing spend...

Yes, that's the expectations. Yes.

Your next question comes from Christian.

My first question is regarding the gross margin of 61%. That was impressively strong. Could you please help us understand the relative contribution to the gross margin? You mentioned the favorable European mix and the inventory buildup effect. So excluding this inventory buildup effect, what would the gross margin have been?

I don't have that number. But of course, when you build up the inventory, we're not able to ship it, you have less cost of sales contributed to that. So it's not the split. But I will stay with the expectations for the full year that we are expecting to be around 58%, 59% for the full year.

Okay. So you are maintaining that communicated corridor of 58% to 59% despite the continued performance of Europe relative to North America?

Yes. I mean it's not like we expect Europe to go down, but we expect the U.S. to catch up, but they don't have the same kind of margins in the U.S. So it will have a negative impact or [ negative ] impact, but it will not remain the gross margin that we have 61%, I don't expect.

Got it. My second question is regarding Europe, which grew by 26% organically in the second quarter. Could you please say how much Europe grew adjusted for the China contribution?

Let's see now. It's -- I don't have that.

Yes, I don't have the number in my head.

Okay. Was that a significant share?

The China order in Q2 was around SEK 8 million.

Okay. Great. My third question is regarding ProDen PlaqueOff, delivering a 32% organic growth in the first half of this year. Could you please elaborate a little bit on what is driving this growth? Is it primarily new product launches or geographic expansion or a combination of both? And do you expect the brand to sustain a high growth in the second half?

Yes. No, it's not so much, let's say, new market, but you could say that, of course, new -- our export markets was really strong, but that's a small portion of the total sales of ProDen PlaqueOff. No major new product launches under the brand. We did launch ProDen PlaqueOff Creme, specifically for cats, but that was introduced at Interzoo. And the only sales we've had for that is some test sales on Amazon. So it's first -- in Q3, we start shipping to distributing partners and also to our local group companies selling out to pet retail.

So I would say -- and it hasn't launched on U.S. Amazon yet. That will probably not be until Q4 due to the delivery. But no, no new products. No, it's the momentum of as we said, the ProDen PlaqueOff is a very attractive product. It's very high when it comes to subscription rates from our partners like Amazon and Chewy predominantly. So we're just adding new customers to current customer base. So we've seen fantastic growth numbers in Europe all across the Amazon channel predominantly. And we expect that to continue to grow because we haven't really marketed that much in the EU, except for the U.K., we have been kind of cautious when building up the organization for that. And in the U.S., I mean, it's going really well. We have had some challenges with our very popular ProDen PlaqueOff dental bones. That's from a supply issue. So we've actually been stocked out for many of the flavors for that. So it could have been even better. So no, so we expect the momentum continue going into Q3 and Q4, and we're very excited about the ProDen PlaqueOff Creme product so that we have another, let's say, product specifically for cats.

Your next question comes from Javier.

Yes, can you hear me?

Yes.

So sorry because I missed the first question, maybe you already answered this, but just wanted to confirm in terms of the U.S. that the -- so everything is up and running now with the new customer. So you are shipping already, you've been approved, just to confirm that. And I wanted to understand how much can that new customer be maybe in terms of percentage of sales there? How much can it contribute to growth in the third quarter? And altogether, so you have a lot of moving parts in the U.S., Prime Day, the merger, this new customer. So it's difficult to understand what can we expect in terms of growth for the second half. And it's obviously a big part of your business.

So it would be helpful if you can help us understand the second half and the third quarter specifically in terms of growth in the U.S.? And also second question on Europe. You've grown very nicely in the second quarter. Part of that was China, as Christian mentioned. I wanted to understand how normal can that growth be? Obviously, maybe not 19%, but can we expect double digit also in third quarter, fourth quarter, if everything remains as it is today? And just the third question, on margins. Obviously, a lot of moving parts again. You improved a little bit quarter-on-quarter. Can we expect the improvement in margin in the third quarter to be higher than the one seen in the second quarter, so more than 30 basis points, just to maybe just a little bit more a directional hint basically.

Yes. Okay. Lots of questions. I'll try to answer and then Jenny can take it. I mean the expectations for Q3 and going forward in the U.S. is definitely growth for the segment. I expect it to be, I mean, over or just under our double-digit target. We definitely do expect the U.S. to bounce back. So let's say, high single digit or hopefully, double digit. But let's see how it performs. But -- and this order, of course, it impacts Q3, but -- and should have been in Q2. So that will impact nicely.

I don't want to say exactly the number of the order, but the setup is that we make a first initial order that we have shipped now in July or shipping some of it in July. So more or less, it will be fully delivered in July. And then there will be replenishment when -- from the day that the product goes out to all of the different stores, we will keep inventory and ship our products to their distribution centers.

So this is an important new customer. Hard to say the exact volume, but of course, it will have a nice effect on second half and definitely in '27. And hopefully, we can expand this program even further. It's a private label program, not that many SKUs. So hopefully, we can add some new SKUs to this program. Then it was...

Then it was Europe. Can we expect -- we have had really strong growth now this quarter. Can we expect it going forward?

Definitely expect double digits. I don't expect perhaps 19% organic growth, but double-digit growth we expect. And the same goes for manufacturing that we expect double-digit growth, but probably not as strong as we had now in Q2.

Yes. And your last question about the margin, yes, we expect profitability to improve in the second half of this year compared to the first half.

And just to follow up on that. Two questions, one on the FX impact. In the second half, it should smooth significantly versus the first half if we consider spot rates, right?

Yes, it flattened out more in the second half compared to the first half or the first quarter, yes.

And your final question comes from Johan.

Just a quick follow-up on the gross margin guidance here. Could you, Jenny, just clarify whether you expect the gross margin to be in the 58% to 59% range for Q3 and Q4? Or is that for 2026 as a whole?

It's difficult to say depending how fast everything or the moving parts are moving, but I expect to be around 58%, 59% for going forward. I think 61% was exceptionally high due to the fact that the U.S. came in a lot lower than we expected.

Yes. But the implication, whether this is on 2026 as a whole or for coming quarters is quite significant given the strong gross margin that you have delivered in Q1 and Q2. Just so we get everything clear.

Well, hopefully, with a strong 61% in 1 quarter, we will be close to the 59%. So let's just say that we will be around the 58%, 59% for the full year. No, I expect it close actually to the each quarter. So I don't expect it to be exceptionally low next quarter due to the fact that it was high this quarter. So 58%, 59% per quarter, I expect.

Going forward, yes.

Yes.

Thank you. That concludes our Q&A session. Back to you guys for any closing comments.

Thank you so much, and we wish you all a lovely summer if you haven't had the summer vacation, and see you next time.

Thank you.

Thank you.

Welcome to Swedencare's pre-quarter update, where Jenny and Hakan will provide a short presentation, followed by a Q&A. So please raise your hand if you have any questions. Over to you, Jenny and Hakan.

Thank you so much, Emma. Hakan and Jenny here, and welcome to our Q2 update. And I'd like to remind you, this is a short update of the business right now. We still have a month to go, financial-wise at least, and a couple of weeks left operationally.

Highlights for the quarter. The biggest pet show in the world that's biannual took place in Nuremberg like always, it's called Interzoo, very busy show for us, and we had our, let's say, biggest booth ever showing more brands than we have done before. A very busy show, strong interest and several new markets will be launched in H2 already due to this show. And it's, of course, some smaller, more fast-moving markets, but still markets where we haven't been present as of yet. And some big opportunities have started negotiations with that.

NaturVet by Swedencare launched online in Europe and will be in retail stores by second half. Several retailers onboard, among them the largest, the U.K. player, and we are also in discussions with a couple of other really big European retailers. We focus on the big opportunities, but of course, have also demand from more local and smaller players, but we'll start focusing on the big opportunities. And as some of you may remember, we sold NaturVet exclusively with Zooplus for 2 years, and now we have expanded to other online channels with NaturVet by Swedencare with the new brand. So we have started now in June with the launch on Amazon as well in rest of Europe and on the U.K. shop where we have been present.

We had our first Capital Market Day ever up in Stockholm, fully booked, with all of the group managers present, and it was more of an in-depth session seeing the different brands, different entities, how we work. And it was very nice to meet the retail investors, professional investors and also all of our analysts covering us were there. So a very good day, and we have had great feedback. So we will definitely have it another time in 1 to 2 years.

We had our AGM in May, and the main decisions there was, we now have an authorization for share buybacks that we may choose to do when we feel it's prudent. And also, as most of you know, we had some change in the Board. We had a new Board member representing Symrise. And we also have a new Chairman, Thomas Eklund, that has been on our Board since 2016. So he knows the business very well, but now he's in the new position as Chairman.

Following up just about the last reminder of the profitability hit that we had in Q4 and why we're showing this is that we predicted that we would have one of the issues would have an effect on first half year 2026, and that is correct. We see, let's say, improvement month-on-month when it comes to the problems we've had on Amazon. And we stand by our, let's say, forecast saying that from Q3, we won't have those kind of issues affecting our sales. So we are happy with the development, but it's been really hard work from the team, and I congratulate them and looking forward going into Q3 with a clean shape.

The different segments, pretty much, let's say, same story as in Q1 that we have, let's say, two segments doing really strong, Europe and production, and North America still at a bit lower pace than we want to be. But looking at the different channels, online is, as I said, improving a lot in North America, so a strong quarter for online. We had a bit of a dip in May -- or April -- May, sorry, May. And that was not only us.

It was overall, let's say, sales on Amazon, at least in our sector and also in the pet retail store, a bit lower demand from consumers, probably due to the geopolitical issues which has had an effect on gas prices in the U.S. And as you all know, gas prices in the U.S. is a sensitive issue. However, we saw already early in June, a strong pickup. And after the potential deal was announced, seen even better results. So happy to say that of the quarter, we will have 2 strong months and one that was a bit softer.

Still lower ROI of NaturVet on Amazon, but improving, as I said, month by month. So Q3 should be back to normal. Pet retail, a big box, solid, but also there, we felt a bit of a geo impact as above. One new major big box private label contract was signed in Q1, and we already in Q2 is shipping the first delivery. So we're very glad about that.

Veterinary side, still a bit soft. Also from another perspective is that the two largest distributors in the U.S. has announced a merger. So they sell actually -- plus 60% of the distribution goes through these two players. And that merger work has had an effect on us and others shipping into them since there have been some constraints on their inventory levels when they make the discovery phases, et cetera. So a bit of turmoil in the market there, but soft to solid, I would say, about the veterinary side.

Looking at Europe, really strong market for us. Online, the biggest and most important for us, increasing month-on-month in all markets. EU8, Amazon, all transitioned for our internal brands. Innovet, our Italian veterinarian brand was the last brand to transition. It started now in June. So it will be exciting to see about that. Pet retail, solid to good demand and veterinary solid to good. Main markets, as you know, Italy, U.K., fairly stable markets, not fantastic growth market-wise, but strong and solid demand.

Looking at production manufacturing, as we have communicated, pharma is continuing to grow, and we are ramping up for a lot more manufacturing. So all year will be an exciting year and going into 2027, where even higher volumes will be manufactured. And also, as we communicated in Q1, still lots of activities when it comes to RFPs more than ever. So there is definitely a shift in the market or more demand for CDMO services when it comes to animal health.

EU and U.K. has continued to have very high demand externally. So it's more about expanding the team and planning the manufacturing, so have had a bit longer lead times for deliveries, but we have perhaps been a bit too quick to the market. So we just need to have a bit longer lead times, but still want to be fast and agile to develop projects.

U.S. supplements, I would say, solid, a couple of new projects starting. U.S. dermal liquids still soft. However, now we're going into the warmer season, then it normally picks up. So hopefully, it will improve. But this is a big part of our business. It is also affected by this merger proposal of the two largest distributors. But all in all, a very high activity quarter and looking forward to getting the final results.

Over to you, Jenny.

Yes. Some expected financial information based on today and what we are expecting for the rest of the quarter. We are still expecting to have a double-digit organic growth for the quarter. The gross margin is expected to be in the same corridor as we have talked about for the last at least year that we would like to be in 58%, 59%. So same as '25 and also since last quarter, where we had 59.7%.

EBITDA, we are expecting to improve profitability compared to last year when we had 19%, and we are expecting a similar profitability compared to what we had last quarter in Q1 when we had 19.6%. There is no material one-offs that we are expecting. However, there is still a lower return on investments for the big box and the Amazon nature, as Hakan spoke about. And also this Interzoo, this big expo, it's biannual expo. So we did not have the cost in '25.

Net debt to EBITDA, we were at 2.8 when we closed Q1. And as you know, we normally decrease this. We are expecting to have a similar net debt to EBITDA in Q2 due to the fact that we are now including the summit earnout because it's less than 12 months until the expected payout. So we have to include it from this quarter. And also, we had a dividend payout in the quarter.

With that said, we are done with our update. So back to Emma.

Yes, we are open for questions. And your first one comes from Adrian.

I hope you can hear me. I just have one question really. Kind of going back to North America here with the merger of the 2 largest distributors. Could you kind of explain a bit more regarding this? Like how structural do you think this will hit your business regarding your veterinary sales? And how should we think about the implications for kind of the overall market?

It's hard to say. As I said, those 2 together plus 60% of the market, how they will organize, we don't know as of yet. They haven't really presented that. But the biggest one, MWI is -- the biggest one is also the biggest customer of ours. And Covetrus is a smaller customer for us, but they are a big player. And then we have Patterson that is a second customer of ours. So how that will play out is difficult to say. But there will definitely be some changes in, let's say, how they distribute over the market, but how quick that will be.

And also, I would like to remind everyone that you never know about these kind of projects. I mean, from, let's say, antitrust perspective and all of that, I don't know if it will go through, but the 2 players are convinced that it will be accepted. And I have read some articles about others saying that it's questionable, but I don't know. So let's see what happens. But they are definitely preparing for the merger and have put some constraints on their inventory levels going forward during this process.

Okay. Can I have just a quick follow-up on that one? Can you give us any sort of ballpark range for the sales exposure that you have to these distributors?

It's difficult to say because we also sell products to -- we manufacture products to brands that sell to them. So it's very complex. I mean, we have many products ending up in these sales channels. But direct sales for us on a yearly basis, I would say that it's between 20 million to -- I don't have the exact number, so USD 20 million, USD 30 million. That's my best guess, but don't hold me to it.

It's one of our top 10 customers for the group.

Thank you. Your next question comes from Adela.

You mentioned here not that much of a move to gross margins, I believe. Could we dive maybe a bit deeper into this? How are you able to offset any sort of inflationary pressures? Or maybe start with, do you see inflationary pressures? And if so, on which components or, I guess, on what sides of the pie do you see the inflationary pressures?

No, we haven't received any big reports on inflation pressure. So basically, what I wanted to communicate is that we have been in the range of 58%, 59% for the last 1 or 2 years, and we expect to stay there for this quarter.

Okay. That's really good news. And then maybe also on Amazon. I mean, you continue to say that cost levels will remain elevated for quite some time or additional quarters. Is that reasoning still true? Or do you see opportunities for more upside or, I guess, for the operating leverage to come through towards H2?

I can just answer by saying that, that's one of the things that we communicated that we are expecting pressure on the profitability still in this H1, and we are expecting it to improve more in the second half of the year.

Your next question comes from Johan. Please go ahead.

A question on the NaturVet's Amazon sales. You talked about this extensively, but you previously indicated that the transparency rollout would be largely completed by the end of Q2 with normalization targets for Q3, as you state today. Where are you now in the transition? Are we talking normalization in the beginning of Q3 or end of the quarter? How should we think about the impact?

I would say normalization should definitely be in the beginning to mid. There are always things happening, but that's normal with Amazon. But the actual challenges we've had, we definitely see an improvement on that with, as you said, the transparency programs. But then it's always that we will continue to have is like third-party sellers online having different types of prices. But we're used to working with that. So I would say that expected from early to mid-Q3, we will definitely be out of the issues that we've had during 2025 and first half '26.

And a question on the U.S. derma liquid business. Had a softer Q1, but you then indicated that Q2 orders were already in hand and that the business should recover in Q2. Now from the call today, I get the impression that this is still somewhat soft. What has changed there?

That's what I tried to explain that we sell directly ourselves and have lots of sales going into the two biggest distributors merging. But of course, we manufacture a lot for different brands selling into them as well. So there's always a possibility to change the orders a bit or push them on a yearly basis. So that's what happened, a bit softer. So I think what we do see that's good is that we see the move out from the distributors. So that has definitely improved for the derma products, but that's also common for this type of seasonality.

So I would say that the issue right now is more those two affecting the whole sector a lot when it comes to bringing in products. But since the move-out is same or better than last year, so we are expecting, the whole industry is expecting, a fairly good year. As I said, we had orders and it looks good for Q2, but there were some drawdowns. So it's a better quarter than Q1, but it's not as good as we expected.

And the final one on pharma. You also described pharma as Q1 as a good start, but not the biggest quarter of the year, so to speak. Are you seeing any acceleration here in Q2 in pharma?

I mean, I would say a lot of acceleration when it comes to hard work and preparing and the development projects, not so much more when it comes to manufacturing. But I mean, lots of projects preparation. And we, of course, invoice that type of business as well. So I would say it's a good quarter, and that will continue all year.

Thank you, Johan. That concludes our Q&A session. So back to you guys for any closing comments.

Thank you for your interest, and happy mid-summer to all of you. And we look forward to seeing you on the 22nd of July when we have the final results.

Thank you.

I think we'll start. I will try to do this without microphone. Can you hear me in the back? So, okay. A warm welcome to all of you. Great to be here. And this is actually our first Capital Markets Day ever, and we're getting closer to our anniversary. We've been a public company since 2016, 14th of June. So we thought that we better have one before 10 years have gone. So that's the main reason. No. But fantastic to see so many here. So we actually had to close the people joining.

And I would like to start by thanking Danske Bank for letting us use this -- their facilities. Excellent to be here. And later on, when we have Q&A, Jonathan from Danske Bank will be the moderator. So we would like to have questions at the end. We have set aside, like, half an hour for that. But a small quick one, you can do, but otherwise, we would prefer summing it up at the end of this session.

So the day today is really focusing on a bit more in-depth in our different business segments and our different brands. So we have gathered all of the group management leaders here and also Geoff Granger, who's responsible for NaturVet brand. And so we will have a packed afternoon. There will be a short coffee break, but please be back -- I will remind you to be back at that set out time at 3:35. So let's start.

A small introduction of Swedencare. Most of you know the story, but I will just go through it. We are an animal health company focusing on non-prescriptive products, focusing on supplements and dermatology products. We have offices in 9 countries, and we've had a, let's say, a growth journey, both organically and with M&A. And that story I will present a bit more about. We have roughly 600 employees, equal men and women, and we have had a strategy to focus a lot on our own manufacturing. That was a key issue for us at the beginning of COVID, you all remember those problems with supply. So we changed our strategy a bit at that point of time because we were worried of not getting products.

So we're really happy to have a strong footprint, both in North America and in Europe with manufacturing. And in Europe, we have manufacturing both within the EU in Ireland and also in the U.K. A couple of years ago, we were a bit worried about the Brexit regulations. It was supposed to be very complicated to ship our type of products if there was animal origin in them between EU and the U.K. Fortunately, that didn't happen, but we're still happy to have 2 different manufacturing sites in Europe.

We have lots of brands in the group. Some of them are focusing on a specific channel, veterinary, pet retail or online. And a couple of the brands that we have are focusing on all of those 3 channels. As I said, we've been very active with M&A, made 14 acquisitions since June 2020. We are a global company with a presence in North America and Europe, but we sell in over 70 markets with our legacy brand, ProDen PlaqueOff that I will describe a bit more later on.

The market where we are at. This is referring to U.S. numbers, but you could say that you have the same trend in Europe, same trend in Asia. U.S. is basically twice the size of Europe. And then if you take Asia, it's more or less the size of Europe, but growing faster than Europe. So the tailwinds really underlying for pet supplements is really the humanization of pets. People live a lot closer with their pets, treat them often better than their own children, really taking good care of them, wanting to give them the same opportunity for a long and happy life and really to try to avoid issues -- health issues going forward. So that's really both from a, let's say, caring perspective, but also from the perspective of, as you all know, the veterinarian bills are -- have had a real inflation in the last 10 years. So from a cost perspective, it's also very good to take care of your pets well.

And in most countries in the world, you don't have that much insurance for your pets, like we do in Sweden and the Nordics and a couple of other markets. But otherwise, pet insurance is still a very virgin market. The spend per pet keeps on going up. So it's the -- for every generation that comes of new pet owners, they are inclined to spend a bit more than the generation before. Why is that? I don't really know. But it's a trend that every generation, Gen Z, Y, or whatever you call them. It's really that the new pet owners, they are like both spending more on pet food, spending more on accessories and definitely are being more interested in pet supplements.

So the -- you see the trend here of yearly CAGR. It's been roughly 20% from going from 2019 to 2024. And going forward, it's around high single digit is expected. So basically, this goes to 2028. But by 2030, it's roughly twice the value that it had in '24. And also the trend for supplements, just the actual usage is projected to go to 38% of the pet owners in 2028. 2020 was 12%. I haven't really seen any new numbers, but I'm guessing it's somewhere closer to 20% now in 2026.

And it's also the actual usage of supplements for humans. That's really -- I read some article about, in the U.S., plus 80% of Americans take some sort of supplement daily. And of course, the value is that you -- how you treat yourself, then you want to take the same good care of your pet. So that's really the trend that's been ongoing. And Geoff will go more in depth in the U.S. market later on.

Online is our fastest-growing channel and also for the market as a whole. It's a very convenient product to be ordering online. Size of the products are normally fairly small. And it's also, I mean, repetitive usage. So I mean, it's -- the subscription format is really, really appreciated. And of course, as we as product owners, we like to have the subscribing customers. So we have very high subscription models. We sell mainly online through online platforms like Amazon, Chewy. In Europe, Zooplus. In Asia, Alibaba and whatever they're called. So it's really -- we don't get -- we get numbers of the percentage of how much subscription they have on our products, but we don't get the direct access to the consumer.

So that's why also we have entered, let's say, a new strategy for a couple of our brands that we are building up more and more D2C where our own web shops selling directly to end consumers. That's important for us, not so much from a profitability perspective, but really to getting the relationship with our end customers. That's really important, getting more knowledge about them, what they prefer, we can utilize them in testing some products. So that's something we are actively building up for a couple of our brands, not all of them.

And just looking at why online is preferred or growing a lot more. It's, of course, a lot easier to market directly to all of the pet owners, social media, Instagram, TikTok, you name it, not always selling directly on those, but really, really leveraging the potential of reaching lots of pet owners at the same time. Also utilizing influencers, presenting our products that's really important, and that's really a strong focus for us. It's always difficult to know which one is going to be hit and which one is going to be a flop. You need to try with lots of different influencers and just getting the right angle.

And then really to be able to test and different types of marketing. I'm really -- we like the whole, let's say, mail order strategy, testing different campaigns to see which ones are effective for different groups. And then when we have tested, then we go all in and start to market more heavily on the successful ones. So we really like that strategy.

Short history about us. And just -- I won't mention all of this, but it was really the idea of Swedencare and the actual product ProDen PlaqueOff was in early '70s. The founder didn't make so much out of it until the, let's say, end of the 1990s. And when it started off as a human product, we still sell that human product in Sweden primarily. And -- but no focus from us. That's the only human product that we have on the market. We have hundreds of other products all over the world, but for pets. But human product, we like to keep the, let's say, original product. But it really took off when they turned it into a pet product.

The main reason for that is that the dog owners in early 2000, most of them, of course, didn't brush their dog's teeth. And now, let's say, a bit higher percentage brush daily the dogs or cats teeth, but it's still around under 10% of dog and cat owners that do that. So we really recommend do brush your pet's teeth every day. That's, of course, the best way of keeping the teeth sound and healthy. But ProDen PlaqueOff is good, let's say, alternative. So it was really that they tested out on a few dogs so that it worked and then started selling it as a powder product. And it took off.

And myself came into the business together with Hakan Svanberg, Johan Bergdahl sitting over here and Pam Armstrong, our former Chairman, 2 former Chairmen. And we bought it in 2014 and saw that it had enormous potential at that point of time, $2 million of sales, sold in 15, 20 countries. We saw a great potential for the product, and I will show the numbers about that later on.

But we decided to go public in 2016, brought in roughly EUR 4.5 million, acquired an Irish company, both with a brand and manufacturing capabilities. And from there on, we made some smaller acquisitions between 2016 and 2020. We actually missed out on a couple of very interesting acquisitions. And in 2020, we got the opportunity to buy one of those that we had missed out, and that was Stratford. Brian Nugent is here and will present the veterinary market in the U.S. And from there on, we were very active with acquisitions.

So we have had strategy of -- we had -- early on, we had a strategy of acquiring companies in the U.S., the world's biggest market. And we bought dermatology products companies. We bought some manufacturing companies with the main one is Vetio. John Kane is here also to present today about the production capabilities and strategy we have in Swedencare. And we have always tried to acquire companies that bring something new to the group, so we can utilize their knowledge, their capacity and most importantly, the product offering to other brands in the group. So we have widened our offering year-by-year basically.

And we have a small part of our business that's Rx products. We don't sell a labeled product on the market ourselves, but we have manufacturing and development capabilities of Rx. And we added a bit more Rx products last year was a company in U.K., a compounding business. It's a very special business, selling off-label products but pharmaceutical products. So we have started to enter a bit more into pharmaceuticals. It's a very interesting area. But the leap -- to take the next leap going into registered product, label product, that's a bigger leap. And let's see if we will do that later on in the coming years, not decided.

I'm going to introduce a bit about ProDen PlaqueOff. As I said, started off with a patient, it was a dentist, Dr. Sune Wikner. He noticed that a patient had better teeth, some years when that patient came to him and other times, it was worse, and he couldn't understand why. He asked the patient, do you only brush teeth every other year? No, I don't. I brushed twice a day, but still, there's a difference. And he asked that patient and where he came from and he had relatives on the Atlantic Coast. And Sune went there and saw that particular village, they -- all of the restaurants served algae-based salad before dinner.

So he started making his own small clinicals and came to the conclusion that it must be this algae called Ascophyllum nodosum that has an effect. And that was the case. And then over the years, there was some refinement of the actual process of it, drying, et cetera. But it's really just by coincidence. So today, sold in 72 markets. The Malmo office opened in 2000, with 2 employees. Those 2 employees are still working with us, responsible for international sales and business development. And it's been a fantastic success story. We are now -- this is one of our brands and products that are sold in all of the different channels. Of course, online is the biggest right now, but we're present in the veterinary channel. We're present in the pet retail channels, and it keeps on growing. So we are -- even though we have more and more competition within the oral care space, ProDen PlaqueOff keeps on distancing itself on most markets.

So here's the last 10 years, you can see the growth of revenue in million SEK (MSEK), so 10x in 10 years. 2.5x since 2020. And last year, we had 29% organic growth. So it's really has become our biggest brand in the group, and we keep on expanding.

Cats is a very important new, let's say, growth market for pets and cats are a bit more tricky when giving supplements. They are more finicky. So you really have to work with the palatability. So we have launched a couple of different products and have just launched a creme product that's been very well received on the market. Daily dosage, easy to give, 9 out of 10 cats accepted. So we do expect a strong year 2026 for ProDen PlaqueOff as well. And it's -- I would say that's a strategy for us as a group. We are definitely looking into more cat offerings for all of our group companies. And that was my introduction. Now over to John.

Thank you, Hakan. Thank you all for attending today. It's my pleasure to be here. Again, my name is John Kane. I'm the Production Director within Swedencare. And I'll talk today, we have 2 expansion projects going on in -- okay, I'll try this. Is that better?

Okay. We have 2 production expansions going on in North America and Canada. I'm going to be speaking about that for Rx products, specifically sterile drugs and then in Jupiter, Florida for treats and other liquids. So we'll go through some of that. I'll talk about the markets that we -- the addressable markets, some of the criteria for us to invest capital, the story of Vetio and within following the acquisition almost 5 years ago, Swedencare has been a great investor in capabilities, and we've had a number of expansions, and we always try to have an anchor customer, whether that's internal supply or an external sponsor that's there waiting for the product, and we've always had that.

And then we always try to address large addressable markets with high growth potential, and that's what you'll see in these new categories. So I'll talk about those, and then I'll talk about specifically pharma, an area where it's one of the high-growth areas for Swedencare as a CMO, but also with Summit Vet, which is one of the group companies.

Starting with the -- what's called the production or manufacturing group within Swedencare, you can see the circle around Vetio U.K. was actually acquired in 2022, rebranded. It was Custom Vet Products. Vetio Ireland was a historical Swedencare site that we rebranded as Vetio in Waterford. And then Vetio North and South. North, all Rx, all drug development and manufacturing, the only facility that does that, in Montreal and then Vetio South in Jupiter, Florida that supplies a lot of the Swedencare businesses. And then Swedencare USA in Houston, Texas, those 5 entities are part of what makes up the production entity. What is not included, and Geoff Granger is here today is the NaturVet business in Southern California, which does its own manufacturing. So that's not part of this discussion.

But as you can see on the bottom, we are in pharma, supplements, topicals, really in all of the core product categories that Swedencare markets. So we have, as Hakan said in the previous slide, 90% capability to produce. And once this expansion in Florida is done, we'll be able to supply all products purchased by Swedencare.

Globally, we're still very strong external as contract manufacturing. We're doing 72% of our revenue comes from companies outside of Swedencare. So that allows the Vetio entity to maintain a high degree of competitiveness. We have to be competitive on quality, on cost. We have a number of competitors around the world in different categories. And by maintaining the Vetio brand on its own, we can stay somewhat independent, but also offer all of those capabilities in-house to Swedencare.

And then by channel, the revenue is pretty well split between retail, that's both brick-and-mortar and online and veterinary. We have, of course, in Vetio North, which is Rx, that's all through the veterinary channel. But elsewhere, a lot of the growth has been in retail because of soft chews, supplements and the topical liquids, a lot of people that tend to be buying online. So we've seen a lot of growth in that area.

So first, starting with what is Swedencare's core market, pet supplements and treats. So at the top, you'll see the Swedencare logo, that's where Swedencare markets these products. And then at the bottom, the Vetio logo where we have manufacturing capabilities. So with supplements, our core market, Vetio has operations in 3 countries and each of which is constantly growing the pipeline and looking at investment. We operate the same technology to make soft chews, which is the most popular dosage form and across those sites. And in the U.S., by far, soft chews are the dominant format to give to pets as they are treats and we're seeing throughout Europe and the U.K., that dosage form is the most popular new form for products.

So we're certainly enjoying a very strong pipeline in our U.K. and Ireland facilities to supply soft chews. And that's been a really nice benefit of having manufacturing in the U.S. and here in Europe, we have the same process. So global customers like working with us because we can make the same product around the world with maybe minor ingredient changes. But that's been a nice value driver for large global brands.

And then functional treats and just the treats category in general, whether it be functional treats with nutraceuticals, which would be like a larger form for supplements or nutritional products, that's also a high-growth area. Both of these market segments are growing 6% to 8-plus percent a year. And Hakanmentioned the drivers, the growth drivers, which we've all heard. But really, the innovation trends favor these formats because what we're seeing is a delivery system that can deliver several active ingredients. People are looking at people that give their pets treats, whether they want to choose between supplements or treats, we can capture either of those by having both capabilities.

I'll get into the details of the projects a bit, but the treats project is underway in our Florida location, and we'll be manufacturing fourth quarter this year for internal supply around the world. And then we'll be piggybacking on that in the U.K. to follow. Once we get the process established in Florida, we'll have a line either in the U.K. or Ireland, perhaps even both at one point.

In the liquids category across animal health, you have on the left, OTC products. These are either medicated dermatology and grooming products, some sold through the vet channel, some sold through online. And then also, you have the Rx products to the right. So in the topicals and oral liquids category, certainly a smaller market, a more niche market within the pet industry. We have in our Florida, U.S.A., location, a very market leadership position with all of the vet companies that use us for contract manufacturing. So we have quite a lot of business with our sister companies. This is a strong category. But as you can see, somewhat limited growth opportunities compared to the market sizes of the other two.

The benefit we have through the Montreal expansion is we're getting into sterile liquids, but then also in Florida with our expansion, we'll be able to make Rx non-steriles, which is a bigger category, which gives us cross-selling opportunities from development with our Canadian team and transferring that technology into the U.S., we already have interest from customers and RFPs that we can pursue. So we have lots of demand for these categories.

In the sterile liquids category, it's the largest liquid delivery format. And the reason for that with high growth is because these can only be administered in the veterinary clinic or hospital. So veterinarians like -- with the vet industry losing some share to online and retail, this is a way for them to gain control of those therapeutics. And so we definitely see demand for that. We've contemplated investing in this in the past, but we've prioritized other investments expansions that we've had. But the time was we had an opportunity with a large global customer that really wanted us to be in this category. So we signed an agreement with them and then commenced the project. And that project, we're underway with some development revenues and expect to do some pre-commercialization manufacturing early next year.

In solid dosage formats, you have Rx products, tablets, which we're all familiar with. They are the most popular dosage form. It's a $10 billion global market. We have a very rich pipeline. We do manufacturing of those today in Canada, and we have a very rich pipeline of not only development projects, which, as you know, from a drug approval process have to get approved, whether it's through FDA, EMA or Health Canada. But we also have quite a number of projects that we call technology transfers. And that is where a customer is not happy with their current CMO or for some reason, they need to re-site a product, find a new manufacturer for a product that's already been approved. Those, as you can imagine, are the best type of projects. There's already a captive demand. They don't go through an approval process. And so we're able to build as we quote them for the actual tech transfer work and then we have the commercial volume. So we have a number of those that will be going through our Canadian operation and very pleased with the reception that we've had since we built that site.

And then on the right, soft chews. Again, a very popular dosage format. But in the vet Rx space, they tend to be limited to the blockbuster drugs. These are the Apoquel, the NexGard, the Heartgard, all of these large -- some of them billion-dollar drug products under Merck or Boehringer Ingelheim or such. They have a lot -- most of these companies have their own intellectual property, which is a big barrier to entry. So it's very difficult for people to get into that space. We're fortunate that we have our own patented technology, globally patented in around the world. So we were able to take on, we have about 6 development projects with partners to develop generic products for those big blockbusters that start coming off patent in the next coming years.

So we have development revenue around those, and then we'll have manufacturing revenue when those get approved. So we have, in the solid dosage area where we have the most business today, we have quite a toolbox of technologies, the patent for the soft chew and then our own line of veterinary-grade palatants, which have to carry a drug master file with FDA. So these have to be approved through a rigorous quality and compliance process. And we use those in our own products, and then we also sell those at a very high price to other companies. So we have a lot of technology in this area to offer folks. And this is one where we're not spending investment money today because we have the assets, but it's a very good -- it's a good part of our future revenue.

So a little bit on each expansion, what we call Vetio South, our U.S. Florida operation. The picture there is the back of the building. We're in a technology park where about, we have 2 buildings. There's one about a kilometer away from that one that we own, where we have our historic liquids building. That building, we will be selling once we complete the expansion. It will be a 12,500-square-meter expansion in this building, which is probably about 2/3 of that building will occupy when we're complete. And between the -- what we expect to sell of the facility, the real estate value, we can manage the CapEx, the net CapEx down to a relatively small number. And as I said, we have the capability to manage -- to make for Swedencare, the dental bones product around the world. So that's -- and then a CMO opportunity for the rest of the industry in a growing space.

The facility itself will have -- we're in it today making nutritional supplements, and then we'll have the Treats facility as part of that supplement and treat food facility. And then the liquids facility, as I mentioned, will be moved over and we'll be at a quality class where now we can make Rx, what's called non-sterile liquids, which I mentioned in a previous slide. So that is what's really critical around that is it gives us a whole new growth platform for liquids. And for our animal health pharma customers that do business with our Canadian operation, they've been wanting another player in this space. So we have another cross-selling opportunity to do developments in Canada and manufacturing in Florida. So it's a really powerful -- this site gives us a lot of different capabilities that we didn't have.

And then in Canada, in Montreal, you're looking at our facility where we occupy both ends of this building. And as we've expanded over the years, we're coming -- we're encroaching on our neighbors as they leave, we're taking up their space. The expansion here is within our own walls. So it's just equipment and a suite that we're building for sterile. This project has been going on with a large global customer. And as I said earlier, we're billing them for development revenues for proof-of-concept batches and whatnot. And then we expect this project to be online next year and have a pipeline of RFPs that will follow.

So really with these 2 expansions, we really have capability to supply virtually every dosage form. So really operating across really large markets. We have anchor customers, both internal and external and lots of growth opportunities. And as you saw from previous slides, a lot of revenue capacity in all of these facilities. So really excited about that.

Talk a little bit about pharma because that's not a segment that you hear a lot about in Swedencare because obviously, most of our revenue there is external with Vetio. And -- but we'll talk a little bit about Summit Vet, which Hakanintroduced earlier. But our development pipeline, Vetio is reputed to be a premier development company in the industry. So whereas a Merck or Zoetis or CEVA or Dechra does a lot of their own development, they don't all do their own development. So they farm that out on a contract basis. And we have the best reputation for that in the industry, and we get paid to do that work. And while that work can sometimes be lumpy, we offset that as we get drug approvals for the recurring revenue of manufacturing.

But at the time, we have the largest backlog of R&D projects, so across dosage forms. So very, very strong revenue year-to-date. We're off to a great start this year and project more and more projects coming in. And then with manufacturing, we obviously have, as I mentioned, tech transfers. So as those things go into the plant, that's only going to grow our manufacturing operation. And then to follow on to that is sterile fill. So really, we'll have a complete suite of capabilities we can offer.

The other thing that's -- we talk -- you hear a lot about supplements, treats, things driving growth in the pet industry. And those drivers are really the same in the pharma side, but there are some others. There's a real appetite for R&D investment amongst the majors, the large animal health, global animal health companies that I mentioned. But there's also quite a number of start-up companies in veterinary pharma and biotech that are trying to take oftentimes a proven API, an active pharmaceutical ingredient that treats, let's say, liver disease, kidney disease, all of the things that are already being used for humans around the world and repurpose that for use in animal drugs. We have several of those clients. We've had successful developments where products have launched, and then we have a pipeline now of some of those very same things. So this is a recurring theme. We see a lot of that, these crossover drugs. And then we have some massive blockbusters coming off.

So we have some clients that -- some of which are not animal health companies. These are human generic companies that have woken up to the fact that now that these larger markets, these larger files are coming available, they want to get into animal health. So they're coming to us for the development because we have the specialization around animal health. So that's one of the things -- another thing driving our development pipeline.

And then finally, Summit Vet. Summit Vet was acquired over two years ago in the U.K. Summit's been off to a nice start. We really like that business of making specials, which is like a bulk compounding pharmacy, addressing market needs, niches that don't exist when a drug is off market or is on back order or certain pets need specific flavors or need specific strengths. Summit really fills that gap and is a really nice, high-margin, high-growth business. We're really excited because one of the first things we did was introduce them to the Vetio soft chew technology. So now in addition to the U.K., Ireland, Canada, where we do drug development, soft chew and then Florida, this will be our fifth manufacturing site within Swedencare that has the Vetio IP, and they're rolling out products. They've had 4 or 5 products on stability that will be released for sale in Q3. So we'll have a market leadership position there, first to market with the soft chew dosage form, already been audited by the VMD in the U.K. They've approved sort of the category classification of soft chew, which is new to the U.K., which is fantastic. So you'll be hearing about that more, but we're really excited about the future with Summit. And between Vetio North and Summit Vet, a nice part of pharma that should have some nice growth in the coming years.

So now I'll introduce Brian Nugent.

Hello. I'm Brian Nugent. I am the Chief Commercial Officer for Swedencare North America with specific oversight of our U.S. and Canadian veterinary markets and our online operations, specifically PetMD. And before I start, I want to get a little participation from you, the audience. So specifically, I would ask, if you have a dog at your house or you own a dog, I'd like you to raise your hand and just keep it up for a second. Okay. Not too many, all right. Does anybody have a cat, raise your hand. Okay. If you have a dog or cat and you do not administer PlaqueOff to that dog or cat, I'd like you to raise your hand. Okay. Good. I think we've got a quorum here. This is great.

So I want to introduce the veterinary team, but what I'd like to point out is we have a lot of different veterinary brands. As Hakan mentioned, we did a lot of acquisitions. And with those acquisitions came specific brands. A lot of those brands had legacy relationships or contracts with various distributors. And I can say right now is the first time in the 6 years that I've been with Swedencare, where we have one team now efficiently controlling the sales, the marketing and the operations of all of the veterinary brands. And so it's a nice thing. And it was not like that a year ago. It was much different 2 years ago, and it was nothing like that 5 years ago. I'd like to also just read our mission statement real quick. Our mission is to be the leader in the advocacy and innovation to the veterinary community by providing premier products, practical business solutions that support the growth, profits and success of veterinary practices. And we'll dive into that a little bit later, but it's an important part of our culture.

On the top, you'll see our distribution partners. And there's only 3 national distributors in the states that's left. 5 years ago, there was probably 6 or 7. 10 years ago, over 10. 20 years ago, when I got into the industry, there was well over 20 national distributors. So there's been a massive amount of consolidation. Each brand, as I said prior, is linked or tied in some way to one of those distributors. So if you look in the middle, MWI, who's the largest distributor globally, but also in the U.S., they handle our Stratford line, our Rx Vitamins line, our VetClassics and a ProDen Dental Care line, which is essentially a PlaqueOff line that we've labeled and created specifically for the vet industry. And we'll touch on that for sure. Patterson is aligned with Animal Pharm and Covetrus has the ProDen line, of course, and the VetClassics line.

Interesting to note, MWI and Covetrus in February announced a merger that if it passes regulatory approval, you'll have now one entity controlling 70% of the U.S. market. So we'll see. It will be interesting to see if that passes regulatory approval. They feel very confident, obviously, that they'll do it. But it's going to be interesting because then you'll just have 2 national distributors in the U.S. So it's going to create a little bit of a turmoil, I think, for some brands that have linked themselves. We feel that we're well prepared for that with the relationships that we have in place.

Quarter 1, we grew at a -- quarter 1 '26 versus '25, we grew at a 13% rate. That was more than 2x that of our competitors. And I'm going to walk through a little bit about how that happened and why that happened. It wasn't by accident. It's something that we started 3 years ago, 2 years ago. And a lot of our competitors in this space, we're looking at 5%, 6%. And we'll kind of dive into how that happened and strategically why it happened. But also, almost more importantly, I wanted to share with you, when we say our veterinary community, yes, we do sell to vets ultimately, and we ultimately have products going to pet owners, but it all starts with our relationship with distributors and it kind of flows down. So veterinarians, there's approximately 25,000 in the U.S. That industry, and I think Hakanalluded to it and so did John, there's a little bit of headwinds, and there has been for the last couple of years.

And the consolidation amongst veterinary hospitals has had some significant impact. I was just discussing -- where's Daniel, but I think with Daniel, how the consolidation is occurring, when the baby boomers became veterinarians, they started retiring 15, 10 years ago. And so right now, 99% of retiring vets in the U.S. are men. 99% of graduating veterinarians from school are women. And there's a huge kind of shift of the paradigm occurring, specifically within veterinarians. Veterinarians who are retiring are realizing I can sell the land for more than I can maybe sell my practice, right? So they're selling to corporate groups. They're getting a quick transaction out of the way. They don't have a lot -- they have veterinarians that want to work for them that are associated veterinarians that don't have ownership, but they don't necessarily want to take ownership of that practice on a go-forward basis.

So it's an interesting time that veterinarians who are stepping out of the marketplace are not necessarily finding a veterinarian to sell to. Veterinary distributors, there's a massive shift happening. So historically, a brand or a manufacturer would go to a distributor and they would pay them margin to represent their brand, to sell their brand. And right now, you've got a number -- a significant number of large companies taking a different approach. They are going direct to the veterinary clinics. So they're making a bet. And that bet is, can I grow quicker, faster by going direct to the vet, taking that margin that I'm no longer giving the vet and investing it in a massive sales team. So maybe hiring 10 reps, 50 reps, 70 reps, upwards of 125 in some of our competitors' cases. So it will be really interesting to see how that plays out. It's a big gamble. It could have a big reward or it could not pay off at all.

I mentioned the consolidation that's occurring. You've got a #1 and #2. If that gets approved, they're supposed to get approved in Q4. It will be super interesting to see what those companies do, because they didn't know when they announced that they were doing this strategy, they didn't realize this consolidation was going to occur.

You also have a trend of veterinary clinics ordering online. And I saw this about 10, 15 years ago, the distributors when they would have -- a lot of them are public companies and when they would represent their earnings, they would be happy to announce that 20% -- we've hit a 20% number of clinics that are ordering online.

The challenge with that now, I think that they're facing is so many of those clinics are ordering online that you lose the relationship, right? So no longer is the vet picking up the phone and calling their rep that they've known for 15 or 20 years. Yes, it's very efficient to order online, but they're ordering online, and it's done. So you're losing that one-on-one contact. So it's something that they've got to really see through. And there's a couple of ways where we bring value to help them overcome this. And then ultimately, pet owners, a lot of price sensitivity. They're changing. They're driving the purchasing habits, the consumer habits. And I think COVID was the big driver in this, right? And so a lot of pet parents became veterinarians during COVID.

They didn't go to vet school. They went to Google. And they say, itchy dog, scratchy dog, dogs shaking its head, ears inflamed. And they think what they're doing is finding solutions. They're going to Amazon and Chewy ordering product. I don't know that, that's -- and you get that the next day. And so -- but is it the right product? Are they administering it correctly? And so that's something we'll have to keep looking at.

Veterinarians are facing a decrease in vet visits now for the fourth year in a row. So post-COVID, you've got less people coming in the door. What that means, you have less products going out the door, less services happening. Interestingly enough, the way vets are squeaking out growth is by charging more. So ultimately, what is that? It's a taxation on the compliant customers that are coming in by charging them more because to make up for the loss of business for customers who aren't coming back as much. So it's something that if you look at core inflation, which is around 3% in 2025, vets charged almost 7% more than they did the previous year. So almost more than 2x inflation. What we do is, again, we focus on value. Value to us is not selling a cheaper product that can be sold less expensive. It's selling a better product.

And specifically, how we do that is we sell -- and this is a big change of the mindset, but we sell and had to sell the vet on the concept of it's okay to make money. It's okay to charge more for a premium product that's under your label. And we're going to dive into this right now. Obviously, with John just mentioning manufacturing, it's important to say one of our advantages is a quick go-to-market strategy, moving through R&D quicker than an outside company can do. And we're improving on that, and we've got some more improvement to do.

Distribution, I said times are changing. Only 3 left right now. There might be 2 left at the end of the year. And again, what the key to us is not helping them sell more at a race to 0. So don't sell more for less money, sell the same you're selling now and make more money. And it's really a challenge sometimes to go to a distributor and let them know, it's okay to make money. It's okay to have a premium product under your label.

And of course, pet owners, they're driving it all. They're driving the purchasing habits. It used to be -- it was very difficult for pet owners to go around the vet. Post-COVID, they found it out. They went on Amazon. My mom is a perfect example. She never would have ordered a dog product without going to the vet. But during COVID, clinics were closed. So what did she do? She ordered online, and it came 3 hours later. And she said, this is convenient and she continues that habit.

And this is our model. So this is how we started seeing growth. This process started 3 years ago. And Hakanand Jenny, God bless them, they had to hear from me, it's going to happen. It's going to happen, it's going to happen. And it finally did. So thanks for the -- I guess, the trust in that process and the strategy. So this is what historically has happened. We go to a distributor, we say, this is our brand. We're going to negotiate and pay you margin for distributing that brand, right? Then manufacturers like ourselves and other brands that we compete with said, we want to give you your private label. So keep selling our stuff, we'll give you a private label. If our product is here in quality and price, we're going to give you a product that's here. It's inferior. But you can sell it at a 10% or 15% discount, right? And so veterinarians said, yes, that sounds pretty good. I'll just sell on price. That's not a good long-term strategy in a market that's struggling a little bit.

What we started 3 years ago was saying, no, no, no. We'll keep doing this, and we'll keep doing this for you. But we want you to sell a premier product. We want to give you a product that's better than what the industry has, right? That can go up against any of the brand leaders, but only if you charge a premium for it. And that's going to allow you to have value to your vet clinics. And the vet clinics are going to have value to the pet owners because we have to check every single box to make this work, this relationship work. And, this is what it looks like. So this is our traditional line. This is the legacy private label. Same product, by the way, in all of the packaging. This is a veterinarian-specific private -- our distributor's specific private label that we provide.

And this is what we started selling 2 or 3 years ago. And it took 2.5 years to sell that concept to the distributor. They're not used to making money. It's uncomfortable for them to realize, I don't have to sell on price. I can actually charge more for something that is better. Yes, you can. And finally, we secured a contract with MWI in the beginning of this year. And we're just starting to see the fruits of that labor, and we're just starting to see those products start to trickle out.

This is a good snapshot to show. So Animal Pharm, which is with Patterson, we actually got that signed last year for this upgraded version, and those products started selling. So in Q1, we had growth on that private label brand of 54%. So we're starting to see -- yes, our theory was right. If you do this, if you take this leap with us, you're going to see growth, and we're going to see growth, and you're going to give value to the veterinarians. MWI -- and by the way, this is only with one product launching in Q1. There's 40 SKUs that we're doing this with across distribution.

MWI, which is our biggest customer and the biggest distributor, we just shipped out in Q1, partial of one order because they take time. They have to get regulatory approval internally. Products have to come from manufacturing, and they had growth of 35%. Since Q1, we've now shipped out 2 other products. I think we have 7 or 8 that will be in Q3 and the remaining ones will be in Q4. So again, these are premier products that are going under private label to the distributor where we actually make equal to or more margin than we do on our own brand. So we're not diluting it, right? It's all accretive.

And this brings me to our last slide. And I think this is important, too. Traditionally, initially, PlaqueOff was always sold in the retail environment. And that kind of posed a challenge for vets because they would introduce it to a client and they would ultimately find it on Amazon, on Chewy, in Petco and PetSmart, and they would lose that customer, right? And so to them, it was like, yes, we love the product. It works very well. The problem is once we do our job, the veterinarian, it works so well if the customer finds it somewhere else, that's more convenient for them.

So in 2024, we created a line called ProDen Dental Care which is a private -- basically a private label PlaqueOff. And if you could see the label up close, it says powered by PlaqueOff. So it's the exclusive line to vets. And so for us, it's a significant investment into growing ProDen PlaqueOff but with a twist, giving the vets a brand that only exists in their ecosystem. So you'll never find this in Walmart. You would never find this in Petco or PetSmart. So we're giving them something. Again, this is how we add value to our veterinary community. And in '25, we saw a modest 30% growth. Now we're starting to see it really pay. So in Q1 '26 versus '25, we saw 86% growth in this line, and it's starting to really gain traction.

So that being said, I'm going to pass this over to Geoff. I look forward to your questions. I do want to say it's fantastic to do these events in real life. And I've seen a lot of you on computer screens for the last few years, but it really reminds you of how great it is to bring everybody together. So thank you.

So I would like to attempt to not speak with the microphone. Can you guys hear me? Or would you prefer -- okay. All right. If I go down, you go from there. So all right. So, let's -- I'm Geoff Granger, CEO of NaturVet. I've been leading our Southern California-based operation for a little over 2 years now. We are a manufacturer of pet supplements and other pet care solutions. But our primary focus is scaling our flagship brand, NaturVet.

Before I dig into the presentation, I thought it would make sense to share a 3-minute video with you that highlights the really tremendous strides and initiatives we put in place over the last year. And I think it will go a long way in kind of as I start touching on those things in the presentation, kind of will help make a little more sense out of all that. So let's go here. Can we hear? Cannot hear anything? It's just music.

[Presentation]

All right. If you even need me now. I think we told the whole story there. So we're going to bust this presentation out to 3 segments. So kind of the umbrella of evolving in a hypercompetitive space. We've done a lot, but we need to continue to do more, to continue to reestablish our authority in the category and continue to grow and grab share. So firstly, I want to talk through our key accomplishments and a lot of what you just saw in the video touched on that. Again, I use this phrase a lot. We've set the table for meaningful and sustained growth. But all along the way, we're always looking at the latest insights. And the way we're integrating the insights into this presentation is kind of as we've done all these things, and now we're like, okay, not quite where I need it to be, what do we need to do differently? What do we need to learn? So digging into the market insights to inform our future -- our short to midterm strategy, and that's the third portion, which is talking about what did we learn from the insights and what else are we doing to drive sustainable and meaningful growth in the brand.

So, all right. So we're going to start with key accomplishments. And I always throw this one in here because I think it's super important because I don't think if we do this right, it's going to matter. And it all starts with culture. And a couple of things that we're very proud of is, number one is really strengthening our employee sentiment. And I tell this story all the time is when I came in, in August of '23, one of the first questions I asked was I talked to our HR lead, and I said, do we do a global employee sentiment survey or whatever.

And she said, "Yes, Swedencare just did one about a month prior." The results just came in. Let's take a look at them. And the big metric that we look at there is the employee Net Promoter Score, eNPS. And we had in that survey, a 33 eNPS. And total Swedencare was a 41. So we were lagging where we needed to be. We were lagging our parent company, and we had a lot of work to do there. So we jumped in, in the weeks, months and years following. We did a lot of structural changes. We communicated differently. We added new processes, and we also changed overall personnel as well, right? That was a big part of it. We took the survey in January, February of 2025, so around a year ago, and our employee Net Promoter Score improved by 20 points to 53.

Anything 50 or above is considered excellent. What's really the key with that is that our employee participation in 2023 was only 64% and went up to 85%. So a lot of times that participation jumps up. That doesn't always help your employee Net Promoter Score. So we got over the 50, again, considered excellent. Our aspiration now is 70, which is considered world-class. So I just -- I always like to start with this because I think that's super meaningful because if we don't have the right people, a bunch of happy people who want to be there and want to grow the business, I don't think we're going to win.

Next 2 things are really key leadership changes. And so about a year ago, we brought in a new Chief Operations Officer. It was probably the most qualified operations leader that we've had in the company with 25-plus years of experience across manufacturing, aerospace and industrial sectors. And what really set him apart is he came with multiple certifications that are essential for running our operation and bringing in new processes, eliminating waste. And when I say eliminating waste, it's actual -- time is waste. So compressing timelines allows us to have more time to make products, more bandwidth to make products, more capacity and then ultimately boosting efficiency.

So there's a certification, I think it's fairly global Lean Six Sigma and he's black belt in that. And basically his mindset is efficiency and capacity and running and setting the table for sustainable growth. So super excited to have Erik Thomas on board. And then much newer change was to our commercial leadership, running our sales and our marketing organization. And that's Kristi Murphy, and she came on in just March of this year. And we had -- again, you saw the accomplishments. We got distributions expanded. It's not quite where we needed to be. And so we needed to get a new commercial leader in place.

We brought Kristi on. Kristi has 30-plus years of pet-specific experience. Literally, her first job was as a clerk in a Petco and she doesn't like to tell that story because they do the math on the age and all that, but 30 years in the pet industry. And 2 things that she brings with her is, one is she's been within large companies, Mars Petcare being one of them, midsized companies and then small-size and start-up companies. We actually were able to recruit her from a start-up company that she had gotten a really good place. And lastly, she brings with her, which is super important, existing long-term relationships with our retail partners, which is super important as we continue to build those partnerships and relationships with new partners that we may not be doing business with.

And then next accomplishment, positioning our flagship brand, positioning NaturVet for growth. So we did completely refresh the brand a year ago. We launched it. We revealed it in March of '23 at the trade show at Global Pet Expo, but ultimately didn't start really transitioning the product out to the new packaging until we got in the back half of last year. At that same time, we activated our marketing campaign as well. We call it the Step Ahead Proactive Pet Care campaign. And again, we do that. And I think Hakantalked about this earlier, the gap between human usage and supplements and pet administration supplements is massive.

So at a minimum, we want to try and track those consumers that are not already in the category, but along the way, we'll take some from our competitors as well. So secured celebrity influencer and veterinary partnerships. You saw some of that in the video. And then we activated this across social digital and influencer media. And then the most important part of this right in the middle is, we committed to expanding distribution a couple of years ago. And we did that. And we are in -- as of the H2 of last year, we're in the #1 U.S. pharmacy chain, CVS -- 1,100 CVS stores, the #1 pet care seller, PetSmart. You might say, well, you're in PetSmart. Yes, we had some PlaqueOff in there, and we had some home and yard stuff, but we never had core NaturVet supplements in there. So we're now in PetSmart, and we're in the #1 U.S. retailer, which is Walmart in 19 SKUs and up to 1,700 stores. And then we've got some regional grocery as well. So we got the distribution in there. And going back to the marketing, we didn't really have a marketing engine. So even last year, the last 6 to 8 months is the first time we really marketed and we have a marketing team, and we're doing 360 degree campaigns. So a lot of exciting things. A lot of that happened in the second half. And now we're ready. We've set the stage for growth.

Lastly, we can't do any of the above. You got to have a good culture. you got to expand your brand, but you also need to make sure you're supporting that scale appropriately with operations. And so we did 2 things that it was called out in the video as well as we finally had an ERP, enterprise resource planning system, the ERP, put in place, which allows all of our internal segments to speak with each other and most importantly, it enables us to make real-time data-driven decisions. So boosting efficiency and reducing costs along the way. So that happened in October. That was table stakes to being able to set us up for scale.

And then last, we had SQF certification, which just happened in April. Safe Quality Food is a GFSI-approved globally recognized certification. It's all about prioritizing food safety for manufacturing operations. And this is a certification that much of our competition still does not have. So this gives us an edge. And so it ultimately expands our market access. And specifically, I'll be a little vague on this, but there is a major club customer who we have secured a private label program for that will be shipping in the near future. We would never have been able to do that if we didn't have the SQF certification. So this sets us up to be able to expand appropriately. Okay.

All right. So we did a lot, right? And along the way, some of that stuff is not quite where we thought it would be. So we've got to understand what do we still need to work on? How has the market -- how the market dynamics shifted and what shifts do we need to make and how do we need to continue to evolve, right? So total U.S. pet supplement category is in the $3 billion range, forecast about 6% to 8% annual growth. I think Hakansaid 7% to 10%. So it's in that range. E-commerce remains the dominant channel. It's been the dominant channel for a while, but it's now consistently over 80% with Amazon being the vast majority of that and our competitors really treating Amazon as a primary marketing channel.

Food drug mass is the highest growth segment across the channels at up over double digits, about 15%, 16%. Walmart is the biggest growth segment growth retailer within that at a 20% and around 50% of the share. Pet Specialty is an interesting channel. It's the most mature channel. It's the most mature channel for us. And it's been the most kind of stagnant channel. It's been up a little bit one quarter, flat, down another quarter. And that is a channel that has a lot of struggles within it. And what has happened is the retailers are trying to find a solve for it and they're just kind of adding brands in there. But they're not necessarily rationalizing or editing and they're creating what is already a massively confusing category, making it even more confusing. And I'll talk more about this channel in a second.

Growing brands, they're getting focused on how they're marketing. They're focusing marketing spend on fewer SKUs, higher conversion content and again, leveraging Amazon as a primary marketing channel. And then in terms of how innovation and product is being informed, Hakantalked about this, human trends, human trends, human trends is informing that innovation. Cat is also a big place to innovate as well because while both cat and dog are growing, cat is growing exponentially more than dog is growing. It's a smaller piece of the pie, much smaller, but it's growing, okay? So that's what we learned.

What are we doing about it? So Amazon. So e-commerce, biggest channel out there, right? We're a little underpenetrated in that. And the way we're going to grow our share there is to continue to maximize Amazon business. We had a little bit of stumbles with Amazon with some growing pains that were a product of some of the changes we made, and we're now back on track. So about a year ago, we moved our management of our Amazon business from a third-party partner internally to PetMD, the other U.S. subsidiary to run that business. At that time, we had -- we expanded distribution, so went to Walmart and other places. And we also, at the end of this year, issued a MAP and price increase. And those things altogether created some challenging dynamics around map enforcement. And you had some new accounts that came in and they weren't enforced -- they weren't abiding by our map. We had to work -- we had to address that because once they go down, everybody goes down. So it's a little fragile.

We also, at the same time, unauthorized seller proliferation. We call it rogue sellers. And then we had an inconsistent site experience post the rebrand, right? We had a bunch of white packaging still with this beautiful new blue packaging. And so -- and you had a mix of it out there in front of the customer. So map not being enforced, inconsistent site experience.

Actions. So we've really partnered with the retailers. We've got the new retailers that came in, we've got them in line and they're abiding by our map now. For rogue sellers, we have a hard fix in place there. We have rolled out Amazon Transparency, which is where you put a special barcode on anything that goes to Amazon. So if something comes under NaturVet to Amazon, it doesn't have the QR code or the barcode on it, they're not selling it. So that's how we're addressing the rogue sellers, and we've pretty much eradicated them. And then a storefront refresh, we've just made the decision, let's get the blue packaging, let's get the new messaging out there. And even if we have some older packaging out there, we have a little tile that says, "Hey, we're transitioning.

So let's tell one story. What are the results? Map violations are down by over 50%. I would actually say that's more around 60% to 70% now. Buy Box recovery. I didn't talk about it in here. That's the big thing. You don't have that lowest price, you lose the Buy Box. So when you go on the site, that's not what's hitting you in the face in terms of you want to buy NaturVet. So we are now back to winning the Buy Box because we have MAP being enforced.

And then most importantly, we're seeing steady year-over-year consumption, so customer POS growth over the last, I'd say, 6 to 8 weeks. Next steps further improve MAP enforcement. We're continuing to expand Transparency rollout, but we have already -- we've already rolled out Transparency to the vast majority of our volume. So we're in a good place there, but we'll continue to roll it out. We're going to have 15 SKUs of new innovation that we're actively launching as I speak on the site, which I'll talk about in a second. And then Amazon continues to be part of our -- evaluating our broader marketing strategy, okay? Because as I say, as goes Amazon goes the whole operation. All right.

So we talked about the biggest piece of e-commerce and we talked about the biggest piece of food drug mass. So when we secured the Walmart placement, that was very exciting, big feather in the hat, not quite seeing the consumption we would like to see. So we're up to 1,700 locations around 19 items max. So we're really targeting marketing. And again, we just built our marketing engine about a year ago or less than a year ago. We're really rethinking. We're doing a hyper focus, almost like a pilot, I would say, on Walmart and hyper focusing these activities to see if we can drive up adoption of the brand.

So what I have on the right here is what you call the marketing funnel. So a lot of marketing drives awareness. And I'll be honest with you, a lot of the stuff you saw in that video, it's a lot of awareness driving, right? But it's not necessarily pushing them into consideration or usage and preference is the loyalty segment of this upside down triangle. And so we're pivoting to get more consideration and usage tactics in there, and we're doing that right now with Walmart. And the big focus is targeted digital display, Walmart Connect and then the connected TV, OTT, the streaming that we're doing. And all those things have call to action elements to them to push this button, save here, and that falls more into this consideration usage.

Additionally, instead of focusing on a category or a bunch of different items, we're focusing on hero items, so really 4 items. So these last 2 bullets here, how are we doing? And so with 3 of the 4 hero items, the week-over-week, the run rate trend has increased significantly, up about 50% to 60% versus the prior trend. And then we are now beating competition across not just across awareness, consideration and usage. We have a brand health metric that we run monthly, we subscribe to, and it helps us tell by at total and by retailer, what are we doing here versus our competition? And where do we rank here? Where do we rank here? And where do we rank here? 100 basis points above competition in Walmart.

Going in, we were below 100 basis points above the competition scores, 200 basis points above the competition scores in usage and preference we're right on at the same percent, but we were markedly below before we did this. So as I said earlier, it's kind of like a lab. It's a test. And so how do we scale this over our larger operation?

So scaled Walmart model. Our big focus areas are brand clarity, one message, one tagline and the hero item focus. Again, we have a lot of messages out there. We have 'we care so much, we make it ourselves'. We have 'the power of pawsome pets', and we've kind of pulled all that back, and we're currently working with a third party to kind of fine-tune our go-forward marketing strategy and messaging, but we're going to one consistent messaging and a big part of that was showing up consistently with the new packaging on site as well.

A full funnel focus, right? We're looking at all aspects of that triangle. We did a lot of really exciting awareness stuff, but we've got to drive the consideration, we've got to drive the usage and drive loyalty at the preference level. Amazon unlocking that to be a growth engine for all channels as goes Amazon goes the whole operation. One truth. So when we launched all of our marketing tactics 6, 8 months ago, we had KPIs. We were making the KPIs, but we weren't getting the consumption and the consumer POS growth that we said. So there's something wrong there. And it's a real-world conversation to say, "Hey, I'm hitting all of my KPIs". So we were doing something wrong. So we're really rethinking how we're measuring. And if we hit those KPIs, then that means we should be growing and we should be hitting our financial aspirations. So we'll totally be working that.

And then category leadership, we did a really good job over the last couple of years on what we call thought leadership. We were bringing data to the market that was not available to the retailers. I can say that firsthand when I was at Petco for 11 years, and I had supplements for a big chunk of that, nobody could tell me what the size of the prize was. Nobody could tell me what the share was or what my share was. Where I was leaking or what the size of the market was. And so we've done a good job with that. Now we're trying -- now we're broadening our relationships with the retailers to help them make the right decisions for their shelf.

And like I said earlier, in Pet Specialty, it is a knife fight right now, and you have a lot -- you kind of have finite shelf space, but you have all these brands coming in. And so we are really partnering with them to help make decisions for the category, which ultimately will benefit us. All right.

And then let's talk Pet Specialty. So the other channel, again, Pet Specialty is especially important to us. So it's 13% of the share for the whole market. It's 38% of our share, right? And that's not a mistake. That's where we grew up, right? That's where we were. But as we look to reinvest in food drug mass, which is the highest growing channel or in e-commerce, which is by far the biggest channel, we have to rethink how we're investing within Pet Specialty, but we still have to win because it's still a big, huge part of our business.

And so improve, invest and partner within improved, revitalizing core assortments and accelerating innovation and adoption. I'll talk about that in a second. And that's all about earning more facings, improving our shelf presence and reestablishing our category.

Invest again, because we need to make sure we're investing in food drug mass. And we're investing in e-commerce. We have to be very deliberate about how we invest in the Pet Specialty channel. And so through quadrant analysis, we're saying, you know what, this particular pet specialty retailer, they don't believe in the category anymore. They're not -- and in general, they're losing -- they're closing stores, and they're not who we want to be investing in. So those are folks in the past, we had peanut-butter investing. We're saying, no, we're not going to invest in you anymore. But these other guys, the Petcos and the PetSmarts and the Tractor Supplies, we're all in on investing with them, right?

And then partner. And this one is interesting because this is specific to private label. So we also see private label. But hey, Geoff, you just said your primary objective is to grow NaturVet. It is. But what we found is that where we can have collaboration on private label with partners who have our NaturVet brand, that creates a stronger bond and a stronger collaboration model. And what we've also found is there may be some retailers that we can't quite get into with NaturVet just yet, but we're able to get into them with private label. And again, there was a major club customer we recently had some success with. And that ultimately is a path to having a bigger environment that is not only private label but the NaturVet brand as well. So that's our approach for those channels.

Two more slides. We talked about product a lot, right? And what did I say at the -- when we talk about the insights, what's informing insights, it's human trends. And so the 2 new innovations in dog that we launched this year are directly informed by human trends. First one is dual action, which takes 2 key need states. And we did a lot of third-party work directly with consumer feedback to understand what are the need states that make the most sense. But the concept came out of going to a target and you're looking at Centrum, a big brand in the States. And this is the exact concept that they're doing.

So the example here is immunity and longevity. We have an immunity and anti-inflammation, and we have a gut and an allergy. And even the packaging kind of has human inspiration like what you've seen. So we're launching that, and we're launching what we call targeted care, which is a double-click kind of humanization of the existing key need states. So what you see here is muscle. That's a double click of hip and joint. There's one called beauty. That's a double-click on skin and coat. And then we have a dental product that is all about managing the oral microbiome and also creating whole body health in doing that.

And then we don't want to forget about cats, right, because they're growing exponentially higher than dogs in sales. So we had 9 formulas that were combined formulas and dog and cat formulas. And I don't think -- when I say this, this isn't a revelation, but cat parents don't want dog formulas. They want cat formulas and they want formulas that are specifically formulated for their cats. So we took those 9 formulas. Those still exist, but we stripped out the cat portion of it. We actually reformulated. It wasn't just, hey, let's slap a new label on it. We reformulated it, added even more beneficial elements to it to benefit cats. And that's what we're launching this year as well, and that's 9 SKUs. We call that our Feline Forward initiative.

Now innovation is where we go a lot, like that's the exciting part of product. But this middle part is the most important part, in my opinion, and that's core assortment revitalization. And that's -- so you're doing your innovation over here, but you're also constantly evolving your existing assortment. And you're doing that through elevating the formulas you're saying, I think we can increase the active levels here. I think we can reduce inactives here, which some would consider to be fillers. Hey, let's make sure that we have natural preservatives.

And the big part of it is palatability. Let's have the best palatability because if you look at the entry into the category, palatability is one of the #1 elements like, "Will my pet eat this?" And so we -- without getting too much detail, later this year, we will have product out there. We've been working with a third-party palatability house and a legal partner. We'll have product out in the market that will have specific palatability claims. Our competitors are not doing that right now. They've done it on their sites and stuff and then they call it off because they're not doing it right. We're doing it right. And that's -- and again, that's one of the #1 entries into the category is will my pet eat it. So I think we have some exciting things happening there. And that's within our core assortment.

And then lastly, our product road map. I think one of the challenges in the past is we've kind of addressed -- we would address innovation with what are we doing this year? Okay. Well, what are we doing next year? But we weren't connecting it all. We didn't have a full journey mapped out. And so we're really fortifying our long-term product strategy. That's 5-plus years. It's actively being done by our R&D team at this point in time, and we'll have more to share on that down the road.

And lastly, like I talked about earlier, we're doing a lot of things. But if we're not setting operations up for, we're doing that starting at the end of this quarter, beginning of third quarter, we're kind of prototyping it. We're going to pilot it, see what it does, and then we will look to scale it in 2027 and beyond. And you know what that's going to do, right? That's going to drive efficiency, increase our capacity and then ultimately reduce costs.

Lean manufacturing, I talked earlier, Erik Thomas, our Chief Operating Officer. He was the first operations lead we had in our company that had the pedigree. He's got the pedigree. He's got the certifications. And so he since trained his entire manufacturing team on these practices. And so these are things that will result in reducing excess inventory, improving our cash flow and ultimately tying in with our supply chain team.

And on that note, a couple of years back when I got here, we had a purchasing group and the purchasing group reported into R&D, but they really didn't have a direct connection to manufacturing. Well, they're buying all the raw materials in the packaging. You got to have that connection. And so once Erik came on board, we moved purchasing into him. It became a true supply chain organization. And then their focus is strategic sourcing with long-term agreements in place. We weren't experiencing savings. We are now meaningful cost savings, improved payment terms, ultimately optimizing our working capital. And we're doing all this under a framework of stringent supplier governance, meaning there are KPIs that we're measuring. And if you're not standing up to those, if you're late, if you don't have the highest quality, then we move on to the next guy. And that is all tied directly into our manufacturing organization. All right.

I think next, we are going to have a break. Sorry, I was standing in your way. I was trying to get through standing in the way of the coffee. Yes. So right. Thank you. Appreciate it. Thank you.

Was quite complex. And we wanted to do something that both drives our business and does good. And that has been our guiding light is trying to keep it as non-complex as possible, but at the same time, it needs to do something good. And as we're growing, the expectations are turning up a little bit, not only from consumers, but also from investors and customers. And so our sustainability work really focused on what matters.

We started out actually in 2024, but in 2025, we moved into really doing the dual materiality analysis. And these are the results that we came to. These are the focus areas. So circular economy, waste and resource efficiency, trying to decrease the impact that we have on the world surrounding us. And then I know Geoff talked about it, but it is a guiding light in the company is making sure that people want to. We want to attract the best talent. And there are several different parts of that, but employee well-being and safety is definitely one of the main factors there, improving the working environment and also skills development. We see that, that is something that we can offer, and we see that something that our talents seek.

And then I would say, most importantly, we need to sell safe products. Our products need to be of the best quality, and they need to be safe for the consumer to trust -- to put their trust in us to help them with their pets well-being. And all of this boils into having a corporate culture and a responsible governance that makes sure that we follow these guiding principles. So having all the different ethical guidelines and compliance transparency and a strong corporate culture. And as you can see, our employee Net Promoter Score is quite high. The benchmark -- it's difficult to find benchmark numbers for our specific sector, but it does look like it's in the 30s, and we had a 44.

So once we looked at the focus areas, we did a lot of both internal and external discussions, and these were the topics where we set targets. By decreasing our footprint, we want to focus more on shifting to fossil-free electricity. Our baseline is quite good, but that can be improved. And our target is to reach 90% by 2035. Decreasing our waste. It is a little bit more complex. So this year, we are working really on finding a baseline number and making sure that all of the different subsidiaries and countries measure the same thing. We do the same thing. So this year, we're focusing on getting the quantitative targets set.

The employee engagement, as I mentioned, 44% is really high. If you try to find benchmark numbers in life science, pharma, pet food industry and that sector, 30% and up is excellent, but we don't want to just be excellent. And we want this to be high. And if it's not measured, well, it kind of gets out of focus a bit. So maintaining a really high employee engagement rate is truly important for us. I don't think anyone has been unaware of the macro changes that are happening right now, shifts in what talent is needed and how -- I mean, let's face it, everyone was talking about how AI is going to either enhance us or maybe shift everything. We still know and believe that the human talent is the core of it.

And being able to attract the right talent and making sure that we retain the right talent and develop the right talent, we believe that we can continue to be competitive at the level that we are going forward. Health and safety, the benchmark in Sweden for the manufacturing industry is around 5, so lost time injury frequency rate is how many injuries happen during a year that has a loss of day afterwards, not counting the day of the injury. So the injury is severe enough that somebody is missing a day of work the next day at least. And we haven't -- the 3-year rolling average is 5, and we want to bring that down to 3.5 by 2031. And then last but not least, the product safety, 0, and it should always be 0. That's our target. And it feels like is it a hygiene factor or something like that? Again, as it is one of our -- well, most important targets and what we build our business on, that needs to be a focus. Even if it's 0, we've had 0 forever, it should continue to be 0, and we need to keep that focus on it.

Last year, there is a little asterisks. Last year, we had an incident, which I would say it's good because we don't really have that many incidents, but there was an incident that really required us to put our processes in place and kind of [ tweak ] test for the Swedes out there to do a little pressure testing on it. And it worked really good. We conducted the investigation and it was concluded. It was a handling error by the customer and it wasn't a product issue. So these targets and what we want them to do is really guide us going forward in making sure that we are the company that you can trust, the company that investors can trust, the company that customers can trust, the company that pets can trust.

So the targets, looking at the targets, how they will help us to do practical improvements. It's all about using the synergy of the group. It starts with dialogue and discussion between the different sectors and different companies. And just by doing that, we already found a couple of efficiencies. So looking forward, we want to make sure that we do have less production waste. It's both good for the environment and it's good financially for the company.

People and safety, I can't reiterate that enough, but having the right talent, maintaining and developing the right talent is really Alpha and Omega for a company like us. And we are building that structure to be able to do that. And we already see that now in our recruitment of new colleagues that when talking about the strong corporate culture we have, it is something that helps us when they're deciding on maybe between a couple of employees, future employees. And product safety, it's strengthening the traceability and all the way down to the suppliers, making sure that the suppliers adhere to the code of conduct and that we do the audits to ensure that the documentation of materials and everything is in place because, again, it's -- the customers look at us for their trust, and we are those gatekeepers, making sure that the products are safe.

And how it is then embedded in the governance, it starts with the Board. The Board has the ultimate responsibility. Executive management team owns the ongoing sustainability work and priorities. And then together, we develop that. It's not something that is just static. We will continue to develop that for the time to come. So it's really focusing on the material topics where we feel that we are -- we can make an impact, but it also strengthen and builds resiliency for our company. Next phase will be, of course, to continue to improve the data quality, strengthen site level execution and making sure that we continue to embed these targets into the day-to-day just by living it. All right.

And then let's shift hats. Now we're talking about EU and or Europe and U.K., Amazon and pet retail. We jokingly say, and then this could be a 30-second presentation, what happens in the U.S. comes here a couple of years later, done. That's the presentation. So now you know what's going to happen in Europe because it's happened in the U.S. But jokes aside, there is a lot of truth into that. When it comes to the pet and especially in the pet care segment, the U.S. is a couple of years ahead of us in the trends and the shifts. As we talked previously, the soft chews is a dominant format to give to your pets for your dogs and cats when it comes to new pet supplements.

And in Europe, it's still emerging. It's emerging quite fast, but it's been the dominant in the U.S. for quite a couple of years now. And the same thing with the online shopping. Amazon is huge in the U.S. and Chewy, and it's starting to shift that way too in Europe. And usually, it starts in the U.K. When we're looking at the strategy we have in Europe, it's very much -- we look at the local, so local route to market and a position, but also a shared digital growth engine. We have a strong momentum right now. The growth in Q1, 21% Main growth drivers have been the dental products and online. We see additional contribution from the vet sector with Innovet in Italy with new product launches and a strong growth there in Q1.

And while the current growth is strong, we still see different building blocks where we can elevate that going into the rest of the year and the years to come. Europe is a very large pet market and is moving at a strong growth rate of -- predicted growth rate of around 8% CAGR for the years to come. And looking at the digital shift, it's moving stronger and stronger towards the online. That's the fastest moving segment for the supplement sector. And this is something that we're seeing. We're seeing more and more interest from customers that historically have not showed as much interest in the supplement. So large retail chains and also the online retailers are now looking to add more of our products into their listings.

It's a little bit different depending on what country you're looking at. The U.K., we have a full omnichannel presence from the veterinary to the retail to online, while the other -- like the more south you go, the market looks a little bit more fragmented. In Italy, we have a very strong history with Innovet being a vet influenced model. And the same, we have that in the U.K., too, while in France, Spain, Greece and the Nordics, we're looking at -- we have smaller local teams and we're building it with the online channel and focus there and leverage that. Germany is one of the markets which is a huge market, but we have been basically nonexistent. We've had a very small footprint there. But we're going to talk a little bit about that and how we believe that we're going to increase that share substantially in the years to come.

The U.K. vet market has had a big thing happening over the last 2 years. They've done a competitive market investigation from the government in the veterinary market. And basically, in very short, they concluded it's just too expensive. It's not transparent enough. Something needs to happen. And they're putting legislation in place to make sure that transparency increases. They're even doing price caps on some of the products, which is forcing the whole model there to shift towards preventative care a little bit. So for Nutraceuticals, it's really a positive thing, the outcome from this investigation. And we think that our brands, nutravet and ProDen PlaqueOff is really well positioned for that. We have a long history in the U.K. with practitioner-led credibility. So we worked -- we have products that are targeted for the veterinary sector, very much clinically oriented branding and condition-based formulas. -- and have a long relationship with them.

Continuing looking at how we're developing that is making sure that we continue to have that sector, but also talk a little bit more towards the end consumers and not only the veterinarians. So making sure that the end consumers are also aware of these -- of the products and what we offer. And looking at the digital practitioner education platform we're developing or have developed and just launched, it's still maintaining and building that strong relationship with the veterinarians. So on the vet sector, we have a good strong standing leg in the U.K. And then looking at the more straight to consumer or direct-to-consumer or consumer-led leg that we have, we're focusing a lot more on really telling the story directly to the consumers by different online channels, but Amazon is definitely the biggest one.

Previously, we were on a vendor. Vendor is online Amazon capacity is that Amazon basically does everything. We just ship in our products and they sell the products for us and they set the prices. They do basically everything. And in 2024, we shifted over where we took over a seller, which gave us a lot more control of everything. And I think if we're looking at the graphs, it was a very successful shift that we did. We built in-house capacity, try to get best-in-class talent to manage the channel. And so far, it has -- the growth has outpaced the market and looking to 2026, we are very confident that we can maintain that growth that we're seeing there.

We also see one of the things that we heard a little bit, well, if you're Amazon, if you're aggressive there, it's going to hurt the brands with retailers because they don't want to compete with Amazon. Well, I'm happy to say that this year, we've had a long relationship with Pets at Home with one product, and they've had, I think, 3 SKUs so far, don't quote me on that. And now they're bringing in a ton load of new SKUs because they see how -- what positive momentum we have. So it doesn't disrupt that channel. It builds, it builds. It builds awareness, it builds demand.

And this in-house capability we have enables us to move faster across other marketplaces too. I don't think anyone here in Sweden would have thought eBay is a marketplace where you can sell pet supplements, but we're successfully selling good volumes on eBay because we have -- we can leverage the knowledge that we have in that in-house team.

And this is something we can then leverage to other markets. So last year, we moved over to trying to replicate the U.K. model across the other European markets. And we see positive momentum there, too. So Spain moved from vendor to seller in the second half of 2025. And if we're looking at Q1, the share -- we see that the traditional channels growing quite nicely and the Amazon channel is growing really, really strong. Again, consumers don't care. They're omnichannel. They're searching for information and pricing point everywhere, and we need to be omnipresent and own that narrative. And the online channel insights gives us a chance to also be faster at reading the market dynamics, trends and changing consumer behavior.

Germany is -- I said I was going to come back to Germany. It's really the market where we see a positive momentum. And now we're getting contacts from major pet retailers who are interested in introducing our products into their stores. And that's really -- I would say it's not just what we're doing online, but it definitely has a big contributing factor to that.

We have mainly -- we have several brands in Europe, but these are the ones we're focusing our efforts to on the years to come going forward. ProDen PlaqueOff is the leading dental brand. And there is still a lot we can do there. If we're looking at, yes, it's our biggest product, but it's still a very low -- relatively low market adoption. It should be even if we come up to 15% of pet parents start using ProDen PlaqueOff, that has a significant uplift for us in sales. So there is definitely room for growth there. Germany is untapped. In Germany, they use dental sprays to basically cover up the bad breath. But the dental sprays don't really do anything. That's -- those are the leading products for oral health in Germany. So -- and we -- as I mentioned, we do see a growing interest and awareness for our products there.

What we can also see is over 80% retention rate after 12 months once they buy a ProDen PlaqueOff product. That is very much unheard of in subscription-based models for -- well, unless maybe a Netflix subscription or something like that. But for -- in our line -- in our segment, it is really, really good.

And then we do range extensions. This year, we launched the Creme for cats, which has been very well taken by the market. And we also noticed that we're also getting broad listings with current retail customers. One other customer we're seeing is in the U.S., we've been in Walmart, some more the grocer or big box stores. And we're seeing that trend also in Europe where it's not just pet real pet specialty stores, retailers that are starting to list or listing these products, but also getting interest from retailers, regular grocery retailers or other retailers.

NaturVet by Swedencare is -- there is different in formulations between legal compliancy between Europe and the U.S. So we can't just take the great American products we have and just launch them in Europe. We need to be compliant to European regulations. So we worked hard with staying true to the format and what has built NaturVet so successful in the U.S. and adapted to the European market.

Again, we have a great track record on Amazon. So when we're launching these in Europe, we benefit from that. We have tens of thousands, if not hundreds of thousands of positive reviews for these products. And as we're trying to stay as true as possible to the U.S. products, we can get benefit from that. We're also seeing -- we're seeing that the soft chew adaptation in Europe is growing very strongly. For the U.K. market, we ourselves saw a 57% growth during Q1 this year versus last year. And then as Geoff said, palatability, we've worked really hard, and we've done palatability testing on these with 94% to 100% results, which is also really, really good. So it means once they buy it, the pets will love it, the dogs will love it and then they will continue buying it.

For the veterinary segment, we have nutravet and Innovet. -- talked before about the nutravet and the U.K. shift towards preventative care. But nutravet is also doing direct-to-consumer sales on their website. So it's sales through clinics, veterinary segment, they have vet select products. And then there is a consumer variation of that product available on the nutravet website. And there is no real conflict with that. Sometimes they start with the consumer product and then go, they want a stronger, maybe a more clinical product and then move to the veterinary product and buy a path for the veterinarian.

Innovet is -- has a really, really strong standing in Italy, and we're trying to build that and use that and build that across Europe, mainly through an online launch in the rest of Europe during H2 this year. And it has a strong presence in major channels in Italy, which we think that it's possible to translate that to the online sales to it. They have also a strong basis with reviews in Italy on Amazon, which can be used because there it is the exact same product, but being sold in new markets, so we can utilize those strong reviews that we have there.

This year also, we did try something new, the Fast-Track innovation. Since we now have, I would say, a really, really strong in-house D2C team focusing on Amazon and other marketplaces. We have a really strong sales channel. We also have this in the pipeline in the back. We have R&D, we have production.

Let's utilize that and move -- try to see if we can move faster. So we had a product where we went from idea to execution in 3 months. It's still a little bit slow. We can improve that. But historically, very fast for a company like us. And it's just been a fantastic result. We pinpointed a space in the market where there was a lot of demand, but not that many options available for the consumer. So we offer -- we launched the product there in late December, and it has quickly jumped up to being top 10 -- one of our top 10 best-selling products on Amazon. Are we going to be able to replicate this with every product? No. But our goal is to launch 10 new products with this Fast-Track innovation concept during this year. And our internal target for success rate is 25%.

And we do believe that this is -- we see -- if we were looking at the competitive market as the pet supplements market segment is growing in Europe, there are several companies and brands out there that are pure D2C and are really aggressive in trying to capture market shares. They don't have what we have. And somewhere here, that's where we're going to -- we are a lot better. But with the D2C capabilities we have, we also have strength here. So we have the full channel strength.

And then last but not least, what would the presentation be without talking about AI? It's 2026. Yes, finally, somebody talks about AI and new technology. And for our -- but it is, it's crucial, and we need to share what we're doing in this because our products are basically -- they are -- that's why AI was invented basically. I'm saying that as a joke, but it is -- even if it's not a high-value product like a new car or a new boat or anything like that, it has a high emotional value. It's again, we're talking about trust and safety. You want to make the right choice for your pet.

And looking at now, we're talking about veterinary costs going up being quite expensive. You're spending -- you want to make sure your pet gets the right thing. We see that shifts coming towards our sector where you start -- you do your kind of medical research on AI. AI is getting better. Probably if we -- I'm not going to do a show of hands, but if I would have asked how many here has asked AI for your own health concerns, we probably have most of hands coming up where, oh, my knees are hurting or my back is I'm at that age now. So my knees are hurting. I don't know why I woke up, it really hurts and explain the symptoms. That's happening right now within the pet industry or pet segment, and it's just going to increase.

We take this seriously. We have the proven digital capabilities and adaptability at our company. We did a little bit of a pilot test here to see how we could increase and capture the pet parent out there who is looking for certain areas within pet health and can we capture them? And I think this is working with AI. And then finally, we found the magic sauce.

Looking forward in 2 to 3 years from now, this is my personal belief that most of the user journeys will involve your -- some sort of generative or answer engine result in making that decision. And we are doing everything that we can to be well prepared and strong in that sector.

So yes, just a summary slide, good tailwind in the European segment, but we think that we can accelerate that even stronger. Our digital capabilities outpace market. We're going to roll out NaturVet by Swedencare in Europe and already have a lot of good interest there. New product innovation is not losing to the D2C actors who are really fast and have that as a bit of specialty. We have the strong standing and strong historical background and the full channel capabilities. And then, yes, the retail is also shifting. So we're building the retail capabilities to and making sure that we continue to being the leading supplier or provider of pet supplements in Europe. Thank you.

I'll also try to speak without the microphone. I think. We'll see if it works.

Okay. I don't have to introduce myself. I'm sure you all know me. I will take the opportunity to talk more about our financial targets, which we published in December 17 last year. There's 4 of them. We will focus on the 2 top ones. And many of the former speakers have, of course, discussed already the big opportunities we have in the group in order to reach these.

But if we spoke about the double-digit organic growth, first of all, we have gone from the market growth. Hakanspoke about this, about the whole humanization of pets. It's not called pet owners. It's now pet parents. People are spending more money on their pet. And of course, they live longer. And just like humans, they get these age-related issues, which our products can, of course, help with.

In addition to that, there is some significant growth drivers, which actually all my colleagues have covered. So we will go through them a little bit. Amazon, D2C and other online. Laszlo has talked about this. There's huge potential in this market.

Amazon is right now about 40% of our sales. There's lots of potential. And of course, there was another initiative that we did last year when we also acquired the NaturVet Amazon account. We got pharma. Pharma is about 10% of our revenue at the moment. And just like John spoke about, there's also great potential. The development and the manufacturing site that we have in Montreal has a pipeline, which is stronger than ever. And in addition to that, we also spoke about the sterile capabilities, which, of course, is also going to participate to the growth.

We got the big box, which Geoff spoke about. This is, for us, a completely new channel since last year. We are now in this channel with Walmart and some other ones. And Geoff also touched on some private label opportunities that are coming up. So NaturVet, both the company and the brand has really laid a really good groundwork for this.

Then we got the product portfolio expansion and innovation. This is something that Laszlo talked about. We are quite unique in our group, how fast we can launch products and how quickly we take advantage of new formats and innovation. We have production sites both in Europe and in the U.S., which help us with this. And of course, we have -- we are present in about 70 countries and in all channels. So of course, we can continue to take our brands, expanding them into new geographical areas and of course, with brands into new selected channels.

And then there are price opportunities. Of course, production has been impacted by price with raw materials, et cetera, which we have pushed to the external customers. But except for that, our other external customers, we've actually been quite prudent when it comes to price increases in the past. So we see an opportunity in the coming years to increase the price as we are having a higher brand awareness and we're becoming a bigger brand. We have also seen this. And actually, we have done a couple of, let's say, tests. You can see that with AI and also with Amazon, where we've been increasing the price, which had no impact on the volume. So this is also an opportunity for our organic growth.

If we move over to the second big target, which is to improve our profitability, we are targeting to move over to a 23% operating EBIT or 26% operating EBITDA. This will be done continuously over the period. And there is, of course, drivers for this as well. I would say the main one is that we have an organization which can deliver significantly higher growth, basically the growth that we've been talking about all afternoon. We can do this without very much increasing the numbers of employees, for example. Our platform, the production, et cetera, has been invested in, in the last few years to carry significantly higher growth.

With that said, when we work with Amazon, we have, of course, cost linked with that. So that part of external costs will continue to grow. But when it comes to personnel, and we also have a fixed platform of cost, that will drive and improve our operating leverage.

We have cost control. We have been working quite a lot in the last few years with the group in order to work on, let's say, common purchasing. With higher volume, there's, of course, more automation. Geoff also touched on that when it comes to NaturVet, but higher automation and also price will, of course, come with that.

We got pharma. I already spoke about that a little bit, that pharma is one of the areas where we expect to have higher growth. Pharma is also one of the areas which have higher margin than the rest of the group. So that, of course, is also going to bring to higher profitability.

And then synergies, efficiencies and rationales. We have coming from a very -- like a phase of lots of acquisition, and now we have in the last few years, worked a lot more with integration. So just like Brian spoke about. In the past, we have had several brands working side by side. We are now integrating that into more of one organization. And the same thing with purchasing and other admin tasks. We are now much more working between the -- or in the group with the synergies on that.

And the last 2 targets is dividend. We have, as you probably know, a very strong cash flow in the group, and we are able to make the necessary investment for growing the company at the same time as we can amortize down our external loans and also pay dividend to our shareholders. And our ambition is, of course, to continue to do that with an increasing every year as we have since we started.

And then last but not least, our net debt to EBITDA, we want this to go -- this ratio to go below 2.0. In Q1 last year, we were at 2.0. Then we acquired Summit, and we also brought this Amazon account in-house. So that brought it up to 2.9, and we are now at 2.8. But this ratio decreases more or less quarter-by-quarter if we don't do any big acquisitions. So that's how we will get to the 2.0 -- that's our financial targets.

And I think Hakanis going to move over to speak about our priorities and strategy for the coming year.

Yes. Thank you so much, Jenny and all of the other speakers. I'm just going to sum it up here. I mean, these last 2 years, '24 and '25, we've had 9% organic growth. And as Jenny said, our target is definitely double digit. And we feel that the last 2 years, we've done lots of preparations and have had some challenges, but we are seeing the end of the tunnel there. So we definitely are -- should be looked at and should be expected to be a fast-growing company with high profitability. We've always had that. And even though we're not happy with 9%, I mean, it is above market, but we will definitely try to have '26 better and going forward. So we started the year with 11% organic growth, and hopefully, that can continue.

So we are -- and also we have done lots of, let's say, focusing on the offering like Brian and Geoff explained and also Laszlo . So I mean, we are evaluating all of our brands. We are evaluating the organization, how we approach the market. And it's definitely -- we feel that we have a good setup going forward. Where we see opportunities going forward, where we're not so present as we would like to is, of course, new markets. Asia and South America has been growing percentage-wise, good for us the last year, but of course, from a lower base. So we are looking -- actively looking to enhance that.

I'm going to China next week and discussing some opportunities there. China is a challenging market when it comes to products with lots of different ingredients. It's very tough to get them in there. So we are looking for some partnerships with manufacturing there. The only product we really have in China is ProDen PlaqueOff, and that's really taking off this year again. We had a tremendous growth up until COVID and then COVID hit and that just made the markets a bit strange in China, and it's taken some years to come back. But now we are really seeing a very solid growth numbers in China.

Continue to work with operational efficiencies, definitely and in production and supply chain, also looking at where we can optimize as John described, we have presence in a couple of different places in the U.S. and it might be going forward, we will, let's say, look if we can perhaps have a bit fewer, at least the smaller ones, perhaps integrate them in some of our other sites.

We and the market, we see online definitely as the future for pet supplements. I mean it's a very convenient way of ordering the product and the pet owners very much looking for advice and what to do in the market and then linked to be able to order the products, then of course, you do that. So I mean, we do focus on online on most of our, let's say, marketing activities. And when it comes to M&A, I often get lots of questions about M&A. But as I said, the M&A, we have always wanted to add new features to our group, and that's a bit more challenging with the broad offering that we have. So I think that we will continue the path that we've had the last couple of years, a bit slower when it comes to acquisitions.

But of course, looking at new geographies is always interesting, but it could also be that we choose to start greenfield in some markets out in Asia from a very small setup.

So Swedencare, how I see it, poised for growth, profitability and shareholder value. That's the focus from me and for the rest of the Board and the organization. So I mean, we will -- we have always tried to keep the entrepreneurial mindset, a recipe for success, like the Fast-Track that Laszlo presented and no other company in the business are having a project like that. So -- and they don't have the capabilities of doing it either. So I'm really focused of keeping that mindset, and it's good to show here also the group leaders here have been on board for when we acquired companies that they led, we have had a few transitions due to retirement. But otherwise, people -- I'm really happy with our -- when we do make M&A, I mean we really scrutinize that the management and the people joining us, they understand how we work. They understand what we can help with. But we really want them to keep the, let's say, same tempo, same -- just us helping them to grow even further.

And I think we've created a very fruitful environment, lots of, let's say, decisions made down in the group, the different group companies. They know their markets best. I don't pedal with the details when it comes to that. And just as long as we grow in the same way and make some strategic decisions, it's definitely the people out there that knows the market best, and they should make the decisions.

Full value chain, that's also important for us, not only from a margin perspective, but quality and also from, let's say, end customer perception or not end customers, let's say, retail customer perception. I mean I've noticed more and more and I get the feedback from all of our group companies that one highlight for us definitely is that we make our products ourselves. That means that we control quality. That means we control the ingredients. That means if something is wrong, then it's our responsibility. And we can also move faster when it comes to supply to our customers. If you're utilizing a third party, then there's always different discussions if something happens, the brand owner or the manufacturer, whose fault was it or whatever. But we feel that it's a feature that our customers appreciate a lot and there has been more discussions about that the last, I would say, 2 years.

Strong growth in market and Swedencare brands will grow stronger due to brand-led approach and strategic marketing. We're really focused on having cost-efficient marketing that should lead to growth, of course, that's always why you do it. But I mean, we are more focused on, let's say, short-term growth than just keep on having brand-building exercises because brand-building exercises is always very challenging to really know when you're going to get the payoff. You can't ignore it, but we do focus on direct marketing.

And then it's the big shift like we've been talking about the pet parents, I mean, that will only continue in the next 5 to 10 years. The proactive care focus from pet parents definitely will just continue to grow. And the premiumization and humanization that we've talked about a lot about that. And then I also like to highlight that like Jenny talked about the pricing opportunity, it is really like we are very proud of all the products that we sell out to the market. It's good ingredients. It's only products that we see that they have, let's say, clinical evidence or an effect. So we do not put out any products on the market that we don't feel are at the premium range. But for some of our brands and some of our -- we do have, let's say, good, better, best. So we have, I mean, brands that are very, let's say, cost efficient, but still very good products.

Global opportunities, like I said, Asia, South America, very interesting markets, Brazil, Argentina, Chile, lots of interesting things happening there. Asia has been the talk of the town for many years, but it's -- I mean, South Korea and Japan, mature markets, but it's the same, let's say, concept there that supplements are more in demand than before. So if the general, let's say, pet markets are growing around 5%, the supplement market is growing faster even in those markets.

And China, I do expect China to -- it has really bounced back for us for our ProDen PlaqueOff, but the market as a whole. It's been a couple of strange years when the Chinese consumers tested new products. They're not as loyal as European and American customers, but we now see a trend. I spoke to Chinese partner yesterday and said there's a shift there as well that the Chinese pet owners, they are becoming -- they see trends that they are becoming more loyal, not only testing new products all the time.

Still a very fragmented market. Of course, possibility to acquire growth and capture manufacturing synergies and drive distribution. That's focus from us. And we do get lots of offerings and contacts. But as I said, we're very picky. And there hasn't been that much M&A activities last 2 years. And that's more from a valuation perspective that sellers are expecting a lot higher multiples than the market is ready to offer right now. Us included, I mean, many, many public companies, they are trading at really low -- historically low multiples looking at this sector. And of course, it is a bit challenging to convince someone to sell at a lower multiple than that.

But there has -- I think there is a tendency that there will be some more transaction going forward, at least in '27, a couple of PE-owned groups starting to end of their session as an owner. So let's see what happens when it comes to the multiples. And then utilize the strong cash flow for growth, M&A and dividend. And as some of you may have noticed during the last AGM, we got the authorization to do buyback of shares as well. So that is something that the Board will consider when we feel that the timing is right.

And with that, I would like to ask my colleague -- yes, I will open up for Q&A. Well, absolutely. But -- so I would ask my colleagues to come up here. And also, I would like to introduce our new Chairman, Thomas Eklund, who has been on the Board since 2016.

Okay. And here's Jonathan from Danske Bank -- the moderator.

My name is Jonathan, and I'm working as an equity research analyst here at Danske Bank. And I think it's nice that all of you are here. So I think I'll start off with a couple of questions. [Operator Instructions].

So maybe start off, I think one of your slides showed really nice growth of ProDen for all these years. I think the sales CAGR has been north of 20%. So could you maybe just try to explain sort of the main reasons for this growth. Has there been any strategic drivers or any key choices that has made this growth possible?

Yes. I would say that sometimes you really can't explain why it's been so tremendously successful. I mean, I think, of course, if you look at the trends, oral care is high interest for pet owners. The -- when we launched ProDen PlaqueOff, it's kind of a strange product. You sprinkle a little powder over the food and the teeth gets better. I mean, stop plaque formation and it's soften tartar. So it is a complicated product to convince someone to buy. But the main reason why we've been successful is that products work for most pets and definitely more than 90% have success, and that continues the continual, let's say, buy of the products from the pet owners. So -- and really, the basis for the growth of ProDen PlaqueOff was really that started off, as I said, very, very strange, complicated -- a bit complicated product to understand. But being sold out at the dog expos from a small stand, pet owners started using it, started recommending it. It was long before Internet.

So I mean, it was really pet owners recommending their friends and family to buy the product and also that the veterinarians that were very skeptical in the beginning, they saw, hey, this product works. So we started off -- on most markets, we started off really to distribute through the veterinary channel. So -- and then we made the right decisions in some, let's say, like I said, some, I mean, brand-building activities, but still at a very low level compared to many competitors. And then just in some markets, you just get the it factor and ProDen PlaqueOff has definitely gotten that. And also, we've been successful in widening the product range because different pet parents like to administer a different way. So I think we've been very strategically good there and have had a good plan to enter new type of product every 2 to 3 years.

I think you touched a bit on it, but Swedencare is not the typical compounder that just leaves everything decentralized. Could you maybe tell us a bit on how you work with this? Has ProDen in any way benefited from the other companies, some mergers and acquisitions in any way?

Absolutely. Often I get questions about, why did you buy different companies? You could have just kept on growing the ProDen PlaqueOff. That wouldn't have happened because many of the companies that's represented here, group companies, they have actually contributed to a new channel, a new market and in ways that we would never been able to grow. So it's really, I mean, Pet MD with our online sales in the U.S., NaturVet organization with us entering into the big pet retailers like PetSmart and Petco, we will perhaps have come in there eventually, but I mean, definitely speeded things up. So I think ProDen PlaqueOff is really -- it's good that it is the, let's say, original brand and it's really a testimony of our strategy that the whole group is helping out on ProDen PlaqueOff, not the whole, but I mean, many of our group companies are involved in this. And like Brian having a different brand for veterinary channel and ProDen DentalCare, it's the same products, but growing now.

Anything you would like to add, giving the North American business side?

I think Hakan hinted on it. I think also the wide expansion of that product line. So starting with powder, right, and then going to having bones and dental bites and now soft chews, that really helps expand. Some people don't like a top dressing for the dog food, for example. They like the reward aspect of giving a treat to their pet. So now you're taking care of the pet health and you're giving it a treat that makes you feel double good.

Okay. Interesting. And maybe, John, Vetio that operates across, I mean, pharma, OTC, different product categories. If you just had to choose which of these product categories you see the most potential in -- is there any special ones just looking at growth in the future?

Great question. Hard to pick ones. I think they both have great opportunities. Maybe starting with sterile and pharma. The sterile fill, it's quite a growing category. There's a lot of demand. When you look at human sterile fill, a lot of that capacity has been taken with vaccines and the demand for human drugs. So the human sterile companies that do animal health, it's more limited. So therefore, a pure animal health player comes in as a very powerful player. So we can have some cross-selling opportunities, and that's very exciting.

But on the other hand, when I look at the expansion we're doing in Florida, we have yet another capability strategically to supply within Swedencare. We've been contemplating this expansion for 2 or 3 years, looking at different sites, and we chose Vetio South in Florida. And that expansion with having the captive production allows us to also revive our liquids facility, which was needing some -- a bit of a facelift, but also now has the benefit of being able to do nonsterile liquids. So we're really getting like 3 new dosage forms with these 2 expansions.

So lots going on, of course, lots to manage, but very exciting. I think the headline is that it's always more fun to work with your colleagues, but we have a complete -- probably the most complete range of capabilities as a CDMO in animal health because we're not only in the pharma side, but we're also on the OTC side. And there really are -- there isn't another company outside of Vetio that does that broad spectrum of capabilities. So we're really excited.

Interesting. Anyone in the crowd? Yes, please.

I have a question, if I may. Johan Fred from SEB. Maybe directed to Jenny initially. On your margin targets, is there any way you could maybe quantify the contribution from each of the initiatives that you just mentioned to help us bridge the gap to the 26% operating margin target?

No. And the order of it is not the order of it should be. I mean operating leverage is definitely one of them. As I said, we have a group that can -- is built on these kinds of targets that we're going to reach. So I would say operating leverage, absolutely, but pharma would also -- I know, we have not split it up or we have not communicated this in which quarter and how much it's going to be.

But do you have a clear vision in mind sort of you know the contribution?

We know the contribution of [indiscernible].

So you have a plan?

Yes. We have a plan.

And on sort of the scalability, what percentage of your total OpEx would you say is fixed versus scale?

Well, personnel is quite -- well, of course, of the production that goes into the gross margin. But if you look at the personnel, that's quite fixed. If you take the external cost, half of it is probably [ leave ] Amazon at the moment and marketing. I would say maybe around 30% is covered the fixed category of the external cost.

Including personnel?

No, excluding personnel. Personnel is separate part.

And the final one before I sort of jump back into the [ she war ]. In terms of the pricing opportunity to fully essentially realize the value of the overall product, what kind of numbers are you thinking here?

I'll pass that on.

I would say that normally, we have -- if you say the market at least in Europe and U.S. is -- I mean, you raise your prices with inflation and 2%, 3%. And I would say that we have an opportunity to at least add another 2%, 3% on our products in general, I would say. And like on Amazon, it's often that you increase it a bit more, not do it as often, it's kind of round numbers. You raise it $1 or something.

[ Plumen ]?

Yes. Can I push into last? So if you look at the online sort of success in Europe versus U.S., that's sort of 2 completely different stories. So what are you doing differently in Europe versus the U.S. and why they're so successful in one group? Yes, really not that bad?

I wouldn't say it's different. The U.S. has made great strides. So we have to separate a little bit. So in Europe, we're very much still ProDen PlaqueOff. So if we isolate ProDen PlaqueOff in the U.S., we have a success. But the European market is -- I would say it's really just making sure that the big shift we did from going from vendor to seller and getting the right people on board for that. But we're learning from each other. In the U.S., we raised prices and sales increased. It's one of these classic textbook examples, when somebody went on holiday and they miss the person responsible for store misread and said, well, oh, it's 2 for 1. No, let's increase the prices by 2, and they sold out of all the necklaces.

We see the same thing in Europe and the U.S. So it's a premium product. Competition is different in the different markets. The U.K. also has a kind of a little bit of underlying demand that's in there that we were able to capture. The U.K. is a lot more forward than the more south you go. So that's going to be exciting for us. We see really positive trends in Spain to replicate the whole U.K. model. And the signs are really positive. So very long-winded answer for short. The U.S. capabilities are good, but it's a broader portfolio of products, which the mix probably -- and now we're going to launch NaturVet by Swedencare, relaunch on Amazon. And maybe it will be a tremendous success. It will be a success. But will it be the same level as ProDen PlaqueOff? That's our target. That's what we're hoping for.

Yes. And I would add also that the competition in the U.S. is, I mean, at least 5x in Europe when it comes to this space, even more. So it's really a lot more cost in taking market share in the U.S.

If I may ask, does that create different unit economics for you when you're sort of growing in Europe compared to the U.S. online? Laszlo, do you have -- see anything?

Not really. It's -- we're starting from a smaller base in Europe. So it does have a bigger effect.

Yes. It's percentage growth versus margin contribution, the way to look at it as well.

On expanding production, do you feel like you have the right capacity in place now to take advantage of...

Let's start with the mic. So let's see. Is it on? Perfect. So I think the question was on product capacity and...

Specifically related to production.

Yes. So production capacity.

Yes. Thank you. Yes, we have plenty of capacity now with the product lines that we produce. With these expansions, we'll have even more, which is -- you remember from the slide, it is about 72% external. So it allows us to build capacity to have good external supply, but then also have plenty for ourselves. So we'll have the physical space as well to grow into. I put some numbers on the revenue capacity, and that's at the CDMO or CMO level. You can apply that by a factor of 4 to get to the end-use market revenue. So the short answer is yes. We are building in the right capacity across those supplements globally, treats eventually globally, but starting in the U.S. and then liquids already in the U.S. I didn't quite mention in the slide that we're starting to do more work in liquids over in our U.K. business. So we'll expand that portfolio as well.

And on pet retail, when should we start to see the operating leverage from the -- or monetization from the opportunities there?

Maybe I'll try to repeat the question, I guess. Or do you want to try with the mic as...

Pet retail monetizing on that opportunity, when should we start to see the real inflection point in operating leverage from that?

So just to make sure I understand and talk through a lot of things we're working, especially in NaturVet, it's a big part of the portfolio. A lot of things we're working on, we start seeing that growth. I would say Q3, Q4, we start to see a benefit of that. I also want to piggyback on the question that John answered is we also have leveraging our scale, but we're creating even more scale with all the operational maintenance that we're going through and all the efficiencies and waste elimination. That's again, everything I talked about was very much about setting the stage for scale. And we believe we'll start to see [indiscernible].

Yes. And then just commenting on pet retail Europe. I mean, like Laszlo presented, we have a very low market share and products out there in pet retail. So that will change this year as well.

Okay. Any more questions? Perfect, Adrian -- maybe you speak up.

Adrian Elmlund from Nordea. A couple of questions, please. Just first, maybe words you, Thomas, regarding or to the end point that you had regarding share buybacks. Is this kind of a new on the Board's perspective? Like is this something that you're eyeing more towards compared to past M&A? [indiscernible] valuation also is lower now in the sector as a whole. But on the prior side, it seems to be a bit higher than you want us to be.

I think I can add also in the past -- okay. In the past, I had a question if this buyback suggestion is instead of dividend. So I can take that one at once. So how we are thinking about it is that -- and this is not a forecast. I'm just looking about that history. We have had very stable dividends. We have increased them every single year except one when we did a major acquisition. So that is still the fundamental. And you have heard Hakan's plans that we are aiming at the double-digit growth and increased margins. It should be room to continue that development of dividends. And buyback is like an extra to have in the toolbox. At the moment, we feel we are a little bit limited.

First of all, there is like this legislation where you're supposed to be in the -- on the main list and there is a proposal to actually include companies on the first north to be allowed to do a buyback. So we have to wait that, and we also would like to see a decrease, maybe not at 2.0x EBITDA, but at least the net debt is at least aiming in that direction. And then at every specific point in time, we just have to do what we think will have the -- bring the highest value to the shareholders. If you find acquisitions that are strategically right and at the right price, I think we would prefer that. But if they are too high or we can't find them and we have excess capital, then we would use the share buybacks instead. So that's how we will look at it.

So you basically just increased your flexibility.

We have increased our flexibility with long extra tool, with the toolbox.

And you're not planning to change the main listing to the NASDAQ?

Maybe Jenny should answer that question.

But it's something that we've been talking about a few years. It's more about when the timing is right. It's been quite a lot of focus on acquisitions, as you know, in the past. So again, it's something that we are discussing.

So we have decided that we have a plan to do it. It's just a matter of time when we will do it. And of course, it's a priority list that we always been below some other things in priority.

May I have another question to you, Laszlo. I think you said that Europe lags U.S. prior period. And learning from that, I guess, what should you do? What shouldn't you have done in the U.S.? What did you learn from the U.S.? Like how do you sort of what you thought it to handle the market sort of. Did you get my question?

Yes. No, I think what we're doing right now is really leveraging online that has been a theme previously, how aggressive do we want to be in the direct-to-consumer sales because will it hurt our other relationships? And seeing in the U.S., especially the last couple of years, how we have built a really good and strong direct-to-consumer channel. We're doing the same thing in Europe. And the good thing in Europe is I'm sad to say it, we don't have the same breadth and legacy. So it's even -- we can do it even at an accelerated rate without risking of hurting our, so to say, legacy customers or legacy segments.

Are you talking about some cannibalization?

That was one of the things that were -- was kind of being considered that's how aggressive can we be because we'll cannibalize, but we haven't seen that. As you saw on the graphs for the U.K. and Spain, both the traditional channels are growing at a lower CAGR. The CAGR for everything else at online in the U.K. was 5%, 6%, I think, the last 5-year CAGR. And online was 30.5%. So it's difficult -- there is no cannibalization. The market is big enough that we need to really utilize all the channels and be as aggressive as we can. That's the learning we have.

Sorry -- yes, I can just add something and then -- no, just what we have learned, for example, I mean, a couple of years ago, 3, 4 years ago, it was very much talk in the U.S. about CBD products. So I mean everyone was supposed to have CBD products, and that was a new way of calming pets down, and there were lots of brands going after that. And that's something we've learned that didn't really happen in the U.S., and we won't focus on that in Europe because there were lots of talk about that in Europe as well. We must look into a regulatory framework. Can we introduce these products? And that was basically a flop in the U.S. after a couple of years. So we learned that.

It's always a one-for-one also. So for example, in the U.S., especially in the Southeast, it's a very warm humid environment. So you sell a lot of dermatology products. Even during our winter, when it drops to 70 degrees in Florida, you have everybody out walking their dog, right? And they're getting into things, the dogs are outside, they're getting fungal infections. They're getting bacterial infections. You don't see that in the U.K. And so by changing trade information, what we realized quickly is that we're not going to sell the same amount of medicated ear wipes, for example, in the U.K. that we would in the United States because the climates are just different. Of course, ProDen DentalCare and things, those are going to be universal, right, health care, but certain products that are very specifically targeted towards a condition are not going to sell equally in one continent or one area versus the other.

And then you'll get one more answer to that. From the production segment, it's a really interesting opportunity for us. So in Europe, you have a fragmented base of CMOs. So whether it's a shampoo or whether it's supplements, these are tend to be made by companies that do human products. So you have historically tablets, capsules, various powders, things like that or shampoos that are made by a cosmetics company. You don't have a lot of pure-play animal health CMOs. But here we have Vetio in the U.K. and Ireland. We have a very strong pipeline for our soft chews using the technology that I explained as patented earlier.

And we have external customers that compete with Swedencare that are coming to us because they can't go anywhere else. So we're looking at how do we take our head start in Europe and really stay out in front because you don't -- some of the people that are doing supplements come from pet food. They bring a different perspective. And we have a really great pipeline and a really great opportunity. We're trying to understand how do we seize that and really get out and stay out in front.

Sorry, one last thing I would say. This is an exciting area. So I mentioned the soft chew. We talked about, and I think all of us have talked about the emergence of soft chews as the most popular dosage form, talked about Summit Vet, introducing those as drug product specials. That's -- they're the first to market there. So that's another way that I think through Swedencare, through all of its subsidiaries, you're going to see soft chews across the brands, across the units and really trying to establish a leadership position there through what NaturVet does through what Vetio does and then all the marketing companies.

So maybe a question to you, Thomas, or is there a rep from Symrise here? Can you talk about the relationship, how you develop them? I guess, what has it entailed?

I can start. Symrise has been an owner and now is the larger owner for quite some time. They have been very supportive and active helping us develop. So we have a very good relationship in that respect. And when it comes to cooperation, we don't have a lot of corporations. So we basically see them as an active, very dedicated and helpful large owner. And I think we should add to that when we did the last acquisitions of NaturVet and Vetio, they were the largest investor in both these rounds. So they actually helped us do this quite large acquisitions on top of that.

Do anyone from Symrise want to add anything? [indiscernible], do you want to add anything to this question?

It's a very good operation cooperation for us. This segment is very important. The [indiscernible] and the health are very difficult, doing fine. So we really believe on the [indiscernible], and this is why we invest in [indiscernible].

Laszlo, I guess you're the youngest one here. So you're the AI man. And I think -- I mean, everyone is saying that AI is fundamentally changing their business in some ways. And it sounds like it's changing how customers find products. Does this create pressure on you to maybe diversify your ways of finding customers? Could it be social media? Could you maybe shed some more light on that, please?

Yes. So this is -- I'm very passionate about it. But actually, we are well positioned. What AI is doing is what Google started and AI will perfect it. It's making sure that the right information reaches the right customer. The thing with Google and SEO and ancillary, you can game it. Social media, you can game. You can create content that position yourself in a better light than maybe what you are. AI keeps you to the truth. What AI and especially with generative AI, but also answer engine AI will do is it will connect the right person with the right information. And that means that if you make products that contribute to pet's health, you need to make them sure that it's high-quality products, it's safe and it has efficacy. You can't game -- you will not be able to game AI with that. AI will -- that's the whole deal with the AI.

So looking at Swedencare, what we talked about today, we own the full supply chain. We work at premium, high-quality products, different segments for different, if you would say, affordability or what you want to call it. But in the end, we want to be having the best product at each price point for each category and each format. And then, of course, you have to be able to communicate that in the right way. Right now, there is -- it's everything with FAQs and schematics and whatnot to make sure that the AI indexes you and reads the right information, but AI will evolve. And looking 2, 3 years from now, the core thing we need to do is make sure that we continue focusing on making the best products. And that will make us better positioned than copycats or me-too products that -- or brands that do not have the same level of control throughout the supply chain as we have.

And Thomas, you're the new Chairman of Board. Could you tell us a bit on your initial takes joining the Board here? I think you've met some of the management team. Could you tell us a bit more?

I have to correct the question. I haven't been the new Chairman of the Board, but I have been on the Board since before the IPO, so more than 10 years. I am new to this but what really stood out and attracted me from the beginning, and it hasn't changed over these 10 years is that I think that we are working in a very attractive market. It's both a high-growth market and very fragmented market. And then on top of that, we have our model of working where we are keeping companies a little bit independent, pushing down decisions as close as you can to the customers and keeping entrepreneurs. And these 2 things in combination make us riding on the 7% growth, taking some market share every year from competition. And on top of that, we can do acquisition because the market is very fragmented. So for me, that is like a very good combination of things to have.

Fully satisfied with how the Walmart launch went. And you -- in your opinion, what went wrong and what could it be done, Nugent?

I think there's skin in the game on 2 sides. So I think Walmart, when they did the reset in Q3, added a ton of brands at one time, ours included. And they didn't do -- they didn't really do a ton of editing around that. So they made a very confusing category, even more confusing. And they kind of get with a lot of the best specialty retailer you're dealing with. They just kind of throw things up the wall, right? So they -- every conversation we've had with Walmart is they're very pleased with the relationship with us and they're very good at it and they understand the trajectory of what's happening. They understand the challenges that they have on their end to solve, which is simplifying the messaging to the consumer in a very confusing category.

And that goes back to what I talked about when I got into being like that category leader is and the conversations we're having with them, they're embracing it. Their brands are a lot bigger than us. They are Walmart and the other retailers, but they don't seem to be as interested as partnering with them, and they've chosen not to be as vers a market the details of the category. And so the skin of the game that we have would be around -- a lot of it would be how we market it. And I would also say how we level set expectations as well. I was convinced that we get it up to 1,700 stores. I think 12 -- 19 SKUs in total, 12 of them were in 1,700 stores. My belief and my team's belief was that's going to be a spigot that's going to turn on quickly.

And we didn't necessarily do a ton of marketing at the launch to drive that deeper level beyond awareness, and that's something we're focusing on right now. So -- but I think a big part of it. The other part of it is we launched a lot of SKUs, like I'm excited about making SKUs as well as about center stores. That's a lot of SKUs, and that's a lot of stories that are being told in the consumer. And so we're currently in discussions with them to potentially focus the assortment. And then obviously, our messaging would be -- would coincide with that as well. And that's why I [indiscernible].

Okay. Perfect. So time is running out. I think we sadly do not have more time for questions now. But we're, of course, we have 1 more hour after this. So Hakan, maybe you want to say some closing remarks.

Yes. Thank you so much for this event. I hope you have gained a lot more knowledge about Swedencare and are as excited as I am of the future of Swedencare. And we have one more -- yes, we have -- for those who are interested, we have goody bags down there with some of our products as on the information sheet. So please take them when going out. And we also have a gathering below, third floor -- first -- down in the entrance, where we have some drinks and we can continue discussions down there. Thank you.

Welcome to the presentation of Swedencare's Q1 report led by our CEO, Hakan Lagerberg; and CFO, Jenny Graflind. And we are pleased to have our CEO of Europe, Laszlo Varga, joining us with the presentation during today's webinar. And as usual, we will have a Q&A after the presentation. So please raise your hand if you have any questions. Over to you, Jenny and Hakan.

Thank you so much, Emma. Warm welcome for our Q1 2026 presentation. We had a solid quarter, starting the year good, double-digit growth, improved gross margin compared to Q4 and '25 and increased profitability as we expected and communicated with our pre-call late -- earlier this year.

Margins and sales still impacted by NaturVet Amazon project and the takeover. It is improving month by month. We target that the normalized levels will be in H2 2026. The other issues we had in Q4 mitigated. And we're happy that we could deliver that as we also communicated. Strong momentum, especially in Europe and production segments with 20% organic growth.

And in different growth groups. Pharma we have been waiting for both development and manufacturing had a fantastic quarter. Dental, including Dental Month in U.S. predominantly, but it has been presented in Europe as well in some markets, really strong demand for dental product and also online overall, of our brands continue to grow faster than we do in other segments.

ProDen PlaqueOff continue to outperform 33% organic growth and NaturVet 14%. The NaturVet brand is really starting to take off now with our online sales on Amazon. So we're really happy to see that. Coming back to the international turmoil, no visible effects as of yet in demand in markets or for us when it comes to any -- getting products. Of course, transportation costs a bit higher, but not a major impact on us. And as you all know, we have our local manufacturing in Europe and in the U.S., so not so much affected by Middle East and Asia. So we're happy to see that. Over to you, Jenny, about the financials.

Yes. So revenue for the quarter amounted to SEK 660 million. This was a 1% growth. 11% was organic growth. We had a 14% negative currency impact and we had a 4% acquired growth. The acquired revenue came from Summit Vet. This was acquired in April last year. So from Q2, it will be reported in organic growth.

The currency impact is mainly coming from the U.S. dollar, but also euro and pound has all weakened against the crown during the quarter. As you can see on the top right, the organic growth of 11% is double compared to what we had last year in Q1 when we achieved 5% as well as the third consecutive quarter with a double-digit growth.

And like Hakan said, this was in line what we communicated on the update call. Operating gross margin is strong, 59.7%, stronger than Q4 and also for the full year '25 and in the higher spend of the corridor where we have communicated we'd like to be with 58%. The higher gross margin is partly coming from the product mix. For example, like Hakan said, we had strong growth in PlaqueOff with 33% growth, and this we have, of course, stronger margins, and we have a lower share of private label this quarter.

So -- but it's also due to the strong growth we have in Europe. Europe is the segment where we have the highest margin. Summit Vet, which we did not have last year, also contributed to a higher gross margin. The external cost is quite stable. It's higher than it was in Q1 last year because we have moved the NaturVet Amazon in-house since then, which has external costs linked to those Amazon sales.

As we have mentioned before, when we grow in Amazon, there is additional costs, which are linked to the sales. In addition to that, in Q1, Swedencare always participates in several trade shows, which also has a higher cost. Personnel costs is slightly down if you compare to Q1 last year and also last quarter and for the full year '25. Partly this is due to the FX. So it's more important, I think, to look at the percentage of sales, and we have the same percentage as we had last year.

Operational EBITDA and reported EBITDA because there was no adjustments between operational and reported this quarter amounts to SEK 128 million for the quarter. This is an increase of 3% compared to last year and a margin of 19.6%. Also, this is a small increase to last year when the margin was 19.4% as well as better than last year as we promised.

Net debt to EBITDA, this is 2.8. It has decreased with 0.1 since last quarter. The increase that you can see in Q2 last year is due to the acquisition of Summit Vet. And in Q4, it was up due to the decreased EBITDA. Our cash conversion for the quarter was 51%.

This is mainly due to higher inventory value at close, together with some larger tax payments we had to do this quarter, which impacted the operating cash flow. During the quarter, we have repaid SEK 50 million on our external long-term loans, and our CapEx remains at 2% of net sales for the quarter, which is in line with what we had last year.

The rolling 4 quarters. On the left chart, you can see that the rolling 12-month trend has not really changed much this quarter because it was very similar to Q1 last year, and that was due to this negative currency impact. On the right-hand side, you can see the trend of all the Q1 for the last 5 years. Here, you can see that there is no adjustments between the reported and operating EBITDA. So back to Hakan to speak about the sales per segment.

Yes. Thank you so much. North America, our biggest segment, SEK 371 million, a minus 10% growth due to currency. Organically grew 5%. And the highlights or important factors to mention, NaturVet on Amazon, as I talked about previously, now we have almost 50% of all the SKUs in transparency program, which means that we after 30 days will be -- and the other sellers selling on Amazon selling out their inventory, we will be the only seller on Amazon.

And that has a huge impact, both on sales and also when it comes to us being able to invest a bit more in the marketing programs that we know have an effect. So that's a big, big step forward. And we -- as I said, month by month, we see an impact of primarily this transparency program helps us with that.

So it increases month by month. So looking forward to having that settled by end of Q2 so that we are all aligned in our sales on Amazon. We also have rebuilt the commercial leadership for NaturVet. So we're excited about that. Met with [ Christie ] for the first time live at Global Pet in March. And not, let's say, major changes, but I do think that they will have a good impact for the year when it comes to the sales for NaturVet. Another big milestone for NaturVet is that they passed the SQF certification. It's a strict certification process that is, I would say in food grade. So it's not so common that people producing supplements for pets have this certification, but it is starting with the bigger retailers and the big box players that we try to get into.

So it's very important to have that. And we -- the team made an excellent effort at a shorter period than normal to get this passed. So and it was very, very tight schedule for us because it was a requirement from a major club customer that put in and awarded us with a big private label contract. So it was very crucial that we attain this one. And I'm happy to say that we passed it.

Lower Private Label after all-time high in Q4, that's a big part of the organic growth not being double digit. For our branded products, we see growth for basically all of our brands. Looking at -- on the vet side in North America, bouncing back a bit, but still affecting more from -- in our production segment than in our North American sales. So our branded products are doing quite well, but the main topic for us is that our New Ceraguard line that I presented last time, it definitely outperforms market, both branded and private label solutions.

And the private label solution has just started to have an effect on us, and I expect more impact in Q2 and onwards. Lots of trade shows, as always, both veterinary trade shows and pet retail. So -- and also started with a couple of product launches in Q1, and there's more to come in Q2.

Then looking at Europe, continuing this very strong growth, 38% growth in sales organically 21%. Laszlo will present a bit more about Europe, specifically some products that's been very successfully launched. All companies in Europe deliver organic growth. Dental & Amazon are performing the others. So continue to have really strong specifically in U.K., really, really strong market for us.

And also looking at -- on the veterinary side in Europe, Italy has had an excellent quarter. Speaking about Amazon, of course, U.K. continues to overdeliver. And now in Q1, we are -- we have done the final stages to handle all of the Amazon sales on [ EU8 ] going forward. So we expect a strong 2026 for rest of Europe sales on Amazon. Brand -- same story here as in U.S. that the branded are really outperforming stronger than the private label and trade shows and product launches in Europe as well.

And rest of the world, we put that in the European segment, and that's really encouraging to see that it's picking back up with really strong growth and China is back on track coming back to normal, normal numbers that we had pre-COVID. That's taken longer to bounce back in China, but it's really, really nice to see.

And finally, the Production segment, 9% growth organically 23%. And pharma is really kicking off as we all have been waiting for. So it's almost doubled compared to Q1 2025 organically, both in manufacturing and in development. So that's also good to see. And the same there that we do expect Pharma to have a really strong year and the coming years. So we are really pushing that and have strong interest from the market. The Weak Derma-demand, as we talked about in our call, 1 month ago. It's what it is, weak Q1, but increasing in Q2 with the orders and expect growth for the full year. So it is coming back. But it's been a tough quarter for our liquid derma manufacturing in the U.S.

Europe, really strong European contract manufacturing. As you know, we've been building out in the U.K. and also in Ireland, specifically for the soft chews, and that continues to show high demand, and we are increasing basically month by month. Improved and increased capabilities, both organizational-wise -- capabilities and organization in Pharma in North America and in Europe when it comes to manufacturing, both in U.K. and Ireland.

We have started a big project with facility upgrade expansion for the dermatology and supplements in Florida. So we -- currently, we have 2 sites. We will merge those 2 into one and a state-of-the-art derma facility. So we're leaving the old derma facility that's been used for a long time. And also when it comes to 2 different, let's say, CapEx items that we have invested in the old one, we can move those with us and then, of course, build out those, and that has also a big effect on manufacturing lead times when it comes to liquids.

So we're looking forward to that, and that will be finished second half of '26. Over to you -- sorry. I thought this was coming later. Sorry. Yes, prior to '26, basically the same as we presented last time, continue our strong growth trajectory, focusing on present main markets, but also looking into newer markets in Asia and South America.

South America have had a really strong 2025, and that continued in Q1 '26, and we are opening up new markets there with partners. Enhanced operational efficiencies. That's really where we -- on all of our manufacturing sites, we see that we keep on improving and both in lead times and also from a cost perspective that we optimize it.

Online strengthening, we continue to focus on Amazon and other platforms, as you know. However, we are also increasing our D2C sales from our own websites, and that will also be a priority going forward for a couple of our brands. And when it comes to M&A, it feels like it's picking up a bit in the market. We are looking at some potential targets, but do not expect us to be overly active in the M&A market because we do feel that with the setup we have currently, it's really a base to build from. So we're looking and see if there's an opportunity, but not very actively, I would say. Over to Laszlo.

Thank you, Hakan. So I'm going to share a little bit about some of the activities and projects that we have done in Europe and looking forward on how we're going to keep building this strong momentum. So as mentioned, we've had a good organic growth in Q1 versus Q2. The main growth drivers have been the dental products and online sales, both our own online sales and sales together with our customers and partners.

We have built an in-house excellence to support both the brand awareness and building the brand together with direct sales. One of the big moves we did last year was moving in our vendor accounts to seller accounts. So maintaining these ourselves, and we've seen very positive growth on those. Still early stages and looking forward to the rest of 2026, we see that the strong growth momentum will continue in our online markets.

We've also had good growth with -- in the veterinary sector, which we are also looking to implement first online and then also into the physical veterinary clinics later in the year. Another big project was our innovation and new brand relaunches and brand development.

So if we go to the next slide ProDen PlaqueOff for cats launched late Q1 this year. Cats is a big, big segment, and it's been a little bit underrepresented when it comes to health and health care. Cats tend to hide. They're suffering a little bit better than dogs. But we know that a majority of older cats suffer from some sort of dental disease. And this is the segment when it comes to cat food and cat supplements that's growing the fastest in pet care.

And cats are more selective eaters and pathology sensitive than dogs. It poses some challenges. And if you click one more time. To meet this, we have a good offering of oral health supplements for cats and Creme really targets and supplements and add additional benefits, meeting the -- it's a little bit fun. It's a treat. It has the same active ingredients, A.N. ProDen and the palatability is really strong.

So the benchmark when it comes to palatability for cats and cat supplements is around 70%, 75%. But with independent testing that we did, we got a 9 out of 10, which is really promising. So we started with a selective rollout in this first phase and have had a stronger-than-anticipated early response and then building on the broader launch that is planned later in the year.

For the Soft Chew format is one of those formats that we see a strong possibility and strong growth in Europe. It has been the dominant format in the U.S. for the last couple of years. And now we're seeing the same movement in Europe. And then usually, trends start in the U.S. when it comes to pet care and is adopted by the European market. And we see it in the U.K., U.K. is adapting faster to the format. We have a good growth momentum. And we've also seen a positive development in the limited online launch we did last year.

We are taking the -- we have taken some learnings from that launch and are now preparing and doing a full-scale European launch this year. The products will be presented at Interzoo in May. And again, here, we have focused on making some improvements to the product, but also worked a lot with the palatability to have the -- what we want to aim for is the best-in-class palatability in the Soft Chew formats.

And here, we also did independent testing and received a very, very strong palatability acceptance between 97% and 100% on the chews tested. We've also done a refreshed branding and look and feel that has been met very positively in the U.S. where it was launched in last year in the fall.

And our initial responses and discussions with some of the larger pet retail chains and Zooplus that we've been working with NaturVet by Swedencare is also very positive. So we're really looking forward to the launch at Interzoo in a month from now, less than a month. And as you can see -- sorry. And I just wanted to point out that even with the limited launch we did, there was a nice growth momentum, and we see that there is a demand for Soft Chews in Europe, and we believe that this updated and refreshed product will be well positioned for that growth momentum we see in Soft Chews. Thank you.

Another interesting pilot we launched late last year was to see if we could utilize the strengths that we have internally. We have the full value chain all the way from R&D to meeting the customers in the market through both our own channels and close partner channels and wanted to test faster from idea to launch product. And the pilot we launched in December in a single market in Europe. As you can see the results there on the growth, it's been a very positive growth result, and we see how it's contributing to the overall growth, too. And based on this initial success, we're going to roll it out to more markets. in Europe. One of the things that we also anticipated and was hoping for is that when we launch it and get a good growth momentum in the online channel is that it's going to attract interest from the retail side, and we're already in discussions. We've already listed this first pilot project with one pet retail customer and are in discussions with several more launching.

We are now scaling up this model based on these initial successes and have a target of a minimum 10 new products to be launched during the remainder of 2026. We don't think that all of the products will be as successful, but we aim for at least 25% of the products to reach the success where we integrate it into the product portfolio and do a full broader launch of it.

And the target there is a positive contribution both to revenue and profitability. The next products are already in the pipeline, and we hope to launch them late or in Q2. So to summarize the European market, we're standing strong. We have good building blocks. There is -- the overall underlying growth of the pet market is good in Europe. Also, the shift towards the online segment is moving very strong in Europe, and we have good channel excellence, both in the Amazon segment, but also general online marketing and brand building. So we're well positioned to capture this shift towards the online segment.

Together with the new product launches, both in existing brands and in product innovation, that's going to contribute to continued growth in the rest of the year and also introduction of the existing brands, for example, some of our vet products, veterinary products and vet consumer products and new European markets, utilizing the different strengths that we have in the channels in Europe. So I look forward to continued healthy momentum in Europe in 2026 and beyond.

Thank you, Laszlo. Yes. And to sum it up, Swedencare's financial targets that we presented Q4 last year. I would like to focus on the 2 top ones. What you can expect from us '26 and onwards is that we do expect us to deliver annual double-digit growth organically. And why we are confident that we can grow faster than the market growth is our online efforts and scale and Pharma segment really taking up now that we have been expected. We have opened up a new channel with the FMCG or Big Box retailers, a big opportunity for us in the U.S., not only for the brand that we have launched with NaturVet, we also see potential to launch other brands that we have into that channel.

Product portfolio expansion, we continue to utilize the offering that we have within the group. We have done lots of things, but there are a lot more to be done when looking at the different portfolios that we have and where we see openings within our different brands. And also, of course, innovation, we have a continued pipeline, like Laszlo said.

So we do expect that we are -- we will be able to launch several innovations under different brands in the coming years. And also pricing opportunities, as I said, we are making investments and which create efficiencies in the manufacturing side and also for a couple of our brands, we do feel that we are -- we have the potential to perhaps have a bit a couple of percentage more possibilities to increase price compared to competition. And then coming back to the profitability, we have a target of 26% EBITDA, and we do expect us to -- on an annual basis to continue to improve that. And that's really built from increased gross margin, scalability in OpEx.

We have lots of opportunities there, synergies and efficiencies and rationalizations as we are looking to where we can optimize our organization and coming back to pricing opportunities there as well. And then lastly, the Pharma division really will be one of the main drivers for growth and profitability within our group, and they have the possibility to outperform many of the others in our group.

And then we would like to highlight, if anyone has missed it, that we will have, for the first time, have a Capital Market Day in Stockholm on June 2. And there will be speakers from the group and also our incoming Chairman will be present, and we will have a couple of hours or more in-depth when it comes to our business strategy and financial targets. So there will be lots of interesting presentations there from our group leaders. And finally, I would like to mention that Hakan Svanberg, our sitting Chairman will today, when we have our annual meeting, will leave the Board.

And I would like to highlight and thank him a lot. This Swedencare as it looks today, wouldn't have been possible without him. He's really the -- he was the one that found Swedencare and me and Johan Bergdahl was part of that from the beginning. But Hakan has been incremental, and we couldn't have done it without him. So thank you so much, Hakan.

And by that, we are open for questions. And the first one comes from Adrian.

It's Adrian Elmlund here from Nordea. I hope you can hear me.

We can hear you.

Very well. Okay. A few questions from me, please. So firstly, just noted that sales in North America was up 5% organically, right? And I think this is even despite a rather easy comp from last year. Could you perhaps give us a number on how much this private label sales did affect the North American segment in the quarter? Kind of what drove the decline in it? And kind of what should we expect for the remainder of the year?

I don't have the actual number here. But as I said, we came from a record quarter when it comes to private label in North America in Q4. And of course, private label customers, they normally order twice or sometimes 3, 4 times a year. But since it was a record quarter, lots of the demand was pushed into Q2. So that was the main difference. And also remember that we had -- we were in discussions with our Amazon partner in -- starting in Q1 last year, and that led up to a very strong, let's say, buying from that partner in Q1 last year.

And so that also affected our, let's say, what was -- even though, as you said, it was not so strong, but it was a big order from that partner that we had and now it's internal sales. So -- that's the main factor. So yes, what you can expect is a, let's say, stronger 3 quarters compared to Q1 for North America. We do expect all of our segments when we look on an annual basis, we do expect that all our segments will be growing double digit in 2026.

Perfect. Okay. Another question here regarding the SQF certification. You said that, that kind of allowed you to land this major private label contract, right? Is this contract that you're alluding to a completely new one that you haven't commented on before? Or is this sort of in line with expectations looking back from last year?

No, it's a new contract, and it's a big contract. But yes, so we landed it in Q1, but with the prerequisite that we would pass the SQF.

And when is it due?

It will be a, let's say, a rolling project, but the first deliveries in that project will be in Q2.

Perfect. And then another question here, Hakan, regarding just a clarification statement. I think you said that the private label like issue, if you will, will have an impact in Q2 as well. Did I misunderstand it? Or kind of what did you...

No. Then I said something wrongly because -- we do think private label will come back to, let's say, normal demand in Q2. We had -- in U.S., it was really, really due to the very strong Q4 when it comes to private label. And in Europe, it was -- it has been just some -- yes, it's not as important in Europe, but still, it was weaker than Q4 in Europe as well. But we expect it to bounce back in Q2.

Okay. Perfect. Maybe that was my fault. And then lastly, a question here for Laszlo. Kind of what is the go-to-market route here launching NaturVet in Europe? Is this sort of exclusively on Amazon and Zooplus? Or am I misunderstanding?

And kind of what -- could you give any flavor on sort of the revenue ramp-up that you expect here? We saw a rather nice chart that you showed there, but we don't have the numbers on sales. And also, do you have any comments with regards to the margin profile of this launch?

Yes. So I'll take it backwards. The margin profile is in line, slightly better, I would say, than the gross margin that we have at the company. So it's completely in line with that. When it comes to expectations, we do not communicate that when it comes to how big share it will be. But we are in discussions with a couple of the major pet retail companies in Europe, both traditional brick-and-mortar and online.

So the go-to-market is a broad launch. We did -- the initial limited launch was purely online together with Zooplus and select Amazon market. And the purpose here was to get a better understanding of the consumer and the market, give it a good momentum with targeted campaigns. We've seen what works, and we've also seen what hasn't worked and made improvements there. So with the launch at Interzoo, we will start with the U.K. market and pan-European online. And then depending on what type of agreements we finally come to in conclusion with the discussions that we have, the target is a broad European launch in all channels by the end of the year.

Right. Just a quick follow-up, if that's fine. Is this -- do you have any larger like [ X ] day when you're ramping up? Or is this just purely sort of gradual, if you will?

It's gradual. When it comes to Amazon and the online segment, where we control it, it will be a launch from day 1, so to say. And then the rest is depending on the various discussions that we're in. But we are planning to do several sort of touchdowns depending on when the different launches appear in the different channels.

Your next question comes from Christian.

We can't hear you, Christian.

I have a couple. The first one is regarding Nutraceuticals. Given that NaturVet grew 14% organically in Q1, do you anticipate a nutraceuticals to reach a double-digit growth for the full year despite the slow start to the year?

Yes, we do.

Okay. Great. The second question is regarding the gross margin that came in close to 60% in Q1. I think this is the highest level that you have reached in a single quarter in the last 6 years. So how should we think about the sustainability of this level going forward? And are there any structural drivers that could push it even higher?

I wouldn't say -- yes, it's a high one. We have communicated that we'd like to be at 58%, 59%, and that's why we are keeping for this year.

Yes. And the higher was partly due to...

The strong growth in Europe.

The strong growth in Europe. We have higher gross margin in Europe than North America, for example.

Okay. Excellent. External costs represented 5% of net sales in Q1, and you had some elevated sales and marketing costs in the quarter. So how should we think about this ratio evolving as the remainder of the year?

Well, we are expecting, like we said, strong growth in Amazon and Amazon will bring up the external costs. So it's not going to follow the pace of Amazon, but it will be increased as Amazon is growing more than the rest of the group.

Your next question comes from Adela.

Just a follow-up on the NaturVet and Amazon transition. I'm sorry if you already mentioned, but are you able to quantify the impact or the impact that you had on the margins in Q1? And also how much of this headwind should we expect in Q2 and going into the second half of the year?

We haven't really quantified it because it is very difficult to really read out. So -- but I would say that it has -- as I said and wrote, it's improving month by month, and it's both linked to actual sales, I mean, sales growth and with that comes a better margin. And finally, what we are targeting now in Q2 is that we will be able to put on our, let's say, marketing and sales programs because we only put them on when we see the return on the investment is good.

So I would say that expect the Amazon sales for NaturVet to improve over the quarter and will be normalized by Q3. But we haven't -- we don't want to communicate the actual impact. You will have to see that when we report it.

Okay. And then maybe on the good growth that you had in the production. How much of this would you say is driven by actual structural demand versus just timing effects?

I would say that's structural demand. I mean it's -- we do expect both Pharma and our EU manufacturing has really stronger demand going forward. And as I also said that we had a weak liquid derma, derma quarter dragging down the numbers for the U.S. So -- and that is normalizing in Q2, looking at the order situation right now. So we expect a strong manufacturing growth for the year.

Thank you. That concludes our Q&A session. So back to you guys for any closing comments.

Yes. Thank you for the interest. And yes, we would like to highlight that we have decided to continue the feature that we had now in Q1. So we will have a pre-call for Q2 update June 17 at 3:00 p.m., and we will send out a press release 1 week before confirming this. And then we have the Q2 report being released on July 22. And thank you so much.

Thank you. Bye.

Welcome to Swedencare's Pre-Quarter Update, where Jenny and Hakan will provide a short presentation followed by a Q&A. So please raise your hand if you have any questions. Over to you, Jenny and Hakan.

Thank you so much, Emma. Welcome to this quarterly update and new for this year. And the reason why we have this is basically due to the fact that we normally have separate analyst calls before entering into a silent period before the quarter ends. And as many of you know, there's been discussions about these type of calls, not for us specifically, but we have decided in collaboration with our CA to try a new format.

And so this call is primarily a short update, not giving away much. You will have to wait for the report, but giving the analysts the possibility to -- and others to post any questions that they might have, and we will answer as we see fit. So a short -- we will try this. And if it's appreciated, we will continue to have these on a quarterly basis.

So agenda, follow-up from Q4 an update by segment, some financial comments. And here also, I would like to take the opportunity to comment on the geopolitical and pet market update, very short, just as you know, Middle East is in turmoil right now, not really affecting us. No big markets for us. And when looking at transports from Asia and back and forth, we normally have flight transportation. So -- and -- so no real impact from that either. And if we look at the market as such, we haven't seen any decline in demand either in Europe or U.S. or rest of the world. So for us, it's like -- it's still business as usual, but we are, of course, following the happenings and also if it might affect any further, let's say, transportation costs if this war drags on. But as of now, no real impact for Swedencare.

Here, profitability hit in Q4. As we described in the Q4 report, we had 4 more or less one-offs and that really affected our profitability in Q4. The higher marketing cost on Amazon related to the transition of the NaturVet brand and the brand protection. As we communicated in the Q4 report, we will still have some impact in the first half year. It is improving month by month. So we are confident that we are really on the right track, and we have seen lots of good things happening. So that will pan out over the first half year. ERP implementation caused interruptions and affected gross margin volumes. No impact going forward, actually improving our production at the NaturVet site, and we're really happy with the new system.

Marketing spend to support Big Box partners, primarily Walmart and CVS, and it was primarily Walmart in Q4. Low-margin display campaign in 2,000 Walmart stores. That was an investment we made in Q4, so it won't happen now in Q1. And going forward, we are, let's say, open to and would like to have these types of campaigns since we have seen a big uptake in sales. But of course, with a more planned margin effect when we decide to do it.

Then for the launch in pet retail. As we said, we are now present in over 500 pet retailers, and that launch has continued to go well in Q1, and we have also signed a new collaboration for distribution partners. So we will have probably even better numbers at least in Q2 when it comes to coverage. And the spend will be aligned with sales going forward when it comes to marketing spend.

Inventory write-offs, no one-offs in Q1, and we follow it, of course, more diligently, and we don't expect to have these types of big write-offs going forward in any quarter.

The different segments, North America, very strong sales in online and multiple new product launches. However, as I said, lower return on investment on NaturVet on Amazon, still affect by -- on H1, however, improving month by month. So we are encouraged by that. And -- the big thing here is also that we are, let's say, not being able to really push our, let's say, marketing campaigns that are doing a really good job for rest of our brands. We need to be a bit more cautious until everything is settled, but it is improving.

And we are also, as we described in Q4, we have started to get SKUs into the transparency program, and that means that no rogue sellers can sell the same SKU. And we will start seeing effect of that in quarter 2. Pet Retail and Big Box, solid demand and the continued week-by-week increase with Walmart first 2 months of 2026. And that's also pushed by the display campaign, of course, and that display campaign ended last week of February. So let's see how it progresses from here, but we are happy that we saw continued growth week by week.

And also, I would like to remind you here that Walmart was -- that was a big order going into Q4 and in Q1 and going forward, it's -- we are replenishing every week to Walmart, but of course, not a major shipment like we had in Q4. Veterinary, solid demand for our branded products. Europe, online, strong demand and growth, especially with Amazon and Zooplus. And finally, we now have transitioned all of the Amazon markets in Europe run internally. So we get the full top line sales and also be able to utilize our marketing programs as we see fit.

Pet Retail, solid demand all over Europe. Veterinary Italian market, strong start. And as some of you remember, Italian market last year in Q1 was rather soft due to some customers pushing orders into Q2. So the comps are a bit lower, but even without that, the Italian market has really had a good start for 2026.

U.K., good B2C and trade with veterinary. We have softer private label solutions there, but that is expected to pick up in Q2. Strong start for production. Pharma, as we've been waiting for, that has started as we expected and EU and U.K. as well. U.S. supplements, solid demand. U.S. derma liquid is still weak as it was in Q4, but expect to pick up in Q2. We have the orders for that. So finally seeing some improvement there. Jenny, over to you.

Some financial comments. As you know, we have our financial targets where we want to grow with double digit on an annual basis. We expect this for Q1. Gross margin, we expect this to increase compared to Q4. If you remember, we had a gross margin of 56.8% in Q4. And for the full year, we were at 58.1%. So we expect the gross margin to be improved compared to these 2. EBITDA -- and also just to mention on the gross margin, this is driven by both improved production and also the fact that we have some partial impact of price increases hitting in Q1, but it will be fully recognized in Q2.

With this scalability, we expect an increased EBITDA compared to Q4, again, reminder that we were about 16% in Q4 and 19% in 2025. So we expect to have improved profitability compared to Q4. No material one-offs are expected in the quarter. And Q1 is also a very busy quarter with expos. So -- but we always have that in Q1, but I just wanted to remind you all of that.

And then our net debt to EBITDA, we were at 2.9 in Q4, and we expect this to decrease compared to that, and we continue to amortize on our long-term debt.

Yes. Just a couple of shots from all of the activities we've done in Q1 and expected to do. And I'm traveling to Global Pet Expo next week, the biggest pet retail show in the U.S., but we have had lots of our different group companies and brands have had expos. So you see we've had a busy quarter and the whole organization is working really hard. And with that, open for questions.

Yes. And your first one comes from Adrian. Please go ahead.

Perfect. Can you hear me guys?

Yes.

Yes, very well. It's Adrian Elmlund here from Nordea. Just a few questions for me, please. So maybe first off, we had some one-off costs, right -- quite a few of them in Q4, right? I just want to double check, like which one of these so-called nonrecurring costs will not affect in Q1. You mentioned the ERP system is done now. Is that done as of 1st of January? Or like did it occur in the quarter? Kind of just timelining, what items should not affect the Q1 numbers?

Yes. No, no. ERP should not affect. Inventory write-offs should not affect.

I just want to say, of course, we're always going to have some inventory write-offs, but it's not going to have a big effect like it did in Q4.

Yes. And we're not going to have the, let's say, overly -- over marketing spend like we had in Q4. So in line with sales. And we are still affected by the rogue sellers and the Amazon transition, but as I said, improving month by month.

Another question is regarding the Walmart numbers. I think you said in the Q4 report that it doubled in January, right? Do we have any further trading update here? Or like has that continued? Was that like a short-term effect?

Just that it -- no, it -- by end of February, it actually grew week by week, definitely not doubling week by week, but increasing some, let's say, percentage every week. So trending in the right direction.

Okay. Last question here for me, please. I don't know if I missed this perhaps, but could you just guide us a bit towards the revenue visibility here for the Pharma segment in 2026? Like in terms of quarters, when are your biggest products hitting the revenues?

I mean we will have a strong quarter from the Pharma division in Q1. But we expect it to basically perhaps not grow quarter-by-quarter, but this is not the biggest quarter for the year.

Your next question comes from Adela. Please go ahead.

Adela Dashian from Jefferies. A few questions from me as well. I appreciate all the comments around what caused the profitability in Q4 and what the expectations are going forward. But could you maybe walk us through if there's any sort of cost headwinds that are affecting your cost base in 2026? I appreciate the comments about business as usual, but is there any pockets where you are actually seeing spikes already now?

No, not already. But we are, of course, monitoring the transportation cost. I mean we don't have that much when it comes to freight by boat. But of course, transportation costs in the U.S. for the distribution there is something we cover in some of the customer contracts, not the majority, but still, I mean, that's probably what I think would be most -- or if there's any new type of, let's say, hits on packaging due to this crisis. But we haven't seen it as of yet and don't expect it.

I see. And you mentioned packaging here. Is there any -- I mean, I would assume that you have pretty local sourcing? Or do you have big exposures to some of these?

I would say it's local companies that source us. But many of those companies, they -- if I'm talking about the U.S. market, they also have lots of, let's say, manufacturing from Asia when it comes to packaging. And so we don't always know if the product comes from their Asian production or if it comes from local U.S. production. But no indications as of yet changes in price for 2026 other than normal price increases that we have calculated.

Okay. I see. And then on your confidence of ROI improving meaningfully with Amazon and NaturVet and so on. What are like the underlying drivers of this? You mentioned the transparency program and fewer rogue sellers and so on. But is there anything else in maybe the -- both the mix and the marketing intensity that gives you confidence in or...

Yes. I mean looking at -- it's definitely when we can activate all of our marketing programs, then we're in full control of the ROI and how much we can spend. The problem is when we have to defend from rogue sellers. And we see the trend here, as I said, it's increasing -- our sales on Amazon are increasing month by month, and it's still -- we haven't activated all the programs that we would like to do. So we're waiting for the transparency program to get more or less full effect.

So -- but we do see an improvement with the number of rogue sellers. We do see an improvement when price -- keeping the price from our other, let's say, online customers. There were some effect in January as we described when we had the call that we made a price increase for NaturVet and then it takes some time for the bigger retailers to adapt to those prices. So that also had a bigger effect in January. But still, January was still better than Q4.

So we're at a -- finally at a comfortable place and see the trends are moving in the right direction and looking forward to really be able to push the trigger on some of the marketing campaigns where we are certain that we will get the velocity and the pricing -- the sales volumes hiking a bit more than it has in the last 6 months.

Okay. Lastly, as well on the entry into Big Box. Do you already have some sort of margin profile in mind? Like is this -- I know we've spoken about this before, but are you -- still is going to be accretive to your overall once you've reached some sort of steady state with the marketing intensity and campaigns, et cetera? Or do you still think that it will take maybe some time for it to actually generate better than group level profitability, if ever?

Yes. I would say it's more down to, let's say, volume, that volume increases within the Big Box. Margin-wise, it's good, but we would like -- as I've said, it's even better than for some retail channels due to the fact that we don't have to go through distribution and some other, let's say, historically setups with bigger pet retailers demanding more cost for, let's say, for being -- getting secondary replacements in their stores. So it's a bit different setup with the Big Box retailers. But -- so we are definitely happy with the margin setup we have in Big Box. So now it's more getting the volumes up and so we can really see the contribution to the group.

We got a question in the chat as well that says, can you expand on your contract manufacturing business, which had a weak performance in Q4. Projects were postponed to H2 2026. Please elaborate.

Yes. I mean contract manufacturing is -- we have contract manufacturing, both in the pharma part and also for supplements. And contract manufacturing was actually strong for some of our units and weaker for others like in the pharma sector in Q4. But as I said, the year has started really strong there. So it will definitely pick up.

And so when we mentioned the segment production, that's basically contract manufacturing. And as we said, pharma, U.K. and EU has had a really, really strong start. The U.S., a bit weaker, but we expect that to come back in Q2. So contract manufacturing/private label solutions, that's really an integral part and important part for us going forward. And we expect that division to have a solid year.

Perfect. That concludes our Q&A session. Back to you guys for any closing comments.

Thank you so much. We'll be working hard last couple of weeks to have a good end of the quarter and looking forward to meeting you on 23rd of April when we release the Q1 report. Thank you. Bye.

Bye-bye.

Welcome to the presentation of Swedencare's year-end report, led by our CEO, Hakan Lagerberg; and CFO, Jenny Graflind. And we are pleased to have North America's CCO, Brian Nugent, joining us with the presentation during today's webinar. And as usual, we will have a Q&A after the presentation. [Operator Instructions]. Over to you, Jenny and Hakan.

Thank you very much, Emma, Hakan Lagerberg here and Jenny in a snowy Malmö. Yes, Q4 2025, a disappointing end of the year when it comes to profitability. And I'm very displeased with myself for not being able to predict this. There were lots of uncertainties coming in at the very end, but I apologize, and we are doing everything we can to improve our internal processes and forecasting.

Double-digit growth, happy with that, 11%. But of course, I expected a bit higher also when it comes to the organic growth. But overall, we're happy as long as it's double digit. The lower profitability, mainly caused by one-offs, but of course, we have gone through everything in detail and lots of follow-ups and action plans with the group companies that underdelivered, lots of focus on profitability going into 2026, and we should never have a quarter like this going forward.

We have also made some organizational improvements end of last year and beginning of this year, and I will be happy to present those later on in coming quarterly reports.

We presented our new long-term financial targets. I will come back to that later in the presentation. The Board has proposed a dividend of SEK 0.28 per share, an increase compared to last year, and we will also come back to that in the financial -- with the financial targets.

But summarizing the end of the quarter when it comes to sales, of course, not all gloom.

We're very happy that NaturVet really has taken off, 33% growth in the quarter, albeit the quarter last year, Q4 was a weak quarter for NaturVet. But overall, we have 15% on a yearly basis for NaturVet. And as many of you know, the first half year was slow dependent on the rebranding. So we're happy that we were tracking at really high growth numbers for NaturVet.

ProDen PlaqueOff continues to grow high double digits, 17% organic growth, 29% year-on-year, a bit lower in Q4, and that was mainly caused by, as many of you know also, the bit lumpiness in the international sales. So some larger international orders came in are delivering now in Q1. But overall, we are very happy with 17% growth also for the quarter.

Looking at the different channels, it's online continued to grow a lot. Pet retail also solid, including the Big Box retailers there. And also when we look at our branded products in the vet channel grew, but a soft quarter for contract manufacturing, especially for liquid dermatology, and I'm coming back to that later on.

Some explanations of the profitability hit in Q4 that was more of a one-off. Higher marketing costs on Amazon related to transition of NaturVet and Brand Protection will still have some impact in this first half year, but basically getting better month by month. One important thing is that we have started to implement the transparency program for the major NaturVet SKUs here in Q1, and that will have a big impact on that. And Brian Nugent will later on describe that more in detail.

We had an ERP implementation in NaturVet. The cost interruptions that affected gross margin and volumes. No impact going forward. We are very happy with the ERP system as is right now. It started functioning really well end of Q4 and no issues now in Q1. So we're happy with the transition. But of course, the implementation caused more problems and took longer time than we expected.

Marketing spend to support the Big Box partners. Of course, we knew that was coming. And -- and we have continued, let's say, implementing marketing spend, and we have seen results in increased sales, as you saw, but there was not enough, let's say, control of the actual marketing spend. And going forward, we will definitely have better control on the spending in 2026.

Also, as you see on the picture here, we're very happy with the actual display campaign that we have launched in Walmart over 2,000 stores. We are in the ordinary shelves in 1,400 stores, expanded to 600 more. now in January. So we're happy with that. We're not happy with the outcome of the actual cost for the campaign, not a big hit for the quarter. But still, there were some unexpected costs for delivering and setting that up. But all in all, happy with the outcome. I will come back to that.

Also, one of our Pet retail-focused brands, Vet Worthy, also have been launching second half year of '25. And the outcome we're happy with, but not the actual cost for it. So going forward, definitely, spend will be aligned with sales growth going forward. Also, we ended up with some higher inventory write-offs than for the other quarters. And we -- like in '24, we had a very average write-off, nothing exceptional, and that is also what we expect going forward into 2026.

Jenny, over to you.

Yes. Some financial highlights. So revenue for the quarter amounted to SEK 682 million. So for the quarter, it was a 3% growth, which 11% was organic. We had a negative 12% of currency impact for the quarter and 4% was acquired growth.

The large currency impact is coming from the stronger krone against the USD, which is the largest currency for the group. However, both the euro and the pound has also weakened quarter-by-quarter in '25.

The acquired growth came from Summit, which we acquired in April.

So for the full year '25, the net revenue amounted to SEK 2.7 billion. This is compared to SEK 2.5 billion last year. So we had an organic growth of 9% for the full year. The operational gross margin is at 56.8%. There are 2 main reasons for the lower margin. Hakan mentioned a little bit of it. There was, first of all, additional write-offs this quarter compared to other quarters when it comes to inventory. This partly is due to discontinued product lines or products, for example, human products that we don't focus so much on anymore. There was some acquired inventory that we had to write off and then a well issue with one of the brands, which will -- we'll be focusing much more on NaturVet by Swedencare in 2026.

The second reason is this low-margin display campaign that you just saw the picture of Walmart. So these 2 together, these 2 reasons had an impact of about 1.5 percentage points. So otherwise, we would have been slightly above 58%, which is the level that we have been at for the last, I would say, 2 years.

The external cost is increasing, as we have mentioned before, with the growth of Amazon, there's costs which are directly linked to the sales. However, in addition, this quarter, there was also the significant marketing initiatives in connection with the Big Box launch. And there's also additional marketing costs linked to Black Week, which occurs in Q4.

Personal cost is stable, in line with the percentage of sales for the full year 2025. So as a result, the operational EBITDA amounts to SEK 109 million for the quarter. This is a decrease of 25% compared to Q4 last year and a margin of 15.9%.

For the full year 2025, operating EBITDA is SEK 511 million and a margin of 19%.

Cash and our net debt to EBITDA. Our net debt to EBITDA is at 2.9% at year-end or 2.9% at year-end. This is an increase both compared to a year ago due to the acquisition that we made in Q2 this year, and it's also an increase compared to Q3 due to the fact that we had a lower EBITDA this quarter.

Our cash conversion was at 41% for the quarter. There was only very minor changes to the working capital in the quarter. However, we have made larger tax payments this quarter, which is impacting this operating cash flow.

During the quarter, we have repaid SEK 65 million on our external long-term debt loans. And for the full year, we have repaid SEK 233 million. With the cash pool structure that we have in place, it's complete in the U.S., and we also have a good progress in Europe. We are able to operate with a lower cash level. So we have been able to reduce this by SEK 83 million during the year. So instead of this cash -- having a large operating cash, we can now use it to decrease our debt level, which is, of course, resulting in lower financing costs.

Our CapEx is below 2% of net sales, both for the quarter and for the full year. Rolling 4 quarters. As you can see, the revenue for the rolling 12 months is increasing. However, both the operating EBITDA and the EBITDA has decreased due to this weaker profitability that we have in Q4.

In 2025, the majority of the difference between the reporting EBITDA and operational EBITDA is the fair market adjustment that we have made with acquired inventory for Summit. That amounts to SEK 48 million for the year.

Product and brand split. These graphs are not -- so the graphs and the amounts are not adjusted for acquisition or currency. However, as you can see, we have added a line below the graphs for organic growth because it's more of a fair comparison as everything has basically a large negative currency impact this year.

So if we look to the left, you can see that there's a double-digit growth in nutraceuticals, partly due to the good private label sales. We also have good growth in Dental, 23% organic, mainly ProDen PlaqueOff, but there is also good improvements in both the toothpaste and the dental wipes. We get a decline in topicals. This is mainly linked to the decrease that we have in contract manufacturing business.

Hakan will come back to that. In pharma, that has the largest increase in growth, which is due to the acquisition of Summit, but it has a decline in organic growth due to the delayed pharma projects. If you look on the right to the brand split, there's the same thing here.

Graph is not currency adjusted, but the organic is -- the organic one is, of course, currency adjusted. So NaturVet, PlaqueOff and, NaturVet and Riley's are the fastest-growing brands in this group for the quarter, all has about 50% organic growth.

Contract manufacturing has decreased due to the weaker vet channel and delayed pharma projects. Note, however, that the internal revenue in our manufacturing facility has increased with about 15% for the quarter. So when we move and we increase production in-house, this supports the other segments, but it affects the Production segment's organic growth negative because it's eliminated on a group level.

Private label has also had good growth this quarter with larger orders at the end of the year. And the reason why other has strong growth, but low organic is that the growth is coming from Summit.

Now over to Lagerberg.

Yes. Looking at the different segments. Net sales for North America, SEK 410 million, 7% growth, not currency adjusted and organic 22%. So the strongest quarter for the year by far. And on a yearly average -- a yearly number, it's 12% growth for North America. So we are very happy that North America has started to bounce back at very high growth numbers.

Predominantly, online and Pet retail business -- Big Box retailers are the drivers. As we mentioned before, NaturVet, ProDen PlaqueOff and Riley's all had very strong quarters.

The NaturVet big display campaign that we did send out in Q4 and had the cost and the sales didn't affect Q4, but we have seen an immediate impact on the out-the-door sales at Walmart. So almost doubling sales in store from first week of January and the trend continues in Q4 or in February. So we're very happy with that and also, of course, have made lots of influencers and social media campaigns about this that we are available in even more Walmart stores.

Vet Worthy, as I mentioned, now present in plus 500 retail stores and also, I think, 6 or 7 distributors nationwide. So lots of focus on that as well, not as costly when it comes to marketing, but still more focused on moms and pop stores, and we saw a gap in the market for a new brand or a relaunch of that brand.

Private label, as Jenny said, a strong quarter and really focused on that as well, evenly out our, let's say, manufacturing capabilities and -- going forward, we do have both concluded some new deals and also in negotiations. So we see private label as an important part of our product offering, and we do see it's an advantage when discussing branded products in -- with bigger retailers and Big Box retailers.

Treats, interesting and keep on growing. It's actually some of the products that we don't manufacture ourselves. So we have had some supply issues that could have been an even stronger quarter. So we are looking into widening our supply for these kind of organic treats.

Europe has had a strong year overall and also Q4 was double digit, 10% and on an average for the year, 14%. I expect going forward that Europe will continue to grow fast and actually a bit more than the 10%. But we're very happy with as long as it's double digit, as you know.

Overall, all of the group companies in U.K., where we have NaturVet, we have Swedencare U.K. focusing nowadays more on online sales, but also they have joint projects together for the Pet retail side, has been performing really, really well.

We have kept on building out the Amazon team. The Amazon team in U.K. is responsible for all marketing and sales in the rest of EU as well. But as some of you perhaps remember, we have satellites out in Europe. We think it's very important to have a local presence. So we have 1 or 2 based in different European countries responsible for sales and marketing on social media and Amazon, and it has turned out as really good, and we will continue to look at different markets there.

Italy had a very strong profitability, like always, basically, single-digit growth, basically growing at -- like the market, but the comps from last year was the strongest quarter last year. So happy with that, even though it wasn't double digit.

And looking at -- and here in the European sales, we also add our international export sales for mainly ProDen PlaqueOff. As I said previously, a bit weaker quarter, but some big orders came in late and will be shipped out in January and has been shipped out in January and will go out this quarter.

Yes. And then looking at production, SEK 112 million in sales. and the organic growth was minus 16%. And it's still a cautious vet market for contract manufacturer. We do see some lowering in prebooked orders and also pushing some orders. So we are working together with our major customers there.

See an improvement later this year, not already in Q1, but Q2 definitely picking up. So hopefully, we have been at the lowest market for that. But as Jenny said, we are also focusing a lot on internal projects, new launches there and have agreed with some new customers for new product lines. I will present that in the next slide.

Also something that was the flavor of 2025, some delays in pharma projects, very annoying, but happy to say that we've now kicked off 2026 really well and expect all the quarters in the sector to be a stronger quarter than last year. So we're very happy with that. And that's one of the entities where we made some organizational changes to better respond to the customer demand and from our internal, let's say, project planning.

So looking forward to 2026 when it comes to pharma development and manufacturing. On that topic, we have now in Q1 signed 2 new material projects. One of them is the ophthalmic facility that we presented that we were investing in. That is on track, completed in Q1, Q2.

First customer now signed if we had an had, let's say, understanding and an agreement for development, but now we also have signed for the tech transfer and the manufacturing that will start in end of Q2, hopefully, or early Q3. So that's a big milestone for us. And when we have started the manufacturing for this first project, we do have other customers in line and discussing this. This seems to be a lack of, let's say, capacity on this when it comes to the pharma side.

Also increase of internal revenue of 15% eliminated on group level, like Jenny said, and it's also relating to the growth we've had in our branded sales, but also preparing for 2026.

Looking at next quarter, Vetio U.K., Ireland and North, all bounced back with increase of external customers. And as I said, when it comes to the liquids, still a bit challenging, but looking a lot better from Q2. And we are trying to push some of that -- those projects into Q1, working hard on that.

Lots of product launches when it comes to 2026. I won't go through all of these, but I want to highlight Calmaiia (sic) [ Calmalia ] from Innovet. As many of you know, it's -- Innovet is our, let's say, most R&D-focused organization, lots of IP and lots of clinicals in every launch there. So we have a new and innovative patented combination of Trytofan (sic) [ Tryptophan ] and PEA Ultra Micronized and have had really, really good clinicals on that. So we are eagerly awaiting the launch for that.

And then also, I would like to highlight the stretch for a completely new and improved K2C product line. That's a legacy line with plus 15 different SKUs and has always been a strong seller, both from a branded perspective, but also when it comes to private label solutions. And we have now been working in almost 2 years to improve that and adding a special ceramide solution called CeraGuard, also with excellent clinicals, expanding the reach and the effectiveness of the product.

And we have just started to launch it with lots of interest from the market and have basically signed all of the major customers to revamp their private label solutions to this offering. So that will have a big impact for us in 2026.

Our new financial targets that we presented, we're adding another target. So we have annual double-digit organic growth going forward. And also, we have said that we will establish an operative EBITDA margin above 26% midterm. And what midterm means is during 2028. We see these new financial targets as a 5-year plan from '26.

Dividend, 40% of net profit adjusted for nonoperating costs. And we will take into account, of course, consolidation and investment needs, liquidity and financial position. And speaking about our dividends since our first pay 2021, historically, we have increased it annually between 5% and 25%. This year's proposal of SEK 0.28 is 13% of the net profit adjusted for nonoperating costs.

Net debt to EBITDA being under 2, the long-term target with flexibility for acquisitions. And we do have room for utilizing our credit lines up to around 3.5.

So -- going forward, we will continue as we have. We have continued to amortize. So that will be one factor to getting the net debt down, of course. But also, like Jenny said, this quarter where we went up from 2.7 to 2.9 was -- even though we did amortize SEK 65 million was due to the lower EBITDA. And what we see going forward is, of course, the increased EBITDA together with amortizations, we will be working towards 2.0. We are not stressed, but you should expect that we continue to get the net debt down.

Structural key growth drivers for the coming years. Yes, for looking at Swedencare as a group, we've been very active when it comes to M&A up until 2022. Going forward, it is a bit more challenging for us to find interesting M&A targets. We do like to add unique companies and product lines to the group like we did with Summit Vet earlier 2025. But going forward, M&A will not be as important for our growth driver as it has been.

So what we see in the coming years is definitely our Pharma division is expected to be one of the fastest-growing product groups, supported by a strong pipeline and good visibility from contracted projects. And it's basically that the manufacturing grows a lot. We -- a couple of years ago, we were basically only doing development work with a very, very minor manufacturing capabilities. Now we have built that out, and we continue to do that. And we see that it is a very good add-on to the -- of course, to our growth.

The Big Box retailers, big channel opportunity, the same size as traditional Pet retail and we will continue to work on that. We have just started, and it's a long-term project. So we see lots of opportunities there.

Amazon will continue. D2C, what we call D2C is when we sell direct to the consumer, not through the platforms. As you know, we are heavy on platforms collaborations, Amazon, Chewy, the Zooplus in Europe. We do investigate and see the D2C as a very interesting part as well, not only to increase sales, but also to get more direct contact with end consumers.

Product portfolio and innovation, of course, product portfolio expansion is one of the key elements for Swedencare is that we take innovative good products that we sell under one brand and expand that to other brands. And then, of course, continue to come out with new products in a fast way like we always have.

Then finally, pricing opportunities. We do see that selective pricing initiatives remain available, supported by strong brands and limited historical price increases. And also, I would like to say that comparing products, we do have, I would say, on average, we do have high-quality products, mostly priced at a bit lower level than comparable competitors. So we do see opportunities for us there. And yes, over to Brian.

Good morning. I'm Brian Nugent, Chief Commercial Officer for Swedencare North America, and I have oversight of our North American veterinary and online operations. Today, we'll be discussing Swedencare North America's online division, Pet MD. Swedencare's online mission statement, while seemingly wordy, can be simply summarized by saying we will meet pet parents where it's convenient for them.

Our North American online division is Pet MD. Acquired by Swedencare in 2021, Pet MD was founded by Ed Holden, who continues to manage both Pet MD, the company as well as the online sales of other Swedencare owned brands.

Pet MD is coming off year-over-year online growth of 20%. It's important to note that the original Pet MD team is still intact and continue to utilize its proprietary systems and in-house algorithms created to assess advertising and ad resource allocation, respectively. This consistency is important for maximum optimization.

Pet MD primarily sells through leading online players like Chewy and Amazon and to a lesser extent, D2C and other e-tailers.

We also handle all the creative for Pet MD and other Swedencare online brands in-house. This includes photos, videos and all creative enhanced brand content. Our primary focus is to leverage Swedencare owned brands and support the products that we manufacture within Swedencare, which, of course, gives us the highest margin opportunity. We'll now run through the top Swedencare brands Pet MD handles.

The main brand, of course, is Pet MD, which we acquired in 2021, as I said, and continues to grow year-over-year. The Pet MD brand acts as the train tracks for Swedencare's other online brands. That is we utilize all the Pet MD systems that we built to manage our other Swedencare brands. Pet MD is mature, has great recognition, and it's important to note that this brand also has only been available online. It's never been sold in the retail outlet. We are, however, exploring options related to this in the near future.

The next brand is ProDen PlaqueOff, Swedencare's core and flagship product. PlaqueOff is the premium oral health care product for pets and it's a high-margin operator. Because of the uniqueness and high margin of PlaqueOff, great focus is paid on this brand. PlaqueOff grew 30% online year-over-year, and we expect it will continue with additional focus and support.

Riley's is Swedencare's entry into the premium treat category. We acquired Riley's in 2024 and for good reason as premium treats are a really interesting category to us because they have high reorder and subscribe and save rates. The average premium treat buyer is purchasing 16x a year. That high frequency drives strong customer lifetime value and extreme brand loyalty. Riley's also grew online 30% year-over-year.

Rx Vitamins is unique in that its original -- its origin is in a veterinary brand that's sold in over 5,000 hospitals. It has unique evidence-based science formulations, which pet owners are very loyal to. Often, these pet owners want to reorder online. And as our simplified mission states noted, we will meet the pet parents wherever they would like to meet, in this case, online.

VetClassics is a science-based line as well, and it was a brand that was acquired through the Garmon NaturVet acquisition. Pet MD handles the online sales of VetClassics, and it has a range of unique delivery forms consisting of powders, tablets and soft chews. Like Rx Vitamins, it is primarily sold through veterinary hospitals as it was originally developed by a veterinarian.

And finally, NaturVet. It's Swedencare's premium retail brand. It's currently sold in PetSmart, PETCO, Walmart, Tractor Supply as well as other national retailers, as Hakan previously said. The NaturVet range was previously sold on Amazon and Chewy via a third-party relationship. Pet MD completed the takeover of Amazon sales in April of 2025.

Full margins are now being fully recognized following the sell-through of the acquired inventory. But that's not to say we haven't had our challenges with NaturVet. While we were able to learn lessons from when we took over ProDen PlaqueOff, NaturVet provided some unexpected issues.

Some of these issues we have sorted through and some we are still sorting through. An example is the rebranding of old labels versus new labels. When you're rebranding an Amazon listing, it's a very tedious process, and you want to ensure that you keep your reviews and your ratings as a lot of things can go wrong during the changeover process. We're happy to report that this process is now 98% complete.

Another challenge is rogue sellers or third parties that purchase the product via distribution and attempt to sell on Amazon platform without conforming to MAP pricing. As of January, we have adjusted for 2026 MAP pricing increases and of course, going back to third parties, we are just now implementing an Amazon anti-counterfeit program called transparency, which Hakan mentioned previously.

We are now in the middle of getting this program launched on the majority of NaturVet products, and this will ensure that there will be no third parties or counterfeit sellers of NaturVet products on the Amazon platform.

Pet MD's continued initiatives to market and to grow the Swedencare brands online with a focus on launching internally manufactured products under existing brands via line extensions. Also to continue to be selective and acquire brand assets when opportunities arise.

Once acquired, we can quickly plug those acquired assets into the Pet MD model in order to scale growth. It's the plug-and-play model similar to what was achieved with Riley's.

And finally, we're going to continue the optimization of advertising efficiency, aiming to scale online brand sales while efficiently monitoring ad spend. And with that, I'll turn it back to Hakan and Jenny. Thanks for your time.

Thank you, Brian. And by that, we are open for questions.

And your first one comes from [ Johan ].

A few ones from my side. First off, if we continue on the topic of NaturVet's Amazon account. So what happened during Q4 specifically? You took over the account earlier this year and sort of what went wrong specifically in Q4 that hurt your margins so badly? And if possible, could you quantify the loss in -- both in terms of revenue and margins in the quarter?

I can start and then you can Jenney and Brian, if you have anything. It's mainly related to, like Brian said, the rogue sellers coming in. And when we establish programs launch or promoting the trademark, the actual brand, then we take the costs for that and expect to get the top line sales for all of those marketing initiatives.

Amazon has different programs. You have a certain percentage that you pay when you sell a product, and that's fine. But since we are owning the brand, we're owning the product line, we make investments and programs and then all of a sudden, someone comes in and lowers the price and get the so-called buy box. And if we want to get the buy box back, then we need to lower our prices and then you're in a, let's say, spiraling down project. So it's been very tedious and tough and a lot tougher in Q4 than the previous quarters for different reasons. It could be that some distributors were selling products out to rogue sellers that didn't do that during Q2 and Q3.

And yes, otherwise. But to quantify -- I don't want to quantify it, but it has had a substantial impact on our profitability. I would like to say that. I don't know if you have anything to add, Brian.

No, as Hakan said it. I think that we bottomed on that. And as I said, we're just now in the process of setting up the transparency program, which will help eliminate third parties from being able to do that in the future.

Okay. Got it. Got it. And so 98% of the products are relabeled. So the only sort of issue, so to speak, should be the rouge sellers going forward, right? Do you have any sort of time line on the transparency program? And again, what kind of margin drag do you expect from the coming quarters?

Yes, the program as such as it works is that when we have launched a transparency code on a product, special SKU, then the same products that are in the Amazon warehouses, they are allowed to be sold out, but they are not allowed to be shipped any new ones in. And we don't have full access of the volumes. We -- for some, we can see the volumes. But I would expect that the programs will have come into full force in Q2, not in Q1, but we will see improvements in Q1.

Okay. Cool. Got it. And on the NaturVet, the Big Box Walmart launch, you stated that sales almost doubled in January, which, of course, is impressive, but says very little to us outsiders as we don't know from what base. So to give some depth to that statement, what kind of sales contribution from Walmart thus far are we talking about?

I mean second half year of '25, we sold a bit over SEK 3 million, SEK 3.5 million, I think. roughly to Amazon. And to calculate how much they have sold, we don't have that exact number. So -- but half year, plus SEK 3 million of sales for second half year for Swedencare to Walmart.

Got it. Cool. And the second -- or third question actually is on the gross margin. So you quantified the impact from low-margin display campaigns and inventory to roughly 1.5 percentage points in the quarter. The latter, of course, you stated it was nonrecurring, but how will the sort of negative mix effect from the display campaigns impact your gross margins in Q2 and Q1?

How the display campaign is going to impact in Q1? It's not going to impact in Q1. It's done.

So that was only product relating to Q4 sales that...

Yes.

… the full contribution margin from Q1.

Yes. It was just a specific campaign. It was just more expensive to both produce and to ship those -- the nice picture that we showed you.

Okay. Got it. So all else being equal, then we should see gross margins in 2026 recovering to the sort of adjusted gross margin level that we saw in 2025?

Yes.

Got it. And continuing another question for you, Jenny, perhaps. Any chance that you could break down the external cost increase in the quarter? How much of external costs in the quarter were related to marketing, for example?

No, no. But I mean, the majority of the increase is linked to marketing. It's both linked to this Amazon marketing, as I was mentioning, for example, the Black Week, for example, it would have more -- it's more expensive to market on Amazon in Q4. And then it's this additional marketing initiatives with Big Box.

Okay. So how should one think about your marketing spend coming quarters then?

Well, the marketing spend, we're not going to have this one-off campaign in Q1. However, marketing spend to Big Box is going to continue to increase. However, we are expecting the volume to be more matched. We didn't have the volume. We didn't have the revenue to match the campaigns. However, marketing is going to continue.

Okay. Got it. And then a final one, if I may. So Production segment sales fell by 16% in Q4, partly due to contract manufacturing, but also postponement of pharma projects into 2026. Focusing on pharma here specifically, you sounded very optimistic on the conference call. And of course, you've stated that this is a key top line and margin driver in 2026. But given that we saw another postponement here in Q4, what makes you confident that 2026 will be different?

It is that we have already started a couple of big projects in Q1, and they will continue in Q2. And as I said, the ophthalmic project that we have -- that we are in the process of getting all set there, we also have signed a contract with a customer that is in, let's say, in hurry. They want us to start manufacturing as soon as we can. So we're working really hard on that. So there are no external factors that could change those facts.

Okay. Got it. And on sort of the timing of those projects, the ones that started in Q1, what sort of -- what time frames are we talking here before we can see a contribution to sales?

In the pharma for Vetio North, you will see a strong performance already in Q1 compared to last year when it comes to sales, definitely.

Got it. Lovely. If I may, one final just clarification on your targets. You stated during the call that the targets are for midterm, which implies 5 years. But you then said that in the same sentence that you expect to reach your margin target by 2028. So just to clarify...

What I meant with midterm, midterm of the 5 years.

Okay. So the 2028 doesn't -- it's a 2030 target?

No. I expect –

It's a 5-year plan.

It's a 5-year plan. But from 2028, I expect us to be on that target.

Your next question comes from [ Adrian ].

And a few questions from me as well, please. Just want to begin here with 2026. It looks like a strong year when it comes to the growth rate with everything going on here. But I guess the recent deviation here, at least in recent history has been in terms of margins, right? You can explain that a lot of these margins are kind of one-off-ish. But how can you -- how -- like what should we expect for the cost or when it comes to the margin looking into 2026? Like how confident can you be that you don't meet any other short-term marketing campaigns that you have to do? How can we have confidence in basically the cost remaining low here?

I mean it's -- this -- as I explained a couple of these, it's been -- some of these launch campaigns, of course, has been needed to do, and we did that in Q4. We don't have the same launches first half next year. We -- as Jenny said, we will continue to market and collaborate with our customers. But it will be in line with the sales in a much better way than we did -- were able to do in Q4.

And it's a combination of the actual projects. It's a combination of, as I said, we made some organizational changes, better control. And some of this, like you said, it was campaigns that we needed to do for the agreements that we did -- that we have with our customers. But those launch campaigns are done for '25. We don't foresee them in '26, first half year at least, then it dependent on if we sign any new major customers, then we have learned the lesson how we handle this quarter. And I would like to add also that there -- I mean, it was a quarter that, as I said, I'm very disappointed how we handled it when it comes to the cost structure, and it won't be repeated.

We are going through everything, and we have lots of cost initiatives when it comes to projects and increased profitability. So the team is really motivated and we are on it a lot better than we did. We definitely failed in Q4. And now we have to rebuild the trust. And the way to rebuild that trust is that we show a couple of quarters with improved margins and improved EBITDA, of course.

Yes. Right. Exactly. So kind of a follow-up question here. Like what visibility do you have for the marketing budget throughout the entire year? Do you know already today what the marketing budget will be throughout 2026? Or can there be unexpected marketing investments during a short-term time frame?

The only unexpected, I would say, is if sales grow even faster than we anticipated in our budgets, then, of course, the marketing spend will increase, but it will be in line with profitability. So we will grow with keeping the targeted profitability what we have set for this year.

Perfect. And another question here. You mentioned that you doubled sales here in January, right? And I can I assume that some of this is driven at least by this low gross margin display campaign. You explained that you took the cost in Q4 and that the gross margin going ahead should be good. But when this campaign runs out, I expect you should see some difficult comps from that maybe on a sequential basis. Could you give us any color on sort of the normal sort of Walmart's release here, excluding the onetime display thing [indiscernible] performing?

Yes, displays campaigns are important, of course, because when looking at retailers in the U.S., you put up products, most of the retailer does. They put up products under therapy area. So Joint product is lumped together with all of the different brands, then you have dental products, all of the different brands, et cetera.

The problem when launching a new brand into a retailer is, of course, to get the customers to see your product. And of course, displays campaign, like you saw on the picture, is extremely important to -- and we are very happy and it's not an easy thing to get an agreement with Walmart for such a big display. So it's a big display, but on a different part of -- in the stores, showing all of the products that we have in the ordinary assortment, all of those products are in the display.

So like you said, it's -- we do it because we want to really enlighten the customers that we are present at Walmart buy our product there. So if they take a product from the display campaign, next time when they come back 2 months later, the display is not there, but then they will find exactly the same product in the ordinary shelves. So that's the whole reasoning by these display campaigns. Then coming back to what Jenny said, next time we will make a display campaign, it won't have such a big impact on the gross margin. We will make it smarter and better next time.

Fair enough. Another question here on the inventory write-offs. They were kind of bigger than expected, I suppose. Could you confirm that these are nonrecurring? And kind of what happened there that made them such a deviation from your expectations?

Well, there's always going to be some level of write-offs every year and every quarter. It's just that this year, about 50% of the inventory write-off came in Q4. There was a couple of product lines. There was a couple of acquired inventory that we have to write off. So it was just a higher level this quarter than we normally have in Q4.

And that became visible very late in the quarter.

Yes.

You mean 50% of the year inventory write-off?

Yes.

Right. Okay. Last question, if that's fine. So going back to the midterm operational EBITDA margin here of some 26% -- you mentioned the time line here, but could we have some color on kind of the contribution? Like where do we expect the margin to come from? Is this really driven by the Production segment, which is margin accretive or the gross margin? Or how should we think about it?

No, I would say that coming back to normal margins from our biggest brand, NaturVet, that has had a big impact for us in 2025. So just by coming back to ordinary margins of what we expect for NaturVet, that's the biggest driver, I would say, short term, the coming 2 years. And then, of course, getting our Amazon sales in line with the expected profitability. That's -- since online sales is now well over SEK 100 million I mean, there was '25, and it will grow even more in '26. Of course, every percentage, we improve profitability when it comes to our online sales, primarily on Amazon has a huge impact.

But then we have our, let's say, smaller entities, including pharma, where we have significantly higher margin compared to, let's say, group average. That is, of course, very accretive to our overall profitability increase when we can -- when we manage to grow those, let's say, smaller entities into higher growth targets -- numbers, sorry.

And your next question comes from Adela.

Adela from Jefferies. I guess I'm also going to stay on this track trying to figure out what exactly happened in Q4. I'm assuming that you had some sort of marketing budget set ahead of the year, ahead of the quarter. So was this just -- I mean, how was this not flagged on a group level earlier? And is this an individual team that was in charge of this and it just was sideways and what, I guess, reporting, what type of measures are you now implementing so that this never happens again?

Yes. I mean it's a couple of, let's say, things affecting. Like Brian explained, the problem for us that hit the -- it is -- you could call it marketing, but when selling on Amazon, when we get a higher cost there, we can't just shut it up because it's our brand. If we shut down, let's say, the branded marketing for our products, then competing brands will take those sales. So we can't really shut that down. And that's -- or we can, but then we will lose sales on -- both on the short term, but also definitely on the longer term.

So even though you have a budget and linked to the metrics when it comes to Amazon sales, it is very tough when getting hit with all of these rouge sellers. So that's harder to, let's say, forecast and foresee.

When it comes to the launch campaigns linked to the Big Box retailers, it's definitely that that there was a lack in control in the organization on the actual spend linked to the sales orders and all of that. So we have -- we took immediate effect with some organizational changes.

And then we have also implemented and following up a lot closer when it comes to spend. So I'm confident going forward that we now have the organization that is not only focused on, let's say, sales and marketing, but very much linked to the actual profitability of the brand. So -- but coming back to that, we need to show it, and that's what we intend to do going forward.

Hakan, but just to clarify then, so there has been changes to the organization and the team has been replaced?

Yes, not the whole team, but there has been changes, yes, and improvements.

Okay. All right. There's already been a lot of questions answered. So I'll just stop there.

Our last question comes from [ Christian ].

I'm not sure if I captured if you mentioned the amount of one-off items in Q4. So would it be possible to disclose the underlying operational EBITDA margin in Q4, excluding these one-off items?

No. No, we're not going to do that. We're not going to adjust for it because part of it is operational. So no, and for example, like I said, even though the marketing spend has been high, yes, we have mentioned in the gross margin, how much the display campaign affect the gross margin and the inventory as well. However, the marketing on the Big Box, it will continue. It's just that we are expecting more sales connected to it. So it's not like a one-off marketing spend on Big Box. It will continue.

Okay. Great. And you also mentioned that the ERP implementation caused disruptions that affected the gross margin and volumes. Could you quantify the impact on Q4 sales?

Again, it's difficult to quantify when you have disruptions and you have things that takes a little bit longer time. But of course, if we did not have this ERP change in Q4, we probably would have got out a lot of more orders in the beginning of October, which would have expected to have reorders from those kind of customers already in Q4. So now we didn't get those because there was delays due to the implementation of the ERP. A lot of people are busy with it, and there's a learning curve, et cetera. But it's not going to be quantified.

It seems like Adela have one more question.

Just a follow-up on marketing spend. You mentioned, Hakan earlier that the only reason marketing spend could be significantly higher again in '26 is if you have higher volumes, higher than what you're expecting. Could you just, I guess, explain that reasoning? Like if you already are seeing good growth, good numbers, then why do you need to spend more on marketing?

No. What I meant -- I don't mean more in percentage of the sales. I mean in actual dollars or kroner it will be higher.

It could be linked to, for example, if we get another new retailers, et cetera, as well.

Thank you. That concludes our Q&A session. So back to you guys for any closing comments.

Thank you so much. I just want to close out with underlining our, let's say, disappointment with the quarter when it comes to profitability. And rest assured that you all know that the Board and many lots in the organizations are important shareholders of Swedencare, and we're very focused on shareholder value and creating that. So we are disappointed, but are actively working very hard and looking over everything, and we will try to come back and be -- and surprise the market this year. So we stay tuned, and I thank you for your support. And as I want to underline once again, we are very focused in improving profitability going forward.

Thank you very much.

Thank you. Bye.

Bye.

Bye.

Welcome to the presentation of Swedencare's Q3 Reports, led by our CEO, Hakan Lagerberg; and CFO, Jenny Graflind. We are pleased to have Production Director, John Kane, joining us with the presentation during today's webinar.

And as usual, we will have a Q&A after the presentation. [Operator Instructions]

Over to you, Jenny, Hakan.

Thank you so much. Hakan and Jenny here in Malmo, [indiscernible] Malmo. I'm pleased to present our Q3 highlights and the report. Let's kick it off. We had record net revenue and also record operative EBITDA. So first time we were over SEK 700 million despite the weak dollar and also over SEK 500 million in operative EBITDA. So happy about that, improving the profitability as we have been working with.

Highlights, of course, what we also presented in the report, 2 full pages about our launch in Big Box retailers. Happy to inform that we're now present in 1400 Walmart stores all over the U.S.A., 1100 CVS pharmacies and also a local Midwest chain called Meijers, 140 stores there. And launch was in Q3. All of our sites are now fully propped with products. And the Walmart order that we communicated in Q2 has been delivered just above half of that, and the rest will go out in Q4. And the reason for that is just the decision by Walmart to have 1 pack of each product instead of 2. So that will go out in Q4.

And we will also have an additional marketing campaign with Walmart in -- starting in early Q1 or end of Q4, but we will deliver it in Q4. So we will actually have separate displays in all of those 1,400 stores and adding 600 or 700 more Walmart stores where we're not present in the lineup. So we will be present in plus 2,000 Walmart store end of this year or early next year. So we're really thrilled about that. And worth noting about that separate campaign is that we are taking the cost for all the displays, so that will be a bit lower gross margin for that setup. And I will come back to continued launch and discussions with Big Box retailers.

We have also had an organizational overview in U.K., spurred of a retirement of our long colleague, John Leonard, that will be leaving the company for retirement end of this year. And by that, we will reshape our Swedencare U.K. operations into being online only, focusing on U.K. and rest of Europe. And the rest of the, let's say, retail sales apparatus will go over to our sister company, nutravet. And in Tampa, we continue to streamline our organization, primarily focused on veterinary sales and also online. So we're utilizing more group resources for joint projects.

We made a very small minority investment in a company called VIYO, adding a new product group is liquid, mainly -- their main product is recuperation product used after surgery in cats and dogs. And we've seen a big potential for us to launch this product line under a couple of our brands. We will start off with nutravet in the U.K., and it will launch as early as Q1 2026.

High international activity and internal collaboration. We've been traveling a lot around the world in Asia and in Q3 also in South America. So we have signed a couple of new distribution agreements and are looking forward to exploring untapped potential all over the world. Internal collaboration, we are working even more with, let's say, product development and also launch strategies together within the group. So that is something that's primarily, I would say, U.S. market work together and then the European market. And then for our, let's say, bigger launches and bigger brands that are international, for example, with ProDen PlaqueOff. As you know, most of you, it's steered from our team here in Malmo, and that keeps on improving the collaboration all the time.

Financial targets. As you know, we have financial target that is by the end of 2026. So we have had lots of discussions within the Board about presenting or setting new targets for a couple of years ahead. And we will -- we are very close to finalizing that after the latest discussions at the Board meeting we had in Canada. So we will be presenting those in, hopefully, early December, at least in December, but my guess is that it will be early December.

Over to you, Jenny.

All right. Some financial highlights for Q3. Revenue amounted to SEK 712 million, for the quarter. It was the first time we were above SEK 700 million, as Hakan said. This represents 11% growth, 50% was the organic growth, and we had a negative 9% impact of the currency and then 5% acquired growth. The acquired growth came from Summit, which we acquired in April. And then we also had 1 month left of MedVant, which we acquired in August last year.

A fun fact about the revenue is actually that this quarter, we almost had the same revenue as we had for the full year 2021. For the first 9 months, net revenue amounted to SEK 2 billion. That's compared to SEK 1.9 billion for the first 9 months last year and an organic growth of 9% year-to-date.

Our operating gross margin is stable, 58.5% for the quarter, so also in line with our expectations. The external costs are increasing, as we have mentioned before, with the growth of Amazon, there is costs which are directly linked to sales. This quarter, we had NaturVet's Amazon account in-house for the full quarter. That's compared to 2 months last quarter. So we have about SEK 10 million of additional Amazon cost for the group compared to Q2.

The more variable external costs, so cost which is not related to Amazon, which is about 50% of the total external cost, which has scalability potentials. Here, we can see that we have decreased this cost as a percentage of sales. Personnel cost has decreased -- is lower this quarter due to reversal of bonus accruals. As a result, operational EBITDA amounted to SEK 155 million for the quarter. This is an increase of 14% compared to last year, 21.7% EBITDA margin compared to 21.2% in Q3 last year. And for the full year, not the full year, but the first 9 months, we have 20.1% EBITDA margin.

Our net debt to EBITDA has increased compared to a year ago. That's due to the acquisitions that we made in Q2 this year, however, still has decreased from 2.9 to 2.7 this quarter. During the quarter, we made cash payments for acquisitions, which we do not have additional EBITDA contribution for. So that, of course, impacts this ratio in a negative way. However, as I mentioned, it still decreased in line with our expectations. Our cash conversion, 99% for the quarter, so really strong, mainly due to decreased inventory levels in the group.

During the quarter, we made additional payments for the Pack Approved acquisition. We made both the second and the last payment as well as an earn-out. In addition, as Hakan mentioned, we made the minority acquisition of VIYO during the quarter. We have also been able to reduce our debt with SEK 75 million on our loans and our interest cost has decreased with the lower interest rates. So for the first 6 -- for the first 9 months, we have about SEK 40 million interest cost compared to SEK 57 million last year. And our CapEx, that's still below 2% of net sales, both for the quarter and for the year-to-date.

Our rolling 12 months. As you can see, the revenue for the 12 months is increasing. However, both operating EBITDA and normal EBITDA has decreased due to the weaker profitability that we had in the first half of this year. Just as in Q2, there is a fair market adjustment of the acquired inventory for Summit, that's SEK 24 million for the quarter and SEK 48 million for the year. So this is the difference between the reported gross margin and operational gross margin. This acquired inventory is now sold, so there will be no more adjustments going forward.

Product and brandsplit. These graphs are not adjusted for acquisitions or currencies. So despite this 9% currency impact, there's actually quite a good growth in the majority of the products group. We have a decline in nutraceuticals. This is mainly due to the lower contract manufacturing we have to external customers. However, we are growing with internal. Dental has the biggest increase in value, still going strong, increase of 28% compared to Q3 last year. And Pharma has the biggest increase in percentage. That's due to the fact that Summit is included in these figures this year, but we did not have that company last year. We have the brandsplit to the right same here, not currency adjusted. So the strong crown has a negative impact on the growth. Summit is included in the category other. But as you can see, many brands have really good growth this year.

Now over to Hakan.

Yes. Looking at our different segments. Net sales in North America, SEK 421.7 million, growth of 8% and looking at organic numbers, it's 18%. So very nice to see that North America has bounced back. It was primarily pet retail and online that was strong. The veterinary market is still soft, both in terms of, let's say, visits to veterinarians. It's still a challenge. It was basically flat '24 compared to '23 and that, let's say, softness has continued. Pet owners visit the pets not in the same, let's say, amount as the market itself grows.

Perhaps also due to the fact that the younger generations of pet owners are definitely more educated and interested in taking good care of their pets. However, it's also impacted by our larger, let's say, distributors and when coming to the production segment, it's definitely also our larger veterinary customers are very cautious about inventory levels and are pressing that a lot, so -- and that could also actually be said about the major pet retailers and Big Box. It's supply chain overall in the market is really good, so they are pressing down their weeks of inventory that they have on hand.

NaturVet, Big Box expansion, as I mentioned, but we're also expanding with other customers like PetSmart. We have now in October are launching 6 new products from the NaturVet line with PetSmart and several of our, let's say, ordinary traditional pet retail customers are now fully in line with our new branded products. So the last products we have with the old design is basically being sold out on Amazon. That's the channel where we, let's say, sell out all of the old label products, not sell out in forms of rebates, but the actual change of the products, Amazon and online will be the last change.

Looking at NaturVet, the Amazon account, that's been a huge project, as you can imagine, and our Pet MD team that handles it has done an excellent job, but lots of work and also collaborating together with NaturVet organization. So I'm happy to say that the acquired inventory that did affect our profitability in Q2 and also here 2 months in Q3 is completely -- basically completely sold out by end of August. So from September and onwards, we see we will have full group margin for our sales on Amazon when it comes to NaturVet. So from Q4 forward, the margin will not be affected by this occurrence.

And also worth saying is that as many of you know, that we took back the ProDen PlaqueOff sales -- on Amazon a couple of years ago. And that was also hard work getting rid of lots of rogue sellers and streamlining the sales there. So it's been 5 months of really hard work for our team, and that continues in Q4, but now we see improvements and expect our sales to keep on growing for a couple of quarters, many quarters going forward.

Online continues to be our strongest channel in North America and as you saw in our -- perhaps saw in our report is that online is definitely the biggest channel for pet products. ProDen PlaqueOff, as Jenny said, continued to have really strong sales and also the late -- one of latest acquisitions, the Pack Approved line that Jenny mentioned, it's high protein or 100% protein treats is doing really, really well online.

We have launched a fairly small brand, VetWorthy that we acquired last summer about a year ago, and now it's bounced back. That's our strategy for working closer to the, let's say, brick-and-mortar stores, the moms and pops stores. And we have now in Q3 launched in over 500 stores and have a nationwide distribution, and also some local distribution. And also a fun fact is that we are launching in Mexico already, so it's been well received on the international market as well. The outlook for the North American segment is that I expect the momentum to improve from the numbers that we have here in Q3.

Net sales Europe, SEK 162.6 million, 39% growth, organic 19%. So continues to be the strongest segment, even though North America chasing Europe this quarter. It's been basically the same story all year that U.K. and Nordics leading the growth. And there was a bit, let's say, less sales online, especially Amazon in rest of Europe, and that's a plan that we had because we're making the same transitions as we did in U.K., 1 year ago that we took back the Amazon sales ourselves. And Amazon has been selling out their inventory in Q3. So we have not had any deliveries basically to Amazon in Q3 for rest of Europe, but that we have started now.

And from Q4 and onwards, we will be handling rest of Europe the same way as we handle U.K. So you can expect strong growth for rest of Europe going forward. We're building out our local team in Amazon. So we have recruited very, very skilled person for Germany in Q2, and now we're looking for adding a Spanish colleague in Q4, and then we will build out the team as going forward.

We now handle Portugal from our Spanish team, and we have a new local partner for the Portuguese market, and it has kicked off really well in Q3. They, let's say, rebranding of NaturVet has not happened in Europe. And as some of you know, is that we've had an exclusive agreement together with Zooplus for the European sales. For next year, we will be launching both online and also in pet retail in select markets with the new design. So from 2026, Q2, we will be -- we will not have an exclusive collaboration with Zooplus, but they will continue being an important partner for us as they have been in the last 1.5 years.

Outlook for Q4 is momentum continues. I would say that the really strong momentum that Europe has had will continue in Q4 and onwards.

Net sales production, almost SEK 129 million, a decline of 4% affected by currency, of course, so organic growth was 3%. It was a bit different quarter in the phase that 3 out of 4 of our entities had double-digit growth and our biggest in South Florida had a 13% decline. And as I explained, it's due to the vet market. The big customer -- external customers in vet market is -- they are cautious with their inventories. So it's a bit seasonal and also bigger orders and productions, they can jump between a couple of quarters. So no reason for alarm here.

And we have also increased our internal demand, and that will continue. So we have 2 big products that are transferred from external partners to internal manufacturing at our Florida site, and that will happen in Q4 and Q1. In production also is a stronger demand in Europe than North America, but that's also the fact that we are -- and we have been launching Soft Chews, as many of you knows, and there's really a strong interest of that. And also that the operations are smaller in Europe. So of course, it's easier to get new assignments there. And also from a competition point of view, the EU market is not as fierce as North America.

Worth mentioning is also the really high RFP activities for our pharma development up in Canada. It's been a very strong year for that and lots of hard work from the team up there, so we've been encouraging them. And as we wrote in the report, we were there with the Board for a Board meeting and also visit, and it was very appreciated by the team that the Board took time and effort to travel there.

I mentioned internal collaboration and know-how transfer, there's been lots going on, and John will mention that later on. Outlook Q4, I think the momentum will be fairly similar in Q4 and expect it to pick up early in 2026 since we have signed both new customers and also received orders for '26 from present customers.

Priorities for 2025, they are the same and looking at new geographies and keep on enhancing operational efficiencies, that's really has been key features for us this year. And the online strength, of course, since being our most important channel, we keep on pushing there. And interesting to see there is really that different marketing campaigns that we do in -- for one, let's say, outlet online affects others. So it's really that if we increase marketing in Amazon, we get more, more sales on our internal web shops and vice versa, if we do campaigns on TikTok or we see increased sales on Amazon. So it's an intertwined net of opportunities for us to market.

And also pursue new acquisitions. As you know, we've been very, very acquisition driven, and we have dialogues ongoing, but I don't expect any acquisitions being made in Q4. It's more long-term discussions. And also coming back, as I said, the new financial targets will be presented before year's end.

Over to you, John.

Thank you, Hakan, and good morning, everyone. Today, I'll talk about the story of Vetio as we build a global contract development and manufacturing organization, and then how we're leveraging that Vetio soft chew technology developed over 10 years to sister companies and different market applications.

The story of Vetio almost 10 years ago, what is now Vetio, the first site in Jupiter, Florida was acquired and specializing in niche topical liquids. These are grooming products, medicated wipes, other medicated dermatology products. And with a strong interest to grow outside of that niche segment, the site in Montreal, Quebec, Canada, Tetragenx Animal Health, which was a contract development for animal health companies was acquired in March 2018. That's where I am this week. And at that time, the two companies were rebranded as Vetio to showcase the commitment to the veterinary industry and global animal health.

And so at that time, the first investment was made in Montreal to build solid dosage plant for pharmaceutical products capitalizing on the development pipeline that we had in place and now still do, and as Hakan mentioned earlier, is growing nicely. So then as you proceed along in time to mid-2021, Vetio was acquired by Swedencare, and we were in the midst of another expansion in Jupiter, Florida, a second plant for nutritional supplements, leveraging the Vetio soft chew technology outside of pharma for which it was developed into nutritional supplements for pets.

And then what -- the story of Vetio North has always been to acquire customers through other equipment and building a pipeline around development and nonsterile liquids spot-ons primarily, where that capability was put in place and development pipeline put in place, which will eventually feed into Vetio South as we get into, as you can see there on the right, a new plant.

And then in 2024, almost 3 years ago, Custom Vet Products in the U.K. was acquired and a company, a CMO specializing in the nutritional supplements space and that company has done quite well under David Ryder. We've leveraged Vetio soft chew technology to Vetio U.K. And then following that, we've done the same thing, Swedencare, Ireland facility sometime in early 2024 was rebranded as Vetio. So when you see the 3 segments of nutritional supplements there, we have 3 sites using the same technology, same products, same formulas for global customers. It's a very valuable value proposition, 4 global brands crossing the Atlantic.

What's exciting now is as we've built a lot of capabilities in the 4 sites. Vetio is now almost 230 employees worldwide. We are launching -- really, we're in the midst of one new investment, which is Sterile Fill and Finish here in Montreal. And that project has started earlier in '25. We are halfway through the construction. Like every project at Vetio, any capital investment is always driven by an anchor client. And that's the case here, and we have a lot of interest for this type of technology. There seems to be a gap in the industry that we aim to fill, and we feel we're out in front with a very quick project to capitalize on that with productions commencing later next year.

And at the same time, we are weeks away from finalizing a lease agreement to expand our Jupiter, Florida site once more. This one, a larger project than what we did in 2021 because what we have in Jupiter is a campus. We have two facilities, the one -- the original one for liquids, about 1 kilometer away from our nutritional supplement plant. So in this project, which will unfold over 2 years, will be 2 different phases. One is where we relocate our liquids to the same site as the nutritional supplements and then also expand a new operation to make treats, injection molded, extruded treats, leveraging a lot of the same formulation technology as soft chews, but having a lot of attractiveness with respect to cross-selling synergies across Vetio's customers, both internal and external.

When we do that, the liquids facility will be at a higher-class level where we will also be able to make larger volume nonsterile liquids. So that will be a nice synergy with the development capabilities in Montreal, where we have solid dosage forms and soon to have Sterile Fill and Finish somewhat more space constrained, we'll have the opportunity to manufacture larger scale commercial products in Florida. So that project will unfold over 2 years. And then like everything else, what we do is we tech transfer the knowledge and the technology of things we do to other sites.

Largely U.K. and Ireland, will have liquids over time and then treats, as you see, following the implementation in Florida. So really an exciting time. We've -- the story of Vetio is a story of growth and capabilities through investment, and we're excited for what that brings both internal and external clients. Talking about the market a little bit, first starting with pharma, which is addressable by Vetio North in Montreal, Canada. You can see it's about a $14 billion companion animal market. We've historically only made products for companion animals or pets as opposed to livestock, large animal -- no, production animal species. And you can see the share by category, parasiticides being the largest. That's obviously a unique part of animal health, what makes it different from human health.

We have development projects and manufacturing across both parasiticides and therapeutics. We are not in vaccines. Having sterile fill capability will eventually give us some capability there. And as you can imagine, the vaccine market is quite large in the livestock and production animals. So the addressable market for us increases with the investment in sterile fill, but also it allows us to get into production animal on a selective basis where it makes sense. And similarly, with the share -- percent share by the administration route, we currently address solid oral dosage in Montreal and then topicals and other in both Florida and Montreal. But this will change as well with the implementation of the sterile project.

This $14 billion market, when you segment it down further, is about a $3 billion addressable market at the manufacturing level. And with outsourcing still around 50% of manufacturing, both in-house brands versus CMOs, it's about a $1.5 billion addressable market. So it's quite a nice opportunity for Vetio North and as we grow outside. Switching gears to more retail-focused markets. These are non-Rx markets. Vetio globally is right about 50-50% between the veterinary channel and the retail and online channel. As everyone knows, online channel is growing fast. Supplements is one of the fast-growing categories, but also is Treats and where we will be in the Treats category in a year or so.

We have 2 very attractive high-growth segments and you can see to the right -- the supplement segment right now is about $2.3 billion. And we calculate the addressable portion of treats to be a similar size, maybe somewhat larger. This is because there's all kinds of treats, some of them natural treats like jerky and freeze-dries, which we will not get into. So quite a large addressable market that will have a lot of cross-selling synergies, capabilities. One of the things I want to talk about is the Vetio soft chew technology and how we've taken that across all of those categories, including to our sister company, Summit Vet now that that's part of the portfolio.

So this technology, the soft chew was developed over 10 years ago. The actual patent was first filed in 2017. We have applied globally and have received acceptance globally. So we have a very great patent protection for this platform. It is something that we leverage as a CMO to our clients that do not have this technology. It's the most attractive dosage form for pets. They consider a Treat. It's palatable and has good aroma, texture, and it's a great delivery form for high-load APIs that applies to both pharma and nutritional supplements.

So in the pharma space, we have a very massive pipeline of therapeutics and parasiticides using the soft chew platform that will commercialize over the coming years. As it is now in Montreal, we get paid for development that funds the investment in the facilities and building out manufacturing. And we have numerous development contracts with manufacturing contracts at the end of those. So we're very confident in our pipeline going forward. And then with respect to nutritional supplements, as I mentioned, we have 3 sites using this technology adapted somewhat for nutritional supplements, which have to be at a lower price point and a higher throughput to match the demand. And that technology is used for both internal Swedencare customers as well as external clients around the world.

And finally, I think an exciting one, which we've announced recently with the acquisition of Summit Vet back in late March, we've worked with Vetio North team and other Vetio people at different sites have helped leverage know-how to the specials area. And they've very quickly learned how to formulate with this technology and have ordered and installed a lot of equipment that will be in use for early next year.

So a little bit about Summit. Summit, as I said, was acquired late March. They are all focused on pet products -- I'm sorry, animal health products, both pet and large animal. And they basically a compounding pharmacy, which we would call a 503B in the United States. It is a -- they're making bulk -- small batch bulk products that are sold through the vet channel in the U.K., over 5,000 veterinary clinics and a very nice facility in the Oxford area in the U.K. These medicines are -- they're compounded because they have a personalized nature to it, whether that be a flavor, whether that be a specific dosage form for an API or a specific dose for certain animals specific needs.

This is a very attractive market. You can see the data that we've collected to show what the percent share is of the U.K. market. It's quite high for both cats and dogs. And in particular for cats because there aren't as many medicines available for cats. This is a more common practice -- and so it's something that we are very keen on leveraging the soft chew technology, and we'll be first to market with that type of technology, which is very innovative. So we're pretty excited about all the things that the production sites, each one of them has its own unique capabilities and strengths that can be leveraged to internal partners as well as our clients around the world.

Some of the drivers behind this, the growth of sterile products, that's been happening over the past several years. Vetio North had received interest in development projects We, of course, did not have manufacturing, so some of those we did not take on. But with -- now with the manufacturing pipeline in place, we have a lot of interest from clients because this is an unmet need. What's driving this is there's a high desire for administration through a shot, an injectable, and that's for accuracy and also to protect vet channel sales. The other thing I said earlier is how this opens up really some additional clients and opportunities around vaccines, and in the large animal and livestock segment.

Another driver that we've capitalized on, and I just talked about is the trend towards soft chews. What's unique right now going on in animal health is there are the biggest generic files, the products, blockbuster products, some of the biggest ones in the industry are coming off patent in the coming years. And we have received a lot of interest, and we are working with people to capitalize on that opportunity, and that will bring with it large development projects for commercial manufacturing starting as early as late next year.

And in supplements, as we know full well in the United States, it's almost the only form of supplements you buy for your pets. It's at least 80%, if not greater, growing nicely. And what we see, as Hakan alluded to earlier, is the same trend converting towards soft chews in the U.K. and European markets. And with Vetio U.K. and Vetio Ireland serving both of those markets, we're well positioned to capitalize on that trend. We have a large pipeline there. And then what we also are very excited about is, as I said, the launch for soft chews specials for the U.K. That project is well underway. Summit will be selling the first products in first quarter next year. We expect that to be a very sought-after product versus tablets and other solid dosage forms.

And then the last one, which is brand new for us as Vetio is the popularity of pet treats capitalizing on the human animal bond. It's another delivery form for health and wellness or specific dietary needs. Dental treats being one of the biggest growing segments. We have our own products within Swedencare today. There are a lot of sister companies in the portfolio that are excited to have this capability. And this is something that we will be able to bring to the CMO external market as well. So we feel like with these investments that we're making in Canada and in Jupiter, which will eventually -- Florida, which will eventually be leveraged into the U.K. and Europe, we'll have really a lot of capabilities. The story of growth will be not only through cross-selling, but also just entering new categories where there's new customers that we can bring into the portfolio.

So very excited about the future and open for questions.

Thank you, John. And by that, we are open for questions. And the first one comes from Johan.

Firstly, a question to you, Hakan. Could you elaborate on the sort of Walmart rollout in late Q4 and Q1? You mentioned that it's going to be higher marketing cost and at a lower gross margin. Is that correct? And if so, could you sort of elaborate on the mix from that order? Are you expecting high volumes to sort of offset that potentially?

Yes. No, that special, let's say, project is a side project from the other sales that we expect to have with Walmart. So that's just a display that will be set up different point of sales in the stores and with all of our products jointly together. So that's part of the sales to Walmart. So I don't expect that, that won't alter the sales that we have for -- when being in the ordinary assortments. So that's just, let's say, a marketing investments that we are doing, getting our displays out in the -- at another site in the 49 stores we're already in and adding 600 more stores where we are in those displays.

So sort of a marginal impact potentially on group gross margins and sort of overall in the investment in marketing?

Yes.

Okay. Got it. Got it. And just a follow-up here on the organic growth drivers in the quarter. Of course, you mentioned several growth drivers during the call, but still 15% organic growth is pretty impressive considering that you only delivered half of the Walmart order in the quarter. Could you sort of just walk us through the top 3 contributors to the strong organic growth?

Definitely, Amazon sales, both in Europe and the U.S. Then looking at Europe, I would say very strong veterinary sales in the U.K. It's a big, big part. And then -- and also in the production segment for Europe. And then looking at the U.S., it was, let's say, other pet retail bounce back. So for example, in all of the NaturVet setup, including their private label, they were 15% up. So of course, the biggest entity in our group when they start to deliver solid growth, that affects the whole group. And as I said, 3 out of 4 production units doing really well. So yes -- but it was -- so it was -- I mean, online main driver, but all -- most of the group companies had fairly good growth or good growth.

And are there any sort of notable mix effects year-on-year in terms of sales split between the segments or channel? And just to return to the Walmart order, is that a positive to group mix?

How do you make any positive in adding margin or...

Yes, exactly.

Yes, yes. I mean, I would say, overall, I mean, the Big Box channel is good margin-wise, but that comes also with responsibilities to increase marketing efforts. So we are -- we did in Q3 and will continue in Q4, be very, let's say, active in announcing to the pet owners in North America that we are present in Walmart, in CVS and Meijer. So with these launches, of course, it comes extra marketing activities that we're not used to. But I mean, as you saw, we improved profitability in Q3. And my message for Q4 is that we will deliver double-digit growth and increase profitability even more in Q4. That's my expectation.

Got it. Got it. And then a final one then on the profitability. I noticed that the lower or the lower OpEx is mainly driven by personnel costs. How should we think about this going forward? Personnel was flat year-on-year and down significantly versus H1. And sort of -- I'm just thinking out loud here, but is the reduction in bonus provision a onetime thing in Q3? Or essentially, how should we think about the dynamics going forward?

It's difficult to say. It all depends how we're going to perform in Q4. But yes, there was a reduction in the provision in Q3 that was basically the buildup for the first 9 months. So yes, it was a bigger release in Q3.

So if you intend to continue to deliver on solid growth and margin expansion, we should expect the personnel costs to increase?

In Q4, yes.

Your next question comes from Adrian. [Audio Gap] Okay. We will take the next question. It comes from Christian.

Can you hear me?

Yes.

Okay. Great. Could you provide an update on your production unit in South Florida, which was a drag in the quarter. Do you expect the headwinds you have been facing to continue in Q4 and into 2026? Or do you expect the internal activities, some of which John talked about to compensate?

I'll handle that, if you…

Yes.

I mean we have, as Hakan mentioned, some larger clients in our Florida facility, managing down inventories, and that will be -- that theme will end this year, and we’ve -- that can only go for so long. We expect that to pick back up. And what will drive some growth is as we're going through our budgeting right now is a very strong development pipeline. So lots of wins that will have a very positive impact in '26.

If I jump to the Dental Product Group, this products delivered another quarter of strong growth. Do you expect this momentum to continue into 2026? And what would be the key drivers behind the growth? Or should we be mindful of tougher comparisons ahead?

I expect dental to continue to grow. We have launched -- I mean, within that product group, it's not only ProDen PlaqueOff even though it's the main driver. But there are still lots of markets where we have just started introducing the expansion of the product line, for example, the soft chews, even though we have had them for a couple of years, there are still many markets out there that are just -- have just launched them or just about to. So -- and we continue to develop that product line. So we will be introducing a very interesting product for cats early next year. So we're just in the planning for that with all of the marketing and manufacturing. So we're excited about that because cats and dental are a tricky issue to handle because of the finicky type of personalities that cats generally are.

So -- and also, we've expanded with our, let's say, taking care of the teeth more in general when it comes to toothpaste and also we have launched special wipes for cleaning teeth, and they are doing really, really well. So I expect the momentum to continue. We see that the subscription rate for our dental products online is really, really high, and we are just adding new customers there. So it is more focusing in the pet space. You -- of course, we're like veterans in this space, but the dental focus just continues to grow every year. So I would say that we expect the strong momentum to continue next year as well.

Let's try again with Adrian. Please go ahead with your questions.

Guys, can you hear me now?

Yes.

Excellent. Sorry for that. I had some technical issues. A couple of questions from my side, please. So firstly, it's great to see that you're now active and expanding into the Big Box retailing sector here. But I'm wondering a bit how you view the kind of incremental sales growth in this sales category going forward? Do you expect to grow by adding some more articles or just -- striking new deals with other stores? Or what should we expect now before going into 2026 or even '27?

I mean it's -- as I said, it's hard work now to really informing the market that we are present and finding our products within those new sales outlets, so that will definitely continue. Expansion of product offering, I don't expect that with the partners that we have now, I think that will stay fairly the same for, let's say, at least first half of next year because it's long sales cycles. As we wrote in the report, we've been working towards the Big Box retailers for almost 2 years. So it's long sales cycles and also the resets are sometimes only once a year. So -- but as we have presented, we are present with a couple of more in the online sites, and our products are performing well there. So I wouldn't be surprised if we open up some more partnerships in 2026.

Another question. You noted and I noted at least that the product category, the other product category saw some 53% increase year-over-year. Could you comment a bit on this? What's driving that particular growth?

Yes. In the other category, you have Summit. So that's -- we have that this year, we did not have that last year. So it's including the acquisition of Summit that falls into that category.

And we also have a pill paste that's been doing really well under a couple of our brands and that we are now expanding in Europe as well. So -- and that comes into that category.

Yes, [indiscernible] category. Yes.

All right. Excellent.

Sorry, Adrian. My answer was for the brandsplit -- for the brandsplit, not the product split.

Okay. It's a bit confusing. Fair enough. Okay. So last question here. You mentioned Asia as well that you have signed some new distribution agreement segments -- distribution agreements, right? Can you give some more details regarding these agreements? Is there something that we could see anytime soon having a material impact on [indiscernible]?

I would say that it's smaller markets, for example, a couple of partners in UAE and Brazil and South America for a couple of [indiscernible] -- so I wouldn't say it won't be, let's say, significant sales there. But we are expanding with both, let's say, coverage in the world, but predominantly, that's been -- it's that we are introducing new product ranges or brands. It's been -- the champion for our international sales is definitely ProDen PlaqueOff, but we are focusing more now with the rebrand launching NaturVet out in the world and also other brands that we have on the dermatology products that we have. So I would say that we are now really starting to leveraging the vast, let's say, product range and brand range that we have so that we are getting out in the world with lots more brands.

Thank you. That concludes our Q&A session. Back to you guys for any closing comments.

Thank you for showing interest, lots of people joining our call today. And I'm really proud of the efforts from the whole organization. They've been doing a great job. And as I said previously, expect us to keep on delivering double-digit growth and aiming for improved profitability in Q4 and onwards. So you will start seeing more results from the scale of our business, definitely.

Thank you. Bye.

Thank you. Bye.

Thank you.