Hello, and welcome. Thank you for attending Puuilo's financial statements '25 presentation.

I am Juha Saarela, CEO of Puuilo, and joining me in this presentation is Puuilo's Interim CFO, Annu von Weymarn.

Hello, everybody.

In this presentation, we will go through the key results of Q4 and the results for the whole financial year '25. After this presentation, you can ask questions by calling the line.

We are happy to answer your questions. Here is the agenda for today's presentation.

First, I will go through the key numbers and events of the fourth quarter and the last financial year. Then Annu will provide a more detailed overview of the financial development during the same periods.

The third point on the agenda covers the capital allocation and dividend proposal. Our general meeting is planned to take place on 12th of May, and the invitation to the meeting will come later.

Then we will move on to point 4, which is the outlook for the financial year '26 and including the forecast range for both net sales and adjusted EBITA. After that, we will have a short overview of our growth strategy and long-term financial targets.

As I said, we have reserved time for questions at the end. Let's start with the final quarter of the financial year.

Our fourth quarter covers the period from November to the end of January, and here you can see its key results. First, net sales.

Net sales for the quarter was approximately €101 million, showing strong growth compared to the same period last year. Total growth was nearly 18%, and like-for-like growth was also strong at 6.1%, and this increase was partly supported by good sales of winter seasonal goods.

Customer traffic continued to grow in both old and new stores. Net sales increased in all months of the last quarter, just as they have in every other month of the financial year.

Then gross margin. In Q4, it also increased and was 38.8%, up by 0.3 percentage points from the comparison period.

The improvement was driven especially by higher sales of private label products. Adjusted EBITA in Q4 was €16.5 million, which is 16.3% of net sales.

This was an increase of €2.2 million compared to last year's Q4. Earnings per share were 14 cents, around 18% higher than in the comparison period.

We continued expansion according to plan and opened new stores in Iisalmi and Heinola during Q4. The new openings, as well as sales performance after openings, have been in line with our expectations.

As we announced in connection with our strategy update, we are preparing for international expansion. In addition to growth in Finland, this is a part of our growth ambitions for the strategy period '26 to '30.

During autumn and winter, we worked systematically across organization to achieve readiness for the opening of the first pilot stores in Sweden. Preparations are proceeding according to plan, and our target is to open the first store within the next 18 months.

Then here are the key results for the full financial year. Net sales was approximately €442 million, increasing by €59 million compared to previous financial year.

Total growth was 15.4%, and like-for-like growth was 3.7%. Growth was driven especially by higher customer traffic, and customer numbers increased both old and, of course, new stores.

As mentioned earlier, net sales grew in every month of the financial year. During that year, the average basket size decreased slightly, which slowed like-for-like growth.

In Q1 and Q4, the average basket did not decline to comparison period, but it is still too early to say that basket size is consistently increasing. Gross margin increased by 0.5 percentage points and was 38.2%.

The same factors supported gross margin and the good development of it. These factors are strong growth in private label sales and a slight shift in the sales mix.

Customers are buying more affordable goods, which have higher margins. Our private label sales developed well, and their share of total sales was 23.6% in last year.

This is the most important driver behind the improvement in gross margin. Adjusted EBITA grew by 15.5% and was €77.4 million, which is 17.5% of net sales.

This was around €10.4 million higher than in the previous financial year. Earnings per share were €0.66, approximately 17% higher than in the previous financial year.

During 2025, we opened 7 new stores: in Varkaus, Savonlinna, Mäntsälä, Lohja, Jyväskylä Keljo, Iisalmi, and Heinola. Additionally, we started preparation for expanding into Sweden.

Overall, last financial year was good for us. The economic environment is uncertain, and consumer confidence has been and continues to be low.

Purchasing power has developed favorable, but due to uncertainty, customers remain cautious and postpone more expensive purchases. The last year wasn't easy for our industry.

However, discount retail is performing well, and our concept works in the current environment. We have no reason for concern related to the economic cycle.

We have attracted new customers, grown our sales, continued expanding, and maintained high profitability at the same time. We can be very pleased with these results.

Thank you to all Puuilo employees. Good, and now, Annu, it is your turn, please.

Thank you, Juha. Net sales for the fourth quarter were €101 million, increasing by 17.7% compared to the previous year.

At the same time, like-for-like net sales grew by 6.1%. Customer traffic increased by 17% in total and by 5.6% in like-for-like stores.

The average basket size grew slightly compared to the previous year, supported by good sales of winter products. Customer traffic continued to develop very well, which is important for us.

During Q4, we opened new stores in Iisalmi and Heinola. For the full financial year, net sales were approximately €442 million.

On company level, net sales grew by 15.4% and like-for-like by 3.7%. In cumulative terms, customer traffic increased by 16.3% at the company level and by 4.8% on a like-for-like basis.

Thus, growth in customer traffic was on a very strong level. Puuilo's sales performance has been good on each quarter.

We are particularly pleased that the development has remained this strong despite the current economic environment and continued low consumer confidence. Next, let's move on to gross margin.

In Q4, Puuilo's gross margin was 38.8%, increasing by 0.3 percentage points compared to the same period last year. The increase was driven by private label products forming a higher share of total net sales.

Sales of these products grew very strongly in the fourth quarter, with growth reaching over 30%. For the full financial year, the gross margin was 38.2%, increasing by half a percentage point from the previous year.

Increase in private label share of sales is also a key driver for the full financial year. In addition, margin development was slightly driven by a favorable sales mix.

In cumulative terms, sales of these private label products increased by 26% compared to last year. We are pleased with margin development and expect the same trend to continue in the future.

This slide shows the development of the share of private label products over the past 5 years. The share out of net sales has grown every year.

In '25, the share of private label products increased by almost 2% and was 23.6% of the total net sales. The growth of the share has continued throughout the years in a trend-like manner, but of course, there are slight differences in the growth rate between the years.

In 2025, sales of private label products grew by approximately 26%, which is a stronger growth rate than the growth rate of the company's entire net sales. This is one of the main reasons for the increase in gross margin described in the previous slide, and also for the upward trend in gross margin that has continued for years.

Private label products are present in all our main product categories. We have a few dozen private label brands.

The number of private label product articles already reaches thousands of products in total. The gross margin of our private label products is clearly better than the margin of branded products.

Increasing the share of private label products is a key part of Puuilo's growth strategy, and as the figures show, this strategy is working. Work on private labels will continue.

Our goal is to increase the private label share of total net sales also in the future. There is still plenty of work to do for years to come.

Next, let's move on to profitability. Adjusted EBITA for Q4 was €16.5 million, an increase of €2.2 million compared to the same period last year.

In percentage terms, adjusted EBITA grew by 15.7% and the EBITA margin was 16.3%. Profitability was solid, but slightly below last year's Q4 level.

Cost development was partly driven by slight increase in personnel expenses and partly by a small increase in other operating expenses. On a cumulative basis, adjusted EBITA for the whole financial year was €77.4 million, with an EBITA margin of 17.5%.

Relative profitability was cumulatively on the same level as previous year. Compared to last year, adjusted EBITA grew by €10.4 million or 15.5% in percentage terms.

Strong profitability is driven by strong net sales performance, higher gross margin, and disciplined cost control. Adjusted operating expenses were 16.2% of net sales on a cumulative basis, with the cost ratio increasing only moderately compared to last year.

The increase in costs was due to small rise in personnel expenses and growth-enabling initiatives incurred during the last year. Relative operating profit remained at last year's level and exceeds our long-term target.

All in all, cost control has remained strong, and we expect it to continue going forward. In summary, Puuilo's financial year '25 was strong, and the figures are well-aligned with the company's strategic targets.

Here you can see the development of Puuilo's inventory levels over the past 3 years. Inventories increased by €7.7 million, which is quite modest increase compared to the expansion of the store network.

Inventory turnover improved compared to the comparison period, even though the share of private label products in total sales has increased. However, the company continues implementing measures aimed at accelerating inventory turnover.

Our long-term target is to further improve inventory turnover. However, in the short term, there may be some variation between quarters and years due to the reasons mentioned above.

In Q4, Puuilo's operating free cash flow was €8 million, which means that it increased by €8 million compared to Q4 in previous year. The cash flow was driven by strong net sales development and, of course, strong profitability.

In cumulative terms, the operating free cash flow was €72.6 million, which is very strong. The growth compared to the same period last year was €28.6 million.

We are very pleased with the cash flow development. The company's net debt to adjusted EBITDA ratio improved slightly from the comparison period and is well-aligned with our long-term targets.

The middle chart shows the ratio of net debt to EBITDA, excluding the impact of IFRS 16. As you can see, the metric calculated without IFRS 16 adjustment has consistently remained on a low level.

Puuilo's cash position at the end of the financial year was approximately €33 million, and the company's financial position is healthy. Net debt excluding IFRS 16, meaning cash minus bank loans, was €36.9 million at the end of the financial year.

Our long-term loans from financial institutions were approximately €70 million at the period end. Here are the figures in summary, which we already went through in detail.

We are very pleased with the performance during Q4 and the financial year. Going forward, Juha will present Puuilo's capital allocation principles and dividend proposal.

Please, Juha.

Thank you, Annu. Next, a brief recap on our capital allocation principles, and after that, the board's dividend proposal for AGM.

Puuilo's capital efficiency creates opportunities to consider additional capital return mechanisms for shareholders. Here is a background on that.

Primarily, we always invest free capital in the current strategy and growth and make sure it's secured. Puuilo's strong profitability generates good cash flow, which allows us to finance expansion in Finland and in Sweden, development projects also, and increase the amount of our own imports that tie up working capital.

They are always the primary uses of capital. Secondly, we can consider additional capital return mechanism such as special dividends or share buybacks due to our efficient and highly profitable operation generating funds beyond what is required for our current growth strategy.

It should be noted that today we have announced that we will start a share buyback of up to €5 million, and primarily for the purposes of our incentive and retention program. Additionally, the company's net debt to adjusted EBITDA must remain below the strategic target of 2.5 times.

Our target is to distribute over 80% of net profit to our shareholders. This has been our practice every year since becoming a listed company.

Puuilo's board proposes to the Annual General Meeting that the company pays a regular dividend of €0.54 per share. This would be an increase of 8 cents from the previous year, which is a 17% increase.

The regular dividend corresponds to approximately 81% of company's net profit. In addition, the board proposes that the company pays a special dividend of 12 cents per share.

Therefore, if the Annual General Meeting approves the board's proposal, shareholders will receive a total dividend of €0.66 per share. Dividends would be paid in 2 installments as in previous years.

Good, and then the outlook for financial year. We forecast that net sales will grow and be between €480 to €510 million.

We also expect adjusted EBITA to be between €80 to €90 million. There are uncertainties related to the outlook, such as the development of the still-uncertain general economic situation, in addition to changes in purchasing power and consumer behavior.

Additionally, there are other unusual uncertainties in outlook, such as geopolitical crises and international tensions, that may have a direct or indirect impact, especially on the availability or price of goods, which can affect sales and profitability. This outlook includes the budgeted setup expenses for Puuilo's international expansion, the costs amount of approximately €1 million.

These costs cover IT, legal, and organizational costs, including the country manager role for Sweden. These measures prepare the business fully for the opening of the first pilot store in Sweden.

Then a reminder about our strategy and long-term financial targets. The 6 key elements of our strategy are: opening new stores and continuing our expansion in Finland, and our target for this period is to reach over 90 stores nationwide; and then entering the international market and starting with a pilot in Sweden; third point, continuing like-for-like sales growth, where there is still significant potential; then strengthening our current position by increasing private label sales and being one of the most cost-efficient operator in the industry; fifth, providing an omnichannel customer experience, a shopping experience that is easy, affordable, and fast is a key factor for both current and potential customers; and the last one, sustainability work and its development, we call this theme Responsible Retailer, which covers the key elements of our sustainability efforts.

Long-term financial targets: our sales growth target is to achieve average annual sales growth of over 10%; by the end of strategy period, we aim to exceed €800 million in net sales; and in terms of profitability, our target is to reach an adjusted EBITA margin over 17%, corresponding to more than €136 million in adjusted EBITA; and we aim to distribute at least 80% of company's net results to shareholders; and regarding net debt, our target is to keep the ratio of the net debt to adjusted EBITDA below 2.5 times. We opened 7 new stores during last financial year, and the ramp-up of these stores have followed the same pattern as previous openings, and all have performed in line with our expectations.

This year, we have already opened store in Hollola, and the next openings will be in Jyväskylä Vaajakoski, Espoo Espoonlahti, Lahti Holma, Kangasala, and Raasepori. Additionally, our store in Vantaa Virkamies will move to new location in Vantaa Tammisto before Midsummer.

If all goes according to plan during this year, we will open at least 7 new stores. Growth continues, and future looks promising.

Some words about Sweden. As we told in connection with our strategy update in autumn, we are preparing for international expansion into Sweden alongside our continued growth in Finland.

During autumn and winter, we have worked systematically and broadly across the organization to achieve readiness for opening the first pilot stores in Sweden. Preparations are proceeding as planned, and our target is to open the first store within the next 18 months.

We have recruited a country manager for Sweden who, together with Finnish organization, is responsible for driving the preparations. In addition, we have started negotiations for the first potential store locations in Sweden.

The budgeted setup costs for financial year '26 are approximately €1 million, and they are included in our outlook for the year. With these measures, we will be fully prepared for opening the first pilot store.

The setup costs cover IT, legal, and organizational costs, including the country manager also. This is a small and defined price to assess the potential of a new market.

Our international expansion is based on organic pilot store openings rather than acquisitions. Expansion will be executed with the same operating model that requires only limited capital and that our shareholders are familiar with in our Finnish business.

We will apply the same good cost control to our international expansion as to all other areas of Puuilo's operations. We are well-positioned to move forward in a controlled manner.

We will provide updates as we reach the next concrete milestones in the pilot process. Good, and thank you.

Now we move on the questions, moderator, please open the line.

Hi, Juha and Annu. Thanks for the presentation.

Have a few questions. I wanted to touch base on the private label and whether you have seen any changes, or how do you see this current situation with the Iran war impacting the sourcing of the private label?

If you touch a bit about the cost as well as the transportation cost on the private label, and how are you thinking about these impacts?

Hi, Maria, and thank you for the question. Shortly or rapidly, we don't see the big changes or dramatic changes in our case.

Of course, oil pricing is increasing. It means that the gasoline for customers here in Finland, it is more expensive, and it may reduce the money what they can use about their purchasings.

On the other hand, higher oil price hit the material prices, purchases prices to some extent, not directly, but in some extent surely. What is coming to the freight prices, of course, it increase them also.

This situation is not abnormal or new for Puuilo. We remember that this kind of situations has been before.

We have a hundred of suppliers. We have suppliers in Finland, we have suppliers in Europe, and in other side of the world, in Far East also.

At the same time, we have over 30,000 products in our assortment. That means that the affect of the higher oil price will dilute or fragmenting in our ecosystem or in our assortment in many ways, not dramatically.

There are some increases, and of course, there are cases where that situation doesn't change anything. Our concept is quite defensive still, and we are fine with that situation.

Of course, we hope that that situations will end and it support customers confident in a future. Anyway, this is not a big problem for us.

What is coming to transporting sea freight times, there are no changes or big changes at the moment. We are quite confident about future.

Thank you. Then I had a second question on the Swedish expansion.

Given that the model in Finland has been probably the fastest one among discount retail peers, how quickly you are cash positive and what is the payback for the new store investments, do you see the same metrics, as far as you know today, apply also in the Swedish market?

Yes, we are going there with the same concept, with the same structure, with the same methodology than we are doing here. Of course, we do that by very practical way: we will pilot, we will test, we will adjust if needed, and ensure that our concept works there.

Same time, we are expanding in Finland faster than before, and the bigger sales growth will come from Finland in near future also. We have same methodology to do that, and we have continued, of course, market study, investigations about Sweden, and by that way also ensure that our concept works as well as possible.

We are challenger also, we fully understand that. Same time, we know that there are space in the market in Sweden for that kind of concept that we have.

Thank you. Then finally, I wanted to touch base, because I think, if we look at last year, this I think this time around, the fixed cost percentage of sales were actually below the market expectations, but I think that was something that spooked some investors during the Q3 that you had higher fixed cost percentage of sales.

Now when we look over to the upcoming financial year, what kind of cost inflation, if any, you are looking for for the upcoming financial year?

If we look at the Finnish business, at the moment, we see only slightly pressure about the purchasing prices because oil price. We can put higher purchasing prices to our selling prices.

If you think that our average product selling price is about €5, if it change €5, it is not a big issue or problem to our customers, because we are selling very cheap products anyway, and mainly our assortment include that so cheap products. Oil price is one can affect to our costs, but we can put them to our selling prices.

About to the fixed costs, I think that there are no big changes. Connecting to our budget, we have estimated the changes about the fixed prices, and they include our forecast also.

No big changes is coming.

Thank you so much. I have no further questions at this point.

Yes, hi, good morning. It's Joonas from OP.

I have a couple of questions regarding Sweden. Firstly, can you clarify the timeline for the first store opening a bit, because based on previous comments, I imagined that the first opening would have taken place this year, but in the report, you talk about the next 18 months, can you clarify the timeline?

What's the plan currently?

Hi, Joonas. Our preparing phase is still ongoing.

As we said that now we have recruited a country manager, and we have started the negotiations about the store sites in Sweden. It's too early to say when the first or second or third store open, but as we have mentioned, it will open in next 18 18 months.

It can happen earlier or later, but anyway, we are proceed that processes, and we are preparing for to open the new stores in Sweden. Process is ongoing.

Thank you. Then a related question.

I think the costs that you mentioned, the report, the €1 million from the Swedish expansion is surprisingly low. The question is then how should we think about that number If we assume that there are no store openings in 2026 or that the first opening will be in late 2026, I'm just wondering what would that number be, that €1 million number, if we kind of theoretically assume that the first store opening would have happened in the beginning of this year?

How much will annual costs increase once the first store open happens? If you're able to clarify that, that would be helpful.

Yes, thank you for the question. This €1 million that Juha was telling telling about in his presentation only represents the setup costs for the Sweden.

If we assume that we would have also stores or we would have opened the stores also in 2026, of course, the costs would be higher. We are going to do this in this same model as we use in Finland, this means also also that we are going to do this in a very cost-efficient way.

Thank you. That's helpful.

That's all I have at the moment.

Hi, this is Miika from DNB Carnegie. Thank you for presentation.

Given that you have conducted market studies now on Sweden since you announced the expansion and presumably even before, what new learnings have come from those studies?

Hi, Miika. I think that it is not good idea to tell to so very deep things, but of course, we have gotten deeper or better understanding about the Swedish consumer confidence, behavior, that how they shop different products, what is competition situations, and so on.

It was a very wide and large study, and it support our for to open the new market.

Thank you. Then on this €1 million setup cost for Sweden, should we think that this is a one-off cost for the preparation of the first store, or will there be another €1 million setup cost next year, another €1 million the following year?

How are these setup costs going to play?

Thank you. A very good question.

This €1 million cost is for the setup costs for the whole project, excluding the actual cost for stores. This is kind of the back office work that we are doing in order to have all the IT systems and other that kind of extra costs that are related to the fact that we are going to a new market.

No, we are not going to have a €1 million extra costs for every store in Sweden.

Thank you. Just wanted to clarify that.

Very well understood. The setup costs and new store openings do still exclude potential marketing and investments in your brand building.

Can you guide us that when should we expect these marketing costs to be visible in your P&L?

Marketing costs, when we go as a new player, unknown brand, as a challenger to new market, it means that we need to create our brand, we need to improve our brand awareness, and it is a long-lasting work. It means that we will do that in next years.

This is a very typical when new player enter to new market.

Okay. That's all from my end.

Thank you.

Good morning, Juha and Annu, and thank you for the presentation. Some of the questions have been already answered, but I had one question regarding current trading.

You said that all months grew in 2025, and I guess based on what you said, January was probably strong, driven by the strong winter weather in Finland. Do you have any comments on February, March?

Thank you. We have no reasons to reduce our estimates.

We are waiting for the typical spring and summer time. Puuilo train is ongoing.

This situation, this economical situation with the uncertainties, it is fine for us, but, of course, we are waiting for the better times also. How weathers affect to our sales, sometime it good weather support and helps our sales growth, sometimes it don't.

In the longer term, let's say, half-year period or something like that, the demands will come sooner or later. Sometimes we have the better weathers and poor weathers, but in longer term, it is not big problem for us, because, as I said, that the demand comes later or the sooner.

This year and the beginning of this year seems to started quite well.

Thank you. Correct me if I'm wrong, but I think I understood that Q4 basket size slight increase was partly related to higher-ticket items related to winter sales, and you did not see a material change in the consumer behavior during Q4.

Basket size was a bit higher than last year comparison period Q4. Now it's too early to say that is it starting to increase in near future.

In last year in Q1 and Q4, average basket size was little bit higher. Let's see what happened.

Of course, it helps. If it start to improve and increase, it helps our sales growth together with customer traffic growth.

We are waiting for that.

Thank you. Then the last question regarding the expansion into Sweden.

The 18 months is probably a bit longer than I had expected. Obviously, it can happen sooner also, but is it possible, would you open only one-by-one pilot stores, or is it possible that you, given, obviously, you get some scale benefits also, could you also open more stores than one at once?

In last autumn, we said that our target is open few stores in Sweden during strategy period, before 2030. We have time to do that.

We have time to pilot how our concept work there. It is too early to say that when we open, how many we open, but if we keep on that outlook, we will do that.

We will open few stores, as pilot stores there. The first store could open earlier or later.

It is too early to say at the moment. As we had stated that during next 18 months, we will do that.

Thank you. That is all from me.

yes. I just have one follow-up question.

That is €1 million setup cost, will it be reported as part of the ongoing business, or will you report it as an extraordinary?

The costs related to that €1 million include both kind of expenses.

Would it be reasonable to assume that it's half and half?

I would say that it's probably more than the half is so-called one-off items. Let's see.

I'm not giving any special figures on that one.

Is it equal split between Q1 to Q4, or how should we think about that? Or is there any clarification?

I would say that the costs will incur during the whole '26.

That's clear. I did not have more questions.

Thank you.

I'm sorry, all my questions were answered, no questions. Thank you.

Good. Thank you for the questions, and of course, thank you joining us today.

I want to thank all our customers for trusting us, and a special thanks to all our employees of your great work. Happy springtime.