Welcome to the MEKO Q3 Report 2025 presentation. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad.

We kindly ask you to mute your phone after having asked your question. I now hand the conference over to the speakers, President and CEO Pehr Oscarson and CFO Christer Johansson.

Please go ahead.

Thank you. Good morning and welcome to MEKO's presentation of our results for the third quarter 2025.

I'm here with our CFO, Christer Johansson, and together we will walk you through our performance and current position. As the first half of this year was marked by slower growth and lower earnings.

Car owners were cautious following a prolonged economic downturn and unpredictable global environment. This also led to intense competition in Q2.

This tough competition continued into the third quarter. We achieved organic growth of 1% during the period compared with 2% in the same quarter last year.

This also means that we moved from negative growth the first half year of 2025 to showing a positive sales trend in Q3. The competitive situation also put pressure on prices, which in turn affected our profitability.

Our adjusted EBIT margin improved compared to the second quarter, but decreased compared with the same quarter 2024, and we are responding to this development. Among other things, we continue the rollout of our new central warehouses, where staffing levels will gradually be reduced.

We also continue the cost-saving measures announced this summer, let's take a look at that on the next slide. As we have been working with the initiative Building a Stronger MEKO for some time.

This initiative aims to improve our long-term profitability. By the end of Q2, we had achieved EBIT improvements of 200 million SEK within this initiative.

During the summer, we launched additional cost savings, adding another 100 million SEK through staff reductions. A significant part of this reduction has now been implemented, and during the quarter, another 2% of the workforce has been given notice of termination.

However, as always, it will take some time before the effect becomes visible in the P&L. All in all, this means that the end of Q4 we will have reduced the number of full-time employees by more than 500 compared to Q3 last year.

We are also progressing in realizing synergies from our acquisition of Elit in Poland. 14 branches has now been closed as part of the optimization plan.

Another key part is improving efficiency through our new central warehouses in connection with the commissioning of these facilities. We have vacated four out of the six facilities.

Let's take a closer look where we stand with these projects, moving on to the next slide. The new high-tech warehouses are now operational, and together they represent a significant upgrade to our logistics capacity.

In Norway, Denmark, and Finland, we are now handling goods with a high degree of automation. These hubs complement the already automated warehouse in Sweden, and together create a logistics network of very high international standard.

The upgrades will naturally lead to several efficiency gains, including the reduction in the number of full-time employees. As mentioned, we still bear some temporary costs such as double rents and staffing, but we will gradually start to see the positive effects.

As it's usually the case with major warehouse automation projects, calibration and fine-tuning takes time before the full potential is reached. This improved logistics capacity was also key topic at our Capital Markets Day in September, where we presented several other important initiatives as well.

Let's move to slide 5. One of the initiatives is an acceleration within exclusive brands.

Among other things, we are launching the brand Every Part Matters in seven new markets, meeting the demand from more price-sensitive customers. We are also expanding our e-commerce business.

The web shop Mekster is launching in Finland and then later in Denmark, making this business present across the Nordics. In addition, we will grow our commercial vehicles business to establish a long-term leading position in this segment.

These are only examples on how we're focused on increasing growth and improved profitability. I will hand over to Christer in just a minute, but first I would like to highlight some interesting findings from our newly released Mobility Barometer on slide 6.

Even in these turbulent times, the car remains number one for all. As a matter of fact, more people are using the car every day compared to last year.

These are a couple of many trends and findings in the new edition of our barometer, the largest study on mobility in the Nordics. This is the fourth year in the row we're making this report, and I recommend reading it.

That said, I hand over to Christer, who will elaborate on the third quarter, starting with our leverage, which has been in focus lately. Please.

Thanks, Pehr. Leverage is always an area of interest, but in this quarter more so than usual.

The reason is lower profitability, which has coincided with a period of heavy investment. This has put significant pressure on leverage, which increased from 2.7 in Q2 to 3.6 in Q3.

Now, of this increase, no part related to an increase in net debt. The increase is instead driven by two other factors of roughly equal size.

To start, we see a lower underlying EBITDA gradually working its way into the rolling 12-month average used in the leverage calculation. Secondly, since we report leverage based on unadjusted EBITDA, items affecting comparability also matter.

As mentioned in the Q2 call, Q3 2024 included positive items affecting comparability, and that quarter is now replaced, if you will, by a new one with negative items affecting comparability. This effect alone corresponded to a 0.6 increase in leverage.

Now, 3.6 is high both in relation to our targets and in relation to our financing agreements. Against that background, we have during Q3 agreed with our banks on certain amendments to the terms.

We have also, with the final steps being taken here in October, secured a one-time waiver from the bondholders through a so-called written procedure. This change, which received strong support by the bondholders, is important because it enables us to execute the second tranche of the dividend decided upon by the AGM back in May 2025.

That payment of circa 110 million SEK will be done here in a few days. Looking at leverage in the longer perspective on page 8, one can see this has varied a bit throughout the years.

We've seen periods of elevated leverage followed by phases of recovery. It's important here to reiterate that we remain committed to our leverage target, and getting back to the 2 to 3 range is a priority, and we're taking actions for that to happen.

One area of focus is working capital, and although this helped in Q3, one should not expect much support in the near term as the fourth quarter is often seasonally weak. Another area is investment seen on the next page, page 9.

In Q3 we see the investment rate coming down as we said it would, and this applies to capex as illustrated in the graph, but the slowdown also applies to other investments such as M&A, which we've not done any, and to the ERP project, where we are now entering a less intense phase. With those initial comments related to leverage, let's move on to profitability on page 10.

Here we saw a slight uptick from Q2, but we're still operating at levels far below last year. On a positive note, organic growth improved from -5% in Q2 to +1% in Q3, and cash flow from operations remained healthy.

On the more challenging side, competition, as Pehr mentioned, remained ever-present, which affected gross margins, as I will come back to on a later page. Project-related activity was still intense in Q3, and this can be seen in the elevated level of items affecting comparability, which include temporary staff involved in moving goods to the new warehouses.

Some of this carries over into Q4, where we have now consolidated Sørensen og Balchen's warehouse operations into the new facility outside Oslo. It's perhaps worth here reiterating how infrequent these kind of costs are.

Our old facilities in Denmark and Norway had all been in operation for, on average, 20 years, and we look at these new investments with a similar horizon, not a very frequent event for sure. Moving to gross margin on page 11, we've already commented on competition, which was particularly noticeable in Denmark and Poland.

It's also so that growing in a lower-margin market like Poland dilutes the consolidated level, and this country mix effect amount to circa 1% percentage point. This effect should be less noticeable going into Q4 because now the comparables fully reflect the acquisition of Elit.

Moving on and comparing adjusted EBIT with a year earlier, two areas stand out. Firstly, Sweden and Norway.

Here it's a combination of disappointing top line and higher fixed cost relating to the automated warehouse in Norway. Secondly, Poland, and here it's price pressure, which has been strong, and the integration of Elit, which is not yet complete.

If we instead compare to Q2 on the next page, the picture looks a little bit different. What is noticeable here is instead an improvement in Finland.

It is, one should admit, from a low level, but still worth commenting. Let's start the business area by business area review with Finland on page 14.

We are, as you can see, back in positive EBIT. Organic growth of 6% helps, even though that has come with a different mix.

Operationally, there are some good signs, and to exemplify, order lines per worked hour in the central warehouse is up 50% within 2025. In fact, the actions that we've taken in Finland, which include automation and cost cutting, it is basically the same medicine as elsewhere, but the difference is that we've come further in Finland because we started earlier.

Let's move to Denmark on page 15. Here we saw organic growth of 1%, although measured in Swedish SEK revenue was still down 2%.

I already mentioned competition, which has led to lower gross margin in Q3. Looking ahead into Q4, the focus is to get into smooth operation in the central warehouse following the move, and we are not quite there yet.

Moving to Poland and the Baltics on page 16, on the positive side, we see organic growth of 9%, but this has, however, come at lower margins. Operationally speaking, it's worth making a distinction between Poland and the Baltics in 2025.

In the Baltics, we have been operating in a steady state, generating decent profitability. In Poland, on the other hand, it's been everything but steady state.

We've implemented several structural changes which are indeed good for the long term, but there's no denying that they have affected operations in 2025. In Sweden/Norway on page 17, top-line development remained muted.

EBIT margins still exceed 10%, but clearly we are zoomed in on actions to improve traction in the market. In Norway, the new central warehouse is operational, and in Q3 there have been a lot of focus on getting ready for Sørensen og Balchen to move in, which happened here in the beginning of Q4.

This leads over to the last business area on page 18, Sørensen og Balchen, another strong quarter, delivering adjusted EBIT of 44 million SEK. Q3 is also the last quarter where Sørensen og Balchen operate with its own independent warehouse, and Q4 will be a transition quarter towards a model where we instead split the cost of the new central warehouse across the two business areas in Norway.

There are no new costs for the group, but for the business area Sørensen og Balchen, they will carry a larger part of the cost, affecting comparability with earlier quarters. With that, I would like to point out and then we are also now vacating quite a few of the buildings that we have used.

The period of double rent is coming to an end, and in total, if you count external locations, we are now out of five out of eight, counting also external locations. Still a little bit to go, but almost there.

With that, I'd like to hand back over to Pehr.

Thank you, Christer. To summarize, Q3 meant a continuation of the intense competition we saw in Q2, which at the same time was a consequence of a slower market.

We achieved organic growth of 1% during the period. This means we moved from negative growth in the first half of '25 to showing a slightly positive sales trend in Q3.

Our adjusted EBIT margin improved compared with the second quarter, but decreased compared to the same quarter '24, and we're taking a number of action to address this development. We're rolling out action for long-term growth and continue our cost-saving measures across the group to ensure we're better positioned as we enter 2026, as we don't expect the current market situation to change in the foreseeable future.

That was all from me. Thank you all for listening, and we will now open up for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad.

We kindly ask you to mute your phone after having asked your question. The next question comes from Andreas Lundberg from SEB.

Please go ahead.

Thank you. Good morning, everyone.

Starting off with cash flow, working capital swings in the third quarter clearly positive. Can you maybe explain a little bit on the development in the third quarter, especially on payables?

Thank you.

Good morning, Andreas. Yes, no, as we say, cash flow was fairly strong in Q3.

In fact, if you were to go back a few year and compare to the trend over the year, you would see that Q3 is often strong. On the contrary, then Q4 is often on the weaker side, I would say that taking the seasonal trend into consideration, the cash flow activity is not much of an outlier.

Perhaps a little bit better than we anticipated, but not overly so.

It's more of a normal trend, you would say, nothing specific you have done on the working capital side?

We always manage the working capital to the best of our ability, but nothing exceptional, and one should not kind of extrapolate this into Q4 because as I said, Q4 is normally on the weaker side.

If you look out beyond Q4, how do you view the working capital needs? All right,

it's good to have the central warehouse project coming to an end because that means we can start to optimize our inventories and so on. If anything, there should be a slight positive coming out of that, but we are not expecting any massive movements there.

Cool. You talked about lower investment levels.

Can you give a guidance for 2026 capex?

I think if you were to look at the Q3 number times four, as per custom, we should be in that trap that we're back toward more of a capex level. This is where we should be.

There are no big new investments on the horizon now for quite some time.

Cool. Then another question on you talk about competition, pricing, and so forth.

What can you do about it, and given that you're running some concept workshop chains, can you capitalize on that in some way, or how is it working? What can you do about it?

We can of course do a lot. A lot of the price competition comes from the situation with the supplier bonuses, that everybody's fighting for volume, and of course that's important for us also to get some help in the gross margin.

The launch of Mekster in new countries, that's way of competing with e-commerce. We launched [unclear] private price fighter brand, Every Part Matters, but I would also say that maybe a little bit more long term, but our thing to help the affiliated workshops with digital bookings, with fleet sales, and so on, that's also where we're not that sensitive in the price competition.

Okay. I think I lost you once in a while there, but I can come back afterwards.

I think you mentioned higher input costs in Sweden, Norway. What is that about?

I would say the primary change in the cost base in Sweden, Norway, if you look over a year, is the addition of the automated warehouse. We are now leaving the warehouse where Sørensen og Balchen has been operating, there's a little bit of double cost running out.

Other than that, the development of cost in Sweden, Norway has been on the positive side, we've been able to take out quite a bit of cost in support functions mostly. Were you looking at something specifically that we can comment on?

Okay. The line is not very clear to me, but lastly then, can you update me on one-time or non-recurring items?

What remains? Thank you.

The two bigger items that we've had over the last few quarters is, part, the investment into the ERP project, and this is now being run at a lower pace, so that part will come down. You can see it's specified in one of the notes.

The other part are costs related to the warehouse move. As we said on the call now, we're very close to being done with this.

Some activity still carries over into Q4, and who knows, maybe there will be a little bit of activity still in Q1, but we're close to the end of that. With that, items affecting comparability should be coming down.

It's also fair to point out that in the 100 million cost-saving program, we've not made any big accrual, and the staff reduction has mostly been done through, I would say, normal negotiation with the unions, should not come with big costs.

Thank you so much. That concludes my questions.

Thank you.

Thank you.

The next question comes from Mats Liss from Kepler Cheuvreux. Please go ahead.

Hi, thank you. A couple of questions here as well.

Coming back to Finland, you managed to turn around to positive numbers here in the third quarter. Is it sort of a sustainable changeover, or are there any sort of one-offs included there which explain the improvement?

No, I wouldn't say so. We have a good growth in Finland, a little bit helped by more stability in the market, but also that we are gaining market shares, and we started already one year, 1.5 year ago with cost-saving programs and which really starts to kind of hit the P&L.

They are also a little bit earlier in the phase with the automation, they start to have a very good effect on that automation part. We have clearly ambition to continue to grow in Finland.

On the other hand, Poland, Baltics is soft, but you had the Elit Polska impact and then again top line was pretty good. When could we expect you to break even there?

On Tuesday, 4:00. No, joke aside, there is still job to be done in the integration.

We said that it will take 18 months, and we are well in progress. I think Christer mentioned that 14 of the approximately 20 branches that we aim to close is done, but it's still work in progress.

Then we have strong competition, of course. I wouldn't say in timing, but we stick with the ambitions we had when we did the acquisitions, that we should be in much better shape during next year.

Maybe what I can add there, in 2025, we've also been moving the warehouse in the Warsaw region, a big one, which has been quite an expensive project, and surely operations has not been running completely smooth during that process. There's also some effects in 2025 from things we've done to improve the run rate going forward.

Good. Then Andreas asked about it, items affecting comparability and so.

Could you say something about the amounts included in the third quarter? Overall, now.

Q3 is not very different from the earlier quarters on this front, the bigger items are the ERP project, which is now entering a slower pace, and then the other bigger part are the costs associated with the warehouse projects. That part should also be coming down because now, in fact, we are approaching the final stage of these projects.

Then as items affecting comparability, they could be things which you did not plan for. I will not make any kind of projection for that item, but there's nothing big that we anticipate now.

When I read quickly through the business segmentary, I found 5 million in Poland, Baltics, I think, and 5 million on the other. Is it sort of on that level, five, well, 10, 15 million of extra costs?

There's a note also in the quarterly report, I think it's note 2 perhaps, where you can see a more detailed split. Roughly what we covered here.

Great. Then again the financial net was, well, a bit softer than I expected.

This leasing obligation, are they also affected by when you sort of move out of warehouses? You get less lease obligations.

No, on the financial items, there's a few things worth pointing out. In other financial items, there's some FX and some other kind of one-off items, I wouldn't kind of factor those into your projections for the future.

On the interest expense side, it could be good to remember that we've completed a tender offer for the old bond, but that was not a 100% completion at that time. In Q3, we've been carrying an excess debt of 500 million SEK almost for the full quarter, even though at the end of the quarter here we repurchased the final part.

That the interest expense on that excess debt amounts to circa 5 million SEK. That is not kind of of no essence for the future quarters.

Then finally, on the lease part that you mentioned, we have now taken all of the facilities into use, the run rate in Q3 includes everything that we are anticipating. It's also so, as you said, that we are now leaving some of the old premises, but the effect thereof is not very material, one should expect the lease cost to kind of stay on this level for the future quarters.

It's also maybe just as a final comment, then of course the bond issue that we did was issued at a lower rate compared to the bond that we repurchased, over time that brought a slight benefit on the external financing coming in here.

Great. Just to follow up on that one, you have to ask the bondholders there to get approval for the final dividend tranche there.

Have that affected the interest rate that you pay going forward, or is it

This was completed after the end of Q3, Q3 is not burdened by those costs, and they will be incurred over the lifetime of the financing. It will not be like a one-off item.

On the bond specifically, as you may recall, the waiver fee was 0.75% on a bond of 1.25 billion, so that's roughly 9 million SEK in costs for the one-off waiver, and then that will be incurred over the lifetime of the bond.

Limited impact. Good.

That's about it. Thank you.

Thank you.

Thank you.

The next question comes from Anders Åkerblom from Nordea. Please go ahead.

Hi, good morning, Pehr and Christer. This is Anders from Nordea.

Just starting off a bit more high level, it would be interesting to hear some more color on the competitive dynamics that you discuss. From which actors in the market is this mainly coming from?

Is it independent players, other e-commerce competitors, chains? Anything here would be quite interesting.

I would say it's coming from everywhere, is the easy answer, but that's also since it is a kind of a hunt for volumes due to the low demand in the first half year especially, which means that everybody's fighting to get on the right level for their supplier bonuses, so that affects everybody. Then if I should point out something, then, yeah, e-commerce is more active, not extremely much, but maybe more active.

We also have some of our European colleagues that works with a lot of export also to get volumes, but in general, it comes from all the players. Maybe if there's some part which is less or stable competition, that is the competition from the OEMs and from the authorized dealers.

That's quite stable. All actors in the independent aftermarket is fighting for volumes simply.

Makes sense. Just following up on that, does that in any way kind of impact your consideration and perhaps how you think of the Mekster e-commerce platform going forward, in any sense?

It makes it more important to do what we have said we should do, and we are expanding now in two new geographical markets. It's capital-light expansion since we have the platform, everything ready for it, but it still takes some time because it's new languages, it's local distribution, and it could be different payment solutions.

We're on full throttle on that area to get into that business more actively.

Yep. Okay.

With regards to that, expanding into Finland and Denmark as you mentioned, could you speak anything to the adoption rates here in the initial markets, and kind of what your expectations are here going forward?

No, we do not disclose that. That's due to we don't want to give our competitors too much information at this stage.

No,

makes sense, makes sense. Finally, you mentioned that you expect the current market situation to kind of remain at these levels in the foreseeable future, if I heard you correctly.

Is that maybe more relevant to think of these levels or the kind of first-half levels? Just how should one think of that comment going forward?

Think of it like we reported Q3, that's where we are at the moment. What is very important is that it's very difficult to predict the future because what I see at least is that the uncertainty around the consumer confidence and so on is as high as it was in Q2.

Maybe in some of the markets a little bit lower interest starts to get a little bit better, but it's first of all too early to say, and so the let's say the outside factors we are still kind of yeah, very very difficult to predict. That what we can do is of course to focus on our initiatives around growth and especially maybe the cost savings program and so on.

Yeah. Makes sense.

Just a final question on that, if I may. Apart from kind of the obvious things, what do you think would need to change for customers to kind of return to more normalized repair and maintenance patterns?

Is there anything you can do specifically to kind of nudge customers in that direction, if you get my question?

That's a good question, but not that easy to answer. I think or guess that with when the let's say the general economy of the consumers allows you to invest a little bit more on the car and other things, I think it's in this part of the let's say the financial situation, when people start to get better, maybe it's not the car who gets the first money from that.

That's very difficult to predict. Of course a better financial situation for the consumers will also lead to higher demand because we see now that people are delaying the service, only do what's actually necessary.

That's not the normal. The normal is that we want to maintain the car to have it live going forward.

It's yeah, but what we can do again is to address and be better in the different customer segments. We have the affiliated workshops, who are very good in the let's say the customer who wants to have easy car life, easy to book online and availability, and so on.

Now also launching the private label, which is for a little bit more price-sensitive customers, they can also kind of repair the car even if it's a very old car and has a very low value. We have an offer for them also.

Yeah. Yeah.

Okay. That makes sense.

Appreciate the answers, Pehr and Christer. Thank you.

Thank you.

Thank you.

The next question comes from Lena Berg from Danske Bank. Please go ahead.

Yes, thank you. Good morning, Pehr and Christer.

Some questions from me. If I start here with the EBIT decline that you have experienced in 2025, could you specify how much that is attributable to lower pricing, the higher price competition that you are seeing, and what could be attributable to other factors such as lower sales, higher fixed or variable costs, if possible?

Maybe I start, and then you can add on, Pehr. Currently we're running with an organic growth of +1%, call it close to zero.

We haven't seen much volume growth in this year, and neither have we seen a big drop in volume. In that sense, you could say it's kind of steady.

What has been different this year compared to last year is that the price competition has been tougher. We've had a negative impact on the gross margin.

You could see it on one of the slides. Of course, in a business like ours where gross margins are pretty high and fixed costs are also fairly high, that has a big impact on EBIT.

The pricing component is considerable here. Then, of course, as you look at EBIT instead of looking at adjusted EBIT, you will also have the effects of the changes that we've been implementing.

If you instead look at adjusted EBIT where we take out those costs, then you see sort of the underlying business, and that's where the gross margin has been a major component. Pehr, please

No, but I think that's you covered

it. Super, thanks.

If we would assume that macro stays the same in 2026, but EBITDA would improve then because of your cost savings yielding and also efficiency measures, do you have any view on when you expect your reported net debt to EBITDA to come back to your target level? Did you lose me?

Hi, sorry, hang on. We're experiencing some problem at the moment, please hang on for a few seconds.

Okay.

Ja visst. Hallå.

Hi, Anders, you're in the presentation mode, you can continue from your phone, please.

Yes, just det. Okej, grabbar, jag kommer jag kör härifrån.

Hello,

some technical difficulties there. Now we're back.

Super. Then I will repeat my question.

If we would assume the same macro in 2026 as 2025, but your EBITDA would improve then because of the cost savings yielding and also efficiency from the new warehouses, could you say anything on when you would expect your reported net debt to EBITDA to come back to your target level?

It's a valid question, but typically we try to avoid to give too much of projections since there are so many factors which we don't influence fully ourselves, like the market, for example. I don't think we want to give a projection for that.

What I can say is, however, that the actions that we're taking are very specific, and staff reduction, they don't have a very long implementation phase. It's cost once.

Effects from the actions we're taking should be [known?] .

Fair. Thank you very much, that was my questions.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. There are no more questions at this time, I hand the conference back to the speakers for any closing comments.

All right.

Okay. Thank you all for listening, and wish you a great continue of the day.

Thank you.