Good morning. This is the Axfood year-end report 2025 telephone conference.

With me today are Simone Margulies, President and CEO, and Anders Lexmon, CFO. In the investor section of our axfood.com website, you will find the presentation material for today's call.

We encourage you to have that presentation at hand as you listen to our prepared commentary. After the presentation, we will be taking questions.

A recording of this call will be made available on our website. With that, I will now hand over the words to Simone.

Please go to page 2, and go ahead Simone.

Thank you Alex, and good morning everyone. We report another quarter of above-market growth and stronger market positions for all our retail chains.

By leveraging the strength of our business concept, we are also preparing for the future and investing in strategically important areas to continue attracting more customers, become even more efficient, and strengthen our competitiveness. On this slide, you see some highlights for the quarter, highlights which we will cover during the course of this presentation.

Turning to page 3. Now, as usual, I will start with a brief market overview and a review of the quarterly development.

Let's go to page 4. Market conditions in Swedish food retail continued to be characterized by a high activity level in the quarter, with intense competition and continued high price awareness among consumers.

Overall market growth amounted to 4.5%. Statistics Sweden reported that the annualized rate for food price inflation was 3.5%.

This level was somewhat lower on a sequential basis, and in absolute terms, the overall price level was quite stable. Growth in Axfood's retail sales amounted to 8.7% and 5.3% excluding City Gross.

Our growth was thereby once again above the rate of the market, both including and excluding City Gross. Volume growth from increased customer traffic, strong customer loyalty, and new store establishments contributed to the development.

We have a long history of market share gains. With the Q4 performance, we have outperformed the market every quarter this year and are reporting our 11th consecutive year of market share gains.

We are now on page 5. Consolidated net sales for Axfood grew 4.4% in the quarter, with higher volumes and positive trend in like-for-like sales in all our retail chains.

We acquired City Gross in November 2024, during the fourth quarter, we started annualizing their performance. However, only 2 months of a quarter, which is clear when you take look at the comparison figures.

Please go to the next page, number 6. Group operating profit increased to 860 million SEK, and the operating margin was higher at 3.8%.

Operating profit included items affecting comparability of -13 million SEK related to City Gross. Last year, items affecting comparability pertained to a re-evaluation of our previously minority stake in City Gross.

Operating profit and margin on an adjusted basis, which excluded items affecting comparability, also increased. Adjusted operating profit was 873 million SEK, and adjusted operating margin amounted to 3.8%.

The improved profitability was primarily driven by higher sales volumes and good growth in both total and like-for-like sales, a stable gross margin trend, and effective cost control. In 2025, we increased our focus on productivity and costs and implemented measures to improve efficiency within and between the group support functions.

In the fourth quarter, we saw some effects from these measures through cost savings, not only in the various businesses, but also in joint group functions, which partly explains the positive profit development there. Let's now turn to Willys and page 7.

Willys continued to outperform the market in the fourth quarter. Growth primarily came from higher volumes as a result of an increased number of customer visits and new store establishments.

Willys continues to attract new members into its customer loyalty program, Willys Plus, and see strong loyalty among its customers. Earnings grew to 467 million SEK, which corresponded to a stable operating margin of 3.7%.

The increase in operating profit was primarily driven by the increased sales volumes, a stable gross margin development, and good cost control. Moving on to Hemköp and page 8.

Hemköp's retail sales growth in the quarter exceeded that of the market. Hemköp's volume growth, driven by increase in customer traffic and in addition a higher average ticket value, impacted the sales development positively.

Operating profit was higher at 78 million SEK, and the operating margin also increased to 3.5%. The increase in operating profit was mainly driven by the increased sales, a somewhat higher gross margin, and solid cost control.

Earnings in the prior year was impacted by new store establishments. Turning to page 9.

City Gross demonstrated a positive performance during the fourth quarter. The financial comparison figures here obviously refer to the 2-month period November to December 2024.

However, to give you a better understanding of City Gross's underlying sales performance, sales growth numbers are calculated with the full October to December period 2024 in the comparison base. While total growth was impacted by store closures, like-for-like growth was solid and amounted to 3%.

City Gross reported a profit for the quarter of 28 million SEK on an adjusted basis, corresponding to an operating margin of 1.2%, with positive contribution from its like-for-like growth. In addition, structural measures and efforts to streamline operations contributed to the development.

As a reminder, the fourth quarter is generally a strong quarter for hypermarkets. On a reported basis, operating profit amounted to 14 million SEK, which corresponded to an operating margin of 0.6%.

This included the items affecting comparability I just mentioned, which refers to structural measures, including discontinuation costs for stores and sales clearance within the non-food assortment. Turning to slide 10.

Our restaurant wholesaler, Snabbgross, delivered growth of 6% in the quarter on both a total and like-for-like basis. Higher volumes through increased customer traffic had a positive impact on sales, in addition to average ticket value.

In terms of profitability, the quarterly development was weak. Operating profit amounted to 35 million SEK, corresponding to an operating margin of 2.5%.

A lower gross margin associated with temporary market investment was not fully offset by volume growth, which had a negative impact on the earnings development in a very competitive market. Next page, number 11.

During the year, Dagab has developed the group's assortment of affordable, good, and sustainable food, with a continued focus in the fourth quarter on ensuring that our chains can provide Swedish customers with a competitive offering. Dagab's fourth-quarter net sales increased by almost 5%, driven by sales to Axfood's own concepts.

Operating profit amounted to 340 million SEK, and the operating margin was 1.5%. Operating profit was negatively impacted by a lower gross margin due to market investments and negative mix effects.

The logistics center in Bålsta, along with the high-bay warehouse in Backa and automation in our fruit and vegetable warehouse in Landskrona, has significantly increased Dagab's capacity and efficiency in logistics. Work continues to optimizing our new logistics structure.

Later on in the presentation, I will come back to the next significant investment in our logistics structure: the facility in Kungsbacka that we plan to establish to increase capacity and efficiency also in the southern parts of Sweden. Before that, it's time for our CFO, Anders, to take you through the financials.

We are now on page 12, but please let's go to the next page, number 13. Anders, please go ahead.

Thank you, Simone. Net sales for the group increased by 6.1% to approximately 89 billion SEK.

Including City Gross, retail sales increased by 16.4%, and excluding City Gross, the increase was 5.9%, which was higher than the full retail market in total, where growth amounted to 4.5%. Operating profit, excluding items affecting comparability, increased 7.4% to almost 3.7 billion SEK.

The operating margin, excluding items affecting comparability, remains unchanged at 4.1%, where the City Gross acquisition impacted the margin with -0.2. Then please turn page to page number 14.

During 2025, the cash flow was 345 million SEK, which was almost 300 million higher compared to last year. We saw strong underlying operating cash flow from both for the fourth quarter and the full year, mainly due to a strong operational performance boosted by positive working capital changes.

Last year was impacted by negative calendar effects in working capital. The negative cash flow from investment activities of 1.7 billion SEK was substantially lower than last year, as last year was impacted by the City Gross acquisition.

Excluding the City Gross effect, we have a higher pace in investments in our retail operations and a lower pace in automation investments compared to last year, since we now are through with our investment in the Bålsta logistics center. By year-end, Axfood utilized approximately 2.7 billion SEK of our credit facilities, compared to 3.1 billion SEK by the end of Q3 and 2.9 billion SEK at year-end 2024.

We are now on page 15. During the last couple of quarters, we have seen a positive trend in the net debt development.

The net debt increased with the acquisition of City Gross in Q4 last year and the dividend paid in March, but is now below 2 and, excluding IFRS 16, just below 0.5. The equity ratio amounted to 21.2%, which was higher than last year and above the year-end target of 20%.

Total investments excluding leasehold and acquisition amounted to 1.7 billion SEK in two in 2025. During the year, we established 9 new group-owned stores, 3 fewer stores compared to the previous year.

Our investments in store modernizations have increased compared to last year. Please then turn to next page, page number 16.

When we look at the capital efficiency, we had a negative development of our rolling 12-month net working capital. The impact of the City Gross acquisition has increased the KPI with approximately 0.3 percentage points on a rolling 12-month basis, which implies a positive underlying development.

Capital employed has increased over the last years, mainly due to the acquisitions of Bergendahls Food and City Gross, as well as the investments in Bålsta. The level of capital employed increased slightly during 2025, mainly as a result of increased leasehold debt and equity.

Due to the increase in capital employed, the return on capital employed decreased to 15.5% compared to last year, despite an improved operating profit. Thereby, I have come to the end of my presentation and hand over to you again, Simone.

Thank you, Anders. We are now on page 17, and it's time for me to give you an update on our strategic agenda and priorities.

Let's turn to page 18. We have a clear house of brands strategy in our group, and it makes us unique in Swedish food retail.

We aim to deliver the strongest customer experiences, and we are present in all market segments with our different concepts. Our largest brands, Willys, Hemköp, and City Gross, made significant progress during the past year.

With a clear focus on always delivering Sweden's cheapest bag of groceries, Willys once again took market share, increased its earnings, and continued to expand with new store establishments. Willys has had a strong momentum for long time and has excellent potential to reach even more customers.

The aim is to open at least 10 new stores for Willys annually in the coming years by also continuously creating an even better customer experience in stores through continuous upgrades to its new store concept, Willys .0 5.0. Hemköp also gained market share during the year while improving its profitability.

This was achieved through a high pace of store modernization and continuous development, focus on price value, sustainability, fresh products, and meal solutions. For City Gross, it was a year of transformation, with a series of improvement initiatives in many areas.

Important steps forward were made, resulting in improved like-for-like sales growth, a lower cost level, and positive earnings trend. We continue to work according to plan to strengthen the chain for the future, to become a truly competitive player in the hypermarket segment, with the aim to achieve profitability at some point during the second half of 2026.

We are now on page 19. To create the right conditions for our retail concepts to be able to succeed on the market, we leverage our strength as a group and focus on 6 strategic development areas.

We elaborated these during the Capital Markets Day in September, and I would now like to go through some of our most important strategic priorities within these going forward. Please turn to page 20.

We strive to offer the market's most attractive assortment, a highly relevant offering that makes affordable, good, and sustainable food available to everyone. This work includes both branded products and private labels, but now I will focus more on the latter.

Because our extensive range, including the Garant and Eldorado brands, is a significant competitive edge. These products contribute to profitable growth by creating an attractive and distinctive assortment that strengthens the offerings within our various concepts.

Our products represent quality and innovation, and we focus a lot on sustainability and health, with a wide selection of sustainability-labeled and organic products. In addition, we have a large selection of products with Swedish origin, with more than 400 products under the Garant brand.

During 2025, we continue to develop our private label offering and launched approximately 270 new products. Our total private label share of sales was diluted by City Gross, that has a lower private label share than Willys and Hemköp.

The private label share continued to increase in each chain, a trend that we've seen for a long time, and in particular, now we see a strong growth also in City Gross. We are now on page 21.

We have an attractive store network, a network that we will continue to develop in the coming years by accelerating the pace of expansion while maintaining a high rate of modernization of existing stores. During 2025, we established 9 new group-owned stores.

On a net basis, we have thereby expanded our network of group-owned stores with more than 100 in the last 10 years, and we aim to continue on this path also going forward. In addition to store establishments, we have continued to modernize and refurbish existing stores in a high pace.

This is really about creating inspiring store environments and great experiences to attract customer traffic and profitable growth. Looking at major refurbishments from 2021, sales from these stores increased significantly more than the market, and operating profit also increased.

I also want to elaborate on how our house of brands strategy creates flexibility and opportunities in terms of our store presence. We can maximize the opportunity on each local marketplace by having the right concept in the right place.

Last year, we converted 2 City Gross stores to Willys because we saw better opportunity for Willys to be successful in those areas. These conversions have proven to be highly successful, as both stores have experienced a substantial sales increase following the conversion.

Adjusted for inflation, sales in the Bromma Blocks store in Stockholm was more than 50% higher during the September to December period last year compared to the same period the year earlier when the store was operating under the City Gross brand. The corresponding increase for the Borlänge store was more than 70% during the November to December.

This really highlights the strength of our house of brands strategy and how we can leverage our strong portfolio of concepts. Next page, number 22.

Last year, we communicated that we are planning to establish a new highly automated logistics center in Kungsbacka to strengthen our supply chain in southern Sweden. During the fourth quarter, we signed agreement for the automation equipment with Witron, a market leader in dynamic warehouse and order picking systems.

We have collaborated with Witron for several years, as they've been our supplier of the automation solution in Bålsta. The total contracted investment will amount to €265 million during the period 2026 to 2031.

On this slide, you can see how the investment undertaking is spread out in the next couple of years, which we communicated just over a month ago. The amount for 2026 is included in our capex guidance that I will provide you with shortly.

We are continuing to build for the future, and this new logistics structure will create capacity for us to continue to grow and become even more competitive. We are now on page 23.

At Axfood, we have a highly ambitious agenda when it comes to sustainability and health. These are integral parts of our operations, and our scope is the entire food supply chain.

During the fourth quarter, we reached a significant milestone as we completed our transition to fossil-free transports, both in our own operations and in procured transports. This is truly a great achievement, and I am proud that we as a group have chosen to take the lead this way to reduce emissions.

We now exclusively use renewable fuels or electricity, and we also have target to electrify 50% of our own transport fleet by 2030. Now, while the impact on emissions from transition is not fully reflected in our numbers for the year, emissions from transports nevertheless went down substantially in 2025.

Looking at the last 5-years period, transport emissions have decreased with approximately 70%. Another highlight during the quarter was that we applied to have 3 climate targets validated by the Science Based Targets initiatives, and we are now on page 24 in the presentation.

We have been working on this for some time now, as you may know. For us, it is of course important that goals and ambitions are worked through thoroughly, and during the process, we identified a need to develop and improve our existing climate reporting, mostly regarding Scope 3.

This work now enable us to better establish a transition plan to show how we will reduce emissions in the long term. We commit to reduce emissions in our operations by at least 70% by 2030 compared to 2024, to have at least 70% of our suppliers set science-based climate targets by 2030 the latest, and to reduce FLAG emissions by at least 30% by 2030 compared with the base year of 2024.

Our application will now be revised by the SBTi, and we will come back to you when we have our targets validated. Please turn to the next page, number 25.

Today, we are issuing the outlook for 2026. We are continuing to invest in our business to strengthen competitiveness and create value for all our stakeholders.

Investments are expected to amount to 2.2 to 2.3 billion SEK, excluding acquisitions and right-of-use assets. The largest part of this is related to recurring investments in our operations, and this also covers expansion through new stores.

However, the amount also includes 470 million SEK automation investments for our future logistics center in Kungsbacka, as I just mentioned. To encourage even more customers to shop with us, we will continue to maintain a high rate of new store establishments in 2026 and beyond.

Our ambition this year is to expand the store network by 10 to 15 new group-owned stores in 2026. In addition, we want to continue attracting franchisees and add new retailer-owned stores to expand our total store base.

To further strengthen City Gross, we will incur 50 million SEK in structural costs in that business in 2026, which will be classified as items affecting comparability. These costs are mainly related to its store base.

Moving on to the dividend and page 26. Axfood has a strong financial position, and the Board of Directors will propose to the Annual General Meeting an increased dividend on 9 Swedish kronor per share.

The dividend will be split into 2 payments: 4.50 SEK per share in March and 4.50 SEK per share in September. The dividend proposal corresponds to 83% of profit after tax, well in line with our dividend policy.

Now turning to the final page of this presentation, page 27. Let me sum up.

We are summarizing a quarter and year in which we attracted growing numbers of customers, with increased loyalty and stronger positions in all our market segments. We are well-positioned to remain the challenger and feel confident about the year ahead.

We operate in dynamic markets that continue to be dominated by a strong focus on price value, and our aim is to continue to grow more than the market. That is because we have a strong business model and structure that create opportunities and competitive advantages.

For us, the key to drive long-term growth and profitability is based on customer traffic, loyalty, and volume growth. We have seen a strong development in all these areas over a long period, also in 2025.

Based on our great commitment and passion for food throughout the organization, we are leveraging the strength of our business model. That was all for today, now please turn to page 28, and I hand over to the operator to open up the line for questions.

Thank you.

Thank you very much. I think I would like to start asking about City Gross, where we now see if we look at the the second half of '25 in total, it's a it's a rather clear profitability that you that you reach H2 '25 on an adjusted EBIT basis.

Could you elaborate a little bit on this in in comparison to to the target you set out to reach breakeven H2 '26? Should we view it that that you have already achieved this target now 1 year earlier, or or is it a very big seasonality difference here that lead us to that you want to highlight when we look at H1 '26?

Thank you very much. Within City Gross, we are in a transition, as you know.

We're in the middle of our transformation plan and to do the turnaround. Our aim is to create a really strong core and to create a strong and competitive player within the hypermarket segment.

It comprises a lot of different initiatives, everything from the operating model to the store concept, to the customer offering. We also made things restructuring the organization, etc.

We're also investing in price. Within the fourth quarter, there are seasonal effects for the hypermarket segment that are in general stronger in the fourth quarter.

However, we are taking really really good steps within City Gross. As you understand, we are in the middle of a journey, and it can go up and it can go down.

We are reiterating that in the second half of this year, we will create an attractive and profitable player within the hypermarket segment. We are reiterating that goal.

All right. Just another thing here on the like-for-like sales growth for City Gross, and forgive me if you've already mentioned it earlier in the presentation, I came in a bit later here.

You state in the table 1.5% like-for-like sales growth, and I assume that relates only to the November to December period. Can you say if that is correct?

Then in the text, you write October to December 3.1% like-for-like growth. Do I interpret this correctly?

In that case, September sales I assume must have been much stronger.

To start with, yes, you have interpreted correctly. So 3 3% in the quarter and 1.5% for the November-December period.

That's actually, as we talked a lot before, that's actually where it all starts. We have to have a positive growth in like-for-like, and that's why we're really really happy to see that during the quarter.

Considering that, I guess, that in the mix of these months in the normal quarter, I guess that the last quarters, i.e., November and December should be larger. Nevertheless, October, I think I said September, of course October must have been very strong for the full-quarter figures to reach 3+%, while the November to December was only 1.5%.

Is that correct?

We don't actually guide you monthly, and it's also about, how you say, what kind of comparison figures you have, of course. I would say that we're really happy that we see the positive like-for-like growth that we've seen now for some time for City Gross.

As I told you, it's a journey, and that's why we're reiterating profitability somewhat in the second half this year because and we're doing and taking large measures and initiatives to really create and building this strong core. That's why you have to look at the trend here, because it can, some months, it can go up, and some months, it can go down, when we're doing so much changes as we do.

For us, it's about looking at the trend. As it starts with the like-for-like growth, but we've also made a lot of initiatives regarding costs and organizational changes, and also operating model, and now we're also developing the store concept.

I think it's important to see the trends, and also I think your two questions maybe are linked. We're on a journey.

It can go up, it can go down, since we're doing so much changes in City Gross.

Right, but the trend, if we look at two figures then, the trend in like-for-like sales growth has been very stable, because you've been delivering now on full quarters, three quarters in a row with above 3% positive like-for-like growth, and you delivered three quarters on sort of adjusted operating profit level. You delivered three quarters in a row with sort of improving results, then flat in Q3, and now a clear profit in Q4.

All right. Thank you for the remarks.

Then I'd like to ask on Dagab. You mention here as one explanatory factor to the weaker margin, price investments from Dagab in the quarter.

I guess, maybe it's been a special quarter to a certain extent, for example, with the PRO survey taking place in this quarter. Can you elaborate if you think or see that there were some temporary factors as relates to price investments that weighed on Dagab's margin in Q4?

To start with, the PRO doesn't have anything to do this, and we do as we always do, to deliver for Willys the cheapest bag groceries in the market. Also for Hemköp and City Gross, it's important to be highly competitive.

I know we don't take that much measures about PRO. To go to Dagab, in Dagab, we see really good effects of the investments we made in the logistics, both in Bålsta, but also the fruit and vegetable in Landskrona and the new high-bay warehouse that we have automated in Backa.

However, as you said, we have a negative effect in the margin, and that is due to both market investments, but also mix effects. To elaborate a little bit more about mix effects, when we have changes in customer behaviors, and also volatility commodity pricing, and then that could vary from month to month and quarter by quarter.

For instance, which we are happy to, we have good volume growth within fruit and vegetables, where we also have had deflation. That has a negative effect in the earnings in Dagab.

I think it's important to look on our result as a group, how we actually play our business model in the most efficient way, and by that, we're once again gaining market shares the 11th year in a row, and also improving our profitability as a group.

Right. Do I interpret you rightly that when you then mention investments, you speak about capital investments that have been capitalized, and then leading to a higher depreciation impacting results?

Is that what you mean?

No, it's market investments. Dagab is a supporting company for all our customers, and their role is to help all the customers to be really competitive in the market, and to have the right conditions to take the market development.

That is what we mean with the market investments.

Exactly. That was my feeling.

Then that means of course market investment means investment into reduced price, I guess, on certain merchandise for the retailers.

It's to increase the competition.

Yes, yes. The quite aggressive price cuts that you took on several items in conjunction with PRO survey must have been impacting profitability somewhere in the chain, either in Willys or in Dagab or both.

Isn't that correct?

I don't like to talk about the PRO. I think Willys has handled those questions.

Willys, there are so many methodological errors in that survey, we don't actually take that much action about that. For us, I think it's important to put our performance in the perspective of a high competition in the market from all the players.

I think that we are navigating that quite successfully since we're gaining market share. We have a high competition in the market, and we also have a consumer that is very conscious, with high focus on price and price awareness.

That's the market that we are navigating quite well, I would say, since we're gaining market share and strengthen our positions with all our brands, our strong brands.

Great. Then on Snabbgross, had a material setback in profitability in Snabbgross here in the quarter, and you mentioned temporary market investments here.

Can you elaborate a little bit on that if perhaps you already did when you ran it through in the presentation, but for a reminder here on Snabbgross?

Yeah. Snabbgross made some market investment that they didn't really get the ROI on in volumes.

They had a good growth with 6%, but it wasn't enough to cover the negative effects in the margin and in the profitability. They made a weak performance for the quarter.

We should interpret that these will not be repeated, these type of investments, then? As I don't give any forecast on the segments.

It was not in our taste, to put it that way.

Right. Great.

Then just looking forward then instead, or not forward-looking statements, but looking at what we all know about the halving of the food VAT from 1st April. We've had a period now where we had very high inflationary pressure where we've seen consumers trading down, to speak, in the mix of what they consume.

Do you think that the relief from the half food VAT might impact the mix in the other direction in any way?

To start with, we look very positive on the reduction of the VAT. I think we have a consumer that has been very cautious, and we still think that the consumer is cautious, and it's very difficult to make any forecast on how the consumer will act.

How you say, they're a little bit scarred from the price shocks that we have experienced the last years, and also we have a pretty high unemployment in Sweden. We think the customer is still cautious and focus on price and value for money.

However, we hope that we will get some positive mix effect in the way that we're hoping to see more increased, how to say, purchases within sustainability and sustainable-labeled food. That's what we're hoping for.

We think it's difficult to give you any forecast. The customers is still very price-conscious, and there is a high competition in the market.

It's difficult to give you any forecast on this.

Right. Just a final one here on the falling international food commodity prices seen now for 4 months straight, and also topped by the strengthening Swedish krona, have you seen so far any effect as relates to sort of Dagab's purchasing from this?

If we look upon the commodity, we see, as you said, we had a higher inflation in the beginning of the year due to dairy, meat, and also to coffee, and and that was stabilized the second half of the year. Also with the strengthening of the Swedish currency, of course, it's is positive, but more on a longer-term perspective for the consumers, since there's so many things that are affecting the prices.

Of course, in the long-term perspective, it's positive for the consumers when we see more stable development in the commodity pricing, and also a a strengthening in the Swedish currency.

Right, those were all my questions. Thank you very much.

Thank you very much.

Hi, thanks very much for taking the questions. I'll go one by one as well.

Just following on from the last one, in terms of inflation you're seeing in the market, you mentioned deflation in fruit and veg, are we seeing slowing inflation further as we start 2026?

It's difficult to give any forecast on the pricing since there are so many things that are affecting. We're also have a geopolitical situation.

We have also, how do you say, climate changes is also affecting. We have had more stable pricing since the summer, I would say.

How it will end up in the future, it's very difficult for me to give any forecast on.

In terms of the first month you've seen, are we seeing prices sort of stable versus December, or would you say falling slightly further?

I can't give you any forecast on the pricing since there are so many things that are affecting the pricing.

Okay. Then maybe you mentioned competitive intensity of the market.

Are you seeing any changes in the more recent months? Has that competitive intensity stepped up, any players you'd flag?

I would say we have experienced a very competitive market for the last couple of years, I would say, and there's been a competition from all the competitors, I would say. We're still in a market with high competition, and also a consumer that is very price-sensitive and cautious.

No real changes?

No, we're pretty much in the same market as we've seen for the couple of years now.

Brilliant, okay. Then in terms of the VAT cut, is your expectation that that will be immediately fully passed to consumers?

Yes, definitely. The VAT is the tax, as that the state put on the food, so that it's digitally transferred to the consumers.

Okay. In terms of historical price elasticities, and I guess we don't have much data on when prices actually fall, but do you have any sort of data which suggests how consumers might react to a 6% fall in prices, or 4% 5% probably it works out at?

No, it's really difficult to know what the customers will do, actually. Since we think it's very positive because the consumer have decreased their economy the last years, and by the lowered VAT on food, that will increase the buying power for the consumers.

How they will act is difficult to forecast since they, as I told a little bit before, they are scarred from the years of the cost shocks they've had, high employment, if they will save the money or they will buy other things than food, or if they will place more money in food, it's really difficult to forecast, we actually don't do any forecast. It's difficult also if you analyze different markets, because it's been different situation in also in these markets.

Understood. Just looking at the sort of Dagab numbers now and how that, I guess you're sharing the savings more broadly across the group, do you think as we look to the next investment in the supply chain, we should think about that more as a kind of just cost of doing business, you need to make this investment to maintain competitiveness, rather than thinking about this as a sort of 300 400 million SEK boost to EBIT, potentially that we were thinking about before from the last project?

We are still negotiating regarding the, how you say, the facility, and when we have everything set, of course we will come back to you with the full scenario. For us, it's important both to secure capacity for the southern part of Sweden from 2030 going on forward, but also it's about strengthening our competitiveness.

When we will open the warehouse, we will have the same cost level as we have today, of course, but then of course we will improve our competitiveness over time.

Okay. Just one more broadly just thinking about the environment.

I know over here in the UK when there've been certain cuts on sort of business rates, for example, the grocers in the UK didn't really take those to the bottom line. What's the political environment about, if there is a volume increase in grocery, is there room for profitability to improve, or is it very much focused on driving that consumer experience?

Could you rephrase the question?

Just I guess with the VAT cut, the sort of overall environment, when these cuts are given to grocers, the expectation is generally the consumer sees the benefit, and I've said in certain markets we cover as well, we've seen those benefits largely just passed to the consumer. In terms of the potential volumes increasing on the back of lower prices in food, do we think that gets further invested in the consumer, or can that drive the bottom line?

Aha, now I understand. As I said, it's difficult to make forecast how the consumer will act.

The other part, we have our long-term target goal for our group set to 4.5%, and that will come from us to continue growing, attracting more customers, and also improve our efficiencies within the entire group. We're aiming, and that's a long-term goal for us to strive towards.

I also think it's important if you look upon our figures last year, and if you exclude City Gross, we're actually having a margin of 4.3%, we're heading towards our goal, but it's set on a long term.

Okay. All right, thank you very much.

Thank you very much.

That was all for today. Thank you all for your good questions, and see you in the next call.