Cautious market and further initiatives to increase profitability

April 1–June 30, 2025

• Net sales declined 4 percent to SEK 4,508 M (4,680). Organic growth was -5 percent. Currency effects had a negative impact of 3 percent on net sales.
• EBIT amounted to SEK 91 M (284) and the EBIT margin was 2.0 percent (6.0). EBIT was negatively impacted by items affecting comparability of SEK -84 M (-73).
• Adjusted EBIT declined to SEK 175 M (357) and the adjusted EBIT margin decreased to 3.8 percent (7.5).
• Earnings per share before and after dilution amounted to SEK -0.12 (2.86).
• Cash flow from operating activities amounted to SEK 498 M (698).
• MEKO held its Annual General Meeting on May 15, where all previous board members were re-elected, and Walter Hanley was elected as a new member.
• MEKO successfully completed a bond issue of SEK 1.25 billion with a maturity of 5 years. Compared to the existing, the new bond offers a lower long-term financing cost.

January 1–June 30, 2025

• Net sales increased 1 percent to SEK 9,070 M (9,000), with most of the increase attributable to the acquisition of Elit Polska. Organic growth was -3 percent. Currency effects had a negative impact of 2 percent on net sales.
• EBIT amounted to SEK 252 M (431) and the EBIT margin was 2.7 percent (4.7). EBIT was negatively impacted by items affecting comparability of SEK -154 M (-150).
• Adjusted EBIT amounted to SEK 406 M (581) and the adjusted EBIT margin was 4.4 percent (6.4).
• Earnings per share before and after dilution amounted to SEK 0.73 (3.78).
• Cash flow from operating activities amounted to SEK 376 M (984).
• Net debt in relation to EBITDA¹⁾ increased to a multiple of 2.7 compared with 2.1 at the beginning of the year.

Significant events after the end of the period

• A new cost saving program was launched that will reduce the cost base by SEK
  100 M yearly, with full effect from 2026.

CEO comment

Sales impacted by cautious market – additional measures to reduce costs

The second quarter was marked by continued economic uncertainty and intense competition. This led to weaker sales and lower earnings compared with the corresponding period in 2024. To meet these developments, we are implementing a new cost reduction program that will lower our costs by SEK 100 million annually, with full effect starting in beginning of 2026. In parallel, we are continuing to strengthen MEKO in the long term by establishing our high-tech central warehouses – a strategic step that paves the way for increased growth.

The international turbulence from the start of the year continued into the second quarter and created new uncertainty about when the economy will improve. Many vehicle owners remained cautious and prioritized only the most essential repairs, with price being particularly decisive. This in turn resulted in competition being intensified to some extent in our markets, which was particularly evident in Denmark and Poland.

At an overall level, year-on-year sales decreased in the second quarter by 4 percent. Organic growth was - 5 percent, and despite the geographic diversification, all business areas experienced varying degrees of a similar development.

Impact on the result – new cost-saving program
We have been increasing our efforts to build a stronger and more profitable MEKO within the initiative “Building a stronger MEKO”. This has included extensive cost optimization, which also had a tangible impact. The measures within this initiative have resulted in a positive impact on operating profit of approximately SEK 200 M on an annualized basis. However, we note that the cautious market situation, with a weaker sales trend, is impacting earnings in the second quarter, despite our focus on efficiency improvements. Adjusted EBIT amounted to SEK 175 M in the second quarter, compared with SEK 357 M in the year-earlier quarter.

We are acting immediately in response to this development. We are therefore strengthening our efforts under the “Building a stronger MEKO” initiative with a new cost-reduction program which will reduce our costs by SEK 100 M per year, with full effect starting in beginning of 2026. The cost reductions will lead to fewer positions in administrative and central functions and will affect all levels of MEKO. In addition, we are implementing a number of initiatives to boost sales, both locally and across the Group. These include, among other things, increased price differentiation between customer categories to strengthen loyalty, more exclusive brand products at a wider range of price points to better meet demand for low-cost alternatives, a continued focused effort in the commercial vehicles segment, further development of our leading workshop concepts – and a long list of other measures.

Long-term growth initiatives – and stronger logistics
In parallel with these short-term initiatives, we are focusing on investments to increase our long-term growth. Our high-tech central warehouses in Denmark, Norway and Finland have been constructed on schedule, and we were able to ensure their successful commissioning during the quarter. In Poland, we completed the relocation to a significantly larger central warehouse without major disruptions. We also finalized preparations and managed to launch our new common ERP system in Poland on July 1 – as the first market in the Group. Once fully implemented, this system will play an important role in our efforts to realize synergies.

These efforts have undoubtedly required a strong focus and have not been without challenges – but we are now very close to concluding an important, strategic strengthening of MEKO’s logistics.

Own-brand initiatives – expansion of Mekonomen brand
During the quarter, we also increased our focus on own brands in spare parts and tools – an initiative that is aligned with our strategy for sustainable growth, and which supports profitability. We aim to offer more products in more categories, adapted to more situations. We have identified a clear demand for products under brands such as ProMeister and Kraft, which are appreciated by both car owners and workshop customers.

During the quarter, Poland also became our fourth market for the Mekonomen brand – one of the Nordic region’s best-known brands in all categories. Mekonomen will be the new name of a franchise concept for spare parts wholesalers, operations that were previously run under the name Elit Polska.

Key confirmation of our strategy
We were also strengthened during the quarter by clear, independent confirmations of our position and strategy. In June, we successfully issued new five-year senior bonds for SEK 1.25 billion. There was substantial interest among investors, which we see as a vote of confidence in our business concept. The transaction generated some costs in the quarter but will reduce our long-term financing costs.

Another important confirmation came with the validation of our climate targets from the Science Based Targets initiative, a leading global standard for science-based climate targets. This validation marks an important step in realizing our sustainability strategy.

Overall, we are navigating in a challenging market. We are doing so by taking action in the short term while continuing to make important investments for the future. Not least, we are lifting our logistics to a new level, improving efficiency, increasing availability and creating new opportunities to grow for a long time to come.

Pehr Oscarson
President and CEO