Higher operating profit in a cautious market

January 1–March 31, 2025

• Net sales increased 6 percent to SEK 4,562 M (4,320), where most of the increase was attributable to the acquisition of Elit Polska. Organic growth was -1 percent.
• EBIT increased to SEK 161 M (146) and the EBIT margin to 3.4 percent (3.3). EBIT for the quarter was impacted by items affecting comparability of SEK -70 M (-78).
• Adjusted EBIT increased to SEK 231 M (224) and the adjusted EBIT margin amounted to 4.9 percent (5.1).
• Earnings per share before and after dilution amounted to SEK 0.85 (0.92).
• Cash flow from operating activities amounted to SEK -122 M (285).
• Net debt in relation to EBITDA¹⁾ amounted to a multiple of 2.4 compared with 2.1 at the beginning of the year

1) EBITDA excl. IFRS16 is calculated on a rolling 12-month basis for the Apr–Mar period.

Significant events after the end of the Quarter

• No significant events occurred.

CEO comments:
Higher operating profit in a cautious market

Cautious consumers and fears of a protracted recession dominated the first quarter. We successfully defended our gross margin by adjusting prices and enhancing purchasing efficiency, despite softer growth. Operating profit was strengthened, and we are fully focused on building a stronger MEKO – which involves taking our logistics to the next level in 2025.

Unlike many other sectors, the demand we face is stable over time, underpinned by the continuous need to service and repair vehicles. The car plays a decisive role in the everyday lives for most people, with many prioritizing rapid repair when something goes wrong. Through our broad range of brands and workshop concepts, we aim to be the most complete partner for everyone who drives, services and repairs vehicles – regardless of the fuel used to power them.

Despite the constant nature of the underlying need for repair, we were not left completely unscathed by the international turbulence we experienced in the first quarter. Varying degrees of caution characterized our markets. We reported overall growth of 6 percent compared with the first quarter of 2024, while organic growth was negative.

This was due in part to the difference between this year’s mild winter and the cold temperatures we experienced in 2024. As a rule, severe winters are good for sales in our industry, which is particularly evident this quarter.

But regardless of external factors, our direction is clear: We will achieve long-term improved profitability through efficiency improvements, synergies and increased growth.

Stable gross margin and stronger operating profit
We defended our gross margin during the quarter by adjusting our prices and enhancing purchasing efficiency. At an overall level, operating profit improved year-on-year. By contrast, the adjusted operating margin declined slightly, due in part to the slight dilutive effect of the structurally lower margin in Poland. The effect is more visible this year, as we saw strong growth in Poland in 2024 thanks to the strategic acquisition of Elit Polska.

On a positive note, the Sweden/Norway and Denmark business areas reported increased profitability due to efficiency improvements within the scope of the “Building a stronger MEKO” profitability initiative. Although we are growing organically in Poland/the Baltics, competition remains intense, thereby ultimately impacting the margin. Performance in Finland remained weak – we expect to see an improvement once the current measures have gained full effect.

Given the prevailing economic turbulence, we now have a particular emphasis on costs. We have therefore implemented, and plan to implement, further margin-raising measures in a number of markets. This includes, among other things, a reduction in the number of positions in certain administrative and central functions. Regarding the trade policy turbulence we’ve seen during the quarter, our assessment is that MEKO is not directly affected by the tariffs imposed or announced by the US. However, we are closely monitoring the situation.

Measures for long-term, sustainable growth
Strengthening the foundations for long-term growth is just as important as acting in the short term. During the quarter, we worked diligently on precisely this:

• Progress in Poland. We continued the integration of Elit Polska to advance positions in the major Polish market, which has clear growth potential.

• Accelerated activity in tires. We launched a stronger focus on tires by entering a strategic partnership with Goodyear, one of the world’s leading tire manufacturers.

• New division for commercial vehicles. We announced a new focus on commercial vehicles, including trucks, buses and vans, where the goal is to achieve the same strong aftermarket position as in passenger cars.

• ERP system nears launch. We are nearing the implementation of our new ERP system with Poland as the first market – a platform that will enable important future synergies.

• More efficient logistics. Above all: We continued according to plan with the commissioning of our high-tech central warehouses in Denmark, Norway and Finland.

These central warehouses are much more than just buildings equipped with more efficient technology. They form the foundation as we take our logistics to the next level, with the growth opportunities that follow. This is something we are also looking forward to talking more about at our capital markets day on September 10.

That said, our overall goals stand firm: Over the long term, to continue building a stronger MEKO – even in more turbulent times.

Pehr Oscarson
President and CEO