We continue to strengthen our profitability, despite a continued soft market. Although volumes in the project market are at a historically low level, our efforts to pool resources into the consumer market are generating solid returns, and our cost out activities and factory consolidations are delivering savings above plan.

Organic net sales for the Group declined by -5% with the Nordic region at -3% and UK at -7%. On a like-for-like store basis, sales in the UK were unchanged. Store visits and kitchen design appointments continue to increase double digit and contribute to the good consumer segment development. However, the low level of residential property developments continue to burden demand in the project segment, especially in the UK.

The adjusted gross margin for the Group declined to 38.8% (39.4), negatively impacted by underabsorption in both regions, and an additional SEK ~20m of depreciation in the Nordic region. The gross margin was supported by continued average order value growth and a favorable mix.

SG&A savings totaled approximately SEK 80m, driven by last years' cost reduction programs and a sustained strong cost discipline across all areas. The accumulated savings since the beginning of 2023 now exceeds SEK 600m.

Group adjusted operating profit increased to SEK 68m (42) on the back of our continued ebit-margin enhancement efforts. Items affecting comparability of SEK -80m primarily relate to the planned closure for the Finnish manufacturing site, which is progressing in line with expectations. Operating cash flow improved to SEK 100m (-53).

In the Nordics, organic growth was -3% with an adjusted operating profit of SEK 134m (113) and an EBIT margin of 8.9% (7.0). Volumes in the Nordic project market continued to decline as a consequence of the low housing completions. However, consumer sales continue to show positive momentum, supporting profit and margin growth.

The ramp-up in Jönköping has reached an important phase, with the launch of consolidated Marbodal kitchen deliveries to end consumers set to begin in August. The factory already plays an increasingly central role in supporting our whole Nordic supply chain network with components. We expect the transfer of production from the Tidaholm factory to be completed as planned in 2025.

The new Jönköping factory is designed to set a benchmark for sustainability in the industry. We are proud to have received further recognition for this, having been awarded the prestigious BREEAM "Excellent" sustainability certification during the quarter. Equipped with unique water-based painting solutions, railway connections, solar panels and other renewable energy solutions - the factory is positioned to become the leading supplier of eco-labelled kitchens in Europe and contribute to Nobia's Scientific Based Targets.

In the UK, organic growth declined by -7%, and adjusted operating profit was SEK -21m (-32). Net sales declined due to the ongoing challenges in the project market and the closure of 17 unprofitable stores, reducing the total to 168 stores. However, Magnet consumer sales continued to grow on the back of successful product launches in the higher price segments, contributing to improved product mix and margin development. Consequently the gross margin improved to 41.6% (40.6). Further SG&A savings were also realized in the quarter, driven by the cost-out programs initiated in 2024 and the exit from unprofitable stores, which more than compensated for the government-mandated wage increases.

We estimate the consumer market to continue its gradual recovery, while the project market is likely to remain subdued for at least the rest of the year. Despite this historically low-volume environment, our margin improvement demonstrates our ability to drive profitability in the Nordics. We are also making progress in the transition of our UK operations to an asset-light model in order to improve the UK profitability, although the underlying market and inflation remains challenging.

Looking ahead, we remain confident in our strategic priorities: ramping up the new Nordic factory in Jönköping, continuing to focus on the UK turnaround, and maintaining disciplined group-wide cost reduction initiatives.

Kristoffer Ljungfelt
President & CEO