New Wave Group Annual Report 2024 | Page 82

NWG // FINANCIAL INFORMATION

Summary of 2024

The Group had a rather tough start to 2024 with lower net sales than the previous year. The first quarter is and has always been the smallest quarter of the year and is often uneven in terms of both sales and earnings due to marketing efforts, sales activities, shifts between quarters, etc. Net sales decreased by 7 %( same in local currencies), of which acquired operations contributed 1 %. Sales decreased in all segments and in both sales channels. All regions except Central Europe had lower turnover than last year. Net sales were also negatively impacted by the calendar effect that arose when Easter this year fell in March instead of April. Operating result decreased and amounted to SEK 185.5( 313.5) million, which was mainly related to the lower net sales.

The market was significantly weaker in the second quarter than we had previously estimated. We expected that an interest rate cut and discussions about further interest rate cuts would boost sales, however this did not happen. Our assessment is that the promo market decreased by 5-10 % in the quarter depending on the country and that the retail trade continued to have a difficult time with decreases as well. However, the Group continued with its market investments as it was a good opportunity to take market share. Net sales increased by 4 %( 3 % in local currencies). It was mainly in the Sports & Leisure segment that net sales increased, while Corporate and Gifts & Home Furnishings were on par with last year. The promo sales channel increased by 2 % and retail by 9 %. Net sales increased in most of our regions but decreased in Southern Europe and Other countries. The operating result for the quarter was lower than in the previous year and amounted to SEK 301.2( 363.9) million. Cash flow from operating activities improved and amounted to SEK 337.5( 230.1) million.

Net sales in the third quarter decreased by 1 %. However, currency fluctuations negatively affected net sales by 3 %, which means that organic growth was 2 %. The Sports & Leisure segment increased its sales slightly, while Corporate and Gifts & Home Furnishings decreased. Both sales channels decreased their net sales by 1 %. The Group continues to take market share in a challenging market. In Sweden, for example, the Sports Index decreased by 1.5 % in the third quarter, which was the

11th consecutive quarter with negative figures. The Home Furnishings Index was minus 9 % in the quarter, despite also being minus 1 % in 2023, a total decline of 10 % compared to the third quarter of 2022. We estimate that the promo market also decreased by around 7-9 %, highlighting that it was a very difficult quarter. Operating result decreased from SEK 381.1 million to SEK 312.8 million. Last year saw some one-off income and the Group had increased payroll costs and continued aggressive market investments, particularly in Germany and the USA. Cash flow from operating activities improved and amounted to SEK 191.4( 173.3) million.

The Group once again had growth in the fourth quarter and net sales increased by 3 %. The Sports & Leisure segment and the promo sales channel saw sales increase, but Corporate also had growth. Gifts & Home Furnishings decreased. Net sales increased in most regions but decreased in Sweden and Southern Europe. The gross profit margin remained strong but slightly lower than the previous year. The Group continues to invest in the market with increase sales and marketing expenditures. Operating result decreased and amounted to SEK 462.7( 518.7) million. The quarter ' s cash flow from operating activities was lower compared to last year and amounted to SEK 545.7( 753.5) million, where the decrease was attributable to more goods purchased than in the previous year.

Net sales for the year amounted to SEK 9,528.7 million, which was on par with last year( SEK 9,512.9 million). The promo and retail sales channels were also at the same level as last year. The Corporate segment decreased by 2 % and had a weak performance during the first three quarters of the year but saw growth in the fourth quarter. Marketing efforts and personnel costs have increased due to general salary increases and new investments. Overall, this has meant that costs have increased and operating result has thus decreased compared to last year. Sports & Leisure had a weak first quarter but has improved thereafter and for the full year the segment increased by 3 %. The segment increased largely in the USA, Central Europe and the Nordic countries( excl. Sweden). Investments in Craft have continued and the brand is showing improvement even though significant marketing investments have been made. Costs increased in the form of more marketing activities and the operating margin was slightly lower than last year. Net sales for Gifts & Home Furnishings decreased by 2 % and the segment

082 // ANNUAL REPORT