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Investing.com -- Europris (OL:EPR) posted a group operating loss in the first quarter of 2025, hit by unrealized currency losses and a weak performance from its recently acquired Swedish business, ÖoB. Despite solid organic growth in Norway, the company’s stock dropped more than 7% Thursday.
Group revenue rose 45% to NOK 2.94 billion, mainly due to the consolidation of ÖoB from May 2024. Organic sales, which exclude the Swedish acquisition, increased 1.2%.
The company said the late Easter and one fewer trading day compared to last year’s leap year reduced organic sales growth by an estimated 4 to 5 percentage points.
Gross profit rose to NOK 1.14 billion from NOK 878 million, but the group’s gross margin fell to 38.7% from 43.3%.
The decline was driven by the lower-margin ÖoB business, which diluted the group margin by 4.2 percentage points. Europris also took a NOK 34 million unrealized loss on currency hedging contracts and accounts payable, reversing a NOK 19 million gain a year ago.
On an organic basis, the gross margin slipped slightly to 42.9% from 43.3%. Excluding currency effects, it improved by 1.7 percentage points.
Operating expenses rose to NOK 913 million from NOK 597 million, driven by the ÖoB integration.
Organic opex increased 4.8% to NOK 626 million. The opex-to-sales ratio rose to 31.1% from 29.5%, or 30.5% on an organic basis.
Europris reported an EBIT loss of NOK 37 million, down from a profit of NOK 107 million last year. The loss includes NOK 115 million in negative EBIT from ÖoB.
Organic EBIT fell by NOK 29 million to NOK 78 million. Excluding currency hedging effects, organic EBIT rose NOK 14 million.
Net loss for the quarter was NOK 80 million. Net debt climbed to NOK 5.01 billion from NOK 3.46 billion, with NOK 1.52 billion excluding lease liabilities. Liquidity reserves stood at NOK 1.43 billion, down from NOK 1.72 billion.
Chief executive Espen Eldal said the Norwegian operations performed well, with sales growth and improved margins when excluding currency effects. “Operating costs are well under control,” he said in a statement.
In Sweden, ÖoB continued its transformation strategy, including clearance sales, product range upgrades, and store remodeling.
The company said the first remodeled store will open before summer, with more updates planned through 2026.
Europris reiterated its goal to grow ÖoB sales to SEK 5 billion by 2028 with a 5% EBIT margin. The company flagged geopolitical uncertainty, interest rate shifts, and currency volatility as ongoing risks.
While real wages have improved, consumer sentiment remains sensitive to debt and rates. Interest rates have been cut in Sweden but remain elevated in Norway.
Still, Europris said it is well positioned for the upcoming retail season and continues to see strong potential in its discount model.