Earnings call transcript: Axfood Q2 2025 sees strong sales growth

Axfood AB reported robust financial performance for the second quarter of 2025, with net sales rising significantly and operating profits showing solid growth. The company’s stock saw a modest increase following the results, reflecting positive investor sentiment. According to InvestingPro data, Axfood maintains a "GOOD" overall financial health score, positioning it as a prominent player in the Consumer Staples Distribution & Retail industry. Axfood maintained its outlook for the year, with expectations of continued growth and efficiency improvements.

Key Takeaways

• Axfood’s Q2 2025 net sales increased by 9%.
• Operating profit rose to SEK 934 million.
• E-commerce sales outpaced market growth, rising 12%.
• The company opened Sweden’s largest solar park.
• Axfood plans to enhance logistics capacity by 2030.

Company Performance

In the second quarter of 2025, Axfood demonstrated strong performance across its business segments. The company achieved a 9% increase in net sales, with a notable rise in retail sales, particularly when excluding the impact of City Gross acquisitions. Axfood’s e-commerce segment grew by 12%, outpacing the market’s 8% growth rate. The company’s strategic focus on renewable energy and operational efficiency is evident in its recent initiatives, including the launch of Sweden’s largest solar park.

Financial Highlights

• Revenue: Increased by 9% year-over-year.
• Operating Profit: SEK 934 million, with an operating margin of 4.1%.
• Adjusted Operating Profit: SEK 959 million.
• Retail Sales: Up 23% overall, with a 9% increase excluding City Gross.

Outlook & Guidance

Axfood has maintained its outlook for the year, with expectations for City Gross to reach profitability by the second half of 2026. The company continues to focus on cost management and efficiency improvements, with plans to expand logistics capacity in southern Sweden by 2030. Notable for income investors, InvestingPro data shows Axfood has maintained dividend payments for 24 consecutive years, with a current dividend yield of 3.09% and six consecutive years of dividend growth. Axfood’s Capital Markets Day, scheduled for September 18, 2025, will provide further insights into its strategic direction.

Executive Commentary

CEO Simone Margulies highlighted the company’s commitment to sustainability and competitive pricing, stating, "We are convinced that this will continue also going forward, considering the increased price awareness among consumers in general." CFO Anders Lexmon emphasized the importance of investing in customer relations to remain competitive, saying, "For us, it’s all about creating the possibility for us to invest in the customer meeting to be really competitive in the market."

Risks and Challenges

• Intense market competition may pressure margins.
• High consumer price sensitivity could impact sales.
• Supply chain disruptions could affect logistics and delivery.
• Macroeconomic factors, such as inflation, could influence consumer spending.
• Regulatory changes in renewable energy policies could impact operational costs.

Axfood’s strategic initiatives and strong financial performance in Q2 2025 position the company well for future growth, despite the challenges posed by market competition and economic conditions.

Full transcript - Axfood AB (AXFO) Q2 2025:

Alex, Conference Moderator, Axfood: Good morning. This is the Axfood second quarter 2025 telephone conference and with me today are Simone Margulies, President and CEO, and Anders Lexmon, CFO. In the Investors section of our Axfood.com website you will find the presentation material for today’s call. We encourage you to have that presentation at hand as you listen to our prepared commentary. After the presentation we will be taking questions. A recording of this call will be.

Made available on our website.

I will now hand over the word to Simone, so please go to page number two.

Simone Margulies, President and CEO, Axfood: Thank you, Alex, and good morning everyone. We summarized a strong second quarter with growth that significantly exceeded the market development. We have a continued momentum in Willys, Hemköp, and Snabbgross, and through affordable and attractive offerings, more customers are choosing to do the grocery shopping in our stores. In addition, the investments that we made in automation and logistics in recent years are now contributing to efficiency and competitiveness for the group. At the same time, strategic initiatives are ongoing to further strengthen our presence and the market positions of our retail chains. Also, during the quarter we made important progress in sustainability, including the inauguration of Sweden’s largest solar park. Let’s turn to page three and the agenda for today’s presentation. I will start with a brief market overview and then I will give you a brief review of our second quarter performance and strategic agenda.

Following that, Anders will take you through the financials. Lastly, just a summary from me before we open up for questions. Turning to page four. Let’s go straight to page five and take a look at the development during the quarter. In the market, competition remains intense across all segments and the consumers continue to focus on price, value, and affordability. We are convinced that this will continue also going forward, considering the increased price awareness among consumers in general. With our group’s business model, with different concepts in collaboration, in combination with a wide and affordable assortment, we have the right conditions in place to continue to navigate a dynamic market. The market growth in Sweden food retail was 6.2% in the second quarter and growth was impacted by a positive calendar effect of 1.2% from the timing of Easter.

Statistics Sweden reported that the annualized rate for food price inflation was 5.4% in the April to May period. This was somewhat higher than in the first quarter this year. However, on a sequential basis, compared to the level at the end of the first quarter, the price development was relatively stable. Growth in Axfood’s retail sales amounted to almost 23%. Excluding City Gross, which was acquired in November last year, growth amounted to 9%. As such, our growth was clearly above the rate of the market, both including and excluding City Gross, and volume growth from increased customer traffic and new store establishments as well as pricing and positive mix were all factors contributing to this development. In E-commerce, growth amounted to 12% compared to market growth of 8%. Excluding City Gross and the discontinued business Middagsfrid, our sales grew 6%. We are now on page 6.

Consolidated net sales grew strongly in the second quarter by just over 9%, driven by continued momentum in Willys, Hemköp, and Snabbgross. Sales in City Gross amounted to more than SEK 2 billion. However, on a group net sales basis, the contribution from City Gross was SEK 364 million due to internal eliminations in Dagab. Please go to the next page. Page 7. Group operating profit increased to SEK 934 million, and operating margin was higher at 4.5%. 4.1%, sorry, operating profit included items affecting comparability of minus SEK 25 million related to City Gross. Adjusted operating profit, which excludes these items, also increased to SEK 959 million, and the adjusted operating margin reached 4.2%. The development was primarily a result of increased customer traffic, strong growth, and efficiency in logistics. Overall, the profit development in absolute terms was driven by Willys and Dagab.

However, Hemköp and Snabbgross also reported increased profits year on year, so the earnings performance was well balanced the quarter. Across our reporting segments, City Gross had a negative impact on the gross profit development, however to less extent than in the first quarter. During the quarter, work to streamline our support functions was completed, entailing the removal of 100 existing positions during the second half of this year. This will lead to cost savings of approximately SEK 80 million from next year 2026, which create conditions for us to continue to invest in price, value, and the competitiveness of our chains. We continue to focus on efficiency and cost in internal processes and procurement. With our structure and the investments in operations, we have a solid foundation for operational excellence. Now let’s go through the development segment by segment, starting with Willys on page eight.

Willys demonstrated a particularly strong performance in the second quarter with growth of 10%, significantly outpacing the market. Willys holds a unique position in the market and continues to be Sweden’s most recommended grocery chain. In addition, the brand always comes out great in customer service. Measuring brand equity growth in the second quarter was driven by a positive trend in both customer traffic and loyalty. In total, the number of members in the Willys loyalty program increased to almost 3.9 million. Earnings grew and amounted to SEK 565 million, which corresponded to a stable operating margin year on year of 4.5%. The higher profit was mainly driven by increased volumes and solid cost control. Let’s turn to page 9. Hemköp also performed strongly in the second quarter with retail sales growth of almost 6%, which was in line with the market, and like-for-like sales growth of almost 5%.

This was primarily driven by increased customer traffic and a higher average ticket value. Total net sales for Hemköp increased 6%. Operating profit increased to SEK 97 million. The operating margin was higher at 4.7%, and it is clear evidence of Hemköp’s positive development in recent years. The higher profit was mainly driven by increased sales, a stable gross margin, and solid cost control. Turning to page 10, City Gross has great potential and gives us presence in hypermarkets, an attractive segment that Axfood previously has not been operating in. This year is a transitional year, and we are working according to our plan to strengthen City Gross for the future. We expect to achieve profitability with City Gross at some point in the second half of 2026, and today we are reiterating that target once again.

We maintain a high activity level by revitalizing the concept and brand, improving the customer offering, implementing a chain management structure, and streamlining operations. In late April, a new communication concept and a stronger, more affordable customer offering were launched to contribute to City Gross’s competitiveness on the market. Also during the quarter, the store in Bromma, Stockholm was closed ahead of a concept change to Willys, and as a reminder, structural measures like this are to create a healthy core in City Gross that the chain can further grow from. Overall sales growth in the second quarter amounted to 2.6% in total and 3.5% on a like-for-like basis. The chain reported an operating loss of minus SEK 20 million in the quarter. This was mainly due to a negative gross margin development following the recent initiatives to strengthen the price position.

Items affecting comparability pertain to structural costs, including closing down. The store in Bollebygd also had a concept change to Willys. The adjusted operating margin was minus 0.9%. Moving on from City Gross and now we are now on page 11. Snabbgross continued to deliver strong growth of 6% despite a continued weak cafe and restaurant market. Sales were up almost 5% on a like for like basis. Increased customer traffic had a positive impact on sales in addition to a higher average ticket value. Unlike the food retail market, the overall calendar effect related to Easter is deemed to have been negative. Operating profit was higher than in the prior year and amounted to SEK 96 million corresponding to a higher operating margin of 6%. The increase in profit was mainly driven by higher sales, a stable gross margin, and solid cost control.

Next page, page 12, and Dagab’s net sales increased by 8% with sales to Willys, Hemköp, and Snabbgross driving the increase in the quarter. Operating profit increased to SEK 298 million and the operating margin was higher at 1.4%. The performance was primarily due to strong sales growth and lower cost levels due to efficiency improvements in logistics operations. The operating profit was however negatively impacted by a lower gross margin and this was a result of increased market investments to support Dagab’s customers in this highly competitive food retail market. The logistics center in Bollebygd is now fully operational since a couple of months and focus is on optimization to continue to improve productivity and efficiency.

As previously communicated, Dagab is also planning for the next steps in the development of the logistics structure to create additional capacity and efficiency in the southern part of Sweden from the year 2030 and we will come back to this in the months ahead. Moving away from segments and we are now on page 13. Renewable energy is one of our major focus areas for reducing our climate impact. In April we officially opened Sweden’s largest solar park in Hallstahammar, a plant which we established in collaboration with the solar energy company Light. Our electricity mix has for a long time consisted of almost only Swedish renewable energy, but with the new solar park we are adding additional capacity to the electricity grid. This helps to increase the conditions for green transition while also creating predictability in our own energy supply.

The park consists of approximately one hundred thousand solar panels in capacity that enable us output of approximately 64 megawatts or 63 gigawatt hours annually, which corresponds to around 15% of our electricity consumption. In addition, we have in recent years established Sweden’s largest rooftop solar power facility at the logistics center in Bollebygd and a large solar power facility on the fruit and vegetable warehouse in Hallstahammar. Also during the quarter, the phasing out of fossil fuels in transport continued through increased use of renewable fuels. Emissions for own transports decreased sharply by 20% compared to the previous year. Turning to page 14, now it’s time for Anders to take you through the financials, so please go to the next page, number 15, and Anders, please go ahead.

Alex, Conference Moderator, Axfood: Thank you, Simone. During the first half of the year, net sales for the group increased by 6.6% to approximately SEK 44 billion including City Gross. Retail sales increased by 19.3%. Excluding City Gross, the increase was 5.9% which was higher than the food retail market. In total, where growth amounted to 4.1%, operating profit excluding items affecting comparability increased 3.8% to just over SEK 1.7 billion. The operating margin excluding items affecting comparability decreased by 0.11 percentage points to 3.9% where the City Gross acquisition impacted the margin by minus 0.3 percentage points. Next page, number 16. During the second quarter the cash flow was SEK 39 million and compared with last year SEK 213 million higher, mainly due to a strong underlying cash flow supported by a positive contribution from net working capital and the reversal of the negative calendar effect from the first quarter.

We also saw a strong underlying operating cash flow for the first half year. The negative cash flow from investment activities of SEK 475 million in Q2 was somewhat higher compared to last year. We now have a higher pace in investments in our retail operations and a lower pace in automation investments since we now are through with our investments in the fulfillment center in Bollebygd. Thanks to the strong operating cash flow, Axfood has reduced the utilization of credit facilities during the second quarter. By the end of Q2, Axfood utilized approximately SEK 2.5 billion of our credit facilities compared with SEK 3.3 billion by the end of Q1 and SEK 0.9 billion at the end of last year. Please turn to page number 17. The net debt has increased since the acquisition of City Gross in Q4 last year.

In addition to the loans raised for the acquisition, net debt also increased with the City Gross leasehold debt of approximately SEK 2 billion. During July, Axfood has successfully refinanced the existing revolving credit facility. The new RCF amounts to SEK 4 billion where SEK 1 billion have a tenure of 3 years and SEK 3 billion have a tenure of 5 years. The conditions in the new agreement are in all essentials unchanged compared with the old facility. The equity ratio amounted to 18.2% which was lower than December 2024. The lower equity ratio compared to Q2 last year was a result of the City Gross acquisition. The decrease during the first six months was in line with the previous years and is a seasonal effect from dividend paid. Total investments excluding leases, sold and acquisitions for the first six months amounted to SEK 844 million.

Year-to-date we have established six new Group-owned stores in comparison to four new Group-owned stores during the same period previous year. We have also increased our store modernization somewhat compared to last year and we are now on page 18. When we look at the capital efficiency, we had a negative development in our rolling 12 months net working capital. As I have mentioned before, the impact of the City Gross acquisition is expected to increase the KPI with approximately 0.3 percentage points on a rolling 12 month basis. Capital employed has increased over the last years mainly due to both the acquisitions of Bergendahls Food and City Gross as well as the investments in Bollebygd. The level of capital employed, however, decreased during the first half of 2025 mainly as a result of the dividend.

Due to the decrease in capital employed, the return on capital employed increased somewhat to 17% compared to last year. I have come to the end of my presentation and I hand over to you, Simone, again.

Simone Margulies, President and CEO, Axfood: Thank you, Anders. We are now on page 19, but let’s go straight to page 20. Our outlook for the year is unchanged. We have covered investments and items affecting comparability already in this presentation. As for expansion, we have established six new group-owned stores so far this year, all of them being Willys, and four of them were established in the second quarter. Please now turn to page 21. We summarize a strong quarter in which we grew significantly more than the market and continue to attract both existing and new customers. We have a positive momentum in Willys, Hemköp, and Snabbgross and maintain a high activity level to develop in the back-end operations. We have become more competitive with our new logistics platform and continue to develop with strategic initiatives in many areas.

With the customer meeting in focus, our ambition level is high, and we maintain a high pace of development to further strengthen our position. Just before we go into the Q&A session, and we are now on page 22. Just a reminder that our Capital Markets Day this year will be held on September 18. The event will be held close to our headquarters in Stockholm at Urban Deli in Hagastaden. At this event, we will cover many areas that are important for our group. The Managing Directors of our retail chains will provide an update of the respective businesses. In addition to the Managing Director of Dagab and the Head of IT, myself and Anders will also present, and more details about the CMD and a link to registration is available on our website. That was all for today. Now let’s turn to page 23.

Hand over to the operator to open up the line for questions. Thank you.

Operator: If you wish to ask a question, please dial on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Gustav Hagaeus from SEB. Please go ahead.

Gustav Hagaeus, Analyst, SEB: Thank you. Thank you Simone for taking my questions. First, one relates to Dagab. You made almost SEK 300 million EBIT adjusted in Dagab in the quarter. It was up from almost SEK 250 million last year. If I recall correctly, you had a freeze incident in Bollebygd last year adding SEK 40 million in costs and you had the double warehousing adding another SEK 30 million. That’s SEK 70 million one-offs that I assume you did not have this quarter. That would mean that Dagab EBIT is down SEK 20 million roughly or 20 basis points on the margin, and basically EBIT is in line with Q2 2022, right, in terms of absolute EBIT. That is on a total group top line that is 25% lower. I assume a lot of those volumes go through Dagab.

I’m a bit curious if you could elaborate a bit on this dynamic given that you’re supposed to have some savings now from the ramp up of the automation investments in Bollebygd of SEK 2,300 million. To what extent did that actually impact in a positive way in the quarter, and what is the reason for this development in terms of earnings for Dagab? That would be helpful, thanks.

Alex, Conference Moderator, Axfood: Yeah, thank you. If we look to Dagab, Dagab has a strong growth due to the growth in our chains Willys, Hemköp, Snabbgross, and we also see the productivity gains and efficiency gains in Dagab. However, we have a weaker gross margin since we’re doing marketing investments to support the customers, and that’s to elaborate. Dagab, we see that the efficiency gains coming as we are suspected and how we also have as I communicated before.

Simone Margulies, President and CEO, Axfood: We have a weak gross margin.

Alex, Conference Moderator, Axfood: On the other sense, to look at in a whole, Dagab is performing better than last year, and also we see a strong growth in our chain. It has been a strategic decision from us to drive the group performance in all and to use our business.

Simone Margulies, President and CEO, Axfood: Model in that way.

Gustav Hagaeus, Analyst, SEB: Yeah, okay, thanks. Curious on that given that you then give away the efficiency gains to your customers basically from Dagab, and I guess most of those refer to internal ones like City Gross and Willys. We saw Willys outgrowing the market in Q2, unlike-for-like, but margins were flat. It seems very costly to drive growth in the market, given that there’s no volume growth in the market, basically. Right. With that in mind, how convinced are you that it’s the best use of capital to expand warehouse capacity further now, given that it’s hard to sort of see, at least from an external perspective, the returns on the investments in Bollebygd at this stage.

Alex, Conference Moderator, Axfood: Yeah, if you look upon us as.

Simone Margulies, President and CEO, Axfood: a group, we make a stronger result.

Alex, Conference Moderator, Axfood: This quarter we’re happy since we have a weaker result for a couple months, and to see that we’re now turning to a stronger result as a group. I think that’s important for us to see how we grow as a whole. For us it’s really a very competitive market, and for us it’s always about gaining market share, growing, growing volumes.

Simone Margulies, President and CEO, Axfood: Growing loyalty from the customers.

Alex, Conference Moderator, Axfood: By that, going backwards and in parallel, we’re taking efficiency measures.

Simone Margulies, President and CEO, Axfood: Of course with investments in Dagab.

Alex, Conference Moderator, Axfood: Also as a group, as a.

Simone Margulies, President and CEO, Axfood: Overall, we have a focus on costs.

Alex, Conference Moderator, Axfood: Efficiencies where the efficiency, the work we’ve been doing with the support function is one part of increasing the focus.

Simone Margulies, President and CEO, Axfood: On costs and efficiency.

Alex, Conference Moderator, Axfood: For us, it’s all about creating the possibility for us to invest in the customer meeting to be really competitive in the market. I would say since we’re growing, outgrowing the market, I think we’re doing it quite successfully.

Simone Margulies, President and CEO, Axfood: Okay, thanks for that.

Gustav Hagaeus, Analyst, SEB: Lastly, just to clarify, those SEK 200 million to SEK 300 million savings from Bollebygd, to what extent are they prevalent in this quarter, and to what amount will you see a year-over-year effect in 2026 from those savings that you have guided before?

Alex, Conference Moderator, Axfood: As we said, in the first quarter we will start to reach those levels from the second quarter, which we are doing. By that said, we will continue to optimize the facility and that’s it.

Simone Margulies, President and CEO, Axfood: A part of our daily operations.

Alex, Conference Moderator, Axfood: Also way of doing like everyday improvements to create even more efficiencies. I would say we have the pace that we said and communicated in the first quarter that we’re supposed to do in the second quarter. On the other hand, we have weaker gross margins and that’s on the negative side in Axfood.

That’s very clear.

As a group, we gain the result and the profitability that we expected.

Gustav Hagaeus, Analyst, SEB: Noted.

Simone Margulies, President and CEO, Axfood: Okay, thank you. Thanks for taking my questions.

Alex, Conference Moderator, Axfood: Thank you very much.

Operator: The next question comes from Frederick Iverson from ABG. Please go ahead.

Thank you.

Good morning, team.

I’ve got three questions, taking them one by one. First one, on Willys, you mentioned that the number of store visits were up. Curious to hear whether you see a lot of new customers trying out the concept or is the sort of increase mainly current customers coming back more frequently.

Alex, Conference Moderator, Axfood: To start with that question, in Willys, we both see increase in members in the loyalty program Willys Plus. We also see an increased frequency on existing customers and we also see.

Simone Margulies, President and CEO, Axfood: An increase in penetration, which means that we meet new customers.

Alex, Conference Moderator, Axfood: We see positive effects in both.

Simone Margulies, President and CEO, Axfood: New and existing customers.

Okay, good, thanks. Second one, coming back to Dagab and the efficiency gains, you say you expected 200 to 300 and it sounds like you’re somewhere there already or in Q2, but it’s a fairly wide range. Curious if you could share your assessment of where you are in terms of those 200 to 300 and what kind of upside you see from here.

Alex, Conference Moderator, Axfood: Yeah, as you said, it’s a span and we’re in the lower range. As I said, we will continue to do trimming the facility and optimizing it to reach the higher level.

Thanks for that. Right, good. Last question also on Dagab, you said you took some investments to support the chains. Can you confirm that this is mainly price investments, and also if you could share whether these investments were spread across all chains or if it is more related to any specific banners?

Dagab is our support company, and they are supporting all our customers and all our brands. They’re doing it a bit differently depending on what need they have, but they are supporting all the things and customers also.

Was it mainly price investments or any other kinds of support as you call it?

What do you mean with other support?

No, I’m just curious whether those investments you made were mainly price cuts or price investments, or if it was any other.

It’s mainly to have competitive conditions for the consumers, the customers.

Okay, good. That’s all my questions.

Simone Margulies, President and CEO, Axfood: Thank you very much.

Operator: The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.

Yes, good morning, Simone. Anders, you gave us some numbers when it came to the Q1 quarter for City Gross. We don’t have the history, but you basically said that you had.

The same.

EBIT in Q1 as you had in Q1 last year, and it is quite a big improvement quarter over quarter. I do appreciate that we have the calendar effect and all that.

But.

Could you give us any rough numbers on where you were in Q2 last year on City Gross in terms of losses?

Alex, Conference Moderator, Axfood: Yeah, to start with, we have a high activity level in City Gross and it’s a year of transition and we’re doing many different improvements in both developing a new store concept, improving or revitalizing the brand. We have decreased the prices during the Q2. It’s a wide agenda that we’re working with and we see, as you say, a little bit stronger sales. We should also, to be honest with you, as we in the report in hypermarkets, we see clear, clearer and stronger seasonal effects according to Easter and.

Simone Margulies, President and CEO, Axfood: Midsummer in hypermarkets than we see.

Alex, Conference Moderator, Axfood: In our other formats, I would say it’s too early for us to say that actually that now we’re turning it to something. I mean, we said that we will turn it to profitability in the second half of 2026, and this year we transformation. Of course, you can see some positive growth in like for like, which is really, we’re really happy to see. It’s too early to say that we have turned it around. We need it this year, and we will work until the second half of next year to turn it to profitability. Of course, we have a little bit positive in like for like and also a little bit less loss in Q2 than Q1. It’s pretty much in line with last year Q2, a little bit stronger, but from low levels as you can.

Because it does look like even if you adjust for Easter, and I appreciate that it’s a larger impact on City Gross than for the rest of the group, maybe. If it’s 1.2% as a total effect in terms of Easter, I would assume still that you would have a positive like-for-like also adjusted for Easter in City Gross.

Is that correct?

Yeah, that’s correct. Okay. We did price investments, as you know, from the second quarter. That has also an effect, of course, both in top line and in the gross margin.

Yeah.

Is it fair to say that those price investments are entirely subsidized by Dagab then given the discussion we had on Dagab?

No, they’re taking in the. I mean, we don’t go into any specific agreements between our different customers. Dagab is supporting all the chains. As you can see, there’s a lower gross margin in City Gross and that’s the result of reduced prices in City Gross. They’re taking in City Gross.

A completely other question, there’s been sort of back and forth situation with Apohem over the past couple of months. What do you expect and what do you see there in terms of, given that you are the biggest supplier to Apohem, what impact has that had already in Q2? What do you see now?

To start with, I mean, clear questions to Martin is better to ask them. The reconstruction was approved yesterday, and we hope really that they find a way going from that to create a healthy business. For us, it’s a small impact. Dagab, as you say as a supplier, it’s less than 1% of Dagab’s sales that we deliver to Apohem.

Okay, was that sort of 1.5% a year ago? What has been the impact over the past year?

Basically no, I think it’s better if you ask questions about Matem to Matem. We have a big respect for our customers, so we don’t say how their sales are going.

Okay.

Okay, just a final then. You announced today that you will generate savings of around SEK 80 million as of 2026 from these staff cuts that you’ve been conducting. Should we expect any severance charges in the coming quarter? Any guidance on that?

We’re taking that in the second quarter. The cost for the employees is taken in the second quarter across all segments, majorly Dagab.

Okay, was that included in the $25 million, one of them?

Yes, for City Gross in the 25 and for Dagab and Axfood for their part of the result.

Okay.

Is that meaningful numbers or any guidance on that?

Simone Margulies, President and CEO, Axfood: No.

Okay.

Rob Joyce, Analyst, BNP Paribas Exane: Okay, thank you.

Simone Margulies, President and CEO, Axfood: Thank you very much.

Operator: The next question comes from Nicholas Pettersson from DNB Carnegie. Please go ahead.

Nicholas Pettersson, Analyst, DNB Carnegie: Thank you. Yes, most of my questions have been asked already here, but maybe just follow up here on Willys and the very strong growth here of over 10%. That’s a market pick up from the 3% growth we’ve seen in recent quarters. How much of this would you say is just easy comparisons and how much is there any notable change in the competitive landscape that you’ve seen compared to what we’ve seen in the past four quarters?

Alex, Conference Moderator, Axfood: No, I would say that the landscape is pretty much the same. There’s high competition and also there’s still a strong price sensitivity by the consumers. So Willys, it’s a really, really strong performance, as you say, from them both in like-for-like sales. Also, with the four new stores in the last quarter, that creates some growth. The majority, as you say, is from like-for-like growth.

Nicholas Pettersson, Analyst, DNB Carnegie: Okay, very clear. Just adding the numbers here, you are outgrowing the market by more than 2.5 percentage points. Ica, we don’t know, but in the first four months at least they outgrew the market by almost 0.5 percentage points. You guys are 75% of the market. It seems like the others are losing significantly. I mean, are we talking almost double-digit declines in or underperformance from Coop, for instance, or what are you seeing out in the market?

Alex, Conference Moderator, Axfood: We see the same as you do, so better to ask the competitors about their figures. We see, as you say, that we are really outperforming the market and doing really well. We are primarily so happy to see that there are so many customers that are doing their grocery shopping in our stores. That creates volumes for us, which means that we can scale on our investments that we made. Together with the increased productivity, it makes a good position for us to grow from.

Nicholas Pettersson, Analyst, DNB Carnegie: Very good, very good. Also, just coming back here to City Gross, if we had, we had SEK 80 million in loss in Q1, SEK 20 million now in Q2, and both of those seem to be largely in line with what you had last year. Can you give us some guidance on what underlying was in Q3 last year?

Alex, Conference Moderator, Axfood: I would say that, I mean last year was 200 on a rolling 12-12. Yeah, so that’s. Last, the fourth quarter was 40 for us. That’s what was the part that we had in our figures. You calculate backwards. November, December, we had 40 and they had 200 approximately on rolling 12 months. For us to be clear, I mean we are building City Gross for the future, so we’re not doing any quick fixes. We are really aiming to create a really strong hypermarket segment here and that will take time. Yeah.

Nicholas Pettersson, Analyst, DNB Carnegie: Very clear. Thank you. Thanks so much for taking my questions.

Alex, Conference Moderator, Axfood: Thank you very much.

Operator: The next question comes from Rob Joyce from BNP Paribas Exane. Please go ahead.

Rob Joyce, Analyst, BNP Paribas Exane: Hi, thanks very much for taking my questions. First one, just thinking about Willys and the operating leverage there as we look into the second half, I guess, let’s say the half as a whole. For the first half you got 5% like-for-like, probably a percent of volume growth in there at least, and flattish margins. How do we think about the second half? Do we think we should see more operating drop through in terms of that margin in the second half, or are we thinking broadly flat margins still?

Gustav Hagaeus, Analyst, SEB: Thank you.

Alex, Conference Moderator, Axfood: We don’t do any guidance for the future. I mean, for us it’s really important to keep a good momentum in Willys to continue to attract new customers. We had really strong performance this quarter and also over time.

Simone Margulies, President and CEO, Axfood: So.

Alex, Conference Moderator, Axfood: There is a competitive market and as we told before, for us it’s always about having a really, really strong customer meeting and then by that we get volumes, and then we have to be really efficient and have focus on cost, and by that we create a good and healthy result in growth. For us it’s difficult to. We don’t do the guidance for the future.

Rob Joyce, Analyst, BNP Paribas Exane: Okay. Maybe we can help think about some of the gross margin investments you’ve made at Willys. Are you able to give us an idea of how the price position sits, particularly versus, I guess, EcoMaxi now, if there’s anything, any change there and where that is?

Simone Margulies, President and CEO, Axfood: Absolutely, yeah.

Alex, Conference Moderator, Axfood: For competitive reasons, we don’t go into details about our price strategies and price gaps. For us, the business idea for Willys is to have the cheapest bag of groceries in Sweden, and we will never lose that promise to the customers. I won’t go into any details.

Simone Margulies, President and CEO, Axfood: About the pricing strategies.

Rob Joyce, Analyst, BNP Paribas Exane: Do you think it’s improved now? Obviously, those investments, are you seeing, can you at least give us a directional sense? Is the pricing improving, or is it kind of holding its own?

Simone Margulies, President and CEO, Axfood: There’s still a high competition in the food retail market.

Alex, Conference Moderator, Axfood: market and the gross margin in Willys is down a little bit, and we’re compensating it with volumes and cost efficiencies. That’s how we are able to create a stable profitability, a growing profitability, but a stable margin in Willys.

Simone Margulies, President and CEO, Axfood: But.

Alex, Conference Moderator, Axfood: To be clear and honest, there’s still a very high competition and the gross margin is down a little bit in Willys.

Rob Joyce, Analyst, BNP Paribas Exane: Thank you. Final one on the working capital now for the year. Strong performance in the half versus last year. Do we have an idea of what sort of working capital levels we should be expecting in terms of inflow for the year now?

Alex, Conference Moderator, Axfood: We believe that we will see a quite stable development, and as I mentioned, if you compare to net sales, we have a little dilution according to or due to the City Gross acquisition, and that we will see in the Q3 as well.

Okay.

Simone Margulies, President and CEO, Axfood: Okay, thank you.

Alex, Conference Moderator, Axfood: Thank you very much.

Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Alex, Conference Moderator, Axfood: Thank you all for joining us today. I wish you all a really nice summer and see you back.

Simone Margulies, President and CEO, Axfood: In August or September.

Alex, Conference Moderator, Axfood: Sorry, see you in CMD.

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