Q4 Report 2016/178 June 2017

Peter JelkebyActing President & CEO

Göran MelinCFO

• Business overview• Financial development• Strategic outlook• Q&A

Agenda

2

Business overview

3

• Solid sales improvement with 5% growth, 2% growth in local currency− Soft spring and calendar effects of -2%

impacting sales growth• Improved profit at 17 MSEK− Driven by improved gross margin

and cost efficiency • Closing the year at 610 MSEK, close

to record level• Further steps on our strategic agenda− Developing our customer offer− Strengthening position in Germany− Executing UK store optimisation programme

Fourth quarter highlights

4

859095

100105110

5

Source: www.konj.se

96

99

102

105

108

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Consumer Confidence

Retail Index

Source: HUI

Source: www.hui.se

• Strengthened consumer confidence• Strengthened retail growth− Large variations between sectors with

soft development in our sectors

13/14 14/15 15/16 16/17

SwedenStable retail market

• Soft sales development over the quarter with 1% sales growth

• Broadening of our service offer− Installation service of robotic lawnmower

• Total 87 stores (85)− 1 new store during Q4− 2 additional stores net compared

to preceding Q4

Solid position

6

98

100

102

104

106

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

NorwayStable retail market

7

-12-9-6-30369

Source: SSB

Consumer Confidence

Retail IndexSource: www.opinion.no

Source: www.ssb.no

13/14 14/15 15/16 16/17

• Strengthened consumer confidence• Total retail growth fairly flat

• Stable sales development in the quarter with sales growth of 4% in local currency

• Implementing new store formats − First Clas Ohlson Compact Store opened

• Total 80 stores (72)− 3 new stores during Q4− 8 additional stores net compared

to preceding Q4

Steady performance

8

0

5

10

15

20

96

98

100

102

104

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FinlandSlight recovery in retail market

9

Source: www.tilastokeskus.fi

Source: www.tilastokeskus.fi

Consumer Confidence

Retail Index

13/14 14/15 15/16 16/17

• Increased consumer confidence, not fully reflected in the market

• Challenging retail market

• Sales growth of 8% in local currency in a challenging market

• We keep strengthening our position and optimising our store network

• Total 37 stores (34)− 1 new store during Q4− 3 additional stores net compared

to preceding Q4

Strong position

10

• High energy in our Hamburg agenda− Positive customer feedback− Keep build up of brand and

strengthening position• Executing UK store optimisation programme− Closure of 2 stores according to plan− Continued focus on London cluster− Continued positive trend in new format stores

• Total 12 stores (14)− No new stores during Q4− 2 less stores net compared to preceding Q4

High activity in new markets

UAE

DE

UK

11

Financial development Q4 2016/17

12

1,2741,386

1,498 1,504 1,575

Q412/13

Q413/14

Q414/15

Q415/16

Q416/17

• Sales 1 575 MSEK, up 5%− Sweden +1%− Norway +11%− Finland +11%− Outside Nordic countries -21%*

• Sales up 2% in local currencies − LFL down 1%− 2% negative calendar effect

• 11 additional stores net compared to end of period last year (7)

Solid sales improvementMSEK +5%

*Effected by store optimisation in the UK

13

5269 74 71 56

Q412/13

Q413/14

Q414/15

Q415/16

Q416/17

13 14 16 17 19

Q412/13

Q413/14

Q414/15

Q415/16

Q416/17

Sales development per market

14

595651 676 703 707

Q412/13

Q413/14

Q414/15

Q415/16

Q416/17

461501

551 576 600

Q412/13

Q413/14

Q414/15

Q415/16

Q416/17

MNOKMSEK MEUR MSEK

*Effected by store optimisation in UK

Sweden

Norway

Finland

Outside Nordic countries

40.5 41.1 41.4 40.8 42.0

Q412/13

Q413/14

Q414/15

Q415/16

Q416/17

• Gross margin up 1.2 percentage points to 42.0%− Positively effected by strengthened

sales currency (NOK)− Positively effected by lower sourcing costs− Negatively effected by currency hedging (NOK)

Strengthened gross margin

15

%

39.0 39.3 39.1 39.2 38.3

Q412/13

Q413/14

Q414/15

Q415/16

Q416/17

• Share of selling expenses 38.3%, down 0.9 p.p. in the quarter− Positively effected by lower costs in UK− Partly offset by costs for Germany

Improved cost efficiency

16

%

-19 -18

-8

-19

17

-5

-3

-1

1

3

Q412/13

Q413/14

Q414/15

Q415/16

Q416/17

*

• Operating profit increased to 17 MSEK• Operating margin increased to 1.1%• Earnings per share increased to 0.31 SEK

Profitable fourth quarter

17

Operating profit, MSEKOperating margin, %

* Excluding non-recurring cost of 107 MSEK

Financial development Financial year 2016/17

18

• Sales 7,990 MSEK, up 5%• Sales up 4% in local currencies • LFL sales up 1%• 11 additional stores net compared

to end of period last year (7)

Solid sales development

19

6,519 6,8087,330 7,602 7,990

12/13 13/14 14/15 15/16 16/17

MSEK +5%

Profit at record levels• Operating profit 610 MSEK− Negatively effected by currency hedging (NOK)− Positively effected by strengthened

sales currency (NOK)− Positively effected by cost savings in the UK,

amounting to 35 MSEK 2016/17− Partly offset by costs for Germany

• Operating margin 7.6%• Earnings per share 7.59 SEK

431

531596 613 610

0

2

4

6

8

10

12

12/13 13/14 14/15 15/16 16/17* Excluding non-recurring cost of 107 MSEK in Q4

*

Operating profit, MSEK

Operating margin, %

20

167 172192

274 264

12/13 13/14 14/15 15/16 16/17

Continued investmentsMSEK• Total investments 264 MSEK (274)

• New stores and refurbishments 128 MSEK (90)

• IT-systems 106 MSEK (133)− Implementation of new business system

according to plan

21

Continued strong financial position• Cash flow from operating activities was 699 MSEK (705)− Inventory 1,631 MSEK (1,639)− Inventory turnover rate DC 6.6 (6.5)

• Cash flow after investments and financing activities of 17 MSEK (95)• Net cash holdings of 625 MSEK (604)

22

• Proposed dividend 6.25 SEK per share (5.75)• Equivalent to 86% (100) of net profit• Inline with dividend policy

At least 50 per cent of earnings per share after tax, with consideration for the financial position

Proposed dividend

23

4.254.75

5.255.75

6.25

12/13 13/14 14/15 15/16 16/17

SEK+9%

Financial development May 2017/18

24

455512

554 540 566

May12/13

May13/14

May14/15

May15/16

May16/17

• Sales 566 MSEK, up 5%• Sales up 3% in local currencies− Sweden 2%− Norway 9%− Finland 9%− Outside Nordic countries -34%*

• 10 additional stores net compared to end of May last year (9)

May sales

25

MSEK

*Effected by store optimisation in the UK

+5%

Strategic outlook

26

• Developing and expanding own brands portfolio− Increased focus on design− Build up of competence and resource

• New range launches− Promising start of new workwear and

solar cell range− New LED and lighting range to be launched

• Growing importance of complementing range with service offer, i.e. rentals, installations, spare parts

Keep strengthening our customer offer

27

• Developing integrated sales channels through the entire customer journey

• Optimising store formats and store network− Relevant offer with regards to location− Introducing Clas Ohlson Compact Store

• Upgrading e-com platform to improve speed and flexibility

Continued development of sales channels

28

• New sustainability goals adopted− Products for a more sustainable lifestyle is to

represent at least 25 per cent of sales by 2020− Reduce emissions of CO2 over time in relation

to turnover• Expanding range for more sustainable lifestyle− Clas Ohlson Product Innovation Challenge

• Initiatives to engage the public− Batterijakten (The Battery Hunt) changing

attitudes and behaviour on recycling− 50,000 fourth grade students

in Sweden and Norway

New steps in sustainability

29

• United Kingdom - London cluster strategy − Keep commercial focus on brand, traffic and

new store format

• Germany - First phase ongoing− Keep building brand and strengthening position− Complementing network with one more store

in prime location− Total network 4 stores in Hamburg and e-com

New markets development

30

• Solid sales growth• Profit at record levels• Further steps on strategic agenda• High energy for the future

Summary

31

Questions & Answers

32

www.clasohlson.com