This article first appeared on GuruFocus .
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Overall Market Growth:4.5%.
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Axfood Retail Sales Growth:8.7% including City Gross, 5.3% excluding City Gross.
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Consolidated Net Sales Growth:4.4% in the quarter.
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Group Operating Profit:SEK860 million, with an operating margin of 3.8%.
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Adjusted Operating Profit:SEK873 million, with an adjusted operating margin of 3.8%.
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Willys Earnings:SEK467 million, with an operating margin of 3.7%.
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Hemkop Operating Profit:SEK78 million, with an operating margin of 3.5%.
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City Gross Profit:SEK28 million on an adjusted basis, with an operating margin of 1.2%.
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Snabbgross Operating Profit:SEK35 million, with an operating margin of 2.5%.
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Dagab Operating Profit:SEK340 million, with an operating margin of 1.5%.
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Net Sales for the Group:Increased by 6.1% to approximately SEK89 billion.
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Operating Profit (Excluding Items Affecting Comparability):Increased 7.4% to almost SEK3.7 billion.
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Cash Flow:SEK345 million, almost SEK300 million higher compared to last year.
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Net Debt:Below 2, excluding IFRS 16, just below 0.5.
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Equity Ratio:21.2%.
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Total Investments:SEK1.7 billion, excluding leases and acquisition.
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New Store Establishments:9 new group-owned stores in 2025.
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Dividend Proposal:Increased to 9 SEK per share, split into two payments.
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Release Date: January 29, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Axfood AB ( FRA:AXL1 ) reported a strong market growth of 8.7% in retail sales, outperforming the overall market growth of 4.5%.
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The company achieved its 11th consecutive year of market share gains, indicating strong customer loyalty and effective business strategies.
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Operating profit increased to SEK860 million, with an improved operating margin of 3.8%, driven by high sales volumes and effective cost control.
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Willys, one of Axfood's brands, continued to outperform the market with strong customer loyalty and increased earnings.
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Axfood's sustainability efforts have led to a significant reduction in transport emissions by approximately 70% over the last five years.
Negative Points
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City Gross, a recent acquisition, reported a lower operating margin of 0.6% due to items affecting comparability and store closures.
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Snabbgross experienced a setback in profitability due to temporary market investments that did not yield the expected return on investment.
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Dagab's operating profit was negatively impacted by a lower gross margin due to market investments and negative mix effects.
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The company's net debt increased due to the acquisition of City Gross and dividend payments, although it is now below 2.
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Axfood faces a highly competitive market environment with intense price competition, impacting profitability and requiring continuous strategic investments.
Q & A Highlights
Q: Could you elaborate on City Gross's profitability in the second half of 2025 and how it compares to your target of reaching break-even in the second half of 2026? A: Simone Margulies, Managing Director - Hemkopskedjan, explained that City Gross is in a transition phase with a transformation plan aimed at creating a strong player in the hypermarket segment. While there are seasonal effects that make the fourth quarter stronger, they are on a journey and reiterate their goal to achieve profitability in the second half of 2026.
Q: Can you clarify the like-for-like sales growth figures for City Gross? A: Simone Margulies confirmed that the 3% growth figure is for the entire quarter, while the 1.5% figure is for the November-December period. The positive like-for-like growth is a key focus, and they are pleased with the trend.
Q: What factors contributed to the weaker margin for Dagab in Q4? A: Simone Margulies noted that Dagab's margin was affected by market investments and mixed effects. Despite good volume growth in fruit and vegetables, deflation in these categories negatively impacted earnings. The focus is on leveraging the business model to gain market share and improve group profitability.
Q: How did market investments impact Snabbgross's profitability in the quarter? A: Simone Margulies stated that Snabbgross made market investments that did not yield the expected return on investment in volumes, resulting in a weak performance for the quarter. These investments were not planned to be repeated in the same manner.
Q: What is the expected impact of the halving of food VAT on consumer behavior and the mix of products consumed? A: Simone Margulies expressed optimism about the VAT reduction, noting that it could increase consumer purchasing power. However, predicting consumer behavior is challenging due to past economic pressures and high unemployment. They hope for a positive impact on sustainable product purchases but remain cautious in making forecasts.
Q: Are you seeing any changes in competitive intensity in the market? A: Simone Margulies indicated that the market remains highly competitive, with no significant changes in recent months. Consumers continue to be price-sensitive and cautious.
Q: Will the VAT cut be fully passed on to consumers? A: Simone Margulies confirmed that the VAT reduction will be directly transferred to consumers, as it is a tax imposed by the state.
Q: How do you view the impact of falling international food commodity prices and the strengthening Swedish krona on Dagab's purchasing? A: Simone Margulies noted that while stable commodity pricing and a stronger Swedish currency are positive in the long term, many factors affect prices. The impact on consumers will be more apparent over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
