Axfood AB
STO:AXFO
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Axfood AB
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Good morning, everyone, and warm welcome to the presentation of Axfood's third quarter. The result will be presented by Axfood's President and CEO, Klas Balkow, together with the CFO, Anders Lexmon.As usual, there will be questions and answers after the presentation from the audience and also from the conference call. And those of you who are watching us on the webcast, you can write questions, and we will then address the questions in the call.And after these practicalities, I will hand over to the first speaker, Klas Balkow.
Thank you, Cecilia. And of course, let me also then welcome you to our financial presentation of the third quarter for Axfood. And the agenda for today, we will cover the ratios for the quarter, obviously. We'll also cover the financial position for the first 9 months as well as I would like to give you an update on some of our strategic initiatives we are now currently working on. And then I'm sure we will have a productive Q&A session.Let me then just start with reminding ourself with what I think the great business model we have in Axfood, where we have unique, strong concepts that is meeting various consumer needs out in the market while at the same time, we work with a common logistics, a common sourcing, a common IT platform that creates our economy of scale and that also drives our ability to grow in a profitable way. Our rolling 12 sales at the moment is about SEK 47 billion and we continue to see that is growing as we move along.And moving into part of the presentation. But before going into the numbers, I think today is a bit chilly outside, and I just want to take ourself back into what we noted this summer. It was a special summer. It was a summer that was -- some of it was very warm. We had some weather conditions that was particularly fairly special versus what we used to see. Some of this had positive effects, some short-term effects that was positive in terms of sales mix for us, but it also had some short-term negative effects in terms our logistics. And I will come back to that, obviously, later on. We will also look at it a bit from a more of a longer perspective and where we see some long-term effects in terms of how we will be able to have sourcing from Swedish food production in general, and we see some lack of supply in certain areas. And of course, we need to work and address this accordingly. So I'll also address this later on in my presentation.Going then into the presentation of today and the highlights that I view from the report is that I'm obviously pleased to note that we are in Axfood, growing and we are gaining market share, and we are again making a record profit for a quarter in Axfood's history. And in this time, especially driven by the very strong performance that we've seen in Willys. But I'm also going to address some of the challenges that we've seen in the logistics due to what I just addressed the summer weather that we've seen in large part of in terms of this quarter.And then have to say, we'll come into that we're also starting to build our future logistic operation. And we're starting to see that -- those plan come into reality for us in terms of Dagab, which is very -- for us very exciting. We are early on. But we want to share this with you. And I'll come back to that as well. So these are the 3 areas that I would like to address as highlights in the presentation.Moving then into the key ratios for the quarter. Looking at sales. We have a positive net sales growth of over 4%, 4.1% in the quarter, where we have a like-for-like growth of over 3% in total for the group. And as you can see on the slide behind me, all segments are contributing, while the growth star for us in this quarter is actually Snabbgross, very much related to the strong performance in the café and restaurant business, when we are supporting from a Snabbgross perspective. And as you can see, we have almost a double-digit growth from a like-for-like perspective and is growing over 11% in the quarter.How are we then performing in the market? Well, in terms of performance versus what we see as the overall market development, it's clear for us that we continue to gain market share with a 4% store sales growth in the quarter. So even if we only have data for July and August that is official data. But even looking at that and what we believe from the market point of view even for September, we are fairly confident that we continue to gain market share with our 4% growth.Going then into our profit. We came in, as I stated initially in the highlights, with a record profit. It's the highest profit we've seen in the quarter in our history in the company at SEK 620 million compared to last year last year's SEK 604 million. It's very much driven by positive like-for-like development. We're also seeing a positive sales mix in the quarter. And it's included these numbers, of course, the negative effects that we're seeing in our logistics. So despite the drop that we have seen in the margins for Dagab, our logistical company, you can note and see that we're almost maintaining our operating margin in the quarter at 5.1%.Let me now go through segment by segment in terms of how we're performing. And have to start with the largest one, Willys. And I'm obviously pleased with the performance that we've seen in this quarter for Willys. We are clearly gaining more customers. We are growing our online business with Willys. And we have a very solid operation.Now it's fair to say that in this quarter, our profit margin has been supported by the positively sales mix effect that we've noted, but also that we've had a strong support from Eurocash, which was the company we acquired a year ago that has been well integrated into Willys. And Eurocash has a positive season for this quarter due to the structure that we have with the border business. So it's been positive, and we've seen that has been very -- also impacted for the quarter in Willys.Hemköp develops more in line with the market in this quarter and also have positive sales development in certain areas. But we also have seen that the summer weather has also been slightly negative, as many of our larger Hemköp stores city-located. With the summer, the city traffic has been somewhat hampered. So the group-owned Hemköp store has somewhat slower like-for-like development in this quarter.We're also continuing our refurbishment program. At this moment, we are refurbishing our largest store in Gothenburg in Nordstan. We've just refurbished Läggesta. And we also closed one store in the quarter, Mariahallen, just south here in Stockholm, that we've closed as we've now reallocated or moved that into a Willys store that actually just opened last week.Our profit is in line with last year, affected then by some of these changes in the refurbishment and so forth, but also that we happily celebrated the 60 years anniversary for Hemköp. And we celebrated that with customers and with our staff, obviously. So that has hampered a little bit. And we are taking also further steps within Hemköp to drive our commercial agenda, where we're now also strengthening our commercial team with a new operational manager as well as a new marketing manager within Hemköp.Now the growth star in the quarter, Snabbgross, is reporting, as I stated, a very positive development. Again, the summer has been favorable for the café and restaurant business but also been favorable for us as we've been good to capture that business opportunity. We have driven slightly higher promotions and we are clearly gaining market shares when we're looking at how the market overall has developed.In terms of profit, we are not seeing the full profit development from that positive like-for-like sales due to slightly negative sales mix actually for Snabbgross. But that's also very much driven to somewhat lower gross margin due to the higher promotion effects as well as we have one more store that is not fully ramped up. And we have to close one store temporarily, that is now open again due to some construction issues.Finally, in terms of going through the segments, going in then to Dagab. Dagab is reporting a growth of 3.1%, obviously a positive development, while margin then is down to 1.6% versus last year, too. The growth is very much driven by the positive performance from Axfood stores, also that we have a very positive drive in the online business as well as our convenience sector that Dagab is supporting is also seeing a positive development in this quarter. And the commentary on Mathem is, just to make it clear that, last year's comparable number included the business we had from Mathem that we don't have any longer. And actually, this is the last quarter that we now have that as comp numbers, as we -- Mathem moved on from Dagab as of November last year.Profit-wise, again we are somewhat down and very much relates that to that we have worked hard in this summer with large variations between the product segment. And we worked hard to maintain our service levels to our customers. That has had an impact on particularly that we needed to have more transports, we needed to have more trucks and particularly trucks with chilled items, that has driven up our cost and also somewhat driven down our productivity in this period as well as we've seen a significant increase of fuel prices that has also driven up our transportation cost.Final comment, which is on the lower side, but also profit has been somewhat impacted by that we have invested in this quarter significantly more on some of our online parts that is included, as you know, Mat.se is part of this segment. And we invested in marketing in this period to gain customers with positive effects. But short-term-wise, it has impacted our profitability.With that, from a segment point of view, I hand over to our CEO -- CFO, Mr. Anders Lexmon, to go through our financials.
Thank you, Klas. Let me first summarize the first 6 months -- 9 months. We had a good growth of 4.6% for the group. And we had an operating profit of just below SEK 1.6 billion. And that corresponds to an operating margin of 4.5%, which is well above our long-term goal of 4%.Looking then into our cash flow for the third quarter, isolated. We have an operating cash flow and paid tax in line with last year. We have a little -- small positive effect in our working capital due to a calendar effect. The last of September was on a Sunday, so we had a gain there.Looking into our investing activities. It was amounted to SEK 172 million, which is quite normal for a quarter for us. However, last quarter, we received the payment for 49% of Eurocash, which impacts the figures for last year. We also, last year, paid back a short-term loan of SEK 124 million, and that we didn't do this year. That ends up with a strong cash position at the end of September with just about SEK 1 billion.If we then take a look at our investments for the first 9 months, it amounted to just under SEK 600 million. We guide on investments for the full year of SEK 900 million to SEK 1 billion and we hold on to that. The fourth quarter this year will be more intensive when it comes to investments if you compare to previous quarter this year. Compared to last year, we have SEK 76 million higher investments, if you don't take -- consider due to the acquisitions last year. And we have higher investments, both in our wholesales operation and in IT.Coming back then to development of our working capital. As you can see on the chart here, we continue to improve our working capital, both in krona and as a percent of net sales. We had a little dip last year, and that was due to our acquisitions. But now we are back on track. And we have, at the end of December, minus 2.4% net sales in working capital. And it's both improvements in accounts payable and accounts receivable.This chart shows our financial position. We have a net debt receivable position of approximately SEK 600 million at the end of September, which is strong. And last year also affected some short-term loans. That means that we had a little bit lower receivable position last year. We stand on a solid base with an equity ratio of just below 40%, which is well above our goal of 25%.And finally, capital employed. We have a very solid and stable figures here, just above -- just below SEK 5 billion and then return on capital employed of just over 40%, which is very stable.And that, Klas, was my last picture here.
Thank you. Anders will come back. And I'm sure he will come back with some of the Q&As later on. Let me then give you an update on our strategic priorities, very much relates to our ambition to be a leader in good and sustainable food. And you've seen this slide many times in terms of this is how we've outlined the strategy elements to drive that agenda, where we have 3 areas in the growth, 2 in efficiencies and then of course, we have 1 key area for our people. I will not go through all of them but give you a few highlights or a few comments on some of them.And starting with our customer offer, where our priorities is clear that we want to drive good and sustainable food. We want to develop our private labels. We are driving the value proposition for Axfood's retailer. And we're also working with our meal solutions to offer more prepared meal to our consumers.But if I comment on then what we talked about for the summer and some we initiated in the reports, some of the short-term effects. But if I look at it from a little bit what's going on, happening as we move along from that, we are clear that we see some effects out of the summer due to some lack of supply for some of the range.There's a shorter season for some of the vegetables. We see some stress in terms of some of the assortment that we need to bring in that is also not only impacting Sweden but also northern part of Europe. There's also an inflation pressure in general even if I have to state and say that I think it's too early to say where this will end up. At this stage, we are around 2% food inflation to our best adjustment or understanding while we see obviously some categories that we can see some higher pressure, example, in some of the fruit and vegetable categories.For us, it's important now from an Axfood perspective that we take responsibility for this as we'll try to work as much as we can with the industry and with the farmers to secure that we will have Swedish food and food production -- from the Swedish food production in our shelves even the coming period. We need to work very closely with this, so we can be secure that we handle it from the right perspective in terms of promotion, campaigns and so on, to make sure that we have a steady flow of these products also the coming period.Going then into the customer meeting, where we have 3 clear priorities. We work on refurbishing our stores. We're also working on developing our customer program. As you know, we have very strong loyalty programs and we need to develop these areas and we're working a lot on that as well as building an omni-channel experience with the new e-com that is growing in the market. And I'm not going to go through what we've done so far in terms of very much on the online, but focus on the refurbishing in the stores. And we have talked and managed a lot in terms of what we're doing with Hemköp that we are rebuilding the stores and taking the next step.This time, I just want to make a comment on Willys. As we have, as you see in a very positive momentum in Willys. And we want to continue that momentum, but we're also taking the next step in terms of how we look at Willys stores. And we've already improved the communication that you've seen, I think, out in the market. But we've also rebuilt our first store in Willys that has an updated, what I would say, look and feel but also is very much improved in terms of premade meals, ready-made salads and an improved general merchandising. So exciting times where we're now evaluating and seeing how this is received out in the market.Going then into expansion. We had 3 areas also here in terms of acquisition but also expanding our store network as well as expanding our offer to the online consumer. If I make a comment there on expanding our store network, I've addressed this in the last quarter that we've had a target of 4 to 8 stores, that we're going to be in the low end -- in the lower range on that. That's clear now. It's getting clear that we are -- we'll be really on the low side. We have 2 completely new stores, but we have then converted a Tempo into Hemköp as well as some franchising stores, and then we have made some conversion within the group. But it's clear that we are on the low end of new stores in 2018, that we will see be ramped up in 2019 as some of the planned stores that we've seen that we thought we're going to open up in 2018 has been, for various reasons, postponed into 2019.Going then into the supply chain, which for this report, I think, or comment is, I think, we're coming with some interesting news here. As we've already stated, the clear priorities for us and a large [ part of ] our opportunities lies in automatization. We have taken steps in our automatization process. We've developed a new warehouse in Jönköping, that we opened the first part already a month ago while we will, in end of this year and early 2019, also link in the automatization part out of that warehouse.We're also working with dark store. We are about to launch the common dark store for Willys, Hemköp and Mat.se as of early next year. As well as for us, within the online, we need to develop the last mile, which is, as you know, a costly part, where we now start to coordinate our transport within our various brands.Now a year ago, we addressed at the Capital Market Day our vision in terms of how we see the future logistics. Now we worked on this for over a year. And therefore, we are -- even if we are in early days, we have not made the final contracts. But we are so getting closer and closer and we also now are more clear about the timeline as well as we're also clear about the CapEx need for these investments that we thought it is a good time to go out and share our plans with you here today.So we have planned to build a fully automated warehouse that also include an automatization in terms of picking. It's a high-tech building that will not only handle the store's picking, it will also handle the e-com. So this is a warehouse that combine them both, which, of course, creates a lot of opportunities for us. And plan is to start to make some of the investments out of that -- of this in next year, 2019, and then this will be fully up and running by 2023.So why are we doing this? Well, logistics for us is one of our core strengths and one of our core competence. And at least now, when we see the new technology available out there in the market, we see, of course, some large opportunities. We will be able to improve our service levels. We will be able to improve our impact on sustainability. We will be able to improve our processes. And of course, we see this that we will have some significant improvement on our productivity.Now as said, we have a time line and we also have a clear indication of our CapEx need for these automatization process or automatization building part of that. That will be between SEK 400 million to SEK 600 million in a 4-year period, starting early 2019. So where are we right now? Well, we are in the final discussions with our suppliers and landlords. And we expect to confirm some of these plans early 2019 or first part of 2019. And obviously, we will come back with more details as we do that.So that sums up our numbers for the third quarter, both in terms of quarter 3 as well as the financial position we have in the company. And I hope you'll also see an update now in terms of some of the areas we're working on in our strategic agenda, where we have a lot of energy for. So we are leaving behind us a strong quarter, a record quarter actually, with particularly Willys doing a really strong performance in the market as well as Snabbgross in terms of growth. We have a record profit. We have a strong financial position and a lot of energy for the future. Thanks a lot.
Thank you, Klas. And with that, we open up for questions. And we start here in the audience. But before I hand over to Niklas Ekman for Carnegie, I just want to give the voice over to the operator, so you can state how the conference call or participant can ask their questions. Please, operator?
[Operator Instructions]
Okay. And then, Niklas, please go ahead.
Niklas Ekman here from Carnegie. I want to start with a couple of questions on this automated fulfillment center. Firstly, this will be launched in Stockholm. What kind of range are you looking at? How far can this distribution center service? How big range in Sweden? And do you need additional fulfillment centers going forward do you think? Or will this be able to service most of the country?
No, it will not serve the whole country. I mean, it's a large part. But obviously, we need more warehouses or fulfillment center to serve the whole country. But it will cover a large part of it. We have today a Stockholm fulfillment center that is serving a large part already today. So -- but we'll come back to more of that when we have outlined exactly how it will look, and we'll see.
I was more thinking are you going to need 2 or 3 of these? Or will this be sufficient to manage the next 10 years?
It will -- well, it will clear out when you start to see the full program out of it, and then we'll outline it then.
And SEK 400 million to SEK 600 million, you say that's on top of your normal CapEx. And I'm wondering what is your normal CapEx because you've talked about in the past SEK 600 million, SEK 700 million. This year, it's SEK 900 million to SEK 1 billion. So what is the kind of normal?
No, that's why we -- and this has been somewhat -- as we said, we had somewhat higher this year. Anders commented on that as well. What we are addressing now is what we see as extra additional for the automatization part of this program. Obviously, we are guiding on year by year then in terms of -- because it relates very much to in terms of how many stores we are building, the refurbishment program and so forth. So that will be on a yearly guiding when we come into -- closer to year-by-year.
This still means that your total cash flow is likely to be lower than the dividend payments that you've done in the past. But at the same time, you have a very strong balance sheet. So I was curious when you've had discussions about this with the board if there is any change in the view on the dividend? Will there be a likely dividend cut in the short term? Or do you think you can sustain the dividend?
No, I think we don't think. I mean, obviously, dividend can influence by many areas and many things going forward. But for this isolated, we have a strong, as you pointed out, financial position. Anders, if you want to comment on it in terms of discussions we have for the financials?
No, it's like Klas said. What we see now is that we're not having any impact on the dividend. But as you mentioned, it's -- at the end of the day, it's a call for the board and for the owners, so.
Okay. Also I have a question on the drought, which you point out as a big challenge. In the past, when you see inflation, normally, you're very good at passing that on, and it can actually end up being positive. Is this different? Is this severe enough to impact volumes, do you think? Or are you confident that you will be able to manage this without having a severe impact on profitability?
Obviously, we believe that we'll be able to manage this. But also, as I'm stating, I think we're a bit early to see how this will sort out. We thought that we're going to had some more meat issues initially than we actually had. So it's -- so we need to follow this closely and need to work closely with the industry. We see some large fluctuations today in certain areas, in certain products that is very market neutral. My concern is a bit more in terms that we need to make sure that we also have the shelf filled up with a lot of the products we used to see. Due to the shortage, we want to make sure that we handle that. I think we're able to do that. We need to follow it and work closely with it.
Also a question on online sales. Can you say something about the share of online sales for the group right now? You have 65 stores and you have Mat.se. So I assume that's at least SEK 500 million in sales or about at least 1%?
As you know, we are not sharing that. But I can confirm so far that we have a very positive growth to our knowledge in terms of what we see versus the market. We are growing faster than the market, so we have a positive development.
Okay. But you're not quantifying the growth either?
No, we are not doing that yet.
Thank you, Niklas. We go over to the conference caller before we continue with the audience. Please, operator?
Our first question on the lines comes from the line of Gustav Sandström of SEB.
If I can revert back to the investment in the warehouse, could you please specify a little bit about this SEK 400 million to SEK 600 million? What are the main costs associated with this project? Is it robots or truck fleet or the actual building? Or what is the input costs in this calculation that you have? And secondly, is there an element to this investment that is more of a centralized function that can be used cross country? Or is it more of a distribution network that has its limits in terms of geography?
Hi, Gustav. If I start and see if Anders can -- if he want to fill up or fill in with something. But majority of this investment very much relates -- as I stated, it's a high-tech building. It's a high-tech fulfillment center, which will -- majority of this is due to the automatization process or the automatization within the building. You may have seen -- and there is nothing similar to this in Sweden, but you may have seen some of it you'll find in other countries. So it's very much linked into how we are building an automatization that is very efficient to handle this kind of structure or this kind of operation that we have. What is also fair or important to point out that this will also include both to the stores,,, as well as e-com. That gives us more efficient operation, but also flexibility in terms of how far the -- or how large the e-com business will be since we're handling this in the same -- we can -- in the same building, so to speak. Gustav, remind me again, your second question was?
In terms of the actual investment, is this mainly refers to the actual distribution capabilities in the surrounding area? Or are the elements listed are sort of on a broader scale would help cross country no matter the length of geography, so to speak?
Well, we are building this in the Stockholm area. And when we are outlining this, as we had the earlier question here, we'll come back with in terms of how far and how big this will reach out. But obviously, we are aiming for a large center that will have a large coverage, but it will not be the only one for Sweden, I can say so far so much.
Okay. And when you talk about the investments being sort of high-tech, is it fair to assume that the depreciation for this investment will be lower than perhaps the normal 10 years?
What we see is that we will have a longer depreciation time with this type of investment compared to what is normal for us.
Even though you referred this as being a high-tech investment, I would assume that the technology would move forward quite quickly. And is it still reasonable to depreciate such an investment over longer than 10 years?
We believe so. And when we say high-technology, obviously, it's a lot of software, obviously, but it's a significant amount of hard construction as well.
Thank you, Gustav. And we go over to Danske Bank and Daniel Schmidt, please.
Could I just ask you a different question on the operations during Q3 and weakness in Dagab's EBIT being down SEK 38 million, I think it was year-on-year? Is there any chance that you can sort of shed some more light on how much of that was related to increased fuel costs? How much of that was related to volatility in deliveries and so on? And how much of that will continue to be impacting the coming quarters? You still have high fuel costs, I assume?
We still have high fuel costs, and it was -- a fair amount of that was the fuel prices, but it also relates to that we have to -- so there it's a combination of that we also needed to have increased our transports, as I pointed out, that we have to increase transport due to the capacity for the trucks due to the heat. So we couldn't ship as much as we normally do in one truck. We needed to add trucks. So it's kind of a combination of more trucks and higher fuel costs impacted so this part.
But would it be fair to saying that the fuel was sort of 60% of the additional costs or is that...
Not 60%, but at least close to 50%.
Okay. And then also coming back to the subject -- the topic of today, it seems like. Could you in any way sort of try to compare what you announced today in terms of the automation investment with what you get in terms of the Ocado deal, and you're spending almost twice as much, but I assume that includes the entire group, what you write about in terms of digitization...
No, I think I'm actually glad you are addressing that question because of -- again, I'm going in with a lot of energy out of this investment because it's a fantastic opportunity, but it's not to compare with an online automatization process. We are taking an automatization for the current business that we have that is still the majority of our business today to fulfill the stores. As you know, when you look at the structure today, it's fairly manual warehouses that we have even if we have some techniques in it, but it's very -- and this will create a great opportunity for us to improve our productivity with highly automized warehousing as well as a new technology that is available where you can also pick it automized, which, of course, creates also great opportunity. So -- but this is for the whole business for us. It's not only part of the online. The beauty is that we can combine this. We're not building a separate automized online. We combining this in one fulfillment center, which, as I pointed out, gives us flexibility in terms of when online how big that market will be. But it also gives us the productivity benefits we also see needed for the online part.
And is it -- should we assume that you already have singled out the supplier for this, but sort of the final papers are not sort of signed yet?
Yes, you should see this, of course, as I said why am I announcing this today. We worked on it over a year. We are getting very close to our plans. We still have not made the final selection or contract in these discussions. But we are getting so clear about the timeline and also getting so clear about in terms of the investment needs. So therefore, we thought it's a valid time to go out and inform the market, so we also keeping the structure right in terms of how are the need for information.
And is this also sort of, in any way, boosting your sort of return on cost base? Is part of this project, is that going to be sort of developed in-house? Or is it a mix where you need to staff up as well?
Well, it is, obviously -- part of it is a mix. But of course, we are working with partners with this since it's not our core business to build automized fulfillment centers. So it will not be for the future either. So -- but of course, we're also building up our own competence to handle this, but yes.
Thank you, Daniel. And I hand over to the operator and the conference call participants.
Our next question comes from the line of Stellan Hellström of Nordea.
Just the question on the automatization or logistics, and if you can say anything about what type of savings you expect from this big investment? And also, if there will be any costs apart from the investments that you put in the balance sheet doing this automatization?
Hi, Stellan. And I understand the question, and that's why we have chosen to go out with this even if it's not fully confirmed all the plans for it. So what we'll do is we'll come back later on when we have this confirmed fully on. But right now, it's very clear in terms of time line, and it's clear in terms of CapEx need. We see some great potential in terms of productivity related to this as we are starting it by 2023. But we'll come back to some of that later on when we have a firm plan.
And this will be a meaningful additional return on investment you think? Or is it more of being able to cope with maybe a higher cost heavily in the online setup?
I think it's a clear meaningful investment.
All right. Then also a question on Hemköp. We have seen now, of course, there was maybe adverse weather conditions in this quarter. But relative to your franchise stores, the owned Hemköp stores, how they have been showing quite weak like-for-like sales for some time now? And is there a reason for this, you think, and is there maybe a need to change the store base somehow?
No, I think you are right in that. And we've seen somewhat slower performance on our group-owned stores over few quarters. We are -- some of that is related to the refurbishment program that we have worked intensively with. And as you know, you're not -- even if you're refurbishing a store, you're not getting fully up in speed. It takes some time. Versus when we're looking at the stores we have refurbished, we are seeing that there's a very positive effect on a going basis, particularly a year or 2, but we are working with the whole group now and particularly with the group-owned to strengthening our Hemköp offer and to address this. So I don't think we have a fairly good -- or not a fairly. We have a good program moving ahead.
Okay. Just finally also you mentioned here that you have better results from online contributing to both Willys and Hemköp. And just wondering how you see that development going forward? Should we expect this also in the coming quarters?
I think it relates very much in terms of how we will be able to grow. We are seeing some benefit with the combining the transports. We're also addressing the joint dark store that will support this for us as we move along as of 2019. Then a clear area for this as well is that we are able to drive the click-and-collect solution and the click-and-collect offer that is particularly positive within Willys that has over 50% click-and-collect rate at this stage.
And operator, we have more calls from the telecom?
Our next question comes from the line of Andreas Lundberg of ABG.
Back to the CapEx. Did you say that your main CapEx is around SEK 700 million? That is my first question.
Sorry, can you take that again?
Now what's your main kind of CapEx for 2018?
Maintenance.
Maintenance. I would say, it approximately 2/3 of the amount so far is for maintenance.
And the remaining CapEx for this year, what do you include in that? Normal growth...
Yes, it's normal growth investments in -- and in all the -- both in stores and in wholesale and in IT.
And then I want to talk about depreciation. Is that your long-term depreciation, that go for all this new CapEx you will take for the next 4 years or is it anything that is shorter?
Well, as we see it now, it will be the same range, and it will be longer than our normal depreciation time, but we -- like Klas said earlier, we have to look into that in more details when we come closer to the investment.
Okay. And will you start take this from 2023 or is it something that will come earlier?
When we begin to use the facilities, we can do depreciate as well.
And that will happen in 2023 or is it early?
Yes, yes.
Okay, cool. And then Willys, which had an impressive performance. I mean, how much would you say is weather-related when it comes to profitability improvements?
I think, in general, it's somewhat weather-related due to the positive sales mix. But as we've stated, as you see and we have a fantastic growth of customers. We have a positive sales development, so slightly on the mix effect, so slightly, which is positive then on the gross margin. But the majority of this is a positive like-for-like and a positive drive with our customer.
Okay. And lastly, you touched upon gross margin, but the gross margin, in general, was very strong as it was, I think, in last quarter. What's behind that?
Sales mix. As you've seen, we had a positive sales mix from this summer. We've also been able to be a bit more productive in certain areas, been able to drive some of the ranges for us in a better way. So that has been the positive side of it. May I comment as well on your last question? As I pointed out in the report, the Eurocash is a seasonal part that has seasonal very strong in third quarter compared to other quarters. That has been positive for Willys in this quarter specifically.
And Eurocash did improve a lot versus last year, correct?
Eurocash had a very strong performance in this quarter.
Operator, do we have another question?
Yes. Our next question comes from the line of Fredrik Ivarsson of Kepler Cheuvreux.
Potentially, one last on the CapEx. You repeated the guidance for the year at SEK 900 million to SEK 1 billion. I think year-to-date you're around SEK 500 million, meaning that 2018 will be very much back-end loaded when it comes to CapEx. Can you give some color on that fact, please?
Well, when I said in the range between SEK 900 million and SEK 1 billion, it will be in the low range, I don't know if I was clear on that. But it will be in the low range. So maybe I didn't understood the question there, but come again?
Yes, still even though it's going to be in the low range, it's still going to be -- I mean, the year will be very much back-end loaded. You're going to see a big chunk going into Q4 when it comes to CapEx. Just curious on why that is?
That is -- some of that is explained for the refurbishment programs in the stores. They will increase a little bit in the Q4 compared to the other quarters for the year. So -- but also in wholesale, we will increase a little bit and in IT as well.
Okay. And last one for me on the Willys margin as well. I think on a 12-month trailing basis, you're at 4.4%, which is slightly above your 4% target for Willys. And you mentioned, obviously, positive mix effect, but still you're quite above. Just wondering how should we see this going forward. Do you expect to reinvest this increased margin in the offering? Or should we expect it to stay at these sort of higher levels assuming that you will perform equally good like-for-like sales, of course?
Assuming that we will perform, of course, for us, the most important part is that we have the price position in the market that we follow on a day-to-day basis. So we are crystal on that. We want to maintain our value proposition to the consumers and keep track on that. That is the most important part. Then obviously, we are getting positive effects in terms of scale when we are driving like-for-like sales. So that is then what you're seeing out there when we are performing as we're doing today in terms of margin. And we don't, yes.
Well, thank you, Fredrik. If we don't have any more questions from the audience, I would like you for participating here today and wish you a nice day, and thank you for us.
Thank you.
Thank you.