Vaisala Oyj

So more than half of this decrease is explained by changes in the currency exchange rates. Strong growth, but more interestingly, what's happening underlying on the top-level numbers is the strong growth in industrial measurements and in subscription sales, and at the same time, weak demand in renewable energy, which then impacted the net sales significantly on that side of the business as well. The gross margin on a good level, albeit a slight decline compared to kind of second quarter last year, and the gas conversion continued strong, and I'll show you a slide on that as well. Industrial measurements, a very good quarter. Growth continued in all geographic areas and all market segments. It's great to see. It has not been the case for quite some time in industrial measurements that I can actually say say that the growth really comes from all geographic areas and all market segments. In terms of orders received, increased compared to a very strong comparable year-on-year by 10%, and net sales correspondingly increased by the same 10%. The growth in America has continued strong, but it's clear growth also in Europe and in Asia, as well as in all market segments that we serve. slight decline in gross margin compared to exceptionally high level kind of same time last year, but well in the range that I can say that it was – I can be very happy about the gross margin as well as on the EBITDA level on industrial measurement side. Mixed inside of weather environment, weak market demand in renewable energy. So orders received decreased, as said, significantly when compared to strong comparison point, albeit a strong comparison point last year, 32%. and the order broke, consequently, 7% down compared to the end of last year. And then net sales decreased by 10% compared to the same time last year, which, again, was a strong note not only in orders received, but also in net sales, as you can see from the graph on the right on the slide. And where did it come from? It came from slowdown in the renewable energy market. Maybe you can have a worthwhile little bit opening up what this means is the Investments into especially wind, as we've said before in previous calls, have slowed down around the world. There are kind of specific markets also that where we operate in. This has now kind of gone into the early phases also in terms of a new potential wind park explorations, which is really where we have the biggest exposure in renewable energy business. And many of the markets or some of the markets where we are kind of being specifically strong, like Central Europe or Japan, have kind of slowed down significantly. So the impact on the market kind of comes through fully in our numbers. But also the complete slowdown in the U.S. as the – The administration changed and the regulations are in flux in the U.S. This has caused a complete kind of slowdown in the U.S., which obviously is seen also in our demand and in our numbers. In subscription sales, I said this earlier as well, very strong growth, 53% growth in subscription sales. And this is obviously coming from the acquired businesses and also very happy on the organic growth of 11% year on year. on underlying business on subscription sales. So continue to progress very, very well on the subscription sales business driven by the ex-weather business that we have. In weather environment, it's worthwhile also in the order intake side, maybe a few words on the traditional side of the business. And I referred back to the cyclicality of nature of that business, kind of a couple of maybe opening up a couple of pointers to that, like if we compare to the last slide. Last year or the second quarter last year or last year and partly the year before, the cycle was driven up in... in a couple of things, one thing being, as an example, the use of COVID-19 recovery fund for renewing meteorology infrastructure, especially in Southern Europe. We benefited quite a bit from that during the past two years. Kind of a prime example of that was the investment in the complete new radar system radar network in Spain, but also in Greece and many other smaller deals in other countries in Southern Europe. The use of that fund, obviously, now finally is over, and at the same time, many of those investments now are on the way. Second thing, albeit much smaller impact, but kind of a typicality of this business is China, where We are now in the fifth year of the five-year plan, and as we anticipated, the investments in meteorology are lower in the last year, as it's typical in these five-year plan executions that China has done. The investment got quite a bit of a boost in the investments. in China last year, and the orders came in last year and this year, clearly in a low level in China. But like I said, these are the nature of the traditional side of the business, the meteorology and aviation side of the business, and that's seen especially in the order intake in that business inside a weather environment. And gross margin kind of decline kind of two things impacting that. It's lower net sales, scalability working the other way. And then on the other hand, unfavorable sales makes meaning that there's a little bit more project revenue in the mix compared to some other quarters, leading also lower profitability compared to the previous year same time. You mentioned the cash flow continuing on a good level. Here you can see kind of changes in the cash flow. Nothing really kind of major here. Cash conversion continuing on a very good level, 1.0 and free cash flow consequently being 22 million in the quarter. Excuse me. And I spoke about the seasonality in kind of comparisons to last year, and here I promised to kind of talk about BIT, kind of the year-on-year comparisons also from a kind of a first-half perspective, which kind of give you a slightly different picture compared to just looking at the second quarter, given the cyclical nature of our business. So cyclical in terms of between the quarters, right? And now when we look at first half compared to previous year, orders received decline was somewhat milder. But at the same time, the company's net sales, strong growth, and same drivers, industrial measurements, subscriber sales, as well as then to some extent also the traditional meteorology business. Gross margin actually ahead of last year and EBITDA ahead of last year, EBIT being ahead of last year. And the operating expenses were in control, kind of some increase, but that really was driven by the acquisitions that we did in the second half of last year, which we are very happy and actually contribute to the net sales and net profitability as well already, and then earnings per share being on the same level as last year. Financial position continued to be on a strong level, comparing to kind of our first half last year, obviously gearing a bit higher since we did the acquisitions last year, but we stayed stay very low levered and we continue to have the asset light business model. And here it's good to remind also that that end report, the investment in the automated logistics center here in Vantaa, continue as planned. So we actually have completed the building. I'm watching out of the window and seeing corner of it. We received the building and inspected, and it's already completed. already completely done and as we speak we are installing the automation machinery into the building and we expect that to be taken into full use during the second half of this year as we have planned. Now maybe changing the focus into future and a few words on the market and business outlook. And so business outlook for this year, we continue to see growth, expect growth in the markets underlying industrial measurements, i.e. industrial life sciences and power. Roads continue to be stable. I talked about the meteorology and aviation in terms of that. The traditional business having a bit of a cyclicality and the cyclicality compared to last year in a lower cycle. And then the challenges in the renewable energy I spoke about as well and thus those markets we see declining this year. If I were to look at long term, then I would say no changes in the outlooks on meteorology and aviation roads. The traditional markets continue to be stable long term. And long term, we continue to believe, obviously, in the energy transitions and so on, as I spoke about in the strategy of the company. Now, Consequently, we are now in the middle of the year, and it's time to look at the business outlook as well. And when we specified the range is a little bit narrower than what we started the year with, and we see the net sales being now between 590 to 605 million euros, and then operating result in terms of EBITDA being between 90 and 100 million euros. So this concludes my prepared remarks, and now we would be very happy to answer any questions you may have.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Niko Ruokangas from SEB. Please go ahead.

This is Niko Ruokangas from SEB. Thank you for the presentation. I have a couple of questions and I'll go one by one. Starting with weather and environment. So you mentioned that the cuts in public spending affected demand in weather and environment. And also there have been made proposals for weather services. Budget cuts in the US, both from presidential office and then from Senate and Congress. So could you discuss what do you think about this? And then... as you discussed about the impact of public spending cuts. So do you think that the biggest risks of that relates to 2025 or then 2026?