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Afry Ab

Q42025

2/5/2026

speaker
Linda
CEO, AFRI

Earlier today, we released AFRIS Q4 and full year 2025 results. And I'll start by taking you through the main highlights from the report. And then I will hand over to our CFO, Bo Sundström, who will share more details on the financials. So let's begin with a brief overview of the full year of 2025. To summarize the year, it has truly been a year of laying the foundation for sustainable and profitable growth for AFRI. Since I took on the role as CEO a year ago, we have moved quickly, implementing a new simplified group structure and launching an ambitions restructuring agenda. This has enabled us to initiate harmonized ways of working across the business and measures to improve operational efficiency. In November, we introduced our new focus strategy, Unlocking AFRI, which aims to realize the full potential of our company. Alongside this, we also introduced new financial targets for 2028. So as we enter 2026, we are already well underway in executing on our strategy. And while we have driven change across the organization, it has been absolutely essential for us to maintain the business momentum and continue delivering to our clients, which remains our top priority. This has meant a strong focus on capturing opportunities in sectors with significant growth potential. At the same time, we have navigated challenging market conditions in several of our segments this year. Global uncertainty has remained high, impacting the overall investment sentiment across many sectors. We have also adjusted capacity throughout the year in line with our strategic priorities, which includes market-related capacity adjustments. This has, together with the significant currency effect, had an impact on our sales development for the full year. We also experienced a weak calendar during 2025, which impacted EBITDA by minus 128 million. While the calendar adjusted EBITDA margin was in line with last year. Based on AFRI's financial position and results for the year, the board proposes a dividend of 6 kronors per share for 2025. So taking a closer look at the fourth quarter, we are now seeing clear steps in the right direction. We strengthened our order backlog, which increased 5.4% adjusted for currency. And while sales growth levels remained pressured, the EBITDA margin excluding items affecting comparability improved to 8.7%. And I was also glad to see that the utilization rate increased year over year for the first time in 14 quarters. This reflects our strong focus on operational efficiency and our commitment to improving this metric. In the quarter, we also made significant progress in our restructuring agenda to optimize our portfolio and adjust capacity. And finally, we ended the year with a strong cash flow and strengthened our financial position, which gives us a solid foundation as we enter the new year. So let's go into the market environment and the performance of our global divisions, starting with energy. As we have seen for quite a while, the overall demand in the global energy market is strong and we have a stable order backlog development in the quarter. The demand is particularly strong in areas such as transmission and distribution, hydro and nuclear power. At the same time, we are seeing some regional variations in some of the segments and this, together with significant currency effects, impacts the sales in the quarter. Profitability remains at high levels supported by strong project execution in several of our segments. Turning to industry, the market remains mixed. This is the division where we see the most impact from global macroeconomic and geopolitical uncertainty, which continues to weigh on market conditions. At the same time, defense-related investments are driving strong demand in several areas, and the mining and metals market remains solid. Pulp and paper, however, continues to be soft. We have negative sales growth in the quarter, but despite this, we managed to improve profitability, which is a result of the restructuring efforts that we are implementing in the division. And then finally turning to our third global division, transportation and places. Here we see that the transport infrastructure market remains globally strong with public investments remain stable across the divisions markets. Demand in the real estate sector remains low with activities shifting more towards refurbishment, public sector projects and investments related also here to defense. The decline in net sales for the quarter is driven by capacity adjustments to mitigate the weak market in parts of the division. And this also impacts the EBITDA margin. But looking forward, this division has an important and exciting strategic journey ahead. And that's why I'm very pleased to introduce our new head of division, Richard Bied. Richard joined AFRI just a couple of weeks ago as the new head of our Global Division Transportation and Places. And Richard, he brings extensive experience from leading global businesses and his deep understanding of our industry makes him an excellent fit to lead this division going forward. He also has a strong background in leading transformational change, and I am convinced that he will be a great addition to AFRI's executive team. So welcome, Richard. Now I'd like to talk a bit about some new client contracts that we won during the quarter. To start with, AFRI was awarded a contract by MEPCO for product management services related to their new paper machine line. We have been involved in the project from the development stages, and now we are continuing with assignments to secure successful completion of the project. And as you know, pulp and paper is an area where we have globally leading expertise, and this is a great example of how we support clients throughout the full lifecycle of large-scale projects. We also have a very strong and long-standing collaboration with Vattenfall. So it's great to see that we now have signed a new framework agreement with them. The agreement covers technical consulting services for nuclear, hydro and wind power across several areas and regions of Vattenfall's operations. So this will be a very important agreement for us going forward. And in Switzerland, we continue to strengthen our position in the transport infrastructure market as we were selected for the expansion of the Lötsch railway tunnel. This project is a part of a large national initiative to strengthen sustainable transport through the Alps, and we were very happy to support with our railway engineering expertise. And speaking of our ability to win new contracts and stay competitive on the global market, I would like to mention another highlight from the quarter. The new 2025 E&R ranking of top engineering and design companies confirms AFRI's global leading position in the key segments. We maintained our strong positions in the overall industry and energy sectors, placing us number six in both categories. It was also encouraging to see that we continue to hold a market leading position in pulp and paper. We advanced significantly in the hydro category, moving up to number three. And for the first time, we made top 10 position in the solar category. This ranking helps us strengthen our long-term relationships with our key clients as a trusted partner. And they serve as an important proof point in connection to new clients to prove our global capacity and provide full lifecycle offerings. Another central element of our strategy that I want to touch upon this quarter is our attractiveness as an employer. As we are going through a period of significant change as a company, it's especially important that we closely monitor employee satisfaction and engagement. And our focus on leadership and culture is a part of our DNA and a key priority for us. And we continue to see that our employer reputation is strong. In Univestion's most recent ranking, Eifri was recognized as one of Sweden's most attractive employers. We also track our attrition rate closely, and it's encouraging to see a steady decline in group attrition since 2022, and that we've been able to keep it stable throughout this transformation journey. We are confident that our strategic direction creates clearer benefits for our employees, providing exciting projects with leading clients and global development opportunities. Our healthy attrition rates reinforces our confidence in this direction as we continue to focus on attracting and retaining the best-in-class engineers and advisors. And with that, I would like to hand over to you both to talk a little bit more in detail about the financials.

speaker
Bo Sundström
CFO, AFRI

Thank you, Linda. So I will cover the financials for Q4 and full year 2025. Quarter 4 showed net sales of 6.6 billion and EBITDA excluding IEC of 577 million. On rolling 12 months, we closed the year at 25.8 billion on net sales and remain right below 1.9 billion on EBITDA. For the full year development compared to last year, we carry significant negative currency and calendar effects, explaining approximately 700 million on net sales and 190 million on EBITDA. In Q4, with a net sales of 6.6 billion, we report adjusted organic growth of negative 4.3%. where volume is pressured by capacity adjustments related to our high-paced restructuring agenda. We maintain a positive underlying pricing, but the market price pressure in some segments seen in Q3 continue in Q4, and the average price development is somewhat lower than seen in the beginning of the year. Total growth is reported at minus 6.2%, affected materially in the third consecutive quarter by FX movements from a strengthened CIEC earlier in 2025. The negative adjusted organic growth in Q4 was sequentially somewhat lower, but materially in line with what we saw in Q3. Global divisions energy and industry both saw small sequential improvements from low levels, where in particularly industry continued to experience a challenging market, but is starting to move out of extensive restructuring. Transportation and places showed sequential decline, mainly related to capacity adjustments in Q4. The order backlog continued to develop favorably and is reported at 20.4 billion, improving to last year and in line with last quarter. Currency adjusted, the backlog has improved 5.4% to last year, despite strong comparables in global division industry in Q4-24. Given current currency headwinds and our restructuring efforts that are ongoing, we're particularly happy to see a solid backlog development in all our three divisions. EBITDA excluding ISE is reported at 577 million with no calendar effects. The EBITDA margin was at 8.7%, an improvement from 8.3% last year. Currency movements have limited impact on the EBITDA margin, but in absolute terms, we estimate a negative currency impact of 20 million on EBITDA compared to last year. Global divisions, energy and industry, support the margin development of the group, and particularly for industry, we see positive trends that the division is coming out of the restructuring agenda, with improvements in utilization supporting the EBITDA margin development. The year-over-year margin improvement in energy and the decline in transportation and places reflect normal quarterly fluctuations in our project business. On utilization, we report a utilization of 72.8% for Q4, the highest in 2025, and an improvement of 0.5 percentage points to last year. This is then the first quarter in 14 quarters where we report an improvement to last year and it marks an important step for our strategic efforts to improve operational efficiency in AFRI. We will continue our focus on improving this metric throughout 2026. We report 161 million restructuring cost as item affecting comparability in Q4. bringing our total to 192 million in the ongoing restructuring program the restructuring costs again primarily relate to redundancies across the group we make significant progress in our efforts to reshape the portfolio and as we move into 2026 we will intensify our efforts on addressing the cost base with two quarters to go in the restructuring program we estimate that total restructuring cost will be at the upper end of our guidance of two to three hundred million with q4 we report our estimated calendar for 2026. we estimate that calendar will have a small but positive effect to erita particularly in the last quarter of q4 of 2026, that is. As anticipated, we carried a very strong operational cash flow in the fourth quarter. Cash flow from operating activities in Q4 was in line with the record high Q4 2024 and was particularly strong given the heavy restructuring agenda that we currently carry. Available liquidity increased to 4.4 billion. Net debt fell below 4 billion. deleveraging to close the year was at 2.5 times. And that was done straight on our financial target. We go into 2026 with a solid financial position and the board proposed an unchanged dividend of 6 kronor per share for 2025. With that, I leave back to you, Linda.

speaker
Linda
CEO, AFRI

Thank you, Bo.

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