Afry Ab

Good morning and welcome to AFRI's presentation of our results for the second quarter of 2026. I am Linda Pålsson, I am CEO of AFRI, and as always, I will begin by sharing my perspective on the quarter before handing over to our CFO Bo Sandström, who will take you through the financial results in more detail. Following the presentation, we will open up for questions. So let's begin. In the second quarter, we have continued to make progress in the execution of our strategy. As a result, we strengthened the order backlog further. It increased 8% year over year and now amounts to 22.4 billion SEK. We also continue to improve the utilization rate. And after 14 consecutive quarters of decline, we have now delivered three quarters with consistent improvement. This is a strong validation of the actions we have taken. In the quarter, we completed our restructuring agenda aimed at optimizing our portfolio and adjust capacity. Total sales was minus 2.4% and the organic sales growth adjusted for calendar effect was minus 5.3%. This reflects the strategic capacity adjustments we have implemented over the past year. EBITDA margin excluding items affecting comparability was in line with last year and amounted to 6.7%. It is evident that our progress is not yet reflected in our financial results. We are now shifting focus to organic growth to capture profitability uplift from the actions we have taken. And we have reached several important milestones during this quarter that will improve efficiency and support organic growth going forward. And I will come back to this later in the presentation. But first, let me take you through how our division performed during the quarter, and we will start with energy. The overall energy market remains strong. It's driven by the global energy transition and the increase in electrification of society. Reflecting the high level of demand and the strong offering that we have in all our segments, we reported a record high order backlog in energy division this quarter. In light of the geopolitical developments, the focus on energy security and reducing dependence on fossil fuels continues, which further strengthen demand for our solutions. Profitability remained at solid high levels, while growth was impacted by the facing of execution in larger projects. But it is encouraging to see the market momentum and order backlog that we have in this division. And our full focus going forward is on delivering on the backlog and to drive growth. If we then turn to industry, the market conditions here are broadly in line with the recent quarters. We see strong demand in areas such as defence, mining and metals, while sectors like pulp and paper and automotive are softer. We also see that a longer period of lower demand is contributing to weak price development in parts of the business, such as within the automotive industry. The acquisition of AMC within mining and metal segments, which I highlighted last quarter, contributed positively to sales this quarter. And it is encouraging to see how the addition of this type of high quality business is already strengthening the division, enhancing our offering and reinforcing our position within this segment. The decrease in sales we saw was primarily a result of implemented capacity adjustments and profitability was impacted by the low sales volumes combined with weak price development in parts of the division. We move to transportation and places. We continue to see solid demand in transport infrastructure. The real estate market continues to be challenging with weak price development, although we are seeing strong momentum in some of our selected focus areas, such as data centers, defense and health care. The effects of the restructuring and other changes that we addressed in Q1 are starting to phase out. The EBITDA margin remained at a stable level year over year, while sales volumes are lower, much due to the strategic capacity adjustment. Then moving over to projects. One example of the growth opportunities in the infrastructure sector, I would like to highlight a key contract we in during the quarter within our places segment. It's the new hospital in Helsingborg in southern Sweden. This is one of the largest hospital projects in Sweden in decades. And AFRI has been entrusted with a key role. It's built on our expertise in complex health care environments. and health care infrastructure is a strategic growth area for us. We see significant market opportunities and we hold a strong position here. We have also been selected by energy company Asilene Renewables to provide project services for its new biofuel plant in Brazil. The facility will produce renewable fuels, including green diesel and sustainable aviation fuel. So this is a great opportunity for AFRI to leverage on our chemical and biorefinery expertise while supporting the decarbonization of transport and aviation sectors. And finally, we signed a framework agreement with Elevio, one of Sweden's largest power distributors. As demand for electrification continues to grow, significant investments are being made to strengthen and modernize the grid infrastructure. With our long track record in the energy sector, AFRE will provide technical consulting services across a wide range of disciplines to Elevio. I would now like to take a moment to highlight another area where we are currently seeing strong momentum and where AFRE has a competitive and comprehensive offering, naming data centers. The demand for data center is growing rapidly, driven by cloud adaptation, digitalization and investments in infrastructure around the world. And according to our estimates, the market for engineering, project management and advisory services that are related to data centers is expected to grow by more than 20 percent annually through 2030. What makes this particularly exciting for us is the breadth of our offering in this area, where we have the competence to support clients across the full data center lifecycle. It draws on expertise from across AFRI, combining advisory, architecture, engineering and infrastructure capabilities. And with our new structure and way of working across safety, we are very well positioned to deliver integrated data center solutions on a global scale and across the full lifecycle. And I would like to highlight that our capabilities are particularly strong in areas such as site selection, localization, building design, combined with the deep expertise that we have in power supply and grid infrastructure. We also help clients to improve their sustainability performance through leading solutions for energy efficiency and for heat recovery. So to summarize, AFRA are well positioned to capture growth opportunities related to data centers going forward. It is a market with strong structural growth and a clear strategic fit and one where we see opportunities to create value for our clients in the years ahead. And as I mentioned, the key driver behind data center expansion is the accelerating adaptation of AI. So let me give you a short update on our work in this area. Because for us, AI is not about isolated tools or initiatives. It's about systematically redesigning how we operate across the business. A3 strength lies in our deep sector expertise, our strong references and our proven product delivery capabilities. and by combining this strength with AI, we see significant potential to improve productivity, quality and speed in our delivers. And our priorities are focused on two dimensions. It's the client delivery and it's in the internal efficiency. So in addition to supporting our clients to realize the value of AI and data in their businesses, we are designing an engineering delivery platform that connects our employees with tools and data to deliver projects more efficiently. Through standardized solutions and secure data architecture, we are establishing the foundation required to scale the adaptation of AI and future technologies. We are also working with selected partners to explore new delivery models for scalable productivity, and we have several pilot initiatives on the way. Then when it comes to our own operation, we are increasingly using AI to improve efficiency in bid management, as well as automating routine tasks through AI agents and self-service analytics. because with the right implementation, AI can free up capacity from repetitive and low risk work, enabling our engineers to focus more on advanced assessments, problem solving and closer client dialogue. And as AI continues to evolve, we build the capabilities, platforms and ways of working needed to capture the full potential over time. It's important area for us. And with that, I would like to hand over to you, Bo, to take us through the financials.

Thank you, Linda. So I will cover the financials for Q2 2026, and I'll start with the overview. Quarter two showed net sales of 6.5 billion and EBITDA excluding ISE of 434 million. Adjusted organic growth remains in negative territory around minus 5%. On rolling 12 months, we're currently at 25.2 billion on net sales. Rolling 12 month EBITDA margin remains at 7.3%. The order backlog continued to develop favorably and is reported at 22.4 billion, an improvement of 8% to last year and 4.2% sequentially. Again, the order backlog is the highest ever reported. All divisions improve sequentially and year over year. The majority of the sequential improvement stems from the industry division, with some good wins in the quarter and also supported by the AMC acquisition as their order backlog is now included in our reported numbers. The backlog for the energy division now surpassed seven billion, leading to an 18% increase year over year. The division is now well set for increasing the growth pace in the upcoming quarters. In Q2, with a net sales of 6.5 billion, we reported total growth of minus 2.4% and adjusted organic growth of negative 5.3%. Whereas the organic growth continues to be pressured by our restructuring agenda, total growth has turned the trend following the AMC acquisition. The market price pressure in some segments seen since the latter part of 2025 is still clearly visible in Q2. This is particularly evident for some segments within industry and transportation and places. Structural effects in Q2 relate to the acquisitions of Reta during Q3 2025 and AMC completed in May 2026. Net of smaller non-core divestments completed in the beginning of this year. The negative adjusted organic growth in Q2 was somewhat lower than last quarter's with small sequential movements in respective division. Global division energy again show low but positive organic growth. Adjusted organic growth for the industry division remain in the minus 6 to 8% territory reflecting a continued challenging market in parts and capacity adjustments during the last 24 months. Total growth for the division is minus 2.1%, with the AMC acquisition as the main structural contributor. Transportation and places remained at minus 5.4% in Q2 as a consequence of capacity adjustments in the end of 2025, combined with a continued weak real estate market. We report a utilization of 73.5% for Q2, close to a percentage point higher than Q2 last year. Again, we see improved year-over-year utilizations for all divisions. This is then the third consecutive quarter where we report an improvement to last year, and it is a continued important step for our strategic efforts to improve operational efficiency in AFRI. We will continue our focus on improving this metric to be one of the main drivers of profitability improvement over time. Since the low mark of 72% on rolling 12 a year ago, we are now at 72.6% and well on our way to 74% being the set ambition in the 2028 roadmap. EBITDA excluding ISE is reported at 434 million with positive calendar effects of 27 million. The EBITDA margin was at 6.7%, reasonably in line with last year reported and calendar adjusted. With the business margin pressured by lower sales volumes, group costs were lower than last year as we're now starting to see effects of the restructuring efforts related to support functions. Looking at the EBITDA margin development by division, they are in general in line with last year. Energy, supported by improved utilization and strong backlog development, continue to report a strong EBITDA margin. Global division industry continues to improve utilization, but it's pressured by significantly lower volumes and weak price development in some of its market segments. In addition, the division carried 15 million of transaction costs for the AMC acquisitions in the quarter. The margin in transportation and places remain pressured from restructuring effects and the soft real estate markets. That said, in Q2, we clearly see the restructuring effects that we experienced in Q1 starts to fade out, and we expect those to be fully phased out in the second half of the year. We report 54 million restructuring costs as items affecting comparability in Q2 and close our restructuring program fully in line with our guidance given throughout. During the program, we made significant progress in our efforts to reshape the portfolio, and we have in addition made good progress on addressing the cost base. This we will continue to do despite closing the program. We see effects of the increased cost effectiveness from the program on the group costs and increased utilization in accordance with our expectations. But from a full run rate perspective, effects are still offset by lower gross margin contribution given the currently lower sales volumes. Following a moderate cash flow in Q1, the second quarter showed a very strong operational cash flow, close to 500 million better than Q2 last year. We managed to release significant working capital outside what we normally experience in Q2. On a rolling 12-month perspective, the operational cash flow is exceptionally strong, as part of the strong cash collection seen in Q2 is normally seen in Q4. Available liquidity decreased to 4.3 billion and net debt increased to 4.7 billion as we distributed dividend and closed the AMC acquisition during Q2. Our financial position remains strong. With a strong operational cash flow in Q2, we managed to keep our leverage including restructuring costs at three times closing the restructuring program. We expect leverage to remain around this level for Q3 and then to close the year at or below our financial target as significant restructuring costs are facing out of the EBITDA component, particularly in Q4. With that, I leave back to you, Linda.

Thank you, Bo. So let me now provide you with an update on our strategy execution. So there. Our unlocking a free strategy sets the direction towards our 2028 targets with a focus on leading position in selected segments, deeper client relationships across the full lifecycle, expand our presence also beyond the Nordics and an improved efficiency through harmonization and simplification. And over this past year, we have been driving significant change at the high pace to position a free for profitable growth and long term competitiveness. As you know, we have introduced a new group structure. It's supported by a clear roadmap with concrete initiatives and actions. We have executed an extensive restructuring agenda, which we now have completed. We have divested or exited non-core business. And we have completed two strategic acquisitions in mining and metals, one of our key growth areas. And we are well underway with the integration. And in addition, we have launched a new resource management platform. As we now move forward, we shift focus to organic growth combined with cost discipline to capture the profitability uplift from the measures already implemented. Our priorities also include further implementation of the resource management platform towards a more consistent, transparent and connected way of working across the group. We are also gradually scaling our global delivery center capabilities to strengthen project execution, improve access to skilled resource and enable a greater cost efficiency. These efforts will be key to realizing the full benefits of our strategy and to drive profitable growth towards our 2028 targets. And with that, we would like to open up for questions.