Norma Group Ag Name Akt

Good afternoon, ladies and gentlemen, and welcome to the Norma Group SEQ2 2025 results. At this time, all participants have been placed on a listener-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Mark Williams, interim CEO of Norma Group.

Good morning, good afternoon to everyone. Welcome to our conference call regarding the Q2 2025 results of Norma Group. I'm Mark Williams, Annette Steve, our CFO, and I will guide you through the following slides. We'll answer your questions after the presentation, as we always do. Now let's move into the discussion of the Q2 results and proceed with the first slide. The macroeconomic environment in Q2 has not really changed compared to Q1 when we reported sales of 284.5 million euros. Moreover, headwinds from currency exchange softer US dollar rates put an additional pressure on our top line. As a result, our net sales totaled 290.4 million euros in the second quarter of this year 2025. Adjusted EBIT abounded to 23.4 million euros in the second quarter of 2025. The adjusted EBIT margin remained relatively stable at 8.1%, a number we had delivered, for example, in 2024 or 2023 full year. And it improved significantly quarter over quarter. You might remember that in Q1 of this year, we reported an adjusted EBIT margin of 3.6%. Our net operating cash flow was positive at 31.6 million euros. Coming to the balance sheet, our equity ratio reached 47.9% at the end of June. And for our CO2 emissions, we are on track to reach our saving targets for this year. Let's now move on to the next slide. where we show our top-line development in some more detail. Compared to the same period of the previous year, sales in the second quarter of 2025 decreased by 5.2% in comparison with minus 7.9% in the first quarter of 2025, however, this development represents an improvement by 270 basis points. Negative currency effects, primarily due to the softer US dollar, led to a decline in sales by 3%. While prices generally remained stable, lower volume contributed 2% to the decline in sales. Let's now move to the next slide to discuss the sales development by region. In the Americas region, shown on the left-hand side of the slide here, sales were almost at the previous year's level had it not been for the currency effect, which had a significant negative impact of 5.1% out of the 6.3% change year over year. As a result, sales failed to 137.2 million euros in the second quarter. Sales in EMEA, EMEA is in the middle of the graph, the slide. Sales in EMEA amounted to 119.8 million euros, down 2.3% on the previous year. In a difficult environment, the decline is nevertheless less pronounced than in the previous quarter, where we reported a reduction of 12.2%. In APEC, sales amounted to 33.4 million euros in the second quarter of 2025, down 10.2% on the same quarter of the previous year. Generally, weak market conditions for mobility and new energy, as well as industry applications, led to this development with a strong and negative currency translation effect coming on top of this one. On the next slide, we take a closer look into those developments. Please allow me to repeat an important remark which we already mentioned in our Q1 call in May. In the current year, the allocation of certain customer groups to the corresponding SBUs was revised. This relates primarily to construction and agricultural machinery customers, which previously were allocated to mobility and new energy and are now included in industry applications. The slide seven actually shows more detail on those numbers. As a result, sales development in the first two quarters of 2025 is only comparable to the respected quarter in the previous year to a limited extent. And therefore, carefully take a look on the detailed numbers here. In America, these relocations led to an increase in sales of 12.6% in industry applications. In water management, currency effects had a negative impact of 4.5%. In total, and despite the slight growth in volume, sales declined by 2.1% in the second quarter for water management. In M&E, sales decreased by 19.3% as a result of tariffs messing up some markets, negative currency translation effect, and the already mentioned reallocation of sales. Let's now move to EMEA. Restrained demand in combination with the reallocation of sales resulted in an increase of 9% in industry applications. In water management, we have also reallocated some sales, which led to an increase by 41.6%. In M&E, subdued markets and the mentioned reallocations of customers resulted in a decrease by 7.2%. And now APEC in industry applications reallocations of sales from IA to water management as well as weak market combined with unfavorable currency effects caused a sales decline by 23.6%. In water management, mainly the reallocation of sales but also growth in volume, which was almost completely offset by negative currency effects, summed up to an increase of 10.2%, while M&E, low volume as well as reallocation of sales contributions and unfavorable currency effects, in addition, resulted in a sales reduction of 12.6%. On the next slide, we will report on our sales by business unit. Let's start on the left hand side with industry applications. Sales increased by 7.5% in Q2 of this year. The reallocation of businesses previously allocated to M&E, especially from construction and agricultural machinery and stationary energy storage, on the one hand had a positive impact, subdued market-related demand, and negative curve. The reclassification of sales in EMEA and APEC, which previously belonged to the IA definition, dampened the currency effect. Mobility and new energy sales were 11.8% below the level of the same quarter of the previous year. This was mainly driven by uncertainties relating to the potential global impact of trade tariffs, U.S. trade tariffs to be precise, in the reclassification of sales from M&E to IA intensified the negative trend in addition to unfavorable currency effects. Let me now hand over to Anette Stieve, who will give you more details on the financials in the second quarter. Many thanks, Marc.

And hello, everyone, and also a warm welcome from my side. Let's start with an overview on the development of our P&L. material costs decreased disproportionately compared to the decrease in sales. At 43.2% in Q2, the material cost ratio was 50 bps below the figure for Q2 of the previous year. As a result of lower material costs, the gross profit margin rose by 110 bps into 225. Personal costs in total fell in the second quarter while the personal cost ratio rose by 100 bps due to lower sales volumes and inefficiencies. The other expenses decreased in total and remained almost stable in relation to sales. Adjusted EBITDA and adjusted EBIT improved significantly in Q2 2025 compared to Q1 this year. Our Q2 adjusted EBIT margin achieved 8.1%. The H1 margin came in at 5.9%. Let's have a look at our adjusted EBIT margin by region in the next slide. The adjusted Q2 EBIT margin in the Americas was 170 bps up against the prior year's development. This was supported by lower costs for regular freight and a beneficial product mix. In EMEA, adjusted Q2 EBIT margin came to 0.5%, which represents a significant improvement over Q1. In general, EBIT margin in the EMEA region was negatively impacted by the temporary structural inflexibility in personnel costs in combination with lower sales. As a result, personal costs could not be fully tailored to the revenue level in the first two quarters of 25. High one-off costs in Q1 added to this development. Adjusted EBIT margin in APEC amounted to 6.3%, which also marks a significant improvement over Q1. The main reason for the decline year over year was likewise increased personnel costs due to existing inflexibilities in personnel structures in conjunction with lower sales. At the next slide, we show our operational adjustments in the P&L. This year, they are expected to include around 15 million from PPA effects, In addition, we assume around 20 million associated transaction costs in connection with the sale of the water management business. On top, adjustments from one-offs for transformation costs up to 30 million euro are to be expected this year. Mark Williams will give you the detail on our transformation in a few minutes. Let's have a look to our EPS on the next slide. Adjusted net income for Q2 amounted to 10.6 million, which was almost at the same level as previous year. Adjusted earnings per share for Q2 were at 0.33 euro, which was also almost at the same level as previous year. So also in our EPS, you can see a significant improvement quarter over quarter. Let's move over to the balance sheet figures. Our net debt slightly increased by 1.7% against end of 24. Due to the lower EBTA, leverage was up to 2.5 times adjusted EBTA from 2.3 times as of June last year. Total equity levels at 648 million. The equity ratio decreased by 230 basis points to 47.9% as a result of foreign exchange translation effects, which had an impact about 61 million. On the next slide, we will discuss our net operating cash flow. Net operating cash flow decreased into Q compared to last year. This is primarily due to the lower EBITDA and the lower trade working capital effect. Please let me point out that net operating cash flow, as well as free cash flow, both are solidly positive in Q1 and H1, despite significant headwinds on the top line and additional one-off costs compared to last year. With this, I hand over back to Mark Willems.