Sp Group A/S

Hi and good afternoon on behalf of Hans-Kristian Andersen Capital. I'd like to welcome you all to this presentation of the Q2 2025 report from SP Group that was published yesterday. My name is Rasmus Køyborg and I have the pleasure of welcoming CEO Lars Behring and CFO Tilda Keilhoff. They promised to take us through the quarterly numbers here and recent highlights so a warm welcome to you. Before I hand over also a warm welcome to those of you who signed up for today's presentation. As usual you can ask questions during the presentation in the chat room on your lower right corner and if you're not comfortable writing in English you can also do it in Danish and I'll translate the questions. And of course we'll be recording this and put it on different platforms afterwards if you want to see it again. But with that I'll leave it to you Lars and Tilda.

Thank you very much Rasmus and thank you to all of you who have chosen to tune in and listen to us. SP Group is a global manufacturer of plastic solutions. We are producing 73% of our revenue is produced as a customer specific solutions where we act as a sub-supplier and 27% of our revenue comes from our own products our own brands. We produce on 30 factories in a global setup with just a little above 2400 employees and we operate a number of different plastic technologies. Our strategic focus on the sales goes to the areas healthcare, clean tech and food tech which I will come back to a little later but we also produce a large number of other plastic components. Taking this, thank you Rasmus. We had as you might remember a strong growth in Q1. It was actually the best quarter ever both on top line and on bottom line. And it was followed by a Q2 where we saw some slowdown. Totally seen in the first half we had a reduced sale of our own products but we have a sub-supplier products on a slightly upward trend. We have made many new agreements on new projects for both healthcare and for clean tech which we expect to contribute to growth in the future. We have also made agreements on new projects for the defence industry and for us that part is in the category as we call other which I will come back to. We have had a focus on reducing complexity, improving efficiency and that has contributed to improved margins. We have decided to increase the space for our medical production. We have seen how we utilize our space and our machinery as we need more space for medical production but that I will come back to also in a little later. Overall seen we expect 2025 in line with what we realized last year in terms of revenue and also the margins. However it's still a very unsecure world and that is how we see it right now. If we take the whole tariffs and trade war area then we can see that a new US-EU trade deal in the way it is presented right now that will only have a marginal effect on us. We have more and more production in the US for the US so it will not hurt us very much. The costs that will arise we expect that we can pass on to our customers over time but at the same time we also have a close dialogue with customers who see the needs of moving production from one region to another region and we expect that to go on in the coming months. During the second quarter we have also we started the share by crack program and we have now decided to increase it with additional 40 million Danish because we see that there's room for this. In the second quarter we also paid out 48 million in dividend to our shareholders all in all which of course have affected our finances in this quarter. Then I said this about the complexity reduction we are looking into the whole structure of the group. We are merging downhill plas, nettoon plas, Atlantic float into Gipo in order to make the business more simple. We are changing name in the business Corp Plast and Ulster Plast so all of our injection molding business for industry is named the same. We are looking at this with customer eyes and working on to make it more simple to become a customer in SBU. Then we have closed down a small factory in Thailand. It was a small satellite production for communication equipment but here the customer does not need the products here anymore so we will produce it in the future in one of the other factories. Overall seen on the first half year we have sold products for 1 billion and 467 million which was a sale of which was a reduction of 1.2 percent compared to the first half last year. EBITDA was reduced 3.7 percent and we realized the level of 291 million danish and likewise EBITDA was also reduced to 5 percent to 192 million danish. The sales of our own products was reduced by 11.5 percent to 388 million. All this led to the fact that we realized an EBITDA of 167 million which was a reduction of 6.7 percent which also meant that earnings per share fell to 10.6 which was a reduction on 6.2 percent. Despite paying our dividend and spending have started to buy back shares we have been able to reduce our debt so the net debt is by end of Q2 757 million and on the same time our equity grew the 4 million to 1.7 billion. We are doing very well in the medical area and we have a demand for increased capacity for the new projects that we have made agreement about with our customers. We have started up the MBOC and as we write in the half year message the factory will affect the result negatively this year. However we have been ISO certified after the medical standards we have started to use our clean home of 1000 square meters and we have also made new projects that will give us additional business in 26 for this factory. So we still see this Lancer factory as the right choice and we are also very happy with the progress that we are doing there. Then we have decided to expand our capacity for medical production in Poland with a huge focus on capacity efficiency and space utilization all over in the group especially in the Polish plants we are able to convert a 7000 square meter building from traditional industrial production to medical production. We will start this year constructing both a big clean room and a big white room for a different type of medical production and we will start to produce in these two facilities in Q1 26. So we will move some machines around and we will also install some new machines to start up this quarter one next year. Our own products has not sold so good in quarter two and this has affected the first half year where sales were reduced to 388 million. There are big projects that have been postponed. We have seen a number of places where customers are insecure due to the trade wars and the risk of tariffs. We have seen reduction in components for agriculture ventilation, a general industry parts that we classify as our own products because we are in various places and we have also seen this lack of sales in the ergo mat. But all in all we see it as a postponement of orders. We have not lost any customers or we have not seen any projects go away. We merely see it as a postponement. If we take our customer groups, then we have seen that the healthcare business has fell .4% to 584 million in the first half year. This is medical equipment, medical packaging and ergonomic and safety products. The clean tech counts for 25% of our revenue. This is renewable energy. It is components for energy reduction and insulation products. Here was a reduction of .1% to 400 million. Food take is 12% of the total revenue in the first half year and it fell by .1% to 171 million. Here it is mainly the agriculture ventilation products that have impacted this area. Then we have had nice growth in the category others. Here it is components as furniture components, components for specialist vehicles, maritime products, defense industry and this increased by .3% to 313 million. If someone is able to remember further back, then you will remember that we actually had a big drop here from 23 to 24. So you could say 313 million is coming back to a bit more normal level. It is especially components for the satellite industry, satellite communication industry that has picked up again.

Yes, and if you look at the financial radius, then we started to look only at Q2. Then please keep in mind that Q2 last year was a very nice quarter. The top line in Q2 was 680 million. It is a decrease of 10.7%. The EBITDA was 125 million, which is a decrease of 18.8%. EBIT was 75 million. EBIT was 64 million, which poses a decrease on almost 30%. If you look at the cash flow, then from operating activities, the cash flow was almost 100 million. We used 26 million for our business. We paid the shareback program and dividends for shareholders for 61 million. If you look at the full year, in the first half year, the decrease in the top price was 1.2. There was an EBITDA on 291. The EBIT was 292 and the EBIT was 165. The earnings per share was 10.6, which is a decrease of 6.2%. The equity was 1.7 billion. That's the first time we were about 1.7. From the cash flow from operations, we had 228. We used 84 million for investments and then paid debt. The shareholders had a dividend to shareholders and a shareback program from 170. The interest bearing debt was 756 and the gearing was 1.3. Compared to last year, it was 1.8 and the end of 2024, it was 1.4. The range was 55 almost. If you look at the top line, there has been growth during the years. However, the last month there was a small drop. It was a decline in healthcare, clean tech and food tech. However, all other segments were increasing. The EBITDA and EBITDA market. Also here we have a nice decrease during the years both in the capital and the capital market. The EBITDA and EBITDA market and the market. However, the last 12 months there was a drop. The drop was due to lower revenue and that changed product mix. The same story goes for the EBITDA and EBITDA market performance. It has been a steady increase during the year, but however, look in the last 12 months, there has been a decrease due to lower revenue and product mix.

Yes, and then we come to the outlook for the full year. We have had to adjust our outlook for the full year. From the start of the year, we expected growth from 3 to 10%. Based on the results we have seen in quarter two, we came out with an adjustment July 10th, where we now say we expect revenue growth in the level of minus 3 to 3%. Basically, we aim to hit the same numbers as we did last year. We expect also that we can keep our margins. We expect the EBITDA margin from 19 to 21%. And we expect an EBITDA margin in the range of 11 to 13%. Finally, if you have seen our report, we have put in a new logo, which we are also updating our visual appearance. We will launch a new website on September 1st, both with a new site telling about SP Group and what we are able to do, but also a new investor site, which I hope you will go in and have a look at on September 1st or after that. So all in all, in summary, after a very good Q1, where we set nice records on revenue and earnings, we had a lack of growth in Q2, mainly due to postponed orders, due to uncertainty among our customers. Our new US factory has come off from a very good start. It's also very important. It is one of our biggest investments ever in making new factories. We have increased the CRYFAC program and despite a lot of uncertainty, we see that a new tariffs between EU and US will only hit us marginally. That was all for our side. Arsene, do you have any questions for us?

Yes, thank you very much Lars and Tilde. Yes, we have a few questions here that came up during the presentation. There was one here with a gearing ratio near the low end of your range. Do you expect share buybacks can increase further if results improve as expected here in the second half of 2025?

I do not expect that we will change anything this year, but we will of course look at it again next year.

Could you expand on the downturn we've seen in Q2? What makes you so confident that it's only temporary postponements? When do we expect this to restart or to see the orders come in again at the pace you've seen earlier? Is that already happening now here in the beginning of Q3 or at least halfway through Q3?

Actually, what we have seen is that and experienced is customers who are hesitating to push the order button. We have agreements with our customers, but they're telling us we need to wait for this and this. We have seen that in different cases. There are also a lot of things that are going very well. We made a lot of agreements in Q24 about new projects. They are also coming in. We are producing several thousands of different plastic parts every day. It's a big mix of different things. The main part of what we see here that actually hit us is that some big projects in different areas, agriculture ventilation, on the clean take parts, on the healthcare part, they're postponed.

Good. We could hear from the presentation you're still investing quite heavily in clean rooms at some of your sites. You mentioned the US and Poland. What is the expected capex for this ramp up? There's a question here.

We are building a new clean room in Poland now. We're building 900 square meter clean room and 800 square meter wide room for different types of production. We expect that this clean room in an existing building will have a cost of around 3 million euro, 22 million Danish.

Okay, very good. Then there was, I think it was mentioned in the Q2 report here, that you prolonged your credit facilities with some of the banks, but it's only until spring 2026. Is it usually to have this short time span on these kind of arrangements? Yeah, we're not far away from spring 2026.

We normally only prolonged one year with the banks.

Okay, good. Then there was a question here. If you could also give some color on the M&A pipeline, is it lack of short time targets? Is that the reason for the increased buybacks?

The reason for the increased buybacks is that we feel we have capacity for it or liquidity for it. And which you might have seen, we have also formalized a policy for capital allocation and dividend payment. And we merely follow that. We do have a pipeline of interesting M&A targets, but nothing has yet materialized. But we are quite picky on how it should fit in. We need to see a very good strategic fit at a reasonable price, of course. We have had a huge focus on organic growth in our medical part, and we will continue to do that. We also see a need for expanding, creating more space for medical production going forward, because we see good opportunities here. And we like that very much to have this area where we can grow it all.

Yeah. Good. And then there was also a question in the presentation earlier on the Danish presentation regarding the defense industry that you're targeting now. Could you put a little bit more flavor on this?

Yes, of course. In the category other, there has always been a slight part of defense products. We see now that it's an area where we can grow more and more. But for now, we will still keep it in the category other. But as the whole industry is facing big growth, we also see a demand for more plastic parts. And we also have our ideas on where more plastic parts can be used. But it's, of course, an area with great confidentiality. So you should not expect us to put parts for the defense industry on our homepage. But it is a nice, interesting area where plastic can be used in many ways. Many of the products that shall be used must be durable. They must be lightweight. And here, plastic is a very good solution, despite it's not bulletproof. But there are many, many areas where this can be used.

Yes. Very good. And then one last question that goes here. The CAPEX driven growth appears sort of inherent to your business model. You need to invest to grow. Can SP Group ever generate above 20% if you are to sort of invest every time in growing?

I would say so. I mean, we, of course, need to look into also how we use our capacity. We have started to focus on capacity utilization in all of our plants. And have a tight focus on making sure that the machines are utilized to a higher degree and see to improve in order also to improve our levels of what we're

doing. Very good. But with that, we will conclude today's presentation. Thank you very much, Lars and Tilde, for the presentation here today.

Thank you, Ars Mojgan. Thank you all for listening in.

Great. Thank you very much. Bye.