Sp Group A/S

Hi and good afternoon. On behalf of Hans Christian Andersen Capital, I'd like to welcome you all to this presentation of the Annual Report 2025 from SP Group that was published this morning. My name is Asmus Koibor and I have the pleasure of welcoming CEO Lars Behring and CFO Allan Jeppesen. They promised to take us through the numbers and the recent highlights, so a warm welcome to you two. And before I hand over, I'll also give a warm welcome to all of 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 also the presentation will be recorded and will be published on different platforms afterwards. But that I'll leave it to you, Lars and Alan, please go ahead.

Thank you very much, Rasmus, and welcome to SP Group's presentation of our annual report of 2025. With me today, I have our new CFO, Allan Malmoos Jeppesen, who brings in a solid knowledge into the group. Welcome, Allan.

Thank you. Thank you very much, Lars. My first two and a half months have been focused on finalizing the annual report of the past year and I'm very happy to be here today and to present the figures of 25 together with you.

Great and together with Søren Uhlstrup we make out the SP Group executive team and today Allan and I will share the presentation where we will help each other along the way. SP Group is a global manufacturer of plastic solution. 73% of our revenue comes from sub-supplier work and 27% of our revenue is based on our own products, niche products in plastic that we sell globally. We have a global footprint with 33 factories and almost 2,800 employees.

When we look at the distribution of the group revenue on product groups, you will see that we have 40% of revenue within healthcare, 27% within clean tech, 13% within food tech, and others is 20%. We will return later to the development in each of these groups.

Yes. SP Group is organized in a number of independent companies that works with their technology, with their products and their own customer relation. They are very independent and we as a group work on materializing synergies across the group. In this overview we have here, we have on the top left-hand part, the companies working with their own products from Ergomad with ergonomical solution, SP Medical with their guidewire products. And on the right side, on the lower part of the figure, we have all the companies working with subcontracting tasks. The decentralized organization enable us to act very closely together with our customers, making sure that the local management is able to make fast decisions and make sure that we fulfill the customer needs. And we as a group, as I said before, work hard on establishing synergies across the group.

SP Group's global footprint is one of our strengths. Today, we have production and sales operations in 13 countries and with a total of 33 factories, as Lars mentioned before. With the acquisition of IDEPRO late December last year, we also added India to the global footprint. Lars will elaborate on that later in this presentation. Our presence across the world, across the globe, enables us to service customers locally, both the customers that we know from Scandinavia, from Europe, but also the local customers in, for example, the US. From a revenue perspective, 74% of the revenue is generated in Europe. 27% of this is in Denmark. When we look at the other regions, we see 16% in North and South America and 10% in Asia.

Then let us look at the highlights. 2025 was a very eventful year. We came out with a record in Q4. The fourth quarter was great. We had a revenue increase of almost 14%. Our EBITDA grew 26%. And all in all, it resulted in a record for 2025. The revenue growth was 0.9 for the whole year, and the EBDA margin was realized in a level of 20.2%, with an EBT margin on 11.7%. So historically, good year for SP Group, slightly better than the year before.

When we look at the outlook for 26, we look into growth in the range of 15% to 23%, an EBITDA margin of 19% to 21%, and an EBT margin in the level of 11% to 13%.

2025 was also a turbulent year. We had very different quarters along the way. We saw postponement of projects in Q2 and Q3 due to uncertainty regarding tariffs that hit especially our own products. But we also saw a good growth in our sub-supply projects. If we look at the subcontracting work, it grew almost 6%. It is the largest increase in growth we have seen for a number of years, organic growth for the subcontracting work for many years. And that is especially tasks in healthcare and in food tech that has driven this growth, which is also two strategic areas for us. On the other side, the revenue from our own products decreased by 10%. That was especially hitting also our healthcare part with the postponed projects in Q2 and Q3. But we saw the demand picking up again late Q3, giving us a very good quarter four. We saw the same picture back in 23, where increasing interest rates also postponed a number of projects for our own products, and that picked up again then in 24. On the images you have on the left hand side here, there is a couple of examples of our own products. First on the picture to the left is products from MedicoPak, where we are producing packaging solutions for the pharmaceutical industry as an own brand. And the other picture shows products from Ergomats. Here we have installed ergonomic mats for an automotive plant, ensuring that the employees will have a good working environment.

When looking more closely on the development across the segments, healthcare, which accounts for 40%, as mentioned before, generated 1,174,000,000, a minor decrease of 0.9%. This was primarily driven by what Lars just mentioned, They postponed deliveries, especially within own products, within medical packaging and economic solutions. When looking at cleantech, as you can see, 27% of the total revenue, they generated 804 million decline of 6.5% compared to 24. Here we have had the same uncertainties in Q2 and Q3 as mentioned. Overall, the group grew 0.9%, and the main part of this was driven by Foodtech, who had a growth of 5%, 5.7% to be exact, in 2025. And the group others had an increase in revenue of 13.7%, totaling a revenue just below 600 million. As mentioned, a project was postponed during 2025 within health tech and clean tech. Uncertainty related to tariffs, geopolitics, that selected customers postponed or actually paused some of the projects. This had an impact on the revenue in 2025. But saying that, it is also very important to say that when looking into Q4, we saw that it was a postponement. We saw a big increase in order intake and revenue increase in general. When we look at other highlights during 25, we also have to mention the increase within healthcare production in the US. Our Atlanta factory started production back in January 25. It's an investment of high strategic importance and it brings us closer to the US customers and actually also reduces the exposure that we might have to travel trade barriers. We expect to ramp up during 2026 in both the US and also in Poland.

Exactly. And the final highlight of 2025 was the acquisition of eDepot. And this I will elaborate on on the next coming slides. The acquisition of IDEPO was made at December 17, 2025, at an enterprise value of 700 million Danish, and we expect IDEPO to contribute with revenue in the level of 450 million Danish and an EBITDA of the level 100 million. Ideipro is one of the most skilled plastic companies in Denmark. They have a very high degree of digitalization and they have an in-house tool manufacturing, which is really unique in our industry. Most suppliers of plastic components are acquiring tools outside. And today it's the same for for SP Group and that is mainly purchased in China. IDEPRO has production in Skive and Glengøre in Denmark and in Bangalore in India, where they established a hub 20 years ago, focusing on the technical competences and administrative tasks. In addition to this, they have built some really high level skills on making functional prototype and producing low volume demand for a broad range of customers. All of this gives SP Group a number of new capabilities that we will utilize going forward. If we see on the synergies, We are really pleased with IDEPRO because we see a really good opportunity to do more cross-selling. There is a very limited overlap of customers between existing SP Group customers and the IDEPRO customers. We also see possibilities in expanding the tool production in IDEPRO. As I said before, we buy mainly tools outside SP Group today, and a very big part of that comes from China. And therefore, we would like to expand the platform ID.pro has built in India to become even bigger and make more tools. We expect that the synergies that we can realize in this acquisition is in the level 20 to 25 million Danish with a full effect in 2027.

Well, let me walk you through some of the key financial highlights of 2025. As mentioned, we had a revenue of 2 billion 948 million Danish, an increase of 0.9% compared to 24. The increase is based on an organic growth of 1.8% measured in local currencies. When we look at the EBITDA, we had an actual of 25 of 595 million. an increase of 1.1% compared to the year before. EBT, the earnings before tax, increased 0.1% to 345 million Danish kroners, corresponding to an EBT margin of 11.7%. Overall, 25 on these figures were the strongest, as Lars mentioned, in the history of SP on both revenue and earnings. When we look at the other key figures, we have cash flow from operating activities amounted to 393 million Danish kroners, a decline of 117 million. main driver in that in the decline is the goods on stock which has increased during q4 and that is due to uh to the activity level we saw in q4 as last mentioned we had a record back in q4 24 and we see a high activity level still early in in 26. The net interest-bearing debt in 2025 was 1.46 billion Danish kroners, increased significantly compared to 2024. The main reason or the main driver in this was the acquisition of eDepot. Last but not least, the equity increased by 112 million to a total end of a year of 1.8 billion. This gives us an equity ratio of 44.7%.

Yes, SP Group has grown consistently since the financial crisis, both organically and through acquisitions. In the past 15 years, we have been able to grow 8.6% a year, and we have completed more than 20 acquisitions, larger and smaller, and have actually participated in the consolidation of our industry. And we are convinced that this approach will also bring value going forward. We have, over the past 10 years, increased our EBITDA margins from 12% in 2015, now to 20.2% in 2025, an increase of 8.2%. We have done this through a consistent focus on three main drivers. We have increased the share of our own products, Our own products have a higher margin than our subcontracting work, where we are competing more with others. Second, we have had a focus on moving production to low-cost countries, which has increased our competitiveness towards the industry. And third, we have increased wherever possible, increased automation wherever possible. And we are sure that these drivers will also support the margin development going forward. The same picture applies to the EBT margin, which has been lifted from 6% back 2015 and now to 11.7%. And our ambition is clear. We want to be the best producing plastics. We want to have a very strong competitiveness and also some sound earnings. And we want to continue our focus on a good mix between our own products, where we develop new innovative nice plastic products, and our work as a subcontractor, where we have a constant focus on making our production processes more efficient.

On this slide, you will see the five-year key figures and financial ratios We have addressed several of these previously on the other slides, but I would like to highlight the net interest-bearing debt EBITDA ratio, which is 2.5, end of 25, an increase from 1.4 back in 24. As mentioned before, the increase is mainly driven by the acquisition of IDEPRO, When you include the depot and make a performer calculation of this key figure, it is instead of 2.5, 2.2 times.

Yes. Now it's time to look forward. And we cannot avoid addressing the conflict in the Middle East. There is a potential risk for increasing raw material prices, energy prices. We also see a risk for longer lead times for raw materials. To address this, we have already started a very close dialogue with our customers and with our suppliers both regarding delivery and prices. However, we also have a robust raw material inventory that can make sure we can deliver what we have orders for. Our expectations for 2026 as a whole is based on the assumption that the conflict in the Middle East will de-escalate within a relatively short period of time.

For 2026, we expect revenue growth in the level of 15 to 23%. an EBITDA margin in the level of 19 to 21%, and an EBT margin in the level of 11 to 13%. The growth is driven by a combination of new products, new customers, and a continued growth within existing customers. But also the addition of EDPRO, which will contribute with approximately 15% of the growth in 2026. We are expanding capacity in both Poland and in the US, and we are entering into new customer agreements, particularly within healthcare. As Lars mentioned, this assumes that the condition in the Middle East will be normalized within a reasonable time.

Yes, and it will not have impact on our ability to supply or the overall demand from our customers. But the core message is clear. SP Group is ready for growth. And when we take that on and look on our strategy towards 2030, it remains unchanged. It relies on six pillars. Our companies should be strong subsidiaries that have a very strong mandate towards their customers. And we will realize synergies across the group. across the whole SP network. We have a big focus on growth industries. We focus on healthcare, on clean tech and food tech. And we also want to serve both startup companies and large global companies. Our broad technology portfolio helps us to find the right solution for our customers. Plastic can be made in many different ways and it is crucial that we find the most cost-efficient solution for our customer so that we can be trusted as their partner. We want to continue focusing also on our own products. We supply a number of niche products in plastic globally today. We want to develop that and making sure that this can also contribute to increased margins and growth in SP Group. We also want to continue with more acquisitions, especially like the ones with IDEPRO, where we find good companies at a fair price that enable us to become both more skilled and gives us new technology. Finally, Sustainability is still in our focus. We want to help customers making more sustainable plastic products that makes a difference. We want to use more recycled material in our own production and we want to use more renewable energy.

Our overall financial ambitions towards 2030 is growth in revenue in the level of 6 to 9%, bringing the revenue up to a total of 4.5 billion Danish kroners. EBT margin is expected in the level of 12 to 14%, bringing the earnings before tax up to a level of around 600 million. As Lars just mentioned, M&A is an important part of the strategy, and we continuously evaluate companies within our own business, companies that have a strategic fit, companies that are able to support our ability to achieve our ambitions. If we're able to do this, if we're able to do a larger acquisitions or several before 2013, that would naturally accelerate the achievement of these targets and these ambitions.

Exactly. And then let me summarize. SP Group has demonstrated resilience in 2025. We made an all time high in Q4. We have had a good growth in our subcontracting work, where we have been able to get new tasks and put them into production. We made an acquisition of eDayPro, gives us both growth, but also a lot of new opportunities for the future. The conflict in the Middle East may have an impact on 2026 performance. The situation is still very unclear on what will go on here in the future. However, SP Group is ready for the growth. Thank you, and now we are ready for some questions.

Thank you very much Lars and Alan. Yes, let's jump into some of the questions here. If we start with your... Guidance slide here. Let me just activate this one. There's a question relating to guidance. You cut guidance in July 2025 and still only landed at 0.9% for 2025. That's top line growth. Your 2026 guidance of 15% to 23% growth implies 0% to 8% organic growth ex-DPRO.

what gives you confidence in the much more ambition 2026 range we started out 2025 with an ambition to grow from with the guidance on zero to ten percent uh so sorry from three to ten percent and uh We saw after the first half year that this was not possible due to all the trouble with the tariffs. And then we reduced it to minus three to three percent and ended up a little better than the year before. We have been all on the same time. We have created a lot of new agreements with customers on new tasks. And one of the very nice things that we also realized last year was that we had a large number of new customers coming into SP Group with new products that we started producing. And actually, the share of the biggest customers was reduced a little bit. But we had a very high number of new customers. And we are sure that these new customers will give us more work during 2026 when we ramp up their production for these projects.

Very good. Thank you. And also looking at your own products, we saw this decline of around 20%, as we can see in the lower right corner here on this slide. And there was a question here that goes own product fell to around 27% of sales from 30% in 2024. When do you expect to reverse that trend? And what does it take?

We expect to see continuously growth over time of our own products, but as we also stated last year, more and more of these own products are sold in big projects and they can have an impact if they are postponed. due to different reasons we saw the same on the back in 23 where we should actually have done some of the work in 24 back in 23. uh the level that we realized in 2025 was the second highest ever and we believe that we can also do this better again this year

Good. And also looking at own products, how should we think about your expectations for own products in 2026, given the current geopolitical instability and the historical tendency for customers to temporarily postpone projects in time of high uncertainty? Have you accounted for this in your guidance?

It is difficult to say what is going to happen in 2026. Yes, especially based on our knowledge on how turbulent things can be in the past years. We continuously work on selling more and more projects and we are doing that successfully. So the structural sales of the own products is going well, but it's difficult for us to predict what will happen in the world and how this could happen to impact what day we send an actual invoice on our products.

Good. And if we stay with sort of the current crisis in the Middle East, there was a couple of questions related to this also. Let me just have a look here. I was seeing increasing price pressure from your raw material suppliers giving the high oil price. And if not, do you expect this to be in the coming months if the oil price remain elevated?

We have seen some few price increases on raw materials. We have seen some increases on transportation costs. Having said that, we also prepared for this situation much better than last time we saw an increase in oil prices. First step for us is a very strong pushback to the supply sides. We want to avoid that we do not get unnecessary increases on raw material and they are fair and based on actual increases on raw materials. So because we do not want to push unnecessary price increases forward to our customers. Having said that, we will of course push price increases to our customers. That is a normal part of the way doing business in our subcontracting work. That is also in all our contracts that if price increases, then we can increase price towards our customers.

Good. And in relation to this, there was another question to the elevated energy prices. How long can you absorb it in your current guidance for 2026?

on energy prices yeah how long can you absorb this in your current guidance i guess it's when do you have to change guidance how long can can this go on with the main part of our electricity is on ppas where we purchase directly from solar panels and wind turbines And actually, we are just on the edge of making sure that our own solar park that we have created together with two other companies will go online and then we will produce most of the power ourselves. When it comes to natural gas, we use a little bit of natural gas in our production. Over the past five years, we have been able to reduce it almost by half Taking into account that the group has also grown in the past five years, so actually the share of natural gas that we use in our facilities is very low compared to previous times. Just from 24 to 25, we have decreased the use of natural gas by 10%. And this is also something that we, to a great extent, has covered on the price.

Thank you. And let's do a couple of questions on EDPRO here. There was one. How is the integration of EDPRO progressing compared to your initial plans? And when do you expect it to be completed?

First of all, Integration of IDEPO into SP Group is going very well. We have been welcomed by a very strong organization with a truly good mindset. On the other side, the excitement of IDEPRO in the SP Group organization is also very big. Many of our colleagues are seeing opportunities together with these acquisitions, making our colleagues very busy. finding new clever solutions on doing things smarter so you could say especially for for the cross-selling part we are we are a little bit overwhelmed on how good things are actually going here we have also found some cost synergies already that we are in process of implementing If you look a bit more ahead and what is on our mind for 26 and 27 is the increase of the tool production which enable us to become more flexible towards our customers. eDepot has some very unique skills here and we believe that by increasing the capacity in their tool production then they are able to supply other businesses in SP Group and we can get the same benefits in more in SP Group that may in the same way that it has made the unique in the past.

Good and the question also goes, have you seen any sort of positive negative surprises? I think you mentioned a few positives. I don't know if they were expected, but but has there been sort of any positive negative surprises after you handed the key?

The positive side, I just covered and I mean, and so far on the negative side, no, absolutely not.

Good. And could you sort of set more specific when will the integration be completed? Can you put on a month, a quarter, a year?

Yeah. I actually don't believe that we can put on a year when it will be completely finalized. We have stated our ambition, what we want to find of synergies in the first two years, but with the team that we have in IDEPRO and the way that we work, I believe that we can actually continue to find good ideas among each other also in the years to come. IDEPRO has some very exciting ways of handling plastic production. We also have the same. I'm sure that the team at IDEPRO can also learn from the rest of HESP group when they get to know each other much better. We have seen that before with other acquisitions and I'm sure we can also do that in this case.

Good. And let's take a couple of questions on the Atlanta facility here. Let me just see here. It goes like this. I was seeing a pull effect where customers want US-based production to avoid tariffs. And what is your own import exposure into the US?

First of all, We see that our customers are wishing for a more regionalized setup in order to reduce risks, no matter if it is supply issues or it's tariff issues or other issues. The focus is that we need to produce where products are needed. And our belief is that this trend will also continue going forward. What was the other part, Rasmus?

That was also on what is your own import exposure into the US.

That is rather limited. Most of what we do in the US is produced in the US. And that is actually the same way what we produce in China is also sold in China. And what we produce in Europe are also sold in Europe. We have a very limited transportation between the different regions of the world with our products.

And as you stated in the annual report, you're doing further investments in the Atlanta site. What is the current utilization in Atlanta? And when is this sort of the facility fully operational?

The facility is fully operational. All the fixed installations and everything has been done. We are running production 24-7. And the future investments in the Atlanta plant will be for further expansion of the capacity. So when we get new tasks with customers, we will need more machines. and that is basically the investment so you could say it will typically be in more injection machines we need in the us when we get more tasks there good and do you have long-term customer commitments in place We have very long term customer relations in place and we are focusing on being a partner that our customers would like to continue with. And that is the normal setup in our business. We do not have customers that says that they would like to buy this and this. We are dependent as a subcontractor on how good that they are in their sales work. And then this will reflect on their demand. Luckily, we have a great team that is able to make new agreements with customers, both new customers, but also existing customers on doing more business, getting a bigger share of wallet with our customers. And we believe we can continue that path.

Good, we're running a bit short of time, but let's take a few last questions focused on your balance sheet and cash flow here on this slide. It says here, networking capital compared to sales increased to 29% in 2025. Is that solely due to the strong growth in Q4? And should we expect a networking capital release once your Atlanta factories fully utilized?

Well, the level of working capital end of 25 is impacted, as mentioned, impacted by the activity level in Q4, which was very high. And also the fact that we looked into beginning of 26, starting at a high level. The working capital is high in 2025, but we expect by focus, and we actually have a focus on improving on working capital during the coming years. So we expect it to be on another level when looking forward.

Good. And then a last question on capital allocation. What are your overall thoughts on capital allocations for 26 and 27, given the acquisition of a depot and higher resulting leverage, as we can also see in this slide? The question goes, do we have the organizational capacity to do further acquisitions if the opportunity arises?

We have a great organization that helps with the integration of IDE Pro. And we are sure if the right case will arrive, then we will also have the mental capacity to handle this. Yes.

And also the last question here goes, how do you prioritize these things? One, deleveraging, two, M&A, and three, dividends slash share buybacks.

We made last year a policy for capital allocation where we have described the priorities that we are working after. For sure, our biggest goal is to create more value for shareholders through making the group bigger and better.

Very good. We will conclude by that. Thank you very much, Alan and Lars, for your presentation here.

Thank you very much. And thank you to all of you who has been listening in. It was a pleasure.

Thank you.