Beijer Alma AB (publ)

Morning everybody and welcome to our webcast where we will today present our first quarter 2024. My name is Henrik Perbeck and with me I have our CFO Johan Duvenmark. Good morning. Today we will present the overall performance of our group. In addition we will also discuss our reporting segments, our two main subsidiaries. These are Leche Force which is a full range supplier of standard and customized industrial springs and other wire and flat strip components. Leche Force is acting globally with the majority of sales in Europe and the US. And then the other Beotech acts mainly in the Nordics within specialized manufacturing value adding industrial trading and automation in profitable niches and Beotech is also a platform for acquisitions into new industrial niches. So starting off with some comments from my side. Today I will present to you what I think is a fairly good report given the world around us and where we are in the business cycle. We saw our first quarter with strong development in Chassis Springs and several other niches. Overall for the group we had some growth both organically and thanks to acquisitions. Of course demand was still quite varied within our very diversified customer base. The automotive aftermarket medical technology and other niches posted good growth whereas broad industrial segments were softer. In Leche Force we saw a mixed demand between customer segments and geographies. As mentioned Chassis Springs business area posted good growth and is now in high season. This was driven by strong end customer demand and normalized inventory levels and also our high delivery speed and service level. Within industrial springs the Nordics UK and US and also Asia contributed some organic growth. Not a lot but still. In central Europe however demand was weaker in relation to general industrial and construction activity. But perhaps most importantly for Leche Force we could see the sequential improvement of margins compared with previous quarters. This is thanks to actions taken but also favorable mix effects. For Baytech in the Nordics demand was generally stable. As you will have seen in the report Baytech is now presenting a new business area called Niche Technologies. This is actually the area that is delivering high growth in this quarter thanks to a combination of acquisitions and organic growth. Fluid technology and industrial products experienced a softer market. Norwegian markets stood out more positively and contributed growth whereas for example Finland was somewhat weaker partly to the indirect effects of the strikes. In the quarter we also completed one new acquisition AVS Power in Finland. AVS is a leading wholesaler and manufacturer of pneumatics, industrial valves and compressors and we think the company fits very well into Baytech fluid technology with also with potential for cooperation within the Nordics. Generally the activity level within the M&A is good and we can see several opportunities in our pipeline. Having said that business cycle and the operating environment is still uncertain and we will balance investments for growth with savings. So looking into our financial performance of the group. Looking at the performance we can see that order bookings grew by 4% but was down 4% organically. This is not so dramatic and I will comment on this in more detail when speaking about Baytech. The net revenues grew by 7% of which 3% was organic which I think better mirrors the demand we are experiencing in the market. Also worth pointing out which cannot be seen on this graph actually but we have reached 7 billion in net revenues over the last 12 months and that's a kind of milestone. During the quarter demand has been fairly stable and healthy since the start of the year and certainly better than the end of Q4. The comparables for Q1 last year are fairly strong and not the least since March this year had three trading days left and last year due to early Easter and of course this should come back in April but still. So adjusted operating profit was 242 million kronor with a margin of 13.3%. Moving on to the performance of the reporting segments starting with Lesfos our spring manufacturers. Lesfos is organized into two business areas. These are industry with mainly customized products to a very diversified customer base globally and Chassis Springs that are standardized replacement springs sold to car part wholesalers mainly in Europe and you can see that the share of revenues down on the right where Chassis Springs a little bit more than a fifth this quarter. Order bookings for Lesfos was 6% increase of which 3% is organically and net revenue also grew by 6% where 5% was organically with Chassis Springs being the key growth driver of course. But starting with industry the largest business area growth was 3% and mainly organic since the net of acquisitions and investments this quarter were neutral. As mentioned volumes grew somewhat in the Nordics, UK, US and Asia. In central Europe including Alcomix the operating environment remained tougher and demand was affected by lower industrial and construction activities. For Chassis Springs net revenues increased by 19% thanks to good demand during the first quarter and we have now entered the high season. Inventory levels at whole series were estimated to be normalized in the beginning of the quarter and end consumer demand drove volumes in actually in all key markets. The adjusted operating profit for Lesfos increased to 200 million with an EBIT operating margin in the quarter of 15.8%. As you can see top right the operating margin improved sequentially versus preceding quarters almost reaching the level of last Q1. This is an improvement of course and thanks to product mix effect but also several actions taken and for example the divestment in December of a German subsidiary which had a slightly positive effect. Moving over to Baytech. Baytech is since the beginning of this year operating in three business areas fluid, technology and industrial products. You know both acting within industrial trading and manufacturing. The third business area a new one is called niche technologies which includes companies with strong market positions in the various industrial niches such as building automation waste management and specialized machinery and typically these companies have other drivers market drivers than a more general industrial demand. For Baytech overall order bookings decreased in the quarter by 1% of which minus 21% organically. Now this negative organic growth in the order bookings does not really mirror the demand we're seeing in the market and order bookings in fact are higher than net revenues in the quarter. Instead this minus 21% is related to very high comps last year and some of you might remember that when we a year ago showed 25% organic growth it was actually attributed to certain specific projects so trading wise it is as I said booked to bill is positive. So net revenue grew by 9% of which 2% was organic and here of course we can see some negative calendar effects towards the end of the quarter in March. Now within business area industrial products and fluid technology demand was overall stable but on the weaker side with slightly declining volumes. As mentioned Norway stood out stronger whereas Finland was weaker. We did not actually have any direct effects of several of our customers had. So industrial products decreased net revenues by 6% versus last year and fluid technology grew by 3%. In the new business area niche technologies growth came both from acquisitions which now is only Philnomics in this quarter but also organic growth so in total growth of 51%. Paytechs operating result decreased to 49 million kronor but here I want to point out that it did include some acquisitions cost late in the quarter including Finnish transaction tax. So the reported 9% operating margin it's not such a trend down the underlying margin would be well above 10% adjusting for that. Good now I will hand over to Johan for some more comments on the financials.

Thank you Henrik. As mentioned net revenue is up 119 million sick compared to last year. The largest part of this is due to acquisitions together with divestments which contributed with 60 million sick and it's equal to an increase of 4% while organic growth was 3%. Leche Forge had an organic growth of 5% mainly affected by strong sales in the Chassis Springs business area and Paytech had a negative organic growth of minus 2%. As Henrik mentioned this was an effect from general demand calendar effect and as well as strikes in Finland. It was also a small positive effect from currency in the quarter. Order bookings increased with 68 million sick to 1,876 million sick. Acquisitions were positive 7% while organic growth was minus 4%. And as Henrik mentioned the main reason for the effect that order bookings were negative was that there was very strong compare comparables in Paytech last year but orders related to projects were delayed from the previous year. Leche Forge had a positive organic growth in order bookings plus 3%. Let's continue with a short look on the segments and how they contribute to revenue and operating results. As we saw in the previous slide net revenue increased with 119 million to 1,812 million We had an increase from all three factors organic growth, net effect from acquisitions and divestments and as well currency. While the biggest factor for the growth in Leche Forge was organic, Paytech's growth was related to acquisitions. Adjusted operating profit was 242 million in Q1. Increase compared last year was among other things related to Chassis Springs which also is in the season but a somewhat more challenging environment in Central Europe contributed less positive. Paytech's operating result was affected by acquisition cost of minus 7%. Adjusted for these Paytech was on par with last year. Underlaying we see a strong development for the companies within niche technology and parts of fluid technology but a softer demand for some of the companies within industrial products. These companies also experienced a stronger calendar effect compared with last year. We did as well reverse an additional 2 million from the Russia close down provision that we made in 2022 which is the difference between adjusted and unadjusted EBIT. Now to some of the key financial ratios. Adjusted EBIT is up 4 million compared to last year. The difference to adjusted EBIT being higher depreciation following a number of acquisitions. Cash flow after capital expenditure was minus 38 million SEK almost in line with last year. The negative cash flow is mainly related to seasonal effects especially within Chassis Springs. Overall we are satisfied with the development of the working capital even though the seasonality effect in Q1 ties a little more capital. Net debt is higher than last year and this is related to acquisitions and most recently the acquisition of obvious power in Finland. The financial net has improved compared to last year. A small part of the improvement is related to more efficient use of cash but also there are some positive effects in the quarter. Thank you and back to Henrik for a continued look on acquisitions and also sustainability.

Yes so just comments on our acquisition strategy. We continue to further grow by acquisitions. During the spring we have seen good activity on the M&A market and we have discussions with several good companies in our pipeline. Last year the acquired companies added over half a billion SEK to our run rate revenue with good profitability and now in 2024 one new company has been added to contribute profitable growth. And here I would also like to take the opportunity to welcome the whole AVS team to our group. Now on a bit different note during this webcast I would like to mention some of the highlights from our sustainability report which was published recently together with our annual report. We said that Bayer Alma's sustainability targets five years ago and has now reached the end of that goal period and I will not go through everything here but overall I think we have developed very well as a group in many of these areas and in particular I want to point out in terms of climate impact as you can see in the middle of this busy slide we have reduced our carbon intensity by 55% during these years well above the target of 25%. This is driven by a range of activities such as and most importantly reduced energy consumption of 36% but also the largest share of renewable energy, solar panels and transition to bio-based fuel. So good progress during these years. So now we move over to a new target period and we're now setting ambitious targets for the future and the year 2030. These are now aligned with that we have set so-called science-based targets for reducing our climate impact and 2030 is what is called our near-term target. Here it is not only our own impact that matters but the climate impact from the whole value chain and significant improvements can only be achieved through close partnership with our customers and suppliers and of course at the same time we will continue to focus and reduce our own footprint. Also in other sustainability areas we must work closer within our value chain. One example is within business ethics where we have started steps with our business partner Codaconduct and over the time will develop a closer due diligence process of suppliers also in conjunction with the development of the legislation in this field. And further we must use resources such as energy and materials more efficiently. For this we will develop circular solutions for waste but perhaps even more importantly to bring sustainability into our innovation and design process. Then we can really add value to our customers and their strive to reduce impact from their final products. So a new journey ahead. So now just summarizing what we said regarding Q1. Growth this quarter came in particular from chassis springs and industrial niches but demand was varied and the broader industrial segments were softer. In Lesherfors, the strong performance in chassis springs, Nordic, UK, US and Asia contributed some organic growth whereas weaker demand in Central Europe and Alkomex in relation to general industrial and construction activity. And also for Lesherfors sequentially improved margins and the recovery from the end of last year in that sense. For Baytek, the new business area niche technologies contributed growth. Industrial trading was particularly strong in Norway, a little bit weaker in Finland and underlying margins remained stable. And finally our new acquisition of AVS Power in Finland, a good fit into Baytek fluid technologies. So with that we will open up for some questions.

If you wish to ask a question please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question please dial pound key 6 on your telephone keypad. The next question comes from Carl Norn from SEB. Please go ahead.

Hello and good morning Henrik and Johan. A couple of questions from my side. Maybe if we start off with Lesherfors and the chassis springs. I mean quite a strong quarter, I think the best queue one ever. I didn't really catch what you said there on the normalized inventory level. Did you say that they would normalize in the beginning of the quarter and at the end of the quarter? So just some commentary on that would be helpful. Thank you.

Good morning Carl. It's a good question. So I didn't say in fact say it was normalized in the beginning of the quarter, meaning that first of all a year ago we had some strong effects on inventory reduction still from the sort of the supply chain issues. But then in the high season in general there is a natural buildup of inventory with our wholesalers. So of course we have good sales now when we're entering the high season and the part of that is of course also the fact that they have increased demand and they are building up stock for the season. So you could also say that it has been normalized levels in the quarter. Nothing particular there. It's more the end consumer demand that is driving and also as I wanted to point out you know the fact that we have a service model that is very strong in the market so we can respond quickly and we do in fact build up stock as you have said also we title a bit more capital in the first quarter in order to meet the spring demand. So it's also part of our business model to really be able to respond to this. So yeah a very good quarter indeed.

Yeah good and on biotech then a little bit weaker model instead than we're used to in the last quarters here. So can you just help us understand it's more blip on the curve driven by some calendar effect on maybe impact on strikes in Finland or if there is some let's say company specific issues in some of the subsidiaries or?

Well first of all I want to once again just reiterate the fact that we did get this M&A cost late in the quarter meaning that we had very little contribution from that acquisition in terms of profitability but the full cost of that transaction. So you know say for that margin level is around .3% which I think is absolutely fine for biotech. We do see as mentioned you know a little bit softer markets in the industrial trading and you can see the industrial products is down by 6% and of course that matters as well. So I think nothing that stands out as such but you know we are still in a market which is fairly flat or yeah. As you said the calendar days in the end of the quarter was part of the

effect.

Yeah

just that can impact profitability a little bit or one extra worth etc. But that's good and then just a question on the M&A as well I mean in the report you said that they have a good pipeline and are in discussion with several targets but they also mentioned you know there's high uncertainty etc high interest rates. I mean you want to hear your view on your balance sheet and ability to take on more acquisitions here near term and what to expect I mean you mentioned 0.5 billion in M&A added during 23 years also possible for 2024 I think.

Yes so first of all on the market as I mentioned we have just you know it's been very interesting that there's a lot of activity. Of course you know when looking into companies in these what should we say these times you know you need to evaluate you know what is the performance of the company and you know there's maybe less growth so it's a matter of you know buyer and seller in a good way but that's you know there's plenty of interesting opportunities. I think yes I think we do have a capacity for a similar amount of acquisitions this year with our debt ratio so that is not holding us back but you know we will continue to be you know selecting very good companies to work with because we're in it for a long time forever hopefully so we really want to make sure we acquire the right companies but we should be able to in terms of financial capability we should be able to similar numbers.

Yeah good that's all for me thank you.

Thank

you

Carl. The next question comes from Johan Dahl from Danske Bank please go ahead.

Yes good morning everyone can you hear me yeah.

Good morning.

Just on your on the Lechefors order intake you reported up three percent I think organically in the quarter and obviously we have this issue with the chassis being high season and you know good end user demand there but on the industrial side on order intake are you seeing sort of any sort of trend there you talk about UK being a bit better I'm just trying to sort of pin down whether this market is could be close to bottom or if you're seeing any cross selling impact here.

Good question if we start on the market side I mean the numbers are not let's say big in any direction as you know it's three percent up and we have an effect of course there also in from chassis brings so I think last quarter we reported that Nordic was a little bit softer so that is more normal now you know perhaps a percentage point or something positive. I wouldn't want to speak about a big trend shift but it's certainly not certainly not worse than Q4 but you know it's a fairly stable and fairly low numbers but you know at least they are positive in a way in these regions that you mentioned still we feel that Europe is softer and a bit tougher and this so this balance between the regions and Europe and Alkomex is a little weaker whereas the others somewhat positive side so it's really hard to say. In terms of cross selling effects these are I think you know it's a constant work ticking in we do have some some more specific segments where it's clearer like we just we have mentioned before the medical technology area where we cooperate very well across the companies and even the continents but it's hard to break out that in this quarter with such you know low numbers but it's positive at least and I think that's what we should bring with us.

All right and on you talk about both growth and savings in your sort of management agenda what new savings initiatives are on the on the on the table right now I mean you did Stump and Schuller last year have you identified any new sort of avenues here?

So you know there are several things going on in a big group and you know we're working very in many ways decentralized so it's I would say it's a general sort of cost consciousness as the basis for everything. We do have certain initiatives where we really try to to get the companies together for example in procurement where you know these are times when you really need to to to work together to find the best deal. In terms of I mean I think what we did with Stumpf was quite you know it's not very often we do structural moves like that but definitely you know we are looking for opportunities also in related to the footprint and where to produce the product in the best way but it's a little bit of it just you know hard work done in the subsidiaries and being cost conscious and right now but then as I said you know it is a balance because we do have some very interesting areas that we want to invest in and make sure we have salespeople so it's really the balance that's the trickier at the same time.

All right just finally the minus eight in minority interest which subsidiary is that primarily? Just to remind us there thanks that's it.

I don't know if we but it could be there are some in Bayetech in the satellite business for example.

Yeah we have if you go through all the press releases you will see there is a minority stake in Alchimax there is a minority stake in some of the Bayetech companies like the satellite business like Finlamex in Finland etc so there are a few companies with like a handful of companies with minority interest.

That was just fairly big we can take it offline later thank you so much.

Yeah. There are no more phone questions at this time so I hand the conference back to the speakers for any written questions and closing comments.

So thank you everybody for joining our webcast this morning and I wish you all a great day thank you very much.