Beijer Alma AB (publ)

Good morning, everybody, to this. I'm actually in the archipelago of Sweden. The sun is shining and it's 25 degrees in there. The first picture you see now is just a mention. It's actually from Finlamex, one of our companies in the Arctic, which manufactures windows, the front window for buses. and that's one of the businesses that are performing very well and we actually at this moment expanding the factory because the demand is higher in our capacity so now you can see it's myself and Peter Forslund CFO who will run this presentation good morning everybody And if you look at this quarter, I think we are rather satisfied with it, and we have managed to improve the profitability at some points. If we go to the two business areas, we actually only have two business areas at this moment. So Le Sjöfors has a mixed demand, and what we can see is the Nordic market is weak, where we have all type of customers in all industries. So that's a weaker market compared to one year ago. The same goes for the United States also, where the market is much weaker, and I guess it's depending on the industrial situation we have at this moment in the United States. On the other hand, for us, Asia is performing better, and Europe is growing. And so the mix ends up in a positive development for the group. As we mentioned earlier, we have one acquisition done a few years ago, that we are struggling with, that we have improved profitability, but still we have our ongoing program to make that up to our standard. And we announced earlier the cost that we'll take for that in the second, third quarter. We also have reduced staff people in Lykkefors to have a more decentralized organization where the local MDs are taking higher responsibility and also are allowed to do that. And that's a trend we have started now. And I think there will come some further steps down the line. Baytech is a smaller business area we have with a very like a normal serial acquire as overall stable demand but we have of course variations between different companies and if we look at the Nordic and they are only working in the Nordic area so Norway is the strongest demand the weakest in Finland then we have Sweden Denmark in between We had organic growth in the quarter, but especially also we had a very nice growth from the Smeva mass acquisition we did in Q1, who has performed actually better than expectations. In the quarter, we announced earlier actually the first April we acquired a company in India and we own 51% of the shareholders and the former owner owns 49% and we have programmed them to buy him out in some years. And then we made a small acquisitions in Baytech in Rikon in Denmark. And if we looked at on the group level, so the order bookings increased by 10%. and revenue by 7%, where organically was 3% for the revenue and for the bookings was 5%. And that's, I think, in the circumstances we have in the world today, that's very good figures. Our adjusted operating profit EBITDA increased to 305 million, and that's an operating margin of 15.1% on a group level. As you can see, 65% of the turnover comes from Leche Forge and 35% from Bayer Tech. But the trends are at this moment pointing a little bit upwards. If you look specifically at Leche Forge Q2, order bookings increased by 6%, where everything was actually organically. and net revenue by 4%. And as you know, we have different types of businesses here. We have something called Chassis Springs, which is to the aftermarket for cars. And that was around the same level as last year. And the winter was rather mild. So that means if it's a tough winter, then we have more sales of Chassis Springs. And if it's a soft winter, we have less sales. Industry increased by 5%. As I mentioned earlier, that was mainly Europe and Asia. And we increased the adjusted EBITDA to 234 million Swedish crowns. Biotech organically was 2% and this when you look at bookings I mean we have very different companies in there some of them are more machine or product oriented and orders comes in one quarter maybe not the next quarter and so forth so it varies but still on the positive side and we think that the outlook mentioned from the business area manager he was he is very satisfied how it looks for the coming quarter and the operating profit increased to 83 million compared to 73 million the year before As you can see, we have three different business areas here, different types of companies. And the growth you see, especially in industrial products, comes from the acquisition of Svemas. I should mention here that we are actually four of the companies with manufacturing in BayerTech just now are increasing their production capacity by making investments because their demand is higher than they can meet. And that's also very positive for the future. If we look at the financials, we had changes at 7.3% operating profit plus 13.3%. And the EBITDA margin is now 15.1%. And we are aiming to increase this by more focus on profitability and organic growth. So I hope we can see this trend for the future. And the EBIT margin was 14% also up from 30.2. Cash flow, about the same level as last year. Will you mention anything about the cash flow, Peter, where it comes from?

No, I think it's fine. I think it's in line with what we expected.

Equity ratio is 44% and that's on the safe side. And we have net debt to EBITDA is 2.1 times. Of course, the reason is now compared to last year is acquisitions we've done, but also the dividend that we do every year. Earnings per share dropped, but that's depending on the reserves we have made for future costs in the Alcomex case and the Turkish business. Acquisitions in the period. was what I said earlier, India. We acquired the first step into India and we think that's a future market. Now to be cautious, we have an arrangement where the former owner still keeps 49% so we can in a few years now learn how the business works. before we go into more than 51% ownership. I think that's wise because there is quite different culture in the Indian market. But long term, I think it's a very interesting area to be in because we see that more and more production are moving now from China to India. And that's just the beginning of the future, I expect. In May, Baytech made an acquisition, Recon OS. It's a mining company that also adds to the Baytech business. So this is just to show you the acquisitions we've done over the years. And I must say it's a number of them are very nice companies with exports around the world. And some are working more in the But I think this by keeping the companies very self-sufficient, running their own business, that's the way to have success when you are an owner of a company. And while the conclusion is organic growth, mixed demand over the world, and we have improved profitability, and I expect that we'll continue. Stable demand. We have made two acquisitions. And even though our focus is on margin and organic growth, we will do acquisitions in the coming future as well. By this short presentation, I open up for 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.

Yes, hello, Jonny and Peter. A couple of questions here from my side. On these 120 million of extraordinary items you've taken in the quarter, you obviously mentioned that 70 million is an inventory write-down and the remaining 50 million is related to the closing of a factory and staff layoffs. If you just circle in a bit more on this 50 million, could you say anything here on which unit in Leisure Force European operations this relates to and also perhaps if you could give any split in terms of how much of these staff layoffs are related to leisure force hq versus how much are related to subsidiaries in leisure force thank you

When we talk about factory, it's one factory within Alcomex. We have a number of factories that's closed down. That is announced also to the personnel. When we talk about how much it is on the headquarters, I have to ask you Peter, do you have those figures?

Yeah, the majority is of course in operations when it comes to the people headcount. There are I would say around between 10 and 20% that is on HQ level or sort of say on more of a white-collar level, mainly production.

I mean, we are closing a factory in Alkomix, but also we are reducing the factory in Turkey with a lot of people. That's a number of people we're talking, I think about 70 people or something in total.

Very clear. And also, I mean, in the report, you mentioned that Alcomex had a slightly better quarter. Could we just clarify here if this refers to an improvement year over year or Q over Q? And also if this comment refers to order intake or sales or if it's primarily related to profitability?

I think, Peter, should you answer that question?

Yeah, I mean, in the first quarter, we guided that profitability in the Alcomex was negative in the first quarter. In the second quarter, we moved to a low single digit positive profit in Alcomex for the first half year. But we are not higher than that.

Okay, very clear. In Le Sjöfors Nordic operations here, you mentioned a bit of a weaker start to the quarter, but that then picked up throughout the quarter. Is it possible to quantify that in anyhow, like how much organic growth in either sales or orders you saw here in June or in the beginning of July, perhaps on a year-over-year basis versus what we saw here in April and May?

probably if you look in the figures, you can find out but I think it's, it's also and we have a very diversified customer base. And it's also in new we have some new areas we're going into heavy springs like for trains and those projects comes as a few big orders so i i think it's hard to see what the message we got from from the management is that it's a weaker market generally in the nordic from all customers more or less

Perfect and just finally from my side on this fire there in Åtminnefors impacting you here in H1 you mentioned in the report that you have decided to shut this factory down permanently now and relocate that production to other factories. Do you foresee any additional cost savings related to this that could then be seen, I guess, on top of this 35 million in annual cost savings that you already communicated, or is that already, I guess, bundled into that figure, if you get my question?

No, it's not bundled in, but I mean, we talk maybe two million or something like that. So it's and that will probably show up in the end of next year or something, because we have all the new machines now, but it's a long delivery time. And before it's really, so we're trying to solve the problems through the manufacturing we have and also actually buying some external products to supply to our customers. But of course, there will be some synergies when when we have one factor less.

understood, and that was all my questions. Thank you very much.

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

Yes, thanks. Good morning, everyone. Just wondering, Janne, you talked about these decentralization initiatives. I was just thinking, you know, can you in any way sort of see the opportunities there in terms of cost savings. And I was wondering, is that something that sort of impacted already here in Q2 positively in Leche Forge? Or was the sort of the earnings improvement in Leche Forge, was it more related just to the swing in Alcomex in the second quarter?

I think it's mainly it's a minor cost savings in the quarter. And it's the swing in the force, but also actually Asia doing well and general Europe doing well. So it's a combination of all that. But the cost reductions effect in Q2 is very small. That will come later on.

Would you say, Johnny, that being into, obviously, we've been on the board for some time, but I was just thinking, do you think you have identified sort of more cost savings potential and productivity improvement potential as opposed to a quarter ago? Or is it fairly much the same plans that you're executing on as we look at it now?

Of course, I've learned more, I think. But I mean, the real driving thing in this is when you give the MDs clear goals you have now You own your business. You're supposed to run it. You're supposed to improve it. And that is something that takes quite a while before they change their mindset from what they've been used to during the last years. But the feedback we received so far, we haven't heard that much of feedback, but that has been positive. So... Got you. Sorry.

Just a final question. Do you have any sort of updated view of the inventory cycle in Chassis Springs? And where would you say sort of in that? I mean, it's been volatile in the past, depending on on your customers inventors, etc.

But where would you say we are right now in the Chassis Springs sort of cycle?

Can you comment that, Peter?

No, I think we should continue to see it to be volatile. Of course, we are in the end of high season and that we generally have had more inventory build up during Q4, for example. So it should follow fairly well the patterns from earlier. There is very little change in the underlying business as such.

So just looking from an LTM perspective, it's fairly neutral, you'd argue, on the chassis. It's not sort of below average or above average.

I would say it's fairly neutral. That's right.

Okay, thanks.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. 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 Johnny, we have a question in the chat, uh, from . Uh, so asks, uh, can you talk a bit more about acquisition strategy going forward?

Yeah, well, I'm supposed to stay here some few months more before Oscar comes, but I mean, The idea is BATIC should continue as before, but we are for the future going to use all the contacts we have around the world now through Lykka Fors and try to use them to find local businesses in other areas like components. We have not really activated that yet because now the focus is in Lykka Fors is to to improve the margin and go for organic growth. But the idea is to grow other areas around the world. with other components and not only springs. And that, as I understand, is what OSCAR also is going to push for in the future. So we have a fantastic network around the world now through the companies owned by Lechefort and use those MDs and their contacts around where they are located. should be a very good way to improve or actually to grow our market outside in other type of components.

Great, then there are no more questions in the activity feed.

Okay. And I thank you for the attention from everyone. And we will meet again in next quarter, Q3. And that will be my last webcast in Beirama because then for the Q4, then Oskar will be in position. Thank you very much and have a nice day and summer. Bye-bye. Bye-bye.