Bulten AB (publ)

Hello and welcome to Bulten's presentation for the second quarter this year. My name is Ulrik Ullgren and I'm responsible for corporate communications and investor relations here at Bulten. Presenting the report are Bulten's acting president and CEO, Kristina Hallin, and our CFO Anna Åkiblade. As usual, you will be able to ask questions after the presentation, both on the web as well as in the telephone conference. And I will now hand over to Kristina.

Good morning. Let's see if we can shed some light more on Bulten. Starting with a short introduction, you know probably that we are a supplier of fastener solutions. Our main customer group is to the light and heavy vehicle OEMs, but the automotive suppliers, the T1s and customers outside of automotive are continuing to grow in our business, our share of business. We serve customers in three regions, Europe, Asia and North America. And besides to supplying hardware, we are also to many of our customers partners for procurement, logistics, product development and innovation support. Our three largest customers are still Jaguar Land Rover, Volvo Cars and Ford. But we have a number of new customers coming in and our fifth largest customer is now non-automotive. And the numbers in the slide is for the full year of 2023. And if we are obviously following the market trends through different channels and what we present here is the global data. And the forecast presented in quarter two shows a slightly decrease to what was presented in quarter one. And if we apply that to the mix of Bulten, it's basically flat for 2024. So we are not foreseeing any drama on the market going forward this year. And if we then look at the highlights of quarter two this year, we are happy to see that we keep the sales level on a strong level also this quarter. We have improved the EBIT margin since the last year's same quarter last year. The distributor Exim that we acquired almost a year ago is showing a good contribution. They are expanding their business and we are in the process of setting up sales office in Europe. And by that we are moving into the distribution business also in Europe. Tension Cam, the startup company where we hold the majority share and they are working with clamp force, monitoring clamp forces really. And they have recently received the first business win from a small Swedish wind turbine company. It's not a big win in terms of money, but we are very happy because it's important since it shows the demand for technology developments also in the foster business. And it's also worth mentioning that we have the opportunity to use Exim as the distributor also for Tension Cam products. So they have it in their portfolio now. It's a good crossover between our business lines here. It's a nice step on sustainability we are taking with the recently signed agreement with the Dutch wire rod manufacturer Exim Steel. This steel gives us access to the best scrap based steel on the market for our own foster production. And it enabled us to offer greener products to our customers. The agreement runs for three years and it will have a major impact for us when it comes to achieving our scope three emission target, which is to reduce emissions from suppliers with 25% per tonne sold 2030. This quarter we also launched a new event, the Bullton supplier award, to recognize our most valuable suppliers. And I must say it was really inspiring to meet the awarded and winning suppliers earlier this summer and it is a way to strengthen our cooperation and partnership with our supply chain. And as mentioned last quarter, we did launch the new regional organization. It's taking the effort of implementation and it's going according to plan and I'm really, really happy to see how a delegated responsibility and with higher accountability further out in the organization pays off in improvements of our own operation and business. That moves us into the regions then. Europe, a short few words on the regions here. In Europe, the new management team has done a good job in building up plans with prioritized activities to improve the operations. It's been made now in close collaboration between manufacturing sales and the support functions and we do see improvements on the metrics, even though it's not yet obvious in the P&L statement. Our focus on safety in our facilities is also much higher as well as improved quality. In Asia, the new president arrived in April, so he has had a few months to step into his new role and it's very, very pleased to see the work he and the team is doing there so far. A lot of focus also on quality in Asia and the work that we are doing in setting up a plant in India for micro screws is progressing. In North America, we are still continuing to focus on to grow the business organically within automotive in the first hand, but we do see unfortunately delays in the ramp up of major customers in the US and need to act on that. Challenges then. As I already mentioned, we do see a better operating result than the same period last year. However, it is not on the level as we had in quarter one and it is not in line with our ambitions and are obviously not satisfied with this and especially since we know that we can do better. So what is the main reason then? We do have the volatile demand from our customers in the European vehicle OEMs and it has with all the macro events that have been over the last two to three years with pandemic and semi-conductors and war and energy and inflation and whatever you have there impacted our manufacturing stability. And it does have an effect when we are not stable enough in our processes and that gives an effect on the result. In the quarter when we are seeing more stable results, we also see that the early stable demands or stable flows in our processes. We do see the financial performance is higher as well. Our main focus is to be both more stable but also more adaptable as we do believe that the quick changes and volatility will stay. So we need to learn how to live with that. And that could for instance be about optimizing batch sizes, avoid too frequent replanning, avoid rework due to quality control and that type of thing. To make sure that we are more better flow in our processes. And that also is actually around the heat treatment failure in Poland that we had the last year and it was a pain at the beginning of this year, last quarter. And obviously still very happy that we didn't have any injuries on this event there. And early on we didn't see too big impacts because the team was really good in handling the situation and making sure that our customers were not suffering from poor delivery on our size. And we did it through the outsourcing portions of our production. But it did have an effect negatively on our manufacturing processes. And that leads as I've said obviously to a impact on the financials as well. Coming back to the regional organization, it is something that is positive in many ways, but it does involve big changes for the organization. We have a lot of new leaders in new roles in many parts of the business. We have new ways of working with more delegated responsibilities which require stronger accountability. We are seeing the positive effects, but it will take some time to trim the new organization. And the last reason I would like to address is that it is hard for us to agree with some of our customers on price increases to meet the higher cost levels. We still have some resilient work to be done here. And with that I hand over to Anna.

Thank you Tina. On this slide you can see an overview of our quarterly sales the last years including 12 months rolling sales. Sales volumes increased in the quarter with .5% compared to the same period last year. We saw strong sales in all sectors, but especially in automotive suppliers and other industries. Next slide please. The second quarter delivered an EBIT of 74 million SEC equal to .1% EBIT margin. The EBIT margin has improved compared to last year. However, margin is still lower than our first quarter and our target for the full year. Next slide please. According to the water form you can see the positive growth in rolling 12 months in all customer groups. And especially automotive suppliers and other industries on the right hand side. Next slide please. As a proportion of 12 months sales, other industries outside automotive amounts to .5% which is an increase compared to previous period. Automotive suppliers have also increased compared to previous period. Our main customer group is still OEM like vehicles, but has decreased percentage wise compared to previous period. Next slide please. Here you can see that our adjusted earnings per share for the second quarter amounted to 1.64 SEC compared to 1.82 SEC last year. The decrease compared to previous period last year is related to interest expenses due to financing of the acquisition of Exxon. Next slide please. The cash flow for the period is positive compared to same period last year as well as the cash position. Looking at the net debt excluding lease liabilities, the main difference between the second quarter this year and the second quarter last year is related to financing of the acquisition of Exxon. I can also mention that we have signed a new bank agreement with Danske Bank, Citibank and SEK with a credit facility of 1710 million SEK. The agreement is valid for the next three years with additional 1 plus 1 extension options. And I'm very happy with this new agreement. Next slide please. Our adjusted key indicators for 12 months are impacted by the acquisition of Exxon. The adjusted return on capital employed excluding financial lease is at 8.4 percent and this is also impacted by the result. Our adjusted net debt and adjusted EBITDA ratio for 12 months is at minus 2.1 and our equity asset ratio excluding financial lease is at 43.8 percent. Next slide please. Our guideline for average net working capital in relation to 12 months sales is about 20 to 25 percent depending on the growth pace. And at the end of this quarter our rolling 12 months are at a level of 16.3 percent which is positive. Both capex and depreciation as percentage of sales are also well in line with our guidelines. And now back to you Tanaz. Thank

you Anna. Let's see if we can wrap this up and a few words about the upcoming period. The number one priority is to improve our profitability especially the one from the automotive industry in Europe. Since that is still our key customer group and still our biggest market. There are a number of things we actually can do to be stable on a higher margin. Not only when it comes to improving our own operations but also in the commercial aspects. We will also continue to trim the organization to deliver on a higher level and do that being more effective in the organization. It's an exciting change process that is initiated and I'm really looking forward to get the effects out of it. And I am still convinced that we are on the good track. You always want to see the effects much quicker and we are stressing time as a vital parameter in selecting initiatives to improve profit. Both through cost savings and gross margin improvements. And with this I would like to thank you for listening to us and 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. As a reminder if you wish to ask a question please dial pound key 5 on your telephone keypad. There are no more questions at this time so I hand the conference back to the speakers for written questions from the webcast and closing comments.

Yeah and I don't see any written questions so I will ask one more time if there are any questions for the ones watching the webcast or listening in via phone. But if not I will hand over to Tina to give some closing comments before we end.

We are doing a lot of nice things here and we are really looking forward to the next quarter and then the rest of the year here. And with that I actually would like to wish you all a good summer break and we will see you again in the

fall. Thank you very much and you have our contact information if you want to reach out to us at any time. Thank you.