Bulten AB (publ)

Hello and welcome to today's presentation with Bulten, where Axel Bernsson, President and CEO, and Anna Åkerblad, CFO, will present the Q1 report for 2025 and answer questions during the Q&A. If you're calling in, please press star 9 to raise your hand and star 6 to mute yourself when you get the word. You can also type in your questions using the form to the right. And with that said, please go ahead with your presentation.

Thank you very much and welcome everybody. So let's start with a summary of the first quarter. For me personally, it's been a very interesting first quarter. So I've taken the opportunity to travel around and visit all our major sites and also an opportunity to meet a few customers and some key partners that we have for the business. And it's really nice to see the good engagement and the care that we have for each other and for the business. And it's been a very good learning experience for me as we go into a phase now where we start to draft the strategy and the way forward for the company. So it's a super interesting first start here. And obviously, from a financial point of view, we have some numbers to show you as well. And the sales is down by about 6.6% versus a very strong Q1 last year. So for me, the sales is on a decent level. It is nothing that is going to look strange to us when we look at these numbers. It looks pretty much as we expected them to be on the sales side. We do have a slight decline in the market in general, especially in Europe, when it comes to light vehicles. That market seems to be a bit softening in Q1. But on a global level, the automotive market is fairly stable, as we will see later on. If we look on a margin level, we are down versus quarter over quarter last year. However, if we look at 2023, we had an EBIT of 4% for the business in 2020. In 2024, we had about 5.2% in EBIT. And now we are adjusted a bit north of 6%. So I think the trend is right. And we do see that there are opportunities if we execute our actions well to make a little bit more money going forward in the company if we have some luck on our side. The downside on Q1 is that we had an anti-dumping toll coming on us as a business. Something that we strongly disagree with. And this stems from a period where we were lack of capacity in coal forming in one of our plants. And we imported parts and raw materials from one of our plants in China. And we are not in agreement with that. We should be taxed on this with non-dumping. But let's see. We will push this to a court ruling and then we'll see what the outcome is on that. If we take a more long-term view, we had a 2024 strategy that had a target of 5 billion in sales. We hit that number with quite good margins. It's nice to see a really good CAGR growth of the company. The only thing is that EBIT did not really follow. Some quarters, we're up there sniffing at the 8% that we put as a target, but primarily because of one-off and disturbances and whatnot. quite dramatic events as such have pushed us away from this number. And therefore we are we are delivering a bit less than the eight. But that is still an ambition that we have as a business. And when we do not hit our profit target, we also do not hit our return on capital employee targets. If we look at something that we'll see later on in the call, we do perform better than our kind of guidelines when it comes to working capital in the business. where the guidelines are 20-25%, and we are somewhere in 16-17%, something like that, of the 17. So that's not too bad, but we want to improve further, obviously, going forward. So touching back on the forecast of our main customer group, which is light vehicles, that is projected to grow by a couple of percent during 2025. That should give opportunities for us to keep reasonable volumes. Obviously, for us, we have a selection of these type of customers as our customers. We do not have all of them. So it's our volumes or more, depending on the performance of our key customers in that way. But on an overall, the market looks fairly much OK, I would say. A hot topic during the last couple of months have been the tariffs. And what we can see, if we touch that point from a building perspective, we have as part of our strategy to produce locally, so basically produce where our customers are. And therefore, we do not have too much flows in between regions, which means that we do not produce much in the US that travels elsewhere. And we also do not produce much in Europe or Asia that travels to North America. So the direct exposure is fairly limited for us. It could be good to know. But obviously, we do provide customers that have tariffs on their side as they do export in between regions more and could then be affected by volumes as a kind of second step here. It's a little bit too early for us to know exactly what that impact is. But obviously, the risk exists. Then we hand over to Anna to give us a view on the financial side.

Thank you, Axel. And here is an overview of our quarterly sales the last years, including 12 months rolling sales and sales volumes for the first quarter was down 6.6% versus same quarter last year. However, our sales is still on a relatively stable level in a more volatile market. And in this waterfall, you can see the change in rolling 12-month sales for different customer groups. And there is a positive growth in the other industries and a slight decrease in the rest of the customer groups. And this means that customer group other industries has increased sales with 16% compared to last year's rolling 12 months.

And just to comment on that, if you look, I mean, going forward of the business, and I think also historically we have had a focus on increasing the share of the business for other industries. And that is a focus that will increase for us going forward. So we're quite happy to see this kind of growth level because our profitability in general is much higher when we go outside of automotive industry. So that's a very positive number that I take away from the first quarter here.

Definitely. And if we look at the next slides, we can also see that as a percentage of total sales, the other industries has grown as well. So it's on 13.9, almost 14% right now. And last year it was 11.6. So that is a very good sign. The main customer group, OM Light Vehicles, amounts to 61.5%. So that is still our largest group, of course, and that is in line with last year. But very positive to see other industries growing. And then we look at the EBIT level. And the first quarter delivered an adjusted EBIT of 89 million SEK, equal to 6.2% EBIT margin. And the quarter was also affected by negative currency effects. If we adjust to that as well, with an impact of EBIT, we end up at 6.8% versus 7.4% last year. Adjusted earnings per share for the quarter was 2.1 SEC and 5.3 SEC for rolling 12 months. And if we look at the cash flow, the first quarter is slower than same period last year, but ends at the positive 12 million SEC. Cash outflow related to CapEx has increased versus same period last year and relates to completion of larger production equipment. The cash position is therefore lower than last year's quarter, but in line with end of last year when taking out exchange rate effects. The net debt excluding lease liabilities is almost about the same level this year compared to last year. Our key indicators for rolling 12 months are in line with last year or slightly below. Adjusted return on capital employed, including financial lease, is at 8.2% versus 8.5% last year. Adjusted net debt and adjusted EBITDA ratio is at minus 2.3 at the end of the quarter and our equity assets ratio excluding financial lease is at 43.5%. Our guideline, as Axel mentioned, for average networking capital in relation to 12 month sales is about 20 to 25 percent, depending on the growth pace. And at the end of the quarter, we are at a level of 17 percent, which is a good level and in line with last year as well. And CapEx as percentage of sales is slightly above our guidelines. And this is related to catch up of previous years where CapEx were held at a low level in combination with the timing of completion of larger production equipment in the period. Depreciation as percentage of sales is in line with our guidelines. Now back to you, Axel.

Thank you for walking us through all these interesting numbers and for a lot of people that get excited about that. If we then make a summary of the quarter, sales volumes were in line with what we expected. And so was the operating result on an adjusted level. We do think there is room to improve our EBIT if we have some luck and continue to execute on our plans going forward. So we look forward to that. And the key highlight from here is that we keep going very well outside of automotive. And if we can continue to do that, that would have a positive influence also on our profitability going forward. So that we need to keep pushing on that and investing more time and resources in growing those areas of the business. Final slide. So what is key and in focus for 2025 is obviously to set a new strategy, the one we had expired in 2024. And that also includes new financial targets for the coming period. And as a consequence of a new strategy, obviously, we need to execute on it and be really crisp in doing everything that we say that we do when we're supposed to do it so we can improve this business. And the top priority will be to improve our profit and overall our return to shareholders. We are not happy with the level that we have, and it needs to be significantly improved. I think that is the final note on that. So we will hand over to some questions.

Thank you very much, Axel and Anna, for that presentation. And let's open up the Q&A section here. If you're calling in, please press the star 9 to raise your hand and star 6 to mute yourself when they get the word. You can also use the form located to the right. And we have Mats Lids from Kepler Chevro. Please go ahead. You have the word.

Yes. Thank you. Yeah, hi, thank you for taking my question. A couple of them. First, I mean, good numbers here in the first quarter, and I was just wondering, normally the second quarter is seasonally stronger, and do you see sort of a similar pattern compared to previous years there, or are there any sort of differences this year with the tariffs, etc. Could you give some colors there?

Hamad, good to hear from you. I think the best indicator is that our order intake in Q1 this year is slightly better than Q1 last year. I think that is the overall kind of indicator that we see. until this point we don't see any major drops in any volumes anywhere anything that would have any significant impact on the trends that we see so until we start to see any other trends we remained kind of hopeful for the next couple of quarters sounds good um can uh you mentioned the well upcoming second half when you are sort of

Not promising, but you will look over your targets, etc. Is it a situation where you will change the structure of targets, or is it more a level? Are you fine with the current setups, or could you say something there, or is it too early yet?

Well, I'm not sure the auditoriums will be the same as such. I mean, the levels will be different. I'm pretty confident in that. But I also think we might use a few different metrics. I'm not sure yet, so we will need to come back with that.

Hopefully we can do that after this summer thing works. Good. Yeah. I also looked through the P&L there a bit, and I can see that some lines are sort of somewhat negative. Looking at other operating expenses, they show a negative there of 17. Are those, if this is related to the anti-dumping duties,

Yes. Hi, Mats. Anna here. Part of it relating to the anti-dumping, 10 out of the 17 is related to that.

So that's correct. And the rest is sort of... It's a mix.

You mean the rest of the anti-dumping? Yes.

Okay, great. Now I guess that's about it. I mean, it's also interesting that you mentioned that profitability in the normal auto segment are higher. Will you start representing this business segment independently or is it too early yet?

We will not do that yet. It's still too early. I think this would be a natural outcome of a strategy. If the strategy means that we will reorganize the business in a different way and that have a significant impact on how we follow up on the business, we will probably evaluate if we publish any other details than that. But it's too early to see much, unfortunately.

And finally, just I mean, market conditions are sort of stable as you indicated but does that mean that you don't see any reason to implement any savings measures or also to adapt things?

I think when you are in the kind of business we are, cost control is always a topic. I think that is in good times and in worst time and anything in between. We are executing a lot of cost control and last month we have unfortunately reduced about a third of our workforce in the US to improve our profit. We don't see that related to the volume drop, but it's an adjustment to the kind of reality that we are facing. We have trimmed it quite a lot. And if you look at, for example, external resources that we have had in the business, I think over the last year, we have about 100 people that we had hired in to help us out with the production and so on that has left. And the team has done quite a lot when it comes to driving productivity, both on headcount and otherwise. So I think that's the work that will always continue. We will continue to do that for the next years to come as well.

Okay, great. Thanks a lot.

And we'll move on with the questions here. Will you continuously report on the order intake from now on?

We have that in the report, so yes, we are doing that.

And there's no plan to change it? No. Thank you for clarifying that. Do you still import from China in a similar fashion, which has been a challenge now?

No, we do not. This was a temporary thing because we had production issues in some of the parts of production in Sweden and that has been solved. So no, we do not.

Thank you for that answer. Could you develop a bit more with the sectors, regions and products you focus on in other industries?

But if you look at the business where we have most of this business is in Asia, and the biggest customer groups will be consumer electronics. That's where we have quite a lot of that, basically, and it's a nice business for us. And if you look at the future going forward for that, I would expect that most of the sales will come through the same regions and the same type of customers as we keep digging into it. uh we also have quite a lot of business for to medical devices that is also business that is developing fairly well and fairly profitable for us and i do not foresee that that will shrink either but most of that is also asia based in some way and when can we expect new targets to be communicated to the market in for 2025 I don't want to give a set date for that because it needs to be approved by our board before we do that. So I will wait. Unfortunately, I would love to give you a date on it. But I think we need to follow the formal routes here and have that approved by board first before we give any promise on that.

Okay, and we take one final question here before wrapping up this Q&A section. Would you consider setting a target of, for example, reach 30% of sales in other industries as a main driver for a more balanced growth in the years ahead?

Yes, I would consider that. I'm not saying that that will be the target, but to consider such a target would make sense from what we can see right now.

Okay. Thank you very much, Axel and Anna, for presenting here today and all the viewers for tuning in for this presentation with Bulten. And I wish you a great rest of the day. Thank you very much.

Thank you, everybody.