Elanders AB (publ)

Hello, and welcome to the LANDERS AB conference call. My name is George. I'll be your coordinator for today's event. Please note that this conference will be recorded and for the duration of the call, your lines will be in the listen-only mode. However, you will have the opportunity to ask questions towards the end of the presentation, and this can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point during the presentation, please press star 0 and you will be connected to an operator. And I'm going to call over to your host today, Mr. Magnus Nilsson, to begin today's conference. Please go ahead, sir.

Thanks, George. Welcome, everyone, to Lando's conference call. And together with me is also our CFO, Josep Wilson. And I will now go directly to slide number five and talk about our fourth quarter. Demand continues to improve in several of our customer segments, but was offset by negative growth from the automotive segment, which is facing major structural changes. This, combined with continuous soft demand from old-fashioned customers in North America, resulted in an unchanged organic growth, but it also affected our adjusted EBITDA margin negatively compared to previous year. In order to meet the decline from automotive and other uncertainties when it comes to future demand, we decided to reduce overall costs, and we carried out additional restructuring measures in the fourth quarter, on top of the early communicated cutbacks in our road transportation operations in Germany. These actions will reduce our exposure towards automotive, but also in general lower cost structure and will lead to yearly savings around 50 million crowns starting in 2025. In total, operating results in the fourth quarter negatively impacted by one of the items of 52 million crowns. We've mainly referred to structural measures and revaluation of additional consideration for CAMAC. If we then go to slide number six presentation and look at our cash flow and cash promotion development, We can show that we continue to deliver very strong cash conversion, which ended up 90% for the full year, and we also managed to reduce our working capital with 145 Indian crowns. If we then go to slide number seven to look at supply chain solutions, you can see that organic growth slowed down compared to the third quarter and ended up 1% in growth compared to growth of 5.2% in the third quarter. The low growth rate was mainly due to the slowdown from automotive in Europe and also continued soft demand from fashion in North America. The rest of our customer segments continued the trend and showed organic growth in the fourth quarter, and we continued to see a very strong inflow of new customers and products in our fashion segment in North America. Our adjusted EBITDA decreased to 5.9% compared to 7.3% previous year. And the major reason for the low margin is the unexpected reduction of automotive , which we couldn't compensate for in such a short notice, but also the continuous of demand from fashion in North America. In a , we continue to reduce our cost base and increase our share of value-adding services by reducing low-modeling business like the road transportation business in Germany. And this combined with the continued positive trend in demand from several customer segments makes the outlook for supply chain look much more positive in 2025. If we then go to slide number eight, look at Princeton's packaging solutions, You can see that they had a very challenging quarter with a negative growth of 5% despite the very strong quarter from online print customers and also some recovery from packaging and marketing. The main reason to the negative growth was the automotive segment that decreased organically with around 28% for print in a quarter. positive was that they still deliver a strong EBITDA margin at 8.9%. And to balance the growth from automotive, have we done several cost cuts during the year, but we also continue the transformation of going from traditional print production to digital print, which open up for growth, continued growth in online print, but also in publishing, packaging, and marketing materials. If we then go to the slide, Number nine, look at the development of our different customer segments in the quarter, and we start to look at fashion. Could we continue recovering Europe? But as I mentioned before, the demand in America remained on a lower level than previous year, and together it results in negative organic growth of 11%. Positive is that we continue to acquire new customers, and the number of new requests, has actually accelerated in January after the decision from Mexico to stop the possibility to deliver fashion products from Mexico due to fee to e-com customers in the U.S. As a result of this, we'll serve our fashion brands before we move warehouse volumes from Mexico to USA, which we expect will give us increased demand from fashion clients. When it comes to the chronics, the picture continues to be overall very positive. We could see a strong organic growth of around 9% in the quarter because of continued increase in laptop and server volumes, but also other products like office printers that have been suffering before. The growth was also supported by continued growth in our lifecycle management services as well. If we then look at automotive, it was the fourth quarter, very challenging for both supply chain and print. And several automotive customers started already in November to reduce their production. And in December, they reduced their productions much more than previous year. And this resulted in a negative organic growth of around 17%. Industry continues to show an overall stable demand, even if it continues to fluctuate quite a lot between customers. And we managed to deliver an organic growth of around 3%. When it comes to healthcare, we continue to see a recovery from our existing customers, but also a very positive development from new customers. And this recovery started already in fourth quarter last year, but organic growth this quarter was around 2%. ADDOC continues to show growth contribution both from our FMCG customers in the UK combined with continued growth from our online print segments. If we then go to slide number 10, and this is how things will be going forward, if we then exclude automotive, we expect to see a continued gradual improvement in demand from our different customer segments, combined with the growth of newly acquired customers. When it comes to automotive, we expect some new swings in the demand, which makes it very hard to predict the development in 2025. To counteract this uncertainty, we have implemented several structural measures during 2024, like the decision to discontinue large parts of our road transportation operations in Germany, but we also do the consideration of capacity in both our business areas to reduce our exposure towards automotive, but also overall lower cost, which will help to improve our margins. Positive is that we continue to see a recovery from our other customer segments, combined with a continuing inflow of new fashion customers. And it's also very positive that our new and first facility in Thailand are now up and running and are starting to deliver, which will have a positive contribution to our earnings in 2025. Thanks. That was everything for me, and now we open up for questions.

Thank you very much, Mr. Nielsen. Ladies and gentlemen, as a reminder, if you have any questions, please press star 1 on your telephone keypad and just make sure your line is not muted so that you can reach your equipment. Our very first question today is coming from Gustav Berneblad of Nordea. Please go ahead. Your line is open.