Eltel AB (publ)

Good morning and a warm welcome to this presentation of LTEL's results for the second quarter 2025. My name is Alexandra Kjernlund. I'm the communications director for LTEL. And by my side are Håkan Dahlström, president and chief executive officer of LTEL, and Tarja Leikas, chief financial officer of LTEL. Welcome. These guys will be running the show and presenting the results to you while I'll be monitoring questions towards the end of the conference. And you can already now start asking your questions via the webcast or via the phone. I'll be back with some more instructions. But with that, let's move to the next slide and handing over to you, Håkan and Tarja.

Thank you Alexandra. Good morning and welcome also from my behalf. I'm delighted to see that we are able to report the eight consecutive quarters of improved profitability. And also important is that all segments are contributing to that improved profitability. So that's something that I think is really important, that we are consistent in this steady improvement and the structured improvement work. Starting on the top, talking a bit about net sales. It's of course not great to see that the net sales decreased by close to 7% in the second quarter. Sweden is the greatest. exception here, with great growth in Sweden. And it's good to see that both power and communication are contributing to the net sales development of the Swedish business. In Finland, where we had a peak of the fiber to the home rollout last year, and there's a much lower level of activity in the fiber rollout this year, we see also a decline on the net sales and in the Finnish market it's clear that the market is going from rollout to densification and more focus on multi-dwelling unit for the continuation of the fiber. Also more money is moving towards the mobile side of communication. Power where we saw a big impact in during 24 in Finland due to the new regulation of distribution. We see some pickup of the activity as we reported in the later part of 24 and that have continued into 25 but not to the level where we were before the new regulation. So more activity but I have to conclude that it was a slow quarter in the Finnish market. Norway, down 18% on net sales as expected. The ending contract that was ended in the beginning of this year is of course impacting significant Norwegian business on the net sales side. Denmark, Germany. Also there, very slow quarter, both in communication, but also a bit in power where the high activity level in, for example, energy storage doesn't really can compensate for the lower activity level in communication. Going to the gross profit, it's great to see that that is improved and coming up to 22.5 million compared to the 21.7 last year. And when we look at the speed of improvement here, we look at the last 12 months and we could see that there is a good improvement in the gross profit over time. Coming down to adjusted EBITDA, we improved with 2 million, and that is, of course, another important step in the right direction, one of many. So that's really nice to see. And in the last 12 months perspective, we have now reached an improvement of 12 million in a one year perspective. So I think that's something that we take with us going forward. And when we look a bit more on the operational side, we see that the public sector have a higher level of activity that is positively impacting us on the net safe side. And we expect more of this going forward. during the quarter, as I said, have to be viewed as a slow quarter. And we have comparatively a low TCV on 104 million euro compared to a quite strong quarter last year, where we had a significant contract summing up to more than 300 million. So, of course, the TCV, we would love to have a higher TCV in this second quarter. A few important contracts that I would like to highlight. Two frame agreements signed in the Swedish business with E.ON. They sum up to a value more than 40 million euro. And of course, it's an estimate, as you understand, since it is a frame agreement. But nevertheless, it's a very important part of the building up of the power business in Sweden. So this is something that we will start delivering on in the end of this year. If those two contracts behave or develop as we normally see it, at this time or somewhere during the third quarter next year, we will see significant revenue on that contract. But this takes time, as you understand, first until we start delivering and then when the ramp up is done and so. But somewhere a year from now, this will contribute nicely to the Swedish business. Data center area is an area that we have become more and more active during the last year. And here is an important contract taken in the Finnish business with Hyperco to a value of 16 million euro. And this is on the power side. So it's about a substation and a line on 110. but also 20 kilowatt connection to that data center. Important step, great to see. And when we look at this new business, we see that the progress is there. It's a steady business. We are increasing as we have predicted. And in the second quarter, we had 10% of our net sales coming from this new business. Since that part of the business have higher margin than what we have in what I call classic business, this is of course important, but also that we are able to attract new customers and being successful in a new market is of course extremely important for us. In the end of the second quarter, we also saw a refinancing of our debt portfolio, and I will ask Thalia to talk more about that in a second. But first, I would also like to mention that we, during the second quarter, appointed two managing directors, Claes Ellenberg for the Swedish business and Tuk Kazan for the Denmark-German business. So really nice to see that the team is in place and that we are ready for taking on the future here during the autumn. But Terje, please say something more about the refinancing.

I will. Thank you. And like Håkan already gave a good intro, please to start with some words about our recent refinancing. Going forward, the cornerstones of our financing will be and already are 130 million bond and 60 million now unutilized revolving credit facility. We entered the bond market and our entering to the bond market was well received. The offering was actually significantly oversubscribed, and that reflects strong investor confidence into our outlook. In addition, we completed a tender offer for our sustainability-linked hybrid bond. We accepted valid tenders worth of approximately 24 million. This financing package provides a stable long-term financing solution. It improves our liquidity. It provides operational flexibility and creates a solid platform for the future business growth. And then today's main topic, second quarter results for April to June. I am delighted to report this eighth consecutive quarter of year over year profitability improvement. And in fact, profitability has been improving now for two years. In net sales, we have mixed results across segments. Segment Sweden, which represents a third of our operations, will report major growth. Here we are driving group-level momentum, while other segments are experiencing decline in net sales. New business is now 10% of our total net sales. And this is indicating successful diversification. Then regarding profitability, all entities showed improvement in adjusted EBITDA. And here, Finland and Norway were leading the way. They were the strongest profitability gainers. And like mentioned and highlighted in the previous slide, second quarter in June, we finalized the comprehensive refinancing of the debt portfolio. And this is now the third year in a row that we are executing our strategy. And on this following slide, we illustrate the EBITDA and cross-profit development. Håkan already mentioned the highlights from here. So this is the eighth consecutive quarter of year-on-year adjusted EBITDA improvement. And all our segments are committed and they work hard to improve the profitability of our current business. And compared to last year, we report more than 12 million improvement in latest 12 months adjusted EBITDA. are segments first finland finland is now 42 percent of ltl group in the second quarter we saw eight percent decline in net sales that is reflecting a shift in market dynamics particularly in communications business the outcome was expected and the adjustments needed were already taken in the end of 24. The fiber rollout peaked in 24 and the pace has now slowed down leading to lower turnover in communications. The growth in power is being driven by new business, solar PV and data center. These are high potential areas where we are building strong momentum. Despite the top-line decline, profitability improved significantly. Adjusted EBIT rose to 3.5 million. That reflects margin improvements in both communication and power. And then second largest, Sweden. Sweden is now third of our operations. And here we are delighted to report 15% increase in net sales this quarter. That is marking the seventh consecutive quarter in growth and communication was There is growth both in communication, especially in communication, and in communication the driver was really robust demand from the public sector, and the power business was fuelled by new business, mainly solar PV. And this is the 13th quarter that we report year on year adjusted EBITDA improvement. That is a remarkable achievement. And I would say that underscores the operational discipline in Sweden. Then Denmark and Germany. This segment is now 17% of Eltel's operations. And here our segment net sales declined with 9%. The primary driver was drop in Denmark's communication business. Smart grids reported nice growth. Despite the top line decline, we achieved a profitability improvement with an adjusted EBITDA margin now 4.8%. This is another step forward in our financial performance. That is diligent financial management, ensuring cost control and margin protection. And then Norway. Norway is now 13% of our operations. And the second quarter net sales in Norway totaled 26 million. There is a decrease of six million compared to the same period last year. We have witnessed progress in new customer acquisition and importantly, new business is beginning to be visible in our net sales. While still negative, EBITDA improved. It improved from negative 3.1 to negative 1.6, and that indicates that our turnaround efforts are gaining traction. Our workforce in Norway is now approximately 220 fewer than a year ago, and that reflects the ongoing efforts to optimise the operations and align resources with the strategic priorities. And while the challenges still remain, the underlying trends, especially in new business and margin recovery, are encouraging. We remain focused on execution and long-term value creation. And then balance sheet, which faced some changes after the refinancing. Here we continue reporting solid progress. 25, like I mentioned earlier, this is the third year of our strategy execution. And in regards of networking capital, we have seen continued strength in networking capital development. It improved further from last year's negative 54, now to negative 59 million. And this is demonstrating our enhanced operational efficiency. And then leverage and net debt. The finalised refinancing has impacted both leverage and net debt figures, making a direct comparison between 2025 and 2024 slightly less straightforward. Approximately 24 million from the hybrid bond previously recorded under equity has now been reclassified as debt. Despite this, our strong financial performance has helped offset the impact. The net debt increased moderately from 128 million to 145. Similarly, leverage improved from 3.5 to 2.8. And even with the refinancing adjustment, on a comparable basis, leverage would have been 2.4. And then my presentation is closed with the financial targets, which we haven't changed. Adjusted EBITDA margin, 5%, annual growth between 2% and 4%, the leverage between 1.5% and 2.5%, and then dividend subject to leverage targets. Thank you.