Ework Group AB

new clients, as well as increased and renewed confidence with existing clients. And by being close to our clients' business and needs, we are moving towards a stronger position for eWork as a talent solutions partner. We see good opportunities for further strengthening our operating margin, as well as market conditions. And once they normalize and business volumes increase, we will see a good development for eWork. This quarter, we are happy to announce multiple wins, re-wins and new business agreements with clients. Among them, two Norwegian clients and one Danish. First out, Norsk Tipping. And this is an agreement where e-work will ensure that Norsk Tipping has access to highly skilled consultants across critical areas of expertise. And through our collaboration, Ewok will support Norsk Tipping's ongoing efforts to deliver attractive and responsible gaming services under strict public control in line with its social mission. Second one, Miljödirektoratet Norge. We also signed a new framework agreement for the Norwegian Miljödirektorat to provide IT consulting services. And under this agreement, Ewok will be responsible for sourcing and delivering a broad range of IT competencies in line with the agency's growing digital ambitions. And finally, Danske Spill. This is a new framework agreement that we won in Denmark. And through this agreement, we will support Danske Spill's strategic workforce planning by ensuring access to the right competence at the right time. This is a managed service provider solution that includes full service support for recruitment and management of contingent talent. The platform that is used to support the delivery adds further value by streamlining the entire process from talent request and onboarding to time reporting and offboarding. This gives Danske Spill full visibility and control over its talent pipeline. So three new framework agreements that we are really, really proud and happy to deliver on. So let us deep dive into our industry segments and the development of them in the second quarter. E-books saw good development in the second quarter in banking, finance and insurance, as well as tech. We also saw some positive indications from the telecom industry compared to previous year. Public sector remained restrained and the segment continued to decline this quarter compared to last year. Finally, looking into the automotive industry, where we have all seen and experienced uncertainties due to the development in tariffs and geopolitics. E-work is well prepared for these market fluctuations, thanks to a broad base of clients within this segment. And this diversification provides a certain stability and helps us mitigate uncertainties effectively. Switching over to our markets, we saw in Denmark a positive development during the quarter, largely due to diversified client portfolio. Larger volumes, a higher hit rate and lower costs impacted our results. Efficiency programs of customers and some contract terminations contributed to lower order intake in the quarter. Net sales increased, however, slightly, while earnings improved, mainly due to a number of more profitable customers in life science and banking and finance. A focus on efficiency and price discipline were other contributing factors to the improved performance in Denmark. In Finland, we see a positive trend in prolongation and extension of agreements within consulting, bank and finance. And manufacturing also impacted the order intake positively. In Sweden, order intake decreased during the second quarter compared to the same period last year. The uncertainty regarding tariffs, challenges in supply chains and continued cost focus affected this development. On a more positive side, new orders in the retail, energy and tech sectors were generally unchanged compared to the second quarter last year. There were also examples of customers in the automotive and manufacturing industries, as well as banking and finance, showing good and positive developments. As said, in Sweden, we also opened up a new office in Luleå during the quarter. Strengthening our position in the northern parts of Sweden is an important step for us as the industrial investments there are creating a growing demand for talent and skills. In Norway, we signed several new agreements of significant size during the quarter. Government agencies that phased out consultants in 2024 and 2025 or changed the way they cooperate and source from external parties are the main reasons for the decline in volumes. Finally, we are establishing new operations in Belgium and have hired a local sales representative who will be leading our business development activities from August and onwards. We see good opportunities for growth of new clients, but also at existing clients. And we leverage a global operating model to support our expansion and further scaling. So, Johanna, over to financials.

Yes, thank you, Karin. And then starting with looking at the financial overview of the second quarter, we start at the top of the P&L. For Q2, we reported a net sales of 3.6 billion SEK, and that is 13% lower than last quarter, where we reported a net sales of 4.2 billion SEK. And of these 13%, approximately 5% is related to the planned phase-out of non-profitable client contracts. And approximately 2% is related to the one less workday or so-called calendar effects in Q2. This is the last quarter that we expect to see the effect of the phase-out that we have reported of before. But the main explanation for the drop is, although related to lower number of consultants on assignment, which is significant. an effect of the slower market that we have reported of in the last couple of quarters. We do not unfortunately see any clear signs of recovery in the market. Sweden and Norway is in particular struggling, as mentioned by Karin. Also mentioned by Karin, we are continuing to be proactive in sales and we are winning new frame agreements also in this market setting, which is really important. If we continue down in the P&L, our gross margin continues to be strong, 4.1% versus last year where we had a margin of 3.8%. This is driven mainly by our add-on services. That has had a good development and we see more potential in this area. We can see a high demand for security services and we expect that to continue. We also have a positive trend in margins in new deals, and we have also reported that in previous quarters, and we see it continuing. But the effect of this will take time, as we also mentioned before. We continue to have a steady focus on our long-term strategic goals to increase our profitability by higher business margins and scalability. EBIT during the second quarter was 45 million versus last year of 52. EBIT is negatively impacted by the lower revenue. That is the main explanation. We have looked into cost reductions, for instance, travel and recruitment freeze short term. But we are also looking into potential savings mid and long term in parallel. We have also the long-term strategic initiatives running that aim to increase efficiency and scalability with, for instance, AI. The financial net was positively impacted by currency effects. As we have reported last quarter, Ewok has ongoing activities that aim to reduce the currency exposure in the business. What is positive is that the Polish business that has been financed by the group has improved their working capital and also reduced their dependency on financing from the group. We have also mentioned before that the EPS growth target of 30% that we have will be challenging given the current market setting. Looking at the order intake, the order intake for the second quarter was 4.1 billion SEK, which is lower than last year, 4.9 billion SEK. And it was impacted by a decrease in all markets, part from Denmark and Finland, where we can see a positive trend. This, although, is not enough to mitigate the drop. We have seen consultancy freezes at some of our larger clients, as mentioned before by Karin. And we do see that the automotive industry is a bit more challenging. And we have exposure in the automotive industry and expect some negative impact from this during the year. And what is positive is that we see this steady trend in better margins in the new agreements that we sign. Looking at net sales, just like in previous quarter, phase-out is impacting the top line negatively. This is, as mentioned, the last quarter we will see this effect. So from Q3, we expect a like-for-like analysis in this area. Our focus remains on profitable growth, meaning that we will not sign frame agreements that does not meet our profitability requirements going forward. In this area, also Sweden and Norway, is the main explanation for the drop. The markets remain challenging. And what's good is that we have a business that can easily be ramped up in case we see a market recovery. What's also positive is that we do not see a significant drop in hourly rates. They remain steady. Looking at the EBIT, of course, this is negatively impacted from the lower volumes and one less workday. That is the main explanation for the decrease in EBIT. We have somewhat higher cost that is relating to IT, given the go-live of the internal platform that we implemented in the first quarter. We have done some significant cost reductions in the past in our work, but we are looking into actions on short and mid-long term that can give effect and adapt to the current market settings. We have also our KPI that we have reported in the previous quarters. eWork has a different business model and we cannot fully use some of the traditional KPIs that are used in consultancy businesses. And we will continue to report our gross profit development over time as this is a part of our strategy. In this presentation, you can see the trend in our gross profit development per quarter. In the second quarter, we had a gross profit over EBIT that was 30% versus last year, 33%. And the effects on the focus on profitability will be gradually seen in our P&L. And this transition will take time, as mentioned before.

I will hand over back to Karin. Thank you. To sum up. Yes, to do a summary. Well, as said, we do see a mixed momentum in our different markets and geographies with strong growth in Denmark and Poland, but continued restrained markets in Sweden and Norway. At the same time, we continue to generate more profitable growth and we are seeing a positive trend in our gross margin as a result. We see at the same time, in order to further increase profitability and need to get the higher volumes and a broader client base. We also see a growing demand for flexible workforce management, which plays to our strengths. Internally, the implementation of our new digital platform is nearly done. It's a key step in improving our efficiency. And looking ahead, this platform will also enable further scalability and the adoption of AI solutions. In short, eWork continues to execute on our long-term strategy, and we are working towards our long-term goals. Now we will be opening up the floor for questions from the viewers. And we will, as usual, start with the phone questions.