Fagerhult Group AB

Welcome to Fagerholt Group Q1 Report 2025. During the presentation, you can queue up to ask questions by dialing pound key 5 on your telephone keypad. You can also write your question in the webcast. Now we'll hand the conference over to Magnus Hagemark, head of M&A. Please go ahead.

Thank you and hello everyone. Welcome to the presentation of Fagerholt Group's first quarter results for 2025. I am Magnus Hagemark, head of M&A here at Fagerholt Group. And on the call today, we have our president and CEO, Bodil Sonnason, and our CFO, Michael Wood. The presentation will start with Bodil giving us a brief update of our results for the first quarter. And Bodil will then continue to update us on some highlights. Today, focused on the professional business area, which will also be the business area for Trapto TAB. After that, Michael will follow with more details about the performance of the group And finally, Bodil will conclude with a recap and then we will open up for questions. First, we will take questions from the conference call and then we will open up for questions from the webcast. You can post questions in the chat window on your screen. I will read them up for Bodil and Michael here. Before we start, let me also remind you that today's session is recorded and we will be available on our website later today. With that, I hand over to you, Bodil. Please go ahead.

Thank you, Magnus, and welcome everyone to our Q1 2025 webcast. So I would like to start today with a positive organic order intake growth of 5.9% in the quarter. In absolute numbers, it was an all time high on order intake. And we also again delivered an all time high on gross profit margin. So we also start to see the impact of the hard work we've been doing on the cost reduction side, and the cost base has started to decrease compared to last year. As previously communicated, we expect to see further impact from these actions during 2025. As I've said many times before, our presence in many geographical markets and in many segments help us to spread the risk and that continues very much to be valid. And what we currently see in the market and that we continue to see is that the swings in order intake between the quarters and the business areas continues. The whole unstable global macroeconomic situation has, of course, as you all know, increased with the tariff uncertainty. We are also, however, as you know, very strong in Europe. So the direct consequences for us are limited. We have 5.7% of our revenue in the US. Having said that, we have already navigated the subdued construction market levels for the last few years, and the all-time high order intake this quarter is a sign that we remain good at securing big investment projects on the market. We see them more in big infrastructure projects than in traditional commercial buildings, and it's a wide range of solutions and strong capabilities in custom-oriented solution that helps us to win. We also start to see some more positive signs from the renovation market that is triggered by the fluorescent ban. And this is helping us to compensate for the lower new build activity. As you know, government starts to plan for the national legislation of the Europeans performance of building directive. that should be implemented by May 2026, so in a year from now. And if we take Sweden as an example, the Byverket in Swedish, which is the authority looking into this, has been done very concrete plans for the number of buildings that needs to be renovated by the latest in 2030 and 2033. And in Sweden only, the number of buildings that do not live up to the standards and needs to be renovated are above 30,000 buildings in professional segments. And also, as you know, the EPBD is also a key driver for smart lighting, as this is mandatory for large and non-residential buildings. I'm also, of course, very happy to speak about the intended acquisition of Charter Thierry Louis, where we signed an agreement on April the 4th. We've said in the last couple of quarters that we've been working hard on the M&A agenda, and it's nice to show you the results. And we believe that Charter GLV fits perfectly into our strategic agenda, and it gives us a very strong foothill in the French market. And France is the third biggest lighting market in Europe, and with this acquisition, we've become the second biggest player in France. So let's have a look at the numbers for the quarter. So as I said, order intake in Q1 was 2.227 billion Swedish crowns, which represents an organic growth of 5.9%, and that is an all-time high. The more disappointing net sales was at 1.94 billion Swedish crowns, and it showed an organic decline of 11%. And this net sales was a direct consequence of the lower order intake levels that we saw during the end of last year. And this unfortunately also has a negative impact on the EBIT results. So the EBIT before EAC was 145 million Swedish crowns with a 7.5 EBIT margin and the EPS before EAC was 0.43 Swedish crowns per share. So moving to the strategic key focus areas for this call, I want to give you a better understanding of our position in the market and why we stand out from other lighting providers. And last quarter, I gave you an overview of business area collection, and this was highly appreciated. So therefore, I will follow up by introducing you to our second of our business area professional. And when we did the new organization in 2020, the working name for business area professional was National Champions. And that already gives you an indication that all of the businesses are strong in their local markets. So very different from our global brands that I presented last time for collection. I will, as said, also give you some more information about Trotter TV. The intention is that the business will be part of business area professional, where it makes a perfect fit and brings new corporation opportunities for future growth. So if we dive into professional, it accounts for 12% of the group's revenue and focuses on local brands. You will hear the word local many times here, which makes them particularly strong on their home market. So they have local production, product development and extensive relationships on their markets. that enables them to develop and deliver bespoke solutions tailored to specific markets needs and with very short lead times so these brands they know their customers very well and they deliver complete solutions and they are seen as trusted partners in many local prestigious projects i'll give you a few examples which span over both private and public sector So this business area is interesting with the benefit from the current nearshoring and the deglobalization trend that we are experiencing. So we see an increasing interest in local brands where it is preferred of a global sourcing alternative. So the label of being either made in UK or in Australia or made in France is today a differentiator. So let's have a look at the three businesses that are part of the business area currently. First one is Arlight. They were founded in 1991 in Ankara. It has its roots in being a customer-oriented organization, creating solutions to meet demands tied to the Turkish markets and its neighboring countries. It joined the group in 2014, and it's known for its high-quality products, customization capabilities, and also has a fully accredited lighting laboratory for testing and certification. we moved to a brand new factory at the beginning of 2024 and the main focus that you will hear with all of the brands in business area professional is segments office education healthcare and our light also do selected outdoor applications they have delivered significant prestigious and large projects such as providing lighting for the turkish parliament Istanbul Airport and also Microsoft IT Academy in Baku. Arlight is also working on OEM sales to some of the other group brands, for examples, in delivering lead modules. Then moving down under, we have our Australian brand Eagle Lighting that was founded in 1972 in Melbourne. They became part of the group in 2007. And they have also benefited from being located in the same city as our smart lighting brand Organic Response, making them another of our leading brands in smart lighting. And Eagle is a strong brand, both in Australia and New Zealand. And of course, due to very long transportation lead times, local production has an advantage, as well as the knowledge of the specific Australian demands on lighting. And besides, again, developing the best solutions for office education and health care, they also presence with other group brands locally. So, for example, Design Plan, who has a focus on the custodial market. where they work very closely together. And here again, some examples of projects. We have Brisbane Commonwealth Law Courts, we have Melbourne City, and we also have the Volvo flagship showroom in Australia. Then we move to the UK. So and to Whitecroft that was founded in 1945 in Manchester and today is one of UK's largest manufacturer of commercial lighting solutions. So again, we come back to they working with the same segments, office, education and health care, where they are considered a strong market leader. And they joined the group in 2005. and it's also one of the brands that has integrated the furthest with regards to smart solution and they have successfully adapted our smart agenda throughout the business and is working very closely with key stakeholders to help them save energy and gain better insight of the utilization of their buildings so whitecroft is also particularly known for very large projects and we've mentioned many of them during the years and i'll give you a few example one is the nuclear power plant hinkley point They work very closely to the Department of Works and Pension. And I think you remember, I mentioned also in one webcast, the new project in London, in Bond Street. And then we also have the Manchester Heritage Town Hall. So to summarize, the business area professional and the companies in the business area have a strong position in their local market, which gives them an edge in renovation markets and dealing with complex local projects. They're also working closer to the construction companies than any other business area. And they all very, very strong in healthcare business as well in office and education. So that ends the current companies and business area professional, and we move over and take the opportunity to say a few words about the intended acquisition of Trato GLV that we announced in early April. We are working and progressing through the regulatory approvals, and I think we will know the decision by the end of the month. And if they are successful, this will be the first lighting acquisition we did since Egocene in 2019. And the strategy has been intentional from our side in order to make sure we take care of our brands, integrate them well into the group, and also reduce our depth ratio, which we now have done. So looking at Chartered CLV, you can see in this picture, you can see some examples of the luminos here for retail to the left for retail and industry application. And Trado is a well-known brand within retail in France, and it has high quality and cost-efficient productions. And its luminaires can be found in many different kinds of store, from large big box warehouses to the most common grocery chain, but also in luxury brand stores. And if you know France, you know that the northern part of France has a very high concentration of headquarters for retail companies. And to the right, you see the examples of products from TLV and Biolume arm of the business that is showing medical supply units and patient room interiors. You find medical supply units in almost all hospital care rooms today. And the role is to integrate power, gas supply and lighting necessary for conducting patient care. And also I think it's worth mentioning is that many of the healthcare products within EU require an MDR class 2b certification, hence pose a decent barrier of entry and TLV has such certifications. We see large opportunities for cross-selling both charter TLVs retail and healthcare products on other markets. And you can see that's a common denominator within business area professional. And well, we also see possibilities in offering our current brand portfolio through Trouto TLV's extensive network in France. So good mutual opportunities. Let's look a little bit more at the company. As I said, they're based in the Northern part of France in Lille and two major brands. Trouto founded in 1947 and that's the retail brand and TLV, which has added to Trouto in 1980. and they are specialized in healthcare applications. Both brands have the majority of sales in France and are considered clear market leaders. The Trato brand has a strong retail offering with innovative solutions, very customer-oriented with long-term relationships with large and small retail chains in France. And in addition to the retail business, they also have this product range for industry application, including transportation and infrastructure projects. And then TLV, as we said, specialists of highly customized healthcare solutions, working very close to architect on the specification side, including medical supply units and room interiors, often with integrated lighting. I want to highlight also what really caught our attention with Trout2TLV was not only their strong position in France, but their impressive customer-driven culture, something we find well aligned with our group core values. Although Trout2TLV's main market is France, we see a great potential for offering their healthcare and retail products on other markets, as well as benefit from their deep network in France to provide other group brand solutions. So we look forward to welcoming Chartered TLV and their teams to the group within the near future. And with that, time for some more numbers. So I will hand over to Michael and the financial summary.