Fagerhult Group AB

Thank you all for joining us today. I'm Niklas Willstrand, Head of Communications at Fagerhut Group, and it's my pleasure to welcome you to our Q3 2025 resource presentation. On the call, we have our President and CEO, Buril Sonneson, along with our CFO, Oskar Wallsten. Buril will begin with a brief overview of our third quarter results, followed by highlights focusing on the business area infrastructure, OSCA will then provide a deeper dive into the group's financial performance. To close, Bodie will summarize the key points before we open the floor for your questions. We'll start with questions from the conference call participants and then take questions from the webcast. If you would like to ask your questions in the conference call, please press pound key five. You can also ask questions in the chat windows on your screen and I will then read them up for Bodie and OSCA. Please note that today's session is being recorded and will be available on our website later today. So with that, I will hand over to our CEO, Bodil. Please go ahead.

Thank you, Niklas. And welcome to everyone joining us today for our Q3 2025 results presentations. I'm also pleased to welcome our new CFO, Oskar Wallstein. This is Oskar's first quarterly report within the Fagold Group as a CFO. And of course, we look forward to the experience and fresh perspectives he will bring as we continue our journey. And I will start by saying that market conditions remain challenging with the overall macroeconomic uncertainty still creating unpredictable environment across several regions. However, I would say that we start to see some very, very early signs of recovery. And I think one part of that is that we've seen a stable order intake during the quarter. And it's supported by broad based daily activity across markets rather than individual large and specific projects. And for me, this indicates a consistent and balanced level of demand within our core segments. Also important for us is that the integration of Trotter, TLV and Capelon is progressing according to plan. Both companies are being incorporated into the group in a structured, measured way, ensuring continuity for customers and employees. We've also started to work on sales synergies with the two new brands in the group. The work supports our strategic ambition to strengthen our position in key European markets and expand our capabilities within selected segments. We continue to maintain strong cost discipline with ongoing efforts to manage expenses and maintain efficiency. The third quarter also includes certain acquisition-related costs. So let's have a look at the numbers for the third quarter. So the order intake for the third quarter was 1.952 billion Swedish crowns and showed actually an organic change of zero, so very stable. And order intake was higher in the first and last months of the quarter, while activity was a little bit slower in August. And at the same time, we saw signs of stabilization in the overall trend. You might remember that we started to speak about a year ago last summer that we saw big swings between the different business areas, almost like a roller coaster. And this has been more stable in the third quarter. which is one of those signs of stability. And net sales for the quarter increased with 5.6% to 2.027 billion Swedish crowns, and the gross margin before AAC decreased slightly to 39%. Selling and administrative expenses increased with 7.7% to 659 million Swedish crowns, There are some different reasons for that. One of them was the recognition of the acquisition related transaction costs, who totals 19 million Swedish crowns as an expense in the quarter. And also both Trato TLV is consolidated in the group throughout the quarter and Cape Elan from August 1st. So operating profit before EIC was 147.1 million Swedish crowns, which is a decrease of 18.9%, with an operating margin before EIC of 7.3%. And earnings per share before EIC were 0.47 Swedish crowns. We're not happy or not satisfied with the operating results. We fell short of our own ambitions. While the underlying business remains solid, there is clear room for improvement, and we are taking firm steps to strengthen performance in the coming quarters. So if we then jump to the year-to-date numbers, the order intake so far has been 6.084 billion Swedish crowns for the period from January to September. which is minus 0.4, or adjusted for currency and acquisition, also 0%. And the group's net sales of 5.815 billion for the January to the September period were down 7.2%. or 7.1 when adjusted for currency effects and acquisitions. So they take out each other. And the group's operating profit before AAC was 412 million Swedish crowns for the January to the September period, resulted in an operating margin of 7.1%. And earnings per shares before AACs were 1.23 Swedish crowns. And of course, as always, Oskar will share more detail when we get into the financial section. And I will, as usual, give you a little bit more update and view of our businesses. And this year, we have decided to go through each of the different business areas to provide a clearer picture of how the group operates. I also want to give you a deeper understanding of our market position, the strength behind it, and how we differentiate ourselves through innovation, sustainability, and close customer collaboration. The group is as is today built around 13 strong lighting brands. As you know, we've added one shown on the slide. And today I will be focusing on the last business area. We've gone through the other three, which is business area infrastructure. So if we look at infrastructure, I think it's very much what the name says. It's a business area which is built on deep expertise and market leadership across specialized industrial segments in Europe. The brands deliver advanced lighting solutions tailored to the environments with strict requirements on installation, durability, and robustness. And as leaders in their fields, they bring very long standing experience in designing the right solution for each project and customer. And growth opportunities are being realized in both transportation and security related projects, alongside strengthening positions in heavy industrial environments. So the business areas include three businesses, being Ivalo, Weka and Designplan. And most of the sales takes place in Europe, but there are some global installations. And I would even say with a Northern European focus. Product development and production takes place in the UK, Finland and the Netherlands. So let's have a brief look at each of the brands. So we start with the smallest one, which is Ivalo, that was founded in Finland in 1963. And I think you all know from design, you probably know the famous Itsela glass factory. And that is actually the origin and it's also still our neighbor. And during the 1970s, Evalo started looking into reliable industrial lighting, mainly driven by a need within their own glass factory and the surrounding paper mill industry. At the same time, nobody was making a luminaire that was suitable for harsh industrial conditions. So Evalo focused on luminaires built to withstand dust, corrosion, extreme temperatures and mechanical stress. And from the start, they've been recognized as a trusted partner for heavy industry and demanding environments. While firmly rooted in the Nordics, they have delivered projects in more than 40 countries worldwide. And actually, they have had very strong sales in Finland. But for the first time this quarter, export sales is higher than the sales in Finland as a result of focusing sales reasons on selected European markets. Then we have VECO, that was founded in the very difficult to pronounce name in the Netherlands, in 1975. And from the beginning, the company is specialized in linear LED lighting for industrial spaces with a very strong focus on energy efficiency and durability. So over the years, VECO has introduced several industry firsts. including the world's first linear lighting system with integrated cable ducts and IP65 protection, so meaning suitable for tough environments. And their unique approach means that products are manufactured to order for each product supplied with codes and delivered pre-assembled without packaging. And this concept greatly reduces both installation time and waste. So they were very early out from a sustainability perspective. And vacant solutions are widely used in open environments such as distribution centres, warehouses and light industry, but are also trusted in more demanding settings, including swimming pools, freezer facilities and retail spaces. So last but not least, we have DesignPlan, who was founded in the UK in 1963 to meet the need for robust and waterproof fittings in demanding environments. And those of you who have heard me speaking before know that I normally say if you're sleeping under a DesignPlan lighting, you are not in a good space. because they are in very harsh environments. So from the outset, the focus was on creating luminaires with high ingress protection and exceptional vandal resistance. And the original vision still guides the company today. So DesignPlan develops lighting solutions for some of the most challenging applications, including transport. They've done a lot of all of the new metro stations in the UK, for example. They do a lot of prisons, so a lot of custodial and social housing, secure health care and urban exteriors. So their products are built for longevity with removal gear trays that allows easy maintenance and technology upgrades, ensuring that fittings remains reliable and future ready. And there again, very good for sustainable perspectives. so in previous calls we're going to wraps i've shared examples of how we combine innovation with sustainability across our brands and i think we are a very good example of when sustainably sustainability meets business needs and business strategy it really makes sense so i want to highlight that today with one of our more exciting new solution which is called wrapped and it's from our fargo brand in harbour and wrapped is actually the world's first cardboard pendant luminaire and You can see it here. You see it on the first page of our report. And I can assure you when you see it, you can't see it's made out of cardboard. It's impossible to see. So it combines sustainability and functionality through careful material choices and design precision. So to ensure strength and stability, we have put significant effort in testing into the Luminar body, and it fully meets our quality standards. It's produced in our Swedish factory in Fagerholt in Harbo, using recycled and renewable material sources from local suppliers. And when the time for recycling comes, which is first after 100,000 hours of use, the luminaire can easily be dissembled and all materials recycled. So WRAP reflects very much our continuous work to reduce environmental impacts while maintaining high quality and long product life. It also demonstrates how responsible design and local production can strengthen our competitiveness and create long-term value for both our customers and the group. So we're also very happy that two weeks ago, RAPT was awarded the best lighting innovation in 2025 in Sweden, in the so-called Elmessan. And with that, I will hand over to our CFO, Oskar Wallsten, who will provide a much more in-depth of this quarter's financial. Please, Oskar.

Thank you, Bodil. It sounds like it has been a busy period. I would also like to welcome everyone to the call. So good morning from me as well. Whilst many strategic topics continue to make very good progress, we are, as Bodil has already stated, not happy with the operating results. From an organic decline of 6.5% in the second quarter, we deliver a flat organic order intake for the third quarter. As Bodil mentioned, the market seems to stabilize. In the quarter, the order intake is positively impacted by FX and acquisitions by a total value of 78 million SEK. Sales is organically growing by 1% in the quarter. FX and acquisitions have a positive impact of 89 million SEK. As mentioned, we are disappointed with the Q3 7.3% operating margin, which is a reduction compared to last year, but an improvement compared to Q2. The Q3 cost is impacted by acquisition transactions of 19 million SEK, which is of a one-time-off nature. The operating cash flow was improved compared to previous quarter and almost on the same level as last year, Q3. Year-to-date order intake is the same as last year, which confirms a stable market. Sales is lagging behind last year by 7.1% organically. The lower sales are partially explained by longer lead times between orders and deliveries. Operating margin is 7.1%, which is lower than last year and is mainly a result of lower sales volume. Cash flow year-to-date is 395 million SEK. It's down because of lower profitability. The rolling 12-month net sales shows a slight increase in the quarter, mainly due to acquisitions of Capron and Trato. The margin development is positive compared to previous quarter, thanks to increased sales volumes. And now we're moving into the business area dimension. We start with collections. The third quarter order intake of 860 million SEK entail organic growth of 9.5%. The order intake for the January to September period of 2,722 million SEK entail an increase of 7.7% in organic growth. Net sales for the quarter total 890 million SEK corresponding to organic growth of 8.4% and operating profit before IAC increased to 86.3 million SEK. For the premium business area, order intake for the quarter is 551 million SEK, entailing an organic decline of 11.1%. And the order intake of 1,940 million SEK for the January to September period showed an organic decline of 7%. Net sales for the quarter totaled 603 million SEC and operating profit before IAC of 90.2 million SEC, resulting in a decrease in the operating margin before IAC of 14.9%. The business area is seeing an increasing number of customers choosing retrofit solutions with smart technology. Professionals. Order intake for the quarter increased to 357 million SEK, mainly through acquisitions. Business area order intake for the January to September period of 866 million SEK entail organic growth of 0.7%. The order backlog remains much improved at 492 million SEK. Net sales for the quarter total 410 million SEK, up 60.1%. of which 6.3% was an organic increase and operating profit before IEC amounted to 31 million SEK. Within the business area, we have Whitecroft that has made a full recovery from the IT incident that took place in the second quarter. And Trato is including the business area, as Bodo mentioned before, from 1st of July. Now over to infrastructure. Order intake for the quarter total 223 million SEK, corresponding to an organic increase of 8.3%. For the January to September period, the order intake decreased by 11.8%. Net sales for the quarter total 180 million SEK, an organic decline of 9.3%. And operating profit before IAC was 6 million SEK. Beko increased its order intake to its highest level for over a year, while concurrently delivering a smart lighting project at one of Europe's largest logistics centers for Daimler in Germany. In the second quarter, the cash flow improved to 162 million SEK, as working capital was better controlled. In the third quarter, we continued to the good trend. work and deliver 208 million SEK in cash flow. The group has a good cash generating process. During the last three to four years, you can see our strategy has been to reduce the net debt. This has enabled us to invest in new acquisitions. Investments in Trato and Capelon has increased debt. Earnings per share. We repeat the message about not being pleased with the earnings per share, and we are working very hard to improve the earnings. And due to the recent and earlier acquisitions, we are considering to start to report EBIT A instead of EBIT. This will give a clear view of the operational profitability before factoring in the non-cash cost or amortizing intangible assets. That was all from me and now back to Bodo.