Fagerhult Group AB

Thank you all for joining us today. I'm Niklas Willstrand, head of communications at Farwood Group, and it's my pleasure to welcome you to our Q2 2026 resource presentation. On the call today, we have our president and CEO, Bule Sonneson, along with our CFO, Oskar Wallsten. Bude will begin with a brief overview of our second quarter results, followed by a presentation of the strategic priorities announced as part of our recently published strategic review. Oskar will then provide a deeper dive into the group's financial performance. And to close, Bude will summarize the key points before we open the floor for your questions. We will start questions from the conference call participants and then take questions from the webcast. You can ask questions by pressing the pound key in five or in the chat window on your screen, and I will then read them out for Bodil and Oskar. 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 you, Bodil. Please go ahead.

Thank you, Niklas, and welcome and good morning to everybody joining us today. So I will start with the word stabilization today. And we noted a stabilization in order intake noted already in April, continued through most of the quarter with order intake increasing to 2.68 billion Swedish crown in the second quarter. And sales also increased during the period. Profitability, although improved from Q1, remains below our expectations. And while activity levels improve, customers in several markets continue to postpone investment decision. And I wouldn't say that the general market conditions have fundamentally changed. In early July, we presented the priorities that will strengthen the group's performance and improve profitability. The first step and the first focus is to restore margins through cost reductions, efficiency improvements and a stronger focus on Europe. We also see significant opportunities to improve performance through closer collaboration across brands, markets and function. At the same time, we will continue to invest in innovation and in growth segments where we see the greatest long-term potential. And smart lighting is part of that. Several of these priorities is already reflected in our day-to-day operations. And during the quarter, we continue to see strong activity in energy efficient lighting and modernization projects. So Fagerhult secured several projects linked to the transition from conventional lead lighting solution as in well as important projects within healthcare, including the new emergency hospital in Västerås that's being built and Scandinavia's largest orthopedic center. Another example of how we strengthen the group's overall position is Tratotill V which is our French group company, which has now been part of the group for exactly one year. So the company has developed in line with expectations and the integration has progressed well. Synergies have been realized while the first projects in new markets together have been secured. So we continue to explore opportunities to further develop and working on possibilities together with Trout or TLV. in their international presence, in collaboration with other Group Rats. We also saw positive development in several growth segments, driven by long-term investment trends. Kepelon, when we look into public investment, secured new municipalities, reflecting the growing demand for smart lighting solutions, while Design Plan, our British brand achieved the highest order backlog in its history. At the same time, they could secure the project for an Opel factory in Germany and continue to expand its pipeline within the European data segment where they have a very suitable product portfolio. So that was a short summary. And if we then look into the numbers, we start with the Q2 numbers. And as I said, our order intake reached 2.68 billion Swedish during the quarter, which was up 8.6 compared to last year. And including for acquisitions and currency effect, the order intake was down with 0.5%. We see it as positive that while order intake exceeded 2 billion, which is always a milestone for us, it was not any single megadyl that made a difference, but rather many mid-sized steel, which we see as a positive indicator of the activity level. And net sales increased by 6.8% to 1.978 billion Swedish crowns. supported by acquisitions completed last year and favorable currency effects. And adjusted for acquisitions and currency movements, sales declined by 1.4%. Overall, the Group EBITDA before EAC was 113 million Swedish crown, which was a decrease of 16.9% with an EBITDA margin before EAC of 5.7%. So we're still not satisfied with that level, of course. We're working hard to get back towards our target. But as I said initially, still a stabilization compared to Q1. And earnings per share before EIC was 0.08 Swedish grand. and we ended also positively the quarter with an order backlog of 1.916 billion Swedish crown, which was up both from a year ago and from the first quarter. So we are moving forward with the implementation of our strategic priorities. But before we get there, let's look also at the half year numbers in brief. If we look at the year-to-date numbers, they are pointed in order intake to 4.37 billion Swedish crowns, a decrease of 2.3% or 8.1% adjusted for currencies, effects and acquisitions. And net sales amounted to 3.795 million Swedish crown, an increase of 0.2%. And when again, when we adjust for currency effects and acquisitions, a decrease of 5.2%. And EBITDA before items affecting comparatability amounted to 158 million Swedish crowns. And the EBITDA margins for the half year was 4.2%. compared to 7.9% in the corresponding period last year. And we have an earnings per share of minus 0.09 Swedish crowns for the half year. So then leave the numbers for the moment and let us go to the strategic review and priorities for future profitable growth. As you already know, we communicated the outcome of our strategic review in July, where we sent out a press release. Our vision remains unchanged, which is a world enhanced by light. The review confirmed the need to sharpen our focus and strengthen the group's performance. We are focusing on three key areas to improve our profits, grow our market share and build a foundation for lasting success. Our first, and we have three main priority buckets, and our first priority is to restore stability and resilience across the group. And that's where we started. And selected initiatives, including a cost-saving program, which is throughout the organization, combined with selected consolidation activities are expected to deliver an improvement of 220 million Swedish crowns, which was what we communicated in the press release. These effects will be realized gradually over the next six to 12 months. And we are already working on a lot of these activities related to the scope of the saving. They haven't yet had any impact on the Q2. The better result in Q2 compared to Q1 was to refer to the increased sales. So these activities will have an impact as we continue the year. And we will inform the market when we have executed on the activities. And the guiding star for us that we're working towards is a stronger focus in Europe, a laser focus, and a clear premium market positioning that will support the ambition of building a more resilient and a more competitive Group. The second priority is to improve performance through stronger execution and increased collaboration across the Group. This starts with clear responsibilities, greater accountability and a more effective way of working. So we, of course, will continue to have empowerment close to the customers in a decentralized organization, which is in line with our way of working. Responsibility for customers, sales, product development, production, operational excellence, and ultimately the P&L performance remains close to the brands and business areas. At the group level, we will strengthen governance around strategy execution, finance, HR, and IT, including both cybersecurity and AI. By sharing all the expertise we're having in the group, we will be leveraging the strength of our different businesses and we will collaborate where it makes sense. And in this way, we can approach much more effectively and better support our customers. Two concrete examples are that we have started to work much closer in an IT forum with the sponsor from the group and then leverage all the competence we have in the organization. We've also started a project to leverage our current footprint in Germany, where we have three German brands local brands and five additional brands in the group being present on the market, but with very limited cooperation today. And in addition to this, we have put an ambitious target for the next three year period based on high efficiencies, selected focus areas and better cooperation. And the third priority is to continue investing in innovation and attractive growth segments. Close customer relationships and the ability to develop solutions that meet changing customer needs remain a very important strength of the group. So demand for smart lighting solution continues to grow, where we had a very good first half year, while several other markets are supported by long-term investment trends. including defense, public infrastructure, data centers, and also retail. And during the quarter, we saw positive development in a number of these segments, reflecting the opportunities created by the underlying trends we all see on the market. Several of these markets are expected to remain attractive over the coming years, providing a solid foundation for future growth. We all know that the landscape in the construction industry has fundamentally changed the last few years and therefore it is important for us to be very agile and finding growth opportunities. It's important to defend the premium market where customers understand the benefits of good lighting quality and for us in many cases bespoke solutions. So if we try to summarize this and to conclude, our first priority to remember is to improve profitability and strengthen the foundations of the business. That's where we start. And as mentioned, we already have quite a few selected initiatives that are expected to deliver an earnings improvement of approximately 220 million Swedish crowns over the next six to 12 months. Nothing of this, as I said, is included in the Q2. At the same time, these initiatives will help to create a more resilient and cost-conscious group by further strengthening our presence in Europe and supporting the long-term development of the business. While our vision remains unchanged, as you can see it here, a world enhanced by light, the focus is on positioning the group for sustainable long-term growth. So continued innovation and increased exposure to new growth segments combined with an ambition to become top three player in selected European markets with a strong focus on some markets will support future growth opportunities and long-term value creation. We believe we need to be laser focused for the period to come. So as I said, restoring profitability comes first. then in the next step looking into accelerating growth once the profitability is achieved. And our ambition remains clear, a 10% EBITDA margin, and then in the second step, a growth of 6%, which is then primarily driven by organic growth. And we will not have an M&A focus in the forthcoming period. We also have a focus on networking capital with a goal of free cash flow of 6%, which for us primarily means a focus on reducing inventory. And that was a quick summary of our three main pillars in our strategy and how we're going to go from a vision to value creation. And with that, I will hand over to our CFO, Oskar Wallstein, to give you a much more detailed update on the financials.

Excellent. Thank you, Bodil. Good morning and welcome everyone to this call. This has been a stronger quarter compared to the weak start of the year. Order intake has developed in a positive way and the business areas, collection and infrastructure are the main drivers behind the positive development. Both business areas grew organically in order intake in the quarter. For the Group as a total, the gross margin is still a challenge as both production costs are higher than last year, as the sales mix is also unfavorable. Still, we see an improved EBITDA margin in professional, thanks to Trato TLV, but for the Group as a total, a weaker margin compared to last year, which is explained by weaker performance in our largest business areas, collection and premium. During the quarter, the Group reported 19.8 million SEK as other operating income, that relates to the Trotto TLV earn-out liability. Now, when the outcome for the first vesting period has been determined, the liability could be reduced and hence an income has been reported for the Group. While organic order intake declined by 0.5% compared to last year, total reported order intake increased by 8.6%. In the quarter, the order intake is negatively impacted by FX. The stronger Swedish krona is affecting our euro business in a negative way also this quarter. On the other hand, the order intake is impacted positively by acquisitions. By this time last year, our brand company, Trout & Thielvi, was not yet incorporated in our numbers. However, since the acquisition has now been part of the group for a full year, this will be the last quarter in which Strato TLV is mentioned as an explanatory item compared to the previous year. Sales decreased organically by 1.4% in the quarter, where FX had a negative impact by 19 million SEK where acquisitions improved the numbers by 171 million SEK, totaling to a net impact of 152 million. The second quarter's EBITDA margin landed on 5.7%, a decline by 1% compared to last year. The margin drop is mainly related to lower business volumes in our two largest business areas, collection and premium. The decline in sales in these business areas has negative impact on our profitability. In the quarter, we had a negative operating cash flow of 9 million SEK compared to positive 162 million last year. We saw a weakening in working capital also in this quarter. I will come back to more cash flow insights later in the presentation. Year-to-date order intake is slightly lower than last year. We see a decrease of 2.3% and an organic decrease of 8.2% year-to-date. The explanation lies in the weak first quarter. Q1 last year was a tough comparison period with a couple of large projects. Sales, on the other hand, are higher than last year's year to date, an increase by 0.2%, yet with an organic decrease of 5.2%. The EBITDA margin is 4.2%, which is lower than last year's 7.9%. The lower gross margin compared to last year is the main explanation. Cash flow year to date is negative 169 million SEK, which can be compared to plus 188 last year. But more about cash flow later. Sales development. The rolling 12-month net sales shows an increase in this quarter. We're back at the same level as Q4 last year after the dip in the first quarter. And looking at margin development, also the margin improved again in the second quarter as a consequence of recovery in sales. The rolling 12 development is, however, still impacted by the weak Q1 and hence a decline in the line chart. Moving over to the business area, starting with collection. In collection, the second quarter order intake of 894 million SEK entailed an organic increase of 2%. The improvement in order intake is coming from both IGUSINI and VEF. Net sales in the quarter amounted to 886 million SEK, corresponding to an organic increase of 1%. The EBITDA before IAC was 76 million SEK, which is lower than last year's 95 million SEK for the second quarter. The EBITDA margin is consequently lower as well, 8.6% compared to 10.7% last year. The demand on collections home markets has been weak during the quarter, despite that Egucene and LeadLinear have succeeded in delivering growth in sales, which compensates for the development in the other brand companies. Premium delivered an order intake for the quarter of 608 million SEK, entailing an organic decline of 4.4%. Net sales for the quarter totaled 601 million SEK, and EBITDA landed on 60 million SEK. As you can see in the chart, both numbers result in a decline compared to last year. The EBITDA margin was 10%, which represents a weakening compared to the second quarter last year when it was 14.5%. Just like business area collection, premium encountered a weak market, especially in the new construction sector and generally fewer larger projects than normal. Moving over to professional. Business area professionals order intake for the quarter increased to 378 million SEK, mainly thanks to the acquisition of Trato TLV. Net sales for the quarter totaled 366 million SEK with an organic growth of 10%. Organic sales growth remained strong in the second quarter and was mainly driven by a strong quarter in the UK. compared with the corresponding period of the previous year. In France, the retail sector also continued to perform well, driven both by existing customers and by new business opportunities, where we are registering increased demand for retrofit solutions. In addition to the organic growth in net sales, Professional also gets a positive impact of 164 million SEK in net sales from Trato TLV. EBITDA before IAC amounted to 8 million SEK, which in turn resulted in an EBITDA margin of 2.2%. The lower EBITDA margin in the business area is primarily related to brand companies Eagle and R-Lite. Trotter TLV has now been a part of the Foghult Group for one year. The company has delivered in line with expectations and the integration has progressed well. As mentioned earlier, this is the last quarter we will refer to Trotter TLV as an explanatory item compared to last year. And then looking at infrastructure. Infrastructure's order intake for the quarter totaled 170 million SEK, corresponding to an organic increase of 16%. This was a result from design plans securing a significant UK prison project in the quarter and setting a new all-time high for the company's order backlog. Veco also showed signs of recovery in the form of a project for an Opel plant in Germany, as Bodil mentioned before. and a growing product pipeline in the European data center segment. The net sales for the quarter total 164 million SEK representing an organic increase of 2.4%. The EBITDA margins is however still negative and landed on negative 2.2% for the quarter. The profitability of infrastructure is still suffering from low gross margin and fixed costs that remain at a high level. The unfavorable development of Ivalos is unfortunately weakening the business area as a whole. Looking at the cash flow, the operating cash flow in the quarter was negative at 9 million SEK compared with a positive 162 million SEK in the same period last year. The large difference in operating cash flow compared to last year is mainly explained by adjustments for non-cash items, which amounted to as much as 121 million SEK last year. In addition to that, we saw a weakening in working capital also this quarter. Working capital has developed in an unfavorable way. It is the customer receivables that have increased during the quarter and hence affected the cash flow in the wrong direction. Yet as the increase in customer receivables is a consequence of higher sales, we don't see a risk in this particular development. Net debt. The recent investment in Trato TLV and Capelon has increased our net debt to a current level, which is higher than before. In the second quarter, our net debt to EBITDA ratio has increased again because of the development in profitability and weak cash flow. Earnings per share. Earnings per share before IAC landed on 0.08 SEC per share for the quarter. Thank you for your attention, and now back to Bodil.