Ferronordic AB (publ)

Then we move to slide number two here, and we continue to see strong performance in the US. And that led us, was much contributing to a 77% revenue growth. We had an operating result that increased to 2 million kroner. If we exclude a one-off effect of an impairment of inventory in Germany, it was 32 million kroner. Net debt of 1.792 billion SEK and that is after the acquisition of the US operation and also partly driven by expansion of our rental fleet in the United States. Total equity of close to 1.5 billion and we also presented on October 2nd new financial objectives on our capital markets. So we move a little further and speak more about the US. The operations there are continuing to perform well. We have revenue of $686 million, operating profit of $53 million, which then gives us an operating margin of 7.7%. We had lower machine sales, actually. The market is slightly down from high levels in 2023. But the revenue was higher also than in last quarter, and that is we had a good mix. We sold a large machine. We do have a higher inventory and a higher rental fleet, which is in line with our strategy to take market shares in the excavator segment mainly. So, US looks good. In Germany, the market is declining big time by 40% in the third quarter. Our own deliveries were down by 60%, which we had a high comparable quarter in 23. But the market is down, the economy is not going well at all, and we see price pressure We've had previous customer cancellations of orders. And obviously, as you might know, we are having a too high stock, which we are making efforts to reduce. And we then took a decision to make a 31 million impairment of inventory in Germany. to allow ourselves to be in line with the market as it is at the moment. What is very positive in Germany, however, is that we see good development on some of the underlying factors, really. Service and parts business continue to increase by 6%. Within the quarter, we saw order intake on new trucks improving. and we saw the electric rental business, which was developing positively. We also saw the results now of our cost reduction program, and we are in line now with the annual target of savings over run rates of 60 million kronor per year. In Kazakhstan, we had a better quarter as well with the sales of new machines and units, which increased to 21. back to the numbers a bit more there so summary on the next slide here um revenues said 77 up to 1.141 billion um us of 686 million german revenue was down 35 percent not as much as deliveries of trucks thanks to a good performance in the after markets to 372 million, and Kazakhstan revenue is up 19% to 82 million. And that then gives us an operating profit of 2 million kroner. And we saw obviously a good contribution from the US, but also the German Underlying development is positive, although the impairment obviously created a decrease in the operating profit in Germany. And in Central Asia, we increased from zero to a positive three billion in terms of operating profits. um we had a big foreign exchange losses in in the quarter and therefore the net income decreased to uh minus 88 million and as i mentioned that depth then increased to 1.7 uh 92 million um and and again this is mainly of course the acquisition of the american operations but also attempts to to increase our market share in the rental fleet in Germany through excavators and to take market share in a very prospective market for excavators where we see opportunities to grow. So, if we take some more operational highlights in the US, historically the market is around between, in our, in North America, totally 52 to 56,000 units for the for the Volvo products that we are representing. Our area covers approximately 8% of the North American market. In nine months, the market for GPE segment, larger construction equipment in total North America declined by 10%. It was a slightly more decline in our area by 21%. But if we compare then Q3 23 to Q3 24, despite the decline in the market, we increased our sales of new machines and conversions of machines from the rental fleet by 2%, and obviously then we're taking market shares. We also saw good sales of Sandvik drills in the quarter. So all in all, in Q3, we sold 61 new units, 10 used units, and 36 units were then converted from the rental fleet to sales. Service and parts business relatively stable in Q3, and that gives us a mix of 49% of revenue related to sales and new and used equipment conversions. 11% to rental and 40% to service and parts. In Germany, as I said, the market is down 40% in the quarter. In our area, it's down actually more, about 47%, and we had a big fall in our deliveries of new units. But again, we saw order intake on the trucks for future deliveries. Then obviously, it started to pick up in the quarter, which is positive. And we see some signs that activities are going in the right direction in our industry. Used truck sales in units also down. That is a deliberate choice that we're taking in this downturn now to decrease our stock. and also our conventional rental fleet. So that's in line with what we want, actually. And then price competition from a supply-demand imbalance and the margin pressure then triggered a decision to pay a part of it by 31 million kroner. But again, very positive. Let's see continued demand for service and parts. And our off-the-market services may grow strongly, actually. So we could actually sell more servicing parts if we had more educated and trained mechanics out there. So off-the-market demand is still high. If we then talk about our efficiency program in Germany, which we launched in Q43, we launched the program to make Our organization in Germany is more patient and resilient, and obviously one key objective is to increase our absorption level, which means how much of our fixed costs are covered by gross profit from the aftermarket business, which is a very, very important target for us as the market is usually more stable and actually even in the downturn, usually continues to grow if we perform well.

And we are now at the level where we can say we do expect to see the coronavirus on an annual basis, starting in Q1. And we believe that we actually can continue to invest in our aftermarket business and in e-mobility.

In Malaysia, with a strong economy and supporting government investments at least, there is aid on infrastructure investments coming up. But the market for construction equipment still remains challenging. Structural tenders, competition from mainly Chinese equipment, and lack of customer funding is creating hurdles for the market to grow. Still in Q3, we believe that the market has grown by roughly 9-10%. We saw an increase in units to 21%, but that was partly at the expense of gross margins. and used equipment of eight units. And so service and parts business actually declined in the quarter because we saw client business activity decrease.