Garo Aktiebolag (publ)

Welcome everyone to Garo's Q2 presentation. I am Jonas Claren, CEO, and it's great to be here today. With me is Helena Claesson, CFO, who will walk you through the financials later. But let's start with the key highlights for the quarter. Next slide, please. Operation and highlights. I want to start by emphasizing that Team Garo continues to move from structure to execution. We have a clear direction and an increased operational pace. Garo electrification, growth areas. We see continued volume growth and a strong performance in Ireland and the UK, alongside early signs of stabilization in Norway. Stable demand. Demand in commercial, public, and renovation projects remains stable. Challenges. However, the Swedish residential construction market remains weak, and the segment continues to face pressure. Improvements. Outside Sweden, margins are improving in several markets, and we are focusing on expanding our product portfolio to reach new market segments. Outlook. The outlook remains stable with continued discipline on margins. Garo Immobility. Headwinds. The market remains challenging, particularly in Sweden and Germany, with delayed investment decisions. Actions. We have completed cost reduction measures, optimized inventory, and shifted to a more focused go-to-market strategy. Sales drivers. AC destination solutions are returning to growth, and sales of our Garo entity platform are going in the right direction. Progress. We have signed strategic framework agreements for a larger infra project in Upland, and with us discerned municipality for both stronger market references. Outlook. The outlook is for gradual recovery in public charging, especially AC charging. Strategic focus. Leadership. On the leadership side, I have taken on an interim responsibility for e-mobility, and we have appointed a new country manager for Sweden. Integration. We now will have clearer priorities and joint action plans for each business area and country. Readiness. Financial control has improved and we have repaid part of our credit facility and lifted the special covenants from our bank. Innovation. We continue to adapt to new market requirements, including UK cybersecurity standards. Outlook. Long-term growth drivers remain intact and we are focused on execution and profitability while keeping short-term caution. In summary, we are delivering on our plans, making strategic moves in the right direction, and preparing Garo for the market recovery we know will come. And now over to you, Helena. Next slide, please.

Thank you, Jonas. And I would like to start by looking at the financial summary for the second quarter. Net sales amounted to 266 million, a decrease of 13% compared with the same quarter last year. The uncertain and varied market situations continue to affect sales in the quarter. Garo Electrification as business area showed a stable business, but the demand in Sweden was weaker than expected. Immobility remains challenging, not least in Sweden. We noticed a lag in order intake and also that some new product categories have not yet made an impact on the market. Gross margins have been at similar levels to previous quarters, where strong margins within GORO electrification has been offset by lower gross margins within GORO immobility. The adjusted EBIT for the quarter amounted to 1 million compared to negative 4 in the same quarter last year. Next slide, please. And now let's look into the two business areas separately, and we start with Garo Electrification. Net sales dropped with 7% compared with the same quarter last year and came in at 206 million, where the overall market for electrification business area was mixed. While Sweden experienced a significant decline, preliminary in the product area project, our market managed to exceed expectations. Our sales to Europe, excluding the Nordic countries, showed a growth of 10% in the quarter, and sales in Ireland continues to be very strong. The market for new construction of single-family homes and apartments in Sweden remained at a very low level during the full first half of this year. Positive signs such as lower interest rates and expected falling inflations are overshadowed by negative global uncertainty related to tariffs and escalating conflicts in various parts of the world. Sales within our product area project and temporary power both decreased by 19% compared to the same quarter last year. The entire decline in the sales within the product area project is attributable to Sweden, while the other markets actually have a positive development, albeit from lower volumes. Adjusted operating profit, also the EBIT for the period, amounted to 15 million compared to 20 in the same quarter last year. Adjusted operating margin came in at 7.4% compared to 9.2%. The ongoing ERP project is burdening this business area, which together with the pressured prices and lower sales in the product area project explains the lower profitability. Next slide, please. And now we move on and focus on the Garo immobility business area. Net sales amounted to 61 million for the quarter, giving us a negative growth of 24 million compared with the same quarter last year. Goro Entity, the new charging platform, accounted for the larger part of the business area's total sale in this quarter. This is a statement of strength and confirms the market's reception of the platform, which has now reached good technical stability. Gaara has signed a framework agreement for a larger project within infrastructure to deliver a large number of charging stations and also some DC fast chargers. The agreement constitutes a strategic reference for the future strengthens of the position with charging infrastructure connected to Sweden's critical energy supply. Furthermore, in collaboration with the wholesaler Rexil, Garo has signed a multi-year agreement with Östersund municipality. This agreement includes the installation of approximately 700 charging points spread across the municipality. The adjusted operating profits, also the business areas EBIT for the quarter, amounted to negative 14 million and is entirely explained by the low sales. Next slide, please. And now let's look a little bit on the cash flow and balance sheet. Cash flow from operating activity before changing working capital amounted to 0.3 million. Cash flow from operating activities after changes in working capital amounted to 9 million. Tied up capital from inventories decreased net with 4 million. We have a deposit with the supplier for materials ordered, but not yet called off. The deposit being in euros has remained unchanged during the quarter and amounted to the equal length of 44 million. Our net deposition amounted to 279.6 million compared with 293.2 in the year earlier quarter. We had an equity asset ratio of 51.4% and available liquidity, including overdraft facilities, of 75 million. And also, as Jonas referred to earlier, as a result of improved cash flow over time, Goro's separate bank covenants ended on June 30th. In July, the availability of overdraft facilities was reduced and 2.4 million Euro was repaid. And now back to you, Jonas. Next slide, please.

Thank you, Helena. Navigating change, strengthening Sweden for the future. Sweden is the heart of Garo. Success here strengthens the whole group. Niklas Rönneng has, as I said earlier, decided to leave immobility, and I sincerely thank him for his dedication and contributions. but to ensure stability and a clear direction, I would take on the interim leadership of e-mobility. We are also merging the two Swedish sales organizations, Electrification and e-mobility, into one national organization. This removes duplication, increases collaboration, and gives us one clear face to the market. Daniel Emilsson becomes country manager of Sweden with full responsibility for sales, support, marketing, personnel, and results. With his 18 years in Garo, Daniel has the experience and the relationships to succeed. The aim is a stronger, energized sales team closer to customers, capturing synergies across our four product areas. We are also creating a Swedish steering group, sales, operations, R&D, HR, and finance, ensuring aligned cross-functional decisions. These changes are about a stronger foundation in Sweden, enabling faster growth, both at home and internationally. Next slide, please. Execution path. As I showed you before, we have laid the foundation in Q1. Structure, governance, and leadership in place. In Q2, we moved into alignment and strengthening with early results from integration. Now in Q3 and Q4, we move into integration and acceleration, embedding transformation into daily operations. We are fine-tuning the plan as we move forward with the finalization in the budget and strategy process later this year. The message is simple. We are staying the course. Next slide, please. Outlook, staying the course, ready when the market turns. In Q2, we saw a clearer increase in operational pace after the leadership changes earlier this year. We made the decision to restructure and integrate Swedish sales operations and now changed and implemented as we speak in Q3. Electrification performed strongly in our international markets, even though the Swedish residential sector remained weak. Our cost control measures and inventory optimizations are delivering results with improved cash flow and EBIT back in positive territory. In e-mobility, LS4 solutions and our entity platform are gaining renewed traction for the year, and the strategic contracts are strengthening our market position. Looking forward, I will take the interim leadership for e-mobility to ensure stability and clear direction. We will fully implement the Swedish sales integration under Daniel Emerson, and the market recovery is slow, however, but we are seeing early signs in both housing and charging infrastructure, and the long-time driver's electrification, energy efficiency, and infrastructure remains strong in our focus. Koro is ready to accelerate when conditions shift and we have the ability to adapt quickly, act with discipline and always move with purpose. Thank you. And next slide, please. Questions.