Hanza AB (publ)

Thank you. A warm welcome to this presentation of Hansa's first quarter 2025. I'm Erik Steenfors, the CEO of the company, and I'm really glad to give you this update together with our CFO, Lars Åkerblom. So as we all know, we are in a turbulent period of the global economy, and therefore we are pleased to present a solid report, but also a clear roadmap for the future. And to provide a better understanding where we are right now and where we're heading, we will start with a short general overview. So for many years, the traditional roots for global manufacturing have been blocked, one by one for various reasons. We see some examples on this slide. And it was the pandemic who opened the eyes how fragile the global supply chains are. And now this year, with the new administration in the US, it's become even more complicated with global manufacturing. They are imposing these new tariffs. And the question is then, where is Hansa in all this? In this new manufacturing landscape, where are we? Well, from the start, we have had our concept to have local and complete manufacturing. There's a feature of Hansa. We have combined different kinds of manufacturing technologies. You see some of them on this slide. So we can offer both mechanics and electronics and cable harnesses a good advantage for our customers. And now we're up to about 3,200 colleagues. We have 25 factories grouped into what we call manufacturing clusters. You see on this map the five manufacturing clusters we have in Europe. And we also have in China, not a cluster, but a single unit. And that is we call it the gateway. That is to help our customers to relocate manufacturing to China for manufacturing, in China for China, and also back to Europe. Another feature of Hansa is that we have something called MIG. We help our customers to rewire the supply chain, to optimize it, to move manufacturing. And all in all, this means that actually Hansa has very low exposure to trade barriers, being a European manufacturer producing in Europe for Europe. Also, we could even have a small advantage when it comes to customers who want to relocate the manufacturing. And if we look at also, this is our business model, but also if we look at our expansion model, we have built Hansa in steps in defined phases. We put the milestone two, three years ahead. We defined operational and financial targets. We have passed three milestones so far. We are heading for number four. This is important. It's called Hansa 2025. We will hear a lot about this during this presentation. And we can actually grow in three dimensions. We could grow with more technologies, manufacturing technologies. We can grow with more geographies. And we can grow with more capacity. And this Hansa 2025 is about increasing capacity on existing geographies, existing manufacturing technologies. And what's interesting, if you look at the sales graph up to the right corner. So this is the sales for the first quarter for a five year period. In 21, we were close to half a billion second sales. Two years later in 23, we were up to a billion second sales. And this quarter, if you include Leden for the full quarter, we are over 1.5 billion second sales. So it means that our business model combined with our expansion model ensures a steady growth under different economic conditions, as has been the case for these five years. In strong economy, we can really help our customers to have a better solution with our all you need is one concept, the different technologies. And in slower economies, we can help with rewiring supply chain and also building on our company. So with this short introduction, I think we are ready for the progress report when it comes to operations, sustainability and finances. And we will also end with a look at the future. And of course, a Q&A session. If there's anything you would like to have further explained, please use that moment to ask any questions you like. The quarter. The main event of the quarter was of course, that we closed the deal with Leden. So the deal we announced in December last year. It was a bit delayed because we had to wait for approvals from the authorities. But it's part of Hansa as of March. And what a nice quarter it has been. I've been traveling around the Uppaline and you see his photo here up to the right. Meeting new colleagues, meeting new customers. We've got very interesting new customers like Eaton, if you know the energy management company and Danfoss. They are into let's say smart motor controls. We've also got more ABB in Finland for Finland. Very nice. And they also have a brand new facility. They opened in January this year in Olinen. You see a picture from that factory, actually from a customer meeting next to the photo of Jukka. A fantastic street metal mechanics factory. So it's been a very pleasant first quarter to get closer to this company. And okay, we could not enter the company until March, but we had a little bit of a quiet start before then. So I would say the integration is running smoothly and it should. Because we do a lot of work before acquisition with our due diligence of the HR and the company culture. So we are on full speed with integration running very, very smoothly. We have also separated the business according to our cluster concept. So Jukka who used to be CEO of Leden is now the president for Finland. He has our old units. You see them on the map, three of them and the units from Leden. And in Estonia, we put the Tallinn unit to Livarkongi who is the president of Baltics. So this has also been a very good separation. I believe very much in this. It's clear that the people also appreciate to be part of the same geography and the same culture, the same language. In this unit that we got in Tallinn, we also got a minor part of non-core business, product owning business. It's not according to strategy. It's a very nice business. However, running at a bit lower margin and we are now evaluating our long-term strategy concerning this unit. We will come back to you about this later on. And talking about a very nice quarter, this was also a highlight. We opened a new factory in very nice dinner with partners and investors and customers and suppliers. So very nice. We were running before this opening because of demand. We had to use an old grocery store. This is a final assembly unit we have built. And now because of the new building, of course, we can move the assembly through this building. It is adjacent to the sheet metal mechanics and that's the way it should be. So when you have made a box, you should fill it with something without transportation. We can do it now. It improves our efficiency. Then also there are a number of other projects going on in Hamza. Worth mentioning is the one in Poland. The integration of Praboty, it's a unit in Poland we got with the acquisition a year ago, the Orbit One acquisition. After that, we've been working to streamline and optimize where to have customers and where to have different technologies. This is a work ongoing and will go on. It will be ready before the end of the year, but it will still take some time to finish this. It will be really good at the end. That's a large project. We also have other similar smaller projects, but all of them should then be ready by the end of this strategy, Hamza 2025, according to our plan. Then also we started something we call Lynx. It's a market program. What we see now, we talk about the turbulence, the new situation in the world. It's not for the best all the time, but we also see that it has brought strength to some certain market segments. We also see in Germany that they're open now to change the supply chain. Previously, they have been rather conservative, at least compared to the Scandinavian countries. We have been more into outsourcing, but now this is changing. It means that we also have a chance to take a bigger stake of the operations of the manufacturing in Germany. So these new areas to take advantage of them, we have launched a market program, Lynx. I'm sure it will show some good results already this year. I will come back and we will present more, of course, when we have some results, but this is something to keep your eyes on. With that, I will leave the floor to Lars.

Lars Vamder, CEO, Lynx Thank you, Erik. For you and the following Hansa for a while, you see that the interim report that we released today has a new format. A little bit change in the layout and the way we present the information and figures. We hope it will be more easy to take on and more visual in how we present the development of Hansa. Starting with sustainability, the main thing happening in the beginning of 2025 was, of course, the release of the sustainability report for 2024 together with the annual report. That was according to the European sustainability reporting standards and a major step towards the CSRD. We also started the integration of leden to be able to report the leden figures. They are not included in the figures you see to the right. We have in the waste a one-time effect due to washing fluid that we always in the first quarter are replacing. That's a one-time effect on the little bit higher KPI. On the other hand, on energy use, we are having a one-time effect in the positive way. We are taking away the gas consumption to adopt the scope to way of measuring the energy use. That's how we're going to present it going forward. We see the injuries are on a stable and quite low level. We've also been working with cybersecurity and bringing more factors into EcoVadis. Looking into the financials, as Erik said, we have the leden joining the group in the beginning of March. We have only one month of the quarter that leden is included. On the other hand, it has a full effect on the balance sheet. So that brings the KPIs a little bit to adjust for the fact that leden, which is a quite big acquisition, is done included one month but the full for the balance sheet. We also speak about the old Hansa comparison units and that is now together with Orbit One that we acquired and integrated from beginning of January 2024. The market is not that strong. We have increased the sales by six percent and that is due to the acquisition of leden. We actually have negative organic growth of three percent in Hansa overall. Proforma, including leden, we are on the one and a half billion. So on a yearly base on six billion SEC and we have an organic growth in the end of the quarter in the old Hansa. We continue to have a sequence increase of the margin. We reached 7.3 percent compared to 7.1 percent in Q4 and going back one year we were on 5.3. So we continue on the development of the margin towards the eight percent which is our financial goal. And leden came in the same level as what we call old Hansa, a little bit about seven percent in March. But of course one month is quite short period to make any general assumptions on where leden is on the margin level. But it's a good start for leden. The EPS is increased compared to last year 1.14 if we adjust for one time items. And we have one time items. Erik talked about the integration of leden, the new opening ceremony and the move from the old grocery store in Tuxfors and the continuous project to integrate the orbit factory in Poland. And also we've been working with the ERP system and adjusting some values on the stock. So the one time cost in the quarter amounted to 11 million sek. Cash flow, we continue to have positive cash flow, not as strong as in the end of 2024 when we saw the effect of the work we did with the working capital in orbit one. We are starting up and working with the working capital also in leden. And we strive to see a similar effect on a positive cash flow effect also when we are able to work with the working capital in leden. On the rolling 12, the cash flow from operations is above 600 million sek. And that also led to that net depth. Of course increased with bringing on the net depth in leden and paying for the shares in leden. But if we deduct for those increased of the net depth, we actually decreased the net depth by 86 million sek. The equity to asset ratio is of course decreased when we add we are still well above the financial target of 30%. We are on 34%. And also the net depth compared to the EBITDA. We said when we did the acquisition of leden that we might be above the financial target on two and a half. But since we have such a strong cash flow, we are now on 2.3. So above below the financial target and we expect the net depth compared to EBITDA to continue to decrease. Looking into the segments, we continue to have a stronger margin in main markets compared to other markets. We see a calendar effect in other markets that led to that we actually decreased the margin a little bit from Q4 where we saw that calendar effect. We see in other markets that we actually have an organic growth of 2% and we have on the other hand negative organic growth in main markets. And the reason for that is the weak market in Germany that affects both the sales but also the margin in the negative way. So we continue to see the increase in profitability in margin. And again we are reaching and on a solid way on to the 8% or above 8% during 2025. The ownership and development of shares. We did a share issue to the sellers of leden of 2.9 million shares which lead to that we have at the end of the period close to 44 million shares. The board proposed the dividends of 0.80 crowns per share compared to 120 a year ago and that is approximately 35 million SEC. And the AGM will be held on May 13 a week from now and we see some changes in the ownership schedule. Håkan Aleon which was the main owner is not on the main owner's list anymore and Erik continued to increase his shareholding in Q1 and is now owning .4% of the shares in Hansa. And by that I lead over to you Erik and the summary.

Thank

you Lars.

So a very quick summary and I look for the future. So a very, very strong start to an important year and we finalized all these very important activities. We saw a sequential increase in the operating margin for old Hansa. We saw leden coming in at a very good margin. Now we will work together to increase it further. And all this that's what makes us confident in repeating our financial goals. We also launched this new market program Lynx and again keep an eye on this. I'm sure it will deliver some results already this year. And then we are closing up to the launch pad of Hansa 2028. As soon as we are done with 25 we will start 28. So expect new operational and financial targets to come as soon as we have reached the current. And most likely we will present that during a capital market date somewhere late this year. So with that we open up for questions. If

you wish to ask a question please dial pound key five on your telephone keypad. To enter the queue if you wish to withdraw your question please dial pound key six on your telephone keypad. The next question comes from Lucas Mattson from Indirs. Please go ahead.

Good morning Erik and Lars. Lucas here from Indirs. Thank you for your time. Thank you for a great presentation. Could you start off by elaborating a bit on what factors are expected to sort of help to bridge the gap to the 8% operating margin target in 2025 and to what extent is reaching that target contingent on an economic recovery given your outlook for a potential upturn in 2025.

I can start Lars if you'd like to continue. So we are not relying of course we hope for a market recovery but we're not relying on it. Hope is not a strategy. So what we are doing is we are collecting new customers and you know that today's sales is tomorrow's revenue so the customers we brought in last year will help us to drive towards this goal. Then we have done these major activities we talked about and there's always a startup phase with this was a state of the art. Now we have if you remember we opened up the sheet metal mechanics factory in Estonia last summer so now we have three state of the art factories Estonia, Sweden and Finland and of course there is a startup of them but that also drives the margin. And then we have all the other activities and not least the synergies. The margin increase comes from higher efficiency caused by our cluster concept. So when we get our business together that will also drive the margin. So there are a number of different things that will make us we are very confident about this margin goal this year and it's not relying on a better market. Okay

great that's very helpful thank you. And then you mentioned organic growth towards the end of the quarter. Could you specify which segments or geographies that are contributing most to this growth?

No to give you a clear answer. You're not revealing that but we are happy to see because again we need organic growth and it's not driven by the market. The market is rather flat since it started a year ago. It's driven by new orders and new sales so we're glad to see that's kicking in and that's also what will drive organic growth further on if you would accept that answer Lucas. Okay okay that's good.

And then lastly have you observed any recent shifts in customer behavior in response to the rising global economic uncertainty due to the tariffs and so on?

Yes yes and again we have a very low percentage of less than one percent for the U.S. so we are not affected. What we see though I had a very interesting customer meeting the other week where there was one customer who said now we will move the manufacturing to Europe. They had it in the U.S. actually I had two such a meeting last month so it can be more disruptive that people move manufacturing to be closer to the market and if you have a company offering manufacturing in Europe for Europe that could be the obvious choice. We have not seen so much in the other direction. I think that Europe is still in the top of our end market so it's just positive.

Okay interesting thank you very much for taking my question.

Thank you.

The next question comes from Fredrik Nielsen from Red Eye. Please go ahead.

Thank you good morning Erik and Lars. I want to start with the margin in other markets. I noticed that you mentioned that seasonality might have some effect but still I mean it was down like one and a half percentage points compared to Q4 and I mean over time we should expect it to move towards main markets in regarding margins. So is it just seasonality or is it something more having a negative impact in the quarter?

Hello Fredrik. If you're looking into the graph maybe I can show it down to the right you see that if you take away the Q4 you see that we are increasing the margin. So the main reason is the seasonality effect in Q4 which we have seen also in 2023. In Q1 we had this project in Poland which is part of Central Europe and part of other markets that led to lower margin but we still are solid in our belief that we are on the right track and on the way to see more equal margins in other markets and main markets.

I can add a bit to this Lars is pointing at the right way here on the graph. So if you look at the quarters for the main markets 24 it was 7.0, 7.2, 8.9 and now it's 9.4 but in Q4 it was 8.1 so disturbing in the series. If we do the same exercise for other markets you see 3.3, 4.0, 4.4, now 4.9 but Q4 disturbing in the series with 6.3. So this seasonal effect in Q4 is disturbing a rather straight line otherwise.

Yeah that's a good point but in 2023 for example it was roughly the same for the full year so I mean it's a bit hard perhaps to draw seasonal conclusions from just one year that was my point but perhaps that's representative for the current business there then.

You had the same thing in 23 so from Q3 to Q4 it was down in the main market 12.4 to 10.4 and up in other markets 5.7 to 6.5 so you have the same season effect there and it's just driven that we are more active in other parts of the world than in the main markets during the end of the year.

Okay maybe my numbers are wrong then I have to look at it. Let's move on so could you give us some color on the impact on growth from orders from new customers which you disclosed quite a bit last year and the demand from current customers respectively.

And the thing is that what you can expect from the new uncertainty and turbulence in the world economy is that there will be a further recession everybody's been waiting for the upturn of the economy it's been was talked about that it was de-stocking a year ago but de-stocking indicates it will be for a short period we don't believe in that we believe rather that's a new level on demand that we don't expect it to go back even to the post-covid level which was really really high but the question is when will the upturn come and still we see that our cost customers are positive about this year it has not affected their full year forecast we still believe in a in a good year not so when we give our forecast we base it on what we know now and it seems like it will continue not bounce up but not go down either so maybe the locomotion in the US will not have this big impact on our customers we don't know that yet we will know that by the end of the year it could be that we see this upturn which has been expected for a long time or it could be that there's had some disaster scenario for all companies in the world but all we know now we believe in a rather solid situation for the rest of the year with the same demand adding new customers that's what drives our increase not the previous demand

okay great and last question from me the 6.5 billion in sales target for this year it seems a bit stretched perhaps given the current environment do you believe another acquisition is needed or do you think you can reach it organically

well lars so you or i answered this you can start i can start yeah but the truth is that we are lagging a bit behind because we were expecting Ledernd to be part of Hansa sooner so for this quarter we have 200 million sec that was not included in our books so we are lagging a bit behind so we have to do something obviously if that was the case we would be on a yearly basis 6.2 something so it would be not so far for 6.5 now now that's not the case and of course we need to measure the actual figures not the performer figures so it means that probably some more activities are needed again i will be a little mysterious but yes we believe in the target still

okay great thanks that's all for me

the next question comes from Oliver Ousatelo from Acti Esperana please go ahead

good morning guys and congratulations to us all the quarter you addressed the increased activity in the german market as well as the new customer dialogues as a consequence of the lead and acquisition i was wondering if you could elaborate on this have you seen any new sales that might even impact q2

yeah again there is a time between when you sign an order and you see it in your books as well as the increase revenue so what is driving the sales right now are orders we took last year took takes maybe half a year to get it up and going so we cannot say that that will impact q2 what orders we have taken in q1 but the one from the last year now what i think is interesting in this question is that if we do like we did last year some MIG exercise in Germany so MIG is when we take over and restructure supply chain then it is faster than traditional or you need one sales because then you can in a few months grab a large portion of manufacturing and move it somewhere where it's beneficial for the customer and also gives a large impact on Hansa so would we be able to conclude some of these MIGs in Germany for instance that could have an impact already this year but when it comes to traditional sales it's a longer period but was that an answer for your question

yeah i think that's a solid answer and i suppose it saves to assume that you had some perhaps some MIG orders in your pipeline then

we always have something in the

pipeline yeah very enough do you think that this increased activity in Germany will drive increased investments or any optics going forward

i can answer on that one we see that the investments are lower than a year ago which we also said during 2024 that we will see a decrease in investments in 2025 we do not see any major investments due to new orders we should be able handle those without any major investments there can always be some minor investments that you need to do in order to add new type of customer or so but no major investments needed

i see great so turning to the integration of Liden and i've tried to address this previously what what does your integration plan look like i suppose you have more a better view of that now and do you expect any additional costs

i can start maybe if you like to continue Lasse so there are some major steps in this one is of course to cut Liden into two pieces which i talked about previously one for the Botex one for cluster Finland that's done already then we have the integration we have now we try to optimize the different manufacturing technologies in the different sites so that's a longer term work but the most important thing the most important thing is that we work together as one team and that's again why it's so important to check the company culture before an acquisition and we see now that already we feel like one unit so the most important part of the integration being one company has already been executed then there are a number of other technical things of course Lasse is working with the child service center to make sure to add things together there we are talking about increasing the margin by maybe transforming the manufacturing between the sites and all that that's a longer period but the main activities are already done and that's why we are quite positive right now

and when Eric says that the these actions are done and the factories are split between the main markets and other markets we still do not see the full effect in the P&L of the synergies that will come in during 2025

Okay fair enough and as you talked about Eric how do you feel that these changes have been received by the leading employees and what impact have you seen on the Hansel Group?

Sorry can you by the people how they feel about this or what you mean?

Yeah exactly how it is by being received by the employees?

Yeah and that's I think is a good lesson learned for anyone running a company that the thing we do when we separate the companies so the Estonians are much happy to work with other Estonian there's always a little language barrier and could be some culture things so the same thing when we acquired Orbit One then we got a unit in Poland and one in Sweden we operated it and we really felt appreciations from the workers being part of geographic area closer than rather than being cross countries so that is one thing secondly we have a lot of activities going on we put a lot of energy and focus on the company culture so we are working hard with that no accidents that there should be no harassment or corruptions and all things and that's also something that people appreciate to be part of a company who really cares about these things so I would say that we have had really good mood let's say with the workers actually right now we have a new sourcing team in the building from from Leiden and Old Hansel and Orbit One and they are working well together so yeah overall a good integration.

Sounds great and I have one last question from my end the sales of Leiden amounted to 320 million for the quarter and I think this was surprisingly high can you elaborate a bit on what has been driving the sales and are there any seasonalities here that we should take into account?

I think that it's a big part of this is of course the new factory in Ullinen with a new capacity and that capacity has let's say the machine has just started so that capacity would increase over the years I wouldn't say it's unusually high it should be like this and more and I think also that the customers appreciate that I can say the customers appreciate being part of Hamsa so now they know that we have another strength and other size meaning that just the size itself makes it possible for them to place larger orders so don't expect this to be a one time for the first quarter rather the other way around.

Interesting thank you for solid answers I get I will jump back into the queue.

Thank you. The next question comes from Forbes Goldman from Lidl.

Yeah hi thanks for taking my question just one follow up on what you said there about Lidl and I guess my question is what sort of capacity you're expecting for this company throughout this year when considering the recent investments in incapacity that you did last year?

I can only answer on a global level and I can say that we have capacity for 6.5 billion SEC without a problem and that's what we have been that's the dimension of Hamsa for this phase so but of course it gives another opportunities we now as I said we have three real estate with our treatment and mechanics factories in Sweden, Finland and Estonia of course they can help each other so there is a secondary effect of being larger so the capacity itself is 6.5 but actually if you rotate it a bit it will be much much higher.

All right that's great and you mentioned the lead and operating margin was in line with Hamsa anything you can say on the organic sales level is that also or that should maybe be a bit higher than than for the old Hamsa considering the investments you did in capacity last year?

I don't know if we can go into details but what I can say like this that I expect the growth of let's say Lidl to be higher as a part of Hamsa than before all factories that we have bought the customers appreciated it and there are new opportunities then of course there is a volume but in general we see more products so I would expect that sales wise we will see some synergies on

this. All right understood and then a final one on CAPEX having completed the acquisition we now see CAPEX levels coming down a lot year over year I think it's 30 million here in Q1 is this level representative for the rest of the year or should we expect anything else going forward?

We have said for a long time that the CAPEX will go down and we have invested quite a lot in the new factories and machines to the new factories and as Erik said we have invested for a capacity of six and a half billion so of course depending on the market and the growth but if the market stays as it is right now and the volumes are in line with what we see today you can continue to see quite low investments in Hamsa of course it's always needs some replacement investment but no major needs for expansion investments.

All right that's understood thank you and well done on a nice quarter.

As a reminder if you wish to ask a question please dial pound key five on your telephone keypad. There are no more questions at this time so I hand the conference back to the speakers for closing comments.

Thank you so much for joining this call thank you for all the interesting questions I hope that you will continue to follow us as we continue to build Hamsa. Thank you so much and bye for now.