Hanza AB (publ)

Thank you. Good morning and thank you for joining us. Today we are hosting this order cast from Sunny Årgäng in Sweden, where we will later this afternoon open a new factory, another important step forward for our group. But first, of course, we'll present the year end report 25. Now, this is a report that shows record results, that we've been able to execute our Hansa 2025 strategy according to plan, and also that we now enter the next phase, Hansa 2028, on a stronger position, even stronger than we originally anticipated. But let's begin then with our business model. It remains unchanged. And it's increasingly relevant. Our model is to create these manufacturing clusters. It means that we are not just offering manufacturing, but we are also offering our customers, the product-owning companies, to consolidate their suppliers. This gives a number of advantages, of course, cost-wise, but also quality and delivery accuracy. And we also see now in this world, which is clearly marked by the geopolitical uncertainty, And that there is a need for supply chain restructuring, and that's where our model have proven really strong. And. The business model is one thing, but execution is the aim of the game. We have a very clear. Execution plan we do it face by face and since start we have developed in these phases you see on this slide. Each phase has had a clear operational and financial targets. And the idea is when we enter the next phase, we should do it on a certain higher level. That's the goal of a phase. 2025 was all about balance and scale and building this robust European platform. And we will soon then launch Hansa 2028, which will be the next step on our journey. So if you then look at the agenda, We will run the normal disposition, so we will have the progress report. Lars Åkerblom, our CFO, will talk about ESG and financial development. We will have some outlook and of course the Q&A session. Please use it for any questions you like. Progress reports, the highlights of 25 actually. So this was a year, another year of structured execution. One year ago, we also, when we launched the Q424, we're also sitting here opening a factory in Töksvård. It's about 20 kilometers from Årjäng. And that has been really important, a new assembly building. And then in March, we completed our Leden acquisition. That's a company with units in Finland and Estonia. It also led to an increase in sales. When we buy companies, not only can we find cost synergies, but many times also sales synergies. And that was the case with this acquisition that led to an unexpected increase in sales and also a strain on the profitability, which we reported last year. But it was good. This acquisition came with a number of nice factories. We see one, a brand new sheet metal factory in Oulainen. a fantastic unit. And then in March, we launched our defense program Lynx, supporting the defense industry while safeguarding them the capacity for our other customers. And as a part of that, we also acquired a company called Melectria, signed the deal in July and waited for the approvals from the authorities and were able to close the deal in October. So a big part of 25 has been about establishing this dedicated defense platform. Moving on in the year. So just a couple of weeks after closing Melecta, we did a truly great acquisition. We bought the company called BMK. I would rank this as one of the or maybe the best EMS company in Europe. We've been chasing them for many years and finally we could agree. It's a company with a main unit in Augsburg. You see in the picture up to the right, the sales is about 3.3 billion SEK. And normally when you have an EMS company that size, it's scattered over many different kinds of factories. In this case, it was a main unit, which really gave advantages. In November, then we had to respond to this increased demand I mentioned. So we added a new factory of 10,000 square meters in Oläinen. So next to the one you saw in the previous picture. December, we were done with the factory that we're going to inaugurate this afternoon, the official opening today. January, we were able to close the deal with BNK, got all the approvals in time, and also we got a very nice recognition. We were awarded supplier of the year by 3M among more than 6,000 other suppliers. A really good nice proof of our operational reliability i was then allowed to go to to minnesota to receive this award and it's not because of me but the fantastic people we have in hamster but the really good validation of our execution quality and with that i will leave the floor to you large to talk about esg

Thank you, Eric. And starting with the ESG and the main activities that we have done in 2025. And of course, mainly focus on the CSRD reporting that we will do for the first time, including an audit for those figures now for 2025. Also to integrate the acquired companies, Leden, Melectria, and starting up with BMK now to involve in the ESG. And then not only in the climate, but also on all the other aspects on ESG, making sure that we have the same follow-up and ways of working with the acquired companies as we have within sort of the old Hansa. We are also focusing on cybersecurity, of course, very important, especially when we are entering into the defense sector and with the LINCS project that Erik talked about. You see the KPIs on the right, the accidents or incidents are on a stable level, going down a little bit. The waste, the increase in waste, hazard waste and energy emissions. is mainly due to um uh in it has ways that we we closed down a factory and had a one-time effect and the energy is due to lead and acquisition with which the type of of technology they have reduction they have has have a higher use of energy Looking into the figures, as I said, we have a really strong quarter that we are reporting now in a strong 2025. And I like to start with sort of the overview of where Hansa is right now and the development. We are right now on 1.8 billion second in sales. If you take that times four, you're a little bit above 7 billion second sales. And we reached a 9% margin in Q4. If we look from the performer figures that we also have as a financial target, including the the companies that we acquired during 2025 we are about 6.5 billion sec and with an 8.3% margin. And I also like to highlight what you see up to the right, the development of the profitability within what we call old Hansa excluding the acquired companies. And we see the downtime in the beginning, we bought Orbit one, we had a little bit lower margin in the beginning and then we were able to increase the profitability uh we also had an effect on the economy in in 2023 so we're really proud and and now to see that we reach close to 10 percent in uh the old hansa um without the the acquisitions and by that we can conclude that we fulfilled all the financial goals that we set for for hansa 2025 And we go into the Hansa 2026 with a really strong profitability and strong company. More details, looking into sales, we grow by 40% and organically we grow by 10% in the fourth quarter. And again, as I said, the sales in 2025 were 6 billion SEK, an increase of 24% and organic growth of 3%. And the earnings, 9%. Comparable units, close to 10%. So a quite rapid and strong increase of profitability. Financial net, a little bit higher cost compared to last year, and that is of course due to that we have a higher interest-bearing debt. Earnings per share increased to 1.65 and for the year we reached 5.38 in profitability or earnings per share. Looking into the cash flow and We continue to have a strong cash flow and what you see in the graph to the right, you can see that we have an effect when we do acquisitions. We've been able to increase or improve the working capital and a year ago in Q4, we saw the effect of the Orbit 1 acquisition and now we see an effect on the Ledon acquisition. CapEx has continued to be on a lower level compared to a couple of years ago. If we continue to have this strong organic growth, we will of course need to continue to invest and maybe increase the CapEx a little bit. We decreased the net debt if we take away the effect of the acquired companies and we are on a quite good level if we compare the net up towards the ebta we are on 1.9 we have set the financial target to not be above 2.5 so we are well above below that target and the board of directors they propose in higher dividends they propose 150 sec per share and one comment there is that in based on the on the today's number of shares that will be approximately 94 million sec in dividends but the the owners of bmco um that owns 27 of of hansa today they have an obligation to pay back the dividends as a shareholder contribution so the net dividend will then be 69 million sec which is uh probably of the net result in hansa and our dividend policy is to pay out dividends of approximately 30 percent of the net results so we are on that level that we have in in the policy um looking into to the the different segments we have main markets which is approximately on on the same level in organic growth the the growth is due to acquisitions here we have one customer in germany that uh compared to to the quarter four last year have decreased a lot in sales so if we exclude that customer and that effect we actually have an organic growth as well in in the main markets We reached 7.1% for comparable units, 7.8%. And then we go into the other markets and here we see really strong organic growth and quite substantial increase of profitability. And if we go back to what we said in Q2 and Q3, we said that increased water intake and expected to see an organic growth in Q4. And this is what we see right now. And the sectors that we've been choosing to focus on, energy, defense, and those kinds of sectors are growing. We also have a minor factor that we sold some components that increase the sales, but a strong quarter, both in both market, but especially then in other markets. And by that also the ownership structure and the biggest change in January is of course that the three owners of BMK received their shares and are now on the list of the biggest. shareholders. And I also like to highlight the fact that both Eric, the CEO and other top management have shares in Hansa 1% of Eric and in total one and a half percent of the owner belongs to the top management. And now I leave back to you Eric for the summary.

Thank you, Lars. And let's have a quick summary then. First of all, we have now created this European platform that we were aiming for. You see it illustrated to the left. Hansa is about manufacturing in Europe for Europe. We also have, so we have five clusters you see on the map here in Europe, but we also have some standalone units. We call them gateways. These are specific factories for specific customer needs, but the clusters are located then in Europe. So about 5,000 people in total, and now our original ambition for this phase was to enter Hansa 2028 at the 6.5 billion sec level. But we see now that we enter at approximately 10 billion sec, including BMK, which is then over our own expectation. And we've done this keeping the Lars explained this, that we have our financial discipline intact, really important to do this quick growth with a strong cash flow and a good strong balance sheet. We also see that the structural trends, they are supporting our direction and the links program, which is important not only for Hansa, but it's really important to support the defense and security situation is going really well. We started that in the Nordic countries and now we are expanding that in Germany. So on the March 10, we will have our capital markets day, and then we will outline how Hamsa 2028 will accelerate profitable growth from this new level. And I hope that you will be able to attend them. And with that, we are ready to take your 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 Anders Akerblom from Nordia. Please go ahead.

Yes, good morning. Thank you for taking my questions. Firstly, I'd like to ask a bit on organic growth and the respective segments. So in main markets, you stated that it was mainly due to one customer behind the somewhat slower organic growth. And then in other markets, you mentioned the component price impact. Could you quantify that and what it mainly related to? Thank you.

I can start, Erik. And hello, Anders. The impact on the one customer in Germany wouldn't mean that we would have the same organic growth in main markets as we have in other markets. And also the component that you mentioned does not have the impact, big impact, the major impact on the organic growth is order intake, new customers and existing customers that are increasing

I can also add to this, Anders. Thank you for calling in. So for us, it's also a bit complicated that we are also transferring orders between the clusters in a certain way, according to the customer's expectation. And we have seen that we need to further explain this. And that's why I'm writing in the CEO letter that on the capital market days we will increase our financial presentation a bit so you will get more information how this works internally because we understand it can be a bit confusing but I think that the main thing is in this report the top line the growth yeah no makes uh make sense um I'd also like to ask a bit about on that theme

I mean, you alluded to it, but just to have it clear and transparent, the sort of margin development between the two segments, quite diverging, obviously. I mean, the strong performance in other markets, simply operating leverage or something else here that we should consider to a greater extent, such as the sort of component comment you made or something like that?

It's connected to this and we will really go through this on our capital market day to explain more how this works. We need to give you more information package, but what we see and what I think is important is the increase of the large mentioned that the comparable units that we have been growing then from when it was down to 5% in Q1 last year to 8% in Q3. And then we saw up to 9.9. And that's a combination, of course, of our programs increasing the margin and the organic growth. So there are two components here driving the margin in the fourth quarter. We would have increased the growth even if it was flat sales. But these two things combined makes the good margin in the fourth quarter.

Yeah, makes sense. Final question from my end, if I may on Defense, could you give any update with regards to how large share of group sales is from the defense industry now?

A very clear answer, no. Please come on our capital market day, because this is also a request we get many times about the customer segment. We will do something about it. That's also what I'm indicating in the report. So you will get more information the 10th of March in just two weeks. Yeah, I'll be there. Thank you. Thank you.

The next question comes from Thomas Blixted from Pareto Securities. Please go ahead.

Thank you, and good morning from just to clarify on this question on the margin. Is it correct to understand that there is no sort of extraordinary effect that is boosting the other market margin in the quarter?

That's correct. And as you see, we always take both positive and negative one-time costs. We disclose them and take them off the adjusted EBITDA that we report. So no one-time effects on the margin.

Okay, perfect. And this is sort of a margin level that you target going forward. There's no unusually high mix effects or normalization to expect going forward.

We are not giving any forecast. What we also say in the report is that don't focus too much on the different segments. It can be up one quarter and maybe a little bit down the next quarter. It's the most important is to view the Hansa overall margin. We have deliveries within the segments that has an impact of both sales and margin in one quarter. So I think that the The most important message is that we see quite strong organic growth in Hansa overall and we see a better margin in Hansa as well.

I can also make a comment on that and that's the effect that Lars talked about with Orbit 1 that required and that it was exactly at the same time as the recession in the beginning of 24 so it downloaded the whole group's margin and then we came back to 9.9 now we've done this large acquisition of bmk and we said that they're running a bit above seven percent so that will also have an impact on a group but we're also sure that we will um be able to raise that margin quite substantially and that's what we're going to talk about also on the financial targets that we represent on our capital market day the 10th of march

Thank you, that's very clear. Just lastly, if you could give some more color on the main growth drivers this quarter, customer segments. And yeah, that would be very helpful.

And we're back to the previous question. And unfortunately, we're not able to do this right now. But we can only talk in general, stating that, of course, defense is an important part, energy is an important part, and there are other parts as well. But stay with us and do visit our Capital Market Day. Then we will talk much more about our segments and customers.

That sounds good. Thank you. That's all for me.

See you later.

Thank you.

The next question comes from Oliver Usitillo from Akshi Sperana. Please go ahead.

Good morning, guys. I hope you can hear me well. First of all, of course, I'm interested in hearing all your comments on the margin development and the outlook for the organic growth, but I guess we will come back to that during the captive markets day. So I guess my first question will be regarding, you've done some heavy lifting, especially in Poland over the last year. Are you through with this restructuring program currently? Are you happy with the current sort of plan set up that you have?

Hansa is not and will never be ready, but we are satisfied. We have done, or not we, but the fantastic management in that area has done a fantastic job. So we are really happy with that also. saying that we'll never be ready so now with the BMK acquisition we got another really nice unit in Czech Republic which needs to be integrated then in the Central Europe cluster so there's always something new to do but so far the the work we did both in in Finland Estonia and Poland has been really really good all right and in terms of integration of both lead and and melectria

Are you through with this currently?

I would say that when it comes to leden we are done and that was the dot over the eye was the acquisition of the second building in Olajnen. When it comes to Melektja we're still running this as a certain project because it's a bit technical but in order to have a good offer for the defense industry we keep these units separately as a platform for that growth and we will do that for a time this year, but by the end of the year that will be integrated in the rest of the group. But that's on purpose that we keep it as a special vehicle for the defense industry.

And previously we have seen that Leighton is falling a bit behind on the margins. What are the situation in Q4?

We said in the Q3 report and that still is the message that Bleden is improving margin and we expect Leden to be on the same level as the other sites in Hansa from 2026. So in Q4 you have an impact on the profitability due to Leden but it's continuing and progressing as we planned.

All right. Do you think that you might be able to reach the like legacy on the margin level for later than during 2026? Or I mean, at what point in time do you think you might be able to reach this eight or 9% or whatever?

We have said during 2025 that this move of the factory and the increased level of orders from customers, taking care of that led to a decrease in profitability. And we took the decision to sort of take that cost in order to be able to deliver and satisfy the customer. We also said that from 2026 we expect that if effect to go away and we shall be back on on normal figures if that is eight or nine percent I will not comment all right and I think my last question previously I think we've discussed

Melectria are running on a bit higher margin than the legacy Hansa. Can we assume that Melectria are running on a double-digit margin? Do you think that's a fair assumption?

You're always trying to make us do forecasts, Oliver, but... We cannot do that, but we can say that the defense industry normally has a much stronger margin than the rest of the industry. And that's why it's so important also because the defense industry becomes the one that's pushing away other customers. That's why it's so important because they're paying better to keep them as a separate part of Hansa, not jeopardizing the rest of our customer group, which is also really important. But it's true, it's a higher margin, but you will not get any figures from that.

All right, fair enough. Thank you so much, guys. Okay, thank you.

The next question comes from Anders Akerblom from Nordia. Please go ahead.

Yeah, thank you. Just a final one from my end, now that everyone's done. I wanted to ask earlier about BMK. Could you... I know you don't like to do forecasts, In terms of sort of the run rate profitability of BMK, what's your expectation of your ability to scale up volumes in BMK and what would be the sort of potential timing of that and could you share anything in terms of sort of the incremental margin contribution from that?

By Lars thinking of an answer, not giving a forecast, I can give you some general picture on this. I spent a lot of time now in Germany and it's fantastic. It's really good engineers. I spent a lot of time with the customers of BMK and they have really received this in a good way. We see, like we normally do, a push from the customers because they see that there are some Some advantages, of course, BMK being part of Hansa, that's the sales synergy that we also talked about in Leden. So that's one thing. And of course, increased sales normally gives a better margin. Secondly, we do have, even though this is a very, very big company, we do have some synergies on the electronics and the purchasing side. So that should also help to do that. But in general, What we always do is that we make sure that we get it up to our standard margin on 8%, and then we go for our long-term financial target, which you will hear in two weeks from now. Lars, would you add on this?

No. I mean, you spend a lot of time there. I spend a lot of time there, and we are satisfied with the acquisition and what we have seen so far. yeah it's going to work well i think maybe also mention large that what you were talking about before that the reporting system and all that is is really progressing in all in this and all acquisitions you talked about the ec reporting or the financial reporting but both are of course important and and a major part of the integration to get that up and working and we expect to be able to present the opening balance and purchase price allocation etc. in Q1.

I think also Lars that our auditors gave you some compliments the other day about how fast and how good you implement this in the financial reporting system.

Yeah, they are satisfied with the work we do and how we integrate the acquired companies into the financial reporting. And that is, of course, important to understand and get an understanding of the acquired companies and make sure we have internal control and control over the financial figures that they report and then we report out to the market.

Very good. Thank you. Thank you both. Have a good day.

Thank you.

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 any closing comments.

Okay, thank you. And as there are no further questions, we will now move forward with the inauguration of our new factory here in Årjäng. But the remark, we have arranged tour of the sites here in Värmland. And for those who are interested in visiting our cluster, We will have this guided tour on May 7th. And you can register by sending an email to info at hansa.com. So that's info at hansa.com. Tour on May 7th. And it is quite worth taking the time. It's a very nice cluster. And we're opening again a very nice factory today. So thank you so much for your attention. And I wish you a good day.