Idun Industrier AB (publ)

Hello and welcome to Idun Industries presentation of the second quarter of 2025. My name is Carl Korsheden and I work as an analyst here at Carnegie and with me in the studio I have the CEO and CFO from Idun who will help us go through the second quarter and where we will round off with a Q&A. And on that topic, I just want to remind you again that there is a chat function for those of you who are listening in there on LinkedIn. So just shoot your questions and I'll read them up in the room. With that said, I'll hand it over to you and the second quarter.

Yes, this is only the second quarter that we are presenting a quarterly report, so I was going to start by giving a short introduction to Idun Industries. So we are an industry group that accounts for about 2.2 billion, has a turnover of –at just over SEK 300 million. We are an industry group with a focus in the north. About three-quarters of the sales take place in Sweden, more than 90% in the north. We consist of two business areas, manufacturing, which accounts for about 60% of revenue and services, and maintenance, which accounts for 40%. If you remember two things about Idunp, on the investment side, we are looking for market leaders. It can be market leaders within areas that may be quite small, but where you otherwise have a very high market share. And if you remember one thing about our business model, it is that we add the pilot school in a very consistent and, one might say, dogmatic way. All of us who are in the fashion company management have most of our private capital invested in food stocks. And in 100% of the cases in the group companies, we have management who are shareholders in respective group companies. So there is a very strong interest community with you as shareholders in food industries. A few words about the long term. Since we established a little more than 10 years ago, IDUN has had a strong financial development. From 2018 to 2024, the turnover has grown by about 30% per year. And we currently have a net debt over EBITDA of 2. Så det är bara för att man zoomar ut och tar den långa bilden. Över till dig, Oskar.

Thank you, Henrik. Yes, we can say that we are not quite satisfied with this quarter, which historically has been our strongest, both in terms of turnover and income, but still on good levels, but could have been a little better. The turnover increases organically by 0.3 percent, while EBITDA organically decreases by 6.2 percent. We have two business areas and within the business areas of production or the companies that are included there, we have both positive revenue and EBITDA to growth organically in the quarter and also the interagro forest additional acquisition. The additional acquisition to LMI contributes positively with another 5 million in results. In the area of business, service and maintenance, we lose about 5% of our turnover per quarter. And it's not a specific company or any individual company that stands out, but we have a few companies where we have a slightly lower turnover. And among other things, as we mention in the introduction, we have Ståtöga Emma Teknik, which has heavy industrial maintenance. And we have Elema, environmental analysis, which does air emission measurements. And Triton, wave technology, which serves and manufactures waves. We are happy with the quarter. We continue to strengthen our gross margin. We go from 60.8% to 61.2%. At the same time, the EBITDA margin is decreasing somewhat, which means that the costs have increased a little compared to previous years, so that the turnover does not really cover in comparison to previous years. If we sum up, the revenue increases by 2.6% to 592 million SEK and EBITDA decreases by 2.2% reported to 89 million SEK. The EBITDA margin in the quarter lands at 15% and if you look at the last three years in the quarter, it has been between 15% and just under 16%. If we look at the last 12 months, we have a revenue growth of 3.2% and 2.4% organically. And on the RÖS result in Bita, we increased LTM, or the last 12 months, by 4.4% and organically by 4.7%. Funly, the cash flow is strengthened in the quarter from 54 to 71 million and the improvement between the quarters is mainly improved capital movement. Also, results and results adjusted for Goodwill continue to increase in the quarter and range from 4 to 4.2. And here we see corresponding graphs divided by our business areas. Manufacturing, where, as I said, both revenue and revenue increase organically for the companies that are included there. And we go from 351 million in revenue to 377, and where we also have Interagro Skog, which contributes positively with about 5 million in the result. For service and maintenance, we lose about 5% of the turnover in the quarter. We improve the gross margin in both manufacturing and service and maintenance, but given that we have increased costs compared to the previous year, we lose a bit of margin. If we look at cash generation, it is still good and in line with the history. What can be mentioned briefly is that only 2022 stands out. We, like many others, during 2022 built a number of layers. And then there was a lot of timing in customer invoicing at the end of the year. So there we had a slightly weaker cash generation, but a part of it was also released in 2023. And with that I leave it back to Henrik.

Yes, if we look at investments in the quarter, the biggest thing that happened there was that we went up in ownership in our group company To Be Best Business from 70% to 98% for about 56 million kronor. This is a group company that we think very much about, Stabilt, which sells industrial components and we are very happy to go up in ownership there. In addition, just after the end of the quarter, we made an additional acquisition in the Estonian clay manufacturer Barem via Fridahl Rydéns. And here, apart from being in the Baltic, we have a little more than 20% of the market in Finland. Furthermore, our group company Stega also made an additional acquisition in a company called Prestec in high-pressure laundry and dust cleaning. Tittar vi på finansieringskostnaderna så har vi kommunicerat tidigare att det gjorde vi i slutet på Q1 en omfinansiering där vi förtidsinlöste en obligation och även gjorde om en del av våra förvärvslån och att det skulle minska våra räntekostnader på årsbasis med 20 miljoner kronor från och med Q2 och då är det glädjande att se att nu i Q2 så har våra räntekostnader minskat med 5 million kronor according to the plan. Furthermore, we have included more group companies in our shared cash pool, so that also that part feels really good. If we look a little forward, then it is so that it is, it is still, hopefully we are at the end of the low-income situation. We get signs of changes, but from our group companies that it is starting to get better, but not when tydliga breda vändningen, den låter ju vänta på sig, så fortsatt osäkerhet måste man väl säga. Men våra gruppbolag har starka positioner, de är välpositionerade för att kunna både försvara sig och gå bra även framåt. Och vi på Idun Industrier har en stark finansiell ställning och vi ser goda möjligheter till förvärv framåt. Sista sidan här då. Och det här egentligen för att visa poängen stabilitet. Ja, vi har haft ett kvartal här Q2 som vi inte är nöjda med. Zoomar man ut bilden så ser man att vi har en väldigt fin stabilitet över tid, både vad gäller bruttomarginal och rörelsemarginal. Och vi känner att det finns ingenting som pekar på att vi inte kommer att fortsätta den goda stabila trenden även framåt. Och där sätter jag nog punkt.

Great, thanks for that. I remind you again that there is a chat function there, so if you have any questions, write them in the chat and I will read them out. In anticipation of potential questions, I can start. One thing I thought about when I read the report was that the gross margin is up here year over year. What struck me then is that you don't export a lot, but you have a lot of foreign currencies. How much has FX played a role in the delta to the brutto margin this year?

It's not so easy to say. It's true, as you say, that we are a lot of Swedish Nordic companies and we have more imports than exports. But there are also product mix effects. Some companies are doing better, some are doing worse. We make price adjustments. It affects us positively, but it's not easy to say what the effect is. We don't follow it specifically.

Great. We have a question here. What do the order books look like for H2? Do you notice any changes, or do you still see customers waiting in service and maintenance?

It's still waiting. It's not that it's going down, but it's not that we're seeing the order books explode. It's still waiting.

You mentioned that the OPEX base is increasing year after year. You also mentioned in the CEO speech that you will address this under H2. What initiatives do you see that you will take? How much can you think that it can result in on the cost side?

Yes, of course, we look at it when the costs are a little too high in relation to the revenues. Specifically, there are some companies, Triton, where a number of people will be reduced here during the fall compared to the spring, as well as Fridahl Rydéns. In that case, it is more an effect of the investments we have made to make it more effective. And then we have a number of companies where we may not do a replacement recruitment or wait with a planned recruitment where we go forward a little balanced. Because you should also remember that the result compared to the last quarter, the last comparison quarter, goes down 2.2 percent. So that we should not do an all too dramatic and wrong conclusion should not be drawn from it all.

No, it is clear. I got another question here. You write in the report that you will look over costs Yes, that was probably exactly the same question I asked. So, let's move on. Right, you've acquired Barem here in Estonia, as well as an additional acquisition here in Stega. Can you give us a sense of what multiples you paid for these acquisitions? And if there is any seasonal effect or value that you should recognize here, and maybe also something about how you see the outlook here for H2 and Inner26 for those companies?

No, but the multiples are probably unchanged. We usually say that we pay between 5 and 8. It sounds broad, but it's not. And that's the case for these companies as well. It is not that we have felt that it has become either more expensive or cheaper in the short term, but they are probably where they usually are. As for the fall, we believe that both companies gick ju bra 2024 och går bra nu, så vi tror att de kommer att bidra till resultatet under hösten. Sen är det två små till SRV, så det är inte någonting som kommer att märkas jättemycket på IDU-nivå, men om något blir ett positivt bidrag.

Just det. En följdfråga på Barem-förvärvet. Det vore intressant att höra era förväntningar kring vad förvärvet skapar för möjligheter för Fridal Rydéns.

No, but it does, because this is a cast factory in Estonia, which sells partly in the Baltic countries, partly in Finland, where most of the sales go, and then you sell a little to some other countries. So here there are partly opportunities to actually sell some of Frida Lundén's products, both urns and casts, through them and increase their assortment. But they also have a certain amount, quite small, But effective and cost-effective factories, some of the things they manufacture, some materials, we would absolutely be able to use in Fredalder Lens as well. And this is something we are looking at now, so to speak. This was carried out on the 3rd of July, I think it was. So it's just now that this is going to be launched, to bring out positive synergies.

Great. And if you look at the procurement market in general, and perhaps the sentiment, have you experienced that there has been any delay here in connection with Q2, when you have had everything with Amen Liberation Day and all that problem? Or does it feel about the same as before, and do you have any idea of how How that part of the business can be developed here under H2? Can you expect any more acquisitions here? Or do you feel that you have done enough in the short term after these two additional acquisitions?

It's not enough, but we're looking forward to more acquisitions. That's the first thing to say. Liberation Day or... It is rather that it affects the existing group companies' markets, their customers and the uncertainty that makes it a little slower. But on the other hand, I would not say that it affects the acquisition opportunities. No, it doesn't. We are satisfied with the two additional acquisitions, but we will continue and there are more acquisition opportunities.

And regarding the financing costs, you mentioned last quarter that they are expected to go down after you use them in your financing and so on. I think you used the new credit space to solve one of these bonds. But you still have one bond that, compared to the new financing, looks more expensive. Is there any plan or something to possibly solve that bond? Or do you have any comments on that? Yes, there is. You are probably better to...

It is true that it is a little more expensive than the bond and from June 2026 we have the opportunity to resolve it on attractive terms. The loan agreement is prepared so that you could jack it up in the loan agreement, the debt in that case. And that could improve the net income by 7-8 million kronor on a yearly basis. But that is something that we will evaluate during the coming year.

Excellent. And you also mentioned that more companies are now joining this joint cash pool and that you are starting to get closer to the transformation. Does that mean that all companies are now part of this cash pool and can you perhaps develop a little about what advantages there are with this for Idun that have not existed before?

I think if you go back a few years, all of our subsidiaries have had their own bank position. And when you have 18 group companies, you have some unnecessary reserves in the system. And with a joint cash pool, we can collect liquidity in the mother company, and from there we need fewer reserves. We still have plus 300 million at the company level, and most of it is in the mother company. But so far, Swedish companies are involved. We have not included any foreign companies in the current situation. But now we are at least satisfied with the work. Excellent.

I have no more questions, but I saw that I got another question here in the chat. How has the marginal development been in Fredal Rydéns since the acquisition?

Marginalutvecklingen i Fredaludens har varit positiv. Vid förvärvet så var det väl i runda slängar knappt 10% som de hade, där vi såg en möjlighet att förbättra och de har stigit utan att det kanske blir för specifikt, för vi redovisar inte så, men ett par procentenheter uppåt har det gått. Det gäller både bruttomarginal och rörelsemarginal, så vi är mycket nöjda med utvecklingen i Fredaludens.

Great, and I can't see that we have anything else in the chat, so I don't know if you want to end with a few words, and then we'll thank you afterwards, maybe.

No, but thanks to you who listen to this, and the main thing is really that we see, we see something with caution in the future.