Idun Industrier AB (publ)

Hello and welcome to Idun Industries conference call for the fourth report of 2025. My name is Carl Korsheden and I work here as an equity research analyst at the DNB Carnegie with a focus on these more acquisition driven companies. With me here in the studio I have the CEO and CFO of Idun which will talk a little bit about the quarter and then we will follow up with a Q&A session in during which you are highly encouraged to participate we have a chat function so if you type your questions there i can read them up here in the studio to to the management team uh yeah so with that i hand over to you and then fourth quarter

So welcome to the presentation of the fourth quarter. I will start with a brief introduction or repetition, if you will, of Eden Industriet, who we are. So we are an industrial group of company with a turnover of some 2.3 billion Swedish and Ebitda slightly above 300 million. Eden is primarily a Swedish or Nordic company. Three quarters of sales is generated in Sweden and more than 90% in the Nordic countries. And we do have subsidiaries in Norway, Finland, Denmark and all three Baltic countries. We consist of two business areas manufacturing and service and maintenance and we have 20 group companies our companies we invest in manufacturing industrial trading companies and industrial services companies and if there is one thing also to remember about eden it's that we really use the the pilot school we have in the board of directors of eden Everyone is an owner, shareholder, owner of Eden. In the mother company, all of us have the bulk of our private capital invested in Eden shares. If we look at the group companies, all the 20 group companies, we have co-ownership in each respective company in the management team in 100% of the companies. and in total we have more than 100 owners managing directors and other key employees in the companies so we think that in eden industry we have a unique link and in terms of alignment of interest from you as external shareholders and down to the management group in each of the eden group companies Over to the fourth quarter and some highlights. So net sales increases by 8.4%, EBITDA up 2% to 76 million in the quarter. We have a good high cash conversion. We have earnings per share that increases more than 20%. And in this quarter, we made... two investments. One is an add-on investment in Meab Stainless, a company based in Malmö, a trading company with mainly stainless steel fasteners, some specialized equipment and components. And this was an add-on acquisition to Eugène Wiberger, our group company in Gothenburg. And it should be said that there is a really good strategic fit between Wiberger and Meab. Then we invested in, we bought 80% of the shares in Tricoby. It's a new Eden Group company. And Tricoby is the leading Swedish manufacturer of knitted fabrics and jersey fabrics. So quite a specialized position where they control the whole value chain and we are really proud of welcoming these two companies to the Eden family. If we take a look from the first investment in 2014, we have continuously invested in two to four companies, either new group companies or add-on acquisitions per year. It has been a rather stable development. If we look back five years, for example, 2020 to 2025, EBITDA has increased 30% per year on average. So sometimes the pace is faster, sometimes like this year it's slightly slower because we are hopefully towards the end of a weaker market. And if we take a look at how each quarter and the rolling 12 months and what it looks like for the six years, we again, we see a quite stable growth year on year and quarter by quarter. And to the right in the This picture will also break down the sales growth in 2025 compared to 2024. And we see that this 8.4% consists of 4.8% is organic growth and the rest comes from investments in new group companies. And the same picture, but with operating profit, again, a rather stable development year per year. But here we can see 2025 compared to 2024, that organically, it was actually a slight decrease compared to last year, but including acquisitions growth by 2%. And here, this slide, the message here is really stability. We see rolling 12-month figures for five years for sales, gross profit, and operating profit. We see that gross profit is really stable at around 60%. And if we look at the EBITDA figures, it's not like it's going up and down. It's really gradually and it's growing in a stable fashion from quarter to quarter. So that is the message in this picture. So with that, we will also now look at the business areas and over to you, Oskar.

Thanks. Starting with manufacturing, sales is up 8.1% or it goes from 337 million to 364 million, driven mainly by acquisitions and a margin that is slightly below last year with 11.1% compared to 11.7%. Viberger and the add-on acquisitions, MEAB, that Henrik already mentioned, performed well in the quarter and also for the full year 2025. Intermecato on the other hand, load attachments for forestry, material handling and so on experience a weak market and demand. So both the quarter and the full year were a bit disappointing, but we see that the figures will turn in 2026. Looking at the service and maintenance, here we have a sales growth of 8.8% and mainly organic growth in sales and EBITDA margin somewhat lower with 16.1% compared to 17.4%. Stega företagen that deliver car washing services among other things have had a strong performance both in the quarter and for the full year of 2025 and driven by good car wash volumes. We have previously mentioned Triton, the service and manufacturing rollers for the process industry. They've had a challenging 2025, but we have now reduced cost in the quarter and had a better profitability than compared to a weak ending of 2024. And also mention, we see that the customers within the process industries, many of our companies within this area, for instance, Stortag Amateknik, we have Triton, we have Lema, service this area and we saw that they have reduced maintenance somewhat or slightly compared to previous years. But we see that this will increase in 2026 compared to 2025. We had a good cash conversion in the quarter around 84% and for the full year around 59%. And going ahead we should be able to reach 60% or more in cash conversion. And looking at the net depth, we increased net depth in the quarter with around 150 million SEK, mainly due to the new acquisitions mentioned by Henrik Tricobi and Meab Stainless. Our interest costs continue to decrease and decrease with 4 million in the quarter and we see that we will lower the interest costs with another 5 million here in Q1. And going ahead here in the second quarter we will continue to evaluate our bond that is callable from the 30th of June. Looking at our financial targets, we have a financial target of EBITDA growth of 15% over year, over time. We can see that we didn't manage to get at this level for 2025, but With our current or the acquisitions made and also Moldex made here in Q1 and together with Organic Growth we see that we will be back on track here in 2026. Net debt to EBITDA should be lower than 3.5 and reported now at the end of 2024 it's 2.4 but then not including EBITDA from the acquisitions made. We have a dividend policy maximum of 10% of the yearly profit and it has been between 8 and 10% and we will have a dividend of 1.15 SEK here at the annual general meeting in the spring.

So last slide, and let's repeat some key takeaways and say some words about the future. So fourth quarter for Eden, net sales increased by 8.4%, EBITDA increased by 2%, earnings per share more than 20%. In the quarter, we made two investments, Mayab Stainless and Tricobi. And also in January, as Oskar mentioned, we invested in Muldex Sweden, which is a company that... offers services and spare parts to the sawmill industry and particularly to planes. And for planes, they have the leading position in Sweden. So we're very happy with that investment as well. And if we look ahead, we saw that in the end of 2025, it was a continued subdued economic environment. And it looks quite different from company to company. So we have 20 group companies. Some of them meet quite strong headwinds, whereas for others it looks quite good. So it's different mixed signals. But overall, we do feel that there are positive indications and it's becoming gradually more positive over the year. And we see specifically that we will be able to increase the operating margin in 2026 compared to 2025. And again, we have a very strong and stable group of companies. They are prepared to take advantage of the year to come. And either in industry or centrally, we have a strong financial position and we see continued opportunities for more investments. Well, I think that's it.

Yeah, thank you very much for that. So again, if you have any questions, feel free to type them in the chat and we'll try to answer them here in the room. But if we start off maybe on the service and maintenance division, we saw Quite a nice, I guess, recovery here in the quarter after a few quarters where it's been a bit sluggish. Is there anything to highlight there? Is it mostly related to, I mean, you've talked about some cost savings here taking effect in some companies recently, but maybe also on the demand side, if that has something to do with it. Or, yeah, how do you break that up in terms of the improvements?

Well, I guess it could be mentioned Triton has performed strongly in the quarter compared to Q4 2024. So that is certainly one part of it. To mention one example, also Stega performs very well.

And on Triton, is that primarily a function on the margin side? So from taking these costs, etc., are you also seeing any improvements on the demand side for that business?

It's both, but short term, it's certain we have taken out some... quite a lot of costs during the year in Triton because we had to. But in parallel, the management there has worked on very actively with sales and meeting customers. We have employed new personnel actually there. So at the same time, taking out some employees and adding in the sales area. So it's both, but the short-term effect, of course, has more to do with cost reduction.

Yeah, cool. And maybe if you have any comments on the sort of general market situation overall, you obviously have a lot of different companies with different growth drivers, etc., etc. But if we just try to generalize a little bit, you obviously saw quite a step change here in organic growth coming up to almost 5%. And it was... I believe minus 2, 1-2% or so in Q3. So would you say that sort of change is reflective of how the underlying market has developed or are there any extraordinary items or extraordinary circumstances here we should keep in mind?

As Henrik mentioned, we had good volumes within Carvosh during the full 2025, both for the full year but also in Q4. So that contributed positively.

And I would say that... Well, yes, we believe that during 2026, it is hard because as you mentioned, we have very different companies and by purpose exposed to different market situations. But in general, if we are to generalize, it is gradually becoming better. So if we will not see, you never know with Iran and other, if there will be a new crisis of some kind. But if not, we believe that gradually it will become better during 2026.

That's encouraging. And yeah, I mean, if we look at, I mean, mostly I guess it's the service and maintenance division, but overall you have a few companies exposed to the Nordic process industry. Are you seeing any signs of improvement there or is that still sluggish and hopefully demand will pick up there as well? I guess that is still sluggish.

These companies, the sawmills, for example, and pulp and paper mills have been reducing personnel in the fall. And it's not like they are en masse starting to employ new ones yet. So I guess that is still to be seen.

And we talk a lot about this, both, I mean, the defense-related exposures, but also energy grids. We have all these AI investments, etc. Do we have any angle there in Idun? Do you have any of your companies in anyhow exposed to those I guess more fast-growing segments?

To be best business for instance I have a lot of articles for the power grids and electrification in general.

And actually We do have some companies with defense related customers, but it is not the case that we have, that that is a big, very big sector for us. That's actually not so.

Yeah, I mean, yeah, you obviously mentioned also in the CEO letter that you expect margins to gradually expand over time. Is that a function more of... I guess this cost savings you've been taking recently, is that more of a near-term statement or is that more long-term? And if so, what do you think will be the key levers to, over time, increase that margin?

I think there are several factors here, actually. One is the cost reductions, as you mentioned. The other is that we work and we always do actively, both with pricing towards customers, but also purchasing to work on the gross margin side. And the third thing, in addition to expenses and gross margin, would be that if you look at the three most recent acquisitions, Meab, Tricorby and now Muldeck Sweden, All these three companies jointly adding some 50 million SEC in additional EBITDA have actually higher EBITDA margin than the Eden Group before they joined. So there are lots of reasons why we feel rather confident that we should be able to increase at least somewhat the EBITDA margin.

Yeah, that's clear. And I guess maybe on the topic of M&A, it's been, I mean, here just in the last couple of months, we've seen quite a step change in M&A pace. Is that a coincidence that, I mean, all of a sudden you have a couple of processes happening to get close to quite a similar window? Or have you changed anything internally? Yeah, how...

No, it is actually a coincidence. So when you work with the investments in the way we do and mostly we source most of the opportunities ourselves, it is often the case that sometimes we make many investments in a short period of time and then it could go sometime in between. And that's OK with us, because for us, it's more important to make the right investments that are suitable for Eden and not make as many as possible. And also, I think I made that comment before. We have to have discipline in walking away from the table if we feel during a due diligence process that something is not right. So for these reasons, it's actually very difficult to say exactly when there will be the next investment. But yeah, we are very happy with the three most recent ones.

And do you see now, following all these deals in quite a short window, do you still feel you have the financial capacity and the pipeline to execute any further deals perhaps during H1 or somewhere in the near term?

Absolutely and yes to both questions. We both have the financial resources, we think that the leverage is fully under control and we have the pipeline to do that. Whether that will be in the first year or later, I cannot say, of course. But that we see opportunities and that we will be making more investments, absolutely.

And on these recently acquired companies, is there any seasonality there we should keep in mind? Or is it a fairly even split throughout the year?

Fairly stable between the quarters.

Thanks. Yeah, and also if we look a little bit into the future, maybe Q1, Q2 or so, is there anything to be said in terms of the comparisons from a year-over-year point of view? Anything that's standing out we should keep in mind or similar or is it business as usual?

Well, maybe I would say that, and that is linked to what I said in the presentation, that we believe that 2026 will gradually become stronger. So in that comment, I guess you see that we, if I would have to bet today, will Q1 be better than Q1 last year or Q2 better than Q2, I would place my bet on Q2. But we don't give specific forecasts, but we think it should gradually improve. Mm-hmm.

Got it. Maybe just a final question from my side. If we look at the manufacturing division, so in this quarter, I think the service and maintenance was probably the clear step up. Our manufacturing is still developing well, but somewhat lower margins year over year. What is the key reason for that? Is it mix or any of the companies coming into the group having diluted margins? How should we view that when we model ahead?

I would say that, and please compliment Oskar, but this is a couple of company-specific reasons. You had, well, Inter Mercato had a tough quarter, for example, and so did Sherbert. And we are 20 group companies, and fewer per business area. So if you have a couple of them with more headwinds in a quarter, you can see it. So I think that is... That is the reason.

Yeah, thank you very much. That was all from my side. I don't think we have any further questions more than the ones I've already asked here. So, yeah, if you have any final remarks or so, please go ahead.

No, only that we think it was a decent, solid, good quarter. And we feel very confident when we look into 2026. And thank you for watching.