Inwido AB

Hello and welcome to today's webcast with Invido, where President and CEO Fredrik Müller and CFO and Deputy CEO Peter Wellin will present their report for the second quarter of 2025. After the presentation, there will be a Q&A. So if you're calling in and want to ask a question, please press star 9 to raise your hand and then star 6 to unmute yourself and hand in the word. You can also send in questions via the form to the right. And with that said, I hand over the word to you guys.

Thank you very much. Good morning, everyone, and welcome to this InVido webcast. Today we congratulate Sweden's crown princess, Victoria, on her birthday, and what better way to celebrate that than to go through InVido's second quarter report of 2025. My name is Fredrik Muller. I'm the president and CEO of InVido, and right next to me here in Malmö today is Peter Berline, our group CFO and deputy CEO. We will, as usual, go through some group highlights and then the detailed group financials, followed by a BA run-through and finish off with summary and outlook and a Q&A. And as usual, this material is also available on InVito's website. Yeah, you're all... very well familiar with Invito already, of course, so there's no need to dwell upon this. What I would like to say, though, is that although Invito is leading in Europe's window and door market, We are actually only in one out of the top 10 markets ranked by size in this industry, and that is the UK market. And my point with this is, of course, that there is still huge growth potential for NVIDIA to expand, both organically and through mergers and acquisitions. If we then look at the quarter, I guess it's best summarized in the word of interesting. Lots of things happening in the world around us, and that has resulted in a bit of an amber please wait button, where the expected and much needed rebound has been pushed forward yet again. It's very much a volume and a timing game. Worth noting, though, is that the fundamentals remain the same, and the fundamentals remain rather strong. Envido has strengthened its positions. We assess that we have gained share throughout the quarter. I'm overall pleased with the performance of the group and still rather optimistic about what's around the corner. Our sales are up a bit. Our order intake is down. Have in mind, though, that in Q2 last year, we did post a record order from Carlson, our entity in Ireland. So that has an impact in comparison now quarter on quarter. Having said that, we must not forget that the order book was up by 9% now in the quarter and is actually at an all-time high for InVito. We did a good job in keeping margins up despite price pressure and a less favorable mix. And for the absolute operating EBITDA number, we must not forget the fact that it's been hampered by a Swedish krona that has been strengthened, and the impact is 9 million SEC. There's no cigar on M&A yet. It's closed, but no cigar. It's not for lack of activity. You can see that if you go into our notes for the EPS that we have taken some transaction-related costs and charges in this quarter. It will take time. Processes are a bit lengthy, partly because of the surrounding market turmoil, but also because of the fact that many of our discussions are related to families selling off their second or third generation company or baby. And that's, of course, an emotional process. It simply takes time. If you look at the... snapshot of our Q2 key financials relative to same quarter last year. Again, we're lacking volume, meaning that some costs remain underabsorbed. Again, the profit has been hurt by the FX impact, the 9 million SEC in translation from our international entities. And at the same time, the margins remain the same as last year's Q2 financials. The main positive drive is coming in this quarter from our BA Scandinavia and Eastern Europe. And I think it's worth mentioning that we continue to reduce our gearing, which, of course, first of all, offers comfort in turbulent times like these, but also provides us with healthy firepower for the mergers and acquisitions spree that we are on. And if we look at the full six months here to date, adding also Q1, the pattern is relatively similar across geographies and business areas. I guess one main difference is that we do see an uptick in Sweden. partly boosted by the government stimulus and lower interest rates. And so that's an important market for us that's performing better and better. Overall, I'm quite pleased with the performance given our circumstances, where both top and bottom line is up, of course. And lack of volume is really a common theme across all markets with household consumption not really taking off despite some stimulus and thicker wallets. And if we look at the Swedish market, for example, it's well illustrated by the fact that the real estate market is showing still rather few transactions and still relatively stable prices. So that's an indicator in itself. Generally, though, we outperform the market. We are still perceived as a flight to safety with also our very high delivery position across many of our entities, which is important. And, again, Scandinavia and Eastern Europe performing a bit better in both absolute and relative terms, while e-commerce and Western Europe are not bad in any way. They're just facing a little bit more headwind. Worth noting is that several of our peers are struggling, I guess most notably in the UK, but also in other markets. We did see some 2024 figures for some of our e-commerce peers the other day, and they are performing much worse than in Vito. We could also note on Friday last week that Eko Okna, a large Poland-based company, window player is laying off thousands of workers at the moment so sign of the times but if we look at sustainability green is not necessarily my favorite color i'm a true blue but in this case green is definitely good And it's yet another quarter of really strong KPI development, which is super pleasing. And again, a sign of us doing the right things. It's a small and big things that add up to the positive totality. Good news is also that this is continued to be recognized also externally with, for example, the Financial Times putting us higher on their list of European climate leaders and CDP ranking us higher now with an A- ranking in their supply engagement assessments. We continue to be candid about the vital few priorities that are key for us in order to achieve our 2030 roadmap. And I have to say, we're gradually getting there. If we start with M&A, again, active and positive level of activities. I think the outlook is rather promising based on the almost record broad and record deep funnel that we have and the ongoing discussions that we have. Needless to say, the market uncertainty has been a bit of a wet blanket on M&A processes. And as I said, the emotional family ties means that some of these discussions are simply taking a bit more time. Moving on, the green transformation is definitely happening. Everyone is talking about energy efficiency. And, of course, we are eagerly awaiting some more clarity on the implementation of the EPBB directive, the Energy Performance for House, for Buildings directive that will come now in the second half of the year with implementation in the early part of 2026. Worth mentioning is, of course, that we have a great add-on to our already strong group management team. Malin Kulin will become our new EVP for people and culture, and I'm really looking forward to having her on board. Pleasing to see also the interest we've had in applications for that role, meaning that Invido enjoys a rather favorable employer brand situation, which is great. It's also great to see that it's a bit of a cultural revolution still continuing within NVIDIA in terms of collaborative, yeah, much more collaboration across the entities, meaning that we have also started to exploit synergies even further. And last but not least, the technology development is something that we are very close to, primarily so far within marketing and within software to our machine investments. Now, for a little bit more flavor on Indido's consolidated Q2 financials, I will hand over to you, Peter, please.

Thank you so much, Fredrik. And we start with the income statements. On this page, you can see the income statement for Q2 to the left, year-to-date in the middle, and to the right, latest 12 months, as well as last year. Starting with a quarter, net sales was on the same level as last year. Organically, it's a growth of 3%. The gross margin was also the same as last year, 25.6%. Operating EBITDA was plus 1% compared to last year. And the operating EBITDA was 1 million above last year, 264 compared to 263 last year. Thereby, the margin was on the same level as last year, 11.3%. As Fredrik mentioned before, the operating EBITDA has a negative impact from the stronger Swedish krona when translating into SEK, the non-Swedish daughter companies, and that has a negative impact of 9 million compared to last year. Sales declined by 76 million due to currency, and the operating EBITDA by 9 million due to the currency. The margin has also a negative impact when looking at the mix. In the quarter, the consumer sales declined by 5%, whereas project sales had an increase of 9%. And those of you who are following InVita for some time knows that we have a higher profitability in consumer compared to projects. And thereby, the underlying margin was improved in the quarter when compared to last year. Between operating in beta and beta, we have 16 million of costs, mainly related to acquisition projects in the quarter. Further down the income statement, we can see that profit after tax is up 8%, and the earnings per share is up 7% compared to last year. Looking at year-to-date, January to June, sales is 5% above last year. Organically, it's plus 6%. Operating EBITDA is plus 6% compared to last year, and also operating EBITDA is also plus 6% compared to last year. And the profit after tax is up 15% compared to last year, and the earnings this year is up 16%, from 289 to 334. And thereby rolling 12 months, Indeed has a sales of 9,034,000,000, with an operating EBITDA of 975,000,000, equal to a margin of 10.8%. And the earnings per share is now on 9.74, rolling 12 months. On this page, we can see the developments in the quarter. And to the left, you can see the development on sales, 2.2 last year and 2.2 this year. And to the right, you can see the developments on the operating in beta. We have improved resource as well as margins in Scandinavia and in Eastern Europe. E-trade is still challenging with lower sales as well as lowest profitability. However, the order intake in a quarter for e-commerce was plus 7%. Western Europe is lower sales as well as lower profits compared to last year. Ireland and social housing in Scotland is still doing okay, whereas the deviation is mainly within England and the consumer sales in England. Looking at more long-term perspective, this page is showing sales as well as operating in beta for Q2 2019 until 2025. During 2020 and 2022, NVIDIA had a positive pandemic impact, mainly due to higher consumer sales during this year in the second quarter. And then in 2022, we had also a volume increase when comparing to this year. The margin for this year is the same as last year. And once again, the underlying margin is improved when seeing that we have a negative mixed impact with lower consumer sales of 5% and higher product sales of 9%. And the margin this year is above the pre-pandemic, the margin 2019 of 10.9%. Look at the cash flows. This page is showing the cash flow development in Q2. Cash flow from operating activities is up compared to last year from 275 million to 289.9, an improvement of 14.9%. We have a negative change in working capital, mainly related to operating receivables due to two things. One is, of course, the mix with higher product sales compared to consumer sales. And the second thing was also the sales during the quarter with higher growth end of the quarter compared to the beginning of the quarter. And that has been a negative impact looking at operating receivables. The cash flows from investments is slightly down compared to last year, both in the quarter as well as the year-to-date, as you can see to the right on the table to the right, or the graph to the right. And we foresee an increased activities level during the second half of this year. With that cash flow, we can see that the net debt is more or less on the same level in June as it was in the end of March, even though we have paid a dividend in May of $319 million. So the net debt end of June equals to $1,517,000,000. That is $230,000,000 lower compared to last year. And the net debt includes IFR 16 debts of $486,000,000 as well as acquisition debts. Looking at NetDev versus EBTA, and it's now on 1.2, including IFR16, compared to 1.4 last year. And excluding IFR16, we are on 0.9 compared to 1.1 last year, below the target of maximum 2.5, meaning InVido has still the headroom for further growth. One of our financial targets is return on operating capital. The target is to be above 15%, and this graph is showing the development from return on operating capital since Q2 2021 up until Q2 2025. Return on operating capital is defined as a beta, rolling 12 months, as percentage of average operating capital, and that is calculated at the average latest four quarters. We were above the target up until Q4 in 2023. Since then, we have been below the target. However, we have seen in the latest two quarters, we have seen improvement in return operating capital, and we are today on 13.4%. This page is showing the order backlog to the left, development order backlog to the left, and the order intake to the right. The order backlog is on the highest level ever, on 2,829,000,000, that is plus 7% compared to last year. Projects is plus 12% compared to last year, and the consumer is down by 5% compared to last year. All segments have higher backlog end of June this year compared to end of June last year. Look at the order intake. The total order intake is down by 7% adjusted for FX. Organically, it's down by 8%. And the main reason is actually the high order we took in Ireland, Carlson, last year of 9 million. So about half of the decline of 7% is explained by the large order we took at Carlson Island last year. Consumer is down by 3% compared to last year, and just for FX, down by 4% organically. And the project is down by 15% compared to last year, just for FX, and organically down by 16%. We have a positive order intake development in Scandinavia, and we hit e-commerce, one respectively of 7%. And then we have a negative decline of east of 5% and western Europe of 34%, mainly due to the order of the cost of 9 million last year.