Investment AB Latour (publ)

Good morning and welcome to the presentation of Investment Abilator's interim report for the first quarter 2025. The first part of the presentation will be in listen-only mode and we'll then open up for questions. If you want to ask a question, dial star five on your telephone keypad or use the chat window. I will now hand over to CEO Johan Jattonsson and CFO Anders Mörk.

Thank you, Katarina. And once again, welcome, everybody. I'm here together with Anders. We're going to go through our Q1 presentation and we're using the same structure and logic as we've done for many, many quarters now. So you will recognize yourself. First of all, here on the first page, the overall group structure is unchanged. considering the business climate, a good start of the year for our businesses. The general demand is quite good in many markets that we operate on, but it varies between regions and industries. Towards the end of the quarter, we have seen a slightly more hesitant market as a response to, among others, the trade war and the US tariffs that I'm sure you're all aware of. Regarding the US tariffs, our exposure is quite limited in the US. It corresponds to 11% of our total net sales. Kalja, Hultafors Group, Nordlok Group and REAC within the two industries have the most exposure vis-à-vis the US. We do have local production in some cases, and in others, we will try to pass on the higher cost to the customers. We are also taking additional preventive actions to mitigate potential future effects. And it's a quite fluid situation, as you can understand, it changes from day to day. And if we go to the next slide, Katarina, please. Our portfolio of 10 listed companies. The development in our listed companies that has reported the Q1 is relatively good considering the business climate that we just talked about. and they are reporting stable results. Clearly very positive underlying growth and profit development during the last 10 years, as you can see on this slide. We own quality companies who have the ability to grow and win market shares in both booms and recessions. Then we can go to the next slide, please, where we comment the total return on the listed portfolio. No major changes within the listed portfolio during the quarter. We have increased our holdings in CFTEC by acquiring another 1,275,000 shares. And our total holding in CFTEC is now 35.3% of the outstanding shares in CFTEC. Value development minus 2.7% during the year, whereas the 6RX index is minus 0.2%. And until yesterday, April 28th, the portfolio value was 84 billion SEK. And the total return amounts to minus 5.2% so far this year, whereas the 6RX is down 1.6%. And if we go to our whole year on the industrial operations on the next slide, our whole year on operations started the year in a positive manner. ordering order intake increased by 21 percent of which 10 percent was organic and net sales increased by 30 percent so really nice starting top line both in order intake and sales the higher pace and acquisitions last year has paid off contributing with a growth of 10 percent in order intake and 11 percent in that sales during the quarter The overall demand is quite good, as I said, on the markets that we're on, but the picture is mixed between the regions and industries. As before, the construction and real estate markets are mostly affected by the downturn. The water intake is, however, growing for the majority of our companies with exposure to those markets, and we are most likely gaining market shares. The logistics sector started to recover at the end of 2024, which we now see in Kalyan's order intake. It has not yet materialized in sales, but the order backlog is growing towards more healthy levels. That's really nice to see. The total order backlog has increased during the quarter, ensuring stable net sales going forward. So we're going into Q2 and Q3 with a very nice order backlog. All in all, the wholly owned operations adjusted operating profit increased to 899 million SEK. We have good cost control, but large currency fluctuations affect the gross margin negatively in parts of the operations and the operating margin amounts to 13.1%. And then to comment on the recent acquisitions. The M&A pace has been high during the quarter. We have finalized five acquisitions, of which three was agreed on and communicated last year. Arkel, HDS Group and Obaterm. Adding to those three, Hultafors Group has acquired Lyngse Rainwear and Svegan has acquired American Geothermal during the first quarter. Lyngse Rainwear is a supplier of high quality rainwear for professional end users with headquarters in Härning, Denmark. Lyngse Rainwear has about 136 million Danish kronas in revenue with a profitability above Latour and Hultafors Group and about 25 employees. American Eothermal is an American manufacturer of heating and cooling systems with 40 employees and headquarters in Murfreesboro, Tennessee. Sales amounted to 14 million US dollars in 2024, through the acquisition Svegon strengthens its presence in the North American market. Early in April, InnovaLift acquired Syntheum, a leading UK specialist distributor of lift communication products for elevators, primarily for the growing modernization segment, since you have annual net sales of about 2 million British pounds. All in all, the conducted acquisitions during the quarter adds another 1.6 billion on our top line on an annual basis. And we're very happy with that and a great start in terms of acquisitions this year. Having said that, I'd like to with a warm hand hand over to Anders that among other things will comment each business area. So over to you, Anders.

Thank you so much, Johan. And we start with the BEMSIC group. And BEMSIC had a good start to the year with the water intake that grew organically by 11% in the first quarter. And with a specially positive contribution from the North American market. The total growth in net sales was 11%, of which 5% were organic. A really strong performance considering the challenging market within the real estate and construction industries. The newly acquired QAL and Armstrong are developing according to plan and contributes with a 7% acquired growth in the quarter. And the operating profit amounted to 120 million with a strong margin of 21.7. And this is despite them several completed recruitments within the group to support future growth. So I must say very well done to Mikael and his team. And on that note, also welcome to Mikael who will follow us Latour's new CFO from next month. And we shall also say that the acting CEO right now at BAMSIC is Anselmi Imanen that carries on the team for future successes. And welcome to you, Anselmi. We turn page to Kalyan and as Johan said before the logistics sector has slowly recovered and Kalyan's pipeline is increasing. Order intake during the quarter is exceeding last year by 63% which is a very good sign and the order backlog is thereby increasing. Net sales is, however, slightly below corresponding period last year for apparent reasons. Kalian has, as you know, conducted a cost saving program to decrease fixed costs while maintaining the level of service to customer. and this has resulted in a substantially lower cost base this year. So a strong gross margin compensates for the lower volumes and thanks to that the quarterly EBIT actually increased to 37 million on lower volumes and the operating margin increased to 12.7%. Thank you to Henrik and your team. Very well done. So we go to Hultafors Group where we can see that the overall market conditions continues to be challenging for Hultafors. The North American market being even more affected than Europe. And also the hardware markets are hardly hit than the personal protection equipment markets. But despite this, Hultafors Group reports organic growth of 3% in the quarter and start of the year quite well. The profit margin is somewhat lower than last year due to investments within product development and marketing initiatives. But the operating profits increased slightly to 257 million with a margin of 14.9%, which is very good under the circumstances. So very well managed to Martin and your team. And we go for the next page. And that page is in Overlift. Order intake is growing during the quarter supported by both acquisitions and organic growth. And the growth is primarily within the components and modernization division. The order intake in total increased in total by 41% and 12% organically. Net sales grew during the quarter due to the acquisitions, but the organic sales remained on the same level as last year. And the gross margin is improving step by step. The quarter result amounted to 77 million with a margin of 9.6%. And we are pleased with the improvement, but it should be noted that there is still room for nice improvement going forward. And Innovalift has, as said before by Johan, finalized the acquisition in OvaKell in Turkey. This will add substantial growth and profitability going forward. And in addition, Innovalift also acquired Syntium in UK within the same component and modernization business area. All in all, very well done to Andrea and your team. And we go to the Latour Industries business area. And the development for Latour Industries shows a little bit of a mixed picture. The underlying demand is good for REAC and Max AGV. The forest and wood and mining industry is weak in the Nordics, affecting the other business units negatively. So the order intake is on lower levels than the corresponding quarter last year, but the net sales grew by 7%, however, 1% organically. This also shows in the results where REAC and MaxRGV shows strong results, but the other businesses have more challenges. say and the operating profit landed at 29 million Swedish krona it should also be said that this business area since the distribution of InnovaLift last year now have an under absorption of their fixed costs on the central level explaining the dip in profitability The acquisition of HDS to LSRB was finalized in January. And as you can see in the headline, Latour Industries will focus to continue to build and develop and find new platform for the future to Latour. Very well done, Tina and the whole team. And we go to Nordlock. In a rather tough business climate, NordLock is developing very positively. Order intake grew by 25%, of which organically 23. And this is a record for one quarter. Net sales grew organically with 5%, although affected by somewhat weaker market development in North America due to lower project deliveries. The base business is, however, growing. And the order, sorry, the quarterly EBIT increased to 135 million with a strong operating margin of 26.3%. So very, very well done to Daniel and your team in this tough market. We go to Sveagon, the last business area, and considering the business claim that Sveagon is overall performing very, very well, and the order intake is growing by 27%, of which 9% is organic growth. Net sales, however, grew during the quarter due to acquisition and the organic sales remained on the same level as last year. And due to cost inflation and investments in product development and other growth-oriented investments, the profit margin decreased a little bit. So the operating profit came in at 244 million with a margin of 9.8%. And Svegon has, as Johan said, finalized the acquisition of Hovaterm in Germany and acquired also American geothermal that strengthens its presence in the North American market and also in the US. So very well done. It looks good for the future to you, Andreas, and your team. And then we go to the picture about net asset value. And it decreased during the quarter by 1.2% and amounted to 213 kronas per share, compared to 6RX that was down 0.2%. The share price at the end of March was 272, which means that there is a premium to the way we show the net asset value of 28% at the end of March. And yesterday, the net asset value was 209 kronas per share compared to the share price 272, which means that the premium now is 30%. Our consolidated net debt increased during the quarter due to acquisition from 12 to 15.4 billion Swedish kronor. And this corresponds to 10% of the market value of our investment. Still leaving a headroom then for further acquisitions. I think that was all Johan, so I hand back to you.

Thank you, Anders. And I'd like to comment our results in relation to our financial targets. So summary of our financial targets during the last 12 months, we have had growth of 5.3%, EBIT margin of 13.8% and return on operating capital of 14.3%. This is an outcome that we're very pleased with. The targets are to be seen over a business cycle. And we are in a recession, as you know. growth is once again increasing much due to acquisitions but also by organic growth egypt margin is strong and return on operating capital is satisfying and then we go to next slide please so overall a great start to the year latour is a long-term sustainable investment company and a responsible owner creating value for our shareholders In all our holdings, we have strong corporate culture that we cherish, which is of great value when we move forward in a quite turbulent global world. We own profitable and stable companies, and we have a strong financial position which enable us to continue investing in both existing and new holdings to enable future growth. We have an ambition to grow both organically and through acquisitions, and I look forward to see the development going forward. This is the last presentation from where Anders Mörk participates. I'd like to thank you Anders for all your 17 years as the CFO in Latour. And I've also calculated you've actually released 69 quarterly reports during your tenure at Latorre. Quite impressive, I think. And having said that, I would also like to welcome Mikael as the new CFO, starting 1st of May. So thank you for that. And we open up for questions, Q&A. So we have the Q&A slide there.

To ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Linus Sigurdsson from DNB Markets. Please go ahead.

Good morning, Johan. Good morning, Anders, and thanks for taking my questions. Starting with passing on the cost of tariffs, my impression you were quite successful on this kind of pricing power during sort of the last supply chain disruption that we saw. Is there any reason to think about it differently this time?

No, there's no reason to think about it differently this time. I would maybe add there is even clearer and clearer reason to pass on the cost this time. It's quite evident for everybody and the customers that we have to do that. So it's the same, but I would say marginally maybe slightly less difficult in that sense.

Okay, that makes sense. And then on the organic order intake in the quarter, is there anything you can say about sort of the purchasing patterns here? Is it fair to say that a portion of it is driven by sort of accelerated activity ahead of potential tariffs?

We haven't seen too much of that in our results. Maybe you could say slight, slight increase end of March, but I would say that is quite quite marginal. We haven't seen any larger orders coming in ahead of the tariffs in that sense. That's nothing I picked up. I don't know about you Anders if you picked up something around that, but I don't think so.

No, I don't think you don't know about the future, but the increase in order intake is very well spread over the quarter that we have had. So it was not a big change in the end of the quarter.

Okay, that's very clear. And then a question on Nordlok. You just talked about what's driving this phenomenal order intake growth there.

You want to start, Anders? Don't you, Johan? Well, I think it's a difficult question. Nordlock is a relatively small company in a very big market, you can say. And we would hope it is because their solutions are found by more customers than before. And we have seen that over the years that it's a long term job to convince Yeah, the market to use Nordlock solutions in the long run. So I think this is a result of a very, very long term job rather than anything else.

Yeah, I'd like to add, I think it's also a very strong and good execution from the management team in Nordlock. And we're reaping the benefits of long term investments in. in marketing and sales and product development. That is combined with a strong execution. You could say in a positive way, Linus, this is not a one-off trend. I expect this trend to continue also going forward.

Okay, thank you so much. Those are my questions. And to Anders, I wish you all the best going forward.

Thank you so much, Linus. Thank you. Thanks, Linus.

No more questions there. Is there any written questions?

It's just a greeting from Pelle Vidén. So thank you, Pelle, also from you.

Okay. Great. And before ending, I also like personally to thank you, Anders, so much for the six years that we got together working as a super team, as CEO and CFO.

Absolutely. Thank you likewise, Johan.

Thank you, Anders. And looking forward to do the same with Mikael here very soon. That's going to be great as well. Okay, thank you everybody. That concludes the Q&A report from Latour and looking forward to speak to you all on the Q2 numbers later in the year in August. Thank you.