Investment AB Latour (publ)

Welcome to the presentation of Investments Abilator's interim report for the second quarter 2025. The first part of the presentation will be in listen-only mode and will then open up for questions. To be able to ask a question, dial star 5 on your telephone keypad or use the chat window. I will now hand over to CEO Johan Hjartalsson and CFO Mikael Jonsson-Albrechtsson.

Thank you, Katarina. Very welcome, everybody, to our presentation of the Q2 report 2025. And as Katarina said, I'm here with our new CFO, Mikael Jonsson-Abrexon. So very welcome, Mikael, to your first presentation for the Latour quarterly results. As you can see on the first slide, our overall group structure is unchanged. And despite the challenging business climate and unstable geopolitical situation, we see a continued good performance in our businesses. And we're very happy with that. The general demand is quite good in many of the markets that we operate on, but it varies between regions and industries. We grow organically during the quarter in both order intake and net sales. However, we had some headwind from negative currency effects that affected our gross margin slightly. Despite the short term external instability, we continue to invest in our companies, and this is truly a natural strength. We invest to ensure long term growth and profitability, even in a tougher climate. As you all have seen during the summer, there has been some clarifications regarding the US tariffs during this summer, where imports from Europe will be charged with 15%, but there's still some uncertainty left. For instance, which products are exempted and which materials to mention one area. Latour's exposure in the US corresponds to 11% of our total net sales and the effect from the tariffs are limited for the overall result and performance of Latour. We import about half of the volume from Europe that we sell in the US, which corresponds to 5% of our total net sales. Some of the imported goods have so far been included in the exempted products and thereby not affected by the tariffs. Kaljan, Hultafors Group, Nordlok Group and REAC within Latour Industries have the most exposure to the US market. We do have local production in some cases and in others we will pass on the higher cost to the customers. But overall the message is it does not have a big impact or a material impact on the Latour results as such. If we go to the next slide, and we to comment a bit on our our listed holdings our portfolio is 10 listed holdings as you know and the development in our listed companies that has reported for q2 and i think they've all reported now it's relatively good considering the business climate overall really very positive underlying growth and profit development over the last 10 years as you can see We own quality companies, well positioned and with the ability to grow and win market shares in both booms and recessions. And then we go to the next slide. No major changes within the listed portfolio during the quarter. Earlier this year, we increased our holding in SEATEC to 35.3% of the share capital. The stock market was somewhat hampered at the end of June, but recovered somewhat since then. Value development, our listed portfolio was minus 4.2% at the end of June, where the 6RX was 2.3%. And until yesterday, August 18th, the portfolio value was 87.4 billion SEK. Total return amounts to plus minus 0% so far this year, whereas the 6RX is at 5.1%. And then we go to comment our wholly owned industrial operations. Our wholly owned operations continue to perform well despite the challenging conditions. Order intake increased by 9%, of which 3% was organic. And net sales increased by 9%, of which 2% was organic. And we're very happy to report organic growth in both order intake and net sales in a tough market. In most markets where we operate, we have an ongoing recession. The overall demand is fairly good on the markets that we operate on, but the picture is quite mixed, as I said, between regions and industries. The downturn combined with geopolitical instability affect customer decision-making, which generally takes longer time. primarily impacted ordering intake in some of our project-based businesses within Kaljan, Nordlok and Svegon. But once again, a mixed picture. Nordlok reported a record quarter Svegon is organically in line with last year, whilst Kaljan is softer than last year. Hultafors Group is affected by the slowdown within the construction industry and real estate markets in Europe and the tariffs in the US, and is reporting that it's slightly below last year's level. However, order intake is growing for the majority of our companies. With exposure to those markets, we are most likely gaining market shares, not least within BEMCIC and Rovalift. The total order backlog has increased during the quarter, ensuring a stable net sales outlook going forward for the remainder of the year. We have good cost control and agile businesses. The adjusted operating profit increased to 989 million SEK in the quarter. And as you all know, large currency fluctuations affected the gross margin negatively in parts of the operations. The operating margin amounts to 13.9%. And if we comment on acquisitions, during the quarter, InnovaLift has acquired Synthium lifts in the UK and NordLock Group has acquired 75% of the shares in energy bolting in the UK. Synthium is a leading UK specialist distributor of lift communication products for elevators, primarily for the growing modernization segment. Synthium have annual net sales of about 2 million British pounds. Energy Bolting is a UK-based manufacturer of critical fasteners. The company has annual net sales exceeding 7 million British pounds. Earlier this year, we have finalized five acquisitions. All in all, the conducted acquisitions so far during the year adds another 1.8 billion second net sales on an annual basis. And we're very happy with that. And so, you know, good start to the year and the first half of the year in applications and continued strong performance in the whole business too. So I think in summary, there is organic growth both in order intake and in net sales is quite a strong sign. So having said that, I hand over to Mikael to comment on our business areas and so forth. So over to you, Mikael.

Thank you, Johan. And we start with BEMSIC Group. BEMSIC had a continued good performance in the quarter with growing order intake driven by both organic growth and acquisitions. The total growth in net sales was 11% of which 9% were organic growth. A strong performance considering the challenging market within the real estate and construction industries. The adjusted operating profit amounted to 120 million SEK with a strong margin of 21.6% with good contributions from all parts of the group. Very well done Anselmi and team. If we then turn the page, we direct the focus towards Kaljan. And as Johan mentioned earlier, Kaljan is affected by the geopolitical instability where customers' decision-making regarding investments generally takes longer time. Order intake is in the quarter down 3% compared to last year, but the order backlog is still at the healthy level. Net sales is growing organically by 26% during the quarter, driven by the loading and unloading segments. Kalyan has conducted a cost-saving program to decrease fixed costs while maintaining the level of service to customers, and this has resulted in a substantially lower cost base this year. This initiative, together with a strong gross margin combined with high volumes, contributes to an adjusted operating profit amounting to 86 million SEK well over last year's level, corresponding to an operating margin increasing to 19%. Thank you and very well done, we say to Henrik and team. We then turn our focus towards Fulda Force Group. And the overall market conditions continues to be challenging for Hotafoss Group in both Europe and North America. The North American market is more affected compared to Europe, not least due to the tariffs. Net sales is down organically by 3% compared to the corresponding quarter last year. The profit margin is lower than last year, mainly due to lower sales and investments within product development and marketing initiatives. and the adjusted operating profit amount to 205 million SEK with a margin of 12.9%, which shall be seen as a good performance under the circumstances. We do, however, continue to invest for future growth and Hulta Force announced an investment in expanded production capacity in Europe during the quarter, strengthening the group long term. All in all, very well managed by Andersen team. Let's then turn page and take a look at Innovalift. And order intake is growing by a strong 29.3%, supported by both acquisition and organic growth, primarily within the components and modernization division. The organic growth was 10.8%. Net sales grew by 35% during the quarter, driven by acquisitions as well as healthy organic growth of 9%. The gross margin continues to improve step by step, however, slightly negatively affected by cost inflation in Turkey. And the quarterly adjusted operating profit amounted to 102 million SEK with a margin of 11.7%. And as Johan mentioned earlier, InnovaLift acquired Syntheum in UK in early April and is expanding its market presence even further within the components and modernization division. Very well done, Andrea and team. We turn page again and look at Latour Industries. And the picture is mixed for Latour Industries business units, where we see a continued underlying good demand for REAC and Max AGV, while the forest, wood and mining industry is weak in the Nordics, affecting the other business units negatively. Order intake was organically in line with last year and net sales grew 2% organically during the quarter. Adjusted operating profit amounted to 37 million SEK, driven by a strong result from Max AGV. The result is negatively affected by currency effects and the weak market climate, as well as ongoing investments for future growth. And it shall also be mentioned that the Latour industry currently has an underabsorption of their fixed costs on a central level following the distribution of InnovaLift, putting additional pressure on the margin. And as the heading of the picture states, the focus of Latour Industries continues to be on developing the existing holdings and to find new platform investments for the future. Well done, Tina and Tim. We then turn page again and look at NordLock. Norlock continues to develop very strong despite the tough business climate and, as Johan mentioned, is reporting a record quarter on several parameters. Order intake amounts to 623 million SEK, which is an all-time high for a quarter and corresponds to an organic growth of 28%. Superbolt contributes to the growth by recording a large order of 100 million SEK in the quarter. Really well done. The net sales level is also all-time high for a quarter, growing organically by 16%, driven by strong sales in EMEA and Americas. And the quarterly adjusted operating profit increased to 157 million SEK with a strong operating morning of 29.8%, which also is an all-time high figure. And as mentioned before, Nordok has acquired 75% of the shares in energy bolting in the UK, complementing the product portfolio in a very nice way. So a really strong quarter for Nordok and very well done, Daniel and your team. We then turn page to our final business area, Sveagon. And order intake slowed down slightly during the quarter and is organically in line with previous year's level. Given the business climate, this is a fairly good performance. Net sales grew during the quarter due to acquisition and organic sales are down by 4% compared to last year. However, key markets as Sweden, North America and the Netherlands are developing positively in the quarter. Profit margin is lower than last year, affected negatively by lower volumes, currency effects, investments in product development and other growth-oriented investments. And the adjusted operating profit came in at 282 million SEK with a margin of 10.9%. Overall, a solid quarter in a challenging environment, but also with future nice potential when volumes come back and ongoing investments materialize. Very well done Andreas and your team. That summarizes our run through of the business areas and we turn the page and look at the net asset value picture. And the net asset value decreased by 1.9% adjusted for dividends during the six months and amounted to 207 SEK per share to be compared to the 6RX that increased by 2.3%. The share price at the end of June was 249 SEK, which means that there is a premium of 20% compared to how we present the net asset value. And as of yesterday, the net asset value was 212 Swedish krona per share, And the share price closed at 244 Swedish kronor, which gives a premium of about 15%. The consolidated net debt increased during the quarter from 15.4 billion SEK to 16.9 billion SEK. And this is explained by acquisitions and paid dividend in the period. And the net debt corresponds to about 11% of the market value of our investments leaving headroom for further acquisition. And with that summarizes my part of the presentation and I hand over back to you, Johan.

Thank you, Michael. Great. And going to comment on our financial targets and summary of our financial targets. So during the last 12 months, we've had growth of 8%, EBIT margin of 14.1% 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. Growth is once again increasing, much due to acquisitions, but also by organic growth. EBIT margin is still strong and return on operating capital is satisfying. To summarize, we are very happy with the development during the second quarter, especially considering the the business climate as i mentioned now a couple of times our businesses are growing and profitability is in a good level despite currency headwind and and various market challenges as we have discussed la tour is a long-term sustainable investment company and the responsible owner we continue to invest in our companies to enable future growth and create value for our shareholders In addition, we have a strong corporate culture that we cherish and that we continue to strengthen, which is of great value when we move forward in a quite turbulent global world. So thank you very much for listening. And I open up and Michael and I are ready to take questions. Thank you.

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 Linus Sigurdsson from DNB Carnegie. Please go ahead.

Good morning, Johan. Good morning, Mikael. Thank you for taking my questions. Starting off with a question on the overall demand picture in industrial operations. I recognize it's very different across markets, across business areas, but is there anything you can say about the start to Q3? Is it fair to assume that demand improved during Q2 and is better going into Q3 than going into Q2? Thank you.

Thank you, Linus. As you know, we are quite careful in doing too much forward-looking statements, but I could say that we saw that demand was quite good also at the end of Q2.

Okay, thank you. On NordLock, I understand that the solutions that they sell are critical, but I suppose just like last quarter, I struggle to fully understand what's driving the strong organic growth. Which end markets or industries are driving this strong performance?

I would say first and foremost, it's a very strong market. performance by the Nordok company and the group and the team within Nordok. And they are taking market share in some markets. So that's what I would like to say is the main reason. It's more our own performance in the market with our products rather than the strong market in itself in that sense, Linus.

Okay, that's really interesting. And then this this major order that you wrote about for 2026. Is there anything at all you can say about what type of customer it is we're talking about?

It's a larger type of government customer. Okay, thank you.

And then my final question on the negative gross margin impact from currency movements. Is there any indication at all you can give on how big this is and where in the business you see it most prominently?

It goes across most of the businesses. I mean, most of our businesses have a quite substantial sales in other currencies than Swedish kronas. But it has, I mean, the main reason is the strengthening of the Swedish krona. Which I think long term is actually good for Sweden and companies in Sweden. So it's more a short term challenge when you compare with the comparison numbers from last year. But that will naturally wash out in that sense. Mikael, I don't know if you would like to add to that?

No, no, I think you're correct. And I think as it varies, I mean, between countries and between business areas, it would be hard to say one generic answer that, you know, is the correct answer to the question. So I just want to echo what you said there, Ivan.

Thank you, Mikael. I hope that could shed some light on your questions there, Linus. Thank you for your questions.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Good, and there's no questions in the chat, right, Mikael? No? No. Okay, fantastic. Thank you all for listening in, and I wish you all a great continued day and a great week, and speak to you when we are at the quarterly results later on. Thanks everybody and thereby we end the conference.