Investment AB Latour (publ)

Good morning and welcome to the presentation of Investment Day Bill Latour's entering report for the second quarter. Only mode and we then open up for questions. To ask a question, dial star five on your telephone keypad or use the chat window. And with that, I hand over to CEO Johan Hjartansson and CFO Mikael Jonsson-Albrechtsson.

Thank you very much, Katarina. Welcome, everybody. This is Johan Antonsson, and welcome to our presentation of the Q2 report. I'm here together with our CFO, Mikael Jonsson-Artexon. So the presentation is divided into two sections. Firstly, we will walk you through the Latour Group's development in Q2, commenting on the development for the investment portfolio and the wholly owned operations. And then we open up for questions together with Mikael. And then we have a second part where we will make a deep dive into NordLock Group, one of Latour's seven wholly owned operations. And there we will invite Daniel Westberg, CEO of NordLock Group, for this section. And finally, we will have a Q&A session all together with Daniel on the NordLock Group presentation. So if we go to the first slide, I would say commenting overall, you know, solid second quarter performance supported by positive market developments, especially toward the end of the quarter. Order intake grew organically by 13% and net sales by 4%. Adjusted EBIT amounted to 999 million SEK with a margin of 13.8%. The order backlog increased to just over 8 billion SEK, which provides a solid foundation for continued growth in that sense going forward for the remainder of the year. As you all know, geopolitical uncertainty remains with delays in some project startups as one effect. Our assessment is that no business has been lost, rather deliveries and revenues that has been postponed to upcoming quarters. The turmoil in the Middle East unfortunately continues. However Latour has limited exposure to the region and no material negative impact has been identified or recorded to date. I will comment more on the financial outcome in details later in this presentation. And the investment portfolio has seen some activities during the quarter. In May, we made a partial investments of our holdings in Assa Abloy and in Securitas. And this is something that we don't do often, and it's important to emphasize that we remain as the largest shareholder in both companies with full support for the respective long-term strategies. By realizing a small portion of the value created in Assam Law and Securities, we can continue to develop and expand our wholly owned operations as we communicated earlier. The acquisitions activity in the whole year on the operations has been high during the quarter with five completed acquisitions. And thereby, I'd like to hand over to Mikael to comment on our net asset value development. So over to you, Mikael.

Thank you very much, Johan. And when summarizing the first half of the year in figures, we can conclude that the net asset value decreased by 3.7% during the six months. And this is adjusted for dividend. and amounted to 203 SEC per share, to be compared to the six RX that increased by 8.1%. And the share price at the end of June was 193 SEC, which means that there was a discount of 5% compared to how we present the net asset value. And as of yesterday, the net asset value was 204 SEC per share, and the share price on the same day closed at 188 SEC, which gives a discount to our way of describing the net asset value of about 8%. The consolidated net debt decreased during the quarter from 15.3 billion SEK to 12.3 billion. And this is driven by proceeds from the investments in the investment portfolio and partly offset by dividend payments. And the net debt corresponds to about 9% of the market value of our investments, leaving headroom for further acquisition as we go forward. And with that, I hand over back to you, Johan.

Thank you, Mikael. And then we would like to continue by commenting on the investment portfolio. As I said in the beginning of this presentation, we made a partial divestment of our holdings in Assa Abloy and Securitas in May. Following the divestment, we hold 29% of the voting rights in Assa Abloy and 27.6% of the voting rights in Securitas and remain, as I said, the principal owner of both companies. The stock market improved slightly in Q2, while volatility remained elevated due to the geopolitical tensions and trade uncertainties. Adjusted to dividends and portfolio changes, the value development of our portfolio of listed holdings amounted to minus 8.8% during the first half of the year, whereas 6RX was plus 8.1. Some of our holdings have shown weaker stock market performance, while others have been better. Until yesterday, August 18th, the portfolio value was 75 billion SEK. and the total return amounted to minus 7.9% so far this year, whereas the 6R is plus 10.6. And if you go to the next slide, the holdings, the comment on the holdings results that are reported are mixed, but the majority of the companies continue to show positive underlying performance and are adapting well to the changing market conditions. As in the wholly owned operations, market conditions improved towards the end of the quarter. and several companies reported strong demand in their key segments during their Q2 reports. Over the past decade, our holdings have demonstrated strong underlying growth and earnings development despite the more challenging market conditions in recent years. We believe we own high-quality companies and continue to act as active principal owners in all our holdings, providing strong support for their long-term strategies. And then we go to comment on the wholly owned operations. Market conditions continue to improve, although the picture remains mixed across regions and sectors. Within the construction industry, demand is particularly strong within the building renovation, energy efficiency in industrial infrastructure sectors, which benefits to several of our companies. Most of our holdings report solid underlying demand with healthy order intake and growing order books. And as I said, some projects startups have been delayed, which has somewhat impacted net sales during the quarter. However, we expect revenues to be recognized in the coming quarters and do not believe any significant orders have been lost. And during the quarter ordering increased organically by a strong 13% and net sales increased organically by a healthy 4%. Currency headwinds continue to give negative effects compared to last year, however, somewhat lower effects now than in the beginning of the year. The adjusted operating result for the quarter amounted to 999 million SEK with an operating margin of 13.8%. The profit development reflects good cost control and efficiency improvements in the operations. Overall, I'm pleased with the quarter. Strong organic growth, especially in order intake, but also in net sales, as I said, and improving market positions and the impact of implemented measures provide a solid platform for the second half of the year to come. And then if we continue to comment on the acquisitions and divestitures, we have had a high pace within the acquisition area. During the quarter, we completed five acquisitions across our operations. Svegon accounted for three of these through the acquisitions of Western Air Conditioning in the Netherlands, Laminaire in Switzerland, and the residential ventilation business of Dantherb in Denmark. Cagliard acquired Wico in the US, enhancing its service offering and market presence in North America. BEMSIC acquired UK-based Seathings, strengthening its presence in the energy metering market. Two acquisitions was made in the first quarter. Latour Industries completed the acquisition of Alstor, and BEMSIC within Latour Industries acquired Scandinavian Sealing. Both companies are based in Sweden. And finally, as mentioned in the last quarter, Svegon also streamlines its operation and have divested non-core holdings. The transactions will have a positive impact on Svegons margins. All in all, we have added net sales of SEK 700 million on an annualized basis so far this year. And I'm looking forward to see what the upcoming quarters can bring. And then I hand back to Mika to comment on the performance of respective holding. So over to you, Mika.

Thank you very much, Johan. And we start with BEMSIC Group. And BEMSIC had a continued positive and stable performance in the quarter. Good growth in order intake amounted to 14%, driven by organic growth and partly offset by negative currency effects. The total organic growth in net sales was 6%, with a strong development on the North American market and within the building automation business. The metering business is somewhat slower, and this is driven by a weak demand in the Nordics. The adjusted operating profit amounted to 124 million SEK with a good margin of 21.3%. And as Johan just mentioned, BEMSIC acquired Seathings in the UK during the quarter, an end-to-end hardware and software solution provider primarily focused on energy usage. And the company has an annual turnover of 2.5 million pounds with a profitability level well above Latour's financial targets. And with that we shift page and take a look at Kalyan where we could see that the positive momentum continues during the quarter with a strong demand from the large customers. Order intake more than double compared to the same quarter last year and driven by larger project orders within loading and unloading. Net sales grew organically by 3% and the order backlog is at solid levels for coming quarters. The gross margin remains at healthy level. However, adjusted operating profit for the quarter was adversely affected by approximately 20 million SEK on a net basis. And this is reflecting a provision for a previously underpaid Section 232 steel tariffs in the US and the impact of refunded IEPA tariffs also in the US. And as mentioned just before, Kellyanne acquired WICO in the US during the quarter, and WICO is a premium provider of maintenance and installation services within the material handling sector. Weiko has an annual turnover of 23 million US dollars with a profitability level above Latour's financial targets. We then continue with Hultafors Group, where we saw that the net sales grew organically by 4%, reflecting strategic investments in product development, sustainability, and digitalization. Strong performance in the personal protective equipment with 6% year-on-year growth while the hardware division continues to face a more challenging market. Gross margin remained at a high level which combined with good cost control supported an increase in adjusted operating profit to 252 million SEK corresponding to a margin of 15.2%. And the adjusted operating profit was positively impacted in the quarter by 13 million SEK following the repayment of US IEPA tariffs that was implemented during 2025. We then turn page again and take a look at Innovalift. And order intake is in line with last year despite challenging markets in the Middle East and Asia. We see stable net sales development with positive growth when adjusted for currency effects. The gross margin continues to improve step by step and this is driven by good price management and cost control. Adjusted operating profit amounted to 98 millisecond corresponding to a margin of 11.4% demonstrating resilience in a challenging market conditions and continued currency headwinds. We then continue with Latour Industries. Latour indices saw the order intake grew by 14%, of which 5% was organic growth. REAC and Altor continues to see a good underlying demand, while the other business units operate in a more challenging market. Net sales increased by 9% during the quarter, driven by acquisitions, while the organic growth decreased by 1% in the quarter. The adjusted operating profit was driven by strong performance in RIA Canal Store and the margin increased to 10.3% in the quarter. And as the heading of the slide states, Latour Industries remains focused on developing its existing holders while continuing to identify new platform investments opportunities for the future. We turn page and take a look at NordLock. And NordLock continues to deliver a very strong performance. Underlying demand remains solid, although order intake was below last year's level, but this is primarily due to a 100 million SEK project order received in the corresponding quarter last year. Net sales grew organically by 8%, and all regions contributed to the growth, and the order backlog remains at a healthy level. The adjusted operating profit increased to 162 million SEK in the quarter, corresponding to a strong operating margin of 28%. And you will all get the opportunity to learn more about the Norlock Group later in this presentation as we welcome CEO Daniel Vesper to the call in just a few minutes. But before that, we turn the page and we take a look at Svegon. At Svegon, order intake continued to develop positively during the quarter with organic growth of healthy 20% supported by strong demand in the Netherlands, North America and India. Net sales was in line with last year's level, negatively affected by divestments and currency headwinds, and organic growth amounted to 5%, where North America and Sweden performed well delivering solid growth. The adjusted operating profit came in at 268 million SEK with a margin of 10.4%. And as Johan mentioned earlier, Swegan completed three acquisitions during the quarter. We had Western Air Conditioning, a supplier of high quality HVAC solutions in the Netherlands, Laminar, a Swiss distributor of room unit products for air distribution, and Dantherm's Danish residential ventilation business, strengthening SweGon's position in the residential indoor climate segment in Denmark. And SweGon has also completed three strategic divestments since December 2025, and this is as part of its efforts to streamline the core business and strengthen long-term competitiveness. While these investments have impacted growth figures compared to last year, they are expected to contribute positively to the margins going forward. And that wraps up the run-through of the business areas and we change slide to our financial targets and I hand over back to you, Johan.

Thank you, Mikael. The financial targets, let's comment on those and where we are. Summary of our financial targets during the last 12 months, we have had growth of 3.8%. EBIT margin of 14% and return on operating capital of 14%. This is an outcome that we're very pleased with, and keep in mind that the targets are to be seen over a business cycle. Growth is driven both by acquisitions and organic growth, but with currency headwind. Adjusted for currency, the growth amounts to 8%. EBIT margin is on a good level and return on operating capital is satisfying. And if we comment a bit on our long-term perspective, on the next slide, overall, we're pleased with the quarter and the progress made across the group. A strong order backlog provides a solid foundation, as I said, for revenue growth in the coming quarters. And our organizations are well positioned to capitalize on the improving market conditions. As a long-term principal owner, we remain committed to supporting our holdings for both opportunities and challenges. Our focus continues to be on the long-term sustainable value creation and we remain dedicated to creating attractive returns for our shareholders over time. With strong market positions, committed teams and a long-term perspective, we are confident in our ability to continue creating sustainable value for our shareholders. Thank you. That was the presentation so far. If you wish 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 Carnegie. Please go ahead.

Thank you very much and good morning. So starting off, could you give some color on these comments about postpone project starts? Like what kinds of extended timelines are we talking about and which parts of the business would you say are mainly affected? Thank you.

Nike, would you like to start?

Yeah, I can do that. In terms of timing, I mean, we are not talking about very lengthy postponements. But rather, I mean, possibly push forward into the coming quarter or so. And in terms of what type of business that these are reflecting to is where you see a bit of a more project orientation. for elements certain aspects of the SweGaN business. And you can also see so much elements of it in, for example, the Kalyan business. But in terms of timing, it's not an extensive timeline extension that we are looking, but more like push from quarter to a quarter or so.

Yeah. And I could just add to that, that you have, you know, dynamics effects. I mean, you know, I would argue that 30% order income growth organically is very strong. in the quarter, but I would also argue that actually 4% organic growth in net sales is quite healthy in the quarter. However, there is a material difference between order income and net sales, and I think it's to affect and the lion effect of the difference is the cost of the order income is recorded in the quarter. And normally we have kind of an average delay of 60 to 90 days from order income to to sales. So that's the main effect. And I think the minor effect is this postponed project that we have seen. Correct. So it was probably correct for us.

And then moving to Svegon who is positive to see the organic momentum picking up. Just a question on the margin development. I mean, given organic growth and that these divested businesses were margin diluted, if I'm not mistaken. What's driving this lower margin year over year? Is it just as simple as cost inflates?

I can start by commenting, and then please you add, Mikael. I think of the divestment businesses, it was kind of non-strategic businesses. And you're correct, Linus, they were margin diluted. So just by investing those businesses, we look forward to improved margins just by that effect. And in the Svegon case on the margin, I mean, it is quite volume dependent, Svegon. Svegon is a manufacturer and have factories and quite a lot of fixed assets in that sense. However, I think they defended the margins fairly well, even though on lower volumes in early quarters. And with increased volume and the market coming back and Svegon continuing to take market share, with a good, healthy gross margin development. We look forward to a quite strong drop through coming in the coming quarters in Sweden. That's what we expect. Mikael, would you like to add to that?

No, I can just add that we have had a rather long stint of positive book to build with Sweden, where order income has been coming in, which means, of course, that we feel confident this will be funneling through to revenue over time. And of course, when you when you build a company you need to take on some costs it's very hard to do that exactly one-on-one with with you know with how the net is developed but that as you once said we you know as those volumes funneled through there is no reason to believe that the fundamental profitability of the company has reduced uh so yeah that's that's fair um and then on who the fortune means saying they're positive to see good momentum in

PPE in particular. I mean, is there any kind of project or type of customer especially that's driving the improvement there in PPE? Michel, would you like to start?

Yeah, I mean, I think I would say more that Hulta Force is doing a good job at moving towards the end customer. I mean, that it's been a very strong, I mean, the underlying organic growth in that industry of construction have been a bit subdued, but I would say that Hulta Force has done a great job in stepping forward, working toward the end customer, being more active in the market, driving campaigns. So I think as we see it, it's a receipt of, you know, well done market activities and being close to the customers more than any specific big project. They have a really good portfolio of products, but I think they have been serving the market and being out there in a good way, which we now see the fruits of.

Yeah. And I'd like to add, I think the lion's share of what the force is, is to the business-to-business sector, other professionals. But there is a fairly large share also of the Hultafors sales that is more exposed to private consumption. And that has been more subdued during the last couple of years. And I think maybe we see some early signs of that coming back as well.

Thanks for that. And then just finally, the reorganizing of the segment structure. Is there anything we should be aware of there? What's the rationale behind that?

That's, I would say, just a way of presenting it. It's the figures for you guys in the market, really. It doesn't mean that there is a significant underlying difference in how they operate. So it makes more sense from a business content perspective to bucket it in this way, and it's also a closer way of how they operate in Hultafors. So there is no significant change underlying that has landed in that segmentation.

I think that's the important part. The latter thing you said there, Mikael, it's more correct way of describing the business in the code as how it's operated, actually. Yes, correct. All right, that's crystal clear. Thank you very much. Thank you, Linus, for your questions.

The next question comes from Derek Laliberte from ABG Sundal Collier. Please go ahead.

Thanks so much and good morning. I wanted to follow up on the order intake, which was fairly strong while the sales and particularly EBIT growth were more muted. How much would you say of this gap is timing and how much reflects any slower conversion mix or margin pressure? Thank you.

Thank you, Derek, for the question. Sorry, I dropped you in the beginning. Was it on the overall group results?

Yes, on the overall industrial operations.

On the overall industrial operations.

Yeah, I mean, we see them primarily as a timing effect, rather than that there is a difference in more increased margin pressure on the businesses overall. As you commented earlier, as that the order intake, you know, funds through the system as revenue, we feel confident that that will funnel through with a good good drop through. So that's why we see it more as a timing effect, rather than anything else, really.

And just to underline again, which Mikael said, we've had for many quarters positive book to build. So we have, I think I said in the beginning, we have an order stock of over 8 billion SEC orders on hand, which is record high for us.

Okay, great. And that 8 billion, I think you alluded to it a bit, but we should see then, I suppose, most of that to be converted into revenue, at least during the second half, I would presume.

Yeah, absolutely. I cannot promise everything will be converted in Q3, but in Q3 and Q4 together, absolutely, it should be converted.

Perfect. And then in the report, you described this gradual market recovery, but also the sort of construction trends looking at it overall here which end markets are actually improving and where would you say that the demand is still weak if you could give some more flavor on that?

Yeah very good question Derrick I mean as you know if you follow Latour we are fairly heavily exposed to the building construction industry at large right but that's a huge industry in most economies around the world right and I think it's important to look deeper down into the different segments of that industry. And you see segments like air quality, air handling, the air climate, the indoor air climate, there's a strong demand there. And then we're well positioned with Sveagon and with BEMSIC. For instance, you see big investments coming into infrastructure development, defense, And the fences, of course, not only, you know, weapon and weapon system, but it's also a lot of buildings and roads and things to be constructed. You see a segment as data centers with extremely high growth in that area suits. I think it's important to look at the building industry in its different segments. And then you have segments like residential building. I would argue strongly that it's very subdued in most markets, both in the US and in Europe. So there you have some examples of good, strong expanding segments, but also an example of a subdued segment in the residential construction area.

All right, I appreciate the clarity there. I wanted to ask on Svegon also. I'm not sure exactly how to look at this, but you mentioned it benefiting from data center and industry-related projects here, sort of. I mean, can we view this as this now being sort of enough to offset any remaining weakness in the commercial and residential construction areas?

Yes, Derek, I think you can. It's important to remember Svegon is exposed to the residential segment, but that's a small part of the Svegon business. The absolute lion's share of the Svegon business is on business to business to commercial buildings and infrastructure and so on. So I would say the short answer is yes to your question.

Okay, great. And finally, After this sell-down here in Nasa, Abloy and Securitas, can you say something about how quickly you expect to deploy this additional financial flexibility into the wholly owned industrial operations?

No, but over time we will deploy that in the wholly owned industrial operations, but I think you can expect the same pace as we have had. and maybe somewhat increased pace, but it's also a way to ensure that we long-term can follow and support and provide capital to our wholly owned businesses when they expand both organically, but also inorganically via M&A. going forward. So it's kind of a long-term action that was taken to be able to support these very fine businesses that we believe a lot in and I think has proven throughout the years to create a lot of value. We expect to continue to do that. So this is the shortest that we can do this over a long period of time going forward.

Okay, perfect. Those were all my questions.

Thank you, Derek. Great. There's no more questions there. Any written questions, Mikael?

No, we do not have any written questions.

Good. Then we are done with the Q&A session on the overall report. And then to the highlight of this presentation, I'd like to introduce again Daniel Westberg, CEO of Nordlök Group, give us an overview of NordLock. And as I said before, after Daniel's presentation, we will have a Q&A, Mikael, I and Daniel together with all of you. So by saying that, I hand over to you, Daniel, please. You have the floor. Thank you.

Thank you, Johan. So my name is Daniel Westberg and CEO of the NordLock Group, as Johan said. And my ambition here, I will try to give you an overview of how we work to create both shareholder value and customer value in the model group. And also by the end of my presentation here, you should understand what's behind our tagline, build connections that lost. So with that, if we can move to the next slide. The group is a truly global group today. And you see on the map here, we've got presence in most industrial companies. And 95% of our sales are outside of Sweden today, although the origin is very Swedish. And being global, it's one of the things that makes Nordlok good. We're able to serve our customers globally wherever they are and follow them around the world. It's also a good way to fence off competition. We meet them early and make sure we're better than competitors in every part of the world. But it's also good in terms of tariffs, high transport costs, currency fluctuations, and also not to forget from a sustainability aspect, try to minimize tariffs. But the main driver being global, it's absolutely being close to the customer, being able to work with the customers in local language, their time zone, etc. And you see this as well, I will not go through all the numbers here, but the 10 tech centers we have is a good example. And these are centers where we can bring in customers, we can do tests on their applications to make sure that they perform as they should. And we have this in 10 places around the world. And this is something where we are significantly better than competition today. And also the geographical expansion. And I'll show you later how we've created value for Latour over time. But also now we're able to continue to expand into new geographies. And at the end of last year, we opened our own sales center in Brazil. And typically we do an investment like this. And around 24 months later, we see a positive impact from investments into new markets. And we still have areas where we can grow within the countries and within regions. And I think especially Southeast Asia is an area where we can continue to be more active to grow long term. So let's move to the next slide. So if we look at this global perspective here from a numbers perspective, you see that we've got a healthy split here. Europe, Middle East and Africa 40%, Americas 35% and APEC 25%. And all regions grow for us. And that is important. Also in a slower growth region like Europe, we are growing and we're growing above industrial production. Fastest growing for us is as it should be. It's the APEC region. It's probably more than 50% of the relevant market for us. So that being 25% of our share today, I mean, we want to grow faster than the other regions, and we're doing that.

If we look at the segment exposure, also here we have a healthy mix of segments.

We sell into a lot of industries, and that's making the group very stable, you know, over a business cycle, they kind of even out a little bit. But also when we look where we are right now, we are active in some industries that are attractive to be in, like Power generation, of course, is an attractive area to be. It's our largest segment. Mining is an area where we're very active as well and growing in. And also in the other spot here, we see rapid growth in the defense side for all our product lines, basically. So we're quite pleased with the exposure we have, and we're continuously playing that to try to maximize our growth. Let's move to the next one. So the Nordok Group today where all our activities are based on five product lines and five brands. And it's important for us that we have these five brands because we tailor our go to market per brand. And this is one of the things that is accelerating the growth. I think a little bit in the last two years where we're really emphasizing this, make sure we sell each product in the best way we can. And as an example, the well-known Nordlock washers, the origin of the group. We serve primarily via distribution. We work with OEMs and end-users to get the spec in, but we supply via distribution. Whilst on the mechanical tensioning side and the hydraulic tensioning with the super bolt and bolt apparatus, it's very engineered. So there's an engineer from our side involved in almost every sale. And here we sell directly to OEMs and end-users and normally don't go via distribution. So it's important to have this tailored approach to make sure we're as good as we can for every customer. And as you see on the right, we are always looking at, okay, what can we do more? What brands can we add and so forth? And that leads us to the next slide. And when we look at how we should develop our company, we're very strict on where we want to be strategically. So if we look at the market as a pyramid, it's quite a traditional way to look at the market. We are in the top of the pyramid. This is an area where we want to be. This is where we have a lot of application challenges. This is where it's really safety critical. The cost of failures is high when something goes wrong. There's a lot of engineering often needed. And this is also where the customers are prepared to pay more. And this is where we are today. And this is also where we will stay. We don't want to become a commodity supplier. Also, as you can see here, one of the reasons why we're growing well and have been over a long time is that we're able to convert applications that are using what we believe is less good solutions. more commodity type of solutions into our premium solutions that are more safe. And this is fueling growth, and this is something that we've been able to industrialize on a global basis, finding the applications around the world that we want to turn to NordLock solutions. So I believe we have a solid idea of where we are and where we want to be also in the future, and also what will continue to drive growth for us over time. So let's move to the next point, Catriona. Another important aspect, you know, claiming to be leaders, you know, it's easy to claim, but you also need to make sure you're a leader in every aspect. So we also need to follow the customers through their full journey. So we're very active in the pre-design phase. As I mentioned before, we've got engineers out in most industrial companies working with the customers, answering their specific questions. We help with product verification. We can do onsite assessments. We do a lot of testing and validation. And then, of course, we manufacture, we supply, we invoice, and that's where we make the money. But we need to be there through the whole lifetime of the design and assembly process as well. And this as well is something where we are well ahead of competition. and make it quite difficult for smaller companies to come in and start competing on a global basis because this takes time to build up. So if we move to the next one, we can see, you know, what has this resulted in over the years. And as you see here, I mean, there's been a phenomenal growth. And here I just show you the value creation since 2009. Latour has owned Nordlok longer than that. But you see an average growth here of around 13% organically and the acquisitions and then also including currency effects. If we look at where we are right now, we're in a good period right now. If I exclude currency effects and M&A effects, we grew by just over 10% last year. And so far this year, 12.6%. And this is of course the result of everything we're doing around the world and not becoming complacent as a leader and continue to have high ambitions. Conversion, I mean, that's probably the main one. And as I said, identifying the right applications, driving growth globally, and also this world-class service that we try to provide engineering, but also availability, quality. We offer a lifetime warranty on all our products, among others. So there's a lot of things behind this fantastic financial development that is very sustainable as well over time. So with that, Katarina, I think we're down to the last slide here. So when safety really matters, that's when we want customers to work with NordLock. And here you see a picture of Öresundsbron. Our solutions keep the cables in place. I hope you can feel quite safe next time you pass the Öresundsbron. So with that, that's all I had. And open for questions, I believe, Johan.

Yes. Thank you, Daniel. Excellent overview flying over the Nordhawk group. Fantastic. So we open up for the Q&A session. And it's Mikael, myself and Daniel. We'll try and answer the questions you have on Nordhawk. No questions.

The next question comes from Linus Sigurdsson from DNB Carnegie. Please go ahead.

Hi, again. Thank you, Daniel, for being on this morning. First off, a question on APAC. I assume China is obviously a big market opportunity for you, but what do you see as the main challenges to grow in that?

We see this regionalization very clearly, and China is driving the Make in China 2025. They started that a long time ago. There is a strong push in China for having it domestically produced. We are moving in that direction as well. We have good presence in China today. If we look on the mechanical tensioning side, we're doing that locally now in China to support the goals. If we look on the washer side, we are supplying that out of Europe still. We've got enormous advantages of scale and it's massive investments to duplicate that. But today we see this clearly and we're trying to navigate this actively in the group.

No, but it's impressive. I think Norlock, as you alluded to, Daniel, has been present in China during a very long time. We've been taking part of the growth in China over a long time, and we have many great examples of of customers and infrastructure projects in China where we have provided our solutions. And I think we're well positioned to continue the growth also the coming years in China with Norlok. So we have very good contacts, very good local team. We have a very strong presence in China.

So APAC is a region and if we split it up, we develop as well in China as we do in the other part of APAC. So I don't see a situation where we're now losing China due to the regionalization and tariffs and so forth. We're on track.

Okay, thank you very much. And then if you could talk a bit about this opportunity that you see in specialty bolting and how this area can command the same kinds of margins that you have in sort of the legacy washer business.

That's a good question. Because specialty bolting, it's an area where it's typically bolts and nuts manufactured to customer specs, where you have a lot of certifications around that it could be for for different energy applications could be like nuclear could be defense certifications, etc. So typically, what we supply, it's a machine product that is all not that complicated, but it's fully traceable down to an individual level. It's been Full manufacturing process is documented. There's normally a lot of coatings on it, a lot of non-destructive testing. So they're often ultrasonically tested so you don't have cracks in them and often in quite unique materials to withstand corrosion materials, et cetera, and so forth. So the paperwork and that aspect often has a higher value and cost than the product in itself. So it's quite difficult for a local machine shop to replicate this because they don't have that infrastructure in place. And this is a large market. We estimate it's between 10 and 30 billion SEK if we look at this from a global space. So it's quite an attractive area for us to enter as a group.

It's a very interesting new growth segment for Nordlok in the coming years. I agree, Daniel.

Thanks for that. And then could you explain a bit more how you work strategically with distribution? I mean, we've seen you buying some distribution businesses in the past, and I assume this is something we could see more of going forward.

Yeah, we've been typically Nordrop has been buying the distribution companies in a specific country, and that's been a very successful way to grow the group. When we look at distribution today, they're our main channel to market for the washers. And we try to stay very loyal to our distributors. And more than 90% of all products, all the washers we supply go via distribution. So the way we work is we try to create the market in every country working with OEMs and end users. But these are C items supplied in high volume, often going together with other C item components. So we have this great synergy between NordLock as the engineering partner and the product owner, and then the distributor that makes sure that they can get the right quantity at the right time when they need it. So this is an ecosystem that is serving us extremely well on the NordLock side. As I explained before, we've got the different dynamics on the more engineered part of the group. Did that answer your question? Yeah, that's helpful.

And then I had a final question more broadly on M&A and the opportunity there and what your pipeline looks like currently.

So we have a pipeline. I think naturally I cannot go into more details for that. But of course, we have both dimensions of growth that are important to us. Always foremost is organic growth. I mean, we should grow organically about 10% every year. That is very important for us. And then we can absolutely grow via acquisitions as well. So we want to do both.

I think we can add, Daniel, that we look for acquisition opportunities in all of the product segments, which Daniel alluded to, but especially I would say there is quite interesting acquisitions opportunities in this new energy bolting segment also going forward.

That's correct, Johan.

Okay, thank you very much. Thank you, Linus. Let's see if we have somebody else who would like to ask some questions.

The next question comes from Derek Laliberte from ABG Sundal Collier. Please go ahead.

Thank you and great presentation. I wanted to ask on your fantastic high-quality products here and looking over time their pricing power has remained intact and whether customers are still accepting premium pricing in the safety-critical applications.

Good interesting question, Derek, and I'm sure Daniel can answer it.

So it's a It's a difficult question to answer, of course, because of course, there's price competition and there are competing products on the market. And we then actively need to work. How do we defend our position? And I alluded to some of the aspects that are making us great. I mean, it is the absolute service levels we have and the proximity to the customers, being able to solve their problems. And I think moving forward, also being able to support our customers digitally, you know, in a superior way. It is important. We're also working quite hard to make sure that we are perceived as a leader as well. And the brand is very important for us here. When you look at safety-critical applications and safety product, critical product, There is a reluctance to take risk, and this is benefiting us quite well. If it fails, it could result in massive asset damages with large costs, personal damage, environmental damage, etc. So the willingness in a lot of cases is, okay, it's not worth it. We want to know it, we know it works, it's proven, etc. So I think it's a large cocktail of activities that... positions us where we are. And, yeah. Anything to add from Mikael or you?

Mikael would like to add.

Yeah, I think in that assessment, I think it's also important to add that the NordLag product in the applications that they go into is a very, very small part of the total cost of material for the applications, which means back to the comment that Daniel had, to take risk on that. Is that where you want to save the extra cent? And so it's a typical very good position also to be a very small part of the TUTOR solution, but very safety critical, which helps in maintaining, you know, and arguing for that price position over time.

I think Don's example with the Öresund bridge is a pretty good example, right? Massive investment to build that bridge, but quite important that those bolts for the cables hold up, right? But still a fairly comparatively small part of the whole investment of the bridge, and I And I think it's just important to underline, yeah, we sell the best product, but we also sell knowledge in this area. And the engineers building the bridge, they want a knowledge partner as they're really experts on secure bolting. And I think that's important as well to remember. It's a knowledge business as well. Right, Daniel?

Absolutely. I think we can... So coming back to the margin question, I think if you look on the last two years, I mean, we're able to increase margins actually. So I think when we see margin development, it will be more mix effects. So, you know, portfolio rather than margin dilution. That I don't see, at least not in the next few coming years. We will be able to maintain that.

Yeah, I got it. Very interesting points there. I really appreciate it. And finally, I was wondering if you could give some flavor on if there's anything to say about how much of NordLock's demand, you would say, is structural versus sort of cycle-driven, particularly in the infrastructure, energy, and I suppose industrial applications.

Daniel?

Yeah. I think most of our applications actually are exposed to the business cycle and follow the demand like any other industrial product. The big difference, if you would compare, I come from SKF, for example, and if you look on the growth we have compared to SKF, I mean, it's a lot higher all the time and it's a lot smoother. It's because we have this constant inflow of new customers all the time. We're able to convert customers to the NordLock solutions. So the business cycle doesn't really matter. It should never be an excuse for us, you know, for not doing well. But of course, it will maybe be a difference, you know, that we grow by 11 percent to 14 percent. That is the business cycle. And that is we are affected by the business cycle in every industry and follow that. But you don't really see it. And I don't think you will see it, you know, if we do a good job.

And having said that, Daniel, as you said in the beginning of your presentation, we are in quite many industrial segments. I mean, one is energy, for instance, and energy has its cycle, depending on oil price and other things. And infrastructure has its cycle. And these cycles are not necessarily always in tune and are in the same. So they also even out throughout the year. So you can say we limit our cycle exposure in that sense that we are in different segments. If you understand.

Absolutely. And also the regional exposure, I mean.

Perfect. Thank you very much.

Thank you, Derek. And then just to check if there's any other questions. No written ones, Mikael.

No written questions recorded, no.

Great. So thank you so much, Daniel, for the presentation of Nordlog Group. And thank you all for listening in to both the presentation of Latour's Q2 report and the deep dive into Nordlog. And we look forward to speak to you again when we release our Q3 reports later this autumn. So that concludes the whole session. And we would like to, from Mikael and Daniel and myself, thank you very much for listening in. Thank you.