Lindab International AB (publ)

Welcome to the LINDAB Q2 presentation for 2025. During the questions and answers session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now I will hand the conference over to the President and CEO Ola Ringdahl and CFO Lars Inner. Please go ahead.

Good morning and welcome to this presentation of LINDAB's Q2 report. My name is Ola Ringdahl, President and CEO of LINDAB Group. And with me today, I have our CFO Lars Inno. We will begin by presenting the results for the quarter. And after that, we will take a closer look at our key focus areas. Following the presentation, there will be a Q&A session. Let's start with some highlights. Despite the continued challenging market environment, ventilation systems showed strength in the quarter, achieving an operating margin of 9.9%. This performance was driven by an improved gross margin and also from the effects of the previously announced cost reductions that are now implemented and showing effects. For profile systems, sales and profitability were impacted by continued low volumes in the project business. During the quarter, currency effects were higher than normal, affecting sales negatively by 4%. Let's take a closer look at our sales development. Ventilation systems were affected by continued low market activity and also currency effects were significant in the quarter at minus 4%. These factors resulted in lower net sales for the quarter. What is encouraging, however, is that many markets are moving in the right direction, both in terms of sales and profitability. Examples include the UK, Denmark, Switzerland, Italy and also the US. However, in Germany and Sweden, two important markets will end up, market conditions remain challenging, influencing sales negatively for the group. For profile systems, we can see that major projects in the important Swedish market have not yet gained momentum. And in the table, you can see that organic growth was minus 12% in the quarter. I would like to mention that Two percentage points are related to the closure of businesses in three countries in Eastern Europe. And another three percentage points are related to the move of the factory for sandwich panels in Sweden. For smaller projects and sales through builders merchants, we are seeing increased sales both in the quarter and year to date. And this is a positive sign for the future. Let's now have a look at operating profit. Ventilation systems demonstrated resilience in the current challenging market and delivered a strong result with an adjusted operating margin of 9.9%. Actions to reduce our cost base have contributed to the strong result. The full effect of the savings will be reached now in July. Together with price adjustments, this has also improved our gross margin. In profile systems, the operating margin was negatively influenced by low volumes and low capacity utilization. We have partly compensated this through lower costs. Group operating profit for the second quarter was 281 million SEK. Currency effects were unusually large in the quarter. At previous year's currency rates, the operating profit would have been approximately 297 million SEK. The operating margin was 8.6% for the group.

Now I hand over to Lars Uner, our CFO, for a look at our cash flow and financial position. Thank you, Ola.

Lindab had a strong cash flow in the second quarter, as cash flow from operating activities amounted to 331 million SEK. Cash flow from operating activities for the nine quarters shown in the left graph amounts to 3.3 billion SE, which can be compared to an adjusted operating profit of 2.5 billion SE during the same period. Our net debt remained on a stable level and amounted to 4 billion 456 million SE, which is lower compared to a year ago. Lindab's target for net debt to EBITDA is that it should be below three times. In Q2, net debt to EBITDA increased to 2.7 times. Financial debt to EBITDA is at 2.1 end of June, which is unchanged versus the previous quarter.

Ola, now back to you and a look at our focus areas for the year. Thank you, Lars.

Our focus areas for this year, we have mentioned before, they are to fully implement our cost reduction programs, to divest the profile businesses in Eastern Europe and to continue to make value enhancing acquisitions within ventilation systems. We are working hard to make this happen and we are clearly on the right track. Let's take a closer look at each of these areas. We start with our actions in ventilation systems. At the time of weak market demand, we have taken structural measures and implemented cost reductions to improve the profitability for the business area. This was announced in the fourth quarter of last year. The actions included the closure of 10 sites and the reduction of 180 full-time positions, of which 160 are in the ventilation systems segment. I cannot conclude that these measures have been successfully implemented with full effect from July. Let's now take a look at our actions within profile systems. As we communicated in the fourth quarter last year, Perfil Systems is making an exit from Eastern Europe due to core profitability development. The strategic focus for the business area will be on the home markets in Scandinavia, where Lindab's market position is strong and where there are significant synergies with the ventilation business. So to date, we have closed three businesses. We have divested Slovakia, that was done in April. And for the remaining two units, the profile business in Hungary and for Romania, we are in constructive negotiations and expect to sign agreements within the near future. Now let's move to our third focus area, acquisitions. Acquisitions form a key part of Lindab's strategy. Lindab has acquired Ventia, a leading ventilation specialist in Poland with 60 employees and annual sales of 240 million SEK. The acquisition was finalized on the 7th of July after clearance from the Polish competition authorities. Ventia brings additional competences in sales of technical products, including air handling units. Together with Lindab's existing business in Poland, we now have a very interesting platform in one of Europe's largest ventilation markets. Ventia will be included in our reporting from the third quarter. And let me also update you on the acquisition of Husvent in the UK. Lindab acquired Husvent in October 2023, and we have since then consolidated Husvent into our quarterly reports. But after the acquisition was made, the British Competition Authority, CMA, opened an investigation. And this thorough investigation that has been ongoing now for more than one and a half year was completed in June 2025 And after minor remedies, the acquisition was finally approved on the 1st of July. We welcome the completion of the acquisition of Husvent. Lindab UK and Husvent together have a strong presence across the UK with over 30 branches. And we look forward to developing our sales in one of Europe's most important ventilation markets. I would also like to add a comment about sustainability. Sustainability is a prioritized area for Lindab and an increasing number of customers are asking for sustainable solutions. For example, like our air ducts made out of recycled steel. Our initiatives are receiving considerable positive attention. In April, the Financial Times named Lindab one of Europe's climate leaders in the construction and building materials category. Lindab secured a strong second place across Europe.

We are very proud of that achievement. Now let's have a look at our outlook comments.

So, of course, predicting the future is always hard. At Lindab, we have a positive market outlook in the medium and long term. Our ventilation systems bring energy savings for buildings and a healthy indoor climate for people. In the near term, we face a challenging market where demand is on a low level and construction activity in Europe has not started to pick up yet. For ventilation systems, it is especially Germany and Sweden where the market volumes are low and seem to remain low for a couple of more quarters. That said, we have many markets where demand is on healthy levels and where we can increase both sales and profitability going forward. We also see some positive signs on the horizon, such as an increasing number of requests and forecasts of increasing building permit applications. Most likely, we will see a stabilization of sales during the second half of 2025, and there are good chances that demand will start to pick up in 2026. For profile systems, larger projects remain at a low level, especially in the Swedish market. However, since the beginning of the year, we see increased sales to small projects and in the sales that goes through builders merchants. And this is a positive sign. Lindam has implemented strong efficiency measures over the past two years to counteract the market decline and to protect profitability. We will continue to implement further actions to strengthen profitability in the second half of the year. These actions include an acceleration of synergies from the many acquisitions we have made over the past years. When the market picks up again, Lindab is very well positioned for profitable growth, thanks to all the efficiency measures we have implemented and continue to implement, and also thanks to the investment program that we have finalized and that ensures that we have enough capacity and a highly automated production to benefit from future positive volume development.

And with that, we are ready for your questions.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Then from Lindab's side, we want to thank you for today and we would like to wish you all a nice and sunny summer. Thank you.