NCAB Group AB (publ)

Good morning. Thank you. So speaking today will be myself and Anders Forsén, accompanied by Gunilla Öhman. If we start by summing up our second quarter, we can see that the market recovery has been slower than we have anticipated. I think notably we have seen a weak demand in Europe and especially Germany, as I think we've all seen from macro numbers on IFO index, et cetera, that the German manufacturing industry has done worse than expected. And that has also impacted our business. Nordics has performed with mixed performance. Some parts have been benefiting from defense growth, but we've also seen lower activity in areas of construction or energy sectors. In North America and East, however, we continue to show progress with order intake growing. And we have also landed some nice larger projects, notably in North America, which further helps the growth trend in orders there. Overall, despite demand being lower than anticipated, especially in Europe, we still continue to see a very healthy growth in our new partner numbers as well as in new customers' one. Looking at the financials, we can see that we are maintaining gross profit at very good levels. Factory prices remain low, and we can also see that the signs we start to see about potential price increase in the market have become somewhat more muted as demand in Europe is lower. EBITDA and EBITDA margin are, of course, impacted by the lower top line, but we have also taken some non-recurring costs in the second quarter, which has another impact on the quarter EBITDA numbers. On the M&A side, however, there's been a lot of activity in the last couple of months, and we have landed four new acquisitions, as well as still having a very active pipeline of continuing ongoing discussions, and we've also added an extra credit facility to support further M&A possibilities of 500 million SEK. If we then look a little bit closer at some of the acquisitions, we started in April with a smaller acquisition here in Belgium, two employees only, but it gives us a nice direct foothold in the Belgian market, and we'll work closely together with our business in the existing Benelux. Then here in July, early July, we announced two other acquisitions. We have ICOM Industrial Components in Switzerland, adding 40 million SEK of annualized revenue and six employees split in Switzerland and in Serbia. This again, we already have a business activity in Switzerland based on our acquisition of DB in 2023, but this gives us a stronger foothold and will enable us to grow the business in Switzerland. And similarly, we also announced an acquisition in Austria, EPI Components Trade, a company with four employees and 35 million SEK Again, a market which we are currently serving out of our German organization, but this gives us a local presence and enables us to continue to grow in that market. Then, as we may have seen yesterday, we announced a larger acquisition. We are announcing that we are acquiring the company DVS Global with main business in Italy, serving industrial customers and also partly in automotive. It's a very quality-focused company that has a long history, almost 20 years of business in the industry, revenue of 230 million Swedish kronor in 23, and with a very good profitability as well. We will be taking over some 31 employees in Italy, Switzerland, Hong Kong, and China. Very similar culture and values with what we have in the NCAB, and we expect a very smooth integration. This is a signing that happened here yesterday, and we expect to close the transaction in September or latest in October. And if we look back at the quarter in some numbers, we can see that net sales are down 12% per year to 935 million SEK. That's an organic decline of 15% in both Swedish kronor and US dollars. And even if it's lower than last year, it is somewhat in line with the order intake that we've seen in the past quarters, where we've been pendling between around 900 to 970. If we look upon the order intake, we're up slightly versus last year, and the book-to-bill is flat on a number of one. If we then look at EBITDA, we are at 120 million SEC, so a healthy EBITDA margin of 12.9%. Of course, impacted by the lower sales, But gross margin helped to maintain a good profit level. Gross margin remaining at 38.5% versus 36.4% of last year. And then also, as I mentioned, we took some one-time costs. We have taken costs. We are in the process of implementing our new IT or business systems. And those activities have been more intense in Q2 than in Q1. And we have also been having our bi-yearly all-employee development conference where we work on strategy and the business development with all of our employees. that was taken now here in 42 this year uh working capital uh or still remains good at 6.2 and that also then helps to generate a continuous strong operating cash flow of 101 million sec versus 152 last year and a good ratio versus rb 220. anders okay yes to summer up what what you said peter that we

We can see that we are down 12% in SEC and 30% US dollar. The exchange rate SEC US dollar has been rather stable within last year. So it's no big difference there. Of course, we can see that we have a bigger drop in EBITDA connected also to the revenue that the supply is down and also some non-recurring costs as we mentioned. EBITDA for the quarter ended up in 12.9%. I think if we continue to have a healthy progress in our gross margin, of course, we still had a good gross margin last year as well. So we can't compensate the drop in revenue as we did in the same way as we did last year. But still, I think we are continuing to run with a very healthy and good gross margin. This is also a sign of that the prices that we expected to increase a little bit from the factories in Asia has been stable on the same level as before. So we don't really see any signs right now for increasing prices. And that might also be the consequence of the weaker demand from mainly from Europe. So just to look in the Graph for the total company then, as we said, the revenue is down. But I think we are on a very stable level quarter by quarter. As I said before, we think it has bottomed out. And we can also say that we see a little bit of fragmented markets between different segments where we can see that Europe is going down while other segments going up. So there are different signs in the different markets. But overall, this gives us a rather flat development quarter by quarter. And I think what we have said before as well, we are really back to a situation where we can more or less measure one quarter's order intake into one quarter's revenue. As we said before, we see some really good signs in East. We also see some positive development in North America where we have gained a number of new interesting projects. And in total book to bill was 1.0. And as Peter also mentioned that we still see a good positive trend in taking new part numbers and a new customer's one. So somewhere there is, I think we can see that we are keeping good control of our market position and we take new orders, but still the customers are very hesitant to place the volume orders. And there are very much cautiousness in the market, which is, says that the new part number doesn't translate into orders and revenue as it normally have done. So we see many, many smaller orders than we used to see before. Going into the EBITDA. So of course, it is a drop versus second quarter 2023, which was a strong quarter on the other hand. And also, of course, when we have a high gross margin, a drop in top line will have a higher impact on the EBITDA. During the quarter, we also continue to take the cost for the new IT platform. And it was a little bit higher than the first quarter. Maybe it was about 8 million in the first quarter and 13 in this one. We also have this bi-yearly employee conference, which really creates value for all the employees and really boost the company values in a good way. And of course, all that cost is taken one quarter. So that will be a hit in the specific quarter. So therefore, we can see a lower EBITDA margin down to 12.9, almost 13%. Still good to see that we can match that with our gross margin and that the gross profit is not going down as much as the top line. Back to you, Peter.

Thank you, Anders. So looking at Nordics, where, as we've mentioned before, that Poland is part of Nordics due to the strong connection of the business that we have. So we're now reporting Poland on the Nordics. Also here we can see ordering intake decreasing, but by 2% versus last year to 226 million SEC. We can see aerospace and defense are sectors that are performing well in the Nordics. But we then have some other business where, say, you can see that Denmark as a country has been exposed to some construction activities and also some energy sector business. And we have also seen slightly weaker activity in EV charging in the second quarter. Net sales amounted to 207 million SEK, decreased by 9% from prior year. And we have seen a slight mix shift or a mix in the quarter. This can always vary a bit. And we've had a little bit more negative mix in terms of customer country mix in the quarter, which has impacted our gross margin slightly negative in the region. EBITDA amounted to 29.6 million SEK and the margin is at 14% versus 22% of last year. If we then look at Europe here, we can see that the net sales is decreasing by 20% versus prior year. And combining comparable units, it's a decrease of 22% in SEC and 23 in US dollars. We can also see that our ordering take is 423. So also a negative book to bill competitor sales. And this again is very much related to German market, which is weak. And that also actually has an impact on neighboring markets as well as like Netherlands and also to some extent, Italy. But we do see some positive development in automotive and also aerospace is an area where there is positive signs within the sector. So what we can see is that the anticipated trend of inventory reductions reducing to then be translated into a growth in the future. I think we can see that probably we have lost at least one quarter and we'll see when that pickup will happen. EBITDA decreased down to 56.7% million SEC. and it corresponds to a beta margin of 12% in the quarter. North America, here we have a more positive trend or continued positive trend. Order intake up to 229 million SEK and a healthy book to bill versus the net sales of 200 million SEK. So order intake for comparable units are up 29% both in Swedish kronor and US dollars. underlying overall growth, but there are also some interesting new projects that have been won in the quarter, both in aerospace and also in research laboratories. Net sales, as we said, also increased by 9% to 200 million SEK. However, for comparable units, it's a decrease of 2%. EBITDA decreased to 28 million SEK versus prior year, and the EBITDA margin is down to 14% versus last year. but slightly up versus the prior quarters. And if we look at East, the market conditions in China overall still remain challenging. And what I think is we've all seen macroeconomic numbers for China also being continually difficult. However, we've been able to win new interesting business as well in the high tech demanding customers. So we have in the quarter a positive book to build of 107. Our order intake was up to 60 million sec. versus 43 last year, which was quite weak, and net sales flat versus last year, 56. We also have an EBITDA on 11 million SEC and an EBITDA margin of a very good 20% in the quarter. Anders, over to you again.