Netel Holding AB (publ)

Good morning and welcome to our presentation of our Q4 results. My name is Jeanette Reuterskuld and with me I have Fredrik Helenius, our CFO. During today's presentation, I will start by running through the key developments in the fourth quarter, as well as a recap of the development for the full year 2025 and our measures to improve our profitability. Fredrik will then go through the financials in more detail before I make a short summary and we open up for your questions. In the quarter, we have charged the result with additional costs to terminate identified loss-making projects, while net sales were slightly lower than expected. We took robust measures to strengthen our operational base and increase predictability in our operations. We carried out comprehensive efforts to streamline our organization and strengthen the parts of the operations that have a negative impact. 2025 was a challenging year with lower volumes and the large write downs in projects that had a negative impact on our earnings. During the fourth quarter, we continue to win attractive contracts and we are entering 26 with a high order backlog, more than 4 billion. Around half of the order backlog is for products that had already underway this year, creating a strong foundation for profitable growth. Agreements were signed at levels that offer good potential for profitability and will help to stabilize the business going forward. The growth in order backlog was primarily driven by power and new framework agreements in telecom. We have, for example, signed new big contracts, one in infraservices for civil engineering works at a new logistics center in Ludvika, worth about 110 million SEK, and an agreement signed with Power Sweden with Elevio for the reconstruction and refurbishment of distribution station in Lidingö, worth about 50 million SEK. And we have renewed a two-year framework agreement within power with LVI Norway for emergency services worth 20 to 30 million NOK per year. Cash flow was strong in the last quarter of the year, as predicted. And once again, we could see clear seasonal patterns as products concluded and final invoicing resulted in increased cash flows during the last months of the year. Cash flow from operating activities amounted to nearly 100 million for continuing operations for the fourth quarter, an excellent performance from our organization. We remain intensely focused on cash flows. We successfully conducted a round of refinancing during the fourth quarter and secured new financing agreements. The financing runs until the end of June 27 with a liquidity covenant structure. A liquidity covenant means that the financing for us is linked to the company's actual ability to pay, thus providing greater stability, predictability and financial flexibility. Overall, this improves conditions to support our operational activities and the implementation of the Group's strategic initiatives going forward. We also have successfully made the divestment of our operations in the UK in mid-December. And earlier, before summer 25, we made the divestment of our operation in Finland. Both of these operations have negatively affected result and cash flow in recent years and have required intense focus from the organization. We can now focus on our core markets. As part of the work to boost Natelscope for action and to improve profitability, we have made changes to the executive team. We removed the management layer within the divisions. The heads of the business areas will now report directly to me. I'm pleased to welcome Axel as the new head of Telekom Norway and Robert as the new head of Infraservices Sweden. The strength of their experience with Intel and its markets means that they are taking key roles with a clear mandate to bring change, enhance operational efficiency and further develop the group's business. These changes strengthen our position and create good conditions for improved earnings and sustainable growth further on. We reported a revenue decline of 9% for the full year 2025, with an adjusted EBITDA margin of 1%. The profitability took a hit in the third quarter when we had identified overvalued products by former management, ahead of product completion in three of our companies acquired in 2021 and 2022. In addition, we had lower volumes than expected due to our focus on profitability in procurements and the increased market competition in the Infraservices division. We focus on winning the right products with the right margins. Through our cost savings programs and more efficient organization, we have strengthened our competitiveness going forward. Volumes were also negatively impacted by a higher portion of products still in the startup phase than expected, as well as the postponed number of products especially we see in telecom. We have been working to improve profitability for a long time, but our activities to increase profitability did not fully succeed in 2025. One of the main reasons for this was that we did not achieve the full potential of our investment in the new business system and the new organization that we set in Norway and that we had anticipated for during 2025. combined with the lower volumes and the right-dancing products that we reported in Q3. As a consequence of the developments during the autumn, we have turned over every stone throughout the group and introduced cost-saving measures with clear time-bound targets. In 2025, we took robust measures to strengthen our operational base and increase predictability in our operations. We carried out comprehensive efforts to streamline the organization, strengthen the parts of operations that have had negative impact on earnings. And as I said earlier, we have divested our operations in Finland and now in December, our operations in the UK. We have also improved internal processes and we now follow up products more frequently than before. We have conducted an extensive review of the subsidiaries and have a clear picture of the operations and our projects. We have strengthened their teams and adjusted the organization. As a more general measure, we reduced managerial levels and the use of consultants in addition to optimizing the use of external resources. In 26, we also will start consolidating subsidiaries to create economies of scale in administration, resource management, with the aim of freeing up more time for the operations and capacity for winning, managing and developing our projects where we earn our money. We are now executing on the cost-saving programs and needed measures. These measures differ slightly between the divisions and the programs were introduced internally with time-specific milestones. Our cost-saving measures are totaling 40 to 50 million as we said in quarter three. The first program is totaling 25 million with full effect this year. Of this amount, 10 million pertains to the identified services and vacancies that have not been filled out during 2025. Forthcoming measures involve the continued restructuring of management functions and cost savings in central functions, as well as 10 million NOK in the Norwegian telecom operations. The second program is totaling 15 to 25 million in savings with a full effect in 27. A large part of that savings relates to the consolidation of our subsidiaries in Sweden. Mattel's market situation is characterized by continued strong demand, but with clear differences between the divisions. Infraservices and telecom are affected by increased competition, delayed product startups and lower volumes, while power, especially in Norway, is showing strong growth and good demand. At the same time, the group's position is strengthened through new framework agreements geographical expansion and growing order backlog for 26. The action programs that are ongoing throughout the organization are expected also to improve both efficiency and profitability in the coming years. In Infraservices, we can see an active market but fierce competition with squeezed margins. Clients provide a number of good opportunities and we notice several interesting products that we tender for. But the number of contractors remain very high and the pressure on the margins continues to increase, creating a market in which we have to be very keen on what we go for. In addition, delayed products and low volumes from framework agreements last year are slowing down development. We focus on risk control, product manager, and the stronger order backlog for 26. Empower, very strong market in Norway with strong growth. Sweden showcased a somewhat lower activity during last year, but during the end of the year and in the beginning of this year, We acknowledge a positive development with additional projects being released, highlighting the great demand for our services and the need for investments in the power networks. Our Swedish operations are affected by fewer products in full production and the focus is on new startups and tenders. New framework agreements that we entered last year with E.ON, Vattenfall and Elvia in Norway strengthened the outlook for 2026. In telecom, we saw lower volumes than expected and product delays were in development. Germany is showing growth with a strengthened customer portfolio and order backlog. In telecom overall, especially in Norway and Sweden, we see decreased volumes in investment from our customers for the coming years, and we need to adapt and secure the right markets and customers we can develop a sustainable business together with. Our underlying business remains stable, And what remains after we exclude the effects from the two underperforming subsidiaries and the unusually large volume loss is highly resilient business with a strong foundation. Even though lower volumes have an impact on earnings for the year, we consider this temporary. Our business model with a high degree of flexibility and a significant share of subcontracting means that we can adapt quickly to changing market conditions. At the same time, parts of the operations are performing very well. It is especially gratifying to note that our power operations in Norway continue to improve and grow over 40% during the year with an EBITDA margin of over 5%. It confirms that our strategic focus areas are delivering and that we are well positioned to create profitable growth when more volumes normalize and the measures we took generate the full effect. Finally, to understand our normal business, we present our seasonal pattern. Netez operations follow clear recurring seasonal patterns related to project life cycles, customer investment plans and weather conditions. These patterns impact volumes, margins and our cash flows. Given how our product mix looks this year, we note slightly lower activity in the beginning of the first quarter than last year. This is due in part to many products in the startup phase, which includes preparatory work such as design and planning, and in part to the winter weather. That means that we have to wait to start some of our production. We expect larger production volumes primarily during the second half of the year. Quarter one is our weakest quarter, then growing further into Q2 and Q3 to end up in Q4, which is our strongest quarter, often the quarter that carries the full year's margin, especially for large product deliveries also with a strong cash flow. So let's move on to our financial performance in more detail, Fredrik. OK.

Good morning and thank you, Annette. Q4 indeed did mark the end of a challenging 25, but with a lot of things taken care of. We, as Gannett mentioned, completed the divestment of our UK operations during mid-December, in addition to the summer exit from the Finnish market, and we have limited the downside from the sub-performing units and continuously work with our actions focused on our organization, the people in our business, in addition to the obvious areas across cash flows and profitability. Our quarterly sales amounted to 812 million with a negative growth of 14% in comparison to 24. Last year, we saw and we were running relatively more bigger projects in a true production phase driving the volume. During the third quarter, we took a hit with the write-downs in a few specific units. And once we have limited the downside and adapted our structure, we have accelerated actions, partially impacted the production here in Q4 as well. In this quarter, we also note the impact from the focus on building a healthy order backlog, working intensively with bids and tenders, less activity within the mobile sector in telecom and an early winter. We are just short of the previous expectation of approximately 3 billion for the full year 25. And this slight drop in volume temporarily impacts the financial performance and the profits. Coming from 90% growth last quarter, our power business in Norway, on the other hand, continued its positive development and grew with over 40% the last quarter, closing 25 with almost 500 million in sales. In total, we noted a negative impact of almost 2% from the FX effects in the quarter and for the full year. And that corresponds to approximately 60 million in sales for 25 in total. Further, I think that adds then to the understanding of the performance by the Norwegian power business as the main reason for the FX effects would be the weaker NOC during 2025. Since 2024, we have a hedge in place using parts of our debt, protecting the equity, but a stronger NOC would nevertheless provide additional opportunities in terms of sales and profits. With continuous additions to the backlog, the power business in Norway again benefits from the skills and expertise within the organization. And we do look forward to the full year effect from the strategic expansion to the southern regions. We also closed 25 with a record order backlog of almost 4.2 billion. Our underlying markets and demand is in general positive with the key drivers still being the need to increase the capacity and reach within the electrical grids and networks. Great investment needs in civil infrastructure and public sectors and the digitalization trends that we see. We continue to be very cautious and thorough with our strategy, being flexible in the market turbulence and competition within the telecom sector and infrastructure business. Nevertheless, the 2 billion of the backlog, having that referring to 26 with new additions based on healthy margins in line with our financial target range, we look forward to an improved performance and will continue to focus on adaptation to market conditions in order to close the gap from the 2 billion in the order backlog, referring to 26, and the envisaged growth for the full year. After the write-down of projects in the third quarter, we recorded small but positive profitability here in Q4. As said, the adjusted EBITDA of 2 million or 0.2% is partially impacted by the relatively lower volume in comparison to previous expectations. And with project delays and projects remaining in the early phases, we will improve our position and restoring profitability during the coming year. With UK closed, we have, as said, limited impact from the sub-performing units. The loss-making power units recorded an EBITDA of minus 2 million in the quarter, and we expect a stepwise improvement over 26 as we close and hand over the remaining ongoing projects from the old agreements and focus on ramping up our new agreements with IANA Waterfall. The Infraservices unit included minus 4 million in EBITDA in the quarter, we still have a few early stage discussions on going to close remaining projects but we focus on limiting the downside risk in cash flows and we do expect to be able to limit cash outflows to zero during 26 in that unit the adjustments of items affecting comparability in the quarter includes approximately 6 million referring to a contract within that infraservices unit and otherwise mainly refer to the costs in relation to the new finance agreements and the reorganization and UK divestments. Of course, as with the sales target, we recorded a full year 25 adjusted EBITDA of approximately 1%, short of the expectation of 1.5 as a result of the impact from the slight drop in volume. Turning to the cash flow, I believe we are able to provide some of the most relevant and important answers. Using percentage of completion as the relevant base for our calculations and reporting, our top line and profitability will unavoidably vary with the values accrued over time within projects. The expected seasonality and strong cash generation in the fourth quarter, on the other hand, provides necessary answers in line with what was previously stated. To partly rephrase what we said in our previous call, the three sub-performing units accounted for approximately minus 60 million in negative operating cash flow until end September. But again, we did expect to see limited future effects as most was already considered. With that background, we are very pleased with the performance from our teams working with our invoicing processes and releasing cash as the year and certain projects are coming to an end during during November and December. With increased invoicing levels, the operating cash flow amounted to 97 million in the quarter. Despite the significant losses from the sub-performing units and write-downs, lower volumes in general, and processes regarding the Finnish and UK divestments, the 100 million cash released in Q4 eased our working capital need for the full year period, resulting in approximately minus 30 million in operating cash flow for the full year. During 25, we also started several new clients and projects in the regions, and that demanding relatively more capital during the startup phase. But the strong performance across the organization during the quarter here in Q4 enabled a positive development of our working capital profile. With that said, we will continue to highlight the evident seasonality of our business. We do expect to improve during 26, but it is likely that Q4 will be the strongest cash generating quarter in the future as well. The leverage ratio calculated in line with our financial targets is 7.6 times. With the LTM EBITDA effect from the last few quarters, we know the increase in leverage, and this was further the underlying reason for the communicated waiver during the fall. Today, however, we are pleased to comment on the achieved new agreements communicated in December with our lenders extending our facilities until end of June 27, having liquidity as the relevant financial undertaking rather than the net leverage metrics. The obvious effect of this is, of course, restored long-term debts and mitigated risks relating to the financing for our business. But the important achievement refers to increased availability, enabling us to focus on the operation and organizational development whilst taking control of our capital structure. With the cash flow in the quarter, we closed 25 with more than 200 million in cash and above 340 million in available liquidity. Turning to our divisions and infraservices, we report sales of 170 million in the quarter and 605 million for the full year, down approximately 28% in both periods. As with power, infraservices includes the effect from the Q3 write-down, but in general, the lower volume for 2025 has an effect from the increased competition. The underlying markets, remain healthy with high activity across public and private sectors. But the competition remains at the higher levels, impacting our possibility to grow as we are focused on adapting the organization and working with bids that would enable profitable projects over time. In addition, Infraservices saw a few delays from projects previously expected to be able to start during late 25 and relatively lower volumes from frame agreements. But we continue to work with building a relevant backlog for 26. and to highlight the reported addition of our major contract here recently. Infraservices reported an EBITDA of minus 3 million or minus 1.5%, out of which then 4 million refers to the loss making units. With new management in place for the division, we continue to work closely and with risk management, consolidation and uniform processes for our bids and estimates. Within power, we reported approximately 14% lower sales or 272 million in the quarter and close 25, just below both last year and the 1 billion threshold. The growth in Sweden is impacted by fewer projects running at full production, especially regarding substations. And during the start of these projects, we engage in low volume activities such as planning and permitting. But once the production kicks off, we generate additional cost items and then obviously accruing income to a greater extent. Power in Norway, as previously said, continued its positive development and grew over 40% in the last quarter, closing 25 with almost half a billion in sales and a total growth for the year above 40% with an EBITDA contribution and margin of over 5%. The team in Norway continue to win interesting contracts, and we have successfully confirmed the expansion to the southern region. The market activities are good, enabling for future growth and continued focus on our client and sector diversification in the Norwegian markets. The EBITDA of 1 million in the quarter is impacted by the lower volumes and the current project mix and phase in Sweden. Previously, we have benefited from additional substation projects in Sweden, improving the project mix. And during 2025, we focused additionally on both starting new ones and, of course, finding new opportunities for the Swedish power business. The full year EBITDA of minus four includes minus 32 million from the loss making units. But with new management in place, new client agreements in place, we do envisage a stepwise improvement over the year of 26, lowering the risk and increasing the performance with a better EBITDA contribution. Telecom generated 369 million in sales in a quarter. down with 6.3% from last year. The quarter and the year is impacted by project delays, but especially lower volumes in comparison to expectation regarding the rollouts and mobile networks. Rollout volumes within fixed and mobile networks in Sweden and Norway are now significantly lower, and we are moving fast towards other interesting opportunities within the defense and public sectors to name a few. Germany too. were slightly behind last year in the quarter as the early winter in our regions halted the operations. But year on year, we turned back to growth and noted a strong performance from the team, successfully entering into agreements and starting projects with new blue chip customers despite uncertainties in the telecom sector and the German economy. We were a bit too optimistic during H1 of 25 and hence account for a negative quarter here at the end of 25 with an EBITDA of minus 16 million. But full year 25 remains in line with previous period at a low positive figure. The 1% margin for the year is not in line with our expectation for long-term profitability, but based on the current state of the actions, we choose to value the backlog, existing positions that we have and expect to execute on additional efficiency across the division, especially in Norway moving on to 26. As we said, Germany grew year on year and have done so whilst adapting with an improved client portfolio and interesting add-ons to the backlog. With the UK and Finland divested, our management updated and the continued execution of measures in the Norwegian organization, we expect to release our efficiency also in the improved profitability. And I think that sums it up quite well. It is a challenging year and a quarter, but again, with a lot of things taken care of. The positives in the quarter are obviously the very important answers from the cash flow, our growing backlog, and that we now entered 26 with a better position and being well prepared to continue our process. And with that summary, I think we are ready to have a few final comments from you, Connett.

Thank you, Fredrik, for this presentation. I will finalize today's presentation with some concluding remarks. Our underlying markets are healthy and driven by the megatrends of electrification, digitalization and modernization of the critical infrastructure. Our business is characterized by long-term customer relationships and we have worked for many years with some of Scandinavia's largest telecom operators such as Tele2 and Telenor, power companies such as E.ON, Vattenfall and Elvia. We also have strong offering, which is reflected in our increased and improved order backlog of 4.2 billion. We have done our homework. Difficult but necessary decisions have been made last and we will undoubtedly have to make more such decisions to adapt to new scenarios in the future. We have a clear plan to improve profitability and we are completing the measures we have communicated. We are maintaining a high pace to win new great contracts, implement the saving programs and complete our signed contracts and have entered 26 with better condition. Through continued focus on consolidation of our operations within the divisions and the group, increased internal efficiency, improved processes and strengthened financial position, we are preparing ourselves to face the future. Our strategic decision to expand geographically in Sweden, Norway and Germany at the same time we stated that we would seek new customer segments, particularly industrial clients within the power division and public customers within telecom, has led, among other contracts, to our expansion into southern parts of Norway with a new customer, Glitternet. And in Sweden, we have won a major framework agreement with the Swedish Defense Materials Administration a couple of years ago, where we now see increasing volumes further on. In the autumn, we presented our indication for 2026, which we are sticking to. We expect growth and margin improvement for the full year 2026, given the savings measures in 2025 and 2026 and the market conditions we see today. Thank you all for listening in and now we are open for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad. We'll have a brief pause while questions are registered. The next question comes from Carl Johan Bonnevier from DNB Carnegie. Please go ahead.

Yes, good morning, Jeanette and Fredrik. A lot of moving parts here, obviously, and thank you for all the extra color, but Maybe you can help me looking at just trying to back out these three problem units. Obviously, you've now done the deconsolidation of the UK, so that's the easy one. But just to understand, what was the impact of these three units in the Q4 numbers and in the full year?

Yeah. Morning, Carl-Johan, and thank you for the question. As you say, UK was one of the three units, and we completed the divestment here in mid-December. Then the full year impact for the other two sub-performing units, we then have one within Power and one within Infra Services. We commented on that briefly now during the presentation. The Power unit, impacted the fourth quarter with minus 4 million and 32 on the full year and the Infra services unit impacted the quarter with 4 million as well and roughly 30 million for the full year just as the power unit and we have included again um a certain or specific table in in the report at the end uh stating the the the impact from both these units uh in detail for for both the the quarter quarterly period and the and the full year excellent and and when you look at uh

You detail quite nicely the steps down that you see in the power unit for this year and then neutralizing those kinds of loss levels. In the infra unit, do you see that you have already been able to neutralize the impact or is there still a lingering effect into the 2026 as well?

Yeah, I had a few words on it as well during the presentation. But what we do see that we have a few discussions ongoing that we need to close to finalize the remaining projects in that unit. But we focus on having a very limited downside risk in terms of cash flow. So our expectation is that we have eliminated the risk for further cash outflows in that unit. And we'll continue to close those discussions during 26.

Excellent. And just looking at the congratulations, fantastic order back, it was good to see and I guess it gives quite a good kind of base load going into this year. Even if I understand it, you say that it's mostly related to the second half. Is that the way to interpret it? It's going to be the facing of it, so to say.

Sorry if I misunderstood, but the backlog that we have of 4.2 billion, we say that roughly 2 billion refers to 26. And then obviously we have our seasonality where we expect that H2 will be the stronger parts of the year. That's correct.

And when you then talk about your final remark, Janet, talking about growth this year and margin improvement, how do you bridge that compared to what you're now seeing in the backlog and you see the facing during the year?

Yes, we said our backlog is healthy and we are transparent of the difficulties we have in one of the companies in Infraservices that we are working on. But it is a healthy order backlog and will make us to go to stabilize our margins for this year, definitely. We took a big hit with product write-downs in Q3 last year, and we had turned over every stone during the last quarter as well, so we feel feel that we our organization is is on track but it's going to take some time of course to totally stabilize but we see an improvement for this year of course as we say the indication due to that the ordinary business which is the the big part of us is is performing very well and one of the example as I said is is the operations the power operations we have in Norway for for one example who increase their growth 40% with a margin of over 5%. So we can focus on the businesses as well and the order backlog that we are continuing to grow with the good margins as well.

Exactly. But if I look at the indication for 2026, then when you talk about growth, Is that only on the EBIT line or is it on the top line as well? So I understand what you tried to say with that indication.

Yeah, we anticipate that we will grow, but it's not our main focus. Our main focus is to have profitable growth. But what we can see right now, we are able to have a profitable growth even for this year. But of course, our main focus is to stabilize our margins for this year. That's most important. But in that, We are working on a market that makes it possible for us to grow. And of course, with this strong order backlog that we are going into with 26, there are all ways for us to be able to grow with profitable margins as well.

I'm sorry to dwell on debt, so I understand. The base for going into 2026 from this kind of statement is the 2.9 billion that you now reported for 2025 on the revenue line.

Yeah, correct.

Excellent. And looking at the fantastic development in Norway, I guess with success in certain niches you might end up in constraints on people that you can utilize for doing these kind of things. Are you able to take on these kind of huge growth rates with the structure you have for the moment?

Yeah, we do. We have a very good team in place in Norway. We have grown the organization there as well. And the benefit for us utilizing on the subcontractor driven model, even though our Norwegian power business is very much focused on our own key individuals in our organization as well, is that we can take on additional volume without having too much effect on the organization. then 40% growth year on year, of course, have other impacts and we will continue to develop that organization to benefit from the market conditions and continue that growth strategy.

Excellent. Sounds good. Good to have 2025 behind and all the best in 26.

Thank you. Thank you, Karl-Johan.

There are no more questions from the telco, so I hand the word back to Jeanette and Fredrik for closing comments.

Thank you all for listening in and we look forward to see you for our presentation of our Q1 results in April the 24th. Have a good day and bye for now.

Thank you everyone.