Nederman Holding AB (publ)

Good morning everybody and welcome to near the man's interim report for quarter two of 2024. If I start by dispelling maybe any rumours, there may be, Sven is not here today. Unfortunately, he had to attend a private event, a funeral, but like I say, that would probably be the first question, where is Sven? And I've put that one away. If we move on to the quarter two, fortunately for me, this is a rather good report to presenting as we see it. This is the second most profitable quarter ever in the near the man group history. Unfortunately, for this presentation, quarter two last year was actually the most profitable quarter in the year. So some very tough comparative figures, but we will come back to that. And quarter two had good profitability development, higher margins overall and strength and position for the near the man group. We in the quarter, we have continued to focus on the development of the range. We've really made some new product releases, which I will come back to. And we believe we are strengthening our leading position in what is an uncertain macro environment. And solid profitability in the second quarter, stable cash flow, advanced positions in some growing industries around the world. And that is something that we take as a clear positive going forwards. Growing service business with a continued positive development in all three of the divisions operate, all four of the divisions operations in that respect. And that is reflected, not least in the margin improvement that we see this quarter. If I move on to the key financials and starting on slide four with orders received, orders received for the group is a whole word down. That's quite clearly in the process technology division, which we know is inherently volatile the large project business making up the vast majority of the sales in that division. The other three divisions are rather solid on the order intake. Nevertheless, that doesn't compensate for the downturn versus the extremely strong quarter two last year, it must be said. Currency neutral order intake is .9% down in quarter two this year quarter on quarter, organically that's 9.9%. Year to date 2.934 billion sick versus just over 3.505 billion sick last year, currency neutral .1% down and organically .5% for the year to date. Like I say, very differing picture between the divisions, which we will come back to later on. Moving on to slide five, sales clearly decreased during the quarter versus again, what I must point out was the record quarter for sales in quarter two, 2023. 1.467 billion Swedish Kronor is down by down from 1.631 billion in quarter two last year. This is process technology again, accounting for the entire drop there. Currency neutral .6% down organically .9% down. Year to date, we're at 2.864 billion Swedish Kronor after half a year now versus 3.113 billion Swedish Kronor at this point last year. Currency neutral .3% down and organically .6% down. What we can see on these charts as well on the bottom left and right of slide number five is that the currency impact has been negligible so far this year. We have seen at least over the first six months of the year in a relatively stable Swedish Kronor, even if it has fluctuated somewhat during the first six months of the year. Profitability, like I already mentioned now on slide six, this is the second most profitable quarter ever and that is by quite some way and we are rather pleased with this outcome. It is lower than quarter two last year like I mentioned and it is the lower volumes in process technology. For quarter two, adjusted a beta, 188 million Swedish Kronor just below the 195 that we did in quarter two last year. Adjusted a beta margin now at .8% versus 12.0%. So going in the right direction, I'll come into some explanations of that via the different divisions as we move on today. Profit after tax, 97 million Swedish Kronor versus 100 in quarter two last year. Gives earnings per share of 277 Kronor versus 286 Q2 last year. -to-date beta, almost exactly at the same level as last year, 366 million Swedish Kronor versus 368 million. The margin clearly improved, .6% to beta margin for the first six months of this year versus .8% at the same point last year. Profit after tax, 187 million Swedish Kronor versus 178 million last year. Remember last year we had a restructuring that cost approximately 20 million Swedish Kronor in China that did impact things. The outcome of that restructuring is one reason for the improving beta margin we now see. Earnings per share, 5.34 Kronor for the first six months is ahead of the 5.08 Kronor for the first six months of 2023. When we look at the chart, like I say, it's quite clear that this is the second most profitable quarter we've ever seen in Swedish Kronor and the most profitable when it comes to margin. Cash flow and net debt, stable cash flow position. A dividend paid out in the year of 139 million Swedish Kronor, that was 7 million Swedish Kronor higher than last year. That was paid in May, which obviously impacts the net debt and as always quarter two has an increase in debt following the dividend payout. What we can say on the cash flow from operating activities is with lower order intake in process technology division, we do also have fewer down payments received on large projects and that impacts somewhat negatively on the cash flow from operations. Nevertheless, for the year to date, 170 million Swedish Kronor is still rather strong and then if you look at the rolling four quarters cash flow from operating activities for an air demand group on the left side there, we are still over the 500 million SEC mark. Net debt, like I mentioned, it's increased somewhat from the same point last year given that we have made rather significant investments in product development and also in some investments in production efficiency in several of our plants around the world. If we then dove down a little deeper and go into the different divisions within the group, extraction and filtration technology, the development for them in the quarter has been one where we've seen a higher number of larger orders received. They count large orders as greater than 5 million Swedish Kronor in individual size. Record number of large orders received but the activity is dampened on what they call mid-size orders between 1 and 5 million Swedish Kronor. There's been significantly fewer of those and there is some rising economic certainty in certain markets that we cannot get away from that but increased R&D expenses with several product launches has meant that we've been able to perform rather well on the market here. We had some one-off costs as RoboVent moved the entire operations onto one new site. Good growth in service sales, this is a positive and this is part of the strategy for the group as a whole as we know but good to see the growth in sales from ENFT. Increased sales volumes on products is also a positive but this improved sales mix with more service and more product sales didn't fully offset the increase in expenses and one-off costs for example from RoboVent that we saw. If we take it region by region, in EMEA, ENFT saw growth in orders and sales. The growth was largely four major orders came in in EMEA and that's healthy and that impacts things positively. While there is still lower activity in some markets, it's dampened. It's the usual companies and countries in Germany, UK and perhaps some other countries that work closely with Germany as well. Americas reduced over all order intake for americas as a whole however USA saw strong growth with major orders and rather solid base business in the US as well. There was slightly different picture versus Europe. APAC had a recovery versus recent quarters and this is something that's positive. It was behind Q2 last year. We're more concerned about how they've been performing versus recent quarters. Two major orders secured in the quarter, one in China, one in Australia and a little bit more activity and a little bit more traction clearly in China now. Extraction and filtration technology, what have their key activities been? A number of product launches, the low vac plug and play MCP Go, smart filter was launched, PAC-M which is a high vac filter for the dust and fume extraction, for extraction and filtration. This is important for the for the Neanderthal man group as a whole and this is where we feel we're getting some traction is these newer energy efficient products and solutions and filters. They are attracting interest on the market. It's giving better. We are able to, how can I say this, we are able to give us sales organization very good material to sell to customers over total cost of ownership. We're never the cheapest. Our solutions are often the most expensive in the initial cost but when it comes to energy efficiency we're clearly better than almost all of the competition and this development that we're doing in our size on a generally very fragmented market means we're able to invest more and more and this is giving us some traction that others are not having. We've launched the future of welding concept. It's related to latest ISO standards and requirements. Rob event like we mentioned they moved their entire production and offices and the distribution as well from the two sites into one during the quarter. That did come with one off costs and not least double rental costs but it was a full operational move and that impacted somewhat negatively in the quarter. These digital solutions for fume extraction presented at two health and safety conferences in the year. Again, new products, new development and interesting for customers. When it comes to the financials, orders received, currency neutral were up 2% in quarter to very slightly down organically 0.5%. Sales .4% up in the quarter and flat organically. Adjusted the beta down from 84% to 78.0. The one off costs from the move of Rob event and increased R&D expenses are the two biggest factors there and the profit reduction. When we look year to date, .3% growth in orders received, currency neutral and .3% growth in sales and profit .1% to beta margin versus 14% gives 181 million in adjusted a beta versus 173 million at the same point last year. So, improvement for the division for the first six months of the year is clear. Process technology where I suspect the most questions might come this quarter from those listening. Order growth clearly down. Only two major orders were booked for the process technology division. Lower sales, yes, but the most important thing there for us perhaps is that's in line with our current expectations and the budget that they have. Remember process technology went into 2024 with a significantly lower order backlog than they went into 2023 with. This is a cyclical business, particularly fibre and textile, but other industries as well and significantly more volatile than the other three divisions. Stable development of a service continued. Service clearly improved its share of the division sales and that's reflected in the beta margin which is in percentage terms is a record for the quarter even if in Swedish Krona there's a clear reduction there. Improved sales mix, like I said, more profitable projects as well. The process technology have a very clear what they call refer to their playbook where we are very careful to select projects with the right margins. If projects are going to drive after market business in the future which could be profitable for us then maybe we're willing to take slightly lower margins but otherwise projects need to be absolutely on satisfactory levels and without any inherent risk. We have seen competitors to this division who have some rather major problems following significant growth. We are looking for profitable growth not growth for the sake of it. Process technology had a small warehouse which they actually rented out to the NFT division in Germany. We have sold that during the quarter and that boosted a beta by six million Swedish Krona. So the 13.3 percent is slightly artificial but they're still around 12.5 percent to be for the quarter even if you exclude this. So still a record quarter for this division in a beta margin. If we move between the business units for process technology, textile and fibre actually increased versus quarter two of 2023 but that was from a very low level. There's a slight upturn now and perhaps China could be mentioned there that we've been booking slightly more orders. In India we've been stronger but China has been rather weak. We've now seen some start of a return in activity in China. The capacity utilization at many feeding mills is still rather low which curbs demand for new equipment there. In foundry and smelters metal recycling is clearly a driver. All sorts of metals from steel to aluminium lead including lead batteries as well. However orders and sales did decline versus a quarter two of 2023. Customized solutions also orders down and partly reduced because of the mining sector. Key activities, we have a plant in Germany where we've installed a new sandblasting system and the paint line as well. That's been completed during the second quarter. That increases production capacity and lowers costs and transport needs as well. We've continued the roll out of this energy efficient fund for the fibre and textile market which we launched late last year. I've actually included one more slide on a slide here. If you see the top right there's a chart there. Those of you that have excel sheets and follow near demand orders and sales on a sustained period of time will probably be able to work this out for yourselves. We constantly monitor the backlog for process technology division. This is going back to 2020 looking at the backlog level. We can see even if backlog is lower than the peaks from the middle of 2022 it is still clearly higher than the troughs that we saw during the COVID time. We're talking more than double the level of the backlog from the pits of the COVID time. Although there is a downturn in process technology, it's a downturn from very high levels. They still have backlog to deliver out quite significant sales in the second half of this year as well. Moving on to duct and filter technology. I may be able to talk on numbers here for a moment as otherwise Thomas Hargstrom, the head of the division, will never forgive me. Sales in the quarter, 410 million versus 644 is a clear reduction as orders were as well. Adjusted a beta, however, 54.4 million is 13.3%. It's a record for process technology division. .5% last year was very good but .3% is beaten. For the year to date they are now at 10.7%. They just did a beta versus .1% at this point last year. Despite a significant drop in sales, they have managed to increase the aftermarket business and increase the profitability on projects to come up with what is for them a rather good or very good a beta margin. Sticking with the theme of good a beta margins, we then move on to duct and filter technology. In the second quarter they increased both orders and sales versus quarter two of 2023. Nordfab in the forefront but Monardi as well. Several orders, what's perhaps the most pleasing thing, growth segments, battery manufacturing, food and green energy have all yielded a good order intake there. Profitability, extremely good, improved production efficiency, which is giving, which is this payback from investments that we've made in the facilities, improved inventory processes, which is also a payback from the investments we've made in expanding the warehouses and improving layouts and such. That will continue for this division. Then of course increased sales volumes mean better absorption of fixed overheads as well. In Nordfab orders received and sales grew versus both Q2 last year and Q1 of this year. Like I mentioned, major orders in battery manufacturing. This Nordfab now concept with delivery within 24 hours, that's launched in early April and this is connected to the inventory processes and ensuring that we have the correct articles in stock, high volume, high movers in order that we are able to dispatch orders very quickly. This accounted for almost a fifth of the we expect that to increase further. In Menardi, orders were down versus Q2 last year, but historically at high levels and we saw a pick up in quarter two. Orders received in May, that was the second highest ever for a single month. Definitely something positive there. Carbon, steel producers, Carbon Black are examples of a couple of industries in which orders were received. Key activities, I've mentioned Nordfab now. The launch of that is absolutely a major thing for the Nordfab ducking organization. BIM Objects, we've now connected up to BIM Objects for Nordfab and it's been launched for the US and Europe and it's resulted in a large number of product downloads and we would continue to work with that and we anticipate that that should be able to drive further sales volumes. In Australia profitability is not at a satisfactory level right now and we have initiated a cost saving program there. It's a rather small part of the business right now. We would like it to be a bigger part, but the first thing to do is ensure that we are making money before we grow the business. Coming on to the financials for Duct and Filter Technology, 5% currency neutral and organic. It's the same thing in this division, no acquisitions made in the last 12 months. So 5% order intake growth, 8% in sales growth to 236 million Swedish kronor in sales in quarter two, which gave in a beta of 49.4 million, which is the margin of 20.9%. Year to date, the order intake is very slightly positive, sales .1% now, gives 443 million kronor in sales for the first half of the year, 92 million kronor in adjusted beta versus 83 last year. So tough comparative figures which they have managed to beat and that means .8% beta margin for the division for the year to date. Moving on to slide 11, monitoring and control technology. In the quarter, orders received declined very slightly versus quarter two last year. Hopefully you remember how extremely good quarter one of this year was. The year to date growth in orders received for the division is 11.1%, which is in line with where we want to be for this highly profitable division. The substantial order backlog helped with a new quarterly sales record. The backlog is still at a high level and we can expect rather strong sales going forward from here. One of the key activities in relation to that is increasing production capacity for Neon monitors in Norway for example. We will continue working with that and there will be some layout changes and expansion there. Profitability improved compared with 2024 quarter one and in absolute numbers versus quarter two of last year as well. Higher sales volumes, larger share of portable products that contributes to the higher margins versus quarter one. We take it region by region for monitoring and control technology. EMEA performed well, Gasmet and Neon monitors both performed strongly and achieved several major orders in France, UK and Switzerland among other places. Sales increased even more, Gasmet were very strong in Europe in quarter two. Also, there's not something that's not of insignificance here, is a five-year service contract was secured for the Lower Saxony Chamber of Agriculture. Service business is important for monitoring and control technology as well. These measurement instruments have an aftermarket, they require recalibration, they require servicing and for example connecting our Gasmet instruments to our Insight app is enabling us to do some of this service work remotely now which ought to increase margins further for this division as well. In Asia, sales increased versus Q1 and Q1 last year and Q2 of this year, sorry the other way around, Q1 of this year and Q2 of last year. Mainly driven by Neon monitors performing very strongly in the region, particularly in China. In America, we had somewhat of a decrease overall in the quarter but that was fewer major project deliveries for Neon monitors while Gasmet and Auburn Field Percent were in line with the second quarter of last year. Key activities I've mentioned already, the continued investments in Neon monitors production capacity, those will continue and we are preparing for the launch of the next generation of Insight products in the framework of and under the management of our OTC, our Operational Technology Centre. This is important, this is where monitoring and control technology's capabilities on digitalisation are combined with the filtration knowledge that Process Technology Division and Extraction and Filtration Technology Division have. This is how we are able to launch these digital filters, these more energy efficient filters that are giving us a strong position in what is a tough market right now. Briefly on the financials then for monitoring and control technology, orders received very slightly down in the quarter, .6% down, .1% year to date in currency neutral and organic growth, gives $418 million in order intake for the first half of the year. Sales in quarter two, $206 million clearly up .9% up versus quarter two of last year. A beta, $39 million Swedish kronor is .9% for quarter two, an improvement over quarter one as I mentioned. So far this year then after six months, $393 million in sales has led to $67 million Swedish kronor in a beta which is on par with where we were at this point last year. 17% of beta margin, like I say, we've improved strongly in the second quarter on the margin. If we talk about outlook, demand is slightly slower, we cannot get away from that but we have a good base business and a strong digital range which we feel leads to us doing rather well on this current market. Having said that, even if the division's divisional performance is largely positive, there is a risk with interest rates, economic activity, generally the general economic environment and investment appetite, it can impact on investment decisions and geopolitical uncertainty is never usually a good thing for business and for investments. If we look a little more short term, with our large backlog that we have, we still have a good strong backlog. Our ability to increase share of sales in industries also with good structural growth, recycling industries are one example, battery plants and other, we take a cautiously positive view on opportunities for the second half of this year. Even if the outlook in industry can be dampened by external factors, the long term potentially is clear. In a world where there's growing insight into the damage that poor air does to people, an air demand with a leading industrial air filtration range has a key role to play and we clearly have good possibilities for continued growth. The financial calendar interim report for quarter three is released on the 22nd of October of this year and the year end report for 2024 is on the 13th of February 2025 as you know and with that I think I can open up for any questions that listeners may have.

If you wish to ask a question please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question please dial pound key six on your telephone keypad. The next question comes from Lena Blom from Handelsbanken. Please go ahead.

Hello Matthew and thank you for the presentations and for taking my questions.

Good morning Lena.

Good morning. So my first question is related to orders received and your current order backlog. What is your view of the orders received in the quarter? Are there currently sufficient order backlogs to support good growth in the coming quarters or how should we interpret this?

What we can say the the backlog overall if you again if you've done if you've done your maths on it orders and sales you probably have done this. The backlog is largely the same level as it was at this point last year. So we're still in a rather strong position. There's a difference in the dynamics between the divisions in that we have a higher portion of the backlog in extraction and filtration technology and monitoring and control technology and a lower portion in process technology. That bodes well for profitability as though the two divisions with the higher backlog are typically slightly more profitable than the process technology division. When it comes to if we're talking growth I'm not sure that you will see huge growth figures in in the coming quarters but we are we have got a very strong position still or we're in exactly the same position almost as where we were 12 months ago so you can make what you will of that given what you know about the profitability on the divisions. Process technology I was very clear to point out that in this presentation they have got a lower backlog than they had some time ago but it is still at rather high levels and we're not at any point there in sort of panicking or any concerns there. This is a cyclical business and we expect to be able to take a market share and when these this comes when the investments come back we will be there to take them.

Super thank you and then it's good to see that you were able to keep profitability at the higher level during the quarter. Could you give some colour on what is the main contributor to this development? If it's mainly that you were able to maintain a higher share of sales that make more service in aftermarket or is it more to it?

There is there's a few reasons the the service business growth is perhaps the single the single largest one we've managed to grow the portion of you've grown service sales in total and that means that the portion has grown even more as the solution sales in process technology have declined somewhat. Then you can if I take it division by division where there are significant changes process technology clearly more service business also the projects that we have we've had fewer projects in the fiber and textile industry which typically does have lower margins so that that has helped in that respect in from a mix within the division and then we have a higher portion of monitoring and control technology for the group as a whole which is clearly strong and then the final one and this isn't insignificant is in duct and filter technology largely but also other divisions we are investing in our own premises and machine park and we've looked at the production process in Thomasville for example on the ducting in quite a lot of detail made big investments and those are paying off now so a very nice one to be able to say is that in the Thomasville prank where we produce ducting 50% of the electricity that we have used in the first six months of the year has come from our own solar panels and that's just that's one small example but it there's a lot of factors but I think I've covered most of them in my answer there.

Super thank you and regarding the process technology division and the profitability reported there I mean it's higher compared to last year despite lower sales volumes would you say that it would be able to you know maintain a higher margin also when volumes come back or get an increase of larger orders and increased activity for example fiber and textile need to lower EBITDA margin going forward?

What can I say there the division is it's a significantly division different division to what it was some year a few years ago now there is um that it this profitability is extremely good on this low margin we were that we were perhaps like more volume I mean shareholders dividends are paid in Swedish Kronor not in percentages but nevertheless the process technology are generating more cash they've got a very good return on capital employed still if they get more project business in they you will likely see some slide in the EBITDA margin from the from the 12 percentage they they aim that we have a little aim to be eight to ten percent in that division even in the even in periods where there's a heavy load of solution sales and this solution sales we can say oh the margins aren't so good why don't we just go for the aftermarket but you can it's a chicken and egg thing we want to the most profitable business we have is the aftermarket you cannot have that without the solutions business and the initial sales of course they were they could they could drop from where they are but they should know not be back down at the sort of five percent mark where they were some years ago they're clearly somewhere else today

Super thank you and then staying on the process technology division and you reported higher order from textile and fiber industries

and

although from low levels are you expecting this positive trend to continue going forward in these more traditional industries

there is there is a slightly favorable trend is is we feel the bottom has been reached and there and it's coming back it's coming back up how quickly that happens we don't want to commit to but that we do expect some further improvement there so there is a pipeline now of quotations out there and some that we rather can't than we might get it will it the peach from in 2021 2022 is a long way off but we're definitely heading in the right direction there or the market is heading in the right direction and we feel we're ahead of the market as well

Thank you for that and going forward to the duct and filter division the Nord Fab now concept contributed a lot to the division in the quarter would you say that this concept is already at full capacity or is it room for improvement and how would a higher share of sales from this concept affect the division financially Nord

Fab now what it's doing is driving order intake in itself where where customers can get can get their products within 24 hours that's that's clearly a big advantage for a lot of customers this ducting can be quite bulky sometimes we are still working on this we're fine tuning it to ensure that we have the right parts in stock and and those that are that are demanding the other point to doing this north have now when we is increasing inventory which when duct and filter technology came to me and said that we're going to need to increase inventory i wasn't particularly happy but the logic is absolutely correct and what it does it frees up the flow in production so you can produce these these high movers and some of the some of the lower slower movers in larger batches and and what that means is that there's more efficiency in the production better flow there and and that's one thing that's really seen in the margins as well that we have much better gross profit margins in that division too but it ought to drive growth as well and it and we are seeing that it's happening and we would like more of of these low volume orders to be to be handled through to become under fab now what we get is i can't remember the percentages we were talking but it's quite a high percentage of these orders that come in by edi and are handled are coming under the and they're called nord fab now products what that means is then we basically don't do any sort of administration or or handle it have to handle it through production these are simply in and out automated orders which improves margins it cuts admin costs so this is this is a significant thing for this division that we want to expand further

super that's clear and then just one last question from me i sent in the report that you are likely more optimistic about the development in the media compared to earlier is that correct is your view and if there is some kind of recovery ongoing in this region you mentioned earlier lingering weakness in germany uk for instance but how does the mea market look currently in general

i can say that i think amir is still clearly behind the usa usa is is much more positive than amir i'm not sure that there is so much of the improvement what we have what we have seen is more larger orders dropping there which is good and and that's great when they happen if you take enft they call a larger order more just more than five million and they've had lots of those what's the concern still in you and it is more in europe than anywhere else is these these mid-size orders are not happening and and this is to do with um this is there is still a hesitancy to invest that that can't we can't get away from that and that does exist in europe

perfect thank you very much that was all from from my side so thank you for answering my questions and have a great summer

thank you lena good to speak to you

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 closing comments

thank you all for listening this morning and i wish you all a very nice summer