Nederman Holding AB (publ)

Good morning and welcome to this session where we are presenting the Nerman interim report for Q1 2025. If we start with some summaries, we can say we had very strong orders received. Three or four divisions had solid order intake and two of them actually had record quarters in a very turbulent time. We continue to advance our positions in a number of areas. We have an extremely challenging microenvironment. We have finalized and are still building on some further investment in operational efficiency. We do have very high level in the newly inaugurated Innovation Center in Helsingborg. And we do have much better presence in structurally growing industries, which has been important in order to get a good order intake. And we also during last quarter finalized the acquisition of Euro equip in Spain. And a few words about Euro equip. Why did we do it? It strengthened Nerman's process technology division in foundry metal recycling market and as we say, hot air applications. It's a strong market position. They are selling equipment to foundries, metal recycling and especially Alminius melting markets. Nerman and Euro equip has a very long working relation where we have cooperated for decades. It gives us a sales structure and a support structure in the Iberian Peninsula and parts of Latin America. They have a headquarter in Lesama, a north part of Spain, Basque country. And we paid about 50 million euro for a company that has a turnover of 22 million euro last year.

If I move on to some key financials for the Nerman group for the quarter then. As Sven mentioned already, orders received was rather strong. Just over 1.5 billion Swedish kronor, a very small reduction versus a strong quarter one last year as well. It is the first quarter since Q1 last year where we've been over 1.5 billion kronor in order intake for the group. So we're we're generally satisfied. And this is with with obviously only three of the four divisions having a strong position. Currency neutral, we were down slightly still 1.8 percent versus Q1 last year, organically minus three percent. Then if we move on to the sales currency neutral, I had to check my calculations to correct that it was exactly 0.0 percent change versus last year. 1.406 million a billion kronor versus 1.397 billion in the same quarter last year. That's that's that's obviously lower as we were we were flagging already in during after Q4 that we were entering the year with a lower order backlog than we had 12. Months previously. What's what is positive for us, of course, is we've built up a backlog of approximately 95 million Swedish kronor in the quarter. So that bodes slightly better looking forwards. When it comes to profitability, ultimately, a beta was down by by 30. A beta was down by 31 million kronor, 243 million versus 174 last year. There are some one off in effects that impact the result quite significantly that we ought to flag there. We mentioned already in Q1 last year there was a comparative figure boost. Q1 last year was boosted by 11 million, which was a pure accounting booking relating to a subsidiary liquidation that we did. If we complete in quarter one last year, the impact of sweet strengthening Swedish kronor as well and the rapid depreciation of the US dollar, particularly at the end of the quarter, also made a big impact. So approximately 20 million of impact that that hits comparability. We also a little bit further down the income statement have obviously some acquisition expenses. We did a full thorough due diligence in relation to euro equip and that's been expensed now. So that there's nothing we apologize for, although it does ultimately impact earnings per share. Earnings per share in the end ended up on one point six nine kronor versus two point five seven kronor per share in the very strong quarter one last year. Moving on to the cash flow and net debt. Euro equip obviously an acquisition for almost 150 million Swedish kronor has a has an impact on cash flow. We we bought we acquired them just just prior to the end of the quarter. So we have that we have the debt on the balance sheet, but very little income from them yet. That will obviously change going forwards. Cash flow from operations in the quarter was positive. Fifteen million is down significantly versus last year. The main reason behind that is the reduced order intake in process technology. Large orders in the process technology division on receipt of them. They're typically we typically see large down payments from customers as well. A lack of those has impacted the cash flow from operations somewhat. Other other working capital has remained rather constant in terms of inventory and receivables and such. When we move on to net debt, I've given the figures including you see the chart including and excluding our first 16. The impact of these two the leases on these two premises that we entered into last year is quite significant. You see the turquoise on the charts there. But net debt nevertheless, excluding our first 16 has increased by approximately 130 140 million kronor versus 12 months previously. During that time, we have acquired euro equipped, do aware and Olli Semmer as well in Denmark. So three acquisitions there obviously making an impact on the net debt. And that's a spree summary of the financials for the group as a whole. If we move then onto the divisions that Sven and start with extraction and filtration technology first.

Yeah, extraction and filtration technology. During the quarter, we saw the strongest ever orders received, which is a good thing. It was boosted by in major orders and it was particularly strong in America in contrary to what we will see in process technology. We also have been working with highlighting that for a long time. The aftermarket and service and we have here in the quarter double T. The growth also for the service segment, which is important. We did have a much lower order backlog moving into this year. And that means that sales are lagging behind the comparative quarter. Eight out of 10 major orders were in US, as I mentioned before, they are doing well in welding, wood, defense and green energy, EV batteries, et cetera. We are now also further negotiating to exchange some Asian filter supply to either batteries in US when they realize that they are not compliant and not working very well. We'll see how that comes out. Me, I saw stable order flow during the quarter and there was a solid base business. APEC noted a slight slowdown, but we grew a little bit versus last year's Q1. And if we talk about the attitudes, it's quite interesting. It seems like Germany are getting more. They're getting a backbone now and starting to talk about future instead of being over depressed. So we'll see what that will lead to during the rest of the year. The key activities relocation of production Helsingborg was completing and we had a February 11 full inauguration. We have also seen that from when we look at the Tavris and so on, division has a very significant manufacturing presence in US. The vast majority of materials are sourced in US and we will, of course, continue to monitor effect of the changing Tavris. But roughly 85 percent of the content is America or region for this division in US, of course.

For on the financials for extraction and filtration technology, orders received obviously a strong increase 10.7 percent versus last year up to 684 million Kroner versus 616 last year. Sales 50 million lower than the order intakes of 635 million was almost in line with the same quarter last year. And with the acquisition of DuraWare, they have a cost increase that means that that is that results with the sales being flat, a reduction in profitability. I can't blame the full beta reduction on the DuraWare. Big positive here. 11 percent increase in order intake. Quite clearly very strong for the division. Process technology then,

Glenn? Yes, process technology. We had low ordering take in the quarter. There's a lack of major orders in the first quarter here, comparative to a slightly better Q1 2024. We have seen that there has been a hesitancy to sign the final papers for large orders, especially in US. And we've seen a few orders that we expected in the pipeline to maybe be materialized to orders during this quarter that has been pushed forward. So we also had a lower order backlog when we moved into 2025. And then again, of course, this is long term and long cycles. We have lower sales as well in Q1. And as mentioned, there is a very cautioned customer base, especially in US. And it's not so much the tariffs in itself. It's more the uncertainty that the that is spread. We do have a very strong quotation pipeline. And it's also so that we are entering into negotiations with the lost orders or orders that we walked away from due to the fact that competitors have filed for Chapter 11. They have not been able to finalize the project, et cetera. So there are a few that we are coming back to again. So we are cautiously optimistic that we will see some change during the latter part of the year, as long as the fog is lifting from these turmoil around tariffs and so on. If we look at textile and fiber, there's a continued overcapacity in spinning. And we can see that has an impact. However, sales were in line with Q1 2024. We are taking a market share. There are competitors that are leaving us. Foundry and Smelters, Euroquip acquired and is a very good strengthening on market areas or especially geographical areas where we haven't been as strong. Low orders received, but the profitability is still solid. We come to customized solutions. We had low orders received and say and this segment is particularly reliant on major capital investments. So it's a clear risk of continuing dampening demand in this segment. Key activities, of course, integration of Euroquip. And as mentioned, the US tariffs have not had any material impact on the division's product flow. But we will continue to look at it where it has the impact is the uncertainty that it creates.

Financials for the process technology division then order intake 344 million versus 486. So there's this down currency neutral, nearly 30 percent. That is, they must be pointed out Q1 2024 was the strongest quarter, I think, in the last two years. So it's tough comparatives. But nevertheless, 344 is low for this division in order intake sales 354 million versus 392. Again, we were flagging for this, but with the backlog going into the year was low. This is the lowest sales quarter for since almost since pandemic pre pandemic times. Adjusted a beta still at six point eight percent, 24.1 million. But that's clearly down versus the versus the 31.5 million and eight percent that we did in the in the quarter one of last year. And a little look on the top the chart on the top right of the process technology slide. You can see the black backlog has has is lower than it has been for quite some time. But nevertheless, is still there is still a backlog there. If we move on to duct and filter technology, Sven.

Yeah, duct and filter technology for Q1 again, strong orders received. And it was in many areas, but mainly driven by Northam US. We had a continuous flow of major orders from manufacturers, even better. And we have sharply improved sales. Do we have a solid backlog, continued positive trend in the quarter? So if we go to especially the Northam where orders received and sales in the US grew sharply versus the comparative Q1, twenty, twenty four, and we have strong profitability. We had new record order intake for ducting to the EV battery segment orders and sales grew in the May versus a month. Minardas comparative quarter, and there are still clear fluctuation orders and say between quarters in a pack positive. We're not in Australia. A new laser welder installed in Thailand to improve efficiency and quality. Minardas orders received increased well versus Q1, twenty, twenty four. And our rapid delivery capabilities have resulted in several new orders during the quarter. We are a niche player and we focus to support our own business. And when we are close to the market, manufacturing is mainly in US. We can supply on short notice. Key activities is the expansion of the facility for larger dimension ducting. And we have, as you possibly remember, already earlier last year, inaugurated a completely new addition to the facility where we do the traditional QF duct. Now we are expanding also when we do the large dimension ducting. We have also during the quarter inaugurated the completely automated warehouse in Thomasville, which is another efficiency booster, which you can see drives also up profitability. At present, the impact of tariffs is very limited. And most of the manufacturing is local for the market where we are operating.

If I run some through some very strong financials for duct and filter, then 224 million in external order intake is up from 184 million up 19 percent. Sales at 240 million versus 207 million last year is 14 percent growth. And then the EBITDA increases from 43 to 53 million kronor and a margin, a beta margin for the first quarter of the year of 22.1 percent, which we are obviously very happy with. If we move on to monitoring and control technology then. Yeah,

again, strong orders received in the again divisions that had a new record order intake for a single quarter. January was very slow, but picked up in February and especially in March. New monitor is starting to bend from increased production capacity and efficiency. We are continuing to shape up that manufacturing site in Oslo, Norway. Profitability clearly up versus Q1 last year. In Meja, we have seen order intake growth. We do have a strategy to grow in service business and that is developing well. We started when we started and we acquired these companies. It was a very low portion that was repeat business and service. We have gradually increased that and we also incorporate our digital solutions that enhance the capability of doing remote service, remote calibration, et cetera. Collaboration between the business is increasing further. And we have ongoing adaptation of all the filters and product line for Europe. We have also a full test set up in the new innovation center here in Helsingborg where they have a long term test capability we didn't have a year ago to do in house. So we are looking forward to see the capabilities here and the result. We will also start selling larger scale AFS products in Europe end of the year. In APAC, several major orders received, especially in China. And we have here an increased focus on direct sales, especially in the amount of those that performed very well and with orders and sales going up. The local service growing for new hub in China. We have set up a small service hub in our factory in Sui Chou where we can do service. We can do calibration. And instead of having to send and ship over to Oslo, we can now do the basic service in China, which has been received very well among our customers. In America, orders received increased sharply. All business units reported favorable growth. And all the filters delivered in line with its current capacity. So we come then continued key activities is to increase Neomonitor's production capacity. It also been taken decision to increase the production capacity in Boston, US. And it will commence in near time. Production in US is in one site and we have in Europe two sites. It's as I mentioned, Boston and it's Oslo and Helsinki. There's no major change to product flow currently planned. And there are contingency plans in place for change in terms, including for some component component sourcing, if deemed favorable and necessary.

Financials for the division. Then orders external orders received 249 million, which is very strong for for them up record quarter. As Sven mentioned, up from up six point six percent from a strong quarter one last year of 234 million total sales clearly below a long way below orders received almost 50 million below one hundred ninety eight million in sales versus one hundred eighty seven million is still an increase of five point eight percent. So on sales of less than two hundred million, the division has managed to do an eighteen percent to beta, which is thirty five point six million Swedish Krona. The outlook going forward then, Sven. The crystal ball.

They absolutely interesting to to try to do. But but demand continues to be slightly slower. Investments are bit investors are a bit hesitant, but our base business, our growing service business and the very strong range enable us to assert ourselves well in current market. We do take market share. Even if the performance of divisions are largely positive, there is a risk that current very uncertain market environment can continue to impact customer investment decisions in the quarters ahead. We don't know. Some are doing very well. Some are doing less well. And I think that we have to see. We will see that pattern. Our order back to remains good and we have a strong offering, enabling us to advance our position even in this challenging macro environment. And again, in a world with growing insight into damage at poor dust to people near amount with leading industrial arbitration offering has a key role to play and good possibilities for continued growth.

The upcoming financial financial calendar for the upcoming period, then the annual general meeting is next week on the Tuesday, the 29th of April at 4 p.m. here in Helsingborg. The preliminary record date for the dividend that is proposed to the AGM is is the second of May and the distribution is scheduled for the seventh of May. The interim report for quarter two will be released on the 15th of July and the interim report for quarter three will be released on the 23rd of October this year. And with that, I think we can open up for any questions that listeners may have.

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 Bloom from Handelsbecken. Please go ahead.

Good morning, Senator Matthew. Thank you for taking my questions.

Thank you. Good morning. You mentioned

in the report. Good morning. As you mentioned in the report, it is expected that the growing political uncertainty will have a negative effect on all the intake in the coming quarters. But is it possible to say anything about the current order trend if you already at the end of the quarter or now in the beginning of Q2 have noticed lower activity?

I know this is I think that it's been a very interesting one started very slow turmoil in February. Very good bounce back in March when it comes to all the intake. And you can see that because it came fairly and fairly late. It continues. But it's very volatile. And the ones you see how good the specialties that MCT is doing, DAKT and filter is doing and all the intake also in EFT has been on a record level. Then PT had suffered, has suffered both in December and the first quarter that these mega large projects where we are a small portion of has been pushed forward. And we don't know when they will start again. On the other hand, we are coming back to and are invited again to orders where we clearly said to a customer or potential customer, we can't do it this cheap. We cannot do it on on sort of this light model that has been because it just won't work. And we have three actual cases where we are now re-invited because one doesn't work to the the supplier has gone bankrupt during the meantime. So we still stick to our price discipline, high quality supply. And we believe that that will be rather a rebounds later on. But the coming two quarters can be very, very volatile with the 90 days of tariffs and so on. Investors want to see or the boardrooms want to see that we have the fog is lifting. We know what we can expect in that. So it's been very interesting period where we have growth in three divisions, record order intake of two of them and one that has had a very, very weak order intake.

OK, perfect. Thank you for that. And then in the extraction and filtration division, you mentioned that profitability was strengthened by fewer medium sized orders, which usually have higher margins. Is this a trend that you expect to continue in the order trend or is it usually something that can differ quarter to quarter?

It's it's if you look at the extraction and filtration technology, they did they grew their backlog by approximately 50 million in the in the quarter. They were lacking these these mid sized orders that were in the sweet spot that we have had. We've had a very good order intake this quarter. So we are expecting these will also. These orders that we've received will also boost the utilization in our factories as well. And we I think there will be you'll see some bounce back on the profitability going forwards. That is, of course, dependent on the continued order intake, which is the big question mark. But those mid sized orders are nice to have. And we we flagged already after Q4 that they were we were lacking a bit of back while going into Q1. This is I think this is quite low margins in the quarter and you should not expect that level going forwards. Anything to add on that, Sven? Never.

I think it's the volatility. If you look on the last month of the quarter, the picture would have been significantly different if I put that point.

Perfect. That's clear. And then just a last question for me. Also in extraction and filtration, you mentioned that orders were secured in data centers. Could you give some color on what you're offering is to the data center industry? And would you say that this is a growing industry for you as a share of space?

I wouldn't say it's a growing industry for us. We have some niche products that we are. But we we we again, we have high quality product that that can be in some in some areas to use that the key. I would say the key developments is rather that we are now getting into battery manufacturing where the normal Asian supply has not function as it should and it's not fulfilling all the regulations. So that is an area. We are also coming back into other areas where we have not been traditionally being present. And as you know, we have been very strong and still is in welding, wood, composite, et cetera. We are now coming into more areas like food mixing stations, chemistry and so on as an alternative to a weaker demand in the traditional industry like wood. You all know about the the housing market, the furniture market, windows, doors, et cetera, has not had a good demand. And we have all for that into a number of others and broaden our scope because it's the same product. It's just a different application. And as we are always cautious, so when we go into new applications, we try and put the foot in the water and see, can we handle this? And how do we do it? How do we know and how the processes? But generally speaking, it's the exactly the same product. It's just how you build the system around it.

Perfect. Thank you for that. And that was all for me. So thank you for taking my questions.

Thank you. If you wish to ask a question, please dial pound key five on your telephone keypad. More questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much. Thank you for taking the time listening. And the takeaway from this is that it's turmoil uncertainties, but we are very have a very strong ordering take and we are committed to continue to develop. And we see that despite the turbulence, we are continuing to strengthen our position as the market leader. And we therefore have a positive view for the rest of the year. However, the turbulence might make it a bit bumpy on the way. So thank you for taking time listening.