Nederman Holding AB (publ)

Good morning and welcome to Neroma Group's Q2 2025 report. We start with some headlines and we can say that we have continued good orders received. We have growth and strengthened market leadership in a number of areas. Q2 in short We have a very uncertain world. We all know that. We continue to advance our positions. We have shown organic and currency neutral growth in orders received and sales. Particularly strong has the development been in extraction and filtration technology division. We have a focused investment in innovation and in operational efficiency, and we have also strengthened the position as a leading player in industrial air filtration. Over to some key financials.

Exactly. So if we look at orders received for the quarter, as Sven mentioned, currency neutral growth, organic growth as well in orders received in the quarter. Currency neutral 8.4% of which 3.7% was organically. That took us to 1.425 billion Swedish kronor in orders received for the quarter. The charts at the bottom of the slide that you can see right now do demonstrate there is obviously a significant negative currency impact from That's almost exclusively down to the depreciation in the value of the US dollar. Nevertheless, the growth that we've generated ourselves by our acquisitions and organically did compensate for that on an orders received perspective. Onto sales for the quarter, particularly strong development of the largest division extraction and filtration technology had the best development of the four divisions in the quarter. We were for the group as a whole. We were at one point four three nine billion kroner. That is slightly behind the one point four six seven billion that we saw in quarter two last year. That is in its entirety, that reduction is in down to currency. The currency neutral growth, we were 5.3% up and organically 0.7% up. Not much more to say on sales. It is a particularly pleasing with extraction and filtration technology, which we'll come back to their profitability. Adjusted EBITDA was 159 million kroner. That was down from an extremely high at 188 million kroner in the same quarter last year. That gave us a margin of 11% for the quarter this year, 12.8% last year. There are a couple of items that we need to highlight when trying to help you analyse that decrease. So if those of you who were following us last year will remember, we actually made a profit on the sale of a premises down in Germany of between six and seven million kroner. That was reported and included in the profit of 188 that you saw for Q2 last year. The second factor is the rapid depreciation in the value of the US dollar has impacted us negatively by 18 million on an EBITDA level in the quarter. That is rather extreme, particularly considering our flows into the US from abroad are relatively limited. Profit after tax was 69 million Krona, 97 million last year, and that means earnings per share 1.97 versus 2.77 last year. Adjusted a beta up a little bit from quarter one, as you can see in the chart at the bottom there. Moving on to the cash flow and net debt, we had a good cash flow from operations in the quarter. Q1 was relatively slow from a cash flow perspective. When looking at cash flow, you must always remember it depends on where the starting point is. Your cash flow in any year is based on the working capital position at the end of the previous year. So on a rolling four basis, we're still over 500 million kroner in cash flow, positive cash flow from operations. The quarter was 59 million positive. When we're looking at net debt, it looks like we can see there's quite an increase there. 1.589 billion was where we were at the end of Q2 last year. Now we're over 2 billion. The acquisition of EuroEquip, obviously, that was approximately 135 million kroner and we paid a dividend of 140 million plus in the quarter as well. Then the final element of the increase in net debt is our favourite international financial reporting standard IFRS 16 relating to leasing, which the growth in the turquoise bar on the bottom part of the bar on the bottom right of this slide, that's versus quarter quarter two last year. That's related to the new lease for the premises here in Helsingborg, where we are now sitting. But Nevertheless, net debt has increased somewhat. We'll come back to some of the investments that we have been making that obviously are connected to that debt. If we go division by division, Sven, then extraction and filtration technology.

yes extraction filtration technology we have some short comments on the development during the quarter it's the second consecutive quarter with the record order intake which is quite pleasing we are taking a good position in the market we had a strong base business um There were some larger orders roughly in line with the Q2 last year. There has been a significant growth of mid-size solutions orders and increased sales has of course followed by the good order intake in the first quarter of the year. We have had a good EBITDA despite the very negative currency effect we've seen. We have also seen growing order backlog and that support the sales for the coming quarter here. We start with the different regions. In Europe we saw orders received and sales grow. Highest orders mainly from a solid base business, not a lot of large orders. There was one in Holland, a major European defense order. America saw record high orders received. There was a number of major orders booked and a strong base business continued. What is interesting here is that we have been able to direct some of our sales sources and our activities to in call it new industries it's not completely new it's the same technology it's the same but we have entered more into food related energy etc with the same technology as we have thereby compensated for the very slow demand for instance in the automotive industry welding etc In Asia, we had a slight decrease, but Australia continued to develop well with all the secure info, for example, defense. But also here, we go outside the normal path, welding, wood, et cetera, and being able to use our knowledge as a cleaner company. The key activities has been partner royal event in Helsingborg. We are now using the facility here, showing the innovation center, showing the experience center. We had 90 global partners present here in Helsingborg in our own premises. And I would say it was a very good event voting well for the future and the enthusiasm that we could beat up with these some new but very many traditional old partners for us. We also launched the Fume Eliminator Go Max. It's a new highly effective welding fume extractor. And we also presented the flow of new products that are in the pipeline. Common for all of these is that it's a focus not only on efficiency, etc. It is very much better energy usage which is important in these states. We have also launched a streamlined modular hood system for containment capture of weld fumes and dust. We also participated in the Ligna trade fair in Hannover. We had a full range of dust collection systems and energy saving technology, and especially the digital system Nederman Save got appreciation and headlines for our ability to save energy in our systems.

so financials for extraction and filtration technology orders received up to 706 million kroner from 673 q2 last year that's currency neutral growth of 12 percent the division are 11.3 positive currency neutral for the year to date as well so uh 1.39 billion kroner versus 1.29 is uh is a is very pleasing sales for the quarter 673 million versus 652 last year, that's up 9.8%. And that gave us in the beta of 101 million kroner, 15% adjusted the beta margin. And that is like Sven mentioned, despite some negative currency effects, this division is the one division that has the right now the biggest individual exposure to US dollar. Year to date, division up to 175 million kroner now, which is 13.4%. Obviously, now with this good order intake for two quarters in a row, the backlog has increased. And like you mentioned, that bodes well for the upcoming quarters sales figures. Moving on then to process technology.

Yes, for process technology, we... have short common comments on the development during the quarter there is a continued hesitancy in customers committing to major capital investments and for This division we are very much linked to larger investment where we are a significantly smaller portion of the investment compared to the rest of furnaces etc. in a foundry or a smelter or whatever. Orders and sales possibly impacted by the acquisition of Euroquip. We continue to get new orders in the South America where they're active and mainly on the Iberian Peninsula. We had one major order in green steel. New steel has been an important part before, but there was a new technology here. Strong service business and good efficiency in project implementation gave a solid EBITDA exceeding 8%, which is in this type of project business okay. If we go to the different parts of the division, textile and fibers, orders and sales growth was negative. The textile segment is still characterized by continued overcapacity in spinning mills. And we do not see a quick turn here. however positive is that we are selling a lot of upgrades we have sold close to a thousand uh fans the special fan that reduce the energy use in these mills so we continue to develop the aftermarket waiting for the large new orders to come keeping good relation with our customers with new innovation and helping them be more efficient If we look into Fowler & Smelters, orders received increased during the quarter. Acquisition of Eurokip boosted this growth. Green steel orders secured and strong underlying recycling trend is positive. We have one more major aluminium recycling order booked. That's a large pipeline, but again, as we've said, there are turbulence in the market the questioning so when they will be signed that we don't know but we have a very strong pipeline in customized solutions we had growth in both orders received and sales and we will continue The key activities for the division has been, of course, integration of EuroCIP and it goes according to plan. We have also increased focus on R&D and sales of new energy efficient solutions.

Financials for process technology then. 388 million in order intake for the quarter was 18.4 growth versus the the same quarter last year year to date still 9.5 percent lower currency neutral um sales for the quarter just over the 400 million mark 401 million versus 410 last year growth again 4.7 currency neutral um a beat that 33.5 million chrono versus 54.4 last quarter same quarter last year 8.4 percent the beta margin for this quarter which friend mentioned was was actually uh reasonably uh pleasing the they must be pointed out that you're comparing to extra an extreme quarter last year for profitability there was 6.5 million kroner of uh We could say free profit from the sale of the building down in Germany. The margin after that was actually 11%. And there were some projects finished in the same quarter last year. We concluded a couple of projects with very favourable margins there. but 8.4 percent is where they they end up for the quarter 7.6 percent year to date uh 57.6 million is is below where we were last year and it's it's it's largely down to this top this top line the sales figures and as you mentioned with this hesitancy on committing to customers committing to large uh capital investments the charts you see on the top right side of the of the slide here it does demonstrate the backlog for the uh for the division. And those of you who've got your Excel files, you've probably seen this work this out already. But the backlog is the order backlog is approximately in line with where we were 12 months ago, despite this rather turbulent macro economic environment. Duct and filter technology, then

Yes, for duct and filter, we have some short comments on the development during the quarter. There was negative. We have reduced the orders received in all three regions. Unfortunately, that has been an increased markdown with the fewer larger orders received across various industries. And that has been the negative impact. the normal base business have been conducted in a more normal way it's the lack of large investment orders we have got new orders in the eb battery production but fewer than previous quarters and as mentioned here later we have not been able to compensate that with the other larger installation for foundry smelters large textile etc so we will continue work on that again we have one in north of ev batteries orders and although lower level fuel large orders base business very solid Problems cross-border sales to Canada from U.S. diminished due to tariffs and also to Mexico, but that has been a smaller market. U.S. production efficiency is boosting profitability. We have a fully automated warehouse we have Nordfab now we have the AGVs in full operation so we have a very efficient manufacturing EMEA orders and sales declined after a strong Q1 Nordfab Denmark and UK coordination continue to give positive profitability impact a new Thai reseller made a positive contribution to orders while sales in Australia remain at the improved level. Menardos orders decreased in U.S. but two new orders were received from steel manufacturers that are coming back and investing in U.S. probably because of the tariffs making it more profitable in U.S. Sales increased in EMEA mainly due to operation only comprising service and aftermath with customers in non-cyclical segments. What key activities have we had in this division? Well, we have launched the laser well-deducting system in Australia from plant in Thailand. We are adding the 2,500 square meters of production and warehouse space of North by U.S. and that will be completed in Q4. And this is to be able to also conduct the North of now concept for larger sized ductworks. We have continued to roll out the BIM object at trade fairs and then part of training sections they have what they call lunch and learn where they invite users for lunch and they train them to use this. Everything to do easier to do business with Neroman and Nordfab here and we see a large interest in continuing developing the relation with us. We are now just waiting for the large project to come.

Financials for Duct and Filter. External orders received 166 million in the quarter versus 205. Currency neutral, we're down 10% there. Year to date, it must be pointed out, still 3.8% positive currency neutral slash organic growth. Sales, 205 million in the quarter versus 236 last year. There is a currency impact there, but currency neutrally, it is, however, still down 4.3%. year to date positive 4.3 percent still um adjusted a beta 37.4 million crown of down from 49.4 million the margin 18.2 percent it might be lower than 20.9 percent in the quarter last year but we're still above 20 point we're at 20.3 percent for the year to date and that is very strong historically for this uh this division still moving on to monitoring and control technology, Sven?

Yes, monitor and control development during the quarters. Orders received slowed with the exception of Americans. Profitability negatively affected by lower sales volumes and unfavorable product mix. Increased market uncertainty leading to some delays on large investment decisions. If we go to the European scene, Neomont had particularly strong sales. GASMET saw a reduction in order intake. Oilsam that we acquired in November is collaborating with GASMET to build up a pipeline of potential projects in emission analysis. If you remember the acquisition of Oilsam or part of the Oilsam is to make a more complete statement of the Clean Air Company. We are now helping customers doing analyzing of the emissions that they are creating both the internal r d but also for reporting to legislative authorities in america's near monitor had very good growth in orders energy sector was particularly strong with neo monitors booking two large orders The higher tariffs at the start of Q2 between U.S. and China essentially resulted in a sales to China coming to a complete halt. It has a negative effect for the division. In APEC, GASMET saw oriented growth in the quarter, while NEOMERSA had a slight decline. Focus on leveraging the technology center in Shanghai and Singapore sales office is going on. What we have is the key activities. We continue the investments and activities to strengthen production capacity and above all efficiency in the Neomonitor's Norwegian hub. Continued development of and preparation for the launch of the next generation of Insight products. Orban FilterSense have been rebranded Orban. We have shortened it, making it easier. And that is the original name. The expansion of Orban's production has commenced and it's not only the capabilities, it's also a matter of efficiency. They've been extremely crowded, which is not generating enough efficiency in the small factory.

so orders received for monitoring and control were 165 million in the quarter 100 versus 185 in q2 last year that's three percent negative for the year to date they are still plus 2.4 currency neutral despite this lacking of larger orders that you referred to, Sven. Sales for the quarter, 190 million versus 206 last year. There were a couple of delays on customers just delayed deliveries over the quarter end, which impacted negatively. It's up to 10 million kroner that was lost in sales there. That does then have an impact in the EBITDA in any individual quarter. So 28.3 million EBITDA is 14.9%. That's not as high as we would like to be. 38.9 million was last year, 18.9%. For the year to date now, the EBITDA is 64 million, Cronaverse is 67. At the same point last year, 16.5% EBITDA, slightly down from the 17% for the year to date, 2024. Talk a little bit about the outlook, Sven.

Yeah, demand. continues to be slightly slower but our solid base business, growing service business and strong digital range enable us to assert ourselves well in the current market. Our performance is largely positive though there is a risk that the very uncertain market environment will continue to impact customers investment decisions in the quarters ahead. Our orders received are healthy, our order backlog remains solid, and we are investing continuously, improving our range, all of which means that we will be able to continue advancing our positions even in this challenging macro environment. In a world with growing insight into the damage that poor air does to people, Nerma, with its leading industrial air filtration range, has a key role to play and good possibilities for continued growth.

Just a quick look at the financial calendar, then interim report for quarter three will be released on the 23rd of October this year, and then the year end report for 2025 will be released on the 12th of February 2026. And with that, I think we can open up for any questions that listeners might 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 Hannah Grimborg from Handelsbanken. Please go ahead.

Yeah, hi, Hannah here. So I have two questions. To start with on M&A, maybe you can tell us a bit more about how the M&A market has been impacted by the increased uncertainty. I mean, is it only processes becoming longer or has something changed when it comes to price expectations and so on?

So I can start there. Okay. Let's say there's a flood of people running for the door at the moment. So there is a long list of potential M&A candidates. However, I think there's still a discrepancy between what is a reasonable a reasonable multiple for a number of them considering the capabilities going forward having said that we are continuously analyzing all the time here but as you have seen we have tried to be quite picky when we go in and not spend shareholders money on something that we do not believe that we can turn into meeting our profitability goals within every year period.

I think you could say as well, Sven, that compared to 12 months ago, the price expectations are a little bit more realistic. We will still not be paying more than the companies are worth, of course, but it is looking slightly more favourable from a buyer perspective than 12 months ago.

That's a fair comment.

All right. All right, clear. And then just I think that maybe you mentioned this a bit, but then maybe you can repeat it. But if you look at the different divisions, did you notice any shifts in demand during the quarter for any of them, either positive or negative towards the end of the quarter?

I think most of them were doing better in the latter part. I would say that June was better than April and May in all divisions. So what that means in reality, it's hard to say. What we've seen is a number of issues like we mentioned especially mct has been hit by the fact that you cannot sell from us to china or to canada for that sake which has been so the mining industry and that has hampered some of the sales and we have also had some other issues and that very much related to the hesitancy that not lost any large project but they are postponed week by week and we don't know when they will come but we have a very healthy pipeline we see that we have a strong position in the market at the moment right okay then thank you for taking my questions thank you hannah

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you for having taken your time listening to our presentation. We can summarize that we have an interesting and challenging environment where we see that we have moved forward and we are reasonably confident that the coming quarters will have more positive signs since we see that there are some clearance in some of the macroeconomic issues going forward so looking forward to the coming quarters and thank you for once again for having taking the time have a good summer vacation for those who are into that