Nolato AB (publ)

Hello and welcome to today's webcast presentation where we have Nolato presenting. Today we have the CEO Krister Wahlqvist and CFO Per-Ola Halmström presenting. If you have any questions you can use the form that is located to the right or if you're calling in please press star 9 to raise your hand and with that said please go ahead with your presentation.

Yes, welcome to the presentation of Nolato's fourth quarter report of 2023. This is Krister Walkie speaking, and right now I'm turning to page two in the presentation, starting with the summary of the fourth quarter for the group. Our sales totaled a little bit more than 2.2 billion Swedish in the quarter. That was a 6% decrease if we adjusted for currency and acquisition. We saw strong growth for the industrial solutions, but lower volumes affecting the other two business areas. Our operating profit increased to 177 million Swedish, in comparison to 163 for the fourth quarter of 2022. That is creating an EBITDA margin of 7.9% compared to 6.9%. We saw the increased margins for medical and industrial solutions had a positive impact through improved efficiency across the board. The cash flow during the quarter rose to 80 million Swedish, comparison very low number for the correspondent quarter in 2022. Turning to page three in the presentation deck, focusing on the full year of 2023. The total sales for the year ended up approximately 9.5 billion Swedish, and a margin of 8% if we exclude the non-recurring items. The earnings were just above two Swedish krona per share, if we exclude the non-recurring again. We have still a very strong financial position with net financial liabilities of just below 900 million, creating an equity-assure ratio of 56%. That enables us to continue to expand with our customers and also for acquisition. The Board of Directors dividend proposal is 1.5 Swedish krona per share. Our policy is that we should have more than 50% of net profit as a dividend. At this ratio, the payout is 74%. Going to page 4 in the presentation deck, showing the three different business areas. So medical solution is the largest correspondent to close to 60% of the net sales of the company. It's 1.3 billion in sales. Then we have our integrated solutions, which are in a phase where we are restarting and creating new businesses after the BHP business. So it corresponds to approximately 10% of the group sales. And then we have our industrial solutions business area, corresponding to approximately one third of the group sales. If we then go into the medical solutions business area, on page five we can see on this graph our continuously growth of the business and building a global supplier and partner to our customers continuously growth over the last 20 years if we then turn to page six looking into the focus products area within the medical solutions business area We have our in vitro diagnostic, which has been stabilized after COVID, and we see good growth potential long-term for this business area. This is corresponding to approximately 13% of the medical solutions sales. The next one is cardiology. It's a high-end market consisting of a lot of lifetime implants and bodily implant products. corresponding to approximately 8% of the business area sales. Pharma packaging, stable volume market, approximately 13% of our net sales. Continence care, 12% of business area sales. It's a very high volume market with large volumes and more advanced products coming. The surgical business corresponding to 21% has been a sort of volatile business after the pandemic with the closing of the hospitals and restarting and the supply chain differences and movements over the last quarters. But going forward, looking into more advanced products with this business going into more and more robotic surgical business. Then we have the drug delivery focus area, that is delivery systems for drugs with large molecules that cannot be taken as oral drugs, corresponding to approximately 15% of business area sales. Turning into fourth quarter of medical solutions on page seven. During the quarter, we saw a 2% decrease of sales if we adjust for currency. That is coming from lower surgical volumes due to the volatility after the pandemic, as I explained previously. The IVD volumes are in line with previous years and stabilizing after the pandemic a little bit. We saw solid demand in other areas, but some impact of inventory adjustments before year end. The margin ended up just below 10% at 9.9 and it's due to a change in sales mix and a lower proportion from surgical as well as the efficiency improvements. So the sales ended up at 1.3 billion with an operating profit EBITDA of 129 million in the quarter. If we then turn to page eight, focusing on our integrated solutions business area. There you go. In this area, we have had, as you know, a strong impact of the VHP sales over the last years. And now it's coming down as expected. And now we are focusing on expanding into new market segments. If you turn to page nine then, looking at these different areas. So we are now focusing our business on building a well-balanced mix of products in different segments after the dramatic movements of the VHP business. In this business area we also have our EMC in thermal business which is then consisting of a shielding solution and thermal management different products for electronic industry. On page 10 we are then jumping into the integrated solutions business area for four quarter. During this quarter, we saw a decrease of 41% of the sales. We saw low volumes and change in sourcing strategy from the previous significant customer within the VHP area had a negative impact as lower demand in general within the consumer electronics business. The EMC sales in the quarter total 159 million in comparison to 165. And in this part of the business, the automotive areas increased significantly while telecom had lower volumes as a total market. The margin was a little bit negative. We had an operating profit of minus one million Swedish krona. And that is, of course, cost adjustments in the Chinese business is going according to plan, but the lower volumes in both consumer electronics and the EMC are offsetting the positive impact on the profit. Jumping into industrial solutions business area, We can see a good growth over the last years in this business area. And here we are on a more technology and geographical expansion journey, creating a strong global footprint. If we then turn to page 12, looking at the different focus products area within industrial, we are working domestic appliances, hygiene, furniture, automotive, garden forestry and packaging. Those are the main areas that we are focusing on our industrial sector. The fourth quarter for industrial solution was a 7% increase of sales if we adjust for the currency. We saw a continuous strong demand within the automotive as well as increased volumes within our hygiene. We on the other hand saw demands for consumer discretionary sectors slightly lower due to the weak economy. The margin of this business area increased to 7.4% in comparison to 2.8%. And that is due to the fact that we have less disruption in the supply chain, especially within the automotive. That meant a more efficient production. And of course, the higher volumes have a positive impact on the margins.

Good afternoon, Karola Holmström commenting on Group Financial Highlights on page 14. Net sales decreased by 6%, adjusted for currency to 2,252,000,000. We did see an improvement for operating profit to 177 compared to 163. The group EBITDA margin increased with one percentage unit to 7.9%. The effective tax rate excluding non-recurring items was 19.4%. The tax rate for 2024 is expected to be between 22 and 23%. Cashflow after investments improved to 80 millions compared to minus 188 millions. Last year had negative effects in working capital because of changes in supplier finance programs. Net investments totaled 427, 25 millions for the full year. We expect an increase 2024 to around 500 millions plus 140 millions for acquiring one production facility in Sweden, which will happen in the first quarter. So totally around 640 millions. The equity asset ratio was 56% and net financial liabilities amounted to 895 millions.