Nolato AB (publ)

Hello and welcome to today's broadcast with Olato, who will be presenting their financial report for the second quarter of 2026. With us, we have the CEO, Christer Wallqvist, and CFO, Per-Ola Holmström. If you wish to ask questions, you can do so via the form found to the right of the broadcast, and if you're calling and would like to ask a question, press star 9 to raise your hand and star 6 to activate your audio once you've been given the word. With that said, I hand it over to you, Christian Perola. The floor is yours.

Thank you and welcome to the presentation of the second quarter for Nolato Group. Starting on page two, we saw a quarter with growth in both business areas with a total growth of 4% currency adjusted with the strongest growth in the medical business area. This was achieved in a difficult environment, I would say. So sales ended up at close to 2.5 billions in the quarter, and that was then 4% adjusted currency growth. The profit EBITDA ended up at 247 millions, creating a margin of 10.1%. The margin was affected by increased raw material prices and some startup costs for new programs. strong cash flow in the in the quarter ended up at 287 millions and as a total we have a very strong financial position enabling us to deliver on the intensified acquisition strategy as communicated previously turning to page three summing up the group so nolato consists of two business areas that create synergies across Both business areas are then working as a development and production partner for leading global customers. On page four, we see a summary of medical solutions development over the last 20 years. So we have seen a continuous sustainable growth and built a global expansion. On page 5, we see a summary of our focus product areas and as mentioned previously, we see growth opportunities across, of course, with some different driving forces, but we see good potentials across the board and we will continue to deliver on the long-term growth of the business area. On page 6, We summarize up the second quarter for medical solutions and the sales ended up close to 1.4 billion in sales. That is then of course a growth of 4% if we adjust for the currency. We saw good development for the in vitro diagnostic market segments. We saw also continuous growth in the drug delivery systems and across the other market areas we saw stable volumes. The EBITDA margin ended up at 11.7%. We saw some negative impact from both raw material price increase driven by oil prices and in that sense we have a time lag before we can adjust to our customers. So we will adjust that going forward. We saw a negative impact in the quarter from a startup of new programs or projects that have not reached the volumes. And that is, of course, a part of our, these projects are a part of our supporting our growth targets for the medical business area. The expansion in Hungary linked to the new customer contract is proceeding according to plan and we have started commercial volumes produced in the end of the second quarter and after the quarter we have started deliveries of commercial volumes. We will gradually increase our capacity according to previously announced schedule. Jumping into engineered solutions on page seven. Here we see also a summary of the last close to 20 years for the business area. And on page eight, we summarize up the focus product areas for engineered solutions. Here in this area we have four of these areas, consumer electronics, automotive, hygiene and others are sort of similar in the business scope. And then we have the materials part that is a little bit different where we have our own developed material solutions for shielding and thermal management. That area we saw a strong growth in the quarter. Jumping to page 9 summarizing the second quarter for engineered solutions. We ended up at the sales of close to 1.1 billion in the quarter and that was a 3% adjusted growth in the quarter. Supporting that was our strong growth for the materials which by itself reached a 19% organically growth in the quarter. We also saw sustained growth in consumer electronics with an increase in smart home products. In the quarter, we also had lower volumes in the hygiene area affected by inventory adjustment and lower market demands. Automotive contracted as expected. Summarizing this, it created a margin of 10.3% and we saw a negative impact from the price increases the raw material similar to the medical but also a favorable product mix with a higher proportion of materials sales in the quarter.

Good morning Per-Ola Holmström CFO and Group Financial Highlights on page 10. Net sales was 2 billion 454 millions in the quarter, a 4% growth. Less currency headwinds than recent quarters on group level 1.5%. Operating profit EBIT A amounted to 247 millions compared to 277. The EBITDA margin was 10.1% compared to 11.6%, and negatively affected mainly by price increases for raw materials driven by higher oil prices. The effect is estimated to almost 20 millions, most part within engineered. As planned during the first six months, We have had resources ahead of starting production and during ramp-up in a number of projects negatively affecting medical, estimated to almost 10 million SEK in the quarter. On group level, a one-off surveillance cost affected by six millions in the quarter. Net investments decreased to 133 millions compared to 188. As planned, most of the capex for the Hungarian expansion is paid, and as we have commented earlier, capex will be on a lower level going forward. 600 to 650 million SEK is expected for the full year. Cash flow after investments was then higher, 154 millions compared to 128. Net financial liabilities, excluding pension and lease liabilities, totaled 1,055,000,000, resulting in net financial liabilities in relation to EBTA of 0.7 times, giving flexibility. Return on capital employed decreased to 13.3% compared to 14.2% for the full year 2025. as the profitability was slightly lower and we now have a balance sheet loaded for higher speed.

Turning to page 11, focusing on the current situation. If we start with the medical business area, we have, of course, the continued growth strategy, higher market activity. We feel that across the board. We have built that on our broad customer base with a long-standing close customer relationships. We see that the major client contracts confirm the overall strategy and we have started commercial production as in our Hungarian establishment. The establishment of operation in Malaysia and expansion in Poland is also creating opportunities going forward. On the engineered solution side, we have advanced our market position, not least in the consumer electronics. We have established position in new product areas and focused on innovative and sustainable solutions. We see success in new products and technology areas, mainly data center that is positive for materials. Of course, the expansion of operations in Malaysia is also supporting the long-term development of engineered solutions. And overall, we have a favorable financial position that enables our intensified M&A agenda. We will now open up for questions.

Thank you for that presentation. We now open up for a short Q&A session. And as a reminder, if you wish to ask questions, you can do so via the form found right under broadcast. If you're calling in and would like to ask a question, press star nine to raise your hand and star six to activate your audio once you've been given the word. We'll begin with Adrian from ABG.

Yes, hello and good morning. Just from my end, before moving into the segments, a question on the group costs. Even if we remove the 6 million in the severance pay, the group costs would still have been at a significantly elevated level compared to your usual run rate. So can you just mention what drove this and if this is something that will revert in coming quarters?

I would say that if we look on the actual for this quarter and compare with the actual previous quarter last year, I would say last year was at the low level and this year was at the high level. And if you would combine them, I would say that is more the normal level. And by doing that, we have the extra 6 million, as you say, on top of that. And we have had a quarter where our intensified M&A agenda also has had some cost in this quarter. So that is explaining the high number this quarter.

Okay, understood. And then you mentioned the 20 million impact from the higher input costs. Do you expect to have raised prices to fully offset this already in Q3 or do you think there could be some lingering effects from higher input costs still in Q3?

We do see some of these costs also affecting the third quarter. We assess that we have taken two-thirds of that effect in this quarter and the rest will come in the beginning of the third quarter.

Okay, that's very helpful. And then perhaps just a status update on the GLP-1 deliveries in Hungary maybe for the second half of the year now that commercial deliveries are up and running. What sort of ramp-up pace should we expect from here?

As we communicated when we announced this new program, we said that we will have a starting point in second quarter this year and then a gradual increase for some years and reaching the full volume somewhere in 2029. And then how exactly that will come in in different quarters, it's very difficult to say because we are, of course, starting the production, ramping up and continuously adding new capacity over that period.

I understand, but can you at least help us if it will be sort of lumpy in stages or whether it will be more of a straight line ramp up?

it will be not a straight line but more you can you can take a line and then of course different quarters will be affected a little bit but it's more of a line than a lumpy jumps okay understood and the final one from me more on a broader note regarding the materials business now that you are back to sort of significant growth is there a

any sort of capacity cap for this business and how long can you sustain growth in this business before you need sort of major investments?

This area is light on the investment compared to the rest and it's not big jumps in capacity increases that it's needed. It's more sort of easy on the growth side from the capital side.

Okay, so no real end point of when you need to start investing again. This can grow for quite a while, it sounds like.

Yes, on the material side, it's light on the investments.

Okay, understood. In that case, that's all from me. So, yeah, to Christer, I wish you all the best going forward.

Thank you very much, Adrian.

Thank you so much. Now, for our second speaker, we will let the number who ends in 1008

Thank you. This is Oskar Enqvist from SEB. Good morning. First, I had a question on the product ramp-up in medical, which had a drag on, I think you said, 10 million. I just wanted to know if you had any comments on the timing. Will that be gone now in Q3, or should that still be the case with this 10 million drag in the coming, let's say, one, two, three quarters?

The situation during the first half year has been affected by different projects as we say but of course starting the production in Hungary that will support going forward in that and some of the others will also increase in volumes going forward. but there will be effects on the margin in a way doing that we will for these projects we will not have let's say the targeted margin near time that will come gradually over time for these projects but situation will ease up going forward gradually in small steps.

All right, perfect. And then just also follow up on the oil price implications here. So you said that around two-thirds uh and it was i think 20 million now in q2 the effect so we could expect you know 10 million in q3 and then after that that should be over is that that how to interpret that is our estimation if um the situation will calm down in in middle east and we won't have any new spikes popping up perfect and and just because the oil price has come down a bit. Could you see any sort of positive effects when that reverses and that you have raised prices for some of your customers and that you could have a short-term boost if plastic prices come down a bit?

No, we don't see that yet. It's still a large uncertainty in the market and there are many other effects affecting the pricing picture and we haven't noticed any downturns yet.

Understood. And then just a final one, sorry for the detailed questions here. But again, on the group function, Ibiza here. So I think the difference sort of on an average level in H1 versus last year looks to be around 10 million. And you say that it's in the sort of middle of that. Is it fair to say that this quarter was maybe elevated by approximately 5 million on group function level and that's due to M&A activity?

Well, of course, there are different things fluctuating a bit. But that is one, maybe the main reason of the difference you mentioned. Yes.

All right, and the magnitude is sort of approximately in the right area.

Yeah, yeah.

Perfect. Yeah, that was all for me. Thank you very much. And yeah, I wish you all the well, Christer. Thank you.

Thank you so much. Now we have some questions from the chat and one of them is that the increased administration costs, what is the effect of those and will they be frequent going forward?

I think we have commented on the administration increased cost already. It is linked to the severance cost. It is linked to M&A activities and some others. But that is naturally, of course, something that hits the administration cost line.

Thank you so much. Now going forward, this is your final interim report as CEO after more than a decade in the role. How would you describe Nolato's position today and what gives you confidence in the company's future on new leadership?

That's a very nice question. Yes, during my 10 years as the CEO of Nolato, we have developed the group to a true global player in both business areas. We have changed our positioning from more a production partner to a development and production partner. So I'm fully confident in the potential of continuous growth and increased margins delivering on our financial targets going forward. In the new leadership, Anders, I have had the opportunity to work with him for many years. I think I hired him three, four years ago. And I have full confidence in his ability to take Nolato to the next level.

Thank you so much. We can continue with some more questions. For example, the EBITDA margin declined to 10.1%, mainly due to higher oil-related raw material costs, and how quickly do you expect these cost increases to be passed through to customers?

Yes, as we commented, we do see that we have one third of these cost effects still coming in the beginning of third quarter. So then it should be handled by us. And if the pricing situation is stable after that, that will be it, so to say, then we're through.

Thank you. Let's see. Well, that was today's last question. So with that, we wrap up today's broadcast. We'd like to extend a real big thank you to Kristin Perula for the presentation, as well as to everyone who submitted questions and watched today's broadcast. I wish you all a continued pleasant day and also a great weekend.