Prevas AB

Hello and welcome to today's webcast with Prevas. With us presenting today we have the CEO Magnus Villén and CFO Lena Buström. If you're calling in or like us a question please press star nine to raise your hand and star six to unmute yourself when you get the word. You can also type in your questions using the form to the right and with that said please go ahead with your presentation.

Thank you. My name is Magnus Villén and I'm the CEO of Prevas and together with me today we have

Lena Buström.

The purpose for this meeting is of course to review the Q2 results of Prevas. The short agenda for this meeting is that we start with an introduction. We will have a review of our financial performance for the quarter. We will have a market update and we will finalize with a Q&A session. Looking into Q2 2025 for Prevas, we continue to grow. We grow .3% during the quarters and that was driven by acquisitions. Looking into profit, the profit for the second quarter was 20.7 million SEK. That was impacted by restructuring costs of 6 million SEK by a calendar effect of 5 million SEK and the lower utilization in this challenging market. Looking into the broader picture we can also see that the margins were improved in Finland for the consecutive quarter in a row. Actually Finland improved the margins during the second quarter of 2025. If we adjust the profitability, the EBITDA, for the restructuring costs and the negative calendar effect, the EBITDA was 31.7 million SEK equals to 7.7%. If we look into the first half of 2025, the accumulated figures, we had .6% turnover growth and .7% of EBITDA. As a summary, to be honest, we are not satisfied with margins like this. We are taking actions in order to improve. I will come back later on in the presentation to be more clear about what we are doing in order to improve the profitability because our aim, our target, and we are devoted to reach our financial targets and we are below and we will take actions for that. But before we come into that, I will ask you, Helena, to review the financial position of Cleoas.

Thank you, Magnus. Cash flow from operating activities decreased with 30 million SEK or 21%. This is mainly driven by the lower result. Working capital contributed positively and improved with approximately 7 million SEK compared to last year, mainly driven by unearned revenue. Cash flow from financing activities increased with 40 million SEK, affecting cash flow negatively compared to the corresponding period last year. This is driven by the amortization of the loan connected with the acquisition of Cleoas Finland. The overdraft facility of 100 million SEK were unused at quarter end and cash at quarter end was 17 million SEK. Prevas remains well below the financial target of maximum two times EBITDA. Net debt in relation to EBITDA is 1.04 times. Prevas equity ratio amounted to .4% in Q2 2025. And finally, in all, Prevas has a strong balance sheet of a solid financial situation.

Thank you, Helena, for reviewing the financial situation for Prevas. So what measures are we taking to improve the margins within the company? We were working with optimization of personnel in areas with low demand. We, as you are aware, we are in a market that is very diversified with some regions where we have high demands, some regions with low demands. And we, during this quarter, we have focused on optimization. This means that we have reduced personnel in areas where we see low demands. And the purpose for this is, of course, to adapt our organization to the present demand we see in the market. And the purpose is to increase the utilization and the performance of Prevas in order to reach higher profitability. During the quarter, we have had strong cost focus, continuous cost focus. During the quarter, we have also worked internally inside of Prevas with new leadership and restructuring. This means that we have a new leadership in our eastern region in Sweden. We have several new business unit managers in place or coming in quite soon. And the reason for doing this is, of course, to improve our performance, injecting new leadership and new potential energy into the organization as such. We have also working with restructuring during this quarter. In the region south, the Malmö region, we made restructuring. We made restructuring in the Stockholm region. We made restructuring inside the Finnish operation. All of these actions we are taking is, of course, with a purpose to improve performance. But we are taking a lot of different actions within the company to improve our performance. That is one thing. Another thing is, of course, to actually focus on saves. And we have a very strong save focus within Prevas. And we continue to grow in the defense area and in the energy sector where we see that the demands are increasing. And then you might wonder, all of these actions that we talk about, do we see any results? Yes, we do. We see improved utilization towards the end of the quarter as a consequence of the measures and actions that we are taking in order to improve. Then a short update about the situation in Finland. On the graph, you can see the situation, the trend for the EBITDA in Finland. The third quarter of 2024, we have a negative result. And since then, the last three quarters, we have improved the EBITDA. So we have a nice, positive EBITDA trend that continued also in the second quarter of 2025. The team in Finland is an excellent team and they're working very hard in order to improve the profitability in the region. One example, one thing we did during the second quarter, that we merged two regions into one, one large region. And in this large region, we now have two different business units, one business unit focusing on projects, one business unit focusing on services. And that makes it more efficient. So we increase the efficiency in the operations in Finland thanks to this merge. That is one of many examples of what we do in order to improve in Finland to reach the healthy EBITDA that we are to get. During this quarter, we have continued to have a good order intake. The first quarter was very strong in terms of order intake. Also, the second quarter was strong. This means that we have a healthy order book moving into the second half of the year. And this is in a very competitive market, a challenging market in Finland as well. And I would say that the reason that we are able to get these orders is that we have a team that is focusing very hard on sales and on customers, and it gives results. So where are we right now? What we see in Finland is that the projects, they are ramping up. We see that utilization is increasing and we now are recruiting because we are in a situation in Finland where we now need to recruit in order to be able to deliver the orders that we have for the second half of the year. I am convinced that the Finnish team, the hard working Finnish team will reach healthy margins. And Q2 was a very good step forward in the right direction. Then a little bit about the general market. How does it look? What we see is a continuous challenging market. We have a high uncertainty driven by the global political uncertainty we see right now and also the geopolitical situation in terms of the wars, et cetera. So it's a very challenging market, high uncertainty. We have also a situation with some regions where we have very high demands, of course, related normally to the defense sector, for example. We also have the regions where we have low demands. So we need to be very agile in how we handle the market as such. What we have seen during this quarter as well is that the customers tend to wait for decisions, not for the small decisions, but for larger decisions, for investments, et cetera. In that area, we continue to see that the customers are waiting, waiting for the decisions. And that is affecting us, of course. We also still see a high competition in different areas in terms of general consulting services. For example, in general IT and in the software area, we still see very high competition in that area as well. Then I also would like to emphasize that in Sweden, lately, during this quarter, we have seen reductions in the vehicle industry. When I'm talking about the vehicle industry, I'm talking about the car industry. I'm talking about, for example, Volvo in Gothenburg that made quite massive reductions during the second quarter of 2025. And that effect was actually 1,000 consultants are being reduced in Volvo in the Gothenburg area. It's quite a massive reduction. The direct effect on Prevas is extremely limited because we have a strategy at Prevas not to be strong in the car industry. In the industry breakdown, you can see that we have automotive, 6% automotive and transportation. And our focus in that area is within trucks, companies like Volvo, like Scania. But we are not large in the car industry, which of course, in a situation like this makes the effect very, very limited for us when Volvo is doing these reductions. In the green energy sector, we have very unfortunate bankruptcy of Northvolt. And that means that in Prevas, Prevas is very strong in the Westros area in Sweden. Northvolt is closing down the facility, laying off 800 employees, mainly engineers. And of course, that affects the market, the regional market in that sense. But once again, the direct effect on Prevas is very limited. What we continue to see is growing demands from the defense sector and from the energy sectors. One example there you can see in the industry breakdown is that the defense portion of Prevas turnover is for this first half of 2025, 15%. Last year it was 12%. In the energy area, now it's 12%. Last year it was 9.5%. So we are actually growing in this area where we see the demands. Generally speaking, the demand for complex solutions, I mean, I would say the core of Prevas that remains strong. Then I would like to talk a little bit about the Prevas and security defense. We are an established partner to the Nordic security defense customers since 15 or 20 years we have been working with some of these customers. We have built long relationships. We have excellent references. We have a good position in the market. During the years, you can see in the graph there that from 2020, we have had a nice growth in the security and the defense area. The turnover in defense for this year will be around 250 million SEK and we continue to see growth. And what are we delivering to the security and defense customers? We are delivering technological expertise. I give you some examples to give you a flavor of what we actually do. We work with the defense customers related to image treatment. When we have a team in Chista, they are experts in developing hardware, electronic hardware and software for image treatment using AI algorithms for processing a lot of data very rapidly. That is one service we make for the security and defense customers. We work with sensor technology. In that case, we work with one example is EMUs, it's inertial measurement units. It's a sensor that measures and reports a body's specific force, angular rate and the orientation of the body. We're talking very, very advanced sensor technology and we have an expert team in Cascuga working with this. And of course, working then with customers within this industry as well as other industries as well in that area. We're working with simulators. We're developing simulators for these kinds of customers, software-based simulator for different products. We're working with tests. And when I'm talking about tests, it can be software tests, it can be hardware tests, but also developing complete test system for end of line test equipment for manufacturing purposes. And as you all are aware, these customers are in a position right now when they are booming in terms of the demand. They need to increase the production rapidly, fast and secure. And PLEVAS is the right partner because we are strong in production development and product development. So we are helping these customers right now as we speak to grow the production in many, many different places. And we're working with automation. We're building production equipment. We're doing a lot of different things in order to increase the production capacity in these customers. We also work with security for the defense customers as well. Are we only working at the customer side? No, we are not. We are working as regular consultants on site, but we are also working with Scopoworks and with projects from our own offices. For example, we need the test systems. We have quite large projects, a lot of engineers working from our premises in secure areas for developing these solutions to the defense customers. During the quarter, we also became a member of SOF, SOF is Säkerhets- och Försvarsföretagen, an organization for the Swedish security and defense industry. And it's 350 members. And PLEVAS, we have decided to take a stronger position in the security and defense area. So this was one of the steps in that direction to be a member in this organization. And in this organization, we can see that many of our present customers, potential customers, present partners, and potential partners are part. So this membership will be one step forward to build the positioning of PLEVAS within the security and defense area. Then some highlights during the quarter. Cyklo-OJ in Finland, in OLO, they choose PLEVAS for the design and automation services to build Finland's largest plastic recycling plant, which is very well aligned with the PLEVAS mission to do good with advanced technology. During the quarter, we also announced together with Hexagon, an enhanced strategic partnership to accelerate the digital transformation in asset management for the Nordics. We are working with a part of Hexagon portfolio. Now we're looking into expanding that into other parts of the Hexagon portfolio and expanding into the Nordic market in the digital transformation area. Examples within this quarter, we communicated that we got a major order from Green Cargo for implementation of Hexagon EIM, but also from Norway, from NScale. NScale is a data center company that are growing substantially in Norway, and they have chosen PLEVAS as their implementation partner for Hexagon EIM. So these are examples that this strategic partnership with Hexagon is giving an effect as well. During the quarter, we also announced that we got the approval for the acquisition of OEM Sweden, because that was that we need approval from the authorities in order to make the acquisition, and that is now done, and the company are welcomed into PLEVAS from July 1st. It's almost 40 experts in OEM Sweden working in advanced product development from industrial design to finalized product within the medtech and the cleantech area. So a warm welcome to OEM into PLEVAS during this quarter, actually in 1st of July. And as a summary, we are not satisfied with the profitability of PLEVAS. The profit for this quarter was impacted by the restructuring costs we have had, the calendar effect, and also low digitalization. We have taken several actions, we will take action to strengthen the profitability in order to be improved in the second half of 25 and for the time moving forward. PLEVAS is an excellent company with an excellent platform, and we will prevail in that sense, we will grow into the future as well. We continue to focus in defense energy, and as I showed in the presentation, we can see continuous growth in these areas, and we are now focusing a lot on the defense and security area in order to accelerate the growth even further in that growing part of the business. I'm very pleased to see that we have a continued positive EBITDA trend in Finland for the second quarter as well. I'm very glad to see that the acquisition of OEM was approved, that their team is now a part of PLEVAS, and we have a solid financial position in PLEVAS. We have a solid balance sheet, and we are ready to act on the possibilities we see in the market, even though it's in a challenging market, but we have the opportunities. And with this, I would thank you all for listening to this presentation. Also, I would like to wish you all a fantastic summer. I'm personally going on vacation tomorrow, although I'm already looking forward to coming back, because to explore the opportunities we see in the second half of 2025. So with this, I welcome you all to the Q&A session. Thank you.

Thank you very much, Magnus and Helena for that presentation. And let's dive into the Q&A section here. If you're calling in, like as a question, please press star 9 to raise your hand and star 6 to mute yourself when you get the word. You can also type in a question using the form located to the right. We'll start with the first one here. Has NMAC received any orders from Valmet related to their large order in Brazil?

Yes, we have received orders from Valmet, not only related to the big order we were talking about previously, but also other orders as well. Yes.

Thank you, Magnus, for that answer. What is the strategic rationale behind the acquisition of OIM Sweden and our additional acquisitions plan in the near future?

The strategic rationale behind the acquisition of OIM is that it's a team that fits very well into the strategy of Prevas. Our strategy is to work within product development, within production development, and this is a team of experts coming into the product development area. It's a team working from industrial design. They work through the whole engineering chain to an industrialized product working within medtech and cleantech. So it's a very good fit in that sense. That is one part of the strategic rationale. The other part is that we together, we combine the strengths of OIM and the team we have in the south, in Malmö Lund, then we shape a very strong development hub in that region. That is the other main part of the rationale.

How do you plan to address the challenges in the software segment and certain regions? Are you reallocating resources or shifting specific focus?

In that area as well as others areas, we tend to be extremely agile. So of course we are moving resources and trying to adapt and find new markets. So one market where we actually are using software development as well is of course within defense. So we are reallocating resources in order to adapt to that rather tough market situation in that sector. That is one part. Another part is also that we have taken actions in terms of actually reducing personnel in areas where we have very hard in order to see that we are able to find the right assignments in that sense in order to safeguard profitability.

Thank you Magnus for clarifying that. What share of revenue currently comes from defense, cybersecurity and energy and how fast are these segments growing?

Today for the first two quarters of 2025 we had 15 percent of the turnover in defense and it's growing. We don't make forecasts for the future but if you look into the history and I showed the graph in the presentation we have seen that we have been growing in the defense area and we look forward and working hard to continue that growth into the future as Looking to the energy area it's about 12 percent of our total turnover for the first two quarters. So also in that area we have seen growth but not at the same pace as we see in the defense area where the demand is booming quite a lot. We don't have a specific figure related to cybersecurity as a portion of the general turnover for Prevas but we are growing in cybersecurity definitely.

Yes. Thank you Magnus. When do we see a trend break for profitability?

We are taking as I mentioned in the presentation several measures and actions in order to to be a more efficient company and that will affect profitability. We have financial targets that we are not meeting and I'm very convinced that we will meet them over time. We work extremely hard to make the improvements in profitability for Prevas.

Okay and we take one final question here before wrapping up the Q&A section. What do you think about the market in Q3 but also in Q4?

So I lost you there. Could you repeat the question?

Yes, apologize. We'll take one final question here before wrapping up. What do you think about the market in Q3 and in Q4?

I believe that the market, the challenge in market will continue. I don't see a big upturn in Q3 and Q4. I think that the market will continue. I don't see a big upturn in Q3 and Q4. So more or less what we see is a flat development moving forward into the second half of 2025. So we need to be very agile and work hard in order to find the opportunities in the marketplace even in the third and the fourth quarter.

Okay and that's a wrap of the Q&A section here. Thank you very much Magnus and Helena for presenting today and answering our questions. I wish you all a great rest of the summer. Thank you very much.

Thank you Martin. Thank you all for participating and have a fantastic summer all of you. Thank you. Bye bye.