Profoto Holding AB (publ)

Good morning and welcome to Profoto's Q1 report. My name is Amanda Åström and today I have with me our CEO Anders Hederbark and our acting CFO Linus Marmstedt. I will now hand over to Anders who will start off by giving you a summary for the quarter.

Good morning, everyone. Sorry that we are late, but now we're on, so I'm very happy to speak to you all, and I hope that you can hear good the voice of me. Otherwise, please send in the group chat. Anyway, welcome. First, the summary of the first quarter 2025. We displayed the report April 15th, and the Q1 results is in accordance with the preliminary figures that we published in April. Net sales decreased by 4% to 164 million Swedish crowns. That is a negative organic growth with 5%. we see a significant decline in US demand and US sales. And that is the most important explanation of the decrease in sales. Consequently EBIT was 17 million, that is compared with 34 million last year, and an EBIT margin of 10%. This is not a satisfying effect of the sales, but it's also affected by the negative currency effects. and Linus will explain more to that. So we will spend quite a lot of time on explaining the report and that's why Linus will take the next slides. What is really happy for us is that we started our market entry into the product segment LED. So we start shipping our L1600D both into the cinema industry and into the existing distribution channel. And we're very happy for that. And it has been received very well. And we are shipping the first product to the large production of cinema production for the TV series. And this is happening in the UK. But as a consequence of the challenging situation, especially in the US demand, the board of directors has withdrawn the dividend proposal. And we will instead focus on share buyback during the year and that remains as earlier proposed and with that i will leave to you linus to explain the figures in a much deeper sense and i will come back in the end of the presentation for for questions thank you very much linus please okay thank you

And as Anders started to mention, we had a negative organic growth of approximately 5%, which is a reflection of the fairly slow market that we have seen during the quarter. And more importantly is the EBIT development, which was on the negative side with an EBIT margin of 10%, which is partly explained by two things. One is that the cost base is higher than what we want to have in relation to the anticipated sales. so actually we foresee a slightly higher sales and given the current development the cost base is actually too high i will revert to that a little bit later but also a reflection of the currency translation effect that we saw in the end of the quarter which is due to some internal asset related factors So adjusted for that, the underlying EBIT was around 15%. And if we look for a slightly longer perspective, we see a flat development for the last 12 months, which is also a reflection of that we see a slow market. So we see no big changes compared to what we have seen during the last year. And also that the LTM is reflected by the week, first quarter of the year. So what we need to solve is actually start to increase the growth in terms of product launches, but also cost reduction. That's how we attack these two issues. And if we look at the geographical differences, what we presented in the preliminary numbers is that we had an okay start of the year, but from mid of February, we saw a fairly sharp decline in the US sales, which is a reflection of the uncertainties that we see in the North America. And if we look at Europe and Asia, I mean, it's still a cautious market, but it's stable. So Europe and Asia is holding up pretty well. We say that that has continued also during the second quarter. That's a clear pattern. If we then look, okay, what are we doing? We see that we have a clear plan for two things. One is to increase the profitability and one is to increase the top line. So as we communicated in the press release, we said that we will reduce the underlying cost base of approximately 20%. And that corresponds, given the current cost base, that corresponds to approximately 60 to 80 million on an annual basis. And that's the cash flow, underlying cash flow effect. And as you know, we capitalize parts of the R&D. So that means that the estimated annual effect on EBIT is approximately 30 million. So that's a very important initiative and step that we take on the cost base. And also, I will come back to the tariffs a little bit later, but we see that we have effects from the tariffs and we take clear actions starting from mid-May to mitigate the negative effects of the tariffs. And more importantly, on the top line is that we really now are entering the lead market. So the clear internal focus is on sales and marketing. This is really, really important to keep that focus internally. And if we look at the R&D spend, that will be affected in relation to the cost reduction, but it will be optimized and focused on the LED product. And as I said, we will come back to the tariffs. And just to start off to say, where do we actually have the production? As you know, we don't have production in the US at the moment, but we have it in Thailand and in Poland. So, I mean, we are not directly affected by Europe's tariffs in terms of manufacturing, But we also see that we have approximately 10% of our production in China, which is, as the world looks today, clearly affected by tariffs into the US. And what kind of actions do we actually take then? From May 15, we will increase our prices on the US markets with approximately 10 to 15% to reflect the tariffs that has put on our direct products. And that accounts for approximately 60% of the total assortment. And let's see what's happening. So we will, of course, have a daily monitoring on this issue so that we really have the right market approach and also to really adjust for any other and potential future changes in tariffs. And the last point on this one is, of course, I mean, we are living in a dynamic market. So let's see how this plays out. Because as you know, several of our key competitors are actually Chinese. So that might change the overall play field. And this slide you have seen before, but I think it's really important to have this on top of your heads. It's because, I mean, we have, as you know, we have invested heavily during the three, four years to really have a full product range in the flash and also on the lead side. And what we feel now is that we have a clear vision and competitive product range within flash it's more or less complete we will see maybe or likely new product launches that will come here during the second quarter but then we will have a complete product range on the flash side So that means that we can focus not solely but mainly on LEDs. So if we shift to the next slide, this is how we foresee the R&D spend for the coming months and quarters. And this is what, as you can see, we have spent heavily and approximately 20% of the total sales has been derived to R&D. And that we will see now. Now we have the potential actually to reduce this. quite substantially as we now have full product range in flash, but also that we are about to launch several new products within LEDs, which means that we can optimize and reduce the total R&D spend to reflect the slow market. And the underlying objective is actually to be back on historical level of around 10% of sales. And as Anders mentioned, the board has decided to withdraw their proposal regarding dividends. And this is, of course, just a matter of caution in terms of reflection of the uncertainties in the market. But still, we have a very solid and healthy balance sheet. so this is more to keep up the the flexibility and then flexibility in terms of both operational but also financially that we can if we want and the board decide so to do buybacks so now we have full flexibility to really drive the company forward And just to summarize, I mean, we are acting in a world with great uncertainties, but we are really fighting and have a clear plan how to really manage these times. And we have a clear focus internally, both in terms of how to grow the company, but also how to really reduce the cost base so we can increase profitability. So short term focus is on product launches and sales and marketing to really drive top line. And also, as I mentioned, the R&D strategy is now optimized to really produce good product launches going forward, but in a more efficient way after a number of years with high investment levels. So we are really proud what we have in terms of R&D team and what we have achieved and what we will achieve going forward. So that's more or less in brief the first quarter and where we are and where we're heading. So now we open up for questions.