Profoto Holding AB (publ)

My name and I'm head of Investor Relations. Today I have with me our CEO Anders Hedebark and our CFO Linus Malmstad. I'll now hand over to Anders who will start off by giving you a summary of the quarter.

Good morning everyone. Thank you for joining in and listening in to our third quarter report. So sales was not good in the quarter. It decreased by 28% to 119 million Swedish crowns. The organic growth was negative with the 23%. And the reason for this is the uncertainty in the macroeconomic situation, especially in the United States. But also we had a dealer inventor build up in previous quarter. And consequently, EBIT is not good either. We are losing 10 million Swedish crown, which is 8% minus EBIT margin. And as we said, it's negative sales, but also we are having a higher cost of goods sold due to the tariffs in the United States. And we also have a changed relationship between capitalization, depreciation, and Linus will cover that in more detail. Let's go to the next slide, please. So weak demand in our larger markets for the quarter. So we had, as I said, we could explain partly the lower US sales by a larger sell in prior to the new tariffs and consequently the price increases in the United States. And that's one of the reasons, but also we see a lower customer demand. And customers are not only cautious in the United States, but also in Europe. And this has the same reasons. On the other hand, we see a slightly better effect in Asia Pacific, especially in China. But this is due to a number of major larger customer deliveries that is driving this positive development. So all in all, we have a negative or sales decline by 22.6% for the group. Americas is down severely with 40%, EMEA 15%, and APAC is a plus 10%. In addition to this, we also have a currency effect where the Swedish crown has appreciated over the quarter in comparison with the last year. So we can take the next slide, please. On the year-to-date figures, sales is down 11% organically. And the reasons and the explanation for this is the same, where we see a damped demand. We also see a higher competition from competitor, as well as a technological shift from flash to constant light LED. Here we have a group total decline of 10%, and in addition to that, we have a currency effect of almost 4% for the group, where we see that Americas are having the biggest problems all in all. EMEA is down 5%, and APAC is down a little bit more than 2%. So including the currency effect, we have a decline of 14.4%. So... We see the customer needs and demands changing, but we are continuing delivering our plan that where we are moving and we are following the customer demand and moving more towards LED based solution. And this is continuing and we're starting to ship and invoicing now in this quarter, partly a part of the product, especially the point source unit with L1600D, L600C and L600D and the panel we will start to ship during the first quarter next year. So we think that we are well positioned for this change. And with our LED portfolio, we are the premium brand for continuous light as well as flash for shooting video and still in the same bay, in the same studio. So we are meeting those demand long term is our ambition. And this is what we are developing new products and solutions for. Thank you. I will leave the word to you, Linus.

Okay, thank you. And this slide and the graph clearly shows the effect on EBIT When we have a decline of a top line of over 20%, it's of course really hard to then compensate that on a cost reduction basis. And also given the gross margin that we have, you see a clear effect on EBIT. And the third quarter is also a ceaseless, not a slow quarter, but with historically lower sales, which has, of course, an impact when you have a more or less fixed cost base. And also, you know that we have recorded some one-off effect during the quarter of a total of 47 million, which leads us to just a little bit of 10, minus 10 million. and i will come back to it but of course one not shouldn't say major explanation but we had an impact during the quarter of the ratio between capitalization and amortization and i will elaborate on that a little And here is the shouldn't say long term trend, but we had, as you know, had a number of quarter with the top line decline, which we tried to compensate by reduction in cost. But the full effect haven't been seen yet. So this is As I said before, this is not my favorite slide. We really need to change in coming back to top line growth in order to actually increase the margins. And we're not sitting still, so we're doing a lot to really take actions to meet this changing market condition, as Anders touched upon on the previous slides. And the cost reduction plan is going according to plan. So the total annual effect will be a reduction of over 20%, and that corresponds to a reduction of the cost base up to 80 million on an annual basis and also that you know that we acquired styleshoot in 2022 and we had seen the effect on top line after the pandemic so we have done a number of actions to really compensate for the the weak development actually in in the choir business So during the quarter, we took some reduction costs, a restructuring cost to reduce the cost. And that's mainly personnel. And also that we did an impairment reduction of the the over values of 11 million. So in total, it's 7 million related to the statute. And during the quarter, we also did some minor adjustments on the devaluation of our asset and the capitalization of assets related to our product portfolio. And that's related to a changed business case just for a small handful number of products. So all in all, we still believe that we have a really strong balance sheet. Yeah, and this is, as I said, we are following our pause of reduction, the cost base. So I think we have done quite substantial reductions and on an annual basis, we will, we're very sure, certain that we will of an annual reduction of 20%. And as you can see, if we start with the end of last year, we have actually reduced it slightly more than the 20%. But on an annual basis, it's 20%. And we are at the full effect by the end of this quarter. And this is just to show the change in what during this quarter is the first time that the depreciations are higher than the capitalizations. This actually have, if you compare to the same quarter last year, it has actually quite substantial impact on EBIT. So it's more to give some background and give more color on the EBIT number that So this is a consequence of when we have a reduction in R&D spend and also that we have now launched a number of products that we are now starting to depreciate on. So that's the other thing.