Ratos AB (publ)

Good morning and welcome to this presentation covering the first quarter of 2024 in Ratos. I am joined by Jonas Wiström, our president and CEO, and Jonas Ågrupp, our CFO here in the studio. And they will guide us through the results shortly. In the end of the presentation, you will be able to raise your questions in our Q&A session. And this webcast is also recorded, so you can find it afterwards at ratos.com. Without further ado, I'll hand over to Jonas Wiström.

Thank you, Josefine, and thank you everyone for joining this morning. And we will introduce and talk about yet another quarter for Atos with EBITDA growth. So all in all, our beta grow with 11%. We took some costs in 3R companies to produce even better beta going forward. We haven't adjusted for them. If we did that, the beta growth would have been 16% actually. EBITDA margins are low in the first quarter, as you know, but we increase EBITDA margin and we increase EBITDA growth in all our business areas. I want to mention already here that the calendar effect which is just one day but still it has a negative impact on industrial service with 5% or 13 million SEK. Sales was flat in this quarter and I will come back to that. Cash flow was down compared to Q1 last year and this is solely due to the fluctuations in working capital in our construction companies. One could add that Easter also was in the end of Q1 which resulted in that many payments came in on the Tuesday. Also, we have an updated financial segment reporting. As you know, we're not a company. We are a company group. We're no longer an investment company, but still we want to make the numbers more transparent, not the least for you. Just to go through these segments, if we start up with industry divided into industrial services where we have Aleido as former was belonging to Semcon, now standard on their own. We have Nitec and Semcon, we have Speed and we have our CRO company TFS. In product solutions, companies who design and develop their own products that you can hold in your hand, I used to say. There we have Diab, HL, Ladil. and Oase Outdoors, and I think you are all familiar with them. Within critical infrastructure, we have Able, we have XPIN, and we have Precise Infra. In construction, Airtime, Hent, SSEA, and Consumer has been transparent before since we give you full numbers for Plantagen, so you can read out both Plantagen and KVD. Yet another quarter with EBITDA growth. When it comes to sales again, this was quite a flat quarter. Starting up with the business areas, here you have the numbers for the three business areas. I'm not going to go through them in detail, but I hope you like this format with the eliminations. Coming into EBITDA in industry, coming back to that grow 1%, construction services 5% and in consumer Q1 is a loss quarter. We had a better result than last Q1 and the group costs are pretty flat. I'm actually quite happy that EBITDA margin and profitability is increasing in all areas. So let's take a look at industry. Flat sales again. Why did we have a low organic sales? Well, we had low net sales in Diab in the wind segment. Diab actually increased their EBITDA with some 50% in the quarter, but wind is still a very weak market and also very small part of Diab, I would say 15%. We also have other companies with lower sales including Oase Outdoors and Speed Group. EBITDA grow but the calendar effect again influenced the quarter with 13 million sec less. And again EBITDA margin up both in the quarter and in the LTM we are 0.2 down. But we are in a good trend I would say. I can't resist from mentioning HL Display that continue a strong growth journey, both organic growth and acquisitional growth. And they're really strengthened their already market leading position in Europe and other markets. Taking again down a look in the segments for industry, you can see that the EBITDA is down only due to the calendar effect and the same goes for EBITDA margin is affected also of the calendar effect. Product solutions, net sales up but organic sales down. EBITDA, quite a good EBITDA growth and EBITDA margin is also on satisfactory levels. Looking into construction and services. If I already now start to talk about the segments, we have a strong demand for critical infrastructure, although Q1 is a weak seasonal quarter. But good demand in construction, as you see, order intake is down a little bit, sales are down for construction, but profitability increases. So we actually grow EBITDA in construction and also in critical infrastructure. I hope you appreciate the order intake numbers also for the segment. We have a good order for pipeline in general. So if we look here at the critical infrastructure, you can see improved the beta in spite of quite weak seasonal quarter. Order intake, very good. Order backlog good. Construction actually increases their EBITDA with 8%. EBITDA margin good still. And order intake is down. But order backlog is strong. And I dare to say that the pipeline also looks strong. Last but not least, consumer. Increased sales in Plantagen, better results in Plantagen. One should remember that the Easter was in Q1 for Plantagen, which affects the sales positively, although the weather was not the best in most places in Easter, but I still think it had a positive effect. Important to mention is the cost savings program that goes on and will continue to go on. We continue to focus on reducing inventory, but we're not as aggressive when it comes to taking down gross margins this year. KVD just continue to develop very well. So with that, I leave over to you Jonas to take us through the financials.

So let's look at net sales and adjust to the beta. If we start with net sales, you can see that we had a flat development for sales. If we look at the LTM numbers in Q1, we are at 33.8 billion roughly in sales. And if we look at the adjusted EBITDA, we had a 11% growth. And we had, as we said earlier, a negative calendar effect. If we adjust for the calendar effect, the increase would have been roughly 15% in the quarter. And if we look at the LTM number, we are at 2.3 billion in EBITDA last 12 months. Cash flow, we know that quarter one normally is a weak quarter. In some of our companies, we build seasonal inventory before the season. If we saw Q1, we had a negative cash flow. In Q1, 22, we had a negative. In Q1, 23, it was positive. And this quarter, it was minus 137 million. We had a good... You can see that we increased received dividends and financial items. We had a positive effect here from dividends from Abel, and Abel in total paid 640 million Norwegian crowns in dividends, and 32% of that ends up in Ratos. And then you can see the big impact here on the cash flow in the quarter was the change in net working capital. You can see that it was a quite big negative amount compared to Q1 previous year and this is caused by fluctuations in our construction companies. So cash conversion was minus 38%, but if we look at the LTM numbers, cash conversion was 159%. We had a cash flow of 3.6 billion roughly rolling 12 months. If we continue and then look at networking capital, you can see and we measure the LTM net sales compared to the LTM net sales and then we measure the average of the four last quarters. And you can see that we are at 1.3% which is down compared to the same quarter last year. Networking capital is 500 million roughly. And if we go through some of the lines here, if we look at inventory, you can see compared to the same quarter last year, we're actually down. And this is very much related to plantage and where we continue to reduce inventory levels. If we look at trade receivables, we are down. If we look at DSO, that's a sales outstanding, we continue to see a positive trend. Contract assets are down, accounts payable is up a little bit, which is good. And if we look at the contract liabilities, we are roughly on the same level as previous year. And then we have a slightly lower negative effect on the other receivables and payables net this quarter compared to the same quarter last year. So 1.3% roughly in net working capital. If we then move to the bridges, we start with the net sales bridge. You can see that acquired, as I said earlier, we had a flat development when it comes to sales in the quarter. If we look at acquired growth, it's 156 million, roughly 2% in the quarter. And this is very much related to HL display in product solutions where we have good development in acquired net sales growth. Organic growth was negative. We saw positive organic growth in construction and services and consumer, but in industry we had a negative organic growth in the quarter and this was very much driven by the lower sales in the wind segment in DIAB. FX, 85 million, so it's down 1%. This is caused by the weak Norwegian Krona. As you know, we have quite large operations in Norway, so this has a negative effect on Ratos. And then if we move to the beta bridge 11% up and you can see that the drop through from acquisitions is 33 million and this is also again very much related to HL display where we also see very good synergies not the least in production where we sort of in-source production to our facilities in for example in Poland. Organic growth, you saw that we had a negative organic growth on the top line but on the beta we have a positive organic growth and this is very much related to critical infrastructure and precise infra which had a record breaking quarter in Q1 this year. And then FX, we have some transaction effects mainly in the business area industry. So this was a positive effect of 16 million. And then we have 44 million, which is one time items, but also restructuring costs that we have in several of our companies in various business areas. If we then look at leverage and return on capital, our leverage increased in the quarter to 0.8 times. If we adjust for the reversal of the write down in the holding enable, it was 1.4 times. And net debt was 3.3 billion, which was a decrease compared to the same quarter previous year. If we look at return on capital employed, it increased in the quarter. We had 10.4% compared to 10% in the same quarter last year. And if we look at return on invested capital, we were at 7.6% up from 7.1% last year. If we look at our financial targets, they are the same as before. We have a target to have an EBITDA of 3 billion at least by 2025. Leveraged net debt to EBITDA should be in the range of 1.5 to 2.5 times. And the dividend payout should be in the range of 30 to 50% of profit after tax. So I leave over to you, Jonas.