Ratos AB (publ)

Good morning and welcome to this presentation covering the fourth quarter and the full year of 2024 in Ratos. Our CFO Jonas Ågrupp is unfortunately ill today. So with me in the studio, I have as always our CEO Jonas Wiström and also our finance director Mattias Junde. 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 will find it at ratos.com afterwards. Without further ado, I'll hand over to you, Jonas Wiström.

Thank you, Josefin, and thank you everyone for attending this important morning where we will describe what I think is the best quarter and best year since I started in Ratos. So let's take a look on the fourth quarter. It was an important and it was a strong quarter, but I cannot enough underline with major one-offs because I saw in the first headlines this morning that one wasn't really aware of that if we back one year and look at Q4 2023, we had a positive one-off of one quarter. a billion, 656 million related to Abel. And we reversed a downwriting that was suggested by our auditors during the period when Abel had tough times. And last year they told us we have to reverse that and go back to the goodwill we had from the beginning. ABL has developed extremely well also in this year. So they have a record year this year and they have a record year the year before. When it comes to 24Q4, we had negative one-offs of 256 million. More than 200 million of them were related to Plantagen and I will get back to that and also the NITI Group and TFS. We had a merger of Nitec and Semcon into the Nitec Group. I will come back to that as well. And we merged Hent and SSCA Group to Sentia. And Plantagen's restructuring is in line with plan and we believe and we hope that we will be able tomorrow to disclose the financial effects and numbers on this reconstruction. I think this is also a very important process that we had during the autumn 2024 and was finalized in Q4. Also, we took up our holding from 72% to 97% by buying KJP Gruppen's shares. Precisinfra has developed, and this is not an exaggeration, extremely well since we acquired the company. If we look at the earnings, cash flows, etc., why was this quarter strong? Well, adjusted EBITDA increased with 23%. Our margin was better than last year. If we look at our core business, as you know, we have communicated that consumers should not be a part of future ratos. And again, plantation was very much affected because of the reconstruction. Stores were closed down and we need to get rid of the end inventory with, to put it carefully, very low margins. So if we look at the core business, Then EBITDA is adjusted to 610 million and our EBITDA margin is 9% instead of 5.2%. So that can be a hint of the future here. I'm happy to say, because the market has been still cautious, we don't have had the demand as we used to have this year, and it goes, I think, for everyone. We had a continued strong development in industrial services, and not the least the technical consultant companies, Nitec and Semcon, who merged, where we also saw organic growth in the technical consultants. Very strong quarter for construction. EBITDA up 40% in a tough market. Net sales declined. As I mentioned before, we have had a weak market. Organic growth is actually minus five. And we did some acquisitions, one in Lidl and three in HL Display during the year was that. Cash flow from operating activities continue to be very strong. We have a cash conversion of 350%. ROSE and ROIC improved a little bit compared to last year. These ROSE and ROIC are numbers we are looking very close into. If we take a look at the full year, all segments except consumer increased their EBITDA in spite of the market I talked about. So EBITDA increased 4% and the margin was 7.2. Again, if we look at the core business, actually we have doubled the growth on EBITDA without a consumer and the EBITDA margin is 8.5%. Again, negative sales numbers, structural effect of 1%. I think except for the consumer market, the construction and services market is also a very tough market. I would put that on second place after consumer in terms of bad markets. But still, our companies had a good order intake and also the order backlog grew. So they're very well fitted for going forward. And again, cash flow from operating activities for the year corresponds to a cash conversion of 148%. So also the year number are very good. And the board proposes to increase the dividend to 1.35%. Now, let's look a little bit into the business areas. I've said a lot here, but if you look at the net sales graph, you could see that we are not in a very good market. I mentioned that the technical consulting companies are actually growing and, can I say, do very good results. A very weak market in industry is the CRO market and we have also taken cost efficiency measures in TFS and you will see more of that. We're not happy with the profitability there. Adjusted EBITDA, in spite of the weak market I talked about, has grown with 8%, and adjusted EBITDA in industrial services was strong at 21%. Adjusted EBITDA margin almost 9%, a little bit down versus last year. But I'm actually satisfied what industry has done in total because of the, or in spite of the weak market. So here you have closer numbers about the different segments. I think I've said the most here, but we had in product solution a net sales growth. Ibita again up 21% in Ibita. If we look at product solutions, we were 7 millions behind last year. I can tell you that those 7 millions is a one-off in Diab. And that sounds strange, but we don't take one time costs and adjust for them if they don't reach 25 million. So it was a flat EBITDA quarter on an operational level. If we go into construction, the net sales decreased a little bit here also with 3%, organic 4%. We had a little bit lower sales in the quarter. And that is basically, I mean, I've said that before that when it comes to sales, we should look on last 12 months because it's very much about project facing. For the whole business area, EBITDA grow 30% in this market. And Sentia, which I talked about earlier, they had a very strong Q4. EBITDA margin 9.5% for construction and services. I'm extremely satisfied with that. And again, order intake up, not a little bit. And order backlog amounts to 29 billion now, and that is excluding Abel, who has a very, very strong order book. If we look at the segments, construction is actually down a little bit in sales, but EBITDA is growing with 40% and a EBITDA margin of 5.9%. Order intake, as you can see, stronger than last year. Order backlog still also higher. In critical infrastructure, Precise Infra and Able has performed very well. Xspin Group is not performing well, but they are performing much better than one year ago. Sales up 8%, EBITDA in critical infrastructure up 23% and the adjusted margin is 19% compared to 16.4%. We had a temporary low order intake in this quarter, but the order backlog is stronger than one year ago. And then we come to consumer. I think I've said the most, but net sales decreased. We have closed a number of stores, but also the market has affected the sales. Adjusted EBITDA down to take the inventory down when shops have been closed, so that has affected the EBITDA and the EBITDA margin. Adjusted EBITDA margin, minus 22, we had minus 15 one year ago. I also want to mention actually that KVD, they are also working in a very tough market. And if you look for a full year, they actually are showing a little bit better result and better EBITDA margin. And I think that is strong given the market they are in. So with that, I will leave over to Mattias, who will take you through the financials. Please, Mattias.

Thank you, Jonas. Yes, net sales in the quarter were down 3%, organic growth was also down about 5% and this is mainly due to the consumer business area. The full year net sales was 32 billion and that is 5% down from last year. Adjustable beta was up 23% in the quarter and both construction services and industry had very positive development compared to last year. If we look at Adjustable beta full year, we have about 2.3 billion and that is up 4% compared to last year. If we go to the items affecting comparability, we have some large items in the quarter, a total of 256 million. And this is mainly due to reconstruction implantation, which is a bit over 200 million. If we go over to the cash flow, we had a strong cash flow in the quarter. It was 1.4 billion. And this is mainly due to the change in net working capital in the business area of construction and services. Cash conversion was amounted to 350% in the quarter. If you look on cash flow from operating activities full year, this was 3.4 billion. This was down a bit compared to last year, but still a strong cash conversion of 148%. If you go to net working capital, this has continued to decrease for each quarter. And at the end of the year, it was negative 0.5%. I would say that this is a normal. We had also negative last year in Q4. And it's due to a lot of... This will not continue to be negative, I would say, in 2025. Main items was accounts receivable, which was lower, but also we have a higher net of other liabilities and receivables. And this is mainly due to less advanced payments to suppliers and also effects of the reconstruction implantation. If we look on the bridges, we can start with the net sales. As I said, the total net sales were down 3%. We had an acquired growth of 2%, which is primarily related to add-on acquisition in industry. We had a negative organic growth in the quarter of 5%. This is mainly due to volume, almost everything. And all business areas had negative organic sales growth. If you look on the FXFX, they were very small in the quarter and only amounted to 0.3%. Other is mainly due to X-BIN implantation. If you go on to the EBITA bridge, we were up 23% in the quarter. and acquired EBITDA growth was about 4% and related to industry business area. We had an organic decline of 38 million and that's mainly due to the consumer business. But it's also by both construction services and industry, which were had organic EBITDA growth during the quarter. FXFX was quite small. It was about 3% and mainly due to NOC and the negative results in the plantation. Other is mainly due to the XPIN correction last year, the reporting errors that we had that time. And if you go over to the leverage and everything and the financial statement, it was 1.3 times in the quarter, which is a bit up, same quarters last year. If I adjust for the items affecting comparability, we had leverage of 1.2 times. Net debt increased during the quarter, mainly due to the acquisition of the shares in Precise Infra, the minority shares. But it was offset by a strong cash flow, so the net increase was only about 60 million in the quarter. Compared to last year, we had a net debt that has increased with about 95 million. And as Jonas said, both Rose and Roik had slightly increased compared to last year. If we look a little on the financial targets, we see that the board has proposed a dividend of 1.35 SEK. And that is 57% of that yesterday net profit. And this is a little bit higher than the normal payout ratio, but it's mainly due to that we have a very strong cash flow during 2024. And with that, I'll leave over to you, Jonas, for the final remarks.