Ratos AB (publ)

Good morning everyone and thank you for listening in to the Ratos Q4 call. I will start by giving some highlights for the full year of 2025, an important and eventful year for Ratos. A year of change with several strategic milestones that created a more focused and streamlined company. I'll give you some examples. The sale of Airtim, a supplier of technical ventilation solutions in the beginning of the year. The listing of our construction company Sentia on the Oslo Stock Exchange in June. Since then, the share price of Sentia increased more than 30%. And last Friday, Sentia proposed a dividend of 5.5 Norwegian krona, corresponding to a dividend percent of 96%. Diab has continued its focus towards more advanced materials and applications into new industry segments such as subsea and defense. And we finalized the year with a major add-on acquisition in HL Display of the German player Deinser, the largest acquisition in HL Display's history. 2025 also came with challenges that required operational improvement projects in some of our companies, but also made a restriction in plantation that resulted in a reduced and more optimized footprint that is better set up for the future. Plantation is a different structure compared to when we acquired it in 2016. And we did the required balance sheet adjustments in the fourth quarter to reflect the new structure. Today, we also announced that we have divested Exbin Group to Barnet service, Norway's leading railway contractor. This is an important step in the continued streamlining of Ratos to strengthen our focus on long-term value creation. We're pleased that Exbin Group will be backed by Banu Service, a strong and committed owner, as the company continues its journey. And Anna will come back to the specifics on the financial impact. In terms of the overall market situation, macroeconomic and geopolitical uncertainty had a negative impact on the overall demand situation in most of the Ratos segments in 2025. But if we now turn to the isolated Q4, we started to see a gradual improvement in net sales, mainly driven by increased demand in the defense and energy sectors. We also want some major orders supporting future net sales. In Q4, HL Display secured orders in the UK and North America of around 500 million Swedish krona, to be delivered over two to three years. After the end of the quarter, Abel was awarded a five year framework agreement with an estimated value of approximately 20 billion Norwegian krona. And Precisinfra secured a five year contract worth about 900 million Norwegian krona. Overall, we expect the uncertain macroeconomic and geopolitical situation to continue to impact our companies and their markets. And if we now move on to the net sales development in Q4 and for the full year. In Q4, we saw an organic growth of 3% for continuing operations and two out of three business areas reported growth. Industry came in at plus 2% and construction and services at plus 9% and consumer at minus 4%. So all in all, for the full year, net sales came in at minus 1%. In Q4, our adjusted EBITDA increased by 57% compared to last year. EBITDA was positively impacted by lower losses in plantagen and the contribution from the minority holding incentive. DIAV delivered robust sales growth with improved profitability. The EBITDA market has improved in all segments except industrial services, where the general market uncertainty remained, with longer decision-making processes having a negative impact on our consulting activities. The full-year adjusted EBITDA increased by 17%. The 2025 earnings per share, or EPS, increased by 19% from 2.36 to 2.8 Swedish krona, supported by improved earnings and lower effective tax rates. The Ratos board of directors proposed a dividend for 2025 of 1.4 Swedish krona per share, corresponding to 50% of profit of the tax. This is in the upper span of our dividend payout ratio of 30 to 50%. And if we now turn to the development by business area in Q4. For industry, organic net sales grew by 2% and adjusted EBITDA declined with minus 17%. Within industry, product solutions had a positive organic growth of 6%, with EBITDA growth of 23%. GEA benefited from the strong demand across several industries and geographies. In industrial services, we saw net sales declining with minus 1%, with a 44% decrease in EBITDA year over year. This came from weaker performance among the consultancy companies related to overall slower market, especially in the automotive segment. The ongoing automation projects in Speed Group also put pressure on the profitability in the quarter. And for construction and services, we saw that Precise Info reported net sales growth in the quarter, But the profitability was impacted by the product mix and the timing of projects. We also saw a worsening market for rail electrification in Finland, and it continued to impact the Exbin Group numbers. Adjusted EBITDA increased with 39%, and if you adjust for the Centia minority contribution, adjusted EBITDA increased with 12%. At yesterday, EBITDA more than excluding minority holdings came in at 9.8%. If we now turn to consumer, we saw organic net sales growth of minus 4% and plantation was declining with minus 6% versus last year's Q4. However, if you do like for likes comparison, sales was slightly positive versus last year, and EBITDA increased as a result of the executed reconstruction. COVID-19's profitability was negatively impacted by the lower volumes, partly offset by cost saving initiatives. Adjusted EBITDA came in at minus 106 million, an improvement from last year's minus 209 million Swedish krona. And with that, I would like to hand it over to Anna for the financial section.

Thank you, Gustav. So let us dig through some details of net sales and adjusted EBITDA. so looking on the left hand side in the bridge of the organic components we saw a really good contribution from this three percent organic growth uh ebit margin accretion of 70 basis points uh on the m a side uh we didn't have a lot of activities uh of executed m a for the quarter hence uh zero or very limited contribution from that Hence, we were really happy to see the closure of signing of Geinser within HL display. Moving along in the bridge, we saw a really good contribution from reconstructing activities implantation, for which the closed stores contributed 130 basis points on our EBIT margin. fx continue to impact us negatively this stems predominantly of sec strengthening towards norwegian krona our associated company sentia contributed significantly 120 basis points and we should remind ourselves that the same period last year so q4 2024 we did not have this minority share in sentia so this is not a bridge effect it's a full effect Last but not least, our associated company, Able, contributed slightly negatively, so margin dilution of 30 basis points. This has to do of project mix, so it's a little bit lower profitability than we saw same period last year. If we would have looked at the full year bridge, ABLE would have been a positive contribution. And ABLE actually leaves this 2025 with record high order book and a record year behind them. So moving into next page, this was one of the important happenings during quarter four. We have conducted a reconstruction in Plantagen, which meant that we do have a vastly different footprint. We've gone from having three markets in Nordic countries to two markets. We have closed down one third of our stores. And historically, Plantagen could generate revenues of 5 billion SEK and had EBITDA margins of above 15%. This is vastly different now. So the 2025 year ended at 3 billion SEC in sales. And what we were happy about is that the full year we reported a 5% EBITDA margin. But due to this vastly different structure, we made a conservative estimate here and hence an impairment of goodwill was booked in quarter four. Going forward, however, we do feel that Tantashen is a more resilient company. And also, it was good to see that we have broken this negative sales trend in Q4 and posted slight positive growth. So going forward, the focus will be of delivering profitable growth. And we are really happy of a new CEO joining as of April. Another important happening was that we signed a contract to sell Expin Group. This is one of the major overhauls that has been done during 2025, where we exited direct exposure towards construction industries. but also that we've decided that we are not the best long-term owner for the exping group and hence we are really happy to see bonus service a reputable and committed owner to support expand continuing journey This has resulted in a negative impact on our reported results of minus 800 million SEC. This is non-cash and that this has been booked in quarter four. We also do expect positive cash flow impact upon closing. Also, what is important just to remember that we do have a couple of different ongoing disputes. as we did discover some accounting differences, accounting deficiencies post our acquisitions back in 2022. This of course would constitute an upside going forward. Turning our attention to networking capital, a big impact here is our disposal of Centia, as Centia normally comes with highly negative networking capital. So we should focus on the gray bars. And comparing this quarter with same period last year, we saw that the relative networking capital came down, even though we saw a slight uptick in absolute terms. This is solely explained by some timing issues in accounts payable in construction and services business area. And looking at our cash flow, Q4 is normally a strong cash conversion quarter. So it is this time around where we almost hit 200% cash conversion mark. But also here we did see impact from the structural changes, especially Sentia again. and some impact from Plantage and from last year. But if we look at on the right hand side and focus on the underlying development, we did see a solid increase of 67% up. The only business area not contributing versus last year was construction and services. And again, has to do with timing of accounts payable. Looking at our leverage, we peaked at Q2 2025, had also to do with a Sentia disposal as Sentia normally has a very strong cash position. Now we are back at pre-Centia disposal level, so very similar to last year at adjusted 1.4 times in net debt to EBITDA. And just as a reminder, our share in Centia is not included in these numbers. And just looking at the share price from yesterday, this amounts to 2.6 billion SEC. And last but not least, we would just like to conclude on our previous financial targets, which were adopted 2020-2021 and have been now concluded. So EBITDA in absolute terms, we said that we would take that up to 3 billion SEK. Looking where we landed, and if we adjust for Sentia and Aire team, adding that back, 2025 is at 2.7 billion versus the three in target. Hence, we did not achieve that. And looking at, so we should have grown EBITDA by 15%. Our actual was 13. So close, but not there. Looking at our leverage target, in the graph, you can see that our average is 1.2 times, whilst the targeted range is 1.5 to 2.5. We can say that we have seen a lot more disposals in the past three years than acquisitions. Hence, the leverage is slightly lower than what the financial target would indicate. And then the third one was the dividend payout ratio. As Gustav said, for this year, the board has proposed 50% payout ratio. But if we look at the past number of years, the average has been 52. So now I hand back to Gustav for some final remarks.

Thank you, Anna. And I would just like to briefly summarize the year and the quarter. So 2025 was a year of transformation with several strategic milestones and operational initiatives towards a more focused Rotos. In Q4, we started to see gradual improvement. We returned to net sales growth. We improved the EBITDA. We won large orders. and we also did a very important add-on acquisition in HL display. Going forward, we expect continued macroeconomic and geopolitical uncertainty to continue, but the Rotos team ends 2025 with a measured optimist going into 2026. We would also like to invite you to our Capital Markets Day on March the 19th. It starts at one o'clock here in Stockholm. So if you're interested to participate, please send an email to the address here on the slide for registration. I will present our strategy going forward and Anna will present our new financial targets. But there will also be presentations by our companies and CEOs from Diab, HL Display, Nitech and Precise Infra, some of our very important platform companies. So welcome. And with that, I would like to open up for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Henrik Hintz from ABG Sundal Collier. Please go ahead.

Hi, this is Henrik. First of all, on XPIN, I was wondering if you could just specify what types of costs were included in this figure that you adjust for in the quarter. And secondly, I was wondering if you could maybe give us the sales and adjust to the beta for 2025 that XPIN contributed with so that we can kind of know what to expect after the divestment here.

Thank you, Henrik. Starting with your first question. So minus 800, which impacted our operating result. You can see that as a capital loss in its entirety. And then we will see what the actual cash flow impact will be at the date upon closing. Our best estimate now is that it's going to be 50 to 70 million SEC. And in regards to the full year results for Xpeng Group, we are at 650 million SEC in sales and we have minus 36 in EBITDA.

Okay, great. And after the divestment, Precise Infra will be the only majority owned company left in the construction services segment. Should we review that? Should we view that as precessing from maybe also being a target for divestment or how will you view the structure after that divestment?

Hi Henrik, it's Gustav here. So Precise Infra, we see it as one of our core platform companies. We also see good opportunities for attractive add-on investments there. So we are very proud owners to Precise Infra and will continue to be so.

And just maybe to add flavor, Precise Infra has shown significant organic growth in the history. We also have really good return on capital employed and we see these M&A opportunities to scale and add to the business.

Okay, very good. And maybe one more question from me. The profitability in the industry segment here in the quarter was down quite a bit despite organic growth in the quarter. So I was just wondering if you could maybe give us a bit more detail on the drivers there.

I think I can take the overall picture and then I will compliment here. But I think if you look at the technical consultants in the last couple of quarters, it's been a bit weaker demand. The activity is not fully there. That has an impact on the profitability. And then we've also had some market and product mix in our specific portfolio that has this impact on the overall profitability. And then I think I mentioned that we are investing in automation that will drive future profitability in this segment. However, in the quarter, that has a negative impact on the margins.

So and that was that is for speed. So speed is doing these automation project which of course come with additional cost up until the automation is up and running. So that's the one we also have had a weaker biotech segments and and so TFS is also contributing to this decline.

Okay, very good. Thank you. That's all from me for now.

Thank you, Henrik.

The next question comes from Bjorn Olsson from SEB. Please go ahead.

Good morning, guys. First on Able, you mentioned that due to the product mix, you see a sort of deteriorating margin. Could you give any guidance if this is to be expected for the years to come as well, or if this is more of a one-off?

I would say like this, not deteriorating project margins. I might have misspoken. It's lower profitability than it was last year. It's still great. So that's only in comparison with Q4 last year. I would say, of course, it's a project business. You can never know for sure. But we don't expect any material change from what we've seen in this very good 2025. Okay.

So flat-ish margins ahead.

I would say so. And then it depends how much new project, how much change orders, how much maintenance is in there.

And like I said, Anna and I, we were up in Haugesund visiting Eibel and it's a very impressive and well-run operation. And I came back from that visit with a strong, positive view on the offshore segments in the area. years to come here. And I think the indication from these large orders of the 20 billion, and that could actually be more in the coming years, is one indication that it's a very strong company, Abel, with a strong future.

Great. And on XPIN, you mentioned that you have an ongoing legal dispute. Could you give any figure and timeline of a potential resolution and if sort of in what ballpark we talk about in terms of financial amounts that you could see as an upside potential?

Yes, thank you, Bjorn. I think there is processes ongoing. We don't want to go into the details on those processes. I think that's important to say. They have to run and we have to follow them and work with them closely. So I think it's too early to say the financial outcomes of those processes.

And I would say these kind of disputes, Bjorn, they can take a very long time. So it is difficult to judge, but it's a substantial amount.

Okay, clear. And just final question. You mentioned the automation investments in speed. When do you expect these to start yielding, improving efficiency and so forth?

I think it's very exciting times now on the automation overall, the trend in the warehousing sector and 3PL and so on. So it's very important to do those investments to have a good offering in also the years to come. Right now we are in a very exciting phase where we start to go live with these projects and these new solutions. And then starting from the coming quarters, we will see a gradual increase bigger automation of those volumes going through our different warehouses. So I think small start and then we will accelerate into Q2, Q3, Q4. So that's the plan we have at the moment.

Okay. Thank you, guys.

Thank you.

The next question comes from Georg Atling from Pareto Securities. Please go ahead.

Good morning, Gustav and Anna. I just wanted to come back to the margins here in industrial services. So I'm wondering, first of all, how much of that margin contraction is speed and how much of that is the technical consultants? And then second, your predecessor, Gustav, guided for 80 million in the cost synergies in the Nitech-Semcon merger. I'm just wondering if you still stand by that estimate.

Yes, I think I can start and then I will continue. If we start with the margins, there is a slight decline in the industrial consulting or technical consulting segment. I think if you look at the industry as such, I think if you take Nitec Group, they're holding up well if you do a benchmark of the other companies. However, there was a bit of what we call market mix with more volumes from markets outside Sweden that impacted a bit. And then we had speed, as we mentioned. If you look at the synergies then that we have been working on the last year or so, if I remember the call correctly, it was added from 50 to 70 million. And I keep the 70 million on the synergies. You saw some of them in the quarter. I think it was 10 million in the quarter. So we're on a run rate of 40 million. And somewhere mid into this year, we expect to be at the 70 million. And I stand behind those numbers as well of the fiscal year 2026.

That's very clear. Second question on capital allocation. So, I mean, if you treat the central position as cash, you're almost in net cash and still the dividend wasn't that big of a hike and no comments on buybacks either. So just wondering what the plan is here on the capital allocation. Are you going to ramp up M&A or are you going to make sure that you aren't going to end up in net cash for too long?

i think that's that's a big part of our strategy yeah or that we're now developing the capital allocation strategy going forward we have talked a lot about focus we've talked about streamlining but we've also talked about add-on m a on our key platforms but i would like to come back to the more detailed strategy going forward on the capital markets day the 19th of march yep that's uh clear uh just final question on

I appreciate if you don't want to go into too much details here, but you've been at the helm now for a couple of months. Just interesting to hear your first impressions and also what you want to do with Ratos in terms of divestments and acquisitions. Is it any different to what the strategy was before you came on board?

Thank you for that question, Jere, because I really enjoyed my first time here at Ratos. I started on 1st of December and I said I really want to visit all the companies, meeting all the people. That's key for me, understanding the leadership, the CEOs, the management teams. And I've been very impressed. I mean, of course, some companies, they have challenges, but they also have a lot of opportunities. So for me, it's really learning the business from the ground up and being very interesting in what our companies are doing. From that knowledge base and together with the leadership team here at Ratos, it's really to thinking about how can we add value? Where can we add value to the companies? Where can we add value to our investors and our shareholders? And from that, we will then do this kind of streamlining strategy, as I mentioned, into focusing more on a couple of the platforms we now have and drive growth there from organic growth, but also from add-on acquisitions. So that's something we are working on. So that's a bit of the ingredients that we will add to the capital market stay strategy. But exactly what that will be is... We need to... I don't want to disclose that now. We'll come back to that on the 19th. But I think Rotos has a fantastic opportunity to create a lot of value. We need to take some tough decisions for sure. And I think we showed that in Q4 that we did. and we'll continue to do that going forward with the end aim to create shareholder value so that's what i can say today okay thank you very much that's all i had thank you thank you the next question comes from johan schuberg from kepler please go ahead thank you and uh good morning to to you um

First, Gustav, maybe you could talk a little bit upon what you see now going into 2026. I mean, given your company's big share of sales towards the Nordics, where you see better PMIs in general and also potential impact also from lower interest rates as the Nordics starts to cut the interest rates earlier than the rest of the markets. Could you talk something about it? Do you see any change whatsoever in terms of sort of sentiment among consumers or the industry, please.

Absolutely, and that's actually something I spent quite a lot of time on reading report, looking at the new KPIs and indices coming out about the business cycle going forward. And I think if you look at the consumer sentiment, it's not me saying, I'm just looking at data, but that's more positive in the end of the year and the beginning of this year. So I think we see positive signals there. And as you can say, if you look at the plantation numbers that we mentioned previously, that's also a positive signal. I mean, I also think if you look at biotech, clinical studies, et cetera, an area that I've spent some time on previously as well, you see positive signal there as well that more of these mid-size biotech companies and pharmaceutical companies will run more clinical studies going forward. And then overall Nordics, I believe in the Nordics, and I think it's really a pleasure working with these countries, both Sweden and Norway, that is the majority, I think it's up to 75-80% of our revenues, that that will develop well. So I see a lot of positive signals. On the flip side, maybe you can see the more industrial cycle with impacting our technical salting. We are a bit cautious there. We want to see that demand coming back and we see it in some segments. We mentioned defense really growing nicely and strongly. We mentioned energy as well. But if you look at automotive, that is a bit more challenging. So, of course, we serve a lot of markets, but I just wanted to give you some important highlights from some of those markets that we serve. Yeah, got it.

And I can ask you on the book value now of Plantagen, how much do you have it on your books now? Because I mean, we are sort of used to, we have seen a lot of write downs, I must say, over the years for us who is sort of And I keep getting surprised, but there is more to write down, to be honest. Where is the book value now in Plantagen?

I would say you won roughly, it will be around one billion, and then you have the leasing debt on top of that, which is additional two.

So two out of the 3.6 in the leasing is from Plantagen? Yes. Okay, good. And then also just coming back to you, Gustav, maybe you could, you obviously now you met up with all the companies here. What was sort of the rationale or I understand the XP acquisition has not really worked out as you had hoped for. And I mean, obviously the market against you, you got the fraud and everything like that. So it was very unlucky, of course. But what was sort of when you messed up, but then looking at it, what was sort of why did you decide to this is not the segment where we should focus going forward here? Because I mean, if for us on the outside, I apologize for my lack of knowledge here comparing XP with the precision for but it seems like sort of these are the similar segments. So why why did you decide to exit this and also at this time of the cycle, given that your early comments that hopefully you would see better, better markets in 26 going forward?

I fully understand and respect that question. And I think it's also about performance. So we have one company performing extremely well, serving more road infrastructure, maintenance, especially in the Nordics, but also in Sweden. And if you look at... Exping Group, that was not fully the case. I mean, there is good trends in the Swedish market. Finland has been extremely challenging, and I think we mentioned that in many quarter reports. So I needed to go into my new position here and look at the companies where I believe we can add most value and grow companies. From that analysis, together with the management team and Annan here, we came to the conclusion It's better that we focus our energy, time, capital on platforms that in the ratus ownership where we can add most value going forward. So it's really from a capital allocation, value creation analysis that we came to that conclusion. So that's the back. Got it. But I believe, I mean, it's a potentially good market going forward and so on. But I think a bonus of it would be an excellent owner of XBIN Group going forward. Yep. Got it. Thanks a lot. Thank you.

Thank you.

The next question comes from Linus Allenton from Nordia. Please go ahead.

Good morning Gustav and Anna. Just a quick couple of questions here from me. I mean you secured major orders here for HL Display, Able and Precise Infra. I was just wondering if you could provide some more visibility here on when you expect these could convert into revenue and does this give you confidence into 2026 here despite the uncertain market uncertainty?

So Linus, if we look at Able, this is a five year contract. And you can roughly just divide it by five, these 20 billion that we got. That's how that looks. For Precise Infra, it's the same thing. It's a five-year contract for those 900 million NOK. and then last but not least the hl display these 500 million sec are spread over two to three years and if we look at our current order backlog i would say it's roughly one-third to be delivered in 2026. so we do feel conf confident uh that this is a good sign um that orders are coming now And also one thing worth mentioning is that for Able, we already have that kind of a frame agreement with Equinor. So this is a repeat. On the other hand, the value has increased a little bit. So 5 billion NOC extra versus the previous period. So it's a great base load.

Okay, super, super. And just one question here on the... uh continue on the capital location here uh i was just wondering i think someone else mentioned it by buybacks here uh is this something that is on the table or do you see the mna pipeline here is strong enough to deploy capital there instead

Linus, that's often a question you get. I think today we announced what the board proposed in terms of dividends. So that historically has been the focus of LOTOS for sure. Then we have an interesting pipeline of add-on acquisitions. So I would take it in that order. And you should never say never on buybacks, but it's not our primary focus right now.

Okay, thanks. And just one last question here regarding the shares in Sentia here, if you could perhaps give some more flavor regarding your thoughts here on this position.

Yes, for Centia for sure. And I recommend all of you to look through and listen in to Centia's report last Friday, where they had really interesting presentations about data centers, etc. And so that's good material that you can take a look at. I think for meeting Sentia, you know, understanding Sentia, I'm impressed by the company. I'm impressed by the market they serve and they're well positioned in that segment. And I'm optimistic about that segment into 2026 as well. And they also have a strong operation, as you know, in Europe. in Sweden. And I've been visiting some of the construction sites and so on. So I think that's a strong place to be in into next year as well. So I'm positive towards our ownership in Sentje.

Okay, super. That's clear. Thanks for taking my questions.

Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Yes, thank you to all of you for listening in to our call and your questions. So if I summarize a bit the whole call, 2025 was an important and very eventful year for Ratos and we're now working really hard to drive strong performance into 2026. So I also hope to see many of you at our Capital Markets Day coming up when we present our strategy and financial targets going forward. So with that, a big thank you to everyone dialing in. Thank you.