Ratos AB (publ)

Good morning and thank you for joining us today.

I will start by taking you through the main events in the quarter before Anna walks through the financials in more detail. I would say that overall Q2 was a strong quarter for Ratos. We deliver profitable growth in what is typically the largest and most important quarter of the year, supported by solid development in our industrial products companies and signs of stabilization in our industrial services companies. Net sales increased by 3.4%. Adjusted EBITDA came in at 988 ms, corresponding to a margin of 17.3% and an EBITDA growth of 14%. Adjusted earnings per share was 1 krona and 97 öre, an increase of 20% compared to last year. We had a strong cash flow and cash conversion in the quarter with underlying cash flow growing by 20% and a cash conversion reaching more than 100%. During the quarter, we continued to execute on Ratos 2030. The strategy we launched at our capital markets day in March, and I will now highlight the key actions we took in Q2 and how they linked to our strategic objectives. Under a strategic objective of building a more focused Ratos, we took several important steps during the quarter. We reduced our ownership in Sentia from 40% to 31%, bringing our stake to a level consistent with our long-term ownership ambition. Sentia has been one of Ratos' stronger investments. With an IRR of around 30% over 13 years, we have owned and developed the company. We're also pleased to be able to report that we received 200 million SEC from our M&A insurance linked to the Xfin Group transaction with a positive cash flow effect in the quarter. During the quarter, we have also been focusing on our divestment processes related to our non-core companies. TURNING TO OUR STRATEGIC OBJECTIVE OF DRIVING PROFITABLE AND CAPITAL EFFICIENT GROWTH, WE MADE PROGRESS IN SEVERAL AREAS DURING THE QUARTER. PRECIS INFA RECEIVED A MAJOR ORDER OF NINE HUNDRED SIXTY-FOUR MILLION RUB FOR OSLO GARDENMUR, COVERING A FIVE-YEAR PERIOD. HOLD DISPLAY ACQUIRED UFO DISPLAY SOLUTIONS, AN AUSTRALIAN DISPLAY COMPANY, STRENGTHENING THE POSITION IN THE AUSTRALIAN MARKET. Finally, under the objective of developing ways of working, we continued to strengthen our model as an active and long-term investment company. One example is a recruitment of external senior leaders and experts as chairs of the boards in selected companies. I would like to welcome Dr. Holger Rubel as chair of the board in Ledil, Lisa Åberg as chair of the board in Aleido, and Magnus Håkansson as chair of Covide Group. And I would now like to move to performance of our companies, which we have categorized, as you know, as core and non-core. Our core portfolio is where we concentrate ownership, attention, and capital to drive profitable, capital-efficient growth over time. Turning to our industrial products companies, DIAV's strong performance continued in the quarter, delivering 16% organic growth, supported by increased demand from defense customers and profitability improved on the back of the higher volumes, but combined with lower depreciation. We also saw a strong development in return on capital employed. HL Display reported 5% organic growth, supported by electronic self-labeling or ESL rollouts. Margins were impacted by product mix and the Dynastar acquisition. HL also did their second add-on acquisition in the year by acquired UFO Display solution, strengthening HL's display on the Australian market. Lidl delivered 2% organic growth driven by the indoor business, while the outdoor business continues to face a more subdued market environment. We also saw improved gross and EBITDA margins. Returning to our industrial services company, market conditions continued to be more challenging. Aledo reported a negative minus 4% organic growth. The overall market remains cautious and the main bright spot is increased orders and activity in the defense segment. Aledo has been driving successful efficiency measures that resulted in a strong EBITDA development compared to last year. For Nitech Group, demand stabilized in the quarter with continued favorable development within the defense customer segment. And Nitech Group also worked with reallocation of resources to growth areas and organization and delaying to drive stronger performance going forward. Speed grew 23% organically from larger new contracts and pricing renegotiations. A big focus for the company is the rollout of the automation project that impacted profitability in the quarter. But we saw a sequential EBITDA improvement from last quarter and the automation project will continue Q3 and Q4, but we will have a positive impact from next fiscal year. TFS delivered 12% organic growth, primarily driven by an increased share of pass-through revenues while service revenues were down. It's positive to see that TFS received orders in the quarter in the dermatology area that will support service revenue growth going forward. Moving now to our infrastructure segment. Precise Infa delivered a 4% organic growth in the quarter, and profitability was somewhat lower, mainly driven by product mix and timing from effects in starting up new projects. Precise Infa won a major order for Oslo Gardermoen of $964 million in winning tuna over these five years. And now moving on to our minority holders. ABLE now have a record high order backlog and we're seeing improving sentiment for European energy industry following the conflict in the Middle East. In the quarter we benefited from successful product execution as well as a more favorable financial net. For Sentia, the share price has increased by more than 50% since the listing in June 2025, and we also received a dividend from Sentia in Q2 of approximately 220 million kronor, corresponding to Ratos' share. And in the beginning of June, we did a sale of the existing shares from 40% to 31% in Sentia to institutional investors, and further improving our long-term free float and liquidity in the Sentia share, and also reducing Rato's ownership to a level consistent with its long-term ownership ambition. The gross proceeds from the transaction amounted to approximately 650 million Norwegian kronor. And lastly, a brief update on our non-core consumer companies. KVD delivered a minus 9% organic growth impacted by lower used car volumes. Forsberg's Fritidscenter continued to perform well with a strong order backlog. Oase Outdoors reported plus 17% organic growth in its largest and most important quarter, and gross margins also improved as a result of initiatives to optimize product cost. Plantagen delivered 3% organic growth, primarily driven by positive development in the Norwegian market, and the gross margin was robust, but EBITDA margins were impacted by marketing investments. And with that, I would like to hand it over to Anna, who will take us through the financials in more detail.

Thank you, Gustav. And without further ado, let us have a look a bit more into details. I would like to highlight that this is the third consecutive quarter of organic growth. And also now we are seeing a last 12 months organic growth of 2%, which is really good to see. Looking at EBIT improvement, EBITDA improvement, it grew healthy by 14%, but also it was a solid plus five, excluding our associated companies. And then digging a bit further on each and every component, we saw a healthy drop through of 15% from our organic growth, But we did see some bits and pieces moving around in that EBITDA contribution. So for instance, speed, had quite a negative contribution on EBITDA line compared with last year. What is good to see is that speed has moved to black numbers and has also sequentially improved. But of course in this bridge, it's highly negative contribution on EBITDA. This was offset, more than offset by very strong DIAB who contributed both from top line and EBITDA perspective. Moving into M&A piece, we have two major items moving in there. It's Expin, the disposal of Expin. And if you remember, Expin was a loss-making company, hence it comes with a good contribution on EBIT here. And also for HL Display acquired Dynesir. Dynesir is a quite a sizable acquisition, but unfortunately due to they have quite pronounced seasonality, out of which Q2 is their weakest quarter, and they were actually loss-making. But still, these two components together were margin accretive of 40 basis points. Moving further down into the bridge, we have the FX component. We have turned a corner, and now FX is in positive territory. This stems from Norwegian krona strengthening towards SEC. It's a translation FX impact. On the other hand, it had a neutral contribution to our EBITDA margin. Then CENTIA, a meaningful contribution of 100 basis points versus last year. We should remember that CENTIA was not part of the Q2 2025 numbers. And also worth remembering that as of Q3, we will no longer have this large bridge item. If anything and all else equal, as we have gone from 40% ownership share in Sentia to 31% ownership share. And all else equal, this should be a negative bridge item as of Q3. ABLE, good to see, positive contribution, 40 basis points on our margin. It has to do of ABLE actually during 2026 being very good at executing on ongoing projects, but also we saw lower, less negative net financial items compared with last year. And digging a little bit further again, I would like to highlight some items. I think it's great to see that Ledeel has turned the corner, posted organic growth, and also managed to improve their gross margins against EBITDA margins. NYTEC Group, it could be under the headline, flattening out. That's good, even if it was on admittedly easy comparables in last year period. Another comment that I would like to make is in regards to Precise Infra, where we saw a solid organic growth, but as you can see, negative contribution on EBITDA line. This, I would say, has rather to do of having quite difficult comparables in the same period last year. And also, as previously mentioned, we are now facing a project mix where we have a larger share of new projects, and these projects come with slightly lower margins up until we are efficient enough to increase them. So I would say nothing funny going on there. And then last but not least, of course, Plantarsan. This is their most important quarter. We saw plus 3% versus last year, again, on easy comparables. Of course, we would have wanted to see more here, but we are happy that we are in positive numbers the second quarter in a row. And also we managed to increase EBITDA by 8 million. We also, just to mention one another thing, that gross margin was good in Plantation, but we did make some marketing investments to support Plantation going onwards. And just looking at Plantation, we have had a year and a half of focusing only on costs. we would like now to move into phase where we actually focus on the commercial side of things. Hence, we believe it was the right thing to do with these marketing investments during the quarter. And now addressing networking capital, relative networking capital hovers around 7% for several quarters now in a row. So nothing major going on. Looking at it sequentially, we saw a bit of decline. So we released some networking capital supporting our cash. And going to cash, I would say that there were two major drivers. One is strong result. The second one is networking capital release. But there are some bits and pieces moving around in our cash flow. Hence, I want to dig a little bit deeper. So we saw a staggering 40% increase in reported cash flow. However, if we were to look at it a bit more operational and a bit more like for like, we adjust for discontinuing operation in the first step. And then if we look at our industry segments, I would like to give a lot of credit to industrial products. We saw a very good cash generation versus the same quarter last year. I would say it's driven by good results, but also good collections going on in some of our companies. For industrial services, also a contribution versus last year. Not so much about results, but a bit more on collection and inventory side. For consumers, this is unfortunate, as Plantagen had fantastic cash flow improved with last year, much due to the inventory reductions. But here for KVD, due to very solid markets within motorhomes for Forsbergs, they had a bit more inventory on that side, hence a negative cash flow contribution versus last year. and some slippage of orders between Q2 and Q3. And looking in infrastructure, which is essentially precise infra, nothing major going on, a bit of an unlucky timing between Q2 and Q3. So 20% underlying growth, good cash conversion above 100. And then on top of this, M&A insurance, this is real cash, 200 million SEC, and also Sentia dividend, which we received during the quarter, taking us up to that high number of 1.5 billion. A couple of comments on return on capital employed. If we look at on the reported numbers, the main effect and the driver behind the decrease is Sentia disposal or that we IPO Sentia. As you might know, Sentia is asset light. hence has always come with high return on capital employed, hence the reported RUSE is down. But if we focus on the underlying or adjusted RUSE, where we are adjusting for its continuing operation, but it's also excluding our associates, we see a good trend line taking us up by 100 basis points in the past two years. The major driver, I would say, industrial products again, DIAB in particular. When it comes to industrial services, this is a long-term metric. We still are suffering from lower results from majority of our industrial service companies, not to say all. And one last comment, due to this excess cash that we received in quarter two, we decided to repay some debts amounting to 800 million in the quarter. which is, of course, part of the capital employed piece. And now, looking at our net debt EBITDA, we see significant deleveraging and taking our leverage down to one time. This is, of course, below our targeted range of 1.5 to 2.5 times. BUT AGAIN THESE ONE-OFF ITEMS HAVE BEEN SIGNIFICANT IN THE QUARTER SO CENTIA SELL DOWN 650 MILLION SEC M&A INSURANCE 200 MILLION SEC CENTIA DIVIDEND ADDITIONAL 221 MILLION SEC AND OF COURSE THE SOLID OPERATIONAL CASH FLOW IN A VERY IMPORTANT Q2 THIS MEANS THEN THAT LEVERAGE IS POSTED AT A VERY LOW NUMBER. BUT I JUST WANTED TO REMIND YOU A DIFFERENT PERSPECTIVE TO TAKE HERE IS RATOS HAS SUCCESSFULLY DURING THE PAST 12 MONTHS RECEIVED NON-RECURRING CASH ITEMS AMOUNTING TO 1.6 BILLION. THIS INCLUDES ALSO THE SETTLEMENT of 700 million in cash, which we received in Q3 last year. If I were to adjust for this, of course, this is a theoretical example, but then our leverage would rather be 1.7 times. But again, what this picture illustrates is of course that we do have high financial flexibility. And what it all boils down to is of course, EPS growth. And we are happy to see year over year, 20% increase taking us just below two krona. But also on the LTM basis, I would say the growth is even higher. It's almost 40%. What makes me additionally happy is that we see accretion throughout the P&L. So it's not just of us growing the underlying result, It is us having lower net financial items supporting EPS, but it's also, if we just look at the tax line, it is in line with last year and that this has to do with us having still some tax losses carried forward. So tax is also supporting. we have a lower share of non-controlling interest that is also supporting and taking us down to this very very nice EPS and just one comment we shouldn't get used to a low tax rate reported tax rate was at 12 percent our normalized tax rate is rather in the range 18 to 17 to 19 percent So very happy to see this EPS working with us as well. And now I would like to hand over to Gustav for some conclusions and summary.