Storskogen Group AB (publ)

Good morning and welcome to the presentation of Storskogen's report for the fourth quarter and full year of 2025. I'm Christer Ahnsson, CEO of Storskogen and with me today is Lena Glader, our CFO. As we close the year, operational execution has remained our top priority. We have continued to strengthen our balance sheet and financial position throughout the year, while navigating an uncertain macro environment, and we are now in the new phase where we are able to increasingly focus on achieving long-term growth. Storskogen is a diversified international business group with sales of approximately 33 billion SEK over the last year and adjusted EBITDA of approximately 3.1 billion SEK spread across our three business area services, trade and industry. At year end, the group consists of 114 business units with an average annual sales of around 290 million SEK. On this slide, you may note a new face. Jesper Kronstrand has joined the group as head of business area services, and he is succeeding Peter Ahlgren, Storskogen's first employee beyond the founders and a key architect of the group. We are very pleased to welcome Jesper, who most recently served as the CEO of our business unit, Suvant. I will return to some additional management comments later in the presentation. Turning to the highlights for the quarter and the full year. I'm pleased that we, for the first time since 2022, conclude the year with organic sales growth in the quarter of 5% and 2% for the full year. On the other hand, in terms of profitability, the picture is mixed across the business areas. For the quarter and the full year, we had the decline of 5% of the adjusted EBITDA, which includes significant FX transaction effects. During the quarter, we completed four acquisitions with combined annual sales of approximately 142 million SEK. We had a share buyback of 100 million SEK that came to completion in January. Overall, I'm not satisfied with the full year outcome in absolute terms. Going into 2025, we anticipated the stronger sales, higher earnings, and clear margin expansions. However, given the environment we have been operating in, I'm pleased with the progress that we've made in many areas across the group. Our companies have delivered solid cash flows and done significant work on balance sheet discipline. This has put us in meaningfully stronger position and allow us to move into a new phase with more emphasis on growth supporting initiative as we clearly outlined already in Q3. Operational focus remain key as market continues to be uncertain, and that will remain our clear priority going forward to support our long-term growth. I'd like to turn briefly to our cash flow performance that continues to be a key strength enabling, for example, the just mentioned completed share buyback and resumed acquisitions. Worth noting Q4 last year was exceptional quarter while Q4 of 2025 is in line with our expectation as cash conversion is moving towards the 70% target. The year on year change is mainly due to change in working capital. In these fairly challenging markets, I'm pleased that the group is trending at around 2.5 to 3 billion SEC in cash flow on an LTM basis. This cash flow of the past year reflects continued discipline, operational execution across the group and remained fundamental to our business model and capital allocation. This slide illustrates seasonal variation alongside our solid performance on a rolling 12 months basis. Quarterly performance naturally fluctuates, with Q1 typically being the softest quarter, but diversification across industry, geographies and end market provides relative stability over time, as you can see on the right. even with ups and downs in underlying demand, the group's breadth supports resilient margins and cash flows, which is a core advantage of the Social Gogen model, which we will get into as we now take a closer look at the developments of the three business areas. In services, organic growth for the full year was minus 5% in net sales, whilst EBITDA showed a negative of 10%. The fourth quarter was softer for business services, while full year performance was broadly in line with last year. Infrastructure services were negatively affected by continued demand in construction-related segments. As always, Q1 is seasonally softer for services, But it's worth noting that Q4 of 2024, as well as Q1 of last year, provided strong indication of improved sentiment with strong margins. This changed quickly due to uncertainty related to global trade. Business units exposed to construction continue to be negatively affected. That said, the current comparables are quite unfavorable. Jesper Kronstrand steps into his new role as head of services bringing both experience from within the group and also adding fresh operational energy and focus as we continue to navigate a challenging market. Trade delivered positive organic sales and EBITDA growth for the full year as well for the fourth quarter and we continue to see a momentum into 2026. Consumer products was positively affected by improved demand and certain orders landing in Q4 rather than in Q1. Professional products was largely in line with last year, but improved margins. A strong SEC was margin supportive and Q1 continues to be a seasonally softer quarter even for trade. Overall, the development in trade compared to services provide a good example of the diversified approach in action, with services currently dealing with a bit of headwinds and trade benefiting from current tailwinds. In industry, the sales growth for the full year was 5%, with e-habitat declining with 5%. The negative organic profit growth was significantly impacted by unfavorable FX transactions effects. We continue to see FX headwinds in January as well. Divestments affects fourth quarter sales and EBITDA by approximately minus 2%. Underlying organic sales growth in Q4 was 7%. Development for industry compared to services and trade somewhere in between with order books remaining is solid and we're heading into 2026 with good visibility for parts of the portfolio. If we look at our capital allocation over the past 12 months, we've gradually begun to deploy capital towards selective acquisitions. For 2025, this sums up to nine acquisitions, three platforms and six add-ons with collectively annual sales of approximately 400 million sec and a margin north of 20%. We've also made one divestment in 2025 of Motabo Group, a chain of hair salon with annual sales of approximately 280 million sec and a margin below our 10% group target. The divestments is part of our continued effort to refine and sharpen our portfolio. With Haircare, we are increasingly focused on our exposure towards the B2B oriented businesses, where we see stronger structural attractiveness. More broadly, organizational and portfolio streaming has been an ongoing theme for Storskogen since 2024, with fewer verticals, clear investment theme and strategic divestment when relevant. With that, I will hand over to Ligana for more detailed financial review.

Thank you, Krister. Let's begin with the financial performance for the fourth quarter adjusted for items affecting comparability on this page. Net sales in Q4 came in at 8.7 billion, representing 2% growth compared to the same quarter last year. For the full year, sales declined by 3% to 33.1 billion. We will walk through the detailed sales bridge later on in the presentation in a while. Adjusted EBITDA decreased by 3% in Q4, and EBITDA fell by 4%. For the full year, both metrics were down 3% year-on-year, which means that our full-year EBITDA margin remained unchanged at 9.4%, as Krister illustrated before. There are three key drivers behind the year-on-year EBITDA decline. decline. First of all we had as mentioned a currency effect which continued to weigh negatively on results in Q4 and that also explained actually a large part of the EBITDA decline. Further, we had mixed effects, as we've also discussed before in this quarter. We have seen strong growth in verticals with somewhat lower margins, such as, for instance, the industrial technology within business area industry. That also explains part of the margin decline. And finally, business area services faced a tough comparison against the strong Q4 last year. And the slower construction market this year made it challenging to reach the same levels as Krister just described. On the positive side, however, we saw a solid margin uplift in trade and lower central costs, both of which contributed favorably to the margin development. EBIT for the fourth quarter was 640 million, down 2% year-on-year, and corresponding to a margin of 7.3%, compared to 7.6% in Q4 last year. For the full year, EBIT declined by 1% to 2.4 billion. We continue to see a positive development in net financials, supported by reduced interest margins and lower absolute debt levels. The lower funding costs combined with a continued reduction in the effective tax rate helped lift adjusted net profit by 2% in the quarter and by all in all 15% for the full year. You will find the reported income statement as an appendix to this presentation and of course in our financial report. Just noting that items affecting comparability, which is the difference between this one and the reported P&L, were in total minus 10 million in Q4 and minus 109 for the full year 2025. Let's turn to our financial KPIs, shown here from Q4 23 onwards. Our adjusted rolling 12-month EBITDA margin remains stable at 9.4%, broadly unchanged from last year, but below our target, which is more than 10%. Our efforts to reduce debt, our lower funding costs, Our increased tax efficiency and buyback of minority shares in our subsidiaries have all in combination resulted in seven consecutive quarters of steadily improving adjusted earnings per share measured on a rolling 12-month basis. Our adjusted EPS now stands at 0.70 Swedish krona per share. The return on working capital has remained above 60% for the past five quarters, reaching 62.2% in Q4. Our adjusted return on equity and return on capital employed are still not at the levels we ultimately want them to be. However, both metrics are trending in the right direction, we believe, especially return on equity. And our ambition is to continue improving these metrics over time. Cash conversion remained solid at 74% on a rolling 12-month basis, which is above our long-term target of more than 70%. In the isolated fourth quarter, cash conversion was more than 100%, signaling strong underlying cash generation despite lower working capital release this year compared with previous periods. The normalization from the above 100% conversion back to the 70 to 80% range is something that we have expected and we've mentioned in many previous earnings calls. Finally, our leverage ratio of 2.3 times is well within our target range of 2 to 3 and has trended down. This reflects the reduction in interest bearing debt thanks to strong cash generation and it provides us with strategic flexibility as we are resuming acquisition activity. So all taken together, this set of KPIs we believe shows that our financial foundation is strong. We maintain margins, improving returns, healthy cash generation and a solid balance sheet. Although some KPIs are below our own targets, we are all in all well positioned for 2026. Let's now turn to the sales bridge here on this page. We break down the contribution to sales from organic growth, structural changes and currency effects for both the fourth quarter and the full year. Organic sales growth for the group was strong in the quarter at plus 5% and plus 2% for the full year, as Krister highlighted earlier. M&A, that's a net of acquisitions and divestments, had a neutral impact on sales growth in Q4, but a negative effect of 3% for the full year sales development. Currency continued to be a headwind, also in sales, reducing sales by 3% in the fourth quarter and by 2% for the full year. Overall, we're of course pleased to see the contribution from both organic and acquired growth during the year and particularly in the fourth quarter. And then let's move to the corresponding EBITDA bridge. Overall, EBITDA declined by 4% in the quarter and 3% year to date. And I'll highlight three main key drivers behind this development, positive and negative. First, the impact of divestments and acquisitions combined with lower group costs added approximately 3% to EBITDA in the quarter. and 4% year-to-date. Second, currency translation effects continue to be a headwind. FX translation reduced EBITDA by 2% in both Q4 and the full year. These are effects from converting earnings in other currencies into Swedish kronas. And then finally, on the negative side, organic EBITDA growth was down 5% in Q4 and year to date. But it's worth highlighting that of this 5% decline, transactional currency effects related to balance sheet re-evaluation, primarily within our industry segment, account for roughly 70%, that's 7-0%, of the negative organic impact in Q4 and about 40% of the full year organic decline. So in other words, currency effects had a significant negative impact on our top line and an even greater negative impact on EBITDA. Let's move to the cash flow statements for the fourth quarter of the full year, starting with taxes. Our continued work on the tax side reduced paid income tax by 41%, or by 269 million Swedish krona in 2025, which we're, of course, very happy with. Next, changing net working capital contributed plus 232 million in the quarter, which is in line with our expectations. And this was driven by lower levels of inventory and accounts receivable in the quarter. Cash flow from operating activities reached 1.2 billion in the fourth quarter and 2.5 billion for the full year. This is also in line with expectations, given that we've anticipated a normalization of working capital in combination with the positive effects from lower interest costs and paid tax. Turning to investments. Of the 137 million in net investments in non-current assets in Q4, capex amounted to 171 million. This corresponds to a capex to sales ratio of 2%, typically a bit higher in Q4. For reference, Q4 last year was 2.4%. Acquisitions and divestments totaled 173 million in the quarter and 759 million for the full year. These amounts include acquisitions of minority shares in existing subsidiaries and some earn out payments. Cash flow from financing activities including leasing payments was 640 million in the quarter and 1.7 billion for the full year. Putting all of this together, net cash flow for the quarter was 201 million and for the full year, minus 508. Our cash balance at the end of December was 1.3 billion Swedish krona and total available liquidity was an ample 4.5 billion, including cash and unutilized credit facilities. And now let's move to a quick glance at the condensed balance sheet here. Total balance sheet amounts to 41.5 billion compared to 43.2 billion a year ago. Over the past 12 months, our total interest-bearing debt has decreased by roughly 800 million Swedish krona, And our net interest bearing debt is down by 180 million Swedish krona, supported by the strong cash flows we just walked through. During the quarter alone, net interest bearing debt was reduced by 675 million Swedish krona. I would also like to highlight that our equity ratio has continued to improve. now at 50% compared to 48% a year ago. And then finally, a quick glance at the debt distribution here. Over the past years, we have worked through our entire debt portfolio, both bank loans and bonds, with the aim of reducing refinancing risk by distributing and extending our maturities, and of course, with the aim of reducing also our funding costs. During the autumn, we refinanced our last shorter dated bond by replacing it with a 1 billion Swedish krona note with maturity in 2030 at a margin of 265 basis points. And with this refinancing now completed, we have no maturities until the second half of 2027, as illustrated here on this slide. You can also see here that our margins have been reduced with every new bond issue during 24 and 25. And I'd also like to add that both the larger term loan and the shorter or the smaller revolving credit facility do include extension options which would further strengthen our flexibility of course. And with that I hand the word back to you Christer.

Thank you Lena. Before moving into the key summary I would like to briefly highlight the two management updates. First, Jesper Kronstrand has been appointed the head of business area services, as I mentioned before. And Jesper most recently served as the CEO of Sovent Group, where he led the strong profitable growth, combining organic development with acquisitions. Since 2018, Sovent sales have grown from about 130 million SEK to 600 million SEK. JASPE brings deep operational experience and a strong understanding of decentralized service businesses. So VENT has about 40 subsidiaries and can be viewed as a mini Storskogen in some ways. And we are very pleased to have him to step into this new role. or this role. Second, Chris Pullen has been appointed the head of Storskogen UK on a permanent basis. Chris joined Storskogen in 2022 and brings extensive leadership experience from CEO roles across multiple UK based organizations. We are very pleased that Chris has agreed to take on this role permanently, providing stability, strong operational leadership and continued M&A expertise as we develop the UK operations further. And as we close the fourth quarter of 2025, here are the key takeaways. One, we deliver organic sales growth and see positive signs of an improving business cycle heading into 2026. Acquisitions resume as the second half of 2025 and Storskogen enters 26 with a solid position of continued value creation. Thank you for your attention and with that we are happy to take your questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Carl Ragnarstam from Nordia. Please go ahead.

Good morning. It's Carl here from Nordia. A couple of questions from my side. Firstly, on services, I, of course, acknowledge the tough comps you had last year. However, sequential deceleration versus Q3 10 basis points makes me a little bit puzzled. especially I guess since Q4 from a POC perspective should be favorable so could you help me understand a bit of that dynamic and you're also guided for a bit of a colder winter impacting some sub-segments entering Q1 so should we look at the same kind of year of year margin dropping Q1 as we saw during Q4?

Good morning, Carl. Looking at Q4 for services, it is a The sentiment for the construction part has been pretty much the same as we have seen in Q2 and Q3. So we have gone into that in Q4 with pretty much the same level as this year has been. And as you said, Q4 last year, we absolutely saw an uptick in margins. And we also saw that the sentiment was going in the right direction. however that changed as you know in kind of with all the turmoil in after kind of in Q1 and with the trade effects in April of last year so Q4 has been in line with Q3 for services okay and could also help a little bit on Q1 how you

look at the cold winter as you guided for, what impact would that have? And also if you can give some flavor on the comparison in Q1.

But as I said, I think Q4 of 2024 and Q1 of 2025, we saw margin expansions in services. And I would guess, and it's super hard to say now, we've only had one month. And January, as you know, is a is a small month starting off the year. But I would guess that we will see pretty much the same situation for our services business as we have seen in Q3 and Q4.

Okay, that is very clear. In trade you mentioned some kind of pre-buying Q4 at least orders were taking Q4 instead of Q1. Do you know what is behind that and also If you could sort of give some magnitudes on it.

A guesstimate is that it's like 10 to 20 million in sales. And there's been companies putting orders ahead of us, increasing prices. But my guesstimate is around that, 10 to 20 million sec of sales.

That's very clear. What is the price increase that you expect in Q1? Do you also expect to fully materialize the price increases given that your procurement costs are down due to the cheaper dollar?

I would say that 2026 and 2025 has been more normalized if you look at an overall level of our companies it's a more normalized way of a couple of percentage portion of the price increases yearly that will affect kind of coming evening in usually in January, February or March for different kinds of companies. But it is a more normalized level, the same level as prior to the inflation increase in 2021-2022.

Okay, that is also very clear. In the report, you talked about the financial targets, right, 15%. 25 to 27 earnings growth. With what you see in Q1 and I guess what you see in orders in industry, could you help with the building blocks a little bit from, I mean, obviously, your delivered balance sheet, your M&A pipeline and organic recovery and so on, especially for perhaps 26

Yeah, I mean, looking in when we set that target in, as I said, in Q4 of 24, we absolutely, as I guess most of the companies saw an uptick in 2025, which didn't materialize. So, of course, that's a disappointment for us of not doing the sales target as we wanted to come in. But of course, for us, We have the ambition to continue to take on that target, and that comes from acquisitions and, of course, a uptick in organic growth. And if we see what people are viewing now, that kind of the uptick in the economy will come as we further go in the year, that would help us, of course, in both trade and industry. And, of course, if we also see an uptick in construction sentiment, that would also help our services part.

And in 2026, do you see a greater contribution from M&A or organic or do you see 50-50 in general?

I would see a greater impact from acquisitions compared to 2025.

Okay, that is very clear. Thank you.

Thanks. The next question comes from Dan Heimer from SEB. Please go ahead.

Yes, good morning, Christian. A couple of questions from my side. Maybe starting a little bit on 5% organic growth in the quarter. My impression was in Q3 that you sound a bit optimistic on demand, primarily in Sweden. Meanwhile, you have some challenges now in services this quarter, as you spoke about. And I guess that mainly is Swedish business. So are you still as positive on demand now in general in Sweden going into next year? Or have you changed your I think I'm optimistic.

If further the year will go, I think we will see an uptick in demand, especially if we see that they materialize what kind of the growth expectation for Swedish economy. I don't have any other view than most of the banks and that will materialize during the year. So in 2026, I'm absolutely more optimistic for an uptick.

Yeah, makes sense. A follow-up question on trade. The continuous strength of the SEC, could you remind me a little bit of the lag between when you see the full impact? Is it like one or two quarters from when the SEC moves, so to say?

Yeah, I would say two to four quarters. It's a little bit different because you have, first of all, you have a hedge effect that companies, a lot of the Swedish trading, they hedge, so they at least half of what they're selling in its head. And then you also have to sell out the products from inventory levels. Do you also have an effect of that? But you should see, and I think we've seen some of the effects already in Q4, but you should anticipate that that's kind of the strength of the dollar. If this level is here, we will see an impact the further the year goes.

Also bear in mind that all of the purchases are of course not in dollars. We do have a big exposure to the Euro as well. I think even more purchases in Euro now than a year or two years ago.

Yeah, so that's one effect. And also, of course, having some... We also have an effect of the weak Norwegian krona when we take in, because we have some large trading companies in Norway. So we have some effects going both ways, even for trade. But when SEK is strengthened to euro and dollar, that will have a positive effect on the net level for trade. But you will see, the further on we go, I think we see a more positive side.

Yeah makes sense and maybe moving on to M&A and maybe starting with divestments perhaps you did one in the quarter as part of the portfolio review a smaller one but still would you say you're basically done now or could there be some fine-tuning of portfolio or how should we think about the divestment part into 2026?

I mean we did a large divestment of 24 And then, I mean, we've done outside of that, we did two small divestments in 24 and then the big ones. And we've done one divestment of 2025. We will continue to always kind of look at our portfolio and optimize that. But I mean, as I said, we took care of the big things in 24, but we will continue to work on always looking at the strategic level of our portfolio.

Perfect, thank you. Maybe a final on how do you view the M&A pipeline and how it's building? It's not been that many quarters where you've been back with acquisition activity, but how is it building? Do you see ramp up now in pipeline versus maybe one or two quarters ago?

Yeah, I mean, I think I mentioned that. I mean, we started off in doing in Q3 and of course, I haven't done many acquisitions in several years, so it has been a builder. But it's getting stronger and stronger, and we have a lot of interesting dialogues with companies. So that is going in the right direction for sure. But always with M&A, it's super hard to say exactly when you close the deal. It's so many things that affect that, as you know.

Yeah, fully understand. But it sounds like the pipeline is at least building.

Yes. Yes.

Okay, perfect. That was all from my side. So thank you very much.

Thank you, Dan.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Johan Daldahl from Danske Bank. Please go ahead.

Yes, good morning. Just a question on those transaction FX effects you talk about in the quarter. What does that represent more specifically? Is it just sort of a balance sheet on the end of day sort of valuation of receivables, et cetera? And do you anticipate that effect to be similar in Q1 here, given where FX is right now? And also, if you could update us on minority repurchases here in Q1. in 2026 where that may end up. Thanks.

sure the transaction effect is as you say it's a revaluation of balance sheet items not only on the balance day but on the average during the quarter and it will well we don't know where the currency is heading in q4 in q1 now but speaking from from january when the corona is continuing to to strengthen that there would If that trend continues, there would likely also be a negative effect in the first quarter. But again, we've only seen one month out of the three so far, if that helps. And then the second question was around the minority liability. which is approximately a little bit short of 1.5 billion on the balance sheet right now. Quite a large part of that is short term, which means that they may be repurchased by us this year. I think you can assume that approximately half of that will actually be bought back during 2026 by us during this year. The majority of that will likely happen in Q3, some of it in Q2 as well, a smaller part, if any, in the first quarter. And then there is a small earn-out liability of 75 million Swedish kronor on the balance sheet, but that's quite small. But yes, we will spend some money on buying back minority shares this year as well. Again, reminding you that this will, I mean, increasing our share of the subsidiaries does help our EPS growth as well. because the EPS is only measured on the profit that belongs to the parent company shareholder.

Great. Thanks a lot.

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

Thank you for the questions and thank you for listening in to this call. I hope that you all have a great day and a great week. Thanks a lot for being with us and looking forward to see you and talk to you in a quarter. Bye bye.