Svedbergs i Dalstorp AB (publ)

Good morning and welcome to this presentation of Svebergs Groups quarterly report for Q2. We will present me, Per-Anne Andersson, who is CEO and CEO of Svebergs Group, and Anne-Sophie Dawesson, CFO for Svebergs Group. There are probably a few of you who know a lot about Svebergs Group, but maybe some new listeners, so before we go into the results of the second quarter, I would like to mention a few words about Svebergs Group. We are a group that long-term acquires and develops strong brand companies in Europe. Our companies design, develop and sell products for the public. In some cases we also produce these products in our own production units. Currently we are operating in the Nordic, British and Netherlands markets. Our ambition is to grow organically and through acquisition. It is important for us to have growth and develop existing companies and expand through acquisition of well-off companies, preferably entrepreneurial companies, that complete our business. Geographically, product-wise and or through broadened expertise. We actively run these companies by being close, supportive, which contributes to the development of the companies in their growth journey. Our ambition is to contribute to consolidating the northern European market for bathing and shower solutions. In this geography we see the possibility of developing our concern to become a better group of strong and decentralized, supported brand companies. We have today a number of brand companies that have strong positions on their respective markets. Svebergs, Macro Design, Kasse, Robroads and last, Tebalux. The total turnover in the company in the last year of business, 2023, was about 1.8 billion SEK, but in bits at 240 million SEK, which is a bit of a .2% percent. In these numbers, Tebalux was only a month. If we had had Tebalux for the whole year 2023, the turnover would have gone up to 2.8 billion SEK and a bit of almost 320 million SEK. If we look at the distribution of sales during quarter two, Robroads is the largest segment with 51% turnover, followed by Tebalux at 19%, Svebergs at 18%, Macro Design at 8% and Kasse at 4%. We have started 2024 strong, both in terms of turnover and results. Our latest turnover for Tebalux performed well and according to the plan, Robroads continues to perform well with a strong margin and a good result on a level of judging the current market. The reason for this development is strong and undeniable focus on launching new products and new products with continuous launches in combination with the organization's ability to develop the business with new revenues in the new customer segment and with new products. During the quarter, we have launched new products under the brand Robroads on the British and Irish markets. We have had a changing distribution development on the Swedish and Finnish markets, which we consider to be weaker than the other markets in the Nordic region. In addition to this, the project market has had a major loss, more than half the government. This affects the Sveberg segment. Macro Design performs better than the previous quarter and Kasse is in line with the previous year. We continue to work with improved efficiency, which among other things shows in an improved gross margin, while we continually adjust our costs to maintain a good condition. And beyond this, Tebalux contributes, which then seems to be a higher margin. We continue to focus on working with sustainability in all our businesses, and here the regulatory Tebalux protection agency has worked through the entire GOG report in scope 1, 2 and 3. In all the stock companies, sustainability is applied as an integrated part of the running business in all areas. Our sales per segment and country in Q2 looks like the highest circle diagram, where the UK stands for 48%, Sweden for 19%, the Netherlands for 18%, Norway 5% and Denmark 4%, and Finland 2%, the upper markets for 4%. Today, we have changed our geographical sales from Rope Roads and Tebalux, where the Nordic is now standing for 30% of the sales. The relevant segment has been commented on in previous pictures, but you can see the distribution of the different segments in the lower circle diagram. The sales distribution for the first six months looks like Q2, but with a slightly smaller difference. However, it can be noted that the Nordic stands for the same share of the sales, 30%, and in this also the Swedenberg segment has had an answer to improve development, and that is above all in quarter two. If we continue with a respective segment, we start with Swedenbergs. Swedenbergs experiences a weaker demand in all sales channels compared to the previous quarter, which gives a turnover in the quarter of 102 million against 128 million previous year, which is an increase of 80. As a result, Swedenbergs has reached a profit of about 1 million against the previous quarter of 10.4 million, and the distribution of sales in the unit circle diagram is Sweden's largest market, followed by Finland, and it is in the Swedish and Finnish markets that we have a lower sales. The higher rate of interest has affected the purchasing power to a higher degree on these markets compared to the previous ones, and Swedenbergs is also negatively affected by the lower development of the new buildings. We have not been able to compensate for this fully, but we have in the quarter taken out more cost savings in Swedenbergs. Nacrodesign has had a sales in the quarter in line with previous years. Sales in the quarter have increased to 43 million, but in EBITDA to 4 million. We can compare with EBITDA the year before to 3 million in the quarter of 2022-23. So Nacrodesign is strengthening its EBITDA margin to 9.3 percent, and Nacrodesign sells on the Swedish and Norwegian markets, and Sweden is the largest with 64 percent. Nacrodesign has now a well-functioning assembly of the bathroom furniture, since it is sourced from suppliers and has thus strengthened its margin, and at the same time the possibility of increasing customer service through a consolidated delivery. In addition, this has given the opportunity to shorten delivery times on parts of the range, and this delivery can happen in 24 to 72 hours depending on availability of freight to customers. Kasse has managed to perform high-level service, over 20 percent in the quarter, despite the market share we have, and this is in line with previous years at this continued high level. Sales have increased to 25 million, which is 3 million higher than previous years, and EBITDA delivers at 5 million. It is very satisfying that Kasse continues to deliver results at this high level. Denmark is the largest market and stands for almost the main part of sales with 89 percent of total sales. Rupert Roles has developed as mentioned previously in a very positive way, and in the quarter sales have increased to 285 million, which is an index of 109. EBITDA has been delivered at 49 million, which is a whopping 10 million better than previous years, and EBITDA at 17.2 percent. Our assessment is that we take market shares on the British market, and this is done by maintaining our customer relations and we continually develop our assortment together with forward sales. The UK is the largest market, 95 percent, and the remaining part of sales is in the Irish market. It is a pleasure to see how we succeed in developing the Rupert Roles business together with the team, and that we improve the solution to this level. Tebalux, which is our latest enterprise, which entered into production at the end of November last year. There we have explained the reasons for the comparison numbers. Tebalux is a well-established company with its own design, development and production of bathroom furniture on the Dutch market, but also a certain export to the neighboring geographies. Through Tebalux we have added two strong brands, PrimaVar and Tebalux, which have entered our console. In the quarter sales are going up to 107 million, and EBITDA is delivered at 28 million, which gives EBITDA at 26.2 percent, which is very good. We have a higher demand than we have capacity for, so we have decided to invest to increase the capacity in the EBITDA factory to meet this higher demand. We have now worked together for a while with the management and staff at Tebalux, and it is going very well, more than expected, and we have had very good cooperation in many areas, and they have also created contact with other brands to get new ideas and knowledge. So we look forward to continuing to be part of Tebalux development. We now move on to Anne-Sophie and a little more detailed preparation of numbers.

Thank you. Just like the previous quarter, we see a fine development in terms of sales. The net turnover increased by about 23 percent to 562 million SEK, compared to 456 million SEK the previous year. We see a growth that is acquired with about 23 percent, but we see a negative organic growth of just under 2 percent. The currency affects sales positively with corresponding about 2 percent. The acquisition of Tebalux and a favorable development for RopeRoads and Kasse affects the net turnover positively, while the above markets are a more mixed picture. The demand for large parts of the Nordic markets has been still weak, which has affected Svebergs and Macro negatively. And just as Parane mentioned, this is primarily about Sweden and Finland. Net turnover for the first half of 2024 increased to 1.134 billion SEK, compared to 2023 at 931 million SEK. The acquisition of Tebalux has a positive net turnover effect with about 23 percent, while the organic growth is negative at minus 3. The currency affects the accumulated sales positively with 2.5 percent. RopeRoads and Kasse have continued to show that the resistance despite the weak market outlook in general, has been challenging, just as earlier, especially for Svebergs, who are for the largest part of the exposure to new technology. The next picture shows the sales development since quarter 2020. As we mentioned in the last quarter report, we see that the curve for the rolling number is rising towards a turnover of more than 2 billion SEK. As mentioned earlier, the acquisition of Tebalux, the currency and the strong development of RopeRoads and Kasse has affected sales positively. If we look at the result of the quarter, it is still at a high and stable level. Compared to the same quarter, the previous year the margin of the stock price rose by about 2 percent. Rolling 12, we are seeing a margin of stock price at an upward 45 percent, which is an improvement compared to the previous quarter. We have a good balance between the price and the cost of the purchase material. As a result of a strong stock price margin and improved sales, the EBITDA result increased by about 18 million SEK compared to the previous year and was summed up to about 76 million SEK. This is the EBITDA margin of 13.5 percent compared to the previous year at 12.6 percent and an increase of rolling 12 with additional points compared to the rolling 12 previous quarter. The gross result for the first half year, 2024, rose to about 504 million SEK compared to the same period previous year at about 390 million SEK. The gross margin is still at a high and stable level and was improved compared to the previous year with 2.6 percent. A strong gross margin in Tebalux, RobRoads and Kasse affects the result positively. In addition, the price adjustments, lower material costs and a good control of our operational costs have had a good effect. The EBITDA result rose to about 159 SEK in the first half year and increased with about 38 million SEK compared to the previous year. Just as the quarter, the EBITDA result is positively affected by an increased sales, a strong gross margin and good cost control. The EBITDA margin rose to 112 million SEK in the first quarter compared to the previous year at 100 million SEK. The improvement compared to the same period previous year is primarily due to our commodity companies actively working to optimize sales levels, map the customer's payment patterns and seek the best possible payment conditions for our suppliers. For the half year, the free cash flow rose to 53 million SEK compared to 2023 at 89 million SEK. The accumulated expense is still lower compared to the previous year, when payments and customer bonuses in the first quarter reduced the free cash flow. The annual investments rose to about 47 million SEK compared to 14 million SEK in the previous year. Of the 47 million SEK, about 30 million SEK is attributed to the new woodworking line in Dahlstor. In addition, the investments are primarily attributed to production equipment and product development. If we look at the balance and solidity, the balance rose to about 48% compared to about 43% in the same period previous year. The positive development is primarily due to increased own capital in conjunction with the previous year's emissions in the beginning of the quarter. The capital emissions in the last quarter rose to about 14%, which is a level with the previous year. And the emissions in own capital were somewhat lower compared to the previous year and rose to 11.3%. The result after tax roll 12 has decreased somewhat compared to the same period previous year, primarily due to increased costs for rents and higher taxes in the UK and the Netherlands. Here is the financial situation. The debt has decreased since the change. In conjunction with the previous emissions, part of the company's debt was regulated. And the net debt on 30 June 2024 rose to about SEK 767 million compared to the previous year at about SEK 639 million. The increase is primarily due to the purchase of Tebalux. The net debt includes the estimated increase in purchase difference for Roper Rhoads and Tebalux at about SEK 196 million compared to the same period previous year at about SEK 172 million. The net debt in relation to EBITDA rises by the end of the quarter to 2.3%, which is the same level as the previous year. The requirement formulated by the bank is 3.5%. Finally, we see the development of the net debt over time.

Thank you, Jan-Sofi. If we look forward and summarize the first half and quarter, we start 2024 with a strong first half and we look forward to a re-performing 2024. To handle this in the best possible way, we continue to strengthen our market position by proactively focusing on product innovation and proactively distributing. We will drive even more engaged, effective and increased capacity in the supply chain. Our focus and work with sustainability continues with great engagement in the entire concern. Tebalux, which I mentioned earlier, is now in the right work and contributes with its knowledge, as well as part of the knowledge and competence that we have already built up. We continue to work to find potential companies to acquire that fit well within our concern and our business model. We have now reached the question time. To participate in this, please follow the link in the press release from July 9th. Thank you for taking the time to listen.

We start with the questions already submitted.

You have some there, Ann-Sofi.

Yes, we have received questions from Markus Ramström. The question is, the financial net was in Q2 minus 18.3 million SEK. How much of this was pure interest? In Q2, the interest costs were minus 14 million SEK. Do you have an idea of how the financial net will be for the whole year 2024? We do not give any forecasts, but what we can say is that it also depends so flat on how the currency goes out of the interest costs. And then, if we can mention anything about Svedberg's average interest on loans in the present situation, it is also quite difficult to answer directly, but we can say that it is around 5-6 percent. The next question in the Q2 report is, the majority of the loan payments are moved from long-term to short-term and the post goes up to 173.6 million SEK. When will these be paid? Payments of these will take place in Q1 2025. The next question is, the sum of the loan payments seems to have increased from 190 million SEK to 196 million SEK. Is that a currency effect? Yes, it is a part that is currency and another that is a interest. We also have a question that looks at post of a one-time character, if there is anything that has affected the Q2 outcome. Actually not, but we have some high costs and are hereby due to the purchase of Tebalux and the integration of the same. The next question is, the sales in the Svedberg stock market fell by minus 21 percent despite a weak comparison quarter where the sales fell by minus 19 percent. Do you see any signs that the market has bottomed out? We would like to say that the market conditions in the Swedish and Finnish markets are still challenging. It feels like it has fallen, but it is very difficult to say. I do not know if you have anything to add there, Pane?

It is difficult. Then you see that the growth part or the stronger uptake on the Swedish market is expected to be a lower interest rate. Of course, it is all the same, so it should give more positive parts. Then it will affect the question. Generally, it feels like it has become a little longer before it goes up. You can see that somewhere it is close to the bottom. Then we can also move on to the next question from Benjamin Wallstedt from ABG. Do you want to estimate both Tebalux organic growth and market growth in the quarter? Our assessment is that organic growth is somewhere around 7-8 percent. If we look at the Dutch market, which is the market where Tebalux works in the largest extent, our assessment is that the market is down by 12-15 percent. We can simply see that it is good in that geography. Then in the video you talk about investments in the Netherlands to meet a strong demand. They have come to an approximate timing and size for these investments. We already have some parts in the one factory, which I mentioned, Biddinghausen is already on its way in. We will continue with some parts and the size of this somewhere 15-20 million when we are done. This is to meet the demand that exists and above all to increase the capacity so that we can reduce the delivery time to get a better customer benefit. What drives Svedberg's softens and resets growth compared to Macro Design and Kasse? Is there a difference in project exposure? The project market is a large part of this. It affects the Svedberg segment largely. It is on all geographies, especially in the Swedish and Finnish markets. We can see that it is what has taken. In Svedberg, it always takes a little time before you have full capacity and full entry of the machine line. There we also have certain costs that we expect to go down to a significantly lower level. You can answer that question with those parts. Then we have a question from Elia Sandhult. It is about the financial network. Why is it so much higher than the previous quarter? I wonder if you have taken with the costs Q2 for cost savings compared to Q1.

Absolutely. When it comes to the financial network in Q2 and compared to Q1 in 2024, we had a positive value effect in Q1. In Q2, we had a negative effect. It has turned on the currency market in the first half of the year. It may disturb the image when looking at the comparison between the two. Then it is about whether we have taken some costs and Q2 for cost savings that are being carried out. No, not really. Of smaller character, but not like anything that sticks out.

Then we leave it and word for word, are there any questions from you who have logged in?

Then we have a question. I can start if no one else has a question. You

are welcome. Thank

you, Mona from Nordea. First and foremost, thank you for your presentation, Per-Anne and Ann-Sofi. Congratulations on a very good quarter, despite the current market conditions. I have two questions from my part. First, I wanted to check if you look at Sveberg, you have had some costs in the quarter given the introduction of new equipment related to the new line down in Daltorp. Could you mention a few words about how you see that development will happen in the future, this type of cost post that we have seen here in Q2?

A bit small but this consists of

outsourced material since we could not run them internally. Of course we have had a higher material share, so to speak, COGS has been affected in that part. And then we have of course a part in that we have not exploited the personnel capacity in the right way, but have had a lot of costs.

We see that this is always a part of this, so it is quite normal in the case, but this will be much more effective than it was from the beginning. But of course we have had some costs, so these will disappear in Q3 and Q4.

Thank you very much. And then I also read that you have decided on additional personnel deductions. When can we expect to see an effect of that and are they only related to Svebergs Varumärket?

Only related to Svebergs Varumärket and what is, you can see on the collective side, we have a permitting with 20% from the beginning of August, 50-60 times, and that will

be in Q3 part of those parts. And then there is a 5-6 service staff who are appointed and that is when their employment time runs out, and it is as long as I think three months. In that case, of course,

someone will be affected in Q3, otherwise they will be in Q4.

Thank you very much, I think that was all from me.

Thank you. Any more questions? I hope it works so

that everyone can come to the speaker, so you can write somewhere in the chat if there is anything left. If there are no more questions, I thank you for your participation and wish you all a nice summer. Thank you very much.