Svedbergs i Dalstorp AB (publ)

Good morning and welcome to this presentation of Svedbergs Groups quarterly report for Q3. We will present me, Aron Andersson, CEO and CEO of Svedbergs Group, and also Ansofi Davidsson, CFO. There are probably some of you who know a lot about Svedbergs Group, but maybe some new listeners, so before we go into the results for the third quarter, I want to mention a few words about Svedbergs Group. We are a company that long-term acquires and develops strong commodity companies in Europe. Our companies design, develop and sell products for bathrooms. In some cases we also produce these products in our own production units. At the moment we are active in the Nordic, British and Dutch markets. Our strategy 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, such as the large-scale, brain- and entrepreneurial companies that complete our business, geographically, product-wise and through broadened expertise. We actively support these companies by being present and supporting them and contributing to the development of the companies in their growth journey. Our plan is to contribute to consolidating the European market for bathrooms, furniture and shower solutions. In this geography we see the opportunity to develop our concern for an even better group of strong and decentralized, strong commodity companies. We have today a number of commodity companies that have strong positions in their respective markets. Svedbergs, Marked Design, Casseroop Roads and Tebalux. The concern in the last year of the year 2023 was almost 1.8 billion Swedish crowns, but it was down by 240 million or 13.2%. In these numbers Tebalux was only a month in a row. We had Tebalux for the whole year 2023, had a performance turnover of just under 2.2 billion and could trade at about 320 million SEK. In the distribution of sales in -to-date, Svedbergs is the largest segment with 52% of the total turnover. Followed by Tebalux at 19%, Svedbergs at 18% and Macro at 7% and Casseroop Roads at 4%. Let's take a look at some highlights for Q3. We have a strong Q3 where we see an increased sales and improved results. Our latest turnover, Tebalux, performs well and follows the plan we have laid out. RoopRoads continues to perform well with a strong margin and a good result on a shrinking British market. The development of this project is a strong focus on product development with continuous product launches in combination with a strong and competent distribution organization that develops existing customer sales that has had success with new customer sales. We have had similar sales development on the Swedish and Finnish markets. We consider that the weaker and upper markets in the Nordic region, in addition to this, the project market has had a decline and this is affected by the Svedberg segment. Macro Design performs well and takes market shares. They deliver a better result compared to the previous year's Q3 and if we look at Casseroop Roads, they are in line with the previous year's Q3. We continue to work with improved efficiency, which is shown in improved gross margin, while we continuously adjust our costs to the current situation. In addition to this, Tebalux contributes, which is marked by a higher margin, and in addition to this, we have also decided to try to invest in increased capacity in our factories in Tebalux. This is done to shorten the lead times for customers and thus improve our market position. The investments together with the previous decisions, we have decided to invest about 25 million, which means we have decided to invest another 15 million crowns in Tebalux. Our sales per segment and country in Q3 looks like in the upper classic diagram, where UK stands for 53%, Sweden for 15%, the Netherlands 18%, Norway for 4%, Denmark for 4% and Finland for 2%. The upper markets represent 4%. I am with the acquisition of Roads and Tebalux, changed our geographical sales, where now Nordic stands for 25% of sales. Our segment says Roads is the largest with 56%, followed by Tebalux 18%, Svedbergs 15%, Macro 7% and Kasse 4%. We have strong sales in Roads, Tebalux and Macro Design, and we also see that we are risk balanced in a good way in the concern now that we are active on several markets. If we look at the sales of G2Date, then we see that Roads has had a strong sales development and the acquisition of Tebalux is a good thing for the concern's sales. Svedbergs' segment has had a weaker G2Date development. If we move on to the respective segment, we start with Svedbergs. Svedbergs is experiencing a weaker demand in all sales channels compared to the previous quarter three. It is a turnover in quarters of 76 million towards 93 previous year with an index of 82. Result-wise, Svedbergs is now likely to switch to 1.7 million towards the previous year's 13.3 million in the quarter. We have worked to reduce staff, we work with efficiencies and we have a goal of knowingly returning sales to this level, and that is what we are convinced that we will do. It is in the Swedish and Finnish markets that we have a lower sales. The higher interest rates have affected the purchasing power to a higher degree on these markets compared to the others. In addition, Svedbergs is negatively affected by a lower development for new developments. This we have not been able to fully compensate for, but we have also taken additional cost savings in the quarter as mentioned. Markkodesign has had a better sales in the quarter compared to the previous year, which is a good result considering the market conditions. The sales in the quarter rose to 35 million and they have reached a bit of 3 million compared to the previous year, which in part was 1 million. They thus strengthen their bit margin to 8.2%. A contribution to this is that Markkodesign now has a well-functioning installation of bathroom furniture and has received a contribution to a strong margin and at the same time the possibility of strengthening customer service through constructed delivery. In addition, this has given the opportunity to short delivery times on parts of the assortment, where delivery can take 24 to 72 hours depending on availability and flat possibility, which we can now see the result of. The cash continues to perform at a higher rate and in the quarter it is .3% in bits. Despite the market conditions, this is better than last year. The sales have gone up to 19 million SEK, which is a bit lower than last year and can be changed to 3 million. Our plan for the cash is to continue to develop the company with a high profitability, which we will continue to do four years after the conversion. Looking at Rope Roads, it was mentioned initially that it developed in a very positive way in a weak British market. In the quarter, the sales increased to 289, an index of 101, a bit of 55 million, which is 7 million better than last year, and a bit of a percentage of 19.1%. Our assessment is that we take market share on the British market by maintaining customer relations and continually developing our assortment together with successful sales efforts. Rope Roads is developed according to the plan and the joy that now makes the assessment that we will achieve full sales. It is a good acquisition that we together have managed to develop in a very positive way in a tough market situation. Tebalux, which is our latest acquisition, came into effect at the end of November last year. Here we have explained the differences in comparison. Tebalux is a well-established actor, with its own design, development and production of bathing furniture on the Dutch market in certain export-reliant countries. Through Tebalux we have divided two strong brands, PrimaBard and Tebalux, into our concern. In the quarter, the sales increased to 94 million, but in a bit of 18 million, or 19.5%. We have a higher demand than what we have capacity for, as I have mentioned earlier, taking the decision to invest in the establishment and to increase the capacity in the factory in Färsjöld to meet the higher demand and improve the efficiency. I have now worked together for a while with the management and staff in Tebalux, and it goes into the plan. We have had a lot of short cooperation in many areas, and we have also created contact with other brand companies to get new ideas and knowledge. But the growing capacity is very positive in having Tebalux in the concern. We continue to focus on working with sustainability in all our activities, and here the joy is that Tebalux has successfully worked through the entire G&G protocol and the report in scope 1, 2 and 3. We have signed a commitment letter for ScienceBase Target Initiatives during the quarter. We have submitted it, we have editing plans in all companies, and during the quarter we have certified, reserved ourselves in Sweden, England, Denmark and Cologne in a great place to work, which is very happy. With that, I leave the floor to Anne-Sophie.

Thank you. Then we can start looking at

the turnover. And just like the previous quarter, we see a fine development. The net turnover increased by about 19% to 512 million crowns, compared to 432 million crowns the previous year. We see a growth that is pervaded at about 22%, and we see a negative organic growth of just under 1%. The currency affects sales negatively, with about minus 2 in the quarter. The turnover of Tebalux affects the net turnover positively with 94 million crowns. And what we see is that Rupert Road, which is in the design, has done well in the stock market during the quarter, but has been a little harder for Svedbergs and Kasse. The demand in the Nordic market is still weak, and especially

in Sweden and Finland. The net turnover for the first

nine months increased to 1,646 million crowns, compared to the previous year at 1,363 million crowns. The Tebalux turnover has a positive effect on the net turnover in the quarter, with about 22%, while the organic growth is negative at minus 2%. The currency affects sales positively, with just under 1%. Tebalux contributes positively with 305 million crowns. The two latest acquisitions, Rupert Road and Tebalux, have performed well during the year, despite the declining home market. Kasse is still better compared to the previous year for the first nine months, but for Svedbergs and Mako, it has been significantly weaker compared

to the previous year. Here we show the sales development since

the beginning of 2020. The trend is holding up. We see that the rolling number goes towards a dry 2 billion turnover. The Tebalux turnover, the currency and the continued strong development of Rupert Road affect sales positively. The division between the quarters shows that quarter three is somewhat lower compared to quarter one and two, and the main reason for this is that quarter three includes semester months with lower production volumes and somewhat lower

activity among customers. If we look at the stock market,

it is still at a high and stable level. Rolling 12 shows that we are at a stock market of about 45%. We have a good balance between the price and the cost of purchased materials, and we see a good cost control in each segment. If we look at the lower picture, we see that the BITDA margin continues to improve and the rolling 12 increases by a few points and now equals around 14%. We are actively working to strengthen our stock market margin and this together with the good cost control affects the BITDA margin positively. The BITDA result in the third quarter is estimated at about SEK 71 million, which is somewhat lower compared to the previous quarter due to the summer months, but SEK 11 million better compared to the same period last year. In the first nine months, the BITDA result was around SEK 740 million compared to the same period last year, at an average of SEK 580 million. The strong margin is a luxury and the strategic initiative in the company and above all in Rope Roads. This means that we deliver good results in the first nine months. In addition, the segment adapts to the current circumstances and the BITDA result for the first nine months was about SEK 231 million, which is an improvement of SEK 50 million compared to the previous year.

The free cash flow

is estimated at SEK 2.4 million compared to the previous year at SEK 29.2 million. Due to the war in the Middle East, we have seen increased delivery times for purchased materials and our storage levels have decreased. During the quarter, storage levels have been adjusted and product availability has improved. During the quarter, the delivery debt has also decreased due to lower activity during the summer months, which in turn has also had an effect on the free cash flow. For the first nine months, the free cash flow rose to SEK 51 million compared to the previous year at SEK 119 million. The amount accumulated is still lower compared to the previous year when payments of public housing and high tax payments at the beginning of the year in conjunction with increased storage levels in the third quarter has reduced the free cash flow. The annual investments are estimated at SEK 53 million compared to the previous year at SEK 31 million. SEK 53 million is about SEK 30 million comparable to the new tree-tree line in Dahlstopp. In addition, the investments are mainly related to production equipment and product development. If we look at the solidity, it rose to about 48 percent compared to 44 percent in the same period the previous year. The positive development is mainly comparable to enhanced own capital in conjunction with the previous emission in the beginning of the quarter or in the beginning of the year. The reduction of the capital rose to about 14 percent which was the level with the previous year. And the emission of own capital is lower compared to the previous year and summed to 10 percent. The result after tax rolling 12 has decreased somewhat compared to the same period the previous year mainly due to the financial network and higher tax levels in the

UK and the Netherlands. What about the financial situation? The

debt has decreased since the year shift. In conjunction with the previous emission some of the concern's debt was regulated and by the end of the quarter the net debt rose to 792 million kronor compared to the previous year at 596 million kronor. The increase is primarily comparable to the acquisition of Tebalux and that we during the third quarter made a new assessment of the supply-buy differences for RoperRoads. RoperRoads has, despite the uncertainty and uncertainty, performed strong quarter and we can now with joy to see that the maximum payment and supply-buy differences will occur in the first quarter of 2025. The total supply-buy differences for RoperRoads and Tebalux together is per the last September to about 212 million kronor compared to the same period the previous year and the net debt for about 168 million kronor. The net debt in relation to EBITDA is at the end of the quarter in 2.3 to compare with 2.1 the previous year and the new assessment of the supply-buy differences for RoperRoads means that the quota is maintained at the same level as the previous quarter and in the form of 2024

is estimated to around 2.

The

last picture shows

the development of the net debt over time and in relation to the acquisition of RoperRoads 2021 and the acquisition of Tebalux 2023 the net debt increased but in time with the acquisition of the companies consolidated into our business we see that our results are strengthened and then the net debt also decreases and our financial situation improves.

I leave over to Perna

General Sofi We have a high activity in the company and deliver increased sales and improved results in challenging market situations We work too hard to succeed well at the end of 2024 so we can end it in a good way The signals we get from the market is that it is still challenging and to meet this work we are proactive with sales still a great focus on improving efficiency through investments and continuous improvement work and at the same time sustainability is always our priority We also work actively with M&A and meet potential companies to expand our business with new companies that fit into our business model with new geographies and product categories So I would like to thank you for listening and we will now answer questions and to share the question time follow the link in the press release from October 15th

Thank you so much for taking the time to listen and we will now answer questions from October 15th and we will now answer questions from the press release from October 15th Thank you We usually answer questions in

advance but I have no one right now so leave the floor to anyone who wants to

start Then I take this opportunity It was lucky that I had clothes on if it would be recorded I wanted to ask about Tebalux You are writing about a production stop I know it has been difficult both for you and for analysts to judge the seasonality in the quarter but can you talk a little about that What was this Q3 result what you had expected

I can start by saying that when it came to the production stop there was a part in the borrower line that hovered so they stood still for about four days and our assessment is that during those four days we lost 200,000 euros in turnover and then a part of extra costs was about 150,000 euros and no, we could not predict this and then when it comes to the seasonal variations we have had a hard time judging them because they are quite recently acquired but what we see here in the last quarter is that the summer months affect them maybe a little more but what we see in other businesses is that they have less activity with the customers and close the factory in a few weeks

A question on that I understand that you do not have the stone control since it is a fairly new acquisition but do you have any perception of the organic growth in Q3

Do you think specifically about the growth?

Yes, exactly,

sorry We can say that we are a few percent more if we say so, organically

Right Good, I'll jump into the corner again and I'll let you know if someone else wants to ask a

question Then maybe I can jump in a little faster Benjamin asked my first question here but I thought if you could develop a little more about the cost savings in Svedberg how much effect they have had in Q3 but also what we should expect in the future

We can say that what we do is that we have had a permit on the collective side which has affected a lot but it does a few smaller parts It does a few million if you look at it that way Then we will take down the staff and adjust it based on the rules and conditions So it will come slowly but surely we will go down and here we can say I think we peak at 190 employees in 2022 and now we are down around 140 and will go down a little further so there is a continuous drop in it The big part we will get here is to get improved efficiency in the business when we get full efficiency on the new installation of the production line we have and the improvements in terms of competence that are done in supply chain So now I'm going to be a little too much but as I said earlier I said when I was at an investment meeting that we are going back to Swedenbergs over 10% and we work hard on that in these parts and then we will of course try to get them up to 15 that's where the goal is but given the market situation there is also a volume question so of course we will see a result effect if you track forward to Q4 then we can say that it would be better and to be adjusted up to our sales of course then it drops a lot but we have adjusted our cost quite well in this case if you compare the last 12 months period with the 12 months period before we are down to 15 million in the 12 months period

Thank you that almost leads me to my second question for Ann-Sofi you mentioned in your presentation how much of your investments are year to date that is transferred to Dalsdorp and the new tree processing line could you repeat the figure because it was just broken there in

the video we have had about 30 million that is transferred to the tree processing line which includes the total promise of about

50 perfect and for the line in Tebalux I don't remember if you have mentioned exactly how big it should be if I am not mistaken was it 1.2 million or is it still applicable yes

it is the first part that we took in Tebalux in the factory in Biddinghavn and then we have taken during the quarter additional decision on 1.2 so it is 27-28 million total

perfect thank you very much and thank you very much from me

I hope to hear again

Benjamin I can continue it would be exciting to hear your view on the Swedish construction market generally if you want to develop it BOG reported yesterday they said they saw light points and looked forward to a recovery would you like to participate in that?

yes as I said earlier you know exactly how it should be you would probably do something else but you can say it looks lighter and of course what we see with the reduction of rent and at the same time more called tax reduction as you can see in the Swedish market there is a number that is flowing from a bank it is about 100 billion that comes out to the consumers it would be desirable that a part of it is probably realistic that a part of it ends up in bathroom investments and that something comes up so we say that it looks lighter of course then it is if you come to project start and these are lower on low levels so of course we see if it comes up but it is not that we see it still down the drain it is not our view but that we have given up and we see a light over there

it sounds optimistic of course we can ask about Rope roads the organic growth rate is coming down compared to Q2 is this an effect of a change in the growth of the market or how should we understand that I understand that you have performed much better than the market now so it is not strange that your friends are getting tougher but all flavor on that would be exciting

there is our performance our work and how the organization and how it works is fantastic what we see in the market now labor has been going out for a while and you come at the end of October and launch a new budget and there is a certain uncertainty and of the signals we get from Rope roads is that there has been a little off guard October compared to generally but it is not a problem I think when this has come out on the market the uncertainty will disappear and it is never good when there is an uncertainty and then it is out in the market so I will come at the end of October with something from the government so that I can say that there is a part in the explanation that there may have been something weaker compared to the previous year

Alright you said Rope roads was out in October was that the meaning or did you mean September if it ends in Q3 or did you mean the beginning of Q4

wrong, September I mean I

understand good that was about the thoughts I had today

thanks Hey, Mark Sumrud here a short question about the follow up on Svedberg the product area itself you talked about 10% and 15% it is up to over 10% with the savings you are doing is that enough without new volumes to get up to 10% is that enough to the more needed market to get up the volumes or get up the margins

there are two parts we have both a volume and then the marginal question and the mix question but we can say that we are getting closer to 10% with a little bit of weak volume but we are counting considering the pandemic and the market we have gotten up on a higher level and now we are down significantly lower where we are now we need 10%

and I assume that the 15% of the market will be back if you get 10% without the volume of the market then we can see the 15% but there the market

is needed if we look back it is a while since Svedberg I was over 15% it has not been long so here we have to work to get them up on the track and the companies we have acquired prove that it works so here we have to work and we have to focus on getting the companies up but it is a big part because it is a production it is a volume part the beauty of production is that you can swallow a lot of volume and get the stock down on the bottom line just like when you fold in volume

a short question about the movement of capital if we are going to expect some changes here capital moves during the quarter did you talk about changes in customer feed for example is it something that is temporary or are the levels now sustainable

when you asked specifically about customer feed it was in the beginning of the year and what happened now in the last quarter it was mainly that Rope and Roads have seen and experienced a certain uncertainty between the Middle East and the war conditions which means that they have almost doubled delivery time and got a pretty big adjustment downwards of the sales levels so that affects the product availability and what they have tried to adjust here now under Q3 so they have a delivery that is in line with what they need so I would like to say that it is quite exceptional in Q3 and should come back to the reasonable levels in Q4

ok

perfect thank you any further questions

I will interpret the silence so that you can hear and listen I wish you a nice day and a nice weekend thank you