Systemair AB (publ)

Welcome to System Air Q4 2025-26 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the President and CEO Robert Larson and CFO Anders Ulf. Please go ahead.

Thank you very much. You are all most welcome to this presentation, where me and Anders will cover the fourth quarter for System R. As you heard, after the presentations, we open up for the Q&A. So the agenda, I think it's quite straightforward. Let's move directly into slide number three. Systemair was established in Skinskatteberg in 1974 by Mr. Gerard Engström, who today remains as the main owner and vice chairman of the board. During the years, the company has grown consistently and has now achieved annual net sales of 1.3 billion euros. Systemair was listed at Nasdaq in October 2007. We are a company operating with our core values of simplicity and reliability. We develop, manufacture, market energy efficient and high quality ventilation products, and we are proud of our wide product portfolio. And in addition, we are determined to meet our customers expectations on delivery, reliability, availability, sustainability and quality. Today, we run our own sales companies in 51 countries and our products are available in totally 135 countries. We operate 27 factories in 19 countries and we have about 7,400 employees. Slide number four. So what stands out in Q4 is the strong organic growth in the context of the current market conditions and the uncertain geopolitical situation. We see this as a sign of strength and we are encouraged to continue executing on our continuous improvement agenda. At Systemair we have since long time back had our Systemair production model that allows us to operate efficiently across all our factories. It contains a firm logic, ways of working, best practices, etc., and allow us to achieve scale of economy across many sites. Now we embark on developing and implementing our system air sales model with the same ambition. We want to offer our decentralized sales organization tools and processes to become even more successful, winning more and better business, and at the same time, gain in efficiency. It is in this context we decided to make concentrated effort in the quarter to restructure parts of our German sales and service organization. Yes, there were some one-off costs involved in this specific case, but we are convinced that it will pay off. During spring and our Q4, there were several major international fairs where we showcased new products and developed our customer relationships. And for example, at the Acrix exhibition in Mumbai, India, a new advanced air handling unit called Verox was launched. It is designed for the Asian market. It is strengthening system-wide positioning in high-growth industrial and commercial segments. And it reinforces our commitment to innovation, localization and long-term market expansion in Asia. In the quarter, we also launched a pilot program for women mentorship. We believe that diverse teams perform better, and being a growth company, expanding our talent pool is important for our long-term success. Next slide, please. Slide number five. One strength of SystemAir is a global and diverse customer base, providing us with a solid foundation for profitable growth and also high resilience. Western Europe is continuing as a largest region with 45%, with the other four regions fairly equal in size. Anders will share more details about the development in each of the regions, but you can already here conclude that there was no major shift in share between the regions during Q4. Slide number six. I did already mention it. We are very pleased with almost 10% organic growth in the quarter, given the current market conditions and uncertain geopolitical situation. The mission is to double the size of the company within seven years, which corresponds to 10% annual growth. To make this feasible, a bit more than half of the growth must be organic. So almost 10% in the quarter and slightly over 6% during the last year is just what is needed. With this, I hand over to Anders.

Thank you, Robert, and good morning to everyone. So our fourth quarter of the fiscal year, 25-26, is covering the month of February, March and April. We met pretty easy comparables in this quarter with a negative growth last year of 2%. This quarter started off a little bit slow in February, but March and April showed good growth. Total net sales amounted to 3.28 billion compared to 3.5%. billion more or less exactly last year. This corresponds to an increase in sales by 9.1%. The currency conversion effects have declined during the quarter, so the organic growth was pretty much on the same level at a positive 9.6%. We can conclude that for the seventh consecutive quarter, we are reporting an organic growth in a relatively slow but sluggish and gradually improving market. We go to slide number seven. A bit more details in the net sales development. We saw organic growth in all regions except for the Nordics during the quarter. We completed the acquisition of Nadi in India in August last year, and this has contributed with 1.3% net sales for the quarter. And then finally, currency effects. The strength in Swedish kronor resulted in a negative effect on sales by 1.8%. The effect comes from several currencies since we have operations in many countries. Going to slide number eight. We go into the geographical breakdown and I will comment on the organic growth rates for each region. Starting with the Nordics where we had close to a flat organic sales development in the quarter. The Norwegian market is suffering from low construction within the residential building segment, where we have a relatively high exposure, while the Danish market is currently in a period of lower demand on the commercial side. However, we can conclude a nice growth in sales in the Swedish market and In Western Europe, our single largest region, we are proud to report an organic growth of 9% for the quarter. Within the region, we experienced a positive development, especially in UK, Belgium and Italy. We are also happy to see continued cautious growth on the German market. In Eastern Europe, we had again very strong organic growth of 19%. Sales were especially strong in the quarter in Czech Republic, Poland and Slovakia. In North America, the organic growth rate was 17%. Our North American operation focusing on school ventilation has entered the start of the peak season with good demand in the market. We have also seen several changes in the tariff recently. From the beginning of April, the tariffs increased to 25% of the total product value. But in the start of June, they were revised down to 15% for most of our products. Our ambition, however, is to forward these tariffs to the customers. In Middle East, Asia, Australia and Africa, we had organic growth in sales of 11%. We experienced a quarter with good sales in Turkey due to some larger product deliveries, but also good growth in Australia and Middle East. All in all, total organic growth, 9.6%. Going into slide number nine. Our gross margin was strong and amounted to 36.3%. This was slightly under the 36.5% that we achieved last year, explained by product mix and price increases on components and freight. As a side note, we have communicated price increases to our customers starting from 1st of June. Overall, we are happy to see yet another quarter with strong gross margin. Our adjusted operating profit amounted to 292 million, or an operating profit margin of 8.9%, which is slightly above Q4 last year. The adjustments in the quarter relates to a provision for financial receivable from a previously disposal of a group company of 17.5 million. Further, we have taken a restructuring cost relating to the German sales and service organization of 22.9 million. Selling and admin expenses in comparable units increased by 5%. Slide number 10. Profit of the tax amounted to 214 million compared to 119 last year. Net financial items for the quarter were negative by minus 4 million compared to minus 99 million last year. Currency effects on bank balances and loans were negative and amounted to minus 9 million. Interest expenses amounted to minus 12 compared to 21 last year. We had a relatively high tax rate for the quarter at 29.8%, which is effective for not activated deferred tax assets. Going into slide 11, the cash flow development for the quarter. We achieved a free cash flow of 46 million compared to 264 million last year. Within the working capital, there was a significant increase in trade receivables of 156 million due to the high sales in the quarter. Net investments of 150 million relate mainly to the production capacity investments in India, Slovakia and Sweden that we are currently working with. Our net debt has decreased down to 888 million, which is 13 million lower than a year ago. Adjusted net debt to EBITDA amounts to 0.54, and we have a strong balance sheet that enables us to pursue further investments for organic growth. In relation to that, I would also like to highlight that we have during the quarter renewed our financing agreements of a total of 130 million euro for the coming three years with better terms than before. And then slide number 12. And we are reporting our last quarter of our financial year. Now I would like to summarize what we have achieved. We are proud to conclude an organic growth for the full year of 6.1%, which is in line with our expectations. Looking at the adjusted EBIT, we have achieved a margin that continues to increase for yet another year, taking us closer to our target of 10%. Over to you, Robert.

Thank you very much, Anders. So clearly, margins have been closing in on the financial target of the 10% operating margin over a business cycle. We do not provide forecasts and of course there are no guarantees, but assuming a continuing stable or even slightly improving market conditions combined with our own improvement agenda, it is most reasonable to assume that we will reach the 10% level during the coming year. Okay, slide number 13 it is. So Hermann Fogel Heidschon Sanitär in Germany has selected system air products for a ventilation system continuously adjusting the airflow in the building based on sensor data and the control system. We choose to present this project since it is a great example of technology being available but not yet mainstream in the industry. This technology has potential for achieving next level of comfort and energy efficient. I think this is the story about the ventilation industry. There is more value that can be provided to customers compared with the current mainstream solutions. Slide 14. We are ramping up our new factory in Riyadh. Unfortunately, we have not yet been able to have a proper inauguration because of the geopolitical situation. Still, for the new stadium in Riyadh, Systemair will supply a complete package of products for a comprehensive ventilation system. The top highlight of the project for Systemair is that all the products will be Saudi-made locally in our new factory in Riyadh. Next slide, please. So we are now executing on this strategy to build a more focused and scalable commercial model. And to illustrate what it means in practice, we here share some details on what it means for our Swedish sales organization. On the left side, you see the directions. The starting point is the group agenda, which is then adopted by the local leadership team for the specifics of the Swedish market. To the right, you find the main execution steps. This is a full transformation, and the program continues well into 2027. And just remember, the ambition, as I said before, is to drive both the growth as well as efficiency or sales productivity. I guess that was this last slide, so we open up for Q&A.

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 Jakob Markin from Seb. Please go ahead.

Good morning, guys. So a couple of questions from my side. Starting on the organic growth, overall, you know, very strong, as you said, and some regions even having almost 20% organic growth here in the quarter. I mean, is there anything here that sticks out being, you know, bigger projects or something being of a one-off character? You mentioned Turkey, but besides that, is there anything that we should have in mind going forward here?

Thank you for the question. I think I probably kind of let Anders provide some insights on this one.

Yes, as I mentioned during the presentation, we have seen that on a monthly basis it's been lately a bit more volatile than we have experienced before. And also, as you can see, we come from a quarter with low growth and before that we were on 8% organic growth. So I would say that the current environment is more volatile than before really. But I wouldn't say that there are any except for Turkey then, and also I would say Eastern Europe is also more project driven. But what we are seeing in, for example, in Western Europe and North America is not really related to any specific project.

Okay, perfect. Thank you. And on the organic road, I mean, you're posting a lot of organic figures than many others in in your segment, is there any particular sub-segments on the client side that you see performing very well or where do you see the demand coming from?

I would comment on saying that I think the growth is kind of broad-based. Yeah, we have some weak spots. We speak about the residential segment in the Nordics and so on. But apart from that, I would say we are happy to see a broad-based growth.

Okay, I see. And then on the base side, you say that you implemented price increases from June due to components being more expensive now and you also talk about price increases due to tariffs in April. Can you help us with the magnitude of these price increases and when should we expect them to impact the P&L?

So the background for the price increases. We have seen some input costs increasing. Freights, I think, is kind of worth mentioning. But also just looking at the London Metal Exchange, you find that copper and aluminium and steel also has increased a lot. energy prices and so on. And certainly we always look for improving our own efficiency to start with, but this is a situation where we need to kind of ask, kind of go out with price increases. So, and then the magnitude we expect ourselves, let's say our kind of ambition is to compensate for the increased costs we have. But then we have a very wide product portfolio and we operate in many markets. And at the end of the day, it is our customers choosing between us and others who suits their needs the best. So there's a big and wide price spread. So I'm not prepared to share a specific number with you. Would you add to that?

I mean in the past we have seen that we have been able to compensate ourselves pretty well for the increased cost space really through the price increases so that is absolutely the ambition this case as well.

Okay and the last one for me just on the working capital build up here in the quarter as you said relating to good growth in the quarter is there anything in particular that you see now that make us they shouldn't make us expect a working capital release in Q1 or how should we expect cash flow in Q1?

Yeah I think we go now into the first quarter and we expect good growth going forward as we I mean on the path where we are currently so I mean, the expectation would be to continue to increase the working capital within trade receivables going forward. On the inventory side, we don't see that there's any specific need for inventory build up due to shortages of components or similar currently.

Okay, perfect. That was all from me. I'll get back in line. Thank you.

The next question comes from Lara Motadi from ABG Sundal Collier. Please go ahead.

Hello, good morning, Robert and Anders. A couple of questions from my end. My first one is on Germany. You flagged continued cautious optimism, but maybe you could just break this down a little. Is what you're seeing driven more by the renovation and, well, non-residential side rather than new build, well, given how soft general residential construction still is. And on all the intake, can you actually improving or is it more sort of stabilizing at low levels?

I think we are a bit optimistic going forward about the German market. We have seen growth in the past. We see growth in this quarter, and that's what we expect going forward also. I wouldn't say that we see a major change in patterns. It's boring enough maybe, but it's more of the same, I would say. Would you add something to that, Anders?

Yeah, I think you said it well, Robert. I don't think it's especially the new build that is driving the growth. I mean, also on the German market, we are present in many business areas also. So this is a product-wide growth that we are seeing and partly built on other areas like the industrial part, I would say.

Okay, great. And just the second one, you had very strong organic growth in the quarter, so just wondering a little bit about the durability of this. You said that North America and Western Europe weren't project-driven, which is incredible, but did you see any maybe customer pre-buying ahead of these tariff increases in North America and the price increases in the rest of Europe?

It's really hard to say. We are announcing the price increases from 1st of June, in general, so it's really hard to say. But specifically for the North American situation, I don't think that the tariffs had any impact on the buying behavior because it was kind of sudden. It was announced on April the 6th that this is coming. But there has also been continuing changes in the situation. Not only the kind of the tariffs themselves, but the interpretations has been shifting over the months. So it's kind of it's really tedious job keeping track on this one. And we do also expect that there will be further tariff changes kind of down the road. We hope for this situation to stabilize. But I would say that I'm particularly happy about seeing the organic growth in North America for the fourth quarter here. We have new leadership in place and we have chosen directions for the next time to come. um we are going kind of our mission or my mission is to double the size of the group or the company in uh in less than seven years and in order to reach the positions that we would like to have in in north america it has to be faster than that so i think that is the context okay um and you just mentioned that you you have the target of doubling sales in seven years because you may be on um help us understand how much is going to be organic and how much is acquisition related so seven doubling in seven years that means ten percent growth per year we have earlier communicated I think quite openly that the majority has to come from organic growth and then the balance them from acquisitions. And the reason for this is that we all know that organic growth kind of it's a fantastic profit contributor. So that's the logic and it is also and it is doable. So looking at the last quarter, we were close to 10%. That's 12 months we are just above 6%, which is kind of that would be needed. So six plus four makes ten. And of course, it could be seven plus three. Who knows? But I think this is the growth pattern that we that we would like to see going forward.

And just the last one from me, the gross margin was down a little bit year on year. And with these price hikes and the 25 years When do you think you'll be seeing a recovering input cost inflation? Should we sort of model a margin lag through the first year, H1, or how should we model this?

This is for you, Anders.

As I mentioned before on the previous question, in the past, we have been able to set off the cost increases pretty well through our price increases. Yes, of course, there's a lag also due to the order backlog and to reach out the full way to the end customer also. So I would say in general, we spoke about the other day, backlog of a couple of months, really.

so it's not a very long backlog either really which is quite good and then of course there are customer contracts that that needs a certain kind of duration certain time duration to change them but i think that's a fair estimate okay great uh thank you very much that was all from my end

The next question comes from Adela Dashian from Jefferies. Please go ahead.

Good morning, gentlemen. One question on your operating leverage. Think about that. I mean, yes, we did see very strong organic growth this quarter, but the margins only expanded modestly. So I guess what's holding you back or holding the operating leverage back at this stage of the cycle? And then maybe also, If you could comment a bit on the regional mix, could that be something that has to do with us not fully seeing the potential in the margins?

Anders, you presented the breakdown.

I think we would, of course, be helped by a bigger growth, organic growth in the Nordics, really. That would help the margins. So we have better margins in the Nordics compared to, for example, Middle East, Asia, Australia and Africa. That's one example then. We also pointed out here that of course we have seen some price increases on the material and so on so that that needs to to go through all the way as well then to increase the margin so and also on the mix side and where are we growing so so a good growth then in in certain areas where we have bigger projects bigger projects normally means a little bit lower margins than the normal day-to-day smaller sales really so That's also a difference here, I would say. And you have to remember also when looking at the gross margin, last year was exceptionally good also. And we are on a quite high level. So all in all, I would say that we are happy with the gross margin. It can always be better, but it's quite on a very good level.

For this quarter at least.

And on the topic of this quarter, and I guess, modeling the coming quarters and we keep coming back to the same question, which is the durability of this organic growth. And I guess it's a valid question because it's been so volatile over the past couple of quarters and you now mentioned that you have in certain regions at least good traction on the project side, which I would assume to some extent increases your visibility on the coming quarters. Would it be fair to assume that in the regions where you do have that sort of exposure that the organic growth trend is now, it's here to stay? And then maybe in regions such as the Nordics, you know, it's going to take a bit longer. Would just be great to get some sort of colour on the expectations going forward.

I think I start with, let's say kind of, I'm sorry for a bit repeating myself, but I think the key message here is that kind of compared with our long-term targets, we need something in the region, six to seven percent organic growth, which is what we have actually had during the last year, despite a bit volatile, as Anders described it earlier. Then, of course, we would hope for the Nordic markets to recover. We believe in our own efforts in kind of reshaping the Swedish organization. And then I already told you that to reach our ambitions and kind of achieve a better position in North America, we have to grow faster than the average of system R group. So with that in mind, I think that's kind of as good as we can put it right now. Do I miss something on this?

I think you put it well. I mean, for the full year, over 6% organic growth in individual quarters. It has been a little bit up and down during this year. And probably it will continue like that. But I don't see anything that has changed in the market that would change this view of continued organic growth.

so let's say we said after the last report during uh after when we presented the last the q3 that um kind of we were let's say we were looking forward to stable or slightly improved markets and i would say uh the same statement would hold true for for this quarter also oh thank you so much gentlemen

The next question comes from Anders JAFS from SB1 Markets. Please go ahead.

Yes, good morning. I just have maybe some question regarding the Nordics specifically. Obviously, you mentioned Sweden that you see good growth there and then obviously a bit weaker in Norway and Denmark. Have you seen any indication maybe towards the end of the quarter or... Do you see some stabilisation in those two countries? Or should we maybe expect a bit weaker first half of next fiscal year as well in these two countries? How do you view that currently? Maybe some more colour on that would be helpful.

I would summarise it like this. The situation in Norway with the slow residential market That has been persistent for some time. The belief is that it should be at the bottom and the hopes for recovery during some time ahead of us is there. If that materializes or not, it's really, really hard to say. But kind of that is – if you check on the market reports and these things, there is this expectation. But we have heard the same messages for a long time, I would say, the hopes of a recovery in Norway. Sweden, let's say, stabilizing seems to be kind of – I think the new thing is the commercial market in Denmark, which has been turning down a bit later than compared with the markets in Sweden and Norway. So I think that's the time sequence of things.

Okay. And maybe to connect to your restructuring on the German side this quarter, is there any need to maybe restructure any other small subparts of the organization for next year? Is that anything you'd like to comment on or not? And also maybe get some more color on the German side. restructuring now this last quarter?

I don't know if there is so much more to share. Sometimes you can get stuck. The expectation is that all parts of the organization should continuously improve its positioning and operations, how we're executing business. In Germany, we got to a situation where we got a bit stuck, and then we end up with this type of activity. It's much better for our business, it's much better for our clients, and it is certainly better for the company if we are really in a strong continuous improvement momentum, which we are targeting in all normal cases. Having this said, uh we say that uh we are continuously continuously evaluating all parts of the organizations and and we when we see there is a need to do sort of more of a concentrated effort we will do that but uh we are not announcing these ones that have the schedule yeah yeah oh fair enough and uh and maybe obviously lastly on on on the you know mna market currently if

I mean you obviously have a very strong balance sheet and if you see anything you see on the broader M&A market currently which makes you a bit more hesitant or how do you view that side currently?

um i think there is no surprise to anybody that we're continuously kind of evaluating targets that's kind of obvious because people do working with this every day but uh i think it's about uh pricing is always a topic but for all for us there are many more things than repricing that is uh kind of criteria we are very in kind of for us corporate culture is really important uh for uh it of course it has to be strategic fit um some of the kind of targets that we dream about they would not be available for um right now but that might happen down the road and at the end of the day it's kind of the price is kind of you need to agree on something when this happens we will be very happy um until death we are kind of consistently working on on our projects so yeah yeah it's it's a it's a not not a very decisive answer but uh i think you know the game rules here yeah yeah but it is bolt-ons that you will be looking on or or i mean if you're looking you know two three years down the line or is that something you can So we have communicated earlier that sort of the tweet spot for us would be some 30 to 50 million euro net turnover for the target companies that we're looking at. Of course when we grow in size our appetite for larger acquisitions would likely to grow also but of course we need to buy what is available on the markets. But I would say 30 to 50 million euros, that's a good range.

Yeah. All right. Well, thank you very much. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from August Flinning from Handelsbanken. Please go ahead.

Good morning. Thanks for taking my questions. Two questions from my side. The first is on growth. Could you just provide some information on the Q4 development now and what parts of this growth should be seen as projects being pushed from Q3 into Q4 as an outcome of the very cold weather that we saw last quarter?

That's a good question. I have not really thought about that one. When we presented the third quarter, I don't think that we specifically mentioned anything about cold weather, specifically had that as an explanation. Now we learned that other actors in the market, they did mention this. I'm not so sure about that. We know that there have been delays and so on. At least in China, we have not used that as an explanation.

It's really, really hard also to judge if something is pushed forward or be buying. But of course, when you launch price increases and there are added tariffs and so on, of course, those two things, they drive be buying to a certain extent. But to quantify that, that's really, really hard.

All right. Thank you for the answer. And my second one, I know we touched upon this a little bit earlier, I think, but discussing margins. And could you just, I know you were in on that a while ago, but could you just provide some color on how we should see the Q4 margin compared to the Q2 margin, for example, where you had similar sales level, but 300 bps higher margin in that quarter?

We haven't done that comparison between those two quarters. We normally compare ourselves with the same quarter last year, really. So, I mean, you have seasonality, different product mix.

The calendar is different.

Yeah.

So many differences.

All right. Could you just give, okay, the product mix, how much, And you mentioned, obviously, Nordics, the region mix, perhaps, that drove the margin a bit down this quarter, perhaps. But yeah, nothing more to consider in that question.

On the margin mix, you mean? Yeah. I don't think I have anything more to add than we have already given in this specific context when it comes to the gross margins. Of course, I mean, as I said before, where we have a strong market position compared to where we have a weaker market position, that makes a change really in the margins. also depending on if it's products that we produce ourselves or if it's traded products. We have traded products also as a complement to our product offering really to be able to deliver the full package on projects.

All right, thank you very much.

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

Let's see. I don't think we have any written questions. Do you want to?

No. If there are no more questions, I thank you for your attention and I wish you a fantastic day.

Yeah, we'll see you again, hopefully 27th of August when we have an annual general meeting in Skinskatteberg and also present our quarter one report. So looking forward to that. Wish you a nice summer.

Thank you very much and goodbye.