Trelleborg AB (publ)

Welcome to the Trelleborg Q1 2025 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 hash 5 on their telephone keypad. Now I will hand the conference over to CEO Peter Nielsen and CFO Frederick Nielsen. Please go ahead.

Thank you and welcome to all of you to this run-through or presentation of the financial performance of Trelleborg in Q1 2025. As usual I will let's say start giving some overall headlines on the report the way we look at and also give you some input on the way we look at the business areas and then Fredrik Nilsson our group CFO will guide you through financials before I summing up with the summary and some comments on the running quarter outlook before finishing off with the Q&A and as usual we're using a slide deck presentation which is on our web page so using that and turning to page two agenda as I said highlights overall highlights business area comments financials summary and outlook and then a Q&A so moving to the slide three on the overall Today we had a solid quarter with record results. Basically we can start off by saying the development in the quarter was very much in line with our expectations and we're happy that all our business, all our three business areas delivered well in line with expectations. In summary then it's summing up then on sales of 8.8 billion an increase of 8% compared to a year ago and this 8% it has split on organic sales 1 percentage points M&A adding 6 percentage points and then currency assisting us with another 1% EBITDA basically following the sales development and ends up at 16.16 which is then a margin of EBITDA margin of 18.2 which is 0.1 percent higher than last year and this is then in total let's say both higher sales and also higher cba in a quarter for us up until now and we continue to to kind of invest in improving the structure we have let's say items affecting colorability on on similar levels as a year ago we also noted satisfaction that even though this first quarter is usually quite challenging in in terms of cash flow due to seasonality but we managed also to grow that in the quarter and we are Fredrik will comment on that later as well but we are let's say satisfied to see that we remain on the 90 percent level rolling 12 on on the cash conversion we also with satisfaction also have included and in in the quarter acquisitions of CSCUS and NuFlow in Canada, US as well. Good add-on, bolt-on acquisitions for us which is strengthening already strong positions. We also post the ending of Q1, we also announced two acquisitions, Aeroplastics which is an American acquisition related to interior for aircrafts, airplanes and also national gummi or national rubber in Sweden where we do also an acquisition supplementing our business within extruded ceiling profiles. So good quarter solid in most aspects or not all aspects from our point of view which is then delivered in a good way resulting in a record result. Turning to page four, organic sales, mixed development. As you see in the quarter, Europe a little bit more challenging, minus five. Partly then compensated by North and South America delivering solid organic growth of 3%, but most of the benefit of best development actually happening in Asia, the rest of the world, where we grow 10% in the quarter compared to last year. Turning to page five agenda again business areas and then quickly turning to page six to comment on industrial solutions solid growth in the quarter high earnings organic sales two percent M&A adding another two percent as it is mixed development in diversified industrial so we see I can say continued strong development in marine solutions, LNG project related businesses and also water infrastructure. All of them showing strong growth. Still continue to be challenging, we would call it construction segments. Maybe flattening it out in Europe but we still see, we do see a continual downturn in especially North America in this segment and that is hurting us. continue to hurt us in the quarter automotive also a little bit subdued and we see also negative growth in automotive coming from a very that's a strong few quarters last year so no surprise for us in a way but nevertheless it's a fact and all in all well managed as usual I should say and we are continue to manage the operational aspects of the business very good and we also continue to invest in structural improvements which means that overall we managed to deliver the highest ever EBITDA and also actually margin with a slim margin to before but nevertheless the best ever margin in the in this business area also already commented a new flow acquired which is then let's say opening kind of a new geographical area for us for pipe relining pipe repair very happy to have that and it will be synergistic for us as we will be able to have let's say a better way of selling these technologies also in North America and then post quarter one a smaller acquisition but nevertheless very important for this small niche business of extruded profiles we're buying the Swedish national GUMMI and thereby kind of supplementing our offering going into a little bit higher dimension profiles which we're kind of lacking in our offering before and then turning to page seven and commenting on medical solutions Strong growth with high margins is the heading organic sales solid organic sales of five percent and an M&A benefiting from the acquisition we did mid last year Baron group in especially then with the presence in China and Australia. Organic sales coming from improvements in Europe where we still see a little bit muted development both in North America and Asia But overall, nevertheless, delivering plus 5%. So solid growth overall. We also noted satisfaction that the life science segment, or we earlier called it biopharma segment, is also improving from fairly low levels. That has been depressed for quite some time, but we now see that that segment, which is then related to kind of active bacteria and vaccine and such stuff, you also see that improving now, which is going to be beneficial for us. EBITDA and margin up of course mainly due to the acquisition and synergies from the integration of the Barron Group. We also want to comment here that we have in medical solutions several ongoing and what you call capacity enhancing projects ongoing in order to really develop the global business. We are investing in Europe to grow our manufacturing platform in Europe. We are also progressing well with the project in Costa Rica in order to become both more complete but also more competitive in the Americas region. So good development overall for medical solutions and managed to deliver an EBITDA margin above 20% in the quarter. Turning to page eight. Sealing solutions here we say stable the price to some challenging markets challenging market in some aspects we'll get back and comment on that organic sales ending up at basically flat dish while M&A then adding five percent to the sales we see these sales that we call diversified industrial declined in Europe and North America but a bit of solid improvement in Asia and here of course it is kind of a mixed development where we continue to see that the construction equipment and AG is being challenged while we have continued good development in other areas like semiconductors Deliveries to the automotive industry weaker in all markets. I think that is general for all our business areas, but that is once again is not unexpected. We had very strong sales end of last year, maybe two strong sales end of last year and we are well prepared to manage this weakening in a good way. Aerospace continue to deliver very well. I mean we are global in this aspects and we are kind of covering all the main OEs in a good way and we continue also, which I get back later, we continue also to add acquisitions into this portfolio which is growing our portfolio even more and thereby improving our abilities to kind of support the industry even better going forward in the aerospace segment. EBITDA unchanged in absolute terms but impacted a little bit by lower production volumes and also we have to note as usual when we buy something in season solution we are initially being hit by somewhat lower margin in the acquired business which we then continue to work with and we continue to let's say improve in order to get them back to the margin where we want them to be. Two acquisitions one in the quarter and one supposed to post the quarter so you see them with the south US exposed to this gulf area which is a good local area especially for oil and gas activities both onshore and offshore. nice addition to our portfolio in North America and then also acquisition of Aeroplastics which is then let's say once again I commented on that before which is then let's say improving our offering widening our offering for the aerospace industry. So overall a good quarter of Seeding Solutions with kind of known challenges in a way especially related to this construction equipment and agriculture. Turning to page 9, a little bit on sustainability, we continue to improve, 8% lowering of the carbon dioxide emissions year-to-year basis, but we are getting to levels here where we will not see big percentages of improvements going forward. There's still some way to go. Of course, we're adding resources to make sure that we continue to deliver improvements, but I think this 8% year-to-year improvement is for us now a good figure. for this improvement and kind of the areas kind of the figures that we should expect also going forward. Turning to page 10 the other sustainability KPI that we are showing of course we work in a lot other areas as well but in these quarterly reports we're focusing on carbon dioxide and also share of renewable and fossil free electricity here we are basically flat this we're already running on a 90% plus activity and we are having a few areas where it's difficult actually to get fossil free electricity but nevertheless we're working on finding solutions to this as well in order to improve this figure even a little bit more. So I guess that is the overall comments on the business areas and the sustainability and basic turning to page 11. financials and then quickly turning to page 12 and ask Fredrik to take us through this section.

Thank you Peter. Looking into page 12 the sales development report net sales up 8% from 8.2 billion to 8.9 billion SEK. Organic sales up 1% in the quarter as Peter said with organic growth for both industrial solution and medical solution while ceiling solution had a flat development. M&A at the six percent in the quarter and then another one percent coming from currency effects. Moving on page 13 showing the historical sales growth. The first quarter was actually almost in line with the growth target of eight percent and it was the highest sales growth since the third quarter 2023. Moving on to page 14 showing the quarterly sales enrollment 12 months for continuing operations at last 12 months the sales amounted to 34.8 billion SEK moving on page 15 looking at the EBIT A development we had a good growth of eight percent from 1 billion 490 million up to 1 billion 616 million EBIT A was the highest so far for a quarter. We have profit growth in all three business areas, with, as Peter mentioned, a very strong growth in medical solution due to the acquisition integration of Baron Group. And we also had a good growth of 5% in industrial solution and more of flat-ish development for ceiling solution. FX on EBIT A in the quarter of 5 million. Modern-wise, up from 18.1 to 18.2 an increase by 0.1 percentage points looking at the rolling 12 months trend we have an EBITDA of 6 billion 266 million with a margin of 18 percent and we have had an EBITDA growth of five percent during the last 12 months Moving on to page 17, looking at some more details on the income statements. ITAS affecting comparability in the quarter of 61 million, entirely related to restructuring costs for adjusting our cost base. Looking further down in the income statement, financial net, an increase from minus 20 up to 144 million. And the main reasons here is that last year we were sitting with a net cash position and got some interest income of 86 million. And now we are sitting with a net debt position, which of course also implies that we get some interest expenses in the quarter. So that is the main reason why we have gone from minus 20 to minus 144 million in financial net. Tax rate in the quarter, 25%, which is in line with our underlying tax rate of 25%. Moving on to page 18, earnings per share. If you look at starting with excluded assets affecting comparability, we were up from 4.23 to 4.28. And the reason here for plus 1% is, of course, the good improvement in EBITDA offset by the higher financial net that I just explained. If you then look, including anticipated probability, earnings per share amounted to 4.08. Moving on to page 19, cash flow. As Peter said, we had a good cash flow in the quarter of 821 million, supported with a good EBITDA development of 148 million. And then cash flow from working capital was negative, but that is due to normal seasonality. And then CapEx was in line with the communicated guidance for the full year. However, somewhat higher than Q1 last year. Moving on to page 20, cash flow conversion running at the good level of 90%. So we still have a high cash conversion ratio. Looking to page 21, looking at the gearing and leverage development, we ended the quarter of 6,733,000,000 in debt. We have done share buybacks of slightly more than a billion during the quarter. Depth equity ratio of 17%, so almost flat compared to year end of 2024. And the same with net depth of EBITDA, 0.9, which was exactly the same that we had end of 2024. In other words, our balance sheet remains strong. Moving on to page 22, return on capital employed 11.8 for the quarter and of course capital employed was impacted by our recent acquisition and also on the higher pace of greenfield investments. Finally, Moving on to page 23, our guidance for 2025. They are unchanged compared to what was presented in late January, which means that capex 1,650,000,000 for the full year, approximately 300,000,000 in restructuring costs for the full year, an amortization of internables 650, and then the underlying tax rate of 25%. By that I would like to hand back the microphone to you Peter.