Nolato - Q1 Presentation 2025

Hello and welcome to today's presentation with Nolato. With us presenting today, we have the CEO Christrist and CFO. If you have any questions and you're calling in, please press star 9 to raise your hand and then star six, unmute yourself when it's your turn to speak. You can also submit your written questions via the form located to the right. And with that said, please go ahead with your presentation.

Thank you and welcome to the presentation of Nolato's first quarter 2025. This is Chris Walk speaking. If we summarize the quarter, we had similar sales as comparing comparison quarter but with a very strong increase of our margins amounting to 11% as a total, creating an EBITA of 271 million.

Moving to page three in the presentation deck. Looking at the two parts of our business. Medical solution now corresponds to 57% of our total sales and engineered solution 43% of the overall sales of the group. Jumping into medical solutions. Starting with that sales amounted to just below 1.4 billion in the quarter and you can also see the continuous growth of the business area over the last 20 years on the graph. Moving to page five in the presentation deck. Splitting up the medical sales in different focus product areas. During this quarter we saw growth within the drug delivery part of the business. And other than that minor changes around the different parts of the business. On page six we summarize the medical first quarter. We saw an adjusted sales increase of if we adjust for currency of 2% and we saw stable volumes across all the different market areas but of course some growth within the drug delivery. Surgical has been stabilizing and within the IVD we saw some lower volumes during the quarter but it's more volatility quarter to quarter than anything else.

A strong margin improvement, a full 1.9 percentage points increase amounting to 12.2% for the quarter. We saw that coming mostly from our US operation with the cost adjustments and intensive work together with customers of the total supply chain in giving improvements both for the customer and ourselves. The expansion in Hungary linked to the big order that we announced a year ago is going according to plan and is progressing in a planned way. We have during the quarter also acquired a property in Poland that will enable us continued expansion in Europe. This is approximately 8,000 square meters of property. So the quarter ended up just below 1.4 billion, an operating profit of 171 million, creating the margin of 12.2 percentage points.

Jumping into engineered solutions and here you see some volatility but over the last years we have stabilized and are now focusing on finding new business and continue the growth of the business area. If we split up the sales within engineered solutions during this quarter, we saw a good growth with materials growing at 12% in the quarter. We saw slower sales within automotive that was expected but we've seen the volumes now on a lower level and we expect that to continue on that level for the coming period of time. If we then look on page nine and summarize the business area, we saw adjusted currency sales decrease of 3% and as expected automotive industry declined and stable volumes across the other sectors except within materials they saw a sharply increased volumes and growth at a strong 12%. The margin within the business area increased to 10.1 percentage points. It was of course favorable product mix but also cost adjustments that we have made in the business. So sales amounted to 1 billion 58 million in the quarter, operating profit at 107 million.

Good afternoon. Perhaps commenting on the financial highlights on page 10. Net sales amounted to 2 billion 453 million, similar as same period last year. Operating profit increased 14% to 271 million by margin improvement in both business areas, but mainly within medical and the EBITA margin for the group improved by 1.3 percentage units to 11.0. The effective tax rate was 21% and we expect between 21 and 22% for the full year. Cash flow from operating activities was similar to last year boosted by improvements in profit but somewhat higher working capital requirements having a negative effect. Increased activity and sales at the end of the quarter compared with the end of 2024 resulted in higher trade receivables. Net investments as expected came in higher at 271 million compared to 230 million last year. Large effects of capex in Hungary for production of devices for treatment of overweight and diabetes. In addition, an operating property in Poland was acquired for 69 million for future medical expansion. We expect 850 million for the full year. Earnings per share increased to 0.74 SEK and return on capital employed improved to 12.7% mainly by the margin improvement. Net financial liabilities in relation to EBITDA at a low level 0.5 times enabling expansion and acquisitions. Turning to page 11 focusing on current situation per business area. Starting with the medical solutions business area. The growth strategy is maintained. We focus on margin, cost adjustment, pricing strategy and efficiency. We base this on innovation and sustainability. Within the business, we have a very broad customer base with longstanding close customer relationships. Within the engineered solutions, we have advanced our market position. We have established a position in new product areas. We have a success in new markets that is very positive for our materials part of the business. We will now open up for questions.

Thank you very much for that presentation and yes, let's open up the Q&A section here. If you're calling in and would like to ask a question, please press star 9 to raise your hand and star six to unmute yourself when you get when it's your turn to speak. And first we have Adrian Gil from ABG. Please go ahead. You have the word.

Hello. Can you hear me? Okay. Yes. Perfect. Yeah, a few questions for me. Starting off in medical, quite steep margin lift in medical. I mean was this to an extent a quarter where things went your way or is this entire margin lift explained by you know structural price cost adjustments that would mean that this is the new base margin that you can increase from in coming quarters or is there a risk we might take a step down in coming quarters?

Okay, sounds good. And also I know you don't report this specifically but can you talk a bit about how the margin is progressing in G plastics as well because you mentioned that surgery is sort of stabilizing from low levels and does this mean you're finally starting to see meaningful progress in gastlastics as well?

Okay. And yeah on the materials business it's grown fairly well for two quarters now. Can you talk a bit about the end markets and sort of if it's a rebound in the traditional telecom business that is driving that or if it's the new market areas where you are sort of increasing the materials penetration?

Okay, perfect. And a final one from me. The question we have to ask all of the companies, can you just say a few words about your tariff exposure and to what extent you expect to be able to sort of offset any direct cost increases from tariffs by increasing prices forward.

Does that also apply for the sourcing of materials as well?

Okay, perfect. In that case that's all for me. So thank you.

Thank you. Okay, we'll give the word to Paul from NIA. Please go ahead, you have the word.

Hi, it's Paul from NIA. Some questions for me as well here. In engineered, I think it's from my point of view at least quite impressive margin given the organic drop you mentioned. The cost out you mentioned, positive mix. Just to clarify here, when you talk about positive mix, you're referring to EMC or is it something else we should acknowledge here regarding mix?

Okay, that's very clear. And on the automotive side, are you planning to reduce cost or transfer costs to other areas in order to absorb the lower volumes? It seems like it might continue for a while. And secondly on the auto, obviously some of your products might through one of your customers end up in the US. Have you seen a weakening auto exposure during the latter part of the quarter or is it fairly same as you might expect for the coming two quarters here?

Perfect. And they are fully materialized in Q1 then or is it something else to come in Q2?

Very clear. And on your Polish expansion here, I think you took 70 million in capex for it. I mean it's not massive, but historically you've done these investments, right? When because you have pretty good visibility in incoming volumes. Is it in this case that you're transferring some lower margin products or is it purely new capacity that you need for future growth? And also because last time you did the big expansion it was post 2020. Of course it was pandemic but then you sort of ended up with quite a big underutilization of some productions. Of course unique circumstance but how do you see it here?

Okay, that is very clear. And the final one if I may, you said IVD has been coming back quite nicely over the past few quarters here. Now you said it was a bit muted, you said mostly I think due to quarterly volatility. The word mostly, what else is it apart from seasonal quarterly volatility?

Okay, so it's quarterly volatility. Okay, that's very clear. Thank you.

Okay, I will give the word to Carl Nuriel from SCB. Please go ahead. You have the word.

Hello. We cannot hear you. In the meantime, we'll give the word to Mik Lassan from Kenya again. Please go ahead. You have the word.

Okay. Hi guys. Thanks for taking my question. Yeah, I want to go back to the margin improvement. Really impressive. Can you say something about the margin improvement or if you had the margin improvement also in the European business for the medical segments?

Okay, got it. And the European side continues on a relatively high stable level, I guess.

No major improvement either. Okay. And when it comes to this improvement that you saw now in Q1, was this in line with your internal expectations that you saw this?

Yeah. Okay. And you have talked about these initiatives that you have implemented, supply changes and cost adjustments and improving the contract or cost out initiatives. Where do you expect more potential from these different initiatives and what line of sight do you have and visibility do you have for the coming quarters when it comes to these initiatives and margin improvement possibilities towards your new target?

Okay. And the final one, can you talk a bit more in general terms about the medical operations in the US? How your different facilities are operating and the market situation for your different end customers there or yeah and markets in general. So we get a feel for how that part is developing.

Okay, great. Thank you so much.

Thank you. So that's a wrap of the Q&A section here. Thank you very much Christ and Peru for presenting today and everyone for tuning in to this Nolato Q1 presentation. Thank you very much. Thank you very much and have a great afternoon. Bye.