Nolato - Q2 Presentation 2025

Good morning and welcome to today's presentation with Nolato. With us presenting today, we have the CEO Christ and CFO Per-ola Holmström. If you're calling in and would like a question, please press star 9 to raise your hand and star six mute yourself when you get the word. You can also use the form looking to the right. And with that said, please go ahead with your presentation.

Okay, good morning everybody and welcome to the presentation of the second quarter for Nolato Group. Turning to page two in the presentation and the summary of Nolato Group. We had during this quarter sales that amounted to just shy of 2.4 billions, which gives a currency adjusted organic growth of 4%. We saw growth in both business areas. We saw a sharp increase of our EBIT margin, increasing 1.6 percentage points to 11.6%, and creating an increase of our operating profit by 13% to 277 millions despite strong currency headwind. Turning to page three, summarizing the Nolato Group and the two business areas. The group is built up based on two distinct business areas, with the medical solution being the largest portion and then engineered close by in size. If we turn to page four focusing on our medical solutions business area, here you can see a 20-year graph of 20 years of consecutive growth. We are focusing on continuous growth and global expansion with this business area. Turning to page five, summarizing our focus product areas within medical solution. Starting with in vitro diagnostics, a high volume market with good growth potential going forward. Then we have our cardiology part with lifetime implants and very high demand products. Third, pharma packaging, which consists of containers for solid and liquid drugs. We have our continence care part of the business, which is a very high volume market. Then we have endoscopy and general surgery, an area in some change with more focus on robotic surgery going forward, good growth potential. Then drug delivery systems with strong growth potential based on large molecules that need to be injected into your body. Turning to page six focusing on second quarter for medical solutions. During this quarter we are proud that we have increased our operating profit to 70 millions, which is good growth, even though we have had strong currency headwinds. Within the business area, sales amounted to 1,350 million Swedish, an increase of 5% if we adjust for currency. We are continuing our expansion, and the expansion in Hungary linked to a significant customer contract is proceeding according to plan. We have also recently decided to establish operations in Malaysia to enable our continued expansion in Asia. Turning to page seven, focusing on engineered solutions. This business area focuses on advanced technology and high productivity manufacturing on a global scale. You can see a graph of our sales during 20 years as well. This business area corresponds to approximately 44% of group sales. Turning to page eight, focusing on the different product areas within engineered solutions, starting with consumer electronics, which includes different types of surveillance systems, connected Wi-Fi systems, and those kinds of things for home and professional use. Second is automotive market. We are as expected seeing some weaker market conditions over a longer period. The third is hygienic, which is in a good growth situation focusing on different types of hygienic products for the engineered solutions market. Then we have materials, which is a bit different in setup, and in this area we see very premium margins compared to the rest of the business area. Turning to page nine, focusing on second quarter for engineered solutions. We had an increase of sales approximately 1% if we adjust for currency, but also a strong increase of our operating profit of 8% despite strong currency headwinds below the surface. We saw continued positive performance for the hygienic market. We saw an increase in consumer electronics mainly through our investments in Asia, and as expected volumes for automotive contracted. The EBITDA margin ended up at 11.2%, a strong increase of 1.2 percentage points.

Thank you very much for that presentation. And if you're calling in and have a question, please press star 9 to raise your hand and star six mute yourself when you get the word. We have the first person calling in. We have a call from Nordia. Please go ahead. You have the word.

Good morning. It's Kier from Nordia. A couple of questions from my side maybe. Starting off in medical, in the report you grew over 5% organically. IVD as you said negative, year surgery stable, but you're still growing. You mentioned the eye business growing. What portion is it of group sales today? How important is it to fuel the organic growth in the quarter? And if you could touch upon the profitability for that business.

Is it a new business that you're ramping, or is it a business that you had for a while but that you've for some reason mentioned in this quarter?

And how come you had good growth in the quarter? Is it new contracts you're ramping up?

Okay. Sounds fair. On Malaysia, could you mention a bit what the size of the plant production is? You mentioned obviously second half, but if you could give more details around the ramp, that would be helpful. Also, is it supposed to replace parts of the Chinese production for either medical or engineered? And what products are you planning to manufacture there, especially for the engineered side?

And will it be an addition, or do you plan to move part of China to Malaysia?

And that is as usual, I mean contracts you already have received, or is it more speculation that you invest in the new facility? Because you did the same in Switzerland and hoped for production volumes, but ended up in an unfortunate situation with underutilization. What conviction do you have in volumes coming in the near term?

Okay, that is very clear. And the final one, if I may. Obviously quite impressive margins in medical in the quarter, also the sequential ramp of the margin. You mentioned pricing, cost outs, mix. I cannot see a mix tailwind in the quarter though, but can you help us bridge it a bit more in detail? Especially also where you are in the US today compared to where you want to be. I guess the US is one important building block to get the margin back to somewhere 13%.

Very clear. Thank you.

And now we'll give the word to Adrian from ABG. Please go ahead. You have the word.

Yes. Hello. A couple of questions from my end. I guess first of all on the medical margins, can you give some indication on Givet Plastics and how much below the average for the segment it still is? Is it starting to close in on the rest of the segment now?

Yeah, understood. And in engineered solutions regarding the margin lift, you said it was broad-based efforts. What about the overcapacity issue you had in China? Is that to a large extent resolved, or is that still running on lower utilization?

Okay, understood. And a more broad-based question on the margin. You raised the target not that long ago to 12%, and you're already closing in on the new higher target. Would you say that the opportunities to further increase margin from current levels are becoming more limited, or can we expect a similar progression as we've seen in the last few quarters ahead?

Yeah, I agree. And a final one for me. With the various expansionary investments ongoing, I know you've issued the capex guidance for 2025 already, but can you mention which investments are going to spill over into 2026? Because when you add these together, we should perhaps expect above average capex in 2026 as well. Is that a fair assumption?

Okay, understood. That's helpful. That's all for me. Thank you.

And that concludes our Q&A session here. Thank you very much, Christ and Per-ola Holmström for presenting today and answering all of our questions. I wish you all a great rest of the summer. Thank you very much.