NOTE (NOTE) Q2 2024 earnings summary

Executive summary

• Q2 sales declined 6% year-over-year to SEK 1,012 million, with a 10% organic drop, mainly due to delayed investments in the communication segment and extended customer destocking activities.

• Profitability remained resilient, with Q2 operating profit at SEK 99 million and an adjusted margin of 9.6%, the highest in the last four quarters, despite lower sales.

• Strong operating cash flow of SEK 154 million in Q2 and SEK 238 million year-to-date, supported by significant inventory reductions; Q2 cash flow after investments was SEK 137 million.

• The order backlog declined 18% year-over-year, but management maintains a positive long-term outlook and continues capacity expansion, including the announced doubling of the Torsby factory.

Financial highlights

• Q2 net sales: SEK 1,012 million (down 6% year-over-year); organic sales down 10%.

• Q2 operating profit: SEK 99 million (9.8% margin); underlying SEK 97 million (9.6%).

• Year-to-date sales down 3%; OP margin at 9.2%.

• Gross margin reached 13.7% in Q2, the highest in eight quarters.

• Equity ratio at 49%, indicating a strong balance sheet.

Outlook and guidance

• Full-year 2024 sales guidance lowered to SEK 4.1–4.4 billion, flat versus last year, with an operating margin of 9.5–10.5%.

• Q3 sales expected to be lower than Q2 due to seasonality, but margins to remain stable.

• Communication segment recovery not expected until 2025; other segments anticipated to strengthen in late 2024 and 2025.

• Long-term target of SEK 7.5 billion in sales by 2027 remains in place, with continued investments in capacity expansion.