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 customer caution, delayed investments in the communication segment, and extended destocking activities.

• Profitability remained resilient, with Q2 operating profit at SEK 99 million and margin at 9.6–9.8%, the highest in the last four quarters, despite lower sales.

• Strong operating cash flow in Q2, reaching SEK 154 million, and cash flow after investments at SEK 137 million, driven by significant inventory reductions.

• Order backlog declined 18% year-over-year as material lead times shortened and customer orders normalized, but management maintains a positive long-term outlook and continues capacity expansion.

• Expansion of the Torsby factory announced, aiming to double its size to meet anticipated customer demand.

Financial highlights

• Q2 sales were SEK 1,012 million, down 6% year-over-year; organic sales down 10%.

• Q2 operating profit was SEK 99 million (9.8% margin); H1 operating profit SEK 190 million.

• Q2 profit after tax was SEK 68 million, down 14% year-over-year; H1 profit after tax SEK 132 million.

• 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, with operating margin expected at 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.

• Management expects progressive improvement through year-end.