Nolato Stock

Hello, and welcome to today's broadcast with Nolato, who will be presenting the financial report for the second quarter of 2026. With us, we have the CEO, Christer Wahlquist; and CFO, Per-Ola Holmstrom. [Operator Instructions] With that said, I hand it over to you, Christer and Per-Ola. The floor is yours.

Thank you, and welcome to the presentation of the second quarter for Nolato Group. Starting on Page 2. We saw a quarter with growth in both business areas with a total growth of 4% currency adjusted with the strongest growth in the Medical business area. This was achieved in a difficult environment, I would say. So sales ended up at -- close to SEK 2.5 billion in the quarter, and that was then 4% adjusted currency growth. The profit EBITA ended up at SEK 247 million, creating a margin of 10.1%. The margin was affected by increased raw material prices and some start-up costs for new programs.

Strong cash flow in the quarter ended up at SEK 287 million and as a total, we have a very strong financial position, enabling us to deliver on the intensified acquisition strategy as communicated previously.

Turning to Page 3, summing up the group. So Nolato consists of 2 business areas that create synergies across. And both business areas are then working as a development and production partner for leading global customers. On Page 4, we see a summary of Medical Solutions' development over the last 20 years. So we have seen a continuous sustainable growth and built a global expansion. On Page 5, we see a summary of our focused product areas and as mentioned previously, we see growth opportunities across, of course, with some different driving forces, but we see good potentials across the board and we will continue to deliver on the long-term growth of the business area.

On Page 6, we summarized up the second quarter for Medical Solutions. And the sales ended up close to SEK 1.4 billion in sales. That is then, of course, a growth of 4% if we adjust for the currency. We saw good development for the in-vitro diagnostic market segment. We saw also continuous growth in the drug delivery systems. And across the other market areas, we saw stable volumes. The EBITA margin ended up at 11.7 percentage we saw some negative impact from both raw material price increase driven by oil prices. And in that sense, we have a time lag before we can adjust to our customers. So we will adjust that going forward.

We saw a negative impact in the quarter from start-up of new programs or projects that have not reached the volumes. And that is, of course, part of our -- these projects are a part of supporting our growth targets for the Medical business area. The expansion in Hungary linked to the new customer contract is proceeding according to plan, and we have started commercial volumes produced in the end of the second quarter and after the quarter, we have started deliveries of commercial volumes. We will gradually increase our capacity according to previously announced schedule.

Jumping into Engineered Solutions on Page 7. Here, we see also a summary of the last close to 20 years for the business area. And on Page 8, we summarize up the focused product areas for Engineered Solutions. Here in this area, we have four of these areas: consumer electronics, automotive, hygiene and others are sort of similar in the business scope. And then we have the materials part that is a little bit different where we have our own developed material solutions for shielding and thermal management. That area, we saw a strong growth in the quarter.

Jumping to Page 9, summarizing the second quarter for Engineered Solutions. We ended up at the sales of close to SEK 1.1 billion in the quarter. And that was a 3% adjusted growth in the quarter. Supporting that was our strong growth for the materials which by itself reached a 19% organic growth in the quarter. We also saw sustained growth in consumer electronics with an increase in smart home products. In the quarter, we also had lower volumes in the hygiene area affected by inventory adjustment and lower market demand. Automotive contracted as expected. Summarizing this, it created a margin of 10.3%, and we saw a negative impact from the price increases, the raw material, similar to the Medical but also a favorable product mix with a higher proportion of materials sales in the quarter.

Good morning, Per-Ola Holmstrom, CFO; and group financial highlights on Page 10. Net sales was SEK 2.454 billion in the quarter, a 4% growth. Less currency headwinds than recent quarters on group level, 1.5%. Operating profit EBITA amounted to SEK 247 million compared to SEK 277 million. The EBITA margin was 10.1% compared to 11.6% and negatively affected mainly by price increases for raw materials, driven by higher oil prices. The effect is estimated to almost SEK 20 million, most part within Engineered. As planned, during the first 6 months, we have had resources ahead of starting production and during ramp-up in the number of projects negatively affecting Medical, estimated to almost SEK 10 million in the quarter. .

On group level, a one-off severance cost affected by SEK 6 million in the quarter. Net investments decreased to SEK 133 million compared to SEK 188 million. As planned, most of the CapEx for the Hungarian expansion is paid. And as we have commented earlier, CapEx will be on a lower level going forward, SEK 600 million to SEK 650 million is expected for the full year. Cash flow after investments was then higher SEK 154 million compared to SEK 128 million. Net financial liabilities, excluding pension and lease liabilities totaled SEK 1.055 billion, resulting in net financial liabilities in relation to EBITDA of 0.7x giving flexibility. Return on capital employed decreased to 13.3% compared to 14.2% for full year 2025 as the profitability was slightly lower, and we now have balance sheet loaded for higher speed.

Turning to Page 11, focusing on the current situation. If we start with the Medical business area, we have, of course, the continued growth strategy, higher market activity. We feel that across the board. We have built that on our broad customer base with a long-standing close customer relationships. We see that the major client contracts confirm the overall strategy and we have started commercial production at our Hungarian establishment. The establishment of operation in Malaysia and the expansion in Poland is also creating opportunities going forward.

On the Engineered Solutions side, we have advanced our market position, not least in the consumer electronics. We have established position in new product areas and focused on innovative and sustainable solutions. We see success in new products and technology areas, mainly data center, that is positive for materials. Of course, the expansion of operations in Malaysia is also supporting the long-term development of Engineered Solutions. And overall, we have a favorable financial position that enables our intensified M&A agenda. We will now open up for questions.

Thank you for that presentation. We now open up for a Q&A session. [Operator Instructions] We'll begin with Adrian from ABG.

Just from my end before moving into the segments, a question on the group costs. Even if we remove the SEK 6 million in the severance pay, the group costs would still have been at a significantly elevated levels compared to your usual run rate. So can you just mention what drove this? And if this is something that will revert in coming quarters?

I would say that if we look on the actual for this quarter and compare with the actual previous quarter last year. I would say last year was at a low level and this year was at a high level. And if you would combine them, I would say that is more the normal level. And by doing that, we have the extra SEK 6 million, as you say, on top of that, and we have had a quarter where our intensified M&A agenda also has had some cost in this quarter. So that is explaining the high number this quarter.

Okay. Understood. And then you mentioned the SEK 20 million impact from the higher input costs. Do you expect to have raised prices to fully offset this already in Q3? Or do you think there could be some lingering effects from higher input costs still in Q3? .

We do see some of these costs also affecting the third quarter. We assess that we have taken 2/3 of that effect in this quarter and the rest will come in the beginning of the third quarter.

Okay. That's very helpful. And then perhaps just a status update on the GLP-1 deliveries in Hungary for -- yes, maybe for the second half of the year now that commercial deliveries are up and running. What sort of ramp-up pace should we expect from here?

As we communicated when we announced this new program, we said that we will have a starting point in second quarter this year and then a gradual increase for some years, so -- and reaching the full volume somewhere in 2029. And then how exactly that will come in, in different quarters. It's very difficult to say because we are, of course, starting the production ramping up and continuously adding new capacity over that period.

I understand. But can you at least help us if it will be sort of lumpy in stages or whether it will be more of a straight line ramp up?

It will be not a straight line, but more you can take a line and then, of course, different quarters will be affected a little bit, but it's more of a line than lumpy jumps.

Okay. Understood. And final one for me, more on a broader note regarding the materials business. Now that you are back to sort of significant growth, is there any sort of capacity cap for this business? And how long can you sustain growth in this business before you need sort of major investments?

This area is light on the investment compared to the rest and it's not big jumps in capacity increases that it's needed. It's more sort of easy on the growth side from the capital side.

Okay. Okay. So no real endpoint of when you need to start investing again. This can grow for quite a while, it sounds like.

Yes. On the material side, it's light on the investments.

Now for our second speaker, we will let the number who ends in 1008.

This is Oscar Ronnkvist, from SEB. So first, just I had a question on the sort of product ramp-up in Medical, which had a drag on. I think you said SEK 10 million. So just wanted to know if you had any comments on the timing? Will that be gone now in Q3? Or should that still be the case with this SEK 10 million drag in the coming, let's say, 1, 2, 3 quarters?

The situation during the first half year has been affected by different projects, as we say. But of course, starting the production in Hungary that will support going forward in that, and some of the others will also increase in volumes going forward. But there will be effects on the margin in a way doing that. We will -- for these projects, we will not have let's say, the targeted margin near time, that will come gradually over time for these projects. But the situation will ease up going forward gradually in small steps.

All right. Perfect. And then just also a follow-up on the oil price implications here. So you said that around 2/3 and it was, I think, SEK 20 million now in Q2 the effect. So we could expect SEK 10 million in Q3. And then after that, that should be over. Is that how to interpret?

That is our estimation if the situation will calm down in the Middle East, and we won't have any new spikes popping up.

Perfect. And just because the oil price obviously has come down a bit, could you see any sort of positive effects when that reversed and that you have raised prices for some of your customers and that you could have a short-term boost if plastic prices come down a bit? .

No, we don't see that yet. It's still a large uncertainty in the market, and there are many other effects affecting the pricing picture. And we haven't noticed any downturns yet.

Understood. And then just a final one, sort of a detailed questions here, but again, on the group function EBITDA here. So I think the difference sort of on an average level in H1 versus last year looks to be around SEK 10 million, and you say that it's in the sort of middle of that. So is it fair to say that this quarter was maybe elevated by approximately SEK 5 million on group function level, and that's due to M&A activity?

Well, of course, there are different things fluctuating a bit, but that is one, maybe the main reason of the difference you mentioned. Yes.

All right. And the magnitude is sort of approximately in the right area?

Yes, yes.

Thank you so much. Now we have some questions from chat. And one of them is that the increased administration costs, what is the effect of those? And will it be frequent going forward? .

I think we have commented on the administration increased cost already. It is linked to the severance cost. It is linked to M&A activities and some others, but that is naturally, of course, something that hits the administration cost line.

Thank you so much. Now going forward, Christer, this is your final interim report as CEO after more than a decade in a row. How would you describe Nolato's position today? And what gives the confidence in the company's future under new leadership?

That's a very nice question. Yes, during my 10 years as the CEO of Nolato, we have developed the group to true global player in both business areas. We have changed our positioning from more a production partner to a development and production partner. So I'm fully confident in the potential of continuous growth and increased margins, delivering on our financial targets going forward. In the new leadership, Anders, I have had the opportunity to work with him for many years. I think I hired him 3, 4 years ago. And I have full confidence in his ability to take Nolato to the next level.

Thank you so much. We can continue with some more questions. For example, EBITDA margin declined to 10.1% mainly due to higher oil-related raw material costs? And how quickly do you expect these cost increases to be passed through to customers? .

Yes. As we commented, we do see that we have 1/3 of these cost effects still coming in the beginning of third quarter. So then it should be handled by us. And if the pricing situation is stable after that, that will be it, so to say then we are through.

Thank you. Well, that was today's last question. So with that, we wrap up today's broadcast. I would like to extend a real big thank you to Christer and Per-Ola for the presentation as well as to everyone who submitted questions and watched today's broadcast. I wish you all a continued pleasant day and also a great weekend.

Thank you all.

Hello, and welcome to today's presentation with Nolato, where CEO, Christer Wahlquist; and CFO, Per-Ola Holmstrom, will present the report for the first quarter of 2026. [Operator Instructions] And with that said, I hand over the word to you guys.

Thank you, and welcome to the presentation of Nolato's first quarter of 2026. Christer Wahlquist speaking here and starting on Page 2. The first quarter -- during the first quarter of 2026, we saw growth in both our business areas despite a very volatile geopolitical situation. The total organic growth, if we adjust for currency, ended up at 3% and it was a little bit stronger on the medical side with 5% and 1% on the engineered side.

That summarizes to an EBITA of SEK 260 million. And of course, the EBITDA was strongly affected by currency headwinds as we calculate to 7%. We kept our margins on 11% and sustaining them in a good way. And of course, our strong financial position with very good possibilities to execute our acquisition agenda remains.

Turning to Page 3, summarizing the Nolato group. The group consists of 2 business areas, the Medical Solutions at 57% of the total and Engineered Solutions at 43%. Of course, it's 2 different markets. But behind the scenes, we are doing similar things, of course, with some different growth drivers and the different key needed things. But the 2 business areas create synergies by combining them to the customer interface.

Then we jump to Page 4, summarizing the first of the Medical Solutions. And here, we can see a 20-year graph of our development and we are, of course, continuous sustainable growth with global expansion as a target.

If we look in behind the scenes on Page 5, we summarize the different focused product areas and of course, then we can start with the In vitro diagnostics, which, this quarter, had a good growth and ended up at 18% of the total business area. This therapeutical areas is a long-term growth market that we think it has good potential for the continuous years going ahead.

The second one is Cardiology, ended up also growth, 7% of the total in this area. This is, of course, the area with the toughest quality demands. Then we have Pharma packaging decreasing as a total of the -- as a share of the total 11%. And this is an area that we entered into because we wanted to build ourselves strongly into the drug deliveries area.

And then, of course, we see the drug delivery increasing from 16% to 17% of the total. This is a long-term potential with delivery devices for the large molecules within Pharma. Then we saw Endoscopy and general surgery decreasing as a total of the -- of the total group ending up at 20%. We saw some stock changes in that market. And then Continence care, it's a high-volume market building for future.

Jumping to Page 6, focusing on the performance first quarter of Medical. As mentioned, we increased the sales with 5% adjusted for currency. And as I mentioned before, we saw growth in In vitro diagnostics, higher proportion of new products. We saw a continuous upbeat performance of the Drug delivery. We saw, as I mentioned before, surgery contracted due to inventory adjustments and other markets had stable volumes. The margin ended up at 11.8 percentage points.

We saw some negative impact from the -- in the quarter from growth in newer products that have not yet reached the planned volumes. And of course, resources for starting up new projects have some negative impact on the margin. The expansion in Hungary linked to the large customer program within the drug delivery systems is proceeding according to plan and validation deliveries was during the quarter according to plan. And late in the second quarter, we expect to have our first commercial volumes in that program.

Going to Page 7, on the Engineered Solutions side. And of course, here, we are advancing our high-productivity manufacturing on the global scale adjusting the customer base and growing in new areas.

If we look on Page 8, we have the focused different areas here. We saw consumer electronic grow as a total -- share of the total, ending up at 11%. Here, we are doing advanced products for smart homes, so strong growth in that area. The Automotive was stable at 23% of the total. On the Hygienic side, we saw some stock movements, decreasing the total of the -- share of the total to 13% from 15% before.

Others were also had some headwinds on the white goods side and also some on the forest equipment. Materials had very strong growth within the quarter. This is, as mentioned, a little bit premium margins and as a share of the total, it was growing from 18% to 21%.

Summarizing the business area's first quarter. We saw a 1% adjusted growth, very strong growth for the Materials at a full 15% adjusted for currency. We saw, as mentioned before, strong growth in the consumer electronic market, where the smart home products are growing, lower volumes within the Hygiene affected by inventories as mentioned, and stable volumes for Automotive. So the margin ended up at 10.6%, and of course, it was affected by the favorable mix with a higher proportion of materials.

Good afternoon. Per-Ola Holmstrom, CFO and group financial highlights on Page 10. Net sales was in the quarter the 3% growth, ending up at SEK 2,357 million. Currency headwinds of 7%. Operating profit amounted to SEK 260 million compared to SEK 271 million last year, again, affected by currency. We had an unchanged EBITA margin of 11%. Tax rate was within expected range of 22%.

Cash flow from operating activities rose to SEK 225 million compared to SEK 135 million. The change of working capital was lower than last year. Net investments affecting cash flow decreased to SEK 193 million compared to SEK 271 million, mainly because last year included an operating property in Poland of SEK 69 million. Return on capital employed for the last 12 months was 14%. Net financial liabilities in relation to EBITDA on a low level, 0.5x, securing flexibility for expansion.

Turning to Page 11 on some development on the sustainable side. We have had a very long-lasting focuses on sustainability, which we feel support our business offer to the market. So it's creating opportunities for us. We have, during 2025, operated all plants with 100% renewable electricity. We have then eliminated Scope 1 and 2 emissions, meaning that the Scope 3 now accounts for 99% of our total carbon dioxide footprint.

We have -- also during -- launched very ambitious sustainable targets for 2030 that are to guide developments in climate circularity. So it's a very long-term focus, and we are ahead of our competitors and feel that this is gaining market positions and possibilities for us.

If we turn to Page 12, focus on the current situation for our business area, first. Of course, we see on the Medical side, continued growth strategy, very high market activity, lot of focus on innovation, sustainability. We have in our base, a very broad customer base with very close long-standing customer relationship. We are expanding, so establishment of operations in Malaysia, and this expansion in Poland is ongoing.

On the Engineered Solutions side, we are advancing our market positioning, not least in the Consumer electronics, and we are on a good way, established positions in new product areas. We see success in new products, new technologies, mainly in data centers that is very positive for the Material side, and we are expanding our operations in Malaysia. And on the overall, we have a very good possibility and focus on acquiring and adding new technologies to our portfolio, creating synergies to our customers.

Thank you. We are now opening up for questions.

[Operator Instructions] And the first caller here is Adrian Gilani from ABG.

I would like to start off on a question since you mentioned data centers in the report, which is probably the hottest theme around right now. I feel I have to ask if you can quantify the exposure you have towards data centers and perhaps how much that part contributed to -- with growth in Q1?

Yes. I would say that it's still very limited numbers in a group perspective. But of course, it's supporting the growth rate very much and it's coming from almost, yes, very limited sales in that area. So it's standing for substantial part of the growth.

Okay. I understand. And then on the sort of, I guess, risk of rising input costs, and I appreciate you move this on to customers with some lag. But just to get a picture of this since you have a lot of petrochemicals on the input cost side, and it's always difficult to track exact prices since there are so many different grades. Can you help us with a rough indication on how much with current price levels, you would expect material costs to rise going forward?

Yes. We have exactly, as you say, exposure to that. And we do see a lot of changes going on right now, and it's a daily change. But we do anticipate that in the near time, we would see an increase of the pricing to us between 5% and 10%. That is the range we do anticipate.

Okay. That's very helpful. And then if I remember my numbers from the last time in 2022 when we had an oil price spike. At the time, I think you said roughly 60% of your total material costs were linked to oil in some way and you had roughly 3- to 6-month lag on moving this forward. Are those rules of thumb still valid? Or have things changed since then?

Yes. I would say that, that is an over-estimate of the fuel impact in our BOM. And I would say it's more -- if we look on the things that is going on right now and what's increasing substantially, it is more SEK 1.6 billion to SEK 1.7 billion of our cost base that is subject to this 5% to 10% price increase in the near-term scenario.

And one thing in addition to that, Adrian, is that, as you say, this is something that we pass on to our customers, and we have been exposed to this from time-to-time. And we can see that we have a good track record of being able to pass on this to our customers and coming out in the same shape when it comes to margins. But as you say, there is a time lag, and that might be around 3, 4 months that we are affected by not having transferred all of that.

Yes. I understand. And a final one from my end on Medical. And you mentioned these new products that aren't quite reaching the planned volumes that you had expected. Can you go into a bit what the reasons are behind this? And if there's any structural issues we should be afraid of or if this is just temporary?

It's -- it should be a little bit [ relaxation ] on that. The ramping is, of course, a little bit delayed. But during a normal ramp, you see those lower volumes during a period. So it's not off track, it's more -- the ramp is ongoing and not on profitable volumes yet. So there is no structure, no change in that.

Okay. And anything on why it's slower than expected? Or is that just always an uncertainty? Is it within normal estimate risk, so to say?

I think it's close to according to plan. So it's more linked to the sort of introduction to the final markets.

And the next caller here is the cell phone number that end with 1008, you have the word.

This is Oscar Ronnkvist from SEB. So my first question, just want to continue on Adrian's question on the potential margin pressure in the near-term. So first of all, I think you said 3 to 4 months. So I mean, Q2 obviously, will naturally have like a lag effect where you don't have a lot of price increases. Is that how to interpret it. So you should see Q3 more of sort of a normalized effect on the EBITA level?

Yes. I think the timing would be more that the effects during April is very limited, actually, and that we will see a spillover into Q3 instead. So that is more the timing we would see.

All right. And then just also just to clarify the 5% to 10% price increases. How should we interpret it? Is that across the board? Or is that a number sort of -- or a share of your total sales that you're going to boost the 5% to 10% price increases to customers?

The 5% to 10% price increases, that is what we are facing from our suppliers of the actual raw materials, we are buying it by the fuel pricing. And that is an average. It's, of course, different percentages, higher ones, lower ones. And that is our estimated average. We do see going forward the next coming months.

All right. So when you refer to SEK 1.6 billion to SEK 1.7 billion, that would be the plastic raw mats, I suppose, and you're going to increase or that you have an increase of like 5% to 10% and those will be passed through to your customers? Is that how to interpret it?

Right. exactly.

All right. Perfect. Then I just had a question on the GLP-1 ramp-up from late Q2. I think you previously mentioned that you were sort of breakeven when you started with the validation sales. So just wondered if you could add some comments to the incremental margin profile of the commercial volume. So will you have a very high drop-through or does cost increase a lot when these commercial volumes are shipped?

Like we have explained earlier, we don't see any large negative effects going forward. But of course, we won't have the margins expected at more full scale operation. But we don't see that the margins would turn down dramatically based on that start-up.

And that project is, of course, one that we're explaining the margin in this Q1 as well because we already have most of the cost base we are going to use to produce that in larger volumes as well. So there is a certain negative effect in the start, but we don't see that to be any substantial negative effects going forward.

Got it. That's helpful. And then just finally, sort of a broad question, I suppose. But given that you have very broad exposure in terms of offering and also geographically. Just want to hear your thoughts on the geopolitical uncertainty. You have this caused a big shift in demand from your customers, which could potentially affect volumes near-term? Or do you feel like you're resilient in -- even in the Engineered segment?

It's interesting. We've seen some volatility over time from different segments and markets. Some are -- in some periods, a little bit cautious, then again, short time later, they are sort of afraid of some lack of supply, so then they increase. So as an overall, I think it's been volatile but stable underlying, but it could be looking forward, it could also affect maybe single quarters with some stronger or some weaker sales. So there will be some volatility connected to this geopolitical situation.

And then we'll go ahead to the next caller, which is a cell phone number that ends with 886.

Can you hear me? Sorry about that.

Yes.

Perfect. It's Anders at Nordea. So I wanted to ask Christer and Per-Ola some questions firstly on sort of the materials exposure that we discussed, I mean, with quite solid growth in the quarter, it would be interesting to hear you elaborate a bit more on sort of the durability of this growth. I mean is it mainly a result looking specifically maybe at data centers, mainly a result of specific customer programs? Or should we view it as more broad-based exposure in sort of this end market?

Yes. I think it's a good question. And I think it's a situation where we are going into and have been going into new markets for some time, and it's not connected to a single customer. It's a broad growth across different sectors. Of course, we talk a little bit about the data centers, but it's also some defense. It's across different customers and different markets. And we feel that -- of course, it was a very strong growth on a high level this quarter, but we see good potential for continuous growth within this area.

Okay. Very good. And sort of just taking data centers, as an example, are you able to share anything sort of in terms of how many customers you're selling into in that sort of vertical?

We have numerous customer -- numerous different smaller projects that adds up to this.

Okay. In sort of surgery, you mentioned some inventory adjustments, particularly early in the quarter as I understood it, clarify a bit sort of -- we should view this, if you think we should do this mainly sort of channel inventory normalization? Or I mean, is there any sort of end demand softness here?

No, we think it's volatility in the supply chain still going on.

And why do you kind of -- how do you arrive at that sort of view just so we understand that?

Yes. Of course, we monitor the sort of end market movements and what kind of end products, our deliveries are going into, and then we monitor them. And then we compare that with our deliveries and then we see volatility. So in some period, we are delivering more volumes than the end market is -- the sellout of the end market. And in some periods, we are selling less than the end market movements. And then, of course, that is movement in the supply chain.

All right. You're doing your homework. In other words, I mean, to sort of question that more sort of the rationale. So we understood that comment. Finally, I wanted to ask a bit on sort of you're talking about the IVD growth and sort of newer products taking a larger share.

We discussed sort of the [indiscernible] ramp up in Europe, but with some volumes not yet at commercial levels, I mean, could you break down a bit more what you're seeing not just in terms of the previous discussion, but by end market sort of IVD, drug delivery, surgery, and what needs to happen for the new product ramps to move from sort of margin dilution to supporting the margins over the next couple of quarters. Is it mainly a factor of volumes? Or is there anything else sort of in that ramp-up that's important to consider?

Of course, during the early volumes in the new program, we have some additional cost because we are then, of course, making sure that the quality is working in all levels. So we have some extra cost to make sure that we are not delivering anything out of specification. Then gradually when volumes and time elapses then we can reduce our cost base of producing. And of course, we get some efficiency of volumes. So that's normal thing. And now we have quite large programs that are expected to ramp. So of course, it's hitting in this quarter.

We will now go ahead with the next caller, who is Mikael Laseen from Carnegie.

Yes, can you hear me?

Yes.

Okay. Great. Yes, I also have a follow-up on this surgery market area, the inventory adjustments. You've had that quite some time. It would be great if you can talk to us a bit more about this volatility and maybe comment on the product pipeline quality and the underlying market growth, what you're seeing there and also your market position in this area to get an understanding of the underlying trajectory.

So starting in -- we entered into this market some years ago with the view that there is changes coming in the market, more robotic surgery coming and so on and so forth. And that change has been a little bit slower than we expected at that time. But of course, we think that change is something that is positive and that's why we entered.

The volatility, it's very long supply chains in the surgical market. And then you can have swings with different inventories in different levels in the supply chain. So it's been more volatile than we expected. And it's -- we foresee that for some time coming as well.

Okay. All right. We have to accept that, I guess, going forward as well. And one thing about the silver input cost that you had struggled with a bit in Q4. How did that develop? And have you taken care of it on the current silver prices?

Yes. I think you could say that it's been handled with a lot of work during the first quarter. And we did see effects of that in the beginning of the quarter. At the end, we do think that most of that has been taken care of either by adjusting pricing or by having a discussion with the customers of changing materials to other metals that are not that involved in the pricing of the silver materials.

Okay. I'm just curious about the Materials area. How much is volume and price and mix effects in that 15% growth that you talked about?

Yes. Of course, there are some effects coming from the price effects, but I would say that the larger part of the 15% is definitely coming from volumes.

Okay. Good. And my final one is on CapEx, if you can update us on what to expect for '26 and maybe also for '27?

Yes. We commented that after Q4 being SEK 650 million to SEK 700 million for the full year 2026, we are still at that expectation, so SEK 650 million to SEK 700 million.

Thank you for the questions there. They were all the callers we had, but we have also had a question sent in to us. Can you clarify what impact -- can you clarify what impact higher input material prices had on Q1 profitability? Also, what magnitude of impact should we expect in Q2 and onwards? And how does the impact differ between Engineered and Medical?

Yes. We do -- we have explained the maths behind it and our best assumptions. The effects during Q1 were very limited, and it's an onward effect, and we did say most of that is during Q2 and some will spill over into Q3 if it stands where it is right now. So I think that is the explanation we can give in uncertain areas.

Thank you for that. That was all the questions we had. So thank you to Nolato for presenting here today, and thank you all for tuning in and sending in questions and calling in.

Thank you all for your interest in Nolato. Thank you.

Hello, and welcome to today's presentation with Nolato, who is going to present the report for the Fourth Quarter of 2025. With us here to present today is CEO, Christer Wahlquist; and CFO, Per-Ola Holmstrom. [Operator Instructions]. After presentation, there will be a Q&A. [Operator Instructions] And with that said, I hand over the word to you guys.

Thank you, and welcome to the presentation of Nolato's Fourth Quarter of 2025. Starting on Page 2, we had sales that totaled just shy of SEK 2.3 billion in the quarter, which gives a growth of approximately 2% adjusted for currency. We saw an increased growth rate for the Medical Solutions business area at 5%. We saw a decrease of approximately 1% for Engineered Solutions adjusted for currency. We had some headwinds on the sales in the last part of the quarter due to Christmas holidays and during that time. Our operating profit ended up at SEK 236 million in comparison to SEK 240 million. This was strongly affected by currency headwinds of 6%. The margin rose to 10.4%. So we saw improved margins in both areas, but sequentially lower due to somewhat weaker volumes during the Christmas break and also some startup costs for the new programs in United States.

If we focus on the full year of 2025, we ended up at close to SEK 9.5 billion in sales. That was corresponding to a 2% increase adjusted for currency. We saw an operating profit increase 11%, even though we had a strong currency headwind. The margin improved and ended up at 11.3% in comparison to 9.9%. So we saw a 1.4 percentage points increase of margin. The earnings per share ended up at SEK 2.88 per share, and we have a very strong financial position, enabling us to execute on our increased acquisition strategy. The dividend proposal is SEK 1.7 in comparison to SEK 1.5 per share, and that is a current payout ratio of 59% in comparison to 61% last year.

If we jump to Page 5, starting with Medical Solutions. Here, we are on a growth and global expansion journey, and this business area now corresponds to 58% of group sales in the fourth quarter.

On Page 6, we see our focused product areas. We feel that we are very well positioned with leading global customers and positioned in very interesting product areas. If we go through them a little quickly, we see the in vitro diagnostics with a long-term growth potential, and we have a very strong position in this therapeutical area. Cardiology, of course, high-end market, a lot of lifetime implants and very high demands on the products delivered. Drug Delivery, a growth market area where we have a very strong position and well positioned for continuously growth. Endoscopy and General Surgery, it's a changing market. It's interesting with the new sort of more robotic surgery that are coming in. Continence Care, of course, high-volume market with huge volumes.

If we then jump into the fourth quarter for Medical Solutions, we ended up just above SEK 1.3 billion in sales, which corresponds to a 5% adjusted currency growth. We see that the drug delivery market continued to exhibit growth within the autoinjector and pen injector systems. We saw a positive development for the in vitro diagnostic during the year with a slow start last year and then increasing volumes.

If we look on the margin side, we ended up at 11.6% margin for the business area. That is an improvement of 0.4 percentage points compared to 2024. We had, during the quarter, a negative impact due to temporary higher cost for the start-ups, as mentioned before, and also some volume headwinds during the Christmas breaks. Our expansions are going according to plan, both in Hungary, Poland and Malaysia.

Jumping into Engineered Solutions, which is a sales level of close to SEK 1 billion and 42% of group sales in fourth quarter. In this area, we are focusing on different product areas, of course, the consumer electronics where we see potentials, hygiene, good potentials and automotive, of course, a little bit slow right now, as we explained in previous quarters. And then that's a little bit different market, the materials, where we see strong growth, but also affected during this quarter by the increased cost of precious materials.

Jumping to the next page and then summarizing Engineered Solutions for the fourth quarter. As mentioned, strong growth for materials, 10% increase if we adjust for the currency. We saw sustained performance for consumer electronics, particularly in Asia. After a positive performance during the year, volumes decreased for Hygiene in the last quarter due to an inventory adjustments ahead of year-end. The total business area ended up at a margin of 9.9% in comparison to 9.2%. We saw, of course, favorable product mix. But if we compare to the previous quarters of 2025, we had negative impact of the lower volumes and sharply increased precious metal prices, as mentioned.

Good afternoon, Per-Ola Holmstrom, CFO, and group financial highlights on Page 11. Net sales was SEK 2.272 billion in the quarter, a 2% growth given currency headwinds of 7%. Operating profit EBITA amounted to SEK 236 million, slightly below last year, but with currency headwinds of 6%, representing an accelerating negative effect of about SEK 14 million in the fourth quarter. The EBITA margin for the full year 2025 improved by 1.4 percentage points, driven by pricing, cost adjustments and efforts in the entire supply chain. The quarter improved 0.3 percentage points to 10.4%.

The declined margin compared to previous quarters 2025 was negatively affected by: one, temporarily higher costs for start-up of the new products in the U.S. The medical margin was negatively affected by that by 0.5 percentage points; two, slightly lower volumes within mainly Engineered due to holidays at year-end; three, sharply increased prices for precious metals within materials in business area Engineered. Summarizing these 2 effects for Engineered, the total negative effect is 1.0 percentage points for the business area.

Four, group cost was on the high side in Q4 and in comparison to Q3 that had one-offs of plus SEK 7 million in addition, effects from M&A activities in Q4, giving a delta of SEK 10 million compared to Q3. Summarizing these 4 items, the temporary negative effect is in the range of SEK 25 million to SEK 30 million compared to Q3. Parts of these will influence the first quarter 2026 as well.

Cash flow from operating activities was SEK 310 million, a good level in the quarter, but last year was very positive from improved working capital. Net investments, we did see a shift in trends. CapEx declined compared to the comparative quarter last year to SEK 146 million. The full year 2026 is expected to be between SEK 650 million to SEK 700 million, where SEK 100 million approximately still is left for the Hungarian project. Return on capital employed for the full year improved to 14.2%.

Turning to Page 13 -- no, sorry. Jumping, turning to Page 12 -- sorry. Sustainable development. We have had a very positive development of our -- all kinds of measurements on the sustainable side. If we focus first on our Scope 1 and 2 emission, we have reduced this by 96% in absolute terms from our base year 2025 (sic) [ 2021 ] versus our target of 70% for 2020 (sic) [ 2030 ] . So it's an impressive journey on that side. If we talk about Scope 3 Upstream's emissions, we have reduced that by 30% in absolute terms from the same base year versus our target of 25%. So we are well ahead of our near-term targets on path towards 2030. We're also delivering fast results on our science-based target initiatives. And our Net-Zero targets for 2045 is approved by science-based target initiative in January of this year.

Turning to Page 13, focusing on our current situation. Overall, we see a very favorable financial position that enables intensified M&A agenda and focusing on medical solutions, we have a continuous growth strategy. We see very high market activity. We have a very strong broad customer base with long-standing close customer relationships enable us to continue our growth journey. Our establishments of operations in Malaysia and an expansion in Poland as well as in Hungary are creating excellent opportunities for us. Within the Engineered Solutions business area, we are advancing our market positions. We have established position in new product areas and successful in new products and technology areas, mainly data center is very positive for materials and also the expansion of our operations in Malaysia, creating opportunities. We are now handling over for questions.

Thank you so much for the presentation. Ladies and gentlemen, we will now carry on with some questions. [Operator Instructions] And the first caller here is Carl Ragnerstam from Nordea. You have the word.

It's Carl from Nordea. Sorry for a slow unmuting. A couple of questions here. It is, of course, a lot of dynamics in these reports. So I hope to unpack some of them. You mentioned 100 basis points in Engineered owing to shutdowns as well as the precious material thing. So firstly, I wonder what materials are we talking about? And secondly, yes, how do you view that topic specifically for Q1 and Q2?

Yes. We could see that the pricing we are talking about that is affecting materials. And as you know, we are compounding a material, which is including metal particles and some of these materials within that part is based on silver particles. And as you have seen, pricing of that has skyrocketed during the fourth quarter, and it has continued in the beginning of January as well. That is a part where we have quite short actions to change the pricing to our customers. And we are, of course, in the process of doing that. It's more standard materials, which we are handling, and that will give effect. But of course, there is a timing effect. And as you have seen, pricing have continued up in the beginning of January as well, however, now declining. So we are in the middle of a very dynamic pricing because of the silver materials mainly. So that is affecting that part.

And what portion of the 100 basis points was the metal or material thing compared to the customer earlier shutdowns?

That is the larger part of the 1 percentage.

And what did you say about Q1? Is it same effect or less effect or ballpark?

Yes. We do see that, that will continue in Q1 as well, but it's slowing down a bit during the end of the quarter. That is our assumption based on pricing activities that we have done. Then, of course, we don't know the ongoing pricing dynamics for the silver pricing going forward. But as far as we can see right now, there will be an effect which is slowing down during the rest of the quarter.

That's very clear. Jumping into Medical, you mentioned the production ramp-up in the U.S., the 50 basis points impact. How long is that ramp? And what product are you? Is it a multiproduct facility? Or what are you ramping?

It's a multi things. There are different programs ramping at the same time. And we are expecting that to continue a little bit into the first quarter and then, of course, be more steady state.

Good. And the final question, if I may, is on the Medical organic growth. Did the new autoinjector contract that you're manufacturing in Hungary contribute with a similar magnitude as in Q3? And if so, what is the main delta behind the acceleration of the organic growth in Medical?

It's continuing -- the new program in Hungary is continuing on the same level as in the third quarter and also expected to continue on the same level in the first quarter of 2026. So that's -- and then it's a general thing. We have a growth in different areas, all kinds -- all over the place, more or less.

Okay. Sorry, final one. In terms of the M&A cost you touched upon, it seems a little bit -- it is a little bit on the high side given your history of doing due diligence. Is it fair to assume that it's a bigger transaction? Or is it several smaller ones you're looking into?

Well, I mean, the delta of the SEK 10 million is coming from SEK 7 million from the one-time positive effect in Q3 and then the rest is mainly coming from these activities. So well...

Okay. Fair enough.

Large or not large, but yes, nothing...

Then I understand that. Very good. That's all for me.

And the next caller here is Oscar Ronnkvist from SEB. You have the word.

So yes, I just had one question on the volumes. So assuming that there were earlier shutdowns in Q4, do you expect to see a catch-up effect in Q1? Or is it more of a normalized quarter?

I think we would see the first quarter as a more normalized quarter.

All right. I see. And then just on the start-up costs here in the U.S., any particular reason why you sort of highlight that as a temporary cost? I suppose that, I mean, you're looking to expand most of the time.

Yes, it was just an explanation to that we have several things running and it was more than normal.

All right. I see. And then just I think a follow-up on Carl's question before, but just a clarification on the pricing adjustments in materials in specific. So how would you handle the dynamics of price increases when we have so volatile precious metal prices?

Yes. It's a continuous -- of course, if you have an upwards trend, it's something that then you have to adjust and do it the right timing. And it's always a dynamic process, and you can't really go back to a customer every day. So then you might lose some temporarily on the upgoing if it's a continuous upwards trend.

All right. But have you done any price increases thus far based on the higher material prices that we saw especially in Q4?

Yes. We have.

Thank you. And yes, final shout out here [Operator Instructions] It seems that, that was all the questions we had. So thank you so much, Nolato, for presenting here today, and thank you all for tuning in. I wish you a pleasant day.

Thank you. Goodbye.

Bye.

Hello, everyone, and welcome to today's presentation with Nolato. With us presenting today, we have the CEO, Christer Wahlquist; and CFO, Per-Ola Holmstrom. [Operator Instructions]

And with that said, please go ahead with your presentation.

Good afternoon, and welcome to the presentation of Nolato's Third Quarter 2025. This is Christer Wahlquist speaking.

During the quarter, we saw organic growth in both our two business areas, approximately 2% if we adjust for currency. And that, in combination with the strong increase of our margins created a strong increase of our EBITDA. So the sales ended up at SEK 2.3 billion on some and the operating profit rose 20% to SEK 281 million, that includes a nonrecurring item of SEK 7 million corresponding to an insurance claim. But as I mentioned, we saw strong improvement of margins in both business areas. We have maintained a very strong financial position with a debt ratio 0.6x EBITDA, giving us opportunity and possibility to expand together with the right business cases from existing and new customers as well as executing on our acquisition strategy.

The Nolato Group consists of two business areas, the Medical Solution, being the largest part at approximately 56% of group sales and Engineered a little bit less than 50% and the rest of the business.

Starting out with Medical Solutions. Here, we see sustainable growth in global expansions. And on this graph, you will see a 20-year show of our sales over the last 20 years. So we've seen good growth over the years. We have a very spread business with six focused product areas, and there are also well spread sales across global leading customers, creating a strong foundation for continuous growth and focus on these six product areas.

If we look into the third quarter for Medical Solutions, we saw a sharp margin improvement, a full 1.4 percentage points, ending up at 12.1% in the quarter. That, in combination with the increase of sales, 2% created, of course, an improved operating profit ending up at SEK 159 million.

We are expanding our business, so we have expansions ongoing in Hungary, Poland and in Malaysia. And all of these are according to plan. And in our Hungarian facilities, we have, during the quarter, started validation deliveries during the third quarter. And we expect that these validation deliveries to continue on approximately the same level for the coming quarters. And then subsequently expected to increase somewhere in the late second quarter.

Jumping into Engineered Solutions. Here, you also see a graph of the last 20 years, and we are now in a position where we have downsized our VHP business and our building a strong foundation in the focused product areas shown on this page. Here, we have a well spread business, different product areas with a little bit different if we specifically look into the materials, which is then, of course, based on our own recipes of raw materials.

If we look into the third quarter for Engineered Solutions, we saw a very sharp margin improvement, a full 1.8 percentage points during this quarter and it's coming from implemented cost savings and increased capacity utilization and of course, some price adjustments. The business sales totaled SEK 1.035 million during the quarter, which was a 2% currency adjusted organic growth.

We saw sales to the automotive industry increased through higher product invoicing and more normal vacation shutdowns amongst our customers. We saw a continuous growth in our hygienic area, thanks to investments in Mexico and also a positive performance for our consumer electronics particularly in Asia.

Good afternoon. Per-Ola Holmstrom commenting on group financial highlights. Net sales amounted to SEK 2.342 billion in the quarter, representing a 2% growth adjusted for currency. Operating profit EBITA increased by 20% to SEK 281 million. And the EBITDA margin for the group improved by 2.2 percentage points to 12.0%, including a nonrecurring positive item of SEK 7 million. The effective tax rate was 19%, which we expected to be for the full year as well.

Net investments were SEK 183 million in the quarter, a higher level of CapEx than last year as planned, mainly for the expansion in Hungary. We foresee around SEK 850 million in CapEx for the full year 2025. And by then, we expect to have paid almost SEK 500 million of the total expansion of SEK 600 million in Hungary.

Enhanced cash flow after investments was lower than last year, SEK 180 million compared to SEK 191 million. Earnings per share increased to SEK 0.8 million. Return on capital employed improved again to 14.1%, mainly driven by the margin improvement.

Okay. Focusing on the current situation per business area, starting with Medical Solutions. Here, we have our maintained growth strategy, and we see high market activity. We have been focusing on margin, implemented cost adjustment and increased efficiency. Of course, innovation and sustainability based on a broad customer with long-standing close customer relationship. We also are now expanding in Asia, in Poland and also in Hungary.

On the Engineered Solutions side, we have advanced our market position. We have a lot of focus on innovative and sustainable solutions. We see success in new market, which is positive for materials and of course, expansion of our operations in Malaysia.

We will now open up for questions.

[Operator Instructions] First, we have Adrian from ABG.

Yes, I'd like to start off with a question on the expansion in Hungary and the outlook you gave on deliveries related to that. Are you able to say anything more specific on when you will go from these sort of validation delivery phase that you're in to a more -- to commercial scale deliveries?

Yes. These type of large programs always have a lot of validation and it's different steps of validation. So we foresee that we will have a validation deliveries during this quarter, next quarter and the first quarter in 2026. And then somewhere in the second quarter, we will start deliveries to the outside market to the patients.

Okay. That's very helpful. And a follow-up on that. Do you see any risk related to this contract, given that the customer in question has had a bit weaker development than recently than I think most people had expected. I mean, could this have an impact on the full run rate volumes for your contract?

We are happy with our discussions with our customers that we have not mentioned who it is. But we have good discussions, and we anticipate this program to start serial deliveries in, as I mentioned, then somewhere in the second quarter of next year and then gradually grow from there according to plan.

Okay. Understood. Then on engineered, specifically on the materials business that declined slightly year-on-year. How much should we read into that? Is that just a normal quarterly volatility? Or are you a bit more cautious on the outlook now compared to sort of last quarter, I guess?

Yes. As we did mention, most of that is coming from the automotive side, which is a bit pressed right now as many areas within automotive, and we foresee that going forward the next quarter as well to be in a similar development.

Okay. Understood. And then when you mentioned the efforts on consumer electronics that are actually yielding results in Asia specifically, does that mean that this Chinese facility that has been on low utilization is back at satisfactory levels now? Or are there more improvements here to make?

We have more capacity, and our ambition is, of course, to gradually fill that with serial deliveries, but it's been improving, and we are gaining new projects and building up. But it's not fully utilized yet.

Okay. Understood. And just a final one from my end, a detail-oriented question regarding this insurance claim of SEK 7 million. Maybe I should know this, but what is that related to? And are there any outstanding claims left that could be booked as income going forward?

We had a flooding situation in one of the factories we have in the U.S. And this is the financial outcome so far, and it could be that we have some additional money coming from that during the end of this year or the beginning of next year. But it's no major money coming from that left.

Let's move on to Mikael Laséen from DNB Carnegie.

Yes. I have a question about the project in Hungary, the validation delivery, first of all, can clarify what you mean with validation deliveries? What this means in practical terms? Yes, that's the first one.

Okay. As I mentioned, during ramp-up of these type of very large and complex programs, you have validation of different steps, so you validate individual component manufacturing, some assemblies and then it has to be validated in the filling side of the customer and so on. So there are a lot of products that need to be tested for different variations of tolerances and so on. And this is what we are running right now. And we sell those products and are getting paid for them. So that's a normal behavior in this type of programs.

Okay. So is this meaningful in any way or very small revenue that you get right now to understand what will happen in Q4 and Q1 next year?

Yes. The sales from these validations is approximately 1% of business area sales during this quarter.

Okay. Got it. And then moving on here, could you also talk to us about the EBITDA margin development for the Medical Solutions segment? It has been relatively stable at around 12% plus two, three quarters now. So what will drive the margins higher than above 12% or well above 12%, which I guess you're targeting?

Yes. If we look forward, we do see possibilities in increasing the margin towards the 13%. We did have some years back. And One thing that should support that is, of course, the new program ramping up in Hungary. We have commented on that before. And of course, also moving into higher volumes for some of the expansions we're in right now, adding up capacity utilization.

Okay. And how is the U.S. side progressing for the medical side?

Sorry, the new?

The Medical segment, how are they doing in the U.S?

They are part of the long-term improvement we have made when it comes to margins but we would still see the U.S. operations as a possibility to move to improve margins compared to the rest of the business area.

And now we'll give the word to Carl Ragnerstam from Nordea.

It's Carl from Nordea. A question from my side as well here. On the new contract, I mean, that you're ramping up in Hungary, could you give any flavor on the production efficiency you're seeing right now, potentially bottom mix versus your expectations? And so far, I mean, it's obviously, I mean, validation volumes, but profitability projection so far if it meets your previous expectations?

Since it's validation, there is no sort of feedback on yield and those kind of things. Of course, you can look on the individual cycle times, and they are according to our expectations, but the full yield, it's too early to give any comments on that.

And the production you're ramping up now, is it covering the cost so far? Is it the burden? I guess it's a burden of margins at such early stage, right? Or -- because its contributed 1% to organic growth in medical. What is the EBIT impact or if any?

It's, of course, a small EBIT effect, but it is covering its cost right now.

Okay. That's very clear. And on IVD. I'm a bit curious to hear more about what you're seeing there. Because we've seen -- I mean, as you wrote a weak start to the year, we saw before that early indications of a recovery followed by declines. So it's been a bit back and forth, at least it is that -- how I look at it. So how do you view the current recovery in that segment?

Yes. There is a lot of dynamics behind the IVD as we've been talking about of course, the volatility and the supply chain discussions after COVID, but also the change of one customer changing to our deliveries to an end customer is that. So there is a lot of changes. But we look positive on this market segment. We see possibilities, definitely. We see a growth opportunity going so we are very positive, but we have seen, as you mentioned, some back and forth in the delivered volumes.

So you see the growth in IVD to be here to say for now, at least what you see? And do you see an acceleration from here? Or what is your feedback from customers? Because they used to be quite a good earnings driver.

Yes. I think the feedback we get from customers is that it's a long-term growth area. They see that and they are adding new test into this type of product. So definitely a long-term growth opportunity. But with some volatility still going on in the single deliveries over quarter-for-quarter.

Okay. That is very clear. And also, maybe you mentioned it, I didn't hear the full call. But in the materials, you've seen the sort of weakness in automotive. On the other hand, where you've seen telecom, I mean, offsetting it. How do you view the short midterm development here? Because we've seen the deceleration in telecom, if I remember correctly, right, from very favorable comparisons. So do you see it at low single-digit negatives ahead as well short, midterm before automotive picks up pace or how do you view the trajectory from here?

I think we should see a sequential development for materials, which is very similar as this quarter in the next quarter. That is the best view we can give. Long term, it is a good growth opportunity for us. But this quarter and also in the next quarter, we foresee a bit slower operations in that area.

And when you see sales sequentially, is it a minus 1? Or is it in absolute numbers or perhaps both? I don't have the comps on top of my head.

I would say, in absolute numbers similar to Q3.

That concludes the Q&A session here. Thank you very much, Christer and Per-Ola for presenting here today. Thank you, everyone, for tuning into this webcast with Nolato and I wish you all a great rest of the day. Thank you very much.

Thank you. Bye-bye.