Interim report January – June 2023

IMPROVED MARGINS AND STRONG CASH FLOW

APRIL – JUNE 2023

• Sales volume amounted to 5,193 (5,371 tonnes) a decline by 3%.
• Net sales amounted to SEK 274.6 (267.1) million, an increase by 3%. The organic decline was 10%.
• Operating profit amounted to SEK 32.0 (13.5) million, an increase by 137%. Government grant for electricity is included amounting to SEK 5.5 million.
• The operating margin declined to 11.6% (5.0%). Operating margin excluding government grant for electricity was 9.6%.
• Profit for the period amounted to SEK 23.7 (9.4) million, an increase by 152%.
• Earnings per share before dilution amounted to SEK 1.18 (0.47) and after dilution to SEK 1.13 (0.45).
• Net debt amounted to SEK 63.1 (107.1) million at the end of the period, 0.6 times (1.1 times) EBITDA.
• Cash flow from operating activities increased to SEK 22.4 (-18.1) million.

JANUARY – JUNE 2023

• Sales volume amounted to 10,085 (10,312 tonnes) a decline by 2%.
• Net sales amounted to SEK 525.6 (493.8) million, an increase by 6%. The organic decline was 6%.
• Operating profit amounted to SEK 47.6 (24.9) million, an increase by 91%. Government grant for electricity is included amounting to SEK 5.5 million.
• The operating margin increased to 9.1% (5.0%). Operating margin excluding government grant for electricity was 8.0%.
• Profit for the period amounted to SEK 37.0 (18.2) million, an increase by 103%.
• Earnings per share before dilution amounted to SEK 1.85 (0.91), and after dilution, to SEK 1.76 (0.87).
• Net debt amounted to SEK 63.1 (107.1) million at the end of the period, 0.6 times (1.1 times) EBITDA.
• Cash flow from operating activities increased to SEK 43.3 (-17.1) million.

Market conditions

The volumes in our industry have continued to decline during the second quarter, although at a lower pace than in 2022. Our view is that our market share in Europe is maintained. The construction industry is generally weak while the demand from other application areas has recovered. The geopolitical situation with war in Europe and the general economy with rising interest rates and high inflation affects the demand. The raw material prices, which affect the net sales as well as gross margin, has continued to decline and we are also experiencing an increased availability of material during the second quarter of 2023.

The integration of the acquisition Alphaplex is continuing according to plan and our position on the important German market has been fortified. It is also positive that our initiative to increase our presence outside of Europe has started to give results.

Stronger margins and cash flow

The volumes declined by 3 percent during the second quarter while the net sales increased by 3 percent. The increased net sales were positively affected by currency movements as well as the acquisition, whereas the lower raw material prices affected net sales negatively. The application areas that have been strong during the quarter are energy, automotive, industry and security, while construction industry is generally weak but where we have noted a positive seasonal effect.

We noted, during the second quarter, a continued good development regarding operating profit and cash flow. The product mix has been favorable and the share of high-quality products has increased. Our initiative regarding a more efficient material utilization has given results and contributed together with the favorable product mix to the increased profit. The gross margin increased to 21.5 percent (14.3). The operating profit increased to SEK 32 (13.5) million, mainly due to the strengthened gross profit. Included in the profit is also a government grant for electricity amounting to SEK 5.5 million, which has improved the profit in Sweden by the same amount.

Our work with strengthening the cash flow continues to give results. The operating cash flow improved significantly in comparison to previous year thanks to the higher operating profit and an improvement in working capital. Primarily, we have managed to keep the stock on lower levels based on an expectation of continuing decline of raw material prices. The strong cash flow has also given us the opportunity to reduce the net debt and together with the increased profit the net debt ratio has decreased.

Sustainability

We are going to fulfill our commitment to reduce the environmental impact. Our activities, with an intention of reducing the environmental footprint and thereby increase the supplier responsibility, have continued during the quarter. Our ambition and goal, in the long run, is that this will lead to an increased awareness and recycling ratio of materials in the supply chain and therefore a reduced carbon footprint.

We have begun an extensive life cycle analysis of our products. The analysis is expected to be completed during 2023 and will contribute with increased transparency of our environmental impact. The result will be an important foundation for our continued sustainability work together with our customers.

Outlook

Uncertainty in the market remains high. We have though a well diversified customer and product portfolio with a good spread of risks within different industries and markets which gives us good conditions to keep working forward on a stable ground.

Our short term ambitions to maintain a good margin and to improve the cash flow together with the work to develop our long term sustainable operations gives us a useful basis for a continued profitable growth journey.

Christian Krichau

President and CEO