Thank you very much. Good morning, good afternoon, whatever it means to you sitting out there.

We are back and we're going to give you 20, 25 minutes presentation of the report, and then we're going of course invite you for questions. Just a couple of things.

We have to finish around 12:00 because we have other tasks to fulfill today. Also, we would ask you to only put two questions at a time to allow as many as possible to get their questions across.

Hello also from my side. Hans here, and I'll be happy to fill in where Eric hands over.

Fine. The overall headline is we believe it's a strong report that demonstrates both of course the growth in revenue and profit and also margin-wise, and it's the sixth consecutive quarter, we might say it's a trend anymore rather than just a quarter coming alone.

We are bold enough to suggest that, and we've given a few hints here on the slide that you have in front of you. That is of course, [coughs] that it's less pronounced with the Swedish krona this time.

It's more like par with the previous similar quarter, a corresponding quarter. We also talk about tariffs, of course we have to do that, but they've been fended off fairly well, but for Stoves.

We're going to come back to that during the presentation. We see also trend towards more renewable attitudes both in Europe and also in North America.

Also something that we're going to comment more on when we come back to the quarter per business area. Then of course, we are very pleased to see that our assortment now is so well-received, and our presence is appreciated, of course, both national and also international.

We keep a good cost control, although we see that things are improving. It's very tempting to perhaps increase cost.

We have to have that discipline. Also we see that our investments in new facilities have given us a good productivity development.

They are sitting there. We are just idling now to fulfill the demand that we believe going to come for the years to come now.

Just a quick glance at the figures. You have them before, of course.

It's the growth there of 7.6%, organically that is really 8.7%, which is a healthy growth. It's also the gross margin that's improving, which is pleasing to us, demonstrating that we are polishing our cost and keeping the cost discipline.

The operating profit speaks for itself, but also that the operating margin has taken a considerable jump compared to the corresponding quarter last year. The graphs that we typically have, that's also indicating that we are now on a stronger path towards the profit after financial items.

That is of course a function of several factors: the sales improvement, also that we have a pretty good cash flow, we borrow a little bit less or quite a bit less than we did a year ago. All the things are working in the right direction.

If we talk about Climate Solutions, we've already mentioned that the market is solid when it comes to improvements. It's very pleasing to see that in Europe both the single individual home market for heat pumps has increased, and that is particular for renovation, of course.

The new construction is not so prosperous until now anyway. Also the commercial segment is expanding.

In the US, as expected, the single-family home market for heat pumps went down when the subsidies were taken away. Nevertheless, the commercial segment is really outnumbering that, overall we still have a growth there.

Also that we have also this political uncertainty that we mentioned initially, but when it comes to looking at it in the US with the manufacturing there, they really have an upper hand, so that's a good thing. Of course, people are affected by the political situation, but I also think or believe, which is sad in a way perhaps, that people are getting used to these things, and eventually we have to continue to live.

We feel that there is an uptick in demand and in positivism in all three segments, really. That I think has to do that eventually you get fatigued listening to all these problems, you just have to continue living.

Again, the product launches have been very, very efficient and successful, and that fills us with the satisfaction, naturally. People are looking for better refrigerants and intelligent controls for energy optimization and so forth.

We feel we are really on the right track, and investments, we have them, the larger ones, behind us now. That's not something that we're going to start now.

They are installed, ready to take on the challenge. Very quickly, Hans going to come back to more detailed figures when it comes to gross margin and such, but it's important to note though that the real underlying growth here, if we take away the effects of the currency, is around 9%, and the operating margin is now up well into the spectrum, whatever we call it, or interval, that we really aim for, between 13% and 15%.

Of course now we have on a running basis 12.2%, still a little bit to go, but that's quite a bit better than corresponding period the previous year. Swinging over to Element, and there we really have had a positive development, and that is particular for the semiconductor segment.

Everyone talks about the segment, AI and all that, and here we are positioned so well in North America with our subsidiaries delivering components to those manufacturers that really stand behind the manufacturing of the chips themselves. They of course predict a steady growth in the future, and now we have gotten a sniff of that, and that is of course one of the major factors behind the growth.

It's also that the HVAC market is certainly coming back, and that also has a positive effect on Element. However, of course, the new construction that is still slower in Europe and elsewhere.

Of course, when construction is slower, that is dampening the whole mechanism in society. Construction drives the whole society.

That's when it comes to the home appliances and stuff like that, that is of course still limping along. Again, net sales, quite an improvement, and of course now we see a growth of organically 11.6%, even outnumbering Climate Solutions.

Then on top of that, we have a couple percent of growth when it comes to acquisitions. Very pleasing to see that our operating margin is back within the interval again, 8.9% versus 6.6%.

That's quite hefty improvement, very pleased to see that. Also the gross margin has taken a good step, which Hans going to come back to and explain.

Stoves, I've said that earlier during interviews today, that we would have liked to have this discussion or this press release or press conference a two days later, because we don't really know what's happening on the tariff side in North America. That is of course very, very important that that is mitigated somehow.

We have had those tariffs since '25, and then they were worsened in April this year. Of course we hinted about that going to be difficult to mitigate that.

We feel that in a little bit longer time we will be able, but now we know that negotiations are going on between Canada and the US, and as long as people are negotiating, there's still hope. Hopefully tonight, their time, they will have reached some kind of agreement, and we hope that the tariffs will be eased off a little bit.

We don't know. They certainly won't be hardened to any aspect.

What we see now, what we've described, is worst case. We thought it was well-thought-out to present that to you.

We hope that after negotiations tonight that we're going to come back with some better news. Despite headwinds, we dare to say that demand has started to improve a little bit, and we see signs in Europe of improvement in demand, not so strong, but still we had an organic growth around the 2% during the quarter.

It's been more stable in North America, we might say. Whether they are not so anxious as we are in Europe or what's behind that, we can't really tell, but it seems like their market has been more stable all together both in Canada and in the US.

It's very promising to see now that we believe that we've been down at the very bottom also on Stoves. On the second quarter that's very pronounced, as we all know, the seasonal pattern for Stoves.

We just hope that we going to have a real comeback now during the coming six months or, say, five months as of today, of course. That's a little bit about the Stoves situation.

Here we have the figures. The margin of course, operating margin is still negative, was a considerable improvement from the previous quarter corresponding year.

That's why we are fairly optimistic about changing this into a decent result. If the 25% tariffs would remain, it would be a bit more difficult to of course mitigate that in the immediate future, but we are fairly optimistic about looking after that.

See what happens tonight. Just a few more pie charts.

Excuse my voice. Here we have the distribution of sales.

Of course now Stoves has not been able to grow, so that's a very obvious dominance by the Climate Solutions and NIBE Element. When it comes to the operating profit, of course that is now all taken care of by Climate Solutions and NIBE Element with the 78% and 22%.

We hope to change that pie chart fairly quickly. I think with that, that is the last pie chart that I have: the Nordic countries slightly under 20%, rest of Europe 45%, and North America just about 30%, and then Asia 7%, which is predominantly Element.

Hans, I hope your voice is better than mine. I hand over to you.

Thank you very much, Eric. I hope you recover quickly now for the question and...

Sure. ...answer session.

All right, hello again from my side to everyone out there. Just like previous on previous calls, I will take you through the numbers a little bit more in detail and of course also the balance sheet, cash flow, and and some key parameters.

If we then again look at Climate Solutions here. As Eric said, we've seen a robust growth in this business area in both sales and profit in most markets, and both on the residential side and the commercial side, the only exception really being the residential in the US, but which has not declined as much as we expected following the Trump administration's, ceasing of the tax credit.

They've actually done fairly well under these circumstances. With regards to the US, our local manufacturing footprint is is of clear advantage over there, because we virtually do not ship any products across any borders there, meaning that tariffs within this business area is not much of an issue.

For that reason, we have neither had much of of tariffs nor any refunds. It's it's the underlying business which we show here.

Looking at the underlying business, as Eric mentioned, we saw a growth in the quarter of 9% cleaned from the currency effect, which by the way is is becoming less and less pronounced for every month that that passes, coming in at sales of 7.3 billion, up from the 6.8, leading to an increase in the result of, some 20%. If we would do the cleaning of the currency impact here, it's actually up to slightly more than 23% improvement in margin.

The reason for this is the improved gross margin, which comes naturally when we get more volumes into the factories, but it's also of course a consequence of the investments that we've made, where we have more efficient, more modern, and automated factories. Year-to-date, we're up some 9.6%, up from the 12.8 billion in sales to more than 13.5, also with a good improvement in gross margin, because of course that that took off already in Q1, leading to an to a result there of or result improvement of more than 18%.

On a rolling 12-month basis, we're now at 13.6% thanks to the 13.8% that we made in Q Q2, and carrying the the 12.2% with us from the first half of the year. All in all, we feel very confident and and happy about the development in this business area.

In terms of geographical distribution of sales, there have not been, any large movements at all. A small shift between Europe and the US, where Europe has taken a percentage point, you can say, because that's where we've seen a a larger growth, and then the US just coming down to 23% from 24% a year ago.

Moving on into Element, also as Eric mentioned, we've seen a phenomenal growth here in the second quarter of 11.6%, and the Element business area has seen an overall strong growth, mainly driven by semiconductors, very much in the US, but in general, and also the HVAC business, as well as an improvement in coming from the electrification of the industry that is going on in general. This growth has been achieved despite of, the geopolitical uncertainty that's out there, leading to not very many houses or buildings being built, and and people are also careful when it comes to private spending, be it, the white goods industry and so forth.

The the statistics and and what you hear so to speak from from central banks and elsewhere is that the this slow slowdown in economy is is coming to an end. We should hopefully here also see an improvement as we move forward.

Also in this business area, the local footprint for us, manufacturing footprint that is, is clearly a strength, and neither here do we see any large impacts of of any tariffs. Again, the numbers speak for for themselves.

Sales, as mentioned, up by 11.6%, up from 2.8 to more than 3.1 billion in the quarter, leading to an improved profit of, 50%, also when you you clean it for currency. Here we've seen the gross margin improved by 2 percentage units, also coming from more volume in the factories, but of course the large investment program that that we've been carrying out over the last 5 years has been within all three business areas, Element has naturally benefited from from that as well.

Then landing the operating margin in in the second quarter at close to 9%, well within our announced interval there. Year-to-date, we're up some 9% and and and with an operating margin of just below 8%.

Rolling 12 12 months, we're at 7.7%, and have good hopes to of course improve this for during the the remainder of the year. Geographical distribution of sales within Element: here we've had some movements in the sense that both North America and Europe have improved if you compare with with a year ago.

Things are clearly moving here in in the right direction and in our very strong markets. The Nordics has kept kept its share in this respect.

Stoves is, as Eric mentioned, of course still facing an overall challenging market, but in North America it's actually fairly stable. It's again these tariffs that causes some questions, of course, but the negotiations between the two countries are ongoing as we speak, and we we interpret that as a positive sign.

From a market point of view, we definitely think that we've been down at the bottom and are are moving in the in the right direction. I think a very clear sign of that is the the small, but very important organic growth that we achieved in the second quarter of 1.8%.

We did come up from the 678 to the 686, and have also here been able to improve gross margin. Numerous actions have of course here been taken to fend off, the impact of of the weak market and the tariffs.

I think we're very well-positioned for a further growth. The operating profit, which is a loss, but if you read the line, it says profit, it's been cut in half, which also is a very good sign for us.

Year-to-date, we're basically on a [coughs] plus-minus zero situation, a small profit in there, and expect to improve from there. On a 12-month rolling basis, we're at 4.3%, and have said that we should aim to be somewhere between 6% and 8% for the for the full year.

Also here, the geographical distribution of sales: the Nordic region has actually taken a slightly larger portion of this pie compared to a year ago. North America has kept its portion, whereas mainland Europe has been a has been losing out a little, and that's where we've seen the strongest weaknesses over the over the last quarters, you can say, but where things are beginning to to move again.

Leaving the business areas and moving into the balance sheet, I won't dwell too much upon this. I think we can comment upon the non-financial current assets having increased from 16.2 at the end of the year up to 18.4.

I would say that is a very natural trend for us. That is the working capital, the inventories that we build during the first half of the year to in order to have our stocks filled with good products for the sale that takes place during the second half of the year.

It's all within our planned levels. On the equity and liability side, the equity itself has has increased by some 2 billion from compared to the beginning of this year.

Long-term liabilities there have increased slightly, the long-term ones. We've made issued a bond, and it was a very successful bond emission that we made.

It was oversubscribed quite substantially, and we decided, given the good conditions that we got there, to simply take on board a little bit more bonds than we needed to replace, as a matter of fact. Very pleasing to see from coming from the performance of the business areas and and the group in total during the first half year, and not the least in the second quarter, is of course the cash flow.

We've increased that by some 50% if you look at the quarter now compared to a year ago, from some 950 million up to 1.4 billion. Of course, we have had a slightly negative effect from the change in working capital, but again, that's just what I mentioned, that's building the inventory.

Then the investments in our current operations has also been reduced quite substantially down from 480 there to 330, roughly, meaning that this large investment program that we have been carrying out has come to an end, and we're more moving into normal maintenance investments. All in all, an operating operating cash flow in the second quarter of close to 800 million, up from, -100 a year ago.

Then the the remaining positions there are more of of mathematical character, you can say. Financing activities, for example, being the the dividends that we paid out.

Looking at the cash flow year-to-date, it's actually increased by some 65%, which is a sign of of the increased sales and profit from from our business areas. Working capital roughly on the same level as last year, but then investments being cut in half.

I think it's a it's a very good cash flow, and we will come back to to the net debt on this page instead, because that is now on 2.7. It's the same number as we had last quarter.

If you do the decimals again, it's actually an improvement. It's 2.65.

Going forward during this year, we are quite convinced we will bring this down roughly to the 2.0 or 2.1 line, hovering around there. This is a key parameter of course that the banks look at, investors look at, and so forth, and and we keep it very much under control.

We're not worried about this at all. It follows exactly our path.

The only challenge was back in '23 when we made this very large acquisition at the peak of the cycle, and then the the market turned sour. Ever since, things have normalized, the the development here has been exactly according to to our plan.

We're we're quite pleased with that. Interest-bearing liabilities as a portion of equity have also continued to decrease at the same time as our equity-assets ratio has increased, we feel that we are quite stable, and also well-positioned for both an organic and a growth through acquisitions going forward.

Working capital, a slight improvement there from a year ago. It's natural again that it is a little bit higher during this part of the year, because we need to fill our stocks for the for the sale, which I just mentioned.

Now a last slide here before we open up for the Q&A. Return on capital employed, return on equity: they are of course not at the targeted level yet, but they are improving step by step as they were also last quarter.

They are on the on the right way, and of course a result again of of this improved sales and profitability situation that we have. The equity share, equity per share has also increased.

The closing day share price, we will know at the end of the day what that will be.

That's right.

Won't comment that any further. [chuckles] But with that, I'm ready for questions.

I don't know if you have anything to add, Eric?

I've been trying to cure my voice, my vocal cords, and we should be ready. Please, you shoot now.

Good morning, Eric. Good morning, Hans, and thanks for the presentation.

I want to start on the working capital, Hans. You mentioned obviously it's up year-on-year.

I think inventory is actually broadly flat in that sense, but you had a more than 700 million lift in both receivables and the liabilities line. If we look at the non-interest-bearing current liabilities, 8.6 billion including provisions, that's up quite considerably quarter-on-quarter and was well ahead of consensus.

I guess two parts to my question here is: first, what drove that increase and are those drivers structural? Then second, what's actually in this number?

Because when I look at the annual report, I think only a third of the line is coming from trade payables. I think you have some contributions in here from acquisitions, just interested in the splits if you can share those.

There are no major or, how shall I put it, one-off effects in these numbers really. The effect from acquisitions is fairly limited, because we have not made any larger acquisitions in this respect.

We have some delay when it comes to the invoicing or the effect from receivables. We saw that quite clearly during last year as well, where they kick in more during the second half of the year.

We have a tendency here of invoicing very much at the end of every quarter, very much in the third and especially in the fourth week, which has an effect, and this is especially pronounced, I would say, when we come to a quarter as well. The inventory, we've been building.

Actually, we should even possibly be building even more to meet the demand out there. The payables and the receivables, which are the major things in there, have developed quite normally.

We can dig into the numbers in a separate call if you have remaining questions.

Thank you, Hans. Appreciate the color.

My second one is on M&A. You have a through-cycle growth target that includes a 10 percentage point contribution from acquisitions.

In the softer end-markets in recent years, growth from M&A has understandably been a bit more modest since 2023. You've acquired Beltrame in the quarter, and the release talks about aims to be more proactive on acquisitions.

I guess just interested in, is NIBE still targeting M&A of that scale, mid-single-digit, double-digit percent of sales? Then, what are the technologies or segments really that you're seeing as a particular focus in your pipeline?

Of course we are going to go back to acquisitions. As they say, once bitten, twice shy.

Hans mentioned that, of course, when you acquire a company that's relatively large at the peak of a cycle and then the downturn comes, and we have of course been very, very cautious not to overburden the balance sheet since then. I think that the overheated market '23, '22, '23, particularly in Climate Solutions, has also taught us a lesson that we have to be cautious when we aim for larger acquisitions.

Hopefully, also the market has been taught that lesson. We are definitely back to again evaluating acquisitions of the larger kinds than the Italian ones you referred to, not to diminish that one to any point.

Certainly now, which Hans' projections here of the important ratio coming down to in the vicinity perhaps of 2.0 or so, we are certainly positioned to take on large acquisition, but without being of course too risky minded. We are back on track when it comes to evaluating acquisitions of larger kinds again.

I hope I answered your question partly anyway.

Is there any sort of regional technology kind of focus there, or?

I think that there are no specific regions, but of course we're fairly well set in the Nordics. That's very important to note.

You could possibly buy one or two companies, but the growth going to come from mainland Europe and North America for all three business areas. That's as clear as I can be there, I think.

Understood. Thank you.

Mhm.

Yes, thank you and good morning. My first one is just on Climate Solutions here.

We think about both what we see happening in the market, and I'm specifically talking about heat pump volumes here, of course that's not all of the Climate Solutions division, but now when we come into the second half here, and we've had organic growth of, well, for the first half close to 10%, you also should have, and to your guidance here about a stronger second half than first half, I'm just a bit curious about how you would expect kind of the seasonality to help you, given that, all else equal, this should also support a bit of an acceleration in your year-over-year figures.

It's perhaps a very naive answer in a way, that seasonality, you can always argue and reason around it, but it seems like heating equipment has more of a season towards the second half of the year. That comes for heat pumps, that comes for Stoves, to a lesser degree of course on the Element side, where we supply so many categories of industries.

I think it's an old or established truth that equipment that we supply has typically its more major season during the second half of the year, and it's very pronounced for Stoves, of course. Whether that is intelligent or not, you can always argue, but you like to have your stove in for Christmas, whether you live in Sweden or whether you live in France or in North America.

It seems like when you have renovations going on, they say, "Well, now comes the season." Could be of course a little bit of a difference when it comes to air conditioning that you like to install in the spring, and that is more pronounced on the south or the Mediterranean market, in Italy for instance.

It's more of a tradition than anything else. We don't foresee that pattern will go away.

How much that going to influence the whole thing, well, I think we have to look at the figures prior to the war in Ukraine and the pandemic, where we had more of a seasonality of a certain kind.

Understood. I'll limit myself to two questions.

The second one is just also on Climate Solutions here, but when we think about the last four quarters really, the increase in operating margins have to a full degree been driven by higher gross margins. Of course, you get the benefit, as you talked about, from more volumes in your factories and so on.

As we now look into second half and think about your margin range guidance and so on, should it still be expected that if we fast-forward to the end of the year that it will have been driven by a continued increase in your gross margins rather than efficiency on the SG&A and R&D line, for example?

I think that overall, I think we are through the streamlining that we went through '24. That is more to monitor that.

There won't be any major additional savings on that, just trying to keep what we've achieved now. That is one thing.

Of course, productivity-wise, as volume now will increase as we predict, of course the productivity going to be more pronounced. That is the major things, of course, when it comes to gross margin.

I don't think that we can cut down any further on sales and those activities. I think they have to tag along with the growth, because we are utilizing our sales resources very, very, should I say, to the maximum right now.

Did that answer your question partly?

Yes, absolutely. Thank you for that.

Good morning, gentlemen. Thank you for taking my questions.

I have two and I'll take them one at a time, if okay. I wanted to start with the Climate Solutions segment.

Organic growth was 10%, but if I reverse the FX benefit in Europe, growth is behind peers and market indicators and it has decelerated sequentially. I do appreciate this is a decentralized business, but it'd be useful to get some color about the underlying top-line trends, where you're seeing growth by product category, and just be useful to comment on growth versus peers here.

Yeah. If we take Europe, as we also mentioned in report, we are fairly large on water heaters.

The fundamental idea years ago when we started to acquire was to acquire companies selling water heaters and then couple that with the heat pumps produced in those days here in Markaryd in Sweden. Of course water heaters today, they don't have any growth, a very modest one.

It's more for replacement, and for some reason it's rather replaced in several instances by a heat pump for just tap water. Also district heating that we have invested in, and that's typically a Nordic phenomena, that is also fairly flat.

It's the heat pumps in Europe that is driving the growth. What's pleasing to see is also that the HVAC commercial segment is improving considerably in Europe.

That's something that we are looking at with very focused, because we believe that there's a lot of things to do there: saving energy, adding air quality to offices, hospitals, schools. That has been, I shouldn't say hasn't been forgotten, but compared to individual homes, it's on a lower level.

That is to come, very pleasing. In North America, that the drive there is of course on the commercial side, and that is naturally ventilation, cooling, and also heating, particularly on the commercial side.

On the individual, single home side, there's been a downturn, as we've explained a couple of times now, mainly due to the subsidies or the tax subsidies taken away. We also see there that the downfall is not as big as we would have anticipated, hopefully giving us a signal that also there the understanding is now coming: you have to heat and ventilate and cool your home in a different fashion.

Hope I answered your question there, the first one.

That was very useful, thank you. My second question's on the cost and margin, because in my view, this is the key positive surprise for investors.

If we exclude operational leverage, could you maybe give us a little bit more detail on what drove the better cost performance? It would also be very useful to understand if you see any cost inflation coming down the supply chain looking into the rest of the year.

Thank you.

I think that's all manufacturers, they're looking at the inflation when the product's coming in. I think that is very important for us to do everything, our utmost, to hinder that.

We have, of course, very ambitious savings programs going on where you, together with manufacturers or our suppliers, do it in a different way, where you say, "Well, if we promise you a certain volume over a number of years, you also have to come down in price, but we also allow you to modify the design, not only a brutal saying price cutting, but also designing the products in a different way for us to benefit that a readymade product at a lower cost." That's going on parallel with guarding off with the price increases that everyone wants to have now.

I think we have a fairly good defense mechanism short-term, but we also have a longer-term defense mechanism where we really work together with our suppliers to lower the cost in a more constructive, civilized way, if you may call it.

Thank you.

Yeah.

Hello. Thanks for the presentation and for taking my questions.

I wanted to follow up again on Climate. You've been through sort of the automation, sort of operating leverage uplift, but I was wondering a bit on sort of the pricing side.

How do you see sort of, I guess, pricing potential in the current environment? You raised prices quite a bit a while back, but how do you see sort of that potential developing?

I think that as inflation has come down, as interest rates have come down, it's not that much of a maneuvering room for price increases. There might be a room for smaller ones, but they can't be compared at all to the price increases we had just some 36 months ago or even 30 months ago.

That's come to a totally different scenario. Of course, that is balanced out with a better volume.

I think they are communicating vessels. You cannot continue to increase prices when inflation is fairly low, at least here in Europe.

Of course, it's not so positive to hear from one point of view that the interest rates are going to go up, but also an indication that the market is coming back, and which we feel. I don't know whether that answered your question fully, but that's how we reason.

Difficult to impose any larger price increases, work together with, yeah, suppliers. Okay?

Yeah. No, that makes sense.

Thank you. I guess the sort of second question that sort of piggybacks a bit on that, from a competitive point of view, would you say that sort of that's impacting your outlook on sort of pricing to any extent?

I guess a sort of question in that, how do you see the competitive landscape mainly from a sort of volume perspective and capacity additions in the market now that market growth has been good, a lot of projects that have been sort of potentially not really ramped up? How do you see that developing going forward?

Typically in the past, we were not so well geared up when it comes to taking on early volumes. We believe that for once, we have done our investments.

It's never ready, you know that, but the major chunk is done. We are ready to expand.

Of course, we have to get labor accordingly when we see the order intake coming. That's very important.

As far as the landscape of competitors, they've always been there. I think everyone is really clinging on to the market shares they have.

I don't think that anyone going to give up, neither will we give up. It's a fight out there, but I think that the pleasing part is when market is developing in a positive direction, I think it's becoming less of a dogfight.

We look at it at a fairly decent situation, but always tough competition. There's nothing new.

Right. Makes sense.

Thank you very much for taking my questions. Thanks.

Welcome.

Hi. Good morning, Hans and Eric.

Thank you very much for taking my question. Two for me, please.

First one is on air-to-air. I think in the last quarterly results, you announced that you're going into the air-to-air segment.

Would you be able to give us a bit more update on what are the opportunities there, what are the timeline of the product launches, and what would be the expectation in terms of margins for that product in Europe?

I'll try to be as expeditious as possible there, Uma. When it comes to air-to-air, a number of our companies that we have acquired have had agencies for air-to-air machines.

They have been limited to their respective countries: Italy, Norway, just to mention a few of them. We've not been able to capture or broaden that, because there have been other countries that have had that agency.

Now we've decided to work with another company to broaden under the NIBE umbrella. The products are produced here in Markaryd.

Because there we have exhaust air, we have water, air-to-water, and we have ground source. We do not have the supplement of air-to-air.

That's why we introduce that one. It's not a new subject in our group, but it's new under the NIBE brand name.

Was that clarifying?

That's super helpful. What kind of margin expectation do you have for the air-to-air product, if I may ask?

I think that we are entering that segment with two price categories, you can say, one very premium one and one a little bit lower priced. That should not be derogatory to the overall margin.

Of course, there we don't carry any investments or anything like that. We of course have to carry inventory.

That should be a supplement to what we already have, not being a burden, and of course coming from a relatively low volume. They're going to take some time before we're up and running.

We see from the companies where we have it elsewhere, there has not been a burden on the profit and loss. That's the experience, and Hans would like to add something there.

No, maybe you haven't forgotten it. I think Uma also asked the question on the timing in this respect.

The timing,

yeah.

Of course. They are on the way to the market now.

Of course they're going to take before we really can say, well, it was a success, we need another year. I think we need a year, definitely we need another summer season.

Perhaps at this time next year, we can give you a more adequate, clear answer of the timing if we have been successful, have we kept the timelines we've given ourselves. I apologize for not getting that.

Thank you, Hans.

No, but they were introduced on the Nordbygg fair this spring, late spring, and they will, as Eric said, they're on their way to the market as we speak, they're being launched now during the fall here or will reach customers during the fall.

That's super exciting. Is that both cooling and heating for that product?

Is it both cooling and heating?

Yeah. That's the traditional one, yeah, absolutely.

That's super helpful. My second question is actually just on the longer-term, I guess it's a follow-up on the previous questions regarding the margin on Climate Solutions.

I guess if you look back in between 2017 to 2020, your Climate Solutions margins is around 14% give or take. I guess, after the rollercoaster of between 2021 and 2024, I would say, that as you have now higher efficiencies, you've done several rounds of cost-cutting.

What do you see in the medium-term as the sort of sustainable margin profile for Climate Solutions? Do you see that to be higher than the previous levels you have before 2020?

I think that it's premature to give you that guidance, Uma. We believe that we give guidance in our reports that we are fairly certain we can fulfill.

Until now, I think we have to live with the 13% to 15%. Of course, there's nothing saying that we wouldn't like to come higher.

I think that we have to give you that guidance continuously right now anyway, that 13% to 15%. It looks promising to fulfill that this year.

I hope you see that in our report. To come out and say now we're going to go for 16%, 17%, it's premature.

That's super helpful. Thank you very much.

Thank you.

Thank you very much. Thank you for the opportunity.

My first question is regarding the semi exposure in the Element business. I think in the past you've said that that's been accounting for roughly 10% to 15% of the division.

First question: does that assumption roughly hold? Then, second question, related on the same topic as well, if you could share anything with regards to the growth in this specific segment here in Q2, given the quite significant step-up we see here sequentially relative to Q1.

Thank you.

Okay. See the 10% to 15%, I think it's rather on the upper side there, of course, anymore.

That is clear guidance we can give you. When it comes to the growth, particularly Q2, I think that's been in the system for a while, that they've been hinting us that you'd better gear up, and that is very, very promising to us.

Of course, they don't release everything to us, but they're fairly good when it comes to giving us indications of what they foresee, what they see in this. They are giants, of course.

When we talk about those companies, I guess it's no secret that we talk about AMAT and LAM. We are a little midget compared to those.

It's very interesting to work with them, and we feel that we have a very good relationship. We also feel that we have a solid position among them, which means that when they grow, we're going to grow.

We also launched new products during the spring here now, which is also helping the improvement, new, very delicate components to their machinery that have been developed together with our customers. I hope that gives you a little bit of an answer to your question.

Absolutely. Yeah.

I was maybe also looking for if you wanted to share the growth number in your Element, or semi exposed business in the Element side, but maybe you want to keep that number for yourself?

Perhaps I'm a bit more discreet there.

Sounds good. Secondly, I just wanted to ask also very briefly on your US heat pump business.

We talked about this in the beginning of the year. I think you were sort of anticipating, yeah, quite a drop here given the removal of the tax breaks.

Now we see that your US, at least measured on the net sales, is still holding up fairly well. Maybe now in hindsight, would you say that the market is still doing a little better than what you anticipated?

Also here would, of course, be very interested to hear anything if you could, given the numbers of what the decline has actually been on the US heat pump side as well for you.

Yeah. It is actually better than we anticipated.

There were predictions of some dramatic drops in market going down 50% and things like that. It's not that dramatic, but it's still a hefty cut if it's perhaps, I shouldn't perhaps be so precise, but if it's much less than the predicted 50 or 40 or 50 that people indicated.

That's an indication we hope that the knowledge among customers of private individual homeowners, it's a higher level of understanding what they can achieve by installing a heat pump, given that the tax subsidies are gone. Of course, it's also noted that the oil and gas prices are high in North America.

Personally visited Canada last summer here now, and that's one of the things that everyone talks about, the petrol prices as you say in Europe, or the gas, when it comes to diesel or, yeah, petrol. Also on the oil side, everyone talks about that.

I think that that is also, sadly enough, driven people to realize, "How should I really climatize my home?" I think those are the main explanations that we've been in the market, the heat pumps is not a novelty anymore, it's something that's there.

Of course, on the commercial side, the construction industry is so well-acquainted with heat pumps, I think that rubs off.

Thank you very much. Yeah.

No, but yeah, absolutely. That's totally fine.

Thank you very much.

Thank you.

Hi, good morning to everybody. Taking my question.

I've got a question about your dealers, distributors' inventory level. Do you see them as having reduced the inventory level in the last two, three months with the Iran war that may, let's say, come back from one day to the other and therefore probably they didn't, let's say, continue to demand at the same pace of the current demand trend?

This is the first question. You prefer that I do the second or you answer to this?

We can take the first one right off. Whether our inventories or the wholesalers' inventories are monitored due to the oil prices, is that the question really, or?

No, the question is more if you feel that they have just used their inventory level to satisfy this spike of the demand in the last two, three months, or not?

That's always the question. That was one of the main reasons why everything went so chaotic three or four years ago.

We just hope that, and I think I mentioned that initially here, we really hope that the industry now is more sensible, not overstocking of any kind, but rather realizing that heat pumps, they're going to be there, and we have to fulfill naturally the demand. You can't swing up and down depending on oil price.

I think that the overall fear among customers is there that oil and gas will not be reliable in the foreseeable future, and therefore they swing over to other alternatives. That's our view of this.

Of course, there could be wholesalers that have been ordering a little bit too much. That is not to our knowledge.

We don't have a total insight into what they do, and I don't like to criticize anyone, but what that part of our industry did '22 and '23 was not very good for the overall industry. That whiplash, whatever you call it, that was terrible for all of us.

We just hope, and when we talk to our immediate wholesalers, we try to convey the message: be sensible, be realistic, don't overstock, we know what going to happen. We are one out of many preachers out there.

We are aware of the question and the danger in your question, and we try to do our chunk of to prevent that. I don't think I can answer your question more than that.

Sure. No, thank you very much.

The second one was just a clarification. When you said that H2 trend should be at least at the same level or even better than the first part, you refer to the organic growth year-on-year for your business, or it was just about seasonality, basically a normal seasonal trend?

Ordinary seasonality, yeah.

Perfect. Thank you very much.

You are there with another question. Should we allow you one more question before we close, because you are so polite?

I had just one question and that's regarding the sales development in Climate Solutions. You had 11% up in Europe, five in—nay, sorry, 11% in the Nordics, 5% in Europe, and 6% in the US.

My question is that this tendency of having a stronger second half, and particularly fourth quarter, is that true also for Europe? Because they have now for a couple of years had the strongest quarter in the second quarter.

This seasonality will be seen in Europe as well?

I think that we should perhaps divide it a little bit better. What you see in the second quarter, and I think I touched upon that during a previous question, that during the second quarter, the air conditioning segment is really strong.

I think that's what you see there. I was referring more to the heating, which is our home turf since many years back.

Okay. For the heating, heat pumps, we will see the seasonal tick-up at least?

Definitely. Okay.

That was all questions for me. Thanks very much.

Thank you. With that, without being impolite, we have to close the session for today.

I apologize for my voice, but interesting questions and very pleasing to present a report to you like the caliber of what we had today, and we hope can continue with that. Thank you very much for calling in.

If there are remaining questions, we realize there are a few more on the line here, feel free to reach out to myself or to our new investor relations officer, Freda Lannerheim, and we'll try to answer the remaining ones. Thank you from my side as well.

Thank you.