Thank you. Good morning, and welcome to HANZA's Q2 2026 presentation.

Thank you for joining us in the middle of summer. Every quarter tells its own story about the company, and the story of Q2 is that HANZA is growing with quality while we are taking the first steps in HANZA 2028.

In this presentation, Lars and I will look at HANZA from two perspectives: how we are performing today and how we are building for tomorrow. The presentation will follow a very simple sequence.

I will begin with a progress report Q2 and then explain these first two steps in HANZA 2028 Horizon and the Fortaco acquisition. Lars will then take us through sustainability and the financial development.

I will return for conclusions and outlook, and in the end, we open the line for your questions. Let's then begin with the numbers that best describe this quarter.

When I say that HANZA is growing with quality, I mean three things: we have an organic growth, 9% in the quarter; we have an improved margin, up from 7% last year to 9.3% for comparable units; we have a strong cash flow, 273 million SEK in the quarter, almost 700 million for the first half year. This strong cash conversion is what strengthen our financial position.

You see that the net debt versus our adjusted EBITDA is down to 1.4. Our target is maximum 2.5.

We also see that the chart to the right, it shows our step-up in sales over the years, and you see also the net debt versus adjusted EBITDA to the right. It's clear that our growth has been delivered with financial discipline.

That's something we are very proud of, because growth without margin is not enough, and margin without cash is not enough. In Q2 and previously, we have delivered on all three.

If we look at the market, I would say rather even demand through our segments. In Electrification & Energy Systems, we see stable sales, but also good long-term demand.

We opened a factory in the beginning of the year for Siemens Energy, for instance. Defense & Security, our smallest segment, but also the largest opportunities, and I will come back to this.

We have new orders already secured and new orders is coming in. Heavy Equipment, strong sales and a very strong demand from different sectors, especially mining.

Industrial & Professional Products, also stable, and we have an increased order intake which will move this segment in 2027. Industrial Machinery & Systems, this segment had lower sales, but it is a project-driven segment.

Normal fluctuates with customers' installation schedules, and we see on order intake that this suggests a recovery. It's not a trend.

The picture is rather the same between the segments, and overall, it indicates a continued healthy demand. Then we all heard about the situation in electronics and certain electronic components, mainly PCBAs and memory circuits has been tighter availability.

We have a very good central sourcing with an office in China working together with also strong local sourcing. They have been able to really manage the situation without any material impact on operations in Q2.

The situation remains uncertain, our mitigating work will continue during the second half of the year, but so far so good. Let's now turn to BMK.

I had the privilege of serving as interim managing director then Geschäftsführer during the spring. I've been seeing the business at close range.

I expected the technical level to be high, but I was wrong. It was even higher.

It's been a pleasure. From a commercial standpoint, however, there is room for improvement, and we already began with some actions.

We see that the company came in with a margin at 7.3%. We are already increasing that to 7.5% in Q2, and this is just the first step in a margin improvement, we expect to continue.

Also, order intake increased compared to Q1, and BMK secured its first major defense and security orders. This is important for the continued development.

This is a new area for BMK and a huge area, really good. The integration progressing well.

We call it the purple rain when we put on our signs and stickers, but it's working well and it should be completed. Normally, have one year for integration, and this should be completed during 2026.

We see the picture to the right, Markus Ernst, who took over as managing director from 1st of June, and I, with some regret, have returned to the much quieter role as being only group CEO. First steps of HANZA 2028: We launched this strategic phase at the Capital Markets Day in March this year.

If we look back, every phase is about working on the customer demand. In the previous phase, HANZA 2025, we strengthened the capacity of our manufacturing clusters.

In HANZA 2028, we are strengthening the manufacturing technologies. Then we have the two first steps: Horizon, it's a program where we are making our manufacturing platform more efficient, and we did an acquisition last week, Fortaco.

There is a special audiocast you can watch for more details. Here, I'll just give you a brief overview.

These are two complementary steps, and let me then begin with Horizon. To understand Horizon, it's important to understand our industrial logic.

Our main focus is manufacturing in Europe, for Europe. This is where we build our manufacturing clusters, and outside Europe, we have select factories.

We call them gateways, serving specific customer needs. Horizon is then designed to make our manufacturing platform more efficient and easier to manage.

That's important for the other step, to strengthen the technologies. In Finland, we have two smaller units in Nivala and Sievi.

We have been concentrating some of the orders and machinery to our larger units in Oulainen. You see it on this picture.

It was 23,000 square meters in this building, and we just bought an adjacent building of 10,000 square meters more. This is a large unit, and the remaining Finnish operation in Nivala and Sievi will now be transferred through a management buyout.

Gateway China: Manufacturing will be discontinued by the end of '26, this is a smaller unit, 60 people. Of course, we'll be working together with our customers and developed manufacturing solutions, they can continue to produce.

Of course, also, very important, we are committed to supporting our people in China. The growth has made it to do some changes also in Central Europe.

We had a cluster. We are now separating this into two clusters: Poland and Czechia.

This is in line with the HANZA model. We would like to have one cluster per country, several advantages: same language, same culture, same holidays, same labor law.

This is the idea, and now we are in a stage where we can finally do this. The measures in China and Finland will reduce our sales with approximately 15 million euro.

Sales matter, but profitability and cash flow matters more, and we see that the result of this will be better capacity utilization and, hence, improved profitability. This is the first step.

The second step: The Fortaco acquisition. We signed the deal on 15th of July to acquire five selected factories from Fortaco.

It's a carve-out. The background: heavy mechanics.

It's our smallest technology area, and at the same time, we see a very clear long-term demand particularly within defense, but also mining, agriculture, forestry, material handling, off-road vehicles. This is important that making acquisitions is not our strategy.

It is our strategy that leads to these carefully selected acquisitions. We always begin with customer needs.

That's why we do this deal. I think that this map illustrates the industrial logic clearly.

We see the factories in Finland, Estonia, and Poland. Together, five of them represent about 1,300 people, substantial manufacturing capacity, and we are talking about established sites with experienced local management.

Five factories, three countries, and one industrial logic. That all of these factories are located in geographies where we already have a presence, it means that we're not just adding five dots on a map, we are connecting these five sites to an existing industrial system.

That's the strength of our cluster model. That's what creates synergies.

This is a carve-out. They will still keep cabin business.

They are doing cabins, and we are carving out the heavy mechanics and complex assembly. We will also get a strong new customer base.

It's a very limited overlap to our existing customers. We all know that new customers is not just today's revenue, it's tomorrow's opportunity.

We do expect sales synergy on this new customer base. With that, I will hand over to you, Lars, for sustainability and financial development.

Thank you, Erik. Starting with sustainability and the main activities in in Q2, I'm glad to be able to present this slide with BMK included.

Now we only have Melectria outside these KPIs. There are no major changes in the KPIs.

I'm glad to see that the accidents, incidents reporting is is going down. Otherwise, we're working with DMA, updating that for for the coming CSRD report, and we also are preparing for the annual employee survey that we do on a yearly basis.

Of course, we include the the acquired companies as as well. We have compliance requirements adding to to the operation, and we work with adopting to to the new complying requirements with internal processes, also including the newly acquired companies.

Looking into the financials, we see a stable company a stable group reporting Q2 on a clear way towards the financial targets for 2028. We see a sales growth of 70%.

We have an organic growth of 9%, slightly lower than than the 20% we had in Q1, but it is a little bit seasonal, but but still a strong organic growth. Erik talked about the shortage of components.

We do not see more than a minor effect on the sales in Q2, the the 9% in organic growth is not depending on on increased prices on components. We have an operating margin for the comparable units of 9.3% compared to 7% a year ago.

As Erik mentioned, we have BMK on 7.5%, a couple of percentage points or two percentage points higher than in Q1 and in line with what they had in 2025. Here we expect the margin to continue to increase quarter by quarter.

We have, as an effect on on the Horizon project and and to enable In order to to to increase the profitability over time, we have taken one-time costs. We have reduced the employees, mainly in in BMK, and we have decided to wind down the operations in China and also done an MBO or decided on an MBO in Finland.

This will, as Erik also mentioned, be approximately 160 employees that will be reduced within the group and approximately 160 million SEK in sales that will be reduced when these actions are done in the end of the year. This leads to that the group's adjusted operational margin is on a stable level on on 8.5%, 7% a year ago.

When we see the the comparable units of 9.3%, if we compare it to the 9.7% in Q1, I'd like to remind you that Leadan is now part of of the comparable units for the full quarter. It was only one month out of three in in Q1, so that's one of the reasons for the slightly reduction in in profitability and margin for comparable units.

Erik spoke about the cash conversion and the financial discipline. We can, this quarter, also report a strong balance sheet and strong cash flow, 273 million SEK in in operational cash flow, net debt compared to EBITDA on 1.4, and a quite good cash position of 773 million SEK, and equity-to-asset ratio, which is also strong, 45%.

This is important, and we have said this many times, that having a strong balance sheet gives us the possibility to continue to invest, to expand, and also, what we announced last week, do acquisitions like the the the Fortaco carve-out deal, and without increasing the number of shares. We can do this with our own financial resources and new credits.

Looking into to to the segments, and we see the segments, main markets and other markets, they are fluctuating depending on on the type of products the customer what customers are increasing and and decreasing, but we also see strong stable development of both these segments. Remember that we will adjust the reporting into the new organization of regions starting from the beginning of 2027.

We have main markets being more or less on the same sales net sales level as in Q1 and the stable margin on on 8.5%, and for comparable units, really strong margin of 9.7%. Segment other markets, slightly down from Q1, but still on this on a stable margin, 8.5%, and for comparable units, 8.9%.

Looking into the acquisition that we announced last last week of the of the selected factories from from Fortaco, we will pay initially on enterprise value of €144 million. We It's a net debt or debt-free and with normalized working capital, this €144 million.

That is approximately 8 times the the rolling 12 months EBITDA that we pay on on on the initial consideration. There is an additional purchase price capped to €56 million, the total pay payment for for this acquisition is €200 million.

It's based on the organic growth in the sales in 2026 and 2027. We will pay in two tranches in the beginning of 2027 and the beginning of 2028.

Both the initial payment and the the earn-out will be paid with existing funds and the credit facilities. There are no financial conditions, and the closing expected to be, I would guess, early in Q Q4.

It's subject to normal regulatory approvals and also approval from certain Fortaco financial stakeholders. This is how Q or first half year would look if we make a pro forma and include the the Forta Fortaco factories.

We would increase from 5.2 billion to approximately 6.2 billion. Quite big company and and well on the way to the 14 billion SEK that we have as financial target for HANZA 2028.

Fortaco factories, we expect to to as a start, deliver on approximately 9% on EBITDA margin. We expect this to have a positive contribution on the EPS from the beginning, from the acquisition.

We will integrate this, as we normally do, into the HANZA cluster model and expect to to increase the margin not only in the acquired companies, but also in total HANZA. The effect on the HANZA balance sheet and and cash flow, we expect the net debt to continue to be below our financial target of 2.5 times the EBITDA.

We expect the equity-to-asset ratio to still be above our financial target of 30%. Just to remind you the the the HANZA 2028 targets: net sales of 14 billion SEK, an EBITA or margin of at least 9%, and equity-to-asset ratio 30%, and again, net debt to EBITDA a maximum 2.5%.

Looking into the shareholder shareholding structure, no major changes from end of Q1. What we have seen in in Q2 is that both Erik, the chairman Francesco Franzé, and the board member Lars-Ola Lundkvist have increased their holding in Q2.

By that, I leave back to you, Erik.

Thank you, Lars. Let me conclude by bringing the different parts together.

Q2, we delivered 9% organic growth, 9.3% operating margin in comparable units, and 273 million SEK in cash flow operations. BMK improved its margin, and we see an increased order intake, also secured the important first defense and security orders.

Horizon will improve efficiency in our manufacturing platform, and Fortaco acquisition will strengthen the technologies. If there are three things to remember from today, and I think it was interesting Lars pointed out that we would still have a strong financial situation after this large acquisition, it's really good.

If there are three things to remember, I would say that we are growing with quality, that creates financial freedom, and we are using that freedom to put HANZA 2028 into action. With that, we are happy to take your questions.

hi, and good morning, Erik and Lars. Thanks for taking my questions.

Starting off maybe on the defense orders here, and the sort of first major order in BMK. Are you able to sort of quantify this a bit more and maybe elaborate a bit more of your expectations here in this segment for 2027?

The challenge we have is that everything is secret. The only thing we can say is that we have from a well-known defense company, a new defense company for HANZA, we are working with, of course, with Saab and Patria, but new defense company, a substantial order and an entrance for more orders.

I wish I could tell you more. It has to be revealed by our customer segments, later on.

Sorry about that.

That's fair, but seems to be quite a good opportunity, then. Sort of on the defense order intake in remaining of HANZA, do you still see a sort of pick up here for even stronger deliveries in '27?

Yes, of course. Defense is here to stay for sad reasons, but still, and what they need is, of course, mechanics.

This Fortaco acquisition is really something that comes really well, and also having units in Poland is important area for the defense industry. We expect the orders to increase, and we have already very good relations with the companies, as I said, in Scandinavia, and now we are moving on in Germany, we expect this to grow.

Okay. Perfect.

That's clear. On the Horizon program, obviously, taking some measures here with closing of the site in China and the two factories of the management buyout in Finland, I understand you cannot give sort of an exact answer here, but are you planning any further actions going forward in this program?

We do.

Of course, that's something we cannot reveal, but I would say that we have done the major steps. For us, it's important now that we're able to focus investments, resources, capacity to larger units, and also take on larger customer orders coming in.

It's a very important step, this Horizon, but we have done a lot of actions already, and also things which are not on the dimension that we should report in Q2. I wouldn't expect any more large activities.

Okay.

That's very clear. On the CapEx side, I know you had some 100 million SEK here in tangible CapEx during the quarter, quite a big pick-up compared to last year.

What is this mainly related to, and what do you expect here for the full year '26?

We did an acquisition of a strategic factory in Finland, Joensuu factory, and that was the main activity in Q2. CapEx goes a little bit up and down between the quarters, but on a longer perspective, we do not see any increased need of CapEx.

It will be on the same level as we have seen before, and of course, increasing when we have an organic growth. We also see that the acquisition of the Fortaco factories will actually decrease the need of CapEx going forward since we will be buying companies that are well invested.

Okay. Perfect.

Sort of on the demand here during the quarter, obviously, strong organic growth here, but did you see any change in momentum during the quarter? Sort of related to that, the momentum here heading into Q3?

No.

No. We have a good momentum.

The only thing I said was regarding this Industrial Machinery & Systems where it fluctuates between the quarter. Other than that, we have a strong demand, we are in a good position.

That's also why it's so important coming back to your previous question that we have this strong cash conversion, because it makes it possible for us to increase capacity either through acquisitions or through expanding our current facilities like Lars pointed out in Joensuu.

Okay. Understood.

Very clear. I'll get back in line for now.

Thanks a lot.

Thank you.

Thank you.

Hello, Erik and Lars. Congrats on the good report.

A few questions from my side, please. Coming back to the shortage with all the electric components, could you give some more color on this?

Would you say that it's more of a problem now versus sort of the beginning of the quarter, is this more of BMK type of problem if you could shed some light there?

Yes. Just like you state, this is an area for electronic components, that's the shortage area, and more directed to this specific areas.

We have been able to navigate through the second quarter without any material impact on operations, also in BMK. Far, good.

We have a really good sourcing team, both centrally and locally. The uncertainty remains, we need to continue with this work, but we haven't had any major impact.

I think that in this kind of shortages, always in the beginning, it's hardest, then you find ways to work and find alternatives and so forth. I cannot promise anything, but we have been really good on working with this so far.

Very good. Are there any other types of shortages that you've noticed?

Not really. We are not restricted by shortages, no.

Okay. Then just looking at the margin sort of recovery story for BMK, the main market underlying is strong at 9.7%, if I remember correctly.

Could you go into this sort of recovery story? Because if you compare it to Läädan, for example, if I remember correctly, it was a lot of sort of capacity constraint driven.

What should we expect sort of year-end margin-wise when we look at BMK?

May I start, Lars? I'm sure you also would like to comment this, but I think it's really important that this is something intentional.

We have acquired a company called Läädan. We acquired a company called Orbit One.

Both of them came in with margins much lower than the HANZA, and they were inside this comparable units now. With this acquisition that came in below our margin, we have restored the margin.

Now we have 9.3% including these units. Now the margin is downloaded by the next acquisition, BMK, but the previous acquisition has done really well.

That's the conclusion you can see from the 7% to the 9.3% margin increase from last year to this year, that we have been able to restore the margins in the acquisitions. I think that is one of the skills we have.

Also, we see that's on the margin side, but also on the sales side. We have talked about many times that when Läädan came in to HANZA, the sales almost exploded.

We see also that BMK inside HANZA, we have sales synergy. There's an advantage.

The company we are acquiring performs better inside HANZA than it did as a standalone company. Now over to you, Lars.

No, I think you answered in a good way. I actually do not have anything to add, and of course, we cannot give you any forecast on the coming quarters.

What we said in the report is that we expect BMK to continue to increase the profitability from this 7.5%, coming from 7.2% last year. That's an ongoing work in line with what Erik said, that we have been able to increase the margin in the companies that we have acquired.

Is there any structural reasons why BMK shouldn't be able to sort of reach this strong underlying margins?

No. No, it's a fantastic company that serves a much higher margin.

Maybe it's a family-owned company, maybe not a clear focus on the commercial side, more the technical side, so that I think that's what we're adding to this fantastic company.

Okay. Thank you very much.

Those were my questions.

Thank you.

Good morning, Erik and Lars. Three quick questions.

I'll take them one by one. First on the working capital development: again, very good in Q2 given the growth.

I guess some of it was related to factoring, and just wondering if you can give some color on the impact here and whether this working capital level is sustainable going forward?

That our CFO, Lars, has a black belt in working capital.

Absolutely.

Good morning, Thomas. I saw you mentioned that the 30 million in positive change in working capital, you expected that to be from factoring.

Actually, this time, you were wrong. It's not any effect from the factoring.

It's just good working with reducing the working capital.

Any particular drivers? What I should keep in mind going forward, or?

No, I would say that 30 million with the size of the balance sheet that we have is not a major figure. We normally see in Q3 that we need to increase the working capital a little bit due to vacation period, but otherwise, I wouldn't say that there is any sort of sustainable driver for this.

Okay. Okay.

Thank you. Then a second, a bit technical question, but I saw that the costs from business development decreased to just 1 million in Q2, which explains, I guess, a few basis points of the underlying margin expansion.

Is this a new sustainable cost level, do you think?

The third segment that we report shall be close to zero or not have any major cost, unless there are any special projects. We distribute all the normal operational cost for central function.

They are distributed out to the main market and other markets. Of course, next quarter it can be that it a few cost that we are not distributing, but I expect you, based on the size of HANZA, that the third operational or non-operational segment shall be not important at all for the total view of HANZA.

That's clear. Thank you.

On just the last question, a follow-up on the CapEx. You mentioned that Fortaco will not need a lot of investments now.

Is that because utilization is currently low and you can quickly ramp up, or did I misunderstand?

Maybe I was not clear, but the fact that we do this acquisition of the Fortaco sites will lead to that the investments in our current business within HANZA will be reduced. Also, what we see is that the factories that we take over have good standard.

They are well invested. On the other hand, this heavy mechanic industry is more heavy on machinery and equipment, and has a higher percentage of depreciation compared to what we see in other parts of HANZA.

That's very clear. Thank you.

That's all for me.

Thank you.

Okay. Thank you for your questions and for joining us today.

Also like to thank all our colleagues who continue to support our customers throughout the holiday season. For those of you taking some time off, I wish you a restful and enjoyable summer.

Look forward to speaking to you soon again. Thank you.

Have a great summer.