It's quarter past 9. Welcome to AQ Group's fourth quarter and year-end report for 2025.

The picture that I start with, it's from our new paint line in Radomir, Bulgaria. It is a very advanced production line which enables us to paint high volume and low volume, large parts and small parts with, I would say, world-class powder coating in a very cost-efficient way.

It is enabling us to increase our volumes in Bulgaria, but also improve the quality to our customers and reduce also energy consumption and paint consumption. It's a it's an investment that is now up and running.

It will be in full swing in in February, and we believe that this will be attracting even more customer to this factory for doing sheet metal. Now let's get into the the business.

Normally, we start with this slide, why to invest in AQ Group. We have had an earnings per share CAGR of 14% over the past 10 years.

We made profit every quarter since the foundation in '94. We are exposed to industrial market segment with high underlying growth: electrification, which is power grid and electrification and data centers; we are exposed to defense markets; we are exposed to medtech; we believe they will grow for many years going forward.

We also have a long history of acquisitions. This year we bought two factories and a design office in Germany and and Czech Republic, also a small one in in in Sweden.

We have a very strong balance sheet with a net cash position. Some facts about AQ: we're 8,000 employees.

For the first time ever, we are above 9 billion SEK in turnover for a year. We have seven business areas, more than 50 markets that we serve, with manufacturing in 17 countries.

We have more than 4,000 customers globally, and we made profit, as I said, every quarter for the for more than 30 years now. The other things there I've said before.

Then we are part of UN Global Compact since 2012, which is our sustainability initiative. For some numbers, then: for the fourth quarter, we managed to increase sales with 9% to 2.3 billion SEK.

It is a little bit below our goal of growing 15% per year, but still, it is a decent number. Operating profit increased with 5% to 216 million, and profit after financial items increased with 2% to 212 million.

The profit margin before tax was 9.1%. The profit after tax was 168 million, a little bit higher than last year.

Cash flow from operating activities came in at 123 million. Get into the details a little bit later in the presentation.

Then earnings per share before dilution was 1.84, which is higher than 1.69 a year ago. For the full year, then, our net sales increased with 6% to 9 billion.

First time ever we are above that number. Operating profit was unchanged, 840 million.

EBT was increased by 1% to 831 million. The profit margin EBT was 9.2%, compared to 9.6% the year before.

Profit after tax was 677 million, a small increase from the year from 2024. Cash flow from operating activities came in at 900 million approximately.

Earnings per share increased to 7.38. Equity ratio is well above our target, and the board of directors will propose a dividend of 1.80 per share, compared to 1.60 last year.

Some highlights in the quarter: organic growth improving, and we almost reach our target, we we we get to 8.6%, which is much better than the previous quarters. This is mainly impacted by growth in data centers, electrification, also in defense.

We have strong growth in the quarter in net sales and order intake for electrification data centers. We have during the quarter four signed a new letter of intent between AQ Trafotek in Finland with one of our legacy customers to deliver medium-voltage transformers and inductors to data centers in the US.

We've also got an order for the design and manufacturing of low-voltage, large transformers to hyperscale data centers in the US through a electrification customer, an American one. We have also received in the quarter additional orders for medium-voltage transformer for our factory in in Hungary, but they are also taking subcomponents from our factory in Czech Republic and and in Shanghai.

Then it's I'm happy to say that we've also finally at least gotten a €4 million order for supercapacitor cabinets from a one of our biggest customers in Europe. Supercapacitor is like a big battery, but it is you can charge it in microseconds and discharge the energy in microseconds, it's not really used for storage; it's used for balancing of the power grid.

This product we have developed together with our customers for 9 years, I believe. The the the the development started in Sweden many years ago in one of our plants, and we have made like 30 prototypes.

Now finally, our customer gets their big first order, we will deliver like almost 300 cabinets now. We believe that this is a field that will expand going forward as well.

We see strong growth from inductive components and electrical cabinets to customers for ventilation, or or you can say cooling, for data centers. Those activities are in Bulgaria and in China, and it's a little bit different.

Electrical cabinets are delivered to to a company that is focusing exclusively on data centers, and they they are delivering cooling solutions for that. From China, we deliver inductive components to an American company that are doing cooling for for hospitals and and data centers and so on, but the the growth is coming from data centers as well.

Then we're happy to see that on-time delivery has improved to 96% in December, and it has steadily improved during last year, it's much better than the year before. It's good that we start to deliver more on time.

Some lowlights in the quarter: we've had quality defects that has impacted profitability negatively in the quarter. We always have this kind of things, unfortunately, but it is a little bit bigger in quarter four than normally.

It's not products that we have produced in quarter four; it is products that we have produced maybe a year earlier. It is also related to data centers.

It is we have done a design and it didn't work perfectly, and now we have redesigned it, and we believe it will work perfectly now. We've also added a lot of new testing equipments and so on so that we can detect these faults before they happen.

Then we I think I indicate here it's slower growth in defense market than expected. It's orders are there, we are get orders, but we are not delivering out as much as we would like because it is not the ramp-up in in the, especially in Europe, is not going so fast for our customers.

We try to help them as much as we can with providing them with more engineering services and and making more parts as well, so that they can they can ramp up faster, but it's not going the growth is not in invoicing as fast as the order intake. Then we have low capacity utilization in Mexico, New York since bus volumes are quite slow there.

We have new customer there, and it is ramping up, but it's going slower than we want, both us and our customer. I believe it will get better during the year.

Then we did some inventory write-offs in in Bulgaria, I would say due to poor material planning. We have put in place a development program for them, and this should not happen going forward.

Then inventory turnover, it improved to 3.2 turns per year, which is sort of a record level for us, but we're still not happy because we don't reach our target of 3.5. I think it's possible to do it in 2026.

Go to some more numbers, then: the earnings per share increased a little bit this year, not as much as I wanted, but still it's a small improvement. The dividend is proposed by the board to increase also to 1.8.

The historical performance is decent, though. Regarding the sales development in the full year, our organic growth is 2%, which is way below our target, and we're facing some headwinds from some of our market segments, like in trucks and in buses, but on the other hand, we're able to offset that with the growth we have in electrification, defense, and data centers.

At least it's a growth in in the year. Then organic growth in Q4 is much better and coming up to 9%, and we are working very hard to deliver out all these products now that we have orders for, to to try to make the organic growth continue in this way.

All in all, quarter four for the growth, we're quite happy; for the full year, not satisfied, but it's maybe okay. Here is now showing the historical organic growth by quarter and almost reaching our target of 10% in quarter four, but we we want it to be higher.

We have done it before, as you can see, we are working hard to come above the green line for the quarters to come. Some new recent customer and project wins: so, as I said before, this supercapacitor cabinets, you can see a glimpse of them on the right side, that is two cabinets, and we are going to deliver almost 300 cabinets in 2026 and 2027.

We are making the complete scope there, it's full sheet metal production, and then we integrate these supercapacitor banks inside, we do the electrical testing, and we deliver to a customer in in Germany, actually. Then we we have also won additional €2 million for electrical cabinets for HVAC to that is a supplier for data centers.

That's also from Bulgaria. Both of these products are made in Bulgaria.

We see also increased volumes for inductors to a large, as I said before, HVAC OEM in North America, and that is deliveries from our factory sold by our US transformer unit, but produced in in our Shanghai factory and delivered to the customer in Mexico. Then we have received the first prototype for the design and manufacturing of large transformers from a new US electrification customer for data centers.

That's exciting. It is, however, quite small order at the moment.

We believe it will be a big order coming, but first we need to deliver the prototypes for them. Then we have received orders for about 40 pieces for a couple of small of these medium-voltage UPS transformers, you can see on the middle picture, during the quarter to increase to our already big order that we received, or the two big orders received last year.

More orders are expected to come there, but we are quite fully utilized. Our capacity is increasing, but for quarter one, we will be quite full and deliver out as much as we can.

Then we get increased capacity in Q2 to deliver out more because of investments that we have made and qualification of the Finnish site and so on. Then we received also in the quarter an award from a European electric truck supplier for power cables for electrical vehicles.

We're happy with that. If they sell as many as they want, then it will be a huge order, but we are very pessimistic that their sales will be as high as they claim, so, but still it's good to be in new products and and new projects.

We learn as well a lot about this type of product, it's we're very happy that we have won this order. Regarding growth from acquisitions, it is mainly in Q4, this MDEX acquisition that we did.

We have several targets under evaluation and negotiation, but we are very picky with the prices we pay. We don't want to overpay because then you will have a hell of a problem later.

We we're negotiating hard and we are staying true to our nature: we will not buy anything that is too expensive. We made a small bolt-on acquisition in November.

It's a small prototype machining workshop that is working with, I could we could say, defense mainly. This will be integrated in our AQ Engineering workshop that is basically the Techro acquisition that we bought in 2024.

MDEX is gradually developing according to plan and the margins are improving, and we can see the photo down there is a newly new machine for winding of this medium-voltage transformers. This is helping us also to utilize the the people and the workshop that we have bought, it is they are they will grow a lot this year, and in combination with the other transformer workshop that will also continue to grow in 2026.

We talk in the report a lot about transformers. You can see on the left on the bottom left in the net sales development of this business area, we have made now three big acquisitions in the area.

We're getting into these data centers that we have talked about a lot already in this presentation. We have a gross CAGR of 30% in this business area, and it has gone in 2018, it was 5.6% of our sales, and in 2025, it's now, I think, 24.99% of our sales, something like this.

It it is it is a little bit special for us because we do a lot of design here, we have design engineers and then we produce the the parts as well in the locations that you can see on the map, the green dots there on the map. It is a very demanding field.

It it is not so easy to do it. We deliver really special customized transformers for specific applications that's supposed to be very cost-efficient, smallest weight and footprint in in the customer's product as possible.

You can also see the customers that we have there are well and renowned customers within electrification and data center and railway. We're very happy about this and we want to continue to grow this business, and we want to be a world leader for this niche-type, dry-type transformers.

We're on the way to be that, which is fun. Regarding margins, we are now on the 12th consecutive quarter above our EBIT target of 8%.

It was 9.1% in the quarter. I think cost control is very good.

However, in quarter four, we have made several provisions for quality issues that we have had. It's not products that we have delivered out in quarter four; it's products that we've delivered out previously that has not been up to the has not fulfilled the customer's specifications completely.

It is sometimes really hard to design these products for new applications. We believe that we have now taken corrective actions and we have better testing in place and have a more robust design in these instances, and we have taken the costs that we believe will incur for for these known defects in quarter four.

Also, MDEX still dilutes the margin a little bit, mainly now because of personnel reduction costs that we have had in the quarter. Still, we see the development is going in the right direction, and in December was quite good, in fact.

Then we have a couple of underutilized factories: one in Bulgaria, one in Mexico, one in New York, and one in India, where we need to sell more and be more active on the sales side. My sales teams are energized and they they are working really hard to bring in more volume, and I think we can see it also on the on the organic growth development that we have had in quarter four.

We believe that there is more to come, and it is not that volumes will fall down from the sky. We we really need to work hard to to to reach the organic growth targets that we have, and I believe that we do.

I'm really impressed by our team's performance in this area. Regarding inventory value and turnover, we are a little bit disappointed because we don't reach our target, which is 3.5.

Currently, we're at 3.2. However, it is the highest level that we've ever been to, it is not not too bad, but not great.

When we add new businesses, normally we see that their inventory turnover is lower than the AQ legacy plants, then we put in a team of people to support them. We also change the ERP system and so on, and improve the planning.

Normally this results also in better delivery performance and better quality, and it's also easier with bookkeeping and everything when you have less inventory to count and so on at year-end. We have done a lot of improvements during the year.

I'm really happy with the team that is working with this specific project to improve this, but still we have several plants that can be much better. We have now a focus on Electric in Bulgaria, our wiring plant in Canada, our wiring plant in UK, our injection molding factory in Hungary, and our wiring plant in Mexico.

As a group, we want to reach 4, but the target first is 3.5, and then we can go even further. Regarding the cash flow, it is a little bit lower in quarter four, and it is heavily impacted by increased in accounts receivables.

It's natural when you increase sales then accounts receivable go up, but also we have during the quarter terminated a lot of all, I would say, factoring agreements that was in MDEX and M-Tech Riedel. This impacts the cash flow quite a lot in the first quarter when you do it, and then when you finally get to the end of the payment term that we have with the customers, then this will improve again.

On the other hand, we have a super good balance sheet with a net debt of or net cash position of 427 million. We have a lot of money to buy companies for and to invest in in in this ramp-up for the transformers for data center and so on.

We're we're we are very careful with the shareholders' money. I can assure you of that, and you can see it also in the performance.

Final slide for today: earnings per share CAGR of 14%, it's actually 14.5% in in after 2025, we can if you're if you're inclined to positivity, you can say it's 15; profit every quarter since foundation; we like to work with these industrial market segments that are growing; and we have a long history of acquisitions, and we're going to make acquisitions going forward as well; and we have a super strong balance sheet with a net cash position. Then we move to Q&A.

Maybe we have Jonnu first? SEB.

Hi, good morning, James. Hope you can hear me.

I have a couple of questions, starting with data center, which is obviously very exciting right now. You mentioned some letter of intent of 200 transformers here in the quarter and some prototype orders as well.

I think in the last quarter you said order book was at €15 million if I remember correctly. How much data center would you say you have now in the order book, and also what sort of lead time can we expect on those orders?

Are they set to be delivered here in 2026, or what can we expect there?

Now the expectation is to deliver those 15 that we received last year, that we communicated already in quarter three, that we're supposed to deliver those out before June this year. We're working super hard in the factories.

Of course, this is not software that we're delivering, and it's a lot of people, machines, testing equipment, shipments, and so on. The target is to deliver out all of that before June.

Then we, as I also presented here, we have received some more orders for some smaller data centers as well, we've just received another 40 units for that. It will continue, and I think we will get more orders for 2026.

Of course, that's what I think doesn't matter at all. We need to get those orders in.

The LOI for Finland is really related to production capacity that our customer wants, they have agreed to buy 200 units over the course of '26, '27, '28. That is to enable us to buy the necessary equipment and to qualify the units also in this factory.

It's the same units that we today deliver from Hungary will be able to deliver also from Finland. We're also working on to deliver those from the US, and then we deliver components.

The transformer and inductor that goes inside this cabinet now can also be produced in some of our other sites in Shanghai and in Hungary as well. It is a system of products.

Then for all these big components that we're talking about now, there is also I think 18 smaller components in each cabinet as well, which we deliver today from our factory in Shanghai. We'll also qualify now our factory in Bulgaria for this volume.

There's a lot of activity ongoing and we're happy that we have such a good collaboration with our customer and that we continue to develop the business and qualifying more sites to be able to deliver the volumes that they believe will come and that we hope will come, we can say.

Yeah. Understood.

Sounds exciting.

Then

a quick one on the quality complaints here a little bit. Is it possible to say something about the magnitude of those extra costs and provisions here in the quarter?

I think I would like to pass on that one because it is like this that we always have quality issues of some sort. On the other hand, we like to highlight that in this transformer field there is a risk.

It is I would say, very beautiful growth hopefully and profit margins, but it's also possible to go wrong. I think it's our duty to talk about those risks.

On the other hand, it's not so small in the quarter, because then we wouldn't mention it. It impacts the EBIT.

Yeah. To go into the details, because it's several different projects and so on as well, I'd like not to go into details there.

Thank you.

I understand. I assume as you mentioned it, as you said, I expect it to be at least, as you said, impacting you.

Can we expect it to be closer 0.5 percentage points maybe on EBIT level? Is that a fair assumption?

Closer to 0.5 percentage points than not?

Very good question, Jonnu, but maybe we take next one.

Okay. Fair enough.

Need to try at least. Okay.

I have one on defense orders. You mentioned some slower deliveries to defense than expected, and I think other suppliers to defense companies have also said similar.

Do you expect this pattern to continue here in the near term, or can we expect some sort of catch-up in deliveries here in the near term?

It's not slow. It's still on a very high pace for us compared to what it has been historically, but it's not growing as fast as we thought going into 2025.

I believe that it should catch up, because our customers have a lot of orders that they need to deliver out. When that catch-up effect is coming, it's hard for me to tell.

For sure, there will be more deliveries, I think, in '26 than it was in '25.

I understand. Yeah.

We'll see. Just a final one.

It's always interesting to hear: what is your general gut feeling here on demand and general economy right now entering the new year?

Yeah. I'm not so good at doing forward-looking statements and we don't really do them, so, as we have written in the report, I think there is a great demand in power grid electrification, in data centers, in defense.

Most of our markets are moving normally. Then it's a little bit slower in trucks and it's a little bit slower in buses, it's a little bit slower in food equipment.

I think we are working really hard to win new business, and I think we are so small still, we should be able to counter those market segments that are declining by winning more business at these customers and take market shares.

Understood. Thank you.

Thank you.

That was all for me. Have a great day, James.

Thanks.

Albin?

Yes. Thanks, James.

Just making sure you can hear me?

Yeah. Hi.

Perfect. Just first one on if we can get some comments on the type of companies you currently have in the M&A pipeline.

Is there typical AQ sort of turnaround acquisition we can expect, or are there companies with good profitability you're aiming for? Also if you can comment something on the size of the companies you're looking for?

Very good question. I think I could sit here talk all day about all the companies that we are looking at.

I believe that we will not buy so much in the defense sector, because those multiples have become too expensive for us for turnarounds and for companies that show a little bit profit. We believe it's hard for us to buy with the prudent way that we see on contract manufacturing acquisitions.

Maybe there is, in the other hand, an opportunity to buy something in medtech with healthy margins. To answer your questions, I would say like this: we look at both.

We look at some companies that are actually doing really well, and we look at some companies that are doing a little bit poorly where we have to put some work into it in order to make it a classic, as you said, AQ acquisition where it's a little bit cheaper with nice machines and customers, but there we need to do a little bit more work. Both of them we're looking at, and our target is to grow with acquisitions 5% per year, and if you take 5% on 9 billion, it should be, yeah, something like turnover of 500 million if we're successful with what we want this year.

On the other hand, I don't want to promise anything.

Good answer. Just another one from me: you have flat year-over-year personnel in number of personnel, but we can see you're up 11% in cost, personnel cost, and also we can see that personnel cost has been around 26% to 28% of sales, now we're at 29%.

Is this given more complex products that we should expect these levels, and/or is this a function of underutilized factories, or yeah, any comments on that would be great.

Yeah. No, but it is of course varying a little bit.

You can say that our biggest business area in terms of personnel is in the wiring systems business, and they're exposed to truck and bus and construction equipment volumes. There we have seen a decline in volume from those customers during the year, and that of course reduced the number of people.

As you said, the people is flat. We're reporting the head count that is employed by us.

We also have, I would say, 15% of the employees that are also rented. That also has an impact.

Then we have of course increased around 400 people when we bought MDEX and M-Tech Riedel as well. The Germans actually pull up a little bit, even though they're not so many, they actually pull up the cost picture for the personnel cost.

We have done some reductions in Germany during quarter three and quarter four, which also is showing in the personnel cost for the fourth quarter and the full year. I hope that answers your question.

Do you think 29 but do you think 29% is a fair level ahead as well given you go

Yeah. I think it's a fair level.

I would say like this that it is so much dependent on what type of products we deliver. Some products we have more working content and some products we have less content in.

If we deliver more electrical cabinets, then work cost is much lower because the components inside are much more expensive. It's also a mixed thing, but I would say it will be in this ballpark sort of.

Perfect. Thanks a lot.

I will jump back. Have a great day.

Thanks.

Thank you so much. Linus?

Yes. Hi and good morning, James.

Just a quick couple of questions here from me. Firstly, on the margin here: the margin declined year-on-year despite 8.6% organic growth here.

I'm just wondering if you could maybe not quantify, but perhaps rank the impact here from the quality reclamations, the inventory write-offs in Bulgaria, MDEX dilution, and capacity utilization here, the

lower? Then we would maybe have written it in the report if we want to go into the details.

All of those things that you mention have an impact on the margin. On the other hand, every year we have inventory write-offs and every year we have quality issues.

I would say it is a little bit bigger in quarter four than normal, but it is nothing really that unusual. Then of course, the MDEX and Riedel acquisition still dilutes the margin as well, and that is the decline that we have seen, I would say, in general for the full year.

Okay. Thank you.

Just a question here on Mexico and New York capacity here: what is the current utilization rates here approximately, and when do you expect them to normalize?

I would say like this that in Mexico, the volumes for buses for us has decreased substantially in 2025. We have now started to grow again compared to '25, because we're getting in some new volume there, which is good.

When you get such a big decrease, then normally you also decrease your capacity. We have reduced workshop space and we have reduced people.

Capacity is, of course, a moving target, but I would say that we could double that turnover. Then again, this Mexican plant is quite small, but I believe we can double the turnover in 2026.

We're working very hard to achieve that with the customers that we have.

All right. Super interesting.

Moving on over to the transformers here, just a question on the margin profile here. They are 25% approximately of sales now.

How do the margins here compare to the group average approximately?

We don't report like that. I would say like this that since we are doing all the design work here and also the risk is higher, then margin should be higher than AQ Group's target and AQ Group average.

All right. Super.

Just one last question here from me on the New Flyer ramp-up. As you said, it's not yet at expected levels.

What are the specific bottlenecks here that prevent a faster scale-up? Is it customer demand, or supplier constraints, or something else?

No, but I think in Canada we have ramped up very quickly and we are at a higher pace. In the US, we are getting in some new volume, but it is also about switching.

The customer need to switch from a present supplier to a new one. They need to get orders for the products where we deliver parts to.

Same with Mexico: we are newly qualified, and then we get parts for part for part, and we're quoting parts, and we get parts, and so on. It normally takes some time.

I believe that Mexico is on a good position at the moment, and New York is working hard as well, so.

Do you have any timeline on that?

Maybe 6 months until we are on the volumes that have been agreed, I would say.

Super. Thank you very much for taking my questions.

Thank you. Do we have any more questions?

Then please raise your hand. Seems to be very quiet.

Then I thank everybody for listening and I wish you a really good day and hope to see you again next quarter. Thank you so much.

We

have a question in the chat. There's a question in the chat, maybe.

Could your LOI of 200 transformers also mean that customers have signed LOI for the same type of transformers with other deliveries, just to make sure that they will not be short of transformers, or are the data center market not so hot?

I don't know if you heard the question, but the LOI for Finland is for 200 transformers over a number of years. If the LOI is just an LOI, as everybody knows, it doesn't mean that they have placed order with us.

On the other hand, we are buying equipment to be able to produce these 200 pieces, and if the customer don't buy these 200 units, they will have to pay for the equipment. Then you can say then we get equipment for free.

Of course, we and our customers wouldn't do this if we didn't think that we will produce this volume. Then of course, our customers, they will always try and want to have second sources, of course they are working with that.

I would say data center market, we are scraping on the surface. If our customer is as successful as they believe that they would be in this area, then there will be a demand that they would need more than 10 AQs in order to be able to deliver all the products that they want to ship.

It's always a risk and so on, but I see that there is demand for everybody if we are successful. I think that was maybe the last question.

Very good one. Thank you.

Then I wish everybody a nice day again. Bye-bye.

Bye-bye.

Bye.