Good morning, welcome to Lassila & Tikanoja January-June 2026 earnings release. My name is Eero Hautaniemi.

I'm the President and CEO, and together with me this morning I have Joni Sorsanen, our CFO. Content of today's presentation is here.

First, a few highlights, then we will go into market environment and what has happened there, then efficiency and operations, followed by sustainability, and then Joni will go through the financials, and then we will conclude the presentation with the outlook that we updated in July. First, a few highlights.

Financial highlights: our net sales grew by 5.9% to €211.1 million, and we saw growth in all of our service lines. Our adjusted EBITDA was €32.8 million compared to €36.9 million in previous year, and our adjusted EBITA was €10.1 million compared to €15.9 million in 2025.

Our free cash flow was in line with previous year's cash flow on comparable basis, and Joni will cover that more in detail later. Then some operational highlights.

We had very strong sales growth in hazardous waste and remediation business where we saw a 33.2% growth year-on-year. The reasons behind that I will cover a little more later.

Then our strategy execution progressed according to our plans despite challenging market environment. Then I will go through corrective actions or measures that we have implemented or are in process of implementing because of the challenges we have been facing during the first half of the year.

First, let's look into the net sales development. As I said, we had healthy growth, 5.9% in the first half, of which 2.8% was organic growth.

Net sales for second quarter amounted €116.2 million, and the growth year-on-year was 5.7% and organic growth 3.5%. This growth that we have seen in the first half is a continuation to the positive development that started already in the last quarter or end of 2025.

By service area, in Waste Management the growth was 1%, which was driven mainly by the acquisition we closed summer 2025, and organically net sales in Waste Management declined a little bit. In Hazardous Waste and Remediation the sales grew 33.2%, mainly due to the fact that we had a very strong remediation pipeline, and overall demand for these type of services is still very strong, and we expect the sort of positive development to continue in this part of our business.

In Hazardous Waste, the demand was stable, and our performance was solid. In Industrial Services and Water Treatment, we had 3.7% growth to €39.9 million, and we have to remember that in 2025, especially the second quarter was very strong.

This year the seasonality is somewhat different, and we expect the third quarter and the beginning of fourth quarter to be the strongest in the year. This is due to the fact that large shutdowns, industrial shutdowns are scheduled to happen in Q3 and beginning of Q4.

This is the case both in Finland and in Sweden for our customers. Our adjusted EBITA for the first half was €10.1 million, as I said, which is 4.8% of sales, and obviously a lot less than a year ago.

Main reasons behind this drop were the approximately €3 million year-on-year increase in diesel prices. Obviously this is due to the fact that there is a lot of turbulence in the Middle East, and obviously we don't know exactly when the situation is going to stabilize, but the impact for the first half was this €3 million.

Also what affected negatively to our performance was the increase in gate fees for waste-to-energy, which is driven by the oversupply of incinerable waste in the market. €0.8 million of extra amortization related to our new ERP system investments.

There was also some impact from the volume decline in Waste Management volumes, but this was a minor. Then what are the actions to compensate this headwind that we have experienced in the first half of 2026?

Obviously, we have implemented a number of price increases in April, May, and June, and we will see the full effect of those price increases in the second half of '26. Then we have a efficiency program targeted to Waste Management, and I will go more into details later in this presentation.

Then we have done a number of actions to manage our fixed cost base, and also that I will cover later in the presentation. Then let's look at what has happened in the surrounding market.

Economic activity continued to recover in the first half of '26 following the sort of subtle growth that we saw already at the end of 2025. Currently, the forecasts or the consensus is 1% GDP growth for '26, but based on the sort of the first and second quarter strong growth, there is a possibility that these projections will be adjusted upwards, but what we will see later once we see the forecasts, but right now the consensus is around 1% growth.

Industrial activity is clearly improving, but the fact is that in construction, it is still slow, and this is especially the case when it comes to the household and sort of office construction projects. Data center projects are very active, and we have a good market share in that market.

We have to remember that there is geopolitical uncertainty, and there are risks because obviously no one knows what happens in the Middle East and when the situation will stabilize. Then if we take a little different look to the market development, we have now statistics for the retail volumes till the end of June, and as you can see from this picture, there is a recovery that started at the end of 2025.

For the municipal solid waste, unfortunately, we only have statistics for 2024, but our expectation is that the sort of the volumes of municipal solid waste develop with a small delay compared to the retail volumes, and our expectation is that we will see a gradual recovery of waste volumes starting second half of 2026. Then another important thing for us is the development of fuel prices, and from this picture, you can see that there is a similar pattern that we saw in 2022.

Right now, or at the end of second quarter, the fuel prices were approximately 35% higher than they were a year earlier, it is significant. As I said, we have implemented several price increases, and let's say that the customers have been less receptive than they were in 2022, but we are working hard, and we are gradually getting the price increases through, and we expect a positive impact from those price increases to be visible in the second half of '26.

Then few graphs about the prices of recycled raw materials, and as you can see, they are pretty flat, nothing significant that I could point out from this development. Then couple of points from what is happening in the regulatory environment.

In Finland, the government of Finland has published its proposal for a new Waste Act, and there is important theme there, and that is to promote fair competition, and there are a number of actions proposed, which will be beneficial for us if the legislation is passed as proposed. The in-house company or in-house sales will be tightened from current 10% to 5% or €500,000.

Then another important thing is that municipal waste companies' opportunities to operate in the market will be limited by tightening the criteria for secondary waste management liability, TSV. Then the municipal waste companies will always have to run a tender process when they acquire or purchase services.

Then the dividend distribution possibilities will be more limited for the municipal waste companies. Then there are certain measures to promote recycling in the future.

Perhaps most significant change is going to be the fact that there is going to be a ban for collecting recyclable waste as energy waste, and that will promote the recycling, and we already have started the preparations towards this change, and we are ready for this change to happen. Then in EU level, perhaps one thing that I'd like to highlight here is that the extension of the ETS to non-hazardous waste incineration and co-incineration installations from 2031.

Earlier, there was discussion that this should happen already '28, there is a 3-year delay compared to the earlier information. The good thing is that it is happening.

Then moving to our own operations next. As I said, our focus during the first half was to execute our strategy successfully, and here we have a few highlights that I'd like to share.

Organically, we have won a number of new customers. We have highlighted here three regional S-retail customers that we have won, which is very important.

On top of this, we have also some smaller retail customers that we have won in the first half, this is encouraging and will certainly support our Waste Management development going forward. Then we have made certain acquisitions already.

We have discussed about Reinikka and Stena, and then we have this Kempeleen Siirtokuljetus acquisition that we have signed, which is currently under review by the Competition Authority, and we expect a ruling from them in the second half of '26. We will see what happens then, but obviously, that would be a very important addition to our operations in the Northern Finland.

Geographical expansion in Sweden. Blast cleaning is gaining market share in Sweden, which is very positive thing, good organic development, and we acquired the remaining SVB shares in the spring, now SVB is 100% our subsidiary.

Then few highlights from waste-to-value and remediation growth. We opened a new recycling plant in Kuopio.

We have about 80 people working there, and that strengthens our position in the Eastern Finland, and we have, let's say, restructured our Kerava recycling operations, and these investments will help us to have even higher yield from the material that we receive in the Kerava plant. Obviously, the Merikarvia expansion is progressing as planned.

Then fixed cost development. We have been able to manage our fixed costs pretty well already in the first half of 2026, but obviously the headwind that we experienced was so strong that we had to do additional measures, and we concluded change negotiations or union negotiations during the summer, and as a result of those negotiations, we will terminate 20 employees, and up to 420 employees will be temporarily laid off for 14 or 30 days.

Other cost efficiency measures will continue in the second half. Then more focused program that we have initiated before summer is targeted towards the sort of operational efficiency of our Waste Management operations, and we have four elements in this program, and this program will continue at least the remainder of this year and then probably in '27 even.

First component is commercial excellence, and we will have more focused and efficient sales organization, and as a result of these union negotiations, we reorganized our sales to meet this target, and that new sales organization will be effective mid-August onwards. In operational efficiency, we are doing a number of things.

Route optimization is obviously in the core because the market is changing and it is increasingly important to be able to react faster to these changes in the market. We have increased our resources in the route optimization.

There are also other measures like improved fleet utilization. We will focus much more on workforce productivity, and we will have more standardized operating practices going forward.

Also, in the Waste Management, we changed our organization structure, and we have now, effective August onwards, we have a more flat organization structure, which enables us to react faster and also hopefully this will help us to also standardize the management practices and sort of sharing of best practices, and through that, better visibility and also across the board, and sort of more even performance. Right now, we have certain units where the performance has been very poor and certain that have been excellent, and now the target is to make sure that all of the units meet the targets that we have set for them.

Quite a few changes that we have already implemented or will be implementing in the second half of '26. Then I will conclude my part with a few words about sustainability.

Overall, solid work in the area of sustainability. Our carbon handprint did not increase, and the fact is that the recyclable paper volumes continue to decline, which affects negatively to this KPI, but the carbon footprint from our own operations continued to go down as planned, which is very encouraging.

I'm really proud of our work safety, where we reached a new record for the first half of 2026, and the reason for this good performance is a sort of very long-term and persistent sort of work that we have done across the board in the organization. With this, I'd like to hand over to Joni, and he will go through the financials.

Looking into net working capital, net working capital developed in line with our own expectations, amounting to -€13.2 million compared to -€15.4 million in second quarter of '25. Looking at the first half, we must note that the development was affected by one-off payments to Luoteva, which related to the partial demerger and amounted to €5.9 million in the first half of '26.

Looking forward to the second half of this year, we expect net working capital to improve towards the year-end, just like in the comparison period. Capital expenditure in January-June was €10.7 million compared to 19.2 in the previous year.

Previous year's capital expenditure included acquisitions worth €7.6 million, which related to Stena's pallet recycling business. Of note is that even though we acquired the 30% of SVB shares in the reporting period, it's not included in CapEx as the company was fully consolidated into the group already since 2022.

Looking more into CapEx in the first half, we can see that it consisted primarily of investments in machinery and equipment. As already noted, in the first half of '26, depreciation and amortization were above previous year by approximately €2 million, half of which was related to the ERP renewal investments, the depreciation of which was started in June '25.

Going forward, we do not expect anymore year-on-year increase from the ERP-related amortization. In full year '25, organic CapEx was around €29 million and business acquisitions around €12.5 million.

As already noted, on a comparable basis, free cash flow developed in line with previous year. Reported net cash flow after investments was -€2.7 million compared to €5.4 million in previous year.

It's of note that the previous year's cash flow is prepared on a carve-out basis, and it does not include, for example, interest payments on financing loans. Therefore, taking into account these one-off payments to Luoteva and also the fact that the interest payments were not included in comparison period's cash flow, we can conclude that the free cash flow developed quite well in line with previous year on a comparable basis.

Looking at our cash flow on a rolling 12-month basis, we were able to generate adjusted EBITDA of around €80 million, net cash flow from operations approximately €64.5 million, and free cash flow of €33.3 million, which is around 45% of reported EBITDA. As already noted, financial position remained strong at the end of June, even though the end of second quarter is usually the weakest quarter-end during a financial year.

Net debt to adjusted EBITDA was 2.1, while net interest-bearing debt amounted to €171.1 million, including IFRS 16-related lease liabilities of €64 million. Equity ratio was 32.9% and gearing 106.9%, affected by dividend recognition related to the previous financial year during the second quarter.

Also good to note that the financial position figures for the comparison periods are not comparable with '26 figures due to these carve-out principles. Maturity structure of interest-bearing debt is intact compared to Q1.

However, what we did during the second quarter was that we utilized the first extension option of our €50 million bank loan, whereby the maturity of the loan was extended to 2029, and we also intend to utilize the second option, whereby we will extend the maturity until 2030. As already noted, IFRS 16-related liabilities amounted to €64 million, and thereby gross interest-bearing debt €189 million at the end of the quarter.

Cash and cash equivalents were around €18 million, and revolving credit facility of €40 million and also our overdraft facility of €10 million, as well as the commercial paper program were all unused at the period end. The average interest rate of our long-term loans were 3.3%.

To conclude this section, finally some additional KPIs for the first half of '26. Reported return on capital employed 8.4%, return on equity 9.1%.

Adjusted for items affecting comparability and certain carve-out principles, return on capital on a comparable basis around 10%, and return on equity also on a more comparable basis 13%. Share of profit from Laania, €1.3 million, in line with previous year.

Finally, earnings per share totaled 12 cents. Also concerning earnings per share, it's good to note that the comparison figure is not in line with the new L&T's financing structure and, therefore, cannot be fully compared with each other.

With these words, I will hand over back to Eero.

Thank you, Joni. Then we have the outlook, and as I said, we released a new outlook.

We had a profit warning in July, and the new outlook is that in 2026, net sales are estimated to be €420 to €450 million and adjusted EBITA €33 to €38 million. In '25, the numbers were €426.6 million for net sales and EBITA €40.6 million on a carve-out basis.

This concludes our presentation, and now we are ready for your questions. Go ahead.

Hello, this is Nikko Ruokangas from SEB. Thank you for the presentation.

I have four questions that I'd like to go one by one. I start with diesel prices and related price increases.

In relative terms, how much of the increased diesel prices do you expect to be able to effectively price in? Should the price hikes you will make related to the diesel prices increase to be visible fully already in Q3?

If I start from the end, our price increases are fully visible in Q3, yes. How much of the diesel price increase are we able to cover depends very much where the diesel prices land, and that we don't know.

We expect to be able to cover most of the price increase in the second half should the prices remain at the levels of end of June. Obviously, as I said, we don't know what happens to the diesel prices.

There is a risk if the prices increase that we cannot fully cover the price increase. When it comes to the industrial, there we have a sort of slightly different mechanism, and there we are able to cover pretty much all of the price increases, especially in the second half of the year.

In Waste Management, the process is slower, and the clauses of our contracts cause a certain delay. Remains to be seen, but I'd say that much better we will be able to cover the price increases than we were able to do in the second quarter.

Yes, understand. That helps, thank you.

I'd like to stay within the inflation theme and then from a bit different angle. Have you seen any positives from the renewable raw material pricing related to the overall higher inflation?

No, nothing significant. I showed you some of the price development of some of the recyclable raw materials, and we have not seen any sort of significant movements that wouldn't be sort of in line with what is sort of normal fluctuation that we see in the market.

We have not yet seen any major positive development in the prices of the recyclable raw materials.

Thank you. Then on Hazardous Waste and Remediation strong growth, I understand the strong outlook overall you highlighted.

Was there a bigger concentration of projects on Q2, or does this kind of illustrate the new level you have grown to?

It sort of reflects the level of projects that we have currently at hand. Obviously, the nature of the business is such that we can see that there's a healthy pipeline, but we have to win the projects going forward as well.

Right now, the demand for this kind of projects is very high, and hopefully we are as successful in the future as we have been in the past. The sort of the level in this market situation is much higher than it has been in the previous years.

All right, sounds good, thank you. The last one from me: you highlighted the data centers and your strong market share there.

Is that more significant to you in Waste Management, or in Remediation and Environmental Construction?

It is definitely more important in Waste Management. There the sort of composition of the material that comes from the construction sites of data centers differs quite significantly from the material that we receive from construction sites if there is a house building construction site or office building construction site.

It therefore is sort of, I would say, less beneficial for us than the sort of normal or household and office construction. Even though there is a very high activity in data center construction in Finland, that is the reason why it doesn't show more in our numbers in the first half than it does right now.

That's helpful. That's all from me, thank you.

Thank you, Nikko.

Yes, a very good question. As we showed in the presentation, we have actually won a number of new and important customers, that is obviously one element.

The other element that is more a market-driven is the fact that obviously when the sort of volume of solid municipal waste has been declining for years, it is very difficult to grow. Right now, it looks like we will return back to the growth path, and obviously that should support also our growth.

Obviously that will be helped by this sort of customer wins that hopefully we will have more in the fall.

Significantly. We will not disclose the exact growth numbers, but the growth was significant, as we have highlighted in the commentary of our results.

Yes. The main reason for this sort of decline of EBITA percent was the fact that our sales mix was different, and obviously another thing was the fact that the profitability in general in Waste Management declined because of the reasons that we explained.

What actions are we doing? I think I went through the actions during the presentation, and we will not sort of quantify or give outlook for the Waste Management at all and certainly not for the second half.

We have given an outlook for the whole company, and there we said that we expect that these measures will support our performance so that our EBITA development will be more or less in line with the performance of the company in the second half of '25.

The cost savings from fixed costs will be millions, but we will not quantify the impact of the price increases in the second half.

Yes, there is. The municipalisation affects the overall waste management market.

It has affected already end of '24, all of '25, certainly first half of '26. It will continue to impact the market '27 and somewhat '28 as well.

That is sort of one of the reasons why the competition is much more intense at the moment in the waste management market.

I would say that there are certainly ingredients that would support growth, also organic growth in the Waste Management, but obviously time will tell how successful we are at the sales front and in our service delivery, but certainly I'm much more optimistic right now than I have been perhaps during the past few quarters.

obviously, as I explained during the presentation, the end of June is usually the weakest point of financial position during a financial year. Definitely, through profit-making in the second half of the year and through positive cash flow, we will be seeing more positive balance sheet figures going forward.

That is just the seasonality fact. As for Laania, we have not disclosed any information on our plans for the joint venture, I will not comment that any further.

The fact is that company's balance sheet is strong, and as Joni very well said, end of June is the point, the lowest point every year, and we see no reason to sort of initiate any sort of special actions to strengthen our balance sheet. It will strengthen through our operations, and we have sort of all reasons to believe that it will be much stronger by the end of the year, as it has been every year.

"So,

we terminated 20 positions in these negotiations and in this restructuring, and we have been doing a number of things to improve our fixed cost efficiency. I wouldn't say that they have remained flat.

One has to remember that the inflation, even though it hasn't been very strong, it has been around 2% to 3% per year, and sort of considering that, we have been able to reduce our costs, and our net sales grew by almost 6%, and at the same time, we were able to remain at the same level or slightly decrease our fixed costs. Obviously, these measures that I explained in the presentation will help us to be even more efficient.

I'd say that we have taken actions, and the actions will be effective, and we will continue to manage our fixed costs also going forward, and I'm certain that we will see a sort of relative improvement going forward.

Thank you. All excellent questions, and if you have more questions, please feel free to contact our Investor Relations, and we are more than happy to have a 1-on-1 meeting either live or through Teams.

Thank you. Have a good continuation of the day.

Bye-bye.