Thank you very much. This is Magnus Andersson here in and broadcasting the Q2 report of KB Components.

Welcome.

Michael Grindborn as well.

In today's agenda, we will start with a brief introduction of of the KB Components Group, followed by a update on quarter two, the financials, some view on the markets we operate in, and then moving on to quarter quarterly results, the regional updates, and then financial position, and ending with concluding remarks. KB Components, a brief introduction to the company.

We are a leading supplier of high-tech and sustainable polymer components with a global footprint. Company founded in 1947 in Örkelljunga, Sweden, making us one of the oldest companies within this industry.

We are now spread around the world, which we will see on the following slide as well. Our vision is to be a world leader in technically advanced and sustainable polymer products.

We have three overarching strategic goals, that is growth, profitability, and employee engagement: 10% growth per year, 10% profitability on EBIT level, and employee engagement measured at over 75% in in a a specific way of of measuring. Our main customer segments are in automotive, electronics, and general industries.

We also operate in in the medical segment and and some other specific industries in our sites around the world. We are present in multiple locations around the world making sure we are close to our customers and that we can quickly and efficiently respond to their product needs and needs of developing new components together with us.

Looking at the group, here you see on the map that we have a presence in Asia, Europe, and North America through several sites. We are also having an expanding footprint coming primarily from our M&A activity, where we have our latest acquisition happening in May of this year in in Poland with the introduction of Robogino into the KB Group, which happened on May 7th.

Our strategy is based on three pillars, that is technological leadership, operational excellence, and global presence. Looking at quarter two as such to give some insight into what we saw during the quarter, we summarize it as a stable quarter in Europe and Asia and the start of a production ramp-up in North America.

The second quarter is characterized by just that, stable growth in Asia and Europe, and as expected, a gradual volume improvement in North America during the later part of the quarter. We are in the ramp-up phase of volumes to Rivian's R2 model, a product that launched in April.

We have started production, and we have seen gradual increases in in in volume on on those components. In Europe, we've had a lot of focus on realizing synergies with the acquired units as of late, the three units in Germany coming on board in October 2025 and and now also our Polish entity coming on board in in May of this year.

Here we are working on various integration activities initiatives and also production consolidation, which we mentioned in the last quarter and which we will talk more about on the next slide. In Asia, the focus is on growth, automation, and expansion, and we're very happy with the development of our Asia segment, where we have seen good growth and good profit improvement in in this quarter as well as in previous quarters.

Common for all regions during quarter two has been focus on managing raw material supply and and availability, and also passing on price increases on raw materials that were caused by increased oil prices coming from the crisis or the war in the Middle East. Far, we deem that this activity has been successful in the form of of maintaining our margins in in the business.

Yes, the acquisition made in May, Robogino, just out of outside of Warsaw in Poland was completed on May 7th. This is around 200 million Swedish krona of turnover that enters the group, and also a a company with an interesting pipeline of new business coming into production.

A wholly owned factory facility in Warsaw that we will develop as a part of of of KB Group, which we see as a big positive in this important and interesting market that is in Poland and surrounding countries. We also continue to work on profitability improving structural projects in the group.

We are relocating production from our production unit in [Zweibrücken?] in Germany to our units in Slovakia and Lithuania.

This is a project that has been ongoing for a couple of months and which we expect to complete by December of 2026. Similarly, in North America, we are also working on relocating some labor-intensive production from our Canada entity down to the better cost locations we have in Mexico in in Puebla and Irapuato.

If we look at the various market segments in a bit more detail, KB Components in in Canada, as we have talked about before, this entity is in a transition period where we're moving away from a high ratio of tool sales for new business one to primarily the Rivian R2 model into the start of component production. This has started now in in Q2.

We are seeing, of course, low start-up volumes in April, but see some stable growth during May and June, and this is a trend that we expect to continue to ramp up through the rest of the year. The Mexico business continues to deliver good results, but in this quarter, we saw a slightly lower demand in this business coming from Volvo Cars and also Volkswagen, who had a yeah, in the quarter, yeah, some lower volumes.

KB Components in the US, we here we have gradually improved our sales and earnings during the quarter. The base business have seen an increasing demand if you compare to quarter one, and also the more project-oriented business, which we reported was under some pressure in the first quarter due to higher raw material prices.

This has improved with raw material prices coming back down, and and we see now that some of these projects projects are starting to come back. We see that as being recovering during the the second half of this year.

Business in Europe is stable in the quarter. We have an organic growth of 3% and an acquired growth of 19% in the quarter.

Profitability is also stable with an adjusted EBITDA margin around the 15% mark similar to the same quarter of last year. Given the focus that has been placed on integration activities as well as customer price activities linked to raw materials, we consider this a a very good result in this environment.

Then coming to Asia, KB Components in China delivers very good results in the quarter, good organic growth, and reporting winning business both with existing and new customers. KB Components in India, who has been a part of the group since January of 2025, continues to develop very well.

We are very pleased with how this is developing. Sales volumes are increasing, new customers as well as increasing demand from existing customers, and efforts in in in operational excellence, automation, process improvements is also delivering good profitability and and improving profitability.

That is a very good development in in that entity. Michael, do you want to take it further?

Some update of the quarterly results and starting with the whole group. Net sales amounted to 737 million, up from 694 last year.

Here acquired growth was 10%, the currency effect was -2%, and organic growth in total was -2%. Project sales from tooling decreased by 25 million compared to last year.

Adjusted EBITDA amounted to 95 million compared to 98 last year, and it corresponds to an adjusted EBITDA margin of 12.9% in the quarter compared to 14.1 last year, the same period. Our adjusted operating result, EBIT, amounted to 52 million, same as last year, and corresponds to an adjusted EBITDA margin of 7.1% compared to 7.5 last year.

Adjusted earnings per share amounted to 0.50 SEK compared to 0.53 last year, and earnings per share amounted to 0.41 SEK. Our cash flow was strong in second quarter just as last year and amounted to 100 million SEK in this year and 186 it was last year.

Have a little more detailed look in our three regions and starting with North America. Here net sales amounted to 283 million compared to 304 last year, and it corresponds to 38% of our total net sales.

Currency effect in North America was -2%, organic growth was -5%, and here the decrease in sales coming from less sales of project sales in tooling that decreased with 35 million. Adjusted EBITDA amounted to 21 million compared to 34 last year, and it corresponds to an adjusted EBITDA margin of 7.3% compared to 11.2 last year.

Our adjusted operating result on EBIT level amounted to 4 million compared to 17 last year, and it corresponds to adjusted operating margin of 1.5% compared to 5.6 last year. Europe, here net sales amounted to 450 million compared to 344 last year, and it corresponds to 55% of our total net sales.

The acquired growth was 19%, currency effect was -1%, and organic growth was 3%. Adjusted EBITDA amounted to 61 million compared to 52 last year, and it corresponds to an adjusted EBITDA margin of 14.8 compared to 15.1 last year.

Adjusted operating result amounted to 40 million compared to 30 last year, and it corresponds to an adjusted operating margin of 9.6% compared to 8.7 last year. Asia, net sales increased to 54 million compared to 45 last year, corresponding to 7% of our total net sales.

Currency effect in Asia was -9%, but organic growth was very strong, 30%. Adjusted EBITDA amounted to 13 million compared to 11 last year, corresponding to an adjusted EBITDA margin of 24.1% compared to 24.4 last year, very equal.

Our adjusted operating result amounted to 8 million compared to 5 last year and a strong operating margin of 15% compared to 11.1 last year. The financial position of the group, our total assets has increased to 2 billion 567 million, and the increase is coming from both acquisition of Robogino and then we have also higher both inventories, trade receivables, and also higher cash and cash equivalents, and corresponding on the opposite liability side, higher trade payables and also higher liabilities to credit institutions.

Equity amounted to 550 million compared to 570 last year, and our equity-to-asset ratio amounted to 21.4%. Our net debt, excluding leasing debt, amounted to 810 million, and our interest-bearing net debt, excluding leasing liabilities and leasing amortization in relation to adjusted EBITDA, amounted to 2.7 compared to 1.7 last year.

We have a 3-year credit facility agreement with DNB and a extension option for additional 2 years.

Thank you, Michael. Some concluding remarks on that.

Our view for the upcoming quarter is that we continue to see a generally stable market across all segments. We expect to see continued gradual improvement in North America related to the ramping up of volumes for Rivian as well as improvements in the US-based project operations.

Focus in Europe also for coming quarter will be on the integration and capturing the synergies of the acquired entities, including the structural improvements that we are working on right now. In Asia, we continue to focus on organic growth and efficiency improvements.

Relative to the raw material situation, we would say that the availability and rising raw material prices that we saw in the second quarter seems to have stabilized a bit for now. There is still uncertainty in the region and in the market.

Of course, this is something we are closely monitoring and acting on to protect our margins if needed. It seems to have stabilized here during the summer months, July and August primarily.

That was our final slide. Thank you for your attention.

Hello? Hello, can you hear me?

Yes, we can hear you.

Sorry, this is Hampus Engellau from Handelsbanken. A couple of questions for me.

Firstly, on the European side, would it be possible for you to maybe add some more color on where you are in terms of synergies, even if we see earnings improving, and maybe how far into that you are and how we should expect an incremental on that going forward? Secondly, if I look at the Canadian business for you guys with the R2 ramp-up, at least the way I'm looking at it, it will be twice the size in Q4 on R2 compared to Q3.

Am I kind of correct on that ballpark when I look at how that would develop for you guys? Then also, if you had to make any adjustments on Rivian's upward revision on full-year range for their sales?

That's my two questions. Thank you.

Yes. Thank you.

Starting with the first question on European synergies, as we mentioned here, one of the key initiatives that we're doing is this relocation of production from Schliessmeyer in [Zweibrücken?] in Germany into our sites in Slovakia and Lithuania.

That is a project started a couple of months ago. We're well underway with that project.

We're relocating tools and machines, and we plan for that to be completed by the end of December. We are at the same time also releasing costs in our German plant, it will be a transition period, but we should be seeing the effects of that, yeah, I would say, in December and into January of 2027 really as profit improvement goes.

That is the main thing. When it comes to the integration of our new Polish entity, there we are not talking about or any production moves or anything like that, so that is more about making some initiatives in terms of pricing quality as well as operational excellence and benchmarking of operations measures and so on.

That is work ongoing that we will see gradual improvement from, I would say, over the coming months. There is profit improvement activity going on there as well, but it will take, yeah, 3 to 6 months before we start seeing the effects of that.

Then if I move to your second question regarding the Canada and the R2 volume ramp-up, I think you are right. The Q4 volumes, yeah, should be at least 2 times the volumes that we have seen in Q3, I would say.

That is a new car model. It's out on the market.

They have had some delay in their ramp-up volumes caused by other sub-suppliers, but volumes are gradually increasing, and we should see them ramping up quicker in Q4 than what we've seen in Q3 is our assumption based on conversations with Rivian. Yes, I hope I've touched on all your questions there.

Did I miss anything?

Yes. No, no, no.

That was all. Just one more question for me then, just clarification on the pricing pieces that you've been implemented to offset the higher raw material.

Should we assume that you are fully compensated in second quarter, or is there a lag into Q3, or is that a small thing, or how should we think about that?

It is a varied picture between all the sites that we have around the world, of course, and there's also various degrees of problem, if we call it that. I would say that we have managed both with buying raw material at the right time and forwarding price increases, managed to neutralized the margin effect to a large degree here in Q2.

I think with the stabilization we're seeing in the raw material prices, I think we have pricing at the right levels for Q3. I don't think there's any major upside waiting for us in Q3, but also not any negatives that will hit us if raw materials are indeed stabilized as we think now.

All right. Thank you very much.

Thank you.

Hello, Magnus and Michael. This is Marcus from DNB Carnegie.

Can you hear me?

Yes, hello, Marcus.

Very good. I would just like to focus on North America for a bit.

Margin is lower than the other markets. Can you just give some more color on this sort of transition period?

There's a lot of moving parts there. If you start with the labor transfer to Mexico, when should we expect this to be completed?

Then also if you can go into the factory footprint consolidation.

On moving of labor-intensive production to Mexico, we have seen some moves happening here in Q2, nearing completion, and there are some additional production moves planned to be completed in Q4. We have seen some of it, and we have some additional production moves happening in Q4, which we should see the effect of in Q1 of next year primarily.

That is ongoing. Then relative to the footprint and in the plant consolidation in Canada, we have, as we have communicated before, acquired a new site, and we are building one large production facility to replace the four production sites we currently are operating in Windsor in Canada.

That we have started using part of that plant, and we have construction now started, which will take around a year to be completed, and then after summer of 2027, we will be able to move all our production machines, etc., into this new building. That is a project that will run over a couple of years, but we will see the big impact of it in the second half of 2027.

Great. Then just a follow-up on North America, looking at the project-based business.

It seemed a bit more healthy in Q2 compared to Q1. Should we expect it to remain at these levels, or do you expect some sort of catch-up effect going on into Q3, Q4?

I would say that the project-based business, there is potential for it to improve in Q3 and Q4. It has improved in Q2, as you correctly point out, and there is potentially for it to continue to improve in Q3 and Q4.

Then I'm thinking specifically about the US-based project business.

Great. Those were my questions.

Thank you very much.

Thank you.

Thank you.

Yes, we have discussed internally, and we think that now the plan is to do it around May, June in 2027.

as Magnus mentioned, we think that we in a very good way have been able to increase our prices to customers more or less as the raw material prices has increased. No big really negative effect or positive effect from raw material prices.

Perhaps slightly negative, but not very much.

The increase is of course coming from both the acquisition we did late last year in Germany and then the acquisition also in Robogino. It's expected that it should increase, and then of course we're doing this restructuring projects, we expect EBITDA to increase, and then even if the debt should be on the same level, the ratio should improve with the improved EBITDA.

We of course work also to have a positive operating cash flow and to go down in our net debt. We're still looking on acquisitions, and of course dividend is always a decision by the shareholders and the board, but we expect to give dividend for Bron as well.

Asia is strategically important and a very interesting market that we're looking at how can we expand more in both in China and in India, as where we are present today. We are actively looking at how can we improve our organic growth and also looking at acquisitions in this region.

I think we have seen that we get good effect from our investments there. Talking about our India plant specifically, which we acquired a year and a half ago, here we have made quite a number of investments in new machines, etc., to facilitate this growth that we're seeing with our customers there.

We don't have a fixed or a set number of capital that we are willing to invest, but we are very interested and willing to invest in that region as we see a very good payback from it.

Thank you very much. From our end, just a thank you for the attention for this webinar.

Yes, we hope we have provided a good view of Q2 and also some insight into how we view the coming period. Thank you very much.