Good morning, everyone, and welcome to Nilfisk Earnings Conference Call for the second quarter of 2022. My name is Elisabeth Klintholm, and I'm the Head of Investor Relations and Group Communication here at Nilfisk. Before we begin today's presentation, I'd like to remind you that this presentation, including remarks from management, may contain forward-looking statements that should not be relied upon as predictions of actual results. For more details, I refer to the content on this slide and also to the disclaimers that we have in the financial report and in the company announcement. To cover Nilfisk Q2 2022 results today, we have our CEO, Torsten Türling, and our CFO, Reinhard Mayer, presenting. Looking at slide four, the agenda for today is as follows.
Torsten Türling will start us off with some high-level commentary on our Q2 financials, as well as a short update on what we are doing and how we are progressing on our Business Plan 2026. Following this, Reinhard Mayer will give an overview of our financial performance for the quarter, and finally, Torsten Türling will comment on our unchanged full-year 2022 outlook. We know that you are in the midst of reporting season, and we appreciate that you take the time to listen in on the call this morning. We'll try to keep today's presentation short and look forward to taking your questions during the Q&A session at the end of the webcast. Torsten Türling, we are ready for your comments to the account.
Thank you very much, Elisabeth, and good morning to all of you. Thank you very much for joining us in this call this morning. We'll be sharing with you this morning the business highlights and our results of the second quarter 2022. I will start with some comments on our revenue development in the second quarter on the next slide. The key highlight here is that sales continued to grow in the second quarter of 2022. We are very pleased with the achievement of this sales growth in the quarter. You will recall that at the end of the first quarter, in March, we had a significant event in our distribution center in the U.S., which got destroyed by a tornado. Despite the significant impact of this tornado destruction of the distribution center, we continued the positive development from the first quarter of this year.
Demand remained solid, and sales reached EUR 272 million, up EUR 14.2 million over prior year. Again, continued solid demand in combination with the initiatives of our new business plan, sales increased to EUR 272 million, representing reported growth of 5.5% in the quarter, which represents an underlying organic growth without FX effects of 2.8% in the quarter. One of the key growth drivers in the quarter was our professional business in Europe, which was driven by solid performance throughout the territory and which led to sales growth in this segment organically by 9.4% in the quarter. Also, the Americas growth was above our expectations. As previously communicated, we were seriously challenged by the tornado destroying our U.S. distribution center in March this year. Despite temporary longer lead times, we continued to receive a strong demand pull from our customers.
The swift reaction from our U.S. team was instrumental to resume distribution operations and start replenishing inventory in a new warehouse. As from June this year, deliveries reached almost normal levels. Supported by the sales growth in Canada as well as in Latin America, overall, the Americas region reached organic sales growth of 1.6% in the quarter. Even with the new U.S. distribution center running at capacity as from June, we expect around EUR 10 million-EUR 12 million of revenue to be delayed into the second half of this year. Also, in Q2, order intake exceeded invoiced revenue. With the continued solid demand for professional cleaning equipment, our order book has reached an all-time high at the end of the second quarter. Another highlight are the key wins that we achieved in the quarter with autonomous machines in the U.S. as well as in Europe.
Last year, in the second quarter, we reported the first big, large-scale order win of autonomous machines for a leading hypermarket operator in Europe. This year, we secured two further key deals for autonomous machines. We won our first large-scale autonomous machines contract with a leading US home improvement retail chain. Furthermore, we secured another large-scale commitment from another leading hypermarket operator in Europe. The invoicing of those contracts will mainly happen over the course of the second half. This is also to underline another highlight in this quarter that we continued to face severe supply chain constraints that muted our growth. Those supply chain challenges persisted in the quarter and made the availability of critical components and parts still a bottleneck to sales growth.
We continue to work very hard on mitigating this effect, and we'll come back to you on this a bit later in the presentation. Slide six for some comments on the earnings. Given those outlined circumstances, we achieved solid earnings in the quarter. EBITDA before special items landed at EUR 34.5 million in the second quarter. Our EBITDA margin came to 12.7% in the quarter. Our margins were challenged by increasing material cost inflation and continued high freight costs. In the second quarter, we saw good traction from our already implemented pricing initiatives. However, they could only partially mitigate the cost inflation. Further pricing actions had been announced at the beginning of the quarter, and we expect their impact to come through throughout the second half of this year.
A moderate increase in overhead cost ratio was driven by our continued investments into capacity expansion as well as into the growth drivers of the Business Plan 2026, as well as continued tight cost control, which happened throughout the quarter. With this, let me turn your attention to page seven for some comments on our Business Plan 2026. We communicated our Business Plan 2026, which is our guideline for the short and the long term, in our capital markets day in April this year. This business plan contains short-term as well as medium-term actions. It is focused on enabling long-term sustainable growth and value creation in Nilfisk. This is to confirm that also in the second quarter, the rollout of the business plan initiatives has increased momentum. In particular, we focused in the second quarter on activities that start to have a positive impact already this year.
Just to highlight three of them. As part of the initiatives to optimize our European leadership position, we have developed smart pricing tools and processes that will now be implemented in the second half of this year and will further help us to mitigate the margin challenges. To support future growth, we need to enhance supply chain robustness. In Q2, we made significant progress in identifying opportunities for further supply diversification as well as opportunities for future material cost savings. Those initiatives will be rolled out as well in the second half and ongoing. A big element of our Business Plan 2026 is the so-called new ways of working. They are also instrumental for the business plan because they shall secure successful execution. In the second quarter, we did strengthen the Nilfisk leadership team around the strategic growth drivers of the plan.
We appointed two new members into the Nilfisk senior leadership team: Jamie O'Neill as general manager for our newly created Americas region and Anupam Bhargava as head of our global service business and leading the strategic priority to grow service as a business. With this introduction, we turn to slide eight, and I'm handing it over to Reinhard, who will take you through our numbers. Thank you, Torsten. Let's dive into financials of Q2. This time, I start with our operating segment. Our branded professional business delivered revenue at EUR 233.9 million in the quarter, up 5.2% organically from last year. Organically, we are driven by strong growth in Europe, where we saw 9.4% organic growth. The 1.6% organic growth in Americas is a very strong result when we consider the business interruption we were facing with the destruction of our U.S. distribution center end of March.
The consumer business delivered revenue at EUR 23.1 million in the quarter and fell 11.5% compared to Q2 2021, where COVID-19-related home improvements benefited this segment. This year, we face a completely different sentiment in the consumer market. Significantly lower consumer confidence driven by the high inflation and the war in Ukraine is affecting our consumer business. The private label and other business reached revenue of EUR 50 million, down 6.2% organically versus Q2 last year. We see the demand from key customers slowing down in 2022, which in essence follows the same reasoning as for our consumer business. In total, we grew revenue in Q2 with 2.8% organically and reached net sales of EUR 272 million across all segments. Moving to slide 10 and our regions. The revenue growth of 5.5% from Q2 2022 was primarily driven by growth in Europe.
In this region, our professional business grew with a very healthy 9.4% organically. Consumer and private label business saw negative growth, coming up against the strong comp in Q2 2021, where we had elevated sales driven by COVID-related demand for home equipment. In total, Europe delivered this quarter revenue of EUR 159.7 million and reported organic growth of 4.6%. As mentioned by Torsten, part of our Business Plan 2026, our optimizing Europe initiative and pricing actions are key strategic levers for profitable growth at Nilfisk. Being faced with the substantial inflationary pressure, we subsequently implemented a further price increase end of Q2. This will show results partially in Q3 and more so in Q4 this year. In Europe South, countries such as Turkey, Italy, and Spain continued to perform very strong, offsetting a moderate decline in France that benefited last year from the large Carrefour deal in Q2.
Europe North saw growth across all markets, and in Central Europe, Germany, Poland, and Switzerland were leading the growth. For the Americas region, revenue came to EUR 89.1 million in the quarter and grew with 1.6% organically. The growth in this quarter was obviously severely impacted by the destruction of our U.S. distribution center and the subsequent effect to fulfill market demand. Despite the business interruption, the professional business continued its underlying growth momentum in Americas region and grew 1.6% organically in the quarter. Through a tremendous effort from our people, we were able to mitigate some of the negative effects caused by the tornado. As a result, we now only see EUR 10 million-EUR 12 million of revenue to be postponed into the second half of 2022. This is about half of what we expected and communicated earlier.
The underlying growth momentum in U.S. remains intact, and we continue to focus our efforts to gain market share with strategic accounts as well as with our distribution partners. For the APAC and Middle East Africa region, revenue declined organically with -4.6% and came to €23.2 million. The main driver of this was the ongoing COVID lockdown policy in China. As mentioned by Torsten earlier, we saw supply chain challenges continuing and having an impact on sales growth realization in all regions in the quarter. Now moving to slide 11 and the income statement. As mentioned, Nilfisk reported net sales of €272 million, an increase of €14.2 million compared to Q2 2021. This corresponds to a total reported growth of 5.5% with foreign exchange rates having a favorable impact of 3.5%. Net sales grew organically with 2.8% to prior year.
Gross margin came in at 38.8%, 210 basis points lower than prior year. The decline was caused primarily by a negative impact from increasing material costs and continued high freight rates, partly offset by positive impact from pricing actions. Increased business activity led to an increase in overhead cost ratio of 120 basis points compared to Q2 2021. As announced on our capital markets day, we invest into our strategic growth levers of our Business Plan 2026. In combination with inflation and foreign exchange rates movements, mainly from the US dollar side, cost came to EUR 85.6 million, EUR 7.4 million higher compared to Q2 2021. The overhead cost ratio came to 31.5%. EBITDA before special items came to EUR 34.5 million, EUR 7.4 million lower than Q2 2021. EBITDA before special items benefited from the higher revenue and good cost control but was negatively impacted by gross margin pressure.
Finally, the EBITDA margin before special items came to 12.7%, a decline of 360 basis points to prior year's quarterly high point. Turning now to the balance sheet and cash flow on slide 12. In the second quarter, we continued to actively manage our inventory levels to match and fulfill increased demand. As a result, inventory value rose by EUR 67 million compared to last year, and we ended the quarter at EUR 242.4 million. The increase came from the higher business activity and investments into stocking of critical parts as well as the effect from inflation on stock valuation. Another significant effect stems from the ramp-up in connection with establishing a new U.S. distribution center and the replenishment of the destroyed stock as per end of Q1 2022. As a result, working capital grew by EUR 89.8 million.
Consequently, our 12-month working capital ratio increased with 260 basis points compared to last year, driven by efforts to support higher sales. CAPEX increased EUR 2.5 million for the period primarily from investments in our new U.S. distribution center, in strategic R&D projects for new sustainable products, and investments into IT systems. Total R&D spend increased by EUR 1.2 million compared to Q2 2021 and came to EUR 7.3 million, corresponding to 2.7% of revenue versus 2.4% in Q2 last year. Free cash flow amounted to an inflow of EUR 11.1 million in Q2 2022, which is down EUR 8.1 million compared to Q2 last year. Cash flow was negatively affected by the increase in working capital, including an increase in the CAPEX ratio to 2.4% from 1.5% in the prior year period.
Our net interest bearing debt at the end of the quarter stood at €367.5 million, an increase of €7.6 million compared to Q2 2021. The positive development in EBITDA over the 12-month period led to an unchanged gearing at 2.7%. Summing up, performance in Q2 2022 was satisfactory given the challenges we were unexpectedly faced with. Our order book continued to grow, proving that demand remains high for our professional business. We see tangible effects from our price increase, which offset the margin pressure from high inflation partially until now. Overall, this leaves us with a solid set of results for the second quarter of 2022. With this, back to you, Torsten. Reinhard, thank you very much. This has been the numbers of the second quarter. Let's turn to the next page where we talk about the outlook for the full year.
With the set of numbers and performance delivered for the year, we continue to see strong demand for professional cleaning equipment. We talked about the tornado implication in the quarter and the delayed sales of EUR 10 million-EUR 12 million into the second half. Overall, we maintain our outlook for 2022 given the current market visibility, the market amount we talked about, the high order book that we faced, the inflationary pressures that we face and that we have initiated mitigation actions for, and the impact from delayed sales from the U.S. distribution center. Overall, we maintain an unchanged guidance for the year, leading to 4%-7% organic sales growth and EBITDA margin before special items of 13.5%-15.5%. With those comments, we conclude the call and open the call for your questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star, followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star, followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star, followed by one at this time. One moment for the first question, please. Our first question comes from the line of Kasper Blom from Danske Bank. Please go ahead. Thank you very much. Congrats with the continued strong growth here in the second quarter. I have a couple of questions, and I'll just take them one by one so you don't have to write things down. I'd like to start with the high order book or backlog.
Can you give any kind of visibility as to how long that backlog is? I mean, what transparency do you have for the coming quarters? That would be the first subject, please. Thanks for the question. As you know, we are not announcing the order book value. As such, we are not in a position to give you exactly the perspective how long it will last. I can tell you a number of orders will even go into 2023. In value, we are not actually disclosing this number. It's higher than in Q1, and we gave there already some perspectives of how much multiple it was at that point in time. Okay. Thank you. That is helpful. Regarding the talk about supply chain constraints, as I understand it, there are some components that are constrained. Others are fairly easier to get hold of.
Can you talk about what part of the business is this holding back? Any kind of guidance on what could revenue have been if you had had, I could say, unlimited supply of components? Any comments on that subject would be valuable. That is a great question, Kasper. I try to get as close as possible to an answer. The main impact on our products is in the floor care category. Here, there's a standard challenge in the materials category, which is electronics, semiconductors, PCB boards. That's not exclusive to our industry, obviously, but it affects our industry as well. Then the more complex the machines, the more sophisticated the machines, the more electronics you have in there. That's something that continues to remain a challenge. There's other material categories that also create some bottleneck. Now, we will not answer the question.
We think it's a purely theoretical question. If we were in a perfect world and had unlimited supply of materials, how much exactly the business would grow? What we can state, though, that and you see this with the increasing level of our order book compared to revenue, that invoice revenue, that obviously, there's much more potential. Sales growth could be higher. We had a particular bottleneck, as we commented on, in the U.S. in the second quarter temporarily. That has a different set of implications. Overall, we can just kind of high-level guide, Kasper, that sales would have been significantly stronger without wanting to give a precise number because it's pure theory. What if you had everything available? What we focus on is to overcome the remaining bottlenecks and then step up to satisfy our customers in a faster way and normalize the order book. Okay.
I appreciate that flavor, Torsten. My last question is on the guidance and in particular on the EBITDA margin guidance, 13.5%-15.5%. Can you give us some help as to what would get us to the high and low end of that guidance range? I suppose to some degree, it's depending on overall growth. But to what degree is it depending on success with price increases, with business mix, etc.? Because it is still a fairly large range given that we are now, yeah, almost eight months into the year. Thank you. Thank you for the question, Kasper. Let me get started. We have Reinhard joining in with additional comments. As you state, this is still a wide range. We think that wide range is necessary and reflecting the current volatility of the market. That allows us to see upside opportunity and challenges.
We have commented on the challenges that are in our actual results. They continue to exist. Of course, we have also launched mitigation actions. We see still a significant bandwidth depending on how strong the mitigation actions come through, how strong, how long, particularly the material cost challenges will last. We have seen some of the critical categories started to come down. You don't see any of this in our second quarter results. If we project this further, depending on how much this happens and how fast this happens, of course, this could be beneficial. This is so much in the uncertain that we feel most comfortable in keeping that range of a guidance. On the top line, obviously, we are pleased with the second quarter performance. We have a strong order book, as we say. Also here, there's market volatility out there.
Reinhard commented on the consumer business. At the same time, continued very strong demand for the professional business. Here, we also see a bandwidth. Overall, we are confident. Therefore, we are maintaining our guidance for the year. Any additional comments? Yeah. I think the key topics are. Are we potentially unlocking some of the supply chain constraints, helping us to drive more floor care, which typically comes with a very high gross profit margin? Then the other topic is also. What is the raw material inflation going to do in the second half of the year? Are we quickly also getting back to a good service level, especially in the United States, which come with high margin? There are a couple of those moving parts, which still allow actually to have a perspective that we can go into both directions.
At the moment, visibility is clearly supporting our guidance but not giving you a better indication towards middle, lower, or higher end. That would be unfair because that is too early at this moment in time. Okay. Is it fair to assume that sort of standing here then and given that you reiterated the full range, then the base case is still in the middle of the range? Is that a fair assumption, or is that putting too much into it? I will not give you a different perspective than you have named. I think there is today, and that is what we see, and that's what we report, higher inflationary pressure than we had originally received and, let's say, planned for. We have brought counteractions and pricing actions in place. They will always come at a later stage.
That is, so to say, now the balance, which is difficult to predict. Hence, I mean, I cannot give you a more precise number and more precise guidance on this. You need to live with that, let's say, uncertainty as well. That's fair enough. Thanks a lot, guys. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star, followed by one, on your telephone. So far, we have no further questions. I hand back to CEO Torsten Türling. Thank you very much, Operator. Thank you, everyone, for joining the call. As we mentioned, we are pleased with the results of the quarter. We continue our journey that is outlined in Business Plan 2026. We're looking forward to meeting you again for a fresh set of results in a couple of months.
Please reach out to our investor relations in case of any follow-up questions. With this, thank you very much again and have a great day. Thank you. Goodbye.