Good morning, everyone, and thank you for listening in to this webcast. If I start with a very brief overview, we can sum up another very strong quarter. The high customer activity continued in all business areas, and we see the net sales up by 36%, of which 19% organic. Again, our entrepreneurial-driven culture and companies have continued to handle the inflation pressure and value chains disruption in a very good way, and also defend the margins at high level. We had an EBITDA growth of 37% with a historically high EBITDA margin of 13.2%, and also here, strong contributions across the line. The demand continued at high levels. Overall, the business climate in our segments have been strong in the quarter.
The macro situation is, as you all know, uncertain, and of course, we follow the development closely. At this point, we see no signs of a general slowdown in customer activity. But of course, we're well prepared for potential tougher market conditions. If you look a bit more into sales, as I said, a very strong sales growth, and on aggregated level, 90% organic, with double-digit numbers in all business areas on organic growth. We should also here take into account that the year-on-year, it's a quite tough comps. We had a strong quarter last year. Looking at the demand, we saw also a positive development trend month-by-month over the quarter, which is also, of course, positive.
If you look at the bottom graph in the picture, as I said, it's really across the board in most markets and segments, and geographies. If I should highlight three things standing out as particularly strong this quarter, I would say it's the power grids in Energy, the battery solutions with strong contribution from acquisitions as well in Electrification, and very strong organic growth in Automation. It's also clear that we have a very strong momentum in areas with structural underlying growth, which is of course satisfying, especially considering the insecure macro climate. I will come back to this later, but in my view, we have never been better positioned than we are now.
Exceptional work has been done throughout the organization to obtain goods, and the disturbances in supply chain start to subside, but it's far from over. It's still a big challenge for some of our companies, but of course, it varies between the units. Looking at earnings, the positive margin and result trend continued in the second quarter with strong EBITDA growth in all business areas.
Due to active efforts to offset price increase in parallel with keeping a firm grip on the cost base, we have managed to increase EBITDA with 37% and defending the margins on historically high levels. Good development in the acquired companies, positive contribution from currency, but it's primarily the strong organic sales that have given such a strong outcome. Of course, also positive that our operating cash flow strengthened in the quarter compared to last year.
Negative effects from higher inventory levels were offset by the strong result and the high margins. R/RK remained at very high levels of 66%. If we move over, some short comments on these business areas. As I said, Automation had a very good market situation during the quarter with stable demand on high levels.
Sales were really good in the market, the key market segments, process, mechanical industry, and the medical technology. Increased demand from defense industry continued in the second quarter. Together with an ease of the component shortage that Automation has really felt this quarter, we had positive effects both on sales and margins. If we look at Electrification, also continued on a very strong note.
Strong business situation in electronics, energy, special vehicles, telecom market remains. Also within Electrification, we have a clear increase in demand from defense industry. The positive trend in the battery department continues. Strong contribution from acquisition as well, as I said, earlier. Also, worth noting is that we, during the quarter, opened a new production plant for battery systems in Tampere in Finland. Maybe some of you read about it.
This production site is aiming to capture potential from electrification of equipment, such as mining, ports, forest machines, and industrial robots. We have developed during a number of years a range of hard-wearing battery systems for this specific purpose that we are now commercializing. We're very happy about this.
Margin seems to be a bit down in Electrification this quarter, but it's more relating to product mix and nothing else. If we move to Energy, we conclude another strong quarter with high customer activity. The favorable market for infrastructure products within the transmission and distribution grids continue to improve from already high levels.
Also, on the back of the current energy crisis, of course, every crisis gives also opportunities, and we see an increased demand for energy-saving electrical installation material during this quarter. To give one example, it's the municipalities around the Nordics changing to more efficient LED solutions and products to control the climate. So here we have an energy positive effect as well.
Other key segments in this business area remain favorable, except for wind power that are trending slightly weaker than previous quarters. It is primarily, as far as I understand this, at least, it's the shift ongoing from onshore to offshore windmills that causes a bit of a slower pace at the moment. Industrial Solutions remains strong.
Forest and sawmill industry continue to be strong, but with a lower demand for new products, projects, however, from very high levels. We had a couple of years now with extremely high level of new products for longer projects. The level of the order backlog, as we also write in the report, remains very good in this segment, for delivery for about two years to come, which is comforting.
Customer activity in waste management continues to increase, and product solutions for special vehicles and mechanical industry remain stable at high levels. In this area, we had an unrealized currency loss in the quarter affecting the margin, and if we take that into consideration, the margin would be in line with last year. Last but not least, Process Technology also delivers a strong quarter with medical technology, forest processing industry as key drivers.
Also business situation for aftermarket components relating to projects in energy segments, mechanical industry, special vehicles were stable, also on a good level. The marine segment is also important segment for this area continued to improve, increased activity, especially I would say relating to service and replacement, which also contributes to a strong margin.
Looking at the first six months of this year, we conclude a very strong period. A strong sales increase across the board. Organic growth all in all 18%. We had 17% in the first quarter, and now 19%. EBITDA growth even stronger, and the margin at a record high 13.1%. Also here, as I said, it's really contributions from all business areas. Cash flow in the period improved year-over-year, so also positive. All of this generates a good earnings per share. We have earnings per share of 2.5 SEK per share in the period. Moving on to acquisitions. We have done seven acquisitions so far this year, two completed in the quarter.
Total turnover added up till now approximately SEK 600 million, meaning that we are pacing in line with our overall growth target on M&A. In terms of geography, we continue to increase our activities outside Nordics in accordance with our ambitions. Also, in general, we have a very positive view of the acquisition market, working actively to fill and process our pipeline with companies that we see are good performers in our selected segments. I would also like to add that our organization is more active than ever when it comes to finding deals. As you know, we are primarily looking into generating our own deal flow.
It's a lot of coffee drinking and more feet on the ground than we have, I would say, ever have before. One positive effect of this is, of course, also that we can be even more selective of what companies that we decide to acquire. One good example of an acquisition we did this quarter outside the Nordics is this company, Allied.
The second acquisition this year outside Nordics within electrical transmission. As you remember, in the beginning of June, we acquired Arruti, a leading supplier in Spain with a lot of export in North and South America, for instance. Allied is U.K.-based, but also very active in countries like Middle East and New Zealand. These two acquisitions complement and strengthen our offer in a very good way, and establish us as a significant supplier in the transmission sector that we see as a clear growth segment. We have now a number of companies exposed to this line of business. Yeah, over to you, Malin.
Yes, thank you. As you've heard now, we have had continued very strong growth in sales with good leverage on the profit margins. The development in sales has come from a very good and broad demand situation, as well as a very strong order backlog. Thanks to our company's ability to offset price increases and ability to deliver on the good demand situation, combined with continued overall good cost control, we managed to keep our operating margin at a high level of 11% on rolling 12.
We believe these margins should be able to persist throughout the year, all else being equal, it's important to say. We're happy to conclude strengthened cash flow during the quarter, mainly due to contribution from higher profits and continuous strong margins. The development was partly offset by an increase in working capital.
Increased volumes led to more capital tied in accounts receivables and inventory levels rose. Levels are still on normal levels in relation to both growth and order backlog. Inventory buildup is, of course, a main focus, but there is, as you've heard, still high activity across them. Our profitable working capital remains on high levels, thanks to profit margins and overall efficient management of working capital.
Our financial position remains strong. Our net debt has increased mainly due to high acquisition pace and because second quarter includes repurchase of own shares and dividends to shareholders. Our key KPIs are at normal and satisfactory levels. We have company headroom to support our ambitions going forward.
Thank you, Malin. Just a few words, looking ahead. As I said in the beginning, of course, macroclimate is uncertain, and we are humbled by its development, of course. At the same time, we are well prepared. If you look at this picture, I'm sure you have all heard me talking about the picture many times. It's our updated organization since one year back.
All business areas have structurally underlying growth to a large extent. If you look at the growth drivers in the bottom, there is a clear link also to sustainability, especially the green shift. We have the industrial automation, power transmission, electrification, solutions for emission reduction, et cetera. All in all, we are well-positioned, I would say, if we enter into period of a weaker general business climate.
These positions, combined with the well-proven business model itself, with the strictly decentralized structure and the companies that are used to quickly adapt to handle challenges and also capture opportunities that I mentioned earlier as well, makes me fully confident that we are well prepared for the future and will continue to create long-term profitable growth.
To sum up, as I think has been clear, we are very pleased with the outcome in this quarter. Strong organic growth, record high margins, and we don't see any signs of a slowdown in the market. All in all, still strong activity on the markets. Order backlog very strong and also with good quality. We keep up our M&A pace and see positively for future here as well.
Finally, of course, following the macro indicators closely, we are well prepared for any kind of development now. We have prepared contingency plans, of course, but more importantly, that our companies and our model has proven many times before that we can adapt quickly to new situations. As I mentioned, we feel that we have good positions in areas of structural growth that gives us some comfort going forward. That was that. Let's open up for questions.
Thank you. This is the conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Karl Bokvist with ABG. Please go ahead.
Thank you, and good morning to you all. The first one is just on the comments regarding your order book and lead times now that you feel that supply constraints may have subsided or improved somewhat. Based on the view of your order book now, I realize a lot of different industries, businesses, and so on, but on average, how would you assess the kind of lead time from backlog to delivery now compared to, like, a quarter or so?
Yeah. Thank you. Of course, yeah, that's a good question. To start with, as you said yourself, it's a huge mix in the order stock. I mean, we have, like last year, a lot of inflow of longer projects, especially in the sawmill sector. In addition, with the longer lead times and shortages, it was also clearly longer orders from, so to say, continuing normal business. Now that has normalized quite a lot.
To say some kind of a feeling of how much has that shortened down, I would say that if we usually have, like, three-six months in order stock and therefore also in order intake, if it has last year been rather, you know, six-nine months, I would say we are maybe back to four-six months. It's slowly but clearly getting shorter. Talking about the order stock, I mean, for us it's very undramatic what we are seeing. We have, as I said, very tough comps on the order intake. What we see now is a normalization, and the demand is remaining on a high level.
Understood. Thank you. Just a comment you made there, Malin, on the margin. You expect it to remain at this level. Did I understand you correctly that that was a comment referring to your fiscal year?
Yes.
All right. Understood. My final one is just a two-parter maybe. Just first of all, do you feel that the business has now kind of returned to a normal seasonality pattern, thereby, you know, if when I look at things, at least it seems like your third quarter usually tends to be bigger in absolute terms than your the second one.
Yeah, when you say bigger third quarter, I mean, third quarter, it talks to seasonality. Usually the third quarter is especially on profit side, we have a seasonality that is rather a bit slower than the second quarter. So if you're talking about the quarter we have now entered, is that your point? When you say higher, what do you mean by that?
Yeah, I was more referring to deliveries or sales.
Okay.
Yeah. Exactly.
Okay. Yeah, I mean, my take on that would definitely be that, as what we see at this point, there's no reason to believe that there will be any difference from a normal seasonality going forward.
Understood. Sorry if I just make one quick one. You mentioned defense industry now a couple of times, and you do provide a quite granular overview of end markets, but today, roughly how much is defense as a share of sales for Addtech?
Yeah, I would say it's around 4%-5%.
Okay. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is a follow-up from Karl Bokvist with ABG. Please go ahead.
Okay. Thank you. Hello again, then my
You can continue.
Yeah, perfect. No, just to follow up on Automation, just to understand this here. Is this more, you know, the demand you're seeing now, is that a result also of orders you booked, maybe last year, similar to, like, a saw mill order lead time process?
Yeah, I mean, that it's easing up on supply chain. I think we have seen it most clearly in Automation, meaning that we just as you indicate, we've been able to deliver out quite a lot also of older orders, so to say. It's definitely that effect in the figures.
Understood. Just then my final question would be, you talk a lot about the power grid demand and then also in batteries, and so on. Just how do you view your own capacity now, given the investment you also highlighted there in Tampere, for example? Do you think that you can meet your own current view of a future demand with like regular CapEx intensity?
Yes, I would definitely say that. I mean, talking about this Tampere facility, it's, I mean, we don't have that kind of CapEx-intensive productions, and the same goes with this example in Tampere. It's more of an assembly. There is nothing really in our setup that would change the CapEx going forward. I mean, we have good positions and capabilities to continue to grow with the market. In this specific sector, in these two sectors, as I have indicated, we see very good potential for the future.
All right. That's all for me. Thank you.
Thank you.
The next question is from Johan Sundén with Carnegie. Please go ahead.
Yes, thank you. Good morning, I must say. Two questions.
Morning.
From my side. First is on the wind power sector where you commented that the market has softened a bit. Earlier, your communication's been that it's more of a stable market than a declining market. Has that changed, given your comment today, or is it more or less the same view on the bigger picture?
Yeah. Hi, Johan. It's really no dramatic change. I would say that, you know, we've been talking about stable, now we see a slight decrease, but it's really not any dramatic change here. I mean, we've had for a number of years a really good growth in this sector, and for the reasons I mentioned before, it's things happening in that market at the moment. It's really not a dramatic change. For sure, we see this market as a very good growing market segment.
Yeah. On your comment on the contingency plans and that you're ready for meeting a weaker market in general, would you say that you're positioned in a way that you should safeguard the margin in a better way than maybe taking a hit short term to grow out from if the market bounces? Or how do you view it if you compare it to other slowdowns in the general economy?
I'm not sure I really understood. Can you just repeat?
Yeah. You comment that you are prepared and have contingency plans in place if the market would be weaker. If you go back to the great financial crisis, you have commented earlier that you weren't really prepared for that to happen, and therefore, you took a bigger hit on margins than you maybe would have done in another period if you're more prepared. Are those efforts that you have initiated now and are preparing so margins should be better safeguarded?
Okay. Yeah, I understand. First of all, I don't know if I have said that we were not prepared in the financial crisis, but of course, everything happened so extremely fast at that point and that affects also the possibilities to be quick in the changes. If I look at the situation now, I would say, first of all, we are, in my view, absolutely better positioned in a kind of normal industrial slowdown at this point due to the positions we have and also the product mix. At that time, it was much more, you know, like day-to-day kind of business. Now we have much longer products and also much more of our own products in the portfolio. That's one thing.
When it comes to protecting margins, of course, everything is dependent on what will happen. Considering how we interpret the situation at this point, I would absolutely say that the plans we have and when we look into it, we should be able to protect the margins in clearly a better way.
Great. Thanks a lot. I think that's all for me.
Okay. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Daniel Johansson with Pantechnicon, SEB. Please go ahead.
Hi, thank you very much for taking my questions. Perhaps this has already been discussed, but I was wondering a little bit about your inventory situation. If I look at it from an historical standpoint, you seem to be at pretty high levels when it comes to trailing inventory to trailing sales.
Yeah, yeah. You can take it.
Yes. Yes, that is true that we have the inventory days rising slightly. Still, we also follow very closely our inventories in relation to the order backlog, because of course our companies with high activities, which we have right now, they need to prepare and also due to long period of disruptions in supply chain, we have had to build some inventory to deliver on the very high order backlog. If we look at the very important relationship between inventory and order backlog, it's still on normal levels.
Okay.
I would say that it's not worrying, even though, of course, high inventory levels is never something we wish for.
Okay. Is it possible to sort of give a number, you know, if we look at how it's distributed between, you know, purchased components and so on and so forth? Or is that something you wouldn't give out?
I'm not quite sure what you actually mean, what kind of split, yes, you mean?
Yeah. Is it finished goods? Is it purchased components? Is it raw materials that have gone up in price? Or, you know, what are the, you know, studying the inventory increase from last year to this year, what accounts for the change?
You know, I would say that it is a mix, and I would say that it is a mix that is comparable with the product offering that we have.
Okay.
Of course it's a mix between companies and also within companies.
Of course also a price increase and currency effect as well in-
Yes, yes, of course.
Of course. It's really a mix, as you said.
Okay. You know, this relationship orders to backlog is that something we should think on also when it comes to receivables, that they are a little bit higher than normal because of that too?
I would say that when it comes to receivables, that's rather high due to sales growth. When we have
Okay.
High sales, of course, that means higher accounts receivables. It's not the same kind of relationship to order backlog in that sense, that I talked about when it comes to inventory. There it's rather sales volumes.
Because if I look at receivables to trailing sales, it's also gone up a little bit relative to history.
Yeah, I don't know. It's maybe a little, but that is mainly due to, I think, high volumes and the summer season then.
Okay. Thank you very much.
Thank you.
The next question is a follow-up from Karl Bokvist with ABG. Please go ahead.
Hello.
Hello.
Just one more, given that you highlighted it. But within your forestry exposure and wood kilns and those kinds of businesses, maybe press Valutec, how do you assess the, you know, point in time for these businesses in relation to the cycle of their end markets, be it, you know, general forestry, general sawmills, or whatever it may be?
Can you explain what you mean by?
Yeah, yeah. Sorry.
the system in the cycle?
For example, just to understand the customers' investment decisions, you know, when do you feel like, when do they make the decisions and when a potential slowdown in these larger projects could happen? You said that they have declined from strong levels, of course, but to understand just, you know, is that investment cycle within that end market now perhaps flattening out or declining as a result of what they are seeing, in terms of selling prices or what it may be?
Yeah, I mean, this sector has experienced, looking, you know, like hundred years back, if it takes specifically the sawmill industry, it's been a very clear cycle over time. Now we have experienced an extremely strong market for a number of years. What is primarily, to put it simple, what is affecting the investment climate here is the price on the saw timber, and that has been fluctuating quite a lot. Coming out of a situation with a very, very high intensive investment climate, that we see now that it's coming back a bit from this high level, it's really nothing, how should I put it?
It's difficult to talk about the normal situation because this sector has experienced very abnormal years now. I would say that we are probably looking into a period now with a little lower inflow of new product projects. As we are indicating, that we have so much long order stock here, for us it feels quite comforting.
Okay, understood. Just from looking at maybe that particular business, Valutec, that seems to have been accretive when you acquired it. Just to understand, do you feel that there are other parts within, let's say, Industrial Solutions, for example, that could compensate and, you know, maintain margins at these higher levels, even if Valutec were to enter a kind of a normal situation again?
Yeah, I mean, as always in Addtech, in the business areas, if you look over a long time, you can see that we are continuing year by year to increase the margins, and we are good at filling in potential gaps. If we have had extremely high margins in some areas, we usually have the possibilities to fill in the gaps. At this point, I don't see any reason why the margin should go down in that area, for instance, even if parts of the business are entering into a little bit of a more a little bit of a flattening out market on a very high level.
Okay, good. That's good color. Thank you.
Thank you.
For any further questions, please press star and one on your telephone. Mr. Stenberg, there are no more questions registered at this time.
Okay.
Okay. Thank you for listening in, and thank you for good questions, and we wish you a good day. Bye-bye.
Thank you. Bye.