Welcome to the Nimbus Q2 presentation. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the CEO Jan-Erik Lindström, CFO Rasmus Alvemyr , and Head of Investor Relations Gunilla Öhman . Please go ahead.
Thank you and welcome. Nimbus Group, the Q2 report. If we start with Sl lide 3, business update for the second quarter. The sales amounted to SEK 571 million, down by 8% compared to last year. Despite this decrease, we by that knows that we performed actually better than the industry as a whole. We had during the quarter a negative impact from the currency development by SEK 10 million, mainly U.S. dollar, which also then, of course, impacted the EBITDA together with this volume decrease. We ended up with an EBITDA of SEK 25 million compared then to SEK 45 million last year. During the quarter and also before that, we have had a focus on stock release, and we can say then the networking capital in general. We have been quite successful, but we also had some small impacts on the margin because of this.
On the other side, the order intake for the quarter was actually then higher than before, SEK 356 million compared with the SEK 341 million. As I said, better than last year, but we will get back to that later on in the presentation. More or less the same sentence as last time, the tariff situation fuels uncertainty and hesitancy among customers. We saw this especially at the beginning of the quarter. That is actually also where you can track the sales that we had to decrease. After that, it has been quite good in the quarter. Of course, the big obstacle for us, as for many others, is still that it's not fully predictable, even if this mental play is starting to calm down, which is good. At the end of last year, we initiated a cost reduction program, and this has started to have effect.
This impact will increase quarter for quarter further on now. Despite this cost reduction, we have continued to invest in the market presence and actually also product development. This market presence has given us that we have established a couple of new marketplaces in locations, as we say here, North America, Europe, and Asia. This we will, of course, gain from further on. Actually, if you then look at the rolling 12, the picture will be even brighter, so to say. We have had a lot of new dealerships around the world during these last 12 months. It's a good work done by the people involved in this work. Finally, on this page, of course, Scorpio, this project is going according to plan and will actually then be finished during Q3.
It may be some small topics that will take some more time, but that will not affect the result or the cash. It will be more administrative or legal, I should say then. If we then switch page, more or less the same as we always show you. This is Nimbus Group, then a short reminder then of who we are. Founded in 1968, and that is actually 57 years ago. We have a long experience and we also have a long history of international trade. Already in 1970, we started to export our products. This is important because for us, export is more or less daily business, which is important then. Since then, where we was a single brand or a mono brand, we have developed to our nowadays true house of premium brands then. You actually find them below here on this slide here.
We have Flipper also there, and you may think, didn't they sell that? We did, but we can still use the name for a period of time. That's the reason we still, because we are selling still Flipper. I will not mention everything on this slide, but at the end, you find 2025 May, new organizational structure implemented. This is a big thing for us. If we look from an internal perspective, it will make us more efficient and also focused on our core business. If we look upon it externally, it's our belief that it will be easier to follow and understand our business. If we then switch page, then we come to commercial sales. This new organization I was talking about, you can actually see it as we have three business legs. We have the commercial sales, which I will then present for you now.
We have the retail sales that Rasmus will talk about later on here. We also then have the operation and operations that you find the boat building, both by our own, but also the outsourced. That is then more or less in everything we do. If we then look at the commercial sales, sales drop 8%, similar as for the group. Still small numbers and more coincident, I should say. It's not that many boats we're talking about. Important for us is that we see then more activity and we are closer to a done deal. A proof of that then may be then that, as we say here, the improved order intake in North America. If we look below in the chart, you can see then that North America has a big jump up from the order intake perspective. Let's not forget about Europe.
Europe has struggled for, I should say, two years now. Even if it's down from low figures, we actually have doubled the order intake in Europe. This is a really good sign for us. The order intake takes us to the order book. This chart we have in front of us on the right side below, you see that more or less the whole picture is affected by the pandemic. That's a pity because it makes it different to relate to something we can call it real then or a normal business. I prefer to talk about the right-hand side of this picture. We have talked about this before during the quarters about this normalization. We can clearly see that now. We have the same pattern in the order book. We also have this shorter order book that we have talked about before.
The supply and the demand is closer to each other, as simple as that. Of course, talking about the order book, only confirmed orders with prepayment in the order book. That's also one thing that we implemented later on. It also affects the comparability in this chart. The order from the Swedish Armed Forces is not included, only the pre-series as before. During the autumn now, we will know more in what tact time this will be produced and then sold to the forces. It will show up in the order book accordingly. Net sales, I will not talk a lot about that. It's more or less in pair, as I said before, small differences. More or less, it's very few boats that differ. The important thing for us is that it has stabilized. Our opinion is that we have reached the bottom and actually are now going upwards again.
With that, I leave to Rasmus.
Thank you, Jan-Erik. We continue with the retail sales development. The second quarter is a seasonally important quarter for the retail business because of the domination in the Nordics. For reference, the second quarter last year represented 56% of the annual sales. That is an important quarter. Having that said, sales decreased by 8% in the quarter to SEK 274 million. This is due to a softer market situation in combination with a bit of unfavorable weather conditions in Scandinavia, which has affected sales on both own brands and traded and used boats. We saw that the positive former trend since the second quarter 2024 was affected by the escalated tariff debate that Jan-Erik mentioned earlier that ended up in March, April. That had a negative impact on the sales, especially the first half of the quarter.
In total, the sales of own brand was down 4% and traded and used boats was down 11%. The order intake turned down by 29% to SEK 148 million versus SEK 209 million last year. The order book amounted to SEK 28 million versus SEK 35 million last year. The fact that the order book now is low in June is driven by seasonality effect with lots of deliveries in the period and follows the normal business cycle. This is not strange. We move on with the P&L. Net sales in the second quarter amounted to SEK 571 million, as I said, which is down 8% since last year, SEK 723 million. The EBITDA amounted to SEK 25 million versus SEK 45 million last year. The gross margin reached 11.9%, which is down 3.7 percentage points.
The gross margin is still affected by cost of short-term effects from low production and low sales volume, but also from this change in U.S. tariffs of SEK 1 million and from exchange rate fluctuations by SEK 10 million in relation to last year. The currency effect is mostly referring to U.S. dollars. Adjusted for those tariffs and currency effects, the gross margin reached 13.9%. The gross margin was also affected, as Jan-Erik mentioned earlier, from those supporting activities to reduce stock level of finished boats. That has also had some impact, of course. OpEx amounted to SEK 42 million, which ends up in a cost reduction of 19% since last year. The gross savings are higher, but investments to strengthen the sales organizations reduces the net savings. More savings initiatives are ongoing, which will gradually have effect from the third quarter.
Regarding the restructuring provision in Finland, the outcome in the period was slightly higher than expected. In the third quarter, we expect to be able to sum up the closing costs, including the outcome of the primo deal. The remaining reserve in the third quarter is SEK 13 million, and SEK 6 million was reversed in the second quarter. The finance net amounted to minus SEK 27 million, and this is mostly driven by currency effect from intercompany balances amounting to about SEK 20 million. This effect comes from the U.S. dollar. We move on to the networking capital and cash flow. Operating cash flow in the period improved and amounted to SEK 90 million versus SEK 79 million last year. Networking capital amounted to SEK 664 million, which is down SEK 77 million since the first quarter.
The change refers to less inventory of SEK 129 million, driven by both seasonality effects and those supporting market activities. Overall, we can say that the buying lead times are longer due to market uncertainty that pushes inventory release forward in both the retail sales and commercial sales business. On the positive side, we can also say that the measures implemented to adapt production volumes to the demand now have started to give the intended effect and that the networking capital decreases. We see that happening gradually now. Available cash, including unused limit, amounted to SEK 299 million versus SEK 77 million last year and SEK 237 million in the first quarter. With that, I leave the word to you, Jan-Erik.
Yes. Finally, our financial targets. Actually, they are exactly the same. We have the same target. We want to have a growth of about 10% over a business cycle. On mid-term, we want to have an EBITDA margin of 10%. Our capital structure is no financial debt unless it's property, for example. We, of course, want to have a dividend. A dividend policy says 30% if everything else is standing in the right manner. We truly believe that this is a correct financial target for us. We need some help then, of course, from the market. A lot of other things are now in place for the future. With that, I actually leave to Gunilla.
Yes, we open up for questions. Please, go ahead.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Henriette Christensen from DNB Carnegie. Please go ahead.
Yes. Good morning, gentlemen. A couple of questions for me. I'll start on the gross margin development. How do we think going forward on that, and how does it look in the order book? Also, how do you work with price in this volatile FX environment that we currently have?
You can start, Rasmus.
If I start off then, the gross margin in the quarter was, as we said, a bit affected by a bit of one-offs to reduce the stock levels. Going forward, of course, we see that this is an effect that will be reduced. Important here is that the underlying margin in the business is still very good. We see that boats delivered in accordance with order book, those we sell in accordance with what we expect to sell. What we expect to see is that the gross margin will improve going forward. This is a temporary drawback, so to say. I'm not sure if you wish to fill in anything here.
You covered it pretty much. The gross margin is, of course, affected by this that we're selling out, you can call it, undervalued boats. In the order book, you find the premium, and that premium has a higher margin from the start, so to say. Of course, we will see an increase of the margin going further on. You asked about, I think, if I heard you right, you asked about the price adjustments. If we look, I think it's related then maybe to the U.S. dollar and the tariffs. We are compensated in our price list for this. These currency effects we're talking about, it's other things than related to this. I don't know if I asked or if we answered your questions there, Henriette, but please.
Maybe I should also fill in there, Jan-Erik, about what we said also regarding the customer absorption. Because now we have reduced the production significantly, which, of course, also reduces the cost side and causes less variance in the production. This will improve the gross margin itself also, but only to a certain level because volumes need to be increased to be able to get full scale, of course.
Perfect, great. Another question here on the order book. You've seen a stabilization here now in the last quarters. Is there an impact there from FX as well that you revalue the order book? That's the first one. Related to that, very strong sales or ordering in North America and Europe as well for that matter. Could you give some color of what's driven by new dealerships added and what's driven by like-for-like sales, if you will?
If I start out with how we treat the currency, we revaluate the currency in the order book. Here we have sort of a negative effect in the order book, so to say. That is how we do it. If you wish to comment upon anything, Jan-Erik, about new dealers.
No, your second question there. Of course, it's driven by the fact that we onboard more dealerships because they will then buy a certain amount of boats. We also see then, not that it increases the retail sales per dealership, so to say, but we have more dealerships. The retail sales follows in the same pattern, so to say. It is, of course, also the fact that we onboard dealerships.
Just so I understand that, the underlying order book development is better than what you report, of course, because you have this negative currency effect that brings down the SEK value of the order.
That is correct. That is correct. That is correct.
If you say that the improvement is 100, roughly, what is driven by new dealership and what's driven by organic growth, if you will? Is the growth driven by new dealers only, or is there a share that's actually driven that markets are improving organically as well, or are we still waiting for that?
I would say that the organic growth is higher than maybe this. 60%, 70%, I would say, is driven by organic growth, and the rest is driven by new dealerships .
Excellent. My final question here is on the dealer inventory situation. You talked about that in the past, that dealers have been quite cautious in taking on inventories. You said that you do well versus competitors. Could you elaborate a bit about that? You know, why are you doing better than competitors? That's what I was thinking.
The situation is more or less the same. We can see that we're talking about the U.S., for example. We can see that the U.S. dealership, the stock levels then, is improving. It's more, you can call it, than the normalization. In Europe, it's still very low activity on that side, which means that we have more or less than had a stock as a boat builder. That's not correct, of course. The good part of that is when the market gets a little bit more activity, as we have talked about, meaning that the dealership doesn't have the boat, which means that they will order it from us. I think that's actually what we see now in the increasing order intake. That is a good sign. Of course, we prefer that the dealership has a relevant number of boats in their stock.
In the Nordics, I should say also, it's a big part of our business. We have normalized the situation, so to say. Now, maybe not everyone, but most of the dealerships have a relevant stock of boats. It's more demonstration.
Very good.
Nordics.
Thank you for answering the questions. Jan-Erik, I wish you a very happy retirement.
Thank you for that. I will still be an owner, so I will follow closely.
The next question comes from Emil Nystedt from DNB Carnegie. Please go ahead.
Good morning, Emil Nystedt from DNB Carnegie. I have just a couple of questions for you. First, I was wondering about the cost cuts that you announced. Could you please expand a bit on these measures? What are you doing? Perhaps the estimated effect on earnings that you mentioned from Q3 onwards.
Again, just to be clear, you said the cost reduction program, the cost out?
Yeah, exactly.
Yes. Okay. To put it simple, we have chosen not to be too specific, so to say. If we have an organization and we are expecting maybe the sales level of, say, SEK 2.4 billion or something like that, and we see a softer market, of course, we need to adjust. That we did already last year. Now we get, you can say, more specific. A big part of this is related to the value boats that we are ending our part of that in the industry. That means also that we take, you can say, we take the opportunity to streamline the company to be this premium company that we wish to be. Talking about levels, the target is approximately SEK 20 million per quarter in saved costs now, to give you a figure. Rolling 12.
That's great. Yeah, thanks. My second question, you touched upon it briefly, but your operating cash flow held up quite well considering your margins. As you mentioned, due to reduced inventories, could you please give us some color on inventory levels moving forward, what we can expect regarding inventory releases and so on?
We had then as a target, actually, then, since it has already happened, we can talk about it. We wanted this demand and the supply to meet. From the beginning, at that point, we are in then during the autumn 2024, we saw that this could happen before the summer. We had a softer market than expected due to the global politics and economics. Especially then, as I said, at the beginning of Q2, that made this point where they meet, so to say, to be a bit further on then. Actually, it will happen during Q3. What we have done then is, of course, that we have reduced our own capacity. We are then closing, for example, then the Korpilahti plant. We are reducing production or have reduced production, I should say, more or less in all our sites and quite severe then.
By that, we're starting to sell then from the stock, simple as that. The demand is slightly higher than we actually have the capacity to build for at the moment. That is the simple tactics behind it.
Exactly. To fill in there, if you look backwards, the first half of 2025, we come from a position where we still have produced more boats than what we could sell. We have changed this, and we are, as we can see, gradually reducing the inventory levels. According to our plan, we expect to do so. We expect to get the biggest impact now from the third quarter, which Jan-Erik mentioned. This is in line with what we have predicted, so to say. It is, of course, very hard to tell exactly what the levels will be. We follow the plan that we made in the beginning of the year right now.
Perfect. That's all for me. Thanks.
Okay, thank you.
Thank you.
There are no more questions at this time. I hand the conference back to the speakers for any written questions and closing comments.
Yes. We have quite a lot of written questions, all from your Liase. I'll take one at a time. He says, "Great to see the reduction in net working capital. How do you see the level developing going forward, including the Bella Boats and Flipper sale?
That is related to the last question we talked about a bit. I would say that goes back to the previous question.
Same answer.
Yeah, same answer. If we fill in regarding the primo deal with Bella Flipper, this is also expected to happen, as Jan-Erik mentioned before, during the third quarter. Those effects will be not that dramatic, I would say, in the quarter.
Okay. He also asks about the restructuring program. Will they cover the reserve that you have covered the expected cost for Q3? No more one-offs expected in Q3?
According to our estimates, we are well covered. When it comes to these kind of items, you can be surprised. We have done the best estimate we can. It is our belief that we are correctly positioned in accordance with what the outcome will be. The outcome is also dependent on what happens when some of the stock boats related to the primo deal. This is connected. We believe that we are well positioned in the reserve.
Good. He also asks regarding your comments on revenues being at the bottom. I think you said that now, Jan-Erik, also that you see increases coming forward. He asks if that implies that you expect year-on-year revenue increase from Q3 and onwards.
The simple answer is then, of course, yes. That is what we see. That's the signs that we are building our, so to say, we can call it forecast then. We have seen talking a lot about the predictability, which is important for all of us, but maybe especially when we are a producing company. We really need that. We have seen during, I should say, especially the late one and a half year now, that we are affected by things that happen globally today, which differs then, of course, if you look quite many years back. Still, it's immediately that you can see that the business process slows down and sometimes then quite severe. It is our belief and fairly confident that we have reached the bottom and we now are starting the next journey, so to say.
Great. He wonders about the sales in the U.S. How is the sell-in versus the sell-through to dealers?
It is good statistics in the U.S. What we see is that soft market, as we see in Europe. The U.S. reached that point a bit later than we did. My guess is that that is the picture we will see at least for this year then. 2026 will most probably then follow the pattern that we have seen in Europe during 2025. It's hard to look through it, so to say. It's tough to predict because it's so dependent on so many things. The business climate tells me that. I think that's what I can answer on that one. Do you want to add something?
He wonders about the sale of boats to the Swedish Armed Forces. Will that start in 2026?
Absolutely. We don't have it in the order book, but of course, it's in a good order, so to say. The only thing we are waiting for now, as I said, is the delivery schedule. There are a lot of discussions ongoing. The plan, I can say, is slightly more positive than the original one that we signed. Again, we are not there yet. During the autumn, we will know much more about this.
Great. His last question is regarding the Nimbus brand of sales in the U.S. What share of sales in the quarter was non-U.S. produced Nimbus boats?
That was a very low percentage. EdgeWater and Nimbus are the absolutely dominating brands. Non-Nimbus or EdgeWater boat branded boats were very low.
The Nimbus branded, but not produced in the U.S., I think.
Okay. Yes. EdgeWater had a strong quarter. At the same time, it was quite... We don't follow this figure, as you understand. We sold quite good of the smaller Nimbus, and it's the smaller Nimbus that are built in the U.S. Rasmus is checking, so please.
I don't have the figures in front of me, unfortunately.
It is still a good portion.
It's smaller.
Yeah, yeah, but it's still a good portion produced in Europe because, for example, we started to sell the 495 during quarter one in the U.S., and that has started really well. We have sold a couple more of them. We still haven't delivered that many. I think it's maybe three that we delivered to the U.S., but that, of course, affects also. It's a lot of money.
Yeah, definitely. That was all the questions that we had. I really would like to thank you all and remind you that our third quarter report will be issued on the 23rd of October. Thank you. Thank you, Jan-Erik and Rasmus.
Thank you.
Thank you.