Hello everyone, and welcome to today's presentation with Bulten , where Axel Berntsson, President and CEO, and Anna Åkerblad, CFO, will present the Q2 report for 2025 and answer questions during the Q&A. If you're calling in, please press star nine to raise your hand and star six to mute yourself when you get the word. You can also use the form located to the right. With that said, please go ahead with your presentation.
Thank you. Welcome to our Q2 presentation. We have a fairly short agenda for today, so we give you a summary of Q2, a quick view of the market development, and then we go through our financial results, and then we sum up and talk about the future in the end. With that said, we move on. If we sum up our second quarter, I would say that it was broadly in line with both the prior year and previous quarter. I think this is quite good given that we saw softening volumes from the automotive sector, while at the same time we did see a strong improvement in our medical technology and consumer electronics segments. It's nice to see that we are able to maintain margins even though volumes are lower.
During the quarter, we've spent quite a lot of time with our strategic review, and we have launched a more detailed process and program around that, where we are focusing on our footprint, on our organization, and how we allocate our resources for the future. If we look quickly at the markets, we usually show a few slides on the automotive sector, but I think they are a bit too broad. Looking at automotive in general, we do foresee a soft market with kind of zero or slightly positive growth globally, which is a little bit driven by Asia, whilst European and North American markets will be very low on growth. However, we do have other areas that we focus on and will focus more on for the future.
If you look at medical technology and consumer electronics, those markets actually have quite sound underlying growth, and we are fairly competitive here and have very good margins. This is an area where we will put more focus for the future, and that is developing very well for us. If we move forward, I'll leave it over to Anna to give you some financial highlights.
Thank you, Axel. Here is an overview of our quarterly sales, the last year's, including 12- months rolling sales. Sales volumes for the second quarter were down over 8% vs the same quarter last year. This is following our customers' pattern, where some of them did not produce for export due to global customs discussions in the beginning of the quarter, which is also reflected in the order intake. However, our sales are still on a relatively stable level in a more volatile market. In this waterfall, you can see the change in rolling 12- months' sales for different customer groups. There is a positive growth in other industries, with a slight decrease in the rest of the customer groups. The customer group other industries has, with this, increased sales with 9% compared to last year's rolling 12- months.
As a proportion of rolling 12-month sales, other industries outside automotive amount to over 14%. This is an increase compared to last year when it amounted to over 12%. Our main customer group, OEM light vehicles, amounts to 61% and is in line with last year. The second quarter delivered an adjusted EBIT of SEK 69 million, which is equal to 5.2% EBIT margin. The quarter was in line with both last year and previous quarter. Adjusted earnings per share for the quarter was down to SEK 1 and SEK 3.1 for the rolling 12- months. Looking at the cash flow and net debt, we have amortized debt with cash, and hence the negative cash flow from financing activities. Cash position is lower than last year's quarter, but in line with the end of last year when taking out the change rate effect.
Net debt excluding lease liabilities is higher than last year, but more in line with year-end. Our adjusted key indicators for rolling 12- months are in line with last year or slightly below. The adjusted net debt in relation to adjusted EBITDA is in line with last year at 2.3%. Our guideline for average net working capital in relation to 12-month sales is about 20% - 25%, depending on growth pace. At the end of the quarter, our rolling 12- months are at a level of 16.7%, which is a good level and in line with last year. CapEx as percentage of sales is slightly above our guidelines, and this is related to catch-up of previous years where CapEx were held at a low level in combination with timing of completion of larger production equipment and efficiency investments. Depreciation as percentage of sales is in line with our guidelines.
Now back to you, Axel.
Thank you. Crisp and quick. All right, if we sum this all up, then we can see that our net sales declined by 8.8%. I would say that through this disciplined cost management and very good control of our operational expenses, we were able to keep EBIT in line with last year. Even though we did see a decline in the passenger vehicle segment, we are quite happy that we have had quite a few wins in both Europe and Asia in our more higher margin businesses, particularly in C-parts, micro screws, and with VMI Solutions. I think this is a good step forward for Bulten, where we are winning in the areas where we make more money, and that is kind of positive for the future, I would say.
If we then take a quick glance at what we are now spending our time on for the rest of 2025, the first thing is to sharpen our focus on the high growth, high margin markets that we just saw on the previous page. That includes the medical technology and consumer electronics businesses, and also into more niched products where you have an opportunity to have higher margins, as well as when you do more value-added services towards your customer, then you create more value, and you have an opportunity to make more money. This is very much in line with our ambition to grow beyond the automotive sector and increase our profitability long term.
Secondly, we are spending a lot of time at the moment to define how to best evolve both our incentive, our governance structure, and overall organization structure to support more of a decentralized, customer-centric model at Bulten. Thirdly, we are reviewing our footprint and a lot of other topics. Basically, what we want to do with all that is to create more financial strength so that we can invest in acquiring more companies and having profitable growth for the future. For that, we need firepower, and we are spending quite a lot of our time to analyze different opportunities to realize that, basically. I think that's what we had for you today as a presentation. With that, I'll leave it over to questions.
Thank you very much for that presentation. Yes, let's open up the Q&A section here. If you're calling in, please press star nine to raise your hand and then star six to mute yourself when you get the word. You can also use the form located to the right. We'll start with the first question here, where we have Mats Liss from Kepler Cheuvreux. Please go ahead, you have the word.
Thank you for taking my question. You mentioned the order intake during the quarter was sort of affected quite substantially during the beginning due to global tariffs. Then sort of headwind eased during the quarter, and you finished somewhat better, I guess. Could you state something there about how your third quarter has started now, or maybe also if you should expect it to be more in line with the previous quarter? I mean, some would see it affected by the holidays and so on.
I would say in general, Q3 is a weaker quarter most years, historically, due to shutdowns at our customers' plants and so on for a lot of maintenance and things like that. That aside, most of the drop that you saw on order intake, which is a quite big drop, the vast majority of that is from one customer that decided to stop deliveries to North America in the beginning of all these custom duties changes and insecurities in the beginning of the quarter. That customer has now resumed all the production and is producing at full speed again, which means that that big drop isn't real, if you say, for the long-term volume. What we can see in the projection from that customer is they remain on the same plan as they did before the custom duties started to arise.
We are not today, we don't see major concern around that.
Yeah, great. It seems that things are moving somewhat better. Looking at the gross margin, it's sort of improved there, and I missed the reasons why, but I guess it seems that you have a pretty good pricing, I guess. Maybe also, if you can touch upon the mixed change there, if that also helps the gross margin, the mixed change of those non-automotive segments.
Yes, in general, the non-automotive segments have significantly higher gross margins than the automotive. Over time, as we grow that portion, we should expect a higher gross margin in the business.
Good. Maybe also coming back to the tariff impact there, could you shed some more light on how that could affect you, given the current indications of tariffs, U.S. tariffs on European imports and so on?
I think on the European business, it is no major impact, but we do follow, I mean, if you follow the large customers that we have and you see their volume projections and their volume deliveries, we kind of follow that in Europe as most of the business that we have in Europe is automotive, and a lot of it is light passenger vehicles. We will follow those trends, and there's no major effect from tariffs on that yet, but there is some. If you look at Volvo, I think they were down 9% year to date overall in their volumes. We are down slightly less than that year to date, but we follow that trend.
If you look in our Asian businesses, we haven't really seen a major effect on that yet, but it could be affecting the future if there's a lot of production that would move to the U.S. I don't foresee that consumption in the U.S. will go down dramatically, and I do foresee that it would take quite some time for all this manufacturing to move elsewhere. Sooner or later, that volume should still be there, if you will.
Great. The other lines there in the P&L, the tax rate is still a bit above what I would like it to be. Could you say something about that?
Of course. Our procedure is that we do not take into account the deferred tax losses carried forward. When we do that calculation, we are at a healthy level, normally at around 25%, 26%. That is the reason why. We are confident that it is at a good level.
Going forward, should we expect 25% , 26% more than the current level?
That is when we do that calculation off. I mean, we have this really when we do the adjustment, but we do not take that into consideration in the calculation during the other quarters as well. When we do the calculation, adjust it, then it will be around 25%, 26%.
Okay. Great. Finally, just this non-controlling interest there, could you shed some light on what they are, what they are about?
Yeah, we have JVs that is in that line, and we have JVs in different countries. We have both in Asia, and we also have in Europe. Those are what you see in that.
The current level is sort of the ground rate to be expected going forward.
Yes. Yeah.
Yes, at the moment, that is what we expect.
Yes.
All right. Thank you. Thank you very much.
Thank you.
Thank you, Mats.
Okay, we'll take the next question here. Can you quantify how much cost you might be able to take out based on your review of the footprint, etc.?
Patty, yes, we could, but we do not want to disclose that yet. Once we are done with, or as I have chosen the scenario that we will implement, we can go public with the effect of that. I do not want to disclose that today.
Okay, thank you. Could you give us an idea for the rest of the year in terms of the sale based on your order book and also margins?
Unfortunately, the answer here is quite boring as well. We don't make any financial projections, and therefore, we will not, I cannot answer that, unfortunately.
Thank you. What are your expectations of net debt levels at the end of the current fiscal year in absolute number, if possible?
I think the same answer here is given that we don't give any financial projections, we also don't give projections for that.
Can you elaborate on the strategic agreement with the Tier 1 supplier in Europe? What kind of revenue potential does this VMI model represent?
Unfortunately, the same here, given that we don't disclose that. I cannot give you the numbers, but it's a fairly significant customer. The VMI part will likely, over time, be all of that business with the VMI solution. This is an automotive tier one to an automotive OEM where we are having a lot of business. We are happy that we also then get directed into their supply chains to help them with that as well. The business as such is very nice, and we are confident that it will be a contributor to our profit over time as well.
I will take one final question here. How do you envision Bulten's competitive position evolving over the next 3-5 years, especially outside the automotive sector?
I know a lot of people are curious about this. As we have said, we will come back and give a presentation of our strategy going forward when we are ready to do that, which could be sometime during this autumn. I do foresee that we will compete with a very customer-centric business model, and that I can say. We will be quite decentralized and try to be very, very close to the customer and run our P&Ls close to the customer. We can be very quick, very service-oriented, and be a very, very good supplier to them. That will be kind of the heart of it. More than that, I do not want to disclose today.
Okay, that concludes today's presentation. Thank you very much, Axel and Anna, for presenting and answering all of our questions. Thank you, everyone who joined us today for this presentation with Bulten. I wish you all a great rest of the day. Thank you very much.
Thank you.
Thank you.