Welcome to the Careium Q2 presentation for 2023. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to CEO Christian Walén and CFO Mathias Carlsson. Please go ahead.
A warm welcome to the Careium report for the Q2 of 2023. I'm Christian Walén, CEO and President of Careium, and I'm here, as stated, together with my CFO and colleague, Mathias Carlsson. It's a truly exciting time for us at Careium, with a strong performance, focus, and disciplined action to deliver on our potential, and innovative and interesting launches across both hardware and software in the upcoming quarter. With that, I'd like to move over to the quarterly report and its highlights. First up, we have delivered a strong quarter across sales and EBIT, without any adjustments, i.e., reflecting our underlying performance. I'm also very proud that the link between the actions we have taken and are continuously taking has a real impact on our outcomes.
We're also happy to see continued success in winning and implementing contracts in Sweden, coupled with the strong product sales, primarily in the UK. These are two very important indicators as it showcases the strength of our offering in two of the most demanding markets across Europe. I'm also particularly proud of the fact that we have completed our hive-up in the UK, effectively rolling four past acquisitions into one entity, Careium UK Limited, which will serve as our platform for driving efficiencies, something that was not fully possible prior to this change. We're also really excited for our launch during the Q3 of the Abby, which is a mobile social alarm, which will be a key component for some of our markets and also strengthening our private pay position.
With the highlights out of the way, let's move to sales and gross margin for the Q2 of 2023. We saw organic growth compared to Q2 of 2022 of 22.6%. While there was some effect of currency, even if we adjust for it, we still attained a growth rate of 18.8%, which is a growth rate above industry standards and something that we're very proud of. In the quarter, we attained service sales of SEK 158.9 million, compared to SEK 132 million in the same period last year, which is an increase of 20.3%. Product sales amounted to SEK 54.9 million, up from SEK 42.4 million last year in the same period, reflected an increase of 29.5%.
Our gross margin reached 42.2%, in contrast with the Q2 2022, where we attained 37.4%. This is driven by low cost for service delivery, following a lot of initiatives to drive efficiencies, also lower cost across our alarm receiving centers and more favorable exchange rates, primarily between the pound and the euro against the USD. Moving on to our markets, I'd like to remind you that since the start of the year in the report, you will also find historic gross margin figures, which is a way for us to be more transparent towards the market and our investors. First up, our business in the Nordics, saw sales grow 18.6% compared to the Q2 of 2022. A standout was the service sales that increased 20.8%.
Since the Nordics is a very mature market, we're very proud of this. Good performance and service delivery, it's also reflected in our increased gross margin. Moving over to the UK, we saw strong overall sales development, in total amounting to 33.7% compared to Q2 2022. Product sales increased 52.9% versus Q2 2022, reflecting the high demand for our digital products. Personally, I think this is particularly impressive as we have also driven various change and development projects across the UK simultaneously while attaining these outcomes. In the UK, the gross margin for the quarter amounted to 38.6, compared to 30.5 in the Q2 of 2022. With that, we move towards Netherlands, that we are disclosing as a separate entity since the start of the year.
In the Netherlands, we drove sales 15% higher than Q2 last year, based on their work to attain a stronger customer mix and also adding new connections. Service sales increased due to this effort, with more connections added, and the higher margin levels were driven both by specific customer projects as well as disciplined work with driving efficiency. Other markets, which consists of primarily Germany and France, decreased 8.8% in terms of sales, compared to the Q2 of 2022. While there is greater volatility in these businesses, it is also in part reflecting on our challenges to provide adequate stocks for Germany and France of specific products, as demand and product requirements, to some extent, outweighs our ability to deliver at present. Gross margins were impacted slightly negatively due to the product.
Turning to profitability for the quarter, EBITDA amounted to SEK 33 million, compared to SEK 32.2 million in the same period last year. EBITDA in the Q2 of 2023 was not affected by any restructuring cost or any non-recurring items, whereas the same period last year, that is the Q2 of 2022, EBITDA was positively affected by SEK 20.4 million. During the quarter, we delivered an EBIT of SEK 14.6 million for the quarter, which compared to the same period last year, where it amounted to SEK 13.5 million. However, as stated in regards to EBITDA, EBIT in Q2 2023 was not affected by any restructuring cost or non-recurring items. Last year, in the same period, the EBIT was positively affected by non-recurring items of SEK 20.4 million. There you have the apples-to-apples comparison.
The improvement in profitability is driven by our focus on sales and also cost reduction and efficiency gains across our operation, and also following some action programs that we completed last year and also developed, expanded upon, and are continuously running for 2023. We move to cash flow. Cash flow from current activities in the Q2 of 2023 amounted to SEK 18.5 million, compared to SEK 10.3 in the Q2 last year. Free cash flow for the period amounted to SEK 7.7 million, in contrast with a negative free cash flow of -SEK 3.9 in the same period of 2023, 2022, sorry. Cash total SEK 53.7 million at the end of the Q2 in 2023, compared to SEK 83.9 million in the same period in 2022.
The bank overdraft facility showed available cash of SEK 35.2 million, compared to zero in the same period last year. Our net debt amounted to SEK 216.8 million at the end of the quarter, compared to a net debt of SEK 223.7 million at the end of the previous quarter, that is quarter one 2023. Compared to last year's Q2, net debt at that point in time was SEK 167.1 million. At the end of the quarter, we complied with the agreed bank covenant waiver that we have communicated, as well as all original covenants in the bank facility agreement. To conclude the report on the Q2 and before opening up to take any questions, our highlights consisted of strong sales and good organic growth.
While exchange rate did play a part in the sales, we still feel that underlying sales growth was very strong. Our efficiency measures are delivering, which is evident, our cash flow of SEK 7.7 million was also positive in the current climate. In spite of this strong result, we were also burdened by some increased OpEx costs for a lot of the changes made, such as the legal fees for the hive-up in the UK. Towards the end of the quarter, there is a seasonality effect with people going on vacations and customers not being as available. We did a lot of work to try and rectify that as much as possible. In addition, during the quarter, the EU also saw a number of incidents, where failing infrastructure brought outages that hit our customers.
I'd argue that this is a clear signal that the EU needs to speed up its transition to digital infrastructure as it is putting people at risk. We look ahead, and our priorities going forward. We now have a very strong plan in place for our UK business, which is enabled by our hive-up. We will also increase our focus on inventory management, associated processes, systems, and so on, to impact and optimize cash flow and be even faster in servicing our customers.
We are also very proud that we are in late stages of launching our new product, Abby, during the Q3, which is a mobile social alarm that is well-suited to our private pay business, connects really well with the demands in many EU markets, and it particularly caters to seniors who are out and about and able to take all their security with them. In addition, we also have expanded data capabilities, which will make for more meaningful digital services. With that, we conclude the presentation and will now be very happy to take your questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Oscar Rönnkvist from ABG. Please go ahead.
Thank you. Morning. Thanks for taking my questions. Start with the top line one. The organic growth saw quite a sharp pickup in the quarter, so I was just wondering, are you seeing any non-recurring effects supporting that top line figure, or should we see it as underlying demand has accelerated? Did you experience any bottlenecks in delivering sales in line with demand over the last few quarters? Just trying to get a sense of the run rate top line here. Thank you.
Thank you, Oscar Rönnkvist. Very good question. We're pleased to report that in regard to the top line, there were no non-recurring effects impacting it. Rather, it was indicative of not just the demand, but also our ability to capture it and drive sales through our activity. In regard to the second part of your question regarding challenges to deliver, we, compared to many other entrants in the industry, do not see that as much of a problem. We've been quite diligent and working really hard to ensure that we can source components and so on, to actually bring our products and services to our customers. When I commented on the German and France situation, it's not necessarily just stock levels, it's also some market-based requirements on the products that we need to be fast to deliver on.
I don't see any challenges in regard to that, rather, that we are perhaps a little bit behind our schedule, but we're quite proud to see our sales being indicative of real demand and real ability to capture that demand.
Perfect. Thank you. Just a follow-up on top line. Do you see any price increases on current connections that you could implement in the future? Should we see it as only like the new contracts that you maybe can raise prices on?
Well, since we have both activity in B2B and the B2 government, or business to public, as well as business to consumer, it changes a bit market by market. I'd argue we have in some instances contractual opportunities for price increases. Of course, every new contract presents that ability, but there is really quite a large regulation on price increase opportunity based on how our contracts are structured. So far that has been doing quite well, and we don't see anything out of the ordinary in terms of either having greater opportunities nor being particularly challenged in relation to price increases.
Thank you. Next one, just on the gross margin, was up 3% points sequentially. I was just wondering if it's mainly driven by the ceased contracts with low profitability, even the loss-making ones, or if we should see it as internal efficiencies explaining the majority of the gross margin improvements. Just finally, if you could quantify the FX support, please. Thank you.
To answer your question, it's a bit of both. We've been really diligent in reviewing and scrutinizing our operations to be as efficient as possible, that has clearly has an impact. We have also, particularly in the U.K., we have done our best to transition out of the less profitable contracts, which also has a positive effect. In regards to the FX effect, Mathias, is there anything really to comment on that we haven't disclosed?
Well, what we can say, we don't have an exact figure, because of course, there are many components when it comes to the exchange rates effects on things. What we can see is that the relation between the British pound and the US dollar, I think that the British pound is about 10% stronger versus the US dollar now in Q2 2023, compared to what it was in 2022. On the other hand, of course, the SEK is weaker, so it goes both ways. Overall, we have had a positive impact on having a weaker dollar towards euro and pounds, especially pounds.
Well, thank you, Oscar, for a good question.
Okay, thank you. Just a final one on the CapEx levels. I think you were at around SEK 11 million this quarter and SEK 10 million the last quarter, so it's a fairly big step down from 2022 levels, what I can see. Can you say anything about the CapEx run rate? Is this a normalized level, or should we see it pick up closer to 2022 levels?
I would say that, you could say that the CapEx consists of 2 main components. One is, of course, our R&D CapEx, and that is a bit lower this year than last year, due to the that we had a cost-saving program last autumn. It's not major differences. When it comes to the other component, it is the amount of rental equipment that we have. That depends a bit on whether the customers choose to buy or if they want them on rental. This year it has been less favorable on asking for rental contracts. That can go a bit up and down and swing a bit between the years. It's more difficult to forecast that part.
In summarizing Mathias' comments, you should not expect any major changes. But r ather normal variation. Should there be any major changes to CapEx, that would be driven by us taking on other kinds of developmental projects and so on, and thus, by our own volition and decision. These smaller variations are more market driven to some extent in regards to the rentals, contracts, and so on.
Got it. Thank you very much. That was all for me.
Thank you, Oscar. Good questions.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Well, with no further questions, we would just like to thank all of those who have listened in to our presentation, and we genuinely hope that you have gotten good information, a good understanding on where we're heading. At Careium, we are really looking forward to keep on delivering in the same momentum. Thank you all, and have a very good day.