Hello and welcome to the Elanders AB conference call. My name is George, and I'll be your coordinator for today's event. Please note that this conference is being recorded, and for the duration of the call, your lines will be in the listen-only mode. However, you'll have the opportunity to ask questions towards the end of the presentation, and this will be done by pressing star one on your double keypad to register your question. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I'd like to turn the call over to your host today, Mr. Magnus Nilsson, to begin today's conference. Please go ahead.
Thank you. Yes, welcome everyone. Magnus here, and together with me, I also have Åsa Vilsson, our CFO. Okay, I'm going to start with our presentation, and I will now go directly to slide number five and talk about our second quarter. Demand decreased for the majority of our customer segments, which resulted in a negative Organic growth of 5%. If we look at our different regions, it was only Asia that performed better than previous year with an Organic growth of 2%. Remaining regions came in low and with negative growth. Despite the lower sales in the second quarter compared to the first quarter, we managed to improve our Adjusted EBITDA margin to 5.5% compared to 4.1% in the first quarter. This was a result of our cost-saving measures that we implemented in the first quarter.
To meet the soft market, we continue to focus on sales, and we're also taking additional actions on the cost side. During the quarter, Svein Beck replaced Dan Svensson as CEO for Elanders' largest subsidiary, LGI. If you then go to slide number six and look at our cash flow and Cash conversion development, we can show that we continue to deliver very strong Cash conversion, which ended at 106% in the second quarter. We also managed to continue to reduce our working capital, which went down by SEK 189 million in the first half year. The decrease in working capital, combined with the strengthening of the Swedish Krona, reduced our net debt, excluding IFRS 16, by SEK 254 million in the first half year, despite a dividend of SEK 147 million in the second quarter.
Including IFRS 16, our net debt was reduced by SEK 888 million in the first half year. If we then go to slide number seven, look at Supply Chain Solutions, you can see that our Organic growth slowed down compared to the first quarter and decreased by 4% compared to 1% in the first quarter. Europe was in line with previous year in the first quarter, came in with a negative growth in the second quarter, and also North America remained weak. As I've mentioned before, Asia showed growth. Our new site in Thailand continues to grow as planned. In terms of customer segments, it was only electronics that could show Organic growth in the second quarter. Our Adjusted EBITDA margin improved compared to the first quarter, but came in lower compared to last year.
However, our Cash conversion continues to be very strong in Supply Chain Solutions and came in better than last year. Structural measures of SEK 18 million were implemented in the quarter with a focus on additional cost savings in Germany and also the change of CEO at LGI. If we then go to slide number eight and look at Print & Packaging Solutions, you can see that our results recovered very positively compared to the first quarter, with an Adjusted EBITDA margin of 5.4% compared to 3% in the first quarter, despite continued negative Organic growth of 5%.
This was a result of the cost savings we executed in the first quarter, and we were also successful in our strategy to be part of the consolidation of the German print market and managed to take over a yearly print volume of EUR 5 million from an external print company that was forced to close down. If we then go to slide nine to look at the development of our different customer segments in the quarter, and we start looking at electronics, the picture continues overall to be very positive, and we could see an Organic growth of around 7% in the quarter because of continued increased demand both in Europe and Asia.
If we look at fashion, fashion continues to see a recovery in Europe, but at a slower pace and couldn't compensate for continued soft demand in North America, and this resulted in a negative Organic growth of 6%. As reported before, continuous pipeline with both new prospects and gaining new customers looked good, but the uncertainty in the market makes the closure and the implementation process of new customer projects slower than normal. If we then look at automotive, they continued a negative trend and showed a negative Organic growth of 14%. It looks like the European market is now stabilizing, but our customers continue to see negative growth regarding exports to both North America and China.
Also, Avro, that has been stable in previous quarters, showed a negative Organic growth of 5%, mainly as a result of low demand from our customers in the food and beverage area, but also online print was slowing down in the second quarter. Industrial, that showed a stable demand last year and saw a negative growth of 3% in the first quarter, continued a negative trend and came in with a negative growth of 12% in the second quarter. When it comes to healthcare, we could see a negative growth of 8%, but overall, the segment continues to look positive going forward with lots of new requests from both existing and new customers.
If we then go to slide number ten and look at how things will be going forward, you can see that the ongoing trade negotiations create a great deal of uncertainties, which affects the majority of our customers very negatively, and it also slows down potential new prospects in the decision process. It is, of course, very hard for them to make strategic decisions in a market that constantly changes. This makes it also very difficult to see when there will be an improvement in demand from our customers. We can also see that their forecasts are, for the moment, very uncertain. To meet this challenging market, we continue to have a high focus on lowering our cost base, but also to improve our efficiency and increase the share of optimization both in our administration and in operations.
The appointment of our CEO of TAG and Charles Ickes to the new role as Group CEO is a very important part of this process. Charles is already today heading the development of our internal warehouse management system, CloudX, and he and his team have last year added several AI functionalities that increase our internal efficiency, and it also makes us able to offer a much more attractive offering to our customers. With this new role now, we will speed up the rollout of the system and the functionalities in the whole group. We still think that over time, the trade barriers create opportunities for global logistics players like Elanders by partly breaking up the global supply chain and then replacing them with a combination of more global and regional logistics chains. Okay, thank you. That's everything from me. Time for questions.
Thank you very much, sir. Ladies and gentlemen, as a reminder, if you have any questions, please press star one on your double keypad. That is star one. Just make sure that your line is not muted to allow you to finish your questions. We'll pause for just a moment. Our very first question this morning is coming from Marcus Ng with a client from DNB Carnegie. Please go ahead.
Yes. Hi. Can you hear me?
I can hear you. Hi, Marcus.
Perfect. Just my first question is just a technical one, but in the discontinued operations, business that you have, the $140 million, is that what's the rest of the buy and sell? There's no, the road transportation business, they will be closed down as of Q3, right?
Which will be closed? What will be closed down in Q3?
The road transportation business.
Yes, last month we were up in June, so that will go away in the third quarter.
It's what's the rest of the buy and sell business is in the discontinued businesses that you have right now. That is also out. There's nothing left of that. In Q3, it will only be the road transportation business that will be sort of closed down businesses impacting sales.
Yeah, it should be. It should be. I think also the subscription box business is coming in mainly in Q3. It should be as a marginal adjustment. You're right, this should be mainly a GSP business. Yeah.
Okay. My second question is on fashion in the U.S. You still have new customers coming in, but can you talk a little bit about the status of these new businesses? I know there's hesitation and such, but what is the status on fashion in the U.S.?
We have secured, as I mentioned before, some new projects. A couple of them will start in the second half of the year, and the one bigger one will start in January of 2026. We can see there's been some delay in the movement from the other suppliers, the existing suppliers, but we can see that we have secured more orders this year than last year. Also, our pipeline is bigger this year than last year, but the process is a bit slower. The customers are still a bit uncertain and waiting about, you know, they're looking to see how the trade negotiations will end up. Some of them will start now in the second half of the year, and some will start in Q1 2026. The trend is much more positive than last year, but it's still a bit slow. It's a bit slow, you know, implementation and everything.
Thank you. On automotive, which held 30%, can you talk a little bit about maybe the differences in that automotive segment? You have the road transportation business, which is coming out as of Q3, but that's still part of it. If you look at that part and the part which will be left, what does it look like then?
I think that the part that will be left will have a less negative decline, if I say like that, because in the GSP, the road business is also part of the negative growth in automotive. That part is actually bigger than the part that we will keep, because the part we will keep is lots of center around manufacturing in Germany. I think the European market now starts to look more stable. For the car models that we are supporting that are not so much export-driven to the U.S., it will be more stable. Some of them go to the U.S. That is still a bit up and down. I think this trend around 12%, 13% will slow down. I think it will be more normalized step by step in the second half of the year.
In the GSP business, we are serving all models that our customers are building because we are taking components from different countries, so you have a bigger organic impact on that one. Hopefully, it will stabilize in the second half of the year.
Okay, if you can give us some granularity on the industrial as well. It was a bit sharper fall than I might have expected in the industrial. If you could just give us some more granularity on if there's anything sticking out there or anything across the board.
I must say industrial was also a bad surprise for us in the second quarter because, as you know, they've been very stable the last two years. Not so much growth, but no negative growth. There was a slight negative growth in Q1, but you could see in Q2 that lots of it was slowing down. Lots of our customers, if you look at trucks, for example, but also other industrial customers, were slowing down. It feels like they are more impacted now than before. It was overall, I must say, most of the manufacturing industrial companies that we have as customers were slowing down in Q2. Maybe still, I would say it's a trend, but I think they're also now feeling the pain of the trade war, and they're slowing down some projects and things like that. It's hard to predict.
I think also the customers were a bit surprised about the slowdown in Q2.
Yeah. Finally, maybe on UK, how is the UK going? Are there any signs of any improvement, or is it continuously difficult?
The U.K. continues to be hard. We are gaining some new customers, especially on the Kammac side, but we could see in Q2 it was slowing down again, also for our more, you know, technologistics part. It's really a bit up and down in the U.K.. We cannot still see a stable trend in improvement. One quarter, they are improving, and then they slow down in another quarter. It's still hard in the U.K.. We are more positive going forward in Germany. We were very big. We cannot see it yet, but I must say it's a much more positive atmosphere in Germany when we talk with our customers and their market overall. I think Germany will be, hopefully, driving more growth for us, maybe not this year, but next year, because you can see a lot of the investments that will be done in Germany. That feels more positive.
Okay. Perfect. Thank you very much.
Thank you.
Thank you. What's your question, sir? Ladies and gentlemen, as a reminder, if you have any questions, please press star one at this time. Mr. Nilsson, we do not appear to have any questions coming in. I'll turn the call back over to you for any additional or closing remarks. Thank you.
Okay. Thank you, everyone, for listening to our conference call, and I hope everyone will have a great summer. Thank you, everyone. Bye-bye.
Thank you very much, sir. Ladies and gentlemen, that will conclude today's conference. Thank you for your attention, and I wish you a nice day. Have a good day and goodbye.