Welcome to the Elanders AB conference call. My name is Alan, and I will be your Coordinator for today's event. Please note this call is being recorded, and for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any time, please press star zero and you will be connected to an operator. I will now hand you over to your host, Florian Beck, to begin today's conference. Thank you.
Yeah. Thank you, Alan, and good afternoon, everyone. Welcome to Elanders conference call for the third quarter of 2026. Thank you for joining us today. For me, this will be the first quarterly conference, as I took over from Magnus Nilsson on September 1st as Group CEO for Elanders. My name is Florian Beck, and with me here is our CFO, Åsa Vilsson. Over the next few minutes, I will walk you through our presentation for the third quarter. After that, we will take questions from the audience, and our operator, Alan, will guide us through until the end. Let's go directly to slide number five. Our third quarter was characterized by strong organic growth and continued improvement in results within Supply Chain Solutions, which is our largest business area. The organic growth for the group came in at 6%.
When we adjusted for air and sea rates, our organic growth was 4% for the group. It was very good and important for us to see that all regions and all customer segments contributed to the growth during the quarter. Our adjusted EBITDA landed at SEK 210 million , which is an improvement of SEK 29 million compared to Q2 this year, and flat compared to Q3 last year. That corresponds to an adjusted EBITDA margin of 6.9% for the group, and our adjusted result before tax increased to SEK 74 million , up from SEK 67 million in Q3 last year. If we move on to slide number six, we take a look at our cash flow, cash conversion, and how our net debt has developed. Cash generation remained strong and improved compared to last year.
The operating cash flow, excluding acquisition, improved to SEK 565 million compared to SEK 316 million a year ago. Our cash conversion of 126%, almost doubled compared to 73% in the third quarter of 2025. Our net debt, excluding IFRS 16, decreased by SEK 65 million in the quarter. Working capital actually released SEK 95 million, while negative currency effects increased our net debt by SEK 82 million . It's clear to see that without the currency headwind, the reduction would have been even larger during the quarter. We go to slide number seven and take a closer look at our Supply Chain Solutions. We can see that we had a very good quarter here with strong organic growth as well as improved results and margin. The organic growth for Supply Chain Solutions was actually 7% or 5% when we adjusted for air and sea rates.
Europe and Asia continued to grow organically, but it was very good for us to see the positive developments in both the U.S. and the U.K., with demand picking up in these markets. Our adjusted EBITDA grew by 12% to 204 million SEK, lifting the adjusted margin to 8.2%, up from 7.9% last year. Our unadjusted EBITDA in absolute terms doubled from 102 to 204, and our cash conversion improved to 109%. If we move to slide number eight, our Print & Packaging Solutions had a quarter which was more on the weaker side, with sales that were flat compared to Q3 last year and came in at SEK 592 million . Similar to the second quarter, we see continued growth in online print and publishing, but these sectors could not compensate for the declining automotive volumes.
Adjusted EBITDA came in at 17 million SEK, which gives an adjusted margin of 2.9%. The main reason for this was weaker demand for the automotive sector in Germany, while other countries and sectors performed well. We have responded to this trend in developments with structural measures to adjust and lower our cost base going forward, which are expected to generate annual cost saving of around SEK 57 million . In addition to that, we have successfully renegotiated an important long-term contract with one of our customers within Print & Packaging. If we go to slide number nine and look at our various customer segments, we can see that electronics, like in Q2, was impacted by the global memory chip shortage, but still grew organically by around 1%, driven by both Asia and Europe.
Our customer segment, fashion and lifestyle, also grew by around 1%, and we are seeing signs of improvement and demand in both Europe and North America. That is especially encouraging since in the U.S. we were dealing with elevated churn rates in the previous quarters. The customer segment, other, showed good growth like in previous quarters and grew organically by around 17%, driven by online print in various regions and also good FMCG volumes in the U.K. Automotive has a very mixed profile for us and shows basically two different pictures. Within Supply Chain Solutions, which is also the larger part of our automotive business, we had organic growth of 25%, while Print & Packaging declined by 35%. When we look at it on a consolidated basis, we had an impressive 7% growth within the automotive customer segment. Industrial grew by around 3%.
That was mostly coming from mainland Europe and was then partially offset by a decline in the U.K. Last, but certainly not least, healthcare delivered a strong organic growth of around 19%, driven by Supply Chain Solutions in Europe, Asia, and the U.K. We move to slide number 10 and my conclusion. In summary, after two consecutive quarters of improved results in Q1 and Q2, the third quarter delivered another solid result, combined with strong organic growth. It was mainly driven by our largest business area, Supply Chain Solutions. Despite continued challenge in the automotive sector and the ongoing global memory chip shortage, we demonstrated resilience as a global organization and generated organic growth in all regions and all customer segments during the quarter. Particularly encouraging was the development in the U.S. and the U.K., where new clients and increasing demand helped these regions to return to organic growth.
Supply Chain Solutions continues to grow profitable across all region and all customer segments. The momentum within Supply Chain Solutions, combined with the structural measures and the renegotiated contract in Print & Packaging Solutions, makes me cautiously optimistic for the remainder of the year and as we head into 2027. Even though the world around us remains uncertain given the conflicts in the Ukraine and the Middle East, the global chip shortage, the struggling automotive sector, and rising inflation as well as interest rates, which are exactly the key developments we are monitoring, and we need to be cautious about going forward. With that, I conclude my short presentation. I thank you all for your attention, and I am now handing back to our operator, Alan, for any questions from the audience.
Thank you. If you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. You will be advised when to ask your question. We will take our first question from Markus Almerud, DNB Carnegie. Your line is open. Please go ahead.
Yeah. Hi. Good afternoon. Markus here from DNB Carnegie. Maybe I will start out with the fashion, and just if you can give us a little bit more color on what is going on in the fashion segment, since we know that there has been new customers coming in. U.S. has been having problem for some time, but also Europe was supposed to be picking up. If you can just talk a little bit more around where you are in fashion.
Yeah. Thank you, Markus. Good afternoon. I am happy to talk about that. So within Europe, in fashion, it was more or less flat compared to Q3 last year. But in both the U.K. and the U.S., we have seen an improvement in demand. As you know from previous calls, in the U.S., we always had a strong funnel, but at the same time we had elevated levels of churn. Now in this quarter, we could see that the churn was going down and opportunities from the funnel started to materialize. So we have been able to sign a number of new clients for the U.S., and they are already contributing to the revenue. So nice development there. And in the U.K., it is the same thing. It was a market where it was hard to generate growth in the past.
But in Q3, we've seen both growth coming from fashion, but also, as you know, we have a strong footprint there in technical logistics and life science client, which was also contributing in the U.K. to an increase in demand.
Mm-hmm. Maybe follow up on that, on the U.S. and the U.K. So when you talk about the U.S. and U.K. improving now, part of that is fashion, then you mention also FMCG in the U.K. Is it any other segments which stick out in terms of the improvements in U.K. and U.S.?
Yeah. In the U.S., it is mostly fashion that was developing well, but we've also had a pretty good quarter for Print & Packaging Solutions in the U.S., contrary to what we've seen in Germany. When we look to the U.K., it was mostly driven by life science and technical logistics, but we also saw good volumes on FMCG and on the fashion side. So what I also said, in general, for the report, it was good for us to see that we had the growth in all regions and across all customer segments. So very balanced for Q3.
Yeah. The mood, especially maybe in the U.K., which has been troublesome for some time, does it feel like you see the light at the end of the tunnel here, or is it temporary factors which bring things up?
No. In the U.K., we also are exiting two lease agreements, which was announced in Q2, and that will certainly help going forward. About the demand, it is always hard to forecast, and you know that the U.K. economy is still a bit up and down. We can see that we have a strong funnel in both of our segments that we talked about and that opportunities are materializing. Let us say on the demand side, I am cautiously optimistic for the U.K., and then we see the benefits of the lower cost base next year starting Q2 probably.
Mm-hmm. In general, when you talk about new customers, because you have a number of new customers coming in, is it mainly the automotive customers that you are referring to? Because I know that you have some new automotive customers coming on, or do you see that in other sectors as well?
No, it is across the board actually. It is not only lopsided on the automotive side. It is a bit quieter right now due to the global chip shortage in electronics. It has been a customer segment where we usually saw good growth, and now it was only 1% for the quarter. All the others are developing nicely with new clients across the board. I also must say, in Print & Packaging Solutions, online print and publishing is developing nicely as a counterpart to the declining traditional print.
Mm-hmm. On print, you saw flat growth in print, but still the margin was half, and you were referring to the automotive going down. Is the margin better on the automotive side than it is in the rest of the business? Is that how we should interpret that?
No, I would say that if the volumes in automotive, for example, are going down, there is much higher fixed cost rate associated with those volumes than we see with online print and publishing. As we go into Q4, we talk about lowering our cost base going forward. That is exactly targeting that area where we adjust to the lower volumes. But on the other hand, in our online print and publishing, that is a very profitable business area for us.
Okay. So it is basically regular operational gearing pushing down the profits in the print.
Yeah, exactly.
Okay. All right. Excellent. Thank you very much. That is all for me for now.
Yeah. Thank you, Markus.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad now. We will take our next question from Anton Ingildsen Nordea, your line is open. Please go ahead.
Hi. Thank you, and congrats, Florian, on a solid first quarter here. It was sort of encouraging to see the solid organic growth here in Supply Chain Solutions. How would you say that demand developed during the quarter? It seems like momentum is quite solid heading into Q4 here as well.
Yeah. Good afternoon, Anton, and thank you for your good wishes. During the quarter, we saw definitely an increase towards the end. August is typically a slow month, and so it was also this year. July was okay, good. August was on the weaker side, especially in Asia with the chip shortage. That was affecting us there quite a bit. It was very good for us to see in September that Asia bounced back, and all the other segments in market delivered also a good result in September. Yeah.
Yeah. Okay. Seems quite promising for the rest of the year then. What's that development sequentially here on the memory side? Do you foresee any sort of larger problems with that going forward as the situation is now?
I mean, larger problems is a big statement. What we see with the chip shortages is that it will be an up and down. There's no steady supply, and that affects our demand from our clients. What was very good to see is that, especially in September, the growth that we've seen in Asia was then by businesses that we took on to compensate against the lower volumes that are relating to the chip shortage. That is probably the key for success going forward, that we're not only relying on businesses that are directly connected to the chips, that we continue finding businesses that are sort of immune to the chip shortage, or, I mean, it's mostly the advanced chips that are missing.
If we find opportunities that have more simple memory chips or other work that we can do for our clients, that will help us to ease that up and down with the global chip shortage going forward, because I expect that to continue well into 2027.
Yeah. Okay. That's very clear. On the very strong sort of 25% organic growth rate in automotive in the Supply Chain Solutions area, is there any sort of larger one-offs or larger contracts driving this, or is it just sort of overall better momentum against the favorable comps here?
I mean, it's not one-offs, but we've been able to win new business that started beginning of Q3, and that's part of the effect that you see here. But we can also see that within the Supply Chain Solutions business area, we have a higher value add per car, so we are less affected if the volume of cars going down. With the manuals, there's only one manual per car. But in Supply Chain Solutions, you can do various services that are linked to one car. So if you increase your value add per car, even if there is less produced, you still have an improvement. And we also have seen good demand in the models of the manufacturers that we work with that are going well. So it's a mix of these three things.
Yeah. Okay. That's very clear. On the print side, with sort of the new efficiency measures you announced here in the quarter and with the new sort of online print contracts coming in here, do you think you're at a solid base, solid foundation to see an improvement here in 2027?
Yeah. I mean, we're adjusting now to the lower volume base that we've seen, and we see that online and publishing is growing. We expect that that will continue to grow in 2027, and we also expect that the traditional print volumes should stabilize around the level that we're seeing now, and that's why we took these measures. I think we will see now in Q4 and Q1 how it shapes out in terms of results for the business area. But for now, we're cautiously optimistic.
Yeah. Perfect. That's very clear and promising. I think that was all from my side here. So thanks a lot for taking my questions.
Thank you, Anton.
There are no further questions on the line, so I will now hand you back to your host for closing remarks.
Thank you all for joining me on my first conference call. It was very good to hear your questions, and I wish you all a nice weekend when it comes. Thank you.
Thank you for joining today's call. You may now disconnect.