Hello and thank you for joining the GARO Interim Report, January to September 2025. My name is Harry, and I'll be coordinating your call today. During the presentation, you can register a question by pressing *1 on your telephone keypad. If you change your mind, please press *2 to exit the queue. I will now hand over to CEO Jonas Klarén to begin. Please go ahead, sir.
Hello and welcome everyone to GARO's Q3 presentation. I am Jonas Klarén, CEO, and as always, we appreciate you taking the time to join. Our focus this quarter has been turning structure into rhythm and rhythm into results. With me is our CFO, Helena Claesson, who will take you through the financials shortly. First, let me share the key developments from the last month. Next slide, please. Let's look at the third quarter and how GARO is progressing. The overall picture is one of steady improvement. We're building momentum across the group and beginning to see structure turning into rhythm. Electrification continues to be our financial backbone, performing steadily across markets. We see positive momentum within installation products and stronger project pipeline, particularly in the U.K. and Ireland. The Swedish residential market is still slow, but we're starting to see signs of increased activity.
Our focus is on sharpening sales integration and preparing for the next market upturn. E-mobility remains challenging as the home charging segment has become a clear low-price market. We are staying disciplined, simplifying the portfolio, reducing inventory, and focusing on professional and public charging where our strengths lie. Technically, the Entity Pro platform is stable, and the LS4 platform continues to gain traction on export markets. Step by step, we're gaining control and positioning the business for recovery. On the leadership side, collaborations between sales, production, and product development are much stronger, and the organization is starting to find its rhythm. We have one unified Swedish sales team and better alignment across the group. Operational control and liquidity have improved, creating a stronger base for what is ahead.
We are now refining and executing the group roadmap to ensure every part of GARO contributes to a more resilient company as we move into 2026. In summary, Q3 shows that our plan is working. The fundamentals are improving, and we are continuing to build GARO step by step for the long term. Over to you, Helena. Next slide, please.
Thank you, Jonas. As usual, I would like to start by looking at the financial summary for the third quarter. Net sales amounted to SEK 251 million, a decrease of 7% compared with the same quarter last year. GARO Electrification showed a stable quarter, with sales almost in line with last year. It is very pleasing to notice that our product group, Electrical Distribution Products, showed growth of 4% compared to the year's earlier quarter. Also, our project business seems to be recovering after the summer. E-mobility continued to develop weakly, with a 22% decrease in sales in the quarter. Gross margins have been on similar levels to previous quarters, where stronger margins within GARO Electrification have been offset by lower gross margins within GARO E-mobility. The adjusted EBIT for the quarter amounted to SEK 2.5 million compared to SEK 0.4 million in the same quarter last year.
EBIT for the third quarter amounted to negative SEK 1.6 million, where the result was charged with SEK 4 million in termination costs for the departing personnel. We have a significant imbalance between the two business areas, GARO Electrification and GARO E-mobility, where the latter weighs on the group's overall results. Next slide, please. Now moving over and looking at the two business areas separately, starting with GARO Electrification. Net sales amounted to SEK 297 million in the quarter, SEK 3 million less compared with the same quarter last year. Sweden experienced a decline of 13%. On the other hand, our sales to the Nordic countries grew with 5%, and the sales to Europe, excluding the Nordic countries, showed growth of 18% in the quarter.
Looking into the different product groups, sales within Electrical Distribution Products increased by 4% compared to the same quarter last year, while sales in product areas Project and Temporary Power both decreased by 12%. However, sales within Project were sequentially higher in September. Anchored current order intake indicates that October will be a good month for project business. This indicates that GARO's seasonality also applies for this year, where the fourth quarter normally is GARO's strongest quarter. Adjusted operating profit amounted to SEK 22 million compared with SEK 20 million in the same quarter last year. The result in the quarter is explained by growth with strengthened gross margins in both Ireland and in the U.K., which has then partly been offset by the costs of ongoing ERP projects.
Our work with the implementation of a new ERP system has reached an intensive phase involving a high rate of reinvestments, but the project is crucial for our long-term efficiency. Adjusted operating margin came in at 11% compared to 10.3% last year. EBIT for the third quarter amounted to SEK 21 million, where the result was charged with SEK 1 million in termination costs for the departing personnel. Next slide, please. Now we move and focus on the GARO E-Mobility business area. Net sales amounted to SEK 54 million for the quarter, giving us a negative growth of 22% or SEK 50 million compared with the same quarter last year. In the quarter, collaborations with E.ON and Hyundai have resulted in GARO delivering a large number of LS4s to the Hyundai European factory in the Czech Republic.
Furthermore, the dialogues have also created business with ZSE in Slovakia for the Kia factory, where GARO will deliver semi-public charging. The adjusted operating profit for the quarter amounted to negative SEK 19 million and is fully explained by the low sales and product mix. EBIT for the third quarter amounted to -SEK 22 million, where the result was charged with SEK 3 million in termination costs for departing personnel. Next slide, please. Now looking into our cash flow and our balance sheet, cash flow from operating activities before change in working capital amounted to SEK 5 million. Cash flow from operating activities after changes in working capital amounted to SEK 11 million. Tied-up capital from inventories decreased net with SEK 18 million in the quarter. We have a deposit with a supplier for materials ordered but not yet called off.
The deposit, being in euros, has remained unchanged during the quarter and amounted to the equivalent of EUR 43 million. Our net debt deposit amounted to SEK 270 million compared with SEK 319 million in the year's earlier quarter. We had an equity-asset ratio of 51.5% and available liquidity, including overdraft facilities, of SEK 50 million. In July, as a result of improved cash flow over time, GARO's available overdraft facilities were reduced and EUR 2.5 million repaid. Now back to you, Jonas. Next slide, please.
Thank you, Helena. Let's move to Sweden. Because as we say, when Sweden works, GARO works. The Swedish organization is now in place and starting to perform as one team. Daniel Emilsson is firmly established as Country Director, leading a unified sales organization across both Electrification and E-mobility, together with Daniel Bentzer, our Sales Director. This structure is giving us clarity, speed, and accountability. Decisions are being made closer to the market, and collaborations are improving week by week. With Roger Törnberg and Franz Svanepaar now joining as Business Development Director, we are increasing our ties with installers and wholesalers, restoring market confidence, and reconnecting GARO with its roots. In short, the commercial engine is starting to turn again, stronger, more focused, and much closer to our customers. Next slide, please. Over the past month, we have focused on creating a clear and predictable framework for how GARO operates.
We now have an integrated structure that connects strategy, operations, and leadership, turning our plans into consistent execution across all markets. Our work is centered around four priorities that define how we move forward: organization and execution. We have established clear roles, country accountability, and a consistent leadership rhythm across the group. Product and technology. We are simplifying the portfolio, securing compliance, and strengthening competitiveness in each product line. Operations and capital. We are improving efficiency, releasing cash, and optimizing factory utilization step by step. Market and customer. We're rebuilding relationships, improving service quality, and restoring brand credibility in every market. Together, these four priorities form the foundation for GARO's next phase: one of stability, profitability, and sustainable growth. Next slide, please. Looking ahead, this roadmap shows how we connect today's recovery with GARO's long-term mission.
Each phase is designed to strengthen our ability to deliver reliable, innovative, and Sustainable Electrification Solutions across Europe. In 2025, our focus has been to stabilize and simplify, to secure profitability, reduce complexity, and fully align our leadership. In 2026, we move to build the baseline, completing our digitalization programs, improving capital efficiency, and preparing for controlled growth. In 2027, we will accelerate and scale, expanding our product reach, leveraging our manufacturing capacity and governance installer trust in all markets. From 2028 to 2030, we aim to lead and evolve, positioning GARO as a sustainable leader in Electrification and expanding in energy solutions. Step by step, this is how we move forward towards our mission: to power the energy transition and to a more sustainable world. Next slide, please. As we close the third quarter, we continue to see steady progress in how the organization works together.
Leadership and collaborations are strengthening across key functions, and the company is finding its operational rhythm. Electrification remains stable with solid margins, and our international markets, particularly Ireland, the U.K., and Finland, continue to perform well, even as the Swedish residential market remains weak. E-mobility is still under pressure, but we are now stabilizing the business through focus and cost control. Cash generation and liquidity have clearly improved, giving us room to move with control into the next phase. Looking ahead, our focus is clear: execute the group roadmap under one leadership rhythm, continue to drive efficiency and rebuild trust, and stay ready to accelerate when the market turns. In short, GARO is becoming a more structured, predictable, and resilient company, step by step. Next slide, please. Thank you for listening, and we are now ready for questions.
Thank you, Jonas. To ask a question, please press Star followed by one on your telephone keypad now. If you change your mind, please press Star followed by two to exit the queue. Finally, when preparing to ask your question, please ensure that your device is unmuted locally. Our first question today will be from the line of Sofia Sörling with DNB Carnegie. Please go ahead. Your line is open.
Okay. Thank you so much for the presentation. A couple of questions from my side. I will start with e-mobility. You mentioned a tough market in the home charging segment and a more focus on public chargers ahead. How would you assess this market segment in terms of your own position, your product offering, and also the competitive landscape? That is my first question. Maybe I can add also, what countries are you focusing on? Thank you.
Just let me be clear. We remain committed to home charging, but we are not competing in the low-price consumer race. We are focusing on the professional home charging where quality and safety matters most, and also developing our web tool and our app to be ready to relaunch them at the end of the year again to make it easier and simpler for installers to use our products. We have the same focus on all our markets, I would say.
Okay. So it's not that you are now preparing for a new focus and new investments in public. You both then be rather close to what you have done more recently as well.
No, I wouldn't say that. We still remain committed to the market. What we have been working on now, firstly, is to make the platform stable, and as it has been now for the last year, hardware. Now we're improving the software so it becomes easier for our installers to use it.
Okay. When do you expect this software then to be more updated? Will it be the beginning of 2026 or already end by 2025?
We are beta testing now, so we will release it as soon as possible, hopefully by the end of the year.
Okay. Also, another question then on e-mobility. You continue to have EBIT losses in this quarter as well. What is your expectation here and plan to reach break-even within this segment? Do you only need more volumes, or could you do more cost measurements within this segment? Is it possible? What is your plan here to meet break-even?
The plan is to work our way through our stocks. We are still, as many of our colleagues in the e-mobility business, very much high on stocks, still due to the component crisis that was a few years ago. The plan is to continue to chew on the stock and releasing as much of our products as possible across all our markets. We have a very distinct plan for all our country managers committing to volumes now, going into Q4 and also for the whole next year.
Okay. All right. Okay. Let's move to Electrification. You mentioned actually that it's quite strong operations in the U.K., Ireland, and the Finnish markets, which is a little bit different from other construction-related capital goods companies, in my view. What would you say is the underlying factor why these regions are strong for GARO during the quarter?
I would say for Ireland, it is a factor driving for many years now quite a high GDP that leads into investments. The segment of data centers is still very active in Ireland, where we supply a lot of components from GARO Ireland. The U.K. is, for us, sort of an emerging market still. We have been in the U.K. a few years, but now it is starting to really pick up, I would say. That is more of the whole range of our products going out in the U.K. that is creating this. It is a huge market compared to Sweden. Residential planning is around 300,000 new apartments or homes in the next year compared to Sweden, as it is around 28,000, roughly, the prognosis. That is picking up a lot. In Finland, it is basically we are very strong in car engine heaters.
That is mostly the segment that is going strong in Finland for us, as Finland as a country has not turned into e-mobility quite strong yet. It is a bit slower than Sweden and for sure Norway. This is the season now for car heaters in Finland.
Okay. So would you say it's typical for this quarter, or do you expect continued high or at least solid demand in these regions ahead?
Yeah, we see a high demand, and we see also e-mobility picking up in Finland, which is really fun for us.
Okay. Great. And then the last.
With the answer to that.
To the question. Okay. And then just a final question on the financial situation. If the E-mobility now segment doesn't improve and it's quite a lot of uncertainty related to the construction market, how do you view your financial situation at the moment and into 2026?
As I said, we are continuing to work our way through the stocks. 2026 will be tough for us on E-mobility for sure. We are seeing that the plan is working. We are pulling out more from the stocks. As some of you remember, we still have, I would say, very high focus and commitment now from all our country managers. We are staying this course. I think the forecasts will show that we can do this. I would say it's a very tough race, but it's doable. We know how to do it. The only solution is to sell.
Yes. Okay. Thank you so much for answering my question.
Thank you.
For any further questions, please press Star followed by one on your telephone keypad now. With no further questions on the line at this time, I'd like to hand the call back to Jonas Klarén for some closing remarks.
All right. Thank you all for listening. It has been a pleasure. I wish you all a good Friday. This is all for us. Thank you.
This concludes today's conference call. Thank you all for joining. You may now disconnect your lines.