Ladies and gentlemen, welcome to the Interim Report, January to June 2020 webcast. My name is Ruby, and I will be your moderator for today's webcast. If you would like to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I will now hand over to your host, Patrik Andersson, CEO of Garo. To begin, Patrik, please go ahead.
Thank you. Good morning, everyone, and welcome to the presentation of Garo's second quarter 2020. My name is Patrik Andersson, and I'm the CEO of Garo, and with me today, I have Helena Claesson, our CFO, to present the financial performance. Next slide, please. Short introduction of the company. Garo was founded in 1939, which means that we have been over 80 years in business. We develop and manufacture innovative products and turnkey solutions for the electrical installation market. We divide our business into two business areas: Sweden, which consists of our Swedish operations, and other markets which cover our business in Norway, Ireland, Finland, Poland, and our newly established company in the U.K. We have production on four sites: two in Gnosjö in Sweden, where we also have our head office, one in Värnamo in Sweden, and the fourth in Szczecin in Poland.
We are approximately 400 employees in the group. Next slide, please. Product areas. Our business consists of four product areas, and on this slide, you can see the different product areas' shares of the total sales for the first six months this year, compared to the same period last year. Our largest product area is electrical distribution products, which contributes to almost half of our revenues, where we saw a small decrease in the quarter, with Sweden showing a stable development while other markets decreased due to the pandemic. Sales within E-mobility accounted for 25% of the total sales, which is up from 22% last year. E-mobility showed a good development in Sweden, while other markets were more or less at the same level as last year due to the COVID-19 situation. Our protection product sales were stable in the quarter and accounted for 22% of the sales.
Our fourth area, temporary power, decreased and now constitutes 6% of our business, down 1 percentage point compared to last year. Next slide, please. Operational highlights. Sweden was stable in the quarter, while the lockdown measures had a negative impact on sales in other markets, particularly during April and May, which led to lower sales in the business area. Vacationing at home during the pandemic contributes to strong sales of recreational products used to measure, control, and electrify marinas and camping sites. We also saw a good demand for our new cable cabinets within the project business, with delivery starting this year. The E-mobility in Sweden increased sales by more than 30%, driven to a large extent by sales of our wall boxes. In May, Garo is strengthening its offering by acquiring 70% of the shares of EV Charge Partner, a company active with service and support within E-mobility.
Garo can now offer a complete solution to the market with E-mobility products, power supply, and service and support. Next slide, please. Recreational products and cable cabinets. Vacationing at home with an RV or boat has boosted the demand for recreational products used for measuring, controlling, and providing electricity to camping sites and marinas. This is an area where Garo is a market-leading provider. New cable cabinets were launched in the first quarter, and delivery during the second quarter was good. These were developed to meet the market demand for environmentally friendly, robust, and user-friendly cabinets. Here we can see clear synergies between the product area project and E-mobility. Next slide, please. Product development. In the first quarter this year, we launched our own fast charger named Atle for the European market.
The charger is developed in-house and stands out in terms of user-friendliness, reliability, and durability, and can be used to charge all electric vehicles on the market. We have also used environmentally friendly materials, for example, the casing is made of a material called nylon. The design of our charger, wall box, and charging station are similar to fit into the Garo range. This gives the customer a complete product solution. The initial response from customers has been positive, and delivery is planned to start during the third quarter of this year. In the beginning of 2020, we launched the new box with two outlets, the Twin box. The product makes our product range even more complete and becomes of high importance when you need to charge two cars at the same time. Also, this product is, of course, designed to fit into the Garo range.
A built-in smart master card for wireless connection to the property's network makes it easy to control the charger via the smartphone or computer. Next slide, please. Sustainability. Sustainability is important for Garo and our stakeholders. We have chosen to focus on seven of UN's Global Goals, where we believe Garo can make a difference. You can see on the slide which seven goals that we have been chosen: number seven, eight, 10, 11, 12, 13, and 16. As a market-leading developer of charging infrastructure for the electric cars industry, we are in the front line of enabling the development towards a fossil-free society. Material selection is a focus area in our product development. Worth highlighting is that many of our newly developed products have been built with more environmentally friendly, corrosion-resistant materials, nylon. Now over to you, Helena. Next slide, please.
Thank you, Patrik. I would like to start with some financial highlights from the second quarter of the year. Despite COVID-19 and its effects on demand in many of our markets, sales have been fairly stable during the quarter, down by 4% in the group and amounting to SEK 238 million. Operating margins came out strongly at 12.7% and up from 9.7% in the same quarter last year. This was, among others, a result of a positive product mix, lower sales costs, and higher efficiency in production. We have also, in the quarter, seen a positive currency effect in operating margins of SEK 5.9 million. From a sharp fall in March of the SEK and the NOK rates towards the euro, since April, these currencies have rebounded back.
At the same time as we hedged about 70% of our need of Euro, the currency movements had a negative impact on our financials, amounting to SEK 3.3 million in the quarter. Also, during this quarter, an efficiency program was carried out, affecting results negatively by SEK 2.3 million. Next slide, please. Now looking into net sales by product area. Our largest product area, electrical distribution products, and our project business were stable in Garo, Sweden, while in Garo, other markets, those two product areas decreased by 19% combined. The main reason was the lockdown measures following the COVID-19. Temporary power continues to have lower sales in Sweden but stable in other markets, even if it is on lower volumes.
The demand for E-mobility has recovered since the drop in March, and sales increased with 17% for the group compared to last year, where the majority of the growth in Q2 came in the Garo, Sweden business. Next slide, please. Now looking into the two business areas separately, starting with Garo, Sweden. Net sales amounted to SEK 166 million in the quarter, which is an increase of 4% compared to the same quarter last year. Market for electrical distribution products in Sweden was stable during the quarter, and Garo's sales in this area, as well as in the project business, were in line with the growth of the market. The quarter is a season for sales of recreational products, power supplying marinas and camping sites, as Patrik mentioned before. Within project business, we have seen good sales of our new cable cabinets. Temporary power continued to be weak.
E-mobility had a growth of 31%, driven by the demand of wallboxes, and we also made our first delivery of the Twin box. EBIT increased and margins improved to 11.2%. This was explained by positive currency movements mainly affecting this business area, a positive product mix, and lower sales costs. Also, in this business area, here we have SEK 2.3 million as an effect of the efficiency program carried out this quarter. Next slide, please. Looking into Garo's other markets, we saw a decrease of sales of 16% in the second quarter as a result of trade restrictions in different markets due to the COVID-19. In Ireland, for example, construction sites were closed for a number of weeks. Volumes were low in April and May but improved towards the end of the quarter as the market started to open up again.
Finland was the country in the business area with sales growth during the quarter compared to last year. This is explained by a broadening of our product offering. Operating profit increased and margins improved to 16.1%. This is due to a positive product price mix in Norway and improved efficiency in the Polish factory. Next slide, please. The COVID-19 virus and the restrictions to prevent the spread of the virus had a fairly limited impact on the sales in Sweden but more so in other markets, where the authorities took more restrictive lockdown measures than in Sweden. Sales volume, as I said before, were low in April and May, while we saw pickup in sales toward the end of the quarter as markets started to open up again.
The sharp depreciation of the SEK and the NOK in relation to the euro rate led to significant exchange rate losses in the first quarter as a lot of our purchases were priced in euro. These losses have then rebounded back in the second quarter. Next slide, please. Looking a little bit into cash flow and balance, cash flow from operating activities amounted to SEK 10 million compared to SEK 25 million last year, mainly due to lower account payables and higher working capital requirements. During the quarter, we have had investments, excluding the acquisition of EV Charge Partner, of about SEK 12 million, where approximately half of this is related to investments within product development. The acquisition of EV Charge Partner amounted to SEK 5.6 million with 70% of the shares. There are possibilities to acquire the remaining 30% of the shares in a two-step solution expiring in 2025.
In connection to this, we also acquired the property of EV Charge Partner in Gnosjö for a price of SEK 5.3 million. We have a strong balance sheet with a net debt per June amounting to SEK 71 million, which is almost SEK 40 million lower than the same time last year, explained by the dividend for 2019 that was canceled in April this year as a precaution. We have an equity-asset ratio of 56.2% and available liquidity, including overdraft facilities, of more than SEK 100 million. Now back to you, Patrik. Next slide, please.
Thank you, Helena. Strong growth and development opportunities. Our strategy remains the same. The main driver of the growth will be organic growth. A successful product development has been and will continue to be the key of this growth. On top of this, we are always looking for potential acquisitions where we can add either new additional products, product areas, or companies with an edge. An example of this is the acquisition of EV Charge Partner, which we announced May the 15th to strengthen our offer in the E-mobility business. We are also looking at new geographic markets with a focus mainly on the north part of Europe. Next slide, please. Outlook. So far, in the third quarter, we see a stable demand in Sweden and gradually getting cautious recovery in other markets.
the long term, looking beyond the COVID-19 virus, our assessment of the core market conditions has not changed. However, great uncertainty prevails due to the COVID-19 long-term consequences on the economy. The market for the E-mobility is growing structurally, and we see a continuing strong trend with further expansion of the charging infrastructure in all markets. Thank you for listening, and now we are ready for questions.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure you are unmuted locally. We have a question from Oscar Vikström of ABG. Your line is now open. Please go ahead.
Okay. Thank you. Yeah, congratulations on a very good quarter. It's good to see the strong profitability. I just have a few questions, so starting off, could you just give some more details on this positive product mix that you're mentioning within the E-mobility segment? What sort of chargers or products and so forth?
Yes. As you know, we have the wall boxes, we have the charging station, and we have the fast charger, and the mix of this, of course, was good in the quarter. We had DC chargers, and we had a lot of system in the wall box, so in that combination, it was good for the E-mobility. And of course, with the recreational products we mentioned for the marinas and camping sites and also these new cable cabinets, so all this in combination was a good combination for the margins.
I understand. And the synergies between the cable cabinets and the E-mobility, is that it's more like selling synergies that you sell both together, bundled together, or how should we view those synergies?
When you are selling an E-mobility solution, for example, if we are selling 20 charging stations, you need to power supply them, often with a cable cabinet that you mount in the ground. So with that said, we could offer the customer both the cabinets, the E-mobility products, and also now the service and support. So this is a unique offer that we could hand over to the markets.
Okay. Thank you. And then secondly, so these lower selling costs, are they an effect purely of the sort of initiatives that you took earlier in the year, or is it sort of related to COVID with less travel and so forth? And I guess my question is, are there any of these costs that you see coming back maybe in Q3, Q4, or is this sort of a new level of selling costs?
We can say, as you mentioned, we haven't traveled at the same level, and all the exhibitions, for example, are put on hold, so we have had lower costs, but of course, when the economy opens up and so on, we will increase the cost, of course, but not at the same level as last year, but it will increase due to the markets opening up, yes.
Okay. So then.
Because we need to meet the customers, we need to be on the exhibitions, and we need to be out on the market to have that growth that we will increase. So it will increase slowly, yes.
Okay. Great. And sort of if you tie these two questions together, looking now at Q3, maybe both the product mix but also in terms of exhibitions and traveling and so forth, how have things been in the first two months here? Have they been sort of in line with what you saw in Q2, or?
As we mentioned in the report, as you said, we see a stable demand in the Swedish market, and in the other markets, it's opening up. Norway and Ireland are opening up slowly, and it's harder in the U.K., so to say. So we can't say more than that. It's opening up slowly, and Sweden's demand is good, still good.
I understand. And also, I guess, in terms of this positive effect from the currencies, we should expect them probably to also be positive in the third quarter here, I'm assuming, given the development of the Swedish krona, or?
Helena here. I would say that the change from March in Q1 to the development of the currency in Q2, with a stable euro or a somewhat stable euro, we should not see as big currency fluctuations going forward as we have done in Q1 and Q2.
Okay. Understood. Okay. That was all from me. Thank you very much.
Thank you, Oscar.
Thank you, Oscar. We now have a question from Kenneth Toll of Carnegie. Your line is now open. Please go ahead.
Yeah. Thank you. So I was a bit curious about this new Atea charger. Do you see higher demand for that charger than the old charger, the old fast charger you used to sell?
Of course, now when we have the complete solution under the same brand Garo and the same design, and you have a lot of software synergies, of course, we think it will be in higher demand. And of course, when we see in Sweden, for example, today, we have a lot of hybrid cars to charge with AC products. But more and more, when you see pure electrical cars, the demand for DC charging will increase. So of course, we think this is a really interesting area. Therefore, we launched this own development DC charger.
Have you seen any gaps in demand that customers didn't want to buy the old product and waiting for the new one, so to say, that has affected orders or sales for you?
No. I can't say that. No.
Okay. And do you plan to have other powers in DC chargers? Do you expect to broaden the range from the sort of 50 kW to other powers?
Of course, we're looking at it all the time, but it's nothing that I can't announce at this moment. We are focusing fully on these 50 kW DC chargers. Nothing at the moment.
Okay. And then when you read the report of one of your competitors, Alfen, they talk quite a lot about new incentive packages in several European countries, like Germany, UK, France, Spain, and so on, for more government support for investing in electric vehicle chargers and so on. Is that something that you have seen as well, and what effect do you think to see from that?
We can say we haven't seen the effect yet, but of course, we know this support, and we are fully aware of them. But of course, this type of support is always good for the market. So hopefully, we can see a positive effect of that, hopefully. But I can't say it will be that, but of course, this support is always good.
Okay. And imagine if demand was very strong and you all of a sudden had, I don't know, say, 50% or 100% higher orders than you have right now. Would you be able to cope with that from a production point of view?
Of course, we are always looking at the production capacity, especially in E-mobility, as you mentioned. Of course, we are ready for more volumes. But as you say, if the increase with 100% very quickly, of course, you will get some problem because you have to supply all the material, and we have to have the people in place. But we are ready for higher volumes, and we are prepared and our prognosis for more volumes. So we are not afraid for that. But of course, you need to act in the right time to not get into delivery problem, of course.
Yeah, so if you get a couple of months, say, then you will have time to expand production capacity and so on.
Yes. Correct.
Sounds good. Yeah. I think that's all from me. Thank you.
Thank you, Kenneth.
Thank you. We currently have no further questions, but I will reiterate, ladies and gentlemen, if you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad. When preparing to ask your question, please ensure you are unmuted locally. We have no further questions. Patrik, back over to you.
Thank you, everyone, for listening, and goodbye.
Ladies and gentlemen, this concludes today's webcast. Thank you for joining. You may now disconnect your line.