Hello, my name is Malin Siberg. I'm the CEO of Guideline Geo.
Good morning. My name is Jonas Nordstrand. I'm the CFO of Guideline Geo.
We're here to present the Q2 report for our company. We'll start with a brief introduction to the company. We'll run you through the Q2 report and the Q2 highlights. In the end, we will have a Q&A session. Please type in any questions that you may have during the presentations in the chat, and we'll try to respond to them in the end of the session. Guideline Geo, what do we do? We map and model what is below the surface. We use non-destructive geophysical methods to achieve this. For us, we can map and model what's just below the surface, down to approximately one kilometer down into the earth. You can use geophysical methods to many, many different applications. Our main applications and our growth applications are groundwater. Are three.
Groundwater, there is groundwater scarcity and groundwater crisis worldwide, and we can help find new groundwater, but we can also help manage your groundwater in a sustainable way. We can help monitor your groundwater for saltwater intrusion, or for pollution, or for water levels. Another application that is growing for us is ground investigations. Ground investigations is being done by the infrastructure and construction markets. Whatever you want, you need to build, it's can be a road, a, a tunnel, a railway, a power plant, a building, a skyscraper, you need to know your ground stability, and through geophysical methods, you can understand where bedrock is, quality of the bedrock, and the ground stability in different ways, as a way to make sure that you build, build and design stable and reliable over time.
Our third applications is utility locating, and utility locating is all about finding pipes and cables just below the surface in your roadwork, for instance. It's all about knowing where to dig, where to put your excavator to work. More and more countries are implementing regulations about utility locating. Not only locating, but actually creating a digital model of your utilities and infrastructure in the ground. If these are our three main applications, our customers can be found both in the private and in the public sector. Contractors and technical consultants and geophysical consultants are our private sectors and a growing sector. We also sell a lot to governments, typically the groundwater applications. The governments own the water, responsibility to make sure that they survive, the society has is provided with, with, with fresh water.
We do also see quite a lot of sales to academia and research in this field. If this is what we do, who are we? This is the company in a very, very brief. We are listed on Nasdaq, on the First North Growth Market. You can see last year's key financial data. We are on a growth path since 2020, and since last year and since last five quarters, we show positive results. We are a growth company that is profitable. If you look at our size, we have a truly global reach, and customers globally need our solutions. Our global reach is through our direct channel, which is the orange dots on this map, and indirect sales and support through our distribution partner network, which are the blue dots on this map.
We are a Swedish company. We are made in Sweden. Our R&D is in Umeå, our operations, our manufacturing is in Malå, up north, our headquarters is in Stockholm here. This year we celebrate 100 years, so we have a history. We are the only company in this industry that carry four geophysical technologies and methods. This makes us stand out and be unique. Our technology and methods are GPR, ground penetrating radar. Think of it as boat radar, but you look down below into the ground instead. We have TEM, which is where we use electromagnetic fields into the ground. We have resistivity, where you send current into the ground, and seismics.
All these four technologies can be used separately or complementary, to help customers find what they're looking for, in a subsurface. We go to market through two brands, two market leading and well-known brands in our industry, ABEM for resistivity, TEM, and sesmics, and MALÅ, which is our brand for GPR, for the radar solutions. Earlier this year, we published our long-term financial targets for the company for profitable and sustainable growth going forward. Our targets are yearly double-digit net sales growth, mainly organically, and you can see that the comparison for last year's net sales growth was 22%. Our second target is to continuously improving EBIT and reach at least 8% in 2027. As a reference, you can see that 4% was our EBIT last year.
We have a target to achieve positive and growing cash flow every year, and last year we had a positive cash flow of 6.4%. The last target is that we have an ambition to carry out acquisitions in line with the company's strategy going forward. That was brief about the company, and now we are moving into the Q2 report and highlights. I will start off with the financial data. We saw a continued strong order intake in Q2. As you can see, if you compare to Q2 to Q2, we were up 43% and ended up with 45.5 million Swedish kronor. You have to be aware that last year's Q2 was a pretty weak order intake quarter.
Still, if you look at H1, the first 6 months, we have a strong and continued strong order intake with +37%. If you look at net sales, Q2 net sales was -8% compared to last year's Q2, but last year's Q2 was a bit was very strong for us. Again, if you look at the first 6 months, we are positive, we are on a growth plan, and we are according to our plan for the year. Our EBIT continues to be positive, 5th quarter in a row, and it is according to our plan. SEK 2.1 for the quarter. Again, last year's quarter was strong. Last year's Q2 was strong.
Again, for the, for the full year, we are on par with our last year and on par with our plan. The cash flow in Q2 was negative, -SEK 7.5. Not as negative as last year's Q2, but still negative. The main reason for the negative cash flow was that we built stock for the summer period to make sure that we could continue to deliver throughout the summer, but this is pretty normal numbers for Q2. If we do a deep dive into the strong order intake, here you can see Q2 comparisons, but also split by regions during for the 3-year period. I'm really happy to see that we see a strong order intake in all three regions, APAC, EMEA, and Americas, both for the quarter but also for the half year.
I'm also glad to see that the strong order intake, we see that on both our products, both, both our product lines, ABEM and MALÅ, and we see specifically strong order intake on our main products, our growth product lines, that I'll talk a little bit more about soon. We can also see a strong order intake, both from the public and from the private sector, which is good to see in this more turbulent economy worldwide. If we move to net sales, this is the 3-year net sales comparison, Q2- Q2 and H1- H1. As I mentioned, Q2 was negative compared to last year, and H1 is positive 6% compared to last year. The difference shows that we do have a pretty strong backlog going into the remainder of this, of this year.
If we split net sales up into the product lines, ABEM and MALÅ, we can see that we continues to have two strong brands, equally strong brands, and equally important brands for our, our sales. We can also see a trend towards a more stable, more even quarters. This is something that we have started to, to steer against and, and to manage for as a way to increase our operational excellence. It's starting to we are starting to see the results of that, and we will continue to monitor and manage to more even quarters going forward. I will do highlights of our two volume product lines or best-selling product lines. The first one being the Terrameter LS2, which is our best-selling ABEM product, targeting the water sector specifically.
Here you can see the growth numbers, Q2 to Q2 and H1 to H1 for 3 years. As you can see, we've done a good journey on this best-selling product line. Q2 highlights that I want to mention is that we are starting to see large orders come from more and newer countries. In Q2, we got large orders on LS2s from Germany, from Colombia, from China, and from Middle East and Africa. We have, in the past, always seen good sales in Middle East and Africa, but we're starting to see the need for geophysical methods for the water sector all over the world, which is good for the sales trends for this product line.
In Q2, we introduced a new, a series of, of two instruments for this market, for this sector. two entry-level resistivity instruments, called Terrameter VES and Terrameter VES Max, that we believe will impact this market in a good way. The second growth application that I want to highlight for Q2 is utility locating. Here we have our Easy Locator Core as our best-selling MALÅ product. That was introduced in 2021 here, so here you can only see two-year comparison data, but it's a growing product line for us that goes well for us. Something that I want to highlight for Q2 specifically, that we're starting to see multiple order sales, where customers are buying more than one at a time from us, from more and more countries.
This means that GPR is being adopted for utility locating by more and more countries, we see legislation come in more and more countries, which means that our customer buys not only one, they equip their entire staff with these type of equipment. Countries like US, U.K., Korea, China, Malaysia, we see a good trend here. From a innovation perspective, we did introduce improved AI features with our June MALA controller software release to even more help simplify workflows, make this technology more open for new, new type of users. You don't have to be a geophysicist to be able to run this. You can have any type of contract being out in the field to gather data and get support from our AI features and online guides.
In June, we had a major event in Stockholm. We invited all our global partners, our distributors from worldwide, to come to Sweden for a partner conference. We celebrated our 100 years together with our partners, but we also saw this as a investment in our sales channel, and also to help strengthen our business focus within the company and within our partners, and build the strong relations that's, that's needed to make that happen. We updated our sales channel on where we are today as a company. It's, We are a different company just from a few years ago, and our strategy going forward to make sure that they want to develop their business together with us, going forward.
We provided product and sales training, and we also gave them a glimpse and update on what's coming so that they can be prepared what's, what's coming next to make make the most impact of our things that are, are coming. Really important is to also that we really got solid and good regional feedback where we want to need to improve and what products we need to develop to make sure that we have good solutions and offerings in our main regions. We continue to work on our sales channel, sales channel development, and these are the updates from this quarter, in Q2. In APAC, we signed a new distributor for India, for our ABEM brand.
In EMEA, we signed, during the partner conference, a new distributor for France, for the MALÅ brand. Americas, we see a strong potential on the West Coast, so we relocated one of our salespersons from the East Coast to the West Coast to help us untap the potential on the West Coast of the United States. On the R&D and innovation side, we are continued to show the industry that we are innovation leaders, and we brought 4 new products to market during Q2, which was according to our plan. We introduced that we can have external GNSS to be compatible to our ABEM brand, just as it is for our MALÅ brand, to really help you position the data that we acquire in the field in a good way.
On the MALÅ side, we introduced a MIRA field trailer, which means that, as you can see in the picture, on the down left, that it's easy to tow our larger GPR systems behind a vehicle. On the ABEM side, we also launched, as I mentioned, the two new products, for resistivity for the water sector, ABEM Terrameter VES and ABEM Terrameter VES MAX. We also, on the on the software release, on the MALÅ Controller App, we implemented quite a few new features, but, and including the AI, I just mentioned. With that, I will hand over to Jonas to go through the, the financial data in some more detail.
Thank you, Malin. We're going to look at the net sales per region, and there we have Americas that grew, increased their sales in, in the second quarter. In the half year, they were pretty much stable. EMEA was down a bit in, in the Q2 compared to last year, but they were still on the growth in the half year. APAC was down 10% in the Q2, but I would say pretty much stable in the first half year. These numbers shows a lot of that we have a still a strong backlog, but we have some exports to countries with some such complex administration, mostly according to their administration and tools and exports documentation, import documentation.
We're still on, on plans with everything in the sales. The Q2 EBIT was SEK 2.1 million compared to a strong Q2, 2022, last year's. We have a couple of factors that I want to mention. It's such as we have personal costs that's up due to salary revision. It was, yeah, you know, at least in Sweden, a little bit higher than I think what I was expected, but that's part of it. We also have inflation, both on materials and also on other external costs. Such as, you know, electricity price was getting quite high. We also did some investments in marketing, the partner event, that we think was a really good one-time off.
Despite this, this is what I'm really glad of, it's the fifth quarter in a row with a positive EBIT, and I think it's, it's good to mention it's the fifth quarter. The cash flow, the 2023 Q2 operating cash flow was higher due to strong sales in, in the first quarter. We have, in operating cash flow, we are impacted by increased stock buildup for, so that we get our supplies for just before the summer, Swedish summer period. We, we still invest in in our R&D, you can see compared to last year. The net cash flow is a little bit higher also in Q2 compared to Q2 last year. Malin?
Yes.
Key takes.
Thank you, Jonas. Key takeaways From our Q2 report. We have a continued strong order intake in Q2. We saw solid net sales and positive EBIT, which is according to our plan going forward, we are transitioning it to a stronger business focus within the company, we are continuing to delivering on that strategy. With that, we will open up for any questions that might have been posted in the chat.
Yes, Malin, how does the weak Swedish krona affect your business?
Of course, it, it does affect us. We sell, and, and, and source, mainly in, in US dollar and in euro, so of course, we have a positive tailwind by the weak Swedish krona. We are, since early this year, hedging our two currencies as a way to even out the impact that we see on, on our, on our financials, on the currency fluctuations. We will start to see the impact of, of, of that hedging of, of US dollar and euro compared to the krona.
Jonas, can you elaborate on the cash flow effect from the investments?
Yeah. As you could see in the cash flow report, we are investing a lot of in R&D, and the outcome, as you also can see, on the new features and other new products or that we have been released, that it's quite high, but mostly it's on the R&D, and I think it's if you're gonna still be an innovative company, it's gonna be pretty much about these levels.
Malin, you said that the order intake is strong, but net sales is weaker. Why is that?
Yes, we see a kind of difference between our strong order intake and our net sales in Q2. It is due to that we have seen pretty large orders in the end of the quarter that are still on our books. We enter Q3 with a pretty strong backlog, that is, makes me confident going forward.
Malin, can you also give some more background to the cost increase in Q2?
Yeah, there are, as Jonas described, quite different factors to our cost increase. Inflation, it affects us all, and it affects us in our offices, in our energy costs, in our material costs that we start to see really come into play here. We mitigate that, of course, in different ways. By the price increase that we did in Q1, we saw that that is coming into place, but, but the inflation cost really impacts us. We did see, as, as Jonas mentioned, the, the salary revision for Sweden, that's where we have most our employees, was a bit higher than we had, had planned for, but of course, that is something that all Swedish companies need to will see.
We had the one-time investment in the partner event, that, we think it's a very good investment, but of course, that affects our cost side.
Jonas, we can see in the report that there is a higher investment spending of SEK 23 million for ongoing product development projects and investments. Can you give more background to this?
Yeah. The background is that we are an, we see ourself as an innovative company, and we invest a lot of money in new features, in new products, and so on. This is as far as I can get. I think it's part of our success story, is that we are an innovative company, and I think it's still, it's. We will still be, and we will still invest.
That's all question that has come in so far.
All right. Thank you for attending and listening, and if you have any questions, Don't hesitate to reach out to Jonas or myself. Thank you.
Thank you.