Welcome to HANZA Q2 Report 2026 presentation. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. I will hand the conference over to the speakers, CEO Erik Stenfors and CFO Lars Åkerblom. Please go ahead.
Thank you. Good morning, welcome to HANZA's Q2 2026 presentation. Thank you for joining us in the middle of summer. Well, every quarter tells its own story about the company, and the story of Q2 is that HANZA is growing with quality while we are taking the first steps in HANZA 2028. In this presentation, Lars and I will look at HANZA from two perspectives, how we are performing today and how we are building for tomorrow. The presentation will follow a very simple sequence. I will begin with a progress report Q2, then explain these first two steps in HANZA 2028 Horizon and the Fortaco acquisition. Lars will take us through sustainability and the financial development. I will return for conclusions and outlook, in the end, we open the line for your questions.
Let's begin with the numbers that best describe this quarter. When I say that HANZA is growing with quality, I mean three things. We have an organic growth, 9% in the quarter. We have an improved margin, up from 7% last year to 9.3% for comparable units. We have a strong cash flow, SEK 273 million in the quarter, almost SEK 700 million for the first half year. This strong cash conversion is what strengthened our financial position. You see that the net debt versus our adjusted EBITDA is down to 1.4. Our target is maximum 2.5. We also see that the chart to the right, it shows our step-up in sales over the years, and you see also the net debt versus adjusted EBITDA to the right. It's clear that our growth has been delivered with financial discipline.
That's something we are very proud of because growth without margin is not enough, margin without cash is not enough. In Q2, previously, we have delivered on all three. If we look at the market, I would say rather even demand through our segments. In Electrification & Energy Systems, we see stable sales, but also very good long-term demand. We opened a factory in the beginning of the year for Siemens Energy, for instance. Defense & Security, our smallest segment, but also the largest opportunities. I will come back to this. We have new orders already secured and new orders is coming in. Heavy Equipment, strong sales and a very strong demand from different sectors, especially mining. Industrial & Professional Products, also stable, we have an increased order intake, which will move this segment in 2027. Industrial Machinery and Systems.
This segment had lower sales, but it is a product-driven segment, normally fluctuates with customers' installation schedules. We see on order intake that this suggests a recovery. It is not a trend. The picture is rather the same between the segments, and overall, it indicates a continued healthy demand. We all heard about the situation in electronics, certain electronic components, mainly PCBAs and memory circuits, has been tighter availability. We have a very good central sourcing with an office in China working together with also strong local sourcing. They have been able to really manage the situation without any material impact on operations in Q2. The situation remains uncertain, so our mitigating work will continue during the second half of the year, but so far so good. Let us now turn to BMK. I had the privilege of serving as interim managing director, then [Non-English content] during the spring.
I have been seeing the business at close range. I expected the technical level to be high, but I was wrong. It was even higher. It has been a pleasure. From a commercial standpoint, however, there is room for improvement, and we already began with some actions. We see that the company came in with a margin at 7.3%. We are already increasing that to 7.5% in Q2, and this is just the first step in a margin improvement, so we expect to continue. Also, order intake increased compared to Q1, and BMK secured its first major Defense & Security orders. This is important for the continued development. This is a new area for BMK and a huge area, so really good. The integration progressing well.
We call it the purple rain when we put on our signs and stickers, but it is working well, and it should be completed. Normally, you have one year for integration, but this should be completed during 2026. We see the picture to the right, Markus Ernst, who took over as Managing Director from 1st of June, and I, with some regret, have returned to the much quieter role as being only Group CEO. First steps of HANZA 2028. We launched this strategic phase at the Capital Markets Day in March this year. If we look back, every phase is about working on the customer demand. In the previous phase, HANZA 2025, we strengthened the capacity of our manufacturing clusters. In HANZA 2028, we are strengthening the manufacturing technologies. We have the two first steps. Horizon.
It is a program where we are making our manufacturing platform more efficient. We did an acquisition last week, Fortaco. There is a special order cast you can watch for more details. Here, I will just give you a brief overview. These are two complementary steps, and let me then begin with Horizon. To understand Horizon, it is important to understand our industrial logic. Our main focus is manufacturing in Europe for Europe. This is where we build our manufacturing clusters. Outside Europe, we have select factories, we call them gateways, serving specific customer needs. Horizon is then designed to make our manufacturing platform more efficient and easier to manage. That is important for the other steps to strengthen the technologies. In Finland, we have two smaller units in Nivala and Sievi. We have been concentrating some of the orders and machinery to our larger units in [Ylivieska].
You see it on this picture, it was 23,000 sq m in this building, and we just bought an adjacent building of 10,000 sq m more. This is a large unit. The remaining Finnish operation in Nivala and Sievi will now be transferred through a management buyout. Gateway China manufacturing will be discontinued by the end of 2026, this is a smaller unit, 60 people. We've been working together with our customers and developed manufacturing solutions so they can continue to produce. Also very important, we are committed to supporting our people in China. The growth has made it to do some changes also in Central Europe. We had a cluster. We are now separating this into two clusters, Poland and Czechia. This is in line with the HANZA model.
We would like to have one cluster per country, several advantages, same language, same culture, same holiday, same labor law. This is the idea. We are in a stage where we can finally do this. The measures in China and Finland will reduce our sales with approximately EUR 50 million. Sales matter, but profitability and cash flow matters more. We see that the result of this will be better capacity utilization and hence improved profitability. This is the first step, the second step. The Fortaco acquisition. We signed the deal on the 15th of July to acquire five selected factories from Fortaco. It's a carve-out. The background, heavy mechanics, it's our smallest technology area. At the same time, we see a very clear long-term demand, particularly within Defense, but also mining, agriculture, forestry, material handling, off-road vehicles.
This is important that making acquisitions is not our strategy. It is our strategy that leads to these carefully selected acquisitions. We always begin with the customer needs. That's why we do this deal. I think that this map illustrates the industrial logic clearly. We see the factories in Finland, Estonia and Poland. Together, five of them represent about 1,300 people, substantial manufacturing capacity. We are talking about established sites with experienced local management. Five factories, three countries and one industrial logic. That all of these factories are located in geographies where we already have a presence, it means that we're not just adding five dots on a map, we are connecting these five sites to an existing industrial system. That's the strength of our cluster model. That's what creates synergies. Furthermore, this acquisition, this is a carve-out.
They will still keep cabin business. They are doing cabins and we are carving out the heavy mechanics and complex assembly. We will also get a strong new customer base. It's a very limited overlap to our existing customers. We all know that new customers, it's not just today's revenue, it's tomorrow's opportunity. We do expect sales synergy on this new customer base. With that, I will hand over to you, Lars, for sustainability and financial development.
Thank you, Erik. Starting with sustainability and the main activities in Q2. I'm glad to be able to present this slide with the BMK included. So now we only have Milectria outside these KPIs. There are no major changes in the KPIs. I'm glad to see that the accidents, incidents reporting is going down. Otherwise, we're working with DMA updating that for the coming CSRD report. We also are preparing for the annual employee survey that we do on a yearly basis. Of course, we include the acquired companies as well. We have compliance requirements adding to the operation, and we work with adapting to the new compliance requirements with internal processes, also including the newly acquired companies. Looking into the financials, we see a stable company, a stable group reporting Q2 on a clear way towards the financial targets for 2028.
We see a sales growth of 70%. We have an organic growth of 9%, slightly lower than the 20% we had in Q1. It is a little bit seasonal, but it's still a strong organic growth. Erik talked about the shortage of components. We do not see more than a minor effect on the sales in Q2, so the 9% in organic growth is not depending on increased prices on components. We have an operating margin for the comparable units of 9.3% compared to 7% a year ago. As Erik mentioned, we have BMK on 7.5%, two percentage points higher than in Q1, and in line with what they had in 2025. Here we expect the margin to continue to increase quarter by quarter. We have, as an effect on the Horizon project, and in order to increase the profitability over time, we have taken one-time cost.
We have reduced employees, mainly in BMK, and we have decided to wind down the operations in China, and also decided on an MBO in Finland. This will, as Erik also mentioned, be approximately 160 employees that will be reduced within the group and approximately SEK 160 million in sales that will be reduced when these actions are done in the end of the year. This leads to that the group's adjusted operational margin is on a stable level on 8.5%, 7% a year ago. When we see the comparable units of 9.3%, and we compare it to the 9.7% in Q1, I'd like to remind you that Leden is now part of the comparable units. For the full quarter, it was only one month out of three in Q1, so that's one of the reasons for the slight reduction in profitability margin for comparable units.
Erik spoke about the cash conversion and the financial discipline. We can this quarter also report a strong balance sheet and a strong cash flow, SEK 273 million in operational cash flow. Net debt compared to EBITDA, on 1.4. Quite good cash position of SEK 773 million . Equity to assets ratio, which is also strong, 45%. This is important, and we have said this many times, that having a strong balance sheet gives us the possibility to continue to invest, to expand, and also what we announced last week, do acquisitions like the Fortaco carve-out deal. Without increasing the number of shares. We can do this with our own financial resources and new credits. Looking into the segments, we see the segments, Main Markets and Other Markets, they are fluctuating, depending on the type of products, the customer, what customers are increasing and decreasing.
We also see strong, stable development of both these segments. Remember that we will adjust the reporting into the new organization of regions starting from the beginning of 2027. We have Main Markets being more or less on the same net sales level as in Q1, and a stable margin on 8.5%. For comparable units, a really strong margin of 9.7%. Segment Other Markets, slightly down from Q1. Still on a stable margin, 8.5%, and for comparable units, 8.9%. Looking into the acquisition that we announced last week of the selected factories from Fortaco. We will pay initially on the enterprise value of EUR 144 million. It is net debt or debt-free with normalized working capital, this EUR 144 million, and that is approximately 8 x the rolling 12 months EBITDA that we pay on the initial consideration.
There is an additional purchase price capped to EUR 56 million. The total payment for this acquisition is EUR 200 million, and it is based on the organic growth in sales in 2026 and 2027. We will pay in two tranches at the beginning of 2027 and the beginning of 2028. Both the initial payment and the earn-out will be paid with existing funds and the credit facilities. There are no financial conditions, and the closing expected to be, I would guess, early in Q4, and it is subject to normal regulatory approvals and also approval from certain Fortaco financial stakeholders. This is how our first half year would look if we make in pro forma and include the Fortaco factories. We would increase from SEK 5.2 billion to approximately SEK 6.2 billion.
Quite a big company and well on the way to the SEK 14 billion that we have as a financial target for HANZA 2028. The Fortaco factories we expect to, as a start, deliver on approximately 9% on the EBITDA margin. We expect this to have a positive contribution on the EPS from the beginning, from the acquisition. We will integrate this as we normally do into the HANZA cluster model, and expect to increase the margin not only in the acquired companies but also in total HANZA. The effect on the HANZA balance sheet and cash flow, we expect the net debt to continue to be below our financial target of 2.5 x the EBITDA. We expect the equity to asset ratio to still be above our financial target of 30%.
Just to remind you that the HANZA 2028 targets net sales of SEK 14 billion and the EBITDA margin of at least 9% and equity to assets ratio of 30%. Again, net debt to EBITDA of maximum 2.5%. Looking into the shareholding structure, no major changes from end of Q1. What we have seen in Q2 is that both Erik, the Chairman, Francesco Franzé, and the Board Member Lars-Ola Lundkvist, have increased their holding in Q2. By that, I leave back to you, Erik.
Thank you, Lars. Let me conclude by bringing the different parts together. Q2, we delivered 9% organic growth, 9.3% operating margin in comparable units, and SEK 273 million in cash flow operations. BMK improved its margin, and we see an increased order intake, also secured the important first D
efense & Security orders. Horizon will improve efficiency in our manufacturing platform, and Fortaco acquisition will strengthen the technologies. If there are three things to remember from today, I think it was interesting that Lars pointed out that we will still have a strong financial situation after this large acquisition, it's really good. If there are three things to remember, I would say that we are growing with quality. That creates financial freedom, and we're using that freedom to put HANZA 2028 into action. With that, we are happy to take your questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Anton Ingves from Nordea. Please go ahead.
Hi, Erik and Lars. Thanks for taking my questions. Starting off maybe on the Defense orders here and the first major order in BMK. Are you able to quantify this a bit more and maybe elaborate a bit more of your expectations here in this segment, for 2027?
The challenge we have is that everything is secret. The only thing we can say is that we have from well-known Defense company, a new Defense company for HANZA. We are working, of course, with Saab and Patria, but new Defense company, a substantial order, and an entrance for more orders. I wish I could tell you more. It has to be revealed by the segments, our customer segments later on. Sorry about that.
That's fair. Seems to be quite a good opportunity then and on the Def ense order intake in remaining of HANZA. Do you still see a pick up here for even stronger deliveries in 2027?
Yes. Of course. Defense is here to stay for sad reasons, but still. What they need is, of course, mechanics. This Fortaco acquisition is really something that comes really well and also having units in Poland, important area for the Defense industry. So we expect orders to increase, and we have already very good relations with the companies, as I said, in Scandinavia, and now we are moving on in Germany, so we expect this to grow.
Okay, perfect. That's clear. On the Horizon program, obviously taking some measures here, with closing of the site in China and the two factories of the management buyout in Finland. I understand you cannot give an exact answer here, but are you planning any further actions, going forward in this program?
Of course, that's something we cannot reveal, I would say that we have done the major steps. For us, it's important now that we're able to focus investments, resources, capacity to larger units, and also take on larger customer orders coming in. That's a very important step, this Horizon, but we have done a lot of actions already and also things which are not on the dimension that we should report in Q2. I wouldn't expect any more large activities.
That's very clear. On the CapEx side, I note you had some SEK 100 million here in tangible CapEx during the quarter, quite a big pickup, compared to last year. What is this mainly related to, and what do you expect here for the full year 2026?
We did an acquisition of a strategic factory in Finland, Joensuu factory. That was the main activity in Q2. The CapEx goes a little bit up and down between the quarters. On a longer perspective, we do not see any increased need of CapEx. It will be on the same level as we have seen before. Of course, increasing when we have an organic growth. We also see that the acquisition of the Fortaco factories will actually decrease the need of CapEx going forward since we will be buying companies that are well invested.
Okay, perfect. On the demand here during the quarter, obviously strong organic growth here. Did you see any change in momentum during the quarter and related to that, the momentum here heading into Q3?
No. We have a good momentum. The only thing I said was regarding this, Industrial Machinery and Systems where this fluctuates between the quarter. Other than that, we have a strong demand. We are in a good position. That's also why it's so important, coming back to your previous question, that we have this strong cash conversion because it makes it possible for us to increase capacity either through acquisitions or through expanding our current facility, like Lars pointed out in Joensuu.
Okay. Understood. Very clear. I'll get back in line for now. Thanks a lot.
Thank you.
Thank you.
The next question comes from Marcus Develius from DNB Carnegie. Please go ahead.
Hello, Erik and Lars. Congrats on the good report. A few questions from my side, please. Coming back to the shortages we saw with electric components, could you give some more color on this? Would you say that it's more of a problem now versus the beginning of the quarter? Maybe going into, is this more a BMK type of problem? If you could shed some light there.
Yes. First of all, yes, like you state, this is an area for electronic components. That's a shortage area, more directed to these specific areas. We have been able to navigate through the second quarter without any material impact on operations, also in BMK. So far, so good. We have a really good sourcing team, both centrally and locally. The uncertainty remains, so we need to continue with this work, but we haven't had any major impact. I think that in this kind of shortages, as always in the beginning, it's hardest, then you find ways to work and find alternatives and so forth. I cannot promise anything, but we have been really good on working with this so far.
Very good. Are there any other types of shortages that you've noticed?
Not really. We are not restricted by shortages, no.
Okay. Just looking at the margin sort of recovery story for BMK. The Main Markets underlying it is strong at 9.7, if I remember correctly. Could you go into the sort of recovery story? Because if you compare it to Leden, for example-
Yeah
if I remember correctly, it was a lot of sort of capacity constraint driven. What should we expect sort of year-end margin wise when we look at BMK?
May I start, Lars? I'm sure-
Yes
you would like to comment this, but I think it's really important that this is something you should have intentional. We acquired a company called Leden, we acquired a company called Orbit One. Both of them came in with margins much lower than HANZA, and they were inside these comparable units now. With this acquisition that came in below our margin, we have restored the margin. Now we have 9.3, including these units. Now the margin is downloaded by the next acquisition, BMK, but the previous acquisition has done really well. That's the conclusion you can see from the 7% to the 9.3% margin increase from last year to this year, that we have been able to restore the margins in the acquisitions, and I think that is one of the skills we have. Also we see that's on the margin side, but also on the sales side.
We have talked about many times that when Leden came into HANZA, the sales almost exploded. We see also that BMK inside HANZA, we have sales synergy. There is an advantage. The company we are acquiring performs better inside HANZA than it did as a standalone company. Now over to you, Lars.
No, I think you answered in a good way. I actually do not have anything to add. Of course, we cannot give you any forecast on the coming quarters. What we said in the report is that we expect BMK to continue to increase the profitability from this 7.5% coming from 7.2% last year. That's an ongoing work in line with what Erik said, that we have been able to increase the margin in the companies that we have acquired.
Is there any structural reasons why BMK shouldn't be able to sort of reach this strong underlying margins?
No. It's a fantastic company that serves a much higher margin. It's a family-owned company, maybe without the clear focus on the commercial side, more on the technical side. I think that's what we're adding to this fantastic company.
Okay. Thank you very much. Those were my questions.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Thomas Blikstad from Pareto Securities. Please go ahead.
Good morning, Erik and Lars. Three quick questions. I'll take them one by one. First, on the working capital development, again, very good in Q2 given the growth. I guess some of it was related to factoring, and just wondering if you could give some color on the impact here and whether this working capital level is sustainable going forward.
You know that our CFO, Lars, has a black belt in working capital?
Absolutely.
Good morning, Thomas. I saw you mentioned that the SEK 30 million in positive change in working capital, you expected that to be from factoring. Actually, this time you were wrong. It's not any effect from the factoring. It's just good working with reducing the working capital.
Any particular drivers that I should keep in mind going forward or?
No. I would say that SEK 30 million with the size of the balance sheet that we have is not a major figure. We normally see in Q3 that we need to increase the working capital a little bit due to vacation period. Otherwise, I wouldn't say that there is any sort of sustainable driver for this.
Okay. Thank you. Then, the second, a bit technical question, but I saw that the cost from business development decreased to just SEK 1 million in Q2, which explains, I guess, a few basis points of the underlying margin expansion. Is this a new sustainable cost level, do you think?
The third segment that we report shall be close to zero or not have any major cost unless there are any special projects. We distribute all the normal operational costs for central function. They are distributed out to the Main Markets and Other Markets. Of course, next quarter it can be that a few costs that we are not distributing, but I expect you, based on the size of HANZA, that the third non-operational segment shall be not important at all for the total view of HANZA.
That's clear. Thank you. Just the last question, a follow-up on the CapEx. You mentioned that Fortaco will not need a lot of investments now. Is that because utilization is currently low, and you can quickly ramp up, or did I misunderstand?
Maybe I was not clear about that. The fact that we do this acquisition of the Fortaco sites will lead to the investments in our current business within HANZA will be reduced. Also what we see is that the factories that we take over have good standard, they are well invested. On the other hand, this heavy mechanic industry is more heavy on machinery and equipment and has a higher percentage of depreciation compared to what we see in other parts of HANZA.
That's very clear. Thank you. That's all from me.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Okay. Thank you for your questions and for joining us today. I also like to thank all our colleagues who continue to support our customers throughout the holiday season. To those of you taking some time off, I wish you a restful and enjoyable summer. Look forward to speaking to you soon again, and thank you. Have a great summer