Thank you operator. Good morning, everyone. Thank you for joining us in the middle of the summer. I'm Erik Stenfors, the Chief Executive Officer of HANZA. I will together with our Chief Financial Officer, Lars Åkerblom, present the second quarter 2021. Also reminder that this presentation is already available on our homepage, hanza.com. Now, the second quarter is an interesting quarter for anyone who is following our company. The Q2 numbers shows how well we are progressing in our business model. The Q2 activities tells quite a lot about the future. Let's go ahead and move to page number two. A short market update. In the dialogues we have with our customers, so that's the product-owning companies, we see some clear priorities now.
There is a vivid discussion on how to streamline the supply chain, not only to lower the cost and increase the flexibility, but also to lower the exposure to supply chain disruptions. That's of course, driven by the experience from last year during the pandemic. There's also a refocus on sustainability, which is really good, something we like to work with. It's a lot of discussions how to make your manufacturing process more sustainable and less negative impact on the environment. Also a hot topic, of course, is the shortage of material and components. That also puts the light on the supply chain because you really like to have a short manufacturing process, so a short time between the arrival of the components and the delivery of the ready products.
If we move on to HANZA, we still are affected by some customer areas that was low during the pandemic. We have customers selling equipment to stores, to breweries, to textile industry. We expect them to come back by the end of the year. The good side is that this trend, driven by the priorities mentioned, is related towards local complete manufacturing, which is the core concept of HANZA. That means also that we have seen a number of new customers and products this spring. On top of that, Germany has now reopened, and this gives us a number of also new opportunities. All in all, we are quite optimistic about the sales development, and that's also why we have launched this year, activity program.
We move to page three. We call it Roadmap 2021. In the previous presentations, we have described how our six manufacturing clusters has a different degree of maturity. We are guided by long-term perspectives, so we're building them step by step. In the light of this increased demand for our offer, we have decided to accelerate the development of our clusters. Of course, the different degrees of maturity gives different capacity and also different contribution to the group margin as Lars will come back to. This year, we have decided to accelerate the development. In the first quarter, we started building a new factory in Estonia. We see on the picture here how it looks today. It will be open by the beginning of next year. We also made a strategic acquisition in Finland, a company that has been well integrated now and is really supporting the Finnish cluster.
Moving on to Q2, in Sweden, we launched a quite extensive investment program on the mechanic side, but we also opened a new coating area for electronics. That is to protect components on circuit boards. In China, we decided to move to new premises, so we will eventually have about 8,000 m² . The factory location will take place this quarter, and we also did some new investments. That's where we are right now. Before I move on to tell you a bit about the future, I will give the floor then to Lars, who will tell you about the financial development. I think then Lars, we will move to the next page number four .
Correct. Thank you, Erik. I will guide you through the financials in HANZA Q2. We start with page four, as Erik said, and the sales. We see that net sales have grown, t hey are up 13% and amounts to SEK 634 million. As we are selling mainly in euro, we have a negative effect on the currency, and that is approximately SEK 21 million. We have made an acquisition that has contributed to the sales, approximately SEK 40 million, and then we have also Leden that is not part of the group anymore, since we moved that production to other production in Sweden, and that is affecting negatively with approximately SEK 10 million. If you adjust for those, we have a growth of approximately 10%.
As Erik said, we could have sold more. We are hurt by the shortage in components, and that has affected both the sales and also the result a little bit negative. We are now on a rolling 12-month sales of SEK 2.2 billion. As you can see that the first half year is SEK 1.2 billion. We are on a higher level in sales for the first half year compared to the second half year last year. We have a strong quarter from an earnings perspective. The EBITDA amounted to SEK 40.4 million, and that is 6.4% in margin compared to last year of minus, but the quarter last year was affected by SEK 27.5 million in one-time cost for early decision to make actions in the middle of the COVID pandemic. As I said, the material situation has been strained and has affected the result negative a little bit.
We are now on a rolling 12 months operating profit of a little bit over SEK 100 million. In the first half year, we are on SEK 63 million. Here again, we have a stronger first half year 2021 compared to the second half year in 2020. We move to slide five. We see the two different segments, w e divide the company into the main markets and other markets. The main markets are where we have production and customer in the same geographic area. Again, we see a growth. We have 11% increase of sales in the Main market. We also here have a currency effect, approximately SEK 9 million. We have a really strong margin. We are close to 8% in EBITDA margin. We are comparing to last year, and that is affected with a one-time cost of approximately SEK 10 million.
We also see a really strong profitability in Other markets, and we see also a quite strong sales increase in Other markets. We are up 17%, and here we also have a currency effect of SEK 12 million. This is, I think, very positive. We have for a long time worked with the development of Other markets, and we see in many consecutive quarters that we have increased both sales and profitability in the Other markets. That, of course, is the key to reach the financial goal of 6% in the group total. In the Other markets, we are reaching a margin of 5%. Both segments are affected by the component shortages. It could have been even stronger results in the two segments.
We move on to slide six, looking into the balance sheet and the KPIs. We have an equity ratio of approximately 32%. That is affected by both the dividends that we paid out with SEK 10 million in this quarter, and also negatively affected by the currency exchange rate. We have also made an acquisition that affects the equity situation. We have a net debt that is increasing a little bit in the quarter, and that is mainly driven by the building of this factory in Estonia, but also the need of increasing the stock due to the shortage in components and the little bit delayed sales, as we have mentioned a couple of times now. That has affected both the net debt and the cash flow from operations.
Cash flow is still positive, but if you compare it to last year, we have a real big change in the working capital that has a negative effect this quarter of SEK 36 million compared to a positive effect of SEK 10 million. This we expect to come back when the component situation is getting better. We have a strong earnings per share. We reached SEK 73.73 in the quarter, SEK 1 for the first half year. That is mainly due to the increased profitability, but also the fact that we are able to keep the financial cost at the same level at the growth of the company. Erik, I will leave over to you for looking ahead.
Thank you, Lars. Then we turn to page number seven. I think that due to numbers, it shows a very solid quarter and a progress according to plan. Should not be any surprise for those who have been following HANZA. What's interesting is the market development, where we see that we have this very strong position and we have sales coming in our direction due to different trends and the opening of the German market and returning volumes. All this calls for increased capacity, and that's why we're running this program, Roadmap 2021. We have done a number of activities, as I showed previously, and we will do more activities in our clusters. We are also open for further strategic acquisitions. We are constantly analyzing different opportunities. Now, we are not running a buy and build strategy.
We're not buying companies in order to become a larger company, but we are buying company in order to be a better company. Still the guiding star is the customer value. Having said that, I think there are a number of companies which are of interest for us and there could come more acquisitions. Also very important, we have created a good culture in HANZA, and now we see that we will expand HANZA with new colleagues. We have fantastic colleagues, Lars and I today. We will have more colleagues, both through possible acquisitions and through recruitment. It's really important to keep the company culture. We have a good and competent HR function in HANZA, and they will be a very important focus area moving forward. By that, we have reached the end of the presentation and now we open for any questions.
Thank you. Ladies and gentlemen, if you do wish to ask a question, please press zero one on your telephone keypad now. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Erik Cassel of ABG Sundal Collier. Please go ahead. Your line is now open.
Hello, everyone. First off, I assume that it's still Germany that is dragging down the margins in key markets. Do you expect recovering volumes to be enough to sort of lift the margin all the way to 10% operating margin? You mentioned 70% of HANZA had this quarter, if that's even possible.
I think I can start answering and maybe Lars will continue. Good morning, Erik. Good to hear you. I think that we have been clear that our model makes it possible for double digits margin in our clusters. We are not going to give any forecast if and when that happens. Now we see that the majority of HANZA is running that. On top of that, we have the clusters under construction, which is downloading the margin. That is actually our business model, that we will continue to grow and be able to develop HANZA and still maintain a good margin after the cost of the new constructions. I wouldn't give a forecast for Germany more than saying that it was a quite profitable unit, and as it is stated, when it comes to Germany, then it's been a downturn.
We expect it to come back and that should of course lead to increased margin. On top of that, we see, as I stated before, a number of new opportunities in Germany. Germany is a huge market. It's larger than all the Nordic countries together. We expect a good development there. Lars, would you like to add something on that?
Just commenting that you are correct in that Germany is part of the Main markets that is with the lowest profitability and taking the profit margin down to the Main markets. That's correct.
Okay. Thank you very much, guys. I assume that it is textile customer. I think you said it's still production was on level Q2 2020 for that customer. Do you have any indications for production ramp-up in that case?
This is a slow-moving sector with also, I think really good forecast. They have been able to forecast the downturn, and I think they are the same accurate with upturn. The frontline is shops like H&M and these, and then it matures into the machine makers. I think that we have a solid forecast, of course subject to force majeure, but otherwise, I think we can see quite well how it will move on the coming year.
Okay. Thank you. You mentioned that the shortages have had a negative effect on results this quarter. I think Lars said they had a small effect, but anyway, is it possible to quantify that in any way? If you have a feel for the potential impact in the third quarter as well?
I would say that when I talk to the customers, they are quite satisfied. Everybody knows about this situation. I only hear positive words that we are doing good in a hard market. I wouldn't be able to quantify it. Only to say that we have higher orders than we can deliver, and it's not due to capacity, it's due to materials, and this is expected to continue. I wouldn't be able to quantify it into some numbers, unfortunately.
No. I can add, you can look into the P&L. We've got some briefing there. You can see on the sales, and then you have the change in work in progress in this quarter, it's plus SEK 41 million, and the last same quarter last year was minus SEK 15 million. There you give some numbers on the effect on the sales and, of course, that is also due to the increase of the sales in total. That gives you a little bit briefing of the insights.
Okay. Thank you. Very helpful. The last one from me. Should you perhaps help us understand the current price cost dynamics on margins at the moment? In other words, how much cost increases are you seeing in terms of raw materials and components, and how much have you increased prices, and is there a potential effect on margins as well?
Would you try to comment on that, Lars?
I think that, no, we will not quantify that. I think you can say that like this, that it doesn't change the fact that we have an organic growth in HANZA. The 10% that we are growing is not due to the price increases. There are also two sides of this, and one is the price increase, and the other is the shortage where you don't get trying to find components. There are two parts of this shortage problem.
Okay. No effect on the margins as a result of these cost increases?
A little bit, but not big ones. Normally, what we do is that we are just forwarding the increase of the material to the customer, and that leads to higher sales and in theory, lower margins, since that is not part of our contribution. It's not in 2022, it's not very much and doesn't change the picture of the development of HANZA.
Okay. That's all from me. Thank you very much.
Thank you.
Thank you. Once again, our reminder, if you do wish to ask a question, please press zero one on your telephone keypad. Our next question comes from the line of Fredrik Nilsson of Redeye. Please go ahead. Your line is now open.
Hi, everyone. Looking at the actual figures you reported today, they came in quite a bit above the preliminary figures. Was it a strong end of the quarter?
I think that it's been strong all over the quarter and continues to be strong. It's just you cannot really predict exactly the amount of deliveries. We forecasted higher then, and we came in higher then, so I think it was quite accurate.
Okay. I see. The margin is obviously increasing in both of your divisions, but could you tell us a bit about the Other markets? I mean, prior to 2020, you were quite optimistic, then the pandemic came, and I mean, if you're happy with its performance now and what's the potential going forward in that division?
The other markets you're talking about?
Yeah, exactly.
It could be interesting to know also that there was some impact on the pandemic also in the second quarter in Central Europe, which is part of the Other markets. That also impacted a bit. Other than that, we did the restart of our unit in Narva, which we described also part of the Other markets, which has been quite costly, but also quite successful. It's a huge amount for that unit. I wouldn't say that we are satisfied, but I think it's according to plan. We know that we have some units which are lowering the margin, but we are aware of it, and we also know that the situation is getting better.
Okay, thanks. That's all from me.
Thank you. We currently have no further audio questions. I will hand back to the speakers for any further remarks.
Okay, thank you. I'd like to thank you all for taking the time again to join us, and I think we will leave it at that, and I wish you a good continued summer and hope that we will talk soon. Bye for now.