Earnings Call: Q3 2025

Oct 24, 2025

Quarterly report

Hello, and welcome to the conference call. My name is Karl Korsheden, and I work as an Equity Research Analyst here at D&B Carnegie. With me today, I have the management team here from Idun Industrier, who is here to talk about their third quarter of 2025. I would like to remind you just that if you are listening in, we have a chat function. If you have any questions, please feel free to type them there in the chat, and I will then read out the questions here in the room to the management. With that said, I'll leave the word over to you. Welcome to this third quarter presentation with Idun. As we have some shareholders that do not understand Swedish and also some potential shareholders, we will for the first time conduct this presentation in English. I will start out with some repetition about Idun Industrier, who we are. Idun Industrier, we are an industrial group of companies consisting of 18 rather independent group companies. Our net sales is about SEK 2.2 billion and operating profit slightly more than SEK 300 million. If we look geographically, Idun is mainly a Swedish or Nordic company. All of our 18 group companies have their base in Sweden, and some three quarters of sales is generated in Sweden. If we look slightly broader, more than 90% of sales is generated in the Nordic countries. We do, of course, have import-export, and we have subsidiaries in, for example, also Norway, Finland, and all the three Baltic countries. If we look at our sales and profits, roughly 60% is in the business area manufacturing and 40% in the business area service and maintenance. We divide those two or our group companies into those two business areas. As an investor, Idun invests in market-leading business-to-business companies, and it's in manufacturing, industrial trade, and industrial services, and companies with strong market positions in their respective areas. One more area where Idun stands out has to do with the pilot school, where we use it in a very consistent, even dogmatic way. From the board of directors, where everybody is a shareholder of Idun Industrier, to us working in the mother company, where all of us have the majority of our private capital invested in Idun shares. In all 18 group companies, without exception, we have management ownership in their respective group company. In terms of alignment of interest from you as an external shareholder down to all group companies in Idun, there is actually a very good, similar interest all the way. Since the first investment in 2015, we have made slightly more than 30 investments, both in group companies and then some add-on acquisitions. On average, that means two to four investments per year. If you look at the curve here, you can even graphically see that sometimes the growth is faster and sometimes it's slightly slower. On average, between 2018 and 2024, the average growth rate in EBITDA has been actually 30%. That is nothing that we guarantee, but one of our financial objectives is to grow on average 15% per year EBITDA, and that is something we are convinced that we will be able to do over a cycle. Yes, over to you, Oskar. Thanks, Henrik. In a quarter, both sales and EBITDA grew, and the business area Manufacturing maintains sales and increased EBITDA, both organic and through acquisitions, and mainly from Interagro Skog. Meanwhile, the business area Service & Maintenance saw a drop both in sales and EBITDA. For the group, sales is up 4.5% and EBITDA is up by 5.6%. Although organic sales is down 2.2% and for EBITDA it's down by 9.2%. As mentioned, business area Manufacturing sales are maintained and organic EBITDA growth by 3%. Bottom and Interagro Skog contribute to both sales and EBITDA. In the quarter, over SEK 10 million EBITDA plus from mainly Interagro Skog since Bottom had a neutral result due to seasonal variation in the quarter. Within Service & Maintenance, we have a drop of 5% or SEK 10 to 11 million in revenue, and EBITDA is down by SEK 8 million. Several companies showed or delivered slightly weaker earnings, including Ståthöga MA Teknik, active within heavy industrial maintenance, ILEMA Miljöteknik that offers measurement for air emission control, and Triton Valsteknik that manufactures and services rows for the process industry. Gross margin improved from 58.5% to 58.7%. If we would exclude Interagro Skog that was added in the quarter for the first time, and that has a lower gross margin than the rest of the group due to trading, we would actually have reached 59% gross margin for the quarter compared to 58.5% last year. If you're looking at the last 12 months, we continue to strengthen the gross margin. It's now in September 2025, 60.6% compared to 60% in September 2024. Other external costs decreased in the quarter. Meanwhile, personnel costs continued to increase in the quarter and where we saw an organic drop in sales. To sum up, sales up 4.5% to SEK 521 million and EBITDA is up by 5.6% to SEK 74 million. The EBITDA margin for the quarter is now 14.1% compared to 14% last year. Looking at the last 12 months, revenue is up 3.7% and 1.3% organic, and EBITDA is up corresponding 3.7% and organic 0.2%. Cash flow from operations amounted to SEK 41 million compared to SEK 44 million last year and was impacted by a temporary increase in working capital, mainly due to vacation payouts in the summer period. Also, glad to see that earnings per share adjusted for goodwill continue to increase from SEK 2.9 to SEK 3.6. Here we see the corresponding charts for the business areas. In manufacturing, we continue to see growth both in sales and earnings, driven by organic development as well as acquisition from both Bottom and Interagro Skog. In total, the increase in EBITDA was SEK 12 million, where SEK 10 million came from Interagro Skog in the quarter and the rest from the other companies. The business area delivered a strong EBITDA margin of 16.5% compared to 14.1% in the third quarter last year. Turning to service and maintenance, we saw an organic decline in sales or revenue by around 5%, from SEK 204 million to SEK 193 million. However, the acquisition from Prestek added another SEK 4 million in sales and around SEK 0.5 million in EBITDA in the quarter. The gross margin was strengthened from around 63% in the quarter to 65% within service and maintenance, but it wasn't fully compensating the operating expenses that have increased in the quarter by around SEK 6 million. As a result, we see a lower EBITDA margin in the quarter and the EBITDA going from SEK 34 million to SEK 26 million. Looking at the year to date, we see an EBITDA margin of 14.9% for service and maintenance. For manufacturing, we have an EBITDA margin year to date of 15.7%. Regarding cash generation, cash generation continues and remains in solid line with historical performance. It was slightly lower than last year, mainly due to increased working capital and some capex. For example, we had a panel bending machine investment in Kulina Products in the quarter. Let's look at some of the highlights for the third quarter. As mentioned already in the previous call, but it was early July, we made these two add-on acquisitions: Bottom, an Estonian coffee manufacturer, add-on to Frilal Rideens, and Prestek, an add-on to Stegaföretagen within high-pressure washing. Even though I cannot say anything specific, obviously at this time, we do have some promising ongoing dialogues when it comes to coming investments. Operational development, Oskar has commented, the margins do remain stable. Gross margins are developing in a good way. Interagro Skog that we acquired slightly less than a year ago has had a very good start with us and delivered a fantastic quarter in this third quarter, which we are very happy to see. In Service & Maintenance, we have some companies that are struggling a bit, and we are watching that obviously carefully. If we look at financing, we described that we made this central refinancing in the end of March, and it delivers around SEK 5 million per quarter in decreased interest costs. This quarter it was actually 4.4%, but we expect another SEK 10 million in decrease in the coming six months. We have one more outstanding bond that can be changed for bank debt already in the middle of next year. If the terms and conditions do not change, there would be a potential to save another almost SEK 8 million on an annual basis in interest costs. In terms of the central cash pool, we have now implemented it fully to the extent that we wish in our group companies. If we look ahead, the picture varies. We have some companies that already are picking up strong signals and positive signals for the future, whereas others still face some headwinds and uncertainty. It really depends, and it's too early to say that we have a broad and clear turn in the economic development. It should be said that we feel very confident with the strength and stability of our group companies. In terms of Idun Industrier, we have a strong financial position and are ready for more investments going forward. Finally, last slide, just a few words. We like to look at this one because the signal is, of course, stability here. It is not the case that the gross margin or the EBITDA margin varies. There are not lots of up and downs between the quarters, but rather a very step-by-step and positive development going forward. We feel quite confident that this will continue also going into 2026. I will stop there. Perfect. Thank you very much for that. I think we have received a couple of questions here. You might have answered some of them, but I will read them out anyways for transparency. If we start off with capex, we have a statement here saying that it remains at a quite high level this quarter. What's driving this and what could you expect in terms of capex ahead? It is true that if we look at the investments that Idun Industrier has made in the last three, four years, we have companies like Molins Rostfria now being a part of Kulina, with also Electrothermo in Kulina, Frilal Rideens, not the least, where we have a lot of manufacturing. With that comes capex if we want to keep improving the efficiency and productivity of those factories. I think as a group, we do have more capex than we had five years ago. Having said that, we do not invest in contract manufacturing. We don't invest in a process industry where it's really expensive, heavy machinery. Rather, a big investment for us is SEK 6 million, SEK 7 million. We do take a careful discussion whether we should do it or postpone it or not. I can mention that all investments above SEK 5 million are actually for approval in our board of directors, which says something about the size of investments. It will be on a higher level going forward than it was two, three years ago. Thank you for that. Another question here. It's a statement saying, "Organic growth comparables will remain quite tough in coming quarters. Should we expect organic growth to remain subdued for a while? We don't give forecasts, but as let's say in the coming half year where it is uncertain, the economy, we haven't seen this clear turn. It could be that for the coming two quarters it would be more challenging for the organic growth. Thereafter, I would dare to say that we should be back on growth, not only acquisition-driven, but also organically. Just to follow up on that, did you see any variations across the quarter in terms of demand? Would you say was it like the quarter started or ended on a stronger or a weaker note, or was it fairly stable across all three months? It's a good question. I would say the start of the quarter is July. The third quarter is maybe a bit difficult to comment, but if anything, we do see slightly more positive signals towards the end of the quarter than in the beginning, yes. That's encouraging. Can you elaborate on underlying factors that resulted in strengthened gross margins? Should we expect continued improvements going ahead? Yes, you should expect gradual continued improvements. Gross margin is something that is very important to us. It has to do with purchasing, it has to do with pricing, and it has to do with buying the right companies. When we look for new companies to invest in, gross margin is one of the criteria we look for. Even though our objective for a long time was to reach 60%, and now we're above 60% gross margin, we will not stop there. The ambition is to step by step try to grow it a bit further. Another question here. Could you please talk a bit about the latest acquisition of Bottom? Products, synergies, market share, etc. Yes, this was quite recent, early July. They are now becoming a part of the Frilal Rideens group in a positive way. In the investment, as we do, we didn't calculate with any synergies. Once we now look closer, there are opportunities. One is that Bottom has both a trading part and a factory in southern Estonia. In this factory, they have also access to quite, well, with good prices, raw material. We are looking into, is the quality the right? Could we buy some raw material from that factory and use it in the rest of Scandinavia? That's one of the things we look at. The other is, of course, to complement the Bottom product range and sell Frilal Rideens urns and coffins into Finland. That is also something that is happening now. It's too early to tell how big those synergies will be, but we are looking into them. Thank you. Very clear. You obviously have done a couple of smaller, call it bolt-on acquisitions recently and so on. I think it's been a while since you did a sort of a standalone acquisition or a standalone company. What would you say is the rationale behind that? Has it in some way become more difficult to find high-quality standalone businesses? What's your take on that? No, I would say it will go up and down. If we look at Interagro Skog, it was an add-on acquisition, yes, 11 months ago. Again, it's a company that delivered more than $10 million EBITDA in a single quarter now. It's not a small acquisition for us. Idun Industrier AB has never been the company that is looking to buy as many companies as possible. For us, it's rather to find the best companies and companies that suit our culture and our way of working. If we make two to four acquisitions, including add-on acquisitions per year, that is sufficient to sustain our growth targets. You are right. Another answer is, yes, we will do make acquisitions in new group companies in the not-too-distant future. I'm sure of that as well. That's very, very helpful. On the topic of M&A, you have obviously in the past primarily done M&A in Sweden. You have done a couple of bolt-ons in other Nordic countries, etc., and now also in the Baltics. How should we look at future M&A from a geographical point of view? Should we continue to see most of it in Sweden, or could we expand across the Nordics and potentially out in the rest of Europe? What's your take on that? We will for sure continue to look in Sweden, but maybe for the first time, part of the answer will actually be that, yes, we will be looking outside Sweden now as well, in the other Nordic countries, and potentially also further beyond. We are in the process of looking here now. You will probably see, I will not promise anything in time, but in the future, you will see Idun acquisitions outside Sweden. If we just talk a bit on the sort of M&A sentiment and pipeline and your feeling of the overall sort of M&A market right now, would you describe it as improving sequentially, or are we at a fairly stable level? Any takes on the M&A pipeline or anything of that would be very helpful. We have a good pipeline, and I cannot say that it's more difficult today than it was one or two years ago. It's not easier either. It's quite similar, and we have a good pipeline, I would say. What would you say? I would agree. There's nothing to add. Got it. A question here on pricing efforts, which you mentioned you are conducting here. Could you specify which segments or potentially even companies this is taking place in? Are you seeing any results of these efforts yet into numbers? We work with pricing in all companies. It's not an effort that we make in one company or another. We have what you call a toolbox and a method that we use. In the end, of course, it's each group company that needs to set the specific prices for their products in their markets. We challenge them. We provide them with tools to do this in a good way. We expect, of course, proactive pricing activities to be conducted. Yes, this is something that is important for us. I cannot comment on exactly what are you doing with pricing in a specific company. In general, this is something we work with actively. This is a part of what sustains our good gross margin, of course. That's where you see the results over time. That's very clear. In the last quarter, you talked about some potential cost savings taking place during the autumn. Obviously, now I think you have quite solid cost control here in Q3. Is that a function of those efforts, or could we expect any more in terms of group implemented cost savings, or what's your take on that? Partly, yes, we have seen, we have implemented some cost savings. Partly, we have still some savings to be where we need to see the effects of them. I would say we, of course, from the group, we look at each company because this differs. We have some group companies where they really have to look at their costs, and they do, and we help them in doing so. We have others where cost cutting is not on the agenda, and it shouldn't be. It's really up to us not to become an, let's say, insensitive big corporation that cuts all across the board because it doesn't apply to all. This situation is really company specific. Of course, we are still in an economically challenging situation, broadly speaking. Cost is something that we are looking at closely. Another question here on the financial target of growing 15% per annum. We have obviously seen here a couple of quarters with growth rates below this sort of threshold. What do you think one should expect relative to the financial targets ahead? Are we in a situation where we are currently in a growth gap, and you think that sort of growth should outpace that target for a couple of years when the economy perhaps gets a bit better and then the sort of cycle average is closer to that 15%? What's your take on that? As I said, we are convinced that on average, over a cycle, we will be able to grow EBITDA 15% per year. Then indirectly, an answer will be that in better times, there will be above 15% for sure, especially because this is combined acquired profit and organic. You're right. Now we are in a situation where EBITDA, the growth was 5.5%, and that's far from 15%. We will get back to 15% and above, for sure we will. Thank you very much. I cannot see that we have any further questions. I think we might stop there. If there is anything else you would like to add, please do. Otherwise, we will wrap things up. Thank you very much for listening, and thank you for being shareholders in Idun Industrier. Thank you. Bye-bye.