Hello, and welcome to Idun Industrier's conference call for the third quarter of 2026. My name is Carl Korsheden, and I work as an equity analyst here at DNB Carnegie with a focus on acquisition-driven compounders, and I am here to moderate this session. With me today, we are, as per usual, joined by Idun's CEO and CFO, Henrik Mella and Oskar Samuelsson, who will take us through the quarter briefly, after which we will follow that up by a Q&A section. During this Q&A section, those of you who are dialing in are very much encouraged to participate and feel free to shoot your questions in the chat function, and we will make sure to cover them here in the studio. With that said, I will leave the word over to you.
Thank you. Welcome to the quarter 3 results for Idun Industrier. As usual, I will start with a brief introduction or repetition of Idun, who we are and how we work. Idun Industrier, an industrial group of companies, sales roughly 2.6 billion Swedish krona, and EBITDA 360 million. On a rolling 12-month basis, we have some 14% EBITDA margin. Idun consists of 22 group companies. We divide these 22 companies into two business areas. Manufacturing, which is roughly 60% of sales and profit, and Service and Maintenance, roughly 40% of sales and profit. Idun is mainly a Swedish and/or Nordic group of companies. Three-quarters of sales is generated in Sweden, and more than 90% in the Nordic countries. We have subsidiaries outside Sweden, in Norway, Finland, Denmark, and all the 3 Baltic countries. A few words about Idun as an investor or a compounder.
We have a lot of investment criteria, but our single most important investment criteria is that we look for profitable market leaders and then market leaders in small sectors within Manufacturing, industrial trading, industrial services, only B2B. If to say one thing about our business model, meaning the way that we manage our 22 group companies, we make very consistent and active use of the pilot school. That is, we believe that managers should have an ownership stake in the companies they lead, and we see on a daily basis what this brings in terms of energy and enthusiasm in the companies. After that introduction, let's go over to the third quarter and some key figures. I should first say, this is a strong quarter for Idun. Net sales grows by 26%, and EBITDA by more than 36%, thereby reaching SEK 101 million.
This is actually the first quarter or the first time where we, in a single quarter, have EBITDA of more than SEK 100 million, so it is a nice milestone for us. Equally important, organic growth is back on track. Double-digit organic growth, both sales and EBITDA grows by roughly 11%. The EBITDA margin in the quarter was 15.3%. Cash flow growth and earnings per share as well. In this quarter, we also made one rather small but still add-on acquisition to our group company, Prident, by buying the Finnish company, Safety Reflector. They are offering reflectors, and reflectors is an important product category for Prident. Since the first investment in 2014, we have made 35 investments. That is in new group companies and add-on acquisitions. Actually, more than 35 if you would include some really small add-on acquisitions.
But this means that we have made on average 2-4 investments per year, and we aim to continue in this pace. We have no objective of being the fastest-growing compounder, but we want to make this number of investments steadily year by year, continue to grow. If we look back a couple of years to 2020, we have managed to grow EBITA by 30% per year. We do not promise to keep up that pace, but that is where we have been so far. On this slide, you see sales growth per quarter during the last seven years. In the green-blue line, you have the rolling 12 months figures. To the right, you see the sales growth split between organic and acquired growth. You basically see a nice, steady growth going forward. The same figures, but for EBITA.
We also here see that the new add-on or new companies that have joined the group contribute in a very good way with SEK 19 million in additional EBITA. On this picture, you see rolling 12 months figures for sales, gross profit, EBITA, as well as the gross margin and EBITA margin. The message here is stability. Sometimes the growth is faster, sometimes it is still growth, but a bit slower, and now it is picking up again. But from quarter to quarter, we keep increasing profits. It could then be mentioned also here that if we look at the recently acquired companies, while some of them, MEAB Stainless, Trikåby, Mouldex, AGB, and most recently Nordbergs, these companies will contribute another roughly SEK 30 million in EBITA going forward as the full-year figures come into the reported ones. With that, over to you, Oskar.
Thanks. Going to our two business areas, starting with the Manufacturing. Net sales grew by 22.8% up to SEK 398 million, and EBITA increased to SEK 66 million from SEK 53 million, driven both by acquisitions but also organic growth. The EBITA margin of 16.5% is in line with last year. Our group company, Fredahl Rydéns, delivered another strong quarter, both in sales and earnings. We now see results from the investment we did in the new handle line for coffins some time ago. Interagro Skog had a setback in wildlife protection products in the quarter and has not yet recovered its root rot protection sales that were weak in the second quarter. Culina Products see fewer public sector kitchen tenders for the public sectors and is adjusting cost and also customer focus and among other areas for private restaurants. The newly acquired companies, Trikåby and Nordbergs, contributed positively.
They have a lower gross margin than the current group, and that also the main reason we see that we have some lower gross margin on the group level. But on the other hand, they have a higher EBITA margin that contribute positively. Finally, in the end of the quarter, as Henrik mentioned, we did small add-on acquisitions in Safety Reflector in Finland for Prident. Going to Service and Maintenance, that had a really strong quarter. Sales grew by 31.5%, driven both by the acquisitions of Mouldex and AGB that came in well, and from organic growth. The margin improved from 13% up to 16%, or EBITA up from SEK 26 million -SEK 41 million. Ståthöga MA Teknik had a good quarter with a high number of projects within composite treatment of water and wastewater facilities.
What could be mentioned is that the project's volume may vary between quarters, but a nice contribution. Triton also contributed to improve its result and has done so for some time, so that we are glad to see. Stegaföretagen delivered a stronger quarter than last year, with higher car washing volumes and EBITA growth in both the Swedish and the Finnish market, while they continue to work to strengthen the margin within insulation and service going ahead. As mentioned, the acquired companies also contributed both to results and margins. Cash conversion and net debt. Operating cash flow was SEK 38 million, up from SEK 33 million, but low relatively to EBITA of SEK 116 million in the quarter. Two effects mainly explain this.
The first one was that the tax paid in the quarter was SEK 36 million compared to SEK 40 million last year, partly due to the newly acquired companies, but also due to temporary high tax payments. In addition, accrued, not yet invoiced income, has increased with SEK 31 million due to current projects that has not yet been invoiced. We see that both two things will normalize as the projects will be invoiced and conversed to cash flow. On a rolling 12 months basis, our cash conversion of 58% are unchanged, and historically, we have been well above 60%, and we don't see any structural changes that wouldn't make us go up to above 6% going forward. Net debt decreased by SEK 21 million in the quarter, and the net debt is now SEK 1,049 million.
Net debt to EBITA is 2.5 or 2.3 if you add the roughly SEK 30 million in EBITA from recent acquisitions that has not been with us the full rolling 12 months. Good. The interest cost has decreased from SEK 30 million -SEK 12 million, and mainly due to the early bond redemption that was carried out in the end of June. Looking at our financial target, they are unchanged. First, EBITA growth of at least 15% over time. On a rolling 12 months basis, we now have 15.3%, mainly driven from acquisitions. Organic contribution is only 0.9%, even though the quarter was alone 10.9%. Second, net debt to EBITA below 3.5 x. We are now at 2.5 at reported pace. The final one, dividend up to 10% of the yearly profit adjusted for goodwill amortization. With that, I hand over to Henrik again.
Last slide, and let's wrap this up. This was a strong quarter for Idun. Sales growth 26%, EBITA growth 36%, organic double-digit growth for both sales and EBITA. Earnings per share is growing by more than 40%. We made one small add-on acquisition. If you say something about the future outlook from Idun's perspective, we look that it's gradually improving, and we look positive to the future. We also see good opportunities for more acquisitions going forward.
Thank you very much for that. Let's jump over to the Q&A section. As per usual, if you have any questions, feel free to type them in the chat, and we'll make sure to cover them here in the room. We have received a couple of questions so far already, so let's go through those. Firstly, we have a question on, how do you view the move of Zepro and its impact on Kjellbergs Plast, if any?
Yes. I suppose the question means Zepro, which is a big customer to Kjellbergs Plast, they will move their production facility from Bispgården to Poland, and this move is happening now. Very short-term, this has no impact because they rather need to build up components. We produce for them control units for these tailgate lifts and some other components as well. It should also be said, even after a move to Poland, in the current discussions, they want to keep buying these control boxes from us. Of course, if you look ahead three, four, five years, once they are solidly established in Poland, there is a risk that they will start looking for local suppliers. But we have a very long, good cooperation since many years.
We are quite competitive when it comes to price, and it's not that easy because it's not like they have one control box. It's many different kind of units, and we own also some of the tools to produce them. So there is a risk, yes, but we are working to mitigate them and in parallel, looking for other customers as well.
That's clear. Another one here. Other Compounders has managed to keep its HQ very lean, and I see that you have hired another one for HQ. How do you view this going forward?
Well, I should say, I do think that we are rather lean as well. We are eight people in the HQ, and we are more than 1,000 people in the group. Our total cost, I think, is like SEK 26 million for all the function, including everything we pay for legal services or whatever we do. This is 1% of our turnover and less than 1% of our market cap. That's one way of answering it. The last one is Anders who joined recently, Anders Ringstedt. It has been two and a half years, I think, since the last colleague.
Almost three years, I think.
Almost three years. With Anders, we see that we will be able to invest in many new companies without adding more people. We think that we are now quite fully invested, although we are eight people for more than 1,000 people. We completely agree that decisions should be made in the companies, and we should have a lean mother company, and we think we have.
Yeah, super. A couple of other questions here. Service and Maintenance grew strongly in the quarter. How much of the segment's organic sales and EBITA growth came from Ståthöga's water and sewage projects?
I can answer that. As mentioned, we had organic growth both in Manufacturing and Service and Maintenance, but Service and Maintenance came out stronger, so double-digit organic growth both in sales and EBITA for the business area and single digit for Manufacturing. A lot of projects for Ståthöga contributed well, but it is not only projects in the business. They have some continuous contracts as well. I would say it comes both from projects that may vary over time, but also current pricing within the whole business.
Yeah. Got it. Another question on that, have Ståthöga projects now been completed or do they also run into Q4? Can you say anything about the backlog heading into 2027?
For Ståthöga, they have some continuous contracts. They also have projects. The projects are quite short, so we do not have that long visibility going ahead. But we see that they still have projects to finalize in Q4.
Great. If we look at Q3 overall, just from a performance point of view and talking maybe specifically about the organic growth, both on the top line as well as on the EBITA level, would you say that it exceeded your own expectations after Q2 that we are now taking another step up, or was this in line with how you viewed Q3 all along, even after Q2?
I would say it was slightly better than we expected. We did expect profit and sales growth, and I think we commented it after the Q2 that we thought that the second half of the year would be stronger. We indicated that, but on the margin, it was slightly better.
Got it. That is clear. When we dig a little bit into maybe Service and Maintenance, obviously a very strong performance this quarter. You have previously highlighted certain one-offs or things like that in the past, for instance, during last quarter, who impacted you negatively then. Is there anything to highlight from maybe a positive point of view in terms of one-offs or things that seem to be more of a temporary character that might have boosted figures this quarter, or is this more of a good representation of underlying performance, you would say?
I would say that Ståthöga had good sales in the quarter due to many ongoing projects. That contributed positively, and that the projects may vary over time.
Having said that, I would say we do not have big one-offs that we thought that we should flag that this is not recurring or nothing like that really.
Yeah. All right. That's clear. You obviously also previously described Stegaföretagen as having quite tough comps throughout the entire year this year. Now it seems that they have managed to improve a bit here in Q3. Could you put a little bit more color on that perhaps, and maybe also if you have any comments on the previously stated, I guess, difficulties with the new ProWash machinery and the implementation of that, if that is still something you believe is hampering Stegaföretagen a little bit this quarter or if that is behind them now?
What could be said is that when looking at the first half year, it was very good washing volumes or so in 2025 and 2026 were still quite good, but not in the same level. Now in Q3, we saw that we had better wash volumes and sales and earnings due to that. Now 2026 is in line with 2025. But we continue, since we have a new machine line in place, we need to put some extra service time to get the machines in place. Our technicians has been working on the last machine for plus 10 years, and now when we have a new one in place, it will take some time to get the installation correct.
Yeah. That's understandable. And as for a little bit on the, say, company level, you mentioned this quarter maybe Culina Products and Interagro as having a little bit more difficulties, perhaps. Is there anything to elaborate on there? What's driving that more specifically, and if this is something you believe is more related to this specific quarter, or if this is something that could be expected also maybe in Q4 and into 2027?
Yes. Two different situations. I would say that Culina, where it's mainly the company Molins Rostfria being impacted, and it's stainless steel furnishings to commercial kitchens. And here we do have a trend where important customer groups like schools and preschools, because of demography, is sort of going down. So, this company is actually taking some cost measures and also is turning to other customer segments to look for more growth. So they do have challenges that will not disappear in Q4. It's still, this is a profitable, very well-run company, but still, the challenges will not disappear. That's for Culina. If we then look at Interagro Skog, it's quite specific.
In Q2, they had this weather-related issue, and it continued a bit into Q3, it seems, and then also another quite specific situation where we've had when deers are, what do you call it, when they eat the tops of the plants, and we know that the product works, but if it is really cold, the deers eat anyway.
It was cold in the last winter. So, in this case, we do see that it has more to do, yes, go back, educate, train, make sure that the people who put on the product to protect the plants do it in exactly the right way and so on. This is manageable. This could change. We have no reason to believe that this will not improve and correct itself in Q4 and going forward. So, two different situations if you compare Culina and Interagro.
Super. That is very clear. Also, if I remember from last quarter, we talked a little bit about both EKAB and Sjöbergs, where there also were some, I guess, company-specific difficulties there at the moment for both those companies. Do you have any follow-up on those companies this quarter? Has the situation improved there?
I can take Sjöbergs, and you can EKAB. Well, Sjöbergs, yes, they had issues related to the U.S. market. We will look closer at the decrease in profit that we saw there. It is all about sales to the U.S., and now we have also changed the managing director. We have taken out some significant costs in the company, and not all the cost has left, sort of. Some is left in Q4, but going into 2027, we will be on another level when it comes to cost. Then we have taken very active measures to increase sales in the Swedish market, which is the core, and this has been quite successful, actually. Now, the next step is to make sure that we handle the situation in the U.S., and we will see.
I cannot say exactly what we will do there because it is a bit also sensitive, but we will have another setup if you look a year from now compared to today. We are taking very active measures in Sjöbergs.
For EKAB, that was not mentioned in the quarter, they continue to perform well, as in line with history. Looking at year to date, they are just under last year's figure. We did not feel the need to give any more details on EKAB.
Yes. No, that is fair. On the contrary, Fredahl Rydéns very strong performance, it seems, for several quarters now at least. Is there anything company specific there to highlight? Because I guess the end market there should be pretty stable, right? When you are talking about the strong development, is that predominantly then sort of a profitability improvement you are referring to, or is the market also there for some reason? Well, it is partly volume, and, well, it is demography. It goes a bit up and down, but it is mainly profitability measures and different ones. One is that, as we mentioned, we made, two years ago, one year ago, it was during some time, some substantial investments in machinery, in a new production line for handles, and now we see the effect from that impacting gross margin. We are very happy to see that.
Also, we have made changes in the products. We are launching now a new range of coffins, and also, we have a bigger portion of the urns that we sell that we now produce ourselves as opposed to having only trading products. All these things together contribute to increasing the profits, but it is a good feeling for good, strong performance from Fredahl Rydéns, as you mentioned, not only this quarter.
Mm. Yeah, super. That is clear. Just on cost savings overall now, obviously things are looking to be improving a bit here, but still, you have been talking a little bit about cost savings in the past as well, and it seems to be still some cost savings impacting maybe Q4 and so on. Is it possible to put any number on that and maybe just how we should think about potential for cost savings going ahead overall?
I would say that if you look at the whole group in the Idun Industrier, you should not count with too much of cost savings. We are not in that phase. It is more company specific. We mentioned Culina. We talked about Sjöbergs that are leaving, and there could be some more selective examples, but overall, we do see that it is gradually improving. If anything, now would be the time, we have a lot of companies in Manufacturing, where we get some leverage, and we can get sales without having to add so much more cost. I would say more like that than there will be cost cutting going forward, in general terms.
Yeah, super. That is clear. Just a final question from my side. If we look at the outlook overall in terms of M&A, obviously done quite a lot this year so far. Anything to highlight there in terms of anticipated deal activity if we look, yeah, I do not know, maybe from Q4 or the final stages here of the year, or yeah, maybe also if you have any view on the M&A pace going into 2027?
Well, I would say that the remainder of 2026, that is a really short period of time. If I would stretch it a bit further into 2027, we have good opportunities, actually, for further acquisitions.
Super. I think that was all the questions we had. I thank you both very much for joining. If you have any final remarks, Henrik, feel free.
Well, only thank you for watching and a strong quarter for Idun Industrier. We are very happy, and we look forward to talk to you again in another quarter.
Thank you very much. Goodbye.