Good morning, everyone, I'm happy now, together with Patrik, to present our quarterly report and half-year report. As usual, let's start with some overall highlights. We had a continued stable and high demand levels in the quarter. Order intake was, in total, up 11%, organically, we had -1%, and this was also due to challenging references from last year. The strongest order development in terms of segments was in the engineering segment, and also in water and wastewater, I will obviously elaborate more on this further on. We also had strong sales, above SEK 8 billion for the second time in the single quarter. Sales growth of 21%, of which 7% was organic. Continued high EBITA margin at 15%, also gladly, an all-time high operational cash flow, also we had a lower inventory.
Last but not least, we have now made six acquisitions so far this year, with a combined annual sales of around SEK 900 million. We then turn to the order intake a little bit more specifically, as I said, it was a stable and high demand situation through the quarter, against quite challenging references, quarter two last year. Just as a reminder, in quarter two last year, we were up organically 7%, and in total, 17%. This quarter now, we were up 11% in total, where of organic was -1%, acquisitions added 7%, and currency, 5%. We had variations between companies, segments, and countries, but it's also important to state that a majority of the companies grew, order intake-wise in the quarter.
As you probably know already, it was, for us, one day, sort of less working days or invoicing day, this quarter, versus a year ago. book-to-bill was a bit below 1, but mainly due to an increasing invoicing pace. Again, the order intake was stable and not at all declining. Some of our companies report about destocking at the customer level and in the value chain, which obviously has some dampened effect on order development.
For us, it's a bit difficult to assess the overall impact, but one area which we also have commented on before is in the single-use area, where we saw basically over-ordering some quarters ago, and they haven't basically ordered any real amounts the last couple of quarters, but hopefully, it's bottoming out about this time now, and we will see signs of better ordering taking Q3 and Q4. As I said, water and wastewater is a strong segment, strong in our Flow Technology area, and also the engineering side, quite broadly, has been good. Not surprisingly, infrastructure and construction has been the weakest segment, and basically, the only weak, sort of, substantial segment for us.
Strong business areas were Industrial Components, and Fluids & Mechanical Solutions, and they were good in the MedTech area, was said, stood out mostly. In terms of weaker order development, we have a business area, Benelux, and they had a difficult reference in valve for power generation, and they also have a few companies in the construction area, which was a bit weaker. In general, as I've said the last couple of quarters, the green transformation is driving a lot of investments and business activity, and several of our companies are benefiting from this in, for example, renewable energies and also the electrification area. If we then turn to net sales, it was a good situation, and it is continuing strong and with good growth in most companies.
In terms of the numbers, we were up 21% in total, 7% organically, 8% from acquisitions, and 6% had a currency effect. If we measure net sales on a rolling twelve-month basis, now we are above SEK 30 billion, and it was comforting to see that seven out of eight business areas grew. Some companies still have issues with their supply chain, and lead time from suppliers are long in many cases, but the situation is clearly better than last year. We still have a good order book, somewhat lower than Q2 2022, but still on a high and good level, which is comforting for the fall here going forward.
If we look at sales in a market perspective, you see on this slide here how we did sales-wise, organically in our major countries. You can see that Scandinavia has been good in quarter two. Sweden, Norway, Denmark, all good segments. In Norway, I would say it's driven by energy and food, more primarily fish farming. In Denmark, the MedTech segment stands out, really driven by Novo Nordisk having a great situation. Finland and Germany were a bit weaker now, and Finland are usually quite early in a business cycle downturn, so not very surprisingly. Also in Germany, it's been a weaker sales situation, but nothing which stands out in particular, but a little bit weaker in, a little bit more broadly, I would say.
It's from a segment perspective, again, infrastructure and construction, which stands out. Asia was also a little bit weak in quarter one, also now in quarter two, but we have basically been exiting the single-use business in Asia, where we have seen a clear preference to buy local big projects with the government support, I would say, to build this business up more locally. We have lost some business in that perspective, but it's, in general, a little bit more volatile project business for us in Asia, and not a very big and significant one either.
If we look at the organic sales growth trend, you see quite a long trend now, which been positive for the last 11 consecutive quarters, obviously driven by strong order backlog. It's now a combination, I would say, of volume and price. Still a clear positive impact from price, but we estimate the impact to have come down slightly from the 7%-8% we have estimated in the last quarters. I would say that our companies probably had their largest price increases in Q4 2021, Q1 2022, and since then, they've obviously continued to work with pricing, but not to the high absolute sort of levels we saw in those quarters. Again, the order backlog remains high and in good quality, I would say.
We have the EBITDA and the profitability situation, it's continued on a high level, EBITDA, again, above SEK 1.2 billion, which is a very high absolute level for us. In terms of the numbers, the overall increase was +19%, whereof organic stood for 6%, acquisitions for 7%, and currency for 6%, the overall EBITDA margin level was 15.0%. We had a slight impact by positive one-offs, in total, SEK 17 million, these were mostly connected to revaluations of earn-outs. If we disregard those one-offs or exclude those one-offs, the EBITDA margin level was 14.8%, still on a good level, I would say.
The decline versus last year mostly is connected to an increased expense level, driven by some growth investments and also general inflation. Gross margin is continued on a good, and relative stable 34.6%, so sequentially, exactly the same as we had in quarter one. If I summarize the financial performance, and I maybe use a hockey game analogy, the first period, we were below 1-0, and the opponent scored one goal, and we were at a loss situation after the first period, basically stating that April was a weak start for us. In the second period, we scored a goal, equaling the game 1-1, May was quite okay.
In the third period, June, we scored two goals and basically finished the game in a strong way. June was really good for us, and that's comforting also in a continuation for Q3 and Q4. For some reason, April was weak. It was a shorter month with Easter and everything, but then May came in much better, and June was really good ending the quarter. We look at the organic sales growth by business area. We saw that seven out of eight business areas had an increase and definitely so in most companies. The strongest order growth was in the Benelux region, and here we had a really good situation for one of our larger companies in the valves for power generation area.
We also had a good situation in the, in Industrial Components, plus 11%, and they had, I would say, quite a good, broad sales situation in a positive sense among their companies. If anything stood out, I would say it was the MedTech area, and Measurement & Sensor Technology was also good in a sales situation, up 9%. They were broadly up in the engineering sector, I would say, quite a lot of companies benefiting from more automation work. Specifically, we have a few companies working with leak detection equipment, which also had a good situation. As I've said, Finland, weaker demand, and they are usually early down in the cycle, but it was mostly the infrastructure and construction segment, which was down.
Also, some forest-related businesses were down a bit. If we look at the EBITDA from a business area perspective, four business areas were actually improving their EBITDA and four were a bit weaker. The improving ones were DACH, Flowit, and Fluids & Mechanical Solutions, and UK. DACH were benefiting from newly acquired companies. We have some companies in the engineering sector, tooling sector, and we also had good companies offering green chemicals for wastewater treatment and so on. Yeah, a really strong situation in the DACH segment, who has year after year now, actually improved stepwise to be on a really high level.
I would say in general, high and stable gross margins, but higher expense levels dampened the EBITDA development in some companies. This is obviously driven by some growth investments and general cost inflation. We had bigger drops in Finland. There, the top line was a bit weak, but we also had some one-offs, both acquisition-related costs this quarter, and a year ago, we actually had a smaller positive one-off. The reference was a bit difficult for Finland in that sense. If we take Measurement & Sensor Technology, it was mainly, I would say, growth initiatives.
That whole business area, they only have companies with own brands, international market coverage, quite global, and they all work with product development and innovation. They have a high activity level, but also slightly lower gross margins. If we comment on the acquisition situation, we have now acquired six really good companies this year, with annual sales of approximately SEK 900 million, and we bought three companies in quarter two. We made our second acquisition this year in Denmark, the company Safematic, and they have an expertise in filters, both process filters and ventilation filters. We were able to acquire Labema in Finland.
It's our first MedTech-oriented company in Finland, and they work with diagnostic equipment and also supplies to public healthcare, food industry, and research laboratories. Then we were also able to acquire our second company in northern Italy, I-Tronik, a really interesting company, and they are having a strong market share, strong position in machines, and consumables for building printed circuit boards, PCBs, and there is quite obviously a broad market of customers, or broad number of customers in Italy, needing and using PCBs for electronics in their products. I could also say that there is a good and stable inflow of new interesting projects, and we have several ongoing projects in different phases. I'm quite optimistic that we will continue to acquire in a good way.
We are measuring, obviously, acquisitions over time, it's best to measure this or follow this over a longer time period, because there can be some differences, obviously, between quarters. Our goal, as we have stated, several times before, is to acquire about two to three companies per business area per year. Last year, we acquired 16 companies. If we measure the last 12 months right now, we have acquired 15 companies, and the 3-year average is currently at 16. The financial effects from the acquisitions have, for the last 12 months, if we measure the 2021 and 2022 period, it's been around SEK 60-70 million per quarter, as you can see in the chart towards the right with the light blue bars. Q1 this year was really good.
We were up to SEK 90 million in Q1, and Q2 now, we were back at around SEK 70 billion because we have acquired some companies involved in the infrastructure and construction segment, and they are experiencing a weaker business cycle right now. Quite a good and stable acquisition situation, and as I said, a portfolio of projects which is promising towards H2 as well. By that, I leave the word over to you, Patrik.
Thank you, Bo. Hello everyone. Let's dive into the details a little bit more. Total growth for orders and sales was +11% and +21%, respectively, for quarter 2. Year to date, 13% and 24%, respectively. Orders were 3% lower than sales in the quarter and 2% lower year to date. Main reason is the increase in invoicing pace rather than a weaker order situation, as Bo already talked about. The gross margin was 34.6% versus 34.9% last year, a slight reduction, but organically and in fixed currency, the gross margin was slightly better. The underlying trend is stable.
The companies in generally continue with the price increases, even though maybe the magnitude of them are not as big as they were a year or a year and a half ago. They continue with price increases to mitigate supplier price increases and general inflation, and also the weak Swedish krona and Norwegian krona that gives some of our companies headwind. EBITDA grew 19% in the quarter and 23% year to date. Looking at the EBITDA margin, it was 15 versus 15.3 last year. Bo mentioned the one-offs, net plus 17. On the positive side, we had earn-out revaluations, and on the negative side, mainly a restructuring project for a company in China. Net, that was plus 17.
If you exclude those one-offs, the EBITDA margin was 14.8% in the quarter. Year to date, 15.1% versus 15.2%, so very stable. Further down in the income statement, higher interest rates and also our increased borrowing level continue to impact the finance net. The finance net in the quarter was SEK 122 million, so that's an increase, a big increase versus last year. For year to date, we are at SEK 220 million. A notable increase in the finance net. Tax cost increased with 10% in the quarter, so that's basically in line with the profit. Year to date, the increase is 19%. Earnings per share up 8% in the quarter and 13% year to date.
Looking at the return side, return on capital employed continue at a good level, 22%, so that's above our target. It's slightly lower than last year, and it's mainly driven by increased tied up capital, both working capital, but also, of course, the higher acquisition pace has created capital tied up as well. Cash flow, good to see a record level above SEK 1.1 billion, driven by a more favorable working capital development than last year. Net debt to EBITDA at 1.9, which is basically the level we've had a couple of quarters. It's higher than last year, but I would say the current level is basically in line with the longer-term historical levels.
Cash flow was, as I said, at an all-time high level, about SEK 1.1. The improvement is connected to more favorable working capital development. Last year, as you may remember, we had a relatively high inventory buildup. This year, the total working capital is basically unchanged during the quarter. Underlying that, there is actually a slight inventory reduction, which is encouraging to see, driven by an increasing, good increase in sales pace, along with the improved supply chains. The inventory levels are however, still high, we think. We continue to work in a focused way with this. We hope and want to see further reductions in the coming quarters.
Moving to earnings per share, as I said, grew with 8% in the quarter from 1.85 to 1.99 SEK per share. The increase is driven by the higher EBITDA, but the finance net I talked about is dampening the increase a little bit, and also higher amortizations dampening a little bit as well from the higher acquisition pace we had the last year. If you look at the more longer term increases, the three and five-year increases, annual increases is 23% and 20% respectively. Lastly, then the debt situation, interest bearing debt increased to 10.1. As you also probably know, then quarter two is normally a seasonally high debt quarter, so to say, because of the dividend.
The increase versus last year, that's mainly connected to the high acquisition pace that we've had, especially in quarter four last year and Q1 this year as well, when we acquired a few larger companies. Also the slightly lower cash flow during last year also impacts the sort of the debt development, of course. The debt ratios are still, they are stable and not high from a longer historical perspective. The net debt equity ratio was 74% in the quarter, and net debt EBITDA, 1.9. If you exclude earn-out liabilities, it's 1.7. To conclude, the financial position is strong, stable, relatively low debt ratios.
I think also the debt maturity profile is well balanced over a approximately five-year period, and only a small share is short term. We have guaranteed unused long-term facilities, which we actually also recently expanded in Q1 to SEK 5.5 billion, which is I think well balanced for the size of company we now are. Yes, by that, I end, and I leave back to Bo.
Thank you. We thought we should give some extra highlights on the segment where we see a weaker order intake situation, being our largest segment, infrastructure and construction. You see a slide here with some details, and we have divided the broader segment into four subsegments. The first one being what we have labeled equipment and products for ground and infrastructure applications. You see some photographs on the slide there representing hydraulic grippers. We have companies here working with geographical location measurements and positioning systems. We have foundation drilling, companies, basically drilling for geotechnical services or measurements. We have different types of valves and pipes, companies linked to infrastructure. This subsegment is approximately 30% of the broader segment.
We have another segment, subsegment, input material and products for mainly commercial buildings. Here we have offerings like glass partition walls, steel profiles, usually for entrance doors and things like that, ventilation, ducting, fire resistant materials, and so on. Equally big, approximately. The third is equipment, tools, and consumables for building and construction companies. Here you have products like fixings, fasteners, sealants, measurement instruments, tools, floor grinders, and things like that. That's also around 30% of the broader segment. Last, lighting and building automation, a smaller segment, about 10% of the overall segment. Here you have products like light posts, high-mast lighting, LED light systems, and energy optimization systems, some sensors and things like that.
To say something about the order intake situation, the weakest situation is in the second segment there with where you see the glass partition walls and the fire-resistant materials. We actually have a positive order intake situation in lighting and building automation, and in the other two, a small weakness. Yeah, then you get a better flavor, perhaps, for what we have in these segments. In the three sub-segments representing around 30% of our sales, there are around 15, 20 companies per sub-segment, and more 5-ish in the light and building automation area. We also thought it was appropriate to comment a bit on sustainability.
Many of you who have followed us a longer time know that we have a financial performance benchmarking among our companies on a quarterly basis on some different KPIs, and this has been implemented since long. Now we have also introduced the Indutrade Sustainability Awards in 2022, and we have some winning companies for 2023 in three different categories. We measure in terms of people, the environment, and product and customer innovation, you can say. The winners in terms of the people category is a UK-based company called Verplas, and they are a manufacturer of ventilation products and ducting solutions in the southern part of the UK.
Here we have a leader since a few years back now, who have really worked with people, employee engagement in a very broad sense and a positive way, and this has led to obviously high team spirit motivation, but also stronger financial performance. Really good to see how they work on the people side. On the environmental side, we have a company in Norway. We actually have a group of companies in Scandinavia called GPA, Sweden, Denmark, Norway, and the Norwegian company have done a very, I would say, structured work in terms of environmental improvement work broadly in the company with positive climate impact, resource use.
This is a company in the Flow Technology area, offering valves and pipes and related components, based in the broader Oslo area. Last but not least, we have a company called Vacuum Engineering Services in the Manchester area in the U.K., and they have basically transformed their business from being more linked to, yeah, oil and gas to, towards more renewable energies, and hydrogen, and so on, and are shifting substantially and have a really strong growth profile going forward. We have congratulated these companies, and it's good for you to understand, you know, how we work with sustainability on a company level as well.
If we then, summarize quarter two and this presentation, we started to talk about stable order intake on a high level and a really strong sales situation. We have solid EBITA margins and record high operational cash flow. If we talk about the general market situation, I think it's comforting that we basically only have one large defined segment where we have seen weaker order intake. Basically, all our other segments are on a stable or even increasing situation. What we see now is not very different from when we ended quarter one. Obviously some signs of weaknesses here and there, but also, as I've said before, a lot of positive opportunities linked to the green transformation.
We have a large and high-quality order backlog. Several of our companies are really well-positioned in structurally growing market areas with good opportunities for continued growth. We have six acquisitions so far in this year, and combined sales of around SEK 900 million. As I said, several ongoing projects in different phases. We will obviously see some further acquisitions in the second part of the year as well. All in all, a strong platform for long-term, sustainable, profitable growth going forward. By that, we end the official presentation and leave the word over to questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Carl Ragnerstam from Nordea. Please go ahead.
Hi, it's Carl here from Nordea. Maybe I start with some boring questions. I mean, looking at the revaluation of earn-outs in the quarter, they were pretty substantial in my book at least. I mean, how many companies are they related to? Is it any specific industry that also relates to it? Seemingly, it could be Finland, right? That is where yeah, they come from.
I don't know. Patrik, do you want to comment on that, or?
Yeah, it's, it's a few companies. It's a handful of companies, and I wouldn't say that they come from a particular segment or business area. And I wouldn't say that it's because a very weak performance. I would say that these companies had pretty aggressive plans, which some companies have, and they have, they will probably get some of the earnout, but this is a sort of a reduction of the amount that we have provided for.
Mm. It's related to companies you acquired in the second half 2022, or is it earlier than that?
I think it's nothing that we acquired recently. It's, I think, at least one year ago that we acquired these companies now.
Okay, very good. Also on you took SEK 47 million in charges related to restructuring. Is it possible to give more flavors, what they relate to? Is it if it's just to sort of adjust the cost base to slightly more weakening macro?
Yeah, I can start to answer, and maybe Patrik can fill in. We have tried to build a business with these single-use offerings locally in China, because we obviously had customers with large interest, and some of these customers were Chinese customers. Rather abruptly, after some time, after we have established ourselves there was a clear by local initiative from the Chinese authorities, I would say, in this area. We have, we had a bit, a bigger platform for business than what we could manage now. There has been some international players also with subsidiaries in China who we have served, but the large majority was to basically build a local business over there. Most of this write-off is linked to basically shutting a large part of this operation down.
Okay, and volume-wise, have you lost a lot of volumes, or is it more that you didn't get the expected volumes?
More the latter.
Ah.
I would say we have lost volume, initially, we supplied these Chinese players from our European footprint, and here we have lost volumes. Then we were localizing this, and that didn't work out as planned. We've lost some volumes in the European system from this, but not from local supply.
Okay. Also, you mentioned that April started weak, May, okay, June, strong. I'm not sure if you referred to sales or orders. Is it a similar pattern you have seen order-wise as well, meaning that you're running, let's say, June, maybe also July, in a positive territory, if you include pricing?
Yeah, maybe it was little bit more profitability than order intake, that analogy, but June was good in terms of order intake, and I would say the best month organically. I can't really comment on July now, but yeah, it's better to sit in this situation now than ending with a weak June, obviously.
Okay, that's very, very clear. Also, finally, margin-wise, your group margin, if you take out the non-recurring items, is a bit pressured, right, year-over-year. You say marketing and selling activities to sort of drive future growth burden margins. I mean, with the order intake, at least negative in the quarter, maybe it picks up, but will you be more sort of restrictive on these activities to preserve margins? Or are you more long term in your thinking, meaning that you'll continue to be able to capture growth in 2024 instead, or?
Yeah, there is obviously also a little bit of a general cost inflation, and it's important that our companies continue to work with pricing. I know there will be continued pricing initiatives in Q3 now, for example. It's much more difficult to manage price increases now than it was some quarters ago. It's not obviously impossible. Hopefully we will see continued good pricing work. Some of the companies which have a weaker top line will work with their expense level or cost levels, maybe reduce headcount here and there. Then we try to work in a portfolio perspective in terms of our business areas. All business areas have defined clusters of companies with clear strategic growth opportunities.
There, I think we will continue to invest, even if the business cycle is a little bit weaker. Then there are some companies which doesn't really have maybe that structural growth opportunity, and they will have to manage cost more. I don't know, Patrik, do you want to add something from your side or?
I think you said it well. I think the portfolio thinking is something, we try to use a lot then. There are still companies that we want to invest in, but some companies have already, as you also said, started with some reduction of cost. It's not the same medicine for all.
No.
Okay. Very clear. Thank you so much.
Thank you, Carl.
The next question comes from Dan Johansson from SEB. Please go ahead.
Hi. Thank you so much for taking my questions. I have two additional questions on supply chains. First one, a bit follow-up on Carl's question. If it's possible to say a few words on how the improve the supply chains now have impacted the order intake. How much, basically, just trying to figure out how much the shorter lead times compared to last year is impacting the order intake, to get a better sense of the underlying demand there. Secondly, also on supply chains, you mentioned that inventory levels improving but still high. Should we expect further normalization now in the second half of the year already? What's your expectations in terms of cash flow now during the second part of this year? Thank you so much.
If I start with your second question on inventory levels, we definitely have the ambition to continue to reduce inventory. Hopefully we will see a little bit even better and higher reductions than what we have seen so far this year. Ambition, focus, priority high in terms of that. Your question linked to the supply chain situation. It's overall much better now, but I would say lead times are still a bit long. As I said, we have seen some segments where we had an oversupply or they bought to build inventory, safety inventory, definitely in the single-use area.
Now, more recently, we get some more comments regarding that in some companies here and there. I don't think it's very significant for us overall, but it's not easy in a group with plus 200 companies to really assess what the underlying market situation is. I don't feel that there is a lot of oversupply impacting our overall numbers, but there is some. Patrik, add, please, from your side.
No, no, additional comment, really. I mean, from the companies that we've heard this, I think, we can hope to see a better situation towards the end of the year that these stocks at the customers will have been reduced, and we can see renewed order placements from these type of customers later on this year, hopefully.
Okay, thanks so much for the clarification. I think it was all for now, so I'll jump back in the line. Thank you so much.
Thank you.
The next question comes from Johan Dahl from Danske Bank. Please go ahead.
Yeah, thanks. Good morning, everyone. Just a question on U.K. You talked earlier in the year about, you know, driving some initiatives to improve profitability there. If you could update us. W hat activities are ongoing in the UK and when that may materialize? Secondly, just on the single-use part being a bit hurt by inventory reductions, et cetera. If you could provide some comments on the, sort of your total MedTech exposure, you're seeing similar things sort of outside single-use, and what makes you confident that the single-use inventory reductions are nearing its end? I think you talked a little bit about that, but we should rather be at the end or rather than the beginning of that inventory reduction.
If I start with the UK, there is obviously as broadly in Europe, a business cycle issue with the building and construction segment, and we have some companies in the UK linked to that, which will probably be a bit problematic for some quarters going forward. We have a few companies which are in more of a turnaround situations, and they, I think they will bottom out maybe between Q3, Q4. They are reducing their headcount right now. They have worked with their customer base and product range, sort of to really understand where they make money and where they don't really make money, and so on, going forward as well.
I think Q3 will not be a drastic improvement in the U.K. I think hopefully in Q4, we will see a little bit of a step, and then continuing to be better and better in Q1 and Q2 next year. That's about the pace I foresee there. In terms of the single-use, we obviously have dialogue with those customers. Some of those companies are really big pharma companies. The information we have is that they overbought and they haven't really placed much of orders in Q1 and Q2 here.
The estimate has been that they should start to order a bit in Q3 and Q4, yeah, if it will be more in Q4 than Q3, it's a little bit difficult to assess. I think we are reaching a stage where they eventually, fairly soon, will start to order again. If we exclude single-use from our MedTech portfolio, I would say the other part of the MedTech portfolio is good. And there we see more increasing order intake than definitely decreasing. That part is consisting of a lot of different types of companies, but sort of broadly better than the single-use order intake wise.
All right. Thanks a lot.
Thanks.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Yeah, we say thank you for following us and participating in the presentation, and wish you all a good summer. Bye-bye.