Earnings Call: Q2 2026

Oct 24, 2025

Welcome to Lagercrantz Group AB Q2 report 2025-2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing 5 on their telephone keypad. Now, I will hand the conference over to CEO Jörgen Wigh and CFO Peter Thysell. Please go ahead. Welcome to Lagercrantz Group AB Q2 report 2025-2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing 5 on their telephone keypad. Now, I will hand the conference over to CEO Jörgen Wigh and CFO Peter Thysell. Please go ahead. Thank you, and welcome everyone to our interim report. We do this every quarter, so this is our Q2 report. As you know, we are starting our year 1st of April, so we are concluding the numbers at the end of September as of today. Together with me here, we're myself, Jörgen Wigh speaking, and also Peter Thysell right beside me here. When we get to the numbers, we'll let him do that part as well. Welcome everyone. I would like to start off with just a short introduction to the group for those of you that are new to the group, and then carry on with the report soon in a couple of slides. Lagercrantz Group AB is the tech group or an industrial group where we are working with the buy-and-build growth model, building a group around a number of subsidiaries, currently some 85 subsidiaries or profit centers, as we call them, building leading positioning in expansive niches is where we are. We have all companies that are working autonomously, but we are gathering them into our five divisions, as you can see here: the Electrify, Control, TecSec, Niche Products, and International divisions. You can see the number of profit centers or companies within each of these divisions. We have been on the stock exchange since 2001, and before that, we were part of the Bergmann and Behring Group, but under our separate names since 2001. We are currently just going through the bar of SEK 10 billion in terms of sales or revenues, and we are some 3,400 employees within the group. All what we're doing in the companies are B2B, so we're selling hardware and all types of industrial products in niches to other companies, so it's B2B, all of it. We are firm believers in running it in a very decentralized way with a decentralized organization with some 85 profit centers gathered in these five divisions. You can see over to the right where we have our locations. We are Northern European today with a number of footholds around in Europe, and you can see some 30% or so is in Sweden. Denmark is our second biggest market, then Finland, Norway, and the UK are of similar size, as you can see from one of them, if you look into it. You can also see that most of what we're doing in the businesses are also, to some extent, export related, so you can see all over to the right where we also have some footholds through our subsidiaries in a number of places around the world. It's in the US, in China, and in India as well, where we have some footholds where we try to sort of establish ourselves and drive exports through those hubs, as we call them, in different parts of the world. That's an introduction to the group. Coming into the interim report then, I think we closed another strong quarter. You could see here that we have had a strong trajectory with our profits picking up every quarter for a number of quarters now, and this was in line where we expect to grow profits or earnings before tax with around 15%, and the figure now was 17%, so slightly above where we have our profit targets. A strong, really sort of solid report, we think it was. You can see where we have our, where we've been over the years, and you can see that we have also increased our margins a little bit along the way, and that was the case also this quarter. A strong quarter and approaching SEK 1.4 billion in terms of profits. We communicated a SEK 2 billion goal about two years ago, and we should reach the SEK 2 billion within five years that we said, and we are well in line with that pace here now, as you can see. We'll move to the next one, I think. Talking about the interim report and the Q2 and the business conditions, we noted that the market situation was generally stable and slightly better during the second quarter compared to the same period previous year and earlier on, so slightly better. This quarter is always very sort of affected by the summer, so it's actually not until September where we see where things are turning out, and it looked fairly good in September, so a strong end to the quarter as well. Of course, demand continued to vary across companies and segments, but we saw some strong demand, especially within the Electrify, the electrification, and the infrastructure within the International division and within the TecSec division that had all good order intake, while demand was weaker in Control and Niche Products divisions. We also concluded that the order intake for comparable units was slightly above invoice sales and increased organically with 5% compared to the same quarter previous year, and that was also then adjusted for the currency effects that impacted some negative by 2%. Stronger order intake than the organic growth that we had in sales, that was only 1% really in the quarter, but we see that as more of an effect of how much we managed to invoice during the quarter. That's why we also highlighted here the % in order intake. You can see further down here on the slide that we also have the net revenues by business type, and it's good to see that we're also in line with our proprietary products target of reaching the 85%. We are currently here on rolling 12 months at 79%, but in the quarter, it was 80%. We crossed that sort of limit as well, or that bar as well now here during this quarter. You can see also that we, from the far right there, you can see that we are over the years getting more and more international with the share of Sweden growing, but as a % of the total, it's actually declining a little bit as we become more international. Peter, maybe you should hand over and look at the numbers a little bit. Yes. Thank you, Jörgen. As mentioned before, we're quite pleased to report another strong quarter with the earnings before tax up by some 17%. Net sales increased by 13% with acquisitions contributing with 14%. The organic growth in sales was 1%, and the currency effects were negative 2%. The EBITDA increased 14%, and the EBITDA margin improved to 17.9%. We're not entirely happy with the cash flow in the quarter, but we feel it remained quite robust. If we turn to the six-month period, the net revenues increased by 11% with, again, the acquisitions contributing with the majority of 12%. The organic growth was slightly higher at 2%, and the currency effects were negative 3%. The EBITDA increased 13%, and the EBITDA margins also improved to 17.7%. As Jörgen mentioned before, we're well on track towards our long-term target with our earnings before tax improving by 15% in the first half year. As you can see, cash flows in the little bit longer period increased by 11%. Return on equity was at 30%, and the equity ratio was 31%. Our internal measure, the profit of working capital, was at 73% compared to 75%, a little bit stronger last year. So far this year, we have completed five acquisitions, but the pace is 10 acquisitions in the past 12 months, contributing with some 12% growth in net revenues. If we look at divisions, we notice that we have a solid growth in four out of five divisions, and especially strong in the International and Electrify divisions. We also saw strong EBITDA growth and margins improvements in three out of our five divisions, that is in the Electrify, Control, and International divisions. We also saw some headwind in the quarter, especially for TecSec that we have seen in a couple of quarters, but this quarter also for Niche Products. Maybe, Jörgen, you can comment by division. Yeah, let's make some comments on each of the divisions. We'll start with Electrify. Electrify posted a very strong quarter, I would say. Revenue is up 17%, and 9% coming from acquisitions or organic leads of 9%. A really good quarter for them. FX was, yeah, minus 1%. The EBITDA rose by 23% to SEK 132 million, and a strong EBITDA margin. They haven't been used to really having it above 20%, but here we are, and that's a goal we've had. Now they posted their first quarter at 21.2%, which is really good compared to 18.8% last year. Electrify is working in a favorable market within both the electrification and infrastructure segments they're addressing. That completed a bit too strong second quarter with good growth and improved margins. We noticed especially that we had good performance in companies like Nordic Road Safety, had a really strong quarter, but also Elcapsuling, Elfack, EFC, Ncom, Kaperow, and Norvesko, a number of companies there. We'd like to highlight the companies here to you guys, and of course, they have their own web pages to understand what they're really doing, what they're all about. You can go to their web pages and see what if you're interested. The Nordic Road Safety company stood out here during the quarter, but also the more traditional companies like Elpress posted a good quarter, even though they're not mentioned here, but also Elcapsuling and Vatana was mentioned here one. The small but still very good company, PPV, newly acquired, reported good earnings, and Mast System, which was a major acquisition we made last year, had a strong order intake during the quarter, which is promising for the future. It looks promising for the future. We moved to the Control division. Their revenues grew by 13%, and acquisitions then was the whole thing. So 13% through acquisitions, but also organically 3%, but FX minus 3%. EBITDA picked up nicely with 43% to SEK 48 million, and the EBITDA margin at 15.1%. A strong EBITDA margin. Control, as for those that have been with us, has been usually having a very strong Q3 and Q4, but have also done through some acquisition balance that out over the years. Now the EBITDA margin was really strong here also during the summer with the 15.1%. A stable market with some successful acquisitions, especially in CP cases in the UK and the US, continue to have a positive development, but also companies in Norway like Lieteng, MH Models in Sweden, Stigbars in Sweden, and Pressmeter in Sweden, but also working very well internationally, showed good earnings improvements. Meanwhile, we in this division also have a number of smaller businesses still reliant on the construction market, and that market we still see has been very sluggish and slow with some real major headwinds there in that market. That is affecting some of the smaller companies here, not the major ones. The newly acquired Hieman posted a good start to the year and also this quarter. During the quarter, they also made an acquisition, a bolt-on acquisition to Dell Electronics with the Qvintus acquisition. I'll come back to that later on. Two really strong divisions there. What we're struggling more with is the TecSec division. Here we saw revenues fall back a little bit, 4%, and organically minus 1%, and no acquisitions here. They're still looking at acquisitions like everyone else, so nothing new there really, but they have been looking at some interesting things going forward. During the quarter here lately, it's not been very much of acquisitions within the TecSec division. The EBITDA amounted to SEK 68 million, and the EBITDA margin fell to 13.8% as opposed to 17% last year. Many of the companies still perform very well in the continuous stable market like Orax, Cobs, Frict-Tape, and Edesco. Some of the bigger ones struggled more with ISG Nord and Swomen Diesel Voima. They reported a good order intake, but slightly weaker earnings in the quarter. Some of the larger units, the PCP, Arcon, and Door & Joiner in Principal Door Sets and CW Landberg, remained affected by the weak market situation within the construction sector. That has affected the TecSec development here organically in the quarter and so far this year. Within the Niche Products division, some comments there. Revenues rose by 10%, and out of that came 17% through acquisitions, and organically was minus 5%. A bit of a sluggish quarter and with some headwinds. Niche Products have a very broad portfolio of companies dependent on a number of segments and markets. Here, some of the really major ones had some headwinds all at the same time, and therefore, we are not entirely happy with the performance of the Niche Products division in the quarter. The EBITDA is still on a good level at SEK 102 million and an EBITDA margin of 19.2%. Strong still, but not entirely living up to last year, which was a really strong quarter and period for some of the companies. Tough comparables then for Toolmec and Asept, for instance, but also Truxter and Westmatic performed below last year. Some of these companies also have a dependency in the U.S. where we have seen some headwinds, partly due to the tariffs and the trade sort of discussions going on, but also due to the fact that they had really strong performances with some project-related businesses last year that they had difficulties meeting this year. Still, a couple of other companies really standing out, so very strong. Predo is one, continued to perform very well. Also, the VLT or Van Leuven Test Group in the Netherlands has been a really good acquisition coming in very well for the Niche Products division. Some of the older ones, ProfSafe, SIB, Thermal, and Waterproof delivered some good improvements as well. The International division then, the last one, we are very happy. The revenues were up 35% to SEK 500 million. Strong growth there, but most of it came from acquisitions. Organically, it was zero and some FX minus 4%. The EBITDA was up 47% within the division and the EBITDA margin at 19.2%. A really strong quarter. International has been the division that has been behind the others in terms of EBITDA margin, but they have picked up here lately, and in the last few years, it's been a gradual improvement or structural improvement within the International division. They are having some seasonality to their business now going forward. We will see what happens during the full year, but so far, it looks very good with the newcomers here, the Friggeråkers Verkstäder and Epoke coming in very nicely here, have a strong period at this part of the year. Also, the marine business, the Libra in Norway, DPCs in the UK, and G9 in Denmark continue to develop strongly. A number of companies are doing very well also within the International division. A strong quarter from the International division. Three divisions we're really very happy with. The TecSec and the Niche Products have a lot to work with or a few things to work with, but we'll probably pick up here going forward, I think. A temporarily weaker period. That was the quarterly report. Let's move on to where we would like to be with the group. To start with, I mean, we are really sort of focused on delivering on the Lagercrantz towards the 2 billion goal. As we've said many times, we would like our annual profits to get there. We would like our annual profits to grow by 15% per year. We will double our profits every five years. We've said that one-third of that should come organically and the rest through 8 to 12 acquisitions per year. As we said already earlier, we posted some 10 acquisitions here in the last 12 months. We're basically on that pace as we are now. The return on equity, we should do this in a very profitable way. We say that return on equity should exceed 25%. As you saw from the numbers, we're currently at 30%. We're ahead on that target as well as we move forward. Building a very strong group of niche-oriented B2B tech and industry companies and building in these five divisions. We have since now three years, three and a half years, building around these five divisions, building positions in what we feel is segments with some underlying structural growth. The electrification, the safety type products, a number of areas within the Niche Products area, but also within the International with the marine businesses, the water cluster that we have within the Niche Products division. We're really trying to find areas where we see some underlying structural growth. Most of our companies should be growing between 5% to 10% per year. It's not dramatic growth, but still high single digit is the ambition that we have for most or all of our companies. Building around these five divisions. One strategic ambition, which is also very important to us, is the aim for increasing the share of proprietary products. We have that as a key KPI for us. Here you can see how that's evolved since 2006-2007, where we made acquisition of Eel Press, which is one of the early ones in terms of having... Sorry. Go back. You saw that in 2006-2007, the 13% there. We have been growing. Now when we surpassed the SEK 1 billion goal, we said that we will move from 75% to 85%. We are currently then on the moving 12 months at 79%. In the report, you can also read that in the quarter, we were at 80%. We are approaching the 80% halfway. That is, we are basically on the right pace there as well as we move forward. With the model, we are also then looking quite a lot at acquisitions, 8 to 12 per year. We posted some 10 acquisitions since October 2024. You can see which ones those are here on this slide. We have gradually been putting more emphasis on our divisions to do more of the acquisitions. They're really picking that up. I think we're looking at a very good pipeline at the moment. We have also then gone more international with our M&A ambitions. We have since a couple of three, four years now been really present in the UK market, but we're also now looking into the Netherlands and other markets as well, Germany, Switzerland, other sort of Northern European markets, gradually increasing our emphasis there. It looks really very well. I think we're growing and scaling Lagercrantz Group AB in a very good way at the moment. Let's look into some, to give you an idea of what we've been acquiring, just a few ones. The MT Miljøteknik is a company in Denmark that is a bolt-on to the water cluster that we're building within the Niche Products division around the Wapor Group. Not a very big company, but still very good. They're very niche-oriented in their market, strong in their market, and delivering, as you can see, good EBITDA margins and good growth as well over the last few years. It's a nice bolt-on. That's how we normally work with things. We'd like to do this in a decentralized way. We'd like to see a lot of bolt-ons to the companies that we have already. That was one example. Another, which is more of a platform investment, is within the... Control? Control division, thank you. Where we acquired a company called Orax, which is a leading Swedish supplier of products for handling and maintenance within the funeral and cemetery sectors. It's a company we've been looking at for many years, really. Now it came up for sale in the right way. It's based in the west part of Sweden, close to Gothenburg. You can see down there, it's around SEK 50 million in terms of sales and an EBITDA margin of, yeah, close to or slightly below 20%, as you can see there. It's a very niche-oriented, strong company within that specific niche where they're working. A couple of more acquisitions, Epoke is another one, a slightly bigger one that we made in Denmark, which is a leading manufacturer of equipment for winter road maintenance and road safety, especially for spreading sand and salt. A strong player, a clear market leader in Denmark, strong also in Norway and in Germany and in the Netherlands, based out of Denmark. Slightly bigger than what we've done, slightly bigger than the average, I would say. Related to that, to some extent at least, is the Friggeråkers Verkstäder with the brand name Falköping, which is a very strong player in the Swedish market, a market leader in Sweden and Norway with the salt spreaders that they're providing. You see them in the wintertime and have some annual profits, so annual revenue of SEK 110 million and some EBITDA margin of close to 20% to 25%, as you can see here. A strong company, and both of these companies are then joining the International division or have been here since summer. Last but not least, we have another bolt-on, which is a bolt-on also within the Control division, now connected to Dell Electronics that have acquired some 100% of the shares. A smaller acquisition, but still, as you can see there, a strong EBITDA margin down there to the right. Some manufacturing supplies of instruments for measuring temperature and pressure is their niche that they're working in. Dell Electronics has other adjacent assortments, and this will add to that. It will be working in close relationship with Dell Electronics, which is an online sort of provider of different types of, yeah, more IT and network-related products. This will fit right in with what they're doing there. To round off, thank you. I think we posted yet another good quarter. You can see that net sales are approaching the SEK 10 billion. Probably we'll get there in a quarter or two. We see the EBITDA and EBITDA margin picking up along the way. You can see the EBT growing, going towards the SEK 2 billion, as we have said. Return on equity should be 25%. You see that's been about 25% for quite some time now. The EPS growth has also been very good for the last few years. We continue now with a pace of 21% here. That was not, we had a stronger period last year, but still doing it at 17% here in the quarter, as you saw from earlier. With that, I think we'll round off and open up for 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 Jakob Marken from Danske Bank. Please go ahead. Hi, Jörgen and Peter. Thanks for taking my question. I have two, but I can start with one of them. I'm just wondering if you can help us a bit on the M&A contribution in International. Quite a lot here in the quarter, and I guess that myself and my self-led colleagues had expected the summer months to be a bit weaker for Epoke and Friggeråkers, but that does not seem to be the case. If you can help us with the seasonality of those acquisitions, it would be great. I think the seasonality is that they're building and working quite a lot with their projects. I mean, it's a winter-related product they're selling, right? They're selling the most of what they're doing in the fall. I think they will have a strong sort of the October, November, September, October, November is usually their really strong period of the year. I think they're doing and delivering quite a lot during that, and it will take another couple of months before they get the cash flows out of that. The seasonality in those companies is strong, and we will need to deal with that along the way here. Okay, perfect. That's good. Thank you. The second one, I'm just wondering if you can help us a bit on the organic order growth. Would you say that they are similar to the sales performance in the different segments, or are there any segments that stick out, you know, both on the positive or the negative side on the order growth? Yeah, I think we have some project-related orders that are also to be delivered here going forward. If you look into it, you could see that we've highlighted that TecSec actually had a good order intake, but it's not delivering in terms of the quarter here. I think they have picked up with a number of good, more long-term related orders. I also see that we have that within the Electrify division. We also see Mast System picking up with some good order intake that is also behind the strong order intake. I think it's, generally speaking, very related, as you're suggesting, but with some things that we've also highlighted in the report, that especially within the TecSec and also within the Electrify, we've had some strong order intake. I think we can... We actually also in the International division have been strong, while it has been slightly weaker in the last quarter in Control and Niche Products divisions. Okay, perfect. Thanks. That was all from me. I'll get back in line. Thank you. The next question comes from Christian Binder from Redeye. Please go ahead. Hi, and thanks so much for taking my questions. One would be whether you could clarify around cash flow. You mentioned that you're not entirely satisfied with this quarter's performance. Can you just talk a little bit more about underlying reasons and potential measures, how that's going to improve in coming quarters? Yeah, I mean, we've seen some seasonality coming into the group, right, with the NRS business in the Nordic Road Safety that we talked about. I mean, they're delivering most of what they're doing during the summer, and they're getting sort of a better cash flow or they're getting paid during the fall. That we see happening, and it has been so for their... they've been with the group now for two years or something. On the Epoke and Friggeråkers Verkstäder, we have a similar seasonality, but it's more delayed leading towards the fall rather than the summer. We see sort of good cash flows. We expect good cash flows to come in here in Q3 and Q4. We'll see. I can add to that that we have seen some improvements in the working capital, also related to, for example, inventory and things like that that we are working with and not entirely happy in the quarter. All right, perfect. That was clear. Then just one follow-up on order intake. If I understood correctly, you know Niche Products was a little bit weak this quarter, and it seems like comparables for organic growth will remain a little bit tough. Should we kind of expect this quarter's performance to continue for the next quarter or two? Yeah, we're working on it, but there were some sort of strong sales in some of the... really strong comparables in a couple of companies last year, and that will probably continue for another quarter. Yes, that's probably correct. Perfect. Thank you. That was all from myself. The next question comes from Zeno Englund Ricciuti from Handelsbanken. Please go ahead. Yesterday, thanks for taking my question as well, two of them on the margin. Firstly, a follow-up on International. Yeah, big improvements which you attribute to M&A, and I would just like to understand that a bit more, especially with the slide on Epoke, which is the larger one which you showed, which at least on a yearly basis is margin dilutive. Yeah, they boosted it in what seems to be a seasonally relatively weak quarter. If you could nuance that a little bit. There is a seasonality also to the margin, right? What you see there on the Epoke slide is for the full year, right? We are expecting Epoke should, as most of our companies, we have definitely the ambition to drive margins in these types of businesses, especially the new ones. We expect that to pick up. Maybe it's not done overnight, but that is definitely the ambition going forward, that it should live up to the expectation and basically the average or so of the group. We have the ambition to always buy companies that have an excess of EBITDA margin of more than 15%. Epoke has been in that neighborhood, but we would like to establish them on about 15% more sort of on a stable, yeah, continuously. We have that as an ambition for that company, yes. Understood. Secondly, on the margin in Electrify, which continues to be quite strong, are there any effects in this quarter we should take into consideration so we don't extrapolate something that's maybe a bit better than it should? I think many other companies are doing very well within the Electrify division, and we have some really strong companies there. I think what stood out here during the quarter, as we've mentioned, is the Nordic Road Safety business that had a strong seasonality, but also had a strong sort of, yeah, performance here during the quarter. Whether that will be sustainable, let's see what happens, but there is a seasonality in there as well. Understood. Thank you. I'll get back in line. There are no more questions at this time. I hand the conference back to the speakers for any closing comments. Do we have any listeners? Questions before we round off? Yeah, we have one question also around declining interest rates in Sweden. Maybe you should take that one, Peter. The question is also if we can see more competition triggered by this cheaper financing and more competition in M&A. I think we have repeated this message a number of times that over time, the multiples in M&A have been very, very stable. As we have mentioned in the report, we see a very, very good acquisition pipeline. We haven't seen any material effect of more competition on the acquisitions lately. I think we're very, very stable and solid M&A situation. Yeah, we see interest rates coming down a little bit, and that, of course, is making our financing a bit cheaper. We don't see that affecting M&A to a large extent. We don't know. It's a very short answer. Okay, good. Thank you, everyone, for listening in. Peter and I are available here during the day if you have additional questions you would like to ask us. If not, have a good day. Thank you for listening in. I think it's a strong, solid quarter from us, and we look into the future with bright eyes. Thank you very much.