Welcome and good morning, everyone. Welcome to Lagercrantz Interim Report, our Q2 release here this morning. Together with me here is Karin as well, our CFO. We will try to go over the presentation as we normally do with a short introduction, and then after that, we will go right into the numbers and present the report. Then we will also have some highlights at the end and round off with Q&A and questions from you guys. So welcome, everyone, and let's get started. We start with page number number, where we see the—
Just to give you, the newcomers, a bit of an overview to the group. Lagercrantz is growing gradually, but we try to— a s you can see, we are a Nordic group, or Northern European group, with currently some 87, I think it adds up to now, profit centers growing little by little every quarter and y ou can see that we are developing along the way. We have more and more companies in the U.K. lately. We have also been growing in Central Europe in terms of the Netherlands and also in Poland a little bit here lately. You can see where we have our needles over to the right there.
We have, in the last year or so, surpassed SEK 10 billion in sales and currently at SEK 11.6 billion, so we're growing quite in a high pace. We are currently some 4,000 employees within the group. We are firm believers in the decentralized way of working with the accountability of freedom and running each of these separate units and profit centers, and try to keep them as autonomous as possible in their areas and under their own brand name, in their own location, and addressing their specific customers and markets in each of the specific units.
Acquisitions is, of course, a central part of being a serial acquirer, and we are currently running at 8- 12 acquisitions per year or so. It's good to see that we posted some eight acquisitions here in the first six months, which is a little bit higher than we're aiming for and a bit before target. We have now are also celebrating here, and did during the quarter as well, celebrating 25 years as a separate company on the Stockholm Stock Exchange. We were part of the Bergman & Beving Group up until August of 2001, and are currently now running on our 25th year, or 26th year, really, as a separate company.
We have changed the content of the group over many years now, going from more of value-adding distribution and sort of import-related businesses, selling to many of the multinational companies that are buying our components and selling them all over the world. But the customers used to be quite of the big ones that do more domestic sales. But with now, we are aiming more for proprietary products where they have their own products selling out in the world, and then we're changing the model from being more import-related to being more export-related.
You can see where we have our footholds in other parts of the world, down to the right here, where we are both operating in North America but also in China and in India and a couple of other places there you can see. That is a bit of an overview in the group. We announced our figures here this morning, and it is glad to see that we posted a really good growth for the quarter, and that also translated into good growth in earnings, s o we kept our trend here. You can see the trend peaking upwards there, and we are aiming for the SEK 2 billion here, and this was another quarter in that direction where we are aiming for that here.
We started out some three and a half or so forth, two and a half, three years maybe ago, with the SEK 2 billion, and we are aiming to be there within a year or two from where we are today. So another strong quarter, and you can see that the trajectory, and we have had many quarters now in a row where we have grown both profits and revenues over time. So it is another strong quarter I think we posted here today. Karin, maybe you can elaborate on the numbers a bit here. First we should go over the business conditions. That is right.
The business conditions, well, we think that the trends that we have seen earlier on remained during and remained positive during Q2. It is a summer quarter, and in July and in August, it was slower due to seasonality, but also a bit slower than it used to be. But it picked up again in September, which I think was good to see. We saw that the businesses exposed to electrification, infrastructure, security, and defense, the things we have highlighted before, and to continue to deliver particularly strong growth while demand in the construction sector, which we have been waiting for to pick up, but it is still a bit slow and a bit sluggish here along the way within that sector.
Of course, the geopolitical situation in the world is, of course, adding to the uncertainty. So we are sort of hesitant, I think, in many areas. We see customers being hesitant to where things are going as things evolve in different parts of the world with affecting freight prices, affecting raw material prices, but also affecting sort of the willingness to invest among customers. But we have seen some strong growth in some areas, so it is picking up along the way here. As I highlighted, we saw a bit of a softening during the July and August, but it strengthened again towards the end of the period, September then or along the fall here.
Gross margins remained stable, but signs of cost inflation was also something that we saw. We saw that was driven by higher raw material prices and freight prices that we have seen. So we are working deliberately now with also compensating through price increases to customers in many of our companies. It's a theme that we're running as we normally do, but maybe more fiercely intensely at the moment. You can also see down to the bottom here, we see that we are gradually becoming more and more international. You can see that from the net revenues by geographical market down to the right there.
We are growing in Sweden as well, but as a percentage of the total group, we're growing faster in other markets, and especially one that is really growing faster is the United Kingdom or U.K., currently at some 10%, but also with some additional M&A being done there. I think that will pick up even further as we move along. I also think that you will see us more and more into Germany and the Netherlands along the way as we grow.
We've also been keen on measuring the proprietary products part of things, and we are aiming for the 85%, which I have maybe a slide later on, but we are currently at some 80%. I think it was 81% actually for the quarter, but on the rolling 12 months, it's 80%. So those are something that we are aiming for as a strategic aim because we see better growth and better margins within proprietary products than in the rest of the categories. That's a bit around the business conditions. Karin, then it's your turn then. Yeah.
Yes. Thank you, Jörgen. As Jörgen mentioned earlier, we deliver another really strong quarter. As you can see here, our revenue grew by 22%, with an organic growth accelerating to 12%. You can compare that to last quarter when we ended up with 6%. Acquisitions contributed with 9%, and currency effects only added up to one. Our EBITA increased by 21% to SEK 530 million, and that resulted in an EBITA margin of 17.8%. Our most important earnings profit of the financial items rose by 24% to SEK 425 million . Cash flow in the quarter was somewhat weaker than we anticipated but remained at a healthy level. Net profit for the quarter amounted to SEK 340 million.
If we sum up the first six months then, our revenue increased by 20%, and then in the first six months, the acquisition contributed with 11%, while the organic growth amounted to 9% and w e had no material impact from currency effect. EBITA increased by 18% to SEK 1,0 29,000,000 compared to SEK 872 million last year, and that resulted in an EBITA margin of 17.4%. Our EBT profits after financial items increased by 21% to SEK 830 million, and the operating cash flow ended up at SEK 549 million. Return- on- equity improved to 31%, and the equity ratio strengthened to 32%. Our internal performance measure profit over working capital is in line with previous year, the same quarter, and remained at 72% and o ur earnings per share increased to 6.45 SEK per share.
Just finally, during the first six months, we completed eight acquisitions with a combined annual sales of approximately SEK 660 million . Jörgen will describe more about these later on, but these acquisitions were completed across several divisions and countries, and that strengthens our platform for continued growth.
Yeah. Thank you. Let's dig into the different divisions and what we see there. The Electrification and Electrify here has had a tremendous good development in the last few quarters, and that continued here during this quarter with some revenues picking up 22%. We see some acquisitions part is slightly lower than the average of the group, so 4%, but organically they're now up 18%. So here we see some really good growth in many of the companies. EBITA also grew by 19%, and the EBITA margin has been now sustainably at about 20% here at 20.7% for the quarter. If you look at the last few quarters, you can see that it's been about 20%, and that's where we would like to have the full group and n ow we have really established Electrify on that level.
We see some favorable market conditions within this area. A lot of the green transition is happening. A lot of investments are being made in the electricity grid. We are doing the green transition also in terms of wind turbine deployments and there where we have our customers. We also see some good growth within the Infrastructure segment, which is also part of this. So we saw some particularly good performance within Elpress, which is the really big contributor and size-wise in the group. That continued here and strengthened during the quarter as well. So Elpress is doing really well at the moment.
Elfac is our Danish operation, with also some within the wind turbine segment, doing really well at the moment as well. Tykoflex, VP metall, and Elkapsling are a couple of other companies that are also doing very well building not only electricity grid, but also fiber grid and all types of other things as well within that area, within Electrification and Infrastructure. It's also good to see that Michael Smith Switchgear, that we acquired here in the beginning of the year posted a strong first half year as part of the group. That was the entry of Electrify into the U.K. market, and that turned out really well for us, or for them.
The Control division then on the second one here, revenues also was up really nicely with 29%. Acquisitions as part of that was 12% and organically 16%. So also very good organic growth here within the Control division. The EBITA was slightly lower, but that also resulted due to some non-recurring restructuring costs that we are. We have some construction-related smaller businesses that we are addressing at the moment, and that added some extra cost here during the quarter. If we take out these extraordinary costs, we probably would have an EBITA margin at the same level as last year or slightly below there. Most of the difference is actually due to these non-recurring restructuring costs.
Here with really some companies that stood out is the CP Cases, Nikodan, Radonova, Direktronik, and Stegborgs. Some of them are doing it really well, but they're smaller, so they don't add that much to the division. But especially CP Cases and Nikodan are slightly bigger in this part of the year, and especially the CP Cases both in the U.K. but also in the U.S. operation. They performed really well here during the last year, and it is also part of the organic contributing very well to the organic growth that we see here. We saw some continued headwinds in the Construction segment that impacted parts of the division. That was also, we are addressing that along the way here now.
The two acquisitions completed in August, bf1systems and Skandinavisk , I will come back to those, but that is also good that they are making new acquisitions. Control is the smallest division that we have, and then it is good for them to add on some more businesses to sort of have a broader base to work from. That I think is really good for the Control division. The recently acquired Hikom that we did here early on this year during the springtime performed well in line with the plan during the quarter.
The TecSec division revenues there were up 37%, and most of that was coming from acquisitions, but organically it still was 13% and FX 1%. So good organic growth there as well. The EBITA was up 32% to SEK 90 million and an EBITA margin of 13.4%. Here you know that we are struggling to get the margins to raise again, and I think we posted a decent quarter, but we still have more to expect from the TecSec division. Several of the division's security businesses, especially Idesco in Finland, but also ISG in Norway, delivered strong performance during the quarter. PcP, the division's largest business, also reported increased sales and earnings across several markets. I think the margin was slightly down, but in terms of earnings, it was up from last year. So that business posted a good quarter.
The market conditions remain weak for the construction-related businesses, which is Lauria, Door and Joinery, and Principal Doorsets are examples of those. There we expect more when we see the market pick up again as we go along here. The recently acquired MedTech businesses I Holland and Marsden in the U.K. both have a strong start to the group or to the division. Especially I Holland, which is a bit more sizable, have performed really well here during their first nine months, I think it is now they have been with us. So it is good to have them with us a good business that we acquired there in the U.K.
We move on to the next one, which is Niche Products. A couple of more to go here. Revenues there were up 19%, and that was mostly acquisition-driven with 11% through acquisitions and organically 7%. That is a good number as well, but even though it is below sort of the average of the group of the 12% that we talked about earlier then. The EBITA rose by 43%, so they have really and posted a strong very EBITA margin. So they are performing really well and pushed through a lot of their price increases now towards their customers that was necessary, and they have also had some U.S. exposure that is also picking up and doing it better along the way.
So a strong second quarter with solid growth, both organically and through acquisitions. We saw particularly some companies did it really well. Those are part of the organic side. So Asept in Lund and in North America did really well. Triado with their folding doors in Sweden did really well, and Tormek and Waterproof also did really well here during the quarter, b ut also the more recently acquired companies, Sit Right and [inaudible] and especially Stalam posted a really strong start within Lagercrantz. So welcome to those companies into the group.
We round up with the last division, which is the International. Their revenues grow by 5%, and they have not performed an acquisition here in the last 12 months, so therefore the acquisition part was zero, but organically was up 5%. A fairly good number where they should be, but we probably would expect more in this part of the market at the moment. We also saw the EBITA decline slightly. Here they were up against some really tough comparables that I will come back to, but the EBITA margin still at a decent level of 17.3%. We saw some stable overall market conditions in most of the businesses.
But we also had some that really stood out, which is Tebul, part of the marine cluster working out of Finland. DeepSea is doing it better and better all the time, performing really well, and also the Unitronic with their new business with some new supply lines adding to that business in Germany with the Unitronic business. So those stood out in the positive side, b ut we also had some other issues here. We have posted some good orders within the road maintenance segments, but the deliveries were slightly lower than last year. Last year they did it really well for us, so they also were up towards some really tough comparables in that business, b ut I am not worried going forward. It looks good.
Now it is up for us to have a tough winter, which we like in this business. Also the maritime company that we have, the Libra in Norway, also posted they had really a good performance last year and did it well this year but did not live up to last year really. Some ups and downs a little bit with different companies here. A lot of detail there, but to give you some flavor on how we see things. So I think we will round off with the outcome by division here. Here you can see the numbers quarter by quarter, and it is great to see that we have really five really strong divisions we are building. We are building by adding companies in new sectors, with the MedTech sector, for instance, within the TecSec division.
We have added the infrastructure segment within Electrify in the last few years, and that is also paying off. The Electrify also growing into new geographical markets, s o we are growing our divisions in different areas. Also, the Control acquisition of bf1 was really important for that division, even though they are still the smallest here, but I think that will pick up here as we move forward. We are still working with operating margin of roughly 18% or so. I will come back to that shortly, b ut really some five divisions on a healthy level, even though the Niche Products and Electrify are fully at the 20%, where the other ones have a little bit more ways to go before we are fully there.
So that was maybe the quarterly figures. So let us have some highlights on what way we would like to go from here. We would like to continue building our group in terms of building these very strong portfolio companies illustrated with these arrows here representing one company each. Very sharp, very lethal, very sort of powerful as separate, but also that we can be a good owner of these companies along the way. Then produce the annual profit growth of 15%, where we over a long period of time, I think there is a reasonable expectation that we should have an EBT growth of 15%-20%, 1/3 of that should probably come organically, while the rest, or 2/3 , should then come through currently some 8- 12 acquisitions per year.
I think we will gradually need to increase the 8 to 12 as we grow because it should represent some 10% of the sales every year then. As the base grows, of course, the number of acquisitions needs to pick up along the way. But currently we are at 8- 12, and we posted eight here the first six months. We are ahead of that goal at the moment. Return- on- equity, and we should do this in a very profitable way. We have the return-on-equity of at least 25%. We will continue then doing this by building our five divisions: the Electrify, Control, TecSec, Niche Products, and International, and I have been over these already.
But what we have put together here since five years is really a setup where we think that we are addressing areas which we find interesting in terms of that we can build sustainable, good profitability in these areas and good growth. So we are looking for sectors where we see some underlying structural growth by setting it up like this. That was also what we see in some years down the road as we have had this now for some four or five years, whatever it is. Yes, something like that. Mm-hmm.
But we also reiterate in the financial targets that we are aiming for the 20%. Even though we had good growth here, I expect more of us in terms of the EBITA margin as we move forward. The target is 20%, and we plan to deliver that within two to three years, as we have said. The profit over working capital should then exceed 60%, which is where we are at the moment. When you read the numbers, you can see that we are already there in that target. But we have some still ways to go with the EBITA margin here. So I think I would like to highlight then instead that the revenues here grew by 22% in Q2. The organic growth then of the 12%, which is the brown part here, actually is the highest organic growth we have had since 2021/ 2022.
After the pandemic, we saw some part of really good organic growth there was a while where it picked up. So the 2021/2022 and 2022/2023 was really high. Then it came down a little bit as we saw the market and the business conditions and the business climate, especially in the Nordics and Nordic Europe, come down a little bit. Then we also had some quarters there you can see with even negative organic growth. But then it is picked up again, and we have been at 6% here for a couple of quarters, and now we are at 12%. So a really good growth, I think, for the quarter. Looking back, it is actually one of the best we have had here for a while.
So a strong quarter we closed is our view on it. Then we also posted 13 acquisitions here since the same quarter last year, so since 1st of July, 2025. We have also added more than the 10% we are aiming for that you saw on the previous picture. It is SEK 1.3 billion here in terms of annual business volume, which are really good companies that have been doing really well for us. Epoke & Friggeråkers is doing really well for us. The season starts now for next year and the winter. I Holland was a really important one for the TecSec, also moving into the MedTech sector. That was also then followed up by the Marsden acquisition. I also would like to highlight the bf1systems in the Control division. Let us look at that one. That is on the next slide, I think.
Yeah, the bf1systems is the most recent one we did here in, was it August? Which is a company having sensors for pressure and temperature, force, position, and speed, especially for the motorsport industry. So there is having good volumes going into different parts of the motorsport segment, which is the Formula One and other categories, but also other areas with these sensors. They have been performing really well for some years. You can see down to the right there, with some also very good EBITA margins along the way. A bit of a sizable company, especially for the Control division. So this will be an important holding for the Control division.
So that is the bf1systems. I have the other ones as well here, but I think I have already introduced these, so maybe we should just round off. We have the other seven that we made here. Let us round off and open up for questions. I round off with a financial overview. You can see here that our long-term trajectory with some revenues going from SEK 3 billion to almost SEK 12 billion. So we have good growth in terms of revenues over some years. You see the EBITA and the EBITA margin picking up, and we are now pushing to get to the 20%. The EBT and the EBT growth should be 15%, and we have been delivering that most years.
Some years due to different reasons, we have not been there every year, but most years we have been there. The return-on-equity there should be 25%, is our goal. So we could see that we have, over a long period of time, delivered on that. Earnings per share has been growing quite nicely as well, and currently we have some earnings per share growth of 21% here for the rolling 12 months compared to last year. It was actually even higher here for the quarter, but I think the 15%- 20% and pushing that a little bit is on a really good level. With that, I think we will 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. The next question comes from Zino Engdalen Ricciuti from Handelsbanken. Please go ahead.
Good day, Jörgen and Karin. Thanks for taking our questions. Starting off with the organic development, which you highlight is quite strong, while you also highlighted that there are some delays in Electrify, I think it was Durmastystem, and then you mentioned that there were delays in International, which I assume is the winter road maintenance companies. Is it possible to give some sort of flavor or quantify the impact? Secondly, if the deliveries could be postponed again in these companies?
Well, there needs to be an individual answer to that. I think that most of them have a project-related business that when they have big deliveries, which will happen every other quarter or so, then it will stand out as a really strong number for them. What we have tried to highlight here is that for this quarter, it was more of a normal quarter for them.
They have things to look forward to, and they are doing a good job in bringing in new orders, but the quarter here was not any huge projects being delivered, even though we also highlighted that the outcome was slightly better than last year still, but it was not the big chunky delivery that we have seen in a couple of other quarters going back. I think the other companies, we have some project-related businesses. I think the beauty of Lagercrantz is that we have these in different parts of the group, and they balance out a little bit. So we had a couple of bigger ones being delivered within the Niche Products division, while in other divisions it actually balances out over time.
Clear. Thank you. Regarding Control with the very strong growth, is there anything that needs to be highlighted there in terms of one-off orders or similar?
I don't think it's one-off orders, really. I think most of it is actually coming from good underlying growth, especially within the military sector and especially the CP Cases business. That part of the business is growing quite nicely, we also see some good pickup in Nikodan in Denmark. In Nikodan it might be a bit project related, but most of it is actually more of a new level for them.
Hmm. Just very last for me in Control, these restructuring costs that you've taken, do you think you are done with them or should we expect them ahead as well?
In our ambition to push for the 20%, we're also addressing some of the low-performing companies within the group, we have a couple in the Control division. We have a couple in the TecSec division and a couple of other places as well. So there are three, four companies that we are pushing quite hard at the moment, that might lead to some restructuring costs in those areas also in the coming quarters. But we've had that for a couple of quarters now, I think we will probably have it for another quarter or two before we're fully through that.
Clear. Thanks for taking my questions. I'll get back in line.
The next question comes from Adrian Gilani from ABG Sundal Collier. Please go ahead.
Yes, hello. I would also just like to follow up on the organic and just trying to figure out how replicable the strong figure is in this quarter. Is there any division you would flag where growth was perhaps driven largely by one or a few companies, and if that is then replicable going forward?
No. I think the simple answer is that it is fairly broad based, b ut in a group of companies like we have, there will always be companies that are standing out a little bit, and I think we have tried to highlight who those were this quarter b ut it is not like we have a big one-off that has been delivered this quarter. It has been a good market and the companies have picked up and the organic growth has been better.
Not to say that it is sustainable at that level. We will see. It depends on how the market evolves over time here b ut it is not like we have a big project-related order that really pushes. You can see that when you look at the organic growth by division, you could see that it is higher than the average in three of them, and that also illustrates a bit that it is more broad based.
Understood. On those project deliveries, I appreciate you won't give any sort of quarter- by- quarter outlook on spots. If we just take overall situation now compared to perhaps six months ago and 12 months ago, those lumpy project orders, is the backlog clearly stronger now compared to what it was, I guess six and 12 months ago?
Yeah, I think it's picked up a bit and the lumpiness is there, but it's not like it's one company or two companies. It's more like it's five or 10 companies that actually see a better ordering take. I think we've illustrated that earlier on with that we see the willingness to invest in bigger projects has come back to some extent. We also was a bit afraid that people get hesitant again with the geopolitical uncertainty that is increasing again. September, it illustrates that we are in a better trend in terms of the underlying market.
That makes sense. On a broader note, you mentioned at some point, perhaps having to raise the 8- 12 acquisitions range that you've given. You're trending above it for this fiscal year already, but I guess, is this something you're already having discussions about doing in the fairly near future, or is this further out?
I don't think we will change the goal this year. I don't think. We have gradually improved. I think we started by two to five acquisitions per year, and then it was six to eight, and then it was eight. Now it's 8- 12, right? We have gradually increased ambition. I think what you should expect from us is really that we try to grow at least 10% through M&A of ourselves every year. That means since we are looking for these smaller transactions, then the number also increases, but it's the 10% that I think you should, yeah, measuring us on.
Okay. Then a final one, just a housekeeping question. In Control, you mentioned non-recurring restructuring costs. Maybe I missed it, but did you mention a number on that?
No, we didn't. I just illustrated that most of the margin decline is—
Yeah.
—due to the non-recurring.
Okay, understandable. In that case, that's all from me, so thank you.
Mm-hmm. Thank you.
There are no more questions at this time, so I hand the conference back to Jörgen and Karin for closing comments.
Yeah. Thank you everyone for listening in. Posting another really strong quarter and good to see the good wording has been out there in the market around it, and we believe it is a strong quarter. We are in a good growth path, and we plan to continue going forward. Good that you are listening in. If you have any additional questions, we are available here to take your call. So give us a ring, and we will try to answer any further questions you might have. Thank you everyone for listening in, and have a good day.