Thank you very much. Good morning, everyone, and welcome to this call where we are going to talk about Nederman Holding Q3 2020 report. We start with two headlines, good margin development despite market challenges. We have, through the period here, been able to not only maintain, but actually slightly improve our margins, which we think is a good achievement considering the market challenges we have seen over the period. This is a result of the early actions taken already in late Q1, Q2, and now resulting in that we have a good cost control, and we see also that we had a bounce back in September when it comes to sales and order intake after very slow July, August. We can also say the digital solution displays strength.
We have since a couple of years, two, three years, focused a lot on the digitalization journey in Nederman as well as the clean air journey, where we now have solutions with the acquired companies as well as with our own developed equipment, where we continuously introduce these on the market. We have seen that if you could say a positive effect of the corona pandemic and the close downs, lockdown, has been that people see that being able to have remote services, better understanding, has a value. We've seen that in a strong order intake in that part of our business.
If I move on to slide three now and go through some financials for Q3. Orders in the quarter amounted to SEK 827 million versus SEK 965 million last year. That's a decreased currency neutral of 5.6% versus the same quarter last year. We've got some comparisons with Q2 in our report this year. I think that's quite relevant in order to understand how the world is developing in these unstable times versus Q2, our order intake was up by almost 12%. Sales for Q3, SEK 826 million versus SEK 1.089 billion in Q3 last year, which is a decreased currency neutral of 16%. Adjusted operating profit for the quarter, SEK 63.5 million versus SEK 77.9 million. As Sven has already mentioned, our operating margin has increased from 7.2% in Q3 last year to 7.7% in Q3 2020.
Net profit SEK 31.5 million versus SEK 52.8 million last year, which gives us an earnings per share of SEK 0.90 versus SEK 1.50 in 2019. If I move on to slide four and take the financials for the year- to- date. We are on orders received of SEK 2.562 billion versus SEK 3.028 billion at this point last year. That's a currency neutral decrease of 12.5%. Sales have decreased at the same time with 12.3%. Operating profit, including our restructuring cost of SEK 75 million, was SEK 125 million for the year- to- date versus SEK 235 million at this point last year. Adjusted operating profit, where we add back restructuring and acquisition costs, comes to SEK 202 million versus SEK 236 million for the first nine months of last year.
Adjusted operating margin is increasing for the year- to- date as well, 7.4% versus 7.3% at this point last year. Net profit SEK 55 million versus SEK 153 million gives us an earnings per share of SEK 1.58 versus SEK 4.37 at this point last year. If we move on to slide five, Sven will tell us a little bit about Extraction and Filtration Technology division.
Yeah. Extraction and Filtration Technology is the largest division. They mostly work on the brand Nederman. Their focus area are wood industry, welding industry, metal fabrication, composite, and other dust applications, just to refresh your memories here. The key activities for the division has been to continue launching what we call future-proof, smart IoT-enabled filters. They can optimize and control the air filtration. We have also slogans like taking control over your air filtration. This has been a plan. It's been slightly delayed, not because of the R&D people, which is the normal case. In this case, it's been the lockdowns. We have had a plan to early in Germany for the metal industry, have a big launch, and in late August in Atlanta for the wood industry, the world's largest woodworking fair. Unfortunately, which six months ago, I did not think would happen.
They closed down both of them, so we have had to launch them in a different way, trying to use and develop online webinars and with some success, more than some, I would say. We have been able to get our message across, but it's of course a drawback and a disappointment when we had 80% of all advanced filters at the IWF show in Atlanta would have been with Nederman IIoT-enabled filters. Again, we have to adapt, improvise, and overcome as one of our division managers takes from Clint Eastwood. We have had to do it this way. We have also launched a dental market system for aerosols, which has been a topic now with people not wanting to go to the dentist and the dentist not wanting to take care of it. We have launched that especially for the American market.
It's a known fact that aerosols could be a very significant problem in dental, and it's a 20-year-old knowledge, but now it starts to move. Further measures relating to cost implementation have also made us reduce our expenses considerably. When it comes to the market, we can, of course, go through all this, but you can see it has been like a roller coaster. They open, they close, they open, and they close, and we see different effects in different markets, and it changes week by week. It's also so that there's not a long visibility on decisions in this case. If we summarize it, APAC has come back, especially China. They are moving faster than the rest of the world, especially China, and they have booked some large orders, and also we see a return in Southeast Asian market there. North America has had a difficult time.
Wood industry's been okay. Some of the engineering markets, car industry, and so on, has been significantly weaker. In Europe, as you see here, Germany been weak. We have Belgium that has been less affected, Netherlands and so on. I leave that for you to study, and it's very much the same pattern that you probably see with other people working with investments related and also the engineering sector as such.
If I take some financials on this division, Extraction and Filtration Technology, we see the incoming orders SEK 360 million versus SEK 494 million in the same quarter last year in an organic decrease of 20%. Sales down by 19% as well. As we said, we've managed to reduce expenses significantly, our adjusted EBITA has decreased to 48.6 million, that gives us an EBITA margin of 13.6% of sales versus 12.6% for the same quarter last year. A margin improvement in this division. Year- to- date, the margin is 12.9% of sales versus 13.1% for the year- to- date last year. Obviously we've managed to compensate for some of the rather large drop in revenue that we've seen, particularly in Europe and Americas. I'll move over back to Sven again, we talk about Process Technology.
Yeah. Process Technology, large system, very much integrated in the process of our customers, it's large filters for foundries, smelters, textile, or fiber, and other significantly large investments. Our key activities in this segment has, of course, been to try to secure what business is there and what is planned and try to build a strong backlog. Here we've seen a return in the textile fiber segment, especially in September. It will be so that we have a pipeline, and we'll see when the decision makers are ready to sign. Of course, we are moving forward. We have seen an extra end with our digitalized filters, with our ability for a remote control, remote service, and so on, has given us an advantage in this market. We are also dealing with potential aftermarket revamping for large, especially American groups at this time.
We have had a continued focus on cost control, and we have managed to keep the expense under control in order to secure that we can deliver profitability even in this demanding time. Weak demand, although some brightening in the market situation can be seen. It's been especially in September where we've seen that the orders and projects had booked earlier are now restarted and is moving on, although some are pushed in, or very many are pushed into Q4. There are some optimists in some areas of the market, and we can see increased activity, meetings starting to be launched. Of course, it doesn't help that we are now seeing lockdowns in Europe again. Textile segment has been challenging for some time.
Spin mills has suspended production for long period. We can see, as mentioned earlier, that we see some recovery and interest in improving their capabilities. We have had problems in the Indian market, where we have not been allowed to have more than 10% of the workforce, including white collars and blue collars, which has slowed down work, which has led to that we had to change some destinations of where we could perform work. That is as of October, now open again. It's now only trying to find the right orders. The orders received in the quarter were clearly better than 2019, and it was very much in September where we saw the customers coming back to us. As also expected, the foundry segment had a very weak performance. There has been a low-level demand from automotive industry, and some have been postponed.
Increased activity has been seen towards the end. Again, I'm talking about September, where we've seen activities. We have been active on the aftermarket, keeping the machinery rolling at our customer, and that has been successful so far. Now over to Matthew.
Financials for the Process Technology division, if we take order intake again for quarter three, 233 million SEK versus 291 million SEK in quarter three last year. That's organic decline of 7.4%. Sales were down significantly more from a very high 419 million SEK last year to 266 million SEK in the quarter this year. Nevertheless, EBITDA dropped by approximately 7 million SEK from 21.5 million SEK in 2019 to 14 million SEK this year. 14 million SEK in EBITDA gives us a margin of 5.3%, which is an improvement from 5.1% in quarter three last year. If you look at the year-to-date, growth on order intake is down organically by 24%. What we see is a slight improvement in this quarter, given that we only decreased by 7.4%. Sven, I will move it back to you in Duct & Filter Technology.
Duct & Filter Technology is where we have our special ducting and filters that are replacement filters and filters that are in our equipment. Key activities has been to complete the restructuring program to protect profitability, and that has been done. In U.K., we have started the preparation for what seems to be not unlikely, a hard Brexit, and this is a very important market for us. If we look at it as total Nordfab, under the brand where we sell our duct, we have had an overall negative growth compared to Q3 last year. Sales declined in U.S., but if we compare to Q2, we have seen a modest recovery. Again, the same pattern, later in the quarter, it became better and better.
In Europe, we have seen a decline, but we have seen that in our APAC small operation in Thailand, we have seen the profitability improvement continue, and we have seen that especially compared to last quarter, we have seen a significant upturn. Menardi Filters, it has been affected by the fact that we have not been allowed on nor any other service within two sites, and that's a situation where they have not been able to do the replacements as planned and thus postponed them. Europe, we've been in line with last year. The U.S. market is significantly larger for us.
Incoming orders in Q3 for Duct & Filter Technology were SEK 92.1 million versus SEK 135 million in the same quarter last year. That's an organic decline, I should say, of 21%. Sales were down also by approximately 21%. It's very much in throughout business. Sales for the quarter, SEK 106 million versus SEK 154 million, excuse me, SEK 155 million last year. That includes sales to our other divisions. Adjusted EBITDA for the quarter, SEK 14.4 million versus SEK 21 million last year, gives it exactly the same EBITDA margin of 13.6%, which also shows that we've been able to keep our costs both in manufacturing and our general expenses under control. Year- to- date, the division has seen an organic decline in orders of 19.2%. If we move on to Monitoring and Control Technology now, Sven.
Yeah. If we haven't had happy messages, we can now take the best of the last in this presentation of the four divisions. Monitoring and Control Technology is, as you know, the acquired companies, Gasmet, NEO Monitors, are measuring gases and particles and controlling also leakages, potential leakages in filters and predictive maintenance possibilities, et cetera. The key activities has been to launch, now delayed due to the fact we couldn't go to the exhibition we planned to, but we have launched them and we have had the largest Insight sales. It's sort of a breakthrough here. It's one order for 120 filters at the customer for one single plant in the U.S. I'm sorry, we are not allowed to tell you who it is.
The Insight technology with monitoring and alarm function will be used to EPA reporting. That is to meet the emissions reporting from the Environmental Protection Agency.
Even if we have a negative twittering when it comes to environmental things, there are still things happening also in the U.S. market. We have continued to, in cooperation with the other divisions, launching the smart filters, and that has been the extraction and filtration for the wood, the latest launch. Highlights. Highest ever quarterly order intake for the division. Asia remains the division's strongest region, with significant growth both in orders and sales, and we continue the positive development. We had a slight order decline in EMEA, and it's been the very hard lockdowns in U.K. and Germany especially that has pushed orders forward and given us problem to access customers. In U.S. we have grown compared to last year and also last in Q2, so that has continued.
Financials for the quarter for Monitoring and Control Technology. Orders received were SEK 143 million versus SEK 54 million in the same quarter last year. That's currency neutral growth of 175% organically, so there is underlying growth, it's not just purchase organically growth was 24%. In sales we sold for SEK 115 million versus SEK 56 million in the same quarter last year. Currency neutral growth 115% there. That volume growth gives us an adjusted EBITDA of SEK 22.4 million versus SEK 1.5 million in Q3 2019. The EBITDA margin adjusted is therefore 19.4% versus 2.7% in the same quarter last year. If we see on the right-hand side, the year- to- date currency neutral growth on orders is 119.5% despite the extremely low Q2 or tough Q2 we should say, organic growth is still positive as well in this division with 2%.
EBITDA for the year- to- date SEK 60.5 million versus SEK 12 million at the same point last year, 17.1% EBITDA margin for the year- to- date is clearly above the average for the rest of the Nederman Group as would be expected now. If I move on to slide number nine, there's some financials for the region. Perhaps the most telling thing here is that we see in the order intake in APAC has bounced back fast or faster than the other regions. Americas and EMEA still showing orders declining in the quarter, obviously a clear upside in Asia versus Q3 2019. I think that's the most important numbers on this slide.
If I move on to Slide 10, we see the cash flow from operations and we see the Nederman typical trend continues with an improved cash flow throughout the year. A reasonably solid quarter of cash flow. We've made money, we've managed to collect it in, we've kept our working capital under control, and this is obviously extremely important in these times. Cash flow from operations SEK 141 million so far this year, and this is despite having cash outflowing from the restructuring programs, approximately half of the spend as cash flow is hit as well. Reasonably good position there, and of course, if you move on to Slide 11, if you keep your cash flow coming in, your debt comes down as well and we see a slight reduction in net debt over the quarter. Sven, back over to you. A summary of the quarter three.
Let's do a quick summary of the different divisions and for the group. Extraction and Filtration Technology, the lockdowns have had a major impact in Europe and Americas. However, it seems like Asia is opening up and we've seen positive trend there. Process Technology is still under a lot of pressure when it comes to getting orders done, but we've seen in the quarter a growth in fiber and textile, and especially APAC again coming back. Duct and Filter Technology, a negative growth, but a slow pickup has been seen, especially later in the quarter. Monitoring Control, very strong order intake, and again, Asia driving very strong for this division as well. If you look overall for the Nederman Group, we have, despite the situation, had a good margin development. The digital solution displaying strength.
We have seen growth in Asia, but Europe, America is very slow in the recovery. We have a solid cash flow. We take the very long outlook this time. I've been saying that there is currently extreme uncertainty regarding the development of the global economy during Q4 2020. Nederman expects the effects of COVID-19 pandemic to remain considerable in most of the group's markets. We're doing our utmost to navigate successfully in a highly unpredictable time and have a high level of readiness to adapt our operations. A contributing factor to these difficulties are major differences in COVID-19 restrictions between different countries. Prevailing regulations are often changed in one direction or another, and the signs from authorities all over the world are often difficult to interpret from a long-term perspective. Accordingly, it's currently not possible to provide a detailed forecast for developments in the coming quarters.
A positive effect of the lockdowns is that they have shown what the world looks like when the air is not polluted by industrial emissions. This is the world that Nederman is working to create by offering the effective industrial air filtration instead of paralyzing pandemic. We demonstrate every day that this can be achieved as every installation that we implement.
Okay. On Slide 14, we see the financial calendar. I believe that the only date that we had not previously released is the interim report for January to September next year. That will be released on October the 22nd, 2021. With that, I think we can open up for any questions that our listeners have.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. That is zero one to register for a question. We have a question from Daniel Lindkvist from Handelsbanken. Please go ahead.
Hi, guys. Can you hear me?
Yes.
Yeah. Just looking at the quarter, there were some dramatic numbers as expected, but now you see signs of activity picking up. My question is simply how much is postponed volumes and not lost business? Are we talking 75% or something, can you give us some flavor on how you view things?
Process Technology. Yeah. It's very difficult to give you a straight answer, very few orders will be canceled as long as our customers are alive and kicking. They want to do these changes, there's also push for the environment. Yeah, I would say that could very well be. How drawn this recovery will be, that's something else, and that's very much depending on the general, how should I say, what's going to happen there. Are we seeing significant closedowns again and so on, then they could postpone even further. We have some, they have been postponing it from April. Now it seems they are restarting it now in October, the project, because they have to if they are going to continue doing business and so on.
You are not completely wrong. I can't say exactly, but it is very much about the gut to sign the paper, do the investment, and it's very much related to how their own business is performing.
Okay. Simply at some point, you need to do the investment to stay in business.
Yes. Absolutely.
If we take Process Technology division, we hear nothing of any project, and they're the ones with these longer-term projects. They're the ones that we're not hearing that projects are canceled. It is delays.
It's delays, and it's also delays in the decision process. It's not only the decision processing within the companies, the decision process in governmental bodies are also slowing down when it comes to new legislation and things like that. We see a lot of that happening right now. They are so preoccupied with what they're going to do with lockdowns, et cetera, and so on, so it seems like they are paralyzed to take any other decisions at the moment.
Cool. Just moving on to the Monitoring and Control Systems, it really sticks out. Now it seems you have a big order supporting you, even so, we've seen a strong development. My question is simply, is this due to legislation, effectiveness demands of the customers, previous sales initiatives, or simply current customers expanding their business with you? What's the explanation?
All of it. One thing is that we, of course, have developed our own product and have been launching them. It may be a little bit delayed because we were planning to have it in conjunction with the large shows and so on. We have our own development. We should have launched new product from NEO Monitors at one time and so on. What we are seeing is that we are launching new products. We have also added sales resources, and we could have done even more if we only had been allowed to travel to Hong Kong and to U.S., where we should sign some papers and do to open new sales channels.
Even so, we are now using the size and body that we have created in this division, whereas before, the individual companies were very regional, if I say so, because they didn't have the global reach as we have, and that we are adding. We see even more possibilities to do that, to do exactly the same as we do in few markets we can do in all markets. Oversimplifying a little bit. It's also so that legislation is driven very much of the fact what can be measured. We have, especially in certain areas, been able to show you can measure on a significantly more distinct and accurate level. Again, that drives legislation.
Some of that legislation has now been postponed, not due to anything else, but that it seems like the notifying bodies and the governments are unable to get their act together and sign the papers and focus also on these things. If you look a year or two or three ahead, I think that this will be continued. Of course, anything can happen in these times, but it will be a continued demand for being able to prove and measure. That is the basis. As we say, you have to measure and control, and then you filter, and we can do all, and we can make sure that the industry is not contributing to the air pollution, and thus giving us a better world. Now I'm almost preaching.
Yes, I think that there is definitely demand, and we have been working very hard for a couple of years to get into it. Remember how much money we have spent on acquisition and especially on our own product development.
Yeah.
That's the result of that.
If we look at the big order you receive in this quarter, is that from a customer that's simply expanding their business? They've tried you out and now they're expanding, or is it a new customer altogether?
It's a new customer. They didn't know. This system didn't exist. It's something that we have developed. We were the only one that, in this case, with the knowledge enough. It's not more unique. I'm sure that Siemens, anyone, if they wanted to develop it, they could probably in there. This, in our niche, we know what it takes to measure and control these types of emissions. Very few others do. We have, since three years, developed this reporting and system, and now we are. We've had many out in test installation for a long period, a year and so on. Now we got this breakthrough, and we have many other discussions. What happens due to the COVID-19, if there is delays and so on, I don't know. There are probably some delays.
We look very positive to the ability, and we also look positive to the thing that we are the cleaner company. We can, as I mentioned before, we can both measure, we can control the process, and we can clean the air.
This monitoring control system, it could even be a bridge for you selling the rest of your offering to these customers.
I think that it's already been to a certain extent. We made a very big secondary aluminum, and so it's recycling of aluminum. One of the determining factors that we got the order on a higher technical level on a, if you say, it wasn't in kronor, but in a higher price, was that we could prove that we were future-proof. We could give them today a solution that works with also. Extra all-including knowledge and follow-up, et cetera. We could also say, if you want to continue to develop, we will continue to develop the programs and the capabilities with this. That has been a determining factor in a couple of cases during this year, although there have been too few large orders, unfortunately, due to the situation we are in.
That's the same for everyone.
Yeah.
Yeah. Then just my last question. Now you have your savings program, it seems to already kick in in this quarter. To what degree should we expect this to stick if we have a fully normalized situation again with demand? What I'm asking is simply, is there an outlook for you to leave this difficult period being an even more effective company?
Answer to that, if you want the short answer, yes.
What's the long answer then?
The long answer would be what is the new normal?
Yeah.
We won't get into that in this call because we usually try and keep it to around an hour or so. We see in the short term that this is sustainable. The level we are is sustainable. When it comes back, we need to look at where potentially you expand and obviously Monitoring and Control Technology is going well, and the digital solutions that are sold by Process Technology and Extraction and Filtration Technology are also very important. It might need some different competencies, but in the short- term, the profitability is protected by what we have done here.
We will not slow down on our R&D efforts. We will continue to launch new products here. We will continue to spend to stay ahead of competition in these fields.
Yeah. Cool. I'll just fall back in line then. Thank you, guys.
Thank you.
I remind you that if you want to ask a question, please press zero one on your telephone keypad now. There are no further questions registered, so I hand back to the speakers for any closing remarks.
Thank you very much for taking the time listening to us, and we hope you all have a good continuation of the day. Thank you from Helsingborg and Matthew and Sven. Thank you.