Hello, and a very warm welcome to Polygiene Group Third Quarter 2026 Webinar. Today's presentation will be divided into three sections. Our new CFO, Anders Nordgren, will begin with the financial update, after which I will provide an overview of the business. We will then conclude with a Q&A session. Anders, over to you.
Yeah. Thanks, Sandrine. And hi, everyone. Great to be here. This is my first quarterly report and presentation at Polygiene, and I look forward to many more in the future. Let's start with having a look at the third quarter. The third quarter was financially challenging for us, something that we also mentioned in the CEO message. Group sales came in at SEK 26.3 million in the third quarter, compared with SEK 36.4 million last year. At the same time, the gross margin declined to 63.7%, with higher silver costs being one of the main drivers. On the positive side, our costs continue to develop in the right direction. Costs in the third quarter were significantly below last year, including lower administration and personnel costs. This helped, but was not enough to offset the shortfall on sales or top line.
As a result, EBITDA came in at -SEK 3 million in Q3. From a cash perspective, cash flow for the quarter was negative, with SEK 16.4 million, mainly due to larger supplier payments related to inventory build-up that we secured earlier during the year. We ended the quarter with a cash of SEK 34.2 million, and since 30th September , we have seen significant payments coming in, which has strengthened the development beginning of Q4. To understand what drove the sales decline, let's look more closely at the development in our two segments. The two segments, Addmaster and Polygiene, showed quite different developments during the quarter. Polygiene sales declined by 51%, while Addmaster grew with 17%. The lower sales in Polygiene were largely due to limited distributor sales, as distributor inventory levels remained high throughout Q3.
As a comparison, distributor sales amounted to SEK 9 million in Q3 last year. When those sales do not happen, as was the case this quarter, the shortfall becomes significant and visible. On the positive side, in addition to the lower cost base, Addmaster grew by 17% during the quarter, reaching sales of almost SEK 15 million. This partly offset the decline in Polygiene, but not enough to compensate for it at group level. To sum up, challenging quarter, Addmaster continued to grow, and our costs moved in the right direction, while elevated distributor inventories continued to hold back sales in Polygiene.
And with that, back to you, Sandrine.
Thank you, Anders. As you have seen from the financial results, the third quarter has been a difficult one for Polygiene Group. Sales have remained weak, particularly on our textile business, and we continue to operate in a very challenging market environment. Today, I do not want the business update to focus only on the quarter that has just passed. I also want to show you where we are making progress against the priorities we set at the beginning of the year, and also where we are taking action to strengthen the business for the future. There are three areas I would particularly like to focus on today, and that is diversification, the changes we have made to improve operational efficiency, and the continued repositioning of Addmaster towards higher-value technical solutions.
At the beginning of 2026, we set up a number of clear priorities for the group. Of course, during the first half of the year, our focus was very much on execution. We had to respond to the significant changes in input costs, particularly silver. We had to adjust pricing and review how we operate in some of our markets. As we move through the second half of the year, some of that work is now translating into more structural progress. Diversification is becoming increasingly visible, both in the market we serve and in the technology we bring to those markets. In the Americas, the restructuring work we discussed earlier in the year is now complete, giving us a leaner and more integrated organization.
Within Addmaster, the technical solutions strategy is gaining momentum under Kurt De Meyer's leadership. While the current trading environment remains difficult, the organization itself is moving forward. One of our key strategic objectives has been to reduce our dependence on traditional sports and outdoor applications. That doesn't mean moving away from those markets. They remain very important to Polygiene. What it does mean is broadening where and how our technology are used. Workwear is a very good example. We are seeing a growing number of partners recognizing the value that freshness, comfort, and product longevity can bring in professional applications. Building on the success we reported already in Q2 with the U.K. company Orbit International, during Q3, we received our first order from French workwear company Kariban.
Fashion and lifestyle is another area where we are beginning to see some good progress. We attended our first dedicated exhibition in this market recently in Shanghai, and we had really positive response in that show. We also received our first order from specialist brand Move Dance. At the same time, our technology portfolio is becoming broader. StayCool continues to gain traction with upcoming launch, for example, in footwear with Adidas in Asia, and OdorCrunch2.0 trials are progressing well with mills across different regions and in a wide range of applications. This broadens our technology base beyond silver solutions and gives us more ways to address consumer needs.
The important point for me is that diversification is no longer just simply something we are talking about strategically. We are actually starting to see it in the commercial activities of the business. This brings me to something that I find particularly interesting. During the year, we commissioned consumer research across five major markets, the U.S., Japan, Germany, France, and Australia, to better understand how consumers think about freshness and odor control in clothing. The results reinforced the feedback we obtained in a similar market research conducted in China about two years ago, and it also reinforced our belief that the consumer need is very much there. 77% of respondents told us that freshness is important to them. 75% identified everyday apparel as one of the key categories where freshness matters.
Perhaps most importantly, 78% said that they would be prepared to pay a premium for odor control technology in their clothing. However, there is also very clear challenge that has come from this market research, as only 42% of the respondents are currently aware that this type of technology exists. For me, that is one of the most important finding from the research. We've spent, as a company, many years developing technologies that deliver performance and also building strong relationships with brands and mills.
The next step is to make sure that consumers understand the benefit those technology bring. The opportunity, therefore, is not just about technology, it's also about communication, and that will increasingly influence how we work with our brand partners, particularly as we move further into new sector, new market segment, like everyday apparel, workwear, and lifestyle application. I would like to close the loop on another priority we had discussed during the year, the Americas. Earlier in 2026, we shared that the operating model in the region needed to become simpler and more efficient, and that restructuring is now complete.
On the solid surfaces side, Biomaster US has been integrated into Addmaster, and the U.S. warehouse structure has been removed. Commercially and operationally, resources can now be managed more efficiently across the wider organization. We have taken a similar approach with the textile side. The Americas and EMEA commercial teams now operate under one leadership structure. This helps us share expertise and also resources more effectively while keeping local customer relationships that remain important in North America and in Latin America. This is not simply about reducing cost. It's about creating a structure that is better suited to the size of the business today and gives us a stronger platform from which we can rebuild profitable growth.
Turning onto Addmaster, I remain really encouraged by the strategic direction of the business. Since Kurt joined us in August as head of commercial growth, we have further increased the focus on application where our technology solve clearly defined customer problems. This includes areas such as antimicrobial resistance, healthcare, clean water, and food security, circularity, resource efficiency, and product traceability. These are markets where the value proposition goes well beyond simply adding an additive for a marketing USP. These applications require technical expertise and understanding of the customer's application, and increasingly, the ability to develop tailored solution, customized solution, and that is exactly where I believe Addmaster should reposition itself.
Whilst we are seeing a growing pipeline of this higher value opportunity, we also need to be realistic, specifically about the near term. Q4 sales within Addmaster are likely to be below last year, and this is largely because of the ordering pattern from one Addmaster customer. This customer is likely to place a smaller order than previously anticipated. This is not because we have lost a customer or the application. It is simply that the customer last year purchased a very large quantity at the end of the year, and their consumption during 2026 has been considerably lower than expected due to market condition. It means that their existing inventory actually is going to last much longer.
The relationship remains very strong and the long-term opportunity is still there, and they are even talking about potential expansion into adjacent markets and also new geographies. This is still a very strong potential for growth, but it is just growing at a much slower pace than we had anticipated originally. It is a short-term headwind, but it is not a change in our view of the underlying opportunity. Our focus remains really at Addmaster on building a strong quality of revenue and long-term vision while we manage the volatility that we see in the market today. The key takeaways to conclude, the market remains difficult, and as we have already indicated, we do not currently expect a meaningful improvement during the fourth quarter.
I also believe it is important to separate the short-term trading environment from the progress we are making within the business. Diversification within our textile business is moving forward with increasing activity in workwear, fashion and lifestyle. The consumer research reinforces the relevance of our freshness, odor control, and cooling technologies, and highlights an important opportunity to communicate their value more effectively, which will be a priority for our marketing team in the coming quarters.
The Americas restructuring is complete, and now we have a leaner operating model in place, and Addmaster is making progress towards the technical solution business we want it to be. There is still a great deal of work ahead of us, and I do not underestimate the challenge we face. But the priorities are clear, and we are taking the action required to strengthen the foundation of the group. So whilst the short-term environment remains difficult, we continue to rebuild towards profitable and sustainable growth.
With that, I think we have covered the key development for the quarter. Thank you for your attention, and Anders and I will now be very happy to take on your questions.
Yeah, I think we received a couple of questions prior to the meeting that was addressed to me, and that would also give you a break, Sandrine.
Okay.
The share price is at all-time low right now since 2016. How are you planning to reverse that trend? I or we understand the shareholders' disappointment with the share price performance, for sure. My or our responsibility is to improve the underlying business, with a clear focus on profitability, cash flow and in the end, a profitable growth. That is, for me, how we rebuild trust and how we create value for the shareholders going forward.
Also a question related to the liquidity in the share. Something I understand is important for our investors and shareholders. Now, I think it has improved during the third quarter, but in general, we are focusing, as I said, on the underlying business with profitability and cash flow, something that should increase the interest of our business and therefore support better liquidity going forward.
Also a question related to a specific shareholder, and that is something that we don't respond to regarding individual shareholders' investment decisions. A question related to Redeye ceased their coverage of Polygiene. Are you planning to have a new company covering the company? I definitely see a value of having an external analyst covering us, helping our investors understand the business. However, currently there is no new arrangement in place. It is something that we will consider and evaluate going forward during probably 2027.
In difficult times, we have to focus the resource available to us, and the decision was made to really focus on growth, stabilizing the business, then growing the business and the IR activity are just paused, and the money that we're not investing in paying for an analyst can go into development and growing the business instead.
I think there was also a question about a large contract which we, as a group, had announced in May 2025, so before either of us joined the company. I hope I have answered that in the report, but just to clarify, this contract has come through. We are selling to this customer, but we are selling at a much lower volume than initially anticipated. This customer was very price sensitive. It was large volume but at a very low price, which today in the current market condition with the silver being very high, would not be viable for us anyway to supply larger volume because it would be at too low margin.
All in all, we haven't lost the opportunity, it's just that the opportunity isn't the size that it was first estimated at. But the estimate was done at a different time, and market conditions have changed in the meantime.
I think those were all the questions if we have not had anything in the chat, which we don't.
Well, thank you all for your time today, and we look forward to speaking with you again in February for the next report, which is Q4, and that is on the 18th of February 2027. Thank you.
Thank you.