Thank you very much. Good morning, and welcome to Salix Group's third quarter report. I'm Martin Hansson, CEO of Salix Group, and with me today is our CFO, Carolina Nerman. As a group, we deliver our 10th consecutive quarter with EBITA growth. A big thank you to all my colleagues in Salix who drive the development within the group with passion and a lot of energy. I will start with the highlights of the quarter, go through the financial development and our three business areas, and then talk about our last acquisition before we open up for questions. Let me start with the highlights of the third quarter. We delivered strong underlying growth, both organically and through acquisitions. Net sales grew by around 20%, and EBITA increased with 35% compared with the same quarter last year. We grew top line organically with 4% and EBITA organically with some 19%.
During the quarter, we acquired Arvid Nilsson, which strengthens our positions in the Nordic Fasteners Market. We do see positive momentum in many of our segments, particularly DIY and agroforestry, along with early signs of recovery in Swedish industry-related segments. If we look at the quarter in numbers, net sales reached some SEK 1.2 billion and is up 20% compared to Q3 last year. EBITA grew 35%, and we see an EBITA margin in the quarter that is now landing on 14% compared to 12% a year ago. That is the highest quarterly EBITA and margin in the period shown on this chart. The EBITA margin also strengthened during the quarter, and we are continuing to do our work to optimize and streamline operations. The growth comes from both organic development and the businesses we have acquired.
Over the last 12 months, net sales now amount to SEK 4.6 billion, and that's up 13% compared to a year earlier. The LTM EBITA landed on SEK 466 million, and that is an increase of about 30%, and an EBITA margin around 10%. To be noted is that Salix had substantially extraordinary cost during H1, which is mainly linked to the IPO process. Looking at the longer trend, EBITA has grown by 15% per year on average since 2019. Margins dipped between 2022 and 2024 during the market downturn, and in that period, acquisitions helped us to mitigate the weaker market and complement our organic growth. We do see a change in the growth since 2024, where the market now has bottomed out, and for the Salix Group companies.
Thank you, Martin. Let's turn to capital efficiency. Our return on working capital measured as EBIT to average trade working capital, reached 42% at the end of the quarter. That is up from 34% a year ago and 38% at year-end, and we continue to deliver on our targets. The improvement comes from both sides of the ratio. LTM EBITDA grew by about 30%, driven by both acquisition and organic growth. Over the same period, average trade working capital increased only around 4%. The improvement we see here is partly driven by higher margins. Beyond that, it reflects a combination of disciplined inventory management and systematic work with payment terms. Another factor is also that we have successfully acquired companies with strong returns on working capital.
As the chart shows, the ratio has increased steadily from around 25% in early 2024 to 42% today, and we will keep that discipline going forward. Moving on to our debt ratio. At the end of the quarter, net debt to EBITDA was 2.8x . That is down from 2.9x in the second quarter and within our target between 2x and 3x . As a reminder, the step-up in the second quarter this year came from acquiring Laydex and the dividend paid before our separation from Volati. Looking ahead, our earnings momentum and seasonally stronger cash flow at year-end give us room to keep growing through acquisitions. At the same time, we have some deferred consideration payments amounting to approximately SEK 150 million coming up in the next quarter that will partly offset the expected reduction in our debt ratio.
What we want to highlight, though, is that the ratio came down in the third quarter despite the acquisition of Arvid Nilsson. Two things drove that: positive cash flow from operating activities and margin expansion that lifts EBITA. Also worth mentioning is that our credit facility includes a covenant requiring net debt to EBITDA to stay below 3.5x . We have comfortable headroom. Let me summarize where we stand against our financial targets. Net sales growth over the last 12 months was 13%. This is slightly below our target of at least 15%. The target applies over a business cycle and acquisition in combination with organic growth remain central to how we get there. Our LTM EBITA margin was 10%, up from 9% last year, but excluding items affecting comparability, the margin was above 12%.
EBITA to trade working capital reached 42%, up from 34% a year ago, and we continue to deliver our target of at least 40%. Finally, net debt to EBITDA was 2.8x , unchanged from a year ago and within our target. To summarize, we continue to see positive momentum in the quarter, especially regarding improved margins and return on working capital. Over to you again, Martin.
Thank you, Carolina. Turning to our business areas, we'll start with Consumables, Trade and Agriculture. Net sales grew by 8% in the quarter to SEK 448 million, and that was driven both by organic and acquired growth. EBITA landed on some SEK 62 million, which is a little bit down compared to last year, but note that last year's quarter included some items affecting comparability of around SEK 11 million. We had a positive adjustment last year. We continue to see positive momentum in the DIY segment, while professionals and industry-related customers remain more cautious. The integration of Arvid Nilsson is ongoing and according to plan. On a 12-month basis, EBITA has grown to SEK 181 million with an 11% margin. EBITA to trade working capital is now at 42%. If we turn to Home & Fittings, we saw a net sales growth of 2%.
EBITA increased by 24% to SEK 71 million, and the margin rose to 19% from 15% last year. The improvement comes from strategic pricing, better customer and product mix, and favorable currency FX, together with structural measures and operational improvements that strengthens our margin. We did mention this about some restructuring in our Finnish business during the first quarters that were linked to Home & Fittings. We did that in the last quarterly calls that we had. EBITA to trade working capital lands at 51%, and the LTM EBITA margin now stands at 15%. The last business area is Construction & Packaging Solutions, which had a strong quarter. Net sales grew 64% to SEK 418 million, and EBITA more than doubled from SEK 21 million- SEK 50 million, with a margin improvement from 12% compared to 8% last year.
Most of the growth comes from Laydex, which we acquired in April, but we also had organic growth in the quarter. We see some signs of recovery in the industry-related segments, particularly in the Swedish market. Over the last 12 months, net sales are now at SEK 1.4 billion, and EBITA is SEK 132 million. Within the Construction & Packaging Solution business area, we have merged two business areas, sorry, two business units in the quarter, which will contribute to operational improvements over time. Over to one of the highlights in the quarter. We are really, really happy with the acquisitions of Arvid Nilsson, a company with net sales of around SEK 250 million and an EBITA margin of around 8% in 2025. The acquisitions really strengthens our positions in the Nordic Fasteners Market.
It's a strong strategic fit, and the company brings more than 100 years of experience for us to build from. It's an add-on acquisition, and that will complement the existing operations at Heco, which has strong position in retail fastenings, whilst Arvid Nilsson has a strong position in the industrial fastenings. Bringing the two together, we now have a strong position in the fastening segment in the Nordics. We also see good opportunities to realize synergies from the acquisition, particularly on the purchasing side. In the long term, the acquisition is expected to contribute to an improvement in the group's margin. Acquisition is an integral part of our strategy. Since 2023, we have made seven acquisitions across our three segments, adding combined net sales of around SEK 1.8 billion at the time of acquisition.
Combined acquisitions have helped Salix to strengthen the market position in our segments as well as overall performance. The two most recent are Laydex in April and Arvid Nilsson in August this year. Our model for growth through M&A is scalable and proven. It builds on in-house capabilities, strong market knowledge, and our commercial edge. To summarize, this quarter, we delivered strong financial development in the quarter, both organically and through acquisitions, and the acquisition of Arvid Nilsson strengthens our positions in the Nordic Fasteners Market. Our financial target are reached or en route to be reached. EBITA to trade working capital and our debt ratio are within target, while sales growth and EBITA margin are moving in the right direction. We delivered the 10th consecutive quarter of solid EBITA growth. EBITA growth is equivalent to 35% with a 14% EBITA margin.
We see positive momentum in DIY, agroforestry, with some signs of recovery in the Swedish industry-related segments. All in all, we are well-positioned for our continued profitable growth. A big thank you to all my colleagues in Salix for a great result in the quarter. With that, we are happy to take your questions.
Thank you so much for that presentation. As you mentioned, now we will carry on with some questions here, and the first question goes to Carl Korsheden that has called in. You have the word.
Yes. Good morning, and thank you for taking my questions. I have a couple of them, if I may. If we start on the organic trajectory here of the business and maybe looking at the different business areas specifically, is there anything to highlight there in terms of customer segments? If you think about the stronger versus weaker customer segments per business area, maybe, and if you have seen any, I guess, meaningful improvement or worsening in any of these business segments now in Q3 relative to Q2, if we think about just the end customer.
Yeah, to say a few words. Thank you, Carl. We have 4% organic growth in the quarter, as we have shared, and it is mainly coming from the DIY-related segment. So, we have seen a positive trend over quite a few quarters. What is different maybe over the last two quarters is that we start to see also a movement in the professional and industry-related segments. It is across all segments that we see a positive trend. We have, in the previous call, mentioned that we, from our market study, see an underlying growth in the market of around 5%, and that goes across the countries and the segments where we are represented. So, it is fall in line with that also in this quarter.
So not really anything new. It follow the same trend as we have seen so far. The overall trend is positive in all our segments, with the DIY segment standing a little bit in the forefront.
That is productive. Is it fair to say that it is predominantly Sweden who is the strongest market at the moment, whereas your other, I guess, specifically the other Nordic countries are more sidelines or still muted?
Yes, Sweden is more positive, as you say. Also, we are getting acquainted with Ireland. So Ireland is also positive. Overall, we have a positive momentum, but the Swedish business is standing out a little bit, as you mentioned. Yes.
Yeah. That is clear. Super. If we turn to the margins, you have seemingly still a very strong drop-through on that organic top-line growth. Just curious to hear your reasoning, how you think about the development going ahead from here. I mean, 19% organic EBITA growth on a 4% organic top-line figure, and then the annual of, what is it, 34% organic EBITA growth on a similar, I guess, 4% organic top-line figure. Is there anything to highlight here in terms of comparisons when we look maybe into Q4 and 2027?
We have, first of all, maybe to state that we do not guide on future margins, and we need to train on that, of course, now being new to the stock market. But, with that said, if we look at the margin development, we have quite nice and good growth in this quarter. It is a mix of the customer mix, and we also have some currency effect. We have also some segment mix in these numbers. Overall, you can say that we are helped a little bit with the currency, and we are helped also with the operational efficiencies that we started already back in 2022 to do. I said a little bit of that in the call with the Finnish business. We have also done a little bit of efficiency improvement this quarter by merging two businesses.
On top of that, I think that our way of working with our own brands, we have a 70% share of our own brands. We invest in innovation. We work with product development. We improve our sourcing over time, et cetera. I think this is the mix of all these ingredients are paying off, and we will continue to work with this, stay competitive, but also work with our pricing in the market in the best possible way.
Yeah, super. That is clear. On the topic of FX, I appreciate this is tough to speculate about, but if we just would assume, say, a similar FX spot rate as we are sitting at the moment, is there anything to keep in mind then when we look into Q4 and maybe 2027 in terms of gross margin development? Do you expect that to have, I guess, more of a negative impact now after a period where the Swedish krona has weakened a bit relative to maybe 2025 and when it strengthened quite a lot or, yeah, just any comments on that would be helpful.
We have exercised the fluctuations of the Swedish krona over the last couple of years and have managed to offset these fluctuations, we believe, in a good way in our pricing. Worth mentioning also is that there is a little bit of lagging effect with the Swedish krona in the way we buy and when we pay for the goods. The exposure that we have right now after we acquired Laydex, a little bit less on the EUR side. A couple of quarters ago, we had a little bit higher exposure towards the EUR. Now it is more towards the dollar. We think that the exposure we have is manageable in the way that we work.
And if, as we are in a world where things are changing fast, we will continue to work with our pricing model to offset potential big fluctuations that we have also shown in the past that we have been able to. I think that what we see in front of us and what we see in the past is that we have managed this in a good way, and we aim to continue to work with the fluctuations in the currency in the same way and be proactive.
Super. That's clear. A question on cash flows, maybe from my perspective, at least a little bit of a weak spot, maybe in an otherwise strong report. Can you talk a little bit about the working capital build here in the quarter? Especially considering that you tend to talk about, I guess, H2 being stronger for the Salix Group overall in terms of cash flows. Should we now expect, I guess, a quite sizable working capital release in Q4? Or, yeah, just some words on that capital build here in Q3 would be helpful.
Well, I can answer that. As we write in the report, our cash flow follows a seasonal pattern where the second half and Q4 in particular has historical been strongest. Despite that we have some deferred consideration that will coming up here in the next quarter that partly offset our cash flow, we are very confident that we have the ability to continue to acquire good companies. Also, that I can mention in the quarter that we have some more capital employed. It's also a result from some timing FX that we have and also the fact that we reported organic net sales growth that naturally result in some more capital employed as well.
All right. Fair enough. Lastly from my side, just on the net financial items, there was also quite a lot of negative, I guess, FX through revaluations FX and so on impacting that figure this quarter. Again, if you just take the exercise of looking at the current spot rates and so on, is this something you expect to also negatively impact the net financials in, say, Q4 and ahead? Or was this something you believe was more related to Q3 for some reason?
Well, that is correct. We have some exchange rates FX on financial items, as you mentioned there, which for the most part are unrealized, so that you should take into consideration. Also, we have some discounting and exchange rates FX related to our deferred consideration coming up. Most part are unrealized of those.
Yeah. Thank you very much. That was all from me. I will jump back in queue.
Thank you very much.
Thank you so much for the questions. We will now go on to the next caller here, and it is the person that has a cell phone number that ends with 7927. You have the word. Please press star six to unmute yourself.
Hello, Martin and Carolina. I was just wondering about some things that we didn't really get answered. Firstly, how come the margins in the Home & Fittings was so strong, even excluding the SEK 3 million positive one-off in Finland? More in particular, what drove the margins in the Home & Fittings solutions to be so strong to 19%?
Thank you. Home & Fittings is, we have three fantastic business areas, but in particular, this business area is heavy on the proprietary brands, so a lot of own developments, innovation, design, and so on. What I mentioned before on the question on the margin, this is now coming through in the way they work with their development of their brands and their product portfolio. This is the main reason why you see a difference and also, you see the development in these areas, that some of the activities that they are doing are, come to fruition in these last couple of quarters. They are generally stronger on an EBITA level and on the margin level over time.
Okay, great. I also had a question on a similar theme in the Consumables, Trade and Agriculture segment. If you adjust for the one-offs in Q3 this year and also the Q3 last year, the underlying margins are up despite the acquisition of Arvid Nilsson supposed to dilute the margins. Should we expect these strong margin profiles going forward, or is there more improvements to be made, let's say?
We still train this and practice this not to comment on the forward-looking margins. Having said that, I think that the margin in this area is similar here. They have also quite a few proprietary brands. Heco, if you take the fasteners segments, where we also now have acquired Arvid, are strong brands, strong positions in the market where we see possibilities from a sourcing perspective, as said, common purchase, et cetera. This is an ongoing work. Our ambition is to continue to make things better, continue to develop, be more efficient, et cetera. As we said in the call, in the presentation before, we had one-off cost last year, and if we adjust for them, you have calculated the improvement. This is the right way of looking at it. We are happy with the development, and we aim to continue to work with, make this business area better.
Okay, great. Lastly, since the margins is the theme of the Q3 report, I was just wondering if you have disclosed a mix between volume and price increase in the organic growth and how much is volume and how much is increase in prices?
No. With the setup that we have and the different business areas and the different businesses, it is not 100% easy for us to calculate the volume effect. Having said that, we have previously said that volume between 2022 and 2024, we have in the market quite a big loss in volume, maybe in the neighborhood of 30% that corresponds to our segments. From a sales perspective, it is not that kind of loss, and we still wait for to see a volume uplift when the market starts to turn. If you read the external report and so on, it is more linked to pricing and pricing-driven increases rather than volume-driven. Maybe we see a slight improvement in volume, but we still believe that we have a volume increase in the markets where we operate. We still believe that we have that ahead of us.
Okay, great. I think that was all for me. I will jump back into queue.
Thank you.
Thank you so much for the questions there. We will now carry on with some questions that have been sent in to us. How is Laydex performing since the acquisition, and how is the business sentiment within Ireland?
The business sentiment in Ireland are similar to Sweden and the Nordics and the market data that we acquired throughout our IPO process. The market data is giving us numbers around the 5% growth in our related segment. They have a positive population growth. They have a need to build more houses, actually on a similar level to Sweden. Sweden and Ireland are similar in the expectations of growth what we can see in the market data. Then you should consider that you have half the population in Ireland compared to Sweden. Quite a positive outlook from the market data that we are looking at. From a performance perspective, we are very happy to see them as part of our portfolio. We have also previously said that we see Ireland as an exciting market going forward from an acquisition perspective.
This is ongoing work to see whether we can continue to grow a broader sense of Salix also in Ireland. Laydex is great, strong management, exciting company, and a platform for Salix to grow from.
Thank you so much. Now we will carry on with the last question here. How is the integration of Arvid Nilsson going so far?
Thank you very much. We are super happy about Arvid Nilsson. As I said in the presentation, to get such a strong position now in fasteners in the Nordics makes us. We are in the beginning of building something special and something exciting. We are at this moment getting to know each other, and we see where we can collaborate and creating value together. We have a great team of new colleagues, and there are a lot of opportunities for cross-fertilization and sharing of best practices where some of the big opportunities that we see sits on the purchasing side, where we can combine joint effort in terms of our purchasing. All in all, very positive, very good, very excited about Arvid Nilsson.
Thank you so much. That was the last question here. So, thank you to Salix Group for presenting here today, and thank you all for watching and calling in with questions. We wish you a pleasant day.
Thank you.
Thank you.
Bye-bye.