Let's start. The time is 2:00 P.M., and we still have plenty of callers that are calling in there. I think I'll wait another 20 seconds or so before I start this. If you could mute your computers, that would be great .
Good afternoon, everyone, and welcome to this summary call we do each quarter just before we enter our silent period, which starts tomorrow. The purpose of this call is to make sure you are all aware of what we have communicated throughout the quarter, especially trends we see in our organic growth, sales growth. For those of you that have called in before, you know the premise. In this call, I will not give out any news or figures that we haven't previously communicated at conferences, seminars, and other events throughout the quarterly period.
As the quarter ends today, you should also be aware that I'm not privy to the full quarter developments. While I have seen the performance in July and August, the full September numbers will not be available until a week into the new quarter. So a week from now, basically, I'll have the full picture. Obviously, I cannot go into the fine details in all our sub-segments, so I will, as per usual, paint in broad strokes and save the details for when we report our results on the 23rd of October. So let's begin, as we always start this call, and that is our guidance for Q3 in our recent Q2 report.
In July, in connection with our Q2 report, we said that we expected demand in Q3 to remain solid, although somewhat lower than in the second quarter 2026, reflecting higher comparative figures and seasonal variations. As a reminder, the organic growth in Q2 was +8%, and the year-on-year comparison number in Q2 2025 was -1 %. Now we're facing, in Q3, a much tougher comparison, namely +4% in Q3 a year ago. So that's the big difference. It was a little bit confusion when we announced this guidance in the Q2 report, so we felt the need to be a bit more transparent when we communicate this. In order to avoid confusion, we added that we expected group organic sales to be approximately +5% in Q3.
Today, I can say we stand by this guidance, so we expect the organic growth to come out at +5%, which is lower than the +8% we did in Q2. But sequentially, it's actually an improvement. So moving on with the business areas, and we will start with Trelleborg Industrial Solutions, and as always, I will make a pause after each one of the three business areas to allow questions. So raise your hand on your computer if you have any questions on that particular business area. So, in Trelleborg Industrial Solutions, in Q2, we had 4% organic growth, which was a clear improvement compared to the Q1 of - 1%. Now, we expect a similar organic growth in Q3.
We've said many times that we expect pent-up project sales to come in more and more in the second half of the year, but I feel that it will be more pronounced, these pent-up deliveries will be more pronounced in Q4. That is our expectations. Where we see this 4% or that level, where we see that coming from, it is good growth in manufacturing and automation. We see very good growth in aerospace. We also see good growth in energy and renewables. On the other hand, the building and construction part of this business area is still down, and automotive is also slightly down. As you know, we make automotive boots, which is down in this quarter.
However, mentioning boots, I must also say that we have acquired a company called Gomet, which is balancing out the legacy decline, and the new addition will bring the sales in automotive, not organic sales, but sales will be plus, but organically it will be down. In terms of EBITDA and EBITDA margin, we expect a typical seasonality in the margin, where the margin in industrial drops off from Q2 by a percentage point or so, and this follows a pattern that we've seen again and again. Margin then typically recovers in Q4, but from Q2 to Q3, we should see a drop in the margin by up to a percentage point or so. That is all I have to say about industrial, and I will take questions. I see that, Ope, you are online.
Hi, Christofer. Hi. Just wanted to ask about OSG, if it is expected to be in line with Q2, I guess. Could you just help us think of the buckets, I suppose, in line with Q2, is that sort of underlying and therefore, how should you also think of the project delivery on top of that? Because I suppose if you have some project delivery should be
Yeah
ahead of Q2 significantly.
Yes. Looking at the order book, we have a very strong order book in project sales. We started to face some of that already in Q2 where we went from -1% in organic growth in Q1 to +4% in Q2, and some of that was the results of some project deliveries. We expect that the kind of deliveries to maintain in Q3, but looking at the order book and the plans and when the customers want the deliveries, we see a more pronounced delivery pattern in Q4 than in Q3. So, the best is yet to come, if I put it like that.
Thank you.
All right. Any further questions on industrial? Yep. I'll move then to our smallest business area, Trelleborg Medical Solutions. This is a little bit tricky because, in Q3 2025, we reported that we had a significant one-off sales, which brought the organic sales a year ago in Q3 to a whopping 13%. This is obviously a much tougher comparison number to face than we did in Q2, which was - 3%. So for that reason, and for that reason only, we have communicated that we expect the organic sales in Trelleborg Medical Solutions to be slightly negative or at best flat-ish, because we're facing +13%. From a sequential perspective, however, from Q2 to Q3 this year, we are actually running at the same clip or better.
In terms of profitability in Trelleborg Medical Solutions, we expect normal seasonality, which means we will likely be down half a percentage point or so from the Q2 margin, and that's a typical pattern here. In terms of geographies where we sell our Trelleborg Medical Solutions, we see organic growth both in Europe and the U.S. in this quarter, but it seems to be weaker year in Asia and in life science in the quarter. Looking at the order intake, it's very healthy in the quarter. So that's what I intended to say about Trelleborg Medical Solutions. If you have any questions on that or am I clear? All right. Great. Then I'll move on to Trelleborg Sealing Solutions. The starting point is the excellent 12% organic growth we had in Q2. Albeit that this strong growth was boosted by soft -4% comparison number a year earlier.
In Q3, we still see good organic growth, but since the comparison number is much tougher in Q3, it was +5% a year ago. We shouldn't expect 12% organic growth in Q3 as well, but it will be strong. This strong growth we see in Q3 is coming from very good aerospace growth with strong sales worldwide. We see actually in this business area as opposed to Trelleborg Industrial Solutions, we see in Trelleborg Sealing Solutions, decent organic growth for the automotive segment. If we split that good automotive development in Trelleborg Sealing Solutions in this quarter, it's coming from damping solutions, i.e. brake shims, whereas I should say also strong or good growth in America and Asia, but it's balanced by a flat performance in Europe, where in Europe, damping solutions is up, whereas the other seals to the automotive industry in Europe is down.
Overall, automotive is up in the quarter. We also see good growth in truck and bus segment. That's maybe a little bit surprising that the automotive is doing well here in Sealing, but that's the case. External organic growth for the industrial segment is also good, and it's driven by a strong sales growth in Asia, particularly for semicon, industrial equipment and construction. On top of that, we also see good sales to the oil and gas segment in America. When I look at the profitability in Trelleborg Sealing Solutions, well, I can say that in Q2, we reported a very strong margin of 22.5%, which is very much closing into our target of 23%. Normal seasonality means a sequential drop in Q3 from Q2 by up to a percentage point.
But we have mentioned before in this quarter that we expect a good margin in Q2, i.e., the 22.5%, to be maintained in Q3. So don't expect a sequential drop in Trelleborg Sealing Solutions this year. Any questions on Trelleborg Sealing Solutions? Yep.
It might be a bit too early, but I know you've done a bit of M&A in that segment in this quarter.
Yeah.
How should we think of the margin there impact?
Well, I would say, well, not much impact in this quarter, to be honest. Coming up, there might be a slight impact on the margin from M&A, because most of the acquisitions, if not all, are always diluted, as you know, [inaudible]. These are fairly small acquisitions, so I don't expect you to notice it, to be honest, that much, but there is underlying a small dilution impact. Do not expect any dilution from acquisitions in Q2. It could be in Q4 somewhat, but again, very marginal. Yes, Vivek?
Thank you very much. Just to clarify on the sequential margin development. Is there any contribution within this from the synergies with MRP and so on, that story in North America? Could you talk us through the bridge going into the quarter? Thank you.
Yes. The good development for the margin Trelleborg Sealing Solutions, all the way from the start of the year, is coming from synergies and also volume growth. We've said repeatedly, as you know, Vivek, that we expect the margin to go up to 23% in this business area once we start to see normalized volumes. That's what we're seeing now. We start to see incrementally the volumes to improve, and that's why we see this good development in Trelleborg Sealing Solutions. As I mentioned, we normally see a drop in Q3 from Q2, but based on this improvement, we can maintain the margins at a good level in Q3 for Trelleborg Sealing Solutions.
Thank you.
Thank you. Agnieszka?
Yes. Thank you, Christofer. I wanted to ask you about the pricing conditions in the quarter. I think you have been quite confident that you can compensate for higher input costs.
Yeah.
If you could follow up on that and maybe, I don't know if you can quantify the pricing impact on your organic growth in the quarter.
No, not at this stage. We can come back to that once we report, obviously. But, no, we are always confident that we can balancing out any inflation, be it in our raw materials or salaries or what have you, because that's what we've been known for being able to do for many years. When we had Wheel Systems, the tire business, there was always a lengthy time gap between when we can do these adjustments to our prices. We were at fixed prices for six months, and then we could adjust it. That cyclicality is gone, obviously. Now we feel that we always are able to compensate for higher input and inflation. Yes, that is true. We've seen some inflation here, and we have compensated.
Thank you.
Thank you. Any further questions on Trelleborg Sealing Solutions? Okay, then I'll try to sum this up by saying that we expect the organic sales growth for the group to come in at 5% or so in Q3. That is a much more transparent way of communicating than we are used to, but this is all due to the confusion with the comparison numbers, which shifts a lot between Q2 and Q3 a year ago. Don't expect me to be so blunt about the organic growth normally, going forward. In terms of margin for the group, we expect the EBITDA margin in Q3 to be influenced by seasonality in both Trelleborg Industrial Solutions and Trelleborg Medical Solutions. That means basically that we see seasonally weaker margins in these two business areas than we saw in Q2.
So weaker in Q3 than it was in Q2, but that's all due to seasonality. However, we don't see that seasonality in Trelleborg Sealing Solutions in Q3, the normal drop, we don't see that in Trelleborg Sealing Solutions this year. We expect the margin to be similar in Q3 that it was in Q2. I'm not sure if you still have questions, Ope and Vivek, but your hands are raised, so I'll start with Ope.
Yeah. So just two quick ones on margins. I think IS margins were down actually quite significantly Q3 2025.
I am just trying to, do you mind helping square the circle in terms of, I get the seasonality point, but-
No, we say, a typical seasonality from Q2 to Q3 in Industrial is typically a percentage point or so. It could be between 0.5 percentage point and 1 percentage point. That is the seasonality we see, and we expect that to repeat itself in Q3 this year. We also then expect the margin to recover back to the same level basically in Q4. That is the pattern we see, and I see, Vivek, you have a question as well?
I do. Thank you very much. My question is, obviously you have given us very helpful color on what you expect the overall organic growth to be, but I am just curious within the verticals, we have seen the PMIs move higher, and I am curious to know what are you seeing within the general industrial space, particularly within Europe? Are you seeing any signs of broad industrial recovery in Europe, for example, or is it still relatively stable? Thank you.
Yeah, I think I alluded to that when I mentioned the Sealing Solutions that we saw that, especially for us in an industrial segment, we see strong sales growth, particularly in Asia, which is bolstered by our semicon business, our industrial equipment, and construction business. We also see particularly strong sales for the oil and gas segment in America. But, in Europe we see it improving, but it is not the hockey stick improvement we have seen in the past. Mind you, we have only had one quarter that has been going up, and it is not that typical after a prolonged downturn, you see a hockey stick where our customers are both buying more from underlying demand, but also restocking. We see improvements, but it is more incremental quarter by quarter, month by month.
So it is still pointing in the right direction, but it is not a very strong development in Europe.
No, it is not.
Thanks very much. If I may just
Yeah
follow up on that, just to make sure I heard you correctly. I think you mentioned you are seeing both some improvement in underlying demand and also some restocking. Did I hear that correctly? Is it possible to quantify roughly how much you think of a restocking effect there is?
No, I would say that it's very typical after two years of down, facing negative volumes, and then in Q2 we saw the volumes come back above the waterline, if you will. It's continuing in Q3. But at this point, at this pre-call, I cannot give you that kind of details. We'll have to wait until we report the numbers.
Fully understood. Thank you.
Yeah. Okay. Hi, Mats.
Hey, Christofer. Just a question there. Coming back to Trelleborg Sealing Solutions, and you mentioned that you haven't seen any sort of seasonal impact there, but I guess, it's always the third quarter. Are there sort of special things that have improved the profitability this quarter? Just to get some more flavor there.
Yeah. I fully understand the question, and the answer to that question is that, it's improving. Even though I don't expect us to do another 12% organic growth in Q3 as we had in Q2, even if it's lower, that means it's improving due to much tougher comparison numbers. It's more about operational excellence and efficiency in our production when we get more volume. That aids us when it comes to the margin.
And it sort of filters through to the margin also, I guess.
Yeah.
But in a normal quarter without seasonality, I would expect the margin to be higher than 23%.
Well, we've always said that 23% is our. Of course, we've said that we are actively trying to keep the margin around 23% because compared to our competitors, that's very often twice as high profitability.
Sure.
If we can keep the margin around 23% and increase the margin slightly every year in industrial, that means we are reaching our 20% group margin target soon. Whatever happens once we reach the target, that's a matter for the group management to discuss whether or not to raise the bar for the group margin even further. No, you should never expect the Q3 margin. It's typically seasonally down from Q2, but this year it's actually at the same level. Also, this year, due to the improvements in the underlying demand.
Okay. Understood. Thank you.
All right. Thank you. Again, I think that's it for me, folks, and I hope to discuss the upcoming results in more details with all of you once we have reported on the 23rd of this month, or actually 23rd of October next month. Thank you very much for calling in today. I hope everything was clear and talk to you soon. Bye.
Thank you.
Thank you.