Welcome to the VBG Group Q2 report 2025 presentation. During the questions and answers session, participants are able to ask questions by dialing Pound key, 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Anders Erkén and CFO Fredrik Jignéus. Please go ahead.
Good morning, everyone. Welcome to the Q2 presentation of the VBG Group. Let me briefly summarize Q2, and Fredrik will give you all the details necessary in the next coming slide. First of all, we had a revenue decline of 9% versus Q2 2024. We can say that a lot of this is related to the currency fluctuations of almost 7%, yeah, a little bit more than 7% of the decline, or 83% of the decline was related to the strengthening of the Swedish krona. The important thing, if we look at the quarter, is that the sales improved gradually as the quarter progressed, and we could see a good trend in the month. The main drivers for this are that destocking is completed on the off-road side in North America, as well as that the HVAC take rate is improved.
All in all, a good end of the quarter, and we'll come back to that later on. Even though we had a small decline in volumes, we managed to maintain our gross margins to a 32% level, and we had a solid EBITDA performance during the quarter as well. What we have done also is that we have made two strategic acquisitions during the quarter. First of all, as you recall, in the beginning of April, we acquired the Swedish company Ledson , a specialist in lighting for vehicles, and that will contribute to the division Truck & Trailer Equipment's aftermarket business, especially the accessories side. On the 1st of July, we acquired the German company Malmedie, which will be a complementary acquisition for the division Ringfeder Power Transmission.
It's really a niche company and a worldwide top performer when it comes to industrial applications, when it comes to coupling technology, mainly niched in the industrial segments, port cranes, and steel mill segments. By that, Fredrik, could you please take us further in the details?
Okay. Thank you, Anders. We are still happy to see a resistance in our gross margins due to our ability to adapt our production capacity despite the lower sales, especially in North America. For the second quarter of 2025, we still have a relatively high comps in 2024. In the second quarter, sales decreased by 8.8% and adjusted for currency and acquired sales, the growth rate was - 5%. Large fixed effects in the quarter. EBITDA amounted to SEK 178 million in the quarter, and the EBITDA margin amounted to 13.1%, a decline from 14.5% in the second quarter of 2024. The SEK continued to strengthen during the quarter and had an impact on the group, especially in MT S and Ringfeder Power Transmission this quarter, but also in financial items where we reevaluate our loans, etc.
The FX effect from strengthening the SEK, especially towards the U.S. dollar in the quarter, affects the P&L in EBITDA with SEK 5.2 million negatively, relating to reevaluation of the balance sheet. During the second quarter, we also received a retroactive pandemic support in the U.S. of a total of SEK 13.4 million that affected the EBITDA positively. At the same time, we have made some reservations for advisory costs and due diligence costs for two acquisition processes of SEK 5 million, and we also have a reorganizational cost in MT S of SEK 2.2 million. Operative cash flow amounts to SEK 83.7 million in the second quarter compared to SEK 204.9 million in the second quarter of 2024. The lower cash flow in the quarter is mainly due to higher working capital tied up, especially in accounts receivable, but also a lower underlying result. Earnings per share amounted to SEK 4 per share compared to SEK 6.71 last year.
Okay, we will go through the second quarter with some touchdown on each division. We start from the left with Truck & Trailer Equipment. Sales for the quarter increased by 2.4% compared to the previous year and amounts to almost SEK 400 million. Adjusted for FX and acquired volumes from Ledson, organic growth increased by 1.7%. Demand for coupling products has continued to be high, and the market for trailer components in Europe has stabilized at a very low level during the second quarter of 2025. EBITDA for Truck & Trailer Equipment increased in the second quarter compared to the previous year and amounted to SEK 67.4 million with a strong EBITDA margin of 16.9%.
The result in the quarter was negatively affected by $1 million in reevaluation of the balance sheet items because of the strengthening of the SEK and also by $1.5 million in costs in connection to the acquisition of Ledson Lights . We go over to Mobile Thermal Solutions. The sales for the second quarter decreased by 13.7% compared to the previous year and amounts to SEK 732 million, with North America accounting for the largest decrease. Adjusted for FX and acquired volumes, organic growth decreased by 9.4%. EBITDA for Mobile Thermal Solutions amounts to SEK 86 million with an EBITDA margin of 11.7%. MTS is negatively affected by lower sales volume due to continued demand, primarily in the complex segment for the off-road vehicles, but also due to lower volumes in the public transport bus segment due to a major customer closing its operations in the U.S.
Overall, this contributes to a lower EBITDA and decreasing EBITDA margin. The result in the quarter was negatively affected by $3 million in reevaluation of the balance sheet items. During the second quarter, SEK 11 million was received in retroactive pandemic support. At the same time, cost of $2.2 million was recognized due to reorganization. We move over to the next one, Ringfeder Power Transmission. Sales from the second quarter decreased by 9.4% compared to the previous year and amounts to SEK 231 million. Adjusted for FX, organic growth decreased by 1.7% in the quarter. EBITDA for Ringfeder Power Transmission decreased to SEK 33 million, and the EBITDA margin decreased to 14.1%. Ringfeder Power Transmission is primarily affected by lower sales volume in the beginning of the quarter and by product mix variation between quarters. Sales volume improved towards the end of the quarter and also the EBITDA margin.
In the second quarter, operating profit was negatively affected by cost relating to the acquisition of M almedie of $3.5 million and negatively affected by $1.2 million reevaluation of the balance sheet items. The acquisition of Malmedie was completed the 1st of July. EBITDA was also positively affected by one-time income relating to retroactive COVID support in the U.S. of SEK 2.4 million. Given the market development in the last quarters of our products, the proportion of North American sales has decreased over the last three quarters and now amounts to 51%. Sales outside Europe and North America increased by 16%, and the acquisition of Italytec in Brazil is a large portion of this. We have a portion of aftermarket sales of 23%. For the first six months of 2025, cash flow came in lower than comparable first six months last year.
The result is the main reason for that, but also high working capital tied up, especially in accounts receivables. After the second quarter, we have a net debt position if we adjust for pension liabilities and leasing commitment of SEK 434 million. During the first six months, we have acquired Italytec and Ledson , and VBG Group has still a strong financial position that can be used to develop the group going forward. In the beginning of the third quarter, we acquired Malmedie and strengthened our position in coupling and brakes for harbor cranes. Growth amounts to 31.6%, but decreased the last quarter, relating to the acquisition of the land in Toronto, but also the acquisitions of Italytec and Ledson together with a lower EBITDA compared to 2024.
Please note that this KPI is not a proforma, which means that Italytec and Ledson contribute five and three out of 12 months in the rolling 12 months EBITDA. Thank you for me. Over to you again, Anders.
Thank you, Fredrik. Just to say a few words on our future focus, I think everyone is aware that we have discussed internally a lot about the U.S. trade tariffs. The decision by the U.S. administration to postpone the tariff pause creates continued uncertainty and especially also the administrative burden. When it comes to that, I said it also after quarter one, the tariffs remain a challenge, but their net impact on our operations will be marginal. We have compensated for the cost increases due to the tariffs with product price adjustments, and we will continue to do so.
With the orders on hand that we have, that we saw coming in during quarter two, and our visibility of three to four months, plus the three acquisitions that will contribute with about SEK 200 million in the second half of the year, we are confident that we will create growth in the second half of 2025. We are very positive about that. As mentioned many times, we will continue to focus on our profitable growth, both when it comes to acquisitions. We have made three acquisitions the first six months. We see that the M&A environment is very positive at the moment. Secondly, we will continue with our organic growth to come out with more new products and to find new markets. By that, we end the short presentation of quarter two, and we are open for questions coming up.
If you wish to ask a question, please dial Pound key, five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial Pound key, six on your telephone keypad. The next question comes from Gustav Berneblad from Nordea. Please go ahead.
Yes, good morning. It's Gustav here from Nordea. I thought maybe we could start off with Ringfeder Power Transmission. If we look at the margin development here in Q2 compared to Q1, it's quite large differences. Is this primarily driven by project-related sales here in Q2, or is it other reasons? You comment on slight improvement here during the latter part of Q2. Maybe if you can just help us understand that.
As we have mentioned many, many times, Ringfeder Power Transmission is really related to projects. That means it could have a real impact on product mix effects when it comes to this. Again, stable gross margins, and we see that the volumes are coming in in the second half of the year, which makes it good capacity utilization in the factories that we have across the world.
Yeah, that's clear. If we just focus on sort of the, it sounds like it's orders you are seeing coming in here that you will deliver in H2. Would you say that the sort of project mix or product mix in those orders are quite okay looking here in the early parts of H2?
Yes, we see pretty much the same product mix. It's hard to say exactly between the quarter, so to say, between quarter three and quarter four, but we believe that the product mix should be fairly stable in the mix.
Perfect. If we just look at the recent acquisition here of M.A. y ou completed here in Ringfeder Power Transmission, it looks like quite attractive margins. If we look at the synergies, are there any tangible ones you can highlight, or how do you look at the case there?
We will drive this short-term as a standalone company, but of course, there will be synergies. We don't foresee to take out too much synergies during 2025. Of course, we see it definitely on the sales side where we have cross-selling effects. That is the mid-term synergies that we see.
Perfect. That's very clear. If we move to Mobile Thermal Solutions here and sort of the compact segment within off-road, it looks relatively weak here in the quarter, but it sounds on you like you're seeing improvements within this part of the business, highlighting the destocking here. Is this something that has sort of picked up in or during the latter part of Q2 as well, or?
You're correct, Gustav. This picked up in the latter part of the quarter. We see really a good trend in the order intake, and we are ready to deliver based on the good order intake that we have in the second half of the year. As I repeated, it's the drivers that are two really drivers in this. This is the destocking of the compact segment in North America in the distribution network. Number two is the take rate is improving on the HVAC segment in this product range.
Yeah, that's very clear. Thanks. Just the last one here on MTS as well, if we move to the bus segment. Obviously, we understand the weakness in the transit bus part of the business, but how's the school bus segment performing, would you say?
The school bus segment is performing really, really nicely. It's a good momentum in the business. The order books look great for the second half of the year. There is a lot of discussion regarding the electrification within school buses, but we see a good pace during 2025, at least.
That's very clear. Thank you very much. That was all for me, and I hope you have a nice summer there.
Thank you very much, Gustav. Same to you.
A reminder, if you wish to ask a question, please dial Pound key, five on your telephone keypad.
We have no written questions this time.
I take the opportunity to wish you all a nice summer on the northern hemisphere, and we will be back after quarter three. Enjoy the summer. Thank you very much.
Thank you. Have a nice summer.