Welcome to VBG Group Q3 2026 presentation. During the Q&A session, participants are able to ask questions by dialing pound key five 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 afternoon, and welcome to the presentation of VBG Group Q3 2026. I will try to make a short summary of the status in the quarter. Fredrik will give you the details, and I will come back to make a wrap-up what our future focus is. Of course, we'll take questions afterwards. It's been another volatile quarter with new tariffs and geopolitical tension, especially in the Middle East, which has had an impact. Still, revenue increased by 5.8% compared to the third quarter of 2025, and adjusted for currency and acquired volume, sales increased by 5.4%. All divisions showed growth together with all the three geographic areas that we have, North America, Europe, and rest of the world. In summary, we can say this is the best third quarter revenue-wise.
If we look a little bit more in detail, we saw growth in our off-road segments for Mobile Thermal Solutions, particularly in the construction and agriculture segment, but also in the mining segment in Europe. It' s positive to see good momentum also for MTS in the European segments. Ringfeder Power Transmission, which had the best sales ever in a specific quarter, showed growth in all industrial verticals. From a Truck & Trailer Equipment perspective, we saw a clear trend that European truck OEMs increased their volumes. Order intake increased by 4.5% in the quarter compared to quarter three in 2025, which indicates a good demand in the coming quarter. The group delivered an EBITA margin of 10.6%. It's worth commenting that the new tariffs and commodity price increases in Mobile Thermal Solutions were mitigated fully during the quarter.
As we stand at the moment, we see that this means that we have reached the bottom in quarter two. We also reserved SEK 4.7 million in Mobile Thermal Solutions, a severance cost in the division in Mobile Thermal Solutions. We will come back with more details in the future focus how we mitigate this. Last but not least, highlight in the quarter is that the operating cash flow reached SEK 265 million during the quarter. Please, Fredrik Jignéus.
Thank you, Anders Erkén. The third quarter was characterized by continued growth across the group. Organic growth amounted to 5.4%, with all three divisions and all geographical regions contributing positively. Overall sales increased by 5.8% to approximately 1.45 billion SEK. Order intake, as Anders said, developed positively, increased by 4.5% compared with the corresponding quarter last year, and organic growth was almost 4% in the order intake. EBITA amounted to SEK 153 million, corresponding to an EBITA margin of 10.6%.
Profitability was affected by several factors during the quarter. These included higher cost for tariffs, raw materials, energy and transport, as well as an unfavorable customer and product mix. The result was also impacted by a personnel-related restructuring cost of approximately SEK 5 million within Mobile Thermal Solutions. We have implemented and will implement more price adjustments to compensate for the higher cost.
However, there' s a timing lag before these measures are fully reflected in the earnings. In parallel, we continue to focus on cost control and operational improvement across the group. If we make a touchdown in each division in third quarter, Truck & Trailer Equipment, starting from the left, Truck & Trailer Equipment delivered another solid quarter. Sales increased by 2.8% to SEK 380 million, corresponding to an organic growth of 2.1%.
Demand for coupling products remained stable, while the European trailer market continued to show a modest positive development from a low level. The defense segment also continued to contribute positively to sales development. EBITA amounted to SEK 63 million, corresponding to an EBITA margin of 16.6%. The result included cost of approximately SEK 4 million related to two larger trade fairs, both of which take place every second year.
Looking at the first nine months for Truck & Trailer Equipment division, the division delivered an EBITA margin of 19.5% and a return on operative capital of approximately 54%. This continues to demonstrate the underlying strength and capital efficiency of the business. Going over to the middle and Mobile Thermal Solutions. Mobile Thermal Solutions continued to report strong demand and solid organic growth. Sales increased by 8.3% to SEK 778 million, with an organic growth of 7.9%.
The development was driven primarily by strong demand within the off-road segment and improved performance in the European markets. EBITDA amounted to SEK 65 million and corresponding to an EBITDA margin of 8.4%. Profitability continued to be affected by higher costs for tariffs, raw materials, and transportation, combined with less favorable customer and product mix. In addition, personnel-related restructuring costs of almost SEK 5 million were recognized during the quarter.
Price increases have been implemented to compensate for these cost increases, but the full impact is achieved with a certain time lag. We therefore remain focused on pricing, cost control, and operational efficiency. The construction of the new production facility in Dobřany is progressing according to plan. The facility expected to reach full production capacity from the second quarter of 2027, and is an important strengthening of the division's future capacity and efficiency. Moving over to Ringfeder Power Transmission. Ringfeder delivered its strongest sales quarter to date. Sales increased by 3.3% to SEK 289 million, corresponding to an organic growth of 3.4%. Demand was stable across the industrial segments, with particularly strong development within defense-related applications. EBITDA amounted to SEK 31 million, corresponding to an EBITDA margin of 10.9%.
Despite the record-high sales level, profitability was affected by temporary ramp-up costs associated with expanding capacity, as well as a slightly unfavorable product mix. The high activity level has created temporary capacity challenges, which affected efficiency during the quarter. The work to increase capacity and improve operational performance continues. Construction of the new production facility in Dobřany is progressing. The facility is planned to become operational during the third quarter of 2027 and will support the division's future efficiency, capacity, and long-term competitiveness.
Moving over for rolling 12 months. Looking at the rolling 12 months perspective, sales continue to develop positively. Rolling 12 months sales reach approximately SEK 5.6 billion, compared to SEK 5.4 billion for the full year 2025. All three divisions contributed to the sales development. Rolling 12 months EBITDA amounted to SEK 648 million, corresponding to an EBITDA margin of 11.5%.
The year-on-year development in profitability primarily reflects higher cost for tariffs, raw materials, energy, and transportation, as well as the unfavorable product mix and temporary ramp-up cost. The result also has been affected by the restructuring measures within Ringfeder and Mobile Thermal Solutions divisions. North America represents 52% of the group sales during the quarter, Europe 33%, and the rest of the world 15%.
All three geographical regions contributed to growth during the quarter. The broad geographical and market exposure reduces our dependency on individual markets and provides resilience in volatile environment. Our diversified business model, with exposure to several industrial niches and significant aftermarket business, also contributes to recurring demand and stability across business cycle. Cash flow improved significantly during the third quarter. Cash flow from operating activities amounted to SEK 265 million, compared to SEK 136 million in the corresponding quarter.
The first nine months cash flow from operating activities increased to SEK 364 million compared to SEK 248 million last year. The improvement was mainly related to lower tax payments and currency effect while working capital contributed to be affected by the higher level of activity in the group. During the first nine months, we have invested around SEK 370 million in our long-term growth agenda. The largest parts relate to the new production facility in Toronto, but we have now also started to invest in the new Ringfeder facility in Dobřany.
These investments temporarily increase capital employed and net debt, but they are important for improving capacity and efficiency and the competitiveness over the long run. At the end of the quarter, net debt amounted to SEK 1.3 billion and net debt in relation to rolling 12 months EBITDA, including IFRS 16, was 1.6 times. The equity ratio remained solid at almost 54%.
Return on operating capital amounted to 25.2%. The reduction compared to the end of 2025 primarily reflects increased operating capital associated with our ongoing investments and combined with lower rolling earnings. Overall, we maintain a strong financial position and sufficient financial flexibility to continue investing in the development of our business. Thank you. Over to you, Anders Erkén.
Thank you, Fredrik Jignéus. As we look ahead, we remained prepared for continued market volatility and external environment characterized by geopolitical uncertainty, inflation pressures, tariffs, fluctuating raw materials, and transportation costs. Despite these challenges, our business remains resilient. During the quarter, we delivered organic growth, as we mentioned, and achieved growth across all divisions and geographic markets. Order intake also increased by 4.5%, reflecting stable demand across several of our key segments. Of course, a major priority going forward is restoring profitability in Mobile Thermal Solutions. While sales increased more than 8% during the quarter, profitability was impacted by higher material and logistic costs, tariffs, and restructuring expenses. We are actively implementing price adjustments, operational improvements, and cost control initiatives to offset these cost increases.
As pricing actions take effect, we expect improvements, and as I mentioned, we believe that we saw the bottom when it comes to the EBITA margin in quarter two, although there is naturally some timing lag before we see the full benefit is reflected in the earnings. Another key focus area is the completion of our new production facility in Dobřany. As Fredrik mentioned, the project is progressing according to plan and will significantly strengthen our manufacturing footprint, capacity competitiveness in North America. The facility is expected to reach full production capacity during the second quarter of 2027. At the same time, we continue to invest in our future growth. Strategic investment in both Mobile Thermal Solutions and Ringfeder Power Transmission are enhancing our operation capabilities and supporting long-term value creation.
We also remain focused on driving organic growth by leveraging our strong market position, broad customer base, and healthy order book. Finally, acquisitions remain an important part of our growth strategy, supported by a strong balance sheet and a strong cash flow generation. We continue to evaluate opportunities that can strengthen our market position, broaden our technology offering, and create long-term shareholder value. In summary, while we remain cautious regarding the external environment, we are confident in our strategy, our operational initiatives, and our ability to continue to build a stronger and more competitive VBG Group. By that, we are open for questions.
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 afternoon. It's Gustav from Nordea. I thought maybe just to start off with MTS here and maybe just start off a bit high level. I just wanted to get your view, get a better sense of how you look upon the market for MTS now with the remainder of 2026, but I guess even more so heading into 2027.
First of all, if we divide the Mobile Thermal Solution, we can start with the off-road side, which is 60%-65% of the revenue, and the big market, of course, North America. We see continued strong growth in what we call the power sports segment, which is the side-by-side business, and it's an underlying growth, but the most important thing that the take rate in the utility sector of HVAC systems are improving here. So we see an underlying growth. We can also see, especially in the construction segment, that there is an underlying growth. If you look at Volvo Construction Equipment, they see something like between 0% and 10% growth in North America next year.
When it comes to the European part, we see the light in the end of the tunnel here, and it's especially in the mining segment and the material handling segment that we see growth, underlying growth. If we go to the bus business, which is particularly a North American business, we see an underlying growth of the big school buses. There we see a compound average growth of somewhere between 4% and 6% in the coming years. We also see a good take rate when it comes to HVAC. The big question mark when it comes to school buses in the U.S., that is the rate of electric school buses in the future, where we most probably will see a drop in the ratio of total school buses.
When it comes to the transit buses, we have an underlying growth, and we have spent really good resources in developing a competitive range, which we will see bear fruit during 2027. We can see that the quoting rate is increasing very much in this segment. All in all, a positive view of MTS on a high level. What we can see also, which is interesting, which probably is your next question, Gustav, that is relating to, yes, for example, it's an 8% growth in the quarter, but what happens with the result? Of course, this has been a key issue for us to increase the gross margins. It's clear that a lot of things has happened during the year.
But we can see now when we are in quarter three, that we are really focusing on, and we have reached the mitigation to offset the cost increases which we have had on the raw material side, presumably aluminum, copper, and plastics, with price adjustments in the market. It' s not enough. We need to continue with this, and I'm convinced that we will continue with price adjustments during 2027 as well. As Fredrik Jignéus mentioned, in this kind of business, it's a lag before the order book is consumed, and we can drive in new prices. But for sure, we are committed to continue to adjust price levels to improve the bottom line at MTS.
That's very clear. Appreciate the color there. I just wanted to move to the factory facility situation in Canada here. You say full production in the new facility Q2 2027. Is that planned to have full production already during the beginning of Q2? If you can just elaborate on the execution timeline here, how you plan to close down current facilities, et cetera.
Yes. We have actually access to the new building now. We have started to move assembly. We have facility ready. We are working on the offices and so on. But now we have a plan to move in all the equipment by year-end. Of course, it takes some time during the quarter to ramp up things. But our aim is to squeeze the period as short as possible now.
So we have a daily plan, and we are following that plan since October 12th, with no hiccups so far. As I mentioned before, it's easy to build a building. It's now the crucial things to move and move machines, but also to move people. But so far, so good. Of course, it would be a ramp-up period during quarter one, but we expect to be at full speed during the beginning of quarter two.
That's clear. Do you see any risk of having to say no to orders or not being able to deliver to the backlog based on your current footprint and your current workforce? Meaning outsourcing, could that be an option?
No. I think we have really been careful with building inventory. We have secured the critical parts, so we do not foresee any backlog at the moment. I think we will reduce inventory during the latter part of quarter four.
Perfect. Just one final one before I get back in line here. On Ringfeder Power Transmission and the temporary ramp-up cost you are seeing there, how long should we expect this to be a headwind for you? Is that until the third quarter of 2027 where you are done with that consolidation as well?
I think maybe I take two minutes to explain this. We have six production facilities across the world: Brazil, U.S., two facilities in Germany, one in Czech Republic, and one in India. Of course, we have had an increase in ordering take, but it's affecting the Czech plant mostly. That is the big pressure. Of course, we take action now, and ramp up internal production with shifts, with operators, and so on. In order to keep lead times and our customers, we are outsourcing quite a lot of hours to mitigate the peak that we have. So the cost that we have now in relation to what we had before, that is the extra outsourcing cost with the transportation cost that is included into that. To your separate question, when have we mitigated this?
I believe that it will take until end of quarter one before we are in line with the situation, because it's really the Czech facility. You can't move these products to other facilities. It's really dedicated production for the Czech factory.
That's very clear. Thank you for taking my questions. I get back in line now.
Thank you. Thank you, Gustav Berneblad .
The next question comes from Albin Barnevik from ABG Sundal Collier. Please go ahead.
Morning, Anders Erkén and Fredrik Jignéus. Or good afternoon, I should say.
Good afternoon.
Perhaps starting off on the order. What segment would you say drove the order growth of 5% here in the quarter?
I would say that if you spread this out, for sure, it's Ringfeder Power Transmission that is top of the line when it comes to this. Secondly, Mobile Thermal Solutions, and then Truck & Trailer Equipment.
I see. On MTS then, of course, the margins here were a bit disappointing, but we still saw an improvement sequentially. Would that improvement be attributable to price hikes in the quarter, or how should we read that? An improved gross margin as well as the MTS margin then?
If I understand your question correctly, it's-
Quarter-over-quarter.
When we compare quarter two to quarter three 2025, we can see that there is tariff and material cost that has affected. But if we compare also the actions that we have taken in the quarter, now we can see that, I would say for the first time, our price adjustment has mitigated all the cost that has occurred in quarter three 2026. If you compare it to quarter two 2026, I think we are on the right track now, mitigating the cost increases that we have for Mobile Thermal Solutions.
All right. Thank you. On the negative customer and product, which you mentioned in the quarter for MTS as well then, shouldn't the fact that off-road is growing faster than buses, for instance, be supportive to the margins here?
It should be so, for sure. There is a certain mix within off-road as well. It's clear it should be so, that the margin is favorable for the off-road side.
Moving on, perhaps, to Ringfeder Power Transmission. As you noted, record high sales here in the quarter, yet softer margins than previous quarters this year. Could you perhaps expand a bit on the product mix in the quarter as well? You gave some color on the capacity challenges, but on the mix here, how should we read that?
I would say that the mix is dependent on one or two product groups. For us, the friction spring business is really, really important. If you look at the mix where it's produced, it's produced and supplied globally from the Czech factory, where we have all the test equipment, the manufacturing equipment specifically for this. This is where we have the backlog. We haven't gotten out with all the volumes that we expected, and we have a backlog with overdue orders in this segment. The friction spring business, it's project-oriented, and as I mentioned many times, it could be different from quarter to quarter. In this quarter, we had capacity constraints for the range and fewer project orders. That's the backbone to the good sales generally in volume, but with a lower product mix of friction springs.
Yeah. That's clear. Perhaps a final one from me then. Could you say a word or two about OpEx in the quarter? I see administrative expenses being up 16% year-over-year, for instance.
I think, without knowing the details, we had two things on the OpEx side which sticks out in the quarter. That is compared to the third quarter of 2025 from the top of my head, and it's basically SEK 9 million . It's first of all the severance payments for two positions within Mobile Thermal Solutions, and we have the fair expenses of a little bit more than SEK 4 million, which comes in every other year. It comes in 2026, it was in 2024, but we did not have the fairs for Truck & Trailer Equipment in 2025.
All right. Thank you. I will get back in line.
Thank you, Albin Barnevik.
The next question comes from Jonny Jin from SEB. Please go ahead.
Thank you. Good afternoon, Anders Erkén, Fredrik Jignéus. I also have a couple of questions. I just want to start with the prices. I think you mentioned price adjustments in the quarter here. What is your estimation of the price impact of sales growth in the quarter, would you say? Secondly, the order bookings you say is up 4.5%. Did that include the price increase in the similar magnitude or are prices in here, in the orders?
Yes. To your first question, the ratio is 50% volume, 50% price in the quarter. Price increases are included in the order intake.
Okay. That is clear. Would you say that the price impact, is it bigger in orders or is it similar magnitude?
My estimation, it has the similar impact.
Okay. That's good. On the order intake, is it possible to say some indication what sort of book-to-bill are you entering Q4 with?
It is about 100%, Jonny Jin.
Okay. That's good. Then I just want to ask a little bit follow up on the Ringfeder Power Transmission. I know you mentioned this ramp-up cost for expanded capacity. Maybe I missed it, but could you maybe quantify roughly how much extra cost that was in the quarter? If we should expect similar cost magnitude going forward? Also did this capacity ramp-up, did that affect any deliveries? Did that hold back deliveries in the quarter in Ringfeder?
To your first question, we are talking a couple of millions in the quarter here. What was your related question to the second one?
Should we— A couple of million extra cost, is that fair to assume that we should have similar costing in Q4 relating to this?
Absolutely. It will continue. Maybe not the magnitude, a little bit lower, but December is December, but it will be a couple of million in quarter four as well.
Yeah, that's clear. The final one was, did this affect delivery in any way, or did you manage to deliver everything you wanted in the quarter?
No, it didn't affect any deliveries. We have, as I mentioned, overdue orders or backlog, but it's more relating to the tail that we brought from quarter two, where the big ramp-up started.
Okay. That's good. Just one final from my end. I want to build on the previous comment on the positive view on the MTS market. How would you say the MTS dealer inventory levels are now within the side-by-sides? Is it fair to assume that we can maybe expect some sort of restocking effect, or would you say that the flow that sell in and sell out in the chain is moving healthy, or could you say something there?
It's a relevant question, Jonny Jin. I can just quote the Polaris quarter two report, where they comment in capital letters that the inventory level in the distribution network is healthy. You remember from the fall 2024, where the destocking activity started, that it's now on a healthy level. We see really positive signs that the take rate on HVAC systems, especially for the utility segment, is increasing here.
All right. That's good. Sounds promising. That was all from me. Thank you, and have a great day.
Thank you, Jonny Jin.
Then we have a question from Emil. How much is defense segment growing within Truck & Trailer Equipment, and what was the share of sales within the segment? First of all, the segment for Truck & Trailer Equipment, it was roughly 12%, and it's growing in mid-single digit numbers. Then we have a question from Otto. How will the election in Brazil and currency movement affect business in the country?
It's a little bit too early for us to say, but it's a relevant question that we are monitoring. Of course, we saw this morning that the currency rate was fluctuating dramatically, and this is something that we are monitoring. What we can see with the currency, at least, that we are buying raw material in Brazilian reais, and we are selling in Brazilian reais. So it shouldn't have too big impact. Of course, when we are converting it to SEK, that' s the big impact.
Great. I think that was all the questions that we had.
Thank you very much for your attention. We wish you then Merry Christmas and a Happy New Year. We will be back in February next year. Thank you very much.
Thank you.