Arjo Aktie

Welcome to the Arjo Q1 presentation for 2026. [Operator Instructions] Now I will hand the conference over to President and CEO, Andreas Elgaard; and CFO, Christofer Carlsson. Please go ahead.

Thanks a lot, and thanks everybody for dialing in and listening to Arjo's First Quarter of 2026. So we believe we have been able to pull together a stable first quarter and we're happy to share that with you. And also, we will talk a little bit on how we are progressing the work with shaping the future Arjo. So just to begin a little bit from my side. And to remind everybody of who we are and what we do because we are really very purpose-led in everything we do. This is something that is very strong in Arjo. We exist and are present at people's most vulnerable moments, and we help them to keep their integrity and dignity and really make sure that they have the best possible situation when they need it the most.

We, as you know, we work across several product segments and categories. So from patient handling and hygiene to medical beds, the mattresses that goes on top often focused on helping to relieve pressure injuries. We work with VTE prevention, diagnostics and disinfection. So these are our product categories. We are about 7,000 people and with an annual turnover of approximately SEK 11 billion. And we are truly a global company with sales to more than 100 countries.

So let me just start by fly over a summary of the first quarter of 2026. So we delivered solid growth in Q1, 3.8% is within our guidance. And it's really driven this year by a positive trend in U.S. in capital sales and strong sales in rest of the world. And also this year, as you saw in Q4, the flu season was not as strong as it usually is for us in U.S. and that has continued. So this is despite a somewhat weak flu season. So we are -- we think this is really a stable result that we deliver.

The gross margin is slightly below last year, and we are, of course, put under continued pressure when it comes to currency and the tariffs in U.S. We are working with trying to compensate this through efficiencies and also to manage our costs in a good way and then looking into price adjustments, especially considering the situation that is in West Asia. So still uncertain how this will affect us, but we are preparing for making sure that we manage those effects.

So just to also highlight, we had healthy cash flow in the quarter compared to last year, it's an improvement, and it follows the seasonal pattern. So this is also something to mention. The adjusted EBITDA came in at SEK 456 million. And maybe one thing to highlight is that we started in the quarter to work on our future strategy, and we've had very intense work and a lot of engagement across the company, and we are progressing in a really good way. And I will come back to this a little bit more towards the end.

So if I zoom in a little bit on sales in North America, we had both in Canada and U.S., really strong end to the quarter. So month of March was really strong. In total, I would say that U.S. continued to grow in the quarter, and Canada came in slightly below last year. But they really met some very strong comparable number. So all in all, a really strong performance is what we have seen, meeting very strong comparable numbers.

Of course, when you meet stronger numbers, the percentage growth is, of course, affected. And as I mentioned before, for U.S., the flu season was not as strong as it usually is but we compensated that through capital sales in Patient Handling.

If you look at the rest of our sales beyond North America, in Western Europe, we were struggling a little bit and it's mainly U.K. that is helping us with it -- not helping us, but that stands with the decline. And most other markets are performing in a good way, and especially France and Italy have had a really good performance in the quarter. Rest of the world beyond Europe then and North America was really, really strong, and the growth was really carried through several markets performing, but the shout out, especially to South Africa that delivered a large medical beds order in their region. And I just want to hang on that topic just because it gives some flavor to what we're doing.

So we have modernized 36 health care facilities in South Africa, this was a special product tailored for their needs. So 2,300 new, more than 2,300 new beds and mattresses. And this to us is not just -- it's a logistic exercise. It's an installation exercise. It needs to be done when it suits the hospital and it needs to be done with good margin and good cash conversion. And all of this came to life through really good strong teamwork from customer to back in supply chain.

So by that, I hand over to Christofer.

Thank you, Andreas. As Andreas stated, we had a stable start of the year. Overall, our gross margin came in at 42.6% compared to last year's 43.7%. Looking at the drivers. The growth in Patient Handling improved group margins, driven by strong development for our floor lift Maxi Move 5 and ceiling lift. Also, our Diagnostic business improved margins driven by higher volumes and a favorable sales mix. The Rental business gross margin slightly increased, driven by France, U.K. and Australia, while U.S. had a negative development due to weaker flu season and some capital conversion among customers.

However, the main part of the gap came from an unfavorable product and country mix impacting the gross margin by minus 1 percentage point, mainly related to a large medical bed order in South Africa. At the same time, U.S. tariffs had a negative impact of SEK 10 million year-over-year, representing a 0.4 percentage point decline in gross margin. In addition, FX had a minor negative impact on gross margin but in absolute numbers, the gross profit and negative FX effect of SEK 123 million.

Finally, our Service business margins were in line with last year when excluding U.S. tariffs. If we now move on to the EBIT slide. Next slide, please.

As you can see, adjusted EBIT in Q1 came in at SEK 190 million compared to SEK 208 million last year. However, when excluding U.S. tariffs and FX, the result is in line with last year. Looking at the costs, OpEx declined in the quarter due to FX effects, at the same time, the organic OpEx increase was 2.8%. In addition, we had a positive effect from revaluation of accounts receivable and accounts payable of SEK 3 million in the quarter reported under other income and expenses. Last year, the equivalent amount was minus SEK 34 million, resulting in a delta of plus SEK 37 million year-over-year. So overall, the total FX impact on adjusted EBIT amounts, therefore, to a minor amount of minus SEK 7 million in the quarter.

Moving to EBITDA. Adjusted EBITDA for the quarter was SEK 456 million compared to SEK 486 million last year. And adjusted EBITDA margin was in line with last year and came in at 16.9% versus 17.0% last year. The EBIT margin increased to 6.8% versus 5.9% last year. This improvement was supported by lower restructuring costs that came in at minus SEK 6 million in the quarter versus SEK 40 million last year.

Now we move over to working capital and cash flow. Next slide, please. Operating cash flow improved in the quarter amounting to SEK 237 million. This was SEK 53 million higher year-over-year, mainly due to improved cash flow from working capital. Following our normal season pattern, the change in working capital were minus SEK 142 million versus minus SEK 180 million. Working capital days increased to 83, up from 81 in Q1 '25. Cash conversion in the quarter improved to 52.7% compared to 41.3% last year. For reference, our cash flow from investing activities was minus SEK 135 million compared to minus SEK 215 million in Q1 '25. The decrease is mainly due to SEK 48 million lower investment in rental assets. If we now move over to the net debt and leverage. Next slide, please.

The decrease in net debt this quarter is driven by improved operating cash flow, lower investments and positive FX effects. Our financial net came in at minus SEK 36 million compared to minus SEK 43 million in Q1 '25. The improvement relates to some positive FX effects. Our cash position remains strong. Net debt to adjusted EBITDA stayed flat versus the year-end and came in at 2.2. Our equity ratio stood at 50.5%, up from 49.8% at year-end '25, mainly due to positive FX effects in equity.

With that, I will now hand it back to you, Andreas.

Thank you, Christofer. So I thought that it would be good maybe to just share a little bit on how the work of shaping the future of Arjo is going. And too early to reveal anything, but I can still try to give you a flavor on what we're doing. And we put the headline here, but it will be a story of untapped potential because being new now into Arjo soon, 4 months into the role, I see a lot of potential in the people, in our relationships with our suppliers and in the relationships with our customers. It's really -- it's not just an industry that has healthy growth expectations, but it also Arjo as an organization is really filled with potential. But this in order to be able to untap that, we really need to have clarity on where we're going and make sure that we build the capability to execute as well.

So one way of doing that is by inviting leaders from across the organization to make sure that we build a common ground, we create alignment, we create understanding on where we are and where we need to be in the future. And by doing that, you don't just get the strategy that comes from top, you get a strategy that is well anchored across the organization, and that really helps you when it's time for execution. So our ambition is to go from strategizing straight into execution, that is the ambition. And creating a clarity in where we're going is really important for everything from product development to supplier relationship development and to product development.

But it's also very important if we want to continue to grow also in new product segments or if we want to open new segments where care is moving. It will also be something that will guide us if we need to accelerate our growth or our strategic movement through acquisitions in the future.

But strategy and talking too much about the future, sometimes can dilute the focus on here and now. And I, for one, is super focused on that we need to deliver two things. We need to deliver clarity for the future, so we know how to execute and build the future Arjo, but we also need to deliver results short term.

So what you can expect from us is a strategy that will focus both on the here and now and how we lay the foundation for the future. so you will have both of it so to say. And our ambition is to get this strategy approved during summer and that we will be able to communicate that to you after the summer. That means the second half of 2026 so that's a little bit the status on where we are by in the work of creating the future Arjo.

And by that, we hand over to the Q&A section.

[Operator Instructions] The next question comes from Filip Wetterqvist from SB1 Markets.

I have a couple. First, can you quantify a little bit more on the contribution from the 36 facilities in South Africa to global sales organic growth? Like what would the underlying organic rate have been ex this order? And how does that inform into the exit run rate into Q2? The first one.

Okay. Thank you for your question. I don't think we have communicated the size of the single order. And I do think that when we have orders of materiality, we will do press release and specify those things. So we have not done that. So we are not giving guidance on that because that will reveal information to competitors that we don't want to reveal. But 2,300 -- more than 2,300 beds to 36 care facilities. It is a substantial order, but we don't judge it being material.

And my second question, you mentioned Middle East cost pressure from Energy & Transportation as a fresh headwind here in the report. Did you see any impact already here in Q1? Or do you anticipate it in Q2? And what is the current run rate assumption for '26?

Yes, thanks for the question. So we have seen a minor effect in Q1. But of course, we and everybody else in the world are very much aware of how much oil affects not just the energy sector, but every -- I would say every process industry and every food production farm in the world through the production of fertilizers. So of course, this will have effects. But we -- so we are preparing to try to mitigate that in the ways that we can. We don't give forecasts on what that might be because -- and I don't think Arjo is the best equipped to give forecast on the financial consequences of the crisis that is ongoing right now.

But given that, of course, we are preparing us for the scenarios that we see internally. So I hope that answers your question enough. And I mean if this conflict becomes short term, hopefully, there will still be effects. That's for sure. But if it becomes short term, I also think it will be something that the world will be able to manage. And this is something that affects Arjo in the same way as it affects everybody else.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay. Thank you very much. So today is the Annual General Meeting. So we are super excited. There will be more than 120 shareholders that will come and listen to us, and we will give a similar message to them. But of course, we will focus on 2025. We'll give a short highlight of the first quarter this year, and we will also give some flavor on the strategy work. So we'll share a movie where different leaders from Arjo is talking about that. We are really excited about that. And by that, we say thank you for this call, and we remain at your disposal. Bye-bye.

Bye-bye.

Welcome to the Arjo Q4 Presentation for 2025. [Operator Instructions]

Now I will hand the conference over to President and CEO, Andreas Elgaard; and CFO, Christofer Carlsson. Please go ahead.

Thank you very much, everybody that have called into this Q4 year-end report 2025. My name is Andreas Elgaard, and with me today, I have Christofer Carlsson. And then I will start the meeting, and then I will hand over to Christofer, when we come into the financial figures, and we will do this together.

So before we begin, I mean, I am -- I've started now in Arjo since 3-plus weeks back. So I'm still new at work, and I'm super excited to lead this first call and also to share a little bit with you guys what I'm experiencing as a new person discovering Arjo. And I thought also that maybe it's a good idea that there could be some newcomers to this call who are interested in getting to know Arjo a little bit.

So just very, very briefly, we are experts in improving mobility in acute care and long-term care settings. And our products truly make a difference when people are at their most vulnerable. They provide safety, dignity and integrity to patients, and they also provide good working conditions for the caregivers. And of course, they deliver value to the clinics and to the institutions where they are in use.

Arjo is founded in the South of Sweden, in Eslöv by Arne Johansson. That's also where the name comes from. It has a long tradition, leading up to where we are today, an SEK 11 billion company with almost 7,000 coworkers and with active sales in 100-plus countries.

I think we can take the next slide. And you know when you're new, of course, you discover the company, and I discover Arjo through all the products and our business, but mainly I discover it through the lens of all of our people. And we have a very, I would say, a rich company in terms of diversity. We have many businesses. We are active across many countries, and we have many versions of Arjo out there. And it's really the people that represent these different versions. So a lot of diversity across Arjo.

We are not always using that to our benefit to drive maybe best practice or learn from successes or failures, but there is one thing that we have in common across Arjo and was a big reason for why I wanted to join as well, and that's we are all connected and really, I would say, passionate about the purpose, and it is the purpose of doing good, to be there when patients are at their most vulnerable situations and provide products that truly help the care situation. I already said it, but integrity, dignity are super important when you are in this position and also to provide that in a safe way. So it is something that is truly a superpower in Arjo and something we will build on for the future.

So let's talk about Q4. So first of all, I would say that we had stable demand throughout the quarter. And then towards the end of the quarter, we saw maybe not the development that we would have wished. We have been challenged by, of course, currency and tariffs, and we have also been challenged a little bit on price pressure in parts of our markets and in the mix where we are selling, where we have slightly higher growth in markets with lower margin versus markets with a little bit higher margin.

But overall, healthy organic growth, very strong cash flow in the quarter. So we almost hit our yearly cash conversion targets, but really, really strong in the quarter. And of course, we had hoped for more when it comes to the gross margin and maybe some of our cost control.

We can look a little bit into the full year. So when we zoom out and look at the full year, we see a growth figure that is within the range that we have promised. And we can see that we deliver this despite being challenged, I would say, mainly in U.K. where we all know that the market in the U.K. and the political situation, the struggles in the health care system in the U.K. is also something that hits Arjo and has been a red thread throughout the year. That is impacting our performance, I would say. And then the headwinds in terms of tariffs and currency together with price pressure in parts of our range, and then the mix is challenging our profitability and our margin.

All in all, our EBITDA is -- we would have -- we expect a little bit more from the quarter. But if you look at the full year, given the adjustments that have been throughout the year, some of the write-offs, this is the level that we landed on.

As I mentioned previously in the -- thanks to the strong performance in Q4, we managed to almost come up in line with our target of 80% cash conversion. We are just south of that. And then very important to highlight is that we propose to stick to the same level of dividend that we had last year. And we -- the Board is recommending to the AGM a dividend of SEK 0.95.

Just very briefly on North America and Global Sales, the 2 segments that we have. You can see that the quarter in North America was slowed down a little bit. But looking at the full year, it was quite strong growth. And looking then at Global Sales, we had a reverse trend where we had a stronger finish and a full year that was more, I would say, stable. And important to notice is that some of the more emerging markets in what we call Rest of the World have high growth, and that's also areas where we have a slightly different profitability, gross profit level. And that hits the overall gross profit of approximately 1%, and then tariffs, currency, et cetera, by approximately another 1% when you look at us from the outside and compare with last year.

And by that, I think it's time to hand over to Christofer.

Thank you, Andreas. Yes, my name is Christofer Carlsson. I'm the CFO of Arjo. As Andreas mentioned, profitability was a challenge in the quarter. Our gross margin came in at 42.1% compared to last year's 44.7%. We continue to have headwinds from currency and U.S. tariffs, representing around 1 percentage point of the drop. In addition, 1 percentage point can be explained by the unfavorable geo and product mix due to higher sales in Global Sales with higher volumes of medical beds. On top of this, the delayed flu season in U.S. pressured our rental volumes, and we also saw impact from continued price pressure in the DVT business in the U.S. in the quarter.

Meanwhile, we had a good momentum and margin development in the rental business in Continental Europe, especially in France, Germany and Italy in the quarter. However, the market condition in U.K. continued to be a challenge, and an 11 percentage point drop in U.K. sales consequently had a negative impact on the gross profit, and offsetting the positive effect from Continental Europe. All in all, a disappointing finish to the year from a gross margin perspective, where we did not have a seasonal uptick that we usually see due to a number of headwinds.

Next slide, please. Adjusted EBIT in Q4 came in at SEK 249 million versus SEK 375 million. The main driver is the drop in gross profit and an OpEx increase of SEK 23 million. We had a negative effect from revaluation of accounts receivable and accounts payable of SEK 3 million in the quarter, booked under other operating expenses. And this was plus SEK 19 million in the same quarter last year, resulting in a delta of SEK 22 million year-over-year. Total FX impact on adjusted EBIT amounted to SEK 73 million in the quarter. The EBIT margin decreased to 8.9% versus 12.5% last year.

On the OpEx side, the increase during the quarter is mainly driven by higher sales of capital sales in U.S., resulting in high GPO fees and sales commission. The organic OpEx increase was 1.9% in the quarter, which means that adjusted for the variable cost, we see a good traction from the cost efficiency initiatives implemented early in this year. Adjusted EBITDA for the quarter was SEK 526 million versus SEK 653 million in Q4 last year. The adjusted EBIT margin decreased with 3.2 percentage points versus last year.

Restructuring costs came in at SEK 68 million in the quarter, where SEK 35 million is a write-down of capitalized IT costs related to an ongoing IT harmonization project. This initiative is expected to lead to annual savings of at least SEK 30 million from 2028 and onwards. Another SEK 33 million related to ongoing improvements in our Global Sales structure to improve the cost and situation for the future.

Next slide, please. Operating cash flow continued to improve in the quarter amounting to SEK 600 million. This was SEK 121 million higher year-over-year, primarily due to inventory reduction and good receivable collection. The decrease in inventory is significant in the quarter, and it turns also to the full year number into a positive number. Our increased capital sales together with the supply chain inventory reduction program is now starting to show results.

Working capital days decreased to 76, down from 82 in Q3, and it's good to see a continued positive trend here. The working capital improvement is also the driver for the improved operating cash flow of SEK 600 million in the quarter. Consequently, cash conversion in the quarter was almost 120% compared to 82% last year. For the full year, we came in at 79%, which is in line with our target of 80%, and an increase versus 2024. For reference, cash flow from investing activities was SEK 172 million compared to SEK 191 million in Q4 '24. The decrease is mainly due to SEK 23 million lower investment in tangible assets. This quarter includes SEK 90 million in investment in the Dutch entity, SlingCare, which was announced in the Q3 report.

Please, next slide. The decrease in net debt in this quarter is mainly due to the improved operating cash flow. Our financial net came in at minus SEK 77 million, which include a noncash flow impact of SEK 35 million, negative revaluation of our holdings in Atlas, Infonomy and Veplas. Adjusted for this revaluation of our financial assets, the financial net was minus SEK 42 million and on par with last year.

Our cash position remains strong. Net debt to adjusted EBITDA stayed flat versus Q3 this year and came in at 2.2. Our equity ratio stood at 49.8%, up from 49.5% in Q3, mainly due to the improved cash flow.

With that, I will hand it back to you, Andreas.

Thanks, Christofer. So let's look ahead. How will we define our future direction. And I would like to say that, I mean, there is always ongoing positive work in preparing for the future. During '25, we launched the Maxi Move 5 that many customers think is really a game changer. We have just recently also launched the new hygiene solution, Symbliss that has received a lot of positive acclaim so far. And we are going to continue to rejuvenate our offer and how we go to market going forward.

But maybe just a few words on what it means to work on this. So we have a solid foundation to build on. We have a macro economics, I would say, or trends that are incredibly positive for us, which is people live longer, more people come out of poverty. The need for care is growing faster than the population is growing and the GDP is growing. So from a macro perspective, all things are positive.

At the same time, we know also that many political systems and many health care systems are set under pressure because it is difficult to keep up with the growing need of care. So there are changes in how care is being administered and given to patients. All of these things will create a more dynamic market in the future, and it's very important for Arjo to set our point of view on that. Part of our foundation is also that we have a very passionate team dedicated and committed to the purpose of doing good for our patients and caregivers.

So that said, there is also a lot of things that Arjo can do that is not about the macro, that is not about the patients, but that is about our own performance and there is significant opportunity across Arjo to share best practice and learn by that and implement going forward and use -- decide on the future in order to be able to take out maybe cost and drive efficiency.

So we can look at the next slide. So how do we realize our potential? Part of that is to know where we're going and setting a strategy, setting a direction. And we intend to present this back to the market in the second half of this year. The work has already started, and we will bring together leaders from all parts of Arjo. We are going to workshop with them and decide on where we want to go for the future, how we will get there, what to prioritize, what we want to do, which markets to have focus on, which parts of our product portfolio to put emphasis on. And if needed, acquire additional capability, additional market position, or maybe additional portfolio offering.

And those things are all easier when you have clarity in your strategic direction. And I think that for Arjo, the last time we set the strategy was back in end of 2019. So we are due to create that clarity for ourselves and for all our shareholders.

The only outlook that we give right now is, of course, the usual one, about 3% to 5%, and we are really looking forward to presenting our future direction and with that also, update the financial targets in the second half of 2026. So that's what you can expect from us during this year.

And by that, I think we are at the Q&A.

[Operator Instructions] The next question comes from Sten Gustafsson from ABG Sundal Collier.

A question on the quarter. You talked about a strong start, but then it slowed down. I was just wondering if you could clarify exactly what happened there, and also if that change in the market has continued into now, the beginning of 2026?

Thank you for your question. I would say, no, that's not how to interpret it. I would say that we -- it's more how we see the result developing across the quarter. So we don't see any trend shifts that we bring with us. We more see that we expected more from the quarter. And I would say that you all know that when you close the books, there are some decisions that you need to take. And as you have seen, we have had a couple of write-offs and write-downs during the quarter that, of course, impacts the situation. So I would say that there is no -- nothing to interpret when it comes to bring forward into 2026.

Would you like to add something to that, maybe?

No. I mean it's always an uncertainty about the flu season, that is impossible to predict exactly, of course, how that will develop. And that can go in both directions.

All right. And then specifically, the U.K., when do you expect that to improve? Or do you expect it to improve near term? Or is it too difficult to say today?

Yes, I would say that, I mean, there are two things here. I mean one is, of course, what is going on in U.K. within NHS and the U.K. health care system. That's one part of it. And of course, we can try to contribute with as much value as we can and to be a good partner to our customers and NHS in particular. So that's one part.

Then it's also about our own performance and what are we doing in this situation. And we have had a lot of actions throughout 2025 to improve our efficiency and productivity. So we have done several things throughout the year that we expect will have effect. If it's enough or not or what will happen in the bigger picture around NHS, that's another topic. And I think most of you guys that follow this sector, you know that U.K. is really troubled. The pressure on the health care system is very high, and there has been some fundamental challenges and still are going forward. At the same time, this is a top priority for all political parties. So we also believe that there is a lot of interest in solving this for the benefit of the people across U.K.

The next question comes from Mattias Vadsten from SEB.

First one is just a follow-up on the U.K. Did you say it was down 11% year-on-year in local currency in Q4?

Yes, that's correct. In the quarter, it's down 11%.

In local currency?

Yes. So organic, delta is 11% down.

Then you talked about the gross margin development. It's quite clear description. And you talked about the mix effect, both from a region perspective and product perspective. So I'm just asking, this mix effect that you saw in Q4, is that likely to sort of sustain here into the coming quarters? Or are you seeing anything to reverse that trend near term, so to speak?

Okay. Maybe if I try to start, and then Christofer can correct my mistakes or add on flavor. No, I think it's -- I don't think that you can draw any major conclusions like that, that is now a sustained level. I think it's, as always, it's a product mix question. It's a market mix question. Then also parts of our business is project driven and tender driven. And depending on how these project or programs land, you get different mixes that will vary naturally between different quarters. So that's -- I mean, that's the natural flow. So we don't have that kind of super stable underlying trend. So that's one thing to bring with you.

And then also, I mean, of course, we expect -- we said this earlier that we expected maybe a different pattern from the flu season in U.S. And when you look at statistics and data, if you just look at the high level, you can see that the flu season looks to be more severe when we dig down in the areas where we have strong representation, especially Western U.S., the hospitalization is not as high as last year. And also, in general, the flu seemed to not cause as much hospitalization as previous years. But it's very early and all data is not accessible. But we have seen that trend in our data.

So I don't know if you want to add some flavor in terms of this mix or this trend moving forward, Christofer?

No, as we said, medical beds has a strong development in this quarter, but that is also very much a business depending on tenders and bigger shipments, it's not a continuous business in that sense. So it could be a different mix in the next quarter for us.

Yes. When you equip a hospital, you do that once, then it takes a number of years before you get the chance to come with a big order again.

Okay. Then I had a question on the ERP systems that will be replaced by Global System. And you said you will find savings of, I think it was SEK 30 million 2028 onwards. I'm looking to understand what this will cost you. So yes, can you comment on the cost for this in 2026 and '27? And also how you aim to report it if it's sort of nonrecurring item or if it will be a drag on adjusted earnings metrics?

The vast majority of the cost for this implementation is actually capitalized because it's -- we are having a system where we actually own the product. So it's not a cloud solution.

And maybe to add some flavor. This has been ongoing for a couple of years in Arjo already. So we only have a few markets left to do this change. So it's not something that is new to us. It's something that have been ongoing for a couple of years. So we are -- yes, we had a couple of go-lives during '25 already. And yes.

We went live with Australia and New Zealand this year. And that's, of course, kind of the key point where we actually -- with the successful implementation in Australia and New Zealand, we decided to also go ahead for the rest of the countries. Otherwise, with a less positive outcome in Australia, we would probably have put on a brake and reverse this project somehow. So this was kind of a key decision point for taking this costs as well.

Okay. Is it possible to say how much it has costed you already or with this?

No. We have not shared that. But I think -- I mean, the write-down is for the old system. This is important, too because we discontinue it before end of life. So it's not connected to the new.

The next question comes from Kristofer Liljeberg from Carnegie.

I have three questions. I'll take them one by one. First, what do you say about the flu hospitalization? I agree it started slowly, but if looking at the public statistics, it seems it picked up a lot in the last weeks 3 weeks of the fourth quarter, but you didn't see that in your rental business then, correct?

Like we said before, we have seen that the flu season has been stronger or I mean, more severe than last year, but it is also distributed differently across U.S. So in the states where we are strong, we have not had the same pattern of hospitalizations. And also, we have seen a pattern that fewer patients are being hospitalized or they quickly get out of hospital versus before. So we don't see a one-to-one pattern as before.

Okay. That makes sense. Then I wanted you to clarify then what still seems like a pretty poor visibility for sales in North America, the message after the third quarter was that you have delayed deliveries that was expected to pick up in Q4. So did you see this happen, i.e., was the disappointing sales for you in Q4, was all of that flu related, i.e., that capital equipment sales were according to plan?

That majority is, of course, the flu season. But we also have seen a less improvement in Canada, which had a very strong comparison numbers. So they actually have a lower growth in the quarter versus U.S. And to some extent, I mean, it didn't pick up at the end. Normally, there are quite a lot of transactional sales, what you say that hospital calls the last week or last 2 weeks when they know that they have x dollar remaining of the budget and they just need to purchase something before the year end. And that volume did not repeat from last year's all-time record actually in Canada.

Do you know why that was the case?

I think there are general budget constraints in the Canadian market. We do see some of the states being more and more restricted in the budgets. But that's the main reason, I think.

Okay. And then my final question, you talked about the mix effect that could, of course, vary a lot between quarters. But otherwise, is there anything you could do here short term to turn this negative margin trend?

Yes. I mean from my point of view, being new now into the company, if I answer first, and then Christofer can add on. I would say that Arjo has a lot of potential to drive efficiency. I would say, both in cost and capital out. That's clear. So we are going to work on that to do our own homework, so to say. Then also, I think that we need to look into parts of our business where market conditions have maybe changed a little bit or market dynamics have changed a little bit. We also need to update our commercial models and make sure that we share best practice in a more rapid way so we can be quicker to react.

So there are always things that you can do on your own. Sometimes there is a lag in that, of course, because you don't know what is changing before it's happened and then it takes some time to adjust. But there are always things that we can do on our own, and we intend to do that.

And in the strategy work, there will be parts of things that we want to do for the future that is long term to build capability, build -- expand our offering or our market position, but we also need to fund that journey. And to large parts, we're going to do that through also, I would say, efficiency initiatives across the group.

I mean, if you start the strategy -- yes. But if you start the strategy work now, then you're going to present this in the second half of the year. It sounds that 2026 will be yet another lost year when it comes to margins for Arjo, or am I missing something here?

Yes. I mean there are always parts that require direction and maybe long term and that you come together as an organization, and that will take some time. But there is plenty of also quick wins that you can activate around procurement, IT and your own efficiency. So there is not -- I am -- I've worked a lot with change in the past, and I'm a firm believer in that you have to transform yourself, you have to change, but you also have to perform while you do that.

And you need to fund the journey of when you need to invest in capability or in products or in M&A. Somehow, you need to fund that journey and you do that by driving efficiency in both capital and cost out of the company. So I think that you cannot say that you need to wait another year, and I think we're going to have -- we will be very, very focused on these also short-term actions.

The next question comes from Ludwig Germunder from Handelsbanken.

Ludwig Germunder from Handelsbanken. I have two, please. The first one is a follow-up on the last one around the strategy work that you will initiate during the spring. I understand that you will do work in the meantime as well. But what should we expect regarding margins for the beginning of 2026?

I mean, we usually don't give any forecasts, and we will continue not to do that. I mean the only outlook we give is what we believe how sales will develop on top line, the 3% to 5% interval. So beyond that, we will not share any outlook until we maybe have a reason to do that.

So that's -- and as I said before, we expect to come back and explain our view on the future and also at that point, also potentially revise our financial targets. So we need to work this through before we communicate it. But we are going to be super focused on trying to drive efficiency before we present our future direction.

Okay. Got it. And the second one is also kind of a follow-up on the discussion around the flu season. So I got you that the hospitalization levels are lower in the parts of the U.S. that you are most active. Could you say something about the sequential development or demand you're seeing from the flu season? Is it at the same levels so far in Q1 as you saw in Q4? Or has it moved in any direction from the Q4 levels?

We're not reporting Q1 today. So we stay on Q4. So I think that what we said is what we have seen that the flu this year seem to end up in fewer hospitalizations. That's what we've seen in Q4.

The next question comes from Erik Cassel from Danske Bank.

First question on North America. If my modeling is decent, it looks like the rental business now is in organic decline over there. Could you potentially comment anything if that only has to do with the ICU rental part or if you're also seeing that for, say, the more long-term contracts as well?

No, it's more on a short-term perspective and the flu season, I would say.

All right. And then on DVT, that business has been under pressure for several years now, I think, I mean, Cardinal started cutting back in '21. So how much additional pressure can you face there now? And can you talk a bit about the sort of current levels of sales and profits to some extent that you're seeing and sort of we should expect that pressure to continue now throughout '26 as well, if there were any, say, pricing cuts now in Q4 that will sort of feed over into at least H1 of '26.

I mean -- so we will not talk about '26. But what we can say is that, I mean, there's a fierce competition on, I would say, the consumables in DVT part of our business. And I think that -- and that Cardinal and others have -- I would say, they have pushed the prices down. We also believe that we've come -- we are either at the bottom or close to the bottom of how far down you can go. And then you can say also that triggers the need for us to counter by looking at our business model, if it is set up for this level or if we need to do any adjustments. But we don't expect the decline to continue in the same pace that it has in the last couple of years. Is that correct, Christofer?

Yes. So the vast majority of our business is on the new price level.

Okay. Good. And then in the U.K., are you seeing continued rental pressures for more and more contracts being lost? Or is this still an effect of those initial -- or was it 5 or 7 contracts that you lost earlier in '25 that, in a way, should be out of comps soon?

And also in U.K., if I could do a follow-up to the follow-up. How much of the negative 11% organic growth that you saw in U.K. was from the rental part of the business versus the product side?

So when it comes to the rental business in general in the U.K., I mean, we have not lost any new contracts in the quarter. So it's more an effect of the early ones that we communicated in 2025. And then I have to come back to you on the rental margins for the U.K.

And how do we usually communicate them. So I think that if we don't communicate them, we will probably not come back. But if we do that, then we'll come back to you, just to be clear.

Okay. I'll wait to see them. And then just a final question. There's been a hiring freeze now outside of sales for quite some time, I believe. So I'm just wondering, in terms of those pruning additional costs, et cetera, how much are you actually able to slim the organization from this point? It seems like this sort of pruning has been done for years now. So are you nearing a point where you can't really cut any more fast?

I don't think I would express myself in that way about the organization, but we can see that we have, as any organization, we have room to improve, and we are going to focus on that. And part of that will, of course, be released to improve our profitability, and part of that might be part of also funding the journey of investing and creating a strong future Arjo.

But I mean, Christofer can add some flavor, but I have now 3.5 weeks in the company. I've spent some time during my onboarding as well. But the only thing I can share is that I see opportunity across Arjo. It's a really mature business, but we also have some inefficiencies. We don't always use our best practice. We don't always share our failures or successes across the company. And there's a lot of commercial excellence in that. And if we can release that, that has a really positive effect. I have first-hand experience of doing that in other contexts.

And then also, we need to take a good look in the mirror and put question marks to ourselves when it comes to our administrative costs because we are high, and we need to be able to do things more efficiently by leveraging our IT systems and by also delivering the administration that is necessary and not something beyond that. So there are clear opportunities for us to address, then it is too early to say when the effect will come and so on. But we will focus on this together as an organization.

The next question comes from Ludvig Lundgren from Nordea.

Yes, I only have one. So you've highlighted quite a strong order intake in the last few quarters, in particular, in patient handling products in the U.S. So can you say anything about how this has developed here in Q4 and whether you're still way above 1 in book-to-bill?

Yes. The order intake has come in a little bit weaker in the quarter. But from an order book perspective, we are almost at the same level as last year. But also please remind yourself that 80% of our transaction is in and out in the same period. So it's an indicator, but it's not the actual true of the sales in the coming quarters.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

So by that, we close this call, the year-end report for 2025. I thank you for listening. I also thank you for bearing with me as being new. And I am really looking forward to coming back and presenting Q1 to you guys, and in the second half, presenting our future strategy. By that, we say thank you.

Yes. Thank you all.

Welcome to the Arjo Q3 Presentation for 2025. [Operator Instructions].

Now I will hand the conference over to Interim President and CEO, Niclas Sjosward; and CFO, Christofer Carlsson. Please go ahead.

Hello, and good morning to everyone, and welcome to Arjo's Quarter 3 2025 Earnings Call. With me here today, I have Christofer Carlsson, our CFO. We will give you some details on the quarter 3 report that we released an hour ago. The agenda looks as usual and includes a summary of activities and results from quarter 3, the balance sheet items and the outlook for 2025 before we open up for questions. We intend to keep this call to an hour and finish no later than 9:00. Next slide, please.

We closed the third quarter in a solid way and could see how demand continued in the quarter with organic net sales growth well in line with our targeted range and as expected, sequentially higher than first half of the year. We had continued strong momentum for our service business and now also supported by stronger growth in our capital sales, while our rental business was slower this quarter. Our North America business is showing stable growth also this quarter, while global sales is now delivering from a strong order book and healthy customer demand and is showing the strongest growth quarter for several years. This all together makes us close the quarter with plus 3.8% organic net sales growth for the group.

We continue to have materially higher order book than the same period last year, and we are looking forward to a strong finish of the year in quarter 4. Our gross margin came in at 41.1% compared to last year, 42.0%. We continue to get support from lower material costs and price adjustments, while these improvements are offset by currency and U.S. tariff headwinds. In quarter 3, we also had unfavorable geo mix impact due to the relatively higher sales volume in global sales and the Rest of the World markets as well as higher medical bed sales, which also impacts the gross margin. Excluding currency and U.S. tariffs, the gross margin would have been on par with last year despite the geo and product mix effects.

For the rest of 2025, we will continue to drive efficiency focus throughout the value chain based on the plans that we have put in place, for example, within supply chain. Our focus on price adjustments will obviously also remain to secure compensation for salary inflation and the U.S. tariffs. The organization is doing a good job on the OpEx side, and we have been able to slow down the cost increase versus quarter 2. Our efforts to increase cost efficiency are showing effect, bringing down the organic OpEx growth versus last year to almost flat. Adjusted EBITDA for the quarter increased to SEK 436 million versus SEK 434 million in quarter 3 last year, a result coming from higher sales and improved OpEx to sales ratio.

The adjusted EBITDA margin improved with 0.6 percentage points versus last year. Overall, our underlying profitability continues to improve and excluding the effects of currencies and tariffs, the adjusted operating profit increased over 20%. Our operational cash flow came in at SEK 446 million, leading to a cash conversion of 105% for the quarter. Both cash flow and cash conversion improved versus last year same period. So in summary, we are delivering a stable third quarter of 2025. Our underlying business develops in a solid way, and we can see how our business model with capital, rental and service is helping us to deliver stability in growth and underlying earnings trend.

In addition to this, we see several important markets showing good signs of increased activity level and healthy demand for our products and solutions. We see increased sales growth and an overall positive momentum in the business, making we believe in a strong finish to 2025 in quarter 4. Next slide, please.

Our North America business continued to show stable growth also this quarter. In our largest market, U.S., we have this quarter a stable but sequentially versus last quarter, a more modest growth due to timing of customer deliveries following on a very strong quarter 2. We have a positive momentum in the U.S. business and overall high customer activity level and expect a stronger quarter 4. Canada also had a stable quarter, but sequentially versus last quarter, a more modest growth after some exceptionally good quarters. And also here, we expect sales growth to increase again in quarter 4.

Then over to Western Europe and the Rest of the World that make up the global sales region. In quarter 3, this region grew net sales organically with plus 5.7%, coming from a strong order book and high customer activity level. In Western Europe, the organic net sales growth was plus 2.1% despite the continued weak market development in U.K. Several other European countries saw good demand and strong organic net sales growth in the quarter, such as France, Germany, Italy and Spain. Our service business in Western Europe continued to develop well in the quarter as well. Our business in the rest of the world markets had an organic net sales growth of 15.9% in the quarter, with most markets performing well. Many important markets grew double digit in the quarter, where India stands out with an impressive 40% growth for the second sequential quarter, which now makes India one of the top 10 markets for Arjo. In addition, Australia, Africa, Singapore all performed well, and we enter into the last quarter of the year with overall good momentum in the Rest of the World markets. Next slide, please.

Our gross margin came in at 41.1% compared to last year, 42.0%. We continue to get support from lower material costs and price adjustment, while these improvements are offset by currency and U.S. tariff headwinds. In quarter 3, we also had negative geo and product mix impact due to relatively higher sales volumes in global sales Rest of the World region with high volume of medical beds. Excluding currency and tariffs, the gross margin would have been on par with last year despite the geo and product mix headwinds. We are, as before, working hard to mitigate the headwinds with continued long-term efficiency gains throughout the value chain, including solid focus on continued supply chain efficiencies. We will also continue to work on price adjustments as one part of the puzzle to mitigate the U.S. tariffs and other external cost increases. Next slide, please.

Adjusted EBIT in quarter 3 was in line with last year despite headwinds in gross profit due to increased sales and improved OpEx to sales ratio. The EBIT margin improved slightly. Excluding the effects of currencies and tariffs, the adjusted EBIT increased over 20%. On the OpEx side, we have been able to slow down the cost increase versus quarter 2, and our actions to mitigate cost increases are showing effect, which makes organic OpEx development now almost flat versus last year and gives us an improved OpEx to sales ratio. I'm happy to see the response from the organization with much sharper focus on cost improvements over the last quarters, and we have now set the tone going forward to manage OpEx in a good way.

We had a negative effect from revaluation of AP and AR of minus SEK 4 million in the quarter booked under other expenses. This was minus SEK 13 million in the same quarter last year. Adjusted EBITDA for the quarter was SEK 436 million versus SEK 434 million in quarter 3 last year, a result coming from higher sales and an improved OpEx to sales ratio. The adjusted EBITDA margin improved with 0.6 percentage points versus last year. Restructuring costs came in at minus SEK 13 million in the quarter related to ongoing improvements in global sales structure to improve the cost situation for the future. Next slide, please.

And here, I hand over to our CFO, Christofer Carlsson.

Thank you, Niclas. Operating cash flow improved significantly with SEK 241 million compared to the second quarter '25 and was SEK 9 million higher year-over-year, primarily due to good receivable collection, which includes the vast majority of the temporary VAT receivable from Q2. The increase in inventory is modest and in line with last year. Our supply chain inventory is declining and instead, the goods are now residing in sales units for deliveries in Q4. As a result of the decline in working capital, working capital days decreased to 82, down from 83 in the second quarter '25. Combined with lower interest costs, this led to an operating cash flow of SEK 446 million versus SEK 437 million in Q3 '24. Consequently, cash conversion was 105% compared to 102% last year.

The last quarter is typically our strongest cash flow quarter. For the full year, we expect to be in line with last year, just below our full year target of 80% for the cash conversion. For reference, cash flow from investing activities was SEK 148 million compared to SEK 190 million last year. The decrease is mainly due to SEK 38 million lower business acquisition. This year, we made a small SEK 5 million acquisition in Australia of Arden service business, while last year, we had the acquisition of GerroMed in Germany. Next slide, please.

The decrease in net debt this quarter is mainly due to the improved operating cash flow. Our financial net improved to minus SEK 41 million, an SEK 18 million improvement from Q3 2024, and it's driven by lower interest rates. Our cash position remains strong. Net debt to adjusted EBITDA improved versus Q2 this year and came in at 2.2, which is on par with Q3 '24. Our equity ratio stood at 49.5%, up from 48.7% in Q2 '25, mainly due to the profit made in the quarter.

With that, I hand it back to Niclas.

Thank you, Christofer. Let's also update you on some other business highlights during the quarter. We received the U.S. FDA approval for our fetal monitors in our diagnostics business. Furthermore, we completed 2 small supplementary acquisitions, which will strengthen our local business in Netherlands and Australia, both of which will start contributing positively already during quarter 4 this year. During the quarter, we also received the latest ESG rating from MSCI, and Arjo was upgraded to the highest possible scoring, AAA. And finally, earlier in the quarter, it was announced that Andréas Elgaard has been appointed to President and CEO starting in January. Next slide, please.

Our outlook for 2025 is that the organic net sales growth will be well within the group's target interval of 3% to 5%.

With that, I would like to summarize today's telco. We have continued healthy demand for our products and solutions with net sales growth comfortably in line with target and sequentially higher growth than the first half of the year as expected. Global sales is the growth engine in the quarter and is showing the highest sales growth in several years. Several markets are standing out positively, and we see good opportunities to continue to build on this momentum moving forward. We see clearly that our cost efficiency measures are paying off, and our focus in this area will continue moving forward. The underlying profitability continues to improve as seen in this quarter with adjusted EBIT, excluding the effects of currency and tariffs, increasing over 20%.

Our cash flow and cash conversion improved in the quarter, and our work to improve working capital is paying off. Overall, a positive quarter for us despite the current macro environment and related uncertainty, and we remain confident that we will be able to deliver a strong finish to the year in quarter 4.

So with that, we can open up for questions. Moderator, please go ahead.

[Operator Instructions]

The next question comes from Ludwig Germunder from Handelsbanken.

It's Ludwig Germunder from Handelsbanken. My first one would be on the tariff impact for the quarter. Is it possible for you to quantify a general impact that you saw from tariffs over the quarter? Is it close to the 15% rate? Or is it below the 15% rate still? And then my second question is around the development in the U.K., which we know is a weak market for you right now. Do you see any changes in the development there? Any color would be helpful.

Yes. Thank you, Ludwig. Regarding the tariffs, the way we explain the impact there is in million SEK as we did last quarter. So we are slightly above SEK 10 million negative impact in the quarter -- in quarter 3. So it's similar impact as last quarter. On the U.K. market, we are working very hard, of course, to find a way forward in the difficult market situation. And of course, we have plans in place. But with uncertainties with NSA's restructuring in the market, we think probably that we can improve from where we are, but it will continue to be a difficult market the rest of the year. I think we need to see it like that.

Okay. And then one more, if I may. You have had a positive development in your net debt to EBITDA. Do you have any plans? Or could we expect any bigger M&A going forward or anything to -- anything in different?

Yes, we have a good development there. And of course, if there are any M&As that we see are helping our business forward, we are open for that. But short term, nothing in the pipeline that we can talk about.

The next question comes from Sten Gustafsson from ABG Sundal Collier.

So a question on the U.S. market. It sounds like you're quite upbeat there and you -- I think you mentioned that you have a strong order intake and expect strong deliveries in Q4. I assume you don't want to comment on the sort of growth rate in orders you have received there. But if that could be sort of the first one. But maybe you can comment on what type of products where you see growth for Q4 in the U.S., please?

Yes. But what I can say is that we have a strong order book in U.S., materially stronger than same period last year. That's why we are upbeat. We had some, you can say, timing issues in quarter 3. We grew very, very strongly in quarter 2, more modest in quarter 3. But the order book is still there and should be delivered. And the piece of the order book that has been growing quickest is the patient handling part in U.S.

And rental, how is that in the U.S.?

It's comparable to last year. So it's no big growth in quarter 3. We are a little bit waiting and anticipating the flu season, which has not kicked in yet, but it will depend on the magnitude of the flu season, how quarter 4 plays out.

Okay. My second question would be on India. If you could comment on how much lower profitability you have there in sort of in general compared to group average on the gross margin?

Yes, exactly. So I think, generally speaking, it's not so bad in India, if we put it that way. But medical beds was one of the drivers of the sales in India this quarter. So you get a combination of geo mix and product mix in quarter 3, you can say. So that's what we're trying to say there. Otherwise, generally, we are selling our products as premium products in India. And with that comes lower than Western Europe and North America, obviously. But for being an emerging market, not bad at all.

[Operator Instructions]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay. Thank you very much for joining and listening in to our quarter 3 update, and we close the meeting by that.

Welcome to the Arjo Q2 presentation for 2025. [Operator Instructions] Now I will hand the conference over to Interim President and CEO, Niclas Sjosward; and interim CFO, Christofer Carlsson. Please go ahead.

Thank you, and good morning to everyone, and welcome to Arjo's Quarter 2 2025 Earnings Call. With me here today, I have, as you heard, Christofer Carlsson, our interim CFO. We will give you some details on the quarter 2 report that we released an hour ago. And agenda looks as usual, includes a summary of activities and results from quarter 2, the balance sheet items and the outlook for 2025, before we open up for questions.

We intend, as always, to keep this call to an hour and finish no later than 9:00 CET.

Next slide, please. We closed the quarter in a solid way and could see how demand continued in the quarter with organic net sales growth in line with our targeted range. We had continued strong momentum for our service and rental business and now also supported by growth in our capital sales. Our North America business is the growth engine in the quarter 2. While global sales is held back due to difficult comparisons, and we closed the quarter with 3.0% organic net sales growth.

And in addition, as a positive sign for the second half of 2025, this net sales development is supported by a significant stronger order intake growth. In our largest market, U.S., we continue to see a positive development and this is related to a combination of our internal efforts to create a more focused U.S. sales organization as well as the financial situation and staff shortages improving among our customers. In global sales, we had difficult comparisons with last year with a strong quarter 2 last year. We still see several countries in Europe with improving demand. For example, France, Germany and Italy had good growth, but U.K. couldn't match last year sales levels.

Our gross margin came in at 43.4%, almost at par with last year's 43.6%. We continue to get support from lower material costs and price adjustments. While these improvements are offset by currency and tariff headwinds.

For the rest of 2025, we will continue to drive efficiency focus throughout the value chain based on the plans that we have put in place, for example, within supply chain. Our focus on price adjustments will obviously also remain to secure compensation for salary inflation and U.S. tariffs. On the OpEx side, we have been able to slow down the cost increase versus quarter 1, and our efforts to increase cost efficiency are now showing effect. Adjusted EBITDA for the quarter was SEK 475 million versus SEK 496 million in quarter 2 last year, a reduction coming from currency and U.S. tariff headwinds. Neutralized for currency and U.S. tariff headwinds, the adjusted EBITDA would have increased, showing a stable underlying business.

Our operational cash flow came in at SEK 205 million, leading to a cash conversion of 47% for the quarter. For those knowing our business, you know that the first half of the year is from a seasonality perspective, weaker in cash flow and cash conversion, and it will improve during the second half of the year.

In summary, we are delivering a stable second quarter of 2025. Our underlying business develops in a solid way, and we can see how our business model with capital, rental and service is helping us to deliver stability in growth and underlying earnings trend. In addition to this, we see several important markets showing good signs of increased activity level and healthy demand for our products and solutions. We now have 3 quarters in a row with higher order intake than sales growth, and we are having a strong order book for the quarters to come, making me believe in a stronger second half of 2025.

Next slide, please. Our North America business grew double digit organically in the quarter with U.S. as the main growth engine. In our largest market, U.S., we have a continued strong and positive development also in this quarter. The double-digit growth in U.S. in the quarter was seen across our product categories. Rental and service continues to drive growth and is developing well. On the capital side, demand is becoming stronger for every quarter, and it's mainly driven by our important patient handling product category, where we also see very positive reception for our newly launched Maximum 5 patient roll.

We had a continued strong development in Canada, where it's especially our long-term care business that is driving the growth also with good profitability levels. Canada is now having more than 20 consecutive quarters of growth. Then over to Western Europe and the Rest of the World that make up our global sales region. In quarter 2, this region declined net sales with minus 1.8% due to difficult comparisons from last year quarter 2, combined with a weaker-than-expected market in U.K. In Western Europe, the comparison to last year is tough, and we declined minus 2.4% versus last year quarter 2. In addition to the difficult comparison, U.K. is weaker than expected, and it is related to delay in some larger orders, and we will need to focus on a catch-up in the second half. Countries with good demand and strong organic net sales growth in the quarter was France, Germany, Italy and Spain.

Our service and rental business in Western Europe continued to develop well in the quarter. Overall, we see good signs for the second half of the year in this region due to strong order intake and a healthy order book. Our business in Rest of the World had an organic net sales growth of plus 0.5% in the quarter with a mixed picture across the markets. India, Singapore, United Arab Emirates all grew double digit in the quarter, where India stands out with an impressive 40% growth. We see good signs for the second half of the year in this region as well due to strong order intake and a healthy order book.

Next slide, please. Our gross margin came in at 43.4%, almost at par with last year's 43.6%. We continue to get support from lower material costs and price adjustments, while these improvements are offset by currency and U.S. tariff headwinds. Neutralizing for currency and U.S. tariff headwinds impact, our underlying margin is improving versus last year. We are, as before, working hard to mitigate the headwinds with continued long-term efficiency gains throughout the value chain, included solid focus on continued supply chain efficiencies. We will also continue to work on price adjustments as one part of the puzzle to mitigate U.S. tariffs and other external cost increases. Next slide, please.

Adjusted EBIT in quarter 2 declined versus last year, only due to currency and U.S. tariff headwinds. Neutralized for currency and U.S. tariff impact, EBIT would have been improving, showing a stable and improving underlying business. On the OpEx side, we have been able to slow down the cost increase versus quarter 1, and our actions to mitigate the cost increase in quarter 1 is showing effect. And I am happy to see the response from the organization after quarter 1 with now much sharper focus on cost improvements in quarter 2. And I believe we have set the tone for the rest of the year to OpEx -- manage OpEx in a good way.

We had a negative effect from revaluation of AR and AP of SEK 2 million in the quarter booked under other expenses. This was minus SEK 5 million in the same quarter last year. Adjusted EBITDA for the quarter was, as I said, SEK 475 million versus the SEK 496 million in quarter 2 last year, a reduction coming from currency and U.S. tariff headwinds. As I said, neutralized for currency and U.S. tariff headwinds, the adjusted EBITDA would have increased also here showing the stable underlying business. Restructuring costs came in at minus SEK 34 million in the quarter. It's related to our change of go-to-market approach in China as well as ongoing improvements in our global sales structure to improve the cost situation for the future.

Next slide, please. And here, I hand over to our interim CFO, Christofer Carlsson.

Thank you, Niclas. Operating cash flow improved slightly compared to Q1 2025, that was SEK 140 million lower year-over-year, primarily due to a buildup in working capital and lower EBIT. The increase in inventory reflects strong order book performance, upcoming rental investments and newly launched products. These new products have temporarily raised inventory levels before older ones are phased out. Additionally, we had a temporary cash flow impact of SEK 50 million due to a VAT settlement, which we expect to recover in Q3. Excluding this, receivable collection would be in line with last year.

As a result of the working capital buildup, working capital days increased to 83, up from 81 in Q1 '25. Combined with the lower profitability, this led to an operating cash flow of SEK 205 million, down from SEK 344 million in Q2 2024. Consequently, cash conversion was 46.7% compared to 69.7% last year. Adjusting for the VAT settlement, cash conversion would have been about 59%. That said, cash flow typically strengthened in the second half of the year, and we remain on track to reach our full year target of 80%. For reference, cash flow from investing activities was SEK 171 million compared to SEK 112 million last year. The increase is mainly due to SEK 22 million higher investment in rental fleet as well in a new office in France and a distribution center in Sydney, Australia. Next slide, please.

The increase in net debt this quarter is mainly due to lower operating cash flow and higher rental investment and the SEK 259 million dividend payout to shareholders. Our financial net improved to SEK 48 million, SEK 17 million improvement versus Q2 2024. And it's driven by lower interest rates. Despite the seasonal impact, our cash position remains strong. Net debt to adjusted EBITDA was 2.3, slightly down from 2.4 in Q2 2024. Excluding the VAT settlement, it would have been 2.2 which is then within the normal seasonal variation. Our equity ratio stood at 48.7%, down from 51.2% in Q1 '25, mainly due to the dividend and some FX effects.

With that, I hand it back to you, Niclas.

Next slide, please, and thank you, Christofer. Our outlook for 2025 is that the organic net sales growth will be well within the group's target interval of 3% to 5%. Next slide, please.

With that, I would like to summarize today's telco. We have continued healthy demand for our products and solutions with net sales growth in line with target, higher order intake growth and further strengthened order book. The U.S. market and our important Patient Handling category are both standing out positively in quarter 2, which is very much in line with our long-term agenda. We see clearly that our cost efficiency measures are paying off, and our focus in this area will continue moving forward, of course. Overall, a positive quarter for us and despite the current macro environment and related uncertainty, our strengthened order book makes us confident that we will be able to deliver a strong second half of the year.

With that, we can open up for questions. So moderator, please go ahead.

[Operator Instructions]. The next question comes from Kristofer Liljeberg from DNB Carnegie.

Three questions. First, good to see the lower cost during the quarter. So I wonder about the possibility to lower them further for the remainder year and whether it's maybe even possible now to keep operating cash -- operating costs flat as percentage of sales for the full year. Second quarter is -- or second question, sorry, if you could maybe quantify more in any way, the strong order growth you talk about and the backload?

And finally, third question, I wonder about the reason here for the weaker U.K. sales and your visibility for that improving in the second half of the year?

Thank you, Kristofer. On the operating expenses, we will for sure continue our effort. I think we have started a very good process within the company now. So of course, the focus continues -- to say exactly sort of increase year-over-year is probably difficult. I think organic OpEx increase year-over-year in quarter 2, at 2.1% is slightly better than I expected. So yes, that's a reference point. And then, of course, we have an ambition to be at least flat on OpEx to sales for the full year. So we will continue to fight for that for sure.

On the order book, we don't report order growth, as you know. But I use the word significantly stronger. So I hope you can see that it is something we would like to highlight for you. So that's why we push it here in the communication. U.K. sales came in weaker than we expected as well. We do have good explanation in terms of some larger orders that was pushed into quarter 3. Maybe due to our impression is that it's a little bit longer lead times decision processes with NHS. You probably know that they go through a quite big reorg right now, so it could be connected to that. but the orders are there. It's more a decision point and being able to deliver on. Actually... so, yes?

Those -- the large orders that were pushed into third quarter, if they had been delivered in the second quarter as expected, what would have been the impact on overall Western Europe sales growth? Would that be positive then or...

No, matter, I cannot say that. But just one more comment, what I want to try to say is that those 2 are important, the bigger orders, and that will help the situation, absolutely. But we also see a little bit slower rental in U.K. in the quarter. So there are 2 things, I would say, explaining this. And on the bigger orders, I see catch-up second half. Rental, we need to analyze a little bit more.

The next question comes from Sten Gustafsson from ABG Sundal Collier.

First, on the tariffs, what do you hear? What's the latest there? And maybe on Canada and Dominican Republic specifically, are they -- are you paying any tariffs on shipments to the U.S. from those 2 countries? Or are they exempt from tariffs? That would be my first question. And then maybe on the gross margin here, based on the backlog you have now, which sounds promising. How do you see the gross margin develop based on the backlog for the second half? That would be my second question.

Yes. Okay. Thank you, Sten. On the tariffs, your specific questions there, we can say that for Canada, it's still exempted. So we don't pay tariffs from Canada factory into U.S. But lately today in the news media, we see things happening all the time. But for quarter 2, no tariffs and no decisions on tariffs going on either for Canada, but let's see what happens. Dominican Republic, we do pay 10% of the base tariff in quarter 2. And we still have hopes that maybe the free trade zone we are in could be exempt, but that's not anything we have indication of today.

On the GP, yes, we are happy with the order book, both the volume and that it's Patient Handling driven. So I think I will stop there, actually, Sten, because I can't guide exactly on the GP development for the second half, as you know. But we are happy with the order book.

The next question comes from Mattias Vadsten from SEB.

First one is just coming back to the order book. My line broke a little bit there. If you provided any order growth figure for Q2? And also maybe if you could elaborate a little bit on how much bigger the order book is now versus a year ago? And maybe also if you could share some thoughts on the anticipated organic growth for quarter 3, that would be helpful as well. That's the first one, then I will come back.

Okay. No, but your line didn't broke up. I didn't give any indication on the size of the order book. I only said that I used the word significantly bigger than last year same time and significantly higher order intake growth and sales growth, and I hope you can use that as a reference. We are happy with the order intake growth. Organic growth for quarter 3, you know that I will not give you a number on that, but you know that it was a weak quarter last year. And as I said, we have built our order book for 3 quarters. So part of that should be delivered in quarter 3. So we are comfortable with quarter 3 growth.

Good. And then when it comes to the gross margin, if you could just elaborate on what kind of mix you anticipate geographical and by product when it comes to the second half of this year?

When it comes to the geo mix, we will see that North America continues on the track that you see first half, so it's very positive. But what we also are very happy to see is that in the order book, we also are seeing very good increase from global sales. So even if global sales was declining slightly, net sales growth in quarter 2, second half looks better, and that is very promising. From a product category perspective, it is Patient Handling that is driving us for sure, but also other categories are growing. So it's -- we will not guide on the mix effect here now, but it looks good.

Then lastly, when it comes to nonrecurring items, they are quite high here also in Q2. So what is the general outlook for those nonrecurring items to be expected ahead? And any larger restructuring to be made or anything that we should know of? That's the last one.

No, I understand that. It's first half this year, we have unusually high restructuring. And it's from quarter 1, it was the management changes. And now in quarter 2, it's more about operational changes to drive future lower cost structures. So it's positive from that perspective and will help us in the future. I don't see now that we would have the same level of restructuring second half. I cannot see that. But of course, if we see opportunities to do structural improvements, we will take them, of course, to shape the company and good for the future. But it's difficult to say that it will be the same level as first, right one.

The next question comes from Ludwig Germunder from Handelsbanken.

Ludwig Germunder from Handelsbanken. Two questions, please. Firstly, with regards to the strength in North America, would you be willing to quantify the magnitude of growth in the U.S. and whether it included any onetime benefits? And my second question would be with regards to the cash conversion in the quarter. How comfortable are you for the full year? And can you expand on the nature of this temporary VAT receivable in the Netherlands?

Yes, for sure. Thank you, Ludwig. So yes, we can talk about U.S. growth in the quarter. So net sales growth in U.S. organically was slightly higher than 12%. So we are very happy to see that. And there were no onetime effects there. And it's really a very good underlying business growth giving that number. And when it comes to the second question, I hand it over to Christofer.

Yes. Regarding the settlement in Netherlands, it is something that we have investigated on our own. It's nothing that's come from the authorities. So we have done an own correction of historical periods, and we are estimated to get this money back in Q3 now. And then the question on the cash conversion. And we have a lower level year-to-date than we had a year ago, but we're still aiming for 80%. It's a little bit more stretch, of course, given where we start now after second half, but we do see quite strong working capital improvements in the second half as well. So we're still aiming for 80%.

The next question comes from Ludvig Lundgren from Nordea.

So 2 questions for me, please. First, you highlight a SEK 10 million tariff effect from the new U.S. tariffs here in Q2. And I wonder if you can estimate whether this level is fair to extrapolate because I assume there's some inventory effect maybe holding this down here in Q2.

Yes. We believe it could be slightly higher given that we have higher volumes in the second half. And we also have an impact on our inventory and very small impact on the rental assets as well due to this tariff because we only account and record them in the P&L when we actually have sold the goods, of course. So you have a tariff component in the inventory value as well.

Okay. Great. And then secondly, I wonder if you can specify what type of costs are including exceptional items, thinking mainly here about the SEK 24 million you categorized under COGS because I think that differs a bit from how you categorize the [ NRIs ] in Q1.

Yes. That is related to our change go-to-market model in China, where we actually have taken some costs related to old inventory and scrutinizing some of the products that we have in the inventory there.

Okay. And could you specify anything about like should we expect continued work here in H2 as well? Or is this done now, so to say?

Not for China. That's complete now.

Next question comes from Christopher Liljeberg from DNB Carnegie.

One follow-up question on the tariffs and what do you think are the possibilities to compensate this with price increases in the U.S.

Yes. We started already beginning in April to drive price increases in U.S., and we have been successful in some pockets, but that work needs to continue and it's -- of course, it's a work to be done in a commercial balance. Of course, we don't want to lose orders to competitors due to price increases. So we do it where we have a really pricing power. We do it on the situations where we anyway can rewrite contracts, et cetera. So we are a little bit sensitive. But so far, we have been quite successful, and we will continue in the second half as well for sure. But I see a good opportunity over time to fully compensate.

But was the SEK 10 million, was that a net negative effect, including some price increases also?

No. That is the cost impact in the P&L.

Okay. So what do you think the net effect was in the quarter?

Our price increases is just taking effect towards the end of the quarter. So it's not much in Q2. We foresee a better impact from Q3 and onwards given that price increases take some time.

You should expect a lower net effect then for the second half of the year.

That is our ambition. As Christofer said, there will be higher volumes going into U.S. second half. So the actual tariff amount will increase. But of course, our price increases should follow the volume as well. So we have good hopes to mitigate as much as possible.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay. Thank you for that, and thanks for all the good questions. We will sum it up here quickly. So we are seeing a stable quarter 2. And as we said, we have an order book that tells us that the second half will be stronger from a net sales growth perspective. So we look forward to the second half of 2025. So thank you for listening, and have a good day.