Engcon Aktie

Good morning, and welcome to engcon's Q1 report presentation. My name is Krister Blomgren. And with me today, as usual, I have our CFO, Marcus Asplund. And today, we also have our next CEO, largest shareholder, Board member and Founder, Stig Engström with us. We will guide you through our Q1 report and also answer questions in the Q&A afterwards. With that, we're going into the presentation.

Starting with the business highlights, and we are off to a flying start in 2026 with a strong growth in both order intake and net sales. Europe continues to be our key growth region going forward. And in Q1, we reached a new record level for order intake in the region. The Nordic region, which made a strong comeback in 2025, is still performing well and delivering solid sales growth. At the same time, margin pressure remains and continues into 2026. So, despite higher sales, we are not yet seeing the operating leverage we want. We will talk more about that later on.

During the quarter, we launched our new 1-2-3 Series for tiltrotators. This is a new way of grouping, packaging our products into clear performance steps, making it easier for customers to choose the right solution. As a part of this shift and to support margin improvement, we have also updated our pricing to better reflect both customer value and today's cost environment, and we expect to see the full effect of that in Q3.

We have also been active in the market in North America, while the U.S. market is currently moving sideways due to tariffs and uncertainty, we remain confident in the long term. During the quarter, we participated in the Conexpo in Las Vegas, a key industry event for building awareness, relationships and showcasing the value of our solutions. Closer to home, we carried out a roadshow in Norway together with Volvo CE, where we met customers and partners to demonstrate how our new Series 3 improved productivity, safety and efficiency.

And we're going over to the numbers. And net sales continue to grow quarter-by-quarter with an organic growth coming in at 27% in Q1. What's encouraging is that both our key markets, the Nordics and Europe are moving in the same direction. In Europe, we see stable growth even if we also see that it's not all markets that's performing strong every quarter. And I will come back to that when we go through the regions.

Order intake. Organic order growth was 10% for the quarter. Order intake remains at the high level overall with a strong trend in both the Nordics and Europe. We are very pleased with where we are. We have to go back to 2022 to see similar levels.

Gross margin. We continue to see margin pressure with the gross margin coming in at 38% for the quarter. As in previous quarters, this is driven by a combination of factors, including a stronger Swedish krona, a volume mix more towards the Nordics and the ongoing production ramp-up. Marcus will also talk more about this shortly.

During the quarter, we also implemented the price adjustments to better reflect the value we deliver to customers and the current cost environment. Over time, we expect this to support margins as it gradually takes effect since we have different notice period on the agreements with the dealers regarding price changes.

EBIT margin came in at 16% for the quarter. Despite strong net sales growth, we are not seeing the full operating leverage yet. That's partly due to the margin pressure that we have discussed, but also due to higher costs in the quarter, including our participation in Conexpo in Las Vegas, which is a key industry event for us, as I mentioned earlier.

We also had ERP project-related costs impacting in the quarter then. And ROCE, the lower profitability level is also reflecting growth for the quarter. And more details will Marcus go through when we guide us through the financials in a short moment.

Moving over then to order intake and net sales. Order intake has now increased for three consecutive quarters, which is a good sign that the positive momentum is continuing. We're seeing solid trends in both the Nordics and Europe, and it's really these two regions that are driving this development while the other regions remain more flat. In the quarter, order intake increased by 6%, corresponding to 10% organic growth with a negative currency impact of SEK 21 million.

Net sales show an even stronger development. Sales increased by 21% in total or 27% organically, also impacted by negative currency effect of SEK 26 million. Overall, we continue to see strong underlying growth in both order intake and net sales supported by good demand in our core markets.

If we're then going over to our regions, and we start with the Nordics then. We have had a strong start to the digging season, driven by continued infrastructure investments and underlying renewal needs, although the recovery across the region remains somewhat uneven. Order intake increased by 18% organically during the quarter, while net sales grew even stronger at 33% organically, reflecting a solid demand and a good execution by us.

In the Nordics, development is primarily driven by the Swedish market, where we continue to see strong momentum. If we're looking at the rolling 12 months, it's clear that the region has delivered a solid performance over the past year. During the quarter, we also carried out a roadshow in Norway together with Volvo CE, where we engaged closely with customers and partners and demonstrated the value of our new 3 Series.

Then going over to Europe. And in Europe, we are coming into the year with a strong momentum. Order intake grew 10% organically, reaching a record high level of SEK 240 million. At the same time, net sales increased 26% organically, a clear sign that the demand remains strong and that we are executing well in Europe also.

We are seeing a real boost in net sales from a solid underlying momentum in the European market. There is a good pace across the business with our markets taking turns driving growth, which tells us we haven't yet seen the full upside of all markets firing at the same time. So overall, this is a business region moving clearly in the right direction with multiple growth drivers in play. And if we take a look at the rolling 12 months, the picture is very clear. This is a strong and consistent growth journey.

We're going over to Americas. In the quarter, order intake decreased by 12% organically, reflecting a more cautious market environment. At the same time, net sales increased by 28% organically with a significant part of that growth driven by the pricing. The demand in the U.S. remains relatively flat impacted by ongoing uncertainty around tariffs and their interpretation which continues to slow down the market activity.

That said, we remain focused on building the market over time. During the quarter, we strengthened our presence at Conexpo in Las Vegas, an important platform to increase awareness and demonstrate the value of our solutions. We continue to invest in building awareness and knowledge in the market to drive long-term demand. This is a gradual process, but a critical part of our strategy, and we remain committed to educating customers expanding the market over time.

And we're going over then to our last region, Asia-Oceania. Order intake decreased by 5% organically during the quarter, while net sales declined by 3% organically. The region continues to be characterized by significant fluctuations between the quarters, which is reflected in the current performance. Asia-Oceania remains relatively flat overall.

In Australia, our key market in the region, activity has been somewhat slow at the start of the year. We expect the Diesel Dirt & Turf Exhibition in April to help reenergize the market and support activity going forward.

Similar to North America, our focus remains on building the awareness and increasing knowledge of the benefit of our solutions. This is essential to driving the long-term demand, and we will continue to invest in these efforts over time.

With that, I hand it over to Marcus to guide us through the financial development. Please go ahead, Marcus.

Thank you, Krister. Net sales amounted to SEK 539 million, representing strong organic growth of 27%. As Krister mentioned, strong levels are achieved as both the Nordics and Europe delivering at high levels.

The gross margin has experienced a clear decline compared to the previous year when we had an exceptionally high level. This is driven by a combination of compounding factors. Although we have seen the Swedish krona give back some of its previous gains, we still see currency headwinds in the quarter-on-quarter comparison.

The higher share of EC compared with spare parts sales dilutes the margin somewhat due to less favorable product mix. We also see negative price and market effects. The Nordics are coming back strongly with Sweden leading the way. As we have discussed previously, this region is more competitive, which also reflects the gross margin.

As we grow, we have also invested in our production capacity. This ramp-up phase has temporarily pressured our margins as these costs have increased ahead of our current production volume. This is mainly seen in the beginning of the quarter.

To counter the negative margin development we have seen recently, at the turn of the quarter, we introduced a price increase in connection with the launch of the 1-2-3 Series. We estimate the impact on an average EC order to be around 5%, and we expect to see the full effect in the third quarter. As several dealers, especially in the Nordics, have notice periods of 60 to 90 days ahead of price changes as well as orders prior to the price increase will be delivered in the coming months.

Looking closer at OpEx, we see some leverage from our net sales despite higher trade show costs in the period related to Conexpo in the U.S. In 2025, trade shows costs were mainly concentrated to Q2 with Bauma in Munich.

We also continue to see higher administrative costs related to IT and the finalizing of the ERP change. Naturally, we expect these elevated IT costs to subside during coming quarters. On the bottom line, we can conclude that earnings leverage from higher net sales has not materialized, as a result of weaker margins and temporary higher cost pressure.

Let's take a look at the EBIT development. EBIT amounted to SEK 84 million, which is aligned with Q1 2025. We're also seeing -- we're not seeing earnings leverage from the strong net sales growth due to weaker gross margins and higher operating expenses with IT costs peaking in Q1 and costs for trade shows. The higher net sales and unchanged EBIT levels means that the EBIT margin declined from 18.8% to 15.7%.

This also affects the cash flow. Although we see an improvement, the cash flow is hampered by higher net working capital as we are in the middle of busy season in the Nordics and Europe with high deliveries and the ramp up of production capacity. The same story applies for return on capital employed, not enough leverage on top line due to currency headwinds and increase in net working capital pull ROCE below where we sustainably should be.

And on that note, I'll pass it back to you, Krister, to summarize the quarter.

Thank you, Marcus. I will try to summarize the quarter then, as you said. We had a strong start to the year with a solid growth in both order intake and net sales, driven primarily by our core markets in Europe and the Nordics. Europe continues to be the key growth engine, reaching record levels in the order intake, while the Nordic maintained good momentum, particularly in Sweden.

Overall, business shows a clear positive trend, supported by a strong rolling 12-month development. At the same time, performance varies across the regions. North America and Asia-Oceania remain more cautious, impacted by the external factors such as tariffs uncertainty and slower market activity. In these regions, our focus remains on building a long-term demand through increased awareness and the customer education.

Margins continue to be under pressure despite higher sales, driven by a combination of currency effects, product and market mix, ramping up costs and last part of the ERP implementation. Actions such as pricing adjustments have been implemented and are expected to support margins over time.

During the quarter, we continue to invest in market presence and customer engagement, including participation in Conexpo in the U.S. and the road shows in Europe. We have also launched our new 1-2-3 product series, simplifying our offering and strengthening customer value. Overall, the business is moving in the right direction with a strong underlying demand, continued market expansion to drive long-term profitability growth.

And to summarize a little bit of my time here then. After 18 years at engcon, including 15 years as Group CEO, I had a meeting with the Board and what was agreed is that it's time for me to step down from my role. It's, of course, something I have mixed emotions about, but also have a great sense of pride in what we have achieved together.

With these years, we have built engcon into the world's leading manufacturer of tiltrotators with a 49% market share and a strong global brand. We have gone from a clear Nordic base to being present in 17 markets today, while delivering a strong growth journey and a significant improving profitability along the way.

I'm also very proud that we took engcon public and on to the large cap list, an important milestone that has strengthened our visibility and created even better conditions for the future. Most importantly, I want to extend a sincere thank you to all our employees, customers and partners who have made this journey possible. I leave with a great confidence that we have the right people and the right culture in place to continue creating value through profitable growth.

And speaking about the right people, now I will hand it over to Stig Engström before we go over to the Q&A. So please go ahead, Stig.

Thank you, Krister. Good morning, everybody. I will give you a short introduction now of me a little bit and also about the current situation in the company. And please feel free after the presentation of the report questions to me or the others.

My name is Stig Engström, and I'm the founder of engcon. I started in 1990 together with my brother, and I was the only one on the pay list for the first three years. Krister came to the company and joined me from 2008. We came together in the toughest time for the company so far. The Lehman Brothers crisis and all that impact on our and other businesses was dramatical. 

During six months in 2008, we reduced employees from 100 to 50 persons and the turnover went down from SEK 500 million to SEK 240 million, all that in just six months. 2009 was a lost year for us, where Krister and I started a cleaning up process with selling out or closing down a number of companies where engcon was -- has become part owners over time. It was a really hard period for us, both, but we learned a lot and especially stand with your core business is one of the most important examples. 

Krister took over the CEO role in 2010, as I said. And from that day, we started a long and successful journey together. After my decision to take engcon to the stock market in 2021, Krister did a fantastic job. In less than 12 months, engcon went from a private owned company to a public company listed on NASDAQ. And that's in time where war was coming up in Europe and Sweden was entering NATO. It was a special time. 

Before we entered the stock market, I met a number of investors and welcome them to be a part of our future success. I also promised them that the financial targets for engcon will be a growth of 20% per year and 20% on the bottom line. And engcon has been on the NASDAQ since June 2022. But everything comes to an end and also the cooperation between Krister and engcon.

The Board, including myself, have agreed together with Krister to change the CEO in engcon. I -- as a person, I've got a verified diagnosis an entrepreneur, a doer without any limit and my patient is close to zero, that's Krister's word. I'm allergic for a complicated process, and I can't see any problems at all.

And from my vision in the Board, I have seen the steps we have taken according to our business plan in the company. But unfortunately, I can also see that the world around us also take steps and maybe bigger steps than ourselves. If we don't speed up now, I'm afraid that engcon will lose the pole position.

Our vision to change the world of digging is already ongoing out there, and we need to work harder with marketing, with R&D, with production and organization if we will remain #1. So therefore, with the Board's request, I will take Krister's place as the CEO from the 1st of May. It's now the third time for me to be CEO in engcon, but I promise you that will absolutely be the last time. 

And what will happen now then? My goal is to come back to what I promised four years ago, growth of 20% a year with a margin of 20% in the bottom line. I have no economic education, but I've learned the last 40 years that increase the income and reduce the cost gives a better margin, and that's exactly what we're going to do that.

So, and how will I do it? Our products are used in the mud and in the dirt. And therefore, it is also very important for the organization to come back to the earth. We have to go back to our core business as we learned in 2008. It will be the old-fashioned boring industrial hard work. 

I have no plans for big change in the strategy, but we need to look in the organization, of course. We have to focus more on our most important customers, tighten up our geographic focus areas. And for now, it's pre on the Nordics and Europe, tightening the product portfolio and more practical sales out in the field. And also in the sustainability part, I have some ideas to do something and not just talk about it, but we will be back in that part later. 

But, at last, thank you, Krister, for all your time together with us in the company. We have really tough days. We have also happy days, a lot of laugh and lot of crying together. I learned a lot of you and hopefully, vice versa. Myself, the Board and the whole company owes you a big thank you for your efforts. Thanks a lot. Thank you, Krister .

Thank you, Stig. Okay. That was everything we had for today's presentation. Now we're happy to open up for your questions and feel free to jump in the telephone conference. So operator, when you are ready, please bring in the first question.

[Operator Instructions] The next question comes from Agnieszka Vilela from Nordea.

Magnus Kruber on behalf of Agnieszka. So, first of all, Stig, could you expand a little bit on what you said about focusing on the Nordics and Europe and tighten up geographic footprint? And what does that involve more specifically?

We have a limited amount of resources, and we need to keep them where we can do the best business for the moment. And we have to be more close where we have the markets now. You know the problems having U.S., for example, we have other business around the globe, and it's rather difficult to do it with for the moment. So therefore, I want to keep it as lean as possible, and we have to be closer to our core markets. So that's for the moment, Nordic and West Europe.

Okay. Got it. Then, separately on the cost ramp that you have for the additional production here in the early part of the quarter, is that kind of behind us? Or is that a bigger ramp that we should expect to sort of weigh on profitability in the coming quarters as well? Or when would you kind of balance the volume with the cost expansion on that part?

Maybe I'll take this one. No, I see that most of it was behind us here in that sense. We already saw in March here coming down. So, I feel confident that these exact things at least, we have left behind us for this time.

Okay. Perfect. And then separately on the cost for Conexpo and Bauma and so on, are those costs kind of comparable in level you had in Q2 last year and Q1 this year, but do they kind of net out on a full-year basis?

They are more or less netting out, and Conexpo is a little bit more expensive one in that way. Everything in the U.S. is more expensive. So, it's a bit less than last year in Q2 with Bauma.

Got it. And then finally, there have also been changes to the Section 232 impacting some companies negatively, some companies positively. Is that something you have accounted for in your price hikes now? Or how do you see the sort of impact from those changes in the coming quarters?

We have adjusted and we're on the ball all the time with the changes and so forth, and we are in a good position as it stands right now. Of course, there is still things happening on which will be the leading one here going forward, and what will be taken out and not. But we are in a good position there, fully compensated right now.

The next question comes from Anna Widstrom from DNB Carnegie.

Firstly, congratulations on the job, well done, Krister, and welcome back, Stig. So, my first question is if you could give us some idea of how the price increases have affected order intake already in this quarter. You've talked about it being sort of gradually implemented, but could you give us some rough idea of how we should think about price versus volumes in this quarter?

It's hard to say if there is any preordering. We were pretty late giving the notice about it in the quarter, and then just not getting the preordering effect in that way. So, I think it's pretty solid order intake for the quarter in that way.

You mean that most of it is volume when we read into the order intake growth?

Yes, it would have come even without the price adjustments or anything like that. So, it's a growth that is a real growth in that way.

Okay. And then my second question is on legal costs, given that the thing has been dismissed now. Did you have any legal costs in the first quarter as well?

Not any bigger numbers, but we have had some legal costs for it. But I don't know, Marcus, if you have the number.

Yes, much less than the comparison quarter 2025, at least when the first decision on the cost came. So yes, it's far less if you want to have the comparison.

Okay. Perfect.

And mainly in Q4.

Yes. Okay. Perfect. We've heard from a lot of other companies much talk about weather conditions, mainly in January, February, actually both in Europe and in North America. Did you notice any impact from this in either of the regions?

I can't say that we see it as a big problem, but it's been colder. There's been more snow and so on. But that's normal, a little bit of digging season path. We are stronger in the northern part of the U.S. and Canada, and the northern part of the U.S., of course, has been affected by the stronger winter. But I can't say that it was any specific thing there. And in the Nordics, it's pretty common that it's in that way. So, I wouldn't say that we were specifically impacted by that.

Okay. Perfect. And then just a final one on how the other countries in the Nordics are doing. You highlighted that Sweden continues to showcase the best trend and momentum, but how are the other countries doing?

It's Sweden that, as you mentioned, is doing the strongest. And maybe that's no surprise as we talked about earlier, Finland being the toughest in that way because of the financial situation that are current in Finland. So, Denmark and Norway are doing a little bit in the middle there then.

[Operator Instructions] The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Sorry, I joined the call a bit late if you have elaborated a bit on the questions. But I'll start with the comments you made regarding if engcon doesn't speed up, you may not be on the pole. Can you elaborate a bit more on what it is that you're seeing out there?

We have technical threats coming up from others. We have competitors ramping up. And we have, of course, also geographical problems with what's happening in different countries. So, we absolutely have to be on our toes and be aware of what's going on out there. So absolutely, we have enormous potential, but we also have to penetrate it and do it now.

And these -- the competitors, is it mainly existing? Or are you seeing new ones entering the market?

No, it's existing, especially.

Very clear. And I'd also like to know further on the profitability side of the ambition to reach the financial goal. Of course, you have, I would say, one-offs affecting the quarter, but do you have any time frame on when you wish to -- or when you expect to see profitability, which comes closer in line to the target?

Hopefully, we'll see some results by the end of this year. But if it comes from actions now or if it's from actions earlier, I don't know, but we have -- at least hopefully, we have something in the end of this year.

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

Okay. Thanks again for tuning in today. And take care. And again, thank you for this time and also for the four years that we've been talking to each other there. Have a good day. Bye-bye.

Good morning, and welcome to engcon's Q4 report presentation. We're also going to have a short review of 2025. My name is Krister Blomgren, and I'm the CEO here at engcon. And with me today, as usual, I have our CFO, Marcus Asplund. We will guide you through our Q4 report and 2025 review also, and also answer questions in the Q&A afterwards.

Let's go into the presentation. 2025 has been a year of clear highs and lows across the global economy, and engcon has experienced a similar dynamic, navigating market volatility while continuing to strengthen its strategic position, operational efficiency and long-term growth potential for shareholders. If we take a look at the bigger developments for engcon during the year, it's clear that 2025 has brought both ups and downs. So let's take a review of 2025.

We launched engcon's Generation 3 that brings faster hydraulics, smoother precision and smarter efficiency to make every excavator job feel easier and more controlled. Engcon also took the step into the large cap segment, an important milestone that strengthens our visibility, broadens our investor base and supports our continued growth journey. And we established our sales company in Japan during the year and supported by government subsidies, we have achieved a solid start, laying a strong foundation for long-term growth in an important strategic market.

The so-called Liberation Day led to a period of more cautious behavior across the global markets. And during the year, we also faced challenges from tariffs and strengthening Swedish krona, factors that have influenced demand and currency dynamics.

Our participation in Bauma, the world's leading construction exhibition, where tiltrotators were visible everywhere, and engcon stood out as a clear reference brand. The strong presence confirms that OEMs are accelerating their integration efforts, and we see a growing interest and traction in the German market as awareness and adoption continue to build. We are now beginning to see the results of the long-term work we have done together with OEMs as more excavators are being prepared for tiltrotators from the factory, an encouraging sign that our efforts are translating into real market progress.

We have also started to establish a presence in Italy, the third largest excavator market in Europe, through a collaboration with TM Benne, an important first step that allows us to enter the market in a focused and capital-efficient way while building a long-term growth opportunities.

Stig Engstrom, Founder of engcon, was honored with an Entrepreneur of the Year award during the year, well-deserved recognition of the long-term vision and entrepreneurial drive that laid the foundation for the company's success and still continues to inspire its development today. We also won in the second instance in our patent dispute with Rototilt during the spring regarding alleged patent infringement. But however, we were later subject to a new lawsuit in the autumn concerning the same patent. So it's an ongoing matter that we continue to handle with confidence and a structured legal approach.

Recent market study by Strategy& show that engcon has increased its market share by 5 percentage points, reaching now 49% market share. That's a strong indication that our long-term investments and focused execution continue to strengthen our leading position in the market.

With this broader review of 2025 in mind, we will now turn our attention to the fourth quarter and take a closer look at the developments during the final part of the year. The fourth quarter was characterized by strong growth with support from all regions. Net sales for the quarter amounted to SEK 498 million, an organic increase of 34% compared with the same period last year. Order intake increased organically by 12% from SEK 506 million to SEK 539 million, with the Swedish market making a particularly strong contribution, driven in part by a significant share of preorders. And we also saw some preorders from European markets like Netherlands and France.

Gross margin in the quarter amounted to 40%, down from 43% last year. This was mainly due to negative currency effects and a less favorable market mix. The operating margin was 15%, slightly lower than the previous year, impacted by the lower gross margin, a stronger Swedish krona and increased administrative costs related to IT and legal services.

Over the last couple of years, we have taken an important step in how engcon operates as a group. As part of our long-term strategy, all engcon companies are now working within one common ERP system. And bringing an entire organization onto a single platform is not just a technical change. It is a transformation. During the implementation phase, this has naturally meant higher costs. We have invested money and time in systems integration, harmonizing processes, training our people and adapting the organization. These efforts have increased our costs, but they are laying a stronger foundation for the future. We can now have a focus on our core business and improve even more from there.

If taking a look on the numbers then. Net sales, we ended the year really strong with a 34% organic net sales increase, SEK 498 million is a high level for fourth quarter, and we need to go back to 2022 to see a higher level. Order intake, we have a 12% organic increase in order intake compared to the previous year, and I will come back to talk more about that when we're also going through the regions then. The gross margin amounts to 40% and is squeezed from several directions. For example, net sales are impacted mainly by the strong Swedish krona and at the same time, a negative market mix as growth is occurring in markets with lower margins like Sweden. The EBIT margin amounts to 15%, which is low provided the strong revenue. The margin is affected by a negative cocktail with the main ingredients that are the weaker gross profit, revaluations of balance sheet items linked to a stronger Swedish krona and higher costs related to IT and legal services.

As I mentioned earlier, the cost of getting all companies to the same ERP system is the biggest part of those costs. At the same time, we have also faced extraordinary costs outside our day-to-day operations. Rototilt have sued us again for the same patent as mentioned earlier. These costs have, therefore, also contributed to higher expenses for the group. When we look at these 2 topics together, they explain a lot why costs have been elevated during the period. But now when we have the largest part of the ERP behind us and profitability is currently below our target levels, we are, therefore, looking to implement targeted measures to ensure continued profitability growth with a strong focus on strategic priorities, pricing and product packaging and an increased cost discipline. And our ROCE amounts to 36%. That's also below our target of 40% and is affected by the lower profitability level and higher inventory levels we have seen during the year. And Marcus will talk more about these financial developments a little bit later on in the presentation.

If we go into the order intake and net sales then and took a look at the fourth quarter as a whole, both net sales and order intake are at high levels. Order intake increased by 12% organically. Net sales increased by 34% organically. This is a strong performance, driven primarily by solid demand in Europe and the Nordics, even though the conditions have been more challenging in the America and Asia-Oceania regions. As we expected, order intake in Q4 was supported by preordering effects like last year, mainly from the Nordic region, but also Europe. These signals higher excavator sales and growing optimism among customers and dealers, an outlook that is also supported by reports from the construction equipment market. Overall, this gives us a positive picture. It shows that Europe and the Nordic continue to perform well and are the key contributors to our growth and results.

Now I will go over to each region to describe that a little bit more, and we start with the Nordics. The Nordic region ended 2025 with a continued robust recovery. Order intake increased by 35% and net sales grew by 37% during the quarter. We're seeing clear signs of improving end market demand. Recent reports from Volvo CE indicate higher excavator sales, supporting our view that activity levels are gradually normalizing. Residential construction is recovering from historically low levels, while overall sentiment is increasingly supported by infrastructure-driven investments. Together, these factors are contributing to a more constructive demand and environment across our core markets.

If you're looking ahead, we expect this gradual recovery to continue, supported by infrastructure pipelines, improving financing conditions and stabilizing dealer inventories. While short-term volatility may persist, the underlying demand drivers in our key regions remain intact. In the fourth quarter, the Nordic region narrowly surpassed Europe to become our largest region once again.

We're going over to Europe. Europe showed a strong recovery during the fourth quarter with organic net sales growth of 39%, an increase in order intake of 9%. In France, our collaboration with Beauloc marks an important strategic milestone. France is a key market for us and gaining traction within the rental segment, traditionally more conservative in adopting new technologies, is a strong validation of both our product offering and long-term market potential. Increased penetration in rental increased the visibility, accelerates fleet exposure and supports structural adoption over time.

In Netherlands, we are seeing encouraging momentum with customers placing preorders in a way that increasingly resembles to the Nordic markets. This signals growing confidence in the tiltrotators as a standard solution rather than an optional add-on. Customers are planning ahead and committing earlier, which indicates maturing demand and improving predictability. The fourth quarter reached a record high level for a fourth quarter in Europe. Importantly, this performance helps mitigate traditional seasonality effects related to the excavation cycle. It demonstrates greater stability in our revenue base and a broader market acceptance of our solution.

Order intake in Europe is also stronger than it may initially appear. Our German partners would typically place larger less frequent orders did not place an order this quarter due to timing as they prepare to move into a new facility expected to be completed in the beginning of March. So we view this as a temporary effect rather than a change in underlying demand in Germany.

Looking ahead here in Europe, we see continued growth potential in Europe, driven by increasing penetration, stronger OEM collaboration and expanding rental exposure. While quarterly order patterns may fluctuate, the structural adoption trend remains intact, and we expect Europe to continue playing a central role in our long-term growth strategy.

Moving over to Americas. In the Americas, the performance during the year was weaker than expected, primarily due to the tariffs introduced in April. Increased uncertainty has dampened the investment appetite in the industry as a clear long-term conditions are still lacking. Despite this, net sales increased organically by 7%, mainly as a result of price adjustments. Order intake, however, declined by 13%, clearly reflecting the cautious market environment. We remain confident in the long-term potential of the U.S. tiltrotator market.

The structural opportunity is significant, supported by the productivity gains and efficiency improvements that are increasingly relevant to contractors facing labor constraints and higher operating costs. That said, the introduction of the tariffs has added uncertainty and may delay the pace of market adoption in the near term. We expect the development in the U.S. to take time, particularly as customers navigate pricing dynamics and investment decisions in the current environment. However, we see this as a timing factor rather than a structural limitation. The underlying value proposition of tiltrotators remains strong in the long term in U.S. We also have CONEXPO in Las Vegas that will be an important exhibition for us. It will provide a valuable opportunity to assess how far the market has progressed in terms of our awareness and understanding of tiltrotator solutions. We see not only as a commercial platform, but also a strategic checkpoint for measuring adoption readiness in the U.S. market. Over time, we believe the U.S. represents one of our most significant growth opportunities even if the ramp-up will be gradual.

In Asia-Oceania, we expect Japan to remain the primary growth engine within the region. The market fundamentals are supportive, particularly given ongoing government initiatives, including the programs led by MLIT and SME-related incentives that are aimed to encouraging investments in increased efficiency technologies. These incentive structures align well with our value proposition as tiltrotators directly contribute to productivity gains and improved capital efficiency. As we previously communicated, the region is characterized by significant quarter-to-quarter volatility. In the fourth quarter, net sales increased organically by 33%, while order intake declined by 32%, clearly illustrating the timing effects that can occur in this market. A good example of this is the Kobelco order received in the third quarter and invoiced in the fourth quarter. This type of timing difference contributes to quarterly fluctuations rather than reflecting any structural change in underlying demand.

Kobelco, our earlier partner there, has also taken proactive steps to support adoption by developing a dedicated catalog aligned with SME subsidies program. This catalog then simplifies the process for end customer and increases confidence that incentives will be secured, lowering the barriers to investment and supporting a more predictable uptake over time.

In Asia-Oceania region, the development remains gradual, but strategically important. Awareness is increasing, although the penetration remains at an early stage. We continue to focus on the education and dealer partnerships and building references cases to strengthen long-term demand. If we're looking ahead here, the 2032 Olympic games in Brisbane are expected to act as a meaningful infrastructure catalyst. Large-scale infrastructure and construction projects linked to the games are likely to support equipment demand and create a favorable environment for productivity increasing solutions.

Overall, we expect Japan to drive near-term growth in the region, while the rest of the region represents a long-term opportunity, supported by infrastructure investment and increasing adoption. Although we will continue to see quarterly volatility in the region, the structural drivers across Asia-Oceania are intact and supported of sustained expansion over time.

With that, I will hand it over to Marcus that will guide you through the financial developments.

Thank you, Krister. Good morning. EBIT landed on SEK 72 million for the quarter, an increase of around 15%. Our operating margin stands at 14.5%, which is below expectations. Although Q4 is typically a weaker quarter, our strong net sales are translating into bottom line growth. We are seeing margin compression at both the gross and operating levels due to several negative factors that are preventing us from achieving leverage in this quarter.

Now let's go through the P&L in more detail. Revenues came in strong this quarter at SEK 498 million, representing a solid 34% organic increase year-on-year. The momentum is driven primarily by the Nordics with our home market, Sweden, leading the way, and we've also been able to release the European backlog that held down revenues last quarter. Overall, we are pleased with this level. At 40.2%, gross margin finishes below last year's level. This contraction is the result of a couple of headwinds converging simultaneously, which have collectively diluted our profitability this quarter. We're seeing a less favorable market mix as the Swedish home market has rebounded more strongly than expected. This is one of our most mature markets, which naturally comes with higher competitive pressure. In addition, the margin is being weighed down by a few deals with rental companies and bigger dealers and continued currency headwinds persist.

When we get to the OpEx, we can see that we are benefiting from operating leverage as a result of the higher revenues. However, administrative expenses are somewhat burdened this quarter by IT and consultancy-related costs, which is a natural consequence of the intensive work required to bring all our companies into one ERP system. On top of this, the ongoing lawsuit with Rototilt is also adding costs related to legal advisory.

Looking at other operating income and expenses, we can also see the impact of the Swedish krona here, a hit of roughly SEK 6 million related to the revaluation of balance sheet items. When everything lands on the bottom line, EBIT comes in at SEK 72 million, corresponding to a margin just above 14.5%. We can conclude that we are benefiting somewhat from a stronger revenue level, although the stronger Swedish krona and higher costs offsets part of that effect. All in all, EBIT is partly affected by external factors and could have been stronger, but it's a reality we must navigate. We are fully committed to active margin improvement and value-driven initiatives, such as a review of our pricing and product packaging as well as our strategic priorities, as Krister mentioned.

Looking at the cash flow from operating activities before changes in working capital, it actually improved full year-on-year, mainly due to higher operating profit. This is, however, offset by increase in working capital, mainly inventory. Inventories have been increased to shorten lead times during the [indiscernible] Nordics and Europe. Hence, inventories are expected to decrease during the first half of this year. [indiscernible] return on capital employed. Not enough leverage on currency headwinds and increase in net working capital pulls below where we sustainably should be.

To summarize, looking at our financials, while the organic net sales growth is strong, the EBIT level is not where we want it to be. And as was mentioned [indiscernible] with extra costs connected to one-offs pulls us down. As both I and Krister has been into, we are addressing these challenges. These challenges, together with higher inventory, also weighs on the capital efficiency. Capital structure, however, continues to be at a satisfactory level. The Board of Directors proposes a dividend of SEK 1 per share to be paid in 2 equal installments.

And with that, I hand it over back to Krister to summarize it all.

Thank you, Marcus. I will try to summarize the presentation then. And we have a great quarter if we look at the net sales and order intake, and it's our key regions, Nordic and Europe, that delivers. Europe's order intake is better than what it looks, as I mentioned earlier, since our partners in Germany didn't place any bigger order this quarter since the extension will not be ready until the beginning of March. We see and hear positive signs about that excavator sales is picking up in whole Europe, including the Nordics. And this pickup is from low levels, so it's a lot of growth left.

Our profitability remains below target, and we are not pleased with that, and we need to plan for actions like reviewing pricing, the product packaging, strategic priorities for improved profitability and reinforced cost discipline. After a major transformation like the ERP implementation, it's easy for a higher cost base to become the new normal. As we move forward, we are sharpening our cost discipline and reinforcing the entrepreneurial mindset that continues to define our culture. This means maintaining tight control over expenses while ensuring we remain adaptive and focus on long-term value creation.

So we also have the second largest exhibition in our industry in Las Vegas in the beginning of March, CONEXPO. And it will be interesting to see, as I mentioned earlier, to see the knowledge level where it is right now then in the Americas. I would also like to extend my sincere thanks to our employees and partners around the world. Your commitment and dedication are the foundation of our success with the year marked by strong growth and increased market presence and a deepened partnership. We continue to strengthen our position as a global market leader now with a market share of 49%. Despite an uncertain external environment, we have established a stable and sustainable foundation for continued profitability growth. Together, we will continue to change the world of digging and create value for our customers, partners and shareholders.

That was everything we had for today's presentation. And now we're happy to open up for your questions. So feel free to jump in through the telephone conference.

So operator, whenever you are ready, please bring in the first question.

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Starting off on the order intake side in Europe, you mentioned now that you didn't get this order from one of your partners. Could you elaborate a bit on the consequence or the scale of it?

I mean Germany is one of our biggest market in total then. So absolutely -- that is important for us. And I don't know if we communicate exactly how much they normally place or anything like that, but they place fewer orders and pretty large orders in that way, but it didn't come because they are building a new assembly factory for tiltrotators and that was not ready yet, and they were now using other places for keeping the stock and so on. So they wanted to wait to place it later when they knew that the new facility would be ready. So they're keeping pretty large stocks, of course, also normally, but now they try to slim it down a little bit. They are in an important market. So it would have been an important add-on for us on the order intake in Europe.

And if it's possible to say, is it to -- for your partner, are they increasing capacity with the new factory or anything like that?

Yes. There is a new factory that they are -- earlier, they've been having the assembling part of the tiltrotators in their old factory. Now they're building a totally new factory and demo area for a total of EUR 25 million. So there are -- I don't remember exactly the size of it, but it's more than double up what they're having in capacity in that way. So it's a big investment they're doing and they're doing because they believe in the tiltrotators in the DACH region.

Very, very interesting. I'm also wondering a bit on the gross margin. You mentioned that Sweden had negative pressure, but there are -- I guess then that since Germany maybe didn't get [indiscernible]. No, that was on order front. What I'm wondering is, did the higher deliveries to Europe because they were a bit lower last quarter, did that have a negative effect on the gross margin in this quarter?

No. Europe is normally a good gross margin country for us. Of course, it's been a little bit lower with the currency effects and so on. But as Marcus there and I also mentioned, the rental fleet there with Beauloc, it's always a little bit squeezed orders that you're getting like that and so on. But otherwise, they are normally good getting orders to the European market. It might be depending, of course, a little bit like we're also having in Netherlands, we're having the local coupler there where you're getting a little bit less margin thatn normally. But I would say, Europe is good for us to get orders to.

And I'll also ask on the IT costs, what we should expect ahead? How much of it has been taken? And maybe also elaborate a bit on the positive effects you expect to see from this implementation.

We expect, I would say, Marcus, that we will still have cost during Q1 because it's been like Hypercare and so on during the Q1. And then from Q2, we would see that our cost for the ERP system would go down in a bigger way than compared to. Q1 will still be higher and Q2 was supposed to be much lower than coming on that.

Yes. I mean, the project phase of it all ending, of course, that will take down some of the extra consultancy costs that we had connected to this, of course. And then some of the other legacy systems with licenses and so forth will come down as well. But we will see this trend more clearly in the Q2 for the IT, I would say. And then continue to come down after that with improvements that we make in the new whole setup as well.

And then that will also hopefully then -- for safety reasons, we've also been having higher stock for not running into problems or anything like with that. So -- but that will also work with that.

The next question comes from Agnieszka Vilela from Nordea.

I have a few questions. Maybe starting with order intake in Q4 and also your expectations for Q1. I can see that in the past 2 years, usually, the Q1 orders in absolute terms were flat compared to Q4. Now we had this dynamic in Q4 that you had some preordering, but also lower orders from Germany. So putting it all together, what do you think will happen in Q1 for you in terms of orders? Do you see a risk for any setback? Or do you think that you can kind of carry this solid momentum into Q1?

The feeling we're having as a current presentation is that we are optimistic about the outlook for our key markets, Europe and the Nordics, where we see positive trends, and we expect Q1 to be good in order intake for both Europe and the Nordics. Americas, it's hard to tell. It's depending a little bit what happens with the CONEXPO and stuff like that, if we can expect anything particular from there. Asia-Oceania is a little bit fluctuation all the time regarding what happens and so on. But I would say our expectations is to be keeping the momentum and being better each quarter than what it was last year.

Perfect. And maybe a question to Marcus really. Looking at 2026, what tailwinds and what headwinds do you see for your profitability? And maybe also if you could quantify the IT costs that you had in total for 2025.

Quantifying the IT, I'm not prepared to say any specific figures there. But talking about, I mean, a tailwind there, it will be a tailwind on the IT side, as we said, but starting to show in Q2, mainly before that, I think we still have to -- we have a higher level than we should have on a normal operational level. Tailwind from currency, I'm not expecting. But then, of course, we will look at, as Krister and I was into regarding the pricing and packaging, product packaging part. I think that will bring us back to a better position, especially coming into the second half of the year. So yes, as I said, there are some challenges, and we really need to address them, and we are, I believe. So this is my expectations at least.

But we also think we can get some tailwind from the volume, like we expect to keep growing and that will, of course, help us on the profitability level, the more volume we get.

Yes. Definitely, definitely.

Yes. So just maybe to end my questions here, you ended 2025 with 17% EBIT margin. So what measures really can you, as a company yourself, take now to push the margins towards 20% target? And do you think that it could be feasible to reaching that already in '26?

We're at least aiming at that. We believe that with the packaging and then the price adapting to the package and so on, we believe we can get the margins up and also the volume. And also then as we talked about that we not will have the cost for the ERP system change then at least after Q2 -- or sorry, after Q1, I think we will work our margin up. If we manage to reach 20% or more, that will be, of course, a challenge depending on now the Swedish krona has been kept on strengthening itself. But if we don't count on any help from that part, of course, we will have a challenge to reach it, but we still think it's possible to do it. We are not saying that we will not reach it, but we need to make some actions as we have mentioned during this call that we will launch pretty soon than what we need to do.

The next question comes from Anna Widstrom from DNB Carnegie.

So my first one is on how we should think about the preordering in the Nordics and Netherlands. Is there a substantial part of the ordering that we should rather expect to be delivered in Q2 than Q1?

Yes. It's like last year, it's probably spread out in that way, both Q1 and Q2. We had a pretty good preordering effect last year, not from Europe, but then from the Nordics. So I would consider it to be similar to that, like last year. It's spread out both Q1 and Q2.

Perfect. And then on the demand situation in the other Nordic countries, how is it in comparison to Sweden? And is Sweden expected to be sort of the main driver for the upcoming year in the Nordics?

Sweden is the country where we have seen the upturn or coming back the longest, I would say, at least. But we see also positive signs in the other -- maybe not Finland, Finland's economy is not that strong, but Finland normally delivers pretty good anyway then, but we will see there. But we believe that the rest of the Nordic countries will come back also this year. So we expect a pretty good growth in the Nordics together with Europe then. Also, if you're looking on the excavator sales there on Volvo CE reports, even if you don't see the Nordics separate, but you see that there a big increase of excavator sales in Europe then.

Great. And do you have any plans on increasing capacity in production and sales in any of the regions from today's level during the upcoming year?

Yes, we are working with changing a little bit where we are improving our possibilities of producing more in the same facilities like that. So there are no really big changes that we see right now than at least not in Stromsund. In Poland, we're talking about extension and so on, finding more space there because we will need that, especially since Europe is going good, and we're also selling more and more tools and so on there.

And could you give us some idea of how the EBIT margin would look if we were to exclude the Americas?

Excuse me, exclude what?

Americas.

No, we don't have a profit and loss on regions, then we would report each region in that way also.

Okay. But we could sort of assume that the cost levels should remain steady or maybe even increase from current levels given that we still have the positive view of the long-term possibilities in the region, even as it's quite uncertain in the near term?

I wouldn't say the cost level to increase since -- as we said, long term, we believe in it. But short term, it's more of a wait-and-see game and presence. So I would not -- shouldn't expect any increase in the cost base in the Americas.

No, I mean that's part of the strategic priorities that we need to look at where we believe we can get the most bang for the buck. That's part of the -- what we need to look into, and that's where we should invest more money in that case.

[Operator Instructions]

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

Thank you again for tuning in today, and we really look forward to seeing you all again soon. Take care, and have a good day. Thank you.

Thank you.

Good morning, and welcome to Engcon's Q3 report presentation. My name is Krister Blomgren, and I'm the CEO here at Engcon. And with me today, as usual, I have our CFO, Marcus Asplund. We will guide you through our Q3 report and also answer questions in the Q&A afterwards. With that, we jump into the presentation.

This was a good quarter for us. In fact, our order intake reached record levels. We have never seen this kind of performance in the third quarter before, which is fantastic. Europe really stood out, matching its own peak at SEK 206 million. What is great is that it wasn't just one country driving the results. Several of our key markets performed well at the same time, which shows the strength of our overall position in the region. Asia-Oceania also had a really strong quarter. We secured major orders in Japan and the overall momentum in the region continues to look very encouraging. And even though the big orders will be delivered into the market in 2026 and therefore, impact the early 2026 order intake in Japan, we still expect demand to strengthen further as the government incentive programs get underway after the turn of the year.

On the operations side, we faced some challenges with scaling our output and managing supply chains. We held back a bit our delivery potential, especially in Europe. However, we have made a solid progress, and we are now fully focused on strengthening our operations so we can turn our growing order backlog into actual sales and keep our customers happy. Strategically, we made some really important moves this quarter. We entered into a partnership with 2 major excavator manufacturers, Hitachi Construction Machinery and Develon. With Hitachi, we are now one of the preferred suppliers in the European dealer network, which is a big step for us. And with Develon, the 9 series excavators will come out tiltrotator-ready right from the factory, which will really improve efficiency and make installations much faster.

Finally, an updated market study conducted by Strategy& confirms we have strengthened our market position and continue to gain market share. Even more exciting, there's still huge untapped potential out there in the tiltrotator market.

So now I will show you some highlights from the market study that Strategy& have updated for us until 2030. This slide shows how market shares have shifted among the key players in our industry over the past few years. What really stands out is that Engcon isn't just holding the #1 position, we are strengthening it. Since 2019, we have expanded our lead by roughly 5 percentage points. In other words, we are clearly the winner in this market landscape. At the same time, we see that not everyone has been able to keep up with the overall growth in the market, and that's why our lead continues to increase. Of course, market dynamics vary from country to country, but the overall direction is unmistakable. We are growing faster than the market, and we are widening the gap to the competition. We are really proud of this development. It proves that our strategy is working and that we are growing faster than the market, which is exactly what we have set out to do.

So, on this slide, Strategy& have forecasted the growth for tiltrotators and even with everything we have achieved so far, it's clear that the biggest opportunities are still ahead of us. The tiltrotator market continues to show incredible strong growth potential. It's expected to expand by around 20% per year all the way through 2030. By then, the market is projected to exceed SEK 6 billion, and that's just the tiltrotator segment alone, not counting in the broader attachments or aftermarket opportunities that come with it. This shows just how much room there still is for us to grow, both by increasing our penetration in existing markets and by expanding into new regions. So, while we are proud of how far we have come, we are even more excited about what lies ahead. The long-term outlook for Engcon and for the entire tiltrotator industry remains extremely strong.

This slide from the market study takes a closer look at the market penetration, how tiltrotators are adopted in the regions where we are active and how that's expected to develop through 2030. What's really exciting here is that there is still a huge potential ahead even in the markets where we already have a strong footprint. The biggest expected growth will come from Europe outside the Nordics then, which is projected to account for about 60% of total unit growth between 2024 and 2030. Germany and UK stand out as the 2 largest excavator markets in Europe, both showing strong expected penetration growth. By 2030, we also expect France and Germany to reach the tipping point, where the tiltrotator starts to be seen as a standard piece of equipment, not just an optional add-on. What's less visible in the chart are the smaller percentage increases in large markets like North America and Japan. Both those movements are extremely important. Even a small shift, say, from below 1% to around 4% will have a massive impact on total tiltrotator sales.

Japan, in particular, is moving quickly. The adoption there is really standing out, helped by strong government incentives. Altogether, this journey will almost triple the size of the tiltrotator market by 2030, which is fantastic news for us and as the clear market leader. But what's even more remarkable is that even at that point, year 2030, about 93% of the global excavator market will still be unpenetrated. So, our journey doesn't stop there 2030. We are still really just at the beginning. Our growth story will continue for many, many more years to come then.

If we're moving back into the report then and taking a look at the key figures for the quarter. Net sales were roughly flat compared to last year. We are seeing a very strong demand, especially in Europe, but some of those orders have been held up in production. We haven't reached our full delivery potential in Europe yet, partly because some of our capacity has been tied up in the Nordics and for overseas markets. Those markets tend to plan further ahead, while Europe typically has more short notice on-demand orders, which makes production planning more challenging. On top of that, we have had some disturbance with component availability, which reduced our capacity slightly during the quarter. At the same time, we have been ramping up inventory and focusing on deliveries to overseas markets, which has also put some short-term pressure on Europe. The good news is that the order intake remains strong across all the regions, up 31%, in fact, this was our best third quarter ever, and Europe matched its all-time high for the quarter.

Our gross margin came in at a solid 43%, a level we are comfortable maintaining over long-term. EBIT margin landed at 17% and rose at 40%, which shows that we are continuing to deliver strong profitability and efficiency. And Marcus will guide you through the financial in more detail shortly. 

So now when we have been covering the KPIs, let's take a step back and look at the bigger picture, how our order intake and net sales are developing. Order intake came in at SEK 467 million, which is actually the strongest third quarter we have ever had, as I said. Demand remains very solid across all regions. Net sales landed at SEK 450 million, so essentially flat compared to the previous year. And if we look at the graph, it's clear that we are not yet seeing the full impact in deliveries. Some of the order intake, particularly from Europe, is still sitting in the order book, waiting to be delivered, and we are now fully focused on ramping up operations to turn our growing order backlog into actual sales and to keep our customers happy, as I mentioned earlier. 

So, with that, let's dive into the regional performance and see what's behind these numbers. Let's start with the Nordics, which continued to perform strongly in the third quarter, both in terms of order intake and deliveries. We are seeing a clear improvement compared to last year, driven by a few positive factors. It's lower interest rates that are boosting investment appetite. The excavator market is recovering, something we can also see reflected in Volvo CE's report. And among dealers, inventory levels have now returned to more normal levels. 

On top of that, we have had some individual deals and slightly higher volumes spread across the region, which have added to the momentum. That said, the higher volumes are coming from markets with slightly lower average margin, which gives us a bit of negative mix effect compared to last year. Marcus will guide you more regarding that later on. Looking ahead, we expect the Nordics to grow in line with the excavator market. 

Turning to Europe. We had a really strong quarter in terms of order intake, matching our previous record of SEK 200 million for a quarter. What's encouraging is that this strength is broad-based. We are seeing solid performance across most of our key markets, even though the construction sector remains relatively weak, and there are some political instability in parts of the region. Despite that, demand for our products continues to grow. During the quarter, we have been very active, participating in several local trade fairs and visiting customers, and we are clearly seeing the result of that. 

As our market penetration increases, demand continues to build. Europe's order intake is very strong, but net sales are slightly behind. That mainly comes down to timing. In the Nordics, customers plan early ahead of the season. In overseas market, we build inventory first before those products reach end customers. But in Europe, orders come on much shorter notice, which is great for demand, but harder to plan capacity for in short-term. And the rise for our largest region, as we talked about in the beginning of the year, is still very much on. Looking at the rolling 12-month order intake, Europe has now overtaken the Nordics as our biggest region. 

Given our strong position in Europe and the fact that this is where the greatest growth is expected through 2030, we feel very confident about the long-term outlook for Europe. If you take a look at the Americas, we are seeing an increase in order intake from low levels. The levels are partly boosted by the tariffs imposed on the price. Challenges in the market persists. As things stand, there's a significant uncertainty, primarily related to tariffs, but also concerning the broader economic outlook. 

This creates a cautious market and as a result, of slower demand for construction equipment. It's a wait and see, both for our customers and us right now. But we are ready when the market turns around. We have strong confidence in this market long-term. It's a large excavator market with low current penetration, and that gives us significant growth potential ahead. 

Now over to Asia-Oceania. And here, we are seeing a very strong order growth in the quarter. This region naturally shows bigger swings from quarter-to-quarter simply because of the baseline is still relatively small. That means individual deals can really move the needle, and that's exactly what we have seen this time with large block orders in Japan driving the performance. We feel confident about the Japanese market. There are strong government support in place for investments in productivity through the MLIT and SME programs as we talked about on earlier calls. The update here is that the program starts has been pushed to January 2026. 

Japan is the world's third largest excavator market. So even a small penetration gain translates into meaningful growth for us. We expect the market to develop in line with our long-term company targets, though not at the exceptional level we saw this quarter. With this, I will hand it over to Marcus that will guide us through the financial development.

Thank you, Krister. Looking at an overview of the profitability trend. EBIT amounts to SEK 70 million for the quarter, corresponding to an operating margin of 16.9%. This is below our financial targets, and profitability is mainly held back by net sales not reaching its full potential in Europe, as Krister described earlier. We are also facing a tough comparison against Q3 previous year when results were boosted by a very high gross profit.

Having a closer look at the income statement to give a sense of how profitability has evolved during the quarter and what's driving the numbers. Starting at the top line, we are seeing a relatively flat development in net sales compared to last year. Naturally, the stronger Swedish krona plays a role here, but more importantly, deliveries to Europe haven't quite reached their full potential, as mentioned before. 

Moving down to the gross margin, that lands on 42.6%. A margin around 43% is generally a healthy level, one we aim to maintain over time. That said, it does look a bit tail in comparison to 2024 when we were on a significantly higher level. Those who listened in last year remember that I mentioned back then that the stars were aligned. Today, the stars have shifted into new positions. As an example, the currency tailwind last year has shifted to a headwind and building on what Krister mentioned on in the regions, we have seen a shift towards the Nordics as a share of revenue, which gives us a slightly weaker market mix from a margin perspective. 

The limitations in volume to Europe, thereby has a bit of a negative impact on margins. If we go further down and look at the cost, we are in line with last year and according to our scalable business model, we adjust our cost to match volume. One thing worth noting is the increase in R&D expenses. This is tied to us nearing the final phase of the third-generation development project, meaning we are capitalizing less R&D spend, hence, expensing a larger share directly. The total R&D spend is amounting to SEK 14 million, the exact same amount as Q3 last year. And finally, the result drops down to -- the EBIT line lands at SEK 170 million, corresponding to the margin of 16.9%, driven by lower gross margin and R&D expenses. So, if the stars were aligned Q3 last year, they have been knocked somewhat out of place this year.

Let's review cash movements and cash flow from our operating activities for the quarter. When we look at the movement of cash, 2 factors dominate EBIT and inventory. Starting at the top, lower EBIT had a direct negative impact on the cash flow and naturally acts as a drag on our operating -- operational cash generation. Regarding the working capital, the inventory buildup is twofold. It involves necessary stock replenishment, but crucially, it's also supporting our overseas sales pipeline. In contrast, our accounts receivables remain stable, consistent with our flat revenue disciplined collection efforts. The net result of this from EBIT and the decision to invest in inventory to fuel future growth brings our final cash flow from operating activities to SEK 42 million.

ROCE comes down slightly, mainly driven by EBIT and increased inventory levels. However, it has improved compared to last year and is in line with our financial targets. To summarize, looking at our financial targets. Due to the reason Krister went through, the net sales growth is not where we want to be nor where we expect to be, neither is the EBIT level. Capital efficiency and capital structure, however, continues to be at the satisfactory level.

And with that, I hand it back to Krister to summarize it all.

Thank you, Marcus, for guiding us through the financials. I will try to wrap it up then and starting with the summary and update. So, starting with our order intake, it continues to be strong across all regions confirming the high demand we are seeing globally. In Europe, in particular, both the strong order intake and our solid order book signal a really promising development ahead. Our updated market study also gives us even more confidence. It shows that the potential is still huge with 93% of the market yet to be penetrated even after 2030. So, there's a lot of room for growth.

So, when we take a step back and look at the full picture, our strengthened market position, the enormous growth potential ahead and the clear trends in adoption, it's obvious we are in a great position. We have proven that we can grow faster than the market, and we have done it by staying true to what makes Engcon special, innovation, quality and a genuine understanding of our customers' needs. But we are not slowing down.

The opportunities in front of us are bigger than ever, and we are ready to seize them by continuing to lead the way, developing smarter solutions and expanding into new markets. And the best part, we are still just getting started. Our journey ahead is full of possibilities. And together, we will keep driving change in this industry, one tiltrotator at the time.

And before we move on, I also want to highlight something we are especially proud of Stig Engström, our founder and majority shareholder being named Arets Foretagare i Sverige 2025, Entrepreneur of the Year in Sweden 2025. It's a fantastic recognition that reflects not just his vision, but the innovation and commitment that define Engcon as a company.

And if we're moving over to the last slide in the presentation, where we're looking ahead to next quarter, we're expecting a stable demand, mainly driven by the Nordics and Europe. In the Nordics, we are now seeing a return to normal seasonal buying behavior. Customers are placing orders earlier again to prepare for the digging season. That gives us a better forward visibility and more efficient planning. In Europe, demand remains strong. That's supported by mainly 2 things: continued market penetration. We are winning more customers quarter-by-quarter. And we also have a solid order book that we're carrying over from recent quarters. So overall, the outlook is stable, steady demand and good underlying momentum in our 2 most important regions.

So that was everything we had for today's presentation. Now we are happy to open up for your questions. So, feel free to jump in.

[Operator Instructions] The next question comes from Agnieszka Vilela from Nordea.

Maybe I can start with the momentum that you see in order intake in October, if you can elaborate on that. And I think also, Krister, you mentioned some prebuying. So how should we think about that happening? And if you look at the prebuy orders, can you tell us what is usually the timing of delivering on such orders?

Yes. We still have a good momentum in -- right now then. And we're talking about prebuy. We expect it to be some prebuy effects this year. We didn't expect it last year, but we got some prebuying then in December. And since the Nordics are more coming back to normal behavior of purchasing, we expect them to place orders in November, December for being delivered in Q1 and Q2 then.

We are having -- we might see some from the European region also especially the Netherlands that have been coming higher up on the tipping point and know that a lot of machines will be equipped with tiltrotators. And also, maybe because of that, we have seen a bit longer lead times that they are seeing the need of putting the preorders in. I don't know if I answered all your questions there Agnieszka.

Yes, that Sounds good. Thank you for the color. And then a question maybe to Marcus on profitability. And I understand the fact that Q3 last year was very strong. But still, when I look at your gross and EBIT margins, they did decline by 3 to 5 percentage points in the quarter year-on-year. Can you elaborate on the primary drivers behind the margin compression? And also, are you taking any specific own actions to restore margins towards your targets? Or do you believe that the margin will recover once we see better deliveries and volumes?

Yes. I truly believe that it will recover. But if we go back to last year, then exceptional gross margin started that. As I said, the stars were aligned. There was the tailwind from currency, for example, that has shifted into a headwind that took a knock off 1% or roughly. And then the market mix was more favorable at that time with less to lower margin markets at that point, which we have now more to in this quarter. So I believe that we see now also when we said that we squeezed Europe a little bit in this quarter that I expect it to come up from where we are right now.

And then the last question for me. I appreciate the fact that you shared with us the market study. But with that said, I was a bit surprised on the expectations for Japan given all the subsidies and projects that are in place. So only 4% penetration by 2030. Do you see that there could be any upside to that? And why don't you think that the market could move towards higher penetration faster?

This is a study that they have made. And I mean, 4% of 55,000 units, it's a lot of tiltrotators then coming into the market. So, it's always hard to predict how fast it will go. Some people, when we talk to them in Japan saying that when they start realizing these things, it moves fast, and some saying that they are slower in that way. So, I think there's still some -- the OEMs are on the train, but some of them still want to stand there and watch a little bit. So, there's still some resistance from the OEMs also to join forces on this because it will, of course, affect a little bit how many machines they will sell in Japan and so on in that way. So, a little bit too early to say. If we're sitting here next year, we may be there to be more optimistic or maybe pessimistic, but I hope we will be more optimistic.

The next question comes from Anna Widstrom from DNB Carnegie.

So firstly, I just want to start on the block orders in Japan. So given the solid block orders, what does that mean timing-wise for deliveries?

Yes. That's -- all the bets are on that right now. It's sold to our old distributor then in Japan. So as soon as it arrives and passes custom in Japan, it will be revenue for us in that way. So, it will be hard for us to know exactly. It will be a border line then in that way if it will be Q4 or if it will be Q1. It depends on the wins and everything like that on the sea then.

And given that we have a very solid order intake in Japan, how much of group orders does Japan stand for now in this quarter?

I don't have that percentage. It's, of course, still low numbers we're starting on in Japan, but we can take a look on that later on and see how it looks like. But we're starting from really low numbers, but it's a big increase there then.

The next question on the less favorable market mix for margins. How does this look for the order intake? Should we have a similar assumption that the market mix will be less favorable looking on how the order intake is looking?

Normally, like Europe is a better mix for us. The more we can have, as you could see from last year on the deliveries, we had pretty good deliveries then in Europe. So, for us, that's one key. Americas have normally been good, but it's slowed down. And then in the Nordics, it's not as easy to say the whole Nordics because it's a little bit different within the Nordics also on the margins and so on. And for this quarter, we had a stronger deliveries to our 2 weaker countries or markets in the Nordics then. So, it's hard to predict just by reading the order intake in that way exactly if you don't know exactly how the orders are looking.

So finally, from my side, just looking on the Americas, the ordering was positive, sharp shift from Q2. Could you just give us some sense of the underlying volume growth and how much your sense is that order has been delayed into Q3 from Q2?

Sorry there. Was it Europe you talked about there or?

No, the Americas, given that the order intake has taken a sharp shift from Q2. So firstly, how the underlying volume growth is as you have price increases? And if you think that part of the order intake is delayed orders from Q2?

I mean Q2 was like a wet blanket over that in total. So yes, maybe a few delayed orders, but I don't think it's that much. It was more like business were starting to happen again and those that have been thinking about it decided to go for it. And it's not a big order increase compared to last year since we have been putting out the tariffs in the price in that way.

So, volumes are rather flat year-over-year in the order intake. Is that how I should understand?

On Q3 level, at least, then I think order intake might be a little bit down in total.

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Starting off with the strong order book you highlight, particularly in Europe. How do you expect it to convert in Q4 if you feel that you have both the capacity and also the supply chain to convert it?

European orders are -- normally, they want to have it as fast as possible, as I mentioned earlier. So, our expectation is that what we have in the order book for Europe should be delivered in Q4. There is some orders in the Nordics that are for after the end of the year, but the majority of that is also wanted to go out in Q4.

Very clear. And also, you mentioned Volvo Construction Equipment briefly, and they highlighted particularly order intake for excavators in Europe, given that their order book is a bit longer than yours. How do you feel the setup for 2026 from an underlying market point of view?

We see it's a market recovery. In that way, Volvo is -- if you're looking on the Volvo's reports that they're having a much higher order intake, and they also had higher deliveries in Europe now in Q3. So, with that, it feels like we've been in the bottom regarding excavator sales. We've also seen that U.K. that was probably hit the hardest last year, have also seen a recovery this year on approximately 9% up on year to September -- for the full year until September. So, we started seeing a small market recovery in excavator sales.

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

Thank you so much, everyone, for all the good questions. And if anything else pops up, don't hesitate to reach out to us. We're always happy to try to help you. Thanks again for tuning in today, and we really look forward to seeing you all again soon. Take care and thank you.

Thank you.

Hello, and a warm welcome to engcon's presentation for the second quarter of 2025. Thanks for joining us today. My name is Krister Blomgren. I'm the CEO at engcon. And with me today is our CFO, Marcus Asplund. We are eager to share some highlights and key numbers from our Q2 report. And after that, we will go into the Q&A where you can shoot your questions. Let's start with the positive highlights.

We have had a really strong second quarter. Both net sales and order intake were at Q2 record levels. In fact, to find similar figures, we have to go back to our standout year 2022. A big driver behind this growth has been the strong return of the Nordic region during the current digging season. We saw high activity and strong demand, especially because many contractors needed to replace aging excavators and dealers had relative low inventory levels coming into the season. It also was a solid tiltrotator volume growth in Europe, especially in Germany and the Netherlands, a high number of tiltrotator units were delivered to the market.

It's a clear sign that we are changing the world of digging and doing it faster than ever. Of course, there were a few challenges, too. The Swedish krona has strengthened sharply, which has put pressure on our margins. And while pushing a large volume out to the market this quarter was part of our strategy, it did reduce our gross margin. We're also laying the foundation for long-term success within engcon. During the quarter, we kicked off an important initiative to develop our shared core values. These will guide how we lead and work together, and they will help us build a strong, unified and inclusive culture we need to reach our global ambitions.

In the past, engcon have mostly been seen as a premium solution, the full package with all the latest tech. That helped us win over early adopters and build a strong brand. But if we want to grow faster and increase market penetration, especially outside the Nordics, we need to reach a broader audience. That's why we are now expanding our offer, creating an engcon for everyone, because let's be honest, you can't take somebody straight from a horse and a wagon to a Ferrari. But if you start with a Fiat, something simple and familiar, it's much easier to take that first step. And once they see the value, the full engcon system becomes the natural next move. [Audio Gap]

Sorry, something happened there. I start all over them from this slide. Our vision is to change the world of digging. How can we do that? Now with an engcon for everyone, we can easier and faster reach our vision to change the world of digging. But to truly make that change happen, we need to start by making the customer feel familiar because real transformation doesn't begin with complexity, it begins with comfort. We have learned a lot from our success in markets like Netherlands and Germany.

And one of the most important insight is this. It's hard to sell the full package right away when you have moved past the innovators and the early adopters. These groups are always looking for the latest and the greatest. But once you try to reach the broader market, the early majority, the approach needs to shift. To climb that product adoption curve faster, we need to start with something the customer already knows and trusts like a coupler that fits the local standards.

That familiarity builds confidence. It lowers the barrier and it helps them take the first step. As I said earlier, because you can't take somebody straight from a horse and a wagon to a Ferrari. But if we offer them a Fiat first, something simple, beginning friendly and useful, and they will start driving. Once they begin to see the benefits, then we can introduce the full power of the engcon ecosystem. That's exactly how we did it in the Nordics back in the early days, and it worked.

As you can see in the picture, we have designed an ecosystem that appeals to more than just innovators and early adopters. We now offer a more basic configuration with a mechanical coupler, a great way for customers to start learning how to tilt and rotate. It's simple, it's affordable, and it competes well with tilting couplers and other entry-level solutions.

Then we have a mid-tier setup, a tiltrotator with a local coupler standard, where customers can get their first experience with tilt and rotate functionality. And finally, we offer the full engcon system with all the performance, flexibility and automation benefits we are known for. It's about guiding the customer on a journey, one step at a time, and we have seen that journey work lately in the Netherlands and earlier in the Nordics. What really transformed the excavator industry is volume, getting more tiltrotators into the hands of more users. That's what drives change in behavior, methods and expectations. And this strategy helps us get there faster.

We're already seeing strong signs of this in the Netherlands, where the penetration is growing rapidly, especially in the smaller excavator segment. In the DACH region, we're following a partnership model where we sell only the tiltrotator and our partners handle the rest of the solution. That means revenue doesn't grow as quickly as unit volume, but that's by design because penetration is the key and it's growing faster than revenue. And that's exactly how we change the world of digging with units.

We are seeing a strong growth in net sales, up 23% organically, which is great, but our growth in units is even greater, as I said on the earlier slide. A big part of this comes from high delivery volumes tied to orders placed back in Q4 and Q1. This fits the seasonal pattern we have seen in the past in the Nordics. We have also had a particularly strong growth in Europe, especially in Germany and the Netherlands, where demand remains high.

The big increase in Germany really shows that Bauma was a sign of that tiltrotators are taking off in Germany. And the Netherlands have taken the step above the tipping point with a lot of smaller tiltrotators this year. That momentum clearly reflects the strength and the trust we are building in the market. Now the stronger Swedish krona has held back our reported growth a bit. But even with that, the organic numbers show we are on the right path.

Order intake continues to grow compared to the same period last year, and we are pleased with the underlying trend. That said, we had hoped to be even further ahead by now. The uncertainty around tariffs and pricing in the U.S. has created some hesitation in the market and slowed things down a bit this quarter. Still, the overall trend is positive, and we remain confident in demand going forward as the situation stabilizes. Gross margin came in at 41% for the quarter, and there are a few things driving that.

Some of the margin pressure comes from the strategic decision we have made about large orders from rental fleets in the Nordics, but the strong Swedish krona was the biggest single factor this time. We have also moved a high number of units into the market, both through the Nordic recovery and through the strong momentum in Central Europe. And yes, this volume push has affected margins in the short term, but this is fully in line with our long-term strategy because it's the tiltrotated volumes that will drive real transformation in the industry. Marcus will also guide more about the gross margin and the reasons behind the drop compared to last year.

EBIT margin came in at 18% for the quarter. Even though we had a strong sales and benefit from a scalable business model, the currency headwinds made it tough to hit our 20% financial target this time. And return on capital employed is moving in the right direction and ended up above our 40% target this quarter. And as I said, Marcus will guide more regarding our financial numbers later on.

We are taking a look at the order intake and net sales development this quarter, and we are trying to putting Q2 into a perspective also. As mentioned earlier, this has been a strong quarter. Both net sales and order intake reached high levels. In fact, the strongest Q2 figures we have seen since our record year in 2022, even though we had some pressure from the currency movements. One trend we have tracked for some time is a strong order intake in Q4 and Q1, followed by a spike in deliveries during Q2 as the Nordic digging season gets underway.

Seeing this pattern return is a clear sign of our renewed strength in the Nordic region. In Europe, particularly in Germany and the Netherlands, volumes have increased significantly. Much of that growth is in entry-level products or the bare tiltrotator frames we sell to our partners. We also see an increase to smaller excavators. That means the impact on net sales is more modest for now, but the volume growth itself is a strong signal of market traction and future potential.

Outside Europe, the situation has been more turbulent. Around Liberation Day, the U.S. announced strict new tariffs. While the direct impact was pronounced in the American market, it also created ripples of uncertainty in other regions. For a few weeks, conversations around interest rates, inflation and economic outlook made customers more cautious. Unfortunately, we couldn't fully recover the drop in order intake that was 3 weeks after Liberation Day.

But the level was back to a good order intake level in the end of the quarter. So still the broader picture remains clear. Q2 delivered strong results with positive trends in both volume and market activity, even if certain headwinds held us back from realizing the full potential. Taking a closer look at the Nordic region, Q2 marked a clear comeback for the Nordics, which stood out as the single largest contributor to our year-over-year growth. It's encouraging to see the region returning to strength. This upswing reflects a combination of strategic wins, market recovery and macroeconomic improvements.

Toward the end of last year, we secured several larger deals, particularly with rental companies. And many of those deliveries were fulfilled in Q2. These volumes had a clear impact on our top line. At the same time, we are seeing the effects of the catch-up investments after a few slower years. Many contractors are now replacing older fleets and that replacement cycle is finally gaining traction. Retailers have also normalized their inventory levels, which has helped drive more consistent order flow.

And on a broader level, there are signs that interest rates might have peaked or even started to ease, which is a positive signal for construction and investment appetite. While we are seeing a return to the typical cycle, high order intake in Q4 and Q1, followed by strong deliveries in Q2, the most important takeaway is this. Growth in the Nordics is being driven by real demand from the end customer. After the first half of the year, the Nordics are once again our largest region in terms of revenue. The outlook is positive, though, of course, we remain attentive to how the broader economic situation evolves heading into the autumn.

We're moving over to Europe. While the Nordics are once again our largest region in revenue, Europe's upward trend continues to steadily -- continue steadily, and they are the largest region in units. One reason to that, that they are the largest region in units is that we have learned that we need to take the early majority to entry-level tiltrotator first to make this shift faster.

We are seeing a strong development across most of our key markets. One clear sign of progress is the growing penetration rate. Just look at Bauma in April, tiltrotators were on display in almost every booth. That kind of visibility reflects the shift that's happening. Smaller tiltrotators are gaining ground in the region, and our collaboration in the DACH region continues to stand out. We have achieved high volumes there, largely thanks to the local couplers together with our tiltrotators.

It's worth noting that many of these products are entry-level with local assembly of the coupler to meet regional standards. That means a lower average revenue per unit and some pressure on gross margin during the quarter. However, these products come with very limited additional sales costs, which makes them solid contributors to our bottom line. And again, let's not forget, it's the tiltrotator units that are changing the world of digging. Through this strong push, we have quickly increased both awareness and market penetration in Europe, something we see as a major success.

Let's talk a bit about how things are going in the Americas. We see a good increase in our net sales, 12% up, but that was mainly orders from Q4 and Q1 that were delivered out. So to be honest, Q2 was more or less a lost quarter in terms of sales. Since Liberation Days, there's been a lot of noise and uncertainty around tariffs. No one really knows where things are going, and that's made both us and our customers a bit cautious, especially when it comes to pricing and planning. That said, we are not standing still. We are keeping close track of developments and staying ready to act as soon as things clear up.

At the same time, we are doing the groundwork, meeting customers face-to-face, talking about how our products can improve their business and making sure we stay top of mind. That day-to-day contact really, really matters. And while we are at it, we are also building up the organization. We are investing in the team, strengthening the structure, laying the foundation for long-term growth in the region. It's not fancy work, but it's the kind of stuff that sets us up to win when the momentum returns. So yes, Q2 was tough, but we are playing the long game here.

Let's take a look at Asia-Oceania, where we're seeing some solid commercial traction. For example, net sales is up 53% and our new sales company in Japan continues to move in the right direction. Volumes are still relatively low, but the trend is clearly positive. Orders are starting to come in more regularly, especially through the dealer network we have established. That's in addition to the OEM sales we already have in place, so the base is growing. The construction industry in Japan is under strong pressure to improve productivity. And here's where it gets really interesting.

The government is actively supporting this shift through 2 different incentive programs. Program 1 targets SME companies, where we can get 30% to 50% of the year investment back from the government when you invest in efficiency-increasing technology like our tiltrotators, for example. Program 2 applies if you are working on the government-funded construction sites. On these sites, you get a higher pay rate for using productivity boosting solutions like our tiltrotators then. This creates a strong business case for customers to invest in our products, and we are positioning ourselves right in the middle of that opportunity.

Australia paused a bit during the elections, but we are now seeing order intake bounce back. It's clearly heading in the right direction again. Korea is also moving positively. We are seeing more engagement, more deals and good signals from the market. So overall, we are not just gaining traction. We are building real momentum in the region with Japan looking especially promising from a sales perspective. And with that, I will hand it over to Marcus that will guide you through the financial development. So go ahead, Marcus.

Thanks, Krister. Let's take a closer look at our EBIT development for the quarter. We are pleased to report that EBIT increased from SEK 82 million in Q2 last year to SEK 94 million this year. This is a solid increase of 15%. Now, naturally, higher sales volume brings higher EBIT. However, we did experience some headwinds this quarter that prevented us from fully translating that revenue increase to the bottom line.

Our EBIT margin stands just under 18%, a slight decrease from last year. While the stronger volume did introduce some mix effects that diluted our gross margin, the primary factor preventing us from reaching our long-term EBIT target was the headwind from the stronger Swedish krona.

Now let's dive deeper into the income statement. For the quarter, our net sales reached SEK 530 million. This is a strong increase of SEK 80 million compared to last year. The currency effects we first observed in our balance sheet in Q1 have now clearly impacted our top line this quarter. Specifically, net sales were negatively affected by approximately SEK 25 million due to currency fluctuations. However, if we exclude this currency effect, we see a strong organic sales increase of 23%.

Moving on to the gross profit. Our gross margin stands at 40.7%. This is about 4 percentage points lower than last year and below the high levels we've seen in recent quarters. Roughly half of this decline can be attributed to the strengthening Swedish krona, which began in Q1. This currency effect is also the primary factor impacting our bottom line. In connection with our strong volume increase, we also experienced a less favorable product and market mix, which I want to briefly highlight.

The significant volume growth in the DACH region came from more entry-level products or to quote Krister, more Fiats. While these dilute our overall margin, this volume is incremental business that doesn't add to selling expenses. So its contribution to the EBIT margin remains high. As we quickly recover in the Nordics, our stable, typically higher-margin, aftermarket business has decreased in relation to total sales. Finally, we saw a market mix shift with more volume moving towards the Nordic and less to, for example, the Americas.

This increased volume in the Nordic also led to slightly lower margins due to higher discounts on bigger deals to, for example, bigger rental fleets, as Krister just mentioned. Despite these factors and the significant increase in revenues, we successfully maintained our selling and administrative expenses at the same level, albeit with some help from the incremental business through our partners in the DACH region, as I mentioned.

This achievement underscores the strength and scalability of our business model. All these factors combined bring us to an EBIT of SEK 94 million or 17.8%. While we achieved strong sales and maintained effective cost controls, these efforts weren't enough to fully offset the impact of a stronger Swedish krona. In the recent quarter, cash flow from operation was SEK 20 million, down from SEK 32 million in the same period last year. For the full period, it improved to SEK 33 million compared to minus SEK 12 million previously.

This increase was primarily driven by higher operating profit and lower tax payments, though partly offset by increased capital tied up in inventories and accounts receivable. Large shipments from the factory late in the quarter, which meant a lot of finished goods in transit by the end of the quarter led to higher inventory levels. As to the increase in accounts receivable, it is in line with the increase in sales.

Cash flow from investing activities was minus SEK 11 million for the quarter, compared to minus SEK 10 million. These investments primarily went towards tangible fixed assets and the continuing development of our third-generation tiltrotators. Cash flow from financing activities was minus SEK 64 million in the quarter and minus SEK 78 million for the period. Acquisition of minority interest in subsidiaries and acquisition of own shares had an impact of minus SEK 63 million for both the quarter and the period.

Additionally, SEK 77 million was paid out in shareholder dividends. Overall, total cash flow for the quarter was minus SEK 55 million and for the full period, it stood at minus SEK 63 million. As expected, the return on capital employed continued its journey upwards for the sixth consecutive quarter to a level where we feel more at home and expect it to be.

Summarizing by looking at our financial targets. We are pleased to report that we have exceeded 3 out of our 4 financial targets, which is a strong position to be in. However, due to currency headwinds, we did not meet our long-term EBIT margin target in this particular quarter. And with that, I'll hand it back to Krister to sum things up and provide us with an update on what's ahead.

Thank you, Marcus, for guiding us through the financial. We're closing the second quarter with a strong net sales and a solid order intake, as I mentioned earlier. And in fact, we haven't seen these Q2 numbers at this level since 2022. That was a record year for us. In the Nordics, we see the return of the typical season pattern we knew pre-pandemic, with Q2 delivering high volumes as expected. Also in the Nordics, we see the effects of the catch-up investments after a few slower years.

Many contractors are now starting to replace older machines and that replacement cycle is finally picking up momentum. At the same time, retailers have adjusted their inventory levels, which is helping to create a more stable and consistent order flow. And looking at the bigger picture, we're starting to see signs that interest rates may have peaked or could even begin to ease, and that's a positive signal for the construction activity and overall investment appetite in the region.

One of the biggest highlights this quarter is the strong progress we are seeing in the DACH region, especially in Germany, Europe's largest excavator market. What's really driving that growth is our focus on the entry-level products. By offering simpler configurations, we are lowering the barriers for customers to get started with engcon. It's a practical, effective way to build trust and show the value early on.

We have seen this strategy work before in the Netherlands and in the Nordics. We are starting with something familiar, help speed up the adoption. It gives customers a clear first step. And from there, it becomes much easier to introduce the full engcon solution over time. This approach is helping us penetrate in key markets faster and it's an important step in our vision to change the world of digging. We are also seeing solid commercial traction in Asia-Oceania, where our efforts are starting to pay off, especially in Japan.

The construction industry in Japan is under real pressure to increase productivity and the Japanese government is actively encouraging the adoption of smart, efficient technologies like tiltrotators. As I mentioned earlier, there are 2 separate incentive programs in place. These programs are creating a strong business case for contractors to modernize and our products are a perfect fit. It's still early days, but the interest is growing, and we are well-positioned to support that shift.

We have also sold significantly more units, especially within the smaller machine segment. This has led to rapidly increasing market penetration, which is exactly what we are aiming for. However, since we are primarily selling tiltrotators to our partners in Germany then and starting with a simpler offering, this unit growth hasn't yet fully translated into full revenue growth. At the same time, higher volumes this quarter came with slightly lower margins, mainly due to currency headwinds from our strong Swedish krona, which had the biggest impact on the bottom line, but also larger share of simpler product configurations and increased discounts in the Nordics linked to the volume and, following that, the less favorable market mix.

Still, the strong organic growth, continued order intake proved that our strategy is working. We are growing in the right way in the right places. A key focus will be in reinforcing our core values and principles. Our people are central to everything we do and building a strong, unified culture will be an important foundation as we continue to scale.

And when we are looking ahead, I feel optimistic about the rest of the year. Compared to last year, I expect continued growth, driven by the ongoing recovery in the Nordics and the clear progress we are making in market penetration across both Europe and Asia-Oceania. There is a strong energy in the business right now. Contractors are investing again. Our simpler product strategy is opening new doors and the awareness of our solution is growing steadily in new regions.

That said, the stronger Swedish krona did have a noticeable impact on our result in the second quarter. And while we are managing that headwind, we can't rule out that it may continue to affect us in the coming quarters. Still, the underlying momentum is solid, and we are in a good position to keep building from here. So with a proven concept, growing demand and a strong team in place, I'm excited for what's ahead. Together, we'll keep changing the world of digging one machine at a time.

Okay. That's everything we had for today's presentation. Now we are happy to open up for your questions. So feel free to jump in through the telephone conference. So operator, whenever you're ready, please bring in the first question.

[Operator Instructions] The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Starting off on the margin side, which, of course, you explained a lot in the presentation. Given the broader offering or a simpler offering, so to say, how do you view your goal of delivering the above 20% margin given where currencies are at currently?

We haven't changed anything regarding our long-term financial goals regarding the EBIT margin. And we believe we will be able to adjust to that. It's everything is -- when it's going fast, it's hard to adapt directly to it. But long term, we still have a strong belief in that we will reach our financial targets and be above that 20%.

Very clear. And on the product mix side, can you give some -- or give us some insight on how your backlog looks right now? Should we expect the mix to -- in the upcoming quarters to be similar to this, then?

Yes. Normally, the -- the Nordic is stronger than the first 6 months, and Europe is a little bit stronger than the last 6 months than compared to the Nordics. So we still think it will be better regarding the revenue also, who will be the largest one. So it depends a little bit.

The European market is not all the same. As I mentioned, it's more Germany and Netherlands that are the simpler products. In France, they are much better on selling the more advanced products and so on. So it depends a little bit on which market that having a good momentum. Right now, Germany are really strong, and we expect it to continue though. So that's the guiding I can do regarding that.

Yes. And on [Audio Gap] order intake, I think you mentioned that there were roughly 3 weeks around Liberation Days, which were slower and that there was not a catch-up effect, primarily maybe related to Europe. Do you feel that the order intake level is a fair representation of where the market is currently at?

Yes. I think with the Liberation Days there, and they got a lot of talk about that could increase the interest rate. We could -- the economic outlook was not positive. And then Germany came out with a really strong budget proposal there. And that, I think, shifted a lot and especially that also been what we see with Germany now that it's a really positive trend there.

They feel confident that they will have jobs for '25, '26, '27 and going further, not for that these jobs have started yet, but they just believe in it. And I think also with what they said about NATO and what the EU have said that they're going to target the 5% goal, that will mean there will be a lot of infrastructure work only. There will not only be weapons and stuff like that, there needs to be infrastructure also as part of that 5% goal. And that will means there will be a lot of digging and a lot of housebuilding and so on.

So I think that will create a good momentum for this industry. And that's also a little bit what you see if you're looking on the Volvo's report yesterday, where they have a big increase on the order intake from low numbers, though, but it's a big increase of order intake on machines that will come out now in 6 to 8 months or something like that. So I think the future looks promising in that way for us.

Very good. And last question from me. You mentioned, of course, that due to the smaller volume -- smaller tiltrotator steps units were higher. Is it possible to get some insight into how the volume in terms of units changed year-over-year?

We haven't really talked about a number of units in that way, but we have said earlier that we have lost like 50% in the Nordics compared to 2019. And we can say that the increase is significantly higher than what we are showing in revenue then -- there are a lot more units going out in the percentage increase are much higher than what we show in revenue. We need to look into how we're going to deal with that in the future then. But right now, we don't report numbers.

The next question comes from Agnieszka Vilela from Nordea.

I think the first one maybe to Marcus. I think you mentioned the negative impact from FX on the EBIT line in the quarter. Can you just repeat what was that, including both the translation impact and the transaction impact related to your exports?

Yes. I mean the major impact, of course, is coming already at the gross profit level. And we were not -- even though we kept our costs very much in line with the previous cost level, held back the cost, even though we increased the revenues, we weren't able to really compensate for that. So the major impact on the EBIT, I would say, for missing our long-term target is currency at this point in this quarter.

And did I cut it correct when -- or catch it correct when you said that about 50% of the gross margin decrease was related to FX?

Yes, yes, just above 50%, yes.

Okay. Perfect. And maybe just if you could share with us what's your kind of production planning now for the coming quarters. If you look at your order backlog, what kind of sales should we expect for Q3, Q4? Any indications there?

The indication is, as you know, we don't have that long lead time on everything or a big order book. So -- but our expectation is that we will be growing compared to last year, have a good growth compared to last year, both in Q3 and Q4. Then unfortunately, we are not like Volvo having 6 months ahead of us and so on.

It is a few weeks ahead that we can guide on what we're having in the order book. We don't have that much more. But also like Marcus said, we -- it was a lot of goods in transit from -- on the end of the quarter that will then come into Q3. So we will hopefully get an extra push from that in that case. I don't know what else can say, Marcus.

No. I mean we expect growth anyway, and that's what we're planning for also in the factory and so forth to beat last year, second half of last year, of course. And yes, but as you said, unfortunately, our horizon is not that clear with the shorter -- it's a positive thing we have shorter lead times, of course, and so forth.

But it also, of course, is challenging to guide on the long term. But as you said also, Krister, regarding all the indications and then the sentiment in the market and then the big deals that's coming out on budgets and so forth, there is a lot more energy in this industry than we've seen in the last couple of years.

Yes. Understood. And then my last question is about Japan. Quite interesting actions from the government there in the construction segments and also you are establishing more presence there. Krister, could you maybe quantify the potential that you see for Japan specifically over the next, say, 3, 5 years in terms of sales value that you could reach there?

That was like the billion-dollar question. It is really, really big potential. Everything is about how we can a little bit of what we talked about also adapt to make it a smaller step for them, maybe not need to go all the way to the full configuration and with the setup with everything on it. But it's coming out to be a normal year, 55,000 excavators in Japan every year. Now this year, they say it's down 10% to say it's around 50,000 excavators coming out.

And if we're looking on, they did the same type of program for machine guidance, the Trimble, Topcon, Leica and so on. And they pretty fast -- that was like 7, 8 years ago. And they pretty fast came up to like a 20% level and that penetration level. And that for them, I don't know if they can go much higher than 30%. So it's impossible to guess, but I think it's a big potential for us to grow and grow fast. They know they're having a huge problem with the aging population and the decreasing of people working in the construction.

The government have made a research that's showing sometime during the 2030s, they will not have enough people to do the maintenance work within the construction industry. So they definitely need to get this change happening, and that's why they are subsidizing and trying to push this change then to reduce the need of manpower and make the work faster. It is worth to mention also in Japan is doing everything really, really in order for everything.

We need to get every tiltrotator approved together with each brand of excavators. So we have done Kobelco. We have done partly Volvo. We are working on getting the other ones on 2 of them. But it's a process that will take some time before we get all the machines. So to see the big things just on these programs will take a little bit longer time, but it's also showing the legislation or rules regarding having a tiltrotator open up. It shows that it's allowed to have it because that had been also not clear earlier.

So that's one of the biggest change, and that's why there are a lot of interest. I was at the CSPI, the exhibition there. And there are a big interest for tiltrotator, there's no doubt about it. And we were on -- we had that exhibition, and we had together with Kobelco then also a private show where we invited customers and so to come and try it and just outside the exhibition area. And so there were big interest for it, and we got a lot of leads to follow up. But no, it sounds like a politician. I think I didn't answer your question, but there is a huge potential there.

The next question comes from Anna Widstrom from DNB Carnegie.

So just a few additional ones from my side. You talked about momentum in ordering during the quarter, which then seemed to have differed between the start and the end of the quarter, mainly in Europe and Americas. Could you give us some details on what order growth levels you noted in these 2 regions in the start versus the end?

Yes, roughly, I think the first 3 weeks thereafter the Liberation Day, we were probably down to 1/3 of what we've been on the rest of the weeks then in the quarter. Something like that...

In which region, sorry?

What?

In both of the regions?

In all regions and in total. So I mean, in Americas, they were more or less favorable because we didn't know what price we would put on the stuff and so on. But also the discussion that ended up here in Europe and so on was -- if they would affect the economic outlook and increased interest rates, then everybody was waiting a little bit. So that was so important then that the European governments came out with this strong unified part of it and more looking to make Europe strong again. I think that was really important for us and for this industry.

Okay. Yes. And just a follow-up on that. And thinking about price effects in Americas, have you started to raise prices already during the second quarter? Or is that something that we'll be implementing during the second half?

We have changed prices at least 2 times already in the U.S. because it's changing the setup all the time. And that's where it's getting everybody getting cautious because they don't know what price they're going to buy it. They might be interested and then we're saying one price one day and then a new price the next day. Of course, people are getting confused regarding that.

So I think if we just can make up this mind and decide this is the level, then we will get back and start selling better and better again. We're still selling. It's unbelievable that people are willing to risk and buy during these circumstances. But -- so that's -- I still know that there is a demand for the product. They want it and they're even going to need it more with these price increases on everything that will happen then in the U.S. But we need to get some stabilized period of time where we can say this is the price.

And so far, have you raised prices like mid- to high single digits? Or how have the pricing points been changing in the U.S. during the years?

Yes. First, we raised it with 25% because that was what we only know. And then we understood that you need to make a calculation on the steel price and then the 10% on everything else that have made it below double digits. And then when you increase steel to 50% and you put also 10% on every added -- on the added value on steel, that again made us have to go above double digits.

Okay. So just thinking on like volumes in Americas in the quarter, it has like a double-digit price effect.

Yes. If you're looking on the order intake then, yes.

Okay. Yes. Very clear. And just thinking about...

We were late -- we didn't have enough stock. So as I mentioned, we had a lot of deliveries from Q1 and Q4. And we prefer to be the person that if you're making a deal with us, we stand with that. So the price that they have received in Q4 and Q1, we were delivering to them on that price. So we didn't increase on that. So in net sales, it is more the old price list, I would say.

And just thinking on the sort of currency effect, is that something that you will sort of leave to be -- to what it is? Or are you going to try to change prices to sort of compensate for how the stronger SEK is affecting in transaction and translation effect?

We have said that we will do a little bit wait and see on it. We need to see where we're going to land with the currency effect. I mean, it's been pretty going -- it was strengthening a lot from the beginning, and now it's been weakened a little bit again.

So we need to find, again, a little bit also like with the tariffs, we need to find what do we believe is the current level where we're going to be. And then we're normally doing our informing about our price adjustment to our dealer network and customers, then for next year's pricing in September or end of September there.

So it will be in the considerations...

Yes.

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

Thank you so much, everyone, for all the good questions. And if anything else pops up, don't hesitate to reach out to us. We're always happy to help. And thank you again for tuning in today, and we really look forward to seeing you all again soon. So take care, and thank you, and have a great summer vacation if you get any. Bye-bye.