Q2 2026 Nibe Industrier AB Earnings Call

August 21, 2026

Speaker #2: Your line is muted.

Speaker #3: Call recording is on.

Speaker #4: Welcome to the Nibe Q2 presentation for 2026. During the Q&A session, participants are able to ask questions by dialing #Q5 on their telephone keypad.

Operator 2: Welcome to the Nibe Q2 presentation for 2026. During the questions and answers session, participants are able to ask questions by dialing #5 on their telephone keypad. Now I will hand the conference over to the CEO, Gerteric Lindquist, and CFO, Hans Backman. Please go ahead.

Operator: Welcome to the NIBE Q2 presentation for 2026. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the CEO, Gerteric Lindquist, and CFO, Hans Backman. Please go ahead.

Speaker #4: Now I will hand the conference over to the CEO, Gerteric Lindquist, and CFO, Hans Backman. Please go ahead.

Speaker #5: Thank you very much. Good morning, good afternoon, wherever it means to you sitting out there. We are back, and we're going to give you a 20- to 25-minute presentation of the report, and then we’re going to, of course, invite you for questions.

Gerteric Lindquist: Thank you very much. Good morning, good afternoon, whatever it means to you sitting out there. We are back, and we are going to give you a 20, 25 minutes presentation of the report. We are going to, of course, invite you for questions. Just a couple of things. We have to finish around 12:00 because we have other tasks to fulfill today. Also, we would ask you to only put two questions at a time to allow as many as possible to get their questions across.

Speaker #5: Just a couple of things. We have to finish around 12:00 because we have other tasks to fulfill today. Also, we would ask you to only put two questions at a time, to allow as many as possible to get their questions across.

Speaker #6: Yeah, hello also from my side—Hans here—and I'll be happy to fill in where Eric hands over.

Hans Backman: Yeah. Hello, also from my side. Hans here, and I will be happy to fill in where Gerteric hands over.

Speaker #5: Okay, fine. Well, the overall headline is we believe it's a strong report that demonstrates both, of course, the growth in revenue and profit, and also margin-wise, and it's the sixth consecutive quarter.

Gerteric Lindquist: Well, the overall headline is we believe it is a strong report that demonstrates both, of course, the growth in revenue and the profit and also margin-wise. It is the sixth consecutive quarter, so we might say it is a trend anymore rather than just a quarter coming alone. We are bold enough to suggest that, and we have given a few hints here on the slide that you have in front of you, and that is, of course, that it is less pronounced with the Swedish crown this time, and it is more like par with the Here we go. There we go. With the previous similar quarter or corresponding quarter. We also talk about tariffs. Of course, we have to do that, but they have been fended off fairly well, but for stoves. We are going to come back to that during the presentation.

Speaker #5: So, we might say it's a trend now rather than just a quarter standing alone. We're bold enough to suggest that, and we've given a few hints here on the slide that you have in front of you, and that is, of course, that it's less pronounced with the Swedish krona this time.

Gerteric Lindquist: We are bold enough to suggest that, and we have given a few hints here on the slide that you have in front of you, and that is, of course, that it is less pronounced with the Swedish crown this time, and it is more like par with the Here we go. There we go. With the previous similar quarter or corresponding quarter. We also talk about tariffs. Of course, we have to do that, but they have been fended off fairly well, but for stoves. We are going to come back to that during the presentation.

Speaker #5: It's more like on par with the "here we go, there we go," with the previous similar quarter—corresponding quarter. We also talk about tariffs—of course, we have to do that—but they've been fended off fairly well.

Speaker #5: But for stoves, we're going to come back to that during the presentation. And we also see a trend towards more renewable attitudes, both in Europe and also in North America.

Gerteric Lindquist: We see also a trend towards more renewable attitudes, both in Europe and also in North America. Also something that we are going to comment more on when we come back to the quarter per business area. Then, of course, we are very pleased to see that our assortment now is so well-received, and our presence is appreciated, of course, both national and also international. We keep the good cost control. Although we see that things are improving, it is very tempting to perhaps increase costs. We have to have that discipline. Also, we see that our investments in new facilities have given us a good productivity development. They are sitting there. We are just idling now to fulfill the demand that we believe going to come for the years to come now. Just a quick glance at the figures, you have them before, of course.

Speaker #5: Also, that's something we're going to comment more on when we come back to the quarter per business area. And then, of course, we're very pleased to see that our assortment now is so well received and our presence is appreciated, of course, both nationally and also internationally.

Speaker #5: And we keep good cost control, although we see that things are improving. It’s very tempting to perhaps increase costs, but we have to have that discipline.

Gerteric Lindquist: We keep the good cost control. Although we see that things are improving, it is very tempting to perhaps increase costs. We have to have that discipline. Also, we see that our investments in new facilities have given us a good productivity development. They are sitting there. We are just idling now to fulfill the demand that we believe going to come for the years to come now. Just a quick glance at the figures, you have them before, of course.

Speaker #5: And also, we see that our investments in new facilities have given us good productivity development. And they're sitting there. We are just idling now, ready to fulfill the demand that we believe is going to come in the years ahead.

Speaker #5: Just a quick glance at the figures—you've seen them before, of course. The growth there of 7.6% organically, that's really 8.7%, which is a healthy growth.

Gerteric Lindquist: The growth there of the 7.6. Organically, that is really 8.7, which is a healthy growth, and it is also the gross margin that is improving, which is pleasing to us, demonstrating that we are polishing our costs and keeping the cost discipline. The operating profit speaks for itself, but also that the operating margin has taken a considerable jump compared to the corresponding quarter last year. The graphs that we typically have, that is also indicating that we are now on a stronger path towards the revenue. We also see, I am sorry, the profit of the financial items, and that is, of course, a function of several factors, the sales improvement, also that we have a pretty good cash flow. We borrow a little bit less or quite a bit less than we did a year ago. So all those things are working in the right direction.

Speaker #5: And there's also the gross margin that's improving, which is pleasing to us, demonstrating that we are polishing our costs and keeping the cost discipline.

Speaker #5: And the operating profit speaks for itself, but also that your operating margin has taken a considerable jump compared to the corresponding quarter last year.

Gerteric Lindquist: compared to the corresponding quarter last year. The graphs that we typically have, that is also indicating that we are now on a stronger path towards the revenue. We also see, I am sorry, the profit of the financial items, and that is, of course, a function of several factors, the sales improvement, also that we have a pretty good cash flow. We borrow a little bit less or quite a bit less than we did a year ago. So all those things are working in the right direction.

Speaker #5: And the graphs that we typically have—that's also indicating that we are now on a stronger path towards the revenue, and we also see, I'm sorry, the profit after financial items.

Speaker #5: And that is, of course, a function of several factors. The sales improvement, and also that we have a pretty good cash flow. We borrow a little bit less, or quite a bit less, than we did a year ago.

Speaker #5: So, all those things are working in the right direction. If we talk about climate solutions, we've already mentioned that the market is solid when it comes to improvements.

Gerteric Lindquist: If we talk about NIBE Climate Solutions, we have already mentioned that the market is solid when it comes to improvements, and it is very pleasing to see that in Europe, both the single individual home market for heat pumps has increased, and that is particular for renovation, of course. The new construction is not so prosperous until now anyway, and also the commercial segment is expanding. In the US, as expected, the single-family home market for heat pumps went down when the subsidies were taken away. But nevertheless, the commercial segment is really outnumbering that. So overall, we still have a growth there. Also that we have these political uncertainties that we mentioned initially, but when it comes to looking at it in the US with the manufacturing there, they will really have an upper hand. So that is a good thing.

Speaker #5: And it's very pleasing to see that in Europe, both—

Speaker #1: With the single individual home market for heat pumps, it has increased, and that is particularly for renovation. Of course, the new construction is not.

Speaker #1: So , you know , the prosperous and until until now , anyway . And also the commercial segment is expanding in the US as expected , the single family home market for heat pumps went down when the subsidies were taken away , but nevertheless , the the commercial segment is really outnumbering that .

Gerteric Lindquist: In the US, as expected, the single-family home market for heat pumps went down when the subsidies were taken away. But nevertheless, the commercial segment is really outnumbering that. So overall, we still have a growth there. Also that we have these political uncertainties that we mentioned initially, but when it comes to looking at it in the US with the manufacturing there, they will really have an upper hand. So that is a good thing.

Speaker #1: So overall , we still have a growth there . And also that we have also these political uncertainties that we mentioned initially . But we .

Speaker #1: When it comes to looking at it in the US with the manufacturing there, they really have the upper hand. So that's a good thing.

Speaker #1: Of course, people are affected by the political situation, but I also think or believe, which is sad in a way perhaps, that people are getting used to these things, and eventually we have to continue to live.

Gerteric Lindquist: Of course, people are affected by the political situation, but I also think or believe, which is sad in a way perhaps, that people are getting used to these things, and eventually, we have to continue to live. We feel that there is an uptick in demand and in positivism in all three segments, really. That, I think, has to do that eventually you get fatigued listening to all these problems. You just have to continue living. Again, the product launches have been very efficient and successful, and that fills us with the satisfaction, naturally, that people are looking for better refrigerants and intelligent controls for energy optimization and so forth. We feel we are really on the right track. Investments, we have them, the larger ones behind us now. That is not something that we are going to start now.

Speaker #1: So we feel that there is an uptick in demand and in positivism in all three segments, really, and that, I think, has to do with that.

Speaker #1: Eventually, you get fatigued listening to all these problems. You just have to continue living, and again, the product launches have been very, very efficient.

Gerteric Lindquist: Again, the product launches have been very efficient and successful, and that fills us with the satisfaction, naturally, that people are looking for better refrigerants and intelligent controls for energy optimization and so forth. We feel we are really on the right track. Investments, we have them, the larger ones behind us now. That is not something that we are going to start now.

Speaker #1: And successful . And that fills us with the satisfaction , naturally , that people are looking for better refrigerants and intelligent controls for energy optimization and so forth .

Speaker #1: So we feel we are really on the right track and investments . We have them . The larger ones behind us now , that's not something that we are going to start now .

Speaker #1: They are installed, ready to take on the challenge, and very quickly, Hans is going to come back to more detailed figures when it comes to gross margin and such.

Gerteric Lindquist: They are installed, ready to take on the challenge. Very quickly, Hans is going to come back to more detailed figures when it comes to gross margin and such. It is important to note, though, that the real underlying growth here, if we take away the effects of the currency, is around 9%, and the operating margin is now up well into the spectrum, whatever we call it, or interval that we really aim for between 13% and 15%. Of course, now we have on a running basis 12.2%, so still a little bit to go, but that is quite a bit better than the corresponding period the previous year. Swinging over to Element, and there we really have had a positive Element, and that is particular for the semiconductor segment.

Speaker #1: But it's important to to note , though , that the real underlying growth here , if we take away the the effects of the currency is around 9% and the operating margin is now up well into the the spectrum , whatever we call it , or interval that we really aim for between 13 and and 15 .

Speaker #1: And of course , now we have on a on a running basis , 12.2 . So still a little bit to go , but that's quite , quite a bit better than the corresponding period the previous year , swinging over to element .

Gerteric Lindquist: Of course, now we have on a running basis 12.2%, so still a little bit to go, but that is quite a bit better than the corresponding period the previous year. Swinging over to Element, and there we really have had a positive Element, and that is particular for the semiconductor segment.

Speaker #1: And there we really have had a positive development . And that is particularly for the semiconductor segment . Everyone talks about the the segment , you know , AI and all that .

Gerteric Lindquist: Everyone talks about the segment, AI and all that, and here we are positioned so well in North America with our subsidiaries delivering components to those manufacturers that really stand behind the manufacturing of the chips themselves. They, of course, predict a steady growth in the future. Now we have gotten a sniff of that, and that is, of course, one of the major factors behind the growth. It is also that the HVAC market is certainly coming back, and that also has a positive effect on Element. However, of course, new construction, that is still slower in Europe and elsewhere. Of course, when construction is slower, that is dampening the whole mechanism in society. Construction drives the whole society. So that is when it comes to the home appliances and stuff like that is, of course, still limping along.

Speaker #1: And here we are, positioned so well in North America with our subsidiaries delivering components to those manufacturers that really stand behind the manufacturing of the chips themselves.

Speaker #1: And they , of course , predict a steady growth in the future . And now we have gotten a sniff of that . And that is , of course , one of the major factors behind the growth .

Speaker #1: But it's also that the Hvac market is certainly coming back . And that also has a positive effect on on element . However , of course , the new construction that is still a slower in Europe and elsewhere .

Gerteric Lindquist: It is also that the HVAC market is certainly coming back, and that also has a positive effect on Element. However, of course, new construction, that is still slower in Europe and elsewhere. Of course, when construction is slower, that is dampening the whole mechanism in society. Construction drives the whole society. So that is when it comes to the home appliances and stuff like that is, of course, still limping along.

Speaker #1: And of course , when construction is slower , that is dampening the whole mechanism in society . Construction drives the whole society . So that's when it comes to the home appliances and stuff like that .

Speaker #1: That is , of course still limping along And just to jumping over to the next two quick . No , here we are .

Gerteric Lindquist: Just jumping over to the next. Too quick. No, here we are. I am sorry. There we are. Again, the net sales, quite an improvement. Of course, now we see a growth of organically 11.6%, and even outnumbering Climate Solution. Then on top of that, we have a couple of percent of growth when it comes to acquisitions. Very pleasing to see that our operating margin is back within the interval again, 8.9% versus 6.6%. That is quite hefty improvement. We are very pleased to see that. Also, the gross margin has taken a good step, which Hans is going to come back to and explain. Stoves, I have said that earlier during interviews today that we would have liked to have this discussion or this press release or press conference 2 days later, because we do not really know what is happening on the tariff side in North America.

Speaker #1: I'm sorry . There we are again . The net sales . Quite an improvement . And of course now we see a growth of organically .

Speaker #1: 11.6, even outnumbering Climate Solutions. And then on top of that, we have a couple of percent of growth when it comes to acquisitions.

Speaker #1: And it's very pleasing to see that our operating margin is back within the interval. Again, 8.9% versus 6.6%. That's quite a hefty improvement, and we're very pleased to see that.

Speaker #1: And also the gross margin has taken a good step . Which horns going to come back to . And explain stoves . I've said that earlier during interviews today that we would have liked to have this discussion or this press release or press conference .

Gerteric Lindquist: Also, the gross margin has taken a good step, which Hans is going to come back to and explain. Stoves, I have said that earlier during interviews today that we would have liked to have this discussion or this press release or press conference 2 days later, because we do not really know what is happening on the tariff side in North America.

Speaker #1: You know , a two days later , because we don't really know what's happening on the on the tariff side in North America .

Speaker #1: That is , of course , very , very important that that is mitigated somehow . We have had , you know , those tariffs and .

Gerteric Lindquist: That is, of course, very, very important that that is mitigated somehow. We have had those tariffs since 2025, and then they were worsened in April this year. Of course, we hinted about that going to be difficult to mitigate that. We feel that in a little bit longer time, we will be able, but now we know that negotiations are going on between Canada and the US. As long as people are negotiating, there is still hope. Hopefully tonight, their time, they will have reached some kind of agreement. We hope that the tariffs will be eased off a little bit. We do not know. They certainly will not be hardened to any respect. So what we see now, what we describe is worst case, and we thought it was well thought out to present that to you.

Speaker #1: 25, and then they were worsened in April this year. And of course, we hinted about that, going to be a bit difficult to mitigate that.

Speaker #1: We feel that in a little bit longer time we will be able. But now we know that negotiations are going on between Canada and the US.

Speaker #1: And as long as people are negotiating , they're still hope . And hopefully at the at tonight , their time , they will have reached some kind of agreement .

Gerteric Lindquist: As long as people are negotiating, there is still hope. Hopefully tonight, their time, they will have reached some kind of agreement. We hope that the tariffs will be eased off a little bit. We do not know. They certainly will not be hardened to any respect. So what we see now, what we describe is worst case, and we thought it was well thought out to present that to you.

Speaker #1: And we are , we hope that the the tariffs will be eased off a little bit . We don't know . They certainly won't be hardened to any specs .

Speaker #1: So what we see now, what we described, is the worst case. And we thought it was, well, you know, well thought out to present that to you.

Speaker #1: But we hope that after negotiations tonight, they are going to come back with some better news. And despite headwinds, we dare to say that demand has started to improve a little bit.

Gerteric Lindquist: But we hope that after negotiations tonight, that we are going to come back with some better news. Despite headwinds, we dare to say that demand has started to improve a little bit, and we see signs in Europe of improvement in demand. Not so strong, but still, we had an organic growth around 2% during the quarter. It has been more stable in North America, I must say. Whether they are not so anxious as we are in Europe or what is behind that, we cannot really tell, but it seems like their market has been more stable altogether, both in Canada and the US. But it is very promising to see now that we believe that we have been down at the very bottom also on stoves.

Speaker #1: And we see signs in Europe of improvement in demand , not so strong , but still , we had an organic growth around the 2% during the quarter .

Speaker #1: It's been more stable in North America. When I say weather, they are not as anxious as we are in Europe, or what's behind that.

Gerteric Lindquist: Whether they are not so anxious as we are in Europe or what is behind that, we cannot really tell, but it seems like their market has been more stable altogether, both in Canada and the US. But it is very promising to see now that we believe that we have been down at the very bottom also on stoves.

Speaker #1: We can't really tell . But it seems like their market has been more stable altogether , both in Canada and in in the US , but it's very promising to see now that we believe that we've been down at the very bottom , also on stoves , and we .

Gerteric Lindquist: On the Q2, that is very pronounced, as we all know, the seasonal pattern for stoves, and we just hope that we are going to have a real comeback now during the coming six months or come, let us say, five months as of today, of course. So that is a little bit about the stove situation. Here we have the figures. The margin, of course, operating margin is still negative, but a considerable improvement from the previous quarter, corresponding year. So that is why we are fairly optimistic about changing this into a decent result. If the 25% tariffs would remain, it would be a bit more difficult to, of course, mitigate that in the immediate future. But we are fairly optimistic about looking after that. See what happens tonight. Just a few more pie charts. Excuse my language. Excuse my voice. Here we have the distribution of sales.

Speaker #1: In the second quarter, that's very pronounced. As we all know, there's a seasonal pattern for stoves. And we just hope that we're going to have a real comeback.

Speaker #1: Now during the coming six months or come , let's say , five months . As of today , of course . So that's a little bit about the the stove situation .

Speaker #1: And here we have the figures , the , the margin , of course , operating margin is still negative , but it's a considerable improvement from the previous the previous quarter , corresponding year .

Speaker #1: So that's why we are fairly optimistic about changing this into a, a decent result. If the 25% tariffs would remain, it would be a bit more difficult to.

Gerteric Lindquist: So that is why we are fairly optimistic about changing this into a decent result. If the 25% tariffs would remain, it would be a bit more difficult to, of course, mitigate that in the immediate future. But we are fairly optimistic about looking after that. See what happens tonight. Just a few more pie charts. Excuse my language. Excuse my voice. Here we have the distribution of sales.

Speaker #1: Of course, we will mitigate that in the immediate future. But we are fairly optimistic about looking after that. We'll see what happens tonight.

Speaker #1: Just a few more pie charts . Excuse my language , excuse my voice . Here we have the distribution of sales . Of course .

Gerteric Lindquist: Of course, now stoves has not been able to grow, so that is a very obvious dominance by the NIBE Climate Solutions and NIBE Element. When it comes to the operating profit, of course, that is now all taken care of by NIBE Climate Solutions and NIBE Element with 78% and 22%. But we hope to change that pie chart fairly quickly. I think with that is the last pie chart that I have. The Nordic countries, slightly under 20%, rest of Europe 45%, and North America just about 30%, and then Asia 7%, which is predominantly NIBE Element. Hans, I hope your voice is better than mine. I hand over to you.

Speaker #1: Now stoves has not been able to grow . So that's a very obvious dominance by the climate solution . And eBay element . And when it comes to the the the operating profit , of course , that is now all taken care of by climate solution and eBay element with the 78 and 22% .

Speaker #1: But we hope to change that pie chart fairly quickly . And I think with that , that is the last the pie chart that I have , the Nordic countries slightly under 20% and the rest of Europe 45 and North America just about 30 , and then Asia a 7% , which is predominantly element horns .

Speaker #1: I hope your voice is better than mine . I hand over to you . Thank you very much . Eric . And I hope you recover quickly .

Hans Backman: Thank you very much, Gerteric. I hope you recover quickly now for the question and

Speaker #1: Now for the for the question . And answer session . All right . Hello again from my side to everyone out there and and just like previous on previous calls , I will take you through the numbers a little bit more in detail .

Gerteric Lindquist: Sure

Hans Backman: answer session.

Hans Backman: All right. Hello again from my side to everyone out there. Just like on previous calls, I will take you through the numbers a little bit more in detail, of course, also the balance sheet, cash flow, and some key parameters. If we then again look at NIBE Climate Solutions here, as Gerteric said, we have seen a robust growth in this business area in both sales and profit in most markets, both on the residential side and the commercial side. The only exception really being the residential in the US, but which has not declined as much as we expected following the Trump administration's seizing of the tax credit. So they have actually done fairly well under these circumstances.

Speaker #1: And of course , also the balance sheet cash flow and some key parameters . If we then again , look at climate solutions here , I mean , as Eric said , we've seen a robust growth in this business area in both sales and profit in most markets .

Speaker #1: And both on the residential side and the commercial side . The only exception really being the residential in the US . But which has not declined as much as we expected following the Trump administration's , you know , seizing of the tax credit .

Hans Backman: The only exception really being the residential in the US, but which has not declined as much as we expected following the Trump administration's seizing of the tax credit. So they have actually done fairly well under these circumstances.

Speaker #1: So they've actually done fairly well under these circumstances. And with regards to the US, our local manufacturing footprint is of clear advantage over there because we virtually do not ship any products across any borders.

Hans Backman: With regards to the US, our local manufacturing footprint is of clear advantage over there, because we virtually do not ship any product across any borders there, meaning that tariffs within this business area is not much of an issue. So for that reason, we have neither had much of tariffs nor any refunds. It is the underlying business which we show here. Looking at the underlying business, as Gerteric mentioned, we saw a growth in the quarter of 9% cleaned from the currency effect, which by the way, is becoming less and less pronounced for every month that passes. Coming in at sales of SEK 7.3 billion, up from the SEK 6.8 billion, leading to an increase in the result of some 20%. If we would do the cleaning of the currency impact here, it is actually up to slightly more than 23% improvement in margin.

Speaker #1: There, meaning that tariffs within this business area are not much of an issue. So for that reason, we have neither had much in the way of tariff refunds.

Speaker #1: It's it's the underlying business which we show here . And looking at the underlying business , I mean , as Eric mentioned , we saw a growth in the quarter of 9% cleaned from the currency effect , which , by the way , is becoming less and less pronounced for every month that that passes .

Hans Backman: Looking at the underlying business, as Gerteric mentioned, we saw a growth in the quarter of 9% cleaned from the currency effect, which by the way, is becoming less and less pronounced for every month that passes. Coming in at sales of SEK 7.3 billion, up from the SEK 6.8 billion, leading to an increase in the result of some 20%. If we would do the cleaning of the currency impact here, it is actually up to slightly more than 23% improvement in margin.

Speaker #1: Coming in at sales of SEK 7.3 billion, up from SEK 6.8 billion, leading to an increase in the result of, you know, some 20%.

Speaker #1: And if we were to do the cleaning of the currency impact here, it’s actually up to slightly more than a 23% improvement in margin.

Speaker #1: And the reason for this is the improved gross margin , which comes naturally when we get more volumes into the factories . But it's also , of course , a consequence of the investments that we've made where we have more efficient , more modern and automated factories .

Hans Backman: The reason for this is the improved gross margin, which comes naturally when we get more volumes into the factories. It is also, of course, a consequence of the investments that we have made, where we have more efficient, more modern, and automated factories. Year to date, we are up some 9.6%, up from the SEK 12.8 billion in sales to more than SEK 13.5 billion. Also with a good improvement in gross margin because, of course, that took off already in Q1, leading to a result improvement of more than 18%. On a rolling 12-month basis, we are now at 13.6%, thanks to the 13.8% that we made in Q2, and carrying the 12.2% with us from the H1 of the year. All in all, we feel very confident and happy about the development in this business area.

Speaker #1: Year to date , we're up some 9.6% . Up from the 12.8 billion in sales to more than 13.5 . Also , with a good improvement in gross margin , because , of course , that that took off already in Q1 , leading to an to a result there of or result improvement of more than 18% .

Hans Backman: Also with a good improvement in gross margin because, of course, that took off already in Q1, leading to a result improvement of more than 18%. On a rolling 12-month basis, we are now at 13.6%, thanks to the 13.8% that we made in Q2, and carrying the 12.2% with us from the H1 of the year. All in all, we feel very confident and happy about the development in this business area.

Speaker #1: So on a rolling 12 month basis , we're now at 13.6% thanks to the 13.8 that we made in Q , Q two .

Speaker #1: And carrying the 12.2 with us from the first half of the year . So all in all , we feel very confident and happy about the development in this business area In terms of geographical distribution of sales , there have not been , you know , any large movements at all .

Hans Backman: In terms of geographical distribution of sales, there have not been any large movements at all. A small shift between Europe and the US, where Europe has taken a percentage point, you can say, because that is where we have seen a larger growth, and then the US just coming down to 23% from 24% a year ago. Moving on into Element. Also, as Gerteric mentioned, we have seen a phenomenal growth here in the Q2 of 11.6%. The Element business area has seen an overall strong growth, mainly driven by semiconductors very much in the US, but in general, and also the HVAC business, as well as an improvement coming from the electrification of the industry that is going on in general.

Speaker #1: A small shift between Europe and the US , where Europe has taken a percentage point . You can say , because that's where we've seen a larger growth .

Speaker #1: And then the US just coming down to 23% from 24% a year ago. Moving on into the element. Also, as Eric mentioned, we've seen phenomenal growth here in the second quarter of 11.6%.

Hans Backman: Also, as Gerteric mentioned, we have seen a phenomenal growth here in the Q2 of 11.6%. The Element business area has seen an overall strong growth, mainly driven by semiconductors very much in the US, but in general, and also the HVAC business, as well as an improvement coming from the electrification of the industry that is going on in general.

Speaker #1: And the element business area has seen an overall strong growth , mainly driven by semiconductors , very much in the US . But in general and also the Hvac business as well as an improvement or in coming from the electrification of the industry .

Speaker #1: That is going on in general. And this growth has been achieved despite, you know, the geopolitical uncertainty that's out there, leading to not very many houses or buildings being built.

Hans Backman: This growth has been achieved despite the geopolitical uncertainty that is out there, leading to not very many houses or buildings being built, and people are also careful when it comes to private spending, be it the white goods industry and so forth. The statistics and what you hear, so to speak, from central banks and elsewhere is that this slowdown in economy is coming to an end. We should hopefully here also see an improvement as we move forward. Also in this business area, the local footprint for us, manufacturing footprint that is clearly a strength. Neither here do we see any large impacts of any tariffs. Again, the numbers speak for themselves. Sales, as I mentioned, up by 11.6%, up from SEK 2.8 billion to more than SEK 3.1 billion in the quarter, leading to an improved profit of 50%.

Speaker #1: And people are also careful when it comes to private spending, be it, you know, in the white goods industry and so forth.

Speaker #1: But the statistics and what you hear , so to speak , from from central banks and elsewhere , is that the this slowed slowdown in economy is coming to an end .

Speaker #1: So we should hopefully here also see an improvement as we move forward . And also in this business area , the local footprint for us , manufacturing footprint that is is clearly a strength and neither here do we see any large impacts of of any tariffs .

Hans Backman: Also in this business area, the local footprint for us, manufacturing footprint that is clearly a strength. Neither here do we see any large impacts of any tariffs. Again, the numbers speak for themselves. Sales, as I mentioned, up by 11.6%, up from SEK 2.8 billion to more than SEK 3.1 billion in the quarter, leading to an improved profit of 50%.

Speaker #1: So again , the numbers speak for for themselves sales . As I mentioned up by 11.6% , up from 2.8 to more than 3.1 billion in the quarter , leading to an improved profit of , you know , 50% .

Speaker #1: Also, when you clean it for currency here, we've seen the gross margin improve by two percentage units, also coming from more volume in the factories.

Hans Backman: Also, when you clean it for currency. Here we have seen the gross margin improve by 2 percentage units, also coming from more volume in the factories. Of course, the large investment program that we have been carrying out over the last five years has been within all three business areas. Element has naturally benefited from that as well. Then landing the operating margin in the Q2 at close to 9%, well within our announced interval there. Year to date, we are up some 9% and with an operating margin of just below 8%. Rolling 12 months, we are at 7.7%, and have good hopes to, of course, improve this during the remainder of the year. Geographical distribution of sales within Element. Here we have had some movements in the sense that both North America and Europe have improved if you compare with a year ago.

Speaker #1: But of course, the large investment programme that we've been carrying out over the last five years has been within all three business areas.

Speaker #1: So element has naturally benefited from from that as well . Then landing the operating margin in the second quarter at close to 9% , well within our announced interval there and year to date , we're up some 9% .

Hans Backman: Year to date, we are up some 9% and with an operating margin of just below 8%. Rolling 12 months, we are at 7.7%, and have good hopes to, of course, improve this during the remainder of the year. Geographical distribution of sales within Element. Here we have had some movements in the sense that both North America and Europe have improved if you compare with a year ago.

Speaker #1: And with an operating margin of just below eight and rolling 1212 months , we're at the 7.7 . And have good hopes to , of course , improve this for during the remainder of the year Geographical distribution of sales within element here we've had some movements in the sense that both North America and Europe have improved .

Speaker #1: If you compare with . With a year ago . So things are clearly moving here in the right direction and in our very strong markets .

Hans Backman: Things are clearly moving here in the right direction and in our very strong markets. Nordics has kept its share in this respect. Stoves is, as Gerteric Lindquist mentioned, of course, still facing an overall challenging market. But in North America, it is actually fairly stable. It is again, these tariffs that causes some questions, of course, but the negotiations between the two countries are ongoing as we speak, and we interpret that as a positive sign. From a market point of view, we definitely think that we have been down at the bottom and are moving in the right direction. I think a very clear sign of that is the small but very important organic growth that we achieved in Q2 of 1.8%. We did come up from the 678 to the 686, and have also here been able to improve gross margin.

Speaker #1: The Nordics has kept kept its share in this respect Stoves is , as Eric mentioned , of course , still facing an overall challenging market .

Speaker #1: But in North America , it's actually fairly stable . It's again , these tariffs that causes some questions . Of course . But the negotiations between the two countries are ongoing as we speak .

Speaker #1: And we interpret that as a positive sign from a market point of view. We definitely think that we've been down at the bottom and are moving in the right direction.

Hans Backman: From a market point of view, we definitely think that we have been down at the bottom and are moving in the right direction. I think a very clear sign of that is the small but very important organic growth that we achieved in Q2 of 1.8%. We did come up from the 678 to the 686, and have also here been able to improve gross margin.

Speaker #1: And I think a very clear sign of that is the small but very important organic growth that we achieved in the second quarter of 1.8%.

Speaker #1: So we did come up from the 678 to the 686 . And have also here been able to improve gross margin and numerous actions have , of course , have been taken to fend off , you know , the impact of , of the weak market and the tariffs .

Hans Backman: Numerous actions have, of course, here been taken to fend off the impact of the weak market and the tariffs. I think we are very well-positioned for a further growth. The operating profit, which is a loss, but if you read the line, it says profit. It has been cut in half, which also is a very good sign for us. Year to date, we are basically on a plus-minus zero situation, a small profit in there, and expect to improve from there. On a 12-month rolling basis, we are at 4.3% and have said that we should aim to be somewhere between 6% and 8% for the full year. Also here, the geographical distribution of sales. The Nordic region has actually taken a slightly larger portion of this pie compared to a year ago.

Speaker #1: So I think we're very well positioned for a further growth . And the operating profit , which is a loss . But if you read the line , it says profit .

Speaker #1: I mean, it's been cut in half, which also is a very good sign for us. Year to date, we're basically in a plus-minus zero situation, with a small profit in there, and expect to improve from there.

Speaker #1: On a 12 month rolling basis . We're at 4.3% and have said that we should aim to be somewhere between 6 and 8 for the for the full year Also here , the geographical distribution of .

Hans Backman: On a 12-month rolling basis, we are at 4.3% and have said that we should aim to be somewhere between 6% and 8% for the full year. Also here, the geographical distribution of sales. The Nordic region has actually taken a slightly larger portion of this pie compared to a year ago.

Speaker #1: The Nordic region has actually taken a slightly larger portion of this pie compared to a year ago. North America has kept its portion.

Hans Backman: North America has kept its portion, whereas mainland Europe has been losing out a little, and that is where we have seen the strongest weaknesses over the last quarters, you can say, but where things are beginning to move again. Leaving the business areas and moving into the balance sheet. I will not dwell too much upon this. I think we can comment upon the non-financial current assets having increased from 16.2 at the end of the year up to 18.4. I would say that is a very natural trend for us. That is the working capital, the inventories that we build during H1 of the year in order to have our stocks filled with good product for the sale that takes place during H2 of the year. So it is all within our planned levels.

Speaker #1: Whereas mainland Europe has been a . Has been losing out a little . And that's where we've seen the . The strongest weaknesses over the over the last quarter .

Speaker #1: As you can say . But where things are beginning to to move again , leaving the business areas and moving into the balance sheet , I won't dwell too much upon this .

Speaker #1: I think we can comment upon the nonfinancial current assets having increased from 16.2 at the end of the year up to 18.4. I would say that is a very natural trend for us.

Hans Backman: I think we can comment upon the non-financial current assets having increased from 16.2 at the end of the year up to 18.4. I would say that is a very natural trend for us. That is the working capital, the inventories that we build during H1 of the year in order to have our stocks filled with good product for the sale that takes place during H2 of the year. So it is all within our planned levels.

Speaker #1: That is the working capital inventories that we build during the first half of the year in order to have our stocks filled with good products for the sale that takes place during the second half of the year.

Speaker #1: So it's all within our planned levels on the equity and liability side. The equity itself has increased by some SEK 2 billion compared to the beginning of this year.

Hans Backman: On the equity and liability side, the equity itself has increased by some SEK 2 billion compared to the beginning of this year. Long-term liabilities there have increased slightly, the long-term ones. We have issued a bond, and it was a very successful bond emission that we made. It was oversubscribed quite substantially, and we decided, given the good conditions that we got there, to simply take on board a little bit more bonds than we needed to replace, as a matter of fact. Very pleasing to see coming from the performance of the business areas and the group in total during H1, and not the least in Q2, is, of course, the cash flow. We have increased that by some 50% if you look at the quarter now compared to a year ago, from some SEK 950 million up to SEK 1.4 billion.

Speaker #1: Long term liabilities there have increased slightly . The long term ones we've made issued a bond , and it was a very successful bond emission that we made .

Speaker #1: It was oversubscribed quite substantially . And we decided , given the good conditions that we got there , to simply take on board a little bit more bonds than we needed to replace as a matter of fact Very pleasing to see from coming from the performance of the business areas and the group .

Hans Backman: Very pleasing to see coming from the performance of the business areas and the group in total during H1, and not the least in Q2, is, of course, the cash flow. We have increased that by some 50% if you look at the quarter now compared to a year ago, from some SEK 950 million up to SEK 1.4 billion.

Speaker #1: In total during the first half year , and not the least in the second quarter , is of course , the cash flow .

Speaker #1: We've increased that by some 50%. If we look at the quarter now compared to a year ago, from some 950 million up to 1.4 billion.

Speaker #1: And of course , we have had a slightly negative effect from the change in working capital . But again , that just what I mentioned , that's building the inventory and then the investments in our current operations has also been reduced quite substantially , down from 480 there to 330 , roughly , meeting this large investment programme that we have been carrying out has come to an end , and we're more moving into normal maintenance investments .

Hans Backman: We have had a slightly negative effect from the change in working capital. That is just what I mentioned, that is building the inventory. The investments in our current operations has also been reduced quite substantially, down from SEK 480 million there to SEK 330 million, roughly. This large investment program that we have been carrying out has come to an end, and we are more moving into normal maintenance investments. All in all, an operating cash flow in Q2 of close to SEK 800 million, up from -SEK 100 million a year ago. The remaining positions there are more of a mathematical character, you can say, financing activities, for example, being the dividends that we paid out.

Speaker #1: So, all in all, an operating cash flow in the second quarter of close to SEK 800 million, up from, you know, minus SEK 100 million a year ago.

Hans Backman: All in all, an operating cash flow in Q2 of close to SEK 800 million, up from -SEK 100 million a year ago. The remaining positions there are more of a mathematical character, you can say, financing activities, for example, being the dividends that we paid out.

Speaker #1: And then the remaining positions , there are more of mathematical character , you can say , financing activities , for example , being the dividends that we paid out looking at the cash flow year to date , it's actually increased by some 65% , which is a sign of of the increased sales and profit from , from our business areas and working capital roughly on the same level as last year .

Hans Backman: Looking at the cash flow year to date, it is actually increased by some 65%, which is a sign of the increased sales and profit from our business areas. Working capital roughly on the same level as last year, but then investments being cut in half. I think it is a very good cash flow, and we will come back to the net debt on this page instead, because that is now on 2.7. It is the same number as we had last quarter. If you do the decimals again, it is actually an improvement. It is 2.65. Going forward during this year, we are quite convinced we will bring this down roughly to the 2.0, 2.1 line, hovering around there. This is a key parameter, of course, that the banks look at, investors look at, and so forth, and we keep it very much under control.

Speaker #1: But then investments being cut in half . So I think it's a it's a very good cash flow . And we will come back to , to the net debt on this page instead , because that is now on 2.7 .

Speaker #1: It's the same number as we had last quarter. If you do the decimals again, it's actually an improvement. It's 2.65.

Hans Backman: It is the same number as we had last quarter. If you do the decimals again, it is actually an improvement. It is 2.65. Going forward during this year, we are quite convinced we will bring this down roughly to the 2.0, 2.1 line, hovering around there. This is a key parameter, of course, that the banks look at, investors look at, and so forth, and we keep it very much under control.

Speaker #1: But going forward during this year, we are quite convinced we will bring this down to roughly the 2.0 to 2.1 line, hovering around there.

Speaker #1: And this is a key parameter , of course , that the banks look at , investors look at and so forth . And we keep it very much under control .

Speaker #1: We're not worried about this at all. It follows exactly our path. The only challenge was back in '23 when we made this very large acquisition at the peak of the cycle.

Hans Backman: We are not worried about this at all. It follows exactly our path. The only challenge was back in 2023, when we made this very large acquisition at the peak of the cycle, and then the market turned sour. But ever since, things have normalized. The development here has been exactly according to our plans, so we are quite pleased with that. Interest-bearing liabilities as a portion of equity have also continued to decrease at the same time as our equity assets ratio has increased. So we feel that we are quite stable and also well-positioned for both an organic and a growth through acquisitions going forward. Working capital, a slight improvement there from a year ago. It is natural, again, that it is a little bit higher during this part of the year, because we need to fill our stocks for the sale, which I just mentioned.

Speaker #1: And then the market turned sour . But ever since , things have normalized , the development here has been exactly according to to our plan .

Speaker #1: So we're we're quite pleased with that . Interest bearing liabilities as a portion of equity have also continued to decrease . At the same time as our equity assets ratio has increased .

Speaker #1: So we feel that we are quite stable, and also well positioned for both organic growth and growth through acquisitions going forward. Working capital—a slight improvement there from a year ago.

Hans Backman: So we feel that we are quite stable and also well-positioned for both an organic and a growth through acquisitions going forward. Working capital, a slight improvement there from a year ago. It is natural, again, that it is a little bit higher during this part of the year, because we need to fill our stocks for the sale, which I just mentioned.

Speaker #1: It's natural , again , that it is a little bit higher during this part of the year because we need to fill our stocks for the for the sale , which I just mentioned And now last slide here before we open up for the Q&A , return on capital employed return on equity .

Hans Backman: Now, a last slide here before we open up for the Q&A. Return on capital employed, return on equity, they are, of course, not at the targeted level yet, but they are improving step by step, as they were also last quarter. So they are on the right way, and of course, the result, again, of this improved sales and profitability situation that we have. The equity per share has also increased. The closing day share price, we will know at the end of the day what that will be.

Speaker #1: They are, of course, not at the targeted level yet, but they are improving step by step, as they were also last quarter.

Speaker #1: So they are on the on the right way . And of course , the result again , of this improved sales and profitability situation that we have and the equity share equity per share has also increased And the closing share price , we will know at the end of the day what that will be right .

Gerteric Lindquist: That is right.

Speaker #1: I won't comment on that any further. But with that, I'm ready for questions. I don't know if you have anything to add.

Hans Backman: Won't comment that any further.

Hans Backman: Won't comment that any further. But with that, I am ready for questions. I do not know if you have anything to add, Gerteric.

Hans Backman: But with that, I am ready for questions. I do not know if you have anything to add, Gerteric.

Speaker #1: Well , I've been trying to cure my voice , you know , my vocal cords . I . We should be ready . So please , you shoot now

Gerteric Lindquist: Well, I have been trying to cure my voice, or my vocal cords. We should be ready, so please, you shoot now.

Speaker #2: If you wish to ask a question, please dial the pound key followed by 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial the pound key on your telephone keypad.

Operator 2: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Christian Hinderaker from Goldman Sachs. Please go ahead.

Operator: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Christian Hinderaker from Goldman Sachs. Please go ahead.

Speaker #2: The next question comes from Christian Hinderaker from Goldman Sachs. Please go ahead.

Speaker #3: Good morning . Good morning , Hans , and thanks for the presentation . I want to start on the on the working capital .

Christian Hinderaker: Good morning, Gerteric. Good morning, Hans, and thanks for the presentation. I want to start on the working capital, Hans. You mentioned, obviously it is up year-on-year. I think inventory is actually broadly flat in that sense, but you had more than 700 million LSK in both receivables and the liabilities line. If we look at the non-interest-bearing current liabilities, 8.6 billion, including provisions, that is up quite considerably quarter-on-quarter and was well ahead of consensus. I guess two parts to my question here is first, what drove that increase, and are those drivers structural? Second, what is actually in this number? Because when I look at the annual report, I think only a third of the line is coming from trade payables. I think you have some contributions in here from acquisitions. Just interested in the splits, if you can share those.

Speaker #3: Hans, you mentioned obviously it's up year on year. I think inventory is actually broadly flat in that sense. But you had more than a SEK 700 million lift in both receivables and in the liabilities line.

Speaker #3: If we look at the non-interest bearing current liabilities, SEK 8.6 billion, including provisions, that's up quite considerably quarter on quarter and was well ahead of consensus.

Speaker #3: I guess there are two parts to my question here. First, what drove that increase, and are those drivers structural? And then second, what's actually in this number?

Christian Hinderaker: Second, what is actually in this number? Because when I look at the annual report, I think only a third of the line is coming from trade payables. I think you have some contributions in here from acquisitions. Just interested in the splits, if you can share those.

Speaker #3: Because when I look at the annual report, I think only a third of the line is coming from trade payables. I think you have some contributions in here from acquisitions.

Speaker #3: Just interested in the splits. If you can share those.

Speaker #1: Well , there are there are no major or how shall I put it , one off effects in these numbers . Really the effect from acquisitions is fairly limited because we have not made any larger acquisitions in this respect .

Hans Backman: Well, there are no major, or how shall I put it, one-off effects in these numbers, really. The effect from acquisitions is fairly limited, because we have not made any larger acquisitions in this respect. We have some delay when it comes to the invoicing or the effect from receivables. We saw that quite clearly during last year as well, where they kick in more during the second half of the year. We have a tendency here of invoicing very much at the end of every quarter. Very much in the third and especially in the fourth week, which has an effect, and this is especially pronounced, I would say, when we come to a quarter as well. The inventory we have been building, actually, we should even possibly be building even more to meet the demand out there.

Speaker #1: We have some delay when it comes to the invoicing or the effect from receivables, and we saw that quite clearly during last year as well, where they kick in more during the second half of the year.

Speaker #1: We have a tendency here of invoicing very much at the end of every quarter, very much in the third, and especially in the fourth week, which has an effect.

Hans Backman: Very much in the third and especially in the fourth week, which has an effect, and this is especially pronounced, I would say, when we come to a quarter as well. The inventory we have been building, actually, we should even possibly be building even more to meet the demand out there. The payables and the receivables, which are the major things in there, have developed quite normally. We can dig into the numbers in a separate call if you have remaining questions.

Speaker #1: And this is especially pronounced , I would say , when we come to the to a quarter as well . So I mean , the inventory we've been building , actually , we should even possibly be building even more to , to meet the demand out there .

Speaker #1: But the payables and receivables , which are the major things in there , have developed quite normally , but we can dig into to the numbers in a separate call .

Hans Backman: The payables and the receivables, which are the major things in there, have developed quite normally. We can dig into the numbers in a separate call if you have remaining questions.

Speaker #1: If you have remaining questions.

Speaker #3: Yeah . Thank you . I appreciate that color . My second one is on M&A . You have a through cycle growth target that includes the ten percentage point contribution from acquisitions .

Christian Hinderaker: Yeah. Thank you, Hans. I appreciate the color. My second one is on M&A. You have the through-cycle growth target that includes the 10 percentage point contribution from acquisitions. Obviously, the softer end markets in recent years, growth from M&As understandably been a bit more modest since 2023. But you have acquired Beltrami in the quarter, and the release talks about aims to be more proactive on acquisitions. I guess, just interested in is Nibe still targeting M&A of that scale, mid-single digit, double-digit percent of sales? What are the technologies or segments, really, that you are seeing as a particular focus in your pipeline?

Speaker #3: Obviously, the softer end markets in recent years and growth from M&A has understandably been a bit more modest since 2023. But you've acquired Beltrami in the quarter, and the release talks about aiming to be more proactive on acquisitions.

Christian Hinderaker: But you have acquired Beltrami in the quarter, and the release talks about aims to be more proactive on acquisitions. I guess, just interested in is Nibe still targeting M&A of that scale, mid-single digit, double-digit percent of sales? What are the technologies or segments, really, that you are seeing as a particular focus in your pipeline?

Speaker #3: I guess I'm just interested in, is Nibe still targeting M&A of that scale—mid-single digit to double-digit percentage of sales? And then, what are the technologies or segments that you're really seeing as a particular focus in your pipeline?

Speaker #1: Well , of course we are going to go back to acquisitions , but as they say , you know , once bitten , twice shy and horns mentioned that , of course , when you acquire a company , there's relatively large at the peak of a cycle .

Gerteric Lindquist: Well, of course, we are going to go back to acquisitions. As they say, once bit then twice shy, and Hans mentioned that, of course, when you acquire a company that is relatively large at the peak of a cycle, and then the downturn comes, and we have, of course, been very cautious not to overburden the balance sheet since then. I think that the overheated market 2023, 2022, 2023, particularly in NIBE Climate Solutions, has also taught us a lesson that we have to be cautious when we aim for larger acquisitions. Hopefully, also the market has been taught that lesson. We are definitely back to, again, evaluating acquisitions of the larger kinds than the Italian ones you referred to.

Speaker #1: And then the downturn comes and we have , of course , been very , very cautious , not to overburden the balance sheet since then .

Speaker #1: I think that the overheated market , 23 , 22 , 23 particularly in climate solution , has also taught us a lesson that we have to be cautious when we aim for larger acquisitions .

Gerteric Lindquist: I think that the overheated market 2023, 2022, 2023, particularly in NIBE Climate Solutions, has also taught us a lesson that we have to be cautious when we aim for larger acquisitions. Hopefully, also the market has been taught that lesson. We are definitely back to, again, evaluating acquisitions of the larger kinds than the Italian ones you referred to.

Speaker #1: Hopefully also , the market has been taught that lesson . So we are definitely back to again evaluating acquisitions of larger kinds than the the the Italian ones .

Speaker #1: You refer to , not to diminish that one to any point , but certainly now with Horn's projections here of the the important , you know , ratio coming down to in the vicinity perhaps of two or so we are certainly , you know , positioned to take on large acquisitions , but without being , of course , two , the risky minded .

Gerteric Lindquist: Not to diminish that one to any point, but certainly now with Hans' projections here of the important ratio coming down to in the vicinity, perhaps, of 2 or so, we are certainly positioned to take on large acquisitions, but without being, of course, too risky minded. We are back on track when it comes to evaluating acquisitions of larger kinds again. I hope I answered your question partly, anyway.

Speaker #1: So we are back on track when it comes to evaluating acquisitions of larger kinds again. I hope I answered your question, at least partly.

Speaker #3: And is there any sort of regional technology kind of focus there, or...

Christian Hinderaker: Is there any sort of regional technology kind of focus there, or?

Speaker #1: Well , I think that there are no specific regions , but of course we are fairly well set in the Nordics . I mean , that's very important to note .

Gerteric Lindquist: Well, I think that there are no specific regions, but of course, we are fairly well set in the Nordics. That's very important to note. You could possibly buy one or two companies, but the growth's going to come from mainland Europe and North America for all three business areas. That's as clear as I can be there, I think.

Speaker #1: I mean, we could possibly buy one or two companies, but the growth is going to come from mainland Europe and North America for all three business areas.

Speaker #1: That's as clear as I can be there, I think.

Speaker #3: Answered thank you

Christian Hinderaker: Understood. Thank you.

Gerteric Lindquist: Yep. Mm-hmm.

Speaker #2: The next question comes from Carl Boqvist from ABG Sundal Collier. Please go ahead.

Operator 2: The next question comes from Karl Bokvist from ABG Sundal Collier. Please go ahead.

Operator: The next question comes from Karl Bokvist from ABG Sundal Collier. Please go ahead.

Speaker #4: Yes, thank you and good morning. My first one is just on climate solutions here, and we think about both what we see happening in the market.

Karl Bokvist: Yes, thank you and good morning. My first one is just on NIBE Climate Solutions here, and we think about both what we see happening in the market. I am specifically talking about heat pump volumes here. Of course, that is not all of the NIBE Climate Solutions division. But now when we come into the H2 here, and we have had organic growth of, well, for the H1, close to 10%. You also should have, and to your guidance here about the stronger H2 than H1, I am just a bit curious about how you would expect kind of the seasonality to help you, given that all else equal, this should also support a bit of an acceleration in your year-over-year figures.

Speaker #4: And I'm specifically talking about the heat pump volumes here . Of course , that's not all of the climate solutions division , but now when we come into the second half here and we've had organic growth of well , for the first half , close to to 10% , you also should have and to your guidance here about the stronger second half than first half .

Karl Bokvist: You also should have, and to your guidance here about the stronger H2 than H1, I am just a bit curious about how you would expect kind of the seasonality to help you, given that all else equal, this should also support a bit of an acceleration in your year-over-year figures.

Speaker #4: I'm just a bit curious about how you would expect kind of a seasonality to to help you , given that all else equal , this should also support a bit of an acceleration in your year over year figures

Speaker #1: Well , I mean , it's perhaps a very naive answer in a way that this is anality . You can always argue and reason around it , but it seems like heating equipment has more of a season towards the second half of the year .

Gerteric Lindquist: Well, it is perhaps a very naive answer in a way, that the seasonality, you can always argue and reason around it, but it seems like heating equipment has more of a season towards the H2 of the year, and that comes for heat pumps, that comes for stoves. To a lesser degree, of course, on the NIBE Element side, where we supply so many categories of the industries. So I think it is an old established truth that equipment that we supply has typically its more major season during the H2 of the year, and it is very pronounced for stoves, of course. Whether that is intelligent or not, you can always argue, but you like to have your stove in for Christmas, whether you live in Sweden or whether you live in France or North America. It seems like when you have renovations going on, now comes the season.

Speaker #1: And that comes for heat pumps . That comes for stoves to a lesser degree . Of course , on the on the element side , where we supply so many categories of industries , I think it's an old or established truth that equipment that we supply has typically it's more major season .

Gerteric Lindquist: So I think it is an old established truth that equipment that we supply has typically its more major season during the H2 of the year, and it is very pronounced for stoves, of course. Whether that is intelligent or not, you can always argue, but you like to have your stove in for Christmas, whether you live in Sweden or whether you live in France or North America. It seems like when you have renovations going on, now comes the season.

Speaker #1: During the second half of the year , and it's very pronounced for stoves . Of course , whether that is in , you know , intelligent enough or not , you can always argue , but you like to have your stove in for Christmas , whether you live in Sweden or whether you live in France or in North America .

Speaker #1: And it seems like when you have renovation renovations going on . So now comes the season . Could be , of course , a little bit of a difference when it comes to clean air conditioning , where you like to install and in the spring .

Gerteric Lindquist: Could be, of course, a little bit of a difference when it comes to air conditioning that you like to install in the spring, and that is more pronounced on the south or the Mediterranean market, in Italy, for instance. So it is more a tradition than anything else. So we do not foresee that that pattern will go away. How much that is going to influence the whole thing? Well, I think we have to look at the figures prior to the war in Ukraine and the pandemic, where we had more of a seasonality of a certain kind.

Speaker #1: And that is more pronounced on the on the south or the Mediterranean market in Italy , for instance . So it's , it's more of a tradition than anything else .

Speaker #1: So we don't we don't foresee that that pattern will , you know , go away . How much that going to influence the whole thing ?

Speaker #1: Well , I think we have to look at the figures prior to the the war in Ukraine and the pandemic , where we had more of a of a seasonality of a certain kind

Speaker #4: Understood . And , and I'll limit myself to two questions . So the second one is just on also on climate solutions here .

Karl Bokvist: Understood.

Gerteric Lindquist: All right.

Karl Bokvist: I will limit myself to two questions. The second one is just also on NIBE Climate Solutions here. When we think about the last four quarters, really, the increase in operating margins have to a full degree, been driven by higher gross margins. So, of course, you get the benefit, as you talked about, from more volumes in your factories and so on. As we now look into the H2 and think about your margin range guidance and so on, should it still be expected that if we fast-forward to end of year, that it will have been driven by a continued increase in your gross margins rather than efficiency on the SG&A and R&D line, for example?

Speaker #4: But when we think about last four quarters , really the increase in operating margins have have to well , almost be well to a full degree , been driven by higher gross margins .

Speaker #4: So of course , you , you get the benefit , as you talked about from from more volumes in your factories and so on .

Speaker #4: And as we now look into the second half and think about your your margin range guidance and so on , should it still be expected that if we fast forward to the end of the year , that it will have been driven , driven by a continued increase in your gross margins rather than efficiency on the S , D , A and R&D line .

Karl Bokvist: As we now look into the H2 and think about your margin range guidance and so on, should it still be expected that if we fast-forward to end of year, that it will have been driven by a continued increase in your gross margins rather than efficiency on the SG&A and R&D line, for example?

Speaker #4: For example

Speaker #1: Well , I think that overall I think we we are through the the streamlining that we went through . 24 . So that is more to monitor that there won't be any major additional savings on that .

Gerteric Lindquist: Well, I think that overall, I think we are through the streamlining that we went through 2024, so that is more to monitor that. That will not be any major additional savings of that. Just trying to keep what we have achieved now. So that is one thing. Of course, productivity wise, as volume now will increase as we predict, of course, the productivity is going to be more pronounced. So that is the major things, of course, when it comes to gross margin. I do not think that we can cut down any further on sales and those activities. I think they have to tag along with the growth because we are utilizing our sales resources very, very, shall I say, to the maximum right now.

Speaker #1: Just trying to keep what we have achieved now . So that is one thing . And of course , productivity wise , s volume now will increase as we predict .

Speaker #1: Of course , the productivity is going to be more pronounced . So that is the major things . Of course , when it comes to gross margin , the I don't think that we can cut down any further on sales and and those activities .

Gerteric Lindquist: So that is the major things, of course, when it comes to gross margin. I do not think that we can cut down any further on sales and those activities. I think they have to tag along with the growth because we are utilizing our sales resources very, very, shall I say, to the maximum right now.

Speaker #1: I think they have to tag along with the growth because we are utilizing our sales resources very , very , should I say to the maximum right now .

Speaker #4: Understood .

Karl Bokvist: Understood. That is clear.

Speaker #1: Your question .

Gerteric Lindquist: If that answers your question in part. Mm-hmm.

Speaker #4: Yes, absolutely. Thank you for that.

Karl Bokvist: Yes, absolutely. Thank you for that.

Speaker #2: The next question comes from Daniel Kagenori from Morgan Stanley. Please go ahead.

Operator 2: The next question comes from Daniel Khajenouri from Morgan Stanley. Please go ahead.

Operator: The next question comes from Daniel Khajenouri from Morgan Stanley. Please go ahead.

Speaker #5: Good morning gentlemen . Thank you for taking my questions . I have two , and I'll take them one at a time if .

Daniel Khajenouri: Good morning, gentlemen. Thank you for taking my questions. I have two, and I will take them one at a time if okay. I wanted to start with the NIBE Climate Solutions segment. Organic growth was 9%, but if I reverse out the FX benefit in Europe, growth is behind peers and market indicators, and it has decelerated sequentially. I do appreciate this is a decentralized business, but it would be useful to get some color about the underlying top-line trends, where you are seeing growth by product category, and just be useful to comment on growth versus peers here.

Speaker #5: Okay . I wanted to start with the climate solutions segment's organic growth was 9% . But if I reverse out the FX benefit in Europe , if it's behind peers and market indicators , and it has decelerated sequentially , I do appreciate this is a decentralized business , but it'd be useful to get some color about the underlying top line trends where you're seeing growth by product category and just be useful to comment on growth versus peers here .

Speaker #1: Yeah . Well , we take Europe . We also mentioned in the report , you know , we have fairly large on water heaters .

Gerteric Lindquist: Well, when we take Europe, we also mentioned in report, we are fairly large on water heaters. The fundamental idea years ago when we started to acquire was to acquire companies selling water heaters and then couple that with the heat pumps produced in those days here in Mariestad in Sweden. So of course, water heaters today, they do not have any growth, a very modest one. It is more for replacement, and for some reason, it is rather replaced in several instances by a heat pump for just tap water. And also district heating that we have invested in, and that is typically a Nordic phenomena, that is also fairly flat. So it is the heat pumps in Europe that is driving the growth.

Speaker #1: I mean, the fundamental idea years ago, when we started to acquire, was to acquire companies selling water heaters, and then couple that with heat pumps produced in those days here on the market in Sweden.

Speaker #1: So of course water heaters today , they don't have any growth . They're very modest . One it's more of a replacement . And reason it's rather replaced in several instances by a heat pump for just tap water .

Gerteric Lindquist: It is more for replacement, and for some reason, it is rather replaced in several instances by a heat pump for just tap water. And also district heating that we have invested in, and that is typically a Nordic phenomena, that is also fairly flat. So it is the heat pumps in Europe that is driving the growth.

Speaker #1: And also district heating that we have invested in. And that's typically a Nordic phenomenon that is also fairly flat. So it's the heat pumps in Europe that are driving the growth.

Speaker #1: And what's pleasing to see is also that the HVAC commercial segment is improving considerably in Europe. And that's something that we are looking at with, you know, very focused attention because we believe that there's a lot of things to do there.

Gerteric Lindquist: And what's pleasing to see is also that the HVAC commercial segment is improving considerably in Europe, and that's something that we are looking at with very focused, because we believe that there's a lot of things to do there, saving energy, adding air quality to offices, hospitals, schools. That has been, I shouldn't say, hasn't been forgotten, but compared to individual homes, it's on a lower level. So that is to come, very pleasing. In North America, the drive there is, of course, on the commercial side, and that is naturally ventilation, cooling, and also heating, particularly on the commercial side. On the individual single home side, there's been a downturn, as we've explained a couple of times now, mainly due to the subsidies, the tax subsidies taken away.

Speaker #1: Saving energy , adding air quality to offices , hospitals , schools . That has been , I shouldn't say hasn't been forgotten , but compared to individual homes , it's on a on a lower level .

Speaker #1: So that is to come very pleasing in North America . That the the drive there is , of course , on a commercial side and that is naturally ventilation , cooling , and also heating , particularly on the commercial side , on the individuals single home side , there's been a downturn as we've explained a couple of times now , mainly due to the the subsidies or the tax tax subsidies taken away .

Gerteric Lindquist: So that is to come, very pleasing. In North America, the drive there is, of course, on the commercial side, and that is naturally ventilation, cooling, and also heating, particularly on the commercial side. On the individual single home side, there's been a downturn, as we've explained a couple of times now, mainly due to the subsidies, the tax subsidies taken away.

Speaker #1: But we also see there that the downfall is not as big as we would have anticipated. Hopefully, this gives us a signal that, also there, the understanding is now coming.

Gerteric Lindquist: But we also see there that the downfall is not as big as we would have anticipated, hopefully giving us a signal that also there, the understanding is now coming. You have to heat and ventilate and cool your home in a different fashion. Hope I answered your question there, the first one.

Speaker #1: You have to heat and ventilate and and cool your home in a different fashion . I hope I answered your question there . The first one .

Speaker #5: Yeah , that was very useful . Thank you . And my second question is on the cost and margin , because in my view , this is the key positive surprise for investors .

Daniel Khajenouri: Yeah, that was very useful. Thank you. My second question is on the cost and margin, because in my view, this is the key positive surprise for investors. But if we exclude operational leverage, could you maybe give us a little bit more detail what drove the better cost performance? And it would also be very useful to understand if you see any cost inflation coming down the supply chain, looking into the rest of the year. Thank you.

Speaker #5: But if we exclude operational leverage, could you maybe give us a little bit more detail on what drove the better cost performance?

Speaker #5: And it would also be very useful to understand if you see any cost inflation coming down the supply chain, looking into the rest of the year.

Speaker #5: Thank you .

Speaker #1: I think that's all manufacturers, they are looking at the inflation when the products are coming in. And I think that is very important for us to do everything, our utmost, to hinder that.

Gerteric Lindquist: I think that all manufacturers, they are looking at the inflation when their product's coming in, and I think that is very important for us to do everything, our utmost, to hinder that. We have, of course, very ambitious savings programs going on, where you together with manufacturers or our suppliers, do it in a different way, where you say, "Well, if we promise you a certain volume over a number of years, you also have to come down in price, but we also allow you to modify the design." Not only a brutal price cutting, but also designing the product in a different way for us to benefit the ready-made product at a lower cost. So that's going on parallel with guarding off with the price increases that everyone wants to have now.

Speaker #1: We have , of course , a very ambitious savings programs going on where you , together with manufacturers or suppliers , you know , do it in a different way where you say , well , if we promise you a certain volume over a number of years , you also have to come down in price .

Speaker #1: But we also allow you to modify the design , not only a brutal , you know , saying price cutting , but also designing the products in a different way for us to benefit that the ready made product at a lower cost .

Gerteric Lindquist: Not only a brutal price cutting, but also designing the product in a different way for us to benefit the ready-made product at a lower cost. So that's going on parallel with guarding off with the price increases that everyone wants to have now. I think we have a fairly good defense mechanism short term, but we also have a longer term defense mechanism where we really work together with our suppliers to lower the cost in a more constructive, civilized way, if I may call it.

Speaker #1: So that's going on in parallel with the guarding of, or with, the price increases that everyone wants to have now. So I think we have a fairly good defense mechanism short term, but we also have a longer-term defense mechanism, where we really work together with our suppliers to lower the cost in a more constructive, civilized way.

Gerteric Lindquist: I think we have a fairly good defense mechanism short term, but we also have a longer term defense mechanism where we really work together with our suppliers to lower the cost in a more constructive, civilized way, if I may call it.

Speaker #1: If we may call it. I hope I answered, yeah.

Daniel Khajenouri: Okay. Thank you.

Gerteric Lindquist: I hope I answered. Yeah.

Speaker #2: The next question comes from Anders Akerblom from Nordia. Please go ahead.

Operator 2: The next question comes from Anders Åkerblom from Nordea. Please go ahead.

Operator: The next question comes from Anders Åkerblom from Nordea. Please go ahead.

Speaker #6: Yeah . Hello . Thanks for the presentation and for taking my questions . So I , I , I wanted to follow up again on , on climate .

Anders Åkerblom: Yeah. Hello. Thanks for the presentation and for taking my question. I wanted to follow up again on climate. You've been through sort of the automation, sort of operating leverage uplift, but I was wondering a bit on sort of the pricing side. How do you see, sort of I guess, pricing potential in the current environment? You raised prices quite a bit a while back, but how do you see sort of that potential developing?

Speaker #6: You've , you've been through sort of the automation sort of operating leverage , uplift , but I was wondering a bit on sort of the pricing side , how do you see sort of , I guess , pricing potential in the current environment ?

Speaker #6: You raise prices quite a bit . The while back . But but how do you see sort of that , that potential developing

Speaker #1: Now , I think that as inflation has come down , as interest rates have come down , it's it's not that much of a maneuvering room for price increases .

Gerteric Lindquist: I think that as inflation has come down, as interest rates have come down, it's not that much of a maneuvering room for price increases. There might be room for smaller ones, but they can't be compared at all to the price increase we had just some 36 months ago, even 30 months ago. So that's come to a totally different scenario. Of course, that is balanced out with a better volume. I think they are communicating vessels. You cannot continue to increase prices when inflation is fairly low, at least here in Europe. Of course, it's not so positive to hear from one point of view that the interest rate's going to go up, but also an indication that the market is coming back, which we feel. I don't know whether I answered your question fully, but that's how we reason.

Speaker #1: There might be a room for smaller ones , but I mean , there can't be compared at all to the price increase . We had just , you know , some 36 months ago , even 30 months ago .

Speaker #1: So that's that's come to a totally different scenario . And of course , that is balanced out with , with a better volume .

Gerteric Lindquist: Of course, that is balanced out with a better volume. I think they are communicating vessels. You cannot continue to increase prices when inflation is fairly low, at least here in Europe. Of course, it's not so positive to hear from one point of view that the interest rate's going to go up, but also an indication that the market is coming back, which we feel. I don't know whether I answered your question fully, but that's how we reason.

Speaker #1: So I think that's a , there are communicating vessels . You cannot continue to increase prices when inflation is fairly low , at least here in Europe .

Speaker #1: And of course, it's not so positive to hear from one point of view that the interest rate is going to go up.

Speaker #1: But it's also an indication that the market is coming back, and that's what we feel. So, I don't know whether I answered your question fully, but that's how we reason.

Anders Åkerblom: No, you did.

Speaker #1: It's difficult to impose any larger price increases. We work together with them—yeah, the suppliers.

Gerteric Lindquist: Difficult to import any larger price increases, work together with.

Anders Åkerblom: Yep

Gerteric Lindquist: Yeah, suppliers.

Speaker #6: Yeah . No , that makes sense . And I , yeah . Thank you . And I guess the sort of second question that sort of piggybacks a bit on that .

Anders Åkerblom: Yep.

Gerteric Lindquist: Okay.

Anders Åkerblom: No, that makes sense. Thank you. I guess the second question that piggybacks a bit on that, from a competitive point of view, would you say that is impacting your outlook on pricing to any extent? I guess a question in that, how do you see the competitive landscape, mainly from a volume perspective and capacity additions in the market now that market growth has been good, a lot of projects that have been paused, potentially not really ramped up. How do you see that developing going forward?

Speaker #6: I mean , from a competitive point of view , would you say that sort of that that's impacting your your outlook on , on sort of pricing to , to , to any extent ?

Speaker #6: And I guess a sort of question in that , I mean , how do you see the competitive landscape mainly from a sort of volume perspective and capacity additions in the market now that , you know , market growth has been been good , a lot of projects that have been sort of paused , potentially not really ramped up .

Speaker #6: How do you see that developing going forward?

Speaker #1: Well , typically in the past , we were not so well geared up when it comes to taking on all the volumes . So we believe that for once we have done our investments , it's never ready .

Gerteric Lindquist: Well, typically in the past, we were not so well geared up when it comes to taking on all the volumes. We believe that for once we have done our investments, it is never ready, you know that, but the major chunk is done. We are ready to expand. Of course, we have to get labor accordingly and when we see the order intake coming, so that is very important. As far as the landscape of competitors, they have always been there. I think everyone is really clinging on to the market shares they have. I do not think that anyone is going to give up, neither will we give up. So it is a fight out there. But I think that the pleasing part is when market is developing in a positive direction, I think it is becoming lesser of a dog fight. So I-

Speaker #1: You know that . But the major chunk is done . We are ready to expand . Of course , we have to get labor accordingly .

Speaker #1: And when we see the order intake coming , so that's very important . And as far as the landscape of competitors from , they've always been there .

Gerteric Lindquist: As far as the landscape of competitors, they have always been there. I think everyone is really clinging on to the market shares they have. I do not think that anyone is going to give up, neither will we give up. So it is a fight out there. But I think that the pleasing part is when market is developing in a positive direction, I think it is becoming lesser of a dog fight. So I- We look at it as a fairly decent situation, but always tough competition, but that is nothing new.

Speaker #1: And I think everyone is really clinging on to the market shares they have. I don't think that anyone is going to give up—neither will we give up.

Speaker #1: So it's a it's a fight out there . But I think that the policing part is when market is developing in a positive direction , I think it's it's becoming lesser of a dogfight .

Speaker #1: So we look at it as a at a fairly decent situation , but always , you know , tough competition . But that's nothing new .

Gerteric Lindquist: We look at it as a fairly decent situation, but always tough competition, but that is nothing new.

Speaker #6: That makes sense. Thank you very much for taking my questions. Thanks.

Anders Åkerblom: Right. Makes sense. Thank you very much for taking my questions. Thanks.

Speaker #1: Welcome

Gerteric Lindquist: Welcome.

Speaker #2: The next question comes from Yuma from Bank of America. Please go ahead.

Operator 2: The next question comes from Uma Samlin from Bank of America. Please go ahead.

Operator: The next question comes from Uma Samlin from Bank of America. Please go ahead.

Speaker #7: Hi .

Uma Samlin: Hi. Good morning, Hans and Gerteric. Thank you very much for taking my question. Two for me, please. The first one is on air-to-air. I think in the last quarterly result, you announced that you are going into the air-to-air segment. Would you be able to give us a bit more update on what are the opportunities there, what are the timeline of the product launches, and what would be the expectation in terms of margins for that line of product in Europe?

Speaker #8: Good morning Hans . Eric , thank you for thank you very much for taking my question . Two for me , please . So first one is on air to air .

Speaker #8: I think in the last quarterly results, you announced that you're going into the air-to-air segment. Would you be able to give us a bit more of an update on what the opportunities are there?

Speaker #8: What is the timeline for the product launches, and what would be the expectation in terms of margins for that line of products in Europe?

Gerteric Lindquist: Well, I will try to be as expedient as possible there, Uma. When it comes to air-to-air, a number of our companies that we have acquired have had agencies for air-to-air machines. But they have been limited to their respective countries, Italy, Norway, just to mention a few of them. And we have not been able to capture or broaden that because there have been other countries that have had in that agency. Now we decided to work with another company to broaden ourselves under the Nibe umbrella. The products that are produced here in Markaryd, and because there we have exhaust there, we have air-to-water, and we have ground source. And we do not have the supplement of air-to-air. So that is why we introduced that one. It is not a new subject in our group, but it is new under the Nibe brand name.

Speaker #1: Well , I try to be as expedient as possible . There . When it comes to air to air , a number of our companies that we have acquired have had agencies for air to air machines , and but they have been limited to their respective countries Italy , Norway , just to mention a few of them .

Speaker #1: And we've not been able to capture or broaden that because there there have been other . You know , countries that have had in that agency .

Speaker #1: Now , we decided to work with the with another company to broaden our . Under the Neba umbrella , the products that are produced here in Mariaud .

Gerteric Lindquist: Now we decided to work with another company to broaden ourselves under the Nibe umbrella. The products that are produced here in Markaryd, and because there we have exhaust there, we have air-to-water, and we have ground source. And we do not have the supplement of air-to-air. So that is why we introduced that one. It is not a new subject in our group, but it is new under the Nibe brand name.Was that clarifying?

Speaker #1: And because there we have exhaust air , we have water , air to water , and we have ground source . And we do not have the supplement of air to air .

Speaker #1: So that's why we introduced that one. It's not a new subject in our group, but it's new under the Nibe brand name.

Speaker #1: But was that clarifying ?

Gerteric Lindquist: Was that clarifying?

Speaker #7: Yeah .

Uma Samlin: Yeah. That is super helpful. What kind of margin expectation do you have for the air-to-air product, if I may ask?

Speaker #8: That's super helpful. And what kind of margin expectation do you have for the R-to-R product, if I may ask?

Speaker #1: Well , I think that we are entering that segment with with two price categories . You can say one very premium one and one a little bit lower .

Gerteric Lindquist: Well, I think that we are entering that segment with two price categories, you can say. One very premium one and one a little bit lower priced. That should not be derogatory to the overall margin, of course, there we do not carry any investments or anything like that. We, of course, have to carry inventory. So that should be a supplement to what we already have, not being a burden. Of course, coming from a relatively low volume, they are going to take some time before we are up and running. But we see from the companies where we have it elsewhere, there has not been a burden on the profit and loss. That is the experience. Hans would like to add something there.

Speaker #1: The priced . So that should not be derogatory to the overall margin . Of course , there we don't carry any investments or anything like that .

Speaker #1: We, of course, have to carry inventory. So that should be a supplement to what we already have, not a burden.

Speaker #1: And of course , coming from a relatively low volume , they're going to take some time before we're up and running . But we see from the companies where we have it elsewhere , that has not been a burden on the profit and loss , and that's the experience .

Speaker #1: And Hans would like to add something there.

Speaker #9: Now, maybe you haven't forgotten it. I think Uma also asked the question on the timing in this respect.

Hans Backman: No, maybe I have not forgotten it. I think Uma also asked the question on the timing in this respect.

Speaker #1: Yeah . The timing . Yeah . Yeah . Of course they are . They are , they are on the way to the market now .

Hans Backman: Yeah, the timing. Yeah.

Gerteric Lindquist: Yeah, the timing. Yeah.

Hans Backman: Yeah.

Hans Backman: Yeah. Of course,

Hans Backman: Of course, they are on the way to the market now. Of course, they are going to take, before we really can say, "Well, it was a success," we need another year. I think we need a year. We definitely need another summer season. Perhaps at this time next year, we can give you a more adequate, clear answer of the timing. If we have been successful, have we kept the timelines we have given ourselves? I apologize for not getting that. Thank you very much.

Gerteric Lindquist: they are on the way to the market now. Of course, they are going to take, before we really can say, "Well, it was a success," we need another year. I think we need a year. We definitely need another summer season. Perhaps at this time next year, we can give you a more adequate, clear answer of the timing. If we have been successful, have we kept the timelines we have given ourselves? I apologize for not getting that.

Speaker #1: So of course they're going to take , you know , before we really can say , well , there was a success or we need another year .

Speaker #1: I think we need a year . We need a definitely we need another summer season . So perhaps at this time next year , we can give you more adequate clear answer of the timing .

Speaker #1: If we have been successful , successful , have we have kept the timelines , we've given ourselves . I apologize for not getting that .

Speaker #1: Thank you .

Hans Backman: Thank you very much. No. They were introduced on the Nordbygg Fair this spring.

Speaker #9: No , no , no , I mean , it was they were introduced on the Nordvig fair this spring , late spring , and they will , as Eric said , they're on their way to the market as we speak .

Hans Backman: No. They were introduced on the Nordbygg Fair this spring.

Hans Backman: Yeah

Gerteric Lindquist: Yeah

Hans Backman: Late spring, and they will, as Gerteric said, they are on their way to the market as we speak.

Speaker #9: So they're being launched now during the fall here, or will reach customers during the fall?

Hans Backman: Yeah.

Gerteric Lindquist: Yeah.

Hans Backman: They are being launched now during the fall here or will reach customers during the fall.

Speaker #7: Yeah, that's super exciting.

Gerteric Lindquist: Yeah.

Uma Samlin: That is super exciting. Is that both cooling and heating for that product?

Speaker #8: Is that both cooling and heating for that product?

Gerteric Lindquist: Wait, what?

Speaker #9: Is it both cooling and heating?

Anders Åkerblom: Is it both cooling and heating?

Hans Backman: Is it both cooling and heating?

Speaker #1: Yeah, that's the traditional one. Yeah, absolutely.

Gerteric Lindquist: Yeah. That is the traditional one. Yeah, absolutely.

Speaker #8: Yeah . That's super helpful . My second question is actually just on the longer term , I guess it's a follow up on the previous questions regarding the margin on climate solution .

Uma Samlin: Yeah. That is super helpful. My second question is actually just on the longer term. I guess it is a follow-up on the previous questions regarding the margin on NIBE Climate Solutions. So I guess if you look back between 2017 to 2020, your NIBE Climate Solutions margins is around 14%, give or take. I guess after the rollercoaster between 2021 and 2024, I would say that you have now higher efficiencies. You have done several rounds of cost-cutting. So what do you see in the medium term as the sustainable margin profile for NIBE Climate Solutions? Do you see that to be higher than the previous levels you had before 2020?

Speaker #8: So I guess if you look back in between 2017 to 2020 , your climate solution margins is around like 14% , give or take .

Speaker #8: I guess, you know, after the roller coaster of, like, between 21 and 24, I would say that I guess you have now higher efficiencies.

Uma Samlin: I guess after the rollercoaster between 2021 and 2024, I would say that you have now higher efficiencies. You have done several rounds of cost-cutting. So what do you see in the medium term as the sustainable margin profile for NIBE Climate Solutions? Do you see that to be higher than the previous levels you had before 2020?

Speaker #8: You have a bit more , you know , you've done like several rounds of cost cutting . So what do you see in the medium term as the sort of the sustainable margin profile for climate solutions ?

Speaker #8: Do you see that to be higher than the previous levels you had before 2020?

Speaker #1: I think that it's premature to give you that guidance. We believe that we give guidance in our report that we are fairly certain we can fulfill.

Gerteric Lindquist: I think that it is premature to give you that guidance, Uma. We believe that we give guidance in our report that we are fairly certain we can fulfill. Until now, I think we have to live with the 13% to 15%. But of course, there is nothing saying that we wouldn't like to come higher. But I think that we have to give you that guidance continuously right now anyway, that 13% to 15%. But it looks promising to fulfill that this year. I hope you see that in our report. But to come out and say now we are going to go for 16%, 17% is premature.

Speaker #1: And until now , I think we have to live with a . 13 to 15 . But of course , there is . There's nothing saying that we wouldn't like to come higher , but I think we have to we have to give you that guidance continuously right now .

Speaker #1: Anyway , that . 13 to 15 . But it looks promising to fulfill that this year . I hope you see that in our report .

Speaker #1: But to come out and say, now we're going to go for 16, 17, it's premature.

Speaker #8: Yeah, that's super helpful. Thank you very much.

Uma Samlin: Yeah, that is super helpful. Thank you very much.

Speaker #1: Thank you .

Gerteric Lindquist: Thank you.

Speaker #2: The next question comes from Carl Dyneburg from NB Carnegie. Please go ahead.

Operator 2: The next question comes from Carl Deijenberg from DNB Markets. Please go ahead.

Operator: The next question comes from Carl Deijenberg from DNB Markets. Please go ahead.

Speaker #10: Thank you very much. Thank you for the opportunity. So my first question is regarding the semi-exposure in the element business.

Carl Deijenberg: Thank you very much. Thank you for the opportunity. My first question is regarding the semi-exposure in the Element business. I think in the past, we've said that that's been accounting for roughly 10% to 15% of the division. First question, does that assumption roughly still hold? My second question related on the same topic as well, if you could share anything with regards to the growth in this specific segment here in Q2, given the quite significant step-up we see here sequentially relative to Q1. Thank you.

Speaker #10: I think in the past we've said that that's been accounting for roughly 10 to 15% of the division. So, first question: does that assumption roughly still hold?

Speaker #10: And then, second question related to the same topic as well. If you could share anything with regards to the growth in this specific segment here in Q2, given the quite significant step up we see here sequentially relative to Q1.

Speaker #10: Thank you

Speaker #1: Okay. I see the 10 to 15%. I think that, I think, is rather on the upper side there. Of course, any more.

Gerteric Lindquist: I see the 10% to 15%, I think it's rather on the upper side there, of course, anymore.

Speaker #1: So that is clear guidance we can give you when it comes to the , the growth , particularly Q2 , I think that's been an in the system for a while .

Carl Deijenberg: Yeah.

Gerteric Lindquist: That is clear guidance we can give you. When it comes to the growth, particularly Q2, I think that has been in the system for a while, that they have been hinting us that you better gear up, and that is very promising to us. Of course, they do not release everything to us, but they are fairly good when it comes to giving us indications of what they foresee, what they see in their system. They are giants, of course. When you talk about those companies, I guess it is no secret that we talk about Applied Materials and Lam Research. We are a little midget compared to those. It is very interesting to work with them, and we feel that we have a very good relationship. We also feel that we have a solid position among them, which means that when they grow, we are going to grow.

Speaker #1: You know , that they've been hinting us that you better gear up and that is very , very promising to us . Of course , they don't release anything .

Speaker #1: Everything to us , but they're fairly good when they come . When it comes to giving us indications of what they foresee , what they see in their system , they are giants .

Gerteric Lindquist: They are giants, of course. When you talk about those companies, I guess it is no secret that we talk about Applied Materials and Lam Research. We are a little midget compared to those. It is very interesting to work with them, and we feel that we have a very good relationship. We also feel that we have a solid position among them, which means that when they grow, we are going to grow.

Speaker #1: Of course. I mean, when you talk about those companies, I guess there's no secret that when we talk about a math and LAM, we are a little midget compared to those.

Speaker #1: So it's it's very interesting to work with them . And we feel that we have a very good relationship . But and we also feel that we have a solid position among them then , which means that when they grow , we're going to grow .

Speaker #1: And we also launched new products during the for the spring here . Now , which is also helping the , the improvement and new very delicate components to their machinery that have been developed together with our customers .

Gerteric Lindquist: We also launched new products during the spring here now, which is also helping the improvement. New, very delicate components to their machinery that have been developed together with our customers. I hope that gives you a little bit of an answer to your question.

Speaker #1: So I hope that gives you a little bit of an answer.

Speaker #10: To your . Yeah , yeah . I was maybe also looking for . If you wanted to share the growth number in your element or Semi-exposed business development side , but maybe you want to keep that number for , for yourself .

Carl Deijenberg: Absolutely. I was maybe also looking for if you wanted to share the growth number in your NIBE Element or semi-exposed business and NIBE Element side, but maybe you want to keep that number for yourself.

Speaker #9: Okay .

Gerteric Lindquist: Well, perhaps I am a little more discreet there.

Speaker #1: Well, perhaps I'm a bit more discreet there.

Gerteric Lindquist: Well, perhaps I am a little more discreet there.

Speaker #10: Okay . Sounds good . Secondly , I just wanted to ask also very briefly on the your US heat pump business . I mean , we talked about this in the beginning of the year .

Carl Deijenberg: Okay, sounds good. Secondly, I just wanted to ask also very briefly on your US heat pump business. We talked about this in the beginning of the year. I think you were sort of anticipating quite a drop here given the removal of the tax breaks, and now we see that

Speaker #10: I think you were sort of anticipating . Yeah , quite a drop here given the the removal of the tax breaks . And now we see that your us at least on the net sales is still holding up very well .

Carl Deijenberg: your US, at least measured on the net sales, is still holding up fairly well. So, maybe now in hindsight, would you say that the market is still doing a little bit better than what you anticipated? Also here would, of course, be very interested to hear anything given the numbers of what the decline has actually been on the US heat pump side as well for you.

Speaker #10: So maybe now in hindsight , would you say that the market is still doing a little bit better than what you anticipated ? And also here would of course , be very interested to hear anything if you did , you know , given the numbers of what the decline has actually been on , on the US heat pump side as well , for you .

Speaker #1: Yeah. Well, it is actually better than we anticipated. You know, there were predictions of some dramatic drops in the market going down by 50% or things like that.

Gerteric Lindquist: Well, it is actually better than we anticipated. There were predictions of some dramatic drops in market going down with 50% or things like that. It is not that dramatic, but it is still a hefty cut. Perhaps I shouldn't be so precise, but it is much less than the predicted 40% or 50% that the people indicated. So that is an indication, we hope, that the knowledge among customers of private individual homeowners, it is a higher level of understanding what they can achieve by installing a heat pump, given that the tax subsidies are gone. Of course, it is also noted that the oil and gas prices are high in North America. I personally visited Canada last summer here now, and that is one of the things that everyone talks about, the petrol prices, as we say in Europe, or the gas, when it comes to diesel or petrol.

Speaker #1: It's not that dramatic , but it's still a hefty cut if it's perhaps I shouldn't be so precise , but it's it's much less than the predicted 50 or 40 or 50 that people indicated .

Speaker #1: So that's an indication, we hope, that the knowledge among customers—private individual homeowners—is at a higher level of understanding about what they can achieve by installing a heat pump, given that the tax subsidies are gone.

Speaker #1: And of course , it's also noted that the oil and gas prices are higher in North America . I personally visited Canada last summer here now , and and that's one of the things that everyone talks about .

Gerteric Lindquist: Of course, it is also noted that the oil and gas prices are high in North America. I personally visited Canada last summer here now, and that is one of the things that everyone talks about, the petrol prices, as we say in Europe, or the gas, when it comes to diesel or petrol.

Speaker #1: The petrol prices , as we say in Europe or the gas , I mean , when it comes to diesel or . Yeah , petrol and also on the on the oil side , everyone talks about that .

Gerteric Lindquist: Also on the oil side, everyone talks about that. So I think that has also, sadly enough, driven people to realize, "How should I really climatize my home?" So I think those are the main explanations that we have been in the market. The heat pumps is not a novelty anymore. It is something that is there. Of course, on the commercial side, the construction industry is so well-acquainted with the heat pumps. So I think that rubs off.

Speaker #1: So I think that that has also, sadly enough, driven people to realize, what should I do? How should I really climatize my home? So I think those are the main explanations that we've seen in the market.

Speaker #1: The heat pumps is not the novelty anymore . It's something that's there . And of course , on the commercial side , the construction industry is so well acquainted with the heat pumps .

Speaker #1: I think that rubs off okay.

Carl Deijenberg: Mm-hmm. Okay.

Carl Deijenberg: Perhaps I was a little bit

Gerteric Lindquist: Perhaps I was a little bit

Speaker #10: Thank you very .

Carl Deijenberg: Thank you very much.

Speaker #1: Much .

Gerteric Lindquist: hesitant there.

Speaker #10: Yeah , yeah , yeah , it's yeah . Yeah , absolutely . That's totally fine . Thank you very much .

Carl Deijenberg: Yeah.

Carl Deijenberg: But it is--

Gerteric Lindquist: But it is--

Carl Deijenberg: No, but it's-- Yeah, absolutely. That's totally fine. Thank you very much.

Speaker #1: Thank you

Gerteric Lindquist: Thank you.

Speaker #2: The next question comes from Michelle Baldelli from BNP Paribas. Please go ahead.

Operator 2: The next question comes from Michele Baldelli from BNP Paribas. Please go ahead.

Operator: The next question comes from Michele Baldelli from BNP Paribas. Please go ahead.

Speaker #11: Hi . Good morning to everybody . Thanks for taking my question . I've got a question about your dealer distributors inventory level . Do you see them as having a reduced inventory level in the last two three months with the Iran war that may , let's say , come back from one day to the other and therefore probably they didn't , let's say , continue to demand at the same pace of the current demand trend .

Michele Baldelli: Hi. Good morning to everybody. Thanks for taking my question. I have got a question about your dealers/distributors inventory level. Do you see them as having reduced the inventory level in the last 2, 3 months with the Iran war that may, let us say, come back from one day to the other, and therefore probably they did not, let us say, continue to demand at the same pace of the current demand trend? This is the first question. You prefer that I do the second, or you answer to this?

Speaker #11: And this is the first question you prefer that I answer. The second, or do you want me to answer this one?

Speaker #1: Well , well , we can we take the first one right off where our inventories or the the wholesalers inventories are monitored due to the oil prices .

Gerteric Lindquist: Well, we can take in the first one right off.

Michele Baldelli: Yeah.

Gerteric Lindquist: Whether our inventories or the wholesalers' inventories are monitored due to the oil prices. Is that the question, really?

Speaker #1: Is that really the question, or...

Speaker #11: No, the question is more if you feel that they have just used their inventory level to satisfy this spike of demand in the last two, three months or not?

Michele Baldelli: No, the question is more if you feel that they have just used their inventory level to satisfy this spike of the demand in the last 2, 3 months.

Gerteric Lindquist: Oh, okay.

Michele Baldelli: or not.

Speaker #1: Well , I mean , that's always the question . That was one of the main reasons why everything went so chaotic , like 3 or 4 years ago .

Gerteric Lindquist: Well, that's always the question. That was one of the main reasons why everything went so chaotic, like 3 or 4 years ago. We just hope that, and I think I mentioned that initially here, we really hope that the industry now is more sensible, not overstocking of any kind, but rather realizing that heat pumps, they're going to be there, and we have to fulfill, naturally, the demand, but you can't swing up and down depending on oil price. I think that the overall fear among customers is there that oil and gas will not be reliable in the foreseeable future, and therefore they swing over to other alternatives. That's our view of this. Of course, there could be wholesalers that have been ordering a little bit too much. That is not to our knowledge. But we don't have the total insight into what they do.

Speaker #1: So we just hope that. And I think I mentioned that initially here, we really hope that the industry now is more sensible and not overstocking of any kind.

Speaker #1: But rather realizing that heat pumps , they're going to they're going to be there . And we have to fulfill naturally the demand .

Speaker #1: But you can't swing up and down. Depending on the oil price, I think that the overall fear among customers is there that oil and gas will not be reliable in the foreseeable future.

Gerteric Lindquist: I think that the overall fear among customers is there that oil and gas will not be reliable in the foreseeable future, and therefore they swing over to other alternatives. That's our view of this. Of course, there could be wholesalers that have been ordering a little bit too much. That is not to our knowledge. But we don't have the total insight into what they do.

Speaker #1: And therefore, they swing over to other alternatives. That's our view of this. And of course, that could be wholesalers that have been ordering a little bit too much.

Speaker #1: That is not to our knowledge , but I mean , we don't have a total insight into what they what they do . And I don't like to criticize anyone , but but that part of our industry did .

Gerteric Lindquist: I don't like to criticize anyone, but what that part of our industry did, 2022 and 2023, was not very good for the overall industry. That whiplash, whatever you call it, that was terrible for all of us. We just hope, and when we talk to our immediate wholesalers, we try to convey the message, be sensible, be realistic, don't overstock. We know what is going to happen. But, we are one out of many preachers out there. We are aware of the question and the danger in your question, and we try to do our chunk to prevent that.

Speaker #1: In ’22 and ’23, it was not very good for the overall industry. That whiplash, or whatever you call it, that was terrible for all of us.

Speaker #1: So we just hope and we , when we talk to our immediate wholesalers , we try to convey the message , be sensible , be realistic , don't overstock .

Speaker #1: We know we're going to happen . So that's but I mean , we are one out of many preachers out there . We are aware of the question and the danger in your question .

Speaker #1: And we try to do our chunk to prevent that. I don't think I can answer your question more than that.

Michele Baldelli: Okay, yeah.

Gerteric Lindquist: I don't think I can answer the question more than that.

Speaker #11: Yeah , sure . No , thank you very much . And the second one was just a clarification . When you said that H2 trends should be at least the same level or even better than the first part you refer to the organic growth year on year for your business , or it was just about seasonality .

Michele Baldelli: Yeah, sure. No, thank you very much. The second one was just a clarification. When you said that H2 trends should be at least the same level or even better than the first part, you refer to the organic growth year-on-year for your business, or it was just about seasonality, so basically a normal seasonal trend?

Speaker #11: So, basically a normal seasonal trend.

Speaker #1: Yeah. Or seasonality. Yeah.

Gerteric Lindquist: Yeah. Ordinary seasonality. Yep.

Speaker #11: Okay. Perfect. Thank you very much.

Michele Baldelli: Okay, perfect. Thank you very much.

Gerteric Lindquist: Well, I think Anders, you are there with another question. Should we allow you one more question before we close because you are so polite?

Speaker #1: Well , I think it's unless you are there with another question , should we allow you one more question before we close ? Because you are so polite .

Gerteric Lindquist: Well, I think Anders, you are there with another question. Should we allow you one more question before we close because you are so polite?

Speaker #2: The next question comes from Anders Roslin from Pareto Securities. Please go ahead.

Operator 2: The next question comes from Anders Rosengren from Pareto Securities. Please go ahead.

Operator: The next question comes from Anders Rosengren from Pareto Securities. Please go ahead.

Speaker #12: Okay . I had just one question , and that's regarding the sales development in climate solutions . You had 11% up in Europe , five ?

Anders Rosengren: Okay. I had just one question, and that is regarding the sales development in NIBE Climate Solutions. You had 11% up in Europe, five No, sorry, 11% in the Nordics, 5% in Europe, and 6% in the US. My question is that this tendency of having a stronger H2, and particularly Q4, is that true also for Europe? Because they have now for a couple of years had the strongest quarter in Q2. So the seasonality, will we see that in Europe as well?

Anders Roslund: Okay. I had just one question, and that is regarding the sales development in NIBE Climate Solutions. You had 11% up in Europe, five No, sorry, 11% in the Nordics, 5% in Europe, and 6% in the US. My question is that this tendency of having a stronger H2, and particularly Q4, is that true also for Europe? Because they have now for a couple of years had the strongest quarter in Q2. So the seasonality, will we see that in Europe as well?

Speaker #12: No , sorry . 11% in the Nordics , five in Europe . And and six in in the U.S. and my question is that this tendency of having a stronger second half and particularly fourth quarter , is that true also for Europe ?

Speaker #12: Because they have now, for a couple of years, had the strongest quarter in the second quarter. So, this seasonality—will we see that in Europe as well?

Speaker #1: I think that we should perhaps divide it a little bit better . What you see in the second quarter , and I think I touched upon that during a previous question , that during the second quarter , the particular the air conditioning segment is really strong .

Gerteric Lindquist: I think that we should perhaps divide it a little bit better. What you see in Q2, and I think I touched upon that during a previous question, that during Q2, the particular, the air conditioning segment is really strong. I think that is what you see there.

Speaker #1: And I think that's what you see there.

Speaker #12: Okay .

Anders Rosengren: Okay.

Anders Roslund: Okay.

Gerteric Lindquist: I was referring more to the heating, which is our home turf since many years back.

Speaker #1: I'm I was referring more to the the heating , which is our , you know , home turf since many years back .

Gerteric Lindquist: I was referring more to the heating, which is our home turf since many years back.

Speaker #12: Okay. So, for the heating heat pumps, we will see the seasonal pickup at least.

Anders Rosengren: Okay. For the heat pumps, we will see the seasonal tick-up, at least.

Anders Roslund: Okay. For the heat pumps, we will see the seasonal tick-up, at least.

Speaker #1: Yeah .

Gerteric Lindquist: Yeah.

Speaker #12: Okay .

Anders Rosengren: Okay.

Anders Roslund: Okay.

Speaker #1: Definitely .

Gerteric Lindquist: Definitely.

Speaker #12: That was all the questions from me. Thanks very much.

Anders Rosengren: That was all questions for me. Thanks very much.

Anders Roslund: That was all questions for me. Thanks very much.

Speaker #13: Thank you .

Gerteric Lindquist: Thank you. With that, without being impolite, we have to close the session for today. I apologize for my voice, but interesting questions, and very pleasing to present the report to you, like the caliber of what we had today. We hope to continue with that. Thank you very much for calling in.

Speaker #1: And with that , I without being impolite , we have to close the session for today . I apologize for my voice , but interesting questions and very pleasing to present the report to you .

Speaker #1: We liked the caliber of what we had today, and we hope to continue with that. So thank you very much for calling in.

Speaker #9: And if there are remaining questions , I mean , we realize there are a few more on the line here . Feel free to reach out to myself or to our new investor relations officer , Vida Lanahan , and we'll try to answer the the remaining ones .

Hans Backman: If there are remaining questions, we realize there are a few more on the line here. Feel free to reach out to myself or to our new Investor Relations Officer, Frida Lannerheim. We will try to answer the remaining ones. Thank you from my side as well.

Speaker #9: Thank you from my side as well. Thank you.

Gerteric Lindquist: Thank you.

Operator 2: The host has ended this call. Goodbye.

Browse all earnings call transcripts

Q2 2026 Nibe Industrier AB Earnings Call

Request TrialDemo

Nibe Industrier

Earnings