Operator: Hello, and welcome to today's presentation with Nolato. Today we have Anders Björklund, President and CEO, and Per-Ola Holmström, CFO, presenting their interim report for Q3 of 2026. We have a Q&A after the presentation, and should you calling in and would like to ask a question, please press star nine to raise your hand and star six to unmute yourself when given the word. You can also type in your questions using the form to the right our broadcast. With that said, I'll hand it over to you guys, and I'll be back when it's time for the Q&A. Go ahead.
Anders Björklund: Thank you, Elliot. Okay. My name is Anders Björklund, and I am the CEO of Nolato since mid-July this year. I've been working for Nolato now for almost four years, but previously heading up the Engineered Solutions business area. Before joining Nolato, I was working for Sandvik, and I was also part of the management team of the IPO of Alleima. Together with me here today, on my right-hand side, I have Per-Ola Holmström, the CFO of Nolato. Then turning into page number 2. The summary of Nolato Group's Q3. I would say it is a solid performance in the quarter. Our sales rose by 7%, up to SEK 2.5 billion compared to SEK 2.342 billion last year. If we adjust for currency and the two made acquisitions, we end up at a growth rate of 3%.
Anders Björklund: What is very encouraging is that the Medical Solutions business area actually grow with 9%. But on the contrary, we had some headwinds in the Engineered Solutions business area, but I will come back to that a little bit later. We have finalized 2 acquisitions during the quarter, and they are consolidated into our numbers as of 1 September and contributed to 56 million Swedish crowns. Our operating profit ended up at 254 million compared to 281 million last year. If we adjust those numbers, we ended up to 262 million Q3 this year and 274 million last year. Our margin or adjusted EBITA margin ended up at 10.5% compared to 11.7% last year. But as you know, we have invested in future growth programs in the medical area, and that has now impacted the margin for some quarters, and it has also impacted this quarter.
Anders Björklund: The investments that I am talking about is primarily related to our programs in Hungary, but also a couple of programs in the United States. The cash flow from our operating activities increased to SEK 332 million compared to SEK 301 million, and that is primarily due to less capital investments. We still have, after the acquisition, strong financial position with net liabilities compared to EBITA of 1.0 compared to 0.5. Turning into page 3 and continue to talk about the acquisitions that we have made. We have made two strategic acquisitions during this quarter, Nolato Qualtech and Nolato Unitron. If you start off with Nolato Qualtech and describe them briefly. Nolato Qualtech brings a business that is located in a medical cluster in Galway, in Ireland. Their prime customers are within the medical area, but they are also strong in the defense area.
Anders Björklund: Looking at the Unitron business, which is located in three locations, one in Holland, one in Belgium and one in the United States, is primarily a development company which is engaging with the customers in early concept studies, and it is a perfect fit into our offering of volume production that we have today. Altogether, these two acquisitions bring around SEK 600 million into the group sales. I also would like to highlight actually that after the closure of Q3, 1 October, we also finalized the divestment of our subsidiary in Romania, which has approximately SEK 70 million in sales. All these three transactions is a step in our portfolio optimization that we are doing to enable our strategy implementation for future growth.
Anders Björklund: Going in then to page 4, which is an overview of the Nolato Group, which consists then of two business area, Medical Solutions and Engineered Solutions. If we then dig a little bit deeper into the numbers of Medical Solutions first. Medical Solutions is operating in seven different product areas, and during this quarter, drug delivery has contributed to a good part of the growth of the business area. We also see some good growth in the IVD area, in the cardiology area, but we also see a good growth actually in the pharma packaging area. Going into page 6 then. We look into the Medical Solutions performance during the quarter, and I must say that I am very satisfied with the growth rate of the quarter for medical. The sales rose by 12%, amounting to SEK 1,469 million, compared to SEK 1,311 million last year.
Anders Björklund: If we adjust it for currency and the two main acquisitions, it is still a growth of full 9%, which is very encouraging. As we talked about earlier, the drug delivery supported good in this area, but also some other segments contributed well. If we look into the EBITA margin for the Medical Solutions, it ended up at 11.3% compared to 12.1%, and that is due to earlier talked about these programs that we have, and also some headwinds in material cost. I really would like to emphasize that I am very pleased with the strengthening of our offering through our two main acquisitions in the quarter. It is actually two very important building blocks in our way to become a more of a complete global solution provider into the medical industry.
Anders Björklund: Unitron will actually enable us to deliver a complete medical product, and a complete medical product solution, with both electromechanical devices and an end manufacturing of complete products. Looking into the second business area, Engineered Solutions at page 7. Engineered Solutions is operating in five different product areas. What is really encouraging during this quarter is that our material business grows significantly. The share of the total sales for materials is now up to 23% compared to 18% last year. We also see a growth in the other business area, but that is mainly driven by the acquisition of Nolato Qualtech in Ireland. We see good contribution in growth from the consumer electronics.
Anders Björklund: On the contrary, we see some strong headwinds in the automotive area, where the sales of automotive has now dropped down to 17% compared to 22% last year for the automotive sector, and now actually automotive is only 7% of the total group sales. Turning into page 8, and looking into the Engineered Solutions more in detail. The total sales amounted to SEK 1,040 million compared to SEK 1,035 million, which is actually adjusted for currency and acquisition, a decrease of 3%. It is a very strong performance from the team within the materials business, which now has an impressive increase of 27% in the quarter. It is actually all three areas where they are operating that is contributing to this growth. It is the aerospace, it is the automotive, and it is the telecom segments. The consumer electronic segment, we have stable volumes.
Anders Björklund: In the hygiene segment, we have some lower volumes, and they are affected with continued inventory adjustments. We also see a sequential improvement for the volumes in the quarter. Looking at the automotive area, we saw a sharp decline with lower demand. It is primarily related to model changes among our customers, but I must say that we also are mitigating our cost to protect the margin in a good way here. The EBITA margin ended up at 10.8% compared to 11% last year. I also here would like to actually highlight the divestment that we did at the first day of Q4 of our Romanian company. It is a step towards focusing Engineered Solutions into strategic selected segments that we have pinpointed. By that, I hand over to you, Per-Ola.
Per-Ola Holmström: Good morning. Per-Ola Holmström, CFO, and group financial highlights on page 9. Net sales was SEK 2.5 billion, which is a 3% organic growth excluding currency and acquisitions. The adjusted EBITA margin was 10.5% compared to 11.7% last year. The negative gap in margin mainly affected and explained by ramp-up of larger projects within medical and remaining raw mat lag, and also automotive volumes and model changes at customers within Engineered Solutions. The effective tax rate is normalized to around 23%. Cash flow from operating activities is favorable, being SEK 332 million compared to SEK 301 million, and net investments, excluding the acquisitions made, was SEK 191 million, which is similar to Q3 last year. CapEx for the full year 2026 is expected to be SEK 600 million to SEK 650 million, in line with the estimation we made after Q2. Last year, 2025, it was SEK 788 million. So a lower number this year is expected as planned.
Per-Ola Holmström: The net financial liabilities in relation to EBITA, even after paid-out dividend in Q2 and two acquisitions in Q3, still on a low level, 1.0 in relation to EBITA, and a sustained strong financial position for further investments and acquisitions.
Anders Björklund: Thank you, Per-Ola. Turning into page 10, our current trading. If we look down on the Medical Solutions, I would like to highlight that we continue our growth strategy, and we see a high market activity in several of the regions in the world. We also have a broad customer base with longstanding close customer relationships, and we have, with these two acquisitions, strengthened those relationships even further, and we have broadened the customer base even more. Looking into the Engineered Solutions, we see clear advanced market positions in the consumer electronics area and, as described before, not at least within the materials area of Engineered Solutions. All in all, I would say that Nolato is well-positioned with our offering in three different continents, and we have a favorable financial position that will enable us to intensify our M&A agenda going forward. Thank you.
Operator: Thank you for that presentation. We will now open up for our Q&A session. As mentioned earlier, if you call in and would like to ask a question, please press star 9 to raise your hand and star 6 to unmute yourself. You can also type in your questions using the form to the right of the broadcast. We will begin with a number whose telephone number ends in 1008. Please press star 6 to unmute yourself.
[Analyst 1]: Good morning, Anders and Per-Ola. Thanks for taking my questions. The first one, I would just like to hear about the temporary cost that we do not adjust for, like the oil price impact, et cetera. You said it was smaller than in Q2. Also any medical ramp-up costs, et cetera. Could you say anything on how much costs you had related to one-off that you do not adjust for?
Per-Ola Holmström: Yes, I can comment on those. The raw material pricing with the background in the oil prices, that is coming in in this quarter as expected. We commented after the Q2 report that we expect SEK 10 million remaining in Q3, that was very close to that number. The main part of that is within Engineered Solutions, that is similar to the Q2 situation. Then, of course, we have the ramp-up of larger projects in Hungary and the US, that is the main cost that you're referring to within Medical Solutions. That explains almost all of the margin difference compared to the Q3 last year. Then we have the automotive effect within Engineered Solutions in addition to the raw material pricing, that is pretty much the rest of the additional cost we have in that business area.
Per-Ola Holmström: In the other direction, we have a larger mix of materials compared to the rest of Engineered Solutions, which is supporting in the other direction. That is pretty much the situation. Also within the Engineered Solutions business area, those three explanations explain most of the gap between the margin we had in Q3 this year and Q3 last year as a matter.
[Analyst 1]: Perfect. That's very appreciated. Based on, I think especially with the raw mats, the oil price hasn't really come down a lot. Based on the current spot rates, do you still see that it should level out in Q4 based on the price increases, et cetera? Or do you still see a small headwind in Q4? Thanks.
Per-Ola Holmström: No, we don't expect a headwind in Q4 if the present situation remains. We have taken the lag effect in Q2 and Q3 that we expected, that is finalized then if we don't run into new headwinds going forward.
[Analyst 1]: Perfect. Thanks. Any comments on the product ramp-ups? Should that fade into Q4, or should we expect that to continue a bit in Q4 as well?
Per-Ola Holmström: I can comment that as well. It is something that we expect to continue going forward some quarters, but we do expect it getting better and better. So that is the estimation we make.
[Analyst 1]: Perfect. Thank you. I was wondering also on the automotive outlook for Q4. So you said that driven by model changes now it is temporarily a bit slower in automotive, and I think the underlying growth was like 2% if we exclude automotive. What is the outlook for Q4? How temporary is this effect in Q3?
Per-Ola Holmström: I would say that the automotive headwind will remain in Q4 for us. So how it looks further on, I have a hard time to say, but the headwind for the automotive segment will remain in Q4.
[Analyst 1]: Great. Thank you. Looking at the P&L, this is very nitty-gritty, but the other income and expenses, net item line in the P&L was -12 million SEK. It differs a bit from the history. I believe that 8 million SEK of those are related to M&A. Is there any other temporary impacts such as balance sheet revaluations, et cetera?
Per-Ola Holmström: No. I would say that most of the other millions remaining is mainly currency effects in different ways. It is a net of currency, the most part of that.
[Analyst 1]: All right. So maybe 4 million SEK or something in some temporary negative effects.
Per-Ola Holmström: Yeah, that is right.
[Analyst 1]: Perfect. I just have one more short question. When you say 27% growth in materials, you say that it is on a currency adjusted basis and not organic. I just wondered if Unitron or M&M contributed anything to the material segment or if 27% is fully organic.
Per-Ola Holmström: It is fully organic. Unitron and Qualtech is not included at all in the materials business.
[Analyst 1]: Great. That was all for me. Thank you very much.
Per-Ola Holmström: Thank you.
Operator: Yes. Thank you for those questions. We go straight ahead to the next caller, whose phone number ends with 0886.
Anders Åkerblom: Yes. Hello, Anders and Per-Ola. Can you hear me?
Per-Ola Holmström: Yes.
Anders Åkerblom: Oh, great. Hi, it's Anders Åkerblom from Nordea. Let's see if there are any questions left, but I wanted to ask a bit on automotive declining obviously a bit more than 20%. Volvo's production issues have been quite well published. My question is at this point, how are you adjusting production pace and capacity towards this customer or in the automotive segment if we state it as such right now, given this?
Per-Ola Holmström: Yeah.
Anders Åkerblom: If you quantify the margin impact a bit closer. I get that there are some puts and takes, raw mats contributing positively, but if you could just specify a bit more how dilutive, in fact, the automotive impact was on margins in Engineered Solutions. I didn't really get that. Sorry for following up on that.
Per-Ola Holmström: Yeah. Anders can explain about how we act in the automotive situation right now, but I can comment on the margin effects. The automotive and model changes in this quarter and also a bit going forward, I would say that is sort of half of the negative effect within Engineered Solutions, and I am relating to the comparison compared to last year, Q3. That would be half of it, and then the remaining lag raw mats pricing would be the other half of it, of the two negative effects. Then you have the positive mix effect with more materials coming in the other direction. The raw mats pricing and the model changing and lower volumes within automotive, they are pretty much in the same range. What we are doing to mitigate for these volume drops is that we continuously review our organizations.
Per-Ola Holmström: Of course, there is always a little bit of a lag in those activities. I would say that we have initiated and taken the necessary actions to be on a level that is corresponding to the demand from the customers.
Anders Åkerblom: Okay. Got it. Thank you. Appreciate that answer. Just a second one, so the other people in line can ask questions as well. In materials, obviously, very healthy growth reported. How should we think about the accretive profitability profile of materials phasing as you continue to ramp that business area? Thank you.
Per-Ola Holmström: The materials business, we have commented earlier that part has a positive margin effect, which is in a material, using that word again, let's say positive effect compared to the rest of the Engineered Solutions business area. We have not nailed out the exact level, but I do think it is quite easy to see what is coming from that part and that
Anders Åkerblom: Yep
Per-Ola Holmström: is material then supporting, of course.
Anders Åkerblom: Yeah. I get that. I meant more sort of given the accretive profitability profile of materials. It is coming from a lower level. But as you continue to expand capacity and sort of invest in that business, how should we think about the relative profitability of materials kind of developing? That was a bit more sort of my angle.
Per-Ola Holmström: Yeah.
Anders Åkerblom: Can you maintain these current levels, basically?
Per-Ola Holmström: Yeah. We are quite confident that we do see that we over the years have went into new segments and going from telecom to automotive to new areas. We have been able to keep the margin within materials, and we do not see any other trends. It is a good margin, it is a good business, and that is continuing also in the new areas.
Anders Åkerblom: Okay. Good to hear. Thank you very much, Anders and Per-Ola. I will get back in line. Have a good day.
Operator: Thank you. Thank you so much for those questions. We go straight ahead to the next caller, whose phone number ends with 8721. I repeat, please unmute yourself with star six, the phone number who ends with 8721.
[Analyst 2]: Yes. Hello. Hi, can you hear me?
Per-Ola Holmström: Yes. Yes.
[Analyst 2]: Okay, great. Hi, it's Michael.
Per-Ola Holmström: Yeah.
[Analyst 2]: Okay, great. Hi, it's Michael.
Per-Ola Holmström: Okay, got it. Just a question also on the intra-group cost. Looks unusually high, even if we exclude the SEK 8 million in M&A related expenses. What explains this increase, and how should we think about this going forward? Yes, I do see what you mean, and it was on the high side, even if you exclude the acquisition cost in the quarter. I would say that if you take the average number during this year, you would end up on a number of SEK 15 million per quarter, if you exclude the acquisition cost. If I compare that with the average number for 2025, it was SEK 9 million. If I do exclude the positive SEK 7 million effect, which landed on these lines. I would say somewhere in between the SEK 9 million and the SEK 15 million would be the ongoing rate going forward, as I expect.
Per-Ola Holmström: So a bit higher level than last year, but the two latest quarters, they have been on the high side.
[Analyst 2]: Mm-hmm. Okay. So you have some mixed non-recurring things in that line, I guess. Or what could that be?
Per-Ola Holmström: I would not say it is maybe non-recurring, but it is jumping up and down a bit between the quarters and hence, we could have some quarters with higher numbers and then some with lower numbers, and referring to the cost outside the business areas.
[Analyst 2]: Okay. Thank you so much.
Per-Ola Holmström: Thank you.
Operator: Thank you for those questions. That was actually the last question for today. With that, we wrap up today's broadcast. A big thank you to Anders and Per-Ola for the presentation and the Q&A, and thank you to all who submitted questions. Here is a final word from the CEO.
Anders Björklund: Thank you very much for showing interest in Nolato, and we wish you all a nice day. Thank you.
Operator: Goodbye
