Half Year 2026 SP Group AS Earnings Call
Speaker #1: Hi, and good afternoon on behalf of Hans Christian Andersen Capital. I would like to welcome you all to this presentation of the report for Q2 and also the first half 2026 from SP that was published yesterday.
Speaker #1: My name is Rasmus Køjborg, and I have the pleasure of welcoming CEO Lars Bering and CFO Ellen Jeppesen, the promise to take us through the numbers and recent highlights, so a warm welcome to you.
Speaker #1: Before I hand over, also a warm welcome to all those of you who signed up for today's presentation. You can, as usual, ask questions in the chat room below, and I'll make sure to publish them and we will do a Q&A in the end of the presentation.
Speaker #1: Should you want to see the presentation again, it will be available afterwards on different platforms. With that, I will turn off my camera and I revert for the Q&A, and for now I'll leave it to you, Lars and Ellen.
Speaker #2: Thank you very much, Rasmus. And welcome to SP Group's presentation of the results of the first half year of 2026. My name is Lars Bering, and I'm Chief Executive Officer of SP Group.
Speaker #3: Yeah, and I'm Ellen Jeppesen, and I'm CFO of SP Group.
Speaker #2: And together with our colleagues, Søren Uhlstrup, we make up the executive board of the group. We will start with a short introduction of SP Group for those of you who might be listening in for the first time, and then move on to a review of the first half year, where we have set records in several ways.
Speaker #2: Ellen and I will be sharing the presentation today, and we will complement each other along the way. SP Group develops manufacturers and sells plastic solutions for a wide range of industries.
Speaker #2: Our focus is technical components, typical for a single-use in the healthcare sector, or plastic components that are built into our customers' products and used for many years.
Speaker #2: In the first half of 2026, 76% of the revenue came from customer-specific sub-supplier tasks, where the remaining 24% came from our own brands. We have a global setup with 35 factories around the world and more than 3,000 employees.
Speaker #2: Finally, we are focused on increasing the share of recycled plastics in our production, we have reached 18% of the raw materials that we are using, and we have a target of reaching 25% by 2030.
Speaker #3: Yes, and as you can see on the right of the screen, our sales are spread across several product groups. 35% of the company revenue is generated within the healthcare product group, a product group that includes medical devices, packaging, as well as ergonomic products.
Speaker #3: At 29% is cleantech, which is the second largest product group and products within renewable energy, energy reduction, and insulation. Foodtech accounts for 14% and includes livestock, housing, ventilation, and measuring equipment, among other things.
Speaker #3: The remaining 22% of the products fall under the category "other", which comprises maritime products, automotive, and products for the defense industry. We will return to the development within the four categories on the following slides.
Speaker #2: Yes. And SP Group is organized into a number of independent units, which own its customers and relationships, and its technology. The light green units on the left-hand side is our own products, including Ergomat, SP Medical, and Medico Pack.
Speaker #2: On the right. Are the sub-supplier units, from injection molding at SP Molding and Composites and Polyurethanes, from SP Tinby. The decentralized structure ensures proximity to customers, fast decisions, and a very good day-to-day agility.
Speaker #2: And then we work deliberately on creating synergies across the group, particularly within procurement, knowledge sharing, and cross-selling.
Speaker #3: With the addition of OGM this week, our global presence has been extended to the UK, and we are now present in 14 countries. Of the 14 countries, we currently have production in 10.
Speaker #3: Production that spreads across 35 factories, as Lars also just mentioned. As you can see on the world map, the group sales are split with 10% in Asia, 16% in North and South America, 47% in Europe, excluding Denmark, and the remaining part 27% in Denmark.
Speaker #3: We have created a robust global platform where the international spreads provides a good basis for growth and reduces the dependencies on individual markets.
Speaker #2: And then let's look at the highlights. First, the second quarter, and then the first half. It has gone really well. The second quarter of 2026 was record strong, we had a revenue growth of 44.6%, of which the organic growth was 29.4%.
Speaker #2: We realized an EBITDA margin at 20.3% and an EBIT margin of 12.4% for the first half of 2026 as a whole, revenue growth 32.9% of the organic growth, accounted for 19.7%.
Speaker #2: With an EBITDA margin of 20.3% and an EBIT margin of 12.7%. We have seen good growth coming from both our own products and from our customer-specific supplier tasks.
Speaker #2: The integration we have expanded our medical device production in Poland, so that we can keep the pace with demand from our customers. The integration of EDPro is proceeding as planned, it is the first time an acquired company in SP Group has interacted so quickly with virtually all companies in the group, which is very pleasing.
Speaker #2: And then we have just announced the acquisition of OGM Molding in the UK, which strengthened our position in the British market. We are proud and pleased of the acquisition and look very much forward to welcoming OGM's management and talented employees into SP Group.
Speaker #3: In connection with the acquisition of OGM, we upgraded our outlook for the full year 2026. We now expect revenue growth in the level of 24% to to 30%.
Speaker #3: We maintain our expectations on EBITDA margin of 19 to 21%, and an EBIT margin of 11 to 13%.
Speaker #2: Sales of own products rose 21.6% to 472 million, Danish, in the first half of 2026, which is a new record. There was a strong progress in sales of components, for livestock, housing, ventilation, and in the ergonomics products from Ergomat.
Speaker #2: While in the development were more flat for Medico Pack's packaging products and for Guidewires. For Medico Pack, it was a significant customer that has chosen to phase out a product and leave the market altogether.
Speaker #2: The sales of Guidewires are characterized by a greater focus on high-margin products, while the capacity being utilized in full. For the sub-supplier task, we have also seen a good growth.
Speaker #2: We had a strong growth in the first half of 2026. The development is, of course, significantly affected by the addition of EDPro, but there was also a strong underlying growth in SP Group in general.
Speaker #2: We have sold sub-supplier tasks for 1 billion 478 million, equivalent to a growth of 37%.
Speaker #3: Developments in our product groups are shown on this slide. At the top, you see each of the product groups' share of the revenue in the first half of 2026, and examples of products in the individual categories.
Speaker #3: Below each product group, you can see the development in revenue, where the first half of 2025 is compared with the first half of 2026.
Speaker #3: As the figures show, all four product groups developed positively. In the first half of 2026. Healthcare grew 18% to 688 million, and as mentioned earlier, accounts for 35% of the revenue.
Speaker #3: In several respects, the categories project-driven and timing can affect individual quarters. We have had a strong intake of customers and projects in the healthcare area, and the pipeline in this area is very strong.
Speaker #3: The other product categories grew between 37% and 61%. Cleantech with 40%, Foodtech with 61%, and other with 37%. Driven by a good combination of the acquisition of EDPro, and strong organic growth within the individual areas.
Speaker #2: Yes. And then we come to OGM. The acquisition of OGM Molding in the UK was announced Wednesday, August 19, and OGM has a production in Oxford and in South Wales, with 119 employees that are working with injection molding and assembly.
Speaker #2: They have a modern production setup, serving customers within medical devices, diagnostics, and safety equipment. And the company is characterized by very long-standing customer relationships, where they are producing very complex products.
Speaker #2: And let me briefly go through the strategic rationale for the acquisition. First and foremost, it strengthens medical devices as a strategic growth area, one of SP's most important growth areas, and it supports also our one-stop shop strategy.
Speaker #2: Next, we gain box build as a new competence, sourcing, testing, and assembly of electronic and metal components into plastic boxes, that are produced at OGM, delivered, tested, fully packaged to the customer as a finished product.
Speaker #2: At the same time, OGM gives us a bridgehead into the UK. A well-established platform in a market where the group has not previously had production.
Speaker #2: This means local service for British customers, at a time where many want production closer to their markets. The main factory in Oxford is close to the universities, in Oxford, Cambridge, and London, which gives access to a strong technology region with qualified labor and ongoing development projects.
Speaker #2: Finally, OGM's customers gain access to SP Group's global production setup, so OGM can follow the customers outside Great Britain when they are successful.
Speaker #3: Yes. Well, let me briefly run through the transaction. The fixed part of the purchase price amounts to 18 million pounds, approximately 158 million Danish kroner.
Speaker #3: On a cash-to-debt basis, and the amount was paid at the completion, mid this week. In addition, there's an earn-out of up to 6 million pounds approximately 53 million Danish kroner.
Speaker #3: For the seller to obtain this OGM must meet certain earning expectations. In the calendar year 2027 and 2028. OGM expects to achieve an EBITDA of 3.5% to 3.7 million in 2027.
Speaker #3: And for its 2025, 2026 fiscal year, which ended end of May this year, OGM reported an EBITDA of approximately 4.4 million pounds. If the earn-out is realized in full, this corresponds to an enterprise value to EBITDA of approximately 4.8 times.
Speaker #3: The acquisition is financed through an acquisition loan. And as a consequence, the net debt to EBITDA ratio measures as a net interest bearing debt to EBITDA, has increased by slightly more than 0.1 time.
Speaker #2: Yes. And as Alan mentioned, the EBITDA in the most recent financial year of OGM was 4.4 million and we expect 3.5 to 3.7 in 2027.
Speaker #2: This requires some explanation. OGM's major challenge in recent years has been to retain successful projects and tasks, the customers are large, international medical and technology companies, that also have a large demand outside the UK.
Speaker #2: And would like to have production in areas like Eastern Europe, the United States, or even in India. Some projects are scheduled to move away, and therefore we expect the activity level to decline slightly.
Speaker #2: However, we also know that many exciting new projects are coming into OGM, which makes us believe in a solitive positive development for the years ahead.
Speaker #2: Then we come to Poland. As we previously have mentioned, we are working on an expansion in Poland. For the medical device production, and it's very well underway.
Speaker #2: We are converting a 7,000 square meter building into medical device production, with a focus on capacity, efficiency, and a better use space. And we have finalized a new clean room of 1,700 square meters, it was completed on August 7, and it's already in use.
Speaker #2: On the picture on the right side, you can perhaps see some of the machines that are standing in the back, and they are now running production.
Speaker #2: This investment is very important in order to deliver already entered, and on the same time strengthens our position within the healthcare where it enables us to meet a rising demand.
Speaker #3: Yes. Let's look a little bit more at the figures and the financial results for the second quarter of 2026, where revenue EBITDA, EBIT, and EBIT all developed positively.
Speaker #3: Revenue growth was 44.6% in the second quarter of 2026, which equals to a total of 984 million. The growth was both organic, 29.4% in the quarter, and driven by acquisition, which contributed with 15.2%.
Speaker #3: It should be noted that the basis for comparison is a weak quarter of 2025, which amplifies the growth percentage issue to 2026. EBITDA rose 59.9% to 200 million, equivalent to an EBITDA margin of 20.3%.
Speaker #3: EBIT increased 86.4% to 240 million, and 91.9% to 122 million Danish kroner. On the next slide, we will look more closely on development in the first half year of 2026.
Speaker #3: And let's start with the revenue, which in the first half of 2026 was 1 billion 950 million Danish kroner. And a growth of 32.9%.
Speaker #3: We touched briefly on the positive development by product areas early. The development for the half year was also driven by organic growth and growth from acquisitions.
Speaker #3: We note with great satisfaction that organic growth has driven around two-thirds of the growth of 32.9%, achieved in this period. Precisely, 19.7% organic growth in the first half.
Speaker #3: Growth from acquisition accounted for 13.2%, which also means that Idepo is largely on plan. Looking at the development in operating earnings, today we still see a positive trend, where growth of 36.2% to 397 million compared with the year before.
Speaker #3: The EBITDA margin came to 20.3% for the first half, which is within the range announced for the full year and better than the same period last year in 2025.
Speaker #3: EBIT increased 45.4% to 280 million Danish kroner. Profit before tax increased 50.3% in the first half to 248 million, with an EBITDA margin of 12.7%.
Speaker #3: On this screen, on this slide, the top of the screen, you see the development in cash flows from operating activities. At right, you have earnings per share, and at the bottom, you see development in net interest bearing debt and equity.
Speaker #3: The strong results from operations also reflect, is also reflected in the cash flows from operating activities. Which is 291 million in the first half of 2026.
Speaker #3: An improvement of 62 million compared with the same period last year. Earnings per share rose 55.1% to 16.49 Danish kroner. In 2025, our net interest bearing debt increased as a natural result of the acquisition of Idepo.
Speaker #3: End of 2025. When we look at the first half, we reduced the debt as expected by 119 million Danish kroner, and end June, we had a debt of 1.341 million.
Speaker #3: The net debt to EBITDA ratio measured as the net interest bearing debt related to EBITDA has thereby been reduced to 1.9 times against 2.4 at the end of 2025.
Speaker #3: The equity increased 91 million, to 1.9 billion, so we continue to have a solid capital base.
Speaker #2: Yes. And then look, let's look at a little longer period. SP Group has grown consistently since the financial crisis, both organically and through acquisitions.
Speaker #2: The average annual growth rate over this period has been 9.1% relative to the past 12 months revenue. We have completed more than 20 larger or smaller acquisitions, and we have taken an active part in the consolidation of the plastics industry.
Speaker #2: We are convinced that this approach a combination of organic growth and strategic acquisitions will continue to be a central part of our growth strategy.
Speaker #2: Over the past 10 years, we have lifted the EBITDA margin from 14% to in 2016 to 20.4 for the past 12 months, an improvement on 6.4%.
Speaker #2: EBITDA growth in the first half of 2026 was 36.2%, and EBITDA now amounts for 701 million measured over the past 12 months. The marketing improvement has been achieved through a focus on four drivers.
Speaker #2: First, an increased share of own products which is very important here we are able to have a higher margin than we are on our sub-supplier tasks.
Speaker #2: Second, we have the increased production in Eastern Europe, with strengthens our competitiveness. And third, we have increased the optimization in our production. Fourth, which is relatively new, we are focused on getting a larger share of the value chain where we take more processes in-house.
Speaker #2: As an example, we have now tool production with the acquisition of Idepo, and we have increased opportunities to build finished products with the acquisition of OGM.
Speaker #2: And we expect that all four drivers will continue to contribute positively to margin development going forward. The same picture applies to the EBITDA margin, which has been lifted from 8% in 2016 to 12.5% for the last 12 months, an improvement on 4.5 percentage point.
Speaker #2: EBITDA growth in the first half of 2026 was 50.3%, even stronger than the EBITDA growth. And EBITDA amounts now for 428 million measured on a 12-month growth basis.
Speaker #2: The margin improvement was driven by the same four factors, increased share of own products, a larger share of the value chain, increased production in Eastern Europe, and optimization.
Speaker #2: And our ambition is clear. We want to be our customers' preferred supplier, with a strong competitiveness and healthy earnings. That requires a good mix between sub-supplier tasks where we continuously improve our processes and our own products where we create innovation and we have higher margins.
Speaker #3: Well, here we have a combined overview of the financial ratios and key figures. Several of which we have already touched on in the previous slides.
Speaker #3: As mentioned earlier, cash flow from operation was positive by 291 million in the first half of 2026, and contributed significantly to the change in cash, which in the first half of 2026 was positive by 54 million against a negative of 25 million last year in the same period, an improvement of 79 million.
Speaker #3: Our equity end of June was 1.9 billion, and this equals to a equity ratio of 46% against the equity ratio end 2025 of 45.3%.
Speaker #3: When we look at the outlook for 2026, we have upgraded our outlook for the fiscal year 2026 twice this summer. The first time was July 10th, on the basis of the first half development, we lifted and narrowed the expectation for revenue growth to 22 to 28%.
Speaker #3: The second time was Wednesday this week, when we upgraded again in connection with the acquisition of OGM. We therefore now expect revenue growth of 24 to 30%, equivalent to a revenue between 3.6 to 3.8 billion.
Speaker #3: Of this growth, 16 to 17% comes from acquisitions and the remainder is organic. The margin expectations are unchanged, and EBITDA margin of 19 to 21%, and an EBITDA margin of 11 to 13%.
Speaker #3: The geopolitic tensions and the conflict in the Middle East still plays a role; our growth in the first half has been strong, very strong, and primarily driven by new projects across a large part of our business.
Speaker #3: Our order horizon is not long, and there may be a minor element of stockpiling in Q2, we therefore take a cautious approach to guidance for the year of 2026.
Speaker #2: Yes. And then it is time to summarize. First half year of 2026 was record strong, with revenue growth of 32.9%, 19.7% was organic growth.
Speaker #2: We are seeing a good growth in both our own products and in our sub-supplier tasks. With the acquisition of OGM molding, we gained access to a new market, we gained new customers in the United Kingdom.
Speaker #2: And we have upgraded the guidance twice and now we expect, as Alan just said, a growth of in a level of 24 to 30%, with unchanged margin expectations.
Speaker #2: The underlying business is very strong and FP Group is ready for continuous growth. Thank you for your attention, and now we are ready for questions.
Speaker #1: Thank you very much, Lars and Alan, and I will just rejoin here with sound camera. And yes, let's jump into some of those questions that came during your presentation, go a few slides back.
Speaker #1: We do have a question on the Outlook, it says here, "If we bridge from the H1 revenue of 195 million Danish to the guided full year range the second half looks materially slower than the first, given with the OGM added.
Speaker #1: Is this guidance built on a junior expectation of lower activity or is there room in the range?"
Speaker #3: Well, as mentioned, we have chosen a cautious approach due to the geopolitic tensions we have seen in the first half of 2026. We strongly believe that 2024 to 30% is achievable.
Speaker #1: Thank you. And then a question also on the ambitions you have further out. What do you think we have a slide here that could support this?
Speaker #1: If you look at your ambitions for the period to 2030, let me just find the question here again. So in financial year 2026, you're guiding for these 3.65 to 3.85 billion, while you're 2030 target still stands at 4.5 billion.
Speaker #1: Looking at your current trajectory, it seems like that target will be hit in financial year 2027 or latest in financial year 2028, while the goal is for 2030.
Speaker #1: Will that figure be updated later?
Speaker #2: We when we set our targets towards 2030, we said we could we believe we could grow the business in the range 6 to 9% annually, and we might be able to do it faster if we were able to complete larger acquisitions.
Speaker #2: We have done so with both ED Pro and with OGM, and now, yes, as you say, it looks like we are going towards this goal faster than expected.
Speaker #2: And when we get there, then we will, of course, set some new high-level goals for the future. That is for sure.
Speaker #1: Thank you. And then we'll move a little back here on the slides again to your EBITDA margin here. Because there's a question here that goes, "EBITDA margin has come down a little in H1 2026 at a level of around 20.3 versus the levels you entered 2025 at in Q4 2025, you were around 21.5% in EBITDA margin." Is it mixed effects and/or has ED Pro acquisition also been diluted?
Speaker #2: It's a mixed effect. We are in a situation now where the sub-supplier tasks are having a bigger share of the revenue, and our own product has been reduced in the total volume.
Speaker #2: And we do have a lower level on the sub-supplier work compared with our own products. It's completely natural, and we, of course, will work hard to increase the share of our own products again, while we're on the same time also work hard to improve the overall business too.
Speaker #2: And we improve our margins.
Speaker #1: Thank you. And a further follow-up on the EBITDA margin, how much operational leverage is there in the coming years? Can you strengthen your margin even more than the 22% in the future, and which levers are needed then?
Speaker #2: The margin levels is highly, as I said before, highly affected of the product mix, especially if we were able to increase the share of our own products, then we are also able to increase the margin levels.
Speaker #2: Very much of our sub-supplier work is very competitive, and here we work really, really hard to become more efficient in all our processes, in our purchasing, every single day.
Speaker #2: On the same time, we are also in a world where this business is not something you just are given. This is where we are competing hard against other competitors.
Speaker #2: In the business.
Speaker #1: Thank you. And then a couple of questions on the OGM molding acquisition. There's a question here, "What is the earn-out structure tied to? Is that to EBITDA, EBIT, or revenue in 2027 and 2028, and how ambitions are the targets that would trigger the full payout?"
Speaker #3: Well. It's related to EBITDA, the operating profit and then the targets are ambitious and the team of OGM needs to achieve a level of operating income that they have done in the past and actually also a bit more so they're ambitious.
Speaker #1: Thank you. And then a more general question, "Could you provide a little more insight into the UK market? Can we take this as a sign that you expect your next acquisitions to be more likely in the UK market, and what percentage of OGA's revenue comes from the outside of the UK?"
Speaker #2: We can start with the last thing first. OGM has a limited sales outside the UK, and the sales that they have outside UK is for their customers in the UK, they have factories outside UK.
Speaker #2: We think that the UK is a very interesting market where there definitely are possibilities in the future, and but not having not said that it is automatically becoming the new place for the next acquisition, we have a good pipeline of interesting targets, and we will now take time and start working with this again for the future.
Speaker #1: Thank you. And then a question related to the healthcare segment. I'll just move back here. And the question goes here, "Healthcare grew only 0.6% in Q1, but 18%, as we can see here on the top, which implies around 40% growth in Q2 alone.
Speaker #1: What has turned around so marketly, and is that a sustainable level into second half of 2026?"
Speaker #2: When you compare with the figures from the different quarters, then we must remember that quarter one last year was actually very, very strong, and at the time, the best quarter ever.
Speaker #2: Quarter two was very poor. Especially on the healthcare part, where we saw some projects had been postponed. It was a time when we learned for the first time a lot about tariffs and trade wars.
Speaker #2: So you would say on an overall basis, that the healthcare part has grown as the rest in our organic growth. We have had an organic growth on the first half of 19.7%, and here we have grown in the first half with 18% on the healthcare part.
Speaker #1: Thank you. And then a question on geopolitics, "How do geopolitics and the conflict in the Middle East affect you today compared with back in April?"
Speaker #2: To a great extent, today we have I would say more certainty that we can get the materials that we need. We have seen stabilization of prices that has flattened out, and we are certain that we can continue if nothing major happens.
Speaker #2: But we fear that the situation could escalate, and then we'll be in a new situation. For sure.
Speaker #1: Good. And then a follow-up here on the ambitions or perhaps more clarifying, because it was here, "Was the 6 to 9% CAGR for FY 2030 goal?
Speaker #1: Was that purely organic?"
Speaker #2: We stayed at the time that it was organic growth with minor acquisitions. If we were able to do larger acquisitions, we could do more.
Speaker #2: And I would characterize both OGM and ED Pro as larger acquisitions compared to what we have done in the past in SP Pro.
Speaker #1: Very good. And there are no further questions so we're about to end the presentation here. So thank you very much for listening in, and thank you, Lars and Alan, for joining us here today.
Speaker #2: Thank you very much, Rasmus, and thank you to all of you who have taken time to listen.
Speaker #3: Thank you.
