Speaker #1: Hello, and a very warm welcome to Polygiene Group Q3 2026 webinar. Today's presentation will be divided into three sections. I'm your CFO, Anders Nordgren will begin with the financial.
Speaker #1: Minus 3 in Q3. From a cash perspective, cash flow for the quarter was negative, at $16.4 million. Mainly due to larger supplier payments related to inventory buildup that we secured earlier during the year.
Speaker #1: We ended the quarter with a cash of 34.2, and since 30 September we have seen significant payments coming in, which has strengthened the development beginning of Q4.
Speaker #1: But to understand what drove the sales decline, let's look more closely at the development in our two segments: the two segments Admaster and Polygene showed quite different events during the quarter.
Speaker #1: Polygene sales declined by 51%, while Admaster grew by 17%. The lower sales were largely due to limited distributor sales as distributor inventory levels remained high throughout Q3.
Speaker #1: As a comparison, distributor sales amounted to 9 million in Q3 last year. When those sales do not happen, as was the case this quarter, the shortfall becomes significant and visible.
Speaker #1: On the positive side, in addition to the lower cost base, Admaster grew by 17% during the quarter. Sales of almost 15 million declined enough to compensate for it.
Speaker #1: Mission: The changes we have made to improve operational efficiency and the continued repositioning of Admaster toward higher-value, technical solutions. At the beginning of 2026, we set up a number of clear priorities for the group.
Speaker #1: Of course, during the first half of the year, our focus was very much on execution. We had to respond to the significant changes in input costs, particularly silver.
Speaker #1: We had to adjust pricing and review how we operate in some of our markets. But as we move through the second half of the year, some of that work is translating into more structural progress.
Speaker #1: Diversification is becoming increasingly visible, both in the market we serve and in the technology we bring to those markets. In the Americas, the restructuring work we discussed earlier in the year is now complete, giving us a leaner and more integrated organization.
Speaker #1: And within Admaster, the technical solution strategy is gaining momentum under Kurt Meyers' leadership. So, while the current trading environment remains difficult, the organization itself is moving forward.
Speaker #1: One key strategic objective has been to reduce our dependence on traditional sports and outdoor applications. Now, that doesn't mean moving away from those markets; they remain very important to Polygine.
Speaker #1: But what it does mean is broadening where and how our technology is used. And "workwear" is a very good example. We are seeing a growing number of partners recognizing the value that freshness, comfort, and product longevity can bring in professional applications.
Speaker #1: And building on the success we reported already in Q2 with the UK company Orbit International, during Q3 we received our first order from French workwear company Caribbean.
Speaker #1: Fashion and lifestyle is another area where we are beginning to see some good progress. We attended our first dedicated exhibition in this market recently in Shanghai, and we had really positive response in that show.
Speaker #1: So, we also received our first order from specialist brand Move Dance. At the same time, our technology portfolio is becoming broader. StayCool continues to gain traction, with an upcoming launch—for example, in footwear with Adidas in Asia. Other current 2.0 trials are progressing well, with mills across different regions and in a wide range of applications.
Speaker #1: So this broadens our technology space beyond silver solutions, and gives us more ways to address consumer needs. The important point for me is that diversification is no longer just simply something we are talking about strategically.
Speaker #1: We are actually starting to see it in the commercial activities of the business. And this brings me to something that I find particularly interesting.
Speaker #1: During the year, we commissioned consumer research across five major markets—the US, Japan, Germany, France, and Australia—to better understand our consumer sentiment about freshness and odor control in clothing.
Speaker #1: And the results reinforced the feedback we obtained in a similar market research conducted in China about two years ago. And it also reinforced our belief that the consumer need is very much there.
Speaker #1: Seventy-seven percent of respondents told us that freshness is important to them. Seventy-five percent identified everyday apparel as one of the key categories where freshness matters. And perhaps most importantly, seventy-eight percent said that they would be prepared to pay a premium for odor control technology in their clothing.
Speaker #1: However, there are also very clear challenges that come from this market research, as only 42% of the respondents are currently aware that this type of technology exists.
Speaker #1: So, for me, that is one of the most important things from the research. We spend, as a company, many years developing technologies that deliver performance and also building strong relationships with brands and mills.
Speaker #1: The next step is to make sure that consumers understand the benefits those technologies bring. The opportunity, therefore, is not just about technology; it's also about communication.
Speaker #1: And that will increasingly influence how we work with our brand partners, particularly as we move further into new sectors, new market segments like everyday apparel, workwear, and lifestyle applications.
Speaker #1: Now, I would like to close the loop on another priority we had discussed during the year, the Americas. Earlier in 2026, we shared that the operating model in the region needed to become simpler and more efficient.
Speaker #1: And that restructuring is now complete. So, on the surfaces side, Biomaster USA has been integrated into Admaster, and the US warehouse structure has been removed.
Speaker #1: So commercially and operationally, resources can now be managed more efficiently across the wider organization. We have taken a similar approach with the textile side.
Speaker #1: The Americas and EMEA commercial teams now operate under one leadership structure. This helps us share expertise and also resources more effectively, while keeping local customer relationships that remain important in North America and in Latin America.
Speaker #1: Now, this is not simply about reducing costs. It's about creating structure that is better suited to the size of the business today. And gives us a stronger platform from which we can rebuild profitable growth.
Speaker #1: Now, turning to Admaster, I remain really encouraged by the strategies of the business. Since Kurt joined us in August as Head of Commercial Growth, we have further increased the focus on applications where our technology solves clearly defined customer problems.
Speaker #1: This includes areas such as anti-microbial resistance, healthcare, clean water, and food security. Circularity, resource efficiency, and product traceability. These are markets where the value proposition goes well beyond simply adding an additive for a market USP.
Speaker #1: These applications require technical expertise, an understanding of the customer's application, and, increasingly, the ability to develop tailored, customized solutions. And that is exactly where I believe Admaster should reposition itself.
Speaker #1: While we are seeing a growing pipeline of these higher-value opportunities, we also need to be realistic—specifically, the near-term Q4 sales within Admaster are likely to be below last year.
Speaker #1: And this is largely because of the ordering pattern from one Masterpiece customer. This customer is likely to place a smaller order than previously anticipated.
Speaker #1: And this is not because we have lost a customer or the application. It's simply that the customer last year purchased a very large quantity at the end of the year.
Speaker #1: And their consumption during 2026 has been considerably lower than expected, due to market conditions. It means that their existing inventory actually is going to last much longer.
Speaker #1: The relationship remains very strong, and the long-term opportunity is still there. They are even talking about potential expansion into adjacent markets and also new geographies.
Speaker #1: So, this is still a very strong potential for growth, but it's just growing at a much slower pace than we had anticipated originally. So, it's a short-term headwind.
Speaker #1: It's not a change. View of the underlying opportunity. Our focus remains really at Admaster on building a strong quality of revenue and long-term vision.
Speaker #1: While we manage the volatility that we see in the markets today. So the key takeaways to conclude: the market remains difficult, and as we've already indicated, we do not currently expect a meaningful improvement during the fourth quarter.
Speaker #1: But I also believe it is important to separate the short-term trading environment from the progress we are making within the business. Diversification within our textile business is moving forward with increasing activity in workwear, fashion, and lifestyle.
Speaker #1: The consumer research reinforces the relevance of our freshness, as well as our control and cooling technologies, and highlights an important opportunity to communicate their value more effectively. This will be a priority for our marketing team in the coming quarters.
Speaker #1: The Americas restructuring is complete, and now we have leaner operating model in place. And Admaster is making progress towards the technical solution business we want it to be.
Speaker #1: There is still a great deal of work ahead of us. And I do not underestimate the challenge we face. But the priority is clear, and we are taking the action required to strengthen the foundation of the group.
Speaker #1: So whilst the short-term environment remains difficult, we continue to rebuild towards profitable and sustainable growth. And with that, I think we have covered the key developments for the quarter.
Speaker #1: So, thank you for your attention. Anders and I will now be very happy to take your questions.
Speaker #2: Yeah. And I think we received a couple of questions through the meeting that was addressed to me, and that would offer you a break somewhere.
Speaker #1: Okay.
Speaker #2: The share price is at an all-time low right now, since 2016. How are you planning to reverse that trend? Well, I — or we — understand the shareholders' disappointment with the share price performance, for sure.
Speaker #2: My responsibility, or our responsibility, is to improve the underlying business with a clear focus on profitability, cash flow, and, in the end, profitable growth.
Speaker #2: That, for me, is how we create value for the shareholders going forward. Also, a question related to the liquidity in the share—something I understand is important for our investors and shareholders.
Speaker #2: Now, I think it has improved during the third quarter. But in general, we are focusing, as I said, on the underlying business with profitability and cash flow.
Speaker #2: Something that should increase the interest of our business and therefore support better liquidity going forward. Also, a question related to a specific shareholder, and that is something that we don't respond to regarding.
Speaker #2: Individual shareholders investment decisions. To coverage of Polygene, are you planning to have a new company covering the companies? I definitely see a value of having an external analyst covering us, helping our investors understand the business.
Speaker #2: However, currently, there is no new arrangement in place. But it is something that we will consider and evaluate going forward during probably 2027.
Speaker #1: Yeah. And in difficult times, we have to focus the results available to us and the decision was made to really focus on growth, stabilizing the business, and growing the business.
Speaker #1: And the money that we're not investing in paying for an analyst can go into development and growing the business instead.
Speaker #2: Yeah.
Speaker #1: I think there was also a question about a large contract, which we as a group, we had announced in May 2025 before. Either of us joined the company.
Speaker #1: I think I hope I have answered in the report, but just to clarify, so this contract has come through. We had selling to this customer, but we are selling at a much lower volume than initially anticipated.
Speaker #1: And this customer was very, very price sensitive. It was a large volume, but at a very low price, which today in the current market condition, with the silver being very, very high, would not be valuable for us anyway to supply a large volume.
Speaker #1: It would be at too low margin. So all in all, we haven't lost the opportunity. It's just that the opportunity isn't the size that it was first estimated at, but the estimate was done at a different time and market condition have changed in the meantime.
Speaker #2: I think those were all the questions, if we don't have anything in the chat—which we don't.
Speaker #1: Okay. Well, thank you all for your time today. And we look forward to speaking with you again in February for the next report, which is Q4.
Speaker #1: And that is on the 18th of February, 2027. Thank you.
