It's 9:00 A.M., so let's start. Welcome to AQ Group Earnings Call for Quarter Two, 2022. I will try to have a brief presentation. Hopefully, it will be less than 30 minutes long, and then please save your questions for later. Just after when we come to the Q&A session, just unmute, and then we take the questions as. It will be simple. Let's go. Second quarter, I guess you have already read the bullets. It is a strong growth quarter with more than way above our target. We have decreased the operating profit at the same time, which we are very disappointed with. Also, EBT is down from last year, and the profit margin before tax is also down, so not very happy about that. Cash flow is also quite low. It is natural because we have such a big growth, and also earnings per share is down in the quarter compared to the same quarter last year. If we go into first half year, it's the same picture really. Net sales are increasing very rapidly. Operating profit is decreasing somewhat. Same with EBT and EBT margin, which is going down, and also the cash flow is going down because of the high growth. Our earnings per share also have decreased compared to last year, first half with 12.3%. Our equity ratio is still very high. We have a strong balance sheet versus equity. If we look at earnings per share growth, then we see that it's not growing this year. If we look rolling 12 months, then it's not growing. To be honest, we have four straight, crappy quarters, where the profit is lower, and we are working hard to reverse this. I would say improvement is in progress, and I think we should be able to increase profit for the full year compared to last year. We move to turnover then. We see a very strong turnover growth. About half of that growth is due to price increases. At the same time, we still see that component supply limits us in electrical cabinets, System Products business areas. They have a lot of components in them. We had one of our business subsidiaries in Shanghai shut down for six weeks due to COVID, which reduces turnover in the quarter by about SEK 10 million. It is not orders that disappear. They are just moved later. We have a big customer in U.S., Canada that has a strike at the moment, so that affects volume in June by SEK 10 million-SEK 20 million as well. We have moved two of our factories to bigger locations in the quarter. One is the factory in Lithuania, where we have built our own building, which is almost double the size of the previous one. The other factory is our transformer factory in India, where we have also doubled the square meters because we see an increased growth from our customers, so we need more space. Despite all of that negativity, we see a very strong growth in the quarter and also continue to increase versus previous quarter, which is good. We aim to continue this trend. Organic growth is very high, as I've said. To point out that we believe that the real organic volume growth is approximately 11% compared to same quarter last year. 10% of the growth, the organic growth as reported, is price increases versus last year. When we look at... I should mention here also, we have a growth on the company level to grow 15% net sales every year. We have now switched the target. Since the inflation is so high, it's too easy to beat this 10% organic growth target, so we have increased it now to 10%. On the other hand, based on the situation we're in with the strong growth, we have decided to lower the ambition on the acquired growth. Because basically, we acquired a big company last year, and then we see that we need really to focus on the big organic growth that we have with our existing customer and businesses and also to improve the profit levels. That is the main focus now for us, to really handle all the new projects that we have won and start to deliver out those and make more profit on those as well. That is the main focus, even though we will never stop looking really for acquisitions. Anyway, that's focus now for us. If we look at the margin then, which I guess is a big interest for all of you who attend this call, as I've said in all my previous calls, we believe that in a healthy state, we should be somewhere between 6%-10%. In EBT margin, every quarter we are just above now in quarter two, and it's really too low and it's a really declining trend as well. We have been fighting a lot with price increases, and I think that we have managed to come through with a lot of customers and several of our businesses are showing sustainable gross margins. However, we still have work to do, especially in our companies that have a lot of automotive customers. They are masters in procrastinating these increases and making it very hard and slow for us to implement those. Even though we have a lot of index clauses and such in our contracts, those clauses do not really represent reality, what we have to pay to the supplier. It's a hassle for us. In the quarter, we have managed to renegotiate a lot of contracts. We have managed to terminate some old bad parts and so on, but the effect on the P&L will come later for that. In addition to this, we are working, as stated in the report, with our company in Mexico to improve operational performance and profitability there and two transformer factories in China where we see a big change in profitability versus last year. I think it is sort of a quick fix. We can fix that one, but it will take a little bit more time, and it's not fixed in this quarter or in the last quarter, but I think we can fix it now in quarter three. If we look at the cash flow then, we see also a declining trend here. It's quite natural when you grow as fast as we are doing. We need more inventory to be able to produce to our customers, even though I believe I have an inventory slide later on. Even though I believe that we have maybe increased a little bit too much and we need to continue to work on that so that we get the inventory turnover up to speed again. However, and then also of course, our accounts receivables increase a lot, but we don't see any big risks in those. In June, actually, the cash flow was quite good, which is natural because we deliver out a bit choppy now. It's a very big difference in turnover with different months. In March, we had a lot of big deliveries and the same actually now in June. It's good at least that cash flow is at least coming back and we see that once this growth will become more stabilized on a little bit lower level than the cash will come. We see that our net debt is increasing. It is due to partly of course because of not good enough cash flow, but also we are doing a lot of investments now to be able to cope with all the volume that we have. A lot of that is in inventory, the net debt, but we have also bought several new machines in the quarter. We are investing in facilities in Lithuania and Bulgaria. Bulgaria is not coming in this quarter, but next quarter. The new factory there, I will come back to that. The Lithuanian plant was taken into operation in this quarter. Here we see a big part of our investments there. Net debt is increasing a little bit, but I would say net debt versus EBITDA is still on a very, very low and healthy level. We are not worried about our debt at the moment, and this is why we've had a very sound financial structure to be able to catch this growth that we see now. We think it's good. This is one of my worries. If we can conclude my worries that makes me sleepless at night is basically our. It's the inflation as such and our ability to implement price increases. The second one is the inventory, which has gone up a lot over the year. We have now put action plans in place at all our companies, and we aim to get back to three. We are currently on a record low level of 2.1 turns per year. It's a little bit natural in the way we calculate also when we have this super strong growth that it becomes a little bit lower. I believe that we will be able to at least come back to a better level in the second half of the year. The reasons for it's natural, it's the growth and price increases of the raw material and also the missing components affect quite a lot that we are not able to deliver out everything that we should, so we have more work in progress than we normally have. If you look at our on-time delivery, it is also not good. We are not alone. We see it of course in our supply chain, which is actually much worse than this. So we're able to through the higher inventory to cope with some of these swings that we see in our supply chain. But nevertheless, it is. I think we've never been this low as long as I can remember, and I've been with the company for more than 10 years. We have a lot of work to do, and we see that some of our customers are really pulling volumes and then going down in volume and then up again. It's quite difficult for us, but here we have a big opportunity to improve really. Still, if we cannot get all the components, it's very hard for us to deliver on time. Maybe the most exciting part of this presentation is these projects that we have for future growth. We start with this one, which maybe I'm most excited about. It is this investment that we sent out a press release a couple of weeks ago. We invested now EUR 5 million in a brownfield in Pernik, Bulgaria. It is about 30 minutes from our main factory in Bulgaria in Radomir. This factory has grown basically 50% per year, the Radomir one, for several years, and we start to become too big in this small town where we are. We decided to go to Pernik, which is a little bit bigger town, but it is not huge, and it is just 30 minutes from our old factory, as I said. It's a really perfect location for us to be able to increase our output from Bulgaria mainly to Europe going forward. This factory will then produce you see some of the cabinets on the picture to the left, and it is for one of our customers, a new customer for us, where they produce battery storage systems for storing renewable energy. We will not build the battery as such. I mean, it will be a battery, but we will get the batteries from China in this case, and then we will assemble them in big cabinets, which we have welded and painted, and then we will ship it to our customers mainly in, I would say, in U.S., Taiwan and U.K., these first orders that we have won together with them. We currently have orders for EUR 12 million. We have already made some deliveries, and we believe that there will be additional volume of EUR 12 million in 2023. This will be a main driver for growth going into 2023. Also worth mentioning that the margin for these projects are in line with our target for the group. We're doing some projects also with supercapacitor banks, which development projects. Actually, our customer lost the first project they had in Europe, but I think they will fight for more projects. I think it is a very interesting thing to be able to balance the load when you have a lot of wind, for instance, in your power system. But for us, it's basically electrical cabinets, even though it's called supercapacitor something. Then in wind power, we see very strong sales in our transformer inductor field, especially from Estonia, but we have also in China and India and in U.S. and Hungary sales in this area. It is on a record level. Here we sell mostly these water-cooled transformers and inductor, and they are quite hard to do. We believe it's very good products for us. We have also managed to sell big aluminum steel structures for the biggest windmill in the world. It is a project run by GE called Haliade-X, and it is a big project for them and quite a big project for us. We see additional potential in that project for our factory in Hungary as well going forward. We think this is an exciting area to be in because despite inflation and everything, I think everybody understands that renewable energy will continue to grow for many years to come. We need to be there. I've talked about railway. We still believe that this is a strong growth area for us. We see in the quarter that we have won an extension for transformers and inductor for the M7 project in Belgium. We see that C30, which is, you can see the driver desk down to the left there. It's the metro in Stockholm. We are doing also all the electrical cabinets. You see them behind the driver desks. We're doing all the transformers and inductors for that project. It's a good volume. It has been a little bit on hold during some time, but now the deliveries are starting again. We see also now that bus volumes are coming back in Europe and Mexico for our wire harness plants. I think our biggest customer there, Volvo Buses, has also launched their new coach, which is, yeah, more energy efficient and a much better bus than their previous one. Very excited about that. We have also designed, and it is an own product, actually. This, it's Charging rail for electric buses, where we sell to basically all big OEMs in Europe. It is our design team, AQ Engineering in Torslanda who have done that design. Now we have done a redesign which is more cost efficient and better, and it will go into production now in quarter three and quarter four. It's not a big, huge volume, but we're very proud of that being part of the electrification of buses and charging of those. If we go into commercial vehicles, we see that we are growing in the construction equipment segment. This is also an effect due to the Ukraine-Russia war, where one of our customers had to move a lot of their volume to us from a supplier they had previously in Russia. We have signed now an agreement with them for additional EUR 9 million per year. The serial production, we have already started all the prototyping and done a lot of that now in Q2, and the serial deliveries are starting mid quarter three, and it will go in full swing end quarter three. We have also done now during this half year a big ramp-up of the fender production. The fender is the what protects the wheel for the splash from the wheel, so to speak, on these big yellow construction machines. We have won a big project several years ago, I think three years ago, but now it's gone into serial productions and we're delivering now at full speed since a quarter, basically. For trucks, we have won more than 200 new parts for one of our customers' new electric trucks, which are now in prototype and ramp-up in our five sites in Sweden and Estonia. Then we are, this we have communicated earlier, but we're implementing also this wire harnesses for a big cab for a truck company in Europe in our factory in Lithuania. That will go into full serial production 2023. We still see big growth in our med tech business, which we think is fun. Our two big customers there, we are basically doubling the volume, and it's a lot about the welding of stainless steel. We have doubled our production space for that in Bulgaria, and we are increasing output now, and I think it will be about double volume this year compared to last year. This we are excited about, and we will continue to try to grow this business because we believe it's very difficult to do. It's very, very high requirements, so it becomes a big moat. It's not so easy to replace us. We come into Q&A. I will try to see if I can do like this so I can see you also. Stop sharing. There we go. Please raise your hand if you have a question or on any specific topic. Christoffer has a question. Please go ahead, Christoffer. Good morning, James and Christina. This is Christoffer from Obligo Funds. Hi. Hi. You touched on that earlier, but, you're still expecting, you know, earnings to increase from 2021. You expect a solid second half of the year. What are you seeing more? Can you elaborate further? We normally don't do forward-looking statements, but what I can see also, the comparable quarters for last year were not as high as the quarter one and quarter two in 2021 also. I still believe that we should be able to come better than those quarters last year. Yeah. It is partly volume related but also on the price increases that we have been able to agree at later part of quarter two as well that will be implemented during quarter three. As I believe that it will be definitely look a little bit better. Yeah. Excellent. Yeah, you're meeting, you know, easier comparables obviously. Yeah. the third quarter. In terms of demand, can you split up any particular sector that is strong? Because you have strong demand across the board, but any particular outlier and a potential, you know, weaker segment? No, to be honest, we see we can say a weaker segment. We see still that the marine side for us is still quite weak, but we have a lot of orders there. Most of that volume is coming in 2023. We are delivering big transformers for ships and also a lot of our electrical automation equipment is going into different types of ro-ro ships and these kind of things. I believe that that volume will come in 2023, but it's low now. Other than that, we see that we previously have stated that railway and buses have been quite low, but what we see now is that it's coming back. That people dare now to go by bus and train again maybe. I don't really see any bad sectors, but then again, I read the news as well, and I'm worried about the truck volumes. What we see now in our forecasts and what we have delivered out this quarter is very, very high volumes. We cannot really see any slowdown in those segments now, or I don't have that visibility at least. It's very hard to see. Yes. Given the macroeconomic uncertainty, it's very difficult. In terms of M&A then, because you obviously are investing for the future, you know, expanding your, Yeah Production capacity, do you see any, you know, bolt-on acquisitions or anything like that, you know, for the second half of the year? Or how does the M&A pipeline look like? I would say that we, I mean, we always have our list with companies that we are speaking to, and I mean, we have interesting companies that we're looking at. At the same time, I would say that we have so much growth now to take care of. I would say we need to focus on getting that in place and make sure that we make enough profit on those projects than rather than to jump into any acquisition. On the other hand, we are always opportunistic, so something can still happen. I would say we are trying to take care of all the volumes that we have at the moment because we have won a lot of new projects. I think this battery factory is a huge project for us. It is not just some small thing. Our customer wants to buy a lot from us, and they want to buy it fast. Yeah. It is in a way I see that as an acquisition because to get to be able to have a very automated factory, especially for the sheet metal where we will have robotic welding and so on, for that type of process in Eastern Europe will be very competitive, I believe. There are more customers there out there that need this kind of product. We think that this is very exciting. Yeah. In terms of production then, because you have obviously expanded your production footprint and how much capacity are you adding now with the Lithuanian factory coming online, can you give us a number or figure? I mean, the Lithuanian factory is basically we are doubling the output there and to give you a number then it used to deliver about EUR 45 million per year, and that will double. We believe it will be not full, but very highly utilized during 2023. The factory in Bulgaria, I expect it to have an output, that site to have an output of similar, I mean, basically EUR 40 million by 2024. That is my expectation. It all depends on if our customer wins orders and so on. Yeah, of course. On the demand side. Thank you very much, James. Yeah. Johan, you had a question as well. Yes. Good morning. Just a quick question on, I'm just trying to understand, you know, you're running 6% margins approximately, say 1%-8%. Yeah. If you look at this deviation, how much would you say is, what is pricing discipline in your company? Yeah. What is the disturbances in production? You talk about this 90% precision, right? You wanna be at 99. Could you divide it a little bit in those buckets if possible? No, I would say that normally when you have this high volume that we have now, I mean, when you grow this much, you should get an overcoverage as well. I would say that it is 2% price increase towards automotive customers mainly. There are some other companies where we are slow, but we have had now a program running, where I think we have been able to catch up in most of our factories, but we have two big sites in Europe where we really need to work with our automotive customers to get back on track with our gross margins. I would say that there is another 2% to be gained when we get up to speed in terms of productivity with all the new people that we are recruiting. It takes, especially in our manual processes where we have manual people doing work, when you grow that one very fast, then it takes time to get them really to be able to deliver at the same speed as the more experienced operators. Okay. Yeah, just a quick follow-up. I mean, I guess from our perspective, you know, we've been in the last, sort of six months, you know, it's been an excellent pricing environment. There's very high acceptance for price hikes, and that's not gonna last, of course. It's gonna be more competitive looking forward. Mm-hmm. To what extent do you feel that you have a corporate governance problem in the company where you take all these orders with poor cash flow, poor margins? The second question I wanted to ask is, what are you seeing currently from the fairly dramatic falls in some raw material prices that happened quite lately here? If you could just talk about how that could potentially impact you in the second half year. Okay, let's start with the first. I don't believe that we have a corporate governance problem. However, what I do believe is that we are, I mean, I think almost no people that we have employed in our company have seen this kind of inflation ever. I think it's also a matter of getting used to, for us and for our customers, a new environment. Yeah, I agree with you. We have been slow in some areas to improve our pricing. It's also a new situation for us. It is not a normal situation for us. I can say that I believe that we have okay pricing power and negotiation power in that sense. However, we really have been slow with these big automotive accounts. To try to answer second question, I can elaborate a little bit more on that as well. I believe it's not new orders, it is a lot of these old running products that we are having more problems with than the new orders we take. Because the new orders we take, of course, there is a new calculation behind that. I believe that it's more old products that have been running for a long time where we have a pricing problem than the new ones. Second question was regarding raw material prices going down. Of course, we will see an effect on that. What we can say is that we see also that these suppliers of raw materials also have an inflation problem. Even though the LMEs are dropping, we still see that these conversion rates that they have are. They are still trying to put them higher. I think we will see some effect, absolutely, especially in aluminum and copper. On the black steel side, I think it will be more or less rollover because we locked our prices in the beginning of last year, in the beginning of this year, and actually the steel price hasn't gone down. It was like a low there. We locked it for six months, so it's basically a rollover for us for black carbon steel. Thinner material, which is the volumes we have most in that business area. For components, we still see that the prices are quite high even though raw materials have gone down. Thanks. More questions? Okay. If you have further questions that you want, don't want to raise in this call, feel free to call me. I think my phone number is in the report, so, and also Christina's number is in the report. So just feel free to give me a call in that case. Thank you all for listening, and I wish you all a great summer.