Welcome to the HANZA Q1 2023 report conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now I will hand the conference over to the speaker CEO and President, Erik Stenfors, and CFO Lars Åkerblom. Please go ahead. Thank you, thank you all for joining this presentation of HANZA's first quarter 2023. I'm Erik Stenfors, the CEO of HANZA, and I will run this presentation as usual with my colleague Lars Åkerblom, CFO. In short, Q1 was another quarter of strong growth, and we show our best results so far. It goes all the way down to earnings per share, which almost tripled. Furthermore, we have an all-time high order backlog, so we stay very optimistic also about the future. In Q1, we presented a new expanded sustainability strategy. Very important. I will come back to this in just a moment, but let's get started and move to page number 2. We have divided this presentation in 3 parts. I will start by walking you through the highlights of the first quarter, then Lars will give you the financial development, then we end with a look at the future. After the presentation, we will have our Q&A session. Please, we will welcome any questions at that point. We move to page number 3. Sales went up almost 30% this quarter compared to the first quarter last year, the organic growth was well above 20%. This is despite tough comparative figures. What makes this possible? First of all, we have managed to collect a portfolio of customers which are quite successful, they are from different industries and different companies. We see from energy, agriculture, defense, mining, reverse vending machines. Secondly, we have an offer which is well-received on the market. We have many product-owning companies which are looking for alternative for these complex global supply chains, then HANZA could be the solution. On top of that, we have also a service part. HANZA is about manufacturing and services, and we are offering product development for our customers and also advisory services. This of course also supports sales. Sales are good. Now in order to grow, we also need to be able to keep up the capacity with the order intake. To do this, we have a number of activities and programs. We are investing constantly. We launched the latest investment program in December, SEK 100 million. We have efficiency programs, and we have been also quite successful with the integrations of our acquisitions. I think Lars will probably come back to this from a number perspective. The main reason why we can handle this growth is our committed and dedicated colleagues. That is what makes this expansion possible and also team HANZA who makes it possible to keep this strong cash flow. We have a cash flow of almost SEK 90 million for this quarter in the midst of the expansion. We know that sales growth is bronze. It shows that you have an attractive offer, profitability is silver. It shows that you actually have a business model that is working. Cash flow is gold. It shows that you have a future. You need a strong cash flow in order to be able to invest, to take on new orders, to be able to keep the debt down and also of course, pay dividends to your shareholders. All in all, a really good and strong quarter. We turn to page 4. I think we all became even more concerned when we saw the latest IPCC report. If you recall, it came in end of March, and the summary was that humanity is on thin ice, and it's melting fast. It means it calls for urgent climate activities. We must of course also support, and therefore we were pleased that we just introduced our expanded sustainability strategy. Sustainability is of course not just about the climate, it's also about the working environment. Now, the good news is there's no conflict in the objectives of sustainability work and running a good company. Au contraire, if you reduce consumption and emissions, you will support the income statement. If you create a green company, it will be easier to recruit, you have easier to attract new customers and also suppliers. If you improve the work environment, well, you will just create a better output. In order now to follow this up, we will in every coming interim report have a special headline where we state the progress of the work with the sustainability. With that, I will hand over to Lars, who will give you the review of our figures and also tell you more about our new sustainability targets. Thank you, Erik. We move to page five. As Erik mentioned, we are today delivering a very strong Q1 report. For the second quarter in a row, we exceed 1 billion SEK in sales. We show, well, a growth of 29%. Of that, 23% is organic. We see that both segments, and more or less all clusters are growing, and also among several different customers. In this quarter, we do not have any major impact or actually no impact at all, more or less, due to increased prices on components and material or energy, that we had in many of the quarters in 2022. We also see an increased earnings. We are 100%. We have the double EBITA compared to last year. We reach, if we exclude electricity subsidy, a margin of 7.7%. We are now on close to SEK 3.8 billion in rolling 12 months sales with an earning percentage of 6.8%. What are the reasons for this really increased both sales and earnings? It's what Erik mentioned, two main factors, and it's the fact that we were early in starting the expansion programs in the middle of the pandemic. We took decisions to continue to invest, and we did continue to invest during 2022 and also in the end of 2022. That has led to increased capacity, and increased sales and increased earnings. One of the major part is of course, the new factory in Tartu, Estonia, that we opened up more or less exactly one year ago. Can move to page 6. As I said, we see increased sales and increased profitability in all clusters and in both segments. As you know, we divide HANZA into two operational segments, Main Markets and Other Markets. We have for a long time said that the Other Markets are not as mature as the Main Markets, and we have seen increased profitability, and we have said that the profitability will increase in Other Markets. Long term, we really do not see any reason for a difference between the profitability in Other Markets and Main Markets. Today we see that Other Markets are growing organically by 30% and has increased its profitability quite a lot and reached 6.4%. The last year, 1.5% is heavily negatively affected by the opening of the new factory in Estonia that I mentioned before. The segment Main Markets is continuously growing and increasing its profitability. We have, excluding the electricity subsidy, a margin of 8.8% compared to 7.7% last year. We can move to page 6. Erik mentioned that cash is extremely important to be able to not only make good sales and good profit, you also need to be able to get cash flow from the operation. We have in Q1 a really strong cash flow of SEK 89 million in the first quarter compared to SEK 13 a year ago. If we take it the rolling twelve months, we have a cash flow of SEK 221 million. We've been very good in organizing the operation and react on the fact that we need to increase stock and also the fact that we are growing, and we are growing in rolling twelves by SEK 1 billion, and we still are able to have a positive cash flow. That's really good. That, of course, together with a strong result and the share issue we did in quarter four, leads to that the net debt is decreasing, and it's actually decreasing a lot if you compare it to the EBITA. We are now on rolling 12 on 1.6x EBITDA in net debt. The earnings per share, very strong, close to 150 SEK per share, 149 compared to 154 in 2022. Almost half of what we did the full year in 2022, when we reached 335. On the AGM next week, the board has proposed a dividend of 0.75 crowns per share. We can move to slide 8. The sustainability goals that we released in connection with the annual report. There is in the annual report a lot more information about the sustainability work and also where we are in the KPIs, and how we have developed the work with the sustainability, so you can read it there if you like. There are not only the environmental and climate focus, it's also the safety and ethics, and also employees. What we have said regarding the environmental and climate is that we shall continue to reduce the carbon dioxide emissions from our own operations. Just as an information, you can see in the annual report that we have reduced this from 2021 to 2022 with 21% and 33% in the two things that we are measuring. We also shall re-reduce the natural resources and energy that we use. Here we have also so far been able to reduce that. Also reduce the waste that we are using in the production. Here we are also mainly down in the how much of waste we are using in the production. Safety and ethics also of course extremely important. We have the data security, and we have a zero goal, and we actually been able to reach zero damages from data breaches and also zero incidents of corruption. That's also something that we really work hard with. We are working of course with a lot of suppliers and main part of the sustainability footprint that we are making is part of what we are buying, and we are working a lot with the suppliers confirming that they are working with code of conduct. From 2023, we will actually also make it mandatory for our main suppliers to sign on that they are following the code of conduct that HANZA has as a rule for the main suppliers. The employees Erik mentioned, that is the result and what we have done in 2022 and in Q1 would not be possible without the work from the employees. Safety. We have of course a zero goal on accidents. Unfortunately, we are not there, but we have decreased it if we compare it to the number of working hours, we are down by 20% in accidents in 2022. Also diversity and gender, that's something that we are working on and focusing on and will be focusing even more on going forward. These are the sustainability goals that we informed about in the end of quarter one. As Erik said, we will from now on in the quarterly reports disclose how the KPIs are developing and how we are developing in the sustainability work. By that, I leave back to you, Erik. Okay. Thank you, Lars. Yes, CO2 is really the great challenge of our time. We all need to work on that. Last year, HANZA reached the financial targets that we communicated back in 2018, therefore we launched new financial targets, including that we should reach 5 billion SEK in sales and have an operating margin of 8% in 2025. If you look at the numbers that Lars presented, we really see that we have made a flying start towards these 2025 targets. We have a straightforward strategy. We will continue to grow and build on our existing manufacturing clusters, existing geographies, existing technologies. We will also further develop the service part of HANZA. That's where we help our customers with the product development and advisory services. We're also open for acquisitions if they are in line with this strategy. We keep focus on the sustainability work. We have an unique possibility in our concept to lower number of shipments, thanks to regional and complete manufacturing. We'll also continue to work and seek to create the best workplace in our industry. Short term, as said, we see a very positive development. Long term, we are aiming for the world. We've been clear that when we have reached the financial targets 2025, we will do a geographical expansion and launch a seventh manufacturing cluster. Where is a question we need to come back to. To summarize the presentation, the best time is still ahead of us. That concludes the presentation. Now we welcome any questions, and we can turn to page number 10. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Fredrik Nilsson from Redeye. Please go ahead. Hello. Can you hear me? Yes. Nice. You have had strong organic growth for many quarters, the order book is record high. I mean, you mentioned that you constantly do some investments in capacity, I mean, how much additional volumes can you handle before needing substantial investments in capacity? Good morning, Fredrik. Erik speaking. Yes, I think we have touched on this before that we have a very cost-efficient way of expanding our activities. We do this in modules, so we have bought land around our existing manufacturing clusters, so we can add the facility and also add more equipment and also new colleagues in a very cost-efficient way. We increase the capacity with at a low cost. This can go on for a long time. In the existing clusters, we can, I will not give you the numbers, but to reach the 5 billion tech goal is no challenge. There's no step function on that road. Okay, I see. Rather smaller gradual investments going on all the time than something new, big. That's... Is that how I should interpret it? Yeah, that's correct. The main cost is to launch a new cluster. That's also why we say that we need to be a really solid ground before we take the next step. The good part is that every time we launch a new cluster, it becomes a smaller part of the whole HANZA. It doesn't affect the group profitability as much as it did in the beginning. It's correct. It will be a cost-efficient small step increase. We will reach this SEK 5 billion and more without any extra large costs. Okay. Other Markets, the margins are improving, quite a lot year-over-year, it's still a bit left to before they reach the Main Markets level. Does that require any substantial investments or efficiency measures, or are they on track to reaching the Main Markets with its current operations? I think that we are following exactly what we have stated in earlier reports. We take it step by step. We know that our mature clusters are delivering a margin in double digits. Different clusters are on different maturity levels, but they are all progressing. I don't believe I can give you a precise answer, but you see that the things we have done are bringing all clusters one step forward, and therefore we are at about the 6% margin, which was the previous goal also on the Other Markets. No, no big step there as well, if that was an answer to your question. Yeah, yeah, sure. I mean, so far, you seem to be ahead of or at least in line with your 2025 target. I mean, do you see any potential threat? What could threaten that target? I mean, it could be some major world event, but for us, we are following a very simple formula. We have done this a number of years, and we're doing it step by step. One thing that is a challenge, sales is not a challenge, and I think the capacity increase is not a challenge. The challenge we have is attracting new people and also skilled people. We see also when we are robotizing that we need more educated people, and we are located outside the big city. That's where we put our, a lot of our energy, and that's also why we are trying to create the best workplace in our industry, a way to find people. As I said, helping environment is also good from the recruitment aspect. I cannot see anything that would destroy this, but of course, it will be hard work, especially recruiting people. Okay. That's all from me. Thank you very much. Thank you. The next question comes from Niklas Elmhammer from Carlsquare. Please go ahead. Hello. Thank you and good morning. You mentioned you have a record order book, and I see positive development. I was just wondering, how do you view inventory levels among customers? Are you any, like, concerned about perhaps high levels there? Lars, would you address that? By the way, good morning, Niklas. Hello, Niklas. I'm not sure if I fully understood your questions, your question about the customers. Yeah. It was, I mean, you have very positive development. Are you in some way, any way concerned about inventory levels among customers? They are sort of, have been rising very fast recently. No, I got it. What you can see is that we had to increase the inventory levels quite a lot a year ago in the first half of 2022. Since that, the inventory levels have been more or less on the same level if you compare them to sales. Where we have been forced to increase the inventory levels are mainly in the electronic business due to component shortage. For a very long time, we have worked with reducing the risk in keeping inventory, so it's really no new, even though the levels are a little bit higher. We always bind the customer to the inventory that we buy because HANZA is not buying inventory for its own sake. It's we are act... We are buying for the customer, and then the customer need to be aware and take responsibility for the inventory that we are buying for them. I really do not see a major risk. We are also, of course, looking into the customer by customer. Overall, we have strong customer. We have customers that are doing well and are strong companies. The risk would be that the customer would go into Chapter 11 or something like that, but we really do not have that type of customer. A long answer that can be in short, that no, I don't see a major risk in the inventory levels. Okay. thank you. I was wondering if you could, perhaps tell us a little more about the expansion plans you have for. You mentioned that you are, in the report, that you are, planning expansion in Estonia, in the Czech Republic, in Poland, if I'm correct. Is it possible to elaborate a little bit about the scope, the size of those expansions and the time plan? I don't know, Erik. Speaking, I don't know if we have communicated this. What we have said is that we are expanding our sheet metal factory in Estonia, but it's ongoing work. Every factory is expanding at some point. And what we do is, it's quite interesting, if you have a minute. You have to have some technologies closer to each other than others. For instance, there's no coincidence that we are expanding the sheet metal factory and the assembly plant because when you have done the sheet metal box and you have painted it, you don't want to cover it and send it somewhere and uncover it. You'd rather like to have the assembly directly. That's the proximity needed there. If you look at our heavy mechanics, it's also very important when you have done some heavy parts that you assemble it and not ship it. When it comes to cable harnessing, for instance, you can actually ship it a little bit without affecting the environment and the cost so much. That's also part of the strategy, how we are expanding the building. Some are more important to expand than others because the proximity is important. We haven't told you the roadmap, but of course, internally, we have a plan exactly which building to expand and when. Okay. Any regarding CapEx? I mean, it's increasing, as you're expanding, do you see similar levels as in this quarter, or how should we think about this? I don't know, Lars, if you would like to answer that. Yes, I can answer. I think, Erik, on Freddy's question that was quite similar, is that we have a cost-effective way of CapEx when we expand. Of course, it can be that it fluctuates quarter-over-quarter, but over a longer period, we do not see major impacts on need of CapEx to be able to grow. It's going to continue. In the same level as it has been in 2022, more or less. As a% of sales, the depreciation is actually not going up, it's decreasing. What we also can see is that when we are investing, we can see that we can move some of the cost for personnel into depreciation. As Erik said, when part of the challenge is to find skilled people, that's also good and makes HANZA more sustainable towards possible personnel challenges. Okay. Just regarding people that you managed to expand sales, with quite a lot, quite a small increase in number of people. You see, the need for, to hire more in the short term? Yes, Eric speaking. Yes, we need that constantly. Also, as I touched on before, as we are robotizing and automating our process, then we need more, let's say, engineers. We need less people, but more skilled people, more educated people. On the other hand, we have good internal. We have HANZA Academy, we try also to have majority coming from inside. Yes, we will continue to employ. As you said also, it's not a high rate of people compared to the revenue increase. Okay. Thank you. Just regarding the margin improvement, I mean, I guess as you mentioned, the major part of the margin improvement in Main Markets is Germany, and I would assume that is Beyers. Have we seen the full effects of the coordination program, or is there still room for further improvement? I would like to expand on that because it's not just Beyers. The Beyers was the company, as you know, that was highly unprofitable when we bought it. We gave it a one-year integration period, added some sales, and made it profitable. It was also an integration in the cluster. It means also by our cluster function, we can split overheads on more people, so forth. It's not just Beyers turning from red to black figures, it's also the cluster getting bigger that helps the profitability. Yes, of course, we're not ready with Germany yet. We will continue to build in Germany. We see also a huge potential there for the coming years. Okay. Thank you. That's all for me for now. Thank you. Thank you. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments. Okay, thank you. By that, we will end this podcast. I hope to see you at our AGM next Monday. Thanks so much for listening in, bye.