Welcome to the HEXPOL Q3 presentation. During the questions and answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the CEO, Klas Dahlberg, and CFO, Peter Rosén. Please go ahead. Thank you, and good afternoon, everyone, and thank you for joining in on the HEXPOL Q3 presentation. I'm Klas Dahlberg, and I'm here together with our CFO, Peter Rosén. If you please turn to page two of the presentation, I will start with the business updates. I have an interesting case from Germany covering recycled material that I would like to share with you, and I will also highlight the importance of our business model. Peter will take you through the financials, and I will summarize the quarter and our focus areas going forward. After that, we are happy to answer your questions. If you please turn to page four, then I will go through the quarter. When looking at demand and sales in the third quarter, demand was down versus Q3 last year, mainly affected by lower demand from automotive end customers. S&P Global Mobility report shows that the U.S. and European automotive production is down some 6%-7% in Q3. As you know, some 40% of our total sales is to the automotive sector, but saying that, it also means that 60% is non-automotive. Sales was also impacted by lower sales prices, driven by lower prices on some main raw materials and also by a negative currency effect, and Peter will come back to that. In the quarter, we delivered sales of close to SEK 5 billion and an EBIT of SEK 800 million, giving us a solid margin of 16.1%. Building and construction is still low, but we can see a slight increase versus Q3 2023. The fact that demand is down versus Q2, this year is mainly affected by seasonal pattern that we normally see actually related to vacations at the end customers, but also somewhat lower underlying demand. Sales prices are sequentially stable, but they have decreased compared to last year, as I mentioned before. Our focus on sustainability continues. We see a high interest in recycled products, resulting in high number of projects, not least from the automotive industry, where we are well-positioned. If you please turn to page five, you will see an example how we are able to turn post-industrial waste into a recycled raw material. I visited our company, Almaak, in Germany some weeks ago. This facility is located 10 km south of Berlin, and 90% of all their end products contain recycled materials from post-industrial waste. It's mainly European-sourced raw materials, for instance, residual textiles from airbag manufacturing. The production line you see on the picture is one example of how we invested in advanced processing equipment to enable recycling. We are well prepared for the proposed ELV or end-of-life vehicle amendment from EU, stipulating the use of up to 25% recycled material for passenger cars. If you then turn to page six, M&A is an important focus area for our growth plans. We look positively on the M&A environment, and we have the financial resources to do more acquisitions, and that way is very exciting and also encouraging. Looking into the different business areas, starting with HEXPOL Compounding. As mentioned before, demand was down versus last year in Q3, mainly affected by lower demand from automotive end customers, and this is a result of the macro environment and not so much related to our performance. The demand in building and construction is up somewhat, and supply chains is stable. Most raw materials see lower prices year over year, but sequentially stable, as I mentioned before, and we see a decrease in operating margin, driven by lower sales, but still on a solid level. If we look at HEXPOL Engineered Products, last week, I visited our facility on Sri Lanka, producing wheels and gaskets. Four facilities all in all, with close to one thousand one hundred employees. I met very skilled teams there, focused on quality and sustainability. Sales for Engineered Products is in line with last year. It's actually slightly up by 1%. Operating profit is somewhat lower, but a strong operating margin. Please turn to page seven. I have now visited some 20 of our 54 facilities, and I feel very confident when I see the skill and dedication from our teams. I can confirm that we have a strong culture within HEXPOL. We are committed, and we are willing to work hard. On page eight, you find our business model. You have seen that model many times, but this is also a very strong model, and it's core for our business. With that being said, I have, together with our group management team, started to investigate the possibility for further growth, focusing on acquisitions, on organic growth, and as well, work on efficiency, and we will come back to you with a development. In the short run, if you look at the lower right side of the model, you find flexible and efficient operations. That means with our decentralized structure, we are ready to adapt to the current business environment, and we are able to scale up or down when necessary. If you please turn to page 10, it's now time for the financial update, and I will hand over the word to you, Peter, to go through the financials. Thank you, Klas. As Klas mentioned, we delivered sales of about SEK 5 billion here in the quarter, which is down some 9% versus the same period last year. Looking at the 9%, 7% organic sales, organic sales are down 7% in the quarter, while the acquisition of Star added about 1% in sales. We also saw negative effects of about SEK 170 million here in the quarter. The lower organic sales are more or less equally driven by somewhat lower volume and somewhat lower sales prices. For the total HEXPOL group, the lower volume comes from the automotive segment. We see a bit relatively a little bit more so in the U.S. than in Europe, and that is because some manufacturers in the U.S. closed down production a little bit more than they normally do during the summer period. But also, the majority of the negative FX effects are related to the U.S. dollar, and that also helps explain why we see a little bit lower or a bigger sales decrease in the U.S. If I can ask you to turn to page 11, looking at the financial overview, we delivered an EBIT of SEK 800 million in the quarter. The margin came in at 16.1%, which is below what we did the same period last year, and also a little bit below Q2 this year. And the main reason for this is the lower volume, where we, in the short run, within a quarter, cannot offset with lower costs. The equity asset ratio remains very high at 64%, and the return on capital also high at 18.4%. We delivered a solid cash flow of SEK 803 million, where EBIT was turned into cash. If I can ask you to turn to page 12, looking just at the financial highlights for the quarter, SEK 5 billion, down 7%-9% compared to Q3 last year, while the operating profit came in at SEK 800 million and below last year. At the same time, we saw an operating margin at 16.1% here in the quarter. And if I can ask you to turn to page thir- We seem to have a technical problem? Yes, we seem to have lost the connection to the speakers. We'll be back shortly. This call is being recorded. Your line is muted. Apologies, everyone. We were cut off here with a telephone line. Don't know why, but we are on page 13. So if we continue, looking at the profit drivers, we see that the lower EBIT is mainly driven by lower sales. We offset some of this with lower OpEx, driven by general cost control in the quarter. And just as a reminder, the EBIT is also impacted negatively with some SEK 20 million in negative FX effects. If I can then ask you to turn to page 14, taking a look at HEXPOL Compounding. Delivered sales of SEK 4.6 billion in the quarter, which is 10% below Q3 last year. As mentioned before, the lower sales are driven by slightly lower demand, negative FX effects, and somewhat lower prices compared to the same period last year. The lower demand is seen with the automotive end customers. On a more positive note, we saw higher sales in building and construction, although from a lower low level. It remains to be seen if this is temporary. Operating profit came in at SEK 735 million, with a margin of about 16%. If I can ask you to turn to page 15, looking at Engineered Products. Sales of SEK 365 million in the quarter for Engineered Products, basically in line with last year, with stable development in all product areas. Operating profit came in at SEK 65 million, basically also in line with last year, with a margin of almost 18%, negatively affected by smaller items compared to last year. If I can ask you to turn to page 16, looking at working capital, it's basically in line with Q3 of last year, but also Q2 this year, with smaller movements across inventory, receivables, and payables. There's no change to the underlying payment terms. If I can ask you to turn to page seventeen, looking at the cash flow, we delivered a solid cash flow of SEK 803 million, with investments below depreciation and small movements in working capital. If I can ask you to turn to page eighteen, looking at net debt, it stands at SEK 2.4 billion at the end of the quarter, with a net debt to EBITDA ratio of 0.6. And just a reminder that this is after payout of the dividends this year, that included both an ordinary dividend as well as the extra dividend. All in all, we continue to stand with a very strong financial position, ready for further M&A. And with that being said, I hand over to Klas to summarize the quarter and the presentation. Thank you, Peter. To summarize the third quarter, we see sales was down, mainly affected, as we have stated, by the lower demand from automotive end customers. I stated already that the S&P report shows that the European and the U.S. automotive production is down somewhere 6%-7% in Q3. Sales was also impacted by lower sales prices, and that was driven by lower prices on some of our main raw materials, and also by negative currency by SEK 172 million. Still, in the quarter, we delivered sales of close to SEK 5 billion, an EBIT of SEK 800 million, resulting in a solid margin of 16.1%. We continue to focus on sustainability. I showed you the Almaak in Germany. That is a nice example, I think, where 90% of all end products contain recycled materials from post-industrial waste. And, by that, we are ready to take on the new proposed end-of-life directive from EU. Finally, my key takeaways from the first quarter as CEO of HEXPOL, I would say, we have a very solid and strong business model. The structure is decentralized, and we have very capable and motivated local teams. We will, as I said, investigate further growth opportunities for HEXPOL, focusing on M&A and organic growth, but also improved efficiency, which is always on our agenda. And by that, we conclude the presentation of the quarter, and we open up for your questions. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Henric Hintze from ABG. Please go ahead. Hi, everyone. This is Henric at ABG. So you wrote in the report that work is underway to review the conditions for organic growth in your various markets. Given that this hasn't been HEXPOL 's strongest point historically, could you elaborate a bit more on what you're looking at here? I would like to say at this stage, I would like to come back to what that means, but all in all, we feel there is, how should I say? Room for to improve organic growth. That should always be in our DNA to improve that. So but what it means, there, I have to come back to you. All right, so then maybe diving a bit more into demand. You said it was slightly weaker sequentially in the quarter. Could you give us any more detail on how you perceive demand changing over the quarter? Did it decline, rise, or remain largely flat, and were there any industries or geographies where you saw more of a change during the quarter? Yeah, if we talk about sequentially, so demand coming or sales coming from second quarter this year into the third quarter, the majority of that decrease is because of seasonal patterns, so where we see customers, they go on vacation, they close down their production, and since we don't have an order book to produce to, our sales also stop for that period. What we saw during the summer is one thing. They did close down as they normally do. Some closed down a little bit more than normal, and especially in the U.S., but apart from that, we also saw somewhat lower demand, and primarily for automotive. All right, thank you. So just one more for me then. You stated that you're also focusing on acquisitions, of course, which you've done historically, and that you view the market positively. We've been hearing from both you and others that acquisition prices have started to normalize, but what has prevented you from closing any acquisitions so far this year? A couple of things. One is that it has taken some time for prices between buyers and sellers to sort of balance themselves. Secondly, when we look at acquisitions, most of potential sellers are family-owned businesses, and those processes take time. Take more time than if you would buy from, for example, a private equity seller. All right. Thank you. That's all for me. The next question comes from Joen Sundmark, from SEB. Please go ahead. Hello, and thank you, Klas and Peter, so first of all, beginning with a question sort of related to autos, but if you were to look beyond that, where do you see weakness from other markets? And do you see any change if you compare Q3 to Q2, for instance, in any other market than autos? No, it's, it's primarily within automotive. There are a couple of movements back and forth, but those are normal movements, so it's primarily, primarily automotive. Okay, very clear. And then second question, sort of, you mentioned a more positive demand from building and construction. Do you mostly refer this to a year-to-year basis, or how the demand level you would compare that to Q2, for instance? It's when we say we see an increase, it's quarter over quarter, so Q3 this year compared to Q3 last year. Q2 to Q3 is more difficult to compare because of the seasonal pattern. We'll have to wait and see if it continues, but quarter over quarter, we do see an uptick in building and construction. Okay, thank you very much. And then, final question. The group's share of sales from Almaak, that you mentioned, and recycled plastics, is that increasing or how do you see that going forward and now in this quarter? Here and now and in the short run, their share would probably remain fairly stable to where it is today. Okay, thank you very much. That's all for me. The next question comes from Gustav Berneblad from Nordea. Please go ahead. Yes. Hi, it's Gustav from Nordea. Just to start off here with the automotive. When you look at your automotive exposure, do you see the risk of your customers or the Tier 1 suppliers sort of absorbing some of the weaker demand from their automotive OEMs, and that this end market can sort of impact you more negatively going forward? Gustav, I'm a little bit uncertain if I understand the question quite right. Could you repeat it? Yeah, basically, if, if you see that your customers are absorbing some of the weaker demand from automotive, meaning that there might be a lag before we see it impacting your financials, so to say? Broadly speaking, we don't think so, because we don't see stock levels increasing, decreasing in the short run. So we think it's fairly sort of quick, but I mean, it has to go through the value chain. But we don't see the Tier 1s absorbing much. No. Okay, that's clear. And then maybe if we jump to given that we are seeing so much or quite significant lower volumes here, especially automotive, but what are you doing exactly to protect the margins here, going forward? In the short run, we, of course, look very much at the production planning to see that we are planning our production according to the demand that we see, which has impact on how we staff our shifts. Then in the medium long term, we're also looking at, for example, OpEx, to have a very strict cost control. And then in the longer term, I think we need to come back on, as Klas mentioned, on looking at the overall efficiency for the group. So, I mean, we mentioned before that, I mean, we will always review the footprints. Yeah, okay, perfect. That's fine. And then just the last one, I mean, we have seen a couple of quarters now with negative organic growth, and obviously it looks like we're seeing increased headwinds, especially in some areas. But are you seeing sort of... Are you seeing competition sort of struggling a bit more? Or are you seeing bankruptcies among your competitors or anything? No, we could say that is happening actually. But you're familiar with the fact that some of our customers tend to go for insourcing of compounding. But when it comes to the competition, we don't see that pattern, no. Yeah, okay, perfect. Thank you. That was all for me. The next question comes from Douglas Lindahl from DNB Markets. Please go ahead. Hi, Klas and Peter. Douglas here from DNB. I had a few questions. Just circling back to your comment there on the construction activity looking a bit, or demand, that is, looking a bit better. I was just curious to hear if you could get a bit more color on that, sort of towards the end of the quarter, any specific geography you're referring to? No, fairly even during the quarter, and also looking at the geographies, we see uptick in the Americas, but we also do see it to a certain extent in Europe as well, but I mean, it's a quarter, it's positive that we see the uptick. I think we need to see, going forward, to see if it remains positive. Okay. At least in this quarter, it's positive. It's a bit too early to call it a trend, maybe, then, or? Yes. Yeah. Yeah. Okay, I hear you loud and clear on the M&A track record. I guess that remains the top priority in terms of capital allocation and how you think about that in the context of your strong balance sheet here. Yes, for sure, yeah. Okay. And on the sort of organic growth efforts, would be interesting to hear that later. But just to start off, is there any sort of end market where you feel like you're lacking exposure currently? Some sort of segment you feel is particularly interesting? No. No, not where we're lacking. We would like to do more in some, but not lacking. Okay. That's it for me. Thank you. The next question comes from Andrés Castanos-Mollor from Berenberg. Please go ahead. Hello, good afternoon. Can you please break down the 9% organic growth between prices and volumes? What was roughly the mix between the two? You mean compared to Q3 last year? Uh, just- Yeah ... what is the largest contributor? Yeah, year on year, exactly. Nine per- Yeah. 9% year on year. I mean, roughly, if we're down to 9%, 7% of that is organic sales. And of the 7%, it's roughly split evenly between volume and pricing. Mm. And the rest from the 7% is the negative FX effects. Perfect. That's very clear. I also wanted to follow up on the integration of Star, the TPE that you bought in the USA last year, and that had some spare capacity. And I wanted to ask about that. How are you being successful to grow volumes there and to relocate production to that site, et cetera? Just an update on the integration one year after the deal. Thank you. Yeah, I would say Star is fully integrated into HEXPOL. Then when we talk about allocating volumes, that's an ongoing work. And, I mean, we allocate volumes where it makes most sense. So that- ... isn't finished, that will be an ongoing review on where do we want to produce most efficiently. But the integration in itself, I would say, is completed. Thank you. That's very helpful. That's it for me. The next question comes from Carl Deijenberg from Carnegie. Please go ahead. Thank you. Hello, Klas and Peter, so two questions from my side. If I could start on M&A. I appreciate the comment here that increasingly coming into focus for you again in order to grow, but I was just curious also, given that you also said that let's say, seller expectations have been a little bit too elevated, and where you seem to be more in line on the discussions right now. What kind of multiples are we talking about, generally speaking? I mean, I guess we would look at HEXPOL longer term or before the pandemic as well. I think you were acquiring on average, let's say, 0.8-0.9 x sales, if we exclude, let's say, transformative acquisitions. Are these multiples anything, you know, that you're seeing right now, or is that level something that is for the past, basically? I think part of the answer is it depends a little bit on the company. So as we've mentioned before, if we go for a specialized TPE or TPE compounders, they most likely have a higher multiple than if we would go for rubber compounder, because the growth is normally higher. So it can differ depending on the company and the product offering that they have. But generally, I mean, in generally speaking, the multiples are below our own. But if we go back and compare to, let's say, ten years ago, yeah, then multiples are up. I mean, valuations are overall higher than history, so yeah, a bit higher than historically, and then it differs depending on which company we're looking at. But in most cases, below our own. Yeah. Yeah, fair enough. And where you're looking now, is that primarily within the TPE or rubber or a combination of both? Combination of both. Okay. Very well. Then I had a follow-up also on the questions with regards to the pricing. I mean, I appreciate the comments you're talking about fairly unchanged pricing here, Q on Q, but down year on year. But has there been any change, you know, going into Q4 here, given the demand trends that you've been stating, for example, in automotive? Or is that fairly steady state or here also in the month of October, you would say? I would say fairly stable. Okay, very well. Thank you very much. The next question comes from Johan Dahl from Danske Bank. Please go ahead. Yes, good afternoon, everyone. Just a question, Klas, there. You talked about visiting some 50 sites in the system, and you know, I appreciate on M&A led growth, organic growth, you'll come back to us. But are there any sort of relevant impressions from your analysis so far with regards to the assets that you have visited, which appear to be sort of the main levers to pull to improve profitability and growth? I mean, is it well invested in your view? How is collaboration between these units and also on the capacity utilization, if you have anything out there, just curious if you could say something. All right, hello, Johan. When it comes to the investment level, I would say we are well invested. I mean, we have the equipment as such and so on is on a very good level. So, that is not at all an issue, I would say. When it comes to collaboration, I would say that is in a way in our DNA, but still, I think that could be we could increase that also between the regions, let's say. But we do have a collaboration between the units, especially when it comes to things like supply management and so on. On capacity utilization, is that something that, you know, is becoming a sort of a top priority in the group, or is it something that you always look at? No, that, that is not, I, I would not say that that is a top priority when it comes to the utilization. That is up to each unit to, make sure they are on the right level. Got you. Just finally, I mean, we touched on it before on the call, but what-- I mean, given the European OEMs, especially on EVs, how they're being squeezed at the moment, quite obviously, how is that feeding through the value chain and impacting your business, apart from the fact that it's lower volumes? To be honest, I think that is the case, the lower volumes, because they ask for the same precision when it comes to quality and so forth. So there is no change in that sense, but it's mostly lower demand then, that is what we see. All right, thanks. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. All right. Thank you very much. Again, I would like to thank you for joining in on this call, and we look forward to connect again after Q4. So thank you very much, and all the best to you all. Thank you. Bye.