Welcome to the HEXPOL Q2 presentation. During the questions-and-answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. I will hand the conference over to the Deputy CEO and CFO, Peter Rosén. Please go ahead. Thank you, everyone, and thank you for listening to our Q2 presentation. For today, I'll take you through the overall business performance in the quarter, go into each business area in a little bit more detail. I'll take you through the financials, we summarize and wrap up with a Q&A session. Let's start on group level. As you've seen, it's a quarter where we deliver strong organic sales growth. When we look at the overall picture of the markets where we operate, there is not much change since the beginning of the year. Generally speaking, we still see fairly high levels of uncertainty and a wait-and-see mentality with a lot of customers and in the markets. From a geographical point of view, it's also similar to the beginning of the year, with higher uncertainty in North America compared to Europe, that is somewhat more stable compared to last year. The uncertainty that we felt in the beginning of the year has, to a certain extent, intensified during the second quarter, following on the Middle East situation, not least with the impact on volatile raw material prices. I will come back to this in a little bit more detail later on. That being said, when we look at our own performance during the quarter, we see improvements in both of our largest business area, Rubber Compounding and Thermoplastic Compounding, while Engineered Products delivers a stable result. Our focus on maintaining and increasing our market share has been successful here in the quarter. We see volume growth to our largest end customer segments, such as wiring cable, general industry, and building and construction. Volume to the automotive end customer segment saw some growth on group level. All in all, we deliver 8% organic growth, mainly driven by higher volumes. It's especially positive to see double-digit organic growth of 12% with Thermoplastic Compounding, which is a clear growth area for us. During the quarter, we have also had to deal with increasing raw material prices, which we compensated for through price increases in both Europe and North America. When we look at the overall Q2 performance, despite some continuing negative FX effects, we deliver SEK 5.3 billion sales, which is up 6% compared to the same period last year, and improve adjusted EBIT at SEK 772 million, and consequently also higher adjusted EPS in the quarter. We go into the business areas and we start with Rubber Compounding. On the markets where we operate, total volumes are still at historically low levels, affected by the general lower customer demand that we see. We also see the captive volumes being at high levels, although we believe these volumes have peaked. When we look at our own performance in this area, we see that the work regarding protecting and also improving market share has been successful, and we have also been able to retain some captive volumes, not least in North America. This has resulted in higher volumes for our larger end customer segments, such as general industry, wiring cable, building and constructions. Automotive volumes are stable in the quarter for Rubber Compounding. The situation in the Middle East has created imbalances in the supply chain and also volatile raw material prices. This has certainly been a challenge during the last few months, but the HEXPOL organization has handled these challenges very well and managed both supply of raw materials and implemented price increases when needed. All in all, we achieved 7% organic growth in the quarter, and this is mainly driven by higher volumes. We go in to and look at Thermoplastic Compounding, deliver a very strong quarter. During the quarter, we see positive ramp-up effects from previously won projects, as well as volumes from new projects being started. Some of these projects are driven by end customers requiring higher levels of recycled content in products that we can deliver, which is positive for us. As with Rubber Compounding, Thermoplastic Compounding has been impacted by the Middle East situation when it comes to availability of raw materials and fluctuating raw material prices. Subsequently, price increases have been implemented also for Thermoplastic Compounding to compensate for the high raw material prices. As I mentioned before, we deliver high organic growth of 12% in the quarter, and this is also mostly driven by higher volumes. If we look at Engineered Products, we saw somewhat lower sales in the quarter, and this is primarily related to a couple of specific customers in Sweden. Last year we saw record level sales and demand has been somewhat lower here in the first half of the year, but we do not see any major market changes in the underlying market, and we still deliver high profitability in the quarter. I will come back to this in more detail later on. We go over and look at the financial overview for the quarter, we delivered a sales of SEK 5.3 billion with an adjusted EBIT of just above SEK 770 million, with a margin of 14.6%. The reason why we use adjusted EBIT stems from that we report the cost associated with the termination of the previous CEO as non-recurring items. The cash flow in the quarter is somewhat below EBIT, but still solid at about SEK 680 million. We do see some negative impact from the Middle East situation on inventory levels, and I will come back to this in a little bit more detail later on. Net debt to EBITDA ratio at the end of the quarter at 1.17 and below what we had last year in the second quarter. If we then look at how this compares to Q2 last year, sales are up 6%, partly offset by negative FX effects, and in fixed currency rates, sales are up 9%. Despite about SEK 20 million in negative FX effects, EBIT increased to SEK 772 million. EBIT margin for the quarter at 14.6%, which is down 50 basis points compared to last year, this is affected by the relative increase in OpEx, driven by increased IT investments, but also cost for more people resources needed to support growth going forward. Looking at sales in a little bit more detail for the group. As mentioned, fixed currency sales are up 9%, out of which 8% is organic growth, while acquisitions, which is Kabkom, add another 1% in the quarter. The organic sales increase is primarily driven by higher volumes. From a geographical perspective, North America showed 3% growth, but in fixed currency, the growth was 7%, while Europe delivered 10% growth or 11% in fixed currency. Asia was in line with last year levels. If we take a look at the development of EBIT, despite the SEK 21 million in negative FX effect, adjusted EBIT increased to SEK 772 million. At fixed rates, the increase was 5% in EBIT. If we then look at the drivers impacting EBIT compared to last year, the main driver is obviously the higher sales, while the gross margin was on the same level as last year. As I mentioned, we see an increase in OpEx, and this is primarily driven by higher IT-related costs and investments in people resources to drive growth. If we then go into a little bit more detail for the three business areas, starting with Rubber Compounding, it delivered sales of SEK 3.6 billion in the quarter, up 5% compared to last year, or at fixed currency rate, the growth was 8%, of which organic growth was 7%. The high organic growth is driven by the higher volumes, acquired Kabkom adds 1% in sales in the quarter. The higher volumes are seen both in North America and in Europe, from an end customer perspective, we see growth with wiring cable, building construction, and general industry, and automotive sales were stable in the quarter. EBIT is negatively impacted by negative FX effects of SEK 20 million or 3%, but came in at SEK 546 million with a margin of 15.2% in the quarter. We then move over to Thermoplastic, delivered sales of SEK 1.3 billion in the quarter, up 9% compared to last year, or at fixed rates, the growth was 12%, all of which is organic growth. Main part of this is volume-driven, but there are also some positive price mix effects in here. As with Rubber Compounding, the organic sales development was positively affected by higher volumes to most end customer segments, not least building construction and general industry, but also automotive and medical saw growth. The drivers of the growth are increased volumes on existing business, but also ramp up of projects that were agreed with customers before this quarter and now start to deliver volumes here in the quarter. Following on the higher sales, we saw strong improvement in EBIT that increased 40% to SEK 155 million. At the same time, we saw strong improvement in the EBIT margin with increase 280 basis points to 11.9% in the quarter. If we take a look at Engineered Products, we saw sales of SEK 386 million here in the quarter, which is below last year, SEK 402 million. The decrease is primarily driven by somewhat lower demand from a couple of customers in Sweden. As I mentioned before, this should be seen in light of record sales in the same period last year. A lower EBIT follow on the lower sales, but still high margins in line with last year, above 18%. If we leave the P&L and look at working capital, it is slightly higher than the same period last year. This is driven by higher inventory, and this is what I referred to in the beginning. This is affected by the situation in the Middle East. In some cases, we've increased our inventory levels to ensure that we have access to the material that we need to produce. Also, the higher raw material prices impact negatively. Depending on how this situation evolves going forward, when it comes to raw material prices, we view this as temporary, as we turn our inventory quite quickly during a year. There is no change in the underlying payment terms to customers and/or suppliers. If we look at the cash flow, we delivered a solid cash flow of below SEK 700 million, where depreciation investments are balanced, while the working capital is, as I mentioned, affected negatively by the inventory in the quarter. To finalize the financial view, we closed the quarter with a net debt of SEK 3.8 billion and a net debt to EBITDA ratio of 1.17, below last year. All in all, we continue here at the end of the second quarter to stand with a very strong financial position. If I can summarize the second quarter, it's a very strong quarter with high organic growth of 8%. The growth we see with both of our largest business areas. In the quarter, we worked intensively to protect and grow our market shares, and we've also been able to win some captive volumes that has contributed to this growth. At the same time, it is a quarter impacted by the Middle East, which has resulted in supply challenges and higher raw materials. I think we've handled these challenges very well. We've been able to secure raw materials needed for us, and we've implemented price increases when necessary. All in all, when we summarize the second quarter, we deliver high sales and higher results, which we are quite proud of. With that, I thank you for listening, and I hand over to Q&A. 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 Sundal Collier. Please go ahead. Hi, Peter. This is Henric. First, I was just wondering a bit about the sequential price mix improvement you talked about. Is that, would you say, a durable customer/product mix change, or is there anything about the raw material price swings driving this? Hi, Henric. When we talk about the sequential price mix improvement, it's primarily price increases that have been implemented. There is some positive. Okay mix, it's primarily price. Yes. Specifically in Thermoplastic Compounding, where the margin was up quite a bit, how come that differed from Rubber? Well, two things that are similar, and third one, which is a little bit more Thermoplastic specific. We've implemented price increases in Thermoplastic as well to compensate for the raw material price increases. We have a little bit positive mix effects, but also, since we've seen higher volumes, they also cover more of the indirect fixed cost in production. You also get some leverage when volumes go up. Okay. On that maybe, we saw OpEx come up quite a bit here, and you mentioned some things driving that, but would you say this is sort of the new base level? Or is it coming up more from here? I don't see that we will increase much from this level, but we do have the increase, which is, as I mentioned, is primarily IT and staffing. the spell is not that we will increase from here. Okay. Just finally, how come automotive volumes are flat in Rubber but up in Thermoplastics? No specific reason more than when we see Thermoplastic, they have initiated more new products related to product launches. Those automotive car models being launched, where we've had higher volumes in the Thermoplastic, and that has had a bigger impact on Thermoplastic Compounding than Rubber Compounding. Okay. Very good. Thank you. The next question comes from Jakob Marken from SEB. Please go ahead. Yes. Hello, Peter, and thank you for taking my question. Some of them you already answered, but just a follow-up on the OpEx part. Can you provide some more detail? Is there any specific segments, geographies, business areas that you're investing in or seeing something special that the OpEx growth is related to? Yes and no. When we look at investment in people, resources to facilitate growth, we have that across the business, I would say. Some of those resources may differ from a market or company geography depending on their needs, but it's primarily salespeople and R&D resources. When it comes to IT, we see a general uptick where we need to do, and then over time, that will be changed from a geographic point of view. Currently, it's more in North America, and then we will see that coming down and see more investments in other areas. Okay. Thank you. That's helpful. Just a question on the M&A side. It seems like the rhetoric in the report is rather similar to Q1. Have you seen any shift in the sort of M&A market or prices are willing to sell or anything on the M&A market that you can update us on? I would say that the M&A market is quite similar to what we saw in the first quarter. We have discussions ongoing that we are intensifying. Okay, perfect. That was all from me. I'll get back in line. The next question comes from Agnieszka Vilela from Nordea. Please go ahead. Hi, Peter, thank you for taking my questions. Maybe starting with pricing, could you help us and tell us how much did you increase prices year-on-year, or what the impact was year-on-year in Q2? Given the volatility in the material prices, what should we expect in the coming quarters? Thank you, Agnieszka. If I take your second question first, the simple answer is we are uncertain. During the second quarter, we saw raw material prices coming up. The forecast is that raw material prices should come down some going forward. I have to admit, it changes almost daily on the exact development of the raw material prices, depending on what happens in the Middle East. The general forecast, I can't say when it happens, is that raw material prices should come down. Difficult to answer whether it happens tomorrow or a month from now, it depends on how it develops in the Middle East. If I take your first question regarding how much price increases have been implemented, I would say they are in the low mid-single-digit growth. Yep. Perfect. Thank you. Just maybe a follow-up on the kind of outlook for your pricing into Q3. Isn't there a lag that means that you already kind of know what you are implementing for Q3? If so, is this kind of pricing element improving? When we go to customers with price changes, that is when we know a little bit more how raw material prices will develop. We cannot, we will not go with daily fluctuations. We will need to see a little bit more, have a little bit more time to see how raw material prices develop, then we will implement changes. There is always a certain lag, if you call it that. We will need to see how raw materials prices develop before we can go with the price changes. Yep. Understood. Maybe on volumes, for the group in general, that was the second quarter with volumes growth for you sequentially or consecutive. What momentum do you see so far in Q3? Will this growth even accelerate? Maybe a follow-up to that, you've seen some captive volumes now returning to your business. Can you tell us what upside do you see to your sales if these captive volumes return to more normalized level? Yeah. We don't give forecast or guidance on future performance. I will shy away from commenting on Q3. When it comes to captive volumes. It's very much a question of if we can get customers to produce for them and deliver both service and quality in time at a price, then we should be able to continue or grow captive volumes. It's still a bit early days, we'll wait and see and come back to it in Q3 when we know how we perform. Can you tell us how much of a kind of headwind it was for you in the say, past two, three years? Sorry, I didn't hear there you. On your growth. Okay. Yeah. If you could tell us how much kind of headwind the more insourcing by customers was for your growth in the past two, three years. Depends on when you have the starting point, it's been significant, let's put it that way. Yeah. The last from me on Thermoplastics, I noticed that you had very strong growth in Europe, in at least reported numbers, + 20% year-on-year. Anything out of ordinary driving it's just the fact that they are performing very well right now? Performing very well, and it's related to when customer-specific projects are started and start to generate volume as well. Thank you. The next question comes from Carl Deijenberg from Carnegie. Please go ahead. Hi, Peter. Could I ask first, I was maybe a little bit surprised on the statement on slide three. I appreciate the comments on the sequential price improvement. Why are not prices higher year-on-year? I think you're stating here that they're on a similar level. Yeah. What are the dynamics behind that? I thought it was definitely going to higher year-on-year as well. No. If we go back one year, at the end of first quarter last year, we started to see raw material prices and subsequently sales prices going down as well. In second quarter of last year, that's where we had a fairly big impact on lower sales prices. Those sales prices we had for the rest of last year as well. When we see where we stand today and we see the price increases that have been implemented, we've basically come back to where we were a year ago. There is some mix effect in it as well, when we look at prices, that's what we've seen. Okay. Could I ask also, I guess the volume development that you're talking about is quite surprisingly positive here. When I read the wording, the markets that you're sourcing that is performing well, like wiring, cables and so forth, I think you've had a similar communication the last couple of quarters. Is there anything specifically driving this change here in Q2? Do you see any competition suffering more from the situation in the Middle East? Is it just a general uptick in those overall end markets? I think it is a combination of a couple of things. When we look at general industry and wiring cable in the segments where we have products, we've seen increased demand. It's our view that we've also been able to take market share in some of these segments, with existing customers. Also been able to add a little bit to that. We've seen increase in those segments. Okay. Those market share gains, is that due to your supply chain and purchasing organization and so forth being more, let's say, proactive or what we want to call it, relative competition? Is that the main explanation as you see it? I would say, depending a little bit where we look, but I think even more customer focus has given some of this volume. We also know that in some cases, we have some of this volume is because also some competitors have difficulty in managing raw materials and deliveries and supplies. In the scenario where, let's say, prices would come down again, or let's say normalize, would you believe that these market share gains are structural, or would it even out again then, in your view? I don't see a direct correlation with the prices and market shares. If raw material prices go down, then we will need to adjust pricing to customers. That would change with raw material prices. The volumes that we have and the market share is something that, of course, we will work very focused on maintaining or, if possible, improve. Okay. Very well. Then maybe just finally also, I know that you're not guiding on price contribution, but if you take the sort of run right now, first couple of weeks here in Q3, what would the price contribution would be on a year-on-year basis, without giving any forecast what the remainder of Q4 is going to be, but what kind of year-on-year run rate are we talking about there? That's almost impossible for me to answer, especially since we see that currently the forecast on raw material prices is down. Any number I will come with will probably change within a week or two weeks. I will pass on that one. Okay. Thank you, Peter. Thanks. The next question comes from Johan Dahl from Danske Bank. Please go ahead. Yes. Good afternoon, everyone. Just on that growth you recorded in Thermoplastics, Peter, you talked about new projects, new customer orders there. I was just wondering, is that sort of an incremental add to your recurring business in the coming 12-month period? Or would you say rather that there's a fair bit of volatility in those projects, sort of how it falls out each and every quarter? Or is it more of recurring net additions to the Thermoplastics operations? I would say the projects themselves are recurring in the sense that if we take a new car or a project with a production of a car, if we get approved and award a part of that project, we should be able to see volumes throughout that project. That project in itself should be fairly stable. Of course, it depends very much on do we have other projects that run out or end, or can we add new projects that will add incremental volume on top? I think to answer your question, Johan, no, the projects themselves should deliver the volumes that they do currently. It's up to us, of course, to add new projects and ensure that older ones are replaced by better projects. All right. Just finally, if you could just reiterate, Peter, if we talk about how price mix has impacted your profitability year-over-year, it's been quite negative in the past year. You talked about weak U.S., weak automotive, et cetera. Now perhaps you don't really see that negative shift there, perhaps a bit on the opposite. Clearly, you highlight Thermoplastics as being a positive driver for product mix. Is there anything else? You're still more bullish on Europe versus North America, and auto seems fairly flat this year-over-year. Any color you can add to that mix change? Yeah. Take these ones first. Automotive is fairly flat if we look at it from a total perspective. Then we have a little growth on the Thermoplastic side. Automotive as a total industry is fairly flat here in the quarter, and we expect it also for the full year. We do see growth in some of the other areas, such as wiring cable and also general industry, we see some improvements, if we talk it from an end customer perspective. From a geographical perspective, we still think that the U.S. is more uncertain than Europe. There is still the question of affordability and that impact on demand, not least on automotive. It has also some other impact in other industries. While Europe, which has its challenges as well, is still more stable than North America when it comes from general demand. All right. Thanks a lot. Thanks. As a reminder, if you wish to ask a question, please dial pound-key five on your telephone keypad. The next question comes from Mats Liss from Kepler Cheuvreux. Please go ahead. Yeah. Hi. Thank you. Well, coming back to organic sales there, I guess you mentioned that you have that increased inventory somewhat to secure deliveries and so on. Do you see a similar pattern among customers there? Maybe also if they try to avoid price increases. Well, have you seen any impact of that in your organic sales improvement? To a certain extent. I think in the beginning of the quarter, if we go back to April and partly May, we did see some customers where we think they order a little bit more than they normally do. Our products don't lend themselves to pre-buying that much since, for example, Rubber probably has a shelf life of three, four weeks, then it needs to be turned into components. Even though we did see a little bit of it in the beginning of the quarter, when we look at the quarter as a total, we don't think that there is much effect of pre-buying. Okay, great. Secondly, on Thermoplastic there, well, you mentioned this market share gains you have succeeded in and on the back of customer projects. Could you say something about the second half there, short term, if you see similar trends benefiting you? Sorry, in the second half of? Yeah, this year or maybe longer term also, if you have sort of a good position in customer-related projects that sort of boosted you in the first half there or in the second quarter. Yeah. In that sense, I mean Our view is that we have a good position, regarding volumes that will materialize the second half of the year, I will pass on that because then I will get close to guidance, and we don't do that. Currently, we're delivering on the projects that we have. We feel comfortable with the share that we have. We will just need to continue to work on this focus going forward. Finally, just on Rubber Compounding there, you mentioned that increased overhead costs there have affected your margin negatively. Could you shed some more color on that one? Yeah. As I mentioned, we've invested in more people resources, not least on the sales side. Also, on the R&D side, where we've made some changes and centralized some R&D, for example, here in Europe. Then we invest more in IT, both to replace existing systems, but also invest in more efficient systems going forward. It's a combination of those things that add. Great. Finally, you mentioned you have a pretty good financial position now and the M&A opportunities. Could you say something about those? I know you are in the changeover process there of management, also CEO. Do that affect how trigger-happy you are to make acquisitions? If I take your last question first, no, that will not impact. Not more than we are very focused on actually on delivering M&A, so there will be no pause or let-up in us doing M&A because of this. We continue to work as focused on this and even more so than we've done before. We're really keen on doing this. Okay, thanks. Thanks a lot. The next question comes from Agnieszka Vilela from Nordea. Please go ahead. I have a follow-up on Thermoplastics and profitability for that division with expansion of almost three percentage points year-on-year in the quarter. I note, though, that comparisons, I think, were a bit easier given that Q2 last year was down on margins. Yeah. Could you tell us, should we expect a similar kind of improvement in profitability in the coming quarters if volumes hold up or improve, if you see this positive mix effect still? What to expect in the coming quarters? Difficult to say, I think the current profitability level where we are now makes sense. That's where we can be in the short term. Of course, we have said that the strategic direction of growth in Thermoplastic is to move up in what we call the product pyramid. That move, where we move into more profitable segments, is something that we will need M&A to drive, to be a large driver of. We need to do more M&A in Thermoplastic in order to move it up further in the product pyramid. Perfect. Thank you. There are no more questions at this time, I hand the conference back to the speakers for any closing comments. Thank you everyone for listening in for our Q2 report. Thank you, and I wish you a very nice week. Take care.