Good day, and welcome to the Nolato fourth quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Christer Wahlquist, CEO. Please go ahead. Hello, welcome to the presentation of Nolato's fourth quarter 2022. This is Christer Wahlquist speaking, I'm starting on the second page of the provided material. In summary, the fourth quarter ended up at just short of SEK 2.4 billion in sales. That was affected by a positive currency effect. It was, if we adjust for that, a 34% decrease of sales. We saw lower volumes in the VHP area affecting the overall numbers. The operating profit ended up at SEK 163 million in comparison to SEK 336 million the corresponding quarter last year. That gave us a margin of 6.9%. The margin was affected by volumes, of course, cost inflation and production efficiency. If you look on the, on the right-hand side of the, of the page, you see that we have been building and working with focus on creating a true global service provider across our three different business areas. Turning to page three, focusing on the full year of 2022. The full year's sales ended up at SEK 10.8 billion and with a margin of 8.4%. The earnings per share ended up at 2.44 in comparison to the 3.70 last the year before. We still have a very strong financial position with net financial liabilities of approximately SEK 700 million and an equity asset ratio of 54%. The proposal from the board of directors on the dividend is to keep it on the SEK 1.9 per share. If we turn to page four, summarizing the three different business areas within the group. We have the Medical Solutions coming in at SEK 1.3 billion in sales in the quarter, and Integrated Solutions at around SEK 400 million, and Industrial Solutions SEK 651 million. Across the board, we are performing similar tasks for our customers, but in different market segments. If we turn to page five, focusing on our business area, Medical Solutions. In this business area, we have continuously expanding our footprint, and created a very good growth over the years, as you see on the graph, and building a global footprint together with the large customers within pharma and med tech. On page six, you will see some of our focus product areas within Medical Solutions, and those are the in vitro diagnostics, IVD, with a good potential for long-term growth, even though we are in a situation where we have some lower volumes at the moment. You can notice that the percentages of our total sales is around 15% for that business area coming down a little bit. The next one is cardiology-focused products at around 8% of our total sales. Pharma packaging, 13%. Then continence care, around 11%. We saw an stronger than average growth within the surgical, ending up at approximately 22% of the total sales. Of course, that is due to the situation where the hospitals are now back on track after the COVID situation. We have the drug delivery coming in around 14%. If we turn to page seven, focusing on the details of the fourth quarter for Medical Solutions. Within the quarter, we saw a 9% increase of sales if we adjusted for currency. We continue our good growth. We saw a particular growth within the surgical area. On the other hand, the IVD volumes are low in the quarter due to pandemic-related inventory adjustments. The charging of higher costs contributed to the increase in sales during the quarter. The margin ended up at 9.6%. In comparison to the year before, it was a little bit lower, and that is due to the fact of the change in the sales mix with the growth within the surgical area and somewhat the decrease in the IVD sector. Also cost impact of the previous capacity investments are affecting. The quarter ended up at SEK 1.3 billion with an operating profit of SEK 126 million, creating the margin of 9.6%. We then turn to page eight and looking into the Integrated Solutions business area. As mentioned, we are working on the expansion ourselves into new market segments within this business area. We then look on page nine, we can see those focus product areas. As you understand, we have had a dual sourcing situation within the VHP sector, and that enables us to continue the growth within the other areas, such as the complex modules, the speakers in over-ear phones, wearables of different kind and smart homes, if we look on the consumer electronic side of the business. On the other side, we have our EMC and thermal business focusing on shielding solutions and thermal management of electronic components. Turning to page 10, the details of fourth quarter for Integrated Solutions. The sales was a heavy decrease in sales, that is due to the VHP area, that we had a regulatory, new regulatory requirements for producing this in China, and that resulting in that we had sales stop or production stopped during a large portion of the quarter. Of course, the end customer demands within the VHP was adversely affected by the situation in Eastern Europe. We have dual sourcing effect. On the other side of the coin, the EMC is continuing to performing well, and we expect the VHP volumes to remain at similar levels in the first quarter of this year. The sales ended up at SEK 407 million, with an operating profit of SEK 25 million, creating the EBITDA margin of 6.1%. That was, of course, affected by the lower volumes. Turning to page 11, focusing on our business area Industrial Solutions. Within this business area, we are on a technology and geographical expansion journey, continuing to expand our geographical footprint in different regions of the world. On page 12, you can see the two major parts of the Industrial Solutions business area. That is general industry with the white goods, forest equipment, furniture, and other industrial solutions. The other smaller portion is the automotive sector. If we turn to page 13, focusing on the fourth quarter for Industrial Solutions, we saw an increase in sales. If we adjust for currency, there was a decrease of 2%. We saw also charging of higher cost contributed positive to the sales number. Lower volumes for product and consumer discretionary sectors during the quarter. The margin ended up at 2.8% and was affected by fluctuating call-off orders resulting in lower operating efficiency, especially in the beginning of the quarter. We also had a little bit lower volumes and inflationary effects on labor and energy cost. The quarter ended up with sales numbers of SEK 651 million and an operating profit of SEK 18 million, creating the margin of 2.8%. Good afternoon. Per-Ola Holmström presenting group financial highlights. That would be on page 14. Net sales amounted to almost SEK 2.4 billion compared to a bit more than SEK 3.1 billion the corresponding quarter 2021. That is a decrease of 34% adjusted for currency. Operating profit was SEK 163 million compared to SEK 336 million, which results in an EBITDA margin of 6.9%. The effective tax rate was 20.3% for the full year 2022. When excluding non-recurring items, it was 21.3%. We expect the tax rates around 21% for the full year 2023 as well. The cash flow after investments was -SEK 188 million. Again, affected by working capital requirements within VHP, because of winding down the supplier finance program. Net investments affecting cash flow, excluding acquisitions and disposals, was SEK 451 million for the full year 2022. A comment about this year, 2023, we do expect around SEK 600 million in CapEx as we will pay for a real estate in Sweden with SEK 150 million during the year. If we turn to page 15, focusing on the current situation per business area and starting with the Medical Solutions business area. In this area, we have a maintain growth strategy, focus on innovation based on our strong customer relationship. On the Integrated Solutions, we have established a position in new product areas. Of course, in the base of flexible production structure, we see a five-year rollout and no new initiatives for automotive sector that are positive for the EMC business. Of course, on the Integrated Solutions, we also see some geopolitical concerns. On the Industrial Solutions side, we have advanced our market positions but are impacted by supply chain disruptions. We put a lot of emphasis on the sustainable solutions, but we see a weaker economic conditions. We will now open up for questions. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then two. The first question is from Carl Ragnerstam of Nordea. Please go ahead. Hi, it's Carl from Nordea. A few questions. firstly, I mean, we saw a quite nice sequential uptick in the medical margin in the quarter. Could you perhaps, I mean, give some flavor on what's behind that? Is it primarily price compensations for raw materials? yeah, what is behind it, would you say? Yes, I would agree to that. We have had less increases, and a more flat situation, and we have been able to come back with some of the effects from previous quarters, and that has helped the margin this quarter. Have you seen any improvements at what now entering, or entering Q1 here in, on the IVD side? I would say that the IVD volumes are still affected by the stocks in the total value chain after COVID. Okay, perfect. Also, on Industrial Solutions, I mean, could you help me understand sort of the margin drop in the quarter? You had just 2% negative organic growth and a quite significant margin contraction there. Should we see it as, I mean, a continued downwards trend entering 2023 from here, or maybe that the worst impact was from the volatility in the automotive sector in the beginning of the quarter? I mean, how should we see the margin profile in Industrial Solutions? We have seen a sort of a quite negative trajectory here in the past few quarters. No, we don't see that that trend is continuing in Q1. We had a bad start of the quarter, the fourth quarter last year, and we did stand still at some of the automotive areas, and that has affected, and we don't see the same situation in this quarter so far anyway. We don't expect a worsening margin looking forward into the Q1. Okay. Also, on your heated tobacco guidance here for Q1, I mean, you were close to half of Q4. Maybe you had a catch-up effect to some of the volumes. Still sequentially unchanged in Q1. I mean, would you say that your customers have reallocated more volumes to the second supplier than you previously thought, or has the sort of conversion to the new product been faster, or is it also maybe simply an effect of a cyclical element of this product? The final question on this is also if you're profitable for this subsegment at the current volumes. If we look on the volume situation first and that, well of course we had some catch-up effects during, we only produced for a short period of time during the fourth quarter. I would say that the dual sourcing situation, we are now in a situation where the new products are dual sourced, and that is what's currently being produced. In the ramping of those new products, of course, we were on the slow start with the situation of the non-production situation in the fourth quarter, and that is affecting the splits going forward a little bit. Perfect. And the- The profitability. Oh, sorry. Yeah. Coming back to the margins in this Integrated area, we are of course seeing an effect of the margins because of the low volumes. That is of course hurting in Q1. If we look separately at the VHP part, these volumes are not supporting profitability situation right now. There are of course different things going on to decrease our cost base, but also an incremental volumes will change that later on. In Q4 and Q1, that is not a profitable segment within Nolato. Okay, very good. That's all for me. Thank you. The next question is from Adrian Gilani of ABG. Please go ahead. Hi, it's Adrian here at ABG. First of all, a follow-up on the input costs. You mentioned sort of flattening out input cost situation. Given that sort of a lot of oil-based products are starting to see a declining trend, could we be seeing an opposite lag effect where you get a sweet spot for a few quarters on margins on input costs? Or is that being a bit too optimistic? As you say right now, we do see some lower costs when it comes to raw material and plastic materials. The labor situation and energy costs, those costs are still on a high level, and we don't see that change in these areas. Okay. On the Integrated Solutions, you talked quite clearly about the VHP part. Looking at the EMC sub-segment, you only say that it looks to continue its strong trend. Should we take that to believe that the growth rate for 2023 can be similar to that of 2022? I think we will have a good situation within EMC. There are some signs in the telecom sector that the 5G rollout is maybe not that strong right now, and going forward in the near time. We do have still a good situation within automotive, and we think the telecom sector will be stable, but maybe not that growth-driven, as it was part of the 2022 year. Okay. apologies if you mentioned this before, I could have missed it. You said that VHP itself was not profitable at the moment. did you mention how we should think about the margins on the segment as a whole for integrated for Q1? Well, the margins will at least not improve, but we can see. The situation is similar to the Q4 in that respect, I would say. Okay. These two quarters of sort of SEK 400 million, are these indicative quarters of how integrated or how VHP will look going forward? Or will the sales growth be a bit more sort of lumpy going forward? We have guided the Q1 with the best knowledge we have of that quarter. As Christer mentioned, we are lagging a bit behind in the dual sourcing because of the delay in Q4. I think there will be chances for improving that, but the speed of that we don't really know yet. We have been approved into new markets with the new products, but in a slower speed than we expected earlier because of the permit, missing that permit. We have to see how that develop beyond the first quarter. But we hope for an improvement in that enabling us going up in volumes after that. Okay. The final question from my end on the cash flow. You had quite a bit of working capital build up here in Q4 and actually on the full year 2022. How much of this would you say is possible to release in Q1 and full year 2023? How much of this is sort of a permanent effect? I would say that the largest part of that is something that will stay into 2023 as well. The largest part is the winding down of the supplier finance program, which we have used within VHP. Doing when we decrease volumes, the working capital is having a need of a requirement of working capital. I don't see much of that will bounce back. We have had some extra inventory because of delays within or waiting for the permit. That will sort of ease out in the Q1 and do some positive effect as a more temporary thing. Okay. In that case, that was all my questions, so thank you. Thank you. Again, if you have a question, please press star then one. The next question is from Mikael Laséen of Carnegie. Please go ahead. Hi. I have also a few questions. We can maybe start with the CapEx side. Can you just repeat what you said about CapEx in 2023? How we should think about that. Yeah. We expect a higher level than 2022, that is because we do have a payment for real estate in Sweden of SEK 150 million, that will come. We don't really know when because it's depending on permits from the authorities. That is really the difference we do see compared to 2022. If you summarize that with the SEK 450 million we had in 2022, we do expect around SEK 600 million in 2023. Okay, got it. Thanks. Yeah, you mentioned that you had a slightly weaker demand within the industrial segment from the consumer discretionary area. Can you remind us, what type of products this is and how large part of industrial this these products represent? Yes. It's I would say on the forest equipment, those kind of products within the industrial. The split of that maybe 25%. Yeah. Around 25% of the total. Okay. Good. When it comes to the supplier finance program, that you're winding down, will you continue with this, at these VHP levels, or will you go back to finance everything yourself sort of? We will from year-end, financing that ourselves. We do see right now that the interest rate levels, they have changed, and we don't see that being profitable for us going forward or at least for the time being. That will cease from January 1. Okay. In general, my final question is on the medical segment. Is it possible to give some indication of the profitability that you have or margins that you have in the U.S. business that you acquired a couple of years ago, roughly where you are in that margin improvement journey? Yes. When we did announce the acquisition, we explained that we were at around the 7% in margins in that part. Then the pandemic came, the volumes went down, affecting the margins a bit as well in the same direction. Now, when volumes have increased again during 2022, they have also been affected by, of course, the inflationary effects that we do see overall. In U.S., the effects of the labor situation have been higher than in other parts of the world. That has done that. All in all, we are still around the level we were when we did announce the acquisition, around the 7%. That has delayed that journey, those two effects, since the acquisition. Okay. underlying, same contract structure, it would be better, of course, without this high inflation situation that you have right now? That's correct. It would have been higher, but that situation has, as I said, of course, affected that part as well. Yeah. What can you do with the labor cost on the energy side? We are working with many different actions in that part, of course, and it's a combination of optimization going on, working with the customers to getting compensated for that as well, and many other things going on to decrease our cost base going forward. Okay, great. Thanks. That's it from me. Thank you. The next question is from Karl Norén of SEB. Please go ahead. Yes, hello. A couple of questions from my side as well. Just firstly, on the Medical side, is it possible... Maybe you said it, but I missed it. It's possible to say that how much of the growth in Medical is priced and how the underlying volumes was developing here in Q4? The major part for medical in Q4 is coming from volume growth. Okay. Just going forward here in medical, would you say that price should it have a big impact in 2023 or year-over-year as the kind of price increases is starting to maybe be a lower part of the growth going forward? It will be a lower part of the growth going forward. There are still some smaller effects to catch up, but the effects from that part will decrease compared to 2022. Okay. A question on the industrial side. I mean, you mentioned that demand is weakening and you're reporting now negative organic growth here in Q4. Is it possible maybe to give some kind of outlook for the upcoming maybe quarters that are you seeing this to get even worse in the first half of the year, or do you expect activity levels to be on a similar level as in Q4? I would say, we would see similar levels, I would say. Okay. Then maybe on the energy cost side, is it possible to say what it was for 2022 and maybe some kind of, what do you expect it to be in 2023? We did see quite a big impact on the energy side. It increased with a bit more than 1% compared to 2021, going from just about 2% to just above 3%. That is, of course, quite a big change. With the situation we do see right now, we don't think that there will be on a full year basis much more increase coming from that side. It's of course very hard to say. It's depending on many different factors, I think that is a big question mark going forward. It has been a higher part of our cost base, it's partly of course affecting us on the margin side. Okay. As the last one, maybe bit more bigger picture on your margin target of 10% in EBITDA margin. I mean, in my view it looks quite hard to reach this already in 2023. Can you give any kind of timeline when you expect to reach it? Because you're quite a bit behind it right now, and you still have some problems in the integrated side, I guess. That is correct, that we are behind our target. I think, we of course, have a lot of measures going on, to decrease cost and make sure that we have the right, cost level and efficiency going on. We will not comment on when we are back on track. Okay. That's all for me. Thank you. Thank you. The next question is from Johan Skoglund of DNB Markets. Please go ahead. Thank you. I guess a quick big picture question from me here. As we see areas of China reopening, how does this affect you now? What do you foresee for 2023 would be uncertainty around COVID-19? Okay. Yeah. The overall picture is that it's easier to travel in and out of China. Of course, that is affecting. The sickness situation in COVID is from our perspective, is improving. It's more a question about the overall global community's willingness to invest more in or heavily in China. Okay. Thank you. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Christer Wahlquist for any closing remarks. I would just like to thank you for your interest in Nolato's quarter and our presentation. I wish you a great day going forward. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.