Concentric (COIC) investor relations material

Executive summary

• Net sales declined 13% year-over-year to MSEK 955, with minimal FX impact and reduced demand, especially for hydraulic products.

• Electric product sales grew 12.7% year-over-year, now representing 23% of total/group sales, up from 18% in Q2 2023.

• A MSEK 100 warranty provision for a manufacturing defect significantly impacted reported results and margins.

• Market conditions remain challenging, especially in agriculture and construction, which together account for about 50% of sales.

• Strategic focus continues on electrification, with investments in India and the U.S. and major new business wins for Alfdex totaling MSEK 1,300.

Financial highlights

• Operating income before items affecting comparability was MSEK 124 (margin 13.0%), but reported operating income dropped to MSEK 24 (margin 2.5%) due to the warranty provision.

• Cash flow from operations reached MSEK 103, with a profit to cash conversion of 137% for the quarter.

• Net debt decreased to MSEK 777 from MSEK 950 a year ago; gearing ratio improved to 35% from 42%.

• Net debt to EBITDA ratio stands at 1.33; cash and equivalents at MSEK 374 after a MSEK 158 dividend payment.

• Book-to-bill ratio at quarter-end was 89% (down from 99% last year).

Outlook and guidance

• Net sales in Q3 2024 are expected to be slightly weaker than Q2, reflecting a book-to-bill ratio of 89%.

• End markets are anticipated to remain weaker throughout 2024 compared to the previous year.

• Additional cost-saving measures are being implemented to maintain margins.

• Continued execution of the electrification strategy and expansion into new markets is expected.