NCAB Interim report, January–June 2024

> Net sales decreased by 12% to SEK 935.1 million (1,057.5). In USD, net sales decreased 13%. For comparable units, net sales decreased 15% in both SEK and USD.
> Order intake increased 1% to SEK 938 million (924), while in USD order intake was unchanged. Order intake for comparable units decreased 2% year-on-year in both SEK and USD. Book to bill amounted to 1.00.
> EBITA decreased to SEK 120.4 million (168.2), representing an EBITA margin of 12.9% (15.9). Earnings were charged with SEK 13 million (10) related to implementation costs for the Group’s new IT system and SEK 13 million in costs for the Group’s business development conference that is held every second year for all employees. SEK 0.8 million (8.4) was also charged to EBITA relating to transaction costs.
> Cash flow from operating activities was SEK 101.2 million (152.7). 
> Operating profit was SEK 105.5 million (154.5).
> Profit after tax was SEK 73.5 million (101.2).
> Earnings per share before and after dilution was SEK 0.39 (0.54).
 
JANUARY–JUNE 2024
 
> Net sales decreased 14% to SEK 1,885.7 million (2,203.8). In USD, net sales decreased 15%. For comparable units, net sales decreased 20% in SEK as well as USD.
> Order intake decreased 2% to SEK 1,907 million (1,954). The decrease in USD was 3%. Order intake for comparable units decreased 8%.
> EBITA decreased to SEK 263.0 million (351.9), representing an EBITA margin of 13.9% (16.0). SEK 0.8 million was charged to EBITA relating to transaction costs. SEK 9.4 million was charged to EBITA relating to transaction costs in the previous year. Earnings were charged with SEK 21 million (18) related to roll-out costs for the Group’s new IT system and approximately SEK 13 million in costs for the Group’s business development conference that is held in alternating years for all employees.
> Cash flow from operating activities was SEK 194.1 million (354.6).
> Operating profit was SEK 232.8 million (327.1).
> Return on equity was 26.0% (39.4).
> Profit after tax was SEK 163.3 million (226.2).
> Earnings per share before and after dilution was SEK 0.87 (1.21).
 
SIGNIFICANT EVENTS DURING AND AFTER THE QUARTER
> Timothy Benjamin was appointed to replace Anders Forsén as new CFO. Timothy will take up his new duties in September.
> On 11 April, 100% of the shares were acquired in Cumatrix BV in Belgium. 
> The Annual General Meeting resolved on a dividend of SEK 1.10 per share.
> Sarah Eccleston and Anders Lindqvist were newly elected as members of the Board at the AGM.
> NCAB expanded its acquisition credit facility by SEK 500 million to ensure financing for future acquisitions.
> On 1 July, 100% of the shares were acquired in ICOM Industrial Components AG in Switzerland.
> On 4 July, the PCB division was acquired from EPI Components in Austria.
> An agreement was signed on 22 July to acquire 100% of the shares in the PCB company DVS Global in Italy.

MESSAGE FROM THE CEO
Weak demand in Germany but continued slow improvement in other regions
 
The quarter was characterised by a weak economy with restrained demand, with weaker growth in Germany than expected. Order intake was still partially impacted by destocking. However, the market was more positive in North America and Asia, and to an extent in the Nordic region.
 
We are navigating the challenges and are focused on strengthening our position. During the quarter, we continued to win contracts for new articles and new customers at an undiminished growth rate. This paves the way for future growth regardless of market developments.
 
Our gross margins remained healthy, but the EBITA margin dipped during the quarter, primarily due to lower net sales and costs for the business development conference held for all the Group’s employees.
 
In North America, we are seeing some signs of increased market activity. This, combined with positive customer dialogues and winning several important projects – including in Aerospace – led to positive order intake trend in the segment compared with the year-earlier quarter.
 
In the East segment, which is dominated by the Chinese market, the trend is still cautious. However, the size of the market means that it is still possible to find sectors that are performing well, and our team managed to generate good growth during the quarter compared with the previous year. This includes growth in test equipment for the semiconductor industry.
 
The Nordics segment, which also includes Poland, delivered a somewhat weaker performance. Norway continued to have good sales, for example connected to the defence industry. It is also gratifying that despite a generally weak market during the quarter we saw growing order intake in countries such as Finland and Denmark.
 
We faced the most challenging market conditions in the Europe segment. The increasingly weak economy in Germany is also affecting the economy in neighbouring countries. Despite this, our order intake grew in a number of other European countries. We also had strong growth in the number of new customers and contracts won for new articles. Sales in Aerospace & Defence are progressing and during the third quarter we will open up for sales in Defence in several European markets.
 
After of period of limited opportunities for organic growth, it is encouraging that we have been able to successfully conclude three of our ongoing acquisition discussions in recent weeks. In addition to contributing annual sales of approximately SEK 300 million, the acquisitions of ICOM in Switzerland, EPI in Austria and DVS in Italy will also further strengthen our position in Europe. The acquisitions in Switzerland and Austria have allowed us to establish a local presence in these industrial markets. This has given us a larger base of demanding customers and a platform for further organic growth.

“It is encouraging that we have been able to successfully conclude three of our ongoing acquisition discussions”
Peter Kruk
President and CEO, NCAB Group AB 

NCAB Group is publishing the interim report for January–June 2024 on Tuesday 23 July at 7:30 a.m. A web-cast teleconference will be held at 10:00 a.m. CEST on the same date, where President and CEO Peter Kruk and CFO Anders Forsén will present the report. The presentation will be followed by a Q&A session. The presentation will be held in English. For those who wish to participate via webcast, please use the link below: https://ir.financialhearings.com/ncab-group-q2-report-2024
 
For those who wish to participate via teleconference, please register on the link below. After registration, you will be provided with phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
https://conference.financialhearings.com/teleconference/?id=50048799
 
FINANCIAL CALENDAR
Interim report third quarter, 5 November 2024
Year-end report 2024, 13 February 2025