• Net sales: MSEK 955 (1,098), reported sales were down -13% year-on-year. After adjusting for the impact of currency +1%, sales on a like for like basis, in constant currency year-on-year were down -14%.
• Operating income: MSEK 24 (175), generating an Operating margin of 2.5% (16.0). After adjusting for the cost associated with a warranty claim of MSEK 100, Operating margin before items affecting comparability was 13.0% (16.0).
• Net income for the period: MSEK 9 (120), basic EPS of SEK 0.25 (3.15). EPS before items affecting comparability was SEK 2.47 (3.15).
• Cash flow from operating activities: Cash flow from operating activities was MSEK 103 (138) with a profit to cash conversion ratio of 137% (135), after adjusting for the warranty provision.

• Net sales: MSEK 1,958 (2,225), reported sales were down -12% year-on-year. After adjusting for the impact of currency +1%, sales on a like for like basis, in constant currency year-on-year were down -13%.
• Operating income: Operating income was MSEK 161 (356), generating an Operating margin of 8.2% (16.0). After adjusting for the cost associated with a warranty claim of MSEK 100, Operating margin before items affecting comparability was 13.3% (16.0).
• Net income for the period: MSEK 109 (241), basic EPS of SEK 2.94 (6.33). EPS before items affecting comparability was SEK 5.16 (6.33).
• Cash flow from operating activities: Cash flow from operating activities was MSEK 146 (227) with a profit to cash conversion ratio of 79% (97).
• Group's net debt: MSEK 777 (950), gearing ratio of 35% (42) and Net debt/ EBITDA of 1.33 (1.66).

President and CEO, Martin Kunz, comments on the Q2 2024 Interim Report.
Despite a challenging market environment, we maintained our Operating margin, bolstered by the continued robust demand for our electric products.

Financial Performance

Our group's reported Net sales for the quarter were MSEK 955 (1,098), down by 13% year-on-year and our Operating income before items affecting comparability was MSEK 124 (175), corresponding to a comparable Operating margin of 13.0% (16.0). There were again minimal FX movements in the quarter. Following the recent customer warranty claim from a manufacturing defect we made a warranty provision of MSEK 100.

Our end-markets continue to provide challenging trading conditions across all of our geographical regions, most notably in Europe and North America, which were weaker year-on-year by 13% and 15% respectively. Customer demand in North America slowed this quarter, whilst Europe remains weak, but stable. Sales of e-Products continued to remain strong during the quarter, MSEK 224 (197) equating to 23% (18%) of group sales.

Quarter-on-quarter sales were lower by circa 5% in both our Engines and Hydraulics divisions, with a corresponding impact to the Operating margin from these lower sales levels. Alfdex, our joint venture with Alfa Laval, had a slightly better performance this quarter than last, however performance year-on-year has been affected by weaker demand in both China and latterly Europe and North America. Our share of income from Alfdex this quarter was MSEK 17 (24).

It's pleasing to report we had a better cash performance this quarter, both in absolute terms and the cash conversion ratio, with our cash flow from operating activities being MSEK 103 (138), which represents a profit to cash conversion ratio of 137% (135). Whilst a significant warranty provision was made in the financial statements, there wasn't an associated cash outflow this quarter. The year-to-date cash conversion ratio is 79% (97).

Executing our Strategy

In addition to strong electrical sales in the quarter, our teams have continued to deliver our strategic objectives with remarkable success. The expansion plans for our Pune facility in India are advancing smoothly and significant strides have been made in readying our data centre cooling solution for our inaugural customer.

Moreover, the enhancements to our Escanaba, US plant for high-voltage fan production are nearing completion. Whilst managing the economic cycle in our business, we are accelerating the execution of our strategy. We anticipate making significant progress in the coming quarters, enhancing our electrification capabilities and securing new electrification business opportunities.

Outlook

Our markets, whether geographical or by end-market application remain challenging environments in which to operate, this is supported by the level of orders we continued to receive during the second quarter. The book-to-bill ratio for the group at the end of the quarter was 89%, and based on the recent order intake level we expect sales in the third quarter will be slightly weaker than the sales achieved during the second quarter of 2024.

The demand for our products from customers has weakened and we are proactively implementing additional cost savings measures to maintain robust operating margins during this challenging economic period.

For further information, please contact:
Martin Kunz (President and CEO) or Marcus Whitehouse (CFO) at Tel: +44 121 445 6545 or E-mail: info@concentricab.com

The information in this report is of the type that Concentric AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the contact persons set out above, at 08.00 CET on 31 July 2024.