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Organic growth and market conditions
Organic growth improved compared with Q1. What changed during the quarter?
This last quarter was a more normal continuation of what we saw and expressed at the end of last year – that customers were gradually becoming more optimistic and with higher activity levels. In Q1, however, we had several things that coincided with each other making it a very weak quarter in terms of sales levels and activities. In Q2 we also had better capacity utilisation in service compared to Q1.
How much of the improvement in organic growth compared with Q1 was driven by previously postponed maintenance and service work?
We are continuously balancing the resources we have for maintenance work in relation to customer demand. What we saw in Q2 was that we had a good capacity utilization in the services operations, foremost due to planned maintenance due in the quarter but also helped by the postponed maintenance from Q1. That helped to drive the margins in a good direction. The ambition now is to have a good utilization level also in Q3 taking care of the backlog but also make sure we have capacity for the planned stops.
You mention a somewhat more positive market environment. What are you actually seeing among customers?
As I mentioned we saw that customers were gradually becoming more optimistic and had a higher activity at the end of the quarter.
You describe significant differences between customer segments. Which segments are performing well today, and which remain more challenging?
From a country perspective, Sweden is the most positive right now. Norway is stable on good levels and Finland is actually ok if we adjust for the larger project sales we had there in Q2 of last year to the power industry. The country that is lagging is Denmark where we see the effects from the decrease in project sales to pharma and green en-ergy that started the second half of last year.
From a customer segment perspective we see good traction in mining, water & wastewater, defence, and also this quarter automotive. The latter however have a ten-dency to be a bit more volatile from quarter to quarter. Pulp & paper was a bit subdued during the quarter.
The Danish market has remained weak for several quarters. Do you see signs that the project market is bottoming out?
Project activity remained subdued in general and in Denmark particularly within pharma and green energy, where we completed several large projects during 2025.
Over time, we expect project demand in general to recover, but the timing and how this will affect individual markets our companies will depend on customers becoming more confident in their own demand outlook and their own investment plans.
Service revenues developed well during the quarter. What drove the improvement?
Service revenues overall developed well due to good capacity utilisation in many of the companies. However, we also saw a continued subdued demand in some of the work-shop oriented businesses. That is likely due to that some customers are still a bit hesi-tant and try to run their machinery as long as they can, due to their own demand situa-tion.
Profitability and margins
EBITA improved despite a still mixed market. What were the main drivers behind the margin improvement?
There were several contributing factors. For the comparable businesses, revenue was stable overall, while gross margins improved and the cost base remained well controlled. We also benefited from better capacity utilisation in parts of our service operations com-pared with the first quarter. In addition, the acquisitions completed over the past year made a positive contribution to both earnings and margins.
Gross margins improved during the quarter. What are the main factors behind the im-provement?
It is really the result of many small improvements rather than one single factor. Our com-panies work continuously with pricing, purchasing, product mix and customer selection. Combined with strong local business acumen, disciplined execution and an attractive customer offering, this enabled us to improve gross margins despite a still somewhat cautious market. Acquisitions have also a positive effect here.
Supplier price increases linked to the situation in the Middle East have started to af-fect purchasing costs. How do you view the impact going forward?
So far, the impact has been relatively limited. We have seen some moderate price in-creases from suppliers, but nothing dramatic. Managing purchasing costs and pricing is part of our daily business, and our companies have a strong track record of adapting when costs change. We therefore expect to continue managing this in the same disci-plined way going forward, although we will of course continue to monitor developments closely.
Industry delivered a very strong EBITA margin in the quarter. Can you explain what drove the improvement, and how should we think about margins going forward?
The improvement was mainly driven by Power Transmission, where we saw stable vol-umes, improved gross margins and continued cost discipline. Specialist remained some-what weaker, primarily due to lower project activity in Denmark. Looking at the business area as a whole, quarterly margins will always vary somewhat depending on business mix and project activity, but we continue to see good underlying profitability in both business units.
Cash flow and capital allocation
Operating cash flow remained strong. What are the main priorities for the cash you generate?
Our capital allocation priorities remain unchanged. First and foremost, we continue to in-vest in acquisitions of successful, sustainable companies. We also support our existing companies with investments that strengthen their long-term competitiveness and growth. At the same time, maintaining a strong balance sheet remains an important prior-ity.
What leverage level are you comfortable operating with as acquisition activity continues?
We have a strong balance sheet and good financial flexibility. We don’t have a target re-garding leverage levels but the level we are at now, which is around 1.5 times we feel to-tally comfortable with. Also a higher level would be totally fine. However, keep in mind that our ultimate source of liquidity for acquisitions is our own cash flow.
Acquisitions and expansion
How does the acquisition pipeline look today? And are you seeing any changes in val-uation multiples or competition for acquisitions?
The pipeline continues to be healthy. We have a good mix of bilateral discussions with entrepreneurs in our target markets as well as a solid inflow of opportunities from advis-ers and brokers. We have not seen any meaningful changes in valuation levels or compe-tition during the quarter. Overall, the acquisition market remains supportive for our strat-egy.
The UK is now part of your platform. How is the business developing and how do you see further expansion outside the Nordics?
We are pleased with the development so far. Actuated Solutions is performing well and we have had a lot of good discussions with management about the future M&A activities in the UK. We are continuing to evaluate markets including UK outside of the Nordics.
