Vestum

Highlights of the period April – June 2025

• Net sales amounted to SEK 1,012 (1,083) million
• Adjusted EBITA amounted to SEK 102 (111) million, corresponding to an adjusted EBITA margin of 10.1% (10.3%)
• EBITA amounted to SEK 96 (114) million, corresponding to an EBITA margin of 9.5% (10.5%)
• EBITA per share before dilution amounted to SEK 0.26 (0.30)
• Operating profit (EBIT) amounted to SEK 24 (44) million
• Cash flow from operating activities amounted to SEK 79 (31) million

Summarising comments by CEO Simon Göthberg
Vestum continues to generate organic growth and solid cash flows. In the second quarter, organic growth reached 4%, while free cash flow increased by over SEK 50 million. Profitability is in line with previous year but varies somewhat across the Group. In general, we see stable underlying demand in our product companies, while the services companies continue to face a challenging market. During the quarter, we have invested in both organic and acquisitive growth. For example, we have expanded capacity in several production companies by moving to larger facilities, consequently increasing lease liabilities. Leverage, expressed as financial net debt in relation to reported EBITDA, rose to 2.65x due to these investments.
 
The Flow Technology segment continues to perform well with sales growth of 32%, mainly driven by acquired growth. Profitability, measured as EBITA margin, declined slightly to 19.4% from 21.3%. In Scandinavia, we are generating volume growth and improved margins in all countries, driven by strong underlying demand. In the UK, which accounts for 60% of the segment’s sales, the market is preparing for the five-year investment plan AMP8, which came into effect in April 2025. Over £100 billion is expected to be invested in water infrastructure, doubling the amount of its predecessor. However, during the upgrade phase the market is somewhat cautious, which is visible across the value chain. This, combined with the absence of extreme weather, negatively impacted volume and margin during the quarter. Our position in the UK market remains very strong, and we are confident that the segment will continue to develop positively. We also plan to make additional acquisitions in the UK during the second half of 2025 to further strengthen our position ahead of the significant investments in the coming years.
 
In the Niche Products segment, volume developed in line with previous year, while the margin improved from 11.6% to 12.4%. We remain focused on strengthening profitability in the segment but will also invest in organic growth in areas where we can achieve the highest return on capital.
 
In the Solutions segment, we have divested several companies during the year, including the largest and third-largest company, meaning that sales in absolute terms decreased. However, organic growth in the segment was positive for the second consecutive quarter. Profitability, measured as EBITA margin, decreased from 7.3% to 5.0%, driven by our installation businesses exposed to the construction industry. The market is expected to recover as construction investments rise from historically low levels. The remaining part of the segment, accounting for 40% of sales and consisting of niched infrastructure services businesses, collectively generated a double-digit EBITA margin during the quarter. Focus remains on improving profitability in the segment.
 
Cash flow is growing as expected, and we see clear positive effects from the improved capital structure established earlier this year. This is reflected in lower financing costs of over SEK 30 million in the quarter. We have created good conditions for free cash flow to continue to grow going forward.
 
Today, half of Vestum’s sales come from businesses that remain strong regardless of the economic cycle, as seen in the Flow Technology segment. We regard the market outlook as very positive in the coming years for this segment, especially in the UK, and look forward to making additional acquisitions. It is encouraging that we are delivering organic growth for the second consecutive quarter, but we also acknowledge that part of the Group is exposed to the Scandinavian construction industry which remains at historically low levels in terms of volume and margin. As construction investments increase in the region, sales and profitability will strengthen for the Group. Vestum will continue to allocate capital to growth through both organic initiatives and acquisitions where we see strong market growth and high return on capital.
 
The Interim Report is available on Vestum’s website: https://www.vestum.se/en/ir/financial-reports/