Edited Transcript of SYSR.ST earnings conference call or presentation 13-Mar-19 7:30am GMT

Next slide, glide #6, advantage after tax. The net economical items ended this region at SEK 5.8 million compared ought SEK 14.9 million at the region before. Effects of foreign exchange above long-term receivables, loans and shore balances calculated at SEK 1.5 million versus minus SEK 8.1 million. The advantage expenses because the quarter, total at all, SEK 8.5 million negative versus SEK 7.2 million at the region the year before. And estimated tax because the region amounted ought minus SEK 29.5 million or 39.7%. total at all, the net advantage after tax is SEK 45 million.

Next slide, glide #7. Looking at the money brook analysis because the region 3, the operating advantage being SEK 80.1 million. vary at working headmaster is a certain SEK 111.7 million. Net investments this region is SEK 47.7 million versus SEK 107 million the region a year before, which gives us a liberate money brook of SEK 144.1 million versus a negative SEK 22.5 million a region the year before. The net indebtedness is a moment bit above SEK 2 billion. The vary at working headmaster is greatly because of the lessen at commerce accounts receivables, and the net investments own greatly of investments above the sites at Germany, Sweden and Denmark.

Next slide, glide #8. Let's appear into the various regions that we eat here. Starting with the Nordics, we had a growth of 4% higher than the same epoch final year. And flat here, if you accept away the foreign exchange effects, acquisitions and divestments, organic growth is truly 4% because the affected sales is truly only marginal. Swedish and Norwegian markets reported same good growth at the quarter, and Denmark and Finland however are stable.

Next slide, glide #9, Western Europe. Sales at the Western European impartial 15% higher than at the corresponding epoch final year. Organic here is 0%, besides here we had some of the tougher comparables with a 10% organic growth reported the year ago because of big plot at Menerga, because you total know about. consequently the underlying organic growth is okay. little markets at the belt performed healthy during the period, here, especially the smaller ones parallel Portugal, Greece, Spain and Italy; and the sales fell slightly at Belgium, Austria and U.K.

Next slide, glide #10, Eastern Europe and CIS countries. Sales at Eastern Europe and CIS rose by 17% during the quarter. Adjusted here because foreign exchange effects and acquisitions truly is an organic growth of 15%. impartial looking at Russia, it was a sales of 12% higher than the corresponding epoch final year. besides other chief markets at the belt showing good growth during the epoch includes Bulgaria, Lithuania, Estonia and Poland, and especially agreeable ought see that total the operations at Czech Republic had truly good growth.

Next slide, glide #11, North and South America. Sales at both North and South America belt during the region were 30% (sic) [40%] higher than at the same epoch final year. Both the American and Canadian impartial performed well. And adjusted because foreign exchange effects and acquisitions, the sales increased truly by 18% at the quarter.

Looking at Asia, center East and Africa. Sales at this belt increased by 9% during the quarter, above this slide. And adjusted because foreign exchange effects and acquisitions, it's an organic growth truly of 16%. And here especially ought mention is that the sales at Morocco, China and Turkey increased during the quarter, besides declined somewhat at parts of center East.

Next slide, glide #13. And here, I expect ought switch above direct ought the next glide because we expect ought highlight some of the projects and things that are ongoing within Systemair. We already announced here that we took a chief bid because a expedition queue because these ships. It's Systemair entity at Netherlands that has received an bid because manufacture of attitude handling units because 2 new ships, and here the evaluate is nearly almost EUR 5 million. because us, the same agreeable is that they are truly with a concentrate above environmental-friendly ships, and they are built above the yard of Chantiers de l'Atlantique at France, which is because us a new customer. And these ships, because you can see at this presentation above the slide, are truly futuristic at both aspects of environmental besides also design. And here, the attitude handling units will exist produced and delivered during 2020 and 2022.

Next slide. also here ought broadcast that Systemair, we will exist the sponsor of the Swedish pavilion above the Expo 2020 at Dubai. at October 2020, Dubai will host the world Expo. The paper here is Connecting Minds, Creating the Future, and the ambitions of the organizer are truly great. And the headmaster concentrate here will exist innovation and sustainability. consequently because it looks today, at excess of truly 170 countries are expected ought accompany the exhibition, and they will eat more than 20 million visitors. consequently agreeable and exciting because us ought exist the sponsor here of total ventilation and cooling equipments because the Swedish pavilion, because the Swedish pavilion, historically, because the final epoch they were attending these expos, usually got an additional give because compose and execution of the pavilion. consequently we're truly looking dispatch ought this.

Also here, because also announced at the periodical liberate before, above the next slide, Systemair and Panasonic. We join ought mature integrated HVAC&R solutions. The concentrate above this partnership is ought together mature sustainable HVAC solutions because both commercial and residential sector. We eat here truly 4 steps coming in. First step ought exist that we will launch a new heat pump and chiller progression produced by Systemair because Panasonic. And together we will then join solutions that will advantage from both parties' existing technologies. And of course, here, we're talking nearly our AC competencies and Panasonic coming at with a destiny of supervise and cloud, besides also of specialty compressor technologies. consequently this we're truly looking dispatch to.

Going ought next slide, which is the summary. consequently because a chief takeaway, continued good growth, no chief moan of lessen at our headmaster countries -- lessen at demand. Then we eat a decreased total verge because of cheap career at one factory, which is mentioned here which is Menerga, besides also because of the acquisition of Koolair. They are operating with a lower total verge besides with a net arise coming into the belt where Systemair ought operate. consequently thereby, the EBIT verge has improved slightly.

And we eat a highly improved money brook because of the improved working headmaster and lower investment rates. And the cooperation with Panasonic will enable Systemair ought expand the amount of force effective and clever products produced at the existing AC factories within Systemair. And because you also eat seen at the periodical release, we eat strengthened our management team ought attain these goals because future.

By that, ladies and gentlemen, I'll thank you and petition the operator ought blank up the lines because questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first puzzle is above the queue of Carl Ragnerstam of Nordea.

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Carl Ragnerstam, Nordea Markets, inquiry part - Analyst [2]

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It's Carl Ragnerstam here from Nordea. Could you first, well, cost a moment ought talking nearly the general petition at the Nordics? eat you seen any slowdown from any of your aim markets yet?

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [3]

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Carl, no, at general, we don't see a slowdown at petition at the Nordics especially, absolutely not, no. Actually, we had a moment bit of -- because we announced, I think, around 1 year ago, we had a vary of petition at Norway, going more from residential ought more mixed with residential and tunnel, because example. besides we also see here a lean revival of the residential market. consequently no lessen of petition impartial now. No.

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Carl Ragnerstam, Nordea Markets, inquiry part - Analyst [4]

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And at Western Europe, can you speak anything there?

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [5]

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In Western Europe, I see no general. There are some hot spots when it comes ought total Europe where we see a moment bit hesitancy above the markets. And here ought mention used to exist Turkey and U.K. because of the political circumstances.

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Carl Ragnerstam, Nordea Markets, inquiry part - Analyst [6]

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Okay, perfect...

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Anders Ulff, Systemair AB (publ) - CFO & Secretary ought the Board [7]

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And then we wrote at the explain that we had pretty well comparables final year there where we had 10% organic growth final year at Western Europe. That's why we eat 0 this quarter. consequently we made a larger plot delivery final year also.

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [8]

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In the quarter, then?

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Anders Ulff, Systemair AB (publ) - CFO & Secretary ought the Board [9]

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Yes.

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Carl Ragnerstam, Nordea Markets, inquiry part - Analyst [10]

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Okay, got it. And you're also talking nearly cheap utilization evaluate at Menerga. What measures will it accept then at bid ought expend profitability ought decent levels? And then what can you fulfill also at condition of taking out SG&A costs?

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [11]

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This is truly middle of the things that we are running impartial now, consequently it's a same good question, Carl. at Menerga, first of all, they are running same cheap utilization at the mill now because a arise truly of having had this big bid because the big bid occupied the volumes at the factory. They couldn't accept at the more healthy moment orders, which is an consequence of that before. besides what we're doing today at Menerga, because you eat seen also at the explain here, we eat some restructuring costs, besides these are the cheap ones. What we fulfill at general is that because the time being impartial now, we are changing total ERP system at Menerga ought fetch at total the processes straight. We also are finalizing the -- or rolling out the new casing from the Geniox platform into Menerga at these coming months. And with that, we also fetch at total the produce preference tools that we have, and the relaxation of the Systemair orchestra also applying them above the Menerga casings ought eat total efficiency there. And total these activities are ongoing at parallel impartial now. And we're looking dispatch ought finalize them at various steps between can and July this year, besides they're highly ongoing impartial because now because the moment.

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Carl Ragnerstam, Nordea Markets, inquiry part - Analyst [12]

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Okay, great. And the final one because me, at condition of manufacturing footprint, are there any measures ought exist taken there ought consolidate it, I mean, closing down plants at bid ought expand overall utilization rates?

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [13]

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We are usually looking into that, yes. We eat some plans, besides I can't uncover them impartial now. besides of course, we're looking into that constantly and appraise the modern condition versus the demand. Yes, absolutely.

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Operator [14]

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We're now above the queue of Douglas Lindahl at Kepler Cheuvreux.

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Douglas Lindahl, Kepler Cheuvreux, inquiry part - Analyst [15]

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Douglas Lindahl, Kepler Cheuvreux. A little questions from my side. consequently you mentioned there that Germany grew, and you touched upon the cheap utilization at your Menerga mill at Germany. can you maybe elaborate a bit farther above that, given that you truly had growing sales at Germany?

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [16]

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Yes, you eat ought see, Germany because us is, of course, a mixture when we lesson nearly Germany now. at Germany, we eat Systemair Germany, we eat the airplane new businesses at Germany, and then we also eat Menerga at Germany together then also with service entities. The cheap utilization evaluate and the, let's say, the biggest shock above the negative phase here has been the Menerga operations. By having this big plot that we finalized, because mentioned also at the explain here because this Russian customer, they certainly occupied also the [all] mill ought exist able ought compose because other projects. because an consequence of that, you eat a delay of bid intake, and we see a smaller utilization at the mill thereby at these months that eat passed at the quarter. also something that I absence ought point out is, of course, also that you absence ought compare with that, especially December and January were pretty short months when it comes ought code days because a factory. consequently total that together gives, of course, an shock above the bottom queue because us.

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Douglas Lindahl, Kepler Cheuvreux, inquiry part - Analyst [17]

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So going forward, what used to you -- how ought we study nearly these effects going dispatch then? at the next quarter, because example, will these issues however consider above profitability? And also, did you eat -- was it -- this negative utilization, does that intend negative salary from that concrete operation?

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [18]

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Yes.

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Douglas Lindahl, Kepler Cheuvreux, inquiry part - Analyst [19]

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And that the shock is pretty significant?

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [20]

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Yes, when you eat a negative -- let's say, if you're running above a cheap utilization at a factory, besides you absence ought allege the mill operations and all, of course, it's a negative consequence above the bottom line, absolutely. besides at the same time, the bid volumes and the manufacture volumes because the next coming months are picking up pretty well. besides at the same time, because mentioned ought the questioner ago you, we are, at the same time, we are finalizing now the implementation, total the big changes that we're doing because the structure of Menerga, such with the implementation of the ERP system changing from SAP ought our existing that we eat at the relaxation of the group, the new produce preference tools and, of course, the biggest material is that we physically changed the produce with the implementation of the Geniox platform because we eat them at the other factories at the Systemair and the AHUs, which is coming above at the next 2 months.

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Anders Ulff, Systemair AB (publ) - CFO & Secretary ought the Board [21]

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I wouldn't expect any big expand at profitability during the fourth region because Menerga because of total these actions that are ongoing because the moment. consequently that will accept it's time ago it has vary across because a beneficial company.

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Roland Kasper, Systemair AB (publ) - orchestra CEO & principal [22]

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So impartial now, we are -- sorry, besides impartial now, of course, we absence ought finalize total these things ought exist able to, I used to say, clean up and location the structure ought compose Menerga coming across a improve flat after region 4. That's, of course, now where we eat the maintenance showing impartial ought exist same clear.

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Douglas Lindahl, Kepler Cheuvreux, inquiry part - Analyst [23]

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