Earnings call transcript: Hanza AB reports Q4 2024 results, stock dips

Hanza AB’s earnings call for the fourth quarter of 2024 revealed a mixed financial performance, leading to an 8.44% drop in its stock price. The company reported strong sales growth due to acquisitions, but faced a decline in organic sales. According to InvestingPro data, Hanza maintains a "GOOD" overall financial health score, though analysts expect net income to decline this year. Despite improvements in cash flow and margins, the market reacted negatively, reflecting concerns over the company’s future growth prospects.

Key Takeaways

• Q4 2024 sales increased by 20% due to acquisitions, but organic sales declined by 5%.
• The EBITA margin for the quarter reached 7.1%, excluding one-time costs.
• Hanza AB’s stock price fell by 8.44% following the earnings release.
• The company set ambitious targets for 2025, aiming for SEK 6,500 million in revenue and an 8% EBITA margin.

Company Performance

Hanza AB experienced a significant boost in its Q4 2024 sales, primarily driven by strategic acquisitions, including OrbitOne and a Finnish mechanics company. However, organic sales saw a decline, indicating underlying challenges in its core operations. The company’s EBITA margin improved to 7.1% for the quarter, signaling operational efficiency gains, yet the market remains cautious.

Financial Highlights

• Revenue: Increased by 20% year-over-year, driven by acquisitions.
• Earnings per share: SEK 2.5 for Q4 2024.
• EBITA margin: 7.1% for Q4 2024, 6.2% for the full year.
• Cash flow: Highest ever quarterly cash flow at SEK 289 million.
• Net debt to EBITDA ratio: 1.6x.

Market Reaction

Hanza AB’s stock price fell by 8.44% in pre-market trading, reflecting investor concerns over the decline in organic sales and the broader market conditions. The stock’s price drop brings it closer to its 52-week low of SEK 50.45, indicating heightened market volatility and investor apprehension.

Outlook & Guidance

Looking ahead, Hanza AB aims for SEK 6,500 million in revenue and an 8% EBITA margin for 2025. The company plans geographic expansion and further integration of recent acquisitions to drive growth. With a strong five-year revenue CAGR of 18% and consistent dividend growth over the past four years, Hanza demonstrates solid execution capabilities. Despite weak market conditions, segments like defense and energy remain stable, offering potential growth avenues.

Get comprehensive insights into Hanza’s growth trajectory and peer comparison with InvestingPro’s detailed research reports, available for over 1,400 stocks.

Executive Commentary

CEO Erik Stenfosz emphasized the company’s focus on cash flow, margins, and sales, stating, "Cash flow is number one, margin is number two, sales is number three." He also highlighted Hanza’s unique positioning, saying, "We are not in the industry. We are outside the industry."

Risks and Challenges

• Decline in organic sales poses a challenge to sustainable growth.
• Market volatility and weak conditions could impact future performance.
• Integration of acquisitions may present operational challenges.
• The company’s ambitious financial targets may face execution risks.

Q&A

During the Q&A session, analysts inquired about the company’s customer disclosure improvements and its confidence in achieving financial targets. Executives expressed optimism in securing new orders and gaining market share, while also highlighting potential cost synergies from the Leerden acquisition.

Full transcript - Hanza AB (HANZA) Q4 2024:

Erik Stenfosz, CEO, Hansa: Good morning. Really, really nice to see so many people here today.

A warm welcome to you all. And of course, a warm welcome to those of you following this through the audio cast. Today we give the presentation of Hansa’s year end report live from Tuxfosz, Varmland, Sweden. And I’m Erik Stenfosz. It will be my pleasure.

I’m the CEO of the company. A pleasure to give you an update of our company together with our excellent CFO, Lars Okeblom. And we have an interesting presentation for you today. We have brought Hansa to a whole new level last year, and we will walk through the major events of that year. We have an agenda.

Looks like this. First, we will go through this from the operational point of view. Then Lars will walk us through the financial development. Next (LON:NXT), we will give our vision of the future, both in general. What do you think about the market development?

And in particular, Hansa twenty twenty five and beyond. And we will, of course, end this with a Q and A session. Please use that. It will be possible both to ask question in this room and of course through the web. So let’s get started.

And, to make this easy to understand this presentation, I would like just to take a minute to repeat our business model. So our vision is manufacturing made easy. It can be quite complicated with outsourced manufacturing due to the fact that you need so many different contract manufacturers, and also they might be located on different places. Result might be, as you see on this slide to the left, a very complex supply chain. So we have created an alternative, local complete manufacturing, grouping together different kind of factories in areas like here in Vermeland, where we can do parts production and parts assembly.

And by the way, we are now sitting in a new assembly hall. Sometimes, still, it can be complicated for the customers, the product owners to do this transformation, because it normally includes manufacturing transfer. And that’s really a science of its own, something that can be complicated. So therefore, we also have something we call MIG, Manufacturing Solutions for increased growth and earnings, a service where we help our customers to do this transformation. We have quite good knowledge of that.

So this is the theory. This is the idea behind Hansa. If we now move to execution, it’s a tiny graph, but it shows the sales development of the sixteen years we’ve been around. And, I trust that this will continue to grow. We have a steady growth, both in good times and bad times.

Why is that? Because the need to streamline your supply chain is almost the same. When the wheels are spinning, you like to optimize, get better delivery accuracy. When it’s a little bit slower economy, you like to lower the cost. And that’s also why we’ve been able to present new orders during 2024, even though it was a recession.

Now we do a development of Hansa in very close cooperation with our customers. What we do is on demand, like the hall we are in now, the new factory, on demand from our customers. The same thing apply when it comes to our acquisitions. So we are not opportunistic trying to find a good deal. Rather, we’re looking for companies where we can really increase our customer value.

We have long discussions with our customer with a potential acquisition, and then we try to find companies where we really can increase customer value. And this is then the reason why we are able to grow so fast, but necessary for this. The key for this is that you have a very well organized company. The organization we have made is decentralized, modular, and scalable, meaning that we have created these kind of manufacturing clusters, pushed out the decisions, decentralizing the decisions, because they are much better if they make decisions here in Turkstoch of a new investment. It’s much better than Lars and me trying to find out what kind of machine is needed.

And then modular, meaning that the clusters, they are like siblings. So you have to manage yourself, but you also have to help each other. And this means that Hansa can grow in several places at the same time. We can expand in Germany, Sweden, Sweden, Finland at the same time, thanks to this organization. Another thing that is needed if you want to be a fast growing company is some kind of fuel.

And for us, the fuel is cashflow. And that’s why you hear us talking about this at every presentation. I’m sure that Lars will talk a lot about our cashflow today as well. So these are some of, let’s say, the features of Hamza, what separates us from the other companies in the industry. And against this background, I think it will be fairly easy to browse through all the activities we have done in ’24.

We started by ending funding that was already ongoing by the late twenty three. And I will come back to the reason for that. Then we acquired this large company, OrbitOne, one of the best EMS companies in The Nordics, highly skilled, extreme competence, however, lagging a bit behind when it comes to the margin. So it was downloading the margin of the whole group. Then also, of course, came the recession.

So given this fact, the large acquisition, downturn in economy, we had to work a bit with our operational strategy. We have something called Hansa twenty twenty five. That’s our core strategy. But in addition to this, we had to do, let’s say, an appendix to that. We call it ONIX, to handle the new circumstances.

And then our financial targets, and this is important, our financial targets, they are not something just hanging in the air. We guess the future, rather they are a consequence of our operational targets. So when we review our operational targets, we also have to look at our financial targets. And conclusion was, one year ago, we made a guidance that we will actually increase the operating margin target. We had said it that we will come back to 8% by the end of twenty twenty five.

Now the new target is 8% for the full year 2025, a consequence of the new operational plan. A bit proud that we were able to guide for this already a year ago and it still remains our target. Okay. Let’s look a little bit more at our Onyx program. It was in three steps.

We will see the financial consequences, but it was, of course, integration of this nice Orbit one. And it also, of course, we needed rightsizing due to the economy, and we needed a number of other activities, but the result was there. So, we will see now from Lars that Q1 was the lowest margin 2024 when we were down to 5.3%, and then 5.7% in Q2, ’6 point ’7 percent in Q3, and now 7.1% in Q4. So we are on track with our target 8% next year. And then, we still have the original strategy, Hansa twenty twenty five.

Now we’re talking about the appendix, and that embraced a new factory in Estonia. We actually had an opening like this in Estonia before the summer. And that’s a fantastic factory. You see it on the picture here. Look up to the left, you see the new extension of the sheet metal factory.

You see it’s connected to another building. The reason for that is that when you have made a sheet metal box, you like to send it somewhere and fill it with something. The same principle applies here, that now we are in Assembly Hall close to our sheet metal factory, which is just next door. A few words about sales. I said we had a rather good year last year.

We brought in new customers. Some worth mentioning is Munter. I think you know about this company in Sweden. Also, we had the single largest order from a defense and security company. It says hundred 34,000,000 sec.

It’s execution execution starts now. And I think even that that number can be slightly higher. And then also we brought in some MIGs. Now it’s important again. You know now what the MIG is, so it’s manufacturing transfer.

Germany, they have been holding tight to the manufacturing and not been as keen on outsourcing like we are in The Nordics. Now the finance situation has changed a bit and they are more easy to discuss outsourcing. We had a company here, VCGMBH, had their manufacturing for one hundred years, supply chain locally, which we can do a MIG and then move to our cluster in Central Europe. Huge customer value for that company. A large order for us, at least €10,000,000 per year.

Then I have something else interesting, really worth mentioning. A Canadian company, Mitel. They are, Nota BN, asking us to move manufacturing from China back to Sweden. So back sourcing, which is also some kind of trend right now. The two interesting MIG contracts right there.

Then we realized we need to move forward, we need to look at the next step of Hansa. I will come back to that. We need to strengthen what we call HLT, Hansa Group Leadership Team. And it’s been consisting, of myself, Lars Okeblom, Andreas Nordin, here somewhere, our CEO. And then we made an expansion of two new positions.

So we brought in Diana. She’s been around on the HR for a long time. Probably, if you’ve been following us, you have heard about the HR due diligence we are doing. So when you buy a company, not only just check finance and check legal stuff, but also checks the company culture. Very important.

So, Diana has been working with us for a long time now. She’s on a C level. Also, Matthias, sitting here, is our new CSO, will work with our strategy, an important expansion of our group leadership team. Then we ended the year by signing a contract to buy a new company about the same size as Orbit, but now in mechanics and now originating from Finland. A factory, also we have been discussing with for a long time, that fits our acquisition parameters.

This is also something we have shown before if you look at the box to the left. It’s no surprise if you’ve been following Hansa, really. We have been talking about Finland for a long time and we have been saying that Hansa twenty twenty five is all about increasing in existing geographies, existing technologies, well fit for our strategy. But on top of that, we must check, of course, the company culture. And that was what made the integration of Orbit one so easy.

So, Diona, also present here today, was tightly involved with looking at the culture, so it will be an easy integration. And also, we have Joke Happalainen, the CEO with his team, which is extremely good. Customer base, we don’t like overlap. We haven’t done the closing of this deal yet, meaning that we cannot talk so much about the customers, but there is no overlap with Hamza’s customer. Financials.

Listen to this. They also had an opening just a couple of weeks ago in Ullainen in Central Finland of a brand new factory. That’s the one on this slide. So many opening ceremonies. And I think it’s really well done.

Lars will come back to the financial of this company, but to open a new factory transfer, we are also opening new factory, but it’s adjacent to the existing factory. Here was a full transfer. To do that in a year of recession and still keeping good financial numbers. So that was really well done. So to summarize the year, it’s been full of activities and we are moving into 2025 at a whole new level, really ready for the future.

And I will come back to the future in a few minutes, but now I will leave the floor to Lars, who will start to talk about sustainability.

Lars Okeblom, CFO, Hansa: Thank you, Erik. Yes, sustainability. And I will walk you through what we have done in sustainability part and then look into the financials and finally look into how will Hansa look together with Leiden. And the main activities in sustainability has been to prepare for the CE STAR D reporting that we will do in 2025. So we have done this DMA double materiality analysis in 2024.

We have also calculated the emission scope one, two and three for Hansa. And then we have continued to work with other sustainability parts like the hub to be able to communicate and get information regarding Hansa out to more of the employees in Hansa than we previously have done. The building that Erik mentioned, the new factory in Estonia, we also added sustainability parts, that solar panel on the roof and other smart ESG functions to reduce the emissions. And we also have a leadership program educating the leaders in Hansa in communication. Looking into the financials, to summarize, it is according to plan, it is according to what we have communicated for the last quarters with one exception and that’s a positive exception.

We have extremely strong cash flow and I will come back to why that is important when we are now entering into Leiden and merging together with Leiden. We still see a quite weak market. We have an increase due to acquisitions, so the increase of sales is 20% in Q4, but the reduction of 5% if we talk organic growth and that is of course due to the lower market. Erik said that we are on plan to reach the 8% target. So in quarter four, we reached 7.1% if we exclude the one time cost.

And for comparable units excluding the Orbit one acquisitions, we are on 7.7%. Then for the full year, we are on 6.2% in EBITA margin and that led to earnings per share of SEK 2.5 per share. Looking into the different segments, we see a similar trend that we are increasing the sales due to acquisitions. So in main markets it’s up 24. In Q4, we have a negative organic growth of 3% and that is mainly due to the weak market in Germany that affects the main market.

Other markets are up 17% and organic decrease of only 1%. And what we see is that the main markets are slightly decreasing their margin, but other markets are increasing. That is what we also saw in 2023 and mainly partly due to vacation period in main markets in the end of the year. Coming into the balance sheet and again, we had a fantastic decrease of working capital and that we have seen for several times when we do acquisition that it takes a couple of quarters and then we can fully utilize our experience on how to decrease working capital. So the cash flow was SEK $289,000,000 in Q4, and that’s the highest cash flow we ever had in one quarter.

And that also been saying a couple of times that we will reduce CapEx, we will come into a period when the capex is lower than the previous years, and we see that in Q4 and the main capex is actually this building that we are now presenting the Q4 report on. And we continue to see that the CapEx will continue to be on a lower level compared to previous years. And the positive cash flow led to decrease of net debt. And if we compare it to the EBITDA, we are now on 1.6x. And that is, of course, extremely important when we are merging and taking in Leerden and adding up the net debt to be able to close that company.

So we come in into Leerden with a lot stronger balance sheet than we actually had when we signed the agreement. We have also again reached over 40% in equity to asset ratio, we are on 41%. And the Board decided to propose to the Annual General Meeting a dividend of SEK 0.8 compared to SEK 1.2 a year ago. And that is according to our policy for dividends that should be 30% of the net profit in Hansel. Shareholdings, we are proud to see that the OpFunde is continuing to increasing.

They’re owning in Hansa and they are now on 7.4%. And also during the year, Eric has continued to invest in Hansa and is now owning 1.4% of the group. Coming into Leiden and the acquisition and pro form a for 2024, we are on approximately SEK 6,000,000,000 in revenue. We have not, as Erik mentioned, we have not closed the deal, we’re waiting for approvals from authorities, but we expect this to be able to be done within a few weeks or so. And together with the other end of the month, we will be close to our financial goal of SEK 6,500,000,000.0.

They are operating on a slightly lower margin than Hansa, so they are on 7%. We expect that with the concept that we can bring into Leiden, the Hansa concept, we expect the margin to be increasing. We also expect that with Leerden we can reduce the CapEx. They are well invested and not in need of any major investments the coming year. We also expect again, like with Orbit, that within a couple of quarters, we will be able to reduce the working capital and have a good cash flow from the acquisition of Liaven as well.

And by that, I leave back to you, Erik.

Erik Stenfosz, CEO, Hansa: Thank you, Lars. So we continue, Pexos, Berndan Sweden, and also through the AudioCast. And let’s talk about the market. This decade has been like nothing else. It started with the pandemic, and we saw that demand went down, then there was a bounce back.

Remember, we had some component shortages. It was a quite tricky situation. Then the economy went down again. What do we think about the future? Well, our forecast is that we’ll not go back to how it was two or three years ago, when you can have double digit percentage organic growth from your existing customer base.

Rather, we expect it to go back pre COVID to a more normal situation, meaning that again, the customer base will start to grow, but you also have to add new customers. So focus is still to get the new orders and to gain new market shares. If we look at Hansa then in particular, sixteen years old, we have built the company in a structured expansion way. We put milestones three, four years ahead with operational targets, and that leads to the financial targets. We have so far passed and succeeded with three milestones.

We are heading for milestone number four, ANSA 20 20 five. And then, we will launch the next plan. So, we have already said that right now we are working just with the existing technology, the existing geographies, but next step will be a geographic expansion. Where, do you ask? Well, it’s really not up to us.

We are on demand. We have a close dialogue with our customers. Our new CSO, Matthias, is working with that. There are a number of options, but I will give this as a cliffhanger. We will not reveal it today, but within a year, we should be able to tell what will be the next expansion step for Hansa.

And by that, we open up for questions.

Conference Operator: If you wish to ask a question, please dial 5 on your telephone keypad The next question comes from Jacob Soderblom from Carnegie Investment Bank. Please go ahead.

Jacob Soderblom, Analyst, Carnegie Investment Bank: Hello and good morning. I have had a super short one actually today. It’s more related to customer disclosure. You’ve been talking a bit before on planning to release something in the coming year regarding this aspect, where you and if I understood you correctly, more talking in a more structured way about customer segments and so on. Do you have any updates on this that you can be able to tell us something more about?

Yes.

Erik Stenfosz, CEO, Hansa: Good morning. Yes and no. We have not come to that point yet, but we have said that I could describe it that we have to give a more detailed specification of our customers. What we can say today is that also after the acquisition of LEA that no customers will come up to this magic 10% of revenue. And if you group together the 10 largest customers, they will still be below 50%.

But that’s as far as we can come today. I understand the need for this and we are working on this solution.

Lars Okeblom, CFO, Hansa: We are working on it. And also when we are now merging and entering into Leerdam, we want to make sure that we have stable figures and are able to present it with a new group.

Jacob Soderblom, Analyst, Carnegie Investment Bank: Yeah. Okay. Great. So is this something we can expect for 2025 or are you able to say anything about the timing of this?

Erik Stenfosz, CEO, Hansa: I will not give any promises. But as soon as possible. Yeah. Sorry for that. Thank you.

Jacob Soderblom, Analyst, Carnegie Investment Bank: No, that’s good. Thank you so much. That’s all for me.

Erik Stenfosz, CEO, Hansa: Thank you.

Speaker 4: We have questions from

Conference Operator: Fredrik Nilsson from Redeis. Please go ahead.

Erik Stenfosz, CEO, Hansa: Okay, Felix.

Fredrik Nilsson, Analyst, Redeis: Thank you. Good morning. I want to start with a question regarding your current customers. I mean, it’s always a tricky question, but I know you have dialogues with them and so on. So perhaps you could tell us what’s your best guess regarding the demand from current customers when you look into 2025?

What do they say?

Erik Stenfosz, CEO, Hansa: Good morning, Fredrik. You should be here. But I will give you an answer, of course. And it’s the same, I would say. We saw the downturn in economy a year ago when we saw some segments still growing like defense and energy, and we had other agriculture, forestry going down.

Nothing much has changed. We see the same demand now on the new lower level and that’s why we are so eager to compensate with the new orders and new customers. So I would say no real change if that’s an answer to your question.

Fredrik Nilsson, Analyst, Redeis: Yeah, yeah, sure it is. And I suppose that I mean looking at your current facilities, you have the capacity for at least $6,500,000,000 in sales. But I mean will you need further investments after that or what’s the capacity in your current facilities approximately?

Erik Stenfosz, CEO, Hansa: Thank you. Very good question. And that’s also what when we work with our operational plan, we say that we have to be able to fulfill what is the financial target plus VAT or something. So a buffer we have for this 6.5% in the existing premises.

Fredrik Nilsson, Analyst, Redeis: Okay. And last question from me. You are at about 7% adjusted EBITDA margin now in Hamsa and Liaodankham coming in with about the same. And you have an 8% target for the full year 2025 and the market might not be that helpful currently, but I suppose you are still confident in reaching that target. But could you elaborate a bit on the way there considering it’s beginning in the next quarter?

Erik Stenfosz, CEO, Hansa: Yes, two comments. First of all, we are not starting from scratch. We have done a number of activities in 2024, so that would help us this year both with profitability and sales. And then secondly, we saw the strength of our concept into a traditional contract manufacturer when we merged with OrbitOne. Actually, the MIGs I was talking about, they came from relations from OrbitOne, but was an expanded to MIGI in our concept.

And that could as well happen with Liadan. And, yeah, I think that is a fair answer to your question.

Fredrik Nilsson, Analyst, Redeis: Yeah, yeah, it is. Sure. That’s all for me. Thank you very much.

Erik Stenfosz, CEO, Hansa: Thank you.

Speaker 4: Let’s see. Are there any more questions from the telephone conference? Otherwise, we have questions in the room. Oliver

Conference Operator: The next question comes from Lucas Matsen from Indoress. Please go ahead.

Lucas Matsen, Analyst, Indoress: Hello. I can ask thank you for taking my questions. A lot of good questions has already been asked, but just a couple of ones additional questions from our side. What would you say are the main moving parts such as demand, price, costs and so on that will determine if you will reach your sales and operating margin target for the full year of 2025?

Erik Stenfosz, CEO, Hansa: I hear it rather poorly. Could you repeat the question a bit higher?

Lucas Matsen, Analyst, Indoress: Yeah, sorry. What are the main moving parts such as demand, price, costs and so on that will determine if you will reach your sales and operating margin target for 2025?

Erik Stenfosz, CEO, Hansa: We always go in this direction that the cash flow is number one, margin is number two, sales is number three. That is a way to create cash flow and margin. The cost structure, we have really worked with that already. So we are done in existing. Comes Leerden, there will be more synergies, of course, on that side, on the cost side.

Also, we expect sales synergy from that. But also, I’d like to again bring in Germany because Germany is a huge opportunity for us. We’ve been waiting for Germany and their in source manufacturing for many years and now it’s happening. So that’s also a component that will help us to fulfill our targets this year.

Lucas Matsen, Analyst, Indoress: Yes. Thank you. That’s very helpful. And second question, how do you see the pricing environment in the industry right now? Is it would you say it’s more normal or more challenging or milder as we speak?

Erik Stenfosz, CEO, Hansa: I don’t know. We are not in the industry. We are outside the industry. So we are trying to offer new kind of supply chains and added increased customer value, meaning that if we look at the deal again with the MIG, then we say this is our margin, we need to have that, we will relocate the manufacturing, we will have huge advantages, but we will keep our margin. We’re not in that case, we have no competitor to discuss with, so we are not bidding on that.

That’s something service we do. Sometimes, of course, for some of the orders we have, we are in the whole industry and and benchmarking against, other contract manufacturers. But it’s, I wouldn’t know. Maybe we should bring our in our head of sales. Veronica, if somebody gives her a microphone, what do you think about the pricing situation?

Veronica, Head of Sales, Hansa: Well, it’s just as to say with regards to the MIG that we offer a certain service that is worth paying for because it gives that benefits. But if we’re looking to the normal contract manufacturing, of course, there is a more benchmark prone market out there. But then we need to, as Erik says, to create this extra value to our customers. Would that be a fair answer to the question?

Lucas Matsen, Analyst, Indoress: Yes. Thank you. That’s very helpful. And that was all from my side. Thank you.

Erik Stenfosz, CEO, Hansa: Thank you. And thank you, Bironika. Sorry for shocking you.

Speaker 8: I suppose I take the next There

Conference Operator: are no questions at this time. So I hand the conference back to the speakers.

Erik Stenfosz, CEO, Hansa: Okay. Good. Because we have some questions from the audience. They have been waiting now. So

Speaker 8: perhaps I could start. Hey, Oliver Frond, Aktus Barna. I was wondering if you could elaborate about your integration strategy for Leiden Group. How will you consolidate volumes in the factories and will you be able to reduce the number of staff?

Erik Stenfosz, CEO, Hansa: Maybe we should bring in our CEO Andreas Nordin on this, since we have them all present now.

Andreas Nordin, CEO, Hansa: The work will, of course, start, and when we get the lead and when we close the deal, and we are going to work together with them. We’re going to look into the factors that we do have today, then we’re going to analyze where is the best place to produce a certain product, and then we’re going to look into what is the best organization to serve that factory base, and also then ultimately create a value for

Speaker 8: the customer. Okay, I see. So we might have to be on the lookout for more information then? It would

Andreas Nordin, CEO, Hansa: be more information as long as we continue and have the more access to the company as well.

Speaker 8: I see. Well, I guess there’s no need for my further questions then. Thank you.

Speaker 4: You’re welcome, Anders.

Lars Okeblom, CFO, Hansa0: Yes. Good morning. Anders Joostland from Pareto. I had a question regarding your growth target of SEK 6,500,000,000.0 for this year. I assume that you need some organic growth to get to that target.

And given your rather cautious view on demand, it means that you expect quite a lot from new business coming on board. Could you elaborate a little bit? Is it possible to reach that target without any market growth?

Erik Stenfosz, CEO, Hansa: Yes. Again, we don’t expect the market to grow. We must make our own new orders and find a new way to grow at this point. We do expect the market to pick up, but it’s nothing that we can base our forecast on. Our forecast is based on this level.

Then we have a number activity and we should tell you more details, but we stay firm that we will reach this goal this year.

Lars Okeblom, CFO, Hansa0: So it’s not only the orders presented here, the MIG orders, the defense that are cooking. There are other orders as well or how should we see

Erik Stenfosz, CEO, Hansa: it? We will be able to announce more orders, but then remember that today’s orders are tomorrow’s revenue. So there is a time between order and revenue. We have already announced some orders last year that will be sales this year.

Lars Okeblom, CFO, Hansa0: Okay.

Lars Okeblom, CFO, Hansa1: Yes. Hi. Forbes also with Pareto. On the margin target, could you discuss perhaps, how you expect to reach there for the full year? What, the cost savings will help you with?

What the new orders will help you with? And, also where you see the highest potential if it’s in main markets or other markets.

Erik Stenfosz, CEO, Hansa: I’ll leave that to you.

Lars Okeblom, CFO, Hansa: As Eric said, the ONIX programs that we launched in 2024 have not yet reached the full effect. So there you have one cost saving. And then we are also bringing in new customers with better margin and we are making investments to improve efficiency and increase the profit as well. So if you see the trend coming from a little bit over 5% in the beginning of the year to a bit over 7% and still we have not fully integrated Orbit from the profit margin perspective. So we are on the right track to reach 8% for the full year in 2025.

It doesn’t mean that we’d need to be on 8% in Q1, but for the full year, we are confident that we will reach 8%.

Erik Stenfosz, CEO, Hansa: We were some comments that we were a bit pessimistic a year ago when we said that we don’t believe this is destocking and we think this is a recession that will take some time. Then there were remarks that we were a bit optimistic, our bottom and we said we can still have our sales target. Now Lars has shown that we are on SEK 6,000,000,000. So in the end, I think the history will show that we were quite realistic.

Lars Okeblom, CFO, Hansa1: Great. And just a follow-up there on profitability comparing with the previous quarter Q3 twenty twenty four, you had a very nice step up here in other markets. How much is the cost savings helping the margin and how much is ramping up new projects?

Lars Okeblom, CFO, Hansa: We haven’t said how much is cost savings. That’s something I can comment. You have some season change due to vacations that hits the main markets a little bit more than it hits the other markets. But we have said for a long time that the other markets shall come closer to the main markets in margin. So this is a trend that we hopefully can continue to see that other markets will reach a margin closer to the main market.

Lars Okeblom, CFO, Hansa1: Okay. Thank you.

Erik Stenfosz, CEO, Hansa: Please use the opportunity. Any questions

Andreas Nordin, CEO, Hansa: you might have.

Speaker 8: Oliver? Yeah. Hi, Oliver, Aktusparana. I was wondering, perhaps this question could be addressed for Weronika again. Sorry to put you on the spot.

Regarding your contracts that’s outside of the MIG projects, how common is it with the dual sourcing that your customers are using? Well, a competitor from your market really?

Veronica, Head of Sales, Hansa: Let’s see, Vincent. Yes. Of course there is a strategy in many of our customers to have dual sourcing but what we actually can see with these customers over time is that they start placing orders, for example, only PCBs or only mechanics, for example, and then at the time they see the value that we can bring and start adding electronics, cables, mechanics and put it together in final assemblies. And then all of a sudden we are all you need is one. So that is a sort of trend that we see.

Speaker 8: Thank you.

Speaker 4: Anyone wants to ask a last question? Otherwise, I would like to say thank you to Eric and Lars, and we’ll give them a big applause for you from Techstars.

Erik Stenfosz, CEO, Hansa: Thank you, and thank you also all of you attending this in the audio cast. I hope that you keep following Hamza, and we will talk soon. Bye for now.

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