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NCAB Group’s Q2 2025 earnings call revealed stable net sales but a notable decline in EBITDA, signaling mixed performance. The company’s stock fell 1.91% pre-market, reflecting investor concerns over financial pressures. While order intake grew, EBITDA fell 22% year-over-year, impacting investor sentiment. According to InvestingPro data, the company currently trades at premium multiples, with a P/E ratio of 46.14 and an EV/EBITDA of 26.04, suggesting high growth expectations despite recent challenges.
Key Takeaways
- Order intake increased by 5% in SEK and 16% in USD.
- EBITDA decreased by 22% year-over-year.
- The stock price dropped by 1.91% pre-market.
- No dividend is expected for the year.
Company Performance
NCAB Group reported stable net sales with an 8% organic growth in USD. However, the EBITDA dropped by 22% compared to the previous year, indicating financial pressure despite strong order intake. The company continues to focus on its asset-light model, emphasizing engineering services and customer efficiency. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 1.83 and operates with moderate debt levels, supporting its asset-light strategy. Get access to 10+ additional ProTips and comprehensive financial metrics with InvestingPro.
Financial Highlights
- Order intake: 985 million SEK (up 5% in SEK, 16% in USD)
- Net sales: Stable in SEK, 8% organic growth in USD
- EBITDA: 94 million SEK (down 22% YoY)
- EBITDA margin: 10% (down 2.9 percentage points)
- Gross margin: Stable at 35-36%
Market Reaction
NCAB Group’s stock price decreased by 1.91% pre-market, with a last close value of 55 SEK. This decline reflects investor concerns over the decrease in EBITDA and margin pressures, despite stable sales and strong order intake.
Outlook & Guidance
The company expects gross margins to stabilize at 35-36%. It remains cautiously optimistic about the European market’s recovery and is exploring M&A opportunities. No dividend is anticipated for the year, and the Q3 report is scheduled for October 24.
Executive Commentary
CEO Peter Crook emphasized the company’s commitment to printed circuit boards and the asset-light model. He noted, "We are slowly starting to climb out of that trough in Europe," indicating cautious optimism about market recovery.
Risks and Challenges
- Margin pressures due to decreased EBITDA.
- Uncertainty in North America from tariffs.
- No dividend expected, which may affect investor sentiment.
- Potential supply chain challenges.
- Dependence on global market recovery.
Q&A
Analysts questioned the impact of US-China trade tensions and tariff effects on order intake. They also inquired about strategies for managing margin pressures and market share growth.
Full transcript - NCAB Group (NCAB) Q2 2025:
Conference Moderator: Welcome to the NCAB Q2 Presentation for 2025. Now I will hand the conference over to the CEO, Peter Crook CFO, Timothy Benjamin and Head of Investor Relations, Gunnella Oman. Please go ahead.
Peter Crook, CEO, NCAB Group: Thank you very much, and welcome, everyone. My name is Peter Crook. And together with Timothy Benjamin, we will be presenting the second quarter results for NCAB Group. Starting point, NCAB, we are a company focused on supplying printed circuit boards. Printed circuit boards are the foundation that you see to the left in all electronics, which forms the brain in any intelligent product.
And what is unique with our product is that every PCB is unique to the product in which it is used. So there are no standard components, but everything in our engineered product will be provided value to our customers both in the design phase as well as through the supply of products. As a company, we are operating globally with a strong local presence in 19 entities. We are serving some 45 markets and we are around six forty five employees. And we use some 36 main factories to supply our customers with different technologies and from different geographies.
We don’t own any in house manufacturing. In fact, we’re we’re using only extended partisan, which makes us flexible in order to support our customers in varying needs both in terms of technology, but also always being able to give our customers the best supply chain possible for their specific needs. If we then move over to the specifically the second quarter. So I’m glad to see that we have another quarter of positive order intake. We have had in the second quarter a very significant headwind from the weakening dollar as the dollar has dropped roughly 10% since Q1.
But if we look upon the order intake, we continue to have a second quarter of growth in order intake for the group. The continued positive development in Nordic and East has continued and we also start to see actually Europe to show order intake growth in U. S. Dollar. U.
S. Our order intake in The U. A. Was weak compared to last year, but part beside the FX, this is partly due to the tough comparables that we’ve had in the quarter. Q1 for us was very strong.
So I’ll come back later to show that full year status. Net sales also devalued by the U. S. Dollar movement, but we see growth in the dollar terms in all regions excluding Europe, which is still down. So it’s lagging a little bit from the order intake.
The impact of U. S. Dollar on net sales is around SEK90 million in the quarter. Gross margin remains stable, improving slightly versus Q1, but the EBITDA is impacted by the weak dollar. The EBITDA would have been some SEK17 million higher excluding the U.
S. Dollar impact. M and A activities as we have reported earlier, have continued. We were able to close the acquisition of BNB Leiterplatten service in Germany here earlier in the spring, and that integration has now commenced. And we have also, during the quarter, renewed and increased our financing for at better terms and with the validity until 02/1930.
If we look more specifically on the numbers for the quarter, we can see that our order intake in Swedish kronor is up by 5% to SEK985 million. If we look upon U. S. Dollar, the order intake is up some 16% versus last year. And it’s also positive that we have a book to bill of SEK105 million in the quarter.
Net sales are stable in Swedish kronor versus last year. If you look upon organic growth excluding acquisitions in U. S. Dollars, we’re actually seeing organic growth of 8% in the quarter. EBIT, as we said, is impacted by the FX.
So we are down to SEK94 million or an EBITDA margin of 10%. Gross margin has gone down versus last year, where we had extraordinary margins in the first two quarters of the year, but we are moving up slightly from our Q1, we were at SEK34.7 million. And as we mentioned, the negative FX is SEK17 million in the quarter. Cash flow, good at SEK93.6 million in comparison to last year’s SEK101 million. Our working capital is
We are up partly due to the acquisition of BNB, and we also see some effects from the tariffs in The U. S. Impacting working capital there. A little bit more information briefly about like BnB, Lattopattern Service is a company based in Eastern Germany with its main customer base also in Germany. It’s a company that was started in the nineties and was running production up until 2022.
That means the company has a very deep knowledge around technology for manufacturing, which is also valuable in the dialogue with customers. Revenue in ’twenty four was around SEK150 million, and they had an EBITDA north of SEK20 million in that year. And with the company comes some 25 employees, predominantly in Germany, but also in China. And the transaction was announced and signed on April 23, and it was now closed on June 3, so has contributed somewhat in the quarter. Then I give it over to you, Tim, to continue.
Timothy Benjamin, CFO, NCAB Group: Thank you, Peter. So I think you heard a little bit from Peter that we had sales of around $934,000,000 in the quarter and fairly flat with quarter two last year. However, when you look at it in U. S. Dollar, which is more of a fixed currency comparison for us since we do so much trading in U.
S. Dollars, we were up to 10% year over year growth with M and A contributing nicely as well. We did have an EBITDA at 93,900,000.0, down 22%. And you heard a little bit from Peter that some some of the impacts there were were both FX and then also a little bit of price product mix. So we we ended the quarter at at around 10% or about down 2.9 percentage points.
If you look at our gross margins over time, we’re we’re running at around 36%, last twelve months, and that’s compared to around 36, 37 for the past two years. But in the longer term, we’ve been able to drive up, gross margins quite nicely. When we turn our heads then to to order intake and sales, it was really nice to see the order intake increasing 5% year over year to $9.85. But, again, in a more fixed currency comparison with US dollars, it’s actually up 8%. We did see some very nice positive indications on the the Nordic side as well as Europe and also on the East, and then a little hesitation, on on the North American side, with all the the tariff movements back and forth in that country.
As mentioned, net sales were flat for the quarter, and that presented the third quarter in a row of positive book to bill, which we are happy to see, as well as a good trend in new part numbers in customer Swan. When we then look at the results, as said, we were down to around SEK94 million. That’s partially an impact of the lower US dollar. In total, SEK17 million, but then also around SEK22 million coming from a negative translation effect as the US dollar weekend, offset by a little bit of positivity on the balance sheet revaluation of 5,000,000 SEK. And the balance sheet revaluation is something that isn’t expected to repeat it.
It really just has to do with how much AP and AR we have on the books in US dollars at the end of every quarter, whereas the the translation effect is something that we expect to continue wherever the US dollar the US dollar is. So that one continues forward. EBITDA margin, as said, 10% with a gross margin slightly improving over quarter one. But we did see gross margins decreasing year over year, which was mainly attributable besides FX to the pricing and product mix, which was quite elevated in h one twenty twenty four. And then we thought we’d give you a little extra detail here, since we do have big FX movements within the quarter.
So if you take a look at the US dollar compared to prior year, down around 10%, so down to 9.66 on average during the quarter versus 10.68 last year. So that gives us a full, 90,000,000 SEK impact on revenue. And as we’ve said, for a while now, we tend to have our revenue coming from, the prior quarter’s order intake. And when you have a prior quarter order intake, that translates, into a different exchange rate, you tend to get impacts like this. So we saw a 90,000,000 SEK impact on revenue versus prior year from FX.
That then resulted in around, 27,000,000 SEK total impact to gross profit, of which minus 32 translation and plus five on the revaluation side, which, again, the revaluation side is the one that’s not expected to repeat, whereas translation, do expect to see repeating as long as the US dollar stays this low. And then s g and a also repeats, and that was at a a positive 10. It’s some of our s g and a converts into less sec. That gave us a total EBITDA impact in the quarter compared with the prior year quarter, quarter two at the higher exchange rates of around minus SEK17 million. With that, over to you, Peter.
Peter Crook, CEO, NCAB Group: So if we look a little bit closer to the segments, I mean, we can see Nordic has had order intake in the quarter being up 15% in SEK and around 26% in U. S. Dollars. I think positive development in a number of the countries and I think like Denmark, but we’re also seen good orders from aerospace and defense. But this also means that some of the order intake that we’ve seen now will have a longer digestion time.
So will primarily or part of it will primarily impact 2026 rather than the second half of twenty twenty five. Net sales up 4% in Swedish krona to SEK $250,000,000 versus SEK $2.00 7,000,000 last year. EBITDA around SEK 23,000,000 versus SEK 29.6 and margin down to SEK10.7 million versus 14.3% margin last year. We have significant FX in the quarter. As Tim highlighted, both the translation part, but the revaluation part has hit different segment differently.
So whilst we have for the group a positive of five, we actually have a negative in the Nordic segment, but positive more in the European segment. So FX or EBITDA would have been on par or better than last year’s EBITDA had we not had the FX in the segment. So Nordics doing quite well operationally. Looking at Europe, we can see here positive here actually that order intake started to grow and that we also see positive order intake in development in U. S.
Dollar. Europe has been the segment lagging in the turnaround and we’re positive to see that this is changing in U. S. Dollars. Even though we have to say that there is uncertainty in a number of our markets, also in Europe, not just in The U.
S. From the tariff situation and what this may impact the general demand sentiment. So some hesitation in the market, but still positive that we are showing growth on the order intake. And some countries like Spain and Benelux have been more clear in their turnaround. If we look upon net sales, we are here still lagging behind.
We’re down 7% in Swedish kronor. And organically, if you then take away the impact of the acquisitions, we’re actually in Swedish krona down still 18% versus last year or 9% in U. S. Dollar. And there are here, of course, there’s one part, which is the time lag between order intake development, which is positive and when it translates into revenue.
And we can see that, say, the markets where we are still sort of trailing behind primarily are some of the bigger ones like Germany, Italy and UK. But hopefully, that order intake trend will start to move the needle here as well. So EBITDA is down quite significantly to SEK33.6 versus SEK56.7 and it corresponds to a margin of SEK7.6 versus SEK12.0. And so the decrease is, say, a big portion of this is coming from the revenue, further enhanced by the FX, but then also some product mix and pricing. If we then look on North America, here, I think I think we’re doing quite okay.
Order intake is showing a big decrease versus last year. Beside FX, there’s also here quite a bit of a kind of timing activity of larger orders. We have we were up 18% versus prior year. So if you actually look upon the full year, we are 9% up in U. S.
Dollar. So it’s more some part of it, this is timing. But there is also a little bit of that anticipation or hesitation in the market from depending on the tariff situation. And also to remember is that the tariffs are not booked in the order intake as they are only visible or only become known when they are actually imported into the country products. So we will have tariff showing up as part of net sales, but not in our order intake.
If we look upon net sales, here based on the order backlog we’ve had, we’ve had a good sales increase. We’re up 12% to million versus last year of SEK200 million. And here, we’ve been successful in transferring tariffs to customers. But we’re also very well positioned to benefit from our global supply base. I mean, NCAB has over the years invested in building a factory network also outside China in various parts of Asia and other parts of the world.
And this is a big strength for us right now being able to help customers who may wanna shift their supply. Right now, there’s still a lot of discussions ongoing and many customers still waiting a little bit because there are still, say, a lot of the tariffs that are up for discussion and are not confirmed. And since moving production is a big step for many of our customers, means that, say, many are in the kind of holding position to make those switches. If you look at the EBITDA, we are up to SEK32 million, up versus SEK28.1 million last year. And our EBITDA margin stable at SEK14.2 million, up then from quarter one and on par with last year’s 14.1%.
If we then look finally on our East segment, also here positive to see that we see growth in order intake despite the FX movement. So the order intake in U. S. Dollar is up a full 12%. And I think we are the market is starting to grow in high-tech.
And I think it’s we are able to capitalize on our supply base. We have a strong network of factories in this area and are able to sort of provide good service to customers. Net sales decreased 2% to million, but in U. S. Dollars were up 7% in revenue.
And our EBITDA is down a little bit to SEK9.5 versus SEK11, but still a very healthy EBITDA margin of SEK17.4 and this is a little bit a mix situation. And I think we continue to be able to drive high margins since our East segment is the area where maybe we are doing more engineering support than other regions for high-tech applications. Over to you, Tim.
Timothy Benjamin, CFO, NCAB Group: Thanks, Peter. So return on equity, 13.5% versus 26% prior year. As you can imagine, that’s just linked to the EBITDA development between the two last twelve month periods. Net debt sitting now at 1.8 versus 1.1 last year and up a couple tens of basis points from prior quarter, I believe 1.6 in quarter one, and that has to do with the acquisition of of BNB that we completed during the quarter. Equity asset ratio, stable, slightly slightly higher versus prior year at 40.7.
And then working capital, also sitting at about, 353,000,000 SEK or 9.2 percent, which is a little bit higher than than last year and a little bit higher than prior quarter. But, again, as mentioned, we had, the BNB acquisition during the quarter, which, which increased both those two numbers, as well as the the impact of The US tariffs impacting both as well. Available liquidity at, 1,260,000,000.00 SEK as well as options to increase that as well, ready to go. And then as mentioned before, no dividend expected for the year.
Peter Crook, CEO, NCAB Group: Thank you. Thank you. So on the M and A side, I mean, we continue with our strategy to explore opportunities for M and A and we have a good pipeline of potential companies, which we have kind of filtering down and we remain with a kind of shortlist of some 50 companies that we feel are a would be a good fit for NCAB and we are in dialogue with some five to 10 companies on a continuous basis. And as we said before, we closed BNB Life Product Service here in earlier in the year and we are hopeful that we can find some other opportunities that can close with that in the coming quarters. If we look upon our overall strategy, we remain 100% focused on printed circuit boards.
We also believe in the model of having an asset light model where we do not have in house manufacturing. It gives us flexibility to really have the best service for our customers and be flexible and and move with varying market needs. So we are instead focusing more on continuing on how how we can improve the sport for our customers in this market with engineering services and other ways of making our customers more efficient and by that growing our market shares in existing markets. We’re also looking how we can expand geographically. We believe very much in being local to our customers.
There’s a big value of that local interaction with our customers and looking to expand into new markets. M and A is an important part of taking those steps into new markets. And finally, it is also a market with a high degree of fragmentation. And we see benefits in consolidating here and looking for economies of scale, both in terms of developing stronger capabilities, but also in terms of finding efficiency and cost advantages. So this is something we’ll continue with and our M and A strategy serves both the consolidation aspect as well as the geographical expansion.
And with that, we close today’s presentation and open up for questions.
Conference Moderator: Next question comes from Johnny Gin from SEB. Please go ahead.
Johnny Gin, Analyst, SEB: Yes. Thank you, and good morning, everyone. I want to start a little bit in North America and understand the demand and impact from tariffs a little bit better. So I suppose that you increased the prices and pushed that on in The U. S, which is reflected in the sales.
But if we break it down a little bit, how would you say if you could elaborate the underlying demand, how that is developing? And I mean, it’s a lot of moving parts, but book to bill is quite a lot below one. And again, I know that the tariff is not reflected in the orders, I suppose. But how is the underlying demand and the sentiment in U. S?
And how is the momentum going into Q3 here, if
Gustav, Analyst, Nordea: you can say some words there?
Peter Crook, CEO, NCAB Group: I’d say it’s it’s a it is it is a challenging situation to understand exactly what the sentiment is. I think there is, say, some concern in the market given the the the uncertainty what happens with tariffs. As you know, there are a number of tariffs being discussed also with Taiwan, South Korea, Japan that are still up in the air. And I think that creates a level of uncertainty. We have still seen pretty good order intake, but I think there is always that limit that anticipation, which makes it harder.
Maybe maybe not specifically on our product, but it’s more on end consumer products where, for instance, you can see truck industries and others where so people are holding off for making, say, bigger capital investments. So I’d I’d still say that our our our order ticket has been pretty good. The drop in quarter two versus last year is largely timing of larger orders. If you look back, we see we had a very strong q two last year. And And I think this year, we also had bigger orders coming in, but they happen to be more in Q1 this year.
So I think it’s a little bit of timing of those bigger orders than to say that it’s related to, say, a general drop in the market. But there is a level of uncertainties. And then I think there’s also this still partly impacting European sentiment as well. I think we can see that we are coming to a turnaround where maybe the European markets have bottomed out and the inventory buildup after the pandemic has suddenly come out of the system, which is improving things. But I think the whole trade war with tariffs has made everyone a little bit more hesitant and maybe means that the recovery is coming a little bit slower in some of these markets.
But we don’t see say, big shifts. I think it’s maybe more of a little bit of anticipation at this time.
Johnny Gin, Analyst, SEB: Okay. Yes. And just a clarifying question. The timing of those some larger orders that you see, did you mean that they came in q one already or that the timing is that they can be pushed to q three?
Peter Crook, CEO, NCAB Group: No. I think what we had, we had if you you look, say, both last year and this year, we’ve we’ve been running certain project with with research customers, which comes more in kind of projects. And we’ve had last year, we had a number of those being booked predominantly in q two of those orders. Whereas this year, we had a numb similar orders coming in, but they we had them predominantly in q one. If you look back, our q one was way above twenty four q one and q two now we’re a little bit below.
But if you look first half, we are still up in US dollars by some 9% in order intake in The US. So I think that sort of those bigger orders plus the FX makes a big part of that sort of shift in the or the drop in order intake.
Johnny Gin, Analyst, SEB: Okay. Yeah. That’s yeah.
Peter Crook, CEO, NCAB Group: And, of course, we hope to see more orders like those research orders coming, but they are a little bit harder to predict when they come. They’re kind of intermittent in their nature.
Johnny Gin, Analyst, SEB: Yes, yes. I understand. I understand. But then the underlying book to bill in North America, maybe we can look at over a little bit longer period? What is the best estimation for the underlying book to bill, would you say?
Peter Crook, CEO, NCAB Group: Yes. I think that the trend that we have seen in The U. S. With, let’s say, I think U. S.
Was one of the markets combined together with East to start the recovery on order intake in during 2024. And I think that is that situation is still healthy. I think the turmoil with the tariff sector maybe has made The U. S. Market slow down a little bit, but we’re not seeing it break in at this time.
Johnny Gin, Analyst, SEB: Yes. Okay. Yes, we’ll see. It’s a lot
Peter Crook, CEO, NCAB Group: of work to
Johnny Gin, Analyst, SEB: do, I suppose. But if we shift over to the gross margin a little bit, it’s a lot of moving components here as well with the price and mix and tariffs and FX and so on. So what is the underlying gross margin here in the quarter, would you say? And what can we expect forward? I mean you mentioned the mix, but would you say that mix is representable for Q2 for Q3 as well here in Q2?
How should we think going forward?
Peter Crook, CEO, NCAB Group: I think overall, I can start with it. But I mean, I think overall, I think what we’ve said before is that we believe probably as a reasonable gross margin that we can maintain is somewhere in that range 35% to to 36%. I think we believe that is to be true. I think in Q1 we were we had more of revaluation impact, which actually hits gross margin percentage as well, whereas say translation doesn’t really impact the percentage of the gross margin so much. So I think we think we are pretty stable.
I think we knew also knew that, say, during latter part of ’twenty three and early part of ’twenty four, we had sort of extraordinary gross margins partly due to just kind of timing of purchase price movements and customer pricing, which gave us a few quarters with, say, a boost to the gross margin. But I think that 35%, 36% is probably more stable to be sustainable at least for the midterm.
Johnny Gin, Analyst, SEB: Yes. Okay.
Timothy Benjamin, CFO, NCAB Group: Yes. Would agree. Think 35, 36 is quite reasonable. You’ll always have timing effects when it comes to revaluations or, for example, M and A. But other than that, yes.
Johnny Gin, Analyst, SEB: Yes, yes. That’s clear. And then shifting focus to Europe. Orders seems developing well there with orders coming in above 8% of our sales in the quarter. So could you maybe elaborate a little bit more what is driving this?
And I think that you mentioned also some early positive signs of recovery in Europe already in Q1. So has this developed as you expected, would you say? Or has there been any shift? And how is the gut feeling? Or what do you hear from the dialogues of your customer and the best guess of the outlook in H2?
Peter Crook, CEO, NCAB Group: No, I agree. I think there is a I think we’ve we saw the trough of of Europe in the second half of last year in q one. We started maybe to see some signs on order intake moving in the right direction. And I think those signs have kind of continued into q two, maybe becoming a little bit stronger, maybe some more markets starting to show progress, but it’s still quite sort of weak growth in Europe. And you have some markets where we see the sort of where we’re still somewhat challenged.
I think UK is a market where the economy is maybe more challenged. And we also, through our UK business, are sort of partly involved with the with the truck industry where you see, for instance, a truck industry order intake slowing down. So I think there are some things there in Europe where where we still see some challenges. But but overall, I think we are slowly starting to climb out of that trough in in Europe. And I think that’s happening kind of stably across the board right now.
And I think we can see if you look upon German trading or German manufacturing PMI indexes, you can actually see that they’re now starting to climb up. They’re still showing actually negative in June, but they’re now climbed down from kind of low forties up to 49. So it’s a clear trend where they are approaching a general growth in German manufacturing industry. So I think this is what we’re seeing as well. It’s not yet booming in any means, but we start to see pockets and of growth, and I think we’re benefiting from that.
Timothy Benjamin, CFO, NCAB Group: I think we also saw some very good performance as well.
Johnny Gin, Analyst, SEB: Yeah. Yeah. Yeah. So cautiously optimistic, if I interpret you correctly.
Peter Crook, CEO, NCAB Group: Yeah. I mean, you say you can say we have momentum in a in a couple of other segments. I think Europe is starting to sort of turn around, but maybe we don’t really see a strong momentum yet. Positive at least that we’re making steps forward.
Johnny Gin, Analyst, SEB: Yes, yes. And then one final one, sorry, another question here. But on the cost and OpEx side of things, do you see more cost like underlying cost reductions ahead to help the EBITA margin going forward? Or do you think that you will need some help from the market and higher volumes to drive the margins going forward?
Peter Crook, CEO, NCAB Group: As I said, we are continuously look to find steps of making sort of things more efficient. At the same time, we are also in the process right now where our order intake is growing. So we are at this time not looking to kind of downsize for lower volumes, which is a different story.
Johnny Gin, Analyst, SEB: Yes, yes. Okay. Thank you. That was all for me and happy summer when you
Peter Crook, CEO, NCAB Group: you, Yoni.
Conference Moderator: Next question comes from Jakob Edler from Danske Bank. Please go ahead.
Jakob Edler, Analyst, Danske Bank: Hi, Peter and Tim, and thanks for taking my questions. I’m just getting back a bit to tariffs to start with. If I read the report correctly, order intake grew 8% in comparable units in U. S. Dollar.
But as you stated, it does not include tariffs as we spoke about a bit. If I was to shout out the number and guess that if I was to include that, that could have been like three percentage points on growth year over year? Does that look like sound like a half reasonable number? Just trying to understand the ish magnitude.
Peter Crook, CEO, NCAB Group: I’m not sure Tim if you have the number or We’re
Timothy Benjamin, CFO, NCAB Group: not looking to give out exact numbers on tariffs. But yes, there was a small effect somewhere in that range of tariff.
Jakob Edler, Analyst, Danske Bank: Perfect. Perfect. And a second question also on order intake. But I remember last year, you had, what was it, 6% of sales coupled to defense and aerospace. But you have stated that order intake was a bit stronger, a bit above that number last year.
And I believe most of those deliveries were set to be seen in sales during the course of 2025. So I’m just wondering, did we see any defense sales bookings bookings here in Q2? Was there any big increases year over year there? Or is that something to expect more for H2, those delayed bookings, so to speak?
Peter Crook, CEO, NCAB Group: I think we do have some of it in The Nordics, but I think we’re predominantly some of the bigger orders that we booked during, say, Q2, Q3 of last year, I think was predominantly will predominantly start building during the second half of this year. So Okay.
Jakob Edler, Analyst, Danske Bank: Cool. And yes, okay, great. Just getting to I guess, during the last week here or yesterday actually, we had some, I guess, positive news from Germany with the stimulus programs being increased and almost doubled, if I read it correctly. Do you think that can kind of help the recovery here ahead? Or how do you think those programs could impact you guys?
Peter Crook, CEO, NCAB Group: I have not had the time to analyze specifically what those programs entails. But I think generally, to say the fact that the German manufacturing industry would benefit us to pick up, I think that would clearly have a benefit for us. So I think it’s something we would anticipate and look forward to.
Jakob Edler, Analyst, Danske Bank: Yep. Great. Great. And then just for East, you stated that you saw some price increases finally coming through. Are you able to add any flavor of the magnitude?
Is it a low single digit number we’re seeing now coupled to those or connected to those high end tech products?
Peter Crook, CEO, NCAB Group: I think the price increase that we’re seeing now is not specifically for East, but I think what we’re seeing is, I mean, you have in some tech areas, factory loading is growing. So I think the tendency for price aggressiveness from the factories is coming down and prices maybe even will start moving up. But we have seen where we have seen specifically pricing increases, we are also now starting to push on new orders here in the second quarter, is more specific related to certain areas where you have, first, we have gold. So you have certain technologies with Inigo and gold surfacing, etcetera. And given the gold price movement there, there are price increases, which may be in the high single digits or even above or 75% to 15% on some product areas.
But it is in select product areas, so the impact on the total number is still quite small.
Jakob Edler, Analyst, Danske Bank: Great. And the last question from my side. Just looking at the margins in North America here sequentially, we obviously had quite poor margins in Q1. How much is that delta sequentially mainly related to mix from Phase three sequentially? Or are there any elements of you guys being more prudent with costs given the tariff situation during the quarter?
Peter Crook, CEO, NCAB Group: I think it’s more a question we have we have good we have also good good revenue in the quarter, which helps a lot. I mean, we we had SEK225 million now versus SEK190 million or SEK127 million in last quarter. So the the volume translation with our gross margin creates a great leverage. So which is also, say, the key for us as a group that say the volume development is important because, I mean, we are still in many parts like Europe operationally running sort of significantly below volumes where we historically have been. So if we can see a pickup in some of the key European markets, we should see a good leverage on that volume increase.
Jakob Edler, Analyst, Danske Bank: Yes, very good. Thank you so much guys for the answers and have a nice summer.
Peter Crook, CEO, NCAB Group: Thank you. You too.
Timothy Benjamin, CFO, NCAB Group: Thanks.
Conference Moderator: Next question comes from Gustav from Bernablade. Please go ahead.
Gustav, Analyst, Nordea: Yes, good morning. It’s Gustav from Nordea. I thought maybe if we can start on the margin in Europe. And just it will be interesting to hear your view on that development here. I mean, you comment slightly on product mix and also price.
So if you can just elaborate a bit on the margin there in the quarter and possibly also quantify the impact from that specifically. And then also, I mean, are you saying that you’re seeing also price pressure in the market? And is that something more structural that we should extrapolate or yes?
Peter Crook, CEO, NCAB Group: I think you can say that we for sure, there is a general price pressure in the market and has been for some time here, given that the market has been quite sort of low in 2023, 2024. So I think the price pressure is there. And I think specifically, as we’ve highlighted that we had very we had good margins in the beginning of twenty twenty four overall, as there were some timing effects partly on on purchase prices from factories as they were coming into effect versus for customers, which kind of gave some boost. And I think Europe benefited from that as well. So I think that is one big part of it.
That, I mean, your whole group is is still down around 3% versus last year. So that is a big part. And then you have, of course, a significantly lower volume in the European segment compared to last year in even if in SEK, it looks pretty stable, but then you have to factor in the fact that you have some acquisitions adding to the existing volume. So the organic drop in is, of course, much lower than local sales numbers, only Swedish krona.
Timothy Benjamin, CFO, NCAB Group: Yeah. And I would say just to to add a little flavor to that, a lot of the the pricing and product mix, development that we had compared to our margins this time last year, that was happening late last year more than it’s happening sort of within the quarter. So that’s something that’s been happening a little bit over time, not not so much lately.
Peter Crook, CEO, NCAB Group: And then, of course, to remember, which contributes as well is, I mean, when we talk about that we have impact on FX, we have some SG and A savings, but, of course, they are all in more or less in in The US and our East segments where we have costs in dollar. Whereas Europe, the FX drop of sales related to dollar hits directly versus an SG and A, which is largely fixed. So you see that impact very clearly on the European and Nordic segments.
Gustav, Analyst, Nordea: Yes. That’s very clear. Thanks. And then, I mean, if we look sort of at the average four year margin in Europe, I mean, it’s been 12%. Obviously, it’s been quite healthy margins.
But I mean, I understand you probably don’t want to guide on anything, but how do you look upon that number sort of going forward, I mean, once sort of we see a normalization in the market, etcetera?
Timothy Benjamin, CFO, NCAB Group: Yes. I think you’re right. We don’t guide here. But maybe one thing to remember around Europe is they are a a little bit lower than their historical average as you point out, but we do expect to see them grow with with some pretty decent leverage as well. So just just remember they’re at a bit of a low point.
I don’t know if you wanna add any color there, Peter.
Peter Crook, CEO, NCAB Group: Yeah. I mean, if if you look sort of over longer terms and if you factor out, say, pandemic boost, etcetera, I mean, typically, what we should expect is, let’s say, Nordics and East are probably the segments that based on, say, mix and technology mix, where we expect maybe to be able to be sort of stable, sort of to be able to perform north of 15% over time, whereas, say, Europe and North America maybe to be somewhere between 10 to 15 in in in the longer term. And I think Europe right now, as you said, Tim, is is the one that is hit by the by the lower revenue. So the under absorption of of cost structures there means that we are now at least struggling, but we are kind of back to below 10%, but we expect to come back north of 10% over time depending on how the market develops is of how quickly that can happen.
Gustav, Analyst, Nordea: Yes, perfect. That’s very clear. Then I thought maybe if you we could focus a bit on your comments regarding taking market shares in the report, to say both organically and through M and A. I mean, if we take the organic part, I mean, you have commented quite recent or recent quarters that you’re taking or won a lot of articles, etcetera. And I guess maybe if you can just give us a bit more conviction in the organic part as the market is a bit volatile.
I mean what are your bases on this? Is it that you actually see competitors go bankrupt? Or are you seeing customers or new customers that come to you? Or yes, anything there would be helpful.
Peter Crook, CEO, NCAB Group: No. I think the different parts that we see, of course, is the trend we see in new customers starting to buy from us, the amount of new part numbers that we are winning, even though in some cases, we are still know that we are running at maybe, say, lower volumes per part number than what we did a few years back. So we can see the positive trend that we are eating into new customer positions. But it’s also positive to see that we now start to see an order intake, which is kind of up 8% in US dollars even organically or even or 16% including acquisitions. So I think that I think we we don’t have market data right now regarding the market development here in ’25.
But I think we believe we feel comfortable that we are in a very good progress here overall in our growth on the order intake side.
Gustav, Analyst, Nordea: Yes, perfect. That’s very helpful.
Peter Crook, CEO, NCAB Group: It is tricky. Mean, it is somewhat tricky to find exact data on the different markets, but I think we feel quite we feel that we’re in a good position here to continue to develop it.
Gustav, Analyst, Nordea: No, no, that’s perfect. And then, sorry, just one last one here. Also, if it’s possible to give any sort of ballpark numbers of the impact of the higher freight rates here in the quarter? And also, I mean, assuming sort of stable rates from here, should we also expect a negative impact in Q3? Or what’s your view there?
Timothy Benjamin, CFO, NCAB Group: We actually saw a slight positive development on the freight rates versus quarter one year on year still a negative effect. I would say, without giving any specific guidance, we do still see some lagging effect on the earlier part of quarter two from the higher costs that were coming through on items from quarter one, but no large material changes expected.
Jakob Edler, Analyst, Danske Bank: Yeah. Okay. Perfect. That was
Gustav, Analyst, Nordea: all for me. Thank you very much, and have a nice summer.
Peter Crook, CEO, NCAB Group: Thank you, Gustav. Same to you.
Timothy Benjamin, CFO, NCAB Group: Thanks.
Conference Moderator: There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing remarks.
Gunnella Oman, Head of Investor Relations, NCAB Group: So we have one written question from Filbert Vessiere at LFDE. And he asked what is happening between the given what is happening between The US and China, do you foresee at some point reshoring of PCB production in The US in the near future? Peter?
Peter Crook, CEO, NCAB Group: Yeah. No. Thank you for the question. At this time, we don’t see any such movements or indications at all. I think what we are seeing is potentially that manufacturing is moving potentially from China out to other parts of Asia.
So I think we are seeing investments in manufacturing capabilities in Southeast Asia, countries like Thailand, Malaysia, etcetera, which potentially is a a next term sourcing ground. What we see however, where we can see impacts from The US China implication and and and trade wars in general is that you may see more near shore or final assembly. And that, of course, could be something which could be beneficial for our our relationships in in North America that you’d see more your more customer activity, but we don’t see manufacturing of the circuit circuit boards themselves move to to The US. Same thing with Europe. We don’t see a shift in more investments in PCBs, but more pickup of assembly work.
I think near shoring of assembly work. That, I think, there’s a trend of, but not of the manufacturer on the printed circuit boards.
Gunnella Oman, Head of Investor Relations, NCAB Group: Okay. Thank you, Peter. And that was all for for today. I just want to remind you that our
Peter Crook, CEO, NCAB Group: I there’s one more question actually. I think there’s one more question from Anders Rudolfsson.
Gunnella Oman, Head of Investor Relations, NCAB Group: No. Sorry. Yeah. That’s right. Came in now.
Anders Rudolfsson at DMB Carnegie asked, do you see any indications of new fabs in The US? That’s the same question.
Peter Crook, CEO, NCAB Group: Guess it’s probably it’s the same question, actually. Yes.
Gunnella Oman, Head of Investor Relations, NCAB Group: Yeah.
Peter Crook, CEO, NCAB Group: No. So we don’t see any any investments in in manufacturing capability right now in The US.
Gunnella Oman, Head of Investor Relations, NCAB Group: So well then. Thank you all for listening in, and our q three report is on the October 24. Thank you, Peter and Tim.
Peter Crook, CEO, NCAB Group: Thank you.
Timothy Benjamin, CFO, NCAB Group: Thanks, everyone.
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