Earnings call transcript: Nexam Chemical Q3 2025 sees stable growth, stock dips

Nexam Chemical Holding AB reported its Q3 2025 earnings, showcasing a stable financial performance with a modest increase in sales, yet its stock faced a slight decline of 1.33% following the announcement. According to InvestingPro analysis, the company maintains a FAIR financial health score of 2.41, despite operating with moderate debt levels. The company’s focus on chemical additives for plastic sustainability and its strategic market expansion efforts were central themes of the earnings call.

Key Takeaways

• Sales increased by SEK 4 million compared to the previous year.
• Gross margin remained stable at 46%.
• Stock price decreased by 1.33% following the earnings report.
• Strong growth potential identified in the recycling segment.
• Company targets sales growth to SEK 300-400 million.

Company Performance

Nexam Chemical reported a solid performance in Q3 2025, with an increase in sales by SEK 4 million compared to the same period last year. The company’s gross margin held steady at 46%, within the expected range of 45-50%, aligning with the trailing twelve-month margin of 47.21% reported by InvestingPro. The EBITDA saw a slight increase, reflecting the company’s efficient operational management, though InvestingPro Tips indicate the company is currently trading at a high EBITDA multiple. Nexam’s focus on sustainability through its chemical additives continues to drive its market presence, particularly in the recycling segment.

Financial Highlights

• Revenue: SEK 4 million increase year-over-year
• Gross Margin: 46%, stable compared to last year
• EBITDA: Slight increase of SEK 0.7 million
• Operational Cash Flow: SEK 8 million
• Cash Position: SEK 11 million, with an additional borrowing capacity of SEK 16 million

Market Reaction

Following the earnings announcement, Nexam Chemical’s stock price experienced a decline of 1.33%, closing at SEK 3.70. The stock currently trades between its 52-week range of SEK 2.50 to SEK 5.20, with a beta of 0.66 indicating lower volatility compared to the market. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value. For deeper insights into valuation metrics and more exclusive ProTips, consider exploring InvestingPro’s comprehensive analysis tools.

Outlook & Guidance

Nexam Chemical is targeting significant sales growth, aiming to increase revenues from SEK 200 million to SEK 300-400 million. According to InvestingPro forecasts, the company is expected to achieve 3% revenue growth in FY2025. The company is optimistic about its potential in the recycling segment and plans to broaden its customer base and expand geographically, particularly in Germany and Eastern Europe. Discover more detailed growth projections and industry analysis in InvestingPro’s exclusive Research Report, part of their coverage of over 1,400 stocks.

Executive Commentary

Ronit Thornquist, CEO, stated, "We see a strong growth potential in the company," highlighting the positive outlook for Nexam’s market expansion efforts. Fredrik Sack, Production Manager at Kula Plus, praised the company’s recycling technology, saying, "Using R305 from Nexa, it’s like night and day when we use recycled plastics."

Risks and Challenges

• Potential supply chain disruptions could impact production capabilities.
• Market saturation in established segments may slow growth.
• Macroeconomic pressures could affect consumer demand and pricing power.
• Dependence on the recycling segment’s growth could pose risks if market conditions change.

Nexam Chemical remains committed to its strategic initiatives, focusing on innovation and market expansion to drive future growth. As the company navigates the current market landscape, its efforts in sustainability and recycling technology position it well for continued success, despite the challenges ahead.

Full transcript - Nexam Chemical Holding AB (NEXAM) Q3 2025:

Erik, Moderator: Hi, and welcome to this live presentation of Nexon Chemicals Quarter three Results. This is a live Q and A session. So use the chat function to ask your questions, and I’ll ask them at the end of this presentation. With us, we have CEO, Ronit Thornquist along with CFO, Markus Nibari. After their presentation, ABG Sundal Collier, Equity Analyst, Lara Mohtadi will ask questions.

After that, I will ask the viewer questions along with other questions we have received. So, Ronit and Chris, welcome.

Ronit Thornquist, CEO, Nexon Chemicals: Thank you, Erik.

Erik, Moderator: How’s the quarter been? What are the

Ronit Thornquist, CEO, Nexon Chemicals: main highlights? It’s been a good and interesting quarter. We have continued with strength in our strong growing segment recycling, and we have had really intensive interesting developments on market and technology development during the quarter. On the same time, we’re moving in fairly slow market, of course. But in combination, we’re not happy with the top line yet, but we are happy with the activities that are underlying and promising future.

Erik, Moderator: The growth in recycling really stands out in the reports. I’m very interesting or interested to hear more about that. So let’s jump straight into the presentation.

Ronit Thornquist, CEO, Nexon Chemicals: All right. Thank you, Erik. Well, third quarter of Nexaam Chemical, me and Markus will share this presentation. I will start out for the ones who do not know us yet to say that Nexaam Chemical is a company that is focused on making additives that make plastics better and more sustainable. A lot of the chemical solutions that we have, we’re an innovation company based on chemicals are used in various applications and many of them are also patented and we have a strong, let’s say, combination of solutions and know how and patents to support what we are doing.

What stands out, just as Erik said, in this quarter is that the reactive recycling is continuing to develop well. It was confirmed at much higher levels that we have seen for a couple of quarters now. And we’re now up to 12% of the total sales. So, increasing from a low level. But on an overview, the products that we make are innovative additives that are based on our knowledge that are used then to modify polymers to meet various application demands on the market.

We divide our markets into the customer value that we bring with our products. So, in short words, for areas, one is lightweighting where our additives enables the manufacturing of structural foams from fairly ordinary plastics. It’s very price competitive and highly functional material that is used in many different business areas. The biggest one being wind power. It’s used in the blades in windmills.

Another area of application is high temperature, where our additives are used to increase temperature resistance of the most temperature resistant plastics in the world. They are used typically in aerospace applications, components close to the engine made from carbon fiber composites. And it’s also used in the electronics industry to protect the circuits from overheating at also quite high peak temperatures. And we have an extensive area where we work with the loops and the durability of plastic materials where we provide colors and other complementary additives to colors to give the right looks of plastic components. And the fourth area then is recycling, where we provide solutions for our customers to increase use of recycled plastics in more advanced applications.

I will dive in a little bit into the recycling area because it is a growing area for us and it requires a little bit of a special attention. So what we have is a portfolio of additives that function for various type of raw plastic materials and various end applications. Common for all is that our additives typically improve the business case for our customers or that it is a way for to enable our customers to secure their business. So, either by using, let’s say, recycled plastics where it could otherwise not be used or that they could use a lower grade, lower cost recycled material in the same application. Plastics industry as a whole is a growing material in the world.

It is on one hand unfortunate, you could say, because we have the problems with microplastics in all living organisms really. We have the contaminations of sea, land, soil of plastic materials. But on the other hand, it is inevitable and plastic is also a good material, advances in, let’s say, medical care, safety features, all of these really important technologies for us are often based on plastics or polymer materials. Anyway, our goal is to take that on a positive way. We see that plastic consumption in the world is increasing, but we also see that the expectations from the people around the world and politicians and legislators and others are driving towards a higher degree of recycled plastic materials.

And this is a trend that we obviously like as persons, more recycling is good for the world. And it’s also good for our businesses. We are dedicated to fix this recycled plastic to make it a better material. In the value chain represented here by a few pictures of plastic material, a recycled plastic material or let’s say a raw plastic material is produced in some kind of plant and this material is then refined and converted into a compound that is a blend of plastic material that is then used to produce various components. It can be everything from flexible film and packaging or technical components like on this picture or rigid packaging and so on and so on.

And that conversion is done at the components manufacturer. And then that is used in various end products and by brand owners and so on. Our position in this value chain is to deliver to most of the time the component manufacturer, an additive that is added in a small portion somewhere between a few tens of percent to some percent and is used as a total part of their total recipe to make these various components. Sometimes the delivery goes to the compound manufacturer that is the step before the component manufacturer. So that is just to put into position where we are, so to say, participating in the market.

And the reactive recycling, which is at the core, it is not the only thing that we do in recycling, but it is the core of what we do in recycling. It is then heat activated master batches. So, delivery form is a plastic granule, which contains a selective chemistry that is reacting with the base plastic material in the process. It creates no byproduct because it chemically reacts during the process and it’s added into ordinary processing equipment. Just to show an example, have the picture here of a recycled material that comes from actually barrier layer in drinks containers.

And it has been severely degraded, of course, during the life of the product, the recycling process and the reprocessing, so that it’s impossible to make a new film of it. By adding just in this case 2.5% of our additive, you can actually make a proper film of it. The reason for that is that the molecules in the plastic during the use and recycling of the material are degraded, so they are cut apart. And our additive is then linking these molecules back together and that’s the, so to say, chemical trick in the whole process. It enables then that a higher degree of recycling can be used in, for example, tray to tray recycling PET.

If you think about containers for cherry tomatoes or grapes or chicken wings or something like that, that’s trace made out of PET. They cannot be recycled into new trace unless something is done and with our additives they can be. Another area of application is blown film. You can think of it as construction protective film for example or garbage bags and so on. They are also worn down in the recycling process and needs to be upgraded in order to produce a new good fit material.

Also, bottle recycling from oil canisters, for example, can also help with our additives, piping sheet extrusion, recycling of textiles. Many textiles are made from polyester materials such as functional clothing. If these textiles are then attempted to be recycled, you cannot produce new fibers. You can use it for other things, but you cannot make it new fibers. Now our additives enables them to be used in new fibers.

There And are many, many other application areas like that. It’s always the same basic chemistry, but the application fields are very wide. The value proposition that is the main driver is the economically motivated use of our additive in recycling. Here is a case that is typical for tray to tray PET recycling. Trays are produced by typically, if they’re based on recycled material, an expensive recycled bottle grade and 10% can be recycled trays and 10% needs to be new plastic.

And that is a fairly expensive recipe. But if we add our additive, we can change the recipe and use much more of the recycled trays, which is a lower cost grade, maintain some of the more expensive bottle grade and still need a little bit of virgin material. But in this generic typical case, you can reduce the recipe cost to produce a tray by 30%, but you need to add some cost for our additive. But in the end product, the final saving is approximately 25 percent in this example. The percentages are of course different from case to case, product to product, production line to production line, etcetera, but it’s a typical calculation example of how customers can make, let’s say, earnings improvements by using our additives.

So, now I take a step back and look at the global plastic market. It is approximately last year four thirty million tons of plastics produced in the world, approximately 10% is mechanically recycled plastics, the area where we are active. There is also a small fraction of bio based plastic, chemically recycled plastics and so on, but they are very, very small in comparison to mechanical recycling and very, very small in comparison to the full full plastic market. I think I want to show this to that of all the different plastic materials that are out there, there are thousands of various polymers that are used of course in the world, but the big portion is the so called polyolefins, that’s polypropylene, low density and high density polyethylene and PET. Those are the materials where we do have functional additives that can improve the value of recycled plastics.

And that is also the majority of the plastics that are being mechanically recycled. So, we are relevant in a very, very big part of the market. So, our development in recycling now this third quarter was a repetition more or less of the high sales numbers that were presented in quarter two, very much higher than last year and much higher than the year before that. It’s really we have spoken about this for quite some time, but it’s really starting to move substantially. We cannot have huge increases like we had in quarter two compared to quarter one sequentially all the time, but the long term trend is definitely there.

And we have several new major customers coming in that are planning for ramp up into full scale production. So, can expect this not every quarter by quarter, but on the longer term like every year by year, it will grow quite significantly also in the coming quarters and years. What is the potential? How big can it become? We looked at the total market size of plastics and recycled plastics.

And then if you look at the whole world’s total addressable market, if all the plastics that we cover by our patents or know how were recycled and we could use our additives, it will absolutely huge market, of course. But if you narrow it down to the parts that are actually recycled, and this is the 2,030 number, so slightly higher recycling rate than the one we have today, but still not huge, maybe 15%. Then it is a market potential for additives of around €2,000,000,000 but it’s still not a realistic market for us to approach because we will not reach every customer everywhere. But if we assume that we can reach 5% market penetration in Europe and 2% in the rest of the world, it is possible to have a market size of about €70,000,000 That’s a very round number. It is quite conservative estimation, but 50,000,000 to €200,000,000 is a serviceable obtainable market for us.

And that is very huge compared to what we currently say is the current run rate in recycling is about €2,000,000 for us. So, there is no end of the possibilities how we can gain growth in these segments and to double or quadruple the market in that segment is not unthinkable. It is definitely a possibility that we also next year can double that market and we can continue so with more, let’s say, with more efforts into market and customer collaboration. So, I want to also mention what is the driving force for the customer, what is the customer’s voice and what do they experience and we have the Kulla plus case that I have spoken about in previous quarterly presentations too. I think it is good because it’s significant for how people are working with recycled plastics in the industry today.

The challenges that they have and the solution that we bring is significant for a grand portion of our current and potential customers. So, what they find is that the quality and performance of their end products can be maintained, but they can improve the environmental performance and they can reduce the cost. And that is really the core of it. This Kola Plus customer case, have made a YouTube video of it to show to other customer has resulted in an enormous interest from that type of business, because there are thousands of similar flexible packaging producers out there in the world and many of them or a few of them have started to see that this is a potential for them. Fredrik Sack of the Production Manager on the picture here at Kula Plus has said that using R305 from Nexa, which is our product that we use here, it’s like night and day when we use recycled plastics.

And it really makes a big difference at a very small added cost. Just the flexible packaging market is of course a big portion, but absolutely not all of that attainable market for us. If we were to come in everywhere in the world where this would be relevant and so on, only this market will be €30,000,000 But there are many other areas where our recycling additives are relevant. But every time we need to go through this process when we start a new business, we need to get the customer interest, get to know them, explain what they can do. They need to think about it from their side.

And then we need to start to collaborate with them. They need to evaluate the material together with their process and their materials, their applications. It offers goes in then to a development stage where we are involved or the customer is doing alone. Sometimes both need to do something to be successful. And then when that has got been of hashed out and we have a concept, then it needs to be proven in, let’s say, production or one product or something like that and then scaled up and industrialized.

And then it goes into launch and commercial. And this process, it takes some time. We have gone through this process in the past years in the segments of lightweight and high temperature. We know more or less how it works. We have processes internally because we are not a startup or even scale up.

We are in a functioning industrial company with experience. So, we know how to handle these steps. But every day we work with new customers, learn things here of how to increase the conversion rate, how to accelerate the process, how to reduce risks and so on and so on. But in the area of recycling, we have maybe 25 currently buying customers and we have a bit more than 100, 100 to 200 somewhere that are somewhere between customer interest evaluation and early development stage. And we have approximately 13 customers that now are in the conversion from launch to commercial.

Some of them larger, some of them smaller. We did a press release early this year, I believe it was about two customers that have become quite significant in recycling. We have a couple of cases like that, that are also quite close to commercial conversion right now. But it is depending then on validation testing in their labs and market tests and so on, on their side. So, it is a little bit difficult for us to put an exact number on this process when how much will drop out and that’s why we’re not giving guidance on future sales in the recycling segment.

But some of the activities we do then to increase conversion rate and accelerate and increasing the number of leads to put inside the funnel is first of all to build awareness with direct customer contacts, trade fair conferences. In this quarter, had two very good trade fairs. One was in Mumbai in India, recycling show where we got a lot of customer interest and our collaboration partner distributing in India is very we see a lot of potential here. We have been collaborating for some time, but now it start to become more and more boiling there. We were also at the Cave Fair in Dusseldorf in Germany, which is the world’s biggest plastic fair every third year.

Just came home from there, was there last week. Huge customer interest, in particular the Kula Plus case and the movie that we made about that triggered a lot of interest from many, many different customers in that field, not only from Germany, but also other countries around the globe, which were on that fair. We do conference presentations next week. Our R and D Director is in Barcelona to present their recycling world event, etcetera. So, try to be out there.

But we need to understand the markets better, become more targeted on the high potentials and try to avoid putting too much energy into leads that do not have the actual need for the additive. And we need to provide good technical customer support. And we are also working on next generation additives in order to meet customer expectations in various fields and be able to be an even better solution provider in the future. That’s typical for Nexa as a very innovative company. We’re not just out there selling our standard portfolio.

We’re also with the air to the ground and try to hear which movements are happening and where other opportunities are. So, work a lot on that. And then, so to say, in the pipeline, flexible packaging that are close to somewhere industrialization, have seven to eight highly active customers that are close to conversion in mainly in Europe. And in Rigid Packaging, we have a higher number, it’s maybe 20 to 30 highly active customers, and they are more has a tendency to be more spread around the world. But I heard yesterday about some Asian customers, Japan and Taiwan that were quite interested in the flexible packaging solutions as well.

So, we’re working on it. Polyester fiber applications, very, very interesting. Many the textile industry want to become more sustainable and there is a lot of interest in textile recycling and we have a really unique additive that no one else has that really helps to balance the properties that are needed for textile fibers. But there we work together with some early adopters. They’re a little bit everywhere in the world, Asia, North America and Europe.

But we don’t have any volumes in that field yet, but we believe in the future. And then we have our concept of Recolor Plus where we combine our knowledge and colors with, let’s say, other complementing additives and our specialties. And there we have new cases all the time. They are each one quite small. It is article specific color batches that we produce there, mainly in the Nordic countries, Germany and Eastern Europe, but it’s also growing all the time and there is a lot of potential there with the especially on the local markets where we have our factories in our presence.

Okay. With this, I would like to leave the world over to Markus to talk some about the current state of business, and I will come back to close-up. Thank you.

Markus Nibari, CFO, Nexon Chemicals: Thank you, Ronny. I’ll give some details about the numbers and what we’re doing at the moment and how it looks in the figures. We had a savings of SEK45.5 million, slightly better than last year. What we also need to mention here is that we are in a really slow market for the moment. So even if recycling is growing, we actually added SEK 4,000,000 to this quarter compared to the same quarter last year.

We don’t really have this double digit growth yet, but that’s what we are working on. So meaning that we don’t get anything for free at the moment in the general plastic market. Our gross margin, we continue to be on a stable level. We are now at 46%. It will be in this range, somewhere between 45 to 50% is to be expected.

And EBITDA, we had a plus of 0.7. We actually took a hit this quarter. We had a U. K. Customer that went into administration, that we made a bad debt reserve of close to SEK1 million.

This is actually the first time in many years that we have any significant losses related to customers. And this is something that we really pay attention to every single week. Send reminders, we send statements, and we also follow-up with the credit terms and so on. And of course, we also go to prepayment. So we don’t really see this as a general risk.

This was more like a onetime. And but it’s, of course, really boring to lose SEK 1,000,000 in this area. We had a stable cash flow during the quarter. I think we it was 8,000,000 in operational cash flow, but also our net cash flow was positive. And that will go a bit up and down during the quarter.

It seems like a snapshot actually, but we continue to be on a stable level. And I will also give you some details of what we have been doing during the quarter. I think Roni mentioned a few things, but we now have two major middle customers in recycling. They’re up and running. And that gives us a run rate of more than SEK 15,000,000 of only those two customers.

And as Ronny mentioned, we have this movie about Koolaplast, and that is really a that really opens doors to many customers so you can see what we actually can do. Because we have actually one issue that our additives are a bit unique in the market, meaning that we need to train and educate potential customers. And we are still a fairly small company. So actually, we are a little suffering from lack competition in those areas, to be honest. And as Roni mentioned before, we also have been out in presenting.

We went to Germany. We went to India. And that also gives us a big interest from existing customers, potential customers, and we are sending out more samples than ever before. And that is mainly in recycling. To give you some more details, one thing that we can note here is that we are we continue to have our focus on the costs and on our cash flow, and we will continue to do so.

That will always be really, really important for us. And at the moment or at the September, we had we are close to SEK11 million on our bank account, and we also have the ability to borrow another SEK16 million. And that, I will also mention something. We are in an industrial company. We have and we are really scalable.

Our breakeven is just short of 50,000,000 on EBITDA. Everything that we add above SEK 50,000,000, at least onethree will go all the way through the P and L. We also see that we have our organization is actually we have a possibility to close to double our state without adding more overhead people. We are also very tight with our customers. Roughly 90% is recurring business.

And as I said before, the margin is expected to be at these levels that we are at the moment. Overall, I can say that we have for the everything that we said that are patented, that we unique, we have at least 50% in margin. And for color, we have roughly 45%. So in recycling, we have 50% in the annual terms. And now I would like to be handing back to Roni again to finish the presentation.

Ronit Thornquist, CEO, Nexon Chemicals: Thank you, Markus. Maybe just to add on the scalability slide that we do not only have overhead organization that can handle more, we also have machine capacity that can handle much more. Approximately double sales would be possible to produce in our machines. So, the horizon of development in the coming, let’s say, ambitions to grow our sales from current SEK200 million per year towards SEK300 million and beyond that towards SEK400 million can be done without having to add a lot of machinery or overhead costs. So we see an absolutely good case to become profitable as we grow.

Another view on what we do is that we have four areas of market that we have defined according to the customer value that we bring. So, a little bit more than half of it is aesthetic, which is a great base business. We are doing really well in that business, but we also have a few really strong competitors that are also doing well. But I think our market orientation from everybody on the shop floor through development and the salespeople and the administration turns out into a really good customer offering. I sense when I meet our customers here that they appreciate what we do.

And I think that the team is doing a really, really strong effort in this area. And then we have the more specialty chemical areas of lightweighting and high temperature. Lightweighting is 18% of the sales. It’s a global niche market with a few global customers with many production locations around the world, where we have a very, very strong customer close collaboration. Unfortunately, that market has been quite weak over the last year and are now down to very low numbers compared to how they were maybe one even more so compared to two years ago.

But it’s a segment that is innovative. They are trying to find new applications and we believe that in the long term this will come back, but it will not be a rapid return and mainly because of the weakness of the wind power market in Europe, North America and some other markets. High Temperature segment is also a specialty market, also characterized by few targeted customers, where we sales level about 15% and it’s quite constant. If you followed us, the number has been very constant for a long time. There is development ongoing.

This is a high-tech area, right? So things are happening, but it’s also long validation times and so on. And we prefer to work in this area by either, yes, continue of course with good deliveries and good collaboration on the practical side with our customers, but also to work on long term by working in R and D projects that we cannot finance ourselves. So with support from either governmental bodies or our customers. And then we have the area of recycling that we talk about so much in this presentation.

It is it has gone from an internal startup to an internal scale up 12% today of the sales. It’s characterized by this endless market opportunity, which is different from the other three areas. Another thing that can be interesting to mention is maybe that all the money that’s around because aesthetics, lightweight and high temperature are by themselves profitable segments. All that profit is reinvested internally into development of the recycling area because we don’t want to lose speed in that process right now. You can also start to analyze it in a different way maybe from more of a stock market perspective.

And you can say that aesthetic is like peers in the local masterbatch producers around the world, where we have a similar situation in terms of competition, product uniqueness and profitability. And then you have the high temperature and lightweight, which are more tailor made, very high level of expertise, very high degree of IP coverage and so on, within historically fairly high growth, but where we have very advanced, you could say, companies to be compared to. And then you have the recycling, which is more, you can say, speculative, where we have a solid case on IP and technical knowledge. It has been proven in terms of product market fit. And it is contributing to sustainability.

And there you need to compare us our initiatives to totally other type of companies. So, what we do have is this innovative and forward looking and hopeful part, which is recycling. We have the specialties that are also of very high value. And then we have a base business where we have a more of a normal industrial production. But combined, let’s say, a hopeful future initiative with the base business is what we think is very attractive because we have given by the base business a totally well functioning organization.

We have quality systems in place. We have the supply chain under control. Everything is in a very ordered manner, you can say, characterized by normal industry. And then on top of that, we have this, let’s say, very interesting initiative with enormous future potential. So, how does it look for the future?

We see continued strong growth in recycling. And we do have the stable base business, and we have a broadening customer base. It has been if you go two, three years back, we were a little bit unstable because we had very few really big customers and now we have a much broader customer range. We have a really focused market strategy and innovation that is driving market differentiation and putting us in a very unique position. And we have behind us already then major breakthroughs in recycle or in the area of recycling.

And now we have multiple customers that are moving down the funnel that I showed before transitioning from interest to investigation towards industrial scale production. We have a really good performance in Eastern And Central Europe and highly increasing interest in that zone. It is a little for me, it was strange when I started at Nexa as CEO for two point five years ago to see that we had so little presence in, for example, Germany and we are fixing that now. And that is starting to pay off. We see expanding position in Structural Foams.

The market, as I said, is kind of depressing the sales number, but we are actually increasing our, let’s say, portion of the market in that area. And as soon as new applications are found in that field, we will right with their increase, which I believe will come, but I cannot say when. And then we have several long term opportunities. Some of them are on one or two year scale and some of them are more into the five to ten year scale. But in the long run, this segment will continue to also provide growth for us.

So, we’re looking positive for the future. So, just to summarize, have I and Markus and everybody else in the management team and so many of you out there invested in Nexa. First of all, I think common for us all, we see a strong growth potential in the company. And we see that with the current investment in, let’s say, overhead and machinery, we can perform a profitable growth with that potential. We have a very focused commercial strategy and it goes in line with key global trends in particular sustainability of plastic material, which is a huge problem in the world that needs to be solved.

There is a huge untapped potential in recycling, but I’d also would like to say that there is a huge potential geographically around us in Europe. We have a really strong innovation capacity and we have a really diverse portfolio of patents. And we are not we are proactive and we are we have the competencies and the knowledge to fix things that we see on the market when we are out there. And so we are not standing still. So, with growth, we can improve our profitability and we have a solid financial position, so that we also in a little bit weaker quarters, which I must say this one is, we still have a solid and stable financial position.

We have an organization that is scalable. We can do much more with the people that we have. And there is obviously opportunities for acquisitions in the future when we come into a stable situation and a stronger financial position. So, those are the main reasons I believe why people invest in Nexon. And that’s why I do it.

So, that was all for today. Hope you enjoyed this and looking forward to hear what Lara would like to know and also from you, Erik, from the audience.

Erik, Moderator: you so much, Ronny and Markus. Super interesting. And once again to everyone listening, make sure you use the live chat function. We already have a few questions coming in. We’ve received some before as well.

But now we hand over to Lara Muthadi from ABG Sundal Collier to give her for her questions.

Lara Mohtadi, Equity Analyst, ABG Sundal Collier: Just a few questions from my end. Firstly, very promising to see the continued growth in recycling. Would you say that you see any operational bottlenecks today in scaling production and maybe delivering to meet this rising demand?

Ronit Thornquist, CEO, Nexon Chemicals: No, not really. As I said, we have much more machine capacity and organizational capacity to take care of this. It’s obviously the result of hard work of the people that are with us, we have very good for last couple of months, very good delivery performance in all areas. We are no delivery delays really, although we are fighting so hard to reduce capital in raw materials. But we manage that process and it works well and available production capacity is not really an issue.

And we also have fantastic KPIs on quality. We have very, very few claims and it’s quite stable.

Lara Mohtadi, Equity Analyst, ABG Sundal Collier: Very clear. And you’ve obviously described Nexen’s position in the recycling space is quite unique. And as your technology gains commercial traction, what would you say you’re seeing from the competitive landscape? And maybe sort of a second part to this question, given the big market opportunities, would you say that your current R and D levels are sufficient to maintain your lead and capitalize on this momentum?

Ronit Thornquist, CEO, Nexon Chemicals: The last one first maybe. If we say that if we break it down from the outside and look at the potential of our market is quite large. And if you compare that kind of number in EUR50 million to EUR100 million, it is much, much more than we currently sell. It is an indication of two things. We have only just started to scrape on the surface in this field.

And the second thing is that to be in such a huge market, we did not have the organization that we would need to do that in a short time. But we are limited, of course, by our ambition not to make any losses and have a stable cash flow. So, we are investing as much as we can. But if we were to invest more, we would be losing money and we don’t want to do that. So, that is why we kind of adapt our resources to what we can afford.

And with that, we try to do as much as possible of it. It is fairly much that we do in comparison to where we are today. But it is also on the same time, nothing compared to where we could come. So, and I think I missed something, some part of

Lara Mohtadi, Equity Analyst, ABG Sundal Collier: the The first part was more on the landscape.

Ronit Thornquist, CEO, Nexon Chemicals: Yes, yes. There are competitors out there, and it’s most of the time not other additive manufacturers. Sometimes you can use, let’s say, machinery solution to improve the quality of recycled material, for example. And then that type of alternative process reduces the need of additives. And then there are some for some of the plastics that we work with, there are other suppliers of also additives that could improve the materials.

But we just do as usual and try to be better than everybody else. And it’s going well.

Lara Mohtadi, Equity Analyst, ABG Sundal Collier: Promising to hear. And a little maybe on the numbers, despite sales being well somewhat softer than the quarter, mainly due to seasonality, you’ve managed to keep your costs rather under control. What should we expect in terms of cost development and efficiency going forward? How do you see the cost base going into 2026?

Ronit Thornquist, CEO, Nexon Chemicals: It’s important, but I’ll let Markus answer the question.

Markus Nibari, CFO, Nexon Chemicals: Yes. What you can say is you can expect more or less stay on the same level as of today. That was what we mean when we said we are a scalable organization. And don’t forget that we actually took a hit of SEK 1,000,000 in this year as a this quarter as a cost, and we don’t expect that going forward.

Ronit Thornquist, CEO, Nexon Chemicals: We continue to be meticulous about cash flow and cost in our day to day business, obviously.

Lara Mohtadi, Equity Analyst, ABG Sundal Collier: Thank you. And you mentioned in the report that there is some uncertainty linked to The U. S. Trade and the current macroeconomic environment. Maybe could you quantify your current exposure to The U.

S. Market? And then how are you preparing to mitigate these potential risks?

Ronit Thornquist, CEO, Nexon Chemicals: How much do you say?

Markus Nibari, CFO, Nexon Chemicals: What do you say about The U. S. Is close to SEK 20,000,000 per year or yes, something like that.

Ronit Thornquist, CEO, Nexon Chemicals: 10% and what we do to mitigate. So the thing is, we if you look at those 10% of the sales that go into The U. S, We do not feel them threatened by in any way. It feels stable and good, all those business. But we do see that the industry in The U.

A. Have, let’s say, difficulties in terms of supply chain management, especially from imports. And if we supply to the same system as someone else who’s then maybe supplying from a country which is in conflict due to trade and so on with The USA, then there can be disturbances on short term. So we don’t see this as a long term issue. It is more of waves that can go up and down.

So we don’t do any particular mitigation except for keeping the air to the ground and speaking to our customers and try to understand their situation and help them in any way we can.

Lara Mohtadi, Equity Analyst, ABG Sundal Collier: And just the last one for me. You mentioned improving your position in Germany, which is an important market in Europe. Which segment do you see as the primary growth driver in this market?

Ronit Thornquist, CEO, Nexon Chemicals: For Germany and the countries around like Benelux, Austria, Switzerland, it’s mainly on let’s say within the range of 26%, 27%, we mainly see recycling and to some extent aesthetics. Our color plant in Poland is in Posna, which is right on the border to Germany. So we see some opportunity to develop also sales in Germany from the Polish unit. But those are the main areas. And Germany and Holland, I would say, and Belgium are the forerunners in Europe in terms of recycling technology, investment height, competence height in recycling.

So it’s important for us to be on those markets also to learn for our activities in the rest of the world, including here and others.

Lara Mohtadi, Equity Analyst, ABG Sundal Collier: Very clear. That was all from my end. Thank you.

Erik, Moderator: Thank you, Laura. Thank you very much, Laura. We’re getting a lot of questions, both in the chat and previously. Most of them are around renewables and recycling. Let’s start off with Stefan Liannon.

Two questions from him. One of them, will new clients also participate as reference cases like KolaWick or KolaPlus has done? And secondly, the timeline for recycling from interest to testing to full scale implementation production, what does that look like? Okay.

Ronit Thornquist, CEO, Nexon Chemicals: Of the 25 customers we have delivered to this year approximately, Kula Plus and maybe one more are open with our collaboration in that field. Many people see this as a competitive edge and they don’t want to tell their competitors how they’re solving things. So, yes, I’m sure there will be more that are open to such reference cases, but it will not be a high percentage. But there is also another there is kind of it’s a small bubble, the plastic world, and people speak to each other. And they speak to their friends and the people that they went to school with or work together with before and so on.

So, the more cases that we do get out on the market, the word also spreads. And since we often need to pass by the R and D and production management at our customers, Those people are the ones that really know the other ones in the business. And we do get a lot of good leads from our customers to find new prospects. And then the lead time from, let’s say, generated interest to actual purchases, typically say three years when you do something different, the customer needs to change something in their process, They need to rethink. They maybe need to purchase other raw materials or change something on the machine, smaller things because it works in a normal process.

But then it typically takes that time period. Sometimes it can go much quicker. We’ve had cases that are the fair in Dusseldorf, we had a one day conversion time and for one customer and others we have been working on. They have a fair case, but we’ve been working for five years and they’re still not buying. So, it can be different, but one to three years.

And we are doing everything we can to shorten that timeline, But that also requires limited resources, so to say, to improve our processes, but we are doing what we can there. But it’s still in that range, one to three years.

Erik, Moderator: And there’s questions about the lead generation that you’re mentioning. Obviously, you were in the fair in Dusseldorf and there’s word-of-mouth within the industry, but how are you working actively to get more leads?

Ronit Thornquist, CEO, Nexon Chemicals: So we are trying to spread on social media and be visible in various industry organizations. Obviously, the fares are an important part of the business here, both Mumbai and Dusseldorf have led to a lot of leads, but also this kind of expert committees and so on, people that are on the Board of Directors of various companies and so on. So we try a little bit of everything. But a good way to create leads is to be local in the plastic industry in the country. So in the Nordic countries where we are that or in Hungary, where we also are that we see more interest in adaptation and opening up of leads.

So yes, it’s a little bit of everything really.

Erik, Moderator: And the last two years must have been incredibly interesting. As you said, you’ve gone from a couple of big clients to being much more diversified to a lot of clients and growing. What is the feedback from the plastic industry on your product?

Markus Nibari, CFO, Nexon Chemicals: Yes. Well,

Ronit Thornquist, CEO, Nexon Chemicals: generally, are quite customer oriented, and we do take care in not only the salespeople or myself. It’s really the whole organization is very customer oriented. And we do get feedback that it’s running well, like logistics quality, all these hygiene factors that you need to have in place, we have them in place. But also, we are perceived as being quite unique in that we have this strong R and D backbone in the company. So, they come with the solution doesn’t work in that application, do you have any ideas and then we immediately start to develop a new version of an additive in order to fix that problem instead of just accepting the defeat.

And that’s very appreciated, especially by I would say, more complex organizations who are themselves analytical, you can say. So, it’s quite well. And like Markus said, we have almost no losses of customers or jobs. When we have been specified in the product, we still we continue to roll and we’re delivering that in serial production for many years, sometimes many decades. And that is both because I think we do a good job, but it’s also because the value of the additive in the final sales price of the component is very small and it’s always a risk to make a technical change.

So that is kind of preventing people from changing supplier in the additive side of business.

Erik, Moderator: And let’s bring in some other risks. As you continue to scale and hopefully double digit sales growth, what’s going to be the main difficulty do you think in scaling up?

Markus Nibari, CFO, Nexon Chemicals: On the short term, been going like from where are today, let’s say, SEK 200 to SEK 3,000,000 to SEK $350,000,000, we don’t really see any major hurdles. I’m pretty sure that will be days to day things to be solved, of course. But we also and that’s I think we said this before, maybe not today, but we are in some months, we actually have sales of SEK 30,000,000 already today. So we are actually testing the capability and the capacity of organization already today. So we are not really worried for that, to be honest.

But of course, there will be different steps. Once we hit €300.03 50,000,000 we will aim for maybe 500,000,000 and 500,000,000 So there will be different steps to this.

Ronit Thornquist, CEO, Nexon Chemicals: Some of those challenges will come, definitely, but not here now. We feel that we have it quite under control. And then there is all until a couple of years ago, we did outsource quite a degree of our production. Currently, make virtually everything ourselves, but we still have those contacts and are good friends with those suppliers. So we could also outsource production if it becomes necessary.

And if we look at the other products,

Erik, Moderator: how are you we have a question from Peter Tufos. How are you affected by the defense scale up in Europe and across the world? Are there any particular areas that are affected? For example, you mentioned lightweight. Yes.

I think the most

Ronit Thornquist, CEO, Nexon Chemicals: clear defense oriented portion of our business are the 10% that go to you say a big portion of that is in defense applications. And if that would scale up with current product mix, whatever and they would do more of that, it would lead to increased sales of course in that segment. But that’s a very slow process, very complex supply chain and so on. So, but that could of course happen. And then we also see a huge interest from both military and civilian aviation in Europe and UK, if you include that in Europe, it is in Europe, right, not in the EU, but in Europe.

We see a huge interest to try to also apply high temperature composites to a higher degree. We have a big interest of that. But I believe in, let’s say, six that would result in engineering services sales to not such a high number. And it will also result in, let’s say, volume production sales, but it will not change the word for us on short term. But we like to participate in the reinforcement of European defense industry, of course.

And so from that perspective, it’s important for us. Yes.

Erik, Moderator: Obviously, yes, we’ve talked about recycling. High temperature, you were saying that there are a lot of long term initiatives going on. A potential there has a potential upside. It’s been very stable. Can you say anything more about that?

Yes.

Ronit Thornquist, CEO, Nexon Chemicals: We get are always extremely secret, we are providing an additive to someone who makes a resin, who sells it to someone who’s making components and so on. So far back in the supply chain, and it’s very secret. And there are so we don’t see everything, but we do get indications that the North American kind of defense related applications that we are inside are typically growing on multiple year basis. And we also see some shorter term potentials where they are trying to drive innovation very fast and that’s both European and American customers that are trying to do developments that are quick and that’s typically then in unmanned aeronautics like drones and so on. There you can do a more rapid validation process and so on.

So there we see some opportunity on the shorter term, but still one or two years in the future until it becomes significant for us.

Erik, Moderator: Ronny and Markus, I want say thank you for being here. It’s incredibly appreciated by the market that you take all this time to go through what’s happened during the quarter in proper details and answer our questions. So thanks so much and good luck in Q4. Thank you, Erik.

Ronit Thornquist, CEO, Nexon Chemicals: You for listening.

Erik, Moderator: So thank you, everyone, that participated, and thank you so much for your questions. Have a great day.

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