Arcoma (Stockholm:ARCOMA) Q2 2025 Earnings Call

0:00 Then we say hello and welcome everyone to DNB Carnegie and today's report interview. My name is Hjalmar Jernström and I work here as an analyst and today I am standing here together with Mattias Leire, who is the CEO of Arcoma. Welcome, Mattias. Thank you very much again. And we will dive straight into the fresh Q2 here. What I thought we would start with is to talk a little about the underlying market, and then maybe especially if we focus on the USA. You write in the report here that you do not see any change in perhaps the underlying market, but at the same time that some American customers may experience an insecurity around the price point you mention. Could you develop a little? What does this mean and how does it affect how you can act on that market? I think we saw in the political insecurity that came in that it was harder to find What do the investment goods cost? Where do the tariffs land?

0:51 What is the interest rate on the way? It created an uncertainty that made the decision processes longer in the short term. We also saw that on other markets. We absolutely saw that it had an impact on the quarter. What do you feel is the momentary picture there right now? Has the smoke settled a little? Have we gotten a little more clarity there? Or what do you think is needed for customers to feel more comfortable doing an investment? Yes, but I absolutely think that we have landed in it and that the discussions are going fast and that we are back from a vacation, but we saw that already before, that we are starting to land and I think we have transparency on what, at least if you have a Europe-Japan supplier base, where we will land. It seems clearer.

1:43 And in the USA, what does Canon say when you talk to them? Do you get any indication from the customers? Do you give any indication, just a little anecdotal, of what they could say when you talk to them? No, but I think it was insecurity now. I think it has stabilized so we see that there are businesses and you have... compared to a supplier base in Europe and Japan, where there is greater uncertainty if you have a production in China that Canon does not have. So I think we see a clarity in the future and that it will continue. If you talk about the fact that the North American market is tough, not just for you, but perhaps for everyone, at least those who are affected by the same toll factors and so on, could it be that when we step out of this, that there is a certain need or that there is some kind of catch-up that we should see in the market here, or do you think that it will continue in a type of more normal pace, just from the level we are at now?

2:51 I think there is absolutely a catch-up effect in the market. It has perhaps accumulated a little over time, and it absolutely exists. Then I thought, if we just take the momentary picture here, how much visibility do you have in your market right now? Is there any difference from a kind of normal situation with regard to maybe the geopolitical worries and worries and so on? And what can you read into this, as you say, about an active current quarter? Has Q3 started very well? As we write, it is an active current quarter. Then we have ongoing good discussions about high activity in the market, as we see. If we look at Asia a little bit there, then how should you look at that market?

3:42 Is it possible that you are a little selective there for keeping a margin or how do you see it? How does it contribute? Maybe remind us first how Asia contributes on the margin side to the group and perhaps how you, based on that, choose to act there right now. Asia has historically not been marginally leading for us, and we have chosen to make sure that we have business in the business we do now. There has been a bit of a storage effect in Asia that is ongoing, so I think we still have many positive dialogues right now. It is important to make sure that you make money on the business you do. We have had a certain margin focus over time.

4:34 And speaking of margin focus, how do you see the aftermarket business right now? How does it move and what is the momentary picture? How should it develop if we go back in time a bit? As we have communicated in previous reports, it has been going well. Then I think that what happens with uncertainty is that we I think we see a storage effect there, as we wrote that it was worse. I think we are on the right track again and the aftermarket, the underlying business is absolutely there. It's a combination of spare parts and upgrades and those bits and we absolutely see that it rolls on.

5:22 And speaking of the margin, it's down a little year over year, but I think it's still at a good level if you take into account that sales in North America are down quite a bit. Could you just remind us of which factors affect the gross margin and what specific factors we saw in Q2 that made you come in at 39%? We have a geographical mix that affects and a product mix. Then of course it affects the customer as well. What makes us come in good here is the accuracy in the business we take. We have good margin, we still have a a weaker retail sales than what we communicate, and we still take good deals. And then we get together a closeness in pricing and in the deals we take, which makes it still, despite weak North American sales, have a strong margin.

6:21 Super, thank you so much. And then if we move down in the results calculation as well, the cost focus or the cost control is very good here in Q2 and the cost of movement decreases here. But what can we take with us from that if we move forward here? How much is it that you managed to keep some costs here in Q2? How much can you extrapolate here and how do you feel in the cost costume that you have right now? No, but we have had a cost focus that then over time has got a breakthrough. We see that we want to make certain selective investments in the right way, but now we have created the basis and can work with a quarter like Q2 that we are absolutely not satisfied with, but we can still make sure that we still create We can in Q2 create a quarter that we are not satisfied with, but we keep the costs and make sure that we solve it anyway.

7:23 Super. And then I thought, finally, you have brought in a new large owner here, also given a little contribution to the cash register, of course. If you could just tell us a little bit, what is your vision with this addition? And how do you see this new owner on the list? We have had a long dialogue. Eiffel is a 7 billion euro under management and 110 employees. It is a French fund. We have talked to them for a long time. They have been on visits. Then came the situation and we thought it was exciting and a clue that we were on the right track with the right strategy. And that creates opportunities for us to continue on the agenda we have with the investments we want to make around products and also look at M&E agendas etc. So it's very cool to get them in and a clue that we, even external partners, think we're on the right track.

8:18 That sounds interesting. Thank you so much, Mattias, for coming here and talking Q2 with us.