Nolato AB (publ) (NOLAB) Earnings Call Transcript & Summary

Welcome to this presentation on Nolato Capital Markets Day, and I'm intrigued to have -- to see you people here. Today, we're going to try to walk through the different aspects of Nolato. We had a lot to embrace the journey up to date, a overview on new financial targets and also some market driver trends for us. but first of all, I would like to present the team that I have with me. So we're starting with Per-Ola Holmstrom, CFO; and then we have Johan Iveberg, Head of the Medical business; Anders Bjorklund, heading up Engineered Solutions Anders Ericsson, President of Materials; Glenn Svedberg, heading up our TDC; and Kristian Sandberg, Sustainable Manager of the group. And this is the agenda for today. So I will have the opening remark. And my name is Stan Christer Wahlquist, I've been the CEO of Nolato for the last 9 years. And previous to that, I was running the medical business within Nolato for 20 years. So I have a longevity with the company. If we start very briefly and give Nolato a picture, so we are working as a flexible and efficient development and production manager of polymer product system across the globe. The history is that we were established back in Torekov the 1938 and been on the stock exchange since mid '80s. Today, we have two business areas, which is Medical Solutions, a little bit more than half of the company and then Engineered Solutions, a little bit less than half the company. The key ratios for 2024 was close to SEK 10 billion in sales, with an operating profit of close to SEK 1 billion and approximately 6,000 people spread around the globe. Our vision is to be the customers' first choice of innovative partner in sustainable design and production, which means that we support large global customers with the design of the next-generation products and the production coming afterwards. So the company has two separate business flows that links together, we are charging the customer for the development work. And then afterwards, we charge them for the production of the same products. If we look on a little bit of a history of the company, this is the development of the last 20 years of the company, the sales development. Here, we can see the two different business area, how they've been growing. So we have delivered strong good organic growth over the years with over the years, an increasing sales of medical as a portion of the total. We -- in the blue color, we are separating out something we call VHP business. So you can see that growing very dramatically and then declining. This was a business that we entered into -- in 2015, '16 when we are sort of reshaping the group a little bit. And this business was a good business by itself, but it grow -- outgrow all our intentions and both the customer ourselves what we intended. So it became too large a portion of the total growth. So we then had long discussions with the customer in order to decrease this dependency since we were in a one-to-one relationship. So we were the only production partner they had, and we had only one customer. And we felt this was getting too big. So we had a long discussion with the customer of the years in order to decrease this share of our spend or of our sales. So that's what we've been doing over the last 2 years, decreasing that. And based on that, we feel that we are in a good position to start growing from more baseline across different sectors. Previous to that VHP business, we were largely into the mobile phone industry and manufacturing, the voices -- okay. So that was the part previous to the VHP. We were doing a lot of mobile phones. We started doing the same maneuvers around getting less and less interested in the volatility of the mobile phones and then reshaping the business going forward. When we had our last Capital Markets Day, this was what we presented as our next step at that time, that was approximately close to 3 years ago that we should be a global innovative end-to-end provider of sustainable solution to leading business and more global presence. We felt and we're going to show today that we have been delivering on that and now ready for the next step in our journey. During that last period of time, we have also changed our group structure. So we had former two business area called Integrated Solutions and Industrial Solutions. We have been merging those two in order to create a stronger total, getting the global footprint from the total of them and also a stronger total offering to the market we -- because we see more and more electronics coming into all kinds of products that we are producing. That skill set was part of the Integrated Solutions, and we had a lot of good customers with potentials for that sort of solution. So that's why we merged the two businesses and created our new strong Engineered Solutions. During the same time, we also took what we call our Technical Design Center, which we'll come back to later on during the day and made that a group-wide resource. It used to be only for the medical and it was built within the medical, but we made it group-wide and also added the specific knowledge around integrating electronics into the product. So by combining the TDC for the group and combining the two business area, we feel that we have now two very strong business areas supported by powerhouse of Technical Design Center and global footprint in both parts of the business. I would try to explain our business model to some extent. So our business model is very simple. We are supporting global customers with development work, industrialization and production on a global scale. And in order to do that, we have some resources that we have been built up. So we have very long-term ownership and management within the company with strong financials. We have good resources that we built in order to support those customers on their growth journey. We have designed for manufacturing, and we -- in this part of the business, can get a lot of knowledge by sharing different markets and giving that to the customer in order to create better solutions than the customer can do by themselves. So always focusing on a win-win situation. We have, over the last years, built up global production resources, so we have now a very strong footprint across the globe, which we will come back to, in order to produce on the right spot close to the end market, so that we are saving the environment, saving costs and also our efficient and lean in that aspect. We have created a lot of customer insight and expertise over the years. So these are the resources that we have been building. On the other hand, we are then by our business model, creating values. So we are creating value for our customers by giving them solutions that they cannot handle by themselves. We are a good employee. We are helping and supporting our employees. And a good example of that is that we have a very stable workforce, people tend to stay very long with the company, and we are believing that people are our most valuable asset. Of course, the shareholders, we have created good returns for our shareholders over the years, and we intend to continue to do that. On the society, we are giving back. We are treating the environment in a good place. We are giving back to society and being a good role model for society as such. And today, of course, it's about the development, the industrialization and the manufacturing on a global scale for large global customers. This is our global footprint as it looks as of today. So we have, as I mentioned, over the last years, created this global footprint in order to handle different supply chain situations and being close to the customer and the end market. So the facilities that are marked in red are the medical ones and the black ones are the engineered ones. So it's been very focused for us to be strong on the three important continents. If we look on the business environment surrounding us, we see some trends. So if we start on the macro trends, we see globalization, but with a lot of geopolitical tensions in the world. We see an aging population across, we see digitalization. We see tendency to shorter product life cycles, and we also see an increased focus on corporate responsibility. Our customers are reacting on those [indiscernible] so we feel that our customers are more and more focusing on their core activities. They are regionalizing with simplified supply chains, this has been increasingly important during COVID, after COVID and now with discussions related to different kind of trade barriers. We see also customers focusing more and more on outsourcing and of course, time to market with a shorter life cycles, differentiation and also feel that a lot of our customers are having an increased focus on the corporate responsibility. And how does this affect us then? We feel that those business and megatrends are benefits for us. We feel with our early participation, our partnership with our customers, we are gaining ground. We have excellent global footprint, simplifying those geopolitical tensions around the world and also helping our customers simplify their supply chains. We are offering multi-site offering to customers, which means that we can produce for them different -- the same thing on different parts of the continents. We, of course, have been working very hard on simulations and pre-engineering in the development phase. We will come back to that later during the day. Of course, a lot of focus on design, productivity, quality and of course, our strong core responsibility. So as a summary, we feel that we are very well positioned for the megatrends that we see. Today, the Board has decided to introduce new financial targets, which we feel are good. We will come back to those later on and describe the journey in more details, but they are organic growth should be organically above 8%, over a business cycle, of course. The EBITA margin has been -- the target has been increased from 10% to above 12%. And then we have return on capital target of higher than 15%. These are the different steps that we are taking with the two parts of the business and also the Nolato Group. So we are constantly moving -- we are in a constant journey. And on the group level, it's all about creating global solutions provider with added extended capabilities. What that means is that we are adding technologies, services surrounding the existing products that we have today an existing offering to do more for the customer. We will come back to that later on during the day as well. And if we then look on the Medical Solutions, that means that we are a global solution provider, but adding electronics and drag handling to our offering. On the Engineered Solutions, it's about being a global solution provider and also adding electronics to the offering. If we look on sustainability, this is something that's been core for the Nolato Group and for me personally for many years. We have done a very solid job of making sure that our facilities are up to world-class doing very good. Some years ago, we also introduced the next step in our sustainable journey, and that is suggesting improvements to our customers. That was the first step. So our engineers in the development phase should and are introducing greener solutions to the customer. In the early stage of this development, we did not get so much positive feedback from the customer. They said, "Well, not interested. Let's do it as we normally do." But I'm very pleased to tell you that over the last 3 years, that has changed. So now the customer coming back to us and asking about those suggestions that we have put in place. As a summary, that has put us in the forefront of our customer as the green solution provider. Very pleased to see that. We have also received a lot of good external recognition for our strong work within the sustainable partly. We will come back also to more details about this. Approximately a year ago, we announced also that we had signed a new long-term agreement with a major customer, existing customer for a large program. This is a heavy investment for Nolato. So we are investing approximately SEK 600 million ongoing to build up capacity of an additional 9,000 square meters and approximately 16 molding machines, 3 assembly lines. And we are -- the estimated annual sales when it's fully ramped, is approximately SEK 700 million, creating approximately 200 new positions in this process. This will be done in our Hungarian facility. If we then look, of course, our journey is continuing. We are expanding our value chain, adding new materials, new services to existing and new customers. We have a continued acquisition strategy, focusing on adding new services and offering to our portfolio. We see increasing profitability, continuing the measures already initiated. We see global -- we have built a global organization set for growth across all parts of our business. I will now hand over to Per-Ola going more into details regarding the financials. And after his presentation, we will welcome questions on both the two first parts of today's presentation.

Good afternoon. My name is Per-Ola Holmstrom, CFO of Nolato Group. I've been with the company since 1995. Today, I will give a review of the finances of the group, starting with some historical performance, we will dig deeper into the new financial targets we announced today, and then some additional key financial figures and explanation to those. Starting with a historical perspective. On this page, you can see sales in the bars and the line is showing our EBITDA margin the last 20 years. In blue, we have separated the VHP sales, vaporising heating products. As you can see, the last 8 years has been affected by the VHP, but still, if we exclude those, we have had continuously increased sales during these years as well. Much coming from, of course, the Medical business area continues to develop within a growth sector. But of course, we have been affected during this time period with the VHP business. During 2021, it was about 1/3 of the group sales. And after the ramp-down of the VHP business, we have, of course, had to adjust our Chinese operations. We have moved almost all production from the Beijing area to South China and Malaysia. It has been a big operation to do that. Many people have been involved, a lot of work to handle that. We have done it according to plan in a very good way. But of course, during 2022 and 2023, our numbers have been affected by that, less profitability and affecting the margins. The situation to then is that -- today is then that we have adjusted for this. We have chosen to have a setup to be able to take on new businesses in China. Here, we have some historical numbers for Medical Solutions. The latest 8 quarters in the graphs showing sales, EBITDA result and EBITDA margin. We have had a situation during this time period still affected by some COVID-related inventory adjustments in some of the market areas IVD and surgery. We have been able to improve our margins quarter-by-quarter from end of 2023. We ended the last quarter with 11.2% in margin. Moving into Engineered Solutions. Of course, the sales, the growth has been impacted by ramping down VHP business. On the other hand, as I said, we have been able to improve our margins step-by-step and during 2024, you can see it's a big jump for the margins, and we have been almost on 10% during that time period, the latest quarter is 9.2%. So that is the situation for our historical present situation when it comes to financials. Christer has earlier today, given the base, the strategies where we are right now. And hence, we have been able to announce new financial targets and moving forward towards those. Repeating organic growth exceeding 8%. EBITDA margin exceeding 12%. Return on capital employed exceeding 15%. That is our long-term goals, and it is the targets over a business cycle for all three of these. How should we then achieve reaching these targets. Starting with organic growth, exceeding 8%. We do think that we can do that in both business areas, supporting the new target. In Medical, we do expect the market to grow 4% to 5%. And in addition to that, we have the new announced drug delivery project that will support from 2026. And as we always have done, during all the history of this business area, we intend to continue to take market share and expand that part. These two, we expect to add another 4%. For Engineered Solutions, market growth, 2% to 3%, less than medical, then we have one market area of almost 20% of the business area materials, formerly EMC. We can see a higher growth rate in that area. We have been successful moving from the telecom business expanding into automotive during the last 5, 6 years. And we do see additional possibilities to new businesses within automotive. And we do see possibilities into some new market areas for that part. And Anders, he will come back to examples what we mean with these new market areas and additional technologies in that part. So a faster growth rate for that part. In addition, then for the other market areas, we expect to introduce new technologies, growing in new market areas. And then taking additional part of the value chain. These two together are adding another 5% for the rest of the business area. The other Anders, he will come back with more examples of what we mean with the value chain and some new technologies. EBITDA margin exceeding 12%. We think that midterm, we can reach 12% and adding units -- percentage units for the Medical Solutions business area and almost 2% units for Engineered Solutions. In Medical, we will continue with cost-out initiatives. That is something we are used to do. It is a way of supporting our partnership with these kind of customers. We do come up with proposals to take out costs from the value chain. And of course, the customer is gaining from that. And in that process, we can increase our margins. In addition to that, the usual efficiency work. We have something we call medical excellence that is driving that part. We do also think that additional volumes, utilization can support increasing the margins, and then the product mix. We have mentioned new drug delivery projects. We have said we will have a higher margin in that part. The two first, the cost-out initiatives and further efficiency. We do think that will come in a higher level from the North America organization. Engineered Solutions, we have adjusted the cost base in China, but we have still a larger caution that we will continue to fill up with more sales. That will support margin going forward. Growth utilization again in this area as well, combined with a mathematical increased share of the market area materials, that will grow faster, as I showed on the previous page. And supporting higher margins, we have premium margins in that area. So that is positive when we have a higher share of materials. Return on capital employed; you can see on the graph that we have been increasing the returns from a low level during the full 2024 gradually every quarter. We ended at 12.3%. And we will continue to increase that by the margin improvements, by organic growth and continue with our efficient cash management work. The main contributor to the return number will be the margin improvement. Moving over to some other within finance. We do have a strong financial position, very important, of course, to have as a base for keep on growing and doing and continuing with the strategies we have decided on. In this growth, you can see our net financial liability in the bars and the line is showing the relation to EBITDA. At the end of this period, the relation was 0.4x. So it's a low level and that will support the growth going forward. We can invest in CapEx to our new selected customer projects, we can do further acquisitions. If we do some calculations on this. We will be prepared to go up to 2.0 in this relation to our EBITDA level. We have SEK 3.4 billion in long-term credit lines, where 1.3 is utilized. So you can see we have the possibility to go up with the level of EBITDA we have today above SEK 1.5 billion yearly to this 2.0 level by using the additional existing credit lines. And moving into CapEx. In the graph, you can see the last 5 years, they are having sales in the bars and CapEx along the lines. For Medical, we have invested between SEK 250 million and SEK 550 million during this 5-year period. Medical is more CapEx intense. And that's based on most of the facilities we have in this part is our own. We do most of the production in clean rooms that is expensive. And we do have a need for further infrastructure some further automation equipment, which does that it is more CapEx heavy. Engineered Solutions has invested between SEK 100 million and SEK 300 million during the same period yearly. And together, that gives a relation to our sales in average of 5%. Engineered Solutions, the value expansion we are going to do going forward, we think is not that CapEx heavy. So combined for the group 2025, we see that our CapEx will be between SEK 800 million and SEK 850 million this year. And long-term around 5% of our sales. This year is then, of course, more. And the reason for that is that we are in the most CapEx intense year for the new drug delivery project. Working capital at the end of 2024, it was almost 14% tied up in relation to our sales. We have normalized after the favorable situation we had for the VHP business. And we think that is a normalized level going forward as well. So then we are prepared for questions.

It's Adrian Gilani here at ABG. Two questions from my end. First of all, on Engineered Solutions, it sounds like materials is quite important, both to achieve the growth target and for the margin target as well. Can you give us some indication on where -- what the situation is currently on materials is 2025 a year where it can actually reach the projected growth targets? Or is that more, as you say, over a cycle?

Let's start with this. Materials is important, and it's a good business for us, both on the financial profile, but also as an integrator of other parts of the businesses. So it's very important, yes. The second part of the question was then, of course, can it be reached in the shorter period of time. We had very good growth within materials last year. And it has some volatility to the growth numbers because of the telecom part of the business. Now we are more and more going into additional areas with new markets and easing that's the volatility a little bit going forward. But of course, it's still a portion of that sales -- a large portion of that sales is still in the telecom. We will come back to that details a little bit later. But of course, it can be achieved. We achieved it last year.

Okay. Understood. And then also the -- regarding the long-term agreement with this unnamed diabetes customer. You haven't really given a concrete profitability number on that before. But considering the return on capital target you announced this morning, can we assume it's at least in line with that or perhaps clearly above given that you've announced the investment, so we can sort of back out what the returns have to be for it to meet that target.

The returns are similar to other businesses we have, which means that the EBITA is a little bit premium.

Yes. So you had the 15% in mind when setting that?

Yes. Karl Norén from SEB. I have a question regarding the medical growth. I mean, of course, you will have a quite good growth ramp-up when you ramp up the new projects. I'm just wondering, is the 8% also target after you have fully ramped up is that you can continue to sustain that growth rate?

Yes, it's a long-term goal. And if you look historically, we have outgrown the market with similar numbers over the last 20 years, and we will continue to aim for that. And we see this project, yes, it's a milestone for us, definitely, but we have other good businesses as well.

Sounds good.

Okay. Here's a question from the online, and it's regarding if the profitability level is similar in the new materials areas for the business -- from the heritage business in materials.

Yes, we do think the new businesses have similar margins as the other parts of materials. Yes.

It's Mikael Laseen at Carnegie here. Just wondering if you can repeat what you said about the margins per segment in your new financial targets. But was it 14% for -- 14%, 15% for medical and 12% for industrial. Is that correct?

I was coming from the levels we have right now and saying that the midterm target reaching 12% would be an improvement of plus 2% for medical and slightly below 2% for Engineered Solutions.

Okay. Got it. And can you also talk to us about China, where you are there in that improvement journey after the reset in second half '23?

Yes, of course. So we have moved the production. The new facilities are up running. So we are according to plan, and we are now addressing new business opportunities to sort of utilize the excess capacity that we have been building.

Marcus, DNB. Just a quick follow-up on the net working capital. You said 14% was normalized. Could you give some more flavor going out a few years, what level could this be at?

I think we are at a level that we will have going forward as well. There might be ups and downs around that level. And of course, we will try to improve in different areas. Then we are a company in between very large customers, very large suppliers. We cannot divide from industry standards when it comes to agreed terms in different ways. And for our inventory situation, we do production based on orders. So that is really what we have in our inventories.

Any more questions? Okay, coming up.

Just one more on M&A here. I mean you have a very strong balance sheet, as you highlighted. I'm just wondering if you could explain a little bit where you seek to deploy capital, what you look at and also if you have any -- what do you have in the pipeline?

Yes. Our acquisition strategy has always been buying good companies that has a good position on the market and a good reputation, well-built companies because we are linking them together with our brand name. So that's always been part of it. Up until now, we have been focusing on building geographical footprint, making sure that we have the right customers and the right geographical spread, we feel that we have accomplished that. So going forward, we are more looking at new technologies could be electronic manufacturing, could be metals, could be drug handling, those kind of things that sort of add on to the overall delivery to the customer. So more sell to -- or value creation in that pipeline.

So more under -- more value for the customer, I guess, more under one house. So could you acquire like an EMS like an electronic manufacturing services company or?

There could be one possibility and then add it on together with our deliveries, so integrating that into our deliveries.

Okay. And are you focusing more on the medical side? Or is it broad-based?

These new add-ons could be both areas. Okay. We will come back to a question session later on the whole day. But then we would like to hand over to Kristian going into sustainability.

Thank you. My name is Kristian Sandberg, and I work as the Sustainability Manager for the group since 15 years back, I've been in various different positions, everything ranging from engineering to marketing to quality and environmental management. It's a pleasure being here today to share our sustainability development journey. And how we leverage that as a competitive advantage for the Nolato Group. I'm going to talk about some trends and drivers. There is a science-based target and the impact the Nolato Group have on the climate. The adaptation to circular economy and the society and spur today and some key takeaways from that. Science-based targets -- sorry, how we contribute to more sustainable society is to make our customers more competitive and more sustainable. We have a 3-pronged approach to do this. Our approach to production and doing this, creating the conditions that helps the customers becoming more sustainable. Our approach to suppliers to take a full responsibility for our supply chain. And our approach to design sharing the raw material expertise, the manufacturing knowledge we have from extensive and many years of experience. And we know that the majority of the sustainability impact of product is formed already at the drawing board when a new product is formed. Science-based target is becoming more and more of a norm requirement from our customers. Now more than 10,000 companies all over the world have committed to science-based targets is a voluntary framework for companies that want to show its impact in line with the Paris agreement. And this is becoming a door opener and a business enabler for Nolato to have these validated. And we got our quite ambitious targets approved from the institution from the science-based target early last year. Going into more details about that later on in this presentation. One of the most important aspect to reduce your climate impact of your own operations is to work with the energy mix and to try to optimize that. In the graph to the left on this slide is the development of our renewable electricity out of the total electricity use we have in the group. This is showing the last decades development. And as you can see, our intention and our development have been quite on a pace and we're now operating on all our facilities on 89% of the total electricity use as renewable electricity. And in Europe and in Asia, we're 100% renewable. Taking all energy sources into consideration, not only electricity, we can see that on the pie chart to the right, that there is very low percentage coming from fossil energy sources such as petroleum products, 1% natural gas contributes 2% of our total energy mix, and we have investments ongoing to replace those heating systems with more energy-efficient geothermal heat pumps and other fossil energy sources. This makes us quite easy to reach 100% renewable energy mix in our production. And one example of how we work with our energy mix is to add additional power purchase agreements. In the end of last year, we released the news that we signed a new one in Studsvik close to Stockholm, this is a new solar park that has been installed, a total production capacity of 25 gigawatt hours, and we have signed up of 14 gigawatt hours. And in combination with the already existing PPA agreement we have with Solar Park in Solna. This now contributes for 1/3 of our electricity consumption in Sweden. And the main takeaways from getting more PPAs agreement is that we continue to contribute to renewable electricity production in Sweden as well as we are mitigating the effects of volatile energy prices. The development of our Scope 1 and 2 emissions coming from 13 years back. Our current Nolato target, you can see in the upper right corner, the bars on the graph is the absolute emissions we have and the blue dotted line is the intensity, the emissions we have per net sales. And the current Nolato targets we have is to reduce the intensity with 80% going from the base year 2011, 2012. And as you can see from the green lines, we have achieved already more than 94% emission reduction. But that is intensity. Looking at the absolute emissions, we can look at the bar for 2014, for example, we can see that we had an absolute reduction of our emissions with 85% being a company less than half of the size of where Nolato is today. This is creating value for our stakeholders and especially our customers who have set science-based targets as well because this is reducing their emissions in their value chain, making Nolato an important partner for them. And how have we achieved this? Well, a little bit more detail about Scope 1 and 2 emissions. This is the science-based targets that we set up and approved last year. The ambitious target of 70% of reduction of absolute emissions going from the base year 2021 to 2030. So this is the development of the last 4 years. And as you can see from the dark green colored parts of the bar, the emissions coming from fossil-based fuels Scope 1 emissions have been significantly reduced in terms of percentage, but the vast majority of the reduction coming from the emissions from electricity use, and by securing renewable electricity directly through the electricity providers or energy attribute certificates have shown a significant reduction in Scope 1 and 2 emissions. We have some emissions coming from district heating as well. The majority of the emissions coming from district heating is in Asia, where the district heating is generated by over 90% fossil-based fuels or coal in combination, generating a lot of emissions. And with the transfer from Beijing to South of China, where district heating is no longer needed. We will continue to decrease the emissions from district heating. And in summary, we are well underway to achieve our science-based target and well ahead of our peers. And this creates a business advantage for Nolato, especially for our customers. Well, having said that, you can see that from the successful journey of reducing our Scope 1 and 2 emissions that comes with the price of being Scope 3 heavy. We have now a 97% of our total climate impact coming from Scope 3. And categorized from the value chain, you can see that 87% of these emissions coming from the upstream activities. And that is advantage for us because it's easier to actually work with your supply chain, but it needs to be done. So looking at the overall development of Scope 3 emissions, the target we set and got validated from science-based target is to have a 25% reduction of the emissions in Scope 3 coming from the upstream value chain. And we have achieved already a 22% reduction. And the key factors to that is to have a resource efficient material use. We have reduced the material use in the group as well as we have increased the share of sustainable materials. And I will show you the development of this because this is a key factor for us going forward as well. So one of the major trends for plastic company today is to transition the use of polymer raw materials from fossil-based alternatives to more sustainable alternatives. This bar represents the last 3 years development of the use of sustainable polymer raw materials. The blue part of the bar is recycled raw materials, and the use of recycled raw materials is increasing due to some of the market segments, such as the automotive, for example, but it is happening now. And it is happening at quite a pace. It has more than doubled over the last 3 years. Bio-based raw materials. You can see from this graph is increasing, but the majority of the increase comes from something that is called mass balance material. And mass balance material is a mixture of bio-based and recycled feedstocks with fossil-based alternatives in the same production system at our raw material suppliers. Allocating the sustainability benefits with certified tracking methods such as ISCC Plus certification. And overall, you can say that this makes us more competitive. It's a door opening -- door opener to new business for customers that want to go away from other materials to sustainable plastics in different forms. And as well, it is decreasing our dependency on fossil-based alternatives. A case study and the cost-out initiatives that we have been working with and a perfect example of how Nolato contributes to make our customers more competitive and more sustainable at the same time. The [ customer ] is one of the leading companies in Europe supplying office furnitures, the product Nolato is manufacturing to them is a cost box, the black part below the mobile pedestal. The starting point of this product. This is a quite heavy product, 0.5 kilo and is the product manufactured in a technically advanced polymer material, polyamide 6 with a really high climate impact. As a first step, together with the customer, we decided to change the material to virgin polypropylene, a much more simple plastic material, which with a lot lower carbon footprint. And as a step 2, we decided to make trials even with a recycled polypropylene. And that turned out well. The customer tested the product and approved it a couple of weeks ago, which means the end result of this case was that the carbon footprint of the product was reduced with 86%, just with these simple changes. You got reduced material costs, which is a nice side effect as well as 19% lower product weight due to the lower density of the polypropylene material. It's not only a win-win for our customers and for Nolato. It's also a customer for -- and it's also a success for the environment, a triple win effect. Our approach to our supply chain is to promote the sustainability, which is becoming increasingly important with the due diligence directive. We have to have a close collaboration with our supply chain and clear expectations. And by clearly stipulating our requirements to our supply chain, we make them improve and we started out an initiative last year, giving our suppliers three different badges for their performance in one of the badges, climate committed if they committed to science-based targets to follow the Paris agreement, a green energy supplier, meaning that they have over 50% of the energy mix coming from renewable sources. And a responsible supplier badge showing that they've assigned our supplier code of conduct, and they have been assessed by EcoVadis. And these three different badges is transparent and visible for all our procurement teams, all of our group companies, making it easy for us to select the suppliers who performs well into these areas. As well as it is a win-win situation for the suppliers because they know that if they perform well into these areas, they are gained new -- they are gaining more business with Nolato. A trend and a future approach is to transition from a liner economy to a circular economy. That means to reduce the use of raw materials that is ending. And this is creating new business opportunities for us in different phases of these strategies. Starting with the dark colored green part of the circle, we start with -- we have the -- we reserve the right to refuse any business that don't go in line with our sustainability expectations. For example, business that is a product manufactured in hazardous material. The most important is to reduce the resource studies used for a product. And that's the phase in the design phase where you can do as much as possible to reduce the environmental impact of a new product. The light green part of this circle is in the use phase of a product. And that is about extending the product lifetime. So for example, the -- for repair, it could be a complex product consisting of 100, 200 of different components, which you could repair Nalotical manufactured components and assemble back. It could be a refurbishment to add new functionality in the product, sensors, for example, or to remanufacture products to disassemble a product integrating the whole components again and manufacturing the discarded products. This is making us new business opportunities all over this circular economy approach. And the intention of this is to avoid the outgoing red arrow, where the products are ending at the wrong places are burned with energy recovery or as the worst example, landfill or ending up in places where it shouldn't be. So some key takeaways from this presentation. Nolato is an innovative sustainable solutions partner for our customers. We are making our customers more competitive and more sustainable at the same time. The resilience in our business model is we can continue to operate in a net 0 environment. We have the infrastructure. We have the production equipment robots; we even have the tooling to be able to run the production with sustainable raw materials instead of using fossil-based alternatives. The transition to a circular economy creates new business opportunities for us and we are adapting to that. We are a solid reliable partner with responsibility for our full supply chain and plastics is a sustainable material for the future. Thank you, and I'll leave over to Mr. Glenn Svedberg.

Hello to all of you in the room and to you who watch us online. I'm Glenn Svedberg. I'm responsible for our global technical design centers and I hope you will find it interesting to learn more about that today. I've been with the company 18 years in different roles, and I've been in the executive group management since 2021. The ID today is that I will guide you through the purpose of having a technical design center, some of the general technology trends, our capabilities in this area and finish off with a couple of examples to highlight this. But let's first start with what really TDC is about for Nolato. We are a business enabler it's also really a differentiator when you look at some of our peers in the industry. And how is this happening? Well, it's the -- it drives new business opportunities, where we work hand-in-hand with sales in order to get access to new areas within the existing accounts or attracting new business to us when we market our engineering service capabilities. It also creates a stronger relationship with our customer because we get a much wider contact surface with the customer. It's not only purchaser speaking to salespersons. We open up and have engineering team collaboration. This is making the relationship -- walking away from a transactional business into more of a partnership approach, which is really strengthening the bonds between us and our customers. And finally, it also increases the value add in our manufacturing services, which is the bread and butter of what we do. And I have one example of that in -- later on in this presentation. So these are the values for Nolato and why we do think that having a global technical design center covering all the market areas we operate in is a great ID, but there are also customer advantages. Instead of going to a traditional consultancy firm and having to potentially redesign things, actually, they get the same package with us. We can be both their competent engineering consultant as well as the manufacturing services partner. And with this, they get fewer contact points. It makes their communication easier, and they have only one responsible partner to deal with. Hopefully, we can bring the manufacturability aspects to the table at an earlier point in time to avoid some of the iterations and the redesign loops, which altogether would provide a shorter time to market for the customer. But the ultimate purpose of TDC is really to help the customer innovate with fast time to market. When we ask the customers, what is the most important and top three factors to remain competitive when it comes to product development. And they highlight product innovation for sustainable solutions, reducing time to market and to have an efficient product development and manufacturing. So at Nolato, it's really how do we can support the customers to get from ID to reality. We don't just innovate. We actually reimagine. So we can combine safe medical devices with fast-moving consumer products. And what the technical design center really do is to seamlessly infuse a design concept with our manufacturing expertise. So in simple words, transform an ID into reality. Moving over to some of the general trends. They are not unique for us, but they have impact on our business. So products, they get smarter, the devices get more powerful. The connected -- connectivity of our products is also increasing, as you read about daily, and that drives the needs for antennas and shielding. It's also been proven that electrification is the fastest route for society to reduce the CO2 footprint. And all of those three points is also strengthening and increasing the electronics integration in products across different market areas. Adding to that is the miniaturization of products that makes our design for manufacturing more complex and also the ability to have a larger amount of products because you miniaturize them. The last couple of years also sustainability has got a seat at the table. So the ecodesign principles is something that is taken into account from an early stage of product development project. So that is also a very strong trend as we heard Christer also mentioned earlier. So at Nolato, we have a global footprint, and we are actually mirroring that also when it comes to the technical design center. We have four offices, two in the U.S., one in Europe and one in Asia. That is ready to support customers in any project globally. And also as we are a decentralized company where we interact a lot between the technical design centers and the individual sites, we have a combined total resource base of some 250 engineers that can support our customers. The business model of Nolato is really to be -- to have an end-to-end customer offering. And even though we prefer to enter as early as possible in the project because then we can add more value to the customer. The core competence of TDC lies really in the definition phase where we can help customers make the proof of concept. And we can take this very often subjective user requirements and translate those into more concrete and tangible product requirements in support of the development project. And then when we move into the development phase, we can really use our core expertise in terms of design for excellence, design for manufacturing, design for assembly, design for test, design for environmental, et cetera. And robust design is the output that we request from those activities, and I will come back a bit to that later on. We later on can help the customer to qualify both design through a verification, but also the whole manufacturing process through validation. And then we tend to cooperate close between the technical design center and the target site that will receive this business in a joint collaboration where we prepare for high-volume production and do the industrialization together. For some customers, we can also support that have an interest in that post market activities. It can be regulatory, quality work, it can be supply chain efforts and related services. In parallel to this, over the last couple of years, we have heard the ecodesign principles also getting ground -- gaining around. And we can help and support customers in the choice of material in selecting the right grades with the right feedstock and use our digital tools for the design for manufacturing, not only to improve the design, but also to reduce the footprint of the product. And also the assembly method, looking at the product life cycle of a product will have an impact to this. If we look at the combined capabilities, we have in this area between TDC and our sites, and the new project is coming in from the left-hand side here. We can create value, and we do that primarily by clustering our services in five different buckets. The first is about tooling, where we can bring our experienced mold engineers and make sure that they are setting the right tool concepts together with the mold manufacturers and have the right mold design and we also project manage that whole process, which is crucial in order to meet the time-to-market requirements. So we can -- regardless whether we source the tool externally or if we make it in-house in one of our three toolmaking facilities, we can still have an overall responsibility to drive that project management. The next is the design phase, where we I already mentioned the robust design and design for excellence features, and we can do things like virtual prototyping and simulation. And I will elaborate a bit about that later on. But we can also help develop test methods for final test procedures and really some of the early day experience we had from the mobile phone business. where we have quite substantial testing. This is also something we can do for other market areas and replicate that knowledge. I already mentioned the ecodesign supply chain, it's about supporting our clients with the products we don't do in-house and through the global network and our global purchasing function, we have a commodity management on that. Of course, being in the forefront means that we will need to look out for new technologies, for new processes and for new materials. Using scientific molding is one such feature where we can also train our process engineers in the individual sites in our training centers to use this mythology. And of course, we want to add new technologies to our already extensive process library as well as look at new technology introduction and importantly, also search for and scout for new sustainable material options. Last but not least, automation is a key to remove labor operations, where it really doesn't -- is beneficial to have that and also to increase quality and output. Automation is gaining ground. And we can help both design to write the user requirement specification to procure and verify the wholesale for automation before we put it in our factories. So it's really about blending the manufacturing expertise with our design expertise to make sure the customer gets access to the total combined powerhouse of all the engineers in order to be successful in our later industrialization and launch. Our virtual factory, it's something that I will try to give you a general description of what that means. It's not just about having a digital twin or make an individual simulation of a component. It's about putting -- pulling together a number of digital tools in the right sequence in a clever way to make use of technology in the best possible way to support our customers. And the first step is really to look into the design and the specifications. We look at the 3D CAD drawings together with the customer, we can make a full dimensional analysis of those parts at the -- in the computer, and we can optimize specifications. We can say it's not one size fits all when it comes to tolerance settings. We will modify it depending on whether it's a crucial area or not. And by this, we cannot just have a deeper understanding of how the product and functionality really works in this case. It also allows for easening up some of the tolerances to have a lower cost of manufacturing. So we really focus only on the hot topics where it is a potential issue for the functionality. The next step is to really take a data-driven mold design approach. So our experienced mold flow mold technicians and mold engineers, they look at the tool concepts. They use the computers to make iterative process to check at what is the right gating position, how should we have the cooling, and they make the finite element analysis to really make the optimization of the component to have the right tool strategy and the right concept from start before we start to cut steel and make the product -- and make the tool. The next step is really to use these small flow simulations and put them together and optimize the part design and refine it further because you can do a full dimensional evaluation still on the virtual product before you have it physically in your hand. And that can also in a dialogue with the customer help to improve the design further. For example, when you assemble simulated distorted component with another. You can see where you have the potential design flows and the risk areas that you need to iterate the design further. Finally, we start to get ready for reality. It's about preparing a measurement program for the finish product, and you can actually also perform a design of experiment where we can elaborate and try different parameters of our manufacturing process in order to check where it's the most safe harbor and define the process setting that is needed in order to get a robust product in the end. So with all these things, we have had a quite structured approach, and we worked very collaborative close with the customer in order to reduce later potential mistakes. And get things right the first time. You can read more on our website about this, but I wanted to demonstrate the value by showing a customer case. In this case, it is a drug delivery device. We work together with the customer, and it involved 14 different plastic components. We use this methodology throughout the process, and it was 440 individual dimensions that we measured on these 14 parts. And it's pleasing to see that 100% of them were right first time out of tool, which is very impressive compared to how we have worked historically a long time ago. It's less than 1% only four dimensions that we had to make a fine tune of to get into the well-centered nominal value. And it really also strengthened again, the partnership with the customer because we work very close together with them. And in the end, you get a time and cost-efficient development and also meeting the strict quality requirements. On the right-hand side, you see a customer testimonial. I will not go through that, but it kind of reflects that the customer felt very comfortable with having us as a more or less an integrated partner, embedded engineer in their site to throughout this project. and that we have the needed know-how to support them in this project to also get to an accurate result in the first time is really good and pleasing. So this is a good example of how we can do it. Another way of summarizing the drivers and the benefits of using this method, I'll try to do here. The most important thing is really to eliminate variables to instead of slowly tune yourself into the right values, you do the work upfront to make sure you have a safe and robust design when the -- first time when it comes out of the tool after having done it virtually. You also get the early assessment of the manufacturing requirements. So the site can be prepared on how to run these products. And quite importantly, you would think that the customer have a genuine understanding of their products. But of course, devil is always in the details. So when you look under the hood and really goes into the nitty-gritty details, you learn new things by using this method and that's really useful. So with all of the above that -- it makes it possible for us to achieve a shorter time to market. Also, the environmentally friendly designs because most of these simulations that I talked about will not just support that we get things right and that we optimize the design from functionality. It also allows us to optimize the actual resource usage for the product, primarily by reducing weight and eliminating materials. So with all, you get a very cost-efficient execution. I wanted also to come back to the point of increasing value, how TDC can do that. And we'll demonstrate that by using this example. If you look at the left side of this diagram, you can see original RFQ. It's the first time we got the referred for quotation from this client. We went through the products, and we quoted a kit price of roughly $10. And by having TDC involved looking at what our array of technologies and services that can be relevant for this product together with the customer. And we worked through that in a number of iterations to see what could be made by Nolato what could be sourced externally and what could potentially be assembled as a submodule in order to give greater value to the customer. And when we were ready to start off this project, actually, we were already at the kit price of a little bit more than $24. So more than 140% increase of the value that we can supply to the customer in this case. And it's not just about increasing the value. It's also reducing the total cost for the customer at the same time as it allows Nolato to increase our margin in absolute numbers. So it's a great story and an example of how we can do it. I've talked a lot about virtual reality -- sorry, virtual prototypes. I talked about simulation. But in the end, it's really about having experience also in reality. How does things work when you really start to do it in your factory. And then we have the great position at Nolato to deal with different market segments, market areas, and we can make a cross-fertilization between these. So we can use the knowledge we get when pioneering medical safety, high-volume precision manufacturing with what we do in Engineered Solutions, complex resin-based products, crafted for resilience and scalable cost efficiency. Topping that up with what we can offer within materials to have EMI and EMC, and thermal management options will only add value to the party. And very often, you also tend to forget the soft factors, but to really drive the project management of this and have highly skilled engineers that have the in-depth knowledge about how to scale this up from a concept based to high-volume production is one of the key factors for us. So to project manage this is really crucial, and it's something we can carry all the way from the concept to the high volume. So in total, we think this demonstrates that Nolato is a company that can develop and manufacture advanced components, subsystems and ready package products, including integrated products to get a complete product in the hands of the customer. So I will actually finish off with just putting the first slide back because this is the kind of key takeaways that I would like you to remember how our technical design centers can build value, open up possibilities for new business and create a stronger relationship with our customers. Thank you. I think we now have a coffee break. 15, 20 minutes, and we will start later on. Thank you. [Break]

All right. Welcome back, everyone. I hope you got some coffee and some snacks to that as well. Now we enter into next part where we actually generate the business and make things work. So myself, Johan Iveberg, I'm the President of Medical Solutions since 2016. I joined the company 6 years earlier as a Managing Director for one of the Swedish medical customers. So all in all, almost 15 years in the company. The agenda for this session is I will have a quick update on where we are with Medical Solutions in brief, then into our offering and some deep dives in some offering and products that we are producing in some of the product areas. Some trends and drivers on the market and then more into the future and the overall strategy and how that links into the overall strategy for the group. Some priority areas for this year and then some important key takeaways from this session. All right. Medical Solutions. We have, as you can see, have a very, very strong growth over the years, mainly organical growth, but on top of that as well, 7 successful acquisitions that has also contributed to the overall growth. The last years has been a little bit different in the medical or health care area. There have been some volatility in some of the product areas such as the surgery and a lot of elective surgery had to be postponed. And that made not a full stop, but a stop in the surgical device area for us. That when the vaccine entered to the market that took off again, and then there was a huge backlog and the demand were very, very high. And then when that got normalized, again, inventory levels were at a very high level in the supply chain. And we have been suffering from that for a year or 2. And we still see that inventory levels are on the high end in the supply chain. Hopefully, that will normalize during this year. IVD or diagnostics had exactly the same but opposite. When COVID hit, huge demand on consumables for -- mainly for PCR tests. And all countries tried to buy whatever they could buy. So the industry boomed. We produced max capacity in all our sites producing consumables. And we sold everything even it was not COVID related. And that has also been -- and that actually was a higher impact than the loss in the surgery. But that has also been impacting us over the last years with low volumes in the IVD that's catching up again. Last year ended up at 10.8%. That is still below -- well below what you heard earlier today from Christer and Per-Ola, meaning that we will increase that profit margin over time. Medical Solutions in brief, growth with increased profitability. That's what we are going to do. And that was clear as well when we presented the new targets today. We have a very strong position with most of the leading big pharma and medtech companies globally. In fact, we are very, very proud and happy to have that customer base. And we more or less have the customers already that we need. We just need to dig deeper into the pockets and increase the share of wallet with these clients, customers. We offer new product development through TDC and through our sites and as well world-class manufacturing from our 20 sites globally. Competitors, there are several. With the growth of Medical Solutions, we are now one of the bigger players in the market. Looking at our footprint, you have heard that earlier today, we are very well positioned in U.S., in Europe and in Asia. And more than that, in Asia, we are in China, and we are outside China. In Europe, we have several manufacturing sites, both in the Western part of Europe, but also in East Europe, adding low-cost capabilities. And we are right now expanding both of those sites in Poland and in Hungary. U.S., a very good footprint since the latest acquisition of GW Plastics, but as well, we can offer low-cost manufacturing from Mexico. So all in all, very good footprint, enabling growth with global pharma and medtech customers. And it has been quite some journey. 20 years ago, there were more or less just 1 dot in Sweden, and we have been growing the business to SEK 5.5 billion in 20 years. Summarizing the business area, we have actually more than 70 years of medical experience, but it's the latest 20, 24 years -- 20, 25 years when we actually have been focusing and growing the business. 20 production sites worldwide. As an engineer, you like to talk about machines. We have more than 1,000 injection molding machines globally in our manufacturing sites. 100 assembly lines, and that is a growing share of the business when we add more value into our deliveries with subassemblies and final assemblies and full box build products. 4 TDCs supporting new business, existing business that you heard Glenn expand. And that team is actually some of the world's best engineers that we have in-house as well as we have great relationship with all the high, I would say, high-tech mold shops in the world. 2,500 employees last year, SEK 5.5 billion sales and a growing footprint now exceeding 150,000 square meters in these sites. Then to our Medical Solutions offer. And the first part is end-to-end offering, where we offer help from early design stage through the chain all the way to qualification, industrialization and full-scale manufacturing. We engage with TDC and the local sites and help the customers to perform during this process. And this could be a new drug delivery product, for example, a new auto-injector or similar. Normally, longer lead times. It's not unusual with at least 5 years of lead time, but actually, it could also be up to 10 years in the long project phase before actually the product reach the market. The next one, manufacturing service is more linked to the outsourcing transfer, capacity extension with existing and new customers. For example, what we are doing now in Hungary, we extend capacity to an existing customer and are investing in new equipment and new capacity. And we do everything from components all the way to subassemblies, full assemblies and complete finished device box build and ready to ship to distribution. The last part of our office -- offer is platform products, our own products. It's a small area. It's less than 10% of our sales. It's in pharma packaging, in breathing balloons and some other small lab assortments. This is an important part, supporting the rest of the business, but always without competing with our customer, which is extremely important. Looking into our focus market, and you can see there is an increase from the year before in the share. We have been growing base business, but we have also been successful in gaining new business in this area. So it's a fast-growing area for us. Cardiology, it's a stable area with high profit. Pharma packaging now is just above 10%. And we have changed the product mix. We have phased out commodity packaging and now focusing more on high-end pharma packaging. The drug delivery segment or market area is another very important area for us, growing and will grow even more going forward, 16% of our sales last year, increased from 14%. And there, we have all kind of different auto-injectors, pen injectors, drug delivery systems. I'll come back later today on that as well. The surgical part, it's the largest area for us, but you can also see it was 22% last year, which was a decrease from 2020 3 linked to what I said earlier about the supply chain challenges and high inventory levels in the supply chain. Continence Care, important segment, the legacy segment for Nolato, very stable growth and important for us. The other segment covers more or less everything else we do, and that is 15% of our business. Some more deep dive into what we actually do in some of these important product areas. And the first one is drug delivery. And we offer solutions with our TDC from -- into development from early stage to full-scale manufacturing. There are some growth drivers in this area. One of them is new drugs being developed, bio-based large molecule products or drugs that need another form of administration. You need to inject these drugs, you cannot take them as solids. So therefore, we have developed a lot of new injectors for these kind of that is changing the market, extreme growth for these drugs related to weight loss. And there are 2 big companies in the world now fighting for the market. And we are in this program as well with expansion in Hungary that is for weight loss products. Some of our customer examples, you can see here, Roche, Sanofi, Novo, Pfizer and so on. We are working with the big pharma globally. Diagnostics, another important area for us where we supply as well the big diagnostics company globally. You can see a movie up in the right that is actually showing one of our manufacturing lines here in Sweden or actually there are 2 lines. It shows the complexity of these products, it's consumables for diagnostics, very, very high volume. And this is a growing area, and we are mainly focusing on the consumables side of this, pipette tips, reaction vessels and everything else that is needed in high volumes. And then medical device in general, I mean, we supply numbers of different medical devices all the way from components to finished box build devices. A lot of focus in surgery, of course. You can see in the middle here, that is a robot that is doing minimal invasive surgery. That is a growing area in the market. It's an important area for Nolato where we are engaged and once again, on the consumable side for these kind of systems. But we are engaged in a lot of different products. You can see as well on the far right, another product that is a revolution for the diabetes patients. It's continuous glucose metering, and that is also blockbuster on the market. That's really changing the life for people with diabetes and as well parents with kids that has diabetes. We estimate that the total spend in the health care system globally is USD 1,700 billion, it is huge. Then the medical device side of that is roughly $500 billion. We believe that our addressable market is around USD 6 billion to USD 7 billion, giving us a market share of 1%, meaning that it's very fragmented. We are one -- we are a big player in the market with a market share of 1%. On top of that, we are growing and the market will grow with 4% to 5% every year going forward. Some of the important trends on the market is that it's driven by consolidation. It's driven by demand for -- to lower health care costs in general. There is a drive for global supplies. The global pharma, the global medtech, they want suppliers like Nolato that can supply globally. Long product life cycles, we heard earlier today that they are getting shorter. But in the medical field, life cycles are often 20 years or actually even more. And it's a stable demand and the high barriers. So if you get the business, you have it for a very, very long time. We see growth potentials in diabetes, weight loss combined with the GLP-1s and in general, drug delivery devices as well with IVD and cardiology. Those are great fits with the footprint we have today and the technology we have. There is also a small but growing interest in connected medical devices. It's still a very low portion on the market that's connected. In the middle, you can see the market, the different segments, and you can see the size of them. In vitro diagnostics is the largest, and it's also the largest -- the fastest-growing segment. Some growth drivers, globalization, we mentioned that earlier, more people get access to medicine, more people get access to health care globally. Chronic diseases, new drugs are coming out on the market to treat chronic diseases. The aging population, I talked about that earlier in combination with the lifestyle that adds on to spend in the health care sector. New therapies entering the market and then a good example of that is the GLP-1s. That's really changing the market with huge, huge volumes. Home care, pandemic, hopefully, that will not happen again, but for sure, it most likely will. Some negative drivers pushing it down is, of course, generic drugs, making the health care system to reduce the costs. But to be honest, for Nolato doesn't really care if it's a generic the public cost awareness of high health care costs is pushing it down. Some other business trends, localization, clearly pushed by the COVID when we realized that we couldn't supply or our customers couldn't get supply or the health care system couldn't get supply from the different regions. So there is a slow drive into this, not the pace as everyone talked about in the beginning, but it's happening, especially across U.S. to Europe. The reshoring from China was also a lot of discussions of that. We have not seen a lot of examples of that actually happening. Again, going forward and our focus into our attractive areas where we think Nolato have an excellent fit. And one of them is, again, diagnostics and IVD. It's a high-volume market. It's a profitable market, and we supply everything from components to full box build products ready to ship to distribution. and it's also a growing business or high growth in that segment. Drug delivery devices, also medium to high volume with high profitability, depending where you are in the value chain. The closer you come to the drug, the higher profitability. That's why we are trying to move up the value chain and reduce just not only producing components and supplying components. And then the medical device, the rest of the medical device, it's a mix. In the low end, there is a lot of commodity products. We are trying to get away from that and climb the value chain as well into more value-add finished products, box build. And there is, of course, as well, which we call the niche technologies and that's low volume but high profitability. And a good example of that is for long-term implants for pacemakers, where we have a very good position. Auto injectors, pen injectors are together with IVD, expected to be the fastest-growing areas until 2030. And on a device, once again, the CGMs that is really driving growth on this -- with this kind of products. So where are we? First of all, we have -- we are -- we have a global solution. We can offer these on all 3 regions. On the medical device, we are climbing the ladder and adding more and more value such as clean room manufacturing, different kind of post processes. It could be decoration and adding metal or whatever into the product, full and subassemblies all the way up to full box assemblies, including electronics or including other services as, for example, sterilization. On the drug delivery side, we are transferring as well from component supply up to more value add. We are supplying subassemblies and full assemblies. However, climbing the next step into drug handling will -- it's a huge step. And it's also something that the big pharma companies want to be in control of. They want to own the drug. They need to be in control of what's happening with it when it goes out to distribution. I think that will change, maybe not on the big pharma in the next years, but on the smaller pharma companies, we get some inquiries to support in this. So we are climbing there as well. On the diagnostics side, I would say we are one of the largest player in the market. We have climbed all the way to the top, starting with the acquisition of Nolato Treff in Switzerland some 8, 9 years ago. We have spread that technology to different sites in Europe and as well to U.S. and most likely over to Asia as well at some point. It's a very good segment, high volumes and good profitability. All right. Looking forward and on the strategy, our directions, I said earlier, we have the customer base we need. Of course, we like to add more as well, but most we need to increase the share of wallet with the existing to get more of the business that they have and as well be part of the growth of these successful companies. We will expand our offering into embedded electronics, full contract manufacturing and possible drug handling. Medical excellence, Per-Ola mentioned that earlier today, is vital for us, and that's our production system to make sure that we are combining lean principles with the high standards in the medical field, making sure that we deliver the right quality in time at the right cost. Our areas for the future is, again, drug delivery devices, diagnostics and complex medical devices and for contract manufacturing. And the last point here, value chain expansion. Christer mentioned earlier on possible acquisitions, and we see potential in that both in North America, Europe and Asia. Priority areas for this year, expand current and win new business. We saw the new growth targets as well this morning. And we will need to dig deeper again into our customers, increase share of wallet, focus on business development and cross-selling between our sites. Profitability will increase. We work on strategic pricing. We also work on the product mix to try to phase out commodity products and instead add more value-add and high-valued products into the system. And again, cost efficiency. Value chain expansion, try to get more of the value outside what we do today with the existing customer. With the new structure of Nolato, we have excellent opportunities to work with Engineered Solutions to sell our complete offering acquisitions could be a quick way to get into this as well. Lastly, again, medical excellence, medical quality culture is crucial for us. Everything we produce will end up in a patient, delivering drugs into a patient or needed at the surgery for some reason. So everything that leaves our facilities has to be 100% correct quality. In that environment, we are working with lean improvements, driving productivity year after year after year. Finally, key takeaways from this presentation. We are a leading full solution provider with a unique global offer with local service in a growing market. We have a global footprint with presence in all strategic medical regions with strong customer relations. And we will grow the business with profit with targeted global pharma and medtech customers. Thank you. And by that, I leave the word to Anders Bjorklund.

Okay. My name is Anders Bjorklund and I'm heading up the business area Engineered Solutions. And I am the new kid on the block compared to the previous speakers today. I have only been with Nolato since January last year. So I have an experience from several different multinational companies and some private equity companies. But my last experience was 10-plus years with the Sandvik Group, and I was involved in the IPO of the company called Alleima as the MD for the Kanthal division. So I will talk about the Engineering Solutions in brief today and what is our offering and how does our -- what is our strategy or our way forward and what is the priorities for 2025. So Engineered Solutions has a little bit more bumpy development compared to Medical Solutions. Since I joined, we have done the ramp down of the VHP business. So a lot of work has been circling around stability and working with profitability for the business area. We have now created a solid platform for accelerating growth going forward. And with the stability and the stable platform that we have created, we have a solid foundation for also improving the profitability going forward. 2024 ended up with an increased share of wallet and a better return on capital employed. So looking more into the short-term actions, what are we doing in 2025? Of course, we need to expand our current business and go for new business. We will do that through selling the complete assortment that we have within Nolato. We will utilizing both twin sales, what we call, which is actually areas where we have been for many years with maybe only 1 or 2 specific customers, okay, what more customers can we actually address with the gain knowledge that we have got over the years. We need to develop key capabilities to realize the long-term strategy to climb the value chain technologies. We need to expand our footprint in these hotspots that we talked about earlier, Southeast Asia, Eastern Europe, Latin America. And of course, we need to work with the basis for Nolato, which is the operational excellence, which is improving our productivity every day. So what are the key takeaways for Nolato Engineered Solutions? It is we are a leading full service provider, and we have a unique global offering with a local presence in our entities around the globe. We have a very strong market already today. We have these 5 market niches and the sub niches below have strong market growth. And we will focus on value chain expansion, which means going for more assembly business. Thank you. And now it's Anders Ericsson, our Head of Materials.

Hello, everybody. Good afternoon. My name is Anders Ericsson, and I'm responsible for the material area within Nolato Group. I joined Nolato in '99, and I've been MD since 2006. And I would like to go through our material today. We have been growing the business over a number of years and started out with business around the telecom business in Sweden, in the Nordic countries. And then we developed a business, expanded into other areas like moving over to Asia, to the China side with the Huawei, CT business within the material areas. And first, maybe I should explain what the materials is. It's EMI material and thermal material. So we are developing material, our own material, which are based on silicon and it can withstand very high temperature. And of course, it will conduct and achieve a shielding solution and transfer thermal material, thermal heat away from the components. And we are developing the material in Sweden, in Hallsberg, and we have a very strong engineering team in Sweden, where we have all the development, and we make all the material in Sweden. And then we are applying the material into applications later on, of course. The sales last year was SEK 752 million, and we are roughly about 8% of the sales of the group and especially in the 3 continents. We are -- sorry, we have been able to grow the business through the expansion, as I mentioned before. As I said, we started off with the telecom and moved into Asia to the telecom business like Huawei, CT, and then we moved on to Samsung in South Korea and finally down to the U.S. with Motorola. So we were covering all the network business. And I think that we achieved a very, very high share of the content within our segment. After a number of years, like 5 years ago, we also entered into the automotive business. And there, we had a chance to apply our material into the new generation of automotive applications which have been a very strong growth, and it will continue because they all need our type of solution within the cars. We acquired 2 companies, one in U.S. to be able to meet the market in U.S. And we also acquired one company in U.K. to be able to reach the European market. And from a competition point of view, of course, we have some strong U.S. guys and some Chinese who wants to copy us. I think from the U.S. side, I think in China, we have a very good position because we are a European company, and we are well established and quite neutral. So I think it's a good safe position for us. Now I just would like to give a short video about our applications. So we are making compounds. We are making materials. And the materials will be applied either like wet material or like solid rubber parts. The wet material can be done by our partners. We have roughly about 80 partners around the world, and the rest of the materials is done in our factories around the world. Okay. Let's look at some of our applications. Automotive. In the Automotive, you have different type of units like an ECU. you have a box and you have different compartments, and it needs to be shielded. And there you can use like Trishield. And you also need to protect it from outside. So you need a gasket, which can withstand environmental ceiling, like water. You also need to make sure that no radiation is coming into the box or out. Finally, you apply a PC board and on the PC board, you have a lot of components and the components need to have a grounding to be a -- to make sure that you have less shielding issues. You also need to apply thermal material. The new generation of components is generating a lot of heat. And you need to transfer wave a heat to be able to prolong the lifetime of a component. The materials can be supplied in different ways either like pads or like fillers. So this is what we're doing and my team in Sweden are developing, and it's our products, which we control and we are developing them the whole time. And I would say we are very good at it, and we have achieved a number of patents within this field. And as you can see, we are today supplying to quite many leading companies around the world. And what I would like to highlight is that we have a number of companies, as you can see in Asia and also some in Europe and some in U.S. So once again, I would say we are quite well established within the 3 different continents, and we can supply locally. And just take 1 example from, let's say China, may be some questions about BYD or NEO, the cars, which you can see on the European market and Swedish market today are expanding a lot. And from my point of view, we are shipping to them in China. So if they're going to grab a quite big share, fine. We're going to have a good supply to them. And also, if you see the rest, you have a lot of players in Europe, like Bosch, or they are also a big customer within this field for the electronics, once again, infotainment system, where you touch in a car, you have a radar system, that's where we apply our material. We have some small value, I would say, in general in the components. We are supplying in different type of shapes. Of course, you have a dispensable material, which you could see earlier on the robots. And then you have molded. We use the molding machines. We apply the material and then we injection mold them as you can do with plastics. We have small grounding pads because on all the shielding -- PC boards you need to shield and you need to ground. Otherwise, you're going to break the electronics. So usually you have small rubber packs or maybe some metal springs. And again, the thermal side, you need to add some thermal material on the components to make sure that you can transfer away the heat. And extruding and molding, you always need to protect them from water to make sure that electronic doesn't break down. And you -- we're going to see in the cars in the number of years, it's going to be some electrical issues with some of these ECUs. Where are we selling today? The automotive segment has become the biggest market today for us. The telecom is the backbone of our business because they have been driving us for the development. And today, we have 5G. We have been on the journey from 2, 3, 4, 5G. Now the investments in general for the 5G have been on hold a little bit, but everybody in our life like Nokia, Ericsson and the network guys are preparing for 6G. I think they're quite well prepared. We have done a number of test beds to be able to test and verify the next generation and the 6G, what they predict, it will start '28, '29 depending on the demand. I think it needs to be more demand. Quite many of the subscribers are happy today with the performance. I mean, we can read our e-mail, we can read, watch TV and Netflix or whatever. So it's working. It's no problem. The capacity is there. But for self-driving cars, et cetera, we need more and also for Internet of Things when you need faster speed in the factories, you need the next generation. The new markets is markets where we are chasing what is coming up. For example, data centers is an example. NVIDIA is an example of a customer, which needs our material to shield and once again, to protect the components and generate a better lifetime for a component. And AC/DC, as soon as you switch from a car, if you charge it in the house, into the car, you are going for AC/DC, you need shielding. So we're going to apply a small gasket there. Market by markets, we are facing great possibilities also within the aerospace defense business because it's growing. We have operation in U.S., which are focusing on the U.S. market, of course, and then we have the team here in Europe, who is chasing the European side. And the shift, some people might ask, is it the same demand in the automotive business for a combustion car or an electric car. They need all of this advanced system. But of course, the electrical car needs a little bit extra of shielding and thermal. So it will play in our hands for the future. If you look a little bit into the network side, you have the big players. You have Nokia, you have Ericsson and Huawei [ XT ] is, of course, blocked for some part of the world. But now at the present time, you can see some new players are coming in India. We're talking about something called ORAN, Open Radio Access Network. That's a segment where some players want the next generation to be open, so they can play and plug, so they can buy an antenna or a radio unit from someone, and they can combine it with different suppliers. It's happening. We have been established an operation in Bangalore to make sure that we can meet the new customers down there. Example is [indiscernible], 2 players, which are quite new in this field. And of course, they are struggling with ramp-up but we are there. We Are supplying them and we are supporting them to make sure that we can catch the next journey. And of course, the defense business as the situation is today, we're going to see more spend in this market, and that will grow. Negative drivers, what can happen for us, a lot of the devices are getting smaller, which makes them contain less of our material, but at the same time, they're getting more and more devices. So that will level it out. As I said before, I think we are in a very good position because we have a global supply possibilities in a different continent. A little bit into the telecom. As I said before, long experience. We're also making the tests for 6G. Another interesting area is, of course, the satellites. Maybe you guys have heard and reflecting about Starlink, which has some power now. Maybe it will change in the future about the network business, but the satellite, the Starlink is coming into the play a lot. We are shipping a lot of material to Starlink guys. And we have done a lot of development together with them. The difference from myself or our team compared with the big competitors we have, they are not so flexible. We are more flexible. We can adjust our product and fit to the needs they have. And this is an example where we have gained a nice business. Radio units, of course, ORAN is an example and then wireless in general. Automotive. Now, of course, it's growing. We can see that we are well-established in different continents. We are at many Tier 1 levels. And you can see on some of the application at the table over there, we have some new devices, what we call central computers, ECUs, of course, Electric Control Units and nowadays moving into the central computers, which is going to be a very powerful device. And I think a lot of this new generation of cars will have this central units that is coming along very fast and they are powerful that means they need shielding. They need thermal material, which are quite nice. Onboard charging, as I said before, cameras are also generating issues regarding shielding because there's a lot of data, which will be transferred. So this is examples where we are -- we're also trying now to move our technology into the commercial vehicles. We have a product life cycles within the passenger cars. And we want to prolong it into the commercial trucks. And then we also have an example for thermal material on the bench there, where you can see thermal material, very big ones for the next generation of Volvo Trucks. Aerospace defense is, of course, radar and instruments and you need very good shielding also on the ships because they are far out on the sea, and they need connection from the satellites, long distance. So application for us, we have the whole range of products, which you need in the defense business, and they are specified according to the UL -- sorry, according to the U.S. standard, mill standard. So we are a number of players in U.S., which can ship into the defense business in U.S. Recently, we have signed an agreement with one of the largest OEMs in U.S. So that opened up the doors. So we have a chance to become closer to OEMs and make sure that we can set the standard. We have our products, and we have our technical data sheets, and we can be able to build moats around our products. New markets, early involvement. We want to be there to be able that we can be involved and set the terms and conditions for the future, be on the drawing. So we put a lot of energy to identify these type of markets, and that gives us a good -- hopefully, a good organic growth within these segments. Okay. What are we doing 2025? Of course, we're chasing new business. We are looking for new business. And of course, we can look for twins, so we can copy our skill and knowledge from one market to another market. And we can reuse the technology from one customer to another customer. And that's a way to make it quite fast and also quite simple. New markets. Of course, we are working with account-based marketing on the Internet and mailings and so on, and Starlink is an example, which they find us on the net, and we're asking for RFQs and that's how it got started. Technology. We need to make sure that we can keep up with a good technology, and we need to be top of the line to make sure that we will be able to stay there for the future. And operation, we need to, of course, to make sure that we produce it in a cost-effective way. But the development of material and production of material is done in Sweden in Hallsberg, and it's very sealed. We want to keep the technology in our house in Sweden in Hallsberg. Finally, once again, we are on 3 continents. We have a very good sales team. We are very strong in these different areas we have talked about. And I think we're going to see a continuous growth of Internet of Things, and it's going to be connected and also about the green tech area, which fits us pretty good with our products. Okay. Thank you very much. And now I will hand over to Christer.

Yes. Okay. Thank you. I hope you are not too tired and I hope you have felt that you have gained in -- gained knowledge and a lot of insights to Nolato, so that was valuable time. Some closing remarks. I will do a summary of all the sections and an overall message and just to rephrase our road to the new financial targets and some operational focus on the near term. So yes. Why Nolato? We are, of course, with our vision to be the customers' first choice of innovative partner and sustainable design and production. We feel that we have the base to deliver that. We feel that the customers are giving us feedback that we are an excellent partner for them. We have possibilities to grow across all customers and all different sectors of our current operations. We are also a very well-balanced group with profitable growth opportunities across -- we see global opportunities with already established customers, and we see growth potential with our new expanded offering. So we feel that we are in a good place with huge opportunities going forward. If we then look on the 2 plus 1 different parts, the 2 business area, Medical Solutions, the Engineered Solutions and then materials, what we have in common across all of them is that we are working closely with customers, solving their next-generation product issues and delivering their development better than they can do by themselves and then afterwards the production of it. What brings us all together is, of course, the corporate responsibility, the different materials technology that we have across and basically, across the different markets, we do the same thing. Of course, there are some different dynamics in the different parts, but the end of the day is the same, and we can help the customer to gain insights to better development by sharing between different segments and so on and so forth. This is where I started to talk about, and we see in all the different areas, and we hope we have been able to explain that to you and give some more flavor to that, how we can do this and how we can move ourselves up the value chain and also continue the good growth of the company. I also hope that you have felt that we have given you some ideas on how we're going to achieve our new financial targets. We think they are exciting. We're going to do our utmost to outperform them, and we are really looking forward and think it's a good timing for us to have those new goals. If we look on our priority areas for this year, we have talked to you across the board, we expand current and win new business. Of course, we will increase our profitability in all aspects of the company, there are possibilities. I also hope that you have understand and gain knowledge to what we talk about when we say value chain expansion. And what's that -- the possibility in that going forward. Then of course, across the things we are talking about operational excellence. It's our group-wide lean program that we would run. They have a little bit different to them with the medical, going for the medical way of doing lean things, but basically behind the scenes, it's the same program that run across. Why should you invest in Nolato? We feel that we have the resources, the expertise and the willingness to help our customers succeed, of course, increase our ability to grow with increased profitability, at a time when customers productivity efforts are accelerating. We are very well positioned with global leading customers. We see the trends, the digitalization, the electrification. We have an excellent global setup in a geopolitical uncertain world. We are driving change based on the trends that we see, of course, in the basis, a strong financial position. And I also hope that we have been able to explain that we are really in the forefront of sustainability. Our ambition now is to open up for questions. I can hope that we have many questions that we will try to answer the best way we can.

So on materials, which appears to be a key driver for you, how do you shield or protect your intellectual property versus competitors or copycats? Do use patents, trade secrets, design rights? And then the second question is, what are some examples of these moats or barriers that you're trying to build there?

Okay, very good. All of the above, but I will ask Anders to explain this.

Okay. Okay. So what we are doing, we are also building brand names regarding my area. We are generating a number of brand names, and we are protecting them also with different patents. So trademarks, patents and technical data sheet. And as I said, we do all the production, close the area in Hallsberg, and ship around the world. And all the patents we have is for 20 years.

Yes. I guess a follow-up question to the one before. How are the Chinese copycats doing quality wise? And do you see a real risk of them catching up to you in a few years?

I think that they are making short cuts. So the quality is not as stable as we have. And they all business we are focusing in China are international business, like BYD, XPeng, Huawei. They do not want copycats.

Okay. And without giving away any company secrets, what specifically is better about the quality from your end?

That's how we control it through the quality systems.

Okay. Sure. Also another one on materials. I was a bit surprised to see that aerospace and defense was as big as it was. Are you allowed to name any of your biggest customers in that space?

Yes. This is a good question for Per-Ola.

Of course, we have signed some contracts with the big OEMs. And of course, the defense business since we are on a component level, we are also shipping into a lot of Tier 1s or Tier 2s, but the big ones we have signed now is Collins Aerospace, Raytheon now.

And then a few questions just digging into the growth in Medical. First of all, the 4% to 5% market growth that you showed us, is that sort of big growth figure for the overall medical market? Or is that for your specific end markets? Because just looking at your pie chart, it seems like a lot of your end markets might be growing quicker than the overall medical market.

Yes. There are differences, but this is sort of netted from a growth where you also have some cost out and so on and so forth. So this is how we expect our market to grow.

Okay. That's fair. And then a final one. You said before that the 8% growth target or more than 8% for medical, that that's valid even after this big drug delivery contract ramps up? I mean I know it's far off, but can you say already today what you see replacing that growth in a couple of years?

We have a solid pipeline of new projects in our design facilities. And when we look through those, of course, we can get some guidance on what's going to happen. Then of course, we know that some of these development programs will be canceled before entering the market. And that percentage of falloff because of different clinical studies or things that are not going according to plan, how that percentage will be that will guide. We give if we go higher or lower. But based on our experience, we know approximately the falloff.

Okay. Can you name many of the exciting areas?

All of the areas that we have shown today are of the interest of growing and we are growing in all areas and we think that it is very good to have a good spread around different therapeutical areas. We are -- when we saw what happened during COVID, we saw some areas growing, some decreasing and then we get a good stability across. So we are not specifically working on one area. We are working across.

So I have some questions from my side as well. If we start on materials. I'm just wondering a bit on the margin side there. Is it possible to say broadly what the margin is? And also if it differs between the different segments within materials?

Maybe you, Per-Ola.

We have commented that we have a premium margin in this area, and we don't -- for the time being anyway, disclose the margins in the different market areas material.

Okay. But it's relatively similar? Or is it big differences between the areas?

You mean between...

Between the aerospace, automotive, telecom, is there any big difference within the...

I don't see there is a big difference.

And then I have a question for Joe and maybe on the medical side. I mean, some of your competitors have a bit more maybe biological exposure to -- or exposure to biologic drugs, I guess, I'm just wondering how you are working on increasing the, let's say, high growth segments within Medical. I mean, of course, you are now on a large contract within the space, but yes, your strategy there would be interesting to hear more on.

I mean we are engaged, as I said, with most of the big pharma companies, and they are all expanding in the biological drugs. And we have products ready for these customers. So I see we are well positioned actually to grow there. And actually, that is spot on our strategy to grow in the drug delivery segment, especially on the biologicals with large molecules.

It's good. And then on the large project that you have announced in Hungary now, can you give us an update on the time line when you expect revenues to start to kick in? I think you mentioned late '25, but when can we expect it to also be maybe fully ramped up, so to say?

We will -- we expect to start some deliveries late this year and then a gradual ramp-up some years from now to full scale. So let's say, in 4 years from now, it might be on the full utilization.

Okay. That's good. Then is the last question. I mean you -- on the engineering side, you focus a lot on increasing the value chain. I mean, and you speak a lot about PCB production, et cetera. I mean you have some spare capacity, I guess, in the factories in China now. Would it make sense to set up assembly lines of PCB assembly boards in China? Or will you do that by acquisitions or organic or yes.

We are evaluating all the different routes at the moment. I would say we have not closed any doors depending on what route to take, so to speaks. But we see that this is a ticket to play to do the value chain expansion that we are talking about.

In the meanwhile, I can take some questions here that came from the outside audience not here. And the first one is you have been working on cost downing initiatives, customer partnership strategies and implemented strategic price increases in the U.S. How much of a positive financial impact have you realized so far and what remains to be done to fully capture the expected benefit. Per-Ola?

Thank you. I think I can explain it in a couple of different ways. So far, we have seen the margins going up during 2024. This area has been 1 driver behind that increase of margins. And it will continue to be one of the important drives for increasing the margin going forward according to the target we have announced today. So it's a fairly big part of the historical improvement during 2024 and it is going forward to reach the target as well. Yes. So I think that answers a bit how we see on that part.

Then I have a question here for Johan Iveberg, specifically. How do you view the potential to increase the amount of owned products over the coming 5 years, where are you today as a percentage of sales and what could it be ahead?

As I explained in my presentation, the amount in sales is less than 10% on our own products. It's not in our strategy to develop our own products due to competition with our existing customers.

Here's another one. You did not touch on pricing on your organic growth assumptions over time. Is that included in your numbers or will come on top?

That is included in the numbers. So pricing inflation is in the target number, so to say. Then I also -- sorry, let's do this.

Yes. Another question for Medical Solutions. Can you please talk about the M&A development there specifically about pricing. There was an article from one of your close peers being in discussions with private equity firms. How has multiples moved in the past year to now?

Maybe you can answer that, Per-Ola?

Do you mean for...

Targets.

When you look at targets, yes.

Yes. Yes, it's a complex question. And I wouldn't say that we have the full answer to that picture. But I think I could say when we're looking into some of the targets, we're looking at, I don't see any big differences lately. It is a widespread, it is depending on the quality. It is depending on which areas they are exposed to. So yes, we have not very good indicator, I would say, what we look up on.

Okay. In the meantime, I can take 1 here. We got a question, if the new product within Medical is dependent on the clinical trials or successful drug delivery or development and the product that we are scaling up is not dependent on the specific clinical trials, it's existing drugs that goes into that more.

I thought of 1 more question for Johan on Medical. You mentioned that 1 thing you can do to sort of increase the value add is to go into the drug handling part, not just assembly. Do you have all the sort of qualifications in place to do that today if the customer would want you to? Or is that a long process for you to move into?

Well, we have that partly, but again, it is a long process. We believe it's a 3- to 5-year horizon to take that step within the business area. But for sure, we have the regulatory expertise in the group. But yes, it will take some time to get into that.

Okay. Okay. Understood. On the new project as well, I mean, you said that it comes with a premium margin in the project in Hungary. But when do you expect it to be like margin accretive or profitable, so to say, given that volumes will gradually be ramped up?

We do expect that project to be fairly quickly profitable. Of course, it will take time until we reach a good utilization of the equipment. So the real, let's say, end point or the real good margins will take some time to be there, but I think it will be supportive fairly quickly when ramping up.

Okay and for us that are not experts on the [indiscernible] business. I mean, can you explain a bit more exactly what you will do for this customer. I mean, yes, the value chain, et cetera, where in that are you? And where do you send the products to next, let's say?

No, I mean our share of this is, of course, injection molding. We are installing 60 brand-new machines down in Hungary. So that's a part. And then out of those parts that we will mold, most of them, we will also assembly to a subassembly and ship that to our customers globally.

No more questions. Then I would like to thank you for participating and showing your interest in Nolato. And I hope you thought it was worthwhile. Thank you.