Polygiene Group AB (POLYG) Earnings Call Transcript & Summary

Hello, and a very warm welcome to Polygiene Group's Second Quarter 2026 Webinar. Today's presentation will be divided into three sections. Our CFO, Niklas, will start with the financial update, after which I will provide an overview of the business, and then we will conclude the session with question and answer. With that, Niklas, over to you.

Yes. During the quarter, we did see an increase of sales with around 1%. And with a negative [ FX ] of around 2%, actually increased by 3%. So it's 32.1% versus 31.9%. We also had an improvement in margin, 71% versus 63%. That includes a positive impact of 2% due to the FX. We also had a positive price impact. We've been a little bit ahead of the curve when it comes to the increased cost of the silver, and we have managed mainly in Addmaster to increase the price to the customers before we actually have had the actual cost increase. And we also had repricing at the distributors at Polygiene, which had a onetime effect of around SEK 1 million to SEK 1.5 million on the [ quarter ]. We had lower operating costs, SEK 18.9 million versus SEK 19.8 million, lower cost in travel, test, legal and IR. And all of that then generated a positive EBITDA of SEK 3.0 million versus minus SEK 1.2 million and a positive EBITDA of SEK 1.6 million versus minus SEK 2.6 million. Looking at the cash flow, we also had a positive cash flow with SEK 6.1 million versus last year of negative SEK 12.6 million. We had a really good [ AR ] collection during the quarter. We had some late inventory buildup, but that was then offset by the accounts payable. Last year, we had the dividends paid out for the first part of the dividends in late May and in June. And then we had a bit of earlier inventory buildup that wasn't offset by the accounts payable. And then at the end, that resulted that we have at the end of the period, we had a positive cash situation of SEK 50.3 million versus SEK 47.4 million last year. Going into a little bit more details on the sales, overall, we can see an increase in both EMEA and America while the region Asia was flat versus last year. We saw a drop in the global. And the global then impacted Polygiene, which was down 10% versus last year, now representing 58% of the total versus 55% last year with the sales of 18.5 million this year versus 20. 9. But as we said, the difference is in the global sales of the distributors, which is then inventory adjustments of around SEK 4 million. All regions are in line or above, we saw actually quite big growth in Americas versus last year with almost 40%. Looking at that Addmaster, we had an increase of 24%, going from 11 to 13.6 in the quarter and was then representing 42% of the total versus 35% last year. And the growth was mainly driven by sales in EMEA.

Thank you, Niklas. Before I move into the business update, I would like to take a moment to thank Niklas personally for his dedication and contribution to Polygiene Group over the past years. It's been a real pleasure working alongside him, and I would like to thank him for the support and professionalism he has shown throughout the leadership transition in the last 7 months. Today's presentation was his final investor webinar before he leaves the company at the end of August. And on behalf of everyone at Polygiene Group, I would like to wish him every success for the future. Looking ahead, I'm also pleased to welcome Anders Nordgren, who joins us as our new CFO on the 17th of August. And the planned overlap with Niklas will ensure a smooth handover and continuity for the business. Now looking beyond the quarterly financials, the key takeaway from Q2 is that we have made tangible progress against the strategy we introduced at the beginning of the year. Market conditions remain challenging, but we have strengthened the business in the areas where we can control. If you recall, at the beginning of the year, I introduced four strategic priorities for the group. 6 months later, those priorities remain unchanged. And more importantly, during the second quarter, we continued to turn strategy into execution. So while the financial results reflect the current market environment, the progress we've made against these priorities reflects the business that we are building for the future. The pricing transition is now complete, our innovation pipeline is building commercial momentum, we have taken further steps to simplify our organization in the Americas, and we continue to strengthen and reposition Addmaster as a trusted technical solutions provider. The remainder of today's update will show how each of these priorities is progressing. So our first strategic priority this year was to manage the impact of higher silver price, and I'm pleased to say that this transition is now complete. While ever price has stabilized, they do remain at around twice the average level seen during 2025, which makes it essential that we continue our adjusted pricing model. During Q2, we completed the final transition across both our Freshness and Addmaster businesses. And that included, as Niklas mentioned earlier, the repricing of the remaining distributor inventories. So from Q3 onwards, all the sales will now reflect the new pricing structure but also the new cost of silver. So it allows us to move beyond the transition phase. And just as a reminder, the objective has never been to expand margin, it has been to recover the higher cost of silver while preserving the gross profit we generate for each sale. And as we communicated previously, because selling prices are now higher, the reported gross margin percentage will naturally be lower. This is simply an accounting consequence of the pricing mechanism, this is not deterioration in the underlying economics of the business. And on the positive side also with the pricing transition now behind us, we can devote more of our attention to the strategic initiatives that will drive future growth. And on this topic, innovation remains one of the key drivers for our long-term growth strategy. We continue to build a balanced innovation pipeline with technologies at different stages of commercial development. ShedGuard is now focused on supply chain optimization, following successful customer validation. And we are preparing for a broader commercial relaunch of the technology later this year. OdorCrunch2.0, which was launched only in March this year, continues to generate very strong customer interest. Extensive mill trials are underway, and that provides us with very valuable feedback as we look to optimize the technology ahead of a wider commercial rollout. And StayCool, which was launched last year, has now progressed into commercial adoption, We're seeing increasing order volumes, new programs with global brands and growing interest from customers looking to combine freshness and thermal comfort. So the balance is important here because it creates multiple opportunities for future growth rather than relying on just any single product. And of course, innovation only creates value if customers adopt it, and that's exactly what we are seeing across a growing number of customers and market sector. During the quarter, we continued to strengthen relationships with existing partners while also expanding into new customer segments. These examples on this slide demonstrate that we are not simply winning customer, we are broadening where and how our technologies are used. So starting on the left, Kingsland is a leading equestrian brand. And this demonstrates how we are deepening a long-standing partnership through joint marketing, sales support, training and expanded product collaboration, helping to drive the brand's long-term growth. As a result, selected line within Kingsland Spring and Summer 2027 collection will become the first in EMEA to feature the full combination of Polygiene's StayFresh OdorCrunch and StayCool altogether in one garment. [ Sesen ] in the middle illustrates how our technologies continue to expand beyond sports and outdoor into premium lifestyle apparel, opening new customer segments and further diversifying our customer base. And finally, on the right-hand side, Orbit International demonstrates growing adoption within professional workwear, another important adjacent market where we see significant long-term growth potential. So together, these examples show that diversification isn't just a strategic ambition. It is being delivered through customer adoption and across a broad range of markets and applications. Executing our strategy also requires the right organization, capabilities and culture. During the second quarter, we have continued to strengthen each of these areas. In May, we brought colleagues from across the group together for our annual company meeting in Berlin. It was an important opportunity to align the organization around our strategic priorities, strengthen collaboration across teams and reinforce a shared direction as we continue to build the business. We've also taken further steps to integrate a solid service business in the Americas into Addmaster. This creates a simpler operating model. It brings technical and commercial expertise together within one organization and most importantly, its improved profitability through a more efficient cost structure. Finally, we've enhanced Addmaster with two important appointments. Adrian Davenport has returned to the business as technical manager, bringing extensive experience and a deep understanding of both Addmaster product and our customers; and Dr. Kurt de Meyer, who will be joining us early August as Head of Commercial growth, bringing more than 20 years of experience and specialist expertise in antimicrobial technologies. Together, they further strengthened both the technical and commercial capability, which we need to support Addmaster's next development phase. And taken together, these initiatives across these slides ensure that we have the right people, the right structure and the right capabilities to execute our strategy and support sustainable profitable growth. And continuing on Addmaster, the fourth strategic priority is to strengthen that side of the business by building on what has always been one of Addmaster's greater strength, technical expertise. For more than 25 years, Addmaster has helped customers solve complex technical challenges across a wide range of industry. And whilst in the recent year following the COVID pandemic, the business became increasingly associated with antimicrobial and consumer-facing application, today, we are returning to the broader technical heritage. We are expanding our presence in industrial and technical application. And for this, scientific and regulatory leadership remains at the heart of this strategy. We need to give customers confidence in both our expertise and our technologies. How we do that? We do that through close collaboration with customers and active engagement across industry trade association. And we're expanding our solution into a really wide range of application from water and construction to automotive, packaging and health care. The key message here is that this isn't about changing what Addmaster is, it's about returning to its technical routes while expanding the market and applications we serve. So to conclude, if I was to leave you with one key message today, it is this. The market conditions remain challenging, and recovery is likely to take time. However, over the past 6 months, we have consistently executed the strategy we committed to. We've completed the pricing transition, we are building a stronger innovation pipeline, we are expanding into new market and customer segments, we are strengthening the organization, and we are restoring Addmaster's position as a leading technical solution provider. So those actions won't transform the business in one single quarter, but together, they are building a stronger, more resilient company that is better positioned for sustainable and profitable growth. Thank you. And we're now happy to take on your questions.

We had some questions prior to the -- to this presentation. I will guess some of them, we have already answered in the presentation. But I will go through them and see if there's anything that hasn't been touched upon. I think the first one we had is a little bit better, which we haven't touched upon is around the stock. -- the stock market, how we can create more interest around it and what we're doing.

Yes. Actually, we did attend some IR events this year. I was in Stockholm twice in March with Redeye and then in June with [ Axiana ]. And we will look into the second half of the year to also do some events similarly.