Arjo AB (publ)

Q2 revenue was not stated explicitly, but management said organic growth was 4.7%. Adjusted EBIT was SEK 211 million, up from SEK 208 million in Q2 last year, while adjusted EBITDA was SEK 482 million versus SEK 475 million last year. Adjusted EBITDA margin was 17.5% and EBIT margin improved to 7.6% from 6.5% last year. Gross profit was down SEK 23 million year over year. Operating cash flow improved to SEK 257 million, up SEK 52 million year over year, and cash conversion increased to 53.3% from 46.6%. Net debt to adjusted EBITDA ended the quarter at 2.4x, and the equity ratio was 49.5%. For guidance, management did not provide formal quarterly or full-year financial targets, instead pointing investors to the September 24 Capital Markets Day for strategy and quantified expectations.

Andréas Elgaard framed the quarter as solid, emphasizing purpose-driven growth, stronger demand for sustainable solutions, and the all-time high sales for ReNu. He said the company has approved a strategy, activated about 90 leaders around it, and will use the Capital Markets Day to explain how Arjo plans to improve value creation. His tone was constructive but cautious, repeatedly noting margin pressure, ongoing work on costs, and that more details will come later.

Christofer Carlsson focused on the margin bridge: lower gross margin came from unfavorable mix, higher transportation and material costs, and a SEK 10 million one-time hit from transportation management system implementation issues. He noted SEK 22 million of initial U.S. tariff reimbursement was received, with a further SEK 1 million being processed, and said U.S. tariff costs were SEK 12 million lower than the comparable quarter excluding that reimbursement. On profitability and cash, he highlighted adjusted EBIT of SEK 211 million, adjusted EBITDA of SEK 482 million, operating cash flow of SEK 257 million, cash conversion of 53.3%, and net debt to adjusted EBITDA of 2.4x after the annual dividend payment of SEK 259 million.

Analysts pressed on whether demand was really improving or if growth was mainly due to mix and easy comps. Management said North America demand is strong but growth was tempered by tough comparisons, while Europe and rest of world also showed healthy demand; they added that U.K. growth was mainly driven by Arjo’s focus, with medical beds leading the recovery. Questions on gross margin pointed to transportation cost as a larger driver than mix, and management also flagged ongoing price pressure in DVT and weaker profitability in the U.S. rental business. On freight and the transport system issues, management said there is no major transport hedging program and the bulk of the implementation problems are now behind them, though the system is not yet fully satisfactory.