Robit Oyj (ROBIT) Earnings Call Transcript

A very good afternoon. My name is Mikko Kuusilehto, I'm the Group CEO of Robit; and I'm joined today by our CFO, Ari Suokas, and we will go through our Q2 figures for 2026. As always, we start with a disclaimer and then heading towards the figures and past performance of Robit in the second quarter. Like we published during the first quarter, we had really a strong start to the year. And I'm extremely satisfied as the CEO that we were able to continue the good performance also through the second quarter of 2026. All in all, it's fair to say that the market demand is very strong, especially in the mining sector. But we've seen that throughout the industry that all in all, the market is in good performance and gives Robit an opportunity to grow. We saw that the order intake increased by 10% from last year, and our net sales increased by 22.5%. Profit-wise, we were able to keep up the good performance of sustaining our healthy EBIT level. On the cash flow side, we were on the negative side. Ari will tell a bit more of that in the coming slides. And when we look at the sustainability targets that we are targeting, we were able to improve and further improve the emission intensity targets that we have set for ourselves and are reaching towards the targets that we have set in the past years. At the same time, it's fair to highlight that we have had poor performance on our lost time frequency index and naturally, as a company focusing solely and having that as our key priority. We're taking all actions in order to improve the future performance and ensuring that the performance of that index is developing positively. If we look on a broader side of the figures, the first half of the year has been a positive movement from the past performance of Robit. We were able to increase, like I said, our net revenue in the second quarter significantly from the year before. And all in all, the start of the year has been very positive. If we look from the SBU perspective, we've seen that our revenue in the Top Hammer side has slightly decreased, but on the Down the Hole side and especially on the Geotechnical side, we've had very, very positive growth during the past year. The EBITDA has as well improved from the past year. The net cash flow for the operations have been minus EUR 4 million. The growth that we've seen has been coming predominantly from the Geotechnical side. If we look at the regions and the performance of individual regions, especially the Americas has been performing very well. We have also had positive growth on the EMEA region and being able to keep the market or keep the revenue in the Asia region. In Australasia, our revenue has decreased from the year before. Ari, if you say a few words about the financial figures.

Thank you, Mikko. First of all, to give you the background, the price pressure continued to be very strong in the market, especially driven by the tungsten. And our net sales was very good. All in all, totaling to EUR 24 million, and it was mainly due to 3 facts. One, our very active visits towards the customer and active activities towards the customer front. Secondly, our product testings. And thirdly, our capability to provide the confirmation to our customers that our solutions work in different types of ground conditions. Our EBITDA in Q2 increased to 7.3%. EBIT percentage Q2 turned positive compared to last year when it was negative. And Q2 '26 result of the period increased and was EUR 0.5 million. All in all, when we look at the EBIT for the first half of the year, we are, at the moment, EUR 2.4 million. And the net sales is EUR 45.3 million for the first half of the year. Moving on to net working capital development. Here, it's good to understand 2 factors. One, there has been a rapid increase with the tungsten prices. Tungsten is a key raw material that is used with the bits, and the price of tungsten first was 7x to 8x higher at the beginning of the year, and now has decreased and stabilized, but it's still 3x to 4x higher than it was last year end of Q2. Second thing that is good to mention when we look at the net working capital development, it is that now we are ramping up multiple multiyear mining contracts. And obviously, that has a temporary impact to our inventories during the ramp-up phase. Net working capital all in all increased by EUR 4 million and totaled EUR 45.8 million. Our inventories increased to EUR 46.3 million, and this was driven by tungsten prices. Compared to last year, this is the increase of EUR 10 million, 80% of that increase is roughly driven by the price. And the rest, 20% is divided to FX and the volume. Our receivables increased to EUR 20.6 million and our payables increased to EUR 21.1 million, and net working capital percentage of last 12 months of sales was 55.3%. Our cash flow before changes in net working capital was EUR 1.9 million. Operating cash flow was negative EUR 2.5 million. Cash flow from investing activities was EUR 0.1 million negative. And here, it's good to understand that the investing is going according to Robit investment plans also. Cash flow from financing activities resulted to EUR 1.5 million. The cash flow impact, what we saw in Q2, we will see also -- or we expect to see similar impacts also during Q3, and especially here, there are the 2 reasons. The high tungsten price increases with the carbide bits, and secondly, the ramp-up of the multiyear mining contracts. Our financial position. Cash and cash equivalents at the end of Q2 were EUR 7.2 million and total interest-bearing loans and utilized credit limits were EUR 26.3 million. And that includes the IFRS 16 lease liabilities of EUR 2.8 million. Our net debt decreased and was EUR 19.1 million, and net debt to 12-month rolling EBITDA was 2.64. And we have twice a year, at the end of June and end of December, a financial covenant, and the threshold for that financial covenant is 3.5, and we are clearly below that one. Our equity ratio remains strong at 48.4%. The loan maturity, loans from our financial institutions at the end of Q2 totaled EUR 23.5 million. We have a senior loan amortization of EUR 1.5 million, and that's also biannually in end of June and end of December. We have also protected ourselves against the interest rate fluctuation, and we have a EUR 10 million interest rate swap, which took effect on July 24 and ends 30th June 2030. Now towards Mikko and outlook.

Yes. Like I said, the first half and the performance of the first half has been really satisfactory. And of course, many positive things have happened in the background, which have led to the fact that we've been able to sort of turn the negative revenue development of the past into a growth mode. I always say that we are, first and foremost, a growth-oriented company, and we need to be a growth company. The market size and the potential that the market offers us in those regions with those products that we are manufacturing, there's plenty of market for Robit to take, which means that our mindset has to be that we are a growth-oriented company. What needs to continue is the positive momentum that we are having in the fields. We have to be really, really active together with our distributors in ensuring that they are able to perform better, that they are able to grow, that they are able to penetrate into the markets with our products. We have to sort of ensure that the positive added value that Robit brings through its products is transferred from the presentations and from these speeches into real-life actions in the fields. And of course, that is something that we have to continue also in the future. The other fundaments remain the same. We have to be really active in the pricing sector. The tungsten development that has evolved during the last 12 months, of course, has been a major disturbance in the market and has created many challenges to the competitive environment, to the customers with the uncertainty of understanding how the prices will develop. And that's, of course, something that we need to work on a daily basis to ensure that we are able to transfer the information of our prices, but also transfer the information about how we expect or how we see that the future will evolve. Of course, the challenge with the tungsten is that the forecasting towards the future is really, really difficult, actually impossible. So we have to live on the daily figures where we stand. But fortunately, we've seen the situation that we've come down from the high peak that we've seen earlier this year to a lower level. But naturally, we are still way above the historical sort of average levels that we've seen during the last years. So customer activity is the key for us. We have to be active in the front line. We have to be active in visiting the customers. That's the base fundament for our future success and that work has to continue also in the coming quarters. Of course, it's easier to have that sort of positive momentum in the background. It's easier to communicate this also throughout the organization, through our distributors that we are able to be successful. So that's, of course, a positive thing that we are able to carry out. That's easy to carry through the communication. But of course, the work needs to continue every single morning that we come to the office and every single day that we meet our customers. And that's basically the standpoint also for the coming months that the hard work that we've done in the past has to continue, and we have to be even better than we've been in the past in order to ensure that we see a future growth momentum also in Robit. Then last but not least, before we go into the questions, the guidance remains the same. We still estimate that the net sales will increase from 2025 as well as the EBIT profitability will also increase from last year.

Ari, do we have any questions online?

Yes, now moving to -- thank you, Mikko. Now moving to the questions and answers. Are there any questions, voice-related questions? We have a few questions in the chat functionality. I assume not. Then let's proceed so that I will read the question and let's take a look after that one, which one, of course, will reply to the question. First question comes from Aapeli Pursimo from Inderes. How does your sales pipeline look like?

Yes, we came out during the second quarter with announcements regarding multiple mining contracts that we've been able to sign. And that's, of course, something fantastic to come up with or come out with that type of information. In that sense, when looking at the announcements that we made, when looking at the order intake that we've been able to collect, of course, the situation where we stand at the moment is, in that sense, better than it has been in the past. At the same time, of course, that work needs to continue to ensure that we are able to continuously increase our order intake. And these, naturally, these types of successes that we've had with this mining contract is something positive, but it's something that has to continue and has to develop day after day, month after month.