Operator: Welcome to the Indutrade Q2 presentation for 2026. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. I will hand the conference over to CEO Bo Annvik and CFO Patrik Johnson. Please go ahead.
Bo Annvik: Welcome and good morning on our behalf as well. We are glad to present a strong quarter. Let's start with the overall highlights. We had a good development in many areas in the quarter, starting with the top-line development. Demand continued to improve. Total order growth was 14%, of which 8% organically, with the majority of our companies growing. Continued positive book-to-bill of 105%. The strongest demand was with companies having customers within the medtech and pharma area and also the energy sector. Net sales increased 11% in total to record high SEK 9 billion, with strong organic growth of 5%. EBITA was also on a record-high level, and the EBITA margin improved to 14.7%, with good operational leverage on the organic sales and margin-accretive acquisitions. Cash flow from operating activities increased. Inventory levels were flat from last year organically. We continued being successful in terms of acquisitions. Nine companies acquired in 2026 so far. Slightly larger companies on average. Our pipeline remains strong. As mentioned, top-line development was strong. Demand improved, however, still varies across companies, geographies, and segments. Companies with customers within medtech and pharma and the energy sector experienced the strongest demand. All major customer segments improved compared to last year. Despite the strong net sales, order intake was even higher, resulting in a positive book-to-bill in the quarter. The order backlog is now 8% higher than the same period last year. In terms of sales, acquisitions contributed positively with 6%, a sequential improvement from the 5% we had in Q1 2026. Currency movements had no impact in the quarter. The organic development was good, +5%, benefiting from the increased order backlog development the last few quarters. All in all, a very good top-line situation, strong sales. Even stronger order intake. If we move into sales per market, sales improved in the Nordic countries with a broad positive development in many companies and segments, except in Denmark, which were down due to lower deliveries to Novo Nordisk. In the rest of Europe, the situation was mixed with slightly negative development in the Benelux region, mainly due to lower construction activity and some tough comparisons in a few companies. Sales was flat in the U.K., Ireland, and Switzerland, and Austria, and up in Germany. Development in Germany was mainly driven by the engineering sector and companies within medtech and pharma. Sales in North America and Asia is more volatile. This quarter, it was flat in North America and up in Asia. Development in Asia was mainly driven by valves for power generation. Total EBITA increased 19%, corresponding to an EBITA margin of 14.7% compared to 13.7% last year. One of our companies in the final earnout stage has performed better than expected. Their earnout became larger than the provision we had, so the additional amount we had to pay to them impacted our profit negatively. Excluding this revaluation, the EBIT margin was 14.9%. EBITA margin was positively affected by the organic sales development, continued strong gross margin, and margin-accretive acquisitions. Regarding the gross margin, there have been price increases in many areas during the quarter, especially connected to freight, certain raw materials, semiconductors, and some electronic components. Our companies have done a really good job in passing price increases to the customers and protecting their gross margins. Looking at the sales development per business area, four out of five business areas had organic growth in the quarter. Life Science stands out with really strong development, and it's mainly connected to broad positive development for many companies within medical technology distribution. We have, for example, deliberately invested in the Polish Life Science market some time back and see some really good progress there recently. Process, Energy & Water and Industrial & Engineering had good development for many companies and segments. Process, Energy & Water benefiting from the large order book built up the last quarters. Within that sector, it was predominantly the energy segment broadly increasing and, for example, investments in gas-powered power plants, but also cooling applications for data centers, and we see some emerging defense orders coming into this business area as well. In terms of Industrial & Engineering, it was rather broad in terms of sales improvement. To mention some areas, we had good progress in terms of hard metal tools, specialty chemicals, and the automotive aftermarket. Infrastructure & Construction was down 3%, still impacted by the weaker general demand, and thus lower order book values coming into the quarter. I would say that the outlook for the second half of the year is cautiously optimistic. Technology & Systems Solutions had a positive development with 2% organic growth, however, from somewhat lower levels, but nonetheless good progress, and also I would say that many companies are delivering in a good way and stepwise increasing. I would say that also there we have a cautiously optimistic perspective on the second half of the year. Four out of five business areas improved the EBITA margin in the quarter. Industrial & Engineering and Life Science were positively impacted by the organic sales growth, gross margin improvements, and also margin-accretive acquisitions. Infrastructure & Construction has for a longer time worked with cost reduction measures and some divestments to improve its margins. Margin-accretive acquisitions contributed positively in Process, Energy & Water. Technology & Systems Solutions had a lower EBITA margin compared to last year, impacted by weak performance in a few project-oriented companies, mainly in the U.K., as we have talked about earlier. Acquisition pace was good in the second quarter, and we have so far this year welcomed nine companies to Indutrade with a total annual turnover of SEK 1.5 billion, continuing the successful trend we have had since the second half of 2025. Looking at the rolling 12 months, we have formally closed 16 companies with a total annual turnover of SEK 2.2 billion. During the quarter, we announced the acquisitions of Axotan in Sweden, Phacotec in Germany, Valveco in the Netherlands, Createc in Germany, and Autek in Norway. After the end of the period, we announced two add-ons, Dorte Egelund in Denmark and Albiox in Finland. All business areas except Infrastructure & Construction have done acquisitions. Infrastructure & Construction continues to prioritize organic operational improvements. This year, so far, the average company size has been on a slightly higher level. This should not, however, be seen as a strategic shift. We are opportunity-oriented and act on the opportunities we believe to be accretive and successful. Consequently, there will be times when we have periods of larger acquisitions and also periods with smaller acquisitions being made. The acquired EBITA was in a high level in Q2, as can be seen on the graph to the right, at SEK 85 million. Also looking at the EBITA margin of the acquired companies, it was on a margin-accretive level of 17.6% for the quarter and 17.5% rolling 12. Good to note that this includes transaction costs, so the underlying margin is even higher. Our business areas are proactive in the acquisition work and building pipeline. Our business segment leaders are spending more time on acquisitions now compared to a year ago, and the current acquisition pipeline is on a high level. By that, I leave the word over to Patrik to comment more on the financials.
Patrik Johnson: Thank you, Bo. Bo has already talked about many of the KPIs, but good to highlight is also the year-to-date numbers with order intake and net sales up 8% and 6% respectively. Gross margin strengthened in the quarter and also year to date. As Bo described, our companies, they are successful in transferring price increases to the customers. That's really good of them. EBITDA and EBITDA margin was strong in the quarter, and even higher, actually, if you exclude the negative effects Bo described regarding revaluations of earnouts. They are connected to one company performing better than expected, which of course, clearly is a good thing. If you exclude this revaluation, the EBITDA margin would have been then 14.9% in the quarter. Year to date, we are on 14%, in line with our financial target. Finance net decreased 4% in the quarter and 11% year to date, mainly due to lower interest rates. Tax costs increased 22% in the quarter and 14% year to date as a result of the higher profitability, mainly. Strong growth in earnings per share of 23% in the quarter and 10% year to date. I will talk about that a little bit more on the coming slides. Return on capital employed, same level as we had in Q1 on 18%. Operating cash flow improved on the back of the higher result and was up 20% in the quarter and is up 10% year to date. Finally, net debt EBITDA was on a controlled level of 1.7. Let's look in more detail on the cash flow. Cash flow from operating activities improved 20%, as I said, mainly due to the higher result. Looking at the EPS. Following a soft development for some time, EPS improved significantly in the quarter, up 23%, actually on an all-time high level. Of course, taking historical share splits into consideration. Main reason is obviously the higher operating profit, but also the lower finance net that I talked about helped as well. Looking at the more long-term perspective, the three-year CAGR, it was -2%, coming from a strong level than 2023. +7% looking at the five-year CAGR. Lastly, looking at the financial position and the net debt, that is seasonally high in Q2 and due to the dividend payout, of course. It increased versus last year because of the increased acquisition pace. However, our net debt ratios are stable and on a controlled level. Net debt equity on 55% compared to 52% last year, net debt EBITDA slightly higher than last year, and it came in at 1.7. If you exclude earnouts, it is on 1.6 compared to 1.4 last year. The financial net debt, which is then the part of the debt that relates to borrowing that needs to be refinanced, is also low at 1.2. In conclusion, our financial position is strong, creating good room for continued value creative acquisitions and also organic growth initiatives. I think this is also confirmed by S&P, who actually upgraded their outlook for us from BBB- with stable outlook to BBB- with a positive outlook. With that, I leave over back to you, Bo.
Bo Annvik: Thank you. We recently announced some changes in the group management, where we have recruited two experienced and well-qualified persons. First, we have Anna Vilogorac, who will be the new CFO of Indutrade. She will assume the role no later than January 14th, 2027. Anna has a broad experience from senior finance positions in global listed companies, combined with deep expertise in capital allocation, business control, and strategy. She is currently the CFO of Ratos AB, having previously served as CFO of the Nuent Group. In addition, she has had many roles within Sandvik, working with group strategy and M&A before taking on senior finance positions, including Head of Group Business Control and CFO of the Sandvik Rock Processing Solutions business area. We have Håkan Svensson, who will be the new Head of Business Area Infrastructure & Construction from August 1st. Juha Kujala, the current head, will continue as a Business Segment Leader within Indutrade in another business area. Håkan is not new to Indutrade. He was actually the Managing Director of our company, Bengtssons Maskin, back in 2000. Since then, he has continued to successfully manage companies in different situations and geographies, including being the CEO of the Dahrén Group, an EVP of Södra, and various positions within Dow Corning. I'm very glad to welcome Anna and Håkan to Indutrade. I'm confident they will be highly valuable as we continue our journey of sustainable, profitable growth. Lastly, some key takeaways before opening up for questions. Strong top-line growth in the quarter despite the strong net sales. Order intake was even higher, resulting in a positive book-to-bill in the quarter. Also, EPS growth was strong. All-time high EBITA and EBITA margin improvement with good operational leverage and strong gross margins. Looking ahead, we have a larger order backlog and good acquisition momentum, but the general market uncertainty remains on a high level. Nine acquisitions so far in 2026, a continued strong pipeline providing good conditions for a continuously strong acquisition pace. We delivered on many of our financial targets in the quarter and are fully focused to keep the momentum going. Thank you.
Operator: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Ope Otaniyi from Goldman Sachs. Please go ahead.
Ope Otaniyi: Good morning, Bo. Good morning, Patrik and Mårten. Thanks for taking my question. Three for my end, just on order book, margin, and M&A. Firstly, on order book, I appreciate we've talked about a growing order book for a few quarters now, but could you give an update on lead times just in the context of the larger order book in this quarter? Secondly, could you just give a bit more detail on what drove the performance in Life Science? Is that just a large customer, or is it broad-based across the Life Science group?
Bo Annvik: Yeah. We have had part of the order book with longer lead times, partly in the Life Science area and partly in the energy segment. Quite a lot of the deliveries linked to this order book will happen in quarter three and quarter four now, I would say. Yeah, that should be a strong platform for a good sales situations in those segments in the second half of the year here. Life Science was broadly, I would say, strong in medical technology companies. In the previous years, I would say Life Science has been mostly driven by production-related sales to the pharmaceutical companies, and now it has switched a bit to our medtech companies selling products which are used in hospitals and laboratories and research institutions. We had some sort of locomotives in that area, but the order intake growth was not purely driven from that. The Polish market is interesting and strong. I would say it's a bit under-invested versus other Western European markets, countries. There is a strong investment phase which has started and will continue for some time. We bought a company in the Polish market 2016, and since then we have done some other activities, and we have a continued strong acquisition focus on the Polish Life Science sector. I think that's the answer to your order intake question.
Ope Otaniyi: Thank you very much.
Bo Annvik: Yeah.
Ope Otaniyi: Yeah. Thanks very much. Just two quick ones on margin and M&A. On margin, could you just break out how much of that was operating leverage versus margin accretion from M&A, but also maybe just give a comment on price cost, given the pricing headwind you faced in the quarter, also by some pricing on your side as well?
Bo Annvik: Well, if we start with the gross margin, it was slightly better than a year ago. I think we had 35.6% this quarter and 35.3% the last one, so a slight improvement in terms of gross margin. I don't know if you can, Patrik, better than me, answer the difference or balance between operational leverage organically and acquisitions.
Patrik Johnson: Yeah. I can try. We had good leverage on both the organic side and the acquisition side. I think the biggest driver, I would say, this quarter for the margin improvement is the organic one, with organic sales increase of 5% and organic profit increase with 11%. There you have your biggest driver, but acquisitions also contributed.
Ope Otaniyi: Okay. Do you have an outlook for price cost going into H2, or is it similar dynamics in Q2 until end of Q1?
Bo Annvik: I would think it's fairly similar going forward in the second half.
Ope Otaniyi: Okay. Thank you very much. Just lastly on M&A, any change in terms of pacing of deals? I know you paused them slightly at some point last year. Is it more linear in terms of when they happen for the foreseeable, for the coming quarters?
Bo Annvik: Yeah, now we have a strong pipeline, right now less hesitation in terms of finalizing projects. The expectation is that we would continue in a good pace also in the second half of the year.
Ope Otaniyi: Great. Thanks for taking my questions, best of luck for the summer and the coming quarters.
Bo Annvik: Thanks.
Operator: The next question comes from Max Bacco from SEB. Please go ahead.
Max Bacco: Thank you operator, good morning, Bo and Patrik. Thank you for taking my questions. Perhaps starting with the Infrastructure & Construction segment. As you mentioned, you are cautiously optimistic here for the second half. I suppose that has to do with the book-to-bill actually being slightly above one. Two questions from that segment. First, are there any specific sub-segments or sub-end markets that are perhaps trending in the right direction? Also with, as you said, Håkan coming in as new Vice President for that segment, do you see any changes that would be made or will it be business as usual?
Bo Annvik: I think it's broadly a better momentum in several countries in terms of Infrastructure & Construction coming up now. There has been quite a lot of delays in projects. In the first quarter, it was quite a lot of weather-related issues. Installation companies had to delay that. Now obviously there is prime time to dig in the ground and work with outside installations. Just that the macros are step-by-step trending in the right way. We see a better and better momentum broadly. There are some, I would say, water, wastewater is a segment where we have very strong positions and where we expect good growth. There are other areas as well where there's been a bit subdued situations. No, it's step-by-step, just a better broad improvement, I would say. It's not going to happen overnight. It's step-by-step and I think sometimes smaller steps as well. Håkan and Juha are both good leaders. They have slightly different leadership styles, as we all have. To use a bit of a sports analogy, sometimes it's beneficial with a new voice in the locker room. Juha has managed the business area through a phase of a lot of cost reductions and some divestments. Now it needs to be a phase with revenue growth, business development, strong focus on sales, and I think this shift will be beneficial in that perspective.
Max Bacco: Okay. Sounds good. Turning to the Technology & Systems Solutions segment. You said the same thing there. I believe that you're cautiously optimistic here for the second half. I think we have seen now three quarters in a row with the book-to-bill above one and quite a bit above one here in the last two quarters. If you could just touch upon the lead times and everything, all else equal, how soon should this potentially then translate to a bit more positive organic earnings growth for the segment? If you have any thoughts on that.
Bo Annvik: Yeah. As you remember, we had an unfortunate situation in quarter four in that business area with two U.K. companies which had some mismanagement in them, and that is impacting the business area quite significantly. There is transformation of those two companies ongoing, and it takes a while to go from one sort of niche orientation, which they had, to going back to more of their original business platform. I really hope that towards at least quarter four, we will see first signs of financial benefit from this transformation. If you exclude some of these problematic companies in that business area, the earnings quality is actually good. It's a small number of specific companies holding them back right now, and there is intense work going on to rectify that situation. As all of you know, it takes some time to transform companies. There are new MDs in these companies. Since some months back now, we have had really strong support from also outside help to kickstart focused agendas on these companies now. I'm optimistic that we will see improvements, but maybe more towards the later part of the year than in the beginning of the second half year.
Max Bacco: Okay, perfect. Then focusing a bit more on this specific quarter, Q2. You have mentioned it, and we see it in the numbers, it was very broad-based, the improvement, but is there anything extraordinary in the quarter that supported the outcome in terms of project completions or something similar that could be relevant to be aware of?
Bo Annvik: No, not on Indutrade Group. Not significant on a group level. There were some drivers in specific business areas. For Process, Energy & Water, we see strong sales into the energy segment and gas power plants. That will continue also in the second half, even stronger in the second half, I would say. In the Life Science area, I spoke a bit about this Polish market, that's been strong and equal to Process, Energy & Water. I think that will also continue in the second half of the year.
Max Bacco: Okay, perfect. The final question, a bit broader perhaps, but as you stated during the presentation, very healthy M&A activity here during the first half of 2026. It seems like you're quite upbeat here on the second half as well. This, of course, would mark a quite clear acceleration versus the previous two years, that, as also mentioned previously, were perhaps burdened by the organizational changes that were made and also perhaps a more hesitant stance due to the geopolitical turbulence and so on and so forth. The question being is basically, do you feel that the organization is fit for fight to now maintain acquisition pace more in line with the historical average for Indutrade?
Bo Annvik: Yes. I would say even stronger than the historical average. We have a very strong platform now, the focus is also clearly there, and the understanding of the importance of a strong pipeline. We have step by step, I would say, built capabilities on generating leads and deals ourselves, rather than relying on external brokers to the same extent as before. I think the platform is stronger than ever now.
Max Bacco: Perfect. Very clear. That was all from me. Thank you very much, and well done.
Bo Annvik: Thank you so much.
Operator: The next question comes from Karl Bokvist from ABG Sundal Collier. Please go ahead.
Karl Bokvist: Thank you. Good morning. Max took almost all of my questions, so I'll see if I find something else here. What I was wondering was on Infrastructure & Construction, you've done a lot on the cost side, and I'm just curious to understand here if we still get, let's say, kind of limited organic sales growth, do you still have more benefits to come that would support a margin increase?
Bo Annvik: Very relevant, interesting question. We start to be a bit limited in terms of driving performance with cost reductions. Maybe one additional smaller step, but it really needs to come more and more from the top line now, I would say. If that answers your question.
Karl Bokvist: Yeah. All right. Then on PEW here, there's been some comments before, at least on some customer hesitancy. Now this quarter it was up year-over-year, and in millions SEK it improved sequentially as well. Can we say something about customers now actually coming back to the negotiating table and placing orders now to a greater degree?
Bo Annvik: Yeah. I think they have placed orders for some quarters now, but the sales haven't really been realized. Some of them have had longer lead times and so on. The outlook is quite positive for that business area for the second half of the year and going forward. There are some strong underlying drivers on the energy side. We see both benefits using gas-powered power plants linked to solar and wind, which it's not always the sun is shining and the wind is blowing. You see some of these plants being updated to also manage hydrogen. You see investments in this area now linked to what has happened in the Middle East recently. I think there is a strong underlying demand for that continuously for some time. That business area see more and more opportunity, I would say, linked to data centers. They work a lot with flow equipment, as you know, and both when you actually build the facility, there are different types of flow equipment needed for the general facility, but not least also for the cooling systems. Some of the companies have opportunities in that area. We also have some companies who have had, I would say, the emerging interests from some defense customers also needing flow-related equipment for different application areas. It's an interesting business area, definitely, and we have strong market positions, high-quality brands and products. Good platform to stand on there.
Karl Bokvist: Understood. That was all from my side. Thank you.
Bo Annvik: Thanks.
Operator: The next question comes from Johan Lönnqvist Sundén from DNB Carnegie. Please go ahead.
Johan Lönnqvist Sundén: Hi, Bo and Patrik. Thank you for taking my questions. The first one is a little bit going back to the discussion on the Life Science segment, and just to get a feeling for how sustainable the growth pace is that we're currently seeing. Can you please give some more color on where we are in the ramp-up, ramp-down phase on your kind of Novo Nordisk exposure, for example, and how more, you seem pretty bullish on the Polish growth for second half, but how much of a one-time, say, element is that, and how much is sustainable in the longer perspective on the growth side there?
Bo Annvik: Yeah. I think overall it's a quite sustainable situation for that business area, but between years, drivers can change a bit. As I said, for the last two, three years, we have seen a lot of production equipment to pharmaceutical producers being sold as you understandably also have identified a lot to Novo Nordisk, but also to the Irish market, a lot of pharmaceutical companies producing there. Both these two takers, if I say the Irish cluster being a taker and Novo Nordisk being another taker, has had definitely lower demand the last year. Novo Nordisk, I'm slightly optimistic, actually, that there could be a bit of a increased phase for certain application areas for the second half and maybe next year. If anything, maybe a slight increase linked to that customer, and maybe the Irish market is a little bit more stable as it is for some time, linked to the U.S.-European trade situation. We have also had a good demand from the single-use area during COVID, and then a sharp decline because they had a lot of safety stock. Now we see a fairly good situation in that market as well. Broadly, there are actually quite a lot of medical technology companies selling products into hospitals or even products patients are using on them. That's also broadly quite strong. I think we have a very good platform, and we are not dependent on single companies or single locomotives in that business area. Hmm?
Johan Lönnqvist Sundén: Thanks for your comments. Sounds promising. My second question is on the cost side. We see in this quarter that revenue start to grow faster than your SG&A cost items in the P&L. If we look into the second half and potentially into 2027, any reason not to assume that this kind of decoupling from, say, the revenue growth versus the SG&A cost to continue as you have ramped up cost quite a lot over the last few years? Any area where you see you need to add on more cost that we should be aware of?
Bo Annvik: No. There's not going to be any sort of cost increase on group level or business area level of significance. If you're a growth company, you should add more direct people if you need to in your production or wherever it might be. I think we are at the level where we should see benefit actually from top line, and SG&A will not increase in 100% correlation to that, for sure not. More of a decoupling if you call it that.
Johan Lönnqvist Sundén: Yeah. A good operational leverage, at least on the-
Bo Annvik: Yeah
Johan Lönnqvist Sundén: incremental volumes.
Bo Annvik: Yeah.
Johan Lönnqvist Sundén: Perfect. Those were my two questions. Thanks Bo. I guess back in line.
Bo Annvik: Yeah. I could also-
Operator: The next question comes from Ope Otaniyi from Goldman Sachs. Please go ahead.
Ope Otaniyi: Hi again. Just two clarifications from my end. Do you mind giving a sense of the Polish market within Life Science just to get a sense of how large and significant it is there? I think you talked about the data center and defense exposure already within Process, Energy & Water, but could you give a sense of, are these orders where you're already seeing firm commitments, or it's upside potentially in coming quarters and years to growth within that segment? Thank you.
Bo Annvik: Yeah, Ope. The Polish business right now is not super significant for the total business area, but the growth rate has been high now for some time. We see that the plans the Polish government has and a lot of private institutions in the Polish market has are, I would say, stronger than what a lot of the other Western countries have, which are more up to date in terms of equipment. It's just a very promising market for a phase of several years going forward. It's both interesting in terms of organic growth based on the presence we have, but also I would say interesting for further acquisition activity into that market. Your question regarding Process, Energy & Water, I would say right now the gas power plants are the stronger driver versus data center and defense. What we have seen in terms of data center and defense is more, maybe not embryonic, but promising signals and potentials going forward. Another strong segment for that business area is the marine area, actually, where we made quite a significant acquisition in the Netherlands during the spring here, a EUR 35 million company with strong international sales. We already had a Swedish company with a manufacturing facility in China, which is also quite large. We bought actually another niche operator in the Netherlands as well in that segment. We have a cluster of companies in the marine area, which is also promising and a growth provider for the future. There are many pockets of opportunities there.
Ope Otaniyi: Thank you very much.
Operator: The next question comes from Zino Engdalen Ricciuti from Handelsbanken. Please go ahead.
Zino Engdalen Ricciuti: Yes, good day, thanks for taking our questions. Two short ones from my side. Firstly, on the order intake, you similarly to previous quarters, I think, comment that just over half of your companies have seen an increased order intake. Could you share a bit on the more underlying? Is it that your larger companies tend to be the ones that are growing more, or how should we look on that dynamic?
Bo Annvik: I wouldn't say it has anything to do with size. It doesn't really either have anything to do with if it's a trading company or production company. It's more what customer base you have and actually if there is underlying demand and if the company's really on their toes in terms of working with business development, which basically all Indutrade companies are obviously. No, there is no size dimension which is standing out in that perspective.
Zino Engdalen Ricciuti: Very clear. On the M&A side, you briefly touched upon that you're relying a bit less on brokers. Could you talk a bit more about the internal flow you are seeing and how it has developed? You've been clear since the 2024, basically, that this will be gradual. Where do you see that you are on this gradual journey when it comes to inflow?
Bo Annvik: It's different phases in this work. An initial phase is about we have defined 30+ segments we are active in, interested in, more broadly, we are also very opportunistic in terms of good companies. We will always find a home for a good company which fits our criteria. Now we work with utilizing the network we have with the customer bases, supplier bases, peers in industries, the personal networks we have. Then we add, I would say, AI-generated lists of relevant companies for all these segments. The second phase is to start to build relationships with these companies, obviously not all of them are in a situation where they want to divest right now. That relationship building can go on for 1-10, 20 years, I don't know, until something is up for sale. When it is up for sale, we want to be in a pole position to be a real contender to acquire that company. Most of that early phase of using our network and using AI and so on is in place, I would say now. It's a lot of relationship building going on within Indutrade right now. Sometimes you're a little bit lucky and you take contact with a company and it's actually for sale or will be for sale within very short. That's a minority, obviously, of the contacts we take. Most of it is establishing something with potential for the future.
Zino Engdalen Ricciuti: Very clear. Just a quick follow-up on the comment there on the AI-generated list. How do you view sourcing work over time since, I guess these AI-generated lists over time will become more of a commodity when it comes to other acquisition-driven companies like yourself looking for niche goods with companies?
Bo Annvik: If you have identified a company which fits our criteria, you have a dialogue, obviously usually the seller will compare a few different buyers with each other. It's extremely helpful to have a 50-year history to have basically a very strong brand in this perspective. We have no scandals, no issues. We've always been profitable, and we have a quite large smorgasbord of different things to offer a seller being part of Indutrade long term in order to help that company take a step from EUR 10 million-EUR 20 million. We have a real credibility to help them do that. They can talk to 200 other MDs who are part of Indutrade who can testify to that. If you compare that to an acquiring company who was founded three, four years ago with less history and a very smaller smorgasbord, I think we are usually in a very strong situation when it comes to those competitive situations.
Zino Engdalen Ricciuti: Very clear. Thank you. Those were my questions. Also, I want to wish you, Patrik, all the best for what comes ahead.
Patrik Johnson: Thank you.
Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Gustav Berneblad from Nordea. Please go ahead.
Gustav Berneblad: Yes, good morning. It's Gustav from Nordea. Just two quick one also here for me. If we start with Industrial & Engineering, just to get a bit more conviction in that margin development year-over-year, 170 basis points, is that, would you say purely driven by volumes or is there a sort of meaningful impact also from a temporary mix effect or anything? Just to get more conviction how sustainable it is.
Bo Annvik: I wouldn't say it's a temporary mix effect. I think it's a more of a broad top-line based leverage benefit, I would say. This is where we should be and plan to be also going forward.
Gustav Berneblad: That's very clear. Thank you. Just to build on Sundén's question here on M&A and sort of internal sourcing and so forth, I think you commented in Q1 that two out of three acquisitions there was sourced internally. It's possible to give an updated figure on that? Also, if you compare the M&A pipeline as you have now versus entering the year, would you say that total EBITA in the pipeline or number of acquisitions is larger now than it was entering the year?
Bo Annvik: I don't want to give you any exact numbers between what's external and internal source, but the internally sourced is step-by-step improving, increasing all the time. I would say that the pipeline is also on a very strong pipeline right now. It's broad based basically in all business areas except for Infrastructure & Construction, where we also have a pipeline, but there has been more transformational work there than in the other areas. Part of that area is a little bit more cyclical than others. We don't want to enter into clearly very cyclical businesses. We want to avoid that and have more of a stable, profitable growth outlook when we acquire something.
Gustav Berneblad: That makes sense. Thank you very much, wish you a good summer here.
Bo Annvik: Thank you so much.
Operator: There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Bo Annvik: I would like to say thank you from our side as well. Great questions, good discussions. I also want to formally thank Patrik for 8+ years with Indutrade. Done a fantastic job. We wish him all the best in his new role as well. Thank you all. Have a nice summer.