Norma Group Ag Name Akt

Thank you. A very warm welcome from my side to all of you listening to this call. This is actually the first full quarterly report as the new CEO of Norma together with the new CFO, Okan Scheliger, today. So as usual, after the presentation, you will have the opportunities to ask your questions and we are very happy to answer them. So we will share some of the results we have in our Q1 and also share some of the changes we have introduced since the start of new norma, which we see some effective already in the Q1 results. So here you see our usual disclaimer. Please pay attention to this one. And as we've done in the full earnings call from 2025, we will differentiate between new norma and former norma. The focus is on new norma and some topics we still talk about the former norma, and this is highlighted in the presentation. So now we have a look at the Q1 milestones and achievements. So first of all, I have to say I'm very happy that we see a very good improvement in our profitability, which is 3.1 percentage point year over year improved. So this is basically coming from a cost discipline in all cost areas and a big thank you to all of our colleagues who made this happen with us. So we see also secondly from the pricing efforts we have taken in positive effects, which is also of course contributing to the profitability. We see in our sales still some slight issues which we are working on. Debt repayment very positive based on the water divestment. So we are net debt free currently. So a very good basis for new normal. The transformation program is progressing exactly as we have planned and as we have communicated and announced to you. So we are simplifying, streamlining our organization, and the cost measures are well underway according to plan and committed. We will share with you in a moment some new business wins, just some examples we see also in M&E, strong contract, and I will share one example from our industrial applications business area, what we could win, which is just an example from several wins in this area. So we confirm our guidance, our outlook for the financial year 2026, also based on the results we have seen in quarter one. Of course, we are still careful with the year going ahead. However, we are confident to confirm and to see the financial year guidance. So now let's move our attention to our business wind. This is an example for mobility and new energy. So we see a very nice sale here, what we could achieve actually with a very nice profitability for one of our customers, a major contract. SOP is in 2029. Now you may say, well, this is only in three years. However, this is important for us. This is the nature of our business. This scale is quite in 2029 and some of the sales we see in SOP in 27 and 28 already. However, the duration is for seven years, so it gives us a very nice and stable business. So the fluid lines we have sold to our customer are improving the emission regulation and are used in internal combustion engine and in hybrids. So this is very nice and very important. I think we are all aware hybrids are gaining traction and will stay in the market. So the forecast for quite many years. So with this, we move on to our industrial applications area where we have several industries in focus. Actually, we have seven focus industries where we are working on. So this is one achievement of our sales team, which we have really positioned in a different way now. So we have sold to a company building machines to basically clean bottles. So our FGR, what we call it, so a very nice sale. We could actually win this because our service is really better than the competitor. Our price was acceptable and we have a fantastic relationship and could give technical advice, which convinced our customer that we are the right partner for this kind of business. So this is actually a product, the FGR, what you see here on the slide, what we have on hand. So this proves again that we have the right products. In some cases, we will work on adaptions. This is a nice case where we have the product on hand and we can use this in this industry. And there's several other industries which are out to sell this kind of products. So let's move on now to the new norma, to the industrial powerhouse. What I shared last time with you, this is basically a reminder and giving some more insights what we have achieved so far. So the pillar number one to the left is the restructuring. This is a transformation project. We have simplified the organization in the first step. We are not done with this, but we have started and see first achievements. Basically, we want to have SG&A which are competitive, which fit to new normal, and this is what we are working against. So the new organization will be really oriented against the performance. We have done this in the sales organization already, and the whole organization will be also measured against business KPIs, and the one normal business will be the focus. So the second pillar is the footprint. We reported already that we could close our footprint measures in China already very successfully. In North America, in Mexico, we are on the way currently as we speak, and we are evaluating currently what is the right footprint setup for plants and for sites. Norma Group. So we will in the second half of this year also present our targeted operational and also structural measures to come up with a new Norma footprint. The third pillar is the sales push. As you have seen already, so we confirm already this measure that we are having a bigger order intake. We could improve here. Just share these two examples. So we will increase also our plant utilization, which is very important to use the capacity we have to use the assets we have already and to have a strong customer focus. And here I want to give you Some insights in what we do. Actually, in February, we have brought together our sales team here and had a start of the year with clearly identifying what is the new way of selling, what is our pricing strategy, what is our calculation methodology. We need to be fast. We need to be competitive. Of course, we need to be competitive. Really profitable and we have seen already the first results of this. Actually, I was two weeks ago at a customer and they really confirmed that they see different behavior and they have given us now additional business and really show and give us more RFQs so we could gain more business. The fourth pillar to the right, which is called Growth, this is currently running on a low key. It's more for the midterm, which could include an M&A transaction. So we are building the pipeline currently. However, because we have a lot of homework in pillars one, two, and three, which is the focus this year, and this is what we are focusing on, and with a little bit of resources, we are also working on the fourth pillar. So from this one we go on to give you a concrete example what we have delivered already in the transformation. So we have implemented the SBU structure or more the business-orientated structure as focus on the SBU, giving more responsibility there. And we will change our reporting as of the year 2027 to a business unit segment reporting, which follows the steering we are currently implementing in Norma Group. Secondly, the Shared Service Center, and you see a photo from Novi Sad in Serbia. What we are expanding, we have about 80 people working there in different functions from HR, from sales, from supply chain and various other functions where we are bundling our resources and sharing really also processes, making use of digitalization and run this Shared Service Center where we see very positive results. SG&A improvements we have seen in the U.S. and in Europe, headcount reduction with voluntary leavers program, which are running according to plan a little bit better, and we foresee that we go ahead as planned and communicate it to you already. So performance orientation, this is basically the sales push based on the agreements with our sales team. So we see really that we can build on the very strong gross margin we have in Norma and really fix our top line situations. So then to give you the key KPIs, our net sales in the Q1 2026 is 208.6 million, slightly lower than one year ago. The basic effects are exchange rate effects, also some organic or some volume effects. Lucky enough, or it's a good message, is that we are having an organic growth in industrial applications, which is, of course, our focus in the growth areas. Adjusted EBIT with 6.3 million, a significant improvement towards last year's Q1, and this translates into the adjusted EBIT margin of 3%. So this is really the big step forward we have made. Of course, we are careful for the year ahead, and we are also very careful at managing the cost situation and, of course, also the sales side. Net Operating Cash Flow, negative. This is formal norma, very important to notice, and we will later on explain how this comes to better here. And with this, I will hand over to Okan to give us some more insight in the key financials.

Exactly. Here on the next slide, and also welcome from my side, everyone. Very happy to be here and very happy also to engage with you for our quarter one with us. So let's deep dive a little bit more into the financial development of Q1. As Birgit mentioned earlier, a quite solid quarter in the year 2026 in terms of sales. We reached 208.6 million, which is a year-over-year development of minus 5.7%. As already mentioned by Birgit, main driver of this decline is attributable to FX headwinds we saw. Globally and primarily or let's say globally of 9.7 million of which 6.8 million were related to the US dollar and development and 1.9 million to the renminbi in the China region. In terms of volume and pricing impact, we managed to reach an organic growth of minus 1.3%, which represents 2.8 million. That means on a volume basis, the business declined. However, we could offset this by positive pricing impacts, which led then overall to the minus 1.3% year on year. So let's move on to the next slide to deep dive in a little bit more into the performance of our business units, starting with the industry applications business on the left hand side. We ended the year with 66.3 million in quarter one. This represents a decline of minus 0.6% year on year. And main drivers here have been, again, the aforementioned currency impact, which basically impacted the development by minus 5.4% year on year. And in terms of volume and pricing impact, important to emphasize here, also mentioned already by Birgit, we've been able to increase our performance in the industry applications business organically with 4.9% year on year, which was mainly driven by a stronger demand in the APEC region and a ramp up of a major project in specifically the APEC region again. So let's look at the mobility and new energy business. So here we achieved 142.3 million in the first quarter. This represents a decline of minus 7.9% year on year. Main drivers here have been a softer automotive demand, which led to a decline on a volume and pricing side represented by minus 3.9%. And again, a currency impact also in the mobility and new energy business at minus 3.9% year on year. On the next slide. We see the regional development. So again, starting on the left side with America's region, Q1 and 2026, we achieved 65 million sales in the Americas region. This represents a decline of minus 10.9% year on year. Again, many driven by FX and also by the software automotive demand as already mentioned. However, at the same time, we've been able to improve our EBIT margin by one percentage points year on year. And with that reach 4.6%, which is mainly due to positive pricing impacts in the Americas region in the first quarter, as well as tight cost management in the region. Moving over to the MAR region, here we reached 114.1 million in the first quarter compared to quarter one 2025. This represents a decline of minus 2.9% year on year. Also here, we achieved a very significant improvement of our EBIT margin, 4.6 percentage points compared to Q1 2025. Main drivers here have been operational improvements and also a tight cost management. Next is the APEC region. The first quarter sales are at 29.5 million, which represents a decline again compared to Q1 2025 of minus 3.8% year on year. But also here we've been able to hold the strong EBIT margin that we saw in the full year 2025 above 10%, which is a very solid performance. Again, underlines the fact that we've been able to sustainably improve the operational situation in the region and at the same time are very disciplined with our spendings and cost structures. Let's move to the next slide. On the next slide, we see more details on our adjusted EBIT development. So we already saw the 6.3 million of adjusted EBIT representing 3% EBIT margin in Q1 of 2026. From left to right, we see basically the main impacts or the drivers that supported this improvement, significant improvement from an adjusted EBIT in Q1 2025 at almost zero, which was mainly impacted, let's say, on the volume and price basis by the weakening demand that has been mentioned. and this basically led to a reduction of 7 million in terms of volume and pricing impact. At the same time, we can see that across the material, personal costs and other OPEX elements, we've been able to offset this Negative impact from the volume reduction, starting with the material cost. The impact year on year was at 8.7 million. Main driver here have been a positive mix or favorable mix, and at the same time also an improved material cost ratio compared to Q1 2025. In terms of personal costs, we could achieve an improvement of roughly 3 million, 2.9 million, mainly a consequence of a lower headcount and improvement in the personal cost area. Other OPEX plus two and a half million. This underlines again the aforementioned discipline cost management across the organization and basically help to support the improvement of our EBIT globally DNA and FX largely stable compared to Q1 2025 and just to round up what Vivit already described in terms of the transformation program in the first quarter our transformation program contributed another 3.8 million to our results compared to Q1 2025 So on the next slide, I will quickly walk you through the Q1 operational adjustments and out of full year 2026. So in the first quarter, adjustments were limited and fully in line with our expectations on EBITDA level. We basically had an adjustment related to transformation. severance and project costs of 0.6 million. On EBIT level, we had an adjustment in total of 1.9 million, which includes an additional 1.1 million amortization of PPA. And in terms of net profit, the adjustment is at a total of 1.4 million, and this is post-tax. For the full year, this means basically that our expectations are remaining unchanged. So we are still expecting a total of approximately 24 million of adjustments on the EBITDA level and 29 million adjustments on our EBIT level. So here on the next slide, we will give you some more details, as mentioned earlier, on the Q1 2026 cash flow development. First of all, it's important to emphasize that on the left-hand side, our adjusted EBITDA in Q1 2026 is representing former normal. So 20.7 million adjusted EBITDA includes the water management business. This is in line with the provisions of IFRS 5. that we applied, let's say in context with the water management sale that took place in the beginning of this year. Our net operating cash flow ultimately ended up at minus 19.7%. And the main driver of this negative development was the trade working capital impact with minus 33.6 million, of which a significant impact was again related to the sale of the water management business. So here, particularly, We basically had to adjust for or could adjust for the supply chain financing program that have been reduced in the context of the sale, as well as a seasonal inventory related effect out of the water management business, which is also part of the 32.7 million that you see here on the page. From our net operating cash flow, if we then also deduct the interest and the tax, as well as the proceeds from the repayments of the derivatives, we get to our external free cash flow of minus 29.2 million. Again, important to emphasize is here, Without the one-off impact out of the water management sale, our net operating cash flow would have been positive, which underlines that new Norma has a positive cash generation also in the quarter one 2026. So on the next slide, we will briefly recap on the balance sheet we set and initial shareholder returns. So starting with the water management divestment, which has been concluded according to the time plan and schedule. So we could basically get net proceeds as planned of approximately 650 million post-tax in full year 2026. So with that, also according to our plan and previous announcement, we parked basically or e-marked a debt repayment of up to 300 million. In the first quarter, 290 million were already repaid. And with that, we are basically very close at the communicated 300 million. The remaining debt is basically consisting of promissory notes with different maturities also included in the 98 million are basically leases around about 20 million. In terms of shareholder return, we've communicated that we are committed to return to our shareholders a total of 260 million, of which 53 million have been returned already in early Q2 2026 via public share buyback offer, as you know. And But that we can basically conclude that all in all, we are on track to reach the 70 to 90 million net cash position by the end of 2026. And again, also confirm what we've shared with you within our communication and 31st March this year. So with that, back to you.

Thanks, Okan, for giving us this insight into the key financials. So you heard it was an encouraging start for Norma Group in the year 2026. We have clearly defined actions on our transformation journey to build new Norma, to build an industrial powerhouse. And we are fully engaged to make this happen. The year 2026, we have a quite volatile external surrounding, but we are working fully on our homework to make this a successful complete year in 2026. Given the situation, we confirm our guidance. And just to remind you, the net sales is in the range of, we foresee in the range of 0% to 2% growth. The adjusted EBIT margin we see in the range of approximately 2% to 4%. And the net operating cash flow we see approximately between 10 million and 20 million euros. So we have promised and we still keep this that in the second half of this year, we will invite and give a strategy update with more insights on our target vision for the year 2028. And with this, I say thanks for the attention and we open up for questions. Thank you. Thank you.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To ensure that the session runs as smoothly as possible and is easy for all participants to follow, we kindly ask that you raise your questions one at a time. In other words, if you have more than one question, please wait for the answer to the current question before moving on to the next one. We'll now take our first question. One moment, please. And our first question today comes from the line of Nikita Papachio from Deutsche Bank. Please go ahead.

Yeah, hi. Thanks for taking my questions. The first one is on your guidance. I mean, with your EBIT margin, you're already in line with your guidance range, while the tails are significantly down compared to the 0% to 2%.

What are you seeing going forward this year?

Do you expect H2 to be stronger, for example, compared to H1 due to other sticking-in and structuring measures, or what should we see here?

Yes, so thanks Mrs. Papaccio for this question. So yes, we see the next quarters actually to be somewhat stronger. We have some measures in our hands, which we are working on to ensure that we can meet the guidance of 0 to 2%. As you have seen in the Q1, we are quite lower. Of course, the exchange rate was not playing in our favor, but also without exchange rate. And with the EBIT margin, as you said, we are in line. We are, of course, also working on this to keep this. So for this reason, we keep the guidance and we confirm the guidance.

Thank you. And if you think about your adjusted EBIT bridge for the next quarters, should we expect a similar tailwind from material and personal costs as you saw in Q1?

Well, in terms of material costs as of now, we expect a similar situation. However, due to the, let's say, a very volatile situation in terms of geopolitical crisis and also economical impacts, Out of that, it's hard to predict as of now, let's say, what will happen. But with everything we know as of today, we don't see any, let's say, immediate impact on our material costs. In terms of personal costs, I've mentioned the 3.8 million for the full year. We've communicated 50 million incremental sales out of the transformation program. So we are here fully in line with our quarterly performance, if you will. So here I would assume that this will stay more or less the same. There will be a ramp up, let's say, towards the end of the year. But also here we confirm, again, the 15 million that we have communicated earlier.

Thank you. And my last question, I mean, we have already made, how is Q2 evolving so far? Are you seeing any signs of improvements in the environment in a specific region or business segment?

I couldn't get the first part of the question. Q2. Q2 is evolving. Currently, we don't see any specific improvements of the situation, but at the same time, we also don't see any negative impacts that will have an impact on our performance. But again, getting back to what I said earlier, it's a volatile environment we are in as of today so far. And I think we proved that also with our Q1 performance. We are basically in line with the expectation. And as of now, as of today, this is basically what we can confirm.

Thank you very much.

Thank you.

As a reminder, if you would like to ask a question, please press star 1 and 1 on your telephone. That is star 1 and 1 to ask a question. We will now go to our next question. And our next question comes from the line of Jasmine Stylin from Barenburg. Please go ahead.

Hello. Many thanks for taking my questions. I have also three FMA and will take them one by one. So the first one on the net operating through cash flow. and just try to get my head around the net operating free cash flow guidance. So, according to the slide in the presentation, the cash out is almost solely attributable to the water management. So, adjusted for this, the net operating free cash flow was already around 13 million in the first quarter. So, even assuming the cash out relates to restructuring measures, 10 to 20 million guidance looks not very ambitious. So could you please walk me through your assumptions there? Thanks very much.

Sure. Thank you for the question, Yasemin. Also here, as of now, we are fully, let's say, in line with our expectation. When we came up with our guidance on our financial KPIs, we tried to incorporate, of course, the situation with everything that we can predict in terms of external factors. As of today, we can basically just underline and confirm that we are very comfortable with our guidance for all the three elements, so let's say EBIT and net operating cash flow. As we don't know, let's say, how the situation will develop globally and also for us as Norma, So the first quarter might look positive. And yes, as you mentioned, there's also, let's say, another impact out of the transformation program. But as of today, with everything that we know, we feel comfortable with that guidance also in terms of net operating cash flow.

Okay, thank you. Then the second one is on the new pricing strategy. Could you share more color on the measures by segment? So what is your target in terms of volume price? Is it more geared towards industrial application or do you also focus to increase the prices on the M&E segment?

Well, it's actually for both segments relevant, maybe starting with M&E. M&E is, of course, a highly competitive market we are in, and we have actually the right products, which our customers are confirming. We have capacity, we have the assets installed, and so we work very diligently through our numbers what pricing we can offer to have the right market share and to work on our top line. As we have seen also in Q1, we are not where we want to be, so this is on the M&E side. On the industrial applications, it's a little bit different, and it's also different industry by industry. We have currently seven focus industries plus, of course, our distribution business, and we do the pricing following each industry, what is the competition, where are we competitive, and also following our cost basis in our plants in our company. So based on this, we have worked out very individual pricing strategies that we are covering our costs, of course, that we are profitable and that we are competitive in the market. And we see here actually the first results that we can achieve nice new business in different areas. However, pricing is very different if you talk about data centers, if you talk about white goods, if you talk about aviation. So it's for each industry, it's a different pricing, what we are applying, basically.

Perfect. And I know it's very early stage, but after your discussion, the first discussions with customers in the industrial application segment, how should we think about the midterm growth trajectory in this segment? How? What is possible also based on the order intakes you have realized already? That's my last question.

Yeah, thanks for this. So we worked out really focus industries, seven focus industries. They have different growth potential. So in terms of numbers, of course, we will share more in our strategy update. But to give you a first flavor, the addressable market we see in this focus markets for industrial application is significantly bigger than we have in M&E. So the next question would be, Do we have the right products which fit for this application? We can broadly say yes, there may be normal adaptations required and we have the right engineering capabilities in-house to make this happen actually in a really good timing, which also our customers appreciate a lot that we have this. So there is really very nice growth potential in this industrial application industries.

Okay, thanks very much. I'll step back into the line. Thank you.

Thank you.

Thank you. Once again, as a reminder, if you would like to ask a question, please press star 1 and 1 on your telephone keypad. That is star 1 and 1 to ask a question. There are currently no further questions. This means this concludes today's Q&A session and today's conference call. Thank you for participating. You may now disconnect.