Alimak Group AB (publ)

Thank you and welcome to this quarter one call for 2024. And as always with me, I have Sylva here. As you maybe have seen already in the report, we have updated it slightly and that you will also see now in the presentation, it's on new information. So hopefully you will appreciate that. Turning page and a short recap of the group and our strategy. Diversified global industrial company. And I think we really start to become that truly. We are organized in five decentralized organization, fully customer centric driven. And then we also have these fundamental drivers, you know, for our success that support our business, that we are supported by some global trends. We do have a leading position in our focused niches that we operate. We have a really global footprint also with a huge installed base, which is founding the base then for our service and the aftermarket business. And we also have a strong balance sheet, good cash conversion. So it's a light model in that sense. Turning page. We started our new heights program in June 2020, and then we set out a completely new strategy for the group. We reorganized, we refocused and we have been driving profitable growth since 2022. And this is the program that we are still driving forward. Turning page, we have our financial targets and dividend policy, and you recognize this, growing six to 10% and EBITDA margin of north of 18%. We said last summer we should deliver within two to three years. We have a leverage ratio of being below two and a half times and a dividend policy of 40 to 60. Turning page, sustainability targets. You see here, we have CO2, of course, we have for employee, we have on the for our health and safety and also towards our suppliers. And one thing I would like to highlight is also that as of April now, 2024, we are in the commitment status for science-based targets. We had to have one year of figures for Tractel on board before we could finally apply. And that's now done and we are in the commitment status, as said. So turning page and moving more into the quarter. So, yeah, as we say, a little bit of a maybe mixed start to the year. We are still facing a challenging market impacted by these persistently high interest rates and also, of course, the geopolitical uncertainty that we all see around us. We also have the US elections coming up, and this do affect some investment decisions around. But still, we do very well as a group due to our resilient model now. So group order intake was on par with our revenue, meaning also that our order book remains on a high level and the diversification, the global footprint, our customer focus and the way we now drive the group ensure that we could still deliver a very solid EBITDA margin in the quarter of 16.4% and also a very good cash flow with an increase of 99% year over year. So it's industrial and wind doing excellent results in the quarter. We also have facade access, which is very pleasing to see that now our action starts to bite and we show solid improvements in that division. HSPS deliver a stable quarter. And as you have seen, of course, construction, they have a disappointing result, but again, a very strong order intake. which means that our Q2 will be back to normal. Turning page and a little bit more details for the quarter. Order intake was 1,729,000,000 SEK, down 8% or 7% organically, which is basically driven by a lower order intake in facade excess, industrial and wind. We had good and very strong order intake, as I said, then in construction division. Revenue was 1,736,000,000 SEK down 1% or flat organically, where it's a construction that report a lower revenue, but that's due to the soft order intake we had in quarter four then last year. And then all of this is fully compensated by a very strong revenue in industrial division in the quarter. EBITDA adjusted was 285,000,000 SEK, slightly down from the 289,000,000. and delivering, I would say, a solid margin of 16.4% versus the 16.6% last year. Continued the margin improvement in façade access very positively, but also then the significant lower margin in construction division affects the quarter, while we had then the strong results in industrial and wind. Turning page and this is a slightly or a new slide talking a little bit more of service. And as you know, service is a key component in the new heights program. It's something that all divisions have as part of their business. And it's, of course, something that creates resilience for us. The focus for all divisions is around doing service. It's about spare parts. It's about certification of our machines. In most places, this needs to be certified on an annual base or more frequent. It's about training. It's about retrofit, et cetera. So we have a wide service portfolio, and this is, as said, a very important piece for us. And we continue to actively drive the growth of this part of the business. And I'm happy to see that it's also developing in that way. Turning page and going into divisions facade access order intake was 423 million SEC in the quarter down 14% also 14 organically. And it's the market for high complexity solutions or building maintenance units, as we call them, which is still challenging. While the market for medium and low complexity solutions continue to develop well and that's has been part of our strategy from. in the new heights program that we should be actively driving that piece of the market which wasn't there before and also something we fundamentally strengthened with the acquisition of of tractel so that's positive to see that that's paying off and it's the right thing for us we also see a good growth in the service and the data fit segments across the board in the quarter revenue was 485 million sec flat organically uh and service revenue continue to be an important part in these times where it's a little bit slower on the more complex side ebitda was 46 million sec 20 versus the 29 million sec last year giving a margin of 9.6 percent up from the six and it's all driven by the activities that we do we sign up new projects with better margin including contingencies we are putting in place this project execution, which is fundamental to keep control over the projects and the development of it. We are increasing prices on the service to ensure there we grow service more. And we're also acting on the factory side, as you know. And the German assembly side closure, as we announced in quarter four, is on its way. Turning page. Yeah, so this Mamendorf assembly site closure is on schedule. We have signed the agreement with the German Works Council. The supply chain competency transfer to Madrid is ongoing, what we are transferring there. And the assembly site will basically be ended by the end of the year, with exception of the Sydney Harbour Bridge projects, which will continue to year end. And as we also said, just to remind you that this is a saving of around 60 million SEK annually that we should start to see from 25 and onwards. And that's on plan. We also did a small acquisition in the quarter, one legacy in Malaysia. This is a specialist BMU service provider turnover of 6.7 million sec, but it's 15, 16 service technicians in this company, which means that we, of course, strengthen our presence and to do service and retrofit and all this in this area. So a small important piece for this business. Turning page into construction, order intake was 484 million SEK in the quarter, up 3%, 4% organically. And we see solid orders for new equipment for rental parts and service. So overall, it was a very solid quarter. Revenue was then somewhat low, 371 million SEK, down 20% and also 20% organically. And this is fully driven by the softer order intake we saw in Q4 last year, which meant that we had very low invoicing out of the Skellefteå factory. This was the hoists coming from there, which was very low in January and February, while it was back more on normal level in March. We also continue to see that the scan climber business, which is very Nordic focused, but we are trying to drive this globally, which will help us going forward. But the Nordic market is still slow. And that's also, of course, something that falls through somewhat due to the factory set up we have there in Poland. EBITDA ended at 39 million SEK down from the 86 margin of 10.4 versus the 18.5. And again, fully driven by this volume drop of machines out of Skellefteå and the Poland factory. So this also means that we have been driving the make-buy initiative and focusing on this for a long time. And we are further also accelerating now some efforts here on the fixed cost structure to make sure that we can become more variable. But as I said also, driven by the new and very good order intake, margins will be back in quarter two. Further turning page, long-term strategy remains. We have a very solid business here, good order intake in quarter one, driven by our customer focus, geographic expansion. We are putting people in places where we haven't had before and getting sales around the globe, product development, and also our flexible business model with rental used, we buy back, refurbish and sell again, et cetera. The market still continues to experience headwinds, and especially Nordic is very weak. But despite this, we continue to see a lot of growth opportunities in most regions around the world, like you see in our order intake in the quarter. Some examples of orders we have won during the quarter, we have multiple orders for construction hoists in the U.S. We have some significant orders for apartment projects in Dubai. We have been selling mass climbers with accessories in India, an important market for us, of course. And also we have sold a solution or have an order for a solution for a first skyscraper in Greece. Turning page. This is basically what it's all about, that we are moving away from the product focus that I would argue that was here before to really an integrated model where we work with our customers, where our intention is to move people, material and businesses safely to new heights. So close with our customers, we take our technology leadership seriously and we have built a sustainable business model. Here you see some sort of infrastructure around this with all the things that we have done over the last two, three years, which we know are very much appreciated by our customers and lead to that we take market shares. Moving page, height safety and productivity solutions. Order intake was 336 million SEK in the quarter, down 4%, 4% organically. and excluding inter-division sales, growth was flat year over year, especially the lifting and handling an elevated business that held up well for us, while the distribution side was a little bit softer in the quarter, and this has also affected that type of business by a slightly shorter quarter. Revenue was 354 million SEK, down 2%, 3% organically. And yeah, it is basically similar to order intake, the reasoning behind this. And EBITDA was 61 million SEC down from 75 with a margin of 17.4 versus the 20.8. And this decrease is as we've been into before, mainly driven by the central cost allocation changes that we did mid last year, which means that this will also affect our Q2 before we have a comparable base. Turning page, business update. Here we also continue to focus on sales, marketing, product development. We focus on certain segments, of course, to be even more specific and customer driven on the elevator, underground networks, confined space industries, fire and rescue. And this we see that leads to lead generation, our efforts here. And so it pays off. And this is all to secure, of course, that we are having a profitable growth going forward. We also work to further strengthen our service capability in this business because that's also an important part. Regionalization has been happening, you know, so we have changed the organization slightly to have a more North American, South European, Northern European and this Asian setup, allowing for more resource sharing. cooperation across countries inside these regions and and then also a nice example here you know that we're not just selling these products one by one or you know that but we also package and we work with our customers like we have done here with the elevator company where we sell them some sort of complete solution with hoists safety devices pull these ropes etc so so that's also a way that we are pursuing going forward to do more of these things Turning page to industrial order intake was 328 million SEC down 12%, 11% organically. And the decrease here in the quarter is coming from the traction equipment side that was moving slow. But this is a question of when you close orders. The pipe is very strong and we have no concerns here. So we expect this business to continue like it has been doing. We also continue to see strong parts and service growth throughout all regions and something, of course, very important for this division. Revenue was 397 million SEK, up 27%, 28% organically. And we had several key deliveries during the quarter with our key segments, cement, oil and gas, port customer, and also a strong aftermarket revenue in the quarter. A very, very strong EBITDA of 106 million SEK, up from 74 last year. Margin of 26.6% versus the 23.6%. And it's driven by volume, good project execution, and our aftermarket activity. Turning page, a little bit more about the business update. We continue also here in industrial to drive you know, the strategy, adding more sales resources out there and in regions and places where we then are not so strong, where we see growth potential, for example, Latin America. We also continue to see success in some of our key segments, you know, and on the offshore wind side, we have done a lot and we secure nice orders again, now on the Rack and Pinion side. We continue to work on our aftermarket penetration, strengthening that setup, and also we have launched a nice new product. This is an EX explosion proof lift coming out of our China factory for non-regulated markets. Turning page to wind, order intake was 175 million sec, down 16%, 15% organically. And this is just comparable to Q1 2023. This is a solid, very good order intake level in our perspectives. Revenue was 153 million SEK, up 1% organically. Strong sales in most regions and specifically ladders, fault protection systems and PPE that influenced the quarter. And also strong service activity in EMEA. EBITDA at 30 million SEK up from 25, a margin of 19.8 versus the 16.5. Again, very, very strong performance and also supported by a favorable product mix. Turning page. We still continue to see that the wind market is being invested in. It's a very good long term. And from 25 and onwards, we still believe that this will continue to grow faster. But there are still challenges in this industry. We see OEMs, our customers, having quality issues on some of their turbines. And it's also some price competition in this market, but we feel we have a good strategy. We have a good position. We have been taking market shares and we feel well set for the remainder of this year. And also, you know, when the market should further start to lift going forward. And we continue to invest in our product development. Of course, you know, to strengthen our offer.

and then we turn page and into the income statement and then i leave for sylvain thank you and good morning everybody on this slide we present a summary profit and loss statement i will not come back to order intake and revenue developments which will we have already commented as far as ibita is concerned it's interesting to see the resilience ibita is almost flat in the quarter despite cost inflationary pressures and the flat revenue If we look below EBITDA, amortization is at its normal level, around 50 million SEC. Finance net is down due to the lower debt. This is related to the repayment of the Tractel acquisition bridge loan last year and more generally the impact of the positive operating cash flows in the last 12 months. Taxation rate is slightly up versus Q1 2023, and that is due to the country mix. And overall, that means we close the bottom line by 6% in the quarter. I present here reported gross margin and operating expenses to give a little bit more color in respect of the EBITDA drivers. Gross margin has steadily increased to 40% plus. This reflects in particular gradual improvements in the façade access and wind divisions. a consequence of their respective improved business models. In the quarter, as mentioned by Oule, wind was favorably impacted by the product mix. On the contrary, construction suffered a negative mix effect and low utilization in its manufacturing facilities. As a percentage of revenue, operating expenses are slightly up versus Q1 2023. We have incurred some specific additional expenses, such as sales expenses for the industrial division or product development for HSPS. But we are not fully happy with that overall cost level, and we have taken a number of cost initiatives to reduce them. Amongst those initiatives, I can refer to the closure of the Facade Access Assembly Facility in Germany, which we have already reported. And we have some other cost projects, in particular in the Hackenpinion manufacturing facilities, where we are working on making the cost more viable, and that specifically applies to the ScanCamber facility in Poland. And besides, I can confirm that we are on track to deliver the 40 million SEC cost synergies expected from the Tractel integration. Reset for the period was 131 million SEC versus 124 in Q1 2023. As I said, it's a growth of 6%. Excluding items affecting comparability, Reset for the period was 135 million SEC, up 7% from last year. EPS was 124 SEC versus 172 last year. Adjusted for ISE and acquisition-related amortization, EPS was 1.66 SEC versus 2.11 last year. And obviously, EPS and adjusted EPS are affected by the higher number of shares further to the right issue in March last year. Next, please. And we are now moving to operating cash flow. And we are pleased with the trend in respect of operating cash flows. Cash has been and will be a focus and more specifically we have improved working capital management and that is reflected in the numbers. Now coming to net debt which is stable in the quarter despite the good cash flow levels and that is due to the impact of the weak SEC on our 300 million euro term loan. We remind here that we chose the euro denomination as most of the Tractel business is a euro business. Leverage is at 2.25, which is in line with our target of being below 2.5. As I said already, we will continue to focus on operating cash flows, which will contribute to future deleveraging. Our priorities for capital allocation remain unchanged. We will invest in organic growth, and I mentioned a few examples earlier. We continue to actively work on acquisition opportunities, allowed by the decreasing leverage. And of course, we will apply the dividend policy, although ultimately this is a board proposal and an AGM decision. On this slide, I have added a raw C-graph because this is a very important indicator for us. It's very slightly down in the quarter, mostly due to the Forex impact on capital employee, and we are definitely working on making this curve rebound in the future. On this, I hand over to Oule.

Thank you, Sylva. So to sum up, a mixed start to the year, but also I would say a very solid start where we as a group show resilience through our business model. And we had a very strong industrial division result, been there for a long, long time. Wind continue to deliver great results and it's a proof of the turnaround that we have done for that business. If you recall, you know, uh very nice to see how that's uh now quarter after quarter month after month to continue to deliver on the facade access side we have made a big step forward and it's also a confirmation that the activities that we are taking there are the right ones and that we are on the way now of fixing that division it will of course be a journey to really get it up to the other division levels but that's our target We have a stable HSPS business in the quarter. And we have a very strong order intake, I would say, on the construction side. So the results should be back on normal levels in quarter two. So we will continue as a group to execute on our new heights program and also, of course, then to ensure that we deliver on our financial and sustainability targets going forward as we have done And with that, I also say a big thank you to all employees for this good start to the year. And we move to Q&A.

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 Hannah Lindbo from DNB. Please go ahead.

Hi, good morning, everyone. My first question, I have to ask about the construction, the division margin, because I know that sales was weak due to Q4 orders, but it still seemed like very weak. So is there any negative mix in this, or how should I think about it going forward?

Yeah, it is a negative mix in the sense that what was very low was the deliveries out of the Skellefteå factory. And also then, as we have continued to have, low deliveries out of the Polish factory. You also know we have a Chinese factory, we have services, we have all the other parts, but it was especially these two factories that we had a very low start to the year, January, February, which of course, have a significant impact on these factory setups.

So if I interrupted correctly, for Q2, this should be back at like a normal margin level for you?

Yes, we have the orders that we are taking are filling up, you know, the Skellefteå factory. Still, we have a logon in the scan climber, but that we have also had for a while, you know, so even though it was even even tougher in the beginning of the year, but Skellefteå factory is absolutely back to normal.

That's good. And then I noticed that the share of service orders in facade access was very high. So my question is, is it any large order in this or is it like this kind of level we should expect in the future?

It's not a specifically big order or anything like this. It's the focus of our business, but it's also an equation of lower product order intake on the BMU side. So it's a relative term of how you split the cake, which is the reasoning for that. So what's lower? is the is the BMU side which is causing that or strengthening that effect and if you like.

All right last question on the industrial margin and I think this one keeps impressing me and I think you have been above 22% margin for the last year now and so my question is how sustainable is this level for industrial or have you been

how has the mix been the last year here i don't think it's a heavily a mix issue but it's a it's a you know an important volume trigger also of course in this quarter because we we had high deliveries and that volume effect also of course falls through like it should on the bottom line and um but at the same time you know we we have a good business model there i don't foresee that the margins should start to drop significantly but i can't promise this type of level but you need to look upon the average over you know a little bit more running running level you know and we will see but we have a good profit level in industrial and that we should remain to have absolutely all right great uh thank you that was all for me

Thank you, Anna.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Thank you. Then we have a written question here. I will read it. Industrial biggest driver for margin improvement. Is it service margins that are increasing or equipment margins that are the biggest driver for the improvement? We work on pricing, so we expand on that side all of it. But I think, as I just referred to, the main lift in the quarter is that we also have a very high level of invoicing, which is, of course, the volume effect that also dipple through down to the results. Else, we have good margins in general about this business on both sides. um that seems to be the only written question also i give it a few seconds if there are more coming i trust that means that we were pretty you know clear today so i thank you everyone for the questions and for following and yeah thank you until next time