Balco Group AB

Hello and welcome to today's presentation with Balco Group. We have the CEO Camille Rector and CFO Mikael Grinborn presenting the Q1 report for 2025. We'll do a Q&A after the presentation and if you're calling in or would like to ask a question, please press star 9 to raise your hand and star 6 to mute yourself. You can also type in your questions using the form to the right. And with that said, please go ahead with your presentation.

Thank you. Welcome to the Q1 presentation for Barco Group. First of all, I would like to make a very quick snapshot for the new listeners regarding Barco Group. Barco Group was founded in 1987 and consists of several balcony and facade companies. The head office is in Växjö and the group has today about 600 employees. We operate in two main segments, the renovation and new build, and the core expertise is to supply glazed balcony and balcony solutions. But we also have a broad portfolio of different kinds of balcony solutions. We are the market leader in the Nordic countries with the key markets, Sweden, Denmark, Norway and Finland, and a challenger position in Northern European markets. By saying so, we go over to quarter one. And we had a weak result in the first quarter this year. The adjusted EBITDA margin amounted to minus 0.9%. And there are several reasons for this weak result. The main one is that we have had delays in our processes. And by saying so, I mean both the permission processes we have in Sweden, but also delays on ongoing new build projects in UK and Finland. And this has then affected negatively both the revenue and our cash flow. This has also led to that we have had an overcapacity in our production, which we have not been able to compensate for in short term during the first quarter. On top of this, we have also had project deviation in one of our big projects in Sweden. We have taken actions during the quarter and we have made some major reductions of manning in Finland and Denmark. And we have taken a decision and also started up to close our production in Arboga and move this production to our existing plant in Växjö in Poland. This production will be taken in on existing manning. And we see also here that we can improve our production efficiency by concentrating the production to less production facilities. The move will be ready during quarter two. During the quarter, we have then taken the structural cost for both the planned and implemented actions of 31 million SEK, and we are estimating a yearly saving of roughly 60 million SEK due to the actions taken and planned. The net sales decreased by 3% to 360 million SEK, and that is also mainly connected to the delays we have had in the processes. The order intake was lower if we compare to the same period previous year, 275 versus 352. And it's always very difficult to match order intake quarter by quarter in a project business. And we could see that 2024, quarter one 2024, we received some really big orders during the first quarter. And of course, we have also big orders in our discussions right now, but we were not able to close them during the first quarter this year. But there are in our quotation portfolio for sure. But also, I would like to emphasize that all Swedish balcony companies and also our Finnish balcony company, Riku, had actually better order intake this year versus previous year. If we go and look a little bit on our market update, we can see that throughout the whole 2024, we saw an increase in the number of requests for quotations. And that trend also continues the first quarter this year. We are overall positive to the market in general, but we can also see that the recovery is slower than all economic forecasts indicated during the autumn 2024. And this is, of course, why we have taken this needed action and why they were needed to be done. But there is an increased custom activity in the renovation segment for our balcony companies in Sweden and Norway. We can also see that the Finnish new build market has bottomed out. It's slightly improved, but we don't see a rapid return for any new construction of multifamily buildings in the Nordic countries. Even if there's a slight improvement, but not a rapid one. But we continue to have a good activity in the new-build segment, both in the UK and Germany, and therefore we have also taken a decision here that we also invested in more local design resources. It is especially important in the new build segment to have local resources for design to be able to, in an early stage, affect the project. Both, of course, to be as cost-efficient as possible, but also to be able to get our design into the project so they can only buy the project from us. The maritime segment has started up again, which we are very happy to see after the pandemic has started up. And we can now see that new ships are actually ordered at the shipyards. And that is very positive for us for ongoing discussion with the shipyards. However, there continues to be a strained competitive situation for our Swedish facade companies and also our balcony company in Denmark. And giving a little bit more about the Danish situation, we can see there that the Danish consumers, they are more cautious in general. And we can also see that on, so to say, consumer-driven products in general, that quite many companies that have sales in Denmark are having a struggling period right now in the Danish market. But that combined with what we see that we have a product, the main product that we have, the main project we have in Denmark, where we are actually adding a new balcony, but on an existing old building. That means that we are, so to say, That is even more struggling for us because if you have a balcony today, you want to renovate it. But if you don't have a balcony, it's a bigger jump to take to invest in a new balcony when you don't have one than to just renovate what you have. But in general, I would say that we have a lot of interesting ongoing discussions on all our different markets. And it's mainly, as I said, the Swedish for safe companies and the balcony company in Denmark, where we still are struggling. Yes, Michael, handing over to the...

Yeah, some financial figures for the quarter. Net sales, as Camilla mentioned, amounted to 360 million, down from 326. Here, acquired group was 8%, and it's Sormen Oort, Cleber Sanders, who was part of our group since March last year, so we had two months of their sales, but were still acquired. Currency effect was minus 1%, and the organic growth was minus 10%. Adjusted EBITDA amounted to minus 3 million compared to 60 million last year, and it's corresponding to an adjusted EBITDA margin of minus 0.9%. The order intake amounted to 275 million down from 352, and our order backlog end of March was 1,238,000,000. Adjusted earnings per share amounted to minus 0.24 SEC compared to 0.11 last year. And earnings per share amounted to minus 1.31 SEC compared to zero last year. Our operating cash flow amounted to 1 million and it was 34 million last quarter one. If we look at the renovation segment, here we saw an increase in sales up to 236 million compared to 222 last year, and it corresponds to 75% of our total net sales. Board intake for renovation segment amounted to 208 million down from 285 last year, and it's 76% of the total order intake. Adjusted EBITDA in the renovation segment was minus 5 million compared to 11 last year. And it's here we have had this major deviation in a large project in one of our Swedish companies. And it corresponds to an operating margin of minus 1.9 million. Water backlog for the renovation segment is just south of 1 billion. It's 991 million this year, this quarter, and it corresponds to 80% of our total water backlog. New build. Here the sales amounted to 71 million down from 104 last year. While the order intake was 67 million, just exactly the same as we had last year in first quarter one. Adjusted EBITDA in the quarter amounted to 2 million, down from 6 million last year. We were corresponding to an adjusted EBITDA margin of 2.8%. Order backlog for the new build segment is 247 million at the end of the quarter, and it's 20% of the total order backlog. If we look at our financial position at the end of the quarter, the group's equity amounted to 757 million. And the equity to asset ratio is the same as it was quarter one last year of 47 percent. Interest bearing net debt, excluding leasing debt in relation to adjusted EBITDA amounted to 4.0 up from 3.2. But we can also say the positive thing that we have extended our existing banking agreement with Danske Bank with a sustainability-linked credit facility of 512 million and an overdraft facility of 75 million. It's been extended to March 31, 2028. And we also have an option for a further extension of two years until end of March 20, 2013.