Balco Group AB

Hello and welcome to today's presentation with Balko Group, who is going to present a report for the fourth quarter of 2025. With us to present here today is CEO Camilla Ekdal and Interim CFO Karin Bengtsson. After the presentation, there will be a Q&A, so if you're calling in and want to ask a question, please press star 9 to raise your hand and then star 6 to unmute yourself when handed the word. You can also send in questions via the form to the right. And with that said, I hand over the word to you, Camilla.

Hi and welcome to the Balco Group Q4 presentation and first of all a very quick and short snapshot about Balco for our new listeners. Balco Group was founded in 1987 and consists of balcony and facade companies. The head office is in Växjö and the group has about 500 employees. Balko operates in two main segments, renovation and new build. And our core expertise is to supply glazed balcony and balcony solutions primarily on the renovation market and to tenant-owned association. But we also have, of course, a broad offering of other balcony solutions, including both open and glazed balconies, as well as facade renovations. Balco Group is a market leader in the Nordics with the key markets being Sweden, Denmark, Norway and Finland. And we also have a strong challenger position on other northern European markets. And if you look on the diagram to the right there, you can see the revenue split per market for 2025, where 45% of other revenue come from the Swedish market, 40% from other Nordics and 15% from other Europe markets. Let's go over to the highlights for the quarter, where we had a very high order intake and also strong cash flow. The order intake increased in the quarter by 45% to record high 521 million SEK. And on a yearly basis, it increased by 12% to a little bit above 1.5 billion. During the quarter, Bakker Group signed its largest order ever, to a value of about 200 million SEK. And this is an order related to the delivery of sliding doors and balconies to three new cruise ships being built by the German shipyard Mayer Werft. And here we actually also have an option of additional three ships later on. The design work has already started for these three ships, and the installation is planned to be in the start of 2027. Also, I would say that crucial for getting this order was actually that we have spent time on broadening our product portfolio during 2025, where we now also can offer sliding doors within the maritime segment. As said, we had a good cash flow and the operating cash flow was strong in the quarter and amounted to 125 million SEK. The net sales were down with 4% to 371 million stick. But here we'd like to highlight that we actually have an organic growth of 1% in the quarter and the currency effect was minus 5%. The profitability in the quarter was not on a satisfactory level. And we know that, as we have said before, we have taken construction measures during 2025 and they are all implemented. And the annual savings are estimated to be of about 55 million SEK. I'm proud to say that we continue to see good results from our sustainability work. Our sustainability rating improved and the KPI continues to develop in the positive direction. I will come back to that later on in the presentation. So if we go to the market updates, we can see that the trend of increased activities continues, particularly within the Swedish renovation market. And here, actually, the Swedish balcony company has increased their order intake by 32% 2025 versus 2024. The Danish market remains challenging for us. There are projects out there, and the quotation activities are actually quite good, but the lead time from decision to project start is still very long. And I also would like to hear a little bit more information to you about this one, because the Danish balcony market, it's actually different quite a lot if you compare to the balcony markets in the other Nordic countries. Because the majority of the projects in Denmark are connected to open balconies for houses without balconies today. And therefore also the investment step is higher for the residents if you compare to making a renovation of an already existing balcony. So therefore it is also, so to say, taking longer time for the decisions to be made in the market. There is, of course, also a need for renovation of balconies in Denmark, but actually also we see there's also a reluctance in this market, a little bit slower recovery. The Finnish market is recovering at a slower pace than in Sweden, and this affects our Finnish companies in both renovation and new construction. And you all know about the financial situation, so to say, in an overall level in Finland. When it comes to UK, we can see here that the balcony market potential remains substantial. The government in UK had a very ambitious goals about the amount of houses to be built between 2023 and 2028. Now, when we are coming into 2026, it's quite probable that the outcome on these very ambitious plans will be a little bit lower, but there is still a very big market potential for balcony solutions within the new construction market in the UK. The renovation market in Germany continues to show strong underlying demand. We also have some interesting new build projects under discussion here. The year started a little bit slower in Germany, and that was mainly depending on the election there. But we have had a good order intake the second half year. And actually, the order intake for the full year increased by 12% on the German market. We also have a positive look on the maritime segment. Increased cruise ship orders at the shipyards resulted in the orders we have received in Balco during 2025. And we can see that with the current order backlog at the shipyards, there is a potential for additional orders coming into Balco. We can see some smaller positive signals in the new build segment, but this is still from a very low level. And since we are also, our companies are later in the project phase, it will take time before this smaller increase reflects in increased order intake for our facade and balconies companies within the new build segment. So that said, I hand over to Karin.

Thank you. Let's start with the group's quarterly results. Net sales amounted to 371 million compared to 386 million last year. Organic growth was 1% and the currency effect was negative 5%. Adjusted operating result, the beta, amounted to 9 million down from 18 million last year. And this corresponds to an adjusted operating margin of 2.4%. Order intake came in at 521 million compared to 360 million last year. The order backlog increased by 16% to 1,523,000,000. Adjusted earnings per share were negative 0.04 compared to 0.28 last year. The operating cash flow for the quarter amounted to 125 million up from 58 million last year. So let's take a look at the different segments starting with renovation. Net sales were 290 million, up 9 million from last year's 281, accounting for 78% of the group's total sales. Order intake reached 228 million in the quarter, representing 44% of the group's total order intake. The adjusted operating result, EBITDA, came in at 7 million compared with 20 million last year, corresponding to an adjusted operating margin of 2.6%. The order backlog was reported at 1,059,000,000 or 70% of the group's total order backlog. So let's move on to the new build segment. Net sales were 82 million compared to 106 million, accounting for 22% of the group's total sales. Order intake for the new bill segment, including maritime order, reached 293 million in the quarter, representing 56% of the group's total order intake. The adjusted operating result data came in at 1 million compared to 3 million last year, corresponding to an adjusted operating margin of 1.8%. The order backlog was reported at 464 million, making up 30% of the group's total order backlog. And that concludes the segment review. Let's now take a look at the group's financial position. At the end of the quarter, the group's equity was 736 million, down from 793 last year. The equity to assets ratio came in at 43% compared with 49% last year. interest-bearing net debt including lease liabilities in relation to adjusted EBITDA was 6.0 times down from 6.8 times in Q3 and compared with 2.5 times last year. Balco received a waiver in December together with an amendment to the existing credit agreement and the covenants are within this agreement. So, moving on to our sustainability updates.