Balco Group AB

Hello and welcome to today's presentation with Balco Group where CEO Camilla Ekdal and CFO Viktor Arvidsson will present a report for the first quarter of 2026. 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 submit in questions via the form to the right and with that said I hand over the floor to you guys.

Thank you. Welcome to our quarter one report. And first of all, for our new listeners, we start with a very short snapshot of Balko Group. Balko Group consists of balcony and facade companies. The head office is in Växjö, and we have about 500 employees. We operate in two main segments, renovation and new build, and our core expertise is to supply glazed balconies and balcony solutions, primarily on the renovation market and to tenant-owned associations. Bakugroup is the 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 European markets. So let us go over to the quarter one highlights. The order intake in the quarter was in line with the corresponding period last year and amounted to 270 million SEK versus 275. Here I want to point out that the order intake for Barco Group must be seen over a longer period than just a quarter, since larger projects can affect heavily in a specific quarter when we get it in. During the first quarter, we didn't book any big projects, but we have some up for discussions. The order backlog increased with 21% by the end of Q1 2026 versus 2025. We had a solid operating cash flow amounted to 32 million SEK. The net sale decreased by 5% and here we have a currency effect of minus 2% and the net sale amounted to 299 million SEK. The profitability is below our target and here especially we can see that the new bed segment had a negative result in the quarter, but also the renovation segment was affected by lower volumes in some companies and also downward revisions of contribution margins in individual projects. It's important to highlight that the project can still be profitable, but when you have late revisions in a project and you're using the percentage of completion as we are doing, there is a hit on the result in the actual period. We have taken extensive actions during 2025 on cost savings. But even though we have done so, the result is not good enough. And we are of course not satisfied with the existing profit level that we now show in this quarter. And therefore we also continue with our cost savings measures and also the structural measures. We work with it during the first quarter and we continue to work with it also onwards. So let's go over to the market update. We start with the Nordic markets and here we can see that the trend of increased activity in the renovation segment in Sweden and Norway remains. But we are concerned that the investment decisions might be affected by increased macro uncertainty. However, we know that the underlying demand for renovation still remains. We can't see a clear market recovery for the Finnish market, and that's mainly linked to that the new bid segment remains on a low level in Finland. The total order intake increased actually for Baku Group for the renovation segment, if you look on the first quarter 2026 versus 2025. The Danish market remains challenging for us. We can't see a clear market change in the market, even though also here the order intake increased. But we can't see a clear change on the market yet. If you look outside the Nordic market, we see that the potential in the UK new-build market remains substantial. We have strong competition on especially big projects in the London area where we can see some price pressure following it. But here we actually focus on other projects and also focus now outside the London area. The renovation market in Germany continues to show good underlying demand and we have a good result here that we implemented the Ricoh glazing into the market for expanding our offering for the premium brand Balco. We have taken new orders with Ricoh Glazing during the first quarter, and there are more projects under discussion. Our view of the maritime segment remains positive. The current order backlog at the shipyard indicates potential for additional orders to bulk go ahead. If you look on the new-build segment, especially here in Sweden, we have seen some smaller positive signals, but that is from a very low level. So I hand over to you, Victor, for the figures.

Thank you, Camilla. If we look at the quarter one and start with the net sales, it amounted to 299 million SEK versus 316 last year. Organic growth was minus 3% and currency effect was minus 2%. Adjusted operating result amounted to zero million SEK versus minus three last year and the year's figure corresponds to an adjusted EBITDA margin of 0.1 percent versus minus 0.9 last year. Border intake amounted to 270 million SEK versus 275 last year. The order backlog increased by 21% to 1,493,000,000 SEK versus 1,238,000,000 last year. Adjusted earnings per share amounted to 0.01 SEK versus minus 0.24 last year. Earnings per share amounted to minus 0.03 SEK versus minus 1.31 last year. And the operating cash flow amounted to 32 million SEK versus 1 million last year. And if we turn to the operating segments and start with the renovation segment, the net sales in the quarter amounted to 229 million SEK versus 236 last year, corresponding to 77% of the total net sales versus 75% last year. Order intake in the quarter amounted to 211 million SEK versus 208 last year, corresponding to 78% versus 76 last year of the total order intake. Adjusted operating result in the quarter amounted to 3 million SEK versus minus 5 last year. That corresponds to an adjusted operating margin of 1.2% versus minus 1.9 last year. The order backlog amounted to 1,048,000 SEK versus 991 last year, corresponding to 70% of the total order backlog versus 80% last year. Turning to the new build segment, net sales in the quarter amounted to 70,000,000 SEK versus 79 last year, corresponding to 23% versus 25% of total net sales last year. Water intake in the quarter amounted to 60 million SEK versus 67, corresponding to 22% versus 24% last year. Adjusted operating result in the quarter amounted to minus 2 million SEK versus 2 million last year corresponding to an adjusted operating margin of minus 3% this year versus 2.8 last year. The order backlog amounted to 445 million SEK versus 247 last year corresponding to 30% of total order backlog versus 20% last year. Look at some more financial figures. At the end of the quarter, the group's equity amounted to 738 million SEK versus 757 last year. Equity asset ratio was 44% versus 47 last year. The interest-bearing net debt, including leasing debt in relation to adjusted EBITDA, amounted to 5.5 times, down from 6.0 times in the end of last year. A reminder, in December 2025, a waiver was obtained together with an amendment to the existing credit agreement. The covenants are within this agreement. I hand back to you, Camilla.

Thank you, Victor. Then some concluding remarks and also the outlook for the coming year. We estimate the continued improvements in the renovation activities in Sweden and Norway. We continue to be cautiously optimistic about these markets here ahead. We believe in a gradual recovery in the Finnish renovation segment. We have also seen some signals of that during the first quarter this year. At the same time, we estimate the Danish market to remain challenging during the year, even though we have a higher order intake in the start of this year versus last year. Overall, in the renovation segment, We will say that the geopolitical uncertainty is creating a more cautious and uncertain outlook. But as we said several times before, the underlying demand remains within the renovation segment. In the Nordic New Build segment, we expect a slower recovery, and this is actually particularly for the balcony companies. For the facade companies, we have seen a better improvement than for the balcony companies. We see also potential for further growth both in Germany and the UK and we also have a positive outlook for the maritime segment. And here is supported by the strong shipyard order intake and also that we have a broader product portfolio now where we have also the sliding doors to offer to the shipyards. The profitability is much below our targets, even though we're taking all the actions during 2025. And therefore, we continue to focus on profitability improvements measures. And we also continue to work with our capital structure. And that was all from us.

Thank you so much for the presentation here. And we will now carry on with the Q&A. So if you're calling in and want to ask a question, please press star nine to raise your hand and then star six to unmute yourself here. But we can start. Oh, we have a first question here. It's Sofia Sörling from Carnegie. You have the word.

Hi, Sofia.

So you can press star six to unmute yourself.

Yes. Hi, Camilla and Victor. Do you hear me now?

Yes, we do. Hello. Great. Hi.

So my first question is related to the new build segment. I was curious if you could give some more color on the losses in the new build segment during the quarter, because I can see that in terms of the revenue levels, you had similar as in Q3 last year, but still you had a profit. So what's the reason for losses in this quarter? And is it something that we should take into account ahead due to perhaps higher costs or perhaps costs related to the marine orders or, yeah.

Just as you point out, Sofia, in the new build segment, we have two different kind of orders. We have the balcony and facade orders and we also have the maritime orders. And in the first quarter here, the maritime business was performing as it should, but we have some challenges within the balcony companies on the profitability level in the new build segment during the first quarter. And that is mainly to specific projects and volumes.

Okay, so not related to the marine orders?

No, not to the marine order, no.

Okay, and is that something that you see will continue into Q2?

That is why we are taking additional actions on the cost-saving structure. This is mainly linked to the Finnish new-build segment. The volume of the new-build segment in Finland has been on a lower level than expected. As I said, we don't see any recovery there and we have taken actions. We have reduced people manning and we continue to do so during the next coming quarters.

Yeah, and when we're talking about Finland, you mentioned that also Finland is a challenging market, both renovation and new build, as I understood it. But you also mentioned that Denmark is a challenging market. You don't see a clear recovery soon. Why is that the case for Denmark compared to Sweden and Norway, for example?

In Denmark, we are mainly working with putting on a balcony on an old building but with buildings without balconies today. So there is a new balcony that you don't have a balcony today and then you add on something you don't have and therefore the investment step is higher than if you already have a balcony and you want to replace it. So therefore, it is a bigger challenge on the recovery for the Danish market, depending on the kind of projects we are working on on this market. Both the cost-wise, it's a higher investment, but also it's easier to postpone something you don't have than to refurbish something you have.

Yeah, I understand. So what do you expect needs to happen for the Danish market to recover?

What we see is that we don't see any big market. We see, so to say, that it will not be worse, for sure, that we don't believe. It would be maybe a slight recover, but it's also like that on the Danish market. As I said, the order intake increased during the first quarter versus the first quarter last year. But it takes nearly between six months to nine months before these produce can be a revenue on. depending on the very long building permission time and things like that on the Danish market. So that's why I say it takes some while before we can see a real recovery on the Danish market.

Okay, I understand. And given a kind of a challenging market, how do you experience the competitive landscape at the moment and what do you expect from competitors during 2026?

In Denmark,

Yeah, in Denmark and in all the other Nordic countries.

In the Nordic countries in general, okay. What we have seen in the Nordic countries in general, so to say, that the competitors that are there are still there. We have not seen, so to say, lately that any of our competitors has left the market. So the competitors are still there. In the Swedish market, I can see that it starts to be a more healthy market competition, I would say, even if it's still a hard competition, but a little bit more healthy competition in the Danish market is still very high capacity versus the underlying demand right now. Okay.

All right. And a question on the order backlog or the order intake also during the quarter. Have you experienced any cancelled orders or lost orders during the quarter?

No.

Okay.

So then... The order backlog since end of last year, so to say, it has gone down a little bit from the end of December to now, but that is linked to that we had a higher revenue than the order intake. So nothing else.

Okay. Okay. Yeah, and maybe my last question, the profitability in the current order backlog, is that more in line with what you want to achieve or Is it more, yeah, is it aligned with current profitability or is it in line with the higher level that you expect?

Hi Sofia, Victor. Yeah, what we see that there should be a healthy profitability in the order backlog we have. And as Camilla mentioned here before, we have seen some deviations in the last So from what we can see now, the profitability in the order backlog is good.

Okay. All right. That was all my questions. Thank you. Thank you.

Thank you, Tobias.

Thank you for those questions. We will now carry on with some questions that have been sent in to us here. What are the key growth drivers for Balco Group in Q1 2026?

The key growth drivers, but we didn't have any growth. So that's why I'm not 100% sure I understand the question because the key growth drivers is, of course, the renovation, so to say. The renovation segment, if we look on a total general level, not quarter one, but in general, I would say that the key growth drivers is the renovation and the underlying demand for renovation. in the Nordic countries. That's a key growth driver. And then we also have a driver in the UK and Germany, and that is a new build market. So these are the headlines, I would say, in our growth ahead.

Thank you. Which alternative does Balco evaluate regarding strengthening their financial situation, I mean?

The capital structure and that is, of course, something that is discussed within the board. And if there are options and if there comes from any alternatives or what will that will end up, then we will communicate that.

Thank you. The geography other Europe has showed good growth for a while. Can you talk about longer term potential here? How big share of the group revenue can it be in three to five years? And also how is the profitability level versus the rest of the group there?

If we look on both UK and Germany, there is a big potential. And as I said, it's a big potential in the new build segment. And right now in UK, we are more or less, I would say 100% within the new build segment. And here we are still a very small player compared to the competitors on these markets. So here we have big potentials ahead. But as I also said here in the presentation, we have seen that in the London area, it's a very high competition because there you have the big projects and everybody wants to have the big projects and you have price pressures. And we want to grow, but we want to have a profitable growth. Therefore, we are focusing on a little bit outside the London area to make sure, because there we can see that the profitability levels are on the same level as we expect to have, between 5-10% on the last row, so to say. That's where we are going to focus in the UK area. In Germany, we have a potential in the new build. Also, Germany is a very fragmented market. There's a lot of players, but the players are quite local. on the market and here we can see also here on the big projects there are also some price pressure and a lot of competitors coming into those and we are very selective also here which kind of projects we take because we want to be on the profitable level on the new build in this market that we can deliver between five to ten percent on the So say profit level, the lowest level. But there is a big potential on this one and we still can see a growth in this one. When we come to renovation in Germany, that is very, very interesting actually, because we made a strategic change three and a half years ago, where we said that we are going to focus now on a Bornegebau. We know that they have money. They are doing their renovation. on a yearly basis. They take it, so to say, houses per houses, and there you can continuously have the same customer having a lot of different houses, and we can continue to work with them during a longer period. And there we have seen a good effect on this strategic decision as we took Now we are mainly working in the Berlin area and around that one. And we are also increasing our resources now in Germany to take also other regions in Germany on this one. So we see a good potential ahead.

Thank you. Have you seen any positive development in project margins, both with respect to actual execution and prospective margins?

Well, as mentioned, we have had some lower deviations this quarter. So, of course, it's a combination of different factors. So here and now in this quarter, we cannot say that we have had any positive development regarding this safe.

Thank you. Do you see any unusual or significant risk to your project margins based on the price fluctuations for steel, aluminum, glass, etc.? Or is the risk mitigated based on contractual clauses or the likes of it, so to speak?

Well, we do have clauses in our contract with the indices and so on. So, of course, we are... We do have some insurance in that part, but of course there are always some risks when it comes to material price fluctuations and so on, because these indices are not 100%. So of course there are some risks, but we do have some mitigating causes in there as well.

Thank you. Could you tell us more about the cost cuts you are doing now? Which companies are affected and how many and what kind of employees?

What I can say is that we are doing, I can take it on an overall level without too much details, but we are taking down the resources in Finland. That's mainly within our balcony company there. We have already reduced a lot with the number of employees there and we continue to do so. We are also changing, so to say, the location for some of the offices. We do the same in Denmark. We are taking away some people and we are also relocating our office to reduce the costs. And then we have also a general cost reduction made by some of the other companies also in Sweden. And we have continuously some discussions ongoing, which I can't tell you about right now.

Thank you. That was all the questions we had for today. So thank you all for calling in and sending us questions. And I will now hand over the word to you, Camilla, from concluding remarks.

Yeah, as concluding remarks, I would say that, yeah, we remain cautiously optimistic, as I say. We have been a little bit, so to say, we are a little bit more cautious now, depending on the uncertainty we can see in our environment. But as I said several times. And by that, I would like to thank you so much for the interesting for participating in our quarter one record.