engcon AB (publ)

Good morning and welcome to ENKON's Q1 report presentation. My name is Christer Blomgren and with me today as usual I have our CFO Marcus Asplund and today we also have our next CEO, largest shareholder, board member and founder Stig Engström with us. We will guide you through our Q1 report and also answer questions in the Q&A afterwards. With that, we're going into the presentation. We're starting with the business highlights, and we are off to a flying start in 2026 with a strong growth in both order intake and net sales. Europe continues to be our key growth region going forward, and in Q1, we reach a new record level for order intake in the region. The Nordic region, which made a strong comeback in 2025, is still performing well and delivering solid sales growth. At the same time, margin pressure remains and continues into 2026. So despite higher sales, we are not yet seeing the operating leverage we want. We will talk more about that later on. During the quarter, we launched our new 123 series for tilt rotators. This is a new wave of grouping, packaging our products into clear performance steps, making it easy for customers to choose the right solution. As a part of this shift and to support margin improvement, we have also updated our pricing to better reflect both customer value and today's cost environment. And we expect to see the full effect of that in Q3. We have also been active in the market in North America while the U.S. market is currently moving sideways due to tariffs and uncertainty. We remain confident in the long term. During the quarter, we participate in the ConExpo in Las Vegas, a key industry event for building awareness, relationships, and showcasing the value of our solutions. Closer to home, we carried out a roadshow in Norway together with Volvo CE, where we met customers and partners to demonstrate how our new Series 3 improved productivity, safety, and efficiency. And we're going over to the numbers and net sales continue to grow quarter by quarter with an organic growth coming in at 27% in Q1. What's encouraging is that both our key markets, the Nordics and Europe, are moving in the same direction. In Europe, we see stable growth, even if we also see that it's not all markets that are performing strong every quarter. And I will come back to that when we go through the regions. Order intake, organic oil growth was 10% for the quarter. Order intake remains at the high level overall with a strong trend in both the Nordics and Europe. We are very pleased with where we are. You have to go back to 2022 to see similar levels. Gross margin, we continue to see margin pressure with the gross margin coming in at 38% for the quarter. As in previous quarters, this is driven by a combination of factors, including a stronger Swedish krona, a volume mix more towards the Nordics and the ongoing production ramp up. Marcus will also talk more about this shortly. During the quarter, we also implemented the price adjustments to better reflect the value we deliver to customers and the current cost environment. Over time, we expect this to support margins as it gradually takes effect since we have different notice period on the agreements with the dealers regarding price changes. EBIT margin came in at 16% for the quarter. Despite strong net sales growth, we are not seeing the full operating leverage yet. That's partly due to the margin pressure that we just discussed, but also due to higher cost in the quarter, including our participation in Conexpo in Las Vegas, which is a key industry event for us, as I mentioned earlier. We also had ERP project-related cost impacting in the quarter then. And the lower profitability level is also reflected in the rows for the quarter. And more details will Markus go through when he guides us through the financials in a short moment. We are moving over then to order intake and net sales. Order intake has now increased for three consecutive quarters, which is a good sign that the positive momentum is continuing. We're seeing solid trends in both the Nordics and Europe, and it's really these two regions that are driving the development, while the other regions remain more flat. In the quarter, order intake increased by 6%, corresponding to 10% organic growth, with a negative currency impact of 21 million SEK. Net sales show an even stronger development, sales increased by 21% in total or 27% organically, also impacted by negative currency effects of 26 million SEK. Overall, we continue to see strong underlying growth in both order intake and net sales, supported by good demand in our core markets. If we're then going over to our regions and we start with the Nordics then. We have had a strong start to the digging season driven by continued infrastructure investments and underlying renewal needs. Although the recovery across the region remains somewhat uneven. Order intake increased by 18% organically during the quarter, while net sales grew even stronger at 33% organically, reflecting a solid demand and a good execution by us. In the Nordics, development is primarily driven by the Swedish market, where you continue to see strong momentum. If you're looking at the rolling 12 months, it's clear that the region have delivered a solid performance over the past year. During the quarter, we also carried out a roadshow in Norway together with the Volvo CE, where we engaged closely with customers and partners and demonstrated the value of our new 3 Series. Then we're going over to Europe. And in Europe, we are coming into the year with a strong momentum. Order intake grew 10% organically, reaching a record high level of 240 million SEK. At the same time, net sales increased 26% organically, a clear sign that the demand remains strong and that we are executing well in Europe also. We are seeing a real boost in net sales from a solid underlying momentum in the European market. There is a good pace across the business with our markets taking turns driving growth, which tells us we haven't yet seen the full upside of all markets firing at the same time. So overall, this is a business region moving clearly in the right direction with multiple growth drivers in play. And if we take a look at the rolling 12 months, the picture is very clear. This is a strong and consistent growth journey. We're going over to Americas. In the quarter, order intake decreased by 12% organically, reflecting a more cautious market environment. At the same time, net sales increased by 28% organically, with a significant part of that growth driven by the pricing. The demand in the US remains relatively flat, impacted by ongoing uncertainty around tariffs and their interpretation, which continues to slow down the market activity. That said, we remain focused on building the market over time. During the quarter, we strengthened our presence at Conexpo in Las Vegas, an important platform to increase awareness and demonstrate the value of our solutions. We continue to invest in building awareness and knowledge in the market to drive long-term demand. This is a gradual process, but a critical part of our strategy, and we remain committed to educating customers, expanding the market over time. And we're going over then to our last region, Asia Oceania. Order intake decreased by 5% organically during the quarter, while net sales declined by 3% organically. The region continues to be characterized by significant fluctuations between the quarters, which is reflected in the current performance. Asia Oceania remains relatively flat overall. In Australia, our key market in the region, activity has been somewhat slow at the start of the year. We expect the Diesel, Dirt and Turf exhibition in April to help re-energize the market and support activity going forward. Similar to North America, our focus remains on building the awareness and increasing knowledge of the benefits of our solutions. This is essential to driving the long-term demand, and we will continue to invest in these efforts over time. With that, I hand it over to Marcus to guide us through the financial development. Please go ahead, Marcus.

Thank you, Krister. Net sales amounted to 539 million SEK representing strong organic growth of 27%. As Krister mentioned, strong levels are achieved as both the Nordics and Europe delivering at high levels. The growth margin has experienced a clear decline compared to the previous year when we had an exceptionally high level. This is driven by a combination of compounding factors. Although we have seen the Swedish krona give back some of its previous gains, we still see currency headwinds in the quarter-on-quarter comparison. The higher share of EEC compared with spare parts sales dilutes the margin somewhat due to less favorable product mix. We also see negative price and market effects. The Nordics are coming back strongly with Sweden leading the way. As we have discussed previously, this region is more competitive, which also reflects the gross margin. As we grow, we have also invested in our production capacity. This ramp up phase has temporarily pressured our margins as these costs have increased ahead of our current production volume. This is mainly seen in the beginning of the quarter. To counter the negative margin developments we have seen recently, at the turn of the quarter we introduced the price increase in connection with the launch of the 1-2-3 series. We estimate the impact on an average EC order to be around 5% and we expect to see the full effect in the third quarter. as several dealers, especially in the Nordics, have noticed periods of 60 to 90 days ahead of price changes, as well as orders prior to the price increase will be delivered in the coming months. Looking closer at OPEX, we see some leverage from Hauer Net Sales, despite higher trade shows cost in the period related to Konexpo in the US. In 2025, trade shows costs were mainly concentrated to Q2 with Bauma in Munich. We also continue to see higher administrative costs related to IT and the finalizing of the ERP change. Naturally, we expect these elevated IT costs to subside during coming quarters. On the bottom line, we can conclude that earnings leverage from higher net sales has not materialized as a result of weaker margins and temporary higher cost pressure. Let's take a look at the EBIT development. EBIT amounted to 84 million SEC, which is aligned with Q1 2025. We're not seeing earnings leverage from the strong net sales growth due to weaker gross margins and higher operating expenses with IT costs peaking in Q1 and costs for trade shows. The higher net sales and unchanged EBIT levels means that the EBIT margin declines from 18.8% to 15.7%. This also affects the cash flow. Although we see an improvement, the cash flow is hampered by higher networking capital as we are in the middle of busy season in the Nordics and Europe with high deliveries and the ramp up of production capacity. The same story applies for return on capital employed. Not enough leverage on top line due to currency headwinds and increase in net working capital pulls ROSE below where we sustainably should be. And on that note, I'll pass it back to you, Krister, to summarize the quarter.

Thank you, Marcus. I will try to summarize the quarter then, as you said. We had a strong start to the year with a solid growth in both order intake and net sales, driven primarily by our core markets in Europe and the Nordics. Europe continues to be the key growth engine, reaching record levels in the order intake, while the Nordic maintained good momentum, particularly in Sweden. Overall, the business shows a clear positive trend, supported by a strong rolling 12-month development. At the same time, performance varies across the regions, North America and Asia Oceania remain more cautious, impacted by the external factors such as tariffs, uncertainty, and slower market activity. In these regions, our focus remains on building a long-term demand through increased awareness and the customer education. Margins continue to be under pressure despite higher sales driven by a combination of currency effects, product and market mix, ramping up costs, and last part of the ERP implementation. Actions such as pricing adjustments have been implemented and are expected to support margins over time. During the quarter, we continue to invest in market presence and customer engagement, including participation in Conexpo in the US and the roadshows in Europe. We have also launched our new 1-2-3 product series, simplifying our offering and strengthening customer value. Overall, the business is moving in the right direction with a strong underlying demand, continued market expansion to drive long-term profitability growth. And summarize a little bit of my time here then. After 18 years at ENKON, including 15 years as a group CEO, I had a meeting with the board and what was agreed is that it's time for me to step down from my role. It's of course something I have mixed emotions about, but also have a great sense of pride in what we have achieved together. With these years, we have built Encon into the world's leading manufacturer of tilt rotators, with a 49% market share and a strong global brand. We have gone from clear Nordic base to being present in 17 markets today while delivering a strong growth journey and a significant improving profitability along the way. I'm also very proud that we took income public and onto the large cap list, an important milestone that has strengthened our visibility and created even better conditions for the future. Most importantly, I want to extend a sincere thank you to all our employees, customers, and partners who have made this journey possible. I leave with a great confidence that we have the right people and the right culture in place to continue creating value through profitable growth. And speaking about the right people, now I will hand it over to Stig Engström before we go over to the Q&A. So please go ahead, Stig.