Lindab International AB (publ)

Hello and welcome to this presentation of Lindab Group's report for the first quarter. I'm Ola Ringdahl, President and CEO of Lindab Group. And next to me, I have our CFO Lars Unno. We will begin by presenting the results for the quarter and then move over to our focus on profitable growth and an outlook. Following the presentation, there will be a Q&A session. Let's begin with some highlights. We can see a mixed picture for our two business areas where ventilation systems showed stability in the quarter and profile systems had a very challenging quarter. Sales and operating profit for profile systems were affected by a combination of external and internal factors which weighed on the group's results. For our largest business area, ventilation systems, I'm pleased to see an improved operating margin for the third consecutive quarter. That's a sign of strength in a challenging time. Now let's take a look at our sales development. Overall, group sales values decreased compared to the first quarter last year, and this was mainly due to currency effects and low sales numbers in profile systems. For ventilation systems, organic sales growth was negative by 1%, and we noticed delayed construction projects during January and February due to the tough winter, but the pace was clearly better in March. Acquisitions contributed with 2% and currency effects continue to be on high levels with an impact of minus 5%. In the Nordics, an important market for Lindab Group, the goods sales trend continued and we reached organic growth for the ventilation segment in the quarter. We also saw a continued good sales trend in important markets like the UK and Italy. In Germany, however, the market is still slow. Sales for business area profile systems was low in the quarter. Divestments reduced the sales value by 7% and currency reduced by 2%. Organic sales growth was minus 10% due to a weak project market and low sales volumes in January to February due to a harsh winter. We saw clearly better sales in March with organic growth for the business area in the month. Now let's move over to operating profit. Group operating profit was negatively affected by the weak quarter for profile systems. Adjusted operating margin was 6.3% for the quarter compared to 7.1% the previous year. Development in ventilation systems showed stability and resilience despite the tough market conditions and negative currency effects. Operating profit for the quarter was on a similar level as last year for ventilation and the operating margin increased to 9.2% from 9.0% last year. I'm pleased to report an increased operating margin for the third consecutive quarter thanks to proactive efficiency measures and good pricing discipline. For profile systems, I am far from pleased to report a negative operating profit in the quarter. There are several factors affecting the results for the business area. First of all, the low sales volume in January and February are the main explanations to the poor results. Secondly, the ramp up of sales and production volume in the sandwich panel factory in the north of Sweden has been slower than anticipated after the relocation of the factory last year. And the third factor is a poor result in our one remaining profile business in Eastern Europe. The divestment of Lindab Romania should have been completed in March, but the authorities are delayed in their administrative approval of the transaction. Now I hand over to our CFO Lars Yno who will present the cash flow development.

Cash flow in Q1 was impacted by timing effects in working capital, amounting to 45 million SEK compared to 160 million SEK last year. Net debt was 4 billion, 410 million SEK, broadly in line with previous levels, with 1 billion, 474 million SEK related to leasing. Our target for net debt to EBITDA is that it should be below three times. In Q1, the ratio was stable at 2.6, in line with the previous quarter. Financial net debt to EBITDA increased slightly to 2.2 from 2.1 at year end. Ola, back to you.

Thank you, Lars. Let me share some more information on how we continue to develop our two business areas. We start with ventilation systems. In our largest business area, there are some encouraging developments. Operating margin has increased for three consecutive quarters, and we see good opportunities to continue this positive trend and to reach an operating margin in line with our financial goals. Within our strategic focus areas, we see good progress Let's look into some of them. In technical ventilation, we are taking important steps within the distribution of air handling units, fans, and room ventilation equipment. Likewise, we see good development within the growth area of decentralized ventilation. Our acquired companies like Airmaster, Atib, and Ventia are all good examples of successful acquisitions that already contribute a lot to Lindab Group's results. For fire and smoke solutions, we see double-digit growth over the past 12 months. This product area is becoming an important business for the Lindab Group. Here, our different companies in the group have started a close cooperation, and we can target the market with a broad and strong product range from Lindab Group. During the last years, implemented structural measures have reduced our cost base within the ventilation business and gross margins have been strengthened thanks to investments in automation. This work will continue and an additional important area is synergies between the different companies in the group in areas like sales, purchasing and production. We move to some comments about business area profile systems. I'm clearly disappointed with the sales and profitability development for profile systems. The exit from Eastern Europe helps our results, but it is not enough. We must take more actions to get profile systems into shape. Therefore, at the beginning of May, we have reorganized the entire business area with the objective to improve business focus and strengthen the results as quickly as possible. We are also evaluating further structural measures. I'm determined to bring back profile systems to a profitability in line with the group's financial targets. Now some words about how the conflict in the Middle East can affect Lindab Group. First of all, I should clarify that Lindab Group has no operations in the Middle East or any significant sales to that region. So the direct consequences of the conflict are minimal for us. However, the conflict in the Middle East is causing, among other things, higher transportation costs due to increased diesel costs, etc., and increased raw material costs. In April, Linda announced price increases to fully offset the higher costs and protect our margins. If necessary, another round of price increases will be implemented during the third quarter. Now let's move to the market outlook. In these turbulent geopolitical times, it is definitely not easy to make any market predictions. We work with different scenarios and try to adjust as best we can. And we are focusing on measures within our own control to influence sales and profitability. Looking at the latest available forecasts, the European construction market is still expected to return to growth during 2026. We expect that this recovery will be slow and it will take some time. For the European ventilation market, there are indications that this market will grow slightly from today's low levels. The Nordic region has started to grow, which is encouraging. But Germany is still a slow development and a question mark for the rest of 2026. For profile systems, a gradual market stabilization is expected during 2026, although it will probably remain on low levels. In the medium and long term, we have a positive market outlook. Our ventilation systems provide energy savings for buildings and help to create a healthy indoor climate. And Lindab's position in this industry is at the very top. Thanks to efficiency measures and our implemented investment program, we have a solid platform for profitability when market demand increases. With that, I conclude this presentation, and Lars and I are now ready to take your questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Anders Akerblom from Nordia. Please go ahead.

Yeah, thank you. Good morning. or not good morning, maybe, but hi, Ola and Lars. Firstly, I wanted to ask a bit about, you said you're evaluating further potential structural measures in profile. Could you elaborate a bit on this?

We will do what is necessary to return to profitability in line with the group's targets. And I rather see a smaller profile systems delivering consistent and good results than a large and wobbly profile systems. So now it's really up to the business units within our group to prove that they can return quickly to an acceptable profitability level. And that is very clear to our organization. And if there are business units within profile systems where we conclude that we are unlikely to return to acceptable profitability, then we will have to make tough decisions. It can be closing down certain activities or it can be a divestment process. We have shown that we are not afraid to make such actions when we have now made an exit from Eastern Europe. And I think the same logic applies when we now scrutinize the the units in Scandinavia.

Okay. And I understand it's a sensitive question, but sort of in a general sense, I mean, how long will your patience be for that sort of turnaround? I mean, are we looking at sort of next quarter that it has to be a significant improvement across some of these business units, or else you'll be evaluating this? Do you have a bit longer time horizon? Just help us understand maybe the potential time horizon for that beyond Romania then, of course.

It would be fair to say that we didn't suddenly discover this sales and profitability challenge just now after the first quarter of 26. We have seen a deteriorating trend during the past two and a half years. So it is no news to our organization that the clock is ticking. On the other hand, making big decisions based on one or two or three months, that would not be so responsible of me to do so. So timing wise, I'm expecting year-on-year improvements during the course of 2026 but there are of course external factors that we cannot completely control as we now see with the conflict in the middle east etc so i need to be tough but i also need to be fair yeah

No, I appreciate that. Thank you, Ola. And finally, just on profile, then I'll let others ask questions. But could you help us understand the margin bridge a bit more here? I mean, you spoke about a gradual improvement, but sort of just representative for 2026 and how we maybe should view the near-term effect with the Romania divestment. Could you help us understand that a bit more?

Profitability wise and profile wise. The remainder of what we have in Eastern Europe is weighing on the results. In our report there is a comment about that. Where is that? Let me just double check.

Hold on a second. You have it on page 19.

Page 19.

On the note 4.

Page 19, note 4. So there it is. the official effect from the remaining Romanian operation. That is a direct effect. Then there are some cleanups related to the rest of the Eastern European businesses that we have left behind. But the main reason why we see this drop in profitability is not Eastern Europe or Romania. It is the low volume businesses that we see in the Scandinavian markets and in low season when the base volumes are already low and with additional pretty tough winter the revenues are not enough to cover the fixed cost base which of course makes you think why do you have such a high fixed cost base obviously and that is one of the areas that we need to address with this reorganization.

Okay, very clear. Thank you, Ola, and Lars for your answers.

Thank you, Anders.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Sophia Sorling from DNB Carnegie. Please go ahead.

Hi, Ola and Lars. A couple of questions from my side. First up, you mentioned a quite soft market in Germany for ventilation. Do you see that you're developing in line with the current market, or do you expect any losses in market share or increases in market share?

Thank you, Sofia, for the question. Yes, I think we are developing in line with the market in Germany. In line with or slightly worse. And why do we perform slightly worse? we don't accept to take projects where the margins are too low. So of course, when the volumes in Germany have come down, price competition, price fighting is intense. So there are some businesses that we have to step away from. But I would say the main explanation why we are suffering from low sales in Germany is market. But we are not at this point taking market share in Germany. That would be too expensive at the current prices that are in the market in Germany.

Okay. So you experience currently more serious competition in Germany than other regions?

The same amount of suppliers are fighting to get their share of a clearly lower volume in Germany. So I think Germany is an extremely competitive market where it's always tough pricing. But now it's very much so. So we are suffering sales-wise and also margin-wise in the German market in these conditions.

Okay. And the final question, the organic development within the ventilation revision, could you give a high-level sleep on volumes and price effects?

For the first quarter, there is no significant... I think we will start to see some price effects now in the second quarter as the price increases that we have announced in April will gradually start to have effect. But in first quarter, I would say that the price effect is neutral. So we are approximately at, say, 0%.

price effect and approximately zero percent volume effect okay okay sorry I have one more question could you give some more uh details on the or an update around the sandwich panel uh production when it's expected to return to normal levels

Yeah, and then the question is, what is the new normal level? Because obviously these products from that factory, they go to larger projects, mainly in the Swedish market, some to the Norwegian market and some to the Danish market. We have a good, say, quotation activity. We are building the order book. Production ramp up is moving in the right direction. It looks clearly better now in the past two months than it did before Christmas. So we are confident that we are gradually improving both production output and consequently also the ability to turn quotations into sales. But it has taken at least half a year longer with this ramp up than we had anticipated. We clearly have the ambition to have a better performance both sales-wise and profitability-wise from that during the second quarter and onwards compared to a year previous.

Okay. Thank you so much.

Thank you, Sofia.

The next question comes from Anders Jaffs from SB1 Markets. Please go ahead.

Yes hi good morning or good day and I just thought to take a question on the M&A situation obviously you've had a bit lower pace over the last year and maybe to ask a bit how you feel that the deal flow currently is going on the broader market currently or that it's still a bit of a standstill overall or that it's more so that you've been focusing more on your internal efforts as of late. I've taken a notice that you have previously mentioned that you still have an interesting pipeline, but maybe some broader paint on that outlook currently would be nice to get.

Thank you Anders. I'm glad that somebody is asking about acquisitions. We had a record high activity in 2024. The pipeline was a bit less filled in 2025. We only did one acquisition in 2025. I am confident that we will make more acquisitions in 2026 than we did in 2025. We have a growing pipeline again. In 2025, we also noticed that in several discussions we had, price expectations were still pretty high. I think we're seeing gradually a more realistic view on valuations. So I feel a little bit optimistic that we will start to see some better acquisition activity going forward.

All right interesting and maybe to touch upon that obviously you mentioned in your annual report that obviously data center is a growing sub-segment in the market and I think it was on the previous report that you still saw that maybe it was a bit higher activity level on acquisitions within this sub-segment? Is the pricing situation then? I mean, naturally it would be a bit higher for those types of acquisition multiple-wise. Is that something that you see currently also? And how do you weigh also growing in that sub-segment, which is on everybody's lips currently as well?

I know it's, of course, So many investments, so big amounts going into data centers. So everybody's chasing after that. We have a good potential to take, say, the product range that we have and package that into quite potent solutions for the data center segment. But of course, there can be additional products and technologies that would fit very well if we could get our hands on those. We don't necessarily have to acquire everybody to make that happen. We also have good partnerships and good supply agreements to create packages, including third-party products. But we are looking at a couple of companies that could really fit and where there is data center applications possible. If those companies already have a data center valuation on them, maybe we are not able to buy them, but I think we will find our way to actually make a couple of acquisitions where part of that product portfolio of those companies can be applied in data centers. But probably most of the work to be done, we can control internally with the current portfolio we have and the current resources we have.

Okay, very interesting. Well, thank you for your answers.

Thank you, Anders.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

From Lars-Inno and myself, we say thank you. We know that the situation is tough for profile systems, but we're also happy to see the good development and stability in ventilation systems currently at 80% of our revenue and moving towards 90% of our revenue. So don't forget that. Thank you, everybody. Have a good day.