NIBE Industrier AB (publ)

Welcome to the NIBQ1 presentation for 2026. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the CEO, Eric Lindquist, and CFO, Hans Backman. Please go ahead.

Thank you very much. Good morning to you out there. Good morning, everyone. And we're going to start like we usually do, you know, me going through some slides and then hands following up. And we hope that this will be no more than 22, 23 minutes, and then it's room for questions. And as you know, this day coincides with our annual shareholders meeting, starting at 5. So quite a number of discussions and interviews today. So at 12 o'clock, we have to stop this session, if we are not impolite suggesting that. So with that said, once again, welcome. And let's dive into the presentation. And, of course, you've already read the report and the main headlines or the main numbers are, of course, the organic growth in the fixed exchange rate of just north of seven, operating margin nine, and the net debt. like 2.7, all indicating that we are in the right way. And it's the fifth consecutive quarter when we are reporting positive sales and margins and results. We're very pleased to note that. Of course, the Swedish crown and Swedish currency diminishes that to a point, at least when you look at it just briefly. But that's a very solid growth behind there. Of course, we've been able to fight off the tariffs within climate solution and element fairly well, whereas stoves have been hit the hardest there. But we can say that the world around us, that's of course pretty unstable. And there are typically two reactions that we see among customers, and that's of course The fossil fuel dilemma is once again pretty much pronounced, and then again people start to look away for other alternatives. But it's also so that, of course, when there are wars and political turbulence, people are a little bit hesitant to spend money, which we also see, of course, on the consumer spending, particularly on stoves. And the, look at it, the figures themselves, you see the 96.50 here with the operating margin coming in around 9 versus the 8.1 the previous year. And, of course, that's a fairly hefty growth and also in the profit after financial items. And that is, of course, an illustration of the fact that we are borrowing less and interest rates are a bit lower anymore, which is pleasing, of course. And this graph is, of course, indicating something flattish, but then again, it's not in the fixed currency, so that looks, again, it fools the eye a little bit. The profitability goes like this, and that's an indication that we are on an uptick, as we write about. And coming to climate solution, which is the largest business area, it's a solid improvement, both in sales and margin. And we've been talking about that, you know, for the fifth consecutive quarter. And the pleasing thing is that both in residential and commercial, it's moving in the right direction. Here again, of course, the Swedish crown is a shadowing part of the development. And when it comes to residential heat pump or the hydronic kind, the European market has been fairly, if not buoyant, but pretty decent, well in line with what we anticipated and our own growth. And also, the heat pump sales and commercial is very pleasing to see. And those countries, particularly Germany, they've been a bit more hesitant, if you go back historically. They're really back to a growth pattern now, like Switzerland and the Nordics. We continue up here to have a decent growth. And when it comes to the U.S., of course, we all know that the tax subsidies were taken away in the beginning of this year, and we must say that we anticipated perhaps a harder time hit then actually happened and we sort of interpret that as the interest of heat bombs also in the US is to a lesser degree dependent on subsidies but also a true interest in changing over from fossil fuels to another more environmentally friendly alternative and we also see and we've been preaching about that that the traditional pattern of the first quarter, third quarter, and so on, grows more and more into the second half of the year when it's coming to a crescendo, if you like to call it. And that's really re-established. There were some years here between 22, 23, when you couldn't really see that pattern. And 24, of course, when we had that downturn in demand from wholesalers and installers, there wasn't really... either a real picture of the demand. And we are bold enough to say that now we are there to make money on the historical levels again, and that's pretty much shown on the next slide, comparing to the 9.2 and 10.3 in operating margin now. we are fairly confident that for the full year, we're going to be up in that range between 13 and 15%. We just touched the 13 base last year, which was a very, very clear ambition. And I think you see our historical development here. And of course, it's very obvious that we like to climb into that 13, 15% margin. And that is an indication that we believe that the remainder part of the year also going to be fairly decent tours. Element, excuse me, my voice is a little bit weak today. I had a cold, and I almost lost my voice a few days ago, but I'm on the go again. And, of course, here, also electrification and digitalization, those are the main drivers, whereas white goods and those sectors are more down or more neutral, we can say. And also the heat pump segment is, of course, vital for the element group. So it's very pleasing to see that element is coming along fine. And, of course, the wars is affecting us to a point, but we've been able to fight that off fairly well. Swedish crown, the same again, of course, is disturbing the immediate visible figures. But for the full year, also here, we are bold enough to say that, well, we should be back within the historical range between 8 and 11%. And that is, of course, viewed here, going from 6.2 to 6.6 and operating margin, and also looking at the development last year. There we had a very clear ambition that we should be up to 8%. We missed that with the percentage unit, mainly due to some shortages in orders from the semiconductor industry, but that is coming along now. So we are fairly confident that we're going to be within that band between 8 to 11%. On the stock side, as we so precisely have explained, it's tougher for us. because they are the terrorists, of course, in North America. They are in the U.S. They are coinciding also with the consumer reluctance when it comes to investing in the stove, when they feel on a daily basis that the wars and political turbulence are, you know, reviewed in front of them. So that's tough enough, but then around Easter, Another message came about from the U.S. government when they said that now they were going to increase the already burdening tariffs with 25% of all sales going into the U.S. And it so happens that we have all our three factories in Canada. So, of course, immediately it would be very difficult to compensate for that. But as with the first slide of... or the introduction of tariffs. We're trying to fight those off with price increases and with, of course, rationalization and also selling more, rather than trying to, in the short term, you know, protecting the margin. I think we have, we are taking a hit, but in the long term, we're going to come back, of course, selling more and having price increases, but also adjusting our costs. And the European market is as soft as it was last year. But we can see some signs of recovery. But we like to be a little bit cautious there. Because typically stoves, they are a few quarters behind the others when it comes to coming up again. And we just feel that there might be some positive signs eventually that Europe might come out of this, whereas in North America the demand is going to be good, but the pair is going to be hard to beat. A seasonal pattern again, that's very pronounced on the snow side typically, also disturbed during those years that I mentioned before, and there we see clear signs of the second part of the year being stronger again, as it had been prior to 1922, we can say. And, yeah, that's a return to that span. We'll come short, of course. We will not be able to do that, and the illustration here that the first quarter last year was relatively good, and this year we come out with 4.4, and it would be unrealistic, we believe, to say that we would come up to the 10 to 13 this year, although that was the target when we budgeted and we entered the year. And now, of course, adding those 150 million crowns in burden, it becomes them. Of course, we do our utmost. That's why we suggest a span of 6-8% rather than the 10-13%. And that is short and mid-term. And as before, if we just look at the pie charts before I hand over to Hans, it's pretty much the same where two-thirds come from climate solution and Niva Element like 30%. And, of course, the first quarter, Niva starts being relatively small, whereas their peak is at the end of the year. Geographically, of course, or, yeah, I don't know whether this is a correct description really. Niva Element sales is not geographical distribution. It's a distribution of the operating margin. And the element then is coming in at 22. And climate solution, of course, having both the size and a better margin on their hands, you know, it's almost three quarters of their profitability. And stoves, again, being very minor during the first quarter for obvious reasons. And geographically, of course, the northern countries pretty much stable around the 19. and 45% in Europe, excluding the Nordics, and North America, 30%. And outside those continents, including the Nordics, we have Asia, and that's pretty much an element that's active there. I think that's... I hand over the monitor to you now, Holmes.

All right. Thank you, Eric. Thank you very much. Before digging into the individual business areas and balance sheet and cash flow, I would just like to – well, first of all, I hope that you appreciate our new format for those of you who have been following our reports before. Not only is it in landscape format, making it a little bit easier on the screen, hopefully, to read, but it also contains a little bit more information where the currency is much clearer stated, of course. The cash flow statement is also more in detail. So I hope this is appreciated. If you have further views, you know, please holler and we'll listen to you. And one little small detection that we've made is that the sales by geography on page 12 had a little sum error in it for the Nordic countries. The sum is not 1850, it's 1840. And then just one more comment on the group before heading into the business areas. For those of you who have seen it already, the elimination line in the group accounts is a positive one. And typically it's a minus 10 to 30, 35. And that's where we typically have one-off costs of different kinds, very often related to acquisition costs. It could be for due diligence work, for purchase price allocation work, or consultancy, or advice of some sort. As you know, we've not been that active on the acquisition side for a while now, so the costs are much, much lower. And in this specific case, with the positive one there, we actually had to reverse costs set aside for an anticipated acquisition that didn't happen. So we had to reverse that. So it has nothing to do with any revaluations or anything. It was just a cost that didn't come, for which we had to set aside some money. Then looking into climate solutions and continuing with the business areas. As Eric stated, we've seen a decent sound demand in the quarter for the business area, both in Europe and the U.S. In Europe, it's been very much Germany, Switzerland, and the Nordics driving demand. And in the U.S., we've actually seen a quite decent demand as well and not as a sharp fall on the residential side as we could have expected. But, of course, there has been an effect when the tax credits went away. Anyway, this has resulted then in an organic growth of 10.3. I mean, the face value of the growth is 3.4 due to the currency effect there of 6.9, as you see. But the underlying growth has been quite decent. And when we get volume into our factories, we also, of course, improve our gross margin. So that has risen by more than a percentage unit, then leading to an operating profit there, which itself has risen with almost 16%. So it's been a decent development, we think. In terms of geographical distribution of sales within climate solutions there are not been many very large movements from from last year it's the pie chart looks basically the same as before so we instead move on to element and overall the elements business area has also seen a quite decent growth as a matter of fact but it's been very different between the different segments, whereas semiconductor, the HVAC, for example, the process heating have been quite nice. The process heating being very important for the electrification of the industry that is going on. Whereas, of course, automotive, white goods, and also on the industrial side, it's been a little bit weaker. But the growth, underlying growth there was actually plus 6.7%. But with the currency effect there, we came in at minus 1.5. The contribution from the acquired company is from Selmo that we have announced before. And also here, of course, more volume generates a better gross margin. But it's also a combination of the cost saving program that we ran in 2024 and trying to keep a tight cost control. And all in all, we came in at the 6.6% of operating margin, which is decent. But of course, we can improve from there as well. And we will as the year moves along. Also here, the distribution of sales per geography is very much similar to what it looked like last year. So it's our most global business area with a good portion of the business in North America, which is continuing quite well. Moving on to stoves. Well, for stoves, demand has been reasonable or stable in North America. The tariffs don't necessarily influence the demand as such. It's more on the profitability side, of course. But in Europe, it's been very cautious for the reasons that Eric mentioned before. And this despite relatively cold winter and high energy prices. But it is, of course, a signal of people holding very tightly to their cash for discretionary products, given the world around. And when it comes to North America, we will see an effect due to the tariffs going forward. The news that were announced just a couple of days ago. But here we didn't decline in sales with 10.1% if you dig into the numbers, if you take away the currency effect. So if you look into local currency, we had a drop of just about two. But of course, it is a tough period that we're going through. But it should, of course, be seen under the light of the difficult time right now in general, but also the more or less overconsumption that took place during COVID and then when Putin invaded the Ukraine, the initial phase of that. But when we lack volume here, it has an effect on gross margin, taking a hit. We've been very, very careful on costs here and also taken out a lot of costs. So we've been able to defend an operating profit here of 37 million and an operating margin of 4.4. And as always within stoves, the Q1 and Q2 are the weaker quarters of the year, and it's always in the second half where things take off. Also here in terms of geographical distribution of saves, the picture is very much similar to what it has been before. And also on the balance sheet side, both on the total asset side and total equity and liability sides. There have not been very many movements, you can say, from the end of the year. More a natural development of the business simply. we'll move on to the cash flow statement instead and i think that it's pleasing to see that the cash flow from the operating activities basically has doubled compared to a year ago so we've generated a good portion of cash there but then we're also back into our more seasonal or traditional seasonal pattern meaning that we are building inventory and preparing for the sales to come during the latter part of the year so we're tying up more in working capital so here we've increased inventory slightly receivables but also the payables but there's also a currency effect here running in the wrong direction which hurts that number a little bit more than necessary so to speak But overall, the cash flow has almost doubled and investments, they have been cut in a third almost from a year ago. So we are clearly seeing the end of this very large investment program that we were running, which, of course, then has an effect on the depreciation side instead, which I'm sure many of you have have seen. So all in all operating cash flow plus 324, whereas it was minus 376 of last year. A few key financial numbers. We have a pretty good cash on hand, so to speak, which we can start to use for acquisitions, as Eric mentioned. The net depth is seemingly on the same level as at the end of the year. If you look at the second decimal, which is not displayed on the picture, it's actually come down a little bit further. And the interest bearing liabilities in relation to equity have also come down, and the equity assets ratio has improved. So overall, I would say it's a fairly stable balance sheet that we're looking at. Working capital is also on the right track. It's slightly lower than a year ago. It's a little bit up from the end of the year, but for the reasons I just mentioned, that this is the time of year where we build up working capital for the second half. But of course, an intermediate target is to come down to 20% here, as we've mentioned several times before. And then just on the last slide, some additional key figures. They are also all moving in the right direction. Return on capital employed a year ago, 7.3. At the end of the year, 8.5. Now up to 8.7. Return on equity from 6.2 to 8.5 to 9. This, of course, not where we want them to be, but we're on the right track towards our goals. And one should not forget either that it's communicating vessels with our equity assets ratio, which of course is fairly strong, where a target in a way is to have at least 30% and we're almost up to 50. So that has an effect on those key numbers. And then net profit per share has also increased nicely. So all in all, I think it's a solid balance sheet that we have now after Q1. But I'm sure that many of you have questions out there, so I guess we open up for that. Thank you, Hans.