Railcare Group AB (publ)

Hello and welcome to Redeye. Railcare released today its quarterly report for the first quarter and with us here in the studio we have Mattias Remahl, managing director. Welcome. Thank you. Yes, you had a stable start to the year, I think. Quite small deviations from what we had expected of us in any case. Or what do you say yourself?

Yes, that's it. In total, it is probably according to expectations. Then you can I have to say that there were some challenges that I hoped we could get rid of and come out even better than this. But it's a stable quarter as a whole, absolutely.

Exactly. If I understand correctly, it is Entrepreneurial Sweden that was affected by this rather late winter. And in general, how has it gone there? Does it look good?

If we start with what has been, it has been a very long and cold winter. Not only up in the north where I come from, but also in the south. We have had to finish a lot of work in the future. It concerns both the work on our railway machines, because it has been frozen to the ground. But above all, I have to say that it is the lining business that has been most affected, where we have not been able to do the lining job. And that has to do with the fact that when it is very cold, it is risky for us to do installations with fiberglass struts, which means that we can simply shoot at them.

What does the project pipeline look like now, if we look at both contracting and relining?

It looks good overall, I think. We have a lot of advanced work, as I was talking about, but then we notice that there is more activity. There is also a very clear debate right now that the railway needs to be re-arranged. And it has never been more up-to-date than now with regard to what is happening at Malmbanan. So there is a lot of work to be planned. I think it looks good overall.

And for the foreign business there, UK, is it a bit more wait and see? This is more of a delay.

In the first quarter, we ended the sixth control or planning period. Now we have entered the seventh planning period. The indication is that there is less money in the system. England and Great Britain have it pretty big right now economically. This will also affect maintenance on the railways. Yes, we are in a position where we really need to think and discuss with Network Rail how we are going to move forward.

And it will drag a bit into the year before you see what it looks like in the future?

If we look at it historically, when we have entered new planning periods, then it has been a bit bigger in the beginning. And that's because the job is to be planned. It's about the same as a budget year in Sweden. It can take a couple of months, and in England perhaps a little longer than that, before you start to see that the planned job comes out. So we have to count on a little lower volumes here in the beginning during that period, all the way to autumn before we start to see where it will take us. So yes, it's a bit of an uncertain situation in Jägna.

Yes, I understand.

Yes, Transport Scandinavia then, where it continues to go like the train, one might say. A good quarter going through.

Absolutely. There are three fixed deposits that we have during the winter and spring, which is partly what affects the business the most. Partly the contract with LKAB is what differs this year from last year. Last year we started in March. Now we have had a contract for the whole first quarter. Kaunis has been just as usual and we are prepared for that.

High volumes. But what happened on Malmbanan didn't affect you financially, but how do you see it affecting you both in the short and long term?

Basically, it shows how vulnerable we are when a stretch of Malmbanatignitet när den inte fungerar. Vi har heller inte fått veta den exakta orsaken till utspårningen än heller. Men det visar sårbarheten i systemet och för oss, precis som du var inne på, vi tassar inte risken för att det stoppar banan utan det får kunden göra. Det där har ju att göra med the distribution of risk and margin, so to speak. But of course, this is a long-term concern. We should be honest and say that this is a problem that we have today with the volumes we transport here and now. Malmbanan kommer att behöva öka kapaciteten ganska snart. I del för att de här gruvorna ska producera mer. Sen är det väldigt mycket annat som transporteras på Malmbanan också. Det här har väl bidragit till att debatten och diskussionen är så pass intensiva som de är just nu.

If we look at this segment, transport Scandinavia, which is an important part of your growth strategy in the future, but it consists of several different legs. Can you help us? Where do you see the opportunities and what are the plans?

If we look at the fixed projects, LKAB, Kaunis and Röjningsloken are the three fixed projects that we currently have. We have the LKAB project for the remaining part of this year, while Kaunis has many years left. Then we know that it will start new preparation flights with the start on January 1st next year. Gradually, we will go up to January 1st in 26, then we will have 10 preparation flights on site. It is a business that we know will increase today. Then we hope to find other permanent sites. There are a number of different projects and to refer to discussions around Malmbanan, the importance of increasing that capacity is also because there are a lot of other projects now that will need to be trafficked on Malmbanan. And there we hope that we will get the confidence to be one of those projects. or the suppliers when it comes to that type of transport service. Then we also have, during the summer and spring, when we have change of tracks, we also run other company machines. We produce materials in the form of slipers, Orel for example, and also Ballas. It is more controlled by how much change of tracks that has been planned.

Machine and technology is the fourth segment here. It seems to be going according to plan with the new MPVs, right?

Yes, we have tested it now during Q1. We have tested to drive up the drum receiver, charge from the contact management and also drive it on it. It has worked very well. The suppliers ABB are here on site who have helped us carry out the tests and they themselves are very pleased with this. So it goes according to plan and we are very happy about it. It is a process now forward to get, partly to build a finished machine, but then also to get it approved by the board of directors. In addition to that, we will also train our operators so that they can handle the contractors in a good way.

And you have mentioned that you have a great international interest there. What stage are you in, so to speak?

We have gone from the phase that we have built and developed technology, which we continue to do, but now we are in the phase that we also want to make sure that we have met the markets around us, because we see that there should be a great demand for this type of machine. Now we are much more active in our ambition to try to sell the machines. We hope that we will get someone who wants to buy these and also that you will remember to sell this type of machine on a new market. It may also mean many times that you have to go there and show the machine in action. It is important that we get the chance to come to these new markets and can show it. and that it might eventually lead to machine sales.

Yes, that's exciting. Thank you very much for today. We'll probably see you here in the future. We will. Thank you very much.