Railcare Group AB (publ)

Hello and welcome to Redeye. Railcare recently released its half-year report and reported a record sales for the second quarter. And with us today we have Mattias Remahl, head of the company.

Welcome.

Thank you. You show fantastic growth in all parts of the UK. What would you like to say about this quarter?

It's basically a very good quarter. Our major businesses are entrepreneurs in Sweden and transport has had a really good growth. It's just like you say, it's England that doesn't look good. We have warned earlier that it would be a little heavier here at the beginning of the new control period and we see it now too. It has received a fairly large review of the report as a whole, but for other parts it is very, very good.

Yes, I can understand that. Entrepreneurial Sweden was surprisingly strong in terms of revenue. Can you tell us a little bit about that?

Partly, as we have talked about earlier, we see that there are higher volumes. There is more work to be done, which is very exciting, because the railway needs to be reassembled quite quickly. During the second quarter, we have also had a very successful project around Västerås Trakten, where we, together with some subcontractors, have taken a greater grip on a project where we have carried out, for our part, ballast changes, but where we have also taken the help of them to carry out other parts. And this is partly a lead in what we ourselves put a lot of pressure on, that there is a stop, that it must go faster and that the efforts should be coordinated. And this has been a very successful project overall, where we have been able to achieve a lot in a short time.

Yes, and you mentioned the UK earlier. You also wrote in the report that it is uncertain in the future. When do you think the smoke will go down?

We are in a situation now when it comes to England. We are in the beginning of the 7th control period and we have said earlier that it is very uncertain and we have historically also seen declines in the beginning of the new control periods. What is a little special this time is that the same amount of money has been deposited as it was in the previous period, but there has been very high inflation during that period. You will need to prioritize which efforts you should make. Here we have a discussion with Network Rail to bring some clarity to how they look on the way forward. It's not easy. You don't want to take a few volumes and guarantee them, but we try to create a better picture of how to work forward. We can't continue like this, we need to raise the volumes to make it profitable. But in the long run, we also need to feel that this is a market that we want to be in, that we have the opportunity to make money.

And then on the transport side, it continues to go like the train.

Yes, absolutely. And then we should also remember that in the fixed projects, LKAB, Kaonis and Beredskapsloken, it has continued. But there has been less change of track, which has meant that we have had less entrepreneurial transport in this quarter. And there we see now that they are planned for a large part in Q3. So it looks good even forward on the transport side.

And in Lokverkstan it also looks like you have a strong pipeline.

Yes, the focus has been on these TB-LOKs and we have also had a number of other jobs there, but there is still a high demand for LOKs and we are happy about that and that also gives opportunities in the future.

And then your fourth segment, machine technology, where are you on the plan with the new NPV?

Yes, the MPV2 is in the final stages. Then it will be approved and taken away from the board. In parallel with that, we train our operators. What is new with this is the power supply and how to handle it. It is on the plan. We have not sold any machines, but we are actively trying to sell. Now we are starting to feel comfortable with the technology. And partly we want to sell batteries within Railvacs. But we have also learned a lot about battery technology. And to be able to sell it even in other machines now is something we We work very actively to be able to achieve this. Machine and technology will always have been quite volatile, both when it comes to turnover and results. It has been quite stable in such a way that we have not sold anything. But that day, if we manage to sell something, then we get to count on higher volumes and of course good results in that business.

Otherwise, it doesn't work. And the discussions you have with potential customers, You talked about Australia earlier. I guess there are many countries that you have potential customers in?

Yes, partly we are looking for new markets. It could mean that we can establish ourselves somewhere like in England, that we can do entrepreneurial work. The other is to be able to sell machines. This is a process that initially looks quite similar. We contact the customers and then if it ends with an entrepreneurial service or if we get to sell machines, that process will be shown. We are working much more actively on that front than we have done for a long time. We hope to get a breakthrough somewhere. As far as Australia is concerned, we are still working on that market.

Yes, it will be exciting to follow. If you were to summarize the market prospects for Sweden, what would you say?

I think it still looks good. We see higher volumes underlying. is that we now also take a greater grip on certain projects and where we ourselves stand for project management and implementation together with entrepreneurs, it can also drive volume in the long run. It has been a very successful project around Västerås. We hope to be able to find similar projects in the future, so overall it looks very good.

You also announced a shareholder in a financing company for LOOC, AC Finance.

Can you tell us a bit about that? This is a company that has bought in 14 LOOC from a Czech LOOC manufacturer. These are the LOOC that we use today in our readiness proposal to the traffic agency. At the moment, we rent them from the Norwegian LOOC company, Trainpoint. But we have ourselves been involved in an operation, among other things, and there we need such a hatch to be able to perform that mission. But what is the big upside in this is that we are able to cover a total of 14 hatches and the hope is that we ourselves will to be able to rent all these locks, because then we have also made a good deal on the other side and found new deals. So this puts us in a very, very good position. This, together with the locks that TrainPoint owns, are the only ones that exist in Sweden today of this type, and this is not It is important to point out that this is not a preparation hatch. This is a hatch that can be used for preparation. But it is also possible to use, for example, as a growing hatch. There are many of these around in Sweden. It is also possible to use for smaller transport activities. There are a lot of areas of use and by getting access to these, we are in a very good position to do business well in the future. And that we also become a shareholder in the company makes us part of it.

Thank you so much for coming today and good luck in the future.