Railcare Group AB (publ)

Hi! This morning we released the report for the third quarter. A stable report, even if the margins were somewhat lower than before. I'm going to give you an insight into the report and how we see the business moving forward. First, a little short about our business. The Railcar Group is mainly operated in three different business areas. Entrepreneurship, Transport and Machine and Technology. Through entrepreneurial activities, we use self-developed vacuum machines, where we effectively perform ballast change and cable reduction along the railway. Over the years, we have also developed and built our own machines for snow plowing. It is both about our snow melters, where we effectively plow snow on, for example, kindergartens, and also plowing machines, where we quickly plow the tracks along the line. In addition to this, we also do the renovation of concrete and stone trusses on both roads and railways. In the transport business, we carry out transport of iron ore and iron ore concentrate for LKABs and Kaunis Iron Räkning. We have long contracts with both of these companies and it gives us a long-term and good and stable basis for the entire company. We also carry out what we call entrepreneurial transports, which is an assignment where we transport materials in connection with the track section. This includes, for example, ballast, slipper and rail. We also have a preparation assignment for the Träffverket, where we work with Olle Lok and Lokförare for the removal of vehicles on the track due to accidents or for other reasons. We have in total seen three workshops within the group. In Långsälj utanför Sollefteå we have a locomotive workshop where we, in addition to running maintenance, also perform larger work such as lifting time extension of locomotives, where we for example perform engine change and rebuild driver's cabins for a better environment for the locomotives. We also carry out installation of onboard equipment. In Skelleftehamn we have a workshop where we build self-developed machines and perform maintenance on wagons and other machines. In recent years, we have focused on the development of our battery-driven maintenance machines that we will use in our own business, but where we also have the hope of being able to sell this machine to external customers. In Kaunis-Ajerås omlastsinstitution i Pitkejärvi har vi också en enklare lokverkstad där vi utför underhåll på de lok vi använder för uppdragen åt Kaunis och LKAB. Vår marknad på järnvägen ser väldigt intressant ut. Underhållsskulden på svensk järnväg är väldigt stor och behovet av en väl fungerande hållbar järnvägsinfrastruktur är avgörande för svensk industris konkurrenskraft. Transporterna på järnvägen förespår samtidigt öka med 50% fram till 2040. Det innebär att underhållen behöver effektiviseras för att minimera påverkan på trafiken på järnvägen. Vårt medlemskap i NATO ställer dessutom ökade krav på järnvägens robusthet och tillförlitlighet. Att järnvägen är i fokus har därför enkla och naturliga förklaringar. Det är lite höjdpunkter från det gångna kvartalet. Vi kan konstatera att vi fortsätter vår tillväxtresa. Tillväxten under det tredje kvartalet var drygt 6% jämfört med föregående års kvartal. Under årets nya första månader har tillväxten varit drygt 15% which we are very pleased with. To enable our continued growth journey and achieve our financial goals for 2027, which means 1 billion in revenue and 13% in margin, we will now increase and adapt the organization. This will be done step by step and means that the margins will vary over time as we increase costs for future income. This applies, for example, to the new preparation project with Röjnings Lok, where we are now building the organization to start up the business next year. We also entered the third quarter as a shareholder in the newly launched Lokutynning company AC Finans. In total, AAC Finans has signed a contract for the acquisition of 14 locomotives of type F. The first three locomotives were delivered about a month later and are now being prepared for the project that will start at the beginning of next year. In mid-October, we signed a new and extended contract with LKAB Malmö Trafik. We have previously had shorter contracts of 60-12 months, but the new contract extends for over five years with the start of January 1 next year. This also means an option of extension for another three years. It is one of the largest agreements we have reached with the company ever and we are very proud that LKAB has now given us this trust. I am also very happy to be able to welcome my former colleague Johan Elverås as the new CFO. Johan comes with his long experience and broad knowledge and fits in very well with us at Railcare. Johan will start his position here in January next year. Finally, the government has presented infrastructure proposals, where large investments are made in infrastructure, sometimes on railways. It is important that the investments are carried out as effectively as possible, and here at Railcare we have a lot to contribute through our entrepreneurial way of thinking. If we then sum up the third quarter, we can see that the revenue for the third quarter ended at 169 million SEK. As I mentioned earlier, an increase of 6% compared to the previous quarter. The lower results are mainly explained by the fact that last year we completed a very successful project with the installation of onboard equipment on a five-track locomotive. This year we have not had any similar projects, which negatively affects the result. Since we now have a larger variation of smaller, shorter tasks and larger, more time-consuming tasks, the margins will vary over time, depending on when the final calculation takes place and the cost development in the project. The growth during the new first months was as I mentioned earlier 15%. We are in a phase where we adjust the business for continued growth and to achieve our financial goals. It will therefore happen step by step with varying margins as a result. But our goals are set and I see continued good opportunities to achieve them. If we then look at the developments in the next four quarters, we see that growth is still strong, but also that it is happening step by step. New projects will of course have a big impact on growth. During next year, for example, the preparation project with the new rowing boats will be added. This requirement in itself is worth SEK 80 million per year. Vissa av dessa kostnader har vi redan i år och det tillsammans med att vi i övrigt anpassar verksamheten för fortsatt tillväxt påverkar marginalerna negativt under tredje kvartalet. If we then look at the different segments, starting with entrepreneurial Sweden, we can be happy that we have continued to increase volumes in the entrepreneurial business in total. The demand is generally high and we experience an increased focus on the implementation of maintenance measures. In the lining business, we have, as before, carried out more market work during the year, which affects the margins negatively. In entrepreneurship abroad, the volumes have been higher than both the second quarter of the year and the third quarter last year. But we are in everything evenly in the beginning of the seventh plan period and we expect that the volumes will vary quite a lot between the quarters. Our discussions with Network Rail continue and we are trying to create a better understanding of the volumes development in the coming time. The transport industry has grown by 15% in the third quarter compared to previous years. I am thinking of the tasks of LKAB and Conway's Iron, but also our entrepreneurial transports in connection with the railways. As I mentioned earlier, both revenues and results have been negatively affected by the fact that no larger projects have been completed and calculated in the farm. The third quarter of last year and at the same time the best quarter ever for the farm where the margins in the completed projects were adjusted together with delivery. It should also be mentioned that the volumes in the farm are still very high and that demand for our services is increasing. In machine and technology, the new battery-powered MPV-2 has been completed. The machines have carried out the first tests in October in connection with proper maintenance work. The machines also work very well and the possibility of charging via pantograph via contact management is a good opportunity for efficient and sustainable maintenance. We are at the forefront of the transition and our hope is that our technology development will also contribute to external business in the future. I have previously mentioned that the cost of maintenance on the railway is very large and that traffic is expected to increase by 50% by the year 2040. When I last year for the first time had the opportunity to discuss maintenance on the Swedish railway with our infrastructure minister Andreas Karlsson, I did the same with the stopover in Formula 1. It was my way of describing how maintenance work on the railway needs to be made more efficient to enable increased traffic. It is about developing new machines and methods, but also in large extent to create long-term success in the industry. Developing new machines is important to make entertainment more efficient, but it is also very capital-intensive for the companies that drive the development and therefore also for us at Railcare. We therefore need more long-term planning to make these investments possible. If we then finally look a little forward, we can see that it is exciting that the government now also in its infrastructure proposition increases its investments in railways. Now it is important that the use of these resources occurs in as effective a way as possible so that the money ends up on the track. Det är ett steg i rätt riktning att efterfrågan på våra tjänster är hög, men vi vill bidra ännu mer. Inte minst med vårt entreprenöriella sätt att tänka och hitta effektiva lösningar. Med stark framtidsro anpassar vi både verksamhet och organisation för att bidra till en långsiktig, robust och tillförlitlig järnväg samtidigt som vi uppfyller våra egna finansiella mål. With this, I would like to thank you for your interest in this presentation. If you want to read the entire quarterly report, it is on our website www.railcare.se. Thank you very much.