Welcome to HusCompagniet Holdings' Financial Presentation for the first three months of 2025. Today's call is being recorded. All participants will be in a listen-only mode throughout the presentation, and afterwards, there will be a question-and-answer session. To ask a question, please press five star on your telephone keypad. I will now turn the call over to your speakers. Please begin.
Thank you, and welcome to our presentation of HusCompagniet Q1 result today. Thank you for taking the time to participate. My name is Martin Ravn-Nielsen , I'm CEO of HusCompagniet, and CFO Allan Auning-Hansen joins me on this call. We will kick off the presentation with a few highlights and a view of the quarter. After that, we will turn to the Q&A session. Please go to slide two for a few comments on the market conditions. The first quarter of 2025 has been eventful, to say that at least on the global scene, we have seen political and macro turmoil. Still, the conditions in the Danish housebuilding market have been relatively stable. We are very pleased to see a continuing pickup in the sales despite the noise abroad. The activity levels remain high, and we note good interest in the housebuilding, leading to more meetings and signings.
Still, the turmoil is causing real uncertainty among consumers. This is reflected in the continued decline in the consumer confidence in the beginning of 2025 and gradual improvements the last couple of years. Even though our activity level is good, we, of course, hope that the trend will change again as soon as possible. When we look at the classic macro indicators, we are pleased that the employment rate remains very high. The core inflation is still steady in Denmark, while the tariff and the trade discussions on the global scene have lifted the long interest rate slightly. We have actually seen a moderate decline in short interest rates in 2025. All in all, we still expect to continue the good momentum this year as the market rebound continues. Let's go to slide three, and Allan takes on the highlights for Q1.
Thank you, Martin. We maintained the momentum and delivered solid revenue growth in Q1 for the third quarter in a row. Activity was high in all three segments, and we are seeing a positive impact of the pickup in sales in recent quarters. Revenue increased by 31% to DKK 635 million, with higher contributions from the detached and semi-detached businesses in Denmark. We are pleased to report that sales continue to increase in line with our expectations. This will have a positive impact on revenue and earnings in the coming quarters. Our gross profit increased by 10% to DKK 124 million, but the margin declined by almost 4 percentage points to 19.5%. This was in line with our expectations, and the 23.3% margin in Q1 last year was a tough comparison as we completed several successful projects, enjoyed a favorable product mix, and benefited from lower than expected material costs back then.
In Q1 this year, we had a different product mix in the semi-detached business, and the share of projects on own land was lower. At the same time, a good part of the high activity level was related to initiation of new projects and execution on the semi-detached order backlog, which more than doubled during 2024. This significant growth in our order book has entailed onboarding of almost 60 new employees. The majority have joined in our production facilities, and we look forward to leveraging the added capacity in the coming months when our new colleagues are fully up to speed. On this backdrop, we were pleased to deliver a gross margin of 14.6% in the semi-detached business. Also, we have seen an increase in material costs when comparing with last year, impacting the detached business as expected.
All in all, the development has been in line with our expectations, and operational performance has been solid, with good efficiency on projects and costs maintained at a reasonable level across the business. On that note, we have reclassified staff costs related to production employees at our factories in Esbjerg and Sweden. This cost component is now presented as part of cost of goods sold instead of SG&A. The change impacts gross profit in the semi-detached and wooden houses segments, and we have restated key figures for the comparison period and added a slide on the changes in the appendix to this presentation. The gross margin of 14.6% for semi-detached mentioned before would be 27.8% prior to the reclassification. For the wooden houses segment, the margin of 47.9% this quarter would have been 52.9%.
Earnings were slightly lower in the quarter, with EBITDA declining to DKK 17 million from DKK 21 million last year and the margin coming to 2.6% compared to 4.4%. This change mainly reflects the declining gross margin and the earlier mentioned onboarding of new employees. We have increased SG&A to support future sales and growth, and a share of our SG&A costs related to the production of elements at our Swedish factory has been allocated to the semi-detached segment as of Q1. As the rebound continues, we are seizing opportunities to win market share and secure scale benefits. Earnings were also impacted by the timing of deliveries of projects in the semi-detached business, as a few large projects kicked off later in 2024 than initially planned. EBIT was DKK 6 million compared to DKK 9 million in Q1 last year and in line with expectations.
The quarter's free cash flow was negative by DKK 14 million and affected by an acquisition of 12 apartments in six housing units in Kosta Park in Sweden at a foreclosure auction. Let us flip to slide four and an overview of sales from Martin.
Thanks, Allan. Q1 was another good quarter in terms of sales activity. Sales were up by 31% compared to the same period last year, with 356 units sold in total and a strong performance from all three segments. We are coming from a very low level, but it's positive that we are moving in the right direction. As Allan mentioned before, we are now beginning to see positive effects of this sale pickup. Progress was solid in the detached segment with 18% growth and very strong in semi-detached with 36% growth, including a great order for 96 units on Bornholm in the quarter. Sales in the Swedish business almost tripled, and we are close to a Swedish B2B contract for 15 units in Q1.
We would like to highlight that the contract for 106 units with Tjolanda announced in October last year is still not included in the semi-detached sales for now. The building permit is pending, and we are looking forward to kicking off the project. The B2B pipeline is still looking good, and we have great traction with larger investors expecting to sign more deals in 2025. To support the good progress in B2B and meet the market demand, we have expanded our production footprint in Esbjerg during Q2 with a new lease contract, and it means that we now add another 4,000 sq m right next to the existing factory. It will enable us to optimize and increase our manufacturing output of wood elements and roof cassettes. Please turn to slide five and an update on deliveries. We delivered 195 houses in the first quarter of 2025.
This was an increase of 17%, and the second quarter in a row with higher deliveries year- on- year. The progress was driven solely by detached business with a 34% increase in deliveries. Deliveries in the semi-detached segments were down to 29 units from 38 units in the comparison period, and the decline was a result of timing of project deliveries and the effect of B2B projects being initiated later in 2024 than first planned. Our business in Sweden delivered 16 houses in Q1, was down from 19 houses last year. Let's turn to slide six and our order backlog. Based on a positive sales traction in recent quarters, we continued to build a stronger net order backlog, which has increased by 61% to DKK 2.1 billion at the end of Q1.
All three segments contribute to the positive development, with the semi-detached business standing out and more than doubling its order book. Semi-detached now comprises 32% of the total order book, with the detached accounting for 62% and the wooden houses for 6%. The net order backlog amounts to 71% of midpoint, and our revenue guidance for 2025 and a number of our B2B orders reach into 2026 as well. Please turn to slide seven for Allan's comments on the outlook.
Thank you, Martin. We are confirming the 2025 outlook today on the back of a solid start to the year with good sales traction and a high activity level. The positive development is expected to drive higher revenue and earnings in the coming quarters. We still expect revenue to be within the range of DKK 2.8 billion-DKK 3.1 billion, and EBITDA to improve to a range of DKK 110 million-DKK 160 million. Consecutively, EBIT is expected to be in the range of DKK 70 million-DKK 120 million, and we have assumed that we will deliver between 1,000 and 1,200 houses this year. Despite the political and macroeconomic uncertainty, we remain optimistic and confident that we are on the right track to benefit from the market rebound in detached and leverage our position in the semi-detached segment to sign more contracts.
Efficient project execution and strict financial discipline remain a key focus area to us, but we are making necessary investments in SG&A to support the continued expansion of our order book. Our leverage was 2.9 at the end of the quarter, and we still expect to stay within the covenants of our financing agreement in 2025. As previously mentioned, dividends are not expected to be reintroduced before our leverage is below 2x net debt to EBITDA. Thank you for listening in. Now, please turn to the next slide for the Q&A session.
If you wish to ask a question, please press five star on your telephone keypad. To withdraw your question, you may do so by pressing five star again. The first question is from the line of Sebastian Grave from Nordea. Please go ahead. Your line will now be unmuted.
Thanks a lot, and thank you for taking my questions, and congratulations on a strong start to the spring selling season here, guys. First question is on the 80 units implied sales rate for detached sales in March. It looks like one of the highest monthly sales numbers we have seen for a long time. I know from history there can be some lumpiness from month- to- month, but my question here is really if there's any sort of one-off effect from larger land pieces becoming available or other things that we need to be aware of, or if this is simply just a reflection of underlying momentum. That will be my first question.
Thank you, Sebastian. We are pleased to note the continuous ramp in Q1, and we can also confirm that the sales in March, or for that matter's sake, in April is not reflecting any of the matters that you are addressing here. It is a part of the continuous ramp and rebound.
That's great to hear, [audio distortion] . Thanks, Allan. You touch upon yourself here, the April sales figures of 75 units. I mean, a tad below March, but I guess in light of the extreme uncertainty around liberation date, it's a very decent number after all. What is your reading to this number? Is there any, I mean, could you comment around any seasonality around Easter or anything to be aware of?
No, we will not see seasonality that way. Easter, it has been, you can see, spoken up to as a high sales period, but from my perspective, it is more a real estate attraction, actually, because we normally see that April is at the same level as the other months in the spring.
Adding to what Martin is saying, we continue to see increased activity levels in meeting activity, etc. I'd say it's more of a fluctuation the way we look at it now.
Okay. Does it mean that you sort of have not seen any change in customer activity or dialogue post-liberation day? Is that the way to read it?
Yeah, I would say we probably see some more fluctuations, but I would say we are still on the right trajectory. I think the month of April was probably the most, what should we say, turbulent month in this year. I would say we saw some fluctuations, but we continue to see increased meeting activity overall.
That's great to hear. Just my final question. On the margin for the detached business, 19.5% here in the quarter, is this the run rate we should look for going forward?
I would say the margin reflects, as we also mentioned, a decline compared to last year, which was in line with our expectations. Yeah.
That's great. Thank you.
The next question is from Christian Torner from SEB. Please go ahead. Your line will now be unmuted.
Yes, thank you. A couple of questions from my side. Now that you have reclassified staff costs related to the production facilities, it becomes a bit easier to, I guess, talk about the expected development in FTEs. We can see that in Q1, staff costs related to non-production FTEs, if you can call it that, was DKK 77.2 million. My question is, have you ramped up your organization sufficiently now, excluding the production workforce? Or is there still more production on, more increase to come on the SG&A staff cost?
The way we look at it now is that we try to ramp in line with our order book and our expectations for the future. As we look at it right now, we are still having a foot on the gas pedal and the brake at the same time. I would say we take it on a quarterly or even on a monthly basis and look at the situation, and then we ramp as we see our momentum increases. I would not put down a certain comment on that.
Okay. When you then see the level of order growth that you've seen in the first four months here, does that then require you to increase your workforce further for the rest of the year?
In some part of our business, we can see already now, for example, the semi-detached that we have to have some construction manager to manage the building process on sites. Yeah, we can see some places that we will ramp up there. As Allan mentioned, it's very important for us to be aware and not go too fast ahead.
Okay, that's fine. That makes sense. Thank you. The next question goes to sort of the phasing of the semi-detached projects. In your comments, you highlight the fact that Q1 last year in semi-detached, you had completion of project with good execution, and then in Q1 this year, you are more in the initial phase of these projects. Also, that, I guess, reflects the perentage of completion accounting. My question is, with the current backlog, are you going to reach completion or close to completion on any major B2B projects in semi-detached, or will that not come until next year?
I think it would be wrong for us to make a comment on that, but as we have mentioned before, we have a good pipeline that we are working on.
Okay. All right. Then maybe just on the B2B segment as well. From your comments, it does not seem that you have seen any sort of major reaction from customers to the macroeconomic uncertainty. I also guess there are differences in the psychology between the B2C and the B2B customers. Perhaps more on the B2B customers specifically. I mean, in what way has the macroeconomic uncertainty changed the dialogue you have?
The interest rate actually is going the positive way also for that kind of investor. So we do not see that the dialogue is going the wrong way. No, not at all.
All right. Understood. Great. That was all for me. Thank you.
Before we take the next question, let me just remind you, if you wish to ask a question, please press star five on your telephone keypad. We'll now continue with Martin Spretzmann from Danske Bank. Please go ahead. Your line will now be unmuted.
Yes, thank you very much. Hello, Martin and Allan. Thank you for taking my questions. I have a few as well. We start with a question on the detached segment. We've seen the ASP on a declining trend towards normalization. Should we expect this ASP in the detached segment to continue down for the following quarters, or is the DKK 2.7 million a fair assumption for ASP going forward?
Again, that can fluctuate a bit, Allan, depending on sales across regions, etc. I would say what we are seeing is not an unusual fluctuation.
Okay. Yeah, that is fair, of course. Then back to the question on the FTE side and the ramp-up in the semi-detached segment. Obviously, you are increasing capacity in the semi-detached segment. You have added some new colleagues as well. How many additional colleagues would you theoretically need to hire in the semi-detached segment given you reach a full production capacity at the present?
I understand your question, Allan, but we can't go into those details, unfortunately.
Okay. Yeah, that's reasonable. Then just a few questions on the Swedish business. Again, actually back to the gross margin here. So 48% in Q1, obviously a high point, and it has been bumpy and good reasons for it being bumpy as well. C an we expect a normalized gross margin in the Swedish business? Should we see this in Q2 and onwards, or what's your comment there?
The Swedish business in Q1 was impacted by the sale of a number of land plots, a limited number of land plots, I would say, but with fairly good margins. This is why we see the margin that we do in the Swedish business for Q1.
Okay. You don't expect, do you expect any additional land plots or similar to have an effect going forward at all?
We currently don't anticipate any land plots producing or generating a margin like this when we look towards the end of the year.
Okay. Thank you very much. Okay. My final question here.
We are very pleased that we actually succeeded in selling the land plots with very good margins despite the situation also that is in the housing market in Sweden. We actually are so focused on the margins also in the Swedish business.
All right. Thank you very much, Martin. My final question here also in Sweden, and you touched upon it a little bit in the presentation here, but can you just elaborate the inventory increase here in Q1 impacted by an acquisition of some units in Sweden? Can you maybe tell us your thought process here and what the plan is with this acquisition?
This was a project we took over from a customer of ours, which went bankrupt. We took it over on a forced auction. The ambition is to finalize that project. It requires a bit of capital. I can't be too detailed about it, but we are not talking a significant amount. We are going to put up the apartments for sale subsequently.
All right. Is there any timeline on this project when it will hit the books?
Somewhere during this year, I expect that we can initiate the sale.
All right. That is perfect. Thank you very much for the answers here.
Thank you.
As a final reminder, if you have a question, please press star five on your telephone keypad now. The next question is from Sophie from Dagbladet Børsen. Please go ahead. Your line will now be unmuted.
Hello, this is Sophie. Thank you for taking my questions. I just have a question. I want to hear how many defect claims has HusCompagniet received on houses in Denmark in the first quarter of this year?
How many what? Sorry, Sophie?
Defect claims on houses.
Okay. Unfortunately, Sophie, this is not a number we can disclose.
Okay. Can you tell me a little about what is the reason for the increase in the number of defect claims for the last years in Denmark?
Sophie, this is not a number we are disclosing.
Okay. Have you experienced an increase in claims, not by a number, but in general?
No. No, we haven't. We deal with the claims that we have on a continuous basis.
Okay. Can you tell me a little about what is the status of the?
Sophie, it is also important. We have never had as high customer satisfaction as we have now. Our very strong focus on delivery at the right time and high quality, it is very, very strong for us also now.
Okay. Great. That's good to hear. Can you tell me a little about if there's any new status of the arbitration case with your former mortgage subcontractor in Denmark, DanGrid?
This is not something we can comment on, Sophie.
Okay. Thank you for taking my questions.
Thank you. You're welcome.
As there are no further questions on the conference call, I will hand it back to the speakers. Please go ahead.
Yes, but then Allan and I will say thank you again, all of you, for taking an interest in HusCompagniet. If you have any following-up questions, please reach out to us and have a nice day.