Welcome to NKT's first quarter result for 2015. My name is Michael Lyng, Group Executive Director of NKT Holding and Chief Executive Officer of NKT Cables. With me today, I have Jonas Persson, Chief Executive Officer of Nilfisk. We will use the normal format. First, I will cover some highlights and finances before we move on with the development in the businesses.
For the last part, Jonas will assist me as usual and cover the Nilfisk part, including for now a deep dive into the new Nilfisk strategy plan with the name Accelerate Growing Our Company to Lead the Industry. Let's start up by the highlights for Q1 2015. Overall, Q1 2015, we see a performance in line with expectations. We are increasing our operational EBITDA with 11% on the basis of an organic growth of 6%. Also, if we look at the cash flow, we are satisfied with the development.
Normally, we see a working capital build-up in first quarter, and that we have also seen in first quarter this year, but we have been able to offset that negative effect from positive effect from the operations. On the basis of this quarter, we are maintaining the 2015 outlook. If we look at NKT Cables, we continue to see the positive development. We continue to transform the business, and we see a significantly improved operational EBITDA to a large extent coming from a DRIVE that fueled the EBITDA with DKK 72 million in first quarter. We are now looking more into the phase II of DRIVE, and I will come back to that later on in the presentation. In Nilfisk, we saw a performance weaker than expected. We are down organically with 2%, and of course, that also impacted our earnings negatively.
We have had some delivery issues in two ways. First, we have had some port strikes in the U.S., which means that we have had difficulties in getting in products to the U.S. market. For the European market, we have had some delivering issues caused by a new IT systems. Both of them are behind us, and Jonas will elaborate more on this when we come to the Nilfisk part of the presentation. Of course, it means lower sales, and it also means that we temporarily are looking at a higher cost base because we are trying to offset the delivering issues with higher distribution cost. Jonas will come back to that in his part of the presentation.
For Photonics, we saw an okay quarter, very much on par with first quarter last year, and we continue to look into the business called Fiber Processing, where we are looking into potential to divest that later on in 2015. If we look at page six, looking at the financial highlights, organic growth came in at 6%, and you can also see here the split, - 2% in Nilfisk, offset by 16% organic growth in NKT Cables, and then a negative development in Photonics group of 4%. Operational EBITDA, if you look at the margins, they are more or less flat compared to first quarter of 2014, slightly up to 8.1% from 8% last year. Nominal, it is a result of DKK 283 million compared to DKK 254 million first quarter of 2014.
One-off cost, we will come back to that later, but of course, it relates to the DRIVE program. Maybe surprisingly here, looking at the financial items, we are actually having a gain of DKK 16 million in first quarter compared to normally an expense, of course. You also see there an expense of DKK 25 million first quarter 2014. This is entirely due to some positive FX adjustments, partly also related to some hedge contracts that we have had in Chinese currency. On the basis of that, we are seeing a profit after tax of DKK 91 million, very much similar to first quarter 2014. Working capital, as already mentioned, developed positively, and I will come back to that in further details later on in the presentation.
We see a cash flow from operation of DKK 95 million down from first quarter last year as a result of the increased working capital in first quarter. We continue to see overall a pretty good cash conversion rate here. Last 12 months, the number is 114% due to an overall reduction of working capital in NKT Cables. On the basis of that cash flow, we see an increase of interest-bearing debt of around DKK 200 million, and I will also come back to that later on. But we are still trading at around 1x operational EBITDA to debt, so at a very low level. On page number seven, we are looking at the operational EBITDA measured at the last 12 months curve. We see overall a more or less flat development. So we maintain the level of around 9.6% where we ended in 2014.
We still have a way to go in order to meet our full year guidance where we have communicated an improvement of up to 1%. If we dig a little bit deeper into the P&L and the composition of revenue, as illustrated here in box number one, we have a revenue nominal-wise an increase of almost DKK 300 million. But it's clear that that is positively impacted by FX changes, partly in China, but also partly more importantly in U.S. If we adjust for that and adjust for metal prices, where we have seen a more or less flat development, then we are down to the 6% organic growth with the split as illustrated here and as mentioned before. If we look at the operational EBITDA, we have seen a nominal increase of DKK 29 million.
Here we are positively impacted by an increase of almost DKK 60 million in NKT Cables. It's clear to see the margin pick up from first quarter 2014, where we ended at 3.6%, to now realizing 6.7% in first quarter 2015. So a very nice improvement coming from NKT Cables. In Nilfisk, we are partly offsetting that positive effect with a negative development of DKK 31 million. It's also as illustrated here, you see the margins in the quarter coming down from 12.3% to 10.1%. Of course, that is impacted by the negative growth for the business and also by what I mentioned before, higher distribution cost in order to offset the delivery issues that we have had in Nilfisk. But of course, it's also impacted by our continuous investment over front-end in more salespeople, feet on the ground.
We strongly believe that that is still the right thing to do, and Jonas will elaborate more on that when we talk about the strategy plan for the coming years. Last but not least, just a split of the financial items, where you can see the positive impact coming from FX effect of DKK 27 million. If we dig a bit deeper into the working capital composition here compared to end 2014, we see an increase of around DKK 400 million, Nilfisk increasing DKK 271 and NKT Cables DKK 158. We should bear in mind that normally we are building up working capital in first quarter in order to deliver products into the market in a very strong second and third quarter, both for Nilfisk and for NKT Cables, so that's pretty normal.
On top of that, we are also here having an impact of around DKK 200 million due to higher FX rates in U.S. and China. If we had not had that, the increase would only have been DKK 200 million. On the next slide, we see the trend curves that we normally look at, and it's good to see that we are at all-time low here, despite the increase in first quarter, 17.2%. That is actually coming down from 18.1% end of 2014. So we continue to see a positive development in the businesses. If we look at the blue box here, it states how the development is in the different businesses. It's also here, the positive impact is coming entirely from NKT Cables, where we are declining down to 14.9% from 16.8% end of 2014.
The development in Nilfisk is more or less flat compared to 2014. On the basis of that, we can look on cash flow. The fact I mentioned before about the FX impact on working capital is also clearly illustrated here, where you can see, of course, cash flow from operating activities being positive with DKK 95 million, but that is then impacted by the increased working capital in cash flow-wise of around DKK 200 million. We continue to invest but also continue to hold back on the investments that we do, in particular in the Cables business. So we are looking at acquisitions of property, plant, and equipment of DKK 38 million. Other kind of investments very much being intangible assets and development cost, DKK 55 million.
So all in all, DKK 93 million, which is more or less comparable with the first quarter 2014 if we adjust for the divestment of business activities we had back then when we divested the Sanders business, where we had a positive impact of DKK 108 million. Then just a picture here on our leverage situation. As mentioned in the beginning, we see a more or less flat development. Of course, the net interest-bearing debt are increasing, but so are last 12 months operational EBITDA. So we are maintaining the level of around one times debt to EBITDA. We continue to be fully in line with our own definition of how we define the optimal capital structure, and that is illustrated here in the blue box.
That also means that we have sufficient room to grow the business, in particular to focus on doing the right investments in front end in Nilfisk in order to fuel more growth for that business. With that, I think actually I will hand over to Jonas to continue with the presentation of Nilfisk.
Thank you very much, Michael. Then we move directly into page 15, where we see the growth of the quarter and development of the growth. - 2% the first quarter 2015 is of course not to satisfaction. We also have to say then that there is an impact of the divestment last year of Sanders. If we take that into consideration, we will actually have a flat start of the year. Still not good. Of course, that Sanders business come from the Americas, that will also impact America sales. If we go into the Americas, that will also be a flat development if you take that into consideration. On top of that, we have had delivery issues as Michael also mentioned before.
In Americas, we have had a port strike on the West Coast that have very much affected us here in quarter one with many orders delayed and also some loss of customers. On top of that, we also have a new system implemented in Europe distribution center, and that have also affected us. Anyway, it was very much disappointing start of the year with a - 2% or flattish compare if we take into consideration of the divestment. Going into Americas, - 7%. As I said before, flattish if we take in consideration of the divestment. Having said that, of course, flat or - 7% is not good. This is continued to drive and try to improve the America sales. EMEA +2% is also better, but still not good.
That is very much affected by the distribution issues we have had here in EMEA. Then we come to APAC, - 16%, which is of course not good. Here we have very much suffered from consumer loss in Pacific, which I also mentioned last quarter. That will hopefully end here after this quarter and we will see an improvement here going into quarter two. Then we also have had some reorganization and restructuring of the sales force in Asia, which was very much expected. That will also come to an end here after Q1. Going into the next page, of course, the low sales in the quarter have very much affected the earnings as well. We ended up with 11.1% compared with Q4, 11.7%, affected by the drop in sales.
That is a big effect, but we also have had huge distribution cost in order to balance the issues we have had on the supply chain. Then we go into next page talking about our strategy. It is very much still a front-end strategy. We try to invest and drive growth. Going then to page 18, the six trends that have very much shaped our strategy is that we see a commoditization in the industry. There is more need for basic products and more simple products. Also there is a pressure on the cleaning cost in the industry, which dilute, of course, the price in the industry. Battle for distribution. Here I think we are in a strong situation in Nilfisk, but it is very much a battle worldwide to get the distribution and to drive sales via that.
We also see a technology change where we see more automation, we see more need for robotics, and also to be able to track the machines when it comes to where they are, when they are serviced, and how much they are used. On top of that, we see a trend also that we see the emerging markets growing faster. With the new salaries in the emerging markets, increasing salaries, there is also, of course, a small need for automation. What are our strength in Nilfisk? Going then to page 19, we have an extensive and very good product range, I would say the world best, that we like to, of course, to maintain. The brand, a strong brand in professional side. We have a very strong market coverage in the sales channels, also the service and after sales coverage.
We have globally a good position, but of course, an even better position in Europe. Our direction and financial aspirations, we talk about 2%-3% above GDP growth. We have to mention then that the business is a GDP minus, where we see diluting in the prices constantly. On top of that, of course, we should grow above this. So we still believe that this 2%-3% is an aggressive going forward over a business cycle. Return on capital, 18%-19%. That is slightly above what we are today, but then we should need to take into consideration that we are talking of continuously investments and also an acceleration of acquisition in the period.
Going into page 21, then we have the different six themes that is driving the strategy, and I am very much going into four of them here and going a little bit deeper in those. But generally, we like to grow market share. We will do that by organic growth and continuous investment in the front end. But we also would continue to accelerate also the efforts we do in the M&A. In order to do that, we like to have a more agile and commercial organization driving our already very good employees and very competent employees to be more customer-oriented and more commercial. Then strengthen the front end. We will come into that, but we also like to drive the competitive offerings, build a strong brand in the industry continuously, and also power up our supplier chain. So let us jump into the front-end investments.
Slide 22 shows very much what we try to do here. Many of these activities have already started here through 2014 and will continue now into the strategy period 2015 and 2018. Resources, we have already in 2014 increased direct salespeople and service people with roughly 10%. We will continue to drive this to get more resources into the front. We are also rolling out here 2015 a sales academy, make sure that we are working in the same way globally when it comes to how we sell and how we do the service. Then, of course, on top of that, we also have introduced a new performance management when it comes to the sales force with new incentive programs for the team. To support that, we have also rolled out the Comx in six countries now. We are on the seventh.
U.K. is on the list right for the moment. These seven countries covering more than 60% of the total revenue. This will continue to drive and roll out over this period as well. This Comx makes sure that we are focused on the right segments, make sure that we focus on the right customers, and also drive our performance in a more professional way. In order to be able to do this, we also need new systems, tools to support this, and therefore we have also started to roll out the Salesforce, our CRM system, and also rolling out the ServiceMax. When it comes to our competitive offerings, we have a very strong product range today.
We would like to push more for innovation and have maybe fewer launches, but make sure that the launches we have give more impact into the market and creates also more growth for the products we are doing. I think that is also a very big part of the strategy going forward. Then, of course, we need to continue to drive the complexity reduction and drive out complexity out of our range to make sure that we are focusing on the right things and put the right effort and resources into the most important segments and products. Next, page 24, we are talking about our brands. We have defined our market with a high-end, mid-market, and low end, where we see the high end stands for roughly 45% in our way of define the market.
Here we have today a very strong market share, and we would like to maintain that position. This stands for 45%, and here we have a global brand, Nilfisk, but of course, we also have local brands as Advance in Americas, for example. This is important, this segment that we have a high quality, a full range, of course, driving service and complete offer to our customers with quick response times. In the mid-market, 40% today out of the total market. We should also know that the mid-market is actually growing faster than the high end for the moment, and therefore we need to be more present here. We are already present, but we would like to increase the presence in this segment. Here we have Viper as the global brand, but also in this segment, we have also local brand.
This here require more basic product, reliable, but also very easy to use. Then we have the low end, which is roughly as we see it, 15% of the market, and here we do not want to be. This is a market where I do not think we can coverage with our ability and our brands. In order to support this, of course, we also need a power supply chain performance. We see, especially in the mid-market, there is a need for faster deliveries for simple and basic products. But we also see a huge push for faster deliveries when it comes to spare parts and serviceability for the high end, where we also introduce and roll out a new way of service the market by overnight deliveries into the customers.
Then, of course, on top of that, we will continue to drive the efficiency in the supply chain and the cost reduction in the back end. Then we come to my last slide in the presentation to sum up. Not a good start of the year, - 2%, very much impacted by the divestment last year, but also of the distribution issues we have had. But having said that, we are still not happy with the start of the year. Gross margin turned out well, very much due to price increases and price management, but also of some mix effect. When it comes to fixed cost, we have very much admin cost under control. Distribution cost was very high in the quarter due to the problem we have had. Of course, we continue to invest in the front end, and which also, of course, affect the margin.
With that, I would like to hand over to Michael.
Thank you, Jonas, and we will continue with the NKT Cables part of the presentation on slide 28. Let us look at the different market segments that we are serving. Overall, we did 16% organic growth, which is a nice number. In order to understand that better, we need to look at the projects, products, and APAC development. Let us start with the project business. Here we did 52%, which of course on paper, seems to be a very high growth number, and it is also a high number reflecting full capacity utilization at the Cologne site, where we are producing products for this segment. But it should also be seen in light of the weak Q4 of 2014, where we did - 24%.
As mentioned earlier on, it is, in this part of the business, more difficult just to look isolated at performance in one given quarter, because it is very much impacted by composition of projects, whether it is including installation, excluding installation, how much we have installed, how much we have finalized, et cetera. But overall, we are of course, satisfied with that development. If we look at the product part of the business, we are also satisfied because we see a small growth, 2%. This is the more cyclical part of the business where we are linked directly into, for example, the construction industry. So it is good to see that we start to see some more growth, in this segment, and it actually goes for all the different markets.
If I should just highlight one of them, the Central European market is actually picking up very nicely, compared to what we saw last year. So markets like Poland, Czech, Hungary, and those markets are developing positively for us. The Nordic market is flattish, and it is impacted by a pretty tough winter, in particular in Sweden, the northern part of Sweden and in Sweden in general, compared to a more mild winter in first quarter 2014, and that is having a negative impact. But overall, we are satisfied, and we see a more positive development for the Nordic market going into second quarter. The specialty area, this is a market where we are producing the railway products for the European market, but also the accessories. We also are satisfied with the development.
When it comes to APAC, - 14%, so we continue to see a very, very difficult and tough market in China, in particular in the railway segment, we are seeing declining trends and declining growth. Whereas we are more, I wouldn't say satisfied, but we see a more flattish development in the medium-high voltage market. But overall, to sum up, we are satisfied with the 16%. We should, of course, bear in mind that we are still guiding an organic growth for the cable business of flat development 2015 compared to 2014, which also means that we expect growth to come down in the coming quarters, in particular in the second half of the year. If you look at the operational EBITDA, it continues to increase.
Margin-wise, we are up from 8% end of 2014 to now 8.6%, and that actually means that we are just entering the low end of the interval that we have guided for 2015 being 8.5%-9%. If we look at nominal earnings, we are realizing DKK 108 million compared to DKK 49 million first quarter last year. As is also illustrated here, we normally see a pretty weak first quarter, due to winter season in Europe. So we are actually satisfied with the development. In the Q1 report, we do mention some issues that have impacted the result negatively in first quarter. One thing is the Anholt provision, where you are all aware of that we have a failure in the cable. We have properly provided provision for that, and we are also negatively impacted by increased bad debt reserve in China with DKK 13 million.
That is, of course, included in the numbers here. The big driver behind the improved EBITDA is, of course, coming from DRIVE. We continue to execute well on the DRIVE project, and it has management's top focus to continue to do this, because there are still a way to go from where we are, end of the first five quarters of this program at DKK 241 million in impact, up to the full year impact that we would like to have going into 2017 of DKK 400 million. But the development in the quarter as illustrated here, first quarter 2015, we realized DKK 72 million. So that is entirely a big part of the improvement that we have seen in the cable in first quarter.
It also comes with a one-off cost of DKK 38 million, which is as earlier communicated, and it also has meant in the quarter that we have laid off additional 19 people in the organization, unfortunately. So program to date, we still have a way to go in realizing the full potential as mentioned before, and a big part of that will come from further FTE reductions, where you can see here that we are accumulated at 290, and we need to be at around 450 people when we are having this program fully realized going into 2017. DRIVE is not only about the Get fit part, as we have talked about earlier on. The Get fit part is very much about reducing cost, reducing complexity, and focusing on restoring profitability for the cable business.
That is ongoing, and as mentioned before, we need to continue to have high focus in order to make sure that we continue to execute well here. But it is also clear that we also need to improve the business going forward. So that is also why we continue to look into the more Be excellent part of this three stages program. So now we are more focusing on how can we even strengthen our business more going forward in the different segments that we are serving, for example, by driving excellence into all the different functions that we have as part of our business system. If you look at page number 32, we have listed three areas that are on the agenda right now, and that takes up a lot of focus in the organization.
First of all, we are looking into the strategy plan up to 2019 for the next coming five years. It will very much be centered around how to increase shareholder value. We, of course, are satisfied with the development that we have seen from DRIVE, and that should bring us to a Return on Capital Employed of around 8%-10%, something like that. But that is also very clear that is not meeting our requirements, and we need to do better. So that is very much the fundamental or the starting point for how to address the strategy plan for the coming five years. I look very much forward to come back and explaining more about the strategy plan when we launch it in August, so only a quarter from now in connection with the second quarter announcement.
Two other projects that we are focusing on here is tender management, the way that we go to the market, in particular in the project business. There we have streamlined the organization, and we have implemented a lot of different tools in order to make sure that we prioritize rightly the projects that we are actually able to win, and that we spend the resources on the projects where it makes sense. So there's a lot of other tools and other process optimizations issues in this tender management topic, but I'm very confident that that will also fuel better performance going forward in the Cables project part of the business. Then it's also about sales excellence. This is a topic that Jonas in Nilfisk have spent a lot of resources on, and we have also explained.
The sales excellence for NKT Cables is more or less similar to what we have been doing in Nilfisk the last couple of years. Of course, we do have a lower complexity when we look at our front end in the cable business compared to Nilfisk. So it is relatively easier to drive excellence with a higher speed because we have less people and less sales offices to work on. But this is very much about increase the Salesforce effectiveness. It's very much about implementing tools and methodologies for how we do prices in the market to make sure that we also are driving excellence into this and that we are also in the end optimizing our pricing in the different markets that we are serving. A slide here on visibility for offshore.
It is still pretty good, at least if we assume that we start up production of Race Bank here beginning of third quarter, which is still depending on the final investment decision by DONG Energy. But as it is today, we are all involved parties in this project working as scheduled, and we strongly believe that we will start up executing as planned very soon. But right now, the focus for the offshore business is very much about the Gemini project that we have communicated around earlier. It's about delivering 209 km, 220 kW high voltage offshore cable with a lot of accessories as well. That project is going according to plan. We have more or less finalized the cable production part of this project, and now we are in the process of handing over the different cable lots to the end customer.
As you know here, we are not depending on doing the installation part. This is a supply-only project. Then looking at the more traditional high voltage onshore business. We earlier on have communicated that this business has been extremely tough and that we have seen price pressure. It's not that we have seen a big change of that, but it's probably fair to say that we have a more positive view on this part of the business than we had in earlier quarters. We are looking into a full utilization in 2015. We have around nine months visibility in this business, and that means that 2015 is fully booked, and we start to book orders into 2016. We here mentioned some key projects that we are serving.
We also are mentioning some reference projects and how we think we can differentiate from competitors with, for example, our ability of producing cable solution for end customers with a fewer number of joints compared to competitors. Here I mentioned that around 20% less. Overall, we are trying to use the knowhow that we have gained over many years of experience in this business and deliver that to our customers. To sum up here on slide 35 on NKT Cables DRIVE proceeding as expected. We have touched on many of the numbers here, but maybe just highlighting the Return on Capital Employed, where we see a pickup from 0.8% in 2014 first quarter to now 5.8%.
That is one of the more important numbers to look at the coming quarters and years, because of course we cannot be satisfied with just around 6% growth, so we need to do much better. As mentioned before, DRIVE will bring us one step forward, and then the strategy plan needs to close the hole up to what the requirement will be decided to be for this business. We will come back to that in August 5th this year. Continuing with one slide here on Photonics. It is pretty simple because we have had a first quarter development very much in line with first quarter 2014. You do not see the negative growth of 4% on top line because top line is the same as 2014, and that is, of course, impacted by the stronger US dollar fueling higher revenue.
If we adjust for that, we are actually looking at -4%. Then you can see the composition between the two main product areas, Imaging and Sensing, where in Imaging we have seen a very strong development of 35% growth, and we have been able to close three significant R&D contracts. We are happy with that because this is what in the end should fuel more growth and penetration of different market segments for the Imaging segment. Unfortunately, that has been offset by -32% in the Sensing market. The Sensing market is partly exposed to the oil industry, and that is why we do not see a lot of traction in that market right now.
Having said that, for all of the three segments that we are serving, we have been able to grow the order backlog, and that is also what should fuel more growth in the coming three quarters. We are maintaining our guidance of organic growth of between 10%-20% for the full year. So it is clear that we need to grow the top line, and we also expect to do that. We are also maintaining the EBITDA margin of between 8%-10%. So the coming quarters need to improve significantly compared to first quarter this year. With that, we can turn to slide number 39, looking at the outlook for 2015. It is pretty simple because we are maintaining what we said back in February when we launched guidance for 2015.
That means that we, for the group in total, are looking at organic growth of up to 3%. We are looking at operational EBITDA margin of up to 10.6%, equaling an improvement of up to 1 percentage point from the 9.6% realized in 2014. We have not changed our planning assumptions for the underlying businesses. So targets for Nilfisk, Cables, and Photonics are unchanged compared to what you have seen earlier on. That is on that basis that we are maintaining consolidated guidance for NKT Holding. With that, we can finish this session with the Q&A session. Operator, any questions online here?
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad. That's zero one if you want to ask a question. We have the first question coming from Mr. Kristian Johansen from Danske Bank. Please go ahead, sir.
Yes. Thank you. A couple of questions from me. First of all, can you elaborate a bit on the supplier challenges for Nilfisk? What exactly has been going on, and has this been carried into Q2 as well?
I am happy to do that, Kristian. When it comes to the strike in the U.S., which have caused some issues for us, there has been a strike on the West Coast for more than five months, actually, and that is over now. They are still catching up in the ports, and that will affect also April and a little bit going into May, but it should be solved after that. That's one part. Then we have a system implementation, a supply and distribution system implemented in Europe, and that have also caused us problem, but that is all over. We all have already caught up, and we will not see any effect of that going forward.
Okay. Then in terms of Cables and this provision you say you have made final, can you quantify this?
No, because if I could, I would also put it in the quarterly report. We cannot quantify it.
Cables, you mentioned you will finish the Gemini project and hopefully start up the Race Bank. This gap that it will leave for Cables in Q2, as I assume you are finishing or that Gemini will not have full impact in Q2. Can you help us a bit on how much that will impact your Q2 results?
Yes. At least I can try to guide you a little bit here. When we are talking about that we will have a hole in the capacity utilization, it is a really simplistic way to look at it, because looking at the production steps in Cologne, of course, there is a lot of different steps, and some are related to offshore, some are related to onshore and the majority of them are mixed. It is not that the factory then will be completely idle for two months before we then start up Race Bank. That is not at all the situation. Quarter two will be a very strong quarter, because we will finalize a number of projects, among others, have much more clarity on Gemini, where handover is in the end of the quarter. We also have some other projects that we will finalize.
So quarter two will be a good quarter for NKT Cables, and that will most likely also flow into quarter three. It is always difficult to say how much will then end up in quarter two and how much will end up in quarter three, because sometimes we are not fully in control of delivering to customers when they actually start up the different tests that they need to do before we can finally close down the project and take in the remaining income.
But quarter two and three will be strong, and then quarter four will be weaker as quarter four last year, because there we will be more exposed to just doing normal production, so to say, in particular on Race Bank, where we will just produce, and we will not really meet any milestones in order to take in or to have more visibility on the provision side of the project. Hopefully this is giving you some guidance.
Yes, that was very helpful. Then just my last question in terms of the DRIVE and the phase II. I know you will address it more in detail in August, but can you just elaborate a bit on whether the phase II will be more cost-cutting or whether you will be doing a strategy more similar to what we see in Nilfisk, where you will have to invest in the business in order to achieve your targets?
I do not expect that cost-cutting will be the overlying theme of a new strategy plan. On the other hand, I will not rule out the issue around doing further cost reduction, because it ties very much into what will the result of the strategy plan be and what consequences does it have for the way that we, for example, are serving the market, the way we are organized, et cetera. But of course, the main theme of the strategy plan will also be how to grow the business further and how to restore profitability even more than we have been able to do with the DRIVE program. So it will be a mix, but more in the direction of what you have seen with Nilfisk.
Okay, very clear. That was all for me. Thank you.
I remind you that if you want to ask a question, you have to press zero one on your telephone keypad. That is zero one. We have the next question coming from Mr. Jesper Christensen from Alm. Brand. Please go ahead, sir.
Yes, hello. Just really two basic questions from me. In Cables, your operational EBITDA was DKK 108 million. Is it correctly understood if there has been no provisions in China, then it would have been DKK 122?
Yes, it would.
Okay. If there has been no provision on the cable projects in Anholt, then it would have been higher again.
That's also right.
Okay. As I said, this was a really basic question. That was all.
It seems like.
Thank you very much.
We have a follow-up question here from Mr. Kristian Johansen from Danske Bank. Please go ahead, sir.
Yes, thank you. Can you just update us on the M&A situation for Nilfisk? You have been talking about this for a while. Are things progressing, or how does it look?
It is very much progressing. Of course, which I also mentioned, we have talked in a while. We have accelerated the efforts into this. Of course, our pipeline today looks totally different as it has done before. Having said that, of course, we should also know that it takes some time to get two to tango, so to speak. We have a more extensive pipeline today and more people to talking to, so I think it is progressing. Of course, I cannot talk more than that about it since we have not signed anything.
But are you optimistic that something will be signed in 2015?
Yes, I am positive to this, and I believe that, but of course, it is very hard to say when it exactly happens.
Okay, I hear what you are saying. Just a clarification question. You say that the organic growth for Nilfisk is negatively impacted by the Sanders divestment. How can organic growth be impacted by divestment?
That is a good question, Kristian. The way that we normally do organic growth is that we adjust for larger either investments or divestments. The smaller one that we do, we do not adjust for. We did not properly adjust for the Sanders business when we divested it in first quarter last year. Seen in hindsight, we should probably have done that because in particular in first quarter this year, it did have a very negative impact or a positive impact if you have adjusted for it in U.S. So that is why we give the flavor. It is difficult to adjust backwards now. So that is how it is.
Okay, I understand. Will there be any impact in Q2, no?
Very limited.
Very limited going forward.
Okay, that's clear. That was all for me. Thank you.
There are no further questions at this time. Please go ahead, speakers.
Okay, that was a short Q&A. That makes life easier here on our side. We will thank all of you for listening in to this first quarter announcement, and we will be back August 20th with the Q2 result, hopefully with some more positive news on the growth side in Nilfisk. Thank you.