Welcome, thank you for joining this Per Aarsleff Holding Q1 conference call. With me today, I have Group CEO, Jesper Kristian Jacobsen, and Group CFO, Mogens Vedel Hvid. After the presentation, we'll continue to the Q&A session, where all speakers will be available for questions. Today's Q&A session will be conducted by phone. For questions, please dial the listed phone numbers and enter the provided conference code. The call details will also be disclosed on the final Q&A slide. The conference call will be recorded and published on aarsleff.com. The call is scheduled to last 45 minutes. Please be aware that the presentation contains forward-looking statements subject to uncertainties. Over to you, Jesper.
Thank you, also welcome from Mogens and my side to this Q1 presentation. The picture you saw on the first slide is from our prefab facility in Świnoujście in Poland. The overall figures, turnover of almost DKK 6.2 trillion, a growth of roughly 12% compared to the same period last year. Turnover over abroad, almost 40%, as stated on the donuts, an EBIT result of DKK 2.54 billion, corresponding to an EBIT percent of 4.1%. First quarter with high activity, high turnover, and earnings as expected. To the next slide. Construction, the biggest of the five segments, DKK 2.8 billion.
High activity within construction works, civil engineering works, especially infrastructure projects. Projects driven by defense, critical infrastructure, green transition. High activity on our projects on Lynetteholmen, Vesthavnen, and Simont especially. Also within renovating of buildings, transformation of buildings, we see high activity, high market conditions in especially greater Copenhagen, and the more classical building market still on a lower level. A growth of 10%, again driven by infrastructure projects and also the investment in Articon.
EBIT result of DKK 106 million, corresponding to 3.8% in line with our expectations. Generally good market conditions, especially within infrastructure projects in Denmark, also many opportunities, good market conditions in the North Atlantic region. As stated on the second last bullet, our ongoing building projects, Mindet and Mejlbryggen in Aarhus, and Terminal three in Copenhagen, are progressing as planned. Technical Solutions, Ecotec, Wicotec Kirkebjerg, revenue of DKK 1.1 billion total, a growth of 20%, and an EBIT result of DKK 58 million in line with expectations and an EBIT margin of a little bit more than 5%.
The positive development that we have seen over the last four-five years continues. Again, generally good market conditions, especially within the project division, district heating, district heating projects that Technical Solutions had together with the Construction segment, which is on a high activity level and progressing as expected. Then also projects driven by green transition is also on a high activity level. Then he just mentioned that we acquired Bøgelund, first of October last year. Rail, a little bit more than DKK 500 million in turnover, and a revenue on the same level, almost exactly the same level as the same period last year.
EBIT result a little bit below zero, -DKK 2 million. Again, we have mentioned that on some of the previous calls, previous years, that, as I said, by normal seasonal fluctuations in Rail. Many of Rail's projects are starting around Easter time and just finishing around mid-October. The first half year is often pretty quiet. EBIT margin of -0.4%. Again, high activity, good market conditions, especially in Denmark, with many opportunities. Also good market conditions, both in Norway and in Sweden.
There we are still progressing the turnaround we have been through the last two-three years, not quite through yet, but the market conditions in both Norway and Sweden are also good, but especially in Denmark, very good. Ground Engineering, the segment that had a difficult year last year and also the year before, has got a good start in the first quarter. Revenue turnover of roughly DKK 1 billion, a growth of 12% compared to the same period last year. It's driven by especially high activity level in Sweden and Germany, and EBIT result of DKK 14 million, as expected, EBIT margin of 1.4%.
Again, affected by, as we also mentioned last year, still a relatively low demand for precast concrete pipes in most of the markets we are in. Price pressure in some of the markets, and that all leads to low capacity utilization, especially on the factories, but also to a certain extent on the driving rigs out in the fields. We do see a good pipeline of projects in almost all the countries we are in. We have a strong belief that we will see improvements during the year and as I said, a good start of, in the first quarter.
We in the last bullet point mentions the acquisition of Steelwood that we did last year, which is done 50% by Ground Engineering and 50% by Pipe Technologies. Pipe Technologies, almost DKK 800 million in turnover, a growth of 17%-18% compared to the same period last year. An EBIT of almost DKK 80 billion, in line with our expectations, and an EBIT margin of roughly 10%. Contrary to Ground Engineering, we've seen strong activity in Pipe Technologies in all the significant markets we are in.
Uh, so, so, uh, uh, a good, a good start of, of, uh, of, uh, the first quarter here in Pipe Technologies as well, and, uh, as said, good, good market conditions and thereby also high capacity utilizations, uh, in, in, in, uh, sorry, Pipe Technologies. Yeah, and then we again mention the, the acquisition of, of, of Steelwood. Order backlog, almost, uh, DKK 28 billion , all-times high, and pretty, pretty solid in, in, in all, uh, segments, as you can see on the left-hand side of the slide, and an order intake of almost DKK 7.7 billion. Uh, and only one major, uh, order intake, that's, uh, two new contracts on Vesthavnen , corresponding to roughly DKK 1.7 billion, uh, and if we took that out, we do still have almost DKK 6 b illion in, uh, in, in small and medium-sized, uh, contracts.
That's also very, very positive. Guidance. I will not spend a lot of time on that. That's unchanged compared to what we presented in the last financial in this presentation. A few words about the two latest acquisitions, the acquisition of LiquiForce in Canada, an acquisition done in Pipe Technologies last week, Thursday afternoon, where we acquired 49.5% of LiquiForce, a Canadian company, specialized in trenchless rehabilitation, like Pipe Technologies, a price of roughly DKK 90 million. Next country, next footprint in Pipe Technologies, with a footprint in the Canadian markets.
The plan is together with the owner of LiquiForce to try to enter also the North America market with trenchless rehabilitation. That's the plan. This morning, we announced the acquisition of CG Jensen, and as well as Knudsen, becomes part of our group. 100% acquisition of those two companies for a price of almost DKK 800 million. It just states very shortly that the agreement includes a number of price, purchase price adjustments as we normally have. CG Jensen and Adserballe & Knudsen are, at least on the Danish market, well-known market players.
CG Jensen having a turnover of roughly DKK 2.1 billion, and Isabella Knudsen, roughly DKK 600 million, same size as Hansen & Knudsen that we already owns. The signing was this morning, and now we are waiting the approval by the competition authorities later this year. That was a very quick run through of the, both of the figures and then the latest two acquisitions, and then we can go over to questions and answers.
Yes. We'll now open the question and answer session. If you do wish to ask a question, you will need to press five star on your telephone keypad. To withdraw it, press five star again. Our first question comes from the line of Christian Thorning from SEB. Please go ahead. Your line will be unmuted.
Thank you. I have a couple of questions specifically around your acquisitions. If we start with the acquisition you announced this morning. As I understand it, the management of CG Jensen owns a material part of the company today through the holding company. I would assume that they are getting some money out of this eventually. Just curious to hear your thoughts. I mean, their motivation going forward, whether there is any earn-out built into this.
It's correct that a part of CG Jensen is owned by the employees. That's correct, and then the other part owned by Jørgen Jensen. We believe from the talks that we have had over a long period, that the management that we have talked to is very motivated by continuing and being part of the company going forward for some years.
Okay. Yeah. The question was just as much that whether there is an earn-out element to the deal as well?
Not in traditional sense. There are some other things included in the agreement, but not a traditional earn-out.
Right.
There are some motivations, but not a traditional earn-out. That's how I would formulate the question.
Not in the classical sense.
Not in the classical sense, no.
All right. Fair enough. Then, how do you plan to integrate CG Jensen and Adserballe & Knudsen? Are they just gonna continue, under their current name as a subsidiary, like we are seeing with, for instance, Hansen & Knudsen or how will you integrate them?
Yeah. Yeah, yeah, that we will do that as we have done in the past, because then we believe that that's the right way to do it. They will continue under their current names in the group. Yeah.
Of course we will then, look where we can cooperate in one company.
Yeah, yeah, as we normally do. Yeah, yeah. They will not be operating under a different name, no.
Makes sense. Looking at their financial performance, you provide some data from 2024, and if you go just a few years back, it's the similar picture. You can say margin levels somewhat below where you are today. How do you plan to improve the profitability of these businesses?
Yeah, we believe that being part of the Aarsleff group , as we will get new competencies in, we will get more capacity, there will be some synergies. We believe by adding all that together, we will also be able to improve margins together, Christian.
Okay. Would it be fair to assume that these businesses should be able to reach a similar margin level as what you have in your Construction segment? Or is there any structural reason why they couldn't reach that level?
No, no. We believe, and that's also the talks that we had with the management, that we believe that that should be possible going forward, yeah.
They have also shown that in the past, if you go some years back, they have been hit hard by some fixed price contracts. There was a sign on the wrong, the timing was wrong, compared to all this high valuation. There are some reasons behind the low EBIT margin the last couple of years.
If you go five to seven years back, Christian, then they actually had quite good EBIT margins compared to.
We strongly believe we can get them up at least the same level as the rest of the Construction segment.
Yeah.
How fast can you do that? Because I assume that there is a backlog you still have to evolve and so on. Is that sort of a three-year horizon, or what's fair to assume?
Hopefully not.
Hopefully not.
Hopefully not. Yeah. That's at least the plan.
Within a few years, we should be up at that level.
Yeah.
My last question on the other acquisition, which you also highlighted here in North America. You provide us a bit of financials for the LiquiForce acquisition in Canada. I'm a bit more curious on the joint venture you are setting up for the U.S. market, as I would assume the potential in the U.S. market is substantially higher than the one in Canada. Can you elaborate a bit on, I mean, how fast can this new company sort of enter the U.S. market and how to think about the financial potential here, really?
You can say there's a clear plan that we introduce the off technology in the Canadian market as fast as possible, and then we will evaluate together with PURIS how fast if we will develop to other part of North America. It will be a common decision together with PURIS what how fast we will move forward with this. As you said, the huge potential in North America, PURIS is already among the one of the five big ones players in that market. Of course, that's attractive to become.
All right. Again, a three-year horizon, is that when we should expect to see?
Yeah.
Some impact there?
Yeah. Canada should be quite fast within a year to within one-two years, we should start to see the effect. The rest of North America, three-year horizon is more realistic. Yeah. Yeah. That's a good guess, Christian. Yes.
All right. Fantastic. Great, thank you. That was all for me.
Thank you.
Next up is Sebastian Grave from Rodeo. Please go ahead. Your line is now unmuted.
Hi, Jesper Lauridsen, thank you for taking my questions and also congrats on a strong quarter. Also exciting to see that you're incredibly active in the M&A space. As Christian, I will also dig into these acquisitions, starting with the LiquiForce acquisition, which, I mean, is not the usual Aarsleff acquisition when you look at acquisition multiples, but also as you allude to, I guess the case here is that you are paying to get a foot into new attractive markets with off-site from the U.S.
On the U.S. opportunity here, maybe I'm trying my luck here again, as Christian did, but could you expand a bit more on sort of the maybe the upside potential and what kind of investments you need to put behind this market expansion into the U.S.?
You can say an expansion into the U.S. would mean that we will have to invest in installation equipment. But of course, that would also be a joint effort with our partner. Yes, there would be investment. It's not as expensive as equipment as the normal type of. If you have a main sewers line, it's much more expensive to invest in installation equipment than in these natural small installations. Investment-wise, would be some, but it's not a major thing in off slip content. Market potential, it's by far the biggest market in the world.
Of course, if we, with our partners, succeeds also in the North America, the huge potential. You can say, we take decision to join one of the major players. We think that's the best strategy for going into North America. We've been looking at also entering ourselves, but it's also a complex market. It was the best solution in our opinion.
Sure. It's incredibly exciting looking forward to follow that going forward. May I ask about also the other acquisitions here? Again, not your, I guess, usual multiple average size acquisitions, C.G. Jensen and Isabella . However, I know I'm looking at 2024 figures here. And that could be nonsense compared to the current earnings momentum. Is it possible to add some more flavor into the current, you know, trajectory in the business, earnings-wise? Also maybe if you could add some more flavor to, you know, the bigger picture strategic rationale of these acquisitions.
I think what's represented forward is that they have had some projects that they have been working out. Backlog and, what we have seen so far has been quite a bit, there's been progress as well in 2025. These projects that have been diluting the earnings, is feeling less and less in the revenue. By in 2026, there will be more or less gone, and in 2025, it was significantly less than in 2024. They are on a good track back to higher margins. Yeah.
Yeah.
About the strategic rationale, as I said before, we will get more capacity, which is important in a market where there are plenty of opportunities. We will get new competencies.
... steel structures, SLT, construct, structures, and basically also within renovating and transformation of buildings where there also is a high demand, high activity. It's a mixture of getting more capacity in some areas where we already are, marine constructions, for instance, and then getting new competencies on board in the group.
They get a better exposure to the renovation market in Copenhagen, where they are quite strong. They are also one of the first mover in building in wood and some probably, one of the leading ones in Denmark. We get that competence in where we see a significant potential here in the coming years.
Then there is a strong cultural fit with how we work with, you could say, own production. They do have the same focus. We see a strong fit with what we already do.
They have a strong exposure to east, so Copenhagen area, and that's also a place where we see a lot of these products coming. That's also a plus for us. Yeah.
Sure. Well, thank you for that answer. The last question here, if I may, sitting in Copenhagen and looking out the window, I can conclude it's been a fairly cold winter. Also talking to other players in the industry, it seems like activity, at least over the past six weeks, has been fairly subdued in the sector. You know, if I look back in history, it's obviously that you have been fairly sensitive to cold winter conditions historically. Could you maybe add some color to how we should expect this to impact your Q2 numbers?
Weather is part of being in the business. Sometimes it's cold, sometimes it's rain, sometimes it's the sunshine. I think that's the premise of being in the construction business. You will not hear Mogens and I using the weather as an argument for either good or bad results. Having said that, I think as you just said, we can all look out of the windows and the weather has been harder than in the recent 10-15 years. That's a fact. You will not hear us using the weather as an excuse on argument. It's a part of being in the business.
Got it. Very clear. Thank you for taking my questions.
Thank you.
As a reminder, press five star to ask a question. Next up is Anders Pretzmann from Danske Bank. Your line is open.
Thank you very much, and hello, Mogens and Jesper. Thank you for taking my questions as well. If I may move on to the Q1 results here, I mean, the margin for the Construction segment. You have mentioned in the report and also on prior calls, that you are deliberately being conservative on the Fehmarn Belt margin recognition on the contract. Is the Q1 margin in Construction due solely to this, or is there something broader happening? Yeah.
That's a part of it. It is also due to the mix of products in this first quarter. The conservative intake of revenue, of earnings, so earnings on the Fehmarn project is a part of it, but not all, not solely, but it's a part of it.
Okay, yeah, that's fair enough. Can you maybe just go a bit more into detail, maybe first of all, on the impact on the Q1 results and then also what you expect going forward? I mean, the Fehmarn Belt contract, or project in general, it's getting a lot of media attention in the recent months at least. It would be nice to hear your perspective on this.
I think we have said earlier that there are some issues on the Fehmarn project. We are, as communicated earlier in dialogue, in a good dialogue with the owner on trying to find solutions to those issues. If it's more concrete questions to time schedule and other topics on the project, then we need to say that we have agreed with the customer that very specific questions to the project timeline and other things is being answered either by the joint venture or by the clients. We are in a good dialogue trying to resolve those different issues that we have on the project.
Yeah. Okay. That's very fair, of course. If I may move on to the Pipe Technologies segment, I mean, very strong EBIT margin of 9.9%. The revenue growth, 17.5% year-over-year, yet your margin for Q1 last year was 11%. Can you please describe the dynamics here? Why was it 11% last year, not this year?
I would say last year was exceptionally good. I think also in the historical perspective, and then you also have now Stiho contributes as with a lower margin percentage. We are not able to get 11% in the market, in the type of job that Stiho are doing before. That's more in line with what we see in Construction segment. That's that type of activity. That's diluting the percentage a bit, adding some revenue, but diluting the percentage a bit.
Okay, thank you. That's very helpful. Yeah.
It's not, we are not concerned, as we said, it's a very strong market, still in technology. So, but it will dilute it slightly with the students.
On the order intake in general, maybe specifically for the Construction segment, you've previously mentioned, you know, severe interest, in, you know, contracts related to the defense industry. How much of the order intake for Q1 is attributable to this, and has anything changed since the last time we spoke?
I don't think we will not be able to provide exact figures, but we can say it's a significant figure in Q1.
Okay.
It's more than one contract. If we look at that market, I guess we are still positive on the critical infrastructure, the defense market. There's a lot of opportunities out there. It's not an easy market to reach. Things can change quickly. So...
It's, as we said earlier, it's product that are confidential, so we cannot say a lot more than most have already done.
You can say, Anders, with the plans also in the North Atlantic, there's plenty of opportunities. That's in the defense segment, critical infrastructure segment here, going forward, the coming years. It's more about how the priority change quite quickly, so it can be difficult to.
It's political driven projects.
Yeah.
It's based on political decisions.
I can say at the moment, Greenland is hot, so that we are looking into two projects. I guess that can easily change, quite quickly, if something else up. We need to be agile and be where the opportunity comes.
Okay. Thank you very much. Maybe a final question from my side, going back to the acquisition announced this morning. Just to be clear, say the acquisition gets approved, what margin should we expect for 2026, 2027? Would it be a fair assumption to say that for the group, the acquisition next year is margin dilutive? Then in combination with this, can you put some flavor on the current order book levels of the, of the acquisition you made?
it would be correct to say that it will dilute it slightly, especially when you look at how we depreciate. We already always allocate some, so we buy an existing order group, as you're saying, and we depreciate, we allocate the good results of that and depreciate it. If you look at EBIT level, it will dilute, and especially when you take in depreciations and amortizations. Order book is very good in Adserballe & Knudsen , and in CG Jensen, they can contribute with the capacity. They have room to take in more projects.
very, very satisfactory level, Adserballe & Knudsen , especially due to all these renovation projects that are coming out in Copenhagen, where they've been winning some quite large projects here during the last three to six months. With CG Jensen, they have a capacity to take in projects and see extra step, but also what's in it for us, here we get some additional capacity.
That was very clear. Final question, I promise. You know, you've made quite a few transactions, in recent months, and now adding something quite significant, I would say this morning, also burning some cash in the process. I mean, what does the pipeline look for you going forward? Should we expect this trajectory to continue, or are you going to lay on the low side for the next year or so until you get the things in place?
Very difficult things, Christian, to answer, because we are not always able to control when things come up for sale. We have always decided to have a low debt, so we have the possibility to take advantage when things come up for sale. I'll say we of course, need to digest this, but it's not the same as we don't have capacity for more.
Thank you very much.
It also depends.
Thank you.
What segment it is in, Anders. Yeah, so yeah.
Thank you. As no one else is lined up for questions, I'll now hand it back to Jesper for any closing remarks.
Thank you. Thanks for the questions. Thanks for the interest.