Good day, thank you for standing by. Welcome to the Solar A/S Q1 report 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link any time during the conference. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jens Andersen, CEO. Please go ahead.
Thank you. Good morning, and thanks for joining us today. I will focus my update on execution and progress across a few key areas, integration of Sonepar, customer platform, operations in Kumla, and then, finally, also some growth segments where we see increased activity and relevance for Solar. After that, I will give the word to Michael, our CFO, who will give you some insights into our financials. Let's start with the integration of Sonepar now. Overall, the integration is progressing ahead of plan, both operationally and commercially. Execution is strong and collaboration between teams is working well. Importantly, we already see synergies taking shape, operational efficiency are improving, and the commercial side, we are seeing positive momentum from levering combined capabilities and customer access. From a financial perspective, we now expect integration costs to be DKK 10 million lower than originally planned.
This reflects disciplined cost control and a very pragmatic approach to integration. Turning next to our customer-facing digital platform. We are approaching an important milestone with our new platform scheduled to be launched on our smallest entity, that is Solar Faroe Islands, during June. This launch marks a concrete step forward in a broader digital strategy. The platform is designed to simplify how customers interact with Solar. It enables an easier buying experience, supports better visibility, and allow us to engage customers in a more consistent and scalable way. Beyond the initial launch, the platform is a key enabler for cross-selling, higher customer engagement, and more digital end-to-end customer journey. Just as importantly, it provides a modern, flexible foundation that can be rolled out and expanded across additional markets over time. Let me now turn to operations, and especially to our new distribution center in Kumla.
Operations have been ramped up as planned. Our store is now operating, and along with systems are ready for operation and currently being loaded. This has been a complex and important transformation, execution is tracking well. At this point, Kumla is handling more than 2/3 of Solar's various total order volume per day. We remain on track for the warehouse to take over all distribution in June. Kumla is a critical cornerstone in strengthening our logistics platform in Sweden. It supports high efficiency, improved service level, better scalability, ultimately better customer satisfaction. Over time, it will also support margin resilience by improving cost efficiency and throughput. Next slide, please. If we look at the growth areas or segments, we see, I think others are seeing the same, the defense industry and critical infrastructure.
We continue to see that the defense industry constructions, and related critical infrastructure, this is a segment where requirements for reliability, documentation, and security are particularly high. In this context, it's worth noting that Solar is already ISO 27001 certified, and that plays an important role as it support confidence in how we handle information and operate securely. This strengthens Solar's position as a reliable partner in projects involving sensitive infrastructure and security requirements. The next one we are working with at the moment is data centers, and it's particularly small and medium-sized projects. Demand in this segment continues to grow, driven by increasing needs for local capacity, resilience, uptime, and information security. While much attention is often given to large hyperscale facilities, we see attractive opportunities in small and mid-sized projects where flexibility, logistics, and standardization matters.
Solar is well-positioned to support these projects, and we see already now that orders are coming in to small and mid-sized data centers. Last but not least, we have a special focus on what we call small installers or small installation contractors. We call it Smart Price Customers. The new initiative, is simply to do it as simple as possible to work with Solar. A simpler pricing, faster onboarding, and an even more digital approach. An easier customer experience. This is to aim and reduce complexity, improve accessibility, and make it easier for smaller contracts to do business with Solar. Before I give the word, I will summarize our priorities. Integration is ahead of our plan and delivering synergies faster than expected.
Our logistics and data center performance are scaling as intended, and we are seeing increased activity in important segments such as defense, critical infrastructure, and data centers. At least we are sharpening our customer proportions to support long-term growth. We remain focused and disciplined, executing strong customer relations and hopefully over time, sustainable value creation for our shareholders. Thanks for your attention and look forward to your questions. Now I will give the word to Michael. Please, Michael.
Thank you, Jens. Let's turn to page number six. Q1 was quite a rollercoaster quarter. We started out weak in January, that was known when we came out with the guidance, followed by an even weaker February where we came down to -7.4% in negative growth. Things started to turn, we ended in March with -0.8%. If you take Solar Polaris out of the equation, which makes things more comparable, we are actually growing with +1% now. The turning point that we saw materialize late Q1 has continued into April as expected. Also the fierce competition, price competition regime has also continued. This resulted in a revenue of DKK 3.3 billion versus DKK 3.2 billion last year.
Please notice that the acquisition of Sonepar Norge added approximately DKK 175 million, and in addition, there is a minor positive FX effect as well. If you look a bit at the segments, installations saw positive growth in both the Netherlands and Sweden and Poland, whereas the other faced headwinds to some degree, but not something dramatically. Within industry, we came out a bit worse. Industry, particularly Poland, where in industry only Poland managed to deliver positive growth. If you look at the sub-segments within industry, you see quite a scattered picture. Infrastructure, so close to -30% in Q1, particularly in Denmark and of course in Norway, which is the where we have the strongest position. The harsh winter was particularly evident within this segment.
Marine offshore was also negative, both in Denmark and Norway with -10, which was slightly more than we expected. It should, however, be noticed that marine offshore, to a large extent, is driven by projects, of which there were very few in Q1. MO also came out slightly negative. MAG45 were also in negative territory as in line with our expectations. We still expect MAG45 to return to growth, mainly in H2, due to an increasing order pipeline that has continued to strengthen throughout the quarter, but also continue to strengthen here in Q2. Please turn to page seven. The EBITDA of DKK 59 million Q1 was in the low end of our expectations, mainly due to the harsh weather where integration and resourcing costs actually came out as expected. It is the underlying performance.
Regarding the guidance, I'll comment on this a little bit later. If you look at the underlying EBITDA, which is equal to DKK 90 million, this was below our expectation. As I mentioned just before, it can mainly be explained by the headwind we saw within the infrastructure due to the harsh weather, which simply put a stop to all work in the soil. You can simply not put cables in. We do not expect any catch-up effect from this. What is lost remains lost. If you look at the cost of goods sold, we saw a decrease of 0.9 compared to last year, of which a minor part can be explained by increasing cost to freight due to the increasing fuel costs.
The drop we saw were mostly pronounced in Denmark, but if you look at them, it spread out across segments and sub-segments. It is our assessment that this is due to a very fierce price competition in the market, but there's also an impact from negative mix with more sales to low-margin customers, particularly in the Netherlands. Regarding freight, we have not yet seen the full effect of the increases in fuel prices that we have seen. I'll comment a little bit more on this when we come to the guidance. Cost initiatives mainly done last year ensured that there is only a minor dilution of the margin due to costs despite the headwind that we saw in the quarter. Loss on trade receivables remain well under control. Now please turn to page eight.
Operating activities came out with minus DKK 173 million. If we take a closer look at this, we can see that there's actually an increase in inventory, which is in line with our expectations. Due to the transition, where we merged Sonepar Norge in Norway with Solar, I know we have increased the inventory in the Norwegian part of the business with approximately DKK 75 million. As Jens also mentioned, during the integration, we're well prepared now for the transition. We have started also to do tactical purchases to counter not only potential price increases but also potential shortage. As of the end of March, we have not seen any major impact on the inventory value, due to this, but it will start to materialize here in the coming months.
Given that the additional purchase is only done within A/R tails, and that is the fast runners, and only typically up to max three months of additional sale, we think that the risk here is fairly limited, and we also think that to a large extent, if you look at the inventory, as at the end of June, there will be a limited impact. The increase you see in accounts receivable of DKK 401 million is due to the normal seasonality, December versus March. If you look at the investing activities, we spent DKK 111 million. Of these, DKK 62 million can be referred to our new Solar warehouse in Kumla. There remains approximately DKK 50 million, and you should expect this to materialize the main part of it here in Q2.
You can say that will be the finalization of the huge investment program that we have seen, meaning moving into H2 territory, you'll see a normalization of our investment and therefore also an improvement of our cash generation. Please turn to page number nine. If you look at net working capital as an average for the last quarters, we've seen a slightly reduction of it. This did not materialize here in Q1, the reason is, of course, that the ramp-up we've done in Norway. All other things equal, we will, when we're on the other side of this, start to see a continued reduction.
If you kind of take out the DKK 75 million we invested in Norway, and there is a small impact already from the tactical purchases, we still think that the inventory is slightly on the high side compared to what would be the optimal level. Looking at the gearing, we see an increase from 2.8 to 4.2, and it is, of course, without our range, but it is as expected, and it's well within the lines of the covenants within our debt financing. Please turn to page 10. In general, the macroeconomic uncertainty increased throughout 2025, and I think it's fair to say that the start of 2026 did not offer any relief, actually on the contrary.
In the most likely scenario, the mid-range, and we stick to what we said before, we expect still our markets to be stagnant in 2026, with installation being slightly positive and industry supported by MAC, although might be slightly negative. Compared to Q1, an improved run rate. Solar Polaris delivers to a major solar park with an expected total revenue of DKK 275 million will positively affect 2026, and it'll start to kick in during Q2. Our outlook for 2026 reflects a minor continued decline in gross margin, mainly driven by the ongoing price pressure we see. Compared to previously, we have now increased our expectations to cycling inventory gains up to DKK 20 million compared to our initial expectation.
This is due to these price increases, mainly within oil-based products, but we can see that it's also spreading out to other categories that we expect to come in the coming months. Revenue. We confirm the revenue guidance we had before with DKK 13.15 as the mid-range. If you calculate with the growth we saw in Q1, you need approximately 3% organic growth for the year to go. Please note that the reference point in Q1 was fairly strong, whereas the quarters that followed last year were substantially softer, and you can return to the figure which was shown on page six in order to see the development. That's makes it slightly easier.
In EBITDA, we still expect an outcome between DKK 400 million and DKK 480 million, now including DKK 75 million in restructuring and integration costs versus previously DKK 85 million. The latter can be split into approximately DKK 40 million to integrate Sonepar, DKK 20 million to relocate to Kumla, and approximately DKK 15 million in restructuring costs. This is basically unchanged with the except that we changed Sonepar due to the strong progress we have seen. Despite the weak start, where we ended on a low end, we still think we can manage to catch up, mainly due to the factors that mentioned above regarding less cost to integrate but also increased cyclic inventory gains. We got increased cost for transportation, in March, we only saw a limited impact of it.
We expect this to continue in the remaining part of the year to go. We cannot, that's not the assumption at least, expect to carry all of this into the market. We will need to absorb part of it within Solar, and this has been taken into consideration. Then again, as said before, there are quite some uncertainty on this point, but we try to incorporate the things that we can quantify the way we see things now. If you look a little bit ahead, you can see that the Sonepar acquisitions currently dilutes the margin with approximately 0.7%. Of course, moving forward from the end of the integration, and that'll be done here in H1, we expect this to turn, and it'll be able to strengthen our margin. Thank you.
Okay. Thank you, Michael. It's time for questions.
Thank you. If you wish to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. If you wish to ask a question via the webcast, please type it into the box and click submit. Once again, if you wish to ask a question, please press star one one on your telephone. We will take our first question. Please stand by. Your question comes from the line of Sebastian Grave from Nordea. Please go ahead. Your line is open.
Hi, Michael and Jens, and thank you for taking my question. It's on the inventory gains here that you, that you alluded to, Michael. Maybe I missed it, but could you maybe just talk around again the DKK 20 million number here that you, that you float in the guidance section of your report? Compared to an inventory position of around DKK 2 billion, I think it doesn't sound like a lot, to be honest. Maybe just talk around the dynamics and the assumptions baked into this number. Could you clarify to what extent these DKK 20 million, is this a firm number baked into your full year guidance, or how should we think of it? Thank you.
Hi, Sebastian. Well, first of all, bear in mind that in the estimate, there is what we would call a normal level of these gains already. We can say this is additional due to the price increases that we see coming. Of course, there's quite some uncertainty to it, so it's not a bulletproof figure as such, because I understand if you measure it against the total inventory value, you get to this consequence. You need to look into that. This is still within a fairly limited range of products that we see. You should also take into consideration into what extent can we pass this on to the market. It'll vary from market to market, from product to product, from segment to segment.
You can see it as something that came in on top of what we had in our estimate year to go before. Normally, we expect prices to increase between 1% and 2%, but now we expect them to increase substantially. We've seen that. That is the rationale for It's an incremental increase to what we already had in the books, and it's a narrow assortment. It's not widely.
It may spread out. We do not know that yet. If we get, I think it's called second wave inflation, where there is basically, you can say, energy in all products, to a larger or lesser extent. That has not really materialized yet. Then again, if you look back to 2022, I think the situation here is slightly different. In 2022, what happened there, and they had very huge additional gains above what we would say were normal level. There was simply an imbalance between demand and supply that made this happen. I think that's not the case here to the same extent.
No, I fully agree.
That was a long answer. I hope it made a little bit of sense.
I don't know about the real No, I really appreciate the color. Thank you also for the reference to 2021, 2022. That would have been my follow-up questions. Obviously, if you benchmark the DKK 20 million that you guide here compared to back then, I think it was more than DKK 200 million in 2022. I think it's quite a substantial difference.
It, it, yeah, it's-
It's a fair point.
It's a very different scenario.
It's a fair point with that.
Uh, uh-
Yeah.
Yeah.
Yeah. And could you maybe elaborate a bit on the discussions you have had with some of your customers. Then, I mean, the ability to pass on these increases, 'cause it seems like you have to maybe give in and as you say, also absorb some of this yourselves. I mean, maybe some more color.
Let me-
to the dialogue and dynamics here.
Let me give you an... This is for illustration purpose. If you normally sell a product for DKK 100, and you make 20% on it, that means you're left with DKK 20 in profit on it. The price goes up to DKK 120. Our underlying assumption is that we cannot We'll still be earning DKK 20 on it, but you can see in percentage, it doesn't go up. If you took the same percentage and add it to the DKK 120, my earnings should increase from DKK 20 to DKK 24. Didn't. We don't necessarily expect that. We may be left with something in between. That's the underlying assumption.
Yeah.
As I also said, it will vary a lot from market to market.
What happens...
Also what... Yeah. Jens, you want?
I'm saying that, still the demand for products is there, of course it's weaker than it were back in 2022, where we saw a lot of shortage and also a lot of hamstring. That's not the case at the moment. I think I support Michael that, the fierce competition compared to a stagnant market is not.
Stagnant market.
You cannot put everything out in the market. It's simply impossible.
Okay.
As we see it right now. It can change in one month or two, but that's our predictions right now.
Yeah. For sure.
you might be right that we were conservative, but basically.
Hopefully.
It's our best guess from what we see right now.
Yeah. Exactly.
It's a good thing to be slightly conservative in the equity market, in my experience.
Don't underestimate the uncertainty here before you deem us way too conservative.
Yeah. No, no, I get it. I get it. It's a fair point. Maybe a follow-up question on the activity levels that you see. I mean, do you have any examples of customers who have sort of canceled projects in the wake of increased energy prices and material prices? What do you see on the activity level here? Sort of, yeah, on an underlying basis.
It's always a difficult question to answer 100%. We do not hope, I think that the sum of major products is lesser. On the other hand, there's a lot of smaller projects. Hopefully, that will be materialized over the coming month. Of course, the price for bricks and isolation material is increasing like hell.
Yeah
price. You might see a stop, and hopefully a go effect again when thing will normalize. There is a risk that something will stop for a period or at least be postponed.
We also see some benefits from it. I mean, we can see that the sale of is gradually gaining more traction.
Yeah, it's coming up. It's coming up.
Okay.
So I think some-
Thank you.
There is a risk that something will be postponed, that's for sure.
Yeah. No, that was it for me. Thank you for taking my questions.
Okay. Thanks.
Thanks.
Yeah.
Thank you. There seems to be no further questions at this time from the phone lines. I would like to hand back for any written questions.
We currently got five written. The first is: How is Sonepar Norge Norway integration progressing into Q1? Are you on or ahead of schedule? What are the early KPIs on synergies and market directions from customers, suppliers and competitors?
I hope I already answered the question. At least we are on track or beyond our original plans, and the synergies we are measuring is also tracking as expected. I hope. So far we haven't seen any negative reaction from customers. On the other hand, we have seen positive reaction from a part of our suppliers, I would say. I think that answer is complete.
Okay.
Yeah.
Sonepar Norge is delivering DKK 275 million to a single solar park project in 2026. Is there a pipeline of similar projects? Do you see your project business as a structural growth leg rather than a one-off contributor?
I would say like this: We cannot disclose our pipeline. I would also say that we do not have a similar size-wise projects coming in as the one we're working at the moment. As we all know, sustainable electrification is again on the agenda. It was more or less closed down for two years. Now it's coming up again. The access to the grid is also a problem because the grid, at least in certain markets, are overloaded. Even though there are projects, there is a risk that the grid cannot allow us to connect. At the moment, we only have, size-wise, this big one, and then we have a lot of smaller ones. Summing up, the big one we have now is the only one.
Third question. You are operating in a market that are soft across the board, and your 2026 guidance reflects an assumption of broadly stagnant conditions. History shows that downturns tends to accelerate consolidation and separate the strong distributors from the rest. My question is this: Are you approaching the current environment as an offensive opportunity to take share, deepen customer relationships, and position for the recovery of the near term priority, primarily to protect the margins and manage the balance sheet back with the gearing targets? Consequently, what would it take for you to shift from one mode to the other?
Thank you. Yes, it's true that the market we look into right now is a bit soft. I would still say if you go a little bit ahead, we're not overly concerned. As Jens also said, electrification will be a key driver. Previously, it was mainly due to reducing the CO2 footprint, but now it also has a strategic importance in order to ensure that we get less dependent. Bear in mind that we have quite a strong position within infrastructure. I think when Okay, currently they are investing in high voltage. There we have a limited role to play, but soon they'll move into mid voltage and low voltage, and then we have a substantial role to play. We're not overly concerned. Now, looking at the consolidation part.
I mean, I've been in this now for 26 years, and I've seen nothing else but consolidation. It's been going on at least for the 26 years I've been around. I'm not sure where this is going. Maybe it's accelerating, I don't know. It's, it's an open question. I think we'll take part of it where it makes sense. We did acquire Sonepar Norge, and it was not a brand-new idea to us. We have actually, shareholders, for many, many years, been wanting to buy Sonepar Norge. There was always with these things, I mean, you need both a buyer and a seller in order to succeed.
It's difficult to plan, but we have close monitoring of the market, and we have a list of things we potentially would find interesting in case the opportunity should occur, and for good reason to not share that list. In terms of the financing that was also a part of the question, yes, it's true that we currently are above our target gearing. We still expect that this will start to normalize after the summer and continue to do so that we, during next year, will get back within line. At the annual general meeting, we actually got a renewed permission from the shareholders so that we could also potentially do a capital increase of another 10% if the need should arise.
I think we are in a good position to manage and should, say, for the sake of the rational, something materialize already in Q3, even though we are above the game, we would take a look at it. We have very good relations with our financial sources. I think we have a huge portfolio of opportunities in front of us here as well. It was a long answer again.
But it was a long question, I would say.
That's right.
Fourth question. One of your Danish competitors. Recently bought a cable distributor, and cable seems to be your unique selling points. How do you think that this will affect your already somewhat sluggish sales in Denmark?
I would say, we are talking about JMV. We know them already. They are servicing the same cost as we are servicing, with the same assortment, and with the same, or not the same, but at least, some cable, knowledge. For us, it is simply not an M&A target. Another saw that differently, which is, as the market is. It only explains that consolidation is going on. Like, Michael explained, we did in Norway. Someone did the same in Denmark. For us, we already have the knowledge, we already have the assortment, and the customers are already served by Solar. For us, it was a no-go in this case.
Fifth question. Which country, countries are the data centers and other growth initiatives primarily located in?
I think it's spread all over, but for sure, we are very strong in our infrastructure footprint in Denmark and in Norway. Of course, we can also serve the Dutch and the Swedish market. I think particular Denmark and Norway is our, there we are strongest, at least when we look into infrastructure. Of course, cable-wise, because it's not only about infrastructure that way around. We also have a specialized team within data in Denmark and partly also in Norway and Sweden. I think we are in the Nordic, at least, we have a decent footprint to take in the mid and small-sized data centers or part of it.
The final question. Does Solar lose or gain market share across different segments? How is Thermonova performing? What are the earnings expected for Thermonova in 2026?
Whoa. There's no single answer to that question.
If we turn back, we doubled, the number of.
Yeah.
sold unit entities products last year or solutions last year. We doubled from 2024 to 2025. Of course, the energy crisis right now should increase demand for Thermonova solutions. Again, we cannot disclose that on this call. We can, of course, follow us during the next quarters. So far, we have won quite a lot, mainly in the solar business. Then Thermonova, for a moment is a little bit weaker in the export share, but that can be changed in one or two months. It's very early days in 2026. At least we won some good-
Yeah.
-strong orders also to the defense industry with Thermonova, by the way.
Regarding the market share, we know, first of all, data is what data is, and what's the market. That's always the question. Based on what we know, we know that in some countries, we are actually gaining market shares in the country as a whole. There's also, we can also find sub-segments where we clearly are losing market share. So again, it's a mixed bag when you look into this. There's not one answer that is a silver bullet here. Some places winning, but we're clearly also, I think, losing in some sub-segments. The infrastructure part where we really saw the headwind, let me just make that absolutely clear, that has nothing to do with loss of market share, just for the avoidance of doubt.
No further questions.
Okay. We will close the call for today and thanks for listening and have a nice sunny day. Bye-bye.
Bye.
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