Hi, and good afternoon. On behalf of Hans Christian Andersen Capital, I'd like to welcome you all to this presentation of the Q1 2025 report from SP Group that was published yesterday. My name is Rasmus Køjborg, and I have the pleasure of welcoming both CEO Lars Bering and CFO Tilde Kejlhof. They promised to take us through the quarterly numbers here, the recent highlights, so a warm welcome to you two.
Thank you.
Before I hand over, also a warm welcome to all of those of you who signed up for today's presentation. As usual, you can ask your questions in the chat room. You can either do it in English, or you can do it in Danish, and we'll help with the translation. Should you miss anything, we will record the presentation here and publish it on different platforms afterwards. With that, I'll leave it to you, Lars and Tilde.
Thank you very much, Rasmus. First of all, thank you very much to all of you listening in. We'll start with an ultra-short intro, but as always, if anyone behind the screen wants to hear more about SP Group and what we do, please feel free to reach out. We are always available for a call or a Teams meeting. We are a global manufacturer of plastic solutions. We have 31 factories around the world. We have 2,400 employees. We have increased the amount of employees a little bit since New Year, and this is mainly in the United States. Our revenue comes from being a sub-supplier of plastic parts. That is 71% of our revenue in the first quarter. We have our own brands, a number of niche products within the plastics industry that go for 29% of the revenue in the first quarter.
We group our products in healthcare, clean tech, food tech, and others. Especially in the first quarter here, we have had a good increase in the healthcare part, which I'll come back to later. If you take the highlights, please change, Rasmus, for the first quarter, we have had a strong growth, especially within the healthcare. The growth has been both in the sub-supplier business that we have, but also in our own brands. In fact, the first quarter has been a record high in revenue and a record high on the bottom line. All in all, we are very happy with this first quarter. However, we have also had a lot of discussions with our customers about tariffs, trade wars, and the uncertainty related to all of this.
We see that there is a risk of customers pulling the brakes a little bit, and that could have an influence in the coming month. We are in a very close dialogue with all our customers about making sure that we are producing their parts in the right location so we avoid tariffs. As everyone probably just has seen on the news right now, it can change rapidly the picture that we are looking into. Since we were here last time, we have started up a share buyback program. We have started a DKK 40 million share buyback program in order to reduce the share capital. If we go to the figures, we had an 8.8% increase in revenue from DKK 723 million to DKK 786 million in the first quarter. We realized an EBITDA at DKK 166 million, which is 12% more than the same time last year.
Depreciations were kept at the same level, and that resulted in an EBIT at DKK 117 million, which is an increase of almost 19%. The sales of our own products increased 10% to DKK 226 million, which was an all-time high in the first quarter for our own products. The reason for me mentioning the own products is that they are very important for us because we are able to have margins that are better than being a sub-supplier on these types of products. They are very important for us, and it is very important that we can grow these own products a little bit faster than the whole business in average. That was, yes, that was the right one. Thank you, Rasmus. This revenue led to a profit before tax on DKK 101 million, which is 19.2% more than the same time last year.
It is for the first time we have had earnings before tax at this level, above DKK 100 million. We are very, very pleased with this. It gives earnings per share in the level of DKK 6.51, an increase of 19%. We have been able to reduce the debt to DKK 764 million. The equity grew DKK 69 million to the level of DKK 1,766 million. All in all, a very strong and nice quarter for us. Our biggest investment in 2024, and so far also in 2025, is going really well. We have started up a new injection molding plant in Peachtree City just outside Atlanta, which now is in operation. We have 14 injection molding machines running. We have 40 employees. We have passed the ISO certification for medical production. We have established a 1,000 sq m class eight clean room for medical device production.
We see possibilities for maintaining a very strong growth for production of components for the healthcare industry. Until now, and in the coming months, we have focused a lot starting up the company SP Meditec, which is focusing solely on components for medical devices. Later this year, we will also start up with SP Moulding, focusing on technical parts for the broader industry. All in all, this has been a very big part of the investments that we have done last year and also the first quarter this year. We are very pleased that it runs well and follows the schedule. When it comes to our own products, as I mentioned before, we have had a nice increase. As you can see here on the graph, 226 best first quarter ever.
This was realized by selling more guide wires from SP Medical, more wires from MedicoPack, and last but not least, more products for industrial work environments from Ergomat. All of these were in the healthcare sector and have contributed a lot to the good increase in the industries, the healthcare industry that we focus on. However, we have also had a very nice growth for the sub-supplier business for the healthcare industry, where we are producing plastic components for medical devices. In the first, we were able to increase the healthcare part of our revenue from DKK 280 million to DKK 335 million, 17.1%. On the other hand, it was more slow on the clean tech side, where we saw some stopping in the demand. We have had a lot of new parts coming in, but we have also seen a lack of demand in other places.
It's a blurry picture, but all in all, basically on the same level as last year. The food tech was a little bit going backwards. On the other hand, the group, the rest was called other, had a nice increase, mainly due to some very big projects within satellite communication, which were delivered in Q1, and also some nice project orders on furniture. We come to you, Tilde.
Yes. As Lars already explained, we had a very nice Q1. The top line was up by 8.8% to DKK 786 million. The EBITDA was up by 12% to DKK 166 million. We had an EBIT on DKK 117 million. We have an earnings before tax on DKK 101 million. Earnings per share was DKK 6.5. It's an increase of 19%. If we look at the cash flow, then cash flow from operation was DKK 131 million. We used DKK 58 million for investments. That's a lot of investments in the U.S. plant. We had DKK 107 million for paying off debt and also buying back shares. The net inspiring debt was DKK 764 million. It has a gearing at 1.3. It's also worth mentioning that here in Q2, we paid dividend to all our shareholders for DKK 50 million.
If you take the next one, the light blue that shows the last 12 months, we almost had a revenue on DKK 3 billion. Historically, the growth has been driven by acquisition and organic growth. EBITDA and EBITDA margin performance. The last 12 months, the EBITDA was DKK 606 million. It is the first time that we see it is above DKK 600 million. The increase is mainly driven by more sales from own products and also better use of our capacity. Earnings before tax. Earnings before tax in the last 12 months were DKK 361 million. Here, it is the same story that the increase during the years has been due to increased sales of own products and also better use of capacity.
Yes. Despite we have had a first quarter that was in the top of the range in the growth, and it was good earnings, we put that together with a very blurry picture for the coming month with a lot of uncertainty on tariffs, geopolitical issues. All in all, we say that we believe we are able to maintain the same guidance as we have given originally, that we will have a revenue growth between 3% and 10%. Our EBITDA margin will be somewhere between 19% and 21%, and EBIT margin between 11% and 13%. If we put all that together, we have had a very nice Q1 with record sales, record levels on EBITDA and EBIT. We have had good improvements in both own products and sub-supplier orders. We have a U.S. factory that is well underway.
It is in operation, and it is running very smoothly for us right now. We have started a new share buyback program in order to reduce the share capital. We see in the coming months some uncertainties due to tariffs and geopolitics. We maintain our expectations for the full year, as stated.
Very good. Thank you very much, Lars and Tilde, for the rundown here of the quarter. Let's jump into some of the questions that came up, and I'll flip a little bit through your slides here. I think we'll go to this one on the financial ratios because there is one related to sort of your debt level towards the EBITDA. So you have a net debt to EBITDA at the moment at 1.3, the lowest in recent years. With a strong balance sheet, how are you prioritizing capital allocations in 2025 between sort of the elements you have? You have the M&A, you have the CapEx, you have dividends, and share buyback. Could you give a little thought on that?
Sure. First of all, the level in quarter one was really low. We have paid out DKK 50 million in dividend now in quarter two, and that will have an effect. The number will go a little bit higher. I think also we are at a low level. First and foremost, we will invest in the equipment that we need. We will especially need to invest more in production for the medical industry, for medical devices and medical packaging. We are in the process of investing in a new clean room in MedicoPack, and we will need more machines for SP Meditec as well. The level of investments is needed. Investments in the other part of the business is not so high as the development is not so strong there, but there is a huge need on the medical side.
After that, we will, of course, pay dividend and prioritize that. Normally, we have done that this year in the level that we normally do. If there are acquisition possibilities, we will also, of course, also take them. If it is not possible to make further acquisitions where we can find good companies at a fair price, we will do more share buybacks.
Very good. Perhaps a follow-up on the M&A. Is it possible at the moment to find companies, good quality companies at a reasonable price, or would you have bought them if that was the case?
We would already have bought them if that was the case. We still believe that it is possible.
Very good. Very good. Let us then also, let's stay on this slide actually, because there was a question related to, as you mentioned on the U.S. slide, that you are establishing these clean rooms. And we could also see in the report that you have done the same thing in Poland, I think it was, because there was a question related to this. If these clean rooms must be very costly, is this where you spend most of your investments at the moment? We could see the DKK 58 million on this slide.
Yeah, we spend most of our investments in the medical sector. These clean rooms, that is a huge investment. It's a house inside the house with a lot of requirements for that is to keep it sterile. There is like a lot of changing for people that need to go into one door, change, and then go to another door. There are a lot of requirements for the clean room, and they are very costly. Of course, it's also a product that has a higher margin normally that we can produce in these rooms.
Okay, very good. If we sort of stick to the healthcare part, I'll just flip back here one slide. As we can see, it's around 43% of your revenue, and it's growing quite well, as it says here also. Healthcare is a substantial part of your business and still growing. There's one question whether the growth is related to new or existing clients.
It is both.
Yeah.
It's both new clients and existing clients. What is worth mentioning here, the part where we are a sub-supplier, where we are producing plastic components for medical devices, it's typically something that takes a very long time to establish. From we sent the first offer until we have a good serial production, that can easily go two-three years. Some of the increase we have seen here in quarter one is also as a result of good sales work done in 2023. As we know what we have been doing in 2023, 2024, and we are doing right now, we are quite confident that we will keep on adding more healthcare business in the revenue during 2025.
Very good. A follow-up in relation to that, because there was also a question going on if you should point to something where you make a difference in this segment. It was asked if it was quality sales time. As I understand it, sales has been an important part. If you are to point to other things that help drive this growth in healthcare, what would that be?
We have had the healthcare as a main priority for many years in SP Group. It is both in our own products and in our sub-supplier business. We have put a lot of energy in securing new agreements with new and existing customers. Something that is probably worth to notice here is that we are not only targeting the world's biggest customer. Basically, we are too small for that. We are targeting very big customers with a demand for plastic components. We are actually also quite or try to be active within startups, med tech startups, where we would like to bond a good relationship with them very early on, and hopefully being able to produce everything from the first prototypes in 3D printing onto the injection molded components that they need for their products.
We can see that some of them, they will most likely become some very, very nice, interesting customers in the future. We believe in very long relationships with our customers. It is natural to start with them when they are very, very small.
Very good. A question related to sort of the sales of your own products. We'll just flip back to this slide because as I think you also ran through in the presentation, this is where that has been a good part of the healthcare growth also with your own products. The question here goes, could you elaborate more on your strategy to increase the share of own brand sales in your non-healthcare markets?
In the.
In the non-healthcare. The other one, the food techs and the clean tech and the other, I presume.
Yes. Here we are doing the marine products with the floats from Atlantic Floats, and we are doing buoys and fenders from Dan- Fender. We are doing animal housing ventilation components in TPI. We are continuously here developing new products, finding new ways of helping our customers with solutions. Of course, if we see interesting own products that could be an acquisition possibility, then we will, of course, also look at that.
Okay, good. I think we've through most of the questions, but we have one last here, and that is sort of what has or what have been the implication for you in regards to the U.S. tariffs? What have you seen there with the feedback from your clients and also what you can see is hitting your own business, perhaps also the sourcing of raw materials? Have you been challenged here?
The major part of the raw material, for example, that we use in the U.S. is produced in the U.S. The major part of the raw material that we use in the E.U. is produced in the E.U. Here we have not seen anything. I would say the major implications and the major part in quarter one has been discussions with our customers on where to produce. We have discussed with customers to move parts from China to Europe or from Europe to the U.S. We make sure that we find solutions where the tariffs or the overall cost with tariffs and transport and labor cost, material cost, will give the best optimum. All in all, we need stability in order to finalize that. It's difficult to plan when we, as what we have seen an hour ago, now see some new threats on tariffs.
Good. One last question came in here. I think we should also address that one. That is also related to the M&A strategy we discussed earlier. It says here, given the lack of acquisitions the past few years, do you think you need to invest more resources in those efforts, or has that not been sort of the caveat here that, yeah, on the resources side?
No, I actually do not believe it is a resource question. I think it is a question about finding the right companies at the right price. Actually, we have seen a number of companies for sale. We are getting pitched basically every week with something. Here we start to evaluate, does it fit into our strategy? Does it fit into SP Group? In the case it does, we look into it and see if it is a good company with good management. Finally, we see if it could be a win-win for both parties, meaning that it could also be a company acquired at the right price. I must say we have not seen anything at the right price yet.
Okay, very good. We will conclude by that. Thank you very much, Lars and Tilde, for the presentation here.
Thank you.
Thank you to all of those of you who participated today and with some good questions. We just wish you all a nice day and a nice weekend later on. Thank you.