Hello and welcome to Enersense Q1 Webcast. I'm Liisi Tamminen from Communications, and with me I have here today our CEO Kari Sundbäck, and CFO, Jyrki Paappa. At the end of the presentations, we will have time for Q&A, so please write your questions during the presentations to the chat box in your screen. Now the floor is yours, Kari. Thank you.
Thank you, Liisi. Welcome everyone to our Q1 Webcast. It is a Q1 during which we strengthened our balance sheet significantly, and we proceeded well on our strategic journey. I will start the presentation today with highlights of the first quarter. Jyrki will proceed with the financial review, and I will continue with the way forward. Indeed, your Questions and Comments, which we will answer towards the end of the Session. Some of the highlights. In summer 2024, our board set a new strategic direction for the company and set three of our businesses under strategic assessment. During Q1 this year, we completed two out of three of those assessments. We also launched a program called Value Uplift, which aims at improving our Performance. The program started very strongly, and I will tell you a bit more about that in a while.
We also concluded a new financing arrangement with different elements reaching 12-15 months ahead. That whole arrangement gives us headroom compared to the past, especially to progress during the coming year. Our full EBITDA landed at EUR 21.2 million and EUR 1.3 million from our core businesses. Our revenue was EUR 69.7 million, down from EUR 98.1 million, whereas our EBITDA was EUR 21.2 million, up from EUR 4.5 million. On the next page, I'll help you with a couple of bridges to see the journey from Q1 last year to Q1 this year. Our EBITDA for core businesses indeed landed at EUR 1.3 million, and our equity ratio sort of came back at the level where it was a year ago, but also the 22.3% is some 10 percentage points up from Q4. In a short while.
There were significant one-off items during Q1, also in Q1 last year. Let me take you through where we started in the comparison period. EUR 4.5 million positive EBITDA in Q1 2024, of which, however, EUR 6.9 million came from a single item, wind power income. With that, Q1 last year was in operative performance, otherwise negative. This year, we sold the wind and solar power project development business that concluded on February 26, with a gain of EUR 22.4 million on EBITDA Level. On February 28, we closed the zero emission transport business, the EV charging business, with a negative Impact of EUR 2.9 million on our EBITDA. The remaining item is a significant EUR 4.3 million improvement in our underlying operative business performance. That is where the significant gap from EUR 4.5 million to EUR 21.2 million came.
When we then look at the journey from EUR 98.1 million turnover in Q1 last year to EUR 69.7 million this year, the same EUR 6.9 million one-time item can first be taken into account. Connectivity had a similar level, slightly improved from last year, whereas power and industry decreased, mainly due to the comparison in projects concluding during Q1 last year in power, especially such as the synchronization projects in the Baltics, which were at full speed a year ago. In industry, also the project portfolio, but also shrinking in our service footprint. We have closed some sites on our journey to focus on profitability. We have been closing Profitable business, and with that, we lose some Revenue, but we also gain in Underlying Operative Performance. In the revenue split, we can clearly start to see the progress in the strategic assessments.
If we start from the right-hand side, the Core Business is now 93% of our turnover and 7% then left for the non-Core Business. On the segment split side, power remains the largest segment with 53%, almost unchanged from a year ago, whereas industry is 6 percentage points less than a year ago, and Connectivity consequently has grown, has gained 5 percentage points of share in our portfolio. Our order backlog has stabilized after some decline in the second half of last year. We focus on our Core Business. In other words, we focus on winning the right deals that allow us to grow in a sustainable manner going forward. We keep our guidance unchanged. Let me just repeat the guidance for this year. We expect our Core Business EBITDA to improve from last year, when last year we landed at EUR 10.4 million.
We expect our Core Business adjusted EBITDA to be at the same level as last year. We have only the Marine and Offshore Unit now under strategic assessment outside of the Core Business, and there's no guidance given for that. We keep our guidance because the underlying performance in our business has strongly improved. We have confidence in our sales pipeline, and also the Value Uplift Program, as you'll hear in a while, will yield positive results already from this year onwards. We have made positive progress in safety. There are two metrics here. First of all, the color of the bars. The dark blue looks at the full calendar year last year, and the orange bar is the last 12 months' performance. The lost time incident frequency has come down. It approaches the target we have given ourselves for this year.
The Total Recordable Incident Frequency also is coming down, not yet close enough to our target, but the direction is right. Separately from what can be seen on the page, when we compare individually the quarters, Q1 this year was notably better than the first quarters of the years 2024 and 2023. The direction is right. We're not yet quite there, but we keep on working. We're also reducing our emissions. In 2023, we committed to join the SBTI initiative, and this year we are setting targets where the work is ongoing as we speak. We'll have from this year onwards a clear roadmap of emission reductions. In the meantime, we're taking concrete actions in the fleet, which is a significant source of emissions.
In Finland, in the space of less than one year during this calendar year, we'll change one third of our Car Fleet and all the new vehicles will be fully EVs, which will significantly reduce the emissions of our fleet. Whilst we still have combustion engines in the connectivity segment where we drive a lot every day, we switch to renewable fuels. I'll come back with you after a while, but I will now hand over to Jyrki for our financial review.
Yes, good afternoon also from my side, and let's start with the group revenue. Our group revenue was at the level of EUR 69.7 million. There was a decline of 29%. The role of non-ore businesses came rapidly down to EUR 5 million when it during the previous year was still close to EUR 20 million. What comes to core, as said, connectivity was stable. Revenue of Industry and Power came down. Some individual big projects were coming to completion during Q4, and therefore project activity was at lower level. Also on the industry side, there were services agreement changes, which affected also the sales. Moving forward to group EBITDA, as you can see, the graph is rising quite steeply. Naturally, it's a question of sale of our wind and solar portfolio development. There is also a EUR 2.9 million EBITDA loss from our electric vehicle charging business.
We took all the remaining risk completely out during at the end of Q1. More important here is that, as Kari said, underlying operational EBITDA came up by EUR 4.3 million. Also, as EBITDA was this high, our operating profit rose to EUR 18.9 million and earnings per share to EUR 1.04. Next is EBITDA for the core businesses. Light orange is showing adjustments, and dark one is core without any adjustments. As you can see, the role of adjustments has been declined much since Q2 2024. Core EBITDA was at the level of EUR 1.3 million and with adjustments EUR 1.9 million. Power division improved, while connectivity and industry were in decline. Connectivity was due to the margin level, which was somewhat lower. In industry, it came from project activity, from changed service agreements, and also our site network was narrower than earlier.
We are having Core Business EBITDA and Bridge. As you can see, Administration is affected negatively by EUR 1.5 Million. The reason is that in previous year, level of administrative costs were exceptionally low level, and the annual cost will be with the same. It is timing difference in there. As said, connectivity came down mostly due to lower margins, and power improved by EUR 1.5 million. Improvement came from substations and also from Baltic transmission line projects. Industry, the same reasons as behind revenue were declining performance of them. As said, overall, the level was EUR 1.3 million. Let's take these segments separately. What comes to Overall Market Situation on Power, it was relatively stable, but there were some delays in grid investments. Our power division's revenue was very close to EUR 37 million, and it came down by 16%. It was a question of project activity.
What comes to the EBITDA, naturally, the wind and solar portfolio development portfolio sale is showing big improvement, the blue part of the bar. Also the core underlying was improving to EUR 3.8 million. There was improvement of EUR 1.5 million. As said, improvement is coming from substations and Baltic projects from building transmission lines. We are having industry. As you can see from the revenue side, it's clearly down, and especially it's clearly down from this blue part of the graph, coming from marine and offshore side. EBITDA is a bit different story. If you are looking at Q1 2024, this is a bit tricky graph to judge, but while there are bars above and below horizontal line, you need to net them. It was clearly loss-making, loss of EUR 2.7 million last year. Now we reached EBITDA profit of EUR 900,000. We are having connectivity.
As you can see from the revenue graph, revenue was very stable. Q1 is typically clearly the lowest quarter in sales in the whole year. As the sales volumes are low, typically also on the EBITDA side, profitability is close to zero or slightly negative, as this was the case also during Q1 this year. As said, Margin Levels were a bit lower, and therefore minus is also EUR 400,000 more than in PreviousY ear. We are moving to balance sheet. Let's start from the left-hand side Operating Cash Flow. As you can see, our Q1 2025 was slightly on the negative side, actually minus EUR 2.2 million. After a very good Q4 2024 and also clearly positive Q3, I am satisfied with the level we reached. The right-hand side is Net Gearing and Equity Ratio.
Net gearing is there on yellow or orange, and blue line is equity ratio. Equity ratio is also one of our covenants, and there we came back to the level of what we had in a year earlier. Net gearing is reacting even faster, and we came down to below 60% with the gearing. Finally, a couple of words from our financing. Our bank loan pack is now extended to Q1 2026, and bank guarantees, which are very important for our business, are prolonged to summer 2026. There is also a familial table of covenants, and actual values are there on the left-hand side. As you can see, equity ratio is clearly above current covenant level value. Interest-bearing net debt EBITDA, I'm calling it leverage, it's clearly under as it needs to be.
Our minimum liquidity situation is very good at EUR 24 million at the end of Q1, while we need to have EUR 8 million reserve in any cases and circumstances. I will hand over back to Kari now.
Thank you, Jyrki. Let's look at the way forward, starting with a page which I hope starts to look familiar, the three key priorities this year. The first priority is to effectively run our current operations. We're strongly improving the underlying operative performance as we speak. Secondly, we increase our value and improve our performance with the Value Uplift Program, which started at the beginning of the year. We are renewing ambitiously the strategic focus of the Core Business for the coming three years, and we'll tell about that in June. A word about our Core Business. We have progressed on this strategic journey strongly during the past nine months or so. Where is the focus? We focus on project and service operations for the green energy transition and in telecommunication networks.
In the three segments in power, we design, we construct, and we maintain transmission grids, substations, wind farms, and solar farms. I could add to that the best of the battery energy storage systems. A few important things: design, construction, and maintenance, not only construction. We are particularly strong in that space with the substation competitiveness. As Jyrki mentioned, the growth in substations, despite some shrinking of top line in power in substations, it has been strong. In industry, again, we construct and we operate and maintain production plants and other demanding metal construction projects. With the Marine and Offshore Unit, we have expertise in the Arctic marine industries and offshore wind power. I am sure many of you have seen during Q1 that P2X's first green hydrogen plant, Finland's first green hydrogen plant.
First of all, it started to operate on Valentine's Day, and then there was an opening ceremony. For us, it is significant if you think of what Enersense has done around it. First of all, we strengthened the power grid before any construction was started with substations and some lines going into the site. We have built the whole process inside the walls of the plant. Now, 24/7, every day, we operate and maintain the production facility, both locally and remotely. There is one company in this country, Enersense, who gains increased understanding and command of such a green hydrogen production process every hour of the day. In connectivity, again, we design, we build, and we maintain both fixed and wireless communications networks, with which we ensure fast and reliable communication connections. That is really our Core Business as it stands today.
The Value Uplift Program was launched at the beginning of this year to support our profitable growth. It will continue throughout the year, and it includes three areas, of which we have started to date the first one, procurement. It has started really strongly. In our own estimates, we currently see that it has started even stronger than we estimated just a couple of months ago when we started the program. The second area will be around improved commercial management. The third area, when our new strategy for the Core Business matures, we will also look at how we have distributed our resources, not as they're needed today, but as they will be needed to execute on the new strategy. At the same occasion, evaluate fixed costs, such as costs coming from facilities and other types of fixed costs.
The graph you see down there in the picture is something we'll keep in these updates from now on. Our target of EUR 5 million run rate improvement from second half 2026 is there. Earlier, when we started the program, we estimated that we will start to see some positive run rate impact already from the beginning of next year, 2025. Now we know that we will start to get these benefits already from this year onwards, from the second half of this year onwards. At the occasion of Q2, we'll be able to quantify already how much the improvement impact will be for this year, 2024, already. A very strong start to that program. There's a lot of potential in all these three areas at Enersense. Our strategic journey proceeds.
I'll just take a quick look back at the middle of last year, where a new strategic direction was set for the company with the aim of focusing on Core Business and strengthening our financial basis. During the second half, we already managed to significantly increase our cash flow to strengthen our balance sheet, and we put in our operations a strong focus on profitability. We progressed on the strategic direction, meaning on the strategic assessments, but also laying the basis for the strategy work we then undertook at year shift. We did a thorough assessment of performance of all of our business and development needs and competitiveness. At the beginning of this year, we have already completed two of three strategic assessments. We continue the assessment of the Marine and Offshore Unit, both in offshore wind and especially in Arctic marine industries.
A lot is happening in the market at the moment. We have unique competencies there in Mäntyluoto, to join what is happening in the market, and hence we continue patiently and in a determined fashion, the strategic assessment. We concluded a new financing arrangement, which Jyrki presented just a while ago. Still during this first half of the year, we will launch our new strategy for the Core Business on precisely June 4, so in just a couple of months, actually a bit more than one month. That new strategy for the Core Business will set us on a path of sustainable growth for the years to come, and we are sustaining that journey with the Value Uplift Program to fund the journey and further improve our operative performance.
With this, we're soon concluding the presentation, but just a reminder of the invitation to the Capital Markets Day on June 4th this year, where we present our updated strategy for the Core Business and also new financial targets. Physically, it will take place from the same location we are here today at, starting just after noon. The event can also be followed by webcast, but we'd be happy to see many of you here in person. Now, Liisi, I think we will turn to questions and comments.
Yes, thank you. We've had quite a lot of questions, so thank you for your active participation. Of course, you can still send new questions during the Q&A session. Let's start with value uplift-related questions. What kind of positive impact do you expect from value uplift from age 225 adjusted core numbers?
As I mentioned, we'll be able to really quantify it at the occasion of Q2. What we saw after just a couple of months from the start is that there will be such effect for the Core Business already from the second half this year. A positive impact to our Core Business adjusted performance already from H2 this year.
Thank you. There are a couple of questions related to value uplift costs. How do you see those for 2025 and 2026?
We will report on them starting from now. We reported a EUR 450,000 cost in Q1, and every quarter we will report both the gain and the cost. The run rate gain and the cost of the program, the one-time cost.
Thank you. A couple of questions regarding revenue. If we look at the revenues geographical split, Finland's revenues are quite a steep decline compared to the comparison period. Do you see some pressure regarding the demand picture in Finland?
No. I think that the revenue development was as expected. When we look at the decline, again, we have to look at the comparison period a year ago, where notably the big projects in the Marine and Offshore Unit were at full speed in Q1 2024. We see the market, there was some softness in the market, but we have confidence in our sales pipeline, also in Finland.
Thank you. Another question regarding revenue. How much of the revenue decline came from non-core operations?
It was roughly EUR 15 million.
15 million.
15 million.
Okay. Then to connectivity performance. Do you expect that there will be a similar type of seasonality between the quarters in connectivity revenue as in 2024?
I think Q1, first of all, was as expected. We had a very high pace at the end of last year, which naturally slows down with seasonality for Q1. I do not see a reason why it would be substantially different from last year. The seasonality, in particular in Connectivity, is very strong. There in particular in the fixed line business.
Continuing on connectivity, why did connectivity's order backlog decline more than quarterly sales, were there some order cancellations?
No, not in Connectivity. It is just the revenues recorded, which came out of the order book into revenues, which impacted that.
Yes. A question to Jyrki about cash flow.
Yes.
Q1 cash flow is impacted by seasonality, but do you think that the cash flow came in as you expected?
Yes, I said I'm satisfied with the cash flow after strong Q4.
Yes. How much do you expect CapEx in full year 2025?
Will stay still quite modest, somewhere around, let's say, EUR 5 million-EUR 6 million.
Thank you. There are a couple of questions regarding the Marine and Offshore Unit. How does the order pipeline look in Marine and Offshore Unit?
It is strengthening all the time. Maybe I'll go a bit into that, why we say that we patiently work on it and grow the order pipeline. We have been maybe even a bit too focused on just offshore wind, where we have unique capabilities and also own design. Offshore wind projects are not very active at the moment. At the same time, we have great competencies there in Mäntyluoto that can be used in other industries. The thicker the steel gets and the bigger the part is that needs to be made out of such thick steel, the less there are competitors. We're actually unique in Finland, and there's not many in this part of the world either who can do what we do. We're focusing on three areas in growing our business there.
Of course, the offshore wind business, but the other two, the marine industry, meaning shipbuilding. As a subcontractor to new ships being built, either blocks or complete floating structures is what we are working on. The third area is other industrial large steel structures, such as the ones needed in carbon capture of different emitting industrial plants. There are several such projects in our pipeline. Progressing on three fronts, this is the translation of progressing patiently with the Marine and Offshore Unit.
Thank you. You partly already answered the next question, which is also about the Marine and Offshore Unit. How do you see that? Could we have some possibilities for the icebreaker deals that the U.S. may come up with?
U.S. or Canada or Sweden or Finland or anyone else? Yes, we have possibilities there. We are working on that.
Yes. About the customer demand and the market environment. Have you seen hesitation in customer demand or activity due to elevated uncertainty regarding global economy?
Yes, we have. We have seen some of that. We have seen some investments being delayed or decisions being delayed of some projects in our pipeline that we would have thought would have closed are somewhat shifting. Not in a big fashion, but we see some of that, some hesitation in individual projects.
Yes. Could you explain a little bit about the guidance you have?
What's that? We are having a couple of questions left. First one is, can you give us the range for the guidance terms, same level and improve, for example, is the same level plus minus 5%? No, it's same level. I will not play with the percentages. Again, just want to repeat on that guidance. There was a question earlier on Q1 being lower than last year and guidance maintained. We're confident with the guidance for three reasons. First of all, the underlying operative performance in Q1 has strongly improved compared to last year. Secondly, we have confidence in our sales pipeline. Thirdly, we know already now that our value uplift will start to yield positive results from second half this year onwards.
The last question is, you mentioned that some changes in service agreements were undermining your revenue in Q1.
Could you specify what kind of changes these were?
There was a loss of one particular service agreement. Secondly, we have deliberately closed a couple of sites which were loss-making, so so-called service centers where they were closed during last year. Obviously, comparing to Q1 last year, they show in revenue, but they have had a positive impact on the underlying operating performance. This is a natural part of what we should do now, focusing on the profitability and sustainable growth of our Core Business. Sometimes we may need to take such actions of closing non-profitable sites, which we have done. I think we're at the end of the questions. I will just, before we close, remind of the invitation to our Capital Markets Day in just a bit more than a month on June 4th here in the same premises and over webcast.
Thank you for your attention today and have a good rest of the day.
Thank you.