Hello, a warmly welcome to Enersense's Q1 result webcast. I am Liisi Tamminen from Enersense Investor Relations. Let's first take a look at our agenda today. First CEO Kari Sundbäck will present the Q1 highlights. Then CFO Jyrki Paappa will continue with the financial review. As we have communicated, we will have a new CFO, Jan-Elof Cavander, starting tomorrow. He will join us shortly to present himself after Jyrki's presentation. Then CEO Kari Sundbäck will continue with the strategy and way forward. In the end, we will have time for a Q&A. I would like to remind you all to write down your questions already during the presentations. We will have time to answer those in the end. Now, I would like to welcome Kari to join us here.
Thank you, Liisi. Welcome on my behalf to our Q1 results. In Q1, we continued our strong order book growth and improved our underlying business. The highlights, the profitability of the underlying business improved. The strong order book growth continued. It has been going on for four quarters now. The Value Uplift program continues to progress well, and accordingly, we have now increased the EBITDA run rate target at the end of June this year when the program is due to come to completion. We see a favorable market, good own performance in order intake, and we have increased our ambition in data centers. Because of that, we decided to increase our growth target over the strategy period. Let me go a bit deeper into each of these highlights.
We generated EUR 61.1 million of revenue, which compares to EUR 62.3 million a year before in Q1 2025. Within EUR 1.5 million of Adjusted EBITDA, last year's reported Adjusted EBITDA is EUR 2.2 million. That includes a EUR 1 million provision release related to a dispute won. The operational result increased from EUR 1.2 last year to EUR 1.5 like-for-like. The Adjusted EBITDA margin landed at 2.5%, and our net gearing is particularly low, especially compared to last year when it was 88.1% and 36.8% now at the end of Q1. Looking at the revenue, the EUR 61.1 is at the same level as last year's Q1, the orange bar on the left of the page.
The dark blue there represents the units sold or discontinued during 2025. Businesses we don't have anymore. The gray line there is the Adjusted EBITDA margin, which indeed landed at 2.5% in Q1 this year. We then compare the revenue split of Q1 to the full year 2025, by business units, we can see that Power clearly had a larger share of our revenue with almost 15 percentage points more compared to its share in 2025 throughout the year, at the expense of Connectivity -9 percentage points and Energy Transition -6 percentage points.
The share of project and services developed such that services were a little more in share in Q1, plus 3.4 percentage points, and then of course projects a similar percentage point decrease. As the order book growth materializes, the order book has been filling in over the past last year of projects. We expect this to go in the other direction momentarily than going forward. Between geographical regions, Finland's share was slightly bigger in Q1 than throughout last year, and also the other Nordic countries, and then Baltics was slightly smaller than throughout 2025. The strong order book growth can be seen here.
For four quarters in a row now, since we have launched our new strategy, we have been able to grow our order book, and now we added EUR 21 million compared to the end of Q4 2025. A few highlights of events in that order book growth. Starting with Helen, we have been operating Helen's energy plants and district heating network since 2022, and during the quarter we agreed for two more years, the years 2027 and 2028. We are grateful to Helen for the opportunity to continue to serve them and add value and efficiency in different ways to them during this relationship.
We have expanded in the electricity grid in BESS battery energy storage systems, through several contracts, two mentioned here, in Finland to a large wind farm, OX2's wind farm. We will deliver battery energy storage systems. This follows a deal from last December when we agreed to build their substation in that same Kannisto Park. We are expanding the substation and adding BESS. Also in Latvia, we will build a BESS park and the power transmission, so the lines, for our customer, into a new customer to us. In Estonia, we agreed on a significant maintenance contract, so we'll maintain and develop over 4,000 km of electricity network in Estonia under a new framework agreement valued at EUR 4.6 million. Data centers, this time in Latvia.
We're delivering both data connections and medium and low-voltage transmission lines for a new large-scale data center close to the capital, Riga. These are some highlights behind the numbers of the order book growth. Our guidance is unchanged. We estimate our Adjusted EBITDA to be between EUR 19 million and EUR 23 million in 2026. I will now hand over to Jyrki for a deeper financial review.
Thanks, Kari. Good morning, everyone. I will start with the same picture which Kari showed already. Comparable revenue [audio distortion] all in all. The blue color units which are sold and discontinued, there are all the non-core businesses which ended last year. There is also discontinued service centers which were part of our core business, as well as our industrial painting unit. That combination of earlier non-core and core businesses, we have sold and which are not continuing anymore. What comes to the comparable revenue decline there, 2%. We had a slower start due to external reasons. There were a couple of key power grid projects which were delayed due to permit issues.
The weather wasn't in favor of us. First, it was too cold winter, too cold to operate, then, sudden and early warming and, ground went too soft to operate again. However, we will improve our pace from here. Let's move on to EBITDA. Dotted blue line shows that it was quite exceptional Q1 last year. It includes EUR 22.4 million sale profit from our wind and solar development portfolio sales. However, if you move on to orange bars, you can see that the difference, we are quite in the last year level. There was actually decline of EUR 700,000 from EUR 2.2 million to EUR 1.5 million.
In the comparison period, there was that EUR 1 million legal case won, which came into a cyclically quiet period. Basically, we are ahead of last year in underlying business, even with slow start. I'm moving on to business units, starting from Power. Starting from revenue. Even if there was those delays in some big project, Power managed to increase its revenue by 2.2%. Those delays were affecting to EBITDA. Power is having 56% higher order book than one year earlier, and it will improve clearly from here moving forward. We are having Energy Transition. There is quite much that light orange that contains sold marine and offshore business, as well as those closed core businesses, service centers and industrial painting.
On comparable basis, revenue declined close to 14%. The reason is that it was affected by completion of major project. Only tails were left during the winter and first quarter this year. However, profitability was improving and EBITDA was maintained at the same level than one year earlier. Next, we are having Connectivity. Connectivity's first quarter is always, due to cyclical reason, very quiet. Activity will double during Q2 already. It's difficult to say anything about the trend from one quarter perspective. However, we are exactly with the revenue and EBITDA at the previous year level. It's good to remind that Connectivity has improved, and its performance during the last two years, and I'm supposing that trend to continue. Moving on to cash flow and balance sheet items. Starting from the left, operating cash flow.
It's quite exceptional, looking quite exceptional. The reason is that when we were making our finance back, we also started to trade our VAT liabilities differently. We won't have that much liability anymore. There was one-time decrease. The amount was EUR 12.5 million. If we are moving to right-hand side graphics, you can see that the blue line equity ratio is still improving from year-end figures. The reason is that we managed to decline our total balance sheet size quite much. The tied capital into inventories, into trade receivables and other receivables, they all went down by multi-million. The net gearing is close to 37%. It's well below yesterday trimmed target, long-term target of 85%.
The last page in my part of presentation is Value Uplift. As Kari already mentioned, we increased our target to EUR 8 million. What we are having left is tails of procurement and side of program. We are having also commercial management in Power with one limited project before ending the whole program. It's now time to call Jan-Elof on stage, so welcome.
Thank you, Jyrki. Good morning, everybody. My name is Jan-Elof Cavander, and I'm very excited to join the company actually tomorrow. A bit of my professional background, I've served as CFO of two listed companies in Finland. In addition to that, I've been having several board memberships in the Nordic area, and currently serving as COO of Virala. Also have the possibility to be part of Enersense's board of directors and will be obviously stepping down as a result of starting as CFO tomorrow. Enersense has gone through a significant strategic transformation and turnaround in the past couple of years. In my view, looking also from the board position, the company is now having a very solid foundation, so it's a great place to start working.
Enersense strategy is very compelling and attractive, and most importantly, it's supported by very attractive and good market outlook in the Nordic countries. Very excited to join the company. As I said, I'm very much looking forward to be working with all Enersense colleagues in all different sites and all different locations and all countries, as well as with our customers, investors and financiers. I would also like to take the opportunity to thank Jyrki for your excellent work in the past couple of years in playing a major role in the financial transformation of the company and having the pleasure now to start to work in a company that has a good and solid foundation. Thank you, Jyrki.
Very much looking forward to meeting all investors, at latest, in our Q2 release in August. Thank you.
Thank you.
If you stay just a minute. Thank you, Jyrki, for your service and your partnership. Enersense is in many positive ways a very different company compared to the time before you started. Jan-Elof, I really look forward to continue to develop Enersense together with you. Thank you.
It has been a teamwork. Thanks.
Thank you.
A few words on our way forward. When we lift our sight further to the year 2028 and the remainder of this strategy period, we're in a good position in growing critical infrastructure markets. Electricity production and consumption and data capacity needs are strongly increasing. We have decided to strengthen our focus to serve the data center segment, the data center customers, so we have added a separate segment to our strategy in an update, done today. At the same time, as we see such a favorable market outlook, our order intake performance is strong, and we have increased ambition in the data center arena. We have decided to increase our growth target.
The compound average growth rate over the years 2025-2028 is now increased to a range of 6%-7%. It was 4%-5% since the launch of the strategy in June last year. The strategy indeed was launched in June 2025. It stays intact. It serves us well. There is an addition in the middle, in the portfolio. O ffering across the asset life cycle for power, energy production, industrial energy transition, connectivity, and now also data center customers in Finland, Baltics, and the Nordics. The rest of the strategy is the same. We continue our life cycle partnership model, and we focus on our customers' success to shape our ambition. A few more words in practice on the data center ambition and Enersense's role in data centers with a simple picture. It's a threefold picture.
We have three essential roles in the data center space. First of all, we connect the data center to the electricity grid with the high voltage lines and the substations. Secondly, we connect the data center to the telecom network with the fiber lines that we construct to several data centers at the moment also. Thirdly, we connect the data center to district heating network. We capture heat from the data center, and we build the necessary equipment to recover the heat in the district heating network. Three essential areas in the data center concept. We have started the first full year of deployment of our lifecycle partner strategy. I would like to give a few highlights of how we are progressing here.
A lifecycle partner by default means that there's a long-term customer relationship, and we're glad to having been able to extend the agreement with Helen on that operations and maintenance partnership now covering also the years 2027 and 2028. There was a different type of highlight in Q1. As Jyrki mentioned, some permitting issues also in the power grids becoming more strict. Together with our customer, we managed to overcome such a situation and continue working. It's also in cases of external challenges, we get together with our customers in partnership, and we find a new way forward. A few examples of the balanced portfolio. Momentarily, we saw the share of service in Q1 increase compared to last year.
We expect the share of services now to increase in the coming quarters, thanks to what we have taken into the order book in the past year. That all serves as the install base for our services. A project, the customer relationship certainly doesn't end at the end of the project. That's the second start for then the service relationship. To strengthen our portfolio and the segments, we have this new dedicated unit to serve our data center customers with the diverse expertise from the three business units. Another proof point of the portfolio working, we're expanding BESS business, battery energy storage system business, not only in Finland, also in Latvia.
We're now piloting with several customers digital solutions for condition-based maintenance in maintenance, so changing the paradigm in maintenance from reactive and calendar-based to condition-based by means of a digital backbone in our service production. Another type of collaboration where we help our customers and focus on our customers' success, so we have partnered with WWF to help our customers find sources of low emission steel. Finally, I said we have updated some of our strategic targets. We have five strategic targets for the period 2025- 2028. The growth target has now been upgraded to a range of 6% - 7% through the strategy period. It was previously 4% - 5%. In profitability, we now change the metric to EBITDA from EBIT. In terms of ambition level, it is the same.
In our business, the EBIT margin over 5% corresponds to EBITDA over 7%. In balance sheet, the net gearing metric is the same. We have just tightened a notch the limit, we now want to stay below 85%. The other two strategic targets stay the same. Thank you. Liisi, now we have ample time for questions.
Yes. Thank you.
Let's invite Jyrki also back here on stage. Thank you for active participation. We have many questions here online, and please keep them coming as we speak here. Let's start with a more familiar topic, our Value Uplift efficiency program. There's a question on the costs related to Value Uplift. They decreased a lot in Q1. Any expectations how they will move forward? Jyrki, could you take this one?
They are decreasing.
The longer we go. It was EUR 300,000 during Q1 when in the comparison period it was the amount was EUR 500,000 . We are coming down clearly, and that will continue.
Yes. Thank you. another question on Value Uplift. Jyrki, also take this one. What is the lead time between the actions and P&L impact? How long does it take to see the full impact on the result?
We have tens of items there, and they are varying a lot. The lead time is from weeks to several months.
Yes.
Some are easy to implement, and some are taking a longer time, and action also from our new procurement team.
Yes. Thank you. We have quite many questions related to data centers, let's deep dive into those ones. Kari, maybe you can take these ones. First of all, can you give us any indication of the data center pipeline?
Yeah. It is a very rich pipeline. We're of course actively following all of the market, but focusing on the quality of the pipeline. When you look at Finland only and the amount of announced projects, we've passed the 100 project or announcement mark. We're focusing on the most valuable 25, 30 of the coming years in our work.
Yes. Thank you. We have a couple of questions, related to share of sales coming from data centers. How is it looking currently, and any expectations for, let's say, 2028?
Yeah, I think there's the direct share of sales and then there's the everything which is indirect. The share in Connectivity is rather high because the work we do in Connectivity in fiber is more and more related to connecting data centers and less doing fiber to the home. In Power, the unit as such is growing on the basis of strengthening the transmission system network in Finland, in other countries. All that is indirectly related to data centers. In Energy Transition, at the moment, the share is not significant. That will be on a project basis, then growing.
Yes. Is it possible to build recurring revenue based on data centers?
Yes. Anything you install needs to be maintained. Absolutely.
Yes.
Just maybe if I may add.
Of course.
Enersense has the largest market share of BESS maintenance in Finland at the moment, counted in megawatts. Even batteries and the installations in which the batteries are placed need maintenance, and we have a very strong market share there, leading market share in Finland. Likewise, the same thing. High voltage lines require maintenance, substations require maintenance, BESS requires maintenance. Absolutely.
Yes. Good. You already told us about the new data center unit, which we have established. There is also a question that have you hired any additional employees related to data centers or made any other investments?
Yes, we have. Latest addition started this morning, a person.
Good. Let's move on to other topics. Jyrki, one question related to updated strategic targets. The updated net gearing target is clearly higher than the current level, so how this should be interpreted?
No any drama in there. Earlier on it was below 100%, and now while we have financed ourself late last year, this is just trimming it to more exact level. However, we want to grow, and also net gearing might go up during with the growth going forward.
Yes. We have a couple of questions about the Power business unit and the permitting topics there.
Kari, what was the revenue impact from the delayed projects in the Power unit?
Compared to the original plan before the permitting issue, several million euros. It's just a postponement. In that case, it's a project which requires different class of permitting, which is more laborsome.
Nothing special in that, the permitting itself is pretty straightforward. It's just work, and the project will start when the permits are in place.
Yes. How do you see the outlook going forward? Will there be more permitting issues and therefore also delays in power projects?
I think there may be some, yes. The case in question now, which impacted us the most in Q1, is in Estonia. It's the renewal of a high voltage line, where some of the communes on the route said this needs to be permitted like it was a new line. Our customer, Elering, then took the stance that out of cautiousness, we will permit the whole line with the new construction type of permit, the more strict permit.
Yes.
Which is, again, it's straightforward work. It just takes more time. As it has happened once, I would expect this to happen again. We just need to take it into account in the schedules.
Yes, this also relates to the order book, timeline, so what is the timeline for deliveries in the order book, and how much of the current order book will be realized during this year?
Well, the order book, each project has a specific timeline, but in general it is so that especially in power and in high voltage lines and in substations, our customers order earlier in advance. In substations, for example, due to transformer lead times globally, our customers prefer to order and the early so the order may sit a year in the order book before we start work.
Yes.
During that time we cater for the necessary lead time for the transformer.
Yes.
We grew a lot our order book in the second half of last year. Most of that will start to show in second half of this year.
Yes. Thank you. Jyrki, one question related to the wind power development project portfolio-
Yes.
... which we sold to Fortum, last year. What is the situation there, and are we still expecting that the first projects will be completed in 2027?
Yes, that's possible. The most advanced project was moving ahead and environmental study, public environmental study is ongoing in fact. Right now.
Yes. The cash flow estimates are still the same as we published a year ago?
Yes. The most ahead of project is still in the timetable.
Yes. Jyrki, about energy, I'm sorry, Kari, about Energy Transition, what kind of possibilities do you see in short to medium term, and, are there any signs of market picking up?
Yes, there are signs of market picking up, and in the short to midterm we have been negotiating and actually starting, a new cooperation which we expect or hope we can confirm and add to our order book soon. The pipeline has become better as the market is sort of, in Finland also, shown signs of recovery lately.
Yes. Good. Jyrki, one question, related to Enersense Wind, minority shareholders. During the review period EUR 2.2 million was distributed to the minority shareholders of Enersense Wind, based on the shareholders' agreement. Can you tell a little bit more about this, and are there still some future payments to be expected?
There is one more project in the pipeline, but it's far ahead, and we won't have any exact timetable or even exact sites for that. However, whatever comes, we are getting more money than what is passed to minority shareholders. However, we won't have exact figures and timetable yet.
Okay. Thank you.
One is left.
Yes. Kari, about the Power business unit EBITDA margin, what can we expect for this year as there was a decline in the Q1?
We can expect recovery.
Good. With a longer question that energy infrastructure such as power plants, grid construction and data centers, they are all an important part of security of supply in times of crisis. Does Enersense have any business in the defense industry, and are you involved in negotiations on reconstruction projects in Ukraine, assuming that the war will end at some point? If so, what would be the market potential for the company?
To the first question, yes, we are serving the defense segment as well. To the second, no, we are not at the negotiation stage compared to Ukraine. Not yet. We are carefully studying the opportunity, actually getting more active on that, especially in terms of high voltage lines. Taking into account the strength of the market in our current geographies and our capability to grow in the current markets, they have priority over Ukraine.
Yes. Thank you. Those were all the questions so far. We thank you all for active participation. Always nice to have so many questions and interest in Enersense. If any more questions, we are happy to answer them later on, so please contact us at any time. For the next time, we will meet here in the webcast in mid-August when our half-year financial reports will be published. Thank you.