On behalf of Arctic Securities, I welcome Borgestad to this Q1 presentation. With us from the company, we have CEO Pål Feen Larsen, and we also have Head of M&A, Bendik Persch Andersen. If you have any questions, please feel free to write them in the chat. Thank you very much, and I'll give the word to Pål and Bendik.
Thank you very much, and thank you for the invitation. Let's go to some highlights. Borgestad released the first quarter this morning, and for sure, it's a weaker quarter than last year due to lower activity within Höganäs Borgestad in low season. Bendik will elaborate more later, but Höganäs Borgestad has a slower start of the year, mainly within the services and installation business in the Swedish market. When we look at the order book for the second quarter and the rest of the year for Höganäs Borgestad, it looks healthy, and the prospects look good. Borgestad do not foresee a general slowdown for the refractory market in the Nordics, but are optimistic on the rest of the year for Höganäs Borgestad. It's very good to see Agora Bytom is continuing its good momentum in the quarter and report higher revenue and EBITDA than same quarter last year.
Borgestad is an industrial investment company focused on real estate and refractory, aiming to expand into niche segments in the future. Borgestad has initiated some key tools that we are driving the company for to review the success. One of them is to have the right team. On 1st of April, it was done a material change. Bendik took then the role as CEO of Höganäs Borgestad Group, and we can already see that he has implemented changes and has worked with the team that we will see success going forward for Höganäs Borgestad. After Bendik has joined Höganäs Borgestad, Borgestad will also need to strengthen the team. From the beginning of June, we have hired an Investment Manager, Jan Fredrik Herud, that will join Borgestad and take part of the role that Bendik has had until before April. We're looking forward to having Jan Fredrik on board.
Our portfolio includes the shopping center Agora Bytom and the refractory company Höganäs Borgestad, both dominant in their respective markets. Agora Bytom is a shopping center in Poland and is the largest investment of the group. Agora is centrally located in the Silesian region of Poland and holds a strong market position in its primary catchment area. Borgestad owns 100% of the shares of the company and the center. Höganäs Borgestad is a manufacturer and supplier of refractory quality products, installation, and solutions that are essential for industrial high temperature processes. Höganäs Borgestad is the market leader in the Nordic refractory market, and Borgestad owns 69.7% of the shares. Let's go into the details and start with Agora Bytom. For the first quarter, the rental income is relatively stable. That is due to tenant changes in the first quarter, and we will see an increase going forward.
EBITDA increased due to cost cuts implemented in 2024, and as communicated before, we have seen the full effect from the first quarter of 2025 and onwards. If we look at the future, Borgestad expects that revenue and EBITDA will increase going forward. Debt towards Bank of Kaunas with due date 31st of December 2028 stands at EUR 29.3 million at the end of the first quarter. That is a loan-to-value below 50% and at a sustainable level. If we look into turnover among tenants, those are down 2.8% in the quarter, and this can be seen as a seasonal fluctuation due to timing, mainly timing of Easter. Easter in 2024 was in the first quarter, while in 2025 it was in the second quarter in April. Easter in Poland has historically been a good period for shopping and turnovers in Agora Bytom.
It is important to understand that Easter in Poland has fewer days closed for shopping centers than in the Norwegian market. This will affect going forward for the second quarter. Agora Bytom keeps a steady high vault, both by years and income. As communicated several times, a normal contract length in the shopping centers is around five years. A vault of almost four is in the high end. 5% of the contracts are ending in 2025, several with the option to renew. The main part of the contracts will be renewed as Agora is reviewing the situation at the moment. Historically, the renewals and strategy for renewal have been a good story for Agora Bytom, and we are confident that this will be the same for this year. Agora Bytom continued to develop a strong position in the local market and increased the occupancy in the quarter.
Occupancy stands at 95.8% based on signed leases end of the first quarter. Borgestad expects further increase in occupancy based on signed leases and based on several ongoing advanced negotiations. Agora Bytom is in advanced negotiations of above 2,400 square meters. The negotiations are a combination of renewals of existing leases and new leases. If all negotiations will be signed, occupancy can be expected to increase up towards 97%-98% within the next three to six months based on signed leases. Agora has a good momentum in the rental market, and management are working to capitalize the momentum into rental income. With the occupancy rate above 95% at Agora Bytom, we expect for further increase going forward, and as a natural consequence, it's hard to find available units in Agora Bytom.
If we have tenants, we need to then change to optimize, and the strategy for going forward is to increase the rent per square meter and work to optimize the parcel in the center. That is a strategy that Borgestad is confident that will be implemented in Agora due to our local management that is incentivized to do and complete that parcel and work with it every day. Let's go into Höganäs Borgestad and over to Bendik.
Thank you, Paul. Let me start with the Q1 results before moving on to our outlook ahead, and I will also provide an update on the previously announced sale-leaseback agreement in Sweden. As shown in the chart to the right, we saw a revenue drop of 8.8% for the first quarter this year compared to the same quarter last year, ending at NOK 186 million. As we do have a relatively high operational leverage with a lot of fixed costs, we are obviously quite dependent on sufficient revenue each month to reach break-even. During Q1 this year, which is always our weakest quarter as a consequence of low maintenance during the winter in the Nordic refractory markets, we recorded an adjusted EBIT of NOK -11.5 million, about NOK 9.5 million behind last year's performance.
If we look at the year overall, we see that historically and generally, Q1 and Q4 are weak quarters for the Nordic refractory market, and that goes for us as well, largely due to the cold weather where a lot of industries are prohibited from making maintenance. As the chart shows, activity typically picks up during the spring and peaks in July-August when a lot of planned maintenance is scheduled during the summer holiday. As the bottom chart shows, we delivered a weaker first quarter this year compared to previous years. As Pål mentioned in the intro, that's due to lower activity in the Swedish subsidiaries, whereas the Norwegian and the Finnish subsidiaries are continuing to perform well also in Q1.
We do not view this weak first quarter as a sign of a broader slowdown or a general setback in the positive momentum we've seen in the last few years, but we are obviously not satisfied with the first quarter this year, and we are working hard to ensure that we will increase our revenues for next year's Q1. In addition to that, we are also implementing cost-cutting measures to reduce our operational leverage for the quarters and years ahead. Looking at our trailing 12-month performance, the weaker Q1 reduced our average EBIT margin from 7.5% in full year 2024 to 6.7% as of Q1 2025. But as I said earlier, we do not view this downturn as dramatic. We have good prospects for the remainder of 2025 and also what we see shaping up in 2026.
Of course, it's natural to ask whether this downturn might be linked to the broader, let's call it, macroeconomic environment with trade tensions and more uncertainty. We do observe some slowdown in certain industries, especially some larger projects being postponed. We also note that other refractory actors have reported a weaker Q1 this year. As history has shown, the installation business in our refractory business is quite resilient to market fluctuations and rather steady. We are, of course, monitoring the market closely and will assess whether we should implement further actions to reduce costs ahead of next year's low season. Finally, a brief update on the sale-leaseback agreement in Bjuv.
As announced in late 2023, we agreed on the sale of our two properties in Bjuv to the local municipality with an option to lease them back for another five years, after which we will relocate our own production. Following this announcement in 2023, a local citizen in the municipality submitted a complaint claiming that the agreed price was too high. In March this year, the administrative court in Malmö reviewed the complaint and ruled against the completion of the transaction, citing insufficient documentation to support the valuation. The municipality has now, in April, appealed the ruling and submitted additional documentation supporting the valuation. We expect initial feedback on whether the appeal will be reviewed now before the summer.
If it is, then the communicated processing time is nine to ten months, meaning that we should have a final feedback on the case by the end of this year or early 2026. From our side, we still expect the transaction to go through as planned, and any updates will, of course, be announced as soon as possible.
Thank you, Bendik. Let's go into the finals financials and sum up at the end of the presentation. Borgestad Group has not started the year as in 2024 due to the slower start of Höganäs Borgestad, reporting a revenue of NOK 206.5 million and an EBIT of NOK -11 million. Net financials are also negatively affected due to increased costs in the first quarter of 2025. The increased cost is due to that Agora Bytom in the first quarter of 2024 had the old interest hedging on very favorable terms. For those who remember good, a new interest hedging was in place from the third quarter of 2024 and onwards. Profit before tax ends up at negatively NOK 23 million. Let's look into the balance sheet. Borgestad has a strong balance sheet with a sustainable debt level and a good cash situation.
Net interest-bearing debt at NOK 249 million at the end of the first quarter. Debt towards Nordea for Höganäs Borgestad is due on the 30th of June this year. We have a good communication and process with Nordea for refinancing and expect to close a new financing or refinancing through June or probably mid-June this year. Inventory is increasing in the period as we are entering into high season for installation and maintenance business for the whole Nordics. The property in Bjuv stays as held for sale until final clarification is received related to the complaint that Bendik talked about previously. Looking at the cash flow statement, net cash from operating activities is negative, mainly due to negative results in the quarter and the increased inventory. Debt decrease according to amortization plan, and Borgestad holds a good cash situation at the end of the quarter.
If we look on the outlooks, Borgestad is optimistic for the remaining part of the year. The order book and prospects for Höganäs Borgestad look good, and Höganäs Borgestad will implement activities to secure a lower cost base going forward and focus on order log for low season already at this stage. Agora Bytom has a good momentum, and Borgestad expects the occupancy to increase, including increased revenue and EBITDA going forward. Thank you.
Thank you very much, Pål, and thank you, Bendik. As mentioned in the introduction, if you have any questions, please feel free to write them in the chat. We have a few questions, and I can start regarding the real estate property in Sweden in Bjuv that you mentioned, Bendik. So it was a question from one of the listeners regarding the values.
I mean, because we have two different valuations on the property, and the question is related to if those valuations are in line with the sale price that has been negotiated or if it's higher or lower.
Yeah. Borgestad had a completed valuation in 2022 for the two properties in Bjuv, and those valuations are then based on, of course, the interest and market rates at that moment. Those two valuations are in line with the transaction price that we have agreed with Bjuv. Bjuv municipality has also ordered an external valuation, and that valuation is also in line with the transaction value. I would say it's at the same value.
Okay. That's supportive. That's also, as we say, the reason for why we are expecting the transaction to go through, because now there are multiple valuations supporting the negotiated price.
Yeah. Thank you. And then to Höganäs Borgestad, you mentioned the cost-cutting measures. Can you provide any more specific details on?
We are outlining the details now. We have a lot of rent, which we are looking at, and also, of course, other parts of the cost base. It is about finding the balance between having a sufficient base for the high season while reducing the cost as much as possible during the low season. We need to find the optimal balance there, but we are looking at it and will be implementing it in the months ahead.
Good. Of course, if you follow the company for a while, you know all about the seasonalities, so it will be interesting to look at Q2 going forward. In Agora, in the, I think it was a Q3 or Q4 report, it was mentioned that the parking facility could be converted into a consumer store for groceries. Yeah, any new developments on that?
We are still working on it. The prospects look good, and the financials also look good. What we are working on is local permissions, etc., and of course, negotiations with potential tenants. I would say that the timeline is a bit extended, but I expect that we have a final communication by the end of the year, if it's possible or not.
Yeah. Good. That was the questions that were asked in the Q&A chat. If you have any additional questions, please feel free to reach out to Arctic or to management directly. Yeah, I think that's good. Thank you very much for a good presentation.
Thank you.
Looking forward to the rest of the year.
Thank you.