Hello everyone, and welcome. Thank you for joining us today as we present AFRY's result for the first quarter of 2026. I am Linda Pålsson, and I am the CEO of AFRY. I will begin with some highlights from the quarter before handing over to our CFO, Bo Sandström. After that, we will open the line for questions. In Q1, our strategy execution continued to progress according to plan. Our order backlog grew 6.4% year-over-year to SEK 21.5 billion, which is a testament to the strength of our client offerings and our focus on sales execution. Our strong order backlog position us well to drive profitable growth in line with our strategy going forward.
In the quarter, we improved profitability with an EBITDA margin that increased to 7.5% from the calendar-adjusted margin of 7.1% in Q1 last year. This was mainly driven by a continued positive development of the utilization rate, which improved 1.1 percentage points. We saw strong performance in our global division, Energy and Industry, while results in Transportation & Places were weaker. Net sales declined 4.3% organically in the quarter, and that is mainly a result of a challenging market and the capacity adjustments we have made over the past year. Global uncertainty remained high at the beginning of the year, which continues to impact the market conditions in some of our segments. As we conclude the first quarter, we are now approaching the end of a comprehensive restructuring phase aimed at optimizing our capacity and portfolio.
With steady development in Q1, we are moving in the right direction, and we will continue to execute our strategy to reach the performance levels we are targeting. If we then going into the divisions, let's begin with Energy. Here, we see a continued favorable market across the sector, which reflects in a strong order backlog development in the quarter. Investments in grid capacity and resilience of energy supply chains are driving strong demand in several areas, most notably in transmission and distribution. Demand is also solid in hydro and pump storage, as well as in nuclear. In the quarter, the division delivered positive organic sales growth and EBITDA margin improvement. That was driven by the solid performance and the higher utilization in several of the Energy segments.
Moving on to Industry, here we continue to see that persistent market uncertainty is impacting overall demand as clients remain cautious around investment decisions for the larger project. At the same time, demand remains strong for defense-related solutions that strengthen resilience and national security. This continues to be a key growth area for AFRY going forward, and we are therefore reinforcing our strategic focus on security and resilience. To support this, we launched a new defense segment within the Industry division during the quarter. The segment brings together AFRY's technology and engineering expertise to better support clients and partners in the Nordic defense sectors. With more than 70 years of experience, we will continue to deliver our leading solutions across engineering, cybersecurity, digitalization, and resilience. In Q1, profitability within the Industry division improved despite declining net sales.
This was mainly driven by efficiency measures and higher utilization. Moving on to our final global division, Transportation & Places. Demand in the transport infrastructure remains stable. It's supported by large national investment programs. We also here see increased defense-related investments across the infrastructure sector, with focus on strengthening infrastructure resilience. Meanwhile, conditions in the real estate market continue to be challenging. Competition is high for the projects that are available, which leads to weak price development in our main markets. To address the challenging market environment and strengthen our position going forward, we have implemented restructuring measures and other necessary changes in the real estate business over the past few quarters, including organizational adjustments and rebranding initiatives. These changes, combined with the challenging market, have pressured our performance in parts of the division this quarter.
We expect that the impacts of these changes have phased out in the second half of the year while we continue to navigate the market conditions in the real estate sector. As mentioned, we strengthen our order backlog during the first quarter with several new client projects. As usual, I would like to highlight a few examples. First, I was pleased to see us further strengthen our partnership with Statnett as AFRY was entrusted to lead the overall project execution for a new transformer station. This is a key grid infrastructure project in Norway that will strengthen the power system to meet growing electricity demand driven by industrial development and electrification. Within our chemicals and biorefining segments, we secured another important partnership as energy company Wega selected AFRY for the pre-engineering phase of a new biorefinery facility.
Once realized, the facility will become Finland's largest biogas plant, producing clean energy and supporting sustainable agriculture. Finally, we were awarded a contract by Berlin's water and wastewater utility to design a new ozone treatment stage at one of the city's wastewater treatment plants. The facility serves around 300,000 residents, and by improving the ability to remove micropollutants, AFRY will help deliver a resilient and sustainable wastewater treatment for the city. Moving on, a key focus area for us in our profitable growth journey is to focus on capturing opportunities in sectors with long-term growth potential. In the quarter, we announced an agreement to acquire AMC, a leading mining consulting firm based in Australia. AMC has a strong global reputation and deep sector expertise, particularly in the early phases of mining projects.
By joining forces, we will further strengthen AFRY's mining and metals offering and expand our ability to deliver comprehensive solutions across the full life cycle for leading clients in the mining industry. AMC also brings a strong data foundation that enables data and technology-driven mine design, capabilities that position us well to meet growing client demand. This acquisition is really a strong strategic fit for AFRY. It's supporting our priorities in terms of segments, geographic presence, life cycle offering, culture, and size. I'm very much looking forward to welcoming AMC's employees to AFRY in the second quarter when we expect to finalize this transaction. Another area that is a key focus for us going forward is of course artificial intelligence. Strengthening our delivery through AI is a core part of AFRY strategy.
We are applying AI across multiple parts of the business and are continuously exploring new digital opportunities to remain at the forefront of this development. As a part of these ambitions, we have entered into a strategic collaboration with a Swedish tech company, Endra, which has developed an AI-based platform to support engineering in building design. We are now evaluating the technology from the inside, and early results indicate strong potential to automate process and improve system and design accuracy. These types of solutions have the potential to amplify our expertise and enable our consultants to focus more on the deeper analysis, sharper insights, and greater strategic impact. So, very excited to follow this partnership going forward. Now I would like to hand over to our CFO, Bo Sandström, who will take us through the financials in greater detail.
Thank you, Linda. I will cover the financials for Q1 2026. Quarter one showed net sales of SEK 6.3 billion and EBITDA excluding IAC of SEK 473 million. Adjusted organic growth remains in negative territory in line with last quarter. On rolling 12 months, we're currently at SEK 25.3 billion on net sales. Rolling 12-month EBITDA margin increased slightly to 7.3% despite a negative calendar in the quarter. The order backlog continued to develop favorably and is reported at SEK 21.5 billion, an improvement of 6% to last year and 5% sequentially. The order backlog is the highest ever reported. The majority of the sequential improvement stems from the Energy division, which is now 16% higher than last year. The remainder of the increase comes from Transportation & Places, in particular from road and rail.
In Q1, with the net sales of SEK 6.3 billion, we report adjusted organic growth of -4.3%, same as last quarter, where volume continued to be pressured by capacity adjustments related to our restructuring agenda. The market price pressure in some segments seen in the latter part of 2025 continue in the beginning of 2026. This is particularly evident for segments within Industry and Transportation & Places. Total growth is reported at -6.3%, affected materially in the fourth consecutive quarter by FX movements. Structural effects in Q1 relate to the net of the acquisition of Reta during 2025, and three smaller non-core divestments completed in the quarter. The negative adjusted organic growth in Q1 was the same as in Q4 2025, but with some movements in respective division.
Global division Energy is now again showing organic growth despite strong comparables from last year. Industry remains at -6% adjusted organic growth, reflecting a continued challenging market and capacity adjustments during the last 24 months. Transportation & Places declined further in the quarter as a consequence of capacity adjustments in the end of 2025, combined with a continued weak real estate market. We report a utilization of 72.2% for Q1, more than a percentage point higher than Q1 last year. We see improved year-over-year utilization for all divisions, in particular for global division Industry. This is the second consecutive quarter where we report an improvement to last year, and it is a continued important step for our strategic efforts to improve operational efficiency in AFRY. The level of improvement this quarter was, however, partly supported by weak comparables.
We will continue our focus on improving this metric to be one of the main drivers of profitability improvement over time. EBITDA excluding IAC is reported at SEK 473 million, with negative calendar effects of SEK 11 million. The EBITDA margin was at 7.5%, an improvement from 7.3% reported last year and 7.1% last year calendar adjusted. Currency movements have limited impact on the EBITDA margin, but in absolute terms, we estimate a negative currency impact of SEK 17 million on EBITDA compared to last year. As in last quarter, the global divisions Energy and Industry support the margin development of the group, and particularly for Industry, we see positive trends that the division is coming out of the restructuring agenda with improvements in utilization, supporting the EBITDA margin development despite negative growth.
Energy, supported by improved utilization and strong backlog development, managed to improve from already high levels. The margin in the quarter in Transportation & Places was pressured by effects from restructuring and other measures during the last two quarters, in combination with the continued challenging real estate market. We report SEK 47 million restructuring costs as item affecting comparability in Q1, bringing our total to SEK 239 million in the ongoing restructuring program. The restructuring costs again primarily relate to redundancies across the group, and for Q1, now more focused towards support functions. We've made significant progress in our efforts to reshape the portfolio, and as we have now moved into 2026, we intensify our efforts on addressing the cost base.
With only one quarter to go in the restructuring program, we reiterate our estimate that the total restructuring cost will be at the upper end of our guidance of SEK 200 million-SEK 300 million. Following a record strong operational cash flow in the fourth quarter, we have a more moderate operational cash flow in Q1, somewhat lower than last year. On a rolling 12 months perspective, the operational cash flow remains strong. Available liquidity increased to SEK 5.2 billion, as we are prepared to distribute dividend and close the AMC acquisitions during Q2. Our financial position remains strong. We see a marginal sequential increase in net debt and a corresponding increase in net debt over EBITDA.
Dividend distribution and the completion of the AMC acquisition will increase leverage further over the next two quarters, but we expect to close the year at or below our financial target. With that, I leave back to you, Linda.
Thank you, Bo . To summarize the first quarter of 2026, the execution of our Unlocking AFRY strategy continues to progress according to plan. As part of this, we are now nearing the completion of our restructuring agenda. We saw steady progress in both the utilization rate and EBITDA margin in the quarter as a result of the structural measures to improve efficiency. We also, again, strengthen our order backlog, which is another key enabler for profitable growth going forward. At the same time, the overall market uncertainty remains high, and it is evident that market conditions in some segments do not yet support our ambitions for profitable growth. With that said, looking ahead, we are focused on capturing growth opportunities in the market. We continue to prioritize sales to maintain a strong order backlog and build on this foundation to drive backlog conversion.
We will also continue to advance key initiatives to harmonize our operation, improve efficiency, and sustain our positive utilization trend. Finally, we will complete the restructuring agenda in the second quarter as planned, while working to ensure an effective transition out of the restructuring phase to enable continued strategy execution at full speed. With that, we will open up for questions.
Great. Thank you, Linda and Bo. Now we will open up for questions. Please use the Raise Your Hand function in Teams if you have a question. We will begin with Julia Sundvall from ABG Sundal Collier. Julia Sundvall, if you would like to unmute and ask a question.
Oh. Oh, can you hear me now? Perfect. Okay, a few questions from my side. I would like to begin with Transportation & Places that are quite weak. You say it's because of the real estate market. Has it become worse during the quarter? And which geographies do you see it has become worse? Could you just give us some flavor on that?
I can start with the market. Well, you know, the building market has been weak for some time, and we see that in the price development for the opportunities that are in the market. We see actually price pressure in parts of the real estate business, and we see that actually across the Nordics.
Yeah.
You know, just to add on that, I mean, we're saying that, of course, the market is not supporting the development, particularly then for Transportation & Places looking at the real estate business. That's not the only thing that we see in a sense in Q1 results. We also see a prolongation of many activities and restructuring efforts that we've done over the last couple of quarters. We see that they, in combination with the continued weak market, that affects the profitability in the quarter specifically.
Yeah, yeah. A combination of several factors. Yes, I see. My second question, the number of FTEs is still down quarter-over-quarter. If I'm not mistaken, you said in your Q4 report that you were going to focus on the support functions from now on regarding your restructuring program. We see the FTE is down during the quarter. How come? Could you give us some more on that?
No, I mean, you see the FTEs, it's always tricky just, like when you look at utilization, it's always tricky to look at on FTEs from a sequential perspective, because the quarters have different characteristics. You're right. We continue to be down on overall FTEs. Then when you look at support functions specifically, we actually made quite significant adjustments at the very end of the quarter in relation to support functions. That is not reflected in the reported FTE numbers, which looks at the average for the full quarter.
Okay. Yeah, makes sense. Just a question regarding your debt. Your net debt- to- EBITDA is now at 2.7x. That's above your margin target. How do you view this together with the recent M&A?
We've always had a very strong seasonality of our leverage. When we look at our leverage target, that is reflective of the end of the year. The slight uptick that we have in leverage between Q4 and Q1 is not abnormal in terms of normal seasonality. We should have ample room to cover the M&A and still be on track to be at or even below the leverage target by end of year.
Okay. Makes sense. Just a last question from my side, regarding the geopolitical uncertainties. Have you seen any effect of this in the quarter? I see, the Industry order backlog is down somewhat. Is that a reason because of the geopolitical uncertainties, or is there other reasons behind it?
Yeah. The geopolitical uncertainty continues, and the impact it has is a little bit of a start-and-stop mechanism in some of our projects. We're not directly impacted, but we are indirectly impacted by this, since it's disturbance in our clients' investment programs. Yes, we are to some extent impacted. But I would say the majority of it comes from delays in large CapEx projects. We are balancing the situation with a combination of smaller projects and managing the projects that we have in a smart way.
And if.
Okay. Perfect.
If you look at Industry, the Industry backlog, and link that to global uncertainty, I think what we're seeing from a short term, you know, kind of global uncertainty perspective, that is not reflected in the development of the Industry. I think, you know, we've been for a longer period of time, we've had global uncertainty, you know, from many different aspects. That is of course pressuring the amount of larger projects in Industry, in the Industry division. That's what we're seeing a bit more over time but not really reflecting the short-term uncertainties.
Okay, perfect. That was all from my side. Thank you.
Thank you, Julia. The next question comes from Johan Sundén from DNB Carnegie.
Hey, Linda, Bo. Hope you can hear me. Three questions from my side. Firstly, it's on the order backlog. Just curious to hear some reflections on pricing levels in the order backlog. Are you satisfied with them, or are you taking some kind of strategic contracts to build volume?
We're very happy with the development of the order backlog. We're also actually happy with the margins of the new projects in the order backlog. It's very much of the new backlog is related to. Well, it's actually a good spread, but I would say the majority comes from Energy. We are happy with the margin development of the backlog in that part.
That's clear. If we stay on Energy, and I see the order backlog development, which is really encouraging. At the same time, we're seeing number of FTEs coming down, both sequentially year-over-year in the Energy segment. How should we think about the kind of bridging the roll down of FTEs in Energy division versus the kind of growth potential from the order backlog and activating that?
Well, I think Energy is the clearest example. As you know, in our plan, we have first the profitability uplift, then we have the growth, the profitable growth path. I see that Energy is now where they should be in terms of profitability. Now we really kick off the growth in Energy, and we have the backlog to support that. We are now aiming to grow faster in Energy than we have done in the last couple of quarters.
That work to kind of recruit in Energy segment starts now, basically. You've been holding that back until today.
That it has started. It takes some time before you can see it in the numbers.
Okay. So, organic growth acceleration, it is a little bit too early to anticipate that to happen in the Energy segment already in Q2, right? Great. The final question is also staying on the FTE numbers. Just, of curiosity on when you look at the kind of FTE split between the various segments, I know that group common and eliminations has actually an uptick in number of FTEs in Q1 2026 versus both Q4 2025 and Q1 2025. How come that?
Yeah, I mean, it is well spotted. You know, kind of one angle of it is what I said on Julia's question. You know, the changes that we've done, you know, kind of we did that at the very end of the quarter, so that's not reflected in the numbers. You know, as you remember, during last year, we took a big step on actually, you know, consolidating everybody that worked, you know, kind of with support functions, into that one category. That work, you know, we made that, you know, kind of 80% through at that point of time.
We've had some, you know, kind of continued actually moving individuals from the divisions over to the group functions. Which is not fully, you know, it's not fully restated in that sense between the different categories. You see a bit of effect of that as well.
So, more like, intra-group shifting around people rather than that you're recruiting at the headquarters?
Exactly.
Perfect. Thanks for that. I get back in line.
Thank you, Johan. Just a reminder that if you have a question, use the Raise Your Hand function so that we can catch you. The next question is from Jesper Stugemo from Handelsbanken.
Yes. Good day. Can you hear me?
Yeah.
Hi, Jesper.
All right. Great. On the commentary in Transportation & Places, you highlighted the weak result as a part of the restructuring. I was thinking that this should yield the opposite result for you. When do you see some improvement from the efficiencies that you have implemented? And on the utilization rate there, could you say something, how much it's up year-on-year, 1 percentage point more or less, or flat?
Okay. Well, I start with the first part of the question. Restructuring measures, I think it was written that it should have the opposite impact. Yes, we of course do this because we believe it's the right thing in the end, and we are holding our direction going there. It takes some time to see the impacts in some parts of the restructuring agenda. Especially then in Places, we are expecting this to turn upwards, but it's taking a little bit longer time than we expected. Yes, you are right. We're doing the restructuring to get ourselves in a better position in terms of profitability. We can see it slightly improving in the utilization rate also in Places part in Q1.
That's sort of the story that we want to build further on.
All right.
To guide you a bit on, you know, kind of utilization development. Utilization development for Transportation & Places is not quite as strong as for the group overall, but close to 1 percentage point. That's driven from the road and rail part of the business rather than the real estate operations.
Okay. Thank you. That's perfect. A follow-up on prices here. You mentioned some price pressure and given the [sell revisions] this year, do you think that you can have a positive yield per consultant throughout this year? And do you see any new areas with price pressure in sub-segments or is it still the same weak areas as before?
Yes. In general, you can say it's the same weak areas that we have seen. As we have reported over the last couple of quarters, we have weak development in buildings or in places, and we have it in parts of the Industry portfolio. It's also there where we see the weakest price development this quarter. Of course, if we see more of that going forward, I wouldn't say that. I would say that we see it still in the same weak segments. We are of course working with measures to do that. We have talked about the restructuring capacity adjustments that we are going through now, but of course it's also about how we source to the projects.
We are scaling our ambitions also on global delivery centers as one example on how we are mitigating the sort of price pressure in these segments
Okay. Thank you. Just one last question from me on AI. It would be more interesting to hear your thoughts. You mentioned Endra here around efficiency and output. Yeah, if you can give us some more color on this, and if it's becoming more complex to run this through the organization as you also are implementing several restructuring initiatives, et cetera?
Yes, there was a lot in that question, but if we start then, then of course, AI is a vital part of our business, both sort of for our internal efficiency, but also for our external work or the projects that we deliver. You saw Endra here is one example of our engineering capabilities within buildings. We actually believe that our new strategy and the segment-based organization that we have chosen, enable us to work even faster with AI than we could before. We see there is a potential for both sort of increasing the quality and increasing the productivity. Again, I think our deep sector knowledge together with the AI tools will put us in a good position.
Okay. From the customer side, have you seen any new dynamics in projects, for example, lower contract values or you're moving from variable prices to more fixed price also here in the Nordics?
We haven't seen a mix, or a shift in the mix between fixed price and time and materials, not at least, not yet. We are quite used to work in these large fixed price contracts as well. It's a natural part of how we deliver.
A fair answer is that we don't see clear movements.
No.
In the customer dialogue, you know, as of now.
Yeah. All right. Thank you. Thank you, guys. Jumping back to the line here.
Thank you, Jesper. The next question comes from Johan Dahl from Danske Bank.
Yes. Good afternoon, everyone. Just a brief question on Transportation & P laces, again, you know, to just trying to get my arms around how sustainable that margin pressure is. Is it sort of correct to make the interpretation that as the order book is developing quite nicely in Transportation & P laces, there is still sort of fair prices to achieve in this business? Secondly, you know, the pressure margin , to what extent is that related to your ability to source competence in this quarter? Have you had to sort of source external supply of competence and that has sort of bumped up cost in the quarter? Just trying to understand how we should look at this margin level going forward.
Yeah. I'll try to answer those. I can start with the last one. No, not specifically, you know, kind of external sourcing in relation to this quarter. I think to go back to, you know, kind of the start of the question, I think, you know, it's very clear that Transportation & Places are covering two sectors that are behaving quite differently, you know, kind of at the moment. You have the stability in the transport infrastructure sector with, you know, reasonable price development, you know, a good starting point and, you know, kind of stability in general.
You have the quite weak market in the real estate, on the real estate side, that has been weak for a while, where we have, over the last couple of quarters specifically, we've done a lot of actions into these businesses. One of them, you know, kind of digging into, you know, kind of restructuring efforts, but also complementing that during this quarter with rebranding efforts. Where we have also had, you know, kind of pockets of attrition that we talked about a lot, you know, kind of during Q4. Those things playing out in combination has pressured particularly the real estate side of the business for the quarter, you know, as such.
It's very much, you know, kind of two different businesses under the hood of one division, and that's very clear for us, you know, in this specific quarter.
Yeah. If you then focus on real estate, that part of the business, have you sort of accelerated cost savings effort or exiting certain businesses to sort of mitigate this? Or will you sort of try to sort of bleed this out in the coming quarters?
I think we went into this restructuring phase with a very high pace, and we have continued to have that high pace throughout. To some extent, that's also what we're seeing in this specific quarter. You know, we're doing a fast pace, a lot of changes in the business, and we see that in the results of the quarter. I wouldn't say that we have accelerated it. In general, we're sticking to the plan that we had going in.
Right. Thanks.
Okay, thank you, Johan. That was all the questions we had today.
Okay. With that, I would like to thank you for joining us here today. We will now move on to our Annual General Meeting, which will take place later this afternoon here at our headquarters. Have a great day, and we look forward to speaking to you again in Q2.