Thank you for standing by. My name is Paulie, and I will be your conference operator today. I would like to welcome you to the Alimak Group Q1 presentation conference call. At this time, all lines have been placed on mute to prevent any background noise. Should you require any assistance, please press star zero on your telephone keypad and an operator will come on the line to assist you. Thank you. I would like to hand over to Ole Kristian Jødahl. You may begin your conference.
Thank you. Welcome to this Q1 2022 conference call. With me today, as always, I have my CFO, Thomas Hendel. If we turn the page and look into the business highlights. As you know, we are now entering step 3 of the New Heights program, where the focus is profitable growth. I'm happy to see that the margin improvements continued during the quarter, driven by revenue growth and also improved gross margins despite an increasingly difficult macro environment. Focus on activities and investments continues and it's of course to further drive profitable growth both on the sales side and also into product and service development.
I think it's also important to highlight that our business is highly contract driven, and that also means that we can have high fluctuations between months and also quarters on the order intake side. As a group, and myself, I'm not at all concerned about the order intake level itself in this quarter. I regard this, with the exception of some comparables, you know, that this is natural swings between months and quarters. If we turn the page and look more into the Group quarterly summary. Order intake was down 2% in the quarter, 9% organically. We saw strong organic growth in Industrial, continuing. As I said, otherwise we also have what I would call natural fluctuations in the quarter.
Strong order intake continue on the service side, part of our strategy and something that should have more, much more stability to it as we see. Wind reported a continued drop also as expected. We're coming back to this. On the revenue slide, we were up 11% in the quarter, 3% organically. With the strong organic increase in construction, industrial and Facade Access and wind again down as expected, due to the situation coming in from last year. EBITDA increased to SEK 107 million, up from SEK 95 million last year, and the margin improved up from 11.2%-11.5%. It's driven by revenue growth and improved gross margin.
also important to note is that our investment into sales and product development is ongoing, and that's something we also see comparing year-over-year. If we turn page and we move into Facade Access. Order intake was down 8%, down 18% organically. it's still a slow market for new equipment within high-rise buildings, so it's not so many closures yet, but we see clear signs now of increased activity level. we foresee that the market and this will improve going forward. we also continue to have a very solid order intake growth on the service side, which is positive and part of the strategy.
Revenue were up 28% in the quarter, 17% organically, and is due to stronger equipment and service revenue across all regions. Good activity level on that side. EBITDA increased to SEK 4 million, up from a loss of SEK 6 million last year, and margin was then positive 1.5%, up from a negative 2.5%. And again, also driven by higher volumes and improved growth margins in services. But of course, also now, you know, we have, with the uncertainty in the market, we see increased raw material costs and supply chain challenges, which is of course also affecting this division, but something we have been able to manage in a solid way, I would say, up to now.
We also expect that we will be able to handle this going forward. There is a high uncertainty to what's coming, of course. If we move to next page. This, as you know, is the Q1 where I'm running this business and that feels good. It gives me, of course, an opportunity to get much more into the details and understanding this business better, which I feel that I already am very well into. We continue our activities to improve both sales and profitability. I'm happy to see that we are making steps in the right direction basically every day. We are also working on expanding, as I announced last quarter, to our product range for low and mid-rise buildings.
In that sense, broadening our addressable market. We have launched during the quarter a CoxGomyl 1000 Series, which is a modular self-powered platform intended for the U.S. market. We have actually also reopened manufacturing operations in Dubai, which should then enhance and are enhancing our competitiveness in emerging markets. This is a manufacturing location which used to be here in the old Cox times. Some years ago, were closed down. We're only doing some smaller things, but now we are really back, and we are manufacturing what we call the CoxGomyl 4000 Series now in Dubai. Already taking orders and we see very nice prospects for this going forward. If we turn to next page and we move into construction.
Order intake was down 14% in the quarter, 19% organically. Important to note here is that we have tough comparables year-over-year. Last year, we had a very solid order intake on the rental side, which is now more on the normal level this year. We have a positive order intake development for new equipment, and also in services. We also see an increased base of transport platforms in Europe, which is now an important part of our strategy. The revenues were up 16%, 9% organically, and continued good development across the full portfolio and also all geographies.
EBITDA ended at 41 million SEK, up from 35 million SEK, and a margin of 15.3%, up from 14.9%, driven by higher volumes and good cost control. Also here we are doing investments both in sales and in R&D that will help fuel profitable growth going forward. Next page, please. We are doing investment and have now put in place dedicated and focused sales resources in Norway and Denmark, places where we have not had this before. It's been managed from outside, and we immediately see positive effects from this and something we will continue to do and review around the world. We have had an organization in UK which has been focusing on selling used equipment.
Now we are putting more structure into this. We are putting up a global structure so that we can be a more active player in bringing in used equipment, bringing it up to shape and reselling it. We are also strengthening our product management and R&D investment into the mast climbing work platforms and transport platforms. As I talked about earlier, this is an important growth area for us, so we are strengthening our position here. We also continue to drive our digitalization strategy, and we get a lot of positive responses from our customers, both related to the building information models that we have released, the SPS 300 customer portal connected to that launch, and also our connected assets.
That's good, of course, being market and customer focused in this sense. If we turn to next page, we move to industrial. Here we continue to see a very strong order intake. As I guess we see this from all industrial companies. This market is strong and so for us, as we have a very strong quarter, up 37% and 28% organically. It's higher equipment and service order intake globally. We also see more positive developments for our traction technology. This was a company we acquired in Bergen 2014 and has basically been focusing in Bergen in Norway. Now we move forward with this technology, and we want to do more globally, and this we see effects from.
Also contribution from the new products that were launched for emerging markets and also special engineered innovations. We have a revenue growth of 12% in the quarter, up 5% organically. Higher volumes driven by strong service and core sales globally. EBITDA decreased to SEK 46 million, down from SEK 50 million last year. We are now reporting a margin of 19.3% versus 23.7% last year. The highly profitable quarter from 2021 due to the favorable mix and also somewhat lower selling expenses. This is the division that we have invested the most since the start of it a year ago into sales and segment structure.
It's also paying off, but that's one of the reasons why we see a slight decrease in margin quarter-over-quarter. We turn to next page, and then dedicated and focused sales force. We are focusing on strengthening global and regional sales and segment focus. Also of course now what is good for this business and in division in general is that when the markets are opening up, we can have much more customer interaction again. That's something we see. We also now, due to the current situation with the war in Ukraine, see of course an increased activity in energy-related segments, and these are segments that we traditionally have been strong in. We expect also to continue to develop well within that business going forward.
We developed last year a solution for offshore support vessels, you know, supporting and connecting offshore wind turbines. Providing access to wind turbines offshore in heavy weather conditions, and we continue to sell very well from this solution. That's a good business, and happy to see that development. If we turn the page to wind. Order intake was down 22% in the quarter, 28% organically. Still it's, as we have announced earlier, the effect of exiting of tower in Tarnów, and the volume impact in the quarter one was 27 million SEK year-over-year. The fact that China continues to be challenging. Revenues were down 20%, 27% organically, and tower internals impact of quarter one was 20 million SEK year-over-year.
Also driven down somewhat by the lower order backlog in China. This, as I said, you know, the exiting of the tower in Tarnów was something we decided beginning last year, and we were driving out throughout last year, and we should also see affecting quarter one this year. Now this is basically something which is, and should be behind us. EBITDA increased to SEK 60 million. Very happy to see that and up from SEK 15 million last year, a margin of 11.6%, up from 9.1% last year. It's due to our and this division's, you know, strong drive to improve margins. They have very well control over their business and also supported somewhat by a favorable product mix in the quarter. Turning page.
What we are seeing now, of course, which is positive for this division, is that there is a huge increased focus on renewable energy around the globe. Something that should support this division solidly going forward. We continue to drive our product development focus to both expand on the product side and on the service side. We are working with our results and to mitigate the effects of the raw material and price cost increases. We have managed prices in a solid way. Also, as you know, the strategic review of the wind division that we announced last quarter, it's ongoing and as soon as we have something to announce or something more to talk about there, we will come back on that one, of course.
Turning page and the financial summary, and then I leave the floor for Thomas Hendel.
Thank you, Ole, and good morning, everyone. As always, I have the overview here for the financials. I'm happy to report back that we have increased the backlog with more than SEK 100 million in the Q1 , and it's mainly industrial division with good margins. We have also clear revenue growth, as you have seen, up 11% reported and 3% organic, and further margin improvements following the revenue growth and also gross margin improvement. Lower cash conversion this quarter, but it's mainly a timing effect, and I will come back to that. Next page, please. Earnings summary. The EBITDA improvement, driven by revenue growth, as I said, and improved gross margin.
The financial net is a little bit lower this year compared to last year, but it's a combination that the interest net as such is improved, but the currency effect has the opposite impact. The tax rate for the quarter is 23% compared with 25%, and is basically reflecting the country profit distribution in the group. Next page, please. The EPS results for the period. The net income is SEK 70 million compared to SEK 63 million, and the earnings per share growth is 13%, following very well the operational result improvement, which is also 13% up. Next page, please. Cash flow. Cash flow from operations SEK 36 million, as I said, basically we had good cash collection in the quarter with somewhat reduced overages, actually. However, we had lower conversion this time.
As you might be aware, we had very strong cash conversion all year 2021. The timing here is coming basically from three areas. Firstly, the timing of shipments leading to that we have increased goods in transit, meaning revenues in the short term should come. Then we have fewer payment milestones in the projects this quarter, leading to an increase of the contract assets. It's also timing effect. Selectively, we have built up inventory to secure future deliveries. These are the main reasons for the lower cash flow this quarter. As I said, it's basically timing effects. Next page, please. Net debt. Stable since year-end, and our leverage is still on a low level, at a strong 0.56 compared to the 1.29 last year's Q1 .
From a cash point of view and the flexibility point of view, we have over SEK 2 billion in unutilized credit facilities. I want to repeat again that our capital allocation priorities remains, which is number one, profitable growth. This time we have also seen now in the comparables on the sales area and the development as Ole mentioned. Secondly, the M&A area, which we foresee increased activity, and we're working hard on that in the management team. Thirdly, that we have to deliver upon our dividend policy. This time we have a proposal to the annual general meeting for a 59% dividend of the net income, which is well in the range of our policy of 40%-60%. Next page, please, and back to Ole.
Yeah. Thank you, Thomas. If you then look at the summary, and the focus is of course on the profitable growth. Happy to see that we are seeing continued margin improvements delivered in line with the New Heights program and supported then by increased volumes and improved growth margins, which also means that we have pricing power in our business, and we do have that in all our divisions. We are the leading player. Of course, the war in Ukraine and also the continued lockdowns that we have seen in China, which is also seeming to continue, have of course also brought further uncertainty into the markets globally. It is a challenging situation to manage.
We have one factory in Germany, which is getting most of its steel from the Eastern Europe side, where it is turbulent, very turbulent these days on reliability of supplies and of course knowing the cost. The team there have managed, I think in a very solid way, so far. We also announced yesterday that we are now you know exiting our business in Russia. We announced when the war broke out that we stopped all deliveries and sales to Russia and Belarus. Now we also initiate the exit of our business unit that we have in Russia. Something that will now be happening in the coming weeks and months.
As a group, I'm happy to see, you know, that we are further set for more margin improvements and continued growth. We continue to manage and mitigate the things around us in a solid way. We are driving our programs. We are expanding our range of products and solutions. We are continuing to drive service penetration, and this is a very important part for the group and something we continue to grow quarter after quarter.
It's of course to do more spare parts and service of our existing setups, but also the fact that it's more and more products or fixed installations out there, especially within industrial and the Facade Access that have now been up for 20, 30, 40 years and are in need of refurbishment or replacement. Here we have a very strong position, I feel, to be able to support that market need, and we do. We continue our efforts in R&D and digitalization. As I said, also now we start to have things here that we are testing and running with customers and getting good feedback. We also increase our M&A efforts, as I've said earlier.
We now have much more stability and a solid base that I feel that we as a group are ready to move forward here. I expect that we will be able to report upon in the future. If you come into the divisions, we have a solid base, very solid base, I would say, in industrial. We have a very solid base in construction. These divisions are continuing, and we have a clear growth path forward. On the facade access side, we are improving, and we have a solid plan in place to, yeah, we might call it a turnaround because we have a lot of margins to improve here. That's ongoing, I feel, with a strong drive.
For wind, we should have now seen the worst, and that should be behind us with this takeout of the tower internals and the China effect. The worst of that should be behind us now. Yeah, I feel that we are well set going forward. I return to next page and move into the Q&A.
At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes through the line of Johan Dahl. Your line is now open.
Yes, thanks. Hi, Ole and Thomas and operator. Just a few questions quickly. On the order backlog, can you just address the risk-
With the terms and conditions, given the substantial cost inflation, I guess you're seeing how will you be able to offset that given the duration in that order book?
Yes. Hi, Johan. Good question. It's of course something that is a little bit different from division to division. The biggest challenge we have in Facade Access, where we might have contracts that are, you know, to be installed three-four years down the road. We are working on projects now that were signed up to three years ago or maybe even more, you know. That's of course a tough challenge, but what we are doing is everything that is possible, you know. We have discussions with our customers. We show them what we are now exposed to. We work with our suppliers. We delay some, we move some, you know.
So far we have been able to manage this in a reasonable way. Of course, it's affecting us, but still, as you see, we are able to move forward and improve our position. If it wouldn't be for this, we would have been even stronger. There is also a lot of uncertainty still going into second quarter, of course, because the war started and the lockdown also now in the latter part of quarter one. There is an uncertainty absolutely into quarter two. It's very difficult to say how, you know, and what will bring going forward. We feel that we are, you know, well set to manage, and we are managing this every day.
Can I talk about sales, as you're putting a lot of efforts into, you know, innovation, sales force, et cetera. How much are you incrementally adding in 2021 versus last year? If you can talk about money or FTEs or just to put it into context.
Yeah. That we have not. Thomas, maybe you want to say or you-
Yeah. It's just by reading the report, it's obvious that it's the sales and the development areas within the SG&A area that we have increased. If we adjust for the currency effect, we talk about in the magnitude of about SEK 50 million quarter-over-quarter.
Yeah.
Okay
a fair assumption on sort of an annualized basis to look at, for the sort of those growth investments.
Thomas?
I would say that we have, I mean, we gradually increased our activities last year. I wouldn't say that you should, let's say, in your models, you shouldn't make automatically another incremental increase. No.
No, this is the figure year-over-year and we will of course also continue to invest, but that it will be some sort of linear thing. It's not. We do you know a balanced approach thereto. That will you know fluctuate a little bit based on what we see as potential and how we manage our results.
Yeah, I think.
Thomas?
Sorry, Johan.
Thomas.
Yeah, I will say, you can just to conclude on what Ole said. I think that you will see certain increases in our efforts in absolute terms when we feel it's good timing, but not relative to revenues.
Yeah. On wind, I appreciate it's difficult to talk about, but how much time are you sort of giving this review? Can you give us any sort of update on what type of sort of things you're primarily looking at right now?
The timing of it's of course always difficult, but I also want to conclude it as, you know, as fast as possible. What we have said, we would expect to be at some sort of conclusion by the end of the year. It should not be. I don't want to give a date, you know, but spending a year on such a thing should be ± enough. It's basically all options on the table, you know, which also could include divestment. There is a lot of things happening in this market now, but whether it change the fundamental, it's of course long parameter that comes in that we are taking into this review.
It hasn't changed the fact that we are continuing on the same path that we announced a quarter ago, you know, that we want to make a full strategic review.
Thanks.
Thank you.
Again, if you would like to ask a question, press star, then the number one on your telephone keypad. Your next question comes from the line of Gustaf Österberg. Your line is now open.
Thank you, operator. Hello Ole and Thomas. Could you just give some more sort of color on the order intake increases in the industrials and construction business? Sort of, is there a common denominator there or what's sort of driving that positive trend?
Yeah. Hi, Gustaf. You know, on the industrial side, it's been, you know, you see that all industrial companies basically are reporting and have been reporting for several quarters a strong market, and that's also what we see globally. It's we have a global presence, and we see global demand, and we are the leading player here, you know? We are getting what we should get. Then we have also invested further into this organization so that we have improved our presence. We see that this is paying off, you know, being close to customers and being out there supporting, and they know us, you know? So we get business there and take a lot of business.
Strong development been for several quarters now, that this will be some sort of linear. We also need to remember that also industrial, it's a lot of projects. It can be smaller projects, and it can be big projects. It can also be fluctuations, you know, natural between quarters. It has some more stability to it than maybe some of the other divisions. Construction also very solid, I must say. You know, the service order intake going up, the growing nicely, the new sales of the machines going up. The thing that pulled that down was the rental, and that had some swings to it, you know. It had a very strong Q1 last year, rental. Maybe a little bit pent up first quarter last year, you know.
The rental order intake now is more normal, I would say, than it was first quarter last year. Nothing, you know, worrying or anything in construction. I think that's a strong position. We have a good business. We are doing the right things, and it's progressing day by day. That market is.
All right. Thank you very much.
Yeah.
Just a quick follow-up on the industrial side. Are you feeling sort of, do you have a closer read on whether you're taking share, or is that sort of a market-wide increase that we're seeing in recent quarters, including Q1?
We are basically taking business in multiple segments and around the globe, so it's nothing really that points out. What we do see is that, of course, you know, the energy segment is coming back even stronger now. That might be a stronger driver going forward. That's a segment, you know, or a sector where we traditionally have been strong. The old Alimak people had a strong business there, you know. We expect also of course that we should have our fair share of that going forward. The general, you know, positive sentiment, and we have a good presence in Asia, in Europe, in North America, and it's all moving.
What is also, you know, strengthening a little bit further now compared to, you know, the first three quarters last year is that our service business is stronger in industrial. This is because markets are opening more up, so it's more possible. You know, it's not these restrictions on travel, et cetera, anymore.
Got it. Thank you very much. Just sort of final quickly on the capital allocation priorities. I appreciate you, Thomas, sort of gave us the ranking there again. On M&A, sort of what type of M&A are we talking about there? You talked about add-ons previously. Do you feel it's the sort of idea to wait and see what the strategic review in Wind sort of arrives at, which type of conclusion you arrive at there before you start to think about M&A, or is there sort of a parallel M&A agenda going on as well?
I would say that it's a parallel agenda. Of course, you know, if the Wind would turn out to be a divestment, that will of course bring even more means, you know, to do more. There is a lot of opportunities for us out there. We already have a very strong position, you know, from an investment perspective. Absolutely that's something we drive in parallel, and I can't say that we have anything now that is on hold due to the strategic review of Wind.
Got it. Those were two questions from me, so thank you very much. Have a great continuation of the day.
Yeah. Thank you. Thank you. Thank you.
There are no further questions at this time. I would like to call the call back over to the presenters.
Yeah. Thank you. I would like to thank everyone then for listening in and also those that asked good questions. That's always nice. Maybe lastly, a thank you to all the employees of the group, you know, for solid work and for driving the group forward. Thank you. Until next time.
This concludes today's conference call. You may now disconnect.