CEO Camilla Ekdahl and CFO Michael Grindborn will present the report for the first quarter of 2024. After the presentation, there will be a Q&A. So if you're calling in, please press star nine to raise your hand and then star six to unmute your microphone when you're handed the word. And if you want to type in your question, please use the form to the right. And with that said, I hand over the word to you guys.
Hello, all, and welcome to the Balco Group quarter one report. It's me, Camilla Ekdahl, having this hearing together with Michael Grindborn, our CFO. First, for all new listeners, I will make a very short snapshot of Balco Group, who we are. Balco Group was founded in 1987 and consists today of several balcony and façade companies. We added two more companies to the group during quarter one, and I will, of course, come back to that later in the presentation. The head office is in Växjö, and the group has approximately 700 employees now, after the acquisitions. We are operating in two main segments, renovation and new build.
The core expertise is to supply glazed balconies and balcony solutions, primarily on the renovation market and to tenant-owned association, and also replacing the balconies with new glazed balconies, according to what we call the Balco Method. The Balco Method means that they have an old slab, which is damaged, and then we cut down the old slab, we put up a new slab, and we also make it with a glazing on. If you do that with a glazing from the brand Balco, you also have 90 years lifetime for the balcony itself. But of course, we can offer also other balcony solution as other open balconies, and we also have façade renovation into our portfolio. Balco Group is a market leader in the Nordics, but we also have a strong challenger position on other Northern European markets.
We want to take an active part in the green transformation, which is needed for the residential properties, and the reason for that is that all glazings of balcony results in energy savings. Simpler glazing can provide between 5%-10% energy saving, while Balco's patterned glazings can have a documented energy savings of 20%-30%, and that is a trigger for doing more so that the customer could either get hold of the green loans or other subsidies that is existing in the different countries. So let us then go over to the quarter one and the highlights we have there. We had a significant increase in our order intake in the quarter. It increased by 44% to 352 million SEK. The increments come from the new acquisitions were made.
The organic order intake was on the same level as the previous year. Our net sales was, as expected, weak, and that was depending on the lower order backlog we had at the start of the year, but also we had some projects that have been delayed during the long winter season here in the Nordic countries. We can see on the market that there's an increased willingness now to invest and also to discuss coming projects, and that is, of course, depending on the improved inflation situation, and also the discussions about expected interest rate cuts. But we also see that the trends we discussed already before, that the processes take longer times, that is still the reality.
So we also know that there are some votings that has been postponed, and we also have the feeling now that it's really a need that we see that the discussed interest rates cuts are implemented and not only discussed any longer. During the quarter, we have made two acquisitions. We started the year with the largest acquisitions we have ever made. It was Riikku Group Oy, the Finnish glazing company, and here in March, we acquired Suomen Julkisivut Laajasalo, which is a Finnish façade company. I will come back and have a little bit more about them. I talked about Riikku Group when we had the quarter four reporting, so I leave that for you to read in the report we had then.
But these two acquisitions together means that we will take a leading market position now in Finland, where we actually before have been a little bit weaker. And they are both in line with our long-term strategy to be the balcony supplier in the Nordics and to also be able to run larger turnkey projects for the green transformation. And talking about this with the green transformation, we have also, in the quarter, taken another large order in Norway, where we will install our unique solution with the air-to-air heat pumps, and this product also includes solar panels. So we see a big interest in this solution that we have taken, and especially for the Norwegian market, where the residential buildings are heated up with electricity. And this is actually our third project in Norway with this integrated solution.
We are also really happy to see that we made another independent analysis just to make sure that we are keeping, so to say, what we are saying. So we made another independent analysis in Norway regarding the energy savings of the Balco glazings, and they confirmed the result we had before. We get between 20%-30% energy savings if you are doing the glazing with the Balco brand, and of course, depending on the size of the balcony and the direction of the balcony. As you saw, also, the results were not in line with what we have wanted. So of course, we continue to work on our reviewing of our cost on organization, and we have here, during the quarter, taken a decision to move some production between our different factories to get better synergies within the certain production processes.
We have had some production processes in more or less all factories, and we are concentrating some of them now to certain factories to get better synergies. So a little bit about our acquisition of Suomen Julkisivut Laajasalo. This was a company that was founded in 1984, and it is a Finnish façade company, as I said, but they also work as a turnkey supplier. They're located in Turku, and they had a turnover of about EUR 11 million and a higher operating margin than Balco Group. Before, I would say a couple of years ago, they worked more or less as a traditional sub-supplier for the builders. But the recent years, they have changed a little bit more the focus to focus more on renovation segment, and also that they have reached a new customer group with the tenant-owned associations.
So they have been very successful now in obtaining and running larger façade renovation projects, especially to the tenant-owned association, where they replace, they take away the old insulation, they put on the new insulation and new façade and replace the old balcony glazing. We have acquired 60% of the company and has an option to buy the remaining 40%. It will continue to be run by the co-owners, Jukka Stam and Mikko Jokinen. And together with the other recent acquisition we made in January, Riikku, we can see now, as we said, that we will be a leading player in Finland, and these two are really, so to say, matching each other because Riikku is already a major supplier to Suomen Julkisivut Laajasalo. So we are seeing now ahead with...
We really think that the Finnish market will grow for us, or we know that it will.
Yeah, and having a look at the quarterly result, as we mentioned, we've seen an increased order intake, but mostly from the acquisitions. But net sales amounted to SEK 326 million, same as last year, but acquired group was 31%, currency effect was +1%, and the organic group was -32%. Our adjusted EBITDA amounted to SEK 16 million, compared to SEK 28 million the year before, and it corresponds to an adjusted operating margin of 5%, compared to 8.7% the year before. Order intake increased 44% to SEK 352 million, and acquired group here was 46%, and the organic order intake was -2%.
Our order backlog has increased by 12% to SEK 1.4 billion, and, of which, which is, 24% was acquired order backlog. So big part was, of course, from the acquisitions from Riikku and Suomen Julkisivut Laajasalo also here. Earnings per share amounted to SEK 0.10, compared to SEK 0.63 the year before, and we saw a little bit improvement in our operating cash flow. It amounted to SEK 18 million, compared to -SEK 10 million last year. If we have a look at the 2 segments we have, the renovation segment, so an increased order intake from the acquisitions. And net sales in the quarter was quite weak.
It was SEK 222 million, down from SEK 299 million the year before, and it was just 68% of our total net sales. Normally, it's been around 80%-90%. Order intake in the quarter increased by 43% to SEK 285 million, compared to SEK 199 million the year before, and it corresponds to 81% of our total order intake. Adjusted EBITDA in the quarter amounted to SEK 11 million, compared to SEK 26 million the year before, and it corresponds to an adjusted operating margin of 4.8%, compared to 8.6%.
The decrease here comes from lower occupancy in our both production and project organizations, and also was quite much affected by the longer winter with more snow and also colder winter in the all Nordic countries, also in the southern parts of Sweden and Denmark. Order backlog amounted to SEK 1,038 million, compared to SEK 1,091 million last year, and it corresponds to 75% of our total order backlog. The new build segment saw increased sales and order intake from mostly, especially from the Riikku acquisition. Net sales in the quarter amounted to SEK 104 million, compared to just SEK 26 million the year before, and it was 32% of our total net sales.
Order intake in the quarter increased by 46% to SEK 67 million, compared to 46 the year before, and it was 19% of our total order intake. Adjusted EBITDA was SEK 6 million compared to just SEK 1 million the year before, and also our adjusted operating margin was 5.3%, slightly improvement from the year before, which was 5.2. So here we have stable margins in Renovation segment. Order backlog, SEK 354 million, compared to SEK 150 million the year before, and it corresponds to 25% of our total order backlog. Our financial position, we see, of course, increased debt from the two large acquisitions we have made. So at the end of the quarter, the group's equity was SEK 801 million, and the equity ratio was 47%.
Net debt divided by EBITDA, both including and excluding leasing, was 3.2. But if you include twelve months result from the acquired companies and add that to the EBITDA, you get the net debt in relations to adjusted EBITDA of 2.2. We have a banking agreement with Danske Bank, which is valid till October 2026, and it is a sustainability-linked revolving credit facility of SEK 510 million, and an overdraft facility of SEK 75 million. Our financial targets for the group, we have a group target that Balco shall achieve growth of 10% per year during the business cycle. If we look at the last twelve months and compare that to the twelve months before that, we see a negative growth of 11%.
We also have a profitability target that our earnings per share shall grow by 20% per year during a business cycle, and here, the last 12 months, we see a negative growth of -50%. Our capital structure should be that our interest-bearing debt and net debt should not exceed 2.5x adjusted EBITDA, other than temporarily, like just after an acquisition. And here we, as was on the last previous page, we are at 3.2, but if we add 12 months profit from the acquisitions, we are at 2.2. We also have a dividend policy that Balco shall distribute between 30% and 50% of profit after tax, taking in consideration needs of Balco's long-term growth and prevailing market conditions.
The board has proposed no dividend to the annual meeting of this year, that will be now in the 12th of May, and it is to finance very recently completed strategic acquisitions. Some update from the sustainability side, as Camilla mentioned before, another independent analysis in Norway regarding the efficiency of energy savings when glazing a balcony with the Balco brand glazing. So, the same results as before, that the glazing from the Balco brand provides an energy saving of between 20% and 30%, depending on the size of balcony and also direction of the balcony. And once again, this strengthens our market case that the glazing from Balco is a trigger to be able to get further improvements from the property's energy consumption.
We have also, also already in 2023, reached our goal in reducing our environmental impact in Scope 1 and Scope 2 by 35% compared to 2019. And this goal was set that it should be reached in 2025, but we reached it already in 2023. So Balco Group has committed to develop new long-term and short-term targets for the energy reduction, including a net zero target in line with Science Based Targets initiative. And we think that that should be improved by the Science Based Targets initiative, either during this year or early next year.
Yeah, going a little bit, again, a little bit deeper maybe to the market update. It is, as we say, the market is improving, the inflation situation and the discussion about expected interest rate cuts are increasing the willingness to invest. But we see there is still a challenging market because processes takes longer time, and decisions are postponed. So we see that the discussed interest rate cuts must be implemented to really see that it's increasing again. We continue, of course, to support our customers with the financial expertise in the dialogues, and we are helping the customers through the whole process.
As I said, the discussions are ongoing, so it's not quiet on the market, but we need more decisions and to get the order intake really to lift. And therefore, I also would like to say that we have seen the increased willingness, but we have not seen a strong... I would not say that we see a very strong recovery in the market, so... Our previous assessment that we will have an impact on the sales and the results the coming quarter is remaining. But we know that the need to renovate balconies remains also, and we know that it's not the need just to renovate the balcony, it's also a need to take the entire surface layer of apartment buildings, and think about the energy savings that can be done.
Balco will be a part of this necessary change, and we are able to carry out the important turnkey projects for this. If we look on the acquisitions, as we said, we have made two big acquisitions during quarter one, and acquisition are an important part of the Balco Group's growth strategy. We are looking for companies, European balcony companies or companies with activities that can complement Balco's green transformation product offering. The two acquisitions we have made is really focusing on this. We made acquisition for Riikku Group, which was a good European, good Finnish balcony company, which was strong position in the niche market, in the new building market in Finland. It's Suomen, which is also complementing for the green transformation and offering with insulation and turnkey supplier.
We are following our acquisition strategy and our long-term strategy. Some concluding remarks. The net sales in quarter one, 326 million SEK, the same level as previous year, with a lower adjusted EBITDA margin of 5%. But as we said, the demand is still there, but we don't have a strong recovery yet. We will continue to have an impact. But we also see that our investment in being able to run projects, for aim to be a more comprehensive energy savings on the property continues to meet with great interest. We see this solution we have with the air-to-air heat pumps, that has a great interest in Norway, and we also see that we are good on including installation of solar panels into our projects.
Once more again, the two acquisitions will make us take a leading market position in Finland, where we previously will have a little bit weaker position. That was all in our presentation. Looking forward to answer some questions.
Thank you so much, and we'll jump right ahead to the Q&A here. So as I mentioned earlier, if you're calling in and want to ask a question, please press star nine to raise your hand, and then star six to unmute your microphone while handed the word. But we will start here with a question you've been writing to us. Hi, did you experience any growth within sales to construction companies, or was all of the growth M&A driven?
No, what we have seen is a growth within the U.K. business, which is to the builders actually there. We have had a very good development, but in the U.K. markets.
Thank you. After the Finnish acquisition, what is sales split between the balcony and the facade renovation/other segments?
It's still mostly balcony. Still more than 90% who is balcony side, and facade is between 5% and 10%.
Thank you. How is the acquired business evolving?
So far, it's evolving according to plan.
Yeah.
We are very pleased with the acquisitions so far.
That's been a very good start, I would say. We have had a very good first startup integration meetings. We are working really closely together with the Riikku Group, both regarding product development and also development of the business in Finland. And, Suomen have also been here, and they are also being able to sell the Balco product for the Finnish market ahead. So, we are really satisfied with the startup and the startup integration. Then, of course, we have a lot, a lot of work to be done, but it has been a good start.
Thank you. What drives the sequential improvement in the gross margin compared to Q4 2023?
Yeah, one part is, Suomen is very strong. We have also seen very good, stable business in the new build side. That has been very positive, both, yeah, stable as we planned for the Riikku Group and the very good development in U.K. So I would say mostly from the new build side, it's been improvements.
Improvements.
Would you say a new normal level for the gross margin is 20%-21% after the acquisitions?
Could be a quite stable margin, and we think, yeah, it should be in that, yeah, more or less in that level.
Thank you. Once again, I just want to repeat, if you're calling in and want to ask a question, please press star nine to raise your hand. We move on with another question here. Could you talk a bit more about the differences in various markets and countries? A quite dramatic decrease in Sweden in the quarter. Renovation, how much of the SEK 80 million, SEK 86 million increase year on year in order intake is related to the acquisitions? Did you get the question there?
No, to be honest, no. Could you repeat it? How was it how much of the order intake that was in the increase? Because, as we said, more or less, the full increase is coming from the acquisition. If you compare it to previous year, if that was the question.
Yes. And also, can you talk a bit more about the difference in various markets and countries?
We usually don't give out too much, so to say, about the development in the different countries, but I can make a very short, so to say, overview of it. And as we said, we can see that we have a good development in the U.K. markets. Development really fine. We have had a little bit more, so to say, a challenging situation in the Nordic markets. But if you compare to previous year, actually, Norway have performed better, and Sweden is a little bit lower than previous year.
Thank you. In terms of current, trading and current demand, what do you see strongest versus weakest demand per region? You mentioned longer process in general, but is that for all Nordic countries?
Yes, I would say it is for all Nordic countries, and it's actually coming in, we see both in Sweden and in Norway, and that is to the tenant-owned associations, of course. And we also actually see it in Denmark, where also the processes, even if you are chosen as a supplier, in the processes in Denmark, it takes a really, really long time now before they are finalized, how many people should have... Because there we are doing city balconies, and then it takes a long time for them to decide how many should really go on to the project and have a new balcony. So that is a really, yeah, change in the market, that we have seen for since actually 1.5 year ago, and that continues.
Thank you. That was all the question that has been sent into our email, and I repeat once again to the ones who are calling in, if you want to ask a question, please press star nine to raise your hand. I will give you a couple seconds here to do so if you want. So it seems not like nobody want to ask a question anymore here, so I will hand over the word to you for some concluding remarks.
Yeah, concluding remarks, I would say that, as I said before, we still have a challenging market, but the market remains. It's not the demand for the renovation for the balcony or for the facades is not disappearing. And, with the new regulations that will come on the energy savings demands, we see that there will be a good market for us ahead, both with the glazed balconies, but also, of course, with the facade renovations and to be able to take these turnkey projects. We know that our products are really valid for the coming market, and we really believe in our products, and that we have seen, especially with the new products we have introduced now to the Norwegian market.
But as I said, we will have an effect both on the sales and results for the coming quarters also.
Thank you so much for the presentation here today, and thank you all for tuning in. I wish you a pleasant day.
Thank you all for here.