Hello, and welcome to today's presentation with the BALCO Group. We have the CEO, Camilla Ekdahl, and CFO, Michael Grindborn, presenting the Q1 report for 2025. We'll do a Q&A after the presentation, and if you're calling in or like to ask a question, please press star nine to raise your hand and star six to mute yourself. You can also type in your questions using the form to the right. With that said, please go ahead with your presentation.
Thank you. Welcome to the Quarter One presentation for BALCO Group. First of all, I would like to make a very quick snapshot for the new listeners regarding BALCO Group. BALCO Group was founded in 1987 and consists of several balcony and facade companies. The head office is in Växjö, and the group has today about 600 employees. We operate in two main segments: the renovation and new build, and the core expertise is to supply glazed balcony and balcony solutions. We also have a broad portfolio of different kinds of balcony solutions. We are the market leader in the Nordic countries with the key markets Sweden, Denmark, Norway, and Finland, and a challenger position in Northern European markets. Saying so, we go over to Quarter One, and we had a weak result in the Q1 this year.
The adjusted EBITDA margin amounted to -0.9%, and there are several reasons for this weak result. The main one is that we have had delays in our processes. By saying so, I mean both the permission processes we have had in Sweden, but also delays on ongoing new build projects in the U.K. and Finland. This has then affected negatively both the revenue and our cash flow. This has also led to that we have had an overcapacity in our production, which we have not been able to compensate for in short term during the Q1. On top of this, we have also had project deviation in one of our big projects in Sweden. We have taken actions during the quarter, and we have made some major reductions of manning in Finland and Denmark.
We have taken a decision and also started up to close our production in Arboga and move this production to our existing plants in Växjö, Poland. This production will be taken in on existing manning. We see also here that we can improve our production efficiency by concentrating the production to fewer production facilities. The move will be ready during Q2. During the quarter, we have then taken the structural cost for both the planned and implemented actions of SEK 31 million, and we are estimating a yearly saving of roughly SEK 60 million due to the actions taken and planned. The net sales decreased by 3% to SEK 360 million, and that is also mainly connected to the delays we have had in the processes. The order intake was lower if we compare to the same period previous year, 275 versus 352.
It is always very difficult to match order intake quarter by quarter in a project business. We can see that 2024, quarter one 2024, we received some really big orders during the Q1. Of course, we have also big orders in our discussions right now, but we were not able to close them during the Q1 this year. They are in our quotation portfolio for sure. Also, I would like to emphasize that all Swedish balcony companies and also our Finnish balcony company, Riikku, had actually better order intake this year versus the previous year. If we go and look a little bit on our market update, we can see that throughout the whole 2024, we saw an increase in the number of requests for quotations, and that trend also continues the Q1 this year.
We are overall positive to the market in general, but we can also see that the recovery is slower than all economic forecasts indicated during the autumn 2024. This is, of course, why we have taken this needed action and why they were needed to be done. There is an increased customer activity in the renovation segment for our balcony companies in Sweden and Norway. We can also see that the Finnish new build market has bottomed out. It's slightly improved, but we don't see a rapid return for any new construction of multifamily buildings in the Nordic countries, even if there's a slight improvement, but not a rapid one. We continue to have a good activity in the new build segment, both in the U.K. and Germany. Therefore, we have also taken a decision here that we also invested in more local design resources.
It is especially important in the new build segment to have local resources for design to be able to, in an early stage, affect the project. Both, of course, to be as cost-efficient as possible, but also to be able to get our design into the project so they can only buy the project from us. The maritime segment has started up again, which is where we are very happy to see after, so to say, the pandemic has started up. We can now see that new ships are actually ordered at the shipyards, and that is very positive for us for ongoing discussion with the shipyards. However, there continues to be a strained competitive situation for our Swedish facade companies and also our balcony company in Denmark.
Giving you a little bit more about the Danish situation, we can see there that the Danish consumers, they are more cautious in general. We can also see that on, so to say, consumer-driven products in general, that quite many companies that have sales in Denmark are having a struggling period right now in the Danish market. That combined with what we see that we have as a product, the main product that we have, the main project we have in Denmark, where we are actually adding a new balcony, but on an existing old building, that means that we are, so to say, that is even more struggling for us because if you have a balcony today, you want to renovate it.
If you don't have a balcony, it's a bigger jump to take to invest in a new balcony when you don't have one than to just renovate what you have. In general, I would say that we have a lot of interesting ongoing discussions on all our different markets. It's mainly, as I said, the Swedish facade companies and the balcony company in Denmark where we still are struggling. Yes, Michael, handing over to the figure numbers.
Yeah, some financial figures for the quarter. Net sales, as Camilla mentioned, amounted to SEK 360 million, down from SEK 326 million. Their acquired growth was 8%, and it's Suomen Ohutlevyasennus, who was part of our group since March last year. We had two months of their sales, but were still acquired. Currency effect was - 1%, and the organic growth was - 10%. Adjusted EBITDA amounted to -SEK 3 million compared to SEK 60 million last year, and it's corresponding to an adjusted EBITDA margin of - 0.9%. The order intake amounted to SEK 275 million, down from SEK 352 million. Our order backlog end of March was SEK 1,238 million.
Adjusted earnings per share amounted to - SEK 0.24 compared to SEK 0.11 last year, and earnings per share amounted to - SEK 1.31 compared to zero last year. Our operating cash flow amounted to SEK 1 million, and it was SEK 34 million last quarter one.
If we look at the renovation segment, here we saw an increase in sales up to SEK 236 million compared to SEK 222 million last year, and it corresponds to 75% of our total net sales. The order intake for the renovation segment amounted to SEK 208 million, down from SEK 285 million last year, and it is 76% of the total order intake. Adjusted EBITDA in the renovation segment was -SEK 5 million compared to SEK 11 million last year, and it is here we have had this major deviation in a large project in one of our Swedish companies. It corresponds to an operating margin of - 1.9%. Order backlog for the renovation segment is just south of SEK 1 billion. It is SEK 991 million this year, this quarter, and it corresponds to 80% of our total order backlog.
New build, here the sales amounted to SEK 71 million, down from SEK 104 million last year, while the order intake was SEK 67 million, just exactly the same as we had last year in quarter one. Adjusted EBITDA in the quarter amounted to SEK 2 million, down from SEK 6 million last year, corresponding to an adjusted EBITDA margin of 2.8%. Order backlog for the new build segment is SEK 247 million at the end of the quarter, and it is 20% of the total order backlog. If we look at our financial position at the end of the quarter, the group's equity amounted to SEK 757 million, and the equity to asset ratio is the same as it was quarter one last year, at 47%. Interest-bearing net debt, excluding leasing debt in relation to adjusted EBITDA, amounted to 4.0, up from 3.2.
We can also say the positive thing that we have extended our existing banking agreement with Danske Bank with a sustainability-linked credit facility of SEK 512 million and an overdraft facility of SEK 75 million. It has been extended to March 31, 2028, and we also have an option for a further extension of two years until the end of March 2030.
Okay, we go into a little bit of outlook, and here again, I would like to repeat a little bit what I said from the market position. Our assessment is that the overall market will gradually improve, and that remains, as we have said before. We can also see that when new unrest and uncertainty arise in our operating environment, as we know it has been doing now during quarter one, we get some setbacks sometimes in our discussions regarding the projects.
We know also that the need for the service and the products that we are offering remains. Therefore, we continue to invest in sales. We continue to invest in our markets and also product development at the same time as we also make these major structural changes in our operations to improve our profitability. We know that the coming quarter will be affected, but we aim to return to an earnings level in line with last year. There is an increase of customer activity in the renovation segment, and we can also see, as I said before, that all Swedish balcony companies and our Finnish balcony company had a better order intake this year versus the previous year. The Finnish new build market has bottomed out, and we see, as I said, a slight increase in the new build segment.
Finally, I would just like to say also that regarding this with the big projects, we have ongoing discussion with big projects, but we were not able to finalize them during quarter one. I think that was all from our side, and I guess we will have a lot of questions now and looking forward to be able to answer them.
Thank you very much for that presentation. Yes, let's open up the Q&A section here. If you're calling in and would like to ask a question, please press star nine to raise your hand and star six to mute yourself. You can also type as requested using the form to the right. We'll start with the first question here. In the report, you mentioned a major project deviation in TBO-Haglinds. Could you specify how much a particular project impacted EBITDA for the quarter? Thank you.
We don't give exact details for just the project, but I can say that that project and also the delays we had had in projects both in Sweden and also the new build segment in the U.K. and Finland. In total, if we haven't had these deviations, we would have an EBITDA, adjusted EBITDA level of between 4% to 4.5%.
Are all costs taken for that project in Q1, or should we expect further negative effects from that project in the coming quarters?
All costs that we expect as of today are taken in this quarter.
Okay, thank you for clarifying that. What segments, renovation or new build, did this project relate to?
Renovation.
Renovation.
Renovation, thank you. Adjusted gross margin dropped significantly both quarter on quarter and year on year to 10.6%. Could you explain what the main drivers of the weaker gross margins in Q1 are?
It's still there. This project, of course, affects a lot. Also, due to these delays in the processes, we have had overcapacity both in production and also some parts in the operations organization.
Thank you, Michael, for clarifying that. Could you also elaborate a little bit more regarding the financial situation and the covenants? Thank you.
Yes, as you saw, we have been able to extend our banking agreement with Danske Bank. We have a current discussion with them ongoing all the time and also very good cooperation. We are just on our covenant right now, but we have a very good cooperation with them. They have been informed during this period. As you saw, we extended another 18 months the agreement, and we have another two years after that as well.
Thank you. We'll move on to the next question here. Was the refinancing finalized with the current Q1 numbers and the current outlook for the remaining year disclosed? Have the covenants been amended compared to earlier?
The discussions with them started already autumn last year. It was finalized just last week as a matter of fact, signed the agreement or two weeks ago, exactly end of two weeks ago. The exact figures were not ready, but they, as I mentioned, we have discussed and informed the bank when the figures were finalized.
What specific steps are being taken to mitigate the delays caused by building permits and rental board processes in Sweden?
What we have done is that since we, as we said here, we saw that we had a big effect on, of course, the result. What we have done is to make the reduction, the actions. All reductions, all actions we have taken is also linked, of course, to that we had delays in this building permission, which gave us an overcapacity here. It was mainly Balco, which was affected by the delays, Balco Växjö. Therefore, we have now been able to take down production and take it in on existing money.
Thank you, Camilla. Given the weaker order intake, what strategies are you implementing to secure more large projects for the coming quarters?
It's not a new strategy. It's the same strategy as we have had before, but it's mainly, so to say, that when you are discussing these big projects, it is very, so to say, very difficult to say if they will come quarter one or Q2 or when they will take these decisions. We have a couple of these big projects that should be decided here now during Q2. There are no change in our strategy because we know that our strategy is the right one, which we're working on to get the big projects. It's always a match between quarter. Therefore, it is important to see the order intake when it comes to a company like BALCO Group. You must see it, so to say, over a longer period.
Thank you for that answer. How confident are you that the restructuring efforts and the cost savings of SEK 60 million annually will be fully realized as planned?
Yeah, of course, we are confident because that is why we implement it. I do not know, to be honest, how to answer that more than we are confident that we will get it out. We know that we have already taken some of this action and they are already implemented. As we said, we know that we are closing down production in Arboga. We can take it in on existing manning. We are very secure by that one. We have some additional actions which will be taken that we are also confident on.
Thank you. Regarding comments on the outlook and perhaps a needed clarification, are you saying you expect to have full year results in line with 2024 on adjusted EBITDA? Alternatively, are you saying that the rest of the year, example Q2 to Q4, are likely to be on par with the same period last year?
We don't give exact forecasts, but we expect it more to be the coming quarters to be on par with last year's quarters. It will be tough to reach exactly the same EBITDA last year, but with some luck, we could go there, but probably slightly below total.
When we say in the report outlook, it's mainly quarter by quarter, the coming quarter.
Thank you for clarifying that. We'll take one final question here. What is the timeline and expected impact of your strategic focus shift in the Netherlands towards open balcony solutions and new construction projects?
When we go to the timeline, when we expect to get the result there, we expect to get the result during this year. I think that was the question or the timeline or exactly. We expect the result to come during this year.
Okay, thank you very much, Camilla and Michael, for taking your time to present the report today and also answering all of our questions. I wish you all a great rest of the day. Thank you very much.
Thank you all for participating.
Yeah, for the questions. Thank you.