Hello and welcome to today's presentation with Balco Group, who is going to present a report for the fourth quarter of 2025. With us to present here today is CEO Camilla Ekdahl and interim CFO Karin Bengtsson. After the presentation there will be a Q&A, so if you're calling in and want to ask a question please press star 9 to raise your hand and then star 6 to unmute yourself when handed the word. You can also send in questions via the form to the right. With that said I hand over the word to you Camilla.
Hi and welcome to the Balco Group quarter four presentation, and first of all a very quick and short snapshot about Balco for our new listeners. Balco Group was founded in 1987 and consists of balcony and façade companies. The head office is in Växjö and the group has about 500 employees. Balco operates in two main segments, renovation and new build, and our core expertise is to supply glazed balcony and balcony solutions primarily on the renovation market and to tenant-owned association. But we also have of course a broad offering of other balcony solutions including both open and glazed balconies as well as façade renovations. Balco Group is a market leader in the Nordics with the key markets being Sweden, Denmark, Norway and Finland, and we also have a strong challenger position on other northern European markets.
If you look on the diagram to the right there you can see the revenue split per market for 2025 where 45% of our revenue come from the Swedish market, 40% from other Nordics and 15% from other Europe. Let's go over to the highlights for the quarter where we had a very high order intake and also strong cash flow. The order intake increased in the quarter by 45% to record high SEK 521 million, and on a yearly basis it increased by 12% to a little bit about SEK 1.5 billion. During the quarter Balco Group signed its largest order ever to a value of about SEK 200 million, and this is an order related to the delivery of sliding doors and balconies to three new cruise ships being built by the German shipyard Meyer Werft.
Here we actually also have an option of additional 3 ships later on. The design work has already started for these 3 ships and the installation is planned to be in the start of 2027. Also I would say that crucial for getting this order was actually that we have spent time on broadening our product portfolio during 2025 where we now also can offer sliding doors within the maritime segment. As said we had a good cash flow and the operating cash flow was strong in the quarter and amounted to SEK 125 million. The net sales were down 4% to SEK 371 million, but here I would like to highlight that we actually have an organic growth of 1% in the quarter and the currency effect was -5%.
The profitability in the quarter was not on a satisfactory level, and we know that we as we have said before we have taken structural measures during 2025 and they are all implemented, and the annual savings are estimated to be of about SEK 55 million. I'm proud to say that we continue to see good result from our sustainability work, and our Sustainalytics rating improved and also the KPI continues to develop in the positive direction, and I will come back to that later on in the presentation. So if we go to the market updates we can see that the trend of increased activities continues particularly within the Swedish renovation market, and here actually the Swedish balcony company has increased their order intake by 32% 2025 versus 2024. The Danish market remains challenging for us.
There are projects out there and the quotation activities are actually quite good, but the lead time from decision to project start is still very long. I also would like to share a little bit more information to you about this one because the Danish balcony market, it's actually different quite a lot if you compare to the balcony markets in the other Nordic countries. Because the majority of the projects in Denmark are connected to open balconies for houses without balconies today, and therefore also the investment step is higher for the residents if you compare to making a renovation of an already existing balcony. So therefore it is also so to say taking longer time for the decisions to be made in the market.
There is of course also a need for renovation of balconies in Denmark, but actually also we see there's also a reluctance in this market, a little bit slower recovery. The Finnish market is recovering at a slower pace than in Sweden, and this affects our Finnish companies in both renovation and new construction. You all know about the financial situation so to say on an overall level in Finland. When it comes to UK, we can see here that the balcony market potential remains substantial.
The government in the U.K. had very ambitious goals about the amount of houses to be built between 2023 and 2028, and now when we are coming into 2026 there's quite probable that the outcome so to say on these very ambitious plans will be a little bit lower, but there is still a very, very big market potential for balcony solutions within the new construction market in the U.K. The renovation market in Germany continues to show strong underlying demand, and we also have some interesting new build projects under discussion here. The year started a little bit slower in Germany, and that was mainly depending on the election there, but we have had a good order intake the second half year, and actually the order intake for the full year increased by 12% on the German market. We also have a positive look on the maritime segment.
Increased cruise ships orders at the shipyards resulted in the orders we have received in Balco during 2025, and we can see that with the current order backlog at the shipyards there is a potential for additional orders coming into Balco. We can see some smaller positive signals in the new build segment, but this is still from a very low level, and since we are also our companies are later in the project phase it will take time before this smaller increase reflects in increased order intake for our façade and balconies companies within the new build segment. So that said I hand over to Karin.
Thank you, and let's start with the group's quarterly results. Net sales amounted to SEK 371 million compared to SEK 386 million last year. Organic growth was 1%, and the currency effect was negative 5%.
Adjusted operating result, the EBITDA, amounted to SEK 9 million down from SEK 18 million last year, and this corresponds to an adjusted operating margin of 2.4%. Order intake came in at SEK 521 million compared to SEK 360 million last year. The order backlog increased by 16% to SEK 1,523 million. Adjusted earnings per share were -0.04 compared to 0.28 last year. The operating cash flow for the quarter amounted to SEK 125 million, up from SEK 58 million last year. So let's take a look at the segment, different segments, starting with renovation.
Net sales were SEK 290 million, up SEK 9 million from last year's SEK 281 million, accounting for 78% of the group's total sales. Order intake reached SEK 228 million in the quarter, representing 44% of the group's total order intake. The adjusted operating result, the EBITDA, came in at SEK 7 million compared with SEK 20 million last year, corresponding to an adjusted operating margin of 2.6%.
The order backlog was reported at SEK 1,059 million, or 70% of the group's total order backlog. So let's move on to the new build segment. Net sales were SEK 82 million compared to SEK 106 million, accounting for 22% of the group's total sales. Order intake for the new build segment, including maritime order, reached SEK 293 million in the quarter, representing 56% of the group's total order intake. The Adjusted EBITDA came in at SEK 1 million compared to SEK 3 million last year, corresponding to an adjusted operating margin of 1.8%. The order backlog was reported at SEK 464 million, making up 30% of the group's total order backlog. And that concludes the segment review. Let's now take a look at the group's financial position. At the end of the quarter, the group's equity was SEK 736 million, down from SEK 793 million last year.
The equity-to-assets ratio came in at 43% compared with 49% last year. Interest-bearing net debt, including lease liabilities in relation to adjusted EBITDA, was 6.0 times, down from 6.8 times in quarter three, and compared with 2.5 times last year. BALCO received a waiver in December together with an amendment to the existing credit agreement, and the covenants are within this agreement. Moving on to our sustainability updates.
Thank you, Karin. As said before, we can see good result in our sustainability work, and the Sustainalytics risk rating improved to 16.6, down from 17.2, which is placing us among the top 5% within the lowest risk rating in our industry. We see also good result on our KPIs where the sickness absence decreased to 3.2%, and the employee turnover decreased to 7.3%. When it comes to the carbon dioxide emissions, we have a KPI where we measured the emission as grams per hour worked. This actually increased during 2025 versus 2024 depending on fewer hours worked. But if we look on the actual carbon dioxide emission, the total one measured in kilos, it actually decreased by 10%. So coming back to some concluding remarks and the outlook, we are cautiously optimistic about the order intake, especially for the renovation projects in Sweden and Norway in 2026.
Our assessment is that Finland will continue to recover more slowly than Sweden, but we still expect an increase, particularly in the renovation segment for 2026. We do not yet see a clear turnaround in the Danish market, but as we said several times before, also in all markets where we have a renovation, the renovation market remains, and it's more a matter of timing, and this is of course also valid for the Danish market for the renovation projects. In the new build segment for the Nordic countries, we expect that the recovery for the balcony companies and also façade companies will take longer time since we are later on in the project phases. We see a potential for further growth in 2026 in both Germany and UK, both to grow together with the market and also by taking market shares.
Also we have a positive view of the maritime segment where we, with a broader product offering combined with a strong ordering flow, can take new orders coming in from that segment. However, being quite positive, we are also, of course, very well aware that the future market development and recovery may be affected by the geopolitical situation, and especially so to say if the consumer markets will be hit by external so to say effects that is happening, we will of course see that also in our recovery. But the company will continue to work on the capital structure. We now have received the waiver. We will continue to work with the capital structure, and we will of course also continue to work with our profitability improvement measures until we can reach the desired capacity utilization and profit level that we have as a target.
By that, I will hand over to you again with the questions.
Thank you so much for the presentation here. As you mentioned, now we will carry on with the Q&A. The first question here is, despite the large marine order, could you say anything about the order trend during the quarter?
Despite, I didn't get what you said from the start.
Yeah, I will repeat. Despite the large marine order, could you say anything?
Marine order, yes, yes, yes.
Could you say anything about the order trend during the quarter?
Yeah, as I said, so to say, we got this large maritime order, which of course gave us also this record high order intake. But we have also said, as I said, we have also had very good order intake in both Germany and UK, and we have also had good order intake in the Swedish balcony companies. So we still see that trend, as I say, as an overall also for the year.
Thank you. Given some overcapacity in your production facilities, will you be able to execute on orders faster during 2026 compared to 2025? Could you please elaborate on this answer?
I would say like this, that so to say, we are already so to say, we have always been quick so to say when we come to the production part of delivering an order. But this so to say, giving the lead time for executing an order, that is very much connected to when do we get the permissions? When do we get the building permission for the order? That is getting if that takes longer time, then it takes longer time before we can execute the incoming order to be in a revenue.
Thank you. Given the different geographical mix in your current order book, how does it impact your Adjusted EBITDA margin into 2026?
I would say like this, that the mix that we have today, that we have had, has of course been an effect of the order intake that we had had earlier, which had been, as we know, a little bit so to say, lower on some of the renovation part. Now when we have seen so to say that we have increased the renovation part, and especially on the market, the Swedish market where we have the best profitability, we of course have a little bit more positive view on the EBITDA development for the coming year.
Thank you. What are the alternatives for creating a more healthy balance sheet? Do you have any properties to sell?
No, we don't have any plans to sell any properties as it is today.
Thank you. Which profitability improvement measures is there still to implement?
We of course look on all our companies closely each month and follow up so to say, and follow up the development of the company and the order intake. And even though, as we say, we have a positive view of quite a lot of the markets and also the companies, there are still some companies that are not performing as they should. And those companies we will of course make actions on further on.
Thank you. Could you comment on the margin picture in your current backlog versus the margins in the orders delivered during the second half of 2025?
The project margin, I would say, is roughly on the same level. It is a little bit higher in the order backlog than we had on the delivery part. But in general, so to say, the gross margin has been hit by that we had an overcapacity more than that the project has a lower margin.
Thank you. Do you think you will meet your original covenants by improving your results before June 30th, 2026? If not, what options do you have?
As mentioned in the report, the company has received a new waiver from the bank and updated the existing agreement with new covenant levels. We consider this sufficient so far.
Thank you for that answer. That was the last question we had there. I will now hand over to Camilla for some closing remarks.
Okay. Thank you all for participating in our presentation. Thank you all also for the questions. I would like to wish you all a good weekend. Thanks again.