Hello, and welcome to today's presentation with BALCO GROUP, who will present the report for the third quarter of 2026. Today, we have acting CEO, and Viktor Arvidsson, CFO. We have a Q&A after the presentation. If you are calling in and would like to ask a question, please press star nine to raise your hand and star six to unmute yourself. You can also type in your questions using the form to the right of the broadcast. With that said, I will hand it over to you guys, and I will be back when it is time for the Q&A. The floor is yours.
Thank you. Welcome everybody to our report, reporting of the Q3 period, and also BALCO GROUP up to today's date. Thank you for taking your time. For those who have not been with us before, very briefly, BALCO was founded in 1987. We have our head office in Växjö and we operate mainly in two segments, renovation and new build within balconies. I think without going into all those details that you probably know about, I can say that we have a very strong position with a broad offering throughout different entities in the Nordics, primarily in Sweden and Norway. We really do not see any signs of that position weakening. On the contrary, actually.
A contributing part to our focus on our core business and our core markets has been that we, during this quarter, discontinued our local operations in the Netherlands. We also consolidated our operations in Sweden. We see good growth opportunities in Germany and U.K. as well in the maritime business as we are quite small in U.K. and Germany and a very strong position in the maritime. That is actually a snapshot of the BALCO GROUP where we are right now. From that, I would like to jump onto Q3 highlights. We feel the order intake remains on satisfactory levels, and we do have a strong order book. Again, as I said last quarter, the market is there. That is not our challenge at this point.
We are trying to define further steps we can take to decrease time between order and revenue, and we have come a little bit on that path. We have, which you can see actually in the net sales, even though it is very early to say anything, take any big conclusions on that. What I think is important to mention here is that we do have items affecting comparisons versus last Q3 of - SEK 88 million , where write-downs of assets are 79 of those. Also think it is very interesting and good to announce that Charlotte Mattsson now has been appointed as a new CEO, and she will start sometime in Q1 2027. We have, as you have seen, taken extensive measures, reduced our workforce with about 60 people, about 10% of our total employment rate.
We have integrated TBO-Haglinds in RK Teknik. We also integrated Stora Fasad into Balco AB. As I mentioned, we discontinued our local operations in the Netherlands. The property that was previously owned by TBO has now been sold. We will see that in the figures in November. I think that is mainly what I would like to mention on the Q3 highlights. I do not know if you want to take us on, Viktor, in the order results and walk us through those.
Yeah, absolutely. Thanks, everyone. Let us look at the financials for the Q3. Net sales, as mentioned, amounted to SEK 295 million versus SEK 277 million same period last year. We had an organic growth of 6% and a currency effect of 1%. The adjusted operating result, EBITA, amounted to SEK 1 million versus SEK 3 million last year, corresponding to an adjusted EBITA margin of 0.5% versus 1.1% last year. The order intake, as mentioned, amounted to SEK 220 million versus SEK 222 million last year. The order backlog was SEK 1,571 million versus SEK 1,377 million the year before. The adjusted earnings per share amounted to -SEK 0.21 versus -SEK 0.23 last year. Earnings per share amounted to -SEK 3.23 versus -SEK 0.23 last year. The operating cash flow amounted to -SEK 12 million this year versus SEK 3 million last year.
If we turn to our segments and looking first on the renovation segment in the quarter, the net sales was SEK 226 million versus SEK 206 million last year. That corresponds to 77% of the total net sales versus 75% last year. The order intake in the quarter amounted to SEK 165 million versus SEK 188 million last year. That corresponds to 75% of the total order intake versus 85% last year. The adjusted operating profit, in the quarter, amounted to SEK 4 million versus SEK 2 million last year, corresponding to adjusted operating margin of 1.7% versus 1.2% last year. The order backlog amounted to SEK 1,109 million versus SEK 1,107 million last year. That corresponds to 71% of the total order backlog versus 80% last year.
On the new build segment, the net sales in the quarter was SEK 68 million versus SEK 70 million last year, corresponding to 23% of the total net sales. Order intake in the quarter amounted to SEK 55 million versus SEK 33 million last year, corresponding to 25% of total order intake. The adjusted operating profit in the quarter was - SEK 3 million versus SEK 1 million last year. That corresponds to an adjusted operating margin of minus 3.9% versus 1% last year.
The order backlog amounted to SEK 462 million versus SEK 269 million last year. If we turn to the financial position at the end of the quarter, our equity amounted to SEK 668 million versus SEK 744 million last year. The equity asset ratio was 43% this year versus 44% last year. The interest-bearing net debt, including leasing debt in relation to adjusted EBITDA, amounted to 6.7 times versus 6.8 times last year. As we reported before, we have a supplementary agreement with our principal bank, which entails time-limited easings of our loan terms. I hand back to you, Johan.
Thank you. A quick report here. If I summarize this, we do remain confident that we have a strong position, we have a strong order backlog, and we are supporting that with a sufficient order intake that is pretty much in line with what has been for a while. As we continue to focus really now on higher margins, increased efficiency, and to reduce restricted capital, tied-up capital, that is our main focuses right now. The market is there, so we can focus on that. Also, we are simplifying the group structure, really getting back to more core, which frees up resources for us to focus on the core business in the prioritized markets we have.
As you have seen, we initiated that work. We have done quite a lot in line with that during Q3, and we expect a gradual improvement keeps going here in the operational and financial result as impact from these measures we have taken, these structural measures evolve. That is where we are at. I think that is pretty much it. Then, of course, we are open to answer any questions you have regarding this.
Yes. Thank you so much for that presentation. We now open up for a short Q&A session. As mentioned earlier, if you are calling in and would like to ask a question, you can also find a form to the right of the broadcast. Or if you are calling in and would like to ask a question, please press star nine to raise your hand and star six to unmute yourself. The first question we have received is, please remind us of the timing of execution of the maritime orders. Will some of the revenue-generating work already start in Q4 this year?
Yes, I can answer that. Yes, it has already begun, so to say, generating revenues. It will continue to do so for the coming years, but it has started this year. That is something that we have already had revenue from.
Yes. Thank you for that. The next question we have is, have you seen any green shoots as of late or during the year so far? For instance, do you see some renovation work, façade renovation or other smaller renovation work picking up faster than the more investment-heavy new balcony projects?
I think we're living with the market as the market has been for quite a while. We don't expect any help in the market picking up right now, neither in new build or renovation. But we think we are quite well-positioned in both of them corresponding to the market the way it is. We have seen maybe a slight, little better market in primarily Sweden and Norway in the new build, but there's nothing we really calculate on. We just do everything we can to be as good as we can every day in the marketplace we're at. We don't expect any fast upturns. We haven't seen that yet, no.
Yes. Thank you. Do you see any significant difference in customer behavior between the countries? If yes, what do you consider to be the underlying reasons?
Yeah. We are very different in different markets, and the customer base is very different in different markets. That's a chapter in itself. The behaviors between customers in the U.K. and typical customers in Sweden is quite different. But it's nothing that's changing now. It's been that way. We don't see any customer behavior changes in a specific market from what it was before. But that's one of the reasons for us to be in different markets, because it even allows risks and it even outs. So the behaviors is very different. If we take, for instance, we take Finland, we have a very dead new build. We see upturns in the renovation. In Sweden, we start seeing maybe a slight pickup in the new build, et cetera. So it's very different, and we also have different offers in different markets.
Yes. Thank you for that. The next question that I have is, when will the new underlying cost level show? Will Q4 this year already represent a clean quarter with the new ongoing cost level?
No, it will. Maybe you can help me here, Viktor, but really it starts picking up the results or what we're done start showing in Q4, but then it will take some time for us to reach full effect. I would say sometime in Q2, probably full effect next year. But it starts showing now, and we start seeing it. But it's a gradual improvement. I don't know what you have to say there, Viktor. Anything to add there?
No, I agree.
Yes. Thank you so much for that. How many employees do you reckon to be year-end compared to the current 515?
Well, the measures we are taking now, what we foresee right now is we are roughly going to be pretty much the same as we are right now, end of Q4.
Yes. Thank you for that. With Charlotte Mattsson appointed as incoming CEO, could you walk us through the onboarding process and how you plan to ensure a smooth transition and rapid ramp-up in terms of operational and business understanding?
Yeah, sure. Charlotte, she is going to join Q1, but we already started that process. I communicate with Charlotte on a regular basis, and she is very much up to date with what we are doing, and the onboarding in that term has already started. So I foresee a very smooth process when she is getting on board. I am really happy to. It feels very good to hand over to her. We have done a lot of work, and I think she is going to be perfect for taking over and evolving, building the company from where we are there. We have a very open discussion about where to be then and how to do things. So she is getting on board already.
Yes. Thank you for that. Norway grew in Q3. Was that renovation or new build? Did it come from project catch-up after the cold winter or from underlying demand? Are project margins there improving?
Norway is still a very interesting market for us. There are good margins for us there. We have done changes during Q3 in Norway to capture those opportunities we have there. We also have had some projects during end of 2025, beginning 2026, where we did not do too well in specific project for specific reasons. We have repaired that. Norway figures are not really representing the opportunities we see in Norway. We have done some screw-ups there and we have taken measures not to do that. We foresee a positive growth in Norway going forward.
I can also add that Q3 is of course the shortest quarter as well. Specific projects can impact the sales on markets quite drastically. It is also a bit of a timing effect, I would say, when you are looking at the net sales.
Yes. Thank you for that. Next question is, how do you see customer engagement development? Are customers withdrawing, choosing other suppliers, cheaper solutions, or do they stay with you?
We foresee that they are staying with us in a very big portion. We think we have a very strong offer and the customers like us. We do not see that customers do not choose us. We are actually the opposite. We have a very strong order intake and we take that on value and by bringing our customers really high value. The customers like us very much.
Yes. Thank you for that. Renovation order intake fell to 165 SEK million and renovation backlog was flat. Are housing associations and property owners actually releasing deferred projects or are you being selective on margin?
Viktor, I did not really. Could you?
Yeah. You can also say there is the timing. I think we usually say that you should not put too much emphasis on single quarters when you look at the order intake, and it is the same here that we have quite large projects. So if one project falls in one quarter or just the days in the next, that can affect the order intake quite a lot. As Johan mentioned before, there can be a little bit of a hesitation once we get an order until that project actually starts when it comes to getting building permits and so forth. But we do not see any big change in the customer behavior during the year so far.
Yes. Thank you for that. Can you please quantify the annual SEK savings from the restructuring? When will it be fully visible in the P&L?
Roughly, we have taken out salary cost for SEK 45+ million . Out of that was about 50% white collar, so about 22 million. 20 million- 25 million. When it comes to the other part, we are using other resources to help us to do a lot of the work on site. It is really hard to calculate exactly how much, because there is two parts of that. One is, of course, the pricing our own personnel, and the other one is the inefficiency or deficiency of our own personnel. So we calculate on somewhere around 25 million. As I said before, we are going to have full effect on that during Q2 2027, but we already start seeing effects of it.
Yes. Thank you for that. The next question I have is how is your debt level trending, and is share issue something you consider going forward?
Viktor, would you like to answer that, or you want me to?
Yeah. We did amortize 10 million on the bank loans during the quarter. So the debt level is a little bit lower. We consider all the measures when it comes to the capital structure, so we do not put anything aside. At this point, I do not think we can say more than that, and that we also have a very good dialogue with our principal bank and have a very good cooperation with them.
Yes. Thank you for that. Adjusted gross margin in Q3 was 14.4% versus 15.2% last year, so lower. Even though you say gross margin has started to improve, what explains the decline in the quarter?
You want me to.
As I mentioned-
Yes.
As I mentioned before, single projects can affect the margins in the quarter. As also different of our companies have different margins. So a little bit depending on who has the higher net sales in the quarter can affect the margins for the group. But when we mention that we see the improvements, we see that in the end of the quarter that it looks better. So we do see an improvement coming.
Yes.
I think it's important also to say that, as Viktor says, we have very long projects in the project-based business. We have successive recognition of profit. It's sometimes looking at a specific quarter, especially this short one, it doesn't really give the true picture of what's happening overall. I think year to date is more representative at this point.
Yes. Thank you for that. The next question I have is about the sold property. Can you tell us a little bit more about that, and also what was the value of it?
The TBO property?
We haven't received.
Yeah.
We actually signed, we will not tell exactly what price we sold it for. But it was lower than we. There is a write-off coming with that.
Yes.
But we can not tell exactly how much we sold it for.
Yes. Thank you for that. You have exited the Netherlands and BALCO U.K. is handling the remaining commitments. Why the Netherlands and are other markets under review?
Well, Netherlands first. We have invested in Netherlands for a quite long time now, and it really did not take off. So, and also, we need to be able to focus really hard on what we are focusing on in the companies and in geographies we do. And we did not see that. We could not put more efforts into the Netherlands, so therefore we went this direction instead. We see a very good. When it comes to Germany and take the BALCO companies, we take Germany and U.K. we have a very small portion of the market there, and we are actually doing a pretty good job in picking up there. So we think that focusing on a few markets, and they are really focused. We have pretty good growth plans in place in both those markets, and we want to be there.
But of course, having said that, we keep monitoring all our entities, and we want to be a good owner to each one of them. Being a good owner means that we are going to grow them, grow profitability in each one of them. That is what we are focusing on right now. But we believe in those markets, and we are focusing even more on how we can help them to improve faster.
Yes. Thank you for that. The next question that we have is, what is the current capacity utilization at your factories?
We are not worried about the capabilities for us to produce more in our factories right now.
Yes. Thank you for that. Can you also tell us a little bit more about the operating profits? Why has it gone down?
You want to elaborate on that, Viktor?
Yeah. If you look at the adjusted operating profit, we can see that there's quite small numbers both this year and last year. As I mentioned before, different markets, companies can affect the overall profitability in the group. So it's more of a, I would say, more of a timing effect in Q3. As Johan mentioned, both the margin and the profit should be looked upon year to date rather than in separate quarters, I would say.
Yes. Thank you for that. The next question that we have is, are there any more cutting measures needed for the future?
We keep monitoring our operations, and we are on a good path. I don't want to Right now, specifically, there are of course improvements we can do, and we are. We have a pretty good action list with improvements we're doing. It doesn't have to mean that we're cutting. It's not only cutting costs, it's also you can increase efficiency in many different ways. It's really also about getting the resources you have to work on the right tasks. So there could be more. I think we've taken the big measures at this point.
Yes. Thank you for that. Now for the final question. How big is your activity in the renovation work? Do you see any pickup in that part of your business?
I think we answered that pretty much. Our efforts in the renovation markets are huge. The market is pretty stable. We do not calculate on renovation market picking up much more. As Viktor mentioned before, it all comes down to interest rates. That is a big. We all are happy one day and then worried one day. It is so volatile right now, the financial market. We do not calculate on getting any help from there. We foresee that the market is going to stay pretty much the way it is today and has been for a while. We can always improve what we do with that market, and that is what we are focusing on right now.
Perfect. Thank you. That was the last question for today. With that, we wrap up today's broadcast. A big thank you to Johan and Viktor for the presentation and for the Q&A. Thank you to all who submitted questions, called in, and tuned in. I wish you all a pleasant rest of the day.
Thank you. Thank you very much. Thanks for listening.