Hi, everyone, and welcome to this Q1 webcast with Bawat, hosted by Arctic. My name is Andreas Gabussi, equity analyst at Arctic. I will moderate today's session. With me today is the CEO of Bawat, Marcus Hummer, who will guide you through the Q1 highlights before we move over to a Q&A. Marcus, the word is yours.
Thank you very much, Andreas, and thank you very much for all of you listening out there. I'll go through the Bawat Water Technologies Q1 report, which was released late last week, and bring you through the highlights, both from a financial and then also with a special focus on our Ballast as a Service, the service leg of Bawat. Starting with the financials from a sales point of view, and remember, we started to hear from 2024 on guiding on sales. We are trailing behind pro rata for the full year. This is in due to a slower than expected conversion of our backlog and some delay in actual placement of new orders, especially in the new building segment.
We are, however, sticking to our guidance for the full year on sales between SEK 42 million and SEK 54 million, and this is because we are seeing quite a substantial uplift in our pipeline on particularly mobile systems. Mobile systems are, let's say, the volume-driven component in our order intake. We're seeing this uplift in large fleet owners. We're seeing it from ports and terminals. We're actually also seeing it from navies and authorities, and this is why we trust in the confirmed guidance. What we are also seeing in terms of uplift and increased activity is on our Ballast as a Service. As you might recall, in last guidance, we spoke about the February job that we did for the first time here in Europe, in Bremen Port, big success.
And since then, we have actually continued to deliver jobs both in April and May. And we are seeing a significant increase in request, not only for the mobile system, but also from the service that the mobile systems can deliver. And we are very, very proud to announce that during the course of Q1 and after Q1, we have negotiated with Hamburg Port, where we are now, as of Friday last week. I have a picture to show you on the next slide. We are now permanently in place with equipment and ready to deliver service. So the two pictures you see here on the right, the top one is from a job that we performed in Denmark in April, and the bottom picture is from Hamburg Port from last Friday, where we are now in place permanently.
So we have made an operating agreement with a local MARPOL service provider called Jongen, which we have a relationship with for a couple of years, and they will be our hands and feet, delivering the service in the port, and we are then delivering the equipment and our technology into this agreement. Hamburg Port has close to 7,000 port calls as of last year, so this, the potential for doing Ballast as a Service is significant in that port. I have placed a quote from the Hamburg Senator for Environment, Climate, Jens Kerstan in the bottom of the slide here, and the Hamburg Port is now basically announcing that non-compliance will not be accepted in the port anymore. And as we know, there is significant non-compliance from vessels arriving in ports.
We believe, and we see, that there is a serious potential in this service business. That's why we are also now in serious negotiation with other Northern European ports, both for service jobs on the spot, but also for having a fixed installation and placements like we do in Hamburg. We are speaking with ports in Germany, in Holland, in Belgium, and in Denmark and Poland. We are speaking about service jobs and on-the-spot jobs. We are having one more piece of equipment coming into play here in Northern Europe as we speak, so we will be able, with the mobility of the system, to be able to service the Northern European ports. So for the rest of the year, for Bawat, we continue to work on three legs to sell our mobile system through our joint effort together with Damen.
We continue to now also deliver service, and we continue to install both retrofit and new build on vessels. That's the three legs we work on in Bawat, and I would say the significance of mobile systems and on service is where we have a great potential and where we have a very large uptake and substantial uplift in requests for quotes, and also jobs that we are now performing on the service side. That's the Q1 from here. Thank you very much.
Thank you for the presentation, Marcus. Now let's move over to the Q&A, where we have a couple of questions.
Okay.
So the first question here is a little bit specific one. So it goes as follows: you mentioned in the Q1 report that the Q1 gross profit was reduced or lower than normal due to two mobile units and one ship installation that was delivered after Q1. Could we see a reversed effect in Q2, where the effects from these deliveries will have a positive effect on the gross profit and gross margin?
Thank you very much for the question. The jobs in particular, why they pulled the gross margin down a bit, what some of the jobs were, a first one, so there were some, let's say, not child diseases, but a couple of small, one-off effects that we will not see on future jobs. So I don't think we would see a reverse effect into Q2, but what we will see is that a similar job going forward would carry higher gross margin. So we are still contemplating that on a—depending on the product mix, we will have a plus 30% gross margin going forward, and that is also what we are sticking with in our guidance going forward.
Yeah. Thank you. That makes sense. And so the last question here is related to the BAS-
Mm-hmm
... or the ballast water as a service. So it appears to be making progress with additional jobs in Q2. Have you received any feedback from customers so far? And do you see the potential of any recurring revenues coming from the previous customers?
We have Ballast as a service will compose of two elements. There will be a volume element that would be primarily contingency customers, and then a more regular business from a recurring customers. We actually now have one customer in Denmark that is, we've done two jobs with, and we have a third job coming in. In Hamburg, we now see that it will be primarily volume-driven customers that come in from a contingency point of view. But as we are now placed permanently in Hamburg, I'm quite sure that in the next two quarters and in 2024, we would see recurring customers coming in that knows that, you know, the equipment is there, the service is there, and then they will buy it upfront rather than have it as a contingency measure.
So I'm quite sure that before the year is over, we will see recurring customers also in Hamburg. Absolutely.
That's good to hear. So, yeah, that was all the questions. I don't know if you have any closing remarks you would like to share, Marcus.
Just as always, follow us on LinkedIn, where, which is one of our major channels for sharing information. We are using that as our primary, let's say, communication tool to the market. We put in everything we do, and there from Hamburg. You can see we have linked both to pictures from the event, but also there is a full statement from the Hamburg Port authorities on the significance of Bawat now being the first in the port. And maybe a closing event here is that Bawat is the only company now available with a single pass port solution, mobile, as we see it in Hamburg. So we are quite confident that before the year is over, we will be present in more ports in Northern Europe. So we look forward to that.
That was some good words. With that, I would just like to thank everyone for joining in, and I hope you all have a good day.