Good day, and welcome to today's Elanders AB conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. You may submit your question by pressing star one on your telephone keypad at any time during the call. At this time, I'd like to hand the call over to Mr. Magnus Nilsson, CEO. Please go ahead, sir.
Welcome, everyone, to Elanders conference call, and this is Magnus Nilsson speaking, and together with me, I also have our Acting CFO, Åsa Vilsson , as well. I will now start with our presentation, and I will go directly to slide number 5 and talk about our first quarter. As expected, continuing the market to be very challenging in the first quarter, and several of our customers show lower demand compared to the previous year, which resulted in a negative organic growth of 9% in the quarter. Of this 9% of negative organic growth, the normalized shipping prices within air and sea was roughly 2%.
It was mainly customers exposed to end consumers that showed a downtrend compared to last year, but our continued focus on lowering our working capital and improving our cash flow resulted in a very strong operating cash flow, and we had a cash conversion of 137% in the quarter, and a cash conversion the last twelve months of 114%. And if we adjust for dividend payment, currency effects, and acquisitions, our net debt, excluding IFRS 16 effects, actually decreased by SEK 200 million in the first quarter, and we managed to lower our working capital with SEK 241 million.
As expected, however, our two recent acquisitions increased our debt, and our financial costs are negatively affected by both the higher debt, but also the high interest rates, which of course, put some pressure on our net profit. But despite this soft result in the first quarter, we could show a rolling twelve-month net debt/EBITDA, excluding IFRS 16, and also including pro forma results from our two acquisitions of 3.2. If we then go to slide number 6, and we look at supply chain solutions, we had a negative organic growth of 9%, and this was mainly due to weaker demand from our customers, especially exposed to consumable goods and durable goods like automotive and fashion, but also our newly acquired company, Kammac, was affected by this downtrend.
This, combined with an overall very soft demand, resulted in a lower margin compared to previous year. But on the other hand, continuous actions to improve cash flow and to lower working capital have a very positive effect, and Supply Chain Solutions could show a cash conversion of 133% compared to 79% the year before. If we then go to slide number 7, to look at Print & Packaging Solutions, could we see a similar effect when it comes to a negative organic growth, which was 7%, for Print? They were also affected by a lot of soft market. But despite this, could the business area show a significantly improved EBITDA margin of 7.5% compared to 4.1% the previous year.
This is a result of that we continue to grow in the online print area, but also an effect of the price increases we did last year, and we also have good effects of stabilized energy and material prices. If I then go to slide number eight, to look at the development of our different customer segments in the quarter, and if we start with fashion, we did expect lower demand from our fashion customers, but it was clearly lower than expected, and we could actually see a drop of around 20% in both Europe and in North America.
But we think that there was an extra negative effect of that lots of our customers really tried to push out their products in Q4, and there was lots of discounts, and we expect in the coming quarters that we will see some improvement from existing customers, and we're also ramping up to two new major customers in Germany that we have talked about before. We'll be ramping up in the second quarter. So we think it will be step-by-step improve, but still a very soft demand in the fashion part. That is Elanders' biggest customer segment.
When it comes to electronics, the other picture is actually more positive, and we could see an organic growth of 4% in the first quarter, and that was despite that some that the demand from some product areas like office printer, heat pumps, and TVs is still very soft. But then on the other hand, we could see a growth that already started in the fourth quarter when it comes to laptops and servers, but also from several other product areas in electronics area. And our lifecycle management services also continues to show growth. And so if we summarize this, we expect that this customer segment will continue to have a positive trend going forward.
If we look at the automotive segment, we could see a very slow start in January and February, but a good recovery in March, and we expect that it will continue on more stable levels the coming quarter. If we look at the demand from the industrial segment, it continues to grow out of solid, except in one area, and that is where we deliver heat pump systems for our customers, which was very weak demand also in the first quarter. If we then look at healthcare, could we see a similar positive trend like in electronics, and we had it on organic growth of 3%. Of course, we also have an increased sales in this customer segment because of the newly acquired companies, Kammac and Bishopsgate, that also increased our sales compared to previous year.
And if we then look at other, we continue to grow in other, because there we have the online print, but we also have contribution in this segment from Kammac's customer segment in retail and food, and in both retail and but also food and beverages. If we then go to slide number 9, and I want to update you on our very important acquisition of U.K.-based company, Bishopsgate, that was done in February. Bishopsgate has yearly sales of around GBP 27 million, and with double digits EBITDA margin, and they are the absolute market leader in U.K. and Ireland when it comes to what we call technical logistics, which is part of what we call in the Elanders life cycle management. Their customers are mainly active in electronics, healthcare, retail, and the bank sector.
For these customers, they handle storage, distribution, installation, takebacks, refurbishment, and also do service of valuable equipment like could be medical devices, big digital printing machines, data centers, but also charging stations, and also things for retail, like parcel lockers, vending machines, and also some refrigerators. Customers who demand this type of service usually have the same needs in several different countries, and by complementing a lot of existing capabilities with Bishopsgate, we can now offer complete solutions for both EU and U.K. Bishopsgate, for you who remember, it's very similar to the Dutch company, Eijgenhuijsen, and that we acquired in 2021.
And then if I go to slide number 10, 10, and look how it looks forward, even if the first quarter was very challenging, we expect that the demand will gradually improve during the year as a result of recovery from our existing customers, but also our newly acquired customers, and we are also, at the moment, having a very strong pipeline when it comes to ongoing inquiries. So as we see it, start to be a recovery in Q2, but we expect that it will be much better on the second half of the year. But of course, you need to be prepared, so in parallel with the, on the high, with the high level of activity on the sales side, we are continuously reviewing our cost and working on various solutions, such as consolidation of warehouse facilities.
We look at short-term rentals and also subletting to reduce our overcapacity. In the end of 2023, we were consolidating two warehouses in Netherlands. In Q1, now we have done some consolidation in U.K., so we are working actively also to try to lower the overcapacity if the market should continue to be very soft. We also continue to focus on reducing our net debt by optimizing our working capital and improving cash flow. As a result, our working capital decreased by SEK 370 million in 2023, and as mentioned before, we managed to reduce it further by SEK 241 million in the first quarter of 2024. Okay, now I open up for questions.
Thank you, sir. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. And please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. So the first question comes from Derek Laliberté from ABG Sundal Collier. Please go ahead.
Okay, thank you very much for taking my questions, and good afternoon. So I'd like to-
Good day.
Hello. Hello, Magnus. So I'd like to ask here on, I mean, it seemed clear even from before that Q1 was going to be weaker here, but I must say I was quite surprised by the lower margin here in supply chain solutions. So I was wondering if you could maybe explain a little more what actually drove this, like how much of it was perhaps a worsening of the overcapacity? Maybe there's a mix between the segments here affecting and how much was the Kammac so being having a weaker quarter?
I think compared to last year, perhaps the biggest negative effect on Supply Chain Solutions was actually the fashion segment. You know, the fashion segment is one of our high-margin areas, and even U.S., that has been very more resistant before, was also suffering with the downturn of 20%. And even if they deliver rather good numbers, of course, it also ends up that they have overcapacity. But it was even more painful in Europe, because there also was 20%, but they don't have the same flexibility. So fashion, absolutely, but the good news on the other side is that in Europe, it's in Europe as well, we will now ramp up these two bigger clients that we have talked about before.
We start implementing in Q1 and ramp up in Q2. Then, of course, we have expected a stronger contribution from Kammac than what we got, and I think because they're also very exposed to end consumer. I must say, U.K. market was really soft in Q1, and we could see it both in Kammac, but also in our existing Elanders U.K. facilities. And even Bishopsgate, that we acquired in February, that normally is more not so sensitive with the life cycle management service, also reported that it was really quiet. But if you look compared to last year, it was fashion was the most painful, and also automotive, that was going very strong for us last year.
January was totally dead, and lots of our customers just closed down, and February, slow start. Very good March, but you couldn't compensate it, and so it was a mix. And also industrial, you know, heat pumps was a big thing for us, so soft last year, and that affects both industrial and also even electronics, where we also have heat pumps. So it was a, it was a pretty big mix.
Very helpful. I appreciate the clarity there. And specifically on the overcapacity, I mean, have you been able to sort of start feeling it a bit, apart from the bigger customers here, and also, are you sort of experiencing maybe some customers leaving out or going bankrupt or similar in the quarter as well?
I think we have now in the Netherlands we closed one facility in the end of the year and consolidated with a good result in Q1. And Germany, I talked about before, they had started to absolutely look better because we are now working a bit with the Kammac concept there, where we combined short-time volumes with long-term volumes. There, we are seeing an improvement. U.S. was tough for us, really tough, because there we also have overcapacity, and when their volumes go down with 20%, that was painful. But there, we also have some ideas, and it's always a balance, how quick should you cut down capacity or not? And we are now looking at different ways to maybe consolidate some warehouses in U.S. as well.
Because it feels like the market maybe will be softer longer than we think in fashion, and so that will be one of our actions. It always need to be a balance, so I think we have come a long way, but Q1 was very tough. It was. But if you look at for us in the results, January, February was very bad, and I must say that March was much better. So that's why we can say that we think that we will be, it will start to recover in Q2, and then it will be better going forward. But I must say it was a perfect storm in Q1. It talked too much.
Got it. Too well. Okay. Yeah, no, okay, so I got it that January, February, extremely weak and then improvement in March continuing into April. And then for, I suppose for the second half, what needs to happen, I mean, the visibility, you, I mean, you get the indications, I then suppose from the clients you have and the contracts ramping up that you should have fairly good visibility of the second half being this much better than the first half, and not only sort of just being dependent on, let's say, some miracle happening in the market, so to speak.
Yeah, I know. I absolutely agree, and I think, you know, we indicated already in the fourth quarter that we expected the first one should be really tough, and the second, a small recovery. But the good thing I must say is on several markets, I must say the activity is extremely high. So we have so many RFQs and lots of really big ones where we look at now. So there's thought to be a big movement in the market, which is promising for us. And I must say also that electronics is now after, you know, electronics went down already in 2022. So after more than one year, we can now see recovery, and that's a very important segment for us.
We also think automotive will be more stable, so that it feels it will come back. We have lots of things here, lots of indications. Yeah.
Sounds promising. And finally, if you could just remind us on some of the phase-out of this sort of less profitable businesses, also the normalization related to Air and Sea, that should all by April now, basically, we should have better year-on-year comparisons. Is that correct?
Yeah, that's absolutely correct. And also, another comment is also that, you know, if you look at, you know, the problems with the inflation and things last year, we were not so affected in Q1 because then we still were strong in the U.S. I think this was a tough quarter to compare with last year because then the trend hadn't started in the same way. So yeah.
Got it. Okay. Thank you very much, and, and have a, have a great weekend.
Thanks. Thanks, Eric.
Thank you. We'll now take our next question from Gustav Bernblad from Nordea. Please go ahead.
Hi, it's Gustav from Nordea.
Hi, Gustav.
Hello. Just in terms of to build on the fashion here, I mean, you comment on Europe being down some 20% and so forth, but is it possible to say anything? Have you lost a mid-sized or larger customer, or is it just a volume drop by your current customers, would you say?
No, it was. We haven't lost any customers. It was really a drop, and one interesting thing was that was especially big drop on a bit more expensive products and also on e-commerce. The customers that is more in the, you know, more similar segment like H&M and those, they were doing pretty well, but the rest was... So it was more over the whole line, and it was the same trend in North America and in Europe. It was 20% down from existing customers. So it was, yeah.
Yeah, okay, perfect. That's very clear. And then, maybe to jump on the U.S. here. You, I mean, you comment just shortly there on potentially having some ideas regarding the overcapacity in the U.S. What is that exactly?
No, you know, we have, you know, even if Bergen is extremely robust and can earn money, even if they only run a warehouse filled to 50%, you know, we had when we acquired them, they have just set up a new site in Pennsylvania, and then they also set up a new site in Atlanta. And both of them are not, you know, they are almost half filled, or 50, 30%, and they still earn money. So could be that we think about consolidating partly these two warehouses, or we rent out half of the warehouses, things like that, to temporarily get down in cost, to go down in cost. That is things we look at.
Because now suddenly on the market, there's lots of logistics buildings available, so if volume comes, we can quickly get a new facility and then ramp it up instead. So that's why.
Okay, that's great. And then maybe, I mean, you comment also a lot in the report, I mean, electronics growing organically in the quarter. Is it possible to give any more on this? I mean, you comment on sort of laptops and printers, but are you seeing any other products specifically or any geographies, if you can give any more nuance to this?
Yeah, no, no, that, that I can give is that this was still soft in Asia, but it's Europe that is really improving, and especially, as I said, laptops and servers. But, you know, we have lots of other customers, you know, we have the same Swedish customer do security cameras. We have company-customers who do roll printers or wall art or whatever. Lots of them are also recovering, because all of them have also had a tough year. So also lots of these medium-sized customers was improving. But heat pumps and big office printers and also TVs, because we haven't handled TVs, and that was still very, very soft.
Yeah, okay. That's, that's very clear. And then when, when you talk about growing organically, we are talking about low single digits, or am I wrong there?
What do you mean when I say organic?
When you talk about the positive organic growth in electronics in the quarter, we are seeing probably low single digits from last year or-
Mm-hmm.
Yeah-
No, but the thing, when I say organic is that I adjust for, because in currency as well, and I take away, you know, because now we acquire companies, so they are putting in volumes in electronics. And then, of course, I adjust for the buy and sell. The buy and sell had a huge impact on electronics in sales. So when I take away, you know, the buy and sell, you adjust for acquisitions, then we can compare, then we can see that we have a growth of 4, 4% compared to last year.
Yeah, okay. That's, that's very clear. Thanks. And then, just, to... A quick one on, on the print. I mean, very impressive margins compared to, to your history for especially Q1, then, would you say... I mean, of course you give a lot of good reasons for why stable raw materials and, input prices, and so forth, but, would you say that this is a margin that is sustainable, given sort of all else equal, or?
I think you need to look at our normal trend from the other year. So, so really good Q1, but normally Q2, Q3, maybe a bit slower, and then Q4 is always extremely strong. So, but overall, a good start, and we have done lots of actions on the cost side. So, now I'm very optimistic about print. I think if you look at the margin for the whole year, I think we will see a strong improvement this year compared to last year.
Yeah, okay. That's, that's great. I think that was all for me. Thank you very much.
Thank you. Thank you, Gustav.
Thank you. As a reminder to ask a question, please signal by pressing star one. We'll pause for just a moment to allow you to signal. It looks like there are currently no further questions at this time. With this, I would like to hand the call back over to Magnus Nilsson for any additional or closing remarks. Over to you, sir.
Thank you. Thank you, Sergei. Thank you everyone for listening to our conference call, and I hope everyone have a great weekend. Thank you very much. Bye-bye.
Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.