Welcome to Energy Save Q1 2026 conference call. For the first part of the conference call, the participants will be in listen only mode. During the question and answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers, CEO Yibo Zhao and CFO Helena Wachtmeister. Please go ahead.
Hello. Thank you very much. This is my first time to be here as the title of the CEO of the company. Today, me and Helena will walk you through the quarter 1 report together.
Great. Thank you very much, Yibo. Our first quarter of 2026, January to March, fell out in line with our expectations. We saw a continued higher net revenue on our own brand compared to the comparison quarter that our own brand ES Energy Save. In total, the net revenue decreased by 8% to SEK 49.4 million and decreased by 30% compared to the closest previous quarter.
This was mainly due to us entering a new season of the new season of the year, which affects us a lot in the residential segment where we are heavily invested currently. The decrease in net revenue and turnover mainly derives from a weaker quarter in the ODM white label sales. This is the sales that we have previously spoken about as OEM sales.
Yibo will elaborate a bit on this in a minute. This the same other brands than our own sales. The ODM white label sales decreased by 27%, reaching SEK 33.5 million . The ODM white label sales was in line with our expectations here and was affected, as I said before, by seasonality, and this seasonality caused stock balancing with our ODM white label customers.
This is a similar pattern as we saw last year and will continue to see entering into the second quarter of the year. On the other hand, the sales with our ES Energy Save brand increased by 99% compared to the comparison quarter, reaching SEK 15.9 million compared to SEK 8 million last year, same quarter last year.
The ES Energy Save brand sales increased due to three reasons mainly: the launch of our new propane offering for commercial property, a 40-kilowatt unit for the commercial segment. Also, we added new distributors to our portfolio, to our partnership portfolio, and increased the activity level in promoting our R32 stock units. We totally saw a decrease in operating expenses by 4% compared to the first quarter of last year.
This is a stabilized OPEX that we are seeing now and have seen since the initiation of our savings program at the end of 2024. We do see a higher decrease in net revenue that has resulted in a negative EBIT in the quarter of SEK -4.2 million .
During this quarter, the Board of Directors appointed Yibo as our new CEO. This was effective from the general assembly that was held on the 29 of April. At that same time, at the annual general meeting, a previous CEO, Fredrik Sävenstrand, was appointed as an operative Chairman of the Board in the company but will continue to operate in the company as a strategic advisor.
Exactly. This is my second week as the CEO, very excited to be here and also to deliver the value that we are aiming to deliver for the shareholders. I want to start with clarification about the ES Group and ES Energy Save as a product brand. The reason for us to clarify the two different brands, the ES Group, and the ES Energy Save, is that ES Group is really about strengthening our platforms for existing ODM and white label existing and new ODM and white label customers, which we previously referred as OEM.
OEM stands for original equipment manufacturer, and ODM means original design manufacturer. The reason we're changing the terminology is that our role is not just contract manufacturing. We develop, adapt, own the solutions which our partner can then market under their brands.
ODM white label describe better what we actually do and the added value we contribute with. We believe that we now have a stronger condition to continue developing this area further. One good example of this is that we, during the quarter, further strengthened our collaboration with Swegon by Blue Box by Swegon in the ODM white label segment.
This enables that Blue Box by Swegon can market their heat pumps based on our product platform under their own brand. Also during the quarter, we introduced the first propane unit, as you know, Helena was into before, for the commercial property portfolio, and we're seeing immediate demand for that product. In the quarter, we have delivered in total 10,000 propane heat pump to the market with an incredibly low failure rate.
Gives us a very high confidence that we can continue to grow this in both ODM WL, but ES Energy Save as a brand. We did deliver the first product to the Saudi Arabia market. Looking forward, we see a weaker second quarter due to seasonality and stock balancing by the ODM WL customer. However, we see trends of market recovery. If planned orders materialize, we expect to approach break even for the full year of 2026.
Thank you very much, Yibo, for this, for the summary of the quarter. Net revenue and operating income, we are seeing changes here, which is in line with our expectations. The net revenue in total declined by 8%, reaching SEK 49.4 million in the quarter, compared to SEK 53.9 million in the comparison quarter of last year. Operating income decreased by 7%, reaching SEK 53.3 million, compared to SEK 57.1 million in the quarter.
The decrease from the closest previous quarter in Q4 2025 by 30% is mainly due to the fact that we are now entering into a new seasonality, a new season, which is, we are very heavily affected by this due to the fact that we are very invested in the villa segment, as we can see on this slide.
The decrease in the quarter in total stems mainly from a decrease in the residential property segment, which amounts to 90% of our total net revenue in the quarter, reaching SEK 44.5 million compared to SEK 49.5 million in the comparison quarter of last year. On the commercial property side, we saw an increase of 50%.
This is an increase from very low levels, reaching SEK 2.9 million compared to SEK 1.9 million or SEK 2 million in the previous, sorry, in the comparison quarter of last year. This increase is still very positive, a very positive sign for us, even though it's from low levels, since the sale in this segment is mainly our newly developed 40-kilowatt propane ES Energy Save unit, which have been received very well by the market. The sales we are seeing here are a lot of initial samples or first purchases of one unit that will likely increase during the rest of the year.
I think, for the proper unit, this is something that we did not have a portfolio for when it comes to propane segments.
Now we have that enables us to new further businesses.
That will create new opportunities for us. With this first unit, we have several products in our pipeline to further develop on. For this unit, it gives us already entrance ticket to several discussion that we were not able to do before.
Exactly. This is very positive. The sales split on the brands, here we see, as we initially mentioned, a decrease on the ODM white label side by 27%, reaching SEK 33.5 million in the quarter, compared to SEK 45.9 million in the comparison quarter of last year. The ES Energy Save brand sales increased from SEK 8 million in the comparison quarter, reaching SEK 15.9 million in the first quarter of 2026, which is a very positive effect.
Right. Maybe I should just elaborate here a little bit on the, on the different brand routes. ODM white label, on this segment, we are going to the market through our ODM white label customers brand. Meanwhile, on ES Energy Save, we are going to the market through distributors in over 30 countries with our own brand. These are two different ways to the market, which have different characteristics, ways to the market.
We believe that we did amazing job to grow the ES Energy Save with a 99%, almost doubling that. Meanwhile, the European Heat Pump Association said the market will grow up with 17%.
During the same time.
During the same quarter. It's also important to know, to feel, we feel that our distributors are recovering, and they're gaining confidence with the number of heat pump we have delivered to markets with a very low failure rates.
We believe that our growth in the ES Energy Save will continue. Meanwhile, we're actively developing new customers on the ODM white label segments.
Very good. Sales split on the geographical side shows that we have had a big increase in the Scandinavian market, mainly due to the fact that the comparison quarter of last year, 2025, had a very low number of SEK 1 million compared then to SEK 6.9 million for the first quarter of 2026.
In Europe, outside of Scandinavia, this is where the decline was seen, 20% down, reaching SEK 42.5 million in the quarter, compared to SEK 52.9 million in the comparison quarter of last year. The number of sold heat pumps in the quarter reached 1,572.
This can be compared to the number of the first quarter of last year, 1,566, and the high number in the end of last year, 1,918 in the end. All in all, we saw OpEx decline in the quarter by 4%.
As I mentioned before, this is a sign now that our costs here are stabilizing after the savings package that we initiated in the end of 2024. We have seen this effect now for several quarters, and the effects here remain. Other external costs decreased by 7%, reaching SEK 10.2 million compared to SEK 11 million in the comparison quarter last year.
In the personnel expenses, we saw a very small decline, mainly the same level as the comparison quarter last year. In the EBIT, the EBIT margin reached minus 8%, EBIT minus SEK 4.2 million, compared to the previous year's minus SEK 3.9 million or minus SEK 4 million.
We are, as we have, Yibo Zhao mentioned this on the 1st slide, we do expect to see some similar trend, similar effects on the 2nd quarter of this year that we have seen on the 2nd quarter of last year. However, we do think that if the orders that are now planned, if they materialize, we do have the opportunity to move closer to break even for the full year of 2026.
Also, in the quarter, we had a positive effect on the gross margin, reaching 30%, compared to last year's 28% in the comparison quarter. Looking at the balance sheet, what stands out is a continued effect on our inventories, decreasing here by 23%.
Still, as it has been now for a couple of quarters, this is an effect, a net effect due to a decrease that comes from R32 units selling out of stock and an increase in renewed inventory, from newly purchased R290 propane units with our new platform. We are not only decreasing our inventory levels here in a way that we, that we wish to, we are also renewing the stock here, making it a very sound and, secure stock value for us.
We are very ready now to sell these products to the European market, the propane. Current receivables declined by 27%. We are seeing a similar effect on the liability side. A decrease in cash and bank balances by 20% from the comparison quarter.
May I add one thing on the inventories?
Absolutely.
There's a refrigeration, refrigerant ban on the previous refrigerants that are R32 and R410A.
The ban will be starting by the first of January 2027.
This ban is for.
For placing on the market in EU.
Basically, it means the same data as importing.
Mm. Mm
make a short summary of what that placing on the market is.
Right.
It's still available to sell these units on, onto the markets. If they are already placed in the market, we can sell this until 2030. Those units are still being demanded by our customers. Here we have a close dialogue together with our customers how to manage the stock situation. We have a stock for them, for those partners who want to sell the R32 and R410A units.
but also we knew how we shifted more and more of the propane units.
Mm. Very good clarification. Thank you. I mentioned a bit about the cash flow. All in all, we have a positive cash flow for the quarter, SEK 0.5 million during the first quarter of 2026. This can be compared to the first quarter of last year, where we had a negative cash flow of SEK 24,000,838.
Great
A 20% decrease in total outgoing cash and cash equivalents, SEK 23.6 million at the end of the period, compared to SEK 29.3 million in the comparison quarter, at the end of the comparison quarter of last year.
Let's summarize the quarter 1. We have an increase in ES Energy Save brand of sales, while we did experience a decrease in the white label sales. This we knew about, and this we were prepared about. We introduced the first unit in our propane property in the segment propane portfolio, and we see an immediate demand.
I should mention again that this is very strategically important for us to have. As Helena Wachtmeister was saying before with the seasonality graphs, we do see most often we see a weaker first half year. That is due to seasonality in the villa segments.
Mm. Mm.
We do see that the curve is more flat when it comes to commercial units, but now we are having the first unit in our portfolio for that segment in the propane platform. We're developing some more products in pipeline for that segment. We have delivered more than 10,000 heat pump to the market with very low failure rates.
Propane heat pumps.
Propane heat pumps.
We have delivered more than 40,000 heat pumps.
We have delivered more than 40,000 heat pump, but 10,000 propane heat pump.
Mm. Mm
with very low failure rates. We had a workshop together with our distributors, and they feel that they are very confident about the quality of our renewed product platform, starting from the propane unit. That is also part of the reason we see...
in the ESESA spread. We have delivered also explore new markets to Saudi Arabia market. That we have tested units and have good feedback. We're continuing that dialogue and see how we can explore that collaboration deeper.
also we signed, another white label, ODM white label customer, Blue Box by Swegon.
in this segment. Moving forward, me as the CEO, I will focus my time and energy to promote the sales in our activities in growing our company. Meaning we are increasing our growth in the sales, meanwhile, we are keeping down the costs, having high cost discipline.
We are, as we said before, we're expecting a seasonal downturn in the second quarter 2026. We will continue with activities in both ODM and white label partnerships, or as well as ES Energy Save for its distribution network. We do see positive trends now in the political focus, where now it's very urgent for EU to build resilience when it comes to in the European domestic heating.
As it becomes more and more, the different resource prices have been gone quite jeopardized over the past two months.
We do see that there's increased stress among the European politicians to build a green resilience.
We see there are market opportunity for us there as well.
Okay.
If the plan order materialize, we expect to approach a full year breakeven during 2026.
Okay. With that summary from our newly appointed CEO, we will now move into the Q&A part of the, of the thing. Here we go.
If you wish to ask a question please dial pound key five on your telephone keypad to enter the queue ,If you wish to withdraw your question please dial pound key six on your telephone keypad. The next question comes from Lara Mohtadi from ABG Sundal Collier. Please go ahead.
Hi. Just a couple of questions from my end. My first one is sort of on your outlook commentary. On the outlook for Q2, you guided for weaker volumes, but you also stated that you anticipate a rebound going into the second half of the year. What specific indicators are giving you this confidence for the recovery in the second half of the year? Is it primarily contracted ODM WL volumes, or is it maybe also order trends in the ES branded sales?
I think it's part of both. We have a contract volume with the ODM white label customer. The contract is until the end of this year. We also have seen positive trends for the ES, both when it comes to the confidence in ES sales brand, but also on the momentum we're seeing now among our distributors.
This is, of course, a momentum that is both for the residential segment, where there is an increase already, both in our sales and in the sales in Europe and in the EU. Also from the commercial segment, where we have not yet, as we have only seen the start of the possibilities in volumes for our ES Energy Save brand.
Great. You touched a bit on the commercial market, but, just on the broader market, here, your commercial sales were up year-over-year, but they're still on a very low base, and remain a quite a small piece of the pie.
You highlighted the accelerating sales of your 40 kW R290 heat pumps. You also like seeing any concrete signs that the broader commercial market is improving. What should we sort of view as a realistic timing or timeline for this segment to actually scale?
We do believe that on the 40 kW, we are now entering. We delivered the first unit in Q1, we are continue having dialogue with how to further grow in that segment. Right now we are experiencing that those are actually selling better than as anticipated we were supposed to do. Now we are having close dialogue to bring a better predictability of the 40 kW or more, or in commercial segment. Those are normally more predictable compared to the residential unit that is more of an consumer opportunistic business.
so to say.
You mean seasonality wise?
The seasonality-
A more even flow of sales to be expected.
Yes. When it come to commercial units, there's most often a real estate that needs to be renovated for the new heat pump, and they need to consult with a HVAC designer who knows that at a coming time in the future, they need to make a project to develop that.
renovate that building. There's a larger timeline to work with.
Meanwhile, when it come to the residential heat pump, a more opportunistic where there's one consumer who wants to buy a heat pump, and he goes to his heat pumps reseller and ask for a quote.
This is more residential side is more less predictable, meanwhile commercial side is more predictable. Now we're entering several longer dialogues with the commercial segment.
with a new propane unit that we were not able to have. Before we had that product in our portfolio.
Exactly. Now we have the product, we have the customers. That being said, also, of course, the commercial side, being a bit more even and sales-wise, it's also a bit longer time from the, to the sales point, right?
Yes, from the initial dialogue.
Yeah
until when we actually deliver the product, because there are different technical parameters that need to be-
to be solved out during the.
Yeah
It's a bit different sales.
Mm-hmm. We do expect an increase in turnover. We expect an even increase over the year.
Yes.
Okay. Very clear. Thank you. Just a question on the Blue Box by Swegon agreement. Can you maybe talk about how this agreement is ramping up? Is it primarily a contributor from next year, or do you expect it to have impact already now in the second half of this year?
No, we are, we are expecting to deliver the first unit within the Q2 or Q3 this year. We're aiming to deliver those soon to Swegon by Q2, but that is a project, so we are working together with them to introduce the unit to them. From their side, they will market it on the second half of the year to their customers.
Okay. How does the scale of this agreement maybe compare to the existing R32 Swegon business?
There is no-- This is, um, uh-
I should say that this is the first or, another, white label.
project. So we are shaping our organization to build capabilities to keep taking more and more of these companies that are one with the more white label. We do see there's increased inquiry of having a good platform that they want to go to buy from a European manufacturer of heat pumps, and has a digital solution, digital ecosystem to integrate their technologies in. But Swegon itself, we cannot comment specifically on that customer because that is information that belongs to our customer.
Yeah, exactly.
which we cannot comment.
We don't comment on the specifics of just one customer. That, yeah, that is correct. The major what we are really positive about is that this is the first of possibly several ODM white label partnerships in the same category or larger. This specific order is not a major, it won't affect our finances in a major way.
Swegon, we have delivered R32 to them before.
I think the timing was quite good because when we introduced the ES Group, we also align with the agreement with them.
Timing-wise, this is very, very good. We'll also be able to set the organization to handle more of these kind of dialogues.
Okay. Thank you. That was clear. Just a last one from me. Services and aftersales, they actually doubled from 2024 to 2025. Still from a lower base, but with the JS Energi spare parts partnership, you're describing this segment as kind of sort of an integral to sales or training, rather than your traditional support function. Could you maybe talk a bit about the medium-term ambitions for the services and aftersales segments? What sort of role do you want this to play for the group going forward?
I think services, and are not our main core, because our main core strategy is to develop products so they are not need to be repaired.
Fixed, which we also can see in the numbers of the 10,000 heat pump we have delivered.
Of course, if somebody has a trouble with the heat pump, they need to be able to fix that.
ES Group, we are not a consumer, we're not a B2C business.
Which mean that we have handled historically several of these issues. Our business setup is on B2B level. Therefore, we have entered a collaboration with JS Energi. The consumers who have product that needs a spare part can get that in within short time.
Exactly. it's an improved service level.
Improved service level
especially against the Nordic markets, where we would like to increase our presence, sales-wise. More of a net sales effect, really.
Yes. Mm-hmm. This also helps-
Okay
us to synchronize our resources.
which is growing on the ODM business, also grow on the ES and same distribution network.
Okay. Very clear. That was very helpful. That was all from my end, so thank you very much.
Thank you very much.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for written questions, any closing comments.
Yes. We have a couple of written questions that we would like to address here. We have a question here about the sales in Europe in the first quarter here. The sales of heat pump surge. There has been articles about surge of heat pumps in sales in the market.
There is a participant that would like to hear about our view on the heat pump market for the remainder of 2026, and how subsidies in different countries will accelerate the sales for our ES brand. This is a very interesting question because we are seeing, of course, the same following this.
The heat pump market has been in decline for two years during 2023 and 2024. We've seen a smaller increase during 2025, and during this time we have expected, and many of us have expected a faster turnaround in the market since this is a market with a underlying growth that will reappear at some point.
We believe that this is now, this is now, the trends now are very clear and a lot more backed up by political initiatives than it has been during this past couple of years, where the EU Heat Pump Action Plan was planned but they never went through with the EU Heat Pump Action Plan.
Now we are seeing a lot of clear political communications about this from the EU Commission has clarified that there is now a pronounced goal to reach 4 million heat pumps in annual sales within the EU in 2030.
That is from today's level of 2.6. This will be done by balancing out the pricing of electricity versus gas, and that can be done by reducing the VAT on heat pumps or reducing tax on electricity. These initiatives will benefit the heat pump market very much likely.
Also this clarity from the legislative from the EU will of course make it easier and more natural for individual nations to continue in clarity with their subsidy programs. This will likely be, how do you call it? Like a wave effect from the subsidies, from regulatory in the EU and out in the to the EU, to the member countries.
We believe that this can have a great effect on our ES and Energy Save sales.
I think here also that we should put in consideration here what journey we have been through, what the market has been through.
2022, everybody vacuum clean the market on heat pumps, and that result of starting from 2023, the European market has been overstocked with heat pumps.
Now, gradually we're seeing that it's becoming more like healthy stock situation on the European market.
Starting from 2023, 2024 and also 2025, we are also seeing that there increased level of demand of the product for the heat pumps.
The product is getting better and better.
Also with the latest Industrial Accelerator Act that is aimed to be implemented 2030, it will be make more difficult to purely trade that heat pumps coming from Asia.
That is, that first, the level is getting higher of the heat pumps.
Meanwhile, European also going to raise the subsidies.
saying that we want to make the European manufacturer.
We are quite well positioned with our, with our factory in Turkey to accelerate that, meanwhile also have shown the confidence in our volume and quality of the propane unit we have.
Exactly. Thank you for that. Next question here. You are talking about a name change from calling yourself Energy Save and starting to call yourself ES Group. What does this mean?
Yeah. I have worked many years in Volvo Group.
It's just a similar philosophy we're taking to Energy Save as with ES Group. Volvo Group, they have different truck brands, Volvo Trucks, they have Renault Trucks, they have Mack Truck to mention a few. All of the same trucks are built on the same truck platform. The same philosophy we're adapting here is all the heat pump we're manufacturing, we're delivering to market, are based on the ES Group's technology, IP, competence, ecosystem on the digital side, but they might come out from different channels to the market.
There's one channel, which is ES Energy Save brand. There's another channel, for example, Swegon. There's a third channel, could be a different brand. Making the difference in the brand become easier communicates with the target customer we want to have a dialogue with.
Right. We do have a question here. Thank you. Sorry. Thank you. Okay. We have a question here. Let me just translate while speaking. The residential heat pumps was up 25% in the first quarter, where Poland, U.K., and France was very strong market. This is on the market side. Our turnover is decreasing and instead increasing the number of sold heat pumps by only 0.4%. Let's see here.
The question is here, what is the plan for the rest of the year to be able to reach growth in what appears to be a very beneficial climate for heat pumps. Yeah, we believe this will be a year with a very beneficial climate for heat pumps. That is correct.
The reason that our sales in this quarter are decreasing on the ODM white label side is due to stock balancing from ODM white label customers. That's the largest effect really affecting net revenue.
Yeah. Maybe I can elaborate a little bit here. If we say we take ES Energy Save brand as example, here we do help our distributor to stock keep this, and we deliver to this when they want this unit to their warehouse in order to get the opportunity six business, for example, or before they have a planned installation for the commercial units.
Here we have quite good data with our ES own brand and units, we of course need to keep a stock for them to get more businesses. On the ODM white label side, we don't stock keep unit for them. They need to do their own stock planning, stock keeping, and we have a downturn in quarter one.
That again is based because of our ODM white label customers. They are stock balancing. They are planning for their own stock. They believe they have sufficient stock for the first quarter, and they didn't want to increase the stock as they're getting ready for an increased seasonality on the second quarter.
On the second half year. We should remember that on the villa side, it's more, seasonal effects.
rather than a commercial side.
Exactly. That is very correct. Since we have the opportunity during this year to increase the sales on the commercial side. We also have the opportunity to somewhat mitigate that seasonality for the following years.
Yes. If I get that question, there's also the question of why we increase the sold heat pumps while the turnover is decreasing. The reason for that is because there's a different product mix that have been sold compared to last year.
Yeah, that is correct. Exactly.
Meanwhile, actually, we lifted our margin.
28%-50%.
Yeah.
We're keeping our, or we're increasing our margins, we are increasing the volume of heat pump we are getting out on the markets.
Absolutely. Yeah. Maybe 'cause we are getting a lot of questions about, like, estimated sales or just how can we affect the sales on our side. I think Yibo Zhao has mentioned in his in the presentation now, but maybe we should clarify that the focus on sales this year is we're always focused on sales.
This year we have a very strong focus on developing our customer base in the ODM WL segment, where we have an amazing opportunity. We have a developed product platform that can easily take interested customers that want to develop their own brand towards the market.
We can fairly, with low risk and a fairly speedy process, take them to market and have a full supply chain and design capability ready. These customers can integrate with our platform with any on the level of their own choosing. It can be a full-blown design, a collaboration. It can also be a straight-off white label delivery in a shorter time. This opportunity with the ERA case that we have now is a very strong offer to the market. This is the sales in this segment is one of our major focus areas right now.
Yes.
Yeah.
Yes, yes. Yeah. Yes, yes.
As well as developing sales for the ES Energy Save brand, where we have seen effects in this quarter, a double of sales. We are launching the commercial, the propane commercial product also, first of several in a line that will be launched.
Yes
during this year. Yeah. Just a bit clarification for our sales plan really moving forward. Okay. Yes, I think we have a question about prices. I think you covered that. I think we covered all the questions now, right? Yeah. No, I'm sorry. There is one very important one, maybe has been, we have seen perhaps, but really is a good one to perhaps send us off on. Yibo, you have now been the CEO for two weeks. What will you focus on? What will your focus in your leadership?
I think this is quite, we can summarize the, what we have discussed here. I will focus my time to grow in our company, both when it come to grow together with new and existing ODM white label customers, meanwhile growing on the ES Energy Save brand. I should also mention that to grow this and making this company profitable, we should have high cost discipline. The ambition is to go and grow us into profitable company.
in the coming years. Focus now on building the good platform we have, platform base we have, growing that together with partnerships on the market, accelerating the product because we are really confident about the portfolio we now have.
Very good. Thank you. With that, I think we, I don't think we have any more questions we haven't addressed. With that, we would like to thank you very much for participating and for listening in today. We will see you again in three months time, approximately.
Thank you very much.
Thank you.