Welcome to the Green Landscaping Group Q1 Presentation 2025. For the first part of the presentation, participants will be in listen-only mode. During the Q&A 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 CEO Johan Nordström and CFO Marcus Holmström . Please go ahead.
Thank you, and welcome to today's earnings call. As mentioned, my name is Johan Nordström, and I'm joined today by our CFO, Marcus Holmström, who is doing his second earnings call, I believe. He will manage the financial section of this presentation. Before we dive into the presentation, just let me tell you about the start of the year and put that into context. We have just left one of the mildest winters for the last 15 years behind us, and the lack of snowfall has, of course, impacted our Q1 numbers. Of course, I'm not satisfied with the performance where we are today. Sales were down about 12%, and the EBITDA margin ended up at 3.2%. Now, being an outdoor company exposed to changing weather conditions, these situations occur. As I said, of course, we're not satisfied with the performance.
We are doing what we can to mitigate the financial impact. When we are comparing to similar conditions as we had back in 2020, we're actually doing better. We are not pleased with the performance, but I can see significant signs of improvements. Now, moving away from the weather, we can still see the market conditions, and that is particular in Sweden, Finland, Norway, and Germany, which are our main markets. Our, let's say, outlook is basically that the markets are moving sideways. We are starting to see some positive signs, some discussions. That is, to some extent, also a slightly decreased competitive situation. We do not forecast that that will have any material impact in any near-time future.
As for the current economic and political turmoil, with tariffs hitting global trade and so forth, our belief today is that we will not be directly impacted again in the near-time future. If we have a recession coming in or something similar, of course, we will be impacted. At this point of time, we do not forecast any negative impact on what is going on. In terms of M&A, I confirm our vision to invest in 8-10 companies during the course of the year, and those plans are progressing. Having that said, let's dive into the Q1 presentation and move on to slide number two. Now, Green Landscaping Group is the leading company for ground maintenance and landscaping services in Europe. We perform mainly three services. That is, landscaping services, the outdoor services, and, of course, the maintenance side of the business.
The third item we have are winter services. In terms of the market we serve, it is a very big and very stable market, and we see a steady growth in the market as well. We do like being in the market, in particular, as we are an acquiring company. That means we have a lot of companies to choose from in that market. We have, during a very long time, developed our business model to fit into the market, in particular, as we are decentralized, meaning that we have local entities serving local entities. That means we are very fast, very nimble, and given the market, we are quite a profitable company. The last item is really about the M&A strategy, and we have been investing in other companies for a long time.
We do know what we are looking for, and we do know how to take care of and develop the company that chooses to join the group. That is just a short description of Green Landscaping Group. Moving on to the next slide here. If we look upon the financial performance for the rolling 12 months, we can see that net sales have increased by 4% to slightly shy of SEK 6.2 billion, where the organic growth, given the development in the Q1 this year, is a negative 4%, while we had acquisitions contributing with 8%. EBITA decreased by 8%, and there we are right now at SEK 477 million. We also saw that the EBITA margin had contracted approximately by 1%, so it means we are coming from 8.7% to 7.7%. Cash flow from operating activities is right now at SEK 532 million.
That is, of course, a significant improvement during the last two quarters. Moving into the Q1 , as I said, I'm not happy or satisfied with the financial performance, and it was impacted by a very unusual mild winter. I will come back to that one later on in the presentation. There we saw that the net sales decreased by 12% to SEK 1.2 billion. Of course, organic growth contracted by 18%. I assume we're going to get some questions about this, but that is the vast majority of the contraction. That is actually not market-related. It's just weather-related that when you don't have the snowfall, then, of course, you have a significant impact on the business we are doing during the Q1 . Now, EBITA decreased by 56%, so we came in at SEK 40 million in EBITA.
Basically, the margin went from 6.5% the previous Q1 quarter to 3.2%. Cash flow came in pretty much in line with our expectation at SEK 139 million. Of course, the financial leverage also came in as we expected at 2.6%. As I said, I'm confirmed with the ambition to invest in other companies, but we have yet to do the first acquisition for this year. Moving on into the next slide here. As can be seen, we have been growing, and we've been growing for quite a long time, and that is still on plan. In terms of the focus for the future growth, in particular for the M&A activities, that is in Germany. If we look upon the financial performance, the EBITA, we can see that we have been growing up until the Q4 of 2023.
We have been kind of flat for basically five, six quarters at this point of time. That is basically because of the market conditions, as we saw in the beginning of 2024, with basically a high interest rate and, I would say, a tough market environment. That means that there is still a potential to grow and improve in terms of profitability, and we are working heavily on it. Again, we are investing money in growing the profitability, and I still expect us to come back onto a positive growth trend when it comes to the EBITA performance of the company. For the last five quarters, it's been kind of flat. Talking about the winter, and in particular, it's on the right-hand side I would like to discuss.
That is the statistics we have based on how much snowfall we have had based on the cities where we are active. Typically, if it snows less than 5 cm, we do not have any snow activity. For us to make what we call a snow round, or when we're actually out taking away the snow, you should see a snowfall heavier than 5 cm in a day. The average where we are active is about four times during the season. In the year of 2020 and in the year of 2025, the Q1 of each year, we can see that we had 1.3 times, and we had 1.5 times this year. When we are comparing the year 2020 to 2025, in terms of winter conditions, they are pretty much the same and significantly lower than historically.
The average. Average. Thank you. The average. They are quite below the average, and that does have a significant negative impact on our activities during the Q1 . That is why we are comparing the performance in 2020 to 2025. What can be clearly seen is that in terms of Sweden, we have improvement in that area, while Norway are the guys who are basically falling short. We have made a significant improvement in Sweden during the last five years in terms of mitigating the dependency on snowfall, while in Norway, we have more work to do in order to be able to make money, even though we do not have the winter services. That is something that needs to happen inside our company. Now, looking upon segment Sweden again, in terms of the rolling 12 months, we can see that the net sales decreased by 10%.
The EBITA decreased by 35% to SEK 140 million. That gives us a 4.4% margin. The Q1, that's the one I'm referring to, we can see that the net sales is actually coming down by 20%. It is a significant decrease in terms of the revenue in the Q1 , while we are still able to deliver a 6.1% margin in that particular quarter. That is actually a strong, I would say it's not a good number, but it's still a strong performance given the weather conditions we have with an unusually mild winter. Also, there is a high level of activities, I would say, in Sweden, and has been so for the last two years in terms of improving the overall financial performance. That is well on track.
We do expect to see, I will not say significant, but it will be signs during the course of the year that we will continue to improve the financial performance in Sweden. We have good reason for that statement. Now, moving on to Norway, to the next slide. There we can see that organically, for the rolling 12 months, we are still growing by 3%, even though we have the negative impact of the Q1 . We have an organic growth of 2%, and then we have one acquisition, if I remember correctly, that is contributing with 3%. Of course, the EBITA, there we can see a decrease by 21%. That means that we are coming from a 10.4% profit margin down to an 8% profit margin for the rolling 12 months.
Now, for the Q1 , again, we can see that the winter, or the mild winter effect, is negatively impacting the segment in Norway. It means we are decreasing by 18%. Of course, we saw a significant decrease on the EBITA performance by 116%. Basically, we went from a margin of 8.8% to a negative 1.7% in this quarter. Of course, that is the unusual mild weather, and to some extent, the lack of readiness on how to cope with that situation in the companies we have in Norway. We should also bear in mind that some of the companies we have are focused on like pure winter service companies, and they have been quite successful for the last two years when we have had winter in Norway.
I do prefer to look upon the performance of those companies in terms of the average for the three years. I'm not excusing the numbers. I'm saying that's the way you should look upon that business because they are quite profitable when it's snowing. Of course, when you don't have the winter, they are not that profitable. There is a volatility in their number built in. There are other companies in Norway that are more similar to the operations we have in Sweden. Those are the companies I actually believe we should see an improved financial performance moving into the future. We are talking about Other Europe. For the rolling 12 months, we can see that we have a heavy growth in that area. This is where we are focusing the main effort in terms of growth.
We are growing by 66% in the rolling 12 months. That means we are now above SEK 1 billion. Organically, they are growing by 3% and acquisitions by 64%. In terms of profitability, that one increased by 60% to SEK 222 million. Right now, for the rolling 12 months, we are at a margin of 20%. That is kind of a healthy margin, but we saw that in Norway as well, that when we are building up the situation, then you are able to have that type of margin. In terms of Q1, we can see that the net sales increased by 87% to SEK 195 million. We have the EBITA that increased to SEK 23 million, giving us a margin of 11.7%. In that number, I believe Marcus, we have included the sale of a building.
In Lithuania, yes, of SEK 19 million.
There is a capital gain from a property of SEK 19 million in those numbers. When I look upon the vast majority of the companies we have in Germany, the Q1 is a low activity season for them because you have fewer working days, and also you have vacation. They have a situation where they actually spend more working hours during the summertime frame when they're running the projects. Then they actually work fewer hours during the Q1 . Naturally, we will see low activity in the Q1 . It is a low season, basically, with winter conditions and vacations in Germany. I think that concludes my part of the presentation here. As I said, we are heavily impacted by the weather situations, and I'm not satisfied with the number per se, but there are things that have gone our way, in particular in Sweden.
I'd like to focus on that one. The things that will be done in Norway, in particular, moving into the future. Marcus, over to you.
Thank you, Johan. I will cover the main financials. Starting with a few key financials, as I said, quarter one showed net sales of SEK 1.2 billion, bringing our rolling 12 months sales to SEK 6.2 billion, resulting in a total growth of 14.4% rolling 12 months. EBITA in the Q1 came in at SEK 40 million, which was behind last year. As Johan explained, the mild weather negatively impacted the demand for winter services, thus also the profitability in Sweden and Norway. Meanwhile, Other Europe delivered a higher performance than last year, attributed to a higher level of activity in landscaping and construction. Also, the last mentioned here, capital gain from sale of property in Lithuania of SEK 19 million. This winter has been unusually mild, and we anticipate that mild winters will become more frequent in the future.
We address actions thereafter, as we have done already in Sweden, looking at the financial outcome comparing to 2020 with similar weather conditions. I will cover more about cash flow in the upcoming slides. Following the strong cash flow in Q4, we came in roughly in line with seasonal expectations on working capital development in Q1, resulting in a cash flow from operating activities of SEK 139 million. Financial leverage increased sequentially to 2.6 times. Order backlog remained on levels from Q4, but levels lower than last year. Have in mind that size fluctuates between quarters, and it should therefore not be a short-term indicator where we are heading. Moving on to cash flow.
As I said, following the strong cash flow in Q4, we continue to manage to reduce working capital in the Q1 , supported by a bit lower season, but also results from the extra efforts made in cash flow focus. Operating cash flow amounted to SEK 139 million, which brings our rolling 12 months cash flow from operating activities to SEK 531 million, comparing to our rolling 12 months EBITA over SEK 477 million. We are converting at a healthy level, but working capital development and cash flow generation continues, as always, to be a focus area of us. Moving on to the bridge, cash flow bridge in the quarter. As I said, again, operating cash flow amounted to SEK 139 million.
We did not close any acquisitions in the quarter, but we paid out earnings totaling SEK 39 million. Cash flow from CapEx and other lease amortization totaled to minus SEK 38 million. We had a net difference between new loans and debt repayment of minus SEK 38 million, totaling the cash flow for the period to SEK 24 million. Financial leverage, as I said, increased sequentially to 2.6 times EBITA and was a result of our lower earnings in the quarter. Despite being slightly above our financial target of 2.5%, we have good headroom to financial covenant in our loan agreements. Our loan maturity profile remained the same as in last quarter. It will mature at the end of 2026.
These are bank loans from three different banks. We have initiated the refinancing discussions with them to start them well in advance of the maturity date. Just concluding a slide of our financial targets. We have a growth target of 10%, and we are currently trading at 4% growth rolling 12 months, which is below target and as a result of the negative growth here in Q1 as a consequence of the weather. We are slightly below on the EBITA margin, 7.7%, our financial leverage at 2.6%. In conjunction with the Q4 report, the board proposed to the annual general meeting that no dividend should be distributed for fiscal year of 2024. We will hold our annual general meeting at 9th of May. With that said, I will hand back to you, Johan, to wrap the presentation.
Thank you very much. As I started with, we are just leaving that mild winter behind us. It is one of the mildest we have had in 15 years. Of course, that has had a negative impact on our performance. That clearly means I am not happy with the financial performance we can see. It is also twofold because we had a similar situation back in 2020. We have been working, I would say, diligently to minimize the impact of a mild winter. We can clearly see that the activities in Sweden are bearing fruit from that perspective. When they are coming in at a margin of 6%, I think that is actually, given the conditions we have, not a good performance, but it is an okay performance. It clearly shows that things can be done to mitigate the weather conditions.
From that perspective, it's a twofold feeling that, again, I'm not happy with the performance per se. On the other hand, I'm quite convinced that we can and need to do something in Norway, in particular, to improve the situation moving into the future. That's pretty much where to sum up the situation here.
Perfect. With that, we will open up for questions.
Thank you.
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 Dan Johansson from SEB. Please go ahead.
Yes, good afternoon, Johan and Marcus. Three questions from my side. Maybe I'll start a bit with Norway. You spoke a lot about it here in the call, but you said I get the dynamics right here in terms of weather impact in Norway. When I'm looking at Sweden, you had a similar drop in sales as in Norway. In Sweden, you were better on defending your margin compared to Norway this quarter compared to last year. Does it have to do with your cost structure in Sweden versus Norway, where you might use less temporary staff in Norway, for example? It is more difficult to adapt to less snow, for example, this year. Or does it more have to do with the mix of companies you have in Norway versus Sweden, which might be more dependent on snow removal? Thank you.
Okay, Dan. First of all, thank you for the question because you're absolutely right that in Norway, we have a couple of companies that are very snow-dependent. When you have snow, they are contributing significantly to the profit. We do not have that type of companies in Sweden. That is basically two companies, I would say, in Norway. I'm referring to mainly the companies behind the big snow removal companies we have in Norway that do perform similar services as we are doing in the southern part of Sweden. We initiated activities five years ago in Sweden on how to be profitable, even though we do not have snow. As the climate changes are progressing, we will see that in the southern part of Sweden, for instance, we hardly reckon with snow anymore.
We're basically planning the activities more or less without any snow, at least along the coastline. That work has clearly turned those companies into, let's say, three-season companies, not the four-season, because we don't have the winter services. They are planning the Q1 activities based on landscaping and maintenance and having excavations and having construction work going on. That's how they solved it. Norway hasn't had that situation. The Q1 is typically a winter quarter. Those companies who are performing landscaping services are the ones who basically had too low flexibility in terms of employees. Also, it's a matter of how the contract is written with the customer. You have to start with the customer having a more flexible contract with them, with less dependency on the winter and so forth. It's a process that takes a couple of years.
You have to involve the customers in the process to basically realize that if winter does not come, the customer should not pay for winter, which we if we do not have the winter services. There should be a readiness both on the customer side as well as on our side. What do we do when we do not have winter conditions? I think that is a process that needs to start in Norway. That one has already been going on for quite some time in Sweden.
There are several activities that need to be done both internally that you control over and activities that you have to do together with the customers to have greater flexibility. When you have a situation like this winter that you do not wait for winter, you basically start with landscaping activities. I think that's the key point that needs to happen in Norway.
Thank you. I understood. Maybe a follow-up to that. Is that made on more of a contractual basis, or is it more in a dialogue with the customer each year? How does that work in practice in southern Sweden, for example?
It has to be by the contracts. Sorry, because you can't have the dialogue per se. You have to make sure that, because as I usually claim, the customers have a budget to a large extent. If they spend a lot of money on winter services, then there's less money for landscaping services during the summer season. You have a similar situation going on in Norway. You have to rewrite the contract and rewrite the readiness. You still have to be able to perform the winter services because that is essential. When you have snow, you have to be able to take it away. If you do not have snow, you have to have the readiness. That means you have to have a contractual agreement that covers both, that we have the readiness for winter.
If we do not have winter, we need to have other activities going on. You have to do that in collaboration with the customers so both parties end up winning on it. For Norway, basically, if you did not spend the money on the winter services, there will be some recovery going on for the coming three quarters of this year because they still have the budget. There will be an upside in the coming three quarters.
Okay, sounds good. Maybe more on demand level. Your order backlog is on the same level as in Q4. Could you say something about how you feel about the market now compared to a year ago? Is it moving sideways or anything new? If it's a difference between the countries, if possible, could you say something about current trading and how you feel the start of Q2 has been when you enter the high season.
What we can see, what I can see changes is actually in Germany and in Sweden, where we actually see that the level of competition is decreasing, meaning you have fewer companies who are submitting quotations for work. From that perspective, probably what I see given that situation is basically, yes, that the situation is improving in Sweden and Norway. I do not see any major change in Finland, unfortunately, while I actually see a slightly growing level of competition in Norway. That is our view at this point of time, that yes, it is moving sideways. I am slightly more optimistic when it comes to Sweden and Germany, while Finland is still in the same situation.
And yeah, it could be that you have little snow in Norway, for instance, and that is why you have a higher level of landscaping competition going on. I cannot say. I see that we do not see that the level of competition is not decreasing in Norway at this point of time. The shortfall in the Q1 is based on the mild winter, not the competition, because we are quoting business that we will deliver in the coming three, four, five, six months. We are not quoting business today that we should do tomorrow.
Perfect. If anything you can say about the first week here in April, has it been a normal start to the quarter or anything unusual, both on the upside or downside that we should be aware of?
No, I would say it's a bit too soon. What has happened when you don't have the winter is that we're basically well into the summer season, meaning that we already have picked up the gravel from the streets and done all that type of work. We are basically several weeks ahead of schedule, if you like. There's a certain rhythm that we have that you have the winter, and then you have the winter activities. Of course, you have to do the cleaning stuff on the cities. You start with the landscaping and flowers and so forth. As we didn't have any winter, that means we are already done with the typical spring activities and are moving into landscaping activities in particular in Sweden.
Okay, thank you so much. I think those are all my questions for now. I'll jump into the queue for now.
Okay, thank you, Dan.
The next question comes from Matts Andersson from DNB Markets. Please go ahead.
Yeah, hi. Hi both. Thanks for taking my questions. I think, yeah, obviously a difficult quarter by many means. I think, as you also said, yourself, Johan, Sweden, to me, looks, at least from a margin perspective, looks quite strong. Obviously, very difficult to compare against last year. At least compared to my estimates and, I guess, consensus as well, the margin was actually quite healthy in Sweden. I was wondering, I mean, as the first question, if you look at it on a like-for-like basis, say that if you envisaged that you had the same winter this year in Sweden that you had last year, what would the margin have looked like? I'm just trying to understand how much the initiatives you've already taken, the fruits of that, how much that would have yielded on a like-for-like basis.
Thank you for the questions. Sorry to say we haven't been able to make that analysis yet. It's quite interesting because we are doing those types of analysis. My assumption was that, given the weather conditions, my base case was basically that I thought that Norway should have performed a little bit better. I thought that Sweden would have performed a little bit worse than the result was. I'm positively surprised by the profit margin in Sweden, given the weather conditions, because we still have weather contracts and we still make money out of contract in Sweden. I'm positively surprised how they were able to cope with the very mild situation. From that perspective, we have to do the analysis. Again, I'm surprised how well that one worked out for us. It's kind of hard to test that one when you have winter.
If you hadn't had winter, what type of profitability would you have had? Those types of analyses are almost impossible to make when you have 25 companies in Sweden. Vice versa, we looked upon Norway. If we actually made the analysis based on, okay, if the Norwegian companies who are similar to Sweden, what would they have made if they had made the same type of activities just to come up with a number on what we should have been expecting if everything else were equal? Yeah, we have some work to do here from the analysis perspective.
Of course, it's quite clear that if we are able to deliver a 6% profit margin or EBITDA margin in Sweden given these weather conditions, and that is a good number because it is a low season, I am not satisfied with a negative 1.7% or whatever we had in Norway. That one is clearly, there is clearly room for improvement in that number. If you can bring it all the way up to 6%, not sure, I would say, at this point of time, because we have companies who are quite profitable and focused on snow removal. If I exclude those companies, then yeah, that's the type of analysis we have made.
Yes, we have a number in our head on what Norway should be producing the next time we end up in a mild winter because the climate is changing and we have to plan accordingly. Actually, I think it serves us well. We are actually on the beneficial side when it becomes warmer. It does not mean I am positive to climate change. From a business perspective, it actually means that we have more work to do. As the cities are investing in cool areas, they are building trees, they are building oases and stuff. You have to take care of the water. That actually means that we are the company who are performing that work. There is an increasing amount of work that we will be doing as the climate change continues.
Fair enough, fair enough. I mean, if we just stick with.
Sorry, just adding on to it a bit of your initial question on the improvement measures. We can. That we initiated during last year in Sweden, we are progressing to that plan. As you said in the presentation, Johan, we will see benefits from those in the coming quarters.
Yeah, okay, sorry. Yeah, those are the activities that are above and beyond the mild winter that we are clearly improving in Sweden. I am looking forward to the coming three quarters where we can see the changes we have done in Sweden.
Yeah, I mean, yeah, exactly. Just sticking with that, I mean, are you still confident that you will see margin increase year over year in Sweden? Should we already expect that from Q2? Is that a fair assumption?
It's a bit too soon. I would say Q3.
Okay, understood. Maybe just on rest of Europe or Other Europe, sorry, obviously a very different business than the business was just one year ago. There have been significant changes, almost doubling of revenues. I was under the impression that the more recent companies that you acquired in Other Europe had an even weaker winter season. Obviously, if we adjust for the SEK 19 million, I guess, non-operational sort of impact, then you would still have made a small profit, at least at an EBITDA level in that division. Year over year, that looks like a significant improvement. What is that? Is that essentially just being able to do stuff earlier because of the milder winter in that region? What's the real driving force behind that?
That's basically the mix of the companies we have and how they perform. We haven't yet today initiated any activities on those companies to improve the performance in Q1 because we are basically now taking care of the companies. We're looking for best practices. We are getting them into thinking in the same way as we are thinking. I would say this is a mix. It's the product mix, if you like. It's a mix of the different companies we have and the way they operate. The majority of the companies we have in Germany at this point of time, I think it's with one exception, actually, who has winter services. The rest of the companies are more or less landscaping companies without any winter services given where they are located. It's basically Stäbler and Stange who have winter services in their portfolio.
The rest of the companies in Germany do not have any winter services in their portfolio.
Fair enough. Maybe just one last from me. Obviously, selling an asset in Lithuania, is this, I mean, what was the rationale behind this? Is this a new sort of strategic shift or priority to become more asset-light? What's the rationale here, please?
Not at all. It was aimed to that. We're still trying to be asset-light. That is our base assumption when we do something. Typically, if we choose to invest in a building, brick and mortar, there needs to be a rationale for it. In Lithuania, there was a rationale to do that investment. They have relocated to a new and bigger building because the company is growing significantly. I think the lease ended, so we had to move. We were basically the owner of that building. That is why we moved the company into a new building. We sold that property with a healthy profit. I'm glad we showed up a profit on that property.
Yeah, understood. Thank you.
Typically, we do not deal with, we do not speculate in buildings. If we choose to do it, it must be a rationale. We did a similar situation, I believe, in Switzerland, where that building was very crucial to the work they are doing in that city they are located. The building was crucial. The same was in Lithuania, that we needed to have that building. Otherwise, we typically stay away from acquiring buildings. As long as it is not needed, we do not buy them.
Understood. Thank you.
Thank you.
Thank you.
The next question comes from Alexander Siljeström from Pareto. Please go ahead.
Hi guys. Just two quick follow-ups from my side. The first one, just if you could talk a bit about to what extent you were able to shift landscaping activities into Q1 and also how that will impact Q2 and Q4.
Basically, Alexander, sorry for the sound was a bit off, but was it to what extent we managed to shift our landscaping activities into Q1?
Yeah, and the impact for Q2 and Q4 also then.
Given the activities, again, we are referring to Sweden, I assume. That means that the companies in Sweden have collected, there are a number of things they are doing, working with the customer and changes in contracts and so forth. That also means they are actually collecting work orders that can be performed like, "You should do this before the beginning of June," or whatever. They start to collect those work orders at the third and the Q4 of the previous year. It means they have a pipeline of work, landscaping work that the customer has ordered. They want it to be done, and it does not have to be done immediately. There is no time limit. It is kind of an open-ended contract that you have to rebuild the playground before the end of April, let's say. We are collecting on those.
Those are high-value orders for the companies. They have other orders that have a timeline to them that they have to perform by a certain date. You have to begin by before and so forth. That means that you are collecting those orders, and then you look upon the weather conditions. Depending on, do you have frost, do you have snow, then you cannot do those. You do the winter services. If you do not have that situation, you start immediately with performing those types of services. From the customer side, and I assume you mean by the impact, is that should we see a lower revenue because of that we already worked with the customers and so forth. That is not our expectation.
It's actually that the customers in, let's say, southern parts of Sweden and around the coast, they have a budget, and they have already allocated a certain amount of money. As you do not have winter services, they do the landscaping services instead. That means, yes, we have done work. We have done landscaping work, and we have been paid for that work, so to say. The customer's budget remains the same as we didn't have any winter services going on.
Okay, that's very helpful.
That's what I'm saying.
Yeah, perfect. If you could talk a bit about the M&A pipeline and also how comfortable you are with the leverage position here at 2.6 times EBITDA.
Yeah, if we start with the 2.6 in terms of the leverage, I'm pleased with that level given the, let's say, the bad financial performance in the Q1 . To end up being at 2.6 given the profit and the winter conditions, I think that is a healthy level. During the second quarter, we actually invest in, that's a build-up period because that's where we are starting projects, and that has a tendency of drawing cash from us. There will be an increase in the financial leverage as we are ending the Q2 . That is typically the cyclicality you can see for the last few years. It will go up by 0.1-0.2 times. That is what I expect happening this year as well. In terms of M&A activities, we still have that capacity. We are on track on doing that one.
That means we will do some M&A activities before the end of the Q2 . The majority of the activities on M&A will happen by the end of the month of June.
Okay, perfect. That's it from me. Thanks.
Okay, thank you.
The next question comes from Julia Sundvall from ABG Sundal Collier. Please go ahead.
Yes, thank you for having my question. I have another question on the weather-dependent companies in Norway. When you change the companies to become less weather-dependent, is there anything happening to the margin, both in the winter months when there is snow, but also on a year basis?
Yeah, again, thank you for the question. What happens is really that when you are an independent company, not a public company as we are, what I have seen is that there's a tendency of speculation going on, meaning that you have a summer contract and you have a winter contract. Of course, you can speculate on the snow part of it. That, to some extent, is problematic to us because we do not like the volatilities. We have to be more careful in what's going on there, meaning that we have less speculation going on on the snow. A newly acquired company might have a winter contract that is quite profitable because of the speculation situation.
If you are trying to even that out, that means that the contracts on the summer services, when they're being renewed, should show up on higher profit margins, while the winter contract will actually have lower margin versus how it was before. I think that's what typically is going on. I would say that the profit margins are being evened out on the seasonality, and you will have a less seasonality effect as you are going forward. I think that is actually what we are seeing in Sweden right now when we have a +6% in the winter time frame. It is not easy to say that if you just stop speculating, yep, then you are going to see that the winter contracts will be less profitable, while the summer contract will have an increased profitability. That is what I have been seeing.
Overall, we are talking about the same amount of money. It does not change the year-end number, if that makes sense.
Yes, thank you. That was all for me.
Okay, thank you very much.
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, so I hand the conference back to the speakers for any closing comments.
Okay, thank you very much. Thank you all for listening in there. As I did start with, it's a twofold feeling I have for this quarter. As I said, I'm not happy with the financial performance on the overall of the company given the weather conditions. I am also positively surprised about the activities that have been taking place in Sweden and the profit margin is so in Sweden. That gives us courage on how to deal with the weather dependency in Norway moving into the future. From that perspective, it's not market-related. The company is growing and the company is improving. I am looking forward to the future.
I think that's a good closing remark.
Yeah. Thank you all for listening in. Thank you all.