Welcome to the Indutrade Q1 presentation for 2026. During the questions- and- answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO Bo Annvik and CFO Patrik Johnson. Please go ahead.
Welcome, and good morning on our behalf as well. As usual, let's start with some overall highlights from the quarter. We can begin with the demand situation. Order intake continued to improve versus last year. Organically, the order intake increased +1%, with slightly more than half of the companies showing a positive order intake. The strongest segments were medical technology and pharmaceuticals, energy, and parts of the process industry. Net sales were unchanged from last year, both in total and organically.
Contributions from acquisitions improved compared to the last quarters and was at a good level. EBITDA margin came in at 13.3%, in line with the underlying margin last year, and we will comment more on this further on in the presentation. Operating cash flow was also in line with last year. Our companies continue to improve management of working capital. Inventories are lower than last year, and the inventory in relation to sales is on a historically low level.
In Q1, we managed to acquire two larger companies, and we also made one more acquisition in April, adding SEK 625 million in revenue on a yearly basis, and the pipeline is continued strong. We are obviously not satisfied with the overall performance in the quarter, however, there are good progress in several areas, which I will comment more upon throughout the presentation. Looking more specifically at the order intake and sales trends, demand was stronger than last year, but still varied across companies, geographies, and segments.
Book-to-bill is seasonally strong in Q1 for us, but improved from 105% last year to 107% now. As mentioned, companies with customers within MedTech, pharma, the energy sector, experienced a strong demand and also parts of the process industry. Order intake for companies with customers in Infrastructure & Construction and Engineering was aggregated slightly down compared to last year. In terms of sales, acquisitions contributed positively with +5%, a sequential improvement from the +4% we had in Q4 2025.
However, currency movements had a negative impact of 5% and organic sales was flat, leading to an unchanged top-line development in total. We had a stronger order book coming into the quarter, but the sales development was impacted by a weak start of the year, mainly due to the challenging weather and also by the composition of the order book with a higher share of orders connected to the energy sector and the process industry with longer lead times in general. The sales development gradually improved during the quarter, starting with a weak January and ending with a strong March.
Moving into sales per market. In the Nordics, sales was up in Norway, flat in Sweden and Finland, and down in Denmark. Flow technology for marine applications, water treatment, and the energy sector were drivers for the positive development in Norway, while the lower sales to Novo Nordisk was the main reason for the decline in Denmark. In the rest of Europe, starting with the Benelux, sales was lower within engineering and in some of the life science companies. U.K., Ireland, was a good development within, for instance, railway rolling stock. In Germany, flat overall, but slightly improved situation in the engineering sector.
Switzerland and Austria was weaker, mainly due to lower sales within valves for power generation and within the construction segment. In North America, sales improved compared to last year due to good development within medical technology. In Asia, sales declined due to difficult references from last year in the marine segment. In terms of profitability, total EBITA decreased 2%, corresponding to an EBITA margin of 13.3% compared to 13.6% last year. However, in Q1 last year, we had some positive one-offs, so the underlying EBITA margin was 13.3%, in line with this year's EBITA margin.
The main reason for the EBITA margin not being on a higher level is the organic sales development in combination with slightly higher expenses. Underlying expenses grew around 1%, but on top of this, we also had some non-recurring costs for downsizing. Patrik will explain more details in his presentation. Perhaps good to elaborate on the type of companies we have and why some of them haven't reduced more. If we go back to the situation late 2025, I would say that expectation was that in 2026 we would see better and better order and sales situations. This could be based on that we had an organic order intake improvement of +3%, both in Q3 and Q4 last year.
Most companies had a somewhat positive outlook, I would say, for 2026. We have, as you know, quite a lot of trading companies, and they are in general people lean. It's difficult to find qualified replacements, hence, there was not sort of on top of their agenda to downsize and there is an hesitation to downsize if they don't really need to, in order linked to the situation that it is difficult to find really good replacement employees. In addition to this, we obviously also have a lot of growing companies, and they need to add people in order to manage their businesses in a professional way. That's a bit of an explanation, I would say, to why we had a +1% expense increase year-over-year.
Positive though, that the gross margin was continued strong, amounting to 36%. Very well managed. There will be some more challenges going forward now in quarter two with raw material price increases. I am optimistic that our companies will handle this in a good way. We have done that for very many years, historically. Looking at the sales development per business area, two of them grew organically, Industrial & Engineering and Life Science, mainly as a broad result of the strengthened order book coming into the quarter.
In Industrial & Engineering, for instance, railway rolling stock was a sort of positive situation. They have had large orders from companies like Alstom, Porterbrook in the U.K. They also had a good situation in terms of specialty chemicals. I think it's worth to note that they had actually an all-time high order intake in March, in the quarter. In Life Science, particular companies within the medical technology had a good development. We usually comment on the single-use business. I think that's still good. We made a Spanish acquisition, our first company in Spain last year, and they are into single-use and the first quarter was all-time high for them, so good start this year for them in Indutrade.
Just to give some other flavors, we have a broad portfolio of MedTech companies. It's everything from, we sell communication equipment to Swedish hospitals, and that business has grown really well. We have a growing business in Poland. We sell medical equipment to hospitals, also consumables to hospitals, and that's also a growing situation. We have companies in Ireland which sell medical technology to large international customers and in the quarter now sold successfully to the U.S. It's not sort of single company. It's a broad base of companies doing well in medical technology.
Infrastructure & Construction and Technology & Systems Solutions continues to be weaker due to demand being subdued on the back of the general market uncertainty and lower investment levels in some customer segments. Process, Energy & Water had a good order book coming into the quarter, but there are generally longer lead times within the energy sector and the process industry. The -3% is more of a timing effect. They now have a record high order book and a good condition for stronger development going forward. March was actually the second-best month ever in terms of order intake for Process, Energy & Water.
In general, I would say that the challenging weather in the beginning of the year also impacted the sales development negatively, mainly in Infrastructure & Construction and Process, Energy & Water. If we then turn to profitability for the business areas, it was three business areas improving the EBITA margin in the quarter. Industrial & Engineering had the strongest margin development, supported by the gross margin improvements, leverage on the organic sales, and margin-accretive acquisitions.
Infrastructure & Construction has for a longer time worked with restructuring measures and keep costs in a really good way, and some divestments to improve its margin. In Life Science, the gross margin further strengthened due to good sales development within the MedTech cluster, as I mentioned, as well as margin-accretive acquisitions contributing positively. Process, Energy & Water was impacted by the lower sales, as I talked about earlier.
The EBITDA margin development in Technology & System Solutions was mainly driven by lower organic sales together with slightly higher expense levels. Acquisitions, positive situation. Far this year, we have acquired three companies, of which two slightly larger companies for us, with a total annual turnover of SEK 625 million. We are very glad to have welcomed Belman, CAT Ricambi, and Axotan to the group. They have all good track record of sustainable, profitable growth and are also margin accretive to the group.
In 2025, the average company size was slightly lower than a normal acquisition year for Indutrade. This year so far, it's slightly higher. This shouldn't be seen as a strategic shift. We are opportunity-oriented, as you know, and we act on opportunities we believe to be accretive and successful. Consequently, there will be times when we have periods of larger acquisitions and periods with smaller acquisitions being made. The acquired EBITDA was in a high level in quarter one, as can be seen on the graph to the right, just over SEK 70 million. Also, looking at the EBITDA margin of the acquired companies, it was on a strong level of 19.5% for the quarter and above 17% for rolling 12 months.
Good to note that this includes transaction costs, so the underlying margin is even higher. Our business areas are successful in the acquisition work, being proactive and building pipeline. Our business segment leaders are spending more time on acquisitions now compared to a year ago, and the current acquisition pipeline is on a high level. By that, I leave the word over to Patrik to comment more on the financials.
Yes. Thank you, Bo. Total growth for orders and sales was +2% and 0%, respectively, in the quarter. Book-to-bill was positive, as Bo talked about. Orders 7% higher than sales and on or above one in all business areas, actually. Strongest performance in Process, Energy & Water. As previously mentioned, our gross margin was strong at 36%, compared to 35.4% last year. Total EBITDA declined 2%. Acquisitions had a strong positive impact of 7%, but this was offset by currency movements and slightly higher expense levels, in combination with the positive one-offs we had last year.
These ones, they were primarily connected then to earn-outs and amounted to net SEK +27 million, which corresponds to around 2.5% on the EBITDA. If we comment a little bit more on the expense situation, total increase in expenses, fixed currency, excluding acquisitions, was around SEK 45 million, corresponding to 2% on the total expense base. Underlying, as Bo already mentioned, it's only half of this, around 1%. We have had some one-offs connected to layoffs, personnel reductions in several companies. Also last year, the cost level was somewhat pushed down, actually, because of some LTI provision releases we had. Underlying, it is + 1%.
EBITDA margin came in for the quarter at 13.3, which is then the same as the underlying EBITDA last year. We are, of course, not satisfied with the margin, but it's important to note that Q1 is historically a seasonally low-margin quarter for us. Going down further in the P&L, finance net decreased with 18%, mainly due to lower interest rates. Tax cost actually increased 5%, but it's mainly due to some one-time effects. Underlying the tax rate, I would say, is the same as before. Earnings per share was down 4%.
Return on capital employed declined slightly to 18%. Capital employed end of the quarter increased with 8% because of the higher acquisition pace since second half of last year, and slightly higher working capital, also mostly connected to increased receivables at the end of the quarter. Cash flow from operating activities, seasonally low also then in quarter one, but was in line with Q1 last year. All in all, group financial position is still very solid with a net debt to EBITDA ratio of 1.5 at the end of quarter.
Let's elaborate little bit more on the cash flow. As mentioned, cash flow is seasonally low in Q1, which you clearly can see from the graph, but it was stable. After CapEx, it was actually slightly higher than last year. Our companies continue to show progress in the management of working capital. I think inventories are lower than last year, and inventories in relation to sales on a rolling 12 months basis is actually now on a historically low level. Overall working capital efficiency is also then slightly better than last year. Cash conversion continue to be on a stable high level and even slightly improved versus last year.
Continuing to the EPS, earnings per share situation, that has developed in a bit weak way the last couple of years, as you know. The driver has been a weak organic development, which is mainly due to the general weaker macro situation that we have experienced and the lower general demand from that. Also, worth noting that the higher interest rates compared to a few years back and currency headwinds lately has also then actually a significant impact on this situation.
In the quarter, specifically, EPS was down 4% because of the lower operational result, and lower interest cost compensated slightly. We are obviously not satisfied with EPS development, but we are now fully focused on coming back to good growth levels in line with our targets. With that, we will also for sure then deliver EPS growth. Then lastly, the financial position, the interest-bearing net debt increased versus last year and also slightly sequentially because of the increased acquisition pace, h owever, the net debt ratios are stable and low from a longer historical perspective. Net debt-to-equity ratio at 45% versus 47% last year. Net debt to EBITDA was slightly higher than last year at 1.5, but still on a comfortable level.
If you exclude earn-outs, it was on 1.3 versus 1.2 last year. The financial net debt, which is then the part of the debt that relates to borrowing that needs to be refinanced, is also historically low on a level of one. All in all, in conclusion, our financial position is very strong and that creates a good foundation for continued value accretive acquisitions, and also room for organic growth investments and initiatives. I think I end there and leave back to you, Bo.
Thank you. Let's summarize some of the key takeaways before we open up for questions. The demand situation improved, and the order backlog was further strengthened. Good acquisition contribution, but total sales were negatively affected by currency movements and the flat organic development due to a weak start of the year and longer lead times in part of the order book. EBITA margin was in line with underlying margin last year. The gross margin was on a continued high level, so we expect a good leverage on the organic sales growth when the market improves.
Looking ahead, as said, we have the larger order backlog and we saw clear improvements throughout the quarter, which is positive. The general market uncertainty remains on a high level linked to the geopolitical situation. We have a good momentum in terms of acquisitions and a strong pipeline, providing good conditions for a gradually increased acquisition pace. Finally, we are not satisfied with the quarter, but there are positive signs in many areas, and we are fully focused and determined to deliver in line with our financial targets. By that, we end our formal presentation and open up for potential questions. Thank you.
If you wish to ask a question, please dial pound key five on your telephone keypad. To end the queue, if you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Oscar Rönnkvist from SEB. Please go ahead.
Thank you and good morning, so I have three questions. My first one would be on Process, Energy & Water, the longer lead times that you mentioned. Are those lead times longer than a normalized situation? Thanks.
No, I would say that we have, as you know, a mix of companies in that business area, and t he segment in the business area is the energy segment, and there we have certain companies who sell to power generation facilities and things like that. That's a usual lead time of minimum six months, I would say, to more than 12 months and beyond. That's a normal situation. We've had that for many years.
Great. Thank you.
That segment, I would say, has potentially grown more than other segments in the business area so that's why maybe that there is a bit of a shift like this.
Perfect. Thanks. The next question on the cost development going forward. Do you expect to align volumes and costs in the coming quarters? I think you gave some comments about the Middle East situation, but as you see, potential cost pressure on the raw materials, etc . Do you expect that to align more in the coming few quarters? Thanks.
Yeah. We haven't seen much of those price increases in quarter one. Obviously, a lot of suppliers have brought forward information about cost increases now towards the end of the quarter and early in quarter two. As I said, I'm quite confident that our companies are prepared for this and will manage this and transfer those costs to price increases to the customers. I'm hopeful that we will manage our gross margins in a good way, also going forward. Was that your question?
Right. Yeah, more on the operational expenses side as well, if you can see anything on that. I think on the gross margin, your comment about the price increases was good.
Yeah. No, we are, believe it or not, cost-conscious in our culture. It's a weighing situation for primarily, I would say, our trading companies. as I said, towards the end of last year, I think most of them had a more positive perspective outlook on 2026, and hence, sort of refrain from certain downsizing. Even if there is now uncertainties linked to the geopolitical situation, there is still some sort of underlying optimism that the markets are improving slightly. Obviously, we will be engaged from the boards in our companies to manage overhead cost situations actively. It's definitely not. If anything, it will improve sequentially from Q1, I would say. Yeah.
Understood. Just a final short one, but-
Yeah.
... you say there's a strong M&A pipeline, but just wanted to hear about the geopolitical turbulence, if that has made any changes in the appetite for M&A as we saw last year following the Liberation Day?
Yeah. No, we take every case by case, but in general, we are not hesitant right now, I would say. The plan is to continue, obviously being professional, obviously being cautious in case by case, but as it looks now, going to be a high activity level in quarter two and onwards.
Perfect. Thank you. That was all for me.
Thanks.
As a reminder, if you wish to ask a question, please dial pound, key five on your telephone keypad. The next question comes from Johan Dahl from Danske Bank. Please go ahead.
Yes, good morning, everyone. Just, Bo, a question on sort of the outlook you presented in Q4. When you presented the year-end numbers, you talked about the harvesting phase in Indutrade late January, and you conclude now that January was a disappointment to you guys. Are you able to sort of box in exactly in the beginning of the year, what was the disappointment? Invoicing is what it is, but was that on cost, or is that isolated to some certain events, or was it more broad-based?
Well, it was a very slow market from a sales perspective in January, and I think you can relate to that also. It's not Indutrade specific, at least not in my perspective. It was quite broad in the industry that it was a harsh winter, I think, and bad weather in large parts of Western Europe, installation companies delaying projects. For some reason, altogether then, sales in January started out very slow. It was slower than the general market underlying need, I would say. It was unexpectedly slow in January, and that created a very weak result. We weren't able to catch up completely from that situation in February and March. As you probably have understood by the presentation, our March ended in a really strong way, both in terms of order intake, sales, and profitability. Yeah. It's a good trend to have into quarter two, I would say.
Got you. Just a follow-up on the one-offs you talked about in the fourth quarter 2025. Were you able to box those in towards the end of the year? Has that had any follow-on effects here now during the beginning of the year? And could you also talk possibly about quantifying cost savings that you have carried out here in the first quarter?
Yeah, I would say that those one-offs are boxed in, but it was linked to two specific companies and when you experience a situation like that, we have changed management as I've said. Obviously, the situation in those two companies is slower, weaker. They need to restart and we have definitely done that and we have helped them with everything from restructuring to strategic analysis to strategic activity prioritization, growth-oriented activity, basically a new business strategy. The new MDs are coming in towards a fairly served table in terms of what to do going forward. We have lost momentum, but compared to what it could have been, I think the momentum going forward will still be a lot better based on all that activity we have done. Yeah. That had some impact on our Technology & System Solutions business area. Now, what was your other question, Johan? Sorry.
If you can talk about how much cost you've taken out in terms of rolling 12-month basis, if it's measurable at all?
Okay, you comment on that, Patrik?
Now, we are continuously working with cost and number of employees in entities that are struggling with demand. That we are doing. I don't know if I have a relevant number on that, but I think we have on the rolling 12-month basis, since mid last year, we have taken down number of employees in these type of entities with around 200 people then, which you can always do more, but it's small companies and so on. We have some more coming here in quarter two then, so w e are continuously pushing on this parameter.
All right. Thank you. I'll go back in line.
Thanks.
The next question comes from Zino Engdalen Ricciuti from Handelsbanken. Please go ahead.
Yes, hello, and thanks for taking our questions. I joined a bit late, so sorry if you have answered these. Looking at high level on the order book which you have been building up, could you say something about how the composition looks now and what your expectations are in terms of converting it to sales?
Yeah. We have a relatively higher share of the order book linked to the Energy segment and some longer lead time Life Science segments. You will see positive release effects from this in quarter two and the further improvements then in quarter three and onwards this year. It's about to happen. A positive step in Q2 and an even bigger step in Q3.
If I add, if you elaborate a little bit on the order book development and compare it to last year, we have seen order book increases in Process, Energy & Water, Life Science, and also Technology & System Solutions with the highest increase in Process, Energy & Water. It's basically flat, you could say, in the Industrial & Engineering business area, and Infrastructure & Construction has actually a lower order book than they had last year. This mix change, you can say then, prolongs a little bit the lead time of the order book.
Understood. Just on the similar topic, specifically in TSS, which saw a bigger step up in the order intake, if it's possible to get some color on expected conversion of that?
Yeah. It's not that long in that business area, so it basically relates to what I said earlier in a bit of a step up in Q2 and then even more in Q3 and onwards. It's the same for that specific business area as well, I would say.
Very clear. Just a last question on the gross margin, which continued to be strong. It would just be interesting to hear more about the drivers behind that.
It's been strong for many, many years and stable, slightly increasing, and it's part of the Indutrade DNA to really work with pricing and try to manage potential cost increases from suppliers and transfer that to customers and watch that situation, step by step, work more and more with value-based pricing versus just some sort of more simplified pricing approach. I also talked a little bit about that the war in the Middle East will drive up, and has driven up oil prices, which will affect plastics and other raw materials. There is going to happen even more in this area, I think in quarter two and onwards, but I'm quite optimistic that we will continue to manage this situation in a good way.
Cheer. Thank you. I'll get back in line.
Yeah, thanks.
The next question comes from Gustav Berneblad from Nordea. Please go ahead.
Yes, good morning. It's Gustav here from Nordea. I thought maybe just to follow up there on the development in Technology & System Solutions. Was the margin weakness basically only driven by the weaker volumes? Should we then sort of expect them to jump back up now when we see volumes pick up in Q2, as you comment on?
I think they will sequentially improve Q1 to Q2. It's linked to. They are suffering, I would say, as a business area from cautious demand from industrial customers broadly internationally. It's not going to be a drastically quick pickup, and they suffer a little bit from a difficult situation in these two U.K. companies and so on. Obviously, we have done the restructuring, as I said, and so on, but it will take some time to improve the situation there to be above average Indutrade levels again. Sequentially improvements, but not very quickly. Don't expect that they go from 14%-18% in two quarters. That's not going to happen, I don't think. They will improve.
That's very helpful. Maybe on the topic of medical technology, Life Science here. You comment on the single-use products being quite solid. Those sounds more recurring, I would assume so.
Yeah.
It sounds like the margins here would be rather sustainable unless there are any larger orders you want to flag.
I think that's a good assumption.
Yeah. Okay. Is it possible to say anything regarding start to Q2? It sounded like it was a slow start to Q1 and then finish very strongly. Should we anticipate that April started quite solid as well, or?
Yeah. We ended the quarter one in a really good way. Usually Q2 is seasonally a good sort of demand quarter for Indutrade companies.
You have a lot of holidays in April and May, which sort of makes the situation a little bit foggy. We have no real news of a sort of a demand change. We hope and believe that sort of March levels will continue with the sort of reservation for holidays, etc.
That's perfect. Thank you very much for taking my questions.
Thank you.
The next question comes from Victor Forss from SB1 Markets. Please go ahead.
Hi. Good morning. Thank you for taking my questions. Just starting off with the non-recurring downsizing cost. Just wondering if you could break down the split by business area, and maybe comment on whether most of those costs are in Technology & System Solutions, or if they're spread across the board. Thank you.
No, not that much in Technology & System Solutions, to be honest. It's a little bit spread out. I think the most part of that is actually in Life Science. Even though they are trending on a good way, I think all business areas have a few companies that need to work with cost. Those particular one-offs I talked about, they are mostly in actually Life Science. Then the LTI costs I mentioned, but those are on group level. That's part of the reason why there's a sort of a deviation compared to last year on group level.
Okay. Thank you. Should we expect any more of this going forward? Or are you sort of done with the larger part of it?
There will, I assume, always be some smaller restructurings in a difficult market. I don't expect them to increase, at least. If anything, on a smaller level.
Okay.
I would assume.
Okay, perfect. Just back to the two U.K. companies and Technology & System Solutions. Just wondering if we look at the greater picture, is essentially all of the margin pressure coming from those two companies still, just given the 4% organic order growth, o r is it spread across the entire segment?
No. There is not like a delta between 14, 18 coming from those two companies, but they have a significant impact. There is a broader set of companies who have more of a flat, I would say, sales situation and weaker EBITA margins than normally. I'm optimistic, as I said, that they will step by step improve during this year and onward. The plan, ambition, commitment from that management team is to come back to the previous levels for sure.
Okay. Thank you. Just a final one on acquisition multiples because I mean in 2024 and 2025, we saw some acquisitions coming in at higher multiples. Looking at the acquisitions here in Q1, it seems like you're back on the 6%-7% range. Just any commentary on future multiples would be helpful.
Yeah. We are where we are, as you said now, and as we predict right now, I think we will be on that level. Yeah, that's where we can close successful deals currently, and I don't foresee any big multiple level increases in the short or medium term.
Okay, great. Thank you.
Yeah. Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Yeah. We thank you for listening in and asking relevant and good questions. We close the conference and wish you a great day.