2025. For the first part of the conference call, the participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing pound five on their telephone keypad. Now, I will hand the conference over to CEO Per Waldemarson and CFO Therése Hoffman. Please go ahead.
Thank you, and good morning, everyone. We can move directly into page number 2 in our investor presentation, where we look at the group's overall financial performance in the first quarter. It was, overall, on the group level, a mixed quarter with mixed outcome in various parts of Lifco. Overall, on the high level, solid performance for the group. We had a 15% growth in sales, driven by around 8% organic growth, particularly strong growth in sales in C solutions, which we will come back to in the next slide. We had also strong growth in acquisitions of 8% in sales. If we go further down and look at EBITDA, we grew that with 17%, and we had slightly higher EBITDA margin compared to the previous year. This EBITDA margin is driven by very strong performance in Demolition & Tools and offset by slightly lower margin in C solutions.
The profit before tax grew by around 20%. Cash flow only grew 3% in the quarter. Cash flow, obviously, is more volatile between quarters. This first quarter, we had slightly higher tax payment compared to last year and also some working capital build-up. We can then go into more details in page number 3 in the presentation. If we go down into the different areas, in dental, it was a quite normal quarter, low single-digit growth both in terms of sales and profit. We had here some positive effects on a later Easter in this year compared to last year, which had some impact on the growth. If we then go further to Demolition & Tools, we grew sales with 10%, which was a combination of organic growth and some acquisition growth.
We had a very strong margin of 25% in the quarter, which is basically due to organic profit improvements in several parts of this business area. EBITDA overall then grew with 37% in the quarter. Just to continue commenting on Demolition & Tools, we actually saw, after a quite long period of time of what I've called weak market conditions, we saw some first indications of slightly improving market conditions in this first quarter of 2025. Having said that, we have to keep in mind that the first quarter took place before the most recent turbulence relating to tariffs, etc. We just have to wait and see how this plays out going forward. We do not have more visibility around that than anyone else. At least, so far, so good, you can say, in terms of—and I'm talking about slight improvements.
We're not in the situation we saw in 2021, 2022, where the markets were very strong, but improvements from the quite low level we had in 2023 and 2024. In C solutions, we had a very mixed performance in the first quarter. If you go further down in that segment, overall, the business area grew with 24%, but EBITDA only grew with 15% due to some mixed effects of growing stronger in slightly lower margin areas and also some weaker profit levels in three of our subdivisions: Environmental T echnology, Transportation Products, and Special Products. Actually, we had a little bit lower organic profit development compared to last year. If we then also make a specific comment around contract manufacturing, we have now, during the second half of 2024, we had very strong deliveries coming out from Contract Manufacturing. That also continued in the first quarter.f
We have, however, now in early April, some indication that this is now turning back to more normal levels again. Visibility here is very low, so we cannot say more than that. We have not a long order book in this business area, so it is really related to what happens going forward. We see some indication of going back to lower normal levels in this quarter. Once again, the lower margin then of 21.6% in this C solution is then a mixed effect of lower margin in contract manufacturing and some weaker organic profit development. If we then go into page number 6 and look a little bit at cash flow, I just want to highlight that we have updated this page number 6 with some updated data. It is measuring the free cash flow per share after CapEx and before dividend acquisitions.
We still do that, but we have also now deducted in all time in every year here in this graph, we have deducted also dividends to minorities. We have in our companies some minorities, and when we pay out the dividend to them, that should, of course, be deducted in this graph, and that has now been updated. The cash flow per share must obviously be measured over long time periods, as cash flow can vary between quarters and even years. It has been on a little bit stagnation level the last two years. The main reason for this low growth is, of course, that we did experience quite weak market conditions and Demolition & Tools in 2023 and 2024.
If we then go further into page number 7 and just quickly look at our debt position, we are staying now at 1.1x interest-bearing net debt to EBITDA, which is a very healthy level. We stay there despite quite a large number of acquisitions in the last 12 months. Obviously, we still have plenty of room to continue making acquisitions when we find the right opportunities. I repeat myself from previous calls, we remain very disciplined in terms of quality of the business we decide to acquire and also the valuations. As always, the exact timing on when different deals materialize is always difficult to forecast. We continue to work very hard and actually expand our search for great companies all around Europe.
We can go into page number 8 and just take another step back and look at the long-term historical performance of Lifco. Once again, we can conclude that we are coming out of two years of quite difficult market conditions for Demolition & Tools, which has led to lower than, I would say, historical growth in 2023, 2024, and so forth. We saw some indications of some improvement in market conditions for Demolition & Tools in the first quarter. Once again, the situation, the global economy now is, of course, very difficult to forecast going forward. I think you can also conclude from this graph that despite this situation, we've been able to grow our profits also in 2023 and 2024, which is a strong indication of we have a great diversification in the group.
We also have, maybe even more importantly, very strong management throughout the Lifco system that is steering the companies and the portfolio in the right direction. If we then go to page number 13, I'd just like to also a little bit take a look at what we actually do with our portfolio. I just want to remind everyone that we have been since the end of the 1990s developing a very strong operating model on how we steer companies in Lifco. It all starts with having hundreds of motivated and very action-oriented, result-oriented managers in all our companies. Equally important, we also have a quite large team nowadays of very experienced former managers that are now taking the ownership representative roles in all these portfolio companies that govern this process going forward. That's extremely important and something that takes many, many years to develop.
I just would like to mention the great work that takes place throughout the Lifco system and how crucial that is for our performance. The other points on slide 13 are just also a reminder for everyone. We continue and we have always focused on going up in margin, becoming more differentiated, and not focusing on the volume segment. We do that in all our businesses across Lifco. We have done it for many years, and we continue to do that. That is also one of the reasons why we have been able to expand our margins over the last decade. We continue to run Lifco in a very simple way. Despite being a quite large company overall, we keep the entrepreneurial spirit in all our companies. We make sure that the most important people in the subsidiaries can shine in such a model.
We are focused on outsourcing wherever it's possible, so basically only doing what's necessary in-house and have the focus on typically the product development and the sales. Sometimes we have to do a little bit of production because of the situation in that specific niche. In general, it's important. Cash flow is a strong focus in all our companies. Also, when we acquire companies, it's a very important part of our screening to ensure that we can own the company for a very long period of time with strong cash flow generation. We do all of this with a very long-term perspective and try to do things a little bit better every year. With that sort of overall comment, I'd like to open up for any questions.
To ask a question, please dial pound five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound six on your telephone keypad.
Can you hear me?
Hello? Who is this?
Hi. Can you hear me, Per? It's Colin from Nordea.
Hi, Colin. Yes. Hello.
Okay. Good. Good. I did not get an operator voice. Sorry. Just a couple of questions here. Firstly, on Systems Solutions, I mean, a bit of a quite unusual margin drop from a historical perspective. You mentioned product mix. I mean, is it purely contract manufacturing you are referring to? I mean, obviously, you mentioned also environmental tech and transportation having a sort of a negative trend. Both of those questions I would like to delve into a bit. Also, when you talk about the negative trend, are you talking to a short-term negative trend or a negative trend that you have noticed for a while? Yeah, and also what is behind it?
That's a good question, Colin. I think the answer is, as always, in Lifco, there's many things coming into this one number. One reason is obviously that when we grow a lot in contract manufacturing, we have slightly lower margin there. That has a mixed effect. That's not the whole explanation of the margin drop in this quarter. There are also some companies that had, I would say, a little bit of a bad luck quarter. Maybe the margins were a little bit lower, which is normal. You have quarterly profitability that can vary on different subsidiaries up and down. We have a little bit of that. We had a few other companies that maybe had a little bit of also weaker market conditions coming into play and hence lower margins coming in. This is all playing together into this quarter.
It is a combination of, I would say, bad luck. Luck is the wrong word, but a little bit more of a one-time effect that probably will not be the next quarter. Some companies that are experiencing weaker development. Then you have this mixed effect where we grow much stronger in a relatively lower margin segment, so to say. These are the three areas playing together.
Okay. That's very fair. You mentioned contract manufacturing, perhaps here in April coming down to more normal levels. The problem to me, at least, is that I don't know what the normal level really is. Maybe you don't either. I'm not sure. What is the normal level? Is it sequentially flat this year, is it back to pre-contract? Also on that, how fast are you able to take out costs if volumes would come down?
I normally would not comment on what's happening in early April, but since we had these extraordinarily good deliveries now, three quarters in a row, and we have seen a little bit weaker start in April, we have to measure something now. We don't know what that means for May and June, to be quite frank. It is very difficult to forecast because the visibility is quite low. Working with OEM customers, we don't have the full visibility on what's happening further down the value chain in this situation. We don't know. The second question, of course, if volumes are going to go down, then it will be some time to sort of adjust going back to normal. We are historically being quite fast on that. It will take some months to get things back to normalized level if that continues.
Right now, we do not have visibility to draw any major conclusion on that. It was more a highlight given that we had now three quarters in a row, and we saw a little bit weaker start in April.
I guess in order to be able to take out costs, you must have some kind of view of what the normalized level really is. Is it sort of half of the contract uptick that you have seen, or do you think that the contract, will it go down to pre-contract, you think, or is it a long-term contract that will continue for many years, or how do you view the contract overall?
No, but it's not that real. It's volatility on the customer side. It's not that we have lost any customers or anything has changed in that role. It's unclear around this field. I think we cannot go into further details here, Colin. We have to address it. It's a very early indication, and it might also come back later on. We just saw that it was slightly weaker in April than it was in the first quarter, and therefore we had to highlight it. I think we have to leave it like that for now. We have to follow this going forward. Yeah, it's unfortunately a bit more volatile the last year in this area than we normally see. This is life sometimes.
Sure. Okay. Thank you. The final one from my side is a bit you touched upon it. I know the visibility is low. I also know that you do not want to comment on things happening post-March in this case here. Looking at the tariffs, the U.S. trade war, have you noticed any sort of impact on demand in recent times here? I guess it is mostly in CapEx-driven companies, I guess, from might be hesitancy from consumers to push the button to invest or start a project. Have you seen any of that yet, or?
I think it's too early to say, Colin. The major part of this turbulence started, was it two or three weeks ago, I think? It's a very short term. We did close orders in the last few weeks as well. Does that mean that things will continue to be great in May, June? We don't know. It's too quick to say. You can say that we have still seen order coming in in April. I don't have the full visibility on what level it is compared to people. It's not like a Lehman Brothers situation that we're experiencing. Things are moving around, and things are materializing also now. Does that mean that May and June and the rest of the year will be great? No, we don't know. It's too early to say.
Okay. Thank you so much.
Thank you.
The next question comes from Zeno Engdahl from Handelsbanken. Please go ahead.
Yes. Good morning, Per. Thanks for taking our questions. Starting out in demolition and tools, of course, as you said, a very strong quarter. Could you maybe elaborate a bit on the segment that we're looking at, the earnings growth? You did not mention that there were any special orders and said that it is organic growth behind it. Could you elaborate a bit more on the performance there?
No. The reason we did not mention that is because there was not one specific order or any project that drove the profit levels in this quarter. It was more strong performance in quite a large number of areas in this area. I think parts of this have to do with the fact that volumes were a little bit better. We have done a little bit of cleaning up, getting the organization a bit more streamlined and being ready for this. You have this quarter. We had, coming back to quarterly variations, no negative impact in this quarter, which I mentioned just previously on C solutions. We had some companies where maybe the profits were a bit lower than we would expect in one given quarter. This can also vary. In this quarter, in Demolition & Tools, we did not have that effect, you can say.
It plays together, and therefore the margins are very strong. It is not one specific delivery that is impacting it. It is actually good performance in different parts of Demolition & Tools playing together. Once again, we are not seeing crazy good markets. We are just saying that we saw an improvement from the levels we had last year.
Yeah. Yeah. That was my follow-up. If there is any or several particular end markets that showed particularly strong performance, if it was more construction or demolition related or forestry.
It was actually in all areas a little bit better, you can say. Having said that, we also have some specific sub—now we are going into very details. We still have some areas where they are now maybe suffering a little bit for some reason, later problems, you can say. It was not a perfect quarter in that sense. We will probably have some areas here that we still have weaker conditions also going forward. The major part of this area did quite well across the board.
Yeah. Was it, so to say, greater across the board through the whole quarter? Did you see an improvement towards the end on a relative perspective?
No. It was quite spread out throughout the quarter.
Okay. Very good. I'll get back in line.
Okay. Thank you.
Question comes from Karl Bokvist from ABG Sundal Collier. Please go ahead.
Thank you. Good morning. My question, or some of those that I wanted to ask, have already been answered. The one I am curious about is when we look at Systems Solutions right now, it has been an upward trajectory in margins over a long time. We started reaching roughly 20% margins in 2021. Then it has been 22%, 24%, 24%. Yeah, now we are back here. Based on the current company compositions in C systems, is there any way of kind of saying what the normal margin interval should be for this division?
It's always very difficult to say what is the normal margin in an area where you have different market exposure and some cyclical volatility in the areas and some very stable areas. I think the margin levels we have had in the last years is a good indication for normalizing that. Once again, what is the normal market? That's maybe the most difficult question to answer. I don't think that coming back to our portfolio of companies, we have very strong market positions. There's a reason why we can have high margins in these businesses. They are very niche, and they add a lot of value to their customers, and they are very specialized in their segment. We, of course, see potential for long-term continued margin expansion in all our areas, including C solutions. Short-term, it can obviously be volatile.
This quarter was, of course, also partly impacted by when you grow more in the lower margin part of this area, then it impacts this area. Overall, we're not worried about the long-term margin development of the area as a whole. Short-term, we can always have volatility, obviously.
Understood. We follow up just in general, but perhaps mainly focused on demolition and C systems. A bit technical. When it comes to volume sensitivity, let's say that we do now get a situation over the next 12 to 24 months, at least, of improving volumes, how sensitive or how positively affected do you think the margins could be from a volume improvement compared to what you have disclosed on several occasions regarding, well, continuous pricing, but also mix in many occasions helping you?
Just to understand the question, you're assuming that volumes will be good in the next 12 months. Is that what you're assuming in the question?
If we get an upturn, for example, I mean, I'm not pointing out that you said that things are looking up now in demolition and that this should be extrapolated. I'm not saying that. If we say that volumes start to improve on a kind of more longer-term level, that it's not just one quarter here and there, that volumes actually begin to improve, how positively affected could we be from that kind of just volume uptick?
I think the quick answer to that question, of course, if the volume goes up, then you have some positive operational leverage effect of that. On the other hand, if you look at how we managed to keep margins very strong in the quite weaker market condition, that maybe is also an indication that we are quite good in handling variations around that. Obviously, the theoretical answer would be that if we get more volume, we should get some benefit out of that. We'll see. We don't know if we'll get more volume in the next 12 months. That's a big unknown.
Yeah. Yeah. It would not be a kind of adverse effect that the most volume-sensitive parts have a negative mix associated with them, for example?
Oh, you mean a mix of—okay. To be honest, the last—okay, now I understand your question, Colin. The last two years, it's been a little bit weak across the board in Demolition & Tools. You can always have that impact, obviously, that let's say we start growing a little bit more in the slightly lower margin part, that could have an impact. We have not—yeah. Maybe there could be some effect around that. Maybe that also a little bit what helped us the last two years, that we had a little bit more stability in the high margin. That is a good point. That can also come into play. I was more referring to volume across the board. If you get operational leverage effect, that, of course, will help us as well. These can, of course, be some factor around that. It is very difficult to know.
I think in general, all areas in Demolition & Tools saw a weaker market condition in the last two years. There can be slight variation in between and timing effects of different quarters, etc. If you measure it over a two-year period, it has been pretty much across the board.
All right. Thank you for that.
Sorry, Colin, just to add on that. Of course, if you take part of the—if you take maybe the attachment tool business, they are more only exposed to infrastructure demolition and construction related, whereas some of our machinery products are, of course, exposed also to that, but maybe also to some industrial sectors and other sectors, which maybe did not fall as much. So yeah, fair point. You could make some theoretical analysis around it. It is very difficult to know exactly how the market conditions play out at any given point of time.
Yeah. Understandable. Thank you for that.
Yep. Okay. Thanks.
No more questions at this time. I hand the conference back to the speakers for any closing comments.
Okay. Thank you very much for listening and for the questions. I wish everyone a good Friday. Thank you.