Ladies and gentlemen, welcome to the Loomis quarter one 2026 conference call. I'm Lorenzo, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for question at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Aritz Larrea, President and CEO. Please go ahead.
Thank you very much. Good morning, everyone, and welcome to the first quarter 2026 presentation for Loomis. My name is Aritz Larrea, and I'm the CEO of Loomis, and with me here today I have our CFO, Johan Wilsby and Jenny Boström, our Head of Sustainability and Investor Relations. I'll start by providing a quick summary of our first quarter before opening for questions. Let's start the presentation by turning to slide number two. We delivered a strong first quarter with revenues close to SEK 7.5 billion despite an 11.6% negative impact from changes in exchange rates. Currency-adjusted growth reached 9.3% with both strong organic growth and contribution from acquisitions.
During the quarter, we saw very strong growth within the international and FX business lines, driven by increased demand for the movement of precious metals, partly due to geopolitical uncertainties. We also continued to deliver strong growth in our Automated Solutions business line. We increased our EBITDA margin by 1 percentage point year-over-year to 12.6%. This represents our highest first quarter margin to date, and I'm pleased to see that the restructuring and efficiency initiatives we have implemented support the margin expansion. We delivered another quarter of strong operating cash flow with a cash conversion of 95% over the rolling 12 months. On a quarterly basis, cash flow was slightly impacted by higher working capital but remained at a solid level with 84% conversion.
This robust cash flow enables us to continue investing in the business while also delivering attractive returns to our shareholders. I am also proud that we have been the first in our industry to have our climate targets validated by the Science Based Targets initiative. I will come back to this later in the presentation. Yesterday, the annual general meeting approved the ordinary dividend of SEK 15 per share and the extraordinary dividend of SEK 5 per share. This means we will distribute over SEK 1.3 billion to shareholders next week. I would also like to highlight that today is the ex-dividend date. Finally, earlier this week, we announced that we had entered into a share tender agreement with among others CVC Capital for their shares in Hermes Transportes Blindados, marking our entry into Peru. The transaction will be carried out through a public tender offer.
I will spend some time on this acquisition after summarizing the first quarter performance. Turning to the next slide to go through Europe and Latin America. Our Europe and Latin American segment delivered a strong performance in the quarter with revenues of SEK 3.6 billion. We achieved organic growth of 6.6%, which was particularly strong considering the communicated revenue decline in the ATM business line. The uncertain geopolitical climate has increased global demand for secure logistics and the management of physical assets such as precious metals. This has positively impacted both our international and FX business lines with international business line growing by over 30% in the quarter compared to prior year. We also achieved double-digit growth within our Automated Solutions.
The operating margin increased close to 1 percentage point to 10.2%, demonstrating that our focus on operational efficiency yields positive results. Let's move on to the next slide to talk about the U.S. The U.S. segment delivered another strong quarter. Adjusting for currency impacts, the U.S. achieved record high revenues. Organic growth was 5.3%, and the acquisition of Burroughs contributed positively to overall growth. The international business line in particular delivered strong performance, which was driven by an increased demand for cross-border movement of precious metals. As you know, we have had double-digit growth, organic growth within Automated Solutions for many quarters in a row, and this trend continued also the first quarter with an organic growth in the mid-teens.
We also saw that price indexation related to higher fuel costs in March following developments in Iran contributed positively to revenue in the first quarter. Despite significant currency headwinds of 15.2%, the business achieved record high operating profit of over SEK 700 million. The operating margin reached 17.9% marking a new record for us. Our operational efficiency initiatives continue to deliver results, enabling us to grow the business without increasing headcount. At the same time, we have maintained a high service quality and strong customer satisfaction. The volume growth, combined with improved efficiency, contributed to the expansion of the operating margin.
The precious metal storage facility in Canada, acquired at the end of 2025, has been successfully integrated during the quarter and contributed positively to profitability. In addition, the sale of a facility and relocation to a new leased site had a slightly positive and non-recurring impact on the margin. Let's turn to the next page and talk about SME Pay. Revenues in the SME Pay segment increased to SEK 72 billion in the quarter. More than 45% of this revenue now comes from new small and medium-sized customers, demonstrating that our strategic focus on SMEs is driving both growth and improved operating results. The reduction in the operating loss compared to the previous year is in line with the segment's strategic priorities. The migration to new POS platforms enables Loomis Pay to focus on larger SME customers across additional verticals.
As part of this process, Loomis Pay has chosen not to migrate non-profitable customers, which has some impact on settled transaction volumes. Let's now move to the next slide, where I'll share a few updates on our sustainability progress. We continue to make solid progress against our carbon emissions reduction plan. During the first quarter, our use of biofuel HVO increased by 10% compared to the same period last year. Today, 40% of the group's total electricity consumption comes from renewable sources, reflecting our ongoing efforts to transition to cleaner energy. Year-over-year, our combined Scope 1 and Scope 2 emissions have increased slightly, primarily due to the acquisitions completed in 2025. However, when compared to the fourth quarter of 2025, we have achieved a meaningful reduction, with Scope 1 and 2 emissions down by 3%. Safety remains an equally important priority for Loomis.
We have set a target to reduce our recordable work-related injury rates by 10% by 2027 compared to 2024 levels. On a rolling 12-month basis, we're performing slightly better than this target level. Protecting our employees and further reducing workplace injuries remain key priority for the company, and we will continue to maintain strong focus on both safety and continuous improvement. Let's move to the next slide, where I'm pleased to share that the Science Based Targets initiative has validated our new emissions reduction targets. Our new targets address both our direct emissions and indirect emissions across our value chain, reflecting a comprehensive and responsible approach to climate action. With this, we cement our role as the industry leader within sustainability, showing that it is possible to reduce our environmental footprint and deliver critical infrastructure at the same time.
We are now taking a leading role in transforming the industry towards a more sustainable future. Now let's turn to the income statement slide, where I'll begin by noting that despite a significant negative impact from exchange rate headwinds, we achieved both strong currency-adjusted growth and organic growth. Our net financial items have improved compared to the previous year, driven by lower financial expenses as interest rates have declined. Our strong performance has resulted in record high earnings per share despite the currency headwinds. I would also like to highlight that our net debt to EBITDA ratio is stable and well below our target of staying under 2x . With the acquisition of Hermes, net debt to EBITDA is expected to temporarily exceed 2 x following completion. However, this increase is short-term, and leverage is expected to come down within six months.
We remain fully committed to maintaining our investment-grade credit rating. Let's move on to the next slide to review our performance in a historical context. We can see, we have a stable and resilient business model that continues to deliver. Looking at the rolling 12 months, we have achieved a record high operating margin of 12.9%. Despite significant currency headwinds, we have maintained revenues at SEK 30 billion. Currency-adjusted growth for the rolling 12 months was 7.2%, slightly above our growth target for the strategic period. Moving to the next slide before opening for Q&A, I want to spend some time on the intended acquisition of Hermes Transportes Blindados. Earlier this week, we announced the intention to acquire Hermes, marking our entry into Peru.
For many years, Loomis has operated in Argentina and Chile. We have continuously explored opportunities to expand our business in Latin America. As you know, this is one of the strategic priorities we presented at our Capital Markets Day in 2024. Peru is one of the countries we have been closely monitoring. It's an attractive market for Loomis, one of the fastest-growing economies in the region, with high cash usage and a stable macroeconomic framework. Hermes is a market leader in secure transportation and cash management in Peru, with around 50% market share and a diversified base of approximately 1,000 clients and about 3,200 employees. The transaction values the business at an enterprise value of PEN 1,450 million, with an adjusted EBITDA multiple of 6.6 x.
We have entered into a tender offer agreement with CVC Capital Partners and other minority shareholders who together hold 99.5% of the share capital. Loomis will conduct a public tender offer to acquire up to 100% of the company shares. We expect to launch the tender offer during Q2 or Q3, with closing of the acquisition during Q3. From an earnings perspective, the acquisition is expected to be immediately accretive to earnings per share. Overall, t his acquisition strengthens our position in Latin America and is a strong strategic fit for Loomis. It aligns well with our growth ambitions within both Automated Solutions and international business line. This concludes my summary of the quarter. Operator, we are now ready for questions.
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered in the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Jönsson Simon from ABG Sundal Collier. Please go ahead.
Good morning, everyone, and thanks for taking my questions. I want to start off with the international business here. Very strong growth again. I wonder if you can clarify a little bit how much of the growth is driven by the precious metals business. Of course, a large part of it, but also, you know, if the other categories in international are also growing and contributing or how that mix is doing?
Thank you, Simon. The situation in Q1 has been mixed. The beginning of the year was mainly driven by silver movements, where a lot of silver was transported globally, as well as we have also opened new geographical lanes and expanded our business. The key drivers include an increase in global interest in precious metals trading during geopolitical uncertainty as we had in Q4 last year as well. The war in Iran at the beginning of March with the closing of airspace has impacted somehow flights and also our business in Dubai and the Middle East. There's been a continued high demand to move precious metal source outside Dubai at the same time.
All right. Thank you. What's the near-term outlook you think for that business, given that volatility may not be as high in the precious metals markets here? What do you see in coming quarters?
As we've always commented, this business is cyclical. Also it's very difficult to estimate how the year will proceed. Forwarding is more of a spot market and the year opens with high demand. However, we don't know how long the situation in Iran will last and the impact it will have on both airspace and availability of flights. Nevertheless, so far, we've seen the same level of momentum in Q2 at the beginning of Q2 as we saw in Q1.
All right. Thanks for that. Turning to the contribution from other segments in Europe, you know, excluding the positive impacts of international for the European margins. How did the rest of Europe develop here in the quarter?
Well, as you mentioned, we had international impact in positively. We also had Automated Solutions with double-digit growth. You know that we have diversified also our portfolio within international, expanding into pharmaceutical logistics, also growing with lower value goods business as well. Now the focus moving forward is to keep growing Automated Solutions and to try and recover part of the ATM business that we lost in prior year.
Okay. It's fair to assume that the cash, the core cash business has been more flat, on margins then?
Yeah. Yeah, you can assume that. Yeah.
All right. You also did not take any new charges for restructurings, I think, here in Q1, if I read correctly. What does that mean for the future of the cash business in Europe in terms of margins and outlook and so on?
I mean, looking at the restructuring costs, you know that we still have an ongoing review on Europe. Therefore, we're sure that some additional restructuring may occur in 2026, although not to the level of what we saw in 2025. Regarding the margins, you know that our ambition is to just try to recover the margins that we had before we got impacted by COVID. I think we're on the right track there. There's still work to be done, but we're happy with the pace that we're showing. I mean, increasing close to 1% our margin in Europe is a strong performance, I would say.
All right. Just the last one from me on the Hermes acquisition. You talk about synergies with your existing international business, taking the cross-border business over there. Do you also plan to expand the local cash management business to more countries in the region, for example? Is that part of the plan?
I mean, we already do that in certain parts of Argentina as well. I think the main purpose with Hermes is on the international side, they only take care of the domestic side of the business, and we want to add that international leg to be able to do that door-to-door service. Another key thing there, a driver of growth will be Automated Solutions. We think there's a low penetrative market in that sense in Peru, and we can be very successful there as well with our CIMA products.
All right. Just to follow up on that, on the mining business in both Peru, but also you mentioned you have some in Argentina. Is what kind of metals are that primarily? Is it gold or also other kinds?
In Peru, you know that they are one of the biggest producers in gold, silver, and copper. You got other materials as well. We manage other materials, numbers that the names don't come up to me now, but palladium, for example. We got other type of precious metals as well. Basically it's gold, silver, and copper.
All right. You mentioned copper. Is that something you work with as well?
Yeah.
Yeah. All right. Thank you so much. That's all for me.
Thanks to you, Simon. Thank you very much.
The next question comes from the line of Varanasi Suhasini from Goldman Sachs. Please go ahead.
Hi. Good morning. Thank you for taking my question. Just one for me, please. Judging by your commentary around international Automated Solutions, FX, et cetera, and also your commentary around passing on higher fuel cost to customers, would it be fair to say that your growth rate at the end of the quarter was a lot higher than the average that you printed, and therefore that's a trend that we can probably expect depending on how the macro evolves into the next quarter as well? Thank you.
Sorry, Suhasini, we didn't get all of your question. You said in the beginning.
Oh.
You were commenting around international Automated Solutions and et cetera.
FX, yes.
The last part of the question.
I just wanted to check whether the growth rate in March, end of the quarter, was higher than what you printed for 1Q as a whole, and therefore is that something that we can look for going into the next quarter as well qualitatively?
I mean, in terms of the fuel fees.
Indexation that we have, that, is true that some of that happened to a larger extent in March.
Then earlier in the quarter. You can complement.
Yeah, I mean, that, that's the growth due to the fuel fee that came mainly in the U.S. We got two countries where we have those fuel matrix in the contract. That is U.S. and France to a certain extent. We saw the big impact in the U.S. and on the revenue. We expect, for example, Q2, the beginning of Q2, it has been as high as it was in Q1. Now, we don't know how long the Iran war would last, but as far as the fuel costs are high, then we should see that growth in revenues going from the fuel fees.
Thank you. Just to follow up, the international and the FX business did not see any phasing on growth through the quarter?
Not really.
Okay, great. Thank you.
The next question comes from the line of Heimer Dan from SEB. Please go ahead.
Yes, good morning. A couple of questions from my side. Maybe starting a little bit on the USA margin, which was, yeah, the strongest one on record. Just to clarify the positive effect from the sale-leaseback here, it sounds like it's quite minor, like $10 million or so. If you can, yeah, confirm that. Also adjusted for this, it would be, yeah, your best quarter ever margin-wise in the U.S?
Yeah.
The-
Yeah. The sale of the facility generated approximately $1 million in EBITDA in Q1.
Perfect. Following up on that, I would assume that Burroughs is still quite a bit dilutive. I was just curious to hear how far progressed you are with the integration there?
First of all, answering your question, yes, it is diluting the margin. We're still in early stages with Burroughs. Our immediate focus is more on solving some existing quality issues to ensure service excellence. Once we achieve that, then we will shift our efforts into improving margins and efficiency.
Yep, perfect. Final one from my side. I noticed that the headcount is down 600 FTEs year-on-year. I assume it's impacted by the restructuring measures, can you remind me how you're thinking about further restructuring measures for 2026, primarily for Europe? I notice you didn't record any items affecting comparability in this quarter. Would you say the FTE reductions are done now, or do you see certain countries that where you need to adapt still?
You're mixing two things here. First of all, if we focus in the U.S., yes, we had 600 employees year-over-year, less FTEs in the U.S., due to operational efficiencies, and we will continue with the work there. If we look at Europe, we didn't have any restructuring cost in Q1 2026, but we do expect to have restructuring costs in the remaining part of the year. Again, not to the extent of what we had in 2025. There's still work ongoing on the different European countries.
Okay, very clear. Thank you for that. I'll jump back into the line. Thank you.
Thank you.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Aritz Larrea for any closing remarks.
Thank you very much everyone for listening in, and please reach out if you have any follow-up questions. Thank you. Bye-bye.
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