Hi, welcome to Momentum Group's Q4 Q&A session. As usual, our CEO, Ulf Lilius, and CFO, Niklas Enmark, will answer your questions following the report. The first question. The margin drop in business area industry in Q4, can you please elaborate on the reasons and if this is a new normal level? Ulf?
On an overall level, the drop in margins was related to two things, of which the first is the predominant one, and that is lower volumes in the Specialist area. The second is lower contribution from acquisitions, both to EBIT and EBITDA margins. I will come back to the question on business unit Specialist later on, as we have specific question on that. If we look at the main business in the business area, power transmission, that business was stable in terms of margins, both gross margins and EBITA margin. Also here, we saw a slight decrease in volumes. Keep in mind that the price pressure from customers is high, and this has caused us to actually say no to certain deals that would impact on our profitability negatively.
Next question. You mentioned in the report the noticeable slowdown in Denmark. Can you elaborate on this and the view of the future situation here?
Over a long period of time, the Danish industrial market has shown very strong development, mainly attributed to the pharma industry. This has affected the general economy and also our Danish business in a positive way. During 2025, we finalized some projects related to pharma customers, which caused a drop in comparable revenues in Q4 this year. This affects Specialist the most, with approximately one third of the revenues stemming from Denmark. For the total group, the projects are limited size, has an effect on a single business unit. With a bit more normalized demand from the pharma industry, the Danish market, we feel, is now relatively aligned with the rest of the Nordic markets in terms of growth for the coming years.
Here's another question for Ulf. Is there a need for larger projects in industry for it to bounce back to normal EBITDA margin levels?
Keep in mind that the lion's share of industry is our power transmission business, which account for approximately 75% of the revenue. That business is quite stable over time and between quarters. Specialists have more project, but still make up a relatively small portion also of that business. Projects are nice when they occur, but it's not vital to the underlying margin level of the business area. However, when we go from one situation to another in a quarter, this can have an effect before we can adapt.
Next question. Can you expand on weaker performance for mining industries in power transmission? Would you say that demand still declined for the customer segment when excluding larger one-off transactions? Niklas.
Thank you, Ann-Charlotte. Mining within the power transmission side is where we have one of the largest impacts from one-off projects, as the deliveries are quite large. That is, the ball bearings are huge in terms of both size, but also, of course, value. Last year, we had quite large deliveries. They will come back with some time intervals, depending on the utilization in the mines, basically.
You mentioned gradually improving signals across more customer segments. What concrete signs are you actually seeing that the market is turning? Ulf?
We see it mainly in behavior, where the number of order inquiries are gradually increasing as well, and an interest to also inquire for more system and project-related businesses. That said, customers are still cautious in investments, but activity is stabilizing and, in some segments, actually increasing, especially defense-related industry, energy, and parts of steel in Sweden, and gradually also Finland. That typically comes before a larger product activity returns.
Next question. Your quarterly sales varies during the year, particularly in infrastructure. Can you explain the seasonal patterns in your business, please?
Yes. Seasonality is quite clear in our operations and mainly driven by our service activities. The second and third quarters are normally the strongest for service and maintenance work, as many customers schedule planned shutdowns and preventive maintenance during spring and autumn. During the summer and around year-end holidays, industrial production slows down, and customers postpone non-critical service work, which lowers utilization temporarily. This means that the quarterly variation are largely a timing effect rather than changes in underlying demand. Over a full year, service demand is relatively stable. It just moves between quarters, depending on customers' production planning.
Another question. You mentioned composition of products and services as an explanation for the variation in margins between the quarters. Why is that, and what is the normal level?
For business area industry, the relation between products and services is relatively stable between the quarters. On average, the share of services here is small, with around 8%. In infrastructure, the services part is larger, on average 27% these last three years, but also ranging more from around 20%-35% of total sales.
Given the current geopolitical situation and increased defense spending in the Nordics, are you seeing tangible demand effects?
Yes, primarily in Sweden. We see increased activity in defense-related industry and infrastructure linked to energy, security, and resilience. It is not a large share of the group, but it contributes positively and, more importantly, provides stability during uncertain periods.
New question. You state that you are taking measures related to cost in various parts of your business, and despite that, costs are increasing. Can you please comment on that?
Yes. Costs in total are increasing, but keep in mind that that is also including contributions from the acquired businesses, as well as costs related to acquisitions, both fees as well as the increase in depreciations. If we adjust for this and also only look at organic companies, we see that the cost base has decreased for comparable units, and especially in Q4. Translated into the number of FTEs, we are about 10 people less than previous year for comparable units. We have also seen a positive effect from the central warehouse relocation for Momentum Industrial with lower logistics costs. The adjustments are done on a company level as before, based on the company's specific conditions.
There was a notable working capital release compared to last year. What is that related to, Niklas?
The decrease in working capital was related to a decreased level of inventories with SEK 23 million and lower accounts receivables with SEK 64 million, but also lower accounts payables with roughly SEK 20 million during the quarter.
Now the final question for today. Entering 2026, what needs to happen for organic growth to turn positive, Ulf?
Customers need predictability. Once industrial customers feel confident about demand, currency, and trade conditions, investment starts gradually. We already see the early phase of that process. Therefore, we believe 2026 will be a year of step-by-step improvement rather than a sharp recovery, but in the right direction.
Thank you, Ulf and Niklas. If you have any follow-up questions, please feel free to contact us at our IR email. Thank you for watching and for your interest in Momentum Group.