Hi, welcome to this Q&A session on Momentum Group's Q1 report. With me, I have our CEO, Ulf Lilius, and our CFO, Niklas Enmark. They are here to answer the questions that we have received this morning. The first question. You said in the report that the direct effects from the announced tariffs are limited. Can you elaborate on the indirect impact? Also, which customer segments are showing the most caution? Ulf?
Yes. The direct impact is limited since most of our business is Nordic and not heavily dependent on global trade flows. We have very limited exports and imports from the U.S. Which customer segments? I'm now only making some assumption, but it will probably be those customers with a relatively high CapEx over time that is more likely to postpone or cancel investments in uncertain times. Sectors impacted could be pulp and paper and the automotive industry, for instance.
However, for us, with a large part of after-market sales, this does not have to be negative as customers will try to maintain and service their existing machinery to a larger extent.
Here we have a question about the stabilization in the automotive segment. It sounds like the volumes increased quarter-on-quarter. Is it fair to say that the margin recovery is due to improved volumes in that segment, or is there an element of focus on other segments?
It was generally a more stable market environment within automotive, as well as focus on other segments that benefited the margin increase in business area industry this quarter.
The Swedish krona has strengthened recently. Has this been positive or negative for Momentum Group? Niklas?
Thank you. As we are net purchasing in EUR for approximately SEK 200 million and U.S. dollars for around SEK 20 million , an appreciated SEK means that we will benefit from a stronger Swedish krona, everything else equal, but to a relatively mild degree, as can be seen from also the scenario analysis in the annual report. When we price to our customers, we normally do it in local currency. For instance, in Swedish krona, or use the same currency as we purchase in or use different types of currency clauses.
We, of course, try to consider the currency in our daily operations in our pricing. As regards translation effects, as we mentioned in the report, the effect in the operating profit from these were zero, but in the quarter, we actually saw a positive contribution in our finance net due to our loans being, to some extent, in euros and in Danish krone.
Organic growth was slightly negative in Q1, and margins are down more than the earnings. What's behind this? Niklas?
To answer the question, we can take a look at the different business areas, where we saw that the EBITA margins were increasing in our business area industry but decreased in business area infrastructure. This, in turn, was affected by that the share of project and service sales were somewhat lower, primarily as a result of seasonal variations and also a lower level of capacity utilization in our workshops due to more cautious customers.
All in all, our level of service revenue in infrastructure was around 20% of revenues in Q1 compared to 25% last year, as we also mentioned in the report.
Now a question about seasonal variations. You mentioned seasonal variation in project and service sales within flow technology. Could you give more color on how Q1 is typically affected and whether this was specific to this year and last year?
Yes. Q1 is usually a bit softer for service-heavy parts of the business. This is related to the fact that some of our customers in infrastructure is electricity and heat production-related customers, and they want to keep up their production during the colder part of the year. We have not seen a cancellation of service business and/or deals or offers, but we also state that the customers are a bit more cautious.
You mentioned lower workshop utilization in technical solution, something you also mentioned in Q4. Is this a stable trend, or are you seeing signs of improvement? Niklas.
We see a more cautious approach from some customers here, as we mentioned in the report. As we mentioned also that we are continually addressing the business situation and also have taken cost-saving action due to the demand.
Business area industry showed strong performance. The new central warehouse for Momentum Industrial is now operational. Can you elaborate on the expected benefits? Ulf, please.
Absolutely. The warehouse went live without disruptions, which we're very pleased with. Going forward, we expect a better logistic efficiency with a more flexible cost model. It is also a modern, automated solution that strengthen our platform for continued growth.
Business area industry showed strong performance. The new central warehouse for Momentum Industrial is now operational. Can you elaborate on the expected benefits? Ulf, please. Now the final question. Given the market uncertainty, are sellers becoming more hesitant? A similar question: Does the global uncertainty you mentioned change your approach to acquisitions?
We have not seen signs on this yet, and we still see a strong flow of opportunities. Our discussions are active, and we try to focus on discussion with the sellers on the long-term situation. That said, we have chosen to pause or halt some discussions where we feel a bit uncertain of the effect from the current turmoil in the market.
Thank you for listening in to this Q&A session. If you have any questions, you can always contact us at ir@momentum.group. Thank you