Welcome to Ratos's Q1 Earnings Call 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. I will hand the conference over to CEO Gustaf Salford and CFO and IR Anna Vilogorac. Please go ahead.
Good morning, everyone, and thank you for joining us today. I will begin with a brief overview of the quarter, and then Anna will go through the financials in more detail. Overall, we delivered solid growth in what continues to be a mixed market environment. Net sales increased by 3.4%, and adjusted EBITDA came in at SEK 460 million, corresponding to a margin on 9.3% and an EBITDA growth of 21%. Adjusted earnings per share was 67 Öre, an increase of 81% compared to last year. We had a strong start of the year in our industrial product companies. Diab and HL Display both posted healthy growth. On the industrial services side, the quarter was more challenging. Both Knightec Group and Aibel faced softer demand and tougher market conditions.
Our results for the quarter was negatively impacted by two main factors. First, lower volumes and gross margins among our technical consulting businesses. Secondly, at Speed, we continue to invest in automation to increase capacity and efficiency over time, which temporarily affected profitability as we absorb these investments. During the quarter, we also launched our strategy, Ratos 2030. The strategy reflects a clear direction. Ratos is returning to its roots as a focused long-term investment company, owning both majority and minority stakes in Nordic companies. For the 2026, 2028 period, we have three strategic objectives, and I'll walk through each one of and highlight what we delivered in the first quarter to support them. Firstly, we're building a more focused Ratos.
In Q1, we launched a new strategy, provided greater clarity on the portfolio, as you also can see in our Q1 report. We also exited Expin Group, steps that reinforce our focus and where we allocate our time and capital. Secondly, we're driving profitable and capital-efficient growth through organic initiatives and add-on acquisitions. In the first quarter, we saw significant orders for Aibel, TFS, and Presis Infra. We delivered organic growth. We generated a robust earnings contribution. We also completed HL Display's add-on acquisition of Deinzer, which supports both growth and value creation in that business. Thirdly, we'll further develop our ways of working as a company. During Q1, we increased our external presence on portfolio company boards, including the appointment of Daniel Sjöberg as chair of the board for Presis Infra.
We have clarified how we categorize our portfolio and where we'll focus going forward. The purpose is to create a clear and more transparent structure for how we manage the companies and how we track progress against our financial targets. At a high level, we now distinguish between core and non-core companies. Our core portfolio is where we will concentrate ownership attention and capital to drive profitable capital-efficient growth over time. If we now turn to our companies, especially the companies in the industrial products, we saw that performance developed well this quarter, especially for Diab and HL Display, and all companies delivered organic growth. Diab delivered a strong 16% organic growth in the quarter, supported by increased demand from defense customers, and profitability improved on the back of the higher volumes combined with lower depreciation. We also saw strong development in Return on Capital Employed.
HL Display reported 4% organic growth. We saw positive sales development in North America. As mentioned earlier, the acquisition of Deinzer was completed during the quarter, strengthening our offering and supporting further growth going forward. Ledil delivered 1% organic growth, driven by the indoor business, while outdoor business continued to face a more subdued market environment. Turning to our industrial services companies, the quarter was more challenging, reflecting a cautious market environment and low utilization in parts of our consulting businesses. Aibel reported a negative 4% organic growth. The market remained cautious and utilization was lower, which affected performance. At the same time, we continued to strengthen our offering. We were awarded a contract to deliver a new AI-based platform solution, which is an encouraging step as we build capabilities for the future.
Knightec delivered a negative -2% organic growth. We saw utilization challenging, driven by uncertain market conditions where customers continued to be cautious with new product starts. Speed grew 12% organically, supported by continued momentum in our logistics solutions and new customers. Profitability was impacted during the quarter as we progressed automation projects that our investments we believe are important to improve capacity and efficiency over time and prepare for growth and margin improvements. TFS delivered 18% organic growth, primarily driven by an increased share of pass-through revenues, while service revenues were down. Importantly, we received a major order of approximately SEK 350 million , supporting a strong development of the business going forward.
Moving to our infrastructure companies, Presis Infra delivered a 2% organic growth in the quarter, profitability was somewhat lower, mainly driven by product mix and timing effects, but we continue to see a robust order backlog which supports good visibility for the coming quarters. Now moving on to our minority holdings. Starting with Aibel, the company was awarded a major framework agreement with Equinor. The agreement has a fixed duration of five years with options for extension, the total value is estimated at around NOK 20 billion over the fixed period, an important win that supports long-term developments. For Sentia, the share price has increased by more than 40% since the listing in June 2025. We also expect to receive a dividend from Sentia in Q2 of approximately NOK 220 million, corresponding to Ratos' share.
Lastly, a brief update on our non-core consumer companies. KVD delivered -3% organic growth, impacted by lower used car volumes. At the same time, Forsby Fritidscenter performed well, with a strong order backlog and solid sales and results. Oase Outdoors reported 12% organic growth, and the business unit built inventory ahead of the peak season in the second quarter, which is consistent with normal seasonal preparations. Plantasjen delivered 4% organic growth, with growth in both the Swedish and the Norwegian markets, and the profitability was impacted a bit by product mix and higher energy costs during the quarter. With that, I would like to hand it over to Anna for the financials.
Thank you, Gustaf. Without further ado, let us dig into some more details. Really on the positive side, this quarter, again, a second quarter in a row now, we displayed positive organic growth, just above 3%. Also if we look at the 12 months rolling trend, this also now is in a positive trajectory. Also, another quite positive item in this quarter is that our EBITDA improved by 21%. This is from a meaningful impact of the Sentia contribution, and we will come into more details from that. Just a reminder that Sentia was not a part of this. This Sentia holding was not part of our Q1 2025 numbers. Here we will break down the net sales and adjusted EBITDA in different components, starting with the organic one. As mentioned, 3% organic growth.
Unfortunately, it was a negative contribution on our EBIT. This stems predominantly from two components. One is being Speed, for which we do see these automation investments, which we are taking through the P&L. The other one is Knightec Group, which actually had organic decline, and here we see a high drop through straight to our bottom line. Moving into M&A component, which actually was margin accretive, we do see Deinzer effect, even though it was small. It was just one out of three months, whilst the other two were actually some disposals and acquisitions within Presis Infra, out of which that disposal actually was loss-making, hence a really strong contribution from the M&A side, which we do not expect to see in the coming quarters.
Moving into FX, as seen in the previous couple of quarters, we still do see negative impact on the top line stemming from both U.S. dollar and Euro, SEK strengthening towards these currencies. On the EBITDA side, on the other hand, it was quite neutral, even though we should remember that our global companies, Diab and HL Display, actually did see quite a negative impact on their EBIT from FX, predominantly strengthening towards U.S. dollar and Euro. Here we can clearly see that meaningful Sentia contribution, which is 150 basis points accretive to our margin. Also, what surprised us positively was Aibel. We are moving towards a year for which we, based on the projects that we have, do expect Aibel to come in lower in revenues in 2026 versus 2025.
On the other hand, we did see good project execution in Q1, and hence a bit more in revenue recognition for the quarter, supporting us positively in the bridge. Here we have now increased our transparency, so we are reporting company by company in our interim report. Bear with me, it's a lot of moving parts here, and I would just make a couple of comments. I would say again, industrial products doing really well, both HL Display and Diab. Again, remembering that we do have a currency headwind in both of these companies, which is quite significant, and still a very good contribution to the EBITDA. We also see this highly negative impact in Knightec Group in Speed. For TFS, just one comment worth making here.
We see a healthy top line growth, +31 in net sales bridge, however, a negative contribution to EBITDA. As Gustaf mentioned, we see good growth in so-called passthrough revenues. What that is us providing third-party services to our customers, for which we are not getting any EBITDA contribution for. Our service business is actually down, and hence, then lower profitability stemming from that. When it comes to consumer companies, KVD, Plantasjen, Oase Outdoors, as you can see, not a lot of movements in there. Quite neutral for the full quarter. Again, our peak season is in Q2, so that's something to look forward to. One last comment is that we saw a positive effect coming from the corporate line. It's a twofold explanation.
One is that we have dismantled the business area level, hence we are running at a lower cost rate currently. The other part is actually coming from lower transaction costs this time around versus previous year. Looking at net working capital, I would say stability is name of this game. If we look at both absolute and relative terms compared with last year, we are quite flat. When it comes to sequential development, we do see inventories as a preparation for the peak season in Q2 for many of our companies. Inventories are up quite significantly on sequential basis. They were offset by other receivables and payables. Hence the net working capital in absolute terms was quite close from the level we saw in Q4. That effect in other receivables payable has to do with us preparing for our dividend payment.
Looking at the cash, I would say that this is probably the thing that we are least happy about in this quarter for Q1. Has to do with a couple of difference, and we do have the comparison difficulties versus the same period last year, as Q1 in 2025 did of course include Sentia, and also there were some reconstruction effects from Plantasjen in that number. Quarter isolated, I would say some normal behavior when it comes to net working capital buildup for some companies. We also had some timing issues when it comes to our industrial services companies. On top of that, we did get a negative effect from our currency loan hedges, and that had to do predominantly by Norwegian krone strengthening in the quarter versus SEK.
Looking at the LTM trend, however, as you can see, it is a quite healthy cash conversion. Net debt, quite similar from previous quarters when it comes to leverage 1.6x . We see again normal seasonal pattern for which the Q1 is a step up, not least due to the cash situation I just described. Versus previous year, it's a slight decline in overall net debt. Again, we are at the lower end of our targeted range of 1.5x-2.5x . Just as a reminder, we do not include our shareholding in Sentia in these numbers. If we would just theoretically and mathematically include those, our leverage would be 0.3x , hence indicating a very stable and solid financial position, which gives us a lot of maneuverability going forward.
Looking at Return on Capital Employed, which is one of our external financial targets, if we first turn to the golden line, we see definitely an impact of us disposing or listing Sentia. As you might remember, Sentia as a construction company, it's more volatile when it comes to cash flow and net working capital. We have become much more stable when it comes to those metrics. On the other hand, we did have quite nice Return on Capital Employed, and that's the effect you can see from Q1 and onwards that it's declining. I would rather us comparing like for like, which is then the bottom line. As you can see, the trajectory is positive.
We are of course still not happy, our ambition is to do even more, but this time around, it is nice to see that it's actually moving in the right direction. Last, but, uh, what it all boils down to is, of course, the EPS. I think also it's nice to see that we have EPS accretion throughout the P&L. If we first turn to the left-hand side graph, this is based on group total. That is how we historically looked. We see a very healthy EPS growth from Q1 last year to Q1 this year, more than 80% growth. Also, if we look at the LTM line, that's also a 16% improvement, which is great to see.
If we look at the table on the right-hand side, here we've tried to do it like for like, just so you understand where this improvement is coming from. This is based on continuing operations. Again, adjusted EBIT, a double-digit improvement. Net financial items, we also see a double-digit improvement as we have lower financing costs. Looking at taxes, another item actually highly supported this quarter around. Even though I just wanna warn you shouldn't see this tax rate of 10% as a normalized tax rate. I would say our effective tax rate is estimated to be somewhere between 17% and 19%. Unusually low tax rate for the quarter has to do with, not least the growing and having good profits in countries where we have a large tax losses carry forward.
All in all, it's a substantial EPS improvement, this is a testament of value creation this year versus past year. With that, I would like to hand over to Gustaf to take us out through a summary.
Thank you so much, Anna. If I try to summarize this quarter, it's really about that we launch our new strategy, Ratos 2030. We also had updated financial targets released for the period 2026 to 2028. It's all aimed at supported increased shareholder value through clear focus and a disciplined capital allocation. Operationally, we delivered organic growth and improved results, supported by strong performance in our industrial product companies, where momentum in business like Diab, HL Display helped offset the more mixed market environment elsewhere in the portfolio. Looking ahead, our focus is really to keep driving improvements, execute on the strategy, and support the portfolio with the right initiatives, so we can sustain profitable, capital-efficient growth through Q2 and onwards. With that, I would like to say thank you, and we are happy to take any questions.
If you wish to ask a question please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question please dial pound key six on your telephone keypad. The next question comes from Henric Hintze from ABG Sundal Collier. Please go ahead.
Hi, this is Henric Hintze with ABG. First of all, I would like to ask on Speed , the automation projects you have ongoing there, when exactly do you expect these to reverse from contributing negatively to contributing positively? What sort of EBITDA recovery should we expect there?
Yes. Hi, Henric. I start with that question. The Speed automation is ongoing. It's impressive product, project where we are driving a lot of automation in the warehouses. We will work with that during the spring here, and then during the autumn, it's expected to go live, so to say, and have the positive impact on margins and the productivity for some of our key clients going forward. And then exact financial impact, we'll see that in the coming year and onwards, I would say. That is the operational and financial plan for the Speed automation.
Okay. Thank you. Also on Knightec, purely automotive is one of the main drivers of the weakness we see there. How are you sort of approaching this? Is there any reason to believe that there will be a recovery in the near term, or are you trying to reduce the number of consultants, or is it somehow possible to divert them to other sectors? How are you thinking about that?
Yes. I think if you look at the Knightec, maybe if you include Aibel as well, of course, there is an impact on cars and trucks. That has been a bit more difficult market in terms of project starts. What Knightec do is really product development and R&D initiatives and so on. It's very important with new projects. However, we're very well-positioned when it comes back, the demand for those products and or projects. As well, we have the defense customers where we see very strong demand at the moment. I think we have the competence, we have the expertise to be well-positioned when the demand comes back.
Of course, short term, we are mitigating the current impact from the weaker markets by looking at utilization and looking at the efficiency of the teams and the cost levels and so on to manage this business cycle. It's also important to say that it's very important that we keep the right expertise to drive growth going forward. We have a kind of positive outlook for technical consulting companies, but at the moment, it's more a challenging market condition.
Okay, very good. Maybe finally, could you just specify exactly what the restructuring charges you had in the quarter were for?
Of course. I would say you have. The biggest one is actually HL Display. They normally consolidate their footprint as they do a lot of M&A. That is one large one. Then we had a small total overall impact from Expin Group, but that was a smaller one, SEK -4. The other one is SEK -21.
Okay. Thank you. That's all for me.
Thank you, Henric.
The next question comes from Björn Olsson from SEB. Please go ahead.
Good morning, guys. First just to follow up on Henric's question on Knightec. I interpret this that you'll keep your sort of being overstaffed waiting for demand to return. How long I mean, given the uncertain outlook in general, for how many quarters do you think that plan could hold before you actually start to take actions? I mean, your margin is down 300 basis points year-on-year. Sort of for how long should we expect that to continue until you take action?
Yeah. Yeah. Thank you, Björn. I mean, on that question, I think it's important to say that we come from a year last year of lower cost and efficiencies. That is something we have been driving for the last year, and we continue to do so because for the company it's important to mitigate the effect of the lower demand. It's impossible to say exactly how many quarters, of course, this situation will continue on the demand side. But we are mitigating the effects. We are looking at efficiencies. I wouldn't say we're overstaffed, but it is important to keep the right experts and expertise in order when the demand comes back.
I cannot say exactly what quarter we expect it to come back, but we are mitigating the effect on the lower demand in Knightec.
Okay. Thanks. On Plantasjen, it seems that the momentum was somewhat picking up in Q1, although with a sort of margin negative product mix. Could you give any flavor of how Q2 seems to be developed this far?
If we look at the first quarter for Plantasjen, I think all of us experienced a quite cold February and there was higher energy cost and so on that impacted the margins, but it's very positive to see that the top line were growing. The product mix was a bit impacted in the quarter. That was a product mix of a bit lower products also linked to the colder February. Looking at this quarter that is, of course, very important, it's spring. That's when you to primarily go to Plantasjen and I think we are optimistic and about the Q2 numbers and I see good activity when I go around and visiting different Plantasjen stores here in Sweden.
I think it's important to say that it was both in Norway and Sweden that we saw growth in Q1.
Just reminding Björn that April last year was actually a very good month for Plantasjen, so perhaps from that reason as well, quite difficult for us to judge from April. It's gonna kind of come down to May and June, unfortunately. Again, it's our biggest quarter. This is where everything kind of ties in for Plantasjen, so a very important quarter ahead.
Makes sense. I guess me and my colleagues will do some secret shopping for the month coming.
Please do.
Absolutely. Can highly recommend it.
Finally, just on your balance sheet. I mean, as you report, you are in the lower end of your net debt target, and since you don't plan to do any major platform acquisitions either in the near term, have you had any, like, second thoughts on buybacks?
Of course, again, it's a discussion that is being had at the board level, of course. We are constantly evaluating how to allocate capital in the best way possible. We also hope that we will get additional M&A throughout the year. Again, companies such as Diab, such as HL Display, such as Presis Infra, there is a lot to be done there. Nothing on the table or decided yet, but of course all of these initiatives or capital allocation possibilities are on the table and being discussed.
All right. Makes sense. Thanks, guys.
Thank you.
Thank you, Björn.
The next question comes from Georg Attling from Pareto Securities. Please go ahead.
Good morning, Gustaf and Anna. Just a few questions from me. One on more high level. I'm wondering what effects you've seen from let's call it the geopolitical unrest, both here in Q1 and also if you've seen anything during the start of Q2.
Yes. Thank you, Georg. Ratos, we are primarily exposed to, I would say, Sweden and Norway when it comes to our revenues, but of course many of our companies have international operations as well. We haven't been impacted in Q1 really. You can almost say for the Norwegian Stock Exchange and also for Aibel, they are in a way supported by this geopolitical unrest. For the rest of our companies, we haven't seen any real impact on supply chains or anything like that because most of our goods were already delivered or in warehouses during Q1. Q2, I don't expect it to impact us significantly. Again, we have the goods we need in order to deliver on the spring season in our companies.
As well the if you take the technical consulting side, it's primarily more on product starts for larger industrial companies that's impacting those volumes. I would say a very limited impact on Ratos, both in Q1 and Q2.
Maybe just to add, Georg, of course, for HL Display and Diab being these international companies, we do hear transport surcharges or raw material inflation. We have initiated, of course, our processes in order to push those kind of price increases towards our customers. So far in Q1, no financial impact. Then of course, going forward, we will try to handle it as best as we can by pushing it to our customers. That's the plan, and I think both companies acted quite early in this. We don't expect any substantial negative impact on our result.
That's clear. Just a follow-up on that, with regards to technical consultants, if you could describe Q1. Did you see that demand was higher at the start of the quarter and then declined in conjunction with this geopolitical tension rising, or has it been sort of subdued throughout the entire quarter?
I don't think we have experienced any difference in the demand between the month. I haven't picked that up, no.
Okay. Just final question on also on Plantasjen. Obviously no margin expansion year-over-year here this quarter, partly attributed to mix as you described. When we look ahead on this sort of top line level, have you done what's possible or sort of picked the low-hanging fruit in terms of margins? Or is it more that can be done even without higher volumes?
I think you have a great leverage in the Plantasjen business model if you get the volumes now during the spring. So that's key. Going into the second quarter now with two quarters of growth in the business, that's a great momentum to have. We don't expect, you know, these high energy prices that we had in the beginning of the year, especially February, to impact Q2 in any meaningful way. We're set up to get leverage from the volume we now see in the spring and the Q2 season.
Maybe just one comment here. For 2025, I would say we believe that we could do 6%-7% EBITDA margin. Of course we had that very cold May. Q2 was not as good as anticipated. We landed just below 5%. I would say cost-wise, we're on the similar levels. The question is whether we can get a bit more top line. Otherwise, you should probably see it as 2025 numbers. That's where we are if we don't get that additional volume now in Q2.
That, that's clear. Just to follow up on that also, I mean, we've seen the NOK really rallying here in the past few months. How will that affect Plantasjen's profitability? Do you have a similar amount of costs in NOK as well, or will that be positive for the margin?
I would say so, that we do have a quite extensive or a large business also in Norway. I would say we don't perceive any large impact from NOK strengthening versus SEK. We saw a slight positive now in this quarter, both on the top line and a little bit of bottom line, if that gives you an idea.
That's great. Thank you. That's all I had.
Thank you.
As a reminder, if you wish to ask a question please dial pound key five on your telephone keypad. The next question comes from Emil Nystedt from Kepler Cheuvreux. Please go ahead.
Good morning. It's Emil from Kepler Cheuvreux. I have a couple of questions. First, I was wondering about TFS, where you had quite high pass-through revenue in the quarter. Should we view Q1 as an isolated data point here, or can we expect continued high pass-through revenues moving forward? Also if you could please give us some color on the SEK 350 million order intake and how the underlying business is doing.
Yes. Thank you, Emil. If we start with pass-through items, this is kind of industry standard that you have significant pass-through items for the clinical trials. That's not something strange. In the quarter, it was a higher proportion compared to the average ratio. Then you see this impact on the margins directly. The service revenue, as we call it, what TFS is getting the margins from, declined in the quarter.
It's so important to see that we now get this very significant order of SEK 350 million that will be part of driving growth for TFS going forward. As you know, the CRO business is a high margin, low capital employed type of business, so getting growth into that business is key for value creation for Ratos and of course also for TFS. I look positively on the industry that the biotech funding is more coming back, and there will be more clinical trials in the areas where TFS is operating. With that, the ratio of pass-through items should then also go down on average compared to what you saw in this quarter.
On the significant deal, we cannot disclose the customer name, but I can say it's a great customer. It's a very good deal that will be supporting TFS' growth going forward.
Just maybe a bit of color. Pass-through revenues in the same period last year was one-third, and it's almost 50% in Q1 2026. It's a huge increase, and that is because of the phases that the different studies are in. In certain years it can be quite high, and in other years it is more insignificant.
Thanks. Then secondly on Diab, plus fixed and organic growth here in the quarter, how much order backlog visibility do you have in Diab today? And, you know, is the current demand level and margin sustainable through the rest of 2026, do you think?
A couple of different points. The visibility that we have is 2 months- 3 months, not that high, unfortunately. That is what we see. Normally, I would say it is difficult to estimate how sustainable, let's call it, defense volumes are. They can come and go in different periods. Also, you need to remember in this EBITDA and margin increase that we do have an impact from lower depreciation, as we did write off fixed assets associated with wind in July last year. Of course, this kind of steep incremental improvement, we do not expect that to continue onwards. That's something to bear in mind for the rest of the year. On the other hand, we do still see solid markets across the board.
Maybe marine segment is not the best one, but apart from that, we stand on the several different segments and see a healthy development. This kind of very exponential improvement should not be penciled in into future. Let's put it like that.
Perfect. Thank you. That's all. I'll get back in line.
Thank you.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Thank you, and thank you for your questions. If we look at Q1, it was really a robust quarter for Ratos with a new strategy launched and improved operational performance with organic growth and margin improvement. We are really looking forward to continuing to deliver during our important second quarter and fiscal year 2026 and beyond. With that, I would like to thank you for listening, and have a great day. Thank you.