Hello, welcome to the Systemair Interim Report Q1 2021 - 2022. Throughout the call, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Roland Kasper, CEO, and Anders Ulff, CFO. Please begin your meeting.
Thank you very much. Welcome to everyone to this telephone conference. You can find today's presentation on our group, systemair.com page. Under Investor Relations, we find the quarterly report, and there also our PDF, the presentation. By that, I hand over to Roland here to do the presentation.
Thank you, Anders, and welcome everyone to our quarter one report for the year 2021-2022. I'll right away start the presentation with our slide number two. Systemair, as you all know, in this summary, Systemair in Brief. Systemair is established in 1974. Today, we have our headquarter here in Skinnskatteberg in Sweden, where we are founded. Our last fiscal year, we had a total turnover of EUR 850 million, and we are, since October 2007, listed on the Nasdaq Nordic stock exchange market. Today, we operate our own sales companies in 54 countries all over the world, and we have our own production facilities in 20 countries with a total book value of SEK 1.2 billion. We employ around about 6,500 employees, and we constantly export to more than 135 countries all over the world. Shifting to slide number three. By that, moving directly into our quarter report.
Net sales for Q1 amounted to SEK 2.29 billion. This corresponds to growth of 9.1% totally, whereof 13.3% organic. On the right side of the slide, you can see the development in graphs. You can, of course, also see the impact of the pandemic throughout last year and the development since then. Going over to slide number four, the growth analyzed for our Q1. Organic, we had actually a good organic growth in all our regions that we report. The impact from acquisitions was rather small, driven by the acquisitions of DeWit in Sweden, Servicebolaget in Sweden, and Burda in Germany, which contributed with 0.5%. Then we have a negative impact of 4.7%, mainly due to the strength in Swedish Krona, which brings us to a total growth of 9.1% in total for the first quarter.
Slide number five, our operating profit for the first quarter. Our gross margin in the first quarter increased to 34.8% compared to 33.6% the quarter the year before. Our sales and admin expenses for the quarter have increased to 2.7% for comparable units. The operating profit for the first quarter thereby amounted to SEK 209.6, compared to SEK 182.1 the year before. This contributes to 9.2% operating profit for the quarter. Slide number six, profit after tax. The net financial items ended the first quarter at SEK -3.4 million, compared to SEK -66.6 million the year before. The effects of the foreign exchange and long-term receivables, loans, and bank balances were calculated at SEK 5 million, compared to SEK -58.1 million the year before.
The interest expense for the quarter totaled SEK -6.5 million, compared to SEK -8.7 million. The estimated tax for the quarter amounted to SEK 49.4 million, compared to SEK 33.5 million the year before. This brings us to a profit after tax for the first quarter to SEK 177.57 million, compared to SEK 82 million the year before. Moving to slide number seven, our cash flow analysis for the first quarter. The cash flow from the operating activities amounted for the first quarter in year 2021-2022 to SEK 249.8 million, compared to SEK 197.5 million the year before. Looking at the change in working capital is SEK -91.2 million in the quarter, compared to a SEK +37.9 million the year before. These changes in the working capital are mainly due to increased inventories of SEK 182 million that are due to the component situation we have in the world.
Our net investment, excluding the acquisitions, amounted to SEK 87.0 million compared to SEK 93 million, and are preliminary, the investments in buildings and machineries in Czech Republic and in Canada. Thereby, the free cash flow amounted to SEK 71.6 million compared to SEK 142.4 million the year before. Our net indebtedness compared to last year has decreased to SEK 1.5 billion compared to SEK 1.83 billion. Looking at our slide number eight and moving into the picture to visualize our cash flow from the operating activities. Here you can quite simply see the development and the slightly lower amount of cash flow from the operating activities in our first quarter, mainly due to, as mentioned, the component situation. Next slide number nine, and by that, going in to have a look into the different geographic markets. Starting with the Nordics.
Sales in the Nordic countries increased by 10.3% in the first quarter compared to the previous year. Here, adjusted for the foreign exchange effect and acquisitions, sales increased by 7.6%. The Swedish and especially Norwegian markets showed very good growth during the quarter, while sales in the Danish and the Finnish markets decreased slightly. Again, growth 10.3%, thereof organic 7.6%. Moving to slide number 10, and Western Europe. Sales in Western Europe market increased during the year by 10.5% compared with the corresponding year before. Adjusted here for foreign exchange effects and acquisitions, sales increased by 13.3%. Most countries in the region, including Italy, France, and England, showed growth during the period, while Belgium, Austria, and Switzerland reduced sales. Growth 10.5%, whereof organic 13.3%. Moving to slide number 11 and Eastern Europe and CIS. Sales in Eastern Europe and the CIS increased by 15% during the quarter.
Here, adjusted for foreign exchange effects and acquisitions, the sales increased by 23.9%. The sales, especially in Russia, increased by 14.4% comparable to this period. This, though, calculated in Swedish Kronors. The Russian market accounts today for 1/3 of the sales in this region reported. Other major markets growing in the region were Czech Republic, Slovenia, and Lithuania. Growth 15%, whereof organic 23.5%. Slide number 12, North and South America. Sales in North and South America region increased by 1.8% during the quarter compared with the same period last year. Here, adjusted for currency effects and acquisitions, sales increased by 6.6%. What we can see here is that we have a by far lower organic growth compared to last year, but is mainly due to delays in supply of components. Growth 1.8%, organic 6.6%. Slide number 13, Middle East, Asia, Australia, and Africa.
Sales in Middle East, Asia, Australia, and Africa increased by 3.4%. Adjusted for currency effects and acquisitions, sales increased by 15.3%. Here, especially India, Morocco, and South Africa showed good growth during the period, while Turkey and Australia reduced sales. Slide number 14. Slide number 14 visualize how we break up the volumes in the different geographic areas of the world. Today, Eastern Europe and the CIS countries contribute to 15% of the total turnover of Systemair Group, compared to 14% the year before. North and South America slightly declined from 12% to today 11%. Middle East, Asia, Australia, Africa declined from 13% - 12%. Nordic region increased from 17% - 18%, and Western Europe is stable at 44% of our total sales. Going into slide number 15, a short notice about our acquisition of the remaining shares in the company Burda in Germany.
We acquired the remaining 50.1% of the shares of the company. Burda today develops, produces, and supplies infrared radiant heaters and heating panels and associated control equipment with several patents. Sales in 2020 amounted to approximately EUR 4 million. Burda is today market leader infrared heaters for outdoor applications and therefore a perfect complement to our existing Frico product range. Next slide number 16, some of the projects we have executed in the period. For example, our entity Systemair Belgium, has been selected supplier for the dehydrogenation of propane built by Borealis. Borealis is building this new world scale 750,000 ton per year propane dehydrogenation plant in Antwerp in Belgium. Our air handling units are prescribed in this high-end explosion proof execution, and the total value is EUR 430,000. First units are delivered in August, produced in our factory in Waalwijk in the Netherlands.
Other products as fans and all the cooling equipment will be delivered from our Systemair entities during fall in 2021. Next slide, number 17. Also a nice reference in this time is that we from Systemair deliver filter solutions for this hospital in Bratislava in Slovakia. It's the Bory Hospital in Bratislava, is the next generation healthcare project currently under construction with the aim to open in 2022. Here, Systemair are pleased to be able to deliver a wide range of our air distribution products, yet specifically, plenty of our CFC-A to this project. CFC-A is an air distribution cassette behind the displacement diffuser, which comprises HEPA filtration unit. This unique hospital in Slovakia will treat patients with most complex needs for world-class staff using state-of-the-art technology. Moving to next slide, slide number 18. Another reference supplied by Systemair is Kanalbyen in Kristiansand in Norway.
Kanalbyen is a new seaside district in the heart of Kristiansand. This project consists of 700 new apartments and has been under construction since 2018. So far, Systemair has delivered 250 energy efficient SAVE residential air handling units for all the completed construction phases, and we are set to deliver for all the remaining phases. Moving to slide number 19. This is launched from all our Systemair entities in Europe, set to start the 1st of September, where Systemair exclusively go in a partnership with Deltrian's virucidal air filters for air handling units. We will be able from 1st of September to supply our air handling units with this outstanding filter solution. DELTRI+ is a new efficient and hygienic air filter, provenly it neutralizes viruses and provides enhancement solution to improve the indoor air quality in buildings.
This filter has been tested in Luxembourg at the Institute of Science and Technology, and have shown proven efficiency and are Eurovent certified with A+ energy. This is something that will be a very good contribution to indoor air quality moving forward. With that, I move to slide number 20, say thank you, and open up for questions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will just be a brief pause while any questions are being registered. And just as a reminder, that was zero one on your telephone keypad, if you wish to ask a question. And as there seems to be no questions, I'll hand it back to the speakers.
Okay. Surprisingly.
We actually have some questions coming in now.
Okay.
Yeah. Our first question is from the line of Henrik Alveskog from Redeye. Please go ahead.
Okay. Hello, do you hear me?
Yes. Hello, Henrik. We hear you.
Yeah. Great. Thanks. Well, I was just wondering if you could maybe give us a little bit more color on the situation with the shortage of certain components, how you experience that now?
Absolutely, Henrik. We actually had very good, how to say, pre-preparation for this issue. We were quite well prepared with little bit higher stocks for the urgent goods. We were hit by this during our last month in the quarter, one week into the last month. Now almost everything of what we see is in the problem area is motors, and yet specifically it's the control equipment, the control part of the motors and the cabling. This is specifically going to bigger projects and some specific motor models, and has been hitting us in both Canada and in some of the European countries.
Okay. Is there any way you can assess when this will be resolved and go back to normal? Is there any visibility in this?
I think if you look out to the normal news that we have out here, you hear similar backgrounds and informations from other industrial actors. We all have the same problem just now when it comes to electronics. If you look at the most efficient motor combinations that are available on the market today, they're all equipped with these electronics that are just now in a shortage. We have so far and also going further, we have a good balance between the factories that we can prioritize the available components, but it has been a further shortage over the last couple of weeks, and we're working hard with our main suppliers to solve or mitigate the situation. It is actually a little bit up and down on a weekly basis for the time being.
I'm not able to make a 100% prediction how it will continue, how far, how long it will continue. It is just a matter of supply of certain electronic components. It's the main problem.
Well, thank you. Thanks.
Thank you, Henrik.
We have just 1 more question from the line of Douglas Lindahl from Kepler Cheuvreux. Please go ahead.
Yes. Hello, gentlemen. Two questions from my side, starting with inventory and raw materials. I see you've been building inventories here in the quarter, so I wanted to see if you could just give a comment on the raw material situation and the pricing discussions with clients. That's my first question. Thanks.
Yeah. I can start with the pricing discussions. Pricing discussions, of course, that's where everything started when the raw material prices increased quite dramatically. So far, we are in the third wave of price adjustments. There hasn't been any problems with that. All customers are understandingly because everyone has the same problem in all the different leads of our industry. We have the bigger, I would say, challenge when it comes to the availability of components, and as the speaker before had the question, it is specifically on controls on electronics where we have an issue. When it comes to our warehouse, our stocks, what increased during the quarter is actually safety stock, but also that we have work in progress, almost finished goods waiting for certain components that did not arrive on time, which led to that we couldn't invoice, and we couldn't ship.
This is a little bit what happened in our first quarter.
Okay, assuming these shortage issues solve themselves throughout, I guess you will see even further organic growth in the upcoming quarter, or how would you see that sequentially?
I would say it's hard to guesstimate. I can say it like this, Douglas, the order intake and the market development is positive. The challenge that we have is the availability of the components. As our sub-suppliers, which are major actors on the market, we're all looking for alternatives.
It's really hard to predict or to make a good guesstimate just now. It's just the order situation is really good, and we have an increased order intake versus last year. Very nice. It's a good development. It's just the shortage of components that is an issue.
Okay. The component shortages, just to understand, they've obviously, I guess, they've increased during the quarter with issues with shortage. It has not been easier, so to say, throughout the quarter, rather the contrary. Is that?
For us-
Correct.
For us specifically, it started in the second week of July, and it has not been better since then.
Okay. Is it possible to give some sort of similar comment on the demand situation, the development over time?
From what we see just now, the demand situation, when it comes now to our end customers, that is stable and good.
Okay, thanks. Thank you so much.
As there are no further questions, I'll hand it back to the speakers.
All right. Thank you very much for calling in, and hope to see you soon again. Please don't hesitate to contact any of us if you have any further questions.
We would look forward to that. By that, thanks a lot. Hope to hear and see you soon again, at the quarter two report.
Exactly, in the beginning of December.
Correct.
Thank you. Bye.
Thank you. Bye-bye.