Aktieselskabet Schouw & Co. ($SCHO)

Good morning, and welcome to Schouw & Co.'s Q1 Report Call. Q1, our Q1 delivered a very satisfying and solid start of 2026 despite continued volatility. In fact, all our companies continue to deal diligently with uncertainties. We really benefit from our experienced leadership teams and dedicated employees across the globe. Our top line was down 3% to DKK 7.7 billion, but we still had high activity across the board. EBITDA, however, increased 5% to DKK 591 million. This was driven by strong day-to-day focus on optimizing at all level. Also very positive to see that our EBT increased 36% in the quarter. We also continue to deleverage with a net interest-bearing leverage of 1.6x EBITDA, really continue to manage our investments and also being very prudent on our capital allocation. Also very positive to announce to you that the next phase of evaluating an IPO of BioMar has been initiated. This morning, we sent out our ITF or intention to float, and it was announced in the market. And now we are really looking forward to the next phase of that. So with that, moving on to BioMar. BioMar performed very well and as expected in Q1. We have to remind ourselves also that Q1 is a rather small quarter due to low activity, especially in the Salmon segment. Top line was down 6% to DKK 3.2 billion. But volume increased 7% to 315,000 tonnes. This shows also that BioMar is a company that is very dependent on raw material prices fluctuating up and down. We really saw a strong development in our Shrimp segment. EBITDA was, however, up 3% to DKK 212 million. Here, we experienced a solid development in Salmon with a very good development in our Australia business. Shrimp profits lower due to what we call toll milling. We are building volume with large customers, and we do not yet have own capacity ready. So we need to buy in volume from other producers. Our Tech segment was impacted from change of the distribution model. BioMar continue to have a focus on broad product offering and a very sharp eye on their commercial excellence strategy. Our joint ventures had a development as expected. BioMar is continuing to build a position of profitability in China. Return on investment remains very strong, around 30%, which is very satisfying for a company like BioMar. Guidance maintained, revenue expected now DKK 16 billion to DKK 17 billion and EBITDA in the range of DKK 1.52 billion to DKK 1.62 billion. And I also have to note here that BioMar, they have been working hard on preparing themselves to be listed. So a lot of hard work has been going on throughout the entire BioMar organization to be ready for the hopeful next step in this case. GPV, our electronic manufacturing service company is now seeing effects from efficiency measures and footprint decisions made over several years. Top line, as expected, down 3% to DKK 2.1 billion, but the backlog is all-time high with GPV. EBITDA, however, was up 12% to DKK 160 million. Across the board in GPV, there has been a strong focus on customer mix and optimization also brought in new customers and new products with a positive impact on EBITDA. GPV, they have full focus on securing critical components, some components like memory chips, et cetera, has been problematic to get hold on and meaning that GPV is building inventories and sourcing at a broader level. GPV continued to prepare for future growth. They have just finished a strategic review that really confirms the potential and strategic direction of GPV. GPV maintains their guidance with a top line of DKK 8.5 billion to DKK 9 billion in '26, EBITDA, around DKK 690 million to DKK 750 million. Of course, the availability of critical components is important for delivering on this guidance. From GPV, moving on to HydraSpecma. HydraSpecma once again delivered a very solid and positive development all over the group. Top line was up 9% to DKK 873 million. Growth was driven by what we call the global OEM segments. The renewable division had a stable level and the order book really continues to build with the HydraSpecma. EBITDA, 5% up to DKK 114 million coming from very strong margin manage and efficiency uplift. Also need to note that in 2025, Q1, there was a positive impact of DKK 12 million from real estate sale in Poland. So the underlying operational profitability is really, really strong. HydraSpecma have a strong focus on future growth. They just acquired rather small Norwegian, HyCo to strengthen their IAM segment. It's a small business, but it's a next step into Norway. HydraSpecma is also exploiting potential in the 2 very attractive segments, defense and data center businesses and have seen a lot of opportunities there. Guidance maintained, top line DKK 3.1 billion to DKK 3.4 billion. EBITDA maintained in the range of DKK 400 million to DKK 440 million. Then moving on to Borg Automotive. Borg, they are in full implementation of a major recovery replan. We call it Refine4Future. Top line, as expected, down 12% to DKK 444 million (sic) [ DKK 445 million. ] We still see soft markets and low demand, but also experienced certain segments starts to recover. EBITDA was down 58% to DKK 13 million, as expected. We had a negative effect from Refine4Future initiatives, driving costs to reap benefits later in 2026. Our Newman business, as we call it, really started to recover and now show profitability. The transformation of Borg, it's really in good progress. There has been a lot of hard work around the organization to relocate production and supply chain, full focus on sharpening the market and the commercial strategy and we are still expecting DKK 100 million of savings because of implementing the Refine4Future plan. Borg maintains also their guidance, top line is DKK 1.6 billion to DKK 1.9 billion expected now and EBITDA in the range of DKK 60 million to DKK 100 million. Then looking into Fibertex Personal Care. Fibertex Personal Care is really facing increased volatility due to the Iran-U.S. situation. Top line decreased as expected 9% to DKK 404 million. Market conditions, particularly in Asia, remains tough and fierce. But Fibertex Personal Care is really having a lot of activities to mitigate the situation. EBITDA was down 5% to DKK 47 million. Here, we're coming from effect from lower volumes and also raw material fluctuations. The print business once again showed solid margins. Fibertex Personal Care really have full focus on day-to-day operations. It's important for them to secure raw material at the best possible prices, but also to be certain that we can have access to raw materials, also full focus on delivering contracted volume to core customers. Fibertex Personal Care have been working a lot with developing new customers and selling innovative products into the market. Guidance maintained despite the volatility, top line DKK 1.5 billion to DKK 1.7 billion expected, and EBITDA now DKK 140 million to DKK 160 million. Then moving on to the last business in our portfolio, Fibertex Nonwovens really delivered a strong profitability uplift in also very challenging markets, but super nice to see that they continue to grow. Top line increased 10% to DKK 638 million, growing volumes both in the U.S. and in Europe. EBITDA was up 48% to DKK 64 million, a strong effect from improved efficiency in our U.S. operations and also professionalization of setup delivers a really huge uplift. Now we also see that the large investments we made over several years really starts to pay off. Fibertex Nonwovens, they are well prepared to continue to grow both volume and profitability in future. New spunlacing line, as we call it, has started to be implemented in the Czech Republic. We expect production -- commercial production to take off during second half of '26. A lot of very innovative new products being introduced to the market, and we also see strong requests from Tier 1 customers really wanting to cooperate at a rather large scale. Fibertex Nonwovens maintained their guidance, top line DKK 2.3 billion to DKK 2.5 billion expected, and EBITDA still DKK 210 million to DKK 240 million. Also with Fibertex Nonwovens, we need to take into consideration that raw material and energy prices still continues to fluctuate. So let me finish off just looking at the overall guidance for Schouw & Co. as a group. Full year guidance maintained. We expect the turnover to be in the range of DKK 33 million to DKK 35.5 billion and EBITDA DKK 2.9 billion to DKK 3.2 billion. And of course, all companies, solid focus on delivering within their guidance. So I think with that note, I will open up for questions.

Yes. There's Wei from SEB.

I have plenty of questions for you today. I'll start with BioMar. You announced the intention to float. But given the elevated macroeconomic uncertainty and also the stock market so volatile, what makes you confident to pursue the IPO amid such volatility?

Thank you for asking that, Wei. I think we have been looking at a lot of different factors, and I think when we conclude on all of them, we see that things has been more stable. I think the most important, not the most important one, but you also know the VIX indicator now really is quite positive. We also have been talking to a lot of investors looking for investing in stable companies. And so we think the window is there, and we think also it's time for BioMar now to take the next step. So we are quite optimistic on going to the market with BioMar, believe that timing is right.

Okay. Great. And could you also remind us the use of proceeds?

Yes. I think we have said over several times that we have a strong business model within the Schouw & Co. We continue to invest in new companies or you could say, we have 2 ways of investing. One is to continue to develop the companies in the portfolio, what we call bolt-on investments. We've been doing that over years. And then, of course, also looking for new platform investments. So of course, now more focused on finding a new platform investment and then really pushing hard on our companies to come up with ideas for value-creating bolt-ons. So that's the 2 things, continue our model and of course, be patient because we should not just buy for buying a company. We need to do the right things and continue to create value. So that's the strategy. And we see plenty of opportunities out there.

Okay. And so I understand that the platform, you mainly referred to the Shrimp and other special segments?

We have a very clear investment strategy saying that we are investing in business-to-business companies. So that's what we are looking into now and really continue that because that's where we have our strengths. We know a lot about running business-to-business companies, need to be international oriented, need to have a strong position in the market, et cetera. So that's just continuing our strategy and really pushing on that.

Okay. And then next question. You have already talked a bit about the capacity expansion in Ecuador. Can you give an update on that? Now it's sort of diluted -- I understand, diluted the Shrimp EBITDA here in Q1. And what would be the expectation for Q2 and the remaining of the year?

Some of the capacity will kick in later in the second half of 2026. So we will still need some toll milling. But there's a lot of things. One thing is toll milling, but also, and you know that also, Wei, that of course, product mix, things like that means a lot for BioMar. And it is a rather small quarter. So we expect things to improve, product mix to be a little bit different. But we need capacity kicking in late 2026 and then we will see improved profitability and margins on that. Jesper Lund, welcome. You're muted, Jesper. Next one then. Wei, you are -- please, you are on the line again. So yes.

It seems that I need to moderate the Q&A session today.

Yes, that's super nice. Thanks for doing that, Wei.

And so next question, maybe a bit nitty-gritty. So looking at the income from associated companies. This quarter, it shows a decline and you have kept full year guidance unchanged. I was wondering, any quarterly phasing of the revenue income?

Yes. So there's a lot of things that can fluctuate in that. We have BioMar's regulations. We have price setting of especially our farming setup in Chile, Salmones Austral, and so on. So there are things that fluctuates, and looking into forward-looking on salmon prices and so on, we still expect to keep the guidance. So within the quarter, things can fluctuate.

Clear. And then on the tech revenue income. I know it is project-based, but you showed a year-over-year decline here. What's the visibility do you have for the remaining of the year?

Yes. Just to make that understandable is that we made a totally new distribution model, meaning that we closed the cooperation with a big distributor in one of our very, very big markets, and they had materials in stock and things like that. So they are selling out of that. And we are moving from doing the distribution more on our own and then also moving into a so-called SaaS model. So that, a lot of things is going on, but we expect them. And we really see strong opportunities and the right choice of model in the future.

Can you comment on what is the initiatives by doing the direct distribution?

It's more that we go direct, try to link it a little bit more also on feed sales and things like that. So it's rather complex that we try to build more share of wallet with the large customers, et cetera. So we can use that also for getting attractive feed contracts and so on. Yes. Jostein, you're on.

I'm Jostein Matre, and I'm a journalist at IntraFish. I apologize for coming in a little bit late to this conference. So my question might be something that you've already spoken about. But can you tell me a little bit because the IPO with BioMar has been on the table for a while now. Can you tell me a little bit about why now feels like the right time to do what you're doing?

So the reason why it has been on the table for a while is, of course, it takes a long time to prepare a company for becoming listed and BioMar was not listed. So it has taken a very long time, and not a very long time, but the time it has taken to prepare and do things. So that's the way it has been doing. And then, of course, we expected it maybe to have been out with the intention to float a little bit earlier, but then a lot of volatility in the world came up. And then we are in a situation where we do not need to do the listing of BioMar, but we do think it's the right thing. So we looked into when it's the best value creation also for Schouw & Co. as a shareholder and when is the best timing for bringing such a great company to the market. So that's the reason behind.

And just one quick follow-up then. What is your expectations going forward now then?

Yes. Now we have launched what we call this intention to float. That means, of course, that we are one step closer to the IPO. Then we will now, we will use some weeks to look into the market and get feedback from the market. You can also see now all analyst reports, they are in the market. We are talking to shareholders really getting a feel on who is interested and the potential shareholders who is interested in buying, et cetera, et cetera. And then within a few weeks, we will decide 100% if we are floating. So that's the phase we are in, things are much closer and still intention, as we have said it over a long time, our intention is to float in the first half of 2026. And as we are in May now, the time is closing in. But we do it if it's right.

Is that enough time?

Yes, absolutely. There's a clear time line now on how to do that, yes. Jesper Lund, we try with you again.

Yes, let's see if it's still -- if it works here from here on. Can you hear me?

Yes, we can.

Okay. It's also about BioMar. I was thinking, as many probably also do, can you tell me something about the -- how many times EBITDA, a company like BioMar can be sold at? And also how many percent do you minimum keep of the company after listing it?

Yes, very interesting questions. But one, we do not really comment on this because we now have to look into -- I think you should look into the analyst report and see what they are saying. And we have not decided the size, what we are selling yet, depending also on what will come out of the next 3 weeks investigations we are doing in the market. So that's as it is now. But I think look into the analysts report and there are some indications on what they think a company like BioMar should be traded at. Yes, we have one more. Thanks, Wei. You're welcome.

And now a change of topic. A question on the GPV. You talked about the higher level of order intake in Q1. And so what end market was driving that momentum? And also, if you can comment a bit on the supply chain risk and also the cost inflation?

Yes. So the order intake has been driven by better, more optimism or what you say with some of our core customers. We are supplying a very big blue chip customers around the globe. They have a more positive outlook. Then we are also looking much more into the data center segment, which you could say, in fact, they are exploding. So we see business coming in also from supplying into data centers and so on so. So we are well positioned in growing segments. So that's the reason behind. Looking into the supply situation on chips and so on, it has been a difficult and still difficult, and I don't really have a very clear answer on it more than we have been in these situations before we are used to handle it, and we have, you could say, all hands on deck to try to get a grip on it. And I think that we are in a good situation, but prices are increasing. But we can pass on most of these increases to our customers due to our contracts and so on.

Okay. Can you elaborate a bit on your exposure? The revenue exposure to the data center segment?

Yes. Our exposure is that we look into GPV, they are into data segment, HydraSpecma. So that's the 2 companies that are really seeing opportunities in supplying data center. GPV, supplying electronics for that, and HydraSpecma more looking -- they are into cooling and lubrication and so on in the data center. So we see a lot of interesting opportunities and we are really pursuing. And we, for the time being, we are talking about the 2 Ds, the data center and defense, and we really need to push and explore ourselves into these segments.

Okay. But you have not answered my question, the revenue exposure. Can you specify?

Yes. No, we are not disclosing that for the time being. But revenue is not significant, but it's increasing, Wei. Sorry for that, yes. So that's the way.

Okay. Great. And next question on the Fibertex. I realize that the raw material is -- could be related to the plastic, which are -- we see a lot of price volatility and now it's more big inflation. So how much of your raw material are exposed? Can you also comment on this?

Yes. If we take Fibertex Personal Care, the one that is most exposed, all their raw materials there are exposed. They use one, more or less, one raw material called polypropylene, 100% oil based. And then there, we are dependent on 2 price settings. One is in Europe, and the other one is in Asia. One is in euro, one is in dollar. And the price has really exploded if we take the euro pricing in Europe, then price used to be around EUR 1,200 per tonnes. It's now around EUR 2,200 per tonnes and so on. So, of course, heavily exposed, but the good thing is that we have passed on mechanisms to all our customers. Of course, we are always lagging a little bit after when things are increasing like, yes, to say so. But we have changed and been able to change the way we can do these pass on. So we are moving from a quarterly basis to a monthly basis now. So we are exposed, but what we are most concerned on is not the pricing, of course also, but we are more concerned about availability of raw materials. So that's how we see it, yes.

Okay. And just looking at your suppliers, I mean, what is risk that you cannot get a supply?

Yes. Of course, there's a risk. But I think, yes, but it's an interesting question. And we are thinking about that every day. But I think we have been in the business for so many years. We have been together with these large suppliers for many years, of course. At the end of the day, they will find a way of distributing it, et cetera. But it is cumbersome for the time being. But so far, knocking wood a little bit, we have been able to have the needed supply.

Okay. Fair enough. Last question, on your cash flow, which was a bit weaker this quarter. And then you can see it's due to the working capital. Can you also elaborate a bit on the dynamics? And any change for your full year expectation?

Yes, as you know, again, as you said, for a quarter, the cash flow can be up and down. And we have also built a little bit in net working capital and so on. But we still expect to deliver quite significant cash flow in 2026. And really now we are getting into the season where we start to build cash flow. So still no concerns on our cash flow situation throughout 2026. Thank you very much, Wei. Thank you for the questions. Okay. Thank you very much. Thank you for listening. Thank you for the questions, and goodbye from us.