Balco Group AB (BALCO) Earnings Call Transcript & Summary

Hello, and welcome to today's webcast where Balco Group will present its financial results for the second quarter of 2026. Joining us today are acting Group CEO, Johan Dyberg; and Viktor Arvidsson, CFO and Head of Investor Relations. [Operator Instructions] With that, I will hand over to you, Johan, and Viktor. Please go ahead.

Thank you very much. So good afternoon, everybody. Welcome to this Q2 report. So yes, I think we can step right into it. Viktor, please. First, a snapshot of Balco Group. I think it's interesting for everybody. You probably know this already, about 85% of our market is in the Nordics. We have about 15% of our revenue in some other European countries. The group was founded in '87, and have a couple of subsidiaries. The offering is really -- we're pretty complete, especially in the Nordic markets when it comes to different type of balcony solutions. And we keep them apart in general 2 different, renovation and new build. The market, we are market leaders especially in the Nordics, and we have a small penetration in Germany and U.K., where we have a challenger position. Yes, I think we can move on from there. So order intake, we had a good order intake. It's good. The business is there. We have a backlog up 18% versus Q2 last year. We have weak operating cash flow this year. We think our cash position is pretty normalized at this point. Net sales increased by 12%, and we have an improved operating profit, but it's still low level, so we'll talk more about that. We have initiated a project to address this, which I'll get back to a bit more. So Balco Group has 2 subsidiaries. We feel we have a very strong market position. We're known to deliver high-quality solutions with different segments and markets where we together as a group are active. The market has been really tough in the last couple of years, but we see signs of recovery, mainly in the renovation segment, not very strong, but we see recovery. But what I think is important now, since 2 months, I've been here a little bit more than 2 months, focus is really to adapt the group to the current market situation and also better utilize the strength the group has as a group and focus 100% on profitability. Then, of course, down the road, also profitable growth going forward. We have an action plan in place. We're still investigating and I hope to come back to discuss -- no, I don't hope, I will come back and discuss more and describe more of that in Q3. We have had a very constructive dialogue with our principal bank, which has resulted in a supplementary agreement that will provide the conditions we need for us to return to sustainable profitable growth. Please, Viktor.

Okay. So if we look at the financials in the quarter, net sales amounted to SEK 370 million versus SEK 331 million last year, with an organic growth of 11% and more or less no currency effect. The adjusted operating result amounted to SEK 12 million versus SEK 6 million last year, corresponding to an adjusted EBITA margin of 3.2% versus 1.9% last year. The order intake, as Johan mentioned, was strong. It amounted to SEK 600 million versus SEK 519 million last year. The order backlog increased by 18% to SEK 1.693 billion versus SEK 1.439 billion last year. The adjusted earnings per share amounted to SEK 0.21 versus SEK 0.01 last year, and the earnings per share amounted to minus SEK 0.07 versus SEK 0 last year. The operating cash flow amounted to minus SEK 62 million versus negative SEK 30 million last year. If we look at the different segments, starting with the renovation segment, the net sales amounted to SEK 274 million in the quarter versus SEK 253 million last year. That corresponds to 74% of the total net sales. The order intake in the quarter amounted to SEK 474 million versus SEK 386 million last year, corresponding to 79% of the total order intake. Adjusted operating result in the quarter amounted to SEK 6 million, which is the same as last year, corresponding to an adjusted operating margin of 2.3% versus 2.4% last year. The order backlog amounted to SEK 1.220 billion versus SEK 1.134 billion last year. That corresponds to 72% of the total order backlog. Turning to the new build segment. The net sales in the quarter was SEK 96 million versus SEK 78 million last year, corresponding to 26% of total net sales. Order intake amounted to SEK 126 million versus SEK 133 million last year, corresponding to 21% of the total order intake. Adjusted operating result in the quarter was SEK 5 million versus SEK 1 million last year, and that corresponds to an adjusted operating margin of 5.3% versus 0.8% last year. The order backlog amounted to SEK 473 million versus SEK 305 million last year, corresponding to 28% of the total order backlog. If we look at the financial positions, we had at the end of the quarter an equity amounting to SEK 738 million versus SEK 753 million same period last year. We had an equity/asset ratio of 44%, down 1% versus last year. The interest-bearing net debt, including leasing debt in relation to adjusted EBITDA amounted to 6.2x versus 5.6x the same period last year. And as Johan mentioned, we have signed a supplementary bank agreement that runs until the first quarter of 2028, and our covenants are within this agreement. I hand back to you, Johan.

Thank you. So concluding remark is really what I started with. We're a strong group. We have a lot of potential. Right now, it's about really making the order book turn into EBIT and focus 100% on profitability. And we have a good action plan to do so. And I look forward to present more of the results of that plan during Q3. So please, I think that's what we have, and we're very open to answer any questions you have.

[Operator Instructions] Thank you for that presentation. Now we will open up for a Q&A session, and let's start with some written questions. Do the temporary loan concessions remain in effect through the third quarter of 2027?

Yes, they do. The target levels are gradually increasing, but they are until third quarter '27, yes.

Great. What is your outlook for demand for balcony and facade renovation projects during the remainder of 2026?

I think the market is catching up a little bit. I think we have been on the bottom. I don't foresee that it's going to be a tremendous change, but the market is not going to be against us. I think it's going to be gradually improving from where we are today.

Yes. And can you talk more about the various markets and where you see improvements?

You can see the renovation side starts picking up. The new build is still very, very slow, and we don't foresee the new build coming back very soon. But renovation starts picking up a little bit from low levels, but it's picking up.

Yes. Let's move on to this question. Which business segment and geographical market does the marine business belong to?