Beijer Ref AB (publ) ($BEIJB)

Welcome to the Beijer Ref Q1 presentation for 2026. [Operator Instructions] Now I will hand the conference over to the CEO, Christopher Norbye; and CFO, Joel Davidsson. Please go ahead.

Good morning, and welcome, and thanks for calling in. Christopher over here together with Joel. So we'll go over some slides and explain a little bit how we look at the first quarter of the year. And then, of course, we'll have some Q&A to wrap it up. So maybe we'll get started right away. So if you summarize this quarter, I would say stable is a very good word. As you all know, Q4 and Q1 for us are a somewhat smaller quarter as we're just now starting ramping up for the summer season in most of our key countries around Europe and the U.S. But in general, we had a stable development in most of our markets across the world. Our organic growth for the quarter was flat. We had some effects of weather, if you remember, in the U.S. closing down branches 3, 4 days in January. We had some extreme comps in some acquired companies, et cetera. So underlying positive growth in Q1. Acquisition added 3%. We had a fairly steep headwind on the currency in Q1 that hopefully will improve here as we roll over to Q2. On the margins, good development across all regions, margins up in the U.S., margins up in APAC and then flattish, a little bit down in EMEA. We'll come into that in there. But in total, numbers in line with last year. Cash flow continues to be positive. We continue to work very active with our cash flow position. We are building inventory here in Q1, and we'll continue to do it here in the beginning of Q2 to ramp up for the summer season, of course. But in general, very good control of the cash flow. We had one acquisition closing in Q1, and we'll come back and address a little bit on the pipeline that's coming up here in Q2 and the rest of the year. And also worth calling out our green OEM, SCM Frigo and Fenagy had a -- continues to have very, very strong order intake and have record backlogs moving into Q2 for the rest of the year. So very positive on the OEM side -- on the green OEM side of the business. Moving on to the next slide, the highlights in the different segments as related to our green OEM continues to do very well and order books are increasing. So we're positive as we ramp that business up for the rest of the year. And especially worth mentioning is that Fenagy had a record order intake quarter here with over SEK 300 million of orders in different segments. It's very encouraging and a lot of activities. We also mentioned here the first time in a couple of years, good preseason for HVAC in France. It's a big market for us. in there. And then the rest of it, if you look at the segment, fairly stable. Commercial refrigeration, 1%, OEM up 5%, but with good order book. And HVAC, if you adjust a little bit for the U.S., would also be slightly positive for the first quarter. So in general, a good start, stable start to the year. If you then move in a little bit to EMEA, I have touched on some of these points. Just trying to break it down a little bit. I would say, positive growth in most of our regions. Worth calling out, as we said, is U.K. And then as I mentioned, that a nice start on the preseason for HVAC in France for the first time in a couple of years. We do have some headwind on comps in acquired companies and Eastern Europe that was extremely strong in the beginning of the year last year. So all in all, a fairly stable quarter and also a smaller quarter for us in Q1 as we're starting now to ramp up for the season. Green OEM continued to be strong, as we said. Reported margin, a little bit diluted by acquisition, and then we had some currency effect last year. But in general, a stable quarter on the margin as well. Then moving into APAC. APAC continues to develop well, plus 3% organic side compared to a good quarter start to the year. They just phasing out their high season, moving in a little bit more to -- not winter, but the summer season is over. So they had a good summer season across the board. And especially worth calling out here, it's very good development in the largest market in APAC, in Australia that continue to take market share and develop in a very good direction. Also good activities on the OEM side and a lot of activity in Southeast Asia on that with good order line and pipeline from our businesses across the globe. A lot of activities, investment from our side on OEM. And refrigeration in Southeast Asia is also proving to be the right strategy. If you look at the margin and development they had over the last couple of years, we're extremely proud of the team over there that has done an amazing job on improving margin in the underlying business, but also moving into segments and parts and supply in a larger way to drive a positive product mix. So a little bit hoping or working with the same type of model we have in the U.S. on the HVAC side, more adapted solution, more parts and supplies, so very positive for them and how they're working with the margin side. So a good quarter in APAC based on a lot of good quarters lately in that region. Then you move over to North America, an active quarter. As we said, I think, on the last quarterly call, we had quite some extreme weather. And being a branch-based business as we are when you close down all our branches, it's tough to do any sales. So after a tough January with 3 or 4 days closing of our branches, we had a positive development in February and positive in March. So all in all, a continued good execution from our U.S. team, not only on the sales side, but also on the margin side. You can see also a very strong margin development in the U.S., driven by a lot of strategic initiatives that we are driving and continue to drive despite dilution from the acquisitions that we did at the end of the last year. Continue to open branches, just opened one, the first new branch in Alabama, I think, in 20 years. So I'm excited for that branch, and we'll continue to do that for the rest of the year. And also a nice start to 2 acquisitions that we did close in end of last year. And we do see -- continue to see that there's no big change, in our view, on the markets in the U.S. As you all know, we are heavy on repair, and that continues to be active. So also looking forward for that market to start strengthening. But right now, it's a stable market for us with good margins. We continue to invest in branches. We invest in our private label initiatives. And we also continue to have a very strong pipeline on acquisitions in the U.S. that we're pretty sure is going to start executing here in the near term. So all in all, I would say, a very solid quarter in North America. Then a little bit on the financial. I won't spend too much time on this. We went over the quarter here, you see the trends here. Of course, currency is a big headwind right now, but that's probably going to ease up a little bit as we move forward and then a stable organic growth on the total reported level. Same on the margin, I would say, a solid Q1. And as you see, if you look at that, Q2, Q3, of course, much bigger quarters for us. So I think we're in a good position, good inventory position, good cash flow, stable margins across the globe to continue to have a nice development here as we move into Q2 and Q3 for us. So all in all, I think this is my last slide, Joel. I think I said this time a couple of times. But I think we'll summarize it as a stable quarter to start off the year, and we all -- we look forward to ramping up here for the season and moving into Q2 and Q3 as Beijer Ref. So with that, Joel will take over.

All right. Thank you, Christopher. Good morning, everyone. Covered most here. But as always, looking at -- starting at EBIT, excluding items affecting comparability of SEK 746 million in the quarter, which is down 4% compared to last year. We are, as I said, significantly impacted by FX. And on a currency-neutral basis, our Q1 EBIT is up 3%. Our net financials continues to develop very well. We have had strong cash flow generation for a number of quarters now. And net financials come in at SEK 109 million here, which is slightly more than SEK 20 million below last year, driven by a combination of lower rates and FX movements. So on a comparable basis, interest costs are roughly SEK 10 million lower in the quarter compared to last year. Tax side, relatively uneventful, SEK 156 million in the quarter, effective tax rate of 25%, in line with last year. So all in all, we report a net profit, which is also in line with last year. And if you adjust for FX, we are up 5%. So moving over to EPS. Clearly, in the quarter, SEK 0.94, same level as last year. But then again, the FX headwind. So adjusting for that, you have a net profit or EPS, which is up 5%. A little bit on the cash flow. As you know, Q1 is a seasonally weaker cash flow quarter due to buildup of working capital, as Christopher mentioned before, ahead of the primary selling season. We did, however, continue to deliver a solid operational cash flow in Q1 of SEK 385 million. And the positive cash flow trend continues, which is also here visible on the next slide, where we have now 11 consecutive quarters of stable and good cash flow. Obviously, we are in the middle of our journey on improving our capital efficiency. So looking forward to continue to deliver strong cash flow here. Just moving over to leverage. Leverage ratio in the quarter moved up slightly sequentially to 1.9, same level in all material aspects as last year, which means that we continue to have a strong balance sheet. And that together with our cash flow generation abilities, we feel have a very strong pipeline and ability to execute. With that, I hand back over to Christopher.

All right. So just to wrap up a little bit the comments on Q1, stable across the board on sales, I would say, good margins starting off the year. As you all said, solid cash flow despite building inventory for the season and then a small acquisition closed out in the year and then, of course, mentioning also record books in our order books in our OEM business. We will look forward for the rest of the year. I think, in the long term, things looks good for us. A lot of activities in our segment on the sustainability, electrification regulation continues to be positive and active in our regions, good balance sheet for future expansion of our business. And also, as we said, for good acquisition pipeline, we'll have an active here first half of the year, and we'll continue to have an active, I would say, second half of the year on the acquisition side as well. So I would say a solid start to the year and also now looking forward to going into more active season for our company and for us. I think with that, we'll wrap up the first part of the call, and then we're open for any questions for -- from people on the call.

[Operator Instructions] the next question comes from Adela Dashian from Jefferies.

A few questions from me. First, if we start with the organic growth trends, you mentioned that there was some weather-related closures in North America and also tough comps in parts of Europe. On North America specifically, would it be fair to assume that had you not had these closures that organic growth would be somewhere in the 2 to 3 percentage range instead? And also similarly, in Europe, how should we expect the underlying organic growth as you exit Q1 and once these effects roll off the tough comps?

Yes. So in the U.S., I would say, underlying probably slightly better than your comment. In Europe, I would say we are -- had a very strong, as you know, also in Q2 in our M&A acquired companies. So similar comps, I would say, in Q2 in Europe from that aspect. But obviously, it's an important part of the year with Q2 in the other markets in Europe where we are, as I said, saw a good preseason in France, for example.

Yes. I think to summarize, slightly better if you do mathematically the closure. So U.S., we're trending more positive than that in February and March. So still early days, of course. And then EMEA, I would say, all in all, will be positive with those type of adjustments. So we try and package this together, I would say that Q1 underlying was probably up 1% to 2%, but that's the case. And the main reason here is, I think it's the U.S. that did have underlying positive trend in Q1.

Great. And then on the OEM visibility here, you mentioned that you have a record order book going into the second quarter. What's the phasing of those deliveries?

Yes. I would say when you say record books, I think in -- there's two parts of the business, you have the daily running or business in what we call the SCM Frigo with cooling systems, while [ Fenagy ] is much, much longer lead times. But I would rather summarize the -- my answer in this way. Based on how the order book looks and how it's developing right now, this activity and sales will be ramping up percentage growth as we run through Q2, Q3 and Q4. So it will start flushing out some of those order books in a positive way here for the rest of the year. And of course, Fenagy will most likely have a good order book based on this rolling into 2027 as well.

And then lastly, I know your answer to this is going to be that you don't have a direct impact. But the change to Section 232, what has the partnerships that you have with the suppliers, what do they [ sell ] will be the implication of that, if any?

We don't see any changes from our partners or anything in the market. So as we see, the market continues to move on as it had independent of this. So we have no information that anything has changed because of this.

The next question comes from Karl Bokvist from ABG Sundal Collier.

The first one is also on North America. We started to see some signs from the industry, both on shipments and among distributors here in the end of Q1 that things started to improve. The first one is really if you agree with the market data that we're now seeing. And the second point is really about kind of if we get improving activity in the market, how you think about the mix in the business currently and that relates to the margin profile?

Yes. I think on the first one, and I think we talked a little bit about this in Q4 as well when we had slightly negative organic in the U.S. And for us, it was more related to very strong comps and then orders versus daily trading business. But I think what we said all along in our model in the U.S. being very active on parts and supply, repair, replacement as a segment. I wouldn't say that Q1 has shifted any of our expectation or view on the market. I think we saw the market pretty stable in Q4. Last year, we saw the market pretty stable here in Q1. We did have strong development as we roll into February and March, but that's also related to the weather issues we had in January. So I would say we continue to have a more stable outlook in the U.S., and I would expect us to continue to take market share and do better in our model than probably most competitors. So I think it's -- it wouldn't be, I think, saying that something has shifted very a lot in March. I think not really. I think it was a good March. But in general, we're still seeing the U.S. as a stable market, and let's see how it plays out here. I think now you're rolling into Q2, it's a lot related to weather and heat waves and starting to ramp up in the season. So no major changes, either negative or positive for us. We continue to develop stable. And then looking at your margin, yes, we do have a lot of initiatives on improving margin in the business, driving product mix, adding spare parts in our acquisitions, driving private label and improving the business. So I think a very solid development on the margin, as you said, some driven by product mix, more repair than project, as we said also in Q4. I think it more shows the strength of the -- at least we think about our business model in the U.S., and we're opening, as I said, a new branch here end of Q1, and we have a couple more coming here in Q2, Q3. So we expect the market in the U.S. continue to be pretty good for us.

The next question comes from Carl Deijenberg from DNB Carnegie.

So a couple of ones from my side. First of all, if you could remind us a little bit of your heat pump exposure in the European business. I remember back in the previous energy crisis, you -- I guess you had a little bit of benefit of having such exposure. So could you just -- brief words what percentage that is of the mix? And do you see any shift here in Europe now, given what we're seeing in the Middle East on the gas and oil price and so forth?

Yes. I think we always said around our heat pump exposure is somewhere between 5% and 10% of our HVAC sales in EMEA. So of course, not a significant part, but not a completely non part as well. I think it's too early to say, to be very, very honest. And I don't really agree with the comments that you will see an effect short term on what's happening on that side. But I think it reminds Europe and our people legislation here how vulnerable we are with the energy system we have with gas and other type of solutions. So I would say right now, you haven't had a big effect of it. But our heat pump sales as of the last quarter continued to grow and expand after you had the dip here for a couple of years. So we had a solid quarter for the heat pump here in Q1. And of course, for us, heat pump is a lot of Q4, Q1, and now we ramp up more into the cooling side. But also remembering that a lot of parts of the world do use air-to-air both for heating and cooling. So you can always debate if it's a cooling or heating solution. But our air-to-water and that type of product that we more allude to when it comes to heat pump has had a nice development in the last couple of quarters anyway.

Good. I wanted to ask also a little bit the comments you gave on -- or maybe starting in another way. I mean, I wanted to ask on pricing in Europe as well. I guess, maybe pricing in the U.S. is a different topic now with Section 232 and so forth. But given how copper prices and so forth have moved, I guess we've heard more and more from the OEMs that price hikes have started to come back. So is that something you're seeing in Europe as well that price adjustments are coming back? And second question to that as well, the comments you gave around the prebuy activity in France and in the U.K. in Q1, could there be any risk that there are any pre-buys on that on anticipation of higher prices on -- given what we're seeing externally? Or is this just a regular pattern you're seeing?

Yes. That was a long question, but I'll try and answer it in a good way. I will go a little bit across. And of course, you had price increases on material, right? And if you look at a lot of our components, you use copper, you use steel, aluminum and that type of things into both refrigeration products and HVAC products. So as I said, I think in Q4, you see on the HVAC side, a price increase coming through here in end of Q1, beginning of Q2 on the HVAC in the U.S. And that's moving along and being executed. So I would say, in HVAC, you saw probably 4% to 5% price increase being executed across the board in the U.S. If you take EMEA and your comment around there, I would say there haven't been any big price increases in EMEA yet. So the presales and et cetera, has nothing to do with prices, and we're following very closely. What we're hearing and seeing in the market is that we also believe as you move into the second half of Q2 and the rest of the year, prices will start coming up on the HVAC equipment in EMEA as well. That's what we're hearing. But for now, it's been fairly, fairly modest despite the increases in copper and other materials. So nothing right now, but most indication shows that the second half of the year, you start seeing this flowing through in EMEA as well, which I think will be positive for us.

And maybe just finally on that, are you -- with regards to Europe and lagging on prices and so forth, are you surprised that this hasn't happened earlier because I guess the prices we're talking about or external materials have been elevated for quite some time? Or is it just inventory still having been flushed out and so forth?

Inventory, I mean, left to be flushed out. I think it's just our OEMs also looking for how the market develops and the strength in the market. So -- and usually, when you come into the HVAC, price increases usually doesn't come until end of April and May anyway. That's the cycle when you start looking into the prices as you ramp up to the season. So I'm not super surprised, but we're keeping a close eye on it. And we also see some opportunities, even if the OEM doesn't go that we have opportunities to raise prices in the market as we moving into the second half, as I alluded to very good activities in some markets and -- which is positive for us. So let's see.

The next question comes from Gustaf Schwerin from Handelsbanken.

Two questions. Firstly, a follow-up on the U.S. OEM pricing in that 4% to 5% range. Can you give us any kind of sense to sales in your own organic growth for, well, Q2, Q3?

Yes. I think if you look at that, it probably touches around 40% to 45% of our business on the HVAC. So you'll get maybe a tailwind of a couple of percent on the total mix in the U.S. on that price increase as we move out to Q2 and Q3.

Okay. Great. Yes. Secondly, on the topic of acquisitions, what are your thoughts on Home Depot going into HVAC now? I mean do you think this changes the playing field for you in terms of competition, multiples or anything really? And are you hearing anything about them looking to work with other OEMs as well?

No. I mean it's early days, right? And you can view it in different ways. So our guys are not too concerned about it. These are not the type of assets that we are looking at. We have a platform in the U.S. So it doesn't affect, in our view, our business in any way. And the add-on acquisition in the area that we want to expand or grow has very little to do with this. So I think for us, it's more a wait and see, but -- at least right now. And then also the business model we have that much more focus on parts and supply and replacement versus how we see the acquisition they did, that's much more on the applied and commercial side. It doesn't -- right now, we don't see any changes in our industry.

The next question comes from [ Bhavin Thaker ] from Bloomberg Intelligence.

I just have one about the projects that you have won in the Europe for data center. I think this is the second kind of announcement you're making in this particular area. Do you think -- or do you foresee any further wins in this area going forward?

Yes. I think it's same as I said before when we captured the first one. It's the same type of solution with a heat pump running on isobutane when you connect data centers and district heating, which we think is a fantastic solution for many reasons. So we do have a strong cooling pipeline activity in that segment. But it's not only that type of solution. It's also industries that do create a lot of heat where you can use our solution in a very, very efficient way. But in the same token, when I say those things, and as I said last year, I'm not here to drive that expectation. But of course, the more we do in this segment, the more we have our solutions out there, more reference and interesting cases we are discussing. So I think long term, let's see how it works out. But for now, I think we should be positive on the short-term trends in this. And then if we see a vast activity increase around these type of areas, and then we will communicate it. But for now, I think it's step by step in the type of segments.

[Operator Instructions] The next question comes from Karl Bokvist from ABG Sundal Collier.

A follow-up on the cash flow here. Back in Q3 and Q4, you had, using your own definitions, higher cash flow year-over-year, and you talked about the strategic initiatives kicking in and showing a clear benefit here. This is a quarter where cash flow is down year-over-year. So I'm just curious if you think it's more about temporary effects, considering that Q1 last year was also a seasonal buildup quarter. And like just -- I think I know we talked about this before, but what more you can do here structurally to lower working capital and especially inventories?

Yes. So yes, you're right. I would say the difference here is small. It's a smaller timing effect in the cash flow compared to last year. So underlying, we are satisfied with the cash flow generation in Q1. You're right in the sense that we are obviously still having a lot of opportunities on the cash flow and the inventory efficiencies, which are -- as I have said a couple of times before, we did correct our inventory levels partly last year, going back to more normal levels. From here, the ambition is clearly to drive structural change going forward, and we are in the middle of that journey, but it is something that will continue for quite some quarters and also years to structurally improve the business setup.

The next question comes from Michele Baldelli from BNP Paribas. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thanks, everyone, for the good questions and listening in. And of course, if anything more you come up with, we can help clarifying. You know where to reach us. So thank you very much for this morning.

Thank you.