Garo Aktiebolag (publ) ($GARO)

Hello, everyone -- for joining the GARO Interim Report First Quarter 2026. My name is Gabrielle, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, Joe Ree. Please go ahead.

Thank you so much. Welcome, everyone, to the presentation of GARO's report for Q1 2026. My name is Joe Ree, and I'm the acting CEO of GARO since February. I'd be surprised if any of you know me, so please allow me a short introduction. As you may guess, I'm not Swedish, I'm Irish, and I apologize for not being able to speak Swedish, but I did try quite a while ago when I lived here for a year. I have worked in GARO now since 1989, became Financial Controller of GARO Ireland in that year. And then in 1994, I lived in Varnamo in Sweden with my wife for a year working as the Group Controller. That went very successfully, but sadly failing very badly learning Swedish. Moving back to Ireland. I was appointed CEO of GARO Ireland in 2015 and Chief Operating Officer of GARO Group in May last year. It's an honor and a pleasure to be here today and to have the opportunity to lead GARO as acting Group CEO until Tobias. Our new permanent CEO starts on June 15. With me today is Helena Claesson, our CFO, who will walk you through our financial performance in more detail a little bit later in this presentation. Next slide, please. Let's start with some operational highlights for the quarter. Our electrification business area continues to perform steadily and remains the financial backbone of GARO. One interesting tender won by our sales team in Sweden this quarter is a 5-year procurement contract worth SEK 50 million. The electrification outlook is of increasing sales, also indicated by the increasing temporary power sales we are experiencing in Sweden, which are normally a strong indication of an uplift in installation and project business. We have, as promised, conducted a review of the E-mobility business area. We will stay in this area because we see potential in it, but continue to closely monitor its developments and our performance within it. Our overall assessment is that the market for E-mobility continues to develop positively in Sweden and the rest of Europe. Whilst GARO sales are currently less than expectations, we remain very confident in our E-mobility products and know that the strategic measures we are now taking will form the basis for recovery in this business area. So what exactly are these strategic items? Tobias will take over his position on June 15. We have implemented a group sales governance system in all of our companies to drive sales growth. And our new ERP has successfully gone live at the beginning of this month with an integrated CRM complete with comprehensive marketing suites. Next slide, please. Here to let you know are some of the strategic decisions that we have taken after the conclusion of Q1. Following a review of our factory footprints, we will wind down our production facilities in Szczecin, Poland with a phased relocation of all production to Sweden to be completed in 2026 before the end of the year. Consolidating production in Sweden will generate clear economies of scale, more efficient processes and a more robust and flexible production structure. This will result in annual savings of SEK 25 million. Additionally, the property in Poland is in excellent condition and will be sold with an estimated value of SEK 110 million to SEK 130 million, depending on market conditions at the time of sale. We will also close Germany -- our sales office in Germany. Customers will be retained and developed through our new export function based in Sweden. This will result in annual savings of SEK 5 million. This facilitates leveraging and expanding our European sales for both of our business areas on a wider customer base in Europe. We are introducing a structural change in Sweden, which involves the consolidation of 3 of our companies in Sweden into one. This would be Garo Elflex and Garo Montage into Garo AB. This means a clear, more cohesive business partner for our customers as well as creating important internal synergy effects. A staff optimization program is underway, which will result in annual savings of SEK 17 million, arising from the synergies of merging the 3 companies and also the adoption of the new ERP. These type of organizational decisions are never easy to make, but it was deemed necessary to create a more focused, efficient and sustainable company for the long term. Next slide, please. As we said, we have concluded our review of the GARO E-mobility business area, and it will continue to develop. We will, of course, monitor this development and respond proactively to market trends and developments. Several of the strategic changes previously mentioned are expected to contribute to increased growth and improved profitability in E-mobility in the future. Further development of our apps and web interfaces, combined with continuous review of product build costs, product range rationalizations will enhance our position on the market. At the same time, we are developing our sales processes, restructuring our sales teams, enhancing our marketing efforts and strengthening the organization with increased sales resources. We continually striving GARO to get closer to the customers to better meet their needs. And now over to you, Helena. Next slide, please.

Thank you, Joe. And I would like to start by looking at the financial summary for the first quarter. Net sales amounted to SEK 246 million. This is a decrease of 7% compared with the same quarter last year. The lower sales is explained by current business economy, but also the unusually cold spring, which made it difficult or delayed outdoor installations. The sales within GARO Electrification continued to show stability, while the charging infrastructure market has remained challenging for us with a decline in sales of 26% in GARO E-mobility. The gross margin has dropped a little bit compared to the same quarter in 2025 and is explained by product mix, targeted campaigns and currency effects in both business areas. The adjusted EBIT for the quarter amounted to negative SEK 13 million. In the quarter, we have seen a little bit higher sales and development costs compared to the same quarter in 2025. And as Joe said, I am happy to say that 2 weeks ago, GARO successfully went live with our new ERP system. This is a strategic investment of SEK 23 million, whereof about half of it, 50% has been charged to this result. Costs are now decreasing and together with a more efficient system and better tools, this will gradually result in stronger profitability. And even if it is a little bit challenging to learn a new system and ways of working, we can already, however, see clear improvements in quality and follow-up of our operations. Next slide, please. And then we move over and look into the 2 business areas separately, and I'll start by GARO Electrification. Net sales amounted to SEK 201 million in the quarter, SEK 3 million less compared with the same quarter last year. Sales in Sweden were at similar levels. And in Ireland and Norway, we have noticed an increased sales within projects. This is pleasing as increased sales within projects normally up on increased sales within electrical distribution products. Also, Temporary Power showed a growth, albeit from low volumes. GARO has won a 5-year procurement with the Swedish Transport Administration worth SEK 50 million for the delivery of low-voltage switching equipment to the Swedish rail infrastructure. And after the end of the quarter, this contract has also been signed. Adjusted operating profit amounted to SEK 10 million, minus SEK 11 million compared with SEK 17 million in the same quarter last year. The lower profitability is explained by product mix and currency effect. And also, we have had some higher sales and development costs compared to the same quarter last year. Next slide, please. And now we move over and focus on GARO E-mobility business area. Net sales amounted to SEK 45 million in the quarter, giving us a negative growth of 26% or SEK 15 million when comparing to last year. Adjusted operating profit for the quarter, at the same time being our EBIT amounted to negative SEK 24 million and is in fully explained by the low sales and gross profit. Since end of last year, we have started targeted campaigns for certain products. This is a strategic choice to fill up production over time and achieve economies of scale. As Joe said earlier, GARO has decided to close our sales office in Germany. Existing and future customer relationships will be secured in the future through sales and through already established channels. This change will give us an annual savings of SEK 5 million. Additionally, we are doing some hard work to reduce the number of product variants to simplify GARO's customer offering, free up working capital and improve margins. Next slide, please. And now looking a little bit into our cash flow and balance sheet. Cash flow from operating activities after change in working capital amounted to negative SEK 7.5 million in the quarter. Tied up capital from inventory remained unchanged when comparing the previous quarter. We have a deposit with the supplier for materials ordered but not yet called off. The deposit being in euro has remained unchanged and amounted to equivalent of SEK 43 million by the end of the quarter. Our net debt position amounted to SEK 255 million compared to SEK 286 million in the year earlier quarter. We had an equity asset ratio of 50.6% and available liquidity, including overdraft facilities of SEK 56 million. And now I will hand back to you Joe for some last words and outlook. Next slide, please.

Thank you, Helena. Looking forward and coming out of this last quarter, we are building a stronger and more predictable GARO going forward. The work initiated by Jonas, our former CEO, continues with myself as acting CEO and our management team building and executing on what has already been decided and planned. One particular focus area is creating a clear and predictable framework for how GARO operates throughout the group. In Sweden, in particular, this means that the work on increased customer focus and presence continues with close monitored follow-ups. We have strengthened our sales organization, both in Sweden and internationally. And during this quarter that has passed, we have carried out extensive sales training for the entire organization. The purpose of this was to strengthen the team's skills, implement a uniform group sales governance system and to ensure that we exploit to the maximum our rich heritage and experience in our business areas and exploit the business opportunities available in the market. Next slide, please. When we look forward, we look at marketing and we look at E-mobility. E-mobility is growing as a business throughout Europe and Sweden, and GARO has the products and market approach to grow market share. Trends such as rising oil prices are accelerating the transition to electrified infrastructure, most likely giving increasing demand for charging and electrification products. In Sweden, residential construction is expected to recover in 2026, which will grow sales as well, and we are seeing stable demand for electrification products. Thank you for your kind attention, and we'll now take any questions you may have. Next slide, please.

[Operator Instructions] We currently have no questions. So I will hand back to Joe for closing remarks.

I'd like to thank everyone who listened. I wish you all a good evening. Thank you so much.

Thank you. This concludes today's call. Thank you for joining. You may now disconnect your lines.