Tariffs and customer behavior
You’ve said in the report that the direct effects from the announces tariffs are limited, can you elaborate on the indirect impact? And which customer segments are showing the most caution?
Yes, the direct impact is limited, since most of our business is Nordic and not heavily dependent on global trade flows. We have very limited exports and imports from the US.
Which customer segments, I am now only making some assumptions but it will probably be those customers with a relatively high capex over time, that is more likely to postpone or cancel investments in uncertain times. Sectors impacted could be pulp & paper and the automotive industry for instance. However, for us with a large part of aftermarket sales this does not have to be negative as customers will try to maintain and service their existing machinery to a larger extent.
On the automotive stabilisation, it sounds like the volumes increased q-q, is it fair to say that the margin recovery is due to improved volumes in that segment, or is there an element of focus on other segments?
It was generally a more stable market environment within automotive as well as a focus on other segments that benefited the margin increase in BA Industry this quarter.
Currency effects
The krona has strengthened recently. Has this been a positive or negative for Momentum Group?
As we are net purchasing in EUR for approximately SEK 200 million and USD 20 million, an appreciated SEK means we will benefit from a stronger SEK everything else equal but to a relatively mild degree, as can be seen from the scenario analysis in the annual report. When we price to our customers we normally do it in local currency, e.g. SEK or use the same currency as we purchase in. We of course try to consider the currency in our daily operations in our pricing.
As regards translation effects, as we mention in the report – the effect in the operating profit from these were zero but in the quarter we saw a positive contribution in our finance net due to our loans in EUR and DKK.
Organic growth and margins
Organic growth was slightly negative in Q1, and margins are down more than earnings. What’s behind this?
Per business area – EBITA margins increased in BA Industry but decreased in BA Infrastructure. This in turn was affected by that the share of project and service sales was somewhat lower, primarily as a result of seasonal variations, and also a lower level of capacity utilization in our workshops due to more cautious customers. All in all, our level of service revenue in Infrastructure was around 20 % in Q1 compared to 25 % last year as can be seen in the report.
Seasonal variations
You mention seasonal variations in project and service sales within Flow Technology. Could you give more colour on how Q1 is typically affected, and whether this was specific to 2024 and 2025? Is it lost volumes or pushed volumes?
Yes, Q1 is usually a bit softer for service-heavy parts of the business. This is related to the fact that some of our customers in Infrastructure is Electricity and heat production related and they want to keep up their production during the colder part of the year. We have not seen a cancellation of service but we also state that the customers are a bit more cautious.
Technical Solutions capacity
You mention lower workshop utilisation in Technical Solutions, also mentioned in Q4. Is this a stable trend or are you seeing signs of improvement?
We see a more cautious approach from some customers here as we mention. However, there is a steady stream of projects but we would also like to have a bit more of longer term contracts as well. As we mention in the report, we are continually addressing the business situation and have also taken cost-saving action due to the demand.
Central warehouse benefits
BA Industry showed strong performance. The new central warehouse for Momentum Industrial is now operational – can you elaborate on the expected benefits?
Absolutely. The warehouse went live without disruptions, which we’re very pleased with. Going forward, we expect better logistics efficiency with a more flexible cost model. It is a modern automated solution that strengthens our platform for continued growth.
Acquisition environment
Given market uncertainty, are sellers becoming more hesitant? Does the global uncertainty you mention change your approach to acquisitions?
We have not seen signs on this yet and we still see a strong flow of opportunities. Our discussions are active and we try to focus our discussions with the sellers on the long-term situation. That said, we have chosen to pause or halt some discussions where we feel a bit uncertain of the effects from the current turmoil in the market.
