Sales and market
Organic growth was down 6% in Q1 — how much of this is structural versus more temporary, geopolitical effects? And has the improvement towards the end of the quarter continued into April?
Even though we had a negative organic sales development in both business areas, there are some differences. Overall however we met a market in Q1 that was more cautious after the more positive signals we saw in the end of last year.
We see this primarily as timing rather than anything structural. We do not see a short term structural shift as regards customers and their fundamental situation in Q1. Yes, there are great uncertainty out there, but most or all of our customers are continuing their operations as before, albeit at a lower pace.
The development in business area Industry continues at about the same pace as these last quarters – a generally sluggish market with lower project sales and the situation in Denmark that has hampered growth these last quarters. We are continuously addressing this and we saw a clear improvement in EBITA margins in Q1 vs Q4 of last year, due to cost reductions and stable gross margins.
The development in business area Infrastructure is mainly driven by lower activity in service and project-related business where customers were clearly more cautious — both in investments and planned maintenance.
Towards the end of the quarter, activity improved. with more enquiries and a somewhat higher activity level across several parts of the Group after a weak start to the month due to the geopolitical situation. The strong finish somewhat compensated for the slow start of the month meaning that March as a total was an “ok” month. However, Q1 is very impacted by March as Jan-Feb are lower activity months and which meant that the final weeks in March was not sufficient to have a significant impact to the whole quarter.
In Infrastructure, how much of the drop in organic growth is driven by service utilisation, project activity, seasonality and general caution?
It’s a combination of all those factors, and it varies somewhat between the business units.
In Flow Technology, the largest impact came from a more cautious market with the largest effect on project demands and also somewhat lower service utilization levels. In the business unit we also saw a significant drop in sales in Denmark.
In Technical Solutions we had a more pronounced seasonal effect this quarter, with lower activity in planned maintenance, which directly impacted utilisation in our service operations. Also, in this area we have a company mix effect from the fact that some of the acquires businesses these last years have a more noticeable seasonality in their business, companies such as Avoma and WH Service.
So overall, it’s a mix of seasonality, lower project volumes and general market caution — not a structural change.
You mention postponed maintenance — is this mainly timing, and do you expect it to come back in Q2?
We clearly see this as timing rather than a permanent reduction.
Customers are postponing maintenance likely due to uncertainty relating to their own demand situation and focus on cost reductions as well and production planning, but the underlying need is still there.
Historically, this type of work tends to come back, although not necessarily fully in one single quarter — it can be spread over time but Q2-Q3 is usually the period where we have the highest maintenance.
More specific in Infrastructure; the customers who have postponed their maintenance in the quarter, is the effect broad or concentrated to a few larger customers?
Our customer concentration is generally quite low so from a group perspective the customers are not large but for a single company that have a handful of service technicians planned for a maintenance work that is postponed, that of course will be of great importance for that single company.
How did project sales develop compared to last year?
Project activity continue to be weak but has been so this last years so nothing dramatically new there. What has changed is the fact that in Denmark, we have had some larger project in both Industry and Infrastructure that have been completed during 2025.
This reflects the cautious behaviour we see among customers when it comes to larger investment decisions.
Denmark was the weakest market — is this a temporary, project-related effect or something more structural?
It is mainly project-related and linked to lower activity in certain segments.
Denmark has been strong over a longer period, so part of what we see now is more of a normalisation.
Margins
Gross margins improved despite weaker volumes — what is driving that? Is it mix-related?
Mix is part of the explanation, but not the only one.
We have seen somewhat lower volumes in certain lower-margin product areas and projects sometimes have a bit lower margins. The lower project volumes thus partly explains this.
But more importantly this reflects pricing discipline and active management at company level and the fact that we say no to work that is not generating acceptable margins.
Our businesses adapt quickly to the market situation, which supports gross margins even in a softer environment.
How much of the decline in the Infrastructure EBITA margin is utilisation-driven versus mix or pricing?
The majority is utilisation-driven. Lower service utilisation has a direct impact on margins as we have the cost for personnel and that is the main explanation this quarter. The drop through rate from lower utilization is quite high.
How are you balancing short-term cost control with maintaining capacity and sales activity ahead of a recovery?
That balance is very important for us. We work actively with cost control and adapt where needed, but we are careful not to weaken our market position. So we continue to invest in sales activities, customer relationships and competence. Our decentralised model allows us to take these decisions close to the customer and adjust in a pragmatic way.
M&A and expansion
You have completed two acquisitions year-to-date — how does the pipeline look in terms of deal flow, seller willingness and valuation levels?
We continue to see a good inflow of opportunities and an active pipeline.
Seller willingness remains solid, and many entrepreneurs are looking for long-term industrial owners.
Valuations are relatively stable overall and assessed case by case, so we see a supportive environment for continued acquisitions.
The pace of acquisitions seems lower than the strong start in 2025 — is that due to increased competition or something else?
The pace can vary between quarters depending on timing of processes. We don’t see any structural change in the market or increased competition affecting us materially. So this is mainly about timing rather than a change in underlying activity.
How do recent acquisitions compare in terms of seasonality — is the revenue and EBITA profile similar to the Group?
Broadly speaking, yes. The companies we acquire typically have a similar mix of products and services, so the seasonal profile is largely aligned with the Group. There are some recent acquisitions that are more seasonality dependent, such as Avome, WH Service, and Sulmu, all part of the Infrastructure business area.
As the Infrastructure share of sales and EBITA has increased, seasonality have become more visible where Q1 and Q4 account for a lesser portion of sales than before.
With your entry into the UK — should we expect further geographic expansion, and how are you working to grow in that market?
The UK is a natural next step and an attractive market for us.
Our focus now is to develop the platform we have established — building on the existing business and identifying opportunities for further growth, both organically and through acquisitions.
At the same time, the Nordics remain our core, but we are open to expansion where we see the right opportunities.
