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Balco Group AB reported its third-quarter earnings for 2025, revealing a significant decline in both revenue and profitability compared to the previous year. Despite a strategic focus on cost-saving measures and market expansion, the company’s financial performance fell short of expectations, prompting a substantial drop in its stock price. Shares of Balco Group fell by 18.18% following the announcement, trading at SEK 22.5, down from the previous close of SEK 27.5. According to InvestingPro data, the stock is now trading near its 52-week low, with a market capitalization of $54.22 million. InvestingPro analysis indicates the stock may be undervalued at current levels.
Key Takeaways
- Balco Group’s Q3 net sales decreased by 16.3% year-over-year to SEK 277 million.
- The company’s adjusted EBITDA saw a sharp decline, dropping to SEK 3 million from SEK 17 million.
- Order intake was down by 22.1%, yet the order backlog increased by 4% to SEK 1,377 million.
- The stock price fell by 18.18%, reflecting investor concerns over the earnings miss and future guidance.
Company Performance
Balco Group’s overall performance in Q3 2025 indicates challenges in maintaining its revenue streams and profitability. The company experienced a 16.3% decline in net sales compared to the same quarter last year, primarily due to a decrease in organic growth and lower order intake. Despite these challenges, the company increased its order backlog, suggesting potential future revenue opportunities.
Financial Highlights
- Revenue: SEK 277 million (down from SEK 331 million YoY)
- Adjusted EBITDA: SEK 3 million (down from SEK 17 million YoY)
- Adjusted EBITDA Margin: 1.1% (down from 5.0%)
- Order Intake: SEK 222 million (down from SEK 285 million YoY)
- Order Backlog: SEK 1,377 million (up 4%)
Market Reaction
Following the earnings announcement, Balco Group’s stock experienced a significant decline, dropping by 18.18% to SEK 22.5. This movement reflects investor concerns about the company’s ability to meet financial expectations and sustain growth, especially given the challenging market conditions in some of its key regions. Despite the recent decline, InvestingPro analysis shows the company has maintained a revenue growth rate of 9.76% over the last twelve months, suggesting potential resilience in its business model. For detailed valuation metrics and expert analysis, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Outlook & Guidance
Looking ahead, Balco Group remains cautiously optimistic about its renovation project order intake, although it anticipates a slower recovery in the new build segment. The company did not provide specific financial forecasts for 2026, but it expects some impact on order intake in the fourth quarter.
Executive Commentary
CEO Camilla Ekdahl expressed cautious optimism, stating, "We continue to be cautiously optimistic for the rest of the year." She highlighted the company’s focus on projects with potential for good profitability and emphasized the timing of order intake as a critical factor.
Risks and Challenges
- Market Conditions: The Danish market remains challenging, with long project timelines affecting revenue recognition.
- Economic Uncertainty: Macroeconomic factors could impact the timing and volume of new orders.
- Competitive Pressure: As a market leader, Balco faces competition in expanding its market share outside the Nordic regions.
- Cost Management: Ongoing cost-saving measures and staff reductions may affect operational efficiency.
Q&A
During the earnings call, analysts inquired about the potential for project cancellations and the impact of ongoing management transitions. The company confirmed no project cancellations and emphasized its strategic focus on business development across its brands.
Full transcript - Balco Group AB (BALCO) Q3 2025:
Presenter/Moderator, BALCO Group: Hello and welcome to today’s presentation with BALCO Group. With us presenting today, we have the CEO, Camilla Ekdahl, CFO, Michael Grindborn, and Interim CFO, Karin Bengtsson. We’ll do a Q&A after the presentation. If you’re calling in and would like to ask a question, please press 9 to raise your hand and 6 to unmute yourself when you get the word. You can also type in your questions using the form to the right. With that said, please go ahead with your presentation.
Camilla Ekdahl, CEO, BALCO Group: Thank you. Welcome to the BALCO Group Quarter Three report presentation. First of all, for all our new listeners, just a short snapshot about BALCO Group. BALCO Group was founded in 1987 and consists of several balcony and facade companies. The head office is in Växjö, and the group has approximately 550 employees. BALCO operates in two main segments: renovation and new build. The core expertise is to supply glazed balconies and balcony solutions, primarily for the renovation market and to tenant-owned associations. BALCO Group is a market leader in the Nordics, with the key markets being Sweden, Denmark, Norway, and Finland. We have a strong challenger position also on other European markets. By that, we go over to the quarter. The order intake in the quarter was SEK 222 million.
This is lower than the same period previous year, but as I said several times before, you need to look over a longer period than one quarter within our business to see the trends. We still can see the positive trend. The last two quarters together show an increase of 11%. We also can see that some of our projects in the pipeline were postponed for decisions in the quarter, but the projects are still active, and we can see a good potential for these to make a positive contribution for the order intake by the end of this year or start of next one. If we look on some of the highlights that I would like to give to you for the order intake in the quarter, it was that we received the first orders in Germany with the glazing system from our Finnish company, RICO.
We can see that with the RICO glazing, we can reach market segments and take projects which we were not able to take before with our premium brand, BALCO. We sell it in a very cost-efficient way because we are using the BALCO sales force, and they can use the RICO brand together with the BALCO. When the BALCO brand is not suitable, we primarily want to sell the BALCO brand, the premium one. If that’s not suitable, then they can also sell now the RICO brand. We see a good potential in this ahead. I also would like to highlight one of the orders we have taken for balconies to a social housing project in the Netherlands. It’s not depending on that it’s a very big project or something like that, but it’s a very, very interesting market for us still ahead within the Dutch market.
This is a project where we will replace the old concrete balconies with aluminum balconies, but we will also add on new balconies. We are discussing a couple of more similar projects where they want to improve the social housing areas. You can imagine, when it comes to a social housing area and the balconies are bad, the facades are bad, and if they are making a refurbishing of the whole area, that also gives a big extra for the people living there. There we are contributing with the balconies. We can see also that our lighter aluminum balconies are a very good solution for this market. That is mainly connected to the building itself in the Netherlands. As some of you might know, the conditions of the houses in the Netherlands are really poor. To have a heavy concrete balcony on it, that is sometimes a problem.
There we can offer our aluminum balconies, and that also gives us a potential market ahead. We are not satisfied with the profitability in the quarter. The delays in the start of the projects still affect our sales. This is especially in the Norway and Swedish market, but also in the UK market. The net sales amounted to SEK 277 million. The structural measurements we launched earlier in the year have continued to be implemented according to our plan. We can see the costs are reduced, but we don’t see the full effect on the profitability level due to the lower sales in the quarter. The work to streamline and optimize our operations, of course, continues. If we go to the market update, we can see that the trends to increase activity, especially in the Swedish and Norwegian renovation markets, continue.
Customers are becoming more willing to make investment decisions, even though the processes still take a little bit longer time. There are positive signals on the market. For example, we can see that projects that have been put on hold for a couple of years now are up for discussions and planning again. We can also see that there are more big projects up for discussion than the past last years. In the Danish market, that continues to be challenging for us. There are projects in the market, and we also receive projects. The timeline from decision to startup is very long regarding both from the house associations, but also from authorities to give permissions. This affects our profitability in the Danish market. We can also see that the Finnish market is recovering at a slower pace than in Sweden.
This affects our Finnish companies in both renovation and new construction. In the UK, the balcony market potential remains substantial. We are active on the UK market, and we have added local R&D resources to be able to take the next step in our growth for this market. The renovation market in Germany continues to demonstrate strong underlying demand. BALCO Group has had a little bit lower order intake at the start of this year, but that has mainly been connected, as we see it, with the uncertainty for the election at the start of the year. They postponed the projects. Now we have some good projects in our pipeline. Usually, there is good order intake in the German market, both for the fourth quarter and the first quarter of the years.
We can there also see, as I said, this with the RICO system that we can address new customer segments and increase our market penetration. For the new construction in Germany, the balcony market remains large. We are working and we’re quoting on projects there, but we are working with projects where we see potential for good profitability. In the Netherlands, the drivers in the markets are both for the new build and the renovation market. There is also a special project coming up, which is transformation projects. Transformation projects are when you are transforming either an industrial building or an office building to house buildings. As you understand, the buildings do not have any balconies from the start, but they want to add balconies when they are transforming them. The product portfolio that BALCO Group can offer with different solutions and alternatives is very interesting for this market.
There are some positive signals about the new build segment, but the increase comes from a very low level, and it will take longer time before it is visible in an increased order intake for our facade and balcony companies in Sweden and Finland. With that said, I hand over to Michael.
Michael Grindborn, CFO, BALCO Group: Yeah. Some quarterly figures. I start with the net sales, but in the quarter, amounted to SEK 277 million, down from SEK 331 million last year. Here, the organic growth was negative by 13%, and the currency effect was minus 3%. The adjusted operating result on EBITDA level amounted to SEK 3 million compared to SEK 17 million last year, and it corresponds to an adjusted EBITDA margin of 1.1% compared to 5.0% last year. The order intake amounted to SEK 222 million, down from SEK 285 million last year. The order backlog, though, increased by 4% up to SEK 1,377 million. Both adjusted earnings per share and earnings per share amounted to minus SEK 0.23. Our operating cash flow in the quarter amounted to SEK 3 million compared to minus SEK 1 million last year. A small improvement here.
If we go over to our two segments and start with the renovation segment, the net sales in the quarter amounted to SEK 206 million, down from SEK 247 million last year. It corresponds to 75% of the total net sales in the quarter. The order intake amounted to SEK 188 million, down from SEK 250 million, and it was 85% of the total order intake. The adjusted operating result, EBITDA, in the quarter amounted to SEK 2 million compared to SEK 15 million last year, and it corresponds to an adjusted operating margin of 1.2% compared to 6.0% last year. Order backlog in the renovation segment increased by 7% up to SEK 1,104 million. Our new build segment, here, the net sales in the quarter amounted to SEK 70 million compared to SEK 84 million last year.
The order intake was more or less in line with last year, SEK 33 million compared to SEK 35 million last year. The adjusted operating result in the quarter amounted to SEK 1 million compared to SEK 3 million last year, and it corresponds to an adjusted operating margin of 1.0% compared to 3.8% last year. Order backlog in the new build segment amounted to SEK 269 million compared to SEK 294 million last year. Our financial position at the end of the quarter, the group’s equity amounted to SEK 744 million compared to SEK 791 million last year. The equity-to-asset ratio was at 44% compared to 49% last year. Our interest-bearing net debt, including leasing debt, in relation to adjusted EBITDA amounted to 6.8 compared to 2.8 last year.
As we mentioned in the last quarter report, we got a waiver with our bank in June, and it’s valid until year-end. The covenants are within this agreement in the waiver agreement. Back to you, Camilla.
Camilla Ekdahl, CEO, BALCO Group: We take the concluding remarks and the outlook. We continue to be cautiously optimistic for the rest of the year regarding our order intake, especially for the renovation projects. As I said several times before, and you all know that, also that the renovation market remains there. It’s a matter of timing when the orders will come in. For the new build segment in the Nordic countries, we see that the recovery will take longer time. It also continues to be a strained competitive situation for our Swedish facade companies, our balcony company in Denmark, and both with the renovation and new build market in Finland, where we see that the market recovery takes longer time than in Sweden. We continue to have a focus on profitability improving measures and also cost savings.
Here at the end of our presentation, I also want to present our changes in the group management. We have employed a Director of Business Development and Head of IT. It’s Andreas Lindberg. He will start next week here on the 1st of November. This is a new position within BALCO Group, and Andreas will work with the business development for all our companies and all our markets and brands. He will assist and drive the local managers together with me and also look for opportunities across the brands. We will investigate new markets and also in the future to look on possible M&As. As informed before, Michael Grindborn, our present CFO and Head of IR, will leave here by the end of October. I want to take the opportunity here in this hearing to thank him for his contribution during his year at BALCO Group.
At the same time, who is also participating at this meeting is our Interim CFO, Karin Bengtsson. She is already on board since September. I’m also happy to say that we also have employed a new CFO and Head of IR, Viktor Arvidsson, who starts the 23rd of February. I also take the opportunity here to announce that Joakim Pettersson Dyggve, the CEO of RICO Räkenetet, the Finnish company, ends his employment by the end of November. Joakim has been a member of the group management. A successor has been recruited, but the successor will not initially take a part in the group management. This was all from us in the presentation.
Thank you very much. Let’s open up the Q&A section here. We’ll start with the first one. Can you elaborate on the comment that you see positive order intake remains and any positive order trend during Q3 and into Q4? Since it’s down 22% YoY, a quite significant decline, I would assume if it’s still positive, it should at least stay at stabilizing levels, example in line with Q3 last year.
Yeah, but it is, as we said, it is very difficult to say that you are comparing one quarter to another quarter when you look over the years. Quarter three previous year, we had one big order taken in from the Swedish balcony company, and we had one very big order, two actually big orders taken in in Suomen Oikeavyasennus. If you take out these very big orders, we are actually better this year. When I say we have a positive trend, it means that we need to look over a couple of quarters in a row. There, as I said, we can see if we look on quarter two and quarter three together, we still have an increase of 11%. I’m also basing this on the quotation levels that we can see.
As I say, especially in the renovation market for Sweden and Norway, we can see that the quotations are increasing each quarter.
Thank you for that answer. The postponed project in your pipeline, can you give any details on the type of project and also size?
No, I will not do that. Sorry. I can say that there are some big projects. I will not go into any figures, how big they are. It is mainly on the Swedish market, but also some on the Norwegian. That is what I can comment.
Okay, thank you. We’ll move on to the next question here. Given the low EBITDA levels and low order intake in Q3, what is your view on leverage into 2026?
We are not giving any forecast, actually, to 2026. We have never given any forecast, so to say, ahead. We remain with that, that we don’t give any forecast. What we are saying is that we see positive trends on the order intake. Of course, if we have a positive trend on the order intake and they will actually also take place, we will also see an improved profitability. How much and when, that I will not forecast about here.
In Q1 2025, you mentioned what the adjusted EBITDA margin would have been if it was not for the delayed projects. What is this figure for Q3 2025?
That we have not actually calculated. Michael, have you any idea about it?
Michael Grindborn, CFO, BALCO Group: No, we haven’t calculated.
Camilla Ekdahl, CEO, BALCO Group: No.
Okay, thank you. You have reduced the staff by about 70 since the turn of the year. How much more will you reduce staff as part of the structural measures? When will all the measures be implemented?
We have a couple of more reductions to be made. I will not go into any detailed figures there either. The plan is that everything will be ready by the end of this year. As we say here in the report, of course, we continue to work. If we see that we need to do more actions, of course, we will do more actions.
Should we be worried about the leverage? Do you expect a further waiver on covenants on the bank debt?
Regarding, so to say, when we come to this with a waiver, we have an agreement by the end of this year, which is, so to say, valid to the end of this year. We are within the waiver for this on the quarter three report.
The order backlog is up 4%, whereas organic revenue growth is down 13%. When shall we expect the increased order backlog to translate into revenue growth YoY?
Michael Grindborn, CFO, BALCO Group: Yeah, we expected to do it already in quarter four. If everything goes according to plan, it will be some increase already in quarter four.
Thank you for that answer. In your balance sheet, you report SEK 48 million in cash. In the table here, you report SEK 102 million. What’s the difference?
As we are writing, it’s cash and also interest-bearing assets. That’s the difference.
Thank you. We take one final question here before wrapping up the Q&A section. What are the key focus areas for the new Business Development and IT role?
Camilla Ekdahl, CEO, BALCO Group: As I said during this meeting, the key focus for Andreas is, as I said, together with me, develop the cooperations between the different brands, how we can use the different brands. As we saw now in the RICO brand, we can use it in Germany to develop that further on and also to look for other business opportunities in more countries where we are not existing, where we are not present today. Also, to really work with the Finnish market. There we go more deeply into the renovation project, in the renovation segment. As you know, the RICO brand has been very much into the new build segment. We are working on the renovation segment, but we want to increase that effort even more.
Thank you. We actually had some more questions here. Could you say anything about the quality of the order backlog? Are there any risk for cancellations? Have you had any cancellations during the quarter?
We have not had any cancellations during the quarter, and the evaluation of the order backlog is that it’s a fresh backlog.
Understood. Thank you. When shall we expect the increased order intake to materialize in increased revenues? For example, how long does it normally take from order intake to revenues? Do you book revenues and margin as percentage-of-completion?
Yes, we book margins and revenue as a percentage-of-completion basis. As Michael Grindborn said before, we expect to see some of the order intake that we took in quarter two that will be affecting here in quarter four.
Okay, thank you very much for your presentation here today. Thank you everyone tuning in to this FinnWide webcast with BALCO Group. I wish you all a great rest of the day. Thank you very much.
Thank you.
Michael Grindborn, CFO, BALCO Group: Thank you.
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