Earnings call transcript: Hanza AB sees stock surge after Q1 2025 results

Hanza AB (market cap: $371.91M) reported its financial results for the first quarter of 2025, showcasing a strong performance that sent its stock soaring by 7.89% in pre-market trading. The company’s earnings per share (EPS) for the quarter reached 1.14 SEK, while sales amounted to 1.5 billion SEK. Building on impressive revenue growth of 17.09% over the last twelve months, Hanza’s operating margin improved, and the company maintained a positive cash flow, contributing to the positive market response.

According to InvestingPro analysis, Hanza shows promising fundamentals with multiple positive indicators. InvestingPro subscribers have access to over 30 additional financial metrics and exclusive insights about Hanza’s performance.

Key Takeaways

• Hanza’s stock rose by 7.89% following the earnings announcement.
• Q1 2025 sales reached 1.5 billion SEK, with an operating margin of 7.3%.
• The company completed the acquisition of LiaDen and integrated it successfully.
• Hanza’s strategic focus remains on expanding manufacturing capabilities and efficiency.

Company Performance

Hanza AB demonstrated resilience in Q1 2025 despite a challenging market environment. The company’s sales reached 1.5 billion SEK, reflecting its ability to maintain a strong market position. Although organic growth was slightly negative at -3%, the operating margin improved to 7.3% from 5.3% a year ago, highlighting operational efficiencies. The acquisition of LiaDen and the opening of a new factory in Sweden are expected to bolster future growth.

Financial Highlights

• Revenue: 1.5 billion SEK, with a pro forma annual run rate of 6 billion SEK.
• Earnings per share: 1.14 SEK, adjusted for one-time items.
• Operating margin: 7.3%, up from 5.3% in the previous year.
• Positive cash flow from operations: 600 million SEK over the past 12 months.
• Net debt to EBITDA ratio: 2.3, below the target of 2.5.

Earnings vs. Forecast

Hanza’s earnings per share of 1.14 SEK slightly missed the forecast of 1.34 USD, but the market reaction was positive, likely due to the company’s strong operational performance and strategic initiatives. The revenue forecast was 1.41 billion USD, and Hanza’s actual sales of 1.5 billion SEK indicate a solid performance relative to expectations.

Market Reaction

Following the earnings announcement, Hanza’s stock price increased by 7.89%, reflecting investor confidence in the company’s strategic direction and operational improvements. Based on InvestingPro’s Fair Value analysis, the stock currently appears slightly undervalued. Analyst consensus remains positive, with price targets suggesting potential upside, while the stock’s rise to 72.9 SEK places it within a favorable range, closer to its 52-week high of 88 SEK, suggesting a strong market sentiment.

Outlook & Guidance

Looking ahead, Hanza aims to achieve an 8% operating margin in 2025, with sales targets set at 6.5 billion SEK. The company’s "Hanza 2028" strategy is expected to drive future growth, and a potential Capital Markets Day later in the year could provide further insights into its strategic plans. Hanza remains cautiously optimistic about market recovery but is not relying solely on external factors for growth.

Executive Commentary

CEO Erik Stenfors emphasized the company’s strategic focus, stating, "Hope is not a strategy," highlighting Hanza’s proactive approach to navigating market challenges. He also noted, "We have capacity for SEK 6,500,000,000 without a problem," underscoring the company’s readiness to meet future demand.

Risks and Challenges

• Global manufacturing complexities and geopolitical tensions could impact supply chains.
• Continued flat market demand poses a challenge for growth acceleration.
• Integration of acquisitions, like LiaDen, requires careful management to realize synergies.
• Dependence on European markets may limit exposure to growth opportunities elsewhere.

Hanza’s Q1 2025 performance and strategic initiatives have positioned the company well for future growth, with investors responding positively to its earnings announcement.

Full transcript - Hanza AB (HANZA) Q1 2025:

Conference Moderator: Now I will hand the conference over to the speakers’ CEO, Erik Stenfors and CFO, Lars Akerblom. Please go ahead.

Erik Stenfors, CEO, Hansa: Thank you. A warm welcome to this presentation of Hansa’s first quarter twenty twenty five. I’m Erik Stenfors, the CEO of the company, and I will be glad to give you this update together with our CFO, Lars Hockblum. So as we all know, we are in a turbulent period of the global economy, and therefore we are pleased to present a solid report, but also a clear roadmap for the future. And to provide a better understanding where we are right now and where we’re heading, we will start with a short general overview.

So for many years, the traditional routes for global manufacturing have have been blocked one by one for various reasons. We see some examples on this slide. And it was the pandemic who opened the eyes, how fragile the global, supply chains are. And now this year, with the new administration in The US, it’s become even more complicated with the global manufacturing. They are imposing these new tariffs.

And the question is then, where is Hansa in all this? In this new manufacturing landscape, where are we? Well, from the start, we have had our concept to have local and complete manufacturing. There’s a feature of Hansa. We have combined different kind of manufacturing technologies.

You see some of them on this slide. So we can offer both mechanics and electronics and cable harnesses a good advantage for our customers. And now we’re up to about, 3,200 colleagues. We have 25 factories, grouped into what we call manufacturing clusters. You see on this map the five manufacturing clusters we have in Europe.

And we also have in China, not a cluster, but a single unit, and that is we call the gateway, that is to help our customers to relocate manufacturing to China for manufacturing in China for China and also back to Europe. Another feature of Hansa is that we have something called MIG. We help our customers to rewire the supply chain, to optimize it, to move manufacturing. And all in all, this means that actually Hansa has a very low exposure to trade barriers, being a European manufacturer producing in Europe or Europe. Also, we could even have a small advantage when it comes to customers who want to relocate the manufacturing.

And if we look at also this is our business model, but also if you look at our expansion model, we have built Hansa in steps in defined phases. We put a milestone two, three years ahead. We defined the operational and the financial targets. We have passed three milestones so far. We are heading for number four.

This is important. It’s called HANSA twenty twenty five. You will hear a lot about this during this presentation. And we can actually grow in three dimensions. We could grow with more technologies, manufacturing technologies.

We can grow with more geographies, and we can grow with more capacity. And this Hansa twenty twenty five is about increasing capacity on existing geographies, existing manufacturing technologies. And what’s interesting, if you look at the sales graph up to the right corner, So this is the sales for the first quarter for a five year period. In 2021, we were close to SEK $05,000,000,000 in sales. Two years later, in 2023, we were up to SEK 1,000,000,000 sales.

And this quarter, if you include LiaDem for the full quarter, we are over SEK 1,500,000,000.0 sales. So it means that our business model, combined with our expansion model, ensures a steady growth under different economic conditions, as has been the case for these five years. In strong economy, we can really help our customers to have a better solution with our All You Need Is One concept, the different technologies. And in slower economies, we can help with rewiring supply chain and also building on our company. So with this short introduction, I think we are ready for the progress report when it comes to operations, sustainability and finances.

And we will also end with a look at the future and, of course, a Q and A session. If there’s anything you would like to have further explained, please use that moment to ask any questions you like. The quarter. The main event of the quarter was, of course, that we closed the deal with LiaDen. So the deal we announced in December, it was a bit delayed because we had to wait for approvals from the authorities.

But it’s part of Hansa as of March. And what a nice quarter it has been. I’ve been traveling around Appaline, and you see, his photo here up to the right, meeting new colleagues, meeting new customers. We’ve got very interesting new customers like Eton, if you know the energy management company, and Danfoss. They are into, let’s say, smart motor controls.

We also got more ABB in Finland for Finland. Very nice. And they also have a brand new facility. They opened in January in Ulineen. You see a picture from that factory, actually from a customer meeting next to the photo of Jukka.

A fantastic treatment and mechanics factory. So it’s been a very pleasant first quarter to get closer to this company. And okay, we could not enter the company until March, but we had a little bit of a quiet start before then. So I would say the integration is running smoothly, and it should, because we do a lot of work before an acquisition with our due diligence of the HR and the company culture. So we are on full speed with integration running very, very smoothly.

We have also separated the business according to our cluster concept. So Jukka, who used to be CEO of Lenin, is now just the president for Finland. He has our old units. You see them on the map, three of them, and the units from Leden. And in Estonia, we put the talent unit to Liva Konge, who is the president of Baltics.

So this has also been a very good separation. I believe very much in this. It’s it’s clear that the people also appreciate to be part of the same geography and the same culture and the same language. In this unit that we got in Tallinn, we also got, let’s say, a minor part of non core business, product owning business. It’s not according to our strategy.

It’s a very nice business, however, running at a bit lower margin, and we are now evaluating our long term strategy concerning this unit. We will come back to you about this later on. And talking about a very nice quarter, this was also a highlight. We opened a new factory in Tugsvos, Varnan, Sweden, in February. Very good day at work, nice opening ceremony, and a very nice dinner with partners and investors and customers and and suppliers, so very nice.

We were running before this opening because of demand, we had to use old grocery store. This is a final assembly unit we have built. And now because of the new building, of course, we can move the assembly to this building. It is adjacent to the sheet metal mechanics, and that’s the way it should be. So when you have made a box, you should fill it with something without transportation.

We can do it now, it improves our efficiency. Then also, there are a number of other projects going on in Hamza. Worth mentioning is the one in Poland, the integration of Pravutti. It’s a unit in Poland we got with the acquisition a year ago, the OrbitOne acquisition. After that, we’ve been working to streamline and optimize where to have customers and where to have different technologies.

This is a work ongoing, and it will go on it will be ready before the end of the year, but it will still take some time to finish this. It will be really good at the end. That’s a large project. We also have other similar smaller projects, but all of them should then be ready by the end of this Strategy ANSAR ’20 ’20 ’5 according to our plan. Then also, we started something we call LINX.

It’s a market program. What we see now, we talk about the turbulence, the new situation in the world, it’s not for the best all the time. But we also see that it has brought strength to some certain market segments. And we also see in Germany that they are open now to change the supply chain. Previously, they have been rather conservative, at least compared to the Scandinavian countries.

We have been more into outsourcing. But now this is changing. And it means that we also have a chance to take a bigger stake of the operations of the manufacturing in Germany. So these new areas to take advantage of them, we have launched a market program links. I’m sure it will show some good results already this year.

And I will come back and we will present more, of course, when we have some results. But this is something to keep your eyes on. And with that, I will leave the floor to Lars.

Lars Akerblom, CFO, Hansa: Thank you, Erik. And for you, and it’s been following Hansa for a while, you see that, the interim report, that we released today has a new format, a little bit change in the layout and the and the way we present the information and figures. We hope it will be more easy to take on and more visional in how we present the development of Hansa. Starting with sustainability and the main thing happening in the beginning of 2025 was of course the release of the sustainability report for 2024 together with the annual report. That was according to to the European sustainability reporting standards, and and major step towards the CSRD.

We also started the integration of of Liadem, to be able to report the Liadem figures. They are not included in in the figures you see to the right. And then we have in the waste onetime effect due to washing fluid that we always in the first quarter are replacing. So that’s a onetime effect on the little bit higher KPI. On the other hand, on energy use, we are having a onetime effect in the positive way.

We are taking away the gas consumption to adopt the Scope two way of measuring the energy use. So that’s how we’re going to present it going forward. We see the injuries are on a stable and quite low level. And we’ve also been working with cybersecurity and bringing more factors into EcoVadis. Looking into the financials, as Erik said, we had Ljaden joining the group in the March.

We have only one month of the quarter that LiaDan is included. On the other hand, it has a full effect on the balance sheet. So that brings the KPIs a little bit you need to adjust for the fact that Ljaden, which is a quite big acquisition, is done included one month, but the full for balance sheet. We also speak about the old Hansa, comparison units, and that is now together with OrbitOne that we acquired and integrated from January 2024. The market, is not that strong.

We have, increased the sales by 6% and that is due to the acquisition of Leland. We actually have negative organic growth of 3% in Enhance overall. Pro form a, including Leiden, we are on the SEK 1,500,000,000.0, so on a yearly base on 6,000,000,000. And we have an organic growth in the end of the quarter in the old Hansa. We continue to have sequence increase of the margin.

We reached 7.3% compared to 7.1% in Q4. And going back one year, we were on 5.3%. So we continue on the development of the margin towards the 8%, which is our financial goal. And Liaven came in the same level as what we call Hansa, old Hansa, a little bit about 7% in March. But of course, one month is quite short period to make any general assumptions on where Ljaden is on the margin level.

But it’s a good start for Ljaden. The EPS is increased compared to last year of 1.14 if we adjust for onetime items. And we have onetime items. Eric talked about the integration of LiaDON, the new opening ceremony and the move from the old grocery store in Taksfos, and the continuous project to integrate the Orbit factory in Poland. And also, we’ve been working with the ERP system and adjusting some values on the stock.

So the onetime cost in the quarter amounted to SEK11 million. Cash flow. We continue to have positive cash flow, not as strong as in the end of twenty twenty four when we saw the effect of the work we did with the working capital in Orbit one. We are starting up and working with the working capital also in LiaDan. And we strive to see a similar effect on a positive cash flow effect also when we are able to work with the working capital in Ljaden.

On the rolling 12, the cash flow from operations is about SEK 600,000,000. And that also led to that net debt, of course, increased with bringing on the net debt in Liaodon and paying for the shares in Liaodon. But if we deduct for those increased of the net debt, we actually decreased net debt by SEK 86,000,000. The equity to asset ratio is, of course, decreased when we add Lianen, but we are still well above the financial target of 30%. We are on 34%.

And also the net debt compared to the EBITDA. We said when we did the acquisition of Liaison that we might be above the financial target on 2.5. But since we have such a strong cash flow, we are now on 2.3. So above below the financial target, and we expect the net debt compared to EBITDA to continue to decrease. Looking into the segments.

We continue to have a stronger margin in main markets compared to other markets. We see a calendar effect in other markets that led to that we actually decreased the margin a little bit from Q4, where we saw that calendar effect. We see in other markets that we actually have an organic growth of 2%. And we have, on the other hand, negative organic growth in main markets. And the reason for that is the weak market in Germany that affects both the sales but also the margin in a negative way.

So we continue to see the increase in profitability in margin. And again, we are reaching on a solid way on to the 8% or above 8% during 2025. The ownership and development of shares. We did a share issue to the sellers of Ledon of 2,900,000.0 shares, which lead to that we have, at the end of the period, close to 44,000,000 shares. We the Board proposed the dividends of SEK 0.8 per share compared to SEK 120 a year ago, and that is approximately SEK 35,000,000.

And the AGM will be held on May 13, a week from now. And we see some changes in ownership schedule. Hokanalian, which was the main owner, is not the main owner’s list anymore. And Erik continued to increase his shareholding in Q1 and is now owning 1.4% of the shares in Hansa. And by that, I’ll lead over to you, Erik, on the summary.

Erik Stenfors, CEO, Hansa: Thank you, Lars. So a very quick summary and I look for the future. So very, very strong start to an important year, and we finalized all these very important activities. We saw a increase in the operating margin. For old Hansa, we saw Liren coming in at a very good margin.

Now we will work together to increase it further. And all this, that’s what makes us confident in repeating our financial goals. We also launched this new market program, Linx. And again, keep an eye on this. I’m sure it will deliver some results already this year.

And then we are closing up to the launch pad of Hamza 2028. As soon as we are done with ’25, we will start ’28. So expect new operational and financial targets to come as soon as we have reached the current. And most likely, we will present that during a Capital Market Day somewhere late this year. So with that, we open up for questions.

Conference Moderator: The next question comes from Lukas Matson from Inderes. Please go ahead.

Lukas Matson, Analyst, Inderes: Morning, Erik and Os. Lukas here from Inderes. Thank you for a great presentation. Could you start off by elaborate a bit on what factors are expected to sort of help to bridge the gap to the 8% operating margin target in 2025? And to what extent is reaching that target contingent on an economic recovery, given your outlook for a potential upturn in 2025?

Erik Stenfors, CEO, Hansa: I can start. And then Lars, if you’d like to continue. So we are not relying of course, we hope for a market recovery, but we are not relying on it. Hope is not a strategy. So what we are doing is we are collecting new customers.

And you know, that today’s sales is tomorrow’s revenue. So the customers we brought in last year will help us to drive towards this goal. Then we have done these major activities we talked about, and there’s always a start up phase with this, I would say, state of the art. Now we have if you remember, we opened OpenSheet, a mechanics factory in Estonia in all summers. And now we have three state of the art factories, Estonia, Sweden and Finland.

And of course, there is a startup of them, but that also drives the margin. And then we have all the other activities and not least the synergies. The margin increase comes from higher efficiency caused by our cluster concept. So when we get our business together, that will also drive the margin. So there are a number of different things that will make us we are very confident about this margin goal this year, and it’s not relying on a better market.

Lukas Matson, Analyst, Inderes: Okay, great. That’s very helpful. Thank you. And then you mentioned organic growth towards the end of the quarter. Could you specify which segments or geographies that are contributing most to this growth?

Erik Stenfors, CEO, Hansa: No. To give you a clear answer, we’re not revealing that. But we are happy to see because, again, we need organic growth, and it’s not driven by the market. The market is rather flat since they started a year ago. It’s driven by new orders and new sales.

So we’re glad to see that’s kicking in, and that’s also what will drive organic growth further on, if you would accept that answer, Lukas.

Fredrik Nielsen, Analyst, Redeye: Okay.

Lukas Matson, Analyst, Inderes: Okay. That’s good. And then lastly, have you observed any recent shifts in customer behavior in response to the rising global economic uncertainty due to the tariffs and so on?

Erik Stenfors, CEO, Hansa: Yes, yes. And again, we have a very low percentage of less than 1% for The U. S, so we are not affected. What we see though, I had a very interesting customer meeting the other week where there was one customer who said, now we will move the manufacturing to Europe. They had it in The US.

Actually, I have two such meeting last month. So it can be more, disruptive that people move manufacturing to be closer to the market. And if you have a company offering manufacturing in Europe or Europe, that could be the obvious choice. We have not seen so much in the other direction. I think that Europe is still our end market, so it’s just positive.

Lukas Matson, Analyst, Inderes: Okay. Interesting. Thank you very much for taking my questions.

Erik Stenfors, CEO, Hansa: Thank you.

Conference Moderator: The next question comes from Fredrik Nielsen from Redeye. Please go ahead.

Fredrik Nielsen, Analyst, Redeye: Thank you. Good morning, Erik and Lars. I want to start with the margin in other markets. I noticed that you mentioned that seasonality might have some effect. But still, I mean, it was down like 1.5 percentage points compared to Q4.

And I mean, over time, we should expect it to move towards main markets in regarding margins. So is it just seasonality? Or is it something more having a negative impact in the quarter?

Lars Akerblom, CFO, Hansa: Fredrik. If you look into the graph, maybe I can show it, down to the right, you see that if you take away the Q4, you see that we are increasing the margin. So the main reason is the seasonality effect in Q4, which we have seen also in 2023. In Q1, we had this project in Poland, which is part of Central Europe and part of other market that led to lower margin. But we still are solid in our belief that we are on the right track and on the way to see more equal margins in other markets and main markets.

Erik Stenfors, CEO, Hansa: I can add a bit to this. Lars is pointing at the right way here on the graph. So if you look at the quarters for the main markets, ’24, it was seven point zero, seven point two, eight point nine and now it’s 9.4. But in Q4, it was 8.1. So disturbing the series.

If we do the same exercise for other markets, you see 3.3, four point zero, four point four, now 4.9, but Q4, disturbing the series with 6.3. So this seasonal effect in Q4 is disturbing a rather straight line otherwise.

Fredrik Nielsen, Analyst, Redeye: Yes, yes, that’s a good point. But in 2023, for example, it was roughly the same for the full year. So I mean it’s a bit hard perhaps to draw seasonal conclusions from just one year. That was my point. But perhaps that’s representative for the current business there then.

Erik Stenfors, CEO, Hansa: You had the same thing in 2023. So from Q3 to Q4, it was down in the main market, 12,400,000,000.0 to SEK 10 point 4 billion and up in other markets, 5,700,000,000.0 to 6,500,000,000.0. So you have the same season effect there. And it’s just driven that we are more active in other parts of the world than in the main markets during the end of the year.

Fredrik Nielsen, Analyst, Redeye: Okay. Maybe my numbers are wrong, then I have to look at it. Let’s move on. So could you give us some color on the impact on growth from orders from new customers, which you disclosed quite a bit last year and the demand from current customers, respectively?

Erik Stenfors, CEO, Hansa: The thing is that what you can expect from the new uncertainty and the turbulence in the world economy is that there will be a further recession. Everybody’s been waiting for the upturn of the economy. It’s been it was talked about that it was destocking a year ago, but destocking indicates it would be for a short period. We don’t believe in that. We believe rather that’s a new level on demand, and we don’t expect it to go back even to the post COVID level, which was really, really high.

But the question is when will the upturn come? And still, see that our customers are positive about this year. It has not affected their full year forecast. We still believe in a good year, not so when we give our forecast, we base it on what we know now, and it seems like it will continue, not bounce up, but not go down either. So maybe the locomotion in The U.

S. Will not have this big impact on our customers. We don’t know that yet. We will know that by the end of the year. It could be that we see this upturn, which has been expected for a long time, or it could be that there’s had some disaster scenario for all companies in the world.

But all we know now, we believe in a rather solid situation for the rest of the year with the same demand, adding new customers. That’s what drives our increase, not the previous demand.

Fredrik Nielsen, Analyst, Redeye: Okay, great. And last question from me. The 6,500,000,000.0 in sales target for this year seems a bit stretched perhaps given the current environment. Do you believe another acquisition is needed? Or do you think you can reach it organically?

Erik Stenfors, CEO, Hansa: Well, Lars, should you or I answer this?

Lars Akerblom, CFO, Hansa: You can start.

Erik Stenfors, CEO, Hansa: I can start. Yeah. But the truth is that we are lagging a bit behind because we were expecting Leren to be part of Hansa sooner. So for this first quarter, we have SEK 200,000,000 that was not included in our books. So we are lagging a bit behind, so we have to do something, obviously.

If that was the case, we will be on a yearly basis 6.2 something, so it would be not so far for 6.5. Now now we that’s not the case. And, course, we need to measure the actual figures, not the pro form a figures. So it means that probably some more activities are needed. Again, I will be a little mysterious, but yes, we believe in the target still.

Fredrik Nielsen, Analyst, Redeye: Great. Thanks. That’s all for me.

Conference Moderator: The next question comes from Oliver Usitolo from Actiasporana. Please go ahead.

Oliver Usitolo, Analyst, Actiasporana: Good morning, guys, and congratulations to a solid quarter. You addressed the increased activity in the German market as well as the new customer dialogues as a consequence of the Leland acquisition. I was wondering if you could elaborate on this. Have you seen any new sales that might even impact Q2?

Erik Stenfors, CEO, Hansa: Again, there is a time between when you sign an order and you see it in your books as increased revenue. So what is driving the sales right now are orders we took last year. Took takes maybe half a year to get it up and going. So we cannot say that, that will impact Q2 orders we have taken in Q1, but the one from the last year. Now what I think is interesting in this question is that if we do, like we did last year, some MIG exercise in Germany.

So MIG is when we take over and restructure the supply chain. Then it is faster than traditional All you need is one sales. Because then you can, in a few months, grab a large portion of manufacturing and move it somewhere where it’s beneficial for the customer and also gives a large impact on Hansa. So would we be able to conclude some of these MIGs in Germany, for instance, that could have an impact already this year. But when it comes to traditional sales, it’s a longer period.

Was that an answer for your question?

Oliver Usitolo, Analyst, Actiasporana: Yeah. I think that’s a solid answer. And I suppose it’s safe to assume that you had some perhaps some MIG orders in your pipeline then.

Erik Stenfors, CEO, Hansa: We always have something in the pipeline.

Oliver Usitolo, Analyst, Actiasporana: Fair enough. Do you think that this increased activity in Germany will drive increased investments or any OpEx going forward?

Lars Akerblom, CFO, Hansa: I can answer on that one. We see that the investments are lower than a year ago, which we also said during 2024 that we will see a decrease in investments in 2025. We do not see any major investments due to new orders, we should be able to handle those without any major investments. They can always be some minor investments that you need to do in order to add new type of customer or so, but no major investments needed.

Oliver Usitolo, Analyst, Actiasporana: I see. Great. So turning to the integration of LiDAR, and I’ve tried to address this previously, what what does your integration plan look like? I suppose you have more a better view of that now. And do you expect any additional cost?

Erik Stenfors, CEO, Hansa: I can start maybe if you like to continue, Lars. So there are some major steps in this. One is, of course, to cut LiaDen into two pieces, which I talked about previously, one for the cluster botics, one for cluster Finland, that’s done already. Then we have the integration. We have now we we try to optimize the different manufacturing technologies in the different sites.

So that’s a longer term work. But the most important thing the most important thing is that we work together as one team. And that’s, again, why it’s so important to check the company culture before an acquisition. And we see now that already we feel like one unit. So the most important part of the integration being one company has already been executed.

Then there are a number of other technical things. Of course, Lars is working with the shared service center to make sure to add things together there. We are talking about increasing the margin by maybe transforming the manufacturing between the sites and all that. That’s a longer period. But the main activities are already done, and that’s why we are quite positive right now.

Lars Akerblom, CFO, Hansa: And when Eric says that these actions are done and the factories are split between the main markets and other markets, we still do not see the full effect in the P and L of the synergies that will come in in, during 2025.

Oliver Usitolo, Analyst, Actiasporana: Okay. Fair enough. And, as you talked about, Eric, how do you feel that these changes have been received by the leading employees? And what impact have you seen on the Hansa Group?

Erik Stenfors, CEO, Hansa: Sorry. Can you by the people, how they feel about this or what do you mean?

Oliver Usitolo, Analyst, Actiasporana: Yeah. Exactly. How it is by been received by the employees?

Erik Stenfors, CEO, Hansa: Yeah. And that that’s, I think, is a good lesson learned for anyone running a company that the thing we do when we separate the companies. So the Estonians are much happy to work with other Estonian. There’s always a little language barrier and could be some culture thing. So the same thing when we acquired OrbitOne, then we got a unit in Poland and one in Sweden, we separated it.

And we really felt appreciations from the workers being part of geographic area close to them rather than being cross countries. So that is one thing. Secondly, we have a lot of activities going on. We put a lot of energy and focus on the company culture. So we are working hard with that.

No accidents, that, there should be no harassment or corruptions and all these things. And that’s also something that people appreciate to be part of a company who really cares about these things. So I would say that we have had really good mood, let’s say, with the work. Because actually right now, we have a new sourcing team in the building from from and and and and they are working well together. So, yeah, overall, a good integration.

Oliver Usitolo, Analyst, Actiasporana: Yes. Sounds great. And I have one last question from my end. The sales of Leaden amounted to SEK $320,000,000 for the quarter. I think this was surprisingly high.

Can you elaborate a bit on what has been driving the sales? And are there any seasonalities here that we should take into account?

Erik Stenfors, CEO, Hansa: I think that it’s a big part of this is, of course, the new factory in Uline with the new capacity. And that capacity has let’s say, the machine has just started, so that capacity will increase over the years. I wouldn’t say it’s unusually high. It should be like this and more. And I think also that the customers appreciate that I can say, the customers appreciate being part of Hamza.

So now they know that we have another strength, another size, meaning that just the size itself makes it possible for them to place larger orders. So don’t expect this to be a onetime for the first quarter rather the other way around.

Oliver Usitolo, Analyst, Actiasporana: Interesting. Thank you for solid answers. I guess I will jump back into the queue.

Erik Stenfors, CEO, Hansa: Thank you.

Conference Moderator: The next question comes from Forbes Goldman from Pareto Securities. Please go ahead.

Forbes Goldman, Analyst, Pareto Securities: Yes. Hi, thanks for taking my question. Just one follow-up on what you said there about Lia Dam. I guess my question is what sort of capacity you’re expecting for this company throughout this year when considering the recent investments in capacity that you did last year?

Erik Stenfors, CEO, Hansa: I can only answer global level, and I can say that we have capacity for SEK 6,500,000,000.0 without a problem. And that’s what we have been that’s the dimension of Hansa for this phase. So but, of course, it gives another opportunities. We’ve now, as I said, we have three real estate of the art treatment mechanics factories in Sweden, Finland and Estonia. Of course, they can help each other.

So there is a secondary effect of being larger. So the capacity itself is 6.5, but actually, if you rotate it a bit, it will be much, much higher.

Forbes Goldman, Analyst, Pareto Securities: All right. That’s great. And you mentioned the lead and operating margin was in line with Hansa. Anything you can say on the organic sales level? Is that also or that should maybe be a bit higher than for the old Hansa considering the investments you did in capacity last year?

Erik Stenfors, CEO, Hansa: I don’t know if we can go into details, but what I can say like this that I expect the growth of, let’s say, Leyden to be higher as a part of Hansa than before. All factories that we have bought, the customers appreciated it and there are new opportunities, then, of course, there is a general economy that sometimes is is taking down the volumes. But in general, we see more products. So I would expect that sales wise, we will see some synergies on this.

Forbes Goldman, Analyst, Pareto Securities: All right, understood. And then a final one on CapEx. Having completed the acquisition, we now see CapEx levels coming down a lot year over year. I think it’s SEK 30,000,000 here in Q1. Is this level representative for the rest of the year?

Or should we expect anything else going forward?

Lars Akerblom, CFO, Hansa: We have said for a long time that the CapEx will go down. And we have invested quite a lot in the new factories and machines to the new factories. And as Erik said, we have invested for a capacity of SEK 6,500,000,000.0. So of course, depending on the market and the growth. But if the market stays as it is right now and the volumes are in line with what we see today, you can continue to see a quite low investments Hansel.

Of course, there’s always need some replacement investment, but no major needs for expansion investments.

Forbes Goldman, Analyst, Pareto Securities: All right. That’s understood. Thank you, and well done on a nice quarter.

Conference Moderator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Erik Stenfors, CEO, Hansa: Okay. Thank you. Thank you so much for joining this call. Thank you for all the interesting questions. I hope that you will continue to follow us as we continue to build Hansa.

Thank you so much, and bye for now.

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