Earnings call transcript: Systemair AB sees slight revenue dip in Q1 2025

Systemair AB reported its financial results for the first quarter of 2025, highlighting a slight decline in revenue but an improvement in gross margin. Despite a year-over-year decrease in net sales, the company maintained strong organic growth and a robust financial position, earning a perfect Piotroski Score of 9 according to InvestingPro data. The stock experienced a decline of 6.92% following the earnings announcement, reflecting investor concerns over the revenue miss and market conditions. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value.

Key Takeaways

• Systemair’s net sales decreased by 0.6% year-over-year to €3,094 million.
• The gross margin improved to 36.4% from 36% the previous year.
• The company’s stock price fell by 6.92% following the earnings release.
• Systemair continues to expand globally with new acquisitions and production facilities.

Company Performance

Systemair’s performance in Q1 2025 was marked by a modest decline in net sales, but the company managed to achieve a gross margin improvement. Despite a challenging market environment, Systemair’s organic growth reached 5.7%, driven by strong performance in regions such as the Nordics and Middle East/Asia/Africa. The company continues to focus on expanding its global footprint and enhancing its product offerings, supported by a strong return on invested capital of 12% and consistent dividend growth over the past five years, as reported by InvestingPro.

Financial Highlights

• Revenue: €3,094 million (0.6% decline year-over-year)
• Gross margin: 36.4% (up from 36% the previous year)
• Adjusted operating profit: €288 million (9.3% profit margin)
• Profit after tax: €193 million
• Free cash flow: €108.4 million

Earnings vs. Forecast

Systemair’s earnings fell short of market expectations, with a reported revenue of €3,094 million, slightly below the forecasted €3.1 billion. The company’s earnings per share (EPS) forecast was €1.19, but the actual EPS was not provided in the summary. The revenue miss, though minor, contributed to the negative market reaction.

Market Reaction

Systemair’s stock price experienced a decline of 6.92% following the earnings announcement. The stock’s last closing value was €93.9, and it reached a low of €87.4 after the earnings call. This movement reflects investor concerns over the revenue shortfall and broader market conditions. The stock remains within its 52-week range, with a high of €103.6 and a low of €65.8.

Outlook & Guidance

Looking ahead, Systemair expects continued positive growth in the Nordics and Western Europe, with the German market anticipated to stabilize and potentially improve in 2026. The company plans capital expenditures of around €350 million over the next 12 months and is pursuing mergers and acquisitions in the industrial ventilation segment.

Executive Commentary

CEO Roland Kasper emphasized the company’s focus on core values and strategic expansion. "We are operating based on our core values of simplicity and reliability," he stated. Kasper also highlighted growth opportunities, saying, "We see industrial investments and infrastructure as promising areas for engagement."

Risks and Challenges

• Market uncertainty in North America could impact future growth.
• The weakening residential market segment poses challenges.
• Potential supply chain disruptions may affect production.
• Economic fluctuations in key regions could influence demand.

Q&A

During the earnings call, analysts raised questions about market stabilization in different regions and the company’s strategy in India. Executives addressed concerns about margin variations and clarified plans for ramping up production in the North American market.

Full transcript - Systemair AB (SYSR) Q1 2026:

Anders, CFO/Financial Executive, System Air: Thank you very much. Hello, everyone, and, very welcome to the presentation of our first quarter report for the year, 2526. We, Roland and myself, are today in for our annual general meeting, and we expect a fairly well visited event. We will now kick off with a rather short presentation of the q q one report and then open up for questions. Presentation is available on our investor relations website as usual.

And by that, I hand over to Roland to start off the presentation.

Roland Kasper, CEO, System Air: Thank you, Anders. And yes. Hello, everyone. Roland Kasper, the CEO. So nice to be able to present this report to you.

I’ll start directly with the our second slide with the agenda. So we will first have a short system and brief, then we’ll look at the first quarter summary, and then we’d look into the quarter one financials and some highlights on sustainability, projects, and products. And after that, of course, we will conclude this presentation and open up for q and a’s. And going directly into slide number three, system error in brief. We are operating based on our core values of simplicity and reliability.

Our business concept is to develop, manufacture, market energy efficient, high quality ventilation products. With our customers in focus, we are determined to meet their expectations on delivery reliability, availability, sustainability, and, of course, quality. As you all know, the company was established in Queen’s Caterpillar in 1974 by our chairman and founder, mister Jarrod Engstrom. In our last fiscal year, we achieved a total annual turnover of roundabout €1,100,000,000. System Air was listed on the Nasdaq Nordic Stock Exchange Market in October 2007.

And today, we proudly operate our own sales companies in 51 countries together with 26 factories in 19 countries. And without about 6,900 employees in System Air, we are present and sell to more than 135 countries around the world. And by that, going directly into slide number four, short strategic update of our first quarter. We recorded a further positive growth trend in all markets except Eastern Europe, and this despite the challenging market environments we see around us today. In the quarter, we also made a nice acquisition of the company, Nadi, in India, a leading producer of industrial fans.

I will come back to that later in this presentation. We also acquired a new manufacturing facility in The Kingdom Of Saudi Arabia to meet the capacity demands that we see in that region. Some other recent highlights in the quarter, at the recently concluded Eurovent Middle East meeting and, Systema public affairs representatives were invited to join and share its expertise in the round table discussions. As you know, Systemera as a group is proud to be a driving force in shaping the future of ventilation, actively contributing to more than 50 industry associations worldwide. Every quarter, we also proudly present some of the product launches that we bring to the markets.

Here in our first quarter, we successfully launched a major product, which is our new fire dampers and backdrop dampers from our system at Slovakia factory to the European markets. For us, the serviceability, ease of installation, and certified performances are top level in these fire safety products. And then going into the next slide, slide number five, and looking into the markets. So let’s have a look at the markets in the quarter. As you know, we have a global and diversified customer base, which provides us with a solid foundation for this profitable growth.

Looking at the different regions starting with the Nordic Region, which is which represents 14% of our total turnover in the quarter same as the same quarter last year. Western Europe has 45% share and is thereby compared to the same quarter last year, an increase from 45 to 46% share of our total turnover. Eastern Europe stable at 13% share, and North America shows a smaller decline from 13 to 12%. Other markets, which, as you know, incorporates North Africa, Turkey, Middle East, and Asia, is continuing its growth path and shows a stable 15% share of our total share in the quarter. By that, we continue with a closer look at the financial outcome in the quarter, and I hand over to Anders.

Anders, CFO/Financial Executive, System Air: Thank you, Roland. First of all, the net sales amounted to 3,094,000,000.000 compared to $3,111,000,000 last year. This corresponds to a decline in sales of minus 0.6%. The decline, however, relates mainly or only to currency conversion effects. Organic growth was positive with 5.7%.

We can conclude that the fourth quarter in a row, we are reporting organic growth in a relatively slow but recovering market. Slide number seven. To give a bit more details behind the net sales development, we saw organic growth in all regions except for Eastern Europe. In this quarter, there are no acquisitions affecting the growth figures, and the acquisition of Nadi in India will be consolidated starting from the next quarter, our Q2 report. And then finally, currency effects.

The strengthened Swedish krona resulted in negative effects on sales by minus 6.3%. Our main currency exposure is towards euro and Canadian and US dollars. Going into Slide number eight. We come down to the geographic breakdown, and I will focus on the organic growth rates for each region then. Starting off with The Nordics where we saw a growth and a positive development also in this quarter in Sweden, Finland, and Norway.

The Danish sales declined slightly quarter. All in all, a continued positive organic growth in this region of 6.4%. In Western Europe, we saw organic growth of 5.8% for the quarter. Within the region, we experienced a positive development in Netherlands, Italy and Spain, while the German market is still not on track along with countries such as UK and France. We are although happy to see yet another quarter with positive organic growth in Western Europe.

In Eastern Europe, we experienced a weaker quarter with organic growth of minus 0.7%. Sales increased in Czech Republic, Slovenia, and Estonia, while Azerbaijan, Lithuania, and Poland declined. Last year, we did some project deliveries in Azerbaijan, and sales in that region tend to be quite volatile from quarter to quarter due to the high share of project driven sales. Going then into North America, the organic growth rate was 1.4%. We saw good growth in US, while Canadian sales contracted.

There’s a stable demand in North America on our commercial and residential products, while school ventilation is currently on the lower level than one year ago. The ongoing tariff discussion is creating a more volatile market. As described earlier, we have a regional production strategy with factories both in US and in Canada. And if needed for economic reasons, there are possibilities to transfer production volumes from Canada into US to mitigate these effects. At the moment, we are only affected by minor effects from the tariffs.

In Middle East, Asia, Australia and Africa, then we had an organic growth of 14.3%. This increase was mainly driven by increased sales in India, Saudi Arabia and Turkey. In India, we had in last quarter some delivery constraints while moving the production in Hyderabad, but that is now all sold, and we are back to normal delivery capacity. All in all then, the total organic growth amounted to 5.7%. And then Slide nine.

Our gross margin for the quarter was again strong and amounted to 36.4% compared to 36% in previous year. We are really happy to see this continued positive development. This is due to the contribution from implemented restructurings, cost reductions, but also favorable product mix despite also the negative effects from currency, especially in our Swedish operations. Our adjusted operating profit amounted to $288,000,000 profit margin of 9.3% compared to 9.8 in last year q one. The adjustment for the quarter relates to capital loss in an associated company of 5,700,000.0 and costs related to the replacement and hiring of a new CEO of 14,600,000.0.

Selling and admin expenses in comparable units increased by 28,500,000.0. Going on to Slide number 10. Profit after tax amounted to $193,000,000 compared to $210,000,000 last year. Net financial items for the quarter were negative by $2,700,000 compared to 16.8 last year. Currency effects on bank balances and loans were positive and amounted to 12,400,000.0.

Interest expenses amounted to minus 12.4 compared to fifteen point six one year ago. Tax rate for the period amounted to 27.3%, which is more or less in line with last year with the cost for the tax of 72,400,000.0. And then Slide number 11. This would be my last slide. And a positive cash flow development for the quarter.

Despite an increase in the working capital of $91,600,000 we achieved a free cash flow of $108,400,000 compared to $91,000,000 same quarter last year. Within the working capital, the increase in inventory and trade receivables was less than last year. Net investments in the quarter amounted to $109,700,000 mainly relating to investments in our factories in Saudi Arabia, Sweden and Norway. Looking at the debt situation, we continue to decrease our loans, and it amounts to $830,000,000 currently compared to $1,056,000,000 one year ago. Our adjusted net debt to EBITDA amounts to the very low 0.52, and we have plenty of headroom for strategic m and a and further investments going forward.

And by that, I hand back to you, Roland.

Roland Kasper, CEO, System Air: Thank you, Anders. I’m changing to the next slide, which is did. And here coming back to that I already mentioned in the beginning of this presentation, that Systema acquired Nadia Air Technologies in India. In August, we completed the acquisition of Nadia Air Technics Ltd. This company with more than seventy years of experience in designing and manufacturing industrial fans with the the company headquartered in Chennai in India, where they are producing high performance centrifugal blowers and actual fans for multiple advanced applications and today have an annual revenue of around about €13,500,000 and 220 employees.

Their actual achieved profitability is slightly above system as target margin and that now they will not only strengthen our position in the growing Indian market, but will also bring valuable expertise with very strong potential for international expansion to the group. But let me go to next slide, slide number 13. Next slide, slide number 13, ladies and gentlemen. As Systemic carries the brand Managa and its units probably in our in our product portfolio, we, of course, also want to highlight what we can achieve with this. The Managa units are designed for highest possible energy efficiency and humidification.

That’s why we’re proud to be able to present this new project where we are part of a new way to build community swimming pool halls. The structure of this new building is designed with 30 to 40% less concrete, resulting in a significantly reduced c o two footprint. It also incorporates substantially more wood in the main construction. We’re in The Nordics, highlighting sustainable middle building materials, of course. With our units as base, it features a unique energy saving solution with Managas key partner in achieving this outstanding efficiency.

The project itself is located in Nakhka, Stockholm, and consists of a new swimming pool facility and surrounding installations. This building will cover a total area of 5,300 square meters, and the project schedule is running from 2025 to 2027. Very exciting, and we look forward to its inauguration. Switching to next slide, gentle ladies and gentlemen, slide number 14. Systemera is proudly supplying actual fans for demanding environments here in Stockholm.

Systemera has been entrusted to deliver ventilation solutions for the Stockholm Metro Blue Line extension, a major infrastructure project expanding the line from, sorry, from south to north and serve the route and the extension that would increase the capacity between the North And Southern Stockholm and enable new housing developments in the region. The order includes jet fans and actual fans for emergency and tunnel ventilation across seven new stations. This long term project underscores Systema’s strong position in providing tailored energy efficient and sustainable ventilation solutions for complex infrastructure investments such as metro, tunnels, railways, airports worldwide. This blue line extension is scheduled to open in 2030. Going to next slide, slide number 15.

This is the last project I would like to highlight in this presentation. It’s the new swimming pool project Kursko in Slovenia. System Air Slovenia secured this project for new public investment for the Kursko swimming pool facility. The delivery includes not only air hanging units along with water to water heat pumps, which are integrated into the hydraulic system for sanitary water, but in addition to the project features a Minaga AquaCon heat pump solution that recovers energy from wastewater generated by the pool filtration system. This order that for the presentation, this order is a showcase of advanced technical solutions and clearly shows that our sales engineers have the competence to combine our products to high efficient and sustainable solutions.

Next slide, slide number 16. As you know, ladies and gentlemen, we have already established our first made in Saudi production in Riyadh in Saudi Arabia. Though for us to continue to grow according to the market demands, Sytema will have to expand capacity, the offering and shorten the delivery times. The solution to this problem is our new acquired facility, which allows us to do so. Our new production facility in Saudi is our second in order.

We’ve taken next big step forward in the local expansion with the establishment of this new factor factory facility located in Mordon Industrial City, one of Saudi Arabia’s most prominent industrial hubs. With this new plant, which is covering 13,500 square meters, we’re considerably enlarging our production footprint. The new facility will increase our capacity to meet growing demands in Saudi for a wider range of system air manufactured products made in Saudi Arabia. The launch of this new factory is scheduled for October and will begin its full scale production by January 2026. And by that, ladies and gentlemen, I switch over to Slide 17 and open up for q and a.

Thank you so much.

Conference Moderator: The next question comes from Johans Sundmark from SEB. Please go ahead.

Johans Sundmark, Analyst, SEB: Yes. So good afternoon, and thank you, Roland and Anders. So if we start with the organic growth development, it’s just like Q4 was sort of a bump in the road negatively. Is it fair to sort of say that the momentum that is now could continue similarly positive and maybe accelerate even? Or do you rather see more uncertainty in the horizon now that you have sort of entered H2 in the market?

Anders, CFO/Financial Executive, System Air: I would say then if I start to respond a bit on that for The Nordics and Western Europe, I mean, the trend has been positive now for several quarters in a row. So I think we can expect that to continue like that. Maybe not, you know, on on the 100%, but still still positive note, so to say. Eastern Europe, more volatile, but we don’t see any any fundamental problem in the demand there. And then US, that was maybe a bit more negative last quarter, now more back to to the normal situation.

But, of course, then due to tariff discussions and everything else ongoing there that that we can expect some turbulence. But and in in the other regions, we we see it positive. What we had last quarter there with the closure of the factory and or or the move of the factory that was a onetime effect. Yes.

Johans Sundmark, Analyst, SEB: Okay. Okay. That’s clear. And then in terms of the German market, it seems to continue to decrease. Are you seeing any signs there of improvement?

Or what’s sort of your base case for the rest of the year in Germany?

Roland Kasper, CEO, System Air: Yes. That’s, of course, a really good question, which is hard to answer. For us in Germany, we, at least for our business today, we would rather see it flattening out. It’s not further decreasing, but it’s flat and stable. The question, of course, is, when will it turn to be a clear, a positive increasing business?

I cannot say that today. It’s a little bit too vague. If you look at the available normal outlooks by 2026, it’s it is at least forecasted to be on a positive again, but it’s too early to to say something actually here.

Johans Sundmark, Analyst, SEB: Okay. That’s clear. And then final question on the gross margin. So do you expect this level to be sort of where you’re at now? Or do you think that there’s more to be done to even get it up a bit further going forward?

Anders, CFO/Financial Executive, System Air: Yeah. I mean, this is a long term project for us to improve the gross margin. And I think what we are seeing right now was also part of the effects of the relocation of the production from Manaragua and Milan to Slovenia. But there are various reasons behind also them. And, of course, within our organic underlying growth in in The Nordics and the Western Europe.

I I think we we could be fairly optimistic here going forward. But and then you had also, we were a little bit we had the currency against us also. So there there could be more. Agree.

Johans Sundmark, Analyst, SEB: Okay. Fair enough. Thank you for that, gentlemen.

Anders, CFO/Financial Executive, System Air: Thank you, John. Thank you.

Conference Moderator: Next question comes from Karl Ragnarstam from Nordea. Please go ahead.

Karl Ragnarstam, Analyst, Nordea: Hi, it’s Karl here from Nordea. A couple of questions from my side as well. Coming back to the gross margin, 36.4. Could you help us split up the different parameters here? You mentioned FX, also touched upon mix in the report.

Because given the organic growth you are presenting, it feels like you don’t really get the sort of drop through it deserves sort of. So how should we think around the operating leverage here on the gross margin in the quarter?

Anders, CFO/Financial Executive, System Air: We haven’t specified that in the in the report as you see them. And, of course, I mean, if we talk about, for example, the restructuring done in when the are that is, you know, a project that is going step by step. And sometimes you follow the plan, and sometimes you fall a little bit behind. And I think, you know, there’s also learning core curve on the receiving entity here also, and that that is also happening as we go along. So I I don’t wanna give any specific figures there.

They all count in here, really. If we look at the currency effect there, maybe I can help you a little bit with the with the with the figure down that we have specified in the annual report. I think that it’s around 5% change in in the currency of Eurosea. It gives an effect of roughly 60,000,000, I believe. And I would say that half of that relates to the Swedish business, really, and which is having a headwind then, which is not really, you know, changing the sales, but it’s only changing the the profit margin since they have a a loss of turnover in euros, if that’s clear.

Yeah. But this and then I also I always

Karl Ragnarstam, Analyst, Nordea: know point

Anders, CFO/Financial Executive, System Air: you have this.

Karl Ragnarstam, Analyst, Nordea: Okay. Thank you. And yeah, and, please. Now if I

Anders, CFO/Financial Executive, System Air: just to to define the word here regarding, you know, we had a project driven business also, and and that affects the margin as well then. And that’s the the the mix problem here, really, to specify, you know, how much that is.

Karl Ragnarstam, Analyst, Nordea: So it was a negative mix in the quarter?

Anders, CFO/Financial Executive, System Air: In this case, we yeah. You know, it depends on where you have the projects as well. If you look only on Eastern Europe, it was more positive than since we had this deliveries to Azerbaijan last year. But in that specific case, maybe the margin was not that bad. So, you know, it it varies.

Sorry not to be able to give a more clear answer here, but it’s it’s a lot of

Karl Ragnarstam, Analyst, Nordea: Okay. Fair enough. That’s fair. And also touching upon the gross margin here. In India, it is, of course, great to see in the numbers that you’re recovering nicely with production ramp up.

When you’re doing a production ramp up in, let’s say, this case, India, what are the margin impacts on the gross margin level when you’re ramping the production that heavily? Does it lead to inefficiencies? Or is it a usual drop through, you’d say?

Roland Kasper, CEO, System Air: Yeah. In in in India, as it looks today, and those projects that we’re serving with with our strategy that we’re following in India, as you know, we’re only going for, let’s call them, the the the high quality projects around the top of of the positioning levels where normally the the prices are not very, how to say, not very low, a very moderate for for what we’re doing. Which means also that for us, the the ramp up as such is trained to learn and to get in more people to help us on the production lines. We will at the second and third step, we will also need to invest more on the machinery and and manufacturing side, but that’s not where we are today. So would say that a big part of the volume increase is also actually a drop through in India, where our profitability is is much higher than our peers in the local market, absolutely.

Karl Ragnarstam, Analyst, Nordea: Okay. Very helpful. And then final one, if I may, is on U. S. You mentioned the uncertainty still in North America, which is fair given the, I guess, current turmoil.

Could you help us a bit understand what you see, especially on the resi side that could be vulnerable from the price increases as well as consumer confidence fluctuation? So what do you see there? And secondly, on that is a bit on the Canadian market, if you’ve seen you saw that you’ve seen it, I think you said decreasing. Is it worsening? Or is it flattening out at a low level, you say?

Roland Kasper, CEO, System Air: All in all, I would say that the the impact for us to start there with with the the turmoil and and discussions on tariffs is so far very minor. And there in the beginning of this week, there were some new developments that we still need to to look into. But given overall, I would say, if you compare it to the last quarter and the same quarter the year before, we had actually in the last quarter, our last fiscal year, we had record high volumes of residential units to the market. It’s, of course, very hard and with with these comparables. So so that that’s one of the the the positions, but I will say that we have normal volumes just now.

The the Canadian market as such, we don’t see any considerable heavy downturns or something like that. It’s a stable and good and healthy market for us. The Canadian market, the time being more stable and and more maybe more interesting than per se the American market. American market though has gone from a little bit more volatile as Anders was into, little bit more stabilization, but of course, very how to say, they’re cautious in in their behavior and in their in their orders. Just YouTube, the discussions around everywhere.

Anders, CFO/Financial Executive, System Air: Yeah. On this school ventilation side, we have been delivering here for for some time Okay.

Karl Ragnarstam, Analyst, Nordea: Very clear. Thank you.

Anders, CFO/Financial Executive, System Air: On record levels. And, you know, so it’s coming down more to a normalized level, I would say, not to a low level. So that is what’s happening. Sorry for the delay here in the responses. It seems to be some lag.

Roland Kasper, CEO, System Air: On the technology. Yeah. Yeah.

Karl Ragnarstam, Analyst, Nordea: That’s fine. Thank you so much. It’s all for me. Thank you, Carl.

Conference Moderator: The next question comes from Anna Widstrom from DNB Carnegie. Please go ahead.

Anna Widstrom, Analyst, DNB Carnegie: Doran. Hi, Anders. Thank you for taking my questions as well.

Analyst: So firstly, I would like to go back to the German market that seems to remain in decline with maybe some signs of stabilization. Are there any like sub sectors that perform a bit better or a bit worse? Or is it very, like, general in that market?

Roland Kasper, CEO, System Air: Yeah. That’s a very good point, Anna. We we for us, as as you know, in Germany, we are manufacturing actual fans for industrial MRT applications. That is to just still a rather stable market with the the consistent demand. We see on the commercial ventilation side, it’s a little bit more volatile and still not really recovered.

But as said before in this call, all in all, we think that the German market and the customer behavior at least is stable. And also when and we follow our peers, we we we get the same signals back. It is stable, not declining, but we don’t we don’t really see the upturn yet, which according to common understanding and discussions is it has to come with incentives, political achievement, these kind of things. So we think that the market is healthy, but it needs to pick up.

Analyst: Okay. Great. Thanks. Very clear. And are there any similar trends, like looking on Europe as a whole?

Because both the Nordics and Western Europe has seen quite good momentum for several quarters now. Is that driven by like any specific subsectors or

Roland Kasper, CEO, System Air: Overall, if you look at at Europe, including West Europe, Northern, and and South, I would say, overall, we see a trend, of course, as we all know, residential is not that strong anymore. The commercial is stabilized, but not on on highest level, on the lower level than before. And and still industrial investments and infrastructure are today promising areas for engagement in in in our business. That’s the same picture all over Europe, I would say, today.

Analyst: Okay. Great. Thank you. And my last question is on m and a. So I think, you know, the acquisition sounds very interesting and like a good fit for us now.

Is there any of those kind of companies in that region specifically to find? Or is it sort of a unique find that you found?

Roland Kasper, CEO, System Air: I think all m and a cases need to be unique finds, Anna. That that first, but let me say like this. What we were looking for and and what we’re following, of course, is to strengthen our approach in in in application, the industrial part of of the ventilation business. So we we have now the with the acquisition of Nadi, we’re very happy about the surplus in in knowledge and manufacturing capability for that part of the world. Of course, we’re still interested and also find that in the other regions where we’re active.

We’re partly we’re doing it ourselves, but to to add on similar businesses in other parts of the world is, of course, still of interest. So it’s not the end. We’re looking.

Analyst: Great. Just a just a super short follow-up on that one. Is there when trying to like expand into the sort of industrial part of the application, is there a sort of a clear difference in the business dynamics like having more service or different kind of pricing, etcetera, or is it very similar to to your current structure?

Roland Kasper, CEO, System Air: It’s it’s a little bit it’s a good question.

Analyst: Of your current structure.

Roland Kasper, CEO, System Air: Yeah. It’s it’s a good question, Anna. It’s it’s a little bit different set of customers. It is that typically the the products are not so standardized, and it’s typically also that it it is longer lead times. But it’s a stable and then it’s a good margin business.

And to your question, it’s also recurring service. Absolutely.

Analyst: Okay. Thank you so much.

Roland Kasper, CEO, System Air: Thank you, Anna.

Analyst: Perfect. Thank you. That’s all for me.

Roland Kasper, CEO, System Air: Alright.

Anders, CFO/Financial Executive, System Air: If we don’t have

Conference Moderator: The next question comes from Adela Dashian from Jefferies. Please go ahead.

Anna Widstrom, Analyst, DNB Carnegie: Hello, gentlemen. Good afternoon.

Roland Kasper, CEO, System Air: Good afternoon. Afternoon.

Anna Widstrom, Analyst, DNB Carnegie: A couple of questions for me. Firstly, on the lost sales, I guess, you could say from the Indian factory relocation or maybe not lost sales, but the timing effects of that. Do you feel like you’re fully caught up on that now? Or will we continue to see some catch up in the coming quarters?

Roland Kasper, CEO, System Air: Adela, yes, we have caught up a little bit, but we are continuously we are increasing the capacity in that new established factory. As said, we were moving into a new factory for around 20,000 square meters manufacturing surface, moving out of a 5,000 square meter big one. And the move was the biggest impact of the loss in this volume that that we reported. Now we’ve started, and we are now, of course, increasing capacity to look for best possible outcome when it comes to delivery times for our customers, but at catching new orders and, of course, increasing our total volume in the near future.

Anna Widstrom, Analyst, DNB Carnegie: Got it. I appreciate that color. Could could you, alongside that, maybe also specify where you see your CapEx levels from from here on out then?

Anders, CFO/Financial Executive, System Air: Yeah. Think for the coming year, it’s somewhere around 350,000,000, something like that in the coming twelve months. Okay.

Anna Widstrom, Analyst, DNB Carnegie: That makes sense. And then maybe lastly on the you know, you mentioned here that you had some negative mix effect that impacted the profitability. It seems like you were focusing in more on the project mix rather than regional mix differences, or is there a combination of both?

Anders, CFO/Financial Executive, System Air: I would say there’s a combination of both if we if we do in specific regions where we have more project driven business, like Eastern Europe or other markets, then we’ll deliver to bigger projects that normally tends to be with a lower margin then. So it goes hand in hand, I would say.

Karl Ragnarstam, Analyst, Nordea: And

Anna Widstrom, Analyst, DNB Carnegie: do you have quite good visibility then for the near term?

Anders, CFO/Financial Executive, System Air: Sorry. Come again?

Anna Widstrom, Analyst, DNB Carnegie: Do you have quite good visibility then on what you’re supposed to deliver in the coming quarters that could suggest, you know, maybe a continuation of the dampened margin trajectory? Or you feel like it could be a quicker turnaround?

Anders, CFO/Financial Executive, System Air: Yeah. As I tried to to say a little bit on the response to Carl here earlier, I mean, also, some projects, some regions could also be with better margins. So it’s it’s would be incorrect to say that it’s constantly, you know, the bigger projects that push down the margin. So it could be different depending of the product and on the geography also. So sorry, but it’s not really that easy to give a straight answer on that.

But in this

Anna Widstrom, Analyst, DNB Carnegie: is That’s that’s like I guess what I’m yeah. I guess what I’m trying to get to is what the the average lead time is on the project to to have a better flavor of what your your what your visibility looks like.

Roland Kasper, CEO, System Air: That’s a little bit to to understand, that’s a little bit our our problem in this our problem. You know, project business is per is per definition can be our end units can also be actual fan fans. The actual fans would, in that case, be in infrastructure projects where the project execution is somewhere between six months to two years, and the annual business be between six weeks and six months. So it depends on the projects since it’s it’s very, hard to give a a common answer to that.

Anders, CFO/Financial Executive, System Air: And the competition in that region, I suppose, as well. Yeah.

Roland Kasper, CEO, System Air: So so it’s a little bit when you enter the project business, it really depends on the project demands, project by project. So it’s very hard to have one solution to all.

Anna Widstrom, Analyst, DNB Carnegie: Got it. Got it. Alright. Thank you so much.

Roland Kasper, CEO, System Air: Thank Thank you, Nila.

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

Anders, CFO/Financial Executive, System Air: Yeah. I think we have two written questions. One from Henrik here at Red Eye regarding Nadia and new business areas here. I think you have more or less already responses responded to that, Roland.

Roland Kasper, CEO, System Air: Yes. Correct.

Anders, CFO/Financial Executive, System Air: And the second one, which cost items in the p and l includes the nonrecurring cost? And then I I can respond to that. It is the bigger part here is the admin expenses then for changing CEO. And for the other parties, other operating expenses regarding this capital loss on this divestiture that we did. Hope that responds to that question.

And that’s all the only two questions we got here in the chat. So I think maybe, Roland, you want to conclude the meeting? Yes. Thank you, Anders. So ladies and gentlemen,

Roland Kasper, CEO, System Air: thank you very much for calling in. We presented our first quarter where we think that we really present a strong organic growth. And given the market situations out there, we’re fairly happy with that. Today, we will, after this one, now hold our annual general meeting with more than 130 people being here in Queens Katy Barre at our headquarters. And, of course, we’re looking forward to presenting our second quarter in December.

Anders, CFO/Financial Executive, System Air: Yeah. Thank you very much all for calling in.

Roland Kasper, CEO, System Air: And looking forward, and take care. Thank you very much.

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