President and CEO André Strömgren’s comments from Wall to Wall Group’s latest quarterly report

During the second quarter, net sales on a comparable basis were essentially unchanged compared with the previous year, breaking the downward revenue trend that has continued since 2023. This stabilization is in line with our expectations of a gradually strengthening market driven by property owners’ pent-up needs. The gross margin was also in line with the previous year on a comparable basis, while the adjusted EBITA margin decreased slightly to 4,6 percent (5,2) due to higher indirect costs. This is not in line with what we have communicated, and we are therefore further increasing the pace of getting the organization, working methods and systems in place. Our target of no more than 18 percent of net sales means, at the current revenue level, SEK 23 million lower indirect costs on an annualized basis.

Within Water & Sewer, pipe flushing continued to improve after the slow start to the year, and overall profitability has returned. Within pipe relining, several operations are delivering good profitability, with Denmark in particular returning to a double-digit operating margin in the second quarter. In Finland, older projects continue to weigh on results, which is why the transition is now being intensified during the third quarter, with the aim of creating a more focused and production-efficient operation. In Norway, pipe flushing operations were started during the quarter and will gradually be scaled up over the remainder of the year. Start-up costs of SEK 2,7 million are reported as items affecting comparability.

Energy did not meet our expectations, and the explanation lies both in the market and in our own execution. Within geoenergy, project starts have been delayed and investment decisions have taken longer than normal, while sales of larger installations within ventilation have been too low. Duct sealing and the service business within ventilation performed better, but not yet at the levels we are seeking. Sales initiatives are now primarily directed towards ventilation and duct sealing, with a focus on higher conversion, coordinated offerings, and cross-selling. We remain confident in the positive outlook for Energy. Volatile energy prices and increased ESG requirements from financiers and tenants make energy efficiency a priority for property owners, while the investments provide good returns.

On a comparable basis, the gross margin amounted to 32,0 percent (31,9) in the quarter and 32,0 percent (31,4) for the latest twelve-month period. Several operations are already delivering good profitability, while the improvement potential is concentrated in a limited number of larger operations. Improvements, particularly in Finland and Energy, could therefore have a significant impact on the Group’s profitability.