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

The quarter did not meet the expectations communicated for the year. The market continues to show positive signs, but despite a growing quotation backlog, conversion and project starts have been more difficult to predict than ever before. There is clear pentup demand that under normal circumstances would have generated more business activity and growth in the sector. However, property owners remain generally cautious and continue to limit investments to what is strictly necessary, primarily already leaking pipes and non-compliant OVK inspections. This will change, and business will again be driven by investments of a more preventive nature, but the frustration felt by both me and the organization over not meeting already conservatively set expectations is significant.

Unforeseen project postponements and delayed conversions particularly affected revenue and earnings in the energy business during the quarter, partly due to external constraints such as capacity limitations in electricity grids. No contracts have been lost, but projects expected to be executed during the quarter have been deferred into 2026.

At the same time, we have also faced some additional challenges. The flushing operations generally reported normal activity levels; however, in one of our larger units, employee turnover and changes in working methods temporarily reduced revenue per technician, with a relatively significant impact on the EBITA margin for the quarter of close to two percentage points. We have also over an extended period struggled with weak profitability in Finland and Denmark. The deviation from expected levels represents an EBITA margin impact of close to three percentage points, both for the quarter and for the year as a whole. These challenges are primarily related to working methods and production efficiency in parts of the operations, as well as costs linked to legacy issues. As the outcome for both the quarter and the year in these countries was below expectations, a goodwill adjustment has been made. That said, we are actively addressing the underlying issues in these operations and expect profitability to reach expected levels.

It is important to emphasize that the goodwill adjustment does not reflect any change in ambition regarding Finland and Denmark. Wall to Wall Group sees significant value in being a leading Nordic provider within pipe flushing, pipe relining, and selected energy services. These services address property owners’ critical maintenance needs over time, creating the foundation for longterm customer relationships and increased value per customer. Pipe flushing represents a core, geographically broad service that also drives demand for pipe relining through inspection and maintenance activities. The ambition is for pipe flushing and pipe relining to be of equal size in terms of revenue, with growth in pipe relining driven by improved production efficiency through shared working methods and materials. The energy business complements the offering through measures that enhance buildings’ energy performance, asset value, and financing opportunities. Economies of scale are created through shared branding, sales, production, and central resources. Taken together, this forms a business model with balanced risk between revenue from recurring but project-based activities and ongoing service and repeat business.

On a comparable basis, the gross margin was unchanged in the quarter at 34.0 percent, while slightly higher for the full year at 34.0 percent compared with 33.6 percent. We see opportunities to improve this by a few percentage points. It is important to emphasize that several units within the Group report significantly higher gross margins than the average, as well as operating margins at or above the long-term profitability targets. The focus is therefore on addressing the previously mentioned challenges in a limited number of larger units, where strengthening the gross margin toward the levels already achieved elsewhere in the Group would have a material impact on the Group’s overall results and profitability.

Indirect costs over the last twelve months amounted to SEK 192 million, representing a reduction of 10.7 percent compared with full-year 2024 and 8.7 percent lower in the quarter, adjusted for currency and on a comparable basis. The target of a cost base below SEK 180 million in run rate was achieved in December. The work to further develop the organization continues, with the objective that indirect costs shall not exceed 20 percent of net sales.