NORMA Group SE

Thank you. A very warm welcome from my side to all of you listening to this call.

This is actually the first full quarterly report as the new CEO of NORMA together with the new CFO, Okan Celiker today. So as usual, after the presentation, you will have the opportunities to ask your questions, and we are very happy to answer them.

So we will share some of the results we have in our Q1 and also share some of the changes we have introduced since the start of NewNORMA, which we see some effective already in the Q1 results. So here, you see our usual disclaimer.

Please pay attention to this one. And as we have done in the full earnings call from 2025, we will differentiate between NewNORMA and Former NORMA.

The focus is on NewNORMA. In some topics, we still talk about the Former NORMA, and this is highlighted in the presentation.

So now we have a look at the Q1 milestones and achievements. So first of all, I have to say I'm very happy that we see a very good improvement in our profitability, which is 3.1 percentage point year-over-year improved.

So this is basically coming from a cost discipline in all cost areas, and a big thank you to all of our colleagues who made this happen with us. So we see also secondly, from the pricing efforts we have taken in positive effects which is also, of course, contributing to the profitability.

We see in our sales still some slight issues, which we are working on. Debt repayment, very positive based on the water divestment.

So we are net debt free currently, so a very good basis for NewNORMA. The transformation program is progressing exactly as we have planned and as we have communicated and announced to you.

So we are simplifying, streamlining our organization, so -- and the cost measures are well underway according to plan and committed. We will share with you in a moment some new business wins, just some examples.

We see also in M&E, strong contract. And I will share one example from our industrial applications business area, what we could win, which is just an example from several wins in this area.

So we confirm our guidance, our outlook for the financial year 2026, also based on the results we have seen in quarter 1. Of course, we are still careful with the year going ahead.

However, we are confident to confirm and to see the financial year guidance. So now let's move our attention to our business win.

This is an example from Mobility & New Energy. So we see a very nice sale here, what we could achieve actually with a very nice profitability for one of our customers, a major contract.

SOP is in 2029. Now you may say, well, this is only in 3 years.

However, this is important for us. This is the nature of our business.

This is quite in 2029 and some of the sales, we see an SOP in '27 and '28 already. However, the duration is for 7 years.

So it gives us a very nice and stable business. So the fluid lines we have sold to our customers are improving the emission regulation and are used in internal combustion engine and in hybrids.

So this is very nice and very important. I think we are all aware, hybrids are gaining traction and will stay in the market, so the forecast for quite many years.

So with this, we move on to our industrial applications area, where we have several industries in focus. Actually, we have 7 focus industries where we are working on.

So this is one achievement of our sales team, which we have really positioned in a different way now. So we have sold to a company building machines to basically clean bottles.

So our FGR, what we call it, so a very nice sale. We could actually win this because our service is really better than the competitor.

Our price was acceptable, and we have a fantastic relationship and could give technical advice, which convinced our customer that we are the right partner for this kind of business. So this is actually a product, the FGR, what you see here on the slide, what we have on hand.

So this proves again that we have the right products. In some cases, we will work on adaptions.

This is a nice case where we have the product on hand, and we can use this in this industry. And there are several other industries which are out to sell this kind of products.

So let's move on now to the NewNORMA to the industrial powerhouse. What I shared last time with you, this is basically a reminder and giving some more insights what we have achieved so far.

So the pillar #1 to the left is the restructuring. This is a transformation project.

We have simplified the organization in the first step. We are not done with this, but we have started and see first achievements.

Basically, we want to have SG&A, which are competitive, which fit to NewNORMA, and this is what we are working against. So the new organization will be really oriented against the performance.

We have done this in the sales organization already, and the whole organization will be also measured against business KPIs and the one NORMA business will be the focus. So the second pillar is the footprint.

We reported already that we could close our footprint measures in China already very successfully. In North America, in Mexico, we are on the way currently as we speak, and we are evaluating currently what is the right footprint setup for plants and for sites for the NORMA Group.

So we will, in the second half of this year, also present our targeted operational and also structural measures to come up with a new NORMA footprint. The third pillar is the sales push, as you have seen already, so we confirm already this measure that we are having a bigger order intake.

We could improve here, just shared these two examples. So we will increase also our plant utilization, which is very important to use the capacity we have to use the assets we have already and to have a strong customer focus.

And here, I want to give you some insights in what we do. Actually, in February, we have brought together our sales team here and had a start of the year with clearly identifying what is the new way of selling, what is our pricing strategy, what is our calculation methodology.

We need to be fast. We need to be competitive.

Of course, we need to be really profitable, and we have seen already the first results of this. Actually, I was 2 weeks ago at a customer, and they really confirm that they see different behavior and they have given us now additional business and really show and give us more RFQs, so we could gain more business.

The fourth pillar to the right, which is called growth. This is currently running on a low key.

It's more for the midterm, which could include an M&A transaction. So we are building the pipeline currently.

However, because we have a lot of homework in pillars 1, 2 and 3, which is the focus this year, and this is what we are focusing on. And with a little bit of resources, we are also working on the fourth pillar.

So from this one, we go on to give you a concrete example what we have delivered already in the transformation. So we have implemented the SBU structure or more the business-orientated structure as focused on the SBU, giving more responsibility there.

And we will change our reporting as of the year 2027 to a business unit segment reporting, which follows the steering we are currently implementing in NORMA Group. Secondly, the Shared Service Center, and you see a photo from Novi Sad in Serbia, what we are expanding.

We have about 80 people working there in different functions, from HR, from sales, from supply chain and various other functions where we are bundling our resources and sharing really also processes, making use of digitalization and run this shared service center where we see very positive results. SG&A improvements we have seen in the U.S.

and in Europe, headcount reduction with voluntary leavers program, which are running according to plan, a little bit better, and we foresee that we go ahead as planned and communicated to you already. So performance orientation, this is basically the sales push based on the agreements with our sales team.

So we see really that we can build on the very strong gross margin we have in NORMA and really fix our top line situation. So then to give you the key KPIs, our net sales in the Q1 2026 is EUR 208.6 million, slightly lower than 1 year ago.

The basic effects are exchange rate effects, also some organic or some volume effects. Lucky enough or it's a good message is that we are having an organic growth in industrial applications, which is, of course, our focus in the growth areas.

Adjusted EBIT with EUR 6.3 million, a significant improvement towards last year's Q1, and this translates into the adjusted EBIT margin of 3%. So this is really the big step forward we have made.

Of course, we are careful for the year ahead, and we are also very careful at managing the cost situation and of course, also the sales side. Net operating cash flow negative.

This is Former NORMA, very important to notice, and we will later on explain how this comes together here. And with this, I will hand over to Okan to give us some more insight in the key financials.

Exactly. Here on the next slide -- and also a warm welcome from my side, everyone.

Very happy to be here and very happy also to engage with you for our quarter 1 results. So let's deep dive a little bit more into the financial development of Q1.

As Birgit mentioned earlier, a quite solid quarter in the year 2026 in terms of sales, we reached EUR 208.6 million, which is a year-over-year development of minus 5.7%. As already mentioned by Birgit, main driver of this decline is attributable to FX headwinds we saw globally and primarily -- or let's say, globally of EUR 9.7 million, of which EUR 6.8 million were related to the U.S.

dollar development and EUR 1.9 million to the renminbi in the China region. In terms of volume and pricing impact, we managed an organic -- to reach an organic growth of minus 1.3%, which represents EUR 2.8 million.

That means we -- on a volume basis, the business declined. However, we could offset this by positive pricing impacts, which led then overall to the minus 1.3% year-on-year.

So let's move to the next slide, to deep dive a little bit more into the performance of our business units, starting with the Industry Applications business on the left-hand side. We ended the year with EUR 66.3 million in quarter 1.

This represents a decline of minus 0.6% year-on-year. And the main drivers here have been, again, the aforementioned currency impact, which basically impacted the development by minus 5.4% year-on-year.

And in terms of volume and pricing impact, important to emphasize here, also mentioned already by Birgit, we've been able to increase our performance in the Industry Applications business organically with 4.9% year-on-year, which was mainly driven by a stronger demand in the APAC region and a ramp-up of a major project in, specifically, the APAC region again. So let's look at the Mobility & New Energy business.

So here, we achieved EUR 142.3 million in the first quarter. This represents a decline of minus 7.9% year-on-year.

Main drivers here have been a softer automotive demand, which led to a decline on the volume and pricing side represented by minus 3.9%. And again, a currency impact also in the Mobility & New Energy business at minus 3.9% year-on-year.

On the next slide, we see the regional development. So again, starting on the left side with the Americas region.

Q1 2026, we achieved EUR 65 million sales in the Americas region. This represents a decline of minus 10.9% year-on-year, again, mainly driven by FX and also by the softer automotive demand, as already mentioned.

However, at the same time, we've been able to improve our EBIT margin by 1 percentage point year-on-year. And with that reached 4.6%, which is mainly due to positive pricing impacts in the Americas region in the first quarter as well as tight cost management in the region.

Moving over to the EMEA region. Here, we reached EUR 114.1 million in the first quarter compared to quarter 1 2025.

This represents a decline of minus 2.9% year-on-year. Also here, we achieved a very significant improvement of our EBIT margin, 4.6 percentage points compared to Q1 2025.

Main drivers here have been operational improvements and also a tight cost management. Next is the APAC region.

The first quarter sales are at EUR 29.5 million, which represents a decline again compared to Q1 2025 of minus 3.8% year-on-year. But also here, we've been able to hold the strong EBIT margin that we saw in the full year 2025 above 10%, which is a very solid performance, again, underlines the fact that we've been able to sustainably improve the operational situation in the region and at the same time, are very disciplined with our spending and cost structures.

Let's move to the next slide. So on the next slide, we see more details on our adjusted EBIT development.

So we already saw the EUR 6.3 million of adjusted EBIT, representing 3% EBIT margin in Q1 2026. From left to right, we see basically the main impacts or the drivers that supported this improvement, a significant improvement from an adjusted EBIT in Q1 2025 at almost 0, which was mainly impacted, let's say, on a volume and price basis by the weakening demand that has been mentioned.

And this basically led to a reduction of EUR 7 million, in terms of volume and pricing impact. At the same time, we can see that across the material, personnel costs and other OpEx elements, we've been able to offset this negative impact from the volume reduction.

Starting with the material cost, the impact year-on-year was at EUR 8.7 million. Main driver here have been a positive mix or favorable mix and at the same time, also an improved material cost ratio compared to Q1 2025.

In terms of personnel costs, we could achieve an improvement of roughly EUR 3 million, EUR 2.9 million, mainly a consequence of a lower headcount and improvement in the personnel cost area. Other OpEx, plus EUR 2.5 million.

This underlines, again, the aforementioned disciplined cost management across the organization and basically helped to support the improvement of our EBIT globally. D&A and FX largely stable compared to Q1 2025.

And just to round up what Birgit already described in terms of the transformation program. In the first quarter, our transformation program contributed another EUR 3.8 million to our results compared to Q1 2025.

So on the next slide, I will briefly walk you through the Q1 operational adjustments and outlook full year 2026. So in the first quarter, adjustments were limited and fully in line with our expectations on EBITDA level, we basically had an adjustment related to transformation severance and project costs of EUR 0.6 million.

On EBIT level, we had an adjustment in total of EUR 1.9 million, which includes an additional EUR 1.1 million amortization of PPA. And in terms of net profit, the adjustment is at a total of EUR 1.4 million, and this is post tax.

For the full year, this mean basically that our expectations are remaining unchanged. So we are still expecting a total of approximately EUR 24 million of adjustments on the EBITDA level and EUR 29 million adjustments on our EBIT level.

So here on the next slide, we will give you some more details, as mentioned earlier, on the Q1 2026 cash flow development. First of all, it's important to emphasize that on the left-hand side, our adjusted EBITDA in Q1 2026 is representing Former NORMA.

So EUR 20.7 million adjusted EBITDA includes the water management business. This is in line with the provisions of IFRS 5, that we applied, let's say, in context with the water management sale that took place in the beginning of this year.

Our net operating cash flow ultimately ended up at minus 19.7% (sic)[EUR 19.7 million]. And the main driver of this negative development was the trade working capital impact with minus EUR 33.6 million, of which a significant impact was again related to the sale of the water management business.

So here, particularly, we basically had to adjust for or could adjust for the supply chain financing program that have been reduced in the context of the sale as well as a seasonal inventory-related effect out of the water management business, which is also part of the EUR 32.7 million that you see here on the page. From our net operating cash flow, if we then also deduct the interest and the tax as well as the proceeds from the repayments of the derivatives, we get to our external free cash flow of minus EUR 29.2 million.

Again, important to emphasize this here, without the one-off impact out of the water management sale, our operating -- net operating cash flow would have been positive, which underlines that NewNORMA has a positive cash generation also in the quarter 1 2026. On the next slide, we will briefly recap on the balance sheet reset and initial shareholder returns.

So starting with the water management divestment, which has been concluded according to the time plan and schedule. So we could basically get the net proceeds as planned of approximately EUR 650 million post tax in full year 2026.

So with that, also according to our plan and previous announcement, we parked basically or earmarked a debt repayment of up to EUR 300 million in the first quarter, EUR 290 million were already repaid. And with that, we are basically very close at the communicated EUR 300 million.

The remaining debt is basically consisting of promissory notes with different maturities, also included in the EUR 98 million are basically leases around about EUR 20 million. In terms of shareholder return, we've communicated that we are committed to return to our shareholders a total of EUR 260 million, of which EUR 53 million have been returned already in early Q2 2026 via a public share buyback offer, as you know.

And with that, we can basically conclude that all in all, we are on track to reach the EUR 70 million to EUR 90 million net cash position by the end of 2026 and again, also confirm what we've shared with you within our communication on 31st March this year. So with that, Birgit, back to you.

Thanks, Okan, for giving us this insight into the key financials. So you heard it was an encouraging start for NORMA Group in the year 2026.

We have clearly defined actions on our transformation journey to build NewNORMA, to build an industrial powerhouse, and we are fully engaged to make this happen. The year 2026, we have a quite volatile external surrounding, but we are working fully on our homework to make this a successful complete year in 2026.

Given the situation, we confirm our guidance. And just to remind you, the net sales is in the range of -- we foresee in the range of 0% to 2% growth.

The adjusted EBIT margin, we see in the range of approximately 2% to 4% and the net operating cash flow, we see approximately between EUR 10 million and EUR 20 million. So we have promised and we still keep this that in the second half of this year, we will invite and give a strategy update with more insights on our target vision for the year 2028.

And with this, I say thanks for the attention, and we open up for questions. Thank you.

Thank you.

The first one is on your guidance. I mean, with your EBIT margin, you're already in line with your guidance range, while net sales are significantly down compared to the 0% to 2%.

What are you seeing going forward this year? Do you expect H2 to be stronger, for example, compared to H1 due to orders kicking in and restructuring measures?

Or what should we see here?

Yes. So thanks, Mrs.

Papaccio, for this question. So yes, we see the next quarters actually to be somewhat stronger.

We have some measures in our hands, which we are working on. to ensure that we can meet the guidance of 0% to 2%.

As you have seen in the Q1, we are quite lower. Of course, the exchange rate was not playing in our favor, but also without exchange rate.

And with the EBIT margin, as you said, we are in line. We are, of course, also working on this to keep this.

So for this reason, we keep the guidance and we confirm the guidance.

And if we think about your adjusted EBIT bridge for the next quarters, should we expect a similar tailwind from material and personnel costs as we saw in Q1?

Should I take that? Well, in terms of material costs, as of now, we expect a similar situation.

However, due to the, let's say, a very volatile situation in terms of geopolitical crisis and also economical impacts out of that, yes, it's hard to predict as of now, let's say, what will happen. But with everything we know as of today, we don't see any, let's say, immediate impact on our material costs.

In terms of personnel costs, I've mentioned the EUR 3.8 million for the full year. We've communicated EUR 15 million incremental sales out of the transformation program.

So we are here fully in line with our quarterly performance, if you will. So here, I would assume that this will stay more or less the same.

There will be a ramp-up, let's say, towards the end of the year. But also here, we confirm again the EUR 15 million that we have communicated earlier.

And my last question, I mean, we have already May. How is Q2 evolving so far?

Are you seeing any signs of improvements in the environment in a specific region or business segment?

I couldn't get the first part of the question.

Q2. Sorry...

How Q2 is evolving?

Okay. So well, currently, we don't see any specific improvements of the situation.

But at the same time, we also don't see, let's say, any negative impacts that will, let's say -- yes, that will have an impact, let's say, on our performance. But again, getting back to what I said earlier, it's a volatile environment we are in as of today so far.

And I think we proved that also with our Q1 performance, we are basically in line with the expectation. And as of now, as of today, this is basically what we can confirm.

That also means without any, let's say, a dramatic or significant changes, yes, we would basically expect or assume that the situation would more or less stay in line with our expectations.

I have also three, if I may, and I will take them one by one. So the first one on the net operating free cash flow.

I just try to get my head around the net operating free cash flow guidance. So according to the slide in the presentation, the cash out is almost solely attributable to the water management.

So adjusted for this, the net operating free cash flow was already around EUR 13 million in the first quarter. So even assuming the cash out related to restructuring measures, the EUR 10 million to EUR 20 million guidance looks not very ambitious.

So could you please walk me through your assumptions there?

Sure. Thank you for the question, Yasmin.

Also here, as of now, we are fully, let's say, in line with our expectation. We -- when we came up with our guidance on our financial KPIs, we try to incorporate, of course, the situation with everything that we can predict in terms of external factors.

As of today, we can basically just underline and confirm that we are very comfortable with our guidance for all the 3 elements, so net sales, EBIT and net operating cash flow. As we don't know, let's say, how the situation will develop globally and also for us as NORMA.

So the first quarter might look positive. And yes, as you mentioned, there is also, let's say, another impact out of the transformation program.

But as of today, with everything that we know, we feel comfortable with that guidance also in terms of net operating cash flow.

Okay. Then the second one is on the new pricing strategy.

Could you share more color on the measures by segment? So what is your target in terms of volume price?

Is it more geared towards industrial application? Or do you also focus to increase the prices on the M&E segment?

Well, it's actually for both segments relevant. Maybe starting with M&E.

M&E is, of course, a highly competitive market we are in. So -- and we have actually the right products, which our customers are confirming.

We have capacity. We have the assets installed.

And so we work very diligently through our numbers, what pricing we can offer to have the right market share and to work on our top line. As we have seen also in Q1, we are not where we want to be.

So this is on the M&E side. On the industrial applications, it's a little bit different.

And it's also different industry by industry. We have currently 7 focus industries, plus, of course, our distribution business.

And we do the pricing following each industry, what is the competition, where are we competitive and also following our cost basis in our plants, in our company. So based on this, we have worked out very individual pricing strategies that we are covering our costs, of course, that we are profitable and that we are competitive in the market.

And we see here actually the first results that we can achieve nice new business in different areas. However, pricing is very different if you talk about data centers, if you talk about white goods, if you talk about aviation.

So it's for each industry, it's a different pricing, what we are applying basically.

Perfect. And I know it's very early stage.

But after your discussions, the first discussions with customers in the Industrial Applications segment, how should we think about the midterm growth trajectory in this segment? What is possible also based on the order intake you have realized already?

That's my last question.

Yes. Thanks for this.

So we worked out really focused industries, seven focus industries. They have different growth potential, sort of in terms of numbers, of course, we will share more in our strategy update.

But to give you a first flavor, the addressable market we see in these focus markets for industrial application is significantly bigger than we have in M&E. So the next question would be, do we have the right products which fit for this application.

We can broadly say, yes, there may be normal adaptations required, and we have the right engineering capabilities in-house to make this happen in a right -- actually in a really good timing, which also our customers appreciate a lot that we have this. So there is really very nice growth potential in the industrial application industries.