Good morning to everyone and welcome to ROCKWOOL's Conference Calls regarding the result for the First Quarter of 2025. My name is Kim Junge Andersen. I'm the CFO of ROCKWOOL A/S. Today I'm pleased to present CEO, Jes Munk Hansen. For the first part of this call, all participants will be in a listen-only mode. As a reminder, this conference call is being recorded. First, yes, we'll go through our presentation and give you an update on the results for the first quarter of 2025. Afterwards, we'll be ready to answer all your questions. Before I hand over the word to Jes, I must ask you to notice slide number two, which is a forward-looking statement. Please be aware that this presentation contains uncertainties. Now we can go to slide three, which is next slide, which is number three. Jes, I'll now hand over the word to you.

Thank you, Kim and good morning. We had a solid start in ROCKWOOL, a solid start to the year in a difficult environment. And when we look at the Q1 highlights, revenue for the first quarter reached EUR959 million. And that's an increase of 4% measured both in local and in reported figures compared to last year. 2% of this increase comes from the acquisitions we made in October last year, and the other 2% come from volume growth throughout the Group where pricing had a neutral impact in Q1. In short, we are quite pleased with our growth performance in this otherwise subdued construction market. EBIT landed at EUR154 million, generating an EBIT margin of 16%. Slide number four, looking at revenue in the Insulation segment, we actually had a 5% revenue growth which was primarily driven by our business in North America. And this was offset by a somewhat slowdown in East Europe, a particular slowdown in Russia. And here, just to repeat, this is where the acquisitions accounted for 2% of the revenue growth, meaning here in this segment. In the System segment, Rockpanel and our Lapinus business, Lapinus business is our OEM business grew, and our Rockfon business was stable. And then we saw a revenue decline in Grodan, our horticulture business, driven by a lower sales in the legal cannabis market in North America. Slide number five. And here we are looking at our regions. And when I look at our Western European business, particularly our biggest market, Germany, actually delivered some growth. But the markets in particular Germany seem to be waiting for what the German government is going to do about the new investment programs. That holds a lot of promise. We also had positive developments in countries like Switzerland, strong performance in countries like Spain and the UK. In another one of our main markets, France, we do experience price pressure, especially in our professional flat roof application segment. The United States continues to perform on a very high level with 15% growth. But like a few markets in Europe, you can notice a little bit of a wait and see mode where some of the customers, some of the markets players are looking for more clarity around the macroeconomics, particularly the interest rates and mortgages, before placing orders on the projects already in the pipeline. Look at slide six about profitability, very short here. EBITDA numbers are up in absolute terms from EUR260 million to EUR223 million. And our EBIT margin continue at a high level. As you see 16% EBIT margin mainly supported by stable pricing and stable input cost. And we, of course, are very pleased to see that. When I look at profitability by segments, we achieved a strong EBIT 15.6% in the Insulation segments which also somewhat benefited from a positive country mix. In the Systems segment, profitability declined this quarter compared to last year. And this was mainly driven by the revenue decrease and profitability decrease in Grodan. Unfortunately, we in the short-term do not expect the situation in Grodan to improve meaningful. Next to last our investment activities on slide eight. As you can see, our total acquisitions volumes was EUR93 million in Q1. That is EUR9 million more than last year's quarter. And our main investments are relating to capacity build ups, our new factory in Romania, electrification of our two large lines in the Netherlands, and then our large factory project in United States of America. Cash flow for the quarter -- free cash flow was minus EUR47 million. However, our net cash position landed at EUR231 million. That's, of course, very positive, a super solid cash position for the Group. So much for the quarter. A few comments to our outlook. As you have seen, we maintain the outlook for a year. We have now, of course, put away one quarter. But when we balance the satisfactory quarter one that we have had against the macroeconomic uncertainty we see, we maintain our full year outlook for a low single digit revenue growth on the top line. Again, also, earnings levels for Q1 was solid and we, of course, always -- as always, stay very alert and monitor our activities across our organization. We adjust the capacities and activities locally as needed, and based on this, we maintain our outlook of an EBIT margin around 16%. And last but not least, our investment projects are on track. We maintain the investment level for -- a level of EUR450 million for the full. These were the initial comments to our first quarter.

And now we go to the Q&A.

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Brijesh Siya of HSBC.

Hi. Good morning, gents. I have two questions. So, the first one is on the guidance. So, in Q1 you had obviously in line with what you expected, the Q1 guidance and in line with your expectations.

Brijesh, you're breaking up quite a lot. I don't know if you can do anything about your mic.

Okay. Is it clear now?

Yeah.

[Technical Difficulty] Is it clear now?

No, no. There's a second voice coming in over.

Okay. It's clear. Hopefully, this is clear now.

Much better.

Okay, sorry. So, the first one is on the full year guidance. So, obviously Q1, you landed bang in line with expectation at the EBITDA margin level. But when you are moving to the second half of the year, especially Q2, I think you can comment a little more. But given what you call seasonality, you should expect the margin to improve as the year progresses. And if you can give a little more flavor about how you think the margin progression going to happen and the Russia dilution which you talked, whether that's in line or anything incremental, you expect to come rest of the year. So that's my first one. I'll come to the second one later.

There is some seasonality in our business, although not a lot. And simply when we balance it out about the uncertainty that we see in the market, then we think it's a reasonable outlook to call it 16% on EBIT.

Okay. Fair enough. And the second one is the Systems division. I guess a couple of quarters that we are talking about. You're making some kind of plan in the business to improve the profitability of the Systems division. I guess Grodan is probably the underlying market weakness. But anything that's under your control, you're trying to do to help improve the performance of Systems.

Yes, we have put together some plans, catalog of improvements for the Systems division. As you know, it's five different businesses, so it's quite different things that needs to be done, ranging from supply chain and production to price positioning and product rationalizations. But yes, we're working on that. And then, yes, each of them also are affected by different market factors. Whereas -- just as an example, Rockfon business is very influenced by office renovations in Europe and the horticulture business by completely different parameters. So, it's a very diverse portfolio.

Okay. Fair enough. Okay. I'll step back to the queue. Thank you.

The next question is from Alexander Craeymeersch of Kepler Cheuvreux.

Hey, good morning. Alexander from Kepler Cheuvreux here. So, first off -- of course, congratulations to Jes Munk and Kim Junge and the ROCKWOOL team on a nice set of results. It's quite impressive, especially starting -- we're starting from a high base of Q1 last year. So, two questions from my side. It's nice to see that you continue to support the Ukrainian reconstruction initiative, but do you plan to continue this support for the remainder of the war? And the second question would be that I've noticed that several plants are now undergoing maintenance and there's actually several big plans. So, could you give us some granularity on how much capacity has been taken out of the market and, of course, maybe hint towards how much capacity or the organic initiatives that you're undergoing right now. How much planned additional capacity do you have in the next year or two? Thank you.

To the first one, I can confirm that at the AGM, the shareholders voted for donating another DKK100 million to the Grameen Foundation. Whether or not they do that again next year, that's up to the shareholders at the AGM. Your question to capacity is a little bit harder to answer, because we don't have insight into all our competitors' capacity. And it's not only about stone wool capacity, it's, of course, also about capacity in adjacencies or competing products such as glass wool. So, I don't have an exact number, so.

And on ROCKWOOL specifically maybe.

Yeah. Kim, here. As you know, Alexander, we are adding capacity in three different sites currently. One of them is in India where we will come online in mid next year. And then, we're adding also in Romania, the second factory line that will come online early '27. And then, the bigger factory in western part of US will also come online late '27, early '28. So that's the capacity that we are adding right now. And then, of course, we have some options that we are considering, but for the time being, that's what the plans are for us.

Okay. Thank you. Back to you.

The next question is from Zaim Beekawa of JPMorgan.

Morning. Thanks for taking my questions. The first one is just on France. Can you maybe comment on the magnitude of that pricing pressure you're seeing and what's really driving that? And then secondly, obviously, strong performance in North America. How much of that is to do with some pull forward in demand? And if we look into Q2, how do you see that the trends evolving in this market given you've got July price increases, so maybe some further pull forward for that against tougher comps given the strikes in 2023. Thank you.

Yeah. Let me start with the US. I'm just writing out it is not a pull forward we see in the US due to -- I assume you mean that there should be a pull forward because of announced price increases in the summer, but that's not what we see. It's not a pull forward that drives our demand. We have quite a healthy pipeline in the US. As you know, we have very low market shares, and we're gaining market shares in the US, have a very healthy pipeline. When I mentioned a little bit of softness in the US market is simply that we can see some of the big contractors delaying projects into the next few quarters. But again, I mean with the growth we have in market share and the pipeline strength, we foresee that we will stay at a growth level that we are delivering already today. France, it's mainly in the Professional segments. I would say that we see the price pressure and it's very nuanced. Let me try to explain. When I say Professional segments, it's mainly the flat roof business and sandwich panels business. So, this is really products that go into distribution centers, data centers and renovation of commercial industrial buildings. And it is very nuanced project from project. So more tactical movement around of winning the right projects, the ones that fit us the best. And overall, it's approximately a percentage point in price that we're encountering there. But that's an average. So, it's more. You have to really look at it by project by project.

Thank you.

The next question comes from Yassine Touahri of On Field Investment Research.

Yeah. Just a follow up question on your strong performance and market share gain in North America. I understand you're delivering 15% sales growth when Owens Corning in glass wool is only delivering 1% growth. What is driving this market share gain? Is it the fire safety property of stone wool? Is there something like -- would be great if you could walk us through what marketing strategy you think is successful and whether you think it's sustainable in the coming years this impressive advertisement.

I think it's paramount to understand that our market share in the US is very low. We are today around 2%, 3% of the insulation market. When I compare that to a market like Canada where we are above 10% market share, then there's no reason why -- you could say from a structural perspective why we shouldn't have a much higher market share in the US as buildings are built more or less the same in Canada and in the US. So, what we're driving here is really market share gain, as I said before and to your questions is really, we're really playing on a row of dimensions. It is new customers, it is new channels and it is, of course, also offering new products into to the US market. Most notable, of course, what we are known for are fire resistant insulation, which is something that is getting more and more recognized as an important factor. So, it is really you can channel customer and product play that we are executing here.

And second question is that when we look at the beginning of April and May, do you see the same kind of trends that you've seen in the first quarter around your portfolio?

Yeah. I don't…

…because of all those political uncertainties.

I don't have any numbers for Q2, of course, now, but there's no significant change in the dynamics. But we do see that some big construction companies also in the US, as I said, are holding back. When I talk to US customers and I've just been there recently, they report a very strong pipelines, many projects that they are quoting, but hesitation to execute the P&Os [ph]. But again, our numbers are very high compared to the rest of the market. And it is simply because we are expanding into new customers, new channels and gaining market share.

And last question, which is a bit more long-term, but if I look at the situation in the European stone wool industry, I think you will have -- you still have a few single plant owners of stone wool. And I think those companies will have to switch at some point from a cupola to an electric melter. And I guess, it's probably going to be difficult if you've got only one plant, you have to be out of the market for six months or a year. Do you think that these difficulties could drive some consolidation in the stone wool market where some of the small plants might decide to sell?

I think it's a fair statement to say that it's difficult to be in this industry if you have a very small footprint for a row of factors, scale, access to technology. And one of the ones you mentioned is, yes, the conversion from fossil melting technologies into electric. There's not a lot of factory capacity that are singles or you can say small footprints. But there has been an ongoing consolidation. Whether or not that will accelerate the next few years, I don't know yet. But I think your overall observation is correct.

And do we have any update on the plants in Poland that was being sold by the government?

No, there's no real development in that. What you're referring to is that -- the Polish government is trying to sell an asset in withhold in Poland, but there's no real news there.

Thank you very much.

The next question is from Claus Almer of Nordea.

Thank you. Also a few questions from my side. If you go back to the US, I think you mentioned a bit about growing into new parts of the various channels. Just be sure, so there's strong growth in Q1. Was that mainly driven by the share of wallet going up in the existing customers, or are you actually adding new customers and new regions of the US? That would be the first one.

It's a little bit of both. We have actually for a long period been on an allocation program where we simply don't have enough capacity to serve the market. So, we've been on an allocation program. So, our existing customers, also the ones I met with recently, still have an unfulfilled demand. But we continue developing not only the existing channels, but also new ones. I could mention one, they're called Affiliated Distributors, which is a very large buying group of the independent distributors with thousands of outlets. And they expressed great interest in our products. Not only the insulation, but also some of our other products. So, the US is truly a market for us for the long run that can be developed and should be developed much more. And that's, of course, also why we invest in significant capacity now in the State of Washington.

Yes. And so that might be the follow up question, as I guess last year you talked about being more or less sold out, at least in the high season. And Q2 last year was pretty strong as I recall. Can you really grow volumes in Q2? And then you have maybe some import from Canada and Europe, but then you have tariffs. So, how do you see the whole volume trend moving forward in this year for US?

You spotted that right. It is a very difficult comparison. We had a very high also for some shifting around of volumes last year that were released a very high level of volume moving last quarter. So that will be hard to beat. But, of course, we are constantly working with our portfolio and moving volumes into the areas that we think are most valuable. We work with our pricing and then, of course, also with existing footprint to optimize the output of the existing production lines. And there's always some things you can do there.

Sure. Okay. And then just my final question goes to this more intensified price competition in the subsegments where you're up against the form-based products. To what extent does this really impact group level -- group performance? Should we be concerned about this?

It does not as such influence our group performance. It is more tactical, ongoing discussion about price points vis a vis the main competing products, not just the foam-based products, but also, for instance, glass. And it varies a lot from market to market, what is appreciated by the customers, but also what price points we can command. So, it's more on a tactical level that we adjust, but on a total aggregated level, it doesn't have a significant impact.

That makes a lot of sense. So, thank you so much and congratulations with the solid start for the year.

The next question is from Marcus Cole of UBS.

Hi. Good morning. So, the first question is just on what pricing developments have been made in Q2 so far. And the second one is, what do you think a realistic outcome for cost-based inflation for the full year is factoring in your current energy hedges. Thanks.

Yeah. We started off with having -- some of our businesses implementing price increases from April 1st. So, we just sort of continue sort of -- the trend with the pricing drum read of 1% to 3% and in more and more markets. So -- and I think the next bigger one is the one in North America from July 1st, as we had talked about before, and that is going to be around 8%. And on the input cost, Marcus, I think we have said we are covering both electricity and gas. And for the remaining part of the year, we have covered about 70% in average. Foundry coke, which is still our biggest input cost. We can only take a quarter at a time. And I see a very small decline in Q2, like a percentage points decline compared to Q1. That's it.

Okay. Thank you very much.

The next question is from Pujarini Ghosh of Bernstein.

Hi. My question is on your local currency growth of 4% that you achieved in Q1. And of that we know 2% is from acquisition. So, could you give us the split between volume and price for the remaining 2%? I'm assuming it's largely volume because pricing -- you're increasing in April and July, as you just mentioned.

But it is of the organic growth. It is almost all volume. It is a small price effect from last year at this point in time.

Okay. Thank you.

The last question is a follow up from Brijesh Siya of HSBC.

Hi. Thank you again. Just on the fire safety and the regulations around Europe, have you seen any marked development in any of the countries, any movement in those regulations and what you hear from the European Commission in terms of kind of moving ahead overall European regulations?

Yeah. But let me start by saying that I sit in my best suit right now, because I'm jumping in on a plane in half an hour going to Brussels to meet with Dan Janssen and a row of parliament members to discuss this subject. So, it's something we spend quite a lot of our time on. And that gets a little bit longer answer. But we have the last six to 12 months really scaled up on our public affairs capabilities and had a lot of dialogues with the individual countries. Because the trick here is that one thing is what Brussels has dictated, you can say in the new directive, but where the real test is, of course, country-by-country implementation of these new directives. So, we work very much on a country-by-country level with our local teams. We monitor that, we influence that and we see some very meaningful programs running in countries like Romania, Poland and Germany also with their new packages has a couple. And France, by the way, also quite some ambitious goals for what they want to achieve the next few years. And as you know, also funding is starting being established. So, I think into the next six months we can also hear -- going forward, share in the next few meetings how we see these individual. Because that's really where you have to look at it. Individual markets developing and catering for this new European performance directive on buildings.

Great. And the second one on the sandwich panel acquisition which you've made towards end of last year, how has been the progress? And do you see any further opportunities in that to kind of expand the product portfolio across the broader group?

Just a small correction, it's not a sandwich panel business, it is a wall systems or also called ETICS system, which is an external insulation system that we made in the UK. It's been quite successful acquisitions. I mean, it's still early days for an acquisition, but they're performing very well. And one of the things we did do was convert this business fully into a stone wool based offering which resonates very well with our UK customer base. So that has been a really good addition to our portfolio.

Great. Thank you very much. Good luck.

Gentlemen, we do have a final question from [indiscernible].

Yeah. Good morning, everyone. Thanks for taking my question. Just to follow up on the organic growth guidance. You mentioned from pricing hike in Q2, high single digit pricing in July, North America, but you stick to your low single digit organic growth guidance for 2025. So, I would assume this then imply volumes going down for the remaining of the year, while you're actually ramping up assets. So, is there anything am I missing here, or is it you guys that I'll just be conservative given limited visibility on volumes going forward? Thank you.

I know you're not missing anything. We don't expect a large volume growth. There's a slowdown everywhere and a hesitation. And then, as was said and wrote, we do see a slowdown, particularly in East Europe and one of the markets is Russia and that does affect our totality numbers. So, I wouldn't call it conservative. I think that is very much the picture that we see now.

Okay. Thank you very much.

That was the final question. I'd like to hand it back over to you gentlemen for any closing remarks.

End of Q&A:

Thank you very much. Jes and I thank you for today's earning call, and we would like to thank you for all your questions, the audience, for listening to today's call. We appreciate your interest in ROCKWOOL. If you have further questions, you always feel free to reach out to me and you can find the details on our investor section in our corporate website. Have a fantastic day. Thank you.