Q1 2026 Rockwool AS Earnings Call

May 20, 2026

Speaker #1: 7, 6, 5, 4, 3,

Speaker #2: Hello and welcome to Rockwool A/S conference calls regarding the result for the first quarter of 2026. My name is Kim Jung Andersen. I'm the CFO of Rockwool A/S.

Kim Junge Andersen: Hello. Welcome to Rockwool A/S conference calls regarding the result for Q1 2026. My name is Kim Junge Andersen, I'm the CFO of Rockwool A/S/ADR. For the first part of this call, all participants will be in a listening-only mode. As a reminder, this conference call is being recorded through our presentation and give you an update of the results for Q1 2026. Afterwards, we will be ready to answer all your questions. Before I hand over to you, please note slide number 2, which is the forward-looking statement. Please be aware that this presentation contains uncertainties. Now we can go to the next slide and hand over the word to you.

Speaker #2: Jung Hansen: For the first part of this call, all participants will be in a listening-only mode. As a reminder, this conference call is being recorded.

Speaker #2: Through our presentation and give you an update of the results for the first quarter of 2026. Afterwards, we'll be ready to answer all your questions.

Speaker #2: Before I hand over to notice slide number two, which is the forward-looking statement. Please be aware that this presentation contains uncertainties. Now we can go to the next slide.

Speaker #2: The word to you.

Speaker #3: Thank you, Kim, also welcome from my side. And as Kim said, I will start on slide number three. The Rockwool Group delivered resilient performance in Q1 despite a challenging operating environment.

Kim Junge Andersen: Thank you, Kim. Also welcome from my side. As Kim said, I will start on slide number 3. The Rockwool Group delivered resilient performance in Q1 despite a challenging operating environment, with revenue growth of 2% in the United States and Southern Europe. The EBIT margin, as you can see, reached 13.2%, what we believe is a satisfactory result, though 2.0% level of last year. construction market, particularly in Canada and the United Kingdom, pressured the margin as did higher logistic costs and an increased cost base. Focus on the revenue in Q1, where overall the construction market continued to be affected by the geopolitical turbulence and macroeconomics. The first 2 months of the year were impacted by adverse weather across Europe and North America. However, volume demand recovered.

[Company Representative] (Rockwool): Thank you, Kim. Also welcome from my side. As Kim said, I will start on slide number 3. The Rockwool Group delivered resilient performance in Q1 despite a challenging operating environment, with revenue growth of 2% in the United States and Southern Europe. The EBIT margin, as you can see, reached 13.2%, what we believe is a satisfactory result, though 2.0% level of last year. construction market, particularly in Canada and the United Kingdom, pressured the margin as did higher logistic costs and an increased cost base. Focus on the revenue in Q1, where overall the construction market continued to be affected by the geopolitical turbulence and macroeconomics. The first 2 months of the year were impacted by adverse weather across Europe and North America. However, volume demand recovered.

Speaker #3: With revenue growth of 2% in States and Southern Europe, the EBIT margin, as you can see, reached 13.2%. What we believe is a satisfactory result, though 2.

Speaker #3: Level of last year. The construction market, particularly in Canada and the United Kingdom, pressured the margin, as did higher logistics costs and an increased cost base.

Speaker #3: Focus on the revenue in Q1. Where overall the construction market continued to be affected by the geopolitical turbulence and macroeconomic two months of the year, were impacted by adverse weather across Europe and North America.

Speaker #3: However, due to volume demand, we successfully restarted the Swiss factory in Flumrock, in Flums—the Flumrock factory—during the quarter, but the production quarter. Additionally, the conversion to electric melting and upgrades to one of our production lines in our Romont factory temporarily reduced output. This was driven by higher volumes and a minor increase in overall sales prices.

Kim Junge Andersen: We successfully restarted the Swiss factory in Flumroc, in Flums, the Flumroc factory, during the quarter, but the production stopped in the quarter. Additionally, the conversion to electric melting and upgrades to one of our production lines in our Roermond factory temporarily reduced was driven by higher volumes and a minor increase in overall sales prices. Page number 5, where you see the revenue by business segments. In local currency, with solid growth in the United States and key markets across Eastern and Southern Europe. That growth was partly offset by decline. In our system segment, revenue grew 4% in local currency. Rockfon Europe Asia delivered solid growth across key markets, while our Rockpanel business had a stable quarter. Page number 6, where we look at the regional.

[Company Representative] (Rockwool): We successfully restarted the Swiss factory in Flumroc, in Flums, the Flumroc factory, during the quarter, but the production stopped in the quarter. Additionally, the conversion to electric melting and upgrades to one of our production lines in our Roermond factory temporarily reduced was driven by higher volumes and a minor increase in overall sales prices. Page number 5, where you see the revenue by business segments. In local currency, with solid growth in the United States and key markets across Eastern and Southern Europe. That growth was partly offset by decline. In our system segment, revenue grew 4% in local currency. Rockfon Europe Asia delivered solid growth across key markets, while our Rockpanel business had a stable quarter. Page number 6, where we look at the regional.

Speaker #3: Page number five where you see the revenue by business segments. In local currency with solid growth in the United States, and key markets across Eastern and Southern Europe.

Speaker #3: That growth was partly offset by decline in our system segment revenue grew 4% in local currency. Rockfoam Europe Asia delivered solid growth across key markets.

Speaker #3: While our rock panel business had a stable quarter, page number six, where we look at the regional in the United States, we sustained the growth momentum, while Canadian revenue declined in a very challenging market characterized by weak residential.

Kim Junge Andersen: In the United States, we sustained the growth momentum while Canadian revenue declined in a very challenging market characterized by weak residential. In Western Europe, revenue declined 1%. A solid growth in Southern Europe was offset by market-driven declines in the UK due to the hard winter in January and February. Eastern Europe delivered strong 15% revenue growth driven by solid growth, increased slightly in the quarter. In Asia, revenue grew more than 7%, with decent growth in several of our markets. Page number 7, where we look at the profitability in the quarter. Although the EBIT margin was down 2.2 percentage points, we consider this a good result and a comparison to a record high profit level last year. Margins in the quarter were impacted by several factors. First, a very weak UK. Second, higher logistic costs and a higher cost base.

[Company Representative] (Rockwool): In the United States, we sustained the growth momentum while Canadian revenue declined in a very challenging market characterized by weak residential. In Western Europe, revenue declined 1%. A solid growth in Southern Europe was offset by market-driven declines in the UK due to the hard winter in January and February. Eastern Europe delivered strong 15% revenue growth driven by solid growth, increased slightly in the quarter. In Asia, revenue grew more than 7%, with decent growth in several of our markets. Page number 7, where we look at the profitability in the quarter. Although the EBIT margin was down 2.2 percentage points, we consider this a good result and a comparison to a record high profit level last year. Margins in the quarter were impacted by several factors. First, a very weak UK. Second, higher logistic costs and a higher cost base.

Speaker #3: In Western Europe, revenue declined 1%. Solid growth in Southern Europe was offset by market-driven declines in the UK, due to the hard winter in January and February.

Speaker #3: Eastern Europe delivered strong 15% revenue growth, driven by solid growth increased slightly in the quarter. In Asia, revenue grew more than 7%, with decent growth in several of our markets.

Speaker #3: Page number seven, where we look at the profitability in the quarter. Although the EBIT margin was down 2.2 percentage points, we consider this a good result.

Speaker #3: And the comparison to a record high profit level last year. Margins in the quarter were impacted by several factors. First, a very weak kingdom. Second, higher logistic costs and a higher cost base.

Speaker #3: Third, additional costs related to the production stop in the Netherlands related to the electric conversion and other upgrades of the production line there. Overall, these decline in margin.

Kim Junge Andersen: Third, additional costs related to the production stop in the Netherlands related to the electric conversion and other upgrades of the production line there. Overall, these decline in margin is equivalent to approximately 1 percentage point. While production is up and running in Switzerland, we do melting technology and these other upgrades in the Netherlands to affect the margin for the rest of the year. Last year, Q1, construction of DKK 6 million out of the total donation of $13 million, while no donation was recognized in 2026. Look at the profitability by segments. First, the insulation segment. Looking at profitability by segment, the EBIT margin in insulation points compared to last year. The result was impacted by several factors, including the ones I just mentioned. In the systems division segment, percentage points driven by inflation on input cost that were not sufficiently offset by sales price increases.

[Company Representative] (Rockwool): Third, additional costs related to the production stop in the Netherlands related to the electric conversion and other upgrades of the production line there. Overall, these decline in margin is equivalent to approximately 1 percentage point. While production is up and running in Switzerland, we do melting technology and these other upgrades in the Netherlands to affect the margin for the rest of the year. Last year, Q1, construction of DKK 6 million out of the total donation of $13 million, while no donation was recognized in 2026. Look at the profitability by segments. First, the insulation segment. Looking at profitability by segment, the EBIT margin in insulation points compared to last year. The result was impacted by several factors, including the ones I just mentioned. In the systems division segment, percentage points driven by inflation on input cost that were not sufficiently offset by sales price increases.

Speaker #3: That is equivalent to approximately 1 percentage point. While production is up and running in Switzerland, we do melting technology and these other upgrades in the Netherlands to affect the margin for the rest of the year.

Speaker #3: Last year, first quarter construction was $6 million out of the total donation of $13 million, while no donation was recognized in 2026. Look at the profitability by segments.

Speaker #3: First, the insulation segment. Looking at profitability by segment, the EBIT margin in insulation points compared to last year. The result was impacted by several factors, including the ones I just mentioned.

Speaker #3: In the systems division segment, so percentage points driven by inflation on input cost that were not sufficiently offset by sales price increases. Additional factors include increases in build-up cost in our new business area which is part of the system segment.

Kim Junge Andersen: Additional factors include increases in build-up cost in our new business area, which is part of the system segment. These new businesses mainly consist of our water management system and our prefab construction. Let's look at our investments in Q1. Our biggest investment in Q1 related to the construction of new factories in the United States and production line in the United States, and the production expansion in Romania, as well as a large logistic. The new factory in India is expected to come online during this summer. The sustainability investments are mainly related to electric conversion. On 5 May, we signed an agreement to acquire Ravago's stone wool factory in northeastern Hungary with a capacity of 40 kilotons. The acquisition will support our long-term priority to meet regional demand. The transaction is expected to close to customary closing condition and regulatory approvals.

[Company Representative] (Rockwool): Additional factors include increases in build-up cost in our new business area, which is part of the system segment. These new businesses mainly consist of our water management system and our prefab construction. Let's look at our investments in Q1. Our biggest investment in Q1 related to the construction of new factories in the United States and production line in the United States, and the production expansion in Romania, as well as a large logistic. The new factory in India is expected to come online during this summer. The sustainability investments are mainly related to electric conversion. On 5 May, we signed an agreement to acquire Ravago's stone wool factory in northeastern Hungary with a capacity of 40 kilotons. The acquisition will support our long-term priority to meet regional demand. The transaction is expected to close to customary closing condition and regulatory approvals.

Speaker #3: These new businesses mainly consist of our water management system and our prefab construction. Let's look at our investments in Q1. Our biggest investment in Q1 related to the construction of new factories in the United States and a production line in the United States.

Speaker #3: And the product expansion in, sorry, production expansion in Romania. As well as a large the new factory in India is expected to come online during this summer.

Speaker #3: The sustainability investments are mainly related to electric. On May 5th, we signed an agreement to acquire Ravago's Stonewood factory in northeastern Hungary, with a capacity of 40 kilotons.

Speaker #3: The acquisition will support our long-term priority to meet regional demand. The transaction is expected to close subject to customary closing conditions and regulatory approvals. The acquisition is not expected to materially impact our 2026 results.

Kim Junge Andersen: The acquisition is not expected to materially impact our 2026. We have our cash flow for the quarter. As expected, financial positions turned into net debt of DKK 3. Our leverage ratio at the end of Q1 at 0.4, which is well within our policy of maximum ratio of an unused credit facility of €400 million. Cash usage for working capital during the quarter was unchanged. The negative development in working capital ratio was mainly due to the planned stock build and a higher than usual seasonal increase in trade receipts towards the end of the quarter. Free cash flow decreased €68 million compared to the same quarter last year, mainly from operations. Last but not least, to our outlook on page 12, the revenue, as previously, revenue growth to land between 3% and 6% in local currencies.

[Company Representative] (Rockwool): The acquisition is not expected to materially impact our 2026. We have our cash flow for the quarter. As expected, financial positions turned into net debt of DKK 3. Our leverage ratio at the end of Q1 at 0.4, which is well within our policy of maximum ratio of an unused credit facility of €400 million. Cash usage for working capital during the quarter was unchanged. The negative development in working capital ratio was mainly due to the planned stock build and a higher than usual seasonal increase in trade receipts towards the end of the quarter. Free cash flow decreased €68 million compared to the same quarter last year, mainly from operations. Last but not least, to our outlook on page 12, the revenue, as previously, revenue growth to land between 3% and 6% in local currencies.

Speaker #3: And then we have our cash flow for the quarter. As expected, financial positions turned into net debt, with our leverage ratio at the end of Q1 at 0.4, which is well within our policy of a maximum ratio and an unused credit facility of €400 million.

Speaker #3: Cash usage for working capital during the quarter was unchanged. The negative development in the working capital ratio was mainly due to the planned stock build and a higher than usual seasonal increase in trade towards the end of the quarter.

Speaker #3: Free cash flow decreased €68 million compared to the same quarter last year, mainly from operations. And last but not least, to our outlook on page 12.

Speaker #3: The revenue, as previous, is expected to grow between 3 and 6 percent in local currencies. And the growth outlook is based on the increased activity we saw in March and thereafter.

Kim Junge Andersen: The growth outlook is based on the increased activity we saw in March and thereafter, 6% to 8%, which will mainly take effect from the mid-year. We continue to closely monitor, of course, the ongoing geopolitics around us. The EBIT Group margin for 2026 is still expected to be between 13% and 14%, expected to offset input costs and logistic inflation, whereby maintaining profit margins. Investments passed in expansions, as already mentioned, in India, Romania, United States, and France, along with the acquisition of land for further manufacturing sites. Overall, our total investments are expected to reach around EUR 700 million in 2026, excluding acquisitions. Concludes my run-through of the key data points, and I hand back over to Kim.

[Company Representative] (Rockwool): The growth outlook is based on the increased activity we saw in March and thereafter, 6% to 8%, which will mainly take effect from the mid-year. We continue to closely monitor, of course, the ongoing geopolitics around us. The EBIT Group margin for 2026 is still expected to be between 13% and 14%, expected to offset input costs and logistic inflation, whereby maintaining profit margins. Investments passed in expansions, as already mentioned, in India, Romania, United States, and France, along with the acquisition of land for further manufacturing sites. Overall, our total investments are expected to reach around EUR 700 million in 2026, excluding acquisitions. Concludes my run-through of the key data points, and I hand back over to Kim.

Speaker #3: Six to eight percent, which will mainly take effect from mid-year. We continue to closely monitor, of course, the ongoing geopolitical situation around us. EBIT—the EBIT Group margin for 2026—is still expected to be between 13 and 14 percent.

Speaker #3: Expected to offset input costs and logistic inflation, thereby maintaining profit margins. And investments passed in expansions, as already mentioned, in India, Romania, United States, and France.

Speaker #3: Along with the acquisition of land for further manufacturing sites. Overall, our total investments are expected to reach around 700 million euro in 2026, excluding includes my run-through of the key data points.

Speaker #3: And I hand back over to.

Speaker #4: Yes, thank you very much. I just have a small request for you. When even if we limit to two questions at a time, please allow us to answer will now begin the question and answer session.

Kim Junge Andersen: Yes, thank you very much. I just have a small request for you. Even if we feel limited to two questions at a time, please allow us to answer.

Operator: We will now begin the question and answer session, and we will start with two questions from each questionnaire. First question is from Bjarne Riis Martin Currie.

Speaker #4: And we will start with two questions from each questionnaire. To ask a question, use the keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #4: To withdraw your question at this time, we will pause momentarily to assemble our roster. The first question is from Ben Rada Martin, Goldman Sachs.

Speaker #5: Great, thanks very much. Yeah, this has been Kim, and thank you for the time today. My first question was on cost inflation. Thank you for providing some of the color in terms of the pricing change.

Bjarne Riis: Great. Thanks very much, Jes and Kim, for the time today. My first question was on cost inflation. Thank you for providing some of the color in terms of the pricing change, what you're seeing in terms of energy cost inflation and transport inflation as we go into H2. Half a billion euros and similar for delivery costs. That would just be my first question. Thank you.

Speaker #5: What you're seeing in terms of energy cost inflation and transport inflation as we go into the back half of the year: half a billion euros, and similar for delivery costs.

Speaker #5: So that would just be my first question. Thank you.

Speaker #4: Yes, let I've seen already an increase in cost inflation, including transportation. It is so that, as you know, our energy consumption consists of three by far the largest energy source.

Kim Junge Andersen: Yes. We've seen already an increase in cost inflation, including transportation. It is so that, as you know, our energy consumption consists of three. It's by far the largest energy source. Then, of course, we also have electricity and then gas that we also use in the manufacturing site. Price agreements a quarter at a time. That has not increased significantly between Q1 and Q2. There's not so much inflation. They are more, say, correlated to the general sort of energy inflation in the market. There we have seen increases. We have, as mentioned before, increased for half of the expected consumption for the H2 of the year. There is inflation coming in the H2, also in transportation, mainly in North America.

Speaker #4: And then, of course, we also have electricity, and then gas that we also use in the manufacturing site. Price agreements accord at the time, and that has not increased significantly between Q1 and Q2.

Speaker #4: So there’s not so much—they are more correlated to the general sort of energy inflation in the market. And there, we have seen increases.

Speaker #4: We have, as mentioned, for like half of the expected consumption for the second half of the year. And there is inflation coming in the second half also on transportation, mainly in North America.

Speaker #4: But we still believe that the six to eight percent price is needed to cover the inflationary impact in the second half.

Kim Junge Andersen: We still believe that the 6% to 8% price has to cover the inflationary impact in H2.

Speaker #5: Excellent. And maybe just a second one on capacity expansions outside of the ones that you're investing in now. I'm thinking Sweden, Italy—could you maybe share an update on some of the timelines for these projects?

Bjarne Riis: Excellent. Maybe just a second one on capacity expansions outside of the ones that you're investing in now. I'm thinking Sweden, Italy. Could you maybe share an update on some of the timelines for these projects? I'm interested just given, I guess, the uncertain economic backdrop in Europe and, I guess, some excess capacity in the market. Could some of these later facility openings be flexible in, I guess, their opening times, or how are you in Europe? Thanks.

Speaker #5: I'm interested, just given, I guess, the uncertain economic backdrop in Europe, and I guess some excess capacity in the market. Could some of these later facility openings be flexible in, I guess, their opening times?

Speaker #5: Or, how are you in Europe? Thanks.

Speaker #4: Yeah, again, give you a couple of data points. Into Europe. So, let's take those. Next year, we open up Romania—the factory where we are adding capacity.

[Company Representative] (Rockwool): Yeah. I can give you a couple of data points into Europe, so let's take those. Next year, we open up Romania factory, where we are adding capacity in Romania. Of course, you should also notice that the capacity we have bought in Hungary adds 40 million kiloton. That is why we bought it. Just a small little detail: Romania is better served from Hungary due to the mountain range going through. Come online next year, and then the acquisition will add another 40 kilotons there. The next one coming online in Europe will be in 2029. Is that expected to open up? Yeah, that was for a song. The other ones that we have announced but where we haven't set a date yet, but after 2030, it will be Italy, the one in Birmingham, and outside of Stockholm.

Speaker #4: In Romania, there, of course, you should also notice that capacity we have bought in Hungary adds 40 million kiloton. That is, and why we bought it.

Speaker #4: Just a small little detail. Romania could be better served from Hungary due to the mountain range going through. From online next year. And then the acquisition will add another 40 kilotons there.

Speaker #4: Then the next one coming online in Europe will be once in ‘29. Is that expected to open up? And yeah, that was for Song.

Speaker #4: And then the other ones that we have announced, but where we haven't set a date yet. But after 30, it will be Italy, the one in Birmingham, and outside of Stockholm.

Speaker #4: I think it is important when we talk capacity also to talk about productivity. We have focused on, of course, also optimizing existing footprint to productivity.

[Company Representative] (Rockwool): I think it is important when we talk capacity also to talk about productivity. We are very focused on, of course, also optimizing existing footprint into productivity, the usual approaches with lean and kaizen. There's quite a lot more than we can pull out of our existing footprint, not just in Europe but throughout the Group.

Speaker #4: The usual approaches with lean and Kaizen. And there's quite a lot more that we can pull out of our existing footprint—not just in Europe, but throughout the group.

Speaker #5: Excellent. And maybe just to follow up on that. It seems like maybe the France factory, your original plans there—is that a constraint on your side, or is some of the progress just taking a little bit longer to move on that plant?

Bjarne Riis: Excellent. Maybe just to follow up on that, it seems like maybe the France factory, your original plans there, is that a concept on your side, or some of the progress is taking a little bit longer to move on that plant?

Speaker #4: Delayed. I mean, you know the delay that originally was caused by getting building permits. That's what pushed it originally. But else, the project is fairly factored. Of course, what we're trying to hit here is this expected uptick in Europe in what we call the renovation wave.

[Company Representative] (Rockwool): Delayed. I mean, the delayed that originally was caused by getting building permits. That's what's pushed it originally. Else, the project is fairly factories. Of course, what we're trying to hit here is this expected uptick in Europe in what we call the Renovation Wave. As you know, in Europe, the regulations that now are falling in place, we are following very, very closely, country by country, and are modelling what volume uptick, of course, are modelling. It is very much driven our logic is driven by the expected uptick due to the EPBD regulations.

Speaker #4: As you know, in Europe, regulations that now are falling in place, we are following very, very closely. Country by country. And our modeling—what volume uptick, of course, our modeling—but it is very much driven, our logic is driven, by the expected uptick due to the EPBD regulations.

Speaker #5: Very clear.

Bjarne Riis: Very clear.

Speaker #6: Next question is from Anna Schumacher, BNP Paribas.

Operator: Next question is from Arnaud Lehmann, BNP Paribas.

Speaker #7: Great, thanks, everyone, and thanks for taking my question. Could you provide a bit more detail on your volume expectations for this year, and possibly by region and cadence?

Arnaud Lehmann: Great. Thanks, everyone. Thanks for taking my question. Could you provide a bit more detail on your volume expectations for this year, possibly by region and cadence? It's just that if I take the midpoint of your price for H2, that gives full-year price increases of about 4.5%, which is the new midpoint of your local currency guide. We'll assume.

Speaker #7: It's just that if I take some midpoints of your price and the H2, that gives full-year price increases of about 4.5 percent, which is the new midpoint of your local currency guide.

Speaker #7: So we'll just assume— And we had a little bit of trouble with the sound, apparently. Could you maybe just repeat? Sorry, sorry about the sound.

Kim Junge Andersen: Anna, we had a little bit of trouble with the sound, apparently. Could you maybe just repeat?

Arnaud Lehmann: Sorry, sorry about the sound. Could you just provide a bit more detail on your volume expectations for this year, possibly by region?

Speaker #7: So, could you just provide a bit more detail on your volume expectations for this year? Possibly by region.

Speaker #4: Yeah, thank you very much. I mean, up here at the beginning of the year, driven by some positive moves in some of our key markets.

Kim Junge Andersen: Yeah, thank you very much. I mean, up here at the beginning of the year, driven by some positive moves in some of our key markets. We can also see that in the Q2, growth, most likely that there are competing materials that are increasing prices faster and higher than we are. Our 1 July. In our forecasting assumptions, we have assumed that we will have a little bit of stagnation on volume in the H2. That is at least the assumption that we have put in the 3% to 6% growth for the full year, is that volume will start to be a bit stagnated compared to last year in

Speaker #4: And we can also see that in the second quarter, growth most likely that there are competing materials that are increasing prices faster and higher than we are.

Speaker #4: But our July 1st. So, in our forecasting assumptions, we have assumed that we will have a little bit of stagnation on volume in the second half.

Speaker #4: You know, but that is at least the assumption that we have put in in the 3% to 6% growth for the full year—that that volume will start to be a bit stagnated compared to last year, in mind is open.

Operator: Line is open.

Speaker #7: Hi, sorry—I was on mute. So, you call out quite solid growth and, from the comments, it sounds like it's mostly volume. What is driving this?

Arnaud Lehmann: Hi, sorry. I was on mute. You call out quite solid growth in from the comments, it sounds like it's mostly volume. What is driving this? Is it new build, renovation, new channels?

Speaker #7: Is it new build, renovation, or new channels?

Speaker #4: Hearing you acoustically, so we just repeated it to each other here. I understood your question was targeted towards Southern and Eastern Europe. The volume pickup we've seen, it is very important to understand we compete against glass, and we compete against foam, plastic products.

[Company Representative] (Rockwool): Hearing you acoustically, so we just repeated it to each other here. I understood your question was targeted towards southern and eastern Europe. The volume pickup we've seen, it is very important to understand. We compete against glass, and we compete against foam, plastic products. When we look at, we do believe that the foam, plastic products are harder hit than we are on price, input cost, so that their price points and availability are under strain. We are winning, I believe, market shares across, and that drives where there's a lot of poor products. In southern Europe, it's been a growth trajectory we've been on for quite a while. Buyer regulations in Europe, particularly also, again, in eastern Europe, Romania, Poland, are getting more and more attention. As a stone wool product, price point-wise against the flammable products, then there's a tendency to shift over to stone wool.

Speaker #4: And when we look at it, we do believe that the foam and plastic products are harder hit than we are on price input cost. It seems that their price points and availability are under strain.

Speaker #4: So, we are winning, I believe, market shares across, and that drives where there's a lot of poor products. And in Southern Europe, it's been a growth trajectory we've been on for quite a while.

Speaker #4: Fire regulations in Europe, particularly in Eastern Europe—Romania, Poland—are getting more and more attention. As a stone wool product, price point–wise against the flammable products, then there’s a tendency to shift over to stone wool.

Speaker #7: Great. Thank you.

Arnaud Lehmann: Great. Thank you.

Speaker #6: Next question is from Zahim Bakawa, JP Morgan.

Operator: Next question is from Zaim Bakhtiar, J.P. Morgan.

Speaker #8: Good morning. Yes, I can. Thanks for taking my question. The first one is just on pricing. I see you've announced six to eight percent, but given your hedging levels and also the comments that you've made on foundry coke being flat between Q1 and Q2, how much of that announcement do you actually need to be realized to protect your margins this year?

Zaim Bakhtiar: Morning, Jes and Kim. Thanks for taking my questions. The first one is just on pricing. As you've announced, 6% to 8%, given your hedging levels and also the comments that you've made on foundry coke being flat between Q1 and Q2, how much of that announcement do you actually need to be realized to protect your margins this year?

Speaker #4: First of all, it is important to understand that input costs, of course, vary across regions. It's a different profile on input costs in North America than it is in Europe.

[Company Representative] (Rockwool): First of all, it is important to understand that input cost, of course, vary across regions. It's a different profile on input cost in North America than it is in Europe. Just as an example, we are harder hit on transport cost in the US because we have longer, further transport patterns in the US, and the diesel price that has gone up in the US hits us there. Input cost depends a lot on the regional profile, so to say. Our pricing is, of course, also adjusted to local market condition and product groups and applications. It's not one-for-all that all products, all regions, all customers get exactly the same number. In totality, in order to balance out the inflation, it is going to be around the 7% that we need to harvest in order to balance out inflation.

Speaker #4: Just as an example, we are harder hit on transport cost in the US because we have longer, further transport patterns in the US, and the diesel price that has gone up in the US hits us there.

Speaker #4: So input cost depends a lot on the regional profile, so to say. And our pricing is, of course, also adjusted to local market conditions and product groups and applications.

Speaker #4: So it's not like one-for-all, that all products, all regions, all customers get exactly the same number. But in totality, in order to balance out the inflation, it is going to be around the seven percent that we need to harvest in order to balance out inflation.

Speaker #8: Okay, thank you. And then my next question is just on some of the one-offs. I think you called out specific factors: Canada, the UK, but also the Netherlands and Switzerland.

Zaim Bakhtiar: Okay. Thank you. My next question is just on some of the one-offs. I think you called out specific factors, Canada, UK, but also Netherlands, Switzerland. How much of this would you expect to be a sort of continue for the remainder of the year? On the topic of one-offs, I think you mentioned India starting online this summer. Will there be any one-off startup costs related to that, and is this already in guidance?

Speaker #8: So, how much of this would you expect to continue for the remainder of the year? And, on the topic of one-offs, I think you mentioned India starting online this summer.

Speaker #8: Will there be any one-off startup costs related to that? And is this already in guidance?

Speaker #4: Let me take your last sub-question first because it's the quickest to answer. In India, it is minimal what you will see affecting the numbers, so it is single digits in India.

[Company Representative] (Rockwool): To take your last sub-question first, because it's the quickest to answer, India, it is minimal what you will see affecting the numbers. It is single-digit in India. It is already in the guidance for that startup that is well planned. The bigger issues, you could say the bigger challenges, that also will take longer time to get resolved, is the market in Canada and the market in the UK. Both are down a lot. You can just read the public market reports about construction industry in Canada. Canada is hugely affected by the trade uncertainties with the US. Investments in commercial, industrial, and in residential have stalled. They're actually down quite significantly. That, I don't think, will resolve quickly. I do want to note that we believe we are winning share in this suppressed market.

Speaker #4: But it is already in the guidance for that startup that is well planned. The bigger issues, you could say, the bigger challenges that also will take longer time to get resolved, are the market in Canada and the market in the UK.

Speaker #4: Both are down a lot—you can just read the public market reports about the construction industry in Canada. Canada is hugely affected by the trade uncertainties with the US. Investments in commercial, industrial, and residential have stalled; they're actually down quite significantly.

Speaker #4: So, that—I don't think will resolve quickly. I do want to note that we believe we are winning share in this suppressed market, but because the overall market is down so significantly, even market share gains from our side do not result in growth in Canada.

[Company Representative] (Rockwool): Because the overall market is down so significant, even market share gains from our side does not result in growth in Canada. The UK is a different story but has been somewhat quick in decline the last 6 months now and is caused by a couple of things. Our read on it is that the macroeconomics in the UK is generating a lot of uncertainty and hence subdued the willingness to invest in construction. That is one thing. The other one is that the UK has instilled a new process for building permitting, which we believe in the long term will benefit us a great deal because it is very much focused around fire and fire regulations. They are struggling with getting the bureaucracy of this new permitting process to get up and running. The backlog of permitting is dramatic in the UK right now.

Speaker #4: The UK is a different story, but has been somewhat quick in decline the last six months now, and is caused by a couple of things.

Speaker #4: Our read on it is that the macroeconomics in the UK is generating a lot of uncertainty, and hence a subdued willingness to invest in construction.

Speaker #4: That is one thing. The other one is that the UK has instilled a new process for building permitting which we believe in the long term will benefit us a great deal because it is very much focused around fire and fire regulations.

Speaker #4: But they are struggling with getting the bureaucracy of this new permitting process to get up and running. So the backlog of permitting is dramatic in the UK right now.

Speaker #4: So we do as that will resolve we do see an improvement in the situation in the UK but else the UK market will also simply depend on the macros in that market.

[Company Representative] (Rockwool): As that resolves, we do see an improvement in the situation in the UK. Else, the UK market will also simply depend on the macros in that market.

Speaker #8: Thank you. And sorry, can I just follow up on the other issues with the Netherlands and Switzerland? So, would that be a drag again in Q2 and beyond?

Zaim Bakhtiar: Thank you. Sorry, can I just follow up on sort of the other issues with Netherlands and Switzerland? Would that be a drag again in Q2 and beyond?

Speaker #4: Yeah, it won't change much in those two markets, but they're small for us, so you won't really see them materially impacting the overall numbers.

[Company Representative] (Rockwool): Yeah, it won't change much in those two markets, but they're small for us, so you won't really see the material impacting the overall numbers.

Speaker #8: Perfect. Thanks for taking my questions.

Zaim Bakhtiar: Perfect. Thanks for taking my questions.

Speaker #6: Next question is from Close Armour, Nordea.

Operator: Next question is from Claus Almer, Nordea.

Speaker #5: Thank you. Also, a few questions from my side. As wished, I will do them one by one. So, the first question goes about these price hikes.

Claus Almer: Thank you. Also a few questions from my side. As wish, I will do them one by one. The first question goes about these price hikes. As I understand, there is a 3 to 5 months of delay between the energy cost inflation to your newer and higher prices. Is there a reason for this long delay, not least as this appears to be later than your main competitors? That would be the first one.

Speaker #5: As I understand, there is a three- to five-month delay between the energy cost inflation and your new and higher prices. Is there a reason for this long delay, not least as this appears to be later than your main competitors?

Speaker #5: That would be the first one.

Speaker #4: I bet, Klaus, it is quite different in the various markets. There are different traditions and different laws that govern, and also commercial contracts that govern how you can increase prices.

[Company Representative] (Rockwool): Klaus, it is quite different in the various markets. There are different traditions and different laws that govern and also commercial contracts that govern how you can increase prices. Some places, we can increase prices faster, and some, it simply takes a 3-months warning period. Yeah, I don't think that's unusual.

Speaker #4: So, some places we can increase prices faster, and some, it simply takes a three-month warning period. So yeah, I don't think that's unusual.

Speaker #5: I know it's not all, it's not all a fair question, but it's also more compared to your key peers. Who seems to be a little bit more aggressive or faster in implementing these price increases?

Claus Almer: It's not all fair question, but it's also more compared to your key peers who seem to be a little bit more aggressive or faster in implementing these price increases. Maybe they have a bigger problem than you have. That might be the reason.

Speaker #5: Maybe they have a bigger problem than you have. That might be the reason.

Speaker #4: There can be many reasons. That's not what we have registered in the market on our direct peers, but we have also not used force majeure or instruments like that.

[Company Representative] (Rockwool): There can be many reasons. That's not what we have registered in the market on our direct peers. We have also not used Force Majeure or instruments like that. You could be very right that some of the foam and plastic products are in a very different situation because their input costs have gone up dramatically more as they are based on petrochemical products almost completely.

Speaker #4: But you could be very right that some of the foam and plastic products are in a very different situation, because their input costs have gone up dramatically more, as they are based on petrochemical products almost completely.

Speaker #5: That makes sense. And then the second question: are there any of your more meaningful markets where you have decided not to raise prices?

Claus Almer: That makes sense. The second question, is there any of your more meaningful markets where you have decided not to raise prices?

Speaker #4: No, there's none of those.

[Company Representative] (Rockwool): No. None of those.

Speaker #5: Okay. That was all. Thank you so much.

Claus Almer: Okay. That was all from me. Thank you so much.

Speaker #6: Next question is from Andres Christian Petersman, Danske Bank.

Operator: Next question is from Anders Christian Preetzmann, Danske Bank.

Speaker #8: Thank you very much, and hi—I think Kim—and thank you for taking my question. My first one is on the recent acquisitions you've made in Hungary.

Anders Christian Preetzmann: Thank you very much. Hi, Jes and Kim. Thank you for taking my question. My first one is on the recent acquisitions you've made in Hungary. I was wondering if this signals now a preference for doing acquisitions in capacity-constrained markets and whether you could maybe give us some examples of other markets where you could do similar transactions to gain volumes.

Speaker #8: I was wondering if this signals now a preference for doing acquisitions in capacity-constrained markets, and whether you could maybe give us some examples of other markets where you could do similar transactions to gain volumes.

Speaker #4: Yeah, I think your observation that it is a somewhat consolidating market is correct. But we don't have a very strict, you can say, M&A search process.

[Company Representative] (Rockwool): Yeah, I think your observation of that it is a somewhat consolidating market is correct. We don't have a very strict, you can say, M&A search process. We are a little bit more opportunistic in our approach and will only do it where it makes sense, obviously, which means where we need the capacity but also where the acquisition target has a high technological level that fits into our quality levels. That simply limits the opportunities that arise.

Speaker #4: We are a little bit more opportunistic in our approach, and will only do it where it makes sense, obviously—which means where we need the capacity, but also where the acquisition target has a high technological level that fits into our quality levels.

Speaker #4: And that simply limits the opportunities that arise.

Speaker #8: Thank you very much. I thought so too. My second question is on the data center opportunity in the US. I mean, yes, you've mentioned in a recent interview that the US pipeline alone includes around 1,500 potential data center projects, which does underline a sizable medium-term opportunity for you guys. But I was wondering if you were able to quantify this a bit for us.

Anders Christian Preetzmann: Thank you very much. I thought so too. My second question is on the data center opportunity in the US. I mean, yes, you've mentioned in a recent interview that the US pipeline alone, that includes around 1,500 potential data center projects, which does underline a sizable medium-term opportunity for you guys. I was wondering if you were able to quantify this a bit for us, maybe what the average ticket size is for a data center project, and considering your situation in the US right now, would you even have available capacity to meet the increased demand? Thank you.

Speaker #8: Maybe what the average ticket size is for a data center project, and considering your situation in the US right now, would you even have available capacity to meet this increased demand?

Speaker #8: Thank you.

Speaker #4: I mean, first, I have to start and say that we have not been a big player in that arena the last few years. But the way data center is now constructed is turning in our favor.

[Company Representative] (Rockwool): I have to start and say that we have not been a big player in that arena the last few years. The way data centers now are constructed is turning in our favor. Let me explain briefly why. A few years ago, the main focus was building what you call data centers, mainly data repositories. It was cloud solutions. There was a lot of focus on bits and bytes and building that. That had a certain building envelope that was not demanding what we can offer with our products, not to the same degree. As these investments now move over to a slightly different type of data centers, namely AI data processing, the equipment in these facilities are becoming significantly more expensive. It's basically high-end processors, as you know. They require both more cooling and more stringent fire protection.

Speaker #4: And let me explain briefly why. A few years ago, the main focus was building what you call data centers—mainly data repositories. It was cloud solutions.

Speaker #4: So there was a lot of focus on bits and bytes and building that. And that had a certain building envelope that was not demanding what we can offer.

Speaker #4: With our products, not to the same degree. As these investments now move over to a slightly different type of data centers, namely AI data processing, the equipment in these facilities is becoming significantly more expensive.

Speaker #4: It's basically high-end processors, as you know. And they require both more cooling and more stringent fire protection. And that is moving into our strength.

[Company Representative] (Rockwool): That is moving into our strength, the cooling insulation from our Technical Insulation team and the fire protection. The numbers are big. Yes, it is around 1,500 projects. They are in very different stages. Some of them are early planning, and some of them are being implemented. It's a big pipeline. Of course, we have organized around ourselves, harvesting that increasingly. Just to give you an idea, for the 2, and they're, of course, all different sizes, but to just give you an idea, it's mainly the Big Four that we work with in this arena. We won 2 big projects. I don't want to mention the customer name. That alone generated around $1 million in fire protection and in cooling insulation. Please don't multiply that with 1,500.

Speaker #4: The cooling insulation from our technical insulation team and the fire protection. And the numbers are big yes it is around 1,500 projects they are in very different stages some of them are early early planning and some of them are being implemented.

Speaker #4: But it's a big pipeline, and of course we have organized ourselves around harvesting that increasingly. Just to give you an idea for the two—and there are, of course, all different sizes—but to just give you an idea, it is mainly the big four that we work with in this arena.

Speaker #4: But we won two big projects I don't want to mention the customer name. But that alone generated around a million US dollar in fire protection and in cooling insulation.

Speaker #4: But please don't multiply that by 1,500.

Speaker #8: Excellent. Thank you very much.

Anders Christian Preetzmann: Excellent. Thank you very much.

Speaker #6: Next question is from Alexander Kreimers. Kepler Schubert.

Operator: Next question is from Anders Koch, Kepler Cheuvreux.

Speaker #8: Hey, hello. Thank you for taking my questions. My first question would be on the networking capital. It was somewhat higher—I think it stands at 14.2% of 12-month sales.

Anders Koch: Hey, hello. Thank you for taking my questions. My first question would be on the networking capital. It was somewhat higher. I think it stands at 14.2% of 12-month sales. It is almost a percentage point higher than usual or at least than last year. In your report, you mentioned next to the seasonal developments that there were planned higher inventories. I am just wondering what you are planning for considering you mentioned that H2 sales volumes should stabilize.

Speaker #8: So, it's almost a percentage point higher than usual, or at least than last year. And in your report, you mentioned next to the seasonal developments that there was planned higher inventories.

Speaker #8: I'm just wondering what you are planning for considering you mentioned that H2 sales volumes should stabilize.

Speaker #4: Yeah. Thank you, Alexander. When we build inventory, it is not to keep that inventory for several quarters. It's typically to keep inventory for a few months, so the buildup of inventory at the end of quarter one was to cater for some maintenance shutdowns in some of the factories, amongst others in Norway.

[Company Representative] (Rockwool): Yeah. Thank you, Alexander. When we build inventory, it is not to keep that inventory for several quarters. It's simply to keep inventory for a few months. The buildup of inventory at the end of Q1 was to cater for some maintenance shutdowns in some of the factories, amongst others, in Norway. We also had a you can say all the growth that we had in Q1, in fact, came in March. There was higher sales in March compared to March last year. That simply built up accounts receivable. We're typically collecting within 20 days after the month. There was a buildup in accounts receivable, and then there was a higher inventory due to this inventory buildup to be used in Q2.

Speaker #4: We also had a you can say the all the growth that we had in Q1 in fact came in March. So there was a higher sales in March.

Speaker #4: Compared to March last year and that simply build up accounts receivable. We typically collecting within 20 days after the month. So there was a build up in accounts receivable and then there was a higher inventory due to this inventory build up to be used in the second quarter.

Speaker #8: Okay. Thank you for that. Now the second question I would have would be on the margin. A colleague of mine already alluded to it but the basically with the 7% price increases that are taking effect as of Q2 is it I guess it's reasonable in relative terms that there's going to be some dilution effect on the margin.

Anders Koch: Okay. Thank you for that. The second question I would have would be on the margin. A colleague of mine already alluded to it. Basically, with the 7% price increases that are taking effect as of Q2, I guess it's reasonable in relative terms that there's going to be some dilution effect on the margin. I'm wondering if the prices remain where they are and if volumes don't change dramatically, that basically would end up at a 13% to 14% guidance more towards the bottom end of that range and less towards the upper end. Is that correct?

Speaker #8: So, I'm wondering if the prices remain where they are, and if volumes don't change dramatically, that basically we would end up at a 13 to 14% guidance—more towards the bottom end of that range and less towards the upper end.

Speaker #8: Is that correct?

Speaker #4: We are guiding in the range of 13 to 14%, but I think it's fair to say that the volume growth we are seeing here in quarter one, and also in quarter two, are mainly within our flat roof segments.

[Company Representative] (Rockwool): We are guiding in the range of 13% to 14%. I think it's fair to say that what we see, the volume growth we are seeing here in Q1 and also in Q2 are mainly within our flat roof segments. That's where we have a selling price that is slightly lower than the average. That's one element of it. I would say to quantify whether it's going to be close to the bottom of the range or in the upper end of the range, I think I'll just wait until I see the Q2 results, then I can guide you slightly better on this one here because it is mainly in Q2 we're going to see the bulk impact before our prices started to pick up.

Speaker #4: And that's where we have an average selling price that is slightly lower than yeah selling price that is slightly lower than the average. So that's one element of it.

Speaker #4: I would say to quantify it, whether it's going to be closer to the bottom of the range or to the upper end of the range, I think I'll just wait until I see the Q2 results, and then I can guide you slightly better on this one here.

Speaker #4: Because it is mainly in Q2, we're going to see the bulk impact before our prices started to pick up.

Speaker #8: Okay. Thank you.

Anders Koch: Okay. Thank you.

Speaker #6: Next question is from Yasin Towari, on field investment research.

Operator: Next question is from Yassine Touahri on Field Investment Research.

Speaker #8: Yeah so my first question thank you very much first for answering. My first question would be on your CapEx program. So I understand that this year you're probably targeting nearly half a billion euro of investment in capacity and sustainability.

Yassine Touahri: Yeah. My first question, thank you very much for answering. My first question would be on your CapEx program. I understand that this year, you're probably targeting nearly half a billion EUR of investment in capacity and sustainability. It's probably the largest investment that you're doing in the group history. I understand that this is going to continue for the foreseeable future, like this half a billion EUR investment there. What kind of economics do you target on those investments? What kind of return? If you can explain a little bit how does it work, the timing, and the potential impact on earnings in the coming years?

Speaker #8: It's probably the largest investment that you're doing in the group's history. And I understand that this is going to continue for the foreseeable future, like this €500 million investment per year.

Speaker #8: What kind of economics do you target on those investments? What kind of return, and if you can explain a little bit how does it work—the timing and the potential impact on earnings in the coming years?

Speaker #4: I mean for sure Yasin it is clear that to build these four capacity expenses at the same time in parallel is a step up.

[Company Representative] (Rockwool): I mean, for sure, Yasin, it is clear that to build these 4 capacity expansions at the same time in parallel is a step up. Having said that, they are, of course, being built in different geographies. We see growth in all 3 geographies: Asia, Europe, and North America, so that we need to build capacity. I would have wished that we could have built the factory in France 2 or 3 years earlier. That would have sort of smoothed out a bit of CapEx impact because we haven't opened a new factory since 2021. It would have been fantastic to have that factory in France a bit earlier. Having said that, we need the capacity. They are now coming sort of in subsequent years, going live into the market. Whenever you open a factory, you typically have the first 12 months of running-in cost.

Speaker #4: Having said that, there are, of course, facilities being built in different geographies, and we see growth in all three geographies: Asia, Europe, and North America.

Speaker #4: So, that means we need to build capacity. I would have wished that we could have built the factory in France two or three years earlier.

Speaker #4: That would have sort of smoothed out a bit of CapEx impact, because we haven't opened a new factory since 2021. So it would have been fantastic to have that factory in France a bit earlier.

Speaker #4: Having said that, we need the capacity, and they are now coming sort of in subsequent years, being—going live into the market. Whenever you open a factory, you typically have the first 12 months of running-in cost, and that is typically for the larger factories.

[Company Representative] (Rockwool): That is typically for the larger factories. Not the one in India, but for the 3 other ones, are typically in the range of EUR 10 to 15 million as one-off cost in the first 12 months of operating. After that, it sort of becomes normal operations. These factories, of course, are all with the latest technologies. That means they will, hopefully, when they are fully utilized, will be the most profitable and most effective factories we'll have in the Group. How to put a number to that? We have not really done that exercise. As I said, it is, of course, part of the plan that they will contribute to a very good return once they're up and running. We are in an industry where it takes 3 to 5 years to build these factories. That means we have to be patient.

Speaker #4: Not the one in India, but for the three other ones, are typically in a range of €10 to €15 million as a one-off cost in the first 12 months of operating.

Speaker #4: After that, it sort of becomes normal operations. And these factories, of course, are all with the latest technologies. That means they will, hopefully, when they are fully utilized, be the most profitable and most effective factories we'll have in the group.

Speaker #4: How to put a number to that—we have not really done that exercise. But as I said, it is of course part of the plan that they will contribute to a very good return once they're up and running.

Speaker #4: But we are in an industry where it takes three to five years to build these factories. And that means we have to be patient.

Speaker #4: Shareholders have to be a bit patient, because we do need that capacity to continue to grow the company and also drive profitable growth.

[Company Representative] (Rockwool): Shareholders have to be a bit patient because we do need that capacity to continue to grow the company and also profitable growth.

Speaker #8: What I'm trying to understand is that when we look at for example the historically when you're investing when you were investing 100 million euro you were able to generate approximately 100 million of sales.

Yassine Touahri: Well, I'm trying to understand. When we look at, for example, historically, when you were investing EUR 100 million, you were able to generate approximately EUR 100 million of sales or a bit more or a bit less, depending on the investment, with a mid-teens margin. Is it what we should expect?

Speaker #8: Or a bit more, or a bit less, depending on the investment. With mid-teens margin. Is it what we should expect? $100 million if you're investing $500 million, we could expect.

[Company Representative] (Rockwool): No.

Yassine Touahri: If you're investing DKK 500 million, we could expect in terms of additional sales over time with a return of a with a margin a bit above the goal?

Speaker #4: In terms of additional sales over time, with a return and with a margin a bit above the group? There is no one rule of thumb.

[Company Representative] (Rockwool): There is no one rule or some. We are building in North America. It is the most expensive place in the world to build. It is also the place where we have the highest both sales and contribution profit per produced tons. It all sort of links in. France also has a relatively high CapEx number. Again, it is also price-wise and contribution profit-wise in Europe, one of the most attractive places. Romania is a place where you can say the sales prices are lower, but the CapEx is also lower. It all sort of ties in. As I said, all of the factories will be more productive than any of existing ones. I do not have sort of a one number to give you that.

Speaker #4: We are building in North America. It's the most expensive place in the world to build, but it's also the place where we have the highest both sales and contribution profit per produced ton.

Speaker #4: So it all sort of links in. France also has a relatively high CapEx number, but again, it is also, price-wise and contribution profit-wise, in Europe.

Speaker #4: One of the most attractive places. Romania is a place where you can say the sales prices are lower, but the CapEx is also lower.

Speaker #4: So it all sort of ties in. And as I said, all of the factories will be more productive than any of the existing ones. But I don't have, sort of, one number to give you.

Speaker #4: That if we spent.

Speaker #8: But when we look at sorry.

Yassine Touahri: Sorry.

Speaker #4: Spent you know 100 million euro.

[Company Representative] (Rockwool): Spent EUR 100 million.

Speaker #8: The number is, yeah. But I understand that when we look at this number, which is quite high with €500 million of additional CapEx on top of maintenance, and I think a lot of investors try to understand what returns you target on those investments.

Yassine Touahri: Which is yeah. I understand that when we look at this number, which is quite high, with DKK 500 million of addition of CapEx on top of maintenance, I think a lot of investors try to understand what returns do you target on those investments? Do you have a minimum number that you're targeting?

Speaker #8: Do you have a minimum number that you're targeting?

Speaker #4: They are all of them are living up to sort of our internal sort of thresholds which I have we have now we have set before.

[Company Representative] (Rockwool): They all of them are living up to sort of our internal sort of thresholds, which we have said before, that we have sort of a threshold around 15% return on invested capital. They are sort of all of them living up to that. As I said, it's very different market to market.

Speaker #4: That we have sort of a threshold around 15% return on invested capital, and that they are, sort of, all of them living up to that.

Speaker #4: But as I said, it's very different market to market.

Speaker #8: And the 15% is before tax?

Yassine Touahri: The 15% is before tax?

Speaker #4: Yeah. That's before tax.

[Company Representative] (Rockwool): Yeah. That's before tax.

Speaker #8: Okay. Thank you.

Yassine Touahri: Okay. Thank you.

Speaker #6: Next question is from Alison Sam, Bank of America.

Operator: Next question is from Alison Samborn, Bank of America.

Speaker #5: Hi, questions. The first question—I just want to confirm, Kim, you mentioned this Swiss bond and Netherlands electrical conversion as one percentage point on ABA margin in Q1.

Alison Samborn: Hi. Good morning. Thank you for taking my questions. The first question, I just want to confirm, Kim, you mentioned this Swiss plant and Netherlands electric conversion as one percentage point on EBIT margin in Q1. Is that correct? Should we expect some margin recovery in Q2 if the operation normalizes?

Speaker #5: Is that correct? And should we expect some margin recovery in Q2 if operations.

Speaker #4: Yeah. Yeah. The Swiss one was not the conversion. That was the factory breakdown in the autumn that's stretched into the beginning of Q1. That factory is up and running now.

[Company Representative] (Rockwool): Yeah. The Swiss one was not the conversion. That was the factory breakdown in the autumn that stretched into the beginning of Q1. That factory is up and running now. That impact is not going to continue into Q2. Whereas the one in Roermond is sort of a bigger conversion we are doing on a major line down there. That will impact also the result in Q2.

Speaker #4: So that impact is not going to continue into Q2. Whereas the one in Le Mans is a sort of a bigger conversion we are doing on a major line down there.

Speaker #4: And that will impact also the result in Q2.

Speaker #5: Okay, thank you. And my second question is maybe more specific on the return on CapEx in this Norway bond, where you have €15 million added.

Alison Samborn: Okay. Thank you. My second question is maybe more specific on the return on CapEx in this Norway plant where you have DKK 15 million added. What kind of I mean, ROIC analysis timeline should we be expecting? Is this going to still be at 15%, as you just mentioned?

Speaker #5: What kind—I mean, Rocky or Roy—and also, the timeline should we be expecting? Is this going to still be at 15%, as you just mentioned?

Speaker #4: No, the investment we are doing in Norway, I think I alluded to somewhere, is just a warehousing—that we have decided to acquire land and construct a warehouse instead of renting several warehouses in the area.

[Company Representative] (Rockwool): No. The investment we are doing in Norway, I think I alluded to somewhere, is just a warehousing that we have decided to acquire a land and construct a warehouse instead of renting several warehouses in the area. That is not a factory per se. It's just a warehousing project.

Speaker #4: So that is not a factory, per se. It's just a warehousing project.

Speaker #5: Okay. Thank you.

Alison Samborn: Okay. Thank you.

Speaker #6: Next question is from Pujarini Gosh Bernstein.

Operator: Next question is from Pujarini Grosch-Benstin.

Speaker #5: Hi, thanks for taking my question. I have just one. So, on your recent acquisition, could you give us some color into the transaction value?

Pujarini Grosch-Benstin: Hi. Thanks for taking my question. I have just one. On your recent acquisition, could you give us some color into the transaction value, how much sales you expect from the plant once it's fully consolidated so we have some numbers around it?

[Analyst]: Hi. Thanks for taking my question. I have just one. On your recent acquisition, could you give us some color into the transaction value, how much sales you expect from the plant once it's fully consolidated so we have some numbers around it?

Speaker #5: How much sales do you expect from the plant once it's fully consolidated, so we have some numbers around it?

Speaker #4: Yes, hello. I mean, as I said, the plant has this capacity of 40,000 tons. And the acquisition prices will be revealed in the annual report anyway.

[Company Representative] (Rockwool): Yes. Hello. I mean, as I said, the plant has this capacity of 40,000 tons. The acquisition price, which will be revealed in the annual report anyway, is sort of in the EUR mid-40s million. It will not have a substantial impact in the financial results for this year, neither on sales nor on earnings. As I said, there is a regulatory sort of period down until we can start to consolidate this into the group.

Speaker #4: It's sort of in the mid-40s million euro. It'll not have a substantial impact on the financial results for this year, neither on sales nor on earnings.

Speaker #4: As I said, there is a regulatory sort of period until we can start to consolidate this into the group.

Speaker #5: Yes, so you mentioned that this year it's not going to have so much of an impact. But once it's fully consolidated, do you have any expectation of how much sales it could generate?

Pujarini Grosch-Benstin: Yes. You mentioned that this year, it's not going to have so much of an impact. Once it's fully consolidated, do you have any expectation of how much sales it could generate?

[Analyst]: Yes. You mentioned that this year, it's not going to have so much of an impact. Once it's fully consolidated, do you have any expectation of how much sales it could generate?

Speaker #4: Well, we will not reveal that. So, we do have an expectation, yes. But it'll be blended into the entire group once we release the 2027 numbers.

[Company Representative] (Rockwool): Well, we will not reveal that. We do have an expectation, yes. It will be blended into the entire group once we release the 2027 numbers.

Speaker #7: It is a running business.

[Company Representative] (Rockwool): It is a running business.

Speaker #5: Okay. Thank you.

Pujarini Grosch-Benstin: Okay. Thank you.

[Analyst]: Okay. Thank you.

Speaker #6: Next question is from Julian Radigler. UBS.

Operator: Next question is from Yves Bromehead, UBS.

Speaker #8: Yeah. Good morning gentlemen. Thank you very much for your time. Two questions for me. They're both on Q2. So the first question is can you and I think this has been asked a few times in one way or another.

Yves Bromehead: Yeah. Good morning, gentlemen. Thank you very much for your time. Two questions from me. They're both on Q2. The first question is, can you and I think this has been asked a few times in one way or another, but can you talk more specifically about the margin impact you expect for Q2 just from the fact that you're not increasing prices yet and you may have some of that input cost inflation? Is there any way for us to just understand if you isolate that price versus cost headwind, is that meaningful at all? How should we think about that?

Speaker #8: But can you talk more specifically about the margin impact you expect for Q2, just from the fact that you're not increasing prices yet, and you may have some of that input cost inflation?

Speaker #8: Is there any way for us to just understand, if you isolate that price versus cost headwind? Is that meaningful at all? How should we think about that?

Speaker #4: Julian we will not do an outdoor quarter by quarter. So you just have to be a bit patient with us. But as I said my take it at least in the forecast assumption is that we will have you can say an impact from the higher input cost in Q2.

[Company Representative] (Rockwool): Julian, we will not do an outlook quarter by quarter. You just have to be a bit patient with us. As I said, my take it, at least in the forecast assumption, is that we will have, you can say, an impact from the higher input cost in Q2. Then we will cover margins gradually in Q3 and Q4. The full year that we have, you can say, the same expectation for margins on EBIT for the full year. That means we will most likely do a bit better in H2 compared to the previous outlook.

Speaker #4: And then we will cover margins gradually in Q3 and Q4. So for the full year, you can say the same expectation for margins on EBIT for the full year.

Speaker #4: That means we will most likely do a bit better in the second half compared to the previous outlook.

Speaker #8: Understood. And then switching to the top line. So, the market challenges in the UK and Canada are very clear. But Canada specifically declined quite meaningfully last year in Q2.

Yves Bromehead: Understood. Switching to the top line. The market challenges in the UK and Canada are very clear. Canada specifically declined quite meaningfully last year in Q2. I remember this well. I think it was one of the reasons for your profit warning at the time. My question is, with Eastern Europe accelerating so meaningfully like we've already seen in Q1 and the base effect in North America becoming meaningfully easier for Canada and the US still doing well anyway, is it fair to think that volume growth in Q2 could be well ahead of Q1?

Speaker #8: I remember this well. I think it was one of the reasons for your profit warning at the time. So my question is: with Eastern Europe accelerating so meaningfully, like we've already seen in Q1, and the base effect in North America becoming meaningfully easier—

Speaker #8: For Canada and the US still doing well, anyway. Is it fair to think that volume growth in Q2 could be well ahead of Q1?

Speaker #7: No. As Kim said before, we don't think Q2 will be way ahead of Q1 on the volume side. We don't see that. So, no to that.

[Company Representative] (Rockwool): No. As Kim said before, we don't think Q2 will be way ahead of Q1 on the volume side. We don't see that. No to that.

Speaker #8: If you follow, do you follow my reasoning though, with the base effect being significantly easier in North America? Is there something I'm missing?

Yves Bromehead: Do you follow my reasoning, though, with the base effect being significantly easier in North America? Is there something I'm missing?

Speaker #7: Yeah, yeah. But that's also based on easier comparables in the latter half of last year. Then I agree.

[Company Representative] (Rockwool): Yeah. Yeah. That's also based on easier comparables in H2 of last year. I agree.

Speaker #8: Okay. Thank you very much.

Yves Bromehead: Okay. Thank you very much.

Speaker #6: Next question is from Chase Colgan, Van Lanshot Kempen.

Operator: Next question is from Trace Colgan, Van Lanschot Kempen.

Speaker #8: Hi. Good morning, everyone. And thank you for taking my questions. I also just have two. Firstly, on the systems margin, it's obviously still under quite some pressure.

Trace Colgan: Hi. Good morning, everyone. Thank you for taking my questions. I also just have 2. Firstly, on the systems margin, it's obviously still under quite some pressure. You explained that there was some inability to pass through prices in time to offset rising costs, bad debt provisions, and so on and so forth. Could you explain a little bit about your expectations for the rest of the year? Are a lot of those problems, primarily pricing, going to be recovered throughout the year? How should I think about the phasing of that divisional margin for the remaining quarters?

Speaker #8: And you explained that there was some inability to pass through prices in time to offset rising costs, bad debt provisions, and so on and so forth.

Speaker #8: Could you explain a little bit about your expectations for the rest of the year? Are a lot of those problems, primarily pricing, going to be recovered throughout the year?

Speaker #8: Or, how should I think about the phasing of that division on margin for the remaining quarters?

Speaker #7: Yeah, I can give you some insight into that. First of all, the bad debt, of course, we're still working on getting secured. And then we do expect an improvement in the profitability in the System Division as our measures take effect in those markets.

[Company Representative] (Rockwool): Yeah. I can give you some insight to that. First of all, the bad debt, of course, we're still working on getting secured. Then we do expect an improvement in the profitability in the system division as our measures take effect in those markets. Some of them are in systems, as you know, more project-based businesses. It takes a little bit longer to flush it through, depending on how the projects are set up. We do expect an improvement in that area.

Speaker #7: Some of them are in systems, as you know, more project-based businesses. And it takes a little bit longer to flush it through, depending on how the projects are set up.

Speaker #7: But we do expect an improvement in that area.

Speaker #8: Okay, perfect. And my second question then—I recognize you just mentioned that you don't necessarily expect volumes in the second quarter to be much above the first quarter.

Trace Colgan: Okay. Perfect. My second question, I recognize you just mentioned that you don't necessarily expect volumes in Q2 to be much above Q1. Something that's been, I guess, spoken a lot about sort of across the entire building materials sector is this idea of pre-buying in Q2 ahead of price increases. Is that not something you think could potentially impact volumes going into H2, I guess?

Speaker #8: But something that's been, I guess, spoken a lot about sort of across the entire building material sector is this idea of rebuying in the second quarter ahead of price increases.

Speaker #8: Is that not something you think could potentially impact volumes going into the second half, I guess?

Speaker #4: Yeah, yeah, Chase. I mean, we didn't comment on the second quarter. I did comment on—I think the volume in the second quarter for sure will be positive.

[Company Representative] (Rockwool): Yeah, Chase. I mean, we didn't comment on Q2. I did comment on it. I think the volume in Q2, for sure, will be positive. It's the volume in H2 that, in our assumption that we have given you, 3 to 6 rents, there we have assumed that volume will be stagnant compared to last year. Whether this is going to be the case, we don't have an order pipeline, as you know, more than 2 months out. We are still sort of a bit uncertain how the autumn season is going to pan out in these uncertain times.

Speaker #4: It's the volume in the second half that, in our assumption that we have given you at 360, there we have assumed that volume will be stagnant compared to last year.

Speaker #4: Whether this is going to be the case, we don't have an order pipeline, as you know, more than two months out. So we are still sort of a bit uncertain how the autumn season is going to pan out in these uncertain times.

Speaker #7: Prebuying quarter.

[Company Representative] (Rockwool): Pre-buying set up.

Speaker #4: And as you know, there might be a little bit of pre-buying here in Q2. But, you know, our distributors—similar to us—we cannot pre-buy a lot of physical products because it simply takes up so much space.

[Company Representative] (Rockwool): As you know, there might be a little bit of pre-buying here in Q2. Our distributors, similar to us, we cannot pre-buy a lot of physical products because it simply takes up so much space. You typically see, if they buy forward a 1 day, it's like a 5% growth in a month. That's more or less it. I don't think a lot of pre-buying will take place simply because of the physical constraints that our customers will have on their own storage space.

Speaker #4: So you typically see if they buy forward a single day, it's like a 5% growth in a month. But that's more or less it.

Speaker #4: But I don't think a lot of prebuying will take place simply because of the physical constraints that our customers will have on their own storage space.

Speaker #8: Okay, great. That's very helpful. Thank you for the clarification, gentlemen.

Trace Colgan: Okay. Great. That's very helpful. Thank you for the clarification, gentlemen.

Speaker #6: A final question is from Zahim Bikawa, JP Morgan.

Operator: The final question is from Nabil Ahmed, JP Morgan.

Speaker #8: Thanks, both. I just had a quick follow-up. With regards to Germany, I think you called out that in the decline in Q1. Was that solely due to weather?

Nabil Ahmed: Thanks, both. I just had a quick follow-up with regards to Germany. I think you called out that in the decline in Q1. Was that solely due to weather? Were the trends in April also good? Thank you.

Speaker #8: And so, were the trends in April also good? Thank you.

Speaker #7: It was a significant impact not only in Germany that the weather was so bad. So all outdoor work, whether or not roofing or you can say façades, were at a very, very low level.

[Company Representative] (Rockwool): It was a significant impact not only in Germany, that the weather was so bad. All outdoor work, whether or not roofing or, you can say, façades, were at a very, very low level in Northern Europe. Yes, the improvement has continued.

Speaker #7: In Northern Europe. And yes, the improvement has continued. So.

Speaker #8: Great. Thank you.

Nabil Ahmed: Great. Thank you.

Speaker #6: This concludes our Q&A session. I would now like to turn the conference back over to management for any closing remarks.

Operator: This concludes our Q&A session. I would like to turn the conference back over to the management for any closing remarks.

Speaker #4: Thank you very much. Yes. And I thank you for today's earnings call, and for all your very good questions. We appreciate your interest in Rockwool.

[Company Representative] (Rockwool): Thank you very much. Yes. I thank you for today's earnings call and for all your very good questions. We appreciate your interest in Rockwool. If you have further questions, please feel free to reach out to me. You may find the Rockwool contact details in the investor section and our corporate website. Have a very nice day. Thank you.

Speaker #4: If you have further questions, please feel free to reach out to me. You may find the Rockwool contact details in the investor section and on our corporate website.