Interim report, first quarter 2026

Revenue was SEK 38.0 billion versus SEK 42.3 billion in the prior period, with currency-adjusted revenue down 1%, while operating income was flat at SEK 1.1 billion and currency-adjusted operating income rose 18%. EPS came in at SEK 2.42 versus SEK 2.40, but operating cash flow was negative at SEK 1.3 billion for the period. Adjusted net receivables/net debt improved to SEK 9.5 billion from SEK 11.5 billion at Dec. 31, 2025.

Analysis

The key signal is not the flat reported profit line, but the widening gap between currency-adjusted operating performance and reported top-line pressure. That usually means the underlying business is stabilizing while FX and mix are masking it; in industrials, that tends to support the equity only if pricing discipline holds and working capital stops absorbing cash. The negative operating cash flow is the more important near-term issue because it limits the ability to convert this operating improvement into de-leveraging or capital returns over the next 1-2 quarters.

Second-order, the segment mix matters more than the consolidated numbers: any strength in Construction bookings can act as a lead indicator for future revenue resilience, but it also typically carries longer cash-conversion cycles and higher exposure to execution slippage. If the order book is improving while cash is still negative, the market will likely reward the stock only after evidence of conversion improves, not at the booking inflection itself. That creates a lagged catalyst window, likely 1-2 quarters, where sentiment can outrun fundamentals and then retrace if working capital remains stretched.

FX is doing some of the heavy lifting here, which cuts both ways. If the currency moves reverse, reported profitability could compress even if local-currency demand is unchanged; conversely, a weaker home currency can keep earnings resilient without any real operational acceleration. The consensus may be underestimating how much of the current margin narrative is simply translation support, making the setup more fragile than the headline operating income suggests.

The cleanest trade is to own the operational turnaround only if the market is giving you time for cash flow to catch up; otherwise this is a better short-on-strength candidate versus a basket of higher-quality industrials with cleaner cash conversion. The immediate catalyst path is the next quarterly order and cash flow print: if bookings translate into receivables/working-capital absorption, the stock should de-rate even on stable EBIT. If the company can show two consecutive quarters of positive operating cash flow, the re-rating could be fast because the market has likely already discounted the FX benefit.

Key Decisions for Investors

• Avoid chasing the reported earnings stability; wait 1 quarter for operating cash flow confirmation before taking a long position. Risk/reward is poor until cash conversion improves.
• If you can short the name, use any post-print strength to initiate a tactical short against a European industrials basket over the next 2-6 weeks. The thesis is that reported EBIT is being propped up by FX while cash flow remains a drag.
• Long the company only on evidence that Construction bookings are converting into working capital release; use a 2-quarter horizon and target a re-rating if operating cash flow turns positive.
• Pair trade: long a high-quality industrial with stronger cash conversion and less FX sensitivity, short this name. This isolates the market’s likely mistake: confusing translation-driven resilience with true operating momentum.
• Set an alert on the next quarterly cash flow and order-book disclosure; if operating cash flow stays negative despite stable EBIT, expect downside in 5-10% range as investors refocus on quality of earnings.