* Q1: sales beat (+19% vs ABGSCe), ES-branded sales up +99% y-o-y * Q2'26 guided weak on ODM/WL inventory rebalance * We cut Q2'26e, return to positive EBIT in H2'26e
Expecting a stronger H2'26e
Q1 sales beat expectations at SEK 49m (+19% vs. ABGSCe) and EBIT was SEK -4m (vs. ABGSCe -5m). The quarter was characterised by an accelerating mix shift toward own-brand, with ES-branded sales up 99% y-o-y to SEK 16m, now 32% of sales (vs. 15% LY) and marking the fourth consecutive quarter of growth. Commercial sales also improved (+50% y-o-y off a low base), supported by the early ramp of the 40 kW R290 platform. FCF turned positive at SEK 1.8m (vs. -20m LY) and cash closed at SEK 24m. That said, management guides Q2'26 to be weak due to seasonality, which is why we forecast Q2 sales of SEK 26m (15m LY).
Cutting Q2'26e but H2'26e recovery thesis intact
We cut '26e sales by 7% and '26e EBIT by SEK 9m, on lowered Q2'26 expectations on the inventory rebalance. For FY'26e, we now forecast EBIT of SEK -10m (vs -1m before), with weakness concentrated in Q2 and a clear pick-up in H2'26e on contracted ODM/WL volumes through year-end and continued ES-branded momentum. We expect a return to positive EBIT in H2'26e (+16% sales growth FY'26e), with FY'27e profitable.
Structural drivers intact
Despite near-term softness, we see several structural drivers supporting the H2e recovery and '27e trajectory. 1) The ES brand inflection continues, with brand sales nearly doubling; 2) The EU R32/R410A refrigerant restrictions from Jan '27 forces a shift to R290, where ES already has a proven concept; 3) The new Bluebox by Swegon R290 WL agreement validates the platform and signals a broader ODM/WL pipeline; 4) The gross margin expanded to 38% in Q1 (ABGSCe defined, 34% LY), with management signalling further gains, which we expect to be supported by better mix and increased ES-branded sales. ES is trading at 13x-5x EV/EBIT '27e-'28e on our revised estimates.