First impression Railcare Group: Already on track to meet the margin target

A good quarter in terms of turnover for the Group and, above all, a
strong margin, thanks to a significant turnaround in Contracting following the low point in Q1 last year. Technology is also performing
well on both measures, whilst Transport came in slightly weaker than
expected due to lower volumes of construction transport.

Revenue and earnings
The report as a whole was close to our expectations. Revenue for the
quarter was 24% higher than last year at SEK 152.1 million (123.0 for
Q1-25), which was 3% below our forecast. The operating margin improved significantly to 12.6% (3.6%) based on a profit of SEK 19.2
million (4.4), which was above our expectations of SEK 17.1 million.

Conclusion: The target remains
In summary, a good quarter in terms of figures, with the baton temporarily taken over by Contracting. However, it is likely to return to
Transport as early as the next quarter when Contracting faces tougher
comparative figures and construction transport picks up pace for
Transport again.

Transport also needs to secure new contracts, preferably within the
next six months, for the group to achieve its financial targets for 2027:
revenue of SEK 1 billion and an operating margin of 13%. However,
management still appears as confident as ever that this can be
achieved, and the 20% rise in the share price since our last analysis
seems to indicate that this scenario is increasingly being priced in.

We are unlikely to make any major changes to our forecasts when our
full analysis is published a little later, so the fair value is unlikely to
change much, if at all.