Interim report July–September 2019
Strong order intake and solid margin
• Net sales increased by 5% to SEK 4,638 million (4,437)
• Organic growth was -3% (6)
• The order backlog was 35% higher at SEK 14,507 million (10,746)
• EBITA increased by 3% to SEK 276 million (267)
• The EBITA margin was 6.0% (6.0)
• Profit after tax was SEK 202 million (202)
• Cash flow from operating activities was SEK 65 million (-132)
• Net debt amounted to SEK -2,735 million (-2,062)
• Four acquisitions were completed in the quarter, adding annual sales of approximately SEK 265 million
• Basic and diluted earnings per share were SEK 0.99 (1.00)
Demand for technical service and installations remains good on our markets. Sales increased in the third quarter and Bravida is continuing to grow in the area of service. The EBITA margin was at the same level as last year. The order backlog continued to rise and is at a new record level. The high pace of acquisitions has persisted, with four acquisitions completed in the quarter.
Sales growth through acquisitions
Bravida continued to grow in the quarter, with sales rising by 5 percent, of which 7 percent was as a result of acquisitions. Service sales increased by 10 percent in the quarter. This is pleasing as our strategy is to increase service assignments, which have a lower level of risk and help improve profitability. The market generally remains good, as reflected in strong order intake, which rose by 25 percent on the same quarter last year. Our order backlog increased by just over SEK 600 million to a new record high of SEK 14.5 billion.
Selective tendering in Finland and the Stockholm area is the main reason for the negative organic growth in the quarter. In Norway we have also been very restrictive in tendering from the business we acquired from Oras. This has improved profitability but has temporarily reduced sales and the order backlog. We are seeing a growing trend of partnering agreements in Norway and we have a number of large projects that are at the design phase and have not yet resulted in any production and are not included in the order backlog until the production phase has been contracted.
Unchanged EBITA margin and good cash flow
The EBITA margin has improved in Norway as a result of systematic work in the business acquired from Oras. In Denmark the margin was unchanged, while in Sweden the margin decreased because of project writedowns in Stockholm. The Stockholm business has experienced negative earnings performance for an extended period. A number of measures such as closing unprofitable departments, selective tendering and a greater emphasis on project management and control have been taken to improve earnings in Stockholm. In Finland, the EBITA margin declined because of some unprofitable projects and low volumes in some areas. We have also implemented measures to improve profitability in Finland.
Cash flow remained good and cash conversion was 104 percent.
Bravida continues to strengthen through acquisitions
Our growth and market position in both service and installation continue to strengthen through acquisitions. So far this year we have completed 17 acquisitions, four of which were in the third quarter and one after the end of the period, adding annual sales of almost SEK 1,000 million. These acquisitions bolster Bravida’s local market positions, complement our business and expand our offering.
There is still a long list of potential acquisitions that are a good fit for Bravida, and our robust financial position with low indebtedness and strong cash conversion means we are well-positioned to carry on growing through acquisitions.
As part of our sustainability work we have decided to drastically reduce our CO2 emissions. The goal is for 30 percent of Bravida’s service vehicles to be fossil-free by 2025. We are also altering the terms for selecting company cars, making it much more advantageous to use environmentally sustainable alternatives and cut emissions from our company cars. Reducing our carbon footprint is a priority and we are placing significant emphasis on reorienting the company’s efforts to help achieve global climate targets.
Our order backlog remains at a record high and the bulk of it consists of lots of small and medium-sized installation projects. In the short term, I expect organic growth to remain low. However, order levels have never been better for Bravida, and together with our large service business the order backlog will contribute to solid sales performance in the long term. Underlying profitability also remains good, so I am positive about our performance going forward.
Mattias Johansson, Stockholm, November 2019
For further information, please contact:
Mattias Johansson, CEO and Group President of Bravida. Tel: +46 8 695 20 00
Åsa Neving, CFO. Tel: +46 8 695 22 87
This information is information that Bravida Holding AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 6 November 2019.
The report will be presented at 09:30 CET by CEO and Group President Mattias Johansson and CFO Åsa Neving. The presentation will be held in English and can be followed on the web or over the phone. There will be room for questions.
Link to the webcast:
Telephone numbers for telephone conference:
SE: +46 8 566 427 06
UK: +44 3333 0090 31
US: +1 646 722 49 02
The report and the presentation are available on bravida.se/en/investors/.