Interim Report July–September 2024

Strong cash flow and improved earnings in Norway and Finland

• Net sales amounted to SEK 6,575 million (6,583)
• The order backlog was SEK 16,610 million (16,459)
• EBITA decreased by 17 percent to SEK 294 million (352)
• The EBITA margin was 4.5 percent (5.4)
• Profit after tax was SEK 200 million (251)
• Cash flow from operating activities was SEK 193 million (-212)
• Net debt amounted to SEK -2,579 million (-3,036)
• One acquisition was completed during the quarter, adding annual sales of approximately SEK 27 million
• Basic and diluted earnings per share were SEK 0.96 (1.21)

CEO statement
The cash flow continued to improve during the quarter. It is also pleasing that we improved our profitability in Finland and Norway, while large parts of the Swedish business remain stable. However, the overall EBITA margin decreased compared with the previous year, due to a weaker market in southern Sweden and the measures taken to address this, as well as the previously communicated developments in Denmark. In the quarter, EBITA was impacted by total of SEK 19 million in non-recurring costs corresponding to a margin of 0.3 percentage points.

Demand for services remains good and our service business grew by eight percent during the quarter.
 

Net sales and EBITA
Group sales were unchanged in the quarter, despite the challenging market situation for installation projects. We managed to compensate for the loss of installation projects with increased service sales and acquisitions. The organic growth was negative, as expected. The weaker order intake in the installation business is explained by a weak market in certain geographical areas and careful project selection, as we prioritise margin over volume and want to avoid having unprofitable projects in the order book.

In southern Sweden, the market remains weak, which has a negative impact on sales and margins, and we have taken measures to adapt the organisation to the current market situation. These measures are impacting earnings, with there being non-recurring costs of SEK 10 million during the quarter. In other parts of Sweden, the market remains stable and we have organic growth and improved margins. 

Our Norwegian business continues to improve its profitability and grow in service. The acquisition of Thunestvedt is developing in line with expectations.

In Denmark, our new management team continues to execute a programme of measures focusing on stronger management and governance, improved ways of working and increased business and customer focus. Previously unprofitable projects are gradually being completed and we can see that the margin in the order backlog has improved. I would like to emphasise that we have good profitability in most of our Danish regions. The poor profitability is attributable to three of our eight regions, which have faced major challenges in their project activities. As part of the organisational changes that have been implemented, non-recurring costs of SEK 9 million impacted earnings in the quarter. In the long term, the outlook for the Danish business is positive. As previously communicated, we have now had three quarters with low margins and in the fourth quarter I expect an improvement in the margin. We still have some low-margin projects to complete, but profitability will now gradually improve.

In Finland, sales have increased as a result of the acquisitions completed over the past year, and we also report a significant improvement in profitability. It is very positive that the determined efforts made by the business are now bearing fruit in the form of increased margins in installation activities.

Strong cash flow 
The cash flow from operating activities remains strong and has improved significantly compared to the third quarter of 2023. Cash conversion was an impressive 134 percent. Net debt is 1.2 times EBITDA, which gives us flexibility and enables continued profitable acquisition activities.

Acquisitions
We continue to see good opportunities to make acquisitions and are actively working with several potential candidates. The multiples we pay are stable and the focus is, as always, on selecting the right acquisition candidates, which have a suitable corporate culture and create value for Bravida. We prioritise service businesses and businesses in strategic technology areas. So far this year, we have completed nine acquisitions, six in Sweden and three in Finland, with total sales of approximately SEK 464 million.

Sustainability
At Bravida, we take a long-term approach to sustainability in order to be a responsible supplier for our customers, a good employer and a leading stakeholder in the industry. I am proud that the hard work we have put in is having a positive effect. Occupational injuries are decreasing, with LTIFR amounting to 5.9 (7.1). The electrification of our vehicle fleet is reducing our climate footprint and for the last 12 months we have reduced emissions from our vehicles by 13 percent and by 35 percent from 2020 in relation to net sales.

Outlook
For Bravida, I believe that the demand for services will remain stable, while the installation volume will be negatively affected by the weak construction market. However, there are considerable geographical differences in the demand for installation work relating to building construction. The markets in southern Sweden and Finland are weak, whereas the market situation in the rest of Sweden, Denmark and Norway is generally better. Overall, we expect an uncertain market and continued weak demand during the rest of the year and in the first half of 2025. We therefore continue to take measures to increase internal efficiency, adapt the organization and increase the underlying profitability.

The demand for installation projects in the infrastructure, industrial, defence and civil engineering sectors remains stable. Other market drivers include the ongoing electrification and digitalisation of society. Considering the current market situation, we continue to focus on strict project selection and cost controls in all our business operations, in order to ensure an improved margin.

Mattias Johansson
Stockholm, October 2024

The report will be presented at 09:30 CEST by CEO and Group President Mattias Johansson and CFO Åsa Neving. The presentation will be held in English and can be followed online or by phone. There will be room for questions in the telephone conference.

Link to webcast
https://ir.financialhearings.com/bravida-q3-report-2024/register

Telephone conference 
Register via the link: https://conference.financialhearings.com/teleconference/?id=50048498
to participate in the telephone conference. After registration, you will receive a phone number and a conference ID to log in to the conference.

The report and presentation will be available at:
https://investors.bravida.com/en/reports-and-presentations

For further information, please contact:
Peter Norström, Head of Investor Relations
[email protected]
+46 8 695 20 07

This disclosure contains information that Bravida Holding AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 22 October 2024, 07:30 CEST.