Bravida – Quarterly report July–September 2024

Strong cash flow and improved earnings in Norway and Finland

 

• Net sales amounted to SEK 6,575 (6,583) million
• The order backlog amounted to SEK 16,610 (16,459) million
• EBITA decreased by 17 percent and amounted to SEK 294 (352) million
• The EBITA margin amounted to 4.5 (5.4) percent
• Profit after tax amounted to SEK 200 (251) million
• The cash flow from current operations amounted to SEK 193 (-212) million
• Net indebtedness amounted to -2,579 (-3,036) MSEK
• An acquisition has been completed during the quarter, which on an annual basis adds a turnover of approximately SEK 27 million
• Earnings per share before and after dilution amounted to SEK 0.96 (1.21).

 

Comment from the CEO

Cash flow continues to improve in the quarter. It is also gratifying that we have improved profitability in Finland and Norway at the same time that large parts of the Swedish operations are stable. However, the total EBITA margin deteriorated compared to the previous year, which is explained by a worse market in southern Sweden and, in addition, previously communicated measures taken in Denmark. In the quarter, EBITA was charged with SEK 19 million in non-recurring costs corresponding to a margin of 0.3 percentage points.

Demand for service remains good and our service business is growing by eight percent in the quarter.

 

Net sales and EBITA

Sales in the group were unchanged in the quarter despite the challenging market situation for installation projects. We manage to compensate for the loss of installation projects with increased turnover from service and acquisitions. As expected, organic growth was negative. The deteriorating order intake within the installation business is explained by a weak market in certain geographies and careful project selection as we prioritize margin over volume and want to avoid unprofitable projects in the order book.

In southern Sweden, the market is still weak, which affects turnover and margin negatively, and we have taken measures to adapt the organization to the current market situation. These measures burden the result with non-recurring costs of SEK 10 million in the quarter. In other parts of Sweden, the market remains stable and we can note organic growth and improved margins. 

Our Norwegian operations continue to improve their profitability and grow in service. The acquisition of Thunestvedt is progressing well as expected.

In Denmark, our new management continues to execute on an action program that focuses on stronger management and governance, improved working methods and increased business and customer focus. Previously taken unprofitable projects are gradually being terminated and we can state that the margin in the order backlog has improved. I want to emphasize that we have good profitability in most of our Danish regions. The lower profitability is attributable to three of our eight regions that had major challenges in their project activities. As part of implemented organizational changes, the result has been charged with non-recurring costs of SEK 9 million in the quarter. In the long term, I have a positive view of the Danish business. As previously communicated, we have now had three quarters with low margins and in the fourth quarter I expect a margin improvement. We still have a few low-margin projects left to complete, but profitability will now gradually improve.

In Finland, turnover has increased through the acquisitions carried out in the past year, while we report a significant improvement in profitability. It is very positive that the business’s purposeful work yields results through an increased margin within the installation business.

 

Strong cash flow 

Cash flow from current operations remains strong and has significantly improved compared to the third quarter of 2023. Cash generation amounted to a high 134 percent. The net debt is 1.2 times EBITDA, which gives us flexibility and enables continued profitable acquisitions.

 

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 choosing the right acquisition candidates who have a suitable culture and are value creators for Bravida. We prioritize service operations and operations in strategic technology areas. So far this year, we have acquired nine businesses, six of which are in Sweden and three in Finland, with a total turnover of approximately SEK 464 million.

 

Sustainability

At Bravida, we work long-term with sustainability in order to be a responsible supplier for our customers, a good employer and a leading player in the industry. I am proud that the hard work we put in is paying off. Occupational injuries are decreasing and the LTIFR amounted to 5.9 (7.1). The electrification of the vehicle fleet reduces our climate footprint and for the last 12 months we have reduced the emissions from our vehicles by 13 percent and by 35 percent from 2020 in relation to turnover.
 

Future prospects

For Bravida, I assess that the demand for service will remain stable at the same time that the installation volume will be negatively affected by the weak construction economy. However, there is a large geographical difference in the demand for installations in house buildings. The market in southern Sweden and Finland is weak, while the market situation in the rest of Sweden, Denmark and Norway is generally stable. We generally expect an uncertain market and continued weak demand for 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 underlying profitability.

Demand for installation projects in infrastructure, industry, defense facilities and community building remains stable. Other market drivers are the ongoing electrification and digitization in society. Given the current market situation, we have a strong focus on continued strict project selection and cost control in all our operations to ensure an improved margin.

Mattias Johansson
Stockholm in October 2024

 

The report will be presented at 09:30 by President and CEO Mattias Johansson and CFO Åsa Neving. The presentation is in English and can be followed on the web or by phone. There will be an opportunity to ask questions via the conference call.

 

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/sv/rapporter-och-presentationer 

 

This information is information that Bravida Holding AB is obliged to make public according to the EU’s market abuse regulation (EU no. 596/2014). The information was submitted, through the care of the specified contact person, for publication on October 22, 2024, at 07.30.