Bravida – Interim Report April–June 2024

Strong cash flow and robust order intake

• Net sales increased by 5 percent to SEK 7,694 million (7,306)
• The order backlog was SEK 17,559 million (16,597)
• EBITA decreased by 16 percent to SEK 343 million (407)
• The EBITA margin was 4.5 percent (5.6)
• Profit after tax was SEK 240 million (302)
• Cash flow from operating activities was SEK 548 million (134)
• Net debt amounted to SEK -2,518 million (-2,512)
• Seven acquisitions were completed during the quarter, adding annual sales of approximately SEK 407 million
• Basic and diluted earnings per share were SEK 1.16 (1.45)
   

CEO statement
I am pleased to note that the improved cash conversion has continued from the previous quarter. Despite the tough market conditions, which were expected in southern Sweden and Finland, organic growth was positive and the service business continued to grow. The EBITA margin was not as good as in the previous year, mainly because of the previously communicated developments and measures in Denmark and a weaker market in southern Sweden.

The other parts of our business are more stable, where the market is driven by societal transformation, infrastructure and electrification. These are market drivers that are likely to continue even as traditional demand returns to the installation industry. In areas where demand is weak, we are, as always, actively working to adapt the organisation accordingly.

Net sales and EBITA
Despite various challenges and some market headwinds, sales increased by five percent and organic growth was one percent, which was better than expected. Our large ongoing projects are helping to keep sales at a good level, while sales in the traditional installation business are weaker in the current market. On the positive side, our focus on service is paying off.

Service sales increased by eight percent compared with the second quarter of 2023. We also continue to have a stable order intake, and it increased in Sweden and Norway. Our order backlog remains high, in fact around the highest level ever, but despite the good order situation there are some challenges as the backlog varies greatly between different geographical areas. In Norway, large parts of Sweden and also in Denmark, the market is relatively stable, while it remains weak in southern Sweden and Finland. Our Finnish business developed favourably in the quarter and improved its EBITA margin, while Sweden and Denmark went in the opposite direction. In Norway, the Thunestvedt acquisition is progressing according to plan, but has diluted the margin by 0.3 percentage points. The underlying business has improved, resulting in an unchanged margin in our Norwegian business. In Sweden, the difficult and downward-trending market conditions in the southern parts of the country have resulted in lower sales and earnings there. To adapt the organisation to the current demand in southern Sweden, we have made cutbacks at a number of branches. Other parts of the Swedish operation have coped well with the market changes with increased turnover, good margins and an increased order intake. The previously reported challenges in Denmark, with write downs and production in low-margin projects, weakened the overall margin as expected. Although I still expect Denmark to return to normal margins at the end of the year I also assess that the second half of the year will be tough for our operations in southern Sweden resulting with weaker margins for the group.

Improved cash flow 
Cash flow from operating activities improved compared to the second quarter of 2023 and cash conversion rose to 112 percent. Net debt remains low, at 1.1 times EBITDA, which 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 acquired eight businesses, six in Sweden and two in Finland, with total sales of approximately SEK 437 million.

Sustainability
At Bravida, we work long-term with sustainability, so that we can be a good supplier to 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 (7.3).

Our structured efforts to electrify our fleet of vehicles is finally starting to become apparent in our metrics. During the quarter, the share of electric vehicles increased from 28 percent of the total fleet to 33 percent. Electrification is paying off and we have reduced total emissions from our vehicles by 11 percent over the last 12 months. These are achievements which I and the entire organisation are very proud of.

As previously reported, we have dealt with the incidents of over-invoicing in a specific branch in Sweden decisively. No other such issues have been identified as part of the reviews we together with customers have conducted.

Outlook
For Bravida, I believe that the demand for services will remain stable, with some growth, 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, while the market situation in the rest of Sweden, Denmark and Norway is generally better. Overall, we are expecting an uncertain market and continuing weak demand for the rest of the year, although this will be offset to some extent by installation projects relating to infrastructure, industry, defence facilities and civil engineering. 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 a stable margin.
 

Mattias Johansson
Stockholm, July 2024

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 online or by phone. There will be room for questions in the telephone conference.

Link to webcast
https://ir.financialhearings.com/bravida-q2-report-2024/register

Telephone conference 
Register via the link: https://conference.financialhearings.com/teleconference/?id=50048497 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