“Rising net sales and an improved underlying operating margin”
Good organic growth for the first six months of the year
In the second quarter, organic growth was positive in Sweden and Denmark, but was unchanged at Group level. Fewer working days in the quarter because of the timing of Easter had a 5-6 percent negative effect on organic growth, with the greatest impact occurring in Norway.
For the first six months of the year, organic growth was 6 percent and all countries except Finland reported organic growth. I’m pleased that growth is coming from both installation and service operations and that we are able to deliver organic growth in excess of our financial target of 5 percent.
Improved order levels in all countries
Our order backlog, which only contains installation projects, continued to increase and it is continuing to generate stable growth. In the second quarter, the order backlog increased by almost SEK 1,500 million to SEK till 10,493 million, SEK 900 million of which comes from the two most recent acquisitions in Norway and Denmark.
Improvement in underlying operating margin
The acquisition of Oras in Norway dilutes our margin in the short term. Adjusted for Oras, our operating margin increased by 0.3 percentage points in the second quarter. The acquisition of Oras will gradually contribute to higher operating profit and will strengthen the operating margin. Following two months as owner, our assumptions prior to the acquisition have been confirmed; Oras has stable underlying operations and there is significant potential for cost savings. Over the next few quarters, there will be a strong focus on improving profitability through measures regarding costs and purchasing, as well as through project selection and implementation of the Bravida Way.
Improved cash flow
Our cash flow from operating activities has improved considerably in recent quarters and has strengthened our balance sheet, which means we are meeting our financial targets on capital structure and cash conversion.
Market remains healthy, but lack of skilled labour
My assessment is that the market will remain good in Sweden and Norway, stable in Denmark and is improving in Finland. We are seeing good demand for our service operations and installation projects such as new-builds and upgrades of public buildings including hospitals, schools, apartment and office buildings and energy projects.
The lack of skilled labour in the construction industry is hampering our growth, however, and risks delaying the start of construction projects. We are managing the problem through careful project selection and increased recruitment and professional development resources.
Our order backlog has grown and is stable, and once again is at a record high. The order backlog contains lots of small and medium-sized orders and some large orders which, together with a growing service market, ensures stable sales and earnings performance over the coming quarters.
Mattias Johansson, Stockholm, July 2017
For further information, please contact:
Mattias Johansson, CEO and Group President of Bravida. Tel: +46 8 695 20 00
Nils-Johan Andersson, CFO of Bravida. Tel: +46 70 668 50 75
This information is information that Bravida Holding AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 13:00 CET on 25 July 2017.
The report will be presented at 15:00 CET by CEO and Group President Mattias Johansson and CFO Nils-Johan Andersson. 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:
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The report and the presentation are available on bravida.se/en/investors/.