Interim report July–September 2017
Regulatory press release
- Net sales increased by 19% to SEK 3,926 million (3,289)
- Organic growth was 6% (-4)
- The order backlog was 25% higher at SEK 10,635 million (8,475)
- Operating profit increased by 17% to SEK 222 million (189)
- The operating margin was 5.7% (5.8)
- Adjusted operating profit was SEK 222 million (200)
- The adjusted operating margin was 5.7% (6.1)
- Profit after tax was SEK 164 million (133)
- Cash flow from operating activities was SEK -144 million (-57)
- Net debt amounted to SEK 2,515 million (2,783)
- One acquisition was made in the quarter, adding annual sales of SEK 30 million
- Basic and diluted earnings per share were SEK 0.81 (0.66)
“Good growth and stable underlying operating margin”
Organic growth shows we can cope with labour market situation
Bravida's sales reached an achieved organic growth of 6 percent in the quarter and overall sales growth was 19 percent. Our ability to grow beyond our financial targets and to attract and employ new people is pleasing, and it shows Bravida is an attractive employer with a strong brand.
We are performing well across all our segments and growth is coming from both the service and installation businesses. Our significant focus on growth in the service business is important and represents an investment for years to come. The order backlog continued to grow in the third quarter, amounting to SEK 10,635 million, which is a new record level for Bravida. The order backlog does not include our service assignments but has a good mix of different contracts. The bulk of the order backlog is made up lots of small installation projects, supporting growth over the next few quarters.
Stable underlying operating margin and reduced leverage
As well as growing by 19 percent, adjusted for the acquisition of Oras in Norway we also have a stable operating margin of 6.1 percent, which is the same level as last year.
The operating margin has improved in our largest markets, Sweden and Norway, adjusted for the dilution from Oras. The operating margin in Denmark decreased in the quarter due to the write-down of a project.
Despite the third quarter being the weakest in terms of cash flow, we have improved Bravida’s capital structure (net debt/EBITDA), which is now 2.3 compared with 3.0 in September 2016.
Platform in Finland is well-established
The business in Finland was founded through the two acquisitions made in summer 2015. Sales in the original business have been reduced as a result of project selection, which has led to improved profitability. The acquisition of the Asentaja Group in December 2016 has strengthened the business and we now have a good platform on which to build.
The Finnish business is entering a new phase and a new Head of Division will oversee further expansion in Finland. I will temporarily assume this role until we have recruited a new Head of Division Finland. This role will provide me with deeper knowledge about the business, which I will use to support the next Head of Division. To achieve critical mass and a better market position, Bravida’s business in Finland needs sales of SEK 1,200–1,500 million. This growth will mainly come from acquisitions and will contribute to greater profitability and an improved operating margin.
Oras integration still proceeding to plan
The acquisition of Oras has gone to plan so far. Our Norwegian organisation has significant experience of acquisitions, which ensures successful integration. The business is breaking even, including the cost of organisational changes. The implementation of Bravida’s business system was carried out at the end of October. The number of people employed by Oras has decreased since the takeover by Bravida, mainly within management and administration. We see significant synergies and opportunities for cost saving in purchasing, administration and premises and from the implementation of Bravida’s operational processes. We believe Oras will break even for the fourth quarter 2017. We then expect to see a better margin in 2018 and then for the margin to gradually improve to the same level as the rest of the Norwegian business.
Market remains good with limited exposure to housing segment
My assessment is that the technical installations and service market will remain good in Sweden and Norway, stable in Denmark and is improving in Finland. Going forward, I expect to see a slowdown in new-build housing in Sweden and Norway. Currently, 10 percent of Bravida’s net sales come from new-build housing and the margin in these projects is slightly lower than our average margin. I believe new-build apartment buildings will gradually be replaced by the renovation of housing, which has been neglected as resources have been allocated to new-builds. Demand for Bravida’s service and installation services will remain good.
Mattias Johansson, Stockholm, November 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 07:30 CET on 10 November 2017.
The report will be presented at 09:30 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:
SE: +46 8 5664 2690
UK: +44 20 3008 9807
US: +1 85 5831 5947
The report and the presentation are available on bravida.se/en/investors/.