Bravida Holding AB (publ)

Good morning everyone and welcome to this presentation of Bravida's second quarter 2023. And as always, it's myself, Mattias Johansson, CEO, who is going to take you through the presentation together with Åsa Neving, CFO. Welcome and let's start. And the agenda, the one of you who have followed us for a while recognize this. We start with the position in the Nordic market, take you through the Q2 numbers. Åsa will present the different countries' performances, and then we summarize and ask your questions. our position in the nordics uh we are continuing to grow our business today we are 13 700 employees we actually after this quarter have close to 29 billion in sales a lot of recurring customers and a big part the major part of our sales is coming from small projects and small orders. We are and want to stay as the leading Nordic provider of sustainable technical solutions for buildings. We are a one-stop shop for our customers. Our customers can use us from early phases in project planning, through installation, the new build, construction, etc. and through renovation service and maintenance. We can offer all different disciplines that actually all our customers need in their premises, houses, buildings, etc. And we will definitely, we are an enabler to help the society to transform with lower energy consumption, electrification, other sustainable services, etc. So our position is stable and we are definitely in a very important space for the future as well. This is why I guess you are a holder of the Bervida shares. Fantastic track record. You can see it seems like we all have been a bit spoiled the last two years. The growth had been extreme high. We have gone for the last two years from 22 billion in sales to close to 30 with very stable margins and on average cash conversion at 100%. So this is of course something we are planning to continue to do. We can continue to do acquisitions, we can continue to gain market shares in the new markets such as energy renovation, energy efficiency, electrification, etc. So what does Nordic leader in sustainable technical solutions actually means? Of course that we have the core business, but we're also working with charging stations for electric cars, solar panels, etc., taking down energy consumptions. and all customers have access to our entire offering and that is an advantage when the systems are getting more and more complex and integrated into each other. We have life cycle perspective for every building and we are and want to stay as the industry leader in sustainability. So, the quarter, and we start with the market outlook. It is, of course, quite challenging, difficult to do any forecast about where the market is heading. We still see an overall good demand for service and installation, except for new-build residentials.

Bravido has a question. Low exposure to new-build residential.

This quarter is actually lower compared to the last quarter. It's down to 8% of the total sales today, and still we are managing to grow our top line. At the same time, as we see that there are some challenges in the market, we see price pressure in the market due to the fact that there is a low demand in some areas. At the same time, we can see some cost inflation, both on material, still on the material side, even if the raw material prices is going down a bit, we can see, I guess, the producers have increased costs for energy and labor, which gives us higher prices. But we also see a growing demand, and this is on the positive side, a growing demand for sustainable and energy-efficient solutions. Increasing interest rates, of course, and inflation leads to delays in some investments. And it will mean pressure on the margins in the whole industry, as well as for... But at the same time, as we talk about a bit... uncertain market we see we can see that the order intake if you have read the numbers is really strong which gives a quite mixed picture of the current situation so the highlights for the quarter five percent organic growth and we are growing in all countries we are growing organically in all countries the net sales is coming down a bit in norway due to some currency effects we are growing six percent from acquisitions We can see that we are growing in both service and installation and ordering take is improving in Norway, Denmark and Finland and in total plus 14%, which is really high numbers if you compare to historic. If you compare to the last quarter, it's somewhat lower, but still it's a very high number. We have had some margin, a lower margin in the quarter. It's 5.6 compared to 5.9. And it's explained by three factors as I see it. First of all, we are investing in our future capability. We are investing in some new resources to be able to catch opportunities in the market. But then, of course, we have struggled a bit with the cost inflation on material mainly. We have handled that situation really, really well throughout the pandemic and the last year. But this quarter, it has started to leak a bit and we haven't been able to transport all the cost increases to the customer this quarter. And I guess our estimate is that we will have some pressure on the margin in the coming quarters as well. And the third part is that we have been growing too much. 14% growth in the quarter, somewhat lower than some of you expected, but still 14% is a really high number if you compare to the history. And I'm going back to this slide again. We have been growing for many, many years, but the last two years we have been growing much, much faster than before. And this has costed us a little bit too much because we haven't been able to do the sourcing in the way we want to do. And we have also been forced to hire subcontractors and other resources in a little bit too inefficient way.