Bravida Holding AB (publ)

is up it's up in Norway Denmark and Finland it decreased in Sweden but you should remember that last year we had a really big contract coming into the books in in q124 that was the underground in Stockholm and the order backlog increased in all countries and the order backlog is only containing the business regarding the installation and not the service business ESG, we want to be the market leader in this segment. And today we have close to 40% of all our 8,800 vehicles electrical driven. And that, of course, gives a really solid improvement in the CO2 emissions from vehicles, down 15% the last 12 months. And if we compare to 2020 as a base and also take into consideration the high growth we have had since that, the improvement is actually 38%. The injuries LTIFR is close to our group target now at five and a half. Sweden and Finland is improving a lot. Norway are already on low numbers. So we hope that we can improve this in Denmark the coming quarter so we on group level can reach our target. Because it's of course very important for us to have a safe environment for all our employees as well as the customers we're working together with. Acquisitions, it has been a slow quarter in Q1, but last year we did 10 acquisitions, slightly less than we normally do in a normal year, but that is not depending on the low amount of opportunities we're having. We still have a really strong pipeline, but we are very thorough about what acquisitions we are doing. And we have started Q2 by doing one quite large acquisition, adding close to 350 million in the second quarter. And we think that we can continue to use our balance sheet going forward. because of the strong pipeline and the momentum we have due to our model of doing acquisitions as well, because we see that our way of doing acquisition is seen as a more favorable one than some of the other players in the market are using. In Denmark, we haven't focused on acquisition so far. We have focused on improving our own profitability, but now we are opening up for discussions, starting to work in Denmark with acquisitions as well. And Norway had been a bit of blocked as well for internal reasons because of the integration of Tunestvet which is going due to plan in Q1. They actually were merged into our ERP system and it is still in line with what we have expected. Opportunities are many, pipeline is strong and we still see that the price levels are very stable. So with that, I hand over to Jossa and let you present the different segments.

Thank you. Then I will take you through the countries. And as usual, we will start with Sweden, where we had a decrease in sales of 6%, ending up at 3.3 billion. And this is explained by the soft market that we have in the southern part of Sweden and also our strict project selection due to that decrease. The southern part of Sweden had a volume decrease of 250 million year on year. So we had a sales, a service sales that was down minus 10 percent and installation was down minus three. The organic growth was eight percent negative and we had some decline. some growth from acquisitions of 1%. EBITDA was 165 versus 172. But even though we had a soft market and decreased sales, we managed to defend and also increase slightly our margin to 5.1% compared to 5.2%. Last year, the order intake was 10% minus year on year. And if you look at last year, we had two larger orders coming into the books in Q1. We had an order backlog that increased during the quarter in Sweden. Moving on to Norway, net sales was down 12% to 1.4 billion. This is due to decreasing sales in the installation business. And last year, we had a couple of projects, mainly hospitals, with high production in the first quarter. So the comps were pretty tough. The organic growth was negative 10% and there was a negative effect of FX also on 2%. But I can say that installation growth was actually down 25% due to this high comps that we had last year. EBITDA, 74% versus 79%. And also here we managed to improve the EBITDA margin significantly. despite the lower sales to 5.2% compared to 4.9%. And the margin improvement is coming from the installation business. The order intake in Norway was plus 8%. And the order intake is coming from installation that was up 37% in the quarter. And we're happy to see that. We're also happy to see that it's healthy projects that we are getting into the order backlog. And the order backlog increased by 173 million in the quarter. Denmark. Happy to see that Denmark is continuing to improve as planned. And in Denmark, we have a growth in sales of 5%, so ending up at 1.7 billion. And this is due to a strong growth in the service business, plus 5%. We also have organic growth in Denmark on 5%. EBITDA is 60 versus 16 last year. So we are really happy to see that this improvement is continuing. And the EBITDA margin improved to 3.5% versus 1% last year. And it's due to better performance in both installation and the service business. Order intake is up 4%. This is coming from the service business. And the order backlog increased by 142 million in the quarter. Then Finland. Finland is a tough market. The sales growth was down 4% and the growth in the installation business was minus 10% and the growth in service business was plus 11%. Net sales ended up at 548 million. It was a negative organic growth of minus 17. We've done some acquisitions in Finland, so the growth of acquisitions was plus 13%. EBITDA 8 versus 7 last year, and also here the EBITDA margin improved. We managed to defend the margin in this tough market also, and the improved margin is coming from the installation business. Order intake increased by 20% year on year, and this is also a strong order intake from installation, which is improving by 43%. in local currency. Order backlog increased by 150 million in the quarter. So that was the countries. And to summarize that, just to stress what Mattias said, that we have, even though that the sales is decreasing in all countries except for Denmark, we have managed to defend the margin in this very tough market and also improve margin in all countries. And we have a growing order backlog with healthy projects. By that, we will move into the financial position, which is continuing to be strong. If you look at the chart in the middle, you see the operating cash flow. It's still on a strong level, 280 versus 399 last year. And the difference here is actually subliminal. supplementary tax payment that we did in Denmark this quarter. That's the main difference here between these quarters. Looking at the financial position on the left-hand side, you can see that we have a cash balance of 608. We have a debt of 1.3 and we have a term loan and we are using commercial papers. We're not drawing anything from the RCF right now. And the leasing according to IFRS 16 is 1.4. This leads to net debt of 2.2 billion. And with the LTM EBITDA also on 2.1 million, we have a net debt EBITDA LTM EBITDA ratio of 1. Cash conversion improved, as Mattias said, to 201% versus 90% last year. We still have two large unpaid receivables, one in Denmark, one in Norway, that we expect to be resolved in the end of this year, so last quarter. And then we still have... one additional large unpaid receivable in Denmark that hasn't changed anything since the last quarter. We don't expect it to be resolved until 2028. But to summarize, low net debt, strong cash flow. By that, Mattias, I will hand it back to you.

Thank you. And I then get the opportunity to talk about the market. First, I think I want to say that service activity continues to be very stable. And that is... Big reason why we can be as stable as we are today. Close to 50% of the revenue is service, as you know. The challenges in the installation business is probably going to continue for a while. There are big differences between different geographies. It is some areas where we have normal markets, some areas where we actually have a quite good market and then we have areas where the market is really, really tough. So again, that is what you get when you invest in Bravida. We don't have low demand in all places at the same time, but we still see that there will be some challenges going forward. We saw after in the end of Q4, beginning of Q1, there were positive discussions with customers and there still are in some areas. We are actually a bit positive regarding the underlying demand in the market. As I said in the report, it seems like some customers have paused the decision a bit because of the uncertainty in the global environment for the moment. So we are a bit positive at the same time as we really don't know when it starts to kick in. But we can probably say that 25 will be... Difficult year. Not tougher. I think it has bottomed out, definitely. We will have some easier comps going forward. But the orders we are winning now or the coming quarters won't start until 26th. there are some areas where there are very favorable market conditions. And that is, for example, in infrastructure, industry, defense facilities and civil engineering. And that gives us business opportunities. And we, Bravida, is a solid, strong, competent partner to our clients in those type of projects. So we think that we are in... a good position to actually win these type of contracts. We have the knowledge, we have the financial stability, and we also hear from the organization now that we are not winning projects on price. And as I said, the orders we have been winning is actually a decent or good margin in those projects, and that is because customers are... very interesting in buying from a financial stable partner and that's us. We will maintain our project selective strategy because that is the only way to go through this type of cycle in the market. We will focus on margin before volume and I think we have proven that in the first quarter when the revenue is down 5% and we still are improving the margin and have strong cash flows. And then on top of that we still see an attractive pipeline of possible acquisitions to do and we have a balance sheet that supports that action and we will do acquisitions going forward. Shortly about the financial targets. You all know that we have a margin target at above 7% which we won't reach this year. That is a target over the cycle. We will get closer to it for every year now. We have a strong cash conversion. We have reached that target for many, many years. Debt level is below target. Sales growth for the moment is not met. And the dividend, I think it's paid out tomorrow. And that is well above the target of 50%. So if we should summarize the quarter, top line is down 5%, and that is mainly due to the installation business. Service business is really, really stable. We are growing from acquisitions with 2%. We have increased order intake in Denmark, Norway, and Finland year on year. We have increased order backlog with good margins in those contracts in all countries compared to last quarter. And we see improved margin in all countries. Stable cash conversion and good cash flow and the ESG KPIs like LTIFR and the CO2 emissions is improving a lot. So before we take questions, just want to mention that we have the next report in beginning of July and then we have the third quarter in 24th of October. Seems quite distance now because we have a lot of work to do before that. But with that, we open up for questions, please.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Carl Norwin from SEB. Please go ahead.

Yes, good morning. A couple of questions from my side, and maybe if we start on Denmark. You state there that you still have a negative margin in the installation business, driven by that you still have production of low-margin projects. I was wondering, how long do you think you will have to produce on these low-margin projects, or when are they finished? And will we then see a more step-up change in the margin, you think? First question, I think.

Should you start also?

I think there will be some projects that are from the old days. They will continuously get out from the books. There are also some provisions to take care of those. They will fade out. There will maybe be some left in this quarter, but by the end of the year they will be out of the books.

But it's not correct that you have a negative margin in the installation business. We are making money on the installation business, but it's impacted some part of a few projects.

Okay. Yeah, that's clear. Maybe I read it the wrong way there, but that's good. And then I have a question on Sweden. I mean, the market environment continues to look quite challenging, especially in the south of Sweden, as you mentioned. Despite this, your margins are quite stable. I'm just wondering, do you think you can expect to continue to protect the margins at similar levels compared to last year? Or is it possible to see kind of slightly improved margins year over year underlying? I mean, adjusted for the Norfolk region, right downs and the one we had last year. Do you think it's reasonable to expect continued margin resilience in Sweden?

I think we will be very stable. If that means that we are improving the margin or if we are a bit on the negative side, of course, that's very hard to answer. But we expect that the south part of Sweden will improve in 2025 compared to 2024 because we did some quite... And big measures last year, which was actually giving us some cost and actually impacted the margin as well when we scaled down the business. We have a flexible cost structure, as you know, but that costed something to take out all those resources in 2024. So we think that we can continue to improve our margin in the south part of Sweden, be stable in the central part of Sweden, Stockholm area. And then it's I think the key question is that if the market keeps up in the north part. If it does, then I think we will have a stable margin in north, high margin in north. It might be a small risk that the market weakens a bit in the north part of Sweden, which automatically will impact our earnings. But all in all, I think that we will see stable margins in Sweden and hopefully a bit improved in 2025. But that is to be proved.

Yeah. Good. And then it's the final one for me on your recent acquisition there in Borlänge. I mean, I'm just looking at it. It's quite big, but it has varied quite a lot in sales during the last couple of years. I'm just wondering what you expect from that going forward in terms of sales. Should we think that the 350 million level, is that reasonable or do you expect it to come down or how should we think?

No, we are very thorough in our work with due diligence. And I think that is why we have taken down the pace of acquisitions a bit. We think that they have a solid order backlog. Then it's always a question of timing. If you look at 25 specifically, then it might vary a bit. But if you're looking on the rolling 12, we think that we can keep the top line. And I guess that will be... We think we can keep the revenue in top line for 2025 and develop it. That is our ambition.

Okay. I think that was all from me. Thank you and have a good day. Same to you.

The next question comes from Johan Lankvist Sundin from Carnegie. Please go ahead.

Good morning, Mattias and Åsa. Thank you for taking my questions.

Good morning, everyone.

The first question from my side is on the Swedish business. And I note your comment, Mattias, during the presentation that the service business is stable. But can you please give some more color? Because when I look at page 17 in your report, it seems like the service revenue in Sweden is down some 10%. How come that?

Maybe you should.

It's actually, there are some smaller projects in service also, and they have actually disappeared during this period. You can say there are less smaller projects that are related to service.

Yeah, then I also think that we have closed down some poor performing branches throughout 24, which was in our books in Q1 24, which are no longer there. So I think, I don't know how you measure that or label that. If that is negative organic or actually business that we have taken out, of course that impacts the organic growth. So I think that is the reason as well.

So you're not losing the market share on the service side?

No, we don't think so. Because if we do, for example, the investigation to public customers in the south part of Sweden, last time we looked, those have increased. It can be that we are losing. I would say like this. In the beginning of this phase where we are probably the first one out to scale down because we know what to do, then we're probably initially losing some market shares because many of our competitors are still trying to keep up the revenue. But in the end, we know that when they are forced to do the same, then we are ready to take the growth. So all in all, we think we have done smart things, and we are not losing market shares because we are not good enough. What you see in the numbers is that we have closed down branches. And as you know, we have lost a lot of volume in that area from Q2 to Q4 because of closing down of branches. And I think that is what you see now when we compare to Q1 in Europe. between 25 and 24.

Yeah, but I tried to quickly look through the last four quarters, and it seems like there was a step down also here in Q1 in the year-of-year development. So that was why I was a little bit curious. If we go to Norway... Just curious to hear, we're now seeing the order backlog on the installation side improving. I know it's hard to assess, but given what you see and the timing of when you start to deliver on the projects, When do you believe the installation side in the Norwegian business should start growing again?

I think that's a tricky question because the Norwegian society is such. They are struggling with inflation. They have high pressure on salaries, which means that we won't see, I guess, we can't expect any lowering of the interest rates in Norway, which is something our industry has been, we think, is in need of. So I think the installation business in Norway will be tough a couple of quarters before we can see it's going up. But again, we are focusing on margin in the orders, quality orders when we are selling. And in Norway as well, in some other countries, there are some positive signals in the industry related to NATO expansions, for example, the weapon industry, but also some infrastructure projects. So we... I don't think I can give you a better answer on that one, but optimal, we had wanted to have a slightly higher order backlog in Norway, but again, we are not stressed. We know what to do and we want to do the right things.

So when you say a couple of quarters, are we... You're thinking Q4-25 or Q1-26? Yeah, I think that's guessing.

Let's see what happens the coming months. But it doesn't seem like there will be a dramatic pickup the coming quarter at least. But still, Norway is also the country where we have the highest part of service revenue, which is around 60%, I think.

yeah perfect and my last question is on Denmark and I think Carl he touched upon it before but just to get a better sense of the seasonality in Denmark throughout 2025 and how we should view margins there 3.5 beginning of or at least in Q1 should Q1 is often the kind of weakest quarter in a year. Do you think there's other kind of seasonality that we should be aware of when doing our forecast?

I think there can probably be some different positives and negatives throughout the years, but we are still very confident that we will deliver on what we have said before, that we will be closer to 5% this year. And if we are above 5%, I think we are very glad because we still see 25 as a year of transition, you can say. And I think that is something we stay to.

And when you say, just to be clear, when you say 5%, you mean that full year 25 should end up there?

Somewhere between, I think we have said somewhere slightly better than 5%.

Excellent. I get back in line and see, maybe I can come back with follow-ups later on. Thank you very much.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Carl Norwin from SEB. Please go ahead.

Yes, back again, here is the follow up on Finland. I mean, you had quite big negative organic growth there, but I also noticed that ordering steak was quite quite strong in the quarter. So I'm just wondering, is that related to products that are coming and becoming, let's say, already in Q2? Or should we expect quite weakish development also in the near term in Finland? Or how should we look upon that segment?

Finland is a tricky market, as we have said a couple of times. But on the other hand, we have won some projects recently. And I think it's more a question of when those come into production. And I don't have that answer here and now, Carl, but... uh we've been quite successful the last uh two months i think in finland but it takes some time before they starts to produce uh yeah okay that's good and then one one on sweden as well uh i think you got a quite big data center ordering was it in q1 which we started to produce on in q2 and throughout the year

I'm just wondering a little bit how that will impact the coming courts or what is the comparison

how much did you produce on that in q2 and q3 last year if you could provide that or if you have that would be helpful yeah i think that will be produced throughout the year so the the one that we got last year was that what your question because we don't have any yeah yeah exactly yeah that was pretty short uh production time on that one i think it was i think it was finished in q9 well there was some in q4 also yeah actually on that

But around 200 million that may be in Q2 and Q3 from that last year, so to say.

Yes. I think that would be at least, yes. Yeah. Perfect. Thank you. Good. Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Okay. Thank you so much for the questions. It is a busy day for our analysts, I know. Plenty of companies to cover. But with that, I say thank you so much for joining and have a great day. Thank you. Have a nice day.