Sweco AB

Good morning and welcome to this presentation of Svekos Q4 and year end report. With me this morning I have Svekos president and CEO Åsa Bergman and our CFO Olof Snålnakke. They will take us through the results of the quarter and the year of course. After the presentation we will open up for questions. Please Åsa.

Welcome everyone to Sweco's Q4 presentation. Before we move into the presentation, let me give you a short overview of Sweco. Sweco is Europe's leading architecture and engineering consultancy with operation in eight geographical business areas across our 15 markets in Europe. We are a well-diversified business operating across three different segments with a good balance between private and public clients. And the foundation for Sweco's long-term success is a mix of competencies spread across our now 22,000 experts. Our focus on organic and acquired growth, as well as our efficient and decentralized operating model. With a strong financial track record and financial position, we are focused on continue our growth journey and build on Sweco's success. If we look at 2023 as a whole, it was a strong year. Despite the challenging macroeconomic climate, we continue to grow and improve, supported by our well diversified business and a strong position as an enabler of the green transition in Europe. Net sales increased by 17% and the organic growth rate was 8% for the full year. EBITDA increased by 18% and 6 out of 8 business areas improved their results compared to last year. We also did 10 new acquisitions that strengthened Sweco's position as the European leader. And I'm pleased that the board has proposed a dividend of 295, which is 9% up from last year. Our financial position remains strong and enable us to continue to act on acquisition opportunities and execute on our strategy to reach top three positions in all business areas. In the past 10 years, we have delivered a solid improvement with a CAGR of 13% for net sales and 14% for EBITDA, growing net sales with 20 billion SEC and EBITDA with more than 1.8 billion SEC over the past years. With this summary, let's move over to the fourth quarter. The fourth quarter was somewhat mixed. Our growth momentum continued in Q4. Net sales increased by 15% and the organic growth amounted to 6%, driven by continued FTE growth and increased average fees. EBITDA decreased by 4% compared to the fourth quarter last year and the margin amounted to 8.5%. The decrease is mainly related to the UK, and this had a significant negative impact on EBITDA in the quarter. We are also taking measures in specific underperforming segments in Finland, and I will get back to this more in detail later in the presentation. I'm not satisfied with the result in the quarter, but if we set those two business areas aside, the rest of the Sweco business delivered a solid result. Looking at the operational highlights in the quarter, we continue to deliver solid organic growth with six out of eight business areas reporting positive organic growth in the quarter. Four out of eight business areas also reported solid double-digit margins. We continue to have a clear focus on growth and we improved our pricing. Belgium, Denmark, Sweden and the Netherlands also reported a good quarter and Germany continued to improve. As I mentioned, the result was negatively impacted by the situation in UK and Finland, and the actions were taken there. The action that we have taken in Q4 will have effect in Q1. We will also continue with further actions when necessary. We foresee that the market remains challenging, but the actions we are taking now will help us adjust to the market situation. As communicated in the Q3 report and during Capital Markets Day, the market situation in the UK is challenging. Especially the transport infrastructure segment is tough, with the government having cancelled major projects. Within the real estate, the weakness in the residential and commercial segments remained. In Q4, we have made significant negative project adjustments mainly related to public infrastructure and building projects. EBITDA was also impacted by a lower billing ratio. In light of the weak market and the significant impact on the business, we have taken several restructuring actions during the quarter. We have carried out the layoffs announced in the third quarter and also took additional layoffs bringing the total to 100 FTIs. We closed underperforming departments and we took additional actions to also reduce office space. As we have talked about earlier, we have taken steps to reposition our UK business towards existing and new growth segments, and this work has been intensified. Although the UK market overall is challenging, we are seeing good demand in energy, environmental service and parts of the building segments. Our focus is to get back on track to healthy organic growth and margins. The demand for services connected to the green transitions remains good, while areas that are more exposed to the macroeconomic situations were weaker, especially in parts of the building segments. The demand in water and energy and most part of the industry remains good, powered by demand connected in Europe's green transition. Transport infrastructure remains good in most markets, driven by large needs to update European infrastructure. In the building segments, the demand for public buildings remains good, while demand in residential and commercial buildings is weak, with variations across markets and subsegments. With lower demand in new construction in those segments, more of our business is being focused on renovations and improvements of existing buildings. And now I will hand over to Olof Stolnacke to walk you through the figures. Please, Olof.

thank you also and good morning everyone starting with a summary of the results again net sales in the quarters quarter is 7.7 billion sec with six percent organic growth seven percent from m a and two percent from fx EBITDA is 654 million, excluding the negative calendar effect, we are 30 million or 4% down with the margin at 8.5%. With the large cash release we see in Q4, leverage decreases from Q3 to 1.1. Compared to last year, the increase is primarily M&A driven. Looking then at net sales, we see organic growth in six out of eight BAs, but with bigger variations than we have seen in the previous quarters. Norway and the Netherlands are slightly positive. Sweden and Denmark are at around 5%. Belgium continued very strong momentum and close to 30% growth. Germany and Central Europe shows even higher growth than Belgium. They have a good momentum in the business, but it is also supported by significant positive project adjustments. Finland is slightly negative, driven by the weakening demand in some segments that Åsa just talked about. UK has negative underlying growth, but is also impacted by negative project adjustments and write-downs of close to 40 million SEK. Across the board, the growth drivers have been continued price increases and FTE growth. We continue to have good momentum in recruiting, and personnel turnover has continued to decline in the quarter. Project adjustments and billing ratio have contributed negatively. Looking then at EBITDA, on the EBITDA side we see a 4% decrease adjusted for calendar. We are of course not at all satisfied with the development even if we are up against a very strong quarter last year. We see margin improvements in Netherlands, Belgium and Germany and Central Europe, despite the negative calendar. Sweden, Denmark, Netherlands and Belgium have double-digit margins. And Germany and Central Europe are very close, delivering 9.8% in another very strong quarter. Finland and Norway at 5% is not where they should be. But the big negative is of course UK showing a significant loss in the quarter. Looking then at the EBITDA bridge by business area, we see bigger variations than we have seen for some time. Belgium and the Netherlands make significant EBITDA contributions in the quarter with strong organic development supported by M&A contribution. Germany and Central Europe has another very strong quarter. Again, the result includes positive project adjustment. So one should not expect 10% every quarter, but this is another very good sign that the turnaround in Germany is progressing well. Sweden, Denmark are more or less flat versus strong quarters last year. Denmark had some negative project adjustments in the quarter. but still has a 12.4% EBITDA margin for the full year. Norway was impacted by a slowdown in growth and lower billing ratio, but the big declines come from the BAs we have highlighted previously, Finland and most significantly, UK. The development in the UK has been covered by ÅSA, but it's worth mentioning that we have the 40 million in project write downs and also 15 million roughly in restructuring costs in the quarter. If we look at Finland, EBITDA is impacted by a weakening market and negative organic growth in Q4. And in Finland, as you may have seen in the report, we have 15 million in restructuring costs in the quarter. And what we have done there is that we have concluded the redundancy negotiations that we talked about in Q3 with 50 permanent layoffs and a maximum of 175 temporary layoffs. And we are currently utilizing around 75 of those 175. Overall for the group, higher average fees continue to be a positive driver, again, together with the contributions from acquisitions. Higher expenses, higher negative project adjustments, and lower billing ratio had a negative impact. And the calendar effect, relatively small, two less working hours, which corresponds to a negative 25 million in net sales and EBITDA. Looking then at the financial position, after working capital release of close to 900 million in Q4, net debt is slightly below 3 billion. And the increase versus last year then primarily explained by outflows for M&A, especially the larger acquisition of VK. Leverage is at 1.1, well below our target. We remain financially strong with available liquid assets of 3.9 billion. And then finally on the financials, the dividend, as Åsa said, based on the financial position, the board has proposed a dividend of 295 per share, a dividend growth of 9% in line with what we have seen historically, and a 63% payout ratio versus our policy. And with that, back to you, Åsa.