Sweco AB

Good morning to you all and welcome to this presentation of Sweco's Q3 report. It will, as usual, be presented by Sweco's president and CEO, Åsa Bergman, and CFO, Olof Stolnacke. After their presentation, we will, of course, welcome all your questions. So with that, Åsa, please.

Welcome everyone to Sweco's Q3 presentation. Before we present the third quarter of 2024, let me give you a quick overview of Sweco. Sweco is Europe's leading architecture and engineering consultancy with operations in eight geographical business areas across 15 markets in Europe. We are a well diversified business operating across three segments with a good balance of private and public clients. The foundation for Sweco's long-term success is our mix of competencies spread across 22 000 experts, our focus on organic and acquired growth as well as our efficient and decentralized operational model. With a strong financial track record and financial position, we are focused on continuing our growth journey and build on Sweco's success. With this introduction, let's move over to the Q3 highlights. QT was another good and stable quarter for Sweco. We continued the positive momentum from the first half of the year and delivered a quarter of solid growth and improved margins. Net sales increased by 6%, of which 4% was organic growth. This quarter marks another milestone on our growth journey, with net sales exceeding 30 billion on rolling 12 months. Five years ago in Q3 2019, we exceeded 20 billion SEK on rolling 12 months, and this new milestone highlights Sweco's strong growth trajectory. Going back to the third quarter, there was a significant positive calendar effect in the quarter. And after adjustment, EBITDA improved by 5% or 22 million SEC. One of the key highlights in the quarter is that we continue to strengthen our margin. The EBITDA margin increased to 8.7%. Apart from the calendar, it was driven by higher average fees and higher billing ratio as a result of our focus on pricing and internal efficiency. Altogether, this was a solid quarter for Sweco, and we continue to deliver profitable growth with improved margins. Another good thing about this quarter was that Sweco now has received the validation and approval of our near-term target by the science-based targets initiative. The climate target covers emissions across the company's scope one, two, and three, and are consistent with the goals of the UN Paris Agreement. This summary lets us dive into some more detail in the third quarter. As mentioned, we continue to build on the momentum from the first two quarters with a positive operational trend. Most of our business areas reported positive organic growth and improved EBITDA. The development is supported by a continued positive trend in average fees. Over the past few quarters, we have placed greater emphasis on our internal efficiency and billing ratio, and we are pleased to see that our measures continue to show effect with further improvements in billing ratio and EBITDA margin. We continue to see solid demand across most business areas and segments, and the level of orders received increased in the quarter, demonstrating that we are well positioned in the market. Let me give you an update on our work to improve our efficiency. Efficiency improvements are key to strengthen our margin, and over the past quarters, we have announced a series of actions. We have previously announced redundancy programs mainly in Sweden and in Finland, the repositioning of our business in the UK and a group-wide organizational review to streamline the organization. We are pleased to see that these measures are continuing to show effect. Finland improved its margin significantly in the quarter and Sweden improved billing ratio. The repositioning in the UK is progressing according to plan and the business area reported another quarter with improved EBITDA and margin. As previously mentioned, we are also seeing an increase in our profitability and improvement in billing ratio across most business areas. This will remain a key priority going forward, and we expect further gradual improvements. Looking then at the overall market situation, it is generally in line with previous quarters. As a group, we undertake more than 150,000 projects annually, with many centered around the ongoing green transition, which continues to be a key growth driver for Sweco. Looking at our segments in the water, energy and industry segment, we see that the demand related to the energy transition and the green transition in industry continues to be strong. We are also seeing good to strong demand in water, while traditional industry remains a bit weaker. Transport infrastructure remains good in most markets, driven by large need to update Europe's transport infrastructure. In the building segment, the demand for public buildings remains stable while demand in residential and commercial real estate continues to be weak with the variation across markets and sub-segments. With that, I will hand over to Olof to walk you through the numbers. Please, Olof.

thank you also and good morning everyone we start with a summary of the quarter net sales at 6.8 billion with four percent calendar adjusted organic growth three percent from m a and fx headwind of two percent EBITDA is at 588 million. Excluding the positive calendar effect, we are 22 million or 5% up, margin at 8.7%. It should be noted that the positive calendar effect fell in July and therefore didn't fully materialize due to vacation. Leverage is down significantly from last year at 1.1%. Looking then at net sales, adjusted for calendar, as said, 4% organic growth, and we see organic growth in six out of eight BAs. Denmark and Germany and Central Europe continues to show very strong growth. Solid growth also in Sweden, Belgium and Netherlands. Norway shows a little bit lower growth this quarter. Finland and UK have negative growth. These continue to be our weakest markets and the markets where we have taken the most significant restructuring action, as you know. The growth drivers have been continued fee increases and also higher billing ratio. On the EBITDA side, we see a 5% increase. This is adjusted for the full calendar effect, so actual EBITDA growth is significantly higher. Denmark, Belgium, and Germany and Central Europe deliver double-digit margins. Sweden, Finland, and Netherlands are in the 7% to 9% range, and the UK delivers 6% in another profitable quarter. Norway shows the lowest margin but are in line with last year despite one of costs in the quarter. Overall, higher average fees continue to be a positive driver, together with higher billing ratio, while higher personnel expenses had a negative impact on EBITDA. Looking at the BAs, six out of eight deliver increased EBITDA. UK delivered the largest improvement, but this was primarily due to significant restructuring costs in Q3 last year. Apart from UK, Finland, Denmark and Germany and Central Europe delivered the largest improvement. Sweden improves despite taking a provision for bad debt in the quarter. Norway and Netherlands had a weaker quarter, in Norway partly explained by the one-off costs I mentioned for our new Oslo headquarters, with moving costs and double lease costs in September. The calendar effect from eight more working hours corresponded to a positive 101 million in net sales and EBITDA impact. And again, vacation reduced that impact significantly. Looking then at the financial position, which remains strong, net debt is significantly down versus Q3 last year. driven by an improved working capital position and lower M&A outflows. Leverage is at 1.1, also significantly down versus last year and well below our target. And we remain financially strong with available liquid assets of 3.2 billion. Finally, on the numbers, a reminder of the calendar effects. We have a slightly negative calendar for Q4 with three less hours. Most of the calendar effect comes in December and always a bit difficult to know how the holidays will play out with that. With our increased size, one hour now corresponds to approximately 13 million SEK. And with that, back to Åsa.