Interim report October–December 2017
A STRONG QUARTER TO END OUR BEST EVER YEAR
Regulatory press release
- Net sales increased by 15% to SEK 4,927 million (4,277)
- Organic growth was 6% (4)
- The order backlog was 19% higher at SEK 10,271 million (8,644)
- Operating profit increased by 10% to SEK 389 million (353)
- The operating margin was 7.9% (8.3)
- Profit after tax was SEK 320 million (255)
- Cash flow from operating activities was SEK 650 million (415)
- Net debt amounted to SEK 1,862 million (2,417)
- One acquisition was made in the quarter, adding annual sales of SEK 10 million
- Basic earnings per share were SEK 1.59 (1.26) and diluted earnings per share were SEK 1.58 (1.26)
Organic growth above our financial target
In 2017 and the fourth quarter we achieved growth in all countries. We grew by 15 percent in the quarter and by 17 percent for the full year. Organic growth was 6 percent for the quarter and for the full year, which is above our growth target.
It’s very pleasing that our initiative to grow within the service business is generating results, with growth amounting to 16 percent for the year and to a very strong 25 percent for the fourth quarter. In the fourth quarter, service accounted for 50 percent of sales.
Improved underlying margin in the quarter
The underlying margin, excluding operations at Oras, improved to 8.5 percent (8.3) in the quarter as a result of higher profitability in Sweden and Norway.
The underlying operating margin for the full year was 6.5 percent, which is the same level as the previous year.
Strong cash flow bolsters capital structure
Cash flow in the fourth quarter reduced our net debt to SEK 1,862 million and gives us the financial flexibility to continue making acquisitions. In addition, the Board proposes that we raise the dividend by 24 percent to SEK 1.55 per share.
Acquisitions continue to strengthen Bravida
Acquisitions are continuing to strengthen Bravida’s growth within both installation and service. In 2017 we carried out four acquisitions, which strengthened our market position. We will continue to grow through acquisitions and have already made three acquisitions so far in 2018.
The strategic acquisition of Oras means we are now the market leader in Norway and that our market position in heating & plumbing and HVAC has been significantly strengthened.
Integration of Oras has proceeded according to plan, with adaptation of the organisation, implementation of Bravida’s procedures and systems, and training of personnel. Integration is essentially now complete, and integration costs have been recognised on an ongoing basis in Bravida Norway. Operating income for 2017 was SEK 0 million and our assessment is that the acquired businesses will post an operating profit in 2018.
In Finland, we acquired Adison Oy in January 2018, an acquisition that bolsters our position in the Helsinki region and is another building block in establishing a critical mass in Finland. To build on the platform we have established in Finland, Bravida has recruited Marko Holopainen as the new Head of Division from March 2018.
Market remains good
As mentioned previously, I believe the technical installations and service markets will remain good in Sweden, Norway and Denmark, and stable in Finland. Ten percent of our sales in 2017 came from new-build apartment buildings. The majority of installations in new-build homes are taking place outside Stockholm and Oslo, with installations for both tenant-owned apartments and rental apartments.
I expect a gradual slowdown in technical installations in new-build housing. Bravida offers, and has the expertise to carry out, complex installations in all types of properties and our broad customer base means we aren’t dependent on individual projects or customers. A slowdown in housing construction will be substituted by other projects from industry, the public sector and housing renovation.
The order backlog, which only includes installation projects, is 19 percent higher than at the same point in the previous year. The order backlog largely consists of small and medium-sized installation projects, which together with our large service business, will support growth over the coming quarters.
During 2017 we have worked intensively with, among other things, the establishing of our new division Riks in Sweden, improvement initiatives in Finland, and several aqcuisitions. These efforts creates a good foundation which positively will contribute to Bravida's continuous development during 2018 and beyond.
Mattias Johansson, Stockholm, February 2018
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 16 February 2018.
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 5661 9353
UK: +44 20 3008 9811
US: +1 85 5831 5945
The report and the presentation are available on bravida.se/en/investors/.