Continued growth and resumption of dividend
In the third quarter of 2020 Bravida’s net sales increased through both organic and acquired growth. It is pleasing that we were able to grow organically in this period, despite the pandemic and the resulting decrease in service business. Earnings performance was solid, with an unchanged EBITA margin, and cash flow was in line with last year. The growing pandemic is making the market outlook uncertain and it is difficult to assess when the market will return to what we consider normal.
The service business was negatively affected by the pandemic, mainly in Denmark and Norway, as demand fell and in a number of cases we were unable to access service properties because of precautionary measures. Installation operations have proceeded without any significant interruptions during the current pandemic.The order backlog, which only contains installation projects, decreased in the quarter. The level of activity is usually lower in the third quarter and the ongoing pandemic has also led to delays in project planning and investment decisions, resulting in lower demand and greater pricing pressure in the market.
The EBITA margin was unchanged at 6.0 percent, with the margin improving in Sweden and Finland. The earnings improvement in Sweden was due to good earnings performance in the Stockholm division as a result of the programme of measures we introduced at the end of last year. In Finland, the improved earnings were due to increased volumes and previously implemented restructuring. In Denmark, the EBITA margin declined due to reduced service sales and lower earnings in a few projects. The slightly lower margin in Norway was mainly due to a decrease in sales within the service business.
Strong cash convension and reinstated share dividend
Cash flow was solid in the third quarter. Cash conversion was 167 percent, which is well above our target, and our net debt remains at a record low. Bravida’s strong balance sheet has enabled us to reintroduce the share dividend this autumn. The dividend was SEK 2.25 per share for 2019, which corresponds to 52 percent of earnings per share. The decision on the share dividend means Bravida will pay back the furlough support it received in Sweden, which had a negative impact on earnings of around SEK 8 million in the quarter.
Aquisitions continue to strengthen Bravida
So far this year we have made 15 acquisitions, one of which was in October. The acquisitions have added annual sales of approximately SEK 776 million. The ongoing pandemic has led to us reducing the rate of acquisitions. But this autumn we decided to raise the intensity once again.
Occupational injuries have decreased by 15 percent over the last 12 months and the LTIR (lost time injury rate) was 9.6 (11.3). Our ultimate aim is to eliminate occupational injuries, while our medium-term goal is an LTIR of below 5.5. Bravida is continually endeavouring to improve injury prevention measures.
We have a good order backlog and a solid service business in many locations. Some markets have been more affected than others by the ongoing pandemic, resulting in lower demand and pricing pressure in some geographic areas. Bravida is sticking to its strategy of margin always taking precedence over volume, even in worse market conditions; we do not take on unprofitable projects. We believe the market outlook will remain uncertain given the development of the pandemic. There will always be demand for our services, and in the longer term demand will also benefit from stimulus measures and transition in society. Looking ahead, green investments under the EU’s European Green Deal will support market performance and contribute to lots of interesting assignments for Bravida.
Mattias Johansson, Stockholm, November 2020
For further information, please contact:
Mattias Johansson, CEO and Group President of Bravida. Tel: +46 8 695 20 00
Åsa Neving, CFO. Tel: +46 8 695 22 87
The report will be presented at 10:00 CET by CEO and Group President Mattias Johansson and CFO Åsa Neving. 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 webcast:
Telephone conference numbers:
SE: 0856618430 (Participant LocalCall)
UK: 08448228902 (Participant LocalCall)
US: 19177200181 (Participant LocalCall)
International Dial-In Number: +44 (0) 2071 928501
Conference ID: 3047487#
This disclosure contains information that Bravida Holding AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 6 November 2020, 07:30 CET.