Interim report January – June 2021 Sweco AB (PUBL)
Continued stable performance
- Net sales increased to SEK 5,643 million (5,489)
- EBITA increased to SEK 529 million (495), margin 9.4 per cent (9.0)
- EBITA decreased 9 per cent year-on-year after adjustment for the substantial positive calendar effect in the quarter
- EBIT increased to SEK 509 million (439), margin 9.0 per cent (8.0)
- Profit after tax increased to SEK 379 million (319), corresponding to SEK 1.06 per share (0.90)
- Net sales increased to SEK 11,181 million (11,170)
- EBITA amounted to SEK 1,070 million (1,125), margin 9.6 per cent (10.1)
- EBITA decreased 2 per cent year-on-year after adjustment for the negative calendar effect in the period
- EBIT amounted to SEK 1,032 million (1,054), margin 9.2 per cent (9.4)
- Net debt/EBITDA increased to 1.0 x (0.5)
- Net debt increased to SEK 1,942 million (1,259)
- Profit after tax increased to SEK 771 million (762), corresponding to SEK 2.17 per share (2.15)
Comments from President and CEO Åsa Bergman:
In the second quarter net sales increased 3 per cent and we delivered margin improvements in five out of eight business areas. Organic growth was approximately 1 per cent, with higher average fees as the main driver.
Adjusted for calendar effects, EBITA declined year-on-year, mainly related to continued weak performances in Germany and the UK as well as a slow quarter in parts of the Finnish business. In addition, some of the cost reductions from last year were reversed as markets started to open.
Even if Covid-19 is still affecting the market, the overall situation is steadily improving. We had a stable inflow of new orders and the order book remains strong. We also continue to win the right type of projects, reflecting our expertise in the sustainable transformation of society. During the quarter, we were commissioned to work on the world’s first energy island in Denmark, design an industrial-scale hydrogen plant in Finland and we also secured a 10-year contract for the North Bothnia Line railway in northern Sweden.
Margin improvements in five out of eight business areas
Net sales amounted to SEK 5,643 million (5,489) in the quarter, corresponding to organic growth of approximately 1 per cent after adjustment for the calendar effect in the quarter. Belgium and Denmark were the main organic growth drivers.
EBITA increased to SEK 529 million (495), with an EBITA margin of 9.4 percent (9.0). There was a substantial positive calendar effect of SEK 81 million in the quarter.
Sweco Sweden continued to deliver high margins, and Sweco Belgium sustained its positive trend with strong, double-digit margins and significant growth. Sweco Norway posted a substantial margin improvement after a slightly weaker first quarter. Sweco Denmark and Sweco Netherlands continued their positive momentum. Altogether, five out of eight business areas improved their margins in the quarter.
Sweco Finland noted a weaker performance in two divisions and was also negatively impacted by acquisition and integration costs. Sweco UK continued to face a challenging market, with some public projects being postponed. In Germany, the new leadership is focused on a turnaround of the German business, implementing efficient work processes focused on the right type of projects, underpinned by strict project governance and control. This is a turnaround that we expect will take time.
We maintained a strong financial position with low net debt.
Acquisition of experts in net-zero emission buildings
During the quarter, we announced three strategic acquisitions. In April, we announced the acquisitions of Gaia Consulting, the largest sustainability consultancy in Finland, and Linja Arkkitehdit, architects specialised in the design of educational and business premises as well as residential buildings in Finland. In June we announced the acquisition of the Belgian consultancy Boydens Engineering.
Boydens Engineering was founded in 1961, employs 140 experts, and is well-known for designing sustainable net zero-emission buildings. This is a good example of how we lead the way in sustainable transformation and secure strong local positions. Together, we are creating a market-leading buildings design and engineering business with a clear sustainability profile in the Belgian market.
Sweco is well-positioned
As we see signs of market conditions improving and restrictions being eased, substantial business opportunities are emerging for Sweco. The pandemic has accelerated digitalisation and raised sustainability to the top of the agenda, resulting in new investments within our core areas of expertise. At Sweco, we have noted increased collaboration across skill sets and national borders. Sweco is well-positioned in the market and the strong financial position allows us to act on opportunities going forward.