Interim Report January – September 2020 Sweco AB (publ)
Continued stable performance
- Net sales decreased to SEK 4,547 million (4,623)
- EBITA increased to SEK 417 million (384), margin 9.2 per cent (8.3)
- EBIT increased to SEK 404 million (361), margin 8.9 per cent (7.8)
- Profit after tax increased to SEK 295 million (249), corresponding to SEK 2.49 per share (2.12)
- Net sales increased to SEK 15,716 million (14,938)
- EBITA increased to SEK 1,542 million (1,337), margin 9.8 per cent (8.9)
- EBIT increased to SEK 1,459 million (1,296), margin 9.3 per cent (8.7)
- Profit after tax increased to SEK 1,057 million (921), corresponding to SEK 8.95 per share (7.84)
- Net debt decreased to SEK 1,410 million (2,511)
- Net debt/EBITDA decreased to 0.6x (1.2)
Comments from President and CEO Åsa Bergman:
The third quarter was yet another stable quarter with good profitability despite the prevailing pandemic. Our diversified business model and digital work methods enable us to maintain high activity and efficiency. After the first phase of short-term crisis management, we have now returned to a more normal, decentralised management of the situation.
Good results and strong financial position in an uncertain market
In the quarter, EBITA improved 9 per cent to SEK 417 million (384). The EBITA margin increased to 9.2 per cent (8.3). The positive EBITA development was mainly driven by lower operating expenses and positive fee development. Cost reductions, mainly related to Covid-19, had a positive impact on EBITA of approximately SEK 70 million.
Geographically, the EBITA improvement was related to Sweden, the Netherlands, Finland and Belgium. The market conditions in the UK continue to be challenging, as a result of Covid-19 related lockdowns.
In Germany, negative project adjustments are having a negative impact on profitability. Based on potential risks in revenue recognition, we are conducting a review of the German project portfolio and have also changed Managing Director. I remain confident about the long term potential for Sweco in Germany.
Our cash flow continues to be strong and we maintain a strong financial position with relatively low net debt and significant financial reserves. Organic growth amounted to approximately -2 per cent, adjusted for calendar effects, in a market that remains affected by the uncertainty caused by the Covid-19 pandemic. We see normal business activity in most segments, but demand in parts of the industry and the private building and real estate segments is still impacted. The number of cancelled or postponed projects has decreased in the third quarter, but we see a caution in some markets when it comes to starting new projects, especially for commercial buildings.
Increased acquisition activity
I am pleased that we have regained our momentum on acquisitions, after a few months of lower activity during spring. We made another minor acquisition in Belgium in the quarter and have concluded several acquisitions in October. Acquiring an architect company in Norway is a milestone for Sweco, giving us a more complete service offering on the Norwegian market.
Sweco is well positioned
Sweco has a broad geographical footprint, well-diversified offerings, balanced mix of public and private clients, and a decentralised model with focus on small and medium sized projects that provides stability. We continue to follow the further development of Covid-19 closely and we are ready to act swiftly if needed. To continue to grow and win new assignments, we will continue to maintain a strong client focus, work efficiently and deliver according to plan.
Looking ahead, we are well-positioned towards trends in society driven by urbanisation, digitalisation and sustainability. Together with our clients, we develop innovative solutions and accelerate the transition towards a more sustainable society.