Cash flow remains strong despite challenging market
January - March 2025
- Net sales increased by 0.3 percent and amounted to SEK 3,293 (3,283) million. Organic growth, adjusted for currency effects, amounted to 0.2 (-8.1) percent.
- EBITA amounted to SEK 123 (231) million, corresponding to an EBITA margin of 3.7 (7.0) percent.
- Adjusted EBITA amounted to SEK 187 million, which corresponds to an adjusted EBITA margin of 5.7 percent after non-recurring costs in the quarter of SEK 64 million.
- Operating profit (EBIT) amounted to SEK 88 (190) million.
- Adjusted EBIT amounted to SEK 152 million, after non-recurring costs in the quarter of SEK 64 million.
- Cash flow from operating activities amounted to SEK 223 (198) million.
- Earnings per share before dilution were SEK 0.16 (0.37) and after dilution were SEK 0.16 (0.37).
- One acquisition was made during the period, which, on an annual basis, contributes an estimated total sales of SEK 55 million.
Comments from CEO Robin Boheman:
The market remained challenging during the first quarter of 2025, although activity levels were higher. For the first time since autumn 2023, we are reporting positive organic growth, primarily driven by our industrial offering. Our order backlog has also remained stable. This highlights the benefits of our strategic focus on small to medium-sized projects, which enable agile responses and well-informed decision-making.
For some time, we have faced the challenge of fewer available projects and intense competition, accompanied by downward pressure on prices. We have also remained steadfast in our strategy of prioritising profitability over volume. However, in weaker market conditions, the pool of suitable projects becomes more limited. All of this is reflected in our margin, which falls far short of our ambition.
We recently completed a number of larger projects, which have not yet been fully replaced with new ones due to the timing of the order backlog. This has resulted in temporarily lower capacity utilisation in some subsidiaries during the quarter. When subsidiaries are operating below capacity it has a direct and immediate effect on the Group's earnings, primarily in the Rest of Nordics segment.
There have also been instances of customer bankruptcies in Sweden, which have had ripple effects such as project delays and suboptimal capacity utilisation. One example of this is the bankruptcy of Northvolt, which resulted in a write-down we recognise as a non-recurring cost during the quarter of SEK 64 million. We are continuously striving to limit our exposure to individual projects and counterparties. Our business model offers a degree of protection from the risks associated with major individual customers, the single largest customer in 2024 accounted for less than four per cent of our sales.
The action plan announced in December 2024 is progressing as planned and we introduce additional measures for subsidiaries requiring further support.
Stability that facilitates continued selective growth
Operating cash flow has improved thanks to focused efforts on working capital, with particular emphasis on project terms and follow-up. The leverage is higher than our own set target. Nevertheless, we still have a healthy margin to the covenants in our loan agreements. We have a stable financial position and expect the leverage ratio to normalise quickly once market conditions improve, supported by our focus on profitability and working capital, as well as our conservative approach to capital allocation.
Our ability to operate in line with our strategy is therefore not affected. We are today very selective with acquisitions and in March we welcomed the strategically important electrical installation company Alf Näslunds Eltjänst to Instalco. The acquisition makes us fully multidisciplinary in Örnsköldsvik, which is a region showing positive signs of significant future investments.
Present in Germany
Our representation in Germany is progressing according to plan and we completed our first investment during the quarter in the German installation group, Fabri AG. The collaboration with Fabri has thus far gone very well and we are already reaping the benefits of knowledge exchange between our companies. Fabri acquired two new units since the announcement of our minority stake in the Group and it now consists of 14 installation companies throughout Germany.
Road to Germany - part of our work with sustainability
For the third year in a row and within the scope of our social sustainability work, we are running the Instalco training which this year is also called Road to Germany. It is offered to all employees of the Group and it is adapted to our decentralised business model. The training is available digitally via an app, which makes for easy access during a run, jog or walk. The Instalco training is a way of boosting our health, well-being, camaraderie and the Instalco spirit. It is also how we are, metaphorically, getting closer to Germany - one kilometre at a time.
Our focus is on what we can impact
External forecasts indicate that the construction sector has passed its weakest period. Despite this, global conditions remain marked by instability and uncertainty. As a local actor, we are not directly affected by increases in world trade tariffs, but it is difficult to assess the impact of both interest rates and geopolitical tensions on the economy and customers' willingness to invest.
Against this backdrop, we focus on what we can influence - being close to our customers, acting quickly in our decisions and working efficiently at every stage to reduce costs and increase the value of projects. The work we do behind the scenes lays the foundation for long-term, value-creating growth. Our clear strategy and decentralised structure empower us to make well-grounded, responsible decisions with the customer at the centre. We remain confident that this approach is the right way forward. By staying true to our core, even in challenging market conditions, we are building Instalco into a company that will stand the test of time.
Presentation of the report
The report will be presented in a telephone conference/audiocast today, 29 April 09:30 CET via
https://instalco.events.inderes.com/q1-report-2025
To participate by phone, register via
https://conference.inderes.com/teleconference/?id=50051423
For further information:
Robin Boheman, CEO
Christina Kassberg, CFO, christina.kassberg@instalco.se
Mathilda Eriksson, Head of IR, mathilda.eriksson@instalco.se +46 (0)70-972 34 29
Instalco is one of the leading installation companies in Northern Europe for electrical, heating & plumbing, ventilation, industrial solutions and technical consulting. We offer system design, installation and service & maintenance of buildings and facilities in Sweden, Norway, Finland and Germany. The business is run through our 150+ subsidiaries, with support from a small, central organisation. Instalco is listed on Nasdaq Stockholm under the ticker INSTAL. For more information, visit www.instalco.se
This information is information that Instalco is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2025-04-29 07:30 CEST.
