Instalco

Focus on margin over volume

April – June 2024

• Net sales decreased by 4.6 percent and amounted to SEK 3,656 (3,832) million. Organic growth, adjusted for currency effects, amounted to -6.4 (5.5) percent.
• EBITA was SEK 265 (296) million.
• The EBITA margin was 7.2 (7.7) percent.
• Operating profit (EBIT) amounted to SEK 224 (244) million.
• Cash flow from operating activities for the period was SEK 158 (225) million.
• Earnings per share before dilution were SEK 0.47 (0.58) and after dilution were SEK 0.47 (0.57).

January – June 2024

• Net sales decreased by 2.2 percent and amounted to SEK 6,938 (7,095) million. Organic growth, adjusted for currency effects, amounted to -7.0 (8.4) percent.
• EBITA was SEK 495 (529) million.
• The EBITA margin was 7.1 (7.5) percent.
• Operating profit (EBIT) amounted to SEK 414 (434) million.
• Cash flow from operating activities for the period was SEK 356 (448) million.
• Earnings per share before dilution were SEK 0.84 (1.06) and after dilution were SEK 0.84 (1.05).
• Two acquisitions were made during the period, which, on an annual basis, contribute an estimated total sales of SEK 29 million.

Comments from CEO Robin Boheman:

Our decentralized model and the diversification of our offering that we have achieved in recent years makes us highly resilient in a challenging market and our revenue from service has continued to grow as our subsidiaries adapt to current conditions. The results for the second quarter of 2024 reflect our focus on prioritizing margin ahead of volume. Many of the projects we delivered during the quarter were signed in a tough market, which is reflected in our margins. It is particularly true for Segment Sweden. Overall, I am proud of how we continue to protect our position as the profitability leader in our industry.

Also today, we are submitting tenders in a challenging market, characterized by high interest rates and inflation. In some regions, the number of available projects has decreased, especially in southern Sweden and the Stockholm area, although we are starting to see positive signals. In the short term, it is unlikely that the interest rate trajectory will impact our customers’ project calculations very much. But it is still an important psychological factor. Both profitability and capacity utilization for our technical consultants at Intec remain good. The services that they offer are early cyclical, while more traditional installation services are late cyclical. We anticipate a slow, gradual improvement once the market trend turns upward again, but exactly when that will happen is difficult to predict.

Over the long term however, we can expect a strong increase in demand driven by such things as the green transition and EU regulations.

I am also happy to see that our cash conversion rate has improved compared to the same quarter last year. On the debt side, we are currently slightly above our long-term target for net debt/EBITDA, which is primarily due to the planned payments of contingent consideration and dividends during the quarter. Taking all of that into consideration, we feel secure with our financial position.

New business area in automation

Already at the end of the first quarter, we were able to report about an important milestone that we had achieved in the technical consulting part of the business run under the Intec brand. For the first time, its margin exceeded that of the Group. It remained so in the second quarter as well.

Based on our experience of building up Intec, at the end of May, we announced our start of a new business area and brand in property automation, applying the same start-up model and the knowledge gained there. We are thus expanding the Technical Consulting division by adding a new business area and brand. It is called Inmatiq, which focuses on energy efficiency and automation in the property and process area.

The launch of Inmatiq is not only a natural next step in our development, but also a critical component for creating sustainable, energy-efficient buildings and industries. Integrating advanced automation technology enables us to offer solutions that both lowers resource and energy consumption and improve comfort for our customers as well as lowers their operational costs. We look forward to continuing to drive innovation and contribute to a greener future.

Focus on culture-building remains

Over the last decade, we have built a decentralized Group with our own unique culture and model. In many ways, it has enabled us to shape and change the installation sector.

At the end of May, we gathered more than 4,000 of our employees at 100+ locations across Sweden, Norway and Finland. Together, we celebrated our first ten years and look ahead to the future. The event was the largest digital meeting in our history to date. The Instalco spirit has never been stronger and there was a great feeling of joy and pride as we celebrated our decentralized way of doing business together. Culture-building and the Instalco spirit is what drives us.

Within Instalco, we are many that share the conviction that our strong culture is an advantage that we will derive many benefits from once the market situation improves.

Report presentation
Instalco’s CEO Robin Boheman and CFO Christina Kassberg will present the report in a conference call/audiocast today, 22 August at 09:30 CET via:
https://ir.financialhearings.com/instalco-q2-report-2024

To participate by phone, register via: https://conference.financialhearings.com/teleconference/?id=50048288

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