tbd30

INTERIM PERIOD 1 OCTOBER – 31 DECEMBER

• The Group’s net revenue amounted to SEK 238.6 (274.7) million, adjusted EBITDA amounted to SEK 27.6 (26.1) million corresponding to an adjusted EBITDA margin of 11.6% (9.5%), and adjusted EBITA amounted to SEK 12.6 (11.7) million corresponding to an adjusted EBITA margin of 5.3% (4.3%). On a comparable and currency-adjusted basis, adjusted for discontinued operations, sales declined by 10.2%. The cash flow from operations during the fourth quarter was strong and amounted to 65.9 (48.2) million
• The fourth quarter was marked by a continued cautious market for planned maintenance, impacting the operations for pipe relining and energy, although signs of improvement were observed. Flushing operations continued to develop positively with stable demand from customers requiring ongoing maintenance
• Operating profit (EBIT) amounted to SEK 0.4 (9.1) million. Items affecting comparability for the period totalled SEK
  8.9 (-0.4) million and primarily pertained to restructuring costs, and costs for the change of system and implementation
• The Group’s net earnings amounted to SEK -11.0 (11.1) million
• The Group’s basic and diluted earnings per share amounted to SEK -0.82 (0.81)

SIGNIFICANT EVENTS DURING THE QUARTER

• On 21 October 2024, it was announced that the Board of Directors of Wall to Wall Group AB had appointed André Strömgren as the new Chief Executive Officer with immediate effect. The company’s former CEO Joachim Welin is leaving the company. André was previously CFO of the company, a role he will retain until a successor has been appointed
• During the quarter, the company repurchased its own shares, corresponding to 50,109 shares, and as of 31 December 2024, treasury shares amounted to 291,553

1 JANUARY – 31 DECEMBER PERIOD

• The Group’s net revenue amounted to SEK 918.5 (956.1) million, adjusted EBITDA amounted to SEK 97.2 (112.0) million corresponding to an adjusted EBITDA margin of 10.6% (11.7%), and adjusted EBITA amounted to SEK 36.7 (58.3) million corresponding to an adjusted EBITA margin of 4.0% (6.1%). On a comparable and currency-adjusted basis, adjusting for discontinued operations, sales declined by 5.3%. The cash flow from operations during the year was strong and amounted to 102.0 (50.7) million
• Operating profit (EBIT) amounted to SEK 33.5 (41.8) million. Items affecting comparability for the period totalled SEK
  -9.2 (4.7) million and primarily pertained to the write-down of contingent earnouts, restructuring costs, and costs for the change of system and implementation
• The Group’s net earnings amounted to SEK 13.8 (17.2) million
• The Group’s basic and diluted earnings per share amounted to SEK 1.01 (1.26)
• The Board of Directors proposes distribution of a cash dividend of SEK 1.00 per share

CEO ANDRÉ STRÖMGREN COMMENTS

CONTINUED CAUTIOUS MARKET IN THE FOURTH QUARTER OF THE YEAR
The fourth quarter was marked by a continued cautious market for property owners and housing cooperatives’ willingness to invest, with a corresponding impact on the company’s operations in pipe relining and energy. The market for these areas continues to strengthen even if the energy operations experienced project delays over the turn of the year. As throughout the year, flushing services continued to develop strongly with stable demand from customers requiring ongoing maintenance.

Net revenue amounted to SEK 238.6 (274.7) million, a decrease of 10.2 percent on a comparable and currency-adjusted basis, adjusted for discontinued operations. The decrease is entirely attributable to lower activity in pipe relining and energy. The adjusted EBITA margin improved 5.3 (4.3) percent due to an overall solid performance in flushing services and continued improvements in Finland. Our focus on streamlining operations resulted in a reduction in indirect costs by 11.1 percent compared to the previous year, a structural improvement we carry with us into 2025. There is, however, still work to be done in this area.

FULL YEAR 2024
In 2024, we navigated a challenging market that gradually improved as the year progressed. Despite this cautiously positive trend, activity levels for the year were lower, primarily because the energy and pipe relining businesses operate with planned projects that take time to materialize into revenue. For the full year, net revenue amounted to SEK 918.5 (956.1) million, a decrease of 5.3 percentage on a comparable and currency-adjusted basis, adjusted for discontinued operations.

In terms of geography, Denmark and Norway contributed positively to results compared to the previous year, while Sweden and Finland showed weaker performance. Flushing services had a strong year with both increased net revenue and margins. As mentioned above, this reflects the market dynamics where property owners’ reluctance to invest in planned maintenance has a direct impact on the demand for ongoing maintenance. This also leads to pent-up demand, suggesting much stronger demand for pipe relining and energy in the coming years.

Despite a challenging market, our focus on profitable projects and businesses has yielded results. The gross margin increased to 34.7 percent, compared to 34.5 percent the previous year and 34.3 percent in 2022.

Our efforts to reduce indirect costs, which fell by 5.7 percent during the year, had a positive impact but did not fully offset the lower activity levels. As a result, the adjusted EBITA margin for the full year was lower at 4.0 percent compared with 6.1 percent the previous year. This decline is entirely attributable to negative economies of scale caused by the market conditions throughout the year. However, continued improvements in gross margins and lower indirect costs provide good opportunities for rapid improvements in an expected stronger market environment going forward.

STRATEGIC PARTNERSHIP WITH LEADING INDUSTRY PLAYER FOR MATERIAL INNOVATION
At the beginning of 2025, we entered into a strategic partnership with a leading industry player to develop next generation pipe relining materials. With our operational expertise and leading position in pipe relining in the Nordic region, combined with the leading industry player’s world-class expertise in material development and innovation, we have found the perfect match.

The new materials will be used and resold by Wall to Wall Group under our own brand. This collaboration enables a unified material solution for Wall to Wall Group's operations while also providing a product that can be launched globally to meet a growing demand for advanced solutions in the industry. I expect this initiative to have a positive impact on our margins already during the current year, with increasing effects over time.

INITIATIVE FOR IMPROVED PROFITABILITY AND CONSOLIDATIONAN
In addition to the strategic material partnership, we have taken several measures to strengthen our sales and margins. Improved central sales functions complement local sales efforts. Furthermore, the framework agreements that Wall to Wall Group has had since mid-2024 with the Odevo Group – represented by SBC and Nabo – have resulted in us winning Nabo’s smart procurement for pipe flushing as well as SBC’s joint procurement for pipe flushing services, targeting their respective housing cooperatives. In 2025, we will take further steps towards a more unified market presence by increasingly operating under the Wall to Wall Group brand. Ensuring visibility and recognition wherever we operate is a given.

Reducing our indirect costs, both in absolute terms and relative to revenue, is a key priority as their share of net revenue has increased significantly since the Group was established in 2022. These cost increases are a result of previous acquisitions, where integration has not yet fully delivered the expected economies of scale. We have therefore accelerated our efforts to consolidate and streamline our cost structure. The initial target is to reduce our indirect costs to below 20 percent of net revenue, which will have a direct positive impact on operating profit while also creating a more efficient organisation.

OUTLOOK FOR 2025
I look ahead to 2025 with confidence, as the market for pipe relining and energy solutions is expected to recover. Flushing services are expected to continue developing strongly, and we plan to further strengthen our presence in this segment. Our ongoing initiatives to reduce indirect costs and increase the scalability of our organisation will positively impact profitability.

Our long-term financial targets remain unchanged – organic growth exceeding 10 percent and an adjusted EBITA margin of 15 percent. Our ambition for 2025, as a milestone toward achieving these the long-term goals, is to deliver a significant improvement in operating profit (adjusted EBITA) compared to 2024. This will be achieved by combining operational improvements with a market recovery while continuing to build for the future through innovation, consolidation, and strategic partnerships.

For full interim report, see appendix.