Vestum

Highlights of the period October – December 2022

• Net sales amounted to SEK 2,025 (987) million
• EBITA amounted to SEK 205 (72) million, corresponding to an EBITA margin of 10.1% (7.3%)
• EBITA per share before and after dilution amounted to SEK 0.56 (0.21)
• Operating profit (EBIT) amounted to SEK 125 (30) million
• Cash flow from operating activities amounted to SEK 211 (11) million
• Operating cash flow amounted to SEK 258 (-31) million, corresponding to a cash conversion of 95% (-28%)

Highlights of the period January – December 2022

• Net sales amounted to SEK 6,930 (1,316) million
• EBITA amounted to SEK 679 (100) million, corresponding to an EBITA margin of 9.8% (7.6%)
• EBITA per share before and after dilution amounted to SEK 1.86 (0.53)
• Operating profit (EBIT) amounted to SEK 378 (45) million
• Cash flow from operating activities amounted to SEK 421 (-10) million
• Operating cash flow amounted to SEK 713 (-42) million, corresponding to a cash conversion of 77% (-26%)

Summarising comments by CEO Conny Ryk
Vestum delivered solid volumes and stable cash flow in the fourth quarter. Net sales for the quarter amounted to SEK 2,025 million and EBITA amounted to SEK 205 million, corresponding to an EBITA margin of 10.1%. The quarter showed strong organic growth of 20%, corresponding to 19% of the total increase in net sales. The organic growth continues to be driven primarily by the Infrastructure segment, and especially our operations within road maintenance, railways, water and sewage, and public transport. Our listing on Nasdaq Stockholm’s main list was completed during the quarter, which we view as a mark of quality and a natural step in Vestum’s growth journey. Being listed on Nasdaq Stockholm provides better conditions for long-term value creation for our shareholders, and is another step for Vestum toward becoming the leading Nordic industrial group within civic infrastructure.

The fourth quarter’s EBITA of SEK 205 million was primarily driven by solid demand within all three segments with high organic growth, driven in particular by the Infrastructure segment. Profitability within the Infrastructure segment remains stable with an EBITA margin of 10.7%. Within the Services segment, the EBITA margin amounted to 12.1%, which is a clear sequential improvement compared to the third quarter and in line with the expected seasonal pattern. The Water segment was negatively impacted by a few assignments within the public sector, which led to an EBITA margin of 8.0%. These assignments will finish during the first quarter of 2023 and are not expected to have any significant impact on profitability during the coming quarters. We are experiencing some continued disruptions on the cost side due to high inflation, as well as within certain customer segments where the challenging macro situation has been noticeable. At the same time, we have carried out price adjustments since the turn of the year which are expected to be reflected in our profitability during the year. Several of our larger businesses have gained market shares during the year and thereby strengthened their market positions. We believe this can also have positive effects on profitability when the market situation stabilizes.

The operating cash flow was stable during the quarter and amounted to SEK 258 million, which corresponds to a cash conversion of 95%. We decreased our level of tied-up capital and released working capital, which is the combined result of seasonal effects and a continued internal focus on improving the Group's cash flow generation. We see further potential for improving the optimisation of working capital. Net debt in relation to pro forma EBITDA amounted to 2.9x at the end of the quarter, which is within the range of our financial target of 2.5-3.5x.

We are continuously working on improving collaboration between Vestum’s businesses and have accelerated this work during the beginning of 2023 with the aim of extracting synergies. Our focus going forward will primarily be on driving margin improvements, but also capital structure efficiencies, and there are good conditions for increasing the Group’s profitability and cash flow generation in the coming years. Overall, we have delivered stable volumes and cash flow during the quarter, and with strong organic growth and gained market shares during the year, we look forward to 2023.

The Year End Report 2022 is available on Vestum’s website: https://www.vestum.se/en/ir/financial-reports/