Interim report January – September 2023

Comments from CEO Robin Boheman:
The third quarter, with a strong September, resulted in a good development for Instalco with higher profitability that increased more than sales. Seasonally, the third quarter is a bit quieter for Instalco because of the summer vacation period. That said, our performance in all areas improved compared to last year. Sales grew by 18.7 percent, of which 3.0 percent was organic. Our profitability (EBITA) increased by 22.7 percent, resulting in a margin of 7.4 (7.2) percent.

Although the underlying need and demand for our services as regards both new construction and renovation is generally high, the rate of new orders for installation assignments has slowed down due the overall macroeconomic situation.

With that it mind, it is thus gratifying that segment Sweden has held up well and that Rest of Nordic delivered such a strong performance during the quarter, with an improvement in the EBITA margin to 6.2 (4.3) percent. Both Finland and Norway contributed to the increase and we are seeing positive results from our focus on profitability, together with the strong acquisitions we have made.

A more resilient company today
Our favourable performance in the third quarter, despite the prevailing market situation, is a sign of strength, which is evidence of the power we derive from the diversification we have undergone in recent years, both geographically and by expanding into new disciplines. Although the demand for traditional installation services in some regions has decreased, our efforts in the industrial area are going strong and we continue to have a low exposure to the housing segment.

We are also benefiting from our focus on the middle section of the market in terms of project size, as well as from the unique balance we have between control and decentralisation in our organisation. We are also noticing the effects of our strategic focus on the service offering, which is less sensitive to cyclical fluctuations. In fact, it was responsible for 28 percent of our revenue in the quarter. This make us stronger and more resilient than we used to be, although not entirely immune. Our order backlog remains steady at a good level.

Continued expansion and improved cash flow
During the quarter, we continued to execute on our acquisition strategy, although at a somewhat slower tempo. Our new company, URD Klima Sandnes in Norway, opens up an exciting new region for Instalco around Stavanger, where major investments are expected to be made in the future. Subsequent to the end of the quarter, we acquired Boas Industriservice, which is yet another complementary company that has been added to our growing industrial discipline.

As a rule, we prefer to fully own our subsidiaries. For some acquisitions and start-ups however, we make some tactical exceptions. In those cases, the plan is to continue acquiring additional shares in profitable businesses, which is something that we did during the quarter.

We have had a high rate of acquisition during the year and are delighted to have added so many great new companies to the Instalco team. Going forward, our focus will be on fully integrating them into our organisation. We are confident with how our balance sheet currently looks and have been quite focused on liquidity, which is reflected in the significant improvement to cash flow from operating activities during the quarter.

Expanded sustainability reporting on the agenda
We are intensifying our ESG work in many areas. In Norway, for example, we recently adapted our organisation to align it with the Transparency Act that was recently adopted by the Norwegian government. It requires an assessment, mapping and reporting of risks in the areas of human rights and working conditions. The aim is to more clearly prevent and limit negative consequences in these areas, both in our subsidiaries and the supply chain.

Our efforts in Norway to comply with the new legislation go hand-in-hand with the adaptations we are making to comply with other new regulations having to do with ESG in the EU, such as the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy, as well as our own high level of ambition.

Installers are key players in the green transition. Besides the work we are doing in our own organisation, we are also, each and every day, helping our customers select and implement energy-efficient, resource-saving installations when they build for a better tomorrow. It’s a journey we’ve only just seen the beginning of.

The full interim report: https://mb.cision.com/Main/15570/3863907/2389774.pdf