Earnings Release • Jul 20, 2017
Earnings Release
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20 July 2017
Sweco delivered a solid operational performance during the second quarter. Increased hourly fees and lower project adjustments contributed positively to the development. Adjusted for calendar effects and last year's extraordinary items, EBITA increased approximately SEK 23 million. However, the reported numbers show a negative development as the quarter had less working hours than last year.
Sweco was awarded several important projects during the quarter to plan and design the cities and communities of the future, including designing the encapsulation plant for Sweden's spent nuclear fuel, planning three new city districts in Amsterdam and advising on the construction of a power plant that will double power generation in Rwanda.
Our main priority is continued operational improvements. We remain focused on our customers, internal efficiency and having the best people in our business, in line with Sweco's operating model. Backed by a strong financial position and as the market-leading architecture and engineering consultancy in Europe, Sweco is well-positioned for continued valuecreating growth. Our strategy for the future is to repeat our history. We will continue to strengthen our Northern European footprint, through acquisitions and organic growth.
Overall, the market for Sweco's services is good. The Swedish market remains strong. The markets in Norway, Denmark, Western Europe and Central Europe are generally good. The markets in the Netherlands and Finland are improving.
Sweco plans and designs tomorrow's communities and cities. Our work produces sustainable buildings, efficient infrastructure and access to electricity and clean water. With 14,500 employees in Europe, we offer our customers the right expertise for every project. We carry out projects in 70 countries annually throughout the world. Sweco is Europe's leading engineering and architecture consulta This information is information that Sweco is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the conta
Adjusted for calendar effects and last year's negative extraordinary items, EBITA increased SEK 23 million. Finland and Germany were the main contributors to the improvement, but the Netherlands also contributed positively. Sweco Sweden is the most profitable Business Area in the group, with a margin of 11.2 per cent.
Overall for the Group, lower project adjustments and a positive trend in hourly fees were the main drivers of improved operational performance. Increased synergies from the Grontmij acquisition also contributed positively.
Adjusted for calendar effects, EBITA increased SEK 35 million. There were no extraordinary items related to the Grontmij acquisition (-12), which consequently contributed to the improvement by SEK 12 million.
The billing ratio improved to 75.5 per cent (75.1), mainly due to positive development in the Netherlands, Western Europe and Central Europe.
Since the Easter holiday fell during the second quarter of 2017 (rather than during the first quarter as in 2016). there were 26 fewer working hours during the second quarter compared to last year. This had a negative yearon-year impact on sales and EBITA of approximately SEK 184 million
Net sales decreased to SEK 4,262 million (4,370). The calendar effect was the main driver of the negative development. EBITA amounted to SEK 312 million (462).
Net financial items decreased to SEK-11 million (-8) due primarily to foreign exchange revaluation effects.
Earnings per share decreased to SEK 1.88 per share $(2.85).$
Net sales increased 3 per cent to SEK 8,670 million (8,387). Organic growth was 1 per cent. Acquired growth contributed 1 per cent, while currency effects made up the remainder.
EBITA increased to SEK 807 million (690), an improvement of SEK 117 million. The improvement is mainly due to higher average fees and lower project adjustments, as well as increased synergies from the Grontmij acquisition.
The absence of extraordinary items related to the Grontmij acquisition contributed SEK 48 million to the EBITA improvement.
Calendar effects of 2 hours had a positive vear-on-vear impact of approximately SEK 18 million on net sales and EBITA.
Adjusted for calendar effects and last year's negative extraordinary items, EBITA increased SEK 51 million. The improvement is mainly attributable to Finland and Germany.
The billing ratio was essentially stable at 74.9 per cent $(74.8)$ .
Net financial items decreased to SEK-23 million (-19) primarily due to foreign exchange revaluation effects.
Earnings per share increased to SEK 4.89 per share $(4.09)$ .
| Jul 2016- | ||||||
|---|---|---|---|---|---|---|
| Kev ratios | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 | Jun 2017 | Full-year 2016 |
| Net sales, SEK M | 4,262 | 4,370 | 8.670 | 8,387 | 16,814 | 16,531 |
| Acquisition-related growth, % | 66 | 65 | 42 | |||
| Organic growth, % | -5 | 4 | 3 | |||
| EBITA, excl. extraordinary items, SEKM |
312 | 474 | 807 | 737 | 1,551 | 1,482 |
| Margin, % | 7.3 | 10.8 | 9.3 | 8.8 | 9.2 | 9.0 |
| EBITA, SEK M | 312 | 462 | 807 | 690 | 1.453 | 1,336 |
| Marain, % | 7.3 | 10.6 | 9.3 | 8.2 | 8.6 | 8,1 |
| Profit after tax, SEK M | 225 | 342 | 585 | 489 | 1,027 | 931 |
| Earnings per share, SEK | 1.88 | 2.85 | 4.89 | 4.09 | 8.57 | 7.78 |
| Number of full-time employees | 14,548 | 14,507 | 14,477 | 14,403 | 14,402 | 14,365 |
| Billing ratio, % | 75.5 | 75.1 | 74.9 | 74.8 | 74.9 | 74.9 |
| Normal working hours | 464 | 490 | 970 | 968 | 1.981 | 1.979 |
| Net debt/EBITDA x | 1.2 | 2.0 | 1.0 |
Net sales by quarter and rolling 12 months
Sweco has been commissioned by the Swedish Nuclear Fuel and Waste Management Company (SKB) for the planned encapsulation plant in Oskarshamn, Sweden. Sweco will finalise the plant's plan, design and technical building services and its safety, control and power supply systems. Sweco will contribute expertise in several disciplines, including energy, environment, architecture and structural engineering. The contract value may exceed SEK 200 million provided that SKB obtains all necessary authorisations. The project will continue until the middle of year 2020.
In the Netherlands, Sweco has been commissioned by the municipality of Amsterdam to develop three major city districts. Sweco's experts will provide advice and services in design, engineering, procurement and contract management throughout the development of the IJburg-2, Zeeburgereiland and Overamstel city districts. The estimated contract value is approximately SEK 9 million per year. The project runs through April 2021 with four further one-year options for continuation.
Sweco has been engaged as advisor for a new peat-fired power plant that will double Rwanda's power generation capacity. Sweco's energy experts conducted feasibility studies and provided assistance during the tender and contract phase. Sweco will oversee project compliance during the construction process which will be completed in 2020.
Overall, the market for Sweco's services is good. The Swedish market remains strong. The markets in Norway. Denmark, Western Europe and Central Europe are generally good. The markets in Finland and the Netherlands are improving.
Demand for Sweco's services predominantly follows the general macro economic trend in Sweco's markets, with some time lag.
The Northern European GDP development is solid. Political uncertainty, the global macro-economic situation and financial market events are risks to the development.
EBITA by quarter and rolling 12 months SEK million Actual
Sweco does not provide forecasts.
EVENTS DURING THE QUARTER
On 1 April Dariush Rezai became President of Sweco Denmark.
On 1 June Sweco announced the acquisition of M&R Engineering, a Belgian engineering consultancy specialised in building service systems with approximately 40 employees in Brussels and Antwerp. The acquisition strengthens Sweco's position in Belgium.
During the quarter Sweco divested the Naarderbos golf course (with approximately 25 full-time employees) in the Netherlands, which was part of a portfolio of noncore real estate assets of the former Grontmij group. The divestment had no significant impact on Group profits.
CASH FLOW AND FINANCIAL POSITION Group cash flow from operating activities totalled SEK 319 million (-21) during the first six months of the year. Net debt decreased to SEK 2,064 million (2,534).
The net debt/EBITDA ratio was 1.2 times (2.0).
Available cash and cash equivalents, including unutilised credit lines, totalled SEK 1,600 million (1,267) at the end of the reporting period.
Investments in equipment totalled SEK 139 million (101) and were primarily attributable to IT investments. Depreciation of equipment totalled SEK 112 million (107) and amortisation of intangible assets totalled SEK 52 million (68).
Purchase consideration paid to acquire companies and operations totalled SEK 77 million (150) and had an impact of SEK-63 million (-135) on Group cash and cash equivalents. Purchase consideration on the divestment of companies and operations totalled SEK 15 million (9) and had an impact of SEK 13 million (9) on Group cash and cash equivalents. Repurchases of Sweco shares totalled SEK 139 million and had the same effect on Group cash and cash equivalents.
Dividends totalling SEK 513 million (418) were distributed to Sweco AB shareholders during the period.
Adjusted for calendar, EBITA improved by approximately SEK 4 million. EBITA was positively affected by an increasing trend in hourly fees and positive project adjustments, while a lower billing ratio contributed negatively.
Net sales and EBITA were impacted by a large negative calendar effect due to the Easter holiday falling during the second guarter this year, rather than during the first guarter as in 2016. The year-on-year calendar effect of -28 hours had a negative impact of approximately SEK 82 million on net sales and EBITA.
Sweco continues to be successful in the market and is one of Sweden's most attractive employers. Growth continues, although competition for talent is increasing. Organic revenue growth from own consultants, adjusted for the calender effect, was 2 per cent. Nominally, organic growth was -6 per cent, mainly due to the negative calendar effect. A reduction in income from sub consultants also impacted organic growth negatively. The reduced income from sub consultants is mainly related to the completion of large projects with a major share of sub-consultants.
The Swedish market remains strong. There is strong demand in the construction and real estate sector, particularly in the larger cities. The infrastructure market is also strong, supported by major public investments. The industrial market is stable and the market for IT-related services is developing positively. The market for power transmission services is strong, while the energy generation market is weak.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 |
| Net sales, SEK M | 1.798 | 1.913 | 3.652 | 3.649 |
| Organic growth, % | -6 | |||
| Currency, % | 0 | |||
| EBITA, SEK M | 202 | 280 | 453 | 450 |
| EBITA marain, % | 11.2 | 14.6 | 12.4 | 12.3 |
| Number of full-time employees | 5.564 | 5.551 | 5.533 | 5.509 |
EBITA decreased to SEK 7 million (68). Net sales and EBITA were impacted by a large negative calendar effect due to the Easter holiday falling during the second quarter this year, rather than during the first quarter as in 2016. The year-on-year calendar effect of -56 hours had a negative impact of approximately SEK 50 million on net sales and EBITA. EBITA was also negatively impacted by lower billing ratio of consulting staff and lower contribution from subconsultants.
The Norwegian market is good, but demand is distributed unevenly. The markets in the greater Oslo region are strong within public infrastructure, private and public commercial construction and residential construction. The markets in southern and western Norway are still challenging, while the northern areas are experiencing moderate growth.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 |
| Net sales, SEK M | 506 | 568 | 1,096 | 1,067 |
| Organic growth, % | $-13$ | 10 | -2 | |
| Currency, % | s. | -8 | ||
| EBITA, SEK M | 68 | 95 | ||
| EBITA margin, % | 1.5 | 12.0 | 8.7 | 9.1 |
| Number of full-time employees | 1.331 | 1,349 | 1,329 | 1.351 |
Net sales increased to SEK 498 million (471). EBITA increased SEK 7 million and the margin improved 1.0 percentage point to 9.9 per cent, despite a significant negative calendar effect of -17 hours with a negative year-on-year impact of approximately SEK 15 million on EBITA and net sales. Adjusted for calendar effects, EBITA increased approximately SEK 22 million. The improvements were mainly attributable to higher average fees and a combination of acquired and organic arowth.
The Finnish economy has gradually improved over the last 18 months. Demand for Sweco's services is stable and developing positively, primarily in the building market in the Helsinki region. Demand for industry, construction and real estate-related services is improving, while the infrastructure market remains challenging.
As the Finnish economy improves, Sweco Finland is well-positioned to benefit from a market-leading position, high internal efficiency and strong customer focus.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 |
| Net sales, SEK M | 498 | 471 | 985 | 896 |
| Organic growth, % | $-2$ | 19 | 15 | |
| Acquisition-related growth, % | ||||
| Currency, % | 5 | Ξì | ||
| EBITA, SEK M | 49 | 42 | 111 | 63 |
| EBITA marain, % | 9.9 | 8.9 | 11.2 | 7.0 |
| Number of full-time employees | 2.096 | 2.019 | 2.052 | 1,996 |
Organic growth was impacted negatively by calendar effects of -4 per cent during the quarter. The remaining organic decline was mainly attributable to a reduction of staff related to ongoing operational improvements.
EBITA declined SEK 27 million. The calendar effect of -22 hours had a negative impact of approximately SEK 14 million on EBITA. The remainder of the decline is mainly attributable to restructuring costs.
Since 1 April, Dariush Rezai is the President of Sweco Denmark. He continues the work to sustainably improve the performance of Sweco Denmark.
The market in Denmark is generally good and developing positively. The construction and real estate sector is developing well and is particularly strong in the larger cities. The infrastructure market is stable, with the exception of weaker demand in road construction. Demand in the water and energy sector is stable, while demand for climate adaption services in the larger cities is improving.
| IN DILLI | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 |
| Net sales, SEK M | 343 | 361 | 732 | 691 |
| Organic growth, % | $-9$ | |||
| Currency, % | 5 | |||
| EBITA, SEK M | -4 | 23 | 26 | |
| EBITA marain, % | $-1.1$ | 6.5 | 3.5 | 4.0 |
| Number of full-time employees | 1.013 | 1.062 | 1.018 | 1.090 |
IN DOICE
EBITA increased SEK 2 million and the margin improved 0.7 percentage points to 3.4 per cent. This despite a negative calendar effect of -8 hours with a year-on-year impact of approximately SEK 5 million. Adjusted for calendar effects, the improvement in EBITA was approximately SEK 7 million. The profit improvement was mainly attributable to an improved billing ratio.
Net sales decreased to SEK 421 million (455), mainly due to a reduction in the number of own consultants. Sweco Netherlands is continuing on its journey to sustainably improve operational performance. The implementation of a new customer-focused organisational model and staff reductions were completed in 2016. Sweco Netherlands continues the implementation of Sweco's operating model supported by a cultural change programme focused on collaboration and leadership.
The market in the Netherlands has been challenging for several years due to the country's real estate and financial crisis. The market is improving, particularly within private building construction. Sweco Netherlands delivers services primarily in the areas of public infrastructure, energy, water and public sector buildings. These markets typically lag behind the private construction market.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 |
| Net sales, SEK M | 421 | 455 | 861 | 878 |
| Organic growth, % | $-11$ | -4 | -4 | |
| Acquisition-related growth, % | -1 | -4 | - | |
| Currency, % | - 1 | |||
| EBITA. SEK M | 14 | 12 | 42 | 31 |
| EBITA marain, % | 3.4 | 2.7 | 4.9 | 3.5 |
| Number of full-time employees | 1,367 | 1,441 | 1,380 | 1.466 |
Net sales increased to SEK 401 million (395). Calendar effects of -12 hours had a negative year-on-year impact of approximately SEK 8 million on net sales and EBITA.
Adjusted for calendar effects, EBITA increased approximately SEK 4 million mainly due to positive operational development in Belgium and the UK. Due to negative calendar effects, EBITA decreased to SEK 29 million (33) and the margin declined 1.1 percentage points to 7.3 per cent.
Demand for Sweco's services in the UK remains good. The infrastructure and water markets are good. The energy and building markets are stable. Although there are no tangible signs of a slowdown, there is uncertainty about market development following the start of negotiations on the EU referendum ("Brexit").
The market in Belgium is generally stable within all market segments. The private and public building markets are improving. The industry market and public infrastructure markets are good.
| . | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 |
| Net sales, SEK M | 401 | 395 | 801 | 794 |
| Organic growth, % | ||||
| Currency, % | -0 | |||
| EBITA, SEK M | 29 | 33 | 57 | 57 |
| EBITA margin, % | 7.3 | 8.4 | 7.1 | |
| Number of full-time employees | 1.581 | 1.528 | 1.569 | 1.510 |
IN RRIFF
IN BOICE
Net sales increased to SEK 329 million (243) due to both double-digit organic and acquisition-related growth in Germany. A calendar effect of -23 hours had a negative year-on-year impact of approximately SEK 9 million on net sales and EBITA.
EBITA increased to SEK 18 million (11) and the EBITA margin improved 0.7 percentage points to 5.4 per cent. Adjusted for calendar effects, the improvement of EBITA was approximately SEK 16 million. The main contributions to the improved profit came from Germany, with positive operational momentum in the existing business and contribution from last year's acquisition of Jo. Franzke.
The German market is good overall and is developing positively. The health care and commercial markets are good. Demand is strong in the transport and environmental sector due to public investments, while the energy market remains challenging.
The Lithuanian market is experiencing weak development due to delayed EU investments in public infrastructure, water and environment. The new rounds of EU investments were initiated during third quarter 2016 and are expected to gradually increase. The Czech market shows signs of recovery with a good demand for Sweco's services. The Polish market is developing positively with good investments in energy, transportation and water.
| IN DRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 |
| Net sales, SEK M | 329 | 243 | 615 | 464 |
| Organic growth, % | 19 | -5 | 14 | |
| Acquisition-related growth, % | 11 | 14 | ||
| Currency, % | -2 | |||
| EBITA, SEK M | 18 | 31 | 14 | |
| EBITA marain, % | 5.4 | 4.7 | 5.0 | 3.0 |
| Number of full-time employees | 1,520 | 1.449 | 1,516 | 1,384 |
Parent Company net sales totalled SEK 309 million (258) and were attributable to intra-group services. Profit after net financial items totalled SEK 385 million (-15). Investments in equipment totalled SEK 4 million (11). Cash and cash equivalents at the end of the period totalled SEK 229 million (187).
Sweco complies with the International Financial Reporting Standards (IFRS) and interpretive statements from the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the EU. This interim report was prepared in accordance with IAS 34, Interim Reporting; the Swedish Annual Accounts Act; and the Swedish Financial Reporting Board's RFR 2, Reporting for Legal Entities.
To align internal and external reporting, Sweco has as of 1 January 2017 changed the definition of Net sales. EBITA and Number of full-time employees as below.
The definition of Acquisition-related items, and therefore also the definition of EBITA, has been adjusted. Profit on the divestment of buildings and land has been moved from Net sales to Acquisition-related items, and loss on the divestment of buildings and land has been moved from Other expenses to Acquisition-related items. The definition of Acquisition-related items has thus been changed to "Amortisation and impairment of goodwill and acquisition-related intangible assets, revaluation of additional purchase price, profit and loss on the divestment of companies and operations, and profit and loss on the divestment of buildings and land". Historical figures have been restated, but the change has no impact on reported figures.
The definition of Net sales has been adjusted to exclude internal revenues concerning internal administrative services. This change only affects Net sales of the business areas. Net sales for previous periods has been restated. This change has no impact on consolidated Group sales and no impact on the Group's or business areas' reported EBITA.
As of 1 January 2017, the accounting treatment of "agency staff" has been aligned across the group. Accordingly agency staff that were previously reported as employees by former Grontmij entities will now be reported as subconsultants. Historical financial figures have not been restated due to this change in accounting treatment: however, the Number of full-time employees has been restated for previous periods.
In all other respects, the Group applies the same accounting and valuation principles as those described in Note 1 of the 2016 annual report. In this interim report, amounts in brackets refer to the corresponding period of the previous year. Because table items are individually
rounded off, table figures do not always tally. The interim report comprises pages 1 - 16; interim financial information presented on pages 1 - 16 is therefore part of this financial report.
As of third quarter 2016 Sweco follows the quidelines from ESMA (European Securities and Markets Authority) regarding APMs (Alternative Performance Measures). In brief, these are measures of historical or ongoing operating results and financial performance that are not specified or defined in IFRS. The presentation of non-IFRS financial measures is limited as an analytical tool and should not be used as a substitute for key ratios pursuant to IFRS. Sweco believes that the APMs will enhance the investor's evaluation of our ongoing operating results, aid in forecasting future periods and facilitate meaningful comparison of results between periods. The non-IFRS financial measures presented in this report may differ from similarly titled measures used by other companies. A complete list of all Sweco's definitions can be found on our website: http://www.sweco.se/en/IR/definitions/.
Key ratio calculations that cannot be obtained directly from the income statement and balance sheet can be found on page 16 (revenue growth) and page 15 (EBITA excluding extraordinary items).
The Sweco share is listed on Nasdag Stockholm. The share price of the Sweco Class B share was SEK 208.30 at the end of the period, representing a 2.0 per cent increase during the quarter. The Nasdag Stockholm General Index increased by 4 per cent over the same period.
In May 2017 Sweco conducted a new share issue totalling 500,000 Class C shares at a price of SEK 1.00 per share. Pursuant to the Articles of Association, Sweco also reduced its share capital in June 2017 by way of repayment to the shareholders through the redemption of 900,000 Class C shares.
The total number of shares at the end of the period was 121,583,819: 10,533,731 Class A shares, 110,550,088 Class B shares and 500,000 Class C shares. The total number of outstanding shares was 119,870,436: 10,533,731 Class A shares and 109,336,705 Class B shares.
Significant risks and uncertainties affecting the Sweco Group and the Parent Company include business risks associated with the general economic trend and investment level in various markets, the capacity to attract and retain skilled personnel and the effects of political decisions. The Group is also exposed to various types of financial risks, such as foreign currency, interest rate and credit risks. No significant risks are deemed to have arisen apart from the risks detailed in
Sweco's 2016 annual report (page 94, Risks and Risk Management).
The number of normal working hours in 2017, based on the 12-month sales-weighted business mix as of September 2016, is broken down as follows:
| 2017 | 2016 | ||
|---|---|---|---|
| Quarter 1: | 506 | 478 | $+28$ |
| Quarter 2: | 464 | 490 | -26 |
| Quarter 3: | 511 | 518 | -7 |
| Quarter 4: | 490 | 493 | -3 |
| Total: | 1.971 | 1.979 | -8 |
ACQUISITION-RELATED INTANGIBLE ASSETS Acquisition-related intangible assets will be amortised pursuant to the following schedule, based on acquisitions to date:
| 2016 Actuals | SEK-92 million |
|---|---|
| 2017 Estimate | SEK-65 million |
| 2018 Estimate | SEK-55 million |
| 2019 Estimate | SEK-29 million |
FORTHCOMING FINANCIAL INFORMATION Interim report January-September 27 October 2017 Year-end report 2017 13 February 2018
FOR FURTHER INFORMATION, PLEASE CONTACT: Tomas Carlsson, President and CEO Phone +46 8 695 66 60 / +46 70 552 92 75 [email protected]
Jonas Dahlberg, CFO Phone +46 8 695 63 32 / +46 70 347 23 83 [email protected]
SWECO AB (publ) Org. nr. 556542-9841 Gjörwellsgatan 22, Box 34044, 100 26 Stockholm, Phone: +46 8 695 60 00 Email: [email protected] www.swecogroup.com
This report has not been audited.
The Board of Directors and the President give their assurance that this interim report gives a true and fair view of the business activities, financial position and results of operations of the Group and the Parent Company, and describes the significant risks and uncertainties to which the Parent Company and Group companies are exposed.
Stockholm, 20 July 2017
Johan Nordström Board Chairman
Anders G.Carlberg Board member
Gunnel Duveblad Board member
Eva Lindqvist Board member Johan Hjertonsson Board member
Christine Wolff Board member Elaine Grunewald Board member
Maria Ekh Employee representative
Anna Leonsson Employee representative
Görgen Edenhagen Employee representative
Tomas Carlsson President and CEO Board member
| Jul 2016- | ||||||
|---|---|---|---|---|---|---|
| Key ratios 1) | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 | Jun 2017 | Full-year 2016 |
| Profitability | ||||||
| EBITA margin, % | 7.3 | 10.6 | 9.3 | 8.2 | 8.6 | 8.1 |
| Operating margin (EBIT), % | 7.0 | 10.0 | 8.9 | 7.7 | 8.2 | 7.6 |
| Profit margin, % | 6.8 | 9.8 | 8.7 | 7.4 | 8.0 | 7.4 |
| Revenue growth 2) | ||||||
| Organic growth, % | $-5$ | $\overline{7}$ | $\it 1$ | 4 | $\sqrt{3}$ | |
| Acquisition-related growth, % | $\it 1$ | 66 | $\mathbf{1}$ | 65 | 42 | |
| Currency, % | $\mathfrak{p}$ | $-2$ | $\mathfrak{p}$ | $-2$ | 0 | |
| Total growth, % | $-2$ | 71 | $\overline{3}$ | 67 | 45 | |
| Debt | ||||||
| Net debt, SEK M | 2.064 | 2.534 | 1,558 | |||
| Interest-bearing debt, SEK M | 2,381 | 2.851 | 2.451 | |||
| Financial strength | ||||||
| Net debt/Equity, % | 38.3 | 51.9 | 28.7 | |||
| Net debt/EBITDA, x | 1.2 | 2.0 | 1.0 | |||
| Equity/Assets ratio, % | 38.3 | 35.5 | 39.3 | |||
| Available cash and cash equivalents, SEK M |
1,600 | 1,267 | 2,138 | |||
| -of which unutilised credit, SEK M | 1,283 | 950 | 1.245 | |||
| Return | ||||||
| Return on equity, % | 20.0 | 18.9 | 18.0 | |||
| Return on capital employed, % | 18.2 | 16.6 | 16.8 | |||
| Share data | ||||||
| Earnings per share, SEK | 1.88 | 2.85 | 4.89 | 4.09 | 8.57 | 7.78 |
| Diluted earnings per share, SEK | 1.85 | 2.81 | 4.79 | 4.03 | 8.41 | 7.65 |
| Equity per share, SEK 3) | 44.89 | 40.75 | 45.37 | |||
| Diluted equity per share, SEK3) | 44.30 | 39.97 | 44.47 | |||
| Number of outstanding shares at | 119,870,436 | 119,624,270 | 119,554,270 | |||
| reporting date | ||||||
| Number of repurchased Class B and Class C shares |
1,713,383 | 2,359,549 | 2,429,549 |
1) Key ratio definitions are available on Sweco's website.
2) See page 16 for details on Sweco's calculation of revenue growth.
3) Refers to portion attributable to Parent Company shareholders.
| Income Statement | Jul 2016- | |||||
|---|---|---|---|---|---|---|
| SEKM | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 | Jun 2017 | Full-year 2016 |
| Net sales | 4,262 | 4,370 | 8,670 | 8,387 | 16,814 | 16,531 |
| Other income | N | |||||
| Other external expenses | $-1,007$ | $-1,016$ | $-2,042$ | $-1.968$ | $-4,126$ | $-4,052$ |
| Personnel expenses | $-2,878$ | $-2,826$ | $-5,690$ | $-5,595$ | $-10,970$ | $-10,875$ |
| EBITDA | 378 | 528 | 940 | 824 | 1,720 | 1,605 |
| Amortisation/depreciation and impairments |
-66 | -66 | $-133$ | $-135$ | $-267$ | $-269$ |
| EBITA | 312 | 462 | 807 | 690 | 1,453 | 1,336 |
| Acquisition-related items 1) | $-14$ | $-24$ | $-31$ | $-47$ | $-71$ | $-87$ |
| Operating profit (EBIT) | 299 | 438 | 776 | 643 | 1,382 | 1,249 |
| Net financial items | $-11$ | -8 | $-23$ | $-19$ | $-38$ | $-33$ |
| Profit before tax | 288 | 429 | 753 | 624 | 1,345 | 1,216 |
| Income tax | $-62$ | $-88$ | $-167$ | $-134$ | $-318$ | $-285$ |
| PROFIT FOR THE PERIOD | 225 | 342 | 585 | 489 | 1,027 | 931 |
| Attributable to: | ||||||
| Parent Company shareholders | 225 | 342 | 584 | 489 | 1.025 | 930 |
| Non-controlling interests | O | 0 | $\Omega$ | |||
| Earnings per share | ||||||
| attributable to Parent Company shareholders, SEK |
1.88 | 2.85 | 4.89 | 4.09 | 8.57 | 7.78 |
| Average number of shares | 119,727,277 | 119.694.871 | 119,613,250 | 119,585,036 | 119,612,927 | 119,598,820 |
| Dividend per share, SEK | 4.30 |
1) Acquisition-related items are defined as amortisation and impairment of goodwill and acquisition-related intangible assets, revaluation of additional purchase price, and
profit and loss on the divestment of companies,
| Consolidated income statement and other compre- hensive |
Jul 2016- | |||||
|---|---|---|---|---|---|---|
| income, SEK M | Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 | Jun 2017 | Full-year 2016 |
| Profit for the period | 225 | 342 | 585 | 489 | 1,027 | 931 |
| Items that will not be reversed in the income state- ment |
||||||
| Revaluation of defined benefit pensions, net after $\text{tax}^{1,2}$ |
$\Omega$ | $-9$ | 0 | $-30$ | 0 | $-30$ |
| Items that may subsequently be reversed in the in- come statement |
||||||
| Translation differences, net after tax | $-19$ | 15 | $-28$ | $-13$ | 23 | 38 |
| Translation differences transferred to profit for the period |
$\overline{\phantom{a}}$ | |||||
| COMPREHENSIVE INCOME FOR THE PERIOD | 207 | 348 | 557 | 447 | 1,051 | 940 |
| Attributable to: | ||||||
| Parent Company shareholders | 206 | 348 | 556 | 447 | 1,048 | 939 |
| Non-controlling interests | 0 | 0 | 2 | |||
| $1$ Tax on revaluation of defined benefit pensions | $\overline{c}$ | 9 | -4 | 5 |
2) Revalued annually. Reviewed quarterly in the event of material changes to actuarial assumptions.
| Cash flow statement SEKM |
Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 | Jul 2016- Jun 2017 |
Full-year 2016 |
|---|---|---|---|---|---|---|
| Cash flow from operating activities before changes in working capital and tax paid |
415 | 547 | 967 | 821 | 1.823 | 1.677 |
| Tax paid | $-57$ | -54 | $-140$ | $-135$ | $-201$ | $-196$ |
| Changes in working capital | $-229$ | $-270$ | $-508$ | $-707$ | $-117$ | $-316$ |
| Cash flow from operating activities | 129 | 223 | 319 | $-21$ | 1.505 | 1,165 |
| Cash flow from investing activities | $-88$ | $-183$ | $-191$ | $-239$ | $-353$ | -401 |
| Cash flow from financing activities | $-219$ | $-72$ | $-693$ | 38 | $-1.159$ | $-428$ |
| CASH FLOW FOR THE PERIOD | $-178$ | $-32$ | $-565$ | $-222$ | $-7$ | 336 |
| Balance sheet | |||
|---|---|---|---|
| SEKM | 30 Jun 2017 | 30 Jun 2016 | 31 Dec 2016 |
| Goodwill | 6.137 | 5.916 | 6.098 |
| Other intangible assets | 312 | 380 | 346 |
| Property, plant and equipment | 609 | 643 | 616 |
| Financial assets | 219 | 172 | 219 |
| Current assets excl. cash and cash equivalents | 6,488 | 6,328 | 5,650 |
| Cash and cash equivalents incl. short-term investments | 317 | 317 | 892 |
| TOTAL ASSETS | 14,081 | 13,756 | 13,820 |
| Equity attributable to Parent Company shareholders | 5,381 | 4,875 | 5.424 |
| Non-controlling interests | 11 | 8 | 10 |
| Total equity | 5,393 | 4,884 | 5,435 |
| Non-current interest-bearing liabilities | 1.415 | 2.511 | 1,515 |
| Other non-current liabilities | 845 | 758 | 833 |
| Current interest-bearing liabilities | 966 | 340 | 936 |
| Other current liabilities | 5,462 | 5,264 | 5,102 |
| TOTAL EQUITY AND LIABILITIES | 14,081 | 13,756 | 13,820 |
| Pledged assets | 21 | 22 | |
| Contingent liabilities | 704 | 633 | 706 |
| Changes in equity SEKM |
Jan-Jun 2017 | Jan-Jun 2016 | ||||
|---|---|---|---|---|---|---|
| Equity at- tributable to Parent Company shareholders |
Non- controlling interests |
Total equity | Equity at- tributable to Parent Company shareholders |
Non- controlling interests |
Total equity | |
| Equity, opening balance | 5,424 | 10 | 5,435 | 4,899 | 4,908 | |
| Comprehensive income for the period | 556 | 1 | 557 | 447 | 447 | |
| Transfer to shareholders | $-513$ | $-513$ | $-418$ | -1 | $-419$ | |
| Preferential rights issue | $\Omega$ | $\overline{\phantom{a}}$ | 0 | $-2$ | $\overline{\phantom{0}}$ | $-2$ |
| Buy-back of treasury shares | $-139$ | $\overline{\phantom{a}}$ | $-139$ | $-114$ | $\overline{\phantom{0}}$ | $-114$ |
| Sales of treasury shares | 3 | - | 3 | |||
| Share-based incentive schemes | 50 | 50 | 59 | $\overline{\phantom{0}}$ | 59 | |
| Share savings schemes | 3 | $\qquad \qquad$ | ۰ | |||
| EQUITY, CLOSING BALANCE | 5,381 | 11 | 5,393 | 4,875 | 8 | 4,884 |
During the period Sweco acquired the Finnish operations of Karves Yhtiöt Ltd and M&R Engineering, a Belgian engineering consultancy. The acquired businesses have an aggregate total of approximately 94 employees. Purchase consideration totalled SEK 77 million and had a negative impact on cash and cash equivalents of SEK 63 million. The acquisitions impacted the consolidated balance sheet as detailed in the table below whereof the acquisition analysis regarding M&R Engineering is preliminary. Of the unsettled purchase price commitment of SEK 3 million, SEK 3 million refers to conditional contingent consideration. During the period the acquired companies contributed SEK 21 million in net sales and SEK 4 million in operating profit (EBIT). If all of the companies had been owned as of 1 January 2017 they would have contributed approximately SEK 55 million in net sales and about SEK 8 million in operating profit.
| Acquisitions, SEKM | |
|---|---|
| Intangible assets | 59 |
| Property, plant and equipment | 3 |
| Financial assets | 0 |
| Current assets | 35 |
| Non-current liabilities | $-3$ |
| Deferred tax | $-2$ |
| Other current liabilities | $-15$ |
| Total purchase consideration | 77 |
| Unsettled purchase price commitment | $-3$ |
| Cash and cash equivalents | $-11$ |
| DECREASE IN GROUP CASH AND CASH EQUIVALENTS | 63 |
During the period Sweco divested Golfexploitatiemaatschappii Naarderbos B.V and Naarderbos Ontwikkeling B.V., with total 65 employees (approximately 25 full-time employees). The businesses contributed SEK 11 million in net sales and SEK-4 million in operating profit. The divestments had a positive impact on profit of SEK 0.1 million and a positive impact on the Group's cash and cash equivalents of SEK13 million. The divestments impacted the consolidated balance sheet as detailed below.
| Divestments, SEK M | |
|---|---|
| Property, plant and equipment | -40 |
| Current assets | 10 |
| Non-current liabilities | -35 |
| Current liabilities | |
| Capital gain recorded on divestment | |
| Total purchase consideration | |
| Cash and cash equivalents in divested companies | |
| INCREASE IN GROUP CASH AND GROUP EQUIVALENTS |
| Acquisition-related items SEK M |
Apr-Jun 2017 | Apr-Jun 2016 | Jan-Jun 2017 | Jan-Jun 2016 | Jul 2016- Jun 2017 |
Full-year 2016 |
|---|---|---|---|---|---|---|
| Amortisation of acquisition-related intangible assets |
$-16$ | $-24$ | $-33$ | $-47$ | $-78$ | $-92$ |
| Revaluation of additional purchase price |
- | 3 | ||||
| Profit/ loss on the divestment of buildings and land |
$\overline{\phantom{a}}$ | ↷ | ||||
| Profit/loss on divestment of companies and operations |
0 | C | ||||
| ACQUISITION-RELATED ITEMS | $-14$ | -24 | $-31$ | -47 | $-71$ | $-87$ |
The Group's financial assets measured at fair value totalled SEK 14 million (14). The derivative instruments are forward currency contracts, the fair value of which are determined based on listed prices for forward currency contracts on the balance sheet date (Level 2). The fair value of unlisted financial assets is determined through market valuation techniques (observable market inputs) such as recent transactions, listed prices of similar instruments and discounted cash flows. In the event no reliable inputs are available for determining fair value, financial assets are reported at acquisition value (Level 3). There were no transfers between levels during the period.
Sweco has restated historical figures for Q2-Q3 2015 to reflect the new Sweco Group organisational structure, effective as of 1 October 2015. Grontmij is included pro forma as if the acquisition had taken place on 31 December 20141). Further, the figures of 2015 and 2016 have been restated to reflect the new definition of Net sales. EBITA and Number of full-time employees as described on page 8.
| Quarterly summary 2) | Actual 2017 02 |
Actual 2017 01 |
Actual 2016 Q4 |
Actual 2016 03 |
Actual 2016 02 |
Actual 2016 01 |
Actual 2015 04 |
Pro forma 2015 03 |
Pro forma 2015 02 |
|---|---|---|---|---|---|---|---|---|---|
| Net sales, SEK M | |||||||||
| Sweco Sweden | 1,798 | 1,854 | 1,951 | 1.465 | 1.913 | 1,736 | 1,900 | 1,372 | 1,775 |
| Sweco Norway | 506 | 590 | 530 | 457 | 568 | 499 | 508 | 401 | 551 |
| Sweco Finland | 498 | 487 | 462 | 402 | 471 | 425 | 483 | 372 | 400 |
| Sweco Denmark | 343 | 389 | 351 | 334 | 361 | 330 | 365 | 320 | 331 |
| Sweco Netherlands | 421 | 440 | 434 | 434 | 455 | 423 | 450 | 445 | 465 |
| Sweco Western Europe | 401 | 400 | 420 | 365 | 395 | 398 | 428 | 389 | 393 |
| Sweco Central Europe | 329 | 285 | 297 | 289 | 243 | 221 | 261 | 218 | 244 |
| Group-wide, Eliminations, etc. | $-36$ | $-36$ | $-24$ | $-22$ | $-36$ | $-15$ | -46 | $-12$ | $-39$ |
| TOTAL GROUP | 4,262 | 4,408 | 4,421 | 3,723 | 4,370 | 4,018 | 4,350 | 3,504 | 4,120 |
| EBITA, SEK M | |||||||||
| Sweco Sweden | 202 | 251 | 273 | 129 | 280 | 170 | 211 | 91 | 186 |
| Sweco Norway | 7 | 88 | 58 | 40 | 68 | 29 | 52 | 24 | 44 |
| Sweco Finland | 49 | 61 | 41 | 35 | 42 | 21 | 35 | 27 | $10\,$ |
| Sweco Denmark | $-4$ | 30 | 44 | 27 | 23 | 4 | 28 | 18 | $-8$ |
| Sweco Netherlands | 14 | 28 | $\mathbf{0}$ | $-4$ | 12 | 18 | $-1$ | 12 | $\mathbf{0}$ |
| Sweco Western Europe | 29 | 28 | 30 | 18 | 33 | 23 | 25 | 22 | 23 |
| Sweco Central Europe | 18 | 13 | 26 | 18 | 11 | 3 | 19 | $\overline{7}$ | 11 |
| Group-wide, Eliminations, etc. | $-4$ | $-4$ | $-77$ | $-12$ | $-9$ | $-40$ | $-170$ | $-63$ | $-79$ |
| EBITA | 312 | 494 | 395 | 252 | 462 | 228 | 200 | 138 | 187 |
| Extraordinary items 3) | 83 | 15 | 12 | 36 | 190 | 59 | 70 | ||
| EBITA excl. extraordinary items | 312 | 494 | 478 | 266 | 474 | 263 | 390 | 197 | 257 |
| EBITA margin, % | |||||||||
| Sweco Sweden | 11.2 | 13.5 | 14.0 | 8.8 | 14.6 | 9.8 | 11.1 | 6.6 | 10.5 |
| Sweco Norway | 1.5 | 14.9 | 11.0 | 8.8 | 12.0 | 5.8 | 10.2 | 6.1 | 8.0 |
| Sweco Finland | 9.9 | 12.6 | 8.8 | 8.7 | 8.9 | 4.8 | 7.2 | 7.4 | 2.6 |
| Sweco Denmark | $-1.1$ | 7.6 | 12.6 | 8.0 | 6.5 | 1.2 | 7.7 | 5.6 | $-2.3$ |
| Sweco Netherlands | 3.4 | 6.3 | $-0.1$ | -0.8 | 2.7 | 4.4 | $-0.3$ | 2.6 | 0.1 |
| Sweco Western Europe | 7.3 | 7.0 | 7.1 | 5.0 | 8.4 | 5.9 | 5.9 | 5.7 | 5.8 |
| Sweco Central Europe | 5.4 | 4.5 | 8.9 | 6.2 | 4.7 | 1.1 | 7.2 | 3.0 | 4.5 |
| EBITA margin | 7.3 | 11.2 | 8.9 | 6.8 | 10.6 | 5.7 | 4.6 | 3.9 | 4.5 |
| Extraordinary items 3) | $\overline{\phantom{a}}$ | 1.9 | 0.4 | 0.2 | 0.9 | 4.4 | 1.7 | 1.7 | |
| EBITA margin excl. extraordinary | 7.3 | 11.2 | 10.8 | 7.2 | 10.8 | 6.6 | 9.0 | 5.6 | 6.2 |
| items | |||||||||
| Billing ratio, % | 75.5 | 74.4 | 75.3 | 74.6 | 75.1 | 74.5 | 74.7 | 74.1 | 74.8 |
| Number of normal working hours | 464 14,548 |
506 | 493 14,482 |
518 14,172 |
490 14,507 |
478 14,302 |
492 14,344 |
519 14,049 |
469 14,436 |
| Number of full-time employees | 14,412 |
1)Pro forma information is based on the consolidated income statements for the first three quarters of 2015 for Sweco and Grontmij, respectively. Sweco and Grontmij both apply IFRS. Financial pro forma information has been compiled and presented in accordance with Sweco's accounting policies as described in Sweco's 2015 annual report. Grontmij's financials have been adjusted to correspond with Sweco's income statement presentation. Pro forma information is only intended to describe a hypothetical situation and has been prepared solely for illustrative purposes. 2) Pro forma information excludes Grontmii's French activities which were divested during 2015 and reported by Grontmii as Assets held for sale. Group-wide, Eliminations, etc. includes Group functions, Grontmij's real estate operations and the operations in China which were divested in Q4 $2016$
3) Extraordinary items include Sweco's and Grontmij's extraordinary items to the extent they are part of Sweco's definition of EBITA. All extraordinary items are included in Group-wide.
| Number of full-time | ||||||||
|---|---|---|---|---|---|---|---|---|
| January-June | Net sales, SEK M | EBITA, SEK M | EBITA margin,% | employees | ||||
| Business area | 2017 | $2016^{2}$ | 2017 | $2016^{2}$ | 2017 | $2016^{2}$ | 2017 | $2016^{2}$ |
| Sweco Sweden | 3.652 | 3.649 | 453 | 450 | 12.4 | 12.3 | 5,533 | 5,509 |
| Sweco Norway | 1,096 | 1.067 | 95 | 97 | 8.7 | 9.1 | 1,329 | 1,351 |
| Sweco Finland | 985 | 896 | 111 | 63 | 11.2 | 7.0 | 2.052 | 1.996 |
| Sweco Denmark | 732 | 691 | 26 | 27 | 3.5 | 4.0 | 1,018 | 1.090 |
| Sweco Netherlands | 861 | 878 | 42 | 31 | 4.9 | 3.5 | 1,380 | 1.466 |
| Sweco Western Europe | 801 | 794 | 57 | 57 | 7.1 | 7.1 | 1.569 | 1.510 |
| Sweco Central Europe | 615 | 464 | 31 | 14 | 5.0 | 3.0 | 1,516 | 1,384 |
| Group-wide, Eliminations, etc. 1) | $-72$ | $-51$ | $-7$ | $-49$ | $\overline{\phantom{a}}$ | $\overline{\phantom{0}}$ | 81 | 98 |
| TOTAL GROUP | 8,670 | 8,387 | 807 | 690 | 9.3 | 8.2 | 14,477 | 14.403 |
1) Group-wide, Eliminations, etc. includes Group functions and Grontmij's real estate operations. All extraordinary items are included in Group-wide.
2) 2016 restated to reflect the new definition of Net sales, EBITA
| Revenue growth | 2017 Apr-Jun |
2016 Apr-Jun |
Growth.% Apr-Jun |
2017 Jan-Jun |
2016 Jan-Jun |
Growth.% Jan-Jun |
|---|---|---|---|---|---|---|
| Net sales | 4,262 | 4,370 | $-2%$ | 8.670 | 8,387 | 3% |
| Currency effects | 94 | 2% | 152 | 2% | ||
| Net sales currency-adjusted | 4.262 | 4.464 | $-5%$ | 8.670 | 8.540 | 2% |
| Acquisitions/divestments | $-28$ | 1% | $-47$ | 22 | 1% | |
| Comparable net sales currency-adjusted | 4,234 | 4,465 | $-5%$ | 8,623 | 8,562 | 1% |
| Parent Company income statement, SEK M | Jan-Jun 2017 | Jan-Jun 2016 | Full-year 2016 |
|---|---|---|---|
| Net sales | 309 | 258 | 538 |
| Operating expenses | $-328$ | $-310$ | $-600$ |
| Operating loss | $-19$ | $-52$ | $-63$ |
| Net financial items | 404 | 37 | 551 |
| Profit/loss after net financial items | 385 | $-15$ | 488 |
| Appropriations | - | 10 | |
| Profit/loss before tax | 385 | $-15$ | 499 |
| Tax | $-86$ | ||
| PROFIT/LOSS AFTER TAX | 385 | $-15$ | 413 |
| Parent Company balance sheet, SEK M | 30 Jun 2017 | 31 Dec 2016 |
|---|---|---|
| Intangible assets | 62 | 75 |
| Property, plant and equipment | 44 | 54 |
| Financial assets | 6,346 | 6.346 |
| Current assets | 1,886 | 2.572 |
| TOTAL ASSETS | 8,339 | 9,047 |
| Equity | 4.426 | 4.626 |
| Untaxed reserves | 12 | 12 |
| Non-current liabilities | 1,312 | 1.379 |
| Current liabilities | 2,589 | 3.030 |
| TOTAL EQUITY AND LIABILITIES | 8.339 | 9,047 |
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