Earnings Release • Jul 18, 2016
Earnings Release
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With the strongest quarterly profit so far, we are continuing on our trajectory of profitable growth. EBITA excluding extraordinary costs increased to SEK 474 million in the second quarter. This is more than the full-year profit only five years ago (2010).
Compared with last year's pro forma, EBITA excluding extraordinary costs increased by SEK 217 million. Calendar effects contributed approximately SEK 140 million to the improvement. Adjusted for calendar effects the improvement was approximately SEK 77 million and primarily related to realisation of synergies, lower project write downs and increased fee level.
Sweco is the leading engineering and architecture consultancy in Europe since the acquisition of Grontmij on 1 October 2015. The integration is progressing well and in several areas faster than the original plan. The rebranding has been completed and all countries are operating under the Sweco brand. We remain confident that we will achieve the financial targets communicated at the announcement of the acquisition.
Overall, the market for Sweco's services is good. The Swedish market is strong. The markets in Norway, Denmark, Western Europe and Central Europe are generally good, with positive developments. There is uncertainty following the EU referendum ("Brexit") in the UK. The markets in Finland and the Netherlands remain challenging.
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 customer 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
PRO FORMA, APRIL-JUNE
The pro forma reporting facilitates analysis of developments in operational activities on a like-for-like basis, assuming that Grontmii had been part of Sweco since the beginning of 2015.
Net sales increased 6 per cent to SEK 4,370 million (4,120). The organic growth was 8 per cent.
Since the Easter holiday was during the first quarter in 2016, as opposed to the second quarter as in 2015, there were 21 more working hours compared with last year. This had a positive contribution on profit and net sales of approximately SEK 140 million. Adjusted for calendar effects the organic growth was 4 per cent.
Compared with last year's pro forma. EBITA excluding extraordinary costs increased by SEK 217 million. All Business Areas increased EBITA compared with last year. Adjusted for calendar effects the improvement was approximately SEK 77 million.
Synergies from the Grontmij-integration contributed approximately SEK 50 million to EBITA and included reduced costs for shared IT and head office functions. reduced costs for overhead in Sweden as well as operational improvements in Denmark and the Netherlands.
The net of project write downs and write ups improved compared to last year. Also higher fee levels contributed to the EBITA development.
The billing ratio increased 0.3 percentage points to 75.1 per cent (74.8). The improved billing ratio essentially corresponds to realisation of synergies, predominantly through reduction of administrative staff.
ACTUALS, APRIL-JUNE
Net sales increased 71 per cent to SEK 4,370 million (2,549). Acquisition-based growth was 66 per cent and is almost exclusively attributable to the Grontmijacquisition.
EBITA, excluding extraordinary costs, increased to SEK 474 million (233).
Extraordinary costs related to transaction, integration and restructuring associated with the Grontmiiacquisition totalled SEK 12 million (29) and are reported in the Group-wide segment.
EBITA was SEK 462 million (204).
Amortisation of acquisition-related intangible assets increased by SEK 11 million and the increase is primarily related to the Grontmij acquisition. This impacted EBIT which amounted to SEK 438 million (191).
Net financial items remained essentially unchanged despite increased net debt. Profit after tax thus increased to SEK 342 million (132).
Earnings per share increased to SEK 2.85 per share $(1.39).$
| Key ratios, Pro forma | Actual Apr-Jun 2016 |
Pro forma Apr-Jun 2015 |
Actual Jan-Jun 2016 |
Pro forma Jan-Jun 2015 |
Pro forma Jul 2015- Jun 2016 |
Pro forma Full-year 2015 |
|---|---|---|---|---|---|---|
| Net sales, SEK M | 4.370 | 4.120 | 8.387 | 8.144 | 16.241 | 15,998 |
| Organic growth, % | 8 | 5 | 4 | |||
| EBITA, excl. extraordinary items, SEK M | 474 | 257 | 737 | 514 | 1,323 | 1.100 |
| Margin, % | 10.8 | 6.2 | 8.8 | 6.3 | 8.1 | 6.9 |
| Number of full-time employees | 14.804 | 14.707 | 14.696 | 14.632 | 14.583 | 14,552 |
| Billing ratio | 75.1% | 74.8% | 74.8% | 74.0% | 74.6% | 74.2% |
| Normal working hours | 490 | 469 | 968 | 957 | 1.979 | 1,968 |
| Net debt/EBITDA excl. extraordinary items | 1.6 | 1.2 |
| Key ratios, Actual | Actual Apr-Jun 2016 |
Actual Apr-Jun 2015 |
Actual Jan-Jun 2016 |
Actual Jan-Jun 2015 |
Actual Jul 2015- Jun 2016 |
Actual Full-year 2015 |
|---|---|---|---|---|---|---|
| Net sales, SEK M | 4,370 | 2.549 | 8,387 | 5,015 | 14,762 | 11,389 |
| Acquisition-related growth, % | 66 | 0 | 65 | 0 | 18 | |
| EBITA, excl. extraordinary items, SEK M | 474 | 233 | 737 | 462 | 1.266 | 991 |
| Margin, % | 10.8 | 9.1 | 8.8 | 9.2 | 8.6 | 8.7 |
| EBITA, SEK M | 462 | 204 | 690 | 432 | 998 | 740 |
| Margin, % | 10.6 | 8.0 | 8.2 | 8.6 | 6,8 | 6.5 |
| Profit after tax, SEK M | 342 | 132 | 489 | 292 | 637 | 439 |
| Earnings per share, SEK* | 2.85 | 1.39 | 4.09 | 3.09 | 5.62 | 4.36 |
| Number of full-time employees | 14,804 | 8.894 | 14.696 | 8,769 | 13.045 | 10,188 |
| Net debt/EBITDA | 2,0 | 1,4 | 1,8 |
* In view of the preferential rights issue conducted during 04 2015, historical share data is restated pursuant to IAS 33.
Net sales by quarter and rolling 12 months
PRO FORMA, JANUARY-JUNE
Net sales increased to SEK 8,387 million (8,144 million). The organic growth was 5 per cent.
Calendar effects amount to 11 hours and made a positive contribution of SEK 62 million to sales and profit compared with last year. Adjusted for calendar effects organic growth was 4 per cent.
EBITA totalled SEK 737 million (514), excluding extraordinary cost that amounted to SEK 48 million (60).
Synergies contributed with approximately SEK 87 million to EBITA.
Billing ratio increased to 74.8 per cent (74.0).
Net sales increased 67 per cent to SEK 8,387 million (5,015). Acquisition-based growth was 65 per cent.
Extraordinary costs were SEK 48 million (30) and EBITA thus amounted to SEK 690 million (432).
Amortisations of acquisition-related intangible assets due to the Grontmij-acquisition increased to SEK 47 million (25). The increase impacted EBIT which totalled SEK 643 million (407).
Financing costs increased due to increased net debt, impacting profit after tax, which increased to SEK 489 million (292).
Earnings per share increased to SEK 4.09 per share $(3.09)$ .
Sweco has been commissioned by Transport Scotland to carry out route option assessment and detailed design work for the upgrade of the A96 highway. The improvements will lead to reduced journey time and better road safety. Sweco will design a 46-kilometres stretch between the villages of Hardmuir and Fochabers. The order value is approximately SEK 300 million.
In France, Sweco Belgium has been commissioned by Société du Grand Paris for overall project management and detailed civil design for the construction of the new Metro line 17. The line includes five new stations and covers a distance of 20 kilometres, from Saint-Denis to
Le Mesnil Amelot. It is the largest metro investment in Europe today. The project is valued at approximately SEK 158 million.
In Poland, Sweco will design a waste-to-energy plant in order to decrease landfilled waste. The plant in Warsaw will be the largest of its kind in Poland and will contribute to the region's electric power supply. The customer is the municipal waste treatment agency Miejskie Przedsiębiorstwo Oczyszczania and the order value is approximately SEK 33 million.
Overall, the market for Sweco's services is good.
The Swedish market is strong. The markets in Norway, Denmark, Western Europe and Central Europe are generally good, with positive developments. There is uncertainty following the EU referendum ("Brexit") in the UK. The markets in Finland and the Netherlands remain challenging.
The European economy has strengthened and GDP growth improved in all of Sweco's home markets, with the exception of Norway. Geopolitical turbulence, the global macro-economic situation and financial market developments are risks to the development.
Demand for Sweco's services predominantly follows the general economic trend in Sweco's markets, with some time lag.
There is uncertainty following the EU referendum ("Brexit") in the UK. With Sweco's UK operations representing around 4 per cent of total Group revenue, the direct impact of a potential slowdown in the UK is limited. However, potential consequences to the general European economy may impact Sweco.
Sweco does not provide forecasts.
During the quarter, Sweco completed the acquisition of Ludes, a German architecture and project management consultancy. The company has approximately 100 employees primarily focusing on the health care sector. Ludes was consolidated into Sweco Group as of 1 May.
The acquisition of Ludes is in line with Sweco's strategy to leverage the footprint in Germany and Northern Europe for further bolt-on acquisitions, in line with the same strategy that has been successfully applied in the Nordics.
Grontmij, with approximately 6,000 employees in 9 countries, was acquired on 1 October 2015. Sweco is now the leading engineering and architecture consultancy in Europe. In 2014 Grontmij had annual sales of approximately SEK 6.0 billion and EBITA (as per Sweco's definition) of approximately SEK 203 million, excluding extraordinary expenses and the divested business in France. Sales for the combined company totalled approximately SEK 16 billion. Following the acquisition. Sweco has around 14,500 employees (pro forma 2015).
The acquisition of Grontmij creates value for all stakeholders - customers, employees, shareholders and society in general:
Sweco has completed around 100 acquisitions over the past 10 years. The acquisition of Grontmij is fully in line with Sweco's growth strategy and vision to be Europe's most respected architecture, engineering and environmental consultancy.
The integration is progressing well and in several areas faster than originally planned. Focus is mainly on profitability improvements and facilitating joint business opportunities.
The operations in the Netherlands, the UK and Poland were rebranded during the second quarter. All of the former Grontmij-countries are rebranded and operate under Sweco's name
The annual run rate of profitability improvements at the end of the second quarter was around SEK 210 million, an increase from SEK 160 million at the end of the first quarter 2016. Synergies and cost savings made a positive contribution of approximately SEK 50 million to EBITA in the second quarter and SEK 87 million year-todate.
Profitability improvements are found in four main areas:
A reduction of approximately 200 positions is expected within the Group due to integration and restructuring. Notice has been given in most cases, and approximately 170 of these employees have left the Group by the end of the period.
At the announcement of the acquisition, annual profitability improvements were estimated at approximately SEK 250 million through cost savings in the joint operations. Ninety per cent of the savings were expected to be realised within four years, and the majority within two years. Realised savings to date show that Sweco is well on its way to realise the targets that were initially set up.
Accumulated extraordinary transaction, integration and restructuring costs totalled SEK 298 million at the end of the period, of which SEK 12 million arose during the second quarter and SEK 48 million year-to-date. All extraordinary costs are reported in the Group-wide seament.
Extraordinary costs were initially estimated at approximately SEK 450 million and expected to arise mostly during the fourth quarter of 2015 and first half of 2016. Extraordinary costs are developing according to plan and integration is expected to be completed within the previously announced cost-frame.
Additional value creation can be achieved in the longer term by increasing customer focus and internal efficiency as well as through organic and acquisitionbased growth in Sweco's new home markets.
OTHER INFORMATION ON THE GRONTMIJ ACQUISITION Sweco currently holds 97.36 per cent of all Grontmij shares and has initiated a statutory squeeze-out procedure for the remaining shares. Approximately SEK 94 million of the cash component remains to be paid in conjunction with the squeeze-out. Since Sweco has initiated a statutory squeeze-out procedure, 100 per cent of the shares are consolidated in the Group accounts. As a consequence, the remaining consideration is reported as a liability and is included in net debt.
Group cash flow from operating activities totalled SEK -21 million (197) during the first six months of the year. Interest-bearing net debt totalled SEK 2.534 million $(1.446)$ .
The net debt/EBITDA ratio was 2.0 times (1.4). Pro forma and adjusted for extraordinary costs, the net debt/EBITDA ratio was 1.6 times.
Available cash and cash equivalents, including unutilised credit lines, totalled SEK 1,267 million (908) at the end of the reporting period.
INVESTMENTS, JANUARY-JUNE 2016
Investments in equipment totalled SEK 101 million (72) and were primarily attributable to IT investments. Depreciation of equipment totalled SEK 107 million (75) and amortisation of intangible assets totalled SEK 68 million (29).
Purchase consideration paid to acquire companies and operations totalled SEK 150 million (32) and had a negative impact of SEK-135 million (-26) on Group cash and cash equivalents. Purchase consideration on the divestment of companies and operations totalled SEK 9 million (6) and had a positive impact of SEK 9 million (3) on Group cash and cash equivalents. Repurchases of Sweco shares totalled SEK 114 million and had the same effect on Group cash and cash equivalents.
During the period, dividends totalling SEK 418 million (318) were distributed to Sweco AB shareholders.
Business Areas are reported on a pro forma basis following the new organisation since 1 October 2015. The pro forma reporting facilitates analysis of developments in operational activities on a like-for-like basis, assuming that Grontmij had been part of Sweco since the beginning of 2015.
Since 1 January, Grontmij Sweden's operations are fully integrated in corresponding divisions within Sweco Sweden.
Calendar effects of 24 more working hours had a positive impact, providing a positive year-on-year effect on sales and operating profit of approximately SEK 68 million. Further improvement to EBITA mainly came from increased fee level, improved billing ratio and synergies realised within administrative overhead.
The Swedish market remains strong. There is strong demand in the construction and real estate sector. The infrastructure market is also strong, supported by major public investments. The industrial market and the market for IT-related services is developing positively. The market for power transmission services is strong, while other energy sectors are weak.
| Actual | Pro forma | Actual | Pro forma | |
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2016 | Apr-Jun 2015 | Jan-Jun 2016 | Jan-Jun 2015 |
| Net sales, SEK M | 1.935 | 1,795 | 3.693 | 3,527 |
| Organic growth, % | ||||
| Currency, % | ||||
| EBITA, SEK M | 280 | 186 | 450 | 370 |
| EBITA margin, % | 14.5 | 10.4 | 12.2 | 10.5 |
| Number of full-time employees | 5,551 | 5.496 | 5,509 | 5,394 |
Organic growth was 10 per cent and is mainly attributable to Easter falling in the first quarter this year, as opposed to the second quarter in 2015. However, also adjusted for the calendar, organic growth was solid.
The calendar effect during Easter is more pronounced in Norway compared with the rest of the Group. The year-on-year calendar effect of 33 hours had a positive impact on sales and profit of approximately SEK 29 million. Negative currency effects reduced net sales and profit by 7 per cent when translated into the Group accounts. Lower project write-downs had a positive contribution to EBITA.
The Norwegian market is good and has stabilised. However, the Norwegian economy is in transition and demand is distributed unevenly. Markets in the Oslo region and within public infrastructure remain strong. The private construction market is good with strong demand within the industry. The markets in southern and western Norway are challenging, while the eastern and northern parts are experiencing moderate growth.
| Net sales and profit | Actual Apr-Jun 2016 |
Pro forma Apr-Jun 2015 |
Actual Jan-Jun 2016 |
Pro forma Jan-Jun 2015 |
|---|---|---|---|---|
| Net sales, SEK M | 568 | 551 | 1,067 | 1,082 |
| Organic growth, % | 10 | о | ||
| Currency, % | $-7$ | -8 | ||
| EBITA, SEK M | 68 | 44 | 97 | 84 |
| EBITA margin, % | 12.0 | 8.0 | 9.1 | 7.8 |
| Number of full-time employees | 1,349 | 1.350 | 1.351 | 1,332 |
Organic growth was 18 per cent despite a challenging market. The calendar effect was 17 hours, which made a positive contribution to sales and profit of approximately SEK 14 million.
Operating profit improved to SEK 42 million (10). The profit improvement is mainly attributable to the positive calendar effect, lower project write-downs and an increased billing ratio.
The Finnish market remains challenging. The Finnish economy has basically had zero GDP growth since 2011. Despite this, the demand for Sweco's services is stable with positive signs on the building market in the Helsinki region. Demand for construction and real estate-related services is satisfactory, while the infrastructure and industry markets remain challenging.
| Actual | Pro forma | Actual | Pro forma | |
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2016 | Apr-Jun 2015 | Jan-Jun 2016 | Jan-Jun 2015 |
| Net sales, SEK M | 477 | 408 | 909 | 800 |
| Organic growth, % | 18 | 14 | ||
| Currency, % | - 1 | $\overline{\phantom{a}}$ | ||
| EBITA, SEK M | 42 | 10 | 63 | |
| EBITA margin, % | 8.8 | 2.5 | 6.9 | 3.3 |
| Number of full-time employees | 2,019 | 1,935 | 1.996 | 1,920 |
Net sales increased compared to last year, primarily due to lower project write downs and positive calendar effects. The positive calendar effect was 22 hours and had a positive vear-on-vear impact of SEK13 million on net sales and profit. Operating profit increased to SEK 23 million (-8), primarily due to lower project write-downs and positive calendar effects.
The market in Denmark is generally good and is developing positively. The construction and real estate sector is developing well and is particularly strong in the bigger cities. The public infrastructure market is experiencing weaker demand and is competitive. Demand in the water and energy sector is stable.
Continued measures are being taken to sustainably improve profitability in the Danish operations.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Actual Apr-Jun 2016 |
Pro forma Apr-Jun 2015 |
Actual Jan-Jun 2016 |
Pro forma Jan-Jun 2015 |
| Net sales, SEK M Organic growth, % |
361 | 331 | 691 | 665 |
| Currency, % | N | |||
| EBITA, SEK M | 23 | -8 | 27 | |
| EBITA marain, % | 6.5 | $-2.3$ | 4.0 | $-1.1$ |
| Number of full-time employees | 1,084 | 1.105 | 1,112 | 1,124 |
Sales decreased to SEK 455 million (465), primarily due to the divestment of minor non-core businesses. The calendar effect was 8 hours, which made a positive contribution to sales and profit of approximately SEK 6 million. Operating profit increased to SEK 12 million (0). The profit improvement was mainly due to lower project write-downs, improved billing ratio and positive calendar effects.
The market in the Netherlands has been challenging for several years due to the country's real estate and financial crisis. The first signs of stabilisation of the market were visible during the first half-year, particularly within private building construction. Sweco Netherlands delivers services primarily in the areas of public infrastructure, energy, water and public sector buildings. This market typically lags behind the private construction market, and overall remains challenging.
Sweco Netherlands introduced a new customer-focused and decentralised organisational model during the end of 2015 and the implementation will continue in 2016. The business is being restructured and staff reductions within administration and the consultant-organisation are ongoing.
| Net sales and profit | Actual Apr-Jun 2016 |
Pro forma Apr-Jun 2015 |
Actual Jan-Jun 2016 |
Pro forma Jan-Jun 2015 |
|---|---|---|---|---|
| Net sales, SEK M | 455 | 465 | 878 | 936 |
| Organic growth, % | -4 | |||
| Acquisition-related growth, % | -4 | $-2$ | ||
| Currency, % | -7 | ۰. | ||
| EBITA, SEK M | 12 | 31 | 14 | |
| EBITA margin, % | 2.7 | 0.1 | 3.5 | 1.5 |
| Number of full-time employees | 1.497 | 1.694 | 1,520 | 1,700 |
Organic growth was 7 per cent during the quarter, mainly due to good growth in the UK. Operating profit increased to SEK 33 million (23) mainly due to increased profits in the UK. Negative currency effects from the GBP depreciation reduced net sales and profits of the UK by 8 per cent when translated into the Group accounts.
The demand for Sweco's services in the UK remained good throughout the second guarter. The infrastructure market is good, while demand varies in the energy and water markets. Although there are no tangible signs of a slowdown, the EU referendum ("Brexit") brings uncertainty about the market development. While it is too early to determine the consequences, the private construction market is expected to be more exposed than the market for publicly financed projects.
The market in Belgium is general stable within all market segments. The private and public building markets are improving. The industry market and the public infrastructure markets are good.
| III PIILI | ||||
|---|---|---|---|---|
| Net sales and profit | Actual Apr-Jun 2016 |
Pro forma Apr-Jun 2015 |
Actual Jan-Jun 2016 |
Pro forma Jan-Jun 2015 |
| Net sales, SEK M | 396 | 393 | 795 | 778 |
| Organic growth, % | ||||
| Currency, % | -6 | -4 | ||
| EBITA, SEK M | 33 | 23 | 57 | 36 |
| EBITA margin, % | 8.4 | 5.8 | 7.1 | 4.6 |
| Number of full-time employees | 1,714 | 1,589 | 1,689 | 1,595 |
Sales remained stable at SEK 244 million (245), as solid organic growth in Germany and the acquisition of Ludes offset negative sales developments in Lithuania and the Czech Republic.
Operating profit remained unchanged at SEK 11 million (11). Improved profits in the existing German business and the acquisition of Ludes offset the negative effects from weaker developments in Lithuania and the Czech Republic.
The German market is good overall and is developing positively. The construction and real estate market is good and is developing well. Demand is solid 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 EU investments are expected to begin in the second half of 2016. The Czech market remains challenging. although there is solid demand for Sweco's services. The Polish market is improving and shows good investments in energy, building and water. Demand will be supported once the new round of EU funding becomes fully available.
| Actual | Pro forma | Actual | Pro forma | |
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2016 | Apr-Jun 2015 | Jan-Jun 2016 | Jan-Jun 2015 |
| Net sales, SEK M | 244 | 245 | 465 | 469 |
| Organic growth, % | -5 | -2 | ||
| Acquisition-related growth, % | ||||
| Currency, % | $-2$ | -2 | ||
| EBITA, SEK M | 11 | 11 | 14 | 23 |
| EBITA margin, % | 4.7 | 4.3 | 3.0 | 4.8 |
| Number of full-time employees | 1,476 | 1,396 | 1.416 | 1,420 |
Parent Company net sales totalled SEK 258 million (177) and were attributable to intra-group services. Profit after net financial items totalled SEK-15 million (7). Investments in equipment totalled SEK 11 million (13). Cash and cash equivalents at the end of the period totalled SEK 187 million (7).
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.
The Group applies the same accounting and valuation principles as those described in Note 1 of the 2015 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 Sweco share is listed on Nasdag Stockholm. The share price of the Sweco B share was SEK 146 at the end of the period, representing a 13 per cent increase during the quarter. The Nasdag Stockholm General Index decreased by 0.3 per cent over the same period.
In May 2016 Sweco conducted a new share issue totalling 900,000 shares of class C at a price of SEK 1.00 per share. Under the Articles of Association, the Board also converted 888,989 class C shares into class B shares and reduced the capital for repayment to the shareholders by redemption of 11,011 class C shares.
The total number of shares at the end of the period was 121.983.819: 10.533.731 Class A shares, 110.550.088 Class B shares and 900,000 Class C shares. The total number of outstanding shares was 119,624,270: 10,533,731 Class A shares and 109,090,539 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 spending 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 2015 annual report (page 90, Risks and Risk) Management).
The number of normal working hours in 2016, based on the pro forma 12-month sales-weighted business mix as of Q3 2015, is broken down as follows:
| Quarter 1: | 478 (488) | -10 |
|---|---|---|
| Quarter 2: | 490 (469) | +21 |
| Quarter 3: | 518 (519) | -1 |
| Quarter 4: | 493 (492) | $+1$ |
| Total 2016: | 1,979 (1,968) | $+11$ |
FORTHCOMING FINANCIAL INFORMATION Interim report January-September 28 October 2016 Year-end report 2016 14 February 2017
FOR FURTHER INFORMATION, PLEASE CONTACT: Tomas Carlsson, President and CEO Phone +46 8 695 66 60 / +46 70 552 92 75 [email protected]
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
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, 18 July 2016
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
Carola Teir-Lehtinen Board member
Maria Ekh Employee representative
Anna Leonsson Employee representative
Thomas Holm Employee representative
Tomas Carlsson President and CEO Board member
| Key ratios 1) | Apr-Jun 2016 | Apr-Jun 2015 | Jan-Jun 2016 | Jan-Jun 2015 | Jul 2015- Jun 2016 |
Full-year 2015 |
|---|---|---|---|---|---|---|
| Profitability | ||||||
| EBITA margin, % | 10.6 | 8.0 | 8.2 | 8.6 | 6.8 | 6.5 |
| Operating margin (EBIT), % | 10.0 | 7.5 | 7.7 | 8.1 | 6.2 | 6.0 |
| Profit margin, % | 9.8 | 7.2 | 7.4 | 7.9 | 5.9 | 5.6 |
| Revenue growth | ||||||
| Organic growth, % | $\overline{7}$ | 9 | 4 | 7 | 6 | |
| Acquisition-related growth, % | 66 | 0 | 65 | 0 | 18 | |
| Currency, % | $-2$ | 0 | $-2$ | 1 | 0 | |
| Total growth, % | 71 | 9 | 67 | 8 | 24 | |
| Debt | ||||||
| Net debt, SEK M | 2,534 | 1.446 | 1.688 | |||
| Interest-bearing debt, SEK M | 2,851 | 1.532 | 2,232 | |||
| Financial strength | ||||||
| Net debt/Equity, % | 51.9 2.0 |
77.2 1.4 |
34.4 | |||
| Net debt/EBITDA, x Equity/Assets ratio, % |
35.5 | 28.5 | 1.8 39.0 |
|||
| Available cash and cash equivalents, SEK M 2) | 1,267 | 908 | 2,229 | |||
| Return | ||||||
| Return on equity, % | 18.9 | 33.6 | 12.9 | |||
| Return on capital employed, % | 16.6 | 24.1 | 13.2 | |||
| Share data 3) | ||||||
| Earnings per share, SEK3) | 2.85 | 1.39 | 4.09 | 3.09 | 5.62 | 4.36 |
| Diluted earnings per share, SEK3) | 2.81 | 1.37 | 4.03 | 3.04 | 5.55 | 4.30 |
| Equity per share, SEK3,4) | 40.75 | 19.63 | 40.98 | |||
| Diluted equity per share, SEK3,4) | 39.97 | 19.35 | 40.49 | |||
| Number of outstanding shares at reporting | 119,624,270 | 91,407,869 | 119,537,510 | |||
| date | ||||||
| Number of repurchased Class B and Class C shares |
2,359,549 | 1,442,769 | 1,557,320 |
1) Key ratio definitions are available on Sweco's website. Key ratios in this table refer to the consolidated accounts (not proforma).
2) Including unutilised credit.
3) Historical share data is restated in accordan
| Income Statement | Jul 2015- | |||||
|---|---|---|---|---|---|---|
| SEKM | Apr-Jun 2016 | Apr-Jun 2015 | Jan-Jun 2016 | Jan-Jun 2015 | Jun 2016 | Full-year 2015 |
| Net sales | 4,370 | 2,549 | 8,387 | 5,015 | 14,762 | 11,389 |
| Other income | 0 | 0 | O | 0 | ||
| Other external expenses | $-1,016$ | $-618$ | $-1,968$ | $-1,158$ | $-3.688$ | $-2,877$ |
| Personnel expenses | $-2,826$ | $-1,686$ | $-5,595$ | $-3,344$ | $-9,832$ | $-7,581$ |
| EBITDA | 528 | 244 | 824 | 513 | 1,242 | 931 |
| Amortisation/depreciation and | $-66$ | $-41$ | $-135$ | -80 | $-245$ | $-190$ |
| impairments | ||||||
| EBITA | 462 | 204 | 690 | 432 | 998 | 740 |
| Acquisition-related items 1) | $-24$ | $-13$ | $-47$ | $-25$ | $-81$ | -60 |
| Operating profit (EBIT) | 438 | 191 | 643 | 407 | 917 | 681 |
| Net financial items | -8 | -7 | $-19$ | $-13$ | $-47$ | -41 |
| Profit before tax | 429 | 184 | 624 | 394 | 870 | 640 |
| Income tax | $-88$ | $-52$ | $-134$ | $-101$ | $-233$ | $-200$ |
| PROFIT FOR THE PERIOD | 342 | 132 | 489 | 292 | 637 | 439 |
| Attributable to: | ||||||
| Parent company shareholders | 342 | 132 | 489 | 292 | 636 | 438 |
| Non-controlling interests | 0 | 0 | O | 0 | 1 | |
| Earnings per share attributable to parent company shareholders, SEK 2) |
2.85 | 1.39 | 4.09 | 3.09 | 5.62 | 4.36 |
| Average number of shares 2) Dividend per share, SEK 2) |
119,694,871 | 94,638,039 | 119,585,036 | 94,448,686 | 113,013,297 | 100,445,122 3.50 |
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 comprehensive income, SEK M |
Apr-Jun 2016 |
Apr-Jun 2015 |
Jan-Jun 2016 |
Jan-Jun 2015 |
Jul 2015- Jun 2016 |
Full-year 2015 |
|---|---|---|---|---|---|---|
| Profit for the period | 342 | 132 | 489 | 292 | 637 | 439 |
| Items that will not be reversed in the income statement | ||||||
| Revaluation of defined benefit pensions, net after $\text{tax}^{1,3}$ | $-9$ | 42 | $-30$ | 42 | $-26$ | 45 |
| Items that may subsequently be reversed in the income state- ment |
||||||
| Revaluation of Grontmij NV holding, net after tax 2) | 12 | 12 | ||||
| Translation differences, net after tax | 15 | $-17$ | $-13$ | $-25$ | $-80$ | $-92$ |
| Translation differences transferred to profit for the period | 0 | 0 | 5 | 5 | ||
| COMPREHENSIVE INCOME FOR THE PERIOD | 348 | 157 | 447 | 309 | 548 | 410 |
| Attributable to: | ||||||
| Parent company shareholders | 348 | 157 | 447 | 309 | 547 | 409 |
| Non-controlling interests | ſ | O | 0 | 0 | ||
| $1)$ Tax on revaluation of defined benefit pensions | $\overline{\mathcal{E}}$ | -16 | 9 | $-16$ | 13 | -16 |
| 2) Tax on revaluation of Grontmij NV holding | -3 | -3 |
$^{\overline{3}}$ Revalued annually. Reviewed quarterly in the event of material changes to actuarial assumptions.
| Cash flow statement SEKM |
Apr-Jun 2016 | Apr-Jun 2015 | Jan-Jun 2016 | Jan-Jun 2015 | Jul 2015- Jun 2016 |
Full-year 2015 |
|---|---|---|---|---|---|---|
| 547 | 235 | 821 | 496 | 1.277 | 952 | |
| Cash flow from operating activities before changes in working capital and tax paid |
||||||
| Tax paid | $-54$ | -60 | $-135$ | $-115$ | $-177$ | $-157$ |
| Changes in working capital | $-270$ | $-37$ | $-707$ | $-184$ | $-178$ | 345 |
| Cash flow from operating activities | 223 | 139 | $-21$ | 197 | 922 | 1.140 |
| Cash flow from investing activities | $-183$ | $-38$ | $-239$ | $-105$ | $-1.574$ | $-1.440$ |
| Cash flow from financing activities | $-72$ | $-110$ | 38 | $-175$ | 920 | 707 |
| CASH FLOW FOR THE PERIOD | $-32$ | $-10$ | $-222$ | -83 | 268 | 407 |
| Balance sheet | |||
|---|---|---|---|
| SEKM | 30 Jun 2016 | 30 Jun 2015 | 31 Dec 2015 |
| Goodwill | 5.916 | 2.140 | 5.752 |
| Other intangible assets | 380 | 112 | 416 |
| Property, plant and equipment | 643 | 391 | 639 |
| Financial assets | 172 | 58 | 157 |
| Current assets excl. cash and cash equivalents | 6,328 | 3,792 | 5.068 |
| Cash and cash equivalents incl. short-term investments | 317 | 86 | 544 |
| TOTAL ASSETS | 13,756 | 6,579 | 12,575 |
| Equity attributable to parent company shareholders | 4,875 | 1,862 | 4,899 |
| Non-controlling interests | 8 | 10 | 9 |
| Total equity | 4,884 | 1,872 | 4,907 |
| Non-current liabilities | 3.269 | 1,482 | 2,700 |
| Current liabilities | 5.604 | 3.225 | 4.968 |
| TOTAL EQUITY AND LIABILITIES | 13,756 | 6,579 | 12,575 |
| Contingent liabilities | 633 | 252 | 704 |
| Changes in equity | ||||||
|---|---|---|---|---|---|---|
| SEKM | Jan-Jun 2016 | Jan-Jun 2015 | ||||
| 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 | 4,899 | 9 | 4,908 | 1,874 | 14 | 1,888 |
| Comprehensive income for the period | 447 | 0 | 447 | 309 | 0 | 309 |
| Transfer to shareholders | $-418$ | $-1$ | $-419$ | $-318$ | -1 | $-318$ |
| Acquisition of non-controlling interests | $\overline{\phantom{0}}$ | $-12$ | -3 | $-15$ | ||
| Preferential rights issue | $-2$ | $-2$ | - | $\overline{\phantom{a}}$ | ||
| Divestments of non-controlling interests | ٠ | $-1$ | $-1$ | |||
| Buy-back of treasury shares | $-114$ | $-114$ | ||||
| Sales of treasury shares | 3 | 3 | 17 | 17 | ||
| Share-based incentive schemes | 59 | 59 | $-9$ | $-9$ | ||
| Share savings schemes | 2 | |||||
| EQUITY, CLOSING BALANCE | 4,875 | 8 | 4,884 | 1,862 | 10 | 1,872 |
During the period Sweco acquired Petro Team Engineering AB, Sletten AS, Ludes Generalplaner GmbH and extended the participation in Par 2 Ontwikkeling B.V. to 100 per cent (was 50 per cent owned). Sweco has also acquired the operations within Altenia Oy. The acquired businesses have an aggregate total of 116 employees. Purchase consideration totalled SEK 150 million and had a negative impact on cash and cash equivalents of SEK 135 million. The acquisitions impacted the consolidated balance sheet as detailed in the table below. Of the unsettled purchase price commitment of SEK 3 million, SEK 1 million refers to conditional contingent consideration. During the period the acquired companies contributed SEK 11 million in sales and SEK 2 million in operating profit (EBIT) before extraordinary costs. If all of the companies had been owned as of 1 January 2016 they would have contributed approximately SEK 46 million in sales and about SEK-4 million in operating profit before extraordinary costs.
| Acquisitions, SEKM | |
|---|---|
| Intangible assets | 131 |
| Property, plant and equipment | 3 |
| Financial assets | |
| Current assets | 306 |
| Non-current liabilities | $-12$ |
| Deferred tax | -4 |
| Other current liabilities | $-275$ |
| Total purchase consideration | 150 |
| Unsettled purchase price commitment | -3 |
| Cash and cash equivalents | $-12$ |
| DECREASE IN GROUP CASH AND CASH EQUIVALENT | 135 |
During the period Sweco divested business within Sweco Nederland BV and Park Frederiksoord B.V. with total 38 employees. The businesses contributed SEK 5 million in sales and SEK 0 million in operating profit. The divestments had a positive impact on profit of SEK 0.5 million and a positive impact on the Group's cash and cash equivalents of SEK 9 million. The divestments impacted the consolidated balance sheet as detailed below.
| Divestments, SEK M | |
|---|---|
| Property, plant and equipment | |
| Current assets | |
| Capital gain recorded on divestment | |
| Total purchase consideration | |
| Cash and cash equivalents in divested companies | |
| INCREASE IN GROUP CASH AND GROUP EQUIVALENTS |
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 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 20131).
| Quarterly summary 2) | Actual 2016 02 |
Actual 2016 $\mathbf{01}$ |
Actual 2015 04 |
Pro forma 2015 03 |
Pro forma 2015 02 |
Pro forma 2015 01 |
Pro forma 2014 04 |
|---|---|---|---|---|---|---|---|
| Net sales, SEK M | |||||||
| Sweco Sweden | 1,935 | 1,758 | 1,921 | 1,390 | 1,795 | 1,732 | 1,768 |
| Sweco Norway | 568 | 499 | 508 | 401 | 551 | 531 | 521 |
| Sweco Finland | 477 | 432 | 488 | 375 | 408 | 392 | 417 |
| Sweco Denmark | 361 | 330 | 365 | 320 | 331 | 334 | 328 |
| Sweco Netherlands | 455 | 423 | 450 | 445 | 465 | 471 | 496 |
| Sweco Western Europe | 396 | 398 | 428 | 389 | 393 | 384 | 362 |
| Sweco Central Europe | 244 | 221 | 262 | 220 | 245 | 224 | 258 |
| Group-wide, Eliminations, etc. | -66 | $-45$ | $-73$ | $-36$ | $-68$ | $-44$ | $-43$ |
| TOTALT GROUP | 4,370 | 4,018 | 4,350 | 3,504 | 4,120 | 4,024 | 4,107 |
| EBITA, SEK M | |||||||
| Sweco Sweden | 280 | 170 | 211 | 91 | 186 | 184 | 223 |
| Sweco Norway | 68 | 29 | 52 | 24 | 44 | 40 | 58 |
| Sweco Finland | 42 | 21 | 35 | 27 | 10 | 17 | $\overline{\mathbf{3}}$ |
| Sweco Denmark | 23 | $\overline{4}$ | 28 | 18 | -8 | 0 | $-5$ |
| Sweco Netherlands | 12 | 18 | $-1$ | 12 | $\mathbf 0$ | 14 | 21 |
| Sweco Western Europe | 33 | 23 | 25 | 22 | 23 | 13 | 20 |
| Sweco Central Europe | 11 | 3 | 19 | $\overline{7}$ | 11 | 12 | 19 |
| Group-wide, Eliminations, etc. | $-9$ | $-40$ | $-170$ | $-63$ | $-79$ | $-23$ | $-58$ |
| EBITA | 462 | 228 | 200 | 138 | 187 | 257 | 281 |
| Extraordinary items 3) | 12 | 36 | 190 | 59 | 70 | 1 | 58 |
| EBITA excl. extraordinary items | 474 | 263 | 390 | 197 | 257 | 258 | 339 |
| EBITA-margin, % | |||||||
| Sweco Sweden | 14.5 | 9.7 | 11.0 | 6.6 | 10.4 | 10.6 | 12.6 |
| Sweco Norway | 12.0 | 5.8 | 10.2 | 6.1 | 8.0 | 7.5 | 11.0 |
| Sweco Finland | 8.8 | 4.8 | 7.1 | 7.3 | 2.5 | 4.2 | 0.8 |
| Sweco Denmark | 6.5 | 1.2 | 7.7 | 5.6 | $-2.3$ | 0.1 | $-1.4$ |
| Sweco Netherlands | 2.7 | 4.4 | $-0.3$ | 2.6 | 0.1 | 2.9 | 4.2 |
| Sweco Western Europe | 8.4 | 5.9 | 5.9 | 5.7 | 5.8 | 3.4 | 5.5 |
| Sweco Central Europe | 4.7 | 1.1 | 7.4 | 3.1 | 4.3 | 5.4 | 7.4 |
| EBITA-margin | 10.6 | 5.7 | 4.6 | 3.9 | 4.5 | 6.4 | 6.8 |
| Extraordinary items 3 ) | 0.2 | 0.9 | 4.4 | 1.7 | 1.7 | $0.0\,$ | $1.5\,$ |
| EBITA-margin excl. extraordinary items | 10.8 | 6.6 | 9.0 | 5.6 | 6.2 | 6.4 | 8.3 |
| Billing ratio, % | 75.1% | 74.5% | 74.7% | 74.1% | 74.8% | 73.2% | 73.8% |
| Number of normal working hours | 490 | 478 | 492 | 519 | 469 | 488 | 486 |
| Number of full-time employees | 14,804 | 14,589 | 14,621 | 14,339 | 14,707 | 14,557 | 14,565 |
1)The pro forma information is based on the consolidated income statements for the fourth quarter of 2014 and for the first three quarters of 2015 of Sweco and Grontmij respectively. Sweco and Grontmij both apply IFRS. The financial pro forma information has been compiled and presented in accordance with Sweco's accounting policies as described in Sweco's annual report for 2015. Herewith, the financials of Grontmij have been adjusted to be consistent with Sweco's presentation of the income statement. The pro forma information is only intended to describe a hypothetical
situation and has been prepared solely with an illustrative purpose.
2)The pro forma information excludes Grontmij's French activities which were divested during 2015 and reported by Grontmij as Assets held for sale. Group-wide, eliminations, etc. includes Group functions, the operations in China as well as Grontmij's real estate operations.
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 | EBITA, SEK M Net sales, SEK M |
EBITA-margin,% | employees | |||||
| Business area | Actual 2016 |
Pro forma 2015 |
Actual 2016 |
Pro forma 2015 |
Actual 2016 |
Pro forma 2015 |
Actual 2016 |
Pro forma 2015 |
| Sweco Sweden | 3.693 | 3,527 | 450 | 370 | 12.2 | 10.5 | 5,509 | 5,394 |
| Sweco Norway | 1,067 | 1,082 | 97 | 84 | 9.1 | 7.8 | 1,351 | 1,332 |
| Sweco Finland | 909 | 800 | 63 | 27 | 6.9 | 3.3 | 1.996 | 1,920 |
| Sweco Denmark | 691 | 665 | 27 | $-7$ | 4.0 | $-1.1$ | 1,112 | 1,124 |
| Sweco Netherlands | 878 | 936 | 31 | 14 | 3.5 | 1.5 | 1,520 | 1,700 |
| Sweco Western Europe | 795 | 778 | 57 | 36 | 7.1 | 4.6 | 1,689 | 1,595 |
| Sweco Central Europe | 465 | 469 | 14 | 23 | 3.0 | 4.8 | 1.416 | 1.420 |
| Group-wide, eliminations, etc. 1) | $-111$ | $-112$ | $-49$ | $-103$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 104 | 147 |
| TOTAL GROUP | 8.387 | 8.144 | 690 | 444 | 8.2 | 5.4 | 14,696 | 14,632 |
$^{10}$ Group-wide, eliminations, etc. includes Group functions, the operations in China as well as Grontmij's real estate operations. All extraordinary items are included in Groupwide.
| Parent Company income statement, SEK M | Jan-Jun 2016 | Jan-Jun 2015 | Full-year 2015 |
|---|---|---|---|
| Net sales | 258 | 177 | 355 |
| Operating expenses | $-310$ | $-190$ | -399 |
| Operating loss | $-52$ | $-13$ | $-44$ |
| Net financial items | 37 | 20 | 508 |
| Profit/loss after net financial items | $-15$ | 464 | |
| Appropriations | $\overline{\phantom{a}}$ | $-20$ | |
| Profit/loss before tax | $-15$ | 444 | |
| Tax | $-61$ | ||
| PROFIT/LOSS AFTER TAX | $-15$ | 383 |
| Parent Company balance sheet, SEK M | 30 Jun 2016 | 31 Dec 2015 |
|---|---|---|
| Intangible assets | 76 | 81 |
| Property, plant and equipment | 48 | 50 |
| Financial assets | 6.286 | 6,348 |
| Current assets | 1,788 | 1,911 |
| TOTAL ASSETS | 8,198 | 8,390 |
| Equity | 4.142 | 4,619 |
| Untaxed reserves | 23 | 23 |
| Non-current liabilities | 2.200 | 2.083 |
| Current liabilities | 1,833 | 1,665 |
| TOTAL EQUITY AND LIABILITIES | 8,198 | 8,390 |
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