Earnings Release • Oct 27, 2017
Earnings Release
Open in ViewerOpens in native device viewer
Sweco had a stable development during the third quarter. We continue to streamline our business towards increasing profitability. Increased hourly fees and lower project adjustments contributed positively to the development. EBITA increased approximately SEK 20 million adjusted for calendar effects and last year's extraordinary items. However, the reported numbers are nominally lower than last year as the quarter had less working hours.
Sweco was awarded several major infrastructure projects, during and after the quarter. The modernisation of Stockholm Central Station, design of Paris metro Line 15 and extension of E6 motorway in Norway are examples demonstrating Sweco's market-leading capabilities within transportation infrastructure.
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.
The market situation is similar across markets and is good overall. The market in Sweden remains strong, but growth is slowing down. The markets in Finland and the Netherlands continue to improve, from an earlier challenging environment. Essentially all other markets remain good.
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 outprojects in 70 countries annually throughout the world. Sweco is Europe's leading engineering and architecture consultan 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
EBITA increased approximately SEK 20 million adjusted for calendar effects and last year's negative extraordinary items. The Netherlands, Western Europe and Finland were the main contributors to the improvement. Finland was the most profitable Business Area in the quarter, with a margin of 10.2 per cent.
Overall for the Group, lower project adjustments and a positive trend in hourly fees were the main drivers of improved operational performance.
The billing ratio improved to 75.1 per cent (74.6), mainly due to positive developments in the Netherlands, Central Europe and Western Europe.
Adjusted for calendar effects, EBITA increased SEK 35 million. There were no extraordinary items related to the Grontmij acquisition (-15), which consequently contributed to the improvement by SEK 15 million.
There were 7 less working hours during the third quarter compared to last year. This had a negative year-on-year impact on sales and EBITA of approximately SEK 50 million.
Net sales decreased to SEK 3,635 million (3,723). Organic growth excluding calendar effects was 1 per cent. EBITA amounted to SEK 237 million (252).
Net financial items decreased to SEK-14 million (-9) due primarily to foreign exchange revaluation effects.
Earnings per share decreased to SEK 1.32 per share $(1.38).$
Adjusted for extraordinary items, EBITA increased SEK 40 million. The improvement was mainly due to higher average fees and lower project adjustments. The improvement was mainly attributable to Finland, the Netherlands and Central Europe.
EBITA increased to SEK 1,044 million (941), an improvement of SEK 103 million. The absence of extraordinary items related to the Grontmii acquisition contributed SEK 63 million to the EBITA improvement.
Calendar effects of 5 hours had a negative year-on-year impact of approximately SEK 32 million on net sales and EBITA.
Net sales increased 2 per cent to SEK 12,305 million (12,111). Acquired growth contributed 1 per cent, while currency effects was 1 per cent. Excluding calendar effects, organic growth was 1 per cent.
The billing ratio increased to 75.0 per cent (74.7), mainly due to positive developments in the Netherlands, Central Europe and Western Europe.
Net financial items decreased to SEK-37 million (-28) primarily due to foreign exchange revaluation effects.
Earnings per share increased to SEK 6.21 per share $(5.47)$ .
| Oct 2016- | ||||||
|---|---|---|---|---|---|---|
| Key ratios | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 | Sep 2017 | Full-year 2016 |
| Net sales, SEK M | 3.635 | 3,723 | 12,305 | 12,111 | 16,726 | 16,531 |
| Acquisition-related growth, % | 77 | 69 | 42 | |||
| Organic growth, % | 0 | 4 | 0 | 4 | 3 | |
| EBITA, excl. extraordinary items, SEKM |
237 | 266 | 1,044 | 1.004 | 1,521 | 1.482 |
| Margin, % | 6.5 | 7.2 | 8.5 | 8.3 | 9.1 | 9.0 |
| EBITA, SEK M | 237 | 252 | 1.044 | 941 | 1.438 | 1,336 |
| Marain, % | 6.5 | 6.8 | 8.5 | 7.8 | 8.6 | 8.1 |
| Profit after tax, SEK M | 158 | 166 | 743 | 655 | 1.019 | 931 |
| Earnings per share, SEK | 1.32 | 1.38 | 6.21 | 5.47 | 8.51 | 7.78 |
| Number of full-time employees | 14.396 | 14.172 | 14,448 | 14.321 | 14.457 | 14.365 |
| Billing ratio, % | 75.1 | 74.6 | 75.0 | 74.7 | 75.1 | 74.9 |
| Normal working hours | 511 | 518 | 1,481 | 1.486 | 1,974 | 1,979 |
| Net debt/EBITDA x | 1.4 | 1.6 | 1.0 |
The Swedish Transport Administration has commissioned Sweco to plan and design the modernisation of Stockholm Central Station, the busiest railway station in Sweden with around 1,000 daily arrivals and departures. Sweco's consultants will work in all of the project's technical areas and work will continue through 2022. Sweco estimates the order value to exceed SEK 300 million.
Sweco Belgium has been commissioned by Société du Grand Paris for the detailed design work and project management of the maintenance complex for Line 15 East of the Grand Paris Express metro network in Paris, France. With 200 kilometres of new underground metro lines and 68 new stations, it is the largest metro project in Europe. The objective is to support urban expansion and make travelling more efficient, reduce traffic, and improve the city's air quality. The line will be opened in stages from 2025 to 2030. The order value for Sweco is approximately SEK 100 million.
After the quarter, Sweco Norway was commissioned to design the new 24-kilometre long E6 motorway in Hedmark. It is one of the largest upcoming infrastructure projects in Norway. Sweco has been commissioned by the construction company Veidekke to design the fourlane motorway and the responsible authority is Nye Veier, the Norwegian infrastructure development company. The project will start immediately and the motorway is scheduled to open in December 2020. The order value for Sweco is approximately SEK 70 million.
The market situation is similar across markets and is good overall. The market in Sweden remains strong, but growth is slowing down. The markets in Finland and the Netherlands continue to improve, from an earlier challenging environment. Essentially all other markets remain good.
Demand for Sweco's services predominantly follows the general macroeconomic trend in Sweco's markets, with some time lag.
The Northern European GDP development is solid. Political uncertainty, the global macroeconomic
situation and financial market events are risks to the development.
Sweco does not provide forecasts.
On 25 August Sweco announced the acquisition of Snoeck & Partners, a Belgian building consultancy with 24 employees. It has a well-established market position in western Belgium and offers services in architecture. structural engineering and infrastructure.
On 23 October Sweco announced the acquisition of Dimension Rådgivning AS, a Norwegian engineering consultancy based in Stavanger with 47 employees that offers services in urban planning, building engineering, municipal engineering and infrastructure.
CASH FLOW AND FINANCIAL POSITION
Group cash flow from operating activities totalled SEK 313 million (309) during the first nine months of the year. Net debt essentially remained stable at SEK 2,311 million (2.315).
The net debt/EBITDA ratio was 1.4 times (1.6).
Available cash and cash equivalents, including unutilised credit lines, totalled SEK 1,351 million (1,552) at the end of the reporting period.
Investments in equipment totalled SEK 189 million (140) and were primarily attributable to IT investments. Depreciation of equipment totalled SEK 170 million (164) and amortisation of intangible assets totalled SEK 80 million (102).
Purchase consideration paid to acquire companies and operations totalled SEK 104 million (154) and had an impact of SEK-77 million (-136) 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 289 million (114) 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.
EBITA was positively affected by an increasing trend in hourly fees and positive project adjustments, while a lower billing ratio contributed negatively. The year-on-year calendar effect of -8 hours had a negative impact of approximately SEK 24 million on net sales and EBITA.
Sweco continues to be successful in the market and is one of Sweden's most attractive employers. Organic revenue growth from own consultants, adjusted for the calender effect, was 2 per cent. Nominally, organic growth was -2 per cent, mainly due to a reduction in income from subconsultants and the negative calendar effect. The reduced income from subconsultants was mainly related to the completion of large projects with a major share of sub-consultants.
The Swedish market remains strong, but growth is slowing down and competition for talent is increasing. 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.
| . | ||||
|---|---|---|---|---|
| Net sales and profit | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 |
| Net sales, SEK M | 1.437 | 1,465 | 5,089 | 5.113 |
| Organic growth, % | -2 | |||
| Currency, % | ||||
| EBITA, SEK M | 95 | 129 | 548 | 579 |
| EBITA marain, % | 6.6 | 8.8 | 10.8 | 11.3 |
| Number of full-time employees | 5,392 | 5.327 | 5,480 | 5,441 |
EBITA decreased to SEK 24 million (40). EBITA was impacted by a negative calendar effect and increased project writedowns. The year-on-year calendar effect of -8 hours had a negative impact of approximately SEK 7 million on net sales and EBITA.
Net sales decreased by 10 per cent, largely due to negative currency translation effects of 7 per cent. Organic growth was impacted negatively by the calendar effect and a reduction in income from subconsultants. Organic revenue growth from own consultants, adjusted for the calender effect, was 1 per cent.
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 | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 |
| Net sales, SEK M | 413 | 457 | 1,509 | 1,525 |
| Organic growth, % | -5 | |||
| Currency, % | $\overline{\phantom{a}}$ | |||
| EBITA, SEK M | 24 | 40 | 119 | 137 |
| EBITA marain, % | 5.8 | 8.8 | 7.9 | 9.0 |
| Number of full-time employees | 1,329 | 1,330 | 1,329 | 1.343 |
$1.122121222$
Net sales increased to SEK 420 million (402). EBITA increased to SEK 43 million and the margin improved 1.5 percentage points to 10.2 per cent. The improvements were mainly attributable to higher average fees and a combination of acquired and organic growth. The year-on-year calendar effect of -2 hours had a negative impact of approximately SEK 1 million on net sales and EBITA.
The Finnish economy has gradually improved over the last two years. 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 good, 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 | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 |
| Net sales, SEK M | 420 | 402 | 1,405 | 1,298 |
| Organic growth, % | 10 | |||
| Acquisition-related growth, % | ||||
| Currency, % | -5 | |||
| EBITA, SEK M | 43 | 35 | 153 | 98 |
| EBITA marain, % | 10.2 | 8.7 | 10.9 | 7.5 |
| Number of full-time employees | 2,069 | 2,008 | 2.058 | 2,000 |
EBITA declined SEK 13 million. The decline was mainly attributable to restructuring costs and a negative calendar effect. The calendar effect of -7 hours had a negative impact of approximately SEK 4 million on EBITA.
Organic growth was impacted negatively by calendar effects of 1 per cent during the quarter. The remaining organic decline was mainly attributable to a reduction of staff related to ongoing operational improvements.
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 environmental sectors is increasing, driven by an higher demand for climate adaption services in the larger cities. The energy market is weak due to a decreasing activity level.
Jul-Sep 2016
$\overline{334}$
$-2$
$\delta$
$27$
$8.0$
$1,027$
Jan-Sep 2017
$1,022$
$-1$
$\overline{1}$
39
$.38$
1,009
Jan-Sep 2016
1.024
$\overline{c}$
$\overline{c}$
54
$5.3$
1,068
| IN RRIFF | |
|---|---|
| Net sales and profit | Jul-Sep 2017 |
| Net sales, SEK M | 290 |
| Organic growth, % | $-9$ |
| Currency, % | -5 |
$14$
$4.7$
992
EBITA, SEK M
EBITA margin, %
Number of full-time employees
EBITA increased SEK 9 million, 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 14 million. The profit improvement was mainly attributable to an improved billing ratio and overhead cost savings.
Net sales decreased to SEK 389 million (434), mainly due to a reduction in the number of own consultants. Sweco Netherlands is continuing on its journey to sustainably improve operational performance. The focus is on the implementation of Sweco's operating model supported by a cultural change programme focused on customers, leadership and collaboration.
Due to the gradual improvement of the Dutch economy, the engineering market in the Netherlands is developing positively. particulary 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 DRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 |
| Net sales, SEK M | 389 | 434 | 1,249 | 1,312 |
| Organic growth, % | -0 | -5 | -5 | -4 |
| Acquisition-related growth, % | -4 | - | ||
| Currency, % | -5 | |||
| EBITA, SEK M | -4 | 47 | ||
| EBITA margin, % | $1.4^{\circ}$ | $-0.8$ | 3.8 | 2.1 |
| Number of full-time employees | 1,348 | 1,408 | 1.369 | 1.446 |
IN DOITE
Net sales increased to SEK 390 million (365), mainly due to solid growth in the UK and the newly acquired company M&R in Belgium which was consolidated for the first time during the third quarter. Organic growth amounted to 3 per cent. Calendar effects of -6 hours had a negative year-on-year impact of approximately SEK 5 million on net sales and EBITA.
Adjusted for calendar effects, EBITA increased approximately SEK 12 million mainly due to positive operational development in the UK and the acquisition of M&R in Belgium. The EBITA margin improved 1.4 percentage points to 6.4 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 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.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 |
| Net sales, SEK M | 390 | 365 | 1.191 | 1.159 |
| Organic growth, % | ||||
| Acquisition-related growth, % | ||||
| Currency, % | -1 | -8 | ٠, | -0 |
| EBITA, SEK M | 25 | 18 | 82 | 75 |
| EBITA margin, % | 6.4 | 5.0 | 6.9 | 6.5 |
| Number of full-time employees | 1.649 | 1.532 | 1.596 | 1.518 |
IN BOICE
Net sales increased to SEK 317 million (289) due to strong organic and acquisition-related growth in Germany. A calendar effect of -8 hours had a negative year-on-year impact of approximately SEK 3 million on net sales and EBITA.
EBITA increased to SEK 19 million (18). Adjusted for calendar effects, the improvement of EBITA was approximately SEK 4 million. The main contributions to improved profits came from Germany, with positive operational momentum in the existing business and contributions 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 gradually increasing. The Czech market is showing signs of a recovery with 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 | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 |
| Net sales, SEK M | 317 | 289 | 932 | 753 |
| Organic growth, % | 10 | 12 | ||
| Acquisition-related growth, % | 16 | 10 | ||
| Currency, % | -5 | |||
| EBITA, SEK M | 19 | 18 | 50 | 32 |
| EBITA marain, % | 6.0 | 6.2 | 5.3 | 4.2 |
| Number of full-time employees | 1,561 | 1,450 | 1,531 | 1,406 |
Parent Company net sales totalled SEK 461 million (389) and were attributable to intra-group services. Profit after net financial items totalled SEK 391 million (26). Investments in equipment totalled SEK 6 million (14). Cash and cash equivalents at the end of the period totalled SEK 218 million (284).
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 material 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.
Sweco follows the guidelines 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 199.50 at the end of the period, representing a 4.0 per cent decrease during the quarter. The Nasdag Stockholm General Index increased by 1 per cent over the same period.
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 119,124,596: 10.533.731 Class A shares and 108.590.865 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-68 million |
| 2018 Estimate | SEK-60 million |
| 2019 Estimate | SEK-33 million |
FORTHCOMING FINANCIAL INFORMATION Year-end report 2017 13 February 2018 Interim report January-March 9 May 2018 Interim report January-June 19 July 2018 Interim report January-September 8 November 2018
Stockholm, 27 October 2017
Tomas Carlsson President and CEO, Member of the Board of Directors
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]
SWEC0 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 is the Auditor's review report on interim financial information, prepared in accordance with IAS 34 and chapter 9 of the Swedish Annual Accounts Act.
We have reviewed the interim report of Sweco AB (publ) for the period 1 January 2017 through 30 September 2017. The board of directors and the President and CEO are responsible for the preparation and presentation of the interim financial statements in accordance with IAS 34 and the Swedish annual Accounts Act. Our responsibility is to express an opinion on the interim financial statements based on our review.
We conducted our review in accordance with International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Idependent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and a substantially smaller scope than an audit conducted in accordance with International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act and, for the Parent Company, in accordance with the Swedish Annual Accounts Act.
Stockholm, 27 October 2017 PricewaterhouseCoopers AB
Michael Bengtsson Authorised public accountant Auditor in charge
| Oct 2016- | ||||||
|---|---|---|---|---|---|---|
| Key ratios 1) | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 | Sep 2017 | Full-year 2016 |
| Profitability | ||||||
| EBITA margin, % | 6.5 | 6.8 | 8.5 | 7.8 | 8.6 | 8.1 |
| Operating margin (EBIT), % | 6.0 | 6.1 | 8.1 | 7.2 | 8.2 | 7.6 |
| Profit margin, % | 5.6 | 5.9 | 7.8 | 7.0 | 8.0 | 7.4 |
| Revenue growth 2) | ||||||
| Organic growth, % | 0 | 4 | $\it{0}$ | 4 | $\overline{3}$ | |
| Acquisition-related growth, % | $\mathbf{1}$ | 77 | $\mathbf{1}$ | 69 | 42 | |
| Currency, % | $-3$ | 3 | 0 | $-1$ | 0 | |
| Total growth, % | $-2$ | 84 | $\overline{c}$ | 72 | 45 | |
| Debt | ||||||
| Net debt, SEK M | 2.311 | 2.315 | 1.558 | |||
| Interest-bearing debt, SEK M | 2.642 | 2,767 | 2.451 | |||
| Financial strength | ||||||
| Net debt/Equity, % | 42.6 | 45.0 | 28.7 | |||
| Net debt/EBITDA, x | 1.4 | 1.6 | 1.0 | |||
| Equity/Assets ratio, % | 38.9 | 37.8 | 39.3 | |||
| Available cash and cash | 1,351 | 1,552 | 2.138 | |||
| equivalents, SEK M | ||||||
| -of which unutilised credit, SEK M | 1.020 | 1,100 | 1.245 | |||
| Return | ||||||
| Return on equity, % | 19.3 | 20.8 | 18.0 | |||
| Return on capital employed, % | 17.4 | 18.0 | 16.8 | |||
| Share data | ||||||
| Earnings per share, SEK | 1.32 | 1.38 | 6.21 | 5.47 | 8.51 | 7.78 |
| Diluted earnings per share, SEK | 1.30 | 1.36 | 6.09 | 5.39 | 8.35 | 7.65 |
| Equity per share, SEK 3) | 45.45 | 42.87 | 45.37 | |||
| Diluted equity per share, SEK3) | 44.57 | 42.04 | 44.47 | |||
| Number of outstanding shares at reporting date |
119,124,596 | 119,624,270 | 119,554,270 | |||
| Number of repurchased Class B and Class C shares |
2,459,223 | 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 | Oct 2016- | |||||
|---|---|---|---|---|---|---|
| SEKM | Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 | Sep 2017 | Full-year 2016 |
| Net sales | 3,635 | 3,723 | 12,305 | 12,111 | 16,726 | 16,531 |
| Other income | N | U | ||||
| Other external expenses | $-986$ | $-987$ | $-3.029$ | $-2.955$ | $-4,125$ | $-4,052$ |
| Personnel expenses | $-2,343$ | $-2,417$ | $-8,032$ | $-8,012$ | $-10,896$ | $-10,875$ |
| EBITDA | 306 | 319 | 1,246 | 1,143 | 1,707 | 1,605 |
| Amortisation/depreciation and impairments |
$-69$ | $-67$ | $-202$ | $-202$ | $-269$ | $-269$ |
| EBITA | 237 | 252 | 1,044 | 941 | 1,438 | 1,336 |
| Acquisition-related items 1) | $-18$ | $-23$ | $-49$ | $-70$ | -66 | $-87$ |
| Operating profit (EBIT) | 219 | 228 | 995 | 871 | 1,373 | 1,249 |
| Net financial items | $-14$ | $-9$ | $-37$ | $-28$ | $-42$ | $-33$ |
| Profit before tax | 205 | 219 | 957 | 843 | 1,330 | 1,216 |
| Income tax | $-47$ | $-53$ | $-215$ | $-188$ | $-312$ | $-285$ |
| PROFIT FOR THE PERIOD | 158 | 166 | 743 | 655 | 1,019 | 931 |
| Attributable to: | ||||||
| Parent Company shareholders | 157 | 166 | 742 | 655 | 1,017 | 930 |
| Non-controlling interests | O | 0 | $\Omega$ | |||
| Earnings per share | ||||||
| attributable to Parent Company shareholders, SEK |
1.32 | 1.38 | 6.21 | 5.47 | 8.51 | 7.78 |
| Average number of shares | 119,377,524 | 119,624,270 | 119,534,675 | 119,598,114 | 119,551,240 | 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 income, SEK M |
Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 | Oct 2016- Sep 2017 |
Full-year 2016 |
|---|---|---|---|---|---|---|
| Profit for the period | 158 | 166 | 743 | 655 | 1019 | 931 |
| Items that will not be reversed in the income state- ment |
||||||
| Revaluation of defined benefit pensions, net after $\text{tax}^{1,2}$ |
$-1$ | $-1$ | $-1$ | $-31$ | ſ | -30 |
| Items that may subsequently be reversed in the in- come statement |
||||||
| Translation differences, net after tax | $-3$ | 63 | $-31$ | 50 | $-43$ | 38 |
| Translation differences transferred to profit for the period |
$\overline{\phantom{a}}$ | |||||
| COMPREHENSIVE INCOME FOR THE PERIOD | 154 | 227 | 711 | 674 | 977 | 940 |
| Attributable to: | ||||||
| Parent Company shareholders | 154 | 225 | 710 | 672 | 977 | 939 |
| Non-controlling interests | $\Omega$ | 1 | ||||
| $^{1)}$ Tax on revaluation of defined benefit pensions | 9 | -4 | 5 |
2) Revalued annually. Reviewed quarterly in the event of material changes to actuarial assumptions.
| Cash flow statement SEKM |
Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 | Oct 2016- Sep 2017 |
Full-year 2016 |
|---|---|---|---|---|---|---|
| Cash flow from operating activities before changes in working capital and tax paid |
314 | 358 | 1.281 | 1.179 | 1.779 | 1.677 |
| Tax paid | $-40$ | $-35$ | $-180$ | $-170$ | $-206$ | $-196$ |
| Changes in working capital | $-280$ | $-788$ | $-700$ | $-404$ | -316 | |
| Cash flow from operating activities | -6 | 330 | 313 | 309 | 1.169 | 1,165 |
| Cash flow from investing activities | $-80$ | $-53$ | $-271$ | $-292$ | $-380$ | -401 |
| Cash flow from financing activities | 102 | $-146$ | $-591$ | $-108$ | $-911$ | $-428$ |
| CASH FLOW FOR THE PERIOD | 16 | 131 | $-549$ | $-91$ | $-122$ | 336 |
| Balance sheet | |||
|---|---|---|---|
| SEKM | 30 Sep 2017 | 30 Sep 2016 | 31 Dec 2016 |
| Goodwill | 6.136 | 5,979 | 6.098 |
| Other intangible assets | 314 | 366 | 346 |
| Property, plant and equipment | 615 | 640 | 616 |
| Financial assets | 220 | 183 | 219 |
| Current assets excl. cash and cash equivalents | 6.341 | 5.981 | 5.650 |
| Cash and cash equivalents incl. short-term investments | 331 | 452 | 892 |
| TOTAL ASSETS | 13,957 | 13,601 | 13,820 |
| Equity attributable to Parent Company shareholders | 5.414 | 5.129 | 5.424 |
| Non-controlling interests | 11 | 10 | 10 |
| Total equity | 5,425 | 5,139 | 5,435 |
| Non-current interest-bearing liabilities | 1.421 | 2.552 | 1,515 |
| Other non-current liabilities | 844 | 747 | 833 |
| Current interest-bearing liabilities | 1,222 | 215 | 936 |
| Other current liabilities | 5.045 | 4,948 | 5,102 |
| TOTAL EQUITY AND LIABILITIES | 13,957 | 13,601 | 13,820 |
| Pledged assets | 21 | 22 | |
| Contingent liabilities | 677 | 631 | 706 |
| Changes in equity SEKM |
Jan-Sep 2017 | Jan-Sep 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 | 710 | 711 | 674 | 675 | ||
| Transfer to shareholders | $-513$ | - | $-513$ | $-418$ | $-1$ | $-419$ |
| Preferential rights issue | $\overline{\phantom{0}}$ | $-2$ | -2 | |||
| Divestments of non-controlling interests | ||||||
| Buy-back of treasury shares | $-289$ | $-289$ | $-114$ | - | $-114$ | |
| Sales of treasury shares | е | $\overline{\phantom{0}}$ | ||||
| Share-based incentive schemes | 77 | 77 | 83 | $\overline{\phantom{0}}$ | 83 | |
| Share savings schemes | 5 | 5 | 4 | 4 | ||
| EQUITY, CLOSING BALANCE | 5,414 | 11 | 5,425 | 5,129 | 10 | 5,139 |
During the period Sweco acquired the operations of Karves Yhtiöt Ltd. MR-Group NV. Byggteam Bodö AS and Snoeck & Partners NV. The acquired businesses have an aggregate total of approximately 125 employees. Purchase consideration totalled SEK 104 million and had a negative impact on cash and cash equivalents of SEK 77 million. The acquisitions impacted the consolidated balance sheet as detailed in the table below whereof the acquisition analysis regarding Snoeck & Partner is preliminary. Of the unsettled purchase price commitment of SEK 5 million, SEK 5 million refers to conditional contingent consideration. During the period the acquired companies contributed SEK 53 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 105 million in net sales and about SEK 6 million in operating profit.
| Acquisitions, SEKM | |
|---|---|
| Intangible assets | 74 |
| Property, plant and equipment | 9 |
| Financial assets | $\Omega$ |
| Current assets | 65 |
| Non-current liabilities | $-11$ |
| Deferred tax | -6 |
| Other current liabilities | $-27$ |
| Total purchase consideration | 104 |
| Unsettled purchase price commitment | -5 |
| Cash and cash equivalents | $-22$ |
| DECREASE IN GROUP CASH AND CASH EQUIVALENTS | 77 |
During the period Sweco divested Golfexploitatiemaatschappij Naarderbos B.V and Naarderbos Ontwikkeling B.V., with a total of 65 employees (approximately 25 full-time employees). The businesses contributed SEK 11 million in net sales and SEK-4 million in operating profit during the period. The divestments had a positive impact on profit of SEK0.1 million and a positive impact on the Group's cash and cash equivalents of SEK 13 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 | 15 |
| Cash and cash equivalents in divested companies | |
| INCREASE IN GROUP CASH AND CASH EQUIVALENTS |
| Acquisition-related items SEK M |
Jul-Sep 2017 | Jul-Sep 2016 | Jan-Sep 2017 | Jan-Sep 2016 | Oct 2016- Sep 2017 |
Full-year 2016 |
|---|---|---|---|---|---|---|
| Amortisation of acquisition-related intangible assets |
$-17$ | $-23$ | $-51$ | $-70$ | $-73$ | $-92$ |
| Revaluation of additional purchase price |
- | O | $\mathfrak{p}$ | |||
| Profit/loss on the divestment of buildings and land |
$\overline{\phantom{a}}$ | ◠ | ||||
| Profit/loss on divestment of companies and operations |
$\overline{\phantom{a}}$ | 3 | ||||
| ACQUISITION-RELATED ITEMS | $-18$ | $-23$ | $-49$ | $-70$ | -66 | $-87$ |
The Group's financial assets measured at fair value totalled SEK 13 million (15). 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 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.
| Actual Actual Actual Actual Actual Actual Actual Quarterly summary 2) 201703 201702 201701 2016 04 2016 03 2016 02 2016 01 |
Actual 2015 04 |
Pro forma 2015 03 |
|---|---|---|
| Net sales, SEK M | ||
| 1,736 Sweco Sweden 1.437 1,798 1,854 1.951 1.465 1.913 |
1,900 | 1,372 |
| 499 413 506 590 530 457 568 Sweco Norway |
508 | 401 |
| 420 498 487 Sweco Finland 462 402 471 425 |
483 | 372 |
| 290 343 389 351 334 361 330 Sweco Denmark |
365 | 320 |
| 389 421 440 434 434 455 423 Sweco Netherlands |
450 | 445 |
| 390 401 400 420 365 395 398 Sweco Western Europe |
428 | 389 |
| 329 297 221 Sweco Central Europe 317 285 289 243 |
261 | 218 |
| $-20$ $-36$ $-36$ $-24$ $-22$ $-36$ $-15$ Group-wide, Eliminations, etc. |
-46 | $-12$ |
| TOTAL GROUP 3,635 3,723 4,370 4,018 4,262 4,408 4,421 |
4,350 | 3,504 |
| EBITA, SEK M | ||
| 95 202 251 273 129 280 170 Sweco Sweden |
211 | 91 |
| 24 $\overline{\phantom{a}}$ 88 58 40 68 29 Sweco Norway |
52 | 24 |
| 49 35 42 21 Sweco Finland 43 61 41 |
35 | 27 |
| 30 27 23 14 $-4$ 44 4 Sweco Denmark |
28 | 18 |
| 5 12 14 28 $\mathbf{0}$ Sweco Netherlands $-4$ 18 |
$-1$ | 12 |
| 29 33 25 28 30 18 23 Sweco Western Europe |
25 | 22 |
| 19 $\overline{3}$ Sweco Central Europe 18 13 26 18 11 |
19 | $\overline{7}$ |
| 12 $-12$ $-9$ $-4$ -4 $-77$ $-40$ Group-wide, Eliminations, etc. |
$-170$ | $-63$ |
| EBITA 237 252 462 312 494 395 228 |
200 | 138 |
| 12 83 15 Extraordinary items 3) 36 ä, ٠ $\overline{a}$ |
190 | 59 |
| 474 263 237 312 494 478 266 EBITA excl. extraordinary items |
390 | 197 |
| EBITA margin, % | ||
| 11.2 Sweco Sweden 13.5 14.0 8.8 14.6 9.8 6.6 |
11.1 | 6.6 |
| 5.8 1.5 14.9 11.0 8.8 12.0 5.8 Sweco Norway |
10.2 | 6.1 |
| 9.9 8.8 8.9 10.2 12.6 8.7 4.8 Sweco Finland |
7.2 | 7.4 |
| 12.6 6.5 1.2 Sweco Denmark 4.7 $-1.1$ 7.6 8.0 |
7.7 | 5.6 |
| 1.4 3.4 6.3 $-0.1$ $-0.8$ 2.7 4.4 Sweco Netherlands |
$-0.3$ | 2.6 |
| 7.3 7.0 7.1 5.0 8.4 5.9 Sweco Western Europe 6.4 |
5.9 | 5.7 |
| 5.4 4.5 8.9 6.2 Sweco Central Europe 6.0 4.7 1.1 |
7.2 | 3.0 |
| 6.5 5.7 7.3 11.2 6.8 10.6 EBITA margin 8.9 |
4.6 | 3.9 |
| 0.2 Extraordinary items 3) 1.9 0.4 0.9 ÷, |
4.4 | 1.7 |
| 7.3 11.2 7.2 10.8 EBITA margin excl. extraordi- 6.5 10.8 6.6 |
9.0 | 5.6 |
| nary items | ||
| 75.5 75.3 75.1 74.5 Billing ratio, % 74.4 74.6 75.1 |
74.7 | 74.1 |
| Number of normal working | ||
| 490 511 464 506 493 518 478 hours |
492 | 519 |
| 14,482 14.396 14,548 14.412 14,172 14,507 14,302 Number of full-time employees |
14,344 | 14,049 |
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 be policies as described in Sweco's 2015 annual report. Grontmij's financials have been adjusted to correspond with Sweco's income statement process as usually intended to describe a hypothetical situation and has been prepared solely for illustrative purposes.
Pro forma information excludes Grontmij's French activities which were divested during 2015 and repor 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-September | 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 | 5.089 | 5.113 | 548 | 579 | 10.8 | 11.3 | 5.480 | 5.441 |
| Sweco Norway | 1,509 | 1,525 | 119 | 137 | 7.9 | 9.0 | 1,329 | 1,343 |
| Sweco Finland | 1,405 | 1.298 | 153 | 98 | 10.9 | 7.5 | 2.058 | 2.000 |
| Sweco Denmark | 1,022 | 1.024 | 39 | 54 | 3.8 | 5.3 | 1.009 | 1.068 |
| Sweco Netherlands | 1,249 | 1,312 | 47 | 27 | 3.8 | 2.1 | 1,369 | 1.446 |
| Sweco Western Europe | 1.191 | 1.159 | 82 | 75 | 6.9 | 6.5 | 1.596 | 1.518 |
| Sweco Central Europe | 932 | 753 | 50 | 32 | 5.3 | 4.2 | 1,531 | 1.406 |
| Group-wide, Eliminations, etc. 1) | -92 | $-73$ | 4 | $-61$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 76 | 98 |
| TOTAL GROUP | 12,305 | 12,111 | 1.044 | 941 | 8.5 | 7.8 | 14,448 | 14,321 |
$^{11}$ Group-wide, Eliminations, etc. includes Group functions and Grontmij's real estate operations. Allextraordinary items are included in Group-wide.
2) 2016 restated to reflect the new definition of Net sales, EBITA
The below table shows the calculation of organic growth, i.e., net sales growth adjusted for the impact of acquisitions and divestments as well as the effect of foreign currency fluctuations.
| Net sales growth | 2017 Jul-Sep |
2016 Jul-Sep |
Growth.% Jul-Sep 2017 |
2017 Jan-Sep |
2016 Jan-Sep |
Growth.% Jan-Sep 2017 |
|---|---|---|---|---|---|---|
| Reported Net sales | 3.635 | 3.723 | $-2%$ | 12.305 | 12.111 | 2% |
| Adjustment for currency effects | $-106$ | $-3%$ | 46 | $0\%$ | ||
| Net sales currency-adjusted | 3.635 | 3.617 | 1% | 12.305 | 12.157 | $1\%$ |
| Adjustment for acquisitions/divestments | $-56$ | $-20$ | 1% | $-103$ | $1\%$ | |
| Comparable net sales currency-adjusted | 3.579 | 3.597 | $0\%$ | 12.202 | 12,159 | $0\%$ |
| Net sales growth | 2016 Jul-Sep |
2015 Jul-Sep |
Growth.% Jul-Sep 2016 |
2016 Jan-Seo |
2015 Jan-Sep |
Growth.% Jan-Sep 2016 |
|---|---|---|---|---|---|---|
| Reported Net sales | 3.723 | 2,024 | 84% | 12,111 | 7.039 | 72% |
| Adjustment for currency effects | 57 | 3% | -36 | $-1%$ | ||
| Net sales currency-adjusted | 3.723 | 2.081 | 79% | 12.111 | 7,003 | 73% |
| Adjustment for acquisitions/divestments | $-41$ | 1.463 | 77% | -77 | 4.563 | 69% |
| Comparable net sales currency-adjusted | 3.683 | 3.544 | 4% | 12.033 | 11,566 | 4% |
| Parent Company income statement, SEK M | Jan-Sep 2017 | Jan-Sep 2016 | Full-year 2016 |
|---|---|---|---|
| Net sales | 461 | 389 | 538 |
| Operating expenses | $-481$ | $-447$ | $-600$ |
| Operating loss | $-20$ | -57 | $-63$ |
| Net financial items | 410 | 83 | 551 |
| Profit/loss after net financial items | 391 | 26 | 488 |
| Appropriations | 10 | ||
| Profit/loss before tax | 391 | 26 | 499 |
| Tax | -86 | ||
| PROFIT/LOSS AFTER TAX | 391 | 26 | 413 |
| Parent Company balance sheet, SEK M | 30 Sep 2017 | 31 Dec 2016 |
|---|---|---|
| Intangible assets | 64 | 75 |
| Property, plant and equipment | 40 | 54 |
| Financial assets | 6.345 | 6.346 |
| Current assets | 1,880 | 2,572 |
| TOTAL ASSETS | 8,330 | 9,047 |
| Equity | 4,310 | 4.626 |
| Untaxed reserves | 12 | 12 |
| Non-current liabilities | 1,312 | 1,379 |
| Current liabilities | 2.696 | 3.030 |
| TOTAL EQUITY AND LIABILITIES | 8,330 | 9,047 |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.