Good morning, and welcome to Luotea's Q3 2026 results webcast. Thank you for joining us today. In this session, we will review our third quarter performance and key financial results, and take a look at Luotea's strategic direction going forward. I will deliver the presentation together with our CFO, Mika Stirkkinen. Throughout the presentation, you can submit questions in the comment field, and we will address them in a Q&A session at the end of the webcast. I will start with some highlights from the third quarter. In Q3, our group net sales increased by 0.4% from third quarter last year. Our adjusted EBITA was EUR 5.7 million, up by EUR 0.8 million in the corresponding quarter last year. The improvement in profitability was driven by our efficiency measures, including lower personnel and ICT costs. In addition, the positive development in Sweden continued. Moving to our guidance.
It was changed in September. For 2026, adjusted EBITA is expected to be better than the adjusted EBITA EUR 7 million in 2025. As part of the execution of Luotea's strategy, we have launched a strategic development initiative to accelerate the evolution of our data-driven services. We will continue to enhance our existing offerings while also building new capabilities, including data-driven property maintenance and new data-driven operating model. In addition, we have decided to launch an ERP upgrade program, and together our investments in data-driven services and ERP upgrade will strengthen Luotea's competitiveness, support profitable growth, and create a strong foundation for long-term value creation. Finally, good customer interest continues to support Luotea Smartti growth. We will take today a closer look at Luotea Smartti later in this presentation. On this slide, we see development of Luotea's net sales and adjusted EBITA.
In third quarter of 2026, our group net sales were EUR 84.2 million, up by EUR 0.3 million from corresponding quarter 2025. The group adjusted EBITA increased by EUR 0.8 million and is now EUR 5.7 million, and we can be really satisfied with this improvement. Looking more closely at our businesses, net sales grew by 6% in Sweden and by 2% in property maintenance and technical services in Finland. At the same time, cleaning and support services in Finland performed below our expectations, with net sales declining by 6% compared with the previous year. Next, let's take a closer look at our performance in Finland. On this slide, we see the development in net sales and adjusted EBITA from our operations in Finland. The sales were EUR 53.3 million in the third quarter, down by EUR 1.6 million from corresponding quarter in 2025.
Adjusted EBITA decreased by EUR 0.9 million and was now EUR 4 million. Our revenue development in the third quarter reflected the polarized market. Cleaning and support services continued to face a challenging market environment, affecting both contract sales and additional sales. At the same time, property maintenance services revenue grew, supported by strong growth in add-on sales. Competition in the cleaning market remained intense. The number and value of tenders were high, but price competition was particularly strong for large public contracts. As I have said earlier, we have not been willing to compromise our margins. Add-on sales outside contract-based services in cleaning and support services also remained below the comparison period, largely due to our customers' cost-saving measures. To improve our financials in Finland, we continue measures to strengthen our operational performance, especially in cleaning and support services.
Then moving on to Sweden, we continue to see positive development. The good news from Sweden is also that our new country manager, Rikard Nyhrén, will be able to start already on 16th November. I believe that under his leadership, we will be able to sharpen our execution and significantly increase the pace of progress. Revenue increased by EUR 1.8 million from the corresponding quarter last year from EUR 29.1 million to EUR 30.9 million. The growth was mainly driven by add-on sales outside contract sales and by new private sector contracts. Revenue increased even though a significant public sector contract was still in effect during the comparison period. We are also seeing progress in profitability. The adjusted EBITA improved to EUR 0.5 million from EUR 0.4 million a year ago. The improvement was supported by higher revenue, our efficiency measures, and improved contract portfolio.
Our positive earnings trend continued for a seventh consecutive quarter, although the improvement was below our expectations. Under the leadership of our new CEO in Sweden, we will place a strong focus on operational efficiency to achieve our target profitability level. Those were the key figures from Q3. Mika will continue with the financials in more detail shortly. Before that, I will say a few words about our strategy and data-driven services. First, let's look at our simplified strategy one-pager. Our strategy and 2028 targets remained unchanged, but we have clarified our strategic priorities. Our strategy is built around four focus areas: data-driven services, efficient operating models, best place to work, and sustainability front runner. The key change is a stronger focus on data-driven services. Now, let's have a closer look on the future of our data-driven services.
As part of the execution of our strategy, we have launched a development initiative to take our data-driven services to the next level. Internally, we call this initiative our game changer. This responds to evolving customer expectation for more comprehensive and intelligent property services that better meet their needs, which we see as an important opportunity for Luotea. We are expanding the use of data-driven cleaning and developing new services, including data-driven property maintenance. In addition, we are building new data-driven operating model with the help of our new upgraded ERP. Our goal is combine data technology and data and the expertise of our people in a way that improves customer experience, makes our operations more efficient, and creates more value for our customers. Let's now take a closer look at Luotea Smartti, our data-driven energy management service, which I've been telling you several times.
As of September 2026, Luotea Smartti managed more than 3.1 million sq m of customer properties in Finland. I say again, 3.1 million sq m of customer properties in Finland. The portfolio covers a broad range of properties. Offices represent the largest share, followed by retail premises and logistics and warehousing properties. Today, Luotea Smartti used to manage 6% of all office properties in Finland, and that's quite a lot. This gives us a strong insight into energy performance of properties across Finland, as well as how they should be operated to achieve the best possible energy efficiency. Our data also allows us to identify which systems deliver the best results. As I mentioned, this data is valuable to our customers and may also open up new business opportunities to Luotea, to us.
Across these different types of properties, Luotea Smartti enables data-driven management of indoor climate and energy use, and it works with the building's existing management system using predictive and dynamic optimization to continuously improve performance. We see a really strong potential for Luotea Smartti. Its broad customer base and the data it generates enables us to develop the service further, expand it to different properties and markets, and create new value-adding services for our customers. I hope this gave you a clearer idea about our strategy and especially Luotea Smartti service and how we plan to execute it. Now, on to our financials and guidance, and I will hand over to our CFO, Mika Stirkkinen.
Thank you, Antti. I am happy to report that adjusted EBITA improved by EUR 0.7 million in Q3 versus last year. As you can see, rolling 12-month adjusted EBITA now exceeds EUR 18 million. Next, let's look at our cash flow for the first nine months of the year. Cash flow before changes in net working capital was EUR 13.3 million. The change in net working capital was EUR 9.7 million negative, partly due to seasonality. We expect the change in net working capital to turn positive in Q4. Net financial items and income taxes paid amounted to EUR 2.7 million negative. Cash flow from investments was EUR 1 million negative. Altogether, operating and investment cash flows amounted to EUR 0.1 million negative. During the first nine months, we repaid the EUR 5 million term loan, paid EUR 2.7 million in dividends, and made EUR 4.5 million in lease payments.
Altogether, financing cash flows were EUR 12.2 million negative. Next, let's turn to capital structure. Our balance sheet remains very strong. At the end of the quarter, we had EUR 3.5 million in cash, no outstanding bank loans, and EUR 12.5 million in IFRS 16 lease liabilities. Altogether, our net debt stood at EUR 9 million. As mentioned earlier, adjusted EBITA for the last 12 months stood at EUR 18.1 million, resulting in a net debt to adjusted EBITA ratio of 0.5. In addition to our cash position, we have a fully undrawn EUR 15 million revolving credit facility. Next, let's turn to our financial targets. Our financial targets remain unchanged. We are targeting 4%-5% revenue growth over the medium term. Our EBITA margin target is 5% over the medium term.
Our cash conversion target is above 90%, meaning that operating free cash flow is expected to be more than 90% of EBITA. Our dividend policy is to pay dividends corresponding to at least 50% of net profit. Next, let's turn to our guidance. We updated our guidance on September 11, and it is as follows. In 2026, adjusted EBITA is expected to be better than the adjusted EBITA, which was EUR 7 million in 2025. Now it is time for your questions.
Hello. My name is Anu-Maaria Vaalama, and I am the communications and marketing director at Luotea, and I will be moderating today's Q&A. Today, we have received four questions, and all the questions come from Waltteri Rossi, Danske Bank. Let us start with the first question. Where is the growth coming from in Sweden? Large or small customers? Customer segments maybe?
The growth comes from medium and large-sized customers and in a commercial sector, mostly from the new commercial sector customers.
Okay. The next two questions considers cleaning. The first question goes: how do you aim to further improve efficiency and margins in Finnish cleaning?
One of the most important measure to improve efficiency and profitability in cleaning Finland is a centralized workforce management team. We have 1.5 million, what it is, scheduled work in cleaning in the year. If you save, for example, one minute of every work piece in future, it is 1.5 million more profitability for us. With the centralized workforce management, I am sure that we will improve the profitability of cleaning Finland.
Okay. When do you expect competition and price pressure to ease in Finnish cleaning market?
I think within two years when the economic starts rising in Finland and the turnover of employees will increase. With those two effect, I think the price competition will be easier in the future. When personnel turnover increases, it will help, and when the economic start rising, it will help also.
Okay. The last question: can you quantify seasonality effects on Q3 profitability, and how should we think about Q4 profit outlook?
Do you want to answer?
Maybe I answer it. We do not guide Q4 separately, so our investors and analysts need to rely on the full year guidance, which is that we expect the adjusted EBITA to be better than 2025 adjusted EBITA.
Okay, thank you.
And-
Yeah.
Sorry, one more. We have not disclosed our brackets what better means, but what I can say is that better in our kind of internal definitions, EUR 0.1 million is not better. EUR 0.1 million is equal than last year. So better means a bit more than EUR 0.1 million better.
Okay. Thank you. These were all the questions for today.
Thank you. Thank you for questions and taking the time to join today's webcast. We appreciate your interest in Luotea and your continued engagement with us. Our next webcast will take place in February 2027, when we will review the fourth quarter and the whole year. We look forward to updating you then. Thank you all, and have a good day. Thank you.