Good day, all, and thank you for joining Sitowise's Q1 Results Webcast. I am Mari Reponen, Head of Investor Relations at Sitowise. With me today are our CEO, Heikki Haasmaa, and our CFO, Hanna Masala, who will begin the presentation shortly. They will first review our Q1 performance and thereafter our outlook and focus areas for future growth and profitability. Feel free to submit any questions via the chat feature below the presentation, and I will address them together with Heikki and Hanna during the Q&A session. We kindly ask you to provide your full name when asking questions. Let's get started with the presentation. I will hand it over to Heikki and Hanna now.
Thank you, Mari. Welcome all on my behalf as well. Let's start then with the key figures for the quarter. As a whole, the group net sales declined by 7.6%, reflecting both the decline in the number of the full-time employees and also the negative calendar effect of minus one working day during the quarter. Our adjusted EBITDA margin was 5.1%, down year on year, but I want to highlight that we had a clearly improving performance compared to the previous quarter, I mean fourth quarter last year. Also, when taking the negative calendar effect into account, we were probably at the same level in the profitability than last year during the first quarter. However, the margin was heavily burdened by the negative performance in Sweden, which also declined significantly year on year.
However, I'm really satisfied with the performance in our Finnish operations, where our underlying performance clearly improved year on year. The adjusted EBITDA decline was also naturally reflected in our operating profit and cash flow, which both decreased, and also our leverage, which increased from the previous quarter end. What was also really good was that our order book was EUR 157 million at the end of the quarter and turning into growth for the first time in actually two years. I'm extremely pleased with this development. We conducted our annual client survey during the first quarter, and I'm happy to see that the Net Promoter Score clearly improved year on year to 35 from the level of 31. This, of course, gives a lot of confidence in the future.
Of course, I would like to thank all of our clients for their trust and for our employees for building that possibility for the trust. There were several highlights during the quarter. I already mentioned a couple of them, but I'm very pleased with our Infra and also Digital business performance, as both of these businesses clearly outperformed their markets in terms of the organic growth. Infra also maintained its target level of profitability, and Digital Solutions delivered a good profitability in a challenging market environment. What was especially good also with the Digi was that our product business continued to grow well. Actually, our recurring revenue growth in that part of the business grew by 19%. That's pretty significant.
Further, we also progressed well in our first steps in internationalizing our product business, as we started Smartlas, which is one of our products, pilot with Ponsse company in France, and then the first client pilot with Routa product in Sweden. Also, I'm very pleased with our performance and the ongoing improvements with our Buildings business. We were able to turn the Buildings business back to black on the adjusted EBITDA level. We are clearly seeing that there are signs of improvement also in the market. That is, of course, building a good path for the future success there. Overall, there has been also more tenders in the markets, not just in the Buildings, but actually in all business lines. That is, of course, promising.
I also want to highlight that we got the new financing agreement that was negotiated during the first quarter and announced in March. Finally, I would like to mention our success in the Grand One Gala. It is Finland's actually largest digital competition. Our Metsään.fi solution won the main prize in the most accessible digital service category. The Planect product received an honorable mention in the best use of data category. These two wins clearly underline our top tier digital competencies. I am very pleased that they got well-deserved recognition also outside our own industry. During the quarter, we progressed in optimizing and also aligning resources in our Sweden and buildings businesses as part of our Building for the Future program that was launched already in August 2024.
In Sweden, due to the continued weakening of the primary markets, we continued to suffer from low utilization, despite the fact that actually our headcount in Sweden was already roughly 25% lower in the first quarter than a year earlier. Of course, this negative performance in Swedish business clearly burdened our group performance, as said. We continued the temporary layoffs and also made some permanent reductions in Buildings too. These were necessary to have a solid foundation then for the future growth and from the cost efficiency point of view. Of course, these also came with significant one-off costs, which are then burdening our first quarter operating profit. We also made a decision on permanent personnel adjustments in our group functions around the end of the quarter. All of these savings basically will then materialize from second quarter onwards.
Overall, I'm very pleased that we've been clearly progressing with the Building for the Future actions and also highlighting that, of course, the main thing there to solve the root causes is that we just have enough workload for our people. Our sales activity has been clearly improving. We will move on more to business area comments, starting with the Infra. Here you can see a picture of the alliance project related to the planning of the western part of the Vantaa Light Rail Alliance that was announced last fall. Why we have it today here also is that actually during the quarter, our Infra business also recorded additional orders related to this project to its order book. That's, of course, helping us further. Overall about the Infra, I'm very pleased with the organic growth, as said.
Overall, net sales increased by 4% year on year. Overall, the profitability was again above our target level, meaning that 12% margin. The growth in infra net sales was largely organic, but it also had a small impact by the acquisitions made some time ago. Key drivers for the growth are really the Green Transition and then the red transport, as you see. Those will be helping or supporting us in the coming quarters and years as well. Overall, the demand in the municipal sector remained reasonably good, but actually the government investments continued to be at a low level. Overall, we also see pretty tough price competition there. Overall, we see that the infrastructure consulting market will remain mixed with modest public sector investment budget for the 2025 year.
However, there is clearly tailwind from the Green Transition environment and also security defense sector. As we also have a strong order book in Infra, the outlook for the Infra businesses is very stable. About the Buildings, also a recent win here. Following a successful piloting, Innovestor's energy storage project continues to its second phase. Sitowise will be responsible for the preliminary studies, implementation planning, and also the construction and project management tasks for altogether actually 26 different sites. This is naturally a great win for us. Net sales in the Buildings business area were down by 12% year on year. This decline is really much due to the tough market situation, but also that we have 14% less employees in the Buildings business than a year ago.
The downturn in the construction market continued to impact the business, and there is clearly overcapacity and pretty intense price competition also in the market. We had to continue wider temporary layoffs across almost all business lines under the Buildings business area. We also had permanent reductions affecting 26 people in structural engineering and building services engineering. Overall, as I said in the beginning, I'm really satisfied that now we have a clear and good direction for the Buildings business. The business turned back to profitability, and we are now really actively going further for the client work and, of course, sales, further improving the utilization rate and then further enhancing our project management practices. Of course, also positive was that the order book grew during the first quarter. That is why we see that clearly the bottom in the construction market is now passed.
We also aim at more like getting back to the profitable growth path. Overall, we see that, of course, the long-term demand is there. We have interesting opportunities in the industry, energy, also in the public buildings and defense security critical services. We will dive deeper to our Digital business. During the quarter, Infrac ontrol, which is our subsidiary in Sweden, began piloting and selling Digi's products in Sweden. One of the successes of the period included the first client pilot of Routa product. Routa is the infrastructure maintenance management and monitoring system. This, of course, hopefully marks the start of a successful product business expansion in Sweden. More about the Digi. Our net sales increased by 7%. I'm really satisfied with this growth. It's clearly going to the right direction now.
As said, also the product business growth of 19% or the recurring revenue growth increased by 19% was a really great achievement. Now the Software as a Service type of products actually have already a 30% share of our Digi business. Digi also had a good profitability, considering also that the integration of Infrac ontrol. We basically moved Infrac ontrol also under the Swedish business to under the Digi business. That had a bit lower profitability. It weakened the business area, the whole Digi business area profitability to its lower profit margin. The market environment for Digi was overall more challenging than expected. Of course, product business has been driving our growth. We can create the market by ourselves. However, overall, the market, both in the public and also the private segment, is a pretty tough one.
Considering all of that, I'm really satisfied with our performance with the Digi business. Finally, we get to Sweden. Let's start with some positive things here. As I mentioned, our bidding activity clearly increased during the first quarter. Also during the period, we won, for example, an assignment as the chief designer of a new purpose-built building for the Stockholm University of the Arts. We also received several smaller assignments, especially in the Life Science sector. Overall, the tendering activity has been increasing, and both order intake and order book is strengthening. That's the really positive side of the Swedish story. Then just the key figures. Our business declined there by 28%. This was really in line also with the reduction in the employee reductions. Also the low utilization rates impacted the business.
During the first quarter, in addition to that sales, our focus was really on adjusting the capacity. That is what we did. Also, just highlighting that now we have that 1/4 or close to 1/4 less employees than one year ago. Price competition in the public sector remained quite fierce. Also, the demand in the private sector continued to suffer further from the downturn in the Swedish construction market. We have been on our competencies really much related to the commercial buildings and also partially to the residential segment, life science segment. Only the latter one is the one which is really going in a strong manner. Overall, of course, we need to conclude that the anticipated turnaround in the Sweden business did not materialize in the first quarter. That is a disappointment.
On the other hand, we see that all of the actions what we have taken and also that the order book is now stabilizing or actually getting a bit to the growth. Also the order intake is improving. All of the actions what we have done, we see that we are really, and I feel that we all are really committed to have a clearly improving performance going further. Now I'd like to hand over to Hanna. If you elaborate a bit more on the group performance as a whole.
Yes, I will. Thank you, Heikki. Yes, as Heikki mentioned, even if the markets are not great, we do see some promising signs in all of our business areas.
On the group level, order book was EUR 157 million at the end of the quarter, which is an increase from the year-end, even if a bit down from a year ago. The value of the projects in the order book, which are on hold, was the same as previously, some EUR 12 million. No change in that respect. The order intake improved from the previous quarter in all business areas, and it was good, especially in Infra. The Green Transition and security critical projects represent a significant part of our new projects. In addition, as already mentioned, there was some scope enlargement in previously won projects, such as this Vantaa Light Rail project. We are very happy to see that in addition to Infra, this quarter also the revenue of Digi grew compared to the same period a year earlier. Very good in this market environment.
Despite this, overall, our net sales fell around 7% from the Q1 2024. Looking at the profitability, even if the EBITDA margin is obviously below our target level, we are very happy that the Buildings got back to black figures this quarter. As said, Sweden continues to make losses, and that's the reason why we were below the comparison period on the group level. One year ago, Sweden had positive profitability in Q1, and now it was unfortunately making a clear loss. If we looked at the group without Sweden business area, we would see that the adjusted EBITDA margin improved roughly by one percentage point from one year ago. The further kind of statement in our Q1 heading also is that the underlying business in Finland is improving.
When we add to this the fact that the number of working days was one less than the previous year, that's even strengthening the kind of Finland being on a good track. The price competition, as mentioned, is still fierce, but we are constantly evaluating our pricing strategy so that we can balance between the volume and margins. This is a really important focus area for us right now. The decline in revenue is quite directly linked to our decline of personnel. When we look at the business areas, it's the same story also here. The personnel number was up in Infra and Digi and down in Buildings and Sweden. Just after the quarter end, we completed reductions and reorganization in two of the Buildings' business lines, which means that roughly 25 employments ended.
These persons were partially already temporarily laid off, so the FTE reduction will be a bit smaller for Q2. Our utilization remained on the level that is not to our satisfaction. The reasons have been mostly discussed earlier, but also here it's Sweden which was kind of putting a pressure on this. In Finland, the utilization rate improved from the same period a year earlier. As we released already in March, we renewed our financing package, and that was the kind of highlight from the quarter from a financing point of view. Obviously, the cash flow for the quarter only modestly positive. This is linked to the working capital tied to the business being a bit higher than at the year-end. Important to note that still our liquidity is very, very strong.
The net debt is slightly up from the year-end, but no dramatical movements there. The leverage was up, and this is reflecting the 12-month rolling EBITDA, which weakened this quarter. Leverage we need to push down, and this is just one more reason for us to focus fully on the profit improvement also in the coming quarters. The financing facility extension, as said, was an important milestone, and we continued with our two relationship banks, making an agreement about 50 months extension from the previous maturity so that now the financing is valid until summer 2027. As we have said before, we have all the time kept a good and open dialogue with our financiers and are happy with this support that they continue to give us. The covenant levels were agreed again for the new financing package, and they are kind of aligned with our current situation.
We have not disclosed the details of the financing terms, but the loan margin still is tied to our leverage, as it was in the previous financing agreement. The margin levels are in a way a continuation of the previous package. Now that the base interest rates or the market rates have come down, this helps to keep the total financing cost broadly at last year's level. This is a heavy numbers page, and I will not certainly go through it, but I will just mention these reorganizations that were made during and just at the end of the quarter. This meant that there was a substantial amount of items affecting comparability. The details of these are in the Q1 report, but the total amount was EUR 1.7 million.
This is the reason that the operating profit and also net result for the period were negative, as Heikki also mentioned in the beginning. We believe these were kind of value-adding and necessary moves and actions and support our profitability going forward. Now I hand over back to Heikki.
Thank you, Hanna. This is a familiar slide showing how our business mix has been changing over the past year. As you can see, the share of our well-performing businesses has been clearly growing. Of course, that has been the intention as well. This change is driven by our own actions and also our decision to focus on certain growth areas in sustainability, energy, industry, security, defense, and also the product business. This change, what we mentioned about this Infrac ontrol, has been taken into account in this picture.
The current performance level in our business areas is quite mixed. As earlier, this table summarizes the % of sales of each business area during the quarter, also the market outlook for the next 12 months and the current profitability level. I've mainly already covered the market outlook comments, but just to mention that, of course, we expect the markets in Infra and Digi to remain pretty stable and quite weak still in Buildings and in Sweden, even though we are seeing some early signs of recovery. As we've commented already earlier, Infra continued to deliver just the TPT above our target level. Digi was a bit below the target level, impacted by this Infrac ontrol inclusion. What was really positive is that the Buildings turned back to black numbers. Sweden was still, unfortunately, like a notably loss-making this quarter.
This is, of course, something that we now need to change going further. Outlook, the long-term growth in the demand for our services is, of course, supported by the megatrends. Overall, we expect the market to remain mixed in 2025. I have already basically covered many of these points. Maybe I will just jump to the final point here. The other factors impacting 2025 are the number of working days. We will have overall like a minus one working day in Finland, and then there is an equal number in Sweden. The second quarter will also have a minus one, so had the first quarters , as said. No guidance will be issued. Summarizing the whole story, of course our key priority here is to improve our profitability.
At the same time, we want to maintain strong cash flow and then increase further the resilience by, like, further diversifying our business in areas that have good growth opportunities. How do we do it? We naturally want to see growth by focusing on the strategic growth segments and also maintaining this high sales activity. We really are in the right path now there. We need to also, secondly, continue to adjust our operations further, especially in Buildings with the temporary layoffs. Otherwise, a lot of adjustments have been done during the first quarter, as said. Thirdly, of course, the aim to be even more efficient in the future and provide added value solutions for our clients is also then enabled by AI solutions. We already have had in good use our own Saga AI solution.
Also, Sales AI tools have been taken into use. Of course, we just want to now take full out of those solutions and have that seen then in the efficiency. Finally, it is about mastering our core processes, so sales and sales mindset, and also the way how we continue to further enhance our project management practices. Now we are coming to the end of the presentation. Actually, before going to the Q&A, maybe you have also seen some news from today, and it is about Hanna, who has decided to leave. It is not time yet for the farewell or saying goodbye. Of course, I already would like to say at this moment that I believe that you have been really instrumental for our success during the last two and a half years.
I personally really value your way of leading and that business orientation and also the value-based behavior that you have. I have really enjoyed working with you. I wish you already all the best for the future, whatever it then brings to you.
Thank you, Heikki. Thanks. Thanks. The same, it has been a pleasure. It has not been the easiest situation in the market, but we have been pushing through together. I think that is great about this company, that there is really good spirit and strong team effort behind everything. We are nothing without our people, and it really shows in everything. Thanks. Still I will be around for a while. Let us come back to that later.
We are ready for the Q&A, Mari.
We have a couple of questions here. Please do send more to us if you have any in mind. Let's start with the market environment. There is a question about Digi's market. It hasn't been that great. Yet you have been able to grow quite nicely. What is really behind the good organic growth in Digital Solutions?
Yeah, it's true that the market has been quite tough now already for some time. As I said, we are also seeing that it will be. Some of the players are having clearly challenges. I would say that what I also highlighted during the presentation, the first one is that we have a strong growing product business. We can create the market then by ourselves. Of course, that's a strong asset at the moment.
Of course, I would say that we've been able to secure this kind of must-win deals or have had solid sales performance there and ensure that we have enough work for our people. I would say that of course we have a really good spirit in that Digi team also. The culture is important and that's helping us as well.
About the sort of buildings and Sweden, their market environment. What is your estimate on when the construction markets will pick up in Finland and Sweden?
It's truly a tough question. Tough to predict. I'm sure that quite many who have tried to do it also have failed with that one.
What we can see is that there are some signs now that, it's pretty clear that the bottom has now been passed. Of course, that's a really strong thing here because then we can, of course, start to in a totally different way look at the future. It's not purely about the adjustment, but it's how do we get then the growth. That's really good. Especially, I would say that also the building engineering services, there we are seeing already good market activity. Also, renovation has been more or less in a quite solid, in the low level, but solid still already for some time. Of course, purely the structural engineering market is still weak. That's depending especially on new build, like housing or commercial building state. Quite many things are impacting when those start so I really don't want to start to guess that one. At least we are seeing that okay, it's not yet today. It will take then still some time.
Sweden, I would say that actually the story is pretty similar. We are seeing that the Finnish and Swedish markets, when it comes to the buildings, are quite similar. Maybe I'm not going to repeat these comments because they are quite equal. That's our understanding. Of course, we are seeing the kind of postponement almost all the time. Of course, it's a bit more already discussion about 2026 than H2 this year.
Thank you. A question to the CFO. What are your key actions to lower leverage?
To lower leverage? I think obviously the main thing has been and is to sort of improve the profitability.
As said, it's really, really valuable and important that our liquidity is good. Our net debt hasn't increased. It's been really well under control. Pushing up the profitability, which we want to do for other reasons as well, is really a crucial thing. Of course, at the same time, kind of keeping focus on cash flow, speedy invoicing, working capital items in control. Those go without saying and that we are doing. I think it's really profitability is a key thing here.
Those were the questions today. Thank you all for joining this Q1 results call. We will see you next time in connection of the half-year results in mid-August. Thank you.