Welcome to Sitowise Q3 2022 presentation. My name is Minttu Vilander, and I'm the Head of Communications and Sustainability here at Sitowise. I'm here today with our CEO, Heikki Haasmaa, and we have a new face here, our CFO, Hanna Masala, and they will shortly start the presentation, but before that, I will briefly give you some technical instructions. Here is our agenda for today. If you wish to comment, you can do it via the chat box under the presentation. I will go through the questions you've sent after the presentation together with Heikki and Hanna. We also kindly ask you to provide your whole name also when you ask the question. Now we continue to the presentation, and I will hand over the stage to Heikki and Hanna. First, Hanna will introduce herself.
She started working here at Sitowise in the beginning of October. Hanna, the stage is yours.
Thank you, Minttu. Yes, it's a very nice day and a great pleasure to represent Sitowise now for the first time when we report our third quarter, and very nice to do it with Heikki, who's already done this a few times during the past quarters. As Minttu said, I started in Sitowise in the beginning of October, and it's been a speedy start. After the end of the quarter, we've done one acquisition in Sweden. We needed to update our full year guidance, and obviously, then we've done a lot of number crunching to finalize this quarter, and then other things as well. It's been really nice to begin learning to know Sitowise with its dynamic and entrepreneurial culture. There's very broad expertise in the company.
I'm obviously only starting to scratch the surface with this fifth week that's ongoing. The team has welcomed me very warmly, and it's really great to continue the journey with them. What I bring along with me to Sitowise is a broad history and experience from different companies and industries. In addition to finance, I have worked a lot with mergers and acquisitions and also with strategy, which I believe will be beneficial for the further development of Sitowise. Now it's time for us to get going on the quarter, so over to you, Heikki.
Thank you, Hanna, and welcome to Sitowise. Great to have you on board. Overall, we had a good quarter. We can be very happy with our net sales, which increased by 16%, and the organic growth, which was 6%. Our order book hit a new record, being at EUR 175 million. The adjusted EBITA was in line with the last year third quarter. We had some negative factors burdening the margin, and I'll explain them in more detail today. Market outlook has changed lately quite a lot. Uncertainty has increased significantly in the construction sector, and this has impacted part of our business as well. This is also the reason why we have revised our guidance for full year, and I'll come back to that one soon. At the.
After the end of the quarter, we strengthened our expertise in Sweden by the acquisition of Convia company, as Hanna said. I want to welcome the 23 new experts to join Sitowise family. Back to you, Hanna.
Thanks. I've been very happy to see that we clearly continued on this growth path. Our net sales increased in all of our business areas. Some examples of especially fast-growing businesses include the renovation business, which we report under the Buildings business area. Also the team in Sweden has achieved strong growth. In Sweden, this was coming both organically as well as from acquisitions. The highest growth in percentages is shown for Digital Solutions. There, the growth is boosted among others by the acquisition carried out in Sweden last year. This is also showing that Swedish market is becoming more and more important for us. The numbers tell it. We are on this growth path. When we then look at the growth on the whole Sitowise level, we continued on double-digit growth figures, and this is in line with our target.
In the third quarter of the year, our net sales increased by 16%, and as Heikki mentioned, our organic growth amounted to 6%. Our order book hit a new record, EUR 175 million in the third quarter. The order book includes several sizable long-term projects that contribute to the stability and predictability of our business. When we compare to the previous quarters, the order book growth is mainly driven by the acquisitions. However, we are very happy to see that even with some uncertainty in the market increasing, the order book development was solid also on an organic basis. Back to Heikki.
Thanks, Hanna. About the EBITA. Our adjusted EBITA was at last year's level at EUR 4.9 million. Considering the very good top line growth we had, we could have done better with the EBITA. There are three main reasons behind this one. Firstly, the uncertainty in the construction industry. That has already led to delays in some of our customers' projects, and for us, this means that we need to reorganize the work of some of our people, and that has an impact on utilization rate and thus profitability. Secondly, we still see higher than normal sick leave absences due to COVID, even though the level is smaller than what it was during the first half of the year. This has an impact on less than planned working hours and thus impacts profitability.
Thirdly, we've had to use more subcontracting than planned as there has been lack of resources, especially in the Digital Solutions business. The employee market has been hot, and there is competition of skilled labor. We've already taken actions to improve the situation, and I can say that we are on a good path there. In addition to these, we had a couple of isolated project overruns. We consider them to be part of normal business. However, we've taken actions to minimize similar ones in the future. Hanna, would you then summarize the whole third quarter?
Thanks. Surely. This is the page with a lot of numbers, and obviously, we've already covered the net sales and EBITA, so no reason to go through them again. Just picking a few other numbers from the page. Net result improved somewhat from the level a year ago, and there were quite a small amount of items affecting comparability, as was also the case a year ago in the same quarter. As you may remember, we record costs mainly related to acquisitions and internal restructurings in this category. Another figure I want to pick from the table is our net debt to EBITDA ratio. As you can see, we are a bit above our long-term target level of 2.5.
The increase comes from the strategic acquisitions we've decided to conclude, and it's worth noting that our cash flow generation is typically seasonally strongest around the year-end, while during the third quarter, the cash flow is impacted by the holiday period. We pay, obviously, salaries, but there is less invoicing, and that's burdening the working capital during the third quarter. All in all, we are comfortable with the current balance sheet structure. Now Heikki will continue with our actions to ensure the strong profitability development also going forward.
Yes. Our ambition is to remain the most profitable player in the industry. We have four main priorities to improve further our profitability. Firstly, as the inflation is high, we look carefully at all the levers to improve pricing further. At the same time, we've already increased cost awareness in all parts of our organization. Secondly, there is a clear focus to improve further billable project work, and in practice, this means that we need to stay very close to our customers and ensure that our work truly adds value to our customers. At the same time, we are selective with our internal activities and events going further as well.
Thirdly, we also continue to look at new ways of working, and what I mean with this one is that we believe that our unique digital platform, Voima, is really helping us there, and we want to use it to full extent. We have some further opportunity with that one. Also, we see that our motivated employees and also the strong leadership culture creates a solid foundation for further ways of or further updating the ways of working. We also expect to see positive contribution to the margin from the recent acquisitions. I also want to, like, remind here that, of course our decisions are guided by the long-term target of having over 12% adjusted EBITA. Let's dive deeper into our business areas, starting with the Buildings.
The growth was there boosted by the acquisition of Rakennuttajakaari in June. Also, the renovation market continued to develop well. However, the new development market was hit by the growing global economic uncertainty as discussed, and some projects have been delayed. In Infra business, we had a strong organic growth, and we outpaced the market, so that's really great achievement. We saw lower market activity in the new tenders. However, we had a good rate. Hit rate, I mean. In digital solutions, the growth was driven by acquisition of Bitcomp company in June, which is a pioneer in software as a service type of solutions for the forest and natural resources sector. Market demand for digital services remained overall strong.
Recruitments were more successful than during the previous quarter, and this has been helping us to now continue with strong growth. Demand in the Swedish market remained stable overall. The order book fell a bit but remained at the healthy level overall. Looking at the Swedish market, the general uncertainty has also increased there, but it looks still overall good and better than in Finland. As has been already said, what comes to M&A part, in October, we strengthened our constructing and infrastructure expertise in Sweden by acquisition of a Stockholm-based Convia company. The company provides expertise within constructing consultant services, and it employs 23 people. Lately, we've been searching for a strong market entry opportunity within infrastructure in Sweden.
Now Convia's capabilities will certainly support us in taking a clear position in bridge and tunnel construction and also maintenance part there. This will make us a true partner to the infrastructure sector in Sweden as well. Looking at the past a bit, we've been actually growing in a fast pace in Sweden over the last couple of years and have made overall eight successful acquisitions. This acquisition, Convia, strengthens our portfolio in Sweden, and I'm truly happy about that one. Looking at the updated guidance. The market outlook remains solid in Sweden, but the uncertainty in the construction market in Finland has increased during the third quarter. The impact on the technical consulting business is not quite as significant, but the risks are.
The risks of somewhat lower activity levels are visible in some of our market segments. That's the reason why we have updated our guidance. The new guidance is that the net sales in euros will increase compared to last year, and that the adjusted EBITDA in euros will be at the same level or slightly below the adjusted EBITDA last year. We trimmed down our guidance slightly, reflecting the impact of uncertainty in the market. That said, overall, we continue to see a very positive long-term need for the technical services we are providing. This growth is supported by the four mega trends. Firstly, urbanization. Overall, what we see is that the construction is more and more complex, and this requires more technical planning. Secondly, the built environment maintenance backlog increases all the time, providing us opportunities.
Digitalization, collecting, managing, and using data to optimize movement of people and goods will just increase. As a fourth item, the climate change. There is need to find energy-efficient solutions and to manage the whole life cycle, and that those kinds of demands increase. These are the challenges that the whole society faces, and we see that we are in a good position as we provide solutions for this one. Let me give you a couple of examples how these mega trends convert to our opportunities. Firstly, the growing maintenance backlog creates more demand for renovation business, and we are strong there. Secondly, many of our customers are increasingly looking at more sustainable solutions, and we are the most advanced in our industry, challenging our customers to think about alternative sustainable solutions.
Thirdly, we already have a good foundation with our SaaS business, and we foresee that there is a clear customer demand for these kind of services in our industry. As a fourth item, we continue to accelerate the growth in Sweden, where also the market seems to be more stable than in Finland. Then let's wrap up. What has been said? Our ambition is to remain the most profitable player in our industry, and we have clear drivers and ongoing actions to support that. Even though the market overall is uncertain, there are several cornerstones for growth, and we want to capture them. We continue to manage actively our M&A pipeline with the very selective approach we've had. Here was our third quarter in a nutshell. Thank you. We are now ready for questions.
Okay. Thank you, Heikki and Hanna. We have questions here. Firstly, let's start with the outlook. Regarding to your outlook, in which areas are you seeing demand possibly slowing, and how much?
Thinking about the demand, so clearly in the new build sector, there is less demand. How it applies to us is that we can say that in our building segment, and especially there actually in the structural engineering which has a direct link to the new build market size, there is the biggest impact on us.
How many projects have you seen been postponed or canceled, and how much have these affected you during 2022?
Yeah. During the third quarter there were a few projects, roughly 20 which were postponed. However, the like, impact on us was quite modest when it comes to the net sales, but it has had some impact on our utilization rate. As I said, we had to reallocate the work a bit in a new manner, and that resulted in like impact on the utilization rate. It's only for this structural engineering.
Okay. About the utilization rate, it has been going down. Do you expect this to continue? For how long, and what would you say is a normal level for you going forward?
The billable working hours is really the key focus area for us, and we already had taken actions, and we are seeing that we are going to the right direction there. I'm sure that the actions what we have taken will be impactful.
You mentioned project overruns, and those also affected your profitability during Q3. Did it have a large effect, and how many projects you have ongoing that could be affected like this?
As I said, there were only, like, a couple of isolated projects which had overruns, and of course we feel that it's a bit of, like, a part of business. Of course we want to minimize those ones, and they are unfortunate. Still, some might also appear in the future, but we have good actions now ongoing to improve the situation.
There is a question about the cost base. What can you do with the cost base to support margins and improve efficiency?
Lately we have been looking at basically all the elements what we have. We have already ongoing actions there. As I also said, we have been now also increasing the cost awareness in the whole organization. I'm sure that this will be helping us going forward with the profitability.
There is a couple of questions about Bitcomp and about the high growth and margins that we expect from Bitcomp. How has Bitcomp performed relatively to your expectations and how the profitability has been developing?
Bitcomp performance has been as expected, and of course, as we have said, we also expect Bitcomp to clearly contribute to the profitability next year as well. We are in a good path, I would say.
There is a question about the competition for the skilled labor and employees. Do you have a plan in place on how to stay competitive in the future when the competition for skilled employees is expected to tighten?
Yeah. Of course, how we retain our people, it's a key thing for us, of course, and especially in our kind of business model. It's the biggest and the only asset what we basically have. We've already done a lot of work lately, and also, now thinking about the way forward. Of course, talent retention is a key thing for us. There are several actions what we are doing already, and we see that they are providing also clear impact to have a, like a, well-maintained turnover.
There is a question for the CFO. How does the CFO see growth potential in new geographical market areas?
Thanks for the question. Yeah, I think as Heikki said now, Sweden is of course a key focus area for us, and there I think we have still a lot to do. We are kind of a newcomer there, and we can gain a lot of market share. Obviously then when it comes to other markets beyond Finland and Sweden, we keep our eyes open. We are not kind of excluding anything. But I think especially with this current market situation, kind of Finland and Sweden are the priorities, and then let's see if there is something else at some point of time.
Thank you, Hanna. We have now the last question about the organic growth rate. It has been growing significantly lately. Do you think that it's possible to maintain such rates despite the market decline?
Yeah. Overall, of course, we are very happy about the organic growth lately. Last year we suffered a bit with that one, and now it's at the 6% level, so of course it's really good. Of course thinking about all what has been said today about the market uncertainty, and also somewhat the impacts on us, so it's a tough target to have the similar one in the future. Of course as we are in a good path here, so we see that there will be organic growth going forward as well.
We don't have any more questions, so Heikki, you can probably give the ending words.
Thank you. Maybe I'll just a little bit wrap up. Of course, profitability remains our topmost priority here, and not just for the fourth quarter, but also when going forward. We want to be and our ambition is to remain the most profitable company in the industry, so that's really guiding our decisions clearly. Thank you.