Good morning, and welcome to this presentation of the results for Multiconsult, the second quarter of 2024 . My name is Grethe Bergly. I'm the CEO, and with me today is also our CFO, Ove Haupberg. Before we look at the figures, we'll just give a brief overview of Multiconsult. We are a Norwegian-based engineering and consultant company. We operate mainly in Norway, but we have a footprint in Scandinavia, Poland, and we have a project footprint in large parts of Europe, some in Africa and also some in Asia. We have four segments: Regions Oslo, that's where the headquarters is, and in addition to offices in Oslo, there's an office at the Lillehammer and Lillestrøm. Then Regions Norway is, of course, all the other location where we're present along the Norway.
Then we have the segment Architecture that comprises three LINK Arkitektur companies, one in Norway, one in Sweden, and one in Denmark, and the Arkitektur A-lab, who have their main office in Oslo. The last segment is International, that comprises our Swedish engineering company, Iterio, and our operations in Poland. In the market, we operate within four business areas: Building & Properties , Mobility & Transportation , Energy & Industry , and Water & Environment . And our clients are 50/50 private and public. Over the last few years, we have had a good, profitable growth. This is based on a robust business model with a strong portfolio and very high-skilled employees. It makes us able to deliver services to our clients, both across business areas and various geographies. Looking at the figures, we've had a very strong quarter.
We've had good operational performance, high billing ratio, good sales, which has also then led to a high continuous high order backlog, and there's been an organic growth of 11.4%. Very strong results is, of course, what comes out from this, and EBITDA over NOK 186 million, which represent a margin of 13% and an increase of 2.2%, adjusted for calendar effect. There were 5 more working days in the second quarter this year compared to last year. It's very pleasing to see the improvements within the segment Architecture, and Ove will give you some more details into the flavor of the various companies. I would just like to state that this is very well considering the extreme challenges that this market is facing.
There's also a put option that's affecting the income. This is related to A-lab and has a positive effect this quarter. Looking at the market, as you can see, steady sales year-over-year, and this also then leads to a continuous high order backlog. It is a good diversification in this backlog, both across business areas and geographies, and I would like to remind you all of the substantial amount of ongoing projects that we have listed. You can see them here on the left-hand side. The sales in the period has again been across various business areas from defense. There's been more on onshore salmon farming. Thank you. We have a hospital in Sweden, and there are also two road projects that we would like to mention.
In the short term, we see a continuous strong pipeline, and as I mentioned, we are seeing a strong demand within defense across all our segments. Looking at people and organization, we are now 3,785 employees. There is an increase of 5.1 with respect to FTEs. We have issued 2,800 shares in connection with our share program to new employees in the quarter. And through the second quarter, we've had a focus on diversity and inclusion, and this is very in line with our values, that in Multiconsult, everyone should feel that they are accepted and respected. And there's a great honor to all the people who work for us, who've had the courage to stand up and tell their stories.
And that's a sentiment to our culture that they are able to do that. Organization, we are in the process of integrating the M&As that we did in the first quarter. We've had a summer program with 116 very enthusiastic summer students. And when it comes to our engagements with our environment, it's been an honor for me to be re-elected as the chair of RIF. That's the organization for consultant engineers in Norway, and also Marianne Wibe Fledsberg, who has been elected as chair of NemiTek. Looking at excellence, Multiconsult was involved with all the projects that were nominated for the BREEAM award of 2024.
And it's also very pleasing to see that the LINK Sverige earns a lot of trust with their clients and has a Net Promoter Score of 58.3%. Before I hand over to Ove, just some words on our biggest investment, MultiCat. This is a purpose-built vessel for investigation and testing in the nearshore areas. It's an area where we have a very strong position, and we look forward to now assisting our clients in all the opportunities that we see along the coast in Norway. And with this, I hand you over to Ove.
Thank you, Grethe, and good morning. Then we have a closer look at second quarter and the first half of 2024, and we are starting with the second quarter. Net operating revenue for the quarter ends at NOK 1,425 million. That is an increase of 23.5% from the same quarter last year. Organic growth 11.4%, and the result of the M&A activity is 4%, and that is from last year, A-lab and the Helm companies, and for first quarter this year, VA- Resurs, also part of Iterio. The companies that Grethe mentioned, Sitepartner and Petter Rasmussen, they are part of the order backlog and also in the number of employees, but the P&L effects will be reported from third quarter this year. The calendar effect is positive by 8%.
Are five more working days compared to last year. The effect is positive by NOK 92.6 million. You can see that in the graphs down right in the picture. Main drivers behind this growth is the higher number of employees. We are 200 more people, or, 174, sorry, 171 full-time employees, also seen in the graphs. So, in addition to this, the increased billing rates and the increased billing ratio, that is 73.8%, improvement of 1.7% from last year, that gives us an all-time high rate, and we are very proud with that. EBITDA in Q2 is NOK 185.7 million.
That is an increase of NOK 130 million from last year and gives us the margin of 13%, and if we adjust for the calendar effect, we have an underlying EBITDA on 7%, and that is an increase of 2.2% from 4.8% last year, and then strong sales NOK 1.531 billion, and that gives us then the order backlog, as Grethe mentioned, NOK 4.943 billion. On the profit for the period, that is NOK 147.9 million, or an increase by NOK 112 million from last year. We have a financial income due to a remeasurement of a put option due to the A-lab purchase from last year. The positive effect is NOK 25.4 million.
Then first half net operating revenue NOK 2,792 million, an increase of 13.3% from last year, and the organic growth is 10.7%. The mentioned M&A activity gives additional increase of 3.4%, and the calendar effect is negative by 0.8%, is one less calendar day the first half compared to last year, and the effect is NOK 21.1 million. The drivers, the same as second quarter, high number of employees. We have an increase in billing rates. That is part of other revenue effects in the graphs, and increase the billing ratio. We deliver 2.1 percentage point stronger than the same period last year.
EBITDA is NOK 322.4 million, 18.6% stronger than last year, or NOK 50.5 million, and also adjusted for the calendar effect. We see an increase in the margin by 1.2 percentage points from 11% to 12.2%. Also, a strong sales for the first half, NOK 3,378 million. Okay, looking then on development over the different periods and over some years, we see the second quarter in orange in this picture. And starting top left, net operating revenue, 23.5% growth, as commented on the last pictures, and also gives us a positive rolling 12 months uplift seen in the light blue line there.
This increase in operating revenue in combination with increased billing ratio and the number of employees, as you can see to the right, gives us then the solid 13% EBITDA, as you see down left. As promised by Grethe, some comments on the different segments and the companies in the segments. All numbers here are Q2 numbers compared to Q2 numbers for 2023. Starting to the left, region Oslo. They deliver at the same high level as last year. Net operating revenues has a good level, NOK 531.6 million, an uplift of 17.3% from last year. The increase is driven by a higher number of employees and a positive calendar effect that is NOK 40.2 million. Also increased billing ratio and increased billing rates.
Operating expenses increased by NOK 8.3 million, mainly caused by a recruitment and ordinary salary adjustments, and the EBITDA ends at NOK 80.7 million or on a margin of 15.2%. Going then to the right to regions Norway, and we see a strong improvement in the results from this segment. Net operating revenue increased by NOK 103.6 million from last year, or 22%, and EBITDA on NOK 88.2 million is NOK 74.6 million stronger than last year. The calendar effect is estimated to be NOK 42.5 million, and hence, the underlying performance is improved significantly from last year, and it's driven by a solid growth in capacity, increased billing ratios, as you can see, 1.5 percentage points, and also increased rates. Then segment Architecture.
The growth of net operating revenue, NOK 60.1 million or close to 40%, is mainly caused by incorporation of A-lab that came in from third quarter last year, and the calendar effect also estimated positive at NOK 9 million. Then, small comments per company. LINK Norway, as you have heard before, they had an increased profit due to the improvement program that we launched by end of 2022. So focused on all aspects on the P&L. On top of that, we see the positive calendar effect and net write-ups in the project portfolio also improves the underlying performance. But due to a more challenging market part of the country, the total capacity is somewhat reduced, and there were some temporary layoffs also at the end of the second quarter.
The positive is that the layoffs is reduced, now after summer. LINK Sweden. The performance has improved from a very good level last year in all parts of the country, with the exception of a somewhat more challenging Stockholm market. LINK Denmark also has an improved performance compared to last year, and the turnaround process, led by the new CEO and her management team, has continued to cause uplift in the billing ratios, the billing rates, and also savings on other costs. In this company, there is a one-time positive effect caused by the sales of the Alum design royalties, and the effect is positive by NOK 7.4 million . A-lab, the last architecture company, is faced with a more demanding market, causing reduced net operating revenues.
A-lab is more focused towards the private market, whereas LINK has a more diversified portfolio. To compensate for the sales loss, there has unfortunately been a number of both permanent and temporary layoffs in the company. A-lab is doing slightly negative results for the quarter, but the result is significantly improved from the second quarter this year. In total, in this segment, a reduction of number of personnel by 8, and there were 23 temporary layoffs at the end of the quarter. Positive again, the number of temporary layoffs is reduced to 13 now in August. Then, the last one, International. Net operating revenues increased by 28.7% from NOK 79.8 milion to NOK 103 million . The currency is estimated positively by NOK 7.6 million .
The main driver is the improved activity in Multiconsult Polska, an integration of both the Helm and the Resurs in Iterio. Calendar effect is positive by NOK 7.2 million. Underlying EBITDA is improved in Multiconsult Polska, but there is a bad debt provision in the quarter that is due to a pending court case is causing a slightly negative result. Iterio is faced by a more demanding market situation, and that has caused a reduced call-off on some frame agreements, and that is putting pressure on the results from that company in this quarter. So that was the segment and then some comments on our financial position, starting to the left on the cash flow. We started the year with a positive cash situation, NOK 278 million.
Then we have positive cash from operations by NOK 356 million, included IFRS effects. Then just a seasonal change in working capital, and we have used NOK 190 million in investments. That is a combination of the three M&A activities and then the new vessel and some other investments. And then we see cash from operations is negative NOK 196 million. That is mainly caused by the dividend payout in April, NOK 221 million, partly compensated by a new loan on NOK 50 million. But in total, cash situation end of Q2 positive NOK 93 million, and also the long-term debt situation, gearing ratio, is 0.8, so still well in line with our policies. The last comment from me is the free cash flow.
We see here, in dark blue, positive cash from operations this quarter, NOK 262 million. Net investments, NOK 19 million, that it gives us the free cash flow on NOK 242 million, and rolling 12 positive on NOK 515 million. That was the financials, Grethe, so handing back to you for closing remarks.
Thank you, Ove. Here's an overview of operating revenue split on the business areas. As you can see, there's a positive development in all four business areas, which is to be expected when you have five more calendar days. The positive drive on the Energy & Industry and Water & Environment is what you should see here, and it's a growth that we expect to continue also into the rest of the year. We also always give you an insight into some of our project portfolio, and this time we've taken the headline, Wilder, Wetter, and Warmer. We are faced with huge climate changes. Our scientists say that this is probably the largest environmental changes in the 21st century, and we, as a society, need to start preparing for the consequences of this climate.
We'd like to give you now some insight into the projects that we are involved with, in particular related to water. This is an area in Norway where we have hydropower dams to produce energy. This network of rivers, there are actually 11 plus 22 dams that are a part of this system. We are looking now at helping our clients have an insight into how fragile is this system, and what are the effects and the domino effects in case of a flooding, and how do we, in the worst case, prepare for an evacuation should the worst thing happen? Vågåmo, small village in Norway, have both in the past and quite recently seen huge problems with flooding and infrastructure being ruined.
We are now reaching the point where we are getting an acceptance in society to start preventing rather than building up when the accident has happened. And here we are part of implementing a substantial plan that has been made to prevent damage to the infrastructure when we see huge amounts of water. Drinking water security related to drinking water supply, major issues happening all over the world, really, and in particular in the E.U. and also then within Norway, to secure safe water to the population. Here is an example from Tromsø, where we are now looking at rehabilitating four dams that are part of the water supply system for this big city. Multiconsult also work international, and this is an example for the work that we do in connection with a planned hydropower plant in Malawi.
Before you start any work of this kind, you need to do an environmental and social impact study. We are working on creating the report for this, looking at mitigating actions. And again, a very good example of the spread of expertise we have, but also the team that we can connect to help our clients in these kind of challenges. And with that, we come to the outlook. We see that the overall market outlook remains positive and stable. We see a good level in the pipeline that we have. There is some continued uncertainty, as we have reported in previous quarters, and somewhat increased competition in parts of the market.
But with our strong portfolio, with the ongoing projects that we have and the pipeline that we see, we are still very robust going into the second half of 2024. And we have, so far, in the start of the second part of the year, seen a good and stable sales. So for me, before I... Before we wrap up from here, next time we see you is in November, and we are also then, in addition to presenting the results, going to send out an invite for our Capital Markets Day. So with that, we open up for questions.
Yep. Thank you. We have no questions directly related to this presentation, but we have some from the Norwegian presentation that was made earlier, so we're gonna translate that into English. So first question was from Simen Mortensen at DNB: Can you say something about the recruitments for Q3?
Yes. We have. The third quarter is the year we invest in new people, and in particular, that's when we take up the largest number of graduates. This year, it's a slightly lower recruitment rate than we had in the quarter, same quarter in 2023.
Next question from Simen was: The order backlog is flat year-over-year, and the number of employees is up 5%. How are you working with this in relation to future goal, growth?
Yeah. The reality is that we have a record high order backlog, and so we are not worried in any way, and we are, of course, monitoring the backlog splits on the number of employees, but it's still a very strong backlog, and we are seeing good, steady sales.
Good. Njal Kleiven, ABG Sundal Collier. You mentioned NOK 7.4 million in Denmark, but also write-ups in the portfolio.
Mm.
Is it possible to comment a bit more on that?
Yeah. That is just normal operation that you re-evaluate over projects. That is done on a quarterly basis, so this is just an ordinary. But this quarter, it was a positive effect, and that was the reason why we commented that.
Okay. So Njal as well, he has two questions: How did the first half of the year compare to your expectations at the start of the year? And, you had a stable outlook for a period, but, if we compare it with Q1 and the beginning of the year, what would you comment on that?
Okay, we. I would say that Q2 was roughly in line with what we'd expected. But there are some particulars in this second quarter that is not part of our normal operations, that we didn't really foresee either. I think on the whole, it's really the big note is that we had a really good start of the year.
Mm
... in the Q1 and Q2, when we don't have Easter falling in the second quarter, that is a very high production period for us.
Yeah. And also, as commented on, on the innovation presentation, our ability, the focus on the projects has been also a strong factor in giving these results.
Thank you. Martine Kverne from Nordea, she was interested in the cost in International. So could you tell us a bit more about the scope of the cost in International and how they are expected to develop going forward, particularly the extraordinary ones?
Yeah. And it was the bad debt provision in Poland that we commented on. Otherwise, it's not a cost issue, it's call off on frame agreement. So, it's on a net operating income that has put a challenge on the results.
Thank you. Erik Jakobsen, also Nordea, he was interested in the defense sector. Could you talk a bit more about how important the defense sector is for you, and how what the outlook is for this sector?
We expect a growth in the defense sector, and all our subsidiaries actually have projects within this sector. It's probably maybe the area where we see a good growth, but again, it's not vital for us in a sense.
Good. Then over to SEB was Magnus Rasmussen. He noted that we had a comment on increased competition, so he was wondering where does this apply, in which business area?
We had earlier commented on increased competition in Building & P roperties, and the way our industry works is that then resources are transferable within all business areas. So in reality, we expect increased competition in all our business areas.
Good. Sindre Sorbye in Arctic: Do you expect further improvements in Architecture beyond the autumn?
Carefully, I would say yes. We have talked, of course, with all our architectural companies, and they are seeing now increased activity. They are being contacted more by clients. So, yes, we have a careful positive attitude towards that part of the market.
Thank you. Simen Mortensen again, from DNB. You know, you have now notified us about the CMD, our Capital Markets Day. Will you consider to work on the financial target? Are there any and are there any major changes in the planned strategy?
That is, of course, a question that we will answer in November, but we are not planning on any drastic changes, I would say, in the direction or the targets that we set for the company.
Yeah.
But, come back in November, and we'll tell you.
Good. And then finally, there was one question from Allianz Trade, and that was also related to the activity in defense and in which segment was that?
Yeah. And as I said, it'll probably hit all our segments-
Mm
... because it's a very complex, when you look at defense infrastructure, it could be anything from buildings to very heavy roads, bridges-
Mm
... defense.
That was all questions, and there are no more questions from this.
Okay.
Mm.
So then we conclude from this day and wish you all a nice day.
Thank you!