Welcome to the capital market updates and quarter two presentation for NRC Group. Welcome to all of you live here in House of Oslo, and also a warm welcome to those of you participating on the stream. Let's take a short look at the agenda. We will start out by a short summary of second quarter results, and Ole will join me for that session before I will summarize our strategy to succeed as a leader in sustainable infrastructure. After that, we will go more into the details on what kind of measures we have done to improve our core processes and what kind of results it has given, and then focus more forward on our strategy of how we are to succeed as a leader in sustainability.
At around 11, our country managing directors will join us and do a regional review of their countries, focusing on the status and market opportunities. In the end, Ole will come in and present our capital allocation priorities and how they will impact short and long-term value creation in NRC Group. At the end, Lene, our EVP of Communications, will host a Q&A session. For those of you participating on stream, please write questions in the chat. Second quarter has been another strong quarter for NRC Group and the fifth consecutive quarter with improved results. We were able to grow our revenues with 25% compared to second quarter last year and our EBITA with 34% compared to last year. We had a strong order intake of NOK 2.7 billion, being a book-to-bill ratio for the quarter of 1.4.
Our operating cash flow is somewhat weaker than last year due to the steep ramp-up of activity. We have gone from NOK 1.2 billion in revenues from quarter one to NOK 1.9 billion in revenues in quarter two. This ramp-up is much steeper than last year, so it's natural that we are tying up more working capital. With a strong order intake throughout last year, we end the quarter with a record high order backlog of NOK 8.3 billion. NRC Group expect our positive operational and financial trend to continue. Our guidance for 2022 is unchanged. We expect that our revenue growth will be moderate to strong, and we expect the margin improvement to be moderate compared to 2021. Looking at our countries, it's clear that it's Norway and Sweden contributing to both growth and profitability improvement in quarter two.
We see a strong growth in Norway, and we see that improved operations in our environmental division is the main improvement in results versus last year. We also see good growth in Sweden, and it is the rail construction activities being the main driver for increased profitability. In Finland, we have a more stable activity level, somewhat lower results, but still strong results from our Finnish operations. We have somewhat lower activity and somewhat lower profitability as a consequence of that due to lower activity in our light rail business. As you remember, we closed a big light rail project in Tampere last year. Our biggest light rail construction project, Jokeri, reached peak production in 2021, so this is an expected development while we're waiting for the new wave of light rail projects to come.
We have been able to replace much of the lower activity with growth within rail construction, and we also see good profitability in this segment. Looking at our safety statistics, we see improved results. We have fewer accidents, and we have fewer accidents leading to lost time incidents. Our lost time incident frequency is down to 4.3, a good improvement from last year, and we also have somewhat lower total recordable injury frequency. We did have one serious accident in quarter one. Luckily, we were able to go through quarter two without any new ones, and our target here is of course always to avoid serious injuries. Our sickness absence rate is increasing somewhat compared to last year, but this is mainly due to COVID-related effects in quarter one.
As we spoke a lot about in quarter one, we see limited impact of the global economy, the rising inflation and raw material prices due to the war in Ukraine. We have a business model with mostly public clients where revenue side of the projects are indexed towards different construction cost indexes. We also have a procurement strategy of closing as much risk as possible early in the projects. Although we see effects of increased material prices in some projects, our total exposure and total impact is limited. Raw material prices are on the way down again, but they are still at record high levels. Ole will go through some more details.
Thank you, Henning. Financially, we had a solid Q2, and we have improvements in most of our financial KPIs. The revenue came in at NOK 1.9 billion, which is up 25% compared to the same quarter last year. This was driven by a very, very strong growth in Norway of 58% and in Sweden with 34% on a like for like currency. Finland was more or less flat compared to the same quarter last year. In the first half of the year, we had the growth of 16% compared to the first half of 2021. Our profitability, which we measure as EBITA before M&A expenses, improved with NOK 16 million and came in at NOK 63 million in the quarter. This gave an EBITA margin of 3.3% compared to 3.0% in the first quarter.
Sorry, in the second quarter last year. Let me give you some more flavor to some of the P&L lines. As you can see, the main M&A expenses in the second quarter was NOK 0. As we see it now, we do not expect further M&A costs related to old projects in our books. The depreciation is coming down to NOK 45 million. This is in line with a strategy to have a lean asset base, and I will come back to this later on in the CMU. Amortization is at NOK 9 million. This is down from last year, but flat compared to the first quarter. Out of this NOK 9 million, NOK 6 million is related to amortization of PPE from the VR Track acquisition in 2019. This amortization will be completed around year-end 2022.
The last 3 million is normal amortization related to software investments. Also you can see our net financial item is coming down to NOK 14 million, and this was related to having less debt. We will also discuss our debt structure strategy as well as our financial cost later on in the presentation. If you look at our order intake, it is very strong at NOK 2.7 billion. Isolated in the quarter, it's like Henning saying, it's 1.4 book-to-bill. Over the last 12 months it comes in at 1.3, which has been steady over the last period. The order backlog is record high at NOK 8.4 billion, and this is up 25% compared to the same quarter last year.
However, if we break down the 8.3 billion, you can see that 2.7 billion of this is for delivery in the second half of 2022, and this is up 6% compared to where we were at the same time last year. We had 60% growth in sales in the first half of the year, and we have an order book which is 6% higher than we were at the same time last year. We feel quite comfortable with our current guidance for 2022. We take our, the sustainability is very important to us, and among others, we measures our taxonomy twice a year. The taxonomy ratio also highlights the uniqueness in NRC business model compared to other construction companies because we deliver sustainable infrastructure.
The analysis for the first half of 2022 show that 88% of our turnover is eligible and 69% of our turnover is aligned according to the EU Taxonomy. Both of these ratio are up compared to the same quarter, so same period last year. I will come back with much more financial data later on in the presentation, but for now, I hand it back to you, Henning.
Thank you, Ole. With five quarters of consecutive improvement in NRC Group's profitability, it's clear that our improvement work are yielding results. We are now ready to go from a three-year transformation phase to focus more on profitable growth, harvesting the benefit of our unique Nordic position and make sure we succeed as a leader in sustainable infrastructure. NRC Group is a young company, and especially in the period between 2015 and 2019, we had a growth at a rapid pace doing 14 acquisitions, expanding in three countries. As many other companies experiencing fast growth, we did meet some challenges. We had to take big losses in Q4 2018 and Q4 2019, and it's clear that we were not able to integrate and develop our acquired companies in a fast enough pace.
When I joined NRC Group in May 2019, my task was to restore profitability, and it was to improve our core commercial processes to make NRC Group ready to succeed as a Nordic leader within sustainable infrastructure. We will go through more details on what we have done for the past three years and the corresponding results later in the presentation. It's time to shift focus for NRC Group, harvesting the benefit from our unique Nordic position and capitalize on the Nordic footprint we have.
We will continue to improve core processes to improve profitability, but we will use more efforts generating profitable growth using the total competence and capacity in NRC Group to increase competitiveness and win more bigger projects. With improved results, we also have improved financial flexibility and we are ready to explore some bolt-on acquisitions to strengthen our value chain.
In short, NRC Group is ready to capitalize on our leading Nordic position. I believe NRC Group has never been better positioned to succeed. The demand for our services rooted in rail infrastructure and our strategy of executing projects in a sustainable way, are driven by two strong megatrends. We have gone through two crises for the past two years, the COVID pandemic and the increased raw material prices.
We are coming out of these two crises with stronger profitability, more financial flexibility, a record high order backlog, and the market at record high levels. With improved core commercial processes in tendering and in project execution, we are ready to add on more profitable growth. NRC Group has a unique position in a big market. Looking at our national transportation plans in our three countries, the total market for maintenance and construction of railways are NOK 65 billion.
As market leader, we only have approximately 10% market share. We believe this market will continue to grow. There's a broad political agreement toward investing in sustainable infrastructure and to continue prioritizing sustainable infrastructure. In a market with strict regulations and high barriers to entry, our opportunities are huge. NRC's business is rooted in rail infrastructure, and the many acquisitions you saw in the early phase of the company was executed to build a full in-house value chain to be able to construct and maintain railways from A- Z. We have a strong position within all rail technical disciplines in all three countries. What separates us from our competitors, and what we believe is our strongest competitive edge, is the fact that we also have the related civil works value chain in-house.
Demolition, doing concrete works, mass transportation, is always a significant part of construction of railways, and it's a significant part of the complexity, and it's a significant part of the risks associated to it. By having this value chain in-house, we are better positioned to calculate our cost correctly. We are better positioned to understand the risk and mitigate the risks connected to these processes, and we have a much bigger flexibility coming to the execution phase to adapt to the changes you will always see in these projects. We will show a video from our Nittedal station project, which should illustrate this in a good way. In a five-day period, we are dismantling all rail technical equipment and the tracks. We are demolishing and recycling an old railway bridge.
We are installing a new bridge that has been pre-constructed at site with our own people, while we are finishing to install rail technical works and the tracks afterwards with our own value chain.
Her skal vi bygge en ny Nittedal stasjon. Det er nye plattformer, ny overgangsbro, ny jernbanebro. Det er da et prosjekt for å øke kapasiteten på Gjøvikbanen. Vi har støpt en betongbro der brospennet skal kjøres inn da på landkarene. Det må vi gjøre på den måten, for det er såpass trangt og i en sving i oppoverbakke, så da er det vanskelig å få det til med kran. På dette prosjekt så er vi jo veldig presset på tid. Mye som skal gjøres samtidig på samme sted. Da er det veldig viktig da med godt samarbeid og god planlegging i forkant for å få det til å gå rundt. Det som er spesielt med prosjektet er da, det er vel at vi er så tett på tredjeperson. Det er bare en innfartsåre til hele boligfeltet oppå her.
Når vi begynner ny jernbanebru i to omganger, så må vi jo stenge den veien. En utfordring å takle det, men det har gått, veldig bra så langt.
I think this video in a good way illustrates NRC Group's competitive edge and our unique Nordic market position. No one can match NRC Group's geographical presence in combination with our value chain offering. It's time to capitalize on this leading Nordic position and our improved core processes to fuel more profitable growth and to succeed as a leader in sustainable infrastructure. Sustainability has always been a part of NRC Group's DNA, and it's an integrated part of our strategy. For us, sustainability is not nice slides, it's real actions that has already reduced our CO2 footprint and that has already produced several commercial opportunities for us. A good example of this is the NOK 400 million mass removal contract we won as a part of constructing Oslo's new drinking water supply.
NRC Group's investment in trucks fueled by biogas put us in a unique position to win this project, as the client's focus on reducing the CO2 footprint in the project is high. With our mass transportation trucks, we are able to reduce the CO2 footprint with this operation of 90%, going from 17,000 tons of CO2 to 1,700 tons. Our mass transportation activity is also the most significant CO2 footprint in NRC Group's portfolio. Our commitment to replace approximately half of our conventional trucks to trucks fueled by biogas will also be an important enabler for us to reach our long-term target of reducing our CO2 footprint by 30% within 2025. With improved profitability, we are ready to focus more on profitable growth.
Our medium-term target, meaning 2024/2025, is to increase our profitability and our EBITDA margin to the range of 4%-5%, while long term, delivering in the interval of 5%-7% on the EBITDA margin. With strong order intake, good growth outlook for 2022, and also a promising order book for next year, we will of course target growth in 2023. Growth can be a bit volatile in our industry as big projects go into the portfolio and big projects go out of the portfolio. Over the cycle, our ambition is to achieve an organic growth above 5% and then adding selective M&A on top of that. With improved profitability, a more flexible financial position, we target to resume our dividend distribution according to our dividend policy.
Our commitment to sustainability stands firm, as we presented on our last slide. It's time to move from a transformation phase to leverage our improvements to succeed as the leading Nordic player within sustainable infrastructure. In the next section, we will go more into the details of the measures we have implemented and the corresponding results before looking forward and presenting our focus for the future. If you look at NRC Group, our business can be divided into two separate activities.
It is the project business, meaning rail construction, civil construction projects in Norway, Sweden, and Finland, doing medium to big-size projects between NOK 6 million-NOK 30 million and NOK 1 billion. Typically, the duration is between three and 36 months. In this category, we also put our environmental business, typically a lot smaller project and shorter duration, but still project industry.
On the other hand, we have our long-term contract business portfolio. This is more recurring revenues. It's connected to the rail maintenance operations we have in Sweden and Finland, and it's related to the third-party material supply agreement we have with the Finnish Transport Infrastructure Agency in Finland. We see close synergies between these two business models. First of all, our maintenance business gives a scale to our machine operations, which means we can also provide efficient machine services to our construction projects. The maintenance business is also smoothing out some of the seasonality in our construction business, as we can use some resources from our construction projects in our maintenance contracts during wintertime. The third element being the obvious, we are all talking about rail technical work and the competence related to that.
When NRC started to meet challenges back in quarter four, 2018, this was mainly related to our project business, and that's why we will spend most of the time explaining what we have done and the results there. Before we do that, let's take a short look at our long-term contract business. As the name tells, this is mainly long-term contracts, typically five years plus additional options year, option years, giving us a good visibility both on the revenue side and the margin side. The past 12 months have been extremely important for us in this business, as we have been able to renew more than two-thirds of our existing contracts for a long period of time going forward. Last summer, we were able to renew the rail supply of materials in Finland with another four + four years.
For the past four months, you have seen that we have won three out of three Swedish maintenance contracts out for tender. With the position before entering this tender cycle in maintenance, having four contracts, these three wins have been extremely important for us to maintain a decent size of this business and have scale to continue to grow and increase this profitability.
With two-thirds of our contracts renewed for another four- five years, we can be more forward-leaning. It's only opportunities to grow, and operational leverage is important in this segment, as we can take on more contracts without increasing our overhead in a significant way. Let's take a look at the project business and the measures we have implemented there. It's mainly related to four different actions, and it starts out by attracting the right leadership to drive this business forward.
We need a management that shares our view of how you are designing a successful modern construction company by having strong commercial processes, having robust processes within tendering and project execution. We were able to strengthen our management team during 2019 and 2020. I believe we have a strong team in place to continue to drive the development of NRC Group.
After having the right people, it's about implementing processes we know will work. The tender process is extremely important for a construction company. Selecting the right projects, calculating the costs correctly, understanding the risk and opportunities to get a balanced risk in your portfolio. These processes goes faster than in the project execution part due to fewer people being a part of these processes, and we can change faster. We have seen significant results from these activities that we will present today.
Project execution is in nature a more long-term process, and it's about the education, training, and mentoring we give to our people every day in the projects in order to prepare them for the challenges they always will meet in the projects. We will continue to work on this, and it will gradually yield results as we move along. Sustainability and the integration of sustainability in our operation has given us clear results already, and we want to continue that focus going forward. It is clear when you look at the development of NRC Group that the loss-making projects won before 2020 have had a negative impact on our results. We had to take big losses in quarter four 2019, mainly driven by the Norwegian rail construction portfolio and the Swedish rail and civil construction portfolio.
These projects proved to be more complex, more resource demanding, and also more financially demanding than what we were able to see back in 2020 when we had our capital markets update. It has been necessary to take further losses both in 2020 and 2021. However, we are now finished with these loss-making projects. Looking at this graph, you will see revenue in NRC Group, the share of revenues coming from projects won before 2020 in green, projects won after 2020 in black, and revenue coming from environment and maintenance in the white square on the top. It's clear as more fresh projects comes into the portfolio, our profitability is increasing. Looking at quarter two this year, 15% of our revenues still comes from projects won before 2020.
Looking at the backlog, you will also see that 15% of our current backlog comes from projects won before 2020. However, these are healthy, profitable projects, mainly coming from light rail revenue in Finland and a big project in Norway, Nykirke-Barkåker, an intercity construction contract we won late 2019. We still do have exposure as a 20% owner of the AGN Haga project company in Gothenburg. It's treated as a financial investment as it is, associated company. It's not a part of our reported order book. It's a challenging project. It will still continue for some years, and it is fair to say that we have some exposure, but our ownership is fairly limited.
Looking at the improved processes in tendering and project execution, we can clearly see the results of increased profitability in our construction portfolio in projects won after 2020 in black versus the projects we had in our order book won before 2020 in green. After spending 15 years in the construction industry, I've seen several project portfolios across several companies in the industry. There's one key to deliver good profitability in construction. That is to avoid or minimize loss-making projects. This is closely connected to the robustness of tender processes. Looking at our old project portfolio, we had 23 loss-making projects with accumulated losses of NOK 240 million. While looking at all new projects, won after 2020, above NOK 30 million, we only have four loss-making projects, but more importantly, the accumulated losses are only NOK 13 million.
This is a huge improvement, and it's instrumental for us to build better profitability in NRC Group. For those of you remembering well, we presented a similar analysis back in quarter three, 2021. That was focused around the areas we struggled most, being rail construction Norway and rail and civil construction Sweden, where we showed a seven percentage point increase in that portfolio. This sample size is more than double the size. It's also covering civil construction in Norway, light rail construction in Finland, and rail construction in Finland, which has been profitable projects for us all the time. When we look back at the portfolio on new projects in the areas where we struggled the most, where we saw this 7% improvement in quarter three, 2021, the profitability has continued to improve in that portfolio.
Another important KPI we are following in NRC is the net project adjustments we do each quarter. As you can see, we have a very positive trend going from big negative project adjustments from 2020 and early 2021 to positive project adjustments. When you have big losses arising during construction phase, it proves that you have unbalanced risk in your portfolio. You have too weak control processes since you are unable to identify this before it shows in your P&L, and you have not been able to mitigate risks. Now we are where we want to be. We see that profitability is increasing during construction. We have much better control processes. We see that the project profitability is increasing, and this is a sign of better risk balance of our projects.
It's a result of better tender processes, but it's also a result of better control processes and better execution. In total, this gives us better financial predictability. I really like this graph. It shows that we are improving and that we have been successful implementing our improvement program in NRC Group. It's time to start leveraging our improved operational processes, exploiting and harvesting the benefits of our unique Nordic position. Our strategic priorities going forward, it's still to continue improving core processes, improving profitability. This is a core of all construction companies, but we are ready to add on more profitable growth by focusing more on bigger projects. By focusing on increasing competitiveness by using our total Nordic muscle, allocating competence and capacity where we get best paid.
With improved profitability and increased financial flexibility, we can also start to look at some M&A opportunities, and the work to integrate sustainability to our operation will of course continue going forward. Growth is important, but we will never sacrifice margins to grow. The growth needs to be value-creating, but the growth is important to be able to develop our organization. Taking on new, big, complex projects is the best way to retain our competent employees, to develop them and to attract new talent. With our business model, growth will also give us operational leverage, improving the overall margin for NRC Group. Operating in a NOK 65 billion market, if we succeed here, our opportunities are enormous.
Winning the right project at the right price, I think I talked about it 500 times the past two years, but it is the core of a construction company to have solid commercial processes. It's nice to see an improvement of profitability to till 2.8%, but we have much higher ambitions, and the winners in our industry is those that handle these processes best. This will be a continuous focus for us going forward.
As said, we will be ready to add on more profitable growth and one measure is to focus more resources towards bigger project. This will yield several benefits for us. First of all, by using our most experienced and competent people on bigger projects gives us better operational leverage. It's a key to retain competent people, but it's also a key to develop our younger, more talented workforce.
By working side by side with our experienced people, we also increase our long-term growth capacity as we are able to train and develop younger talent faster to take on more responsibility. Bigger projects is also important to realize the benefits of Nordic collaboration. Working together day by day, that is the best way to transfer competence. Doing bigger projects, you need to have bigger projects in order to actually do this, to make sense of it. That is an important part of our strategy. Of course, we do look at the competition and our statistics are clear. There are fewer competitors on bigger projects, meaning we should increase our hit rate in tendering and the likelihood of winning with a decent margin should be better in this segment. Doing bigger project will also speed up our sustainability strategy.
As in bigger projects, we can put on more resources to develop cutting-edge solutions for our clients. Trønder- og Meråkerbanen is a good example where we have done a redesign of the foundations of the catenary system in order to reduce the CO2 footprint. In this project, we have reduced the footprint in this operation by 48%. When you are constructing 2,500 foundations, then it matters. Most of NRC Group's growth going forward will still come from organic growth. With improved profitability, better financial flexibility, we are ready to investigate some opportunities on the M&A side. We are looking for small to medium-sized companies, mainly in the subcontractor segment, that can join NRC Group and strengthen our value chain or strengthen our local or regional market position.
We believe NRC Group to be an attractive owner of such companies for people who still want to develop their company in an industrial way going forward. An important part of increasing our competitiveness is to work with Nordic collaboration across our three countries. We have been very focused on improving core processes in our separate countries, but now we are ready to also utilize best practice sharing across countries. The key is to share competence and capacity and allocate resources where we get best paid, especially cooperating to win more big projects. As said, it's also a key to be able to share these best practices to work together and big projects is the best solution for that.
We will also target other processes to implement best practice sharing, tendering being an obvious one, where we will compare tender strategies across our countries, compare capacities, understand why we are calculating with different capacities, and identify our opportunity to improve. Maintenance, it's another key area for us where we do more or less the same operation day by day in Sweden and Finland, although in a bit different contractual setup. Nordic collaboration will be an important initiative to improve efficiency and improve profitability of our maintenance business. Digitalization, of course, using or having a common strategy and pooling resources in digitalization, Nordic collaboration will make a lot of sense. When it comes to sustainability, our clients and also our own organization is at different stages in the journey on, of converting to sustainable production.
We will utilize these differences to speed up our own journey to be ready to capitalize on the commercial opportunities that will come across our markets. Now, we are ready to start the regional review before letting Arild, Harri, and Robert take place here. We will do a short glance at our total market. As said earlier, we operate in a large market driven by strong mega trends. The annual investments and spend on maintenance in our market is NOK 65 billion, according to the national transportation plans. We are in a unique position because these are long-term trends outlining the investments and the projects to be done for the next 12 years.
In these plans, the market growth is expected to be 2% in real terms, and the normal process is that the governments will do a yearly inflation adjustment of these figures before approving the final budget. However, in this inflationary environment, it might be too optimistic to assume this to be done, but we are confident that the market will still grow. There's a broad political consensus to still prioritize sustainable investments, and we have a combined rail maintenance backlog of NOK 80 billion across our three markets that cannot be neglected. Our countries have different starting points for their transformation journey, and we are also in different stages of our transformation across our countries. We have been able to restore profitability in Norway, and we believe we are ready to start focusing on more profitable growth.
Sweden was the country hit hardest back in 2019 and has also experienced the most challenging markets since then. We have improved profitability, but we are not yet back in black figures, and the main focus going forward will still be to improve profitability. In Finland, we are the clear market leader within rail infrastructure, and we are the clear market leader when it comes to profitability. Our goal is to continue profitable growth and to continue to deliver profitability on a very high level. Arild, it's your turn to take a short overview of Norway.
Thank you, Henning. Yes, my name is Arild Moe. I'm the managing director for the Norwegian organization. Joined NRC in November 2020. Before that, around 30 years in the industry. I will give a brief overview of the status in Norway and how we are looking into the market going forward. First, as we have been through, the performance at this time in this quarter is 2.9 based on the last 12-month duration. It's okay. It's not on the level we like to be. We have even higher ambition, of course, and the possibility should be good to increase that even more.
We can see that we have had one and a half year struggling with losses, mainly driven by Norsk Saneringsservice in 2020 and also some project from earlier phase in rail and the turnaround case we have been through in 2019. Today, we are in a better position, and we think that we should improve this performance going forward. We have three divisions. The biggest division is our environment division, where the revenue is nearly NOK 1 billion. If you look to rail and civil divisions, they have a revenue on about NOK 1.2 billion yearly.
They are doing projects stand-alone, but part of the revenue in civil should also be linked to the rail divisions because they are doing a lot of internal joint venture projects. Order backlog on NOK 2.3 billion is also quite high for us at this time. With a good market, it should be possible to increase that even more. Let's look more into the divisions we do have. Rail is the biggest division if it comes to the market and the possibility to increase the revenue going forward. We are able to do both medium-sized project from around NOK 50 million up to the biggest project which are in the market, around NOK 2 billion. We have a capacity and competence to do the turnkey contract, which is quite new in this market.
We have won two of four projects which have been in the market the last three years here. We do have all the capacity on all technical issues and to build railways and in Norway today, we have a position too in the market. Civil construction is a very fragmented divisions and market. We are more, I would say, a niche operator in this market. Very big high position on top in harbors and quaysides projects and for groundworks, especially related to concrete works and for this case also then in connecting to rail construction projects. We are trying to search to find projects which are too complicated for the small players and maybe too small for the really big players. This means those projects will be around NOK 100 million-NOK 500 million, which we are looking for.
When it comes to environment, our biggest divisions, we have our mass transportation company, Gunnar Knudsen, which have a number one position in our market. We have also top three position in demolition and recycling market in Norsk Saneringsservice. We have been through both some work from Henning and a video from Nittedal. Not one of our biggest project, but maybe one of our most complex project we have had the last year. We will finish this project this autumn. Just to explain a little about well, how we can use our common strong vessel to do this project. This is a project we are building new double track through the station area and new platforms while the traffic are running on the railway. We have some shutdowns during this project.
We are stopping the work and then build up new things. For this project, we have done all the technical issues for rail construction, all disciplines in-house. We have done all the civil works related to groundworks and concrete works, bridges by our civil divisions. We have done the mass transportation by Gunnar Knudsen and the demolition work with Norsk Saneringsservice. What is important in this project is, of course, then to have all these internal resources which give us flexibility to do this project in a good way. Yeah. The same picture as you have seen from group, also from Norway. We have been this situation in 2020 when we lost a lot of money in Norsk Saneringsservice.
Already in 2021, they were at a zero level, and we suppose them to be to contribute a lot to both the revenue and the results going forward. We also see that we have finished a lot of those project taken under the old system and we have organization and tendering work and execution procedures before 2020. We have a lot of new fresh project. Although we have a big project, Nykirke-Barkåker, which is in our order backlog, but that is a profitable and good project. The sum up for Norway, the most important we do, I think, for all countries is to build strong project teams.
We've focused a lot in the last couple of years, also supported by our support function from the head office, so they can support them in the execution phase. We also build good systems both for project execution, tendering works and at least these most important risk assessment systems. Our project priorities in Norway is also to have bigger project, both in civil and in rail construction. As I said, in rail, up to NOK 2 billion, and for civil, up to NOK 500 million.
Also, identify project that we can use our internal power to internal joint venture and Nordic collaboration across countries, which we already have done. The last focus is, in the environment, to be still a strong player in the niche market, both for Gunnar Knudsen and Norske Tog Maintenance Service, and increase that strong position even more. That should be possible. If you look to the tender pipeline, the next 9 months, we have identified for us around NOK 7 billion in the market we should be able to tender for. Around 28 projects over NOK 30 million. Of that, nine projects over NOK 300 million. These are projects that are coming in and out, going forward based on how we see our competitive edge in the project.
A lot of interesting project, and I think there are more about choosing the right project, as Henning said, than we participate in all this. The market is very high. It's even NOK 1.2 billion higher than it was the last quarter this year. These slides show then the market, the total market, in the long term, forward. Around NOK 27-28 billion the first years, up to NOK 30 billion, in the end of this period. This is mainly taken from the Norwegian National Transport Plan. Besides that, we have a light rail project, Bybanen Bergen, and a light rail project, Fornebubanen in Oslo, which will come on top of this.
We think that most of this project, hopefully for the sustainable transportation system railway, will be a part of what we are going to do, and the public financing will be into this market. So far, we haven't heard anything from the politicians that not will do the priority to this market. I think that was a brief, short trip to Norway, and then we should go over to Robert and my colleague.
In Sweden.
Yes.
Thank you, Arild. Hello, my name is Robert. I joined NRC in September 2019. I've been in this industry for 45 years, so I have done a few things in this area. Let's go to profitability, since most of you will probably wonder when will Sweden be profitable again. If you look at the graphs and the history, it's clear we are and we have been through a very extensive turnaround. That's clear. We see now, we finally see the first results. We are climbing up, and I believe that the measures we are doing, the initiatives we have will continue to show progress going forward. We are not ready yet. We still need time, but we are on the right track, and that is very, very positive.
We have had a very strong order intake the last 12 months, driven by rail construction. You heard Henning also saying it, and we have had a great win this summer. We won three of our own maintenance contracts. We won them back, and to have three of your own contracts at the same big bang in the market, that is a challenge. We are super happy for that, and that gives a very strong foundation now for us to grow and continue and expand in the maintenance area. We also have a full occupation this year, so all our division are fully occupied in 2022. The luxury position, even if it's a bit sweaty sometimes, you have too few jobs or you too much, but you're never happy. It's like the farmers.
Anyhow, going forward, when I look into 2023 also and the pipeline that we have, I think that we in 2023 will be able to meet 2022. Hopefully, maybe even exceed it a bit, but we will see. Now the tender race is starting for 2023. It starts now, so now we are tendering heavily for 2023 and 2024 going forward. The Swedish market is a very competitive market. It is a market that has been tendering projects and maintenance for 20 years now. Sweden is probably the most privatized market, liberalized market. Everything is deregulated in Sweden, train operations, maintenance, projects, trams, everything total. That means it's also an available market, so that is very positive.
We are also seeing, and let's say it in this way, you have heard it several times, probably also from Henning, it's a very competitive market, and it's a very sharp pricing in the market. That's what we see. We also see now when we analyze our hit rates today and see the results, we actually see that it looks like the suppliers are reflecting now the risks in the projects, the risk profiles, and also the contractual demands. We are not the only one who had bad projects and lost money, so I think the suppliers are a bit reflecting, and that's also reflecting that the prices are slowly a bit going up. I hope that can continue because it shows that we can have a profitable growth, but the price is more right.
Nobody knows what the right price is, but then when the price is more reflecting the risks and the profiles, then it's more healthy. We have also a strong position. We are number three in rail and in maintenance, rail construction maintenance. That's a strong and good position. We have also high ambition, being number three means we can be number two. Being number two means we can be number one. We have room to improve, and we are fighting for that. Looking at civil, we are more a niche player. We are a bit different from my colleagues in Norway. In Sweden, we are more niched, so it's civil rail that we're focusing on or a niche market more located in Värmland, Karlstad, where we have our civil department. That's more small project, local projects, also private clients.
Going forward, this is a nice picture. Some were very sweaty yesterday to put in the last picture. What you see here is the future shunting yard in Norrköping. This is how it looks before there is a new shunting yard. This is a new shunting yard that is the start of the new high-speed line in Sweden between Stockholm and Malmö. To give room for that, where the today shunting yard is, they have to build a new one, so they can demolish the old one and start doing the civil works and construction work for the new high-speed line. We are doing this one now. This is a typical mid-sized project in Sweden where rail and civil is integrated together, a bit like the Nittedal, you can say.
For us, this also shows that it gives us the synergies when we can integrate already in the calculation or the production planning, execution planning in the tender stage. We have a competitive edge when we have it in-house, and we can use our best knowledge, our best people. We did, and we had a great success, so we won this one. We are focusing on projects like this, where it's a high complexity or where we can utilize our resources. Improved profitability. In a way to give you a little bit more flavor, as I said, I joined NRC in 2019. The company had some challenges, and we had some things to do, and I will give you a little bit highlight on it, so you understand what we've been through.
First, we had the integration between NRC and VR Track was not completed yet, so we had to put in some work on that. During quarter four 2019, we discovered that we had several projects with very significant challenges financially and operationally. Really tough projects. We discovered and understood that we also had to improve our management skills, capacities, and our processes. We had to improve them or even sometimes take them in place. All that had to be in the same time in parallel, full speed ahead. Develop, fixing, executing, and we knew that was a huge challenge, and it was. We knew it. We had a plan. I have to say, when I'm standing here today, it was much more than I could guess at that moment. It was much more.
We have done it. We are through it, and we are very, very happy for being where we are today. Again, we are never ready, we are never finished, and we will continuously work on this. To be here now and have what we have accomplished also behind us and with us, like a solid and stable tender process. All divisions are very stable, as Henning said. That is the starting point. Win the right project, that means that the tender process has to be stable. We have a solid and stable operation in maintenance, which is profitable. We see that our new projects, and also mainly driven in the rail construction from 2020, they can even perform a little bit better than we believed in the tender stage. We can slowly increase our margins, quality.
Most important of all, we are finally done with all these old projects, to be honest. They are gone, so I'm very happy. We are continuing our journey going forward. What do we do then? We have said it many times. We talk about project management, talents, our people. We focus a lot on our people. Already what we did in the turnaround is continuously we are working on, so we are developing and training our people constantly. Leadership, our values, commercial mindset, commercial thinking, and safety. These four things are cornerstones for everybody in Sweden, in NRC. That we do constantly because that puts us on the level where we want to be. To that, we are training also our operational people, of course, a bit more detail, and we talk about project management and project execution.
From our side, it's a lot about production calculation, production execution, cost control, contract management, know-how to invoice your client. This sounds maybe strange when we say it, but really, it's also about how to invoice our client. We do a lot for them, so they have to pay for everything also. Then, of course, the supply chain, purchase, predictability, being in control, forecasting. Nobody likes to have late surprises. I don't like them. Henning for sure doesn't like them. If it goes to hell, we like to know it early, then we can do something. Of course, the risk management, mitigating risks. That is what we do in all divisions. We are focusing now from the platform we have with the maintenance to grow, speed up. We are tendering.
We have some tenders in for new contracts, so we can grow and develop the business. Then we have another new area we haven't addressed yet. We had hoped to be there maybe today, but we are not, and that's the SL business, the tram in Stockholm, the metro. It's a very huge market, second market in Sweden. We are now pre-qualified to tender there for the upcoming big maintenance contracts, really big ones. I know some of them because I've been working there for 15 years with that contract. But since COVID-19 came, of course, that also affected SL, so they closed down for two years. That's why there is a huge delay. These contracts will not start before 2024, but they're coming out for tendering now.
I will also like to address the fact that Henning has touched, and we already do. The fourth and very big pillar we can do both to increase our profitability and grow together, that's together, NRC Group, Sweden, Finland, or whatever we say it, in which way. We together can source the right products in the markets, maybe where we fits our capacities best or where the profitability is the highest or where we can develop the best. We have great opportunities when we do it together because often standalone in a country you can't do everything, and we see it in the tender pipeline.
There are so many opportunities, so big projects, and then maybe it's better to be selective to choose two in one country and stop in some other countries with the resources we have while we are still growing and expanding. That is what we foresee, great opportunities. I will not talk too much about this. You have seen the facts. You have seen the figures. There is more than enough to tender for, so we are selective being the right product. There is no shortage of projects to look at or tender for. I would like to summarize Sweden a bit before I hand over to the next speaker. The pipeline is very big in Sweden. The driver in investing in rail infrastructure is what Henning has touched.
In Sweden it's clear the railways are part of the Swedish goals for reaching the climate goals 2045, and that has to be done, and it has to be done by the railways taking a bigger part of the transportation system in Sweden. It means it has to be less trucks on the roads. It has to be less airplanes in the air. It has to be more transport. That means it will be built new lines in Sweden. It will be upgraded from two track to four tracks, and four tracks will be upgraded to six tracks. It will be built high-speed lines, and all that has to be done to reach the climate goals, and this means it's a broad political consensus in Sweden about this.
Regardless if you're on the right wing, left wing, and fight about everything, they at least in this point agree because there is no turning back, and this is a global trend. We have to get into the fossil-free future. The sustainability goal has to be reached. We have to have a future for our kids, the future generation. I think as NRC, I think it's fantastic. We can work in a industry we love. We can do good projects, and we can also be contributing by doing this, that we have a future that we are proud of in the future, and this is a super big market. NRC has a great opportunity, and I stop there. Thank you. Harri.
Okay. Thanks, Robert, and hello, everyone. My name is Harri Lukkarinen, and I'm managing director for Finland. I joined NRC through the acquisition of VR Track back in 2019. Let's move on to Finland. In Finland, we have a solid organization of about 1,000 people, and the core management team is mostly same as in 2019, strengthened by some new recruitments. Our track record is solid from profitability point of view, and we will continue to contribute to deliver on a good level going forward, although maybe not as high a level as in 2021 margin level at least constantly. The order book for this year is strong, and multi-year projects give us a good starting point for next year as well.
The most part of revenue comes from rail construction, including railway construction and rail construction and rail maintenance, which are strongly synergistic, and our expertise covers the whole scope of rail technology, which is our competitive advantage. In Finland, we support also railway-related material services for external customers, which also support our own construction and maintenance projects. We are the number one player in rail infrastructure in Finland with growth opportunities. In rail construction, we are the market leader as our expertise covers the entire track technology, including also electrification and signaling systems. Last year and this year, we have won the largest multi-discipline railway yard projects like Joensuu and Kuopio railway yards and construction of two large raw wood terminals as an example.
According to the National Transport System Plan, investments in railway construction and renovation are increasing, so our purpose is to take advantage of our strong position in the market in seeking growth by also strengthening our civil construction-related capabilities. Maintenance. The competition for railway maintenance areas has been tough, and new players have joined during the last three years. Our market share fell after we narrowly lost some areas which we used to have before. Right now, we have three of four electrical maintenance areas and four of 12 track maintenance areas. Next maintenance areas which will be tendered are currently held by our competitors, so that way those tenders offer us an opportunity to regain our market share in maintenance. Light rail.
We are involved in three of four major light rail network construction projects, which has quickly given us a strong foothold in fast-growing new market, which is synergistic with our core expertise related to railways. If you talk about rail technical works, we are clear leader in the light rail market. Actually, we have won all alliance light rail projects we have competed on. During the strategy period, several new major light rail projects are coming up for tender, where we can utilize our strong position in the market. Last year, we won Joensuu Railway Yard Improvement project, which is actually one of the largest single contracts on Finnish railway network for years. The railway yard and station area will be completely renewed to meet today's requirements and traffic needs.
The project includes all aspects of railway technology as our know-how. The works are carried out in the middle of busy train traffic, which we have experience with. I think that this project is a good example of multi-discipline demanding project where we can utilize our strengths competitively and successfully. This year, we won similar but smaller, about EUR 25 million, project for renewal of Kuopio railway yard. We have improved our profitability last three years. In project business, profitability is based on solid tender calculation and project execution, which we have developed systematically. On the other hand, due to the dynamism of project business, it's important to constantly ensure efficient use of resources. Our profitability is driven by light rail and rail construction. The maintenance business is delivering stable result, however, still at too low level.
In maintenance and in machine operations, we have quickly adjusted the amount of our resources in accordance with our decreased market share while still ensuring our opportunities to tender and win new maintenance areas and regain our market share. The material business, it's more of a process business which continuity ensured by winning new five years material service agreement which started this year. Our goal and strategy is to deliver profitable growth. In rail construction, we strengthen our value chain in capabilities within civil construction disciplines to be able to increase our market share in civil construction projects related to railways and in selected projects outside railways. During the strategy period, several new light rail projects will be tendered, for which we have already started preparing, utilizing our strong position in the market and expertise developed and successfully implemented projects.
In maintenance, we continue measures to improve profitability and prepare for coming maintenance area tenders, which offer opportunity to regain our market share as they are currently held by competitors. In addition, we contribute to Nordic collaboration to be even stronger together to win new large projects in the future. Compared to previous years, visibility of the tender pipeline has improved also in Finland. The total tender pipeline have developed positively from Q1- Q2, driven by maintenance and those mentioned maintenance areas. Almost all of the projects included in our tender pipeline are very relevant to us, thus that way we are able to tender them competitively. In addition, high investment level for light rail projects is expected to continue in the coming years. Light rail market, how it looks like.
We have won all major light rail projects implemented using the alliance model in which we have participated in tenders. Now, several new light rail projects are in design phase. Total value of those new projects is over EUR 1 billion. Implementation decisions have been already made for some of them, and the decided projects are also planned to be implemented using the alliance model. Preparation and bidding processes are long in large alliance projects, so potential revenue impact from new projects starts from 2024. In addition to the projects shown in the picture, the Helsinki and Tampere regions have long-term plans to expand their light rail networks significantly in the future. The National Transport System Plan shows stable long-term growth in financing of railway investments.
In addition, planning of totally new railway connections funded outside the national plan are ongoing between Helsinki-Turku, Helsinki-Tampere, and east of Helsinki sections. That's how I see our situation briefly in Finland, and I guess that now I hand over back to Ole.
Thank you, Harri. I will over the next few minutes walk you through our financial strategy and our financial priorities, areas to strengthen our value creation in the company. As Henning mentioned earlier in the presentation, NRC Group is a young company. We've gone through a consolidation phase and a transformation phase, and with improved performance, we're now entering a new phase where we'll capitalize on our leading Nordic position. During the end of the consolidation phase, we saw a dramatic drop in profitability. The last two years, the management have focused to regain control and improve profits. As you can see on this slide that we managed to keep our turnover around NOK 6.4 billion, but at the same time, we managed to get our margin up to a respectable 2.8%. However, we want more.
Where do we go from here? Our core financial priority is to support continued profitability improvements, as well as expected organic growth. In addition to this, we now aim to better manage our balance sheet with a goal to return more free cash to our equity owners. Operational restructuring takes time, and as mentioned several times during the CMU, you gradually have to renew your order book, basically getting new project at healthy margin and replace the old loss-making project. An effect of this is gradually yielding result, as you can see on the graph to the right. Over the latter part of the transformation phase, we saw a solid financial recovery, and our EBITA measure over the last 12 months came in at NOK 177 million in Q2.
The very good news now is that we're also starting to see solid growth, especially in Norway and Sweden. Our order intake and our order backlog is at record high levels, and this support further growth. The rail infrastructure market is also looking very strong, and so far, we have not been impacted by the uncertainty in the global economy as well as the war in Ukraine. In addition to this, we have previously analyzed our sensitivity to increased material prices as well as inflation, and our findings is that our business is well protected, especially short term, but possibly also medium term. One more comment also related to our order backlog and the risk in the order backlog.
Please note that more than 90% of our order backlog is to public customers, and we believe that public customers is less likely or it is not likely that they will postpone or cancel any project related to financial uncertainty in the world. In addition to this, public contract nearly always have inflation price adjustment clause attached to it. In NRC Group, we also have a strategy to have a lean asset base.
By lean asset base, we mean three things. First and foremost, we want to maximize the utilization of our assets. The second is that we will prefer to have leased assets over owned assets. The third area is that on special equipment, we will rent it from project-to-project basis. This is a long-term process, but as you can see on the left-hand side, which measures our depreciation versus revenues, it goes down.
On the right-hand side, our tangible assets and our leased right-of-use assets compared to revenues, it's also going down. When these graphs are going downwards, it's a signal that we are getting less asset intensive. Going forward, we will evaluate further improvements between the countries as part of our Nordic collaboration strategy. However, we just want to point out that we have an optimistic approach when it comes to asset investments, and by that we mean that we will not compromise on business development. Another area where we have a lot of focus is working capital management. As we have a lot of public contracts, they are quite fixed, and there's a limit to how much we can drive down the net working capital.
Still, there are always room to improve by focusing on having the right internal processes, well, as well as the right internal culture. The positive flip side of this, by having a lot of public contracts, is that our counterparty risk in our accounts receivable is limited. On the left graph, you can see the net working capital development during the different quarters. As you can see, we are building up quite a lot net working capital in the second quarter of the year, while we release this during the autumn and the winter season.
The reason for this is that, as you heard earlier from both Sweden, Norway, and Finland, we have a lot of activity in the late spring period and during the summer. On the graph to the right, we have taken out seasonality by giving you the average over the last four quarters. As you can see, it has been steady improvement over the last year and a half. This is telling us that we're doing the right things within working capital management and also improving our cash conversion cycle. Early in the earlier presentation, Henning mentioned that we had NOK -90 million in operational cash flow in Q2, and that is all related to the seasonality in the net working capital as mentioned on the previous slide.
If we measure operational cash flow over the last four quarters, you can see this is steady improvement over the last few years, and it's now running around NOK 350-NOK 400 million on an annual basis. It's also our cash flow from operation is also steadily being higher than at our EBITDA, and we are satisfied with this performance. If you move to the slide or move to the graph to the right, you can first see that our cash flow from investing activities or our CapEx is very limited over the last 12 months, and that is partly related to our strategy to have a lean asset base. Despite this, you can also see that we have not been able to generate more cash on our balance sheet.
The reason for this is that during the transformation phase, we have prioritized to have a solid cash position on our balance sheet, as well as a steep down payment profile in our bank debt. As we're now moving into a new phase, we will prioritize differently. Moving over to our financial position, which at the end of June is robust.
We have a bank debt of only NOK 364 million and a bond debt of NOK 600 million. The bank debt installment profile is approximately NOK 35 million per quarter, and it falls due in Q1 2024. While our bond debt falls due in full in Q3 2024. If you go then over to our liquidity side, we have more than NOK 400 million cash on our bank account, and we have an undrawn credit facility of NOK 200 million.
This means that we have more than NOK 600 million in available liquidity. Please note that this is actually on the peak of the working capital cycle. As such, with improved profitability, we believe that we now are somewhat overcapitalized. Therefore, we are in the process to align our debt structure with our updated strategy as presented today, as well as our current profitability levels. The goal here is obviously to reduce the cost of debt and create more financial flexibility. We have a long-term leverage ratio target to be below 2.5x EBITDA. As you can see, we have now gradually come down to this threshold due to a combination of improved profits as well as paying down our debt in that period.
We believe our financial position is now sufficiently robust to increase the free cash flow to our equity owners and resume dividend payment, possibly already based on the 2022 numbers. In addition to this, we want to build some financial headroom to execute bolt-on acquisitions. To summarize our capital allocation priorities, first and foremost, we want to support the existing activities and continued profitability improvements. In addition to this, we expect organic growth related to our current activities. Secondly is that we want to continue optimizing our capital structure and manage our balance sheet. By that, we mean continue handling or continuing managing our working capital and having a lean asset base. In addition to this, we now also want to align our debt structure with our current financial position and our updated strategy.
Lastly is that we want now to increase the free cash to our equity owners and resume dividends. With that, I hand it over to you, Henning, to summarize this review.
Thank you, Ole. As we have presented, quarter two was the fifth consecutive quarter with improved results for NRC Group. Our expectations for the future is that our positive financial and operational development will continue. Our medium-term target is to deliver EBITDA margins in the range of 4%-5% while reaching 5%-7% in long term. With a strong order intake, record high order book, we believe to have a good growth rate in 2022, but also well-positioned for growth next year. Through the cycle, our target is to deliver an organic growth rate above 5% and then of course, seek to do some bolt-on acquisitions on top of that. As Ole said, with improved profitability, improved financial flexibility, the target is to resume dividend distribution according to our existing dividend policy. Our commitment to sustainability stands strong.
We are well on track to reach our 2025 ambition to reduce CO2 emissions by 30%. The strategic focus going forward is centered around continuing to improve core processes to improve profitability. We can take new steps to generate profitable growth by focusing on bigger projects and by increasing our competitiveness using our unique Nordic position to drive increased competitiveness. We will explore some acquisition opportunities, and we will continue to integrate sustainability into our operations. As a summary, we are ready to capitalize on our leading Nordic position. The demand for our services centered around rail infrastructure and our strategy to execute projects in a sustainable way is driven by strong global mega trends that have stayed strong throughout two major crises.
We are coming out of these two years with stronger profitability, more financial flexibility, a record high order book, and markets at record high levels. With strengthened processes within tendering and project execution, we are ready to add on more growth, and I believe NRC is better positioned ever to succeed. Now, we will start the Q&A session. Lene?
Yeah. Maybe we can start with a question from the stream.
Yeah.
Simen Mortensen, how and when will dividend policy be integrated in the financial targets for NRC?
I think we already answered that. We have, we are hopeful, or it's possible it might happen already based on our 2022 numbers, and then it's done for payment in 2023. But this is not guaranteed. We are discussing obviously this with our board. We need to deliver some thresholds, some profits, and we have also some clauses in our debt structure. We will see if it's possible to do this year.
Second question from Simen. How are the targets for the financial leverage?
Well, I think we mentioned also that our leverage target is to have it below 2.5x EBITDA. We think that's a fair level to have a leverage target. We know that some of our competitors have a lower leverage, but there are similarities here in our business model, but there are also some differences. We have a positive working capital, or our working capital which is around zero, and that some of our peers have a very negative working capital. As such, you know, our balance sheet has then less risk than them because in the end, negative working capital is a debt, and if you unwind your balance sheet, you need to pay that off.
We think that we should have also a debt structure which is around or below 2.5, which is our target.
Yep. Let's open up for questions here. Any questions here? Please.
A follow-up on a question on that. Your net working capital on average has been declining. Do you see a possibility for you to have negative working capital on average for a 12-month period as well from your perspective?
Yeah. I think it's possible, but you know, we are hovering around zero. We are not really. I mean, NOK 100 million plus, NOK 80 million minus. I mean, it is not really. It's not significantly plus or significantly minus. We are hovering around zero. Is it possible to get continued down? Yes. We will not get the same level as construction company with only private contract because they have much more opportunities to manage their contracts to get better on their working capital. While we are fixed more because public contract are more fixed, there's less thing we can do.
As I said, there are opportunities if you'd have the right culture and the right internal processes to continue squeeze it down, but it's not going to be at similar levels as some of the other construction companies.
Mm-hmm.
Coming to your margins, I think the guidance you're providing is, of course, on the overall company level. Could you elaborate a little on what that implies for project margins? Because you have a certain overhead you have to deduct. Could you also elaborate a bit on this bit. How is the margin picture between projects and the maintenance contracts?
Yeah. To take the last first, the projects in our construction contracts are higher than in the sort of long-term contract business. Profitability in construction is higher on average in our company. You asked about.
The deducting overhead.
Yeah.
The kind of project margins we're talking about?
Yeah. The increased profitability will come from increased project margins, and our target is to somewhat reduce overhead as we get more operational leverage, taking on higher revenue without increasing overheads in the same pace. Partly by increasing the average project margin by the measures we are doing in the project execution process, and partly operating leverage by increasing revenues without increasing fixed costs in the same pace.
What's your fixed cost overall, cost now?
That is not something we are communicating.
You showed a picture here which kind of gave an indication of revenue growth in the second half if we look at the current order backlog. Could you share some thoughts on the first half of next year where you will have a very tough year on your comparison, obviously?
Yeah, we can do that. To comment a little bit on 2022 first, we have seen a high growth rate first half. We have order book for the next six months being 6% above last year. What is a bit special this year is that we have procured more materials and supplied it to our construction sites to be better prepared due to the supply chain challenges we have seen. It might be that, sort of, we have pushed a bit more revenues to first half than what would normally be the case in a normal, sort of, supply chain environment. Looking at next year, we see that our current order book is approximately 5% higher than the same period last year for also sort of first half of 2023.
It's important that if you still have to fill the pipeline quite significantly.
Yeah.
Next year. It's not like we have done 2023 already. There are uncertainties to this. Right now our order book for next year is somewhat over where we were a year ago.
It's correct, like, Robert mentioned, that, you know, the second half of the year, that is the tender race for next season. It is that, sort of, it's the tenders won for the next six months that will, sort of, fill up most of the order book for 2023.
Are there any major projects being finalized this fall as was the case with Jokeri Light Rail?
We finished Tampere Light Rail last year. This year we will more or less complete Jokeri, so we will only have one ongoing or one major ongoing light rail project in Finland next year. Besides that, I think it's a sort of normal churn of bigger and bigger projects. Tore?
I had a question on the competitive situation in Sweden, because I think Robert mentioned that the projects are gone and you're fully occupied. Still you're at -2.5% margin, and then you kind of have to conclude that the market has to improve a lot for you to get positive margins. Prices have to go up, because you're fully occupied and the projects are gone, then the average project must still be not very attractive.
Looking at our profitability, it's also a fact that from 2019 up till today, our revenues has gone from NOK 2.1 billion and down to, I think it's approximately NOK 1.7 billion the past 12 months. We have had a negative operational leverage impacting our profitability as well. The negative projects is finished, which is good. When we have still not, sort of, reached positive territory yet, it's partly due to the fierce competition. I said earlier, I believe we are able to deliver back figures in Sweden in the current market environment. As Robert said, we are also seeing some small signs of prices increasing, which is good. To come and deliver on the level we want to in Sweden long term, we clearly still need to see a positive development in the market.
We are able to deliver positive results in Sweden in the current market conditions. As Robert is saying, we have had a lot to do in Sweden. We have worked hard to improve our core processes in parallel with integrating two big organizations and training and developing employees. It will take some time, as Robert said, but we are on track to getting back to profitability in Sweden. To get to, sort of, 4%-7%, we clearly also need to see better market environment and be able to grow also the maintenance business to get operational leverage and improve profitability there.
With the current market conditions, what revenue level do you need to be at in order to have black figures with the current market?
I think with a little bit more progress on our improvement processes, we should be able to deliver profitability with the size we are today.
Other questions now?
Yeah.
Yeah. I think there's one thing that stands out. You mentioned that you want to take on bigger contracts, which is something that you probably haven't talked about earlier. Do you think that increase your risk in your business model or decrease your risk? Is that strategy true for all countries?
We have the same strategy across all countries, but market opportunities are a bit different between our three countries. When we are talking about taking on bigger projects, it's about winning bigger projects and increasing the size of our average projects. It's not like we will convert 100% of revenues, sort of, quitting doing smaller to medium size project, but it's to lift the average project scope to better capitalize on our operational leverage. I don't think it will increase our risk. I think if we look at the history in our order backlog and our projects executed, we have been good at handling the risk in the bigger project. I think the light rail projects in Finland is a good example of it. We have a good project in Norway, the Nykirke-Barkåker project.
We have a big project in Sweden, Slagarp Arlöv, NOK 400 million-NOK 500 million contract, all being profitable and healthy projects. It can be a bit sort of counter-intuitive, but when we are doing smaller projects, the risk is actually higher because we have to allocate more responsibility to a less number of people. Maybe having one or two key resources handling a broad spectrum of competences, both production planning, contract management, safety. They need to cover so many areas that we see that the spread in profitability we have on smaller projects are actually bigger than on the bigger ones.
Other questions?
From net?
Yeah, I think.
You mentioned several times the competitive edge that you get from having both civil and rail. I'm just wondering how much of your civil volume is linked to your own rail projects, and is this a percentage that you're tracking? Is it coming up or is it? You know, and what's the difference between the countries?
In Norway, I would say it's 50-50. 50% of the civil volumes are connected to rail construction projects, and 50% is standalone volumes. In Sweden, we have a higher share connected to sort of the local market position we have in Karlstad and less being integrated in the rail construction project. There we have a clear strategy to change that percentage. We want to use more of our civil capacity in Sweden to support our rail construction projects where we have the competitive edge. The shunting yard in Norrköping is a good example of this priority, trying to direct more resources into supporting rail construction projects as the competitive landscape is maybe a bit different there than sort of pure civil projects.
In Finland, our civil capacity is more or less integrated in the rail construction organization, so we are not doing civil construction outside rail at all. We are building more civil competence in Finland to do more of the scope on the civil side internally in our rail construction projects. Also, as in Norway, try to see if we can win some projects in civil construction close to railroads, where our rail competence will be important to be able to tender and handle the risks and deliver good profitability. Because that is also a part of the Norwegian civil construction.
If you take Skøyen, one of our civil construction projects, the scope of rail technical works is zero, but it's situated five meters on the right side of the double tracks going through Oslo city center, and by that, you need to have a strong rail technical competence to manage the risk and be able to operate that close to the railways. This is something we are trying to exploit in Finland as well, expanding our civil operations, but closely connected to what we already know, rail construction and rail technical work.
Okay. We've seen that the pipeline for rail construction in Finland has decreased somewhat over the past quarters. That's been a big part of the Finnish revenue. Can you say anything about the expectations for that segment in the medium to long term?
Medium to long term, we expect the pipeline to grow. We have been through a phase now for the past couple of quarters where it has been lower. With excellent tender execution from our Finnish organization, we have won, as Harri said, the biggest rail construction contracts in the market. We have a record high order book in the rail construction segment. A bit weaker pipeline, it's not a problem for us short to medium term. Of course, long term, we want to see these pipelines grow, that is also according to the plan for the Finnish Transport Infrastructure Agency.
Perfect. Back to the dividend. If I tie that up with your guidance of moderate to strong growth in revenue and moderate increase in EBITDA, would that be the threshold for resuming dividend payments?
I think we are in a good position to be able to resume dividend payments if we reach our targeted levels in the guidance. It's also very sensitive toward the working capital development. You know, we can have single contracts with payments of NOK 50 million falling the 2nd of January or 31st of December, which impact these thresholds we have in our loan agreement. That's why we have a clear ambition, but we cannot guarantee that we will sort of meet all these thresholds due to this volatility in working capital.
From a profit perspective, the answer is yes.
Yeah.
From a profit, yes.
Anything else from the net?
Yeah. We have a lot of viewers, but we don't have any further questions, so I think they're busy buying more shares.
Well, everything has been crystal clear, and that's fine. Thank you for your participation, both here in House of Oslo and on the stream. We will be also available for some time here for some more questions if you have that. Have a nice day, everyone.
Thank you.
Thank you.