Good day, and thank you for standing by. Welcome to the Ambea's Interim Report Second Quarter 2024 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star 1, 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1, 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mark Jensen. Please go ahead.
Good morning, everyone, and welcome to Ambea's second quarter 2024 report presentation. Speaking as Mark Jensen, CEO of Ambea, and presenting with me today is Benno Eliasson, CFO. I will give you an introduction to the quarter, then I will talk about some of our efforts within quality and sustainability before Benno will describe the development of the financials for the group and for the different business areas. After that, I will summarize the quarter and compare to our financial targets before we open for questions. I would like to begin with a brief overview of Ambea. Ambea is the leading Scandinavian care provider. We have over 30,000 employees across Sweden, Norway, and Denmark, and revenues of SEK 13.7 billion. We offer a full range of services within elderly care, social care, staffing, and competency solutions.
We have more than 450 municipalities as our clients, and we are an important partner in solving challenges in the welfare system. Let's have a brief look at some of the reasons to invest in Ambea. Ambea deliver value to society, and we aspire to be the most attractive investment in the care sector. From a distance, care providers can look somewhat similar, but at a closer look, there are distinct differences, as you see on this slide. Today, I would like to highlight our growth potential in own managed elderly care. Due to an increased and aging population in all Scandinavian countries, we'll see a steep rise in care needs towards 2030. The rise will materialize gradually over the coming years, and therefore, society has an urgent need to expand the number of modern care facilities.
In Scandinavia, the municipalities are so responsible for providing elderly care to their citizens. New municipal construction is far from meeting the total need, and political reforms are needed to boost public investments, as well as inviting the private sector to further contribute. Alternatively, we will face a steadily increasing undersupply of care homes. The risk of not having access to high-quality care when citizens are in need will be a major problem for society and will challenge citizens' trust in the welfare state. So this is an important topic, but there are signs of hope. In Denmark, we have seen political will to open the market as politicians on national level have realized all good forces, including private operators, are needed to catch up with the undersupply of nursing homes.
New legislation is expected next year, and assuming our Danish business is in good shape, where we plan it to be, this provides a good growth opportunity. In Sweden, there are 290 municipalities who can decide if they want to include private operators to supply elderly care besides the municipal's own care services. The most common way is through adapting the freedom of choice legislation in Swedish LOV. Regarding private nursing homes, 25 municipalities have applied LOV, and here, supply and demand is in balance, as an open market will normally cater for that. Many of the remaining municipalities have supply issues of varying degree and where the tough economic situation makes it difficult to invest sufficiently in new nursing homes.
Here, Ambea and our industry organizations argue for reforms on national level to ensure municipalities secure sufficient supply of nursing homes, and we believe the Danish example is worth following. A Swedish national reform could secure the elderly will be able to get the care service they expect and have taxed for. Together with construction companies and property owners, Ambea stand ready to rapidly expand investments in new and modern nursing homes would the opportunity arise. With our expertise in designing sustainable nursing homes to both quality and cost, we would also provide a cost-effective alternative to public construction. I will come back to organic growth and new care homes later in the presentation, but for now, let's turn to care quality. Quality ultimately arises in the interaction between care receivers and our employees.
We always want to make it easy for employees to do the right thing in any given situation, so that they can spend their time on things that create quality and value. We have a systematic approach to quality and sustainability, where we carefully follow up all our units every month. In the quality report, we highlight some of the activities that were carried out during the last quarter and relevant KPIs. Employee satisfaction is incredibly important to us, and we measure whether employees would recommend us as a workplace to people who trust them. We therefore measure eNPS, Employee Net Promoter Score, twice per year in May and December, where we ask the question: How likely are you to recommend us as an employer to a friend or acquaintance? The results from May shows that the proportion of employees who recommend Ambea is increasing every year.
In this survey, the Ambea group's eNPS was +26, which is an increase of +4 compared to the previous survey. The long-term target for 2024 is above +19, and the scale ranges from -100 to +100. A high eNPS is generally important in the care sector. As a sector, we need to attract thousands of new skilled employees over the coming years, while recommendable good workplaces on a broad base are extremely important. At the beginning of the year, we introduced an AI solution that helps our managers to see patterns and trends in employee views. AI now allows us to listen to employees' feedback and suggestions in a more efficient and structured way. Twice per year, each care unit completes a self-assessment comprising around 200 questions.
The questions are mainly related to compliance with care regulations, as well as Ambea's concepts and procedures. The self-assessment helps employees and managers identify any areas that need to be improved. Action plans are drawn up and monitored each month. As well as being able to address issues at care unit level, we are also able to aggregate the data at regional and business unit level to understand what wider issues and trends exist, allowing us to take measures at the right place in the business. And now over to sustainability. Our focus on sustainability has been further reinforced during quarter two. In May, we placed extra focus on diversity and inclusion, inclusion during the European Diversity Month, and both Nytida and Vardaga became official supporters of Stockholm Pride, the largest pride festival in the Nordic region. In our operations, everyone should feel welcome and included.
It is a fundamental human right and important part of our mission and values. During the month of May, we drew extra attention to diversity and inclusion in various ways. In August, we encouraged our businesses around the country to celebrate pride and put extra focus on how we can raise awareness and talk about norms, sexuality, and sexual identity. We believe that joy of movement and physical activity are important for all people based on individual circumstances, and we therefore strive to inspire movement in our activities with several collaborations focusing on exercise and health. We also continue to support Ukraine and Ukrainian refugees. 30 out of our 130 Ukrainian employees in Nytida and Vardaga are now undergoing education to care assistants.
The education is an initiative conducted and financed by Ambea, together with the organization Beredskapslyftet and Sverige International, with the aim of strengthening the position of Ukrainians in the Swedish job market. Ambea and Beredskapslyftet will also finance training for those who want to continue their studies to become assistant nurses. The education, which includes Swedish language studies, are conducted besides practical work within Vardaga and Nytida, and we are impressed by the participants' progress. Turning to organic growth. In quarter two, the own management pipeline was growing. We have 1,272 beds or care places in pipeline, most of them in Sweden. In Norway, we continue to build our pipeline in segments with good potential in line with our strategy. The pipeline increased compared to the previous quarter due to new signed contracts in Nytida, Vardaga, and Stendi.
In all three markets, we could open new beds and care places this quarter. Vardaga opened two new nursing homes with 80 beds each in Uppsala and in Bro, Stockholm. Vardaga also signed two new nursing homes during the quarter with a total of 240 beds that is planned to open in 2027. Nytida increased the pipeline with three new assisted living facilities, with a total of 52 beds and expanding an existing daily activity unit by 30 additional care places. Stendi opened two new assisted living facilities with a total of nine beds and signed four new contracts with a total of 25 beds. And Altiden opened a new assisted living facility with a total of five beds. Now, let's have a look at acquisitions.
In 2022, and in the years before, Ambea had a very active M&A agenda, and significant experience has been gained from the large number of acquisitions that Ambea concluded over the past decade. We have a structured acquisition process, which is supported by internal and external expertise, and in addition, Ambea has a detailed process to follow up and learn from previous acquisitions. In 2022, 5 bolt-on acquisitions with annual net sales of SEK 263 million were closed. Nytida closed 2 acquisitions, and Vardaga, Altiden, and Klara closed 1 acquisition each. However, no acquisitions were closed in 2023 due to lower levels of M&A activity in the market, and these activities started to increase again in 2024. In the second quarter of 2024, Nytida acquired 2 companies with total annual net sales of SEK 65 million.
Åklyftan, a company that runs homes for care or residence for children and young people in central Gothenburg. The operations includes 24 care places and 19 employees. Annual net sales in 2023 amounted to SEK 25 million, and the acquisition was closed on May 2nd. The second company was Evus Omsorg Omsorg. This company consists of 3 assisted living facilities and 2 daily activity units, which are in 5 different municipalities outside Stockholm. The operations include 51 care places and 31 employees. Annual net sales in 2023 amounted to SEK 40 million, and this acquisition was closed on June 3rd. The third bolt-on acquisition was signed after the quarter ended. Nytida acquired Sorbus Vårdboende, operating an assisted living facility specializing in care for individuals with Huntington's disease and younger people with dementia.
Annual net sales in 2023 amounted to SEK 22 million, and the acquisition was closed on July 1st. We remain active in seeking for quality bolt-on acquisitions that will contribute to total growth and see more opportunities for M&A ahead. Let's look at total revenue growth. The organic growth showed in the purple bars follows the positive trend we have seen since quarter one, 2022. The total organic growth in this quarter was 5.9%. We remain positive about our overall growth potential in the coming quarters, where volume, price, price mix, and acquisitions are expected to contribute. Now to the highlights of the second quarter. In the second quarter, Ambea continued to improve EBITDA and profitability. Moreover, Ambea has a strong financial position with high free cash flow generation. EBITDA increased by 42% versus last year.
Our group EBITDA margin improved significantly to 7.7%, compared to 5.8% in quarter two last year. Our free cash flow increased by 24% this quarter due to the strong earnings. The high cash, cash flow generation enabled for continued active capital allocation through dividend payout, acquisitions, and share buybacks. Ambea completed the previous share buyback program, under which 3 million shares for SEK 187 million were repurchased during the first half of the year. Shortly thereafter, we initiated a new share buyback, share buyback program of another 3 million shares, with repurchased shares for additional SEK 98 million by the end of the second quarter....
You can always follow the progress of our share buyback programs via the investor relations page at our website, and Benno will also provide more detailed information on cash flow generation and utilization later in the presentation. Nytida acquired two companies in quarter two and closed the third bolt-on acquisition after the quarter ended. The three companies complement Nytida well and are in line with our strategy to acquire quality companies, contributing to our service offering and profitability target. Now over to you, Benno, for a presentation of the financial summary.
Thank you, Mark. The good organic growth we have seen in the last quarters continues. Vardaga, Stendi, and Nytida contributed to the growth, where Altiden and Klara had a negative growth. This quarter, net sales grew by 6% in total. Vardaga accounted for most of the growth and increased net sales by 12%. Like in the previous quarters, there is an increased occupancy trend. Higher prices also have contributed to the revenue growth. Further, Vardaga started several new contract management units the last quarters. Nytida has opened new own management units and started several contract management units the last quarters, together with higher prices. The net sales growth was offset by a lower demand in parts of the segment, individual and family care. Net sales growth was 3%.
Stendi increased revenue by 10% in SEK and 9% in local currency due to a stable and high demand and a better price mix. Altiden decreased revenue by 5% in SEK, which was mainly driven by one large elderly care contract that expired. Klara decreased revenue by 10% due to continued lower demand for staffing solutions. Now turning to the EBITDA development. This slide shows how the different business areas have affected the EBITDA of the group. EBITDA in total grew by 42% compared to the same quarter last year. EBITDA was positively impacted by lower staffing costs, as most of the Easter bank holidays were in Q1 this year. Last year's EBITDA was also impacted by two non-recurring items of -SEK 16 million. Two of Ambea's business areas were particularly strong also this quarter.
Vardaga's EBITDA was up SEK 37 million, thanks to improved occupancy and operational efficiency, higher prices, and positive effects on earlier measures related to handed back rental contracts, and the EBITDA margin was up 2.3 percentage points. The second one is Stendi. Stendi's EBITDA margin was up 4.8 percentage points due to higher occupancy and prices, as well as operational improvements. The strong improvement resulted in SEK 42 million higher EBITDA compared to last year. EBITDA, Altiden showed improvement of SEK 5 million compared to last year, despite a high sick leave rate and lower occupancy. Nytida's EBITDA decreased by SEK 10 million or 1.3 percentage point. Nytida had an exceptionally strong Q2 last year, which we could not fully match this quarter, but the underlying profitability, profitability is still very strong.
Klara's EBITDA was down SEK 8 million or minus 6.4 percentage points due to lower net sales, which could not be fully offset by lower costs. All in all, and excluding the two non-recurring items of total minus SEK 16 million from last year, the group EBITDA was up SEK 64 million. EBITDA margin was strengthened by 1.9 percentage points to 7.7%. And turning to the cash flow development, operating cash flow increased substantially compared to the same quarter last year. Cash conversion continues to be above 100%. The continued good cash flow development reflects the strong EBITDA and also a positive working capital effect in this quarter.
Also, the better color from the Easter holidays of last quarter was not affecting the Q2 cash flow in any material way, which confirms that we continue to show strong underlying cash flow development. And this slide shows the way from the rolling twelve reported EBITDA of SEK 1,219 million to the SEK 1,101 million in EBITDA, EBITDA, excluding IFRS 16, and down the way to the free cash flow post-tax of SEK 840 million. This is 228 million or 37% higher than the full year 2023 number we reported just two quarters ago. We can see that we have, the last twelve months, have invested SEK 77 million in fixed assets. We have paid SEK 135 million in interest and SEK 109 million in taxes.
We also have a small positive effect from working capital of SEK 33 million. Utilization. On this slide, we see how we have used the generated SEK 804 million in free cash flow. SEK 130 million was distributed to our shareholders as dividend, SEK 72 million was spent on the two acquisitions, and SEK 285 million was spent on the two share buyback programs. Based on our strong cash flow, we continue to reduce our debts, Rolling 12 by SEK 375 million. And now to the overview of the business areas. We can start with Nytida. Sales increased by 3%, which is driven by new operations in both contract management and own management, as well as higher prices.
As an offsetting effect, we had lower occupancy in some parts of the segment, individual and family care, which can be seen as natural fluctuations in demand. Nytida increased their own management pipeline with 52 beds and expanded one existing unit by 30 additional care pricing, care places during the quarter. EBITDA was lower than last year and decreased by 7% to SEK 124 million. The decrease is due to low occupancy, as said, in part of, of the individual and family care, where we were not fully able to offset staffing costs. EBITDA has also been negatively impacted by acquisition costs and by some startup costs and termination costs of several management contracts. EBITDA margin in the quarter landed at 11.9%, and rolling twelve, the EBITDA now trend at 13.3. Vardaga.
In Vardaga, net sales increased by 12% year-on-year, driven by higher occupancy, new contract management units, and higher prices. Vardaga opened two new nursing homes with 160 beds during the quarter. Our management portfolio increased net sales by 9%, and contract management portfolio increased by 17%, which is a result of commenced operations of previously won tenders. EBITDA amounted to SEK 105 million, which was significantly higher than last year, up 54%. Vardaga continues to show higher occupancy and prices, as well as operational improvement. The EBITDA increase is also driven by earlier measures related to handed back rental contracts. The earnings increase was somehow offset by startup costs for the two newly opened nursing homes. Mature units showed a margin of 9.8%.
That is 1.5 percentage points higher than the average margin for Vardaga's total portfolio. Vardaga has, at the end of Q2, balanced contracts net of SEK 63 million in upcoming annual net revenue, which will further contribute to future revenue and EBITDA growth. Two new nursing homes with a total of 240 beds were signed in the quarter, with a planned opening in 2027. During this year, 2024, two rental contracts with no operations have been handed back. On the next slide, we turn to our business area, Norway, Stendi. In Stendi, net sales increased by 10% in SEK and by 9% in local currency due to stable and high occupancy and better price mix. All segments continue to show growth like in previous quarters.
The increased demand for care services for children and youth with complex needs remains. As Stendi has exited the elderly care segment, the underlying increase in net sales was in fact 14% in local currency. In the quarter, Stendi opened 2 new assisting living facilities with a total of 9 beds and signed 4 new contracts with a total of 25 beds. EBITDA increased by 42 million SEK to 61 million SEK, due to the positive occupancy and price growth, as well as operational improvements. Earnings were also positively impacted by fewer public holidays compared to the same quarter last year. The EBITDA margin in the quarter increased by 4.8 percentage points to 7.3%. Rolling twelve margin increased to 8.4%, thanks to the good earnings development over the last quarters. Altiden. Net sales in Altiden fell by 5%.
During the quarter, Altiden opened 1 new assisted living facility with a total of 5 beds. The decrease in contract management by 9%, sales by 19% was mainly due to 1 large elderly care contract that expired, which also explained the rise in our management share to 71% of total, Altiden's total net sales. In Q2, the EBITDA was -13 million SEK. That is 5 million SEK better than last year, thanks to the continued structural profitability improvement measures regarding capacity and organization. Our improvement measures are gradually gaining effect, improving the financial performance, despite a high sickly rate and lower occupancy in the quarter. The turnaround takes time, but we expect further profitability improvements during the year. And now over to Klara, our smallest segment.
In Klara, net sales decreased by 10% because of continued weak demand due to the public healthcare region's limitations on the use of temporary care workers and the subsequent effect on the other staffing services as well. EBITDA decreased by 8 million SEK to 5 million SEK due to the lower net sales, which could not be fully offset by lower costs. Rolling 12 margin is now at 9.7% with that, back to you Mark.
Thank you so much, Benno. To sum up our financial development versus our targets. Our growth target is 8%-10% through a combination of organic and acquired growth. We expect continued good organic growth and maintain an active M&A agenda. Over time, the growth target can be reached through a combination of organic and acquired growth. Looking at the profitability target, we have a midterm adjusted EBITDA target of 9.5%. We are on our way to reach the target with an increased EBITDA margin amounting to 8.9% rolling twelve. Most of the gap we have seen in the previous years is now closed, thanks to three very strong quarters, and we expect further improvements going forward. The leverage level is again at 2.1x EBITDA, which is well below our financial target, primarily thanks to the strong EBITDA.
We expect our solid cash conversion to continue, which gives us potential to grow and provides financial flexibility. Free cash flow will be used for bolt-on acquisitions, future dividends according to our policy, for the share buyback program, and eventually for debt reduction. Before we open for questions, I would like to provide an outlook post Q2 2024. Ambea's growth is expected to continue through a higher demand, driving increased occupancy. We will also see effects from price adjustments versus last year. Nytida and Stendi plan to open several new units and care places in the coming quarters. New openings, together with acquisitions, will contribute to Nytida's growth going forward, and more bolt-on acquisitions are expected this year. We expect the profitability to improve, and we will continue to close the gap versus our profitability target.
We have bought back more than half of the 3 million shares of the current share buyback program, which we will continue. As of today, the company owns 5.03% of Ambea's total shares. The board has a mandate from the annual general meeting to buy back shares up to a maximum of 10% ownership before the next AGM. To which degree the mandate will be utilized is up to the board to decide. Finally, I would like to highlight the contribution of our employees. We provide care to 15,000 care receivers, many of them with complex needs, and where the efforts that goes in to provide quality care for better and more independent lives are truly impressive. The job done ensures a society where we look after and provide care and support to those in need.
It is an integrated part of the Nordic welfare model, and close to our hearts and minds when we strive to make the world a better place, one person at a time. For that, I express my gratitude to every employee at Ambea. This concludes our presentation, and we will now open for questions.
Thank you. As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again. We will now take our first question. Please stand by. The first question comes from the line of David Johansson from Nordea Markets. Please go ahead. Your line is now open.
Hi, good morning, and thank you for taking my questions. I wanted to start off on Altiden, and we have kind of touched on this for a number of quarters now. How confident are you in your guidance now around break even for the full year, given the labor challenges and also occupancy? I think that would be the first one. Thank you.
Our aim and our target is still that Altiden should break even this year. But of course, we would need some tailwind in the two areas you mentioned. Lowering the sick leaves and also getting occupancy levels up in the second half of the year will be paramount in order to reach that target, but it's still our ambition.
Okay, great. And then if I could follow up on Nytida. Could you elaborate on the top line, which to me looks to have slowed down a bit, at least organically. So perhaps you can expand on the demand trend, especially in individual and family care, and what your expectations are in terms of growth, as we look towards H2. Thank you.
Yeah. I said, there is a natural fluctuation in the demand in individual and family care, especially for children and youth. We have seen a little bit lower than the same quarter last year, which was really good. We don't see that it is a trend that will continue, and we also have some more openings, and also contract management portfolio will increase during the rest of the year. So we will hopefully see a little bit better net sales growth during the coming quarters in Nytida.
Okay, thank you for the clarity there. And then, looking at Stendi, this favorable demand, I think especially for complex youth care. What is your visibility now for Q3 and then perhaps also Q4? You know, I think, previously you have believed this trend to be maybe more temporary, but now obviously it has lasted a bit longer than expected. So, I think any sort of clarity here, I think, what you see in terms of demand, would be great. Thank you.
Yeah. So the Norwegian society continues to face a quite high need for children and youth care, and especially with more complex issues. So the visibility we have for quarter three and quarter four is that we expect the current demand, so to say, will not decrease. As far as we can see, that situation will continue for the next couple of quarters. As these placements are naturally shorter than other placements, it is difficult to provide any view beyond that. But with the visibility we have now, we still expect a high demand in the coming quarters.
Okay, great. Then if I could end with a question on Vardaga. And again, another very strong result here, and an 8.6 margin now on a rolling basis. I mean, what do you think is achievable here? I think you have reached a level where you have wanted to be, at least looking historically. So what does outlook from here look like from your perspective? Thank you.
As said, we have made a lot of progress in operational management in Vardaga the last years. But we think that there is still some occupancy to gain, and there is also some operational improvements still to be made. So I think that we have not reached the top margin, if you could say so. We think there is possibility to gain another percentage point or so in Vardaga, absolutely.
Okay, thank you. Those are my questions.
Thank you. We will now take our next question. Please stand by. The next question comes from the line of Jakob Lemke from SEB. Please go ahead. Your line is now open.
Hi, and good morning. My first question is a follow-on on Stendi. Just looking at the sort of sequential increase here from Q1 on top line, how much of that is driven by this sort of short-term placement, and how much is more longer-term placements?
It's difficult to say exactly how much belongs to each of the segments here. And also, I mean, you're not, you do not always know the length of the placement when you get it, because it also depends on the progress with the care receiver. So, I would say that most of the growth in revenue comes from the children and youth segment, but there are also growth in the other segments. And where we also see a good demand, and also very good performance by the Norwegian team. So, it's not, it doesn't belong to one segment only.
It is a quite good basket, you know, with a mix from different segments, but the strongest contributor is children and youth care.
Okay. And another one on that. It seems like we are at the sort of supply-demand imbalance here in that segment. Do you see increased supply coming to the market and sort of a more balanced picture here, perhaps a year ahead of time?
It takes time, because first of all, I mean, you need to find proper locations, which is not that easy, or you need to construct them, which takes time. We have projects in our pipeline for more placements going forward in the children and youth segment. And we will continue to see, you know, where the authorities are looking for demand, and where they need our support in order to fulfill that demand through new established care homes, either new construction or existing facilities that can be turned into such homes.
But, I mean, the short term, it's difficult to increase demand, both because you have the property issues, but you also have also the staffing, which you need to put in place, and where there are quite high demands in the region market for the level, educational level of the staff that can work in children and youth care. So these two elements has to go hands in hand in hand, and that also means that it takes time. So we are contributing as good as we can, and we are in very close dialogue with the authorities, and trying to do whatever we can in order to fulfill the demand. But it takes time.
Okay. And then I have a question on Vardaga. I mean, you mentioned in the report that there is this sort of shortage of elderly care units here in Sweden. And you also say that this new unit in Vardaga has gotten off to a good start. I guess my question is, would you say that it is easier to fill capacity now compared to earlier? Is the more favorable environment for you?
It depends very much on the local demand and supply situation in that specific municipality. Now, we have opened up in Stockholm and Uppsala, and there seems to be a good demand, and there is also freedom of choice, so the care receivers can choose our homes, if they want to, and that is a very important factor. So in these cases, yes, but in some cases, that could be the other way.
Okay. And then, I'm wondering if you could give an update on how many elderly care units you have with no active operations and the sort of outlook for those?
We have five units at the moment with no active operations, and we are working with all of them to see when and how we can open them, or how they can be used for other purposes. We have during the last quarter solved two of them, two contracts that are handed back. So it's now five five units that are not owned.
Okay. Very clear. That's all for me. Thank you.
Thank you.
Thank you. We will now take our next question. Please stand by. The next question comes from the line of Kristofer Liljeberg from Carnegie. Please go ahead. Your line is now open.
Thank you. Sorry, three questions. First, I don't know if you have comment on the occupancy levels for Vardaga. I missed the first part of the call. Second question, Nytida margin a bit lower here. How much of that would you say come from various items of all, or more one-off nature versus the lower occupancy in social care you commented about? And in Norway, may be difficult to say, but how much do you think margin benefits right now from the tight supply situation? And do you think it's reasonable to assume the current margins will be sustainable longer term with the more normalization of demand or demand supply? Thank you.
I can start with the last question, and then I will hand over to Benno for the two first ones you have. So in terms of Norway, the margin now, we have said that we believe that sustainable margin in Norway is 7.5%-8%. Now, we are slightly above that, and that is because of our favorable demand situation. As we also said, with the visibility we have now, we foresee that this will continue. So there might be a little more in the short term for the margins in Stendi, but over strategy cycle, we believe that the current level is more sustainable.
So, that's the kind of perspective we have on the Norwegian margin, margins, both short term and over strategy cycle. And then to your 2 questions on Nytida margins and-
Yep.
-occupancy level, I will hand over to Benno.
Yeah, Vardaga occupancy level, what we have, what we said is that the occupancy is higher sequentially than the first quarter and higher than last year. We don't report any specific numbers in percent or something like that,
there is still room for improvements in the occupancy levels in Vardaga, even if it's on a higher level right now. The Nytida margin, we said that this quarter was 11.9, and rolling 12, 13.3. We think that maybe the 13.3 is a sustainable margin level in Nytida. There will be some ups and downs in the quarter. There's natural fluctuations in some of the business area, business sub-segments in Nytida. We don't see a trend of lowering margins or something like that that we have seen the last two quarters, and we are rather confident that we will keep the margins going forward in Nytida.
But do you mean that the reason for not being at 13% is the more one-off items you had in the quarter? Or is lower occupancy having a negative-
No, it's if we have the 13.3 as a rolling 12, we have always higher margins in the third quarter, and being at 11.9 in the second quarter represent around 13% in a non-seasonal quarter, you can say.
Okay, thanks.
Thank you. We will now take our next question. Please stand by. The next question comes from the line of Karl-Johan Bonnevier from DNB Markets. Please go ahead. Your line is now open.
Yes, good morning, Mark and Ben. First of all, congratulations to a very solid Q2 development. Coming back to maybe some more granularity to a couple of the questions already posed. Looking at the new units that you are now setting in Vardaga, you indicate that it's a good start. But if you are looking at these municipalities where you have the free choice on these kind of things, would you say we are now back to what you would call the more historical kind of ramping model, and how things evolves for you?
Yeah, I mean, absolutely. When we have freedom of choice, we see that we have a normal ramping model, so to speak. The two units or the two nursing homes we opened this quarter are both with 80 apartments, so they are slightly bigger than the ones that we normally open, that are around 60. i.e., will probably take a little longer time to ramp them up fully. But as we have said, we are very satisfied with the early progress that we had in the first couple of months, and we look forward to welcome more care receivers moving in.
Excellent. The second part of that is obviously finding the qualified staff. Is that...
It's always tough to find the right staff. We continue to work very hard in our employee branding efforts, but also in securing that we have a very good work environment, that we have good managers and leaders that can lead the people at our care homes, that we have good competency developments for everyone that works with us. We're very happy to see also that the eNPS, as we described, is now at an all-time high at +26, which means that many are willing to recommend their workplace to a friend or acquaintance.
So, these things are important to us, and we have seen a slightly less tight situation on nurses in the Swedish market over the last 6-8 months. But other than that, I mean, the challenges remain, and this is a high priority for us to continue to work on.
Sounds logical. Looking at Contract Management, and obviously you now left it in Norway, was that a lost burden for you towards the end, or was that average margins for Norway, or just breakeven or something?
It was margins well below our current margins. So that has, of course, been a contributor also to the margin development. But I would say the margin development in Norway comes from extremely hard and dedicated work by our Norwegian teams in many areas of the business. It's not only the strong demand in the sectors, it's also a number of operational improvements. And we have seen and we continue to see in the Norwegian business. So we are very satisfied and proud of our team in Norway and what they have achieved.
Easily understood. And looking similar on Altiden, and also left a couple of contract management, is that something that improves the outlook, that what has been a burden for you?
Not really. That was the contract we exited in Denmark expired. And that wasn't a drag on profits. So that is not something that will help us going forward. But there are many other things that will help us going forward that we are working on in Denmark. So we expect profitability to continue to improve in the Danish market also.
Excellent. And Mark, you started off talking about the supply need in the market, particularly in the elderly care space. Do you have any updated views on what the needs would be in, say, a 3- to 5-year perspective or something like that for the different Nordic countries?
Yeah, so we turn to the Swedish market. I mean, there have been made quite a few forecasts on this, and it is not so difficult to calculate actually how many care and nursing homes that are needed. It is towards 2031, a little more than 400 new nursing homes that are required, and we are not anywhere near building at that pace at the moment. So the public sector is not putting up construction to meet the demand. And they simply need to invite private operators into more municipalities for us to support. We are working actively to find good locations in municipalities where we are welcome, and we are still expanding our pipeline.
But if the welfare model in Sweden should last and taxpayers should expect to get the quality care that they have taxed for when they are in need, simply the pace has to increase, and that has to happen relatively fast. Otherwise, we will end up in a situation where queues will be long and where people will potentially die waiting for a placement. And that's not the way we want it to be in Sweden or in Scandinavia. So this is something that we work hard on with ourselves and with our industry organizations, and are discussing with both municipalities and on national level. In Denmark, the need is somewhat similar.
The population is around half the size, so here the need is a little more than 200 new nursing homes. But here there is, as I described, political will, and we expect new legislation coming in next year that will open all municipalities to private operators in a model that we believe will be a good example for the Swedish politicians to look at. And as you said yourself, we are not in elderly care in Norway. The market is a little different there, where it's a predominantly public managed care homes or nursing homes in the elderly care sector. So here, with a similar demographic pattern in Norway, also public construction has to increase, but at the moment we cannot really support there.
So it is very evident that these things will change, and we are very happy and stand ready to support.
Excellent. And in Norway, you would say at least the demographic need would be similar to maybe Denmark in size, but then you don't have the little political will to use the private alternative to cater for that?
Correct.
Excellent. Well, thank you very much, and I hope you can help bridge that gap.
Thank you. We'll do our best.
Thank you. As there are no further questions, I would now like to hand back to Mark Jensen for any closing remarks.
No more questions. Thank you all for calling in. The Quarter Three report for 2024 will be published on November sixth. Have a nice day, and stay safe and healthy, everyone. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.