Thank you for standing by. Welcome to the Ambea Interim Report Second Quarter 2025 Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mark Jensen, President and CEO. Please go ahead.
Thank you and welcome everyone. Today we will review Ambea's performance for the second quarter of 2025. My name is Mark Jensen, CEO of Ambea, and I'm joined by our CFO, Benno Eliasson. Together, we will walk you through our results and highlight the key developments during this period. After that, I will summarize the quarter and compare Ambea's performance to our financial targets before we open for questions. I would like to begin with a brief overview of Ambea. Ambea remains the leading care provider in the four largest Nordic countries. We offer high-quality care and support across more than 1,000 care units for over 16,000 care receivers. We deliver the services to 450 municipalities in Scandinavia and 20 well-being services counties in Finland. Due to the acquisition of the Finnish business, we present Validia as a new business area for the first time this quarter.
The financial data for Validia pertains to one quarter only in the rolling 12 numbers. All business areas contributed well to the group EBITDA, which resulted in an adjusted EBITDA margin of 9.6% on group level, in line with our financial target. More about that later in the presentation. Let's go straight to some of the important achievements within quality and sustainability. As we continue to grow, our commitment to delivering safe, high-quality care is unwavering. We take a structured, proactive approach to both quality and sustainability, with monthly follow-ups across all our care units to ensure consistency, to track progress, and identify new opportunities for improvement. In this quarter's report, we are spotlighting some of the initiatives and KPIs driving this progress. Earlier this year, Stendi completed a successful pilot with Able, a company offering health guidance via app and video.
The goal was to help employees achieve a better work-life balance and reduce sick leave over time. The impact was clear. Participants reported high energy, better sleep, and improved well-being, reducing sick leave for the group. Building on this success, Stendi is now part of a national study led by Synteb, one of Europe's largest independent research institutes, through which 300 more employees will receive digital health support. In a highly labor-intensive business like ours, our employees are truly at the heart of everything we do. Our latest employee Net Promoter Score, which measures how likely colleagues are to recommend Ambea as a workplace, remains consistently high. This reflects the positive culture we are building together and strengthens the foundation of our employer brand. Finally, at Validia in Finland, we partner with Global Hope to give new life to discarded textiles.
These materials are being transformed into functional products such as acoustic panels and support cushions, which are now in use across our Finnish units. This is another step forward in reducing waste and advancing our sustainability goals. You can read more about our quality and sustainability work in the quarterly report. Next, I'd like to highlight Ambea's future growth opportunities. We remain focused on expanding our services to meet the growing demand for care, fueled by an aging population and increasing care needs in all four Nordic countries. In Q2, our own management pipeline increased as Nytida, Vardaga, Stendi, and also Validia signed new contracts, adding 119 care places in total. Our pipeline is still by far the strongest in the Nordic care sector compared to other care providers. We now have 1,360 beds and care places in our own management pipeline, most of them in Vardaga.
We plan to open new care homes with over 500 care places during the coming 12 months, of which 336 beds in Vardaga, 107 care places in Nytida, and 49 beds in Stendi. Rolling 12, we have opened 107 new places if we exclude Validia, so the coming year will be a clear acceleration of new openings. More units are under construction, positioning us for future organic growth in our markets, and we continue to seek more opportunities to help society manage the welfare challenge in the coming years. We will now have a look at acquired growth, which is an important part of Ambea's growth agenda. As you can notice, we made acquisitions in almost all business areas between 2021 and 2025, except for Stendi. Nytida was most active in Bolon acquisitions, expanding our footprint within Social Care in Sweden.
This is part of our strategy to strengthen our service offering through qualitative Bolon acquisitions. So far, 2025 has been an active year with strong M&A momentum. On April 1st, Ambea completed the acquisition of Validia in Finland, making us the only care provider with a strong presence in the four largest Nordic countries. Validia runs operations in residential care and support for people with disabilities, thereby adding approximately SEK 1.4 billion in annual net sales. Furthermore, we acquired Avasta in the second quarter, which operates care units in both Vardaga's and Nytida's operational areas, with annual sales of approximately SEK 104 million. Avasta operates a nursing home and four care units for adults with lifelong disabilities and psychosocial problems. Further qualitative Bolon acquisitions are expected in the coming quarters in several business areas as we continue to identify strategic opportunities for growth in all Nordic markets.
In Finland, we are increasing focus on pursuing additional acquisitions to Validia to strengthen and complement our existing operations in the market. We also allocate additional resources to our M&A team. Therefore, we foresee a continued active year within M&A. Let's have a look at the total revenue growth. This quarter, acquired growth was significantly higher at 13.1% due to the acquisition of Validia. The organic growth illustrated in the purple bars continues to show the strong trend observed since 2022, and the total organic growth in this quarter was 4.9%. We saw negative currency effects of - 1.8%, which affected overall growth. Overall growth landed at 16.2%. Summing up the highlights of the second quarter, in conclusion, the second quarter of 2025 has been another successful quarter for Ambea, marked by acquisitions, continued organic growth, improved occupancy, and strengthened earnings performance.
Net sales increased by 16%, driven by 13% acquired growth and 5% organic growth. Group EBITDA increased by 15%, reaching a margin of 7.6%, despite negative seasonality effects from the Easter holiday falling into the second quarter this year. Validia in Finland performed very well with high occupancy and a strong EBITDA margin. Altida in Denmark continues to see profitability improvements with positive earnings this quarter, as well as growth in net sales resulting from higher occupancy. ENPS remained at a high level at + 26, demonstrating that our employees are engaged, motivated, and feel valued. Now I will hand over the presentation to Benno, who will provide a financial overview of our performance this quarter.
Thank you, Mark. The majority of the net sales growth came from the acquisition of Validia that added SEK 375 million to net sales. The good growth we have seen in recent quarters continued, driven by acquisitions and startup units in Nytida and Vardaga, as well as increased occupancy in our care units in Vardaga and Altida. Stendi had a negative growth in SEK; however, in local currency, net sales growth was positive, which reflects a good demand for Stendi's care services still. Turning to the EBITDA development on the next slide, this slide shows how the different business areas have contributed to the adjusted EBITDA of the group. Earnings were negatively impacted by seasonality effects, as the Easter holiday fell in the second quarter this year compared to the first quarter last year. This has, of course, affected the comparison figures.
As usual and expected, the seasonal effect had a particularly negative impact on Stendi and Altida. Adjusted EBITDA totally grew by 15%, and our margin was 7.6%, driven by the strong results in Vardaga, Validia, and, of course, the positive earnings in Altida. Nytida's EBITDA was higher than last year, thanks to the acquired businesses. Vardaga's EBITDA improved slightly, driven by high and stable occupancy and fewer new openings. Stendi's EBITDA decreased by SEK 32 million, or 3.8 percentage points compared to the same quarter last year, mainly due to the mentioned negative seasonal effects from the Easter holiday. Validia, our new business area, added SEK 39 million to the group EBITDA, which underscores a strong EBITDA and EBITDA margin for our Finnish business.
Altida's EBITDA continued to increase significantly, and the margin increased by 4.5 percentage points, despite the seasonal effects from the Easter holiday, a development that reflects the good occupancy growth together with operational improvements in the social care segment. Klara's EBITDA increased by 3.9 percentage points, enabled by a lower cost base in Klara. On the next slide, I will present Ambea's adjusted earnings per share, a KPI that we have not previously disclosed. The strong development in profitability, together with the share buybacks we have conducted, have produced a very strong growth in earnings per share every quarter the last year. After a bit slower pace in reported EBITDA growth the last quarter due to the Validia acquisition, we expect the growth pace to pick up again going forward.
If we look at the underlying EPS adjusted for IFRS 16 and items related to acquisitions, we see an extremely strong development the last year. Now over to the cash flow. Our operating cash flow slightly increased and amounted to SEK 610 million. Cash conversion was a bit lower in the quarter. We had two non-recurring items negatively affecting the cash flow in the second quarter. The first one was the settlement of a legal dispute in Norway, accrued already in 2021, and there were also payments related to the acquisitions of Validia. Together, these two non-recurring items amounted to SEK 106 million in cash flow effect. This means that the underlying cash flow remains strong. This slide shows the way from the adjusted EBITDA down to the free cash flow post-tax of SEK 642 million, excluding IFRS 16.
This number is a bit lower than previous quarters, but as I said, affected by one-offs in the quarter. We had rolling 12 and negative effects on working capital of SEK 95 million, but over time, we think that the net working capital effect to the cash flow will be neutral to slightly positive. Next to the utilization of the free cash flow, this is how we used the generated SEK 642 million. SEK 185 million was distributed to our shareholders as dividend. SEK 1.358 billion was spent on the four acquisitions, and SEK 365 million was spent on the share buyback programs. Net debt then increased by SEK 1.221 billion compared to the same quarter last year, of course, driven by the strategic acquisition of Validia, which was mainly financed by a loan. Now have a look at the different business areas. We can start with Nytida.
Nytida showed a good growth in the second quarter. Sales increased by 10%, which is driven both by acquired operations as well as startup units. As an offsetting effect, we saw continued lower occupancy in some parts of the individual and family care segment. EBITDA increased by 2% compared to the same quarter last year and landed at SEK 127 million. The increase in earnings was thanks to the good earnings in the acquired businesses, but offset by this negative calendar effect due to the Easter holiday and by continued low demand within parts of the individual and family segment. Nytida continues to work actively by adjusting its service portfolio and opening units in areas with strong demand, aiming to increase occupancy and to improve margins going forward. That adaptation of operations is aligned with the new Swedish Social Services Act, which came into force on July 1st this year.
EBITDA margin in the quarter was 11.0%. At rolling 12%, we were at 12.0%. We had several quarters now in Nytida with lower margin than previous year, but we expect to turn around that trend in the second half of this year. During the quarter, Nytida acquired Avasta, adding four care units with a total of 64 care places and approximately SEK 62 million in annual sales. We turn to Vardaga, Swedish elderly care. In Vardaga, net sales increased by 8% year on year, driven by acquisition, higher occupancy in owned managed as well as new contract management units. EBITDA amounted to SEK 115 million, which is SEK 10 million higher than last year, thanks to the higher occupancy and less new openings.
Vardaga had a more mature portfolio since no new openings have taken place since Q2 last year and therefore managed to compensate for the negative Easter effect versus last year. Mature units showed an improved margin of 9.9%, which is 1.4 percentage points higher than the average margin for Vardaga's total portfolio. During the quarter, Vardaga acquired Avasta, adding one nursing home in Gothenburg with 90 beds and approximately SEK 82 million in annual sales. Vardaga will open two new nursing homes and one large expansion of an existing home during the second half of this year. Next slide, we turn to our business area in Norway, Stendi. Stendi's care services experienced somewhat lower occupancy with higher fluctuation this quarter. Net sales decreased by 2% in SEK, but increased by 4% in local currency.
EBITDA decreased to SEK 29 million, mainly due to the unfavorable seasonal effect from Easter holiday, which fell into the second quarter this year versus the first quarter last year. Public holidays have a stronger seasonal impact in Norway, as pay for inconvenient working hours is higher than in other Nordic countries. Lower staffing efficiency due to more fluctuating occupancy levels also had a negative, though smaller impact on the earnings. EBITDA margin in the quarter decreased, as I said, by 3.8 percentage points to 3.5. If you look at the first six months of the EBITDA margin, it was 5.9%, which is down from 7.2% last year, and rolling 12% margin ended now at 9.4%. During the quarter, Stendi adjusted its capacity by opening two new units and expanding one existing unit in high-demand areas, while closing seven smaller units to optimize its operations.
Let's take a closer look at our new business area in Finland, Validia. Validia is reported as a new business area and has been consolidated from the 1st of April. As I said, net sales amounted to SEK 375 million. Validia delivered a strong performance with a good margin despite integration efforts, and due to normally being a seasonally weak quarter, EBITDA amounted to SEK 39 million and EBITDA margin was 10.4%. The integration of Validia is proceeding according to plan. The work is structured around clearly defined workstreams, of which several have already been successfully completed. Early successes include integration of Validia into Ambea's operational financial follow-up processes, inclusion in Ambea's science-based target initiative application, and the creation of a new visual identity for Validia that will be implemented during the fall.
Furthermore, our expansion and acquisition efforts have been structured in line with Ambea's growth model, and we have allocated additional resources to accelerate growth in Finland. During the quarter, Validia signed agreements to open two new care units with a total capacity of 78 beds. The units are planned to open in 2026 in a region with strong demand comprising 60 and 18 beds respectively. We are pleased to have signed agreements already in the first quarter of the joint operation. We are also evaluating additional organic growth opportunities to increase capacity as well as M&A opportunities in Finland. The market for M&A within care services in Finland remains active. Now a look at Altida. Our Danish business, Altida, continues to improve earnings even in this quarter despite the negative seasonal effects from the Easter holiday.
Net sales in Altida increased by 5% in SEK as a result of higher occupancy in both elderly and social care. The increase in owned management was 10% in local currency. Altida once again delivered a strong profitability improvement. EBITDA was up SEK 14 million compared to the same quarter last year, thanks to the good occupancy growth together with operational improvements in the social care segment. EBITDA margin in the quarter increased by 4.5 points to 0.3. Rolling 12%, EBITDA margin increased to 3.4%. The new national elderly care legislation, effective from July 1st, paves the way for the future opening of more owned managed nursing homes in Denmark. Now over to our smallest business area, Klara. In Klara, net sales were in line with the same quarter last year as student health services could offset the continued weaker demand for traditional service services.
Klara adjusted its cost base to reflect the structurally lower demand in the market, which has contributed to the improved earnings, and EBITDA increased by SEK 4 million to SEK 9 million. EBITDA margin increased to 8.7%, up 3.9 percentage points. This demonstrates a good earning development given the situation with the public healthcare region's limitations on the use of temporary nurses. Klara's EBITDA margin is significantly above all staffing competitors' margins thanks to Klara's diversified portfolio consisting of different services, for example, mobile nursing teams and student health services. This diversity in Klara's services and adaptability to change market conditions is, of course, a core strength. With that said, over back to you, Mark.
Thank you, Benno. I'm proud to say that for the first time ever, we met all our financial targets in a single quarter. We aim for an annual growth rate of 8% - 10%, driven by both organic and acquired growth, and total growth rolling 12% was 8%, supported by continued strong organic growth and contributions from acquisitions. Going forward, we expect further growth through acquisitions and, of course, from Validia, which will further boost our overall growth level. Our profitability target is an adjusted EBITDA margin of 9.5% in the medium term. We reached our profitability target again this quarter at 9.6% over the last 12 months. For leverage, our target is a net debt to EBITDA ratio below 3.25x , and as of quarter two, we remain below this level at 2.7x.
The increase compared to previous quarters is linked to the Validia acquisition in line with earlier communications to the market. Achieving all three financial targets for the first time marks a significant milestone and underscores our commitment to delivering sustainable financial performance while continuing to invest in our current operation and in long-term growth. We remain committed to consistently deliver on all three financial targets. Before we open for questions, I would like to provide an outlook post the second quarter this year. Looking at that, we expect solid growth ahead, driven by both acquisitions and organic growth, supporting our ability to deliver on our financial targets. Ambea has by far the strongest pipeline of new care capacity in the Nordics, and further expansion of our organic pipeline is anticipated, supporting Ambea's long-term growth.
With ongoing adjustments in operations at Nytida, we expect margins to stabilize above the current rolling 12 level in the coming quarters. At Stendi, we are seeing signs of a normalized demand compared with the previous year, and we are well positioned to fulfill this demand with high quality of care and good margins. Ambea plays an important role in society. We remain involved in the public dialogue and are committed to shape solutions for the growing care needs in the Nordics. With operations in four Nordic countries and as one of the largest players in the sector, we actively contribute to discussions on the future of care and the challenges facing the Nordic welfare systems. By demonstrating how elderly and social care can be developed with quality, competence, and a long-term perspective, we aim to be a responsible and constructive voice.
We will continue this work to ensure politicians recognize the need for capacity expansion and give private operators such as Ambea a key role in solving the challenge, which we are ready to handle. We are convinced that solutions must be shaped in close collaboration with municipalities, well-being services counties, and national governments, and see good examples as the Danish new Elderly Care Services Act is effective July 1st, 2024. I'm also encouraged by the discussions I've had with our professional operational managers and team members at my site visit this quarter. We all want to see people in the need of care get it when they need it and not spend that valuable time waiting in a queue, impacting also the life of their relatives in a negative way.
If politicians can see the individual care receivers and their right to a good and independent life the same way as our teams do, the future for Nordic care looks bright. This concludes our presentation, and we will now open for questions.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question. From the line of Jacob Lenske from SEB, please go ahead.
Hi, and good morning. First question on Nytida. That you are so confident that profitability will improve here ahead, is that you have seen a positive benefit on occupancy from these adjustments you have done, or is there something else you're seeing?
Thank you, Jacob. We feel confident ahead as our second half last year was not particularly strong, and as we can see that the measures that we have put in place to align our operations to the new Swedish Social Services Act are delivering good results in line with our plans in the second quarter. We believe that that will lead to margin improvements in the coming quarter, so we feel confident that that can be achieved.
Okay. On Stendi and regarding the comments that demand is normalizing, it seems that net sales is still holding up quite well. Is this something that will be more visible ahead, or is there something else that is sort of compensating for this demand?
We have had a very strong demand in the previous quarters, as we have mentioned also in the previous quarterly reports. We see that now is normalizing. The net sales growth in local currency is, of course, still holding up and is positive, as Benno mentioned, + 4%. It's somewhat lower than what we have seen in previous quarters and is mainly driven by a positive price mix from more challenging care receivers. In total numbers, demand is a little down, but we see we are delivering very good care services to demanding care receivers, which is appreciated by the municipalities and thereby also giving a positive uplift in net sales from that. Demand overall is at a more normalized level in Norway now than what we have seen in previous quarters.
Okay, you don't see a risk that you start to see a sales decline in Stendi going forward?
No, we don't see a risk for that.
Okay. On the profitability in Stendi, do you have a sense of sort of where the normalized profitability or EBITDA margin is?
We have communicated before that the 2024 margin has both calendar effects, and one effect of that was a little bit of non-recurring in the fourth quarter that totally were maybe 1 percentage point in margin. If we look at the margins that we have had for the first six months, we have now a margin of 5.9% versus 7.2% last year. We are down 1.3 percentage points. That is also one small calendar effect last year when we had the 29th of February, that extra invoicing day. The underlying is probably like 1% below last year or something. We think that this is a more normalized level than what we had in 2024.
Okay, that's very clear. On Validia, regarding the comments on organic growth, I'm wondering a bit on how fast you can fill sort of new capacity for Validia and also if you focus more on organic growth if you expect profitability to get hurt by that.
We have a position in Finland where we, from the strong platform we have acquired with Validia, want, of course, to expand. We want to do that both with new openings delivering organic growth, but also through qualitative acquisitions, both in segments where we are present and maybe in segments close to the ones that we operate today. That remains clear. With the good start we had with Validia and all the positive signs we see from a very competent local team, we believe that that can be accelerated. That's also why we have signed two new contracts already in the second quarter to open in 2026. We are, of course, interested to sign more contracts if need be.
It is, of course, important that we stay close to the well-being services regions in Finland to understand where they see the need and how we can support society fulfilling it and also what we can find in terms of qualitative acquisitions. We will continue to pursue that. It is unlikely that we will find organic growth that will impact within the next 12 months. That would be further out in time as it takes time to refurbish and construct new facilities, whereas acquisitions could come within the next 12 months. We are very positive about the overall growth opportunities in Finland and are placing additional efforts also to deliver on those.
Okay. A final question on buybacks. You have previously said that you potentially could return with them here in the fall. Is this still the case? If so, when could we expect that?
We're not forecasting them, but there are, of course, possibilities to come back to buybacks in the second half of this year. Absolutely. With the board beside us, yeah, of course.
Okay, that's all for me. Thank you very much.
Thank you. We will now take the next question. From the line of Raymond Ke from Nordea, please go ahead.
Yeah, hi. Good morning. A couple of questions from me regarding Validia. Just curious, what is it that you see in Validia that has made you more forward-leaning about M&A opportunities, particularly in Finland, as opposed to, say, other geographies in the near term? Help us understand.
Yeah. If we look at Validia and Validia's service offering, it is concentrated to a few areas where Validia is very strong within social care in Finland. There are neighboring areas where Validia could actively play a role, to enter new segments within both child protection and also within adult care in the Finnish market. That is, of course, of interest. Whereas further growth in the existing segments is probably coming more from organic growth opportunities, as we are already so strong in that area. The reason for us being more forward-leaning, as you mentioned, is because we have seen very high quality in the business that we have acquired and very high quality in the local team also, which encourages us going forward to be actively looking for more opportunities in the Finnish market. Also, it's always about how much activity is there in the market.
We see that the Finnish M&A market is active, and probably the entry of us into the Finnish market has increased interest, maybe from small and mid-sized players, to consider whether it's the right time to sell the business. That's, of course, also an opportunity that gives us interest in that market particularly.
Right. That makes a lot of sense. How soon are we talking? Are you potentially looking for acquisitions already in Q3, or it sounds like it's very close when you're talking about these sort of M&As in Finland?
Very close. I will not say. As I said before to Jacob's question, I mean, we expect acquisitions within the next 12 months in Validia. When they will come remains to be seen, but we are in interesting dialogues also in Finland, as well as in other markets. We expect acquisitions within the next 12 months also in Finland.
Great. When you acquired Validia, the sort of anticipated integration costs were around SEK 40 million, I think, split evenly across 2025 and 2026. You incurred sort of SEK 25 million here in Q2. How should we think about that going forward, the IAC costs or one-off?
We communicated that it was SEK 40 million + SEK 30 million, and totally SEK 70 million in transaction and integration costs totally. We have had for two quarters SEK 55 million out of, and we feel that that sum of SEK 70 million is still valid. We think that that will come most of them in the coming two quarters, and maybe we have some left in the first quarter of 2026.
Great. That's very helpful. Maybe just one last question regarding the integration work for Validia there, divided into a number of clearly defined areas, of which many you've already completed. Could you talk about the ones that sort of remain and a bit on the timeline for when you expect to complete those?
One of the larger ones remaining is IT, and that is, of course, very complex because we're doing a carve-out from the previous owner. With all the regulations and security around the IT area, that is something that we put a lot of attention to and will do fast, but not too fast. That is one of the workstreams that will conclude in the first quarter of next year, as Benno just mentioned. That's one of the bigger ones. We have some of the larger ones, which are more linked to rolling in our competence development model from Lera into the Finnish market. We need to make sure that we do it in the right way, that we translate it to Finnish language and to Finnish legislation and culture and all that.
That is also ongoing, and we will start that now in the second half of the year and continue that into next year also. There are a few of them for various reasons that take a little longer time, but everything is going as planned, and we are positive about the process so far, integration so far.
That is very helpful. Thank you very much, Mark and Benno. I'll get back in line.
Thank you.
Thank you. As a reminder, to ask a question, please press star one and one on your telephone. We will now take the next question from the line of Christopher Lilleberg from DNB Carnegie. Please go ahead.
Yeah, thank you. Good morning. Some questions from me. First, is it possible to quantify the Easter effect here year over year in the quarter on earnings?
No, we are not quantifying. We're saying that it has most effect in Norway and in Denmark, and then lower effect in Sweden. There are effects in Sweden as well. There are several percentage points in margin in Norway and Denmark related to the Easter.
Okay. On the previous question about buybacks, how do you weigh now the opportunity to do M&A? You seem much more upbeat about that relative to do more buybacks. Should we expect both of them, or less buybacks, more M&A than what we have seen in the past few years here?
Our priority in terms of capital allocation is, of course, to make sure that we invest in the operation that we have, and of course, also that we stay close to our dividend policy, which we have been doing consistently over the years. Acquisitions, of course, qualitative acquisitions, are important to us. It differs a little from time to time, the quality of the opportunities and how many there are. It is really important to us that we continue to do that to deliver on our financial targets. If there is opportunity, of course, buybacks will also be used. We believe there is opportunity to have a mix of both sticking to the dividend policy, to qualitative acquisitions, and to buybacks. We expect that would be also a part of the capital allocation going forward.
Okay. Makes sense. I guess also having entered Finland now, a new market, maybe more fragmented than Sweden, I guess there should be possibilities to do more M&A than what you have been used to here.
Yeah, that's true.
Okay. I just wonder about the acquired business in Finland. Margin in the second quarter was a bit weaker, or stronger, sorry, stronger than I expected. There was some seasonality here, I guess. Is it possible to say anything about the run rate margin in the Finnish business based on this first quarter being part of Ambea?
I wouldn't say so much about the full year numbers because we have only one quarter. One quarter is, as you said, normally this is a seasonal weak quarter, or at least not one of the best ones. We will hopefully see a little bit better trend after the Q3. I won't predict any full-year margins after just one quarter.
Full-year margins should be higher than what we saw in the second quarter.
That is normally so. Normally, we would be a little bit lower for the margin in all countries. Maybe it is not so high seasonality effects in Finland as we see in the other Nordic countries, but that has to be seen.
With this and your ambition to grow Finland, I guess over time, this might have an impact on your group margin target also if Finland is better than other regions.
The margin target remains as it is. Now we have, for the first time ever in a quarter, hit all three financial targets at the same time. We are focusing on doing that also going forward and doing it consistently. There are no plans to revise the financial target rather than showing over time that we can deliver on them consistently. Also, as we are now accelerating growth, which we have also communicated earlier was a priority to us, where we have been lacking a bit versus the financial target, of course, that would also impact margins a bit, especially from the much stronger organic growth to the next 12 months. Opening new care homes will, of course, be in the beginning a drag to the margin. We think that this level is a good and sustainable level that we are committed to continue to deliver upon.
Okay. Finally, on Altida in Denmark, if we adjust for the seasonal effects here, did you see continued sequential improvements in earnings? My second question related to Denmark is, how do you view the possibility to accelerate growth there and find new projects that could be open in the next couple of years? Thank you.
Okay. I can start with the margins. As I said, the second quarter is by far the weakest quarter in Denmark since there are also high extra costs for inconvenient hours related to all the banking holidays in the second quarter. Normally, the full-year margin is a couple of percentage points at least higher than the margins in the second quarter. I would say that we are still in an improving part in Denmark, that we improve year on year and quarter on quarter. Now, of course, we are meeting much tougher comparisons going forward, but we think that we still have a good trend in the underlying profitability in Altida. To the growth outlook, the new Danish Elderly Care Act that came into force here on July 1st is opening new opportunities for us for owned managed nursing homes in Denmark.
We are looking at several projects to expand our footprint of owned managed nursing in the Altida brand and expect to sign new contracts within the coming 12 months also in the Danish market. When you look at demand, it is at a similar level as it is in, as an example, in Sweden, with approximately half of the population. Denmark needs more than 200 new nursing homes within the next eight to 1 0 years. We can contribute to the society by constructing and operating more of these homes, which we, of course, are committed to do and which we believe we have a better opportunity doing with the new Elderly Care Act. That is one area of expected growth. One should know, of course, that signing a contract for a big nursing home takes time for construction before we can open, normally a couple of years.
It is not something that will come in in the short term. There are also opportunities for organic growth in certain areas of our social care business in Denmark, where we are now reaching high occupancy in certain segments. There we are also looking for growth opportunities. We are not ruling out acquisitions in Denmark. It could be qualitative Bolon acquisitions to complement the Danish business. There are good opportunities also for future growth in the Danish market. We are ready for it.
Thank you very much. Great to see the much improved stability in earnings here last year versus historically.
Thank you so much. Thank you, Christopher.
Thank you. As a reminder, to ask a question, please press star and one on your telephone. That's star one and one to ask a question. There are no further questions on the line. I would like to hand back over to Mark Jensen for closing remarks.
Thank you so much, and thank you all for calling in. The report for the third quarter will be published in 2025. Have a nice day and stay safe and healthy. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.