Hello, and welcome to today's presentation with Balco Group. With us presenting, we have the CEO, Camilla Ekdahl, and CFO, Michael Grindborn. We'll do a Q&A after the presentation, and if you're calling in and would like to ask a question, please press * 9 to raise your hand and then * 6 to mute yourself. You can also type in your questions using the form to the right. With that said, please go ahead with your presentation.
Thank you. Welcome to Balco Group, Quarter Four Presentation. First of all, for some maybe new listeners, a very short snapshot about Balco Group. Balco Group was founded in 1987 and consists of several balcony and facade companies. Balco operates in two main segments: renovation and new build, and our core expertise is to supply glazed balcony solutions on the renovation market to tenant-owned associations. Balco Group is a market leader in the Nordics with key markets: Sweden, Denmark, Norway, and Finland, and we also have a strong challenger position on other Northern European markets.
If you have a look on the chart where we show the revenue per market there, maybe then for old listeners, you can see that if we see the revenue per market on 2024 versus 2023, we have an increase there on the part belonging to other Nordic countries where we go from 25% to 45%, and then it's a decrease for the Swedish market, and the rest of Europe is on the same level, 13% compared to 2023. Let's go over to our fourth quarter. We had a very strong cash flow both in the quarter and also for the full year where the operating cash flow amounted to SEK 58 million for the quarter and SEK 139 million for the full year. The order intake increased by 22% to SEK 360 million in the quarter and by 41% for the full year to SEK 1,377 million.
Here I can say that the organic order intake was unchanged for the full year, but we had an increase in the second half of the year by 6%, and that shows that our impression is that the market has actually bottomed out now. The net sales increased by 33% to SEK 386 million, and here the increase comes from the acquisition we made previous year. Organic increase for the quarter was 1%. We have had a very good development in Norway both in the quarter and for the full year, and during the fourth quarter, Balco AB received a major project in Norway with an order value of about NOK 50 million, and we can see here that our solution to integrate air-to-air heat pumps into our balcony projects has been successful in the Norwegian market.
During the quarter, we also finalized the integration of the Riikku subsidiaries into the other companies in Balco Group, and the cost for this has been taken in the fourth quarter. Here we received very positive feedback both from our internal organization and also from the customer side on these integrations. I'm also very happy to say that our sustainability KPIs have developed good in the positive direction. For the full year, we have shown lower sickness rate, lower employee turnover, and also lower carbon dioxide emission for the full year. We also have here that the board of directors proposed that the annual general meeting result that no dividend shall be paid out for the financial year. If we go over a little bit more to the market, I would say that the market situation has more or less been unchanged since the previous quarter.
We have said before that we have seen an increase in activities, and we continue to see that increase, and especially if we talk about the renovation segment for the balcony companies in Sweden and Norway, here we have a positive direction for sure. As I said, the order intake and sales have developed well in Norway during the full year, and here both regarding the major turnkey contracts that we can do with the air-to-air heat pumps and also single balcony projects. However, we see that it continues to be a strained competitive situation for our Swedish facade companies, and we also have a strained competitive situation for our balcony company in Denmark. In Denmark, our main product is city balconies, and a city balcony is more or less what you see on the picture there.
It's a smaller but open balcony, and we are putting them onto older houses. If you look, so to say, on the renovation market where they already have a balcony, that is developing accordingly as in the other countries, also in Denmark. Quite a large amount of our sales in Denmark is connected to that we put new balconies on existing old houses. Here we can see that the markets are more cautious, and the decision times continue, as we said before, to take longer time. If we look on the Finnish market, we can see that the new build market has bottomed out, but we can't see any rapid return for new construction of multi-family buildings actually in any Nordic countries yet.
In Finland, there is a support now, a support system for the construction and renovation of multi-family housing, so that can be a positive impact during the year, and they're especially promoting that they should have an early start. The longer you are coming to the project, the more, so to say, it's easier for you to get the support. We hope that that could have a positive effect on the new building business in Finland. However, the new build segment in the U.K., and Germany continues to develop well, as well as the Finnish renovation market. If you go a little bit over to more of the figures, Michael Grindborn.
Yeah, and have a look at the quarterly figures and also the full year figures. Net sales in the quarter increased by 33% to SEK 386 million. Here acquired group was 34%. We had a negative currency effect of 2%, and organic group was 1%. For the full year, net sales increased by 17% to SEK 1,418 million. Adjusted operating profit, the EBITA, amounted to SEK 18 million in the quarter, corresponding to an adjusted operating margin of 4.7%. For the full year, adjusted operating profit was SEK 70 million with an adjusted operating margin of 4.9%. Order intake increased by 22% in the quarter to SEK 360 million, and for the full year, it increased by 41% to SEK 1,377 million. Our order backlog has increased by 22% to SEK 1,309 million.
For the earnings per share, it was negative in the quarter, and if we look at the full year, earnings per share was SEK 0.05, and adjusted earnings per share for the full year was SEK 0.89. We had a very strong operating cash flow that amounted to SEK 58 million in the quarter and for the full year, SEK 139 million. Have a look at the two segments and start with the renovation segment. Here, net sales in the quarter increased by 16% to SEK 281 million, which corresponds to 73% of the total net sales, and for the full year, net sales per renovation segment was exactly SEK 1 billion. Order intake in the quarter increased by 6% to SEK 285 million, which corresponds to 79% of the total order intake, and for the full year, order intake has increased by 28% to SEK 1,074 million.
Adjusted operating profit in the quarter amounted to SEK 20 million, corresponding to an adjusted operating margin of 7.0%. For the full year, the operating profit was SEK 56 million with an operating margin of 5.6%. Order backlog has increased by 13% to SEK 1,044 million, and it corresponds to 80% of the total order backlog. Our new build segment, the smaller segment, has increased during the year with our acquisition of Riikku and also strong development in the U.K. Here, net sales in the quarter increased to SEK 106 million, and for the full year, it has increased to SEK 418 million. Order intake in the quarter increased to SEK 75 million, and for the full year, order intake was SEK 303 million.
Adjusted operating profit in the quarter amounted to SEK 3 million with an adjusted operating margin of 2.8%, while for the full year, operating profit was SEK 19 million with an adjusted operating margin of 4.5%. Order backlog for the new build segment has increased by 79% to SEK 265 million. Our financial position at year-end, we had equity of SEK 801 million, and our equity-to-asset ratio was 49%. Our interest-bearing net debt, excluding leasing debt in relation to adjusted EBITDA pro forma, amounted to 2.7, and it was a small decrease since quarter three when it was 2.8. Some update on the sustainability side, and now we have full year figures. Our risk rating according to Sustainalytics was lowered or improved to 17.2, and it means that we are among the 6% with the lowest risk rating in our industry, which is building products.
If we look at all companies, we are among the 20% with the lowest risk rating. Sickness absence in 2024 decreased to 3.6% from 3.7%. Employee turnover decreased also to 7.9%. If we look at the accident frequency and for rolling three years, it continued to decrease, but for the actual year 2024, it increased to 11.4. The increase comes from the acquired companies, which have a little bit different way they report it. We have also started a training program to increase safety on construction sites and also reduce the number of accidents. Our carbon dioxide emissions, according to Scope 1, and we measure it per work hour, decreased to 957 grams per work hour compared to 1,200 last year. For Scope 2, it decreased to 460 grams per work hour compared to 509 the year before.
Also, recycled waste increased to 80% compared to 76% last year.
Thank you, Michael Grindborn. Let's have a very short discussion also and talk about the acquisition. Acquisitions are still an important part of Balco Group's growth strategy, and we continue to work with possible acquisitions. As you understand, we are a little bit cautious considering our profitability situation versus our net debt. When we are looking on it, we are very much, so to say, looking on the strong position in a niche market and profitable, well-managed companies. We have for sure continued to work with acquisitions also. Some concluding remarks then. The net sales, as you have seen, 2024 was about SEK 1.4 billion, and adjusted EBITDA margin 4.9%. This is, of course, not a margin that we are satisfied with, and therefore we continue to work with our profitability.
We have been working with our profitability during the whole year, the cost situation, but also, of course, to increase the order intake, and we continue to do so also 2025. The order intake was also nearly SEK 1.4 billion, and as I said before here, on the full year, the organic order intake was more or less unchanged, but we can see an increase in the second half year on the organic order intake. As I said before, we see an increase of the customer activity, especially for our balcony companies that work with the renovation market. We have also, as I said, a good development both in the U.K., and Germany, but there are some challenges still, so to say, on the new building sectors in the Nordic countries and also on the facade side.
Our assessment is that the overall market will continue to improve gradually, but it looks like that we will not have a V-turn, we will have a gradual improvement all the time here. We continue to work with our profitability and to adapt both our organization and all companies for the existing sales and order intake. All companies, I can assure you that all companies in the group have a very strong focus on order intake, and we also continue to work with cash flow and costs. When we talk about this, how we do this to work with our profitability, of course, integration of Riikku Group is one part that we have made, and we have also integrated, so to say, we have moved production from units to better utilize the capacity we have, and this is continued work also for 2025.
That was all from us today, so please, questions.
Thank you very much, Camilla Ekdahl and Michael Grindborn, for that presentation, and yes, let's dive into the Q&A section here. We'll start with the first one. How would you evaluate the acquisition of Riikku Group, and will it create value for shareholders?
Yeah, we can say like this for Riikku Group. Riikku was a strategic acquisition, and I can understand that sometimes people question, I, so to say, the timing for it, depending on that they were focusing so much on the new building segment before, and the new building segment has gone down in the whole Nordic countries, of course also for them. Riikku is having a product that is suitable for both new building and also renovation segment in both the Nordic countries and also in other European countries. What we have actually been doing is that we have also been quoting some of the Riikku glazing also into new building projects in Germany, for example.
We have, as we said, we have taken the Riikku glazing into the renovation market in Sweden by Arkoteknik, and Arkoteknik have also integrated the total new building segment in them. I will say the Riikku acquisition, you will not see, you have not seen the result or the positive result you can have, we will have for the Riikku acquisition during 2024. You will see it coming years because that is a strategic, important acquisition where we have both got the product and we have also got the position on the Finnish market. When market turns, then we will get it back to the shareholders.
Thank you for that answer. What are the reasons for the lower gross margins in 2024? Are there any one-time effects involved, or is it a temporary situation?
I would say a little bit both, both that we have a different cost structure in the companies, both Riikku and Suomen Ohutlevyasennus, and have quite a lot different cost structure with a lower gross margin than the old Balco companies. It's also a difference between the markets that in Sweden and Norway, especially the Balco companies have the highest, strongest gross margin, while in countries like the U.K., and Germany, we have also a different cost structure with a lower gross margin. It will not come back to the old levels that we had before the pandemic, that's for sure.
We have not, we have too much capacity for the moment in production, and in some companies also slightly too high capacity in the operations side, while we have competence, for example, as among project managers that we want to keep in the company and have not been working 100% with just projects this year. We have also helped with sales.
For the Nordics, if possible, could you talk a bit about the competitive situation in various subsegments, like customer group, project size, etc., and also your exposure, your typical share of revenue within the various subsegments?
I can give a little bit overview, so to say, of the competitive situation, and if we look, so to say, on different markets, there's a different competitive situation. If you look from the Nordic countries, because that was the question, I think, there we have a strong competitive situation, I would say, both in Sweden and Denmark. Depending on, so to say, quite a lot of companies are doing the same kind of concept. Balco AB is a little bit unique in Sweden with the glazings, very special glazes there. So there Balco AB has a unique situation, but otherwise, so to say, most of the companies are offering the same kind of products and the same kind of, so to say, projects as everybody else.
There is quite strong competition both in Sweden and in Denmark, and that is valid both for the balcony companies and for the facade companies. If we look on the Finnish markets, there are competitions for sure on the new building segment, for sure. If we look on the renovation segment, where our company, Suomen Ohutlevyasennus, is working, not so many companies are doing exactly the same as they are doing there. It is mostly that there are other kinds of companies. You come to more of the building companies that are the competitors, not the same facade companies that are doing these turnkey projects. There we are having a very good situation. In Norway, I would also say we have a good situation with what we are doing there.
There you can see that either you come into a project from the building side or we come from the balcony side, and we come from the balcony side, and there we have some competitors, but we have a good situation there also.
The Danish market remains cautious with strong competition. How do you plan to navigate this, and are there any strategic shifts to mitigate risks in Denmark?
We are working with the Danish market all the time how to do it, and I can't say, so to say, exactly how we should do it. That will be announced when we are ready with it.
Okay, thank you. With inflation and interest rates declining, when do you expect to see a positive impact on order intake and overall financial performance?
Yeah, we see it's coming part by part, but as we said, it will not be a quick turn. We hope to see slight improvements all the year, but I would say for the financial side to see better profitability, it probably will be at the second half of 2025, hopefully. Latest, I would say in quarter four 2025, but it will take until the second half of the year anyway because of the lower order intake we still had in 2023-2024.
We see that what is very good, so to say, on the market right now is at least that the interest rates are more or less what we could expect them to be. We can see here that in Sweden, a tenant-owned association, which is quite a good financial situation, they can get a loan now for between 3, around 3, actually below 3%. I think the interest rate we have now, now it's more that the consumers need to start to dare also to invest, and we can see it coming in on other things, so to say, so that will come also on the balconies.
We have seen the activity on the market, and when we see that, when we get the order intake, then we get, so to say, we get it down to the bottom line also because we are prepared really for an increase in the order intake, and then it will come down directly to the bottom line.
Thank you for that answer. When do you believe Balco will be able to distribute dividends again?
Yeah, hopefully for the next year. That's our plan at least.
Thank you. Given the improvements in sustainability KPIs and the lower risk rating from Sustainalytics, how do you plan to leverage ESG performance for competitive advantage and also potential cost savings?
Of course, we have it as an important part in our presentation to customers, and we see that a lot of customers think it's an important part that you are good working with ESG ratings, but still price is the most important.
It would be very, very good. We are looking forward to that it gets more into when you got to these official quotations that they are requesting in more information from the companies regarding the sustainability work that they are doing. If they do so, and we are promoting it all the time, it is, as Michael Grindborn is saying, quite often, unfortunately, still, so to say, also on, so to say, official, so to say, they come into the price discussion instead of taking care of about the sustainability targets ahead. You can see sometimes they ask for it, and then we for sure have an advantage.
Okay, and we'll take one final question here. With a slower market recovery expected, what is your long-term strategy to ensure sustainable growth, particularly in the new build segment and also in international markets?
If we talk about the new build segment, we are doing as we did. If we talk about, so to say, Sweden here, we integrated the new build segment as we had with Riikku. We integrated that into the same organization as are working with the renovation. It's different markets, so to say, segments, but it's still in the same company, Arkoteknik. What we are doing is that for the company that are working, that have been working 100% with new building, that is actually, it is actually Riikku, the only company that has been doing. We are making sure that they are together, either as we did in Sweden, we integrate them with Arkoteknik that has the renovation also, so we can, so to say, split the risks.
In Finland, we are adding on renovation to the new build organization to make sure that they also can split the risks. When we talk about other markets, in Germany, we are working with both new build and renovation already. In the U.K., so far, we can see that the product we have there, that is, so to say, so focused on the new build segment, and that is growing so fast. There we are actually still focusing on the new build segment in the U.K. I don't know if that was the answer or.
Also, product development. We have developed product, as you said, both in the U.K., but especially for the new build side, and also in Germany, we have products that are very suited for the new build segment.
Yeah. Just to, because I think the question was how to take care of the risks in the new build segment, if I understand the question correctly. Yeah, yeah, yeah. That we do by integrating them, so to say, so they are not working 100% with new build. We are working with both.
Thank you very much, Camilla Ekdahl and Michael Grindborn, for that presentation, but also answering all of our questions. Thank you everyone who followed this presentation with Balco Group. I wish you all a great rest of the day, and thank you very much.
Thank you.
Thank you.