Welcome to our presentation. We will start with some highlights. We had a all-time high net sales, we have also very strong cash flow. The net sales for the quarter increased by 18% to SEK 383 million, and for the full year, the increase was 19%. The operating cash flow was SEK 78 million in the quarter and SEK 200 million for the full year. We have made two acquisitions during the quarter. The first one was Söderåsens Mur & Kakel, which was consolidated from November 1, 2022, and then Arutex AB, which will be consolidated from January 1, 2023. Söderåsen is a facade company in southern of Sweden, while Arutex will be a subsidiary to TBO Haglinds and are carrying out installation of the balconies and glazings.
As we already announced in Q3 , we needed to plan for a cost-saving program due to the lower sales and order intake and the tougher market conditions we have seen. These have now been affected, and we have seen savings of SEK 20 million annually. About 30 people have left Balco Group. However, as you see also in our report, the order intake is still a issue for us, but we see a big interest in the market for our products. There is still a great interest and need for the balcony renovation and the energy efficiency improvements that we can offer. Almost 90% of our turnover is coming from the renovation segment, and the need to renovate balconies is not going away.
We are confident that the order intake will pick up again when there is a stabilization of the interest rates and inflation. However, in our estimation is that that will take until the end of Q2 this year. Please, Mikael.
Yeah. I'll go probably little bit the financial highlights both for the quarter and the full year and start with Q4 financial highlights. Our net sales, as Camilla mentioned, increased by 18% up to an all-time high, SEK 383 million. Our acquired group was 3%. We had a positive currency effect of 2%, and then our organic group was 13%. All our organic group came from price increases. Our renovation segment accounted for 85% of the net sales, and the new build segment, 15%. Our order intake was just SEK 188 million, down from SEK 484 million the year before, which was an all-time high order intake. Our renovation segment accounted for 73% and the new build segment, 27%.
The order backlog at year-end was SEK 1.275 billion. Our adjusted operating profit for the quarter amounted to SEK 33 million, with an operating profit margin of 8.7%. Our operating cash flow in the quarter was again a strong one at SEK 78 million in the quarter. Our board of directors has proposed a dividend of 1 SEK 50 öre per share, and it will be divided into two payments of SEK 0.75 per share in May and SEK 0.75 in November 2023. If we look at the two business segment and start with the renovation segment, here, the order intake was down 67% down to SEK 138 million.
Revenue was very strong, 2% increase up to SEK 327 million. The order backlog at year-end in the renovation segment is SEK 1,146 million, and our adjusted operating profit for the renovation segment in the quarter was SEK 35 million, which is an adjusted operating profit margin of 10.6%. If we look at the new build segment, also here, order intake was down by 26%, down to SEK 50 million. Revenue was stable at SEK 56 million in the quarter. Order backlog has decreased and is now SEK 129 million at year-end. Here we don't have any new orders for the maritime segment, and that's the reason why the order backlog has decreased in this segment.
Our operating profit in the quarter was SEK 3 million, with an operating profit margin of 5.9%. If we look at the full year of 2022, our net sales increased by 19%, up to SEK 1,334 million. Acquired group was 4%. Positive currency effect of 2%, organic growth was 13%. Also here, the organic growth comes from price increases. Renovation segment has accounted for 87% of the net sales and new build segment of 13%. Order intake for the full year was SEK 1,109 million, renovation segment has accounted for 89% and new build segment for 11% of order intake.
Our adjusted operating profit for the full year amounted to SEK 105 million, and adjusted operating profit margin was 7.8%. Our operating cash flow for the full year had been very strong and was SEK 200 million for the full year. I look at the two business segment for the full year. Renovation segment, order intake down 37% to SEK 984 million, while revenue has increased by 23% up to SEK 1,164 million. Adjusted operating profit was SEK 98 million with a margin of 8.4% for the full year. New build segment order intake stable compared to the year before, SEK 125 million.
Revenue has been stable at SEK 170 million, while operating profit has gone down slightly to SEK 10 million with a margin of 6.1%. If we have a look at our balance sheet, we still have a very strong financial position. Our equity to asset ratio is at 56%. Our net debt compared to EBITDA, if we include leasing, it's at 0.7, and excluding leasing it's down to 0.2. Net profit for the period was SEK 76 million, corresponding to an earning per share of SEK 3.78. We are prepared for further acquisitions. We have a very low indebtedness, as you see above.
We also have a banking agreement with a sustainability-linked revolving credit facility with Danske Bank that is valid to October 2024, with the possibility, option to prolong it by one or two years if we do it within October 2023. If we have a look at our financial targets for the group, we have a group target of 10% that we, Balco Group sales should increase by 10% per year. Okay, we had a strong growth in 2022 by 19%. Our profitability target is that our earnings per share shall grow by 20% per year. Here, earnings per share declined by 8% in 2022. Our capital structure, we have a goal that our interest bearing debt compared to EBITDA shouldn't be exceed 2.5 more than temporarily.
Here we are just at 0.7 including leasing and 0.2 excluding leasing. We have a dividend policy that Balco shall distribute 30% to 50% of profit after tax to its shareholders. The proposed dividend of 1.50 SEK per share is 40% of the total profit after tax. We also have a sustainability goal that 30% of the group's sales shall provide 30% energy savings to our customers. Here the year end figure was 11%.
Yeah. We continue to work with our sustainability work and to reduce our environmental impact. Balco has improved its ESG rating from 20.8 to 18.7, and we are ranked as a low-risk company, and we are actually among the 20% of all companies in the world with the lowest ESG risk. As Mikael already said before, we have a goal that 30% of our glazing projects should provide 30% energy savings. Previous year we had 11% which were in the 30%, but we also had 41%, which gave 15% to 30% in energy savings. Next slide. Some concluding remarks from my side is that we actually have a revenue growth even in a strained economy, but we have been hit on our profitability with increasing costs.
The renovations are postponed, but we see a big interest and a great interest in our solutions and our products that we have. The renovation market is less prone to macroeconomic risks than other industries, because you need to do a renovation. Even if you might postpone them for a while, they are needed to be done. I will also emphasize our very strong financial profiles that we have, that we can actually take advantage now on opportunities that we can see on acquisitions coming up ahead. That's all from us. Thank you.
Thank you.
Questions?
Thank you so much for the presentation. The first question here is from Sofia Sörling, so I give you the word.
Perfect. Thank you so much. Can you hear me?
Yep.
Yep.
Hello, Sofia.
Hello. Thank you. All right. Could you please, just on profitability to start with, could you just again elaborate a little bit on why the gross margin decreased so much compared to the same quarter last year, from 26.3% to 24.1%, and perhaps give the top three main reasons if this decrease? That's my first question.
Main reason is really that we have a shift in sales, that more part of our sales are coming from both companies that have a lower general gross margin. They are in general below 20%, all of them. From markets where they have a lower gross margin, like UK and Germany that is developing well. We have less sales in Sweden and Norway. That's one reason. Number two is that we get compensated for increased material cost by our material index, but we just get compensated SEK per SEK, so we don't get the extra margin on the on that side. We also have seen, even if it's not the biggest, like, cost for us, but energy cost has really increased.
It's not been more or less, anything that we have talked about before, but especially November, December, the energy costs were high. We have a couple of SEK million extra cost, in just energy cost compared to last year.
All right. Okay, thank you. A couple of questions on your order intake. Could you give us the split between organic order intake and acquired order intake during this quarter? Also, what would you say is the main reason for this, I mean, at least compared to the previous same quarter last year, the drop in order intake, is it because of the customers are pausing or are they canceling orders or are the demand just low at the moment, would you say?
We have not, we have not received any cancellation of orders in Q4 . We have seen, as we said, that they are postponing, you should also remember that the quarter that we are now comparing with, the previous, the Q4 in 2021, that was an all-time high.
Yeah.
That came after the pandemic. We are comparing with a very, very strong quarter. Even though we are comparing with a very strong quarter, there was a lower order intake in Q4, it's mainly coming back to that they are postponing.
Okay. All right.
Acquired order intake is less than 10% of the total order intake.
Yes.
Okay, thank you. My last question. You mentioned that you want to reach out to these more public-owned companies and private property owners.
Yes.
Could you give us some more or elaborate a little bit on how you will reach those companies?
That's a little bit different that you need to work in a little bit different way because you need to be very close to them and work with them when they are setting up the projects itself, so to say. To make sure that you can get, so to say, a good feeling for your product, and that is the product they want to have later on. It's a little bit different, and you also are always working in competitions with others. Sometimes when we're working with BRFs in Sweden, for example, some of our companies are there as a single supplier to them. Also, you know, on the public market, you also are into this, what you call it?
Tenders.
Tenders, exactly.
Okay.
It's a little bit different way to work with it.
Yes, I see. All right. That's all from me. Thank you.
The next question is from a person that have a cell number that ends with 631. I give you the word.
Thanks, operator. This is Nicklas Fhärm with SEB Equities. Good afternoon, everybody.
Hello.
Hello.
Hello. I guess my first question would actually just to go back to your sort of idea on the outlook here and how perhaps the end of the H1 will play out. My question is twofold. First of all, you write that you expect a stabilization, or actually a pickup in order intake on the back of a stabilization of interest rates and inflation rates. Are there any other sort of more near sector like sort of data points that would support that statement? Or is this, you know, mostly based on macro and your assumptions of how macro would play out?
It's based on both that we also see that the material prices has, so to say, stabilized. We see also that is also of course, one of the things that we can see a stabilization on. They don't need to expect, so to say, this uncertainty any longer on material prices. If nothing else happened on the market, you never know. As we can see right now, and we are basing it on the discussions when we have discussion because we are in very close discussions with all our customers. We base this estimation on our discussions with the customers when they are planning to have their votings.
Yeah.
They say to us that quarter two is the quarter then when they will start up again.
Would it be sort of base case trying to forecast order intake in sort of the end of the H1 this year? Would that be to add back what you kind of lost in Q1, i.e., around 60% of the order intake? Would it be reasonable to assume that that's what you expect to have back in terms of order intake towards the end of Q2?
I would say that the main part will come back, hope, in the end of Q2 , but some of it will actually go over, I think, to also start of Q3 .
Yeah, makes sense. Thank you. Can I also ask you a little bit of a, perhaps a bit detailed question, but just for the record? Obviously you have completed the restructuring program.
Yes
As I on an annualized basis, you're now counting on about SEK 20 million or so in a lower cost base going forward, right?
Yes.
Can we also assume that all the sort of pertinent restructuring costs have actually been charged to these results that we're looking at today, i.e., about SEK 11 million?
Yes.
Is that the total?
Yeah. That's correct.
Okay. Yeah. Excellent. Can I also ask you to, t hen this is my last question for now, and maybe I can come back later in the call. I know it's the board that proposes the dividend, but it would be very interesting to hear if you could share your thoughts on the dividend level vis-a-vis sort of your M&A opportunity as you go into 2023, implicitly, of course, given the balance sheet that you have.
Yeah. We had a discussion with the board about this, and we thought this was a good level to have it on. In the middle of our financial target between 30% and 50%, it's on 40%. We see that we have a strong balance sheet, so we can give a good dividend to our shareholders. We have also a lot of discussions ongoing for acquisitions, and we see good opportunities to land a few acquisitions during 2023. We hope to land at least this goal that we have one to three acquisitions and hopefully on the first side of that. We see good opportunities, and with a strong balance sheet, we think this is a balanced dividend.
Both at our shareholders can get dividend, but also we have possibilities to get.
Make acquisitions
. Yeah, these opportunities which we see in the market and do, go for them.
Excellent. Very, very good. Thank you so much. I may come back later in the call. Thanks.
Thank you.
I will now give the word to Anders Björkstål.
Hi, good afternoon. Can you guys hear me?
Yes.
Yes. Hello.
Very good. Hi, this is Anders from Solarstein Capital. I have a few questions. First of all, I send it in online as well, so you can just disregard it, but I thought I'd take the opportunity to ask you instead. Is there any specific customer type that is, if you look at your order intake, the decline, is there anyone specific in the market that is showing weakness or is it pretty much across the board?
No, the order intake, the postponed decisions are coming from the BRFs in Sweden and from Boligbyggelag in Norway. That's the main, there is why they are postponing their decisions.
It's really about them being maybe levered or they are revisiting the decisions to do something. You said basically in Q2, you managed or you think that this will sort of normalize maybe from a new bottom or whatever. What makes you feel that? What gives you confidence in that? Is it just the feeling you have in the market? Can you maybe share some insights that you might have?
Yeah, it is as we said before, it's connected to the discussions we have with them. To these customers, we are very close to them, and we talk to the board directly, and we talk to the people living there in the BRFs directly. When we discuss with them, they are planning that they should have their votings, and they are planning for votings in Q2. Because then they feel also that if they do a voting right now, you know, it's private customers that do the voting, and they take the decisions.
That's why their boards doesn't want to have any votings now during Q1 with still, so to say, a lot of discussion about energy prices, still uncertainty where the interest rate will be, what is coming with the inflation. That's why they say, "We postpone the voting mainly for Q2 ." Maybe as end of Q1 , some of them have also said, because then they are more confident that they will have a yes on the voting. That's a reason that why we are estimating this.
Okay. I have a little bit on the pricing as well. If you look in kind of your supply chain, it looks like a lot of, let's call it the HVAC distributors and so on. I mean, they are making a lot of money at the moment, and they are selling their inventory they bought a while ago to higher prices. It looks to me like you are the ones who basically have to carry that burden a little bit and not being able to push all the prices forward. How is your discussions with them or with your suppliers changing now? Do you feel like there is more for you to maybe get prices down? Or how is that kind of discussion going?
I'm not sure that I understood because distributors, we don't have any distributors. We are doing the installations and everything on our own. We are mainly selling our own produced products with our own installation teams. We are sometimes working with builders, and I think the building industry is also a little bit pressed right now. I'm not 100% sure I understood the question.
Yeah, that was maybe more my question towards because the builders get their materials from elsewhere. Maybe they just trickle through. If you just look at the whole supply chain.
Yeah
It looks to me like you have been the ones that have, maybe suffered, among the most. My question is, how is that kind of dynamic changing going forward? If the market is slowing down, will you be able to kinda get prices down whilst remaining with price increases, basically?
Yeah. We have seen that raw materials are starting to come down.
Yeah
Especially steel, but also stabilization in glass and aluminum.
Yep.
So far we have kept our price because of uncertainty.
Yeah
We see a more stable market, and we think that it should have some positive impact on our gross margin.
Okay. Thank you. Thank you very much. That's all from me.
Yeah. Thank you.
Did anyone else had any questions? Okay, Oh, yeah, we have one more question from cell number that ends with 631.
Yes. It's Nicklas Fhärm with SEB Equities again. I just would like to hear your thoughts on cash flow. I understand Q4 2021 was a particularly good quarter as well, but so is actually Q4 today. I know I've been asking this question before, Michael, we've been discussing this a lot, but it would be great if you could give us some understanding of whether these, you know, cash flow working capital releases, operating cash flow generation, to what extent it's kind of sustainable recurring, or if there's any extraordinaries because of the changes you've made to your business most recently going into this year.
Is there anything you would like to point us to, not to get overly optimistic or for that matter, overly negative?
We think, of course, we have done a very good job this year, and it's probably not possible to decrease this as much as we did this year, working capital. We think that this level of working capital and also our, as we call it, project net, it should be more or less on the level that we are today. We should be able to keep the working capital percentage on the level that we are currently at.
Okay, very clear. Just a nitty-gritty question on Stora Fasad AB, the most recent little acquisition you did.
Yeah
Could you just give us any idea of what to expect in terms of margins out of those SEK 1,450 million in revenue that you will probably generate on an annual basis?
They should-
Is that in line with the group or is it higher?
Stora Fasad AB is, as we mentioned, company that work with installation, for the balconies of TBOH. What they will do mainly is that, their income will be a part, reduce the cost for TBOH. They don't have any own final customer, but they will be in a installation company for TBOH's balconies. They should improve the gross margin of TBOH. That's why also slightly improve the total gross margin for the group.
Yep. Got it. All right. Thank you very much. That's all from me.
We have some questions also that we received through mail, so I'm just gonna take them here from BF.capital. Could you comment on the development in number of employees ending at a higher number than the end of Q3?
Acquisitions?
Yeah. Both of course, acquisitions from Söderåsen, that is now a part of group. Then also the people that will leave, and now some of them has left, but none of them had left at the end of December. That's also one reason. We have also built up an own installation team of more people that are employed by Balco AB to do the installation of Balco's balcony. Before, we worked more with subcontractors for the installation part.
Thanks. One more question from BF.capital. What do you base your hypothesis of significant improvement in order intake in late Q2 on?
I think we answered that, or we take it again?
Yeah, I think you could just repeat a little bit short.
Yeah. We base it on the discussions we have with BRFs in Sweden and in Norway, and that they don't want to take their voting right now, depending on the discussions that is ongoing with private persons here in Sweden regarding, so to say, energy costs, inflations, interest rates, et cetera. They want to take their voting for the balconies, yeah, they start Q2 , they say. Maybe some of them have actually also planned votings in end of Q1 . Therefore we estimate the order intake to come then.
Thank you. To finalize here, do we have any last questions? Doesn't seem that way. When we have no further questions, I thank you all for watching and thank Balco for presenting today.
Thank you.
Thank you.
I wish you all a pleasant evening. Goodbye.
Thank you. Bye bye.
Bye.