Welcome to the Q2 reporting of Balco. It's me here, Kenneth Lundahl, CEO, and Michael Grindborn, CFO. We're on page two. In Q3, we have more than doubled order intake. The order intake increase was 116% to 306 million SEK compared to 142 last year. It was also 54% higher than in the third quarter. Order intake was 26% higher than the revenue in the quarter. We see that the order intake in Q4, Q1, and Q2 will be really good. The reason for that is that we see all the cooperation agreement signed. We see the prospectus and the offering stock.
The reason for the high order intake in Q2, Q3, and the coming, as we see now, three quarters, that's not only, I'll say, pent-up demand after the corona period. We see also that one of the main effect is the improvement we did in the financing before the corona period. The improved financing, especially in the Nordic countries, has lowered the monthly cost with about 25% for our customers. This gives a really good effect, and it will support the Balco business many, many quarters, years going forward. We have a strong financial position. Equity to asset ratio is 51%. Net debt to EBITDA, 1.2.
We have an extended bank agreement has been signed with Danske Bank with a sustainability-linked revolving credit facility of SEK 510 million and an overdraft facility of SEK 75 million. We have done a lot of sustainability activities, and we will come back to that. Of course, a lot of improvements, a lot of rating improvements, but we will also change and support our business model in how we can help our customers to transform our project buildings to green buildings. We have an improved ESG rating at Sustainalytics from 28.6 to 20.8, and we are really confident in improving this really further next year. Balco has this autumn become a member of the Swedish Green Building Council and the UN Global Compact. Transformation into green estates.
We have seen that there are old buildings. There are in some cases where you really have to do big change of the buildings, and that can be that the balcony is falling down, you have to do something. In these cases, you see that you should really go in and analyze and see what kind of improvements in energy saving you can do. This has all been done in Balco, in Holland, in Germany, where we are working with energy consultants and making big transformations of the buildings where the energy savings in many cases are more than 30%. Now we will do this offering also in the Nordic countries. I will come back to this later in this presentation.
If we make a quick analysis now of the order intake in the third quarter, 62% of that will give more than 50% in energy savings for our customer, and 10% of the projects will give more than 30% in energy savings. Our goal, and that's not a 5-year goal, I would say it's a 2-3-year goal, is that at least 50% of our project glazing projects for our customer, we will provide at least 30% energy saving. This will of course help them to run the project really efficient and also give them good long-term financing and also green loans, bonds. I will come back to this green building transformation. Michael?
Yeah. Start to have a look at Q3 financial highlights. As Kenneth mentioned, we more than doubled our order intake in the quarter. Net sales amounted to SEK 243 million, down from SEK 258 million last year, of which we had acquired growth of 11%, and the organic growth was negative by 17%. The sales was affected by the low order intake during the corona period from March 2022 to April this year. That had a strong impact of negative growth of the sales. Order intake was 26% higher than our net sales and increased by 116% compared to last year up to SEK 306 million.
Of this, 103% was organic growth of the order intake. The order intake was also 54% higher than before the corona year. Compared to 2019, it was 54% higher this year. Of the order intake, 96% come from the renovation segment. Our order backlog has increased by 13% compared to the same period last year and is now close to SEK 1.5 billion again.
Operating profit in the period was SEK 25 million, down SEK 4 million compared to last year, with an operating margin of 10.4%, adjusted operating margin. The reason for the lower EBIT was both lower sales and also that we had too little to do still in operations and production. Now with a good order intake in the last two quarters and our increasing backlog, we will have a positive effect and need to employ roughly 70 people, both white collar and blue collar people in the coming half year. We really see that we're starting to have more to do in operations and production already in quarter four, and from beginning of next year, we'll be up and running on full speed again.
Our cash flow in the quarter was SEK 24 million operating cash flow compared to SEK 35 million last year. Turning to page four to have a look at the two business segments that we have. They start with the Renovation segment. We had a really strong order intake for the Renovation segment. It increased by 138% to SEK 295 million, and it was 96% of the total order intake in the quarter. The order backlog for the Renovation segment increased by 15% to SEK 1.25 billion, and is 86% of our total order backlog. Revenue in the quarter was down 12% to SEK 213 million, and the operating profit was SEK 24 million with an operating margin of 11.1%.
Turning to page five and, our new build segment, it had little bit lower order intake, compared to last year. It was just SEK 12 million in the quarter, and it was 4% of the total order intake. Order backlog is stable at SEK 207 million, and it is 14% of our total order backlog. Revenue though increased by 90% up to SEK 30 million, and it's mainly because of increased sales in the maritime segment and also from Stora Fasad, our acquired company. Operating profit was SEK 2 million with an operating margin of 6.7%, and that's an improvement from 4.1% the year before. Now turning to page six and have a look at the nine-month period.
During this period, our order intake has grown by 53%, and it has been 35% higher than our revenue. Net sales has been affected by the low order intake during the COVID period and has been SEK 797 million during this period, of which 10% is acquired sales and organic growth has been negative by 24%. Order intake has increased by 53% up to close to SEK 1.1 billion, and of which 29% has been organic order intake growth. Operating profit amounted to SEK 81 million with an operating margin of 10.2%. Our operating cash flow during this nine-month period has been slightly negative by SEK 30 million.
Now turning to page seven and the two business segments during this nine-month period, and starting with renovation segment. Here, sales has been negatively affected by the low order intake in the COVID period. It's been down 20% to SEK 679 million. It's been 85% of our total sales. Order intake though has been very strong, increased by 68% to more than SEK 1 billion, and it's been 95% of our total order intake in this nine-month period. Operating profit SEK 72 million with an operating margin of 10.7%. New build segment has had an increase in sales by 44% up to SEK 118 million. It's been fifteen percent of our total sales.
Order intake has been SEK 58 million, and our order backlog is stable at the same level as last year. Operating profit up 34% to SEK 10 million, and also the operating margin has been increased to 8.1% compared to 7.6% last year. Going forward to page 8 and a look at our financial position. We have a strong equity to asset ratio of more than 51%, 51.4% to be exact. Two percentage points better than the same period last year where we had 49.4%. Net debt to EBITDA still lower than our set financial goal. It's 8 to 1.2. We have still quite good possibilities to further acquisitions.
If you exclude leasing debt, the net debt to EBITDA is just 0.9. Our profit after tax has been SEK 16 million, with a corresponding earnings per share of 2.76 SEK during this nine-month period. We are prepared for further acquisitions. We have an acquisition headroom. We extended our bank agreement with Danske Bank and it was signed and now valid until October 12, 2024. It's a sustainability-linked revolving credit facility of SEK 510 million, and we also have an overdraft facility of SEK 75 million. We also have authorization to issue shares for to finance acquisitions. We are really prepared to further on continue with our acquisition growth. Turning to next page and have a look at our financial targets.
We have a growth target of 10% per year. Now during the last 12 months, we have had negative growth, but we expect to be back on track next year and start growing at least this 10% per year again. Our profitability goal is 13%, and we have been, during the last 12 months, down at 9.7%. We also here see that we will start to increase the EBIT margin again. Our capital structure, we have said that our interest activity should not exceed 2.5 more than temporarily. Here we are down at 1.2 right now. Here we have good possibilities to grow with acquisitions. Our dividend policy is that we should distribute at least half of our profit after tax to our shareholders.
Now we had furlough during the first half year of this year, so we are not able to give any dividend this year, but we will be back, give dividend again now in 2022. Turning to the next page with sustainability initiatives. We have a product that we have documented that our material and construction lasts for at least 90 years, and it's also fully recyclable after these 90 years. The only thing that is needed during this 90-year period is 2 minor services. We also have documented that our City balconies, open balconies, last for more than 70 years. When you have a glazed balcony, the average temperature inside the glazed balcony is on average 17 centigrade higher than the temperature outside.
Due to this, you get energy savings of 15%-30%, depending on which product you have and under which conditions, if it's in south, west or east, the balcony. This all together give that they are climate positive after 25-40 years with our glazed balconies. Kenneth will talk to this a little bit more, but we have set a new goal that 50% of our glazed balcony products should give at least 30% energy saving. This will be done through complementary product offerings to help our customers transform their building into green buildings or green estates through energy savings.
We have also worked a lot with improvement in our sustainability work, and during this year we have gone down with our sustainability ESG rating from 28.6 to 20.8, so we're now on the low range of a medium risk ESG rating. We have set a goal that we should be down below 20 next year and be rated as a low-risk ESG company. Now back to you, Kenneth.
Excellent, Michael. We change to page eleven. Green transformation of estates. We have learned during many years, and we have seen it, that when you really have a big project with a building, then that's a triggering to make an analysis of what you can do energy-saving wise for a building. We already do this in a professional way in Holland, where we have energy consultants. Say, Morses Flat for example, you have a Climate Wall built, you have an insulation of the whole roof. We cut the gas supply and make, let's say, a borehole in the mountain for the energy. That is already happening.
In Germany, we have the same situation there, where we take a whole grid, make an analysis of the building, but it always start with the glazing. Now we have taken decision to do the same in the Northern countries. We have hired our own energy consultants, and we will really help the customer to make an analysis of what we can do and help them with the buildings. This we are only doing as a general contractor working very, very close to the customer. Our goal is that in the long run, at least 50% of our glazing projects will provide at least 30% energy saving.
We can change, improve the energy declaration of the building, and we can finance the whole building with a green loan, and all the loans in the building be green loans. The renovation of balconies with the Balco method to new glazed balconies gives energy saving of 15%-30%, and we have very good knowledge of own products. This is not due to that it's just a glazed balcony. It's also due to the patents, the solutions, the ventilation system that we have. I would say that if we would buy another glazing company, we could pretty quick improve their possibilities to save energy. Anyway, glazed balcony project gives a trigger that enables energy saving. We will help them to transform them where we see it's possible.
The idea is that when we sign a cooperation agreement, we offer also to make an energy declaration of the house or make an analysis of existing energy declaration. With the resources we have, we can very, very quick evaluate which kind of things we can do to improve it. If they have a problem with the facade, we solve the facade. If they haven't done the roof insulation correctly, we will do that. If they have mechanical air change, we can change that. If they don't have solar panels, we will offer that. The solar panel investment with our solution would actually decrease the monthly cost.
If they don't have enough current for the buildings, and they want to have, let's say, charging poles, we will also offer them solar panels, battery charging, and electrical poles. This is the this starts with the key triggering is that the balcony that had to do them that we make an analysis of the building. We already know directly that we make a big energy saving of the balconies. It it's not. We don't need to transform the whole building. We will, of course, never, ever do something if the building is fresh. You can't do the change. If we see that you have to do some renovations anyway, then we will take the grip. This will do as a total contractor.
The reason we do this is, of course, as total contractor, get a good grip, of course, support the business. But we also feel a responsibility because the only time you can do this transformation with the energy declaration, that is when you do one or two big investments. If you have a good balcony, good facade, it's really difficult to change the energy saving really big. We also know in other countries, like in Holland and Germany, there are subsidies to do this big transformation. In Holland, they can. Balco doesn't need subsidies to, how to say, to sell and support our business. With our financing, with our projects, and with our lifetime, and we will sell anyway a lot. But we see that there is a big push to really transform the buildings.
There is a European Green Deal, EUR 715 billion, where probably one-third of the money will be pushed in to transform old buildings with the key focus of energy saving. Already before the European Green Deal, there are subsidy systems in Holland and in Germany. What happened now, first of October in Sweden, it's possible to get subsidies if you do energy saving of 20% or more of a building. This is coming step by step in every country. In Sweden, bang. In Finland, we started also. Most probably, there will come some kind of system in Norway, I would say in six months. Anyway, we will come back to this in many times.
This offering is already happening now in our or in our organization. We have the resources, we have the system, we know how to calculate, we have the financing in place. Now, as you see, down in page 11, we can already now follow how much energy saving the projects are giving in the orders we have sold. Our objective is that this will move so that more than 50% of our projects has an energy saving of 30% or more. Okay, I think that was it. Please, questions.
Thank you. If you wish to ask a question, please press zero and one on telephone keypad. If you wish to withdraw your question, you may do so by pressing zero and two to cancel. We have the first question. It's from Nicholas Cham at ABG Sundal Collier. The line is now open for you.
Thanks, operator, and good morning to you. First, a couple of housekeeping questions on Q3 results. I meant to ask you if you could walk us through the gross margin bridge, which is expanding by about two full percentage points compared to Q3 last year, please.
Yeah. Main improvement are coming from where we have our sales. Of course, we have had some increased material costs, but we have been able to transfer them to customers. We have no real effect on the project margins. They are very stable. We have sold at or have, had most of our net sales in our high margin countries. Main part of the sales have been coming from Sweden and Norway. That's really the main reason that we have improved our gross margin. Because still, people in both production and operations have a little bit too little to do. Full positive effect we have not seen. Main reason is that, yeah, main sales are coming from Sweden and Norway, where we have our best margins.
Mm-hmm.
We could say that the margin going forward, as Michael said that regarding price increases, we are always selling on the existing prices, not what we have bought material and so on. We also have a material index of, I would say, 80% of all the orders we have in the order backlog. The orders we are putting into the order backlog, they are also always evaluated when they put in them and also monthly. We feel really comfortable of the margin of, you know, order backlog.
Yeah.
We don't feel that we will get the hit in our neck due to the material cost in our order backlog.
Thanks for taking that as well. That was actually my second question. My third question would be if you could give us some idea of the EBIT contribution from Stora Fasad and RK Teknik in Q3, please.
We don't comment on EBIT on separate companies. We will not give that.
I can say that if you look at the plans we have when we made acquisitions, they are running that or, I would say, performing better.
Yeah.
In order intake going forward, we are very happy that we bought these two companies. Also if you look at in our product offering, the combination, balconies and facade, where we in some cases do everything ourselves and in some cases we take in someone else, that is, really a good thing. When we run it as a total contractor, the efficiency we get from that is really high. I would say that when we bought Stora Fasad turnover is SEK 30 million, they will expand many times going forward. Not in percentage, it's more that times.
Yeah.
That area we are increasing heavily with the people, both in sales and also we are building up a lot big operationalization in that area.
Mm-hmm. Now, thank you, Kenneth. This is also of course answering some of my follow-up questions here. But for the record, could you give us just a broad description of the main drivers for taking primarily RK Teknik's say 8%-ish margin to closer to your group margin target sometime in the future? What would be the main components necessary for you to deliver on here, please?
When we bought TB, we improved the profit with 100% EBIT-wise in three years. We will do the same for RK Teknik due to the synergies, due to the sales pros and the offering we can do. They will also get new products from us. They haven't had their own glazings before, now they will get it. They are also a niche player that are really competent in concrete balconies, which they can sell to all other companies and all other countries in our group. We don't have that solution. We didn't have that solution before. They will have both a margin improvement and also sales improvement.
They will have also a really good, I would say, run in Balco as TB has. Also, they were only selling in Sweden before, and we can offer their products also in all the other Nordic countries.
Okay. I will come back into the call perhaps later, but one final question from me at this stage would be to ask you, so your new green estates goal does that actually include increased OpEx or CapEx for that matter in order to be met?
No, the only thing that will happen, we think. If we look at actions we have done step by step. Before corona period, we improved our financing a lot. That will improve our order intake many, many years going forward. This offering in green estates, this broaden our offering, increases our turnover, and it will also increase our sales of balconies. The only thing that will happen is that we will need to build more capacity earlier. Because we believe that order intake going forward here will be really, really good organically. This will also support organic growth. I would say that this green estate transformation is one of the biggest things that Balco has done, the last eight years.
After that, I would say it's a transformation of the financing and of course some new product. But this is really a big thing helping the customer, I would say. This is not just something we found out last week, we have learned a lot of what has happened in Holland and Germany. We know very well about the energy savings effect in a building.
All right. Kenneth and Michael, thank you so much, and I'll come back later into the call. Thanks for now.
Thank you.
Thanks.
The next question is by Kenneth Toll, Carnegie. The line is now open for you.
Yeah, thank you. There were good questions asked by the former questioner. Still, I want to go back into the green estates and that project. Have you started working like this in some countries but not in all countries, or where are you in your offering on this side country-wise?
In Holland, we have done this, I would say one year. In Germany, half a year or a little bit more perhaps. There we have already these, how to say, energy consultants that understand our products very well. They understand the financing, they understand the subsidy system because there they have subsidy system. We are actually the consultants helping the customers through the whole process, the evaluation, the calculation, the financing, and also all the application of how you are applying for this. In Sweden now we have hired internally this kind of resource. This resource worked before in the Nordic Sweden. He himself found buildings that had to do something with glazing. He found out what they could do with it, insulation, the facade, windows, roof insulation, heat exchanging.
He came to the customer and said that with this action, with the financing I have from the bank, we can do this without you having to increase the monthly cost at all. That person we have hired and we have worked with this for a while. This we are already offering. We already know, as you see in our order intake, have a good feeling about what energy saving is happening. This week, we signed one cooperation agreement. One product is EUR 10 million, and we already know now that that will be an energy saving of over 30%. There we can do all the work with the project, give them a good project. We can help them with the financing.
We can help with the green bond. Also here, with the green bond, we can actually change all the loans they have in the building. If you don't take this chance to really move your building from class E, F to say C, D, if you don't take that chance then you will not have the opportunity the next perhaps 15-20 years. Kenneth Toll, this is happening now, today. We are doing the offering. Of course, this is a lot of education internally but also, say, externally for the customer. We will see that we don't need to buy more companies. We have cooperation agreements with solar panel solutions. We know the effect of that. Facade, we know very well of.
Some of the facade we do ourselves, some of the facade we will do as total contract and we take in a supplier. The only thing I see now that I would like to buy tomorrow, that's a roof insulation company that is flexible in the Nordic countries. That one we would buy 100% or 51%, directly because that's a quick fix, helping energy saving with a low cost and a quick return.
Mm-hmm.
Yeah.
Also interesting. Thank you. That's all.
Thank you.
Thank you.
The next question is by Sofia Sörling , Carnegie. The line is now also open for you.
Thank you. My first question is, this order backlog in Q3, could you tell us how much was from the new acquired companies?
It's slightly less than SEK 100 million, which is coming from the acquired companies.
Okay. Thank you. Can you also say something about what we can expect in future acquisitions? Are you focused on new verticals, what countries, and yeah.
Acquisitions going forward is in the Nordic countries as number one. After the Nordic countries it will be Germany. Number one is where we are in the Nordic countries, and it is in the balcony segment. It can be like a roof insulation company, but otherwise we are growing organically with competence in-house, doing the most of the work ourselves as total contractor.
Okay. Thank you. This financial target in total sales growth, how is that split by organic and acquired, would you say?
Just a second here. Which page, Michael? This one here.
Yeah.
The 10% that we will achieve a lot more than next year and then going forward. I mean that the next coming two years organically in the backlog. Probably some more acquisitions. Don't forget that we had a really boring period during the corona. Now Q3 autumn trade good, Q3 and the next coming three quarters will be really good. Turnover increase next year will be more than 10% for sure, and probably next year also with all the activities we are doing. We will not change this target anyway. The next coming years, organically, yes.
Yeah.
Later on, perhaps organic with acquisitions.
Okay. I see. This subsidies, would you say that tenants association organizations, that they know about this or do you-
No, this is a good question. This is so good. Listen here. Listen. We were working with this since one year ago, and we knew about the EU Green Deal. Suddenly one person internally in Balco organization says. "Kenneth, I've seen some small notice indeed that there is a subsidy come here." We didn't know. I mean, hello. You at Carnegie didn't know it. HSB didn't know it. Riksbyggen didn't know it. I mean, hello, what kind of advertising was this in Sweden of the EU Green Deal? This is something that Länsstyrelsen and Boverket working on. Actually, their own people internally, right here to the handläggare in English, the-
Yeah, the people handling the-
The people handling this, they will be educated next week.
Next week.
They have got in already 150 applications.
Yeah.
You could say like this, we didn't know this was coming, but from what I believe, it happened in Sweden now. I think that in Finland, they will improve that. And I would guess that in six months they will do something in Norway. This will just be popping up in many countries.
Yeah. Okay. I think that is another question. Thank you so much.
Thank you.
Thank you. There are no further questions until I hand back to you.
Okay, excellent. Thank you all, and we wish you all a really good day.
Yeah, thank you.