Thank you. Welcome to the Q3 reporting of BALCO. We start with page two. BALCO helps customers who have problems with their existing balconies. Our solution is to take away the old balcony, put up a bigger, in most cases, glazed balcony. We are focusing mainly on the renovation segment. We have a unique selling process helping the customer through the whole process. Page three. Q3, strong financial position. Quarter affected by COVID-19. We had an improved EBIT margin. Negative COVID-19 impact. Net sales was SEK 258 million compared to SEK 292 last year. Operating profit SEK 29 million compared to SEK 31. Operating margin improved to 11.2% compared to 10.7% last year. COVID-19. The second wave of COVID-19, with increased rate of infection in most countries, has influenced BALCO's order intake in the third quarter. We have a lot of activities.
We're working with the customers, and we can do most of the work, but people are cautious about meeting in groups. In the last process, then we have the meeting physically, where people meet and they vote. Here we are working with other solutions though, and we have some digital voting that happens, and we are also now evaluating COVID-19 quick tests, and I think we have chosen one supplier now. We will actually offer all our customers quick tests, and the people who have corona, they can give power of attorney in the voting process. We are working with different solutions so that the customer really can have the voting, because we have a really good, what to say, piling up of possible orders. We have to solve the last part of the process and help the customer then.
Customers have moved the final voting of products in Q3 for a value of more than SEK 250 million. Possible orders are piling up in Q4 and Q1 in 2021. The weak order intake since March will negatively affect sales and earnings in the coming quarters, mainly Q4 and a little bit in Q1. We have a strong financial position, operating cash flow of SEK 35 million in the quarter, and operating cash conversion of 91% in the quarter. Our equity assets ratio is 49%. No dividend in 2020 due to acquisition opportunities. BALCO evaluates various acquisition opportunities, and in the light of this, the board of directors confirmed its previous decision not to pay out dividend in 2020. Michael, next page.
Yeah. Some more financial highlights from the third quarter. We had strong cash flow and improved our operating margin. Net sales, as Kenneth mentioned, amounted to SEK 258 million, down from SEK 292 million last year. The renovation segment accounted for 94% of the sales, and the new-build segment just 6%. Order intake amounted to SEK 142 million, down from SEK 199 million. Here, the renovation segment accounted for 87% of order intake in the quarter. Our order backlog at the end of September was SEK 1.3 billion, down from SEK 1.66 billion last year. Operating profit amounted to SEK 29 million, down from SEK 31 million last year. Our operating profit margin improved to 11.2% from 10.7% last year. Cash flow was strong and improved to SEK 35 million, -SEK 1 million last year, mainly due to reduced working capital.
Our operating cash flow conversion was 91% in the quarter, and cash and cash equivalents at the quarter end was SEK 181 million. Turn to the next page. Just a summary of the third quarter. Order intake down 29% to SEK 141 million. Order backlogs reduced 17% to SEK 1.3 billion. Revenue down 12% to SEK 258 million, and operating profit down 8% to SEK 29 million, but an improved operating profit margin of 11.2%. Turn to the next page and look at the development of our business segment. Start with the renovation segment. Also here, order intake was down 24%, down to SEK 124 million. Order backlog reduced by 23% to SEK 1.1 billion. Revenue reduced 5% to SEK 242 million, and operating profit was reduced by 6% to SEK 29 million. We have a stable operating profit margin of about 12% in the quarter.
If you turn to the next page and look at the new-build segment. Here the order intake was very low, just SEK 18 million, and also revenue was reduced quite a lot, by 57%, down to SEK 16 million. Revenue was a lot affected of the maritime business, which has slowed down a lot. They have not canceled any orders, but they have postponed the fulfillment of a running project. They have been postponed in time. Still the order backlog is bigger than last year, SEK 205 million, 45% more than we had last year. Operating profit was affected by the low sales, just SEK 1 million profit in this quarter, but a stable operating profit margin of about 4%. Turn to the next page and look at the nine-month period. In the first nine months, we have had net sales growth and improved profitability and a strong cash flow.
Net sales has increased by 5% in the nine-month period to SEK 931 million. Renovation segment has accounted for 91% of the sales, and new build segment 9%. Order intake has amounted to SEK 703 million, where the renovation segment has accounted for 86% of the order intake. Our operating profit has improved by 10% up to SEK 113 million, and operating profit margin has improved to 12.1% compared to 11.6% last year. Operating cash flow has improved to SEK 125 million compared to SEK 34 million last year, and it's both due to better EBITDA and also better development of our working capital. The operating cash conversion in the nine-month period was 89%, and if we look at the last 12 months, we have had 119% operating cash conversion. Really strong cash flow. Turn to the next page and look at a summary of the first nine months.
Order intake has been down by 30%, strongly affected by the COVID-19, so it's down to SEK 703 million. Revenue has increased by 5% to SEK 931 million. Operating profit increased by 10% to SEK 113 million, with an improved operating profit margin as well. Our earnings per share has increased by 7% and is now SEK 0.0382 per share. If we turn to the next page and look at the development for the two business segments. In the first nine months, our renovation segment, we have seen an improved revenue by 11%, up to SEK 850 million in sales. Also an improved operating profit by 10% to SEK 109 million, with operating profit margin of close to 13%. The new build segment has been affected a lot, mostly by the maritime segment slowing down.
We have reduced revenue by 33% to SEK 82 million, and also reduced operating profit by 27% down to SEK 6 million. We have improved our operating profit margin, so it's now above 7% for that segment. Turn to the next page and look at our balance sheet and our strong financial position. The equity to asset ratio is currently at 49% compared to 45% last year at the same period, and it's driven by the increased profit, low investment, and of course, also no dividend this year is affecting this. Our net debt to EBITDA is down at 0.4, and if we take away also the leasing debt is just 0.1, so we have really low debt for the moment. Our net profit for the period, profit after tax, has increased by 8% to SEK 83 million, and it corresponds to SEK 0.0382 per share.
We are really prepared for acquisitions. We have an acquisition headroom. We have a banking agreement until September 2022. We have an acquisition credit of SEK 100 million, and we have cash and cash equivalents at quarter end of SEK 181 million. We have also authorization to issue shares to finance acquisitions. Turning to the next page and look at our financial goals. We have a growth target of 10% per year. Currently, the last 12 months, we are down now at 6%, affected by the COVID-19 in the third quarter. Profitability, we have a goal to reach 13% of profit margin, and looking at the last 12 months, we are now up to 11.9%. When it comes to debt, our net debt to EBITDA should not exceed 2.5x , and currently we are just at 0.4x. As I mentioned before, without the leasing debt, just 0.1.
Our dividend policy is that we should distribute at least 50% of the profit after tax to our shareholders. Due to some uncertainty of the COVID-19, but mostly affected by all the possibilities we see with some acquisition targets, we have decided not to have any dividend for this year. Over time to next page and summarized by Kenneth.
Excellent, Michael. Page 13, our sustainability initiatives. We know that our lifetime of our glazed balcony solution is more than 90 years. We know that the lifetime of our BALCO's balconies lasts for more than 70 years and know that our energy savings of our glazed balcony solution is between 15%-30%, depending on products and conditions. We know that our solutions of balcony glazed solutions are climate positive between 30-50 years, depending on solution. Here are new goals to reduce this within another five to 10 year. This is already in action, I will say that we will reach this goal in the beginning of 2021.
Yeah.
We are increasing our sustainability focus. We know that we have climate positive solutions, but we're also working with a sustainability focus in the whole group. Our goal here is to be green rated in Sustainalytics in the beginning of next year, and this is one of our top priority projects we are working on at BALCO GROUP. Okay, that was the end of the presentation. Please, questions, and we will try to answer.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Kenneth Toll from Carnegie. Please go ahead.
Yeah, thank you. I'm a little bit worried about the order intake and you say that there are postponements due to COVID and so on. Now the COVID is spreading faster or quite fast at least, and this situation might last until the summer or something like this. Are you preparing yourself for a period now, maybe a year ahead of lower sales volumes and so on? Are you trimming your costs or how are you meeting this period?
We're still optimistic about the possible orders coming in. It's piling up and we have an order intake, it looks not as bad yet. We have more and more solution of digital voting solutions. Now we will offer all our customers which want a quick test, COVID-19, takes 15 minutes to get an answer.
At a low cost.
At a very low cost. After that, the people have the Corona.
Power of attorney.
Power of attorney voting because the customer really want. They want to have solution. They want to solve that and there are different kinds. We are not in that stage. Of course, as you say, Kenneth, you never know if the Corona would be really increasing and gets even more dangerous. We never know what kind of decision government takes. We don't feel that. I would say we're still pretty optimistic. The orders are piling up. Even if half of the orders were postponed, there are still orders coming in. It's not like dead.
We are more trying to find solutions for our customers so we can have the meetings. Of course, we are prepared if it should not happen, we are prepared as well.
The answer to your question, we are not yet in any position that we cut costs.
No
No, we don't see that need yet. If it would be needed, we can do that easily.
Yeah. I guess, the beautiful thing, just look at balcony.
Kenneth, a question to you. If you look at the increased sale cost this year, the sales cost is still increasing. It's not that we are not yet changing anything in our strategy. I would say opposite. In our strategy, we will be even more aggressive. We have no plans to reduce our sales force. We have increased the sales cost this year with, I don't know, how much is it?
Yeah, SEK 15 million roughly.
SEK 15 million. We increased our sales cost with SEK 15 million in a corona crisis. Kenneth, we're not there yet. Still optimistic.
That's good. The beautiful thing with balconies is also that if you don't renovate them today, they're still in need of renovation. It could just be a soft spot, the demand is still out there once we are through it.
We are working, our sales force are working. There is a mutual need both from BALCO and both from the customer to solve this.
Of course, in the process, you have three meetings where you meet a lot of people. You have a lot of meetings, but you have a meeting in the limit fence, you have a meeting with TemShow, and you have a meeting in the voting process. There are different nice solutions. Of course, when a government in Germany says that you're not allowed to meet more than seven people, then it gets more difficult. It's most difficult in Germany and Denmark.
Yeah.
Okay.
Okay. Thank you very much.
We cannot know cost caps yet.
Okay. That's clear. Thank you.
The next question comes from the line of Julius Rapeli from SEB. Please go ahead.
Yes, good morning, thanks for the presentation. Maybe one question relating to order intake and the outlook for Q4. We are quite far already in the last quarter of the year, and the impact in Q3 was quite harsh from the pandemic. You briefly talked about it already, but what's your outlook for Q4, and what should we expect regarding orders here?
Regarding orders, it's piling up in Q4 and Q1, we are optimistic. You never know what decision will be taken tomorrow with different government. That is the case. What will affect us in Q4 and Q1, that's the turnover.
Of the low order intake the last six months. There are a lot of products we are working with, and if you ask me today, we are optimistic about an order intake in Q4 and Q1 because it's also piling up a lot in Q1. What will happen tomorrow? Yesterday, Julius, we were not allowed to go and drink alcohol after 10:00 in Sweden. What will happen tomorrow?
I see. It makes sense. It's really unclear for everyone what comes in the near term. Looking at the declines in orders, you had around 30% year-over-year decline in Q2 and Q3. Is this the expectations you have going into Q4, or do you think it will improve?
Julius, in Q3, we believe that we would build our order stock.
Yeah.
That is what we believed. If I say to you that we believe that we will build our order stock in Q4, yes.
That's what you believe today.
That's what we believe today, but we are not writing that because last time we said it didn't happen. If you ask us today, yes, we believe that we will build order stock in Q4 and a lot in Q1.
Yeah.
We didn't write that anywhere.
Okay. Perfect. Regarding maybe delivery side, Q2, you had quite decent deliveries despite the pandemic. Has the impact been harder now in Q3 and Q4 on your operations?
Turnover-wise, you will have a big effect in Q4 and Q1. It has affected some in Q3.
Okay. Perfect. Thank you. Maybe one question regarding M&A. You mentioned it again in the presentation. Any update on that front?
We believe next year will be the best year ever for BALCO.
Yeah.
That was the answer to that question.
Okay, crystal clear. Thank you very much.
Just as a reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. We have one more question from the line of Will Garbutt from Canaccord. Please go ahead.
Hi there, Kenneth. I was just wondering, in terms of building permits, what's been the effect in Q3? I mean, has there been more delays, or are they still functioning in terms of issuing permits at a normal rate?
No, I would say it's a normal rate. We have actually, due to the COVID-19, been able to start with both building permissions and some of the work before they have had what you call the voting. That's one of the few positive effects of COVID-19, that we are allowed to work with projects even before we have the orders. Every time before, we have not been working with building permissions before they have had a voting process. This is new, and this is something we will keep also after the COVID is over because it is possible.
So you can-
It helps turnover. You can start with projects earlier.
Yeah.
When you get an order, you can start with the projects earlier.
Yeah. Okay, this SEK 250 million stack of projects that have the delayed voting, are you expecting the votes to be made in Q4 for those?
Q4 and Q1.
Okay. All right.
Yeah.
Those projects, once they've been voted, and they're approved, I'm assuming you've got the building permits or you're in the process of getting the.
Not of everyone, but some of them, David, you can actually start very quick. Yeah.
Okay. You'll recognize what, 50%-60% of the revenue because you've already got the permits or pretty much got the permits in hand?
It will be quicker than it has been the last two years.
If we look at average the last two years, the order backlog has taken 1.2 year to be revenue, and perhaps we can reduce that to 1.1 or even one due to this.
Okay. Thanks.
As there are no further questions, I'll hand it back to the speakers for closing remarks.
Excellent. Thank you, everyone. We wish you a safe day.
Thank you.