Good morning, everyone, and welcome to the presentation of Bonava's second quarter 2024. My name is Anna Falck Fyhrlund, and I'm head of investor relations here at Bonava. I'm sitting here in a sunny Stockholm together with our CEO, Peter Wallin, and our CFO, Lars Ingman, who will take you through the highlights of this report. At the end, you will be able to ask questions through the phone or online. You can already now start to type your questions online. If you want to ask a question, you do it through the phone, and you dial star five. So, with that short introduction, I leave the word over to you, Peter.
Thank you very much, Anna, and good morning to everyone. In front of you, you have a fantastic picture of our project in Uppsala, Seminarieparken, where we started 66 homes during the second quarter. This will be a fantastic new part of Uppsala where we have attracted a lot of interest. Just let me start with some comments on the market. As we have stated before, we are continuing to see improvement in demand across the board in the market. This improvement is very clear and visible in the Swedish market from a very low level. We are also seeing early signs of improvement in the German market. The German market, as you know, has been much more stable and resilient than the Nordic markets as such. We are also seeing early signs of improvement also from these levels in Germany.
The consumer segment has been the leading edge in the return to production starts again. The investor market has been more challenging. But I'm very glad to see that we have a string of deals lined up on the investor markets in the second half. We started the third quarter with the first investor deal for the year in Germany during July. The lower, more stable interest rates and rate of inflation are creating more stable conditions for institutional investors. We are continuing to focus on sales, and we foresee sort of a step up and ramp up of production starts gradually during the second half of 2024 and in 2025. If we take a little bit look into our P&L, we had a net sales of SEK 2.3 billion. We know and we knew that the level would be quite low.
We also see that our most important market, the German market, is showing a stable result and improved profitability in the quarter. We are aligned with our cost reduction of OPEX, and with OPEX, we mean both the visible S&A line as well as the indirect cost, which is included in the gross profit. So, even if we have cut the cost, we are, according to our plan, of course, the low business volume, the low net sales level means that the margin takes a little bit of hit also on the gross side because of the underabsorption of cost. As we start up more projects and as we see full effect from the savings, this underabsorption will be reduced and balanced over time.
The operating EBIT margin was 4.5%, and even if this is by far not on the level we should see, we are still seeing sort of a gradual step up in this margin. The cash flow in the quarter was strong, meaning that we again continued to significantly reduce our net debt. We are at SEK 3.8 billion compared to SEK 6.6 billion last year. Talking about our projects, I've already commented upon Seminarieparken in Uppsala where we started up. When we report the sales, we talk about contracted sales, committed sales. In Seminarieparken, we started up this in the back end of the second quarter. We will now convert the bookings, which amounted to 42% of the project during the third quarter.
Turning to Germany, in Langen, not far from Frankfurt Airport, where I'm sure many of you have been over the years, we are developing and continuing to develop an area where we are now starting up 50 units for consumers. This is a fantastic area, which I just visited a week ago, and there are very promising developments there. Last but not least, we also have Riga, where we are developing the Trend concept. This is an investment where we have developed many units over the years, and this is the last phase of that large investment. Very popular area where we are completely sold out. So, that's a very good step up for the production starts and a good example of the great pipeline that we have. With that number crunching, I hand over the word to you, Lars.
Thank you, Peter, and good morning, everyone. I will now try to take you through the Q2 figures. We start with a slide about the number of recognized units in the quarter. As you see, the actual completion were 561 units, and of that, 97 remain unsold at the end of the quarter. In the quarter, we also reduced the inventory by 140 units. An additional 5 units were sold but not recognized at the end of the quarter. All in all, 600 units recognized in the quarter. Next page, we have the clear ambition to continue to reduce our inventory of unsold completed units. This slide summarizes the development of the inventory during the quarter. Starting balance of the inventory of 485 units and with completed 561 units in the quarter.
Of the completed units, 64 or 83% were sold in the quarter, and also 140 units were sold from the inventory. So, in total, the inventory decreased with 43 units in the quarter. Year to date, the inventory value is down with around SEK 300 million. So, the next slide about the profit and loss account. So, based on the 600 units I mentioned on the recognized units, we reached a net sales of SEK 2.3 billion compared to last year, SEK 3.6 billion. And that was based on 1,203 units compared with this year, 600 units. The gross margin was impacted by selective price adjustment, but also negatively impacted by the indirect production cost that cannot be covered by the current project volumes. Selling and admin were down with SEK 13 million in the quarter and down with SEK 54 million year to date.
This is due to the implementation of the ongoing cost reduction program that started last year. The operating EBIT of SEK 43 million decreased versus last year, and this is mainly explained by the lower sales and lower gross margin versus last year, but are in line with the plan for the quarter. All in all, the EBIT outcome, including impairment items of -25, amounted to SEK 15 million. Net financial items decreased with SEK 10 million to SEK 158 million, and this is due to increase in interest margin effects items plus bank and guarantee fees. Here you can see a summary of the operating profit and margin for the group and per business unit in the quarter and per rolling 12 months.
As you can see, the development during the last 12 months is positive in Germany, stable in Baltics, but are more challenging in Sweden and in Finland.
When it comes to the restructuring plan, we are on track, and the target remains to reduce the overhead and indirect cost by SEK 600 million with full effect during 2025. Let's move then to the business units, starting with Germany. Here we recognize 246 units, and the net sales figures decreased slightly to SEK 1.4 billion, and the gross margin increased from 9.1%-9.8%. And this is due to increased higher gross margin and in the recognized projects. The selling and admin cost were slightly down to SEK 63 million, and the operating profit was almost flat versus last year. In the quarter, you can also see that we started 218 units, which is basically up 42% versus last year, and the number of sold units increased also slightly. We continue to Sweden.
The Sweden net sales amounted to SEK 369 million, and this is based on 61 recognized units in the period versus 376 last year. The gross margin decreased to 4.3% due to the lower margins in the recognized unit. The selling and admin was slightly reduced in the quarter. And so, in summary, the operating EBIT was negative with SEK 16 million. The outcome was not a surprise to us, but were in line with our forecast. Continue to Finland. And in Finland, the net sales was down based on 22 recognized units to consumer and 198 to investors in total 220 units, resulting in a net sales of SEK 496 million versus the SEK 915 million last year. And the operating margin amounted to 4.6% versus last year 10.5%. And this is due to the lower volume and the sales mix. Continue to Baltics.
The number of recognized units decreased to 73 versus 135 last year, and the net sales were down, and the gross margin was below last year due to selective price adjustment and also the lower sales volume. The occupancy rate in the current Build- to -Manage project continues to increase month by month and are now up to 71%. This graph summarizes the number of expected completion per quarter and also the corresponding sales per quarter for the consumer units. The leftmost bar represents the number of completed units during the second quarter 2024, and the other bars indicate the expected completion and actual sales status per quarter. During Q3 2024, the expected completion is 210 units compared to a total recognized unit Q3 2023 of 719. But the expected major increase of estimated completion during Q4 2024 of 630 units.
This is the same graph, but I have to do with the investors, investor deals. For the investor business, there are zero completion or expected zero completion during quarter three and 250 completions during the Q4 2024. Today, business unit Germany and Finland having expected project completions for 2024 and 2025. We go to the next slide, and here is the summary of the total number of building rights, 28,500 in the same last quarter, distributed between the business units and the potential project starts per year, plus a forecast of the distribution between business to business project and business to consumer products projects. Sorry. On the next slide, you can recognize our updated operating cash flow statement. In summary, the operating cash flow amounted to SEK +720 million versus last year SEK -34 million.
The main driver for this major improvement is the housing project sales that exceed investments in the quarter, but also the cash flow from land buy investments. Working capital was in the red, negative SEK 332 million due to lower advance payments from customers and cash flow related to restructuring, where the cost was already taken last year. Continue to the next slide. We can see there is a summary of the reduction of the net debt from SEK 6.6 billion last year to the current SEK 3.8 billion. This is a clear reduction of almost 50%. Only from Q1, the net debt decreased by around SEK 500 million. The decrease is mainly due to lower bank debt and also reduction of the housing company debt. This slide summarizes the external financing facility per end of June.
The total facility amounted to SEK 5.6 billion with SEK 200 million undrawn and SEK 1.3 billion in cash. In total, SEK 1.5 billion in available liquidity per June 30. As mentioned last quarter, Bonava have new financial targets regarding operating margin and return on equity. We also introduced financial framework with two metrics, net project assets to exceed net debt and equity-to- assets ratio to be about 30%. Both conditions were fulfilled at the end of the quarter. So with that said, back to Peter.
Thank you very much, Lars. The pride of Finspång, thank you for delivering a good and clear presentation. So wrapping up this, we see that we are increasing the production starts and we will ramp these up gradually. The market is improving across the board, apart from Finland, but the normalization will take time. This is a sort of a long-term business where things are a little bit sticky. It takes time to develop and sort of see the investments through. We are significantly reduced the net debt and improved the cash flow, as Lars has talked about. This will allow us to start projects and also to reduce the financial costs incurred for us. So we are at a very stable basis, which allows us to start projects. We are on plan when it comes to the cost reductions.
You are seeing more and more of the German restructuring coming into play when it comes to the numbers. We know that we have a low business volume with the way we are reporting right now with the handovers. This means that we have an under-absorption of OPEX, which negatively impacts gross margin and also operating margin. But as we start up and see full impact of the cost reductions, this will be reduced. The pipelines to start during the second half is strong. Of course, we will not do this unless we have achieved the right sales status, verified the production starts, and having the right teams. This is a very strong foundation for us to be able to control risks and opportunities in our business. My final comment to the report is that we are delivering according to the plan that we have.
And we are sort of, we have built a bridge into normalization with the reduced cost level and also reduced indebtedness. So Bonava is much stronger now and prepared to take on a continuous improvement of the market conditions. With that, I think that we can move into the next part, Anna.
Yes. Thank you both for a very good presentation. Now we will open up for questions. You can post them online, or if you want to dial in, you should dial star five on your phone and you can ask questions. If you wish to withdraw your question, you dial star five again. I can see that Simen at DNB have posted some questions, so we will start with that. Here's a question for you, Lars. There's a solid quarter-over-quarter hike in financial expenses from -116 SEK in Q1 to -184 SEK in Q2. Can you give a detailed reason why they have increased?
I think you should look also. We have financial, we have also financial income, so you should probably look on the 15, on the if the 158 is probably the what you should look into. In the current 158 is also included cost for bank cost and guarantee cost is included in that figure. So the pure interest cost is not a sort of major cost increase.
There is also a negative currency impact, which drives up the financial net.
It's an effect, reason for this. The pure interest cost is not increasing on the same level.
His second question is that we have seen investor sales recently being done in pairs with a low EBIT margin. How do you look at the competitive landscape and the outlook for starting profitable deals?
Yes, that's quite notable that the investor market has been suppressed for quite some times because of the high production cost and of course reduced sales prices. That's impacting the profitability. I think we are starting to see more and more traction in the Swedish market. I think it will take time for it to come through. The same is true for the Finnish market. Whereas in Germany, the market has been more stable and the deals that we are now lined up, even if it's not the super profitability, they are profitable for Bonava, apart from the fact it adds business volumes and cash flow. I'm very happy for Bonava's sake. Nordic markets is a little bit tougher.
Yes, so there's no more questions at the moment, so I will take one. So now we're talking about the investor market. Can we say anything about the consumer market where we see starting up projects? Is it in all our business units or what do we see?
I think that we are seeing a much more stable growth in Germany, Baltics, and also now with Sweden coming online again. If anything, those conditions have improved even more during the second quarter. Finland continues to be in the doldrums with much more challenges. We foresee sort of a growth across those three businesses in terms of production starts during the second half. We are of course preparing starts also in Finland, but I don't think it will be any major volumes, as we also have stated before, until the very end of the year.
Yes. And Lars, you like to talk about selling completed units. So if we would comment, are we selling in all business units or is there someone sticking out in the quarter?
Yes. I mean, we continue to make this reduction of the inventory and we have been successfully reducing it already during the year, and especially in Sweden and in Germany and also in Finland, but mainly we have a little bit challenge to increase this in the Baltic states. But it's a good inventory we have and we see no problem to continue to reduce it.
No. We are also talking a bit about selective price adjustment. Is it in a few projects? Is it in all business units? Could we comment something on that?
Yeah, I mean, we are seeing sort of a reduction overall. I think in terms of Germany, the status is quite low when it comes to completed unsold as it is, whereas Sweden and Finland are trimming their stock. In Baltics, as we know by tradition, the sales is happening much more at the end of the project. So we have much more of the volume there to deal with.
Yes. We have nothing on the phone and no more questions coming in. I think we will end this call with this and wish you all a nice summer. Thank you.
Thank you.