Good morning, everyone, and welcome to the third quarterly report for 2022 in Bravida. Today, I hope you hear me, Åsa and myself, as usual, is going to-
Yes
Take you through this presentation. Again, very welcome and, I think we start.
I think we do.
Yes.
Go ahead.
Thanks. The agenda, Bravida and the position in the Nordics as usual, and then we'll dive deep into the Q3 numbers. Åsa will take you through the different countries, and then in the end, we will have a summary and an opportunity for all of you to ask some questions, and we will do our best to answer them as good as we can. Starting with our position in the Nordics, and again, those of you who have listened to us before, you have heard this story many times. I think it's so important to mention that Bravida is in many different places, in many different local markets with many different customers. As you can see to the left, we are developing and improving our ability to act like a one-stop shop for the customers.
Our customers are many different type of customers, but all customers have the potential to buy all the services from Bravida as a one-stop shop. Our main segments are electrical, plumbing, and HVAC, but we have segments as security, sprinkler, cooling, automation, technical FM, energy management, solar panel, car chargers, et cetera. The services we offers to the customers are many, and the customers are many with different kinds of needs, and that is what creates the stability in our business model. Having a diversified end markets, low customer concentration, and very small average contract size is of course a good thing to have, no matter the market conditions we are acting in.
As you see, we are getting closer to SEK 25 billion in sales, 13,000 employees, and the main part of our projects is below SEK 50 million, and close to two-thirds of our sales is service, renovation, and refurbishment. I will argue, and I will say to you that we are a very stable company today, going forward as well. On top of this, we have a very strong balance sheet. This is what it looks like when you use a position in the market, the different opportunities you can see in the market, the different kinds of demands in many different places. This is the CAGR regarding sales and profitability since 2014. We have added 9% on average on sales and 10% on average on the profit.
Fantastic, you have a very stable cash flow as well, and the average during this period is somewhere around or above 100%. All in all, we can use this strong cash flow to invest in our business, to invest in M&A, and together with acquired growth, we can grow this business organically with a very stable margin, and that is what have created this fantastic, as I see it, track record. We are and want to stay as the Nordic leader in sustainable technical solutions. We want to be a partner for the customers from the whole life cycle of their building, and we want to support our customers with sustainable services in both service as well as in installation.
The last couple of years, we have extended our service offer to the customers with solar panels, car chargers, energy management, et cetera, and we will probably see some other areas added to their business as well the coming years. The leading Nordic provider of sustainable technical solutions for buildings, and every customers has access to our entire offering, life cycle perspective on every building, and we are and want to stay as the industry leader in this segment. What about the quarter? As I see it as a really strong quarter, even if we have had some kind of difficulties in the market, we have a high inflation rate, we have managed that in a really good way, as I see it. Today, we still see a good demand for both service and installation, especially for service.
You will see later that our service business had been growing 30% in the quarter. We see growing demand, definitely growing demand for sustainable and energy-efficient solutions. A year ago, it was the interest in sustainable services that actually were driving this demand. Today, it is still the sustainable reasons, but on top of that, we have high energy prices that is driving this as well. Helping our clients save energy is much more interesting today than it was six months ago. We definitely see a lower risk for material shortages. That said, we of course see some uncertain times, increasing interest rates and a very high inflation, and that may lead to delays in investments or changes in how our customers choose to use their capital.
Anyway, I think that if someone thinks they have too expensive, or too high cost on the premises side, I think they need to do something. Maybe they move to another place, and if they move to another place, they need to do some adjustment in that building, and that's a good service business for us. All in all, today we see a good demand in the market, but we have the full respect of that, it can be somewhat trickier going ahead, high inflation and, some, what do you say, push on the margin side as well. We will always have a very stable margin, that's for sure. Maybe I'm a bit afraid for the whole industry.
Because normally when we see a slightly softer market, and I think it's mostly on the, or mainly on the residential market, people, competitors, other types of actors in the industry thinks that it is possible to buy material, labor, whatever, cheaper. I think the risk now is that some of our competitors is pricing a bit lower, which I think will put some pressure on our margin. If they price it lower, and at the same time you're seeing inflation continue to go up, they will end up in trouble. We will avoid that. I think also we are seen as a very stable partner to work together with. We have a very strong balance sheet.
We will be there in a couple of years to finalize the project or the service agreements, et cetera. There is a risk for increased bankruptcy in the industry, and I think that is something we can yeah get stronger out of because the customers has to focus more about stronger, financially stronger partners, and that is Bravida. Our quarter net sales is up 26%, organic growth at 13%, and order intake is good. We have a seasonality regarding the order intake, but if you look at one of the slides in the material, you can see that the LTM order intake is increasing and have increased every quarter. We have a record high order backlog. It seems like I have said that many times. It's close to SEK 18 billion now.
Margin is stable at 5.9%. Cash flow improved much better than last year, and we have a very strong improvement on the safety side. The LTIFR, as we call it, very easy thing to say, is down to 6.9% compared to 8.6%, down with 20%, which is something we are really happy about because that means that all our employees have a safer working place today than they had a year ago. We continue to work with this, and our focus is high. Electric cars, changing our car fleet is improving a lot. 63% of all ordered vehicles are electric. That is actually summing up to close to 1,000 cars so far this year that is 100% electrically driven. That will, of course, be seen in the KPIs going forward.
Unfortunately, we haven't got all the cars delivered yet. There are some laggings in that process, but that will make sure that we have a good opportunity to reach our sustainable targets for 2025. On group level, as I said, 26% sales increase from SEK 4.8 billion-SEK 6.1 billion. Organic growth 13%, which is extremely good, very high in our type of business. Maybe that is one reason why we are struggling a bit with the margin on the project side in Norway and Denmark for the moment. We have maybe been growing too much. Also, we'll elaborate on that later. EBITA margin, very stable, 5.9%.
If we take into consideration all the investments we are doing in both systems and all the people we are hiring to be an even better supplier for our customers on the service side, energy side, automation side, et cetera, we have actually at least presenting a flat margin or maybe even improved it. As we say on this slide as well, we have increase in cost for upgrading the IT platform, new systems, and business development, and that is approximately SEK 35 million compared to the same quarter last year. Order intake I mentioned, but order backlog is up 17% and close to SEK 18 billion. If we break down the sales performance, you can see that SEK 627 million is coming from organic growth.
M&A is contributing with close to SEK 500 million , and then we have some currency effect with SEK 100 million plus. All in all, that sums up to a really strong growth at 26%. What about the EBITA then? The margin I mentioned, very stable. We see improved margins in Finland, unchanged in Sweden, and somewhat lower in Norway and Denmark. EBIT affected by non-recurring costs, for implementing the system I recently mentioned, and that is SEK 11 million in the quarter. So far this year, that sum is SEK 46 million, and our forecast for the year is, as we have said before, somewhere between SEK 80 million and SEK 100 million. We also have some effects, from developing the new businesses that we're talking about, sustainability and modern IT platform.
Those are going to plan, and they are costing to plan as well. We are driving the business plan forward, and that is, of course, increasing the administrative costs a bit, as I just mentioned. But it will improve our margin and our ability to grow going forward. We have said that the margin impact will probably come out positive from these investments in late, in the end of 2023. As you may have seen, this morning, we have sent out a press release where Magnus Liljefors is internally recruited. He is part of the group management. He will be in charge of those new businesses that we're calling growth segments.
That is because we want to accelerate the growth, development of those segments, and we want to become even better in helping our customers save energy, be more sustainable. Magnus will drive this and accelerate that segment, in a very good way, and I'm really looking forward to talk more about this, going forward as well. Increased recurring costs due to the IT platform. We have some digital development capabilities as well. Of course, the increased sustainability focus needs some resources, and those resources cost something, and that is also into the P&L.
We have improved our HR support to be able to attract more and new talents, the technical skilled people, and as well as we want to improve our ability to foster new talents, foster new leaders within Bravida, and that is also something that is part of the recurring costs. Initial cost for the investments in new businesses is technical facility management, automation, and energy management. We haven't been talking very much about energy management before, but we have good solutions in place for our customers to help them save energy, and that is something we are putting into this new business unit, which we call growth segments, to be able to accelerate and help more customers better and more often.
As I said, this is expected to add positively to the margin at the end of 2023. Order intake and order backlog. Now you can see that the order intake in the quarter at 5.9 is adding to the LTM order intake. You have a seasonality in the order intake, as you can see. Of course, it's driven by the positive development in the service business. The order backlog, as you can see to the right, is and has been improving every quarter a couple of years back. Record high level, we have increased order intake in all countries, which is a very positive thing. We are very stable for the moment. We have a strong balance sheet. Yeah, a lot of things is looking good.
Regarding the sustainability and then KPIs, declining injury numbers, as I said, -20%. Declining injury numbers in Sweden and Denmark. It's going up a bit in Finland. Slightly smaller business, so they are more sensitive to one or two accidents, but the focus is high in Finland. In Norway, they are well below the target at 5.5, and they are the pole star in the group. That is what all the other one is striving for, to make sure that we have the same focus and are as good as they are in Norway. Ordered electrical cars or vehicles, 63% of total number year to date. That means close to 1,000 cars. Quite fantastic.
That means that we will have a good possibility to reach our sustainable targets for 2025. We can see now that the change in CO2 emissions from vehicles is up by 3.7%, and that is mainly because cars haven't been delivered yet. On the other hand, if we adjust or take this into correlation with our sales, you can see that it's down 7.7% in relation to the LTM net sales, and that is positive, of course. We've seen that when we do acquisitions, that we very often get, if you could say, a worse car fleet into our books. That is, of course, one way we can do some good things for the environment as well.
When we acquire a company, we also increase that company's sustainability focus or even actually start the sustainability focus. That is one way we can help and support the whole industry to improve in this area. Acquisitions so far this year, 21, adding SEK 1.6 billion. As we said in last quarter, we will see somewhat lower tempo in H2 this year. With that said, that doesn't mean that we don't have a pipeline. The pipeline is strong. We closed 21 deals before the summer, and then it has been somewhat a lower tempo, but we are in discussions. You should not see this as we have stopped doing acquisitions. We will use our balance sheet, and we have plenty of opportunities to continue to do that as well. Still attractive multiples.
I expect the multiples to go down a bit. We still see some players in the market who is paying quite much, which is a bit strange, but let's see what happens. It hasn't increased, but it hasn't gone down either. Let's see what happens. We think that we will see a small adjustment downwards regarding the multiples. Anyway, still attractive multiples. Åsa, performance by country. Performance. Please.
Thank you, Mattias. Let's start with our largest country, Sweden, that continues to be the engine of our business. Sweden is growing with 12% in the quarter to SEK 2.9 billion, and the growth is mainly coming from service. The organic growth is +4%, and it's a bit uneven, you can say, spread in the country. We have a higher growth in the northern part, lower growth in the Stockholm area and southern part. If you look at the year-to-date figures, the growth is 8% in total, and the organic growth is 2%. EBITDA margin is unchanged at 6.9% in the quarter, so very stable, 6.3% year-to-date. The EBITDA is SEK 199 million, compared to SEK 178 million last year.
It's really good that we can continue to keep a strong and stable margin in Sweden. We are taking, as Mattias said, some additional costs for improving our business and modernizing IT and new initiatives and so on, and these costs are spread out, or we are allocating them into the different countries. Mainly Sweden is taking a little bit more because we're taking some resources here for the new businesses like Technical FM and automation and so on. They are taking some extra cost here and still continue to deliver a strong margin. Order intake is +11%, that is SEK 3 billion.
This is coming from service, so installation is negative in the quarter, but strong order backlog 3% plus 3% year-on-year. Moving on to Norway, that has been growing a lot with a 45% during the quarter to SEK 1.3 billion. The growth is coming from both installation and services, but mostly from installation in the quarter. The organic growth is 29%, and we're growing by acquisitions 6%. The year-to-date total growth is 37%, and organic growth is 25%. EBITDA, SEK 69 million compared to SEK 53 million last year.
The EBITDA margin is declining to 5.2% from 5.9% last year, and this is mainly due to the fact that, first of all, we have been growing really fast, so the margin doesn't in some areas really keep up with the growth. We also have a change in the sales mix, now with more installation, and installation has a lower margin than service. We have a couple of projects in the Oslo area where we have some write-downs, and we are taking actions there, and we talked about this before. Order intake +2%. It's slightly negative in Norwegian kroner, and it's negative.
The installation side is negative, and this is, we actually have a really strong order backlog here, so we're growing the backlog with +43%. We are a bit selective now on taking on new installation projects also with the when we've had this high growth. Denmark also growing a lot, growing with 47% in the quarter, and is now our second-largest country. They are growing both in service and installation, and the organic growth was 25%, and acquisition grew by 17%. Year-to-date figures is 29% total and 17% organic. Here EBITDA was SEK 70 million compared to SEK 51 million last year, and the EBITDA margin is declining here to 4.6% from 5.0%. This is also almost the same trend, you can say, as in Norway. We have a different sales mix towards more installation.
We've been growing a bit too fast in some areas, so the margin doesn't really keep up. We have a couple of projects where we had some write-downs. We've also talked about this before. Order intake +18%, and the order intake comes from both service and installation. Strong order backlog +38% year-on-year. Finland has also been growing in the quarter with 19%. They are growing in both service and installation. The organic growth is negative -3%, so the growth comes from acquisitions. Although we have an organic growth in service in the quarter. EBITDA SEK 20 compared to SEK 13 last year. EBITDA margin improving 5% from 3.8%.
Really happy to see this strong improvement in the EBITDA margin that has been continuing now for some quarters. It's really good to see how the Finnish business is working very structured to increase the margin bit by bit. Improvement in the margin comes from both the service and installation in Finland. Order intake is plus 51%, and the order intake comes from both service and installation. Order backlog strong, + 35% year-over-year. If you look at our net debt and cash position. If you look at the chart in the middle, you can see our operating cash flow, and the third quarter is the worst quarter in the year.
This year it's positive, so it's + SEK 78 million compared to -SEK 139 million last year in the quarter. This also then leads to a improvement in the year-to-date figures, so plus SEK 482 million. We're also then improving the cash conversion to 88% from 80% last year. This is if you look at our financial position then on the left-hand side, you can see that we have a cash balance of SEK 1 billion, roughly. Our debts are from term loan SEK 500 million. We are using the RCF SEK 1 billion, and then we have some commercial papers now around SEK 700 million, and that adds up to SEK 2.2 billion in loans. Adding the leasing contracts, that's another SEK 1 billion.
Total net debt is SEK 2.1 billion, which then leads to a net debt EBITDA ratio of one compared to 1.1 last year. Our financial targets, where are we? We have a financial target of 7% EBITDA margin. We're not there yet. The LTM figure is 6.7%, but then you need to remember that we had some repayment of pension funds money last year. Adjusting for that, it's at 6.3%. Cash conversion, we want it to be more than 100%. We are increasing it now, so it's at 88%, going in the right direction. Net debt EBITDA is a lot lower than our target. It should be lower than 2.5, and it is, as I said, at one.
Sales growth a lot higher than 5%. It's on 17% year to date. Last year we paid out more than 50% of our net profit. I think that's all for me, Mattias.
Thank you, Åsa.
I'll take my notes here.
Yeah.
Spread them out.
Maybe I need them.
Yeah.
Okay, just a summary before we enter into the Q&A. I think you have heard 26% growth, a somewhat lower margin. On the other hand, we are making more money, and we are increasing the earnings per share with 19%, which is not said on this slide, but I think it's 19% up on earnings per share, which is maybe the most important thing. Organic growth 13%. We see organic growth in Sweden, Norway, and Denmark. Acquisitions continue to contribute with another 10%. We see increased backlog in the quarter, close to half a billion SEK. The margin is somewhat lower but very stable.
Considering the circumstances with the high inflation, material prices going in some areas sky-high, we have handled that both in our pricing to the customers as well as our procurement team and our procurement strategy has been shown once again to be working. I think this is good solid quarter and both myself, Åsa, and the rest of the management are really motivated to continue to take care of the business no matter what the market will look like. We know what to do, and we will do it, and we have so many opportunities in the energy sector, energy management, sustainability areas, et cetera. Really looking forward to the coming quarters as well. With that said, I think we can open up for some questions.
Thank you very much. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our rosters. The first question comes from the line of Carl Rådeström from SEB. Please proceed.
Yes, good morning. I have a couple of questions here. First, maybe on the visibility in terms of the organic growth, going into next year. I mean, you have a quite solid order backlog and a continued strong order intake now in Q3. I'm just wondering what is your expectations for next year, given what you know at the moment with the Nya Slussen project moving into the production phase next year? Would be interesting to hear your thoughts there. Thanks.
Yeah. Good morning. First, we never guide on the organic growth for different reasons. On the other hand, when we have entered into a growth phase, the big machinery of Bravida, we normally stay in the positive organic growth phase for a while. As you said, we have a really strong order backlog. We have a good order intake, solid demand for services. I don't think that the organic growth will disappear. 13% is high. I think we can say that we expect, yeah, organic growth in the next quarter as well. It's, of course, hard to see. We are very busy for today.
Just an example, when I was out traveling last week in the organization, I met a region manager who prepared the budget for next year. That region manager, he said, he's pretty much sold out for the full for the next year. Of course, we see in the Stockholm area, where the residential building is a big part of the total market, where we see some project is delayed or actually canceled or stopped. That is another type of market. I think that is why we can be very stable in Bravida, because we won't have a big downturn in the oil markets at the same time. We have different kinds of cycles regarding the local order stocks et cetera.
I think, 13% organic growth in Q3 must mean that we will have some organic growth going forward as well. I think the growth side is not our challenge for the moment. I think, as we have said a couple of times, it is on the margin side where we see some pressure from different reasons. You have the inflation on the material side, which we are handling very good, but the customers can't pay all the increases. We have some competitors who, I guess, won't price very structured or logically going forward. I think the whole industry or not, some players in the industry will underestimate the fact that we can have a situation where the market is a bit insecure, slightly softer.
At the same time as everything you need to fulfill your contract is actually getting more expensive. Positive outlook on the growth, the coming quarters, I would say. Slightly tougher on the margin, but the margin will be very stable. Åsa, do you want to add something?
Okay.
No, I think that's a good picture.
Yeah, good answer. Just a follow-up maybe on the margin side and maybe how you are pricing your products right now, because I guess we will see some more higher salary inflation going into next year. I'm just curious about how you're pricing discipline is right now and how you expect this to contribute to the margins here.
Yeah. The way we are pricing in the discussions we're having, in the prices we are offering to the customers, we are expecting higher wages, definitely, and somewhat higher material prices as well. We have a very structured way of working with the materials. I expect that we won't get the same increases as the rest of the market because we are the number one. We have a very clear strategy regarding how to procure. We have our partners, as I said a couple of times before, we have some suppliers that aren't our partners or it seems like they don't want to be our partners, acting a bit strange sometimes.
We are working close to our partners, and the partners is the one that we can help, and they can help us to take down prices or keep the prices on very stable levels. In the offers, we are calculating with higher wages and somewhat higher materials.
Okay, that's very clear. Just the last one on the order intake in the quarter. If you look on the organic side, is it a fair assumption that the organic order intake was relatively flat year-over-year?
Yeah, I think it's if you look at the history, you can see that we have quite low order intake last Q3 as well. There is a seasonality in those numbers. I think you shouldn't look too much on it. On the other hand, the order intake this year is much, much better than last year. Overall, the order intake is a combination of the service sales and the installation sales. The service sales is very positive for the moment. The order backlog is high, meaning that we are not very stressed in the negotiations because we don't, in some places, we don't need new jobs.
That can also impact the order intake because we don't have, we are not in the position that we need to sell more jobs because we need to focus on delivering the contracts we already have signed.
Okay. Thank you.
Thanks.
Thank you.
The next question comes from Kjetil Bøhn with DNB Markets. Please go ahead.
Yes, good morning, Mattias and Åsa. Just to continue on the previous question and you're saying that to some extent you can't really take on more, I mean, more orders for the moment. In the current situation, what kind of visibility do you have for yourself into 2023? I guess it must be at least a very good load in the first half independent on really what happened in the market at this stage, or how do you see it?
Yeah, I think, yeah, agree. That is from the group perspective, we are following the order backlog on not only the branch level, we are actually following the order backlog on cost unit level. All our region managers, when we have the reviews, we are discussing the order backlogs in Simrishamn, in Kiruna, in Sandefjord, in Odense. That is, of course, also the case that in some areas we are probably needing some new projects in the beginning of the next year. Overall, I would say that we have at least a clear view of where those places are. We have a clear view about what we are supposed to do the coming seven to nine months.
Where we have a full order backlog, we know that, and if we have some places where we need some more top line, we definitely know that as well. Overall, the full picture is that we have a good visibility in the order backlog, and we have plenty of things to do the coming quarters.
Excellent. If you are really hit by a deep recession here for some reason, so to say, how does your plan B look in that kind of situation?
Again, we are looking at not only branch level, we are looking at the local markets on cost unit levels. Of course, if we don't have any jobs, if it will be a dramatic change in the market, for example, let's say you have a CTX, the case can be that the electrical department can have plenty of things to do, but the plumbing department needs some jobs, and we can't find those jobs at the right prices, then we will try to take out cost. 30% of our cost base is material. Another 30% is the labor cost needed to assemble the material we do need. So we have a very flexible cost base.
In our world, we are adjusting and taking out some of those costs if that is occurring that you are saying. I think that we have. Of course, residential will be built too, much fewer residentials will be built. On the other hand, you have the transformation in the society regarding charging, new energy systems, new energy sources, taking down the energy consumptions. The green, the sustainable demand in our industry will increase at the same time as I think the renovation and service market will be very stable or even go up. I remember in the crisis 2009, new build sector went down a lot, but the service and renovation market, I think that was growing a bit at the same time.
Having close to two-thirds of the top line on service renovation and refurbishment is quite good, I would say.
Yeah. I can just add that we are actually planning for a plan B as well, as we are now into the budget discussions, and we have a main scenario, and then all regions do also a plan B scenario if we see a larger downturn. It's in the plan.
That is something we have had for the last three years with.
Yes. Yes. It's not
That's. Yeah.
now it's maybe a bit more important.
Relevant.
Yes.
As you say, I guess it's something that is gonna be implemented on case by case but in a way in a decentralized kind of setup. It's never gonna be a situation where you probably will experience it over the whole platform or something like that.
No. I think in the crisis 2009, you saw. I was a region manager at that time, and actually we were able to grow our business during that period in my region, depending on different circumstances. It's also a lot of possibilities. Today, we have a market share in Norway and Denmark around 5%. We normally say that means that we have 95% we don't have. There is a lot of opportunities. At the same time, you of course need to take actions if the market is too tough. Definitely. We are ready to do that if that's needed. We're not there today.
Right. Excellent. Good to hear, good to hear. Looking at the write-downs you are taking in Norway and Denmark, is there any common themes why you end up in this write-down situation? Is it late projects, not access to material or, say, too few installers on your side, or why have you ended up in these kind of project write-down situations?
I don't think we have finalized the full analysis of that yet. I would say that if you remember last year, Norway had a quite low activity on the installation side, Q3 last year. Now they have a really high activity because some of the postponed projects by then have come into the production now. There are, I would say, too much things to do at the same time, leading to the fact that we can't produce with the same productivity as we normally have been able to do. That's why, this is why we don't want to grow the business too much. We are focusing on margin. We want to grow this business with quality, with the margin control.
I think what has happened in Denmark and Norway is that we have been growing too much, meaning that we haven't found enough white collar resources, or good enough white collar resources that have been able to produce it with efficient enough. Of course, when you have a lot of things to do on the blue collar side as well, you maybe need to use slightly more subcontractors and the quality isn't really the same. You need to build it stone by stone, with quality, and I think that is the reason. We have in Norway been very structured in what kind of projects we want to win, what kind of customers we want to work with.
We think we have a much better order backlog today than we had a year ago, but it has been too high productivity at the same time, and that is why we are losing too much money on the installation side for the moment. To try to improve this area and support the organization slightly better, we have mentioned the investment on the IT side. One system that we're investing in is actually a system to be able to produce our installation business more efficient with a better control, with a slightly easier way following up as well. We are taking measures locally, and we are taking measures centrally in a structured way to try to improve our installation business and make sure that this is not happening too many times.
When I look at the seasonality in working capital, is there any reason why we shouldn't see a similar kind of Q4 phenomenon as we have seen in the last couple of years this year? Is there anything on the growth side that will impact that as you see it?
Yeah. On a general level, I can say we have already always an improved cash flow, et cetera, from now on until end of February. The worst position is 22nd of September or something.
Yeah
... it improved to February.
Q4 is normally really good. It's also, like, end of the year, so everybody is cleaning up what they haven't cleaned up before, you can say, and sending out the invoices. Yes, we believe that it will be improving.
Excellent. Mattias, just one or two words on the structure of putting these growth segments together. Could you indicate the size of these operations today and maybe your ambitions for where you want to take it over the next three to five years?
Let us come back with a more structured way of presenting this. I've said before that automation, for example, our ambition, our vision and ambition is definitely to be the market leader in that segment in the Nordics, in two to three years time from now. Let's see. I'm very aspirational when I'm saying that, but I think that goes for the technical FM and the energy management as well. We want to be a leading player, leading partner for all our customers in all the segments we are acting in, and that is the same case for those as well. Of course, we see it's tight, quite difficult to grow in these segments through acquisitions because this is quite new markets.
This will be mainly organically driven, which is of course complicating it, a bit. On the other hand, that seems like even more fragmented market to try to win, compared to the rest of our business.
Really looking forward to this. Magnus Liljefors' responsible to lead this will be really good. Really looking forward to how he can accelerate those segments going forward. Those segments has been reporting to me, so this is actually meaning that we are adding more leadership to this investment at the same time as I can focus slightly more on the rest. I think that is one plus one should be more than two here. Really, yeah.
I'm as keen or eager as you are to see the numbers, but let's come back to how we present it.
Yeah.
We'll continue to present the different countries.
Yeah.
We won't have this segment as a certain reporting point in the reports, but we will of course follow this closely, and I understand that you are very interested in this as well. Let us come back with that, Kjetil.
Just to finish off on that. If we now end up in the recession, how will you treat these growth areas? Is that an area where you I guess it's the easiest area to probably postpone investments in as well to some extent, so.
Yeah, I think we have done the investments that we need. Some system investments remaining, but on the other hand, those segments are extremely stable. I think we can continue to grow and develop these areas even if the market goes down. I think that is one of the reason why we try to win this market.
Sounds promising. All the best out there.
Thank you. Thank you.
Thank you. The next question comes from Ben Wilde with Deutsche Bank. Please go ahead.
Good morning, everybody, and thanks for taking my questions. Just I've got three questions. Maybe I'll just start with the first two and then come back. Firstly, can you give us an idea of what the organic revenue, what the growth is for service and installation on an organic basis? And secondly, within the 13% organic growth, how much is pricing? If you can give us an idea, it'd be much appreciated.
Yeah, I think on the first part of the question, we not disclose.
No
that number. Also, I think you have the answer on the price part of the-
Well, if we look at the organic growth, it's a smaller part that is coming from price increases actually. It's difficult to say exactly how large that is. It is mostly organic growth. Say it's a couple of percentages that comes from inflation or price increases rather.
If we think about that versus previous quarters and the coming quarters, do you expect or is pricing playing an increasing role in Q3 versus Q2 and Q1? How do you think it will evolve going forward?
If the question is about service, I think that's quite difficult to answer. On the installation side, we have some index clauses in the agreements, and of course, they will have some impact in that perspective. I think the index clauses starts to pick up now. There are some delays in those clauses. I think we don't have systems, we are not measuring the thing you're asking for. I think services is very much that we are charging for the things we are doing, so there is no risk. Of course, there will be some inflation from more expensive material and then later on wages, et cetera. So far, not very big part, and I don't think the changes will be very dramatic.
No. It doesn't look like that.
No
now at least. Let's see.
Let's see about the wages in the spring.
Yeah.
We have new wages coming up in all countries in April next year. We don't know anything about that. It's too early to say. Of course, that will impact the whole industry. It doesn't change our competitiveness because that is the change everyone gets in the market.
Sure. The final question was just coming back on some of the broader points you've made on the outlook, Mattias, and particularly around the potential for rising bankruptcies in the industry next year and later on through a downturn. If we think about market consolidation and of course your own consistent M&A activity, given these risks that you've described, do you prefer to wait to compete for market share organically or will you be looking to continue to acquire smaller players through a downturn? How do you see this dynamic playing out and how do you participate in it?
I think we will continue to do both because there are some different reasons why we're doing acquisitions. In some acquisitions, we actually want to get hold of a really strong leader. In some of the other acquisitions, we want to add a new vertical to the existing offer to our customers. In some cases, we are buying a top line with a profit that we think we can increase due to the synergies, et cetera. We will continue to do both. We will be more selective what kind of acquisitions we want to do. On the other hand, I think the opportunities will increase. I think some might get into some troubles, needs support from a financial stable partner. I think some other buyers will disappear because they don't have the same balance sheet as we're having.
I think we will continue to do both, definitely.
Finally, on that point around your balance sheet, of course, if things do slow down, you will build up a very, very strong position over the next 12-18 months. How would you think about the potential for a significant deal, a larger deal, during this dynamic?
Yeah, I think the smaller one, the bolt-ons, they're just happening, going on. We have a very structured way of doing that. That's part of someone said it's close to semi organic growth because we're paying so, yeah, due to the prices we're paying. We have always said that we are always looking for some larger deals. We're having discussions with different players, not only to, because we want to buy them, but we want when they are ready to sell for some reasons, we want to have a relation being first in line to be able to do the deal. We are prepared and ready to do bigger deals if it adds values to our shareholders or if it add values to us as a company. I think it's not the first or the second.
I think both are going hand in hand. We won't do acquisitions just because we want to become bigger. We want to do acquisitions because we want to improve our ability to provide service to our customers.
Okay. That's all my questions. Thanks very much.
Thank you very much.
Thank you. If you have a question, please press star then one.
Maybe that was-
Reminder to the participants.
Yeah, I think maybe that.
If you have a question.
Maybe that was all because we have some we know that are doing something different as well. Do we have any more questions?
We do not have questions in the queue.
Okay. Thank you so much. I think we end this session. We are running to the next pit stop.
Exactly.
Thank you so much for listening and I hope you get a really great day and a great week. If you have any questions, just contact us, and then we will do our best to answer those questions. Until next time, have a great time.
Thank you.
See you soon. Bye.
Have a good day. Bye-bye.