Ladies and gentlemen, welcome to the Bravida Q4 report 2019. Today, I'm pleased to present CEO, Mattias Johansson and CFO, Åsa Neving. For the first part of this call, all participants are in listen-only mode, and afterward, there will be a question and answer session. Speaker, please go ahead.
Thank you and good morning. Mattias here, welcome to Bravida's Q4 report for 2019. As usual, I will start presenting, my CFO, Åsa Neving, will continue. Starting on slide three, at the moment, we have LTM sales at SEK 20.4 billion, and LTM EBITDA at SEK 1.226 million, and we are now more than 11,500 employees. As you know, we are located in more than 160 places, and if you look to the right on the slide, you can see how diversified our market is, which together with two other buildings, actually show the low risk in our business model.
We have a small average complex size because we have close to 50% of sales in air service, low customer concentration, as I mentioned before, and the diversified end markets. Turning to the highlights on the, for the quarter on the next slide. The net sales grew 3% to SEK 5.7 billion due to M&A, a growth at 5%. We had growth in Sweden and Denmark, and the sales growth was 6%. The installation growth was 0. We have a very high order backlog at SEK 14.5 billion, close to. It's up 21% year-on-year. We still have a good momentum in the order intake. Our order intake was SEK 5.5 billion, and if you compare to the last year, you see that this is lower.
Last Q4, we had one of the big contracts from Bypass Stockholm. Excluding that contract, we still have an increase in the order intake with 8.5%. We have a good order intake in Sweden, Denmark and Norway. EBITDA decreased by 3% to SEK 425 million, and the margin decreased to 7.5%, should be compared to 7.9% last year. As you have heard in our Q3 report, we plan to take a structural, restructuring cost in Stockholm, and that's something we also done in the quarter. It's SEK 58 million, and if we adjust for that cost, we actually have a higher margin in the quarter, which we think is good, of course. EBITDA pre-restructuring increased by 10% to SEK 483 million.
Cash flow from operating activities was improved to 989 million SEK, and the cash conversion is above our financial target at 115%, stronger than last year. Working capital, -1 .1 billion SEK or - 5.6% of sales. Net debt is, we have a strong balance sheet, 1.3x EBITDA on LTM basis. The strong cash flow, not only enables us to continue with M&As, it also gives us the possibility to increase dividend, the dividend with 13%. That means that the dividend proposal is in line with the financial target. We have done four acquisitions in the quarter, adding 170 million SEK, 20 acquisitions in 19 in total, adding 1.1 billion SEK, and we still see a good pipeline.
We think that we can continue to do M&A and continue to strengthen the company throughout these activities. The market trends on slide five. We still see a good market in Sweden, Norway and Denmark, and as before, a stable market in Finland. In Sweden, the main growth drivers are public investment in building and infrastructure. We see a good activity in service, and the construction confidence indicator is above normal level. In Norway, overall service and installation activity is good, and the drivers are public investment and energy efficiency projects. In Denmark, a strong market, supported by public investment and service, mostly residential, healthcare and education buildings that are driving the volumes.
Even in Denmark, good activity and service, and then Finland, stable market, refurbishment and public investments are at good level, and we see a stable service in installation market. Turning to slide six, and the sales and EBITDA development. 3% up in sales, where 5% comes from M&A, we had a negative organic growth. When we look at the growth, I think it's, we are happy to see that the service is growing 6%. We have continued to do acquisitions, which contribute with 5%. I think, as you know, we had a dip in organic growth in 2016 as well. This type of business, when you try to balance risk, the risk profile with growth, we have some areas with slightly weaker organic growth.
We are very selective when it comes to what type of installation project we try to win. We think with a strong order backlog and the margin we have in that, we think we have a good position to both turn that into an organic growth throughout the year, but also improve the margin. We have sales growth in both Sweden and Denmark. The margin was lower. EBITDA is minus 3%, down to SEK 425 million, which gives us the margin 7.5%. EBITDA margin was improved in Norway and lower in Sweden due to the restructuring in Division Stockholm, as you know. EBITDA margin in Finland was lower due to write downs and lower volume in some branches.
When it comes to Finland, we can say that the challenges we have had is more isolated now to one city and three branches. If we exclude those branches, we actually have quite good margin in three out of four regions in 2019, which is actually giving us some confidence that we can improve the margin throughout 2020. The margin was lower in Denmark due to one-off profitable projects and acquisitions we did in 2019, where it takes a slightly longer time to actually get them up to the level, so they contribute to the margin. For the moment, they are diluting the Danish margin. Turning to the next slide, that means slide seven. The order momentum. The order backlog is up 21% year-on-year, unchanged order backlog in the quarter.
We have an increased order backlog in Sweden, Denmark, and Finland, unchanged in Norway. As always, with Bravida, we have mainly small and medium orders in the order backlog. Said that, I also think it's worth to mention that the big and more complex project is a good market for us as well, because we think the competition is slightly lower, and we have the know-how and the size to compete and be a good supplier for the customers in that segment. One large order in Sweden, an industrial building was booked in the order backlog. It's 680 million SEK.
A large order received in Q4 2018, Bypass Stockholm, added that quarter close to SEK 1.6 million, and that is explaining the declining ordering rate if you compare this Q4 to Q4 last year. If we exclude that, we still have a growth in the order intake, which is important to understand. Turning to the next slide and acquisitions. We have done 20 acquisitions in 2019, adding roughly SEK 1.1 billion in sales. We have done acquisitions in all countries. We are now ready to intensify the work with acquisitions in Norway after Oras, and we slowly move to the same position in Finland, where we think it's a good idea to do acquisitions, mainly containing service business in Finland as well. Otherwise, most of the cases we acquired last year was in Sweden and Denmark.
We still see a continued strong pipeline. We can do acquisitions on attractive multiples. This is a good way of creating value for you as a shareholder. Now over to Åsa. Please.
Thank you, Mattias. I will guide you through the figures in the different countries, and we will start with Sweden. If you look at the top line, we have had a for the fourth quarter, we've had a sales growth of 3%. This is due to acquisitions. If you look at the organic growth, it was negative, -2%. The reason for this organic, negative organic growth is because of the Stockholm division, where we have, as we said before, taking down, we closed down a couple of branches, and we are taking down volume there. Also in our division, Riks or National, sorry, we have had last year, we had a couple of projects that had a very larger projects with very high production, that we haven't had this year to the same extent.
We had an increase in service with 5% in the quarter, so it's very good. If you move to the full year, the sales growth was 4%, and the organic growth was negative, -1%. Moving on to the EBITDA, the EBITDA for Q4 was SEK 251. That was a slightly lower margin at 8.4%. We took restructuring costs in Stockholm, as Mattias has said, on SEK 58 million, and if we exclude these restructuring costs, we had a margin of 10% in Sweden. The rest of Sweden has performed really well during the quarter. We still have a good market. We have a good order backlog.
The order intake was a little bit lower in, and that was explained by the Stockholm Bypass order that we got in last year in the fourth quarter. During this quarter, we got one large contract in, an industrial contract of around SEK 700 million, that is in our order books now. The order backlog was +27% year-on-year, and if you exclude the Stockholm Bypass, we were +15%. Also our order backlog increased in the quarter by SEK 640 million. Turning to the next slide, page 10, moving on to Norway. The sales growth in Norway was -5%, and we had a negative organic growth of 4%.
If you look at the full year, the growth was +2%. We had organic growth of 2%. The sales was lower due to a lower production in the installation business on -14% during the quarter. Services was up 5%. We had, if we move on to the EBITDA, the EBITDA was SEK 88. The EBITDA margin improved to 6.7% from 6.6% last year. If you look at the full year, the EBITDA margin decreased to 5% from 6%. This is, of course, due to these projects, these all projects from the Aures acquisition that we have talked about in the last quarters that we took some losses in.
These projects are now closed or they are finalized, and we have also made sure that we will not take, have any more hits from these projects and have put some provisions in our books for the fourth quarter as well. They are closed. If we look at the order intake and order backlog, we had a strong order intake, +23% year-on-year. The order backlog is unchanged, but we have said before, we have many partnering projects in early stages here that is not yet included in the backlog that we believe will come in during this year.
As we published last week, we have signed a contract with Skanska on a technical installation at the hospital of around NOK 600 million-NOK 800 million that we will put in on order books now. Turning to page 11, moving to Denmark. For the quarter, we had a sales growth of 17%. This is explained by acquisition. We had a 0% organic growth. If you look at the full year, the growth was 19% and the organic growth was 3%. Moving on to the EBITDA, we had an EBITDA of SEK 70, and the EBITDA margin was lower at 6.6% compared to last year. This is due to we had one unprofitable project that we are about to close.
There is also the dilution from our acquisitions that we did earlier 2019. We did five acquisitions pretty at the same time, and this has taken a little bit longer than expected to get them to the profitability level that we expect them, that they should be. They have had some negative effect on the margin, but they are improving now. The full year margin was down 5.4% compared to 5.8%. This is also due to the fact that I just said. The order backlog is at a high level. We had an order intake at +1% year-on-year and an order backlog of 26%. If we move on to slide 12, we are heading to Finland.
Finland had a negative sales growth of -6%. This is explained by lower production in the installation business, mainly. The organic growth of -11%. We had low volume in some branches, and we have also had some delayed in project start in mainly the southern part of Finland. For the full year, the growth was 6%. This is due to acquisitions. We had organic growth or a negative growth of -7%. The EBITDA was 14%, decreased to 4.2%, and this is due to that we have some project write downs in one region, and we also have low volume in some of the branches.
As Mattias said, we have isolated these problems or challenges that we've had in Finland to one area, and Finland is improving, even if it's not shown in the figures, it is improving, but it's going slowly. We had a lower order intake, -20%, and a order backlog of +28% year-on-year. Moving on to next page, that is slide 13. Looking at our cash position, we have a really strong cash flow for the quarter and also for the year. If you look at the cash flow at the year end, we have increased it more than 50%.
It has the lease, the leasing effect of IFRS 16 has some effect, of course, it's also due to the fact that we are improving our working capital, which is really good. If you look at the net at adjusted EBITDA rate ratio, it is at 1.3. If you exclude IFRS, it's on 0.8, this is comparable with 1.1 last year. Very strong cash flow going forward. If we move to the next page and get into the financial targets, if we look at sales, we have a target of more than 10% sales growth. 5% should be organic, 5%-7% should be from acquisitions.
We have reached the acquisition target on 5%, but not the organic, where we are at flat 0% for the year. Sorry. The EBITDA target is on more than 7%. We are ending up at 6%, so we have not reached that target this year. At the cash conversion and dividend, we have a target of a cash conversion of about 100%, which we have reached. We have a cash conversion this year on 115%, and we are suggesting a dividend payout of SEK 2.35 per share, and that is more than 50% of the net profit. We also have a net debt ratio that is well below the 2.5. It's on 1.2, including IFRS 16, and 0.8 excluding IFRS 16.
We are also currently doing an overview of these targets. We have had these targets since the IPO, and I think five years after the IPO is the appropriate time to actually do a review. This also fits very well with the business plan work we are doing now for 2021 to 2023. We're doing this at the same time. There has not been any decision, and we have not done on whether we will change these targets or not, but we will communicate if we do that at the Capital Market Day in March, and then we will put this in a holistic content, talking about our business plan going forward also. I think that's more or less it. I will hand over to you then again, Mattias.
Thank you, Åsa. Turning to slide 15, just to give you slightly longer perspective on what a company like Bravida can do and not just only focusing on a quarter. You can see three different graphs or picture showing the development throughout the last five years plus. As you can see, Bravida is a robust and resilient cash flow generator. We have grown from SEK 12 billion to over SEK 20 billion the last five years. Our cash flow will in the future as well support our M&A growth, will support future dividend, and continue to strengthen our balance sheet we can use that to develop the business.
If you look at the mid, the picture in the middle, you can see that we had a slightly drop in the development in EBITDA in 2019, but we think this is very much due to the restructuring we have done. We think we have a really strong position going forward so we can continue this development. On slide 16, I will summarize the quarter. As you have heard a couple of times now, the sale was increased with 3%, and the growth came from acquisitions. We had a slightly negative organic growth, -3%. The order backlog for installation, it's only installation that's actually in the order backlog. The service is not booked as in the order backlog.
The order backlog is at a very high level, SEK 14.5 billion, and we see a continued good business momentum for service that will support the growth the coming quarters. The margin was 7.5%, and in that margin, we have taken the restructuring cost in Sweden, close to SEK 60 million. The EBITDA margin was improved in Norway. M&A execution is on track with a healthy pipeline, 20 acquisition completed in 2019 and adding SEK 1.2 billion in sales. The net debt compared to EBITDA is 1.3x , and that's including the new IFRS rules. We have a strong operating cash flow at close to SEK 1.6 billion.
Cash conversion well above financial target of 115%, and the board proposed a dividend of SEK 2.25, which means 52% of net income and well in line with the financial target. That's an increase in 13% as well. Finally, we see stable good market conditions continue. Finally, before we open up for questions, we want to remind you about the Capital Market Day in March, fourth of March, 1:00 P.M. to 5:00 P.M. It's in Stockholm at a venue called World Trade Center, and you can sign up for this on our website before the 21st of February. Hopefully we will see you there. Thank you very much. I think we will take the questions now.
... If you have a question for the speakers, please press zero-one on your telephone keypad. We have the first question from Christian Andersson from SEB. Please go ahead.
Oh, sorry, it's probably Christian Andersson. Okay, first question. You had this restructuring that you pre-announced at 60, and the 58 was affected in the quarter. Just wondering, is there anything else to do for Q1, or are we done with that activity now?
We think we are done, yes. No, we are done, yeah.
Yep. Looking at the underlying margin in Sweden, seems to be 10.3%, 10.4%, something like that, if I add back to 58, which, you know, is almost 2 percentage points higher than last year. In a historic perspective, very, very high. Could you maybe help us not to get too carried away, or maybe we should get carried away, about that margin year-on-year? A little bit more detail.
Yeah, I think it's a good question. But I'll try to explain it. I don't think you should be carried away, but a strong quarter in Sweden, definitely. For the last years, you can say that we have had four divisions in Sweden, and the other three has performed very well over a long time and on a very stable levels. Stockholm has been the one who has underperformed on lower margin, and then also in that perspective, diluted the Swedish margin. I think this is a result of that we very openly tells you about the cost we have had with this due to this restructuring.
On the other hand, I think you should know that it takes a strong, we have had strong quarters in the other three divisions, Q4, for many, many years, but I think this was really good. I think that's how you see it. That will be probably be good for you for next year as well. This was a good year. Yeah.
When you say a good year for you, is that, you know, successful project closures, where you've been able to release some profit?
I wouldn't say that. It's not one or few big, large, closes or projects. It's a high service activity and many small and mid-sized contracts that we have finalized.
Okay, good. If I look at the M&A, you talked about the good pipeline and so on. You've been a little bit on a slowing pace, I guess, and I shouldn't draw any conclusion from so early in 2020, but you haven't done that much so far. How do you see the pipeline? Are you positive that you could, you know, step up in 2020 over last year when it comes to acquiring revenues?
Yeah, I haven't seen the analysis you referred to, but my feeling is not that we have slowed down. I think it's more about timing, when we can close deals. The pipeline is good, the activity is high. I think you should remember that we reinforce or strengthen the central M&A team that helps the organization to do acquisitions. We took a quite big step up in the activity in 19 compared to 18. I shouldn't expect a very big increase in 19, but we will continue on the same level, at least that's my expectations.
The final thing then, on. You touched it, and of course, difficult for you to answer this, but the financial targets, since you flagged that you're looking at them, I just have to ask. Looking at the sales target of 10%, that's a target that you actually have reached two or three times , if we go back the last 12 to 13 years. The margin target, I don't think you've ever reached that. I mean, is it fair to say that you're not looking at raising targets, or are you more looking at changing or lowering targets?
Let's see. As also I said, this is a work that we, it's carried out through alongside with the strategy work for the future. Just to comment on the margin target, we think that's definitely a target that we can achieve, and that's, at least from my perspective, something that we, I think I want to achieve. Yeah.
Thank you. Thank you.
Okay, ladies and gentlemen, I remind you that if you want to ask a question, you will have to press zero-one on your telephone keypad. We have a question from Henrik Mawby. Please go ahead.
Hi, Henrik Mawby from Nordea. One question from me, if I may. On the profitability issues that you've had in the Stockholm division over the past few years, what is the... You know, what's your analysis of what the root cause of that low profitability in that region is? I suppose it's competition from, for some reason, but what, but why is Stockholm particularly, you know, exposed to higher competition? Is it foreign workers or what has been going on there? Thank you.
Hey, Henrik. No, no, I think, welcome back to Bravida, by the way. I think we have said before that this is not market related, it's not company related either. It's more branch specific issues we have had, because this is we have to add two, one, two region Elektro in Stockholm area. They are working with the same customers in the same market, with the same everything, so to say. One of the regions is profitable to at least margins that we think is good margins. The other one has been heavily loss-making. This is a restructuring work we have done throughout the last two years, especially in 2019, where we have the new head of division in place.
Together with, the central team, this last autumn has done a good job and divided, isolated the challenges, meaning that we ended up with two regions, one profitable and one loss-making. We decided to close the loss-making down. I wouldn't say it's, due to high competition, because the other region has the same competition, as they are making money. It's more about the ability within that organization, in all levels, how they can compete, perform, I would say.
Okay. Just one follow-up on that. You say it's been loss-making. Can you quantify on what type of magnitude those losses have been?
No, I don't think we have done that before, but it, and in some way accelerated the last year. It has been clearer and clearer what we have to do. Then it's something we have to do, unfortunately. Yeah, I stop there.
Is it fair to assume that it's on a level on par with the one loss, approximately, you know, SEK 50 million-SEK 70 million losses?
actually, I don't have that numbers, but those close to SEK 60 million is a combination of taking out people and other restructuring costs, but also finalize bad projects.
Okay. Thank you very much.
Thank you.
We have the next question from Johan Sundelin, from DNB Markets. Please go ahead.
Yes, good afternoon, or morning, I should say. You have had very good growth in the service segment, and I guess you are with the organic growth re-acceleration you're talking about for 2020, also seeing installation service coming back from the backlog. Could you give us some idea about the quarterly profile and then where you can, say, get organic growth rate back to during this year, or if you correlate that to your financial target, obviously?
Did I understand it correctly, if we could give you some information about when we come back to organic growth? Was that the question?
Yeah. If you could see the quarterly profile for it, obviously you have very good organic growth already in the service segment.
Part of the service growth is acquired growth as well, because that's what we focus on when we do the acquisitions, because we think it's more value for Bravida to acquire service businesses than installation businesses. It's not only organic. Then we have some difficulties to actually do the analysis and see when the organic growth comes because of when the customers decide to start the projects, et cetera, et cetera. We can see that we have a positive trend regarding the organic growth the last three months. And we have said before that we expect the organic growth to come back sometimes in H1, and we have no reasons for stop believing that that's a fact, or that's our expectation, at least.
Excellent. Thank you.
Thanks.
Ladies and gentlemen, if you would like to ask a question, please press zero-one on your telephone keypad. I repeat again, if you would like to ask a question, please press zero-one on your telephone keypad. There are no further question at this time. Speaker, please go ahead.
Okay. Yeah. Thank you very much. A reminder again, the Capital Market Day, March fourth, and please sign up. Happy to see you there. Have a nice day. Thank you very much.