Thank you very much, good morning, everyone, and welcome to our presentation of the Q4 report for Bravida. I'm Mattias Johansson speaking, and on my side, I have Nils- Johan, as usual. I guess you all know us quite well at this moment, so I actually just want to say, remember that we are a very decentralized organization located in 150 different places in the Nordics. I think that's the main message in slide three. We're close to 10,000 employees, and we have a sales at SEK 14.8 billion. Therefore, I skip the rest on slide three, and we go to slide four and look at the highlights for Q4.
In Q4 in 2016, we had an organic growth at 4%, M&A at 5%, adding up to 9% and approximately SEK 4.3 billion in the quarter. Service sales growth, it was 7%, and the sales was impacted by strong performance in Norway and Denmark, but also we had a growth in Sweden. For another quarter, we have seen a record high level at the order backlog. It's up 22% to SEK 8.6 billion. Order intake is +11% to SEK 4.3 billion. We are very happy to see that maybe in our toughest market for the moment, that is in the southwest of Norway, we signed an agreement on a tunnel in Stavanger in Q4, which gives us a good position in that area for 2017 and 2018.
As usual, we have a price discipline and margin over volume, we try to balance our will to grow and keep the focus on the margin. We have a good demand in the market, lack of resources. It's very important for us to choose the right projects to be able to improve the margin at the same time as we grow our business. Adjusted EBIT, it's up to SEK 353 million in the quarter compared to SEK 308 last year. However, we have no specific costs in Q4 in 2016. It's a really strong quarter. Adjusted EBIT margin is up to 8.3% compared to 7.9% last year, this is very much thanks to the project selection and the impact from the initiatives.
Excluding Finland, we are at a margin at 8.5%. We are very happy for that figure, of course. Cash flow was SEK 415 million from operating activities in the quarter. It's a little bit lower than last year. Last year, you should remember that it was exceptionally strong year. I think we said last year that you should look at Q4 and Q1 together. I think we say the same this year. It has started strong in January. Maybe we can come back to that after Q1, but it's, I think you should see those quarter together. Working capital, minus SEK 859 million or minus 5.8% of the sales.
Net debt at SEK 2.4 billion, which is the same as 2.5 x adjusted EBITDAR on LTM basis. We have done four acquisition in Q4, one in Finland, as entire group, which complete our offers to the west coast of Finland. We did Moelven Elektro in Norway, and we have done two other acquisitions in Sweden, and all in all, this adds up to SEK 300 million, SEK 430 million. The market trends, I think you all know and have seen that the market is strong. In Sweden, we have a strong market, building constructions activity is strong. We have an improving order backlog for our largest customers, which is the construction companies, as well. The industry confidence indicator are at high level.
The main growth drivers are housing, but also public buildings and infrastructure, and this, as I see it, will continue for a while ahead as well. In Norway, the market is improved. There are a continuous low activity in southwest of Norway, depending on the oil and gas industry, as you know, but overall, we can see high public investments and a strong and good market. The market in Denmark is supported by public investment and housing. There are a low activity in the commercial buildings, and the construction confidence indicator are still below average. Overall, we see the market in Denmark as strong, and we also have a lack of resources, which actually strengthen the sense of a strong demand and a great market.
In Finland, the market is improving, still from low level, it's getting better and better. The sales have increased for the construction companies, the building permits have increased as well. The market growth is mainly focused on the large cities in Finland, overall, a solid and a strong market, as we can see for our business. If we turn to slide six, group sales and adjusted EBIT development. Sales growth at 9% and 4% organic. The growth comes from Norway, Denmark, also from Sweden. We have seen stabilization in Stockholm area. EBIT margin is up to 8.3%. If we exclude Finland, 8.5%, we see as a really strong figure.
We can see improvement in all countries excluding Norway. Norway had still the highest margin in the group. I think you should see that as a continued good performance in Norway, but we have had really strong figures margin-wise in Norway before. Reported EBIT is up 28% in the quarter to SEK 353 million. Order momentum on slide seven, record high level, as you know, SEK 8.6 billion. It has increased by 22%, 12% year-on-year basis. In Sweden, we have won a couple of hospitals, office projects, housing projects in Norway, housing, office buildings, road tunnel in southwest, the one I mentioned earlier in Stavanger. Hospital in Denmark, Jutland, and Finland office project.
As you can see, we are winning a lot of hospitals, which we see is quite nice project for us. We have done that before, we know the risk, and we think that's a perfect project for the organization and the knowledge we have in Bravida today. Remember, when it comes to the order backlog, this only includes the installation part, not service, and service is close to 50%, I'll say. This is a good platform for continued development in 2017. Slide eight, the order backlog is still above sales installation on LTM basis. The red line is the service sales, as you can see, have been developing in a very positive way, the whole period you can see on this chart. Green line is the installation sales, and the blue is the order backlog.
As you can see, the order backlog is above the LTM sales, and it actually has widened the gap even more the last month. Yeah, our estimate is that this will, of course, support the organic growth in Q1, as it did in Q4, and probably we will see a decent or good year in 2017 as well. Johan will now take you through the financials. Please, Johan.
Yes, thank you, Mattias, and we should start to look a little bit deeper into the figures on. If we start with the sales switch, there were limited currency effect in Q4, and we are using the average currency rate during the year. There were limited impact from the weakest Swedish krona in the end of last year. Of course, now in from Q1, from January, we will have the impact, and we estimate that the currency impact will be with the current currency rates, something between 2%-3%. Acquisition added 5% in Q4 and 6% for the full year.
If we look at organic growth, as Mattias mentioned, it was up with 4%. This is in line what we communicated after Q3, that we expected with support from the strong order backlog, that we should see it, I think we used the word trend shift in Q4, that we're going to organic growth. We saw a good growth in November and December. This has also continued now in January. If we look for earning per share, the last year, we had an earning per share for SEK 0.28, up to SEK 1.26. There are three main reason for this. Of course, we have a better operating profit. Also last year, we had cost for closing down the hedges, the currency and interest hedges connected to the old financial package.
Also, last year, we had what we call specific cost for SEK 33 million, mainly related to the IPO. The cost for the currency and interest hedges was SEK 156 million. Let's go look for the next slide and going and talk a little bit more on the different markets, and we're starting with our largest market, Sweden. We had a strong quarter in Sweden, and if you look for the margin, it increased from 6.6% up to 8.2%. The main reason is that we see a good impact from the initiatives, both the purchasing and the productivity initiatives, and we see more, call it, stable situation in Stockholm. We also saw growth in Sweden this quarter, 5% up.
If we look into the future, it's good to see that the backlog is up with 24% year-on-year. That, of course, will support development in 2017. We continue with Norway. We had an excellent growth in Norway. There's a combination of both acquisition and organic growth. Top line was up with 20%. If you look for the margin, it decreased in the quarter from high 10.2% down to 8.9%. As Mattias mentioned, 8.9% is still the highest in the group.
Probably you remember that we, a year ago, we talked about that we had a positive one-off in Q4 2015, something between SEK 10 million-SEK 15 million from that we were in final stages of a couple of large product that we had, we were able to gain some profit from. Looking at the order backlog is up 30% year on year. I think we are happy to see that we are taking a good order now in the Stavanger area, the tunnel order that we will start produce during the summer. So that will give us support for the growth in 2017 and 2018.
If we go for next slide, talk a little bit about Denmark. Denmark summarize a good quarter with growth and improved margins. We see also 16% growth, that's also a combination of organic growth and acquisition. The EBITDA margin increased from 6.1- 6.8. Of course, there is a good development in the quarter. Please remember also that last year, Q4 2015, we had a couple of project in region infrastructure, there was some challenges with. Order backlog is up 18% from a high level. Denmark sales up 16% and EBITDA up 29%. We continue with Finland. We were able to improve the result with a small figure.
I think the most important activity in Q4 was the acquisition of Asentaja. As Mattias mentioned, now we can offer service to our customer in both south, west, and east Finland. We continue to priority The Bravida Way, the highlight now in the beginning of this year is the productivity program that we are educating many of the employees in Finland in the way we are working. Market is improving. If we go back to 1.5 years, when we entered the Finnish market, the market is better today compared to 1.5 years ago. Okay, if you go to slide 14, just add some comments about the M&A.
All in all, we did 9 acquisitions last year, adding roughly SEK 900 million to the annual sales. It's good to see that we were able to do M&A in all four countries. As we see also, there is a strong pipeline, and the multiples are still attractive. Let's come back and talk about more M&A when we talk about the dividend. Next slide. This is the net debt. We have, as you know, a seasonality in the cash flow.
Q4 is always the strongest quarter during the year, and we had a operating cash flow for roughly SEK 450 million, taking down the net debt to SEK 2,000,000,417, and giving a net debt to EBITDA of 2.5. We have also, in the beginning of this year, actually last Friday, signed a new term loan with SEK, Svensk Exportkredit. We will use this loan to repay the current term loan with the current bank group. The reason for signing this is to, of course, to add a new lender, but also to reduce costs. It's flexibility and cost, and the new term loan have the same maturity as the larger agreement. Next slide, and dividend.
The board's proposal to the annual meeting is to increase the dividend with 25%, up to SEK 1.25. This correspond to 37% of the net profit and a total amount of SEK 252. Looking at our financial target, we are saying 50% of net profit. The reason why we are not going up to 50% is that we continue to see a strong M&A pipeline, and we would like to have the financial flexibility to try to grab these opportunities that we see coming up now in 2017. The annual meeting is on 10th of May, and I think the payment will be, the dividend will be paid out 15th of May.
Financial target, we are saying that we would like to grow this business with 10%, a combination of organic growth and M&A. I think we were quite close to this figure in Q4. EBITDA, adjusted EBITDA, we would like to take this company to up to 7% margin. During last year, we increased the margin from 6.2 - 6.5. Cash conversion target is to have it around 100%. We were at a low figure. We were down to 60 in end of December. As Mattias mentioned, that we have had a strong cash flow in the beginning of the year.
Hopefully we, when we report the Q1, you will see that we are not continuing on this low level. Target is to pay out 50%. We talked about this on the last slide. Net debt, I think we have also discussed. Mattias?
Thank you, Nils-Johan. To summarize this presentation, again, the stable good market conditions will continue. We have installation order backlog and service business momentum that will support organic growth and the cash flow the coming quarters. EBIT margin improvement is on track, supported by initiatives and implementation of The Bravida Way, which we think is the most important thing in our business model, our culture, and our will to always improve ourselves in what we're doing. I think you should remember also that we think that the initiatives that supports the margin expansion is on track, as we said. I think it's fair to say that the first part of those initiatives are a little bit more easy to take out. This is very much about changing people's behavior, work with the culture in the organization, and continuous improvement.
We still think there are a potential to take out, but we also can see that it's getting a little bit slower and slower in, not in the end of the initiatives. We will, of course, have a great potential to improve our margin, but it's not a quick fix, just to remember that one. M&A execution is on track with a healthy or even a strong pipeline, therefore, the dividend that we propose is a little bit lower than the financial target. On the other hand, I think that's the best way that we can use our cash to continue to improve and develop the company, so we can make sure that we make Bravida even greater during 2017.
I think this was a nice quarter to end 2016 with and a good platform to start the 2017 with. Thank you very much, and I think we can open up for questions.
Thank you. Ladies and gentlemen, if you have a question for our speakers, please press zero one on your telephone keypad now to enter the queue. Our first question comes from Silvia Stotova of Deutsche Bank. Please go ahead. Your line is open.
Hi, good morning, everyone. I've got two questions, please. First of all, on organic growth, you said that you're currently running at similar rates in January. Just to confirm, you're still at kind of 4%-5%? If we think about the shape of 2017, does that mean that maybe Sweden continues on an improving path, and then we see Norway and Denmark were quite strong? I don't know how that phases out, but potentially there's a bit of a moderation in Norway and in Denmark. Is that the way to think about it? Secondly, on the M&A, obviously you made quite an explicit comment there with the dividend and the desire for acquisitions. Do you have any specific larger acquisitions in mind, or is this just to continue as you have in the past?
Thank you.
Okay, Silvia, thank you very much. Regarding the organic growth, we have started to do the analysis where we compare the order backlog with the LTM installation phase. We have had seen a strong support for the organic growth throughout the second half of 2016. What we can see in January, the growth trend have continued as it ended the year in November and December. We think that we It's always hard to estimate the organic growth, as you know, but we think that we get closer and closer, and maybe be able to deliver on the financial targets as 5% organic growth. Could be slightly below, could be over, but we definitely have a good situation to deliver on organic growth.
When it comes to M&A, I think we have said earlier that we will continue to do bolt-ons, and we will do that as well. We have said that we will try to do one larger acquisition every year. You never know when those occasions comes. Overall, we see that we have a strong pipeline, and we think that we can use those money better than actually give them out as dividend. That's how I think. We will continue to do the work as we have done, and let's see. You know, it, we want to buy, and you need to have someone who wants to sell as well, but the pipeline is good.
Okay, thanks. Do you have a large acquisition in the pipeline that you are kind of working towards or?
We know the pipeline, our world is discussion regarding agreements. Of course, we have target, as we said, but that we have had for a long time. I don't want to comment if we have a larger in the pipe.
Yeah.
We think that we have a good position to continue to do M&As.
Okay, great. Thanks very much.
Thank you. Our next question comes from Henrik Nilsson of Nordea Markets. Please go ahead. Your line is open.
Hi, good morning, all. Thank you for taking my questions. First one, as you said, there was a solid quarter in Sweden. You have a number of different drivers there, cost savings initiatives, growth in the south, let me say, stabilization in Stockholm, and then successful project selection. Can you give us any more comment or indications of the relative impact of these factors on the profitability in the quarter in Sweden? Thank you.
Oh, you mentioned a lot. Good morning, Henrik.
Good morning.
I think you mentioned it all. I think, we are working consistently and consequently with the initiatives, and of course, they have impact on the margin. We also try to be as close as possible to the market and try to select the projects where we can price the risk in the way we think is the right way to price it. I think overall, the initiatives, the support from the market, that we have done a lot of things in the right way, but not. Actually, I don't think this is a result of what we have done in Q4. I think the growth comes from what we actually did during Q2, Q1, Q2, and Q3 as well. This is something you need to work with every day.
I think, yeah, I don't know if I answered your question, but that's how I look at it.
Put it this way, is it fair to assume that cost savings, growth and project selection, it is roughly a third each on the 1% or on the 1.6 percentage points increase in margin? What's the full part?
You, at least you are quite close to it, yeah.
Okay. Okay, thank you. You have been over the past, two years, perhaps commenting on pricing pressure in the market from certain competitors in some regions. I think we've heard also that the discipline has been improving during 2016. Are you still seeing an improving pricing discipline in the tenderings?
I first of all, I don't think we have talked very much about it, but we got questioned about it. I think that it's hard to say if we have noticed the changes from other competitors, or peers. We think that we have been able to take and win projects and service contracts for that matter as well, on levels that we think is healthy levels. Of course, we actually, there are different other places. They need to focus on cash margin and so on. Of course, that will help the market and our position in that market.
On that note, do you think we should be, sort of careful or concerned that the you have been forced to also come down in pricing? Have you been able to sustain the same type of profitability target in the contract?
Yeah.
I mean-
Yeah, I think we have, but of course, you need to have respect for the balance we try to have between growth and margin. We haven't changed our way of manage the company, we haven't changed the way of actually price our services. Of course, it's a balance every day, and sometimes you are more successful than other times. We can't see anything that tells us that it is has been a change.
Okay, one last question here. On the order backlog, you've previously commented that the strong backlog we've seen in the past few quarters has a slightly longer duration than what has been the normal historically. Is this picture still the same or?
Yeah, I think we have said that, and we refer to one construction company as well, that it takes a little bit longer time from that you have signed the deal until the production starts. I think that's the result why our growth, we're a little bit late from our own forecast. Our own estimate says that around 70% of the order backlog will be produced within 12 months from now, and I think that's close to the same as earlier. No big change in that perspective.
Okay, brilliant. Thank you.
Thank you.
Thank you. Once again, ladies and gentlemen, if you do wish to ask any further questions, please dial 01 on your telephone keypad now. There is one as I say that, it's a follow-up from Silvia of Deutsche Bank. Please go ahead, your line is open.
Hi, good morning again. Could I please just check the impact of working days on your organic growth in the bigger regions in Q1 and Q2, please?
You mean, going forward in, you say Q1 and Q2?
Sorry, did my line... yes, Q1 and Q2 2017, please.
Yeah, of course, it's good that you. We, last year, we had the Easter impact in, we had Easter in Q1, and now it's in Q2. That will of course, help the growth in Q1, and the opposite in Q2. I think we last year talked about the impact will be something three days or something, three days, four days. We have to calculate when we take into calculation, when we look into the different quarters.
Am I correct in thinking it was about 3-4 days overall for the group?
I think we were, that what were referred to. We have not actually looked into this specific, but when we talked about it last year, if I remember, we talked about 3-4 days.
Okay, great. Thanks.
We have a further follow-up from, Henrik of Nordea Markets. Please go ahead, your line is open.
Hi again, thank you. I just remembered Finland is moving to a longer workweek, as I understand it. How should we think about that, and how that will impact you in Finland going forward?
A longer workweek, you said that? Yes. I think we, I don't think that will affect us in the short term, but in the longer term, yes, maybe. We are working with other things in Finland that is much more important to... Nils-Johan mentioned that we are launching the productivity initiative for the moment. I think that will have a much, much greater impact than if we get longer working days, as we look in Finland for this moment.
Okay, thank you.
Thank you. Once again, if there are any further questions on the line, please dial zero one on your telephone keypads now. As there are no further questions on the line, I'll hand back to our speakers for the closing comments.
Okay. Thank you very much. It's a snowy and icy day in Stockholm, and I'm very happy to have a great better report than the weather is in Stockholm today. We're looking forward to a nice day in Stockholm here, and I hope you get the same wherever you are. Thank you very much.