Thank you for standing by, ladies and gentlemen, and welcome to the Bravida Q2 2020 Report. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star and one on your telephone keypad. And I must advise you, this conference is being recorded today, Friday, the 17th of July 2020. And I would now like to hand the conference over to your first speaker today, Mattias Johansson. Thank you, sir. Please go ahead.
Thank you very much. Hi and welcome, everyone. As you heard, this is the presentation of Bravida's Q2 report in 2020. Here in Stockholm, Åsa Neving will do the presentation together with myself, and I think we start immediately on slide three, and I think this quarter, we have really been able to show what we have meant before when we have said that Bravida has a low risk in our business model. We have good visibility in our backlog, and we saw and communicated already to you before Christmas or last year that we were entering a growth phase during Q2 this year, and this has also been achieved despite the COVID-19, and I think this is proof of the strength of Bravida as a company, but also the business model we have.
We are the premier multi-technical provider in the Nordics with a strong local market position or a lot of many strong local market positions. I think that's the better way to say it. We have many customers in many different segments, and we have a good mix between service and installation, or another way to say, both small and large contract size. T his has meant that we have been able to improve the earnings this quarter as well. F or the last 12 months, we have now sales slightly above SEK 21 billion. We have an LTM EBITDA close to SEK 1.3 billion, and we are close to 12,000 FTEs. Turning to the next slide and the highlights of the quarter. And as I said, this quarter is really a strong quarter, and I'm really pleased with our performance.
Or as we say in Bravida, we should be proud but not satisfied. Net sales grew 6% to SEK 5,382 million. We had an organic growth at 3%, and an M&A contributed with 6% in the quarter. We had organic growth in Sweden and Finland. And even if we had 3% organic growth, we had some issues on the servicing side, as you can understand, depending on the pandemic. Servicing sales growth was negative at -4%. On the other hand, the installation growth was 40% up. And despite having a negative growth on the service side, we were able to have an organic growth at 3%, which is, of course, very strong. The order backlog is at high level, close to SEK 15 billion. It's up 8% year on year. We have stable order intake, SEK 5,346 million, but weak order intake from servicing.
This is due to negative servicing growth in the quarter and some currency effect as well. Order intake, we're increasing local currency in Sweden and Norway, which are our biggest markets, as you know. Nowadays, many talk about better EBITDA than consensus, but actually, we have been able to improve our EBITDA in the quarter with 16%, up to SEK 317 million, and the margin has improved to 5.9%. EBITDA margin is improved in Norway, Denmark, and Finland, and it's flat in Sweden. Cash flow from operating activities was improved to SEK 728 million, and cash conversion was at 149%. Working capital minus SEK 1.7 billion or minus 8.1% of sales. Net debt at SEK 1,185 million or 0.7 times EBITDA. On the acquisition side, we have done six acquisitions in the quarter, adding SEK 363 million, and we still see a good pipeline.
On next slide, slide five, we have a summary of the COVID-19 impact so far. We have a minor impact from COVID-19 in the quarter. It's milder than expected, and Bravida has received limited support from government. Negative impact in the servicing business, and we just had a few installation sites that have been closed during the quarter. Of course, we have had some higher sickness absence in the beginning of the quarter, but it has been improving throughout the quarter, and in May and June, it is at normal level again. Having said that, of course, we had rather preferred to have the resources on site delivering the services to the customers instead of being home with symptoms or closed out because of quarantine, etc. We think that the demand has been high enough to be able to support this.
We expect, in general, a stable installation market and successively a normalization of the servicing market going forward. But of course, the market conditions are a bit uncertain. But again, we have a good business model. We have visibility in our order backlog, and as you see further down, we have low fixed costs, which gives us the possibility to adjust the cost base if needed. The order backlog is good, and the visibility is high in the installation business. And we, as always, will focus on margin over volume, and we will defend the margin even if the volume decreases. And I think this quarter is evidence of that. Even if we have had some trouble on the servicing side, we have been able to improve the margin. On the next slide, that shows the sales and EBITDA development. Again, sales growth up 6%.
6% coming from M&A, and organic growth was 3%. And we are up 7% year to date. We had sales increase in Sweden, Denmark, and Finland. The EBITDA margin was improved and up 16%. The EBITDA was up 16% to SEK 317 million, and the margin was improved to 5.9%, which is 50 basis points higher than last year and 30 basis points higher year to date. EBITDA margin was improved in Norway, Denmark, and Finland. And we also have had some costs for reduction of personnel and changes of personnel in the quarter at SEK 12 million, which is also in the numbers and is impacting the result in the quarter, of course. And this is done to strengthen Bravida for the future and the coming years. All in all, sales is up 6%, and EBITDA is up 16%.
Then on the next slide, you can see that the order backlog is up 8%. It seems like I can repeat myself for the last reports we have done and spoken to you. We have improved the order backlog. It seems like we have said that we have a record high level on the order backlog every quarter. This time, it's actually SEK 30 million lower than the last quarter. Year on year, it's up 8%. The order backlog decreased SEK 30 million in the quarter, but we have a high order backlog, and only lowering the order backlog with SEK 33 million is close to nothing in a quarter like this, where there have been some difficulties to actually meet customers, do the negotiations, and close deals. I'm very happy with the order backlog, and it is on really high levels.
If you follow the numbers a couple of years back, you understand that the order backlog we are having is really high, and that's, of course, very good having that. We can see that the order backlog is increasing year on year in Sweden, Denmark, and Finland. The order intake declined by 2%, and this is explained by lower orders from the servicing business and currency effects. All in all, a strong position when it comes to the order momentum. Looking on the next slide and the acquisitions. W e have done 13 acquisitions so far in 2020, adding SEK 725 million on an annual basis so far. We have done acquisitions in all countries. We can see a continued strong pipeline, and we are acquiring to attractive multiples. The same multiples as we have done for the last couple of years, I would say.
The COVID-19 pandemic will, of course, have some impact on the acquisitions pace, but the possibilities for the future are many, and we will continue to do acquisitions even if we will see some delays in acquisitions the coming months. That's at least what I estimate. On the other hand, I said that the last time we met as well, and since then, we have done, I think, six acquisitions. But the activity is high, and the pipeline is strong. That's for sure. And we also have a strong balance sheet that gives us the opportunity to continue to create great shareholder value for future acquisitions. On slide nine, we have two examples of projects that we, together with our customers in close partnerships, have delivered, in which we have delivered our services. Sorry.
To the left, you can see a project in Finland where we are doing electrical and HVAC installation in a new smart technology center to Wärtsilä. Bravida has been commissioned to carry out the installation of all electrical and HVAC systems in the new buildings covering 73,000 square meters, and to the right, you can see a photo of the roof of Norsk Kylling in Trondheim. We are doing all installation in this energy-efficient production facility. Bravida has been tasked with delivering a comprehensive installation package comprising heating and plumbing, HVAC, and electrical, and when I'm talking about plumbing, HVAC, and electrical, I also mean sprinkler, building control systems, fire alarms, and access control systems, so we have all systems related to the building. T his facility is due to completion by autumn 2021.
As you can see on the roof, there is a solar array to cover the energy requirements to the owner of the building. This is getting more and more as a new normal in all installations we are having. The sustainability profile of the project and servicing business is increasing. As you probably have seen, we have done two acquisitions, one in Sweden and one in Finland, that are working with the solar panels. I think that is the reason behind that. On the next slide, I think Åsa will take you through the financials. Please, Åsa.
Thank you, Mattias. Now we are on slide or page number 10, and we'll start with Sweden. Starting with the top line where sales have increased by 10%, both organically and by acquisitions.
The organic growth in Sweden was 5%, and in Sweden, we have had growth also in the service business this quarter. The EBITDA was SEK 119 million compared to 176 last year. And this leads to a stable margin of 6.4%. It's a little bit lower than last year, but in this quarter, we're also taking some costs for layoffs, as Mattias mentioned. The order intake was plus 9%, and this is mostly coming from installation. We had an order backlog increased by 14% year on year, and we also had an increase in the backlog for the quarter compared to Q1. And that was an increase of SEK 135 million. And as Mattias said, in Q2, we acquired a solar cell installation company that we believe fits very well with our strategy to be a more sustainable company in the future. Moving on to slide 11 and Norway.
In Norway, we had a decrease in sales by 13%. This is mainly due to a weaker Norwegian krone. In local currency, the decrease was only 1%. The organic growth was minus 2%, and the decrease in sales comes from services, while the sales from installation actually increased. The EBITDA margin increased to 6.4%, and this is compared to last year's second quarter where we had a margin of 4%. And as you may remember, we had two big write-downs in Norway last year, so that explains some of the difference. The order intake in Norway was minus 11% year on year, but it increased in local currency by 4%. The order backlog decreased by 25% year on year, and in local currency, a little bit less by minus 10%. But we had an increase in the backlog in the quarter versus quarter one.
Moving to the next page, which is Denmark. In Denmark, the top line grew by 13%, and the growth came from acquisitions, and sales from servicing was decreasing here. The EBITDA margin improved to 5% from 4.2% last year, and the EBITDA improved from DKK 39 million to DKK 53 million. The order intake was minus 14% year on year. It was less in local currency, and it was minus 1%, and also in Denmark, the servicing demand was weak. The order backlog was 9% year on year, and then moving to Finland on page 13, and here we are happy to present that both sales and EBITDA improved this quarter. Sales increased by 90%, both organically and by acquisition. The increase is mainly from installation, but there is also some growth from servicing here.
The organic growth was 12%, and the EBITDA margin improved to 3% from 1.5% last year's second quarter. The order intake decreased minus 26%. This is mainly installation, but it also has had a currency effect here. So in local currency, the decrease was 11%. And the order backlog was strong. It increased by 55% year on year, and it also increased in the quarter. That was the countries. If we move to the next slide, we have the financial position. And as you can see, we have a very strong financial position. We have a strong cash balance, and we have amortized on our loans. And this leads us to a net debt of SEK 1.2 billion, and it also leads us to a net debt/EBITDA ratio of 0.7. That is a record low.
We have a very strong operating cash flow, and if you look at the operating cash flow here on a rolling 12 basis, you can see that there's a strong improvement. Part of it is IFRS 16 effects, roughly 200, but then it's mostly working capital. That explains the improvement in working capital. That explains the difference, and here we have a one-off effect because we have postponed tax payments in Denmark and Norway due to COVID-19, and that will be paid in Q3 instead, and that is SEK 277 million. Also, cash conversion is on a record high level, 149% compared to 98% last year. Here we also have an effect of this postponed tax payments, and if we exclude this from the cash conversion measure, it would be 127%, so it's still on a very strong and high level. Next slide, page 15, shows our financial targets.
And as you may know, we have a sales growth target of more than 5%, and right now we are on 7% year to date. We have an EBITDA target of more than 7%. We are year to date now on 5.5%, and we have a rolling 12 on 6.1%. So there is a little bit of way to go there. Our cash conversion, as I said, is very high, 149%, and so far we haven't paid out any dividend this year. And the net debt ratio, the net debt/EBITDA ratio is record low on 0.7%, and our target is less than 2.5 times the ratio. So far, so good, Mattias.
Thank you, Åsa. And if you take a look at slide 16, you can see our historical performance.
As you can see on this slide, we have for the last five to six years had a continuous growth regarding sales and EBITDA. I think, personally, that we can continue to create shareholder value in the coming years and to do the same, continue the great development in Bravida. Why do I think this? We have a strong market position, both from national perspective and in the local markets in many places. We have a good solid mix between servicing and installation, and we had a strong cash flow that will support us to continue to grow the business through our continued M&As. Adding SEK 12 billion in sales in 2014, going up to above SEK 21 billion with improved EBITDA throughout the period is really a proven strategy, and this is something we will continue to do, of course.
And the cash conversion to the right is another way of showing this strength, and that will support the ongoing journey for the coming years as well. So turning to the next slide and the future, we are now working with a new business plan from 2021 and three years ahead. And this is a way to secure that we will have a future development as well and to make sure that we are continuing to create value for you as shareholders. And we are now working on the new business plan. And just to give you some heads-up, the plan will focus, of course, on servicing to try to grow the servicing business. It will have some digitalization that will support both servicing and the installation part of the business. And this will, of course, require some investment, both regarding systems but also new resources in the organization.
That will be coming into the P&L the coming quarters. We think that we have a demand for our services that will be quite stable, but we need to do some investments. The size of this is not extreme, but neither they are negligible. And I think this should be seen as a sign of our ambition to continue to grow the profit and develop Bravida as a company for the coming years as well. There will be no cost for this in Q3, and see this as information, and then we'll come back to this when our business plan for the coming years is finalized. But I can guarantee that we will do everything in our power to make sure that we are an even stronger company in 2021 compared to 2020 and so on. Moving on to the next slide and the summary of the quarter.
As you have seen, we have limited impact from COVID-19 in Q2, but there are some uncertainties in the market conditions ahead. We think we have a strong position. We have a good visibility, strong order backlog, and a good mix between service and installation. And growing the business with 6% in the quarter, despite the fact that we have been closed out for some servicing business, I think that's a really strong proof of the business model. The growth, as I said, increased 6%. It's above financial target. We have a mix between acquisition, acquired growth, and organic growth. Servicing sales is down 5% due to impact from COVID-19. Installation order backlog are at stable high level, close to SEK 15 billion. The EBITDA margin is improved to 5.9%. We have improved margin in Norway, Denmark, and Finland.
M&A execution is on track with a healthy pipeline, six acquisitions completed in the quarter and 13 in total so far in 2020. Net debt 0.7 times EBITDA, well below our financial target, and we have a strong operating cash flow at SEK 728 million. There are some one-offs in that numbers, but still a very strong number. Cash conversion, LTM, well above financial target at 149%. With that said, I think we can open up for some questions. Thank you.
Thank you, ladies and gentlemen. If you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the hash key. That is star and one to ask a question. We do have two questions at this time.
Your first question comes from the line of Lucas Ferhani of Deutsche Bank. Please ask your question.
Hello. Morning, everyone. So my first question was on the service side of the business. Can you just remind us how the contracts work? Is it a monthly or a quarterly service? And once business reopens, do you expect some pent-up demand, maybe more kind of servicing needed because it wasn't serviced for an extended period of time as things go back to normal? And also, how quickly do you think things are getting back to normal, especially in Norway, Denmark, where you had the bigger lockdown? Are you already going back to clients, or is it still tough to service clients? Thanks.
Yeah. I think first, I think it's important to remember that the downturn on the servicing side is not demand-driven. It's health-driven.
Customers and our own personnel have been, in some cases, forced to stay at home because of the quarantine, the lockdown in society, especially in Denmark and Norway, as you said. So the demand is still there. I think when it comes to the different types of the servicing agreements, monthly, weekly, or yearly, it depends. But very often, it's actually service that is needed to make sure that the installation is working. We are fixing things that have been broken. So servicing that were not carried out in Q2, most likely those servicing, I can say, issues or working orders, they will be carried out the coming months. And we have already now seen that it's getting back to normal levels again. And I think that's because it's not demand-driven. It's health-driven.
So I expect that we are during Q3 at normal levels on the servicing side again, as it looks today. The Danish and Norwegian societies are opening up more and more, and more and more people, as I said, are coming back to work. W e have got some, as Åsa said, some supply for the government, but I don't think that's a gift. I had preferred to have the blue colors working on the field instead because we are not getting money from the governments. We are losing sales, and we are losing profit in that perspective. So demand for servicing will come. It's close to normal already now, I would say.
Okay. Thanks. And the next one was just on the Stockholm Bypass project.
Can you remind us when is that supposed to start, and do you hear anything from the government in terms of the normal kind of timeline?
Yeah. First of all, it's a long project. We are in the design phase now, and in that phase, we are actually ahead of the plan. We have delivered the documents the customer has asked for very early. So we are actually ahead of the plan so far. The production won't start until 2023. We will have some FATs carried out in the end of this year. That is actually meaning that we will do some smaller installation to make sure that the systems are working, and that will be taking place late this year. But the real production won't start until 2023, and until then, it's a lot of design and engineering time.
So the big part of the production starts in a couple of years from now. Then there have been some discussions about delays in the project, but there is not anything decided yet. We have received a suggestion from the customers to change the timeline in some ways, and that is something that we are looking into now to make sure or give our thoughts about that suggestion. And we're actually getting paid to do that work, and we are going to present the impact on our scope of work due to the suggestion we have received from the customer so far.
Okay. Perfect. Thank you.
Thank you.
Thank you. Once again, ladies and gentlemen, if you do wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced.
If you wish to cancel the request, please press the hash key. And your next question comes from the line of KJ Bonnevier, of Deutsche Bank, sorry, of DNB Markets. Please ask your question.
Thank you very much. I don't want to change employer today. I'm quite happy where I am, so. Yes. Coming back, Mattias, to the great report, by the way, a fantastic show looking at, as you say, Lowry's model paying off. But when you look at service revenues and the earlier answer to the question you got in the previous question, can we say that the decrease you saw in the quarter was really related to the first part of this quarter and coming after the end of the quarter you are basically back to normal levels, or how should we see it?
I think that is hard to answer.
I think we can see a 4% decrease of the service business, and of course, most of it were in the beginning of the quarter, definitely. But then in some local places, look at Sweden, for example, where we had the virus spread quite early in the Stockholm area. Then it actually took a month or maybe one and a half months before it actually was seen on the countryside. So I think it can be quite well spread over the quarter depending on where in the geography you are, actually. Yeah. I don't know if that was the answer on your question, but if we are calculating on the minus four on the service side, that's close to SEK 100 million in sales. And yeah, if we look at the slightly higher margin of the service, that's a 7% margin, and then we are actually losing SEK 7 million in EBITDA.
Exactly. Because that's coming back to my second follow-up question on that. Looking at the margin development on group levels in the quarter, obviously very strong, being able to expand margins in this kind of market environment. And then, as you say, the mix really should suggest that there should have been, say, a margin headwind for you, rather. So what is driving? Is there some extra components in there?
Well, in Sweden, we are flat margin-wise, even if we have taken some costs for changing the personnel to strengthen the organization. So if we adjust the profit in Sweden, we're actually improving the margin in Sweden as well, I would say.
In Norway, we can now see that we are improving the margin that Oras AS is delivering, that we are, the project I mentioned, Norsk Kylling in Norway, that's a project that we haven't been able to win before we did the Oras acquisition, for example. So Oras AS has strengthened us in many ways, and now the margin is coming up in Norway as well. And then we have improved the margin in both Finland and Denmark as well. So I think this is, even if we have a mix that is not that good because the servicing is going down, I would say that we have improved the installation side, and that's a good sign, of course. I think you're right. The mix is not perfect this quarter. On the other hand, we have improved the margin on the installation business.
Because I also saw, and looking through your detailed numbers, that you increased the provisions with something like SEK 30 million in the quarter, which obviously also should be a hampering effect on the reporting number.
Yeah. And I think that we have been able to, yeah. I think this quarter is more conservative from that perspective. So you're right. Definitely.
And on the positive side, you're not benefiting from a lot of, say, end-of-project kind of writebacks or anything like that, or, say, extra earnings from those kinds of things?
No. No. So it's a.
So it's a usual quarter, basically.
Yeah. Exactly.
Excellent. And Åsa, I just heard you mention when you talked about the dividend that it hasn't been decided so far. How is the board thinking about, say, maybe reinstating the dividend that they pulled and these kinds of things?
That is yet to be seen, but that will be a discussion on the board meeting in the fall. And then it's. Yeah. So the decision will be taken later on.
But do you think it's more natural for you to come back, have an extraordinary meeting deciding a dividend this year, or maybe rather looking for an extraordinary dividend next year?
There will be a meeting deciding on this this year.
Yeah. To be honest, we didn't discuss that on the board meeting this morning. When we postponed the decision about. Well, when the board postponed the decision about the dividend, they decided at the same time. Let's take a new discussion during the fall about this and look at the market conditions, the situation in the market, what has happened with the cash flow and the debt level.
And of course, the debt and the cash flow hasn't become at least weaker since they said that. But the decision was, let's take a new discussion during the autumn, and that's been the decision. So let's see.
Excellent. You're at least coming to work this from a position of financial strength. And just on that, do you see any acquisitions of the size that could mean that you would come up towards the, say, the limitation you're putting yourself on the balance sheet of 2.5% debt servicing?
Of course, there are some targets. And of course, the strong cash flow, the low debt, of course, makes the discussions we are having internally slightly differently. That's, of course, quite natural.
As I said a couple of times during my presentation, I want to develop Bravida as a company and to make sure that we can increase the profit through acquisitions. That's one way to do it. With the balance sheet we're having, of course, we would get plenty of opportunities to continue to create shareholder value through both organic growth, as we have shown this quarter, but also through future acquisitions, definitely. Small and large acquisitions is part of that plan.
Excellent. Thank you. Thanks for the color .
Thank you very much.
Thank you. Our next question is a follow-up question from Lucas Ferhani of Deutsche Bank. Please ask your question.
Hi. Just again on the backlog and the order intake. So I understand from the release, most of it is driven by the weaker servicing business.
But on purely installation, are you already seeing signs of maybe weaker demand because of the uncertainty going forward?
No. So far, we can't see a weaker demand. No.
Okay. That's clear.
Thank you. Once again, thank you.
Yeah. I think that's a fact.
Thank you. Once again, ladies and gentlemen, if you do wish to ask a question, please press star and one. There are no further questions at this time, sir. Please continue.
Okay. Thank you very much, everyone. I think this, at least from my and Åsa's perspective, this was a good final of the first two quarters of the year. We are not too satisfied, but we are really proud of the two first quarters of Bravida this year. We are planning to have some celebrations tonight at least. I hope you can have some nice vacation when it's time for that.
So have a nice summer, and thank you very much. Bye-bye.
Thank you.
Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you for participating.