Ladies and gentlemen, welcome to the Bravida Q3 2017 report. Today, I'm pleased to present CEO, Mattias Johansson, and CFO, Nils-Johan Andersson. For the first part of this conference, all participants will be in listen-only mode. Afterwards, there'll be a question and answer session. Gentlemen, please begin.
Thank you, good morning, everyone, and welcome to our Q3 report, presentation of the Q3 report, I would say. As usually, it's myself and Johan Andersson, who will present, this report for you. I would like to start at slide three and talk a bit about our new business model. We have earlier mentioned a couple of times about the risk in our business model. I think it's worth to mention it again, that we have, number one, diversified end markets, we have low customer concentration, and the last one, small average contract size. I just want to underline that we are not dependent on any special end market, for itself, the new build residentials that we have, there has been a lot of talk about the last month in the Nordics.
We are also represented in more than 150 different locations in more than 250 branches. We have more than 50,000 customers. Our median contract size are slightly above SEK 350,000. Moving to the key highlights on the next slide, I would say that we have a really strong quarter behind us. The sales grew 90% to SEK 3.9 billion, where our organic growth was 6%. Acquisition represented 13%. By that, we have been growing 6% organic year to date, 12% in Q1 and 0 in Q2. Please remember the Eastern effect in the second quarter, meaning that I would say that 6% organic the first six months as well.
Inflation, we're 21% up, and service sales growth was 80%, which is important, of course, as well. We have 10% of our net sales coming from new build residentials, and this is also reflected in the order backlogs. It's not more than that in the order backlog we are having. When we talk about the order backlog, it's once again at record high level at SEK 10.6 billion. It's up 25%, and the order backlog has actually been growing since the second quarter 2015, in a very stable way. We have a strong demand for our, from our services in the market we're in.
We have a strong momentum in order intake, +10%. We also can see a really good order intake in Sweden and Norway, which are our two biggest markets. Of course, that's important as well. Adjusted EBIT is up to SEK 222 million. The margin is a bit diluted by Oras, the Norwegian acquisition, by 0.4%, but the underlying EBIT margin is unchanged at 6.1%. We have improved margin in Sweden, as well as the underlying margin in Norway. Again, that's a good thing while we're having the largest part of the business in those two countries. The cash flow from operating activities is minus SEK 144 million in the quarter.
It's slightly weaker than last year, but as you know, Q3 is our weakest quarter, and it can vary from quarter to quarter, and I'm expecting this to improve in the last quarter of 2017, of course. On the acquisition side, we have completed one acquisition in the quarter, Pounus rör in Kiruna, Sweden, added SEK 30 million in annual sales. The integration of Oras is running according to the plan we have put up, and we expect a break-even result this year. It's going to be really interesting to follow that company for the next quarters ahead. We have been taking them into our platform since two weeks ago, which means that we can start to take out some cost synergies regarding purchasing and so on.
On the next slide, you can see that we have a continued good demand for our services in our market. We expect that this demand will remain good. We have a good visibility in our own order backlog, and we can also take advantage of the construction company's order backlog. They are approximately six months ahead of us in the cycle, and all the large public companies in the Nordics have reported increased order backlogs in the third quarter as well. It seems like we have a support for our view regarding the market in their order backlogs as well. In Sweden, strong market, building construction activity is strong. Good order backlog, as I mentioned, in the construction companies.
Industry confidence indicator are at high level, main growth drivers of public investment in building and infrastructure, and of course, residentials as well. In Norway, we have an increasing residential construction starts and a stable market for offices. Overall, the building construction and installation activities are up close to 8% year-on-year. The market drivers are public investment and, of course, even here, residential buildings. We can see that we have improved activity for public buildings that will balance the decline for commercial buildings in Norway. In Denmark, we have a really stable market as well, supported by public investment and residential construction, residential, healthcare, and education buildings driving the volumes in Denmark for the moment. We also see in Denmark that we have a strong demand for our services.
Finally, Finland, the construction market is improving, all by from lower level. We have had that headline for a couple of quarters, but we can clearly see that the activity is going up, and also the increase in sales for the construction companies is positive. Overall, as I said earlier, the demand will remain good. This is also reflected in the sales development, as you can see on the next slide. In Q3, we had a sales growth of 90%, which is 6% organic and 13% from M&A. We have a sales growth in all countries, and it's up 80% to SEK 12.3 billion year to date.
Adjusted EBIT margin, excluding Oras, is unchanged at 6.1%, and Oras has a break-even result in Q3, and dilute the margins by 0.4%, as I earlier mentioned. We have an improvement in Sweden and Norway, adjusted for Oras, and the EBIT margin is affected negatively by a write-down in a project in Denmark. Reported EBIT is +17% in Q3 and up to SEK 222 million. On the next slide, we have the order momentum, and order intake is up 10% in the quarter, and year to date, it's up 14%. Our order backlog increases with 25% to SEK 10.6 billion, and as you can see on the next slide, the gap between the sales and our order backlog increases and will support the continued growth the coming quarters.
The blue line shows the order backlog, the green line is sales installation on LTM basis, and the red one is presenting the service sales LTM. Important when we talk about the order backlog is to note that all orders in the backlog are all signed contracts, and they will be delivered in some way to the customers. The order backlog does not include our service business, which is close to half of the sales, which means that half of the sales is coming from the service business ongoing. Speaking of service, I'm very happy to see that our service business is growing as well, and that is, of course, important.
A good development in our service business is important, as you know, because it's much more stable over the cycle and also more profitable than installation. It's not only that the sales is coming from the installation business, it's also coming from service business, which is important for the future. On the next slide, Nils-Johans will take you through our financial performance.
Yeah, thank you, Mattias, and let's look deeper into the financial figures. As you see, the trend from the first six months continued in Q3, with both good organic growth and good growth coming from M&A. As you heard, Mattias said that the organic growth was 6% in the quarter, same figure as for the first six months, and acquisition contributed with a 13%, adding up in 19. There were no currency effects in the quarter. If we look at the bottom and looking for the earnings per share, was up with 23%, and the two main reasons why this was growing faster than the operating profit. It's one, that we continue to improve the financial net.
We were down to -11% this quarter compared to -17% a year ago, but also that we had no specific cost in this quarter compared with last year. Let's look into next slide and start to look into different markets. We start with Sweden. Sweden is our largest market, and we are really happy to see that we continue to show a strong development in the earnings. This quarter, we improved with 37%, 37, and also see that the sales was up with 16%, and this is mainly driven by the organic growth.
Looking at the EBIT margin, we increased from 5.6 to 6.6, there of course are many reasons why we are able to increase this with 1% unit, but one of the main reason is that we continue to have a good cost control in the business. If we look into the order intake and order backlog and to the future, you see that order intake is up with 14%, the order backlog is up with 20%. Of course, this is promising for the coming quarters. We continue with Norway on page 11. We see that we have a strong sales growth in Norway, up with 40% this quarter. Of course, the main reason for this is the acquisition of Oras.
If we look at the EBIT margin, we reported 5.7%. If we look for the underlying, excluding Oras made a break-even result this quarter, it's up to 7.7%. It's actually impressive development of the EBIT margin in Norway. We see also good cost control in Norway, but also we have a project that we have run now for a couple of quarters that we focusing on the sick leave, and call it good bettering, and we start to see that the sick leave level start to come down as well, and this has an impact on the profit. Looking to the order backlog, up with 77% compared to a year ago.
Even if we adjust for the Oras, we have an increase of 28%, still a good increase excluding Oras. Looking to Oras, as Mattias mentioned earlier, that has been when we did the acquisition, when we announced it, and when we took over the company the 8th of May, we expect that we should be it to have a cost or with negative impact on the EBIT for SEK 10 million-SEK 20 million in this year, 2017. Far, we have had a break-even result both in Q2 and Q3. In Q3, we have had an extensive education program. Over 600 people have been educated from two to 10 days.
They are now on our platform since the 23rd of October. Of course, that has had an impact on the productivity in the quarter, because many people have been on education. We are really happy to see that the momentum continues to be good in the integration phase. On the synergy side, we start to realize the potential, both on the administration cost and of course, on the material side. When they start using our systems, they can start to benefit from our lower purchasing prices. Oras continue to developing well. We continue with Denmark on next slide 12. As I mentioned, we are really happy with the development in Sweden and Norway.
Denmark were a disappointment in the quarter. We have to take a write-down on a project. Of course, this had a negative impact on the EBITDA in the quarter. Sales anyhow was up with 5%, and the EBIT margin was down from 5.2 to 3.4. Focus now in Denmark is to improve the internal processes to make sure that we avoid these type of write-downs in the future. If we see that we are looking at the growth 5%, this was also impacted by the large hospital project that we signed a year ago in Q3 2016. There was a delay in this project. We expect it to start up during the summer period, but it has been delayed more or less a quarter.
Now we are in a startup phase for this larger project, and that will have a positive impact on the coming quarter sales. If you see that the order intake is down with 42%, but this is explained by the large hospital order that we took in a year ago. Finland. We continue to grow in Finland, and this is driven by the acquisition of Asentaja Group. If you look at the result, we reported a profit of SEK 3 million in Finland this quarter, same level as last year. Please remember that we also have taken costs for changing management in the Q3 figures, and this is the cost is something between SEK 2 million-SEK 3 million.
There is a replacement, there is a search going on for a new head of Finland. The order backlog is up with 15% as well compared to a year ago. We have now a good platform in place, as we have communicated earlier, that we would like to grow with Finland, but most likely it will be through acquisition, we need more critical mass. Let's look into next slide, we have summarized the acquisitions so far this year. We have done three acquisition, adding SEK 1.4 billion in sales. We continue to see a strong pipeline.
There is a handful discussions going on for the time being, and if you look at the price level, it's more or less in line with what the what we have seen in the past. We hope we can close a couple of deals before year-end. You never know, of course, we have a couple of good discussion going on. If you look for next slide, look into the cash flow and net debt, please remember, as Mattias said earlier, that Q3 is the weakest quarter from a cash flow perspective.
Normally, we have a weak cash flow in August and the first half of September, and from mid-September to more or less mid-February, we have a strong cash flow. This has been the case. We had a good cash flow in the second part of September, and this will also continue in October. We end up with a net debt close to SEK 2.5 billion in the end of September. Giving a net debt to EBITDA from 2.3. This figure was 3.0 a year ago. Looking at the bottom at the operating cash flow, we continue to generate strong cash flow.
The last 12 months from operating cash flow, we have generated roughly SEK 800 million. If you compare for one year earlier, this was close to SEK 100 million lower, continued strong cash flow. In the third quarter, we have also issued a commercial paper program. We have a frame on a total amount of SEK 2 billion. We have used SEK 1 billion in the quarter, and we have used the money to repay the bank loans. Of course, this will support financial debt. It will lower the financial debt the coming quarters. Look for next slide and take a little bit longer view on both the EBITDA margin and the earnings per share.
Looking to the right here, we see the development, the blue line on the EBIT margin, excluding Oras and Finland. We see since the IPO, we have had a steady, strong growth of the EBITDA margin. I think this is what we expect. You will see from Bravida, stable growth of the margin. Of course, Oras and Finland is two projects that will contribute to increased profit, both in 2018 and 2019. To the left, you see the development on the earnings per share. It's a stable growth. We end up in 3.74 for the last 12 months in earnings per share. Financial targets to sum her up. We are committed to growing the business with over 10%.
It's a combination of organic growth and M&A, and we will also take this business to an EBIT margin about 7%. Cash conversion, the target is to have this about 100, and to pay out at least 50% of the net profit. On the balance sheet, we say that the target is to have a leverage rate to around 2-2.5. Mattias?
Thank you, Niklas. On the slide nine to 18, we have the summary. We have mentioned it all earlier. I think it's good to mention them all again. We see a stable, good market conditions. They will continue. Sales increase at 90%, where our organic growth is 6%. We also have 6% year to date in organic growth. The installation order backlog, +25%, continued good service business momentum will support organic growth the coming quarters. Underlying EBIT margin, stable at 6.1% in Q3, in January and September at 5.8%, compared to 5.7% last year. M&A execution is on track with a healthy pipeline. We have added SEK 1,360 million in sales during the first 9 months. We also have strong cash flow.
LTM has strengthened the balance sheet. Net debt adjusted EBITDA is at 2.3 for the moment, and the target is actually 2.5 here. We've improved even more the last quarter as we see. Of course, something that I'm really happy for is that we continue and have a really strong performance in the two biggest markets, Sweden and Norway. Yeah, I'm really looking forward to the next quarter as well. Thank you very much for listening. Now we can open up for some questions.
Thank you. Ladies and gentlemen, if you wish to ask a question, please dial zero one on your telephone keypad now to enter the queue. Once your name's been announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Once again, that's zero one to ask a question or zero two if you need to cancel. Our first question comes from Stefan Andersson of SEB. Please go ahead, your line is open.
Thank you. First a question on Oras. I mean, it seems like it's performing well. You say according to plan, to me, it sounds even stronger than planned. If we look at the I mean, reaching breakeven is one thing, and taking out costs initially is, you know, lifting at one level. How do you see the work of lifting it to Bravida levels? Is it so that you need to churn out contracts taken at too low prices? In that case, what kind of duration do you have? Is it just, well, just, sorry for using that word, but is it all about working with the processes of how people work, how they work and so on?
Thank you, Stefan. First of all, I would say that I think you are right when you say that we are little bit better than the original plan, because I think we guided with SEK 10 million-SEK 20 million in loss in 2017, the first time we spoke about it. We have a breakeven result, and it's going at least to plan. When it comes to the same margin as the rest group, as I understood the question, I think it will, of course, take some time, because this is very much about culture, how you think, how you price risk, what type of customers you're working with, what type of projects you're working with, if you actually try to optimize the customer or the type of projects, depending on your own competencies and organization.
I think that's something we're quite good in Bravida to doing, instead of just trying to win what is actually available in the market. I don't want to, and I don't think I can give you any guidance on how long time it will take, but that we can see that we are pretty sure that we will take yeah, a step, or if it's a large step, I don't know. It depends how long the line is, but we will definitely take the next step and enter into the next phase next year.
I actually were on a big management meeting the day before yesterday and met, first of all, the management for whole Norwegian company, including the new manager from Oras. It was a very positive atmosphere. They actually said for the first time, they're part of something, yeah, bigger and who is actually focusing on a very structured way on the businesses. I'm really looking forward in a positive way on Oras. I don't know if I answered your question, but I don't give you any timeframe when they have the same margin, but that we can reach the same margin, I'm quite sure of, about.
Okay. No, that's fine, thank you. On Denmark, two questions. First, I mean, to me, the revenues came down quite a lot versus what I expected, but. You mentioned this bigger project that was delayed and is now up and running. If, I don't know the size of it, but normally when you start a new project of size, there is, of course, a risk that you don't, that you are cautious in how you account for that. This project should we It's a delay this quarter, but should we also be cautious on how you account for it, margin-wise, as it's initially in the initial phase?
First of all, I don't know if I agree that they have a lower sales, because they were up 5% in the quarter, and it's quite Q3 is a small quarter, so it can vary a bit as well. When it comes to the write-down, we try to be conservative and a bit cautious, and this write-down, some of it is bad performance from ourselves, but it's also some of it is a discussion with the customer where we have not agreed. We have a dispute where we will think we should have some more money than they think, and therefore, we also are conservative and actually take the write-down if we risk it. Let's see what happens in this dispute, but we don't expect more to come in this project, no.
Okay, sorry if you misunderstood me. I got the impression that you had some volumes being delayed, a project that was going to start up later.
Yeah, yeah. One of the hospitals is delayed. Yeah, excluding for that, 5% growth is okay. If we have had the production started a bit earlier, they have started in Q4 now. We have started it. I think that was a, yeah, negative effect in or impact in the, yeah, isolated quarter.
Yeah. It's not, we shouldn't be worried that as you start up such a big project, that you take lower margins in the beginning of the project and then more in the end. It's more normal project in that sense.
Yeah, that project was delayed. We are always a bit cautious in the beginning to get a positive, yeah, completion effect, if you say that, yeah.
Okay, sorry, I have one more question on the write-down, because I listened, probably badly there. Did you just say the size of the write-down?
Yeah, we said DKK 6 million.
Thank you. The last one is really, net debt is falling quickly, so you have some room again to do acquisitions. Are you concerned that you can't deploy the available funds or it sounds like you have a very nice pipeline lined up?
I think, well, of course, we are happy to see that the net debt is coming down and that we generate a lot of cash. I think we are, we have a healthy pipeline, and we are actually now in a phase where we're looking through the business plan for the coming three years during this period. Of course, part of this is to look through the M&A story as well, and there is nothing has changed. There is a lot of acquisitions, opportunities in the market, and hopefully, we can continue, as we have done the last three years, more or less, with a good growth coming from M&A.
Yes. Thank you. That's all for me. Thank you.
Thank you. Our next question comes from Silvia Cuneo of Deutsche Bank. Please go ahead, your line is open.
Yes. Hey, good morning, everyone. First of all, on Oras, sorry, I think I might have missed it, but, how much did you have in terms of one-off costs in Q3 relating to, improving the business, and how much do you think you'll have in Q4? Or is it projected kind of excluding your-
We don't talk about integration cost in. Of course, as we said, there has been a quite substantial education phase now. We also have implemented a new ERP system, a new purchasing system. These costs, they are in the reported figures, so to say. That will be the. We will do the same in Q4. There will not be no specific line called the integration cost in because that's what we see as an ordinary business cost.
Yeah, but I guess it was profitable excluding then the cost that you put in. Do you think that you're, you'll be done by the end of Q4 in, with the spending to achieve the savings or?
Yeah, we, of course, now we are, of course, Q3. It's, of course, when you change the IT system, and when you educate over 600 people, of course, there is cost related to this, but it's, this will decline. The cost will decline in Q4, and probably be even lower in the beginning of next year. Yeah.
Can you indicate roughly where you think the margins might get to in 2018? Is that maybe a little bit ahead of plan than where you were before?
I think what we have said, we will take a step in the right direction, and probably we have sometimes also mentioned that it could be a 3%-4% margin next year. Of course, it's too early to say. We are sitting with doing the internal plans for next year. Everything indicate by better purchasing prices, lower administration costs, also that we're moving together and taking our rental costs, that will give us a better platform for the business next year.
Okay, great. Thank you. Secondly, on Sweden, the margin was clearly up, very well in Q3. How much of that was linked to any timing of projects finishing or starting, and anything else which could potentially not carry into Q4?
No, it was there was nothing positive one-off in the quarter in Sweden. It's, I think there was nothing extra like that we were in the final phase of a large project. It's, please remember that we were in the beginning of this year, we had a lower margin because we were in a startup phase in a couple of projects, and now we are a little bit. We are now in the middle of these. But it's, as I said, a good performance in many places, many regions in Sweden and also a good cost control.
Okay. Okay. You're not seeing any of the constraints on labor or increasing labor costs? That's not been mentioned in this report. It feels like maybe that's cooled off a bit.
Yeah.
Any change?
We have talked about the bottleneck in resources in many quarters, we have, in some way, I think you have seen, and we have seen that we managed to grow this business, double-digit figures, and we hire the needed resources. We see ourselves as a very attractive employer. By the way, yesterday it was public that we were announced as the ninth most popular employer by academic personnel in Sweden. That's, of course, another sign of that we are attractive.
Mm-hmm
... company. We, in that investigation or survey, we're ahead of many of the large construction companies, other consultant firms in the market. We, we don't, of course, they're not lined up to start working for us, but we are an attractive employer as we see it, and we can handle the growth so far, and we think we can continue to do that.
Okay, great. Finally, just on the multiples and acquisitions, are you seeing any change to, you know, potentially what you might be paying for the projects which you currently have in later stages within your pipeline? Have you seen any change in pricing across any of the markets at all?
No, at, there is a handful of discussion going on. If you look at the price level is, it's still on the same level as we were last year and the year before. It's around a multiple, around 5x on EBIT level, on delivered results 12 months before on a running rate. No, nothing actually changed on the price level.
Okay, great. Thank you very much.
Thank you.
Thank you. Our next question comes from Erik Hultgård of Handelsbanken. Please go ahead. You're online, he's ready.
Thank you. Good morning, Mattias, and everyone.
Morning, John.
I'd like to come back to a previous question on Oras, and if there were any bad projects in the backlog that need to be churned out before margins improve, apart from just improving the cost level. You didn't really answer that part of the question.
No, of course, there are, and I think that's why we saw a potential, one of the reasons why we wanted to buy them, because we think that we can train them in another way and convince them to do another type of business. In the contract, to the seller, we have some projects that we are actually, let's say, go safe from. We know that the business were loss-making before we bought them, and, of course, they have some bad projects, but no big surprises. We saw them in the due diligence phase, and, yeah, it's quite stable in that matter.
When will those orders be, or when will the backlog be free from those type of projects? Will it be late next year, or?
Yeah, I think, yeah, you know that the projects are at a phase of, from the start until they have finished, it's something between nine to 15 months, depending on the size of the project. We have part of those projects in 2018 as well.
Another question on Norway. A strong margin, I must say, if you, if you strip out the dilution from Oras, it's a, it's a big increase from last year. Maybe you could mention a little bit more on the reasons for the strong Norwegian margin.
Yeah, I think that Bravida Way, it's very well explained by this, because the Norwegian market is strong. It's extremely high demand in the market, but there have been some problems in the southwest of Norway. We do what we always will do in a bad market. We take out people, we close branches, and defend the margin. That is actually what they have done in Norway.
Oh, sorry.
Sorry. A good market combined with the good work from the Norwegian organization has taken up the margin, I would say.
Could I get that organically, your growth wasn't really that strong in Norway, so it couldn't be leverage on volumes improving the margin. Is it, a really good project mix that was invoiced in the quarter? Have you done cost cuts in your underlying business as well, having the effect on the margin? Just something else to make me understand a little bit better.
I think as I mentioned, that there is a. We have a good cost control, so we don't add. When we are growing, we don't add the same level as cost. We don't, as you know, we don't have the really good operating leverage because the fixed cost base is only 8%- 9% in the Bravida business. It's working with the right products, make sure you are having the right cost level, and that you improve, you're working hard with the purchasing as well on the material side.
Okay.
Can I also say that they are the, maybe the, that part of Bravida who's gone the farthest way or using this, improvement, programs that we have in Bravida in the best way so far. That's the reason as well.
Okay, great. Then just a detail on the Danish writedown. If you were successful in your negotiation with that customer, could it potentially be a write-up, if you get the...?
Yeah, a write-up, it's never a positive thing when you are in a dispute. SEK 1 is always SEK 1, as you know. Of course, if we have taken the write-down, and if we come out well in that negotiation, of course, there will be a positive effect, when we have finalized that discussion. Let's take that when it comes to...
Sure.
Yeah.
A detail on the financial net. I think it was SEK 11 million in the quarter. Is that a pure financial net, or is there any FX or anything else in it?
It, it's the pure... Yeah, it's some FX. We, I think what, as I said, the SEK 11 million is, of course, explained by a lower financial cost. I think we had, if I remember now, last year, there was a small currency loss for SEK 1 million or something. In Q3 2016. It's, the major part is only financial costs, so to say.
In Q3 2017?
Yeah. Yeah.
That should be lower from Q4, as you refinance a bit.
Yeah, we took out SEK 1 billion in the bank loan, paying 140 bips. The current rate on the commercial paper is 18. Of course, we will save a couple of million SEK every quarter for the coming year.
Super. Then on Finland, is the Finnish market different from Norway and, well, the other markets in any particular way that it could potentially make it tougher to operate the Bravida Way, so to speak, or is it no major difference?
Yeah, I think I can take that question. I'm the interim leader of Finland for the moment. Of course, there are differences between all countries, but I haven't seen anything that will make those initiatives that we're having not working in Finland. Of course, we need to do some adjustments that we have done between Finland, Norway, and Denmark, or Sweden, Norway, and Denmark as well. We need to adjust the program to the Finnish market, but the improvement potential we see is very much connected to competitive cost levels, using the scale advantage, using the system in an efficient way, and that's the same for all markets, for all countries whatsoever. I think that differences, yes, but not so big differences that we can't use our models. Definitely not.
Do you think the Finnish companies in Finland, are they as used and adaptable to the sort of decentralized management model that you have?
Of course, they are not as used to it as we are. That's why we are working very closely with the Finnish team. That's why I have decided to be closer to the Finnish organization for a while. First of all, to get the knowledge, but also to put me in a better position to support the next head of Finland. I think they are a very strong local leaders as well, in Finland as well, and in the other countries. I think when they have learned our way of thinking, our advantages as a big group company, I think they can manage to take advantage of that, definitely.
It sounds like on your previous comments and in this report, that Finland is the key market you want to find acquisitions in now. Is that correct interpretation?
No, I would say that we want to find acquisitions in all countries. For a while, we have paused the acquisition in Norway, depending on that, we think that the integration of Oras is that important, so we need to focus on that. We want to find acquisitions in Sweden, Finland, and Denmark. Of course, we have said, and maybe that's what you think of, that before we can even get close to the group margin we have on average in Finland, we need to have a critical mass, and therefore, we of course, want to have higher sales and do acquisition in Finland. We are not in a hurry.
We want still to do the right acquisitions for us, meaning that it into our culture, but also that we have synergies and the right seller in place, so we can take advantage of that in the next phase. We continue to do as we have done before, but Finland is one place that we want to do acquisition.
Understood. My final question, the pretty big concerns right now about the residential markets in the Nordics, particularly Norway and Sweden right now. You seem to believe that when or if residential new builds goes down, renovation markets will offset that partly at least. Could you perhaps elaborate a bit on how Bravida has developed in previous housing downturns, what the other segments have done, and how Bravida has developed on top line and earnings?
Yeah. First of all, I want to start that, please remember that Bravida sales is 2/3 renovation, service, and maintenance, and only 1/3 is coming from new build, approximately. Out of the new build piece is, of course, one part new build residential, and it's 10%. Residential is 17% of our sales, but 10% units of those 17% is represented on new build residential. It's not only in Stockholm, it's not only in Oslo. We are in 250 different branches, which means that we are very much in the countryside as well. First of all, I would be very surprised if the demand or the amount of residentials that will be built goes up instead of goes down. I think that's the outcome you can expect.
On the other hand, I think that I know for sure that the Million Programme in Sweden needs to be renovated, and there is a big backlog in the demand for renovate the Million Programme. Secondly, many of the companies who could put resources in renovation of the Million Programme, they are actually putting their resources today in their own developed residential projects or building residential for others, because they think the money is there instead. I think the backlog in the renovation of residentials will increase, and when the new build residentials come down even more, I think resources and the market will, yeah, turn to the renovation market instead. I think that's a market that soon does much more better than new build residentials, actually.
In previous housing declines.
Yeah.
How has your service business trended? Has it been stable or?
Yeah. Actually, in 2008, many of the companies had an all-time high margin. Bravida had a margin at 5.9%, if I remember correctly. 2009, the market actually disappeared, but we did that time what we have been doing in southwest of Norway now. We took out cost, defend our margin, and as always, margin over volume philosophy were actually very important for us by then. Meaning that we bottomed out, if you can say that at 5% in EBIT in 2009, and 2010, we were up to 6% again. In this period, the service business grew. The market and renovation, the market for renovation and...
Yeah, the market for renovation were actually up 1.9%, if I remember correctly, when the new build sector were down 13-point something percent. The service business is important because of that, and we're focusing a lot on the service business, and we think that we can handle a downturn in the market in a good way. Of course, the sales will go down, but we will always defend the margin as good as possible.
Great. Thanks for that answer. That's all for me. Thank you.
Thanks.
Thank you. Once again, if there are any further questions, please dial zero one on your telephone keypads now. We do have one further question coming through. That's from Silvia Cuneo at Deutsche Bank. Please go ahead, your line is open.
Hi, good morning again. Just following on from that and looking out to 2018. When you look at your portfolio of bigger projects or projects that you can identify, do you see the balance for 2018 net positive or attrition, or will all the growth need to come from kind of incremental work, which is coming through from the order book now, around the smaller end of the project? If we look at consensus at, you know, 4%, how do you think about that versus market indicators now for 2018?
If we look for the order backlog and the duration that we follow up every quarter, I think nothing has changed. I think that roughly 80, but for at the end of September, 80% of the current order backlog should be produced in 2017 and in 2018, and that's more or less the same figure we have seen a year ago. If you look for the larger projects, that's normally that we have something between 10 to 50 larger project, over SEK 100 million in order value. I think that's a quite stable figure as well. We don't see increasing numbers, we still don't see a decreasing number. We used to be on that level.
That's from one quarter to another, that we could be having delays, as we talked about in Denmark, that we were delaying one project that has a slightly negative impact on the growth in Denmark for that quarter. If you look for 2018, I think we expect that we should have a continued good growth, and a stable business.
Thank you very much.
Thank you.
If there are any final questions, please dial zero-one on your telephone keypad now. Okay, as there seem to be no further questions, I'll hand back to our speakers for the closing comments.
Okay. Thank you, everyone, for listening, and thank you for all good and interesting questions as well. See you soon, and have a nice day.