Welcome to the Bravida Webcast with Teleconference Q4 2021. Today, I am pleased to present CEO Mattias Johansson and CFO Åsa Neving. For the first part of the call, all participants will be in listen-only mode, and afterwards, there'll be a question-and-answer session. Speakers, over to you.
Thank you very much, and good morning. As you heard, it's myself who will take you through this presentation together with our CFO, Åsa Neving. Slightly younger on the picture, but still going strong.
Absolutely.
Or... Uh-
Stronger than ever, I would say.
Yeah. Today's agenda is first something about the market position in the Nordic, the Q4 report, of course, and then Åsa will take you through the different countries and the performance in those segments. We have a summary and a Q&A in the end. Welcome to this presentation. We start with the market and our position in the same. Again, I think to repeat what kind of business model we have is important. We are in the four Nordic countries, and strong public finances that are supporting the demand in the market together with a quite strong economy overall. When we entered the pandemic in...
Yeah, two years ago, my ambition was to show you as an investor what kind of strong business model we have, how resilient it is, and I think we have done it. I think the reason why we have been able of doing that is, of course, that we have so many, close to 12,000, really skilled employees who are really close to the customers. There are three different things we usually mention, and that are that we are having diversified end markets, low customer concentration, and small average contract size. I think that is the secret behind the, I would say, success we are able to present today in the Q4 report today. We have a broad scope of offer to the customers that are buying over and over again from us really strong and tight relations with those, of course.
Internally in Bravida, we very often say, or I say together with the group management and many other leaders, that we are not satisfied with the result we have been able to deliver, but we are really proud. Today, I think we are really proud to present this report. Bravida is a company that we try to develop, and we are changing. We have a high focus on the next business plan, delivering more service, better service, more sustainable service to the customers. We also have a new vision for a new time, as we say. Bravida helps customers develop the full potential of their buildings. Through service and installations, we bring buildings to life, leading the way to sustainable and resilient society.
I think that is important to understand that we are very often the solution for many of our customers to improve their work with their sustainability and reach their sustainability targets. We are the Nordic leader in sustainable technical solutions. We want to be a partner from the design phase throughout the building phase, the installation phase, as we call it, and the service phase. We want to do it in a very sustainable way. Offering and explain for the customers how we can help them with the sustainable work they are facing or thinks is a bit challenged is of course on our top focus on our list.
Every customers have an access to all our services, life cycle perspective of, all buildings, and we want to be the one who's leading the work with sustainability in this industry. We're adding new business areas like building automation and technical facility management. Being number one in building automation, telling the vision to the market, to future employees that we have ambitions of being, the best in the market regarding those is important. I think we are probably best positioned to do that because we, together with technical facility management and building automation, we can offer the full scope to the customers, which is an advantage for us as a supplier. We are working with, solar panels, changing that more to business-to-business customers. We have a really good solution for, car charging, and, by saying that, I mean the software.
We have the best solution as we see it in the market that can take care of existing chargers, expand the solution for the customers with another type of chargers and still be able to administrate the for example who is going to pay for the electricity, reporting to the sustainability department, et cetera. We really have a really strong offer on that sector as well. Of course, helping the customers to taking down the energy consumption is important for us. That was the short intro. Now, what about the Q4? As you probably understood and already maybe read, the Q4 report is really solid and a strong report. The market outlook is good. We can see a good demand for both service and installation.
We also see quite increasing demand for sustainable and energy efficient solutions. It hasn't really come up to very high volume yet, but due to the energy prices, et cetera, of course, our customers want to use less energy and make sure that they have efficient solutions inside their buildings. We can see some rising raw material prices, and we see some risk for material shortage as well. So far, we have handled the situation quite well. We are working in different ways with the material prices. Of course, we are working together with our partners on the supply side to make sure that we don't get too high increases.
We are working on the customer side to increase the prices, but we are also focusing more on sourcing more direct, taking away different levels in the chain that are not adding value, and we are focusing more and more to do more international sourcing, direct import. We see some high sick leave in the end of Q4 and in the beginning of Q1. In January, we had really high sick leave that will of course impact the Q1 and short term. In some places, we're already now seeing that the sick leave is going down again. Hopefully, that is something that we can put behind us quite soon. The demand is good, but of course, we need to have people in production to make to be able to deliver strong numbers next quarter as well.
Short term, some challenges, long term, we really have a strong demand in the market and a good order situation as well. Building confidence indicators is actually above normal level in all countries. The highlights in the quarter, net sales are up 11%, 6% coming from organic growth. As we have guided and said, the last two sessions like this, we have said that we are expecting the organic growth to come back in Q4 or Q1, 6% in Q4, so I'm happy to see that the thing we said actually happened as well. Strong order intake, really strong, +41%, and we see a really strong order intake in Norway, which is of course good for us. Norway is a country that are coming back to quite high margin again.
Now we have for a short while suffered a bit from slightly lower order intake, et cetera. We see the order intake coming in. A lot of projects where we have been in early phases developing this together with customers. Also, quite low risk because of index clauses as well, due to the discussion we had, we have regarding the material prices. Record high order backlog above SEK 16 billion, EBITDA margin 10.1%, and we see improved cash flow at SEK 1 billion, SEK 150 million .
We have some repayment from insurance premiums that are affecting the quarter, but at the same time, we have done some investments in the business as well regarding digitalization to offer our employees a better platform to continue development and perform even better the coming years and quarters. Cash conversion 83%, and we are seeing that when Q1 and Q2 from last year is going out from those numbers, we can see an improvement regarding that as well. Net sales, again, SEK 329 million is organic growth, SEK 233 million from M&A. We have some FX impact as well. But really happy to see that we have organic growth in all countries except for Norway then.
On the other hand, the order intake in Norway was the highest in the group. We really are positive for the future, regarding Norway as well. We can see that we are growing both service and installation, which is of course a strength as well. Sales growth in 2021, growing 3% in the full year, and we can see growth in service business mainly. Slight positive organic growth. I think it was 0.4% or something, rounded down to zero. We can see organic growth in all countries except Norway, and 3% is coming from acquisition. Take a step back in looking on what we have done during the pandemic.
I said that I wanted to show you that we were a stronger company when we left the pandemic than we were when we before we entered it. When I said that, I couldn't imagine that this will vary for two years so far, and hopefully, we can say it was only for those two years. Being able to grow the business with 7% during those two years and increase the EBITDA with 23% is extremely good and something that we are not satisfied with, but we are very proud of being able to present it. EBITDA 10.1% in the quarter. We have improved margin in all countries except for Denmark. We have some effect impact on the EBITDA. We have some investments on the digitalization, as I said.
We also have participated in a tender for Fehmarn Belt tunnel. Let's see what happens with that, but we took that as a cost last year. In total for the year, SEK 44 million. Being able to present in the best year ever and still investing in the future is of course something that we're really happy to be able to do. By the way, Fehmarn Belt, there are four competitors in the world that have been pre-qualified to be able to participate in that tender. One actually left because they, the reason I don't know, but there are three remaining.
Being one out of three in the world that are chosen to compete on a tender like that shows a quality, what kind of quality we have in Bravida as well, which is some other way you can explain the strength we're having in Bravida. We have also invested in new skills on group level to capitalize on our business plan. That is, of course, also taking into as a cost in the P&L, and we normally don't adjust for those things. So it's a clean P&L, but we have done investments for the future as well. I think that's important for you to understand. It's important for you to, for me to explain for you, because quite often companies are adjusting for this. We are not so far.
EBITDA margin in 2021 improved to 6.9%, which is a really strong number, of course. Order intake, I mentioned it a couple of times, +41%, and it's increasing in all countries except for Finland. It has been a little bit more challenging market in Finland, but we have been able to grow our business in Finland during 2021, so we haven't been stressed. Hopefully, the demand will go up again. The statistics will say that it will be quite okay or positive demand regarding the outlook for 2022. The order backlog increased with 20%, and order backlog is only installation contracts. The service is not included in that number. Really strong order backlog, and again, the order intake increased in all countries except for Finland.
Down to the left, you can see how the order intake last 12 months have developed, and that is of course supporting the growth coming, going ahead. Earnings per share increased dividend, and the dividend proposal is SEK 3, and it's increased by 20%, and that is 53% of the net profit. To the right, you can see the development of the dividend. Again, during the pandemic, we have been able to increase the dividend with 33%, and we have increased it with 10%+ as an average, since we did the IPO in 2015, which also is a way to look at Bravida as an investment. Health and safety, and one KPI that we are working with internally regarding our sustainable work internally has improved.
We can see an improved LTIFR overall in Sweden, Norway and Denmark. It's down to 8.4% compared to 8.6% last year. We have still some work to do. There are some differences in the different markets, and the focus on this number is high. Another topic we are discussing a lot internally and a way for us to actually make a difference is our cars. I think we have one of the biggest car fleets in Sweden. We have a target that we are supposed to reduce our emissions with 30% until 2025. One important measure to do this is to change our cars that are old enough to be changed. We are not changing new cars. That is to buy electric vehicles instead.
During 2021, we bought 279 electric cars, which is 33% of the total number of vehicles. There are still some shortage regarding those cars. We are not really able to buy 100% yet because of long delivery times, etcetera. We have a high focus, and that is one KPI we are following up our regions branches upon. In Sweden, for example, we have around 1,200 company vehicles, and we are trying to get even more climate friendly regarding this. From now on, it's only possible in Bravida to buy electric cars if you're driving a company vehicle, and that means that we have the possibility to offer all our employees to drive an electric vehicle instead of fossil driven.
We are no longer buying a hybrid car. We are focusing on electric vehicles. That's another way for us to make a difference in society. Acquisitions. I know that some of you or many of you think this is an important part. We have already, to this date, done six new acquisitions in 2022, adding around SEK 200 million in sales. During 2021, we did 20, adding a billion plus in sales. We still have really strong pipeline. We definitely have a balance sheet that will support a continued M&A journey. We still can do M&A to attractive multiples, and we can see somewhat increased competition, but nothing that we can't handle. M&A after the pandemic, we suffered a bit during the pandemic because we want to meet the company we are buying. We want to...
It's so important for us to integrate, to create value. One plus one are supposed to be more than two. To be able to learning to know the seller, get them, give them the opportunity to know us, discuss what we want to do together to improve the business is important. Now we have the pace up again regarding M&As. Now I'm going to hand over to Åsa, who will take you through the different countries. Please.
Thank you, Mattias. I am very proud to present the strong performance in our country segments, and we will start with Sweden. Sweden did a strong quarter. They grew, starting with the top line, the sales with 9% in the quarter, and the growth was 5% the full year. The growth was both coming from service and installation, and as Mattias said, service has been picking up all during the year, and then installation was a bit slow in the beginning but has been picking up now in the last quarters, you can say. We had organic growth in Sweden by 5%, and all divisions had organic growth in Sweden. That was really strong.
Our largest division, South, that was a bit slower in the beginning of the year, had now the strongest organic growth in the quarter. A very strong EBITA margin. It improved to 12.5% in the quarter compared to 9.5%, the previous year. In this figure, we have this non-recurring repayment of this insurance premium in 1996. Even if you take that out, it's a really strong EBITA margin, higher than last year. If you look at the full year, the EBITA margin is very strong, 8% compared to 7.1%. Taking out this non-recurring item, it's still above our financial target of 7.2%. Very strong order intake, +19% during the quarter, and all divisions had a strong
All the Swedish divisions had a strong order intake during the quarter. Backlog +10% year-over-year. Moving on to Norway, and as Mattias said, Norway was the hardest hit by the pandemic and has done a really strong recovery. Now, if you look at the Q4, they grew the top line with 6% to SEK 1.2 in reporting currency. If you look at it in local currency, it was a black zero, you can say. You have to go back to Q1 2020 to find growth in Norway. Very strong, I'm happy that we are picking it up again. Organic growth was still negative -1% but also improving during the quarter. EBITA margin was very strong, 7.8% compared to 6.4% last year.
If you look at the full year, it was 6.2% compared to 5.7%. Also, as Mattias said, extremely high order intake, 168%. If you look at local currency, it was still strong, 148%, and a strong order backlog at +76% year-on-year. In this order intake, there are 6 large hospital orders that we received during the quarter at an amount of SEK 775 million. Mattias talked a little bit about those, and I would also like to add that Norway has done a lot of hospital, large hospital projects before, so we feel very comfortable with this type of projects. Moving on to Denmark, who also had a strong growth in the quarter. They were growing by 11% to SEK 1.2 billion. The growth was also coming from both service and installation.
If you look at the full- year growth, it was 4%, and in local currency, 7%. Organic growth, strong, +12%. If you look at the EBITA margin, it decreased some in the quarter to 5.8% compared to 6.3%. It was due to a lower performance in the project portfolio. If you look at the full year, Denmark increased the margin to 5.3%. Also, Denmark had a very strong order intake, 11%, and a strong order backlog at 13% year-on-year. Moving on to Finland. In Finland, we also see a strong sales growth, +27%, and some percentage higher if you look at it in local currency, so ending up at SEK 5,496. Finland was also growing both in service and installation. The organic growth was good at 9%.
If you look at the EBITA margin, I am very proud that they have improved the EBITA margin to 8.6% in the quarter, but also the full- year margin has improved to 5.07%, compared to 4% last year, which I think is very strong. Order intake a little bit slower in Finland, so order intake decreased with 15%, and also the order backlog decreased with minus 2%. Finland needs to fill out their order books a little bit. We should also remember that Finland has had high production now in almost two years, or at least one and a half. They got a large order, the Wärtsilä project in beginning of 2020, which they are producing on now for 2020, 2021.
They will have some difficult comps in the coming quarters. Very strong results there also. Let's look a little bit at our financials. As you know from previous quarters, we've had a lower operating cash flow, and we have a lower cash flow in 2021 compared to 2020. This is, as we've said before, the main reason is that we have had two projects where we are in dispute with the customers in Denmark, so the accounts receivable have increased a lot there. As we said before, there is no news on this.
This will be settled in court, probably later this year, one of them, and then the other one will take probably another two years. We don't expect any effect on the result there. That has been affecting the cash flow for 2021, although we see now an improvement in the Q4, mainly coming from the fact that we are increasing the installation projects and getting good payments plan there, and it's the working capital that is improving. This also leads to the improvement in cash conversion to 83%. It was 75% last quarter. This we also expect will improve as we go along.
This is an LTM figure, so we have now in this number, we have two low quarters in the beginning of the year 2021 in those. Looking at the net debt-to- EBITDA ratio, it's on a low 0.5%, and if you would take out the leasing part of this, we would be on more or less zero net debt. On the next slide, just showing the working capital. We talked about it last time, that it has worsened a bit, but now you can see that in this quarter, we are coming back on a good low level again at minus 6.7%. Just summarizing the financial targets that we have. As you know, we have an EBITDA margin target on 7%, or more than 7%. We had a year with a margin of 6.9%.
If you take out this non-recurring item, it is still on 6.5%. We are not there yet, but the margin is higher than last year, we are improving. Cash conversion, not 100%, but 83%, and it is picking up. Net debt- to- EBITDA, as I said, is on 0.5%, so a lot below our target. Sales growth, 3%, which is good in this pandemic, in a year of pandemic, as Mattias talked about earlier. We have a dividend proposal that we will pay out 53% of our net profit. Mattias, by that, I will hand over to you.
Thank you, Åsa. You looked really proud.
Yeah. I am proud. Of course, not satisfied.
No, of course.
Very proud.
We are never.
No, no.
Okay, just to summarize this presentation, again, organic growth 6%, growth in service and installation, order intake +41%, increased order backlog, record high level, SEK 8 billion , improved EBITDA margin in Sweden, Norway, and Finland. The cash flow is good, and the dividend proposal is SEK 3 per share, increased by 20%. This slide is a really nice one, and you can see the development. Again, this shows the beauty of the business model we having and the way we are actually executing on the model as well, because we have so many employees, close to 12,000, that every day goes to work and do everything they can to give a really strong, good service to the customers, and this is the result of that.
You can see the, in the middle of this slide, the EBITDA development during the last seven, eight years, and we have 9% CAGR, which is of course really strong. This year, a couple of weeks ago, actually, it was 24 years since I started in the company, so I will during this year start my 25th year. At the same time, we have anniversary in Bravida. Bravida turns 100 years old this year. We are going to celebrate that. Of course, in the year we are celebrating 100 years of Bravida. My plan is not to change this trend at least. Hopefully we can have a nice celebration of Bravida at the same time as we continue to develop the business in the company.
By that, we open up for some questions.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Carl Ragnerstam of Nordea. Please go ahead. Your line is open.
Good morning. It's Carl from Nordea. A few questions from me. Firstly on the higher sick leave rates you mentioned in late December and also until today in 2022. Is it possible to quantify the rates currently compared to normalized quarter? Also would you say that the effect from that is mostly on EBIT or is it also sort of on organic growth or do you manage to compensate with subcontractors?
No, I think first of all, it's hard to give you an exact number, but it's definitely twice as high in the beginning of the year as it normally is. There are some geographic variations, and it will impact both the EBITDA, both the earnings and the growth because we need the hours to allocate costs to make sure that we get the sales. I don't know if you want to add something.
No, it's just double. In January, it's roughly double what we normally have, and then probably also the first week in February. Now we see that it is. We think we see, at least we get some signs that it is going down.
Now it's not sick leave as it normally is.
Yeah.
It's very often quarantine as well because you have someone else in the family. When those rules are loosened up a bit, of course, people will come back to a higher extent quite quick.
Okay, perfect. In a way, as you said, you took a few big hospital projects, but in a market with quite extreme raw material inflation or any inflation for that matter, how do you ensure that these projects sort of are taken with the right profitability? Are they partnering projects in general or a fixed price?
In Norway, you can say in general they are partnering projects. Of course, in that specific type of contract, we have discussions with the customers how to source it in the most efficient way. I would say that in Norway, we have another culture of using indexes. Again, we have been discussing raw material price increases in last summer. We have been aware of it. We have tried to adjust it. I think it's more a question about if we have adjusted enough or too much. It's not the question if we have adjusted.
If there will be some impact, negative or positive, I think those impacts will be quite short because we are discussing it and we try to pass it through at the same time as we try to keep the prices down, of course. As I said in the report, but also earlier in this presentation, we are working more on sourcing more directly and try to make sure that we are sourcing in an efficient way by doing more direct import as well. That's another solution to handle increases because there are some suppliers in the Nordic market that are actually not doing their job. They are just trying to pass through increases.
There are so many who is taking the chance to increase the prices more than what I think is okay to do. We are working on more than one front.
Okay, perfect. Very good. In Denmark, I mean, the margin there has been a bit muted the past few quarters. It continued somewhat in Q4 as well. What is a bit surprising to me at least is that services is growing 5x installation, which should mean that you have a favorable margin mix in the quarter, but still margins is down quite a few basis points in the quarter. Do you have bad installation projects that you need to work through also the coming quarters in Denmark or what's happening?
Yeah, I think you are right in your analysis here. Service is normally very good. We think that we still have a potential on the service business in Denmark, but we have struggled a bit in some installation projects in Denmark in the quarter. Still presenting a quite okay margin, I would say. They are chased by Finland now. Finland have improved a lot. I think that we will see, hopefully we can see a margin, a better margin the coming year compared to 2021. That's at least our ambition.
Okay, perfect. The final one from my side is a bit maybe a longer question, but with easing restrictions in the Nordics, which we see during Q1, hopefully people are returning to the offices or maybe it will be a hybrid model, I don't know. Would you say that the traffic coming back now to offices will drive sort of more installation demand for you in at least the coming few quarters here. I mean, I guess companies need to remodel offices to be ready to have a more hybrid model for of working.
Yeah, I think the answer to that one is yes, definitely. I think maybe the most important thing is that when people coming back to different types of workplaces again, they see things that is not working and then they start to order again. I think people back on job sites is good, yes.
Okay. Perfect. Thank you.
Thank you. Our next question comes from the line of Stefan Andersson at SEB. Please go ahead, your line is open.
Thank you. Starting a bit with the M&A side, you touched a little bit about it, talked about the SEK 1 billion acquired last year in sales. I mean, your balance sheet is extraordinarily strong. Probably net debt- to- EBITDA I guess is the highest you've had. I don't know, if you're in your 25 years, probably not, but for a long time. So I'm just thinking what's your ambition here? Because if you keep the pace that you have currently, it's not really, you're not using up that balance sheet. So, are you hoping to dramatically improve your pace here or have there been discussions on the board level when it comes to extra dividends or repurchasing of shares or you know, what's your thinking about that?
Of course, I don't know everything that what the board is thinking, but I know what I want to do. I think increasing the dividend with 20% is one way of showing you that we have the muscles to increase the dividend. On the other hand, we want, I want to keep some money in the company to continue to develop through M&A. We think that we can increase the pace compared to last year because the first six months, H1 last year was quite slow, and then we speed it up a bit, H2. We think we can have a slightly higher pace, but we also think although should be some kind of possibility to do slightly larger M&As as well during the coming X years.
I think that's why I want at least to have ammunition to do that as well. Strong balance sheet is of course supporting that and let's see what happens. We definitely have an ambition to do more SEK 22 than the SEK 1,050 last year.
Would a company like Assemblin be too big for you?
I think Assemblin is one of the biggest in the market, and maybe, just a comment on that one. I think maybe we are too strong in, the same places, in too many places. I don't think Assemblin is too big, but maybe that's not the same as I think Assemblin is a good target.
On the sick leaves, maybe I missed that, but if you look at the countries, which countries are most impacted? You talked about geographical differences here, and I could do some guessing, but if you help me out, I would be grateful.
No, no. I think Sweden has been quite heavily impacted in the beginning of this year. Of course, in the end of last year, I think the last version of the virus actually impacted everyone. It was close enough to look at someone in the paper who had the disease, then you got it yourself. It was quite dramatic in the end of last year. Still a strong report, and of course, that has followed us in Q1. I think Sweden had the highest impact followed by Norway. Finland and Denmark quite okay, but they had some. Finland had some restrictions slightly longer. Denmark had. I think Denmark was first out in that queue. They had some slightly higher problems in maybe November, beginning of December, so.
Okay. Good. My final question, and I don't know if what you can answer on that but, the organic growth pickup in the quarter was very high. Normally we don't see those kind of movements. I'm a little bit curious if we should see this as, I mean, activity increasing that much all of a sudden or if there is some extraordinary items, maybe large projects that are, you know, the final invoice is sent out or something like that.
I think 6% is high, a high number, definitely. I think what you can expect when we have entered an organic growth phase, that will continue, but 6% is high for a quarter for our industry with the risk management and control, so to say. We don't really know the sick leave in Q1, but I definitely will say that we have support for organic growth. If we exclude the question about the sick leave in Q1. We have a strong order backlog, we have a strong demand, we have installation projects again that we can produce on at the same time as the service demand is picking up.
I think that is the difference, and I also think 6%, we had quite low comps maybe compared to the last quarter where we had, I think Q4 2020 we had slightly lower installation activity, I think. Now we had a good momentum in both installation and service at the same time, which is a normal way actually. That is a normal situation. I expect that the growth will continue, but 6% is high, as you say.
Okay, great. Perfect answer. Thank you.
Thanks.
Thank you. We have our third question in the queue. Just as a reminder to participants, if you do wish to ask a question, please dial zero one on your telephone keypads now. The next question comes from the line of Carl-Johan Bonnevier of DNB Markets. Please go ahead. Your line is open.
Yes, good morning. First of all, congratulations to a result that you're at least satisfied with or proud of, not satisfied with.
Exactly. That's important.
I think it is good on most lines. A couple of things to dig deeper. Looking at the order backlog obviously being at record level, and how do you feel the risk of inflation creeping into that order backlog and then taking down your perceived profit margins in there? I guess a part of that backlog is now starting to get a little old as well, isn't it? Compared to what you normally would see.
I think that's maybe the one and maybe the only concern I have for the moment. We are thinking about many things, but have we increased the prices enough? Then you can split that question up. In Norway we have close to 95%-100% index clauses in all contracts, which is some kind of protection of course. In Sweden that is not the same culture, not in Denmark as well, meaning that we have been discussing we need to do some measures to be able to protect the margin when the price is going up. Again, we are working intense on the supply side to make sure that the increases are as low as possible. We are also looking after alternative type of materials, doing direct import.
We have since last summer been discussing in all our tendering meetings, as you know, we have a really strict process on how the four-eyes principle when we are submitting a tender above a certain level, you need to discuss with the person above you. In those meetings we are always discussing inflation regarding salaries, material prices, et cetera. That is something we have done. We are always doing that, and that is nothing we have started just because of this certain happening regarding the material prices now. That is common business for us. We are always doing that because when we are offering today, we know that we will have salary and material increases in March, April. We always have to take that into consideration.
Now, instead of adding 2.5%, 3%, we are adding 10%, 12% maybe, 15%, 20%, I don't know, depending on the different segments. The process regarding discussing this is down into our culture. Now it's more about have we discussed the right type, the right amount of increase? I think, what I'm thinking about is not if we have done it, have we done enough? I think, let's say we haven't, then we get some impact, quite short. We also can, if we win a contract today, material prices is coming in April, then we can do the deal already today to make sure that we are buying to the prices we are having today, and then get the material delivered, after the summer, et cetera. We have different tools of handling this.
I guess the other part of that question also is, now when organic growth is picking up, as you described, obviously do you see any risk for labor shortage out there, that becoming then a double situation, so to say, for you to be able to deliver?
Yeah, labor shortage. I think this is the 26th report I'm doing as a CEO of a listed company, and I think I've got that question in all of them. What about the?
Yeah
Shortage regarding the resources in the industry. That is something we need to handle. Maybe that will increase even more. We need to try to search different way of solving that, improve the productivity, subcontracting. I think longer term, I think the whole industry have to work to make sure that we're getting more resources into the industry, so we can solve this issue more long term. I think the whole society has a challenge of support and actually make sure that there are handcrafts workers in the society because we are needed. I think one way to look at it, everything that can be digitalized will be.
Some kind of the service we are offering can't be at least in the very near future. I think there is a really good future for the younger generation who want to have a nice, good job and a maybe safe place to work in as well. I think short term, some challenges. Long term, we need to improve our ability to actually make sure that we get more talents into the industry.
Excellent. To sum that up, Mattias, just to understand it fully, looking at the order backlog and the labor shortage and all these kind of things, looking at what you have in there for the moment, you feel pretty confident that you have, say, a good enough margin in the order backlog, and also, say, the resources to deliver on the order backlog, standing here in mid-February looking forward, so to say?
I think to have the resources and to be sure on the margin is of course not fair to say because we can't have resources sitting and waiting for an order backlog to be produced. I think that is a work we are doing in parallel. We have to do that at the same time as we are growing, we need to hire more people. During the pandemic, for example, we took down the numbers of employees because of the market situation. Now we are in another situation where we need and want to hire more people. We think we have done enough measures on the margin side. We don't know yet. Time will tell.
We have definitely structure, processes to be able to be successful in that topic, and hopefully we have been that or will be that.
Excellent. That sounds confident. I noticed that you took up provisions about SEK 80 million-SEK 90 million during the quarter. Is that something particular in there or is that just a general cautiousness that is behind that?
I think it's on a year-over-year basis, I think it's SEK 60 million-something, right? No, I think it's more, as you may say, contract management. It is, we have putting some provisions in Sweden and also in Finland. But that's, yeah, you can say precautions, but that's the way we work. It's not anything unusual, no.
Also I noticed that you changed the definition of the cash conversion in the quarter. Is that anything special or that we should notice in that?
No, it's actually very, very little difference. It's just that now you can find all the items in the report, and that was a comment that our auditors had that you couldn't find the different, you know, items adding up to the cash conversion. So we have changed it for that reason. But it has very little impact.
It's the traceability basically.
Yeah, exactly. It has very little impact on the actual figure.
Perfect. One final for me, coming back to Stefan's question on the capital allocation. Mattias, you have highlighted facility management and building automation as two new segments where you really would like to grow. Could you just describe the size of those operations for the moment and what you think those could be, say, in a three- to five-year perspective or something like that if your ambition plays out?
Yeah, regarding building automation, I think, depending on how the definitions are, but we have around SEK 500 million today in Bravida, and our ambition is to be the market leader medium term. I don't know if it's three, four years. Of course, that will take the time we need to do it, but we will be number one in that market. And I think we will be that, and that means something around SEK 2 billion plus in total. Regarding technical FM, I think, it's a little bit harder to actually answer that because what we see, it's a clear trend of customers that have a high extent of installations in their services they try to outsource.
That trend is of course supporting the demand for technical facility management, and let's see how fast that journey will go. But again, when we do something and communicating this clear as we have done regarding technical FM, of course, we want to be one of the biggest player. We have some players that are quite large on the soft FM. That's not our ambition to compete with those. Maybe on the contracts that they are having and using specialists like us as a subcontractor because the customers want to buy the food from the chef and the installations from an installer. And we have strong belief in that we can continue to grow Bravida throughout those two initiatives, and let's see how long time it will take. We have one...
We have good discussions with some customers on the technical FM side. We have one couple of smaller ones as well, so it's slowly growing. Maybe we can come back to that in the next session or after the summer maybe when we have sped it up a bit.
Sounds promising. I guess all those areas are interconnected to some extent, aren't they as well?
Yeah, I think one of the customers, actually, we won a contract that isn't signed yet, but we were the only one who could offer the services they were asking for, to close to 95%. Just a small amount of the service they wanted to buy was something we needed some contractors for. Of course, that is good quality for the customers, giving us the opportunity to give better service for them. It's also something for the customers. They of course understand that they does not have to pay margin on margins, and that is an advantage for us, of course.
Excellent. Thank you.
Thank you. We've had one further question come through. That's from Stefan Andersson at SEB. Please go ahead. Your line is open.
Oh, thank you. Just two follow-ups. On the salary issue or question, just remind there, in Sweden I think you have a couple of years agreement. Is it like two years left on that agreement? How is it looking in the other countries? Are there negotiations coming?
Actually, I don't know for the moment. There could be a negotiation coming up in Norway. I'm sorry, I am really not sure. Maybe we can come back on that one. It's right that you say in Sweden. We have an agreement that are. There is no new negotiation this year. That's correct.
On your financial net, and I can't see that in the report, and maybe you said it and I missed it, but to me it looks a little bit high when it comes to the interest rate. There must be some revaluations in there as well or, am I mistaken?
No. For the quarter or?
I'm thinking about the quarter. Maybe I've done something wrong with my numbers.
No, I don't think it was high.
It looks like SEK 19 million something.
No, I don't think it was that high.
Okay.
No
normal round way. It's okay.
Yeah.
Good. Thank you.
Thank you. As there are no further questions in the queue, I'll hand back to our speakers for the closing comments.
Thank you so much for all questions and for your participating in this conference. Now Åsa and myself are going to work on the 2022 year's result-
Will be exciting.
meet some investors. And have during the year until we meet next time, we'll have some cake and celebrate with the 100 year as well. Thank you very much for listening. Bye-bye.
Thank you. Bye-bye.