Good morning, everyone. Welcome to this presentation of Fasadgruppen's Q4 results. We released the year-end report this morning. In the room today, we have Martin Jacobsson, CEO, Casper Tamm, CFO, and myself, Adrian Westman, Head of Communications and Investor Relations. We'll start off with the presentation. Martin will take you through the slides, and then we will conclude with a Q&A session. Please, Martin, go ahead.
Thank you, Adrian, and good morning also from me. I'm glad to present this report to you today. We have a comprehensive report to go through today. First of all, I'd just like to highlight that we have stable development in Denmark, Norway, and Finland. What stands out today is clearly the Swedish operations. It has been a weak, unusually weak fourth quarter for us, especially in Sweden. With that said, we've also implemented a new organizational structure from today. We are looking into improving the Swedish situation from here. I'll get back to that further in the presentation. Another thing that stands out is the implementation, the integration of Clearl Line, which have gone well. They have been in this report with us two months and have clearly affected results positively.
I would like to highlight that there is plenty of projects to calculate on at the Clear Line facilities. There is plenty to do for them, which is very positive. That affects also the order backlog, which has increased here, even if we exclude Clear Line. The project margin or the order backlog margin has also increased from Q3. However, with the weak results, we have seen an increase on our important covenant, Net debt to adjusted EBITDA pro forma, which is around 3.3 times. The board also proposed to have no dividend for 2024 and remove the dividend policy. Hence, we are very focused on taking leverage back below 2.5 times. Some further details on the net sales. First of all, it was a total decrease of roughly 1.6%.
However, organically, it was down sharply by roughly 15.6%, where the Swedish operations, as I mentioned, continued to decline. It was a very low activity, unusually low. It was a combination then of low demand in new construction and also some seasonality effects in December here, especially with less working days. We have also experienced continued tough competition throughout the quarter. However, as I mentioned, pretty stable development in the rest of the Nordics. The organic growth for it was organic growth in 2024 for all of the other countries except for Sweden. Looking at Clear Line, they were part of the group for two months, as I mentioned, and managed to have net sales of roughly SEK 126 million. Looking at the adjusted EBITDA margin, it came in at 6.4%, declined versus last year, which was at 9.1%. Here it was once more the Swedish operations that stood out.
We took a hit in conjunction with the bankruptcy of Savneke of roughly SEK 10 million. However, there are some possibilities that we can maybe start up on those projects again, but that's not included in our books. We have been working closely with bankruptcy lawyers there. As I mentioned, December was very unfavorable for us. It's usually quite a good month, but we once again had a disappointing end to a quarter, and that spills over to the results clearly. We have had some subsidiary-specific challenges, such as the low demand on the new construction, as I mentioned, with very weak activity. We have had some extra works that usually have pretty high margins, as I've spoken about historically, which did not have quite as good margins as usual. Some minor customers have also had problems with paying up.
With that said, it is a super tough situation in Sweden. We're very humble about that. With that said, it is back to what we said, I think, in Q2, Q3, that we took a diversification path where we chose to grow into the other Nordic countries, which we're very glad for today. Of course, into the U.K. market, diversifying our portfolio and adapting to the various markets that are throughout Northern Europe. Clear Line came in a bit stronger than historical figures, around GBP 57 million some of these two months in EBITDA. Looking at the order backlog, as I mentioned, it's on historical all-time high. However, there was some drop organically of roughly 8%. You can say that the Clear Line acquisition also had an increase here of the order backlog of some roughly SEK 1 billion.
As I mentioned, also, we've seen an increase in prices that is affecting the order backlog margin. We've seen roughly one percentage point increase in the order backlog margin compared to Q3 of 2024, excluding Clear Line then, which have obviously a much higher order backlog margin. With that said, since we are mainly focusing on renovation, as you know, it is also some variances on when exactly the projects will start. It can be some delays when they start. Usually, with the order backlog, it starts roughly maybe six to nine months ahead from when you sign the order. With that said, it's very hard here to see exactly when the increase will come. Clearly positive that the order backlog margin is growing.
On the cash flow side, we had a decrease here in the operating cash flow, mainly then due to the lower earnings. However, it was a much lower decrease, mainly affected by the working capital improvements. That I would like to highlight. That's been a continued focus for us. We've seen longer payment terms, as an example, from our suppliers, which is clearly affecting us positively here in the cash conversions. We're roughly at 118% cash conversion for the full year, 220% in the fourth quarter. Looking at the important numbers here on the financial capacity and net debt, the average interest rate was around 6.1% here for 2024. We still have a very short interest rate period, one to three months. Our key covenant here is, as I mentioned initially, around 3.3 times, which we're monitoring very closely and focusing to decrease, of course.
We have also converted our credit facilities into a sustainability-linked loan. We have added two new acquisitions. First of all, Clear Line, which I would like to highlight once more. Very strong foundation for this company located in the U.K. and performs services on facades, focusing on often complex high-rise buildings, plenty of facade fire remediation projects, but also more classic facade renovation projects. The thing with Clear Line is that it is a total solution company which provides design, pre-contract service agreements, delivery, and execution to the customers for us, so from start to finish, which also stands out due to the fact that they have all of the competencies in-house. With Clear Line, they also have a very established customer base and a great network in the U.K. and also outside the U.K.
The focus is now, of course, in the U.K. for Clear Line since mainly due to the Grenfell Tower fire disaster, which was in 2017, which then led to, you can say, a new focus on facades in the United Kingdom from the government, not to say the least. It is a huge problem in the U.K. where these kind of facades are dangerous. Clear Line is one of the experts that are assisting the United Kingdom with implementing new, better facades. I would like to stress that this has led to a more professional market in the United Kingdom and ultimately leading them to better, let's say, margin possibilities in the U.K. for our kind of work. Roughly for the, we mentioned when we acquired Clear Line that they had revenues of approximately GBP 49 million.
I'd also like to highlight a new acquisition we made in Q1, which is called Liab Plåtbyggarna. A fantastic company situated in Södertälje, focusing on sheet metal forging assembly work for steel halls throughout the Mälardalen Stockholm area. They have plenty of industrial customers and various, say, military sector also customer groups. We acquired 80% of the company, existing management holds the rest of the shares, which we think is creating a strong incentive. They had revenues of approximately SEK 80 million in 2024. This has then also a minimal impact on the net debt to Adjusted EBITDA Pro Forma. We've spoken to Liab, I would say, more or less first contact maybe three years ago. It's been a long process for us ultimately leading to this great acquisition.
Of course, I would like to highlight that we are implementing a new flatter organization as of today in order to create a more efficient governance. We have removed one level between group management and the subsidiaries. Each subsidiary will report to a chair of the board. Also, to further optimize our governance, we've taken a small number of subsidiaries that would be a part of the larger subsidiaries in order to optimize and make the governance as efficient as possible. That will lead to a decrease in the number of units in roughly 10% or, sorry, 10 units. Looking at the cost side, with this setup, we've also seen that there's a possibility here and an opportunity to reduce cost and profitability over time with this new setup.
I am also very glad to be able to present our new group management team, which will then be including myself, Casper Tamm, CFO, Daniel Bergman, Jan Erik Pedersen, Peter Andersson, Johan Fagerlind, Dave Higgins, and Petri Mannen. We are then, as I mentioned, creating a flatter organization. This group management is also then directly, some of them are also directly from our subsidiaries and representing all of our nationalities within the group in form of where the companies are situated. With this setup, I am certain that we will work in a more efficient way and closer to our subsidiaries, which is the key to our success. Looking at our financial targets and how we have been faring, I mean, 2024, I think will go down to history as one of the toughest years, at least in our history, if not the toughest.
As you remember here, we have a net sales growth target to grow of at least 15% per year over a business cycle. We managed then in 2024 to decrease by 3.6%. On the profitability side, we have a target of at least 10% per year over a business cycle, managed 5.7%. Cash conversion stood out, of course, as I mentioned, on a good level. Capital structure-wise, we have our targets not to exceed 2.5 times, and it is currently at 3.3 times on a pro forma level. We have had a dividend policy, as I mentioned, which has then been removed by the board yesterday evening.
Just to focus on that a bit more, I think it's clear here that we want to create shareholder value mainly through our previously announced strategy where we focus on taking down debt, improving profitability, and then growing mainly through acquisitions, but also organically. With that said, we've clarified the dividend policy here, meaning that as of now, sorry, we will not pay any dividend. Priorities 2025 to 2028, this is, as you may recall, a slide from the capital markets day, which we had last year, where we had profitability and leverage on the top focus areas. Now we're stressing that once more. It is truly our focus areas now. We want to focus on ensuring continuous improvements in our subsidiaries, our efficiency in operations, and cooperation within the group.
With that, I think we'll lead also to more healthy leverage levels than we are at currently. With that said, before we open up for questions, I would like to do some concluding remarks. We see 2025, as it is now, would be a year of deleveraging and profitability measures. We need to conclude 2024. It was disappointing, even though it was a very, very tough market situation, especially in Sweden. We made a strategic acquisition, Clear Line, back on the 29th of October, which I think is clearly what stands out for Fasadgruppen Group in its history, the largest acquisition as of yet. We have been welcomed very warmly into the group, and we feel very glad to have welcomed such a fantastic company into the group.
We have seen some positive signs in the order backlog, as I mentioned, both in, let's say, quarter over quarter, but also margin-wise. Some positive signs also on the pricing side. We have created a new flatter organization with more efficient governance. I would like to stress here also that the chair of the board of our subsidiaries will be working very closely to the companies and have plenty of experience of running companies themselves. On the profitability improvements and the deleveraging, that's top priorities now for 2025. With that said, we're also introducing segments reporting in the first quarter of 2025, which will reflect then more closely or with more granularity on how the group is faring, which I'm very glad to announce today that we will be doing. We'll get back to that in the next quarter.
With that, we would like to open up for questions.
If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Elvin Rolder from Carnegie Investment Bank AB.
Good morning.
Good morning, Elvin.
Good morning, Martin. Good morning, Martin and team. I hope you are well. I have a couple of questions here initially from my side. If we begin a little bit about the organizational measures that you are taking, especially in Sweden, can you give a little bit more color on why you take these measures now? I mean, the margin trend in Sweden and the competitive landscape has been troublesome for quite a couple of quarters now.
Is there anything specifically that happened in Q4 and now in Q1 that makes you want to take these measures now, or can you just comment a little bit more about that?
I mean, good morning, Elvin, Martin here. I would like to say that what stands out is, of course, Q4 was not in what we planned for. Of course, we aim to be as close to the subsidiaries as possible. We implemented a new structure in November 2023, as you may recall. Our purpose was to work even closer to the subsidiaries with these operations units. That was not, I mean, it's impossible to know if those measures that were taken then led to worse result or better results. It's hard to tell. With that said, what we are doing now is implementing a structure where we are getting even closer to subsidiaries.
I think that is what we are seeing as the most efficient way at the current times. I think we're very humble about the market situation still. We've seen some positive signs, yes. There is, let's say, all hands on deck at this moment because the subsidiaries are the Fasadgruppen Group's total operations. We want to come as close to the operations as possible at this time, especially. That's why we are implementing these kind of measures now then.
Okay. Perfect. Thank you. I mean, roughly, what type of cost savings could one expect from this? Is that beginning now, like entering Q1, or will there be some delay before we can see those measures take action, so to say, if you can comment a bit on that?
Yeah. I mean, not really quantified that.
I mean, it is, let's say, in the range of SEK 10-20 million. Maybe full effect is maybe a year from now or something like that because it's also hard to tell on how much it will affect on the, let's say, efficiency side where we work even closer to the companies. That is yet to come. We will get back to that regarding how the new organization will fare.
Okay. Perfect. Thank you. A little bit of a question regarding the acquisition of Liab Plåtbyggarna, which you announced a week or so ago. I mean, because I understand that you now want to focus on getting the profitability right for the existing subsidiaries and that you focus on efficiency and trying to navigate this market. Was there any specific reason why you went ahead with the acquisition of Liab Plåtbyggarna anyway?
Was it a unique asset in that sense? Because I mean, the picture from someone looking on the outside is a bit bifurcated when an acquisition was announced last week. Then we see that you want to stop or not stop, but pause it for a while to get efficiency out of the existing companies. If you can comment a bit on that.
Yeah, absolutely. As I mentioned, we've spoken to Liab Plåtbyggarna for several years. It is a unique asset in that sense where we feel that this opportunity is too good to pass on. We mentioned also that it's a minimal impact on the important covenant figures here. Of course, I can see that it can look like that from the outside. We have been discussing with them for several years and wanting to do this acquisition badly.
It is a unique asset in that sense. We are very glad to have Liab Plåtbyggarna on board and welcome them to the group. They also have a very strong order backlog, which we are happy to take part of, so to speak.
Perfect. Just the final question from me while we are on the topic of the order backlog. You mentioned, if I did not hear you, I had quite a bad line there in the beginning, but you said that the order backlog margin was up 100 basis points or something like that. Is that on a year-over-year sense or on a Q-on-Q sense? I mean, how should we think about the increased margin within the order backlog? I want to recall that you, during the beginning of last year, also mentioned that the margin within the backlog was strengthened.
But then, I mean, with the picture we've seen during the second half of the year has been, I mean, obviously quite a weak margin in Sweden, regardless. If you just can comment a bit on how we should think about when that margin is executed and, yeah, give some more color on that.
Absolutely. Yeah. What I said, Elvin, was that, yes, if we exclude Clear Line, the order backlog margin is up roughly 100 basis points, quarter of quarter, Q3 2024 compared to now then Q4 2024. Yes, we've also seen some strengthening during 2024. Remember here that the order backlog margin does not give the full picture. Usually, a project that we get grows by roughly 20-30% on extra work. I mean, there's still the same amount of extra works in properties, but customers are more price-sensitive in a sense.
With that said, it is hard to determine where these kind of extra works are going. What we've seen historically is when, let's say, in better times, there is plenty to do for all players, meaning that once you have a project, you're kind of inside the loop. In tougher times, there are, let's say, more players, more competition also around extra work where the customers have a possibility to take contact with several competitors to bring the pricing around these kind of extra works down, which leads to ultimately a weaker profitability for players. With that said, we've mentioned that on a new build basis that, yes, we are in innovation, but the total market is still affected by the weak activity on the new build side, meaning plenty of players still in the loop for these kind of works.
However, we've seen some easing, yes, but obviously then not enough to distort the kind of, yeah, current numbers.
Sure. Thank you so much.
I'll get back in the queue and see if there are any other questions. Thank you so much. Have a good day.
You too.
Thanks for your reminder. If you wish to ask a question, please dial pound key 5 on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments or written questions.
Thank you. We have received two written questions. It sounds like you haven't closed the line of Elvin, maybe. We will continue. They are on the same theme. What was Clear Line EBITDA contribution and adjusted EBITDA contribution from Clear Line in the quarters? Two questions.
Yeah. EBITDA for Clear Line is quite close to EBITDA.
There is very little depreciation. And on an adjusted EBITDA contribution, it was on the same level. There were no adjustments for Clear Line in the quarter. We could add also, you can find the performance for fourth quarter for Clear Line in note 8, business acquisitions.
We have also received another question here. At least actually two questions. We can take them both at the same time. The first one, when do you expect to see an uplift in the Swedish market? The other one on a bit different theme, can you give some more details on the tax expense in the quarter?
Yeah. As you have seen, probably we had quite a high tax in the fourth quarter here and also on the full year here. This is then, the reason is the non-tax deductible cost that we have.
That makes up mainly our write-down of goodwill and trademarks, which was approximately SEK 45 million. Also, acquisition costs that we have had during both the quarter and the full year. That is the main reason. The comparison between these costs and the weak result before tax, that is the reason that we have this abnormal anomaly.
Yeah. The other one on the Swedish market, Martin, maybe you want to comment on that.
Yeah. We are humble about when we see an uplift in the Swedish market, of course. I mean, if we should, let's say, look into some kind of directions where we see customers' uptick and more demand, I would say in the second half of 2025, we see some improvements. It is too early to tell.
Actually, we are receiving a few more questions now in writing. We'll continue. There are quite a lot of one-offs, SEK 35 million for M&A, SEK 10 million from the Savneke bankruptcy. Would net profit be positive without them? Maybe we have to double-check that. I think on the net-net,
yes, probably.
Looking at the interest rates, Q1 2025, how much will they decrease?
Yeah. I would say on the interest rate level, of course, the STIBOR, which we are connected to, is on a lower level than a year ago. At the same time, we have a range where we see a range between how our leverage current is compared to the underlying STIBOR, 180 days. With that said, it's a bit too early to tell exactly how much it will decrease.
But we can double-check that if you want to write us to our investor relations mail.
Okay. I think we have reached the end of the Q&A session. Martin, if you want to make any concluding remarks once more.
Yeah. No, I think we've gone through it all. Of course, super tough 2024, all in all. When I've spoken to, let's say, entrepreneurs that have been with us for a very long time, they also bring some memories back to the situation in Sweden, which was at the beginning of the 1990s compared to the 2024 levels. That says something about the tough situation, as I would like to say. With that said, we are positive on the future. We are full of confidence that we will get through this even stronger.
I would also take the opportunity to thank all our employees for their outstanding work. I know it's tough out there, but together, we will make this a fantastic company. Thank you for that.