Today, I'm pleased to present CEO Erik Stenfors and CFO Lars Åkerblom. Please go ahead with your meeting.
Good morning, thank you for joining this audio cast. I'm Erik Stenfors, CEO of the company, and next to me, with social secure distance, I have Lars Åkerblom, our CFO. We will present the year-end report, and we publish it this morning. We go directly to page number three. I'd like to start with a short introduction of HANZA. It's also good in order to understand the current development. We are a high-tech manufacturing company powered by customer value. If you look to the left, we have designed a concept. We call it Complete Manufacturing Services. What we have done is we have grouped together different kind of manufacturing technologies in areas which we call clusters. By doing this, we can offer both part production and part assembly for our customer, all under our slogan, All You Need Is One. Currently we are up to six such clusters.
You see the picture to the right. We are active in Sweden, Finland, Germany, Central Europe, Baltics, and China. These clusters have different size, and they also have a different degree of maturity, but they all are under the same concept. In addition, we also offer advisory services. We help our customers to streamline the supply chain, which also adds value. At the bottom, you see some customer examples. We're really proud to work with successful companies. In the middle, you see a sales graph. HANZA has been one of the fastest-growing manufacturers, and already in 2019, we were able to reach SEK 2 billion in annual turnover. After this introduction, we turn to page four and to the year 2020. It was a tough year for us. It started good, though. We had a very strong beginning. We have customers' forecasts pointing at double-digit increase percentage-wise.
We prepared accordingly, so we invested, and we trimmed our clusters, but then the clouds started to pile, and by end of first quarter, we had a full thunderstorm. It was more or less just to buckle up because you cannot really affect your customers, the sales volumes. What you can do is affect the cost side. We immediately launched an action program. We call it Resistor. It was in the beginning of the second quarter in April. What we did was that we tried to lower our fixed cost in order to survive a possible long period of low sales. We did that through merging companies in Estonia and in Sweden. Already in Q3, there was some daylight. We saw some volumes coming back. We didn't expect it so early, but that was the fact.
When it came to Q4, it was a more mixed weather. We saw that in the Nordic countries, we had still some increased volumes, whereas in the rest of Europe, especially Germany, there was a new lockdown just before Christmas. It seems like it's been separated that the Nordic countries and the companies here have been doing rather well, whereas the rest of Europe has been still struggling. We also have disease issues outside Nordic countries, especially in Czech Republic. When we summarize the year, the increase rate was only 4%, and the earnings level was far below what we expected in the beginning of the year, and Lars will soon come back to this. Let me turn to page five. The good news is that we expect this to be just a blip in our growth curve. It's a temporary slowdown. Why do we believe this?
We have not lost any customers. On the contrary, we're working very close with our customers. We even received some awards during these difficult circumstances. We are confident that the volumes will eventually come back. Another positive note is that we did refine our organization during 2020. That was actually one of the goals we had. If you look to the right, you see the group management. It was downsized from six to three persons to make it more agile, and we also decentralized some of our group functions. This is important. I'm proud to say that we truly now have a modular and scalable organization, and this is actually a cornerstone for our future growth. On the same topic, preparing for growth, we made a decision by the end of last year in December to start building a new factory in Pärnu, Estonia.
For us, it's a quite substantial investment, EUR 8 million. We believe the timing is good. This will be ready by the beginning of next year, 2022. That is a point in time where we do believe that the volume will have come back. That leaves 2020 behind us. Before I move on to the future, I will leave the floor to Lars to give the financial development.
Thank you. Starting with page number six, the financials for Q4 2020. What we see is that the sales are, of course, quite heavily impacted by the pandemic. We see that one of the biggest customer in HANZA, being in the textile industry, have lost approximately SEK 25 million compared to quarter four 2019. We also see that the action program that Erik mentioned had an impact on lower sales, approximately also SEK 25 million in Q4 compared to the year before. We also see a currency effect. We see that mainly the euro is weaker, and since we have quite a central part of our sales in euros, it has an impact on us. That's approximately SEK 15 million in Q4.
If you deduct those, you see that there's actually an increase of the sales of approximately 2%, if you compare the 494 compared to the 548 the year before and adjust them for these three major things that has impact. That is an organic growth of the existing customer base and of course, new customers. Also, the earnings has been affected by the lower sales, we have two positive things in the earnings. The first is the other markets where we have said for a long time that we will see an increase in profitability, and we see that we are increasing the profitability in other markets. We also see that in Sweden, which is the biggest cluster, we see a downturn in profitability in percentage wise in Q3. Now Sweden is back and have a market-leading profitability of approximately 9%.
Going also into the sales of the main markets, the main market is Sweden, Finland, and Germany. We see that we here have the biggest drop in sales, and that is due to this big customer within the textile industry. On the other hand, with the sales in other markets, it's actually increasing. If you deduct the currency effect, you have an increase organic growth of a little bit over 3%. We move to slide seven. Looking into the balance sheet and the cash flow and the full year 2020. As Erik said, we see a limited growth, approximately 4%. Here we have a little bit effect on the acquisitions we did in 2019 that was not part of the other group for the full year 2019 but has been part of the group for the full year 2020.
In Q4, we have the same number of companies. There's no acquisitions having an impact on the Q4. Looking into the EBITDA, we had a big impact to this Resistor project, downsizing and preparing for long-term effects on the COVID. If you adjust for that cost, you have an EBITDA of SEK 73 million compared to SEK 68 million the year before. What has been prioritized in HANZA has always been the cash flow. We are proud to say that we have another quarter of really good cash flow. We have been able to have a year of good cash flow. We have reduced the operating net debt with approximately SEK 80 million down to SEK 271 million, that is approximately 23% of the net debt. That is, of course, strong going into 2021. We turn to page eight, looking at the share.
We are trading today at approximately SEK 14 per share. If you look into the right, you have a graph showing the share price at the start of every year. You see that we have a decrease in the share in 2021, but looking from the history perspective, it's quite a good growth anyhow. We have a market value close to SEK 500 million, SEK 475 million approximately, and the board decided, and you can see that in the report, to propose a dividend of SEK 0.25 per share for the annual general meeting. That shall be seen as a delayed dividend for the year 2019 rather compared to the 2020 financial year. I leave over to Erik looking into the future.
Page number nine, please. Looking ahead, what will happen? What will HANZA do next? Well, as Lars described, we have had a really good outcome of the stress test on our larger clusters. It means that the strategy forward is rather clear. It's to increase the remaining clusters, and this is actually a strategy revisited. That was the strategy we had already when the pandemic started. Secondly, we will continue to explore the German market. So far, we have just scratched the surface. Our concept has been really well-received in Germany, and right now we have heavy travel restrictions, hard to meet customers. As soon as those are released, we will continue to work. I'm sure that we will be able to get a space on German customers later on. We have two global trends, which are actually our friends.
First, it became obvious last year that the complex global supply chains are quite fragile. We see a backlash to the globalization, now it's more regionalization. This really fits into our cluster concept. Secondly, the environment will again go back to be priority number one. Here we have a chance through our advisory services to help with not only streamlining the supply chain but also making it green, lower the CO2 emissions. That's something we'll focus on the coming years. A few words about acquisitions. This is an important part of our business model. Now, we don't buy companies to be bigger, but to be better. Here's a promise. Every time we buy a company, we will clearly state exactly how that acquisition will increase the customer value.
A bit mid-term and long-term, it looks really good, but it doesn't mean that we are without challenges right now. Still, we have the lockdown is prolonged in Germany to March. Still, we have some outbreak of the virus. Now we also have a new challenge. It started to be at shortages of material and components. This is something that HANZA, like all other manufacturers, will struggle with this year. A bit expected of the downturn in the economy. All in all, we see that still some dark clouds above us, but in the direction we're heading, it's a clear blue sky. We see a promising future. By that, we go over to page 10, and we welcome your questions.
Thank you. If you wish to ask an audio question, please press zero one on your telephone keypad. If you wish to recall your question, please press zero two to cancel. Once again please press, zero one on your telephone keypad, if you wish to ask an audio question. Our first question comes from Erik Cassel from ABG. Please go ahead.
Hello, Erik and Lars. Erik from ABG here. You touched upon this, but Sweden has a selling margin of 9%, but that would kind of imply that the other regions in main markets are barely profitable right now. I assume it's mainly the German part of the business that is dragging down margins. Could you comment on the profitability in Germany and how you see it developing going forward?
We cannot comment on Germany individually, but you are definitely correct that having a SEK 25 million decrease in turnover, of course, leads to lower profitability. We have also seen in Finland, which is the third part of the other main market, we have been affected by a downturn in some of the customer areas where they are buying. The main reason for the lower profitability in the main market is, of course, the downturn of the biggest customer in the group that is in Germany.
I also like to add to that again, the size is important in Germany. So far, we only have a single factory. We had downturn of sales also in Sweden, but we were able to increase the margin. Whereas in Germany, we don't have the same bandwidth yet. That was what I was referring to previously, that the way forward is to increase the smaller clusters, then they will be able to handle any coming downturn better in the future.
Thank you. Another question on margins. Given that you work a lot with metals, are the high sheet metal prices affecting margins in any way right now, or are you easily available to transfer those prices to your customers?
We have in the step up towards customers, we have normally a possibility or a right, or even in a month to adjust the prices when the metal prices are changing. It should not affect the margin, and we are able to push that out to the customers, yes.
No short or short-term effect here in Q1 until you transfer?
It could be, but that is minor. I think that the major impact can come from the shortage and possibility to buy raw material. That could be probably the biggest problem right now.
Thank you. Then you had several contracts announced during the year now that should come in primarily now in H1 in 2021. Do you have a ballpark estimate of the total volumes from those contracts that we could see in 2021?
The simple answer is no. We haven't revealed the number. That's a bit of a challenge we have that sometimes the customer doesn't want to announce they have switched to HANZA because they're still working with another supplier. Sometimes the market value is secret for their competitors. We are not drowning the market with press releases, rather commenting that we are active in getting new customers. What I think is important is that what we have seen in 2020, which is new, is that we not only get manufacturing contracts, but also design contracts. We are now helping our customers both with the product development and product manufacturing, which is an even more complete concept. I'm afraid we cannot give any numbers.
Thank you anyway. Then on the net debt position, it has improved now over the year, and to a large extent driven by working capital. I think it's about 9% of rolling 12 months sales right now. I'm wondering how much of working capital increase we could see in 2021, if any, when volumes ramp up again given the restructuring you have done?
You're definitely correct in the way of thinking that it is a percentage of sales. When the sales are growing, of course, the working capital will increase. We don't give any forecast on how much we expect the working capital to, or the net debt to change in the future.
All right. Last question from me, and perhaps a real long shot. You mentioned in the report and also in the conference call that you had forecasts for customers of double-digit growth in the beginning of 2020. Do you have any such forecast to share with us here today for 2021? I know it's a long shot.
It's a long shot. I promise to share that with you one year from now.
Okay, perfect. Thank you, guys. That's all from me.
Thank you. Just as a quick reminder, if you wish to ask an audio question, please press zero one on your telephone keypad. Our next question comes from Fredrik Nilsson from Redeye. Please go ahead. Apologies, it appears that Fredrik has disconnected. Please hold while I bring him back into the call. Our next question comes from Fredrik Nilsson. Fredrik, can you hear us?
Yes, I can hear you. Can you hear me?
Yes, we can now. Perfect. Thank you.
I want to get back to the strong margin in the Swedish cluster despite the lower volumes. You touched upon Germany, but I want to look at Finland. Why is that such a big difference likely between Sweden and Finland in terms of how well they managed to obtain solid margins despite lower volumes?
Again, the answer is simply size. We are 4x bigger in Sweden, much easier to talk with this. In order to have a good margin, you have to have a number of different ingredients. First of all, you have to have customer value so that you can actually charge your customer and still they will make a good deal. Secondly, you have to have enough customers in your factory. If you have not known, a factory is a bit of a channel, and that's also all factories. Now, we have an advantage in terms of clusters, so we can actually borrow resources between the different factories. That's why we can handle upturns and downturns more easily than if we are finding one technology within one factory. Altogether, I expect you to see some good increase also in the Finnish cluster. In the future, we can post some better margins.
Other markets continue to improve its adjusted margins. Is that mainly due to the restructuring you made through the years paying off, or did the market improve as well?
That's one part of it. It's also that other markets are getting more and more mature and coping with the HANZA way of producing and doing business. It is a lot of work we have put in time that the Swedish cluster was the first cluster and the most mature cluster. When we see that the other clusters are getting more and more mature, they are also increasing profitability.
One last question from me. I'm well aware that you do not make predictions, but you seem quite optimistic regarding this year. What signals do you get from your customers?
I think I said both up and down. We are so optimistic is because of our business model. We see that this is really working. It adds value to our customers. We are easily getting new customers who used to have traditional manufacturers who are switching to HANZA. Still, this is a company under development. That means also that while we are building new clusters, things like this pandemic really slows us down. Again, we are confident because we feel that it's a temporary slowdown. To make no mistake, short term, we still have the challenges we had before.
They are still here today with the pandemic. It's not over yet. We understand that in one year from now, there will be no pandemic unless something dramatic has happened. That's also why we feel that we had a good stress test of organization. We see exactly where we have our strengths and weaknesses. We can adjust them. Which means when summer comes soon, we will have a stronger body HANZA.
That's all from me. Thanks.
Thank you. There appears to be no further questions, so I will hand back to the speakers for any further remarks.
We have no more parts of our presentation, so we thank you so much for taking the time to listen in to this podcast, and we hope that you will listen again when we present the next report. Thank you very much for listening.
This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.