Welcome to the Humana Q4 2024 Report Presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing #5 on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to CEO Nathalie Boulas Nilsson and CFO Christoffer Herou. Please go ahead.
Good morning, and welcome to Humana's Q4 and full year 2024 presentation. My name is Ewelina Pettersson, and I'm the Head of IR at Humana. With me today, I have our CEO, Nathalie Boulas Nilsson, and our CFO, Christoffer Herou. They will walk you through the presentation. Please go ahead, Nathalie.
Thank you. We will start off with some of the highlights from the period. There are three specific areas that I'd like to highlight. First of all, we are continuing to improve on our financials, and we have also reached our target on net debt ratio, which we are quite happy about. We ended the year with a strong cash position, which also allowed the board to propose a dividend of SEK 1. This morning, they also made a resolution to repurchase our own shares. Happy about the improvement on the financials. The second area is our ability to execute on the strategic agenda. We have, during the quarter, made the divestment of the elderly care unit. The last parts came together, and as you saw earlier this week, we press released that we have now completed the divestment.
We will continue to focus in our targeted areas, child welfare services and disability services in Finland. We have also completed the integration of Team Olivia in Norway. This has been done in a very good way and has exceeded our expectations, both on the business case and on synergies. A job very well done by the Norwegian team. On the theme of making a real difference, which we also like to talk about within Humana, we are happy to see that we have continued to improve our customer satisfaction by 4 percentage points Q4 this year compared to Q4 last year.
We have also made a decision and a commitment to introduce and set science-based targets, both on short-term and long-term net zero targets, which I believe we are the first ones within the Nordic care market to set, and we are happy to lead the way in this area. As mentioned, the satisfied customers have increased both on a quarterly level and on a year compared to previous years. We have a continued high degree of satisfied employees, and we are delivering a very safe service continually. On the social impact, which we like to measure, we have increased the number of placements in our care homes that lead to a lower level of care by 6 percentage points. This is, of course, a great achievement for the individuals who can return to a more normal way of life, returning to schools, et cetera.
It is also a great impact to the society when we achieve this and when we continue to increase our social impact. We have also increased the number of clients in our residential care homes who achieve the targets on their implementation plans from 62% to 66%, which makes a big difference for the individual per se. During the Q3 presentation, we talked about the areas that we will put special attention to in the short-term agenda, and we have been executing on these areas. On the cost control area, one of the highlights is that we have now set the Swedish organization. We have gathered the support functions within the different companies and the different business areas in Sweden into common functions. This itself allows us to start introducing common processes, routines, and systems.
It also allows us to ensure that we have specialized services for all of our business areas. At the same time, we are achieving a high degree of savings of approximately SEK 55 million, which will be fully implemented by the end of 2026. The main part of these savings will be effectuated during this year. We are also continuing to work with the internal governance and control and ensuring that we become one Humana, that we work according to common processes, that we set targets on a group level, break them down, and follow up to ensure that we reach our goals in a good way. We have also put a lot of focus on consolidation of the Humana group.
As we talked about in the Q3 presentation, Humana has a long history of growing through acquisitions, and this has led us to have a fairly complex company structure. We have around 180 companies when we started off this journey, and we have now set targets of reducing the company group to around 50 companies. We have started the execution of this project. It is a fairly complex project. It impacts, of course, moving staff, securing contracts, reapplying for permits, considering tax and financial impact. I am convinced that this will help us become much more efficient in all types of activities. We are expecting savings of around SEK 10 million by implementing this. It will be fully implemented by the end of 2026.
We also said that we are very happy with the specialization strategy that we have in place, but that we would deep dive into a few areas to see if we can optimize them further. The areas that we have reviewed during Q4 is INF, and we have made two main conclusions from that work. One is we are in the residential care home business, and we are market leaders there, especially in Sweden, but also in Finland. Within this area, we will continue to strengthen the surrounding services, such as family home and supported housing. The point of doing this is that we can keep the placements for a longer time, in different levels of care. It will give us also more business in the surrounding areas with slightly higher margins.
It is also beneficial for the children and the young people during their upbringing that they get a better continuity and the same contact through a longer period of time. We are very happy about that direction. We will also, for the adult segment, continue to strengthen our position within LSS in Sweden. We see that this will give the mix, our portfolio within INF, a slightly better stability moving forward. In Finland, we have dived into two areas, and one is the open care area, where we have now seen for quite a period of time, and we expect also moving forward to see a slightly decreased purchasing behavior from the SOTE- region. This is due to the savings programs that have been implemented there.
The type of open care services that we have today are not legally mandatory services, which makes it easier to save on those types of services. At the same time, it's not a long-term viable solution to save on those because it means that you will start increasing the need for institutional care. We have, with the new Disability Care Act in Finland, we see opportunities in developing a concept for disability open care services, which we believe will give us advantages in two different ways. One is it's a legally mandatory service, so it's not a service that's easy to save on for the SOTE- regions. It's also a service that we can easily add to our already existing network for open care services, so it will not give us a large amount of additional overhead.
We also see the opportunity that it will feed into a nice care chain into our disability care homes, which is a focus area for us. The other area we looked into in Finland is the mental health area. We see that there are some interesting movements as regards the housing options. We will, for now, maintain our mental health position on the market, and we will closely follow and monitor the tendering over the upcoming years. The third area that we talked about for our phase two is the elderly care area. We have just initiated the work on that to form a strategy for the elderly care within Nordics. I am looking forward to getting back on future presentations and telling you more about that. Now over to you, Christoffer, for some financial highlights.
Yes, thank you. To start with, I would like to recognize the milestone that Humana reached over SEK 10 billion in yearly revenues in 2024, SEK 10.3 billion to be accurate. This is an increase with 7% from 2023 and an increase of 12% for the quarter, compared to the same quarter last year. The organic growth is not yet where we want it to be, but improvements are accomplished during 2024. We are on a positive track when it comes to development in adjusted EBIT. At the same time, as mentioned, we have increased our revenues with 7% during 2024. The adjusted EBIT has increased 18%, which makes us proud but not satisfied. Now diving into the different segments. Within Sweden, both individual and family and elderly care performed well in the quarter with an organic growth of 5% and 11% respectively.
The EBIT was improved for individual and family in the quarter, and elderly care is summarizing the year with an EBIT improvement of SEK 37 million compared to last year. As you know, personal assistance is facing a challenging situation in its market. The revenue decreased also during this quarter compared to last year. The EBIT in Q4 last year was positively impacted by a SEK 10 million effect from an adjustment in pension costs. If that effect is excluded, personal assistance shows a slightly improved EBIT in this quarter compared to last year. Looking at the full year of 2024, the EBIT in Sweden improved by SEK 15 million, corresponding to 6%. Finland has had a tough quarter. The decrease in demand within open care services, as we also mentioned in Q3, has continued also in this quarter.
To face this, we have been very active and reshaped parts of our organization, which has led to some one-time costs of approximately SEK 4 million, which we have recognized in this quarter. The other subsegments in Finland show an improved EBIT compared to previous periods, both for the quarter as well as for the full year. In Finland, we are actively working with finding organic growth opportunities, and we have started to build a pipeline with new business opportunities. As you know, we have now divested the elderly care business in Finland. As CFO, I was pleased to see the purchase price of EUR 25 million coming into our bank account last Monday. Norway continues to perform also in this quarter.
In addition to integrate the new business of Team Olivia Norway, the segment has also performed an organic growth in the quarter of more than 8% and for the full year of almost 12%. Many of the synergies from the acquisition have been realized, but some synergies are still to be taken out during 2025. During this year, one of our primary focuses in Norway is to improve the profitability within the subsegment healthcare services, or as we say, Helse og omsorgstjenester. We had a strong operating cash flow in the quarter. In this quarter, we managed to be accurate in our cash collection at year-end, resulting in a cash position of almost SEK 600 million.
With our cash position and the development of the business in general and our current financial position in mind, the board is now proposing to the AGM a dividend for the year of SEK 1 per share. In combination with this, the board has also taken a decision to utilize their existing mandate from the last AGM to repurchase up to 1 million shares. To summarize, let's catch up with our financial targets. We are not yet where we want to be when it comes to our organic growth. During the last two quarters, we have improved compared to last year, but clearly still a way to go. However, excluding personal assistance, we are at 4.1% in the quarter and 5.5% for the full year. Our adjusted EBIT has improved in the quarter compared to last year and also on a full year basis.
For the full year, the adjusted EBIT is 5% compared to 4.6% in 2023. Last but definitely not least, our capital structure gradually improves. From the debt ratio of 3.8% in Q2, just after the acquisition of Team Olivia Norway, we have now managed to come down to our targeted level of 3.0%. With that, back to you, Nathalie.
Thank you. Why should you invest in the Nordic care market and Humana specifically? It is a growing non-cyclical market with a growing need for highly complex services. We are very well positioned at Humana with our specialization strategy to meet these needs. We have a diversified portfolio, many segments and several countries, and a clear strategy for growth, both M&A and organic, which we have been able to execute on historically. We have increased net revenues with 12% just recently. We are focusing on sustainable value creation at all levels, on customer satisfaction, on the social impact, and now also on commitment to scientifically based climate targets. We have improved our financials, and we have an attractive cash flow, which has allowed the board to propose reintroduced dividends.
Summing up and a focus going forward, we will continue with all the cost control initiatives already introduced. We will continue the consolidation journey of the Humana group, both in ensuring that we work with common processes and that we reduce the complexity and increase efficiency. We will continue to execute on our specialization strategy, both on the already identified areas and also by reviewing the elderly care strategy and setting that in the coming year. We will continue to work on strengthening our ability for organic growth. We have, during the last quarter, grown a healthy pipeline of projects in our targeted areas. We will continue to secure good partnerships that will allow us to grow as desired in these areas. We will also continue to focus on securing a customer inflow within the personal assistance in Sweden.
It is an extremely stagnant market, and there is a big need for some movement on the market. We are active in this area and looking at different options. Of course, we will continue to ensure that we make a real difference at all levels: customer satisfaction, social impact, as well as now with setting the climate-based sustainability target. Very happy about that. With that, we open up for questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Kristofer Liljeberg from Carnegie. Please go ahead.
Yeah, hi. Good morning. I wonder if you could maybe comment a little bit more how we should think about earnings in Finland and how soon the cost savings could have an effect, and especially now when you are divesting the elderly care business there as well. If you could comment on what the mix will look like after that. My second question relates to personal assistance and whether you see any signs of more stable client net flows here and the potential to regain some profitability in that business here in 2025. Thank you.
Yeah. Starting off with the question in Finland, it is a smaller part of our business that we are divesting. It has approximately the same profitability as our other areas. We do not foresee a big change in the margins in Finland moving forward. What we do see is that our targeted areas, both within intensive care for child welfare services and the intensive care for disability, are higher margin business. We have opened units, and we have new units in the pipeline that will be announced. From that perspective, we feel fairly confident that we will continue on a good development there. Over the next this year, we do have some changes in Finland, though, partly with the open care services. We are looking into, we know that there will be a continued reduced purchasing behavior.
We have adjusted our organization for that, but it may need to be adjusted continually. We will see a little bit how that develops. We are looking this spring at developing a new concept to introduce into the open care services, which we are quite excited about. We do have a new management also coming in June. There will be a few changes during the year, and we are focusing also on the divestment and making sure that lands according to plan. Fairly confident that we will be able to counteract the impacts of the sale, of course, of the elderly care.
If you look at Finland, you generated like SEK 17 million in profit here in Q4. I think there were some cost SEK 4 million, if I just put that for the cost for the restructuring program. So that is around SEK 20 million. And that is like SEK 10 million below the earnings level you had in the first and second quarter. Is there some seasonality in here, or does this just reflect a continued or a worsening trend for some of the segments in Finland?
Yeah, we are following Finland closely. As Nathalie said, it is a period of many changes now with the divestment of the elderly care. That is some 20% of the revenue. Of course, we need to follow the organization and to follow Finland very closely now and also making sure that these adjustments that we have made, that it also shows in the numbers, of course. Q4 is a weak quarter, also with a lot of holidays and so on. As you say, we have a gap from the performance in Q4 last year, also with that one-time effect, as you also mentioned, included. We are working with this and following Finland very closely.
It is primarily with the open care services area. We feel we have that under our watch.
As mentioned, also the other subsegments, except for open care services, they are actually performing a better EBIT, both in Q4 compared to last year Q4 and also for the whole of 2024 compared to 2023. That is also, yeah, comforting, I think.
Yeah. That is the areas that we are focusing on.
Did you mention how large the savings are in Finland?
No.
The savings on the SAS for the restructuring of open care services.
Yeah.
Yeah. It's around SEK 4 million during the quarter.
Okay. Okay. And personal assistance?
Yeah. Personal assistance, let me put it this way. It is an extremely stagnant market. There are fewer customers, and the number of customers are continuing to decrease on the market. We see a slight increase in the number of hours, which means that the customers are getting older and with more needs in general. From that perspective, it's hard to say when the turn will actually come. What is preventing the movement on the market is primarily that a lot of companies have issues with reclaims from the insurance board and with the permit problems with IVO, the IVO in Sweden, the permit agency. We do have some embryos and thoughts on how we can get that moving, that we will start looking at more actively now during the first half of the year.
It is a little bit hard to say what that will lead to. We do believe that it will be a continued challenging market when it comes to increasing the number of customers on the market. There is a big need for it. The municipalities are making fewer decisions. The insurance board is making fewer decisions. The need within the groups is not decreasing. There is a growing need, and we are quite active in that debate as well, as some of you may have already noticed. We are hoping that we will see some movement during this year. As we said also in the previous quarter, we are not too worried because even when the customer base is slightly decreasing, we are still the largest on the market. It is fairly easy to adjust the costs on the personal assistance level.
Okay. I thought you have said previously that as long as the number of clients is going down, you will always be lagging with the cost savings. I guess for this business to start generating some profit again, you need to see at least stable net flow in clients.
Yeah, yeah, that's correct. We have seen a gradual decrease of the customer net outflow. It is slowly improving, but we're not yet at zero. Like Christoffer mentioned during his financial presentation as well, if you compare Q4 this year compared to Q4 last year, we had a one-time impact on pension repayments last year of SEK 10 million. The underlying profitability has actually improved this year in Q4.
Yeah. Yeah.
We do see improvements. Yeah.
The next question comes from Jakob Lembke from SEB. Please go ahead.
Hi. My first question is on Norway. I'm wondering if the margin level you're doing here in Q4 is sort of representative of where you are now and if we can expect that to continue going forward?
Thanks for the question. In Q4 in Norway, we mentioned on the Q3 call that there was this strike situation within one of the staff areas in Norway. That agreement was settled during Q4, and we actually had a little bit of a positive upside there when we released our provisions being made. We had a slight positive one-time effect there in the result. I think it is a little bit perhaps stronger for a typical Q4 in this Q4. We see in Norway, the year to date, we have a slightly lower EBIT percentage, but that also comes from the beginning of the year. I think it will be exciting for us during 2025 to continue to work hard and also to realize the last synergies that we have also and that we mentioned previously.
We believe in a good continued development in Norway.
Okay. I have a question, more of a technical one. The IFRS 16 impact on EBIT increased quite substantially here in the quarter. Is this something we should expect going forward to continue at this level?
Yeah. This was a bit of a special effect now in Q4, as we wrote primarily in our Q4 report that during the quarter, we had the Finnish elderly care companies. They were accounted for as assets and liabilities held for sale. That also, with the accounting standard, implies that we should stop account for depreciation on the lease contracts when those circumstances occur. That is the reason why we had the approximately SEK 10 million in less depreciations during this quarter. Now we have sold and divested it in the beginning of this week so that the decrease will not remain going forward.
Okay. Just a final question on the repurchases. You write that it's to create flexibility for future acquisitions. Do we then read this as more of a one-off, or is this something you will do more regularly going forward?
is, of course, up to the board to decide. We now have, as you said, a good cash position at year-end. On top of that, we also had the cash coming in from the divestment of the elderly care. We are, of course, working with the capital allocation continuously. At this stage, the board this morning took this decision. The liquidity in our share is not very high. I think with this initial mandate and decision of up to 1 million shares, that will also take a while. Let us see after that what the board thinks going forward.
We see it as a very positive development.
Okay. That's all for me. Thank you very much.
The next question comes from Kristofer Liljeberg from Carnegie. Please go ahead.
Yeah. Hi. You mentioned this release of the provision in Norway. How large was that in the quarter?
That was, yeah, a minor effect. Not substantial, but it was an effect, but not that big.
Okay. I think you had minus EUR 2 million extraordinary items for the group. Does that include both the cost you had in Finland and this positive provision or release of the provision in Norway?
No, it actually does not include any of those items. There are other items for that. We have that. Yeah. I can read them out. It's three different ones. We have them in the Q4 report, of course, but it's related to the-
Okay. Okay. Never mind. Would you say that the positive effect in Norway is netting out the negative effect in Finland?
Yeah, that could be a reasonable assumption.
Okay. Great. Thank you.
Thanks.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time. I hand the conference back to the speakers for any written questions or closing comments.
Thank you. We have a couple of written questions. I will read them out. The first one is, please elaborate on your medium-term strategy to generate volume growth within individual and family in Sweden.
It is primarily within the areas that we have already mentioned. We will focus on growth a little bit, of course, on the occupancy, but it is not a huge focus for us, but a little bit on occupancy. Growing within LSS is a targeted area that we have started looking into more, both organic and M&A, of course. Also, the surrounding areas to our residential care homes within child and young, so supported living and family homes. Those are our primary targeted areas. Of course, we have a few other types of projects as well in the pipeline that we will continue to execute on.
All right. Second question. Please elaborate briefly on your M&A strategy given the large cash balance including Finland exits. Do you foresee closing additional add-ons during 2020?
I would not exclude it. We are monitoring and looking into, and we are continuously evaluating possible acquisitions. We have reviewed several during the past few months, and we have also started looking more actively into some of our targeted areas that we may be able to pursue. I will not exclude it, but we will do it at the right multiples and when it makes sense and aligns with our strategic agenda.
Thank you. Last question. What drives the Capex spend of approximately SEK 70 million in the quarter? How many new units, homes have you started, and within which business areas? Do you foresee any divestments of real estate assets during 2020?
Okay. So many questions in one question then. We have the topics investment that you mentioned, and I would say that half of that is investments in our project that we are having a joint venture and building an elderly care house property in Stegnes, as you know. The rest of it is more running topics investments that we do in our business on a recurring basis. The other questions were?
Do you foresee any divestments of real estate assets during 2020?
Not any major effects from that. No.
Okay. Thank you very much. That was the last question. We want to thank everyone for listening and have a good day. Thank you.