Dear ladies and gentlemen, welcome to the Instalco Audiocast with Teleconference Q4 2021. For the first part of this call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Today, I'm pleased to present CEO Robin Boheman. Speaker, please begin.
Hello, everyone. Welcome to this Q4 presentation from Instalco. With me today, I have our CFO, Christina Kassberg, and also Fredrik Trahn, Head of IR. We will guide you to our Q4 and also give a little bit of a summary of 2021. Just to give a little bit of start and look at what is Instalco, for those of you who haven't followed us, we are a leading Nordic installation group with focus in Sweden, Norway, and Finland. Our main business area is installation and service of electrical heating and plumbing, ventilation, cooling system, alongside our industrial and technical consultants that I will come back to a little bit later in the presentation. We are roughly 110 subsidiaries and 4,900 employees. We are a decentralized structure. We are a buy and build case.
We are supported by a small central head organization. We are looking for strong profitability and high margins over time. That is Instalco in brief. If we take next slide and go through the highlights of Q4, I want to start off by saying that the fourth quarter has been very stable, a quarter overall with result and margins. We have still had to cope with some restriction and circumstances associated with the pandemic, which has, of course, affected us in the quarter. We have higher sick leave than normal, but I want to focus this on the high cash flow. As those of you who followed us in Q3, we had some lower cash flow in Q3 due to a little bit of lack of focus, and we have focused on it in Q4.
We have brought in Christina as well as new CFO. I think we have gotten ourselves back on track. As you also can see, a tremendous net sales growth of 27.5% in the quarter, and we were also able to grow organically by 7%, and made six acquisitions. Overall, a very strong quarter. We turned over SEK 2.6 billion. We had an EBITDA of SEK 227 million, which gives us a EBITDA margin of 8.6%. And in these numbers, there is also one off from our AFA insurance that contributed with SEK 22 million positive for us. If we go to next slide, and just summarize a little bit about 2021, we almost reached SEK 9 billion turnover.
We had SEK 748 million in EBITDA, correlating to 8.4% EBITDA margin. We were managing to grow the business by almost 25%. A lot comes from acquisitions. We acquired 27 companies with a total acquisition annual sales of SEK 1.7 billion. We have an order backlog of almost SEK 6.8 billion, so correlating to roughly about 75% of our turnover. A strong order book as well. That was a little bit brief summary of 2021. I will come back to it a little bit later in the presentation. Next slide, please. I'll hand over to you, Christina, to talk us through a little bit about net sales development during the quarter.
Thank you, Robin. Yes, on this slide, we can see the net sales development in Q4 and how the growth is distributed. We have had a high activity in the quarter, and the net sales increased in total with 27.5% to SEK 2.6 billion. Acquired growth increased with impressive 19.7%, definitely a strong proof of the successful and intensive M&A agenda. Organic growth increased with 7%, a performance that we are proud of. This is a strong proof of our business model. Our companies collaborate, find synergies, and use the cross-selling concept towards customers. The management facilitate the collaboration, and on a regular basis, bring our companies together. The companies meet, they discuss, learn from each other, and get inspired. Do not forget, our companies keep their independence and local responsibility. Next slide, please.
On this slide, we can see the adjusted EBITDA development quarterly, both in million and the margin. As you can see, a record high adjusted EBITDA in Q4, an increase of total 10.6% to SEK 214 billion compared with the Q4 previous year. Historically, the fourth quarter has been strong for Instalco, and that holds true for 2021 as well. Several projects delivering during Q4. Adjusted EBITDA margin in the quarter landed at 8.1%, and this is still a good level and a good performance in challenging markets. The margin is also proof of a strong position in strategically selected areas and geographies. During the quarter, we have faced some supply chain and logistics challenges with impact from rising prices for raw materials and equipment.
Our hardworking companies has overall handled the situation very well. The EBITDA adjustment, I just want to mention about them. In the quarter, we had a sum of net -30 million SEK attributable to revaluation of contingent consideration with a positive effect of 16 million SEK. Transaction cost for the acquisitions was 4 million SEK. This adjustment only affect the group level and not our two business segments. Over to slide seven, and some words about the order backlog development, the quarterly development in this picture. Order backlog growth year-over-year was 2.6%, an increase to 6.8 billion SEK. We have continuously a stable ratio of 76% relative to 12 months rolling net sales. This is a ratio level that enable us to be flexible and bid on interesting future projects.
Despite the impact of the pandemic and certain amount of sluggishness from customers, our companies continue to sign new, exciting, and profitable agreements. Organic development was -9.5% year-over-year, a comparison from a high level. As our companies deliver in the big Swedish hospital projects, for example, the order backlog comes to a more normalized level. Acquired growth year-over-year was 10.9%, again, a strong proof of the successful and intensive M&A agenda. Okay, Robin, let's hand over to you and talk about some exciting projects during the quarter.
Yes. Thank you. Next slide eight. I'll talk to you about just to mention a few projects that we have delivered in the quarter. As you know, we always strive to help our customers to lower their environmental impact via lower water or energy consumption and through higher environmental awareness. That is something that we do every day and want to design and install sustainable energy-efficient solution. I think this is a very good example of one of our daughter companies, Vallacom, who was assigned by Riksbyggen for Riksbyggen's largest installation of solar panels in a complex of 37 block houses and a 5,200 sq m solar panel installation, so that these block houses be self-sustainable for energy in summer months.
This is also an installation where we do connect this to charging poles as well for electrical cars. This is a typical good example of a sustainable Instalco project, where we as a company with our experience can come in and take the full responsibility for this installation. A very good example of a sustainable Instalco project. If you go into next page nine, this is also an example, a little bit like you mentioned, Christina, about the collaboration and the synergies between our subsidiaries.
This is a clear example of where we can come in with the expertise from five different companies and jointly take a project, in this case for Peab, where we take all the responsibility for design, installation of electrical heating and plumbing, ventilation, and sprinkler system, and renovate a property called Entré in Malmö, which is also a demand-driven installation for energy savings. That is one of the reasons why they are doing this refurbishment. This is, of course, also a good example of a sustainable Instalco project, where we can come together as a team and do this. So once again, good example of a collaboration and synergies that we can create. I will now hand over to Christina to talk a little bit about the different segments, starting with Sweden.
Thank you, Robin. Yes. Here on this side, we can see the segment Sweden development in Q4. Sweden continues to deliver with high margins. Our Swedish companies have coped with the pandemic very well, and there are many excellent examples of collaboration, as mentioned before. Our companies, they can share best practice. They work together in tendering processes and with cross-selling. As said, we have had a high activity in the quarter, and the net sales in Sweden increased with 29.4% to SEK 2.1 billion. The organic growth was 7.4%, a very strong and solid performance. Acquired growth was 22.1%, and here we can see the effect of the M&A agenda. The EBITDA increased with 20.2% to SEK 200 million.
EBITDA margin 9.5%, a drop, but still a good level in a challenging market. To mention as well, we have the lump sum payment from AFA Försäkring that has had a positive impact on EBITDA in segment Sweden by approximately SEK 22 million, and no EBITDA adjustment has been calculated for this payment. Then we have the segment Other Nordic development in Q4. This segment has recovered compared with Q3, although it is still performing below the desired level. The market in Norway has stabilized at a high level regarding both the new construction and renovation. The market in Finland is primarily driven by the major metropolitan areas. During the pandemic, this market has been sluggish. In total, the net sales increased with 20.4% to SEK 550 million compared with the same quarter previous year.
Organic growth 5.8%, a very strong and good performance. Acquired growth of 11.3%, also a proof of the acquisition we have made primarily here in Norway. The EBITDA increase was 23.4% to SEK 31 million, and we are now starting to see the positive effects of our action plan to improve the profitability of our Norwegian subsidiaries. The margin 5.8%, a very strong performance during a pandemic. Robin, over to you and the acquisitions.
Thank you. This is of course an area as you've seen in 2021 that has not been affected at all by the pandemic. We have done a record high year of 27 acquisitions, and like I mentioned, SEK 1.7 billion in annual turnover during 2021. Out of these, the main of them were in Sweden, and rest of Nordics a little bit behind. We'll come back to that. If we go into page 13, you can see the acquisitions that we have done in Q4.
Just to mention a few specific ones, I would like to mention the Nordpipe Composite Engineering, NCE, which are specialized in production and installation of composite solutions for the industry, which is a company that we have worked together with a few of other companies before. In Sweden, I would also like to highlight that we have acquired our first company in Norrbotten with MRM and EPS, which are niched themselves into the industry and infrastructure. All these acquisitions that were done in Q4 are profitable companies and very exciting to have them along and in the team. We also focus on highly profitable companies. We always do, and we can see that we have a continued good M&A pipeline for 2022 as well.
I'm very happy with the team and that we can continue this growth journey and continue our buy and build in this sector. I think I will hand over back to you, Christina, to talk about our financial targets and the dividend policy.
Yes. Thank you. On this slide, we summarize the performance of the financial targets and also the dividend policy. As you all can see, we are glad to tick almost all boxes regarding three of our total four financial targets, we have performed well above. Cash conversion for full year is below the target due to weaker cash flow, mainly in Q3. During Q4, we have strengthened the cash flow, mostly driven by the positive net from income accruals. We expect this strengthening to continue, and the focus with the cash flow will go on. Finally, the board proposes a dividend of SEK 3.25 per share prior to the split in line with the policy and previous year. Robin, over to you again.
Yes. I would like to summarize a little bit the year 2021. The theme for this quarter is the summary of 2021. First of all, as you all know, there's been a change in the management team during 2021. Per Sjöstrand, a former CEO, and one of the founder, stepped over to become Chairman of the Board. Myself had the opportunity and very glad to take over the CEO role as of September 1st. I'm also very glad to have Christina Kassberg on board as CFO as of 1st of November last year. A little bit of changes, but no big changes in how we run the business, and we have a good collaboration together, the three of us.
If we go into next slide and talk a little bit about the year, I mean, we are late cycle as we have mentioned before. We were not as disturbed by the pandemic in 2020 because a lot of the projects that we took in 2019 was pre-pandemic that we delivered in 2020. In 2021, we had somewhat tougher market. We have had higher sick leave than normal in 2021. We all see dramatically increase in raw material prices, and also in some cases, even shortage of some material.
I think we have been able to cope with this in a very structured and methodized way, but of course, it has been some challenges and also coming back to like Norway and Finland with the closing down of these two countries has also put some stop and go in a lot of construction sites. Despite all of the above, we did manage to deliver on our financial targets, as Christina just mentioned, and we have a strong balance sheet as well to continue the growth going forward. With that being said, I am very proud to be able to deliver these numbers, and I'm also very proud of the team that has done this.
If you go into next slide, one of the milestones in 2021 was this hundredth acquisition, which I must say I'm very proud of that, we have been able to consolidate this market and delivered on our expectation on this consolidation. We focus on the highly profitable companies, and creating synergies as we have shown earlier in the presentation today. Acquisition agenda continues as I mentioned before as well. Looking ahead a little bit, I will give you the top three focus areas at the moment. First being expansion in rest of Nordics. We have analyzed the market. We have gone back to the drawing board.
As you know, we have had some problems in Norway and Finland over the years, but we do believe in our plan to consolidate the Finnish and Norwegian market. We have an action plan, as Christina mentioned. We have downsized a few companies, changed management, increased the support, specifically in Norway, and we are seeing that this is being affected, and we see the positive turnover from this. We have started off and improved, so we have made a stronger regional organization. The strategy in Norway is to continue our geographical growth, continue with the action plans. Strategy in Finland would be to continue to consolidate the larger metropolitan areas and will broaden our base of companies in rest of Nordics. You will see a little bit of shift here that we'll do more acquisitions here as well.
Going into one of our other focus areas, is the industry discipline. Just to be clear, industry for us is not the production industry. It is that we do installation for the industry. Basically industry is mainly our customer here. Background is that we started actually this already in 2014. One of the first companies that joined Instalco was Orab. Now we have 13 companies. We are all over Sweden with a focus in northern part of Sweden. Why do we do this? It's nearby business. There is a strong growth. There is less competition about projects, and also targets here as well. Last quarter, like I mentioned, we have our first companies in Norrbotten and our first acquisition in Finland as well.
Very excited area to be in, and I think, growth possibilities here are huge. Stepping into the third one. Page 21. Expansion of technical consultants. I've mentioned this already to you guys before, so I won't go into too much of a detail, but I'll just summarize. We are about 230 employees. We are of 11 companies. Why do we do this? I think this is where the technical consultants belong. Here we can have the theoretical and the practical knowledge in one basket. We can come in earlier in the projects. We can give a complete solution to our customers, and I would be lying if I hadn't looked at the higher profitability in that area as well. Happy to have them on board as well.
This is a little bit the main focus as you will see in 2022 from our perspective. To summarize, what you've heard today is Q4 stable quarter. It's been high focus on cash flow. I think we have proven that we can get back on track and what we promise we deliver on. You have seen acquisitions in Norway and Finland as we have communicated to you guys before that this is a focus area to us, and we always deliver on that. Summarizing 2021, I think it's been an impressive result with so to say the cards that we were dealt with. Record high acquisition growth, strong business model, showing once again that the Instalco business model is the way to go. We are able to continue our consolidation of the market.
We continue to have strong growth within our subsidiaries. Last but not least, also one stepping stone in the journey for Instalco is that we, as of January now, are listed as a Large Cap on the Nordic Stock Exchange. I'm also very happy with that milestone as well. With that, I summarize the year and the presentation, and I will leave it over to questions.
Thank you. We will now begin the question and answer session. If you wish to ask a question, please press 0 and 1 on your telephone keypad. The first question is from Carl Ragnerstam of Nordea Bank. Your line is now open. Please go ahead.
Hi, it's Carl Ragnerstam here from Nordea. A few questions from my side. Firstly, in terms of sick leaves, I guess the spread of Omicron might have been a bit challenging at the end of Q4, also going into 2022. What would you say was the impact in Q4 and what could we expect so far this year?
Hi, Carl. Yeah, I think what we can say about Q4 is that we were affected. It's of course, as I think one of you asked in Q3 as well, that it's hard to calculate in a number. What we can say is that we have about 40% higher sick leave than a normal quarter. Normal quarter being then, like, Q4 2019, for instance. It's hard to put a number on what it has cost us, but what we can say is that, I mean, at the end of the day, we make money on selling hours and materials that is installed during those hours. If you are at home, you're not making any money for us in that sense. Unfortunately, I can't give a number on the cost exactly. It has affected us. It's 40% higher.
We also see that, sorry for the English word, but VAB is very high. So basically, staying home with your child is also much higher than regularly. We have been very much affected by the Omicron version. The Delta one, we managed better, to be honest, but the spread has been very high for the Omicron one. It has also affected us.
Okay.
... in the beginning of I think like the whole society. I mean basically I think almost everybody has gotten COVID in January. It feels like. Been a little bit tough in January as well. Also at the end of the day I think January is not the most productive month anyway. I think we will cope with that in Q1 as well. We have a long year in 2022 to get back on track as well. Not too concerned about that.
Okay, perfect. Also, group common costs are at SEK -17 million. How should we look at that number going forward? Because it's positive at some quarters and negative at some. Should we expect it to be positive or negative going forward, to start with that?
Carl, I can put some words about that topic. Just to give you a brief background, quarter by quarter, the positive EBIT you can see in this, in the group and in the group segment is somewhat higher debit of management fee during Q1 to Q3. In Q4, you can see a lower number of that and gives then the negative result of SEK -17. Over to the question what we can expect from that going forward, we can always strive to change our routines and make things better and be more normal when it comes to this part of the group. If that is a help for you to understand the figures here.
I can just add into that and say that hopefully, not too many of our daughter company CEOs are listening in because we have basically invoiced them too high in Q1, Q2, and Q3. On that topic, I think that's also a thing that we took in Christina, so she will try to improve this process as well. Also to give a background of the management fee is invoiced on turnover, and we are turning over almost SEK 9 billion. To estimate exactly the percentage that we will charge our subsidiaries, and then we are SEK 17 million from the exact number.
I know it's tough for you guys that has to do this, analysis, but to us, SEK 17 million of SEK 9 billion is not too far off, to be honest. I know that.
Mm
It is not what you want to hear, but that's purely the facts. We will try to improve, and we will try to come up with a good system that works for the both of us.
Did Christina, you said a normalized level. What is a normalized level? Because I mean, in the quarter, it's almost 10% of EBIT. That's even of course if you compare it to sales, it's not that much. It's 10% of EBIT, so it's actually quite a lot. How should we look at the number going forward? What is normalized?
Uh-
Is it positive or negative to start off with?
Our objective, my objective, is to get a zero effect here. We'll never come to zero on a quarterly basis, but as close as possible, so you don't have to have the sluggishness between the quarters here. That is an objective, and we can strive for it, but we will not come to the zero level at the end, but maybe closer in the coming quarter, yeah.
Okay. Perfect. Also on the group EBITDA margin, it's at 7.3%, down 200 basis points year-over-year, which is, I think, a remarkable drop, especially given the 7% organic growth and as you're consolidating margin-accretive acquisitions. Could you help us understand what is behind the margin drop and how we should look at the margin profile going forward? Thanks.
Yeah, I think you have to look at the slide where I discussed about the summary of 2021. I think and also as I mentioned in the call in Q3 is that yes, we are seeing some clouds on the sky in the short term, but long term we are positive. Short term being that, as I mentioned, we have 40% higher sick leave. We have increases of raw material where we are talking about reasonable numbers is maybe 2% increase. Now we are seeing between 10% and sometimes 50%, sometimes 15% higher in the cost of goods that we install. In the short term, we are of course not able to push that on further to the customer.
In the short term, we will be a little bit squeezed, but long term we will be able to push that all over to the customer at the end of the day anyway. Short term, we will be squeezed, as I mentioned in Q3 as well. I think those are the two main reasons, and of course also this stop and go that we are seeing where we kind of start up the project, people get sick, have to be in quarantine, et cetera. We stop and go. The time schedule is very hard to keep, so that has affected us. Long term, I see no differences of historical numbers being able to deliver on that as well.
Short term we will have some struggles, and I think we delivered a good report and good numbers for, like I said, the cards that we were dealt.
How do you ensure that first off, how long are the average projects? 'Cause I think as you said, you need to work through some projects taken at, sort of, at least in retrospect, wrong prices.
Yes.
not considering the raw material
Yeah.
inflation. How long will that
So it's-
I mean, is it a quarter or two? Or what?
A typical Instalco project is six to nine months, is a typical Instalco project.
We should expect squeeze for typically six to nine months-
Yes.
Going forward as well then, or?
Yes.
Okay. Perfect. Yes. That's all from me. Thank you.
Thank you, Carl Ragnerstam.
The next question is from Stefan Andersson, SEB. Your line is now open. Please go ahead.
Thank you. Yeah, some of the questions were answered there, but one clarification, just you talked about the action plan going ahead. Just so I understood you correctly, when you commented on the action downsizing, it sounded like that was something that you already have done, and that's in the history, so that's not really something that we should expect going forward, and then some of the other things you mentioned were more forward oriented, or did I misunderstand that?
No. Maybe it was a miss on my side there, but you are correct, Stefan. The downsizing has been done, but now we need to kind of fulfill the plan also, so to say. We need to kind of
Okay.
We execute on the plan, but we have downsized a lot already, so.
Going back to the margin, I guess we went through it rather much in detail, but is it correct also that if I look at the divisions, when you say that you reimburse the divisions, they have also received? So in that, in the divisional results, you have this reversal of central costs included there as well. So it's a minus on the group level, but then on the divisional they receive that. So,
Yes.
In total
Yes.
Um.
In total, yeah, it's inter-
Sure, yeah.
It's internal money in that sense.
Yeah.
Yeah.
So coming back to the material and sick leave impact is I guess would have been similar kind of to both other Nordic and the Swedish region, but it seems like the Swedish region have been affected more. Is that incorrect just because of difficulties with comparisons or is there a bigger impact in Sweden you would say than in the other region?
I think it's a little bit bigger in Sweden, and we have been a little bit more affected in Sweden, and that has to do with that we have a larger order book in Sweden. In Finland, for instance, the project is quite close to say negotiation to start is very short, compared to in Sweden, where you negotiate and you put it in the order backlog, and then it has a few months until you start to execute. In this scenario as we have today, that will be more affected. In Finland where the time period is shorter, you will of course be able to kind of cope with the price increases quicker.
Perfect. Thank you. My last question, and I fully understand it is difficult, so but I'll also ask it anyhow. Looking at the order backlog, you mentioned that for a few quarters now that it's been extraordinarily high, some larger progress in there and so on, and you're not concerned at all. You know, what kind of timing are you expecting to get it to the normalized level? Or, if you want to, how many percentage too high of the normalized level is it? If you can answer any of that, I would be happy.
Yeah.
I fully understand if it's.
Um-
If it's a challenge.
I think it, when I look at it and, especially maybe you can take the, my predecessor's word on it as well, is that if you are at 60%-70%, we are quite satisfied. I mean, like I mentioned to Carl here before, like a typical Instalco project is six to nine months. That meaning that we have quite the full order book at sixty to seventy percent. I think when we are in that ratio, we are quite satisfied. Now we are at almost a little bit above 75%. I mean, we are at good levels. We have a sufficient inflow of new interesting projects, and we are able to be out there on the spot market as well and take projects.
I think that's the level we want to be at, and this is where we want to be. We may be slightly higher than the optimal setup, but yeah. To us, this is not a big concern. We sleep well at night. We are how do you say? We're very satisfied with the order backlog and the order intake that we have.
Perfect. That's all for me. Thank you.
The next question is from Robin Nyberg, Carnegie. Your line is now open. Please go ahead.
Hello. It's Robin from Carnegie here.
Hello, Robin.
Continuing with the same topics here, first, the margin in Q4. Could you just comment what the underlying EBITDA actually was if we would adjust for the AFA payment and earnout reversals?
I don't have it off the top of my head, but we can do it very quickly for you. Basically, if I would deduct the SEK 22 million, we would, from the adjusted, I think we will end up at 7.2 if I do the math correctly here. And non-adjusted would be then 7.7. It should be 5% and 0. 7.7% EBITDA, and adjusted EBITDA will be 7.2%.
Okay. Yes. That's clear. Okay. Then moving to the backlog, if we look at the comparable units, how that developed, it was down by 9% in Sweden, 14% down in the rest of Nordics. Is the main reason for this lower backlog here that you had larger projects in the backlog before and some units have not been able to take on new projects? Is that the main reason? Does this basically mean that there is potential for negative organic growth in the next quarters?
Yeah, a little bit of multiple question there, Robin, but I'll try to dig it down one by one. If we start off by looking at Sweden, main reason for that Sweden is down is due to these larger hospital projects where we are sort of, say, working ourselves down, and are not able to take on new projects in those companies. That is one of the main reasons in Sweden. Looking at rest of Nordics, the main reason there is actually you are representing it yourself, Robin. It is actually basically Finland that has not been able to take as many orders as before due to that the Finnish market is not there where we want it to be, and we don't want to take on projects that are not at a sufficient level, then we rather wait.
That's a main reason for rest of Nordics being down. It's a strategic way of not taking on bad orders that we have to pay for later. The third question there was, you cannot, so to say, do a comparison about order backlog being down and organic growth because first of all, organic growth is calculated not by all of our companies. It is just the companies that we've owned for more than a year. The correlation is not hundred percent there. Also the order backlog depends a little bit on when it is being done compared to when, so to say, when it starts, when the project starts and when it's finalized. You cannot also do a perfect line there.
I wouldn't draw too much, I wouldn't put too much emphasis on that order backlog is a little bit down and immediately start saying that organic growth will go down. It is not fully correlated that way, if that answers a little bit the question.
Okay. Yeah, that's a good answer. A follow-up related to the margin, if we would just add the divisions, you had SEK 200 million in Division Sweden, that's inflated by SEK 22 million.
Yeah.
You had SEK 31 million in other Nordics.
Yeah.
Basically, the other that was -SEK 17 million should be in a normal quarter around zero. Wouldn't it be fair to say that the kind of underlying EBITDA was actually then about SEK 209 million, so a margin of 7.9%, not the 7.2% that you mentioned?
Yeah. The 7.2 that I mentioned was the adjusted EBITDA. It was also included the earnouts. The 7.2 is something different than you calculated now.
Yeah, but they, I mean, if we just look at the kind of how the underlying business has developed in Q4, because the other -17, it tends to hover around zero, so to speak. Isn't it fair to say then that it, you get to-
Yeah.
The kind of underlying-
Okay. I understand there, Robin.
The, the-
I understand where you're coming from.
Underlying earnings should be around SEK 209 million, and that's if you calculate SEK 200 million plus SEK 31 million, and then minus SEK 22 million.
No, and I understand where you're coming from, Robin, and I agree with you. That is one way of calculating, absolutely. Because the SEK 17 million is, like I said, it's internal money in that sense. Yes-
Yeah
I agree with you there. You could calculate 7.9% if you want. Yes.
All right. That's all from me. Thank you.
Thank you.
The next question is from Erik Karlsson, Kepler Cheuvreux. The line is now open. Please go ahead.
Hi there. It's Erik Karlsson from Kepler Cheuvreux. Thanks for taking my question. Appreciate the comments on the order book versus organic growth correlation. If you could still give us some thoughts on organic growth for Sweden during 2022. Do you think it will be positive or negative? What speaks for positive respective, negative respectively? That'd be helpful for us, just directionally. Thank you.
Yeah, if you have followed us, you know that we don't give any forecast on organic growth. I will leave it at that.
Okay. Thank you.
The next question is from Marcus Almstedt, Danske Bank. The line is now open. Please go ahead.
Hi. Marcus here at Danske Bank. Sorry for coming back to the question and asking it again, but I might have missed. Just wanna confirm the 200 basis points margin contraction that we saw if we exclude the SEK 22 million from AFA. Was it? You said there was raw materials, and then you have also a bit low productivity because of the high sick leaves. Was there something else that I missed that was driving that down? That's my first question. The second question is then, I would assume that the raw material prices or the higher raw material prices will then be compensated by you pushing pricing through. How does the contracts look on the projects? We're talking about nine-month projects.
Are the price closed in those contracts, or will the price increases start affecting the new projects that you are taking on?
Many questions in one there. I'll try to,
Yeah
to sort them out a little bit.
You-
I think you have to help me out with a few to get back.
I think more than sick leave.
First of all, the margin.
Yeah, we can take them one by one.
Yeah, the margin then.
Mm-hmm.
As I said, main reason, sick leave and increase of raw material prices, and of course, this kind of stop-and-go scenario that we've been in in 2021, where kind of projects start up, we have to close it down, and we start it up again. That affects the kind of timeline and the planning for us. You don't get a smooth process with this stop and go. Those are the main three reasons, I would say. I think that was the first.
Mm-hmm
question.
Mm-hmm.
Uh, the other one-
Yeah, and then just.
Regarding the contracts.
Yeah. Yeah, if I can just follow up on that. If I look at January, I mean, you said that January was also. We all know what the society looked like in January. Everybody around you had COVID, basically.
Yeah.
Things have started to ease off. Now in mid-February and most people are back to work. I mean, I would assume then that this stop and go, kind of what are you seeing on that? Now it's a bit early in the season and the weather is what the weather is, but are you kind of seeing this also being phased out, the people also coming back to work in your organization? I assume that you see the same thing as we see, for instance.
Yeah. I absolutely, and I mean, January was crazy, I think, as you all know about how society looked in January, people getting COVID left and right. I think we're definitely seeing people back. We are back at work. If I could ever choose a month to have high sick leave, I would choose January every day of the week.
Mm-hmm
... or every day of the year because January is not the most productive month anyway. I think, and as I mentioned before in the call.
Yeah. Yeah
We have all the time to catch up.
Perfect. My second question is a little bit follow-up on the second part of the factors driving the margin down, that is the higher raw material prices, because I would assume then that you were talking about price increases will compensate for this over time, right? And then how does this tie up with the project? First of all, assuming you have all of the price increases in the system, do these also affect the project which are running at the moment? Or are the prices for those projects fixed, and then you will have a higher cost and the prices out are fixed, and then it will be the new projects coming in that will have the higher price. How does it work?
How does that dynamic work?
Yeah, this is what I mean, that we are being, so to say, affected by the higher raw material prices that we see because we have taken projects prior to price increases and prior to knowing about the price increases, and we have, of course, calculated with some price increases, but not to the extent. I think the market has never seen these type of price increases. We are basically normal level is a 2% increase. Now we're seeing 10%-15%. Nobody has been able to calculate with that type of price increases. The fixed price projects that we have taken prior to the price increases, those, of course, we are being squeezed at, and we try to negotiate, of course, but it's not that easy.
We also have some contracts saying that we have a cost plus perspective, where we're able to add a certain percentage. In those cases, we are not affected by the price increases. You could even argue that it's positive with price increases. However, that has affected us and as I mentioned earlier in the question before here was that we will see that in the near term, but in the long term, we will be able to push this on.
I mean, I appreciate that. But if you look at the number of projects you have, is a normal project kind of fixed pricing or is. What's the norm?
Okay. Basically our turnover is-
In other words.
Yeah.
Yeah.
Basically, our turnover is 20% service, which is so to say spot price. You have roughly around 30% is pure cost plus perspective. You have 30% fixed price, and then you have so to say 20% which is a little bit mixed of a fixed price and a partnering project, I would say. 30%-40% is fixed price projects.
Okay. That's very helpful. Thank you very much.
Thank you.
There are no further questions at this time. Speakers, please go ahead.
We have had a few questions from the webcast as well. We'll take a few of them. One is a question from the webcast. If it's possible to increase the speed of M&A with higher net debt, would that be a way to go?
I think, I mean, the possibility of increasing M&A is more in the sense of how much M&A do we want to make and be sure that we can kind of continue to deliver on our goal of buying the best-in-class companies with track records and being an Instalco fits. I think that is more the question on how fast we can find and integrate and also be able to kind of onboard companies in the Instalco methodology. I think we will be able to kind of cope with net debt and so forth. That's not, so to say, the limiting factor in this case.
Another question is about rest of Nordics. What margins can we presume there in the future? Can we expect up to 7%-8% in rest of Nordics, or what are your comment on that?
I mean, I think that the margins that we are seeing in rest of Nordics now are good margins, but of course, we're not satisfied with that. If you look at the market and the companies that we own in these companies, I do expect them to deliver around 7%-8% in a normal market, yes, sir.
One question about technical consulting. Just, you talked a little bit about it, but can you sort of give a more update on the plans there?
Yes. I mean, the plan is, as I mentioned in Q3 as well, and as I mentioned a little bit today, is that continue the growth. It is still not a, so to say, a positive cash generating yet because we're growing it so fast. I do believe in, as I mentioned, there are higher margins in this area, so I'm very positive about the technical consultants going forward.
Do you want to comment on that?
Yes. We can also comment. We have got some questions about the dividend. As reported in the report and the proposal from the board, it's for SEK 3.25 per share, calculated with the shares at the end of the year. After the split of five, the money per share will come to SEK 0.65 per share.
Okay. Thank you. No further questions from the webcast or from the audio cast, I believe.
We say thank you very much for listening in, and we close this call down, and have a nice day, everyone.
Thank you.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.