Ladies and gentlemen, welcome to the Instalco Q4 2018 report. Today, I am pleased to present CEO, Per Sjöstrand. 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. Speakers, please begin.
Thank you very much. My name is Per Sjöstrand. I'm CEO of Instalco, and I will be assisted during this presentation by our CFO, Lotta Sjögren. Starting with slide two, it shows an overview, a brief overview of Instalco, and I hope by now that you know that Instalco is one of the leading Nordic companies for heating, plumbing, electricity, ventilation, cooling, and industrial solutions. Our main business is installation, service, and maintenance of buildings and facilities in Sweden, Norway, and Finland. We are a Pan-Nordic company. I'm pleased to report that we now have reached the sales of SEK 4.5 billion in the top 12 months rolling basis, where there are around 55 companies and more than 2,000 employees. We can go to slide three. Talk a little bit about the market.
As you know, there has been a rapid growth in the Nordic installation market for some time now. However, now it's starting to level off in some regions, growth will likely slow down, but I think still, will still remain at a very high level. The value of the total Nordic market is about SEK 200 billion, where Sweden is the largest market. Throughout the Nordic region, urbanization is the strongest trend and one of the main driving forces in the installation sector.
Next slide, please. For Q4 in 2018, we are once again able to report robust growth in profitability. We made several new company acquisitions. Net sales increased by 35% to just under SEK 1.3 billion. Organic growth for the quarter was 1.5%. For the full-year it was 6.6%. Adjusted EBITDA for Q4 was approximately SEK 120 million, with a margin of 9.4%. This quarter, you can see that Adjusted EBITDA is lower than in this term. The installation sector remains strong. Our order backlog remains high at more than SEK 4 billion, which is an increase of 27%. Next slide, please. This diagrams shows the trend in net sales and Adjusted EBITDA compared to last year.
The diagram to the left shows the jump-off point 2017, with the bridge to 2018. As you can see in the diagram of the right, Q4 is the strongest quarter as previous years.
Okay. Thank you, Lotta. Go to the next slide six. Already in 2014, when Instalco was established and we started Instalco, we formulated our run rate EBITDA target of SEK 450 million by 2019. As you can see, and I'm very happy to report that we are well on our way to achieving that. Other news today is that the Instalco board has updated their financial targets, and we will go over these with you shortly. We can move to slide seven. Next slide. As I already mentioned, our backlog of orders remains high. Our situation is stable, thanks to the level of diversification we have as regards types of projects and markets. Our order backlog also provides us with excellent opportunities for adapting our business if changes occur in the market.
Like to mention a few significant orders that we won Q4. Megu, for example, has been contracted for electrical installation work at Skanska's new office complex at Hammarby Sjöstad in Stockholm. Another project is VVS-kraft, which has been contracted by Swedish Broadcast to reconstruct the central cooling system at properties for Sveriges Television, Sveriges Radio, and the concert hall, Berwaldhallen in Stockholm. More projects on next slide, and that's slide eight. Here you can see two other projects from the quarter that I'd like to highlight. It's a great example of how Instalco works. Collaboration between Instalco companies enables us to deliver attractive solutions to customers that meet all the needs.
For example, three of our companies specialize in electrical installation, plumbing, and ventilation, collaborated in starting renovation of the classic Elite Hotel Savoy in Malmö, you can see in the picture. I'd also say that every single day, Instalco strives to generate benefits to society and help improve both environment and climate. A good example of that is that obviously here in [inaudible] work at Linköping University Hospital, where a new large building is being constructed. Once the building has been completed, it will be one of Sweden's most energy-efficient hospital buildings. The goal is, of course, to obtain certification at the silver level from Sweden Green Building Council.
Next slide, please. If we look more closely at operations in Sweden, we can see that the market for installation services remains stable, particularly for the public sector, but the rate of construction and renovation for schools and hospital is high. Net sales for Sweden increased by 42.3%, with organic growth of 6.9%. We also have a very strong margin here at 10.5%. Next slide, please. I'm pleased to report that the figures for the segment Rest of Nordic are now starting to look good as we have absorbed the costs of a significant loss project in Norway. We now have an EBITDA margin for the Rest of Nordic of 6.7%. The markets in both Norway and Finland are stable. We made two new company acquisitions in Finland during the quarter.
Okay, then we can move to slide 11. I'd like to highlight two of the acquisitions we have made during the quarter. The first one with MSI in Motala, which strengthens our position in Östergötland, thanks to their wide operations in electrical installation, service, and plumbing. The one, the other one, you can see on the right side there, is Sähkö-Buumi in Helsinki, and they are specialists in electrical installation in conjunction with apartment renovations. I think those are good examples of strategic acquisitions we made to strengthen our position in a particular area. Okay, next slide. You can see all the acquisitions we made during 2018.
Altogether, our company acquisitions in 2018 contribute annual sales of approximately SEK 760 million, with which is consistent with our goal in acquired sales per year. Our goal for 2019 is to once again achieve sales growth through acquisition at the same level. I also want to point out that all our subsidiaries have strong reputation and are strong brands in their local markets. With that, we can go to slide 13. A little bit how we create value. We purchase high-margin companies. We pay very reasonable multiples for them. They have high cash conversion and low investment, and that enables us to acquire companies with our own generated profits.
When a new company joins the Instalco group, it gets to collaborate with other Instalco companies, which creates synergies on many levels, of course. New customer contacts are created, with that comes cross-selling. Also, new companies in the group also gain access to projects they wouldn't have been able to manage on their own, they may also use the central purchasing agreements we have created. We also put a lot in entrepreneurial spirit to keep the entrepreneurial spirit in our companies very high, along with the desire to continually develop and improve throughout the entire organization. Through it all, we keep our central costs at a very, very low level.
Next slide, please. As Per mentioned earlier, the board reached a decision today on updated financial targets. Instalco now has a target of average growth that should be at least 10% per year over one business cycle. Growth shall occur through a combination of organic growth and successful acquisitions. Another updated target is to achieve a cash conversion rate of 100% on a rolling 12 month basis for one business cycle. The other financial targets remain unchanged. As you can see, we are all well in line with all our financial goals.
Thank you, Lotta. Must be easy to be CFO in Instalco. We can go to the next slide, and looking ahead. That's slide 15. Looking forward, our assessment is that the market remains stable with continued high demand for installation services and a high demand for energy-efficient solutions. As before, one of the biggest challenge is to find enough skilled labor to meet that demand. We've said it before, and we will say it again. Our future acquisitions opportunities remain good, we think, and we have an ongoing close dialogue with several potential candidates. With that, we can summarize the whole quarter. Next slide, 16. In summary, I can conclude that Instalco has another strong quarter and a strong year with high growth, high profitability, and a very healthy order backlog.
We are very optimistic about the future and eager to pursue and achieve our updated financial targets. We go to next slide 17. You know, I use these presentations. I'm a music lover. I like to finish this presentation with the Simon & Garfunkel, Keep the Customer Satisfied. Because that is how it is, the customer is always in focus for Instalco. Okay, with that, I'd like to thank you all for joining me on this call, and I now could take your questions if there is any.
Thank you. Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a brief pause while questions are being registered. Our first question comes from the line of Robin Sandberg from Carnegie. Please go ahead. Your line is now open.
Hello, it's Robin from Carnegie. First, congrats on the good results. I have a couple of questions. First, relating to the margin performance last year, which was extremely strong, would you say that the good performance was more broad-based, or did you have, let's say, a couple of, or a few projects where you had super strong margins that would explain the margin development last year?
Yeah, last year in quarter four, we had a very large project in Bergen, in Oslo. It ended in December. You know, I think we had in Rest of Nordic, we had a result of 12.5% on the EBITDA margin, I think, and that's not. I mean, it's very hard to achieve. That's the simple explanation that we are lower, a bit lower this quarter than last year.
All right. All right. When you talk about the outlook, you seem quite positive overall, but could you break up this by division? For example, in Sweden, it seems quite tough to maintain kind of similar margins in this year compared to 2018. Then again, in Other Nordics, there should be some kind of improvement potential. Is this also how you think?
I think we can remain with the margin in Sweden. We have a very good situation in Stockholm and especially in Gothenburg. Very high demand of our services there. I think that the Swedish market is rather good. We have struggled with a project in Norway, as you know, and I think we can raise the margin in what we call Rest of Nordic. We are looking forward, we are very comfortable in looking forward, and I think we can remain with high margins during 2019 with that type of products that we have, and we are very specialized in what we do.
Remaining in margins, I think we can do.
All right. Then finally, when you look at the performance of the acquired companies, and if you look at those that you acquired, let's say, three, four years ago, have those been according to your expectations, those margins in those acquired companies?
Yeah, in 95%, I think, as we used to say, we regret two acquisitions we did. In 95%, they are growing within Instalco as well, and the margin is raising a bit, increasing a bit. We are very satisfied, but we have to have focus on what type of companies, management, type of management, in the future as well. But we have done it so far, and I think the pipe or pipeline with the companies is good, and we have several discussions with very interesting companies ongoing.
All right. That's all from me. Thank you, and have a nice weekend.
Thank you very much.
Thank you. Our next question comes from the line of [inaudbile] . Go ahead, your line is now open.
Hi, thanks for taking my question. I saw that in the Rest of Nordic, you showed organic growth of minus 11.7% in the report. I was wondering if you could clarify this a bit further, where this came from, and, yeah.
Can you
I'm sorry, but we couldn't hear what you said.
Oh, I'm sorry. In the report, I saw that organic growth in the Rest of Nordic showed minus 11.7%. I was wondering if you could clarify a bit further on this point.
we don't follow you right there, I think. We, Was it
Can you repeat the question?
organic growth for the Nordic.
Yes, that shows minus 11.7% in the report.
-11%. Where do you find -11%, you know?
On page five of the report, it says, "Organic growth, adjusted for currency effect, was -11.7% for the fourth quarter net sales.
Okay, okay. Let's see. Just wait a second there.
Yep, sure.
Okay, now I understand. Yeah. We shut down, we say, one company in Norway, the loss-making company that we had there with a loss-making project, large loss-making project is shut down now. The company shut down. That means that when we compare organic growth yearly, that company has been in our hand for three years. When we compare, we have an effect on that we're closing it down. Another effect is that the large project we talked about earlier, Avinor in Bergen, was closed down, also it ended in November, December, in 2017.
That gives an effect on organic growth from quarter- to- quarter four to quarter four.
Great. Perfect. Thanks.
Thank you. Just to remind you, ladies and gentlemen, that if you wish to ask a question, please press zero one on your telephone keypad. There'll be a further pause while questions are being registered. Okay, it looks like there are no questions registered at this time. Now I'll hand the call back to you speakers for your final comments.
Okay, thank you very much, everyone. We are looking forward to a very good 2019, as I said. We will be back in after quarter one. Thank you very much, and have a nice weekend. Thank you.
Thank you.
This now concludes our conference call. Thank you all for attending. You may now disconnect your line.