Ladies and gentlemen, welcome to the Instalco Q2 Report 2019. Today, I am pleased to present CEO Per Sjöstrand and CFO Lotta Sjögren. For the first part of this call, all participants will be in listen-only mode, and afterwards there'll be a question and answer session. Speakers, please begin.
I also want to welcome you to this presentation of Instalco's quarter two report for 2019. As you heard at the introduction, my name is Per Sjöstrand. I'm CEO of Instalco, and during this presentation, as always, I have been assisted by our CFO, Lotta Sjögren. Let's move to slide number two, showing a brief overview over the Instalco company. Of course, I'm now pleased to report that we have reached sales of more than SEK 4.5 billion. That is on a 12-month rolling basis. We have now 60 companies and in total almost 2,500 employees. You can also see there that we have a running EBITDA on 8.4%. Going to the next slide, a little bit about the market. We will say that the total value of the Nordic market is more than SEK 200 billion.
Sweden is the largest component, and we think also that throughout the Nordic region, still urbanization is a strong trend and one of the main driving forces in this sector. We have also other factors fueling the market, such as a shortage of housing, technology development, a lot of investments in infrastructure, and also aging property holdings. As you know, more recently, there has also been greater emphasis on environmental awareness, generating benefits to society, and sustainable entrepreneurship in the market. Over time, the Nordic installation markets have had a stable rate of growth. It's starting to level off, but important to emphasize that it is doing so at a record high level. We will be back to that later on. Going to next slide four.
Of course, I'm proud to report that we have had a good profitability and strong growth in the second quarter of this year. During the period, we have made five acquisitions, which has broadened our geographic coverage. We also start up two new companies of our own, and we will go back to that, too. Net sales increased by 20% to SEK 1.4 billion with an organic growth of 2.7%. Adjusted EBITDA for this quarter was SEK 123 million, and that's up from SEK 107 million last year. That gives us a margin of 8.7%. Our order backlog remains high at more than SEK 4.5 billion, which is an increase of 16%. We can move to slide number six. Slide number five. Okay. These diagrams show the trend for Instalco net sales and adjusted EBITDA compared to prior years. Our robust growth stems from our active acquisition strategy.
Also for several quarters, we have had order backlog the size of the last 12 months. These strong figures are now reflecting the results of our strategy of working with many small companies and medium-sized projects that keeps risk at a low level with a high profit margin. Our business also has low exposures to the declining housing market with just 10% of new construction. Our largest area of operations is installation work at public buildings such as schools, preschools, hospitals, and other public facilities, and offices and commercial facilities are our next largest area. We can move to slide six. As I already mentioned, our backlog of orders remains high and our situation is quite stable. Thanks to our wide portfolio regarding types of projects and markets.
Our large order backlog also provides us with excellent opportunities for adapting our business if changes occurs in the market. If you go to slide number seven, I would like to highlight two projects from the quarter. I think they are great examples of how we work in Instalco. As we have said from the beginning, creating synergies and cross-selling between our companies is fundamental to Instalco's business model. One excellent example of that is our project from Axfood, where five Instalco companies with different areas of specializations are collaborating. Together we will provide heating and plumbing, electric and ventilation installations, along with control and regulations technology associated with construction of the new supermarket in Hemköp.
Another example of a successful collaboration between Instalco companies we find in Finland are LVI-Paavola and Sähkö-Buumi are collaborating on the heating, plumbing, and electrical installation at a large office building in Helsinki that is being renovated. Going to slide number eight. Now, if you look a bit closer, more closely at the segment Sweden, you can see the net sales increased by over 50%, with an organic growth of 2.4%. I also think we have a stable margin here at 5.6%. Lotta will comment on that later on. We think that the Swedish market remains stable with electrical installation as the largest component. We can also say that in Sweden we have organized ourselves in four regions. It's north, south, east, and west, where each region has a regional manager taking care of around 10 to 15 companies each.
These managers are working not only as managers, they are also acting like supporting coaches for the companies in the region. If you want to grow, we can also start new regions, and I think that's a strength that we have. Going to slide number nine, and Rest of Nordic, that means Finland and Norway, of course. Net sales increased by slightly more than 33%, and with an organic growth of 3.8%, a little above Sweden. In the recent quarters, I think you have heard it before, but profitability for Rest of Nordic was negatively impacted by a major loss project in Norway. That project has now been completed, so we expect to see good results here going forward. We can already see good results here.
Of course, I'm very pleased with the steps we have taken to improve profitability and proud that the Rest of Nordic is performing so well. Improvements are partly attributed to our efforts to improve processes, also higher focus on activities to improve profitability, of course, also our improvement program, IFOKUS, that we have launched. We have also done a lot of good acquisitions, I would say. Looking into the market, the market in Finland, I think it's strong. We have a good large order backlog. Here, major metropolitan areas and industry clusters are still the main engines in the market. Going to Norway, the market is stable, as been so for many years, especially in the Oslo region, with high growth in all regions where we are represented as well. Okay. Going to slide number 10, a little bit about acquired companies.
As you have understood, we have continued to actively pursue our acquisition agenda. During the quarter, we acquired several new interesting companies and operations, which has broadened our geographic coverage and offering. Here are two examples of that that I want to highlight. One is a company called Moi Rør, which is located in Kristiansand in Norway, in south Norway, which has given us access to a new interesting market. The company primarily focuses on major heating and plumbing installation projects for industrial customers. The second acquisition I'd like to highlight is Bogesunds El & Tele. It's located in Östersund, Sweden, and it specializes in electrical installation at residential property. The acquisition broadens our coverage of Västernorrland, which is a strategically important region for us. I think that both are good examples of strategic acquisitions we made to strengthen our position in a particular area.
As you well know, I think all our companies and these companies as well, have strong brands and reputations in their local markets. Other companies we have acquired during the second quarter are El & Säkerhet in Katrineholm and Gävle Elbyggnads. The latest was acquired by our subsidiary, DALAB. Talk a little about what we call startups. Just on slide 11. Sometimes we start up our own companies. That's a supplement to our main acquisition strategy, which involves setting up company together with a local entrepreneur if we have concluded, of course, first that the market there is favorable. One example of this is our startup company, Insta EL in Malmö.
It's an electrical installation company which enables us to work on major electrical installation contracts in southern Sweden, of course, as well as collaboration projects with other Instalco companies in the region. The other example to the right here is a startup company, DynaMate in Södertälje. It was established for the purpose of running the installation division that we acquired from DynaMate, which is owned by Scania. DynaMate offers heating and plumbing, electrical and ventilation installation for industrial companies, of course, including Scania. Going to slide number 12, looking forward. Our assessment is that the market remains stable, as I said before, with a constantly rising demand for energy efficient, sustainable solutions. We also think that the rate of growth for construction in the public sector remains high, the same applies to construction of commercial properties such as offices and business facilities.
As you know, everyone at this point, there has been an overall slowdown in the economy and in our market, of course. I think we have a wide portfolio and large backlog of orders, and because of that, we have many ways of adapting to any changes that might occur in the market.
Thank you, Per. I'd like to do some additional comments on that. Next slide, please. During the first half of the year, we have made eight acquisitions in total. After the end of the reporting period, we have made another five acquisitions. These five companies have an estimated annual sales of around SEK 350 million. That means that so far this year, we have acquired annual sales of slightly more than SEK 1 billion, which far exceeds our goal of SEK 600 million-SEK 800 million per year. With this in mind, we have more than five months left this year for upcoming interesting acquisitions. What I'm saying is that we will keep up at this acquisition pace even though we already reached our target by far. I'm also glad to report that thanks to our strong cash conversion, we have been able to mostly acquire companies without increasing our loans.
As you perhaps noticed, the adjusted EBITDA margin for the group is lower than EBITDA. The explanation for that is that this stems from an adjustment of prior reported additional earn-outs. I would also like to comment on the fact that the EBITDA for Sweden is lower than it was for the same period in 2018. The slight decline is primarily attributable to an extraordinary margin the same period last year, and delayed start of some projects earlier in this year. These are now underway, however. On the other hand, as Per said, the margin for Rest of Nordic has improved exceptionally well. Next slide, please. Just six months into the year, we've nearly achieved our run rate EBITDA target of SEK 450 million by 2019. As you might remember, it's a goal we formulated when Instalco first was established.
Since we started Instalco, we have had stable profitability, and the graph here shows that we have accomplished what we set out to do all the way back in 2014. With this in mind, we will continue our plan of acquiring profitable companies, creating synergies, and developing companies together with others within the Instalco group. Next slide, please. On this slide, we show our financial targets. As you can see on the right, there are green light for all the targets. Instalco's growth target is that the average growth in sales should amount to no less than 10% a year over a business cycle. The growth should be achieved both organically and through acquisition. With that, we can conclude that our performance is in line with all of our financial targets.
It is also worth mentioning that we have set targets that we can maintain over time and which enable us to cope with the fluctuations in the market.
Thank you for those clarifications, Lotta. We can move to slide 16 and a summary. I could probably conclude that Instalco has another strong quarter with high growth and profitability. Of course, as you have understood already, I'm particularly proud of how Rest of Nordic has performed. As we have also mentioned, we have made five additional acquisitions subsequent to the end of the reporting quarter, leading me to conclude that the acquisition climate remains favorable and interest in becoming part of the Instalco group is very high. We can go to the last slide. This time, I'd like to conclude with a reference to another classic Rolling Stones hit from 1974, and time waits for no one, and it won't wait for us. I think the song and its titles reflect what profitable entrepreneurship is all about, namely doing business here and now.
What I mean with that is, I think we have the right business model for acting now, and the climate for consolidation in our industry couldn't be better, both from a customer and a sustainability perspective. I also think that conditions are right for making acquisitions, and we have many interesting acquisition targets in the pipeline. We can and should act now on the opportunities in front of us. Last slide. With that, I'd like to thank you all for joining in on this call, and now I'd like to take your questions.
Thank you. If you wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. Once your name's announced, you can ask your question. If you find your question's answered before it's your turn to speak, you can dial 02 to cancel. There'll be a brief pause now while we register any questions. Our first question comes from the line of Stefan Andersson of SEB. Please go ahead, your line is open.
Stefan Andersson, yeah. A couple of questions. First, on the growth rate, two questions there.
Can you speak out louder, please?
Absolutely. Can you hear me better now?
Yeah.
Okay. Two questions on the growth first. You said organic growth in the quarter was 2 point almost 3%, and for the half year, 2%. If I remember correctly, it was 6% or something like that in Q1, so it doesn't really work if you weigh those together. Maybe it has something to do with all the companies coming on stream. Maybe if you could just elaborate on that number. While you do that, what kind of impact do you think that Easter had on your revenues in the quarter? I guess it's been negative. Is it like 2%-4% or around 3% negative? Yeah, that's first.
For the organic growth, when you have just the second quarter, it's the same as the second quarter last year. When you take for the first half year, it's not the same companies, because some of the companies was not there from the beginning of the year, that's why it doesn't really correlate when you look at it like that. It's a bit hard to explain.
Okay. Different bases that are used.
Yeah.
Okay. I get it. Yeah. If I'm trying to understand, the reason I'm asking is that I would like to look at the half year to see the underlying organic growth and Easter is impacting Q1 positively and Q2 negatively. If you just look at Q2 isolated, the 2.7% or 3%, what kind of impact do you think Easter had, if any? Maybe you would say it had none impact. I don't know.
I don't think it had any really big.
No major impact.
no major impact. It's more how the project is starting and ending, and what projects is going on for the time being. It has much more impact than if the Easter comes or not.
Yeah. Second question is on the earn-out revision that you do here. Maybe if you can just mention where it originates from.
It's from several companies that we had bought from both last year or the year in 2017 and 2018. Some of the companies hasn't performed so well that we thought they would do. They didn't get so much earn-outs that we thought they should have in the beginning.
Is it fair to say? Sorry.
We have tried to refine how to calculate this so it won't be so big difference in the future. Yeah.
Is it fair to say that you made a bigger run-through of that subject and adjusting it? Okay, good.
Yeah.
The financial net. Boring question, and maybe it's in the report, I haven't seen it, but it's only SEK 2 million, I think, which looked a little bit low. Is there any specifics in there or is that the level now?
On what? I didn't get from-
The financial net was SEK 2 million only in costs. I think it was SEK 5 million in Q1. It was a little bit on the low side. Is there some revaluations in there or?
No.
Now you look surprised. Maybe I'm wrong here.
I have to look into that because I can't answer that right away.
Okay. The Swedish margin. You don't write much about that on the year-on-year comparison, but I guess I saw a little bit of that in Q1 as well. It's two quarters with margins down. Maybe if you would like to elaborate a little bit on that development, why it's there and how we should view that going forward. It's well covered now by the improvement in the international, but still, it surprised me on the weak side, to be honest.
Yeah. It's more a normalized margin now, I think. I think that last year was extraordinary margins on. You can't have 11.7% of what we had. It's impossible. I think we have our financial goals, 8% margin over time. You can also look into the Rest of Nordic, where we today have 9.7%. It differs, I think Sweden is doing very well, and I think also we can accelerate the production this year or next year. The margins, I don't think we can expect 11% in margin in any market. We also can say that I think this year, maybe the second half of the year will be stronger. I think that the margin, as I said, is more normalized now than last year.
Okay. Thank you. That's all from me.
Thank you once again. If there are any further questions, please dial 01 on your telephone keypads now. Okay, there seems to be no further questions at this time. I'll hand back to our speakers for the closing comments.
Thank you very much, and see you next time. It's November 6th, I think, or 5th. Something like that. Thank you very much, and have a nice weekend. Thank you.
Thank you.