Welcome to the Instalco Q4 presentation for 2022. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to CEO Robin Boheman. Please go ahead.
Welcome to this Q4 presentation of 2022. My name is Robin Boheman, CEO of Instalco. With me today I have my CFO, Christina Kassberg, and Fredrik Trahn, Head of IR. With that, I would like to open the call up. Just for new listeners, what is Instalco? We are a leading Nordic group within heating and plumbing, electrician, ventilation, cooling, industry, and technical consultants. We do project planning, installation, service, and maintenance, and system installation for property and facilities all around Nordics. We have a highly decentralized structure, as you can see on the map here, we have 125 subsidiaries, specialized local companies, with unique skill sets that can collaborate within the organization.
As you can see, Sweden is our largest market, but we are also establishing ourselves in Finland and Norway, which is one of our focus areas at the moment. We have roughly 5,600 employees within Instalco. Going into some key financials, last 12 months being 2022, we surpassed the SEK 12 billion sales. We had an EBITA of SEK 960 million, which collaborates to an EBITA margin of 7.6%. We had a strong cash flow of SEK 753 million. We managed, this year, to acquire companies with an annual sales of roughly SEK 1.1 billion, and we have a strong order backlog of almost SEK 8.4 billion.
Going into Q4 and looking at some of the highlights, we had a really strong sales growth of 35%, which meaning that Q4 ended up at SEK 3.6 billion sales and EBITA of SEK 292 million, which is an EBITA margin of 8.1%, which is a really good, solid EBITA margin for us and also can contribute to a solid and good performance for the quarter. We also see that we managed to increase our EBITA margin from last year, which were in comparable numbers, 7.7%, if you deduct the repayment that we got from AFA Health Insurance. We're able to increase our EBITA margin quarter to quarter. We also had a strong organic growth of above 10%.
Like I mentioned before, continued strong order backlog, solid cash flow in the quarter. We see a strong demand for energy-efficient solutions. We have continued to grow our service business. We are increasing our presence in the rest of Nordics, as I said, which has been a focus area for us going forward. We managed to do a few startups, and also a few add-ons for existing subsidiaries. And also we increased our industrial development in Finland. We're now present in Finland with some industrial installation companies as well. Overall, a really good, solid quarter. And with that, I leave over to you, Christina, to go through a little bit of the numbers in more detail.
Thanks, Robin. I go ahead then. In this slide, we can see the increase in net sales with a comparison of Q4 present and prior year. Our strong position continued to generate growth, strong growth in the quarter. Net sales increased by 35.6% compared to last year and amounted to SEK 3.6 billion. We are very pleased that the growth is especially strong in the service area, an excellent prereq for the coming year. The growth is driven by the high demand of sustainable investments and energy optimization and our high rate of acquisitions. We are satisfied that our organic growth rate, which was 10.7%. Acquired growth, just over 23%. This slide shows the quarterly trend of EBITA in both millions and margin. We continue to deliver a high and stable profitability.
EBITA increased in absolute numbers by 28.9% and amounted to SEK 292 million, which corresponds to a margin of 8.1%. Despite continued high inflation pressure and higher interest rates, we defended our margins in the quarter. Our underlying margin for Q4 was comparatively stronger after having adjusted for the lump sum payment from AFA, received in Q4 2021, then 7.7%. This slide shows the quarterly progression of the order backlog. We have a substantial order backlog with good quality, and this was further strengthened during the quarter. The order backlog has a good composition of both services and contract forms. Our order backlog grew by 23.3% and is at a record high level in absolute numbers.
In total, SEK 8.4 billion, which corresponds to approximately 70% of annual sales. Organically, the order backlog grew by 5.3%, and the order backlog from acquired companies contributed with growth of 16.6%. Over to a slide that summarizes segment Sweden in Q4. The business situation in Sweden remained strong in the quarter, and our companies have managed the market successfully with high profitability and strong growth. In general, the market situation is good. The supply of installation projects in certain regions has temporarily declined somewhat, but from a high level. Rising inflation and higher material prices is impacting the industry's profitability. New construction and renovation in the private and public sectors remain at a high level. For new production, we have noted somewhat of a dampening effect. Rising electricity prices and investments in Swedish basic industry are increasing the need for energy efficiency.
Construction investments in the industry remain at a high level, particularly in northern Sweden. For technical consulting, short term demand is good. Overall, in Sweden, net sale increased by 27.4% to SEK 2.7 billion. Organic growth amounted to 10.7%, acquired growth amounted to 16.7%. EBITDA was SEK 244 million and the margin was 9.1%. The underlying margin was comparatively stronger after having adjusted for the lump sum payment from AFA received in Q4 2021, adjusted to 8.4%. Now for a summary of the rest of Nordic segment. Rest of Nordic is overall delivering a strong trend of growth. The demand for energy efficient installations is increasing in line with rising energy prices. For new production of residential property, as in Sweden, we noticed a dampening effect at a high level. The market in Norway remains stable in terms of both construction and renovation.
The market in Finland after the pandemic has still not fully recovered. The financial situation is causing a delay in its recovery. Overall, net sales increased by 67.5% to SEK 0.9 billion. Organic growth amounted to 10.7%. Acquired growth amounted to 48.1%, which is a clear confirmation of our focus to grow in rest of Nordic. The EBITDA margin is still below desired level, but we have due a positive trend primarily explained by the market in Norway and a positive earnings effect from acquired companies. EBITDA was SEK 50 million and the margin was 5.5%. The underlying margin was comparatively stronger before revelation of contingent consideration, which had a negative impact of the margin. To summarize our performance in relation to our financial targets, all in all, over a business cycle, we are confident that we are delivering in line with our financial targets.
Our well-proven business model with entrepreneur-led and decentralized companies quickly adapting to challenges as well as opportunities, and this has equipped us well for the future. Regarding growth, we are performing well beyond our financial target, and we are pleased that the EBITDA margin were above our targets in Q4, yet somewhat lower year to date. Capital structure is well within target and varies between quarters. We are comfortable with the rate, and we are maintaining both a balanced level of indebtedness and a strong balance sheet. Cash conversion was below, but improved slightly compared to 2021. Finally, the board proposes a dividend in line with the 30% policy. By that, Robin Boheman, over to you.
Thank you, Christina Kassberg, for clarifying all the numbers. Looking at a little bit about operations, a few years ago, I think I've talked about this before, we made an strategic decision to go into hospitals since we saw a tremendous growth in that area. Yet again, we can be proud of a new, large project together this time with Byggdialog and Regionfastigheter Dalarna, with the expansion of Falun Hospital. This is a collaboration between three of our Instalco companies, Henningsons El, Dalab, and Intec, our technical consultants. This is also a little bit extra exciting because this is a hospital project that is highly focused on energy efficiency, and also environmentally friendly, with high energy efficient solution.
The total budget for this is SEK 140 million, so it's a quite large project for us, but it spans over a few years, and this is also taken in partnering, so it's not a fixed price project. Very excited about continuing to be the largest hospital installer in Sweden. Going into one of our other priorities, as you all know, is M&A. The one of the priorities, as mentioned before, is to increase our presence in rest of Nordics. We can see in the quarter that we continue to go, so all acquisitions actually done in Q4 was in rest of Nordics.
Here, for instance, is an example of EMES, which is an electrical and technical installation in the fishing industry, in the city of Tromsø in Northern Norway. With this acquisition of EMES, we increase our presence in the interesting market in Northern Norway. We also see opportunities for synergies and collaboration between EMES and our other subsidiary, JB Elektro, which is also present in Tromsø. This is also in the strategy, as we mentioned before, on making sure that we have more subsidiaries within the same area. Going into summarizing a little bit about acquisitions in 2022. First of all, I mean, Instalco is a niche acquirer in the installation industry.
We exclusively focus on quality companies. We made 16 acquisitions during the past year, nine of them in rest of Nordics, contributing to about, as I said before, SEK 1.1 billion in annual sales. This is maybe a little bit slower pace than you've seen the last two years. I think I'm very comfortable at this rate. I think it's a solid rate. As you've seen, we are able to grow quite substantially. I think the focus for 2023 will still be to make solid acquisitions, but we'll have a focus on profitability and making sure that we will come back to the levels that we have been at before. With that said, I mean, we started 2023 with some real solid acquisitions already.
I think it will be a very exciting year for 2023 as well. Summing up the quarter, we did three acquisitions, as I said, in rest of Nordics. EMES was one of the examples. We had a solid quarter when it comes to acquisitions. I would like to take the time at this call also to summarize up 2022 a bit and also look forward for 2027. I think we can start with a little bit of the summary. To start off there, I think a lot of us forget about the global pandemic. I mean, for us, January, February was maybe the worst year when Omicron hit us. We had really challenging time with staffing, especially January, February.
We saw uncertainties in demand for investments, major disruptions in the value chain. Just when we kind of gotten through that, we saw Russia invading Ukraine, increasing raw material prices, disruption in value chain once again. We saw a kickoff of the energy crisis of expensive electricity, fuel, transportation. And that kind of sparked off inflation as well and willingness to invest due to the rise of interest rates, slowdown in housing construction, cost pressure on material and labor. Basically what I'm saying here is that, I mean, even in all these macro trends that kind of worked against us, we still were able to deliver a solid 2022, which I'm proud of and the work that has been done in the company.
Also during these times, we also took the time in 2022, to go through our vision and our roadmap, for 2027. We launched a quite extensive work on launching a new vision and a new roadmap for us. We also took the starting point to look at some opportunities, going forward, where we see three major areas: sustainability, energy shortage, and green transformation, and also, as Christina mentioned, industrial investments, especially in the Nordics. Looking at sustainability, we really have a key play.
We are a key player here and take a big role in sustainability because at the end of the day, there is a lot of installations that needs to be done if we want to do the shift in society, as I think many of us believe we need to do. If we want to reach the Paris Agreement, and so forth, we need to take action here today. Instalco is very well equipped, together with the installation market overall to make this shift. Looking at energy shortage, there's a lot of discussions, at the moment regarding energy bills, but I think that's a very short-term discussion because we will be stuck with this for quite a while, if you ask me.
However, there are solutions to be made, and a company like Instalco, we can really make a difference here today, with making e-energy shortage somewhat less of a stress for the society due to we can make improvements in a lot of areas, and we can also make the green transformation. That kind of comes in also to the large investments within the industry, especially in the northern part of Sweden, but also in the Nordics overall and the world, where we see industries making large investments in changing the way that they operate and also what they do, both in new companies being founded, but also in the older, somewhat long-term companies that they're also changing their strategy. Here we have a key role to play.
During this year, there's been an interactive process with the group to arrive at a new vision to clearly focus on our employees, our customers, our companies, sustainability, and the continued growth that we have seen in the past that we want to continue, and that's how we have developed our roadmap for 2027. In conjunction with that, we have also taken the opportunity to adapt our leadership organization a little bit to be more optimal way of achieving this roadmap to 2027. I think it's important that, with the new vision, we are now embarking on a next step towards the future by gearing up for a continuous growth journey, and also making clear and challenging vision.
I think it's very important for all of us and all our employees that strengthen us together and makes us also a more attractive company. I would say the decentralized business model, with the local entrepreneurship is still lies in the foundation of this, and has always been the foundation of Instalco, and will continue to be that. With that, our new vision is we enable our companies, employees, and customers to grow by collaborating on installations for the transition to a greener society for the next generation. We are the most competent and effective installation partner for our customer. I think this emphasizes a lot on that we are focused on our companies and our employees. To make them grow, we can also make our customers grow.
By collaborating together, we, the installation market and Instalco specifically, can help the transition for a greener society and make sure that next generation also has a good setup for the coming future as well. For me, this is a very important topic and something I really think is needed to take that steps towards the roadmap to 2027. With that, I would actually just wanna conclude and summarize and the more shorter term. The Q4. With a strong quarter, high growth, and good profitability, we still see a strong demand for our products and services. We are a leading producer when it comes to hospital construction areas, and we confirm that in the quarter once again.
This also, I think, summarizes the whole concept that the Instalco model works very well also in challenging times. With that, I would actually like to close off our Q4 presentation and open up for questions. Thank you, everyone, for listening in, and hope you had a nice listen.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Karl Bokvist from ABG Sundal Collier, p lease go ahead.
Thank you and good morning. My first one, seems you highlight the strong demand and, you know, the potential to continue have a quite good sales development. My question will be on cost. Margin trend a bit more positive this quarter. I understand it's difficult, but best guess, looking at your current project portfolio, with less, you know, hopefully no sick leave in Q1 or Q2 next year, do you feel that the kind of peak cost headwind is now behind you, even though building cost index and so on is still rising?
I think that we are more prepared and that we are more kind of, I mean, this is, how to say? The market is more on top of things, so to say. I think it's more, what we saw last year in 2022, I think came a little bit to a surprise to a lot of us, that you could see that kind of quick and fast increases of prices. I think we'll still see very high prices in material and so forth. We still have to work a lot, in 2023 on making sure that we push those pricing, continue to push those price increase out to the customer, and the end market.
In 2023, I think the visibility is better than it was in when we started in 2022.
Understood. You highlighted the strong performance in Sweden, but in rest of Nordics, forgive me if you did cover it, but could you comment a bit on potential differences between the Norwegian and the Finnish market?
Yeah, I think, as we've mentioned before, I think it is really good to see that Norway is picking up. Some of these actions that we've taken during the last year and a half are starting to prove themselves, and also that we are seeing some increases in margin in a few of our subsidiaries that has been, so to say, quite hardly hit. Unfortunately, Finland market is not really back to former glory, so to say. There is still some work that needs to be done in Finland. There, I think it's more a discussion of market than, so to say, our sub-specific subsidiaries.
We've done a few changes also in Finland, and we continue to monitor the situation quite thorough and working closely together with the new area managers in Finland as well.
Understood. My, my final question, when looking at your contribution from acquisitions, still seems to be like a rough, if we round it, you know, 15%-16% EBIT margin from acquisitions this year. Is it mainly related to one very strong performing unit, or that there are a couple of these businesses performing at very high margin levels?
I mean, we have managed actually to get out some synergies from a few of our acquisitions that we've done in the year. There are a few of them that has been really profitable, and that has also been able to grow within Instalco, that we have been able to really quickly get out a few synergies that's maybe not as common as with our, so to say, regular acquisitions that we do. But in these specific cases, we were able to really quickly get out some synergies as well to increase margin in a few of them.
All right.
All right.
Thank you. That is all for me.
Thank you.
The next question comes from Oscar Rönnkvist from SEB, please go ahead.
Yes. Good morning. A couple of questions. If we start on the order backlog, I mean, it looks really solid here entering into 2023. I think in the CEO letter and on the call, you don't really mention anything about the weakening in new orders, et cetera. Could you maybe comment a bit on, like, how you see the market right out there right now, and also maybe if you've seen any lower demand from new build residential, et cetera?
Yeah, sure. I mean, I think overall market, as I said, is solid, and we continue to take new orders and continue to constantly work with our order backlog. I think also what we see today is that you only see the order backlog, you don't see the service. I mean, on top of this, you also have our service business that is not included in these numbers, which is also a growing percentage of our sales. I think, we still see strong demand in the market. As mentioned, I think the only thing where we see a weakening is in residential.
However, that is not a big part of our business, and a lot of our residential projects are ongoing and quite booked for quite some time. I think there's not a big risk in that area. However, we don't see demand picking up anytime soon in that. That's a good thing with the installation business. We can change. I mean, if you're an electrical installer, okay, you might be used to making a lot of apartments. However, you can also do other stuff as well. To us, this is not a super big issue.
Okay, great. A question on the margin side. I mean, adjusting for a reversal of purchase price consideration, et cetera, I think you did 7.9% margin here in Q4, and you have a target of reaching 8%. Usually Q4 is the strongest quarter on a margin, on a quarterly basis, the strongest margin quarter. How should we see the margin developing here going forward? Do you think that you could reach 8% margin already in 2023, or what do you expect?
We don't guide, give out guidance on the future. Whatever I can say is that if you compare like-for-like for Q4, compared to last year, we were able to go, like you said, to 7.9%, compared to 7.1% last quarter, actually, if you deduct the AFA health insurance. I mean, we are on the right track. I mean, the target is eight, and I'm a competitive guy, and so is the rest of the management team. I mean, we will do everything we can. I think, as I mentioned also on the call, I mean, our focus is to improve profitability in 2023. However, we see, it is a little bit tougher market than maybe compared to 2020 and 2019.
I mean, we will The target is there, and it's there that we want to reach it and go above it, so.
Good. Then there's the one with seasonality. I think everyone is a bit surprised on the strong sales here. I think that industry, your industrial customers are a bit more seasonal, stronger maybe in Q4 compared to Q3. Can you give us some kind of information regarding your new, let's say, seasonality effects in Instalco after growing so much in the, in the industrial segment?
Sorry, can you repeat that question again?
Yeah. Just that I think Q4 was very strong on the top line side. I guess it's somewhat driven by that, you know, industrial, the industrial segments are a bit more seasonal compared to the normal installation business. If that's correct, then can you maybe give some kind of how we should think going forward here, if Q1 is a bit weak or how we should think then about that?
No, I think that, sorry, now I understand the question. I think you're absolutely on the right track here, that Q4 is typically a strongest quarter for us due to that a lot of projects needs to be finalized during Q4. People want to kind of, say, finalize their project and so to say, spend their budget for the year. Especially in the industry, it takes a little bit of time before project starts in the new year. The industry typically kicks off a little bit later on. They set budgets and so forth, they kick off their projects, maybe Q2, Q3, which Q1 is typically a somewhat lower how to say?
There's somewhat lower activity in the industry in the beginning of the year, but they sort of say race in the end of the year.
Okay.
We build an industrial segment that we're doing, I think you need, as an investor, to have a little bit more patience on that. Seasonality will maybe grow even a little bit larger than we have seen before due to that industry is typically slower in the beginning of the year, but typically races a little bit faster in the end of the year. Was that kind of.
Yeah. That was exactly what I was seeking for, so that's great. I just have a last question on Intec, and if you could give us an update on how many consultants you have in Intec right now, and maybe some kind of run rate on revenues would be helpful.
Yeah. They have roughly around 320 technical consultants. And let's say around 150 of them are running at full capacity, so to say. And then the rest are, so to say, working their way up when it comes to utilization rates and so forth. We're in good pace, we're on the right track. We still have a lot of work to do, we're still growing the business and building an organization to cope with the growth and so forth. You might not see as fast of a growth as we had in end 2021 and beginning 2022. We're still growing our business, and we still see collaboration increases together with our companies.
The goal for 2023 is to build a strong and solid company, within the technical consultants.
Sounds good and promising. Thank you for taking my question.
The next question comes from Johan Skoglund from DNB Markets. Please go ahead.
Hi, I'm following up on the strong Q4 report. I have a few short questions as well. Organic sales growth, that was strong. Could you please elaborate what was the rough split between price and volume here, and about how much do you think you can increase prices in next year?
It's a good question. We don't have any way of calculating exactly. Since we are running 6,000 different projects, it is very hard to see kind of what type of price increase. How much of the growth was price increases and how much was, so to say, solid organic growth. Unfortunately, we cannot cope and get that type of information out. However, we can see that our number of FTEs has grown on an organic basis, so it's at least the proof that there is solid organic growth within these numbers, which is very comforting. We are also seeing that we are able to push over price increases to end customers.
There's still a possibility to continue to That we haven't reached, so to say, the maximum level yet, so.
Okay, perfect. The next question is on net financial costs, which is up. Is this the expected run rate going into next year?
I think it depends, of course, on how much debt we put on the balance sheet. If we continue our M&A journey in the same pace as we've done, we will probably need to borrow a little bit more money, so I guess cost will increase. If we take a somewhat slower approach, we will still be able to do it with our cash that we generate in the business. It has a little bit to do with the M&A effect. I mean, since we've taken on debt during the year, I think you will have to in your model then expect a little bit overall higher costs going forward.
Okay. interest rates, are they double, are they triple, or how should we think about that?
I mean, as almost everybody has, I mean, our bank agreement is that, it's a floating agreement, I think it's, on the STIBOR. If that increases, our interest rates increases. Say the margin to the banks is same.
Okay, perfect. Thank you so much.
Please state your name and company. Please go ahead.
Hi, it's Carly from Nordea. I'm a bit curious to know more about your 2027 vision, and maybe if it's possible to sort of provide any more tangible financial sort of results from it than where you want to reach. I mean, you mentioned continued growth as one pillar. Is it possible to sort of give more flavor on focus areas by 2027 from an organic point of view? Obviously, industry is one of them. Do you have any other sort of incremental new focus areas which you could comment on? Also if you could shed some light on the M&A roadmap by 2027 and whether it includes an expansion outside of the Nordics.
Hi, Carl. I think that, at the moment we are not openly discussing the roadmap yet. I think we launched it quite recently, and we want to kind of work towards it internally a bit further. However, as soon as we have something to discuss openly, we'll definitely do so. At the moment, it is an internal document for us. What we can say is that we're building an organization now that is building up itself for growth to continue our growth. As I mentioned before, short-term goals is to improve profitability and come back to the levels we have been at. That's the short-term focus area.
Looking long term, I think it is necessary to look into new geographies and maybe nearby businesses. That is absolutely something that is in the roadmap for 2027.
Okay. Very good. Also a bit curious to know more about your strategy in Finland. I mean, it's been struggling a bit for some time, maybe due to the market. What is your sort of view of the strategy? Is it to do as you did in Norway to maybe downsize the business, or is it maybe to do the opposite, building a more of a critical mass, which you also done in Norway nowadays? Yeah.
I think it is, I mean, we've already started with this process in Finland. We have already downsized a few of the companies. We have closed one entity down. We have changed a bit of the managers. It's an ongoing project in Finland as well. I say we have quite high expectations of the new team in Finland. It's a new young, hungry team in Finland. I don't like to blame the market, but I'm gonna do it anyway. Is that I think that if we see projects coming back, I think we have the right team in the right place with some fine-tuning and getting this new management team both in our subsidiaries but also so to say on Instalco level for Finland.
Giving them a little bit more time, I think we have a solid business in Finland going forward. I mean, it has historically been very good for us. This problem started basically during COVID.
Okay, good. Also you managed to release some working capital in the quarter, which is very nice to see. I mean, however, from an historical point of view, I mean, in my book at least, working capital is still a bit elevated. I mean, what measures are you implementing to sort of take it down? Should we expect it to gradually come down a bit here entering, or even further entering, first half? I, of course, acknowledge that the industrial installation is of course impacting, given no prepayments in that business.
I think this is absolutely an area where we focus on and we follow up much more closely now. Christina is doing a good job on putting the focus back to working capital. As I've discussed it before with a lot of you guys, is that historically cash was free, now it's not. This is also becoming a more important area for our subsidiaries. They understand that the cost of capital has gone up, and that they need to also help us so to say in a larger extent on keeping this working capital at a minimal level. This is absolutely a focus area we will try to push on releasing even more working capital.
However, like you say, our focus on going into the installation business within the industry is putting some pressure on working capital due to payment terms and that type of contracts that are basically being used in the installation business when it comes to the industry. It's putting a bit pressure on us. However, we focus on it and try to keep it at the minimum.
The final one from my side is back at the technical consultants. You said that 150 is running at full capacity of 320 consultants. If you look at those 150 running at full capacity, what would you say is the margin level for those? Is it in line with your ambition when you launched the initiative?
Yeah, absolutely. I think they are, we see that these technical consultants that are running within our business, and that have good utilization, they are on a, how should I say it, market level when it comes to profitability.
On the sort of remaining 150, will you give it some time in order to sort of give them the chance to get up to full speed? Or should we continue to see you taking out a few consultants, maybe some is not working and?
Yeah, I mean, that's.
...in terms of release.
...always an ongoing process. Of course, if you, if you recruit that many people that fast, there is always some that slip through the net. We are also always trying to look at effective work on making them more profitable. Like I said before, 2023, the focus for the technical consultants is of course growth also, but it's also focusing on profitability, especially for these subsidiaries within Intec that has been with us for one year, one and a half or two years almost now.
They need to focus on profitability, and making sure that eventually, so to say, Intec can pay for their growth themselves, by the profitable consultants, so to say, paying for the newly employed or acquired consultants.
Okay. Very good. Thank you.
The next question comes from Marcus Almerud from Penser Bank. Please go ahead.
Yeah. Hi. Marcus here. A couple of questions left, I guess. Just try to get a sense of where the markets are moving. You were talking a bit about it. Residential is still difficult, and the other markets are still fine. But if you try to talk a little bit about direction also for the residential, maybe sequentially and going into 2023, what you're seeing on the ground compared to Q3 and through Q4. Are they kind of flattish or deteriorating or moving a little bit up?
I mean, when you look at residential, I think you have to understand that for us, new construction residential is basically 10, maybe 10% of our turnover. It's not kind of the most key focus area for us. With that said, the companies that are working solidly on installing for new constructions, those order books are full for 2023. They are running at full capacity at the moment because those projects that we are working on now, those, so to say, started a year, a year and a half ago. Those are impossible to stop. Those are running. We are running at full capacity when it comes to new build apartments.
However, they are, of course, looking into further in the future of how much has started being produced in 2022, and there we can see a drop. We can anticipate this, up until, maybe 2024, and try to take measures accordingly.
Mm-hmm. outside of residential, the other 90%.
Yeah.
Directionally.
Sorry, once again.
Directionally.
Directionally. I think that, I mean, we don't see a change. I mean, we are constantly taking new projects. We don't see any big shifts yet when it comes to kind of projects. We have a full order book for the near term. We have a strong outlook going forward as well so far.
Okay. Okay. Good to hear. My second question is on sick leave. I think around me at least, I'm seeing a lot of, I mean, not like last year, but still high levels of sick leave. Is this also something that you're seeing, or are you managing that or not seeing it?
I think like for the overall year, it is higher than usual due to that, we had higher, very high sick leave in the beginning of the year. You sometimes forget that in beginning of 2022, it seems very far away, we were in the middle of the pandemic. Looking at Q4 compare, looking at Q4 at the moment, we are basically at normal, running at normal levels. Maybe society overall has shifted a little bit, so we might not get back to the real low, lower numbers that we had some years ago because society has changed a little bit on, I would say. Overall, I think it's coming back.
Looking into Q1, what have you seen?
I mean, Q1, we have basically just seen January. January is typically not a great month for installation. As I said, a lot of the run is to towards the end of the year. A lot in construction is closed down during Christmas and also beginning of the year. It's hard to tell anything like from what we know so far.
Okay. Fair enough. My final question is on the impact from the acquisitions, particularly in Norway. How much... We talked a little bit before about the scale and the scale, particularly in Norway, you've been a little bit too small, and then you focused on acquisitions in that area. Then we've seen, especially with the large acquisition you announced the other day, it's a little bit in a different area. How much does it mean to kind of get the size up overall in that region for building profitability?
I think, one of the key things here is that, for instance, if you take the example of the acquisition we did recently, Lysteknikk, which we signed and, it's not closed, it's, how do you say it in English? It's, under, competition, analysis or not, how to say it, but. However, I think it's important to get a few of these companies in with really good profitability, that can also coach, help, other parts of the group-On how they work to get more best practice within the group, and especially also get a few of these somewhat larger ones in the group is also good to give a solid foundation within the different areas as well.
Lysteknikk, I mean, a typical el-electrical installation company, they have a somewhat more focus on like data centers and so forth, which is of course an exciting field to be in these days. I mean, we'll continue making good acquisitions. As I said, we look for quality companies within the installation business. We'll continue to do that. How much impact is hard to say. However, it's always good to get profitable companies within the group because they are doing something right. If we can learn from that can of course improve our overall margin as well. It's impossible to say how much that can affect.
Mm-hmm. Okay. Thank you very much.
Thank you, Marcus.
The next question comes from Karl Bokvist from ABG Sundal Collier. Please go ahead.
Yes, thank you. Just a couple of more technical follow-up, perhaps more towards Christina. I just noticed that, for example, PPA amortization is down compared to the level we saw in Q3. We discussed net financials, also on cash flow, there seemed to be no payments to earnouts of already made acquisitions in the quarter. Just a couple of questions, you know, around how should we think about potential payments of already made acquisitions in 2023, and also how we should think about the level of depreciation going forward since it seems to be a bit down compared to the Q3 level.
Yes. Thank you for the questions. As you mentioned, we have a little bit lower depreciation of acquired intangible assets this quarter, and you can be prepared that it can vary a little bit over the quarters. In the long run, we have today a larger portion of these kind of assets related to the acquisition. You can expect the growth to continue with this amortization in line with how we make the acquisitions, but it can still vary a little bit between the quarters.
Understood. Then, the earnout payments, at least when I try to look at it seems like there have been no payments of earnouts neither in Q3 or Q4. How should one think of a kind of like a payment level in 2023?
If I get your question correctly, is that the reason for that is that we don't pay out any earnouts in Q3 and Q4 because you get earnout payments once your annual report is completed. There hasn't been any earnout payments during Q3, if I understand correctly, because none of our subsidiaries have made any so to say, closed their books. They are closing their books as we speak. That's when we start paying out. If they reach their target, that's when we start paying out the earnout payment. They will come in Q1. If you want to talk about cash out, so to say.
Yes. That's, that's helpful. Thank you. For the full year, it was SEK 170, roughly. Do you think that amount I mean, based on the current portfolio, should we assume that that amount will be a bit higher in 2023?
Good question. I think that, looking at the overall portfolio, I mean, since we've acquired a lot of companies in 2020 and 2021 and also in 2022, a lot of them. We are running a quite high portion of earnouts, so to say, due to that we have acquired a lot of companies. I guess you could calculate at least with a similar or maybe a little bit increased is my on top of my head, don't, so to say, hang me if I'm wrong.
Yeah.
This is my very quick analysis.
Yeah, yeah. Just a ballpark figure. That's helpful. Thank you.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
We have to summarize a few comments or questions from the webcast. One is again, on the technical consultant side. Is it possible to say how much or how little the contribution was negative or positive during the quarter from technical consultant?
No, we don't disclose that. No.
The other question was, is it possible to comment on if there was effect or if you can comment on that, from price increases, if that has affected the organic growth or of course it has, but any numbers on that or?
No, as I said before, I mean, we are running what some 6,000 projects. It's impossible to recalculate all the 6,000 projects to get out a specific number on how much price increases were in the organic. However, we can see that we are growing our business due to we can look at the FTEs in subsidiaries. We also see that the price increase is definitely not 10.7% than how much part of it. That's unfortunately not something we can disclose or recalculate.
With that, That's no further questions.
Okay.
We say thank you everyone for listening. Thank you for the good questions. Now you know as much as we know about the company. With that, thank you very much and have a great day everyone.