Everyone, welcome to this call. My name is Ola Ringdahl, and I'm the President and CEO of the Lindab Group. I'm sitting here together with our CFO, Malin Samuelsson. On slide two, we have today's agenda. I will quickly flip to slide number four, where we talk about the highlights from the third quarter. In the third quarter, we saw stability and recovery. We increased sales compared to the second quarter, and we see a clear recovery in the major markets.
Compared to the third quarter previous year, sales was a bit lower as many countries are still impacted by COVID-19. Ventilation Systems had a challenging second quarter, but is now back on almost the same level as previous year. Profile Systems, they have continued to perform very well and showed growth in the third quarter and high margins. Building Systems have had a tougher time and been more affected by the weaker market climate due to COVID-19.
Despite the significant sales decline, they have maintained a satisfactory operating margin. We are pleased that we reached an adjusted operating margin of 11.4% in the quarter, this is the highest operating margin for Lindab in more than 10 years. We have achieved this thanks to a decentralized organization that has adapted very fast to the new reality. In the third quarter, we also had a strong cash flow, both from operating activities and in total.
This is enabling us to continue our strategic investment program, where we are upgrading many of our production facilities to increase both capacity and efficiency. We have our M&A activities. We have acquired the company Crenna in July. Crenna is a leader in rectangular ventilation in Sweden. At the beginning of October, we acquired Ekovent, a leader in ventilation and fire and smoke protection solutions in Sweden.
We are also pleased that we have found a long-term solution for IMP Klima Group when we divested the company in September to the Dutch company Orange Climate. Last but not least, we had another positive event in the quarter when we were awarded an energy prize in Denmark for our innovative solar roof solution. This is a product that combines our extensive experience of sheet metal roofs with a solar power technology. Now we move to slide five. We look at the sales growth per geographic region.
In our largest region, the Nordics, we saw organic growth of 3% in the quarter. The growth for the region is mainly related to Profile Systems, thanks to increased sales of industrial building projects in Sweden. I would add that also the roof solutions and Rainline systems showed a very positive development. The Nordic region has had the lowest impact of COVID-19 out of our regions. Building sites have remained open throughout the quarter.
In Western Europe, several countries have recovered after a tough second quarter, especially at the end of this period. Eastern Europe, however, has continued to experience more impact by the uncertainties related to COVID-19. Now we move to the financial section and slide number seven, and I hand over to you, Malin.
Thank you, Ola. As you can see, we are now on the group financial highlights in six, seven, we can see that net sales decreased 6%, it amounted to SEK 2,302 million. The organic growth decreased by 4%, currency had a negative impact on growth by 3%. Structural changes contributed positively by 1%. The adjusted EBIT margin improved to 11.4% compared to previous year of 11.1%, that is due to reduced costs, but also strengthened gross margin.
Only a smaller part of the reduced cost is related to received governmental support as Lindab Group-wise only received SEK 9 million during the third quarter. Net profit amounted to SEK 198 million compared to SEK 212 million during the same period previous year. Now we look at our different business areas, we move to the Ventilation Systems. The net sales for Ventilation Systems amounted to SEK 1, 405 million, that is a decrease of 4% during the quarter.
The organic sales decreased by 3%, the currency effect was a negative impact by 3%. Structural changes contributed positively by 2%, that is mainly related to the acquisitions of Crenna and Torda. In relation to the second quarter of the year, there has been a clear sales recovery, especially in Western Europe. Nordics continue to show stable development. Despite the uncertainties related to COVID-19, Ventilation Systems reported a solid adjusted EBIT margin amounting to 11.2% compared to 11.5% previous year.
We have successfully managed to reduce costs to balance the lower sales volume. We move to the next slide and the Profile Systems. Net sales in Profile Systems increased by 3% to SEK 664 million. The organic growth was positive by 5%, while currency had a negative impact of 2%. Sales increased mainly due to deliveries on industrial projects in Sweden, that is compared to last year.
Sweden also had a good growth in rainwater system products, which have benefited from this stay-at-home effect, driven by an increased demand from the consumer market. The adjusted EBIT margin increased to 15% compared to 12.9% previous year. The improved adjusted EBIT is explained by strong volume growth and strength in gross margin.
We move over to Building Systems on slide 10, where we can see that the net sales amounted to SEK 243 million, and the decrease in sales during the quarter is compared to an unusually strong third quarter last year in 2019, where we had deliveries to primarily France and Poland. The adjusted EBIT margin was 6.6%, versus the 9.5% previous year. The lower EBIT margin is explained by significantly lower sales volume and also, to some extent, by the weakened Russian ruble.
This has been partly offset by strengthened gross margins and lower costs. During the quarter, a number of cost-saving measures have been implemented, and the quarter include a cost of SEK 5 million related to a voluntarily early retirement program. In addition, Building Systems has benefited from a received governmental support of SEK 3 million. The net order intake decreased in the quarter, but the total order backlog at the end of Q3 is lower than a year ago.
We move over to the next slide, and we see that the strong long-term cash flow trend from the operating activities continues. The free cash flow adjusted for M&A amounted to SEK 346 million, which is in line with last year. The improvement in cash flow from operating activities is driven by changes in working capital, which was partly offset by higher paid tax. Net debt decreased to SEK 1,740 million, which gives the net debt/equity ratio of 0.3. That concludes the financial session. I hand over to Ola.
Thank you, Malin. We will talk a bit about acquisitions and structural changes, we start on slide 13. In the second quarter, we took the tough decision to close down IMP Klima Group, with its operations in Slovenia and subsidiaries in surrounding countries. IMP Klima was acquired in 2015 to establish a presence in the air-handling unit market for Lindab Group. Despite our joint efforts, IMP Klima has shown weak development, and it has been a loss-making business for several years.
After announcing the planned closure, we got in contact with the Dutch company Orange Climate, we eventually agreed that they would acquire the business. That was very well received by the employees of IMP Klima, as it will save many jobs. In Q2, when we took the decision to close down, we took one-time costs of SEK 74 million for the closure, and after the divestment, we have reversed SEK 4 million, and the one-time costs year to date are now SEK 70 million.
Now we move to slide 14 and the acquisition of Crenna. At the beginning of July, Lindab acquired Crenna. Crenna is a market leader in rectangular ventilation duct systems in Sweden. Rectangular ventilation ducts make up around 40% of the Swedish market. The rectangular solutions are usually combined with circular ducts in the same system, circular ducts being the traditional expertise of the Lindab Group. With the acquisition, we will now have a complete range of ventilation duct systems for the Swedish market.
Crenna's revenue is approximately SEK 120 million and they have 85 employees. Their operating margin is in line with Lindab's margin. Crenna's Managing Director, Mr. Niklas Hyttsten, will remain in the company and drive the business. Crenna is now part of our business area Ventilation Systems. As we can see on the photo on this slide, Crenna has already started to interact and benefit from Lindab's network of pro shops.
On this photo, Crenna is promoting their express delivery service in a Lindab shop. Now we move to the next slide, number 15, and the acquisition of Ekovent. Ekovent was acquired on the 1st of October, so it is not part of the Q3 numbers, but still worth mentioning here. Ekovent is a leader in ventilation systems and fire and smoke protection in Sweden, but it can also serve the wider Nordic market.
Ekovent is based in a town called Vellinge, outside of Malmö in Sweden, and it also has offices in Stockholm and Gothenburg. The revenue is SEK 123 million, and their operating margin is in line with Lindab's. Currently, Ekovent is employing 64 people, and it will be part of our business area Ventilation Systems. Both Crenna and Ekovent are good examples of companies we like to acquire. They are strong in their local markets with high-quality products, well-run, and with good margins.
We now have an interesting pipeline for future acquisition targets that we are investigating, and we are well-prepared to manage them as part of the Lindab Group. Let's move to slide 17 and take a look at our current focus areas. To those of you who have been in previous calls with Lindab in the past year, you will most likely recognize this slide. It's one of my favorites. Our strategic focus areas remain despite the COVID-19 situation. We continue to strive for sustainable profitability in line with our targets.
And that we achieve through a decentralized approach with very clear accountability. We believe that our decentralized approach has served us very well in these challenging COVID-19 times, and all business units have stepped up to the challenge in a very good way. Customer satisfaction is more important than ever, and during the corona crisis, Lindab has stood up for its customers, and we have kept a very high delivery performance throughout this period.
We have walked the extra mile to secure deliveries to customers even during lockdown, and this includes important examples like hospital projects for emergency use. While handling the short-term challenges, we must also plan for the future. We continue to implement the key elements of our strategic investment program, especially the projects that will lead to improved efficiency and safety. That said about our current focus areas, we move to slide 18 and the summary.
When we summarize the third quarter, we see a stable quarter with improved margins, continued investments, and value-adding acquisitions. We have confidence in our decentralized organization to adapt to the challenging times we are facing. We have a good plan on group level for how to improve efficiency and safety throughout the company. All in all, we see a Lindab that is prepared to continue to drive both growth and profitability improvements going forward. With that, we open up for questions.
Thank you, if you would like 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 that is zero one if you would like to ask question. Our first question is from Carl Ragnerstam from Nordea. Please go ahead.
Hi, it's Carl from Nordea. I have a few questions. First of all, could you give some flavor on the recovery pace within Ventilation Systems during the quarter, possibly month by month, if you could? Thank you.
Thank you, Carl. We had a relatively slow start in the quarter back in July, and then gradually we saw an improvement in August, and September looked quite strong. Now, whether that is truly a fundamental demand increase or if there are some catching up effects after the summer period is difficult to say, but September looked good.
Have you seen this continuing in October as well, or is it too early to say?
We are cautious to go into that, but there has been no dramatic difference in October, but we do see that the virus spreading throughout Europe can, of course, mean something in the future, but we don't notice any negative effects of that yet.
Okay, perfect. Regarding the gross margin, you managed to increase that by roughly 50 basis points year-over-year. Could you please explain the main drivers behind that? Thank you.
There are several effects, of course. Efficiency is one of the drivers. The product mix is another one. We had a good performance in Profile Systems and Ventilation Systems. Building Systems had a slightly weaker, or clearly weaker development. Malin, you can help me here to say something smart about this.
Nothing smart.
There's a mix of effects, but efficiency and being very cautious with cost is the main driver. I think there are also mix effects between the business areas and product segments.
I think clearly we can see also that we have, over time, been more focused on making sure that the different projects we engage into, and that we understand the possibilities. I think it's a very good effort to engage in projects where we make reasonable margins.
Okay, perfect. On Profile Systems, that segment has been boosted by Lindab Hallen in the past quarters. Could you say something on the backlog for Lindab Hallen and maybe also quotations for such projects? The e-commerce exposure must be rather favorable, I guess, in these times.
Indeed, the e-commerce trend is very strong and Lindab Hallen, as you say, our Nordic whole building concept is perfect for those kind of solutions. We have a lot of interest, lots of quotation activity. We have a good backlog there.
I think that we can continue to grow in that segment, but we should also say that between the quarters, there can be quite a lot of variation depending on when these larger projects are invoiced. It is not something that will grow in equal percentages every quarter. Overall, we are fundamentally positive to that segment and that development for the coming years.
Perfect. The final one from my side is, I wonder if you have seen any changes in demand between the project sales and sort of bread-and-butter business and also how much of your sales could be defined as project business or project-related businesses?
Most of the revenue in Building Systems, that business area is project-based. Of course, there are smaller projects and there are larger projects. Normally in a business downturn, we see more stability in the smaller projects within Building Systems and more uncertainty in the larger projects. That we see now as well. The bigger the financing decisions become, the more things can influence the decision process and cause delays in such decisions about large buildings.
I would say now, depending on how you define projects, I would say that Building Systems is purely a project business. When it comes to Profile Systems, we have a part of it, but it is a minority share of Profile Systems that can be termed project-based. In Ventilation Systems, it's minimal. There it is mainly bread-and-butter sales. I hope that answers your question.
Okay, perfect. Thank you.
Just as a reminder, do press zero one if you would like to ask a question. Our next question is from Marcella Klein [Inaudible].
Hi, I have a couple of questions regarding your acquisition pipeline. Is it on course? There's more focus on ventilation, and what is your pipeline in other areas?
Hello, Marcella. Well, it is correct that we are mainly focusing on Ventilation Systems when we are creating our acquisition gross lists or pipeline. It does not exclude the possibility that we will also look at other attractive areas. We have some very interesting and high-performing areas also in Profile Systems where it can make sense to have a look. The main focus is very much on Ventilation Systems, and we see quite many opportunities there because our industry is not so very consolidated. There are many players active.
Another question regarding the delayed construction projects. Are you able to adjust your capacity or replace them with anything else, or you just have to pull through?
To a certain extent we can adjust, but there is always a critical level when a factory starts to cost money when the capacity utilization is too low. When we see the relatively large contraction for Building Systems, I think we are showing that we are quite resilient and that we can adjust costs in a substantial way.
We are still making a decent margin in Building Systems even at way lower invoicing and production levels than we saw a year ago. But there is, of course, a limit. If volumes go down too much, we will also have a very difficult time, but we are better prepared now than we might have been in the past.
Thank you.
Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad. Our next question is from Kenneth Toll from Carnegie. Please go ahead.
Yeah, thank you. The margins were very good in this quarter, and you said also that the savings were a big contributor to that. How much do you think that operating costs could come back when economies are opening up more and traveling comes back? Are you seeing operation as normal now?
That's an interesting question. Do habits change, or do we go back to normal after a while? I think some habits will change. I think that the COVID-19 crisis will help companies to become more efficient. It will also help Lindab to become more efficient. I think that we can maintain many of the savings that we have captured in this period, and also in the future.
We are not an organization that travels immensely. We are a decentralized and relatively local organization. That is not maybe the biggest cost account that we have normally. Of course, it helps and adds to the savings to some extent.
On acquisitions, the last couple of ones you have made in the Nordics, do you think it's hard to realize acquisitions or close acquisitions in other countries now when we have this pandemic running around?
Yes, it is more difficult. Travel restrictions can create chaos in your plans quite quickly. When we divested IMP Klima to Orange Climate, I think it was 24 hours before they should come and visit in Slovenia, but Slovenia closed the border to everybody from the Netherlands, and we had to ask the interior ministry for a special permit for them to come and visit, which was granted. Yes, it is more difficult to meet people you haven't met before. It is difficult to travel, so the international acquisition agenda can be impacted.
However, in the countries where Lindab is looking for interesting acquisitions, we already have a strong presence. We have people on the ground in those countries. And right now we are looking at making smaller acquisitions where the local managing director will be involved. I think for Lindab, it is not completely blocking us from pursuing our acquisition agenda. We can do it, but it probably slows it down a little bit because of the travel restrictions.
Do you think that it has affected prices of acquisitions, that it's become cheaper now?
I think that is a very difficult question to answer. I can speculate. I speculate that companies that are well-run and profitable, in good shape, for them the price tag has not gone down. For more vulnerable companies who are not withstanding the crisis in a good way, the price tag is lower today.
Okay. Finally, for Building Systems that have a difficult situation right now, what do you think would need to change for the outlook to improve or yeah, the big question is when, of course, but what are you looking for that business and demand there to recover?
History repeats itself. As Building Systems, they have seen these fluctuations before. I think that we will continue to have a tough situation in Building Systems for the coming months. Europe will come to a time when we start to be more optimistic about the economic growth going forward, and then infrastructure will start to be built again on a big scale.
We are prepared for some more tough months, but long term, I have a positive outlook on Building Systems, and especially their expertise in e-commerce buildings and warehousing and logistic buildings in the multi-story car parks for dense population areas, and some other niche segments where they are really very competent and have a very good solution. I am optimistic medium and long term, and cautious short term.
Makes sense. Okay. Thank you.
We currently have no further audio questions. I will hand it back to the speakers.
From Malin and myself, we say thank you for showing interest and listening in, and hope to see you soon again or hear you soon again. Thank you and have a good weekend.
Thank you. Bye-bye.