All participants will be in a listen-only mode. Afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Per Waldemarson, CEO. Please go ahead with your meeting.
Hello, everyone, welcome to the Q3 quarterly presentation from Lifco. If we already flip to page number two in our presentation, I’d like to give some high-level comments on the quarterly performance. If we start with sales, we are growing our sales with about 15%. It’s a combination of 8% coming from acquisitions, 5% organically, and also some help from currencies in the quarter. As you can see, also the EBITDA numbers are growing, but slightly lower rates, which means that our margins are a little bit lower than last year in the quarter, which is related to the performance in Systems Solutions, which I will get back to shortly. Also on the higher level for the group, we had pretty strong cash flow in the quarter, which is mainly due to lower receivables.
Just to comment also on the high level, we think that overall we had good performance across the line, and also the sales and profits in our more cyclical part of the business was quite good in the quarter. We could comment that as many of you know from the overall market, there is a more uncertain situation right now. The coming months and quarters will be interesting to follow the development. So far everything has been good for Lifco. If we flip to page number three, we can go through the different business areas. On Dental, there's not much to say. This quarter we have not had any help from acquisitions as it was more than one year ago that we made the latest acquisition in Dental. It's all driven from organic and currency in that division, in that business area.
As you can see here in Demolition & Tools, we have a strong development both organically and from acquisitions. We come to the Systems Solutions area where we have also in our quarterly report commented that we have had a weak performance in our Forest division, partly related to low margin which can fluctuate between the quarters. In addition to that, we also made some reserves for increased project costs for the projects that are running, also a specific reserve for restructuring or savings, organizational restructuring in one of our companies in that division. That in total, the reserves are SEK 15 million. We can flip to page number five and look at our net debt and balance sheet.
As you can see, the net debt to EBITDA, including our leasing IFRS 16 effect and also the option agreements that we have in our debt position is about two times EBITA. If you look only at the interest-bearing net debt to EBITA, we have 1.5 times. That is giving our financial targets quite low level, which gives us room for future acquisition potential. Just also to comment on the balance sheet we have on the tangible fixed assets and the interest-bearing liabilities in both sides of the balance sheet, we have an IFRS 16 effect of SEK 488 million that has impacted compared to last year. We can turn to page seven.
Just to highlight once again, and this is a similar story that we discussed in last quarter, when it comes to our return on capital employed, we have now during this year we include the IFRS 16 effect in the calculation, which means that in the asset side we include then all the leasing effect which then brings down the return on capital employed. From next year, we will then have more comparable figures when we compare the return on capital employed. It's mainly an IFRS 16 effect that drags down these numbers. We can flip all the way back to page 27, and just shortly comment on the acquisitions made so far this year. We have only made five acquisitions, but in total, they have contributed with SEK 930 million. As you all know, we are continuously looking for more acquisitions.
The timing and exactly when it will happen is always an uncertainty for us, as we have pointed out in previous calls like this. With that, I would like to open up if there are any questions.
Thank you. If you do 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. Our first question comes from the line of Julius Rapeli from SEB. Please go ahead.
Thank you. Good afternoon, and thanks for the presentation. My first question would be relating to the Systems Solutions, especially on the margins there. You mentioned some struggles in the Forest division, but is there anything else? Could you put some more color on the other divisions as well? Are the acquisitions you made there margin accretive or dilutive? Thank you.
Well, as we have pointed out in our report, basically, the explanation can be found in the Forest division. In the other division, there's no material impact that's worth mentioning in it. In the Forest division, we have a pretty weak quarter in terms of the margins, and on top of that, we have this extra reserve that we made. It's a combination of those two factors.
Okay. Thank you. If I may continue.
Sorry, on the acquisitions, they are not impacting the overall picture so much in this quarter.
All right.
Yes.
On the Demolition & Tools, are there any differences in the development regarding growth and profitability between Brokk or the demolition robot side and the attachment side? Is it going as business as usual?
It's pretty stable in the quarter overall.
Okay, no big differences between the segments?
No, it's not material.
Okay. Thank you. That's all from me.
The next question comes from the line of Johan Dahl from Danske Bank. Please go ahead.
Yes, hi there. I just had a question on, I hope I'm not repeating because I came in later, but the Demolition & Tools appears to be quite a significant slowdown in organic growth here in the quarter. Can you just talk about what you're seeing in the market there? We're seeing some significant weakness among other sort of construction-related peers. It would be interesting to hear your view on that.
Overall, we had a good development in the quarter in the figures presented. We do, as I mentioned earlier in the phone call here, we, as everyone else, think that the market situation is a bit more uncertain now than if you compare it to how it was in the beginning of the year. In the third quarter, it was good for us, so to say. I think the uncertainty has increased since the spring, is what we're feeling.
Am I correct in Demolition & Tools that we're going from some high double-digit organic growth to low single digits here in the quarter?
I don't think we present that on a divisional level. You could say that the organic growth, yes, was high in the beginning of the year, it's fair to assume, but we still have organic growth in the quarter.
Cool. On the acquisition cost, I was thinking the additional consideration and change in call and put option values, can you just explain your visibility on that particular item going forward here? Anything that we should be aware of or any numbers that you can sort of share with us?
These numbers are every quarter, we update the valuation of all option agreements based on the last 12 months performance. How these companies develop can any quarter have impact on this. In this quarter, we had a positive development in that part of the portfolio, which led to higher costs as well.
Okay, there's no sort of visibility in terms of capital changes in the subsidiaries, I guess the best way to model that would be just to assume according to your financial targets in the group, sort of steady increase in earnings in those minorities here?
Yeah, we don't give any guidance on that.
Okay, cool. Thanks.
Thanks.
The next question comes from the line of Karri Rinta from Nordea. Please go ahead.
Hi, thanks. I have one question on Systems Solutions, and I was just looking at the historical performance, and in Q4 last year, the EBITDA margin was almost 17% in Q4. I just want to sort of recollect on if there was a sort of positive one-off or anything else that sort of lifted the margin in Q4 last year, sort of to have in the back of my head when I model going forward.
I'm sorry, but I don't have that on the top of my mind right now, so I will have to come back on that question later.
Okay. My other question was one that Johan just asked about the organic growth, because I also have it sort of slowing quite considerably from at least 20% or something to, well, at least below 10% for Q3 now. Can you confirm that it is at least single digits, the organic growth in Q3?
The organic growth in Q3 for the group.
Yeah, for Demolition & Tools.
For Demolition & Tools. It's also a lower rate than in the beginning of the year. Yes.
Yeah, is it in single digits?
Yes, it's below 10% in this quarter.
Yeah. Okay. Thank you.
Just as a reminder, if you do wish to ask a question, please press 01 on your telephone keypad now. We have a follow-up question from the line of Julius Rapeli from
Yes. Thanks for taking the question. Just one thing to follow up on, you mentioned something on the M&A pipeline. Is there something you can discuss about the pipeline? How does it look? Do you see any differences compared to the previous quarters, years in the activity in the market? Yeah, thanks.
I think the comment on the and I tried to make that comment earlier, but the comment is as always, that there's always a lot of discussions ongoing, but the timing on when we will make a deal is always very difficult. Unfortunately, we cannot give any guidance. We work very hard on this, but there's many things that have to be right to get the deal done. As always.
I see.
There's no change.
No change in the pipeline. You don't see any slowdown in companies available or anything like that?
No, I think it's pretty much the same as it's been the last couple of years.
Okay. Perfect. Thanks.
It's difficult to comment on because every deal is unique in a way.
Yeah, sure. Thanks.
As there are no further questions, I'll hand it back to the speaker.
Okay. Thank you very much for dialing in. We hand it over to the coordinator again. Thank you.
This is the conference call. Thank you all for attending. You may now disconnect your lines.