Hello everyone, and welcome to the presentation of NYAB's Interim Report for the Second Quarter of 2024. NYAB has released its financials this morning, and giving the presentation, we have the Group CEO, Johan Larsson, and CFO, Aku Väliaho. My name is Marko Peltonen, and I am the director of Investor Relations at NYAB. If you have any questions for our management, please write them in the chat during the presentation, and we will go through them at the end. Now, to get started, I hand over to Johan, who will introduce NYAB's key figures and progress made during the first half of the year.
Thank you, Marko, and welcome all. Great day, first report as a Swedish-listed company. Very suitable that we actually have four records for the first half year: top line, order backlog, EBIT, and cash flow is the best in NYAB history for our seasonally weakest first half. So, to give a little bit more flavor to that improvement and development, suitable headline, our revenue amounted to EUR 135.2 million for the first half. That is a year-over-year growth of 29.5%. Our EBIT, EUR 4.2 billion, an increase to 109.4% year- over- year, and our EBIT margin, 3.1%. Very good, taking seasonality into consideration.
It's a clear improvement from the previous year, and it's an even bigger improvement than reported if you take into consideration that the comparison period benefited from the settlement of Mikkeli dispute, which had a positive effect in 2023 Q2 with EUR 3.3 million. We also improved our free cash flow, amounting to EUR 12.5 million and a record high order backlog to EUR 342.6 million. That's 36% year-over-year increase. So, rolling twelve doesn't have too much effect due to our strong seasonality. We have the vast majority of both revenue and earnings in our second half, has been so since this company started a decade ago. Still, we see clear improvements. Revenue, rolling twelve, 11% growth from Q4 2023.
EBIT, 14.4% growth, amounting to EUR 17.4 million, and the EBIT margin has improved from 5.4%- 5.6%. These improvements are really strong, considering that it's in our weakest half of the year. We also have an improvement in free cash flow, and the order backlog improved with 16.3% from Q4 2023. Our strategic progress continues. We have completed the cross-border conversion and transferred the registered office to Luleå, Sweden, and our share is now traded on Nasdaq First North Premier since June 28. We have done a acquisition, Dyk & Anläggning , waterworks. We completed that at the end of May.
Our order backlog reached an all-time high level, and according to our strategic plan, we are increasing our average project size a bit, and we have also significant order intake after second quarter. A few of many won projects, just to add some flavor of what we actually do. Huddinge Municipality, we are very happy to do the Vidja etapp 2BC for them. We have other projects in conjunction with this project. It's a infrastructure project. For Trafikverket, we won dredging work with the diving and other waterwork included, where we are about to widen and deepen the fairway through Södertälje Canal. Trafikverket also appointed us due to our strong organization and our planning on how to execute this, in many ways, complicated project, widening a stretch of the road 261, Ekerövägen in Stockholm.
And after this, the end of Q2 in July, we received a order of approximately EUR 80 million for the construction of power lines between Hedenlunda and Oxelösund to support SSAB's needs. Client is Vattenfall Eldistribution. Now, since this is our first report as a Swedish-listed company, I will grasp the opportunity to thoroughly explain NYAB from a business perspective, and I will trickle it down to our business model and scalability. And with that said, this won't be a recurrent slide in future reports. Many investors view us as peers to consulting and project management companies, for several reasons I don't agree, mainly from the fact that we do have that kind of work with no business risk in a subsidiary.
There we have approximately 30 employees, consisting of engineers, designers, and project managers, and where our customers, in all relevant, are charged per hour. However, most of our engineers and project managers, site managers, et cetera, do work in NYAB core business. Those are the lion part of our approximately 470 employees, of which more than 70% are white collar. In our core business, consisting of the business areas, industry, energy, and infrastructure, more than 50% of our revenue have fixed price and a business risk. The rest of the revenue comes from different sorts of collaborative contracts, contracts where we charge per hour, and different forms of current, accounts on frame agreements, et cetera.
If you see our revenue per full-time employee, it's vastly much higher than any listed company who are viewed as a contractor, or as a consultant, or project management business. With this stated, you probably already understand that we do most of our production through suppliers, subcontractors, and niche providers. Hence, it's up to us on every project, in what stage we want to secure our supply and if we do it with a fixed price or else. The decision always comes from a quality and business perspective, where delivery security is included. We run approximately 150 projects simultaneously, in which we always have done the calculation, pricing, tendering with our own personnel, and then sometimes the design, and we always lead the projects with our own personnel.
What this does is that it gives us low fixed cost and a low CapEx, low investment needs, and together with a strong balance sheet, we have the possibility to choose and select our projects from the perspective of what's most long-term suitable for us. We focus on owning the contract with the end client, which puts high demand on our knowledge within contract law and construction law. It also puts high demand on our engineering, planning, pricing, and calculation skills, and a high demand on our project management capabilities, where project administration of all sorts and HSEQ is included. So in this regard, NYAB have a different setup in comparison to other public companies by delivering high-quality turnkey facilities and projects to the end client. And it's with a unique business model that enables scalability and decent margins.
So there you have the explanation of our historical track record with growth and our margins. You also see that what we do now in 2024 with our growth 30% for H1 in constant currencies, that growth comes mainly from a quite small growth in project size, where average project size last year was EUR 3.5 million, and this year it's increasing, so it will be higher, but it won't be, it will not be above 5, above EUR 5 million . This is as good as I, in this format, can explain why we so clearly, through the last two years, has emphasized to grow without increasing our risk, and that it's one of our most supporting column, and that is due to our scalability, and that sets the pace for our growth....
So underlying market growth are expected to remain at high levels in our core markets. In Sweden, the market turns out very fine, nice, moving upwards. If we go to where we have our strongest position, up in the north, we are even up to double-digit market growth. Finnish construction industry are moving sideways from a decent level. Of course, we don't need the same volumes and market growth in Finland due to our size, in Finland. And together, our addressable markets in Sweden and Finland clearly exceed SEK 400 billion. And the drivers for this are, of course: deglobalization, urbanization, and the green transition. And with that said, I leave over to Aku.
Thank you. Good afternoon on my behalf also, and we can now take a closer look at our Q2 financial performance. So, on the Q2, our revenue growth was approximately 17%, with a limited impact from the currencies year-over-year. Main contributor to the revenue growth was energy projects, and within that business area, especially power network projects. Revenue from Sweden grew significantly year-over-year, over 37%, and that, of course, then led to the higher share of our revenue being recorded from Sweden. So nowadays, it is 75% almost, that is generated from Sweden. Also, the power network projects are visible in the split of public versus private sector revenue, as the public sector share has increased to 61%.
On rolling twelve-months basis, Sweden now represents 72% of our revenue, and public sector, 57% of our revenue. Then, we had very good development in the underlying EBIT. So our EBIT margin was at 5%, and as Johan mentioned in the beginning, in the comparison period, we recorded a EUR 3.3 million positive impact from a settlement of Mikkeli dispute in Finland. So in the way, underlying EBIT margin has improved by over four percentage points. Mainly, the underlying EBIT improvement is a result of revenue growth combined with solid margins, and in addition, we benefited from lower PPA amortizations against the comparison period.
For the H1, our net profit was at EUR 0.8 million, and it was dragged by costs relating to parent company's redomiciliation and listing transfer, which amounted, in total, EUR 2 million, and they were booked to finance expenses. Order backlog growth was extremely strong, so we were growing 36% year-over-year. Growth was especially driven by the strong order intake in Sweden. To be more specific, especially in the Mälardalen region, we witnessed the strongest order intake. In addition, order intake was also good due to the Luleå Municipality exercising its extension option in infrastructure maintenance contract, and that was recorded to order book for the Q2.
Tendering activity in Sweden has remained strong and robust, and it is well above last year, while we are still experiencing some softness in Finnish market. Q2 cash flow was pretty typical for our business. Typically, we have seasonal variation in working capital fluctuation, where Q2 and Q3 our working capital is tied up and then released in Q4 and Q1. Our free cash flow for the Q2 was minus EUR 1 million. However, of course, there was a cash part paid out in conjunction of acquisition of Dyk & Anläggning. Adjusting for that, our free cash flow was basically flat. In comparison period, Mikkeli settlement contributed over EUR 9 million positive cash flow impact, so we can say that pretty much the cash flow performance year-over-year was in line.
For the first half of the year, free cash flow was strong and stemming mainly from working capital changes. We ended the Q2 in net cash position of EUR 7.2 million, equity ratio above 73%, net debt to EBITDA -0.3x, and unadjusted return on capital employed for the rolling twelve months was 8.1%. So to conclude the financial performance, we can be very satisfied for both H1 and Q2 performance. Then I hand back over to Johan.
Thank you, Aku. Yeah, something that's important to us, that we always measure our performance against are our long-term financial targets. There are four of them. First one, annual revenue growth exceeding 10%. This far this year, we have a growth reported of 29.5%. Doesn't bear too much effect due to our seasonality, meaning that we are a much bigger company, revenue-wise and earning-wise, second half of the year. But we are close to that target already. We will for sure, manage to succeed when it comes to our annual revenue growth. EBIT margin exceeding 7.5%, next goal. Historically, we have had quite an easy time reaching that. Last year, we didn't. We ended up with 5.4% EBIT, mainly due to macroeconomic circumstances of different reasons.
You all know them. We live in the same world. EBIT margin is improving, and it's really good to see that the EBIT margin improves and comes through with 0.2%, even if it's in H1. So we're moving in the right direction for that long-term financial target. Net debt below 1.5x EBITDA. We have a negative net debt, so we have a very strong both cash position and a very strong balance sheet. So, looking good. And, dividend with this CapEx light, asset light business, with quite good margins, we have decided to be able to have a dividend exceeding 35% of net profit. And, last year, we had 62% in ordinary repayment or dividend, and, 109% in total to an extra dividend.
So that's about our long-term financial targets. And to sum it all up, our game is not too different from football. You win the game in the second half. After first half, we are in a very good condition. It looks good, but the important second half needs to be played. And, we continued to execute and deliver with revenue growth of 30%, and we actually more than doubled our reported EBIT for H1 2024, and that is reported EBIT. So if you take Mikkeli into consideration, it's even further improvement than that. And our order backlog has reached all-time high levels with new large projects in energy and infrastructure sectors, according to our plan. So it's very satisfying, and we are well positioned to seize growth opportunities, with our explained business model and strong balance sheet.
Of course, we are very happy that the completion of the cross-border conversion and listing transfer are done, and it enables a increased focus on our core business and developing the company. So that's it for me. Thank you for listening.
Thank you, Johan. Thank you, Aku. Now, let's move on to the questions we have received. Can you give some color on the tendering process for the big Vattenfall order that you won? What were the key reasons behind NYAB winning?
... Yeah, the key, the key reason, in this case was, of course, a combination of, quality, efficiency, and price.
Can you break down what industry segments are driving increase in order backlog?
Yeah. I would say that the energy, what's related to the green transition, if we talk about Finnish state, Fingrid, and Svenska kraftnät, their needed investments and all other power line owners and such are a main driver. Then you have a big driver within infrastructure. We need to improve our infrastructure, and the industry are doing loads of investment in both Finland and Sweden. So, that are the main drivers. If you wanna go a bit higher above it, it comes to the three mega trends that drives investments. And there you have the urbanization, who creates a demand for new infrastructure, new electricity, and so on. And, you have the green transition. We need new infrastructure for electricity and energy, and we need new sources for it.
You have the de-globalization, where you have upcoming auto investments, and securing supply chains and so on from industry, making sure that they invest and take care of rare earth metals and such. Overall, it's those three mega trends that drives the investments.
Next question: Do you expect tendering activity to increase further during the second half? And what markets are you seeing the strongest acceleration?
We see. I would say that we see both within infrastructure and energy. We see a increasing demand, especially in Sweden, a bit more slowness in Finland, who has a much more volatile economy. But we know that when it changes up, it goes fast in Finland. But our tendering business is ongoing all year around, so there are a lot of interesting projects in the pipe of different sizes.
Okay, then a question about the Finnish market. When do you expect it to start growing at a faster rate again?
That's a super good question, and if I knew it, I would be a very rich man. But, guessing about the market is always hard, but I would say that we already, in some sectors, see some positive signs, but we're not there yet. So, I would bet that we will have at least 12 more months with lower activity than what's good, at least 12 months more. And, within the energy sector, I believe it will be even longer than that, actually. That, that's my best guesstimation.
Given your net cash position, could you rank what you see as the most interesting and attractive capital allocation options?
Well, then we touch M&A strategy, I would say. And when it comes to our M&A activities, that's also constantly ongoing. We took a smaller break during the re-domiciliation, delisting, and new listing in Sweden, but now it's up and running again. We know how to run companies, and we know this industry, and there are loads of interesting target to roughly fair prices for us. I would say that's where the money will be allocated. But make no mistake, we need a very strong cash position for the business model we have, so we never get squeezed. We will also need an increased working capital with our growth.
Then we have a question that, conversion of Finnish shares into Swedish shares has been slow in some banks. Could you do anything to speed up the processes?
I'm sorry, we really can't. That's totally out of our hands. It's up to every custodian bank who have different routines and settings and so on. I have just heard, like, second-hand information that immediately for some custodian banks, 3 days for some, 1 week for some, and a month or more for some. That's like all I know, and I'm, of course, sorry, sorry for that, but I can't have any effect whatsoever on it. I wish I could.
Yes, and we have advised all our shareholders to contact their custodian banks in questions related to the share conversion, because there are so many technical differences, so those banks can give the best answer. Then, about our financial guidance, it is known that, after H1, we are quite clearly ahead of last year regarding revenue and operating profit, and also order backlog is way above last year's level. But still, you reaffirmed your guidance, in which you expect revenue and operating profit to increase from last year, which is rather broad verbal guidance. Could you give a little bit more color how the guidance should be interpreted? That is, for example, do you have more positive guidance levels, such as increase significantly, et cetera, or is the current guidance also the highest one?
No, I would say that, first of all, there's a difference in practice between Finnish market and Swedish market. And related to that, I would say that there are, of course, no limits in exceeding revenue or exceeding EBIT. But what gives the best guidance for this year, when we're sort of stuck between Finnish routines and Swedish routines, I would say look at our long-term financial targets. Those are the ones we are executing against.
Then you mentioned in the report that during Q2, you decided not to participate in Skarta Energy's commercial funding rounds, and thus your ownership diluted to 27% from 34%. However, you participated in the financing round in Q1, so what has changed, and how is the strategic review regarding Skarta Energy developing overall?
Yeah, of course, a lot, a lot happens within a quarter or so. Aku knows this business a lot better than I do, so he can gladly answer this question.
Yeah, of course. Yeah. So, first of all, of course, strategic reviews take time, and whenever we proceed on time, we get more educated, and we can make more informed decisions. That is one thing. Then it's also good to understand that, in the Q1, we didn't fully participate in all funding rounds, so that is also one aspect. But, when taking some thoughts around this, these Q2 activities we did, may be the good indicator also for the future.
Then we have one last question, and that is that: could you estimate the time period when you would be moving to Stockholm Stock Exchange's main list?
Well, no, can't really say. We know that we chose to be on First North Premier, which is a step up from First North in Helsinki, Premier, that is. But we know that the best environment for us, with the heavy, profitable growth we have, we're just about to scale it up further, where M&A are a strategic part of our growth plan, and an important part. We want to be in an environment that is optimal for our core business development. So that's actually why we decided on First North Premier. So I can't say when the timing is right for main list, but I will say that it would surprise me if it's within the next coming two years. It will be further away than that, is my best belief now.
It's not my decision, I don't own it. I view it from a CEO operative point of view.
Okay, now we have gone through all the questions in the chat, so we thank everyone for participating, and see you next time.
Thanks.
Thank you.