Hello everyone, and welcome to NYAB's Result Presentation for the Second Quarter and First Half of 2025. NYAB has today released its interim report, and with us in this call, we have the Group CEO, Johan Larsson, and the Group CFO, Klas Rewelj. My name is Erik Petersen, and I'm the VP of Corporate Affairs and the Head of Communications and Investor Relations at NYAB. During the presentation, you can write your questions to our management in the chat, and we will go through them at the end. To get started, I hand over to Johan, who will go through the results.
Thank you, Erik. Yeah, welcome everybody. We have a strong first half of the year and a strong second quarter. A revenue in the quarter of EUR 135.8 million. That's an increase of 78% towards the comparison period. We have an EBIT that improves 51%. We have an EBIT margin, and that has, as expected, a dilution from the Dover acquisition. Worth mentioning is that our civil engineering margin for the quarter improves from 5.1% - 5.3%. We have a great free cash flow of EUR 5.5 million. Even better if you take into account that the Dover acquisition has an impact of - EUR 1.2 million . That is, of course, key to our business model, our strong free cash flow. We have had a good order intake. We've been selective, taking the right kind of projects in the right segments and the right type and the geography we like.
We are very happy with our current order book, and the book-to-bill is still high, remaining at 1.4. For the first half, slightly higher growth than we have in the quarter, 79%, of which the organic growth amounts to 38%. We have an EBIT of EUR 6.7 million, 61% better than the first half of 2024. We also have a negative impact from the Dover transaction. The EBIT margin is 2.8%. That's -0.33% year- over- year, as expected, with a very strong free cash flow, as mentioned, if you take into the consideration that the Dover acquisition impacts with a - EUR 29.2 million. The order intake for the first half is strong. Q1 in line with Q2. The order intake is up 81% year- over- year.
When it comes to the revenue splits, you see that our business segments, civil engineering, our core business, our consulting volumes were very limited before the Dover acquisition. Civil engineering amounts to 76% in the first half of the year. Going through the second half of the year, that number will increase since civil engineering has its high season in Q3 and Q4. Market segments, energy, by far the biggest. That volume will decrease or are expected to decrease in H2 due to the same reasons that civil engineering has clearly more revenues in H2 than in H1. Industrial and other 11%, and infrastructure with 29%. The main growth driver for the energy segment is the power network projects in Sweden. Worth mentioning, of course, is that we have a high revenue growth both in energy and infrastructure. Revenue splits. Seasonal effects are reflected in the regional split.
As stated, the weight towards private sector revenue is, to a very large extent, attributable to Dover. Regions and sectors, Sweden continues to be our biggest market. We expect that part of the whole to grow as well going forward. We have an even split in revenue volume between Finland and Norway at the moment. In other regions, such as Singapore and Canada, it amounts to only 3% of our total volume. The private sector versus public sector for the first half was 66% versus 34%. Over time and going forward, we will be closer to 50/50. We have very strong customers. Customers are very much needed, but exemplified here by a selection of new projects. For the Swedish Transport Administration, we won a contract of widening A4 in Västerbotten, Sweden, which includes the construction of five bridges. That contract has a value of EUR 38 million.
Skarta Energy showed us great confidence by contracting us for the construction of a battery energy storage system, BESS, at the Utajärvi solar park . Type of project we see an increased demand on the market. SL Stockholm Public Transport hired us to do the renovation of the green line of the Stockholm subway. A long contract, perennial, which many of our contracts nowadays are, which gives good foreseeable revenue and good possibilities to plan under a strong growth phase. The value amounts to EUR 33 million. We are very happy that Aker BP signed a same agreement extension with us. The new agreement is valid for the coming five years, where we mainly hire out consultants in the form of engineers, but there are also other factors there. All the white collar worth mentioning.
After the period, we finally got to sign the contract with Uppsala Tramway, a contract we actually were awarded already in 2024. Now the contract for phase I is signed. The phase I includes mainly projecting and planning for the next phase. phase II is expected to be signed during 2026. Growth drivers. We had an organic growth of 38% in civil engineering and an acquisitive growth of 41%. We have an average full-time employee increase year- over- year by 22%. We have an average project size growth of 12%. We have a number of projects that grow with 9%. The revenue per average full-time employee increased with 14%. If you don't recognize the figures for the revenue per average full-time employee, it's due to the Dover acquisition that has a completely different profile for natural reasons, a different business model.
Our long-term financial targets: target number one, a revenue growth exceeding 10%. As expected, we are performing very high above our target. The outcome is 46% rolling 12, or LTM. Profitability, due to the margin dilution of the Dover acquisition, we are down to 6.2%, expecting it to increase over the year, especially since civil engineering is high season in H2. We hope or are quite confident that we will have some smaller margin improvements also in the target company during this year. Capital structure, our goal is to have a net debt less than 1.5. At the moment, we actually have a net debt, so it's 0.31, but close to zero then. We have good margins there, room for maneuvers when the timing is right. We have a goal of a direct shareholder return exceeding 35% of previous year's net profit. We had a dividend that accumulated 42%.
That's it for me. I hand over to Klas.
Thank you, Johan. Hello, everybody. We'll take a little deep dive into our quarterly revenue development then. The second quarter revenue was, as mentioned, EUR 135.8 million, and that is representing a growth year-on-year of 78%. The organic growth component was a full 43%, and that is mainly driven by high activity in our projects on the Swedish market. The quarterly year-on-year acquisitive effect, 35%, driven by the Dover revenue. That revenue fully in line with earlier communication and our expectation also for the second quarter. Dover revenue doesn't have the seasonal variations, but only minor variations related to in-quarter calendar effects. I think worth highlighting here is our rolling 12-month performance with the revenue now above EUR 450 million, growing rapidly at the rate of 46% year-on-year for the group.
Profitability, second quarter operating profit, and also as mentioned, EUR 5.7 million, representing an increase of 51%. Net of the additional IFRS items, the Dover business contributed to quarterly operating profit positively with EUR 0.5 million. The organic EBIT increase remaining was derived through revenue growth combined with stable and positive project margins. The operating margin calculated to 4.2%. The reduction, as Johan mentioned, versus the comparison period 2024 is explained in full by the consolidation of Dover. The second quarter net profit was EUR 4.2 million, and that represents a full 196% increase versus 2024, where those numbers were adversely impacted by the domiciliation costs in the level of EUR 1.6 million. Also here, we highlight our rolling 12 months LTM performance. Operating profit rounded to EUR 28 million, representing a growth of 61%.
Moving to financial position, free cash flow for the second quarter was + EUR 5.5 million, and that is then compared to -EUR 1 million for the same period last year. The Dover acquisition closing accounts were agreed during the quarter, and an additional EUR 1.2 million was paid, making the total consideration EUR 29.1 million. Following this, the positive free cash flow and also dividend payment in the quarter, EUR 7.1 million. The ending net debt balance was +EUR 10.4 million , as Johan noted, giving a net debt-to-EBITDA ratio of 0.31. Worth noting is that the Dover acquisition bridge loan was repaid in full at the end of the second quarter. Also here, I would like to highlight some rolling 12-month performance adjusted for the Dover acquisition consideration. Free cash flow rolling 12 was + EUR 34.6 million, and that represents a full 103% in cash conversion in relation to EBITDA.
Further, return on capital employed 13.3% compared to 8.1% last year. Taking a deeper look at civil engineering, meaning our legacy NYAB business for construction projects currently on Swedish and Finnish markets. For civil engineering, the market activity remained high, and the tender volumes that we currently have are well above last year's level. Order intake grew with 22% to EUR 162.9 million, representing a quarterly book-to-bill ratio of 1.5 to revenue. During the quarter, we secured several attractive infrastructure projects. Total order backlog increased with 14% during the quarter and ended at EUR 424.7 million, and that is a 25% increase over last year. Our market scope currently remains Sweden and Finland, and the current backlog is well diversified, we believe, between market segments as well as sectors, public and private.
The civil engineering quarterly revenue grew with a full 43% to EUR 107.5 million. It is noted that we saw and reported revenue growth both in Sweden and in Finland. The segment's operating margin, 5.3%, is an improvement over 5.1% last year. For the segment, the rolling 12-month margin closed at 7.4%. Increased cross-border project collaboration supported the revenue and profit growth for Finland. The Swedish organization expanded following the much higher activity, demand, and volumes. Segment costs therefore increased, giving periodic quarterly negative scaling, thus holding back profit and margin development somewhat. In the coming seasonal strong second half year, we will manage for sure this to secure margins on target. Our new consulting business, with obviously the acquired Dover business combined with our sitting operations since before in Finland. Consulting revenue was EUR 28.5 million with an operating margin of 2.9%.
This was fully in line with expectation and previous communication, and as well as first quarter performance. We see positive development in Norway and also are having an increased focus on profitability for the business as a total. With reported order value and right book-to-bill ratio, a larger volume of new project assignment is therefore needed to demonstrate tangible business growth for this segment. Market and project activity was high in the oil and gas, while the renewable energy sector remained slow. We continued with good approaches of the synergy integration with increased strategic clarity and cooperation on different levels of the organization. That was the end of the financial section there from me, and over to Johan again to summarize.
Great. Thank you, Klas.
Before I summarize, just correcting myself, referring to page eight or slide eight, it refers to H1, the figures when it comes to revenue per average full-time employee. The consultants are, of course, excluded. We sum up a strong performance in the quarter and year to date. The market conditions in our core geographies are developing positively. Yet there are differences, great possibilities when Finland picks up. There's a high activity in Sweden across all our market segments. Civil engineering has performed well. We have had a high growth and improved our margin for like the sixth consecutive quarter or something in that order. Very pleased with that. Still, that is our core business, and being able to handle that during a real strong growth phase is of great importance. We had a stable performance in consulting.
Very happy that we can, by the time of the report, after close to half a year as owners of Dover, we can state that we have gotten what we paid for. There are no negative surprises, and the improvement work is ongoing. Order intake growth and order backlog is on a record high level. Very important, also expected since we are going more towards bigger contracts, perennial contracts. Several strategic project wins, particularly in infrastructure, that has their high season in H2. Looking forward to going to H2. Of course, the phase I of the Uppsala Tramway signed after the end of the quarter is a very exciting contract for us. We're looking forward to perform together with our client and partner there. We are very well positioned, better positioned than ever heading into the second half of the year.
We, of course, had the formal decision to transfer our listing to Nasdaq Stockholm Main Market. This aligns very well with the development of the company, our core business, our type of clients and contracts. Really looking forward to that.
Okay. Thank you very much, Johan. And thank you very much, Klas, for the presentations. Let's now move on to the questions. We take them one by one. First question. You have now signed the collaborative agreement for phase I, Uppsala Tramway, that refers to. Can you elaborate on what gives you confidence that NYAB also can secure the phase II?
Yeah, it's a natural part of our business. We have, of course, been assigned the contract due to their trust and confidence in us. We have a good talk and great knowledge within the area. Just to go by statistics, when it's public procurement and you secure phase I, it's extremely rare that you're not the partner for phase II. Of course, we have to prove ourselves and do, as always, a great job with a lot of quality.
Okay. Next question. You have gained good traction within the broader energy sector with several power network project wins over the last years. How do you view the outlook specifically for the renewable energy segment? Do you expect investments to pick up soon, or will current economic and geopolitical headwinds delay that recovery?
Yeah, I would say that there is a market. It's a slow market, and the best guess at the moment is that there will be a slow market for another couple of years. It doesn't hurt us in any way because we're not niched or specialized or need that market per se to perform. We do projects that are related more into power headlines and grids and cabling and stuff like that with our energy competencies.
Next question. A broad recovery of the Finnish market is yet to be materialized, yet you managed to grow 32% during Q2. Would you attribute this primarily to a relatively easy comparable, or that NYAB is able to do much better than the market as a whole?
I don't like bragging, but our performance is clearly better than the market as a whole. No matter what you measure, it doesn't matter if it's cash flow, if it's EBIT margin, if it's growth, and so on. Of course, we are performing better than the market as a whole. You also have the fact that we can work cross-border in a way that gives us a flexibility our competitors don't have. We are formatted to view the market as a whole. Internally, we don't really view it as countries. We have to report it that way, but that is contributing.
I fully agree. I think that not only helps our growth and financial performance in the quarter, but it also is in line with our strategic development, aligning the businesses in different countries, making us strong and going ahead. I think that is well noted.
It is a very strong performance by our Finnish organization. Given the right market sentiment with the right market conditions, you will have vast improvements from these already good figures.
The consulting segment saw flat growth in Q2 compared to Proforma, with near focus remaining on profitability. With that in mind, how have these efforts progressed during the quarter, and where have you seen notable margin improvements, and where is there still work to be done?
Yeah. We expected a flat growth. We got a flat growth. Our near-term focus is on profitability. The profitability comes from all sources you can mention. Efficiency comes from collaboration and synergies with NYAB's existing business. We have had our first consultants in Sweden, which was a blank on the chart of Dover. Of course, we are tendering and bidding with clients and such. The notable margin improvements are not seen in H1 whatsoever. We make a small margin improvement between Q1 and Q2 of 0.1%. That's what you can see. As stated, just as NYAB as a whole and our culture, we don't want to be any middle performer. We want to be one of the best within the industries and the segments we address. All I can say for now is that the work is ongoing. It looks good, and I like our position.
Thank you. Next question. A key driver of NYAB's overall growth is to increase the average project size, which has increased from around EUR 3.5 million in 2023 to over EUR 4 million today. What do you see as a realistic target for average project size over the next three to five years without materially increasing the risk profile of the business?
The question is a bit too narrow, so you have to take in the mix of contract types and such. Since our volumes of collaborative contracts increase, and we have a lot of frame agreements with a lower risk profile and such, I would say that with the bigger perennial contracts that we both have secured recently and what the clients want from us where we have close relations, like heavy Swedish-based industry and such, my best guess is that if we do the job right, which we plan and intend to do, and we have the right mix, we could have an average project size of closer to EUR 10 million in a couple of years to come. Something in that region without increasing the risk.
The reported EBIT margin came in at a healthy level, but would you say that the sustained high growth rate during the quarter continues to make margin optimization a bit more challenging at the moment, or are there any timing-related effects during the quarter?
Yeah, I mean, there are timing effects. I mean, we are growing at a really high level. Also, as we mentioned, the market activity and demand is also developing in a strong way. I mean, we have to do that work, and we're doing it. When you do that work, you need people and resources. We've added that, in particular in Sweden, which I think has an impact on the periodic cost development. Yes, there will be. I think going ahead, now it's coming the second half year, which is typically and will be our high-volume quarter for revenue. We will manage the cost, of course, taking care of it. Our performance is always focused on having good project performance with our client and stable margin there too. I think that will always be the key for us to also have an EBIT margin.
Yeah.
As we have stated earlier, our best-case scenario is that we have over time a growth in the region of 30%. Naturally, when we are clearly higher than that, you get more exposed to timing effects, delays on big contracts, and like everything. Of course, there are initial costs before you have revenues. Taking that into consideration, we should maybe be even more happy than we show with our performance and result in H1.
Next question. The book-to-bill ratio remained on a very high level for the civil engineering business at 1.5, and it was 1.7 as well in the first quarter. Are you experiencing any kind of capacity constraints, whether in skilled labor, subcontractors, or supply chain at this moment?
No, I wouldn't say that, but that is like the fundament of being a growth company. We have more than a decade of strong growth, so for us, it's like business as usual. The bottlenecks have always been and will always be individuals with the right capacity. We don't grow harder than we know that we can handle. That's the case.
Next question. Could you elaborate some on the conditions for the EBIT margin increase in the Dover business?
First of all, to say that, as Johan mentioned, I think that Dover is, you know, as we're going to what we expected to get is what we've gotten. I think that the basis for Dover is very strong competence with its core in complex offshore projects and investments, a really solid base to build from. That being said, I think we, I mean, the margin and the revenue is stable, but the margin is lower than what we say we want to have on a long-term basis. We will focus on increasing that and develop the business. It's a step-by-step journey. It relates to people. It relates to business and contracts. We don't want to force that development, but we know how to do it. We also want to, we don't delay it. We are executing on it, as we mentioned.
Next question. How was the bridge loan repayment funded?
I think we entered the year with a strong financial position. You know, we've had strong free cash flow for the first half year. I think those two factors allowed us to make that repayment of the bridge loan we took when the acquisition was made. It is not more complicated than that. I think it is giving us a strong financial position going into the second quarter and also improved our other KPIs like return on capital import. I can elaborate a bit on that with just the fact that we are measured wrongly, and traditional construction companies are viewed as our peers. We have a completely different business model. Just look at our cash conversion in the region of 100%, rolling 12 above 100%. We are a completely different animal. That's the simple underlying answer.
That's the medicine, yeah.
Next question. I would like some further comments on the margins in the future. Do you still believe that you can continue the organic growth while improving margins to 7.5%? If so, do you have an updated timeline for this after the recent quarter?
Hi. Thanks for your congratulations. I would say that we are most definitely aiming to reach 7.5%. This year, we have been very clear that it's not very likely that we will do it. The consulting business will be a contributor to achieving and having margins exceeding 7.5%, which is actually the target. An updated timeline when everything moves, let's just say that it won't happen 2025 to a very high certainty. After that, we are game to aim to reach that goal.
Stepwise. Great. Next question. How do you expect to leverage your civils business by the Dover acquisition?
We are already leveraging it at the moment in tender phases and such. We have needed competencies there. We have Tier 1 and Tier 2 management for large projects. It's quite heavy, complicated projects that Dover staff has been involved with, working on the side of big energy companies and the state. That's already ongoing. On the other hand, we have Norway as a possible market for our civil business by having the foothold. If we want to go for a bigger contract in Norway, we have people who know the Norwegian laws, regulations, and culture. That's some of the answers.
Next question. You are growing fast. Are you able to attract new highly educated staff in line with your demand?
Yes. Otherwise, we would have had a lower growth packet. That is key. I mean, we have a unique business model with less than 15% blue collars. We are, to a high extent, a project management company. For our business model to work and perform, we have to have very skilled people in our core business. Yes, we are able to attract them. Usually, we have already attracted them before we go into the growth phase. Worth mentioning is our ENPS score that is more or less off the charts. We are a quite attractive employer, and especially we attract talent.
Next question. Is it possible to have the consulting segment support the civil engineering division during the phase I contracts?
Yes, it's possible. I'm not sure that we will do that because we are occupied and we have alternative solutions. It's possible if that's our wish together with our client, of course.
Okay. Thank you very much, Johan and Klas, for the Q&A, and thank you, participants in this call, for all the questions. We have now gone through all of them. NYAB will release its interim report for the third quarter on November 5. See you guys then. For now, we would like to thank you all for participating in this call.
Thank you.