We'll present the Q2 report for 2024. With us presenting, we have the CEO, Magnus Welén, and CFO, Helena Burström. If you're calling in and would like to ask a question, please press star nine to raise your hand and then star six to unmute yourself. We will then announce if it's your turn by saying the last four digits of your phone number. You can also use the form that is located to the right. With that said, please go ahead with your presentation.
Thank you very much. My name is Magnus Welén, and I am the CEO of Prevas. I welcome you all to this presentation of the Q2 report for Prevas. And with me today, as it was announced, we have our CFO-
Helena Burström.
And we will go through this presentation and also finalize with a Q&A later on, during this meeting. Looking to the agenda for today, we will start with a brief introduction. Then we will have review of the financial performance for Prevas. We will have a discussion about the market, a brief market update, and then we will finalize with a Q&A session. I hope that you all come in with a lot of questions, so we get a good discussion after this very brief presentation. Okay, looking into Q2, how have we performed? Actually, we have been able to grow in this first quarter. We have grown with 4.8% in turnover, almost 5% growth in this market climate, but we believe that is rather strong, actually.
And this growth was made mainly by price increases and through increase of project deliveries. So all in all, Prevas continued to grow during the second quarter of 2024. Looking into the profit, actually, this quarter was the best Q2 that Prevas has ever performed. So we are very proud of that, of course, and we also are very positive to see that we have a strong cash flow for the Q2 as well. The EBITDA for the quarter was SEK 36.2 million , and we delivered a margin of 9.2%. Compared to last year, we had a lower utilization, but that was offset by a positive calendar effect. We had one more working day this quarter compared to last year, but we also had increased gross margin.
The increased gross margin comes from that we have been able to increase the prices, more than the cost inflation and the inflation for salaries. That is one part of the increased gross margin. Another part is that we've been able to work with our business development, where we deliver higher value to our customers in working with our business model. This is a long-term work, but we see continuously, that we get results of that kind of business development that we work with within Prevas. We also see that the cash flow has increased substantially compared to last year. Helena will come back to that a little bit later with a review how that could be possible. During this quarter, we have also invested in Prevas, actually. We have invested in the future.
One example is that we have now moved into a new facility in Västerås, 4,000 square meters, where we will gather our team of engineers in order to be able to develop and build new automation for the industry. For global multinational companies, we are developing robot automation, process automation, and now we can gather these resources and be able to grow at an even steadier pace moving into the future. During the quarter, we have also got the regulatory approval for the acquisition of Enmac that was announced during the first quarter, and we are very glad for that as well.
Looking a little bit more into details of the figures for the quarter, you can see that what I was mentioning about the turnover and the EBITDA, but you can also see that the EBIT actually is lower than last year. The reason for that is that during this quarter, we have acquisition-related items of SEK 4.3 million. If we add those SEK 4.3 million on the SEK 31.8 million, we reach an EBITDA sorry an EBIT of SEK 36.1 million, 9.1%, which we believe is rather good in the present market climate. We also get this effect, of course, on EPS, but despite this, we actually grow the EPS for the quarter with 5.8%.
So we deliver an EPS for the second quarter of SEK 2.01 per share, which of course is, I'm very proud to be able to deliver increased EPS for the quarter. So one quarter is one thing, but of course, we need to look into the value creation we do over time in Prevas. You can see in these graphs that we have been able to make a big change in Prevas since 2017, looking into both in terms of growth, but in terms of EBITDA development. What you also can see, unfortunately, in this sense, is that we have a lower margin now than we had four quarters ago.
And the underlying reason for that is that we have had a market that has been more challenging for some quarters, which of course has affected Prevas as well as many of our peers in the industry. During these quarters, we have been focusing a lot on the margin. We have been adapting our resources to go into the markets where we see demands, and we have been working a lot with our costs. And we have also worked with our recruitment so that we recruit in the areas where we see demands, and we actually have been decreasing in some other regions where we have seen lower demands.
So an active work within Prevas in order to work to maintain our margins in the rather challenging in this kind of market climate that we have seen. So a rolling twelve Prevas now has EBITDA of 11%. And we see that we have very good opportunities to reach our target when we see that market comes back again as we have made quite a lot of operational improvements during these four quarters as well for the future. So I'm very, very positive for the time that we have ahead of us based on what we have done internally in Prevas as well. Looking into. Sorry, the wrong picture.
Looking into our financial position, I leave this to our CFO, Helena, so who will review that.
Thank you, Magnus. We have increased cash flow from operating activities with 26% or SEK 30 million compared to Q2 last year, from SEK 50 million Q2 2023 to SEK 63 million Q2 2024. This is mainly driven by positive change of working capital. Cash flow from financing activities includes payment of dividend of SEK 63 million compared to last year's SEK 58 million . Since the payday of Q2 2024 was during the week, and the amortization was deducted at the beginning of July, and thus affecting financing activities positively with approximately SEK 6 million. The incentive program 2021-2024 has affected cash flow positively with approximately SEK 5.5 million when converting into shares.
Cash amounted to SEK 120 million at the end of Q2 2024, compared to SEK 60 million in Q2 2023. Prevas financial position remains strong. We can see that, Prevas is well below the financial target of maximum 2x EBITDA, and net debt in relation to EBITDA is still negative. Prevas equity ratio remains strong and amounts to 58.2% in Q2. Q2 2023 equity ratio amounted to 59%. Then Magnus, can you please give some updates regarding Enmac?
Of course. Thank you, Helena. A little bit about Enmac and the progress. As I was mentioning, we now have the regulatory approval that was received the end of June. And so we closed the deal on July 1, which means that we now will consolidate Enmac into Prevas for the third quarter of 2024. Enmac is a company based in Finland, with around 200 employees, spread out on eight locations across all of Finland, also strong in the northern parts of Finland. They have a turnover of last year of around EUR 23 million, with a healthy margin. And they're specialized in process and production development, and it's an engineering company, a consultancy company. So it's a very good fit with Prevas in many different aspects.
But through this merge, Prevas will be a Pan-Nordic group operating across Sweden, Norway, Denmark, and now Finland. And adding the two companies together, pro forma, so to say, we are actually on a turnover of SEK 1.75 billion in an annual turnover, and we are now around 1,100 colleagues within Prevas, which is a very good step forward for Prevas as a group. And as we now have closed the deal, the time has come to actually start to work. Because one thing is closing the deal, and another thing is the good, interesting part that start now, when we actually will work together and create the values that we see ahead of us together. The main target with this acquisition is develop the business and foster mutual growth.
We see this not as a cost cut case, but a more of a growth case. And we see already now that the combined strengths we have within the different two companies gives us competitive advantages. And one example that we have a discussion today with a customer within industrial automation, a multinational group that is interested in acquiring larger scopes of industrial automation. And those scopes has been a little bit too big for Prevas, but absolutely too big for Enmac. But now, when we are one team, we can actually have a strategic discussion with this multinational customer and see if we can find ways forward together.
This, I think, is a good example of what I see that we can do together with Enmac, utilizing the different strengths in these two very nice organizations. Talking about integration, Prevas has acquired 10 companies since 2021, and we have done that in a successful way. So we have, of course, made a lot of experience in how to do these kinds of integrations. Our way of doing that is a very pragmatic view, where we build upon the strengths of the different companies and choose the best way of working. So we have a good method that we have, so to say, practice with the acquisitions we have made, and with that, we will utilize also in the acquisitions of Enmac.
The key in all of these kinds of integrations is the people. So we will focus a lot on getting the people on board and getting motivation, and the motivation comes very, very much from the customer side. We want to deliver customer value, and that is what we will focus with in this integration as well. It's important to have the team on board, and what we have in this case is that the MD and his management team, they have chosen to reinvest into Prevas after this merge as well. So that is also, of course, a good signal in sense of for the integration moving forward.
So I'm very excited about this, and also now we have full speed ahead, together in building the Nordic Prevas, and taking this giant step forward for Prevas as a corporation. And then a little bit about the market. The market during the second quarter was very similar in many aspects as the first quarter. We see high demands in some areas, like the green transition, within cybersecurity, within defense. But we also see that the competition in some areas is rather high, especially on consultancy assignments. That the competition has remained high during the second quarter as well. And one example there is, in general, IT services.
It's not a big part for Prevas, but in that area, we clearly see, even during the second quarter, that there is a lot of free consultants that need searching for assignments, which of course affects us in those, that part of our business as well. But during this quarter, we also have seen that the demand for complex solutions remains. Prevas, as a company, comes to its best when we are able to work with the complex issues, with the complex solutions. We're using advanced technology for doing good things, and we see that the demand in these areas are still high. And I would say a couple of years ago, that one part was a lot of startups drove this also, needs.
But we have seen during the second quarter as well that the need within the startup scene has been very quite low. But the multinational global players that are partners with Prevas, there we see that there still is a good demand for solving complex problems. And there, that is very very good for Prevas as well. What we can see also is that our largest customer, we have the five largest customers are less than 25% of our turnover. And actually, there has been a slight change in that list because we have grown in Getinge. And Getinge is a multinational leader in med tech industry. And over time, we have been working with Getinge for many many years, but recently, we have grown our business together with Getinge.
So now they are actually one of our top five customers, which we are very glad to see, of course. Looking into the market, we can see that we see some positive signals here and there. But most clearly, actually, in Denmark, our Danish unit has experienced quite challenging market conditions for quite many quarters. But now we see that the order books are increasing. We see that the discussions with customers is in a different way. So we see the demands in Denmark is picking up, and we also now feel confident that Denmark will deliver very good now for the coming quarters. So that is a positive change that we see in the market as well. Generally speaking, we are very positive about the future, and also, we foresee that we will see...
Looking into the PMIs and discussions in the society and the interest rates are going down, everything is pointing towards an increased demand moving forward. But as I said, during the second quarter, it was very similar as in the first quarter, but we are positive. Okay, a summary of this presentation. I believe we made a rather good second quarter for Prevas. We showed that Prevas can deliver value even in these kinds of market situations that we have now. We managed to increase our turnover, we increased our EBITDA, and we also actually made the best second quarter that Prevas has ever delivered over time, which of course, we are very proud of. We are also happy to announce that we now are through the approval of the acquisition of Enmac.
And finally, we can start together to establish our platform in Finland and shaping the Nordic Prevas. That work has started, but of course, due to the vacation, and people are on vacation, the real work start more or less in August in that sense. We have a strong cash flow, as Helena was mentioning, a very strong financial platform, and we are looking for further acquisitions as well. And we have the discussions regularly with many different companies, and looking into different acquisition targets. But as I said before, we are very picky, so I can't promise that we will acquire companies, but I can promise that we have we focus on the issues as well, and we will be able to find interesting acquisitions candidates moving forward.
So all in all, from my point of view, I think we're executing on our long-term endeavor to strengthen our position as a premium company. A premium company for our customer, a premium company for our employees, a premium company for the society, and also premium company for all of you, our investors. That is very important for us as a company. We strive all the time to strengthen our position as a premium company in all different aspects. This was the presentation that me and Helena should give today. I would like to summarize this, but okay, now we're moving into summer. Me and Helena will have a short summer break, but we look forward to the autumn.
It's very strange to say that in that sense, but we really look forward to the autumn to explore all the possibilities that we see and in the autumn as well. So with this, that was the finalized, the final part of this presentation, and now we move into the Q&A session. I hope that all of you have a lot of interesting questions for us. Thank you very much for listening.
Thank you very much for that, presentation. Yes, we do have a lot of questions for you. Starting with the first one here: Are there any specific reasons behind the lower profitability compared to last year, since the calendar should have been a tailwind?
Yes. I mean, the specific, as I wrote in the report as well, is that we have had a lower utilization this period compared to last year. That has been offset by this calendar effect and also the improved gross margin. But underlying, we had a lower utilization, that is the explanation in that sense, regarding the profitability as such.
Are there any signs of improvement in the market as of late?
I would say that the market for Q2 was very similar to Q1. We have some positive discussions with customers, and as I was mentioning, we have the situation in Denmark, where we clearly see that we have an upturn. We think there are positive discussions, and we are very hopeful for the third quarter and the fourth quarter as well. But as we all know, it needs to show in the order books moving forward. But we are very positive in that sense. Yes.
Okay, and are you currently accepting lower utilization, meaning lower margin, in order to have the required manpower when the market picks up again?
A very good question. I would say that partly, but, we strive to reach a good utilization. Which means that if we have regions and units with lower utilization, then we take action. We have taken that action throughout the last four quarters as well. Although, of course, our main objective is to increase the sales in order to fill the pipeline, so to say. So in that sense, given that we have a slightly lower utilization this quarter compared to last year, given that we can increase the utilization slightly, it will have a nice effect there, of course, on the EBITDA moving forward.
Can you give us some more color on the positive working capital inflow? Is it a result of the current challenging environment?
I would say it's an effect of constantly working with working capital and having really good customers and focusing on this area.
What you say were the primary drivers behind the 4.8 increase in turnover during the second quarter?
The main drivers for the increase in turnover was that we have had higher prices compared to last year. That is one major driver. Another driver is that we have a larger delivery, project deliveries from Prevas compared to last year, with some part also that is in material. A small part of was in the material area as well, but we did deliver more projects this quarter compared to last year, the same quarter. Those were the two main drivers. A small effect was, of course, also due to this extra working day in that sense. The extra working day has a big effect on the bottom line, but not so huge effect on the top line.
But that were the main effects: price increases, and project deliveries that were higher than last year.
How would you say, how is Prevas positioned to take advantage of the continued high demand in the growth areas such as energy, electrification, and also sustainability?
I think we have a very good position because we are working with the right customers in that sense. So we have a good possibility to grow in those areas. We have customers within energy, where we are having good discussions, and we are increasing. And in some areas, actually, we are recruiting in order to meet the demands. So the market is very so to say dynamic in that sense. In some areas, we have very good demands. For example, in Mälardalen, in that region, we see very high demands, for example, in the energy area. And then we have other regions there where we have a lower so to say demand. So it's a very complex market in that sense.
Some areas are with good demands, and there we actually are recruiting and growing. Some areas we're having low demands, and there we are actually, over time, reducing our capabilities. All in all, to be able to handle the market and maintain our margins as well. But, I believe we have a very good position to be able to continue to grow in the growing areas, so to say. Another area we have been growing in is in the defense industry as well, where we have seen in the figures as well that we have grown. And we expect to continue to grow in those areas as well moving forward.
Okay, what specific initiatives are being taken to ensure successful integration and also collaboration with Enmac to maximize the customer value?
What we have been doing with Enmac is that we have set up a integration team now, consisted of people from all, both organizations. I identify the different value streams that we will review and discuss during this integration period. And the priority, the most important value stream in this is the customers. So the way we handle this is that we set up a team, and we're working together. And I believe it's a lot about getting people to meet people and getting rapidly to build trust, because I believe business is built on trust. So we need to meet, and we need to take the time in order to get to learn each other and to understand the respective customer bases between the two companies, and then discuss and explore the possibilities.
You've made many acquisitions, including a major one in Finland. How do you view the continued effort to acquire companies?
Effort is an interesting word. We will continue to look into further acquisitions. Based on our experience, we believe it's a good way to combine with the organic growth of Prevas, and we will continue to put effort into that area moving forward as well. We have discussions with companies right now, of course, and we have that all the time with new acquisitions candidates.
Okay, and we'll take one final question here. If the utilization rate were to increase, what would that mean for Prevas?
Given the organizational and internal work we have been doing, optimizing Prevas, if we would increase our utilization rate in the present setup, it of course will have a good effect on our margins because the cost is already there. So if we can increase the utilization, it will have a very good effect on our EBITDA and margins moving forward. And we will work hard for that, of course.
Okay, let's wrap up the Q&A section here. Thank you very much, Magnus and Helena, for presenting today. Also thank you, everyone, who followed this presentation with Prevas. I hope you have a great rest of the summer, and until next time, thank you very much, and goodbye, everyone.
Thank you, everybody.
Thank you.
Bye-bye.
Bye.