Good morning, and welcome to this presentation covering the third quarter in Ratos. Jonas Wiström, President and CEO, and Jonas Ågrup, CFO, will join us shortly to guide us through the results. I will give you a short update on sustainability in Ratos, and in the end of the presentation, you will be able to raise questions in our Q&A session. This webcast will also be recorded and is available at ratos.com afterwards. Well, we have a really strong result, and we can't wait to get started. Jonas Wiström, please come and join us. I'll hand over to you.
Thank you, Josefine, and thank you everyone joining this Monday morning. I will start with the overview over this quarter. We have a strong quarter. Adjusted EBITDA is up 18%, reported 100%. Our sales growth significantly to 31%, 7% organic. Also, the acquired companies have had a good development, good growth, good sales growth, good EBITDA growth since they were acquired. The order backlog is a record high. It's over SEK 50 billion , and the order intake in the quarter was some SEK 9 billion , and that excludes Aibel. The EPS, which I think is one of the most important key ratios, is actually up 70% last twelve months.
Jonas will come back to these targets, including return on capital employed, which is almost 11% this quarter. It's also an important quarter in the sense that we continue our journey to a more homogeneous group. The acquisition of Knightec was closed in the quarter, and we have been with them now in August and September. As you know, we have launched a public tender on Semcon, and I will come back to that. If we look a little bit deeper in the numbers for Q3 and also the year-to-date numbers, again, sales growth is up 31%. Year-to-date sales is up 29%. We have very strong cash flows.
The cash flow for the quarter is roughly SEK 560 million, which means a cash conversion of 130%. EBITDA, also good growth. I mentioned the numbers before. In the quarter, we had generally strong demand. We had weaker demand in the wind industry and also in parts of Plantasjen. If we go into our business areas, starting up in alphabetic order with Construction and Services, again, very strong quarter, both in terms of EBITDA, in terms of cash flow, in terms of sales. Sales grow 54%, 17% organic. EBITDA increased by 86%, and our profitability also went up.
A really strong quarter for Construction & Services in spite of the fact that we lost some SEK 25 million. Or lost is wrong because it's an unrealized loss in currency for Aibel in the quarter. Let's move over to Consumer. Consumer have a lower EBITDA in the quarter. Net sales grow just a little bit, organic 1% down. This is driven by the dominating company in the business area, Plantasjen, who had weaker sales in capital goods, durable goods. The plants did okay, but those kind of articles like hardware, you know, barbecue equipment, furniture, et cetera, they were down significantly in the quarter.
We've also had extremely high energy costs and logistics costs in Plantasjen in the quarter, which affect the business area. One could mention that all quarters in the business area on Plantasjen is stronger in 2022 than they were in the pre-pandemic years, 2018 and 2019. Coming into Industry, here we have EBITDA growth. Very much because of the acquisition of Knightec that has been with us two months this quarter. General strong demand. However, as you have seen from the big wind market manufacturers, it's been a very weak year for wind, and that has affected Diab, who is running their cost restructuring program. We said in the beginning of the year that the results will show off during this year.
Actually, in this quarter, we have seen some improvement due to the restructuring program, but there is more to come. Net sales is up 16%, but the organic sales is down. As you who have followed us for a couple of years, you know we started off 2018 with a, you can call it restructuring program, an EBITDA increase, debt decrease program that went on for 2018, 2019, 2020. We managed to increase EBITDA as an average of 86% during this period. In 2021, we started to perform acquisitions. Not to be, not to sort of make acquisition, to make arbitrage on our multiples or anything. No, it is to build a solid company group.
We will also be a more homogeneous group going forward with more soft synergies. You might ask, what kind of group will that be? How will it look like? Well, a clue is to look on what have we acquired and what have we divested and what are we going to divest. The picture will be more clear. Vestia, that was an adjacent company when we announced it, is actually kind of a platform today in the SSEA Group. They have also former HENT Sverige AB. In the infrastructure business, Presis Infra was acquired in the end of last year. Has had very good development since then in infrastructure services, which we like. NVBS, also in infrastructure projects and services, acquired in Q2.
Knightec, professional services in the technical consulting industry, is and will be a very important area for Ratos. Why? Well, engineers is it will be a great demand for engineers for many years to come, even though, of course, they are also affected by business cycles and so on. Over time, we will see a strong demand on engineers, not the least to make our world much more sustainable. Clever politicians and great engineers stands for a big part of the journey to a more sustainable society. If we look on another thing we did in the quarter was that we released a public tender for Semcon and of the same reason as Knightec.
I just put down the Semcon numbers for sales and EBITA, so you get a feeling of the size of this company. We are in good hope that Semcon will be with us this year. We have 52% of the shares already in our hands through irrevocables, and we believe this bid will come through. With that, I move over to you, Josefine, and I apologize for my a little bit of autumn flu here, but I hope everything went through. Please, Josefine.
Thank you so much, Jonas. I am happy to give you a short update on the sustainability side. We have a very holistic and action-based view on sustainability in Ratos, as many of you already know, you who have been following us for a while. In the quarter, the positive development continued in our companies, and you will see on the slide a short description of two good examples. HENT goes from strength to strength. They continue to collect trust as they receive trust to build landmark after landmark in Sweden and Norway.
What you can see on the slide is a picture of the Giga Arctic battery factory, which is to be built by FREYR in the north of Norway in Mo i Rana. This will be the beginning of a very new industry in Norway building battery factories. A few words also on our innovative consultants in Knightec, which is our newest member in the growing and changing band of siblings in the Ratos family. As you can see, the example covers a school collaboration which was initiated by Knightec in 2008.
Now they are taking the next step together with their customers, and this is a company with a strong commitment to society and the conviction to work together with its customers for positive impressions and changes in society. This school project is an example of that, so it's gonna be very exciting to see where it's gonna end. Lastly, a few words on EU legislation. As you know, there is a lot going on in that area coming up. It will contain the new CSRD, Corporate Sustainability Reporting Directive, which will be the next step of the NFRD directive that we are using today.
In the CSRD, there will be a more comprehensive and clearer view, and clearer requirements for sustainability information based on ESG. Our examples from the quarter, as you might see, they mirrors very well the broader take on sustainability, which we have to take into consideration going forward. Ratos is very well equipped to meet the new demands. With that, I hand over to our CFO, Jonas Ågrup. Please.
Thank you, Josefine. Let's move into the financial part. We start with the net debt. You can see that we have increased net debt as a result of acquisitions made, but we have also increased the working capital, mainly in the business area consumer. You saw that we were actually at the net cash position in Q3 last year. If we look at the net financial items, we are improving in the quarter. We were at SEK 63 million. We had a positive FX effect, but we also, despite that we have higher debt, we saw lower interest rates in the quarter, and this is due to the effect of the centralized treasury function that we have in Ratos today. In the quarter last year, in Q3 last year, we had interest rates of 2.8%.
This quarter, we had at 1.8%, so much lower. If we look at the effective tax rate, we were low in the quarter, and this is actually what I expect going forward, that we will be below 20% in tax rate. We booked some deferred tax assets in the parent company in the quarter, about SEK 45 million, and we will continue to book these DTAs going forward. If we look at earnings per share, we were at SEK 0.61 in the quarter. Last year, we were affected negatively by the revaluation of the Dun & Bradstreet shares. So that's the main reason why we were lower, but we also have lower tax rates this year and also lower interest costs as I explained earlier. If we look at the cash flow from operations, Jonas mentioned a really strong quarter.
If you look at the LTM number in Q3, a strong quarter for operating cash flow. We saw a good cash flow in the business area Construction and Services, where actually all companies reported positive cash flow in the quarter. Net debt or the leverage, net debt to adjusted EBITDA, at 0.8x. We are in a net debt position now, and this is, as I said earlier, mainly due to acquisitions, but also some working capital increases that we have seen in business area Consumer mainly. This is showing the leverage development going back to the third quarter 2020. You see that certain periods we had a net cash position, and this was after the divestment of Bisnode.
We were now in the third quarter 2022 at 0.8x, and if we would pro forma adjust for the Semcon acquisition, we would be at 1.9x. We have secured financing for the acquisition. We have commitment from our main banks, our three main banks. It's a term loan. It's 3+1 year, and the terms are, as we see it, very attractive. If we then move on to this net sales bridge, net sales increased 31% in the quarter. A lot of this increase was acquired growth, 20%, and this is generated mainly from construction services, where we had two large acquisitions in the Presis Infra and then the Vestia.
We saw organic growth of 7%, and we saw organic growth not only in construction services but also in some parts of industry. We had a positive FX effect, and you can see that we had a negative other effect, and this is within business area industry, where we have ceased our operations in Russia and Belarus, and that had a negative impact of SEK 12 million on top line. If we look at adjusted EBITDA, up 18% in the quarter, a lot of acquired growth, as you can see in EBITDA. Organic growth, we have a negative effect, and this is mainly attributed to Plantasjen and Diab, and implementation, we saw lower sales levels, but we also higher cost for energy and also higher cost for warehouse logistics in the quarter.
Of course, Diab, we had a negative effect also where we see much lower volumes in the wind segment. Positive effect from FX, SEK 22 million, and this is caused by the weak Swedish krona, mainly against the Norwegian and Danish krona. If we move on to earnings per share, and as Jonas said, this is a focus area for us. We see an increase of 70%, which is a good increase in the quarter. If we look at return on capital employed, we are roughly on the same level as in the third quarter last year, so we are at 10.6%. By that, I move back over to Jonas Wiström.
Thank you, Jonas. Good numbers. Let me try to sum this up. We have mentioned the strong EBITDA cash flow and growth figures. The demand is still good, but we're all, of course, seeing a lot of dark clouds in the sky. I've been in business for quite some time, and I can't help reflecting a little bit about the last crisis, the Lehman crisis. It was another kind of crisis. The demand just fell down dramatically in a very short time. It is quite hard to foresee what will happen in the future for obvious reasons. We see the inflation.
We see customers are more reluctant to buy. I don't know if it's a good translation from Swedish, but things you buy more seldom, like furniture, et cetera. In any case, to have a strong balance sheet is very important, I believe, and we believe. We're also happy about the fact that the order books are so strong and the order intake is also very strong. If we look into the construction services area, I think it's worth to mention that 70% of what we're doing in construction is actually partnering or cost-plus business. Less than 5% is within residentials. In fact, it's quite much lower than 5%.
We will do our best to keep our strong financial position and use our order books and perform them in a good way going further. I want to reiterate the fact that you have seen one more step in the quarter of the journey to and our work to be a more structure that is more homogeneous and with more soft synergies between the companies. We see a lot of them in many areas, including the sustainability area. I do also believe that we will see another step with Semcon coming in later in this month or beginning of next month. All in all, I'm quite happy.
You always want more, but this is the best EBITDA we have done for a very long time, as we can see. It's a great quarter for Ratos. Thank you very much for attending this, and maybe there is some questions or comments. I don't know. Josefine?
Let's have a look. It's time for the Q&A session. Please, Jonas, also join us. We'll have a look. Here we go. I know that we have Victor Hansen from Nordea. The line is open for you. Please go ahead.
Thank you very much. Sorry, Victor. I think you can hear me, but I'll try to talk a little bit. The first question here, what's driving the working capital release in your construction business?
We can hear you well, but we have some troubles here. Can you hear us?
I can hear you.
Very good.
Should I go ahead?
Would you like to take that, Jonas?
Yes. Hi, Victor. Well, as you know, our business area, Construction & Services, is actually quite capital light. We don't build that much in working capital usually. We have good profit levels, and that's generating good cash flows. We also received the advance payment on a project in the quarter. That contributed also a little bit on the cash flow, yeah.
In general, it's an area we focus a lot on. I mean, I used to say in the office here, you know, the beta is great, but cash flow is even better.
Thank you very much. Do you have another question, Victor, or are you happy with that one?
I have a few more. Maybe two more and I can.
Please go ahead.
back in the line. Yeah. Thank you. I'm thinking here on Diab's restructuring, if you could tell us a little bit more about how it's going and if we should expect a full run rate savings effect already from Q4.
I can't promise you know, that we will get back to the results we had when wind was on top. I've sort of been wrong before when it comes to the demand from the wind market. We hear about it every day almost, but there has been a low demand during this year. We expect that it will come back. But I can't promise how much. What I can promise is that we will be less dependent in the future on this market that has actually been quite volatile. We have 50% of our sales in Diab is within marine industry and aerospace, and that business is doing great, really great.
I'm also happy that Johan Arvidsson, the new CEO, with very long experience from the industry, finally came in, now just one or two weeks ago. You will hear much more about Diab in the coming quarters.
Thank you. Feel free to continue, Victor.
Yeah. Sounds promising. I'll do one final question here. If you could provide some sort of update on your M&A pipeline, perhaps split by platform and add on?
Well, those are just the things we want to answer as you understand. I can say that, you know, I've been talking before about that out of 200 sort of companies in the long list, we have sort of went further with 20 and maybe acquired six or seven. The M&A market is softer today. Valuations are coming down, but not in the speed as it has been for public and stock listed companies. We will be even more cautious going forward and more selective, but it looks good.
Thank you very much. Victor Hansen.
Okay. Thank you.
...from Nordea. Thank you. The line is open for Rasmus Engberg, Svenska Handelsbanken.
Yes. Hi, good morning, guys. Can you hear me?
Yes.
Yes.
Very good. Coming back to your comments about being homogeneous. I think a lot of people think that there is one division maybe that makes you less so than what would have been the case. Is there a reading in that?
You know I won't answer any of those questions. I can say what I think is important is that the companies that are to be acquired, they know about it, but I won't tell anyone else.
The other question, if you could elaborate a little bit on what's happening now with Semcon. How do we proceed from here? I mean, the acceptance period ends this week, if I'm correct.
Yes.
What happens then? Do you need to be at 90% or will you prolong or?
Yes. We want to be on 90% and we hope that we will be that when the period is out. If not, we will come back with new communication.
Right. Then just a housekeeping question. This SEK 25 million that you sort of lost in Aibel, is there anything else in the business working the other way? Or should we sort of think that next year, this SEK 25 million would sort of drive your earnings?
I'm looking at you, Jonas.
We had some positive effects. One was in Plantasjen that had a positive FX effect in the quarter, and we also had a positive FX swap effect actually in the parent company, Ratos AB. We had some positive effects in the quarter, but we had this negative effect from Aibel.
I think the question was going forward, if you
Yeah. I think you maybe answered then that we won some and we lost some, I guess.
Yeah. Exactly.
Yeah.
going forward, you know, we can never predict, FX.
Yeah. Sure.
You know?
Very good. Thank you. I'm done with questions.
Thank you, Rasmus. Good to hear you.
Thank you very much. Let's move forward to Max Bergman at ABG. Please, the line is open.
Yes. Good morning. Just making sure, can you hear me?
Yes.
Yes. Good morning.
Hi, Max. Good to hear you.
Hi. Perfect. Nice. Two questions from me, both on Plantasjen. You wrote in a report that you are implementing cost-saving measures here to reduce the cost base. Just wondering if you could elaborate on what types of cost-saving measures and the potential impact on earnings going ahead. Is it staff? Is it advertisement and so on?
Yeah.
What are you looking at?
Yeah. Obvious reasons, we don't want to go into those details.
Mm.
I can say that it is an ambitious cost-saving program.
Okay. Perfect. The next one, you also wrote that you had seen significantly higher energy cost here in Q3 for Plantasjen.
Yeah.
Is it possible to say how much it has increased year on year, either in absolute terms or in relation to sales?
I think it's fair to say in the quarter that energy and logistics costs is up some SEK 50 million.
Okay. Perfect. Nice. That was all from me. Thank you very much.
Thank you.
Good luck going ahead.
Thank you, Max.
Thank you, Max.
Thank you very much, Max. We also have Henric Hintze from ABG on the line. Perhaps Max covered if you had any questions as well, or do you wanna sort of ask anything?
No, Max covered ABG's questions today.
Okay. Perfect. Thank you. I think I can see we have Georg Attling from Pareto also on the line.
Mm.
Please.
Yes. Thank you. Just one question for me on the pro forma leverage. The 1.9 that you mentioned, Jonas, I guess that doesn't include the trailing EBITDA contribution from the recent acquisitions, neither Semcon's trailing EBITDA. So, do you have the figure for the pro forma figure, including the trailing EBITDA from acquisitions?
Yeah, that's the 0.8x is actually pro forma adjusted for acquisitions made, like Knightec, for example. On top, we have the Semcon acquisition that gives us the 1.9x.
Okay. That includes Semcon's trailing EBITDA as well?
Yes. It's the rolling last 12 months per Q3 this year.
Okay. Well, that's the only question I had. Thanks.
Okay. Thank you very much. Is there anyone else on the call who hasn't been approached who wanna post a question? No, I think we are done with that. This webcast has been recorded, so if you wanna see it afterwards, it's ratos.com. With that, I wanna thank you, Jonas and Jonas.
Thank you.
Of course, thank all of you who has been with us this morning, and you are most welcome back next quarter. Thank you very much.
I hope to see you before then. Thank you very much.
Yeah. Thank you very much.