Good morning, and welcome to this presentation covering the fourth quarter and the full year in Ratos. I am joined by Jonas Wiström, our President and CEO, and Jonas Ågrup, our CFO here in the studio, and they will guide us through the results shortly. In the end of the presentation, you will be able to raise questions in our Q&A session, and this webcast is also being recorded, so you can find it at ratos.com afterwards. Without further ado, I'll hand over to Jonas Wiström.
Thank you, Josefine. Thank you everyone for joining us this morning. Let's start off with the first slide showing the year, 2022. We grow our EBITDA with 9%. It's encouraging that the platforms we acquired in 2021 actually showed strong growth, organic growth during 2022, some 35%. The organic growth was up 8% during the year. We had a record high order intake. We have record high order books, which I will come back to. On the negative side, we have weaker markets for wind power and consumer. I will come back to that as well.
When we look back at 2022, we can see that also this year, we have continued to invest in the infrastructure and the industrial services area, and that is something that will continue to be the focus going forward. If we take a look into the fourth quarter, our EBITDA was up 41%. For those who have had time to read the report, we actually had cost reduction actions during the quarter, and we don't adjust for smaller numbers, so these SEK 43 million, they're actually included in the adjusted EBITDA. If we adjusted for them, actually, the EBITDA would be up 60% in the quarter. In general, we still have a good demand in the market. Also in the Q4, the order intake was very high.
Of course, we have to mention the fact that Semcon, which was a big acquisition, was acquired and is in the numbers in November and December for the fourth quarter. The wind power market, as you have seen, has been very low. You see the big OEMs showing negative numbers. I'm coming back to that. The consumer market has, of course, deteriorated, based on the inflation we have in the society. If we take a look at the business areas in alphabetic order and start up with the Construction & Services, yet another very strong quarter in all respects. As I mentioned, we have a record breaking order backlog and order intake.
We don't disclose these numbers, but I can say that both order intake and order backlog is far above the yearly sales. Why is that? The Construction & Services market for us is very much into infrastructure and public projects. Maybe you noticed also that in January, we sent out a press release for another big order on SEK 700 million for schools in the Gothenburg area. Sales was up 51%. Organic growth was as strong as 22%. EBITDA up 53%, even more if you consider the cost reductions we actually had in SSEA Group. The EBITDA margin is up close to 8%. A really strong quarter for Construction & Services again. Consumer is another story.
We had lower sales, and the main contributor here is Plantasjen. If you look over the year, Plantasjen has been hit. If we look at the other consumer companies, it looks much better. The numbers are shortly, sharply down. We have also two high stock levels in Plantasjen affecting our cash flow. We have performed cost reduction actions in both Plantasjen and in KVD, which will save up to SEK 100 million. These problems we have in Plantasjen, we will continue, and we will find a solution on this is our plan for the year 2023. If we go to industry, strong EBITDA growth, of course, due to the acquisition of Knightec and also Semcon that has been with us for two months.
Strong development for these companies. Also a good development for all the Industry companies during the quarter. We have Diab is, thanks to the restructuring program, making a better results in Q4 this year than Q4 last year. The wind market has, as I said, actually continued to deteriorate, and we are also addressing that problem. I got the question in an interview with Dagens Industri this morning, will there be no new large OPEX savings by reducing staff, et cetera? No, we won't see a program as big as that when it comes to OPEX and people. We need to take some actions to make sure that Diab can be at a profitability level they should be.
EBITDA all in all is 3x up versus last quarter, 2021. With that, I will just say a few words about our acquisitions. If we look at the platforms, in 2021, we acquired Vestia in Sweden and Presis Infra in Norway. During this year, we have made three platforms, NVBS in Construction & Services, Knightec and Semcon in Industry. If we take a look at the performance during 2022, organic for Vestia and Presis Infra, they together are up 35%. In Swedish currency, Presis Infra is up even more than on the slide. We have also performed 6 add-on acquisitions, these add-on acquisitions will be more and more important the more our group is the homogeneous group we are striving for. We have acquired these companies for a multiple between five and six
Upon that, we gain synergies from these acquisitions, and we'll continue to work this way. I think this is something that separates us from the popular word, compounder, or in Swedish, serieförvärvare. We work in an industrial way when it comes to acquisitions. Two in Industry and four in Construction & Services. Sustainability becomes more and more important, and we work hard with that, and Josefine will take us through some success stories in the year and quarter. Thank you, Josefine.
Thank you, Jonas. Thank you very much. Well, as Jonas mentioned, over the year, there were several high-profile contracts secured in the Ratos family that will accelerate the transition towards a more sustainable future. Well, to mention a few words on the full year before we move into the, to the quarter, we are extremely proud that Aibel has become a key supplier to the world's largest facility for offshore wind in the North Sea. We are also very proud that HENT is building Norway's first battery factory, the FREYR Battery Giga Arctic, actually the start of a whole new green industry in Norway. If we look at the quarter, you can see a few highlights on the slide. There are both recognitions and sustainable business to be proud of.
Excitingly enough, Knightec, if we start at the end, is part of the development team at Oceanbird. Oceanbird is a joint venture between Alfa Laval and Wallenius. Knightec's part is to develop new technology for wind power vessels. Wind power vessel propulsion, sorry. If you look at the maritime transport, they emit around 940 million tons of CO2 annually, and that is 3% of the global greenhouse gas emissions, actually more than airplanes. The little part Knightec is providing here is gonna make a huge difference in the future.
If you look at the first two examples, it's SSEA Group and Speed Group, and we're very proud that they are recognized for their sustainability efforts, both of them receiving distinguished awards during the quarter, and we are absolutely sure that this will make them more attractive as business partners going forward. That was a few words on sustainability from Ratos, sustainable business to be proud of. I will hand over to our CFO, Jonas Ågrup, for some financials.
Thank you, Josefine. Sorry. Let's move into the financials. I will start showing you the EPS development for the year. If we were down 41%, down to SEK 1.68, this is very much explained by very large positive one times effect in Q4 last year, and we had some
Some minor negative one-time effects actually in the fourth quarter this year. One of the biggest effects was the revaluation of the Dun & Bradstreet shares that we had in Q4 last year. This is a bridge explaining what has happened between... You can see its earning after tax in Q4, and also you can see to the right, we have earnings after tax in Q4 2022, and 2021 to the left. We have an uplift in operating EBIT of SEK 138 million. The bars that are orange marked here is actually one-time effects that we have if you compare, you know, quarter to quarter. If you add up these orange bars, it's in total SEK 370 million.
In the fourth quarter last year, we had a revaluation of the Dun & Bradstreet shares. That was SEK 164 million. We had restructuring costs, as Jonas talked about, in three of our companies in the fourth quarter this year. That's SEK 43 million in total. We also had a one-time positive effect in Consumer in the fourth quarter last year, and that was actually an effect or a result of an early termination of a lease contract in Plantasjen. We also had a negative effect in the finance net in the fourth quarter this year. In the fourth quarter last year, we booked a deferred tax asset of SEK 66 million in total. This was, you know, the first quarter when Ratos was taxed as an ordinary company and not as an investment company anymore.
That's why we booked this full amount of SEK 66 million in the quarter. Then we had also in Diab a reversal of a deferred tax asset of SEK 29 million in the fourth quarter this year. That is sort of the bridge between the SEK 383 and the SEK 45, in total minus SEK 370 million. If we look at the leverage, you can see that we are at 2.5x . Our financial target is to be between 1.5x and 2.5x , and we can be as high as 3.5x in leverage. This increase is very much driven by the financing of the Semcon acquisition that was made in the end of October.
We also saw some working capital build up in mainly in the Consumer business area during the year. If you look at the total net debt in the end of the year, it was SEK 4.8 billion compared to SEK 342 million in the end of last year. If we look at the bridges, we move to the net sales bridge. We were up 42%. A lot of this growth was coming from a strong organic growth, 12%. We also had large growth in acquired growth in net sales, mainly coming from Construction & Services. That's the acquisitions of Presis Infra and NVBS, but also from Industry with the acquisitions of Knightec and Semcon. We had a positive FX effect as a result of the weaker Swedish crown.
We had a negative effect of SEK 15 million in the quarter. This is due to that we have ceased our operations in Russia and Belarus. This is mainly businesses that we had in the Industry business area. If we look at the EBITA bridge, we were up 41% in the quarter. Large part is coming from acquisitions, as I mentioned earlier, both from Construction & Services but also from Industry. If you look at the organic growth, you can see that we are -6% in the quarter. This is a mixed picture because if we look at Construction & Services and Industry, we are actually growing the businesses organically in EBITA, but we have this quite large negative effect in the Consumer.
That's if you add those three up, we end up at -SEK 6. We have other -SEK 70. This is the restructuring program that we initiated in Q4, but it's also the one-time effect of the Plantasjen one-time effect that we had in Q4 last year with the termination of the lease contract. We had a negative FX effect of -SEK 10. If we look at rows, we were down to 10.2% this year. This is also affected by the working capital build up in mainly in Consumer. Cash flow and working capital is an area where we need to improve. We will focus a lot on these areas during this year and going forward.
By that, I leave back over to Jonas Wiström.
Thank you, Jonas. Lot of negative things there. I'm glad it's not cash flow. Summing up a good year and an even better fourth quarter in a challenging world and a challenging environment. EBITA is up 9% for the year, 41% for the quarter. The acquisitions we made 2021 has developed very well. We have record order books, record order intake, but the challenges in wind and Consumer market are still here and will be with us during the year to come, I'm sure. As Jonas said, we will take measures to minimize the effects for the Ratos group. We continue to invest in infrastructure and industrial services, and so will the future be. We have taken some steps to the homogeneous group we will have in Ratos.
With that, we can open up for questions. Josefine?
Yes. Let's start our Q&A session. I know we have some people on the line. Let's start to see if we have Henric Hintze from ABG on the line. Please, the line is open for you. We'll see. No Henric Hintze? Let's move forward in alphabetic order. Victor Hansen from Nordea. We'll see. We seems to have a bit of a trouble with the line. We will fix that shortly.
Can we just perform a way, voice test if anyone can be heard?
Yeah. Is there anyone on the line who wants to just say something to see if we can hear you? No? Seems to be some trouble with the line. Maybe if you want to sort of emphasize something of your final remarks while we're waiting for the line to open up. Okay. We will close down Teams and reopen it to see if there is some trouble. Just one second. Hang in there. Is there something you want to emphasize from your final remarks?
Before we're shutting down the meeting?
No, go ahead.
Okay. Well, maybe I.
Ratos, you are muted.
Now we can hear you. Now we hear you.
Now we can hear you. That's perfect.
We can hear you, Victor.
Perfect. The problem seems to be fixed very soon. We'll see. He said that we are mute. We have to look at our technical guy, Peter. Are we on mute? We are not on mute. Can you hear us? Yeah, we can hear each other, Henric says now.
Yes. Now we can.
Okay, perfect.
Okay. Now. Good. Very good.
Sorry for that little trouble. Let's move on with the Q&A session. Let's start. Henric Hintze, ABG. You're welcome.
Great. Thank you. In the... You're also writing that you will be looking into divestments going forward. I'm just wondering, you say that you postponed the IPO due to market sentiment, so I'm just wondering if you're seeing a difference between market sentiment for IPOs and for M&A, or if we'll have to wait for divestments until the market gets a bit more positive as well.
Very good question, if I should answer it.
Please.
Well, I don't think I need to comment the IPO market. We see it every day. I just want to add that Aibel just have had another phenomenal year, both when it comes to profits, sales, but also cash flow. They have a very strong balance sheet. The timing for an IPO feels very bad. The M&A market, yes, it has changed. What we see is that private equity or financial buyers, they are very much lower activity than just a year ago. When it comes to industrials, I think the market is fairly good. Of course, it has been affected, but it's not like the IPO market.
We are in good hope that the plan we have as it comes to the divestments will come through. As you understand, I can't comment it more than that. The M&A market is not closed, not at all. Private equity is much more restrictive. They are there, but much in a smaller scale than they used to be.
All right. Thank you for that. I have another one, if that's all right.
Please, Henric, go ahead.
The Construction & Services segment is obviously continuing to outperform. I'm just wondering if there are any particular companies within the segment that are really driving this outperformance, or if most companies are contributing fairly equally?
I mean, all companies are developing well. I mentioned, I mentioned Vestia and Presis Infra. You saw the numbers for them. Vestia being a little bit of smaller company stands out when it comes to percentage of growth. No, it's strong all over the line, including the results we get from Aibel
All right.
Are you happy with that, Henric?
I'm happy to ask another question if we have time.
We have time. Please. You can have a third question.
Well, I'll be so bold as to ask a third question. In Diab, you say that you're seeing improvement now compared to last year, that's of course happy news. I'm just wondering if you could elaborate a bit on how the situation in Diab compares now to before the troubles began as well.
Well, what has happened is that we have a lower OPEX number and it's mainly restructuring in our factories and especially in Italy. I want to underline though, you've seen that from the other. Well, from our clients in the wind power area, the OEMs, they're making losses. They predict losses also for this year, for 2023. If we look behind 2023, it's not a great story for 2024 either. Everyone waits for sort of what will happen with wind power at sea. The truth is that it's a very tough market now and tougher than we expected 1 year ago.
At the same time, I mentioned this before, more Diab was founded for solutions for marine industry and later aerospace. They have had a very strong development since the start, except for the Lehman Brothers year 2009. Revenue is increasing. The profitability for this business area is some 20%. There are two sides of Diab. The wind power side is still losing money, basically, even if we lose less money than we did one year ago. We do, we believe that we have a good solution on that, which I can't further develop here and now.
Gs move forward.
In any growth in the M&A you did, you've done, it should have been 9% structured growth in Construction & Services. You achieved 25%, which is quite a bit better. You told us here which companies were strong, but could you also, tell us if we should expect it to continue?
Again, I wasn't really sure maybe, Jonas, what about the companies here. I mean, all companies are performing well, and the order books are very strong, and the order intake has until now been very strong.
When it comes to the future, Victor, I mean, we don't give sort of forecasts and so on, but it looks good as Jonas said, when it comes to the order books, for the companies within the Construction & Services business area.
Yeah. Okay. Okay. It was a similar story here in Industry. The structural growth was stronger, quite a bit stronger than I anticipated. I'm wondering what's driving this stronger performance in the acquired units?
Well, well, the acquired I mean, if we take the platforms, I think it's too early to say that, you know, I mean, You have seen on the market, I think, that the industrial services, they have good times, but in Ratos case, they have not been with us during the year, during the whole year, except for TFS. We shouldn't discuss companies, but I hope it's okay, Jonas, that I say that even TFS has developed extremely well during the year. When it comes to product manufacturing, it has also been good, except then again for Diab, which you can say is better, but not good. It's a good development in all companies except for Diab.
I think- it's hard operational work and the synergies from the add-ons we have done, have showed in numbers. One have to remember that both, I mean, the industrial companies has been affected by Russia and Belarus, as you mentioned.
Mm.
Especially HL Display, if we start to talk about companies again. In spite of that, even so, they had a great year.
Okay, great.
Yeah.
Yeah. A final question here.
Please.
Yes. Thank you. The SEK 100 million in savings in Consumer, when will this come into your numbers?
Those savings will start to come already in Q1 this year.
It's the same for the entire program.
Yes, it is. Yeah.
We performed that in December. It's important to know that, you know, some of these savings, especially in Plantasjen, will sort of counteract the co-cost increases that we see in energy costs and so on, for example. I think we stated that in the report.
Yeah. Yeah.
Yeah. Perfect. Thank you very much, Victor Hansen at Nordea. Let's move on to Rasmus Engberg.
It seemed like there was another question.
Did you have any more questions, Victor?
Oh, sorry. Was there more questions, Victor?
No, that was all for me. Thank you.
Okay.
Thanks.
Thank you very much. Rasmus Engberg, Handelsbanken, please. The line is open.
Yes. Hi, good morning. Well, firstly, this is a kind of a full year report, you don't talk so much about the financial target of SEK 3 billion. Do you think that's still achievable in the timeframe that we talked about before?
Yes. You saw that we continue to be conservative when it comes to dividend. We do 40% out of the adjusted EPS. One reason for that is, of course, to have dry powder in a business cycle which is low. My experience is that in the end of these cycles, you do the best businesses. We want to have dry powder. I also want to mention that organic growth will always be the most value-creating thing. I'm so happy that the companies we have acquired are growing good organic and that our companies that has been with us for all time is growing organically.
Organic growth will continue to be the most important, but we will do divestments and acquisitions, during this year.
All right.
I want just to mention one thing. I'm not sure I said it in this meeting. I have to say that I don't think we have been good enough when it comes to cash flow. We have to be better in cash conversion. Yes, we have working capital build-ups here and there, but it comes through from that down to payment terms. I want to see a better cash flow from Ratos this year. I think that is what I have been disappointed of. It's not bad cash flow, but it should be better.
Just I thought the financial net, even without the one-off, looked quite high. What is your, roughly, your interest rate now in Q1, broadly speaking? What do you pay on your loans?
I mean, in the quarter, the fourth quarter, we were at 2.6%. That's up 1 percentage point compared to the same quarter last year. Going out of the quarter, we are around 4%.
Okay.
We have another 50 basis points, that, the interest hike that we saw this week.
I didn't know these was official numbers. Yeah.
And, and, uh-
I think we have low interest rates.
... one more question, if I may. You own 100% of Semcon now, right?
Yes. I think we have a couple of shares left.
Oh, 98. 90.
They, we will get them in March, I think.
Okay. 'Cause there's a, like, kind of a big difference between the minority share of earnings. I assume that is because Diab and Plantasjen is losing money. Is that?
Exactly.
Is that the reason?
Yeah, that's the reason.
Yeah.
We have a negative mix when it comes to the profit that belongs to the shareholders of the parent company.
Yep. Okay. No further questions. Thanks.
Thank you.
Okay. Thank you very much, Rasmus Engberg, Handelsbanken. We move on to Kavaljer. We have both Peter Lindvall and Håkan Telander on the line, I think. Please, should we start with Peter maybe? No? Peter, are you with us? It seems so. When I look at the Teams meeting, maybe you're on mute. Håkan Telander, are you on the line? Nope. Let's wait. You can just wave your hand if you join us. You will have the mic-
Yes, yeah.
Okay.
Peter here. We are with you, but we didn't have any questions so far, so thank you.
Okay. Okay.
Okay.
Good. If you change your mind, just raise your hand. We move over to Georg Attling at Pareto. The line is open. Please.
Thank you. Good morning. Just a question on Plantasjen. I know you don't want to talk in too much detail about the companies, but can you say anything about the profitability expectations for 2023, maybe on this sort of revenue level? What can you expect on profitability-wise?
No, we won't answer that question, but I think, we can say, I mean, certainly we were boosted to some extent during the COVID and now we have been down, we went from one extreme to another. If you look at the result for this year, for that company and compare it with the numbers we had, before COVID, 2015, 2016, 2017, 2018, and 2019 and so on, we are still doing a sort of good results compared to that because there was a lot of good things done in the recent three years. It's not that, it has sort of collapsed. Now in Q4, we had again the one-time effects, et cetera. Overall, Plantasjen is doing fairly good.
I mean, we're now in the fourth quarter, which always is a loss quarter for Plantasjen. It's hit by extra costs et cetera, this year.
Yeah.
Over the year, the profitability and EBIT is sound and good.
Okay.
We don't like the seasonal, seasonality either with Plantasjen of course, but that's the name of the game in that business. Plantasjen has absolutely not sort of collapsed and fall through and will have difficulties to make a 7% profit margin. No. If there is no... We don't know what disasters will come in 2023, and you shouldn't laugh, which I did, but I mean, I'm quite concerned about the war going on in Europe and where we're heading. If we have a situation like today, even with the lower customer demand, it's a decent, good business, but very seasonal.
It sounds like no more cost savings is something you plan other than the ones you already announced.
We encourage all companies to all the time challenge yourself if you can reduce the costs, but this cost program that was done in Plantasjen now is our new CEO who wanted to have a much leaner overhead organization if you want. Between the CEO and a store out in Norway, Sweden, or Finland, there is just one level, two levels between him and the store manager, which I think is excellent, and I'm sure there will be smaller. Again, we haven't adjusted for this. We haven't adjusted our EBITDA numbers for this smaller restructurings. I mean, in total, we're talking SEK 43 million, and we are conservative there because we don't want to adjust for everything.
Without that, the EBITDA would have been up 60% growth if we adjusted for these costs. We will do that all the time, but no big programs, no.
Okay. In the first half of 2023, do you expect similar restructuring costs, or are they behind us now?
Again, as the world looks now, no. We will do small things, we'll probably not mention. SEK 41 with the SEK 43 million, we think it's good to mention in the report. If we do one thing for SEK 2 million-SEK 3 million here and there, we won't talk about it. It's part of our daily business.
Okay. On the M&A side, I assume that 2023 will be quite a quiet year unless you divest anything. Is that your sort of plan as well, or do you believe that you can maybe push leverage a bit to cope the potential here when the market is down a bit?
Yeah, I'm not really keen on. I'm not. Now this leverage on 2.5, it's not the pro forma level.
No.
We say how it is right now. We think we should keep our balance sheet fairly strong during the year to come. I mean, the new Ratos as we see it is, there will be a very limited number of new platforms coming in. It will be more of add-on acquisitions and divestments if that is a clue for you.
Yes. Thank you. That's all for me.
Okay. Thank you, Georg Attling from Pareto. Peter Lindvall and Håkan Telander, Kavaljer, haven't changed your minds taking the opportunity to ask a question? Nope. Doesn't seem so. I think we are done with the Q&A hence there are no one on the line who feels forgotten and want to pose another question. Okay, Henric Hintze, your hand is raised. Is that a new hand or an old hand to use?
No, that's from before.
Okay. Okay. Everything's done and done with this presentation. Thank you very much, Jonas and Jonas. You can, of course, see this webcast afterwards at ratos.com. Thank you so much for being with us this morning. Have a nice day and see you soon.