Good morning, and welcome to the Blique Hotel and Sweco's Capital Markets Day. Welcome to you here on the premises, and also welcome to you that are following us online. My name is Marcela Sylvander, and I'm heading the communication for the Sweco Group. I'd like to start by sharing a few practicalities and instructions with you. As you might have noticed, there was one entry point into this room, and that's also the exit point, should we need to leave this premises. After leaving this room, you turn to the right, and there will be more signs to follow how to exit. Should we need to leave the hotel in total, the assembly point is across the street at the Gävlegatan, right by the north tower.
There is a defibrillator at the reception, and as some of you probably have noticed already, the hotel supplies us with an open Wi-Fi that you can use. After this morning's presentation, we will take a field trip, for those of you who have signed up, to Nacka, where you will be able to hear a presentation, also to see a bit about the new metro project that's going on in Stockholm. So I hope that as many of you as possible are able to join us on that. I will talk more about that and give you more details as we go along. There is no coincidence, actually, that we have gathered you here at the Blique Hotel, because the Blique Hotel is an excellent example of how you can extract, reuse material from an existing building and building something completely new.
You see, originally, this was a warehouse and office building from the 19th century, and due to the low ceilings, it was sort of doomed for demolition, no use to anyone. But however, there was a thought that there was some culture and also historical value to this area and to this building, so there was a competition held how to transform the building into something else. And we, from Sweco, we had a multidisciplinary team, consisting of an architect. I need to read this because there are so many people, a culture heritage specialist, a structure engineer, and a material broker, nonetheless, that transformed this warehouse into this very chic hotel that it is today. And not only transforming the building, but at the same time, actually saving 3,600 tons of carbon emissions on the way by thinking in circular terms.
To translate this amount of carbon emissions, it adds up to EUR 2.5 million in monetary terms. The savings also, by not having to buy and construct, getting new materials into this, were additionally EUR 8.6 million, and the savings for reducing waste during the circular construction totaled to EUR 63 per square meter. So this is when Åsa, Olof, also Ann-Louise and Erwin will talk about circularity, this is a really good example that you're sitting in right now. Here is the agenda for today. Christina, my clicker, will show you. You will soon be hearing from Sweco's President and CEO, Åsa Bergman, followed by our CFO, Olof Stålnacke.
After the break, that's approximately 10:20 A.M., we will welcome Erwin Malcorps, Business Area President for Sweco Belgium, and Ann-Louise Lökholm Klasson, Business Area President for Sweco Sweden, to share their insights from their respective markets. There will be opportunities to ask questions to Åsa and Olof after their combined presentations, and individually to Erwin and Ann-Louise after their presentations. Lunch will be served at 12:20 P.M., and after that, we will leave for Nacka.
Before I let Åsa onto the stage, I'd just like to share a short film with you.
One way of describing Sweco's history is through the amazing results we have achieved together with our clients. From installing central heating at Sweden's Royal Palace in 1910, to planning the future railway in Northern Europe, and designing vibrant, sustainable, and dynamic city districts where people can live, work, and thrive. Our core business has always been to transform society together with our clients. Our story started more than 130 years ago and is intertwined with the development of society, starting with the shift to an industrial economy, up until today's mega trends of urbanization, digitalization, and sustainability. Today, Sweco is Europe's leading architectural and engineering company. Still, many things remain the same, and we run our business based on the same basic principles. One of Sweco's founders, Gunnar Nordström, already in the 1950s, had the idea that Sweco, as a company, should reflect society.
With diverse teams and competencies, we've been able to co-create broader perspectives and more innovative solutions together with our clients. At Sweco, we grow through transformation. We've built our legacy, grown to become a European leader, and now we continuously support clients in the green transition, transforming societies together. We work in small teams and close to the client to ensure the best relationship by offering full attention and an in-depth understanding of our clients' needs. Today, Sweco is the result of more than 160 mergers and acquisitions. We deliver 120,000 projects every year in around 15 markets in Europe. We believe that we, together with our clients, can achieve the most innovative and sustainable solutions by combining different skills and capabilities. We match every assignment with the right team, who live and breathe every project, exploring, questioning, testing, and collaborating.
To us, our client's success is every bit as important to us as our own.
So, and now, welcome, please, Åsa Bergman.
Hi, everyone, and again, welcome to Sweco's Capital Markets Day 2023. It has been a long time since we met together physically for, you know, half or a whole day. So this makes me really happy, not only hearing you over Teams links every quarter. Sweco has a long and proud history, and we can look at our history and the journey that we have achieved and in different phases. When we look at the journey over time, Sweco's foundation is really linked to the combination of architecture and engineering and the strength of that combination. And it is, as you heard in the film, it's the legacy of one of our founders, Gunnar Nordström.
In the first phase, Sweco was active in the consolidation of the Swedish market, and we built the market-leading position in Sweden with an IPO 1998. In the second phase, we took on the growth in the Nordic countries and became regional leader. And in the third phase, which started with the acquisition of the Dutch company, Grontmij, 2015, and the company was into our books 2016. We started the journey of conquering or establish ourself as the market leader in Europe, and that is the journey that we have been on the last seven years. And the journey so far has been rewarding for our stakeholders with a total return of 16,500% since we were IPO'd in 1998.
Since the IPO, Sweco has delivered a total return of 23% per year, while the stock market index have had a total return of 10% per year. So this was a little bit about the journey and our legacy and the growth up until now. Today, Sweco remains number one on the European market, but with a much larger scale. We have grown our presence significantly in the Nordics and in the Northern part of Europe, which means that we have extended our service offering across those business areas. In total, our net sales have increased from SEK 16.5 billion to SEK 27.5 billion today, and the annual growth rate for the net sales is up 8% over this period.
When it comes to EBITDA, it's up 9% over the same period. So today, we are a much larger company, 21,000 experts, corresponding to around 20,000 full-time employees. As you can see, it has been a positive period in the development for the shareholders, with a total return of 110% since 2016. I have worked in Sweco my entire career. It's some +30 years right now. And for the last five years, I've been the CEO of Sweco. It has been a journey of constant change to meet the demand for the future, and this has always been backed with a strong and solid company culture, and also a clear strategy over those years.
Sweco's combination of stability and flexibility is our core strength, and we are constantly evolving over time. Today, we are in the middle of the green transition, supporting our clients to decarbonize industries, establish new industries and new technology, new energy system, transport infrastructure, build resilient cities and communities. And it has never been more relevant and motivating to lead a company like Sweco than it is today. And this is Sweco today. The foundation for Sweco is a decentralized business model, operational model. It consists of 1,700 teams that carries out some 120,000 projects per year. We focus on eight geographical business areas, where we have well-diversified business in terms of geographies, segments, and a mix of public and private clients.
Sustainability is in the core of our business, and we work integrated and actively to support our clients, as well as becoming a front runner in our own operation when it comes to sustainability. This diversified client and project portfolio makes us resilient over economic cycles. If you have heard me many times, some of you talking about how we can distribute our services and our resources across the different segments. We continue our journey towards achieving top three positions in all our core markets and segments, and to be the first choice for clients and for talents, while delivering on our financial targets. Reaching top three market positions, and being a leader in attractive segments is essential to reach our goal and becoming and establish ourselves over and over again as the market leader in Europe.
Top positions will continue to ensure that we win the greatest projects, welcome, and remain the forefront in the green transition in Europe, in transforming society together with our clients. Today, we are number one in five out of eight markets, and we are aiming to take the next steps in Denmark and the Netherlands, where we are well positioned in many segments, and currently number four in these two markets. In U.K., we have a longer journey ahead, as the market is somewhat more challenging in some way, but there is also great potential in U.K. going forward, and I will come back to U.K. later in this presentation. We are continuing the journey with a clear focus on delivering on our financial targets.
This means a solid focus on profitable growth with improved margins toward our financial targets of 12%. I will walk you through the different building blocks that is key to succeeding with reaching our goals. Let me start with the market situation and the market opportunities that we see ahead. There are several long-term trends that we normally often talk about, but there is also short-term trends that we constantly are addressing. But our main focus is to focus on the long-term trend and the long-term development of the company. Sustainability is, of course, in the center of everything. It's the most present, it's the most pressing topic of our time to make sure that we can work with the consequences of the climate change.
It's an urgent need for this green transition to happen, and it affects all the sectors that Sweco working in. We see that there is a need in all European cities and communities to address this question, and we see lots of investments happening. It's about concrete measures to ensure also water, energy supply, resources, and infrastructure, short term, long term, of course. Urbanization and demographic development are all other core drivers that creates demand for urban development. And today, urbanization interfaces with digital developments and improve sustainability to create new development and movement patterns. Increased demand for climate-adapted and sustainability solutions is really driving demand for new types of urban planning, one in which smarter solutions from the micro and the infrastructure levels are needed to connect and expand cities and areas.
So all of this is interlinked in what we see now, in our clients' needs, and also in the solutions that we provide. There is also an increased need for digital solutions to solve increasingly more complex task. It's also a need to implement digital solutions to speed up the change and what needs to happen linked to sustainability. And digital solutions is used in urban development processes also to streamline everything from design to resource utilization in areas spanning from construction, transport, and energy solutions. There are, as we all know, also macro and geopolitical trends that are changing and will continue to shape the needs of clients across Europe. It is about energy, supply chain, resilience, and security.
Even though the macroeconomic perspective and the situation short term is pressing, the trends are clearly pointing towards massive investments in the green transition in Europe, covering and affecting all the above and what I've talked about. So I want to give you some example what this means for Sweco, but first, some words on how to approach sustainability in Sweco. We actively support the world's commitment to achieving the necessary transition in society as set forth in the Paris Agreement and the Agenda 2030. Our approach to sustainability is based on UN's 17 global sustainability development goals for 2030, and sustainability is integrating in everything that we are doing.
But we illustrate this on three perspective, and the first one is our client business, where we making sure that we work with and support our clients as an advisor or designing new solutions for the society. Meaning that we carry out new technology, new energy production system, transmissions, making sure that we support with whatever is needed of sustainable solutions for the future. The second part is about making sure that we have the right competence, the right tools, to deliver sustainability in all our projects, and that is very much linked to making sure that Sweco's organization and all our engineers and architects has the right competence in sustainability in our client projects. And the last part is our own operations.
As experts in this field, we have a responsibility and great opportunity to making sure that we act in Sweco in a sustainable way. Sweco's group-wide target to be climate neutral no later than 2040, and to halve our emissions by 2030, is in place. And we also put great emphasis in being an ethical company and a really attractive workplace for current and future employees. All in all, this means that we're taking an active part in everything when it comes to sustainability, not only for our clients for the new solutions in society for the future, but also in our own business operations. And now let me talk about the opportunities that we see going forward.
The green transition in Europe is ongoing, and it's driven by the overall trend of sustainability, but it also is accelerated by the geopolitical situation that I talked about earlier. Political priorities, policies, and programs, as well as legislation, are also speeding the development. And I could also add that we see an increased demand from our from consumers, from clients, and also from investors, as well as increased funding, and accelerating technical development. And it all trickles down to many business opportunities for Sweco. To simplify, we can categorize those opportunities as transition in energy, transition in transport, industrial transition, and urban transition. The energy transition is driven by the increased electrification in society and industries, and the shift from fossil fuels and energy sources.
This results in large investments in energy production, grids, and new technology. For example, the EU's REPowerEU package. The transport transition is a shift from fossil fuel transportation to electrical vehicles, increased public transportations, and focus on mobility and modernization, more modernized rail infrastructure over Europe. One example here is that Europe's high-speed rail traffic infrastructure is expected to double by 2030. The industrial transition is linked to decarbonizing existing industries, establish completely new industries, and this is happening across Europe, supported by massive private and public capital. The urban transition is connected to the need to meet a growing urban population and demographic development, while also building a more sustainable and resilient cities and urban areas.
Estimates here shows that EUR 580 billion will be allocated from the EU budget to climate-relevant actions, and this is over the period of 2021-2027. To sum up, roughly, 5% of those investments, of total investments, will be spent on consultancy service as the ones that Sweco provide. So positioning Sweco as a leader in the Green transition is key to monetize on these developments. And we see great opportunity to grow in all our core markets. The total market size in Sweco's addressable market is approximately EUR 210 billion. All markets where we operate are to some extent fragmented, even though we have a strong market position in many markets.
We see still a significant room to grow and to continue to consolidate the market. In Sweden, the market is around EUR 10 billion, and this is our home market, and where we have the largest market share, and the top five companies have almost one third of the market. In the other Nordic market, the market size is around EUR 6 billion, and we are in top three position in three of them. These markets are also quite consolidated in terms of market share, dominates by top five companies. In Belgium, Sweco has the number one position, and the market is worth around EUR 12 billion. So even if we are number one, there is much more potential there.
Sweco Belgium's President, Erwin Malcorps, he's here today to tell us more about how they have succeeded in the Belgian market, and how we will proceed in the Belgian market. The top five player still only holds about 7% on the Belgian market, so there is also more to take, so to say. In U.K. and Germany, we see great potential of grow our business and increase our market share. The addressable markets are huge, and there is a window of opportunities to maneuvering to long-term strong positions in those markets. Our strategy remains the same, and we have a clear path forward to execute our ambition to take on the undisputed market leadership in Europe with a top three position in all our business areas. We focus on three key growth pillars.
The first one is to fully implement and deliver on our operational model, the Sweco model, in all our markets. The second pillar is to continue focus on acquisitions, to grow our market position and to address new niche markets. The third pillar is to position Sweco as a leader in the key growth trends in the market. I will now walk you through these more in detail. The foundation for Sweco is our client-centric approach and working in a decentralized way. It provides us with proximity to clients and great agility, and a solid base of small to mid-sized projects with lower risk, also over cycles. The basis, as I said, is our 1,700 local teams with their own P&L, meaning that every team is a business unit with accountability and a clear business focus.
These teams are delivering around 120,000 projects yearly. This provides us with a very stable and flexible platform for growth, making it possible for us to deliver solid growth in a tougher market and accelerate in better markets. We deliver solid net sales growth despite fluctuations in the market. We saw that, for example, during the pandemic era, that we were really quick and flexible in handling that situation. We are also fostering a culture of simplicity and efficiency, and a key focus area going forward is to make sure that these principles are implemented in all markets and segments, with a clear focus on costs, pricing, and billing ratio to improve efficiency and profitability going forward. We're succeeding in this by putting a lot of focus, attracting and retaining the right and the best people.
Delivering the best advice in the green transition means we need to have the right expertise, we need to have the right competence, and we need to have the right experience to be able to meet the client demands. Again, and something that we talked about many times over the last years, this is a people's business, and we sell competence, experience, and expertise, and our ability to attract and recruit and retain the best people is a competitive edge for us. So through persistent work, Sweco has secured a strong employer brand, and we are one of the industry's most attractive employers. We are building a culture based on collaboration, personal development, and equal opportunities. And as a result, Sweco can demonstrate high employee satisfaction. We have an 80% recommendation rate from our employees.
There is a clear skills gap in Europe, where the green transition and the investment will require thousands of engineers. But in Europe, in all countries, there is an experience shortage of this specific competence that is needed. And Sweco, we encourage countries and enterprises to work together. We need to work more together for education of more engineers, for reskilling of existing engineers to green, and for an increased competence mobility between countries. And in Sweco, we work lots with cooperation between the different countries, and I think we will see more of that going forward. Looking at the journey ahead, the focus is to deliver profitable growth in all our business areas. That means a combination of solid growth and margins in line with our financial targets.
As you can see here, we have one group of business areas, Belgium, Denmark and Sweden, that represent about half of our business that are already delivering on our financial targets. The key to this is, this positive development in these business areas is mainly linked to strong market positions, high efficiency, and positive pricing trends. Then you have the second group, Finland, the Netherlands, and Norway, who represents about a third of our business, and all delivering good margins, but need to further improve to reach our targets. Finland and Norway have been on stable levels for a long time, and the Netherlands has made a journey from 1.5% to 9% over the past seven years.
Sweco are well positioned in these markets, and we need to continue to working to optimize our position, internal efficiency, and pricing to improve profitability going forward. The development in Denmark and Belgium over the past five years are good examples that this can be done. These two groups represents more than 85% of our, our business, the first one with Belgium, Denmark, Sweden, and the second, Finland, Netherlands, and Norway. And then we have Germany and the U.K. There are two markets with a similar journey ahead of them. In Germany, the turnaround, began in 2021 to get the organization on the right track with the right project and, client mix, and to fully implement our business processes.
And with that, we have seen a gradual improvement in Germany, and the focus going forward is to accelerate these improvements and to proactively capture opportunities on the German market. This is our largest market, and we see great opportunities in this market going forward. The U.K. has experienced headwind for quite some time connected to Brexit, and also exposure to the public sector, where several projects have been either delayed or canceled. We have now intensified our measures to create the turnaround in U.K., and there are several parts of the business that are performing well, and other parts that are underperforming due to several factors in the market, and we are taking measures to restructure these units. And this is basically to improve the client and project mix towards more attractive segments.
We are seeing business opportunities in the U.K. with several sectors with good demand, so we will continue to focus on positioning ourself in these segments. Our strategy is to grow our company through a combination of organic and acquired growth. We have grown organically and made more than 160 acquisitions over the past 20 years. We have a strong track record and a proven model. The strategy is to use acquisitions to either strengthen our overall market position or in interesting growth segments. We fully integrate all acquisitions and working together with them under the same roof and under the same brand. After the Grontmij acquisition in 2015, we have done another 63 acquisitions, adding more than 4,000 experts and close to SEK 7 billion in net sales. We acquire companies in all sizes across all business areas.
One key M&A achievement during this period is that we have established a combined architecture and engineering offering in seven out of eight business areas. We have accelerated the pace in our M&A activities over the past two years. We see that this current market provides us with a window of opportunities, and we are well positioned, and we have this attractive model and a strong financial position, which means that we can act when we get the opportunity. Our decentralized model is attractive to target companies since it allows founders and key personnel to stay in Sweco and expand and grow their business in combination with Sweco's. And this year, we have done 10 acquisitions and added a total of close to SEK 2 billion to Sweco.
When scanning the market, we see essentially we're actually looking for essentially two different types of targets. The first one is scale: acquiring companies that enable us to catch a larger proportion of the market and position us stronger in the market when it comes to size. These type of acquisitions adds both new and existing expertise. One example of this is OJ Rådgivende Ingeniører that we announced in Q3. This acquisition takes us to expand our footprint in Denmark and position ourself to be the strongest in the building sector, and it advances us to reach the top three position on the Danish market. The other category is niche, where we're looking for specialized companies with the specific competence we need for the future.
Normally, it is really where we see high growth and potential for high profitability. An example of this in Q3 is Medins, that we bought in Sweden, and they are expert in the water survey business, and that is a competence that is needed in most of European countries, and it's a scarcity with this competence. To have this niche competence will, you know, it will create an opportunity for us to build from that and expand that competence from this company. An acquisition is also closely related to our third pillar, to position Sweco as a leader in key growth trends. The third pillar is our focus on building strong position in key areas with strong demand and potential for future growth.
Going back to the slides with the opportunities that I showed you earlier, we are actively positioning Sweco as a leader and partner of choice in these areas, and we have a strategy in all our countries to making sure that we have the competencies and that we build the competence for the future in those areas. For example, when you're looking at the energy transition, we are today leading European consultancy in energy technologies, working with transmission, distribution, wind and solar panel power, hydrogen, and energy storage. We have established ourselves as the leading European consultancy in the rail business with 6,000 experts, working multidisciplinary in the rail area, focusing on mobility and active travel, electrification and fossil-free fuels, traffic safety, climate adaptation of the infrastructure.
We are the trusted advisor for some of Europe's largest and most ambitious industrial projects, working with decarbonization, including carbon capture storage, industrial circularity, energy supply and efficiency, and battery technology. And then, the last part of urban transition, the strength of combining architects and engineers, paired with the challenges regarding the urban areas and our cities, we are distributing with our competence. We plan, design, construct, and work with circularity, as mentioned here in the beginning, in the built environment. We work with resilient urban infrastructure, and we work with nature-based solutions. Today, Sweco has an architectural business of 1,500 architects, which makes us the fourth largest architecture business in the world.
And with this, I will hand over to Olof to walk you through the next part of this presentation.
Thank you, Åsa, and good morning, everyone. I'm Olof Stålnacke, Sweco's CFO. And as a starting point, I just want to recap some highlights from our recent Q3 report. The third quarter was yet another good quarter for Sweco, with strong organic and acquired growth, and a 41% EBITDA uplift, adjusted for the negative calendar effect. We have an overall positive momentum, despite the partly challenging market, and our financial position remains strong. Looking at our operating targets, this has been the case for some time now. We've had a stable margin of above 9%, over the past couple of years, and if you take out the effects of the mostly temporary cost savings that we saw during COVID in 2020 and 2021, we have increased margin gradually since 2017.
It is, however, at the pace that we are not satisfied with, and improving margins while continuing to grow remains a priority for us going forward. Our net debt remains well within the targets we have, but is now higher than historically after the accelerated M&A and based on some trade working capital buildup. It's worth mentioning that Q3 is a seasonal peak, and that leverage will come down with the normal seasonal release in Q4, and also with working capital measures that we are taking going forward. Our financial position remains a strength and ensures that we can act on M&A opportunities in the market. We are also delivering a steadily increasing dividend with the distribution above our target of at least 50%.
As also mentioned, sustainability is an integrated part of our business in our client projects and in our own operations. Group-wide, we want to have a climate neutral operations by 2040, with a 2030 milestone of 50%, and all emission reductions are measured against the base year of 2020. Also, group-wide, we have a target of having 40% female employees, and we are currently at 35%. On governance and compliance, we have zero tolerance for bribes, corruption, and human rights violation. In 2020, we had zero confirmed cases, and we also had quite a high participation rate in our mandatory internal trainings.
Looking at the financial development, since 2016 and the acquisition of Grontmij, which made Sweco into a European player, we have delivered a solid improvement with CAGR of 8% on net sales, and of 9% on EBITDA. We have grown net sales with SEK 11 billion, and EBITDA with more than SEK 1 billion in the last seven years. An important part of our strategy, as also talked about, is to have a healthy balance between organic and acquired growth. After the acquisition and integration of Grontmij in 2016 and 2017, we have shown this healthy balance with the acquired and organic growth from 2018 to 2023, and the exception is, of course, the pandemic year of 2020, when we significantly reduced recruitment. In a consultancy firm, time is money.
Billing ratio is our key short and long-term efficiency measure. It's something we track every week from the individual teams out in the organization up to group level. The way we measure billing ratio, it includes every single hour worked in the group, including non-billable people like Åsa and myself. In a consulting firm, money is also money, and average fees is also a big lever for us, and especially combined with the personnel cost. Fee-salary ratio is a key metric for us, and this has become even more important over the last two years, when we have seen higher in salary inflation rates than we have seen for a long time. Calendar, finally, is something that we can't do anything about, but it is a key factor to understand business performance.
Working hours will affect our revenue, while costs, to a large extent, stay the same. How are we then working with these levers? On the pricing side, we quickly accelerated our efforts moving into the higher inflation environment. There is still more to do for us on pricing, but we are happy with how we have been able to stay ahead of the curve in terms of salary increases and improve our fees over the last 18 months. It is extremely important for us to maintain this focus going forward, as we will most likely see elevated salary inflation also next year. Our billing ratio has gradually decreased since 2016, a development we, which we are not satisfied with. This is partly driven by increasing employee turnover.
Onboarding of newly recruited consultants drives inefficiency, both in terms of management time, but also in the time it takes for new consultants to get up to the normal billing ratio. Accelerated pace of M&A has also impacted billing ratio, since acquired companies normally come in with not necessary, less efficiency than Sweco, but definitely less focus on time reporting and on follow-up of billing ratio. A third factor that has impacted in recent years is the larger variances in demand between segments, making resource planning more challenging. That being said, these are all things that every business area is focusing on. As we have said over the past year, most of the decline of the group's billing ratio comes from Sweden, Finland, and the U.K.
In Finland, we have taken actions turning the negative trend, and we are now, as we announced in connection with the Q3 report, also making further targeted personnel reductions to adapt to the demand in the market. The same goes for U.K., where we have taken restructuring actions in the last few months. In Sweden, we've had very high inflows of new employees, but with the employee turnover now coming down and with the structural actions we are taking, we expect to start moving in the right direction also there. What are then the keys to improve margins going forward? We come back to the slide that also showed a little bit earlier. In the high-performing half of our business, Belgium, Denmark, and Sweden, it is mostly about continuing to grow and about fine-tuning performance.
We also need to maintain the focus and the positive trend we have had on pricing in these markets. In Sweden, as said, there is also, of course, a specific focus on improving the billing ratio. For the third, there are the business areas, Finland, Norway, and the Netherlands, that have come part of the way towards our target. The path to higher margin lies in the different mixes of price increases, improved efficiency, and also cost control. In Germany, as also said, we have been working on a turnaround since 2021, and we are seeing positive signs that profitability is improving and the business is stabilizing. And once we have a stable platform there, there is a significant opportunity, as you have seen, to drive the consolidation of the very fragmented German market.
In the U.K., we have been impacted by a challenging market and by our market position, which again, as you have seen, is very different than it is in other markets. Short term, we have taken restructuring actions in segments with weak demand, and we are focusing our resources on segments or even niches where we have strong position. Longer term, we want to continue the journey to a top three position. Looking then at value creation through acquisition. Also talked a bit about the turnover and the number of acquisitions. If you look at it in EBITDA terms, we have acquired around SEK 500 million of EBITDA since 2016, and the weighted average EV/EBITDA multiple for this acquisition is at around 50% of our own current multiple.
We believe that our proven approach and process for M&A is a key for us being able to create value with these acquisitions. All our M&A activities are coordinated by a group M&A team in close collaboration with BA management and with high involvement from Åsa and myself. We have structured business area and group pipelines, which goes through a clearly defined funnel. We make valuations and business cases based on long experience and with clear go, no-go criteria for the acquisitions. We perform the due diligence, mostly with our own personnel, taking in experts only for very specific areas like tax, pensions, et cetera. And we focus very much in the DD on cultural and organizational fit on the project portfolio, and on risks overall in the business.
Most importantly, integrations are well prepared, fast and complete, focused on client and employee retention, and also, of course, on synergy realization. So, to summarize, Sweco has a strong market position, and we are well positioned towards strong trends in society. Sweco also has a proven track record of long-term organic and acquired growth and long-term improvements based on our operating model. Our well-diversified business means both risk diversification and a broad, broad exposure towards growth trends. And last but not least, and again, we have a strong financial position, which enables us to capture opportunities in the market and be a leader in the consolidation of our industry. And finally, another recap from our Q3 position. We will continue to stay close to our clients and make sure that we have the right resources to meet demands in all of our segments.
We will continue to increase fees to make sure we get paid for the value we provide to our clients and to mitigate salary and other cost increases. We will maintain cost control, and we will ensure that we break the long-term trend on billing ratio.
And finally, we will continue to execute on our M&A strategy. Thank you.
Thank you, Olof. And I'd like to welcome back Åsa on the stage now. It's time and opportunity for questions. My colleague, Christina, has a microphone, so just raise your hand and for the information of everyone, please state your name and company when you ask questions. For those of you online, you're able to ask the questions through the chat function. So please.
Thank you so much. Good morning, everyone, Dan Johansson from SEB. I think I'll start with two questions here. Mainly the first one on, I thought it was an interesting data point on your strategy of sort of getting in a combined architecture and engineering units in most markets, and it seems like you accomplished that. What, what's sort of the tangible results of that combination of engineering and architecture skills? Is it sort of growth synergies, or is it more of a diversification that perhaps you get lower risk and different cycles? So what, what's sort of the tangible results of that combination?
I mean, it's many things. One thing is that we actually, if I'm looking back now, I mean, 20 years ago, it's really clear that we worked in a, you know, in more silos in the industry, meaning that, you know, the architect did their work, and they were handing over the work to the next. Today, we are working in a more iterative way. Everyone is designing and BIM modeling, meaning that we are working with one modeling, and you take decisions to create sustainable solutions by one profession is doing one thing, and then you kind of discuss, and then you redo, so to say. So there is a need for architects and engineers to work much closer and more interlinked.
So to have the architects in Sweco makes us more, how to say, capable of building up the competence of working architects and engineers together. So it's about having the quality, but also from the client side, to be able to, to go and approach Sweco to get the full package. This building is one example of engineers, architects and environmental experts working together to create the solutions. So that is one thing, and of course, it's a growth platform for us. It's also about that there is many projects that starts with the contact with an architect. So also about, I mean, how do we win our projects? So when we kind of, you know, go to market, it's also strength to have the architects in-house.
I can take the example of hospital projects always start by architects that has the skill set of healthcare planning. So to have those, architects that is healthcare planners in Sweco's business, will makes us more attractive to be able to distribute the full package of, healthcare and hospital design, for example.
Okay. Thank you so much. And maybe a second question, if I may. On sort of the margin potential in different markets, I guess industry consolidation or consolidation in a single market is a quite important factor, and the Nordics is quite extreme in terms of one third in the top five companies. So would you say that is it possible to get the same margins also in these countries where markets that are less consolidated and in the short term, so to speak?
I mean, let's take Germany as an example. I mean, we're having a number one or two position, top three position in the German market, but we're very small on the German market, meaning that we don't get the traction that we could have as really strong top one, two, three player. But I mean, what is going on on the German market has gone on since some years, maybe the last, I don't know exactly. The pace of it, you can start to argue about, but that, for me, that has to do with how active we are in that market. So with that said, the consolidation is ongoing.
The question might there be more about how many of the mid-size companies can you find on that market, or do you have to do much more of smaller acquisitions to create that platform? If you can make the same margins, that question I got 2018 when I entered in this role, and I was questioned around as I'd then been business area president for Sweden, if the markets outside the Nordic wasn't, you know, different when it comes to profit levels. But then I think we should pose that question until Erwin is providing the information about the Belgium market. Because for me, it's about and I've said it before, it's about making the right choices on the market.
Making sure that you create this project portfolio of working in the right segments, select and deselect, and also making sure that we go for those projects and the growth where we see an opportunity to price ourself, to get the right terms and conditions in place, and that we deselect maybe parts of the market for a period. Because normally when a client or a segment is lacking resources or need resources, they will start to rethink the terms and conditions that they procure on. And as a insight, when we measure all our bigger contracts, we win on quality, and we lose when it's a fierce price competition. And that is part of our strategy to making sure that we're really relevant, staying close to the client, and that we distribute qualitative work.
With that said, it sounds easy, but of course it's tougher if the market segment is that everyone is, you know, having lower margins. But I had this discussion with the business area president of Denmark as well five years ago. So even internally, there is discussions about, you know— Look at the competition. This market gives you certain margins. But that's not true. It's about how you operate the market, and what, what you— how you choose the projects on the market.
Thank you so much.
Thank you. Johan Sundén for Carnegie. Two questions from my side as well. First one is on Germany, where you, to some extent, opened the door for making a little bit more acquisition than we've seen over the last few years. Where you also mentioned this, you must reach a more stable platform. Where - How do we measure when it's time for making more acquisitions in Germany?
We don't have sort of a fixed target for that, at least not one that we want to communicate, maybe. But I think we are seeing, as we saw now in Q3 especially, we are seeing that we are starting to stabilize on a higher margin level. So I think we are maybe not that far away, but we still have some more work to do in terms of the turnaround plan and the improvements. But it's true what you say, we are getting closer to that point.
And it can also have to do, of course, with the stability of the whole business, but it can also be so that we're looking into certain segment, where we see that we're strong, and we, if we find an opportunity. So you will know the day, first day that we announce the first acquisitions, as you knew when we were in shape in the Netherlands, going from, in my perspective, weak performance in the Netherlands. We were not, you know, we were not ready to invest, at least, you know, 2018, when I entered in on the Dutch market. But when we did the first acquisitions, we were really there, and now we're kind of investing and looking for targets there. And hopefully we'll see the same situation in Germany going forward.
Perfect. And one other question for Olof on the billing ratio trend. You're not satisfied with the current level. What-- Is it possible to quantify where you want to be, or is the history, where you performed historically, still relevant, or the market shift has different position?
No, I mean, we don't have a specific target, but I see no reason if we sort of reach the efficiency levels we want to reach in all business areas, that we shouldn't be able to get back to the 2016 level, for example. Maybe it's difficult to compare with the time before that, because before the Grontmij acquisitions, Sweco was, to a large extent, a different company. But at least 2016 should be a reasonable starting point for us.
Thank you.
Thank you. Daniel Djurberg, Handelsbanken. Thank you for hosting this day. First, I would like to ask, you on the EU finance, I think you just spoke about EUR 580 billion over eight years or something, 20% tilted towards the services sector. How large part of these EUR 580 billion would be in your markets, would you say, more or less?
I think a normal rule of thumb is to be a bit careful, that around 5% of the investment goes to the consulting part of the projects, if that's what you mean.
Oh, and the EUR 580 billion is also in, it's within your geographies, or?
It's distributed all over Europe.
All over Europe.
So it's-- I can't really-- Is it half, maybe?
Maybe half of it, yes.
Maybe half, okay. Perfect.
But that's just a guess--
Yeah, yeah.
You take it from there.
Just to know ballpark, to understand. And secondly, if I may, on, the recruitment strategy has been obviously extremely positive for many, many years. Has this uncertainty in the market changed the overall, you know, the organic, recruitment strategy for the company or anything you can-
No, I mean, over economic cycles, we always, I mean, recruit where we see growth and where we need, and then we are a little bit more careful, maybe, where we don't see the growth. We have talked a lot about, for example, in residential and housing, and, and commercial real estate, we see a, a weaker market. Then we might not, I mean, push on, because it's about making sure that the existing employees or consultants has, you know, work to do, and then we focus more on growth in other segments. With that said, I mean, if we find very skilled or, and very good competence, that makes us more successful, then we of course, recruit in those areas as, as well.
But it's more about when the market gets a bit, as it is now, mixed, to be a more, you know, diligent in where and what competence, what experience do we need? I said, one reason to why it's so important for us to take a leading market position is because not only the brand, the leadership, the working environment is important for Sweco, it's also about making sure that we win the most interesting project. Because if you ask an engineer and architects about what is the most important thing for them, it will be that you actually are contributing to the most exciting projects, where the new technology, the future in this specific field happens. I can assure you, if we could measure, we could see movements.
If we win a big contract, you could see some movement in the market where, you know, people are jumping from one company to another to be part of that, that project. So for us, it's really about, making sure that we win the exciting projects.
Thank you.
Yes, good morning, Johan Dahl at Danske. But just, how do you steer the business in terms of operating risks? I presume we should always look at this margin target, the margin performance, in relation to risks. And is that something that you're sort of driving pricing models or project scope, et cetera, to increase or decrease risks in Sweco's operating model? It'd just be interesting to hear.
You or me?
You start, I can--
Okay. So we are—I mean, we are measuring and steering and leading risks in different dimension. But maybe the most important thing for us is our project portfolio, as you refer to. Making sure that we have good terms and conditions in place, which means that we have, you know, controlling mechanism in when we, you know, put contracts or take contracts into Sweco. So we are taking on terms and conditions that we evaluate being the right risk level for Sweco, and then also making sure that we have the right organizational set up, and then we have this monthly project follow-up, making sure that we can maneuver what's going on in all projects in the portfolio that we have.
When we're talking about implementing the Sweco model, it's about also this risk mitigation and having control over the project risk. Because-- And we're also talking about writedowns in projects, and the better you run your business, the more implemented those processes are, and the more skills, competence you have in the leadership, the more stable the business is. You will always have write-ups and writedowns, but you will have control over the potential project risks in your portfolio. So that is like, for me at least, our main risk mitigation activities. It's to securing the project portfolio we have in hand to limit the risk of project writedowns or clients, you know, claiming us for something that we have done wrong.
I think also the fact that the bulk of what we do are small and mid-sized projects, relatively short in time span, relatively less complex as well, reduces the total risk in our project portfolio.
All right. And also, it's a very big question, but perhaps can provide a brief answer. But in looking at your competitive set globally, you used to be pioneers, driving consolidation and the way you grew. But it seems just that if you look globally on the business, some other players have significantly accelerated their growth, cross-continent acquisitions. What has changed when you meet your competitive set? Would you argue that this has made things tougher for you guys to be competitive, and to sort of operate relative to your peers?
I wouldn't say so. I mean, what we have experienced the last 10 or 15 years in Europe, we have experienced, you know, all global players being present in one or the other way, trying to compete, but mainly on the bigger projects. And then, as said before, if some of the big global companies is buying something on the local market, that competition shifts to another kind of, you know, guise, but it's the same competition on the local market. It is still so that the local language and the local circumstances is what makes you relevant and strong and capable of making the right choices on the market. So we operate the same way and really clear of having this local presence.
But at the same time, I have to say that if I talk about a language as a barrier into the market, I also would like to see more of, you know, English in our projects in Europe, because that will make the possibility for us in Sweco to distribute away our work in a more easier and accessible way across countries.
Hi, Raymond from Nordea here. Two questions. First one regarding higher average fees, you said. Could you elaborate a bit more on how you intend to achieve that, considering that we are maybe starting to see inflation slow, and do you expect to continue to raise prices, and for how long?
I mean, we have been increasing prices. And if you looked at the somewhat illustrative graph I showed earlier, it was the only period where we saw some flattening out of that is really during the sort of second half of 2020, during the pandemic. So we want to continue that, of course. I agree that it will probably be slightly more challenging with inflation coming down. But that being said, as I said, there is also more to do in some of our business areas when it comes to pricing. We said it would be the biggest challenge probably for us this year, and I think it will be one of the biggest challenges for us to continue this also next year.
But again, quite happy with what we have done, and we see that there is room to do more in some of our business, at least.
Great. Second one, regarding utilization. I recall you saying that M&A time, because of some M&As, you had certain areas that were not necessarily less efficient, but perhaps where it's a time reporting. So if you would go back to 2016 levels, would that maybe be partly due to just paper improvements and not so much actual improvements, if you know what I mean?
I think when we have talked about that, it has mostly been in the second and third quarter of this year, when we made somewhat bigger acquisitions and maybe coming in with a bit bigger short-term impact on the billing ratio. So, sort of short term, there will be a more of a paper effect when these completely come into our processes and do the time reporting and follow up as we do it. But over the sort of longer term, it will not be a big factor.
Thanks a lot.
Tom Guinchard, Pareto Securities. I was wondering about you speak of lack of engineers in the long term. How are you working with the knowledge sharing within the organization, whilst having a decentralized M&A strategy?
That was a good, really good question, because that is really a flip side of an organization like this. But we have a long tradition of working and connecting competence across, meaning that we connect the different competence centers across Sweco. We also define areas of important growth segment, for example, with hydrogen, as we did, I think three or four years ago, where we interlink the competence in a network with the focus of supporting each other to win contract with that competence, but also to supporting a specific business area to expand. But we are having those different processes in place, but we also try to be very flexible and looking into certain segment and thinking about, okay, how do we operate this segment to become successful?
For example, data centers, some years ago, the investors for data centers were established in London, and how do you make sure that you have the kind of, you know, investors interface and the client interface, but at the same time, distributing the work across Europe? So it's a little bit situation based, but we work with different tools to distribute the competence.
Thanks. Just a question on the matrix organization. You have your business areas and geographies. How much are we working in the different directions horizontally?
So we have a very straight line business model. We don't have any matrix. It sounds like we have a matrix when you kind of think through, when you look at it from outside and you see the projects as you are actually distributing resources across. But the organizational structure is a straight line with the responsibility from the business area president down to the team manager, and that is where the responsibility lies. Meaning that we take on a project, the project ends up at a specific team, in a specific business unit, in one country, and then all the work is distributed from wherever, but the income is registered on the specific business unit. So we don't have a matrix, and we are very clear about that this is the responsibility that we have.
All right. Thank you.
Yes. Hi, Anders Jåfs from Kepler Cheuvreux. Just expanding a bit on the billing ratio. Do you see a correlation where in markets where you have a higher market share, you have a higher billing ratio? Or do you see any correlation there, or do you measure that in any way, or?
We measure billing ratio, of course, as we said, from individual teams up to group level, and we do it every week. There is no correlation between market share and billing ratio.
Another question on that topic as well. Considering that you will continue on this profitable growth strategy, one can assume you will continue making acquisitions. Will that also put maybe some downside pressure going forward on the billing ratio, or are you confident in your ability to internally raise that to previous levels, in 2016 levels, for instance, or?
I think if you look at it historically, the acquisitions we have made have not been negative for billing ratio. I think we have some of the short-term impact that we talked about earlier, when before they sort of come into our processes, and not necessarily that they are less efficient, but that they are maybe measuring it less diligently than we are. So, no long-term risk for that. You can get the same short-term effects that we've had this year, but, nothing else than that.
Okay.
Also, to add to that, I mean, if we find companies with lower margins where we see synergy, potential, and value creation in acquiring them, we will, meaning that in the short term you can see also margin dilution in some of the integrations.
Okay, perfect. Thank you.
Thank you. Fredrik Lithell from Handelsbanken. On your decentralized organization, the 1,700 teams, P&L teams, is that a sort of—have you ever questioned that or challenged that that is too decentralized in terms of reaching your margins? You have not been close to the 12% target for some time. The more decentralized you are, maybe the more non-revenue generating people you have. Is this something you have a debate and challenged internally?
There is many parts of the business model that is debated and discussed internally due to the fact that we're-- I mean, you can, you can organize and structure yourself in many different ways, and there is always a flip side. So I think it's more about-- I mean, in, in our view, how is the client, you know, organized, and where is the client, and where is the build society project established? That is really linked to that we want to have this local presence with a close interlink between the local organization and the client. The size of the teams, of course, but there, there is many dimensions to this because it's also about personal turnover, making sure that the span of control is not too big for our team managers.
It's also about having control, and linked to Johan's question before regarding risk, it's about making sure that they actually can control the project portfolio in a decent way without taking on risks. So of course, we have discussions about this, and especially when we get the big contracts into Sweco's portfolio, you can argue that there is maybe, you know, it becomes a question for you, how we handle those big projects. But for sure, we identify big contracts in a different way, and then we organize ourselves around those projects, meaning that then we are handling those in a different way. So we try to be flexible in that sense.
But that we normally don't talk that much about, due to the fact that this model we have of, you know, bread and butter of small and midsize project is what makes us strong, resilient, and also a preferred advisor for many clients. Because, I mean, we all here read about the big projects, and the ones that we read about in the media, but if we look into our clients, no matter what industry they are in, the small advising reports, feasibility studies, pre-studies, reconstruction things is, you know, daily work for our clients, and they need the competence of Sweco for that kind of work, and that builds the trust and the relationship long-term with our clients.
Meaning that when the midsize and the big contract schemes or investments is coming up, when we then show that we are capable of delivering those, you have that established way of working with the client, and then, you know, that benefits us.
But I think, I mean, it's a good point you have, because one part of both becoming efficient and staying efficient is making sure that you, I wouldn't say minimize, but optimize the number of non-billable resources out in the organization. So it is an important point for us to, to work with every day.
Yeah.
And just a second, maybe touching on this, the M&A strategy, is that less decentralized in structure in how you work, or is it that you need to-- Is it coming from the small teams, that this one you should look at, and then it moves up into a funnel or something like that? How does that work?
No, the, as I said, when I talked about M&A, it is a very coordinated process across the group, and I would say this is not-- I mean, obviously, leads can come from team level, but in terms of coordinating the M&A we actually have in the pipeline, it's business area management together with our group M&A team, and with very much involvement from Åsa and myself. So that is a more centralized process in Sweco.
Do we have time for one more question?
Yes, we have time. Take some more then.
Hello, Francesco Ancona from Degroof Petercam Asset Management. Just following up on the M&A question previously. I want to understand, as you said, those margins, sorry, those deals are margin dilutives, and correct me if I'm wrong, it might take up to one-two years to extract all the synergies, right? So if it's true that M&A is accelerating, as you mentioned, could this, on a certain extent, counterbalance the, let's say, operational efficiency, and so put the stuff on those 12% EBITDA target, in the, let's say, mid to long term? And if that's the case, then how you would like to achieve those 12% concretely? Yeah, thanks.
To start with, I mean, historically, on average, M&A has been margin dilutive, and that is, as you say, it takes us further away from the margin target in a way. But we believe that in addition to the margin target, it's also important to have an absolute EBITDA growth, which is also what we have shown over the last seven years. That being said, all acquisitions are not margin dilutive. The big one we made in, mostly in Belgium this spring, VK, as we have shown after Q2, that this is margin accretive on the other way, so it should improve Erwin's wonderful margins even more going forward. And now I sort of dropped the second part of your question, sorry.
No, well, you answered, but just wondering indeed if this counterbalance a bit, how then, what are the concrete action to achieve this 12% target?
No, I think that's very much about what we had on the slide. It's about fine-tuning performance in the high-performing markets that are already on or around the margin target. It's about taking the sort of halfway, Norway, Netherlands, and Finland, the final steps. And it's a mix of price increases and efficiency improvements. And then it's the turnaround in Germany and the similar turnaround in the U.K.
Thanks.
Thank you. We have two questions from our audience online. The first question is from Simen Mortensen, DNB Markets. How is the price rate competition trending in your market, given current building markets?
Not sort of talking about the pricing in the building market specifically, I think, not only we, but also competition has been quite successful in improving prices over the last year in the inflation environment and with the higher salary inflation. So I think it has been quite disciplined in the market when it comes to price competition.
Okay. Second question is from Kamil Vlčinský . Sorry for the pronunciation. Praxis Partners. It's a long question, so bear with me, and with Kamil . Can you talk a bit more about the benefits from European programs that have been initiated around COVID times, such as EU Green Deal or Chips? Some of your peers communicated they see European programs to start being deployed next year. Do you see similar, and what do you think will be the uplift to grow from these programs in percentage terms to your organic growth? And if you are not able to take a benefit in organic growth due to the employee bottleneck, do you think it can accelerate margins by allowing you to be more selective on your projects? So it's three, it's three questions in one.
First of all, I think, on the latter question, being selective when it comes to our clients in, and in our projects, that is how we operate our business. And then another thing is that we are actually looking for, as I presented, the growth areas where we see investments coming and where the need for our competence is huge, meaning that we try to position ourselves to really grow in those areas. We have experienced that the focus, linked from EU down to governments and down to legislations and regulations, has been there for the last years. So it's ongoing.
But of course, with the Russia's full scale invasion of Ukraine and what has happened afterwards, linked to that, on the different markets, the pace of things and how to prioritize differs between different countries. But in a overall perspective, we foresee this kind of push from those programs going forward.
I think in terms of putting numbers on this, I think it will have positive impact on organic growth. It will give opportunities to increase margins, but putting a number on it is not possible at this time.
But maybe we can elaborate a little bit about- Because we have said, I mean, if I look back 20 years ago, or even 10 years ago, or even seven years ago, we said that, Sweco's business is interlinked with, the GDP growth and the GDP movement, and that is true. But with that said, there is also some kind of, you know, long-term, overarching trends and focus when it comes to investments that has, you know, really started to benefit us the last, I would say, five years, and I've talked about this before.
Thank you. I thought you liked numbers, Olof.
Yeah, but not making them up, though.
With this, thank you for all your interesting questions. We'd like to invite you for some coffee and refreshments. And as some of you have already tried out, there's a virtual reality possibility for you outside, looking into the new metro line, looking into what the, I say it in Sweden, Sturekvarteret, will look like eventually. And also climbing on top on a wind turbine for those without motion sickness, et cetera, et cetera. After the break, we will invite Erwin Malcorps, Business Area President for Sweco Belgium, to tell their exciting journey, and I really need you back here at 10:20 A.M. Thank you.
Welcome back, everyone. Hope you had some good refreshments and some nice journeys in the virtual reality world, standing on the turbine or whatever. Without further introductions, perhaps, but let me introduce Erwin Malcorps to take us through the Sweco Belgium journey. Welcome, Erwin.
Good morning. Good morning, everyone. My name is Erwin Malcorps. I'm a business area president for Sweco Belgium. This year, I work 25 years for the company, so I can't beat you, Åsa, with 30 years of loyal service. Well, we've been part of Sweco since 2015, since the acquisition of Grontmij. Yes, since 2015, we've seen an incredible journey of growth to become today number one on the Belgian market. Today, we are 2,650 people in Belgium, working, as you can see, for almost 4,000 different clients. We work on 10,000 different projects. We have small projects, small assignments, at the same time, very large assignments as well.
For instance, we work on the Antwerp Ring Road, we work on large hospital projects, on metro projects as well. Strong regional presence, also very decentralized organization. Our priority business, of course, is the Belgian business, but we have also operations in France, in Luxembourg, and also in Vietnam, mostly linked to work sharing business. You immediately on slide, you can see some pictures. Below, picture of our industrial projects, and on top, It's a rendering of the new railway administration in Brussels. And maybe as you can see, it's a timber construction, and there was a question in the room regarding knowledge sharing.
Well, this is a good example because we sent two young engineers to Norway because our Norwegian colleagues already did the design of a very large timber construction building in Brumunddal. So, there we used all the knowledge available in the group to do the design here of this new building that will be built soon in Brussels. Our business is divided in 6 divisions. This year we added VK after the acquisition. As you can see on the screen, it's a very important part of the business. Very large acquisition, which we added to the Belgian business. We're active in the building environment. We're also active in energy and environment. The industry business is quite important in Belgium. A lot of industrial activities, mostly linked to the Antwerp Harbor.
Infrastructure, also important business. Pharmaceutical business. I believe almost all major pharmaceutical clients, they have business in Belgium, and they do a lot of investments. And then, VK Architects Engineers and BUUR. So you need to pronounce it BUUR. It's a bit special name. It's well known in Belgium. In fact, it's a Dutch acronym for Bureau for Urbanism, so it's an office for urban planning. And at the same time, in Dutch language, it means neighbor. A neighbor, because we work close with our customers, but also close with citizens, because in the end, we do city planning, we do urban planning. But the key topic of my presentation today will be the incredible journey of growth we've made with the Belgian organization.
As you can see on this slide, our business today in 2023 is, yeah, 6x as large - four times as large as our business in 2016, which means an annual growth of 23%. And we also managed to increase our margin, our profitability, looking at EBITDA from SEK 50 million in 2016 to SEK 400 million year to date in 2023. This means a margin improvement from 6% to 12.6% today. Of course, this growth had a huge impact on our Belgian organization. We're very proud of this development, and on the next slide, I will walk you through all the key drivers that contributed to this success.
As already mentioned, the Belgian business for Sweco started in 2015 after the acquisition of Grontmij. The three key pillars in our journey of growth are the ones on the screen. First, we implemented the Sweco model. I have to say, immediately from day one, we started to roll out the Sweco way of working. Later on in the presentation, we'll give you some more details. The second pillar were the strategic acquisitions, and the third one was the positioning of Sweco towards real growth opportunities on the Belgian market, where we saw clear trends of important growth. And indeed, the implementation of the Sweco model has been key to our success. Sweco strategy, as I was already showed earlier in the presentation, is based on four cornerstones.
And the first one is the client focus. Of course, we focus on our clients. We work closely with our clients. We also measure client satisfaction. We use the Net Promoter Score, the NPS, which today is at 51. It's a very decent result. It's also what we hear when we speak with our clients. We listen to them. They're satisfied, satisfied about our expertise, about our service, and yeah, I believe my dear colleague, Ann-Louise, in her presentation, will show even a higher NPS score in the Nordics. And at the same time, that's also our ambition in Belgium, to get those Nordic levels in result. But what is also important, this is much more than just a commercial KPI. This is the result of the rollout, the implementation of a strategic plan.
Because we wanted to make sure that each team, each team manager, really understands the importance of client focus, and that all the teams, they start to work with the feedback we get from our customers. Of course, we need the best people. Recruitment is important, retention is important, the development of our people are important. Just to give you some figures on the recruitment. In 2016, we recruited 50 new employees yearly. So this means, as an average, almost one contract signed a week. This year, in 2023, we expect we'll recruit 500 new employees, so this means more than two contracts signed a day, which is a huge difference and put a lot of efforts on our recruitment team.
We look a lot on diversity, personal development. We measure employee satisfaction. So client focus is important. Our people, of course, are important. I don't have to explain that. Best people today is maybe our most important key focus in a market where we face fierce competition, looking for the best talent, but we want to work with the best people. Internal efficiency is also important. You know, when I showed the graph in the presentation, this one, how we became a double-digit margin business area, starting from 6%-12.6% year to date in 2023. Of course, this is a proof of the internal efficiency and the measures taken in our business area. Yes, we focused a lot on the efficiency, our internal flows.
We invested a lot in digitalization, in scripting, in our design process, in automation of our design process. That enabled us to reach this higher margin, double-digit margins, combined with the decentralized responsibility. The decentralized responsibility, we are convinced at Sweco that by working in smaller units, that it really increases the accountability and the responsibility of our people working for customers. So it's today we work with almost 250 teams. They have all their profit and loss.
They have their dashboards, and, and of course, by working with a decentralized organization, we also need to make sure that we have our governance, that we have the monitoring, that we have the follow-up, so that, that everything is well prepared. Working in 25 offices today in Belgium and also nine offices outside Belgium, 2,650 experts working on those, 10,000 different projects. So yes, we are very proud of, this development and this achievement. And, yeah, the decentralized organization also helped us to achieve good results and client focus. It helps us to have good people management, and it improves our internal efficiency.
Yet to reach the result from 6%-12.6%, it's a matter of internal efficiency, and at the same time, also focus was already a question in the room earlier on, the average fee on our pricing. As you can see, in 2023 year to date, we boosted results compared to last year. Well, we started up a huge program on pricing and on average fee. Of course, there was the inflation on the market, but we believe that just this inflation was the right momentum to go to our customers, to go to our clients, and to ask for higher fees and to get paid for the quality of our services.
So together with all the teams, with all the team manager, with all the project managers, we rolled out a program in 2022 already to make sure that we get those higher fees, once we face again the high inflation rates. We managed to do so. So when we look at the average fees, today in 2023, they're significantly higher than they were in 2022. So it's another result of this decentralized responsibility, where we ask the commitment, engagement, and accountability of everyone in the company. Yeah, as already said, retention is important, recruitment is important, development of our employees is key, within Sweco. And yeah, we've seen a significant growth in number of employees, since 2015.
So over the seven years, we've grown from a company of roughly 800 people to a company today in Belgium with 2,650 employees. So of course, it's a huge evolution and with a huge impact in the company. And to do so, we also invested a lot in our brand awareness. And just to explain you, in 2016, when we organized early bird breakfast with the young starters, and I asked them if they knew Sweco before they joined Sweco, about 15% of the young graduates told me that they knew Sweco before. Today, we organized those early breakfasts also with much more people due to a lot of young starters.
When I asked the same question, they all know Sweco, but at the same time, 90% of young starter, they're convinced that Sweco today is the best workplace for young people. So it's a huge difference, a huge difference in brand awareness, and of course, it's a result of a lot of work done. We focused on social media campaigns, very professional campaigns. We are at all the job fairs, at high schools, at universities. We organize lectures, we organize site visits, just to make sure that we have this brand awareness in Belgium. And yeah, a second pillar that contributed to our growth journey were the acquisitions.
So together with the organic growth, it really enabled us to reach this leading position in Belgium, to become market leader in Belgium, where in 2016, we were about in 5th position. We did more than 20 acquisitions over seven years time, adding SEK 1.75 billion to the net sales, adding 1,300 new employees to the large Sweco family. So yeah, we've been very successful in the integration of acquisition in the preparation of acquisition, and also afterwards in a very fast integration of those companies. And yeah, we look at two types of acquisition. On the one hand, there's what we can call the scale acquisitions, adding capacity, extra market share to our operations today.
I believe that VK Architects and Engineers, which we acquired this year, is an example of this scale acquisition, really giving us a strong market position in the building business in Belgium, also adding extra services to our portfolio. Another one maybe is Talboom. They joined us in 2020, very active in the pharmaceutical business just before the COVID lockdowns. Then the second type of acquisitions is what we can call the niche acquisitions. Sometimes companies, maybe not the largest one, but really specialized in some specific industries. Maybe just one example, Venac, there were only five, very small acquisition, but key experts in acoustic engineering, and that really gave us an extra unique selling point to our portfolio.
Maybe also, FPC, they joined us this year. Fire consultants and experts in emergency management. There again, a very good complement to our actual portfolio. Maybe also to mention Futureproofed , a bit special. Why? Because, Futureproofed designs software. So, they design software that help customers to monitor their carbon footprint, and also at the same time, to have a good view on the impact of actions taken by the clients. And of course, today, with Futureproofed and Sweco in combined offering, we are not only selling software, but at the same time also selling extra consultancy services, helping our customers just in their journey to become more sustainable.
Yeah, maybe the other one, Infranea, was part of the VK group in, which we acquired in 2023. You could say they are BIM infrastructure engineers. I suppose you've tried already the VR glasses of the, of the Stockholm metro. We tend to call them, information infrastructure information engineers. And as an idea, I added a small movie. And this is also a 3D rendering. It's a virtual reality. This is what we already use today. It helps us in our design process, in our engineering process. It also helps us to explain our customers the real details of our concepts and our projects in any conditions, whether it's a car or a truck or in rainy conditions.
But we also go already some steps further, because we, we use this BIM model also for training purposes. To help a customer, for instance, for a centralized traffic control center, where we simulate reality. And we also add some traffic data and big data in the model. And then by some machine learning and with the artificial intelligence, we can help the customer to preset some scenarios. For instance, if an accident would occur in the tunnel, how to react and how traffic similarly should be organized in reality. So this is just an example how digital tools and artificial intelligence today are already used in a lot of our infrastructure projects. So this is one example of tunnels we design also in the Antwerp Ring Road.
It's one of the largest infrastructure projects today in Europe. The work's already started, and we're still designing the next phases. The third pillar that was a key to our success in our growth journey was the positioning of Sweco towards clear growth trends on the Belgian market. Yeah, I've made a selection of some of those opportunities. The first one here I mentioned is climate adaptation. Yeah, we can't deny that, yeah, local municipalities, cities today, they have to adapt to meet climate change, extreme weather conditions in the next future. Well, our country, almost two years ago, was hit by strong floodings in the south and the east, where some local municipalities were really destroyed in one hour time after floodings.
Maybe that was kind of an eye-opener and at least created a lot of awareness in the country. Yeah, some weeks ago, we also won the assignment for the government for coastal protection measures. So just as an example, that this is a growing market and that customers ask for our services in this area. The same goes for energy transition. Belgium invests a lot in renewable energies, also in the backbone of renewable energies. As one example, there are a lot of investments planned in hydrogen backbones, so we already are working on a lot of those projects on hydrogen. Also, the energy grids, it's about energy transmission and even also the renewable energy production. As I've shown in the movie, another trend are the digital solutions within infrastructure.
With our business area today, we work on the Antwerp Ring Road, as I just mentioned. We also work on the new Paris Metro lines. We work on the Brussels Metro, the Brussels Ring Road as well. And what we see today is that digitalization becomes much more important in infrastructure projects. We are on top of it, we have a lot of expertise and experience in this area. And then last but not least, the pharmaceutical business. Well, Sweco was responsible for the design for the new Pfizer COVID production sites between Antwerp and Brussels. Huge time pressure, I don't have to explain. On that project, we worked day and night during holidays, during weekends, to meet the extreme severe deadlines.
But we did not only the civil design, we did also the process, we did the design of clean utilities, the filling, the dry freezing. So in other words, we are really experts in this area. And I can say today, we are market leader on the Belgian market, but we are also very active in a very broad portfolio in all industries today. And I believe today on the market, we are the only ones with such a diversified portfolio on the Belgian market. So to conclude, yeah, we are very proud of this development on the Belgian market, which we've seen over the past seven years. As you also can see on this slide, there are a lot of growth opportunities on the Belgian market.
Looking forward for continued growth and also to support our customers in the green transition, which is key today. Thank you.
Thank you, Erwin. Now it's possibility to, to ask questions to Erwin, as we did before. Christina will hand out the microphones, and for those of you online, please ask your questions through the chat function. State your name before.
Thank you. So Johan Sundén from Carnegie as well. Question on the kind of brand, and if you compare Sweco as a employer compared to the other kind of engineering firms that are present in Belgium, what is make you really different, and what is the thing that the newly graduate engineer really appreciate with Sweco?
Yeah, good question. How can we attract young graduates in another way compared to our competitors? I believe what is key today in our branding is our focus on our sustainable development. So we've been very clear in the market in our portfolio that this is the way forward. It really attracts a lot of young graduates. They want, they want to join Sweco because they want to make a difference, and they want to have impact. If you look at the project we are working on, we really look for those projects where we really can contribute and can make the world better.
At the same time, I believe there are a lot of other branding elements which we use in our branding towards the labor market. This is a call it a great workplace, and this is focusing on the company spirits, on how we can develop people, how we invest in training, development possibilities, the decentralized responsibility. So there are a lot of elements which we use in the branding.
Maybe a question for maybe also Olof, but if you look at wider kind of European perspective, do you see that the engineers in, say, Germany, Netherlands, U.K., are looking for the same attributes?
Yeah, yeah, yeah, I would say so because, I mean, the world has become more globalized, meaning that, I mean, and transparent, meaning that the knowledge about what is doable and what is needed for the whole society and what challenges we are meeting, everyone knows about that. So, I would say especially the younger generations, they are actually thinking more about that they can move to some other countries. They are expecting more, and they are expecting exactly what Erwin is saying right now. But I won't say it's only for the youngsters. It's everyone that wants to work in a company that is leaning forward and want to kind of, you know, develop in this way. So yes.
Johan Dahl at Danske. Just looking at what opportunities do you see from Belgium to possibly look sort of in adjacent countries? Maybe that's a sort of a group type of question, but just from your perspective- What you see into neighboring countries. And secondly, also, if you compare yourself to Netherlands, it seems big, as you know, significant difference in organic growth in between those two countries. What, in your view, is, is the main difference there between you and the Netherlands?
Yeah. To answer your first question, when we look at activities in adjacent countries, first, we look at the Luxembourg market, just next to Belgium. We already have three, four offices now in Luxembourg, and we have about 100 people working in that country. So there are clearly some more opportunities to explore in that market. Looking at the south, at the French market, of course, we speak the same language, which is an advantage. We look at specific opportunities. It's a huge country. We have one office in Paris, where we rather focus today on large infrastructure projects like the Metro. Compared to the Netherlands, when we look at the growth we've seen in Belgium, I believe each country is different, each market position is different.
I believe when we entered the Sweco organization in 2016, we felt that there was room for further consolidation on the Belgian market. It was the Belgian market in 2016 was quite stable, and we have not seen a kind of consolidation wave. Maybe that already happened in the Netherlands when I look at the Dutch landscape. So there was room, it was the right moment, and we were in the right position to do so.
If I can add to that as well. It has also to do with the project portfolio and the client portfolio that Belgium has compared with the Netherlands. So part of our business model is, as you know, from today, that having a diversified portfolio, but also bringing on the bigger contracts. So I mean, when we implement the Sweco model, we work a lot about making sure that we have this right mix and that we have the also the big contracts in our portfolio. So the starting point of the Netherlands and Belgium was different in 2016. And also, of course, what Erwin is putting forward with the market circumstances. And if you also look at the numbers, I said before, Netherlands started at 1.5%.
We saw back then that the trust in the management, and what do we needed to do on the Dutch market to secure stability on the platform before we started to take on M&A activities. We had to go a bit further, so it has to do also with how aggressive we could work in Belgium with the M&A, again, like, compared with the Netherlands. So in that sense, they are a little bit behind.
Yeah. Thank you, Daniel Djurberg , Handelsbanken. I was just curious about the trend you see in fixed pricing and also in the procurement processes. If you see more, you know, more smaller projects than due to some uncertainties or shorter projects, perhaps I should say, or is it more business as usual? Thank you.
Yeah. Well, when we look at our actual portfolio, we have a clear well-balanced mix of lump sum agreements on time and material contracts, fixed price. We have huge differences in contracts and in way customers do the procurement. To answer your second question, whether we see a trend towards one specific direction, I have to say that rather within infrastructure, we see a trend towards more time and material contracts. Where before most of the contracts on the Belgian market were based as a percentage on the investment amount. I don't have to explain that that contains a higher risk to manage than time and material. Each contract is different, means the different risk level, also means different way of handling, different way of follow-up.
But, I couldn't say that there's a trend towards one or more different kind of contracts.
Hello, Francesco Ancona, the Degroof Petercam Asset Management. On the decentralized model, could you give us a bit of color on what are the pros and the cons of having 200+ teams running their own P&L, so in terms of efficiency, but costs, resources, usage of resources? Thanks.
Thank you. I like that question, because, I'm a strong believer of our decentralized model, and I already also explained it. We don't have matrix organization, so it's quite simple organization with a decentralized responsibility. This means that we rely a lot on the leadership, and the accountability of our team managers, which we do. This also means that we need to have a good follow-up, a good governance, and good monitoring of, what is happening. But in the end, what we feel is that this decentralized responsibility creates indeed a lot of accountability and ownership, and people are proud. They're smart people. We look for the best, and that they are ready and eager to take up, that responsibility.
So we want, we want to give them this space to maneuver, the space to manage their business. So we don't want to bother them with too many administrative burden. Of course, there is a good governance and a follow-up, but it's something else than strong hierarchic or complex organizational setups. We rely a lot on our culture. We rely a lot on leadership and on collaboration. As I just explained on the first slide, if we win a project in Brussels and we need expertise from our Norwegian colleagues, yeah, I just pick up the phone and I call my Norwegian colleagues. So we don't have a complex structure to organize cross-border collaboration, but we support the company spirit, and we support people that want to collaborate.
And there again, we rely a lot on decentralized responsibility, which helped us a lot during COVID crisis, where all team managers took up the responsibility when we get stuck in lockdowns. It also helped us in the pricing. Today, when we face high inflation rates, we don't have one centralized program to ask for higher average fees, but we ask all team managers to take up contact with the clients and to ask for those higher fees because they are the best to do so. They can convince the customers to pay for the quality of our services.
Quite clear. Thank you.
Hi, Raymond from Nordea here. Just one quick question. So you mentioned, for example, that you don't want to burden your key account managers with too much admin. Was there maybe a tangible difference before Grontmij joined Sweco versus after, in terms of admin work or?
A tricky question, because now you ask me what's the difference between Grontmij and Sweco? On that point, honestly, I believe there was a difference between Grontmij and Sweco. Grontmij was a bit more centralized, a bit more organized in a top-down way. So, that was something we discovered in 2015, 2016, when we became part of Sweco, where we really took the time to understand the difference and the strategic differences. And this decentralized responsibility, it was well perceived, of course, when it was presented to us, but it also took us some time to understand what it really means. And on that point, indeed, I believe there is a difference.
We really tried to limit the administrative burden on our team manager, also on our project managers, if you ask young people joining Sweco what they want to do, most of them, they want to work on projects and not on administration. So we try to limit and to lower down the administrative burden.
More questions? I think we're done.
Thank you. There, I'm not letting you off the hook. Yes, yes, we have the chat. And we have Mark van der Geest from Neuberger Berman, who's asking: How many days are Sweco Belgium employees in the office, and how many days do they work from home? How do you see this balance evolving?
Yeah. Of course, the first days after COVID were a bit awkward. In Belgium, we had quite strong lockdowns where people were really forced to stay at home, so heavy lockdowns. Yeah, after several months, we felt that it was not easy to ask people to come back to the office immediately. Well, we asked our team managers, so what to do? If they would prefer to have a clear guideline set by the management to ask people to be four, three, four days in the office, or to leave it up to them to organize the best way they can do in the teams. Well, there was a clear answer from our team, as I said: "No, we can handle the situation. We don't need the guidelines.
Maybe that's the easy way to do, just putting forward a guideline, three days in the office, end of story." No, their answer does that. They, as team manager, want to have the mandate to organize in the best way they can do so, which they did. And when I look at the situation today, I believe we are at 60%-70% of the people normally in the office, which is quite a high figure. And what we do, of course, we organize things. We organize a lecture or a sit-in at noon, which makes it also attractive to come to the office.
But in the end, it's the team manager's responsibility, and we always say, "Client first, team first, and the project goes first, and then, of course, your individual private organization," and works well.
Okay. Thank you. Jonas Eriksson from H&H is asking if you could say something about your project with the subway in Paris, the metro in Paris. That was a good question, wasn't it?
Yeah.
Yeah.
Also a question I like. We work on Line 17 project in Paris, which is a new metro line between the airport, Charles de Gaulle in the north and the city center. Project is in execution today. So the TBM, the tunnel boring machine, already arrived in one of the underground station. So in other words, in a full execution, we met the customer a while ago, Jose and I. We got good feedback, and yeah, project is on track, and it's a huge investment. It's a EUR 1.5 billion investment, and now the contractor was appointed for the last part, where we will cross underneath two runways in the Charles de Gaulle. So from a technical point of view, the challenge we like.
[audio distortion] Has been ongoing for quite a long time.
Yeah, I think it was almost at the same time when we joined Sweco, so I believe it's 2015, 2016 when we started that assignment, and when we opened a project office at that moment in time in Paris.
It's a good project to recruit youngsters--
Yeah, it is.
Yeah. Thank you so much, Erwin, for your presentation, and thank you for your questions. Now, I would like to invite Ann-Louise Lökholm Klasson on the stage, business area president for Sweco Sweden.
Thank you so much, and now you can hear me. Hi, everyone. So, I'm heading the Swedish operation and has done so for five years, and I'm actually the youngster here. I only been within Sweco for 15 years, so compared to you guys, I'm, I'm a youngster. Sweden is the home market of Sweco, and it's also the largest business area, so a big and interesting responsibility. So this is how it is. We have a net sale, sales over SEK 8 billion and an EBITDA margin at 11.6%. We have a really strong market position. And if I'm listening to you and your journey, when I started back in 2008, nobody knew what Sweco was.
But today, I think it's very common in the society to know what we are and what we stand for, so it's a big journey here as well. We are, though, number two on the market when it comes to size, and we have about 6,300 FTEs in the organization. And I'm really thrilled about the numbers we have around our clients. So we have about 7,000 clients in Sweden, but we also have an export organization, so we do clients outside, we do projects outside Sweden as well, and 29,000 ongoing projects. And we have the really, really small project. It could be down to a few hours up until the subway that you will see out here and that we will visit after. So we range broadly in the organization.
And yes, I will briefly, we're very proud of our Net Promoter Score. So 67 is a really high and really nice feedback that we are getting from our clients. And I think it's something we've been working on for a while, to have this close relationship, understanding our client, be curious in the feedback. But where we are in Sweden now with the market, this number is more important than ever for us. We are in a very tall country, as you know of. Sweden is, you know, a tall country, and we have 50 locations, from Kiruna in north, down to Malmö in south. So very decentralized, very local organization, which is key for us. My organization is divided into six divisions. It's a fairly new organization, since two years back.
It's clear for the division managers what their role is. Their role is to become number one in whatever they are doing, but also understanding on the shifts coming, short term and long term, and prepare us for that. The smallest division here now is digital services, with a huge potential to grow, and my largest one is transport infrastructure, with about 1,500 employees. So it's a big range also here. We are number one already in quite many areas, like the whole building division is number one in what we provide our our clients. Transport infrastructure, number one. Within water and environment, number one. Energy, number one. And I'm really happy to say that our architects are number one on the market, with a bit over 600 employees. So that was Sweco Sweden at a glance.
So decentralized, local, six divisions, and we have a history of combining architecture and engineers. We are very used to this. We've been working with it for a long time. But today, I think this is more important than ever. With the changes we have on the market in complexity, the uniqueness that we create together is giving us something else that no one else can really provide on the market. And it's. And I will come back to more in-depth regarding trends and what's happening on the market. But to really create something sustainable, like the Blique Hotel, you need to work together really closely with the client, of course, but also between the engineers and the architects. But we are also very careful in not just talking about the architects and engineer.
It's so important for us that the digital solution team are working close to water experts, for instance, to create smarter solutions. And we see that the complexity is driving a need of innovation. Innovation to create new solutions, new way of doing things, and also, like you touched upon also, in the increased speed that we need to solve a climate solution. And to meet that, it's one key thing here for us to have the right culture, the right mindset set, the right leaders, the best people, but also making sure that we put diverse set of viewpoints into the room, and we do that with competences, but also with diversity and equality. So Sweden is almost, almost there when it comes to true diverse and equal organization, with 38% women, both on manager level and overall employee level.
The diversity target is set to 20, and we have reached that this year. A bit more about our numbers. We have an industry-leading margin. I'm really happy and proud about that as well, especially in a mixed market, as we are in now, to be able to maintain a strong, sustainable margin is important for us. I'm also proud that we are creating growth, and really strong growth the last couple of years. As you can see, we were affected by the pandemic, a bit lower, but we have also created growth thanks to the changes that we see in the market now, the potential, and I will come back to you on this.
We are, of course, not happy with the trend that we have on billing ratio, and we are taking measures on that. And that includes improving organizational setup. We are looking into the onboarding, how fast can we get our new employees out in the projects? And we hired 1,200 new employees last year, so it's a machinery ongoing on this, of course, but still is a potential to do it even better. We have a good cost control, but with the inflation and what's going on in society, this is a key thing for us to continue to focus on. So for a couple of years ago, we did a job in the management team to look on where are we heading? What's gonna be important for us? What's gonna affect our clients?
We spoke about sustainability, digitalization, all the mega trends, and so on. We said that there are some certain things that we need to focus on, and that we need to understand, and that each division needs to really be on top on. We gathered in these four areas with the shifting client needs, all the sustainability, digitalization driven, and so on. There's a whole package here, which I will come back to you on. But we also said that we need to look into how our clients are purchasing us, what kind of new demands they are putting on us. There was a question to you regarding fixed price and so on, and Sweden is a time and material organization. If we look from a Swedish overall perspective, there's no real big trend on this.
But if we look at the division, there are trends. Like we can see in the transport infrastructure, it's more fixed price, or in the digital area, it's something we call item sales. So there are some movements below in the organization. We also see a competitor landscape transition, and, and this is partly a long-term trend for us, but it's also partly new trend. So what we can see in the Swedish market is that we have competition from abroad coming into the market, but due to new regulations and, and so on, we can also see existing other actors moving into our field, for instance, within CSRD. And also touched upon the engineering problem, so to say, in Europe, and the skill complexity that we have.
So we can see also in Sweden, a lack of engineering, and this is something that we decided to focus upon when we did this work, that it is gonna be a lack of competence. But what's interesting with that one is also that it contains a shift in competence due to AI, for instance, how we work, what we do. So we decided that we needed to focus on that as well. One thing I forgot to mention, in a competitor landscape, what we decided was to increase how we work with sourcing. So we have an organization in India with a couple of hundred employees that are supporting our organization where it's needed.
So one thing we did when we saw that, it's gonna be a scarce resource with engineers, we said that we need to be really attractive when it comes to senior professional civil engineers, because we were already on a really high level when it comes to young professionals. So we decided to invest stronger in our employee brand, connected to senior. And, well, this is the result. So we are in top in Sweden, and I'm so proud of this result. So together with Polestar, Spotify, IKEA, and Google, we are in top in Sweden. Mm-hmm. So this is the really key for us to have the best people. The best people will also bring in the best projects for us, and then you are in the positive movement.
So apart from organic growth, we are also working with the acquisitions, not as much as you are doing in Belgium, but again, it is a different market. We are more consolidated in Sweden than the other countries are. But we have selected some really strategic, important acquisitions in Sweden to tap into new growth segments. And in this selection, you will find energy with the PetroTeam, Tovatt Architects , urban planning, which is something that we did before, but they strengthen us in it. AdviceU is a digital strategic competence, advisors in early stages. And also, you mentioned Medins, and that's also on the picture here. So Medins are doing water surveys, and it's a scarce resource. This is something that we see will grow for us. And together with the competence we already had, together with Medins, we are now number one in Sweden in this area.
Let's see. Here we are. Okay, growth areas. You know, this was really hard to select a few words on what to put on a slide, because it exists in so many ways, in so many areas that are interesting for us. Just for instance, with the new regulations and laws coming from EU, there is a need, a growing need for strategic advisory service. So one area that's growing for us is the CSRD, CSRD competence, where we can support our clients in how they will respond, how to act, how it affects their organization. But there's other parts here as well that's really interesting.
So I mentioned before, we are number one in water, and water supply, water cleaning, you know, all of that. But water is also like you touched upon. We have higher sea levels, we have more flooding, more rain coming, so how to protect the society? And then it's really interesting to let digital solutions meet water competence. So our digital team together with our water expert experts, for instance, formed something we call Smart Water. So Smart Water is where we're using AI competence to provide our client with risk mitigations, you know, that can predict the future in another way, work more efficient. And that, of course, is applicable to regardless of, because it's a really interesting meeting we have there.
Security, well, it's on our lips as well as the society, especially in Sweden, and we are, of course, talking about security from a different perspective. It could be cybersecurity as well as protecting our roads, railroads, or houses. Energy. Energy is, of course, on everyone's lips. The transformation, the growth. In Sweden, we're supposed to double the energy production, so how is that gonna be? So for us, energy is a growing area, both when it comes to production, but also the strategic advisory services. How are we gonna move? What kind of decisions do we, as a client, need to take? Circularity is also something really interesting, and here we can learn from Europe, because Sweden is behind when it comes to circularity.
So Blique Hotel is a really good example where we have used circularity to reduce the CO2 emissions. But circularity also comes into the industrial transformation, where we can connect different industries. For instance, one industry has too much heat and another one needs heat, so we combine them together. I hope you have some questions about this later, because this is really interesting, I think. And, but I think I will stop there, actually, and move into this. So you all heard about the green transition in the Northern part of Sweden, and it's driven by industries. But of course, what's interesting is the growth and the production of energy, together with the needs in infrastructure, together with the need of urban planning. So about 100,000 citizen are needed to fulfill the green transition up in the Northern part of Sweden.
How do you then attract people to move up there? You need houses, you need daycare center, culture, you know, and so on and so on. So that's what we are also working on. To be a bit more specific on it, so we are securing future power supply in the Northern part of Sweden, as well as in the rest of Sweden. We are doing industrial transformation and working with the new industries as well as the established ones. So new could be Northvolt, the established could be LKAB or SCA, that we are supporting. A really nice example with critical infrastructure is the one of our larger projects up in the north with the Norrbotniabanan. Urban planning is, like I said, supporting the society to develop, to attract, and have houses and so on.
One thing that didn't fit on this slide, but I think is really important also to mention, we are number one when it comes to environmental permits, and we do about 400 every year. I mentioned in an article once that it's in the eye of the storm in Sweden and also in many other countries. But we are involved in many of these things happening up in the Northern part of Sweden and the rest of Sweden when it comes to permits. Okay, final slide. So today, you all are invited to follow us to Nacka site, where we will look into the new subway in Stockholm. And it's one of the largest investments ever for Region Stockholm. And I mentioned in the beginning, that is one of our largest projects as well.
So we have been working with this since 2014, and if you have been paying attention on your phones today, you saw the press release that we launched early this morning. So we have now won a new contract worth SEK 250 million. And with that contract, we will continue to work with the subway up until 2030. So a really, really long project. And we are doing that together with our partner, TYPSA, and the one we launched today, we will deliver site supervision, works coordination, expert support service for all utilities, railway, its supporting system for the implementation of the 11.5 km new rail and new seven new stations. So a really interesting project that as well. And here again, we have a good example on where our engineers are working together with our architects.
We have engineers involved from 2014, and we have one station where our architects are designing, and now this one. It's different pieces of the puzzles coming together. If you haven't tried the VR glasses out there, do that, because it's quite fascinating to try out and see how it looks. Okay.
Thank you, Ann-Louise. And yeah, we're getting really good at this. So Christina, you hand out the mic, and you ask the questions.
Thank you. Dan Johansson from SEB. I think I have two questions. I can take them both at the same time. You've done a few M&A in Sweden as well as the other countries, but no larger M&A, so more of the sort of niche niches that you find interesting. Is it totally out of the table to do a bit larger M&A as well, adding a bit of people, for example, in the north? And, perhaps also another question, I could take it at the same time. In terms of the onboarding, how in practice do you improve on that? Is this sort of digital training modules, or how can you actually speed that up a bit more then?
I don't know. Do you guys want to answer on the M&A part, or should I take it?
You can take the M&A.
Yeah, I would say it's not--
Okay, we can say.
Yeah, it's not. It's, of course, interesting also with the size, and I think what I wanted to show with my presentation is that it, it is growth potential if we find the right, candidate, of course.
I have nothing to add, because that is the answer.
Yeah. Okay, so we have done quite some work now in how to onboard from a central perspective when it comes to doing introduction as much as we can, actually, before they start. And then it's up to the manager to meet them and train them and so on. But everything that we can, we are trying to do before or right when they start. Then it's more, you know, how used are they to the consultant work? Do they need training like that? That takes longer time. But I think for Sweden, it's critical, of course, to get them out in project as fast as we can, but also to get the personnel turnover down, because that will calm the organization a little bit.
It's a big work that we did last year with 1,200 new employees coming in together with personnel turnover, but now we see that one coming down, like Olof mentioned. So, that will support the managers, so they can be more efficient in the onboarding as well.
Thank you. A few more questions from me, Johan Sundén at Carnegie. The first one is on the NPS score, which you were very proud of in the beginning.
Yeah, yeah.
Is it possible to give some color on the kind of industry average and what potential there are to convert that NPS score to higher fees?
Good question. I actually don't know how it looks on the market. I haven't seen those numbers, and maybe you guys have seen them. No? No. No, it's a no on that one. I think the NPS scores shows that we have a close relationship with our clients, that we understand what they're going through and their needs, so we can be advisors to them. That also means that we will win the projects we want to win. And I think with the market and the mixed market we have in Sweden today, we are quite successful when it comes to raising prices, as we see different situations all over the map that we have.
So in some way, it's a yes on that one, but I think the correlation that you were looking for in your question could be were higher, of course. So it's a potential, I guess we can say.
Yes, and my second question are related to the construction market and the building area. Would be very interested to hear what kind of planning assumptions you have looking into 2024 and what you are seeing currently in the market, and how you are tackling with the quite troublesome situation?
Yeah, and, I'm guessing we don't want to go into those details. Åsa, Olof?
As we have reported and, you know, the market is mixed. It's the residential, the housing market, it's the commercial real estate market that we see is weaker. And then parts of the industry and more traditional industry is a bit weaker, and that is what we reported in Q3. And with that said, I have to say that, if I look from my horizon to Sweco Sweden and what we are capable in this market of selecting and deselecting and growing in the segments that actually is stable, we are doing a good job. And the order backlog is stable. Do you want to add something then?
No, that's good. That's good.
Yes, Johan Dahl. You talked about the changing buying behavior. You talked about some changing customer competitor behavior as well. To what extent is that structural for this market domestically in Sweden? Because looking over an extended period of time, earnings have been relatively flattish. You talk about a strong market, you have a market position, employer branding, et cetera. So what has changed here in your view, which may mean that economies of scale aren't what they used to be?
So that slide that I show is the work we did looking into the future to 2030, on things that we need to understand on the market, need to work on. And again, if we look, on a Swedish level, it's no real trend, but if we look into the different divisions, we can see trends. Like on the infrastructure side, we can see, over time, more, competitors coming from other countries in, into, Sweden, for instance. So it's a bit different, regarding how you look.
Would you say the profitability in Sweden for the entire sector is sort of deteriorating?
No, I think our stable margin shows that it's not.
Yeah, you sure, you're the market leader, you could be outperforming, but you claim it's fairly stable then in, domestically in Sweden in terms of margins. Is that your view, sort of, the profitability, the way it's developing in Sweden?
Well, if we deep dived into Q3, I think we saw some differences regarding how it looks. I don't know. You have done the deep dive, I think, Olof.
Without knowing sort of the full picture of the profitability in the industry, my impression is that we may have seen a bit of a slow short-term decline, maybe in the industry. But at the same time, what I said earlier about discipline in terms of price increases, et cetera, I think that goes for Sweden very much as well. So I wouldn't say, even if you will see the short-term fluctuations with the sort of mixed market picture we have right now, I don't see that there has been a general decline or a general change in the profitability in the market. You do see a bit of volatility, but not a step change, I would argue.
Thank you. Fredrik Lithell from Handelsbanken. Congratulations to your contract this morning. I was thinking about your short comment around, you see some movements towards more of fixed price projects with Sweden being a very traditional time and material market. How do you prepare for that? Is it a big move? Is it very slow? And how do you prepare the organization for that in order to not get caught up in wrong calculations on fixed price projects? Thank you.
We have seen it mainly in the transport infrastructure area, and we have trained the organization well. We are really business-minded, and have a really good process when it comes to our tenders in doing the calculation, really look into the risks. And here, I would also like to say that we have good support in how to work with fixed price from our colleagues in the other countries, like Belgium, because you're really strong in that. So it's good, good benefit to be in the family from that sense.
Can I just add to that question? Because it's normally a view, especially in the Nordic countries, that, you know, it's either/or, fixed price or time and material. I mean, both Ann-Louise and Erwin has related to that. We see a mix depending on what segments we look at and what type of projects. With that said, it's not so that you kind of have higher profit levels in fixed price projects or higher profit in time and material projects. But it's normally so that if you work in time and material projects, you think that you should move into fixed price, because then you can make more profit.
And the other way around, if you are in fixed price, you want to go to time and material because that is, you know, the grass is always greener somewhere else if you are in a tough, competitive market. But I would say that your question is really good, because what I have seen from my horizon is that the movement from time and material to fixed price, or the movement from fixed price to time and material, that is where the risk lays. Meaning, what Ann-Louise is emphasizing, that we're training, and we are trying to, you know, have the right people in place to steer and lead, and we are a little bit more in control to look at those projects when we are moving from one way, one condition in a project to another.
Which for instance, does mean that if you select a project manager to drive that, you're really careful in who you select? Yes.
Yeah, Daniel Djurberg, also Handelsbanken. I'm a little bit wondering about also these large projects in the Northern part of Sweden. We have the move of Kiruna, we have the HYBRIT, we have Boden, defense investments all over the place. But can you say, is this still in the beginning, or have you paced the biggest part of the project for your- from your perspective? And also another question, and that I can take at the same time, on the use of these digital twins. To some extent, you move also human capital into more structural capital and for example, building a factory. It's perhaps easier to replace this when building the second factory.
So my question is, is this in essence creating better stickiness for those helping the customer with this, or is it the opposite, that it's easier to, you know, take this digital twin and replicate it and do another procurement because all the data is already in the cloud or whatever? Thanks.
Okay, good question. So no, on the first one. No, we are not above. It still continue. We still see growth, we still see things happening, and it's still a need to develop the society to be part of it, so to say. So it's not ready. So it will continue. Oh, now I dropped the second one.
Digital twin.
Yeah, the digital twin. So it's very—every product is so unique, and we have touched upon this in our organization, how we can support some of the clients who want to, you know, build factories similar, but it's still so unique. So we can partly use the competence, of course, the experience, the reference, and so on. But the uniqueness makes it hard to make it actually more efficient. So you still need to go through the process, we still need the people and so on. So if we take the larger projects that we are doing up there when it comes to industry, we have the local experience, we have knowledge, but we support it with competence from other parts. And in the industry, we are, for instance, working very close with you, but also with Finland.
We use the competence all over the place.
Thank you.
One last question.
Yeah, hi, Raymond from Nordea. So a short one, you mentioned previously on initiatives to deliver on the margin target, mentioning, for example, improving the organizational structure. I'm not sure, maybe I'm reading too much into this, but, could you maybe describe how you're working, with that to give some more color and maybe compare it to how other, divisions or countries are having their organization set up right now?
I think with high speed of change, together with high level of personnel turnover, we have had a little bit too many managers in the organizations. For instance, we are looking into that, and we have really good guidance from the Sweco model in how it should look and how we can, you know, drive the business. So we are leaning on that and making sure that we are following the Sweco model. And I think the work that you have done in Belgium is a good example. And the learning is also that this is something, you know, you don't fix once and leave behind. This is an ongoing work that you need to continue to keep your eye on all the time.
Really, together with the high speed of change that we are seeing on the market, it's important to follow it and track it.
Thank you. Ann-Louise.
Okay.
I welcome back Åsa on the stage.
Yeah. Now we have come to the end of this presentation, and thank you for listening. The purpose of this day was to deep dive in our business model and deep dive in our diversified business. Also show you what great opportunities we see ahead, and how we should make sure that we actually capturing those opportunities on the market. We will focusing on continue to delivering shareholder value over time. We will, as we also reported in Q3, continue to focus on cost control, efficiency, and increase our fees to expand our margin and to provide profitable growth going forward.
With this financial position, we have continued to focus on our M&A agenda that we had tried to put a little bit more flavor on today. So thank you for being here, and thank you for good and, you know, insightful questions from your side as well. And a big thank you to Ann-Louise and Erwin that has contributed today. Normally, you meet Olof, myself, and Marcela when we meet at the quarterly reports, but it's always nice to be able to provide you with a little bit more from Sweco's side.
So thank you very much.
So, the moment we've all been waiting for, lunch will be served outside in just a few minutes, and there will still be time to try out the VR if you, or again, perhaps if you felt that you wanted more. The bus that will take us to Nacka will leave at 1:00 P.M. at-- And I'm looking to see if I can find some logistic colleague here, but I think it's outside Gävlegatan. Yes, Christina, it's. Yes. So, one o'clock outside, the bus will leave for Nacka, and lunch is served now. Thank you for joining us here on, at Blique , and thank you to all of you joining us online. Have a nice day.
Transforming it is the most necessary and inspiring challenge we can imagine. One Sweco proudly rises to. Every day since 1958, our concept of architects and engineers working together has brought new perspectives to the most pressing challenges of our time. Times change, but our philosophy hasn't. We believe the collective knowledge of citizens, communities, clients, and consultants create solutions that stand out and transform. It's why, with our global expertise and local presence, we're at the very center of the green transition and society's most seismic trends. Take urbanization. Digital developments are reshaping the role of the city. Demand for climate-adapted solutions are soaring. A new type of urban planning is essential, with sustainable innovation from micro to infrastructure level. Take sustainability. We're navigating the energy transition shoulder to shoulder with clients, creating solutions that are reliable, resource efficient, climate smart, making society more sustainable and more resilient.
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