Good morning. Time has come for us to present Sweco's Q3 report that we published earlier this morning. With us today, as usual, we have Sweco's President and CEO, Åsa Bergman, and CFO, Jan Allde. They will take us through the numbers and results, and after that, of course, we will open up for questions and the detail for that will follow. Please, Åsa.
Thank you, Marcela. Welcome, everyone, to Sweco's Q3 presentation. Before we present the result for the third quarter, let me give you a quick overview of Sweco. Sweco is Europe's leading architecture and engineering consultancy, with operations in eight geographical business areas across 15 markets in Europe. We are a well-diversified business operating across three different segments with a good balance of private and public clients. The foundation for Sweco's long-term success is our mix of competencies spread across 23,000 experts, our focus on organic and acquired growth, as well as our efficient and decentralized operational model. With a strong financial track record and financial position, we are focused on continuing our growth journey and build on Sweco's success. Let's move over to the summary of the third quarter of 2026. Sweco delivered its strongest third quarter to date and a double-digit margin in a seasonal challenging market.
The quarter was characterized by higher average fees, a strong billing ratio, and continued acquisition activity. Net sales increased by 7% to SEK 7.6 billion, and organic growth amounted to 2% adjusted for calendar effects. EBITA increased to SEK 786 million, corresponding to an EBITA margin of 10.3%. Adjusted for calendar effects, EBITA increased by 10%. The positive development was mainly driven by strong billing ratio and higher average fees. We continue to execute on our M&A agenda by completing four acquisitions during the quarter and announcing another one in the beginning of October. Moving over to operations. Overall, Sweco maintained a solid operational development in the quarter. Five out of eight business areas reported organic growth, and six out of eight increased EBITA in the quarter. We continue to navigate the market well with a strong order backlog.
We also maintained a strong focus on efficiency, reflected in a strong billing ratio of 75.1%. The solid operational trend continues across several of our business areas, where the main EBITA improvements in this quarter came from Sweco Sweden, Norway, and Finland. Sweco Belgium and Germany Central Europe delivered strong margins, and Sweco U.K. and the Netherlands continued to improve profitability. While maintaining a strong margin, Sweco Denmark reported lower net sales and EBITA due to lower activity in the Danish pharma sector. Overall, we are pleased to see that we continue to make progress across our business areas. Let us then turn to the market overview. Demand for Sweco services remained broadly unchanged compared with previous quarters. We see a continued growing demand within defense and security that has positive effect across Sweco segments. Demand remained good in energy, water, environment, and transport infrastructure.
The public and commercial building segments improved, driven by investments in hospital, defense and security, and data centers. At the same time, the residential building segments and part of the industry segment remained weak. With that, I welcome our CFO, Jan Allde, to walk you through the numbers. Jan, please.
Thank you, Åsa, and good to be back. We'll start with a summary of the result. Net sales increased to SEK 7.6 billion, with a calendar-adjusted organic growth rate of 2%. Acquired growth was 3% and the FX impact was 1%, giving a total sales growth of 7%. The calendar effect was one more working hour versus last year. EBITA increased 10% or to SEK 72 million, adjusted for calendar effects. EBITA margin improved to 10.3% versus 9.8% last year, and a net debt to EBITDA ratio decreased to 0.8x. Let's look at the net sales development. Organic growth of 2% in the quarter was primarily driven by higher average fees and higher billing ratio, while the organic FTE growth was negative.
The negative organic FTE growth was due to a combination of market-related measures, synergy realization, and internal efficiency actions, primarily in Denmark, Finland, and Sweden. From a BA perspective, we saw organic growth in five out of eight BAs. Sweden reported an organic growth of 2%, driven by higher average fees and a higher billing ratio. The growth was negatively impacted by personnel reductions related to internal efficiency measures. The underlying market was stable, with early signs of improvement, particularly within the public building segment. Norway reported an organic growth of 6% with good demand in energy, water, and defense. Finland also reported a good organic growth of 5% due to improved market situation, driven by investments in energy, defense, and data centers.
The organic growth in Denmark was - 7% due to an overall reduction of investments in the pharma industry and due to the ramp-down of one of the largest pharma projects that Sweco has been involved in. This was partly compensated by strong underlying growth in other market segments in Denmark. Netherlands reported an organic growth of 4% in an overall stable market. Higher absence led to small negative organic growth in Belgium, and the U.K. also reported negative growth due to less sub-consultants and FTEs. The markets in both the U.K. and Belgium were overall stable. The strongest organic growth was reported by Germany, Central Europe with 8% growth, driven by higher average fees and FTE growth in an overall healthy market with continued demand across our key segments. Then look at the EBITA. EBITA increased by SEK 72 million, or 10% adjusted for calendar effect.
The EBITA margin improved to 10.3% versus 9.8% last year. This is the highest EBITA margin that Sweco has achieved in a third quarter to date. The EBITA improvement was driven by higher average fees, improved billing ratio, while higher personnel and other operating expenses had a negative impact. Let me walk through the performance by BA. Sweco Sweden continued to improve its EBITA margin in Q3. Restructuring integration costs were lower than last year, but even adjusting for this, the EBITA margin improved significantly. The EBITA margin in Norway, Finland, the Netherlands, and the U.K. were all higher, in most cases driven by higher billing ratio and higher average fees. Sweco Denmark, Sweco Belgium, and Germany and Central Europe reported lower margins. However, all three countries delivered double-digit EBITA margins. Let's look at the EBITA bridge done by BA.
The result in Sweco Sweden was 39% or SEK 51 million higher than last year, driven by higher average fees and a higher billing ratio. Restructuring integration costs were lower than last year, but even adjusted for this, the result was 30% higher. The result in Norway was SEK 24 million higher, driven by higher average fees and a higher billing ratio, and the result in Finland was SEK 20 million higher, primarily driven due to higher billing ratio. Denmark reported an EBITA decrease of SEK 25 million due to lower number of employees and lower earnings from sub-consultants, both related to lower activity in the pharma industry. Denmark delivered a strong EBITA margin at 15.2%. The result in Netherlands was SEK 11 million higher, while Belgium reported an EBITA decrease of SEK 12 million due to higher absence and higher other operating expenses.
Again, maintained a strong margin at 12.8% in Belgium. Result in U.K. continues to improve, and they reported an EBITA increase of SEK 5 million. Germany and Central Europe reported a small increase in EBITA, driven by higher fees. The calendar effect was one more working hours in Q3 versus last year, corresponding to a year-on-year impact of SEK 13 million. In conclusion, the group EBITA increased by SEK 72 million or 10% adjusted for calendar effects, hence an overall very strong performance. Let's look at the financial position. Cash flow from operating activities year to date in 2026 was SEK 1.1 billion compared to SEK 1.4 billion last year and was negatively impacted by a seasonal increase in working capital in Q3. M&A cash outflow was SEK 310 million, and dividend paid was SEK 1.3 billion.
The net debt position at the end of September was SEK 3.2 billion, on about the same level as last year, while our net debt to EBITDA ratio decreased to 0.8x. Hence, our leverage is well below our target, and we remain financially very strong to pursue an active M&A agenda. Finally, let's look at the calendar effect for 2026 and for 2027. The expected total number of working hours for 2026 is expected to be seven hours more than in 2025, and in Q4, we expect six hours more than the same quarter last year. For 2027, we expect total number of working hours to be 11 hours more than in 2026, with a significantly lower number of working hours in Q1 and with the opposite situation for Q2 due to how the Easter break falls next year. By that, back to you, Åsa.
Thank you, Jan. Let's have a look at our acquisition activities. Acquisitions is a key growth driver for Sweco, and during the third quarter, we completed four acquisitions, and one was announced after the quarter. We completed the acquisition of water specialist STEIN Ingenieure in Germany and of Sitowise Sweden, a technology advisory in buildings and infrastructure. In Belgium, we acquired environmental specialist All Soil Assistance and structural engineering consultancy Technocon. in the beginning of October, we also announced the acquisition of Stendess in Belgium that are specializing in complex steel structures in infrastructure and industrial buildings. In total, we have closed nine acquisitions this year across four business areas, reflecting our ambition to have an active M&A agenda for both niche and larger acquisition that strengthen our expertise and position across our core markets.
Last year, we presented our AI strategy, and I would like to take this opportunity to put a brief spotlight on how we are putting it into practice. Sweco's AI strategy has three levels of value creation. The first level, individual productivity, empowers every employee to work smarter. This delivers immediate gain across Sweco through AI adoption at scale. The second level, process automation, creates structural efficiency by redesigning entire workflows end to end rather than just enhancing existing ones. The third level, accelerated digital innovation, positions Sweco to develop tailored solution as a part of client deliveries, increasing client value. By launching Sweco GPT to all employees in May 2023, we were one of the earliest adopters of generative AI in the industry. Since then, we have been implementing AI across businesses while improving our margins and increasing our billing ratio and order stock.
Today, the vast majority of Sweco's workforce use AI across multiple different applications, and this was the first level. We have now moved into the second level of AI integration with the redesign of entire workflows end to end. We see that substantial value can be created when high volume, technically defined, and labor-intensive processes are redesigned around AI. Our AI development platform is now being rolled out. It will enable our organization to, in a decentralized way, build digital tools and applications in a safe and secure manner. Tasks that currently consume work hours can be handled faster, leaving more time for complex analysis, design thinking, and client engagement. This will enable us to work even closer with our clients, solving problems, and delivering even more client-specific value.
We strongly believe that AI will change how architecture and engineering consultancy work is delivered, and that our operating model gives us a strong advantage. Our decentralized organization means that our teams work closely with the clients, enabling us to identify opportunities, test ideas, and rapidly scale successful solutions. At the same time, Sweco size, broad European presence, and accumulated project knowledge provide the resources and expertise needed to invest in AI and make a meaningful impact. Combined with our multidisciplinary way of working, this enables experts to collaborate more efficiently, explore solutions faster, and deliver better outcomes for clients. Here are some few examples of what this means in practice. Smart Water helps clients such as municipalities predict floods, manage water levels, and prevent pollution. Our Flexibility Tool helps clients analyze and act on movements in the energy market.
The Capture platform enables the planning of wildlife protection measures. Another example is Sampling Plan, AI automated data collection, analysis, and reporting to speed up sampling plans. The common thread is using technology to free up our experts for analysis, judgment, and advice while developing new ways to create value for clients. We see AI as a key component in strengthening our competitiveness over time. Projects won during this quarter demonstrate the breadth of our offering and the continued demand for expertise linked to resilience, sustainability, and infrastructure across Europe. In Denmark, Sweco was appointed sole consultant to Aalborg Forsyning, supporting the development of a diversified energy system that includes electricity-based heating and surplus heat. During the quarter, Sweco also entered into major framework agreement with the Belgian National Railway Company to supervise and quality assure infrastructure works at stations across the country.
In Norway, Sweco was awarded a framework agreement with Lillestrøm municipality and partner municipalities for the planning and delivery of schools, healthcare facilities, fire stations, and other essential public buildings. Finally, in October, Sweco announced a SEK 500 million framework agreement for high security facilities for the Swedish state-owned property company, Specialfastigheter. Highlighting our multidisciplinary expertise across feasibility studies, design, and construction management. To summarize, Sweco delivered its strongest third quarter to date, characterized by high internal efficiency, a strong commercial focus, and improved profitability. Looking ahead, we remain committed to operational efficiency and continued margin improvement. A strong billing ratio and disciplined execution, combined with greater focus on recruitment to support solid organic growth and further progress towards our EBITA margin target. Secondly, acquisitions remain an important part of our growth strategy.
We will continue to pursue an active M&A agenda across our business areas while maintaining a strong focus on successful integration and value creation from recent acquisitions. Thirdly, we continue to position Sweco towards attractive growth segments where we see strong long-term demand while also executing on our AI strategy. With a strong market position, diversified portfolio, and solid financial position, Sweco is well positioned to continue to transform society together with our clients. Thank you.
Thank you, Åsa. Thank you, Jan. I hope that you are prepared to take some questions now. Please, Razia, if you could take us through the procedures.
Thank you. To ask a question on the phone, please press star one one and wait for your name to be announced. To withdraw your question, please press star one one again. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. If you wish to ask a question via the webcast, please type them in the question box and click submit. Thank you. We are now going to proceed with our first question. The question comes from the line of Dan Heimer from SEB. Please ask your question. Dan Heimer, your line is open. Please ask your question. We are now going to proceed with our next question. The question comes from the line of Adela Dashian from Jefferies. Please ask your question.
Thank you, and good morning, Åsa and Jan. First question from me is just trying to balance the organic growth development versus the utilization improvements. Going into the next year, you are putting greater emphasis on employee growth. I guess, how should we think about the trade-off, then, between you rebuilding your headcount while at the same time protecting utilization through 2027?
First of all, good morning, and thank you for the question to start with. We will continue to focus on internal efficiency for sure. There is room to work with the billing ratio and efficiency ahead as well. That will be very important for us. As you know and see is that the FTE growth has come out a bit weaker the last quarters. So what we now need to focus on is to really focus and succeed with the FTE growth ahead. So we will try to do both into 2027, and we are focusing on it right now.
Okay. Thank you. But if we think about more of a sustainable billing ratio as you are accelerating the hiring process, should 75% now be viewed as a base case, or do you see further structural upside from here?
I do not want to forecast any billing ratio, but for sure, we have taken a lot of actions and focused a lot to bring efficiency into the game. That is, of course, shown in the expansion of the billing ratio, and that will continue. You have to read for the future.
That is helpful. Lastly, on pricing, I guess first, how should we think about the fee increases into the next year? At the same time, are you still seeing pricing comfortably ahead of the salary inflation, or should we see more contribution from pricing to organic growth, that to moderate from the current levels?
Well, I would say we have been operating in a competitive environment, and where we have seen price pressure in some markets for some time. I do not see any change, particularly here in Q3. We handle that by continuing to have a strong pricing discipline. We drive continual internal efficiencies, working on doing even more sourcing and also expanding our prices in markets and situations where we see that that is possible. We expect to continue to be successful in expanding our prices more than the cost levels. That continues to be a super high focus for us.
Super. Thank you so much, Jan.
Thank you.
Thank you.
We are now going to proceed with our next question. The questions come from the line of Dan Heimer from SEB. Please ask your question.
Good morning, Jan and Åsa. I will try again here. Hopefully it works better now.
Good morning, Dan.
Morning, Dan.
Perfect. Just circling back a little bit on your intention to increase the employee growth. It sounds to me that you are a little bit more confident on the market growth, development and maybe also the development in your order backlog now in October compared to when we spoke in June. Maybe you could say a few words on how orders are growing now. Are they growing more in line with sales or above sales here in the quarter? Thank you.
As I said, the market is fairly unchanged compared with what we saw last quarter. We see some positive movements, and that started even then, in Sweden and Finland, but we also see other shifts in other directions. It is more about that we are well-positioned in the areas where we see growth ahead. When it comes to the order book, the order book is solid during the quarter. I do not know if you would like to comment any more on that.
No, I would say the order backlog, in absolute terms, it is growing. I would say if you put the order backlog in relationship to the sales development, I would say it is stable. So, as Åsa said, we have a solid order backlog. We have a solid order pipeline, so we feel confident.
But just a reminder, if I look back to the period with COVID, in phases, we are in a situation where we see a lower FTE growth, and we are in such a period right now. With that said, the need for succeeding with recruitment in the right areas across Sweco is still there. So that is why I say that we now have this really on the radar and leaning forward, to really succeed with more FTE growth ahead.
And maybe one point to add on the FTE or, say, the organic FTE development, as we said, it is a reflection of structural measurements that we have taken in, for example, Denmark, Sweden, Finland. We said now we see a little bit of improvement in the Finnish market. Some of the actions we have taken to adapt in Denmark to the current market situation. We of course will continue to do integration work and drive efficiency, but my point is that some of the measures we have now taken. So, I think it is a good point to remember.
Thank you very much for that. Maybe another question on the topic of AI. Historically had 4%-5% organic sales growth, 50/50 price employee growth. But looking ahead with AI, some argue you could see pressure in the market, but on the flip side, it can also make you more efficient of course. Do you see any signs of market developing into that direction already or is that a premature observation that maybe organic sales growth might come down, but then on the other hand, you can become more efficient in terms of how you utilize your staff?
I think it's too early to tell. With that said, I also think that AI implemented in the right way and making sure that we can create the competitiveness that I talk about and enable us to deliver even more client value, will bring us in a stronger position ahead. With that said, we haven't changed our goals when it comes to organic growth, if that is your explicit question. It's too early to tell how this will play out ahead. Our intention is to make sure that we stay as strong and that we strengthen our competitiveness.
Yeah, I understand. That was basically what I was referring to. Maybe the final question, if I may, on the working capital buildup here year to date, it's close to SEK 1 billion now. Do you expect to release a portion of that in Q4? You have a strong balance sheet, but still, what do you expect in terms of working capital release here in Q4 that's typically strong from a cash flow perspective?
Yeah. No, as I said, Q3, we normally see a seasonal negative impact. Now, this Q3, in addition to the, let's say, seasonal impact, we had some of, for example, the project addendums coming through in Germany. They came very late in the quarter. We have some negative impact in Sweden because of the recent acquisitions and so forth. We expect that Q4 should be strong. It is normally from a seasonal perspective, and I feel that I'm not concerned about the working capital levels. Hope that answers your question.
Thanks very much. Yeah, it did. I think that was all from my side for now. Thank you very much.
Thank you, Dan.
We are now going to proceed with our next question, and the questions come from the line of Fredrik Lithell from Handelsbanken. Please ask a question.
Thank you. Thank you for taking my question as well.
Good morning. I had one first on Norway, which did an excellent performance in the quarter. If I look at Norway for the first half year of 2026, I think they did an EBITA improvement of SEK 13 million. Now in Q3 we have this very big step up. The question is this all organic? You worked for a long time to improve utilization, billing rates, and all that, or is there any element of final payment of contract or whatever it might be in there? Just clarifying that a little bit.
No, it's just a good operational momentum and as you refer to, a lot of focus and a good order backlog and good execution power in Norway.
Okay. The EBITA margin trend is something we should sort of see as a step up that will be sustained if we take into respect the seasonalities between quarters.
I think, as I normally say, if you see a very strong step up in a quarter, you should think about it in a little bit longer perspective. That is what I can give you. But the performance in Norway has moved in the right direction. But, I don't know if you want to.
No, there is no single one time, let's say, impacts, in this quarter. Q3 last year wasn't super strong. I think it's the right way to, as Åsa said, project business is better to look at on a rolling 12 months basis, rather than just focusing on one quarter. But good operational improvement in Norway.
Yeah, definitely. Thank you. Just one housekeeping thing. You have an EU restructuring charge of SEK 7 million in the quarter. Is that a Denmark event, or?
No, the restructuring cost in the quarter is related to Sweden. Sweden continues to optimize the organization.
Okay. In Sweden. All right. Perfect. Thank you very much.
Thank you, Fredrik.
We are now going to proceed with our next question. The question comes from the line of Johan Dahl from Danske Bank. Please ask your question.
Yes, good morning, everyone. Just a couple of questions. Firstly, on what seems to be a slightly raised outlook for the public and commercial properties. Could you elaborate a little bit on that, Åsa? If you see it across your entire buildings and urban area system, all the way from architecture, or is it just certain sweet spots that affects you? What are your conclusions from this looking forward for Sweco?
Good morning, Johan. Yeah, as said, we have talked quite a long time about the residential segment, and there is no change this week. It is clear that we see, linked to what I said, in those areas of public and commercial buildings, that we see a bit of a better outlook, but it is mainly due to the areas that I refer to. Which means that if you think about the commercial real estate, it is still in the same stage, or what you can call it, as previous times. But it is more about that we are positioned really well. So where we are strong in hospitals, where we are well exposed towards defense and security across, and also towards data centers, we see an increased investment willingness in those areas. We can measure it in our portfolio of services towards the buildings segments.
I would say it goes across, as we are established in the countries that you are aware of in Europe. All of those countries has the same underlying need when it comes to upgrade and development of their healthcare facilities and systems. The same goes with data centers linked to competitiveness and digitalization and AI across Europe. The same goes for defense and security with some differences across the different countries. Depending, of course, on the starting point, but also how the funding works towards defense and security in the different countries.
All right, got you. Thanks for that. Can you give us a brief update on acquisitions? You explained in the report a fairly big negative earnings contribution looking at the nine-month period pro forma. Could you just talk about how that looks here and now, and also what you did last year, how that is performing? Just to understand how this is going to phase possibly in the coming quarters and years.
Yeah. In Q3, of course, we completed the acquisition of Sitowise Sweden. They came into the group as loss-making. Of course, we have a clear view on that and the actions that we need to take to improve the profitability there. I would say that integration has now started working well. We expect to complete most of those integration efforts are this year. We will likely take some integration cost in Q4, but I would say significantly less than what we see, for example, comparing the Projektengagemang integration cost. I would say that is the primary reason why we said that we didn't see a contribution from acquisitions this quarter. I would say underlying all the recent acquisitions are performing well. So it's more the fact that we now consolidate Sitowise Sweden into the books here in Q3.
Got you. Final question just on Sweden. Very impressive earnings improvement there, obviously. But is that now completed? Has it been a matter of just harvesting the low-hanging fruits in Sweden? Or would you say you're early in that profit improvement program? Just interested to hear your view there.
One factor linked to the expansion of the result in Sweden is, of course, the acquisition of PE and the integration of PE into Sweco. So, the value creation linked to that is in the numbers. Sweden has continued to work with their internal efficiency, and they get good traction on the market, and we start to see the big framework agreements linked to many of our clients coming through. So, there is many reasons, and, of course, we will continue to work the same way ahead.
Very good. Thank you very much for that.
Thank you.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. If you wish to ask a question via the webcast, please type them in the question box and click Submit. We are now going to proceed with our next question. The questions come from the line of Julia Sundvall from ABG. Please ask a question.
Yeah. So hi and good morning.
Good morning.
Just a couple of questions from my side. I would like to start with Germany that delivered 8% organic growth and a high margin. How much of that growth reflects higher volumes and additional fees? How much were project revisions and revenue recognition?
Yeah. I would say Germany is in a good position in that market, and that helps. From a margin point of view, I would say we normally see a seasonal pattern of these change orders or addendums, as we say. They have a tendency to come more into the second half of the year. That follows our, let's say, prudent revenue recognition principles we apply in Germany. I would say Q3 was on a similar level as last year. So I would say quite comparable on a quarterly basis versus last year.
Okay. Perfect. That's helpful. On Denmark, how far are you on the reductions in the pharma activity here? You say you grow in other areas, but can we expect any further volume declines from the pharma part? Is it gone from the books? How should I think there?
Should I?
Yeah.
I can start. I would argue that there are two areas when it comes to the Danish business. One is the decrease of the overall volumes linked to the exposure towards the pharmaceutical. Then it is a stop in the project. With that said, we are still working for the client and distributing, and it is an important client for us, and that will continue. But now we are up against last quarter, and that we will be in Q4 as well. I think it is also important to say that we have underlying, and in other segments in Denmark, we see good growth. As you have seen the margin, we have still a strong margin or even very strong margin in Denmark. So it is a stable business in that sense. Anything else you would like to know?
Yeah. Thank you. Then one last question from me on Belgium. You say the result was a little bit soft, I could say. But you say it is because of higher operating costs and absent levels. Should this be seen as a one-off effect, or is it something that should persist into Q4? Or how should we think here?
Yeah, no, I would say there are two things impacting the margins in Belgium. Keep in mind they still delivered a very strong margin. One is that they had a slow start up in the quarter, so a little bit of a higher absence that impacted the result. This is more of a temporary nature, I would say. The second, as you were on, also a little bit higher cost levels. I would say nothing extraordinary there. So, I think there is a very strong underlying performance in Belgium, and see no reason why that should not continue.
Yeah. Could you be more specific where the costs come from?
Well, it's a combination of different things. We have a slightly higher IT cost, for example, which is quite natural considering the investment that we're doing in digitalization AI. We're also switching our whole vehicle fleet over to electrical cars, and Belgium had a very extensive use of company cars. So that drives some of the cost. There are some more technical accounting costs, which are related to, as you grow, you also need to make more provisions on some of the projects. So I would say I don't see anything that really sticks out.
Okay, perfect. That was all from my side. Thank you.
Thank you, Julia.
Thank you. This concludes the question and answer session on the phone. I will now hand over to Marcela. Please go ahead.
I thank you for joining us, and thank you for all your questions. Thanks to Åsa and Jan. Just as a reminder, our Q4 report will be published on February 11. Have a nice day, and a nice Halloween.