Good morning, and welcome to today's webcast presentation, where we have Volati presenting the Q3 report for 2023. With us presenting, we have the CEO, Andreas Stenbäck, and CFO, Martin Aronsson. If you have any questions for Andreas and Martin, please use the form that is located to the right, or if you're calling in, please press star nine to raise your hand. And with that said, please go ahead with your presentation.
Thank you. So happy to be here today and talk about our Q3 report, and let's dig into it. To start with, Volati, we're a fast-growing and acquisitive group of six well-managed platforms. All six of our platforms are built upon an industrial logic. We have a market-leading position and the growth potential, at least in line with Volati's overall goal of 15% per year, and we have strong cash flows. Two of our platforms are the natural and integrated business areas, Salix Group and Ettiketto Group, while the remaining four platforms are within our business area Industry. With these business areas and platforms, our continuous operations, we have shown an average EBITDA growth of 35%, over the last five years, which roughly half have been organic.
On the next slide, you will see a bit more details about our growth the last five years and broken up into the organic net sales growth and organic EBITDA growth. I showed this for you already in Q1, when we had just had a quarter with strong organic growth. We have now updated it with the year-to-date figures. I want to highlight that when looking at this, we are best evaluated based on the long term. During the period 2018 to 2022, meaning the last five annual years, we have shown an average EBITDA growth of 39%. That fluctuates somewhat over time. It's, for example, dependent on the pace of acquisitions that we've had. Roughly half of our EBITDA growth has been organic over that period.
Of course, that comes from our organic net sales growth, which has been 5%, but even more through our continuous efforts to drive operational improvement and our acquisition strategy, which means that we're focusing on value-adding add-on acquisitions, where we realize synergies, which means improved margins. The last year, we showed slightly lower organic growth, that has mainly been driven by the development in Salix, caused by the changing market environment there. Most recently, in our most recent quarter, it's have been affected by our development in the platform Communication, which we'll be getting into a bit more in detail later on. Our other platforms have successfully compensated for the development, but in Q3, it didn't lead all the way.
And also before digging into the most recent quarter, I want to take an even further step back and look at the long-term development. Volati's overriding goal is to generate long-term value growth. That means that we are not best evaluated at, on the, in an individual quarter, but rather long term. Our ability to create value over time. This graph, I think, summarized that in a very good way. Over the last 10+ years, we have had an average annual growth on EBITDA of 22%. This is something that we have been achieving with our own cash flow. So I think this summarize our long-term performance in a very good way. So with that said, let's discuss and get into our most recent quarter, Q3.
It has been a strong quarter in five out of six platforms, where we have growth both in our EBITDA and margin in the quarter. Ettiketto is delivering a very strong quarter. They are actually improving their EBITDA margin from 16% to 21%. 20%, if you adjust for the electricity support that we have received. That means, so that shows me that our acquisition strategy, focusing on add-on acquisitions, where we can, over time, increase the margins in the companies that we acquire, is really successful. Salix Group also delivers a good quarter. It's actually the first quarter, first time in five quarters, where we grow the EBITDA in absolute numbers, and that is despite that we still see a challenging market, and the sales has been down somewhat in the quarter.
This shows that, the colleagues in Salix are doing an excellent working, actually working with the margins and taking cost measures to, adjust the organization for their current environment. Industry has had a good development in three out of four platforms. Tornum, Corroventa, and S:t Eriks have all grown their EBITDA and margin in the quarter. I'm particularly happy with the development in S:t Eriks. We have mentioned previously that we have seen a slowdown in the construction-related part of that business, while, we actually see that the infrastructure part is holding up, quite good, and they do a very good quarter, if you summarize that. So our Communication platform then, that's also part of, t hat's the fourth platform in our business area. Industry has had a tough quarter.
We entered Q3 with a record year behind us, which actually started one year ago in Q3 last year, which was very, very strong. We saw already in Q3 that we expected demand to flatten out from a very high level, but the slowdown has actually been stronger than we expected. It's mainly because of the slowdown in the 5G rollout, and we have taken measures to reduce cost as we foresee this slowdown to remain for yet some time. But over time, the volumes will come back. The 5G rollout will continue. So, looking into the quarter in a bit more detail on next slide, one can see that, yes, sales and EBITDA in the quarter is down somewhat.
Sales, as described, is mainly due to Salix and Platform Communication, while the EBITDA is mainly due to Communication or solely due to Communication. However, the operational cash flow has been very strong in the quarter, and that's actually what we expected. We have been working hard with this for more than a year now, and we really see the results. So we increased the operational cash flow with SEK 100 million in the quarter compared to last year. And that leaves us with the net debt Adjusted EBITDA, which I'm very happy with. Looking at the development over the last 12 months, we are almost at SEK 8 billion of revenue, on an annual basis, up 5% compared to the same period last year.
EBITDA at 778 is up 13% compared to the same period last year, meaning that we have successfully improved margins over this period. Again, looking at the operational cash flow, we've worked hard with this for the last year. It's up SEK 460 million, showing that our efforts in reducing net working capital is really working. With that, I leave the word to Martin.
Thank you, Andreas. So, let's start with looking at our three financial targets, and starting with the EBITDA growth per ordinary share over the last 12 months. This period, we came in at 13% in this target, and the target for this measure is 15%. But we should remember also that that is measured over a business cycle. Our second financial target is the return on adjusted equity, which is a target of 20%. This quarter, we significantly overachieved that with 28%. So that really proves our ability to create shareholder value.
Looking at our last financial target, which is the capital structure, the target is to have a net debt to Adjusted EBITDA ratio of between 2x and 3x, and never exceeding 3.5x. As Andreas mentioned, we are right now at 2.0x, which is a structure that we're happy with. It's in the lower range of our financial target, and that also leaves us with substantial capacity for further acquisitions going forward. So let's look at how our three business areas are performing in a little bit more detail. So let's start with Salix Group, where we're very happy to see that the EBITDA in nominal terms increased for the first time in 5 quarters.
And also the EBITDA margin increased, going from 8% in the comparable quarter last year to 10% in this quarter. And this is despite the sales decline of 5% in the quarter. So this really shows that the efforts taken to counter the effects of lower demand is paying off. When talking about the demand, the demand in the quarter continues to be hampered, and the currency effects are also working against us. So the market for Salix Group is tough right now, but they are handling this very, very well. And we also are confident that there is a long-term demand for our products going forward.
Given the very successful work with adapting the business, we really believe that Salix Group is well positioned to capitalize on the growth when the volumes return. Moving over to Ettiketto Group, they are performing another solid quarter, and the margin development journey is continuing, where margins went up from 16% in the comparable quarter last year to 21% this quarter. And as Andreas mentioned, if you adjust for electricity support, it's around 20%. Also taking a little bit longer view on this, the last 12-month margins are now at roughly 18%, which is more than 2 percentage points higher than the full year of 2022.
So we're steadily working our way towards the historical margins, and we're doing that through realizing the synergies, continuing to realize the synergies in the acquired businesses, but also working with operational improvements in the business. The demand for the products continues to be good. However, if you look at the quarter, there's a slight sales decline, but that's predominantly due to that we have a tough comparable from last year's quarter three, where the demand was boosted in the aftermath of the strike at the material supplier, UPM. Constantly looking for further acquisitions, both in the Nordics and Europe for Ettiketto Group, and we see significant potential to continue the growth journey in this business area.
So then lastly, let's talk about Industry, which experienced a sales decline of 9% in the quarter, and an EBITDA decline, EBITDA margin declined by 2 percentage points. But if we took a little bit longer view, the year-to-date sales is up by 13%, and the EBITDA margin is up by 1 percentage points. I also want to mention that the business area is a diversified business area, and if we lift the hood a bit on this and look at the platforms, three out of our four platforms in this business area performed very well and increased margins and results. Corroventa, firstly, is benefiting from several late summer storms in Europe, which drives the demand for water damage remediation products.
And also Tornum continued to deliver another solid quarter with increased margins and results. Also, S:t Eriks performed well in the quarter, and they see a good demand in the infrastructure segment, and which has this quarter compensated for the weaker demand in the construction segment. But as Andreas mentioned, the quarterly development is affected negatively by a sharper-than-expected decline in the Communication platform. And the main result or the main reason for that is the slowdown in the 5G rollout, especially in North America. But also we should remember that the platform is meeting tough comparables from last year. In the quarter, we acquired one company to the business area through Gunnar Prefab , which is an add-on acquisition to the S:t Eriks platform.
Andreas will talk a little bit more about that later. With that, I leave it to you, Andreas.
Thank you. So looking at our acquisitions that we've done since 2020, we've done 21 acquisitions, and we've been active in all platforms except Corroventa. For the last four quarters or the last 12 months, we've completed four acquisitions, of which Gunnar Prefab was completed in Q3. Gunnar Prefab is a very good example of what type of acquisitions that we want to do. It's been a company that we've been in contact with now for actually many years. It's a good example of that sometimes, in particular in this market, discussions take a bit longer.
But as often the case, you know, when we are the ideal buyer, we reach a conclusion at one point in time, and with Gunnar Prefab, we very happily reached that conclusion in September. Gunnar Prefab is complementing our, or is an add-on acquisition to our platform, S:t Eriks. They are particularly strong in the infrastructure segment, and they have their own traffic barrier, GP-Link, which is complementing S:t Eriks offering in that segment. Thus, the acquisition is strengthening our product offering in S:t Eriks and other our position on the market. At the same time, we have synergies between S:t Eriks and Gunnar Prefab, which will add additional value over time.
Looking at the historical M&A pace, as can be seen, we've been slightly slower recently, even though we are on a positive trajectory in the most recent quarter. I want to point out that M&A work is very binary. Either you close transaction or you don't. And during the last six months, we've had a couple of cases that were closed, but unfortunately, we weren't able to sign to the right terms. So some of these situations will come back to us at the later stage, as happened with Gunnar Prefab, for example. But for us, discipline is extremely important. I don't want the organization to get too stressed, too stressed up about the short-term pace.
What's important for us is to remain disciplined, do the right acquisitions for the right returns, and maintaining this discipline has been one of the core elements of Volati success in the past. I'm happy with the pipeline that we have in our platforms, activities on the level which I would expect. And as it can be seen on this next slide, we also have the financial capacity in place to act on acquisitions when they occur. As already mentioned a couple of times, we've had a very good cash flow the last year, leaving us with a net debt to Adjusted EBITDA level at the lower part of our goal. Also, since spring, we have had a new credit agreement, adding SEB alongside Nordea.
So we also have the liquidity in place to act on acquisitions when they occur. To summarize, we had a solid second quarter into Q3. Five out of six platforms are increasing their EBITDA margin, while, as mentioned, we're working with Communication. Year to date, we're up 13% in EBITDA for the group, and this, the cash flow is really there. We want to focus on long-term value creation. I think we have proven that we have achieved that. We have a high average growth over time. We also distributed SEK 2 billion to the common shareholders in the IPO in 2016, and our return on equity speaks for itself.
We are in a good position to continue delivering on our growth journey. I'm very happy with the six platforms that we have. They should, over time, be able to achieve a growth in line with, or in excess of what we want to achieve with Volati with Volati, our financial goal of 15%, also through driving M&A in all these platforms. We have the financial strength to support that growth. With that, we leave over for any potential questions.
Thank you very much for that presentation, and now we'll jump into the Q and A section. So if you're calling in and want to ask a question, please press star nine to raise your hand. Or if you're watching this, you can also type in your question using the form that is located to the right. And we'll start with the first question here: What has been the main drivers for the improved margins?
That's hard to answer with a general question since we're actually improving margins in five out of six platforms. In Salix and parts of Industry, for example, S:t Eriks, cost measures and margin improvement work, given the, you know, market circumstances, have for sure being part of the reason. As a general answer, we're working with continuous operational improvement in all our platforms, and we see the benefits of those, I would say more or less all over the line. And then we have our strategy with value-adding add-on acquisitions, which, for example, S:t Eriks is a good example of, where we acquire companies with lower margins.
But we could actually then raise those margins over time as we come in as a new owner. Meaning that we actually increase then their overall margin as well. So I would say that that's the, that's the short answer, the short answer to that.
Looking at Salix Group, where there is a long-term demand for the products, what has the response been like from the customers?
Oh, it's a very good, good question. I think, it's very good that the person mentions that, yes, we also believe there is really long-term demand for the products that we have in Salix. And I'm really looking forward to the times when, when, the demand is picking up again, because then we're going to be in extremely good position. With regards to the response from our customers, I, a s far as, as, as we see it, we, we remain our strong position with the, with the customers. We are, rather gaining market share than losing. So, so I, I would foresee, or I would say that, you know, our relationship with our customers within Salix Group is as good as ever.
For how long can we expect a decreased demand in the Communication platform?
Sorry, can you say that again?
Yes. So for how long can we expect a decrease in demand in the Communication platform?
It's a tough question to answer. We expect the lower demand to remain at least well into 2024. As a consequence, we're also working with the cost base in that platform. But similar situation as with Salix, we're confident that demand will come back, and then we will be very ready for it.
Have the unstable environment in the world impacted your organization? And if so, in what way?
Yes, it has. In particular, I already mentioned that, of course, we have some of our platforms where we have been forced to adjust our cost base, and then it has for sure impacted.
Do you have anything in your pipeline that you could comment on today?
We never do that. I can just reiterate what I said, and I think activity is, b ecause I assumed it's M&A pipeline that the question refers to. I could just say that the activity is at the level where I, you know, what I'm happy with. I just want to reach a couple of more, you know, completions or transactions. And that will happen. It's just a matter of time.
Given that the economic climate remains the same going into 2024, would you say that Volati is well-prepared to perform next year?
Yes, I think that's what we want to point out, and we've been very prepared. Yes, for sure, in all our platforms.
Okay, we'll take the next question here. What should investors look out for in the coming quarters?
I think that's up to the investors. I don't have any good answer to that.
Okay, thank you. That was all of the question we have. Andreas and Martin, do you have any final concluding remarks that you want to say before we wrap this up?
Not from our point. I think what summarized is what we want to say. So, thank you for listening in, and see you next quarter.
Thank you very much.