Hello everyone, thank you for joining us for this presentation of Sweco's Q2 report. Åsa Bergman, Sweco's President and CEO, is here together with Jan Allde, Sweco's CFO, to take us through the results of the second quarter. After their presentation, there will, of course, be an opportunity for you to ask questions. With that said, please, Åsa.
Welcome everyone to Sweco's Q2 presentation. Before we present the results for the second 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 14 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 start with a summary of the second quarter of 2026.
It was a solid second quarter in a continued mixed market characterized by broad organic growth, higher average fees, a strong billing ratio, and continued acquisition activity. Net sales increased by 9% to SEK 8.6 billion. Organic growth amounted to 3% adjusted for calendar effects. EBITA increased to SEK 864 million, corresponding to an EBITA margin of 10.1%. EBITA increased by 7% adjusted for calendar effects. The positive development was supported by higher average fees and an improved billing ratio, as well as positive contributions from recent acquisitions. We also continued to execute on our M&A agenda by announcing two new acquisitions during the quarter. Moving over to the operational highlights. Overall, we delivered a solid second quarter. Seven out of eight business areas reported organic growth and six out of eight increased EBITA. We continued to navigate the market well, increasing both order backlog and orders received.
We also maintained a strong focus on efficiency, reflected in an increased billing ratio of 75.9%. The solid operational trend continues across several business areas with three reporting double-digit margins. I would also like to highlight the strong EBITA improvements in the quarter from Sweco Sweden and the Netherlands. Overall, we are pleased to see that we continue to make progress across our business areas. Turning to the market overview. Demand for our services remained broadly unchanged compared with previous quarters. Demand was good in energy, infrastructure, water, and environment. We also continued to see growing demand related to security and defense across several of our markets. At the same time, residential and commercial buildings, as well as parts of the industry segment, remained weak. While the geopolitical and macroeconomic environment is uncertain, Sweco benefits from a diversified business model, a strong local presence, and a clear European focus.
Trends related to sustainability, demographic shifts, digitalization and AI, as well as security and defense, are driving demand for Sweco services across our core segments. With that, I welcome our CFO, Jan Allde, to walk you through the numbers. Please, Jan.
Thank you, Åsa. I'll start with a summary of the Q2. Net sales was SEK 8.6 billion with a calendar-adjusted organic growth rate of 3% and with acquired growth of 5%, giving a total sales growth of 9% versus last year. Calendar effect was five more working hours versus last year. EBITA increased 7% or SEK 53 million adjusted for the calendar effect. EBITA margin came in at 10.1% versus 9.6% last year, and our net debt-to-EBITDA ratio of 0.8 x at the end of June, which is the same as last year. Let's look at net sales. Organic growth of 3% was driven by higher average fees and higher billing ratio. We saw organic growth in seven out of eight BAs.
Germany and Central Europe had the strongest organic growth rate at 7%, driven by higher average fees and FTE growth in an overall stable market. The growth in Finland was still low, but we saw a somewhat improved demand situation within the public and commercial building segments. Denmark was impacted by lower investment in the pharmaceutical industry. They have been able to compensate this by strong growth in other segments, and hence showed an organic growth in Q2. The U.K. reported negative growth rate of 3% due to less sub-consultants and less FTEs, while the overall market was stable. Please note that the growth in both Finland, Denmark, and the U.K. was negatively impacted by lower FTEs due to ongoing efficiency improvements and measures taken to adapt the organizations to current market conditions. Sweden, Norway, and the Netherlands all reported organic growth rates of 4% versus last year.
We look at the EBITA. EBITA increased by 7% versus last year, adjusted for calendar effect. The quarter was negatively impacted by restructuring and integration costs in Sweden and Finland of SEK 30 million, which is SEK 18 million higher than last year. Adjusting for this, EBITA for the group increased by 10% versus last year. The EBITA improvement was driven by higher average fees, improved billing ratio, and contributions from acquisitions. While higher personnel and other operating expenses had a negative impact. The reported EBITA margin was 10.1% versus 9.6% last year, and the calendar effect in Q2 affected the result positively in Sweden and Norway. Now let's look through the performance by BA. Sweden continued to improve its underlying EBITA margin as the positive calendar effect and the negative effect of restructuring and integration cost in Sweden was almost the same.
The EBITDA margin in Norway was unchanged, adjusting for the calendar effect. Denmark reported improved margins from already high levels, and the Netherlands reported a strong margin improvement versus last year. The EBITDA margin in Belgium was lower than last year, but they continued to perform at a high level. The EBITDA margin in Germany and Central Europe was lower, while the margins in Finland and the U.K. were roughly in- line with last year. Let's have a look at the EBITDA bridge. Starting with Sweden, where the result was 10% higher than last year, driven by higher average fees, higher billing ratio, and positive contributions from the PE acquisition. Please note that Sweden booked SEK 26 million of restructuring and integration cost in Q2. Excluding this, EBITDA improved by 20% versus last year.
The restructuring integration costs were mainly related to optimizing the organizational structure in Sweden and drive efficiencies. The cost related to the PE integration was minor, as the integration is now completed. The result in Norway was SEK 7 million higher than last year, driven by positive FX effects, and the higher result in Finland was due to SEK 8 million less restructuring and integration costs compared to last year, but also due to higher billing ratio. The result in Netherlands was 34% higher than last year, driven by higher average fees, higher billing ratio, as well as contributions from the acquisitions made last year. Denmark and Belgium delivered EBITDA improvements, while the result in the U.K. was stable. The result in Germany, Central Europe was slightly lower due to higher personnel costs and less positive project adjustment versus last year.
The calendar effect was five more working hours versus last year, corresponding to a positive year-on-year impact of SEK 60 million. Overall, the integration of the acquisitions made last year and also this year are progressing well, and we expect synergies to continue to materialize during the year. Let's look at the financial position. Cash flow from operating activities was SEK 911 million, compared to SEK 680 million last year. M&A cash out was SEK 176 million, and dividend paid was SEK 1,355 million. The net debt position at the end of June was SEK 2.9 billion, slightly higher than last year, while our net debt- to- EBITDA ratio was 0.8 x, same as last year. Hence, our leverage is well below our target, and we remain financially very strong to pursue an active M&A agenda. Lastly, look at the calendar.
The calendar effect for 2026 is that we expect to have seven hours more than 2025, and in Q3, we expect one hour more than the same quarter last year. By that, I hand back to you, Åsa.
Thank you, Jan. During the second quarter, we announced two new acquisitions. In Finland, we announced the acquisition of Platom, a specialist consultancy providing technical advisory services across the full life cycle of nuclear operations. The acquisition strengthens Sweco's position in Finland, making us the leading nuclear consultancy in the country. It also strengthens our European capabilities in this growing sector. We also announced the acquisition of Sitowise Sverige AB, adding approximately 250 experts within structural engineering, building services, project management, and transport infrastructure. The acquisition further strengthens Sweco's position and geographical footprint in Sweden. After the quarter, we also announced the acquisition of STEIN Ingenieure in Germany. STEIN are experts within water and wastewater infrastructure, including sewer system rehabilitation, structural engineering, pipe jacking, and inspection of engineering structures. The acquisition further strengthens Sweco's position in the growing water segment.
Acquisition is a key growth driver for Sweco. During the second quarter, we announced two new acquisitions. All in all, we completed five acquisitions to- date, and by the end of July, Sitowise will also be completed. During the quarter, we secured several significant client projects that contributed to a stronger order book. These projects underscore the breadth of our offering and the continued demand for our expertise in resilience, sustainability, and infrastructure across Europe. Some examples from the quarter and the rest you find in the report as always. Sweco was selected to provide planning and design consulting for a new railway section between Mölndal and Landvetter Airport in Sweden, forming part of one of the country's largest infrastructure investments.
During the quarter, Sweco was also commissioned to plan and design a new emergency hospital campus in Helsingborg, which will be one of Sweden's largest healthcare properties projects in modern times. In Norway, Sweco was awarded a framework agreement related to flood protection, supporting climate adaptation and critical infrastructure resilience across the country. Finally, Sweco was selected for the planning of Rail Nordica in Finland, a strategic railway project aimed at strengthening cross-border logistics, security of supply, and military mobility across Northern Europe. I would also like to take the opportunity to give you a quick update on how Sweco is using AI to maximize business benefits. We see AI as an ongoing structural transformation of our industry and an opportunity to strengthen our market position. We have worked with incorporating AI in Sweco's operations since 2023 and see the development as a natural technological leap for us as consultants.
Like CAD and BIM once did, we now use AI to create value for our clients and improve our own efficiency. Our AI approach is focused on three overarching business benefits. Individual productivity, allowing every employee to work smarter, creating immediate effects throughout Sweco by large-scale use of AI. Process automation, which is about creating structural efficiency by automating and reshaping workflows within our core business. The third part is about accelerating digital innovation, developing and delivering IT solutions as integrated components in projects, and thereby creating client value. Let's not forget in this, as Europe's facing a significant shortage of engineers with major infrastructure investments planned while facing a deficit of roughly 2 million STEM experts, we are already today using AI as a mechanism for closing this gap. To summarize, Sweco delivered a solid second quarter characterized by broad-based growth, higher efficiency, and improved profitability.
Looking ahead, our priorities remain unchanged. First, we continue to position Sweco in attractive growth segments while we see continued long-term demand building on a solid foundation. Second, we continue to execute our AI strategy with the opportunity-based approach I just talked about, supporting both our experts and our clients. Third, acquisitions remain an important part of our growth strategy. We will continue to evaluate opportunities across our core markets while maintaining a strong focus on successful integration and value creation from recent acquisitions. Finally, we remain committed to operational efficiency and continued margin improvement. Strong billing ratio, disciplined execution, and efficient resource allocation will remain key priorities going forward. With a strong market presence, diversified portfolio, and a solid financial standing, Sweco is well-positioned to continue transforming society together with our clients. Thank you, everyone.
Thank you, Åsa, and thank you, Jan. It's now time to open up for questions. Please, Sharon, if you could give us the instructions.
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please type it into the box and click submit. We will now go to our first question. One moment, please. The first question today comes from the line of Julia Sundvall from ABG Sundal Collier. Please go ahead.
Hi, Åsa and Jan. I have a few questions, my first question is on the utilization rate. It rose some in the quarter, how should we think forward? How much headroom do you think is left?
Hi, Julia. First of all, it's an area where we have focused quite a long time, and we are really pleased to see that we are continuing to move in the right direction, and it's really hard to say where the limits are in this. The only thing I can give you is that we will continue to work on the efficiency, as it is as important as it has always been.
Yeah. Okay. Moving on the average fees, you have had a positive momentum for quite some time. Will you be able to lift the price further in a mixed market, or is the momentum from now, is it sustainable, or how do you view it?
We have shown in the past that we have been able to meet the salary inflation and cost inflation with the fee increases, and the fee increases, just to remind us, that it's both about what prices we put on the market and how we execute our projects. Our intention is to continue to focus on this and ensuring that we can meet the cost inflation, and including then salary inflation, into the future.
Yeah. That sounds good. Looking at both the utilization rate and the prices and bridging it to your financial targets. Going forward, how do you think you should work with these two components to reach your financial target of the margin?
I think it's fair to say that it depends on where you're looking at Sweco. On the overall level, of course, we work with both, among others, when it comes to different levers for creating the result. It's also about which country you look at. Some needs to work more on their efficiency, and some countries need to work with the price expansion. It depends on both how far they have come with having this broad project portfolio that we're aiming for with the Sweco model and making sure that we actually cover all the sectors, cover all the kind of clients, and have this balanced project portfolio in place. We will work with both, and it depends on which business areas you're looking into.
Yeah. Perfect. Sounds reasonable. Moving on to acquisitions. You have started the year quite good. Do you have any updates on how the integration is going on the large ones?
Hi, Julia. Jan here. I would say the integrations are progressing well, and you see the comments that we make, that we see good contributions from acquired companies into our P&L. Yeah, overall progressing well.
Is there some dilution effect in any BAs?
Yeah, I would say overall, the margins of the acquired companies as they come through the P&L, I would say are almost in- line with the group with some variations between the BAs. Overall, I would say they are quite close to the group average from a margin point of view.
Okay, perfect. Just the last question on the order stock that you say it's coming up in the quarter. Just wondering, how is your visibility of the order backlog? Can you say anything about the margin?
Julia, as Åsa said, we see that the order book is developing well. I believe you have seen also the orders that we have announced. I would say one of the key aspects of our strategy is to make sure that we remain very price disciplined. That's also why we continue to see price expansion in our P&L. I think that's all I can comment on.
Okay, that's super. Thank you.
Thank you.
Thank you, Julia.
Your next question today comes from the line of Daniel Djurberg from Handelsbanken. Please go ahead.
Thank you, operator. Hi, Åsa and Jan, and congrats on a strong quarter.
Hi, Dan.
I just wanted to ask a little bit on, you had some SEK 25 million restructuring charges and SEK 5 million in integration costs in Q2 here, and now you have closed Sitowise as well. Is it possible to give some indication on what we should expect here for Q3 and Q4 with regards to will it be similar levels? Any input would be great.
Just to clarify, Dan, you were asking about the restructuring and integration charges that we have taken and how we see them going forward?
Yes, correct.
If we start with the Q2, then as I said, we took in total SEK 30 million of restructuring and integration costs. I would say the vast majority of that was restructuring costs related to Sweden. We took some integration costs, I would say minor integration costs related to the [Sitowise Sverige] acquisition in Q2. We took some integration costs related to the Fimpec integration in Finland. I would say starting maybe with integration and going forward, I would say, as I said, the PE integration is complete, so you shouldn't expect more integration costs there. On the Fimpec case, there will be some integration costs coming through in the remainder of 2026. When it comes to the restructuring cost, I would say we continuously adapt our organizational structure as the market situation develops, and also to drive efficiency improvement actions.
I think it's difficult to, w e don't normally provide forecasts on restructuring. I think it's part of our business model that when needed, we adapt our organization for the market situation.
Yeah. That's fair. May I ask you on Finland, you saw some improvement in public and you've taken some nice orders. My question is, should we expect this mainly to be Sweco- related, i.e., that you take market share or is it so that you have the trough in Finland now behind and if so, can you also use some historical temporary layoffs to bring back people quite fast, if so?
First of all, I think the points we have here is related to that we have taken some orders and that we are growing our order backlog. We see orders received in the backend of this quarter positive in Finland. I think it's too early to say if this is a start of some market expansion that we don't have any proof points of yet. As you said, we have this temporary layoff situation that we can maneuver. Mainly, of course, it's about making sure that we can focus on growing the order backlog continuously and working with our own efficiency and also working with recruitment ahead. Too early to tell if this is the start of something positive on the Finnish market.
Perfect. If I may, last question from my side would be a little bit on your stronghold in data center build special entities there, and I think you do this from your U.K. business. Can you tell us a little bit on how important this is and the trends? Is it growing still or is it flattening out? Do you work with a lot of suppliers or names like Microsoft and others, or is it only a few hyperscalers?
First of all, I would say that the exposure for us is limited by the breadth of our business. With that said, data center is, on your question, a growing area. In our perspective, this is a long-term trend, and we work with a broad range of different stakeholder clients in this. Of many reasons, I can't outline them. We work with them locally, of course, distributing the design and the resources in our different business areas. As the clients are mostly located from the U.K., we have strong client relationships from our U.K. business. That is the reason to why we work with leading and heading the client relationships and the projects from the Sweco U.K. Mostly, we work with data centers in early planning, permitting, and pre-design and those kind of areas, but also with the full scope, so to say.
Thank you so much for the input, and have a great summer, and good luck in Q3, both of you.
Thank you.
Thank you, Dan. Have a nice summer.
Thank you. Your next question comes from the line of Dan Heimer from SEB. Please go ahead.
Hi, Åsa and Jan. A couple of questions from my side as well. Hi. Maybe starting off on Germany. If we adjust for the project divestments last year, would you say you were around par in terms of profitability in Germany versus last year? Also if you can share a few words on the strategy on how to lift Germany towards the next level now, and maybe we can add U.K. to the mix also, how to get that into more group standards in terms of margins. Thank you.
Yeah.
Yeah. Hi. First of all, I would like to say that we have a really positive outlook for the German market. It's fair to say that we see it as an attractive market. As you know, we are also focusing on finding the right M&A targets with this example now that we signed early this week. What we see in this quarter is that we see a somewhat lower EBITA margin compared with last year. This is mainly related to the accounting practices for the addenda projects that we have talked about before. Since we had a difficult decision in our German business back in the days, we implemented really strict procedures when it comes to accounting. It is more of a seasonal effect when it comes to the addenda works that you see now in Germany, rather than any material changes in the underlying business.
All in all, we are having a good position and we are winning good contracts. This is really related to the addendums in Germany. When it comes to U.K., on your second question, we have repositioned ourselves on the market and we are moving in the right direction. That is a continued work, step by step to strengthen our portfolio, both when it comes to clients and when it comes to projects in U.K. and work really disciplined with our projects and that will continue to pay off.
Thanks. Makes sense. Just to get it right, to get to the next level, so to speak, double- digit margins in Germany, what would it require? Would it be more density and you getting a little bit more of market share in Germany? Or what's sort of the big lever to take it from, yeah, to where it is from today to the next level in the next few years?
It is a continued work exactly in line with what we have done so far. Also getting a bit more stability with the results over the yearly cycle, meaning that this addenda work that I refer to needs to be focused on a bit more in the organization. It's a bit about operational excellence. Market position wise and looking at the orders we're winning on the German market, we are in good shape. There is always room to, of course, improve. It's no rocket science. It's more about continue to work with the Sweco model and being very diligent when it comes to how we deliver and execute our projects.
Thank you for that color . The final one is following up on the M&A pipeline. I think you discussed earlier that you really picked up in pace in terms of bolt-on acquisition. Despite the earnings growth you have right now and have had for the last few quarters, your net debt- to- EBITDA ratio is unchanged compared to last year. Seasonally, of course, your net debt will probably come down now, depending on what you do. Thinking a little bit on capital allocation, how is the M&A pipeline in terms of larger acquisitions, as well? Do you think you will land something there in the coming quarters? What's your thinking? Because you have a quite good financial position, which is quite an opportunity here.
As we have done for quite many years, we work really actively in all our countries now to find good opportunities for us to buy. We have an M&A strategy in place, meaning that we know what we would like to buy in all countries, and we are staying active on all sizes of acquisitions if we think it's the right fit for us culturally, but also competence wise. As you know, it takes two to tango, so this is really about timing situations for us, and that is all I can say.
Yeah, fully understand. Thank you so much for that, Åsa and Jan. I think I'll jump back into the line, and I wish you all a good summer. Thank you.
Thank you.
Thank you.
Thank you. Your next question today comes from the line of Johan Dahl from Danske Bank. Please go ahead.
Yes, thanks. Good morning, everyone. Firstly, just a question on the sort of market environment. I think in the first half you've grown sort of 2%-3% organically, slightly below sort of long-term trend, I would argue, and you've been fairly optimistic when speaking about the sort of order backlog. I'm just curious to hear, do you think that looking at your order backlog, is it a correct reflection that it represents growth of 2%-3%? Or do you anticipate somewhere that that order backlog actually is better or alternatively worse than this 2%-3%?
It's a good question, of course. We really have the intention to grow around 5% over economic cycle, as you know. Of course, we would like to see a little bit more organic growth coming through. This is also about what kind of projects we have in our portfolio. Yeah, we focus on this and we aim for a bit higher organic growth. Doesn't really answer your question, Johan.
No, I'm just curious if you see some sort of inflection point. You obviously don't have to guide when that is, but is this what the market allows right now, sort of 2%-3% growth? Or are you seeing something else in your order book that answers the question?
It's fair to say, if you look back the last, I would say two years at least. That we have, or more than that, we have operated in a mixed market with lot of, how to say, changes that has put really demand on us to maneuver the market. That goes for most of our markets, and depending on market position, of course. I think parts of what you see when it comes to organic growth is related to that. Your ability to maneuver this mixed market and the changes in the market. The better you are at that and has been, the more organic growth you can, of course, achieve. Let's see ahead. We will continue to maneuver, and we will continue to push for more organic growth.
Thanks a lot for that detail. Secondly, just on the margins, I hate to go into much detail here, but in the second quarter, you improved margins, what was it, 50 basis points, right? Year-over-year. I think the calendar effect alone was slightly more than that. Also, the billing ratio was up quite substantially. Basically what I'm asking, is there any sort of headwinds that you're experiencing on margins that we have not talked about today, such as cost inflation on certain either on wages or on admin or whatever, that sort of prevents both the calendar and the billing ratio showing in your reported numbers?
Hey, Johan. I think first of all, if you exclude the restructuring integration cost that we have taken, part of that, of course, stemming from a lot of the acquisitions we've done. If you would adjust for that, I think the underlying margin do show an improvement quarter-over-quarter. Of course, as we do these acquisitions, it will take some time to harvest the synergies from that, and that can normally take one to two years. Of course, when we do these acquisitions, we do that with a long-term growth in mind. I think we have to, as we step up, or let's say we stepped up the acquisition levels last year, we have a continuous good level of acquisitions this year. Of course, short- term, that has an impact on the margin.
I think long- term, it will support our margin journey.
Yeah. That makes a lot of sense, but that also implies that the acquisitions made in the LTM period is margin dilutive. I thought you sort of talked about it being close to the group average. Certainly, if they are dilutive, that explains probably a lot of the dilution, I would guess.
Yeah. As I said, if you look at, let's say, the gross margin that you achieve, I think they are trending very well in- line with our financial plan for the acquisitions. Overall, they are, sort of say, keeping up in a good level, but you still have a certain cost that takes some time, or synergies that takes some time to work through.
That's true. Yeah. Just a final one on Sitowise. Is that going to be red numbers as you consolidate that in the second half year? It's something perhaps you want to flag for having a sort of short-term negative contribution?
Yeah. Short- term, yes, they will be margin dilutive. I think we have a good track record of turning around these type of businesses. We have done a very good job, I think, on the Projektengagemang acquisition to get the synergies and quickly turn around that business. We have, let's say, confidence to do the same. You have to flag short- term, there will be a margin dilution. Now we have that acquisition approved by local authorities. We hope to close that by end of July. That means that we can now work to plan the integration, plan how that company will look going forward. Again, that will take some time before we can do the same thing there and turn around that business.
Understood. Excellent. Best of luck with that, thanks so much for taking my questions.
Thank you.
Thank you.
Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone keypad. If you wish to ask a question via the webcast, please type it into the box and click submit. We will now go to the next phone question. One moment, please. The question comes from the line of Johan Lönnqvist Sundén from DNB Carnegie. Please go ahead.
Hey, Åsa and Jan. Thank you for taking my questions.
Hi, Johan.
Just one from my side, and it is a little bit tied towards what Dan asked before on margins in Germany and accounting of the add-on contracts that you referred to. Can you please help us? How much visibility do you have that those kind of add-on contracts or addendum contracts that you referred to really will take place in H2 this year, as we saw in H2 last year?
It is contract that we have, it is contract that we work with, but the addendums are not signed. Of course, we have comfort in the orders that we have and the contracts that we work with. Otherwise, we would have flagged something else.
Yeah. If I remember H2 last year, you were pretty clear that the margin step up is a structure step up in margins and not a one-off thing, you are not saying that we should retest that assessment?
No, with that said, I don't want to give clear forecast because, of course, until you have things in your financials, you don't have them in your financials. That is also why I refer to when I got the question regarding what is the next step for our German business. It's really about making sure that we can create a little bit more stability of the result over the yearly cycle. I have great confidence in the German business.
As an outsider, what could trigger you not being able to book this kind of extra contract in H2?
It would be if we can't really get the clients to agree on certain things in the projects, or that we are overexposed or have worked too much in some projects in relation to the contracts that we have.
Fair enough. Thanks for the call. That was actually.
Thank you, Johan.
That was the only question I have. Thanks.
Thank you. There are currently no further phone questions. I will now hand the call over to Anna.
Thank you. There are no questions in the chat. With that, we thank you for joining and wish you all a nice summer.
Thank you very much, everyone.
Thank you.