Interim report April-June 2024
April-June 2024
- Solid growth in total operating revenue of 17.3%, driven by a currency adjusted organic growth of 9.2% and growth from acquisitions of 8.5%, currency effect reduces overall growth by 0.4%. Tailwind of +2.6% due to more working days in the quarter.
- Total operating revenue amounted to NOK 937.6 million (799.4) for the quarter and NOK 1,707.6 million (1,504.0) for the first half year.
- Significant margin improvements in the Scandinavian operations, resulting in an Adjusted EBITA margin improvement for the Group of 2.2 percentage points in the quarter compared to a weak quarter last year. Good development at some of the underperforming units.
- Profit for the period before taxes was NOK 79.4 million (77.8) for the quarter and NOK 116.4 million (122.5) for the first half year.
- Basic/Diluted earnings per share amounted to NOK 0.31 (0.31) for the quarter and NOK 0.43 (0.49) for the first half year.
- Signed the acquisitions of Vitek Miljø AS, Nordic Powergroup Holding A/S (closed May 21) and Högtryckstjänst Syd AB (closed May 16) in the quarter, adding approximately NOK 350 million of yearly revenues
Solid growth and margin improvement in the quarter
It gives me great pleasure to report that the Norva24 team delivered a strong second quarter 2024 with solid currency adjusted organic- and acquisition driven growth, as well as improved margins.
We are the leading consolidator of the underground infrastructure maintenance (UIM) industry in Europe, and it is great to conclude that we have added around NOK 350 million in annual revenues from the three acquisitions signed during the quarter.
In Scandinavia, we saw significant improvements in the second quarter. Norway, Sweden and Denmark achieved solid growth and improved their margins by 2.2, 7.5 and 6.6 percentage points respectively. Germany, on the other hand, had a slow first half of the year, mainly caused by one large entity, where we have already taken corrective measures in early Q3. Combined, this resulted in an improvement in the Adjusted EBITA margin of 2.2 percentage points for the Group compared to the second quarter last year, and a currency adjusted organic growth of 9.2%.
The first half of the year is seasonally the weakest in terms of cash generation. In Q2 we had cash flows from operating activities of NOK 110 million, compared to NOK 133 million last year. The decline is driven by strong growth which resulted in an increased level of net working capital of NOK 71 million, which should reverse in the second half of 2024. In addition, we have initiated measures to reduce working capital in Germany and Denmark to improve the NWC levels to an acceptable level closer to the Group average.
We continue to work relentlessly on operational improvements, and I would like to take the opportunity to reiterate our three strategic initiatives:
1. Price optimization, ensuring compensation for cost inflation
2. Improved utilization of vehicles and personnel
3. Close follow-up of underperforming branches through benchmarking, people management and firm action plans
We see clear positive effects across all the three initiatives, and together with synergies from acquisitions, this will support lifting our margins to the mid-term target of 14-15%.
The markets Norva24 operates in are growing significantly above the general growth of the economy and are a-cyclical. The current economic environment with higher interest rates and higher inflation is only to a limited extent impacting market growth. All our four markets are experiencing continued strong growth, and our financial performance is therefore primarily dependent on operational execution. The differences in performance between our branches are directly linked to how well the branch is managed, where we see that the right manager can significantly improve an underperforming branch with structured work to optimize prices and utilization.
Finally, let me once again mention the massive remaining potential for consolidation we see in the underground infrastructure maintenance (UIM) market. We are the clear consolidation leader in Scandinavia and Germany with more than 50 acquisitions behind us, and I can assure you that our M&A pipeline stays rich. Our strong financial profile and attractive cash conversion combined with a net debt/pro forma LTM EBITDA of 2.2 underpins that we have the muscle to reach our 2025 revenue target of 4.5 bn NOK.
Looking beyond that, the long-term megatrends of this industry remain robust. With our well-developed platform, I am highly optimistic about our value creation outlook, and I’m looking forward to reporting on the progress going forward.
Henrik Norrbom
Group CEO
Webcast with teleconference at 09.30 (CET)
To participate in the conference and access the phone numbers, please use the link below.
Webcast/Teleconference:
https://financialhearings.com/event/48431
https://www.norva24.com/section/investors/
For further information:
Henrik Norrbom, Group CEO
Tel. +46 72 708 1515
Henrik.norrbom@norva24.com
Stein Yndestad, Group CFO
Tel: +47 916 86 696
stein.yndestad@norva24.com
ir@norva24.com