Interim report Q2 2022

  • Revenue 608.5 MNOK (486.5)
  • EBIT 63.6 MNOK (43.0)
  • Cash flow 32.3 MNOK (47.8)

Strong organic growth in most markets during the second quarter

April-June 2022
•   Total operating revenue amounted to NOK 608.5 million (486.5), an increase of 25.1%. Currency-adjusted organic growth was 13.1%.
•   Revenue from customer contracts amounted to NOK 603.9 million (483.0), an increase of 25.0%.
•   EBIT amounted to NOK 63.6 million (43.0).
•   The quarter was charged with non-recurring items amounting to NOK 5.6 million (19.8).
•   Adjusted EBITA amounted to NOK 77.6 million (69.9).
•   Profit for the period was NOK 58.2 million (20.9).
•   Cash flows from operating activities totaled NOK 32.2 million (47.8).
•   Basic/Diluted earnings per share amounted to NOK 0.32 (0.28).

January-June 2022
•   Total operating revenue amounted to NOK 1,134.9 million (895.3), an increase of 26.8%. Currency-adjusted organic growth was 13.1%.
•   Revenue from customer contracts amounted to NOK 1,122.1 million (890.4), an increase of 26.0%.
•   EBIT amounted to NOK 99.9 million (63.4).
•   The period was charged with non-recurring items amounting to NOK 5.6 million (26.3).
•   Adjusted EBITA amounted to NOK 120.9 million (103.1).
•   Profit for the period was NOK 76.3 million (15.5).
•   Cash flows from operating activities totaled NOK 66.6 million (89.5).
•   Basic/Diluted earnings per share amounted to NOK 0.42 (–0.09).

Significant events during the January-June 2022 period
•   Norva24 acquired the German company Zimmerbeutel, which is a leading provider of underground infrastructure maintenance (UIM) services in the Rhein/Ruhr area.
•   Norva24 Group acquired the Swedish company IRG Rörinspektion. The acquisition is strategically important for Norva24’s efforts to develop new technological solutions within sensor technology and digital monitoring in addition to regular UIM services.
•   In order to strengthen Norva24’s Group Management Team and prepare for further expansion, current Group CFO Stein Yndestad will become Group Chief Business Development Officer reporting to the Group CEO and remains part of the Group Management Team. In this role, Stein Yndestad’s main responsibilities will be M&A, geographical expansion and investor relations. Stein Yndestad will remain in his current role as Group CFO until a new Group CFO has been recruited and has started the employment.
•   First AGM as listed company was held on May 31, 2022. All resolutions were adopted as proposed by the Board of Directors.

Significant events after the reporting period
•   Norva24 strengthened its market position in Jutland Denmark through the acquisition of Thornvig Jensen – a company that has been operating for 100 years.
•   Norva24 strengthened its position within pipe relining in the Swedish market through the acquisition of Stockholm Relining
•   Norva24 Group AB is appointing Dean Zuzic as Group Chief Financial Officer (CFO). Dean will start his role as CFO at the latest in February 2023.

CEO comment:

Strong organic growth and continued strong margin in most markets

The second quarter largely continued the same pace as the first quarter confirming that we are on the right track to achieve our financial targets in 2025. In Q2 2022, Norva24 achieved a satisfactory total revenue growth of 25%, supported by strong currency–adjusted organic growth of 13%. Our acquisition pipeline remains solid, and we expect 2022 to be a strong acquisition year, confirmed by the completed acquisitions in the beginning of the summer. Adjusted EBITA in the quarter was NOK 78 million, an increase of 11% year-on-year.

Norva24’s currency-adjusted organic growth of 13% and the solid EBITA development in Q2 proves that our business model even is inflation resistant. As previously communicated, we have increased customer price to compensate for potential cost increases such as fuel, salaries and other operating expenses in 2022 and it is important to note that fuel costs only accounts for approximately 6% of our revenues.

I am very satisfied that all the three Scandinavian countries delivered double digit currency adjusted organic growth in Q2 similar to Q1 with Norway at 20%, Denmark at 18% and Sweden at 12%. The strong organic growth was driven by increased customer activity and general price increases and in the case of Norway also driven by the assignments postponed in 2020 and 2021 due to Covid-19.

Furthermore it is promising to see that the improvements in the Danish operations in previous quarters continued in the second quarter with 18% organic growth and positive EBITA of NOK 2.4 million. Margin is up by a very strong 16 percentage points vs last year. The results of the quarter confirm that Denmark is on the right track, in line with what has been previously communicated.

For the second quarter in a row, Norway reported currency adjusted organic growth above 20%, with an adjusted EBITA margin of 20% in Q2 2022. This robust organic growth was driven by a very high overall level of activity, price adjustments and the backlog of assignments postponed from 2020 and 2021 due to Covid-19.
As in Q1 2022, Sweden had a strong total growth in Q2 2022. Total revenue growth in Sweden in Q2 was 68% due to acquisitions combined with currency-adjusted organic growth of 12% driven by increased customer activities, improved efficiency and general price increases.

As stated in our Q1 report, the Omicron variant of the Covid-19 virus had the most significant impact in Germany due to the different Covid-19 restrictions affecting sick leaves more in Germany compared with Scandinavia. In line with the information communicated in the Q1 report, we saw no impact from Covid-19 on sick leave in Scandinavia in Q2 2022, but a continued impact in Germany, although there was a normalization during the month of June. By the end of Q2 Covid-19 no longer had an impact on the sick leave in Germany. The increased absence of staff has temporarily impacted our business operations, growth, and margin in Germany. Despite this, the segment posted a healthy Q2 adjusted EBITA margin of 15.8% up from 15.1% Q2 last year. The organic growth in Q2 has on average been 10.8% per year since 2020.
With regards to acquisitions, two deals were closed in the beginning of the quarter. Zimmerbeutel in the Rhein/Ruhr area of Germany and IRG Rörinspektion in the Gothenburg region of Sweden. Both companies have a strong local position in strategic markets, and we are currently well in process to integrate these companies.

As mentioned above, Zimmerbeutel provides Norva24 with a foothold in the strategically important German Rhein/Ruhr metropolitan area and IRG Rörinspektion gives access to new technological solutions within sensor technology and digital monitoring in addition to regular UIM services on the west coast of Sweden.
In July 2022 we closed two additional high-quality transactions. The first was Thornvig Jensen, a company with over 100 years of operations. With this acquisition we will strengthen our position and improve density in UIM services in the Danish market, including high-pressure flushing, sludge suction, pipe cleaning, TV inspection and industrial cleaning services.
The second was Stockholm Relining. This acquisition complements Norva24’s range of services and makes the company a full-service provider within UIM in the Stockholm area.

We have acquired a total of twelve companies since Q4 2020, adding annual revenue of NOK 750 million. We will continue to act in a prudent and orderly fashion in accordance with our acquisition strategy, with diligent assessment and integration of candidates, to ensure continued strong organic development.
Our vision is clear: We want to be the market leader in underground infrastructure maintenance in Europe. We will continue to strengthen our position through both acquisitions and organic growth to fully live up to our promise to our customers: “We always help!”

The market we operate in is non-cyclical, and our business is resilient since our services are mission-critical with market growth driven by factors such as an ageing underground infrastructure, increased regulation, and a higher frequency of extreme weather events due to climate change. Our services are critical to the functioning of society and there is a need for them regardless of any economic cycles and inflationary environments.
We have a clear, proven and consistent acquisition strategy, with 37 acquisitions completed since Norva24 was established.

We operate in the European UIM market, with a total addressable market of NOK 140 billion, and hold a clear number one position in Northern Europe, a market worth NOK 36billion, which provides a unique opportunity for a focused and industry-specific compounder like us to reach our financial target of NOK 4.5 billion in revenue by 2025.
Maintenance of underground infrastructure is a key factor for a sustainable future, and we recently presented Norva24’s first sustainability report as a listed company. We work continually to further develop Norva24’s sustainability initiatives to safeguard the UN Global Sustainable Development Goals for clean water, sanitation and clean energy in order to further consolidate our position as the leading player in the industry.

Henrik Damgaard
Chief Executive Officer

“Norva24 achieved strong total -revenue growth of 25%, supported by an impressive currency adjusted organic growth of 13%. We have completed four acquisitions so far this year and our pipeline remains strong.”Shareholders, Investors, analysts and journalists are welcome to attend the company’s presentation in Oslo or webcast with teleconference at 09.30 (CEST) .

Henrik Damgaard, CEO, Stein Yndestad, CFO, and Sture Stölen, Head of IR, will present the report. The presentation will be held in English.
Date: August 24 2022
Time: Report published at 08.00 (CEST)
Webcast with teleconference at 09.30 (CEST)
To participate in the conference, please go to link or dial in on the telephone numbers below
If you want to be present physically at the meeting in Oslo please send an email to ir@norva24.com to register to get details of venue.

Dial-in number

  • SE: +46-8-5051-6386
  • UK:  +44-20-319-84884
  • DE/ US: +1-412-317-6300 , Pin code: 2750959# (Tollfree)

For further information contact:
Sture Stölen, Head of IR
Tel: +46 723 68 65 07
E-mail: sture.stolen@norva24.com