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Welcome to our Q1 interim report presentation. My name is Minttu Vilander, and I'm the Head of Communications and Sustainability here at Sitowise. It's my pleasure to be here today with our new CEO, Heikki Haasmaa; and with our CFO, Heidi Karlsson. Here is the agenda for today, and we will shortly go do the presentation. I have just a couple of things that I need to explain to you before we go. [Operator Instructions]
And without any other information now, we can start the presentation. So go ahead, Heikki. Please start.
Thank you a lot, Minttu. I'm really eagerly looking forward to the Sitowise journey. My background is from KONE. I've had several leadership roles there during the last 19 years. Recently, I was leading globally the maintenance business. And before that, I was the Managing Director of Finland and Baltics. Those roles have helped me to understand how to grow profitably international business. We are also the forerunner in digitalization and lead organization of professionals. And I'm sure this will be helping me now with the Sitowise when we aim to be a significant player in the Nordics during the coming years.
What are my first impressions about Sitowise? I would say that Sitowise has a very good foothold overall in Finland. We have great opportunities for further growth in Sweden and then later on in other Nordic countries. Overall, the business performance is a solid one, and we have a strong ambition for growth.
And about our people, I'm really impressed. Our people are very committed, open and also really passionate about what they are doing. And this is a big asset for us going forward. So I really would like to thank all of our people for the great work during the last years and also during the first quarter. So thank you. Also, I'd like to thank Pekka Eloholma, the previous CEO, for his very good contribution in the past. So thank you, Pek.
And then we move on to see how the first quarter went. Here is the first quarter in a nutshell. Net sales developed well in both Finland and Sweden, and we continued strong organic growth. Demand was solid in the quarter, and also our order book is very strong. And profitability remained on a good level. We had 2 successful acquisitions that we already have started to integrate. We also made a customer satisfaction survey in the beginning of the year, and we learned that we have a strong trust from our customers. The war in Ukraine will increase general uncertainties in the market, however, we see that the direct impact on our business will be limited.
Now I'll hand over to Heidi to tell a little bit more about the details of financial performance. So Heidi, please.
Thank you, Heikki. So looking at our first quarter, we can conclude that we have had a good first quarter. Our top line was EUR 49 million. It means a growth of 15% compared to the first quarter last year. The strong growth was a combination of organic and acquired growth. Looking at our profitability, it remained on a good level. The adjusted EBITA was EUR 5.2 million, which means an increase of 11% or EUR 0.5 million compared to year-on-year, i.e., compared to Q1 last year.
The difference between the adjusted EBITA and EBITA are the items that relate to comparability or the so-called one-offs. This year, in Q1, they were higher than last year. And they include, among other things, write-downs of projects related to Russian-owned entities.
Historically, we have had a strong cash flow, at the end of the year, in the last quarter as well as then in the first quarter, and this year was no exception. The increase in cash flow that we had in Q1 was mainly due to the positive changes in the working capital. Our leverage that we measure by net debt divided by adjusted EBITA stayed approximately on the same level as last year or at the end of the year.
Heikki just told that we concluded 2 or we completed 2 acquisitions in the first quarter, and those we did by our own cash, so we didn't have to raise any new debt.
So let's next take closer look at our order book net sales and profitability. Once again, we can inform that our order book was at record high at the end of the quarter. So with an order book of EUR 172 million, what it means is that we have had a growth of 30% compared to last year and also a growth of 6% compared to the year-end. In the first quarter, our growth was -- we had a couple of good -- bigger orders, but the growth in our order book was mainly driven by small and medium-sized projects.
If you look at our net sales, we have pointed out already that the growth, we are very pleased with the strong growth that we had in it, 15% growth. And this growth was particularly driven by the 7% organic growth. If you recall, in Q4, the organic growth was a little bit lower. It was 6%. The organic growth that we had in the first quarter, it was composed of 3 factors. We had an increase in our average number of personnel. Our utilization rate improved. And we also had higher average prices.
In the first quarter this year, we did have 1 working day more compared to last year. But unfortunately, due to the increased sick leaves, there was no positive impact of that additional working day. So our increased sick leaves, the positive impact was unfortunately offset by the increased sick leaves.
Moving to our profitability. So when we look at our adjusted EBITA, where we could see the increase by 11%, which was driven by the higher net sales, our profitability was weakened by the increased sick leave. And in addition, we also had some higher operating expenses due to the fact that we have -- gradually, we have had the transition to the post coronavirus period and are having more activities.
We could also add that in Q1 last year, the operating expenses were not burdened by any costs related to being a listed company, which we have this year. All in all or overall, we can see that our financial foundations, that they remain very solid. And we will continue focusing on our profitability as we keep on growing.
So let's move on to look at our -- at the business area-specific development. In the first quarter, we are pleased to see that we had a strong top line growth in all of our business areas. In those business areas where we had double-digit growth, the organic growth has been particularly strong. So we are talking about Buildings, Digital Solutions and Sweden. In the Infrastructure, the growth was lower, but I would like to point out that Infra still grew faster than the market. I also would like -- or I think it's important to note that the Digital Solutions and Sweden's share of the group's net sales keep increasing, which is totally in line with our strategy. To summarize, the net sales development was strong in all of our business areas.
And next, Heikki will tell a little bit more about the development in our business areas.
Yes, thank you. Thank you, Heidi. Firstly, I think we can be very happy about the order book being at a really high level across all business areas due to continued market recovery, but also our own active sales efforts. Secondly, we had 2 major projects: planning of the Liminka-Oulu railway in Northern Finland and then the design of the Västerås hospital in Sweden.
And as Heidi said earlier, we also received a significant dump of small and medium-sized orders. Thirdly, we announced one new acquisition in Sweden where we expanded our Infrastructure business with the acquisition of Mavacon-called company. Earlier this year, we also completed the acquisition of VRT Finland business regarding 3D construction inspection. And the final highlight is that we also launched now Sitowise brand in Sweden, and we'll integrate the daughter company brands to become one big Sitowise. So we now have a strong foothold in all our business areas also in Sweden. This is, again, like a great foundation for the future growth.
I mentioned earlier about the customer survey. So our customer survey conducted in the beginning of the year confirmed that Sitowise expertise is highly appreciated. And as you can see, our customers trust us. All of them or nearly all of them would reselect Sitowise as their supplier. And during last years, we have steadily strengthened our image as an industry leader and developer of new and innovative solutions. I would say we have a great foundation for further developing our customer loyalty and customers' experience.
Now I'll hand over to Heidi to tell a little bit more about the impact of Ukraine war.
So the war in Ukraine is, of course, a very big tragedy, and it is changing the world. On Sitowise, the direct short-term impact of the war are limited as we do not -- as we didn't have any subsidiaries in Russia, Ukraine or Belarus and -- nor did we export to those countries.
After the war break out, our business has continued as normal, and the demand has remained strong during Q1. In early March, we decided that we will not begin any new projects with Russian-owned entities. We also went through our ongoing -- our current projects. We found a couple of -- with such ties, and we suspended them. This resulted in the write-down that we had in Q1, which were related to this project with the Russian-owned entities.
If you look mid and long term, we anticipate that there might be impact on our client projects due to the increased inflation and material costs, energy availability as well as the general uncertainty in the economy. We might experience delays in projects, schedules and also starting of new projects of our clients. Therefore, it is important that we will continue focusing on balancing the increase in cost with price increases as well as focusing on growth opportunities which, for example, the green transition could bring. And of this, Heikki will tell more about next.
Thanks, Heidi. So clearly, the green transition is a positive impact here. And why it's seen as a positive one is that overall, the green transition will be accelerated, and it's in the core of Sitowise vision. We want to be the most responsible partner of prosperous living environment.
And here, you can see a couple of examples of areas how we enable the green transition: minimizing carbon footprint, designing new energy solutions and also optimizing movement of people and material. We enable the sustainable urban life.
And the world of tomorrow is planned today. As the societies in Nordics are well functioning, we can be the pioneers of developing solutions for complex problems. And there can be demand worldwide for the expertise we've been developing. At Sitowise, we can contribute to this by making the buildings and infrastructure to support people's lives in a sustainable and cost-efficient way. Great opportunity.
Then let's have a look at the market outlook. The stable growth in the demand of design and also consulting services to create sustainable societies is supported by the megatrends such as urbanization, renovation backlog, sustainability and then also digitalization. And demand in all of the business areas has remained strong, but the uncertainty in the market brought by the war in Ukraine can impact decision-making of our customers.
When it comes to guidance, it's unchanged. So we estimate that both net sales and adjusted EBITA in euros will increase compared to last year. And also, our long-term financial targets remain the same.
So that concludes my first quarterly presentation and our presentation. During the forthcoming weeks, I'm going to meet actively our customers, investors and also employees to understand well our strengths and also opportunities for further growth in the Nordics. I really strongly believe in our ambition to be a significant Nordic player, and it's just great to be part of the next phase of Sitowise journey.
And about the way forward, we will continue to build on the solid foundation and the good company culture. And I see that there are a couple of areas where we need to focus on: firstly, accelerating further our growth in the Nordic countries; secondly, driving digitalization to increase the impact of our own operations, but also creating new businesses; and then thirdly, sustainability being an essential part of our culture, mindset and way of working and that we are really supporting our customers with their sustainability target.
Now it's time for the Q&A. So any questions, please?
[Operator Instructions] There seems to be no audio questions. So I hand it back to the speakers.
Thank you. We have questions here in the chat, so I will ask those now. We have -- first, we have a couple of questions from Olli Koponen from Inderes. And here is the first one. Your costs have increased in materials and services, and also other operating expenses have risen. Can you explain a bit more this cost structure changes compared to the comparison period? And can we expect this to continue?
Thanks for the question. I could start. So I would at least say that -- what we also pointed out earlier, so now of course, when we are -- we're moving to more post-COVID environment where we have more activity -- internal activities, so that had an impact on the cost basis. But other than that, maybe I'll ask Heidi to complement a bit.
Yes. So yes, what Heikki was mentioning, so those were things that were impacting our other operating expenses, which was one part of the question. And the first part of the question related to the higher material and services costs, I would say that these are always things that -- it's a combination of the projects that we are having, so it's a little big. What is our project mix, and that has a very big impact on our material and services costs, i.e., the subcontracting costs. And then I would say that there is also seasonality in our costs as we have seasonality in on our top line.
Thank you. Then there is another question from Olli, too that, are there projects delayed because of market uncertainty? And do you see that if the situations changed?
There are some postponements. We are also seeing that there is like an increased risk of some postponements. So in that sense, market has been a bit changing. Again, maybe, Heidi, if any further thoughts about this?
Yes. I would say that when it comes to the ongoing projects, I wouldn't say that strongly, that there has been delays in the ongoing projects, that here, our -- the current projects are developing and are progressing according to plans. But where we do see a small decline is of the incoming tenders.
Thank you. Then there is also a little bit -- a question about the order backlog. How we see it like, okay, the order backlog is really good, but what about the realization of the order backlog? How is it progressing? And is there any differences if we compare to a normal situation?
Maybe you could also elaborate on this one, yes.
Starting from the end, so our order backlog and if we look at the development that we have had, that it has been increasing, there is no big difference in the development and in the -- what is included in our order backlog. So we can see that we have a strong order backlog in all of our business areas. We have -- we can say that a big part of our order backlog will be realized within sales within the next 12 months. But of course, our order backlog includes also firm orders that are -- of those big projects which run over several years.
Thank you. Then there is a question from Robin Nyberg from Carnegie. "The second half of the year tends to be stronger for you in terms of profits. Do you expect that to be the case in 2022 as well? Or is it too early to say because of the uncertainty?"
Yes, I think we can clearly say that it's too early to say at this moment. But what we have said earlier, of course, what comes to our guidance, so that remains unchanged.
Thank you. Then from Robin also. "you have done a limited amount of acquisitions recently. What kind of M&A pipeline do you have? And which areas do you aim to acquire?"
Yes. So about the pipeline overall, so of course, as we've said, our aim is to be a significant player in Nordics, so of course, we are covering that market and looking at opportunities there. I would say that we have a solid pipeline there, and we have been progressing with those ones pretty well. Heidi, anything to add maybe?
No, I think it was quite a good answer. And I think we can say that we have a quite active, active, active fights.
Thank you. Then there is a question about EBITA margins and how much the sick leaves have impacted the EBITA margin.
So the amount of sick leaves was basically EUR 700,000 during the first quarter.
Yes.
And then one question about the pricing and order backlog. So we have a high order backlog, but do we see that -- is there any risk for mispricing because of the inflation?
If you, Heidi, comment this one, yes.
So we have, of course, there are -- as I said, that our order backlog is a mixture of very many different orders and from different kind of clients. But we do have the possibility to adjust, in many of the cases, we do have a possibility to negotiate and adjust the prices as well as sell -- as well as to sell, also, additional services.
So as the message has been that we are actually very pleased of having, going into this kind of an uncertain time with such a high order backlog because as we do know from the past that when the times do get uncertain, there will be a very, very tough competition for the upcoming orders.
Thank you. Then there was also a question about the prices that do we see that there is a pressure to increase the prices.
I would say that it's an opportunity definitely here for us also to proactively drive price increases overall in the market. And of course, we see that there's an increase of -- there's increased risk of the cost base increasing next year. So of course, now we are looking at opportunities this year how to improve, overall, the pricing.
Thank you. Then about the write-downs caused by Ukraine, do we tell how much are the write-downs caused by the Ukraine war?
It's about EUR 0.5 million, which can be seen in our -- actually, in our interim report, in the notes information that we have there as we are disclosing our items that -- our one-offs in different groups, so it is under the group Other. So that information can be found in the interim report as well, so EUR 0.5 million.
Thank you. And then the last question. Utilization rate remained on a decent level despite of higher sick leave rate in Q1. What level of utilization rate do you believe to be achievable in a normalized market situation?
I think, Heidi, you are more the expert now at this stage.
Yes. So our -- so we had in Q1, our utilization rate was a little bit below 77%. And it should be -- our target is -- it's on -- when it's on a good level, we think it should be 78%. And of course, everything about that is very good, but that is our target.
Thank you. That was all the questions that we have for today, and now we can wrap up. Heikki, please.
So thank you all for the questions. And as we described, there is a great solid foundation overall. We had a very good first quarter. And now I'm looking -- we are looking forward to the next phase of Sitowise journey. Thank you.
Thank you.