Multiconsult ASA
OSE:MULTI
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
117.5
194.5
|
| Price Target |
|
We'll email you a reminder when the closing price reaches NOK.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Multiconsult ASA
Earnings Call Analysis
Summary
Q3-2023
Multiconsult showcased a mixed Q3 performance with increased revenues but weaker profit margins. Net operating revenue rose by 11.5%, fueled by heightened employee numbers and higher billing rates. However, EBITA dropped 56.9%, with the margin falling to 3% from last year's 7.7%. Despite a decrease in billing ratio and increased competition in markets, the company retains a strong order backlog, peaking at nearly NOK 5.1 billion, and a robust order intake, climbing almost 43% due to significant project wins. Investments in growth, like higher staffing levels and onboarding graduates, are foundational to future value creation but have heightened costs. They also remain committed to employee share ownership, with a new campaign rolling out complimentary shares. Ending with a cash deficit of NOK 70 million for the quarter, Multiconsult is preparing for a more challenging market but remains optimistic, given its diversified project portfolio and ongoing strong demand for sustainable solutions.
You don't have any saved screeners yet
Good morning, and welcome to this presentation of the figures for the third quarter for Multiconsult. And as you've seen from the invitation, we will also have an extended presentation where we will go into a bit more detail both with respect to the market and to give you an update on the strategy. There will not be a break between the 2 sessions, and that means that we open up for questions when we've gone through all the presentation.
My name is Grethe Bergly, I'm the CEO. Up on stage today, I will also have our CFO, Ove Haupberg; and our EVP, Sales, Thor Ørjan Holt. And it's an honor to welcome you to our offices here at Skøyen for today's presentation.
Looking at the key figures for this quarter, I will call it a mixed picture. We have good figures when it comes to revenue. There's strong sales in the period, showing that there is still a market, but we have a weaker result on the EBIT and, therefore, also the EBIT margin. And we have a somewhat weakening of the billing ratio. I will give you some background, and Ove, of course, will take you through more of the details.
We've chosen to call it investing for growth. And the rationale for this is this quarter is the quarter where we welcome a lot of new graduates to the company. And we have a significant increase in the number of employees. The investing on onboarding and training this, of course, is an extremely important part for the future value creation. And this also then drives the increased net operating revenue and the organic growth.
So we have now, for a number of quarters, showed that we can have a strong organic growth. And we are very pleased about that because we know that, that is, again, a way of future value creation. It's very good sales in the period, and we continue to build our order backlog. So we have, again, a record high order backlog. It is an unsatisfactory low billing ratio, partly because we welcome a lot of new employees, but there are also a big variation between the different segments, and Ove will go through this a bit later.
We have appointed a new EVP for the segment Architecture, Kristin O. Augestad. She also then will take the position as Chairwoman for all the 4 Architects subsidiaries that we have. We have strengthened our market position in the period, and we started the journey to get to know and work with A-lab. And we have also been awarded a number of contracts.
So looking more in detail on the market and sales. The largest sale in the period is the E10 Hålogalandsvegen. It's a private public partnership that Skanska has with the road authorities. They have also included the contractor, Hæhre, and we will be the main designer in the team with Aas-Jakobsen.
The other new sales that you see here is a good example of the combination and the strength we have in working in all -- in 4 different business areas, and they represent the growth that we have seen for a while, both within energy, water and climate adoption.
You can see on the graph that there's a good increase in both sales and order backlog, continued strong sales, an all-time high order backlog, high volume of ongoing projects, a good mixture with the basis of some very large projects and a combination with the smaller, more diversified portfolio. At the same time, we are noticing now that the market for our services have leveled off, but it has leveled off from a high figure. And we do see that there's still a lot of opportunities in the market.
Looking at the organization, we are now 3,717 employees, an increase of 12.3%, slightly less increase in the -- when you turn those into FTEs. And we welcomed 225 new employees in this quarter, and like quite a substantial part of that are graduates.
The organization, when we started with putting Kristin in as EVP of the Architect, we've got a cascade of other changes that we needed to make. Leif Olav Bogen takes over Oslo. He used to have the segment -- the Regions Norway. Kari Dowsett has been promoted from being a Director of the Region West to take on Regions Norway. And we have also made a change in LINK Denmark where Kristina Jordt Adsersen has been appointed Managing Director.
This also represents a very strong picture of the -- our ability to plan for succession, develop our leaders. And I think this shows the strength that we are able to fill all these positions with internal candidates. When it comes to excellence, it's again good combination of innovation, I would say, experience and also the future.
LINK has been awarded an innovation prize for the work that they've done on The Augmented Architect. And if you want to know who that is, I recommend you go and look at their Internet pages. But it's the combination of human knowledge and technology that has created a much more efficient way and supporting our clients in their decision-making.
Both Svein Bjørberg and Elisabeth have been awarded honorable memberships for their engagement and contribution to the industry. And it is a privilege for us to have this kind of capacity working within the organization. And last but not least, Håkon Duus, in a strong competition with a number of young engineers, he was awarded the Advisor of the Year within the Consultant Engineering Association in Norway, proving that we will be set for more honorable memberships, I'm sure, in the future.
Since we got listed on the stock exchange in 2015, Multiconsult has been running a share program for our employees where they can, once a year, they can buy shares at a 20% discount. We've had roughly 25% of our employees have participated in this program. We have a strong belief that employee ownership contributes to long-term increased shareholder value.
And in connection with this year's program, we're going to run more of a campaign to make sure that all our employees are aware of this program. And we do accept and we do realize, having now talked to a number of our employees, that there is a hurdle for some people to actually set up an account and start investing in shares. So that has meant that we will, for this year, also award 40 complimentary shares for all eligible employees in the group in connection with the share program that we roll out now in November.
And with that, Ove, I hand it over to you.
Thank you, Grethe, and good morning all. It's a pleasure to see you. We have a closer look then to the numbers for the third quarter and year-to-date, starting with the third quarter.
The net operating revenue, NOK 977 million, that is an increase of 11.5% from last year. Organic growth, 8.4%. We see the effect of 1 less calendar day. That's 1.9% of NOK 16.6 million that is shown in the graph underneath in the picture. M&A activity is 5%, that is the split between Roar Jørgensen, which we bought by end of last year, and A-lab this summer.
The main effect here, the drivers behind the growth, higher number of employees, as Grethe has shown you, 407 new employees or 278 full-time equivalents. You see this also in the graph as increased capacity, and we have higher billing rates. Last year, just to remind you that we had then the insurance settlement on this [ bold barquette ] on NOK 13.6 million. So that is also as a difference in other revenue effect in this graph.
The billing ratio, 67.8%, a decrease of 0.5 percentage points from last year, explained by the 225 new employees in the quarter; and among them, a large number of recent graduates to create future growth. Besides a change in the project portfolio on large assignments and a more demanding local market in some segments, so a mixed picture, as Grethe just explained us.
The EBITA, NOK 29.2 million, a reduction of 56.9% or NOK 38.6 million since last year. Then to remind you, the value of 1 calendar day, [ 13.6 ], and insurance settlement accounts for a total of NOK 30.2 million on comparable figures.
Margin, 3% in the quarter, a reduction from last year's 7.7%. Corrected for the calendar effect, the margin ends at 4.6%, as we show you in the report. The prime driver year-on-year seen here as the gray in the graph is the increase in employee benefit expenses, and that is 8.8% per employee, and that is included increased employers' tax.
Order intake, very strong, NOK 1.349 billion, an increase of close to 43% from last year, and the majority here is caused by the project E10, also as Grethe mentioned. Order backlog, close to NOK 5.1 billion, the best again in the Multiconsult history. Other OpEx ratio, a small change from last year on 0.2 percentage points. We see some effects on office rents, on consultancy and IT in the quarter. So that was Q3.
Then year-to-date figures. We see more of the same effects, of course. The growth, NOK 3.4 billion, increase of 12.4% from last year, organic of 10.7%. M&A activity, an equal split between Roar Jørgensen and A-lab; and the calendar effect is [ 0.7% ]. We had the same number of calendar days, but we have a different value between the years. And the drivers, of course, then the high number of employees and higher rates per hours.
On the billing ratio, that is -- has a somewhat reduction. The main deviation stems from this quarter. EBITA, NOK 301.1 million, a decrease of NOK 10.6 million from last year. And the margin on 8.8%, also a reduction of 1.4 percentage points. And again, the main explanation is the increase of employee benefit expenses, and that's again included the employee tax. The positive is the order intake, of course, NOK 5.5 billion in these numbers.
Other OpEx ratio, again, lower than last year. The cost increase on NOK 57 million shown in the graph is office expenses, included what we saw last winter on electricity and insurance, consultancy, travel and IT. The profit for the period, NOK 203.7 million, a change from last year on minus NOK 23.7 million or 10.4%, gives still a positive earnings per share on NOK 7.46 on these numbers. And we still have Q4 to go.
Then as you are used to, I'll look on the different quarters. And the reason why this is that our numbers are affected by the number of available working days. Q3 is normally, and also this year, our weakest quarter. We have the vacation period. We have the start-up after the summer vacation, and we have the start-up of recent graduates. And again, 1 less day than last year.
So starting top left, good growth year-on-year, 11.5%. And the positive growth trend in the rolling 12, shown in the blue line, is still positive and somewhat increasing. We see, down right, a significant growth in the number of employees, 12.3%. And in combination then with a lower billing ratio and higher cost per full-time equivalent puts pressure on the margin, and that's shown then in the down-left corner. And we explained the reasons on the previous pages.
Then over the 4 segments. And just to remind you that the segment Energy was incorporated in the Regions Oslo and Norway from and including Q4 last year. And the historical figures have been reworked. We have the new segment Architecture from Q2, but first time this quarter is included both the P&L effects from LINK and A-lab. And again, we compare the quarter -- this quarter with the same quarter last year.
Okay. Then you are ready from the left, Region Oslo. A good growth in net operating revenue, 10.1%. The prime drivers are increased billing rates and then the increased number of employees. We have 94 full-time equivalents.
EBITA of NOK 25.6 million, the margin on 6.9%. And the billing ratio on 68.2% is influenced by several effects: the increased number of new employees in the quarter, a change in the project portfolio. We have the ramp down of the Sotra project and a ramp-up of E10 and the hospital projects in Oslo. And we have a more diversified market for our services, cooling down in some parts and positive development in others. And we have, of course, the effect of this calendar day.
Moving to the right, Region Norway. Net operating income increased by NOK 80.7 million or 5%. And also in this segment, the prime drivers of increased billing rates and increased number of employees, 107 full-time equivalents in this segment.
EBITA, NOK 11.9 million or with a margin on 3.1% and the billing ratio of 66.5% is affected by the increase of new employees, but also increased competition and pressure on margins due to lower investment levels in some district and markets. And of course, here again, the calendar day, and I mentioned that now for the last time. We have, of course, on comparable numbers, the insurance settlement last year, and we had the positive effect of including Roar Jørgensen from beginning of this year.
Then Architecture. The growth in net operating revenue is 30.8%, mainly caused by the incorporation of A-lab in this segment. And then small comments per company, these 4 companies in Architecture. LINK Norway, underlying performance has strengthened caused by the improvement program, which we have talked about now for some quarters, but have a focus on all aspects on the P&L. The results are somewhat weaker due to onetime bonuses last year. And we see a challenging market in the country, and that has caused some permanent layoffs, but only 4 and the same as last quarter.
LINK Sweden, we talked last time about the ramp-down of Växjö hospital, and that has effect now, and the planning of ramp-up of the new hospital project in Malmø. So this ramp-down and, in general, more demanding market has caused a lower billing ratio.
LINK Denmark, still faced with weak performance. There are some delays in both public and private projects, and that is causing low productivity. But we have the new CEO that has shaped a new management team, and we have a reduction in number of employees that was communicated this week. And also due to a more demanding market, results in A-lab is affected by the cost of permanent temporary layoff of personnel. So that was the segment Architecture.
To the right, International, we have a positive increase in net operating revenue, 23%. And that is also included a currency effect that is estimated to drive 9.9% of this growth. Very positive development still in Polska, high activity there, but a somewhat weaker result from Iterio and a more difficult market for Iterio in the Swedish market.
Okay, that was the segment. But we still have a very strong financial position. Two pictures in the same, and cash flow to the left and we start there. So the cash position at the start of the year, NOK 115 million. And then we have the cash flow from operation this year, NOK 369 million, included IFRS 16 effect of NOK 149 million. Then the change in working capital, negative by NOK 362 million. Most of this is seasonal effects also seen last year, but we have some effects of late payments in projects, but we still have considered low risk and have just minor changes in our provisions. And just to confirm that we are maintaining our high focus on the level of working capital.
Then cash to investments, that is NOK 146 million. It includes 40% of the shares in A-lab, that is NOK 67 million, and the rest is increase in fixed assets, mainly machinery, equipment and IT. On the financing activity, we see 2 effects that goes in opposite directions. So we have the dividend payout, NOK 247 million, and the purchase of owned share, close to NOK 50 million. But that is financed by loans of NOK 400 million, gives us a NOK 95 million positive. And then we have the IFRS effects here as well. And we end then with a negative NOK 70 million cash effects at the end of this quarter.
But just to the right, the net interest-bearing debt, NOK 440 million, that is still good within our credit policy. Now this change from last year is the finance that increased dividend and M&A activity, so both to increase shareholder value. The last picture for me, free cash flow. Just to remind you, on 12-months rolling, still positive on NOK 369 million, which we see on the top line here. A negative effect this quarter from the operating profit corrected for the change in working capital.
So by that, I welcome Grethe back on the podium.
Thank you, Ove. The outlook for Multiconsult is that this -- the request for our services is still strong, but it has leveled off. We see a significant variation within geography and the various business areas. It does mean that we are now mobilizing to navigate in a more complex and uncertain market.
One of the markets that's a lot attention towards is, of course, the Buildings & Properties market. And also here, we see that there is a diversified market outlook. There is a weakening in parts of it, but there are also positive developments. And later on, Thor Ørjan Holt will give you some more insight into how we are exposed within the area of Buildings & Properties.
We are seeing a continuous strengthening for services to assist society and our clients in the demand for sustainable solutions. And we are well positioned for the future through the high volume of ongoing projects that we have and the diverse portfolio and a very strong order backlog.
So with that, we conclude the first part of this presentation. And we're now going to go into giving you an update on strategy and on market, and we have called it Fit for the Future. This is to show you what we have done and how we're working now for the next -- going into a slightly more demanding market, we would say.
A short reminder of who we are. We are a Norwegian powerhouse with 3,700 skilled architects and engineers. We do architecture, we do consultancy, we do engineering within the construction industry in Norway and abroad. And we do 10,000 -- more than 10,000 projects for more than 4,500 private and public clients in more than 20 countries annually. So it's quite diversified and quite a large operations.
For those who have followed us for a while, you know the journey from the turnaround next-level program through which we created the common ground for the need to change, and we made sure to action on the changes that we needed to make. At the Capital Market Day in 2021, we introduced the term The Winning Philosophy, communicated the plan for our strategic position that we were working towards.
Having lifted Multiconsult to a satisfying higher profitability level, we are now concentrating our efforts on staying ahead. Staying ahead contains business operations and processes to ensure growth whilst maintaining profitability and developing the company, delivering on the promise for the targets we've set. Staying ahead contains methods and constant monitoring and surveillance to the core business to enable implementing changes when the environment change locally or globally.
In this picture, we sum up what we have actually achieved in the period just behind us. We have delivered profitability in line with target. For 4 consecutive years, we've been within the growth ambition. We have managed to keep control of our costs. We strengthened the business through strategic M&A. And not least, I'm privileged to had a team of extremely competent Executive Vice Presidents.
Then looking on the right-hand side. In this period, we have created an EBITA of NOK 1.1 billion, representing a margin of 9.7%. We've had an average growth of 7%. We paid out NOK 628 million in dividend, and we've had an average payout ratio of 80% of net profit. And together, this creates a foundation then for further growth.
We have a solid position in the market and order backlog. We have a strong position towards the green shift. Our competence and experience makes us an enabler for the net-zero society that we are working towards in the long run. We have a strong and diversified client base with long-term relations. We are a preferred employer, both when it comes to graduates and professionals. And we are seeing that we are, with our clients and partners, creating excellence and being awarded and recognized for this.
So then looking into more of the details of this. In addition to organic growth, the following M&A has been instrumental to the development of Multiconsult. It has provided us, given us the #1 position within Buildings & Properties in Norway and the #1 position as an integrated consultancy and architecture services. It has strengthened our market position geographically and within the value chain.
When we then look at further growth, it will take place along these 3 axes. We are now looking into how to accelerate the market in Norway. There are still opportunities for organic growth. There are still some geography areas that we are not covered. And we are looking at also how we can work with partners to expand our position in Norway, in the markets and the core that we're already operating.
Secondly, we will start -- we look at introduction of new services. And on this one, we will work both horizontally and vertically in the value chain integration that we are already a part of. And then outside Norway, we would look for further market expansion, and we will use the footprint that we already have in Denmark, Sweden and Poland.
In 2021, we set the goals for the strategic positions that we wanted to take within 5 areas, respectively, clients, industry, climate, colleagues, but also that we wanted to create a position for ourselves in exploring the unknown, making sure that we also followed and exploited, I would say, the opportunities to come from this. It was in a position where we saw that there are changes in the market. Our clients are being challenged. We wanted to be part -- a partnership with our clients on this journey. And for each of these areas, set defined goals to measure ourselves against to see that we were actually confirming that we are on track.
When it comes to clients, to build long-lasting clients relation through groundbreaking projects. How do we know that we're on the way to do this? One way of knowing is to see that you're actually part of contracts and projects that win awards because that's the benchmark against the world or the rest of the society. And we see that we are currently involved with projects that has been given awards, and we have finished projects that are winning awards.
The zero emission lab is a really good example of that where it's a combination of innovative solutions, future non-CO2 emissions. And it's a living lab where you can test out almost anything you can imagine on how a building is working. We have won prestigious awards when it comes to hospitals. And we have also won prestigious awards when we come to hydropower dams.
With the industry, we wanted to be a driving force in developing new technologies. And what we're seeing now with the big -- in particular in the large projects, we are now applying technology innovation in the execution of projects. An example is from the Fornebubanen, we are now actually designing in a way that we can take the information we have directly to the machines who's going to go out and dig and prepare the sites. And this is, of course, 2 large benefits. It's more efficient, but it also reduces the chances of mistakes. But we are part of some of the really groundbreaking technology breaks that's going on in the industry.
And we are also engaging in partnerships to support our clients in their most challenging projects. And we are taking part in new types of contracts where we are much more partnerships. And we're also joining in with the client, the contractor and the consultants, taking on more risk, but also then getting the opportunity to get the reward through the new way of running projects.
On the climate, we set out to invest in strategic development to provide capabilities needed to support our clients in the green shift. We're seeing now that our expertise support clients in choosing climate-friendly solutions to developing renewable energy. In the last 12 to 18 months, we have won and delivered assignments for the green shift, natural hazards, energy-efficient building. So we're working across the whole chain really under the umbrella of sustainability. And we are part of developing future energy solutions, being it carbon capture storage, solar and wind power, hydrogen and ammonia.
We also set some targets for colleagues because developing and attracting talent to solve the most challenging future that we see is a very important part of what we do. And we have established an academy. We have established career programs as a foundation for developing and retaining our most valuable assets. At the same time, as we continue to -- our focus on maintaining a position as a preferred employer for graduates because that's a way of building and maintaining our talent pool.
And then last, the X, the unknown. We have established what we call the Explorer Factory, but it's really an efficient way of running innovation and being part of innovation projects also with other partners. It's a way of validating and commercialize our business opportunities and encouraging new ideas, but supporting them because most of our staff are not trained to take an idea and follow it all the way through to a viable product. But we're seeing through this the X, we also make sure we are out there exploring. We're part of the arenas where innovation takes place.
And we have, in the last few years, invested in 2 start-ups: 7 Analytics, where we're working very closely, different business model, but also topics and technology that support some of the areas where we are already strong to go to our clients with another value proposition; and now latest is the Anker, which is a start-up working on more related to building information system technology to support the testing, but also how we collect the data and can use it for some of the work that is routine work that the machines can now do for us. So these are some of the examples of the areas that we have worked within these 5 positions.
And with that, I hand you over to Thor Ørjan who will take you through the market in more detail.
Thank you, Grethe. And once again, good morning, everybody. My name is Thor Ørjan Holt. I am the EVP, Sales in Multiconsult, and I'm responsible for our market and sales activities. I'm going to give some more details into our market and present to you our 4 business areas. I will comment on our position in various parts of our market, and I'll also give some more insights to our market outlook.
First, an executive summary of Multiconsult's market. Norway is Multiconsult's home market. We have more than 30 offices in the country. We also have offices in Sweden, in Denmark, in Poland and U.K., and we have a partly owned company, Norplan in Tanzania. Multiconsult's core business is providing architecture consulting, multidisciplinary engineering within the construction industry. We deliver services to 4,000 -- more than 4,500 clients in more than 10,000 projects in more than 20 countries each year.
Now I will give a short introduction to our subsidiaries and our views on our position. Multiconsult in Norway is the second-largest consulting and engineering company in the country. We state that we have a leading position within consulting and engineering in several parts of our market. Our newest member in the group is the architectural company, A-lab. A-lab has a #1 position in Norway with respect to urbanization and private property development.
LINK Arkitektur is the second-largest architectural company in Norway. It is among the 10 largest in Sweden, and it's a medium-sized player in the Danish market. Combined, LINK Arkitektur has a #1 position within hospitals in Scandinavia. And LINK has been a vital part of Multiconsult's ambition also to become the #1 company within hospitals in Norway. Multiconsult believes that a stronger integration of architects and engineers will generate increased synergies going forward.
In Sweden, we also have Iterio. Iterio is a niche player in the Swedish market, mainly operating in the infrastructure market in Sweden. Then finally, Multiconsult Polska is a local Polish company. It is among the top 10 companies providing services in the local Polish market. Multiconsult Polska is also becoming an increasingly important partner for Multiconsult Norway, providing now increasingly more capacity into our Norwegian projects.
Looking a little bit more into our Norwegian home market. I will -- based on available sources of information, Multiconsult estimate that we have about 14% of the market share within the onshore construction market in Norway. This is excluding the oil and gas industry. Looking at the architectural market, we foresee that we have about a 15% market share.
When we look at Multiconsult Norway, among our Norwegian peers, we state that we have a strong #2 position, that our growth is back on track and that we are currently gaining market shares. Multiconsult has a robust and flexible business model. A large portion of our employees has the capabilities to work across several of our business areas. This gives us the flexibility to move resources towards the shifting demands in the various markets.
In Q3, Multiconsult had a gross operating revenue of more than NOK 1.1 billion. And we note that we have a steady and good growth in all business areas. In addition, we see that we have a significant growth in Energy & Industry of 26%. Currently, there is a cooldown in parts of the Buildings & Properties market. And we are currently moving resources in the direction of Energy & Industry market. We are currently in a position where we have an all-time high order backlog relevant, representing all the business areas. And we are well positioned in the market going forward.
Now we will go a little more deeper into each of our 4 business areas, starting with Buildings & Properties. The Buildings & Properties market is diverse. It consists of a large number of clients, a large number of smaller- and medium-sized projects, but it's also consisting of some major construction projects such as the new Rikshospitalet. The main growth -- the main driver in the growth in this market is the general growth in the population, which generates a steady increase of demand within health care, within hospitals, schools, all kinds of public services as well as increased demand of housing and both cultural and commercial buildings.
At the same time, the new taxonomy and EU and national regulations related to energy saving and sustainability is driving the market. This is especially important in the modernization and renovation part of the market. Buildings that doesn't meet high sustainability standards in the future will lose its value. Important clients for us in this market is the major public clients such as Statsbygg, Forsvarsbygg, Sykehusbygg, as well as counties and municipalities throughout the country. Private property developers and contractors are also important clients.
Looking at the market outlook within Buildings & Properties, we see also a diverse outlook. Currently, the housing and real estate part of this market is cooling down. And we see that it will take some time before that part of the market will recover. Multiconsult has about 5% of its Buildings & Properties part of our revenue related to housing. LINK Arkitektur has about 23% of its revenue related to the same housing market, meaning that LINK Arkitektur are more exposed to this cooldown than Multiconsult.
We see also that other parts of the market has a positive development. There is a strong growth in the investment in defense projects, and we note that we have a steady demand within energy saving and transformation projects. Multiconsult states that we have a leading position within integrated architectural and engineering design of buildings. We state that we have a #1 position within architecture in Scandinavia, and we have the largest capacity of HVAC and geotechnical engineering in Norway.
Now moving into our business area Mobility & Transportation. This market is mainly driven by some large [indiscernible] such as Statens vegvesen, [indiscernible] and Bane NOR. However, it's important to understand that a large portion of the projects in this market is executed through design and build contracts, meaning that Multiconsult is working for the contractors. Having good and long-term relationships with the contractors is key to access this part of the market.
The market is driving -- is driven by the political ambitions and political priorities when it comes to the projects. And these political directions are given through the national investment plans. Sustainable developing or sustainable transportations -- transport solution is also driving the market as well as the need for modernization of urban areas.
Looking at the market outlook, we see a steady market. We foresee a flat investment plan level for the next couple of years. But it's a flat level on a good level for us, and it will result in significant investment in infrastructure projects as well as projects related to sustainable urban development.
Multiconsult state that we have a leading position in Norway within roads, rail, light-rail design. And our position reflects the size of our company as the second largest in Norway. We have -- we are a preferred partner for several of the major Norwegian contractors. And we state that we have a #1 position in geotechnical design of infrastructure projects.
Moving on to Energy & Industry. We see here that our traditional clients within oil and gas-related projects now also is becoming our biggest clients within renewable energy. And it's the electrification of the society that drives this market now. This generates an increased demand of renewable energy that puts pressure on our national grid. This has resulted in all-time high investment plans in the national grid going forward.
In addition, private industry plans are transforming, moving away from fossil fuels towards the green shift through electrification projects. Important clients in this market is Statnett, Statkraft, Equinor, Aker, grid and power plant operators as well as international investors in electrification and hydropower projects, especially for us in East Africa.
Looking at the market outlook, we see a stable, growing market with high investments in the grid infrastructure. We also see an emerging market on a longer-term perspective within our new Norwegian offshore wind industry. We see a steady demand for services within development of new energy sources, such as green and blue hydrogen and ammonia, and also developing our technology related to carbon capture and storage.
Multiconsult state that we have a leading position within development of the national grid. We also have a leading position within hydropower and international, especially in East Africa. And we state that we have a #1 position within solar and smart grid as well as within electrification and design of onshore energy plants.
Finally, going into our business area Water & Environment. This market is driven by the state, the county and the municipalities investment plans. Climate change and new EU and national regulations towards water supply and sewage treatment is driving the market. Also, we see that the large backlog in maintenance of existing infrastructure is creating a steady and increased demand for consulting and engineering services going forward. Nature and natural diversity is becoming equally -- is coming increasingly more important for our clients.
Our important clients here are counties and municipalities throughout the country, NVE, Kystverket, Statens vegvesen and, of course, also private contractors and property developers. Going into the market outlook. We see and we expect increased investment in water distribution and sewage treatment. We see a strong development within natural hazard and flood protection, and there is a high attention toward quick clay and landslides.
Multiconsult state that we have a leading position within water and environmental services, and we have a #1 position within marine environment and geotechnical investigation. We also have a #1 position within authority planning and authority approvals.
And bringing your attention to the picture, Multiconsult, really in 2024, put our new environmental and geotechnical investigation both in service. And we are the only country -- only company in Norway that provides this specific service to the market.
In Multiconsult, all clients are equally important. But it's also important to understand that a few of our major clients generate almost half of our revenue. And then the remaining part of our revenue is generated by a large number of medium-sized and smaller projects. But our smaller projects is also important. It's often niche projects where we develop technology, new competence and experience that will be critical for us to stay relevant in the market also in a long-term perspective.
So with this, sums up my presentation. Thank you for your attention, and I will bring -- I will invite Ove back on the stage.
Thank you, Thor Ørjan.
Then I will confirm our financial targets here and start with the profitability target. And you see here in the graph that after turnaround program, nextLEVEL in 2019, that we have performed as a company on a stable high EBITA in the last 4 years. So this is around margin levels of 9% to 10%. And we confirm that also going forward that the target is 10%, measured on an annual basis throughout the strategy period. And this, in comparison with others, that we, in line with our goals, have also delivered performance that is among the top players in the industry since 2019.
Revenue growth ambition. The combined aggregated growth rate has been 10% from 2010 and up until the last 12 months. And we confirm also going forward that the growth ambition is between 8% and 10%, including M&A also in the strategy period.
Gearing and equity. We see a normal gearing ratio between 1 and 2, maximum on 2.5. This is then measured as net interest-bearing debt, excluding IFRS 16, divided on EBITDA. We may, in special circumstances, increase this to 3, and that is, for instance, if there are M&A opportunities in the market. But also, the equity ratio should be about 25% to maintain our financial strength.
M&A. Moderate and selective, that is still what we are looking for and primary focus on core business. Examples last period, Roar Jørgensen and A-lab, these are cash-generating opportunities, strengthen the company and it creates future growth and shareholder value. But we will also continuously monitor opportunities outside this scope that may be within digitalization, sustainability and new business models.
Then the last target, dividend and payout ratio. Since the listing in 2015, we have, as you see, which we have been above 50% payout ratio in all years, except to one. And since 2019, we have been above 70%. And the dividend level has been between NOK 6 and NOK 9 per share in the last 3 years. So based on this, we confirm our ambition on dividend of at least 50% of the gross net profit annually. And just to remind you that this may vary based on the market conditions, cash flow, financing opportunities, equity level and, of course, then M&A activities.
So by that, I welcome Grethe back on the stand for some closing remarks and Q&A.
Thank you, Ove. I'm just going to go back to this one where I started with because I think this sums up what we have achieved over the last 4 years, and it is the foundation of this that gives us the position to say that we are fit for the future. We are optimistic. We see that there are a lot of opportunities. And we have a strength in the company, both with capability and the financial position.
And just to remind you, this is the financial calendar for the next quarter then is in February and also then the financial year of 2024.
And with that, we finish our presentation. Thank you for your attention, and we open up for questions.
Hans-Erik Jacobsen, Nordea. You mentioned that the competition has increased in the [indiscernible] regions, and you said mainly related to Buildings & Properties. And are there increasing competition from existing competitors? Or are you seeing new ones coming in?
We're not seeing new ones coming in. And the increased competition is because when housing goes down, there are other part -- other competitors who have housing as a larger part of their business than we have, and then they will try and enter into the segments that we are in. But we haven't seen many new players.
Okay, we got some questions from Bengt Jonassen, ABG Sundal Collier. It comes to -- it's regarding the Arkitektur and A-lab. It should suggest a NOK 4.5 million net loss in the quarter. This compares to NOK 15 million to NOK 20 million on annual profits. Are there any smaller one-offs? Or is there a representative for running profitability adjusted for seasonality?
It's representative. But just to remind you that we have a quarter now with lots of changes. As we commented that we have a ramp-down over at Växjö in Sweden and the ramp-up of Malmø. So that is a change going on there. And there has been onetime effects also in A-lab with the reduction of employees and the costs related to that. So I would say that Q3 is not representative, but has some one-off effects that we -- yes, we don't expect this -- all of this in Q4.
Okay. I have more -- 4 more questions. So going over to the billing rate for ratio, I assume he means. But for architects, what happened here, billing rate?
Well, it's lots of effects actually in this. I would say that A-lab has a stronger billing ratio than -- if the question was billing ratio, Pål-Sverre?
It is billing ratio, which came from 68.4% last year to 70.1% this year.
Yes, yes. So basically, it's opposite effect. So A-lab runs with a higher billing ratio than LINK Arkitektur. So that is the positive effect, but you have then the market situation in LINK, which has dragged this down. So actually, you have more effects on this. So it's not just one answer, but it's opposite effects in this.
Okay, thank you. Order intake was NOK 375 million higher than the revenue, net revenue; order backlog, up only NOK 150 million quarter-to-quarter. What has been removed from the order backlog?
I think there was some cancellations in LINK Arkitektur, if I remember the report correctly, so cancellation of project. And basically, that's the difference in these numbers, I will say.
Updated target change on leverage ratio, should -- how should we interpret that?
Our understanding is that we confirmed the leverage targets between 1 and 2. I have to say that for some years, we have been below that. But this quarter, no, we are within the target, 1.1 in this quarter. So the target is between 1 and 2. But I have said it, it means that we have investment capacity in this. We have -- within the over limits now close to NOK 700 million in unused capacity.
Okay. Thank you. Last one on markets -- or actually, there is one more, but the market, some larger public projects has been postponed. Will this affect you directly?
We are not involved with projects in Norway that has been postponed. And I would actually like to highlight a point that part of the success that we see or the profits that we are creating is that we have been very good at and working very systematically when we go through the pipeline to make an estimate for which one we do believe will get investments and which one won't. But we have not been involved with that. But we are seeing some project takes longer to start, but they have not been canceled.
Thank you. Last one here. He has a question regarding M&A going forward. Do you want to outline that a little bit more?
The short answer is no, but I don't think you want that. I think we will continue. You've seen the pattern that we have. We are vetting very carefully. We're looking at cultural match, and we are doing a good combination of organic growth and M&A.
Okay. A question from Sindre Sørbye. Are there any costs associated with the integration of A-lab that you may characterize as nonrecurring?
Not in this quarter. It's only cost related to operation in A-lab. And the difference between the country is part of the purchase, and that is then part of the equity going into this quarter.
Okay. Then there's no more questions from the web. Is there any more questions here?
No. I think we then we round up. Thank you all for having been here, and thank you for all of you who are listening, and have a nice day.
Thank you.