Bravida Holding AB
STO:BRAV
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
American Express Co
NYSE:AXP
|
Financial Services
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Target Corp
NYSE:TGT
|
Retail
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
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 |
62.8444
91.9487
|
| Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Estee Lauder Companies Inc
NYSE:EL
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Church & Dwight Co Inc
NYSE:CHD
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
American Express Co
NYSE:AXP
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Target Corp
NYSE:TGT
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
Mueller Industries Inc
NYSE:MLI
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Bravida Holding AB
You don't have any saved screeners yet
Hi, everyone, and welcome to this presentation of Bravida's First Quarter Report in 2024. My name is Mattias Johansson, CEO and Group President for Bravida. And as usual, my colleague...
Asa Neving is here as well.
CFO, and we will take you through this presentation.So let's start. Thank you very much for joining. I'll start with this slide. Bravida brings buildings to life throughout the Nordic region. Bravida is the Nordic region's leading supplier of holistic climate smart solution for buildings and facilities. Our long-term goal is to be climate neutral throughout our value chain by 2045, so that our customers can be as well. We have 14,000 employees in around 365 different branches in the Nordic countries, Sweden, Norway, Denmark and Finland. Our initiatives within building automation and energy management enable a continued competitive offering for our customers. So that is in brief, Bravida.And Bravida as an investment case. First, stable and profitable growth with strong cash flows. We are a leader in our industry in the Nordic region. We are well positioned for the future, meaning that we are one of the providers in the industry who will take care of energy efficiency in buildings, which is very important for all our customers, but we also contribute to increased automation and energy efficiency in the society as such. Stable sales with good risk diversification and good opportunities for growth through acquisitions is also part of the investment story of Bravida.So going into this quarter and the highlights for the first quarter. Net sales is down with 2%, as expected, the organic growth is down minus 6% in the quarter, and we are growing 4% throughout our acquisitions. Order intake, very strong, increased with 16%, and it increases all over the group. Order backlog, more than SEK 800 million up compared to the last quarter, which gives us a strong position, a good position for the quarters going forward. Strong cash flow, 90% cash conversion. Cash flow is SEK 399 million in the quarter compared to SEK 60 million, mainly driven by improvement of net working capital.Cash conversion, as I said, 90%, and that is the highest number since Q1 2022. The margin is down from 5% to 4% as expected and as guided. Low margin in Denmark. We have improved margin in Norway. We have struggled a bit in the South part of Sweden as well. Important to mention is that Norway are improving the margin at the same time as they are integrating the acquisition of Thunestvedt. And Thunestvedt -- the acquisition of Thunestvedt is going due to our plan, which is positive. Very happy to say also that our KPIs regarding sustainability, all of them is improving and going in the right direction. And very happy to see that the frequency of lost time because of injuries is down 25%, and we are improving in all the countries.The bridge regarding the net sales, we started last year at SEK 7,429 million. The organic growth takes it down with SEK 435 million. We have M&A, who is contributing with [ SEK 317 million ], and then we have some currency effects around SEK 36 million, and that is how we end up at SEK 7,275 million. Quite positive about that number. So as you all know, we have a quite difficult market out there, but we are very sustainable, and we have been able to actually change or sell another type of projects. Even if some of the part of the market is down because of higher interest rates, we have been able to offset those low demand with some other segments, which is really positive. We also see in the quarter that the service mix, the service part is improving a bit as well.Regarding the EBITA margin, 4% instead of 5%. As I said just a few minutes ago, number of measures taken to improve profitability, such as integrating the Growth Segments division into our ordinary business. We have taken a cost, a one-off of SEK 9 million in the quarter. That is, of course, impacting our numbers. But we also have reduced staffing centrally as well as locally. EBITA margin is improved in Norway despite the integration of Thunestvedt Group and decreased in other countries due mainly to the tough markets in Finland, South part of Sweden, but also the turnaround in Denmark, as we mentioned as the last bullet.Last week, our new Head of Denmark, Christian Also started, which is, of course, very positive. Really looking forward to start to work together with him, and I know he's very welcomed in the management group as well. Otherwise, the margin at 4% is very much in line with what we expected due to the fact that we are making a turnaround in Denmark and facing some tougher markets in the South part of Sweden and Finland. The order intake and the backlog together with the cash flow is probably the most positive numbers in the report. As you can see on this slide, the order intake is up 16% year-on-year, and we have an increased order intake in all our countries. We've seen a growing order backlog in the quarter with SEK 835 million, mainly because of 2 larger contracts in the central middle part of Sweden, which is 2 data center orders. And I think it's important to understand and remind you that the order backlog is only regarding installation. The service business is not part of the order backlog. So a good order position for the coming quarters definitely.Sustainability, as I started the meeting with saying that we have a very positive trend in all the KPIs regarding sustainability, which is strength from our company, but also something that I'm really happy to be able to communicate. You can see that the LTIFR on group level is down 25% in the quarter. We have a group target at 5.5, and we are very close to that target, 5.6 compared to 7.5 last quarter, but we are very close to the target at 5.5. We have improved numbers in all countries. And both Norway and Sweden are below the target at 5.5.Then when it comes to our CO2 emissions, we have a target that we should lower our CO2 emissions with 30% until 2025 compared to the position we were at in 2020. And as you can see, we have on the last 12 months improved or lowered the emissions with 10%. But compared to the target 30% compared to 2020, we actually have lowered the emissions with 27%. And that is due to the fact that we have been changing out a lot of our cars in the car fleet. 28% of all our cars today are 100% electrical driven. And that is an investment we have done, and that is something we will be able to contribute from going forward.Acquisitions, we have a strong balance sheet, as you know, [ 0.9x ] in debt level, which gives us the opportunity to continue to pay dividend and invest in Bravida through acquisitions. In 2024, we have so far done 5 acquisitions, adding SEK 285 million annually. Integration of Thunestvedt in Norway progressing according to plan. We are not for the moment focusing on any acquisitions in Denmark. We are focusing on the turnaround. So let's do that first, then we focus on acquisitions. We see a strong pipeline of potential candidates to continue our strategy of selective M&A growth. Leverage, as I said, remains low, enabling continued value-creative acquisitions.Summarizing, 5 acquisitions so far in 2024, adding close to SEK 300 million in annual sales.Now I hand over to Asa, who will take you through the different countries. Please, Asa.
Thank you, Mattias. So as always, let's start with Sweden, where we had a top line of SEK 3.5 billion. We have had tough comparative figures this quarter, and this goes for all countries. So the growth in sales was negative 4%, and the organic growth was minus 7%. We had a growth from acquisitions of plus 3% during the quarter. EBITA, SEK 172 million compared to SEK 198 million, and the EBITA margin declined to 5.0% compared to 5.5%. And this is explained by a weaker market in the Southern part of Sweden, which is also affecting the turnover, of course, and -- but the rest of the country was stable. So it's a Southern part that was a bit weaker.And we also had a one-off effect that Mattias talked about when we integrated Growth Segment of SEK 9 million, and this is affecting the Swedish result. And adjusted for that, it would have been 5.2%. Order intake, plus 4% coming from installation and the order backlog 8% year-on-year. We got 2 large orders in the order intake this quarter. One was a data center and the other was in a waste water treatment plant.And then Norway, Norway had a top line of SEK 1.6 billion. That is a growth of 2%, and the growth is coming from acquisition, 10%. Organic growth, minus 4% and another minus 4% from FX. The -- as Mattias said, the Thunestvedt Group, the large acquisition that we did last year is included now in our figures and is expected to add roughly SEK 600 million in yearly sales. And we expect that the EBITA will be around 0 for the year. The share of service sales has increased in the quarter and is accounted for 53% compared to 50% of total sales last year. And very happy that the EBITA margin improved to 4.9%. That is an EBITA of SEK 79 million. And if we would exclude the Thunestvedt Group, it would have been 5.2%. Strong order intake, plus 19% and an order backlog year-on-year of minus 16%.Moving on to Denmark, where the top line was [ SEK 1.66 billion ], and the sales growth is minus 3%, and this is the installation business that is going down. The organic growth was 4%. The growth from acquisition was plus 1%. Shares of service sales has also increased in Denmark and is accounted for 44% of total sales compared to 41% last year. The EBITA margin decreased to 1% compared to 4%. And this is, as Mattias said and as we have communicated earlier, due to the challenges that we have in Denmark right now with write-downs and also with production going in low -- with production in low-margin projects due to the previous write-downs that we had done. Very strong order intake, plus 49%, and the order backlog is 40%. This is mainly coming from installation, the order intake.And we have, as you may know, the pharma industry is going very strong in Denmark, and we have roughly SEK 450 million of pharma orders into -- in this order intake. As we have said, we have done a thorough review in Denmark and are taking significant measures to get Denmark back on track again. And one is, as Mattias said, now that we have a new CEO and Head of Denmark in place from 1st of May, which we are very happy about. And yes, even though we have had a challenging quarter, we believe that we will be back on normal margins again in the fourth quarter in Denmark.And then last but not least, Finland, where the net sales was SEK 0.6 billion (sic) [ SEK 573 million ]. That is a growth in sales of 3%. Organic growth minus 7%, and there is a soft market in Finland. Growth from acquisition is plus 10%. Also, EBITA margin declined to 1.3% compared to 3.7% last year. And this is explained by a lower margin in the installation business and lower volume and also margin in the sales -- in the service business. Order intake increased also in Finland with plus 8%, and the order backlog was plus 12% year-on-year.And then if we look at the net debt and cash flow and our financing position. If you look at the chart in the middle, you can see that we have improved the cash flow -- the operating cash flow to SEK 399 million this quarter compared to SEK 60 million last year, and this is mainly due to the improvement in working capital. And also, if you look at the LTM figure, cash flow has been improved to SEK 1.8 billion. And this has then also affected the cash conversion that is improved to 90%. It was 70% last year. And as Mattias said, this is the highest levels in 2 years.On the left-hand side, you see the net debt and the net debt remains low on SEK 2.1 billion, and that leads to a net debt ratio of 0.9x EBITA. As we have said before, we still have 3 large orders or 3 large unpaid receivables, I should say that we expect that they will be resolved in -- during the next year. And this is 2 projects in Denmark and 1 project in Norway.Then if you look at our financing, we -- that consists of a commercial paper program of SEK 1.5 billion and EUR 50 million. And also, we have a 3-year loan of SEK 500 million and that one is maturing in 2025 in August.Well, Mattias, I -- by that, I will hand it over back to you.
Thank you so much. Thank you, Asa. And a short view on the market. We still see a very stable demand for the service activities. There are some challenges in installation continuing, of course, and there are definitely variation between geographies. There are though favorable market conditions in segments like infrastructure, industry, defense facilities and civil engineering, which gives us quite significant opportunities. And I also think that is what you can see in the strong order backlog as well. We will maintain our project selective strategy with continued focus on cost control across all projects and margin over volume.So take a look at the financial targets. We have a margin target above 7% EBITA. We have a cash conversion target over 100%. The net debt target at below 2.5x is something we, as Asa said, have delivered upon. We have a sales growth that this quarter is below the target. The target is above 7% -- 5%, the combination of organic growth and acquired growth. In many, many quarters now, we have been above that target as well, well above as well. And we have a target of paying out more than 50% of the net profit in dividend. And later today, we will have an annual meeting where we hopefully will decide upon the dividend as well.To summarize the quarter, sales growth, we have acquired growth in -- from acquisitions but have a negative organic growth in total. Not a surprise, what expected slightly down with minus 2%. The EBITA margin is down from 5% to 4% also as expected, due to the fact that we are making a turnaround in Denmark and are facing a tougher market in Finland and Sweden, but improved margin in Norway and very stable margin in the rest of Sweden is positive, of course. I'm very happy to see the good performance in Norway. I think that Norway will come back to the old great margins in the future as well, and we now see the first positive signs of that.We are doing significant measures in Denmark. And as we have said a couple of times, we are welcoming Christian Also as the new CEO and Head of Denmark. Really looking forward to work together with him and the management team in Denmark that I have learned to know for 4 months, 5 months now. And I can tell you that they are very skilled, slightly a bit bad of confidence, but we have improved a lot in our way of negotiating contracts, terms in contracts, pricing, et cetera. So I'm really looking forward to see what Denmark can do in a couple of quarters from now. In total, strong order intake and a strong order backlog, improved cash flow and cash conversion and the highest level since the beginning of 2022. And most importantly, maybe that we are improving the LTIFR for all our employees.We are a much safer employer today than we were before. So improving a lot in that area, which is very good to see. And CO2 emissions is down significantly as well. So we are delivering very well on the sustainability KPIs, which I'm very happy to be able to communicate. And now we have a stable order backlog, and we will start delivering on the margin as well going forward.So thank you for that, and I think we can open up for some questions.
[Operator Instructions] The next question comes from Karl Noren from SEB.
Yes. Mattias and Asa, a couple of questions from my side. If we start off with the strong order backlog and the order intake during the quarter, I'm just wondering if it's possible to say anything about the current state of the order book, so to say, in terms of the margins in the backlog? Is it possible to comment anything on that would be really helpful?
No. We normally don't disclose those numbers. But what I have seen in Denmark, for example, where I have been very close and also the projects we have won in Sweden, we are not going after volumes, we are going after margin. And overall, I can say that we have slightly better margins, definitely better contracts than before. So I think it's on the positive side compared to what we have had in the order backlog before those contracts were signed.
Okay. So you would say the large contracts like the data center sector are at the premium margin compared to your overall margin?
Yes.
That's good. And then I just have a question on -- here in Q1, did you have any like extra costs related to the investigations of the overbuilding in [ Malmo ] or will that come in Q2 or how will that impact you?
I think the answer is yes, but it's not in the Q1. It will come in Q2. And I don't think we have those numbers today. So...
No, we don't. It will come later.
And just to say that's cost related to the work we have done, no other types of costs really. So I think it's still an isolated problem, so you don't understand it in the wrong way.
It's some -- I mean it's mostly internal resources until now and some external that we will communicate next quarter. Yes.
Yes. And then I just have a question on the project [ right now here ] in Denmark in the quarter. I'm not sure if you will quantify it, but can you say anything on how it impacted the margin in the quarter? And if you see any need for more write-downs in Q2 and going forward?
But I think what we have said earlier is still valid. We have said that we will have poor profitability in Denmark, the Q1 and Q2, but black numbers. I think that's still the same. And I think we still guide for a slightly weaker Q3 but a normal Q4 margin-wise.
Yes, that's good. And then I just have a question on -- I mean, you have a very strong balance sheet. I mean are you open for launching like a buyback program? Or do you seek to use the balance sheet more for accelerating the M&A side? Or how do you view kind of the balance there, given that your [indiscernible] has been impacted quite a lot recently?
First of all, we are very happy to confirm or agree -- we agree to you that we have a very strong balance sheet, and we will use that to develop Bravida as a company. And today, we have a annual meeting coming up, and we will see what kind of decision that will bring or what possibilities we will get. But then in the end, it's, of course, a question for the Board. But we see a positive -- that's a positive thing that we can use the balance sheet to continue to improve and build a stronger Bravida.
Yes, that's great. And then just the last question here on the cash flow, which was also good during the quarter. I was wondering -- just I think Asa said that we should expect a continued good cash flow going forward. Was that the message just to confirm?
We see that we have a positive trend going forward, yes.
That's good. That's all for me.
The next question comes from Carl Ragnerstam from Nordea.
It's Carl here from Nordea. So firstly, I mean, the Southern Swedish market is still seemingly a bit challenging, I guess, also pricing-wise. I mean are you considering downsizing that operation similar to what you did in the capital region of Stockholm some time ago? Or what is the plan? Or is it just to endure a period of tougher pricing and then hopefully, it will come back or...
But I think it's total different challenges if you compare to the region Stockholm a couple of years ago. I think now the Stockholm a couple of years ago was not because of a poor market demand, it was more about poor execution, poor performance from our side. I think in division, South or South part of Sweden, it's more about demand-driven challenge. I think that we will have -- we are downsizing already locally depending on the local demand, how that is changing, and that is part of our model. But I think we will need to do some more measures going forward because it seems like the demand in the South part is a bit trickier than in the rest of the organization.So -- but it's not the same type of challenge as we had in Stockholm a couple of years ago. We have many well-performing units in South part. But I think the main problem is that the construction companies has very small order backlogs or lower order backlogs, which give them a position where they have to fight about orders, then they try to push the problem down to subcontractors such as Bravida, et cetera. So I think we need to do measures, but not in the same way as we did in Stockholm a couple of years ago.
And have you so far seen any signs of Southern Sweden starting to perform well? When I look at at least some bankruptcies, but it's maybe not enough to turn the market to a better pricing situation or...
No, I think it's too early to see. Let's see what happens with the interest if that can push the demand in the right direction, but it's still a tricky environment in the South part of Sweden. So let's see when that will improve. But I think it's quite stable for the moment on low levels, which is, of course, a challenge for us.
Okay. Fair enough. Then -- and the order intake has been solid for quite a while here, much driven, of course, by large projects. I mean, in some of the instances, they are delivered, I mean, in 1 year or 2 years or in various portions. So would you expect organic growth to be under pressure in the short term, we're talking 1, 2, maybe 3 quarters and then went through a period of deliveries on the large projects or how should we look at the delivery?
I think it's very hard to estimate. But earlier, we have said that the organic growth will be tricky part in 2024. And I think we will stick to that. It's...
Yes.
And have you seen it getting a bit worse than you thought a quarter ago or what direction is it heading in your view?
No, I think we have been coping with this very well before. So I think I'm more surprised about how well we have been able to handle the high interest, lower demand. It's more that than I think it's tougher now actually. We have been able to grow our business for many, many quarters. I think this is the first quarter in many, many years that we have a declining volume. And I think due to the circumstances we are facing, I think that's good.On the other hand, that will be a fact in our business model as well at some time. And now it's happened. So I think '24 will be volume-wise a tough year. Hopefully, we can work a lot with the margin if you do the calculation for the turnaround in Denmark, et cetera.
Okay. Perfect. And also coming back a bit on Denmark here. So if you exclude the large sort of what you call the problem or dispute contracts, would you say that the margin sort of underlying, if you look at the sort of bigger base, smaller contracts is roughly 5%, which is, I guess, is a normal quarter for Denmark in Q1? Or it's also the sort of smaller bulk of the contracts also at a lower margin level, which means...
No, but I think we have said earlier, Carl, that we have 3 regions where we're having issues, are struggling a bit in Denmark. And the other regions are well-performing regions, and that is still the same. So we have partly a healthy business, and then we have another part of the Danish organization that has been underperforming due to too high growth, too bad contract terms, low prices, et cetera. And that is something we have started to fix. So by saying that, I also can say that the new orders we have won in those regions are on a different level, which gives us the opportunity to create profitability in those regions as well.That in combination with improvement in educations regarding execution, how to run projects, et cetera, is all together bringing up the margin in Denmark. So we have one part of the Danish division that are really well performing. And then we have some areas we need to fix, and that is what we are doing now.
So -- but I guess when you say that the margin is good on new projects in Denmark, I guess, I mean, a year ago or 2 years ago, when I guess the branch manager ever came to you and said, hey, we have good projects. I mean the margin will, I guess, initially always look good in new projects because you don't run the math on it, but then stuff happened, right? So what makes you more confidence? Is it that you have a margin of safety in the new orders, meaning that the sort of gross margin is so good that it's inevitable that the margin would be good? Or how could you have conviction compared to what you -- I guess, if I asked you a year ago or 2 years ago, you'll probably say that margin was good in Denmark during that period as well...
Yes, may be -- I'm not sure I have done that. But I have been part of the Danish organization since December, and we have changed the rules for applying tenders, what they can do and what they allow to do. For example, we have to be above a certain EBITA margin in the calculation. And on top of that, we have to have a certain number of risk in percentage as well. And that is a new thing. That in combination with more focus in the contract signing on the payment terms, other terms as well. That is why I think we have better margin in the order backlog now because I've been part of it, we have changed the way of working.Then in combination with that, we are also launching training, education for the project managers, branch [ managers ], et cetera, who are supposed to run those projects. So we are doing different measures to a, sign better deals and b, be able to execute on those when we have them in production.
That sounds very good that you have margin of safety. And the final one from my side, if I may. I mean you made some organization changes to the growth organization. Could you explain a little bit the rationale behind it? Because it was not that long ago, you launched it, right?
No, but we have had an organization who has been starting up the building automation, energy management and technical facility management. And we saw that this started to be more of a ordinary business. We saw scale advantages of actually taking these 3 business segments out in the ordinary organization, which meant that we didn't need the on top overhead for that division. So that is a way to continue to develop those business segments in a more cost-efficient way. So for example, building automation is around SEK 1 billion in sales today in Bravida, that is not a start-up anymore. That's part of our daily business. So that's part of our ordinary divisions.And the other 2, we have learned also that they are part of the local offer. So that they had to be -- they were actually in a better place being part of the local regions working together with the local branches in another way. So that is a way of saving cost and continue to do what we actually thought is a good idea to continue doing.
So it's not that it's not performing as you want, it's more that you want it, yes, more slim, I guess?
Exactly.
Okay. Very good.
The next question comes from Johan Lonnqvist Sunden from Carnegie.
There's already been asked quite a few good questions on both Denmark and the order book. So I think I'll skip those. But one detail I want to have some clarification on. If you're looking at the distribution on EBITA in between the various segments, I note that the group-wide and elimination is up quite significantly year-over-year. What is the explanation behind that uptick?
Johan, I hand over to Asa.
I think you should see that as more -- this is where we allocate some internal costs also between this group function and the divisions. So in this case, it's internal allocations and then it turn out that the -- that we allocated out a bit more costs, I can say.
So no kind of earn-out revaluation that is impacting positively?
No, it's not like one-offs or anything like that.
Okay. Perfect. I think you -- if you just take one, we've been into the Danish situation for some time now. But just to clarify, for Q4, foresee margins taking the step up to what you are guiding for. Is it just that the contracts you're currently working on are ended and the new kind of order book is activated? Or is there anything other that is giving you so good contracts on Q4?
No, but I think, first of all, the Danish organization is, in general, very good. It's about using them in the right type of businesses working with the right type of customers, give them confidence of saying no thank you to bad contracts, bad terms, bad project services, et cetera. And then in our business model, when you have finalized poor projects with poor margin, then they are out of the books. So it's quite quickly that you can actually get rid of the problem, if you start at the same time as you produce on the low-margin project.If you at the same time can focus on winning new contracts with higher margins, use your resources where you actually can get the most benefit out of them. Then you turn around a business like this quite quick. And just telling the Danish organization that you don't have to win volume that is not profitable. I think that was a [ relief ] for them to hear. When I said you should now go after projects that is not bringing any profitability home to your own P&L, that is not what we are focusing at. And it's [ low ]. I will never be angry at you if you are lowering your volume as -- if you at the same time is making better margins, et cetera, that is our focus.Our job is to bring home money for our owners, not make sure that we have enough of projects to work with. Focus on margin instead of volume, make sure you have the resources in place, make sure they have the right competencies in those resources to be able to deliver those projects before you win the projects, before they have focused too much on winning projects and then try to find resources who should actually deliver those to the customers. And I think that's the wrong way to think. Focus on the margin, focus on what you're good at, make sure you're working with the right customers, just telling them that and they feel confident that it's okay to not win projects that is not profitable. I think that is a big step of improving the Danish organization.So we have done a lot of improvement, as I said to Carl at Nordea recently, that in combination with focusing on training and educate our project managers, et cetera, who should deliver their projects is a good thing to do. Then we can't forget the service business in Denmark, which is really important as well. A profitable business that is too small part of the Danish organization today. But if we can continue to grow the profitable service business at the same time as we solve the installation issues, then we will have a division that is performed -- will be performing in line with the rest of the countries, I'm sure.
And with regards to incentives, have you changed incentives? Or have -- it seems like the Danish organization has been -- given their stronger growth focus, they have been less incentivized on margins compared to the Swedish organization for example. Has there been any changes there or...
They have been incentivized in the same way, and that has been margin. So I think it has been more of a culture of chasing volume instead of margin because they have been incentivized the margins. That's a strange thing. So the margin focus has changed the Denmark and is in top of the agenda. I can promise you.
Excellent.
[Operator Instructions] The next question comes from Karl-Johan Bonnevier from DNB Markets.
Yes. I need to pick your brain a little more on the order intake. And just to get your feel for -- or how surprised you are that it's so strong still, given that you are talking about, say, the competitive and price-sensitive environment out there and then adding to it that you are not going for anything like volume, you are going for profit margin. And even if I adjust for these big contracts that you have singled out, it still seems to be a very, very good SME kind of underlying order intake. How do you get it together say -- to get together, so to say?
No, but I think that is what has surprised me, and I think more people in this industry in the last year because we have been waiting for the downturn in the market because of lower activity in the resi market, fewer offices that are being built, et cetera, et cetera. But what we actually didn't expect was the drivers like electrification, the transformation in the society, data centers, infrastructure, military facilities, the security part of our industry. There are so many other segments that are growing that we have been offsetting the poor demand in resi, commercial buildings, et cetera.And I think that is, of course, very positive, but I'm a bit surprised. I think that is why we can -- at the same time, as we say that the order backlog and the market situation are a bit poor in Finland and South part of Sweden, that we are able to present solid order intake, improved order backlog. I think that is the reason. We are in a very good spot because of the transformation of the society and that these people like ours who are supposed to deliver the services that will make sure that we are using electrical vehicles, that we are using less energies, that we are using in another type of energy, et cetera, et cetera. So I think that is the reason, Karl-Johan.
Excellent. Excellent. Just what I want to hear. So if you look at Q1, did you see a huge kind of workday impact in that organic growth number? Is that something we should look through in your case?
There is some Eastern effect, but I don't know how...
Yes, if -- but that is if you look at March, if you look at the quarter, it's very little. It's like 1 day or so. It will be -- the effect of days is coming in April. So...
In a positive way then.
In a positive way. Yes. There are more days in April now than it was last year. So -- but for the Q1, no, not that much.
Excellent. And just one final one for me as well. So if you go back 6 months, you obviously, Mattias, you talked a lot about payment patterns in the market. How has that developed since you obviously have these Danish contracts or a special situation, but back then, you alluded to that it might be more of a, say, a whole market problem or something like that.
No, but I think I also said that I think it has been for a while very easy to get good payment plans. And then we were surprised about not getting those because they -- the other side were improving or changing much, much quicker than we did. So we had poor cash flow because we weren't really on our toes. Then we have changed our focus again back to the normal. So I think that is the reason why we are presenting a strong cash flow now, because in all -- or not all maybe, but in most of the new contracts we are signing, we have a very high focus on the payment plans, again, which we normally always said before, but then it was a period where we had very easy to get the money and then suddenly happened. So now we are back in the normal way of handling it again. So I think that explains the cash flow.
And it's also seen obviously in your much better working capital management and contract balance management. So it seems to be -- or would you say we're back to normal kind of situation or do you see a lot of bad debt risks out there?
I think it's now, nothing changed in that perspective, Asa?
No, it's not normal yet. I would not say that, but it's -- we haven't seen any changes in the -- since the last quarter.
But I think that's a good question because I think it's very important for us to be aware of the risks. So we are on our toes, try to identify those risk customers in an early phases and try to get the money into our bank account. And I think that is the main reason why we want to improve our payment plans, because if you -- the earlier you get the money, the better your position is in regarding negotiations, but also that you are risking less if something happens on the customer side.
Sounds [ okay ]. Thank you very much, and all the best out there.
No more questions.
I heard no more questions. Is that correct? Yes. Then I just want to say thank you for listening in to this report. And we are really looking forward to continue our work with [ Asa ] and the rest of the management team and make sure that we continue the great cash flow and make sure that we do the best out of the really good order backlog position. So thank you very much for listening and see you soon. Bye.
Thank you.