Instalco AB

STO:INSTAL

Earnings Call Transcript 2021-Q1

[Per Sjostrand, Founder, President, CEO & Director]

Okay. Thank you. And first of all, welcome to this presentation of Instalco's Q1 report for 2021. My name is as you heard, Per Sjostrand. I'm CEO of Instalco. And with me today I have Robin Boheman, our CFO; and Fredrik Trahn, IR. We can start moving to slide number 2, a short update on us. We are one of the leading installation groups in the markets of Sweden, Norway and Finland. Our main business area is installation and service for electrical, heating and plumbing, ventilation and cooling systems, along with solutions for industry and technical consulting. The group now consists of more than 90 subsidiaries and around 4,000 employees. We have a highly decentralized structure, and we are supported by a small central organization. And as you will see, we have strong profitability and high margins. But going to Slide #3. And for the last 12 months rolling, our sales increased to SEK 7.4 billion with an adjusted EBITA of SEK 648 million and an adjusted EBITA margin of 8.8%. We also have, as you can see, a solid order backlog at just over SEK 6.7 billion. The acquired annual sales, I would say, also was -- is SEK 1.5 billion. We're talking now about LTM. So if we go to Slide #4, highlights foe the quarter, quarter 1. I will say that the first quarter now that is off to a somewhat sluggish start in 2021, leading us to conclude that the pandemic is far from over. During this quarter, we were more affected than we have been thus far by the pandemic, primarily as regards to sick leave and shutdowns at construction sites. We are pursuing our action plan in Norway where, at some companies, we are focusing on lowering our sales to raising the margins. And you will see that further on here. It is an effort that it will take some time before we start seeing the full results. Overall, however, the outlook is -- the outlook is very positive to our companies in the year ahead despite getting off to a somewhat sluggish start this quarter, as I mentioned. Adjusted EBITA for the quarter was SEK 154 million. Adjusted EBITA margin, 8.0% and a cash flow of SEK 164 million. And I'm very pleased with the result for segment Sweden, although Rest of Nordics is still performing somewhat below the desired level, as I already mentioned. If we go to Slide 5. I will talk a little about change in the management team. I previously announced my intention of exiting from my role as CEO and taking over as Chairman of the Board at Instalco instead. And by doing so, I will be able to focus even more on the strategic matters and Instalco's future investments and pursuits. I'm very much looking forward to work with Instalco's highly competent Board of Director as well. At today's AGM, which was -- we had postal voting, it was resolved that our current Chairman of the Board, Olof Ehrlén, will remain in his role as Chairman until September 1, at which point I will take over. Olof Ehrlén will remain after that on the Board as a director. I'm of course, very happy that Robin Boheman, our CFO at Instalco, will be taking over as the CEO as of September 1, and we have already started new recruitment process to recruit new CFO. Robin and I have worked very closely together ever since Instalco was established in 2014. His experience of the group's acquisitions and the accounting and financial function makes him highly suitable and an excellent successor for this role. I think with Robin as our new CEO will also ensure continuity and that we have a person -- that person who will be right to start with speed, which is very important to us in our 90 subsidiaries. And Robin, you are sitting beside me here, maybe a comment on that.

[Robin Boheman, CFO & Head of Business Development]

Yes. Thank you, Per. And first of all, I'm very pleased, I'm very happy to take on this role. As you said, I've been with the company since the start. So this is, of course, very dear to me. And also continuing the collaboration that we have had over the years. I'm really looking forward to put the new hat on, so to say. Of course, now the focus for me is, of course, finishing off my CFO duties and also, like you said, the recruitment process for new CFO is undergoing. So I'm really looking forward to finishing this off very well and then take on the new role in September. So once again, thank you for the trust, and I'm really looking forward to it.

[Per Sjostrand, Founder, President, CEO & Director]

Okay. Thank you, Robin. Going to Slide #6, we continue. Net sales increased by 16% to nearly SEK 2 billion, primarily via acquisitions this quarter. Organic growth was negative 1.2%. I think now we can go to Slide #7. Historically, the first quarter, as you may know, has always been the quarter with the lowest sales and the profitability over the year. It's no different this year. Instalco has recently been expanding its industrial business area. And in this segment, especially the first quarter, is always the low season. However, due to the extraordinary circumstances associated with the ongoing pandemic, business activity for the industrial area has been a bit more subdued and normal, even. So on Slide #8, talking about our order backlog. As I mentioned earlier, our order backlog is very solid, SEK 6.7 billion. And that corresponds to 91% of our annual sales. I think that is the best we ever had. We have newly acquired companies under order books and exciting to mention and contribution to our order backlog. We are very satisfied with our backlog. I think it's -- it also will prove something we've talked further on here. And that I think there will be a boom in [ Finland ] here, but we will come back to that. So after that, Robin?

[Robin Boheman, CFO & Head of Business Development]

Yes, let's talk a little bit about the segments that we have. Slide 9, then you could change that, please. So looking at segment Sweden on Slide 9 then. We have a strong solid result in Sweden. Very impressed that we are able to have organic growth within the pandemic in a quarter like this. We have comparison numbers that are, so to say, non-corona affected, and we are able to have organic growth in Sweden in a quarter like this. And as Per mentioned, we have been hit a little bit hard, and we see that in other Nordics. But looking at Sweden mainly, strong solid margin, 8.9%. EBITA, SEK 136 million and a growth in the order backlog, which is also very impressive. And also the rate of the growth is very impressive. So overall, summing up Sweden, we are very pleased with the Swedish segment overall. So if we change to Slide 10, please, and going to Rest of Nordics. As we've discussed before, Rest of Nordics, we do have a few problem areas here. But we have them under control still. We see a growth in the order backlog, which also gives us comfort that this segment will bounce back. We don't see the margin effect yet, but as we have commented before, this takes time. However, we are downsizing those companies that are not performing accordingly. I just wanted to stress as well, but if we look over a rolling 12 months, we do have a margin of 5-point -- a little bit above 5%, which in this type of market must be considered a good margin, especially if you compare to our competitors. So overall, the segments are -- no alarm bells here, but we do have improvement areas, and we are on it, I would say. If we then could move to Slide 11, please. One thing that has not been affected by the corona pandemic is our rate of acquisitions. We still have a good rate in the acquisitions. We have a good strong pipeline. During the first quarter, we've been able to make 5 acquisitions, 4 in Sweden and also done 1 in Norway. Overall, we have acquired a turnover of about SEK 250 million, and the pipeline for the rest of the year is looking strong. You see on the slide here, there are a few spots to be filled, and we are confident that we are going to fill them as well. So we're looking forward for a good acquisition here as well. Maybe we should highlight some of the acquisitions. So if you move to Slide 12, please. So 2 examples of acquisitions that we've done in the quarter, to start off with JB Elektro in Tromsö, which is in the northern part of Norway. We are very happy to be able to establish our first business here. It's a very interesting region. This company also has a very specific niche in the electric market. They are specialized in road lightning, which is a niche that we don't have yet in Instalco. That's interesting as well. Approximate sales turnover of SEK 140 million (sic) [ SEK 40 million ].Looking at the second one here is an acquisition of Kempes El, a very known company with a long history, over 90 years. And this also strengthens our position along the Northern coastline in Sweden, which is an area that we have been trying to increase our presence in as well. And Kempes El have 5 offices in cities along the coast as well. So we're very happy with that. And it gives us an annual sales increase of about SEK 85 million. And when talking about the M&A, I also wanted to highlight here as well that we have promoted Gustaf Larsson Ernefelt also to Head of M&A, which is a colleague that has been working with us for 2 years, very closely together with me. So I'm very happy to announce that he now takes over the role as Head of M&A, and he will also be part of the group management team as well as of now. He has been showing a strong competence in this field, and I'm very happy to continue close collaboration together with him and also continue the acquisition journey that we have started in Instalco. So welcome, Gustaf, as well, if you're listening. And now moving into the next slide, please. We look at the financial target and dividend policy. And as you can see here, we are checking all the boxes and we have growth that exceeds our target, 15.9% year-to-date. We also have a margin that is in line with our expectation. The capital structure is in -- gives us the opportunity to increase our M&A activities, as we wanted. We have a record-breaking cash covenant of -- cash conversion, sorry, of 117%. And the dividend policy is in line, and we are going to pay out SEK 2.70 all in next week. So we're happy, and we are in line with all our targets. So then I will leave it back to you.

[Per Sjostrand, Founder, President, CEO & Director]

Thank you, Robin. Good. I will give you some examples of new projects from the quarter that I'd like to highlight as great examples of how Instalco works. And the first is where 4 Instalco companies have been contracted by Peab, a construction company, with joined assignment in Malmö. And the work involves design and installation of the electrical, heating and plumbing, ventilations, and sprinkler systems in conjunction with construction of Oatly’s new head office at the property called Gjuteriet in Malmö. And with 4 Instalco companies getting involved so early in the process, we have been able to suggest sustainable, efficient solutions that we'll now easily be able to implement. The second project is in Finland, where 2 Instalco companies, LVI-Urakointi and Sähkö-Buumi, have been engaged for a joint assignment for a Finnish environmental management company, Remeo. It involves installation of both the heating and plumbing and electrical solutions in conjunction with the new construction of waste management facility at Vanda in the Northern part of Helsinki. And finally, the third example is a unique project with Linköping of Instalco company, Vallacom, as installing for the solar panels of the roof of a parking garage. And what is unique about this is that sunlight can pass-through the panels, creating a bright, safe environment on the top floor of the garage, while locally produced electricity is supplied to the rest of the garage. Smart, smart solution. Moving to Slide 15. About our sustainability program. And during the quarter, we took the next step, I would say, in the rollout of our new sustainability program. Instalco and the Swedish Society for Nature Conservation has joined forces to collaborate on a project to lower the presence of pharmaceuticals in water. It enables the Swedish Society for Nature Conservation to intensify its efforts of lowering the level of water pollution and preventing pharmaceuticals from getting into the water supply, thereby helping make the Nordic region's water clean, and particularly the Baltic Sea. We are very proud of that collaboration. So moving to Slide #16, summary. To sum up the quarter, we had somewhat a sluggish start, which was the case for many of us in the construction and installation sector. The pandemic is far from over even though we can see the light in the end of the tunnel. And I have a very positive outlook for 2021 overall. When it comes to our leadership, we are now on the verge of making some major changes in Instalco, where I will transition from the role as CEO into the role of Chairman of the Board at Instalco later in the year. And once again, I'd like to welcome Robin who will take over at the helm as the CEO of Instalco, once he returns from [ parity ] in the fall and after we have recruited a new CFO as his a replacement. As you know, last slide, Slide 17, also note, I'd like to wrap up these meetings with reference to a song title. And this time, I'm choosing the classic Frank Sinatra hit, "The Best is Yet To Come". And that is how it is in Instalco at the moment. Now we will gear up the energy and full speed with Robin Boheman as CEO from September and myself as Chairman of the Board. And we strongly believe in this, and the best is yet to come. So with that, I'd like to thank you all for joining in this call. And I'd now like to take your questions, please.

[Operator]

[Operator Instructions] From the line of Robin Nyberg from Carnegie.

[Robin Nyberg, Financial Analyst]

Per and Robin, it's Robin Nyberg from Carnegie. Can you hear me?

[Per Sjostrand, Founder, President, CEO & Director]

Hi, Robin.

[Robin Nyberg, Financial Analyst]

Okay. Perfect. A couple of questions. First, a little bit longer-term question to you, Per. You are soon assuming a role at the Board, and it would be quite interesting to hear a little bit your thoughts about the longer-term development of the company. And do you think that you can maintain the growth in line with your financial targets? And what kind of new areas are you potentially looking, where you could expand?

[Per Sjostrand, Founder, President, CEO & Director]

I mean, there's a lot more to do in this company. And we, as I said, we want to gear up. We want to go into new areas. We have been -- we have started up our consultancy program or part of the company. We have gone in more into what we call heavy industry. We are looking into new countries. So there is still a lot to do. There are also some larger companies for sale out there, and we are looking into that option as well. So there's a lot to do, and I think we can gear up this and still have a path in the future that takes us to new levels. And so I'm looking forward to that. And I think that our strategic decisions that we took for a couple of years ago, we will still -- we'll continue that. And we still have a lot of acquisitions to make beside other things, of course, growing organically and other things. So of course, there is competition out there, and the market is heavier coming to roll-ups and acquisitions. But our reputation and how we do it, our business model is very, very strong, and we have an inflow of very -- a lot of companies. So I'm looking forward. And I think that next year will have a lot of interesting things for us.

[Robin Nyberg, Financial Analyst]

All right. Sounds interesting. Now then moving on more to Q1 performance. Margins in Norway have been a bit a bit weaker for some quarters. Could you walk us through the steps that you now intend to take in Norway? And when do you expect margins to improve in Norway?

[Per Sjostrand, Founder, President, CEO & Director]

I can start and Robin can continue. But we have said for, I mean, a whole year now that we will come back to what we call normal margins, normal margins in Norway, as in Sweden, maybe a little lower, but 8% what we're aiming for. And we have had some bumps on the road, but what we now do and what you can see is that we are slowing down a little bit. We are -- the organic growth is negative. But we focus on margins. But this takes time, and of course, it takes a longer time than we expected. But with our new launched program for this, and I think Robin can explain a little bit how it works, I think we will come back. Absolutely. And then, of course, the society has been more down in Norway and Finland, of course, than in Sweden. So it's a longer journey than we had thought. But maybe, Robin, you can add to that?

[Robin Boheman, CFO & Head of Business Development]

Yes. I think it's a valid question, Robin. And that's, of course, something we need to address also of the summer and in the fall here. But like Per mentioned, we have talked about Norway a while. And just to give you a few things that we have done is that we'll change a few CEOs in our daughter companies. And of course, it takes -- I mean, it takes 6 to 12 months to get a new one up and rolling. We have downsized 2 of our largest companies by around 30%. So we are taking some drastic measures here. But of course, I don't want to blame only the pandemic. But of course, the pandemic is definitely not helping us to roll out this action plan. It's making it harder to do. But we are doing our best, and both me and Per are waiting for to get our shots to be able to travel and to go over there and take more actions firmly, so to say. So -- but I have a strong belief in the Norwegian market overall, but like we mentioned before, they are -- with more closedowns and lockdowns and particularly than you would have hoped for, so to say.

[Robin Nyberg, Financial Analyst]

Okay. Then I know you don't focus on organic growth and it fluctuates between quarters. But could you still say anything about the -- or something about the organic growth outlook for the full year? Is it kind of fair to assume that it's going to be positive given that, I think, you said that the backlog was up 14% for comparable units?

[Per Sjostrand, Founder, President, CEO & Director]

The short answer, I mean -- if you see at segment Sweden, if you look into segment Sweden, we have a positive organic growth. We have the organic negative growth is due to the fact that our strategic measures taking -- as we have taken in Norway, has been that we are gearing down a little bit there on volumes and focus on margins. So the answer is, as you said, we have a very positive order backlog, both in Sweden, I would say, and in the rest of Nordics. So my best guess is that we will have organic growth looking forward.

[Robin Boheman, CFO & Head of Business Development]

Thank you, Per, for not putting any pressure on me.

[Robin Nyberg, Financial Analyst]

Okay. Then I'm putting a final pressure on Mr. Boheman with a detailed question here. So earnings, they tend to vary a bit depending on expected earn-out payments. So for example, now, I think in Q1, you had a positive effect. So basically implying that some acquisitions have been slightly weaker than we expected, and it can be the other way around as well. But could you please remind us that this group adjusted EBITA of SEK 154 million in the quarter, has that been adjusted for changes in expected earn-outs?

[Robin Boheman, CFO & Head of Business Development]

Yes. But in the quarter, it was very limited adjustments. And the reason for that is that the main adjustment that we do when we do adjustments is that every year, the company gives out the prognosis. So every subsidiary gives out the prognosis of the year, and they do that in May, and we do it in September, October and they do it at the end of the year. And those are the ones that we usually look at compared to what our reserves are. So in Q1, there are not that big of the changes. But you saw, for instance, bigger changes in Q4 due to the fact that then we had received the prognosis for next year, and we could adjust accordingly. And we try to not adjust too much too many times because, as you know, if you have a 3-year earn-out period, we can adjust up 1 quarter and then we have to adjust down the next one and so on. So we try to pool it a little bit together and try to make it as correct as possible without, so to say, doing too many changes too often, so to say.

[Robin Nyberg, Financial Analyst]

Yes. And then I assume then that on segment level, when you report EBITA, so those figures are not adjusted for changes in earn-out?

[Robin Boheman, CFO & Head of Business Development]

No -- yes, okay, sorry. No, that's correct. That's correct. They are adjusted, so to say, on HQ level, so to say.

[Operator]

The next question comes from the line of Stefan Andersson from SEB.

[Stefan E. Andersson, Analyst]

Thank you. I wasn't planning to start with the nitty gritty. But since we ended on that, I'll actually go back to that. You said there wasn't much of a difference. I think what Robin was alluding to was that on the segment -- if you look at 3 at the Nordics, there's a difference of SEK 10 million to get to the group EBITA. And that's a positive. In Q4, it was negative SEK 19 million. And in Q1 '20, it was a negative SEK 15 million. It's SEK 20 million difference year-on-year. So would that be a very small change in earn-outs? Or is there something else there?

[Robin Boheman, CFO & Head of Business Development]

Okay, sorry, no. That -- the difference this quarter is that we received an additional payment to HQ, which was not expected. So it was a positive result for HQ, so to say, in that sense, which we were not expecting. So the difference here in earn-outs was limited, but we got an additional, I think it was SEK 5 million to SEK 6 million...

[Per Sjostrand, Founder, President, CEO & Director]

Earn-outs from one of our projects.

[Robin Boheman, CFO & Head of Business Development]

Yes. So we received, so to say, an earn-out from one of our larger projects that we were not expecting.

[Stefan E. Andersson, Analyst]

So why is that taken on the head office side?

[Robin Boheman, CFO & Head of Business Development]

It was an agreement between all the -- so it was a group -- we took a project together with many of our subsidies. And then together, we received the bonus if we could push the project faster and if we could also go in with -- under our budget, so to say.

[Per Sjostrand, Founder, President, CEO & Director]

It was a partnering project.

[Robin Boheman, CFO & Head of Business Development]

And then the bonus will be pushed to Instalco. And then we, of course, divide out to the subsidies. But it landed on Instalco.

[Stefan E. Andersson, Analyst]

Yes. Okay. That, I fully understand. And then otherwise, your vision is to have the overhead -- I mean, all costs are from the head office is pushed out. So I guess that your ambition is to be on a small positive every quarter?

[Robin Boheman, CFO & Head of Business Development]

Yes. This was, of course, a very happy adjustment. So yes, but this is not something I think you in your model should, so to say, calculating. The main thing here is usually like you and Robin mentioned are write-downs or write-ups when it comes to earn-outs.

[Stefan E. Andersson, Analyst]

Yes. Okay. Good. And then another very -- just a small thing. But in the P&L, it says that the EBITA is SEK 150 million, on the front page, SEK 152 million. And then a SEK 2 million one-off takes adjusted EBITA to SEK 154 million. So just wondering why it says SEK 150 million on the P&L and SEK 152 million on the front page. Is that just a miss? Or is there something else in between that?

[Robin Boheman, CFO & Head of Business Development]

It's EBIT, EBITA and EBITDA. So it's EBIT on the front page side. And EBITA in the P&L.

[Stefan E. Andersson, Analyst]

Okay. Sorry, my wrong. Okay. Good. That, I got it. My wrong. Good.

[Robin Boheman, CFO & Head of Business Development]

You're just checking, Stefan. I know you, you were trying to fool me.

[Stefan E. Andersson, Analyst]

That's good. And then you talked about some -- I mean, I think you said that you have been on the quick side here, but you said you've been as active as before in M&A. But I mean, you're a little bit slower because you've been so extremely active in the last 2, 3 years. So you started off a little bit slower here. But on the other hand, you're talking a little bit about doing some bigger ones. So I expect that there might be something coming up. Just trying to understand what you mean by big. Would that be like SEK 200 million to SEK 400 million in revenues? Is that big for you? Or am I guessing wrong?

[Per Sjostrand, Founder, President, CEO & Director]

I think that's rather big, Stefan. But I think the word big for us is over SEK 500 million revenue, but that's quite big SEK 300 million to SEK 500 million.

[Robin Boheman, CFO & Head of Business Development]

But I would also like to comment on regarding your commentary, Stefan, that we are a little bit slower. And I agree with you. We have a strong pipeline. We have, unfortunately, now last month, maybe 1 or 2, so to say, where we just missed out and couldn't come to an agreement at the end. And we are very selective when it comes to M&A. So if we don't think or believe that the company is an Instalco fit, we rather step down and then continue just to -- to kind of continue the growth journey of M&A. But I'm still very confident that we can end up at a very high level when the year ends. We have a strong order backlog. And I think what Per mentioned was that there are a few larger players out there for sale, not saying that we are going to buy them, but we are saying that there are opportunities out there.

[Per Sjostrand, Founder, President, CEO & Director]

Yes.

[Robin Boheman, CFO & Head of Business Development]

So that's something new. We haven't seen that since Instalco was founded, that these type of companies are even up for sale, now at least, they are on the market.

[Stefan E. Andersson, Analyst]

The compounding idea is spreading, as you know, and very popular. And you're not alone -- just when you look at the bigger targets, wouldn't the price be a little bit different? Or would you -- do you think you could still stay the...

[Per Sjostrand, Founder, President, CEO & Director]

Maybe so. Maybe so. We will always spend our money where we find the best value from it. So if the price is too high, we just say, "No thanks." But that's -- we have no other intention or strategy going forward.

[Stefan E. Andersson, Analyst]

Yes. And then on the -- on Norway or other Nordics, you're running through 2 issues there with some subsidiaries, I guess, a year ago or something. And then we got the impression that maybe you were coming out of that. And now we're -- seems to be running into some more issues. If I listen to you, I get the impression that this will take a little while. It's not a quick fix. You need to get some orders through and so on, so a little bit of a margin pressure for 2 or 3 more quarters. Am I misunderstanding you then? Or is this the right interpretation?

[Per Sjostrand, Founder, President, CEO & Director]

I think you have a point there. And I think that, I mean, it takes time and the pandemic hasn't exactly helped us in any way with this. So I think you're right there, a couple of quarters maybe. But on the other hand, LTM, as you heard, 5.5%, so it's not too bad. It's not good standard for our -- with our estimations. But it's not too bad. And -- but we are not, of course, we are not satisfied with that. Of course not. We will not give up until we have reached 8%, at least. So I think it's a reasonable and reachable, I would say. And I think we will be there someday. But it takes some time, definitely so.

[Stefan E. Andersson, Analyst]

Yes. Yes, I don't -- I mean, you've been so successful before. I don't argue against you there. I just -- I mean, to me, when I see Q1, it's a big drop. And what you're trying to say is that I should not look too much on the drop for the quarter. I should look more to the rolling 12 months. Is that what you're trying to say? In fact, I shouldn't be -- shouldn't be too scared about the Q1?

[Per Sjostrand, Founder, President, CEO & Director]

Yes. Yes, that's right.

[Stefan E. Andersson, Analyst]

Okay, good. And then...

[Per Sjostrand, Founder, President, CEO & Director]

I think they are -- they have control over it, I would say.

[Robin Boheman, CFO & Head of Business Development]

Like I mentioned, I think we look bright for the future. And I think we've done a lot of things and followed our initial action plan. But like I said, it takes some time, both to get, so to say, the old people out and the new people in. And also like your said, you mentioned that you need to roll out the old project and that also takes a few months, and then you need to get the new ones in running -- and those projects up and running as well. And just to be clear, once again, I think in wave 1 and wave 2 of the pandemic, the construction business was not hit too hard. But this wave 3 has actually hit the construction business somewhat harder. So that is also affecting us in Q1 in large extent than wave 1 and 2 did.

[Stefan E. Andersson, Analyst]

Good. And then I'm just talking about Norway and the margin there, and I fully agree. But you have Finland there as well. And correct me but -- if I'm wrong, but just on the call with Bravida here in the quarter, they commented on that Finland is a more difficult market and, given that Caverion has lower margins there, that's putting pressure on the whole industry. And they feel that Finland is more difficult. But is that your view as well? Or do you see that also Finland could be on the Norwegian level, or Swedish level?

[Robin Boheman, CFO & Head of Business Development]

I think I fully agree with Bravida there. Finland is -- the price levels in Finland are lower. However, for us, Finland has been very, very stable. But if you compare the countries, I would say, Finland is, of course -- or not of course, but Finland is the country that has most price pressure but there are also very solid companies that we have in Finland. So we have been able to give a solid margin from Finland. So the drop that you see here is unfortunately in Norway. Finland is delivering on point. But of course, it is harder in Finland. It is not very common to have the type of margins that you see in Sweden. Those are very, very uncommon in Finland. But Finland is very stable, at least the companies that we have, so far.

[Per Sjostrand, Founder, President, CEO & Director]

And the economy overall in Finland is a little bit weaker than in Sweden or Norway.

[Robin Boheman, CFO & Head of Business Development]

Yes.

[Stefan E. Andersson, Analyst]

Okay. Good. Yes, what was -- yes, I have one more thing. It seems like looking from the construction side and the construction companies I cover, residential, it's very, very strong. And we see starts coming up rather quickly and then has been on a high level for a while here as well. So just curious, I know you do it a little bit for JN, so that's, of course, helping. But I would expect that you have quite a good exposure to the resi side on the new growth, but I could be wrong. But is that something that could be very helpful for you when those projects are ready for installments here H2 and 2022?

[Per Sjostrand, Founder, President, CEO & Director]

Yes. That's right. And I think that I mentioned earlier here today that we expect to do -- might expect to do in fall. And I think also, of course, we are a little bit late into the projects. But I think we have a good order backlog, and we can also see a lot of our projects coming out now. The architects has fully booked and also the technology -- technical consultants. So I think we can see forward that there will be -- I mean, we have a need for a lot of housing and apartments and everything. And I think we can see a boom there. And I think that will be rather stable business for the next couple of years. I believe that because there's a lot of money out there, and there's a lot of project starts coming up and where I see demand for it.

[Operator]

And the last question comes from the line of Markus Almerud from Penser Bank.

[Markus Almerud]

Gentlemen, can you hear me?

[Per Sjostrand, Founder, President, CEO & Director]

Yes. We hear you.

[Robin Boheman, CFO & Head of Business Development]

Yes.

[Markus Almerud]

So a couple of questions. Starting with the margin in Sweden, moving away from Norway to Sweden. The Sweden -- Swedish margin was also down year-on-year, and it's a bit weaker than we've normally seen for the past 3 years or so. What were the reasons behind that and what pushed that margin down, starting there?

[Robin Boheman, CFO & Head of Business Development]

Yes. I think like we mentioned, wave 1 and wave 2 of the pandemic has not hit the construction market very much. And if you listen to the calls before, those of you who have heard us say that we were not so affected. But however, in Q1, we were affected. We had a lot of sick leaves. Even in Sweden, we had shutdowns of a few construction sites as well, which we haven't seen in the pandemic. And that, of course, hits us right away when we have people not installing. And I think that is one of the main reasons. Second one, which is -- which also had some effect is that we are growing in the more heavy industry market. And then we have to start to cope with that. The industry is somewhat slower in Q1. Heavy industry does not make any orders in January, February. They come more towards Q2 and in Q4 are bigger and better, so to say, quarters for them. So we also have to start, so to say, coping with that as well.

[Markus Almerud]

And how large a part is the industry -- heavy industry right now?

[Per Sjostrand, Founder, President, CEO & Director]

We don't know exactly, but I think it's...

[Robin Boheman, CFO & Head of Business Development]

Roughly SEK 500 million to SEK 700 million in turnover.

[Per Sjostrand, Founder, President, CEO & Director]

Yes. And then they have -- I mean, they have a period during the summer, I would say, that with more maintenance and what you call a stop. And that's the reason why they were a little bit slow in January and February.

[Markus Almerud]

Okay. But SEK 500 million to SEK 700 million -- but ballpark SEK 500 million to SEK 700 million, thereabouts?

[Per Sjostrand, Founder, President, CEO & Director]

Yes.

[Markus Almerud]

Okay. Okay. And then next question is a little bit about the quarter and the trend in the quarter because given that it was the pandemic which was driving this. Can you talk a little bit about how you saw the quarter developing? Because we know from last year that everything was very, very fast. When it happened, it happened fast. The curves were very sharp. Are you seeing this kind of disappearing? As we entered Q2, was it kind of like normalizing or continuing at the stable level, et cetera?

[Per Sjostrand, Founder, President, CEO & Director]

I think we don't want to comment about our future. But what we can comment about is regarding the core present months and the toughest month of January, February. So we see a positive development within the quarter. So March was a very good month for us.

[Markus Almerud]

Okay, okay, okay. That's helpful. And then a little bit about acquisitions. So I was just thinking -- so when we go through kind of the cycle that we have been of crisis that we have been through right now, you have a lot of especially smaller companies, which might have big problems with financing and distress, et cetera, et cetera. Are you seeing that as well? And should we on the back of that -- I mean, what are the talks like? I mean, do you think that you will be able to accelerate the acquisition pace on the back of something like that? And there will be more healthy targets out there that could close? Or is that not a factor here, really?

[Per Sjostrand, Founder, President, CEO & Director]

I don't think it's a factor. I think that it will continue as has been. And I think there is no major changes in that.

[Robin Boheman, CFO & Head of Business Development]

The only thing I think we've seen is, what we've discussed before, is that we see a little bit of tendency of the possibility to negotiate more earn-out than sort of cash upfront situation. But otherwise, there are no effects in that sense, what you're saying, unfortunately.

[Markus Almerud]

Okay. Okay. And then finally, I guess -- or 2 more questions. The first one is the order intake. I mean, maybe it's not a factor at all when we talk about the order backlogs. But given that you had March maybe as the best month in the quarter, is it possible to say anything about the order intake relative to sales to see if we'll see -- I mean, could see, is it higher, significantly higher, the level you see a ramp-up in -- expected ramp-up in Q2 in terms of sales, which you have gotten, but not backlog yet?

[Per Sjostrand, Founder, President, CEO & Director]

I mean, the order backlog, as we mentioned, is -- I think it is all-time high. It is all-time high, compared also to our sales. We have another type of projects called partnering, and you could talk about Phase I, 2 and 3. Phase 1 is more design work. Phase 2 is more when you come to the construction plant and start install. And we are in Phase I in many projects at the moment. So -- and it takes, of course, some months before we are in Phase 2, but we will be there sooner or later in many, many projects. So I think the situation is good and stable. And I think it's...

[Robin Boheman, CFO & Head of Business Development]

Maybe we could guide and say like if we have an order backlog that it's around 70% -- 65%, 70%, we are very happy. And we are at 91% now. And I think that's going to really help you with some guidance.

[Markus Almerud]

Yes, that is good color. And then finally, just a housekeeping question. If you could help me, it would be very helpful. So if you look at the carryover effect of the acquisitions already made, what's that for the full year, if you see what I mean?

[Robin Boheman, CFO & Head of Business Development]

No, I'm not sure.

[Markus Almerud]

Okay. So the additional -- I mean, if I look for the full year and look at the acquisitions made to date, how much addition from acquisitions will you see for the full year, just where you are right now? Do you see what I mean?

[Per Sjostrand, Founder, President, CEO & Director]

How much additional...

[Markus Almerud]

We can take that -- let's -- we can take that off-line. I'll send an e-mail.

[Per Sjostrand, Founder, President, CEO & Director]

We look like question marks here.

[Markus Almerud]

Okay. We'll take it offline. But okay, thank you for the answer. Very good color.

[Operator]

Thank you. There are no further questions at this time. Please go ahead, speakers.

[Per Sjostrand, Founder, President, CEO & Director]

Okay. Then we thank you for calling in, for all these questions as well. And thank you very much. See you in 3 months or something. Thank you.

[Robin Boheman, CFO & Head of Business Development]

Thank you. Take care. Bye-bye.

[Per Sjostrand, Founder, President, CEO & Director]

Bye.