Instalco AB

STO:INSTAL

Earnings Call Transcript 2021-Q4

[Operator]

Dear ladies and gentlemen, welcome to the Instalco Audio Calls with Teleconference Q4 2021. [Operator Instructions] Today, I'm pleased to present CEO, Robin Boheman. Speaker, please begin.

[Robin Boheman, Chief Executive Officer]

Hello, everyone. Welcome to this Q4 presentation from Instalco. With me today, I have our CFO, Christina Kassberg; and also Fredrik Trahn, Head of IR. And we will guide you to our Q4 and also give a little bit of a summary of 2021. So just to give a little bit of a start and look at what is Instalco for those of you who haven't followed us. We are a leading Nordic installation group with focus in Sweden, Norway and Finland. Our main business area is installation and service of electrical, heating and plumbing, ventilation, cooling system alongside our industrial and technical consultants that will come back to a little bit later in the presentation. We are roughly 110 subsidiaries and 4,900 employees. We are a decentralized structure. We are buying build case. We are supported by a small central head organization, we are looking for strong profitability and high margins over time. That is Instalco in brief. So if you take the next slide and go through the highlights of Q4. I want to start off by saying that the fourth quarter has been very stable quarter overall with result in margins. We have still had to cope with some restriction and circumstances associated with the pandemic, which has, of course, affected us in the quarter. We have higher sick leave than normal, but I want to focus this on the high cash flow. As those of you who follow us in Q3, we had some lower cash flow in Q3 due to a little bit of lack of focus and we have focused on it in Q4. We have brought in Christina as well as new CFO. So I think we have gotten ourselves back on track. As you also can see a tremendous net sales growth of 27.5% in the quarter, and we were also able to grow organically by 7% and made 6 acquisitions. So overall, a very strong quarter. We turned over SEK 2.6 billion with an EBITA of SEK 227 million, which gives us an EBITA margin of 8.6%. And in these numbers, there is also a one-off from our [ RFR ] insurance that contributed with SEK 22 million positive for us. So if we go to next slide and just summarize a little bit about 2021. We almost reached SEK 9 billion turnover. We had SEK 748 million in EBITA, correlating to 8.4% EBITA margin. We were managing to grow the business by almost 25%. A lot comes from acquisitions. We acquired 27 companies with a total acquisition annual sales of SEK 1.7 billion. And we have an order backlog of almost SEK 6.8 billion, so correlating to roughly about 75% of our turnover. So a strong order book as well. So that was a little brief summary of '21. I will come back to it a little bit later in the presentation. So next slide, please. So I'll hand over to you, Christina to talk us through a little bit about net sales development during the quarter.

[Christina Kassberg, Chief Financial Officer]

Thank you, Robin. Yes. On this slide, we can see the net sales development in Q4 and how the growth is distributed. We have had a high activity in the quarter, and the net sales increased in total with 27.5% to SEK 2.6 billion. Acquired growth increased with impressive 19.7%, definitely a strong proof of the successful and intensive M&A agenda. Organic growth increased with 7%, a performance that we are proud of. This is a strong proof of our business model. Our companies collaborate, find synergies and use the cross-selling concept towards customers. The management facilitates the collaboration and on a regular basis, bring our companies together. The companies need, they discuss, learn from each other and get inspired but not forget our companies keep their independency and local responsibility. Next slide, please. On this slide, we can see the adjusted EBITA development quarterly, both in million and the margin. As you can see, a record high adjusted EBITA in Q4 an increase of total 10.6% to SEK 240 billion compared with the Q4 previous year. Historically, the fourth quarter has been strong for Instalco and that holds true for 2021 as well. Several projects delivering during Q4. Adjusted EBITA margin in the quarter landed at 8.1% and this is still a good level and a good performance in challenging markets. The margin is also a proof of a strong position in strategically selected areas and geographies. During the quarter, we have faced some supply chain and logistic challenges with impact from rising prices for raw materials and equipment. But our hard working companies has overall handled the situation very well. The EBITA adjustment I just want to mention about them. In the quarter, we had a sum of net minus SEK 30 million attributable to revaluation of contingent consideration with a positive effect of SEK 16 million. Transaction costs for the acquisitions was SEK 4 million. This adjustment only affect the group level and not our 2 business segments. Over to Slide 7. And some words about the order backlog development, the quarterly development in this picture. Order backlog growth year-over-year was 2.6% and an increase to SEK 6.8 billion. We have continuously a stable ratio of 76% relative to 12 months rolling net sales. This is a ratio level that enable us to be flexible and bid on interesting future projects. Despite the impact of the pandemic and certain amount of sluggishness from customers, our companies continue to sign new, exciting and profitable agreements. Organic development was minus 9.5% year-over-year, a comparison from a high level. As our companies deliver in the big Swedish hospital projects, for example, the order backlog comes to a more normalized level. Acquired growth year-over-year was 10.9%, again, a strong proof of the successful and intensive M&A agenda. Okay, Robin, let's hand over to you and talk about some exciting projects during the quarter.

[Robin Boheman, Chief Executive Officer]

Yes. Thank you. So next slide, Slide 8. So I'll talk to you about -- just to mention a few projects that we have delivered in the quarter. And as you know, we always try to help our customers to lower their environmentally impact via lower water or energy consumption and through higher environmental awareness. And that is something that we do every day and want to design and install sustainable energy-efficient solution. And I think this is a very good example of one of our daughter companies, Vallacom, who was assigned by Riksbyggens, for Riksbyggens' largest installation of solar panels in a complex of 37 block houses and a 5,200 square meter solar panel installation so that these block houses be self-sustainable for energy in the summer months. This is also an installation where we do connect this to charging poles as well for electrical cars. So this is a typical good example of a sustainable Instalco project, where we, as a company, with our experience, can come in and take the full responsibility for this installation. So a very good example of a sustainable Instalco project. If you go into next Page 9. This is also an example a little bit like you mentioned, Christina, about the collaboration and the synergies between our subsidiaries. And this is a clear example of where we can come in with the expertise from 5 different companies and jointly take a project in this case for Peab where we take all the responsibility for design, installation of electrical heating and plumbing, ventilation and sprinkler system and renovate a property called Entré in Malmö, which is also demand-driven installation for energy savings. That is one of the reasons why they are doing this refurnishment. This is, of course, also a good example of a sustainable Instalco projects where we can come together as a team and do this. So once again, a good example of collaboration and synergies that we can create. I will now hand over to Christina to talk a little bit about the different segments, starting with Sweden.

[Christina Kassberg, Chief Financial Officer]

Thank you, Robin. Yes, on the side, we can see the segment Sweden development in Q4. Sweden continues to deliver with high margins. Our Swedish companies have coped with the pandemic very well and there are many excellent examples of collaboration as mentioned before. Our companies, they can share best practice. They work together in tendering processes and with cross-selling. As said, we have had a high activity in the quarter, and the net sales in Sweden increased with 29.4% to SEK 2.1 billion. The organic growth was 7.4%, a very strong and solid performance. Acquired growth was 22.1%. And here, we can see the effect of the M&A agenda. The EBITA increased with 20.2% to SEK 200 million. EBITA margin, 9.5%, a drop, but still a good level in a challenging market. To mention as well, yes, we have the lump sum payment from [indiscernible] that has had a positive impact on EBITA in segment Sweden by approximately SEK 22 million, and no EBITA adjustment has been calculated for this payment. Then we have the segment other Nordic development in Q4. This segment has recovered compared with Q3, although it is still performing below the desired level. The market in Norway has stabilized at a high level regarding both the new construction and renovation. And the market in Finland is primarily driven by the major metropolitan areas. During the pandemic, this market has been sluggish. In total, the net sales increased with 20.4% to SEK 550 million compared with the same quarter previous year. Organic growth, 5.8%, a very strong and good performance. Acquired growth of 11.3%, also a proof of the acquisition we have made primarily here in Norway. The EBITA increase was 23.4% to SEK 31 million, and we are now starting to see the positive effects of our action plan to improve the profitability of our Norwegian subsidiaries. The margin, 5.8% a very strong performance during pandemic. Robin, over to you and the acquisitions.

[Robin Boheman, Chief Executive Officer]

Thank you. And this is, of course, an area as you've seen in 2021 that has not been affected at all by the pandemic, and we do -- we have done a record high year of 27 acquisitions and like I mentioned, SEK 1.7 billion in annual turnover during '21. Out of these, the main of the more in Sweden and Rest of Nordics a little bit behind. We'll come back to that. If we go into Page 13, you can see the acquisitions that we have done in Q4. I used to mention a few specific ones, I would like to mention the Nordpipe Composite Engineering, NCE, which are special in production and installation of composite solutions for the industry, which is a company that we have worked together with a few other companies before. And in Sweden, I would also like to highlight that we have acquired our first company in Norrbotten with MRM and APS which are niched themselves into the industry and infrastructure. But all these acquisitions that were done in Q4 are profitable companies and very exciting to have them along in the team. We also focus on highly profitable companies. We always do, and we can see that we have a continued good M&A pipeline for 2022 as well. So I'm very happy with the team and that we can continue this growth journey and continue our buy and build in this sector. I think I will hand over back to you, Christina, to talk about our financial targets and the dividend policy.

[Christina Kassberg, Chief Financial Officer]

Yes. Thank you. On this slide, we summarize the performance of the financial targets and also the dividend policy. As you all can see, we are glad to take almost all boxes regarding 3 of our total 4 financial targets. We have performed well above. Cash conversion for full year is below the target due to weaker cash flow mainly in Q3. During Q4, we have strengthened the cash flow mostly driven by the positive net from income accruals. We expect this strengthening to continue and the focus with the cash flow will go on. And finally, the Board proposes a dividend of SEK 3.25 per share prior to the split, in line with the policy and the previous year. Robin, over to you again.

[Robin Boheman, Chief Executive Officer]

Yes. I would like to summarize a little bit the year 2021. So the theme for this quarter is a summary of 2021. And first of all, as you all know, there has been a change in the management team during 2021. Per Sjöstrand, former CEO and one of the founder stepped over to become Chairman of the Board, myself had the opportunity and very glad to take over the CEO role as of September 1. And I'm also very glad to have Christina on board as CFO as of 1st of November last year. So a little bit of changes, but no big changes in how we run the business, and we have a good collaboration together the 3 of us. So if we go into the next slide and talk a little bit about the year. I mean we are late cycle. As we have mentioned before, we were not as disturbed by the pandemic in 2020 because a lot of the projects that we took in 2019 was pre-pandemic that we delivered in 2020. In 2021, we had somewhat tougher market. We have had higher sick leave than normal in 2021. We all see dramatically increase in raw material prices and also, in some cases, even shortage of some material. I think we have been able to cope with this in a very structured and methodized way. But of course, it has been some challenges and also coming back to like Norway and Finland, with the closing down of these 2 countries has also put some stop and go in a lot of construction sites. Despite all of the above, we did manage to deliver on our financial targets, as Christina just mentioned, and we have a strong balance sheet as well to continue the growth going forward. So with that being said, I am very proud to be able to deliver these numbers, and I'm also very proud of the team that has done this. If we go into next slide, one of the milestones in 2021 was this 100 acquisition, which I must say, I'm very proud of that we have been able to consolidate this market and delivered on our expectation on this consolidation. We focus on the high profitable companies and creating synergies as we have shown earlier in the presentation today. And acquisition, again, that continues, as I mentioned before as well. Looking ahead a little bit, I will give you our top -- one of the -- or basically the top 3 focus areas at the moment. First being expansion in rest of Nordics. So we have analyzed the market. We have gone back to the drawing board. As you know, we have had some problems in Norway and Finland over the years, but we do believe in our plan to consolidate the Finnish and Norwegian market. We have an action plan, as Christina mentioned, we have downsized a few companies, changed management, increased the support, specifically in Norway, and we are seeing that this is getting -- being affected and we see the positive turnover from this. We have started off and improved. So we have made a stronger regional organization. The strategy in Norway is to continue our geographic growth continue with the action plans. Strategy in Finland will be to continue to consolidate the larger metropolitan areas and will broaden our base of companies in rest of Nordics. So you will see a little bit of shift here that we'll do more acquisitions here as well. Going into one of our other focus areas is the industry discipline. And just to be clear, industry for us is not a production industry. It is that we do installation for the industry. So basically, industry is mainly our customer here. Background is that we started actually this already in 2014, one of the first companies that joined Instalco was Orab. And now we have 13 companies. We are all over Sweden with a focus in northern part of Sweden. And why do we do this? Yes, it's nearby business. There is a strong growth, there is less competition about projects and also targets here as well. And last quarter, like I mentioned, we have our first companies in Norrbotten and our first acquisition in Finland as well. Very excited area to be in, and I think growth possibilities here are huge. Stepping into the third one, there is some -- sorry. So Page 21, expansion of technical consultants. I've mentioned this already to you guys before, so I won't go into too much of the detail, but we summarized. We are about 230 employees. We are 11 companies. Why do we do this? I think this is where the technical consultants belong. Here, we can have the theoretical and the practical knowledge in 1 basket. We can come in earlier in the projects. We can give a complete solution to our customers. And I would be lying if I hadn't looked at the higher profitability in that area as well. So happy to have them on board as well. So this is a little bit the main focus, as you will see in 2022 from our perspective. So to summarize, what you've heard today is Q4, stable quarter. It's been high focus on cash flow. I think we've proven that we can get back on track and what we promise we deliver on. You have seen acquisitions in Norway and Finland, as we have communicated to you guys before, but this is a focus area to us, and we always deliver on that. Summarizing 2021. I think it's been an impressive result with, so say, the cards that we were dealt with, record high acquisition growth strong business model, showing once again that the Instalco business model is the way to go. We are able to continue our consolidation of the market. We continue to have strong growth within our subsidiaries. And last but not least, also one stepping stone in the journey for Instalco is that we, as of January now, our list as a large cap on the Nordic Stock Exchange. So I'm also very happy with that milestone as well. So with that, I summarize the year and the presentation, and I will leave it over to questions.

[Operator]

[Operator Instructions] The first question is from Carl Ragnerstam of Nordea Bank.

[Carl Ragnerstam, Analyst]

It's Carl here from Nordea. A few questions from my side. Firstly, in terms of sick leave, I guess, the spread of Omicron might have been a bit challenging at the end of Q4 also going into 2022. Have you -- what would you say was the impact in Q4? And what could we expect so far this year?

[Robin Boheman, Chief Executive Officer]

Carl. Yes, I think what we can say about Q4 is that we were affected. It's, of course, as I think one of you asked in Q3 as well is that it's hard to calculate in a number. What we can say is that we have about 40% higher sick leave than a normal quarter, normal quarter being then like Q4 2019, for instance. So it's hard to put a number on what it has cost us. But what we can say is that, I mean, at the end of the day, we make money on selling hours and materials that is installed during those hours. So if you are at home, you're not making any money for us in that sense. So Unfortunately, I can't give a number on the cost exactly. It has affected us. It's 40% higher. We also see that sorry for the English word, but [indiscernible] is very high. I don't know the -- so basically staying home with your child is also much higher than regularly. So we have been very much affected by the Omicron version. We were able to -- the Delta one, we managed better, to be honest, but the spread has been very high for the Omicron one. And it also affected us in the beginning of I think like the whole society, I mean, basically, I think almost everybody has gotten COVID in January, it feels like. So been a little bit tough in January as well. But also at the end of the day, I think January is not the most productive month anyway. So I think we will cope with that in Q1 as well. And we have a long year in 2022 to get back on track as well. So not too concerned about that.

[Carl Ragnerstam, Analyst]

Okay. Perfect. And also, group common cost are at minus SEK 17 million. How should we look at that number going forward because it's positive at some quarters and negative at some. Should we expect it to be positive or negative going forward to start with that?

[Christina Kassberg, Chief Financial Officer]

Carl, I can put some words about that topic. Just to give you a brief background quarter-by-quarter, the positive EBIT, you can see this in the group and in the group segment is somewhat higher debit of management fee during Q1 to Q3. And in Q4, you can see a lower number of that and gives them the negative result of minus SEK 17 million. And over to the question, what we can expect from that going forward, we can always strive to be -- change our routines and make things better and be near more normal when it comes to this part of the group. So if that is helpful for you to understand the figures here.

[Robin Boheman, Chief Executive Officer]

I just add into that and say that, hopefully, not too many of our daughter companies' CEOs are listening in because we have basically invoiced them too high in Q1, Q2 and Q3. So they're getting some money back in Q4. And on that topic, I think that's also a thing that we took in Christina, so she will try to improve these processes as well. But also to give a background of the management fee is invoiced on turnover, and we are turning over almost SEK 9 billion and to estimate exactly the percentage that we will charge our subsidiaries and then we are SEK 70 million from the exact number. I know it's tough for you guys that has to do this analysis. But to us, SEK 70 million of SEK 9 billion is not too far off. to be honest. I know that it is not what you want to hear, but that's purely the fact. We will try to improve and we will try to come up with a good system that works for both of us.

[Carl Ragnerstam, Analyst]

Just Christina, you said a normalized level. So what is the normalized level? Because I mean, in the quarter, it's almost 10% of EBIT. That's even of course, if you compare it to sales, it's not that much, but it's 10% of EBIT. It's actually quite a lot. So how should we look at the number going forward? What is normalized? Is it positive or negative?

[Christina Kassberg, Chief Financial Officer]

Our objective -- my objective is to get as a 0 effect here, we'll never come to 0 on a quarterly basis. but as close as possible, so you don't have to have the sluggishness between the quarters here. That is an objective, and we can strive for it. But we will not come to the 0 level at the end, but maybe closer in the coming quarter.

[Carl Ragnerstam, Analyst]

Okay. Perfect. And also on the group EBITA margin, it's at 7.3% to down 200 basis points year-over-year, which is, I think, a remarkable drop especially given the 7% organic growth and also as you're consolidating margin-accretive acquisitions. So could you help us understand what is behind the margin drop and how we should look at the margin profile going forward?

[Robin Boheman, Chief Executive Officer]

Yes. I think you have to look at the slide where I discussed in -- about the summary of 2021. I think -- and also, as I mentioned in the call in Q3 is that, yes, we are seeing some clouds on the sky in the short term, but long term, we are positive. Short-term being that, as I mentioned, we have 40% higher sick leave. We have increases of raw material, where we are talking about reasonable numbers is maybe a 2% increase. Now we are seeing between 10% and sometimes 50%, sometimes 15% higher in the cost of goods that we install. And in the short term, we are, of course, not able to push that on further to the customers. So in the short term, we will be a little bit squeezed but long term, we will be able to push that all over to the customer at the end of the day anyway. But short term, we will be squeezed, as I mentioned, in Q3 as well. I think those are the 2 main reasons. And of course, also the stop and go that we are seeing, where we kind of started up the project, people get sick, have to be in quarantine, et cetera, and we stop and go. The time schedule is very hard to keep. So that has affected us. Long term, I see no differences of historical numbers being able to deliver on that as well. But short term, we will have some struggles. And I think we delivered a good report and good numbers for, like I said, the cards that we were dealt.

[Carl Ragnerstam, Analyst]

And how do you ensure that -- first off, how long are the average projects? Because I think, as you said, you need to work through some projects taking at sort of at least in retrospect on prices or at least not considering the raw material inflation. How long will that I mean, is it a quarter or 2 or what ?

[Robin Boheman, Chief Executive Officer]

Typically Instalco projects is 6 to 9 months -- is a typical Instalco project.

[Carl Ragnerstam, Analyst]

Okay. So then we should expect squeeze for typically 6 to 9 months going forward as well then or.

[Robin Boheman, Chief Executive Officer]

Yes.

[Operator]

Next question is from Stefan Andersson, SEB.

[Stefan E. Andersson, Analyst]

Yes. Some of the questions were answered there. But 1 clarification, just you talked about the action plan going ahead, just I understood you correctly when you commented on the actual downsizing, it sounded like that was something that you already have done and that's in the history. So that's not really something that we should expect going forward. And then some of the other things you mentioned were more forward-oriented or did I misunderstand that?

[Robin Boheman, Chief Executive Officer]

No. Maybe it's a miss on my side there, but you are correct, Stefan, the downsizing has been done. But now we need to kind of fulfill the plan also, so to say, we need to kind of -- we execute on the plan, but we have downsized a lot already so.

[Stefan E. Andersson, Analyst]

And then going back to the margin, I guess, we went through it rather much in detail. But is it correct also that if I look at the divisions, when you say that you reimburse the divisions, they have also received. So in the divisional results, you have this reversal of central costs included there as well. So it's a minus on the group level, but then on the divisional they received that -- in total, it's ...

[Robin Boheman, Chief Executive Officer]

Yes, it's internal money in that sense. So, yeah.

[Stefan E. Andersson, Analyst]

So coming back to the material and sick leave impact is, I guess, would have been similar kind of to both other Nordic and the Swedish region, but it seems like the Swedish region have been affected more. Is that incorrect just because of difficulties with comparisons? Or is there a bigger impact in Sweden, you would say, than in the other region?

[Robin Boheman, Chief Executive Officer]

I think it's a little bit bigger in Sweden, and it's -- we have been a little bit more affected in Sweden, and that has to do with that we have a larger order book in Sweden. In Finland, for instance, the project is quite close to, say, negotiation to start is very short compared to in Sweden, where you negotiate and you put it in the order backlog and then it has a few months until you start to execute. So then in this scenario, as we have today, that will be more affected in Finland where the time period is shorter, we will, of course, be able to kind of cope with the price increases quicker.

[Stefan E. Andersson, Analyst]

Perfect. And then my last question. And I fully understand it is difficult, but I'll ask it anyhow. Looking at the order backlog, you mentioned that for a few quarters now that it's been extraordinarily high, some larger projects in there and so on, and you're not concerned at all. what kind of timing are you expecting to get in to the normalized level? Or if you want to, how many percentage too high of the normalized level is it? If you can answer any of that, I would be happy. I fully understand it [indiscernible] challenge.

[Robin Boheman, Chief Executive Officer]

Yes, if it's a challenge I think when I look at it and especially maybe you can take my predecessors word on it as well, is that if you are at 60% to 70%, we are quite satisfied. I mean, like I mentioned to call here before, like a typical Instalco project is 6 to 9 months. So that meaning that we have quite a full order book at 60% to 70%. So I think when we are in that ratio, we are quite satisfied. Now we are at almost a little bit above 75%. So I mean we are at good levels. We have a sufficient inflow of new interesting projects. We are able to be out there on the spot market as well and take projects. So I think that's the level we want to be at. And so this is where we want to be. We are maybe slightly higher than the optimal setup but -- to us, this is not a big concern. We sleep well at night. We are -- how do you say, we're very satisfied with the order backlog and order intake that we have.

[Operator]

The next question is from Robin Nyberg, Carnegie.

[Robin Nyberg, Financial Analyst]

It's Robin from Carnegie here. Continuing with the same topics here. First, the margin in Q4. Could you just comment what the underlying [ EBITA ] actually was if we would adjust for the after payment and earn-out reversals?

[Robin Boheman, Chief Executive Officer]

Okay. Let's see. I have to -- I don't have my -- in the top of my head, but we can do it very quickly for you. So basically, if I would deduct the SEK 22 million, we would -- from the adjusted, I think we will end up at 7.2%, if I do the math correctly. And non-adjusted would be then 7.7%, it should be 5% Yes. So 7.7% [ EBITA ] and adjusted [ EBITA ] will be 7.2%.

[Robin Nyberg, Financial Analyst]

Okay. Yes, that's clear. Okay. Then moving to the backlog. If we look at the comparable units, how that developed, it was down by 9% in Sweden and 14% down in rest of Nordics. Is the main reason for the slower backlog here that you had larger projects in the backlog before and some units have not been able to take on new projects? Is that the main reason? And does this basically mean that there is potential for negative organic growth in the next quarters?

[Robin Boheman, Chief Executive Officer]

Yes, a little bit of multiple questions there, Robin, but I'll try to dig it down one by one. So if we start off by looking at Sweden, main reason for that Sweden is down is due to these larger hospital projects where we are sort of say, working ourselves down and are not able to take on new projects in those companies. So that is one of the main reasons in Sweden. Looking at the rest of Nordics, the main reason there is actually you are representing it yourself, Robin, it is actually basically Finland that has not been able to take as many orders as before due to that the Finnish market is not there where we want it to be, and we don't want to take on projects that are not at a sufficient level, then we'd rather wait. So that's the main reason for rest of Nordics being down. So it's a strategic way of not taking on bad orders that we have to pay for later. Then the third question there was, you cannot sort of say, do a comparison about order backlog being down and organic growth because, first of all, organic growth is calculated not by all of our companies. It is just a company that we've owned for more than a year. So the correlation is not 100% there. And also the order backlog depends a little bit on when it is being done compared to when so-- when the project starts and when it's finalized. So you cannot also do a perfect line there. So I wouldn't draw too much -- I wouldn't put too much emphasis on that order backlog is a little bit down and immediately start saying that organic growth will go down. It is not fully correlated that way. That answers a little bit of your question.

[Robin Nyberg, Financial Analyst]

Yes, that's a good answer. Then a follow-up, rate, to the margin, if we would just add the divisions, you had a SEK 200 million in divisions Sweden, that's inflated by SEK 22 million, and then you had SEK 31 million in other Nordics. And then basically, the other, that was minus SEK 17 million, that should be in normal quarter around 0. So wouldn't it be fair to say that the kind of underlying [ EBITA ] was actually then about SEK 209 million, so a margin of 7.9%, not the 7.2% that you mentioned?

[Robin Boheman, Chief Executive Officer]

Yes, the 7.2% that I mentioned was the adjusted [ EBITA ]. Then it was also included the earnouts. So the 7.2% is something different than you calculated now.

[Robin Nyberg, Financial Analyst]

Yes. But I mean, if we just look at the kind of how the underlying business has developed in Q4 because the other minus SEK 17 million, it tends to be cover around 0, so to speak. So isn't it fair to say then that you get to the kind of underlying -- underlying earnings should be around SEK 209 million. And that's -- if you calculate [ SEK 200 million ] plus [ SEK 31 million ] and then minus SEK 22 million.

[Robin Boheman, Chief Executive Officer]

And I understand where you come from Robin. And I agree with you. That is 1 way of calculating absolutely. And because the SEK 17 million is -- like I said, it's internal money in that sense. So yes, I agree with you there. You could calculate 7.9%, if you want, yes.

[Operator]

The next question is from [ Eric Carlson ], [indiscernible] Capital.

[Unknown Analyst]

It's [ Eric ] from [ Citi ]. I appreciate your comments on the order book versus organic growth correlation. But if you could just give us some thoughts on organic growth for Sweden during 2022. Do you think it will be positive or negative? What's peaks for positive, negative, respectively? That would be helpful for us, just directionally.

[Robin Boheman, Chief Executive Officer]

Yes. If you have followed us, you know that we don't give any forecast on organic growth. So I will leave it at that.

[Operator]

The next question is from Markus Almerud, Erik Penser Bank.

[Markus A. Almerud, Analyst]

Markus here at Erik Penser Bank. Sorry for coming back to the question and then ask me to begin, but I might have missed. Just want to confirm the 200 basis point margin contraction that we saw if we exclude the SEK 22 million from [ AFA ]. Was it -- so you said there was raw materials and then you have also the a bit lower productivity because of the high sick leaves. Was there something else that I missed that was driving that down? That's my first question. And the second question is then I would assume that the raw material prices or the higher raw material prices will then be compensated by you pushing pricing through. How does the contracts look on the projects? So we're talking about 9 months projects. Are the price clauses in those contracts or will the price increases start affecting the new projects that you are taking on?

[Robin Boheman, Chief Executive Officer]

Many questions in 1 there. I'll try to sort them out a little bit. I think you have to help me out with a few to get back. So yes, let me...

[Markus A. Almerud, Analyst]

First of all, the margin.

[Robin Boheman, Chief Executive Officer]

Yes, the margin then. As I said, main reason, sick leave and increase of raw material prices and of course, this kind of stop-and-go scenario that we've been in 2021 where kind of project start up, we have to close it down, and we start it up again. That affects the kind of timeline and the planning for us. You don't get a smooth process with this stop and go. Those are the main 3 reasons, I would say. I think that was the first question. Other one?

[Markus A. Almerud, Analyst]

Yes. Yes. If I can just follow up on that. So if I look at January, I mean you said that January was also -- we all know what the society looks like in January, everybody run, you had COVID basically. And then things have started to resolve. And now in mid Feb and most people are back to work. So I mean, will we -- I would assume then that the stop and go kind of what are you seeing on that? Now it's a bit early in the season and the weather is, what the weather is. But are you kind of seeing this also being phased out and people also coming back to work in the organization. I assume that you see the same thing as we see for instance?

[Robin Boheman, Chief Executive Officer]

Yes. Absolutely. And I mean January was crazy. I think, as you all know, how society looked in January, people getting COVID left and right. And I think we're definitely seeing people back. We are back at work. And if I could ever choose a month to have high sick leave, I would choose January every day of the week, every day of the year because January is not the most productive month anyway.

[Markus A. Almerud, Analyst]

Yes, yes. Okay. Okay. Perfect. My second question is a little bit follow-up on the second part of the factors driving the margin down. That is the higher raw material prices. Because I would assume then that -- and you were talking about price increases as well compensate for this over time, right? And so -- and then how does this tie up with the project? So first of all, I assume you have all of the price increases in the system, do these also affect the project which are running at the moment? Or is it -- or are the prices for those projects fixed and then you will so you will have a higher cost and the prices out are fixed, and then it will be the new projects coming in that will have a higher price. How does it work? How does that dynamic work?

[Robin Boheman, Chief Executive Officer]

Yes. And this is what I mean that we are being sort of say, affected by the higher raw material prices that we see because we have taken projects prior to price increases and prior to knowing about the price increases. And we have, of course, calculated with some price increases, but not to the extent. I think the market has never seen this type of price increases. We are basically -- normal level is a 2% increase. Now we're seeing 10% to 15%. Nobody has been able to calculate with that type of price increases. So the fixed price projects that we have taken prior to the price increases. Those, of course, we are being squeezed at and we try to negotiate, of course, but it's not that easy. But we also have some contracts saying that we have a cost-plus perspective where we're able to add a certain percentage in those cases where we are not affected by the price increases. You could even argue that it's positive with price increases. However, that has affected us. And as I mentioned earlier in the question before here was that we will see that in the near term. But in the long term, we will be able to push this on.

[Markus A. Almerud, Analyst]

Yes. Yes, yes. I mean, I appreciate that. But if you look at the number of projects you have, is a normal project kind of fixed pricing or what was the norm?

[Robin Boheman, Chief Executive Officer]

So basically our turnover is -- yes, basically, our turnover is 20% service, which is, so to say, spot price. And then you have roughly around 30% is a pure cost-plus perspective. And then you have 30% fixed price and then you have sort of say, 20%, which is a little bit of a mix for the fixed price and a partnering project, I would say. So 30%, 40% is fixed price projects.

[Operator]

There are no further questions at this time. Speakers, please go ahead.

[Fredrik Trahn, Head of IR & Communications]

We have had some -- a few questions from the webcast as well. We'll take a few of them. One is, if it's possible to rise the M&A agenda with the -- Sorry, I'll take that again. Questions from the webcast. If it's possible to increase the speed of M&A with higher net debt? Would that be a way to go?

[Robin Boheman, Chief Executive Officer]

I think -- I mean the possibility of increasing M&A is more in the sense of how much M&A do we want to make and be sure that we can kind of continue to deliver on our goal of buying the best-in-class companies with track records and being in Instalco fits. I think that is more the question on how fast we can find and integrate and also be able to kind of onboard companies in the Instalco methodology. Then I think we will be able to kind of cope with net debt and so forth that's not so say the limiting factor in this case.

[Fredrik Trahn, Head of IR & Communications]

So another question is about Rest of Nordics. What margins can we presume there in the future? Can we expect up to 7%, 8% in rest of Nordics or what are your comments on that?

[Robin Boheman, Chief Executive Officer]

I mean, I think the margins that we are seeing in rest of Nordics now are good margins, but of course, we're not satisfied with that. And if you look at the market and the companies that we own in these companies, I do expect them to deliver around 7% to 8% in a normal market, yes.

[Fredrik Trahn, Head of IR & Communications]

And then one question about technical consulting. Just you talked a little bit about it, but can you sort of give more update on the plans there?

[Robin Boheman, Chief Executive Officer]

Yes. I mean the plan is, as I mentioned, in Q3 as well, and as I mentioned a little bit today, is that continue the growth, it is still not a, so to say, a positive cash-generating yet because we are growing it so fast. But I do believe as I mentioned, there are higher margins in this area. So I'm very positive about the technical consultants going forward.

[Fredrik Trahn, Head of IR & Communications]

Do you want to comment on that one?

[Christina Kassberg, Chief Financial Officer]

Yes, we can also comment. We have gotten some questions about the dividend as reported in the report and the proposal from the Board is for SEK 3.25 per -- calculated with the shares at the end of the year. But after the split of [ 5 ], the money per share will come to SEK 0.65 per share.

[Fredrik Trahn, Head of IR & Communications]

Okay. Thank you. No further questions from the webcast or from the audiocast, I believe.

[Robin Boheman, Chief Executive Officer]

Okay. Then we say thank you very much for listening in. And we close this call down, and have a nice day, everyone.

[Fredrik Trahn, Head of IR & Communications]

Thank you.

[Operator]

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.