Seasonal effects

Instalco’s profitability and cash flow are affected by seasonal variations, weekends and public holidays, which limit comparability between different seasonal periods. Instalco reports its revenues in accordance with the project’s percentage-of-completion, with the consequence that fewer workdays result in a reduction in Instalco’s revenues from ongoing projects. For example, net sales and profitability during the first and third quarters of the year are affected by vacation periods and reduced activity.

Instalco’s working capital is also affected by seasonal effects despite regular invoicing of ongoing and completed projects as well as service work. There is normally a high level of invoicing in December due to invoices issued prior to the end of the year, with a resulting strong cash flow in December and January.

Net sales, operating profit and cash flow tend to be strongest during the fourth quarter, when customers in both the public sector and private sector attempt to match their budgets for maintenance and operating costs during the year and to complete work on ongoing projects before the end of the year. Cash flows tend to be lowest in August and September due to a lower level of activity in July, which is the most common vacation month on Instalco’s markets.