Interim report January – June 2022

Comments from CEO Robin Boheman:

Net sales for the quarter increased by 34.2 percent, driven by stable organic growth and prior high-quality acquisitions. Profitability also improved compared to the first quarter and the EBITA margin increased to 8.1 percent. It is thus back at the Instalco level.

We are extremely proud of being able to deliver a margin at this strong level. Our companies have managed to deal with the increasing inflationary pressure in a satisfying way and we have been able to defend our operating margins.

We achieved a major milestone by, for the first time in Instalco’s history, surpassing net sales of SEK 10 billion on a 12-month rolling basis.

Continued improvements in Rest of Nordic
One of our priority areas is to grow the Rest of Nordic segment. We want to expand our base of companies in Norway and Finland so that we can more easily create business synergies between our subsidiaries, which is one of the pillars of the Instalco model. In line with our strategy, we are thus continuing to increase the percentage of acquisitions in Rest of Nordic. During the quarter, we supplemented and strengthened the organization by making four acquisitions, of which four in Rest of Nordic, which contribute annual sales of around SEK 574 million.

We continue pursuing our action plan to raise profitability in the Rest of Nordic segment. We see good results from our efforts, although the situation and market, primarily in Finland, remains quite challenging for our companies.

Acquisitions is an important cornerstone of our strategy. The pace of acquisitions this year is strong, which is reflected in the growth we are delivering. Over the short term, the increasing pace of acquisitions results in a somewhat higher level of indebtedness, together with the decision of not using equity as payment method for our recent acquisitions. We are comfortable with the rate of acquisitions and we are maintaining both a sound level of indebtedness and strong balance sheet.

Record-high order backlog
Despite an uncertain macro situation, willingness to invest among our customers has remained high during the quarter and our observation is that demand is stable. Our order backlog has grown to its highest level ever of SEK 8.1 billion, which corresponds to 78 percent of annual sales.

For quite some time, Instalco has been one of ¬Sweden’s leading hospital contractors for electrical, Heating & Plumbing and ventilation installations. During the quarter, we solidified our position even more by signing agreements for two major hospital assignments. The first is our subsidiary APC, which has been contracted for electrical installations at Linköping University Hospital. The second is Ventpartner, which will be doing comprehensive ventilation work in conjunction with the expansion of Västervik Hospital.

Strong sustainability offering
One of our sustainability targets is generating benefits to society. We do that each and every day not only through our energy-saving installations, but also through various types of collaboration. During the quarter, within the scope of our Sustainability Program, Instalco began collaborating with Universeum, which is the national science centre of Sweden, located in Gothenburg. The collaboration is aimed at developing sustainability knowledge and strengthening our position in the area.
Sustainability and energy conversion are strong driving forces in the installation area. Adaptations to climate change and smart building solutions are strong trends on our industry. Instalco is well-¬positioned for offering customers the option of installing climate smart and energy optimization, all hand-in-hand with our sustainability offer.

I look with confidence to the future. Our assessment is that the market is stable and demand high, despite the challenging and uncertain macro situation.