Sitowise’s Interim Report January-March 2022: On organic growth path
Interim reports - 18.5.2022 at 8.30 UTC+2
Sitowise Group Plc, Interim Report, January 1 - March 31, 2022, 18 May 2022 at 8:30 AM
Q1: ON ORGANIC GROWTH PATH
January – March in brief
- Net sales increased by 15% to EUR 49.2 (42.8) million
- Organic net sales grew by 7 (0) %
- Adjusted EBITA was EUR 5.2 (4.7) million, or 10.6% (11.0%) of net sales
- The order book increased by 29% to EUR 172 (133) million
- Leverage (net debt / adjusted EBITDA) remained at the same level and was 1.5x (1.4x)
- In the client survey conducted at the beginning of the year, the willingness to recommend remained at a good level, in addition to which 94% of respondents would re-select Sitowise as their supplier.
- Sitowise acquired the Swedish infrastructure design agency Mavacon AB and completed the acquisition of VRT Finland Oy's business regarding 3D construction inspection.
CEO Heikki Haasmaa
In the first quarter, Sitowise’s net sales developed favorably in both Finland and Sweden, with the company seeing a growth in net sales of 15 percent compared to the previous year. We continued on an organic growth path, with an organic growth of 7 percent in the first quarter. Our profitability remained at a good level. The adjusted EBITA was EUR 5.2 million, which represents an increase of 11 percent or EUR 0.5 million from the comparison period. The relative profitability decreased due to higher sick leave impacted mainly by the corona virus and the influenza season.
The continued recovery in the market since last year was reflected by increased tenders in January-March, and due to active sales efforts, our order book remained at a historically high level across all business areas. Among the most significant orders were the planning of the Liminka-Oulu double-track railway in northern Finland and the design of the Västerås hospital in Sweden. In addition to larger railway and hospital projects, we again received a significant number of small and medium-sized orders. Demand is now growing for projects related to, for example, securing the energy network and for wind power initiatives. In building design, the proportion of renovation projects is growing and many high-rise projects have also progressed.
The consequences of the war in Ukraine may increase the risks of a slowdown in market growth in the construction sector as well, but we see the direct effects of the crisis on Sitowise as limited. During the first quarter of the year, demand across all our business areas remained strong. In the coming months, we will see the extent to which increased material costs in construction, challenges in energy availability, as well as accelerated inflation and general market uncertainty will affect the schedules of ongoing projects and projects in the planning phase. In early March, Sitowise outlined its principles regarding the impact of the Ukraine war on the company’s projects and subcontracting; these impacts are primarily associated with the Infrastructure business area. Sitowise will not begin new projects with Russian-owned entities and has gone through its ongoing projects in order to suspend any with such ties.
Various countries are currently reviewing and revising their national budgets accordingly. Regarding some projects, these realignments may lead to delays, but at the same time significant new opportunities will arise for Sitowise in all business areas. The crisis has made it clear to everyone that the crucial green transition needs to be accelerated, which has sped up the planning of related projects. This represents a significant opportunity for us, as Sitowise wants to be the industry's most responsible partner in developing a prosperous living environment and investing in the development of sustainable services.
During the first quarter of the year, we announced one new acquisition in Sweden, where we expanded our infrastructure business with the acquisition of Mavacon Mark & VA Consult AB. In April, we also launched our unified Sitowise brand in Sweden, and now we have a strong foothold in all of our business areas there, creating a good foundation for future growth. In addition, the acquisition of VRT Finland Oy's service business area related to underwater surveys and structural inspections, announced at the end of the year, was successfully completed in January.
Our client survey conducted at the beginning of the year confirmed that Sitowise’s expertise is appreciated. We have steadily strengthened our image as an industry leader and developer of new and innovative solutions. Our clients also trust us: 94% say they would re-select Sitowise as their supplier. As the new CEO, I am proud to continue building that trust together with our whole personnel.
Key figures
| EUR million | 1-3/2022 | 1-3/2021 | 1-12/2021 |
| Net sales | 49.2 | 42.8 | 179.3 |
| EBITA, adjusted | 5.2 | 4.7 | 21.1 |
| % of net sales | 10.6% | 11.0% | 11.8% |
| EBITA | 3.5 | 4.1 | 18.5 |
| Result for the period | 1.1 | -0.8 | 7.9 |
| Cash flow from operating activities before financial Items and taxes | 7.0 | 5.2 | 22.8 |
| Net debt | 33.4 | 30.5 | 30.9 |
| Net debt / EBITDA, adjusted | 1.5x | 1.4x | 1.4x |
| Equity ratio, % | 47.2% | 46.0% | 46.0% |
| Earnings per share (EPS), EUR | 0.03 | -0.02 | 0.22 |
| Number of personnel, average | 2,044 | 1,910 | 1,969 |
Market outlook
The stable growth in the demand of design and consulting services to create sustainable societies is supported by megatrends such as urbanization, renovation backlog, sustainability, and digitalization.
During the first quarter of the year, demand across all our business areas remained strong. However,
the uncertainty in the market brought by the war in Ukraine, material availability issues, energy availability challenges, and inflationary pressures could potentially affect the short-term decision-making of Sitowise's clients.
Guidance (unchanged)
Sitowise Group estimates that both net sales and adjusted EBITA in euros will increase compared to 2021.
Long-term financial targets (unchanged)
The Board of Directors of Sitowise Group has set the following long-term financial targets:
- Growth: Annual growth in net sales of more than 10 percent, including acquisitions;
- Profitability: Adjusted EBITA margin of at least 12 percent;
- Leverage: Net debt / adjusted EBITDA should not exceed 2.5x, except temporarily in conjunction with acquisitions; and
- Dividend policy: Sitowise targets paying a dividend corresponding to 30–50 percent of net profit.
Main events after period-end
The Annual General Meeting was held on 20 April 2022. The Annual General Meeting adopted the financial statements for the accounting period 1 January - 31 December 2021, and discharged the persons who have acted as members of the Board of Directors and as CEO during the financial year from liability. The Annual General Meeting decided on a dividend of EUR 0.10 per share as proposed by the Board of Directors, which was paid out on 29 April 2022 to shareholders who were entered in the company's shareholder register maintained by Euroclear Finland Oy on the record date of the dividend payment, 22 April 2022. The Annual General Meeting approved the remuneration policy of the Company’s governing bodies, decided that the composition and remuneration of the Board of Directors would remain the same, and re-elected the auditor. The Board's authorization to repurchase the company's own shares, to issue shares, and to grant special rights entitling to shares was renewed.
At the inaugural meeting following the Annual General Meeting, the Board elected Eero Heliövaara as its Chair and Tomi Terho as its Deputy Chair. In addition, the Board elected members to its committees. Eero Heliövaara was elected Chair of the Nomination Committee and Petri Rignell and Tomi Terho were elected members. Mirel Leino-Haltia was elected Chair of the Audit Committee and Taina Kyllönen and Tomi Terho were elected members. Eero Heliövaara was elected Chair of the Personnel Committee and Leif Gustafsson and Elina Piispanen were elected members. Tomi Terho was elected Chair of the Acquisition Committee and Eero Heliövaara, Leif Gustafsson and Petri Rignell were elected members.
Heikki Haasmaa started as the Group's new CEO on 1 May 2022.
Financial calendar
Planned publication dates for the Sitowise Group’s financial reports in 2022 are as follows:
- Half-year Report, January – June 2022, on 17 August 2022
- Interim Report, January – September 2022, on 2 November 2022
Briefing for analysts, media, and investors
Sitowise's CEO Heikki Haasmaa and CFO Heidi Karlsson will present the company's results in a conference call and live webcast held in English on 18/5/2022 starting at 1:00 pm (EET).
Webcast
The briefing will be streamed at https://sitowise.videosync.fi/2022-q1-results. Written questions can be submitted through the webcast. Presentation material and a recording of the event will be available afterwards at www.sitowise.com/investors/reports-and-presentations.
Conference call
It is also possible to dial-in to the briefing 5–10 minutes before the start of the event by calling a number below and entering the PIN code attached:
Finland Toll-Free: 0800 523 163 PIN: 58063357#
Finland Toll: +358 9 8171 0310 PIN: 58063357#
United Kingdom Toll-Free: 0800 358 9473, PIN: 58063357#
United Kingdom Toll: +44 3333 000 804, PIN: 58063357#
US Toll-Free: +1 855 85 70686, PIN: 58063357#
US Toll: +1 6319 131 422, PIN: 58063357#
Sweden Toll-Free: 0200 883 685, PIN: 58063357#
Sweden Toll: +46 856 642 651, PIN: 58063357#
International access numbers and further instructions available here.
Additional information
Heikki Haasmaa, CEO, heikki.haasmaa@sitowise.com, +358 50 304 7765
Heidi Karlsson, CFO, heidi.karlsson@sitowise.com, +358 40 759 3320
Minttu Vilander, Chief Communications and Corporate Responsibility Officer, minttu.vilander@sitowise.com, +358 40 575 6660
Sitowise in brief
Sitowise is a Nordic expert in the built environment and digital solutions. We provide design and consulting services to enable more responsible and smarter urban development as well as smooth transportation. We operate in three business areas in Finland and Sweden: real estate and buildings, infrastructure, and digital solutions.
We want to raise the bar for intelligence and sustainability, and that is why our vision is to be the most responsible partner in developing thriving and sustainable living environments. Sitowise has grown rapidly and profitably in recent years. The Group's net sales in 2021 was approximately EUR 179 million and the company employs more than 2,000 experts. Sitowise Group Plc is listed on Nasdaq Helsinki under the trading symbol SITOWS.
This release is a summary of Sitowise Group’s Interim Report January–March 2022. The complete Interim Report is attached, and also available on the company’s website at www.sitowise.com/investors/reports-and-presentations.
The figures in the interim report are unaudited. Comparative figures for the corresponding period of the previous year are in brackets. This report has been published in Finnish and English. If there are any differences between the English translation and the original Finnish version, the Finnish report shall prevail.