Green Landscaping Group AB (publ) (GREEN) Earnings Call Transcript & Summary

Welcome to the Green Landscaping Group Q4 Presentation 2024. [Operator Instructions] Now I will hand the conference over to the CEO, Johan Nordstrom; and CFO, Marcus Holmström. Please begin your meeting.

Thank you, and a warm welcome to you all. As mentioned, my name is Johan Nordstrom. And today, I'm joined by our new CFO, Marcus Holmström, who came aboard in -- finally came aboard in December, a long wait for him. Marcus will walk us through the financial section of the presentation in just a few minutes. But first, let me just give an overview of the performance in 2024. So we conclude the year of 2024 with a 9% sales growth. And we had, I would say, a strong 3% organic, and we reached an EBITA margin of 8.3%. And this is despite the headwinds we have faced in the market during the year. So from the financial perspective, I'm quite happy with the performance we, as a company, have done for the full year of 2024. When I look up on the fourth quarter, the final quarter of the year, in my mind, it's an okay quarter, where basically, you have 2 major observations that stands out. And on the bright side, I would say that's really the cash flow. I'm quite happy to see it because it has been somewhat up and down during the last quarters. And we did initiate some activities in order to make sure that we had a strong cash flow, and so we did. So we had a very strong cash flow in the fourth quarter. And that, of course, brought down the leverage to a very comfortable 2.5 level. Then not so bright or the shortcomings of the fourth quarter, that is really the underperformance of the segments in Sweden, where you can see that neither sales and in particular, not the profit did meet our expectation and came in as a bit as a surprise to us. But again, we ended the year and the quarter on a strong note. We also invested in 3 new companies in the fourth quarter. And that means that we right now are back on track in terms of the investment or the acquisitions in new companies. And the goal we had for the 2024 was 8 to 10 companies, and we did achieve that one. So we do welcome those companies into the Green Landscaping family. And of course, looking into the year of 2025, we will see a similar pace, I would say, in terms of investments or acquisitions that we're looking forward into that year. So by that, I do conclude that it was kind of a good year for us with a couple of highlights in the fourth quarter and also 1 setback in that particular quarter. So let's move into the presentation. Now we basically only have 1 slide on the Green Landscaping Group. But again, we are active on a very attractive market, and there are certain characteristics of the market that I would like to highlight. And the first one, it's a large market with low cyclicality and high degree of stability. Having a big market really means that we can pick and choose, to some extent, on how we would like to position ourselves in terms of what customers and what services to perform and also in terms of what companies we would like to invest in. So being in a big market, we're right now active in 6 geographies, meaning that we can really, from a strategic perspective, position ourselves in the way we would like to be positioned. The right business model is about decentralization. And again, we have 60 very skilled entrepreneurs working in 6 different geographies, being close to the customers, making business decisions, basically every day, being close to employees, and that has proven to be a very strong model that also makes us fast, nimble and quite profitable given the market we are in. And again, then we have the M&A strategy, and we have been doing that for years. So we have several criteria on -- in the selection of great companies that we choose to invest in. And having a large pool to choose from really means that we can pick and choose the very best entrepreneurs and the very best companies to join the company. So next slide, please. So to do the summary for the full year of 2024. As I mentioned, net sales increased by 9%, and that means we basically reached SEK 6.3 billion, organically 3%. And again, given the market situation, I think that is a good number to bear in mind, that it's headwinds out there and having a 3% organic also given some structural changes we've done throughout the year, that is a good number. Back on track for an acquisition. That contributed by 7%. And the profitability increased by 3%, and that means we actually came to SEK 528 million in EBITA. The EBITA margin have roughly been like 0.5% below previous year. And again, given the market condition, I think that is good numbers. We landed at 8.3%. We were on a positive track. And for the last, I would say, 4 quarters, we can see that we have kind of leveled out that one. I don't see any reason why we should not be able to come back to a situation where we continue to improve the profit margins. But nonetheless, 8.3%, given where we are in the industry we're in, it's a good number. Then, of course, cash flow from operating activities for the full year, that's SEK 601 million. And in comparison to the EBITA of SEK 528 million, I think that is clearly a very good number. Moving into the fourth quarter. There, we saw that the net sales increased by 7%. And of course, the organic, in particular, due to the segment in Sweden means we had a negative 6% on the organic side on net sales. EBITA increased by 3% to SEK 164 million. And the margin that we landed is, as we said before, 9.3% versus 9.6%. It's still a fairly strong margin of 9.3% in the fourth quarter. The cash flow, as I did mention, that's SEK 282 million. So that's kind of a very big number, in particular, when you compare to previous year or the previous quarter -- in comparison quarter, sorry, where we had SEK 8 million (sic) [ SEK 80 million ]. So still, a very strong cash flow from operating activities. And the financial leverage means that we are right now at 2.5. And that we were joined by 3 companies in the fourth quarter. So that's pretty much on that one. So the next slide, please. In terms of growth, we have a growth ambition, and we intend to grow by 10% year-over-year. We took a step back on the M&A activities in the year of 2023, 2024. We are back on track in the number of companies we are looking for. And that means that we right now are at approximately 10% growth. That's where we are at this point of time, and that's what -- we have had a higher number in the future. That's really what I'm saying. And as we are coming back on track on the investment, we should see that number start to increase again. Stable market and right business. As I did mention, we are active in a very large market, and that enables us to position ourselves and having a decentralized model enabled us to have a margin that is quite higher than the average of the market. And being above 8%, that's the financial goal we have. I think that is -- yes, we are meeting the target and working on exceeding that one significantly. Next slide, please. Now moving into Sweden. The full year on Sweden basically means that the net sales decreased by 4%. And that, due to basically 2 factors. We have headwinds in the market. And also, as we have communicated before, we are focusing on increasing the profit margin in Sweden and, to some extent, that means that we are closing down 1 or 2 companies. We are getting rid of unprofitable customer contracts, and that's primarily focused on the Swedish market. So for the full year, EBITA, we had -- given the fourth quarter performance, we saw a decrease of 21% to SEK 135 million (sic) [ SEK 137 million ], and that means that we landed at a margin of 5% versus 6.1% the previous year. And that is, of course, below our expectations. But nonetheless, that's where we are. The fourth quarter, net sales decreased by 16% to SEK 670 million and EBITA decreased by 63% to SEK 21 million, gives us a margin of 3.1% versus 7.1%. So this is the shortfall that we saw, to some extent, unexpected. And also, yes, we're going to say that one and I'm sure we're going to have questions coming further on in this one. I can mention that about 50% of the shortcoming, that one we can refer to, let's say, company-specific events; and the other rest, the 50% of the shortcoming is it was a tough market in the fourth quarter. So moving on to Norway. What we can see in Norway for the full year of 2024, we saw an increase of 10%. And again, the market conditions in Norway was also quite a significant headwind, I would say. So having an increase of 10% in that year is a very strong performance on our Norwegian company. So hats off for those guys. They did a very good job. Organically, they grew by 8%, and then we had the acquired one of 3%. And then, of course, we had the increase of EBITA by 6%, and that meant they landed the year at a healthy 9.9% EBITA. So quite strong performance in Norway for the full year of '24. In the fourth quarter, we saw an increase of 13%. And we saw that the EBITA increased by 9%, and they landed at the margin again at 11.6%, quite the performance of our colleagues in Norway. Then moving on to Other Europe. As communicated before, Other Europe, that's particularly, I would say, Germany, and that's where we have the heavy focus on investments. But for the full year performance, they grew by 67%. They have now reached SEK 1 billion in annual revenue. And also, we saw a very substantial organic growth by 14%. And then again, invest in new companies or acquisitions by 54%. So it's a high-growth situation for us. EBITA grew by 36%, and that means that we reach SEK 192 million, and that gives us a margin of 18.8%. So again, significant growth in both revenue as well as in EBITA. Now in the fourth quarter, we saw that the net sales increased by 86%, and we saw an EBITA growth -- grew to SEK 70 million, and that gives us a margin of 21.1% in the fourth quarter. So again, we are building up Europe. We have Munich as the second headquarter. We are focusing on there, [ surprises ] DACH speaking, the German-speaking region of Europe at this point of time. And we do -- our ambition is to continue the growth in the German market for the coming 1 or 2 years. Then going through the companies, we basically are presenting 3 companies. We made 1 additional company in Finland, and that is Turun. It was founded back in 1985, operates out of Turku in Finland. And this is actually a sweet-spot company in terms of what they are doing because they are doing both landscaping and maintenance services. The majority of the companies we have in Finland are landscaping companies, who have come -- and the maintenance companies with service contracts, longer public contracts and so forth. They have an annual sales of EUR 3.6 million with 20 employees. So we do welcome Turun to the Finnish organization as well as to the Green Landscaping Group. They are a great addition to us. Then we have Viva Gartenbau in Switzerland. So they are operating in Basel. This is an acquisition that we actually made -- or an investment that we made a year ago, actually, more than a year ago and then for various reasons that, to some extent, is out of our control. We needed permits in order to acquire the buildings then in Basel, and that actually meant that we had to wait 12 months before we conclude this business. But nonetheless, they are much welcome to the group. They have a revenue of CHF 3.2 million, and they have 20 employees. And we do welcome that company to the group as well. And then the last company to be presented today is Tiefbau Lenzen GmbH. That was founded back in 1953. This is the first company in North Rhine-Westphalia. They are located in Bonn, and that is basically in the rural area of Germany. And we do expect other companies in that area to be followed by Tiefbau Lenzen. They have an annual revenue of EUR 8 million, and they do that with about 30 employees. So this is a very good addition to what we are doing in Germany, and we do welcome Tiefbau Lenzen to the Green Landscaping family. I think that concludes my part of the presentation, and then I hand it over to our new CFO, Marcus Holmström, that we have been waiting for, for a long time. So Marcus, take it away.

Great. Thank you, Johan. And I will cover the main financials. Quarter 4 showed net sales of SEK 1.8 billion, bringing our rolling 12 months to SEK 6.4 billion, resulting in a total growth of 9% for the year. EBITA in the fourth quarter came in at SEK 164 million, which was ahead of last year, but the margin was slightly below at 9.3%, positively impacted by the development in Norway and Other Europe, but weighted by the development in Sweden, as Johan already mentioned. I will talk more about cash flow on the following slides, but we are very pleased with the way we ended the year. And as a consequence, financial leverage decreased sequentially to 2.5x. Order backlog decreased to SEK 7.3 billion in the quarter. But have in mind that the size fluctuates between quarters and it should, therefore, not be used as a short-term leading indicator. Earnings per share in the quarter was SEK 1.09 compared to SEK 1.66 last year. It's worth noting that last year, we had a positive effect of SEK 0.42 per share related to revaluation of estimated outcome of earnout considerations. So let's have a look at cash flow. During the quarter, we managed to reduce working capital, supporting the already seasonally strong cash flow quarter, resulting in an operating cash flow of SEK 182 million (sic) [ SEK 282 million ], which is clearly stronger than last year. This brings the rolling 12 months cash flow to SEK 601 million, as Johan said, that we're very pleased with. Nonetheless, working capital development and cash flow generation continues to be a focus area for us. And looking at the cash flow bridge and total cash flow, as I said, the operating activities contributed with SEK 282 million in the quarter, then we completed 3 acquisitions totaling SEK 119 million in cash considerations. We then also divested certain assets, such as machinery and so on, resulting in a net positive SEK 1 million from CapEx and other investments. The net difference between new loans and debt amortization was positive SEK 65 million, totaling the cash flow for the period at SEK 228 million. Given the positive cash flow in Q4, in combination with positive effects on EBITDA, we sequentially deleveraged to 2.5x, which is in line with our financial target and gives us headroom to continue the M&A agenda. The loan maturity profile remains the same as in previous quarters, with maturity at the end of 2026. These are bank's loans from 3 different banks, and we have only 1 covenant, which is net debt to EBITDA pro forma. And financial targets. We have a growth target at 10%, and we're currently shy of it at 9%. But looking at margin, we're ahead at 8.3% and spot on at our leverage, 2.5x. The Board proposes to their AGM that we should not distribute any dividend for fiscal year 2024. And with that, I will hand back to you, Johan.

Okay. So thank you, Marcus. Just to sum up the year for 2024. And as I think you all know, it's -- given the segment we're in, we have faced some headwinds during the course of the year. And having a net sales increase by 9%, I think that is a strong performance. I look upon the organic growth of 3% and also that the investment activities have yielded in an another 7%. I think that is -- it's a strong performance. And to me, it's a quality indication of the companies that we have in the group that we continue to grow even though we have/are having headwinds. The EBITA increased by 3% to SEK 528 million. And again, if I look upon the margin that we were at -- if I compare the previous year, 8.8%, and that we are at 8.3%, again, that is a very strong performance of the companies out there, and they really do show a pricing discipline because if it's tough market conditions, the number of quotes are -- or the competition is increasing and so forth and still showing a very strong discipline in what they are doing, I think that is a quality indication of the companies we have. And as I did, we did, are highlighting the cash flow being able to deliver SEK 601 million in cash flow, given the EBITDA of SEK 528 million, it's also a very strong performance. So all in all, I think it's another successful year for the group, and I'm quite happy with the performance given the market conditions that we have seen. So by that, I do believe we are opening up for the Q&A part of this conference call.

[Operator Instructions] The next question comes from Dan Johansson from SEB.

I think I had three questions here. Maybe not unsurprisingly, I start with Sweden. And if I understand you correctly, Johan, you said that about 1/2 of the shortcoming in Sweden was due to company specifics and credit loss. So does that mean around SEK 15 million to SEK 20 million impact on EBITA, if my math is correct there? And how much of that is sort of the credit loss part of that shortcoming?

Yes. Kind of a detailed question. You are on, I would use, the low side of the span of numbers you used on what was company specifics, if that's understandable. And yes, I really don't go into that specific, but it was about 1/3 of the company's specific shortcomings that was belonging to the bankruptcy per se. And also, there is a likelihood that we're going to get that money back again because the customer needs to finish the project. But nonetheless, we have to accrue for it, and that's what we did. So we -- it's not a super high amount to begin with. What happens when you have companies like -- in Sweden, we have roughly like 25 companies. And then you have companies who are underperforming, you typically see that you have volatility, but you also have companies who are overperforming given the expectations you have. What happened in the fourth quarter in Sweden was basically that we had underperformance or that they came in according to plan. So we didn't have the upside of companies that you typically see. So even in regions like Norway and Germany, you see that you have companies who are overperforming and companies who are underperforming. What happened in the fourth quarter was basically that we had the underperformance in a handful of companies, while we didn't have the overperformance who basically could contribute, so to say, to the performance. So that's why we saw the shortcoming.

Yes, understand. Thank you for that clarification. And maybe just a follow-up on Sweden then. Do you feel now that you've done enough with the contract portfolio, the leadership changes, et cetera? Have you done enough now to see profitability improving going forward? Or is there still some efforts that need to be made in order to take it where you want it to be in terms of profitability?

Yes. We have been talking about Sweden and talking about specific objects, but also, of course, over a number of years. Also, we have basically, during the course of 2024, we did increase the efforts in order to improve the profitability. Because if they are like 5%, 6% EBITA profit margin in Sweden, that is a too low profit margin, and we really don't see a reason why we shouldn't be at a significantly higher profit margins in Sweden. It's the same market in Sweden. We do the same thing. So if I compare it to what we're doing in Norway or what we're doing in Germany and so forth, my expectations are clearly higher than 5%, 6%, or even 7%. That's still not acceptable. So we have been in the process of improving that one in Sweden. And also, we did initiate, I would say, increased efforts before we saw the result of the fourth quarter. That was already underway on how to improve for Sweden. I wouldn't extrapolate too much on the setback I saw in the fourth quarter, so I don't consider that being like a new jump-off point. It was basically a mishap in the fourth quarter. So my expectations on Sweden coming into 2025 is actually that we are still very much focused on improving the profitability in Sweden. And that also means that I do not see any high organic growth. I would actually assume that we're going to be flat or slightly negative in 2025 organically, as we are focusing on improving the profit margins in the contracts we have. And for any new contracts, of course, we should see a profit increase in contracts coming into the portfolio during the course of 2025. So improving profit margins in Sweden is a very high focus and very high on our agenda I would say for the coming 2, 3, 4 years before we see that we are in a position where we would like to be profit-wise in Sweden.

Yes. Makes sense to prioritize, yes, profitability over growth right now in Sweden, I guess. Maybe then switching a little bit gear to your M&A ambitions for 2025. You had a very strong cash flow. You saw your net debt coming down a little bit sequentially. Would you say the goal for this year is also to do something like 8 to 10 acquisitions? Or what should we expect from you now in 2025?

Yes, as we have communicated, we are on track. We took a step back in 2024 -- sorry, 2023, given the uncertainty in the marketplace. In that point of time, I weren't comfortable with doing 8 or 10 acquisitions in that particular year, so I think we landed at 3. Now for 2024, we geared up the machine again and landed 8 acquisitions in that particular year. And you will see a gradual increase in pace as we move forward into 2026, '27 and so forth. For the 2025, right now, as everything looks, probably the same number as you saw in 2024. I think if I look upon the pipeline of companies we have, I assume that's -- yes, that's my ambition at this point of time. 8 to 10 investments during the course of 2025, that's the ambition.

Maybe a final question...

That is, of course, supported by the balance sheet of the company as well. So we have fundings in order to do it.

Yes. And maybe a final question, if I may. This one might be a bit difficult to answer. But 1 month into the new year now, how do you feel about the market situation so far in January? Have you seen any change? Or is it basically the same level as in previous quarter here and during 2024? Or is there any changes in any direction you see here?

Well, that's a two follow-up question. From my perspective, when I look upon the market and as I did communicate when we had the Copenhagen seminar, that is, I don't see a rapid improvement in the market condition. I don't see the market conditions being worsened. I think we got -- I still see that we -- there will probably be an increased amount of bankruptcies in the market in adjacent sectors and to some extent, that's something we have to be aware of. So I think it's -- it will be -- at this point of time, my projection is that you're going to have a sideways movement in the market conditions for 2025. I look upon the order books and typically, in the landscaping companies, their order books are 3 to 6 months on the average. And I know that our local managing directors are quite -- they are more positive today than a year ago. But I still have to see that positive momentum, so to say, turn into increase or stronger order books. So we don't have weak order books, that's not what I'm saying. I'm saying that we have the similar -- we basically have the similar size and situation in the beginning of 2025 as we had in the beginning of 2024. And if my outlook is basically 6 to 7 months in the future, that means that the first 2, 2.5 quarters of this year, given the order book, are pretty much the same as we had in the previous year. So I don't see any rapid positive increase in the market at this point of time. So that's why I'm judging that, yes, 2025, will pretty much look like 2024. And then, of course, our quarter in Q1, that is really when we have the winter activities and we're coming from basically 2, I would say, good winters historically. And as everybody can see there, we have a mild winter in Stockholm and the southern part of Sweden. It's not the same type of snow remover and activities and so forth this -- so far in this quarter as we have had for the last 2 years. So that's my take on where we are. So pretty much from a business standpoint and an industrial standpoint, I would say it's the same as 2024. At this point of time from a winter perspective, somewhat weaker than I saw in 2024.

The next question comes from Mads Andersen from DNB Markets.

Can you hear me, gentlemen?

Hello, Mads. We hear you.

So obviously, a challenging quarter like you alluded to yourself. But if we start on a positive note, I know you just talked a little bit about the free cash flow. But any sort of color you can give on the initiatives that you took during the quarter? But also, how sort of sustainable this is going forward? And could we essentially expect somewhat a -- or at least a slight improvement on something like receivable days going forward?

Yes, I can take that one. No, but it's the result of that we actually, during a few quarters, had weaker than normal cash flow despite the Q3 actually being the positive one. But how we started the year, it was weaker than we're used to. So -- but what was done was that we had just additional focus in making sure in the invoicing and collection process, it was not more advanced than that. And if we actually zoom out over a longer period, we can see that we have a really good cash conversion rate. So we will continue to focus on working capital buildup and making sure that we have the positive conversion rate that we now can see on the rolling 12 months perspective.

Yes, understood. Maybe on M&A because obviously, you said, Johan just confirmed that you're looking for 8 to 10 companies in '25. But I guess also, not that many months ago, you basically confirmed that you're looking to double this within a couple of years' time. So if you do 8 to 10, if that's the goal for '25, how should we think about something like '26? I know it's already a few years away. But should we see that going up already in '26 or accelerate in '26? Or is it going to be sort of a big catch-up effect in '27?

No, it will be a gradual increase. So when we are looking forward, this is just -- we are talking about capital allocation, what we're going to use the cash flow for and what cash flow we have available and, of course, which leverage are we at. So those are the parameters you are looking at. But the increase, I would say, is about 20% to 30% in terms of cash available to invest additionally in the year of 2026 versus 2025. And if that turns in whereby a company with SEK 4 million revenue or SEK 10 million revenue, the sweet spot companies that we are referring to, that's a SEK 10 million or SEK 8 million to SEK 10 million revenue company with a 10% margin. And then you turn that into how many companies can you acquire and at what multiple. And typically, we are between 5 and 6, as we have communicated. That equates roughly to 8 companies, if we are being specific from that perspective. And then you're going to look upon 10 to 12 companies in 2026, everything else equal, yes. And then gradually, you're going to increase that with the same amount moving into 2027.

Very clear. Maybe just while we are on the topic of M&A, and obviously, you've long awaited, but then you finished the Viva Gartenbau acquisition in Switzerland. Sort of how confident are you that you can also continue expanding your presence? I mean, not only in Germany, but also in the other German-speaking countries like Switzerland and Austria? And how should we think about that in '25? And I guess, overall, your view of the pipeline as well, please?

From our perspective, we are -- we have established the headquarters in Munich. And that is kind of our bridgehead into both Switzerland; Austria; to some extent, Poland, actually; and Germany, of course. And then you have kind of the neighboring countries, that is, I would say, the Netherlands. That is a part of -- that's within scope, I would say, for the coming 2 years. And then exactly when it's going to happen, that's basically up to the companies we have. But it's actually -- Netherlands is closer to North Rhine-Westphalia than North Rhine-Westphalia is to Munich, to begin with. So to us, it's a big step between Netherlands, Germany, Switzerland, Austria. So we are active in all those areas at this point in time. And if we are investing in easily, let's say, for the 3 years, we're probably going to do 40 to 50 investments or something, then eventually, you're going to cover that marketplace in a good way. So that's kind of from an organic growth. I don't see it -- like moving into Germany was kind of moving into Mainland Europe, and that was a big step. Moving into a neighboring country like Netherlands or Austria or Poland or whatever, that is not. That's more of an organic M&A growth from my perspective, that will be carried out from our Munich hub.

Yes. No, that makes sense. Maybe just a final one for me on, obviously, the rest of Europe. Continues to do very well, both from a top line and also from a profitability perspective. I think you also mentioned yourself again that's the goal, and Lithuania is still doing a great job. Any sort of signs of any tapering off in that business? Or anything that you would like to highlight into '25 and anything you should think of?

We are active in the area, if we are talking about the Baltics. And also, we need to keep in mind that Estonia and Latvia are kind of cultural and, to some extent, connected to -- and they have closer ties to Finland, while where we are right now is actually closer then to Poland and that region. So there's a slight difference between. What I'm saying is that we're going to have benefit of building a cluster. That cluster needs to build where we are. So we are looking upon companies in that area. So far, we haven't made any additional investment. But, of course, that is prudent and it's in line with our strategy to make a follow-up acquisition close to Stebule where we have. So they are not being a stand-alone company in that region.

Yes. That makes sense. I think maybe -- it was my bad. I wasn't being super clear, sorry. I was more referring to the fact that, obviously, Stebule is still highly profitable and whether you have any sort of expectations of any dramatic changes of that in '25 or whether we should see that as more or less steady as she goes from here on?

I agree, they are very -- highly profitable company. It's a very well-run company. And at this point of time, I don't see any major changes in contract or the way they operate that in the short term should jeopardize that situation. Then, of course, as everybody knows, having that high profit margin, is that sustainable moving into the future? I can't say. But I don't see any major change in the -- let's say, in the 12 months to come, I don't expect any changes.

The next question comes from Julia Sundvall from ABG Sundal Collier.

So I have one question, and that is, how large and when do you think the work with the Swedish company's margins will be seen?

Sorry, can you please repeat the question? Maybe we have some bad sound here.

Yes. Yes, of course. So how large and when do you think the work with the Swedish company's margins can be seen?

You should see a sign of improvement by the end -- when we close 2025, I do expect there that their margins to be improved versus '24. And yes, we had -- if my mind is correct here, we were at 6.1% the previous year and my expectation is that we should be at 6% or above 6% for the final year of 2025. Otherwise, that's clearly a disappointing development.

The next question comes from Alexander Siljeström from Pareto Securities.

Most of my questions has already been answered, but just one question to clarify on Sweden. In terms of sort of the nonrecurring part of the negative development here in the quarter, could you shed some light of the amount?

I really don't want to be so specific, but our expectations in Sweden were -- if you look upon the development in Sweden, you saw that there, we were kind of on track. If I compare 2024 development to 2023 development, we were -- basically, for the first 3 quarters, we were on track compared to the previous year. There weren't that big a deviation, either plus or minus. It was pretty much the same. And our expectations were basically that we should have landed 2024 Q4 at the same level as the previous year. That's our expectations. And that gives you the magnitude of the shortfall, so to say, in the fourth quarter, if that's what...

That's very helpful then.

That's the answer to your question. That's when I look upon where we firmly believe that, okay, this is what's going to happen. Then we were on track. I weren't too happy with the development. But nonetheless, it was kind of given where we were, yes, that's what we expected to land the year. And then we saw the shortfall of 1.1% and with -- all that landed in the fourth quarter. But still, we have to keep in mind that 5% for the full year of 2024 isn't really a disaster. I'm not happy with the performance, but 5%, given the market condition at this point in time, it's below expectations, but it's not a disaster to begin with. And we have seen a steady increase in profitability in the Swedish market, given where we're coming from. So if you elevate that view and look upon the development for the last, I would say, 4 or 5 years, I know that's a long term in your environment, but for us, we're building companies, that's kind of the horizon we have. So we have been on a steady improvement of the businesses in Sweden organically for the last 4 or 5 years. And I do expect that work to continue in the years to come. So it's not a one-off to begin with.

Yes. Got you. And you alluded to it previously, but in terms of the margin trajectory for Sweden, you just said around 6% or above 6% hopefully in 2025. And then, I guess, until 2026, 2027, somewhere around there, you should be able to meet maybe the group margin target for the Swedish business. Is that a fair assumption from our end?

Let's have a discussion by end of this year. I would prefer that one. But as I said, in theory, I totally agree with you. There's no reason why we should not see the same margin. It's only where we are coming from. And that's the long story that we had: Green, as a centralized company; then we acquired Svensk Markservice, and both of those companies were basically not making money; and then we started to incorporate those businesses and doing the decentralization and so forth. So this is a journey that has been going on for 10 years in this particular market. But there's no difference in the market saying that we shouldn't be able to have similar profit margins as we can see in other countries. So my expectations for profit margin in Sweden is that there's no different market. We provide the same type of services. You have similarities in terms of the customers you have. So if we are able to produce close to 10% in Norway, for instance, we have talked about 8% and so forth as we have as a company go from my perspective, that should be achievable in Sweden as well. It's only a matter of when do we reach that one. It's not a matter of if we can reach it. It's only the timing from my perspective. Then of course, we can't wait 100 years for that to happen. It has to happen in somewhat near-time future. But it's going to take us a couple of years to have this stability and being able to achieve that profit margin in Sweden, but I'm quite convinced that we will achieve it.

Yes. Fair enough. And then just a final one and just thinking about the mild winter that we have seen so far. And just if you could shed some light on the geographical sort of distribution of sales in terms of snow removal and how much of that is tilted towards north of Sweden and then compared to Stockholm and south of Sweden?

Yes. That is really a good question, and that is something I'm trying to figure out myself. And also, as we are -- to some extent, we are a fast-growing company. And that means that if I look upon the companies in Germany that we have added to the group, there you can see that they actually have quite weak first quarters. So the seasonality effect has actually been increased in a negative way given the companies we have added to the group. When we added companies like Hadeland and so forth in Norway, that kind of countered the effect that we had on the seasonality because their high season was in the winter. And given the new companies we have, that means that the seasonality effect are actually growing, given that their companies were out of Germany. No, the biggest snow dependency we have, that is in Norway and northern part of Sweden. So they are quite -- that's where we have to look at in how much snowfall they have had, how much snow removal. And then, of course, you will see a negative impact in Stockholm and I would say the southern part of Sweden, given that we haven't had any winter yet and now we are at the end of January. So yes, I would say, in the companies we have in Stockholm and south of Stockholm, their snow activities, I assume, I don't have the data, is quite low just looking upon their weather forecasts, and then I do follow where it's snowing, where you have ice and so forth and we haven't a strong winter so far. But the true dependency of the company, that is in Norway and northern part of Sweden. And yes, that's where you have the dependency.

Yes. And then just maybe a final one. In terms of then your ability to shift and say maybe if we have a mild February as well, is it possible to start landscaping activities, for instance, earlier? Or is the weather still too sort of cold to make that shift? If you could shed some light on that.

Not -- we're going back in time here. When we had -- we basically had a very challenging situation, I believe it was in the winter season of 2019, 2020, when we basically didn't have any winter in Sweden whatsoever. As an effect of that one, we initiated numerous activities. One was, of course, that we invested in companies who -- counterintuitive, but we did invest in companies, like Hadeland, who has a high season in regions where you are basically having weak activities, and that is the Oslo region. And so far, that strategy has proven to be a good strategy. The second we did was basically to outsource the winter part of the contracts to subcontractors, meaning that we are, to some extent, indifferent of the winter, meaning that if you have a good winter, we don't make any money, but if you have a bad winter, you don't lose any money, either, so you have predictability. So that was 1 activity that we did back in 2021, 2022. And then, of course, we have added the new companies to the group. So I think those are the 3 differences that makes it a bit uncertain what's going to happen if you have a weak winter. But our exposure to a warm winter or a bad winter, if you like, that has been, I would say, significantly reduced compared to what the company looked like 4 years ago.

Okay. That's really interesting. So what you're basically saying then is that sort of you don't have any, or way less, fixed cost on the snow removal as compared to, I guess, it was Q1 2020 when you had...

I think way less is a strong word. But that we are really trying to mitigate the risk or taking care of the risk of the warm winter. That one we have been working on in order to not have such a bad exposure to a warm winter as we had 4 or 5 years ago. So that situation has changed.

The next question comes from Karl Bokvist from ABG Sundal Collier.

My question is a bit on what we've already discussed. But regarding the market here and if I interpret you correctly, it was perhaps, particularly in Sweden, the sense that the market worsened rather than stayed weak. Maybe I'm just hanging on to specific phrasing here. But on this comment and regarding the competition, is it so that you still see this situation where other companies who are not necessarily active in your market are now increasingly entering your markets? Or is it that more direct competitors are becoming more intense and pushing on price and so on?

I'm sorry if I'm being unclear here. The competition or the situation isn't worsening. It's the same as you had in 2024. So from that perspective, it's a sideways movement; it's not getting worse. What happened during the last 2 years is that the competition have increased. So that means that there are more bidders on the contract that's out there, and the size of landscaping projects to bid on have been decreased. So they are -- and also there are, to some extent, fewer contracts to bid on. So that's the scenario. You have more players who are bidding on smaller projects and pure projects that you had in for. That's the situation that we have had for 1.5 years. That situation has not gone worse. It's the same situation today as we had in 2024. And what I'm talking about is, basically, I don't see this situation easing up in the first half year of this year because we already have those contracts in our order books. So it's not getting worse. And I'm talking about not only Sweden, this is basically Sweden, Norway and Finland that I'm referring to. Germany is another story. So it's not getting worse. However, the signals I'm receiving from the managing directors, and those are the people who have eyes and ears very close to the ground, they are the people who meet the customers, they are the one who do the calculations and the bidding process. These guys are more positive towards 2025 than they were in 2024. My comment is seeing is believing. So I want to see it in the order books before I start saying that I see that the market is easing up and that we have less competition in the marketplace or that we have increased business to -- or quotations to bid on. So it's a sideway movement. It's not getting worse. We have shown that we have a good pricing discipline in our quotation because that's the important part, that if the order books are empty and you have a high competition, then it's very easy or tempting for a local managing director to decrease the profit margins in order to win the contract. So pricing discipline is crucial in this scenario. And of course, I do expect weak players both on the competition side as well as on the customer side to -- yes, basically, we saw some in the last 2 weeks or whatever went into bankruptcy. I believe you're going to see more companies being weeded out. Not necessarily a bad thing because the bad competitors and the bad customers will be weeded out in this market environment. And in the long run, that's positive for the business. So I hope I was clear. It's not getting worse. That's not what I'm saying. And my local MDs are having a positive view. I'm just being a bit conservative here saying, yes, let's wait and see. When I see it, I will communicate it. But at this point of time, I haven't seen it, but the local MDs who are close to the market, they are more positive on 2025 than they were on 2024.

Yes. That was very clear.

It's not getting worse. And clearly, as interest rates and everything are moving in the right direction, then, of course, you will see. I do believe that the market will become better. Clearly, that's what's going to happen. And to some extent, the big players, the construction companies or [indiscernible], they will basically go for other type of works as that market is recovering. And that means that it will be easier. But I just -- I haven't seen it in reality yet. I strongly believe it will happen, but I'm just being cautious. As said, let's wait and see until we will clearly see that now the market is recovering. And that's not where we are at this point in time. I do expect it to improve by the end of 2025.

Understood. And just one follow-up is are we still mainly talking about the project side of a business? Or do you also see similar challenges in what we would call kind of ongoing business and service, et cetera?

What we've seen is basically that you have the long-term contracts, and those are anything from 4 to 6 years. And those contracts were won previously, but before we had interest rate going up and so forth. So there, you see that they are kind of stable. But you always have additional work being done within the framework. So the customers have a budget and let's say that 70% of the budget is kind of fixed. And then you have 30% that is, what you say, a variable part of that particular contract. And to some extent, we have seen situations where on the buy side, they have been, for some reason, careful with the money and then a couple of months afterwards, they have released the funds again. So there are some volatility in the fixed agreements, but to a very limited extent compared to the project-based business.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay. So I do appreciate all the questions we got and that you listen in too. I think this is the longest conference we have ever had. This is 57 minutes. So nonetheless, thank you for listening in, and have a good day.

Thank you.