Caverion Corporation's Interim Report for 1 January - 31 March 2023

Caverion Corporation Interim Report 27 April 2023 at 8.00 a.m. EEST

Strong organic growth and performance improvement continued

HELSINKI, April 27, 2023 /PRNewswire/ -- 

1 January – 31 March 2023

• Order backlog: EUR 2,034.3 (1,951.6) million, up by 4.2 (20.0) percent. Services backlog increased by 2.2 (20.5) percent. Projects backlog increased by 6.9 (19.2) percent.

• Revenue: EUR 614.8 (528.1) million, up by 16.4 (2.5) percent. Organic growth was 13.5 (2.4) percent. Services business revenue increased by 15.3 (4.3) percent. Projects business revenue increased by 18.5 (-1.0) percent.

• Adjusted EBITA: EUR 24.5 (17.4) million, or 4.0 (3.3) percent of revenue, up by 40.5 percent.

• EBITA: EUR 22.4 (15.0) million, or 3.6 (2.8) percent of revenue, up by 49.5 percent.

• Operating profit: EUR 18.3 (11.4) million, or 3.0 (2.2) percent of revenue, up by 60.8 percent.

• Operating cash flow before financial and tax items: EUR 52.1 (39.1) million, up by 33.5 percent.

• Cash conversion (LTM): 103.6 (89.6) percent.

• Earnings per share, undiluted: EUR 0.09 (0.04) per share.

• Net debt/Adjusted EBITDA: 1.2x (0.9x).

• Acquisitions: Caverion closed the acquisition of TM Voima group's substation and power transmission line business in Finland and in Estonia in February 2023, with a total revenue of EUR 47.7 million in 2022.

Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.

Guidance for 2023: In 2023, Caverion Group's revenue (2022: EUR 2,352.1 million) and adjusted EBITA (2022: EUR 105.8 million) will grow compared to 2022

KEY FIGURES

Jacob Götzsche, President and CEO:

"I am pleased that we continued improving our underlying business and increased our revenue and earnings during the first quarter of 2023. I am satisfied that we had a strong order intake and organic growth. Recent acquisitions and business mix development supported our revenue growth and earnings levels for the quarter. In addition, our consistent efforts in improving project risk management have gradually resulted in a healthier and more profitable project portfolio. This demonstrates our capability to deliver sustainable, profitable growth in line with our strategy.

The positive momentum of the previous year continued also in the first quarter of 2023. Our first quarter revenue increased by 16.4 percent to EUR 614.8 (528.1) million and organic growth was 13.5 percent. The organic growth was partially driven by the increased costs of materials and external services, that we were able to successfully factor in our sales prices. In the previous year, our first quarter performance was still modest compared to the rest of the year 2022 due to high sickness levels and the corona pandemic. Acquisitions and divestments increased the first quarter revenue by 6.5 percent compared to the previous year.

Our adjusted EBITA improved by 40.5 percent to EUR 24.5 (17.4) million, or 4.0 (3.3) percent of revenue during the first quarter of 2023. Even if the corona pandemic in large scale seems to be behind us, we are still experiencing a much higher sickness rate than before the pandemic, which continues to have a negative impact on our activity level and thereby our profitability. Overall, our business has however proved to be relatively resilient to the high inflation. I am also pleased that our continuous focus on cash flow improved our operating cash flow before financial and tax items to EUR 52.1 (39.1) million in the first quarter.

Our order backlog amounted to EUR 2,034.3 (1,951.6) million at the end of March, 4.2 percent higher compared to the previous year. We expect our solid order backlog to support revenue growth also going forward. The high inflation still continues to have some impact on the building technology market, although we have already seen the material price inflation slowing down. On the other hand, we expect wage inflation to gradually increase during the year. In 2023, we expect the underlying demand to be overall positive in Services. In Projects, we expect the underlying business activity to remain stable in 2023, however, the economic uncertainty driven by the increasing inflation and interest rates as well as the war in Ukraine is impacting the demand environment for new construction negatively.

As part of the implementation of our Sustainable Growth strategy, we closed one acquisition in the first quarter of 2023 with a total revenue of EUR 47.7 million in 2022 and whereby we welcomed about 70 new colleagues from TM Voima group's substation and power transmission line business in Finland and in Estonia. We continue to screen high quality companies that complement our existing capabilities or geographical footprint.

Once again I would like to thank our customers, partners, shareholders and our 14,600 employees for their great contribution and cooperation. Despite the continuing volatility and uncertainty, I am proud that we together delivered great achievements and financial results for the first quarter 2023. Updated status on the recent tender offers has been presented under "Events after the reporting period" in this report. The announced tender offers provide clear evidence that our goal to achieve Sustainable Growth by serving our customers along the entire lifecycle of the built environment and assisting in green transition to smart buildings is an attractive strategy."

Market outlook for 2023

Caverion expects the underlying demand to be overall positive in Services during 2023.

In Projects, the economic uncertainty driven by the increasing inflation and interest rates as well as the war in Ukraine is impacting the demand environment for new construction negatively. With its balanced Projects business portfolio, Caverion still expects the underlying business activity to remain stable in 2023.

The digitalisation and sustainability megatrends are in many ways favourable to Caverion and they are believed to increase demand for Caverion's offerings going forward. The increased energy efficiency requirements, and the increasing digitalisation, automation and technology requirements in the built environment remain strong, together with the urbanisation megatrend. Increasing awareness of sustainability is supported by both EU-driven regulations and national legislation setting higher targets and actions for energy efficiency and carbon-neutrality. The continued focus on energy efficiency and CO2 reduction activities and projects continues to support activity and business volume in Caverion's operating environment.

Financial and sustainability targets

Caverion updated its financial targets in connection with publishing its updated strategy on 9 May 2022. Sustainability targets remained unchanged.

*Calculated as Dividend per earnings (%). The Annual General Meeting approved the proposal of the Board of Directors according to which a dividend of EUR 0.20 per share was paid from the distributable funds of the company for the financial year 2022. The dividend was paid on 5 April 2023.

* Sustainability eLearning available since Q4/2022. During the year two other ESG related eLearnings conducted with performance rates of 97% (InfoSec eLEarning) and 97% (Code of Conduct eLEarning).

** Sustainability eLearning not yet available. Two other ESG related eLearnings conducted with performance rates of 86% (Safety eLearning) and 92% (Code of Conduct eLearning).

NEWS CONFERENCE, WEBCAST AND CONFERENCE CALL

Caverion will hold a news conference on its Q1 Interim Report on Thursday, 27 April 2023, at 10.00 a.m. Finnish time (EEST) at Hotel Kämp, Room Symposion, Helsinki, Finland. The news conference can be viewed live on Caverion's website at www.caverion.com/investors. It is also possible to participate in the event through a conference call by registering beforehand on the following link: https://palvelu.flik.fi/teleconference/?id=1009621. Phone numbers and the conference ID to access the conference will be provided after the registration. To ask a question, press *5 on your telephone keypad to enter the queue. More practical information on the news conference can be found on Caverion's website, www.caverion.com/investors.

Financial information to be published in 2023

Half-yearly/Interim Reports for 2023 will be published on 3 August and 3 November 2023.

Financial reports and other investor information are available on Caverion's website www.caverion.com/investors. The materials may also be ordered by sending an e-mail to IR@caverion.com.

CAVERION CORPORATION

Distribution: Nasdaq Helsinki, principal media, www.caverion.com

For further information, please contact:

Mikko Kettunen, CFO, Caverion Corporation, tel. +358 50 347 7462, mikko.kettunen@caverion.com 
Milena Hæggström, Head of Investor Relations, Caverion Corporation, tel. +358 40 5581 328, milena.haeggstrom@caverion.com

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