Nordisk Bergteknik : Interim report Q1 2024 Report

Interim report

January - March 2024

NORDISK BERGTEKNIK

Interim report

January - March 2024

Period January - March 2024

• Net sales decreased by 18% and amounted to SEK 751.4 (911.7) million
• Organic growth amounted to -21 (21) %
• Operating profit (EBIT) amounted to SEK 22.7 (33.7) million. EBIT margin amounted to 3.0 (3.7) %
• Adjusted EBIT amounted to SEK 24.1 (50.9) million. Adjusted EBIT margin amounted to 3.2 (5.6) %
• Profit for the period amounted to SEK -14.6 (14.6) million
• Earnings per share for the period before and after dilution amounted to SEK -0.26 (0.29)
• Cash flow from operating activities amounted to SEK 51.0 (92.9) million
• Net debt/adjusted EBITDA LTM amounted to 3.5 (2.6) times

Significant events during the quarter

• Work on the West Link stage, extending from Korsvägen to Almedal in Gothenburg, began during the fourth quarter and continued into the first quarter. The total turnover for the project is estimated to be in the order of SEK 50 million.
• In Norway, several of the group's companies collaborates in the K2D project, which involves the construction of the second-to-last section of the Fornebubanen. The project is expected to continue throughout 2024, with turnover estimated to be in the order of SEK 90 million for Nordisk Bergteknik.
• In April 2024, several subsidiaries entered into agreements regarding ground preparations and infrastructure for the construction of wind farms in northern Sweden, with a total value of around SEK 140 million. The work is expected to mainly take place during 2024 and has already been partially initiated during the quarter.

Net sales and organic growth

Group development, per quarter

Net sales							Organic
(SEK million)							growth
1 200							50%
1 000							40%
							30%
800							20%
600							10%
400							0%
							-10%
200							-20%
0							-30%
Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
	2022			2023		2024

Adjusted EBIT and EBIT margin

Group development, per quarter

Adjusted EBIT	Adjusted
(SEK million)	EBIT margin

90							20%
80
70							16%
60							12%
50
40							8%
30
20							4%
10
0							0%
Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
	2022			2023			2024

2 NORDISK BERGTEKNIK AB | INTERIM REPORT JANUARY - MARCH 2024

COMMENTS FROM THE CEO

Strong development in Rock Sweden and positive effects of cost adaptions

The very low activity in housing construction and its surrounding effects continue to negatively impact on the group's financial performance, particularly our revenue. However, ongoing and initiated activities to restructure and consolidate both Rock Norway and Foundation Sweden are yielding the desired and positive result. The same applies to our efforts to adapt the cost base to the current business climate. It's also encouraging that we've seen strong growth in the Swedish rock operations during the quarter and solid underlying demand in the Norwegian operations, marked by several new project commencements and orders within each unit, both during and after the quarter's end. The revenue and margin decline in the first quarter can mainly be attributed to reduced demand in our foundation segment due to low housing construction activity and its surrounding effects. In addition, Rock Norway have been affected by tough weather conditions.

Strong development and several new projects

The positive trend we've observed in the Rock Sweden segment towards the end of last year has continued during the quarter, with the EBIT margin reaching 7.9%, a significant increase from the weak 3.9% of the fourth quarter. It's also an improvement compared to the same period last year and exceeds the financial target for the group. In addition to the underlying work in major national mining and infrastructure projects, we continue to secure projects related to the green transition, including the establishment of wind farms totaling approximately SEK 140 million.

Cost adaptions yield results

Due to, for us, bad weather conditions, many rock reinforcement projects could not be carried out as we were unable to operate due to safety risks. This negatively impacted the net sales in Rock Norway during the quarter, which was 25% lower than the same period last year.

Nevertheless, the result was in line with the comparison quarter, clear evidence that the structural changes and cost-saving measures we have implemented have paid off. We see good underlying demand for our services. This, combined with our involvement in the construction of the second-to-last section of the Fornebubanen entering an intensive phase in 2024, gives us a positive outlook for the year.

Continued negative effects of housing construction

Our operations in Foundation Sweden continue to be affected by the very low activity in housing construction and its surrounding effects on local infrastructure, resulting in a significant decline in revenue compared to last year. The first quarter, which is admittedly the weakest of the year due to seasonal effects, however, like Rock Norway, shows positive effects in terms of results from the cost adaptions we have implemented.

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Outlook

Our previous assessment that there is a significant underlying need for infrastructure investments, as well as an increasing demand for operation and maintenance services in existing transportation networks and other infrastructure, remains unchanged. Additionally, there is a clear need for several of our services as the green transition continues to be realized. However, like several major industry players, we share the assessment that it will take a few quarters before the activity level in housing construction normalizes. This continues to negatively impact us in foundation work, while we see increasing demand and project activity in our rock operations. Over time, Sweden's entry into NATO and the new requirements expected to be placed on the country's infrastructure, particularly rail and road networks, will also contribute to higher demand for our services.

GOTHENBURG, 2 MAY 2024

ANDREAS CHRISTOFFERSSON

PRESIDENT AND CEO

"The positive trend we've observed in the Rock Sweden segment towards the end of last year has continued during

the quarter, with the EBIT margin reaching 7.9%"

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Key financial figures

The Group	Jan-Mar	Jan-Mar		Jan-Dec
	LTM4
	2024	2023	2023

Net sales, SEK million

Organic growth, %1

EBITDA, SEK million1

EBITDA margin, %1

Adjusted EBITDA, SEK million1 5 Adjusted EBITDA margin, %1 5

EBIT, SEK million1

EBIT margin, %1

Adjusted EBIT, SEK million1 5

Adjusted EBIT margin, %1 5

Items affecting comparability, SEK million1 2 5

Profit/loss for the period, SEK million

Earnings per share for the period before and after dilution, SEK3

Cash flow from operating activities, SEK million

Adjusted cash flow from operating activities, SEK million1 5

Equity/asset ratio, %1

Net debt, SEK million1

Net debt/adjusted EBITDA LTM, SEK million1 5

751.4	911.7	3,366.1	3,526.4
-21%	21%	-	-4%
105.2	106.3	443.4	444.5
14.0%	11.7%	13.2%	12.6%
106.5	123.4	467.6	484.5
14.2%	13.5%	13.9%	13.7%
22.7	33.7	122.0	133.0
3.0%	3.7%	3.6%	3.8%
24.1	50.9	146.3	173.1
3.2%	5.6%	4.3%	4.9%
-1.3	-17.2	-24.2	-40.0
-14.6	14.6	9.5	38.7
-0.26	0.29	-	0.71
51.0	92.9	-	291.6
52.3	94.7	-	305.8
34.1%	35.2%	-	34.2%
1,613.5	1,388.8	-	1,558.0
3.5	2.6	-	3.2

1. For definitions, see section "Definitions of alternative performance measures" on page 27-28
2. See note 9 for further details
3. See note 10 for further details
4. LTM (last twelve months) refers to the Group's net sales and key financial figures for the past 12 months
5. In the Q3 2023 interim report, the definition of items affecting comparability was updated. In connection with this, the comparison figures for adjusted measures for Q1 and Q2 2023 were updated. Therefore, the comparison figures in this interim report differ from those in the Q1 2023 interim report. For more information regarding the differences, please refer to note 11 in the Q3 2023 interim report

Group performance during the first quarter

Net sales

The group's net sales for the first quarter amounted to SEK 751.4 (911.7) million, a decrease of 18% compared to the previous year. Organic growth amounted to -21

1. %. During the quarter, the group continued to be negatively affected by the weak development in the housing construction and its surrounding effect, resulting in negative organic growth. The seasonally sensitive operations in Rock Norway have also been negatively affected by the cold and snowy winter, particularly in the beginning of the quarter.

EBIT

Adjusted EBIT for the group amounted to SEK 24.1 (50.9) million for the quarter. The adjusted EBIT margin

amounted to 3.2 (5.6) %. The EBIT margin has continued to be negatively affected by lower volumes and a changed sales mix with a lower proportion of foundation work.

The group's EBIT amounted to SEK 22.7 (33.7) million. The EBIT margin amounted to 3.0 (3.7) % and includes items affecting comparability amounting to SEK -1.3(-17.2) million.

Net financial items

The financial net for the quarter amounted to SEK -34.3(-14.9) million. The financial net excluding results from short-term investments and currency effects amounted to SEK -26.5(-20.1) million. The group's external liabilities

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have increased compared to the comparison period, and the rising interest rate in 2023 has had a negative impact on the group's financial net with higher interest costs as a result.

Tax and profit for the period

The tax cost for the quarter amounted to SEK -3.1(-4.3) million. The effective tax rate amounted to 27 (23) % and was negatively impacted by the interest deduction limitation rules in Sweden. The result for the quarter amounted to SEK -14.6 (14.6) million, corresponding to an earnings per share of SEK -0.26 (0.29) before and after dilution.

Segment development

Nordisk Bergteknik divides its operations into the segments: Rock Sweden, Rock Norway, and Foundation Sweden. The operating segments are based on the group's operational management. Find more details on each segment on the following pages.

Vision and financial targets

Nordisk Bergteknik's vision is to be a leading player in rock handling and foundation solutions in the respective national market. In most cases, Nordisk Bergteknik acts as a strategic partner with specialist expertise in various niches. The group mainly works with a diversified portfolio of many small and medium-sized projects. Nordisk Bergteknik has a clear growth strategy with the objective to contribute to the development of a future sustainable society. To be involved at an early stage in building modern societal functions is our everyday life, our home ground, and our future.

Our financial targets are:

Growth

Achieve annual growth exceeding 15% over a business cycle, generated organically as well as through complementary acquisitions.

Operating margin

The Group is striving for the adjusted EBIT margin to exceed 7% in the medium term.

Capital structure

Nordisk Bergteknik's target is for the net debt/ adjusted EBITDA LTM not to exceed 2.5x. The ratio may temporarily be higher, for example in connection with larger acquisitions.

Dividend policy

Nordisk Bergteknik's target is to distribute up to 40% of the Group's consolidated net income over time, taking into consideration M&A and growth opportunities as well as financial position and cash conversion.

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Rock Sweden

The Rock Sweden segment offers services including drilling, rock excavation, crushing, transportation and excavation, operation and maintenance of transportation networks, and mining and prospect drilling. The companies within this segment undertake projects in areas such as infrastructure, construction contracts, wind farms, mines, and natural environments. The segment has a strong geographical presence on the West Coast and in northern Sweden. Among its customers are major mining companies, construction companies, as well as local contractors.

	Jan-Mar	Jan-Mar	LTM	Jan-Dec
	2024	2023	2023
External net sales, SEK million	405.5	419.8	1,627.1	1,641.4
Organic growth, %	-12%	19%	-	-3%
EBITDA, SEK million	76.0	64.3	250.0	238.4
EBITDA margin, %	18.2%	15.1%	15.0%	14.2%
EBIT, SEK million	33.0	28.8	87.1	82.8
EBIT margin, %	7.9%	6.7%	5.2%	4.9%

The segment's development

Net sales

External net sales for the first quarter amounted to SEK

405.5 (419.8) million. The segment's organic growth for the period amounted to -12 (19) %. During the quarter, the segment continued to be negatively affected by the decline in housing construction, which also impacts local infrastructure and creates delays in larger national infrastructure projects, resulting in negative organic growth.

EBIT

EBIT for the first quarter amounted to SEK 33.0 (28.8) million. The EBIT margin amounted to 7.9 (6.7) %. The EBIT margin has increased despite the decreased volume, which can be attributed to the project mix with a higher proportion of prospect drilling projects.

Operational focus

The operation has been characterized by maintaining as high activity as possible despite a seasonally weak quarter due to the winter months. The segment has seen an increased number of inquiries recently, and several new major assignments have been obtained, along with renegotiations of several existing contracts with positive outcomes. It is also gratifying that the mining and prospect drilling service area continues to expand, and the combined offering of rock excavation and transportation has been successful for selected customers.

Net sales and EBIT margin

(SEK million)

500							20%
450
400							15%
350
300							10%
250
200							5%
150
100							0%
50
0							-5%
Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
2022	2022	2022	2023	2023	2023	2023	2024

Net sales by service area

(LTM)

Mining and prospect drilling

Drilling and rock excavation

Transport and excavation

Rock crushing

Other

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Rock Norway

Services such as drilling, rock excavation, rock reinforcement, concrete spraying, and maintenance of concrete structures, among other things, are offered in the Rock Norway segment. The companies within the segment undertake projects in various sectors such as infrastructure, construction contracts, wind farms, mines, and natural environments. The segment has a strong geographical presence throughout Norway and carries out assignments for the state, municipalities, and contractors.

	Jan-Mar	Jan-Mar	LTM	Jan-Dec
	2024	2023	2023
External net sales, SEK million	164.1	217.8	950.7	1,004.4
Organic growth, %	-22%	7%	-	4%
EBITDA, SEK million	16.5	16.6	114.0	114.1
EBITDA margin, %	10.0%	7.5%	12.0%	11.3%
EBIT, SEK million	-3.3	-2.1	36.2	37.4
EBIT margin, %	-2.0%	-1.0%	3.8%	3.7%

The segment's development

Net sales

External net sales in the segment for the first quarter amounted to SEK 164.1 (217.8) million, a decrease of 25%, primarily attributable to the cold and snowy winter at the beginning of the quarter and fewer major projects during the period compared to the previous year. The organic growth amounted to -22 (7) %.

EBIT

EBIT for the first quarter amounted to SEK -3.3(-2.1) million. The EBIT margin amounted to -2.0(-1.0) % and was in line with the previous year. Additionally, restructuring costs amounting to SEK -1.0 million have negatively impacted on the margin for the quarter.

Operational focus

Within Rock Norway, we have been working since last autumn on both restructuring and consolidating the Norwegian operations into fewer units and adapting the operations to the current market climate. The focus has been on developing the organizations within the new larger units to achieve maximum synergy effects and strengthen the brand. The work is progressing well and according

to plan. The segment experienced lower activity during the first quarter, primarily due to unfavorable weather conditions affecting rock reinforcement operations.

Net sales and EBIT margin

(SEK million)

350							20%
300							15%
250
200							10%
150							5%
100							0%
50
0							-5%
Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
2022	2022	2022	2023	2023	2023	2023	2024

Net sales by service area

(LTM)

Rock reinforcement

Drilling and rock excavation

Concrete rehabilitation

Piling

Foundation reinforcement

Other

Mining and prospect drilling

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Foundation Sweden

The Foundation Sweden segment offers services within piling, sheet piling, ground reinforcement, grouting, soil injection, soil reinforcement and groundwater lowering. The companies within the segment undertake projects in various sectors such as infrastructure, construction contracts, marine construction, and bridges. The segment has a strong geographical presence on the West Coast and in Mälardalen. Among its customers are major construction companies as well as local contractors.

	Jan-Mar	Jan-Mar	LTM	Jan-Dec
	2024	2023	2023
External net sales, SEK million	181.8	274.1	788.3	880.6
Organic growth, %	-34%	49%	-	-28%
EBITDA, SEK million	16.3	29.2	92.1	105.1
EBITDA margin, %	8.5%	10.3%	10.9%	11.2%
EBIT, SEK million	-2.6	11.6	14.4	28.5
EBIT margin, %	-1.3%	4.1%	1.7%	3.1%

The segment's development

Net sales

The external net sales during the first quarter decreased by 34% and amounted to SEK 181.8 (274.1) million. The organic growth amounted to -34 (49) %. The current economic situation, with a sharp reduction in housing construction and project starts within the local infrastructure, has continued to negatively impact the segment during the quarter.

EBIT

EBIT for the first quarter amounted to SEK -2.6 (11.6) million. The segment has been negatively affected by the decline in housing construction and its surrounding effects on local infrastructure, resulting in a lower EBIT margin of -1.3 (4.1) %. In the quarter, the margin was also negatively affected by restructuring costs amounting to SEK -0.3 million.

Operational focus

The Foundation Sweden segment continues to be characterized by a challenging market environment, and the workforce has been reduced by over 10% compared to the same period last year to align with lower volumes. Organizational changes are underway in the segment to create higher efficiency, realize synergies, and further reduce costs. Additionally, ongoing evaluations and activities are being conducted to allocate the right resources to each project in order to achieve the best possible efficiency and results.

Net sales and EBIT margin

(SEK million)

350							20%
300							15%
250
200							10%
150							5%
100							0%
50
0							-5%
Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
2022	2022	2022	2023	2023	2023	2023	2024

Net sales by service area

(LTM)

Piling

Foundation reinforcement

Sheet piling

Soil reinforcement

Other

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Other financial information

Financial position

At the end of the period, the group's assets amounted to SEK 3,531.8 (3,590,7) million which was in line with the previous year. The group's equity amounted to SEK 1,206.0 (1,264.0) million.

The group's net debt amounted to SEK 1,613.5 (1,388.8) million and consisted of loans to credit institutions, machine loans, acquisition loans, lease liabilities for right-of-use assets, cash, and short-term investments. The group's debt ratio, measured as net debt/adjusted EBITDA, was 3.5x (2.6x). The group had a lower result than the previous year which has resulted in a higher debt ratio than the group's long-term financial goal of 2.5x.

The group's financing agreement contains two covenants; the group's debt ratio, calculated as the ratio between net debt and adjusted EBITDA rolling 12 months pro forma, and equity to asset ratio, calculated as the ratio between total equity and total assets.

Investments and cash flow

The cash flow from operating activities amounted to SEK

51.0 (92.9) million during the first quarter and the adjusted cash flow from operating activities amounted to SEK 52.3 (94.7) million (adjusted for items affecting comparability). The decrease from the previous year is due to the lower result, increased financial costs, and higher capital tie-up.

The cash flow from investment activities amounted to SEK -63.2(-101.8) million and mainly consisted of investments in tangible fixed assets. The improvement is attributed to business combinations totaling SEK -45.3 million in the previous year.

The cash flow from financing activities amounted to SEK -22.5(-8.1) million.

As of March 31, the group's cash and cash equivalents amounted to SEK 79.8 (240.4) million and utilized overdraft facilities amounted to SEK 35.4 (-) million. The group has an unused overdraft facility of SEK 167 million and an unused revolving credit facility of another SEK 145 million and thus available liquidity of total SEK 356 million.

Personnel and organization

As of the end of the quarter, the group had 1,174 (1,191) employees, as shown below:

Rock	Rock	Foundation	Parent
Sweden	Norway	Sweden	company
629 (616)	365 (376)	173 (192)	7 (7)

Other information

Shares and share capital

As of March 31, 2024, the number of shares and votes amounted to 57,237,867 with a share capital of SEK 572,379 corresponding to a quotient value of SEK 0.01.

Parent company

Nordisk Bergteknik AB's operations are covered by head office functions such as group-wide management and finance functions. Net sales consist of management fees that are invoiced to the subsidiaries.

Net sales for the quarter amounted to SEK 9.1 (8.6) million. Profit/loss before appropriations and tax amounted to SEK -19.6(-17.6) million. The financial net of the parent company amounted to SEK -15.2(-13.2) million.

The parent company's total assets amounted to SEK 2,249.0 (2,187.2) million. As of March 31, equity amounted to SEK 1,008.9 (1,049.3) million.

Significant events after the reported period

No significant events have occurred after the end of the reporting period.

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