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Good morning, and welcome to today's webcast presentation where we have Volati presenting. With us, we have the CEO, Andreas Stenbäck; and CFO, Martin Aronsson. [Operator Instructions] And with that said, please go ahead with your presentation, Andreas and Martin.
Thank you. Good to see so many of you listening in today. Let's begin today's presentation. Firstly, just a short reminder, Volati, we are a fast-growing and acquisitive group, consisting of a well-managed platform -- 6 well-managed platform that over time have proven to show strong growth, earnings and cash flows.
We consider Sweden, Norway and Finland as our home market, but we're also active in large parts of Europe. Two of our platforms: Salix Group and Ettiketto Group are also our natural business areas, and the remaining 4 platforms are within our business area industry. And we will, for example, get into S:t Eriks and Communication a bit more in the detail later today.
So let's talk about this recent quarter in a bit more detail. Before doing that, firstly, I would like to point out that Volati is best evaluated over time. I made that point about a year ago when we had just recently showed a 55% EBITDA growth in our record quarter last year. And I'm reminding you about the same thing today when we saw a sharp decline compared to last year.
I also understand that our quarters are hard to predict. This year, we expected to come in lower than last year and that was for a couple of reasons. Firstly, our 5G rollout pace was at its peak last year, which led to that we had a very good result, well above our own expectations in platform communication. What has happened since then and also more specifically since last summer is that we've seen a sharp decline in the rollout pace, which is also now affecting us in Q1.
Secondly, the construction market has been even weaker than a year ago, affecting our platforms in S:t Eriks and Salix. The consumer-related part of the construction market hit us and the end market about 1.5 year ago. But what happened 1 year ago about the same time as this call, about a year ago was that it also hit the professional part. And so now we see both the construction and the professional-related part being a bit weaker.
And lastly, we have calendar effects, and that is from the Easter being in Q1 this year. However, even though we expect it to come in behind last year's, we also came in slightly behind our own expectations. And what's the reason for that one? That's mainly attributed to an even slower construction market that we saw and that then affected our 2 platforms: Salix and S:t Eriks.
Last year, the market in 2023, the market was down a bit more than 15% compared to the last year before, the general construction market that we serving and we see a similar development in the beginning of this year. Having said all this, I'm a bit more positive about the quarter to come. We have a number of reasons for that. We do not expect any dramatic shift in the market short term, but we still see that we are over the year going to meet easier comparables.
We also see that we will continue to see effects from our cost saving measures, which will help us then to mitigate tough market. And lastly, we will have support from the acquisitions that we have already done, which will drive some of the growth going forward.
Under these tough market conditions, it's very important -- and I'm especially thinking about my colleagues in Salix, S:t Eriks and Communication, it's very important to keep the energy up to continue every day, making the right decision with the long term in mind. We're getting closer to a shift in the market. And at one point in time, we will go from having a fierce market-related headwind in the phase every day we go to work to meet somewhat of a breeze. And then suddenly, we will have the wind in our backs.
And when that day comes, and that's on our next slide, we will be in a very good position. I believe that we have successfully balanced the short-term profits to drive that, but still keeping the long-term value creation in mind. We have really focused on the structural measures, and these measures we will have with us once the market returns.
I said this already last quarter that currently, we're not operating where I think we should be in a normal market. And I say normal market, but peak market. We will see the effects from this once we have the construction market coming with us again. So once we have that market starting growing in and that will lead to accelerated organic growth for us.
We are also very well positioned to continue being active doing acquisitions. We finalized 2 acquisitions in the first quarter. One of them was signed in 2003 -- 2023 in Q4. And these 2 are adding about SEK 500 million of yearly revenue. I also see a positive outlook for maintained good acquisition pace, but we will never prioritize growth to the expansion of poor returns.
We're currently at 2.6 net debt to EBITDA. So that's in the middle of our financial goal. But we're also confident to be there to drive further acquisitions and we will get back to that a bit later on.
So with all that, let's get into our numbers. And on this next slide, you can see -- let's see -- on this next slide, you can see that our sales in Q1 were down 8% and EBITA came in at SEK 90 million compared to SEK 159 million last year. And the main reasons for that I already touched upon. It's market related, it's not structural and it's mainly attributable to Salix, S:t Eriks and Communication.
We are also more volume sensitive in a small quarter like Q1, where the lower sales have a larger impact on our margins. The cash flow in the quarter, I'm okay with. It's lower than last year, but then we had a situation with high net working capital release in our platforms. So looking at the last 12 months, our cash conversion is at 96%. So that's a level which I'm happy with.
The net debt to EBITDA, as stated earlier, it's in the middle of our financial goal. We are comfortable being there. Q1 is usually a negative cash flow quarter. And this year, we also finalized 2 acquisitions and we have the strong cash flow quarters ahead of us.
Looking at this next slide, I will just briefly comment on it, but I said earlier that it's hard to predict individual course of Volati. And I think that this is a good way of illustrating that. I can see 2 things on this slide. Firstly, predicting 2023 Q1 was really hard because it's a positive outlier looking at the history. But it also provides them a perspective why we were expecting lower results in Q1 this year.
So what I -- and we will have those negative and positive outliers also going forward. And when we have that, it's very important to return to the long-term perspective. Now talking about then the long-term perspective, the last 5 years, if we look at full year rolling 12 months figures, we have shown a CAGR, so an average growth rate on EBITDA of 20%.
So despite the recent just lower growth rates, on average, we're still above our financial goal. Having said that, once the market return, we will compensate for the last year's lower growth rates in relation to our financial goals, which Martin will now tell you a bit more about.
Yes. Thank you, Andreas. So let's look at our performance in relation to our 3 financial targets. And let's start with our growth in the EBITA per ordinary share. And as Andreas mentioned, we have, right now, EBITA headwind in a few of our platforms affecting the growth negatively. And we are now at the EBITA growth per ordinary share of roughly 13%, and that should be compared to our target of 15%.
It is worth noting though that our target is measured over business cycles. And if you take a longer-term perspective, our 5-year average EBITA growth per ordinary share is 23%. And over time, that means that we are comfortable with our long-term financial EBITA growth target.
And our second financial target is our return on adjusted equity, which came in at 18% versus our financial target of roughly 20%. So that is below and that is driven by a lower EBITDA growth during this quarter. Taking a longer-term perspective, however, during the past 5 years, we have delivered an average return on adjusted equity of roughly 29%.
Our last financial target is our capital structure, which is our net debt-to-EBITDA ratio, which came in at 2.6x in the end of the quarter, which is in the middle range of our financial target of a ratio between 2 and 3x net debt-to-EBITDA. And that means that we still have a financial capacity left to act on when we find the right acquisition opportunity.
So let's look at our 3 business areas. And let's start with our business area, Salix Group. Salix Group saw sales decline with 5% in the quarter and EBITA declined with roughly SEK 9 million in the quarter. And the demand continues to be hampered for Salix Group, driven by the headwind in the construction industry. But despite this, the sales decline, the EBITA margin only decreased with 1 percentage points. And why do I say only? Well, it's because the first quarter structurally is the smallest quarter with the lowest margin, and that also makes us more sensitive to volume reductions.
That means that the margins actually held up quite well, and that is due to successfully working with cost savings initiatives in the business area. and that is increasingly also yielding effects as we go along. And they are also successfully worked with realizing synergies and working with coordination initiatives within the group. And all in all, we believe that, that really makes Salix Group to be in a good shape when the demand recovers.
Moving over to our next business area, Ettiketto Group, who concludes a solid quarter in quarter 1. They had a slight sales decline, but the order intake in the quarter is very healthy, especially in the Swedish part of the business, which is the largest part of the Ettiketto Group. And to meet this increased demand, the Swedish part of the business is ramping up capacity through adding shifts to the machines that they have.
However, as we mentioned already in the last quarter, we still have lower volumes in Norway. EBITA in the quarter increased with the SEK 3 million and the margins increased with 2 percentage points. And that means that now and full year margins is at 18.8%. And that means that we're now getting close to the historical margins of roughly 20%. And that is possible through Ettiketto Group working very systematically with extracting synergies from the acquisitions that they have completed, but also working with operational improvements throughout the business.
Historically, Ettiketto Group has grown substantially through acquisitions and they are actively looking for new acquisition targets. And that is both in the Nordics, but also in the -- across Europe.
So moving to our last business area, which is business Industry. They concluded a tough quarter with a sales decline of roughly 12% and EBITA going from SEK 81 million to SEK 24 million in the quarter. As Andreas mentioned, the industry consists of 4 platforms. And for the platform S:t Eriks, the construction market continues to be challenging and that is affecting the construction-related part of S:t Eriks negatively.
Also, the Easter, as Andreas mentioned, and also the cold weather had a negative impact on sales for S:t Eriks. For the platform, Communications, we continue to see a market headwind for that platform, and that is predominantly due to the slowdown in the 5G rollout that we already saw in -- during last half year. They are also meeting strong competitors from quarter 1 2023.
During the past 9 to 12 months, we have really taken actions to adapt to the current market situation, both in S:t Eriks and Communication. Then on a more positive note, the year has acted very well for our platform, Corroventa, and that is driven by the aftermath of the late storms in 2023, which is resulting in a good demand for Corroventa's products for water damage remediation.
Our last platform, Tornum Group is also performing well, and they are increasing the full year margins compared to 1 year back. And they are also seeing a positive contribution from the newly acquired company, Simeza. However, if you summarize, overall, this company is a tough quarter for industry, where 2 out of our 4 platforms are performing well below what we expect in a normalized market. But as also mentioned, we have taken the necessary actions in Communications and S:t Eriks and we are really confident that we are well positioned when the market return. So with that, I leave the word to you, Andreas.
Thank you, Martin. Then we will spend a few minutes on acquisitions. So first, looking at this slide, we've completed 2 acquisitions during Q1, 1 of which was signed already last year. I think also this slide shows in a good way that our model -- the sound plus model with add-on acquisitions for platforms really works. We've done now 24 acquisitions in 5 out of 6 platforms since 2020.
Looking at the M&A pace then, it has picked up again from a slower fall 2022 and spring 2023. We're not now up at levels where we see we should be in the long term. I want to remind you about that M&A work is very binary. Either you close a transaction or you don't. And right now, the outlook is positive. So I feel confident where we are right now, but the deal is not done until it's closed.
Discipline is of extreme importance. I do not want the organization to get stressed out about the short-term acquisition pace. We're in it for the long term. It's really the return that's important for us from the acquisitions that we do. Having said all that, I'm happy with the pipeline that we have in our platform. I think the activities is on the level where I want it to be. And as I said earlier, I think we are also in a good position to keep up the acquisition pace once the -- when the right opportunities occur.
I want to spend a few minutes also on our most recent acquisition, Beslag & Design, a very nice family-owned business based out of Bålsta in Sweden that we've had eyes on for many years. This is an add-on acquisitions to Salix Group and more specifically our home and fittings business, where we also already have companies and operations like Habo and Pisla operating in the same segment.
This acquisition complements our existing business has done very well, and we will have synergies, for example, within the areas of e-commerce, supply chain and purchasing. I'm also very happy to see that Salix is able to show consistency in their M&A work. It's our largest platform, and it has now done 9 acquisitions since 2020, also under the more recent tougher market conditions.
And in order to make acquisitions, one have to have their finances in place. And we've touched upon most of this, but what I really want to highlight when it comes to our financial position is that the cash conversion is where we want it to be. The largest effects in this small quarter is the cash flow that we directed towards the 2 acquisitions that we've done.
Short term, this year, we have the stronger cash flow quarters ahead of us. And once the market comes back, we will see a positive effect from the EBITDA expansion that we anticipate.
So to summarize before opening up for questions. So I think we're best evaluated over time. Individual quarters are hard to predict. Last year, we had a record quarter. This year, we are below our own expectations and that's market related. We have a more positive outlook for the coming quarters. We see that we're meeting somewhat easier comparables. We have cost measures showing effect, and we will get also help from the recently done acquisitions.
And we're also very eager for when the market comes back because we know that then we will be in a very good position to also compensate for some of the lower growth that we've had in recent years. We're well positioned for continued acquisitions. I think the activity level is good and we are comfortable with where our net debt to EBITDA are at the moment, so that will not compromise our acquisition pace. So with that, I leave the word for questions.
[Operator Instructions] And we'll start by the person calling in from 2616. Please go ahead, you have the word.
Can you hear me?
Yes, we can hear you well.
Perfect. Albin here from Nordea. For Communication faced the last tough quarter this Q1. Can you comment on the development now and going forward, is it rather stable? Or do you see a further decline as a result of the challenging market?
What I can say that is that we really saw a fairly rapid slowdown last summer, which fit our Q3 and Q4 and also now our Q1 numbers. I think the overall 5G rollout pace haven't dramatically changed over these 3 quarters. So it's not that we have a constantly declining market or that the slowdown is rapidly going in either direction. And with regards to forward-looking, that's what we expect also in the coming months. We do not expect any dramatic shifts either way.
Okay. But the last second quarter was not as bad as Q3 and Q4 or Q3?
Was in line with Q3 and Q4. So it's been slow over the last 9 months.
Okay. And for Corroventa, had a great start to this year. Do you see Corroventa continuing to develop well in Q2 as well?
It's -- the dynamics of Corroventa is how much you rain you get or flooding you get in the large markets that we address and that's impossible to forecast that. We know that long term, I think, unfortunately, with the weather shifts that's in favor of a business like Corroventa, but whether that will happen this Q2 or Q3, that's impossible for us to have a view on.
All right. And Ettiketto has a good market share in Sweden and Norway. Regarding M&A, do you see further opportunities in these countries? Or which countries are most likely for Ettiketto going forward?
It's a very good question, Albin. So when it comes to acquisitions, I think we've proven now in the last couple of years that we're not only focusing on our home markets, but also addressing other markets. So we've been doing acquisitions in Spain. We've been doing it in U.K. We've been very active in Norway and Finland, and that's the reason why we now consider them our home markets. So the answer to where we are looking at acquisitions, that depends on the platform. So we could take, for example, Ettiketto Group, as an example, where we feel that we have a strong position in Sweden and Norway. But we also want to expand that group outside of the Nordics.
So then we're looking into many other countries like Germany, Poland, the Baltics. We could even look at the U.K. So we're most definitely looking also outside the Nordics.
All right. And also for Ettiketto, you continue to increase the margin on the back of the last acquisitions. And you mentioned 20% as some kind of starting on normalized margin, but is that some kind of limit? Or would you say that as Ettiketto grows, that you can realize even more synergies and end up above 20% normalized margin?
I think -- so I think what we've seen so far is that we've been very successful on realizing the synergies that we saw or identified when we did the acquisitions. And -- but what we also see now it's been some years since we did the first acquisitions. We also see the potential of actually bringing even more value to those businesses that we acquired over time. That means that we're -- we have also shown that we are improving margins beyond what we kind of had in our investment case when we did the acquisitions. Whether that will take us in excess of our financial goal, that's not something that I could comment, but we most definitely still see a positive trend. That's for sure.
Okay. We'll move on with the Q&A here. And we've got a few questions coming in, and we'll start for the first one here. What were the reasons behind the 8% decrease in net sales for the quarter? And how do you plan to address this decline?
I think that's what we try to address in this call. We -- it's -- firstly, it's market-driven, not structural driven. So for that, what that means is that the main reason for our decline in sales is that the construction market is slower than it was last year. The 5G rollout is still also slower than it was Q1 last year. So that's the main reason. And when it comes to -- what we do to address that. It's really important for us to kind of find the balance between short-term profit optimization and creating the best potential for when the market comes back and our long-term value creation perspective. And I think that's the balance where we feel happy that we are having in a very good way.
And thirdly, I think what's important is that we do not lose market share. So -- and that's what I mean with sometimes you can have structural problems, but we rather feel that we had the margin gain, the market share than lose market share. So that's, of course, something that we're tracking.
Okay. And how have Salix Group and S:t Eriks being impacted by the way, construction industry? And what strategies are in place to mitigate these effects?
It's a very similar answer to the answer that I gave before. So in Salix now, for the last 1.5 years since the construction -- or the consumer-related part of this construction market started hitting us, they worked on kind of balancing these short-term cost programs. We're also creating the best potential for the long-term value creation. And that means for Salix, for example, looking at accelerating the benefits of -- and the synergies within Salix Group. So that's structural measures that they have been successfully working with. And we have similar action addressed in S:t Eriks. And S:t Eriks was hit a bit later. Last spring, we saw the real market-related effects there. But they are acting in a similar way.
And how the recent acquisitions such as Beslag Design are there and Trejon Försäljnings are there contribute to your overall strategy and growth prospects?
They are both the perfect examples of the type of add-on acquisitions that we want to do, and that's been within our strategy -- or acquisition strategy for the last now 5 years or so. So we want to add add-on acquisitions to our existing platforms in order to accelerate the strategies that we have in the past on place. And Trejon and Beslag Design are perfectly good examples of that.
Okay. That's a wrap of the Q&A section here. Thank you very much. And Andreas, do you have any concluding remarks?
Yes. Thank you. Running a bit late on time, I think. But just a short comment for me is that, yes, Q1 was a tough quarter, and it's market related, which we touched upon a number of times, I think we are or we are more positive on the quarters to come. We have easier comparables. We have cost savings and acquisitions that will help us to mitigate the market dynamics that we see. And once the market rebounds, once we get the market in our favor, we're very confident that we will see an organic growth that will compensate for the slower growth that we've seen for now 2 years or so.
Okay. Thank you very much for presenting today and answering all questions. And also, thank you to everyone who followed along for this webcast presentation with Volati. And until next time, thank you very much, and goodbye.
Thank you very much.
Thank you.
Have a good day.