During 2024, our value creating Toolbox and ability to share knowledge and resources to reinforce performance was invaluable.
The weak sentiment in the new build market continued during the year, especially in Sweden, while the refurbishment market remained resilient. In this environment, our consolidated EBIT margin was temporarily hurt, but we managed to improve cash flow from operations, which is crucial for our continued growth.
I am impressed by our companies. Many reported increasing net revenues, combined with an EBITA margin on or above the same period last year, despite the headwind. However, a smaller group of companies in Norway and Sweden underperformed, which largely explains the weak profitability.
In the year, we continued to focus on leveraging on our united network. We conducted negotiations with our suppliers and achieved savings on material from improved procurement agreements of over NOK 25 million. Furthermore, we leveraged on our network and toolkit, including HG Academy (10% of our employees attended a program in 2024), best practices, procurement agreements, organizational development, joint tendering and knowledge base. All while maintaining each company’s local identity and culture.
23
new companies joined HG in 2024.
Mixed development in our three segments
We developed well in three out of our four markets. Total net revenues increased in Germany, while both total and organic net revenue increased in Norway and Denmark. The EBITA-margin improved in Denmark.
In Sweden, where the market is at its lowest since the 1990s, operating revenue increased slightly, while EBITA development was negative. However, I am still impressed by the performance of most of our companies, although there is plenty of room for improvement. We now put extra focus on improving performance in a handful low performing companies and reduced the workforce in Sweden by more than 100 employees during 2024 to adapt the cost structure to the current market conditions.
I see great room for improvement, not the least by leveraging on our Toolbox and shared initiatives. We have successfully done so in Norway and last year in Denmark, which resulted in improved financial performance in 2024. Going forward, we will persist our attention to performance and we will act quickly to close gaps when these arise.
Continued high self-financed M&A activity
80% of our companies are sourced from referrals from the existing HG network and our ambition is to include only companies that are among the 20% strongest in their markets in the HG family. In 2024, we welcomed 23 companies, whereof three in Norway, three in Sweden, 14 in Denmark and three in Germany. This means that we are now more than 150 businesses, whereof 49 in Sweden, 70 in Norway, 27 in Denmark and five in Germany. The resounding approval rate of joining companies recommending HG to others (~80 percent) attests to the strength of our cultural bonds.
As mentioned, our high M&A activity is supported by our solid operating cash flow and strong operating cash conversion of 118 percent in 2024. The strong cash flow lays the foundation for continued M&A growth, with focus on Germany and Denmark.
We have an attractive model and culture for the medium to high-margin niche companies we focus on across all countries. They all experience increasing demand from customers in terms of quality of services, ESG, digitalisation, control and documentation. As a standalone firm this creates challenges. To be part of a group of companies that values heritage while offering shared benefits and knowledge, education and standards, creates possibilities.
8%
of our current workforce is apprentices.
ESG, education and knowledge sharing at the core
In 2024, we continued to develop the ESG agendas of both the Group and our local companies. This included continued focus to ISO certify relevant companies, mapping scope 1 and 2 emissions, and driving lasting change across the industry through code of conduct training for our craftspeople. Furthermore, 8% of our current workforce is apprentices, which is an integral part of our ESG strategy and a key enabler for future growth. In addition, our ongoing efforts to minimize our carbon footprint have been significant, with 100 percent of relevant local companies having achieved ISO 14001 certification by the end of 2024.
In essence, we create a positive impact on people, society and environment by minimizing our companies’ environmental footprint, ISO certifying our businesses and promoting sustainable practices.
Close “co-operational freedom” the recipe for success
Anyone who follows us will find statement such as that “HG’s culture celebrates craftmanship, collaboration and recognizes our people as the cornerstone of our success”. That “we empower local decision-making and cherish the local heritage and relationships that define us". This is not just words but truly define who we are.
The management teams and employees in our family of companies uphold these high standards. As a result, we can fully trust each other’s independent decision-making. Each company is an established local-market leader with a proven track record, retaining strong local brands, employees, and customer relationships. HG’s role is to support them, leverage their key competences, and provide best practice, professional support, and national coordination. It’s as simple as that – though it requires a focused approach. To ensure this, we regularly bring our people together through regional workshops, the Annual General Managers’ Meeting, and quarterly shareholder meetings.
In essence, we create a positive impact on people, society and environment by minimizing our companies’ environmental footprint, ISO certifying our businesses and promoting sustainable practices.
Ready for the next steps
HG is now the largest and fastest growing surfacing contractor in Europe. We have during 2024 built the capabilities and processes that are required for listed companies. This means that we are IPO ready, but even more importantly that we have built a sustainable organisation to support our growth. As a well-established player, we are now moving into the new year with the continued ambition to outperform the market and improve margins for the Group and our segment through the application of our Toolkit, while also targeting a cost reduction - both in absolute numbers and as a share of net revenue.
Furthermore, many of the companies are new to HG and have not yet fully benefited from the opportunities that lies within the HG network. We see this as key to our success, are ready to take advantage of improved market conditions when they occur and continue our path to become the Northern European market leader in surface treatment.
CEO Comment
During 2024, our value creating Toolbox and ability to share knowledge and resources to reinforce performance was invaluable.
The weak sentiment in the new build market continued during the year, especially in Sweden, while the refurbishment market remained resilient. In this environment, our consolidated EBIT margin was temporarily hurt, but we managed to improve cash flow from operations, which is crucial for our continued growth.
I am impressed by our companies. Many reported increasing net revenues, combined with an EBITA margin on or above the same period last year, despite the headwind. However, a smaller group of companies in Norway and Sweden underperformed, which largely explains the weak profitability.
In the year, we continued to focus on leveraging on our united network. We conducted negotiations with our suppliers and achieved savings on material from improved procurement agreements of over NOK 25 million. Furthermore, we leveraged on our network and toolkit, including HG Academy (10% of our employees attended a program in 2024), best practices, procurement agreements, organizational development, joint tendering and knowledge base. All while maintaining each company’s local identity and culture.
new companies joined HG in 2024.
Mixed development in our three segments
We developed well in three out of our four markets. Total net revenues increased in Germany, while both total and organic net revenue increased in Norway and Denmark. The EBITA-margin improved in Denmark.
In Sweden, where the market is at its lowest since the 1990s, operating revenue increased slightly, while EBITA development was negative. However, I am still impressed by the performance of most of our companies, although there is plenty of room for improvement. We now put extra focus on improving performance in a handful low performing companies and reduced the workforce in Sweden by more than 100 employees during 2024 to adapt the cost structure to the current market conditions.
I see great room for improvement, not the least by leveraging on our Toolbox and shared initiatives. We have successfully done so in Norway and last year in Denmark, which resulted in improved financial performance in 2024. Going forward, we will persist our attention to performance and we will act quickly to close gaps when these arise.
Continued high self-financed M&A activity
80% of our companies are sourced from referrals from the existing HG network and our ambition is to include only companies that are among the 20% strongest in their markets in the HG family. In 2024, we welcomed 23 companies, whereof three in Norway, three in Sweden, 14 in Denmark and three in Germany. This means that we are now more than 150 businesses, whereof 49 in Sweden, 70 in Norway, 27 in Denmark and five in Germany. The resounding approval rate of joining companies recommending HG to others (~80 percent) attests to the strength of our cultural bonds.
As mentioned, our high M&A activity is supported by our solid operating cash flow and strong operating cash conversion of 118 percent in 2024. The strong cash flow lays the foundation for continued M&A growth, with focus on Germany and Denmark.
We have an attractive model and culture for the medium to high-margin niche companies we focus on across all countries. They all experience increasing demand from customers in terms of quality of services, ESG, digitalisation, control and documentation. As a standalone firm this creates challenges. To be part of a group of companies that values heritage while offering shared benefits and knowledge, education and standards, creates possibilities.
of our current workforce is apprentices.
ESG, education and knowledge sharing at the core
In 2024, we continued to develop the ESG agendas of both the Group and our local companies. This included continued focus to ISO certify relevant companies, mapping scope 1 and 2 emissions, and driving lasting change across the industry through code of conduct training for our craftspeople. Furthermore, 8% of our current workforce is apprentices, which is an integral part of our ESG strategy and a key enabler for future growth. In addition, our ongoing efforts to minimize our carbon footprint have been significant, with 100 percent of relevant local companies having achieved ISO 14001 certification by the end of 2024.
In essence, we create a positive impact on people, society and environment by minimizing our companies’ environmental footprint, ISO certifying our businesses and promoting sustainable practices.
Close “co-operational freedom” the recipe for success
Anyone who follows us will find statement such as that “HG’s culture celebrates craftmanship, collaboration and recognizes our people as the cornerstone of our success”. That “we empower local decision-making and cherish the local heritage and relationships that define us". This is not just words but truly define who we are.
The management teams and employees in our family of companies uphold these high standards. As a result, we can fully trust each other’s independent decision-making. Each company is an established local-market leader with a proven track record, retaining strong local brands, employees, and customer relationships. HG’s role is to support them, leverage their key competences, and provide best practice, professional support, and national coordination. It’s as simple as that – though it requires a focused approach. To ensure this, we regularly bring our people together through regional workshops, the Annual General Managers’ Meeting, and quarterly shareholder meetings.
Ready for the next steps
HG is now the largest and fastest growing surfacing contractor in Europe. We have during 2024 built the capabilities and processes that are required for listed companies. This means that we are IPO ready, but even more importantly that we have built a sustainable organisation to support our growth. As a well-established player, we are now moving into the new year with the continued ambition to outperform the market and improve margins for the Group and our segment through the application of our Toolkit, while also targeting a cost reduction - both in absolute numbers and as a share of net revenue.
Furthermore, many of the companies are new to HG and have not yet fully benefited from the opportunities that lies within the HG network. We see this as key to our success, are ready to take advantage of improved market conditions when they occur and continue our path to become the Northern European market leader in surface treatment.
Øyvind Emblem
CEO