Robust financial performance gives us a clear runway for future growth
Despite a challenging market backdrop, we continued to grow our market position and have welcomed 33 new crafts companies1 to HG, which has further driven reported revenue growth of 55 percent to NOK 5 959 million and reported EBITDA growth of 29 percent to NOK 423 million and reported EBITA growth of 16% to NOK 273 million. This performance has allowed us to continue outperforming the market on average.
Our reported EBITA margin performance dropped from 6.1 percent to 4.6 percent in 2023. The drop in margin was due to tougher local market conditions, investments in new geographies, such as Germany and Denmark and strategic M&A activities expected to benefit us in the longer term. Given the challenging market circumstances and rapid expansion, we are still pleased with our margin performance.
We remain committed to strong margin performance and expect our margins to improve again once the market backdrop recovers, but we are already addressing operational performance across our local companies to ensure that all are equipped to fulfil their full potential margin. In addition, we will continue to deploy and exploit our organic toolkit across all companies in all countries which represent a significant opportunity for margin up-lift.
We look to continue including companies to HG at the same rate as we have done previously, both in terms of revenue contributions but also in terms of operational scale. We see HG’s offering continues to attract high quality, high margin businesses, and also at an operational level we are starting to leverage the one-off investments that we have made throughout 2023, particularly in Germany and Denmark.
9%
revenue growth in Norway.
Country performance
Our reported revenues in Norway grew by 9 percent in 2023, outperforming weighted market growth of 2.1 percent3, with approximately 50 percent of our companies seeing an improved EBITDA and EBITA in 2023. Our growth prospects remain strong in the Norwegian market, thanks to an increasing share of our revenues being tied to rehabilitation and maintenance - a market which is growing at 4 percent annually4.
Our performance in Sweden was strong, despite a challenging market backdrop, thanks to the 291 new local companies which have joined us in the country. Reported revenues more than doubled in 2023 to above SEK 2 000 million thanks to these acquisitions. However, prevailing headwinds in Sweden, particularly across the new build sector, put pressure across the whole market resulting in a contraction of the market of 6.1 percent5. Meanwhile, the companies which have joined HG over the past 12 months have increased our proportion of renovation and painting revenues in Sweden. This is particularly illustrated by our acquisition of Dextry Group in June 2023, providing for a more resilient revenue performance in challenging market conditions.
The Danish companies joining the Group at the end of 2022 experienced a relatively flat revenue development throughout 2023 which was in line with the wider Danish market performance6 and follows a year of outperformance in 2022. Meanwhile, the EBITDA and EBITA margin was on the same level as for Sweden.
We started our journey in Germany in 2023 with two acquisitions that fit well with our existing Group, and which put us in a strong position with EBITDA margins above our Group average. We see Germany as a very attractive market, with a market growth in 2023 of 5.3 percent, mainly driven by the refurbishment sector.
We started our journey in Germany in 2023 with two acquisitions that fit well with our existing Group, and which put us in a strong position with EBITDA margins above our Group average.
Gjermund Söder Vegge CFO, Håndverksgruppen
Outlook
We expect markets to recover from the somewhat depressed levels of activity seen in 2023 over the course of the coming 12 to 18 months. Regardless of these conditions, we expect to continue to make acquisitions and grow revenue at the same rate as we have done during the past three years, with the aim of making acquisitions at a higher EBITA margin performance than previously.
We are excited to see our organic toolkit providing significant upside to the performance of our local companies driven by the investment and efforts we have put into it. We are excited to continue to leverage the toolkit for the benefit of the local companies. Our M&A team’s experience of making acquisitions, onboarding these companies and delivering incremental growth continues to improve and we expect to see this develop further during the year ahead. We continue to make acquisitions at a competitive transaction multiple.
Germany and Denmark will be the main focus for our acquisitions during 2024, coupled with driving increased market share across Sweden and Norway as well as increasing organic growth rates across these two markets. ESG continues to remain a core focus for our company, and we are committed to deliver on our strategy of taking responsibility for our employees, our customers, our suppliers and our society.
With a deep pool of identified opportunities in our target markets, improving economic conditions, our increasingly efficient acquisitions toolkit and our continued focus on our toolbox; we look forward to another year of exciting progress in 2024
Gjermund Söder Vegge CFO, Håndverksgruppen
1 Includes operating companies only 3/4/5/6 Prognosenteret, Management analysis
CFO STATEMENT
Robust financial performance gives us a clear runway for future growth
Despite a challenging market backdrop, we continued to grow our market position and have welcomed 33 new crafts companies1 to HG, which has further driven reported revenue growth of 55 percent to NOK 5 959 million and reported EBITDA growth of 29 percent to NOK 423 million and reported EBITA growth of 16% to NOK 273 million. This performance has allowed us to continue outperforming the market on average.
Our reported EBITA margin performance dropped from 6.1 percent to 4.6 percent in 2023. The drop in margin was due to tougher local market conditions, investments in new geographies, such as Germany and Denmark and strategic M&A activities expected to benefit us in the longer term. Given the challenging market circumstances and rapid expansion, we are still pleased with our margin performance.
We remain committed to strong margin performance and expect our margins to improve again once the market backdrop recovers, but we are already addressing operational performance across our local companies to ensure that all are equipped to fulfil their full potential margin. In addition, we will continue to deploy and exploit our organic toolkit across all companies in all countries which represent a significant opportunity for margin up-lift.
We look to continue including companies to HG at the same rate as we have done previously, both in terms of revenue contributions but also in terms of operational scale. We see HG’s offering continues to attract high quality, high margin businesses, and also at an operational level we are starting to leverage the one-off investments that we have made throughout 2023, particularly in Germany and Denmark.
revenue growth in Norway.
Country performance
Our reported revenues in Norway grew by 9 percent in 2023, outperforming weighted market growth of 2.1 percent3, with approximately 50 percent of our companies seeing an improved EBITDA and EBITA in 2023. Our growth prospects remain strong in the Norwegian market, thanks to an increasing share of our revenues being tied to rehabilitation and maintenance - a market which is growing at 4 percent annually4.
Our performance in Sweden was strong, despite a challenging market backdrop, thanks to the 291 new local companies which have joined us in the country. Reported revenues more than doubled in 2023 to above SEK 2 000 million thanks to these acquisitions. However, prevailing headwinds in Sweden, particularly across the new build sector, put pressure across the whole market resulting in a contraction of the market of 6.1 percent5. Meanwhile, the companies which have joined HG over the past 12 months have increased our proportion of renovation and painting revenues in Sweden. This is particularly illustrated by our acquisition of Dextry Group in June 2023, providing for a more resilient revenue performance in challenging market conditions.
The Danish companies joining the Group at the end of 2022 experienced a relatively flat revenue development throughout 2023 which was in line with the wider Danish market performance6 and follows a year of outperformance in 2022. Meanwhile, the EBITDA and EBITA margin was on the same level as for Sweden.
We started our journey in Germany in 2023 with two acquisitions that fit well with our existing Group, and which put us in a strong position with EBITDA margins above our Group average. We see Germany as a very attractive market, with a market growth in 2023 of 5.3 percent, mainly driven by the refurbishment sector.
Gjermund Söder Vegge
CFO, Håndverksgruppen
Outlook
We expect markets to recover from the somewhat depressed levels of activity seen in 2023 over the course of the coming 12 to 18 months. Regardless of these conditions, we expect to continue to make acquisitions and grow revenue at the same rate as we have done during the past three years, with the aim of making acquisitions at a higher EBITA margin performance than previously.
We are excited to see our organic toolkit providing significant upside to the performance of our local companies driven by the investment and efforts we have put into it. We are excited to continue to leverage the toolkit for the benefit of the local companies. Our M&A team’s experience of making acquisitions, onboarding these companies and delivering incremental growth continues to improve and we expect to see this develop further during the year ahead. We continue to make acquisitions at a competitive transaction multiple.
Germany and Denmark will be the main focus for our acquisitions during 2024, coupled with driving increased market share across Sweden and Norway as well as increasing organic growth rates across these two markets. ESG continues to remain a core focus for our company, and we are committed to deliver on our strategy of taking responsibility for our employees, our customers, our suppliers and our society.
With a deep pool of identified opportunities in our target markets, improving economic conditions, our increasingly efficient acquisitions toolkit and our continued focus on our toolbox; we look forward to another year of exciting progress in 2024
Gjermund Söder Vegge
CFO, Håndverksgruppen
1 Includes operating companies only
3/4/5/6 Prognosenteret, Management analysis