ÅF Sets New Mid-Term Financial Targets. Targets 10% Annual Revenue Growth

/ October 9, 2017/ ÅF Pöyry / AFRY, Investor Update, Sweden

Ahead of its Capital Market Day in November, ÅF has announced changes in its financial objectives, and geographical footprint strategy.

The new financial objectives, “over a business cycle” are:

  • Annual growth of 10%, including small acquisitions. The objective does not include the contribution of large acquisitions
    The previous objective was EUR 2bn in revenues by 2020 (2016: SEK 11,070m / €1.16bn)
  • An EBITA margin of 10% (unchanged)
  • Net debt to EBITA ratio of 2.5 (previously a ratio in the 1.5-2.0 range).

ÅF has also provided more clarity on its geographical intentions, retaining a focus on Sweden, Norway, Denmark, Finland, and the Czech Republic, while intending to become more international for selected operations, i.e. automotive R&D, food and pharma, advanced manufacturing, the process industry and lighting.

Under his new CEO, Jonas Gustavsson, ÅF is clarifying its objectives. The company was likely to see its EUR 2bn revenue target by 2020. It needed to acquire we estimate EUR 500m-600m in revenues during 2017-2020 but was constrained by its net debt objectives (2.3 debt to EBITA ratio at end of H1 2017). The change in the financial objective strengthens the credibility of ÅF.

Also, ÅF had for long stated it targeted the Nordics market, primarily. Yet, ÅF derived 78% of its revenues from Sweden and 10% from Norway. ÅF’s third geography was Switzerland (4% of revenues). The company has limited presence in Denmark and almost no presence in Finland. Again, we welcome the clarification in the internationalization strategy.

Finally, ÅF will expand its business model towards more “packaged solutions and concepts”. We assume ÅF is referring to products. We will get back on this topic, when ÅF announces its Q3 2017 results.

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