NYAB as the company of the month20.04.23
Pörssisäätiö / Finnish Foundation for Share Promotion introduces NYAB as the company of the month and interviews Johan Larsson, CEO of NYAB. In the interview, Johan discusses, among others, the integration of company cultures, value creation, as well as NYAB’s essential strategic objectives. The interview was originally published on 12th of April in Finnish.
Swedish NYAB Group and Finnish Skarta Group combined at the end of last March in a 200 MEUR transaction. How has the integration of company cultures been going?
Good question, since our employees and staff are NYAB´s most important resource. This will be quite a long answer to make sense for your audience.
Of course, NYAB´s history in Sweden consisting of organic growth meant that we had a very strong culture in our Swedish organization. For a decade, individuals and the company have grown together. In comparison with Finnish organization that had a core from earthmoving business and industrial construction. Recently before the merger, Skarta Group had gone public and made a couple of acquisitions and start-ups within foundation, engineering, and energy. All of this of course led to a diversified culture and not that much common ground nor common history in our Finnish organization. Taking all of this into consideration, we have made great progress in integrating company cultures, both domestic and cross border.
A winning and sustainable culture cannot be created nor constructed by internal communication, policies, and guidelines. They are only tools with minor effect. The culture develops over time and expands in every direction from the bottom up, sideways and from the top down. To sum it up, I am very pleased with the development and integration of our culture during our first year, and I am confident that it will improve further going forward.
You mentioned in your annual report that last year was particularly difficult in Finnish markets at the beginning of the year, and that you succeeded in turning the business profitable at the end of the year. What were your challenges and solutions to make the turnaround?
From September onwards, Finland had earnings every month in 2022, also with quite good margins. And that is of course key for our future and makes 2023 very promising.
Key is to focus on value creation. Our challenges were mainly great individuals in wrong roles. In this industry you must have quite high industrial knowledge to be a good manager, and even more so when you are in a growth phase. Our solutions were to appoint a new country manager for Finland, who meets earlier mentioned criteria and has the capability to see the bigger picture. Next was to appoint right managers at the level below him, who are both good leaders and specialized within their fields. After this you improve internal processes and put decision making in the right level. Then it comes quite naturally that you reduce fixed costs that aren’t value creating. What really made this turnaround possible in such a short time was that we from the start had a high level and good standard on our employees within project execution in Finland. That is the core in our business, and these individuals to a high extent supported and believed in the changes we proposed and implemented.
Could you tell more about the project of Skarta Energy that is owned together by NYAB and CapMan?
Yes. This business is outside our P/L since it is a joint venture. We have a good pipeline with ongoing projects in different stages. Two most important projects at this stage are Utajärvi and Hitura-Callio solar parks. We aim to complete energy producing facilities exceeding 800 MW in the coming five years. These mentioned projects have been granted state subsidies in the region of 25 million euros. NYAB is the preferred EPC partner.
From a philosophical point of view, it makes a lot of sense that solar will be the end solution as energy provider for this planet.
In which markets you see that your company has the largest growth potential in the coming years?
We are exposed to and operate in markets with a high underlying demand. As well as counter cyclical markets and booming markets. There is a lot of growth potential within all our business areas. If I should single out one, I would say that the largest growth potential is within energy. I must add that it´s not necessarily only in Sweden and Finland, we might operate in a wider geography soon.
What are your central strategic objectives and how have they made progress?
First and foremost, our not stated strategic objective is to in a sustainable way create value long term. When we create value to our customers and to our society, we and all our stakeholders will take part and benefit of that value creation. To do this we have published three strategic objectives for 2022-2024.
Continuing profitable growth. A pro forma revenue 2022 of 265 million euros and EBITA margin exceeding 11% strongly indicates great progress in this area. Taking into consideration that 2022 was a year with a massive merger that took a lot of effort, and losses from Finnish operations January-August that was turnaround from September going forward.
Accelerating the monetization of renewable energy projects. December 2022, we established our JV with CapMan. This sets us up in a strong position for future value creation within energy.
Strengthening an entrepreneurial culture. We are a company with an entrepreneurial soul. And it´s very important to keep that as we grow. We have entrepreneurs among our owners, in our board as well as executive management. We also have entrepreneurs in our middle management and a lot of entrepreneurs in our project execution business. The need of strengthening an entrepreneurial culture comes from the fact that we are growing and that means that we must get more corporate without losing our soul and adventures spirit. We got this covered and I am happy with our ongoing performance in this area.
How do you differentiate yourself from your biggest competitors?
First, it´s very hard to define who our biggest competitors and peers are. If you look at our annual organic growth in combination with our earnings, and if you look at what markets we address and that we are contractors and constructors without any exposure to housing. And simultaneously we are renewable energy project developers. We also have a very well working engineering business without any risk regarding project execution. Look at our revenue per employee and compare that number with other companies, we are pro forma exceeding 650 000 euro for 2022, and that in a low CAPEX business model. We are so different from other listed contractors. And we are so different compared to other energy developers. What I am trying to say is that NYAB is unique, it´s hard to differentiate ourselves more then we already do.
Which megatrends you believe have the biggest impacts on your business in the coming years?
With certainty it´s urbanization and green transition. They are very strong drivers for all our business segments and the markets we address. These megatrends are the reason why NYAB is exposed to the right markets.