AFRY (AFRY) CMD 2025 summary

Strategic direction and transformation

• Launched the 'Unlocking AFRY' strategy, focusing on profitable growth, global expansion, and prioritizing segments with significant transition needs, especially in energy and industry, while deepening client partnerships and replacing previous targets and structures.

• Portfolio review identified 10% of revenues as non-core, with plans to phase out or divest these areas and concentrate on core, high-potential segments, targeting large and leading clients and reducing the long tail of small, non-recurring projects.

• Shift from a decentralized, complex organization to a leaner, segment-driven model, emphasizing cross-staffing, harmonized systems, and AI-enabled capabilities to improve efficiency and profitability.

• Strategy execution is phased: Phase I (to 2026) focuses on margin improvement and selective organic growth; Phase II (from 2027) accelerates both organic and inorganic growth, including disciplined M&A and global scaling.

• Enhanced focus on recurring business with large clients, leveraging sector expertise, expanding lifecycle offerings, and being an employer of choice through development opportunities and engaging projects.

Financial targets and execution path

• 2028 targets: SEK 35 billion in net sales, 10% EBITA/EBITDA margin (excluding items affecting comparability), and net debt/EBITDA of 2.5x, replacing prior growth targets.

• Supporting KPIs include increasing order backlog to SEK 30 billion and improving utilization from 72% to 74% by 2028.

• Margin expansion driven by commercial leadership, portfolio enhancement, cost optimization, and a fit-for-purpose support structure.

• Capital allocation remains disciplined, with stable cash flow, a 50% dividend policy, selective M&A in core segments and geographies outside the Nordics, and continued investment in digitalization and AI.

• Restructuring costs of SEK 200–300 million are expected, mainly related to redundancies, with payback anticipated within a year.

Business divisions and market positioning

• Three global divisions: Energy (smallest but fastest-growing, strong in renewables, nuclear, grid, and decarbonization), Industry (largest, leading in pulp & paper, food, chemicals, mining, life science, and advisory), and Transportation & Places (focus on mobility, urban development, and infrastructure in Europe and the Nordics).

• Energy division targets high-growth segments like renewables, storage, transmission, and decarbonization, leveraging global expertise and advisory services.

• Industry division prioritizes profitability, international expansion (especially Americas), and high-value segments, shifting from product development to advisory and project business.

• Transportation & Places division is refocusing on large clients, adjusting for overcapacity, expanding advisory services, and growing in transport infrastructure, especially rail and road.

• All divisions leverage multidisciplinary offerings, digital and AI capabilities, and project-based delivery models to drive value and resilience.