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Sweco: Europe's Quiet Engineering Giant
In the tunnels beneath Stockholm, thirty meters below the surface, architects and engineers spent a decade solving one of Sweden's most complex infrastructure puzzles. The Citybanan project—a six-kilometer twin-track railway corridor threading underneath the capital's historic center—required teams from Sweco to coordinate everything from structural engineering in ancient bedrock to integrating new platforms with century-old metro stations. When the line finally opened in 2017, doubling the rail capacity through Stockholm, few commuters boarding at the gleaming Odenplan station understood that this single project encapsulated everything that makes Sweco distinctive: multidisciplinary expertise, patient long-term execution, and the quiet ambition to shape how Europeans live, work, and move.
With 23,000 architects, engineers, and other experts working together with clients to facilitate the green transition, Sweco is Europe's leading architecture and engineering consultancy, with sales of approximately SEK 31 billion (EUR 2.7 billion) in 2024. The company trades on Nasdaq Stockholm with a market capitalization of roughly $6 billion—a figure that understates the strategic importance of a firm embedded in virtually every major infrastructure decision across Northern and Western Europe.
The central question of Sweco's story isn't whether engineering consultancies can be successful businesses—they obviously can. The more interesting puzzle is how a collection of Swedish technical offices, some with roots stretching back to 1889, assembled into Europe's largest architecture and engineering consultancy through more than 160 acquisitions while maintaining both profitability and a distinctive operational culture. As CEO Åsa Bergman puts it: "Our small, agile and empowered teams, tapping into Sweco's total knowledge base and taking full business responsibility is the fundament of The Sweco Model. We have more than 60 years of profitable growth. The Sweco Model is a crucial part of our success."
This is a story about roll-up strategies done right, about decentralization as competitive advantage, and about positioning a business at the intersection of megatrends—urbanization, the green transition, infrastructure renewal—that will define European development for decades. It's also a story about whether boring, essential services can compound value as effectively as the technology companies that dominate investment discourse.
I. Origins: The Deep Engineering Roots
The engineering heritage Sweco claims extends back to 1889, when Sweden was industrializing rapidly and needed technical expertise to build the physical infrastructure of a modern nation. In 1889, Hugo Theorell formed Theorell Installationskonsult AB and focused on constructing systems for ventilation and heating. The company was later acquired by Sweco. This was not the Hugo Theorell who won the Nobel Prize in Medicine in 1955—that was Axel Hugo Theodor Theorell, a different person entirely. The engineering Hugo, born in 1859, was a technically-minded graduate who saw opportunity in Sweden's building boom.
The memory of Hugo Theorell still lives on with the "Hugo prize" that is awarded to energy saving ideas and innovations to recognize the impact Hugo Theorell had in this area. That a company traces its identity to a 19th-century heating engineer says something important about the Scandinavian approach to knowledge businesses—technical excellence accumulated over generations creates institutional credibility that cannot be quickly replicated.
Our services in water systems was in demand already in 1902, when Johan Gustaf Richert formed Vattenbyggnadsbyrån AB (VBB). The innovations of VBB spread across Sweden as well as the rest of the world such as Kuwait, Egypt and India. Richert was a prominent water engineer who had previously led Göteborg's water and sewage department and developed innovative groundwater infiltration techniques. VBB would become one of the two primary tributaries flowing into what eventually became Sweco.
The other tributary emerged in 1958. Bertil Falck, Carl-Erik Fogelvik, Gunnar Nordström and Erik Smas founded the architecture firm FFNS. In 1996, the company had more than 550 employees working across 20 different locations. FFNS—the name combines the founders' initials—represented a different strain of technical expertise: architecture integrated with practical engineering considerations.
During the 1960s and 1970s, both VBB and FFNS evolved from narrowly-focused technical consultancies toward more multidisciplinary approaches. This shift reflected broader changes in how infrastructure projects were conceived and executed. Building a hospital, for instance, requires not just structural engineers but architects, mechanical systems designers, environmental consultants, and project managers who can coordinate across specialties. Firms that could offer integrated services across multiple disciplines held advantages over narrower specialists.
Gunnar Nordström, one of FFNS's founders, proved particularly influential in shaping the organizational philosophy that would later define Sweco. Bergman traces to Sweco co-founder Gunnar Nordström, who died in 2017 at 88, the firm's core decentralization strategy, with small teams and slimmed-down management structures working closely with clients. The belief that engineering firms should remain close to clients, empowering small teams rather than imposing heavy bureaucratic structures, became embedded in FFNS's DNA.
By the mid-1990s, both VBB and FFNS had established strong positions in Swedish engineering and architecture. VBB had particularly valuable international experience—VBB had conducted its first international project in St. Petersburg in 1902; by the 21st century, the companies in Sweco's portfolio had carried out projects in more than 100 countries. But both companies recognized that consolidation was coming to European professional services, and that firms with broader capabilities and deeper resources would have advantages in winning large, complex projects.
II. The Formation of Sweco & IPO (1997-1998)
The transaction that created Sweco was, in hindsight, remarkably consequential for a deal between mid-sized Swedish consultancies. Sweco was formed in 1997 through the acquisition of VBB group (Vattenbyggnadsbyrån AB) by FFNS (Falck/Fogelvik/Nordström/Smas AB). The name Sweco is an abbreviation of "Swedish Consultants", a name that had been used by VBB on its international projects.
Sweco was founded on the idea of combining the expertise of architects and engineers, creating a multidisciplinary company where experts from different fields could meet and collaborate. This principle remains at the heart of the company's operations. The strategic rationale was straightforward but differentiated: while most engineering firms remained technically siloed, and most architecture firms focused primarily on aesthetic design, Sweco would integrate both capabilities from the start.
This wasn't merely organizational convenience. There's genuine competitive advantage in having architects and engineers working within the same firm, sharing information systems, speaking the same corporate language, and accountable to the same leadership. Projects designed by integrated teams tend to have fewer coordination failures, lower change-order costs, and better outcomes for clients. The challenge is that architects and engineers often have different professional cultures—artists versus technicians, roughly speaking—and combining them requires careful attention to organizational design.
The company is listed on NASDAQ OMX Stockholm since 1998, and has since acquired more than a hundred companies of varying sizes. The IPO provided the currency that would fuel Sweco's subsequent expansion. Public shares allowed acquisitions to be financed partly with equity, preserving cash while aligning acquired company employees with the combined entity's success. It also imposed the discipline of quarterly reporting and analyst scrutiny, which can be beneficial for professional services firms that might otherwise drift toward comfortable mediocrity.
At listing, Sweco was primarily a Swedish business with ambitions to become a Nordic leader. The company's leaders understood that professional services firms generally must be either very local—serving clients within a narrow geographic radius where relationships and reputation matter—or quite large, with the resources to win major projects and the breadth to serve multinational clients across regions. The uncomfortable middle ground, where you're too big to survive on local relationships but too small to compete for major contracts, tends to produce struggling firms.
Sweco's strategic choice was scale, achieved through acquisition. And the 1998 IPO established the foundation for what would become one of the most consistent roll-up strategies in European professional services.
III. Building the Acquisition Machine (1998-2014)
The mathematics of acquisition-driven growth can be seductive or destructive, depending on execution. Sweco's approach fell definitively into the first category. Sweco has completed approximately 100 acquisitions over the past ten years and, on average, has doubled its sales every five years.
The company articulated clear criteria for target selection: Sweco's acquisition focus is on economically strong markets. A professional and cultural fit is of paramount importance in Sweco's evaluation of acquisition candidates, as acquired companies are integrated into Sweco's organisational and operational structure and under the Sweco brand. This wasn't mere rhetoric—Sweco consistently walked away from deals that didn't meet these standards.
The Nordic consolidation phase extended through the 2000s. 2003: PIC Engineering Oy (founded in 1971) merged with Sweco. 2005: Paatela-Paatela & Co (founded in 1919) merged with Sweco. 2006: CM Urakointi (founded in 1989) merged with Sweco. 2012: FMC Group (founded in 1959) merged with Sweco.
The FMC Group acquisition deserves particular attention. FMC Group is the Finnish market leader in structural engineering and holds strong positions in segments such as building service systems and industrial engineering. FMC Group reported an operating profit (EBITA) of EUR 9.4 million for the financial year 2010/2011. The acquisition will give Sweco annual sales of approximately SEK 6.4 billion and a total of around 7,300 employees, of which 1,600 in Finland. Sweco already previously had more than 500 employees in Finland.
This deal exemplified Sweco's approach. Rather than entering a new market with a small toe-hold acquisition that would take years to scale, Sweco made a decisive move to acquire market leadership immediately. "We will become the obvious alternative to the Poyry and the ambition is clear. We will be number one in Finland", says Sweco's CEO Mats Wäppling.
The acquisition playbook refined during this period had several distinctive elements:
Integration under the Sweco brand. Unlike some roll-up strategies that maintain acquired company brands indefinitely, Sweco moved relatively quickly to rebrand acquisitions. This created a unified market presence and prevented the confusion of maintaining multiple overlapping brands.
Implementation of the Sweco Model. Acquired companies weren't just bolted onto Sweco's financial statements—they were integrated into Sweco's operational approach, with its emphasis on decentralized teams, client proximity, and shared knowledge systems.
Retention of key talent. Engineering consultancies are fundamentally talent businesses. The value walks out the door every evening. Sweco structured acquisitions and post-merger integration to retain the engineers and architects who generated revenue and client relationships.
Discipline on valuation. Sweco consistently paid reasonable multiples for acquisitions, avoiding the bidding wars that destroyed value in many roll-up strategies. This discipline stemmed partly from having alternatives—organic growth remained a viable path—and partly from institutional patience about building market position over time.
By 2014, Sweco had established dominant positions in Sweden and strong presences across the Nordic region. But the company remained primarily a Northern European player, with limited exposure to the larger markets of Western and Central Europe. That was about to change dramatically.
IV. KEY INFLECTION POINT #1: The Grontmij Acquisition (2015)
Some acquisitions are merely accretive; others are transformational. Sweco's acquisition of Grontmij was unambiguously the latter. On 1 June 2015, Sweco announced its intention to acquire Grontmij, a Dutch consultancy with about 6,000 employees. On 25 September 2015 it was announced that the acceptance level for the offer was met with a good margin.
Sweco, a European engineering consultancy, has acquired Grontmij, a Dutch engineering consultancy, in a transaction worth €354 million. The new entity is expected to have about 14,500 employees and be situated in 15 European countries.
The strategic logic was compelling. "With one move, we have become the European leader. We now have a more prominent role in planning and designing the communities and cities of the future," says Tomas Carlsson, President and CEO of Sweco. With the acquisition, Sweco now has about 14,500 employees across 15 European countries.
Grontmij brought geographic reach that would have taken Sweco a decade or more to build organically. In one transaction, Sweco gained meaningful positions in the Netherlands, Belgium, Germany, the UK, and several Central European markets. "Sweco and Grontmij complement each other perfectly. Both businesses are known for a strong customer focus and recognized expertise. Geographically, we operate in different markets, and this is a crucial platform for continued growth opportunities," says Tomas Carlsson.
The acquisition had been carefully prepared. Over twelve months ago Grontmij started an extensive strategic review to evaluate all strategic options through a structured process led by the Executive Board in close consultation with the Supervisory Board. An acquisition by a strong partner was, after due and careful consideration by the Executive Board and the Supervisory Board, considered the best option for Grontmij and its stakeholders. After discussions with selected parties, Sweco was deemed the most attractive partner.
Sweco has a solid track record of continuous operational improvements. In terms of growth, Sweco has consistently shown its ability to successfully grow through mergers. Now that our latest large acquisition, from 2013, has been very successfully integrated, we are ready to take the next step on the European market.
The markets in which Grontmij operated presented both opportunity and challenge. The markets in which Grontmij operates are fragmented, with no single design firm controlling more than 5%. So far, Sweco's strategy appears to be paying off. Fragmentation meant room for consolidation and growth. But it also meant that cultural integration would be more complex than in relatively homogeneous Nordic markets.
Integration proceeded systematically. The move follows Sweco's acquisition of Grontmij in October 2015. Sweco UK managing director Max Joy said: "Our rebrand represents the next step of our successful integration of Grontmij into Sweco."
The Grontmij acquisition transformed Sweco from a Nordic champion into a genuinely pan-European player. It also validated the company's thesis that its operational model could be exported beyond Scandinavia—that the Sweco Model wasn't merely a Swedish cultural artifact but a genuinely transferable competitive advantage.
V. KEY INFLECTION POINT #2: Leadership Transition & The Ă…sa Bergman Era (2018-Present)
Tomas Carlsson's tenure as CEO had been transformational. "Tomas has during his five years at Sweco led the development from a strong Nordic company to become the leading engineering and architecture consultancy in Europe. Tomas has been pivotal to the successful development of Sweco's operations." Tomas Carlsson has been the President of Sweco since the end of 2012. During his time as President, the company increased its sales from approximately SEK 8 billion to approximately SEK 17 billion with a stable operating margin.
When Carlsson departed for NCC in early 2018, the board turned to an internal candidate with deep institutional knowledge. Ms Bergman joined the Sweco group in 1991. After eight years she was appointed regional manager to oversee Sweco's project managers in northern Sweden, before being appointed president of Sweco Management in 2006. She took over as president of Sweco Sweden in 2012. During Ms Bergman's time at Sweco, the Swedish organisation has grown from around 3,000 to around 5,700 employees, and operating revenues have grown from roughly SEK 3.6 billion to approximately SEK 7.0 billion.
"We are very pleased that Åsa Bergman will be Sweco's next CEO. She has consistently delivered good operating results during her career at Sweco. She combines evident leadership skills with in-depth understanding of Sweco and the company's strategic direction. She is the ideal person to lead and develop the group going forward," says Johan Nordström, chairman of Sweco's board of directors.
Bergman's background shaped her leadership approach. From an early age, Åsa Bergman was an extrovert, never hesitating to take a stand, with a strong sense of justice and equality for everyone. It was no surprise that she took on an education in Civil Engineering from Stockholm's Royal Institute of Technology – at the time a far more male dominated line of work than today.
She is a strong advocate for equality for everyone, not least gender equality, and has transformed Sweco into one of Sweden's most equal companies, with women holding 50% of top management positions – quite an accomplishment in the engineering business still dominated by men in the Nordic countries. This wasn't merely corporate social responsibility—it was talent strategy. Engineering faces structural talent shortages, and firms that can effectively recruit and retain women have advantages over those that cannot.
Under Bergman's leadership, the acquisition strategy continued. Sweco's strategy is to grow through a combination of acquisitions and organic growth, and the Group has completed more than 160 acquisitions over the past 20 years. But there was also increased emphasis on operational efficiency and margin expansion alongside growth.
The results have been compelling. In 2024, net sales surpassed SEK 30 billion, EBITA exceeded SEK 3 billion and we delivered a full year double-digit margin for the first time in over a decade. Net sales increased 8 per cent and EBITA 20 per cent for the full year.
Bergman has articulated a vision that positions Sweco at the center of Europe's most important infrastructure challenges. "2024 was a successful year with good growth and strong profitability. I am proud that Sweco's experts play such a vital role in planning and designing a stronger, more competitive and resilient Europe. We have a strong position in advising clients in the green transition, and we grow in areas such as defence and security. Digitalisation and AI served as powerful means to further accelerate internal efficiency, create value in client projects and evolve the service offering," says Ă…sa Bergman.
VI. The Sweco Model: Decentralization as Competitive Advantage
Many companies claim to have distinctive operating models. Few actually do. Sweco's model is genuinely differentiated and worth examining in detail.
Sweco's operational model is based on four corner stones that form the basis of Sweco's way of working and therefore also the company's success. The Sweco Model is based on four cornerstones: client focus, the best employees, internal efficiency and a decentralised organisation. Our way of working has taken us from being a local business to becoming Europe's leading architecture and engineering consultancy.
Decentralization is the most distinctive element. Small, agile teams are empowered to work independently and take advantage of Sweco's knowledge base which needs to be centralized. Sweco's business model is decentralised and based on being close to our clients. Every client should feel that Sweco's consultants have an in-depth understanding of their business. Only then can we be the truly committed business partner who stands ready to create value for the client.
This isn't decentralization for its own sake. Engineering projects require local knowledge—understanding of regulations, relationships with municipal officials, familiarity with site conditions, awareness of subcontractor capabilities. A centralized organization would struggle to maintain this local expertise across 14 countries. But pure decentralization would sacrifice the scale advantages that justify Sweco's existence. The Sweco Model threads this needle by pushing authority to small teams while maintaining centralized systems for knowledge sharing, financial management, and talent development.
Of some 70,000 current jobs, Bergman values the average fee at under $50,000, with a median worth below $10,000. Small projects are no less profitable than the major ones. Customers "need to have expert service and design on those small projects, so they are really important to us," says Bergman. "That is part of our strategy to go for the small and midsize projects and that is also why [we have] the decentralized organization."
This project mix is revealing. While Sweco wins large, prestigious infrastructure contracts, most of its work consists of smaller engagements that might seem unglamorous: renovating a school building, designing a small water treatment facility, planning traffic improvements for a municipal intersection. These projects don't generate headlines but they generate consistent revenue and, critically, they build relationships that lead to larger opportunities.
Client focus flows naturally from decentralization. Everything starts and ends with our clients and, to us at Sweco, all client projects are equally important. We strive to be the best at serving our clients, by close collaboration and being the most relevant partner for their needs.
Best employees matters because engineering consultancies have no proprietary technology, no patents, no network effects, and minimal switching costs. Their only durable asset is the quality of their people. Sweco remains one of the industry's most attractive employers, with high employee satisfaction and decreasing voluntary turnover. In 2024, Sweco recruited 3,500 new employees through active recruitment and acquisitions.
Internal efficiency receives perhaps less attention externally but matters enormously to profitability. The positive trend mainly being driven by higher average fees and an improved billing ratio. Billing ratio—the percentage of employee time that can be charged to clients—is the key operational lever in professional services. Even small improvements compound dramatically across thousands of employees.
The Sweco Model also explains why acquisitions integrate successfully. Acquired companies aren't forced into a bureaucratic straitjacket; they're given autonomy within a framework that emphasizes local decision-making. This reduces the culture clash that destroys value in many acquisitions.
VII. KEY INFLECTION POINT #3: The Green Transition & Infrastructure Mega-Cycle
Timing matters enormously in business. Sweco has positioned itself at the intersection of multiple structural trends that will drive European infrastructure investment for decades.
Europe faces a major infrastructure upgrade estimated at EUR 9 trillion up to 2040 making it vital that we integrate nature into new energy, transport, water and building projects. Nine trillion euros is an almost incomprehensibly large number—roughly five years of Germany's entire GDP. This isn't speculative; it's the acknowledged investment requirement to meet climate commitments, maintain aging infrastructure, and adapt to demographic change.
The green transition is impacting society at large, facilitated by the increasing amount of capital being directed in a sustainable direction. The complexity of these issues is driving demand for Sweco's expertise in all business segments. Sweco carries out client projects that actively support sustainable development through measures such as designing resource-efficient and resilient urban areas and buildings; developing systems for renewable energy production, transmission and storage; reducing the climate impact of industries; expanding and restructuring transport infrastructure.
Energy infrastructure represents a particularly large opportunity. A well-functioning electricity transmission system with expanded grid capacity is essential to the green transition's success. It enables integration of renewable energy, provides grid stability, facilitates long-distance electricity transmission, optimises energy flows, and supports the transition from fossil fuels to a more sustainable energy mix.
Sweco has won significant projects demonstrating this positioning. Sweco will be supporting Dutch energy operator Gasunie in the development of a new energy infrastructure, enabling the operator's transition from transportation of natural gas to hydrogen, CO2, renewable gas, and heat. This represents exactly the kind of complex, long-term engagement that drives recurring revenue.
The company's historical project portfolio includes landmark infrastructure achievements. In the Malmö City Tunnel project, Citytunneln under Malmö är ett av Sveriges största infrastrukturprojekt som knyter samman Skåne med Själland. För Swecos arkitekter har uppdraget omfattat tre av dess underjordiska stationer. The line opened in 2010, connecting Sweden to Denmark via the Öresund Bridge, and Sweco's Triangeln Station won Sweden's prestigious Kasper Salin Prize for architecture.
For the Stockholm Citybanan, Uppdraget som hade ett totalvärde för Sweco på cirka 100 miljoner SEK omfattar ett komplext järnvägsprojekt som fördubblar spårkapaciteten genom Stockholm. Vårt arbete med Citybanan började redan 2004 då vi fick uppdraget att ta fram en systemhandling för de två nya pendeltågsstationerna tillsammans med Grontmij. 2007 fick vi även bygghandlingsuppdraget för station Odenplan och för den norra delen av banan till Tomteboda. Nästan alla Swecos verksamheter har deltagit i vår del av Citybananprojektet i någon fas.
Recent project wins continue the pattern. Demand remained good in the energy, infrastructure, water and environment sectors, with continued increases in demand in security and defence. Five acquisitions were closed during the quarter, and Sweco has now grown to 23,000 experts across Europe.
We secured a framework contract to support the City of Helsinki in their SEK 13.7 billion programme to build new tracks for rail-driven and carbon-neutral transportation as part of their "15-minute city" vision for 2030.
In Norway, we entered a framework agreement with the public transport operator Sporveien to support sustainable transportation in the Oslo and Akershus area. In Sweden, Svenska Kraftnät has commissioned Sweco to renew power lines in the Jämtland region to enhance grid resilience and enable future wind power development.
The security and defence segment represents an emerging growth area. Belgium's new Defense Headquarters, which is being built near NATO in Brussels, and is a major project involving both Sweco and assar architects. It will house around 4,000 personnel and meet contemporary requirements in terms of functionality, safety, wellbeing, and sustainability. European rearmament following Russia's invasion of Ukraine has accelerated investment in military infrastructure, and Sweco's expertise in secure facility design positions it well for this demand.
VIII. Recent Acquisitions & Continued Roll-Up (2023-2025)
The acquisition machine continues operating. Acquisitions: 5 acquisitions in Q3, 12 total in 2025, adding SEK 2 billion in annual revenues.
We continue to build a strong M&A pipeline which resulted in the announcement of five acquisitions during the quarter and three new acquisitions after the quarter: Fimpec Group, assar architects and VHGM. The Belgian consultancy assar architects is a leading expert in large-scale public and private sector projects. The acquisition will add 150 experts and significantly broaden Sweco's architecture offering in Belgium and Luxembourg. VHGM is a Dutch company with 22 experts specialised in geothermal energy consulting.
Fimpec is a project management, engineering and consulting company with specialist expertise in renewable energy, hydrogen, bio- and circular economy, forest industry, and batteries and critical minerals. The company operates mainly in Finland and employs around 400 experts. Its turnover in 2024 was close to EUR 51 million.
These acquisitions share common characteristics: they add specialized expertise in high-growth segments (renewable energy, circular economy, geothermal), they strengthen positions in core European markets, and they bring experienced professionals who can be integrated into the Sweco operating model.
Sweco has signed agreements to acquire PROgroup and +ImpaKT, both of which are based in Luxembourg and specialise in consultancy services in the project management of sustainability and circular economy projects, as well as data-driven expertise. The acquisitions will add around 40 specialists to Sweco's existing team of 110 experts in Luxembourg.
The pace of acquisitions has accelerated in 2025, reflecting both the availability of targets and Sweco's financial capacity. Net Debt to EBITDA Ratio: 0.9 times. Regarding the net debt position, it now stands at SEK 3.1 billion at the end of Q3, and the net debt to EBITDA ratio was 0.9x versus 1.1x at the same time last year. Our leverage is well below our target, and we remain financially very strong.
This low leverage provides substantial acquisition firepower. In December 2024, Sweco signed an agreement for refinancing its existing EUR 400 million revolving credit facility (RCF). The new credit will now be linked to Sweco's sustainability targets. The credit facility is intended to be utilised for general corporate purposes and for acquisitions.
IX. Current Financial Performance & Positioning
Sweco's financial performance validates the strategy. In 2024, net sales surpassed SEK 30 billion, EBITA exceeded SEK 3 billion, and Sweco reported a full year double-digit margin. Net sales increased 8 per cent and EBITA 20 per cent for the full year.
The most recent quarterly results continue the positive trajectory. Sweco (NASDAQ: SWEC-B) reports a strong result for the third quarter. Net sales increased 5 per cent to SEK 7.1 billion. EBITA increased 19 per cent to SEK 702 million, and the EBITA margin improved to 9.8 per cent. Demand remained good in the energy, infrastructure, water and environment sectors, with continued increases in demand in security and defence. Five acquisitions were closed during the quarter, and Sweco has now grown to 23,000 experts across Europe.
Geographic diversification provides stability. Operations are managed through eight business areas: Sweco Sweden, Sweco Norway, Sweco Finland, Sweco Denmark, Sweco Netherlands, Sweco Belgium, Sweco Germany & Central Europe and Sweco United Kingdom. Sweco Denmark and Belgium continued to capitalise on their strong positions in attractive segments and delivered well above Sweco's financial target. Sweco Norway improved its result compared with a weak quarter last year and Finland continued to deliver solid results in a challenging market.
We are a well-diversified business operating across three different segments with a good balance of private and public clients. The foundation for Sweco's long-term success is our mix of competencies spread across 23,000 experts, our focus on organic and acquired growth, as well as our efficient and decentralized operational model. With a strong financial track record and financial position, we are focused on continuing our growth journey.
The dividend policy reflects confidence in cash generation. The Board of Directors proposes a dividend distribution of SEK 3.30 per share.
X. Playbook: Business & Investing Lessons
Sweco's success offers several broadly applicable lessons:
Lesson 1: Roll-ups can work when you have a genuine operational model. Many roll-up strategies fail because acquiring companies add businesses without any real integration thesis. They're essentially financial holding companies disguised as operating companies. Sweco's approach works because the Sweco Model represents a genuine operating advantage that creates value at acquired companies. The model isn't just marketing—it's a transferable system for running professional services businesses.
Lesson 2: Decentralization enables scale in knowledge businesses. The traditional assumption is that scale requires centralization. Sweco demonstrates the opposite: thoughtful decentralization—pushing decision authority to small teams while maintaining centralized knowledge systems and financial discipline—can enable growth while preserving the client proximity that drives success in professional services.
Lesson 3: Market leadership begets market leadership. Sweco strives to hold a top-three position in its core markets. A leading position is essential for attracting the best employees and meeting clients' needs with the best solutions. In 2022 Sweco held top-three positions in five of its eight core markets. This isn't merely aspiration—it reflects the competitive dynamics of professional services, where talent gravitates to market leaders and clients prefer working with established firms.
Lesson 4: Riding megatrends with boring but essential services. Sweco doesn't operate in exciting technology markets. It plans water treatment plants, designs office buildings, and engineers power transmission lines. These services are unglamorous but essential. The company's positioning at the intersection of urbanization, sustainability, and infrastructure renewal means that structural demand will persist regardless of short-term economic cycles.
Lesson 5: Capital-light businesses enable aggressive M&A. Professional services require minimal physical capital—no factories, no inventory, limited equipment. This means most of the cash generated can be returned to shareholders or deployed for acquisitions. Sweco has consistently used this advantage to maintain an active acquisition program while preserving financial flexibility.
XI. Competitive Dynamics & Strategic Analysis
Porter's Five Forces:
Threat of New Entrants: LOW-MODERATE. High barriers exist through reputation, track record, and relationships accumulated over decades. A leading position is essential for attracting the best employees and meeting clients' needs with the best solutions. Regulatory requirements and professional certifications add complexity. However, small boutique firms can still enter niche segments, and digital tools may eventually reduce some barriers.
Bargaining Power of Suppliers: LOW. The primary input is human capital, which is distributed across labor markets rather than concentrated. Sweco's scale and brand provide recruiting advantages. Sweco remains one of the industry's most attractive employers, with high employee satisfaction and decreasing voluntary turnover.
Bargaining Power of Buyers: MODERATE. Public sector clients—a significant portion of Sweco's revenue—often use competitive tenders and framework agreements that constrain pricing power. However, switching costs exist due to project knowledge and established relationships.
Threat of Substitutes: LOW. Engineering and architecture services cannot easily be substituted by alternative solutions. Some large clients maintain in-house capabilities, but this represents displacement rather than true substitution. AI and automation may change delivery methods but won't eliminate the fundamental need for professional engineering judgment.
Industry Rivalry: MODERATE-HIGH. The European engineering consultancy market remains fragmented. Cowi is perceived as one of SWECO's biggest rivals. Like SWECO, Cowi also operates in the Industrial Goods & Services industry. Compared to SWECO, Cowi generates $1.1B more revenue. Competition includes global players like AECOM, WSP, and Jacobs, as well as regional specialists. Consolidation continues, suggesting the industry hasn't yet reached equilibrium.
Hamilton Helmer's 7 Powers:
Scale Economies: Present but limited. Sweco benefits from spreading overhead across more projects, but engineering services don't exhibit the dramatic scale economies of manufacturing or software.
Network Effects: Minimal. Unlike platforms, Sweco doesn't become more valuable to users as more users join.
Counter-positioning: Sweco's decentralized model represents mild counter-positioning against competitors organized around centralized delivery. Incumbents may find it difficult to match this approach without disrupting existing structures.
Switching Costs: Moderate. Clients develop project-specific relationships and institutional knowledge that creates friction around switching.
Branding: Meaningful in talent markets and for large public-sector contracts. Sweco's reputation for quality influences both hiring and client selection.
Cornered Resources: Limited. Engineering talent is not uniquely available to Sweco, though the company's culture and employer brand may attract talent that might not join competitors.
Process Power: This is Sweco's strongest source of competitive advantage. The Sweco Model—decentralized decision-making, knowledge sharing systems, acquisition integration methodology—represents process power developed over decades that competitors cannot easily replicate.
XII. Key Performance Indicators
For investors monitoring Sweco's ongoing performance, three KPIs deserve primary attention:
1. EBITA Margin
We delivered a full year double-digit margin for the first time in over a decade. EBITA margin captures both pricing power (can Sweco raise fees?) and operational efficiency (is the billing ratio improving?). The trajectory from single-digit margins toward sustainable double-digit margins represents genuine operating improvement. Investors should track whether this margin expansion continues or stabilizes.
2. Organic Growth Rate
Total revenue growth combines organic performance with acquisition contributions. Organic growth—revenue growth excluding acquisitions—reveals underlying demand for Sweco's services. The organic sales growth rate was 4 per cent. Sustained mid-single-digit organic growth alongside acquisition-driven expansion suggests healthy underlying demand.
3. Billing Ratio
The positive trend mainly being driven by higher average fees and an improved billing ratio. Billing ratio measures the percentage of consultant time charged to clients. For a business with minimal variable costs beyond compensation, billing ratio improvement flows directly to the bottom line. Even a 1-2 percentage point improvement across 23,000 employees generates substantial profit impact.
XIII. Risk Factors and Investment Considerations
Bull Case:
Europe's €9 trillion infrastructure investment requirement creates a multi-decade demand tailwind. Sweco's positioning in energy transition, sustainable construction, and infrastructure renewal means the company captures an increasing share of growing markets. The acquisition machine continues generating value through disciplined integration. Margin expansion continues as the Sweco Model is further embedded in acquired operations. Market leadership in key geographies attracts talent and wins large contracts, creating a virtuous cycle.
Bear Case:
Economic slowdown in Europe reduces infrastructure investment, particularly in private-sector construction. Rising interest rates constrain public budgets for infrastructure spending. Talent competition from technology companies and other sectors reduces Sweco's recruiting advantage. Acquisition integration becomes more challenging as the company grows larger and more complex. AI and automation eventually disintermediate some engineering services, reducing billable hours.
Key Uncertainties:
The trajectory of European infrastructure investment depends substantially on political decisions about climate policy, defense spending, and fiscal priorities. Sweco has limited control over these macro factors but significant exposure to their outcomes.
Integration of recent acquisitions, particularly the significant additions in 2025, requires execution over coming quarters. While Sweco has a strong track record, each acquisition carries integration risk.
Geographic exposure to multiple European economies creates diversification benefits but also complexity. Performance in any single market can diverge from group trends.
Material Legal/Regulatory Considerations:
Engineering consultancies face professional liability exposure from project errors. Sweco maintains professional indemnity insurance, but large claims could affect financial performance.
EU regulations around sustainability reporting, climate targets, and infrastructure standards generally benefit Sweco by driving demand for its services. However, regulatory changes in professional services—licensing requirements, liability frameworks—could affect competitive dynamics.
XIV. Conclusion
In Stockholm's metro system, passengers boarding at Odenplan station descend into a space that reflects decades of Swedish engineering tradition—clean lines, natural materials, light penetrating deep underground. They're unlikely to know that Sweco architects designed this station, coordinating with metro operators, municipal planners, and construction contractors over a decade-long engagement. They're even less likely to consider that this single station represents one of 150,000 annual projects executed by a company that traces its heritage to a heating engineer who started business when Sweden was still largely agrarian.
For over 130 years, Sweco has been involved in societal change, helping its customers solve the challenges of our time. This isn't marketing puffery—it's a factual description of what engineering consultancies do. They don't make physical products or provide consumer services. They help societies build the infrastructure that enables everything else: the tunnels that carry commuters, the treatment plants that clean water, the power lines that distribute electricity, the buildings where people work and live.
Sweco's investment case rests on three pillars. First, structural demand: Europe's infrastructure deficit is real and will require trillions in investment regardless of short-term economic conditions. Second, competitive positioning: the Sweco Model creates genuine advantages in execution and acquisition integration that competitors cannot easily replicate. Third, financial discipline: consistent profitable growth, prudent capital allocation, and sustainable dividend payments demonstrate management quality.
The company isn't cheap by traditional valuation metrics. But quality rarely is. For investors seeking exposure to European infrastructure investment through a well-managed, capital-light business with a multi-decade track record of execution, Sweco merits serious consideration.
The engineers and architects descending into their offices at Sweco's Stockholm headquarters each morning may not think of themselves as participants in a €9 trillion infrastructure transformation. But that's exactly what they are. And that's exactly why their company matters.
Myth vs. Reality Box:
Myth: "Engineering consultancies are commoditized businesses with no differentiation."
Reality: While basic engineering services are indeed commoditized, Sweco's integrated architecture-engineering model, distinctive operational approach, and market leadership positions create meaningful differentiation. The company's ability to win large, complex projects—and to integrate acquisitions successfully—demonstrates competitive advantages that pure price competition cannot explain.
Myth: "Roll-up strategies inevitably fail as companies get larger."
Reality: Many roll-ups do fail, but Sweco's 160+ acquisitions over 25+ years demonstrate that disciplined execution can create sustained value. The key differentiator is having a genuine operational model that creates value at acquired companies, rather than merely financial engineering.
Myth: "European infrastructure is a mature market with limited growth potential."
Reality: The green transition and infrastructure renewal requirements represent the largest European investment cycle since post-war reconstruction. A €9 trillion investment need through 2040 suggests growth, not maturity.
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