Welcome to the webcast by NKT here in connection with the announcement of the Q3 report this morning. My name is Michael Lyng, President and CEO for NKT, and I am here today seconded by Basil Garabet, the CEO and President from NKT Photonics. I am also today seconded by Roland Andersen, the CFO of NKT. It is the first time that we are reporting numbers only for NKT. As you know, we finalized the split of Nilfisk at beginning of October. Nilfisk is still part of the numbers end of September, but in this presentation today, we will only focus on NKT and NKT Photonics. I will cover some business-related stuff and our overall performance. I will hand it over to Roland to take you through some of the numbers. We move into NKT Photonics, and in the end, we will jointly do a Q&A session.
On slide number five, you can see here that after a good capital market day back in September, and an extraordinary general meeting in October, we finally delisted Nilfisk and had the first trading day the 12th of October. I think we can all be satisfied with the result of the split. It was a tough process, a lot of detailed work needed to be executed, but now we are here in the new setting. As you know also, Nilfisk are also communicating numbers for third quarter today. Moving into 2018, we will somehow make sure that we do not report numbers at the same day. With that, let us move into group highlights for the third quarter 2017. We saw an increased operational EBITDA margin in the year or in the quarter. We reported 14.4%, up from 10.4% third quarter 2016.
With that number, we somehow also demonstrate the potential and also the robustness of the business, because it actually reflects a quarter with high utilization both in Karlskrona and in Cologne. Although we are not fully satisfied with our underlying performance in the applications on the product business. We are reporting an organic growth of 24%, and this is cleaned up from the acquisition effect of ABB High Voltage Cables. If you somehow look into the different segments, it is definitely the project business supporting a 4% organic growth, whereas we are more flattish in the product business. We also are satisfied with the recently announced project wins.
We got an order award for the Borssele Beta, and then we have also announced that we are the preferred supplier on the Moray East and the Triton Knoll projects, and I will come back to that a little bit later in the presentation. It somehow underlines the robustness and also the strengths in the offshore market that we currently are seeing. With the numbers for third quarter, we are reconfirming our financial outlook for 2017, and that is unchanged. In the Photonics business, and Basil will also cover this in greater detail a little bit later in the presentation, we are somehow also satisfied. As normal in this business, we tend to see a very strong fourth quarter, and that is really where we are seeing the growth in a year, and that will also be the situation in this year.
And that's why being flattish in Q3 is actually okay and more or less in line with the expectations. We are also reporting that we have a slight adjustment for some historical LTI programs. It's a kind of a one-off, and it hits the number with almost EUR 2 million. That's why the EBITDA is negative with almost EUR 1 million, and if you somehow adjust for that, which is more representing the underlying business, then we are reporting close to EUR 1 million operational EBITDA. We finalized the Onefive acquisition back in September. Caused by this LTI adjustment, we are revising the financial outlook for the year. But it doesn't really impact the totality of NKT. Let's move into slide number seven, where we are comparing a lot of numbers here. If you start by looking at the revenue increase, we see it's up with EUR 139 million.
Metal prices are supporting that journey with almost EUR 32 million. FX is not really impacting the numbers. Then we have some acquisition impact, but also some divestment impacts before we are then down to the underlying organic growth of the EUR 58 million that entirely relates to NKT. On the operational EBITDA line, you can see that we are up with EUR 22.2 million from the EUR 20.8 million to the EUR 43 million operational EBITDA. Here, EUR 23.3 million of that relates to NKT, where we see an underlying EBITDA margin increase from 10.4%- 14.4%. So really a strong development. This level of 14%- 15% is actually the level that we somehow want to realize full year. When we do that, we will somehow be able to meet our medium- to long-term strategic ambitions.
NKT, as mentioned before, down EUR 1.7 million, but up EUR 1 million if you adjust for the LTI program, and then we have small impacts from others. We continue to do well on the integration of the former ABB High Voltage Cables business that we took over back in March, and as communicated earlier, there are of course, also some integration costs related to that. As you can see here in the lower part of the slide, we have spent EUR 5.3 million in integration costs, and also have to announce that we are following that according to plan. I will not cover more of the numbers here because Roland will come back to that in greater details a little bit later. We also see cash flow more or less in line with the same period.
Last year, we were reporting cash flows from operating activities of around EUR 46.7 million, more or less similar to last quarter. But as you can see here, this quarter we have less positive impact from changes in working capital, and that's why you don't see a higher operational cash flow. Cash flow from investments of EUR-30.8 million, down from EUR 20 million. So we continue to invest in the business. Of course, also here impacted by the acquisition that happened in this business. You can see impacting here, and if you look at the full year for the first three quarters, of course you see the significant imapact of ABB High Voltage Cables acquisition with the just south of EUR 800 million number. If we move on to slide number nine, this is how we are somehow trending on our leverage ratio. We are end of Q3 at 2.6x operating EBITDA.
This is somehow for the totality of the business because these are included in these numbers. We somehow also try to illustrate the split that we have after the date here, after September announce. As you can see out of this, EUR 340 million goes to NKT and EUR 318 million goes to Nilfisk. This should be very much in line with what we have communicated earlier on. Then let's move into NKT with this nice picture of NKT Victoria. If we look at slide number 11, we can look at the performance in the different segments and the project business, as already mentioned, 44% up in the quarter. That really does reflect the fact that we have been extremely busy in the sites, both in Karlskrona and in Cologne. We have seen an execution on the different projects fully in line with expectations.
The numbers that we are reporting here in Q3 for the former NKT business or for the Cologne activities, are not yet impacted by any significant project closures. That will happen here in Q4 due to the fact that some of our customers have been slightly delayed, not caused by us, but caused by other issues. It's also a Q3 that we see a full utilization of NKT Victoria. She's been very busy installing cables both in Belgium, and then also as communicated earlier, up in Scotland. The HV onshore market remains to be a tough market, in particular in the markets where we typically are seen to be very strong, for example, the German market. We continue to do whatever we can in order to offset the negative development. We know it's also extremely tough for competitors there.
Some of them closing sites, closing production lines, laying off a lot of people. That's not the situation for us. We somehow try to optimize and allocate resources to the offshore sector. That doesn't change the fact that we are still hoping and also expecting to see that market somehow recover in the years ahead of us. If we then look at the product business, which is more stable here, we are reporting 1% organic growth. We see pretty good market conditions in the Nordic countries, in particular in Sweden, also supported by U.K. So check mark on that. Then in the former quarters, we have communicated a significant weaker Central and Eastern European market. In particular, Poland disappointed us in the first couple of quarters.
Here we are happy to announce that we start to see a recovery of that market into Q4, although it's still a market that we somehow need to make sure that we somehow are sitting close to, because it does still remain to be under pressure. The fourth year in Germany are still impacting the numbers in the medium voltage segment slightly, although it's almost behind us, and we should start to see more positive numbers in Q4 in the medium voltage segment on a year-on-year basis. With that, we are reporting a 9% organic growth for the totality of the nine first months, and we are fully in line with expectations.
Then looking a little bit in the years ahead of us, we are happy to announce that we have seen continuing high activity levels in the different tendering markets, both when it comes to offshore wind, but also when it comes to interconnect, either offshore or onshore. We are here mentioning three project wins that we announced the last three months. The Borssele III, which was an option where the customer could somehow trigger that, and he did. It will impact the numbers with a top line of EUR 90 million, and this will be fully occupying the offshore wind capacity that we have installed in Karlskrona as of today. Then we also are reporting a preferred supplier agreement, both on the Triton Knoll project, but also the Moray East. These two projects were two out of three projects mentioned under the recent announced Contracts for Difference award in U.K.
We also here are illustrating the contract value. These are somehow contracts that are conditions to financial close, and we expect that to happen mid- 2018 for both of them. Then we are somehow ready to move ahead with the production. So these productions, these products give good visibility into 2019, both partly in Karlskrona, but in particular in Karlskrona. So good to see. We remain to be very positive and optimistic on the years ahead of us in 2019, 2020, and plus.
We also are, of course, following the development on a number of onshore interconnect projects, among others, the SuedLink projects in Germany that are progressing well, but also the Viking Link project, the project with the DC connection between Denmark and U.K., where we have noticed that on the Danish side, there is a strong political willingness to support that project, and it has also received the necessary approvals. So good progress there as well that somehow are supporting our underlying business assumptions. Also, as you know, when we move into 2018, we will start to communicate more on the service business, service and accessories. Here we also have seen a good project win, although it is smaller top-line wise, but it is a good margin business. Here we are currently executing repair work for the Statnett up in Norway.
If we move on to slide number 13, and I already have touched on part of this. We see a strong and positive political climate that somehow are putting a pressure on making the right decisions in the different segments that we are servicing. We have continued to be positive on the offshore wind segment in Europe. We, of course, have noticed the pressure that there are on some of the players in that market. What we do is that we work very closely with our customers to make sure that we have the right offering to the customer in order to be competitive. We all have somehow a responsibility to make sure that we are driving down costs in the offshore wind segment, and that is not new for us at all.
For us, it is really about standardizing the different solutions to the offshore wind segment in Europe. If we are able to do that, the customers would also be able to benefit strongly from that. That's what we are working with. Then, of course, we're also working in moving it into more a turnkey business, so we can really benefit from the NKT Victoria capability and provide the customers with turnkey solutions, meaning production, installation with the NKT Victoria. The project wins we already have talked about, so I will not mention more on that. Then the U.K.-Denmark link mentioned here, and I also touch on that very important project for NKT, and it is one among several interconnect projects that somehow are being developed both in Europe but also outside Europe, both in country and the U.S. Integration progressing as planned.
Since beginning of September, we are fully working in a new organizational structure. From that perspective, we are fully integrated. Of course, there is a lot of optimization potential that we still are working on, but somehow a prerequisite for that is we need to have one organization, and we have that. We are in the process of qualifying the Cologne facility to be able to produce high-voltage DC gates. That is the following plan. It is a very important project because it somehow ties into the market potential in Germany. It also ties into the synergy potential because some of the synergies are somehow related to manufacturing, where the fact that having two factories that can complement each other are closely tied into manufacturing synergies, but also to more commercial-related synergies, because it will give us more capacity to sell to the market.
That requires a lot of focus and it is following the plans. With that, I would like to hand over to Roland to take us through some financial aspects of the performance before we then hand over to Basil. Please, Roland.
Thank you, Michael. If we move on to slide 15, the development in our order backlog. Our order backlog stands at a bit more than EUR 800 million coming out of Q3, down from a bit more than EUR 1 billion in Q2. 25% of that is expected to be delivered for the remainder of 2017 and then 75% in 2018 and onwards. After the balance sheet day, as Michael went over, we have received the order on Borssele Beta and also being awarded on preferred suppliers on Moray East and on Triton Knoll , and that adds up to potentially the order value of EUR 335 million. If we look at the order backlog, it's still a good mix of both offshore wind but also interconnectors and a few projects in the oil and gas sector.
If we move on to slide 16, that is basically reiterating what Michael touched upon, our LTM EBITDA margin up to 12.7%. The quarter of Q3 of EUR 44 million is the best quarter we have had. It is of course driven by the acquired activities in the high-voltage business, and it reiterates our potential if everything sort of stays at this level. I think the quarter Q3 reveals a strong quarter in the solutions business, both the factory in Cologne and also the factory in Karlskrona was running close to full steam, and also NKT Victoria has been deployed most of third quarter. The margin itself for the quarter was 14.4%. If we move on to slide 17, we are continuing to work with our working capital. As you know, there has been tremendous work in the legacy NKT business on receivables and inventory over the past two or three years.
We sold part of the long overdue outstandings by end of 2016, and then the acquired high-voltage business has also added positively to working capital. Positive means that working capital becomes negative here, and that means that our working capital as a percentage of revenue is now close to 0%. If we move to slide 18, Michael touched upon some of these numbers, an organic growth of 24% and an EBITDA margin of 14.4%. EBITDA of EUR 43.8 million compares to EUR 20.5 million last year, and majority of this is, of course, from the acquired high-voltage business. Our ROCE is now up to 8.7% for Q3. And interesting to see here is also that our free cash flow is now 16.6% for the quarter versus 5.5% in the same period last year. So ROCE up and also a positive free cash flow development.
We will then, on this basis, reiterate our financial outlook for 2017 at a revenue and fundamental prices of EUR 1.1 billion and operational EBITDA of around EUR 140 million. If we move to slide 19, this is a little bit of a recap of what we presented on our Capital Markets Day in September. We are currently at an EBITDA for 2017 of EUR 140 million, and our mid-term target is to reach an EBITDA of EUR 200 million and EUR 225 million. And that is given that we are not expanding capacity from where we are today. If we reach that level, then our target would be a return on capital employed above 13%.
The way we think about this is that what is going to build us from the current EUR 140 million up to EUR 200 million and EUR 225 million is, first of all, the solutions, including the vessel, have a lot of operational improvements that they will work with over the next two, three, four years. Efficiency in the front end, efficiency in the way they drive the business. Also, the solutions business will be included with 12 months and not only 10 months like in 2017. Similarly, in the applications business, where we have a lot of initiatives on commercial excellence and the way we go to market, operational improvements. And also the services and accessories business are expected to induce a lot of efficiencies and get organized in the new segment structure here and also grow from where we are today.
Then, in addition, we will deliver the synergies from the acquisition with the former ABB High Voltage Cables activities of EUR 30 million, effective from 2019, as previously stated. Our Excellence 2020 initiative will also add to this journey here under the turnaround of the railway business, the potential turnaround of our HV onshore activities in Cologne. We will harvest quite some efficiency gains from our new target operating model and installation of global excellence functions here under quality lean, R&D technology, and also a more global organization of the support functions. I think with those comments, I will give over to Basil on NKT Photonics. There you go, Basil.
Thanks, Roland. We move on to slide number 21. Going through the financial developments in the third quarter. In the imaging and metrology sector, which is our largest sector, we had a very solid order intake for the quarter, as expected, and that will bode well for our fourth quarter. We also launched a new product platform, the SuperK EVO, and that's now available for general sale into the fourth quarter. We will have several marketing campaigns to bolster that into the new year, especially with our large shows and conferences starting in January and March. In the sensing and energy sector, we have a pretty solid demand coming in for our Koheras fiber laser line, resulting in very solid order backlog way ahead of last year. Again, that will bode well for our fourth quarter.
In contrast, our LIOS sensing business is below expectations, mainly to a delay in a number of projects. Again, that will probably go into the fourth quarter, but more likely into the first quarter of 2018. In our third sector, which is one of our most promising in material processing, we completed the acquisition of Onefive, which is one of the major ultra-fast laser manufacturers based in Switzerland, in Zurich. Completed that on the 1st of September. In our results, we have about one month's revenue in Q3. Integration is going well. It's going to plan and is expected to complete in the first quarter of 2018. We move to page 22, the NKT Photonics summary.
As you see, the revenue of EUR 11.2 million is slightly ahead of the same quarter of last year in 2016, and the first three quarters at EUR 29.9 million is ahead of the first three quarters of EUR 26.9 million. The difference you see in the EBITDA is, as Michael mentioned earlier, is due to a Long-Term Incentive program for senior management, and that's a one-off that we've been put in. The EBITDA has also been impacted with a new ERP system that we have been installing into the company, which will help with integration. We have four sites. We have also moved to a new facility, and that happened in September. It's given us much needed space or expansion. In fact, this is about 40% more. Finally, the outlook for the year. The organic growth, we're still holding at 10%.
The margin, again, due to the Long-Term Incentive programs, has been revised to 10%, where it was previously at 15%. We move to the next slide. Again, this is a recap of what we presented at the Capital Market today. There is no change in that. I am not going to go through it in detail, but the main four drivers of what we do today is moving up the food chain. We saw that in the acquisition we made. We are focusing now on organic growth. We are going to stabilize what we have, increase the growth in there, and actively pursue other opportunities within these particular areas. We also put in lean manufacturing to all our operations, and that will help in our strategic growth. Finally, like everything in our business, fast introduction of new products is absolutely needed, and we have additional focus on that.
For my final slide, again, just to reiterate what we said at the Capital Markets Day, we expect our annual organic growth to be upwards of 10%, expect our EBITDA margin in the medium term to be in the 25% region, and our return on capital on 20%. Thank you very much. I will pass on to Michael.
Thank you, Basil. That somehow finalized our review of the Q3 and also touched a little bit on long-term or mid-term targets in both the businesses, and we are ready now to move on to the Q&A part. Operator, I will hand it over to you.
Thank you, sir. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will pause just for a moment to allow everyone an opportunity to signal for questions. First question comes from Christian Johansen, from Danske Bank. Please go ahead, your line is open.
Yes, thank you, and good morning. You have talked about this production gap at the Karlskrona in 2018 before. Can you just sort of give us an update on that, especially in terms of those few orders still available in the market which could solve this issue. Are they still there, and then how are they progressing?
Yes, we are still working on trying to create more visibility for 2018. Bear in mind that it's not that we don't have any visibility, it's mainly a second-half issue in Karlskrona. We have a number of different initiatives that we are working on. Of course, we are trying to touch on the large projects in the market where we have communicated on those before, and they are still active. But unfortunately, we have not been able to communicate any wins there. It's not that we have lost anything, but they are progressing with maybe a slight slower speed than we had somehow hoped for. There are also a lot of other opportunities that we are working on. There are smaller projects that also will impact the numbers.
There are also the fact that we are looking into making sure that we will have full utilization of NKT Victoria during 2018. That means that we are also looking to charter her out in second half or to optimize everything around her. Then last but not least, as we also are moving towards second half of 2018, the 2019 numbers are of course also becoming very important. There we are happy to announce that we have seen a significant project win there. The more we win for 2019 and the year ahead of that, the more flexibility we will also have in moving some of that into second half of 2018 and also to optimize the overall loads. That is very much the picture.
Okay. That's quite clear. My other question was regarding the HV onshore business. You sort of have said the same quite a number of quarters now that it's still tough and there's no improvement. Can you just elaborate a bit more on what this means for earnings, because I'm assuming that segment is loss-making as it is right now, but is it loss-making at a constant level, or is there a deterioration of the earnings as well, or how should we think about that?
No, it's loss-making at a pretty constant level. I think even I have communicated a EUR- 10 million EBIT number in the past, and that's really where we are. The market is somehow the market, and we cannot really impact that. We can of course impact the number of markets that we are addressing and also our go-to-market strategy, and that's what we currently are looking into. We have strengthened our sales optimization in the project business, and we have hired a new head of sales. The name of that guy is Michael C. Hjorth. He used to be the CEO of NKT Flexibles that we divested some years back. He's having a lot of experience in the project business from a commercial perspective, and he is now working on redefining go-to-market strategies in markets that we have not really addressed in the past. That's one thing.
Another thing is that we currently also look at a number of important frame contracts in the market. Frame contracts are maybe not overly attractive from a margin perspective, but they are very important when you look at capacity planning because it gives you a base load in your factories. That's also important that we, within the next quarters, are coming back on track and get our fair share on significant frame contracts. So we do a lot of different initiatives, but that does not change the fact that where we are strong, in particular in Germany, HV onshore, the market is very challenging.
The market will, however, improve, at least if we are right in our forecast on the HV onshore interconnect market, the shipping projects, because that will in itself also impact the overall supply-demand balance in the industry, and also thereby have a positive impact on the more traditional high-voltage onshore business.
All right. Excellent. That was all from me. Thank you very much.
You are welcome, Christian.
Next question comes from Casper Blom from ABG. Please go ahead, your line is open.
Thank you very much. A couple of questions regarding the cable business from my side as well. First of all, Roland, you were very kind to explain how you get to your medium-term outlook. I suppose it is also an outlook that is based on fairly high utilization, which you are also seeing in this quarter. If I take the EUR 44 million that you provide in this quarter and multiply by four and add the EUR 30 million of synergies, I basically get to the lower end of your medium-term guidance range. However, you mentioned a whole lot of other things that should also drive things. Should we really expect all those things to add only around EUR 20 million to the calculation I just suggested, or is there really an upside if all these things go through? That is my first question.
Casper, in the product business, that is a market where you constantly need to work on a number of improvement factors in order to maintain your profitability, because it is a commoditized segment. It is not a bad segment, but that is just the underlying facts for that business. What we work on, we decided all that percentage, that ties into our Excellence in Transition journey. Part of that will reach the bottom line in order to close the gap between where we are today and where we want to be. Then part of it, we also somehow need to pass on to customers in order to maintain to be competitive in the markets where we have decided to play.
There are, of course, a lot of positive things, but we also just know that there will also be negative surprises that also somehow needs to be covered by the overall journey. The EUR 200 million to EUR 225 million are then the sum of all this.
Okay, fair enough. Michael, you touched a little bit upon this, but can you just confirm that you are not seeing any sort of unusual price pressure on your products? This, of course, being said in the light of what we are seeing the wind turbine producers saying at the moment, and you also being part of that supply chain.
I can definitely confirm that I do not see any connection between what we see in that segment and our segment. I think you need to bear in mind there that the majority of the pressure you see in the wind segment is related to onshore projects. That is not really where we play when we talk about our project business. That does not change the fact that it is of common interest between us and our customers to make sure that we constantly work on doing more or maintain our competitiveness. We also do that in strategic cooperation with our key customers, and we want to maintain that.
Also have something to do with how you go to market, what part of the value chain do you actually cover, where we think we can be more competitive seen from a customer perspective if we do a combined supply, but also installation of the cables, then we can really optimize and also de-risk the overall projects. That will, of course, have a positive impact on price. For us, it is really about standardized small offerings to the offshore segment. Customers have a tendency somehow to start from a blank piece of paper every time they start with a new offshore project. There is no reason to do that. Why do not you use what they know works from former projects, instead of begin from the starting point every time? Because that, of course, also impacts supply chains.
A lot can be done in standardizing offerings to the market.
Excellent. Just want to make sure. Then just a final follow-up. You provided the slide with the backlog. Can you break that down into how much backlog you have for 2018 isolated? Secondly, sort of spilling over effect from the possible slightly lower activity in 2018, what should we expect on the ABB High Voltage Cables synergies next year? If you can give a little guidance on that as well. Thanks.
Yeah. Thank you for that. I think the majority of the 75% we talked about in the backlog, you can expect to be in 2018. Then, of course, what is not in the backlog is the ongoing things that we do month to month to month when you build up your revenue base. So that is one thing. The second thing is that all along we have said that we are taking out synergies slowly in 2017, and accelerating a little bit in 2018 and then full year impact will be in 2019. So you should not expect a lot of the synergies to have a full year impact in 2018.
Okay, that is clear. Thanks a lot.
Next question comes from David Vos from Barclays. Please go ahead, your line is open.
Good morning, gents. Thanks for taking my questions. Just one on the backlog as well. I noticed that the slide you put up at the Capital Markets Day, the one that shows the 2x EUR 5 billion worth of potential order intake in 2018 and 2019, was not in today's presentation. What do we read into that, coupled with the more cautiously sounding comments that you just issued? That will be question one. Thanks.
Thank you for that question. You should absolutely not read anything into that. You can still find the slide on our homepage, and that slide still stays. This is a quarterly, somehow, performance review, and that's why we do not really touch on the long-term perspective, other than the comments that we provide. We have absolutely the same strong view on coming orders into the market. The 2x 5 stands without questions.
Okay. If we could look at the Borssele Beta contract as a good example of how a typical project might flow from order intake into revenue, could you sketch that picture for us? You take the order in Q4, delivery is scheduled, installation is scheduled for late 2019. What is the revenue profile between now and then for that particular project?
Thank you, David. First of all, that depends a little bit on when we decide to produce it. But as we expect to produce it in Karlskrona and we have full visibility in Karlskrona for 2018, we expect this to be produced during 2019 with the current production planning. Then we saw that the revenues are taken in as and when we produce cost for cost, basically. We can produce it in 2019, revenues will be taken in 2019, and then installation end 2019, beginning of 2020.
Maybe just to add, of course, as I mentioned before, it ties into the overall capacity planning, right? As we move into a second half 2018 and 2019 and the year ahead of us, and when we know exactly what is in the backlog, we will start to optimize and also use our internal storage facilities tying into really optimizing capacity planning.
That is very clear. The question is really around then, what does that do to working capital? If I understand you correctly, optimization in this case would mean that you would start producing in 2018 rather than 2019. Does that then come hand in hand with a big working capital buildup? Or will the customer be so kind to take the stuff off your hands and sort of therefore not create a working capital issue?
I think that's a commercial decision with the customer, right? In some instances, it can be both our and our interest that we put the production differently timing-wise than originally planned, and then we will make that agreement directly with the customer. In other instances, we will decide that it's better for us to use the production capacity now, put it on stock, and then deliver later on. There's no straight answer to that one.
Okay. The question goes hand in hand with the question of the former analyst who wants to know what the backlog is in 2018, right? I think the reason that you do not break it out at this moment, is that because it is still a little bit up in the air, or do you just not want to give us a number for another reason?
We always want to give numbers if we have transparency. We are not holding back information. When it comes to capacity planning, it is difficult to forecast how that will be for 2018 and 2019 before we exactly know what we can do. That is a daily and a quarterly planning exercise. If what you are somehow referring to is, if we are having an opportunity for filling in more capacity into Karlskrona in second half of 2018, even with a negative working capital impact, we would of course do that because that is a commercial sound decision to do. That is how we do it every day.
Okay. The view on the guidance for 2018, when can we expect that? Because that presumably would incorporate a sort of more accurate split between then 2018, the current year, and 2019 and onwards.
Yeah. We will guide for 2018 when we are announcing the numbers for the full year 2017 in our annual report.
Okay.
Basically following our way of guiding.
Okay doke. Thanks very much.
You are welcome.
Ladies and gentlemen, as a reminder, please press star one if you wish to ask the question. Next question comes from Claus Almer, from Nordea. Please go ahead. Your line is open.
Thank you. Also, a few questions from my side. Michael, could you give an update on the situation in the U.S.? That would be the first one.
Yes, I can give an update. We are continuing to have a high focus on U.S. and also continue to build up, in particular front-end sales capabilities and resources. The projects that are currently there are progressing well. It is all about receiving the right incentive packages. There, some of the orders that we are targeting have been shortlisted in that process. So it is a positive development, but we are not yet there where we somehow can announce any win, so to say. Only positive development.
Okay, that is good to hear. Also a question regarding pricing. We talked a lot about the subsea segment or the high-voltage segment. Could you also give an update on the other segments, mainly within the product segments?
Yes, I think in the Nordic markets, and being Denmark, Sweden, and we are also counting in the U.K., we see pretty strong markets that somehow impact the overall supply-demand balance. We are not the only one being a little bit tight on capacity in those segments. That of course impacts the price environment that we definitely do not see any negative consequences of that. Then when we move into Central Europe and Eastern Europe, it is a little bit more tough, of course, caused by the Q3 and last year, the medium-voltage market in Germany are significantly down from a volume perspective, and that also impacts the prices, unchanged compared to what we said before. I have to say that actually the demand in the market is at a slightly higher level than expected.
Moving into Eastern Europe, Poland, where we have a very strong market position and also tied related to the fact that we have local production there, has been very strong. The first couple of quarters being impacted also by Germany. But there we start to see a recovery of that market, and we are also moving into fourth quarter, we are increasing the price level in that business.
Okay. And with this situation in Poland, which is an important market for you in Eastern Europe, will that have a meaningful impact on 2018 earnings, for instance, if things continue as it is today?
For the application business, yes. Maybe for the totality of the business, including project business, less visible. But, yeah.
Okay. And then, just my final question goes to Q4. Has there been, or do you expect any special events in Q4? Yeah, that would be the question. I am not talking about a disaster or anything. Just will Q4 be a more traditional, normal quarter, or is there any weather-related issues or something like that we should take into account?
No, there are not any particular. We still expect the business to happen on the 24th.
Good to hear.
More or less in line with a normal quarter.
Okay. The only reason why I am asking is that after nine months, the implicit Q4 guidance looks a bit on the conservative side. That is just why I am asking.
We also know that Q4 is a tricky quarter in the application on the product business. It can easily be impacted by weather conditions, et cetera, and partly that can also impact the project business. That's what we are guiding, and you should not expect much more than our guidance for fourth quarter.
Okay, thank you so much.
There is no further questions at this moment.
Okay, but then we can somehow close the call. So thank you for dialing in and for questions. As illustrated here on the last slide, the financial calendar for upcoming events. We also this morning announced the full financial calendar for 2018. But for now, until further, we will be back on the 27th of February with our fourth quarter announcement, including annual report and also our guidance for 2018. Thank you and goodbye.
This concludes today's call. Ladies and gentlemen, thank you for your participation. You may now all disconnect.