Earnings Call: Q1 2020

Apr 28, 2020

Thank you so much. And welcome all of you to this webcast when we will present the result for quarter 1 for what period we are sorry about the delay in 5 minutes, but I hope we are now up and running and that you all hear me well and you can see the slides. So moving into the quarter results of quarter 1, you mean that it's a slide number 2, Page number 2, we will show them the overall result for the first quarter. And as we have in the headline, we have seen a stable result during quarter 1. The combined company, which is the interesting numbers, where we can see that the net sales amounted to SEK5.3 billion and the EBITDA of $474,000,000 corresponding to EBITDA margin of 9%. The top line we're thinking minus 3.1%. And we have highlighted 3 main issues, explaining why we had the negative growth. And that was number 1, effect from the stop in automotive supply chain during end of the quarter. And we also have an ongoing repositioning of the annual division actually to reposition annually in those healthy market and segments that we want to operate in and here we have taken a kind of top line hit, but actually the underlying performance is improving. On top of that, we have the big EPC project in Philippines that was closed down or finalized and that also in the comparable number affected quarter 1. So that's the major reason for the negative minus point 1. If you look on the EBITDA for $74,000,000 and the 9 percent, what's actually solid from our side? You could always wish for more, but also including some effects in specialty industry and digital solutions under the quarter, I think the 9% shows a solid stable performance in the overall quarter. We had a solid capital development and you saw I see a further comment more on that. And of course, we took a lot of measures to mitigate the effects from the corona crisis that we could see at the end of the quarter, but of course, we will now feel them more in quarter 2, and we have taken a lot of measures. Thank you so much and welcome all of you to this web costs when we will present the result, for quarter 1 for what period we are sorry about the delay of time units. But I hope we are now up and running and that you all hear me well and that you can see the slides. So moving into the quarter results, of quarter 1, you mean that it's slide number 2, page number 2, where we show them the overall result for the first quarter. As we have in the headline, we have seen a stable result during quarter 1. The combined company, which is the interesting numbers, where we can see that the net sales amounted to SEK5.2 billion and the EBITDA SEK474,000,000 corresponding to EBITDA margin of 9%. The top line we're thinking minus 3.1 Sunton. And we have highlighted 3 main issues, explaining why we had the negative growth. And that was Number 1, effect from the stop in automotive supply chain during end of the quarter, And we also have an ongoing repositioning of the NNE division actually to reposition NNE in those healthy market and segments that we want to operate in and here we have taken a kind of top line hit, but actually the underlying performance is improving On top of that, we had a big EPC project in Philippines that was closed down or finalized and that also in the comparable number affected quarter 1. So that's the major reason for the negative minus 3.1. If you look on the EBITDA for $74,000,000 and the 9% what's actually solid from our side. You could always wish for more, but also including some effects in specialty industry and digital solutions end of the quarter, I think the 9% shows a solid stable performance in the overall quarter. We had a solid cash flow development and you also, our CFO will comment more on that. And of course, we took a lot of first to mitigate the effects from the corona crisis that we could see in end of the quarter, but of course, we will not feel them more in quarter 2, and we have taken a lot of measures to protect ourselves and make sure that we have a solid operations also in the second quarter. But all over a solid quarter 1. And moving into the next slide, these are some of the things that we have done. Of course, you could say that basically from 1 week to the other, we were going from the way we work before to, I would just say distance work using a lot of digital platform for close to 17,000 increase across the world. And it has worked tremendously good. I'm deeply impressed in the way we have been able to manage operation. Across our company that has worked very well and it shows that we have a high level of IC materials in the company. We have now taken actions across different counties, especially in Sweden, using 4 converged allowances. And we have now roughly 1600 employees on different kind of 4 current work allowance. Most of them centered around automotive because I guess you all know that, on 1 Friday end of March, all three big clients in Sweden decided to stop the operation due to interruption in the supply chain and actually then we were kind of really effective from that. But then we have also taken actions in step functions across the company to take out costs and make sure that we're moving into quarter 2 with as good cost structure as possible. So today, we have roughly 1600 employees on short term work allowance. We have, of course, reduced costs down here across the company, and of course, Navil, and these are short term savings, but we are also, of course, increasing the ambitions down the road in our ongoing cost program of $20,000,000 that we announced in the fourth quarter that will help us also to inform that it gets sustainable savings in our company, when we are coming after the summer, for example, and we are continuing with the important investment program But we have changed a bit in how we integrate that in order to make it more efficient, but we are still make sure that we get this essential IT platforms in place. And as you all know, we have done the board proposing a withdrawal of the dividend and we have also renewed the credit facilities. So I think just within a few weeks, we took a lot of actions that is supporting our financial performance in quarter 1, but also moving into the 2nd quarter. You also you will come back to that. But of course, it is an good thing these days to have a big part of the cost structure being flexible. And here you can see just a rough overview that a lot of our cost is, of course, connected to personal costs. So if you compare that to an industrial company where you maybe had 70% fixed cost. We have 70% of our cost base systems in different ways variable. And of course, now we are taking actions on the billable consultant side when they are effective from, for example, in automotive. But on top of that, we are now using all the tools we can, can, in different countries to take up costs being prepared for a tougher market climate into second quarter. If you look at the overall market, I would say that we started off the year in good pace, quarter, January, February, moving as we expected in a good pace. And then of course, we saw the effects on the COVID-nineteen pandemic hitting us or affecting us in the end of the quarter. But if you look on the infrastructure division with a lot of public business, We're seeing that the market is in general stable for further areas like private buildings where we can see some effect. But if you look on the overall volume, certainly if you look on the Nordic but also including Switzerland, there is It's a big appetite to continue projects. So it's a good place to be. Industry and D, there's a solution for 4, that's where we took the major hit in the end of the quarter. 10% of our total revenue, not more, but still 10% is it's geared towards Automotive Industry. And here we have 3 of our big clients in Sweden that actually soft operations end of the quarter They are now ramping up, but it's a bit it's a slightly different volume than before. And we have then taken all the necessary actions to protect us. At the same time, we have seen the industry and business solutions for the pharma and defense industry doing very well. So we also have growing business areas within the industry part. But of course, it's a bit overshadow right now from automotive and the related supply chain. Costs at the end of the day, basically no impact on the crisis so far. Good performance, good operations across all the countries they're operating in. And I was saying also the early business, we actually can see that The effects from the repositioning is starting to be seen. And I think the ongoing work is going even better than we hoped. But of course, we have seen some interruptions with sites that had to close down for a couple of weeks due to the quarantine rooms. But in general doing very well. And then in management consulting, we can see the ongoing transition in engineering and bio industry Also, giving a good market also in the management consulting business. But of course, when we are not looking into quarter 2, we can see that we will have negative effects of the COVID-nineteen. Firstly, we can see it in them in the automotive industry because that's where we have seen big inter in operations end of quarter 1, but also into the 1st part of quarter 2. We need to remember that A3 is exposed to a quite broad number of segments. And that had given us quite a good stability in crisis before, and we can see the same thing right now. Circuits And Public Business 70% private and also to different industrial segments. And of course, the 10% in automotive has been weak for a few weeks here in end of the quarter, beginning in 1 quarter 2, but in general, a good total portfolio. We are signing a lot of good interesting assignments. And I have to say that we have had, I would say, in general, at the same level of large interesting projects signed during the first quarter as ever before, And I wouldn't say that they have seen any kind of product that has not been signed due to the COVID 19 crisis. Of course, there are some delays in decisions, but in general, especially on the public sector, pulp and paper, we have seen a good order intake during the quarter. Now I will leave it over to you, so, our CFO who is sitting in Finland, who will come with a bit on growth impacted by the challenging market concession and the growth numbers. So, you also would you like to comment the slide? Thank you, Jonas. Now we are on Slide 8 growth impacted by financing market conditions and greetings from Claudi Helsinki, we have all learned to work from distance across the group. What has happened basically, you can see that the total growth in combined operation is minus 3.1%. That is obviously not optimal. But then when we are thinking about where it is coming from, and how it is coming from. We have positive growth in 3 out of our 5 divisions. And then we have 2 components that we have already known earlier. And if you take out for example, our Q4 release, you have seen that a comment related to the repositioning of energy and the EPC project volume. So we have had 1 major EPC project in southeastern Asia that was in the heavy implementation phase and now it has materially completed and there we have a bit delta between the materials and self consulting delivered to client comfort to previous year. And then the other part is that we have divested a unit within the energy fully according to our plan within the, within the repositioning program. So these have combined us to have reduction in volumes in any case. And then on top of that one, we have the automobile that has been clearly difficult segment, but at the same time, the Q1 twenty nineteen was still a difficult benchmark as we as you may remember that the automotive segment issues that we have been repeating in the couple of quarters started mainly in Q2 previous year in 2019. So Q1 2019 has still been a tough comparable period. So if we look all in all, the growth and we think about it, we have lost some CHF 200,000,000 set of volume, but at the same time, if we take the divestments and the materials and sub consulting components in total, this million is the total number, not only the EPC project impact. We can actually say that the underlying growth of our own engineers has been there. We have been able to sell more of our own people compared to subconsulting and material compared to earlier. And one of the positive components on that one is pricing. However, if prices have been having a positives being upwards which are extremely happy to report about. But then the counter part of that one is always the salary inflation. So going to next page on page number 9, improved profitability. When we see the combined operations, it is absolutely positive that our EBITDA margin is up from 8.6% to 9%. And despite the emerging global crisis that had an impact on us in certain segments, especially during the last 2 days of March, we have been able to improve the relative margin and we have been able to take a step towards our long term target of 10%. If we then see where we have been performing especially well, we have processed industry is taking a positive result, growing result with a healthy growth numbers also in the top line. Energy has been progressing in the transformation and repositioning quicker than we have anticipated. Reitrucking of the head of division has been taking really good measures and has been able to move forward to have a solid stable portfolio of energy occurring. Then our synergy program has been from the previous year. Obviously, we have gained the same we are happy to see that those ones are materialized in the bottom line. And we have taken some general cost savings to cover the drop in volume already in March, but material part of the measures you honestly mentioned are having an impact in Q2. Then if you think about the negatives, we are talking about a especially challenging situation within automotive but I will come a bit more onto the details when we go to the divisional slides. Going forward to Slide number 10, we can see the profitability per division and a bit of the breach. So we can see that also from profit perspective, we have a process industries and energy that are taking that are improving, that are improving in all measures you can imagine what comes to the bottom line. Our difficulties and the most difficult segment has been industry and digital solutions. Where basically, basically the automotive demand sharply declined especially during March. But once again, pacing off the difficult comparables of Q1 twenty nineteen, infrastructure we had an old case that we lost in court, which was a surprise to ourselves and that has impacted as a SEK 12,000,000 loss both from top line and bottom line. And that infrastructure is behind from previous year. And at the same time in the commercial building segment, especially in the last week of March, we started to see some impact from this fall. So If we take calendar impacts, we have only minor effects to our small comps compared to 2019 in our average portfolio. And then finally, if we see the common group, it is SEK 34,000,000 better than in previous year and in there, do you see the proof of the pudding and the synergy program that we have been implementing. Obviously, some parts of those ones are also visible in the division, but I would say that we have been quite successful on, touching our cost structure, which of course we will continue doing going into the future. Jumping into Slide number 11, growth and profitability. So here we can see the growth numbers adjusted with calendar FX and now referring to the pro form a, sorry, the combined operation numbers, infra 0.8 percentage points not optimal if we adjust for the loss of SEK 12,000,000, that's roughly 0.6 percentage points on top of that month. So we are in SEK 1.4 per a corner which is still below our ambitions and something that obviously, when we raise out from the COVID, we need to have a careful eye on that we can leverage the potential growth in the market also. Industrial Digital Solutions, while we can see that it's 8.5% down from growth perspective, it is good to understand that they are excluding Automotive. We have solid growth numbers in other segments And this is something that has a total operating portfolio view, we are keen to optimize and obviously then catch up with the Automotive. Process industry, solid growth going forward, underlying market is good. But there, like with any industrial market, it is difficult to how the future looks like coming into Q2 and Q3. But at the same time, we have a solid order stock and so far with outlook. Energy driven basically by the repositioning that that was explained earlier and management consulting taking new steps into market where especially former OSAT has been strong in seed and, and, we would expect to see growth our difficulties coming from the transaction as a transaction related success piece that basically drive totally up in March when the crisis broke out and then some of the supporting services within that one. For example, due diligence have suffered a bit. But in the longer term, I would say that the outlook is mute and this is the place that has a short order stock takes on crisis quickly and then recovers also quickly because the more thermal you have in the market the more, there is also need for high end, high quality services like our management consulting is offering. So all in all, I would say that we have been able to pair in a stable environment and taking the measures as needed. And we are fully prepared for the Q2, which will be difficult based on or let me know what you have seen 1600 employees on short term work allowances and similar. It indicates that the that the Q2 will be still a term over. Like you saw in our cost structure, we have all the means to to take on the crisis and to take temporary measures to ensure that we can protect both our profitability and balance sheet. If we then go to Slide 12, on the net debt development, we have a very strong liquidity. We had a solid operating cash flow, which puts the adjusted net debt EBITDA to 2.3, which basically means that excluding items affecting comparability and acquisitions and divestments trial format on rolling 12 months. We are 2.3. We hit a fairly okay number below our financial target. At the same time, what is really good and solid is that our clients are paying the invoices. Do you see and continue to see the solid cash inflow and that's also within our type of business where the cash conversion is fairly stable and high import for our liquidity. Then if we see the net debt, it was reduced SEK 67,000,000. We have the operating cash flow. We had investments at acquisition related items that were 106,000,000 at negative and then other impact of noncash related items, roughly 76,000,000. The South Africa pension liabilities which are highly technical balance sheet components, not including cash outflow, And then part of our loan structure is also in euro terms, which then when converted the industry Crown means that the value of the net increase is, but then it's important to remember that at the same time we have a material position in equity in euro terms. Which then means that our gearing and our equity component is getting a positive swing out from that one. So the value of our equity has also increased. Then finally, our liquidity, we have some SEK 900,000,000 sec of cash at hand. And at the same time during March, we had renewed our revolving credit facility adding from SEK 1,000,000,000 to SEK 1,500,000,000. And that's the same time taking Our only short term loan that we have in our balance sheet is maturing in May this year and we have secured also repayment of that one with a committed term loan from our core banks of SEK 500,000,000. So in total, with these measures, we have all increased our liquidity and prepared to take any kind of short term term loan that is available And thus, our total available funding is almost 4,600,000,000, almost 4,700,000,000 at the moment. So that is really positive. Then on top of that, on our Board of Directors, evaluate the situation and failed that it is important to keep the company balance sheet in a position that we can also react if react quickly, no matter what happens, but also that we can accelerate our phone needs and our phone opportunity. When the terminal is over. So the dividend has been, has been basically proposed not to pay. Obviously, we have the unwanted around been taking place a couple of hours from now. So this is the proposal for the modem directors. So this is about the financials Moving to Slide number 13, handing over back to you, Jonas. Thanks a lot, Joseph, for that run through the financial situation. And I have to say that I think in the current situation, we are with the extremely good management team, I have to say where I mean, part of the management team is coming from period and you have your challenging times, you're also going through the turnaround, looking on the cost structure, We have Robert Lawson coming in from ABB that has been faced with a lot of challenges. And I have to say myself then being in some league for the last 10 years, started with the financial crisis. I think we are well equipped for handling the crisis situation right now. I had a question from an investor to feel that it's a good experience to have that with you. And I said yes. So now looking at what we are doing and we are trying to describe that with the three ways. Obviously, we have been reacting and adjusting when this crisis started to affect us in the first quarter. And of course, then everything from protecting our employees, making sure that we could quickly go from working at office to distance work using all the digital platforms we can. And then at the same time, very quickly, resting on cost. Make sure that it could protect quarter 1 and also moving into the quarter 2. And of course, I would say that we have a lot of gain from the ongoing kind of structured way we had on working with costs also from 2019. Now moving into corporate too, and also looking into quarter 2, it is clear that the market is much more uncertain. We see effects already in automotive industry, So for sure, we are taking a lot of 4 term measures to protect, the quarter 2 where the, where we will see effects from the crisis. And we will need both on the cost in general, but also to see how can we make it more flexible But I think we will also use this crisis to rethink and use it in a way to maybe go faster into the structure that we were aiming at the ore period, the Afre structure. We are also of course looking on the strategic plan where to play on how to win. And of course, now we have fast forward repositioning in automotive industry for example, but we see also other opportunities. So then depending on, of course, how this crisis will play out, We've been moving into end of the year. And as you also said, we will do everything we can from leveraging from a leaner structure and also our strong position in some segments and to be forward leaning when the market is becoming more stabilized. Of course, we are a company looking for growth, potential M and As, we want to build our brand and attract the best people to our company. So to execute the strategy, I'm a firm believer that the need for sustainable solutions, digital new business models will maybe be even more relevant when the immediate crisis is over. So I think our company is well positioned. We will maneuver these cries as best as ever possible. And my belief is that we will come out stronger But of course, now we are looking at different scenarios because nobody really knows how it will play out. But we are getting ourselves prepared by doing everything we can short term protects cost balance sheet as you also showed to be rather than to accelerate where we see a stabilization in the market. So with that, I will stay for now and I will leave it back to the operator And I will open over and we will now start the Q And A and I will hand over to our operator, John. Yes, sir. Thank And we have a question that came through, sir. Your first question comes from the line of Johan Dahl. Your line is now open. Please go ahead. Your line is now open. You may go ahead and ask your Thank you so much. I was muted here. I was just wondering where we stand right now, at this point in time, Can you see anything regarding a potential trough in your delivery towards your clients? Can you see it going forward or right now? Or are there anything is there anything you can share with us here with regards to restart of projects, etcetera? Well, I think Q1, in general, we have seen that except the automotive industry, where obviously 3 big clients in Sweden on the same day. We call it a bit the Black Friday, where they all closed down operations I would say that most of our other projects have been continuing with some interruptions you want due to the current team. We have had some sites globally that have been closing down, but I would say plus minus in general, it continues across right now. So we don't have any big interrupts fronts in other segments except Automotive Industry right now. I just thought there's been some communication out with regards to your clients in the whole vehicle, both commercial and automotive. With regards to restarts. But can you see forward here when you think things will normalize her? Okay. Well, of course, we are also in a closed dialogue and there are step by step starting their, I would say, manufacturing operation, but then it's more a question than you want. Will they read start the volume of R and D projects to the same level as they had before. That's more a question, which we are following closely. I mean, I think, Martin Lund, that the table will be clearly saying that let's see what kind of demand situation we will have. He continues to say that it will go from a supply challenge to demand challenge. So we know that there are step by step now starting up and we have they are very close dialogues with them. How can we also support the automotive clients to become more flexible agile and faster on the products that we have been working on. All right. Could you just help us also pencil in the sort of financial effects of the very big measures you're taking right now. For example, on the furloughs, are those consultants billable at all? If you look on things right now? And secondly, what sort of short term cost savings that you referred to how much can that amount to sort of in the very short term? Yes, I will start and leave it then over to you, so to talk a bit. But of course, 100, rough, it's a combination you want of billable consultants that we are then, using all these for prem allowance as we can do to actually try to go with our clients. I mean, So that's one thing. But on top of that, we have taken extensive measures to also have people on staff functions and others on different kind of short term because we're actually ramping down a lot of activities in the quarter. Then basic is to protect the top line drop we have. You also, I don't know if you want to talk a bit more about FX short term. Yes. So basically, we have, as it is 1300 employees, especially in automotive, but then also to both function and in a minor component, some other segments, this is not the 100% layoff but basically, we are talking about most of these employees are working at a certain percentage level. So there's still a billable work and we have been able to push quite many to other assignments and so on. So the impact would not be you trust take your calculator, you take 1600 tonnes, 3 months' time, annual sales. And that could be the loss. It is far less than that one we have, we have not disclosed the exact number, but we see are still material working also. But at the same time, we have put them, what you're saying, see this temporary layer of partition where you can decide now whether they are being working 1, 2, 3, 4, 1, 2, 3 or 4 days a week. And then obviously, we have similar structures in other countries. So so then what we can say is that many of these ones are working. And then, obviously, when the thermostat functions we are happy to say that, that is a direct bottom line savings but obviously then we are also losing the top line from the billable people. So in total, the impact will be material on our Q3, Q2 numbers both in the top line and in the bottom line and the beauty of our business is and then the the positive nature of this crisis that we are all in the same boat is that the pretty well tools available to make these type of temporary adaptation measures to me as little painful as they can be. And then on top of that one, we have the whole indirect spending category. You can imagine that nobody has been traveling since mid March, anywhere. So these type of cost savings are returning us more or less to our correlation. When your top line speaks and when you have these restrictions in place, certain spending simply goes away and that also factors into context on profitability. Okay, thanks. Thanks, Ewan. And we have another question. And this comes from the line of Eric Elander. Your line is now open. Please go ahead. Yes. Hello. I was wondering, the infrastructure market seems to be very good. Derieties in your report as well. I obviously heard it from other sources as well. Despite this, you have grown organic by around 1% to 0% the past quarters and margins has been declining year over year as well. And net recruitment has been negative? What's behind this? Hello, speaker. I think the line of ever get disconnected? Sona is about to come back in. So it will be Eric Wade and let's let Jonas answer first. If you can repeat the question once Solna is back. Yes. Okay. Let's wait that we hear from Solna. I would Okay, sure. Yeah, I repeat the question though. Because I didn't get any single answer. So just Yes, they dropped off. I trust with them. They are falling in back So there has happened some kind of a technical error. All right. But, okay, I go then again. Yeah. I'll confirm once immediately once all my back in so that you can you can ask the question. I think there isn't even here. Okay. So Jonas is not from the line right now? Yes, they dropped out from the line. So you're not from the line right now. Oh. So you're not saying the team is showing a drop out of the line apparently. I don't know if it's between Nokia and Ericsson, but being on this app. So it's just given me speaking No. Everyone else on the line can hear. Jonas, are you there? Okay. Not yet. I am deeply apologizing this kind of technical issues. I think we have had today a couple of too many but we will sort this one out with the service provider also. Yeah. No worries. That stuff happens even to the best people. Yes, that's especially when it comes to IP. That's sometimes things are a bit volatile. Still not Okay. Let's talk about the question. Jonas will join when they get the technicalities up. So you are asking why infra is not growing basically more than the one person. Of course, when we take now this Q1 number being suppose the 12,000,000 check-in the revenue that would improve it a bit. We would be around 1.5,1.5,1.4,1.5 percentage growth. But as you know, there seems to be more positive growth and if you take the peer group, I can say that we have 2 impacts in there. And the other one, we have been referring earlier still in last year that we had some difficulties in our, Danish operations And then at the same time, we have been evaluating some parts of our Central European operations. So we can say that kind of core of the core in our infra which is especially Sweden and Norway. And seeing what we are doing really well and other parts of the 4th Olivia assessing continuously and first ensuring that we are on par with the performance that we would like to see So that's definitely one component in there. And then if you would go deeper into the numbers, you would see that we have maybe losing a bit more the subcons up material part on the volume side than in our own employee contribution. But now all of this one, you need to also put into the context that there's 2 underlying factors. You can take the former third factor if you go back to the infrastructure numbers in the form of order and regional operations like debit card at some point of time. That was below the portfolio business. And obviously, we did not stop on trying to make them on the portfolio after the merger And then there's the acquisitions in Denmark that former all have made that has also we have been working on those ones to make them to be on the level they would need to be. So that's in a nutshell the inflow. Yes, because what I think here is that it's, despite writing that the market is good and infrastructure, the net recruitment is negative, I. E. Quarter over quarter, you decline in terms of number people. So you're not actually done recruiting into the strong demand that you referred to. So why is that? No, you are trumping to conclusions because the portfolio is consisting of various different markets and various different spaces. So actually where we see the strong demand and where we are performing well, we are in net growing and we are growing in a quite positive manner, but at the same time, the places where we are not fully happy, we are stable or actually, actually shrinking a bit And that in net produce is the lower growth numbers in total that we see at the moment. So we are not losing indirect equipment market in the hot places, which is important for us that we are not losing there either. But at the same time, our portfolio is not in all places as solid as we would like to see it. And in those places, we need to take actions and we need to be able to react on that part. Okay. And then the second question regarding remote work I mean, it's obviously impossible to say how large part of the consultant's assignment that can be they can do remotely but which one is most or less negatively impacted by the fact that you cannot meet the clients at the moment? And what parts of the business in terms of business areas is most affected by the fact that you cannot meet other employees. And So then basically it is not maybe a segment question. It is rather like a project life cycle question. That in the early phases of a project life cycle, when we are talking about consulting, when we are talking about basic engineering, details, engineering, kind of these type of assignments, it is easy to work from wherever you are. The biggest issues are coming from the heavy big information models that you need to be running. And then the limitation, normally, is your home broadband and to make sure that our people can work with the heavy, heavy design softwares. We have basically, made good type of arrangements in our offices, putting computers away from each other and making sure that we have innovative safe spaces to work with when your bandwidth from home is not enough, for example. And this is something that is very easy to do remotely no matter no matter where you are. Then if you go to the parts of the offering that are more difficult to work remotely, then you see, for example, the automotive the professional services part of that one, when you are actually in the client side working in a client pack, for example, as an as a mechanical engineer or auto engineer. In those places, when the engineering is not or when the industrial facilities is not working then obviously our guys can't work either. And this is normally work that you can't do off-site. And then the 3rd component that is impacted is on the construction sites. If you stop a construction site, then obviously our guys who are in the site supervision or the CN part of the construction side. Those ones also drop to be idle. So it depends rather on the life cycle of the project than the segment that the low value convert from business. No, Jonas. Yes. So sorry about that. We tried to get in some technical problems. So maybe take your time. You will see if there's any questions that was directed to me that I could, I would be happy to answer. I know that they were out for a while, sorry about that. A quick recap, the questions were infra growth I explained on the situation in Denmark and how we are stabilizing the third part of the infra that was below portfolio profitability and also maybe explaining the infra growth not being as high as could be about at the same time in our core market now by 3 months, Sweden, we are able to grow and we are not losing in the recruitment yet. And then the other part was working remotely. Question. So those were Eric's questions. Do you have any other questions? No, actually, just to clarify, the second question there is that the remote part of your consultants working and not from the office from home instead, it's not the big issue going forward for you. Is that correct? It is correct. And I would say that today, we are surprised how quickly we could start operating from home. From different kind of environment. And I think we have very high performance in that. And Justin Sweden, I would say, large majority of all our work is based from homework. So it has not affected us it has been very positive. Excellent. Thank you very much both of you. Thank you. And your next question comes from the line of Dan Johansen. Your line is now open. Please go ahead. Thank you and good afternoon. A few questions from my side as well. I'll start with the first one. You mentioned price increases in your presentation. Could you say something about the magnitude? Is it perhaps in line with the weights in place you're seeing or is it even above that? Thanks. Yes, I will leave that question to you, Uso, if you take the pricing question. Yes. So basically when we are talking about pricing, there's a first we need to remember that average price is coming from our geographical portfolio. It's coming from FX component is coming from the seniority structure. So the first answer is that as a combination of all of those once we see a very positive impact on the average fees. Then the second part of that one is that, yes, we have a salary inflation and that salary inflation is also driven by 2 factors. There's the seniority structure or the underlying age pyramid actually. If you hire more seniors, then juniors, then your average fee but also average salary goes up. And then you have the normal inflation for annual adjustments on the salary And those ones, we have been fairly good to balance, in a manner that we are able to regularly can see that reason in a place in in order. So then as a result of those, once you actually see that our underlying EBIT margin is slightly improving. We have gone from 8.6 to 9. It's not only kind of a question of salary inflation and increasing prices. There are also other components impacting, but in a nutshell, positive price increases and slightly lower salary inflation than the prices. Okay. Perfect. Thanks. And second question, in terms of revenues from your private clients, Are you seeing already now and increased willingness to invest and perhaps start up projects a bit quicker, for example, within infrastructure? Gives some flavor on that? I wouldn't say that we see any quicker maybe. I mean, from the immediate start of the COVID-nineteen crisis feels like long time back, but actually only a few weeks back, we could foresee some clients are now interested on seeing how can we recover some of the projects that took a stop immediately. So from that sense, I think more and more clients are starting to maneuver in a post immediate corona crisis situation. So on that question, I will say, yes, Okay. Thanks. And the last question from my side. I mean, you seem to have a quite solid turnaround here in Energy. Are you satisfied with the current structure you have over the business or you're seeing, some further fine tuning ahead there in the coming quarters? Thanks. We will see some fine tuning ongoing. And I think, Richard Pinock and the team, they are executing In a very good way, the strategy that we laid out and discussed also in the board, we have done some divestments and now it will be continuous fine tuning in the coming quarter, and they are extremely motivated. And I'm so happy that we could see already the financial effect in the quarter from their repositioning, it keeps it fuels a lot of energy into the energy division. So maybe we continue fine tuning to sign those growth pockets to the regions where we have a solid position And I feel extremely proud and happy that after a few years, actually, where we have been struggling in the UHua struck, if you remember, to find a strong position in MDD that the combined company now A3 in MDD, we have a solid plan moving down the road. Whether you also need to maneuver in that potentially also more, you know, there will be Corona effects, also into that. But so far so good in the execution of a very solid strategy. Okay. Sounds good. That was it for me. Thank you. And we have a follow-up question from Johanal. Your line is now open. Please go ahead. Thanks. I was just wondering at what stage do you envisage that this current sort of pandemic will impact the structure of the industry? I guess some of your smaller competitors would have crucial problem. So are we there already or does it have to be more sort of extended this pandemic to for that to have effect? It's a good question, Johan. I think what we are doing now is to spend a lot of time with our clients because of course, we We want to see that we are a company that they can trust that have a solid financial situation We are willing to follow them through a crisis situation like now and become even stronger after version And of course, we will keep a good eye on structural changes in the industry environment. So for you, and I'm not sure that we are there yet. Because obviously there's a lot of, you know, people that all companies are using everything they can to protect themselves, but we believe that it will be a partly different time, structure after the crisis also. But I'm not sure that we are there yet, you are, but for 4, we are keeping a good eye on that. And we see some very interesting growth pockets as we have seen before too, so that far multi currency industry to overall digitalization. And of course, we want to be a strong partner also in automotive. So we let's see, but we are keeping a good eye on it, you know, that I can promise you. And maybe do I count that one that basically, if you take the industry in whole, also companies, whether you are big or small, have the access to fill me, like, kind of state reliefs at, at everyone. So if you think about Sweden or Nordics, they are quite okay measures ongoing, maybe excluding Finland But then what the smaller ones are lack are kind of lacking then is most likely the access to funding that can alter alter in the short to mid term things. We as a big player, we have far better access to any kind of ponding than the smaller ones. So that is something that we may see going forward as impacting the industry structure, but nobody knows. Thanks. Good. Sounds good. Thanks. Thank you. And we have another follow-up question from Eric Alander. Your line is now open. Please go ahead. Yes. So, I mean, it's a lot of talk about the public sector carrying the growth torch, so to speak, when the rest of the economy is slowing down due to the virus situation, and especially considering the strong public finances of the Nordic markets as well. Have we actually seen or have you actually seen a stronger order intake from the public sector? Or is still just rumors so far? No, I think, Eric, I mean, it has not been that loan where we have been in this corona crisis situation. So I think we have seen a strong public sector, driven from the demand also went into this period and it has continued. And I think besides the fact that we have a contested good balance sheet in the Nordic, there is a strong need of underlying infrastructure projects like in Sweden, there's a lot of ongoing things. So I think we it has continued on a strong level in all countries, I would say. Not not and I think right now it is on a high pace driven from the underlying demand in general. That's what we can see right now. And then, Eric, you need to kind of put it into context that when you are talking about public sector, procurement, you have the legislation in there that has not been overturned and public sector will not materially bypass those processes we have been now depending how you measure 6 to 8 weeks into the crisis for public sectors' ability to materially change the course quickly. It's not that great, especially when we talk about big infra projects, the old one And then the second step is that the high ambition is to improve the employment situation by kicking off big protests, then you have a limited number of projects that you can kick off very quickly because to have the big employment impact, you need to start construction. And starting construction, it means that you need to have some part of the design already made. So that puts certain type of a bottleneck on quickly kicking off impact targets. And I would even add to that also that the whole infrastructure environment was going on a quite high pace, not that it cannot go up further, but I think in general, we will not expect big, big increases, but it is a very solid and strong market. That's for sure. Okay. Thank you very much to both of you. Thank you. And no further questions have been through at this time. Please continue. Okay. But then again, I want to apologize for the ruptcy we had. It's a bit, interesting to talk about the company that has a high level of digitalization capability when we have some challenges to to handle the phone concerns, we need to talk about our solution provider in that respect. But I'll take that aside. I would say that Quarter 1 was stable and it has given us and the activities that we have taken in quarter 1 tools us into quarter 2. It's a tremendous amount of energy and good mood in the company. And I'm so happy with the, the acquisition parity that we run together safely because we are much stronger in this crisis situation that when we would have been as 2 different companies a year back. The fact that we could take out the cost last year that we had a higher run rate on the synergy cost that we came in this year with some challenges for 4. But in the other hand, a lot of good things, the repositional energy, the fact that we are implementing strong digital platforms, ERP system that in the core of the core of A3, we have sustainable solutions, strong digital capability that we believe that the demand will even be stronger for 4 challenges in the short term automotive, but we feel extremely energized to go through this crisis and come out as an even stronger company, that's performed. So thank you all for listening and we wish you a good safe, healthy day. Thank you here from Stockholm.