Earnings Call: Q4 2019

Feb 7, 2020

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 Report for 2019. During the call, all participants will be in a listen only mode. There will be a presentation followed by a question and answer must advise you that the call is being recorded today, Friday 7th February, 2020. And I shall now hand over to your speaker for today, Jonas Gustafsson. Please go ahead. Thank you. And good morning to all of you. This is you, one of Gustafsson speaking. I'm sitting here in Stockholm, so not together with you, Souayanan, our CFO. And we will take you through this presentation covering 2019 on, of course, quarter 4 So thank you again for calling in to this, presentation. So let's start up with the first slide, which is basically an overview of how we ended up in the quarter, quarter 4 and also the full year. And as you can see that for quarter 4, the net sales amounted to SEK 5,400,000,000, just about SEK 5,400,000,000. Which was a decline compared to last year. If you look to combine operation, then, or FMPORIDA with 2.9% minus, I will get back to that. We are very happy that we have been able to improve the EBITDA margin from 8.8to9.5, ending up at 516,000,000 And then just looking on the full year, I mean, we are happy that we have been growing, with 5 point 3% the full year 2019. And if you use the full or period as 1 company compared to 2018 and then also improved the EBITDA margin 5.44. The EBITDA in absolute numbers is 5.4%. Then we have kept the EBITDA margins stable. So I would say that we are ending 2019 with a strong operation. And then of course, we will back to one segment that has been lower during quarter 4. Looking on the general market, it's been stable in most segments. What sticks out is automotive and, I would say, connected manufacturing industries. Here we have seen a decline during the year. However, we have seen during end of quarter 4 as stabilization, if you look on a sequential development, but if you look in year on year, quarter 4, automotive have been going down. We are very happy with cost synergies. And as you know, then we have then delivered SEK 218 1,000,000 run rate cost savings, compared then to the torque, do we have that SEK 118,000,000 we can now see these are impacting positively quarter 4 supporting the margin. We are now extending this program into 2020. I'll get back to that. Another SEK 120,000,000. And this will also support us during 2020. And at the same time, we have also now finalized the analyze of the repositioning program in Annuities. And this will have then a negative impact 105,000,000 that we have then already guided for in conjunction with the quarter 3 presentation where where we gave an interval and now we have finalized that and it's 105,000,000. Well, looking on the net slide, which is more, if you look, look, the reported numbers, so to say. And of course, it's been interest in drilling year for us because, I mean, we did the acquisition of Peyde, meaning that the reported numbers, we have a 37% growth And if you look on the full year, it's actually up to 41% growth. And we'll, of course, then a big change on the EBITDA margin So that's but so I would say that the pay the acquisition as such have proven to be as good or even better as we plan for when we started to look on that mid year 2018. We're very happy with that. Moving to the next slide. Market, I would say in general, most of the markets and segments in our core markets are stable. If you look on infrastructure also, let's say most markets and segments stable and good. We have seen some delays in some transportation projects, but that's more I wouldn't say it's a market trend. It's more based on where we have where we have our business. But in general, infra continues to be a solid and good market. Then in industry and digital, that's where we have seen then the decline over the year. And that's very much related to the Automotive segment and the connected drink structure. And this we have been seeing declining over the years. So we have been mitigating that to to support the margin. And what is good now I would say is that we see more a stabilized trend by end of quarter 4. Still the comparable number down to last year is much lower. We can see some very good segments in the industry. For example, food and pharma and the defense industry have shown very good development during the quarter. In Process industry, strong, North America, Nordics, and South America strong, regions and we can see now the fact that we have seen that for a while that the whole bio economy change is supporting, among others, pulp and paper. And also in end delivery nicotine improved demand, especially nuclear, there are some delays in the investments decisions, but In general, I, we see that the end of the market as such is stable and developing in the right direction. So especially also with all the actions that we are taking in that division. So if you just isolate the automotive market and the related supply chain into that, the Tier 1 suppliers And we have some timing effects in annual dividend EPC product that is fading out. I would say the market generally stable and good, but of course, we felt that automotive volume reduction during quarter 4. This is just an update on our portfolio and the share of revenue when we have then closed 29 in, and you can see then that infrastructure remains the largest for 38% in December 29, and then energy and processing the CPP in each and the managed consulting 3%. And then we have our industry segments where infrastructure also 20% and the power process industry real estate and then automotive and vehicles. And then we have the other segments. And again, on the right side, we are 75 to the revenues in the Nordics and then we have Central Europe and some strong core countries outside Europe. Moving into the cost synergy program of 2019, we set a target for us to reach 180,000,000 and we have over delivered that. We reached SEK 280,000,000. And actually, it came as we hoped and believe that it was not a proportional over the year. It was more an exponential that we saw a lot of activities when we closed the deal during the spring and improving effects during the autumn then. And we had a good effect than in quarter 4. And I would say we had good progress in all areas, just to say once, we couldn't also see some effects of, combining the real estate that we're closing down office and we are bringing people together and using that leverage. The integration costs amounted roughly to SEK 215,000,000, which basically means that we have to invest SEK 1,000,000 to get SEK 1,000,000 saving, but it's a good pay of this investment. And of course, we are carrying that run rate with us into 2020. On top of that, we are launching, we have stock already with the next way, which we are targeting another $120,000,000 run rate savings for this year. So that will also be supporting the savings we have with us from 2019. But we are also more clear now to say that in conjunction with the investments program we have on the platforms and on the IT side, We have a cost increase due to that amounting to SEK 50,000,000 to SEK 70,000,000 because we are implementing an ERP system and CRM system. And set in the system platform supporting us for the future. So roughly half of these savings or these savings will also support us in doing those investments in the IT platforms. So we expect the $50,000,000 to $70,000,000 P and L impact from that investment program in 2020. But all in all, then if you look at 2019 and 20 as such, then in cost synergies and the efficiency program, we are amount we are targeting a number 3, 3, 8 and when we close 2020 run rate saving. And then of course, some of that will then be reinvested in our business, as I said, related to the IT platform. But I'm, I have to say that I'm very happy with the operational performance and the organization's ability to execute on those cost savings And this is something that we will bring with us moving forward. And because this end of the day is strengthening our different divisions ability to be very forward leaning and aggressive on the market. And, so this is very good. And then if you look on the next slide, this is again a bit more, around this cost program for 2020 on this, but it's a bit same things as we did 2019. We have still more, obviously, synergy related cost savings On top of that, we are now step by step on how to say fine tuning each divisional's management layer sales struck operational efficiency front end. And then of course, we will step by step, get these gains from the combined IT platforms, etcetera, etcetera. But then clearly, we are investing in our operational platforms. So we have IT systems, we have already communicated ERP and of course, these are investments that capitalized, but the cost related to implementing those system, we have an increase done in 2020. So these savings that we are driving for 2020 will partly be reinvested in supporting that program. And I would say I we are so much looking forward because I can already feel the strength we will have when we will operate with unified cyst across the company, we will have a stronger position. So the total run rate of those savings will be half of that will reach bottom line for 2020, the run rate savings. Yes, the 2 words of the report shifting of annual division. And this is something that we have been we started to look at, if you remember, correctly from the old point of view more than a year ago to realize that, especially that international ended recently, we have we had to do a kind of a reposition because we were under critical. There were markets and forex that was maybe not fitting us perfectly. We have started that analyzed and then we want to get with parity and then we have kind of even strengthened that ambition And now during quarter 4, we've finalized that analyzed and we even started to execute on that. And it kind of consists of exit from certain markets and projects I would say a renewed sales structure, we expect these effects to step us that be visible during the first 6 months of 2020. And I would say that we can even feel that improvement already now. So I think they're doing a fantastic good job So that means though that we have a negative impact on the SEK 105,000,000 in quarter 4 compared to the range that we commune catered in the quarter 3, which was 130 to 150. So it was lower than, but now that analyzed is done and we are a lot of good projects. And as I said, order pipeline looks solid and good. And this is just a select of what we are doing in the different business. We have new frame agreement with some of the regions in Sweden. We have interesting business in Finland, for designing of the tamper tram. We have a very interesting client, which is Otley, and they have a a quite offensive investment program and we deliver to them. We have also other projects in Gastenberg. Keester Hanssen in Denmark moves on and we have other business in Finland. So I would say that looking on the order high plan for all our kind of project part of the business, it continues to look solid. So with that, I will leave it over to you, so to take a few through a few of the numbers. So please, Joseph? Thank you, Jonas. So the first slide is about the growth and the revenue. So first of all, as we can see, we have a total growth of 38% in the quarter, which is highlighting the further acquisition. And I prefer to mention it because it is a major topic and a big big impact for us during the year 2019. Then obviously when we are talking about the total growth on combined operation, -2.9 percent, we can't be fully happy with that number. But when we go down with divisional split, you will get a bit more flavor on that one. But basically, if we see, we have solid growth in infrastructure and in Process Industries, and then the lower volumes are especially coming from Automotive and then the supporting Manufacturing segment. Then in energy, we have basically a major EPC project almost completed and it generated less revenue in Q4 2019 compared to 20 18. And then finally, management consulting, which is inherently volatile, what comes to success fees and the Q4 2018 was highly, highly mute, probably the best ever from that perspective. So that's in a nutshell what we are seeing. So if we summarize strong growth when we compare the total growth due to per acquisition, solid growth in most of our segments, but then we had some decline in a especially one market segment and then otherwise retirement related items in energy and management consulting. If we then talk about the profitability, what I have to say is that I'm really happy on the 9.5% EBITDA margin on on Q4, on compound operations, the comparison point is 8.8 compared to previous year. And this is something that we need to remember that we had roughly one working day less compared to previous year. And also, that obviously impacts the revenue levels and the decline in there. So with less working days, we have managed to substantially improve the margins And at the same time, if you then compare that one to the cash generation, we are also generating this margin improvement as cash. So if we look this figure, I'm quite happy to report the CHF 516,000,000 above previous years on combined operations and obviously clearly above Bolon reported. We are having solid performance in all of our divisions. We have sequential improvement So from Q3 to Q4 2019 in all of our divisions. So all in all, in this front, I'm quite happy and especially then the cost synergy program SEK280 1,000,000 run rate savings. And we have been able to show that that is now visible in our margins. We are talking roughly SEK 100,000,000 positive impact in 2019 from the actions implemented and now going for 2020, we have the 218 tonne rates that should support us. We have a really strong platform now that we are going to 2020. Then if we take a bit of the breach and the divisional views, we see that going from 8.8 $9,500,000 or $492,000,000 to $500,000,000. We have had the negative calendar impact due to one working day less are talking about the ballpark of SEK 30,000,000 rounded impact on that in a negative side and that has been then covered by basically synergies you see in the common or group elimination part certified $1,000,000 improvement, we see, Property Industry And Energy And Management Consulting improving also the absolute profitability in planned Industrial And Digital Solutions are then not contributing as well. But as said, sequential improvement if we take from Q3 to Q4 and we take the delta Q3 2019, Q3 2018, we have been squeezing that delta smaller, and we see that our actions are, are having an impact. So I'm fairly confident that we will continue with those ones. Then going further deeper into the divisions, we see that infrastructure is having a trusted organic growth of 2.3%. It is slower than in earlier quarters, we still see some softness, especially in architectural market Q4 compared to Q4 previous year. And then we have had to be late in the process in transportation, but otherwise, it is solid. It is strong. Industry And Digital Solutions, minus 4.7% in the growth, basically driven by Automotive And the Manufacturing sector. This is something that has stabilized now between the quarters but we are now going on a lower levels than earlier. So Q1 2020, for example, is still facing growing and strong market of Q1 twenty nineteen. But also if you put that one into the context that we have been losing top line, we have been able to stabilize the margins. We are delivering 8.5% margin in a division. It's not within our ambition, but given the circumstances, I'm quite happy to see this type of a number in here. Then if this is the processing of the 21st and this, well, Happy number. If we put that one, if we take the combined operations, we are roughly 9% growth, no matter which one of those you are looking, this type of a broad combined with 13% profitability is an exceptionally good performance. And we are really happy to see it. This is supported by solid market conditions. There are many projects in a planning phase or in implementation phase, both in Nordics and in Latin America. So this is favorable for us. Energy minus 2.4% growth. This is something that we need to understand the EPC program swing in here. So we have, at any point of time, we have 0 to 2 EPC projects currently. We have 1 and it is up pretty much on the finalization stage, which means that we have less revenue from that one. The impact is roughly SEK 50,000,000 Q4 2018 to Q4 2009. In. That translates to 5 point some percentage points on growth, on combined operation levels. So if we adjust for that one, actually our energy division is growing. And then if you see the margin, 8.3 compared to 6.8 percentage points in combined operations. That's 150 basis points improvement. This is something that we are also really happy to see. And we see some minor impacts already coming from our repositioning. And this is a note that we want to continue and we are very confident and the actions that we have started in Q4 will materialize further in the second or the first half of twenty 20. Then also in here, we see the impact of the synergies from the merger of and Peru had similar type of operations and combining those ones have been positive. Management consulting growth, we are not but this is something that I am not worried at all. Q4 2018, we had in a very unique quarter what comes to success fees, we were not able to repeat that one in 2019, that is within the business model, we are still delivering 13.3% margin compared to 15.9 previous year. So we can even say that the underlying operations are stronger than year ago if we take the success fee volatility out from there. So all in all, I would say that, especially when it comes to the EBITDA percentages, I'm really happy And on the growth, we have some work to do and items to address, in our summer market segments. Then the second component that I'm really happy to report is the cash flow. We are delivering basically almost SEK 2,000,000,000 of operating cash flow for the year or SEK 1,000,000,000 operating cash flow for the quarter. And this is now visible if we take the net debt levels we have Please standby whilst I reconnect your speaker. It is working now, but we are still on it. Yes. You are now live in the call. Thank you. I would be highly, highly thankful if some of the A pre team would confirm that we are we are being heard. Airline, I see you are there. So could you confirm? Good. My deepest apologies for the technical issues. We do not know what happened, but we are absolutely happy to be back. So I understood that you lost me when I started to talk about the net debt. So basically, I am extremely happy on the EUR 4,400,000,000 net debt and the 2.2 if we take growing concern operations on net debt to EBITDA. So our balance sheet is not a limiting factor on any of the actions we want to take in the future. That is also highlighted by the Board of Directors as proposal on dividends of 5 per share. If you put that one into the context of our dividend policy, it is 50% of the adjusted net profits of the year. But obviously, when we take the items affecting comparability, it would be above. So 5.5 per share is roughly SEK 560,000,000 for the company, and we are happy to distribute that one to our owners. We are confident with our balance sheet policy Then going forward. Thank you, Joseph. So you have to finalize, I mean, 2019, again, that was an exciting year. And then, for 4, there's a few things that we will need to address. But overall, we are pleased with the positional period and integration. We launched a new brand, joint brand, a350, still having the legal name with period. We are happy to unify our forces on the bakery brands step by step, and it had brought us a lot of new energy So moving into 2020, I think we have an excellent platform, excellent base. So you have to summarize, where we are, I think you could say that by improving the profitability and the strong cash flow, it shows that we have a good grip of our operation. And I'm very pleased on that. And I think that's been for some of your concerns. And can you do a big integration the period and the work on how will that materialize. I will say that we are a much, much stronger company now. We have an overall solid demand in most segments, very much supported for the big global trends. I mean, we see this need of our engineering competence and design competence all over the segments. Yes, we have had a bit of a decline in automotive. We are addressing that. And I think the good sign is that we are more flat than we have the sequential more balanced volume. So this is something that you're addressing. But all over, it looks good. And I think to deliver the SEK 218,000,000 then in the cost cillaries, adding on the SEK 120,000,000 for 2020 will give us a strong position because it's more and more they become operationally strong as more offensive and aggressive it can be front end. And this will also be support by the IT investments we are doing, and these are needed. And we are doing that. We are driving that program as we speak and it it delivered as we expect so far. So I have a good feeling that by step by that we will have these joint platforms that also will support our operational performance going forward. So right now, there's a lot of focus on efficiency and I will add growth. Of course, now moving into 2020 with the favorable market, we are focusing on growth. And of course, then you've unified with our joint brand. So this is, basically ending the presentation so far. So with that said, again, we want to apologize for the break that has on the sound, but open up for any questions. Thank you very much Our first for today is from Johan Dahls from Danske Bank. Please go ahead. A couple of questions. Firstly, on this new efficiency initiative that you're launching, you're talking about Deficiencies 103000000 to 1000000. When do you expect that to be sort of accretive to profitability in the group? We talked about SEK 120 1,000,000, but Yossi will take you through the thinking behind it. Yes. So basically SEK 120,000,000 is something that we are now working on, we are using the same methodology as in the synergy program for the 2019 and we have different type of components in there, but we are quite confident that we have a solid progress throughout H1 and continued in and Q4. So at the moment, we are foreseeing somewhat linear progress, but given the content of the program having the Epi and the platform component, the efficiency part is a bit more operations driven and subject also to market conditions a bit more while then the platform part has the IP and really set components dominating it. So those ones are coming in a bit more binary type of components, how we address and how we progress. For example, moving people to new office either. And IT is driven by certain milestones. So all in all, I will talk about linear implementation at the moment. But of course, we have a bit of the momentum from the 2019 program because we had a good progress by end of the we are using that momentum into 2020 adding on also a few efficiency activities. Yes. No, I'm just wondering what's your budget for sort of, if you will, will it be accretive at all in 2020 or no? I mean, part of what it will be, but you talk about the run rate and then we have been highlighting that this investment program we are doing then on the IIT system platform, part of basically you say that if efficiency and cost savings will be reinvested in our operation at the same time as we have the momentum from the 2019 program with us. Before we should have an overall benefit and support on the bottom line throughout the year. But again, part of it will be reinvested to support that cost increase that we have to implement all those, new systems that we have. Okay. On energy, having decided on the and taking the charge share in Q4. Can you explain a little bit what sort of what how much sales are you cutting away and potential impact on your reported profitability? I have to even first reiterate that we have been continuously talking about 3 positioning, which is from hyper effective different compared to restructuring, we are pushing our sales of patients into different market pockets. And our key impact on the profitability is that we gain different type of projects. We target different type of projects, having different type of higher profit margins, and that will come invisible little by little during 2020. And at the same time, like you saw from the margin from the energy, there's the merger synergies that are visible in their the better span of management and taking over some overlapping, functions or activities So that will continue to be visible continuously. And then the reprocessing in part is coming through throughout H1 and liver value will continue in H2. I would say you want us to be in the worst before than we going forward. Is it fair to look in or is less than any of the business where we've had some trouble from here? I see not confident with this program and execution that we are doing from which are Pina can a team that we will have a strong and solid operation before we are more selecting and more products we're bidding for. So, but I wouldn't say, as you also said, there's not a big negative top line thinking about it. So I think we should have also grown some, and then we have the EPC projects that will come a lot to come. But, I've have a strong comp, then we have that we will reach that, 8% to 10% margin band that we have had. And also reach growth in that division. Okay. It seems as a fairly reported weaker's top line Q4, twenty nineteen compatriated. Can you just elaborate a bit on these big EPC projects? What sort of headwind are you needing there full year 2020. You said EUR 50,000,000 in Q4, is it like EUR 200,000,000 for 2020? Or how do you how do you do that? We have basically in the prototype now we need to continuously remember that the combined operations are making a split between OS and Peru is not very meaningful anymore because how we have been pushing people and operation to different levers. But if we take on a macro level, we two components in the former herbicides. We have the EPC project component, which has roughly SEK 50,000,000 quarter, quarter to quarter for previous year impact. On the revenue line, which is purely coming from a timing of an EPC project. We are implementing thermal power plant in Philippines. And there we had in Q4 2018, the heavy installation material a material delivery for ongoing and now the project is ramping down the vessel, the thermal power plant is being taken into use. So we have it's not generating that type of a pass through elements anymore in the revenues. And that is definitely visible and attributable to all 3rd. And then the second component is coming from the management that I explained also earlier. If we take any other operations, we process industries and so on, there's no revenue declines in the form of Peru side? No. Another school to try this one, I think we have the strength and position to take A few of us had one to maybe also two slots E2C projects a year. And we have, we have good prospects and hopefully, we'll get one of the also coming in this year. But they are more binary, but I don't see that we are in any case weak in the end, in the opposite. I think we are getting stronger in the operational parts of the Okay. Just finally, in terms of calendar effects, 2020, what do you sort of put into your expectations there for the Wealth Group 20 versus 2019. That's all. Thank you. We have never reached 1 calendar day more in 20 compared to 2019. So obviously, one calendar day more all things equal should mean one working day more of revenue generation. You put that one on the 17,000 employees we are having. So then you can do the math from there. Your own parameters. It should be a better year. Yes. That's the conclusion. Our next question for today is from Dan Johansen from SEB. Please go ahead. Two questions from my side. First one, recent strikes in the finished pulp paper industry, do you having any impact on your process industries business for Q1? Basically, first, we need to understand end that it is our clients who may be in strike and none of the major CapEx projects are not stopped down and so on. So basically, we don't expect it to have material impact in short term for our business. In a longer term, obviously, it's never used to have turmoil in our key segments. So short term, not, but let's see how long the strike will continue because of course, it's not beneficial for our large clients in Finland. Okay. Very clear. Thank you. And last question on the cash flow, as you also mentioned, it looks very strong in the quarter. Is there any sort of one time effect in the working capital improvement or it's just a very solid underlying cash flow development in Q4? Thank you. Well, part of that one is seasonality. If you take a longer track record, our business tends to deliver around cash flows, all of these, we have been working heavily on the network capital and talking about cash and creating cash culture and I would love to believe that that is now visible in our numbers. Okay. That was it for me. Thank you. Thanks, Tom. And our next question is from Johan Sundan from Carnegie. Please go ahead. Hi, Johan. Hi, one question from my side as well. And it's on the revenue of the group in the quarter. When you look at the bridge between the divisions, it seems like other and eliminations has increased substantially compared to Q4 last year, What's the reason behind that? Thank you, Johan. So basically, we are making a mix at the moment. And if we put a bit of the legacy and history on the topic, of course, working in a quite local environment with limited number of internal counterparts. Peru has been working in a quite international environment with quite substantial number of internal counterparts. And that legacy has created into different type of internal elimination rules within the two groups, which has meant that when we are combining these two ones, we have needed to make some decisions and we don't yet have a full system support for all of the accounting and consolidation work underneath that has created in a wider elimination differences. And then the second component is that when you look for the combined operations and the previous year, making these eliminations, in retroactive for historical data is almost impossible, or at least would require a substantial amount of money longer that we have chosen not to pay too much effort on that one. So that's in an upsell what has happened, but it's also quite financial technical. But this is something that we are now working on and improving our business landscape. So we should see this one to stabilize. Yes. So around the full year effect should be some kind of a good thing to look at or going for the future. Okay, perfect. Thank you. That was all for me. The next is from Eric Allender from Handelsbanken. Please go ahead. Thank you. Hi, Eric. Hello, guys. I have some questions here for you. So in 2020 now or in 2019, actually, your industrial and details solutions decline in terms of organic growth. Do you expect the weakness in the automotive and industry sector to new in 2020? Or is it possible to come back to the group target level within segment of 5% organic growth going into this year? Well, good question. Of course, we are we know the market right now. And as we said, we have seen a stabilization, I would say, between quarter 4 and the quarter 4 when it comes to automotive. And I would say, of course, automotive has an impact of related supply structure, and that we saw declining, as we have said, well, over the year. Then we have seen positive, I would say, in segments like Food And Pharma And Defense Industry. So there are also bright spots into the overall industrial segments. What to see into 2020, Eric, not so for us. And we are not guiding the forward looking either, but of course, we are doing everything we can to drive growth on those segments where we have a good demand and we see some good opportunities. And there are several. At the same time, as we are seeing, at least now, what you see right now, I would say sequential stabilization on the automotive part. There are some great trends supporting us also in the industry, automation, digitization, electrification to merge the fuel. And so I'm not worried, Eric, about the underlying trends in industry and opposite. I think they talk in favor of us. Then of course, when you have a large segment that also affects the related manufacturing industry like automotive, having a decline, of course, we've seen that. But looking a bit ahead, not speculating on the market as such right now, I believe that underlying terms speak very much in favor of our industry division. So that's what we are looking for. So let's see, in fact, we will do everything we can to to continue to drive efficiency operation and to go for growth also in that division and there are many, many bright spots. All right. Thank you. And talking about growth in the energy segment, it hasn't been improving. In terms of organic growth, it has been improving now, for some quarters. Did it expect the energy business to grow, I mean, positive organic growth numbers in 2020? Or will you continue to focus on margins by reducing stuff? No, I would say that if you take away this EPC product, that they are very, as we said, they are big and they will come and or not, if you take away them, we expect growth. I mean, Richard Pinnock and the team are doing an excellent job in repositioning, the whole energy business, targeting countries, Sortech's clients where we have a good position, solid projects. So yes, if you take away EPC, we expect growth, but we know also that the focus have been very much to reach that interval between 8% 10% in that we gave them as a challenge because going back a couple of years, what have been very much, in the volatility and being on on larger levels. And then on top of that, a few small divestments we might have. But in general, the underlying end of the business, yes, we will see growth and it's very much important on the transformation on the end of the market. We all know that At the certain point, the whole electrification, renewable, the whole challenge we have on the sustainability park and climate challenge will support us and the need of engineering solutions in the energy market. So I'm quite positive. Okay, great. And then on the net recruitment, so development of a number of employees quarter over quarter, it actually declined by $277,000,000 What is the reason behind this? Well, I think you see the effect of course, if you look at the industry and did that they had to mitigate the fact that we lost a bit on there. So that's been a kind of a position. And then we have the effect on the group in general. I mean, the synergies that stocks have declined people on the functional side, etcetera. And then I would say how we are organized right now, we are organized in 5 divisions and a number of business area with full P and L below, and they are the full focus on growing, setting the focus on their different structure. So that basically answers it, but we are a company that should we are recruiting a lot and people are also leaving So that's what we see. So I think this was more a timing issue on the reduction. This is a timing issue. And then we need to remember that we are talking about full time Equivalent And this is maybe a place where we have some challenges combining kind of the better way of reporting and lower way of reporting. So we are from employee and FTE perspective, we have been fairly stable, but that's the first question. Okay. So it's not like you're seeing a higher personnel turnover again among the consultants. Not at all in the opposite, Eric, but I think STs are all complicated also joining the 2 companies together. But for sure, all our divisions have a high focus on recruiting and growing. And I think moving into this year, that will be the name of the game because the platforms are becoming more and more solid. We still have more employees at the end of Q4 compared to what we had at the end of Q3. So this is also something that we need to highlight. Yes. Okay. Right. And the final one for me. In the Infrastructure division, are you seeing that cost customers are becoming more reluctant when it comes that you have seen being delayed, just a one off case. It's not the structural change in the market. I would say not the structural change in the market. Small one offs for us. I mean, the market in Israel, we know it, especially in the Nordic, but also when we include Switzerland, And it's still very solid. Then I think more ability sometimes, I think also the client handle a lot of these big projects at the same time can delay some of the decision points, but the underlying demand in infrastructure project continues to be very solid. So these were more, I would say, related to us and one offs. I don't see a structural change in the markets. Okay. Thank you so much. You will now send you also for your answers. That's all for me. And our next question is from Euler Suttemarc from Kepler Cheuvreux. Please go ahead. Yes, hello, Farma, Kepler Cheuvreux. Some follow-up questions on, hi, on Yarek's question about timing and contracts in the infrastructure business and also highlighted that some project were close with with lower profitability than expected. Are everything happening in Q4? And can we expect some positive effects quarter over quarter in Q1? Or should we expect some negative effects in Q1 as well? I think you should not expect, I think We are always, as you know, we are becoming more and more product business and now we happen to have a few delayed products in transportation and we close a few products with lower no longer contribution than we expect, but this is nothing that is a systematic thing that we should think will come. I mean, every quarter, we have pluses and minuses. Now it happened to be a bit more on the minus side, but this is nothing that we expect moving forward. Okay. That's very good. And also a question on the investments in the new platform and ET investments. I know of experience that when companies are implementing new structure and the ET platforms, it could turn the focus internally. So do you see any risk there and you look at some momentum? No, I can tell you that a year ahead of the acquisition of Peyote, we had already decided that over that we had to do it. And it was the we had to implement a new ERP system. So we started with to work with that a year ahead of the period acquisition. So we have continued to work with that. And I guess that shows that we are not fully internally focused because in the meantime, we have been able to make an acquisition of Pori to integrate that liver the 5.3% growth over the year, stable margins still implementing and driving DRP and the system platform. So I'm not worried about that. And I will say that we are doing this in an extreme rigorous way because we know that if you do it the wrong way, it can end up in trouble. The same time, I think we as a company, using also period of experience and the suppliers we have, it's a much high maturity in how to implement new system platform. For further obstacles that you'd need to maneuver in that handle, But what I see is that we do it in a very rigorous way, and I don't have any fear that this will be a problem for us. And also said, these are the things and tools that we need to be even sharper in our business. And that's why I'm quite pleased with what we have been able to do as a joint company this year because for 4, we do not have the perfect system support. So to say it. Deal with that, not perfect system support that actually drives inefficiency, we are delivering the result that we're doing now. So I'm, I'm quite positive in how we are implementing and I'm very much excited what kind of strength you can give us. Sounds very good. And just the last follow-up question on the water pipeline. And just out of curiosity, has any area in the order pipeline year to date surprised you on the positive side or on the negative side? Just get a feeling of what's happening right now? Well, as I say, of course, we see the automotive declines. And I don't there's a big transition not to multi, as you know, that the many of our clients are investing in new platforms. I mean, there are there are some big bets for the big automotive. How fast do you transform to electrification how much are you protecting your old platforms? So there's a big transformation. I end of the day, that will be beneficial, but throughout the year, we saw a decline that that was something that we didn't see coming then, but we have adjusted for it. Then on the remaining part, I think it's been very strong. If you look at process indices, I was in Brazil last week, by the way, looking into some of the big clients and projects we have in Brazil. And I was just amazing how strong our brand. And I'm not talking about period that has been very much in Brazil for a long period. And when we are the company, that's a implement 2 big investments in the bio economy in Brazil. So that's, that's, I would say that the things that we looked at for period that we said this, we will gain this period before, I mean, there are things that we always want to have more. But in general, I can assure you that it gave us exactly what we wanted. Yes, there are more integration work to do, but I'm positively surprised how we are putting together on looking on what we can do. Okay. Thank you very much. Thanks a lot. Okay. And our next question is from Johan Dahl from Danske Bank. Please go ahead. Follow-up, it's been fairly slow on acquisitions for obvious reason in the last 12 months. What's your outlook here for 2020? When would you say that your balance is fixed to continue to grow? Well, I think as you also said, we are very happy with quarter 4 cash flow you want, and I expect also solid into this year. And that means with the net debt we have now that we are ready for stepping up that. So this is, of course, what's in the plan. At the same time, we are becoming, maybe even more selective what companies to buy. So this there are basically 2 things, but we are now step by step improving our pipeline on potential acquisitions. So, I don't think you'll see a big capture effect, but for sure, we are ramping up the focus on that. And we are getting ready because for some larger ones. And this is also very much supported from the board. And again, the net steps position is supporting that. Yes. But given the higher demands on the candidates, have you sort of cleaned out the pipeline and sort of restarted it or is it that a slower period in 12 months have created a lot of potential deals to be made in the short term? Well, I mean, the truth is that just when we were, when we did the period, we have a lot of other prospects that we discussed with. And of course, when we did a period, we have to say no to many of those. So some of them are still in the game. We are looking at them the same time, as we talked about at least, and I joined the webinar close to 3 years ago, we are looking also for companies that will help us in the transformation. We are targeting higher up in the value chain. We are looking at software companies. We are looking at companies that could also maybe give us a recurring revenue to complement our service business. So for sure, we are more selective also from a strategic point of view, where do we invest in companies. We have a broader geographical spread. So they are more variable, but the it's I've seen now we are getting more and better our fleet and direction. We are getting ready for now take on 2020 on acquisition side. Yes. And then if we refer to pure pipeline, the pipeline solid the MSA activity in our industry is there. So there is opportunities, but as Yona says, we want to be careful on which opportunities we grasp. Thank you. There are no further questions that are waiting. Okay. Then we're getting close to 11 o'clock. Thank you all for listening in, and for all the good questions and dialogue. And thank you from us here at Stockholm, and we wish you all a great day. Thank you so much for listening. Thank you very much, sir. Ladies and gentlemen, that does conclude the call for today. Thank you all for joining. You may now disconnect.