Earnings Call: Q3 2019

Oct 29, 2019

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 Report 2019 Conference Call. At this time, all participants are in a listen only mode. A question is being recorded today, Tuesday 29th October 2019. I would now like to hand the conference over to your speaker today. CEO, Eunice Gustafsson. Please go ahead, sir. Thank you very much, and good morning, everybody, and welcome to this a quarter 3 presentation of Owa Pedrin, I'm here to get with you, so pile on our CFO. And We will present a few slides for you and then of course open for questions. So I hope you have received the presentation. All you're able to look at I will immediately jump in to the presentation, starting with the overall development. And what we have seen in the third quarter in general is a stable development in the third quarter. As you know, the joint company is growing and we keep our margins stable. I also have to say that the strategic acquisition of Peyri has created a leading engineering and design company in Nordics and it has a proven to be, if I would say anything, more strategic than we ever thought. It's a very good platform. Among others, we are strengthening the international platform. And the integration goes according to plan. We are where we hope to be. So that's really good news. Then moving over to the combined company. And again, I'm looking on the numbers, as the combined company then, then I would say that we have a stable performance and there's, of course, a great focus on continued integration and driving efficiency. And I'm fully asking the numbers that we are growing roughly 4% and the EBITDA margin is stable at 0.6% equal to SEK 345,000,000. I will get back to the market, but we have seen in general that the market is stable However, in a couple of industrial segments, we have faced a bit more weaker market in the 3rd quarter. These ones related to the Automotive Industry. The integration and the cost synergies goes according to plan. I would even say that the head of plan. And but what we are doing now is that we are extending the cost synergy and I would say efficiency program into 2020. We will get back to that, during the fourth quarter because we have not yet finalized the final number of the target for 2020, but that we can get back to you through in quarter 4th quarter, but we are working heavily on that. Next one, the reported numbers. Of course, this is when we see it when we see period as an acquisition, which has been done during the then of course, both growth and earnings is about 50% because it's been, it's been one of the, I mean, the biggest acquisition in the history of UHF. And it's been really an important one. And then I used to it is it will take a bit longer to integrate fully the 2 companies, but we're well on the way. Moving to market. As we said, our core markets show a continuous solid demand within interest of course, we are focusing on Sweden, Norway, Denmark, Finland, and we have Switzerland also. And all these five Countries, we see an underlying strong demand, solid demand in infrastructure. We have seen in automotive and some related manufacturing industry as a slower demand during the third quarter. But the same time, we see other industrial segments like the sounds industry and Food And Pharma, doing very good. But of course, automotive and some manufacturing has been a bit weaker. If you look on process industry, it goes very strong. We see a good demand in the Nordics and Latin America. And as you also have seen the number, we are growing and also the margin is good. And in the end of the sector, there's also overall good demand. However, we are seeing some larger projects globally that has been postponed, in T And D and also in the hydro area. We have seen some of the projects, the decision is taking a bit longer. So of course, today, we announced the fact that the market is a bit more uncertain, but we need to understand what is what done infrastructure doing good. And there are a couple of industrial segments that we have seen then being a bit slower. And again, these are related to the automotive and related and Next slide, we were just putting up just to once again state the fact that we have a very diversified portfolio. We are organized in 5 divisions, infrastructure, industry and digital process industry and management consulting, and you see the relation between them. So roughly 40% is infrastructure, 30% is Industrial Solutions. And then 2 segments, processing industry and then 15% each and then a smaller business in management consulting. And you can also see the pie chart on the right side how our business is split in different segments. And what we want to say with this is that our strong belief is that we are less cyclical joining together with Parelli because the Relation Automotive now is less than it was before the Journey forces with Parelli. And at the same time for peyote, they have a big, a fair process industry. So together, we have an even more mixed portfolio and that we can actually see now that that segments are balancing each other in an even better way. And the same is valid for our geographical footprint that we have a better geographical footprint. So our company, I would say, is less cyclical, and we have a good diversified portfolio in our offering. There's a number of projects, of course, that we have been, winning during the third quarter. I will not read through all of them. What we like is that we see a general pickup on digitalization, which is a big offering of us in all the industrial domains. So we are strengthening the fact that we have a lot of capacity in digital that we now are leveraging more and more into our different industrial domain. And that can be about, you know, digitization in the processing industry. It can be a degradation to a city, for example, then and this is some that we are seeing a continued good demand. And then we have a lot of other interesting products. So the order intake in general has been good during the third quarter. For example, processing industry, pulp and paper, we have a very, very strong order book moving forward. Then if you look on cost synergies and the revenue synergies, as we have announced, when we announced the deal with Perry, we said that are targeting 180,000,000 run rate by end of 2019. And actually, we are we are delivering according to plan even ahead we have a run rate of SEK 165,000,000 and we are following this really detail on activity levels. And then part of that is is supporting us in quarter 3, but not all of us, of course, because this is the run rate. What we are doing now and is that we will since the integration with Purdistan longer process, we are continuing with the integration cost synergy plan in 2020. On top of that, we will focus heavily on efficiency activities. So that's kind of expanding the program into 2020. The amount, the target we have for 2020, we are about just to define and that we will announce during quarter 4. But this is not yet defined, but of course, we are looking for an ambitious targeting in, in 2020. And basically, we are doing that for 3 reasons. One is to drive profitability as we are planning Also, since we have seen a bit more uncertain market climate in some industrial segment, but also the fact that we are doing some investments in our IT platforms. We are looking to a joint ERP system and to get fully integrated in all the different business units, we are updating the system escape. And that's a lot of work, and there are investments related to that. So there are three reasons, but this is something that we do moving into 2020. And then if you look on the revenue synergies, each division after months roughly together have defined very concrete strategic plans and we are not, we are not driving those into attrition. And there are lots of examples of interesting offers that we are doing jointly together between OAuth and Perry than If it's transportation and building a Switzerland, the water offering, we have a annuity, we are leveraging from both the different companies And again, we are taking larger products in processing industry. We have digital offering and so on and so on. So I see a lot of interesting activities on the front end towards the clients, at the same time, we are taking actions in 2020 on the back end and driving synergies together. One year ago, we announced the fact that we have started repositioning of an annuity business in the former UF company because we were not happy with mainly the global business, how the margin and top line developed. And we felt that we were a bit too fragmented. And then we made the acquisition with Parete, and we continue that work journey together. And now we have now we have basically in the end of that annualized phase. And we have worked quite heavily to find what is the position you should have on our NNE business. And that is something that we're about to close during quarter 4 now. And it will be an enhanced strong business model based on, you could say, the maybe perry global model and the UF local model. And this one, we are combining. This means that we're overlooking in complete global sales, truck we are addressing underperforming and subcritical units and we are basically changing all those ones setup that we are sure will deliver an improved margin profitability moving forward. This will have a negative impact that we have estimated some SEK 130,000,000 to SEK 150,000,000 in we will take that plan to take that in quarter 4 when we are done with the final analyzed The estimation is that it will be approximately 20% of that is cash, the remaining part is done, balance sheet items, so goodwill we'll take. But that will actually create a platform that is setting the base for a long term or mid term profitable growth in the end of the business. So with that, I will leave it over to you, so to talk a bit about the top line on the growth. Thank you, Jonas. So when we are talking about the top line and the growth, first of all, if we take combined operations, we are now at EUR 21,000,000,000 Swedish Crowns last 12 months running, which is a new plateau for us, but also in the whole Nordic Engineering setup. If we take the combined growth then on 3rd quarter, we are in 3.7%, we're basically in front contributed positively around 7% process invested around 9% and management consulting around 5%. While then energy was stable and industrial and digital solutions were slightly negative. So if we take the portfolio view, I'm really happy to see that being in the middle of an integration though very successful, we are still within the combined operations growing and reaching solid figures. We did have one working day more in the quarter, which has impacted roughly one percentage point to the growth numbers. But then when we are looking at the combined operation growth, we don't have any more that many other than Peru acquisitions impacting So material part of that growth is one variable or another organic. So if we then take the numbers looking backwards, I'm pretty comfortable where we are. And if we are looking forward, we see the solid demand, as Jonas explained in our core markets, despite also seeing some slower development especially Industrial segments of Automotive And Manufacturing. Then going to earnings We are also in here producing stable solid earnings at 7.6% for 3rd quarter we need to always remember that the 3rd quarter is the, especially Nordics, but also in European countries, the holiday periods. So it is always involving 1st ramp down of operations and then a ramp up of operations. And thus third quarter, profitability normally below the full year profitability. 7.6 percent EBITDA margin during that period is solid and At the same time, we are delivering SEK 345 million of EBITDA, which is an increase from previous year on combined operations and obviously then compared to reported numbers of 2 20 previous year. We have had items affecting component built in total of SEK 37,000,000 and also relating to the integration costs. We have delivered solid earnings across our businesses in our core markets, especially in such market that SS Buildings, Process Industries, Industries, Digital. But we also have our pain points, which we have been addressing already earlier and we continue to address, especially in intra, we have, some struggles in Denmark. We have some components, especially in the automotive in industry and digital solutions. We are working on those ones and we are confident that our actions will carry crude when we are going forward. Cash flow This is the 2nd part. We are stable on the net debt position reaching 2.8 net debt to EBITDA multiple if we take further acquisition rolling 12 months in there. What we have seen during the quarter is that we have normal seasonality for Q3, a bit of more buildup of working capital after summer than I would probably have liked to But despite that one, we can see that we delivered SEK 190,000,000 SEK 135,000,000 cash flow from operating acquisitions from operating activities. And then if we put the share buyback that we have also consumed money in And our acquisitions and contingent considerations in total, we have delivered very solid stable cash flow also during the quarter. But this is definitely a place that we will continue working on and also improving. Then if we take the IFRS 16 view, including the leasehold considerations, the picture the big picture is obviously the same, but then you see a bit of that distinguish between the lease components and the operating activities, SEK571 1,000,000 from operating activities, but that includes SEK386,000,000 related to IFRS 16 considerations. So the big picture still is exactly the same. All right. Thank you. So then, stepping back a bit to the divisions that are starting with infra and we already talked about the fact that we have seen a continued stable underlying need for investments in our core markets. And that for all the segments that we are operating within infrastructure. For example, we have seen a solid development in buildings, and then we have had that you also mentioned a weak development in Denmark. And we also had a slightly lower utilization in part from transportation in the beginning of the quarter. We are taking action and we are addressing that. And we are happy that we are growing infrastructure, compared to last year. And in general, the overall market is still solid. Of course, we can say private housing has gone down. We have a very small exposure to that. But, I would say in general, solid market in infrastructure, when we are taking actions where we have not maybe delivered on the margin as we hope for. On Industrial And Digital Solutions, we also talked about that that in general, there is, due to the fact that we are in this big transitions where all segments are looking for sustainable solutions. On top of that, we have digitalization, electrification, the underlying demand in industry is still there. Then we have seen, as we said, in Automotive and the related manufacturing segments, a bit weak your activities in the third quarter. We are taking action in that. So again, we have a confidence that we have a good development in industry and digital moving forward because the underlying demand for our services are still good. Force of the industry, very happy with that. I mean, we are delivering a strong combined growth. We also have a solid and good margin and I have to say that the order book we have is very solid and this is one of the areas where we are world leading. And very, it's very good to see our combined operation over and joining forces together meeting clients offering fantastic projects actually across the world. And this is something that we really can be a proud of and delivers what we hope for. And it is We talked about that and we are now repositioning the energy and that it looks very promising. And we have this business where we have strong businesses locally in Sweden and the related Nordic Countries, including Switzerland, at the same time, we are now implementing the global model You could say the one that Peyri was driving into all our markets globally, and that will actually create a very solid platform for our elderly is moving forward. And we can also see here that all the changes transitions, we will see a continued underlying demand for our energy services. And then finally, management consulting. This is our smallest business, but at the same time, maybe this is our high end business we had. Now we had fantastic, consultants all over the world focusing a lot on the Process Industries segment and on the energy segment. And this one really gives us the full insight of those industries that we're also gaining for in our engineering Smith. And they are delivering solid result. It's a bit more volatile depending on the payment terms with our clients and success fees that we get, but it it's really solid. And we are really happy to have this strong team in the group because double exit pave the way in a lot of interesting and engineering segment or business across the world. So that's the it's a bit mixed bag, but all over, we are confident that we are taking the and we all the divisions are working hard to deliver on their strategic plans. And then just to finalize, we were very happy with that the same that our brand was now, this year ranked as the 2nd most attractive employer among young engineers. Last year, we were actually down to number 4. And this year, we climbed up and we are the 2nd which is an improvement, but I have to say we are never really happy with the 2nd place. So we want to do our utmost to be the number one, the most equity employer. So that's a target. As we have said, we will have a lot of branding activities moving forward to really show everybody what the fantastic company we are. So to summarize that, as you also mentioned, it's been a solid combined growth and stable earnings during the quarter. The overall market, if you look on the $21,000,000,000 revenue, as you also mentioned, that we are meeting, There are a few segments weaker, but the general, infrastructure and some related is still very solid. The integration goes according to the plan. We are where we hope to be. Of course, to integrate 2 large companies, which are, will take some time. We have more efficiency and cost synergies to take out and that we will now formulate and present for 2020. And that will help us in many areas And we need to understand one thing, we have IT investments and an IT landscape where we are now taking to get joint IT platform system for the 2 companies. And this is something that we are working on. It will continue into 2020. It will require investments. And it's but it will help us quickly in getting efficiency and transparency up in the company. And then of course, they are now also the repositioning or division energy. So with that said, I think it's just fantastic, the fact that we have within short time have integrated and we are integrating 2 really strong companies 2 large companies, we are creating them a leading position in the Nordics, and we are strengthening our international platform. So with that said, I would like to open up for questions, if anybody. Thank And your first question is coming from the line of Johan Dahl from Danske Bank. Please go ahead. Yes, good morning, Jonas. I think I need to hear about your, how bullish you are on the combined entities in terms of selling new projects. I was just wondering I mean, the figures are slightly bleak, however, just only 1% organic growth. Is this, can you explain why that isn't higher? Are you seeing better figures on order intake? Are we seeing negative effects on portfolio sort of pruning integration effects? Well, I think, thank you all for the question. What bullish, I think, when we looked on the period end or combination, we knew where we were getting stronger. For example, processing this is one strong evidence of that. Then, of course, what we have seen in the automotive and related manufacturing industry in Sweden of course, been a bit more negative, which has not so much to do with the paid integration because that's actually former WAF operations then. Then on infrastructure, I think in general, infrastructure is doing very good. We know that the period infrastructure business came with with slightly lower margin. And that we're working on. And then we have had some more challenging time in Denmark, which is also actually related to the former UF business. Management consulting solid. And the energy, we are really gaining from the period business modeling in repositioning the WAF business section that you want to bring. So I think, yes, the numbers are maybe not as, as we hope for in all areas, but our confidence build is build on the fact that we are building this strong platform moving forward. So even though the quarter 3 then was not meeting you know, we were a bit lower on the top line as we hope for, still growing 4%, we know where we have the pain points and we are adjusting them and then feeling confident that we will have a good story moving forward. Were orders higher or lower compared to sales in the quarter? Industry because part of our business is more transactional, but I could say that in general, we feel good where we have the larger projects that we have had solid order intake. For example, Process Industries is one where we have a strong portfolio right now. Yes, definitely. So if we take the profit part where we can the biggest part then is process industries and energy. We are seeing solid order intake and especially in processing that our book to bill ratios are very healthy and very high. Then on the more transactional part, especially in the Industrial And Digital Solutions, we feel and see the automotive part but we also see that one stabilizing. So all in all, from order intake perspective, we are pretty comfortable where we are standing. So the fact that we delivered 7.6% I think it's solid, as you also said, if you look back the quarter, it's actually a solid quarter and then the actions we are taking pointing on a more uncertain market climate These are as much preventive actions moving into 2020 because we don't see really maybe that the market is going down right now, but we will We will take those actions both to be prepared if that happens. At the same time, we will gain for that, of course, to build a story moving forward, drive profitability. Okay. Just before getting back in line, I mean, there are a lot of programs it seems now looking into 2020. You've got the synergies, a new cost out program, you've got energy restructuring. What sort of numbers? Can you give any guidance, about cost out impact next year versus 2019 in very round figures to get a sense of the frame of all this activity Well, a lot of programs, I would say that we have 2, Johan, that may be a lot. We have the cost and efficiency program that we announced this year. That should meet one 80 by end of the year. It will do that. And we will expand that into 2020. We will get back with a number on that. On top of that, we are then taking this frame as we have announced in Energy that we're confident will improve the margin, but we will get back with those numbers late this year or during quarter 4, you won. So we are at this point just about finalizing all our thoughts and use on the 2020. And that's why we are not yet prepared to see how far are we looking into? We want to have a number that we really feel is the right number. And then we what comes to energy, it is very important to understand that this is not as such a program. It is a repositioning of our portfolio. So what we are doing is that we are basically exiting some markets. We are talking about what kind of offerings we will have in the future, which made any include closure of units or divestment of units. So this is a different dialogue, then when we are talking about cost and efficiency program or synergies, we are revamping our portfolio so that we have an offering that can be sustainably in the benchmark profit corridors as we have disclosed during, for example, Capital Market Day, that's where our ambition is. So this is a different compared to an efficiency program. It's really about touching our portfolio. Flow or at least the last year. But now the target is to meet that Richard Pinna pointed out, we want to be solid in the corridor 8% to 10%. That's the target then we to deliver on. Your next question is coming from the line of Ola Sodemang from Kepler Cheuvreux. Please go ahead. Yes, hello, and good morning. If you could give some more color on the Infrastructure Division, I mean, the growth rate was quite good. But the margins were at least a little bit lower or quite a bit lower than at least we had expected. Can you give some color on the development during the quarter and the measures are taking and how we should see it going forward? Yes. Yes, you're right. And first starting, we started up after the summer a bit slower than we hoped for, and that we're hitting a bit on utilization. And then I would say that we have at least a couple of areas where we have not been that successful. I think Denmark is 1, and this is This is related to businesses that the work was acquiring a couple of years ago where we had the product portfolio that has not been as good as we hope for and we are taking actions on them. And that affected the quarter. We have also seen that in general, the architecture business is still doing okay, but maybe not as good as it did a year back. And that affected us a bit. And then we have a bit part of the transportation set also taking a bit, had a bit of a low utilization. A lot of it is we saw a bit of a mixed picture being a bit lower in the beginning of the quarter, I'm guessing a bit better by end of the quarter. But those are the areas that we have been phasing during the quarter affecting the margin. So basically, right, we did kind of a mental breach from previous year, combined operation to Q3 this year, we can say that the positive contributors have we have 1 working day more. We have a solid growth number. Those are bringing more EBIT compared to previous year. And then we have had the Danish items, which is roughly 2 thirds of the problem. And then we have everything else, which includes the slower start, some minor utilization gas in transportation. And then the architecture business that has had some struggles like we communicated already in Q2 and that one is then a 1 third of the problem. And all of these ones we are addressing and we are progressing in our in our airport, but that's in a nutshell, what has been happening in the infrastructure. Then I have to do a follow-up. If you're saying that the Danish problem is roughly 1, 2 third of the problem. Is it possible to quantify it? You have to kind of range? Well, you can do your own mathematics on that one, but we still need to see that we are talking about a SEK 13,000,000,000 in pro form a numbers negative deviation compared to previous year and then depending how you have a lot of calendar impact and growth profitability, if you get kind of the total operation there, you can calculate what is your about filling on that one. But we normally don't talk about country level results as such. What we can say is that, and I agree with you that we have, we had hoped for more, in the infra business The thing that we have now is that the market is in general solid. Denmark has been maybe the market where it's been a bit more weaker also not only our problems that we have had, but also the market as such. Moving into quarter 4, we see a con we see a solid market in infrastructure across There's a lot of spending in public infrastructure projects in the Nordics, but also in Switzerland where we are large. So of course, now with actions that we are taking in Infrastructure Division, we expect a solid development moving forward. So you can say that you have seen a clear improvement during the quarter or or is it too much earlier? Yes, I mean, again, we have seen an improvement during the quarter, yes. But then it's in but yes, we have seen an improvement during the quarter. Okay. And just a follow-up question on the industrial and digitalization area. How is I mean, it has been a when the market may be also a little bit better, the personal turnover has been quite high. How do you see the development here? Well, I think we are able to find the people we need and we are also seeing a good development in keeping people. So of course, the whole industry, if you are thinking of Gathenburg as a super strong automotive with a lot of businesses, Right now there is maybe a lower kind of turnover since the market in general is a bit more weak and uncertain in those areas. So, but I would say that maybe a year ago, we had that as a challenge. But it's been we are far behind having that as our kind of problem. I think the fact that you're strengthening our brand more and more is also enabling us to keep and retain and get the best people on board. So right now, that is not our problem, so to say, And again, if anything I want to say about Automotive Manufacturing is that Well, let's see now because we don't know what happened in 2020, but we feel that we are taking actions on those segments that will help us in 2020. Okay. And my question was actually the other way around if it's a problem that you have rig the organization for recruitment and now you maybe don't need such a feeling No, no, no, that's a clear no. We are not overstaffed this stuff. Not at all. There are tasks projects, there are some areas where we need to reposition. So if you're fully into one of the big automotive players in Gothenburg and they are reducing, it will take a bit time to re position those services to other clients and that will create some gaps on utilization, but we are not overstaffed in that sense. Okay. Thank you very much. Thank you. Thank you. Your next question is coming from the line of Dan Johansen from SCB. Please go ahead. Thank you. A couple of questions from my side as well. First one on cost synergies. Your run rate was roughly SEK 100,000,000 at the end of Q2. Is it possible to sort of quantify how much rolled into the actual Q4 figure Is there anything more than SEK 25,000,000 realized in Q3? Or is it roughly around that number? Thank you. Well, basically, we can talk about in the ballpark of 30, so it's 25 from the first half and then part from the actions on the 60 65 that we have gained during Q3 is has already had an impact in Q3 results. So we are in the ballpark of 30s. Very clear. Thank you. And last one from me on Enbridge, the measures you're taking now, how far do you expect it to take here? You're slightly below 7 percent margin now? Is it a fair assumption that you intend to do somewhere in the 8% to 10% margin corridor that you talked about during the Capital Markets Day? Is that a fair so? Thanks. Yes, it is. And this is absolutely what we are targeting in that division we will, and that's the dialogue we have had also before, we don't foresee the theories that we have not been super happy with part of the, especially the international energy business, been too fragmented, too kind of under critical And now we are tightening that together. As you also said, it will be a combination of looking over those full sales structure, divestments, etcetera, etcetera to set the structure that should deliver a solid 8% to 10% margin and growth moving forward. We are asked to finalize the plans in the quarter 4 and then we will see the improvement kicking in during 2020. That we are confident on. Okay. Thank you. That was it for me. Thank you. Your next question is coming from the line of Eric Elanda from Handelsbanken. Please go ahead. Yes. Hello. So I have three questions. First of all, given the weaker demand in the Automotive And Industry segment within industry and digital solutions, should we expect you focusing more on margins rather than growth in the next quarter, sir, upcoming? Thank you for the question, Eric. Well, I think we will focus on both, but clearly when you see a couple of segments going a bit slower, we are focusing on take actions to defend and strengthen the margin. That's for sure. But at the same time, as we have announced, I mean, there's been a very strong focus now on those segments in automotive industry, but there are other segments that actually shows good growth, like Food And Forum has been good and this defense industry as others, So it's more a question about how can we gear up and target even more those segments where we see a strong underlying demand. And then I have to say that we don't forsaken believe that the automotive industry will not it will be good because The need for the whole transition in automotive was on R&D to electrification autonomous car, etcetera. It's not stopping because we have seen now a short term dip. And we have to remember that we are not exposed to, if you look on car sales, we are more exposed to the fact that we are involved in a lot of these, changes going on in the industry. So, a short answer, Eric, we will focus on margin for short taking action, but we will also target growth in that division. Thank you. Very clear. And the second one for me also related to the industry and digital solutions segment. I mean, this segment is actually a consolidation of the former industry segment and the digital solutions segment in the Formula West. How is it possible to get a split in terms of growth between those segments now in the West Peyter? Well, 1st of all, there's a reason why we have merged these divisions and that is to increase the cooperation and to make sure that we have a joint offer in tackling the market demand. And part of that merger, we have made a true integration of services. So we don't feel comfortable on talking about those 2 separately. But then obviously, if you think about the markets where we are operating how we are operating the digital solutions and the demand for IT related services, embedded solutions and such continues to be strong and has been favorable while in the automotive, which also includes an IT part of the offering. It has been more difficult. So from those months, you can fairly well jump to conclusions of how it could have happened. But as said, we are talking about one division with shared offering, with shared better working, so we don't feel comfortable splitting those 2 into 2 different bags. Yes. And the last one for me. Also or actually related to the Energy segment, when do you actually expect to have the platform in place in Energy And what in terms of your transitions that you're going to do here? And what will that mean for margins? Well, you have to start on Annabel, but we expect that, I would say, to be fully in place, I would say, during the year, if everything works out. I mean, the majority of those actions, and I think we already have seen just to point on, we have already seen that improvements are kicking in in that division. But the full implement, I expect those to be finalized during 2020. Yes. But then we need to understand also that what we are saying once again, the key in here is not necessarily the platform. We have functional base of working. We have functional platforms. We need to integrate M. D. And make them a bit more robust. But the key in here is that we are taking a portfolio decisions on what type of a work we want to do on what kind of markets we want to cooperate and in which kind of which types of projects and market we are not comfortable on operating or we don't see that our business model is fit for purpose for those market needs. So this is more about a dialogue on the portfolio than on integration and synergies and platforms. Okay, perfect. That's all for me. Have a great day. Thank you. We have no questions at this time. Question. And we have another question coming from Johan Dahl from Danske Bank. Please go ahead. I was on the topic of prices. I mean, you're claiming market leadership in the Nordics with another well known period, and I guess they're they are having a great tailwind sort of 4% on pricing. Can you just explain why your pricing performance appear to be significantly worse? Well, I will prefer to talk about Austin, maybe not in comparison to the other peers that you referred to. So I think We are, of course, pushing prices in all the segments as we can. And of course, if you you would look on an automotive related manufacturer industry that is kind of being in a tougher situation, maybe it's a bit tougher to get through price increases in those segments. But in general, I would say that all our business units, you are pushing on prices wherever we have the position as such. I mean, you take processing this as one example and others where we have a strong position and a strong demand, we are getting prices pushed through. So is it that the weak sort of pockets that you're talking about are sort of offset those price initiatives? And also looking into next year, what sort of milestones or sort of follow-up points are you accepting in terms of pricing Is that sort of a more reactive from sort of group management or is it something that is diligently pushed? No, we are talking about pricing you want and we are following it up also. But of course, I mean, to be clear, if you have part of the business where you see a lower demand, competition tend to increase and we then need to be very balanced in when do we step in and take a project to secure volume and to what price and what margin and when do we actually step out? Because we when we are focusing on kind of value based pricing. So it's a very balancing act, you want, but of course, when you refer to the guess, you referred to the infrastructure business in general, where you see this solid underlying demand. And of course, here, you are also pushing prices as much as everybody else, But then we are a company with a slightly different portfolio than some others. We have a more international exposure to NVVM Process Industry we have a bigger port to the industry segment. That's who we are. I believe then that, yes, right now, we have a tougher time, but we believe that the pricing right now, you won, but I can assure you that, of course, right now, the message to all our, our mandates to push on prices, wherever we have a position that justifies that. And then just to highlight, we are operating in exactly the same market in many corners as the peers you may refer to And there's a continuous market pricing on every vendor you go out and especially when it comes to public sector, we have full visibility, who wins, buy wins, what are the prices. So on that part, I'm feeling very comfortable that we are at least as good as anyone on the market. And I think it's very good also for us that the way we see the market now, and even announcing that in some segment we see on higher uncertainty. That also enables us to take actions in them. And that, I think, will benefit us into 2020. Okay. On the big ERP project, can you just mention timeframe, investment frame, what are the sort of what would you capitalize from this? And yes, just to get the figures, right? Yes. So basically, we have not least blocked the full values and full numbers and based on kind of agreements with the vendors and such, I don't feel comfortable on giving all of that one out, but we are talking about an patient where we are renewing the ERP of the full financial backbone of the total corporation. Normally those projects tend to last 3 plus years. And this is also the time frame for us. But then obviously, when we go core country to core country, we penetrate the material parts or maturity of businesses quite quickly. And then we are talking about Well, ERP life cycle is normally average 11 years. So then we are talking about the depreciation periods on that for park under investment rates is several 100,000,000 in total. It is in the in several SEK 100,000,000 in total, but I said, we will come probably back on that one also in the Q4 when we are talking about the efficient efficiency program. Yes. Because the fact is that even you want, even before we don't enforce the liquidity, we had a very fragmented, the system landscape in former And there was a need to actually renew or modernize a lot of systems. But really good part is now that the efficiency gain and structural gains and the transparency that we will get from these are will be substantial, even though we have a heavy year ahead of us with changes and integrate related to the IT platform. So what we have seen the $165,000,000 we are delivering now, I would call that the low hanging fruits very much people related that they have been able to merge function between Ortho and Phedi. The gains in efficiency and platform gains to systemize, they are still ahead of us, which is a good thing for us. So there are there are more to get from that, but that we will see starting to picking up in 2020 and actually also the year after. Okay. This $130,000,000 to $151,000,000 of cost in energy, I mean, clearly, there's a lot of leases write downs. What are you actually writing off? Is it goodwill or is it projects? And secondly, the cash out, is that redundancies? Is that a fairly good assumption So basically, yes, we are writing down goodwill and some other balance sheet items, which normally then in our business relates to projects And then basically, the cash out is expected to be a various different kind of cash out payments related on exiting certain projects our market. Thank you. We have no further questions at this time. Please continue. Okay. But then I would like to thank everybody listing in. And, I will probably hear and talk to you soon again. And, I wish you all a fantastic good day. Thank you so much from our side. Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.