Earnings Call: Q1 2019

May 15, 2019

Thank you very much. And good afternoon, everybody, and welcome to this webcast. I'm sitting here in Stockholm, so not to get the CFM new ones on CFO. And we will as a normal always then go through the quarterly report as we have presented it today. So again, welcome. The agenda today, we will we will talk about store real performance. We will talk about the combined group. Obviously, it's a special quarter for us since It's the first quarter where we have period included at least 1 month out of the 3, which makes the quarter be special. A few words about the market and some highlights, financials obviously, and CFM will take you through them. Shortly about each division and also a summary afterwards. And we will try to do that as quick and fast as possible. And then have time for questions if needed afterwards. So if you'll summarize the core progress, it's been a stable it's a stable performance and the integration is in line with the plan. We are happy if you start with organic growth. That we are delivering an organic growth of 8%. I think it's a very strong sign that including a quite large integration we are keeping a very good focus on serving our clients. And I will say that we are not losing at all momentum towards the in the office, it actually, I think, the two companies of impaired jointly jointly together have sort of annually out on selling our services and solutions to our clients. So that's very good. I will also say that we are delivering a solid profit level. You could see that part of the Peru business have actually delivered a very strong performance. Part of the work business, we'll get back on that is that we had a bit slower start in some areas in beginning of the year. And that affected a bit the margin development. But it's a solid start and we can see it's an overall good demand. However, there are a few segments that we can see signs of a bit slower demand. And one of them that we highlight is actually automotive then. But all over, it's a good and stable quarter if you look on OF 30. And then just to highlight the whole acquisition and the process related that acquisition is complete quite fast. We have also made 2 successful rights issues and CFM will get back on how is the balance sheet looking after this. This is, going according to plan, I would even say that it costs even a bit better So I'm very pleased with the way that we are able to integrate, over some period together. I think to analyze, we have done in the 2 happy with. We have a strong plan on delivering the 180,000,000 annual run rate savings on cost that we have presented, in conjunction with the acquisition of payer. And we are following that very thoroughly and we are now after quarter 1 on 20 5,000,000, and I feel very confident that we will be up on a run rate close to the SEK 180,000,000 by end of this year as we have communicated. So also that is progressing according to plan. And on top of that, strong organic growth and stable earnings. So So, of course, there are always challenging areas, but all over, it is a very strong and solid quarter. The group, as it looks now, is that we have close to 17,000 employees. We have percent of this before that we have a very balanced portfolio. And we are a strong Nordic player. So 75% of the sales and revenue is in the Nordic, but we have also expanded now the geographical footprint with better balance portfolio, strong European platforms, but also strong operation in those, regions that is valid for us. And for example, in Southeast Asia serving the energy business. So also here, I think the setup of the new is very interesting. We have 50 countries where we are present. Of course, there's a few ones where we are very big in infrastructure. We know the core countries. And then we have a portfolio down that is expanding towards more and more projects. We have still a strong service delivery in the bottom, but I think the way we are able to handle project is one of the success sectors moving forward. The customer base, obviously, jointly together is very strong. So this is the 10 large customers as we have jointed together in the group. So some of them we have been working with on different sites before on coming together, we are becoming even stronger then. So we are serving a lot of important, good clients. Looking on the market, overall, I would say that it's still a favorable market across the majority of the And I think the reason is also that many of our clients are affected from disrupted trends where they need to take in new competence. For example, into 5G, it's if it's electrification or if it's digitalization. So the need for competence is is very high at the client side. We also know there's an underlying need in general, especially in the Nordic, but also in in Europe for infrastructure solutions. So I think we have a very strong position. On top of that, the fact that we are now a world leading player in process industry is extremely interesting. I mean, we have been strong on that. In Sweden and Purdy obviously have gained a leading position in process industry and jointly together. We are one of the key players. So that's interesting. On top of that, jointed together now, we have a very strong portfolio towards annual business. And here, we see a lot of transitions obviously in Europe and in Nordic, it moves towards, I would say, different kinds of business models, including renewables, and smart grids, etcetera. At the same time, we have a very strong operational platform now to serving new build energy project in, for example, Southeast Asia. The area that we have highlighted where we can see a flattening out on signs is Automotive segment. And the overall portfolio, we have a quite strong position and to LatAmoto. But here we can see that that we have seen some signs in the quarter then. But all over, it is still a favorable market. Of course, the project portfolio is filling up and we are constantly booking a lot of new projects. And here's a few examples. Then that we have been taking during the quarter, both in infrastructure and also in the annuity business and other areas. And I will say based on the market situation that our perfect pipeline is continued to be very strong in all those segments. So I think I'm pleased also very pleased with the position that we are getting jointed together. So all of that looks good. And then moving over to look a bit on the growth side on the sales side, and I believe it Stefan to comment out a bit. Thank you, Jonas. Good afternoon, everybody. As Jonas mentioned, we have a strong underlying market in general, except for from various from certain areas. And that also reflects the top line increasing by SEK 1,000,000,000 to SEK 4,400,000,000, of course, driven by mainly by the acquisition. But an underlying growth of 8%. And if you recall last year, we were struggling with the growth. More or less flat in the first quarter. But now we are picking up and showing reporting a very good number. In terms of growth. And we are very happy about that. And we see it's not one single segment that are, that are driving the growth. We see a good demand and growth in all divisions and Countries. But of course, especially within infrastructure and especially within the billing technology within infrastructure. We are coming back to that. And so conclusion is it's a good in generally good demand and good underlying market in which we are growing in. If you look at the bottom line, we also increased the profit up to 3.90 of course, driven by mainly by the acquisition of Prairie. So the former UF Group or the the especially in infrastructure in the industry had a slow start of the year as as Jonas mentioned, with a lower utilization rate than we expected. So the start of the year was a little bit of disappointment. On the other hand, we see Perris Energy Division And Processing Industry Division performing very well I shouldn't say ahead of our plan, but very, very, very good and stable profit performance in that unit. We're happy about that. We took, 1 off items of $63,000,000 in the quarter. Whereof $44,000,000 was related to transaction cost and 2019 was it related to integration cost. In total, we expect integration cost to amount to roughly $180,000,000, the same as our targets for cost synergies. We have also together a kind of a I shouldn't say pro form a, but it combine quarter result for the group. As if the per group was consolidated as per January 1, 2019, and comparing that with the same numbers Q1 2018. And if you look at the details, you can see that period is increasing the profit from $91,000,000 to $126,000,000 in the quarter, up 38%. And we also can notice for the whole group, a growth rate of 14% in total, whereof 9% is organic growth. So both units are growing at the moment in a good market. The balance sheet has, of course, been a concern for you guys and for us over over period of time. But now we can conclude that we have, made 2 rights issues, one direct issue and right this year in a successive way. We start if you look at the graph, we started the year by net debt of SEK3.5 1,000,000,000. And the key rate was SEK2.5 billion net debt to EBITDA. And then I am and then if you go forward, we made the acquisition that the balance of the acquisition in the first quarter. We started to buy shares of the market in Q4 already. And we also concluded the direct issue $1,200,000 during the quarter, which means that we ended up the quarter in with a net debt of SEK 7,100,000,000 excluding the IFRS 16 leasing effect of SEK 2 point 7,000,000,000. That means that we ended the quarter over the key ratio of 3.7 And in that number, I've included a 12 month EBITDA from period. Because their reported number is over 5, but this is the most relevant number when you look at the balance sheet exposure. Then we also try to make a kind of pro form a, balance sheet as if the share issue and the dividend have been made using the quarter. And when having made those, we end up in a net debt position of roughly SEK5 billion with a net debt ratio of SEK2.6. And if I should give you some kind of guidance going forward, I assume that ratio will be rather stable during 2019 because we will have a good cash flow generation as always. But we also have earn out payments and we also have to have cash outlays related to the integration costs during the second half here. So I expect the ratio to be around 2.5 to 3 ending this year, which is slightly better than I have indicated to you before. So we feel that the balance sheet has strengthened. And during the end of the year, I think we can start doing some smaller acquisitions again to go back, to our, kind of, our way of doing business and adding value to the shareholders. Thank you. Thank you, Stefan, and Stephanie is right on that that, you all know that the model we have been using for many years to drive organic growth. On top of that, finding those good companies with a good fit, call and bolt on acquisitions. And with this development of the balance sheet, we will be up and back to that model by endoftheyear. And I think that there's a lot of interesting possibilities that we could look at that would support the new company in a good way and we already started that process. So I think that is something that we are looking for we had a very nice pipeline when we acquired Pori. But of course, due to the operational exposure and to the balance sheet exposure, we stopped fully all investments. But, now we can start looking at those again. Yes. And I also think another, perspective on that is that integration 30s progressing very well. So I think we will also be read the pure operational by second half of the year to take on smaller companies again. So with all that said, the new divestiture, as you already know, it, we presented that very early. And I think that has been a success sector that we have been very clear on how to organize and set up the new company. And here you see the 5 divisions, then you also see the split talking from less with infrastructure. And then we have a strong and big industrial business solution, and then through, I would say, segment related division's process industry and energy and also the management consulting business. And if you look on each of these, the issues then starting with infrastructure, we have talked a lot about that. We had a bit of a slower start in piggy of the year affected a bit the margin, the market as such is very favorable. We can see that some areas maybe on the architect side, or maybe affected, in general in Sweden due to the maybe private housing slowdown. But we still see the infrastructure market to be very strong, especially the building technology where we have a very strong position. One highlight is of course that we are growing our business very strongly. So, looking forward, I think that we have a very strong efficient in the core counties where we have the biggest operation, which is now Sweden, Norway, Denmark since before, of course, now adding Finland, jointed together, we are very strong in Switzerland. And then we have some interesting businesses now both in Germany and also in Austria. I think the infrastructure division is a very strong and interesting business that we will continue now to drive performance. Moving over to Industrial and solution. This is a combined division of the 2 divisions we had separate in the former OS. And you can see here that we had the same effect also here that this division, we had some challenges last year to get up to growth. We are very pleased on the fact that we now have 5% organic growth. On the flip side, we also here had a bit of a slower start in the beginning of the year, in the service related business. And also, of course, distribution done, have this, you know, automotive exporter. And here, we have seen some signs that decisions in that segments are delayed, and that is something that we are monitoring very closely then. So you saw last year delivered 9.3 percent in EBITDA margin and we lost a bit on the margin side. And due to this slower ramp up beginning of the year. In general, the industrial market is still favorable and coming back to the fact that the structured trend continues to drive demand for high competency and digitalization, ultimate and electrification as mentioned a few of them. Process Industries, Stefan mentioned that this is, of course, I would say that period have the super strong position and that's where basically the heritage of period is. And so on top of that, oh, we also have a long tradition in process industry. And you can see all the numbers that we are combining 2 very strong units, ending up to an 11.5% unit in EBITDA margin, which is, I think, is very strong. So both areas had an operational improvement compared to last year. And we see again, with the strong demand in not only pulp and paper, but mining and metals in the Nordics. And we also see the whole trend disrupted trends with bioeconomy at and so on, real fuel growth in that segment. So I'm very pleased on the fact that we are one of the world's leading comp in this segment. And, that's what I really liked with us that in few of those segments where we have been strong on each side, together, we are becoming 1 of the world's leading player in that segment. And that's of course very interesting for us. So we are looking forward to continue to guide that business. The next leg then, next segment division we have is Energy. And you all know that OAF have had some challenges, especially on the, I would say, international energy business where we have been under critical and small scale. We have also not had the business model supporting that, while on the payer side, over years developing an integrated local business actually that actually enables period to take on Southeast Asia Perfect and drive good margins. So you can see here that the OS improved from low number, 3.9% up to 5.5%, 3rd has a development up to 7.8%. There's still a lot of hard work in that division. The progress is very good. And I'm very pleased how those guys have taken on the challenge. And I think we will expect them continue to drive margin improvements in that division. There's a growth opportunity in general, we see that many countries and regions also in Europe now have some big challenging questions ahead of them, not least in Sweden, how to take on the fact that we need to have sustainable, power generation also to support electrification There's a nuclear dismantling decisions made. We need to get less and less, depending on the coal plans, etcetera, etcetera. So the fact that annually is a strategic important businesses for many countries will also support our business. And still there's a lot of new build hydro plants, in, in, for example, Southeast Asia that we are all supporting. So I'm also very positively in what we each can join together in the annual business. And then finally, the management consulting, which is then the business that Peoria have, have had since many 100 years, focusing on 2 very clear segments. One hand process industry and the other hand energy, of course, having here excess to key clients all over the world in strategic, kind of devices service is very interesting for us. And on top of that, having some interesting business modeling pricing, forecasting, etcetera, etcetera. So all of that combining work period to be a company now with close to 17,000 experts in some of the most relevant segments, strong Nordic platform, and on top of that, a very strong and clear international footprint. And it's been fantastic to see what we can join to do together. And we will, of course, continue then, yes, those who mentioned employer branding has been one of the success factors that you guys look on or work in this case. Being a company that actually delivered sustainable solutions with the latest technology, we have been able to attract the best talents, for example, by engineers. And I think combining 2 strong brands making us even more relevant will enable us even to take up the fight in that segment even more moving forward. So that will be very good. And if you look at the strategic direction for the new company, I think it will not be different to the rectum you have, that's, or per year separately because when we look on our combined thinking, it fits very well together. And this we knew when we had the management discussions and the DD process that we are looking on the ball on the challenges in very similar ways. So we will continue to drive growth, to take leading positions in Nordic in our core countries and in the relevant segments. We will continue even with a higher pace to drive value creation and expand our business model to deliver higher value. We share the passion on moving towards combined solutions, foresight, and using digitalization as one tool of that. Of course, now being 17,000 spread out business, we will need to operate our business in an even more professional way. The scale enables us to do that. For example, in all on the functional side, we have now reached a scale that we can take the step become even more professional. And that's also interesting. Finally, people then have been a high competent people leaving from having the best talents, we need them to attract the best talents. And again, by enabling international careers, by being more exposed to the latest technology and foresight, we will also be able to attract the best people and we will continue to make our company even more relevant moving forward, but the strategy direction and execution continues as it did before. One important part has been synergies. And as you all know that in the kind of business case of acquiring parity, we have committed to deliver 1,000,000 run rate savings with a large part executed by end of this year. And I would say that we are progressing according to plan also here. When we close quarter 1, we are on SEK 25,000,000 And we have a very rigorous way of, following cost synergies. I can assure you that it takes some strong criterias to fill into that box to be calculated as a cost synergy. And obviously, we will see not a linear curve, but that is a bit of an exponential curve that we are following since some decisions are done right now that we will see the effect of, for example, in quarter 3. But we are following the plan and we have good believe that we will be closed at 180 by endofthisyear. And this, in general, administration costs, the operating structure efficiency There are part of the information systems and also, for example, on the facility side. And we are also delayering using scales on sales and management levers. So all of that is progressing in a good way. And at the same time, we are now step by step getting the front end together and getting the divisions together, meaning that they are really getting the arms more and more into what kind of joint top line synergies can refine. And we see all of the evidence that we can take on strong bigger project, more complicated challenge for our clients that will fall into the box revenue synergies. And we have invited to a Capital Markets Day in end of this month where you will also see more and more evidence. So where is the divisional strategy having done? And I'm also very pleased with the way that we are driving that business moving forward. During the quarter, we also clarified or we've actually communicated our new financial target since the group is new. It happened to be that we are sticking to the same targets that we had in the former web group. Which is by safe and ambition then, we are saying that we will have a 10% annual growth and that will be a split between bolt on acquisition and organic growth. And of course, now being a 20,000,000,000 company, that's a It's a ambitious target because that means that we should add a couple of 1,000,000,000 every year. But as CFO said, organic growth, we are having a good pace in quarter 1. On top of that, by end of the year, we will be able to take on the bolt on acquisitions as we have had before a successful model. The EBITDA margin, 10%. We have that also in the former works, and now we have some 1.5% roughly to work on. And that's also a challenge, but we will work hard to get there. And there are some a lot of improvement actions in each division. The next step in relation to EBITDA will remain 2.5 as we had before, and CFM mentioned that we are in a rolling 12 month, getting close to that in the second half year. And then we have also cleared the dividend policy that will also remain that we will have a 50% of the consolidated profit after tax that will be given back to the shareholders. And so that will be the dividend policy. So with all of that said, I'm very pleased. There are always things that can be better and going for a second, believe that we are we have a lot of energy to drive improvements in the whole areas, but at the same time, I have to say that we have now created the long term value creation for our clients, for our shareholders, and also for employees where we will have tremendous opportunities to take on the most interesting perfect hotels are actually needed to transform the society. So the summary, solid and good start to 29 seen with organic growth as a highlight. We have a stable profit and also margin, we would say, and there's a continued good demand we could see Automotive is one area where we have some concerns, but in general good. And the integration with OAuth and Parete is going as good as we expected, which is actually based on the fact that we share a lot of the values the history and the way and the view on the future. So I think with all that said, I will leave it to you, Katri. Thank you very much. Yes. Thank you Jonas and operator. We are now ready for questions. You. We do have questions coming through. The first question comes from the line of Ulla Zundamak from Blair. Your line is open. Please go ahead. Yes, good morning. Hello, good afternoon, Janssenans. I have a question on the Infrastructure Division. You mentioned that it was a slow start of the year, but despite that it seems that the numbers are not too bad and actually a little bit better than I had expected. Can you put some more color on the development during the quarter? Yes, I can start and maybe see if I'm going to fill in what we have had. And I think we can see that in the numbers is that we have been very geared up to drive growth. And it's valid for infrastructure as well as for the industry division. I'm very pleased with that number, but the effect of that was that starting up the year, we had especially related to the service part of our business where we have smaller projects or or more service related business, we had a few some of our consultants were not out on real kind of tasks initially in the year. So we had a bit lower utilization in beginning of the year that affected the margin. In that division. That's the overall reason for not delivering a margin improvement following the top line improvement. Okay. But you ended the quarter on a strong note, and I assume. We could see an improvement during the quarter, than I think as we said that in general, the market is favorable. We could see, for example, that if you look on the architect side, we have noted that in Sweden that, it's been even public that some architects can see that I think in effect from the private housing, going down that you could see hourly rates going down. Now with failure now, we are exposed more to the non private housing area. So But, so in general, the market is very good, and we had more operational issues on our own that affected the margin in beginning of the quarter. And just a question on synergies. It seems like the integration is going quite well. By that it's just 1 month that you had consolidated numbers or consolidated per year. Should we read in something in the wording that you are now saying that you expect most of the synergies to be realized? Released during 2019? Is it some change there or is it going faster than expected? No, I would say that we've already been quite clear in saying that the majority of the cost synergies, if you look on a run rate, will, will be affected by end of quarter 4. And I still think we stick to that. And then there's always, plus minus, but we will be we have a good confidence that we will be close to the SEK 180,000,000 by end of the year. So I think there's no there's no difference in, in, in, what we're saying. It's more clarifying that we continue to follow the plan. And actually to realize this, it goes neither easier or more difficult than they expected. It follows if it follows the plan that we were putting together. Thank you. Thank you. Your next question comes from the line of Johan Dahl from Danske Bank. Your line is open. Please go ahead. Yes, thanks. I was just wondering, can you say anything regarding orders, order intake in the 1st quarter, perhaps particularly failure, which you see that number before? Secondly, I was wondering, you talked to Jonas about, bidding for more complex bigger projects in the combined with the combined group. It just seems very early after 1 month of integration to have coordinated that offering. Are there any can you sort of point to any tangible sort of orders is that just your strategic ambition to go there? Well, on the first side, I would say that we are not yet in a situation where we will be able to closed to join together order book to bill. And I know Perry has been very clear on that. Now we are, we are up 1 month out to 3 jointly together. So we will get back to that. But in general, you want the pipeline is good and strong also if you read, for example, the wordings on Process Industry And Energy. And then you are right, we are only operated, you know, jointed together, 1 month. But you should also be clear that that the business units have been very early together in, going out on the market. So I think the reading we had on the integration was that the fit would be very strong. And this majority complementary business. And that actually had led to the fact that the teams are very early out meeting clients jointly. So I would, at this point, not be ready to disclose any specific project that we have booked due to the joint group, but I can assure you that there's a lot of prospect coming up where we can see evidence that by going together, we have stronger combined offering, in the business, but I hope and believe I will get back to you guys. We will see some strong interesting evidence that we could take a bigger project due to the fact that we are strong together. All right. Could you also talk, as you validated the synergies, from what sort of buckets will these synergies come Can you just take that in broad terms? You talk about cost or revenue? Yes. $180,000,000 in synergies out by year end. That's from where does that come from? Is it? Yes, I could say that it's yes, you can see it in different but obviously it comes quite a lot from the functional side by combining finance communication, HR, IT, legal, etcetera, there's an expected synergy and then we talk about people. Then there's an expected from management delayering and actually sales force delayering from the operational side. So, for example, by having a few sales people for energy at UF Smaller Business Southeast Asia. Apparently have a much stronger coverage, you could basically integrate that sales in the 30 business. And by that, you can actually reduce the number of sales people, but having the same effect in Southeast Asia. The first wave will be a lot of, having people redundant. 2nd wave is system platforms, by scaling up the operation, we can also renegotiate some contracts of a big suppliers of systems to OFP. 3rd way will be joint office facilities. These ones are coming basically in that time span. First way will be people second, system optimization platforms and the third way will be, by combining offices and facilities. Great. Just a final question on the billing ratio for sort of OS Classic. I mean, it's a bit difficult to compare given the with pairing the numbers, but how much was it down would you say in OS Classic? Well, I think you can most if you read the report, I think you can translate the decline as all of numbers. The next question comes from the line of Victor Alindaberg from Carnegie. Your line is open. Please go ahead. Thank you. Some questions were actually just answered, but maybe if you could update us on the P and L merger integration costs that you expect from here on onwards and the timing of this. Is it predominantly going to be incurred now in 2019, given that you reaped a bigger portion of the synergies by year end as well. So that's my first question. Secondly, on your definition of EBITDA and thinking about IFRS 16. So I know that a peer of you they report EBITDA without IFRS 16 impact, but it seems to me that you have included it in your numbers. So just want to see if you could confirm or just help us here. Yes. If we start with the first question, the answer is yes. Most of the cost synergies, will be implemented during 2019, which means that we will also post the costs related to those during this year. Mainly from Q3 and om forward. Q3 and Q4 will be the most affected quarters. When it comes to EBITDA, we have a discussion internally whether we should change our definition or not. But since the impact only was $8,000,000 in the quarter, we have decided that so far we don't make any changes. We will also review what other, other large companies doing this are doing in this way. So instead of trying to invent an own margin definition. We are waiting for the other big players, how they will act. So far, IFRS 16 is included in our definition. All right. No, I think it's, I mean, in my view, it's very good that you keep the disclosure as you have it and also give us granularity on the financial leasing impact. So very much appreciate that you can continue to streamline insurance. We will continue to disclose the effect to IFRS 16 going forward as well. Thank you. Thank you. The next question comes from the line of Eric Yolanda from SHB. Your line is open. Please go ahead. Okay. Thank you. So the automotive sector, you talked about this being a little bit weaker now. Can you explain what it is? Is it because now you have included both in DAF industry and digital solutions within the same business area? Is it mechanical engineering projects that is being weak, or is digital, or is it both, you would say? Well, I think, in general, what we can feel is that the decision process is going a bit slower and that we have obviously also noticed related to a few of the big Swedish clients that they are looking over the cost base. But in general, we can feel and see especially this decision process in assignments are taking a bit longer and I think that's cross the line But as you as you can see, we are a bit careful in this in the writing, we are feeling indications of, but it's an important big segment, we have highlighted it. But that's how clear we can be at this point. Okay. And then I was wondering about how one should model the extraordinary costs related to the higher integration over the coming quarters, should we expect it to come down from this SEK 63,000,000 that you have in this quarter or off should one model it? Yes. I mean, you can divide the cost in 2 parts. One is the transaction cost which is now concluded. We took some of the cost in Q4 last year and the balance was posted this quarter. So now we have, the balance of the integration cost left. And we took $20,000,000 this quarter and the remaining will be charged a little posted during Q2, Q3, Q4. And maybe some minor items in Q1 2020. Okay. So that will be how much is left in Q2 to Q4? Have charged $20,000,000 this quarter and we have said that the integration costs will amount to roughly $180,000,000. So that means that it's SEK 160,000,000 left to post. And then I was wondering about the organic growth as well because it was very impressive in the quarter. How much of this is related to net recruitment and how much is related to the price increases? Is it possible to divide those 2? Yes, we are following both, but we will not disclose that. But I think you can see a big part of that is related to kind of growing by, you know, recruitment and not by the growing, taking on new assignments. But, Eric, what, I mean, we do have salary increase, as you know, and we are always trying to compensate for that. So part of this is, of course, related to price increases. All right. And I was also wondering about it's a little bit related to the last question there in the beginning related to the structure and industrial solutions industry and digital solutions area. You mentioned that there's started quite weekly in January. But how have they finished during the latter part of the quarter and how do you expect them to develop going forward? Are you, in other words, back on track in these two segment? Well, I would say that we are normally not giving any forecasting guidance, as you know, but of course, we could see an and ramp up through the quarter. After Christmas, we normally have a starting up, but this year, it went a bit slower than due to the fact that we went hard on growing both areas. But moving forward, I think we will we will wait with that until we have the quarter to result. But over the quarter, we saw improvements. Okay. And the last question for me. Now we have integrated Toyota. They had a lower operating margin than the West standalone, but we're also in a very good economic cycle, when do you expect to actually reach your 10% EBITA margin given that you also want to climb the value chain and deliver more high value added projects, which in turn should also lead to a higher margin. What type of time frame are we talking before you reach this margin? Yes. I think first of all, just to now you have greater period. I would say that we have been operating, 1 month or 1.5 months jointly together. It's 6000 employees across the world. So I think a bit too early to say that we have integrated, but you say that the integration is moving according to plan and we are happy with that. Then obviously we have a joint plan as we have communicated now in our financial targets to reach the 10%. When that will happen now, I think we will we will need to wait a bit before we set the dates when that will happen. But of course, we have a lot of actions now to both client of value chain, take on new assignments, expanding our offering using digitization as one tool and take out costs. So, obviously, step by step, we will take the journey to reach the 10%. When it will happen, I don't I'm not prepared to set the date at this point. All right. That's all for me. And thank you very much. You too. Thank you. Thank you. The next question comes from the line of Johan Daul from Danske Bank. Your line is open. Please go ahead. Just a follow-up. I was just wondering if you look on divisions, like infrastructure and energy, this seems to be very different profitability in the operations coming from Iran from Woolworth. I was just wondering what's your sort of the feedback from the organization when you approach that fact Is that very much a part of the sort of strategy to fix that going forward or just what's your take on that issue? Yes, I think you point on one of the reasons why this is a perfect merger together with the crude company. We know that Toyota has a stronger position and energy more integrated and clear business model, everything from how they follow the project and the fact that they have, and we now have an operation for example, in Thailand, enables us to really drive margin on those projects. So, I think by that, we have a strong belief that we will have a improvement in the overall energy business. At the same time, on infrastructure, we know that the OS model on building strong local presence have been very successful, adding on niche offerings like architectures, lighting, designs, etcetera. And having them building technology. So, I think both of them, we expect each of the 4 businesses to lift the other ones So, for 4, we hope that we can joint it together, improve the former parity infrastructure business and opposite on the energy side. Now, we have to respect that, for example, period have, former period have an exposure to the German infra market. That's one example. So there are some geographical differences also in how we are positioned and those ones we will of course address. But I think you want the thing that you point on has been a deep, deep part of the analyze why the two companies would jointly be stronger together. And is the synergies that you're aiming is that sort of part of that operational improvement? Or I would say that I would say that part of it is that, but I expect the journey to be towards 1 10% EBIT will be partly the the cost synergies, but I think over time, it's more about changing addressing the business model where and how to operate in both of those segments. I mean, $180,000,000, I mean, we will realize them this year. The way we will set up infrastructure jointed together and end on a global arena will take more than three quarters. And we have no further questions from the phone lines. I would now like to hand the conference back to Mr. Gust phone for closing remarks. Okay. Thank you and thank you everybody for listening in. And then again, summarizing the quarter for us, it's been a busy quarter, but I'm very pleased with the fact that we are able then to deliver and drive our business at the same I'm integrating. And we have a lot more work to do, but so far we follow the plan in a very good way. And also remind you that you're all welcome our capital markets say that will take place on May 29th. Then we will hopefully be even more clear on each division strategy moving forward. As well as for the whole company. So thank you very much for listening in and have a continued fantastic