Thank you very much. Good afternoon, everybody, and welcome to this webcast. I am sitting here in Stockholm, Solna, together with Stefan Johansson, our CFO. We will, as normal always, then go through the quarterly report as we have presented it today. Again, welcome. The agenda today. We will talk about overall 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 Pöyry included at least one month out of the three, which made the quarter a bit special. A few words about the market and some highlights, financials, obviously. Stefan will take you through them. Shortly about each division and also a summary afterwards. We will try to do that as quick and fast as possible and then have time for questions if needed afterwards.
If you summarize the quarter, I would say it's a stable performance and the integration is in line with the plan. We are happy if you start with the organic growth, that we are delivering 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. I would say that we are not losing at all momentum towards the customers. In the opposite actually, I think the two companies, ÅF and Pöyry, jointly together have energy out on selling our services and solutions to our clients. That's very good. I would also say that we are delivering a solid profit level. You could see that part of the Pöyry business have actually delivered a very strong performance.
What we have seen on some 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. 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. All over, it's a good and stable quarter, if you look on ÅF. Just to highlight the whole acquisition and the process related. That acquisition is complete. Respect quite fast. We have also made two successful rights issues. Stefan will get back on how is the balance sheet looking after this. This is going according to plan.
I would even say that it goes even a bit better. I'm very pleased with the way that we are able to integrate ÅF and Pöyry together. I think the analysis we have done on the two companies. Happy with. We have a strong plan on delivering the SEK 180 million annual run rate savings on cost that we have presented in conjunction with acquisition of Pöyry. We are following that very thoroughly, and we are now after quarter one on SEK 25 million, and I feel very confident that we will be up on a run rate close to the SEK 180 million by end of this year as we have communicated. Also that is progressing according to plan. On top of that, strong organic growth and stable earnings. 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 presented this before, that we have a very balanced portfolio. We are a strong Nordic player. 75% of the sales and revenue is in the Nordic, but we have also expanded now the geographical footprint with a better balanced portfolio, strong European platforms, but also strong operation in those regions that is valid for us, for example, in Southeast Asia, serving the Energy business. Also here, I think the setup of the new company is very interesting. We have 50 countries where we are present. Of course, there's a few ones where we are very big, like in Infrastructure, we know the core countries. We have a portfolio then 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 factors moving forward. The customer base, obviously, jointly together is very strong. This is the 10 large customers as we have jointly together in the group. Some of them we have been working with on different sides before. Coming together, we are becoming even stronger then. 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 world's various sectors. I think the reason is also that many of our clients are affected from disruptive trends where they need to take in new competence, for example, into 5G, if it's electrification or if it's digitalization.
The need for competence is very high at the client side. We also know there's an underlying need in general, especially in the Nordic, but also in Europe, for Infrastructure solutions. I think we have a very strong position. On top of that, the fact that we are now a world-leading player in Process Industries is extremely interesting. ÅF have been strong on that in Sweden, and Pöyry obviously have gained a world-leading position in Process Industries, and joined together, we are one of the key players. That's interesting. On top of that, joined together now, we have a very strong portfolio towards Energy business. Here we see a lot of transitions. Obviously, in Europe and the Nordic, it moves towards the, I would say, different kind of business models, including renewables and smart grids, et cetera.
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. The ÅF portfolio, we have a quite strong position to automotive. Here we can see that we have seen some signs in the quarter then. All over, it is still a favorable market. Of course, the project portfolio is filling up. We are constantly booking a lot of new projects. Here is a few examples that we have been taking during the quarter, both in Infrastructure and also in the Energy business and other areas. I will say, based on the market situation, that our project pipeline is continued to be very strong in all the segments.
I think I'm very pleased with the position that we are getting joined together. All of that looks good. Moving over to look a bit on the growth side, on the sales side, I will leave it to Stefan to comment that a bit.
Thank you, Jonas. Good afternoon, everybody. As Jonas mentioned, we have a strong underlying market in general, except for certain areas. That also reflects the top line, increasing by SEK 1 billion to SEK 4.4 billion, of course, driven mainly by the acquisition, but an underlying growth of 8%. If you recall, last year, we were struggling with the growth, more or less flat in the first quarter. Now we are picking up and reporting a very good number in terms of growth, and we are very happy about that. We see it's not one single segment 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 building technology within Infrastructure. We are coming back to that.
Conclusion is, in general, a 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 SEK 390 million, of course, driven mainly by the acquisition of Pöyry. The former ÅF group, especially in Infrastructure in industry, had a slow start of the year, as Jonas mentioned, with a lower utilization rate than we expected. The start of the year was a little bit of a disappointment. On the other hand, we see Pöyry's Energy division and Process Industries division performing very well. I shouldn't say ahead of our plan, but a very good and stable profit performance in that unit. We're very happy about that. We took one-off items of SEK 63 million in the quarter, whereof SEK 44 million was related to transaction cost and SEK 19 million was related to integration cost.
In total, we expect integration cost to amount to roughly SEK 180 million, the same as our target for cost synergies. We have also together a kind of, I shouldn't say pro forma, but a combined quarter result for the group as if the Pöyry Group was consolidated as per January 1, 2019, and comparing that with the same numbers Q1 2018. If you look at the details, you can see that Pöyry is increasing the profit from SEK 91 million to SEK 126 million in the quarter, up 38%. We also can notice for the whole group a growth rate of 14% in total, whereof 9% is organic growth. 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 a period of time.
Now we can conclude that we have made two right issues, one direct issue and one right issue, in a successive way. If you look at the graph, we started the year by net debt of SEK 3.5 billion, and the key ratio was 2.5 net debt to EBITDA. If you go forward, we made the balance of the acquisition in the first quarter. We started to buy shares over the market in Q4 already. We also concluded a direct issue, SEK 1.2 million during the quarter, which means that we ended up the quarter with a net debt of SEK 7.1 billion, excluding the IFRS 16 leasing effect of SEK 2.7 billion. That means that we ended the quarter of a key ratio of 3.7, and in that number I've included 12-month EBITA from Pöyry, because their reported number is over five.
This is the most relevant number when you look at the balance sheet exposure. We also try to make a pro forma balance sheet, as if the share issue and the dividend have been made during the quarter. When having made those, we end up in a net debt position of roughly SEK 5 billion, with a net debt ratio of 2.6. 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. We also have earn-out payments, and we also have to have cash outlays related to the integration cost during the second half year. 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.
We feel that the balance sheet has strengthened. During the end of the year, I think we can start doing some smaller acquisitions again to go back to our way of doing business and adding value to the shareholders.
Thank you. Thank you, Stefan. I think Stefan is right on 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 them bolt-on acquisitions. With this development of the balance sheet, we will be up and back to that model by end of the year. 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. We have already started that process. I think that is something that we are looking for.
We had a very nice pipeline when we acquired Pöyry. Of course, due to the operational exposure and to the balance sheet exposure, we stopped all investments, but now we can start looking at those again.
Yes, I also think another perspective on that is that the integration of Pöyry is progressing very well. I think we will also be ready, purely operational by second half of the year to take on smaller companies again. With all that said, the new division structure, as you already know it, we presented that very early and I think that has been a success factor that we have been very clear on how to organize and set up the new company. Here you see the five divisions, you also see the split starting from left with Infrastructure. We have our strong and big Industrial & Digital Solutions division. Two, I would say, segment-related divisions, Process Industries and Energy, and also the Management Consulting business.
If you look on each of these divisions then starting with Infrastructure, we have talked a lot about that. We had a bit of a slower start in beginning 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, are 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. Looking forward, I think we have a very strong position in the core countries where we have the biggest operation, which is now Sweden, Norway, Denmark since before, of course now adding Finland.
Jointly together, we are very strong in Switzerland, 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 in it. Moving over to Industrial & Digital Solutions, this is a combined division of the two divisions we had separately in the former ÅF. 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 beginning of the year in the service-related business. Also, of course, this division then have this automotive exposure.
Here we have seen some signs that decisions in that segment are delayed, that is something that we are monitoring very closely. You saw last year delivered 9.3% in EBITA margin, we lost a bit on the margin side due to this slower ramp-up in beginning of the year. In general, the industrial market is still favorable, coming back to the fact that disruptive trends continues to drive demand for high competency in digitalization, automation, and electrification, as mentioned a few of them. Process Industries, Stefan mentioned that. This is, I would say, where Pöyry have the super strong position, that's where basically the heritage of Pöyry is. On top of that, ÅF also have a long tradition in Process Industries.
You can see on the numbers that we are combining two very strong units, adding up to an 11.5% unit in EBITDA margin, which I think is very strong. Both areas had an operational improvement compared to last year. We see again, with the strong demand in not only pulp and paper, but mining and metals in the Nordics, we also see the whole disruptive trends with bioeconomy will fuel growth in that segment. I'm very pleased on the fact that we are one of the world leading companies in this segment. That's what I really like with us, that in two segment where we have been strong on each side, together, we are becoming one of the world's leading player in that segment. That's, of course, very interesting for us.
We are looking forward to continue to drive that business. The next leg, next segment division we have is Energy. You all know that ÅF 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 Pöyry side, over years developing an integrated local business actually, that actually enables Pöyry to take on Southeast Asia project and drive good margins. You can see here that ÅF improved from low number 3.9% up to 5.5%. Pöyry had a development up to 7.8%. There's still a lot of hard work in that division.
The progress is very good, I'm very pleased how those guys have taken on the challenge, I think we will expect and continue to drive margin improvement 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 dependent on the coal plants, et cetera. The fact that Energy is a strategic important businesses for many countries will also support our business. Still there's a lot of new build hydro plants in, for example, Southeast Asia that we are also supporting.
I'm also very positively in what we can jointly do together in the Energy business. Then finally, the Management Consulting, which is the business that Pöyry have had since many years, focusing on two very clear segments. On one hand, Process Industries, on the other hand, Energy. Of course, having here access to key clients all over the world in strategic devices service is very interesting for us. On top of that, having some interesting business modeling, pricing, forecasting, et cetera. All of that combining ÅF Pöyry 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. It will be fantastic to see what we can jointly do together.
We will, of course, continue then, just also mention, employer branding has been one of the success factors, if you just look on ÅF in this case. Being a company that actually delivers sustainable solutions with the latest technology, we have been able to attract the best talents, for example, by engineers. I think combining two strong brands, making us even more relevant, will enable us even to take up the fight in that segment even more moving forward. That will be very good. If you look on the strategic direction for the new company, I think it will not be different towards the direction we had as ÅF or Pöyry separately, because when we look on our combined thinking, it fits very well together.
This we knew when we had the management discussions and the DD process that we are looking on the world on the challenges in very similar ways. 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, project, 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 of the functional sides, we have now reached a scale that we can take the step to become even more professional, and that's also interesting. Finally, people then.
As being a high competence people, living from having the best talents, we need then to attract the best talents. Again, by enabling international careers, by being more exposed to the latest technology and projects, we will also be able to attract the best people, and we will continue to make our company even more relevant moving forward. The strategy direction and execution continues as it did before. One important part has been synergies. As you all know that in the kind of business case of acquiring Pöyry, we have committed to deliver SEK 180 million run rate savings with a large part executed by end of this year. I would say that we are progressing according to plan also here. When we close quarter one, we are on SEK 25 million, and we have a very rigorous way of following cost synergies.
I can assure you that it takes some strong criteria to fill into that box to be calculated as a cost synergy. Obviously, we will see not a linear curve of that. There's 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 three. We are following the plan, and we have good beliefs that we will be close to SEK 180 million by end of this year. There is, in general, administration cost, there is 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 levels. Also that is progressing in a good way.
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 we find. We see all of the evidence that we can take on strong, bigger projects, more complicated challenge for our clients that will fall into the box revenue synergies. We have invited to a capital markets day in end of this month where you will also see more and more evidence on where is the divisional strategy heading then. I'm also very pleased with the way that we are driving that business moving forward. During the quarter, we also clarified, or we actually communicated our new financial targets since the group is new.
It happened to be that we are sticking to the same targets that we had in the former work group. By safe ambition, we are saying that we will have a 10% annual growth, and that will be a split between bolt-on acquisition and organic growth. Of course, now being a SEK 20 billion company, it's an ambitious target because that means that we should add a couple of billion SEK every year. As Stefan said, organic growth, we are having a good pace in quarter one. 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 as a successful model. The EBITDA margin, 10%, we had that also in the former work, and now we have some 1.5% units roughly to work on.
That's also a challenge, but we will work hard to get there. There are a lot of improvement actions in each division. The next step in relation to EBITDA will remain 2.5 as we had before, and Stefan mentioned that we are in a rolling 12-month, getting close to that in the second half year. We have also clarified 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. That will be the dividend policy. With all of that said, I'm very pleased. There are always things that can be better, and don't for a second believe that we have a lot of energy to drive improvement in all areas.
I have to say that we have now created, with ÅF Pöyry, a very strong platform to drive continued 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 project that actually is needed to transform the society. The summary, solid and good start to 2019 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 as one area where we have some concerns, but in general, good. The integration with ÅF and Pöyry 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.
I think with all that said, I will leave it to you, Catherine. Thank you very much.
Yes. Thank you, Jonas. Operator, we are now ready for questions.
Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, that's star one if you wish to ask a question. We do have questions coming through. The first question comes from the line of Ola Södermark from Kepler. Your line is open. Please go ahead.
Yes. Good morning, hello, good afternoon, gentlemen. 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?
Yeah, I can start here, and maybe Stefan will fill in what we have had. I think we can see that in the numbers is that we have been very geared up to drive growth. 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 more service-related business. We had some of our consultants were not out on real kind of tasks initially in the year. 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. You ended the quarter on a strong note then, I assume.
We could see an improvement during the quarter. 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 an effect from the private housing going down, that you could see hourly rates going down. Now with Pöyry now we are exposed more to the non-private housing area. 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.
Just a question on synergies. It seems like the integration is going quite well despite that it's just one month that you had consolidated numbers or consolidated Pöyry. Should we read in something in the wording that you are now saying that you expect most of the synergies to be realized at least 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 be affected by end of quarter four. I still think we stick to that. Then there's always a plus, minus. We have a good confidence that we will be close to SEK 180 million by end of the year. I think there's no difference in what we are saying. It's more clarifying that we continue to follow the plan. Actually to realize the synergy, it goes neither easier or more difficult than we expected. It follows the plan that we were putting together.
Okay. Thank you very much.
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, the order intake in the first quarter perhaps particularly Pöyry, which used to disclose that number before. Second, I was wondering, you talked, Jonas, about bidding for more complex, bigger projects with a combined group. It just seems very early after one month of integration to have coordinated that offering. Can you sort of point to any tangible sort of orders or 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 would be able to disclose the joint together order book to build. I know Pöyry has been very clear on that. Now we are just one month out of three jointed together. We will get back to that. In general, Johan, the pipeline is good and strong. Also, if you read on, for example, the wordings on Process Industries and Energy. You are right, we are only operated jointed together one month. You should also be clear that the business units have been very early together in going out on the market.
I think the reading we had on the integration was that the fit would be very strong, and this majority is complementary business, and that actually had led to the fact that the teams are very early out meeting clients jointly. I would at this point not be ready to disclose any specific project that we have booked due to the joint group. I can assure you that there's a lot of prospects coming up where we can see evidence that by going together, we have stronger combined offering in the business. I hope and believe I will get back to you guys where we'll 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?
Yeah, SEK 180 million in synergies out by year-end. From where does that come from?
Yeah, you could see it in different cuts, but obviously it comes quite a lot from the functional side by combining finance, communication, HR, IT, legal, et cetera. There's an expected synergy, and then we talk about people. There's an expected from management delayering and actually sales force delayering from the operational side. For example, by having a few salespeople for Energy at ÅF, smaller business, Southeast Asia, Pöyry have a much stronger coverage. You could basically integrate that sales in the Pöyry business, and by that you can actually reduce the number of salespeople, but having the same effect in Southeast Asia. The first wave will be a lot of having people redundant. Second way is system platforms. By scaling up the operation, we can also renegotiate some contracts of big suppliers of systems to AFRY. Third 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 ÅF classic. It's a bit difficult to compare given with paying the numbers, but how much was it down, would you say, in ÅF classic?
Well, I think if you read the report, I think you can translate the decline as ÅF numbers.
Okay, thanks.
Thank you. The next question comes from the line of Viktor Lindeberg from Carnegie. Your line is open. Please go ahead.
Thank you. Some questions were actually just answered, maybe if you could update us on the P&L merger and integration costs that you expect from here onwards and the timing of this. Is it predominantly going to be incurred now in 2019, given that you reaped the bigger portion of the synergies by year-end as well? That's my first question. Secondly, on your definition of EBITDA, and thinking about IFRS 16. I know that a peer of yours, they report EBITDA without IFRS 16 impact. It seems to me that you have included it in your numbers. Just want to see if you could confirm or just help us here. Thank you.
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 a cost related to those during this year, mainly from Q3 and 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. Since the impact only was SEK 8 million in a quarter, we have decided that so far we don't make any changes. We will also review what other large companies are doing in this way. 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. Understood. 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. Very much appreciate that you can continue to strip that for us.
We will continue to disclose the effect of IFRS 16 going forward as well.
Okay. Goodie. Thanks. That's all from me.
Thank you.
Thank you. The next question comes from the line of Erik Elander from SHB. Your line is open. Please go ahead.
Okay. Thank you. The automotive sector, you talked about it being a little bit weaker now. Can you explain what it is it's being weaker? Is it because now you have included both Industrial & Digital Solutions within the same business area. Is it mechanical engineering project that is being weaker, or is it 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, that we have obviously also noticed, related to a few of the big Swedish clients, that they are looking over their cost base. In general, we can feel and see that especially decision process in assignments are taking a bit longer, I think that's crossed the line. As you can see, we are a bit careful in the writing. We are feeling indications of, since it's an important big segment, we have highlighted it. That's how clear we can be at this point.
Okay. 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 million that you have in this quarter, or how should one model it?
Yeah, you can divide the cost in two parts. One is the transaction cost, which is now concluded. We took some of the cost in Q4 last year, the balance was posted this quarter. Now we have the balance of the integration cost left. We took SEK 20 million this quarter, the remaining will be charged or posted during Q2, Q3, Q4, and maybe some minor items in Q1 2020.
Okay. That will be how much is left in Q2 to Q4 to be charged?
We have charged SEK 20 million this quarter, and we have said that the integration costs will amount to roughly SEK 180 million. That means that it's SEK 160 million left to post.
Perfect. Thank you. 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 increase? Is it possible to divide those two?
Yeah, we are following both, but we will not disclose that. I think you can see a big part of that is related to growing by recruitment or not, but growing, taking on new assignments.
Erik, we do have salary increase as you know, and we are always trying to compensate for that. Part of it is of course related to price increases.
All right. I was also wondering about, it's a little bit related to last question there in the beginning, related to the Infrastructure and industrial solutions, Industrial & Digital Solutions area. You mentioned that they started quite weakly in January. 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 segments?
Well, I would say that we are normally not giving any forecasting guidance, as you know. Of course, we could see 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. Moving forward, I think we will wait with that until we have the quarter two result. Over the quarter, we saw improvements.
Okay. Last question for me. Now we have integrated Pöyry, and they had a lower operating margin than the rest down below. 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 timeframe are we talking before you reach this margin?
Yeah. I think, first of all, now you have integrated Pöyry, I would say that we have been operating one month or one and a half months jointly together. It's 6,000 employees across the world, I think it's a bit early to say that we have integrated Pöyry. What we say is that the integration is moving according to plan, and we are happy with that. 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 need to wait a bit before we set the date when that will happen. Of course, we have a lot of actions now to both climb the value chain, take on new assignments, expanding our offering, using digitalization as one tool and take out costs.
Obviously step by step, we will take the journey to reach the 10%. When it will happen, I'm not prepared to set the date at this point.
All right. Yeah. That's all from me, thank you very much.
Thank you.
Thank you. The next question comes from the line of Johan Dahl from Danske Bank. Your line is open. Please go ahead.
Yeah, thank you. Just a follow-up. I was just wondering if you look on the divisions like Infrastructure and Energy, there seem to be very different profitability in the operations coming from Pöyry and from ÅF. I was just wondering, what's your sort of 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? What's your take on that issue?
Yeah, I think you point on one of the reasons why this is a perfect merger together with the [Clue company]. We know that Pöyry have had a stronger position in Energy, more integrated and clear business model. Everything from how they follow the project and the fact that we now have an operation, for example, in Thailand enables us to really drive margin on those projects. I think by that, we have a strong belief that we will have an improvement in the overall Energy business. At the same time on Infrastructure, we know that the ÅF model on building strong local presence have been very successful, adding on niche offerings like architects, lighting designs, et cetera, and having them building technology. I think both of them, we expect each of the former businesses to lift the other ones.
For sure we hope that we can jointly together improve the former Pöyry Infrastructure business and opposite on the Energy side. Now, we have to respect that, for example, former Pöyry have an exposure to the German infra market, that's one example. There are some geographical differences also in how we are positioned, and those ones we will of course address. I think the thing that you point on has been a deep part of the analysis why the two companies would jointly be stronger together.
The synergies that you're aiming for, is that sort of part of that operational improvement or?
I would say that part of it is that, I expect the journey to be towards 10% EBIT will be partly the cost synergies. 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, the SEK 180 million, we will realize them this year. The way we will set up Infrastructure jointly together and Energy on a global arena will take more than three quarters, obviously.
Thank you. Ladies and gentlemen, once again, if you wish to ask a question, please press star one. We have no further questions from the phone lines. I would now like to hand the conference back to Mr. Gustavsson for closing remarks.
Okay. Thank you. Thank you everybody for listening in. Again, summarizing the quarter for us, it's been a busy quarter. I'm very pleased with the fact that we are able then to deliver and drive our business, at the same time integrating. We have a lot of more work to do, so far we followed the plan in a very good way. Also remind you that you're all welcome to our capital markets day that will take place on May 29th. We will hopefully be even more clear on each division strategy moving forward as well as for the whole company. Thank you very much for listening in, and have a continued fantastic day.