Earnings Call: Q4 2018

Feb 7, 2019

Ladies and gentlemen, thank you for standing by and welcome to the 4th Quarter Report 2018 Conference Call. Today's speakers will be CEO, Mr. Jonas Gustafsson and CFO, Mr. Stephen Johansen. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today. Thursday 7th February 2019. I would now like to hand the conference over to your first speaker today, Mr. Jason Gustafsson. Thank you. Please go ahead, sir. Thank you very much and good morning to all of you and welcome to this presentation of the fourth quarter full year 2018. Ahweth. I'm sitting here, you and Oscar Stossen. And on my side, I have CFO, YJuanson, our CFO. So we will take you through a presentation, obviously focusing on the result for the fourth quarter, but we will also have talked a few words about the ongoing deal we have with Peyri. So that will be a part of the presentation. And and there will be time for questions in the end of the presentation. So, the part that we would like to talk about today short business overview, based on the market and highlights. Stefan will talk a bit about the financials each division's performance, we will shortly talk about the strategy and then of course, a few words about the ongoing work we are doing with period end of the summary. So when looking at, the 4th quarter, we came in at, 3,900,000,000 on top line compared to 3.5%. So that was up 13%. EBITDA, 357, compared to last year, 3.44. The margin ended up at 9% lower than last year on the margin side. CFM will go into that a bit more in the detail. But on the overall level, we feel that it was a strong growth in the fourth quarter, which we are very happy about that our organic growth are are actually picking up. The margin stable. We know where we have work to do. We continue to see a good amount on the market. The strategy that we have been working on is, I would say, step by step also becoming more solid and clear And of course, we are now focusing a lot on acquisition on period. And when you're looking on the full year, we had a 10% growth I think also historically, maybe CFM will comment that I think on the organic growth side, we are quite pleased to see that it's picking up and that we also could improve the margin and also of course EBIT and absolute numbers. So all in all, I would say that it's been a solid and good year for And now we are looking very much forward to what we can do together with Peyri. That's how we get back to. I mean, a few words, when we summarize 2018 without going in details and these numbers are then updated based on 2018 numbers. We are just about 11,000 employees. And we are just on SEK 14,000,000,000 in top line. And of course, we are a very strong Nordic company and we have activities in quite a few countries. We will get back to a few words on that when we are looking on us going to together with We have, as you all know, a quite broad portfolio of services and foresight that we're delivering towards infrastructure industry and then also a strong portfolio of digitalization. And this is all down split between different segments. I think this is a core part of the strength of our West that we have a wide portfolio, ballast portfolio, also that we have 1 third of the business going to public sector and then, as you see here, 70% to the private sector. OS has since I would say many, many years, a very strong customer base. These are the top 10 customers. I will say that this one represents around 25 percent of the total revenue roughly. And this is as close to recurring revenue you can come. Many of these clients have been on the top list for web since. I think we made a contract with Ericsson. Somebody told me that it was 6. So one of the strengths we have is that we have a very, very deep and strong, core customer base that we have been working with for many, many, many years. And we are done as for many of these, we are a strong partner and we are continuing jointly together to expand and improve our offering. So that feels very good. Of course, what as a company providing, as we say, innovation leading solutions, These trends are driving a lot of our businesses. Everything going on on the Smartsheet, the infrastructure the whole challenge on mobility with electrification, autonomous cars, the industrial, digitalization, also the end of the market that is changing, is driving a lot of the business that we are doing. So moving into the fourth quarter on the market side, we will say that the general market trend is remaining good. We see that in the industrial sector, the demand for digitalization, electrification, automation, remains strong. We also see on the infrastructure side, if you look on core markets, which is basically suite as of today, Sweden, Norway, Denmark, and you would say, I would say Switzerland. These are still very strong. You see a demand on which is a big portfolio of us commercial and public buildings, road and rail as well as these interesting niche areas where OS has taken a strong in architecture and design. And we continue to see a strong and good demand in this segment. On the end of the market, I would say that the business we have in our in the Nordics are continuing to be good. Where we have been struggling a bit then is to position ourselves correctly on the international engine market. And that has affected our margin as you have seen in the fourth quarter, but I feel I have a good confidence that we will step that improve that. And together with Parew, we will be able to set up a completely different annuity business that has its much more profile and strong toward our customers. And then in general, the market for digitalization service continues to be very good for all sectors. So all in all, we, of course, ask ourselves quite a lot these days. What about the market development. But I will say what we see in our numbers, what we see in our order intake it remains all over quite good, in all sectors. Of course, during the quarter, we are taking in a lot of projects. We should remember that we are step by step, increasing our project portfolio. Yes, we have a large share of service business, but we also know that Mandevac clients are moving towards getting a package project. So these are just a selection of some of the projects that we were bringing in in quarter 4. We have a lot of ongoing business with Sedavia here have a SEK 55,000,000 project. A lot of different building projects, and automotive for us remains drawn. Automated product lines is also a core part of our business. We have taken a business in energy And, I would also say that the digital part, for example, the defense sector is also continuing to be very strong. And on top of that, we have orders to the telecom business in Sweden. And so there's a good balance for effect order intake portfolio also in the fourth quarter. So I would say that our order intake remains very strong as a consequence on the in the good market then. During 2018, we closed 11 acquisitions So that's basically one per month, smaller and larger. These ones adds up to roughly 500,000,000 which then adds up to approximately 5% acquire growth. So around 5% on the organic and then 5% on the acquire growth. So a good performance on that side also. And then, Stefan, a few words more on the growth side? Thank you, Jonas. As Jonas mentioned, we were close to SEK4 billion in sales in the quarter. Which is up by 13% compared to last year. The And then the if I look at the growth mix compared to last year, we see more organic growth this year compared to last year. Over the 13%, 8.2% unit was organic growth. And even if we adjust for the currency effect and we're a number of working days, we ended up in a 0.2% compared to 5% last year. And if you look at, last year year to date, we ended up at 3.5% for the whole year 2017. And if you then look at our performance and our progress this year, we started the year of growth rate by 3% and then increased quarter by quarter and ending up at 8.2 percent organic growth. So we have improved our underlying growth quarter by quarter during 2018. So the conclusion is that we are we have put together the organization and it took some while, especially in the industry division. But now we also see growth rates in the industry, which we didn't see in the beginning of the year. So we are very happy on the growth rate from industry. In France, digital continue to report a very high growth rate more about 10% whereas energy, which is flat, which we which and they come in according to our expectations. The profitability came in at 9.9%, which is slightly below last year. And the main driver in Jonas will come back to each of the division is the Energy Division, which we also indicated when we released our Q3 report that we should have a rather weak Q3, the Q3, Q4 report when it comes to the Energy Division. If we look at the other divisions, digitalization is improving reporting a 10.6% margin, which is up versus last year, industry had a slow start in the quarter. And we had some capacity utilization concerns and then we strike with the capacity of utilizations. But when when going when entering into January February, we see good utilization in the industry division again. So it's not a main concern. So we think that the margin will continue to increase. Cash flow and very strong cash flow during the quarter. Ending up at a cash conversion rate for the year of more than 1. This by the growth rate, organic growth rate of 6%. Of course, we thereof fluctuations since we are in the project business, with, with, payment terms that are slightly different from our professional service side. But still a good cash flow. So we are very happy on that. The net debt position was SEK 2,600,000,000 burdened by the acquisition, the 11 acquisition, that, Jonas talked about. Of close to SEK 400,000,000. The dividend of SEK 5.00 per share And if you look at 2018, the board proposals proposed an unchanged dividend. And that's that's And then that's I hope you understand the reasons behind that. That's because we are going to make to make a right issue of SEK 2,800,000,000. So we've said that there were no reason to increase the dividend since we are asking for more more cash from our shareholders. Another position that burden our cash flow was, of course, the purchase of the shares in Prairie. Which we in which we now own 10.5 percent in the company. So the net debt to EBITDA ratio was 2.5, gone end of 2017. Adjusted for the purchase of the shares imperative we have ended the year by in it by 2.0%. So a good cash flow generation in Q4. Okay. Stefan, just a few words then about each division. Stefan was mentioning the bits and starting with the Impress I will say infrastructure division at the WharfTA that continues to deliver very strong performance. Growth and also stable profitability level on good levels. So as we have said before, that the underlying demand across the market that we are focusing on is in general very good. We have a big rail and road business. We have a big building, I would say, building technology business, focusing on electrical and ventilation, all the complexities that you can have in commercial building. Continue to deliver in very good rates. And we see a lot of interesting projects related to everything from schools, to hospitals to shopping malls to airports. And we can see the demand for high complexity solutions in buildings continuing to be very, very interesting for us. And this is in the center of the know how OS, having the deep technology from the industrial side, And on top of that, understanding the whole infrastructure market, including everything from architecture design, lighting design, and so on. That makes us, I would say, in an extreme well position for the upcoming, you know, aside from market shares where I think we make a lot of good progress So all over, good performance from an infrastructure division, and we are so much looking forward to continue to deliver good result in that business. In this innovation, I would say that we are very pleased on the progress during the quarter. CFM mentioned that we started a bit slow. But we see the progress picking up also on the growth. And by that, we expect that also the margin will improve step by step. We did quite a big change in the industry division a year ago, a bit more than a year ago. We are becoming a more and more clear on our offering Robert Larson and the team in, industry is doing a very, very good job. And I am very confident that we will see continued good progress in the industry division. The underlying demand from the market is is there. And we are, of course, then climbing the value chain, offering more and more concepts, projects and solution on top of the well established service business that we already had. And we should remember when we talk about automotive and car sales that the majority of our business in automotive is going towards electrification, autonomous cars, digitalization, So, I would debate that the cyclicality of all of business is slightly different in relation to sell sold cars. So that's why I think we see also continued good demand from the automotive sector. So that's what we see in the industry. And then, Andy, clearly, this has been a struggle, for quite some time for us. And as we have said before, the Nordic and the Swedish Energy business is solid and stable. Of course, we are step by step adjusting ourselves towards the more regional business that you have in the energy sector. And then, but picking up and that we have a good, position, with both service and projects. But then on the I would say the international energy business project that we have also in the portfolio, we know that we have been a bit too small scale. We have delivered good projects with high quality, but to get the margin done to the level that we have, you expect has not been that easy. So we are now restructuring that repositioned that and that has taken a bit taken down the margin a bit because we are doing that as we speak. But what we see now very promising is that we know that the period annuity portfolio is more scalable and more precise than ours. So we know that when we combine our annual business with the period ended business to one division, we expect that we believe that that will improve. So that's a part of are thinking related to the energy. So in general good work, but of course, we cannot say that we're happy with the margin that we deliver. But the work we are doing will give us, you know, improvements down the road, especially when they combine this business which we hope done with the 30 business. Finally, digital, and of course, continued very strong growth and also good profitability. The Anton mentioned that we also pick up and continue to have a good underlying growth in that division. So, a lot of new contracts, we have a lot of long term clients that we're working with. And step by step, we are also here improving our offering, becoming more precise on projects and delivering teams on top of the kind of service business that we have. So that concludes then quarter 4. And if you look on on the overall levels. I think we are, as we said, very much pleased with the growth that we have picked up and see if I mentioned that we have improved organic growth, I think it's a consequence on a good market, but it is also consequence of the fact that we are becoming more clear on our offering. And then the margin was slightly lower compared to last year. But and we know that energy has been lagging a bit behind, but we know that we will improve that also. So all over, it's a stable margin and good, good developments on the growth side. So with that said, moving a bit over, few words about the ongoing work we are doing with the period And this is the frame of our overall strategy, including our distribution value that is important for us that we have been working very much on. We had the clear plan to be more precise and decide on our expansion internationally. That's been the big part of our thinking on top of the fact that we are climbing the value chain, delivering more and more concepts and prospects. So that was has been on our mind, the full year 2018. And one other thing that we always need to keep in mind that this is an important part of what we work a lot then to continue to be one of the most attractive working places to work out for engineers in Sweden and in the Nordics. And we came out on 4th place this year in 2018. We had to good competitors in Sikia, Volvacor and Google. And there was a study when there was 600 researchers, which company do keep high highest when it comes to technology and research and welfare the 1st place in ABB and AstraZeneca. So or as a company is attractive. And we believe that with the changes we are doing now, including the protocol section, we will become even more attractive. This is a big part of the value that we can attract the best talents to our company. Strategy I talked about, and of course, the first on growth where we said clearly, we need to have a clear plan for international expansions into leading positions. And then we have the value creation, operations and people. So with that said, the period transaction and, I mean, We have been looking on different alternatives throughout last year. And Pearly has been on the radar screen for many years, as you all know. And last year, it was possible then to come together and ended up with the fact that we were putting and bid on period end. And right now and then why a platform, we believe absolutely that this market will continue to be consolidated. We see it. We have been a part of driving that. As you all know, we see that many of the projects that we are coming closer to now is also, I would say we see larger players moving into that. We see our clients wanting us to take on bigger part of that cake. So we knew and know that we need to have a better structure for the international growth in some of the initiatives that we are today already operating in. We know and believe that size and scale will be important. We need to continue to have great opportunities for our employees. Internet work is one of them. And I believe what we said now with the structure we have in ORF, with the business models we have, we are ready to take on that challenge now. And then I will not plan too much on the transaction. You all know that with we announced that the public tender of Peyri in December, we are right in the middle of the integration planning. We expect the deal to be closed in quarter 1. We have good belief that that will be that this we had to prolong 2 weeks due to competition filings. But I mean, from my point of view, everything points on the fact that we will be able to close the deal during quarter 1. And my feeling with the planning we have ongoing is that this will it will be a very good through us and that we will be very early after and delivering, on the promises we have done. Perry, as you know, a company that had done the turnaround over the last 3 years. We believe and feel that it's a very solid company being very good on process industry, of course, that's the heritage, from Finland, but also having very strong end of the business globally. And then they have an infrastructure business where they have been struggling a bit. They are repositioning that and then the management consulting that is delivering good. So these things that fairly offers together what we have at the WAF we believe will be very strong. And I'm so confident that we will take out at least SEK 180,000,000 from cost synergies that we have committed to externally. Of course, our internal ambitions is even higher And on top of that, there are, of course, significant revenue synergies. We will be more precise on them when we are really down together with Terry to do the real integration planning as soon as the deal has been announced. So far, there are clear guidance what you can do in this process, but I can assure you that we are all very keen on closing the deal so we can move from the left part cost synergies towards the top line synergies that we really feel are significant. We are all thrilled of forming a leading European Engineering design consultancy company. I think in many of the areas, we will be unique. We have a fantastic mix of talented engineers, with industrial heritage from both companies, but going down from engineers, designers and also to advisors in the new company. And Of course, scale masters, and we will be one of the largest players in the Nordics. And I think also step by step and on the different segments that we have decided to be on, we will also be significant and have a good position also Internationally. And that's been a key driver for us. Again, coming back to the end of the business that we today feel that we are too small scale to be able to deliver performance. Together with 30, our international energy business will be scalable with a good footprint. And that is something that we're looking forward to. We already have set out the division structures, which, which is very good. So we will be early up a rounding We have we will have an infrastructure business that is just above SEK 7,000,000,000. And as you all know also, we announced that Marlin Frending actually joined us from 1st February and Mats Paulson has done a fantastic job building up this will retire during next year, but is remaining as an advisor supporting us also in the integration of the Podi Infrastructure business. But I'm somewhat looking forward to having Marlyn here. And I think she will add a lot from her competence from different businesses before. Robert, as you know, then been with us a bit less than a year, long, long experience from ABB, and he's doing a fantastic job together with this team in the industry that will be asked about below SEK 6,000,000,000 includes also the digital offer. Then we will have 2, I would say, segment divisions One is our process industry business, also around NOK 3,000,000,000. Nicholas Uksanen is the plan that we'll appoint him, and he's a guy that's been working in 30 for some 20 years. Extreme know how in process industry. And then Richard Pinock, Same with him, South African that has been in the annuity business for all his life. And you see both of these divisions will be around 3,000,000,000. And, clearly, on the process industry, we will be a world leading player. And on the annual business together, we will also be one of the top players. For us, it's been important that if remaining on these international, we have to take a position that is one of the leaders. Us. As of today, we were too small in some of these. Together with 30, we will be significant. So with that said, I think the fit them is very good for us because we believe in both of these two segments, then on top of that, we will have the management consulting business that really gives us access in energy and process in this high up in the value chain, excess high as you can get that. So again, as soon as we close the deal, these guys will be appointed and we will be up around day 1 already. So and the planning is ongoing. And one of the things that we feel is important that we are not spreading ourselves thin in the new organization that some people says that you are not getting to spread out, which is completely wrong. You see here that we will have over 10,000 employees in the Nordics. So which is the core part, we will have some 2000 in Europe gives us good access to an interesting core part in the infra market in Europe also on top of the others kind of segments. And then we will have some scalable units in Asia, for example, and in South America that, for example, have a lot of the process industries and so on. So we are becoming then maybe from a very Swedish centric, we will become a very strong Nordic player of course getting Finland into the Nordic, which we did not have before at OS. So I think the footprint is very good. And, this is standard change as you can see, using, the numbers that we have worked on, you will see that the portfolio will not dramatically change, but I think we will be more precise on androgen process industry. We will get a strong infrastructure business adding on Finland and then together with the Nordic footprint. So I would say that also the coming portfolio for OAuth and Toyota will have a very broad and balanced. And if anything, a stronger, kind of less Swedish dependent. We will have a bit more balance to other markets also that I think will be favorable moving forward. Some of the key numbers obviously when we close the deal and we will get out to the pro form a number, some of the deals will change because we will have this in 2018. But you can see that, of course, Today, we are a very strong Swedish Nordic with 90%. That goes down to 75% approximately, and we will get a stronger than European sales then. And Of course, we are very thrilled of this just 14,500, you will see, but I think we will might even be close to 16,000 employees when this is, the deal is closed. So I think after this picture done that, I think balanced portfolio, strong Nordic with also a significant, European platform. You know, we had a counter presence, which is 15 now, which I think is important in some of the core countries that we add together with 30, we can scale Instead of having offices with 50 in 20, we will have offices with 200 or 250, where you really can do the work detailed in the nearing for the local markets, and that will make a difference. And yes, we will increase the fixed price project a bit. Some people see that as risky, but I can tell you what we have seen is that period is extremely good in handling these projects. So still balanced, 16%, fixed price, 50% profit delivery, and then 30 1st, 4% service delivery. So all of that, and summarizing, as we talked about, as the quarter and the full year 18 has been solid. We see the market continuing to be good. And the strategy we have executed last year was with including the 11 smaller acquisitions and now then we are prepared then to take on the integration of PODI and set the platform for this company that I'm sure will be very good moving forward that will create value for our shareholders that will give extreme opportunities for employees and also be able to deliver the best solutions to our customers. So that's what we are working on. And I can tell you that our energy in our kind of companies as high as ever then. So with that said, I would like to session. Session. Our first question comes from the line of Patrick Savi Novick from Nordea. You mentioned a couple of projects in the Energy Division in the report. Could you talk about the order values here and how they're priced and what to expect on the margin side considering that Energy was quite weak in the quarter and would like to know if it has improved here with new orders. Well, I'm not sure that we will be able to deliver you the margins on each of these projects, but, I can tell you that If you look on the margin that we are delivering in the quarter, you are completely right. It's been on the lower side, which is an effect of, I would say, more on the rip sickling of the whole entity business that we are doing then, rather than any specific project being bad. And one of the reasons why you see a flat development in energy And one of the reason is that we are more selective when it comes to the project portfolio. So we will really now make sure that the margins will increase over time. And but we, of course, we are not and as always, we are not releasing any numbers of order values or margins. All right. Thank you. And on the energy side or sorry, industry side, you really accelerated the growth here in Q4. And it will be interesting to hear why and how this happened and also The margin was a bit lower. So did you maybe lower pricing here to gain sales or was it some other effects Also, you did write that the utilization was low in the beginning of the quarter, but it didn't improve in the latter part of Q4. I can start with the EBIT margin and then Jonas can discuss the top line performance, which we are very happy with. When this comes to the EBIT margins, as we comment in our report, we had we started slightly in the beginning of the quarter. And as I mentioned, we are in a good shape now starting the new year. So the capital utilization has increased. And then as we also mentioned in our report, the profit, the margins in recognized, project was very high in Q4 last year. So we didn't reach exactly at the same level as to last year. That's also one of the reason why the margin dropped compared to last year's quarter. But we are all we are, in average, having a good margin development in our project portfolio. So it's not a negative it's not a negative trend when it comes to the margin portfolio more that we had some very good revenue recognition Q4 last year. So I think we have will improve the margin portfolio to more normalized level, going forward. Maybe to add on then, what you talked about, how, what about how do we increase the organic growth and about the industry. 1st of all, we are setting up industry division now, which we have done over the year, and Robert and team is now driving that to really drive long term performance and to be a key player in this segment for the coming years. So one thing that we have done, and which is important is that we are more precise what are we offering. So we have, some segments where we believe that we can be a leader, not only the Nordic, but also play it naturally. And that's Advanced Manufacturing Solutions, where we deliver really automated state of the art manufacturing lines to both manufacturing industry to automotive, It is, automotive R and D. We have a fantastic position in that, starting with acquiring a Lenovo, which was the former So about the multi team, adding on all the digital competence that we have included them by the linear, we are a key player in the Nordics, but also towards, for example, China. Food Pharma, we have a long tradition in being able to support those segments with different kind of project, and than process industry, where we now have the opportunity to get it ready to be even better. So there are 4 clear segments that we have over the last year, positional sell to not only to deliver service, kind of ours, but also deliver value for fixed content. On top of that, we have 3 areas, plants in the nearing, in the Nordics, product development and also specialized technical service, where we sell smaller project or un larger project wide to the different indices. So over the year, We have gone from a regional set up, selling a lot of service to be more precise on climbing the value. And of course, that takes a bit time. But I think the transition we have done without losing momentum is starting to pay off. We want to be a key player selling interesting large, high advanced project to the industry. And this is what we're aiming for. So I think that's why we see also the growth rate picking up? They do a fantastic job and I'm looking forward to see what they can do more. Very good. Thank you very much. And one final one for me, on Digital Solutions where we see decent momentum here. And as I believe it here is the segment where you previously had some issues with wages and staff churn, but now the operations look quite solidly at good margins, etcetera. Has there been any changes to any of these as in churn? And and wages and how is the pricing developing here towards your clients? I mean, since the as you can see, we report a very good margin in Q4. And if you look at the whole year, we are at record margins for this division. Which means that we are and we when it comes to margins, we're, oh, we are working on different perspectives, both when it comes to pricing. As Jonas mentioned, we are trying to and we are climb the value chain, providing teams, etcetera, to the clients that both parties, benefit from. And we have also been able to protect the wage increases, buy price increases in general. Otherwise, the margins would have started to drop. And but we still see a big demand from other people wanting to get get hold of our sources. So it's the war is not over. So we are struggling every month to really keep the growth rate and the turnover down. But just to add on to what Stephan said, I mean, one of the things that we add on as a value to people starting at the work is that it's not that you only can work with generic digitalization project, you can be a relevant player in some of the industrial verticals, meaning that we are more and more using this digitalization in specific project related to either infrastructure or the industry or also to, to other areas. And we had a few examples when we took an interesting project to get with Volvo, when it came to road conditions. So I think that's a value that this company can offer to others can. So that will then, for us, improve the the people turnover because we will be more relevant in enabling to offer even more interesting assignments to these fantastic talents that today have different choices. They can choose different companies. So who else needs to be the most relevant, has the best leadership And by that, we can serve our clients with profit that few others can. Very good. Thank you. Thank you very much. Our next question comes Blana Burke from Carnegie. Three questions from my side. First on the restructurings taken in the Energy Division. Partly, can you elaborate on the initiatives that we now take and maybe I missed it, sorry, in that case, but also if you could quantify, are there any tangible nonrecurring effect that we should be aware of that you did not report that as one offs given that it is sort of a going concern. To handle the up and downward swings in a technical consultancy business. So starting on that, and then I have 2 more questions. Yes. May I ask first of all, I think what we are doing, what we are doing, and then it is touched on this, international business that we are kind of doing the repositioning that we feel that we need to do. And that is smaller changes, smaller offices that we are taking as we speak running, but it's not It's not significant down writings or problematic like that. It's more that we are step by step changing. So Stefan, you're And of course, I mean, since we are planning to take out synergies when it comes to the combination of previous energy business and our business, of course, we will take some costs. But those should be a part of the integration costs that we have announced. So beside that, Jonas is correct that we will will, of course, adjust the organization. But if we should take some big steps, that would be part of the integration cost. Okay. And also from time to another in the past, we've been opening in Q4. Taking pension revaluations. Is this something that has affected any numbers in the this year or is it a neutral effect? No, it hasn't. This year, we were it's always with those kind of tension benefit plans that you have to reevaluate from time to time or change from time to time. And last year, we made a change in the pension plan in in Switzerland related to our current infrastructure division. So when you look at the comparable numbers Q4 for infrastructure. The margin has actually improved year quarter on quarter on a comparable basis since we had an adjustment on the pension plan in Switzerland last year. But this year, we have nothing in that sense. Okay. And then on the payer transaction, you now have $25,000,000 plus I think it was $15,000,000 transaction costs, some taken in the OpEx and some in the financial net Could you help us quantify your expected transaction costs in the P and L both in OpEx and the financial net the coming 6 months. So we know what's the model essentially? I think we indicated some numbers when we announced the deal, but the transaction costs will be in the range between 55,000,000 to 70,000,000. And the financing cost will be slightly below that range, but in that range. Okay. Final, on the industry division, just trying to bridge the margins when 18, but also Q4 2018 versus last year, you had a slight change in the mix in the contract portfolio, maybe on lower margin teams, but also you've had quite a nice tailwind from or you should have had a good tailwind from the cost savings program that you initiated in 2017. But still, the margin is down quite a lot on now what the better organic growth. So even as I know you elaborated a bit on that, but maybe if you could talk a bit about the cost saving initiatives that should have seen. Is it something that you have seen coming through? But it has been lost in space that I don't know more share gains, what have you, if you could just elaborate on that for your knowledge? Yes. No, I mean, we have seen the cost saving coming through for 4 But then you are correct that in, I would say, the repositioning we are doing in taking a bit moves in the, I would say, after the summer to increase the capacity, having a bit on the utilization and as a consequence of this rearrangement, I think we lost a bit. And, but I see now, so that was maybe eating a bit on the margin side. That's the way it has been. But I think now then moving forward, we are becoming more and more clear. And I have a good feeling that we will see continued good trend in this industry division. So I think it was not one single issue that you can point on. It was a bit spread out, losing a bit momentum here. We had a bit down in some of the segments But, right now, I think we are becoming more and more clear. So there's no there's not one foreflight or there's not one area that you can point on. It's been a And as I mentioned, Victor, we started the quarter on a lower side. We had some capacity utilization issues. And combined with that the recognition of profit margins were on the lower side compared to a normalized level, whereas last year, they were on the upper side. On a normalized level. So it was a quarter that we were not that happy with, but as I mentioned, ending the year in a good way and starting the 2019 on a good capacity utilization level. I think we are confident with the margins going forward. Yes. Got it. And 9% is not a bad number. Keep that in mind. It's not it's not completely bad. So I think, of course, we want to do more. And I think when we are being able to package our offering even more, of course, we have high ambitions for margin development. I know that on the process industry side, now jointly together with parity, we will be one of the leaders, and we believe and be a higher up in the value chain. And that's a big share of our it's a significant part of our current industry business process industry, which is petrochemical It's, of course, pulp and paper. It is mining and metals. So there's a big underlying demand also for disruptive changes, digitalization related to all these segments, smart solutions and all of these we can offer. So, before that we are not satisfied at all, to be on 9 ish, we want to be well above that. And that journey has started and we see good progress. Yes. Okay. And you press released a few days ago that you have now extended the the offer period, for the years, a few days, a few weeks now. Should we expect this is pushing everything out in time by approximately 2 weeks as well, or something you can catch up? So they'll be able to close the transaction before the end of the first quarter. Yes. I think we will be able or I'm very confident as we will be able to close transaction by quarter 1. So we had that you wouldn't call it slack, but we have that as an potential, in our plants or the different beginning. We knew it was a bold, you know, saying that we might it under quarter of the January. So we are very close to that, of course, working a lot on the transaction part of the deal and we feel confident right now that we will be able to close it. And which is good because the integration planning is progress in a very good way. We know what we are allowed to do and that we are doing, of course, but as soon as we have closed the deal, we can, of course, open all the books and focus a lot on the top line also besides the fact that we see a good progress in planning also on the synergy side we have committed to deliver. So all in all, I mean, I, as you know, I was in some of the industrial companies where we did a lot of work I feel that it's a very strong, fairing the core value, the values between period and of the day, it's people. And here, we feel that we are talking the I wouldn't say the same language because Finnish is slightly different, but we share the same kind of fundamental beliefs where this business is heading. Got it. Thank you. Thanks guys. Thank you. Thank you. Your next question comes from the line of Eric Allender from SHB. Just wondering how much of the decline in capacity utilization is related to the energy segment and the industrial segment? Well, we don't Of course, we have a number, but there are, of course, those divisions that has impacted the utilization rate. Mainly from the Energy Division, but a small portion on the industry as well. But it's I mean, it also you have to keep in mind that you are looking on an average number and the mix can we have an impact on the utilization rate. As we discussed last year, we in the infrastructure, which has also a slightly lower utilization rate when moving from large, very large project there in which you can afford to have in which you have more or less 100% utilization rates going from to more mid sized and small projects, with a slightly higher margin, but have an impact on the utilization rate. So, so, so it's utilization rate. It's not the only indicator. How the organization performs? You have to follow-up on that, and I think you're onto something very important. I think utilization or utilization will always be a key key KPI for this business. But I think over time compared to how important it was in the past, it might not be the only one. I compare that myself from my 20 years in the industry, focusing a lot of manufacturing. If you have a factory producing standard products, which was if you go back, you push out a lot of standard products, do you keep that utilization high? Maybe the margin is not perfect. Then you start to add and change the mix. So you produce more high value products in your factory that could also cause a bit more challenges maybe in the production supply chain. But at the end of the day, the clients as long as the clients is prepared to pay more for that combined special product and solution, you will increase your margin. And I think we will see that So when we climb the value chain, when we spend more time in presales of concepts, when we spend more time to solutions, maybe you see the utilization will not mirror that completely. But if you don't see the margin picking up, well, then you have a problem. So, we will also, I believe, be more precise on that because, again, simplify said, if you only sell ours, professional service, the utilization is key. If you sell more and more concepts, perfect utilization is 1 KPI, not only 1, But key end of the day, if your margin is not picking up and you're pointing them on the problem in industry and energy, clearly, we have had the challenge to get the margin on the level we have. So here, we have had some challenges, but And a good example is our digital division, which has, as I mentioned, record high margins, but a drop in utilization rate So that's the mix that Jonas is talking about. We are climbing the value chain, which are hitting the utilization rate slightly, but improving our margins. All right. Interesting. And then a second question for me also regarding the Energy segment. So do you think we have actually hit like the bottom now in terms of margins? How is the restructuring going there in the division? And should we expect the margin it comes during the coming quarters of the year? Yes, I think, if you look on what stand alone, I have a good feeling that we have kind of reached maybe on the lower margin, the lower side. I mean, it will take a few months more, but then I expect us to see a pickup on the margins. Yes. We believe that we will see a slight improvement on the margin during the first half year. And when we are taking the measures needed, And then we we because we expected that division to report the same margin level as the rest of the division, And of course, looking strategically on an annual basis, we know that we have a very strong position in Sweden and also a bit in Norway, but that's the long herds that you have, we have been working to Vattenfall and some of the key clients for a long long year. So there's a strong connection. But on the international energy side, which came quite a lot with the acquisition of Kolenco in maybe 10 years ago, where we have that position in Switzerland. We knew that that has not been strong or scalable enough. So then you have a few options, what you do, We decided to start to reposition it, more than half a year ago, but now together this period, which has a much stronger solid position, we can do things that we cannot do on our own. They have scalable units in Southeast Asia, where you actually, I would say, produce detailed design going for that market. We are working today with an export model, doing a lot of the designs in Switzerland and maybe even the Nordic and then exporting these to this big project. That is over time not the thing you can do. We will still have a lot of concept designs in the core like Switzerland and Finland and so on, but a lot of the detail design will be done locally. And that's a big change. It's like, you can also compare that to the manufacturing or product industry that of course, as a certain point, if you want to compete in China or in Asia, you need to have some kind of operational footprint that is scalable. And this is exactly what we are looking for. So I can tell you the 3,000,000,000 business that we will jointly have on Energy yes, to step out points, we will have a high demand on that business on margin as on the remaining ones. All right. Thanks guys. That's all for me. Thank you. Thank you. There are no further questions at this time. Please continue. Okay. So then, thank you all for taking the time to call in. And, we are looking forward down to hopefully within this quarter announced that we have closed the deal with Perry, and then we will be, as I see it, this amazing company, the 16,000 employees. And then we will get back to you because then we will be even more precise, not only on the cost synergies, but also what we can do on the top pulse synergies in the overall. So thank you again for listening in and talk and see you soon again, and have a great day. Thank you. That does conclude our conference for today. Thank you all for participating.