Earnings Call: Q3 2018

Oct 24, 2018

Good day and welcome to the OF AB Third Quarter Financial Reports Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jonas Gustafsson, CEO. Please go ahead sir. Thank you, and hello, and good morning, everybody. And welcome to this, call and update on the third quarter for Wes. I'm here, Jonas Gustafsson, CEO. And together with me, I have CFO, Johan Johan, CFO. And we will assume take you through some slides presenting the third quarter. We will cover short business overview, some of the highlights also looking a bit on the market, financials. We were looking to each division a few words about the ongoing strategy implementation and the summary. And we will also have time for any questions in them. Starting with an overview of the quarter, and if you look on July to September, we came in at a, yes, 4,000,000,000 to SEK 3,900,000,000 on top line, which was an increase of 13%. The EBITDA ended up at 2 20, which was an increase of 20% and the EBITDA margin ended up at 7.4% compared to 0.9% last year. And this, of course, in general then, you could say that we are pleased with the quarter We have improved our earnings when we see a continued solid growth. And in general, as you will see later on the market, as such, continues to be very good. And when it comes to the stress and implementation, it goes according to plan. So I'm also pleased with that. This means also that if you look on January to September, and we are, at this point, on 9% growth for the 3 quarters, which is very close to our financial targets, which is 10 And the EBITDA margin after 3 quarters at 9.1% and which is also an increase and improvement compared to the same period last year. So all over, obviously, we have high ambitions, but this is a quarter that comes came in according to our own plans and we're quite pleased on that. Well, I guess you all know us, this is just to remind who we are then, 10,000 and growing. We have actually in the third quarter CF only got back to that 6% organic growth. So I think in the growth side, we were getting back a bit on organic growth. 13,000,000,000 and our main business is in the Nordic region then. Next slide shows that we actually have a broad product portfolio, so to say. We have we are exposed to many different segments, which I feel It's a good, kind of balanced portfolio, especially when you have some segment down and some is increasing. But at the moment, we see in general good demand across many segments. Next slide, again, as you know, then, we have a lot of global trends that actually drives the demand of the competences and the solutions we deliver from the West. And then maybe you saw that yesterday, we actually were sending out a press release where we are actually getting our competence know how and delivers in what we call future cities, which is an extremely interesting area where we have, I would say, unique competencies from in the through infrastructure digitalization, and I'm extremely thrilled on that moving forward. Market as such, well, I can say that the general market continue to be good, both from the industry market and also from the infrastructure market. The annuity market, we have said it for quite some time that if you look on the large scale annuity market in Europe, still tough and the whole energy sector is still in transition. So for sure, that is the part of our business, which is not as favorable as the others then. And of course, when it comes to digital solution, we see a continued strong demand. So I mean, we have some questions because there is a lot to question where will the market go. But at this point, we don't see any sign of a declining demand. We see a continued good demand as we are right now looking in quarter 3. We have, in general, a good, book to bill and we continue to win a lot of interesting assignments And what I think on this list, we highlight a few of them. And starting with the first one, which is an, I would say, destructive way of doing this So this is where we work together from our digital competence together with the infrastructure. And actually, we are doing a completely new way of measuring how sleepy the road conditions are in Sweden. And in the old way, it was a few cars driving around in Sweden and sending data and now by using the anonymous data from all the Volvo cars, we have actually made a destructive project together with Volvo cars that is It's just it's one way of looking on men in your profit that will come where you mix digital solutions, but for example, infrastructure and industry knowledge. Groundwater. This is one part actually in our future city umbrella. We see water competence becoming more and more important. And we know that in the municipalities in Sweden, there will be a lot of investments done in the next coming years. So what is important for us? Architect, the 3rd one, we acquired Gottlieb Paladone, a very good Danish company that has a focus on infrastructure. They are taking a lot of assignments on their own and we can see the importance of having this cross knowledge with architecture and infrastructure. So that's a very good project. On our industrial side, we delivered new automated production lines to Volvo Cars. And this is a segment where we are very strong. And I also see our industry division is becoming even better than that one. TSRPAK also on automation line, we are continuing to focus top and paper segment and we are getting increased assignments from middle cautioners. And there was a few more in the power plants in the Nordics We have a pump storage in India. And then finally, several projects related to digital and industry 4.0 then. So all over, reflecting the market condition, we see a good order intake across our different business lines. Moving into acquisitions, we have since July, on 3 acquisitions, a smaller one in Switzerland, We did one in Finland and another one recently announced in Denmark. I would say all of these 3 months have a niche or a position supporting our, strategic direction, up in the value chain or, for example, the one in Finland supporting also focus on the Nordics, including Finland. And the third one that we have announced a few days ago, PAP then, which is an energy specialized company based in Denmark, that actually will support our focus on the new energy market in the Nordics. So please, please, with that. And this means that so far, this year, we have actually closed ten acquisitions, ending up to slightly above 500,000,000 supporting our top line And each of these ones are, again, then supporting, the provisioning of in relevant segments or geographical focus. And so as we say, we are pleased with both the organic but also the fact that we have a we are ramping up our acquisition process. So with that, I will just leave over to Stefan to a bit more on the growth in the quarter 3. So, Stephane, please. Thank you, Yunas. Yes, sales picked up. I'm ended up in SEK3 billion for the quarter, which means a growth rate of 12.5%. And if we make a breakdown, we can see that the acquisition growth was 4.5%, which is high in the number than the previous quarter. So that means that we are picking up as just as Jonas mentioned. As you may recall, we had we were a little bit conservative during the end of last year or the last year. Due to the new strategic direction and the analyze of the strategy, some constraints of the balance sheet, but now we're picking up again. But what's very positive during the quarter was the organic growth ending up at 8%. And adjusting for current effect, it ended up in 6%, which is the highest number for a number of quarters. Comparing with Q1 and Q2, it was 3.13% in Q1 and then 5.1% in Q2. So that was good news. Even so it's it's a it's a we shouldn't do too many conclusion of a in the individual quarter, especially during the summer period. But it's good news in a way. If we look at the individual division and that, as we come back on that, the solid growth came from from infrastructure and in industry, digital solution division. Industry is still flat and in energy, we are still struggling with the international business, but reported a very strong growth in the Nordic areas. Margin wise and profit wise, as Jonas mentioned, the profit came in according to our expectations, even so, and one division infrastructure might over performed compared to our plans. And then the division came in slightly below our expectations. But all in all, it was a good quarter with a margin 7.4% compared to 6.9% last year. So it's picking up. If we look at the profit unadjusted profit we have to recall that we had an restructuring expense of close to 70,000,000 last year. Cash flow wise, we also have been working capital and cash flow from operating activities was good and strong. But we have to remind ourselves that the volatility from the project business in cash flow is always kind of a calendar problem. If you recall, last year, we had some downturns in the cash regeneration for you to the project business. Dividend, 50% of net income, we stick to our policy. And we also reduced, we also both back shares of close to $200,000,000. And the reason is to reduce the dilution from the convertible debt program in order to minimize the dilution for the shareholders. Ending after a net debt position of close to $3,000,000,000 $2,200,000,000 in the KPI to be compared with our target of 2.5. So we are under the target at a moment. All right. Thank you, Stefan. So with that said, I'm looking a bit into each division and Stefan already mentioned a few things if you look at infrastructure, obviously, we're happy with the fact that we they came in with a strong growth and also increased profitability. And as we said before, we don't see it continues to see the infrastructure business as a very strong market across our different kinds of business line or we call it business areas. And so for example, the building, which we, the building technology part, very strong. And also, if they continue demand in road and rail, as well on the architecture side. So and then we have the niche offerings like with the merchant water that becomes increasingly important and interesting And again, we have been winning a lot of assignments. And again, here's mentioned this one that we did, which we found very interesting together with Woolver Carston, which is, again, a destructive way of transforming in all the way of in this case, road, how slippery the roads are and by using the Volvo fleet we can basically much more online measure the role condition. So it's actually a safety feature also. And I think this is just the beginning of seeing also the infrastructure business with destructive eyes and use digital content much more. And I would say that OAuth is one of the companies that has the best position in this segment. And No, you might know that I had 20 years experience in the industry and obviously industry is moving ahead and we can see that demand also. But when I looked on the infrastructure business, I think there's a tremendous interest in potential for making life both better, but also safer in many ways. So this is something which is a part also of our future city focus more than 4 of them. Where acquired a company in Switzerland and we are building on our Swiss footprint, which is actually very solid. And I think we are starting to be a significant number of people in Switzerland. I think they're coming close to 600, 700 people in Switzerland. And again, as quarter that we could be proud of, and see if I mentioned that we delivered actually 20% growth. And if you have the ask for calendar effect, And also currency, we were down to, but slightly above 13% organic growth, even if it's a third quarter with summer it's a very strong growth for us. Moving over to industry, I would say that we are pleased and it's a stable earnings At the same time, we are here fighting with the growth part. And as you see, we are basically flat. However, I know that the industry division are working very hard on repositioning and implementing the new strategic position basic that we talk about. So I'm I'm quite confident that we will pick up both on the profit side, but also on the growth side. Even of course, we fight a lot with competence. And of course, here, our competitive sector on that side is the industrial companies, basically. But we are winning a lot on your assignments then. We mentioned a few one already before, but both to the industrial companies like Volvo, but also in this case here at APAC and also in the Pulp and Paper port. We acquired a company into the industry, which is the one in Finland Propelldbach, which is the 1st step, I would say, to answer the finished market a bit more. We have had, energy related business in Finland before. But now we also look on Finland more as a core market for us as a part of the Nordic focus that we have 6.7 percent margin, so stable margin, but we expect more from the growth side. Moving over to Henley. And of course, this is a small one of our smaller divisions then, but you could say the top line and see if I mentioned that if you look on this as 2 different businesses. You could say the Nordic in one way. And in the Nordic, we saw increased demand on the OAF services. And we were actually improving our profit and we also delivered a solid growth. And then we have our international business, which is more related to CapEx project, actually global profit. And And here we have seen a more volatile and also business, but also with price pressure. And here we are conducting, again, I would say, a review in the order to reposition our end of your business according to our new strategy. We also are looking to reduce the exposures to volatile countries, volatile, perfect. And this is a work that we are doing right now. And I would say the sum of all of that I would say affected our margin in the quarter slightly. It's not a it's not a dramatic thing and you can see that that's came in in one of our in the weakest quarter in the year, we came in at 4% EBITDA, and we actually delivered growth. But for sure, this is one of the business that we have been working on repositioning over the last couple of years. But in the Nordic, we have done it a bit faster. What's for us remaining now is to do kind of basically same journey on the international business. And that we are doing right now. So we ramped up that work before summer and we have worked very hard throughout the summer and we will continue throughout the second half year now to basically set the structure on the international business that will be driving growth, but also increased profit. And again, then, having a balanced exposures if you look on geographical and the different kinds of segments. So, and then we acquired a company than PIP, which is a is a niche energy specialist company in Denmark that will add on to an Nordic portfolio in a great way. So CFS said, we came in a bit low on this one, of course, compared to some of the others, but I am also here confident that we will position energy, towards growth and increased earnings. And I would say, no, we are doing the things on this national business that that is remaining in that business segment. Finally, this is the solutions. And here you can see the overall demand in the industry button society in whole is still very high. And we have seen getting back here to growth, which was very positive then. So we actually had the 8% organic growth and also a solid profitability. And again, we don't see any end of need or demand in this segment. So and of course, part of this division delivers solutions directly to our customers But a big part of this competence in distribution goes across other other business areas. And again, the perfectly took to take work to get with Woolworths, one example, when we use our extensive infrastructure knowledge mixed with digital components. So that finalized. And if you look at the summary for the quarter, and again, then CFM said it is, of course, the weaker Corker, having the whole summer vacation period, but we are pleased with the fact that we were getting back to growth a stable 6% growth and also that improves our earnings with 1.0.5% units then which is a step in the right direction. So according to plan. With that said, there are moving over a bit to, as you all know, then we presented a strategy, revised strategy a bit more than a year or a year ago. And or less than a year ago, and we are moving a core discipline. So this is just a frame with our big solution value. And then we have a growth drivers And again, yesterday, we communicated the future CTS-one kind of joined a pro form a work to take on a few of the large complex challenges that they have in society, with the city development, we know that urbanization is extremely going very fast and it puts a lot of pressure on finding good solution for making the cities, to deliver sustainable solution in cities. We have a clear growth strategy plan. We are working on our 4 pillars growth, value creation, operations, and people. And then when it comes to value creation, probably for us to climb the value chain is 1 One important part, and here I can say that all of our business areas works very hard on the defining their way of increasing the value. And on top of that, then, as I mentioned those several times, future cities, it's a way for us to with an umbrella take all the competencies we have at OAF to work in challenges related to city development. And we know that if you look back, there's clearly things that could have been done better in the facilities. I guess you all are I mean, if you are in the medium sized city or in Stockholm area or if you're currently in the big global cities, getting a couple of hours in traffic jam is maybe not what you want to do. On top of that, we have huge sustainability challenges. And on top of that, we need to create cities where people want to live. And we believe that having infrastructure, having industry, having digital, we are one of the companies that really can lead and guide that development. We have been into that for many years, but I think this is first time when we basically frame our complete competence into that part. We know our detector with no building technology, we know sound and vibrations, we know industry, we know automation, we know automotive, have been no digitalization. So we are now clustering that together, and it will be extremely exciting looking at that moving forward. Now you know, strategy, we have a well implemented plan to increase to implement our strategy. And I just want to say that we are implementing that according to plan. And I'm also proud that we are doing that without having any heck on the curve on our financial performance. So we are delivering growth. We are improving our margin while we are implementing the new strategy. And I'm very pleased with that. And then also to remind that, of course, for all west to be one of the attractive places to work on is simple. And then the ranking that we have followed for years where young professionals, engineers are ranking the top companies, we came out as number 4, which is really And we are the leader in our brands, so to say, and we then compete with the key of all the costs in Google. There are strong completions but we are very pleased on that ranking. And on top of that, we know that when you're off researchers in Sweden, which company the rates number 1, we came up with ABB and AstraZeneca. So clearly, the brand was when it comes to technology making future is ranked extremely high. And this is something that we will, if anything, increase our focus to keep that brand, And by doing that, we will also take on the most complex and interesting assignments. And I can tell you coming back to that assignments involving cars, that we do to take back it, when you can see that you're mixing digital with infrastructure, that's one in the nearest gas field. Do something destructive that actually, in this case, even improve safety. And here, I think, UHWAF is a tremendous interest in place to work with. The financial targets, we know them, but of course, then after 3 quarters, we are, we are 9% compared to the 10 we have on the growth and you know that they have 10% EBITDA margin, and we are fighting together, and I'm sure we will. And then as Difa mentioned, we are now off the 3rd quarter on the net debt on 2.2. Which means that we do have now ammunition to continue our growth related acquisitions. So, and again, I think we have a good selection when we look on companies. And I can tell you we are turning down also because we are not paying the high end of the, of course, in this part of the business cycle, some of the companies are expensive, but we have a good process of evaluating the companies were acquired. And that summarize the quarter then. And again, then it's a good quarter came in according to plan with good growth and improved profits. The market continues to be favorable and we are implementing the strategy as planned. Finally, before I open up for questions, we have seen that we would like to welcome you all to Storkulman. So on November 20, when we have our Capital Markets Day, and we will tell you more about the growth story of OS. With that said, I think we will open up if any question. Our first question today comes from pre drag Salvinich from Nordea Bank. Please go ahead. Thank you very much. There's really strong growth in infra this quarter. Do you have any extraordinary orders or maybe taking market shares here? And if you could comment a bit on the fast growth here. Well, I think, I think we are in general, strengthening our position on the market And I would of course like to highlight our building technology side, which I think also from a purely industrial perspective, have a capacity position because the transformation going on on complex buildings like airports, schools, hospitals, commercial building is just fantastic. And then, and here, we had another strong quarter But then I would say across all our business lines, we had a good and stable quarter. Stefan, I don't know if you want to No, that's great. So I think it's a combination that we are taking market shares because we are growing this business, but we are also operating on a market that chose do demand. Okay. Thank you. And I mean, automotive has had a tough couple of months with profit warning among several large companies. Will this affect you somehow or What is your thinking here? I mean, we obviously monitored automotive sector closed. And of course, what we deliver is sometimes having a different cycle than selling cars and how that is moving on. We are very involved now in setting up the automotive industry to electrification autonomous cars. So when you can see and that goes from even what we deliver from automated manufacturing lines all the way to what we do on the R and D side. So for example, we are more and more involved now in setting up new lines for the electrified new platforms And on the R and D, we are involved in supporting the automotive makers in both electrification and autonomous cars. So that is maybe sometimes even right now, a different cycle than if you just look on the pure car sales. So right now, we see the automotive segment in Sweden, but also the international business lab continued to be solid and good as we see it right now at least. And could you walk us through the margin a bit here? I mean, in for a very strong industry is slightly down. Energy is down in spite of nice organic growth and the same thing for digital solutions. Why doesn't the margin take off here in specifically energy and then in digital solutions? Well, I think on starting with digital, I think they delivered a solid and stable margin. And of course, it's a balance on growth versus margin. And we had a few focus now on the digit where we we were not growing. So we are focused a lot to get back on growth. And then in digital, we are transforming that business moving from basically professional service, selling a lot of ours towards more and more concept and taking on assignments, so to say selling teams, etcetera, then So that balance act, made us deliver there. But I mean, for us, it was according to plan and stable there in line with last year. So it's still a solid 9% margin business. But we expect that down the road also take improve, but that was for us according to plan. The ones that we are pointing on, which is the smaller part of our business then, the entity has been for a few years, the challenge. And what we have done now, I would say, is we have taken on the repositioning the international energy business, and that I could tell you that kind of work have affected the EBIT margin in the third quarter. And we have taken a few decision on what prospects to take on what market to operate in and that clearly have affected the margin a bit during the quarter. I mean Iran was one market that we actually had some growing interesting business, going back a year or so but that's for clearly ones that we have actually, completely stopped and we have left that market And we have other such related things. And the whole idea here is to set a stable balance also when it comes to risk versus reward. And I expect that to be done. And when we move into next year, we will step by step improve the margin and start time growth also in international business because if you look on the Nordic base, we are actually growing and we are improving the margins. So we have it's more the international business where we are a bit too disgusted when it comes to the footprint, and this will not consolidate. And actually today, we also announced that we have now appointed pizza plug then as new division or precedent for the annual division. We had Roberto Gerbrand, who was leading that division for 10 years. And Roberto was a guy that kind of came into OS with, I would say, more with the view of the market as it may be was 10 years ago then. And now we are doing repositioning of energy. So, it had some effect on the margin in the third quarter. It's not dramatic and as an overall then we delivered a solid morning. But that's basically and then of course, you talked about the infra doing really well. And in industry, I'm also pleased because also here we are repositioning a note over to our firm that we higher from ABB are working very hard with all its business areas to move up in the value chain to take on both National Nordic, but also international profit. So, I'm quite pleased with versus we are doing to set over for the future. And of course, then we have some effect on the margin in the third quarter. Thank you very much for that. Thank you. You. Our next question today comes from Victor Lindbergh from Carnegie. Please go ahead. Following up on energy and infrastructure, could you quantify if you had meaningful project revisions on the upside, I guess, in front, maybe on the downside in energy relative to what you're used to when looking at this on a quarterly basis. I would say, Stefan, super, but I would say that, of course, as in the quarter, you have some delivering a bit better than you hope and some, but I was saying that on the infrastructure, a few months, but not really major one that you could say. It was more an underlying performance in general than coming back to the building part that we had the big bread and butter we do here is really the volume of a lot of smaller medium sized projects. When it comes to the elderly, clearly, the fact that we on the international business and we are reviewing the project portfolio. I would say, extremely tough on this natural business and we are taking the effect on that setting the new direction had some effect in the third quarter. Not material at all, but it affected the margin slightly, would you say so stiff on the fuel? Yes. And as we stated in our report, the competition and the price pressure in combination with our cost of sales in combination with some margin slippage as of course, the margin slippage but this is overall some good news on the infra and some bad news on energy. But I'll give you an example also that when we now have been maybe a bit more rigorous in what segment, we want to do. We have actually said no to a lot of profit that would have given us, work and that have led to lower utility sales and that clearly affected the margin in the third quarter. So by that, you could say that We went down for 7% last year to 4% this year. And that is clearly an effect, I would say, from the repositioning Iran is one example. We had a Czech Republic unit handling on like 3 ongoing pro affected high margin and we, for both political reasons, but as we don't want to be in Iran, withdraw from that quite quickly and that's affected. And we have some other like that. And we will continue with that work, but I don't see a dramatic thing, but we have said that if it's anything that we really need now to takes the consequences solely to really set for the future, it's the international energy business, which is a smaller part of them than in whole, but still. So just to be clear, what Jonas said is that the underlying business that is the kind of main, the good news in Impre and some venues in in energy. It's not the main the margin stipulation is not the main reason for the margin, increased margin or the low margin. And obviously, the international energy business process on 1,000,000,000 plus, something like that. So it's not the major forklift but that work is ongoing. But on the income structure, again, the underlying, we did not have any significant big profit that we could release profit from that effect that's not focused. It was the underlying operative business delivering a solid result. Yes, that was going to be my follow-up on how we should think about this going into Q4, if there will be a lingering effect from this better current performance on the book that you have in the Infra business right now? And maybe also on energy, if you could quantify the the size and length of that international order book. So we know, how we should risk assess that when you are looking through the projects? Is it a 1, 2, 3 quarter type of in infra? Yes, we have some of those. I would say on the infrastructure business, you know, and we know that infra demand is still very good. So I mean, we have high expectation from the infra moving forward request about that. When it comes to energy, We are doing this repositioning as we work on them. And I think we can expect a couple of quarters moving ahead with a flattish view on the international business. Then while I have to say on the Nordic base, I still believe that we will grow and improve our margins then. But on that selective international business, we will continue to have a couple quarters ahead of us with with a bit of a bit flattish margins, but again, did lower impact of OFS and Holden. That's what I would say. It should take some quarters before we are back to a decent margin again. And then hopefully, we can improve up to the 10% pitch hour target in the medium term. And when it's got same traffic, we know that some quarters we do very well. And this quarter, most of the boxes, the good boxes were ticked off. So it's a stable margin improvement in the infra. So you know, it's a good margin. Don't extrapolate too much, I guess, on the year over year. New York Celsius as you used to. And then, just to understand, you mentioned that the infrastructure demand being at a very high level. Should we read this as you're thinking about demand being also an elevated level right here and right now and that longer term, the demand will normalize and thereby trend lower or just how should we read that sentence being at a high level? Well, I think it's the same sense as we have had for a few quarters now that we don't see the market demand growing significantly, but still being on a high level. And we don't see any sign that there will be fewer projects, what we can see if you look on the demand and all the projects that has started. On top of that, I truly believe that these destructive trends will also change the income market. Because if you take ginning as one example, while we are exposed to a lot of new build, but we are also exposed heavily to to upgrade. If you look on a lot of the airport work you're doing, it's upgrades or extension, like on all land or other. So, I think you should read it as it says, it's a continued good demand on the interim business at the point, we don't see any signing that's going on. Obviously, everybody look into the private housing and that we see that one going down. But again, our export for what is in total is 1% to private housing. So that was the decision that we have done over years and also maybe increased over the last year that we are positioning everything from architecture and all the way back to commercial complex buildings, hospital airport, So that's, I think, how we should read it. Then I can tell you, with everything going on, we are, of course, raising a lot of reports measuring a lot of KPIs to be very, very close on the market and by that being very quick in adjusting if anything And that's the beauty of it or worse than that we have that growth portfolio that we are involved in many different industries. But we keep our eyes very close to the market. And our next question comes from Johan Dahl from SEB. Please go ahead. Yes, hi there. I was wondering, Jonas, what gives you the confidence believe in the improvements on the industry divisions. So we have the growth of flat margins when the industrial activity arguably peaking capacity utilization arguably peaking as well? And also talk right now about slowing investments next year. What special initiatives do you believe will drive improvements here? Well, I think it's the whole, I mean, I haven't said that it's any statement that I might know a bit more obviously industry. And I think with a fantastic competence base, we have a tool. We have a solid, I would call it, professional service business. And when we work towards the big industrial companies since we're in the, but Of course, where we make a big difference is when we deliver a concept or a perfect or even a closer product. And that is really the strategy moving forward increase the value creation for our customers. And then we do by also mixing digital knowledge then. So if you look at all our different business areas, as we have named them, then starting with manufacturing, it's not just a Swedish, it's a Nordic and it's an international business. Here, we work very much on defining total profits to the customers. We are, for example, moving into China with that segment. If you look on, automotive R and D, We mentioned that before that we see that demand continuing to be high, reflecting the transition that the automotive mix are doing. We delivered and by the system solutions to deliver related chassis solutions for electrical cars and automated lines. Then process industries and other, for example, pulp and paper, the whole biomass where we see, for example, a pro form a that we took in South Africa, which is related to tissue pro form a that will actually be used for clothing We see an awesome interest in where we have been a bit defensive over the last years on the international market. So here we are moving out a bit more tougher And these are examples on segments when we are working more on the value creation from OS and I also want the food and the food and farm as another segment. So these are 4 segments in the industry. Where Robert and his team are working, how can we increase the value to our clients. And I think that is what gives me the comfort that over time, we will be able to drive margin because it will be less of cost plus model, which you tend to end up being when you do professional service and more about the value based sell. That will not go from 1 quarter to another quarter. But over time, and basically, that is, that's basically the reason why I joined the West. That's the journey we want to do. And that's the journey we can. Okay. I was just wondering on prices, Am I right in reading a higher contribution sequentially in Q3 from pricing? Or is that just over exaggerating now? No, we shouldn't do that. That's a too big conclusion on an individual quarter. What we what we say is we are able to compensate the pressure on the wage increases by price increases in general. And then of course, it differs from from segment to segment and from industry to industry, but all in all, we are compensating cost increases by wage price increases. All right. Thanks. Our next question today comes from Eric Yolanda from FHG. Please go ahead. Yes, hello. So I was wondering, you have accelerated organic growth now for three quarters in a row. How should we look at organic growth going into Q4? Can you stay at this quite high levels of 6% in Q3 for? As you know, Eric, we don't provide any forecast. It was a high number slightly higher than expected. So if you look at the growth rate year to date, I think you will be you would have a good guidance when you're looking to the Q4. Okay, great. So I was also wondering about the industry division. You wrote in the report you're taking on some recruitment initiatives to boost organic growth in this segment. So what are these recruitment initiatives and when we should we expect these to materialize in the numbers for you? I think one example is that when we feel that we're confident in getting assignments, we are a bit more offensive in recruiting people into Western. So that's that is ongoing because we believe there is a strong demand. So I think that's what we mean with that is that, we have had which, I think, we presented you guys is that when we, if you go back, we, we, we, we, we, we're in the organization first of January. We went from, you could easily say, a national geographical organization with less of cross collaboration even within the segments. So you could easily say that you had even in Sweden, regions that was spoken on the Readiness work and we had We have not moved our total competences together in, for example, Pulp and Paper. So we have more, a bit more isolated islands. This we, we implemented as of course, OEM, which was a quite significant change, especially in the industry division. And I would say that, of course, have taken us some time. On top of that, we were recruiting a new president Albertlarphone that has a fantastic, experience from the industry. So with all that said, then, you know, we looked on all the projects, we looked on what we can do, So of course, in that period, we did slow down a bit on bringing in people because we wanted to really see what do we have and where do we go? We feel now with new leader, clear business areas, clear structure that we are prepared not to be a bit more offensive in bringing in people up. So I think it's both a timing, cross as well as the fact that we start to feel, as also saying to another question that was asked, why do I believe that the industry will pick up? I have a strong belief that we have a fantastic story down the road. So how is coming back to Stefan? Of course, 4 to 4, we see more as a we could read the longer trends. But of course, when we move into 2019, the clear ambition with the work is to deliver a 10% EBITDA margin We have said that and we are seeking to that. Will it come to 2019? Well, we are not guiding you forward, but for 4, it will come and we are extremely focused on delivering that. So that affects the long answer why we why we believe that we will pick up in the industry and that's why we are also increasing the focus and bringing in a compliant pattern in the solution. Okay, great. Because I guess also in the Industrial Division, there is a high competition for the staff that you want to recruit as well. So how will you, how will you, I mean, recruit this personnel? What's why should or why should they go to WAF instead of, for instance, e work as a self employed consultant or other companies that are doing this kind of industrial consulting businesses as well? Well, I think if you compare it with WAFE work, I think you maybe should we should have a discussion about the strategy moving forward because I think some of the assignments we are doing Eberk will not take on. So when we are delivering the SEK 200,000,000 project in South Africa, we're completing the SEK 100,000,000 extension of all the cars or a complete new way of thinking that's a big market. I do not think these are the projects that Evert will take on. We are hiring. We meet some 300 employees every month that you install with. We came out on the yearly ranking on which company would you like to work on in Sweden among engineers who have came on position number 4. Of course, we were a bit from Ikea, Google and Volvo, but still ahead of a few others. I meet tremendous amount of engineers and they all rank and keep who are very high. The strategies we are implementing is exactly on that. We are a company that will deliver solutions value rather than ours that you're right, Evert could provide. We will still have a professional service business, but over time, that will reduce in relation to the other parts. So I think, and you know, I left a company that was good, Sandvik, and I don't know what, but I'm even more convinced right now that over time, we will transform this company from a traditional consultant company selling a lot of ours to deliver engineering and design solutions, which we are. So, and this is actually the passion that we have And that's the passion that we are transforming from Edas and are more convinced than ever that we can do that. And this end of the day, we'll drive margin and growth. Okay. Thanks for that. And I was also wondering about the declining billing ratio year over year. Was that primarily related to the energy business that you withdraw from or why was that? Yes, that was made related to the energy business. Since Jonas mentioned, we have been slightly selective in taking on projects and that's, of course, hit the utilization rate. But we also it also depends on a mix, what kind of projects or the mix of professional services and projects put in the individual quarter. So then I was talking about the other divisions. So, so, but the main drop come from the energy division, yes. Okay. And also, I was wondering about what's can you say like a difference between the margins the Nordic Energy business compared to the international because as I understand, it is the international business that's that is kind of anchored to the margins for you in this quarter and that's been historically as well. What is the like the margin if fits between these kind of segments? We don't go into those details, but the margin is higher in the Nordics and lower in the international business. And I can't guide you at we will now go into those pieces, but it's a, but it is a gap that it's There is a gap. There is a gap. But following up on that, I think in the overall strategy moving forward, we have clearly that what we believe is that we should grow strong and faster in the countries where we have scale and volume. Now we know that in Sweden, starting up in Norway and Denmark where for example, we acquired also a company now also in Finland. We have a strong you say natural delivery capacity to the big companies like Vattenfall or E. ON or whatsoever. And then we have the natural CapEx related business that is different, and, what we are doing now is to really decide how big and where should you operate on the international CapEx business and Then when it comes to the Nordic base, we see ourselves as a more a one stop crop than where we actually can guide and support them fall in the transition they're doing in many interesting areas. So I think the end of this segment as such is very interesting, but you have to be selective and clear on where to operate and how to operate. And that's what we are doing right now. Okay. So would you actually be open to close down, so to speak, the international business, where you're doing the large CapEx projects and just focus on the more profitable Nordic related businesses? I think what we will do and for 4, we will we are overlooking our unions, but I think some of these international segments we will stick to them because they are driving growth in margin and they are also important for our core country position them. But you're absolutely right. And then you're reading us correct is that we are overlooking that Hintner this is much more closely and careful now. And that will that might affect some sites, some units that we have. And it's been a bit too spread out. No question about that. And I think with also the shift we have now in leadership in the Energy Division, we can basically know on that with the and the we had the kind of the direction we are setting is more clear now of what we want to do. But it will still be a combination of very strong focus on the Nordic including, you know, core countries like Switzerland, we have a strong positioning and then we will be much more selective on what CapEx for effectivity take on and which region, which country, what support do we have in the international business. We will be able to do the transition over time. I mean, we went through that before then that, it will take a few quarters, but it's not dramatic, but it's a clear changing direction. Okay. Thank you very much. That's all for me. You. Gentlemen, we have a follow-up question from Mr. Victor Lenderberg. You have to take it. Wonderful. Please go ahead, sir. Your line is open. Thanks. Just to questions here. Looking at the number of employees in the group function, it has been increasing quite a lot. Throughout the year. Can you comment if this is just, different way of accounting or have you been adding 50% to the to the overhead. Secondly, the court case with Danier, I think it's now heating up. Can you tell us where we are in that process right now? Sure. We'll start with the first question. The reason why we have an increase in the common function is that we have centralized support functions in other countries in Sweden. One is example, Norway, in which we have created a shared service centers, supporting the operations in Norway, but with IT finance HR. So we are combining all those resources from the operating units into a larger central function. But I also know, so that's the main reason why it's increasing on the common function. But I also know that we have some calculating issues during the summer period, calculating the the star functions because of the number of hours. So it will come down slightly in Q4. So but the answer is more common functions to support to be a better supported to the business. Operations. And we have no other philosophy, the whole or governance model is to run a very decentralized way of thinking, but at the same time, you start to be a company that can start to scale support functions across the countries, but we have not any significant increase on kind of traditional overhead people. Danil. The process were supposed to start, during this month. But it has been postponed due to some illness from the counterparts lawyers. So it has been postponed and there are no new days set yet for the process. All right. Thanks. Got it. That's all from my side. Thank you. Gentlemen, we have no further questions. I'd like to hand back over to you for any closing remarks. Thank you. All right. No, but then I just want to thank you for taking the time to listen in and asking a lot of good questions. And really hope to see you all in Solna on our Capital Markets Day, November 20. We will give you a good run through on the strategy where we are and then a lot of interesting thing and you will also be able to visit our completely newly renovated fantastic head office and so on. So with that, I wish you all a fantastic good day. And thank you for listening in. Ladies and gentlemen, that will conclude today's conference call. Thank you very much for your participation. You may now disconnect.