Earnings Call: Q1 2018

Apr 25, 2018

Good day and welcome to call today's conference is being recorded. At this time, I would like to hand the conference over to Jonas Gustafsson, CEO. Please go ahead. All right. Hello, you and Oscar Stefan here, COO West, and I'm sitting here with CFO, CFO. And we will take you through the interim report for this quarter, 2018. So again, welcome to this conference call. So, I start off with the first summary slide, of the first quarter. And, it's been, as you see, it's been improved result in the continued favorable market. And what we are seeing is that we have improved our margins. From a profit and margin. And basically, let's say that we have a good order pipeline in all divisions. So our sales ended up at SEK 3,400,000,000, which was up plus 4.6% compared to the last year. And EBITDA ended up at SEK 325,000,000, which was actually an improvement of 13.5% compared to the same quarter last year. EBITDA margin ends up at 9.5%. And that should be compared to 8.8% and last year at the same period, which was an improvement then. So, overall, an improved result and in the continued favorable market. So the market has continued to be strong. We have seen in the quarter that it is a challenge to drive organic growth due to the fact that it's a high competition for the billionaires. So I would say that we could have had some stronger growth if we would have signed the right people actually towards. And even though we are ranked as the top 3 companies with them, we are fighting today to get the best engineers to work with them. But in general, solid results start of the first quarter this year. We are an engineering and design company. This is 20 seventy numbers where you see the share between each of our 4 divisions that we are organized from 1st January, both mentioning is that we have not passed 10,000 employees, for the first time, we have been close to that number for quite a while, but now we are actually more than 10,000 very talented engineers in the Westland. The fair of our business, 1 third, approximately to the public sector and 2 thirds to a private sector. And as you know, we have a quite broad portfolio, which we see as a great asset moving into many of the new assignments, which actually goes across many different competence areas and divisions. The new organization that's effective from 1st January is reflected on this slide where we have infrastructure, Energy Industry And Digital Solutions. And beneath each division, then we have organized ourselves in business areas. So for example, in infrastructure, we have 5 business areas with full P and L, and the same is valid for the other poor, 3 divisional stands and up to 21 business areas. So I think we have clarified our organization where each of the business areas have a clear focus on the respective target markets, So that's the structure we are operating in as of 1st January. We see a continued high demand related to many of the global trends. And we have used these in our strategic work last year, and we see that If you look on smart cities and the need for smart infrastructure solutions, it's increasing the mobility question with and connectivity. It's one of the areas where we are working. The same is valid for the industrial digitalization and also the energy market that is changing. So these 4 kind of summarizes some of these trends that really affect and, and, support the OS journey going forward. The marketing quarter 1, we see the overall market is largely unchanged compared to the previous quarter, meaning that it is still a strong market. It is a strong market. International market is strong. In most of the sectors, we see a continued high rate of investments in the infrastructure market in it's Sweden and Norway, but actually, I would say, Scandinavian. And what we have seen and we expect to that is that we see a higher volume of small and medium sized projects. And I think Infrastructure Division has been very good in changing a bit the operation to operate in that kind of landscape. Then in the market we see is stabilized, but still weak in Europe, and overall conversion to fossil free production and increasing for energy storage and smart grids, of course, is a very interesting area rough, even though a lot of that growth is, I would say ahead of us, still the end of the market is a bit I would say, it's not growing that much, but would we see more stabilization on the lower level then? And finally, the digitalization trend 3 is priced, of course, increasing demand in all markets and all segments. We have during quarter 1, gotten quite, of course, a lot of new assignments and projects. This is a selection of them. We had one big order for automation, for Handbag Stahl's, Purification plant, stock combustion, around SEK 200,000,000. So it's a good order process that will give us a good workload for quite some buy in in some of our industrial areas. We also went out this morning with a separate press release that we have actually booked, the biggest order so far in the history of work in the area of elkom paper then. And this is an extension of the world's largest dissolving pulp mill in South Africa. And the company's SAPI and estimated order value for all assets around SEK 170 5,000,000. It's a joint venture that we're doing together. Another player. And we are very happy for that. And, South Africa has been one of the old markets for Urs in their pulp and paper. So this has been a very good work and other sales result of the new strategic direction. And So this is, hopefully, at the beginning of a new segment where we can be a bit more offices. So we're very proud of that order. We have also extended the strategic partnership with Electrolux. This is a business where we actually take over team of engineers from Electrolux and we are doing business with them moving forward. And an interesting assignment, together with a good industrial career in Sweden, a pre startive extension of our Lambda terminal 5 is another project, green profile design assignment of a new biomass plant in Hamburg, This is also related to a new, acquisitions that were done at Gottlieb are design company or architecture company in Denmark. So they have a very interesting profile into architecture design in to industrial and infrastructure buildings among others. Our Swiss company have received a good order to reach in Switzerland. And we also booked a new hydro plant in South Asia. I would say that our order pipeline remains strong. Acquisition, we mentioned that that during 2017, We have slowed down the number of acquisition a bit related to the fact that we went through a strategic direction. Also, we needed and wanted to strengthen the balance sheet But I would say now we are clear with the strategic direction and we will now, I would say, increase our activities into acquisitions. Still we did one good one here, Gottfred, Palazan, Architex in Denmark, 100 and 40,000,000 in revenue, and 2 small ones on top of that. And again, we will increase the activity level related to acquisitions moving forward. So then, I'll leave over to Stephane, who also wants to take you through a few slides related more to finance and our numbers. Most definitely Thank you, Jonas. If we look at the our net sales in the quarter, amounting to SEK 3,400,000,000 which means the growth rate of 4.6%. 4.3% were related to acquisitions. And as Jonas mentioned, we have slowed down the pace in acquisitions, but the pipeline is growing. So in the coming years, we hopefully have a we will be able to report a high number in this in this area. The reported organic growth was 0.3%. But if you adjust for calendar effect, which means, 1 less working day compared to quarter on quarter last year. And current effect, the growth rate was 2%. And that is not adjusted for the Easter effect in 2017, the Easter was falling in partly in March Whereas in 2017, 2 weeks were felt in during April. So all in all, rather okay organic growth, even though we are not meeting our targets, infrastructure is the main contributor to the growth. And we'll come back to each of the divisions. And as Jonas also mentioned, the main one of the reasons for the slightly lower organic growth is the supply chain. The demand is, is on the market, but the supply chain is our challenge at the moment. Margin wise, we are pleased to report a 9.5% EBITDA margin margin, an increase versus last year. And the in price, especially increase, especially in price increase in the margin. But 3 out of 4 divisions as a high margin 2018 compared to last year's And we also see the savings from the restructuring program are kicking in. 2 thirds of the program has now been translated into cash and into EBITDA profit. Cash flow wise, we have a we had a good cash flow during the quarter. Good cash conversion rate. And so we ended up the quarter with a net debt position of SEK 2,500,000,000, which means a key ratio of SEK 2,200,000,000 to be compared to the target of SEK 2.5. So we do have a strong balance sheet and now we do have ammunition to continue our acquired growth. All right. Thank you, Stephan. Then I will take you through a short glance on each of the division. Starting with the infrastructure, and as I've seen, delivered a strong growth and also increased profitability. So we are very pleased with the performance of infrastructure. And we said that the investment continues to be strong in both Norway and Sweden are 2 key countries. But also in other areas like other areas like Switzerland where we have a big operation. It's also doing very well. We also acquired what I believe is a very strong company, both the Palmas and Architechs in Denmark. So you'll see the inflow had a good total growth 10.8. And again, and that's an ordinal level of 3. So that's a strong performance, in the continued good market. Industry division, which was actually one of the divisions that did not stand on up to the same margin level compared to last year, 8.8, but so it's a setback of 0.2 percent unit. So it's not a big drama. We have seen a stable profitability. We have had some slowed growth due to resource performance. We see, of course, that many of our customers are doing very well. I mean, the climate in Sweden and in their area is very strong. So many of our customers are hiring people. So it's a part to get the best engineers, but And we see again then that the demand side that the F1 management is still very strong. We also see that we have a strong order pipeline in the industry and not the least we mentioned some assignments that we have taken down in South Africa, the corporation in Electrolux also shows that this basic good market on the industry side. So it's a solid result from industry division. We could wish more for the growth side, which we are working very hard with them, of course. Energy again, smaller business for us. So this is the new energy division where we have taken and focusing on all the energy. We could see that the whole European energy market is still weak. It is a market that is still in a change mode from the big scale and you do towards smaller scale with smart grids and a lot of storage solutions with nuclear decommissioning and so on. And we are following that and we are we are setting up our new structure to meet that mark. But in this transition phase, it's still a kind of weak market, even though it's flattening out. We are taking some good orders on the morning's national based, one example here in Turkey, another it's a hydro power plant in Asia. So you can see that, if you adjust for the working days, we ended up on a flat growth where we are offering, which I think is, for the first time, for quite some time, that this business is not shrinking. And we also had an improvement on the margins when it's up on the EBITDA on 4%, which compared to the same quarter last year, then with the comparable unit was 2.4. So, still work to do, but I think we are moving in the right direction in the end of the division. And finally, and digital, and of course, here you can say that, all our customers and clients in one industrial verticals or segments are, are wanting to have more digital support But also here, we see, of course, that there is a big fight for getting the best, competence into our company down But this demand is very high. And then one of this, cooperation with Electrolux is related to the digital division We ended up at 10.2 percent EBITDA margin, so strong solid margin, but again, then we are not growing as we want. But we also have had some change of client structures. We had one client that reduced a bit 1000 Part of Sweden. But we are working very hard to get the strength and the growth in this side. It's a very interesting area for us, the digital area, of course. Some, it's up to a summary of the divisions done that we have talked about, where, I would say, infrastructure is the 1 division that speaks out with very good numbers in all areas, actually. And again, we see a continued good demand basically for most of the segments related business. Just looking a bit on, the fact that we last year, released our revised structures. We have a new vision that we are working very much with and that gives us an in work but also related to our of us providing leading solutions for innovations to come. It's been received very well in our company, and we are now executing the strategy of making future And I think it gives us a lot of fuel in discussions internally, but also with our clients. And the fact that we see ourselves as a company creating sustainable engineering and design solutions. And I feel this is an excellent pace. We'll continue to develop forward moving forward. And then the strategy we have talked about for quite some time, and now we are executing the work in how how do we grow our business, the value creation, the fact that we are step by step shifting towards higher value but also how can we further develop our service business down? We still have a big portion of professional service is one of our key things. Operations, how to operate the company, see if I mentioned the fact that we are working executing our restructuring program, but also how can we optimize our sourcing? So of course, for us to find new ways to use offshore sourcing when there's a challenge to get capacity in house is important for us. And then of course, best in class people We are a company that is highly rated among engineers, and we need to continue to be one of the best companies to work and I think we have an excellent platform. And then if you look on the business model, we have kind of formulated like that. We have 1 big latest service and another, which is moving into Porsche. And today, we can see that when we look you deep into a number, 60% of the business is related to projects. And some 40% to service. And you can see on the service side, there is different way to develop that offer further. Professional service, which is more the hourly consultants we are doing, we see more and more a demand on team delivery, Then we can see that we can move up to aftermarket. It's one area that they have not penetrated fully and also to operate satellites to our clients. On the right side projects, the time and material projects fixed price and even turnkey projects then. So to climb the value chain, and add more value to our clients to have increased scalability and delivery, we leverage from our extensive content portfolio across different divisions. We don't see a big risk increase in that because we will balance that to reduce risk in some other areas. We are doing a lot of projects today. It's more about where would we like to go into turn to keep for effect and bigger assignments? We will claim that we are have good experience and very good in volume projects. So even so we are mentioning in our report that we had some as a one hiccup. In general, we do have more and more positive variances on our projects the negative. So we have a long experience of doing projects. So we feel that long term And that will contribute to the margin and to the top line. Now we are currently also rolling out a state of the art project model that we will use and are using for all the larger project. We will also strength in our tool base. So I see a company who knows doing project and maybe become even more professional because we believe that is one way would differentiate ourselves towards small cost on companies that can offer a lot of our consultants. Still, we will have a big leg into the service model And we believe that it's a lot of different way to further develop that business. So I think it's of course, then we are looking for interesting top end products, so to say, how can we conceptualize and drive solutions? But today is sixty-forty. So that's ongoing. And we are running the rollout in, in our company, in structured way where the first step was to engage and involve a lot of people. We are looking now where much how can we further drive Cross OS solutions in business and teams smart city is one very interesting area. A few of the assignments that we have been taking has been related to the fact that we are more and more cooperating between divisions. And we will also step by step strengthen the tools to our different managers, not the least related to how we drive profit. So I'm very proud of the fact that we are people business. We have done quite some changes, but we are delivering a strong quarter 1 also in a period when we have done some changes and are operating in the new organization. So the platform that they've created with a strong vision, value, mission, the growth driver is clear there, and then we have our 4 pillars in the strategy is a good foundation for continued to develop what we've done. And sustainability is something that we see is more and more an integrated part of our business. We see that our clients and customers are extremely interested to understand how can our competence support them in developing new sustainable solutions, if it's in the R and D side, but also related to their operation. And so we're very happy to have that DNA in us. We have ourselves developed different tool, that we are supporting and helping with we haven't sustainable business performance index that we are actually working SBTI And I also would like to mention one initiative that was have been very successful for quite some years that we have, we have assigned persons diversity code, who works full time in how can we at UHAS bring in new, new integrated engineers. And we have today more than 70 engineers at work that have been coming to Sweden then. And that's been quite some success. And I'm very proud of the fact that we take that responsibility, but it also is driving business for work done. So that's something that we should be very proud of. And I think it's a part of the DNA on over Western. Again, we are ranked as a top player. We are in this, from young, Swedish professionals at the new engineering study. And here, we are competing 2 other good companies, Ikea and Google. I think you heard about them too. We are on 2nd place in this And so this is very important for us, and we will continue to strengthen our brand. The target you know about and as CFO said, we have a slower organic growth in quarter 1. We are working very hard on that, and we will give up to acquire the growth because we feel now that the balance sheet is also very solid. So summary then, repeating what I already said, we came up at plus 4.6 on the net sales strengthen the EBITDA and also the margin, which we're proud of. And in general, the market is good and divisions are doing very well. We are starting to get the best talent started to work. And we are continuing to deliver on our strategic agenda. So with that said, I will leave over to you, operator, and any questions that we might have from the people that have called in. Thank We'll now take our first question from Johan Dahl from SEB. Yes, hi, Stefan. And also how you're not, I was wondering, could you have a number for the sick leave in the first quarter was a problem for you due to the internal flu season? That as I think the most Swedish companies, I think were affected to a bit higher ceiling for the flu in the quarter 1 actually. And I heard that many in the business that relate to people had an effect on that. Clearly, we could see in that we had the it was a lot of people that were home to do the sick leave in quarter 1, but We do not have a number that we would like to disclose at this time, but I can assure you it didn't help our number of hours in the first quarter. It had some effect I can't say exactly how much it is, how much it was, but it was clearly affecting us a bit. Okay. In this environment you're describing with strong demand and lack of resources, what sort of impact is that having on your organization? And we see that the organic growth is weak but what other things are you seeing out there that's a result of this? Well, I think We are working on 2 sides. Actually, one is to continue to be a very attractive, company to start to work with but we are also working very hard to make sure that we are very attractive, but as we stay in, we have a lot of things that we can improve internally, because we have a lot of interesting assignments. I believe that the new strategy that we are rolled out will be one of the biggest tools because with that, we will have more and more interesting assignments and cross projects But in general, I would say that the ambition and the dynamic in the company very good So I don't see any immediate effect related to that more than its effect that we have a more competitive environment to hire people, not the least because many of our clients, especially the industrial companies are also very keen on hiring people in the different areas. If you go back like I'm coming from Sandeep myself and for many years, we had as you know, than a tough environment. But I mean, over the last one and a half, 2 years, it's a full steam ahead. So But I think we will need to be even better in hiring and finding the best people, and we need to be the best to keep the best people in work by having the most interesting assignments. All right. Now it doesn't seem far fetched that you can be in the order book more and perhaps David pick you on which orders you take, but that doesn't appear to be on the prior list. Of course, I would say in infrastructure, I would say that we see that. I would say that a bit on the improvements that we clearly see in the infrastructure cracker is related to the fact that we are also turning down orders. So yes, that's one thing, but then of course, we are now, as you see on the South Africa Torsac, which is an order that we would probably not have been, taking just a couple of years ago. So But clearly, we see in some of the segments, we are able to be more picky on the orders we are saying yes to. I think that's all industries. When you have a strong position in a niche, you can be picky. But then of course, we also have areas where we have not so strong And you are one of the reasons why we have been running at close to 10% margin, even Historically is that we are saying no two orders that are not having decent margins. We are not hunting top line for, for, as a full priority. So, and then that's not That's nothing new, Dewey. We are very we are picking and we'll continue to be picky. Okay. Were you happy with the billing ratio in Q1? Anything in particular that impact that number? No, we have a stable billing ratio. Okay, thanks. Thank you. We'll now take the next question from Pritrack Szenovic from Nordea. Please go ahead. Yes, thank you very much. Could you comment a bit on the labor side and could labor shortage happen in your organic growth like it has done for some of your peers, at least in last year? Yes, it's said, Dan, that We feel that if you look for specialty digital solution, which is one of the, I would say, very interesting area, where you see a high demand from industrial customers, but also governmental public look on data security and so on. There is a high demand from all actors, but of course, mainly are investing in digital solutions. So here we see a competitive environment to get the best in the nears. I think we can further look on how can we attract the best people. But again, we also are working very hard, which is a part of the new strategy, how do we make sure that we, that we keep people staying at the and CEO of us being a great company. This is a long career around having a lot of different assignments. So that's, then we have the quarter 1. That was affected. We had an Easter effect also that that affected us. So people took out some extra day and we had the flu season. So of course, it was a quarter where we had some effects. On top of that, we had high, high market. And so still coming up on the organic growth. That was, for example, infrastructure up to 4%, 5%. So it's not that it's been very bad. It's more of the fact that we feel that with a high demand, we should could have delivered more. And then you also mentioned a follow-up on that last comment as well. You mentioned that the order pipeline is good in all divisions, but could you maybe quantify this in any way? Well, we are actually looking on how we are quantifying. Of course, we can see the orders. So when we book an order, as we went out this morning with, to South Africa on, we have O'Reilly and then we have more and more frame agreement. We talked about Electrolux of course, we see more and more that we are able to follow the order backlog. But then of course, the part of our business is service related. But at this point, we are not able to, disclose in the numbers, but in general, we feel that we're strengthening the order backlog, so to say. That's right. And we have to remember that our average project is between 3400,001,000 acres. So I mean, But so the backlog is very short, but what we can see is that the after having doing the reorganization, especially in the industry, where we focus on each industry, we see that the business area managers are no loading their backlogs and loading their prospects, backlog. So we can clearly see that the indications of of an increased demand and the backlogs. We are not releasing back to numbers. That's what I'm trying to say. Yes. And not considering the cost savings program that you say come pretty far with, what would the EBITDA or the EBITDA margin be at then in order to get a fee for, for the profitability? What we have stated is that we have a benefit from twothree of the program. 2 third of the program has been implemented and and reported into the EBITDA. And the rest will kick in during Q2 and minor part could come in Q3 as well. Okay. And the final one for me, you state that driving forces is increased demand for smart solutions in Smart Cities. You also mentioned that in the call. Could you just add some more flavor, some examples to this so we'd better understand the What kind of project this is? Well, I think, to be a bit more honest, I would say, all perfect we are involved in sizable, there is a discussion from also the clients about how can we make this a state of the art business. So if you look on, for example, the new automation order for Handexdals prefication plant in Stockholm Water, which is a profitable government years. I would say that is digital or digit solution. There's a lot of automation and a smartness in that solution. So and then, of course, when you go into a city, if you look on the infrastructure side, we have small proof effect with smart solutions, but what we see more and more is an larger interest in how can you connect different industry discipline to solve some of the connections that is around them. But all projects that we are delivering, we are always confronted with how can you make it more sustainable? And how can we deliver a higher value? How can we use more of your knowledge into details? And so I would still say all assignments today have that flavor in it. And we will be smart city as one concept, it's something that has been growing over many years. We believe that or what have strong position because people that we are one of the few who knows a lot of different disciplines. So step by step, we will be a bit more vocal how we can play in that segment when it comes to multi disciplinary solutions into different kind of hit these solutions, for example, Got you. And just maybe a final one here. You said you wanted to increase the pace on acquisitive growth Could you give us some more hints on the magnitude here and what we should expect in terms of added sales for the next No, I think it's very difficult to do that. The only thing we said is that you can of course see that 2016, there was a kind of there was a lot of acquisitions that put a bit pressure on the balance sheet. Now we slowed down a bit and we're down a few, but you we see that the balance sheet is stronger. And, we are increasing our own pace. And looking on both bolt on and as we said, we will also, always look for platform acquisitions that are on the largest scale. Of course, you need to be a bit selective because we know with today's business climate, there's a quite high value for many of the companies, but clearly, our ambition is to increase organic growth. We want to be very selective and buy companies that really adds value and actually support our journey on the, on the strategic side. But I can't, and I don't want to disclose any numbers because As you first have a platform, you know, they are also they can happen, but they cannot happen. And the only thing I can say is that we are driving a lot of ongoing discussions. And we and myself, it's increasing the focus in that area after spending quite some time in in looking how can we set up our structure then. The next question comes from Victor Lindbergh from Carnegie. Maybe just wonder if you can comment on the acquired growth contribution in the quarter. I was a bit behind on my numbers. Think you add the close to SEK 140,000,000 in the in revenue from acquisitions. And we know the bigger ones being Aitik concept stock on Gottlieb and in use, so for fairly significant ones. But is there another or a couple of smaller companies adding more beyond that? Or, maybe I have missed one bigger one. Well, Victor, it's very hard to get into the details and compare your calculation with ours. The phone call. So we have a number of $140,000,000 snaccarat growth rate and I think we need to take a look at and compare our numbers after this call. It is okay with you. All right. Yes, yes. That's fine. And then wondering about the, the slide where you provided the projects relative to the service model. And can you just help us sort out what kind of average size of these projects? That you have in the project service delivery versus the service model delivery? I know the outlook for the group is just below 500,000. Yes. And that's what we say is that we tend to talk a lot about the big $200,000,000 project or so on. But of course, as TFO said, the average size on our project is 200,000 dollars, $300,000 maybe then because in buildings, I think we have a number of 10,000 projects per year. So I'm a strong believer that we will well manage, not increase the risk, but well managed, we will increase the value to our clients. Done. So it's everything from a small local power reflect towards this bigger complex project when we use the full power of our weapon. And as you can see, even before IO and before we started to talk about this, what always talks about, we want to increase the value chain, the value chain because that's really how we can use or have in a much more clear way than the local consultant company. Now we believe that we can also develop a service model further. We see an increased need of team delivery, for example, where we are not just, so to say, delivering one person making shifting at the client's office and helping them, but we actually deliver a full team. That's something that we will further explore because there you have another leverage on your pricing model and also how you can get some more leverage into that. Aftermarkets now there. So I believe that we, it's a wash to market. We also will be a bit more precise in the shares between the different ones, but us, it's also continued analyzing our own business model and developing this further. But today, we can say that 40% is related to service and 60% is related to project And then we see a friction open in the infrastructure, there's a superiority project, this time, a material project, meaning not fixed price So with very low risk. And then we have, of course, airfare maybe take on the full risk with turnkey assignment. But this is really a way forward. And I would not today say that one is maybe better than the other, clearly, what I believe is that both the service model and the project model, we can increase the value. And by that part, get away from the fact that we are so hindered from organic growth due to capacity shortage. Now I believe that of for sourcing is some one area where many companies looked at it as local sourcing, But now with the constraints we have on the market, it will not just be local sourcing. It's another way to get capacity. So I also will say that we will increase the pace in setting up more clearly structure for offshore sourcing because it's not just a cost margin help, it will also be a capacity to support. But we will get back to you guys being more and more clear about this model that we have shown here. And we are using it at a lot internally. So one roll out of our strategy is that each unit either if they're on the service level, on the project, well, things and how can we further develop ourselves and increase the the value that we deliver to our customers. So the interesting model to to work with, both internally and in discussions with our customers. Thanks. That's quite clear. And then thinking about, this model and also, relating to what you've been commenting on the shortage on finding the right people. I mean, going back to the Epsilon acquisition, along with that, came this network of professionals that you could sort of utilize almost like sub suppliers to you in the delivery. Is this something that you, utilize today? Is it something that you scraped because it was not a core element of the new strategy? Or is this No, no, we use it, and it is an integrated part of our model. And you're absolutely clear that, it's a great model and we are using our extensive work, all the time. But of course, as a part of the strategy, we have been more clear on how and where to use it because as, coming from the industry, when you had the same, you're using a sub supplier network, you do not want to end up that you are depending in core area from suppliers. So we need to be 4, when do we hire in expertise in what area when do we use it more for capacity? And that's what we have been. So we are absolutely clear on using that but maybe we are step by step becoming more clear how and when to use it. But it's an absolutely integrated part of our, multi day, too. And a very important part. So we are utilizing that. Got it. Then on, maybe a question for you, Stefan, more on cost saving, the run rate you mentioning is just above SEK 60,000,000 16,000,000 in the quarter now is, is that an average number or the run rate by the end of the quarter? And then looking into Q2, maybe you start off at a higher level than $16,000,000 actually, or That's right. That's an average number for the quarter. So you're right. We are the run rate is just higher when we are going to the Q2. Got it. And Can you comment on the distribution? I think you've done that in the past, but maybe can you help us out on where have you seen the long the realization so far in the divisions. I would say that, Energy Division has concluded the program. So that's done. And the rest of the division is in progress. We'll now take our next question from Ola Zollermark from Kepler Cheuvreux. Yes. Hello. Good afternoon. Just a short follow-up on the industry division. You mentioned that you have some impairment there project impairments. Is it possible to quantify them? Because I can't really see you have done it. No, we don't, I mean, we don't quantify that. But We normally don't, I would say, blame that project for lowering our margins. But in this case, we did an acquisition and acquired a project related to that in the past, in the very past. So that has not been running according to estimates and then forecasts. And but all in all, our positive variance is ahead of the negatives. But we would like we wanted to comment on that because we we are happy with the margins in the division, but we are stating that we are expecting more we could they could have been higher if not for that project. So one way to think about it is if had it been really material, then they had to quantify it. So it's not really material, but it's worth the highlights. It's about $5,000,000 or so. We will not quantify the amount, but it's not material. If it's a very material, then we have have we been forced to comply? Yes, Stephan is right, but at the same time, it's a project that is kind of affecting a bit. We had to fight with it, but you're right. It's not material on that. And one another negative side is of course that we are there are a number of sources. We are dining up resources into that project. So we also, losing out slightly on the top line. Because those resources have been used to other projects because the demand is there and then our challenge is the supply chain. So if you could put it up, we'd rather use our people, good projects and battles. It's a it's kind of a way to say that you have an improvement potential after the We'll now take our next question from Erik Ylander from Handelsbanken. Okay. Thank you very much. So, obviously, we have talked about the staff shortage being quite obvious here for consultancy companies. But we're talking about it in a quite negative term. I mean, would it be possible to compensate the volume part of the organic growth by increasing prices instead? Because the demand for the customer is still quite high. I mean, so the organic mix growth will be different between volume and price. I think you're right. I mean, normally it is like that. If the demand is higher than the capacity you get and you could, but you could say that, I mean, we talked a bit about infrastructure that is doing very well. Here you can say that the infrastructure is also managing, I would say, a bit operator change, handling more small and medium sized project. We used to have Ghana Airport and bypassed to really large project that we're able to continue to have a lot of people in. So in one way, we have been able to change a bit that model into the market demand, which is very good at the same time, increasing our Martin. So I could say there, you can mostly see effects on the fact that we are doing exactly, as you say. Then we have also areas where we have a lower position, where we maybe are not able to do it even though the market is good. And then there's a drag in how do we see ourselves and so on. But step by step, we will even highlight that as a part of our strategy strategy to be more clear on pricing. How can we, in this this these times be more clear on where do we say no to orders. And as you know, the who have model, which is very good, is a very decent lies modern. But when it comes to pricing, I think we have also some room to improve moving forward. We are on top of it on all the projects that we are booking or the sizable projects that we have looked on. I can tell you, we are very much on, on top of it. But of course, when you look on all these, we talked about tens of thousands of projects in one of the business areas. Of course, here it will take some time before we maybe are able to implement that. But you're absolutely right. I think it's one of the cash flows now moving forward. Okay, great. So just talking about the impairments as well, within industry division, is this something we go in that we can expect to see also in the coming quarters, the impairment continues in other words? It's a project that, contribute that are not contributing. I will say, to the margin. And the project will be running and the plan is to conclude the project during Q2. Okay. But it was still this project It's an individual project that will be finalized, estimated to be finalized during Q2. So Q2 will also be impacted. Okay, okay. But because this was the main reason for the margin decline within the industry, right? Well, I mean, there are a number of reasons ups and downs, but we will like, we wanted to hire that, at least one. Yes, okay. Perfect. So I also had a question regarding your corporate costs, Erika, because it has been fluctuated quite much during the past quarters to restructurings in line with the new strategy and so on. In this quarter, you have SEK 10,000,000 CX So a run rate of SEK 40,000,000 per year. Is this a good as estimate also for the quarters going forward or how should you use the the corporate cost? That's, maybe a little bit too less. If you'll compare with 2017, I think you will get a good guidance out of the corporate cost 2017, 90 was related to the restructuring program. So how My estimate is that we will be in line with 2017. So if we just go back to a project versus the services, what is the margin difference for selling projects versus services? And how do you see this mix changing going forward like the coming 2 years or some Well, I think, of course, when you move up in the chain and take on time at the higher risk, you should also have a higher margin to be compensated for that. At the same time, I see us becoming better and better at the end of this year. I've been in the company to develop our service modem. So I see more and more. I came from the industry and I was I felt that I had a view on the project when we delivered a turnkey automated robot line clients of $100,000,000. I really can see the value of Uber. But I also see now that the service that we are delivering First of a look into teams, if you add on the aftermarket, 20 fourseven support and so on, it's also a high value to man decline. If you add a bit digitization on top of that. So clearly, we see prospects when we take it to 15 plus percent margin, but I also see that we can further develop our service model. So, I can't give you a number. What I can say is that I believe both the service and the forklift business can be improved when we are becoming a more professionals to add more value. It was end of the day, the way to improve margin is that the way we can add more value to our customers and then get away from a cost plus model. When we talk about salary costs and plus with our clients, that's the worst negotiation position you can have them. But when we can talk about the real added value that we deliver, then it's a different position. So let us get back to that, when we meet and we can further elaborate on potential margin increase related to the 2 different business models. Okay. And also just a last question regarding staff turnover. I guess it's around 15% right now, but you talked about when you implemented the new strategy, you wanted people to stay more or longer in the west. Have you seen or maybe it's too short of a time to comment on that, but have you seen any changes in per now turnover since you implemented a new strategy as of 1st January, 2018? I would say that we are basically 3 months a quarter into the new strategy and the organization. At the same time, we have a a higher external market than we have ever seen before. So what is the net of that? Where this we'll see, we are not seeing as super pickup on the turnover, which I'm very happy with, so with all the changes we have done internally in the people business, we have been able to keep a good track on our business, delivering for customers with some quite changes. So I think that's an evidence that people are very supportive and very curious on what this journey will lead to. So me meeting a lot of our employees, I feel that we have a good spectrum, but then the market is tough for now than half a year. I think there's a high year demand for engineering resources now than it's ever been before for a long, long period. But I feel, optimistic, and I believe that we, if anything, will improve, or what make it an even more interesting company to work in. I mean, we are more, for example, a given example, we have had very clear career models for managers, of course. We start to be very clear on some project, career models. And we will further also look into the aerial specialist, meaning that when we start up the weapon, you want to continue to be a specialist in some areas. How can we make sure that these people also see a possibility to increase their confidence level, but also have a career path in that area? So we are looking many different areas to become an even more interesting company to stay at also. Okay. Thank you very much to both of you. And I'll get back in line. As there are no further questions, I'll hand the call back over to your host. Okay. So with that said, I would like to thank you all for calling in. And I wish you a continued excellent today in a Sunday Stockholm where finally the spring have arrived. So thank you and looking forward to meet you and hear you soon again. Thank you very Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.