Good day, and welcome to the ÅF fourth quarter financial report conference call. Today's conference is being recorded. During today's presentation, you will hear the CEO, Mr. Jonas Gustavsson, and the CFO, Mr. Stefan Johansson. At this time, I'd like to hand the call over to Mr. Jonas Gustavsson, CEO. Please go ahead, sir.
Okay. Thank you, and hello, and welcome, everybody. This is Jonas Gustavsson speaking, and I'm sitting here with Stefan Johansson, and we will take you through our interim report for quarter four, and also for the full year 2017. We will wrap it up pretty quickly, then we will open up for questions at the end on the presentation. I will do a part, then Stefan will support me on some of the financial slides. Starting up with the overview, we believe the quarter four was a strong result with a continued good growth. That's how we summarized the quarter. As you know, we ended up on the top line of SEK 3.5 billion, which was up 12% compared to the same period last year. We delivered an EBITDA of SEK 344 million, which was up 13%, and the EBITDA margin for the quarter ended up at 9.8%.
Looking at the full year, AFRY then, just about SEK 12.6 billion, 14% growth on the full year, and EBITDA SEK 1.1 billion, then 13% up, which is then, of course, excluding the one-off items and the restructuring program that we announced in quarter three. The EBITDA margin on the full year was 8.8%. I would say on the quarter four, we'll come back to that, it was a solid quarter. Then if you look on the full year, the EBITDA margin on the 8.8%, obviously the quarter three results had an impact on that. I would say that looking on the quarter four, I'm happy to see that, as you will see later on, all divisions delivered a margin about 10%, or 10% or above, which I think is good for the fourth quarter. Before moving into the detail, a few words on AFRY then.
We are positioning ourselves more and more as an engineering and design company. I believe that AFRY has one of the most comprehensive portfolios of different kinds of services and competence on the market. As you see on the market segment cut on the right side, which is updated with 2017 numbers, our big segments are energy and power, which actually has, as you all know, following AFRY, been decreased over the year due to the adjustment on the energy market. We see real estate, 17%, being a very strong segment for AFRY, and as you know, we are positioned on more the commercial buildings in different kinds. We do not have a strong exposure at all on private building, I would say for the company as such, it's 1% unit. Automotive vehicles 16%. We have infrastructure, 20%. Then we have different segments complementing the whole portfolio then.
That said, 12.7, as we said, we are pretty much on 10,000 employees. What we have done, of course, we'll come back to that just a few slides down on the presentation, we are about adjusting our strategy to fit to what we see the new market, also meeting the new competitors as we see on the market. I think we have a very good platform moving into 2018. The 10 largest clients we have, you can see on this slide, they account for just less than one third of the total revenue. I think for us being positioned in Sweden, to have a lot of good global industrial companies is something that we, of course, work with as a part of our moving in more international business.
We can see when we deliver a good automated manufacturing line to Volvo or SKF in Sweden, we are then fighting to follow them on that level also on the global market. 67% of the total revenue goes to private customer, 33 to public, which is then mirroring the infrastructure part mainly then. This is something that we have talked about in the strategy, that we see some of the global trends really favorable for AFRY, we have then formulated that in four mega trends that we are actively working with to position ourselves. One is smart cities and infrastructure, which we believe then is something that a lot of people talk about, I believe it's just in the beginning of the development curve.
We will, as AFRY, position ourselves more and more into that because we believe that with our broadness of competence, we can work a lot into needed solutions in solving a lot of the challenges we have in big cities. Future mobility, obviously, with everything from electrification to autonomous cars, the whole industrial digitalization, also the fact that the changing energy market is something that will also be, down the road, we believe, favorable for us. After a few years of, I would say, changing also AFRY from positioning towards large-scale energy in Europe, we are now setting ourself up in a way that we can meet the future energy, smart grids, focusing on our core countries. These are four trends that we believe will be very favorable for ÅF moving forward.
Coming back now to quarter four on the market, we see the market in general very strong. We see the industrial market is strong in Sweden, obviously following a lot on the big industrial clients, many of them delivered record earnings in quarter four. I would say in general, a strong industrial market. Key segments for us, such as automotive, food and pharma, pulp and paper, all of them are growing. We see a continued trend or a need for digitalization across all industries. We see it clearly in the industry segment. I'm coming from that, I know that over the last years, that is a need that we have seen on the industrial clients. We see it also spreading out also in retail other segments too then. Clearly digitalization is a trend that we will continue to see growing moving forward.
We see also continued high rates of investment in the infrastructure market. What we see though, we said that even in quarter three, that for us at ÅF, we have had a few of these big projects like Förbifart Stockholm and Gardermoen Airport. These are, we say, really large projects. We see now a pattern where we see more of the small- and medium-sized projects. That is something that, of course, for an organization as ÅF, we need to then be able to maneuver in that space and keep utilization rates up. It puts a bit more pressure on our operating performance in that level. Partly what we saw in quarter three then, we had some trouble in Norway.
I would say it's an effect of that I wouldn't say the market still is strong, but our ability to keep the same kind of performance in that space is slightly different. I would say that we are doing a very good job in adjusting to that kind of market. Then again, the energy market is still challenging, but we have a good confidence that down the road we will see good opportunities for ÅF to develop that business. In general, market as such is still very strong. We are winning a lot of projects all the time. This is just a selection, one which I think is very good. We will deliver a robot line to SKF in Germany. This is also a consequence of us being a bit more offensive internationally.
Another example, when we follow a strong Swedish industrial global player out of Sweden. We awarded a new contract in Norway for Follobanen, which is a high-speed train between Oslo and Ski in Norway. We are constantly increasing our delivery to Telia and FMV when it comes to Digital Solutions as well as the automotive industry, where I think the demand is still very strong. You all know that up in north in Sweden, there is a big project where actually Kiruna city will be moved to open up for new business for LKAB. We are actually investing in that area. I would say the whole Nordic part of Sweden and Finland when it comes to infrastructure and mining is very interesting. We are working in Switzerland with the new energy strategy.
We are working very closely on that. We also received a lot of new contracts in Switzerland. This is just a selection, of course, but I would say that the order pipeline looks promising and good. When it comes to acquisitions, during the quarter four, we announced two in October actually, inUse, which was an interesting one where we then strengthen our position in service design and user experience. We acquired that company. Actually that puts us in a leading position in Sweden when it comes to service and user design. This is an increased demand we see in all industries. Then we did a small one in October, Light Bureau, that puts a small footprint in London for our lighting niche, which is a smaller business of ÅF, but an extremely good one where we see good profitability and also increased demand.
I think we are delivering state-of-the-art lighting solutions on an international base. In January, we announced Gottlieb Paludan Architects, a Danish company. It adds a good competence for architect portfolio. They are very strong in infrastructure, industrial buildings, et cetera. It's not just an architect. What we have said when it comes to moving into design, that we are looking for the best companies, we are looking for strong companies, we are looking for companies who also have a strong brand, because that will also support a multi-brand strategy. Now with sandellsandberg, with Koncept, with Gottlieb, with inUse, we believe that, Tengbom, we already have, of course, we are starting to get a very comprehensive and strong portfolio when it comes to architect and design. We did a small one even in Switzerland, a small base company in Switzerland, Arcad Architects.
ÅF is getting stronger and stronger in the design and architect part. Again, we are not just going for volumes. We want to have the best ones into our company. With that said, I'm leaving over to Stefan. A few words about the top-line development during the quarter and the full year.
Thank you, Jonas. The top line ended up in 3.5 billion SEK, which means a growth of close to 12%, mainly driven by acquisitions. With the establishment of a strong position in the infrastructure market in Switzerland by the acquisition of Edy Toscano, also continued strong resource building in our core countries like the acquisition of Midtconsult in Denmark. As Jonas mentioned, the design and architecture companies contributed to the top line. Organic growth ended up in 2.8%, when adjusting for currency effects, we actually ended up in 3.6%. We were very happy about the improved organic growth rate. The strong growth came mainly from the industry sector, but also from infrastructure that had a dip in Q3, if you recall.
Mainly driven by strong demand in the building sector, both from the commercial sector and from the public sector when it comes to the building. As Jonas mentioned, we are not that engaged and exposed to the private sector when it comes to building. Year-end ended up in a growth rate of 14.3%, and if I adjust for currency effects and calendar effects, the organic growth rate ended up in 3.5%, which is a clear improvement from last year, which ended up in adjusted organic growth of 2.2%. Bottom line, as Jonas mentioned, all divisions were about 10% in margins. I think we ended the year in a very positive way. Part driven by the restructure program we announced during 2017, which should contribute to an annual savings effect of SEK 100 million when it's concluded.
SEK 40 million has been achieved in Q4, giving a profit effect of SEK 10 million in a quarter. The balance will be gradually implemented during Q1 and Q2. We still believe and are convinced that we will achieve the SEK 100 million cost-saving targets. I will mention also two major items that affected the result in Q4. One is the adjustment of a pension plan in Switzerland, which contributed by SEK 10 million to the bottom line. We also put a lot of effort in implementing the new strategy. We had a huge management conference of more than 700 managers gathered in Stockholm to really make sure that the new strategy is implemented in a good way and in a professional way. We took some SEK 10 million over the profit in Q4.
Why I'm saying this is because you should understand the underlying profit was more or less in line with the reported profit.
Okay. Thank you, Stefan. Just a snapshot on each division then. As we said, industry division delivered a growth of 4.3%, so we are happy with organic growth in the quarter. The EBITDA margin was just 10%. We see in general the market being very strong. We see an increased acquisition on international project for us that we are working on. Step by step, I would also say that our more maybe optimized organization will also yield effect, where we have a stronger, clearer accountability for each of the segments in the industry. I'm sure will be one of the reason why I hope we will also deliver the continuous strong result in the coming year then. Industry did a solid quarter four. We talked about the infrastructure. As we said, we had a slightly more challenging quarter three, where we also saw some more challenges in Norway.
Now in quarter four, we delivered 11.1%, and actually the organic growth was just around 4%. I would say it's a solid quarter for infrastructure. Again, step by step, I think we will be better and better to maneuver in, I would say, as we see it, maybe a newer market with more small or medium-sized projects. I would say a solid quarter for infrastructure. International, again, this is, I would say the last quarter also where we have international as an own division. As you know, it's been partly energy business and partly then the acquired infrastructure business, ended up at 10.4%. You should know that in this 10.4%, we have that pension one-off that was on the infrastructure division, boosting the margin slightly.
As Stefan said, we have another cost item on the group that actually put that into a neutral base. For us as a group, it was the underlying. What we see is still that the energy business is still as such challenging, and we could see for the overall division a negative growth of 8.2%, where you could see that the infra part still was positive. That means that the energy business as such is still challenging. I need to say that we are doing a good job in keeping profit margin moving in the right way. I think we are actually becoming better and better to maneuver in that energy landscape that we are operating in. I have a strong confidence that we will see a continued good development in the energy business.
Finally, we see the Technology Division, as you know, with some add-ons, will be named Digital Solutions as of 1st of January, ended up at 10.2%. Also a good margin. We could see the organic growth was slightly lower than 2%. We have one client that has actually reducing the workload for us, and that is something that you could see in quarter four. I will say on the overall market that in general it's still a very strong market for Digital Solutions. Summarizing, this is the quarter four with the current organization, where you can see each of the divisions with the share of sales and the growth numbers, where of the organic growth you can see on the third line and the EBITDA margin. Here you can see, which we were very happy with, is that all divisions were on 10% or above.
As you know, our clear ambition moving forward is to have us as a company on 10% EBITDA margin over a business cycle. It was a step in the right direction, but we are far from satisfied. We will continue to work hard to deliver and improve our margin. We have done, Stefan, also made a pro forma.
In order to guide you and to help you doing forecast going forward, we have provided you, and you can find it in our interim report. We have restated the 2017 numbers quarter by quarter as if the new organization was in place as from January 1, 2017. At the first look, you can see that there are not many changes in profit margins, but looking into the gross movements, they are rather big. We have tried to describe the movements also in our interim reports. One example is that we are focused on, as Jonas mentioned, that each division should have a clear industry focus. Especially if you can look at the energy division, we gathered all the international business in one division and putting also the Swedish energy business into that division. Previously, the Swedish energy business was reported under industry.
We are clarifying and, I think, improving the clarity and the ability to analyze our numbers in a much better way than the previous organization. Cash flow. As expected, we provided a good cash flow during Q4. As usual, we came out as net debt as expected. If we dig into the numbers, we can see that we started the year by a net debt of SEK 2.3 billion. Cash flow from the operation activities, including taxes, gave a positive effect of SEK 600 million, reducing the debt. Uses are as usual. We made acquisition of more than SEK 400 million in 2017. Also keeping up our policy by having a dividend policy of 50%, which resulted in a SEK 350 million dividend to the shareholders. For the next year, the board proposed to the shareholders meeting a dividend of SEK 5 per share for 2018.
All in all, we ended up in SEK 2.6 billion with a net debt to EBITDA ratio of 2.3, which is in line with our target. That gives us, of course, room for further growth by acquisition next year. We are confident that we will be able to continue both our organic growth, but also the acquisition growth, because we do have a rather strong balance sheet.
Okay. Thank you, Stefan. Before opening up for questions, just a few slides about the fact that we are just implementing the strategy. We announced it in Q4 in the capital markets day, we have step by step implemented, as Stefan said. Among others, we have had the management conference and a lot of activities related to this during Q4. I really feel that we have a good story externally, but also to our employees, and there's a lot of things ongoing. Summarizing the strategy, as you know, we have set a new vision, providing leading solutions for innovations to come. We have clear values and a mission.
The four growth drivers that I talked about, I believe is really important for us, important for us to use and to formulate our offer into those, I think they will be a great driver for our business. We have set a strategy which is based on four clear pillars. The fact that we have a clear growth strategy, how we are about to think about Swedish growth, but also the international growth. We are looking very much about value creation, how do we improve our business model to deliver even higher value? We see that customers and clients are more and more willing and asking for not just hours from our employees, but also from our solutions and our expertise in advising our customers in how and what to do.
This is related to the fact that many of our customers are in these destructive shifts. When you are about to develop a complete new electrified trailer, you need more external expertise than you just continue to deliver your diesel platform. The value creation is extremely important, something that we work with every day. We are working a lot with operations. How do we tighten the ÅF operation even further? We have a new organization. If I mention it, we have launched the saving program last year. We are looking on how could we further optimize how we operate ÅF. The fourth one, extremely important, of course, people. How do we make sure that we attract the best people?
Of course, part of that is to have a strong business and enable our people to work on the most complex project, but also to be active on the market explaining who ÅF is and what we are doing. I think that the organization is worth mentioning. We have had before a mixture of different competencies and businesses in divisions. Now we are, in one way, a bit more clean to say that in infrastructure, we have five business areas with clear profit and loss, Buildings, Rail and Road, Project Management, Water and Environment, Architect and Design. That kind of is the focus in infrastructure. We have seven business areas in industry, as Stefan said, industry is really focusing on these segments that we are showing here.
We have energy business in Scandinavia, Sweden, Norway, Denmark, Finland, also internationally in one division, focusing on developing the best energy solutions in that division. We have the Digital Solutions. We have a strong IT and embedded systems. We have a systems management business, and experience design is something where we are adding then based on the new acquisition, service design and user experience, which is very much linked into the whole digital design for many of our clients. That's the setup that we are operating in as of 1st of January. I also need to mention we are even tightening up now our performance management to make sure that we are driving the business towards higher growth, of course, but also improve margins.
To remind you about our financial targets, I think we have mentioned that several times during the fall, 10% organic growth, including add-on acquisitions. On top of that, we are looking for platform acquisitions. I think the growth ambition is as high as it has been or even higher. If I mention that I think we have a strong balance sheet for driving this 10%. On top of that, the board is extremely open to look on platform acquisitions where we can also use shares to succeed with that. The EBITDA margin, clearly, we should be on 10% over a business cycle, we have a new ratio announced that gives us more room to drive acquisitions. Last slide before I open up for questions. We believe that it was a strong result, and we see a continued good growth.
I think we have created a very good platform with a strong result and a clear new strategy and a new organization. We ended up at +12% on the top line, +13% on the EBITDA. We have a good order pipeline, and again, we are set up for take what to the next level during 2018 then. With that, I would like to open up for any questions.
Thank you, sir. Ladies and gentlemen, if you wish to ask a question at this time, please press the star followed by the digit 1 on your telephone keypad. Please also ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, it is star one, if you wish to ask a question. Our first question comes from Johan Dahl from SEB. Please go ahead. Your line is open.
Yes. Thank you. Hi, Jonas and Stefan. Could you just comment a little bit how pricing is impacting the group, the net of wage price and the price to your clients? We know there's a shortage of resources in the market. You describe the market as strong. I guess you have to churn your portfolio a little bit to get the new prices. Just describe where we are in that process.
In general, we have been, during the whole year, been able to compensate for wage increases. Otherwise, the margin should have dropped. Of course, there are price pressures in certain segments. What I'm talking about is an average. In some cases, we have not been able. In some cases, we have been. All in all, we are fairly okay with the compensation.
Yeah, I think from my side and Jonas here is that, of course, when we see that we have a more unique offering, when we have competence level which is ahead of competition, we could push it further on. That's more the value proposition. In general, I think we have a good process on the pricing.
Of course, we need to improve our internal efficiencies as well. All the time. We have to improve our internal efficiencies to be able to meet the customer demand on both prices and the delivery performance.
I got you. On the topic of efficiency, I was just curious on the international division. You increased sales by 33% in a quarter, earnings flat if we adjust for this pension revaluation. What's the sense of urgency here? You talked about growing markets at the capital markets day. You seem to be talking about supportive mega trends, but you've lost 10% organic in sales in the last two years. What's going on here?
That's a problem. We are confusing you guys with mixing two businesses in the international division. We have the infrastructure business, the acquisition of Edy Toscano in Switzerland, which is performing very well and are growing. If you look at the organic growth, we dropped by 8% in a quarter, which is related to the energy sector. We're able anyway to meet the profit margin of close to 7%. Yes, it is a struggle, but so far we have been able to meet the decline in the sales by, I shouldn't say good, but a decent margin. We are not reporting red figures. We have been able to meet by cost reductions and part of the restructure program is related to the energy business. That's also one of the reasons why we are able to meet the lower top line.
You could say that over the last couple of years, we have been very much set up for a large-scale European energy market that has actually changed dramatically. We are not still done with that, we believe down the road that there is a new market evolving that we will take part in.
Yeah.
It's not the fact that this is a quick fix that will go from one quarter to the other. It's still, as you know, the energy market is still challenging. We see a lot of interesting trends and leads that we will work on, not the least in the Scandinavian area. Maybe our focus has also been very international and big, and we will focus very much on the core countries where we know the energy market very well.
Right. Do you stick to the view that this is a business that will grow going forward? You talked about smart grid, et cetera.
Yeah, I believe down the road that there will be growth, exactly the timing. We talked about this in October, and now we are four months later. Of course, these trends take time. I still think that we have businesses that are still not really set up for the new. I believe that down the road, there is a fundamental underlying need to exchange the transmission in Sweden, Scandinavia. There's a need for smart grid installation, et cetera. We as ÅF then, we need to change the way we do business and work in that, and that is ongoing. I believe that that business will be a healthy business moving forward.
All right.
Of course, if you look on our last couple of years, we have seen a shrinking business and also numbers that have been negative earning numbers. Now we see step by step that we get earnings under control. When that's done, we are positioning ourselves to the new market. We will see growth picking up. Exactly the timing on that is difficult to say.
Yeah. Got you. Just quickly on infrastructure. It appears to have been, in 2017, a fairly special year with regards to the churn in the infrastructure portfolio, also weak results in Norway. How do you see this developing in a sort of 2018 versus 2017 comparison? Is that a significant delta, or do you regard it more as normal operations or?
I think that clearly we had that in quarter three when we saw Norway as one example, where we had some more challenging operation in Norway that we are step by step improving. Yes, I believe that on the upside is that our organization are getting more and more used to and able to operate in an infra market where there are more, as we have said several times, medium, small-sized projects compared to the super big ones for us, where it maybe was easier to keep the utilization level high and so on. From that sense, I believe that we are better set up for that during 2018. Of course, we are also expanding. We are now becoming a larger player in Norway and Denmark. We have also operations in Switzerland.
We still believe that there's nothing today that we can say that doesn't say that 2018 should be a strong year based on the intelligent market data we have right now.
All right. I'll get back in line. Thanks.
Thank you.
Thank you. We will now take our next question from Viktor Lindeberg from Carnegie. Please go ahead, sir. Your line is open.
Thank you. I was thinking about what you mentioned in the beginning of the presentation there, Jonas, on organic growth. There's a good market outlook in general or maybe even strong. Now we see you are maybe at the peak of the cycle in terms of macro growing close to 3% and obviously want to accelerate that. Can you elaborate a bit on which division do you have highest hopes for going forward? Is it you recouping industry growth now and that accelerating on the back of outlook and macro, or is it more infrastructure coming back on track, would you say? Can you please provide some flavor on that? That would be helpful.
I believe that both industry and infrastructure, of course, are very important when it comes to growth. I think the industry division based on a strong Swedish platform, the fact that we have also, if you look on our exposure to Finland and also the close by countries, on top of that, we have a few niches where we are getting stronger and stronger. Surely I believe that the industry division will deliver and should deliver a good growth during 2018, and the same is valid for infrastructure. We have a very strong position in infrastructure, and step by step we are strengthening that. If you look on the growth side, yes, these two. I could say that everything we do in Digital Solutions, the demand is really high, and it will be for 2018 too.
The challenge we have here is to find people. More and more we are moving into concepts and projects, then the growth will not be direct proportional to how many people we have. So far, a lot of that business is driven from business related to professional service. Then it's actually a challenge for us to find these people. The forecast with both division infrastructure and industry will for sure drive good growth, but also supported from Digital. Coming back to the energy division, still challenging when it comes to the top-line growth, but I believe they will step by step improve that and also deliver the healthy margin.
On shorter term thinking here, maybe a question for you, Stefan. Calendar effects were quite severe in Q1 and Q2 with Easter effect. Can you guide us on what do you see in Q1 this year? Is it a slight negative year-over-year that we should anticipate and neutral in Q2?
You should take a look at where the Easter is placed. Last year we had large swings between Q1 and Q2, which we will also have in this year. By just looking at the week before Easter and the week after Easter, that's where the utilization rates go down.
Yep. All right. I was looking into your overhead, I'll call it, the number of FTEs, the headcount there on the group function. It was actually up quite a lot from 130 something to 150 something sequentially. Have you been beefing up the group function that much, or what should we think about that, the number that we saw?
No, you shouldn't. We always move resources from, not always, but from time to time, we centralize certain functions. One example is when we are building up new businesses in a new country, such as Norway, we start with small entities. In order to get the economic scale and the competencies up, we centralize IT, finance, HR, and those kind of functions in the countries we are moving into. We are not increasing the number of, you can say, supporting functions. On the contrary, we are reducing that number. Instead of having them spread all over, we are centralizing those functions when moving into new countries.
I agree on that, Viktor, that maybe on that should be a bit more clear, because you can look on the numbers as we have increased dramatically from quarter three to quarter four in the group. From a total, we have not.
No. Okay. Perfect. I'll get back in line as well. Thank you.
Thank you very much. Our next question comes from Erik Elander from Handelsbanken. Please go ahead, your line is open. Mr. Elander, your line is open.
Thank you very much. I had it on mute, sorry for that. Here I am, I have a question about organic growth. How much of it is price versus volume?
It's very hard to calculate that kind of number. We don't try to. We have, of course, internal calculation, we are not announcing that externally. As we said before, we are compensating the wage increases by price increases. That gives you an indication where we're heading.
Okay, perfect. Yeah. I have another question as well regarding volume, actually. Your net recruitment has been very strong for the past quarters and so on. I was wondering, do you see any form of labor shortage that could dampen the organic growth in 2018, or shall we expect you to hire more consultants? What kind of growth rate are we talking about here?
Yeah. We have our financial targets. You saw the growth ambition we have. Of course, part of that is driven from finding new people. Of course, step by step, when we work with our business model, we will not be fully dependent on them. You could say one is that on the digital part of our business, you could say there is a shortage of competence across Sweden, and I would say even Scandinavia, where we operate. Everybody fights for the best engineers when it comes to developing autonomous cars or digital solution. You see the retail business now needing a lot of people in the public sector as well when it comes to different kind of digital service. We don't talk about IT consult, we talk about digital consult. That's one shortage.
I also have to say that as a company, we have step by step improved our model. We are also an attractive employer. We have today 300 new engineers here in the building that we are welcoming to us. It will be a continuous fight to get the best one, but I feel optimistic that we will be able to, both with the shift in business model and the fact how we drive onward, be able to find them. I would say the process that digital is still a challenging area for, I would say all companies, because the development and the need in that area is just growing so dramatically fast.
Okay, perfect. It's mostly related to digital then, the eventual shortages.
In some kind of relative scale, yes. Then again, we always need to get the best engineers into work. From that perspective, I think we have a good position. We are starting from being one of the companies rated very high on all the service from engineers, and we want to keep and strengthen that. A lot by having a business model in the work that will also allow people to develop and develop concepts and solutions. I feel very optimistic in that area.
Perfect. Just one more question, and it is about organic growth, and possibly I missed something in the presentation, why was organic growth only 1.9% in the Technology Segment despite very strong market?
Yeah. Actually, it is related to one client where we have had an unproportionally large network business that is reducing the business over a quarter. If you would take away that, we see still a healthy growth in that business division. Then I would say again then, any area that we have a large portfolio of professional service, meaning hourly consultant, we are depending on people, it is in that division. I would say that, coming back to your question before, where would you see the most challenging area when it comes to driving growth? I would say that is in that, even though the market is super hot, it is because we need all these competent people, and many of them are out hunting. Quarter four is related to one client where we had a lot, and big network business.
Okay, going forward, we can expect a more healthy growth in that business area?
Yeah, remember that going forward, at least the coming quarters, we have the comparable numbers. We had rather high volumes towards that client in Q1 and Q2 in 2017 as well. That give you maybe an indication where. The problem, if we could make all the problem, is not over.
Okay. Thank you very much. That's all from me. I get back in line. Thank you.
Yep.
Thank you. Again, ladies and gentlemen, it is star one if you wish to ask a question. We now have a follow-up question from Mr. Johan Dahl. Please go ahead. Your line is open.
Yes, thanks. If you look on 2017, could you just talk about how this consultancy network that you have, did that grow stronger or weaker than the rest of the group? Was it comparable? Second, I was wondering, the Swiss franc was a bit volatile. It declined in the quarter here. Did that have any profitability effect on you? Finally, also on cash flow, I understand the trends leading to fairly weak development on working capital. I'm just curious if you could come with some forward-looking comments there, how far you're willing to go there to take new clients in automotive, for example.
Okay. If I start with the first questions regarding our partner business, that has been growing at a high pace than the rest of the group historically. Now we can see by moving into more, if I could call it, project business and trying to get more packages. We use those guys also in those kind of business. It has declined during the end of 2017. The growth rate is still slightly higher than the rest of the group. Remember that the business is around SEK 1 billion-SEK 1.5 billion. We have to weigh the impact on the overall business. In regard to cash flow, Oh, sorry, Johan, do you have an additional question?
No, no. No, cash flow.
In regard to cash flow, we have a good cash generation and a very good cash conversion rate, Moving more into other segments like automotive, et cetera, that push pressure on the payment terms. Automotive clients is requesting or asking for 100 days payment terms. To be honest, yes, that will push some pressure on the working capital. Also in addition, going more into projects, that will also have an impact on cash generation, because professional services is good from that perspective that you invoice by month the work you have performed. In projects, the payment milestones is slightly different from the working capital build-up. We will still generate a good cash generation, but you have to be used to slightly more working capital tied up.
All right. Thanks.
Thank you.
What was the second question? No? Okay.
As the final reminder, ladies and gentlemen, star one to ask a question. Mr. Gustavsson and Mr. Johansson, we have no further questions. At this point, I'd like to hand the call back to you for any additional or closing remarks. Thank you.
I would like to thank you all for calling in to this summary of the fourth quarter and 2017. I hope to hear you soon then again, to meet you or hear you when we present quarter one. We are already close to being in the middle of quarter one. Again, I feel that the result we have delivered is a solid base and with a new strategy and organization to drive profitable growth during 2018 and then. Again, thank you all for calling in, and see and hear you soon again. Thank you.
Thank you. Again, ladies and gentlemen, that will now conclude today's conference call. Thank you very much for your participation today. You may now disconnect