Earnings Call: Q4 2017

Feb 8, 2018

Good day, and welcome to the OF Fourth Quarter Financial Report Conference Call. Today's conference is being recorded. During today's presentation, you will hear the CEO, Mr. Jonas Gustafsson, and the CFO, Mr. Stefan Johansen. At this time, I'd like to hand the call over to Mr. Jonas Gustafsson, CEO. Please go ahead, sir. Okay. Thank you. And hello, and welcome, everybody. This is Johan Vasquezosn speaking then, and I'm sitting here with CF and you once on. And we will take you through then our interim report for quarter 4 and also for the full year 2017. So we will wrap it up pretty quickly and then we will open up for questions, if any, and on the presentation. I will do a part and then CFM will support me on some of the financial slides. Starting up with the overview, we believe it was quarter 4 was a strong result with a continued good growth that how we summarized the quarter. As you know, we ended up on the top line of SEK 3,500,000,000 which was up 12% compared to the same period last year. We delivered an EBITDA of SEK 344,000,000, which was up 13% and the EBITDA margin for the quarter ended up at 9.8%. Looking at the full year, we've done yacht about SEK 12,600,000,000, 14% growth for the full year and EBITDA of SEK 1,100,000,000 and 13%. Up, which is then, of course, excluding then the one off items and the restructuring program that we announced in quarter 3. EBITDA margin on the full year was 8.8%. And then I would say on the quarter 4, we'll come back to that. It was solid quarter. And then if you look on the full year, the EBITDA margin on the 8.8%, obviously, the quarter 3 result had an impact on that. So I would say that looking on the quarter 4, I'm happy to see that, as you will see later on, that all divisions delivered a margin about 10% or 10% or above, which I think is good for the 4th quarter. Before moving into the detail, a few words on the Westend, I mean, we are then positional sales more and more in engineering and design company I believe that all web apps, one of the most comprehensive portfolios of different kinds of services and competence on the market. And as you see on the market segment, cut on the right side, which is updated and with 2017 numbers, our big, segments are energy and power, which actually has, as you all know, than following what we have been this increased over the year due to the adjustment on the energy market. We see real estate, 17% being a very strong segment for us and you know, we are positioned, on more the commercial buildings in different kinds. We do not have a strong export at all in private building, I would say, for the company as such, is 1% units. Automotive vehicle, 16%. We have infrastructure, 20%. And then we have a different segments, complementing the whole portfolio then. Let's say 12.7, as you said, we are just slightly we are pretty much on 10,000 employees. What we have done, of course, and we'll come back to that just a few slides under the presentation. We are about changing our adjusting our strategy to fit to the what we see in the new market and also, meeting the new competitors as we see on the market. So I think we have a very good platform moving into 2018. The 10 largest clients we have you can see on this slide, and they account for just less than 1 third of the total revenue. And I think for us being positioned in Sweden to have a good lots of good global industrial companies is something that we, of course, work with them in a support of our, moving in more into the international business. So we can see when we delivered a good automated manufacturing line to wallboard SKS in Sweden, we are then fighting to follow them on that level also out on the global market. 67% over the total revenue was a private customer and then 33 to public, which and mirroring the infrastructure port mechanism. Is something that we have talked about in the strategy that we see some of the global trends really favorable progress. We have done formalize that in 4 megatrends that we are actively working with to position ourselves. 1 is Smart Cities And Infrastructure which we believe then is something that a lot of people talk about. And I believe it's just in the beginning of the development curve. We will, as always, position ourselves more and more into that because we believe that with our broadness or 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, And also the fact that the changing energy market is something that will also be down the road, we believe, favorable towards after a few years. So I would say, changing also all up from positioning towards large scale energy in Europe we are now setting ourselves up in a way that we can meet the future energy smart grids focusing on our core countries. So these support trends that we believe will be very favorable for us moving forward. Coming back now to quarter 4 and 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 industry clients, and many of them delivered record earnings in quarter 4. So I would say in general, a strong industrial market. Key signals for us such as automotive for the pharma, pulp and paper, all of them are growing. We see a continued trend or need for digitalization across all industries. We see it clearly in the industry segment. I mean, I'm coming from that, and I know that over the last years, that is a need that we are seeing on the industrial clients, we see it also spreading out also on retail and other segments too then. So clearly, digitalization is a trend that that we will continue to see growing moving forward. We see also continued high rate of investment in the infrastructure market. What we see though, and we said that even in quarter 3, that for us to do work, we have had a few of this big projects like bypass stock Goldman Gardeborn Airport. These are, let's say, a really large project. We see now a pattern where we see more of the small and medium sized project. And that is something that, of course, for normalization as to what we need to then be able to maneuver in that space and keep utilization rates up. So it puts a bit more pressure on our operating performance in that level. And partly what we saw in quarter 3 then we had some problem in Norway. I would say it's an effect of that, that I wouldn't say the market still strong, but our ability to keep the same kind of performance in that space is slightly different, but I would say that we are doing a very good job in adjusting to that kind of market. And then again, the end of the market is still challenging, but we have a good confidence on down the road. We will see, good opportunities for to develop that business. So in general, market, such is still very strong. We are winning a lot of projects all the time. This is after Select 1, which I think is very good. We will deliver a robot line to SKF in Germany. And 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 have ordered a new contract in Norway for Lebanon, which is the highest speed train between Oslo and ski in Norway, We are constantly increasing our delivery to TLN SMB when it comes to digital solution as well as the automotive industry where I think the demand is still very, very strong. You all know that up in North And Sweden, there is a big profit where actually Kieruna City will be moved to open up for new business for LK AB. And we are actually investing in that area. So I would say that all Nordic, Nordic, part of Sweden and 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. And you also received a lot of new contracts in Switzerland. And this is just a selection, of course, but I would say that order pipeline looks promising and good. When it comes to our positions, during the quarter 4, we announced 2, 1 in October, which are 2 in October actually in use, which is an interesting one where we then strengthen our position in service design and use VIX variance. So we acquired that company. And, actually, that puts us in a leading position in Sweden in when it comes to service and use to this And this is an increased demand we see in all industries. And then we did a small one in October light broad that puts small footprint in London for our lighting niche, which is a smaller business of work, but an extremely good one where we see good profitability and also increased demand. And I think we are delivering state of the art lighting solutions on an international base. In January, we announced Gottlieb, Paradan, architect, the Danish company. It adds a good competence to our architect for for you. They are very strong in infrastructure, industrial buildings, etcetera. So 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're looking for companies who also have a strong brand because that will also support a multi brand strategy. So now with Sanddell found very good concept with We've got a bit in use. We believe that Teng III already have, of course, we are, starting to get a very comprehensive and strong fallen when it comes to Architec and Design. We did a small one even in Switzerland, a small based company in Switzerland, ArkOT, Architec. So all of which getting stronger, stronger in the design and architect part. But again, we are not just going for volumes. We want to have the best ones into our company. So 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. Yes, the top line ended up in SEK 3,500,000,000, which means the growth of close to 12%, mainly driven by acquisitions, with the establishment of a strong positioned in the infrastructure market in Switzerland by the acquisition of Ed Skana, but also continued, strong build strong resource building in our core countries, like the acquisition of Midconsulting in Denmark. And also, as Jonas mentioned, the design and I should take through companies contributed to this offline. Organic growth ended up in 2.8 percent. But when adjusting for currency effects, we actually ended up in 3.6%. So we were very happy about the improved organic growth rate. And the strong growth came mainly from the industry sector, but also from infrastructure that had a dip in Q3, if you recall. And the driven and mainly driven by a strong demand in the building sector, both from the commercial sector and from the public sector when it comes to the building. And as you want to mention, we are not that engaged and exposed to the private sector when it's come to be linked. Year end ended up in a growth rate of 14 0.3%. And even if I adjust for currency effects and calendar effects, The organic growth rate ended up in 3.5 percent, 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. And so I think we ended the year in a very positive way. Part driven by the restructuring program we announced during 2017. Which should contribute to a saving and annual savings effect of $100,000,000 or when it when it's concluded. 40,000,000 was, has been achieved in Q3, Q4. Giving you a profit effect of SEK 10,000,000 in a quarter. The balance will be will be gradually implemented during Q1 and Q2, but we still our belief that we and are convinced that we will achieve the SEK 100,000,000 as cost saving targets. I will mention all the 2 major items that affected the result in in Q4. 1 is the adjustment of a pension plan in Switzerland, which contributed by $10,000,000 to to the bottom line. But 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 the Stockholm. To really make sure that the new strategy is implemented in a good way and in a professional way. So we take we took some SEK 10,000,000 over the profit in Q4. So 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. And then just a snapshot on each division. As we said, industry division delivered a growth of 4.3%. So we're 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 acquirers on international projects for us that we're working on And step by step, I would also say that our more maybe optimized organization will also yield effect. We will 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 down. So interest rate is a solid quarter 4. We talked about the infrastructure. As we said, we had a slightly more challenging quarter 3 with we also saw some more challenges in Norway. And now in quarter 4, we delivered an 11.1% and actually the organic growth was just around 4%. So I would say it's a solid quarter for infrastructure. And again, step by step, I think we will be better and better to maneuver. And I would say as we see it maybe a newer market with more small and medium sized projects. So I would say a solid quarter for infrastructure. International again, this is, I will say, the last quarter also when we have international, it's a known division. As you know, it's been partly end of the business and part of them that acquired, infrastructure business ended up at 10.4%. Then you should know that in this 10 point we have that tension, one off that was, on the infrastructure division, boosting the margin slightly. That CFO said, we had then another cost item on the group that actually put that into a brutal base. So for UFSA group, it was the underlying. What we see is still that the energy business is still, as is such, challenging. And we could see for the overall divisional negative growth of 8.2, where you could see them the infra part still was positive. So that means that the M and A business such is still challenging, but I need to say that we are doing a good job in keeping profit margin in moving in the right way. So I think work is becoming better and better to maneuver in that end of the landscape that we are operating. And I have a strong confidence that we will see a continued full development in the energy business. Finally, then we see the technology division, as you know, will be then, with some add ons, will be named Digital Solutions. That's the 1st January ended up at 10.2%. So also a good margin, we can 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 4. I would say overall market, I think, generally, it's still a very, very strong market. For digital solutions. So, summarizing, this is, quarter 4 with the current organization, when 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 3rd line and the EBITDA margin. And here you can see it and then which we were very happy with is that all divisions were on 10% or above. And as you know, our clear mission moving forward is to have who worked as a company on 10% EBITDA margin over a business cycle. So 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 CFM also made a pro form a. Yeah. In order to guide you and to help you doing forecast going forward. We have provided you and you can find it in our quarter 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. And then at the first look, you can see that there are so not many changes in in profit margins. But looking into the gross movements, there are rather big. And we have tried to describe the movements also in our interim reports. One example is that we are focused on like, as Jonas mentioned, that each division should have a clear industry focus. So the especially these 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. So 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, we as expected, we provided a good cash flow during Q4. And, as usual, So we came out as a net debt as expected. If it dig into the numbers, we can see that we started the year by an net debt of SEK 2,300,000,000. Cash flow from from the operation activities, including taxes, and gave a positive effect of 600,000,000 reducing the debts. But uses are, as usual, we we've made acquisition of more than SEK 400,000,000 in 2017. And also keeping up our policy by having a dividend policy of 50%, which resulted in a 350,000,000 dividend to the shareholders. And for the next year, the board proposed to the annual meeting, the shareholders meeting, a dividend of SEK5 per share for 2018. All in all, we ended up in $2,600,000,000 with a net debt to EBITDA ratio of $2,300,000,000, which is in line with our target. And that gives us, of course, a room for further growth by acquisition next year. So 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, you have a few slides about the fact that we are just implementing the strategy, we announced it in quarter 4 in the Capital Markets Day and we have step by step implemented and see if and among others, we have had the management conference and a lot of activities related to this during quarter 4. So I really feel that we have a good story externally, but also to our employees. And there's a lot of things ongoing. And summarizing the strategy, as you know, then we have set a new vision, providing leading solutions for innovations to come. We have clear values and our mission. The 4 growth drivers that I talked about, I believe it's really important for us, and they will be So important for us to use and to formalize our offer into those. And I think there will be a great driver for our business. And then we have set a strategy, which is based on 4 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. This see that customers and clients are more and more willing and asking for not just hours from our from our employees, but also from our solutions and our expertise in advising our customers in how and what to do And this is related to the fact that many of our customers are in this destructive 5th. So when you are about to develop a complete electric wild trailer, you need more external expertise than when you have continued to deliver your diesel platform. So the value creation is really important, something that we work with every day. We are working a lot with operations, how do we tighten the OAF operation even further? We have a new organization If I mentioned it, we have launched the saving program last year. We are looking on how could we further optimize how we operate towards And the fourth one, excluding it, of course, people, how do we make sure that Petriq, the best, people And 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 are based on what we're doing. I think that the organizations worth mentioning, we have had before a mixture of different, competences and businesses in the divisions. Now we are in one way a bit more clean to say that in infrastructure, we have 5 business areas with clear profit and loss buildings, railroad, perfect management, water environment, architect, and design. So that kind of is the focus in infrastructure. We have 7 business areas in the industry, of the effect of that, then industry is really focusing on these segments that we are, showing here. And then we have energy business in Scandinavia, Sweden, Oregon, Denmark, Finland, also international in one division, focusing on developing the best energy solutions in that division. And then we have the Digital Solutions. We have a strong IT and then by the systems, we have a systems management business, and Experience Design is something where we are adding then based on the news acquisition, service design and user experience. Which is very much linked into the whole digital design for many of our clients. So that's the setup that we are operating in as so far as to the end here. And I also need to match, we are even tightening up now our performance management to make sure that we are driving the business towards, you know, higher growth, of course, but also improved margins. And to remind you about our financial targets, I think we have mentioned that several times during the fall, but 10% organic growth, including add on acquisitions. And then on top of that, we are looking for platform acquisitions. So I think the growth ambition is as high as it has been even higher. So if I mentioned that we, 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 like where we can also use shares to succeed with that. Cycle and then we have a new ratio, allowance then that gives us more room to drive acquisitions. So last slide before we open up for questions, we believe that it was a strong result and we see a continued good growth. And again, I think we have created a very good platform, gives us strong results and a clear new strategy and new organization. We ended up at last 12 on the top line plus 13 on the EBITDA. We have a good order pipeline. And again, we are set up for for, you know, take us to the next level during 2018. So with that, I would like to open up for any questions. Thank And please also Our first question comes from Johan Dahl from SEB. Please go ahead. Your line is open. Yes, thank you. How are you on us, 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 described 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 margins should have been should have dropped. But of course, there are price pressures in certain segments. So what I'm talking about is an average in some cases, we have not been able in some cases. We have been. So all in all, we are fairly okay with the compensation. And then from my side, and you will not hear is that, of course, when we see we have a more, more unique offering, when we have a, when we have, you know, competent level, which is, you know, ahead of competition, we could push it further. And so that's more the value proposition. But in general, I think we have a good process on the pricing. But of course, we need to improve our internal efficiencies as well. We can't just all the time, we haven't we have to improve our internal efficiencies to be able to meet the customer's demand on both prices and the delivery performance. I got you. On the topic of efficiency, I was just curious on the international division. I mean, you increased sales by 33% in the quarter earnings flat, if we adjust for this pension revaluation. I mean, what's the sense of see here. You talked about growing markets at the Capital Markets Day. You seem to be talking about supportive megatrends, but you've lost 10% organic in sales in the last 2 years. What's going on here? That's a problem. We are confusing you guys with mixing 2 businesses in international division. We have the infrastructure business the acquisition of Editas, Ghana and Switzerland, which is performing very well. So and growing. But if you look at the organic growth, we dropped by 8% in the quarter in the energies, which is related to the energy sector. But we're able at least, anyway, to meet the profit margin of close to 7%. So yes, this is a struggle, but so far, we have been able to meet the decline in the sales. By, as you can say, good, but a decent margin, we are not reporting red figures. So we have been able to meet by cost reductions And part of the restructuring program is related to the energy business. And that's also one of the reasons why we are able to meet the lower top line. But 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. And we are, we are not still down with but we believe down the road that there's a new mark devolving that we will take part in. Yes. But it's not the fact that this is a quick fix that will go from one point to the other. It's still, as you know, then the end of the market is still challenging, but we see a lot of interesting trends and leads that we will work on. Not the least in the Scandinavian area. So maybe our focus has also been very international and big and we will focus very much on the core countries where we will know then in the market very well. Great. But do you stick to the view that this is a business that will grow going forward? You talked about smart grid, etcetera, and Yes, I believe on the road that there will be growth. And then exactly the timing, I mean, we talked about this in October, and now we are 4 months later. Of course, this trend takes time. And I still think that we have businesses that is still not really set up for the new But I believe that down the road, there is a fundamental underlying need to exchange the transmission in in Sweden, Scandinavia. There's a need for smart grid installation, etcetera. But we are so worked and we need to change the way we do business and work in that. And that is ongoing. So I believe that that business will be a healthy business moving forward. All right. And of course, we have seen, if you look on over the last couple of years, we have seen a shrinking business and also numbers that been negative early numbers. Now we see step by step that we get the earnings on the control and then when that's done, a position ourselves with the new market and with the C growth picking up. But exactly, exactly the timing on that is difficult to say. Quickly on infrastructure, I mean, 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 sort of see this developing in a sort of 2018 versus 2017 comparison? Is that a significant delta or do you regard it more as normal ones are? Well, I think that clearly, we had that in quarter 3 when we saw Norway as one example, we had some challenging operation in Norway that we are step by step improving. So yes, I believe that on the upside is that our organization are getting more and more used to unable to operate in an infra market where there are more, as we have said several times, medium small sized project compared to the super big ones for us where it maybe was easier to keep the utilization level high and so on. So from that sense, I believe that we are better set up for that during 2018. But then of course, we are also expanding. We are not becoming an auto player in Norway and Denmark, and we have also in Switzerland. So, but we still believe that 2018, I mean, there's nothing today that we can say that, let's just say that 2018 should be a strong year. Based on the intelligence market data we have right now. Question from Victor Lindeberg from Carnegie. Please go ahead, sir. Your line is open. Thinking about, what you've mentioned in the beginning of the presentation there, Jonas, on organic growth and there's good market outlook in general or maybe even strong. And 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. But 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 color on that? That would be helpful. Yes, thanks. But I believe that both industry and infrastructure of course, very important when it comes to growth. I think the industry division based on a strong Swedish platform, but 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. So for me, I believe that the industry division will deliver and should deliver a good close to 2018. And the same is valid for infrastructure I mean, we have a very strong position in infrastructure and step by step, we are strengthening that. So if you look on the growth side, yes, these two Then I could say that everything we do indeed is solutions. The demand is really high, and it will be for 2018, too, the challenge we have here is to find people. So, I mean, more and more, we are moving into concepts and projects. And then the growth will not be direct proportional to how many people we have, but so far a lot of that business driven from a business related to professional service. And then it's extra challenge for us to find these people. So the forecast with both division infrastructure and industry will, for sure, should drive good growth, but also support the fund digital. And then coming back to the annual 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. And on, 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? Neutral in Q2? You should take a look at where the Easter is placed. I mean, last year, we had large swings between Q1 and Q2, which we also have in this year. So by looking at the the week before Easter and the week after Easter, that's where the utilization rates go down. All right. And I was looking into your overhead, I'll call it, the number of FTEs, the headcount there, or on the group function, it was actually up quite a lot from 130 something 1.50 something sequentially. Have you been beefing up the group function that much or what should we think about that the number. No, we shouldn't. We always move resources from not always, but from time to time, we centralized surgical functions. One example is when we are building up new businesses in in a new country, such as Norway. We start with small entities, but in order to get the economic scale and the competences up, we centralized IT finance, HR, and those kind of functions in the countries we are moving into. So we are not increasing the number of And I can say supporting functions on the contrary, we are reducing that number. But instead of having them spread all over, we are centralizing those functions from when moving into new countries. But, I agree on that because we may be on that still be a bit more clear because you can look on the numbers as we have increased dramatically from quarter 3 to quarter 4 in the group. But from our total, we have not No, okay. Perfect. I'll get back in line as well. Thank you very much. Our next question comes from Eric 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, so sorry for that. However, here I am. And I have a question about organic growth. How much of it is priced versus volume? We are not, it's very, very hard to calculate that kind of number. So we don't try to we have, of course, internal calculation, but we are not announcing that externally. But as we said before, we are compensating the wage increases by price increases. So So that gives you an indication where we're heading. Okay, perfect. Yes. So I have another question as when regarding volume actually. So I mean, your net recruitment has been very strong for the past quarters and so on. So So I was wondering, do you see any form of labor shortage that could like dampened the organic growth 2018? Or shall we expect you to, I mean, hire more consultants and what kind of growth rate are we talking about there? Yes. I mean, we have our financial targets and you saw the growth ambition we have. And then of course, part of that is driven from finding new people. But of course, step by step when we work with our business model, we will not be fully depending on them. But you could say one is that on the digital part of our business, you could say there's a shortage of competence across Sweden. And I would say even Scandinavia where we operate. Everybody fights for the best in the years when it comes to developing autonomous car, so did a solution. You see the retail business now needing a lot of people in the public sector as well when a different kind of digital. We don't talk about IT consultancy. We talk about digital. So that's one shortage. But I also have to say that as a company with step by step, I mean, from a model, we are also an attractive employer. We will have today 300 new engineers here in the building that we're welcoming to work. So it will be a continuous fight to get the best one, but, I feel optimistic that we will be able to both with the 15 business model and the fact how we drive over work, be able to find them. And then I would say that passes that digitally is still challenging area for, I would say, whole companies because the development and the need in that area is going so dramatically fast. Okay, perfect. So it's mostly related to digital than the eventual shortage? Yes, in some kind of relative scale, yes, but then again, we always need to find to best get the best engineers into work. But from that respect, I think we have a good position. I mean, we are starting from being one of the companies rated very high on the service from millionaires. And we want to keep and strengthen that a lot by having a business model in the west that will also allow people to develop and develop concepts and solutions. So I feel very optimistic in that area. Perfect. So just one more question. And it's about organic growth. Possibly I missed something in the presentation, but why was organic growth only 1.9% in the technology sector, technology segment, despite very strong market? Yes, and fleet related to one client where we have had an unprofitable large network business. That is reducing the business over a quarter. So if you take away that, we see still a healthy growth in that business division. So it was, and then I would say, again, then an area that we have a large portfolio of professional service, meaning our only consultant, so we are depending on people it's in that division. So, 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 planted. But quarter 4 is related to one client where we had a lot and big network business. Okay. So going forward, we can expect a more healthy growth in that business area? Yes, but remember that the going forward at least the coming quarters, we have a compare we have the comparable numbers. We had a rather high volumes towards that client in Q1 and Q2 in 2017 as well. So that's give you maybe an indication where we so the problem, if you could make all the problem, it's not over. Okay. Thank you very much. That's all for me, and I'll get back in line. Thank you. Thank you. And again, ladies and gentlemen, it is We now have a follow-up question from Mr. Joham Dalz. Please go ahead. Your line is open. Yes, thanks. Just on if you look on 2017, could you just talk about how the this consultancy network that you have, did that grow stronger or weaker than the rest of the group? Or was it comparable. 2nd, I was wondering that the Swiss brand was a bit volatile and declined in the quarter here. Did that have any profitability effect on you? And finally also on the, on cash flow, I mean, 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 the high pace than the rest of the group historically. But now we can see by moving to more effects call it, project business and trying to get more packages. Even so we use those guys in also in those kinds of business. It's it has declined during the during 2 South. The end of 2017. So the growth rate is still but the growth rate is still slightly higher than the rest of the group. But remember that the business is around $1,000,000,000 to $1,500,000,000. So it's a we have to wait the impact on the overall business. In regard to cash flow, we Oh, sorry, Johan. Do you have an additional question? No, no, no, no, no, cash flow. In regard to cash flow, we We have a good cash generation and a very good cash conversion rate, but moving more into other segments like Automotive, etcetera. That push of course, push pressure on the payment terms. Automotive clients is requesting or asking for 100 days payment terms. So to be honest, yes, that will push some pressure on the working capital. But also going to more in addition, going more into projects that could also have a an impact on cash generation because professional services is good from that perspective that you invoice by month the work you have performed. But in projects, the payment milestones is slightly different from the working capital buildup. So 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? Okay. Okay, Mr. Gustafsson and Mr. Johansen, we have no further questions. So at this point, I'd like to hand the call back to you any additional or closing remarks. Thank you. Okay. But then I would like to thank you all for calling into this sumro the fourth quarter 2017. And I hope to hear you soon then again to meet you or hear you when we present quarter 1. I mean, it's we are already close to be in the middle of quarter 1. So And 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 then. So Again, thank you all for calling in and see and hear you soon again. Thank you. Thank you. And again, ladies and gentlemen, that will now conclude today. Conference call. Thank you very much for your participation today. You may now disconnect.