Good morning, very welcome to Bonava's third quarter report presentation. Very welcome everyone who is with us here at Lindhagensgatan, our office here in Stockholm, and of course, equally welcome to all of you watching us through the webcast. We have an hour ahead of us. My name is Sophia Rudbeck, and I will be your Moderator during this hour. We have an agenda divided in two parts. The first part, there will be a presentation of the report done by our CEO, Joachim Hallengren, and our CFO, Ann-Sofi Danielsson. The next part, we will open up for questions in a Q&A session, and I will come back to those practicalities when we get there. With that said, let us get started. I would like to welcome Joachim Hallengren, our CEO of Bonava, up on stage.
Thank you very much, Sophia. Good morning, all. This is the Q3 report for Bonava. Overall, I am really proud of the results. I think it is a strong quarter across the board. Looking at some of the areas, starting with the numbers of starts. We are up with 20% compared to last year, which leads to an all-time high number of unit in production. Not least important is that the quality of the portfolio when it comes to sales ratio is up also, a really strong 70% sales ratio. That is very important for the future. Building for the future, being able to start new units. Net sales in this individual quarter is up, and of course, also result. We are looking at a net sales of almost SEK 3.4 billion, and EBIT of SEK 406 compared to SEK 218.
If I can draw your attention to the part of land sales, you can also see that the contribution from land sales is about half of what it was one year ago. Again, very important for us at Bonava, the core of the strategy is to grow the business in Germany, and we can see continuing growth. Bonava's German operations now represents 40% of the business. If we look on rolling 12 net sales, that would be 38%, 39%. We had the milestone last quarter with the handing over the leading position in Bonava from Sweden to Germany, and that is really well proven here. Of course, the numbers, the percentages might shift from quarter to quarter, but Sweden will not short, mid, or long-term pass Germany again. Super strong backbone in the German operations.
Of course, we are on eight of the 11 biggest markets or cities in Germany. We reach over 30 million people there with a much more stable development. It feels really, really good. That also gives us a lot of opportunities, not based on the Swedish market. Looking at sold units, it is more or less in par with last year, both to consumers and investors. Though, the market in Sweden is very cautious and challenging. I think that is a really strong number. The sales in Sweden specifically are not that impressive. It is 80 units. It is about half of what we sold one year ago, but the benchmark was pretty tough because that quarter was quite good. It was the beginning of the slowdown. Still, it is a number that can be improved. I perceive that it was a bit more activity on the market.
This is not sustained by any data, but that was the gut feeling we had. We had a sales rate of somewhere around 40% Q1 and Q2. This is sort of double the amount, but still. I don't think I need to spend that much more time sort of describing the Swedish situation. I think everybody's very aware of that. What is important is that we tend to sort of be drawn towards the Swedish market situation in each and every presentation or wherever we go. Let's just remind you that Bonava is 71% outside of Sweden. Looking at housing starts, that's really important going forward. Of course, building the future, building future profits. It's up with 20%. A lot of starts coming out of Germany, but also the solid business or good business in St. Petersburg.
If we talk a bit more about the markets, of course, Germany is really strong. Finland and especially Greater Helsinki and Norway. Norway for Bonava is Bergen. St. Petersburg, good markets. We have good sales speed and a good demand. While the operations in Denmark, which is Greater Copenhagen, is solid. Again, Sweden, cautious market. I do not have any facts or data. This is sort of gut feeling. It feels like the price expectations between seller and buyer start is sort of to meet at a level somewhere between 8%, 10%, 12% from the top. Again, I think you should add for now. Who knows if it will move upwards or downwards. I think that it's fair to say that most likely price expectations are where they are. Still, we only sell 80 units.
I would argue that a lot of consumers have challenges getting financing. We have a lot of political initiatives sort of stapled on top of each other, not least regarding amortization, and debt quota. We also have the bank financing, where it's perceived that the banks have pretty cautious sort of income and cost risk calculations to approve financing for private consumers. On top of that, many banks also would like to secure that the equity that the private person should be put in into the future purchase should be verified, and sometimes even by selling the current asset, which is a real big challenge when you should enter into a business like 16, 18, 20 months ahead of time. It's looking more and less like a catch-22. Again, this is gut feeling, not necessarily true, but that's the picture that we have.
Investor side is, if we start in Sweden, totally opposite. It's really strong. A lot of institutions and other actors out there eager to buy more rental projects. You could say that across geographies where we actually work with investors, that we can more or less sell anything we put on the market at really good prices. This is also part of Bonava's strategy, that we can mitigate weak consumer sales by ramping up investor sales. That was a remedy we used in Finland when Finland was in recession and consumer sales were down. We were somewhere around 50/50 or even 60/40 for a while selling to investors versus consumers. That's possible. However, I think it's important to state that over time, we said that one-third is a good balance for us to go into the investor business.
If we will move further into investor business, then we will be a much more sort of leaner company. We think that the mix is pretty perfect. You can see now, for instance, in Sweden, that a cautious consumer market does not necessarily mean that there is 100% correlation with the investor market. Stating the obvious, we always show this. This is the ongoing portfolio divided into two growths. One is the sales value, and the other one is the number of units. It is really clear here that Germany—this is now the snapshot, 39% of the closing balance. 39% of the operations is in Germany, while Sweden is at 33%. Still a very important market, of course. You can see the correlation between number of units and value that the Swedish units are very valuable, or expensive if you like.
While there is a more balanced 35% versus 39% unit numbers and value in Germany. Still, the numbers might individually shift. You would have to get used to, and that is sort of the wanted position also, the dark, the forest green Germany being the biggest part, the backbone of the business. Otherwise, very stable. Mixed between the different geographies or markets. To finalize this part of the presentation, I will just walk you through some of the projects that we have started in the quarter, starting with two projects in Germany. We have the Wesseling project. This is a very typical German single-family, semi-detached row house project. Size is between 70 and 150 units. We do not start everything at the same time.
We are so skilled and experienced in our platform, we can start five units or 10 units at a time in sequence according to the sales speed. This is outside Cologne. We can move to Duisburg, which is in the Rhine-Ruhr area, one of the most densely populated areas in Germany, but also in Europe, where we have this Zum Wassergraben project, which is a pretty typical multifamily building. Rather on the sort of small end, 50 units. I think these two examples are really good example also. If I use the expression bread and butter in the German operations, both in the affordable segment. Of course, the financial strength and the muscles of Bonava gives us also opportunity to start projects in markets which are more cautious. Mästarens Bergsjö is in Sollentuna Centrum, just north of the city center of Stockholm.
Very well received on the market, 104 units. I know that if you sort of isolate Sweden and look at the sales ratio in the city portfolio, it is 43%. Now we measure that on portfolio. It is more of a sort of a portfolio theory set up with Bonava, we can mitigate a very high sales ratio, 70%, with taking active business decisions where we have a weaker sales ratio in other, if we think it makes sense. This was one very good example. I think it is also very fair to point out with the strength of Bonava, we are not dependent on bank financing for each and every project. We can start projects with equity. We can start projects with commercial paper as well. We have other sources of financing, which makes it possible to be contrarian if we like to do that.
While others can be stuck for different kind of reasons, Bonava is one of the companies who can actually act. So really interesting and good project, well received by the market, Mästarens Bergsjö. Last, and certainly not least, Magnifika in the Magnitogorskaya area in St. Petersburg. This is one really good example of an affordable or lifestyle segment, as we call it in St. Petersburg. 104 units. Really high sales speed, very good cash flow, also started in the quarter. As you see, this is one of the big development schemes we have in St. Petersburg, is over 2,000 units, which is now coming into play. So this is the third phase that we start in this area. Being in the affordable segment also means that we can have a very high sales speed.
With that, I would like to hand over the word to our CFO, Ann-Sofi Danielsson.
Thank you, Joachim. I will walk you through this third quarter of 2019, starting with this, the outcome of our financial objectives, where we are towards them. Starting with return on capital employed, our objective is to be between 10%-15%, and we are at 12.4% for the last 12 months. Equity to assets ratio, above 30%. Since we have the seasonal variations, quarter two and quarter three are very active quarters where we tie up a lot of capital into our ongoing projects. So we have a somewhat lower equity to assets ratio due to seasonal variations here in quarter two and quarter three. So 28.1% at the end of quarter three. Then our dividend policy, 40% of earnings per share after tax, and we are at 10.70% if you look back 12 months from quarter three.
A very good quarter all in all. High net sales, SEK 3.4 billion compared to SEK 2.1 billion last year, so we are up quite a lot here. The reason for that are here. One is that we have more units recognized to consumers, especially in Germany, and also those that we have recognized in Sweden of rather good value. So that's one part of the explanation. The other one is that we have more units recognized to investors, both in Sweden and in Germany and also in Finland in this third quarter. So that is the main explanation of the high net sales here in quarter three. EBIT here, SEK 406 million compared to SEK 218 million. As you can state it out, last year we had profit coming from sales of land of SEK 65 million, only SEK 30 million coming from that kind of business in this third quarter.
If you deduct that, you see that it's a really strong Q3 2018, with a good EBIT margin as well. Just to look a bit deeper here into where does this come from? Well, we had a very good EBIT in Sweden in Q3 due to these units that we have recognized now in Q3. Germany also a very strong Q3 with many units recognized and also good margin on those units. I also want to point out here that we have said for a couple of quarters now that we have been not so happy with our Finnish operations, and we have said that Finland will be back on black figures, and that is what we see here now in Q3 here. A good development also in the Finnish organization of Bonava.
SEK 406 compared to SEK 218, a really good EBIT level in Q3. Some other things to comment here, I usually do that on net financial items. They are down to SEK -35 compared to SEK -51. We continue to reduce our debt in RUB, where we have the highest interest rates. That's one reason. The other reason is actually that we've done a reclassification of guarantee costs in Germany, moving them from the financial net up to gross profit, and that is around SEK 7 million-SEK 8 million in this Q3. That's also one reason why we have a somewhat improved financial net. Tax, 22%, normal for our business, so we end here Q3 with SEK 289 million as net profit. Just some words then about our business units. Well, we have reduced EBIT margin in Sweden.
However, we think that to be close to 20% in that business on a rolling 12-month basis is really strong. Lower net sales in Sweden, that is also what you saw here when we looked at our project portfolio, why that is. At the same time as Germany continues to grow to be our biggest market when it comes to net sales. Almost SEK 5.7 billion here with a good EBIT margin. I continue to stress that we say that to be above 12% in the business that we have in Germany is really world-class. We are happy with the development in Germany, giving us both high net sales but also a decent and good EBIT margin.
Finland, here you see the development that we have talked about for some time now, that we are up to black numbers, even though the margin is not that strong. We are happy to see that the development goes in the direction that we want it to be. Denmark, Norway, same, very stable. They're level both when it comes to net sales and also when it comes to our margin in that business. We have somewhat lower net sales in St. Petersburg and also somewhat lower EBIT margin. However, we see it as a stable development also in our Russian operations. Units in production. Here you have also the division between consumers and investors. We are increasing the total level, and we are also increasing the part to investors. We think that our project portfolio is very, very solid. 10,300 units with a sales ratio of 70%.
I think it's very easy to forget. It's good to have this historical development when you look at it, that this is really good, 70%. If you look back here to quarter two, one year ago, 65%. This is really a strong portfolio all in all, and that is what we have stressed now many times, but we really think so. We have many units to be completed in the last quarter here. We have more units to be completed now going forward than we had one quarter ago. The simple reason for that is, of course, that we have started more units. I think it's relevant here to remind you that this is a forecast and units can be moved from one quarter to another when it comes to completions due to a number of reasons.
It can be delayed, or it can also be something that will go faster. This is just an estimation of when we expect our units to be completed. For those of you who are really into our numbers, you see here that one quarter ago, we had more units to be completed here in quarter four 2018. That's what we said when we talked about quarter two. We have fewer now, and the reason for that is that we have some delays in Finland. Those units will be completed in quarter one 2019. That is just an example of what can happen between one quarter to another, since this is estimations and forecasts. Our assets are up to almost SEK 24 billion. That's a lot of assets, of course.
The reason why we grow, why we have more assets now is, of course, first of all, we have more properties held for future development, land. Most of that increase is done in Germany, where we are growing. We have more housing units in production. The light green part of our total assets here and the dark green part is the main reasons why we have more assets in our balance sheet now. All in the world, if you take this in all, our cash flow coming out from this result and also how our assets have developed during this third quarter. We had a good result. The cash flow from our businesses is good, SEK 423 million here. We have also had a lot of cash coming in from the sales of our housing projects.
What we have done is that we have continued to invest into new housing projects. We have more starts, we have more units into production, and we have also bought more land. That's the reason why we end up with a negative cash flow before financing in this third quarter. We have used the cash that we have received mainly into new investments in Germany. Development of our net debt, always interesting to see also here again, the seasonal variation here. The seasonal development that we have in our business is very clear, where we tie up more debt in quarter two and quarter three. That is also the case in 2018. We are now at SEK 6.2 billion. We are at SEK 4.3 billion.
Our debt is tied up in our Swedish tenant-owner associations and the Finnish housing companies where. That's the POC revenue recognition. What comes with that is that we also include the debt in our projects. That's a difference when you compare Bonava with our competitors. I just remind you about that. SEK 6.2 billion. To summarize this then is that we now have almost SEK 14 billion tied up as capital employed at the end of quarter three. We have more land, we have more ongoing production. Still we are well in line with our own financial objectives since we have a good development of our result. 12.4 return on SEK 13.7 billion as capital employed. By that, I hand over to you, Joachim, to summarize this quarter.
I think this is a strong quarter across the board. I think there are many really strong indicators that we are moving in the right direction. Sales, more or less in part with last year, both consumers and investors, though we have a challenging situation with the cautious market in Sweden. We succeeded to increase the starts, which for me is a strong signal of the capacity and the strength of the company building future business. Many units in production on top of that with a very strong sales rate, 70% of our portfolio is already sold. The quarter itself, strong net sales, strong profit, strong margin, and then again, walking the talk, following the strategy. It might seem boring, but it's actually very efficient growing the German operation. It's now manifesting in the numbers. I close the presentation here, invite Sophia to head the Q&A.
Thank you very much, Ann-Sofi and Joachim. We will soon open up for the Q&A. I'll just go through a few of the practicalities beforehand. If you have any questions, please state always your name and the company you represent before. You can post your questions through the webcast or the phone conference or, of course, here in the room. Just notify me. There are microphones here so that everyone can hear your question. With that said, any questions to Joachim and Ann-Sofi? Here we have a question.
Jan Åfeldt, Kepler Cheuvreux. I have three questions. I'll put it one by one. First one is regarding the 2,900 units that will be delivered in the fourth quarter. How much of that is already sold?
You have that on the graph. You see the graph. I forgot to tell you that the graph, the line that you have there. I don't remember exactly how much is sold, but you see that. I think it's something 75%-80% at least is sold.
Okay. The second and third question really regards the Swedish market as it represent nearly two-thirds of your operating profit so far this year. The question is really, we see an oversupply on the market. How do you look upon the market? Are there many desperate smaller players? When do you think that the oversupply situation subside?
Well, I guess, for the desperate player, the last person they want to tell is me, the main competitor. I guess people working in the finance sector will meet them before I do. I have said like this, again, a gut feeling rather than data. I've been surprised that a slowdown in sales in combination with softening prices has not been shown if you operate your business with POC. It's evident that is two-thirds of all what that formula is based upon. We see price adjustments. We have done a pretty thorough study over Stockholm. We still looked at more than 80 competing projects, and more or less all of them had done price adjustments. There are, to my knowledge, not yet that much pain in the system, so people are getting desperate to get out of land acquisitions or projects.
My visibility might be very restricted for certain reasons. We have seen a lot of, I don't know the English term, "markanvisningar," which is sort of options giving the municipalities that has been returned. That is more and more frequent. However, there is very hard to do any business on that because there was normally a bidding competition. To win, you had to pay the highest price. For sure, there will be opportunities. Regarding the oversupply, I agree with that conclusion. There is an oversupply, and you have to remember it's because the cycles are pretty long, especially in the Nordic countries, when it can take 18, 20, 22, 24 months before you finalize a project after building start. I think we will see a lot of oversupply Q1, Q2-- Sorry, Q1 in 2019, potentially also a bit into Q2. This is not scientifically based.
I know that there is a Sveriges Byggindustrier have just given a forecast saying that they predict a pressure downwards in the start with 20,000 units from the top. That might be slightly on the optimistic side because we have seen that it was not the major players who took market share, it was the small players. They are pretty digital. They can do or they can't do. Potentially, there is a lot of stuff out there, and that means that a majority of the players cannot start anything new, which means that the absorption should be there. Also if you have the stamina to start, might be a fantastic opportunity. However, the SEK 10,000 question would be, when will this be over? Right?
I think we can already conclude that the Lehman effect on the Swedish market was that very short and bounced back really quickly. We are not looking at that scenario. We're looking at a longer scenario, which is good for us with the stamina that we have. I predict Q4, Q1, potentially also Q2, especially Stockholm Mälardalen region, an oversupply situation. I might be wrong. I'm not basing this on facts, but I've said for a long time that I think this will take longer than anybody thinks.
Okay, thanks. The third question regards the investor market in Sweden. What kind of yields are you selling your products on? Has this changed anything due to rising interest rates?
We are selling our products at best ever yields. No, it has not changed. I know there's a sort of a discussion, and if you look at the valuation of commercial real estate companies, they're looking, saying, "Well, interest rates are coming up, valuations should come up." We haven't seen that yet. There is a lot of liquidity out in the market, and a lot of buyers. We are trading at top yields for the moment.
Okay.
Okay. Thank you very much. We have a question through the phone conference, so I'll open up for the phone conference. The first question is from Niklas Regnér, Nordea. Your line is now open.
Yes. Good morning. Niklas Regnér here. A couple of questions from my side as well, if I may. Firstly, coming back to the Swedish operations. Your sold units rebounded from a very weak first half, although you only started one project. We just heard you being a little bit cautious also going into the next year, despite the very low starts we've seen in the market. How should we look at Bonava's opportunities here to start over the next 12 months in Stockholm? Will you stay at one project per quarter, or when will you stop being optimistic?
If I could answer that, it would be fantastic. I think that we have to be very project-specific. As you know, you've followed us for a long time, it might not only be the customer demand who is the main driver to start. It might also be that we are restricted by bottlenecks. Normally, that would be building permits. With what I just said, anyone who would expect us to flood the market with new projects would be disappointed, of course. I can't say whether we will start one or two projects. We are cautious, but we have the ability to act really quickly if we feel we have a business opportunity. It's very project individual estimates.
A follow-up on that note. You've sold a lot of land very successfully. When you look at your underlying profitability in the backlog, would you say that you cannot afford to start projects if you need a better cushion in prices? i.e., you don't have the right projects at the moment? Is it only related to a slower market and a slower demand situation?
Basically you ask me if I have too much expensive land in Sweden. Is that correct?
Right.
Okay. No, I don't think so. We have some new projects to start. I think that they are correctly priced. We get really positive feedback from the market, but it's stuck in the process of getting financing and a more cautious approach. We are not suffering. We were actually contrarian. We sold when land was expensive, and we are now looking for opportunity to refill the land bank with cheaper land prices. We are not stuck in that position.
Okay. If I may move over to the German operations. You have a very strong margin again in the third quarter, and you talk about world-class 12.5% or 12% margin outlook. Is it fair to expect that margin should have the same seasonality as we normally have in Germany, driven by good operational leverage for the fourth quarter? Sara.
If I follow you, the margin in Germany, it depends upon when do we recognize units for profit, in what quarter. We have a fixed organization that if we can't recognize enough units, then of course the margin will be somewhat low. The opposite, if we have many units to recognize in one quarter, the margin can be very good in that quarter. If that is the answer to your question. There is a seasonality, of course, since also Germany is affected by the fact that we start almost always in the same quarter, and we deliver the units mainly in the fourth quarter also in Germany. Even though we try to change that, but it seems rather tough to do that. If that's the answer to your question, if I understood you correctly.
My question was just related to, since you're talking about the 12% margin, but you're already there or above on a rolling 12-month basis.
Yes
when you have the strongest quarter ahead.
Yes.
I was just wondering if that was an outlook statement on margin or just a cautious statement.
We still think that above 12% is world-class, and the margin there you have there is on a rolling 12 months. You have the fourth quarter last year included in those 12.9%. If you compare it on a rolling 12-month basis and also on a calendar year, it's almost the same.
Niklas, I think it's also fair to point out that, 12%, we perceive that as world-class. Maybe we should add over a business cycle.
Yes.
Of course, we are a very ambitious company, and we're not satisfied with only 12% when it's a really strong market. What we said is that above 12% is more tweaking than leaping, right? We wouldn't mind getting up to 13% eventually and so on. 12% is really good. I think that's an important state.
On Germany, last question. You have a very good start. Is it something we should be aware of on average selling price in Germany? The mix coming down to more affordable units? Or do you follow the sort of general German market where we see continued healthy price improvements? Or is there any structural changes in your
No, not really. I think it's fair to point out that the price increase of condominiums in Germany is also, of course, followed by an increasing demand from land sellers when it comes to price. I think we can predict pretty stable development. No major shifts.
That's all my questions. Thank you.
Thank you.
Thank you very much. We have another question coming in from the phone conference.
The next question is from Fredrik Stenhagen. Your line's now open.
Good morning. I'm not sure if that's me. Fredrik Stenhagen at Carnegie. A few questions from my side as well. I'm sure you would like to spend more time on the non-Swedish part, but I have a few on Sweden as well. If you look at started units under 27 units during the first three quarters, that's more than an 80% reduction versus last year. Of course, the market is difficult, but that's more than a lot of your peers have reported. Is it so that the building rights that you have in the balance sheet is not really suitable for start, or is this just about the market?
That's sort of more or less what Niklas asked, I think. No, it's about the market. It's a very cautious market. Building rights are getting more and more sort of in line with what we want to do. That's not the problem. The problem is that the consumers have a hard time getting financing and are hesitating, we have to respect that.
You mentioned the outlook for rentals remains very strong. Of course, you started a few projects here during the first three quarters, it seems to me that there should be plenty of opportunities to do more. What's your ambition in terms of production, let's say, within a year?
We're stuck in Sweden, I presume.
We are.
Yeah. Okay. If we could do maybe four to 500 over time, I think that would be good. Unfortunately, these investor deals, they come in lumps. They are not evenly distributed, right? It's A, you need to get your hands on cheap land. I think it's fair to call it cheap because, I mean, the business model as such demands for low costs. You have to get the permits in place. Getting the investor, that's the easy part. That is a scenario I would like to see. When that can materialize, I cannot say.
Is it a necessity to have it pre-sold, given the demand situation? Can't you build on speculation?
We can. As again, the investor is not the challenge, right? Yes, to get there, I don't really care whether we start before we sold or not. I prefer to start. I talk about the Swedish market now, which is really hot for investors. The tricky thing, getting your hands on land, getting all the permits, it's a walk in the park.
My final question on Ann-Sofi. You mentioned estimated completions. There were some finished projects that were delayed. When I look at the chart, it looks like the number of estimated completions also for Q1, Q2, was lower than you anticipated for the second quarter.
Yes.
What's the reason for that?
Yeah, it can be delays due to a number of reasons. First of all, that we see that our process is slower or that something has happened. In St. Petersburg, for instance, it has a lot to do with the permits that we need to hand them over to the final customer. There can be a number of reasons. Why I pointed out quarter four was just because we are so close to that quarter. That was the reason why I mentioned just quarter four. It can happen for many reasons. That's also why we say that this is a forecast and an estimation and not fixed numbers.
Thank you.
Thank you very much. We have another question through the phone conference.
The next question is from Tobias Kaj, ABG. Your line is now open.
Yes. Thank you. Tobias Kaj from ABG. Several of my questions has been kind of asked already before. Regarding completed units in incoming quarters, with the 2,900, you look like you end up from 5,700 for the full year. Based on the forecast, you're looking for some 5,200 for next year in delivered units.
Is that the figure that still can increase with starts in Q4 or is that roughly what we should expect?
It can increase, it has to be within the row house, single family, or semi-detached business. We have shorter cycles down to six months. When it comes to multifamily, the window for 2019 profit recognition is already closed.
Okay. In terms of Germany, you have seen a strong growth in production starts year-to-date. How big are the economies of scale in that region? Should we expect higher margins when volumes are increasing as well?
You could all wish for that. I'm not sure that will actually happen. It's really stiff competition when it comes to resources in Germany, as it is in any market where there is really an attractive market. I think we should predict pretty stable development.
Okay, final question regarding Finland, where you have increased the number of recognized units quite significantly, both to consumers and to investors. The margin or the EBIT is still at very low level, even though it was positive in Q3. What should we expect for 2019? Will recognized units continue to increase? What kind of margin should we expect for next year?
I leave the number of units to Ann-Sofi, but regarding the margin, I think we have said for a long time that we have had challenges. I think this is the first important milestone when it comes to Finland, but it is not yet sustainable. I am hoping for better margins than this, of course, over time.
Units to be recognized in the future will increase. As we have said many times, one of the reasons why we have had a negative EBIT and very low numbers in Finland has been that we had too few units to recognize both in the end of 2016 and also 2017. We have chosen to keep our organization in Finland. Even though we had very few units to recognize, we kept the fixed costs. That is one of the main reasons why we have had a negative EBIT in the past. Going further on, we will have more units to recognize in Finland.
We said also long term that we see no reason for any country to have a significantly lower margin than the others. That is sort of a midterm goal for Finland.
Based on the pipeline for next year, do you think you will reach satisfying margins already 2019 in Finland?
I have to pause on that because I'm really unsure. For the moment, I think it's important that we get a sustainable sort of positive profit development. If we will be there already 2019, I think it's a bit early to say. You can hope, but I can't promise.
Okay. Thank you for taking my questions.
Thank you.
Thank you very much. We have another question through the phone conference.
The next question is from Stefan Jonassen. Sir, your line is now open.
Hi. Thank you. Just a small detail, maybe you already covered it, when I look at the started units for consumers in Sweden, you seem to have 127 started for January to September, and you say it's 104 in the quarter, and you had 89 started for the first half. To me, the difference is 38. I'm just wondering, is it 38 started or 104 started in the quarter?
104 started in the quarter. I can confirm that.
The 127 for the nine months is wrong then?
No, it's not wrong. No, it's not wrong. It's a reallocation.
Okay. Yeah. It is a project that was started in another category that now have been moved as ongoing, in this case, to investors. From consumers to investors.
Okay. Perfect. Thank you.
Okay, thank you. Did you have any further questions? Okay. Anyone here in the room that has a question that you would like to ask? No. I think we've taken all the questions through the phone conference. Is that correct? Yes. There are no further questions here. I would leave the opportunity to you, Joachim, to give any closing remarks to this quarter.
Thank you, Sophia. I again stand before you really proud. I think this was a really good quarter all over. I think there is some solid also indications that we are moving according to the path that we have predicted and wanting. Following the strategy being a bit boring, but boring can also be very efficient and in the end, very profitable. With that, thank you very much for attending, and see you again at the Q4 report. Thank you.
Thank you very much, and hope to see you all soon again. Thank you.