Welcome, everybody, and good morning, and welcome to this third quarter earnings call for NCC Limited. I'm Tomas Carlsson, the CEO, and with me here, I have our CFO, Susanne Lithander. I will start this presentation by summarizing the quarter like this. We have a very strong EBIT growth in the quarter, 15%+ compared to last year, driven by two things: all-time high profit in industry. We're really happy about that, SEK 461 million in profit for industry, but also solid development in the contracting business with an EBIT margin of about 3% at this quarter. Current earnings are in very good shape, and we're also really happy about the large number of early involvement projects that we have and that we have won during the quarter. I will get into more details about that.
Currently, we have approximately 40 projects above SEK 500 million, an estimated volume of above SEK 500 million. Overall, a good quarter now, but also a positive outlook through our early involvement projects. Earnings quarter on quarter developing like this, SEK 7.67 in the quarter comparing to the same quarter last year. It's a clear improvement, and it's also important to remember that we had a small profit from property development in the third quarter of 2023, and this year we have a small loss, mainly driven by the exit from the Norwegian property development market. Growing earnings. Orders received, stable, but what's more important is the early involvement projects that over time will convert into orders. This is in line with what we've been working with in all business areas, working together with our customers in earlier phases and developing projects together with them.
Normally, we don't talk about the size of the early involvement projects, mainly because we really don't know at this point what the final order sum will be, but we can talk about what our customers have communicated from their side. For example, we have during the quarter won the contract for power line development for a large part of Sweden, Västra Götaland, for the customer Svenska Kraftnät, and they have estimated the volume of that to SEK 7.5 billion. We are also happy that we have won the contract to develop the new prison in Trelleborg in southern Sweden. It's a 110,000 square meter building, and bear in mind that the normal office normally has a price tag of around between SEK 35,000 to SEK 45,000 per square meter. You get an idea about the size of this project.
Finally, SSAB have announced that they will invest EUR 4.5 billion into a completely new steel mill in Luleå. We have won the construction contract for the hot mill part of this. It's the largest part of the construction building, and we will develop at least 150,000 square meter building for this important steel development. This is a large building. The footprint is at least 150,000 square meter, but it's also a tall building. It's approximately 50 m high at its highest, and it has a really complex foundation for the steel making process. These are some examples of large recent wins in the quarter. Just to remind you, we have press released a number of early involvement projects like this over the last couple of years. This is examples of projects like this. It's not all of the projects that we have.
As you can see, there are, for example, no projects relating to defense in this. We have a smaller part of them in the order registration and in our net income, but most of it is typically not in the order backlog. These are some examples that we have press released. That brings us to an order backlog that is in line with the strategic priorities. It's negatively impacted year on year from the strengthened currency of the Swedish krona, but you can also see that the sales are relatively flat. That's because of the order backlog, but also that we have early works in the projects that are yet not order registered that impact sales quarter on quarter. It's a stable development for sales and a strong volume of early involvement projects that will convert into orders.
Orders that we have actually registered in the quarter are, for example, we have a prison in Kristianstad, slightly smaller prison than the other one in Trelleborg. We have ordered a police office in Karlstad in Sweden and refurbishment of a residential area in Kolding in Denmark, one of our key competencies in renovation Denmark. Net sales in line with recent years, you can see the NCC blue bars developed quarter on quarter. We've also marked where we have PD development of large sales, most notably the fourth quarter last year. This means that we have financial targets like this. We are on a rolling basis on an earnings per share 16.2, but I would like to remind everybody that that is impacted by the high earnings from PD in the fourth quarter last year. We don't expect to have anything like that in PD this year.
We have very low net debt. Susanne will come back to that. As you know, the AGM decided on a dividend of SEK 9 + SEK 2, and the second tranche of that is coming within a few weeks. Before I move on to other topics, I'll have to say something about the Korsvägen project in Gothenburg. Our client, the Swedish Highway Administration, has terminated the contract. We think there's no motivation for this termination, and more importantly, we have a strong opinion that the termination lacks legal grounds. We intend to file substantial damage claims within the near future. It has no impact on the third quarter, and the profit has been... We have not recognized any profit in the projects from the start. It will not have an impact going forward. It will rather strengthen the margin in infrastructure.
We will have to make everybody aware that we will decrease the order backlog for infrastructure with roughly SEK 1 billion in the fourth quarter as this project is terminated. Moving on, targets, climate, and energy. We, as I may remind you, changed our target for emissions since we reached the previous target that we have. We have a new target now on scope one and two of - 75%. We have, as of half year 2025, reached - 60%. Then we have a scope three target of - 50% until 2030. We are measuring that in three big topics: ready mix concrete, steel reinforcement, and transportation. We're having a very positive development for ready mix concrete and steel reinforcement, but an increase for transportation, and that is completely due to the lower emission reduction obligation that has been implemented in Sweden.
Health and safety, we are working towards a target of LTIF4 of equal to or lower than 2 at the end of 2026. We are in this quarter lowering the accident frequencies to 2.9. We're well on the way to reach that target, but this is ongoing hard work, and we are really focusing on this. Finally, before I hand over to Susanne, we have a continued positive market outlook in the same way that we've had it for quite some time now. We think that there's generally a good market demand. We see a particularly strong demand for infrastructure of all kinds, not only the most normal or usual types of rail and railway, but also energy generation, energy distribution, water treatment, water distribution. We see a good demand for industrial and public buildings. We see an emerging demand for defense.
We have since before a strong demand for hospitals and other related buildings. We see a strong demand for asphalt and stone and an increasing requirement for better infrastructure in the Nordic countries, and that drives the demand for asphalt and stone. However, commercial properties and residential remain really cautious right now. That's our outlook. With that, I hand over to Susanne Lithander.
Thank you, Tomas. Here are the highlights for our contracting units. As you heard from Tomas, we are very happy about our strong increase of early involvement projects, or as we call them also, phase one projects. These projects do take a little longer to land as orders in our order book, and often they also come in in parts over a longer period of time, depending on the size.
Building Sweden showed improvement in both margin and earnings despite lower sales volumes, and they do have a better project portfolio moving forward. Building Nordics continued with good performance improvements, and it's primarily driven by Denmark. Our infrastructure business continues to be very stable with really solid performance. Green Industry has made good progress with the customers SSAB and LKAB. They now have three phase one agreements in place to date. Our contracting margins are going in the right direction. We have 3.1% as a total for all of them in Q3. As you can see on this slide, the dark blue here is infrastructure, and they are very stable. Building Nordics and Building Sweden have an upwards trending.
Industry had an all-time high third quarter, and they have a very strong overall development with increasing volumes and good operational efficiency in asphalt, and they have higher productivity in stone materials. As Tomas alluded to, demand is fueled by increasing funding for road maintenance in both Sweden and Norway. We've said it several times. Now we have higher volumes in asphalt. Stone materials, on the other hand, have lower volumes, but with a better and more profitable mix. Earnings are up 36% in the quarter and 32% year to date. The margin is up to 5.7% year to date. If you round that without decimals, I guess they reached their target of 6%. It is driven by the increased volume and operational efficiency in asphalt and better product mix and productivity in stone materials. Both divisions are doing really well.
Capital employed decreased to 4.4 billion due to the improved working capital, and the return has gone up to 17.1%, which is clearly outperforming the target of 12%. Property development still has a challenging market with very low letting in the quarter. Our portfolio consists of six completed projects that are not sold and three ongoing projects that are sold. As Tomas said, in the quarter, we did divest our properties and exited Norway. Letting in the quarter was very low. Only one small contract was signed. The letting ratio in our total portfolio is 81%, and our completion ratio is up to 66% after the quarter. Earnings were minus SEK 10 million, and the lower earnings are explained by less rental income from the properties that we sold off in Q4 last year and also the divestment in Norway.
The exit from Norway has a zero effect on earnings for the year, but timing-wise, we have a slightly negative effect in Q3, and we expect to have a slight positive to the same size in Q4. Capital employed is lower thanks to the divestment of our properties in Q4 last year. Last segment, other and eliminations. Earnings in the quarter for this segment are on par with last year. The third quarter is always seasonally lower, as we have said a couple of times, and the slightly lower cost in group costs is primarily driven by timing effects when it comes to our IT investments. Internal gains and pensions and other adjustments are on the same level as last year. The segments added up to SEK 767 million in operating profit.
Our financial net is on the same level as last year, despite the fact that we have a much lower net debt, and that is explained by the fact that we are not allowed to capitalize interest on our completed property projects. Tax-wise, we have also a higher tax rate than we usually have. It's 24.5% year to date, and that is explained by the profit recognitions that we don't have in property development. That brings us to a net profit of SEK 534 million with an earnings per share of SEK 5.5 in the quarter. We have a better cash flow in the quarter due to all three items on the top. We have improved earnings, we have less investments in property development, and we have a better working capital.
We do have a bit higher investing activities or CapEx that is primarily driven by machinery in industry, but to some extent also by our IT investments, but they are on a quite normal level for the quarter. Our corporate net debt decreased to SEK 1.4 billion due to the divestment of properties in the end of last year. As Tomas showed, our net debt EBITDA target is to be below 2.5x , and we are below that at 0.5 after Q3. With that, I hand back to you, Tomas.
Thank you, Susanne. I think almost you could stay because I have only one short message here. We are now reporting a very strong performance in the quarter. We also have a positive outlook on the general market, and we also have a positive outlook because of the high number of early involvement projects that will provide growth going forward. We see a good demand in contracting and in asphalt and stone. The ongoing strategic review of Industry, we haven't said anything about that for now because it's ongoing and we have nothing new to report, but we have a really high interest in that and we expect to come to some kind of conclusion within a limited number of months. Thank you very much. With that, operator, I open up for questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Kevan Shivanpur from SEB. Please go ahead.
Thank you and good morning. I have a couple of questions. The first regarding the industry, which had very strong profitability, could you maybe say something about how much of this could be extrapolated? Would you say that this is sort of a new normal, or is there any type of temporary effect? You mentioned this increased funds for road maintenance, for instance.
Good morning, Kevan. It's notoriously hard to extrapolate, but what we see is that we have an underlying better operational discipline in the whole business area. That's one contributing factor. We worked quite a lot with pricing in both stone and asphalt, and that is a contributing factor. Third, we have a better mix of volumes in terms of price, and we have higher volumes in asphalt. All of that is contributing. The way I hear your question is, is this a normalized higher demand? I think we will see a higher demand going forward for the foreseeable future driven by many reasons, but asphalt is also a highly weather-dependent business. We've had a really good September. Going forward, it depends on do we have good weather in October and November to really determine the earnings in Q4. We have a positive outlook for the demand.
Okay, good. I also have a question on the Korsvägen project. First of all, what constitutes a significant claim? Is this something that you can quantify?
No, it will be significant.
Okay. The second question on the same project is that you mentioned that you recognize this at zero profit, but could you say anything about what is the remaining share of the project, which then implies what is the theoretical size of potential impairment if you would lose this appeal?
I don't want to speculate in that because there are so many moving parts in that. I really don't want to do this. We were well on track of finalizing the project to 2030. We've been at it since 2018. That gives an indication of how much was built. There's actually no claim for the remaining parts, there are other claims. We think that we have a strong position in this.
Okay. I also have a question on the property development. Do you have any ongoing dialogues with potential buyers, and are you hopeful that you maybe could close some transactions before year end?
We have ongoing dialogues. Whether we can close them before the year end depends on a lot of factors. I don't know, but I think it's important to say that we sold the best projects last year. I don't expect the same type of lost end of the year earnings that we saw last year.
Yes. Okay. It's the final question, and that's related to the elimination costs. It was quite low. If you look at last year Q4, it went up by nearly SEK 100 million Q3 versus Q4. You mentioned this seasonal pattern. Would you say that this is a reasonable assumption for Q4 this year as well?
Yeah, I would say that.
Okay, good. Thanks. Those were my questions.
Thank you very much.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from Julia Sundvall from ABG. Please go ahead.
Yes, hi and good morning. I have a question on the infrastructure segment. We see a little bit weak order intake and a downwards order book. Was it only a strong last year, or could you elaborate a bit more on that one?
Good morning, Julia. Order intake for infrastructure in the quarter is a little bit lower, and it has actually been there for some time. The reason being that we are focusing more on the early involvement projects, and we're really happy that we have won a number of really large early involvement projects that will convert into order intake in the years to come. For example, we have the large contract for Svenska Kraftnät, Västra Götaland region. As Svenska Kraftnät has communicated, it's a SEK 7.5 billion project. We've also won transformer stations in Stockholm to a significant value. We've won other types of smaller projects in an early phase. Even though the order intake may at face value look a little bit low, I'm really happy with the large number of early involvement projects that we have.
Yeah. Do you think this trend is something we're going to see going forward, or should we come to a bottom?
I think we will see lots of early involvement projects. However, it will take some time before they are converted into orders received. It depends on the project, and there are many different types of projects, but we will see phases of the projects coming relatively soon, and that over time it will increase the order intake.
Perfect. On the Building Nordics, Finland is weak, you say. Could you elaborate a little bit more on the situation there and what needs to happen going forward to that turnaround?
I'd like to nuance that a little bit. The market in Finland is a little bit weak, generally in Finland. We've taken quite strong action a couple of years or a year and a half ago in Finland. I actually think that our Finnish organization is doing pretty good on that market and compared to competitors in Finland. It's actually only one department that is slightly underperforming right now. The market is tough. I think our organization is doing quite well. We're working with one department that is underperforming.
Okay, perfect. Thank you. That was all of my questions.
Once again, to ask a question, please press star and one on your telephone. There are no more questions at this time from the phone. Back over to you.
Thank you. We have one question from the intraweb.
Yes, correct. Henrik Sätherén has a question here. He recognized our strong earnings development and wondered what it takes for you to consider to raise our profit target. I guess it's meaning the EPS target.
We have an EPS target that is based on the assumption that we will need a contribution from property development profits to reach it, but we are also gradually increasing the expectation of contribution from contracting and industry. Depending on the development in the strategic review of industry, we will have a thorough look at our earnings target, and we'll get back to that after the project India, as we call it, is finalized. Very good. If there are no further questions, thank you all for listening in. We are open to take your questions if you reach out to us, and I guess you have our contact data. See you around and see you for the fourth quarter report in February. Thank you all.