NCC AB (publ) (STO:NCC.B)

CMD 2020

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Nov 18, 2020

Good morning, and welcome to us here at NCC. We're at the head office in Solna in Sweden, where we actually moved in exactly 1 year ago today. We would, of course, have liked to invite you all over, but in the current circumstances, that's not possible. So we hope that you will be with us behind your screens and also that you will ask questions later in the Q and A. The agenda for today starts with an update on our general status, our strategic direction and our financial targets with CEO, Thomas Karlsson and with Susan Littander, our CFO. And then later in the program, we'll move over to more of the business updates from each of the business area heads. And we will also hear more from Thomas and Susan. And then in the end, a Q and A. The numbers for the Q and A will be available on the webcast and also on the web page. And I will also give them to you a bit later in the program. Today's presenters, just so you know, besides Thomas Karlsson and Susanne Littander are also Henrik Landielius, Head of Building Sweden Kathryn Namoli Endrones, Head of Building Nordics Joakim Hollenberg, Head of Property Development Ilvala Agason, Head of Industry and myself, Marla Grinberg, who's Head of Communication. With that, I will hand over to Thomas Karlsson to start with an update on where we are. Good morning. 2 years ago, in October 2018, we held Capital Markets Day on the back of a comprehensive business review. And following that business review, we did SEK 1,600,000,000 of revaluations of balance sheet items and write downs in projects. We concluded that we had a healthy core, but also quite significant need for change. And today we will tell you something about what has happened since, but maybe more importantly, what's happening now. So let's go back to the beginning in 2,008. And this was our starting point. We had too low margins. We didn't have any real bottom line growth. We were using too much capital. And we have 2 large and 2 frequent negative surprises in the company. So as a consequence, we launched a 3 step road map. First phase of that road map was to stabilize the company and make sure that we did all the things that we saw from the business review and also had a clear action plan on what to do. 2nd stage of that plan is to improve the profitability and to develop operational model and strategic direction for the company. And the 3rd step is to build on that improved performance. Now today, I'm happy to report back to you that the first phase is done. The company is stabilized. On the four main themes that we had for the stabilization plan, we're done or we are we have established fixed processes to continue to work with it. Organization and team in place. The senior management team, of course, already at an early stage was established. But throughout these years, we've made quite significant changes to the organization. Out of the top 150 managers in the company, roughly 2 thirds are new in their positions, promoted from within NCC or recruited externally. We have exited or divested nonperforming businesses. Most well known is maybe the road service business. And we closed the divestment of Sweden and Finland just recently and are looking forward to close the road service business in Denmark within short. But well worth to know is that we've also exited or divested many other smaller businesses throughout the company. We have launched improved processes and training. We have quite comprehensive process for tenders with a higher degree of rigor in the tender selection and also a new organization for that. We have we launched the NCC Academy as a framework for developing competence within the company. And we are working with the low performers that we saw in the company in a structured way, in structured turnaround programs. So 1st phase done stabilized. And you can see that from the numbers. This was the way that we described the company in 20 18. A strong core performing, but a large proportion underperforming. And on of the underperformers, several with significant losses. 2020, we have reduced the tail and the underperformers as well as the loss making businesses have been reduced to a very small proportion of the overall business. You can describe it like this, where we've looked at how large proportion of the departments do have earnings above 3.5 percent EBIT or between 2% and 3.5% and below 2% and the proportion of low performing units clearly decreasing. This can be described like this, increasing profitability in the business. On a rolling 12 basis, the EBIT margin has gone up to 2.9, still some headroom to our current target, but moving in the right direction. And that, while producing really strong cash flow throughout the period, even though that we have been net investors into our property development business. So first phase, done, stabilized. We're now looking at the 2nd stage, improved profitability. And we've started the process to establish a joint operating model for the Group and a strategic direction. And while we're doing that, we're trying to look a little bit ahead towards the next step on building on that. When we started to work with this, it was clear that the situation that we saw in 2018 was not a one off occurrence. This is the contracting business pro form a according to the current configuration over 20 years. And you can see shorter periods meeting the targets, but you can also see a history of write downs and weaker performance. This seems to be a pattern for us. But it also seems to be a pattern for the industry. So relatively early it was clear to us that just doing more of the same is not the solution. Even though we want to build on the healthy and the good core, just doing more of the same is probably not the solution. So we went back to the basics. We asked ourselves a number of fundamental questions. What's the core of our company? What are the economies of scale for a company like NCC? Where should we focus? And how do we operate to get higher and more consistent performance throughout the group. We did this through a comprehensive process to align the company and get an understanding and a buy in for the change that is needed in the company. We have had the top 150 management team of course involved, but also many, many other people from the organization organized around several work streams. And then on a number of occasions, we've all come together making sure that we align on the description of the challenges that we face, but also aligning around the initiatives and the activities and the targets where we're going. When we went through this process, there's one theme that kept coming back. And that was the construction process. And bear with me, because there's a story to be told here. We are operating in a business with a long term demand. This every generation will have to develop society according to their needs and what is considered to be a good society. We can have a really positive impact on society. But from the customer's point of view, even though they are primarily interested in the finished product, regardless on who you are as the customer, You may want to have a new road or a tunnel or you may want to have a new residential building or you may want to have an office building or a hospital or any other type of product that we can deliver. You tend to be really involved in the construction process. And from the customer's perspective, this is always a complex thing. There are many stakeholders, there are many uncertainties, there's an element of risk. And then you have us. We are of course really, really proud of the products that we deliver. But what is evident from the organization is that we are really passionate about the process. And from this realization we came to this: The complexity of the construction process is at the core of what we do. Now this may sound like stating the obvious. But I'll give you a number of reasons why this is not stating the obvious. First of all, internally and we've talked to a lot of people in the organization. When we talk about what is NCC all about, we got a wide range of answers going from a company full of tradesmen to on the other end of the scale a company that develops society almost looking into planning and bordering on politics. But what is the core here internally is the construction process. The same thing when we look at external stakeholders, primarily customers but also other external stakeholders. We get the same type of range on how you look at LCC from being a large group of tradesmen to developers of society and planners. And if you think about our peer group, how do they describe themselves? It's not obvious that it's all about the construction process. There's a lot about trade, there's a lot about developing society. So from this realization that managing the complexity of the construction process is really what differentiates us. That's really where we're creating value. And that's really where we can create a solid position for the future. We have developed a core statement, we have developed a purpose statement, we've developed a market position from this realization. We've also acknowledged that this means that we're really a knowledge based company where the engineering and the process management is at the heart of what we do. To keep developing that and to find the value from the large company, we need to develop a culture based on shared values and behaviors. We have a lot of shared values, but maybe we can develop the behaviors to be more common going forward. Based on this realization of the core of managing the construction process and the way that we have framed our core statement and our purpose statement. But also based on insights that we have from customers as part of the process and also insights into the competitive landscape, there's a number of important implications and decisions that we have made. The first one is that in our scope of construction, it covers all of our 3 businesses. It is a given that industry is part of the construction industry and the construction process, providing essential material to what we do. It is equally given that property development is part of the construction, making sure that we can leverage our local presence and our knowledge about the construction industry to develop our own and invest our own money into property development. And of course, it's the contracting business. These business areas have different business logics. They create value in different ways. But they have important interconnections between them and they have important interdependencies to make us stronger. We've also decided that we're a Nordic company and that we should strive to be large but local. Large as a leverage against small and midsized companies. Local as a leverage towards the international specialized companies competing on the market. We have our strongest base in Sweden, which means that the main growth potential is outside Sweden in the other Nordic countries. But we have a caveat here. We should be local, but only if we manage to be profitable on that market. We also realized that the most important value that we have to our customers is that when we act as proactive construction experts realizing the projects with our customers, the projects that are always considered to be complex. And complexity drives value for NCC. Now let's be clear, complexity is not as unmanaged risk, but it means combining skill sets and expertise. We know that we have a value when we develop the know how on how to manage the construction process. We also know that the degree of complexity, when we mix the different skill sets we have, when we combine the capabilities that we have in different business areas or in business countries, we become stronger and provide value. And this leads to the important thing to recognize that we are a knowledge based company. We've always developed knowledge, but maybe we can do more. Maybe we can do more about sharing knowledge. And we also realize that there's a huge potential going forward being more data informed. All of this has led us to 4 focus areas. First one is all about knowledge base, value, behaviors, leadership. Second one is about investments into IT, digitalization and becoming more data informed. The third is the proactivity towards our customers, helping our customers through this complex process and putting our knowledge to the service for our customers. And the 4th, going back to the construction process, making sure that we leverage this construction process to create value for our customers, our shareholders and society at large. This means that we are now working in 8 development initiatives. They have different time frames and they will be ongoing for a long time. Some have started, some we are just preparing for, but around these four themes. So in summary, our strategic direction can be looked at like this. Our core competence is the construction process. We are a knowledge based company striving to be more and more data informed. Being large but local is a value and a multiplier and a differentiator. Going to market together as a group, collaborating well, using all our skill sets and capabilities is essential. A degree of complexity leverage our strength and then to make sure that we have an operating model that makes sure that everybody understands on how to operate within the NCC Group. We are a decentralized group within a clear framework. And it's important to think of us than more than the sum of a number of small companies. And finally, for you, how will this create shareholder value? First of all, higher clarity on what our core is, makes it easier to make sure that we use the strength of the entire company managing the complexity of the construction process. What's the economy of scale? That's what we get from a common operating model. Where should we focus? We should focus in the Nordic countries, leveraging the full scope of all our capabilities. And then finally, how do we operate? It's through our common operating model that we have started to develop and that we will continue to build on going forward. Thank you, Thomas, and welcome over here to me. And welcome, Susanne Lythander, our CFO and only recently also Head of Doost, our Development and Operations Services, our IT. We will get back to that a bit later in the program, though. Because now let's talk a bit about our financial targets and what this means for us financially. Maybe start while looking at the current financial targets, Susanne. Can you comment on that? Yes. I'm sure you're all aware of that we have today, we have 3 targets financial targets and we have a dividend policy. The first target is that we should have an EBIT margin at least that reaches 4%. And on the rolling 12% in Q3, we were at 2.9%. In we also have the target for return that is set to return on equity to be above 20%. That target is at Q3 at 41%. And in as a debt target, we have stated that net debt to EBITDA as a ratio should be less than 2.5 times. And in Q3, that was 0.08 times. And our dividend policy states that we should be we should distribute more than 40% of our net profit. So a bit away from the operating margin. Today, the board has decided on new targets for us. I'll click to them. Thomas, the net debt target and the dividend policy, they are the same? Yes. Comment on that? Well, the easiest way to think about it is, first of all, they work. And they are easy to motivate. From a point of view of running a company, you need to have some kind of restrictions. And you have to have an idea on how you pay back capital to the shareholders. So I think this is the way to think. They work and they are pretty standard in any type of industry. Fine. But, Sasan, the target for return on equity has been removed. What's the reasoning behind that? Yes. We the Board decided to remove that. We have had that target for a while, and we have out performed on that target probably for the wrong reasons, and we think that it has really outplayed its role. We think it's more important that we have good targets for capital intensive business to have a good return on those instead. So will we have separate targets for that? Yes, we will. But then maybe the biggest change, Thomas, is that the EBIT margin target has been replaced by an earnings per share target set for 2023. Can you walk a little bit? Yes. And first of all, I think it's important to recognize that margin is an important KPI in basically all types of business and maybe even more pronounced so in our type of business. But it's not always giving the right incentives to create shareholder value. It is a good KPI when you're underperforming and try to increase, then it's always good to strive towards higher margins. It's a good reflection of risk. But it doesn't really give the right incentives to actually develop the company into more bottom line growth. So we will of course keep the margin targets for the relevant business areas and the relevant businesses. But we wanted to have a target for the group that reflects that is independent of the mix of the business, whether it's industry or contracting or property development, bringing in the profits and also something that is aiming at shareholder value. So EPS is the best target that we found. And the year 2023, how was that 3 years out? How was that chosen? What does it mean? Well, it is actually balanced like most things in life. We felt that 5 years were too far away, not providing the sense of urgency for the company. But shorter than 3 years was too early to actually give us room to implement a new strategic direction and operational model and make something happen. And Susan, how will we follow-up the business areas? Because we'll only have 3 targets on group level, but I guess more on No, we're not going to change any of the reporting that we do externally. We keep the reporting as it is on the same metrics. We, however, keep also some of the targets internally. For our contracting business, for instance, we keep the EBIT margin target on 3.5%. We think that's still valid. On the more capital intensive units, we have decided to raise the bar a bit. And for industry, that means that they are expected to give a return on capital employed of 12% and an EBIT margin of 6%. And our property development business needs also to step up and have a return on capital employed of 12% on the same level as industry. The same level for both? Yes. I'm sure that we will be able to talk more about this later in the Q and A. But now it's time to start hearing a bit more about our different business areas, and we will start with the 2 building business areas. First, we will hear from Henrik Landelius, who is Head of Building Sweden and then after that from Katarina Mollie and Rune, Head of Building Nordics. So Henrik? Building Sweden. We are the leading contractor in a number of prioritized segments where we work. We focus on areas to improve, but we're building from stability in terms of profitability and orders received. I will tell you briefly a few words on who we are, how we are working to improve our performance and what we're aiming to build on for tomorrow. This is us. NCC Building Sweden is present all over Sweden from Jellevare up north down to Usta in southern Sweden. We operate from some 30 offices and the 3,000 colleagues of mine together is the collective competence that actually solves the complex process of construction together with our customers. We have an evenly distributed base of customers between public and private customers. And we have a strong market position, growing in the segments where we prioritize the focus. I will soon bring you to them. We have, as I said, improved our margins for 5 quarters in a row, but we are not satisfied with that, and we are obviously aiming to improve every day. The story goes like this. The Swedish population is growing. Our elderly live longer. We give birth to more children. That drives a strong demand for better health care, for new schools. And with the urbanization still ongoing, obviously we need to invest in public buildings like swimming facilities on this slide, residentials and workplaces for people to work at. We can see when we look at this year, year to date from January to September, that we're actually building on the order backlog. We have a significantly stronger orders received this year. And if you look at to the figures on orders received and compare them to the net sales figures, you can see that we're building the backlog of offices, but also the backlog of public buildings where we're aiming to become stronger also in the years to come. The margin is slightly better, improving 5 quarters in a row, but we keep building on the solid basis of the prioritized segments. So are we settled with that? No, of course not. We want to build better business moving forward as well. I'll give you some examples on where me and my colleagues spend our time to improve our delivery to you. We are working strongly with balancing a healthy portfolio over time, the right mix of customers, the right contract types, the right balance in terms of risks and also connecting that to what competence we have available within the business area, but of course also from the rest of NCC and together with our suppliers and other partners. While doing so, we spend a lot of time in actually making the customer journeys in each segment more specific to the segment. Obviously, there's a different need when building hospitals for SEK 2,500,000,000 in Region Somland than there is to a small residential project with approximately SEK 30 somewhere else in the country. We need to adapt our processes and see what distinctive competencies we need to develop to be able to add value to our customers. Another area is of high importance to us as well. The majority of what we do are both design and build responsibilities. How we handle designing the projects to the right cost, but also grasping the opportunity of improving our profits will obviously also add higher profitability to us, at the same time keeping the right value for our customers. The local presence, as Thomas said, is of essence to us. We need to be in all the areas where we decide to on an everyday basis. But we also need to be able to provide the support from our prioritized segments and the centers of excellence that we have in the business area within hospitals and area within hospitals and swimming facilities, etcetera, to the local organization to secure that our competitive edge compared to the local regional, midsized and smaller players are strong over time. So we spend a lot of time on improving in that sense too. And let me take another recent example where we show that when we build together within the Group across the country, learning from projects that we have performed recently, but also across business areas, we seldomly get beat by competition. You've maybe read about 2 depots here in Stockholm, 1 for railway and 1 for subway that we actually won. That's 100% hit rate. That is built from us combining the internal competence much better than we've been able to do in recent years. We will keep a lot of focus on expanding that as well, of course. We can spend our time on improving in all these four areas since Building Sweden has had a stability in earnings in our very large projects over time. Of course, that gives room for improvement in the other areas. And we will remain with the balanced risk management and contract management in the larger projects to be able to focus on developing the other ones as well. To move on, it's obvious that the industry has some problem with improving productivity. There's not one single solution where we can become better, but there are multiple areas where we need to improve. I'll just give you a sneak peek on 2 of the areas where we spend a lot of time right now. A couple of years ago, we developed what we call residential products within NCC. We've been able to build thousands of apartments of these, day by day improving how we build them to see that we have today secured that we actually deliver these products or residentials 20% cheaper than when we deliver on uniquely designed projects. Obviously, we can learn from the products and bring it to the unique ones too through platforms and standardized methods how we should build residentials. So I expect us to improve in that area. When doing VDC right or virtual design and construction, we can find alternative solutions much quicker. We can hire the degree of prefabrication off-site and in that way reduce waste on-site, take away the hurdles from inefficient logistics, saving costs and actually also reducing the climate impact. That will obviously keep improving our productivity over the years too. We are the sum of all the competencies within our colleagues. We've spent a lot of time this year to do in-depth interviews and also tests on our 130 project managers to see in which areas we can actually evolve the most. So So we've established trainings both on-site, on the job and educations where we develop our project managers moving forward, mainly within cost and contract management. We will now roll out this to our approximately 300 site managers as well. Obviously, we can improve in terms of purchasing. 75% of what we bring to the projects in my business area are some sort of a purchase. The earlier we can get involved, the better we can collaborate with our suppliers to work with their cost base to reduce costs, obviously both for our customer, but also keep savings within. Digitalization helps us a lot on that journey moving forward. It makes sense to be locally present. But when you handle complex purchasing like frames or installations, it makes sense to actually do it on a joint BA level. We have elaborated on something we call lead buyers for a couple of years now, and we can see a big benefit in terms of gathering that knowledge. Today, we are able to handle a bit more risk in terms of buying parts of superstructures, which actually also saves costs for us and gives room for improved profitability. To move on and soon to wrap up, we need to handle the balance between reducing the climate impact of what we do, but at the same time add new business that creates shareholder value. So again, we went to 20 customers this year, made in-depth interviews on how they see the forthcoming years ahead in terms of both legislation, but also areas where they want to drive the development. Built on that, we have established 6 areas where we see huge room for improvement. I don't have time to go through all of them today, but I would like to take you to something that we call climate calculations or climate estimations, if you would like. It's driven by legislation that in a couple of years we need to do this, but we won't wait for that. We have decided that in all our design and build contracts above SEK 50,000,000, we will start doing this today to collect a lot of knowledge, to be able to guide our customers through smart sustainable solutions at the same time as they can save the long term value of their investments. So let me wrap up. What we can see is that when we focus, we develop accordingly in the prioritized segments. And when we use the centers of excellence centrally that can share knowledge across the country and to the other BAs, we can develop further from that. We've also seen throughout the years that our method for turning around underperforming units has proven itself to be solid. We will end this year with a much lower exposure to turnaround than we've had in recent years before. Our margins are improving. We are not satisfied, but we will do that, keep doing that day by day, quarter by quarter, moving forward towards our goals. We're developing better business, working on our productivity and finally balancing the climate impact with building new business, better business moving forward. I'm going to talk about building Nordics. I've been responsible for this business area for almost a year now, and I'm really excited to tell you about who we are, where we come from and where we are going. We are present in Denmark, Finland and Norway, and we have a turnover on net sales of approximately SEK 12,000,000,000 And that represents 20% of NCC's total revenue. We are 2,400 employees, and we have more than 250 ongoing projects. 50% of our revenue comes from Finland, 35% comes from Denmark and 15% from Norway. We have a very strong backlog. And as you can see, we have a very strong backlog in Denmark. And that is due to the big order intake in 2019 that's where we signed some really big projects. But I will also argue that our backlog in Finland is strong as well. We have some prioritized segments, and we are really focusing on residential, office buildings, hospitals, schools and swimming facilities. But that also differs geographically. In Denmark, we are really good at refurbishment and high end residential. In Finland, we are really good at more mid market residential and non residential. And in Norway, we are really good at swimming facility based on a recipe that we have got from building Sweden. And this shows that we really have great potential when we're sharing knowledge across borders and between BAs. Building Nordics was a new business area in 2018. And for those of you who were present at the Capital Markets Day then, remember that we had some serious profitability problems. Since then, we have really made a successful turnaround, and we have improved our earnings with several percentage points. We have reviewed our business from many dimensions. We have changed management where that was needed. We have selected our projects very, very carefully, and we are focused on profitability before growth. This have resulted in a very strong backlog with healthy projects and a good base to build from. I believe that we now can start to grow again. And I feel confident that we can and will increase both net sales and earnings. I think this picture speaks for itself. This is a development for the last 3 years. And as you can see, we have growing net sales, growing backlog and growing earnings margins. So we are really going in the right direction. So looking at our market situation. In all three countries, we see a growth in refurbishment and a decrease a slight decrease in residential. But we also see a big variation in the non residential market depending on geography. There are big investments in the public sectors, but they are concentrated to rather big projects in fewer locations. The office market is still good. It's a bit hesitant and waits the actions after the COVID-nineteen. I would say that we are top 3 in Denmark, we are top 5 in Finland and we are top 5 in Norway if we include infrastructure. If we just take Building Norway on itself, we're not on the top 10 list yet. Our orders 2020 has been lower than last year. But then again, 2019 was really an exceptional year. We see a trend where we are involved much earlier in the projects, where we, together with our clients, design and develop our projects in a much in a very early stage before we start the construction phase. In general, we see that our markets are stable with a risk for a small decrease. But on the other hand, there are enough projects out there and there are market shares to take in all three markets. Building Nordics come from different starting points in different geographies, different cultures, different markets, different realities. So it's not one plan that fits all. The starting point in Trondheim is not the same as the starting point in Helsinki. So we need to be both local and Nordic. So how do we see our future? We have great potential. In Denmark, we have over the last 2 years really made a turnaround. And we now have a healthy business with growing margins. We have worked systematically with business improvements, risk management and have carefully chosen which projects to tender. We are now ready for growth while focusing on keeping our margins. And there are market segments where we can expand, and there are market shares that can be taken. In Finland, we have had a rather stable business with stable earnings for several years, but on a too low level. We have recovered very well after the divestment of NCC Housing and we have replaced the lost business with new business. But we are looking at a transformation of our business, a shift of mindset. A new generation of leaders are emerging. And in combination with the lessons that we have learned from the turnaround in Denmark and the knowledge that we have gained in the work with our strategic direction, we are confident that we can improve our earnings with maintained net sales and market share. To Norway. I think Norway has maybe the greatest potential. If we look back a couple of years, we had too many projects with a really high risk profile. We have now stabilized that business, and we see an end to that era. Our new projects are contributing to our earnings in a good way. And over the last year, we have focused on rebuilding the organization. And I'm happy to see that the pipeline looks more and more promising. I'd like to mention a couple of projects that we have taken over the last month, and it's the Manglerud Bard in Oslo. It's a school at Tesco Skate also in Oslo. And Giroa Norsen Ski Center in Trondheim that we actually won together with infrastructure. I'm convinced that we in Building Norway can and will take our fair share of the Norwegian construction market in the cities where we are present and where in the cities that we will be present. But we need to have sustainable growth, not only in financial terms. We will continue to work for a safer working environment and for lowering the greenhouse gases, but we want to be good and do good at the same time. And by sharing our experience and our knowledge with our customers, we can, together with them, build a more sustainable environment. We embrace diversity. Our team members are our biggest asset and we cannot afford to discriminate on gender, age or anything else for that matter. For us, competence is key. So looking forward, we are really embarking on a truly exciting journey. I believe that the new strategic direction is a perfect fit for building Nordics. We will benefit from strong harmonization where that makes the best and most difference and still have the possibility to bespoke routines where that makes the most sense. We can really make the most of being both local and Nordic. By working closely together with our customers, preferably in early phases, and using our combined knowledge, we can build great and profitable projects. We need to constantly improve, not only financially. We need to find ways to consistently work on improved productivity, find better ways of doing things and really leverage on our construction expertise and never ever underestimating the value of the crucial basic construction skills. Last but not least is the team members that are going to make this happen. We how we behave towards our customers, how we behave towards each other, how we act in society and how we take responsibility for what we do is what's going to make the difference and what's going to make us stand out from the crowd. And that is really what living our values is all about. So if I you should remember only 3 things from my presentation. It is this. We have significantly improved our business over the last years. We are ready to grow, and we come from different starting points. When but when we share knowledge between geographies or BAs, we can really unlock our potential. Thank you. Thanks, Katarina, and welcome over to this side. So we've listened to you both talk about building that we do in 4 countries. Would you say that there are large differences between the countries? Henrik? Well, there's obviously a difference in terms of market share, and there are some legislation that differs still. But those hurdles are lower. And if we compare a number of cities within your BAA with the size of cities within mine, we have a lot of similarities. And you also heard us say that we focus on the same segments. So there are more similarities, I would say, than differences. I completely agree. I would say that we think that the differences are bigger than they really are. I think we're very, very similar. And there are things that we can do between and share knowledge between our BAs. And we do that, both, as I said, in swimming facilities and in hospitals, etcetera. So it's Actually, talk about that a bit because it's in the new strategic direction, we talk about leveraging the strength of the whole company. How do we do that? How do we make sure that we use the competencies over borders? Should we take the swimming facilities as an example perhaps? You mentioned that we built on a core center of excellence within swimming facilities that is super tricky to do to handle all the risks that we need to handle. And then we started to help out in Norway when we went into that market at first with a couple of swimming facilities, and then we've grown from that. And you've built your own center of excellence that is strongly connected and share knowledge obviously with our center of excellence in Sweden. That's one of the examples besides hospitals and other areas. Yes. And we actually also share knowledge back when we kind of when we improve. So it's a very good communication. And that also shows that we can share knowledge between ourselves. And that also creates a strive from our different organization to actually ask for information. They want it. A thing that is very much discussed is productivity and how to improve productivity. What are we doing to do that, Henrik? Well, we touched upon that in my presentation as well and yours too, of course, obviously in Thomas' introduction. And again, building between countries, Denmark Building Denmark has been in the forefront of developing our virtual design and construction skills. So by learning a lot from the Danish organization, we now can expand on, as I presented, the opportunities driven by digitalization in that sense. That's another case where we learn from each other to move forward together. That's one example perhaps to answer your question. And maybe and of course, standardization sounds boring, but it's something that we need to do in processes, in small parts, even though we should be able to build bespoke projects, but still have standardized parts that we can make more efficient. Will we do more of that? Absolutely. Definitely. Good. We'll talk more to you, so don't leave. Stay here. Thank you both. We will now add one aspect, the property development and hand over to Joakim Hollenberg, Head of Property Development, and then also to Thomas Karlsson to talk about our sustainability targets. But first, we'll start with Jurgen. Property Development, we are a small specialized business in the heart of NCC. And we are operating close with a close collaboration with NCC building. And we are active in the Nordic capitals and the major cities. And for segments, we are focused and develop offices in attractive location. That is who we are. And the last 2 years we have the key action for strengthening our business has been on building stronger management. We have new recruitments in Oslo in Norway 2019. And this year we have a new management in Sweden. We have also stabilized the portfolio in Finland and started up some new projects this year. And the focus is has been in all the countries to stronger the pipeline. And also the leverage on the internal collaboration, especially here between property development and building. And that has been our focus on the key action. So how does the new the ongoing Nordic portfolio looks like? We have 230 1,000 square meter ongoing now. Approximately 60% of that is in Sweden, mainly in the Stockholm and Gothenburg area. Then we have 16% in Finland, in Helsinki area. And then in Denmark we are approximately around 11%, 12% and it's in 2 projects in Orhus. And then in Oslo, we have one project ongoing. So from the portfolio over to leasable and lettable spaces here, we can see since 2018 we have increased the volume here mainly in Sweden and in Finland. But we have a contribution here from all the countries. And we have a healthy gap also here between the letting ratio and the completion ratio. So we follow that closely when we start up new projects. So all of the projects we develop as having high level of sustainability and certification. And last week, the Sweden Green Building Award for the CityLab Project 2020 was won by the City Development Area Masthugskaian in Gothenburg. And we have 2 ongoing projects there today, Vorg, Huzet and Brick Studio. From the portfolio, about the numbers here and improvement. The first 9 months we have increased the profitability since 2019. The KPIs also about the EBIT margin and the rolling 12% for return on capital employed has increased compared to 2019 2018. So leaving numbers, how does the outlook and the market looks like? We deliver green interesting projects which have a really strong cash flow, which is really interest investment in the market. And the interest rates will be low and that will make a strong interest for stable cash flow. And the Nordic cities where we are will still grow and that is where we're looking for that. But we are also in pandemic in corona. And it's too early the long term effect here is too early to say something about. But during Q2 we saw some activity going down and some of the tenant were more hesitant. But after summer, we have a lot of activity coming back. And just to mention some of the letting we did in Q3 was the new headquarter for the broadcasting company in MTV in Helsinki. And also Meine Hem Svetling in Gothenburg. Our focus now going forward is to be in the capital areas and the larger growing cities. We will focus on office in strong location and close to public transport hubs. And we still continue to build strong project pipeline with the strong collaboration in the NCC group here. But we need to follow market development and risk exposures closely now. And that means that when we look for new starts, we have looked for more pre let. And in a big development area we're also going to look for starting up projects in phases in more medium size. And we will also start work with more business models. And one of that's to improve the capital efficiency. And one of the models we work with today is Jont Ventures. We have today one project in Kinneum in Gothenburg together with our partner Plazir. But we also see some opportunity about our strong cash flow and the interest in the investment market about doing forward funding. We have done that in Finland this year and we will look into it if we see more of that kind of opportunity. Ending up, we have now a strong management in all countries and have a collaboration internal and across the Nordic countries. We new office with the right profile is an attractive investment. And we have a strong collaboration now across the BAs and with our external partners. And we will work with multiple business models and develop in the right places and build a strong pipeline. Now we will see some of our films from our projects. Let me talk a little bit about sustainability in the projects. Joakim mentioned that in his presentation, and we've also seen examples throughout the previous presentations. And then let me just establish one thing here. Sustainability is and has to be a key part of the construction process. That's a given in today's world and in our markets. But there's also a number of different aspects that you can look at sustainability throughout the construction process. And let me walk you through this chart here. At the base, of course, we are meeting regulatory requirements and the expectations from our current customers and stakeholders. That's a given today. But we are also working with anticipating and developing products and offerings in advance of the regulatory framework and in advance of what our expectations our customers have. Let me give you an example. Henrik talked about the climate declaration that we will start to provide a year early compared to what is normally expected. On top of that, we are continuously working with competitive offerings and new products that has a higher sustainability profile and a lower impact on the climate. An example would be, for example, our green asphalt and recycled products that we've been working on for a long, long, long time. But also green and sustainable letting contracts that we offer from the PD organization. And on top of that, values are important to us. It's important to society. And we're operating with value driven development to have a more sustainable operation at NCC. One example would be that we have invested in the safety park at Arlanda to make sure that we can have real practice on a safer method to work in the construction industry. And then last but not least, together with our customers and suppliers, we are working with innovation and technology for a more sustainable development. One example would be the more efficient loadout that we're working with together with Volvo to make sure that we are optimizing transportation processes in our industry. We have current sustainability targets within 5 areas. Several of these will now be legislation. Several are part of our everyday life. We will continue to work with all of these going forward. But we want to put an emphasis on 2 that distinguish this industry and try to develop that a little bit more. So going forward, we will have 2 sustainability targets. Health and safety, of course. We've done a lot, but we can do more. This is an industry where we have a really dangerous environment and we need to continue to work with that. For the careful reader of this document, you can see that the target is now on something called long term injury frequency 4, focusing on the little bit more severe accidents. That's a European standard. And we're setting the target to 3 accidents for every 1000000 hours of work time. And then of course, climate and energy. We already have an ambitious target on climate and energy until the end of this year. We're expanding that target until the end of 2,030 to reduce the CO2 emissions from our own production scope, 1 and 2 per 1,000,000 in turnover. But we're also adding another target, a scope 3 relative CO2 emissions relative to bought materials. But we will focus that on 4 essential materials that contribute a lot to CO2 emissions. That's concrete, steel, asphalt and transport. Can we, together with our suppliers, have a real impact within these areas that will make a real difference for the industry. Going forward, we will be following these targets. But also we will continue to build our competence and our offerings to our customers within sustainability. We will have internal targets for other focus areas for all the old ones, but also additional to that. And then we will have specific targets for all the business areas. This is an ingrained part of the NCC operations. And over to us, we're here now with both Building and Property Development. I would like to pick up a bit on sustainability and talk more about that. Hendrik, you already mentioned that you have talked to a lot of customers about their expectations. Can you elaborate a bit on what are they expecting from us in terms of sustainability? Well, being a large player in the markets where we work, they expect us to be in the forefront in a number of areas, of course, sharing knowledge as well across all the BAs and becoming a bit more specific in how they can develop their projects or products in balance between reducing the climate impact, taking social responsibility, but at the same time, of course, securing the long term return on investments. Most of these PIC-twenty customers that we went to, they were both public and private, want to drive this ahead of legislation. That's an obvious finding from the interviews we performed. Katharina, what do you see from your horizon? I'm just also to build on what you are saying, Henrik. I see that it's higher need and request for sustainable projects. But it's also very much about, as you mentioned, knowledge sharing, how we because we have really good knowledge and experience in sustainability. And together, as I said, also with our customers, we can really share knowledge between BAs, but also with our customers to really kind of get a quick start or really get more out of the sustainability improvements to build a good environment. Joakim, you touched upon that when you talked as well. But from the investors' point of view, what are the requirements on sustainability there? I think they are really high. This is a business driver. So that's why we together here internal also develop all these high level sustainable building with a high level of certification because it's a premium. And it's so it's good. And the interesting thing is really strong and stable for that. Obviously, important. Can I just add one thing? And it's just that with being Nordic, what we can do is also to take the knowledge that we gain in Norway and Finland and Denmark to Sweden. And that actually is really good for society. So that is something extra we can do. Are there other trends that we see from the customer side that they ask for and that they want us to develop? In terms of sustainability? In terms of sustainability or other things. Well, I think to build on what I said earlier on and what you've added is, this is becoming a more integrated part of everything we do. It's not a standalone as it was perhaps 10 years ago. I gave the example of how working with virtual design and construction will have positive impact. They expect us to integrate this in a much stronger way, I would say. I would also say that a trend right now is in the middle of this pandemic. You could perhaps think that they would lean back, our customers would lean back and be a bit more passive. I would say the opposite. Actually, I would say that the vulnerability of being in this has made us think about what we do in terms of putting pressure on the climate. So I would say we have a strong driver today than maybe a year ago only. That's another trend that I can see at least from my market. You mentioned Corona, so let's move on to that a bit. How did we how has the market developed? And how are we what's the feeling in the market? Gertrude, Catranda? Actually, we don't see we see a little hesitance, but otherwise, it's not that big a difference. The difference is, as we talked back again, that there's been a more focus on sustainability in a larger sense, But due to corona, so far not big of a difference. Another thing we have to touch upon that everyone is discussing is the office. We're standing here today in a with socially distance between us and in a pretty empty office actually. Joakim, we build a lot of offices. What are the trends in the office market? First, we are in the pandemic. Of course, what I said earlier about we see activity in leasing and so on gone down because of the remote work and so on. But the need for workplaces and sustainable office and places is going to be coming back. And the long term effects now, it's too early to say today. Hendrik? We can see I showed that in my presentation. We're actually building our order backlog in offices. That's due to us focusing there, learning from each other, but we're actually adding new offices. So short term, I can't see the impact. Long term, we don't know. The long term perspective. Yeah. In the more short term perspective, it's time for us to take a little break. Welcome back. We will continue by hearing from our 2 remaining business areas. And a bit later, there will be a Q and A. There may have been some issues with numbers, but the right numbers to call if you want to ask a question should be under the web cast and on the NCC website now. So if you try there, it should definitely work. We will hear first from Kenneth Nielsen, who is Head of our largest business area in terms of volume, infrastructure, and then from Ilva Lageson, who is brand new as Business Area Manager for Industry, but with a long history in NCC and also in the construction industry. She was most recently Head of DUS, Development, Operations and Services. So she will also join us when we about digitalization a bit later. But first, Kenneth. Thank you, Maria. I'm going to talk about Business Area Infrastructure, and I will do it in 3 ways. I will start talking about what we do. Then I will talk about our market going forward. And last, I will talk about actions we will do to increase the profitability. To start with what we do, What we built and designed are the following products. We built roads and railways. We do groundworks. We do water and energy. And what you can see on this slide is Helsingborg's water treatment plant that we have developed and built together with the customer. And what you can see from this slide, it is a very beautiful sea view for being a water treatment plant. We're also doing heavy industrial work. And you can see here, we have 4,400 employees. We got 1200 projects and 5.50 customers. Our net sales then. We are pretty much Swedish operations. 75% of our net sales are within Sweden. We had 18% in Norway and 77% in Denmark. And you look at our products, that the 3 biggest products are roads and railways, it is groundworks and it's water and energy. And from our net sales, normally so that roughly 60% comes from public customers and 40% from private customers. Going over to the market. We believe that we still have a strong market and it's growing. And we have not been affected very much from the pandemic going on now. So but of course, we need to stay close to the markets. We see if there is a change so we can make the necessary adaptations. The numbers you see here on the market growth is from Euroconstrukt and they are produced volume. Starting with Sweden. You can see that we will have a healthy growth in Sweden 2021 2022. And in Sweden, it's many large project and they are primarily related to roads. And now when we're looking at new bids, it's a concentration on new bids in Stockholm. And for instance, the extension of the subway is now at Forbidden Stockholm. And when it comes to Sybros and the large project, there is a strong international competition, and it has been so actually for a long time. It's nothing really new there. Moving on with to Norway. And the Norway civil market, that's actually larger than the Swedish civil market. And as you can see from the numbers, it's also growing faster than the Swedish civil market. Also in Norway, there's a lot of large project, but it's mostly related to roads, even though there's a fair share of railways also in Norway. And there's a lot of now project coming up in the larger Oslo area. And also in Norway, there's a strong international competition for the larger project. Moving over to action for increased profitability. Our overall priority is that we go for profit before volume, meaning that we don't enter into project if we don't see clear track for profitability. We do not take on project just for keeping the volume. In 2018, we launched an action plan for increased profitability, and it was within these four areas. The first one, to set in place what the right organization and team and then to working with our main process, which is winning projects and executing projects. And of course, they should be profitable. And our 4th area was we had some underperforming units, so we have kind of a special treat for them, special action plans. And we've been working very hard now with these actions and been following them up every quarter and actually for the underperforming units even more often. So what is the outcome? Well, here you see the blue bars is actually representing our regions. And you can see the EBIT also in percentage. And you see in 2018, we had 7 regions that were under 0, and some of them had heavy losses. And then if you look at 2020, we have now managed to take away many of the losses in the regions. We actually now just have one region that has an EBIT loss, and that's a rather small region. Another perspective, if you look at the net sales here and the margin from 2018, we had a terrible year 2018. We had a loss of minus 4.1%. In 2019, we improved to EBIT 1.2%. And now the rolling 12% is now 1.8%. And the year to date is 2%. So we are improving. We are far from happy here. And what you heard earlier today is that we at least should reach over and above 3.5%. That is our target. So the route to increased profitability then. We will continue with the action plan that we have. That is very much securing the basic capabilities that you need to have in place in every construction unit. We keep on sticking to them to improving them. And that will give us improved profit in short term. But as you saw, we have stabilized the business. We can now start also looking for the long term development. So it's a good timing for us to start looking in a strategic direction, where we can develop our capabilities where we want to be over time, but also, of course, improve our profit, both short term and long term. So we are working with a lot of areas here. One of the areas that we see that it's a high potential, it's increased productivity. That is a prioritized area for us. And you might have heard that there have been numerous studies in the construction industry that shows that there is a lot of potential for lowering cost in construction projects, and that is by reducing waste. And waste in this term that is like inefficient worksites, it's rework, it's over design and so on and so forth. During our work with the strategic direction, we were identifying 11 areas for improved productivity. And one of them is that we want to be leader in productivity in some selected company projects. And one of them is water treatment plants, where we have a very strong position. We can do the CBR work and we can do the process work. So for us, it's not so complex. But for others, it can be like that. And we want to develop that. We are good at that. We want to develop that even more to take an even stronger position. And we can do that, but even more improved our knowledge sharing and also leverage best practice from the different projects from one to another when it comes to methods and design. And we will also, of course, add on to that to be more proactive in the market, being closer to the customers, who understand the customer needs, so we can do better business for our customers and also do better business for NCC. So as a summary here, the Business Area's EBIT that has gradually improved. We have stabilized our performance through our action plan. And going forward, we believe that we still have a strong and growing market in our relevant countries. And we continue with our action plan, secure the basics, but also add on the actions we have within the strategic direction. So that was a really good example of how we can use modern technology to raise productivity in our industry. And keep that thought because we will go into talk a little bit about digitalization and modern technology later. As Maria mentioned before, I have had this role for 2 weeks, but I have a long history in NCC and even longer in the construction industry. I am going to tell you about NCC Industry and the steps that we are taking to further improve this business. And the scope of this business area is to produce and deliver asphalt and stone material. These are key components in the construction process, and we do that to external customers, but also especially together with the infrastructure to build better business for the entire NCC. The market for industry is strongly connected to the rest of the construction industries market. Asphalt driven by infrastructure investments, both new ones and maintenance, while stone also have a strong component in the building market. The business area and industry also plays a very important role in reaching the sustainability targets for NCC. And I will come back to that a little bit later as well. Looking into the specific 2 divisions, we have division asphalt, as you can see right now operating in all 4 Nordic countries with a good distribution over the market. We will sell Asphalt Finland, and I will come back to that. We offer products that are close to the customer demands, and we develop them ourselves so we can really meet what is expected out there. And when it comes to the other division, that is stone material, we are equally well or even further distributed over the 4 countries. Here too, we are working with understanding the needs for the customer, the needs for the market, and we are developing a lot of products, both in division stone but also together with the rest of NCC and in asphalt particularly. The business without foundation that is Hercules that we will move to infrastructure will look like this. This is our starting point and as you can see we are heavy in Sweden but we are also relevant in the other markets. We have a product mix where approximately 75% or 3 quarters are asphalt and the rest is stone material. And the customer mix, as you can see, 7%, quite small of our net sales goes internally, while we have central governments and municipalities as key customers together with a broad range of private customers. So this is the starting point for industry going forward. We have already announced and also started some immediate actions to further strengthen and improve this business area. First, we found out or noted that we had a complexity in division asphalt, in the asphalt business that didn't bring value. So we are reorganizing and de layering to really be so efficient as we can be to be competitive and meet the customers' demands. This means that we will reduce approximately 100 full time employees. We will lower the cost base in this division with SEK 50,000,000 yearly. And we see that this requires a restructure cost for approximately SEK65 1,000,000 that will be taken Q4 or Q1 next year. So this is one important thing that we do to further make us strong and profitable. The other thing that we are doing is to divest asphalt Finland. This business is fully detached from the rest of NCC. We no longer have infrastructure in Finland and we don't see that we have synergies or multipliers that defend us to work and act on the Finnish market in asphalt. Furthermore, it has been a non profitable unit for us over a couple of years. So what we're doing now is to find the best way to divest this and leave Finland's asphalt markets. Finally, we are also moving the foundation business that is Hercules to infrastructure. While this might look like it's just moving a box in an org chart, it's an important matter for us to be focused and use the same similar business logics to really scale up and be able to find more profitability. They will also simplify the internal business since Hercules as such has infrastructure is a really big customer. So these are 3 important steps that we're taking right now. And while this business as such being really mature, being industrial in how it acts, you always have to have productivity, listen to the market, nuance what the customer needs. That is always top of the agenda for everyone in this business and for us especially. So every manager in industry is always keeping on fine tuning operational excellence and working with measures to improve our competitiveness. But the good thing is that this business is also a really good candidate for adding in modern technology to further take leaps in all of these measures. And we're doing a lot of that and we'll continue to strengthen that. Every single thing we do is not a self purpose in itself. We are really trying to find the good ways that we can use modern technology to improve areas where we want to improve. So for example, working with remote vehicles, autonomous equipment that will help us with safety and efficiency. We will see a little move later on with drones that is both driving safety but also control and efficiency. Sustainability, an area that is really important for us. Here we can also see that connected and electrified vehicles like the one that you saw, the connected vehicles you saw in the Volvo initiative, the initiative we have with Volvo, that drives sustainability because we will have the opportunity to really know what makes the difference in transport, for example. And something that you might most often meet in the interface to business to consumer. We are also acting quite a lot in the interface to our customers. We have something we call spot. It's an easy platform for our customers in municipalities when they have for example a pothole in the street they want to fix, they just take photos, send it to us, and we have a much quicker, better way to solve it than the very labor intensive work we had before. So taking some actions, 3 actions, immediate actions, continuously working with productivity and efficiency and adding on this modern technology that will make us really competitive and profitable even in the future. And we will defend and strengthen our market leading position. And I want to end with the responsibility and opportunity our business has in sustainability. And you have heard Thomas earlier mention and tell what our targets are. And I think it's really, really good that we have in our own hands to impact this climate footprint so much because the things that we do in industry, the heavy production we have, that is something that we really can change when it comes to carbon dioxide footprint. So we have done that all the way from 2015 and even before and we will continue to do that to reduce the fossil products that we use in producing asphalt and also when using stone crushers. We have a lot of different things, all of them because we know that it will not be a sustainability activity, will not remain sustainable unless it also has something that is good for us as businesses, good for you as shareholders. So every single one of these initiatives also comes with a good and clear profit or impact that benefits us as a company or shareholder. We're delayering the asphalt organization, we're exit, asphalt Finland, we will focus by using the same or similar business logics. We will increase speed in using data and modern technology to leverage this business. And we will keep the front position in sustainability transformation. Thank you, and welcome back. We will have a short discussion on digitalization and productivity and maybe some other topics. But I would like to remind you also that in just a short while, we will have a Q and A, and we're really looking forward to any questions you will have. We have all the presenters from today here in the room. We'll try to be socially distanced, so we may need to move around a bit, but they are all here. If you want to ask a question, you need to call into the telephone conference. The numbers are the correct numbers under the web cast. And then you press 1 on your telephone, and you will be put in the queue for the questions. So please do that now and think about that while we continue to talk to Kennet, to Ulva and to Susanne Littander, who is back, but not in the CFO role this time, but in the role of new head of DOS, Development Operations and Services, and also IT. How does that feel? Feels great. That's good. We talked we saw one example on digitalization in the drone film. Maybe, Ken, that you can elaborate a bit. What do we do with digitalization that can help us and also hopefully improve what we do? I see digitalization as an accelerator. I mean, the basis is actually that we know what we're doing, that we know how the design process is and how we produce. When we use the utilization, for instance, in design, we will increase the efficiency. It will be higher quality. And when we start the building process, when we start the actual building, we can do better planning, better see the logistic so that we reduce waste. So have the basic in place, add on digitalization that will increase the productivity. We talk about and Tomas mentioned that about becoming more data informed. Ilva, what does that actually mean? Yeah. I would like to stick to that, that it's data informed and not data driven. That is something that you hear quite a lot. And why that is important for us is that we're a knowledge company and we still rely a lot on the individuals, their their knowledge and the team as such, but we still want them to be more fact based when they take decisions. And this is really, really good for us as a large company that we can move knowledge between the parts in the industry or in the company. We have heard examples of that before. So when we can transfer knowledge into information, into data and back again and make data informed decisions. That's really good for us in addition to the knowledge we have in each and every individual. And are we is development going fast now or it seems like this is something we talked about for some time? Yes, but it is kind of a tipping point because we are now in the state where the technology is with us, the maturity with all our employees are with us. So I see that we can really leverage from this as well, and it will go much quicker from now on. In the interest. And Sam, what do we need to do to get ready for this? Do we have are we geared up? Yes, we are. We are gearing up. It's a super important area for the business areas, as we've heard from all of them, to improve efficiency and productivity, etcetera. We have a few investments that we need to do. We have to invest in people, in competence, in new areas when it comes to IT, for instance. We are recruiting people there, new people with new competences that we haven't had. We're also strengthening some areas where we need to have more competence in certain areas where we need in the for the way ahead. We also need to make heavy investments in our technical platforms. So we have developed a road map, a set of initiatives with prerequisites, what we need to do to be able to change out our technical platforms and tools and the way we work to really reach all the way to become data informed. Kennett, what will it mean for you and your I mean, let me take an example. For instance, in the bidding, if we can collect all the information that we have from similar products that we have done, similar projects, if we collect kind of experiences from those projects and put that into our bids, like when it comes to cost, cost in detail, time, safety, quality issues and so on. That will add a lot of fact based things that will increase kind of the quality in our bids. So I think that could be very useful. And how will our people learn how to use all this new data? What are we doing there? Yeah. Well, 1st of all, it has almost started to be so that the employees teach us because people are so much more mature. But in general, of course, we try to implement things that brings the value immediately so that you get a pull and desire to use things. Thank you. I'm sure we can get back to that as well if people have more questions. If not, we will take a really short break while we rearrange ourselves here in the room for a bit for questions. And again, please call in and press 1 or you can send in your questions as I see that some have done as well. So stay with us, and we will be back very soon. Now we're back and ready to take questions. If you want to call in and press 1, you can do that or you can send in questions. But I think we have we'll start with a question on the phone. And if this all works, I'll ask the operator to take a question from Erik Grandstrom at Carnegie. Erik? Thank you very much. Can you all hear me? We can. Hi. All right, good. Thank you for having the call. I have a few questions. Starting off perhaps with the financial targets, you previously you've been unwilling to sort of provide a timeline for the financial targets, but now you are providing an EPS target for 2023. Is sort of this increased transparency a reflection of your view of where profitability is heading? Or how should we view this sort of time line? Hi. Good morning, Erik. I think the way to think about this is that we've been through the first phase of our plan. And while we've been doing that, it's been very difficult to set a defined timeline. Now we have a clearer idea on where we're heading. And I think it's for external stakeholders like yourself or for our for the NCC organization, it's a good thing that we set the time defined target. So it's basically it's a question of progression in the development of the company. Okay. Thank you. And then also if we could move into sort of the business area, if you could please restate the targets that you mentioned for the business units because I couldn't see them in the presentation, but I do know that you mentioned them earlier. Could you restate what those targets are as well as when do you expect them to reach those targets? Is there a time line here as well? Well, there's no specific time line for each business area because it's as soon as possible. That's the time line. And one of the qualities with the EPS target is that it really doesn't take into consideration the mix of contribution to the profits. So we will in all types of businesses, there are certain element of we remain with the target for 3.5% margin for the contracting unit. While for industry, we've actually raised the bar a little bit to 6% margin and also putting more emphasis on the 12% return on capital employed target. And for PD, the emphasis is all on return on capital employed 12%, while the margin target of 10% is more of a risk management measurement than anything else. Okay. And then finally, on Industry, you mentioned that the new target sort of is a 6% profitability target. I believe it was 4% previously, and the return on capital employed is now 12%. Could you perhaps state a little bit of how you expect to reach that? That does mean that the business needs to grow in order for you to do that? Or do you think that the current operations that you have within industry, including some of the changes that you've already announced, is enough to reach that target over time? Well, the reason why we've increased the margin target for industry is to better reflect the fact that the business area has significant fixed assets. So there has to be a balance between those. The 2 initiatives that we launched the other week takes us away towards the target, But there's still some distance to go. We have historically met and overachieved on these targets in our Swedish operations, which means that we will probably have to work with more of the operations in Denmark, Norway going forward. And then all the elements of the strategic direction with more of an emphasis of collaboration between business areas and using our expertise and capabilities between primarily industry and infrastructure going forward. Okay. And my final question regards your ability to reach sort of this EPS targets for 2023. Do you think that do you need to have the market working in your favor in order to do that? Or do you feel that as long as the market remains stable, this is an EPS that you should be able to achieve with the current order backlog that you have? Well, that's fundamentally, it's an impossible question to answer. But let me put it like this. This is based on the current estimates that we do. We would of course like to have a tailwind from the market. That's always good. But it's all we think that it's a relatively robust strategic direction that we have on normal market fluctuations. Thank you, Erik. Okay. Thank you very much. Thank you for having me. Thanks, Erik. We have a number of questions here that I will read as well. So starting with questions from Tobias Kaj at ABG. I'll take them in three questions, but I'll take them one at a time. The first one is, do you expect do we expect a gradual improvement of EPS from the current level to 16% in 2023? Or is it back loaded? My expectation is that we will have a steady progression towards the target. Okay. And then there is a question about PD. Can you be more specific regarding changed pre lease requirements to start new PD projects? The short answer is that is no because it depends on the situation. But so we will make it depends on the size of the project. It depends on the location, it depends on what kind of prereases we have. So the thing we can say that during the normal the current circumstances, we will be a little bit more cautious. A bit more cautious. And then there's another PD question about relating more to sustainability. And we talk a lot about sustainability. You say that it's important for you. In PD, you often mention certification of buildings, which refer to emissions in the management. But that is peanuts, in Tobias' words, compared to emissions from the production. When will you report CO2 emissions from the construction of PD projects as well as the remaining operation? Well, PD that's, of course, true. But PD is a relatively small part of the total production of construction that we have. So we will focus on CO2 emission scope 12. And then we are adding CO2 emissions Scope 3, I. E. Bought emissions from steel, concrete, transportation and asphalt. And that is true for PDN, it's true for all the other business all our other construction activities. Dusan, did you want to No. Okay. Good. I hope that's okay to be there. We have to come back otherwise. I also have a question from Simeon Mortensen of DNB. How much revenue growth will be needed to meet the SEK 16 EPS target? And also, do we see a risk for corona or COVID-nineteen impact to this and to growth in general, I guess? I was going to say it's the same answer as the previous question regarding the market. But to add on that, EPS, going back to the qualities of EPS, it doesn't really take into reflection the mix of growth and margin increases. And we will work with both. So I really don't want to state the number on where exactly where we how we have calculated it. We have an abundance of scenarios that gets us to this number. Okay. I can build on a question on growth from Stefan Andersson at SAB. We can grow you can grow through being more aggressive in tendering. But would you also consider using acquisitions as a tool, given your large deviation from the debt target? First of all, tendering is one of the tricky things with this business. Because as a leader in the company, you want to have lots of orders received. But you have to also make sure that you have a certain rigor in your process, making sure that you have the right price, you have the right risk profile and you have the right competence available. So we will work with that and make sure that we maintain the same rigor that we've had up until now. We have a strong balance sheet and I'm glad that so many are appreciating that for this quarter. Of course M and A is an alternative for all companies. But what's important for me is that we make sure that we have a traction on the strategic direction before that. So we haven't added industrial value to any type of M and A that we would do. If that happens, whenever it happens, we will come back to that then. I signal to Katarina to come in because there was a build on question on Denmark. Can you repeat the growth ambitions in Denmark, as I might have misunderstood those, says Stefan. I think I heard unchanged top line with margin improvement, but I might have misunderstood how we're thinking about building in Denmark? I what I said was growing on net sales and market share with maintained profitability. So growth is still an option. Any other comments on growth? I mean growth is long term necessary. But first of all, it's bottom line growth that we're focusing on. And not making the mistake of using top line growth as a given proxy for bottom line growth. The rigor and the discipline in the operations needs to be there first. Good. And then I have a question from Alwyn Sanberg, Kepler Cheuvreux. You talked about methods for turnaround in building Sweden, for example. Can you be more specific around the turnaround programs? And also more specifically, why we wouldn't appear why we wouldn't get in those situations again where we need turnaround programs? First of all, I think we will get into a situation where we will need turnaround programs, but fewer and not as drastic as what we've seen before. That's so we'll probably never get to the 0 level. On the program, it's program where we identify root causes, where we identify activities, where we have a rigorous process of following up every month, both that the activities has been done, how much has been realized and if we are moving into the right direction. Good. And then a follow-up or another question, rather, from Albin Gen. I like the clear EPS target for 2023, but volatility in the commercial property development can be quite substantial. How is that viewed from your side? That's true. And we've tried to factor that in, but that's an issue going forward. And we will always try to do sound business decisions regardless. So it's a factor. We've thought about it and we will try to handle Good. I have no further questions on the telephone, I think, and actually no further questions here either. So maybe give people 15 seconds. And if not, I think we're ready to soon end this Capital Market Meeting. We will publish the recordings and presentations from this meeting afterwards on our web, and you are welcome to follow that there. But for some final words on this day and first to summarize, I will hand over to Thomas Kapsal. Thank you. Thank you all for spending this time with us, and thank you all for very good questions. I hope that you today has heard us talk about stability and how we have now created a platform for further development of the NCC Group. I also hope that you've heard us talk about productivity, digitalization, that you heard about talk about sustainability, that you heard us talk about segment focus and profitability. But most of all, I hope that you've heard us talk about our focus and commitment to our core, to our ability to handle, manage the complex construction process. Building on our skills and building on our expertise and being the knowledge based company that we are. That is what will make us reach our targets. That is what will make us improve on earnings. And that is what will create value to shareholders and to all other stakeholders to NCC. I'm really looking forward to the day when we can meet in person. But for now, thank you all and take care and stay safe.

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