Welcome, everyone, to the presentation of Skanska's three-month report for 2017. I'm André Löfgren, and I am heading up Investor Relations for Skanska. As many times before, we are hosting it here at our headquarters in Stockholm with a live audience, but we also have a lot of participants on the web and over the phone. You will all be able to ask questions after the presentation. The presentation will be held by our CEO, Johan Karlström, and also our CFO, Peter Wallin. With that, Johan, I leave it to you.
Mm-hmm. Thanks, André, and welcome, everybody, to this report. Do you see the three people behind me on the slideshow there? They're working at a very impressive project, the Slussen project in Stockholm, three of the employees on the project, and we have a very large organization there. And even when you are in Stockholm, I really want you to take a look at the Slussen project, and it will continue for several years. We have plenty of time, but it's a very good example of a huge infrastructure project that we see now going on in Stockholm. But it's also an example of what we do around the world in the different markets. Safety is a very high priority in Skanska.
For us, it's important that everybody that is on the work site, I'm talking about Skanska employees, subcontractors, consultants, representatives from the clients, and sometimes even people from the outside, that they're coming home every single day without being injured. That's a value that we work really hard with within Skanska. Next week, we have the Skanska Safety Week, 2017. We always have it once a year. Of course, we focus on safety year-round, but we have like a special week when we dedicate the whole organization to look at safety on all the thousands of projects that we have.
In several of the markets, we also have extended it to its, so it's an industry-wide safety week with all the players in the market, including our competitors, and this is something that we definitely want the whole construction industry to join to work upon. So with that, I'm moving into the quarterly report, and you can see here that we have an operating income of SEK 1.8 billion for the first quarter, SEK 200 million lower compared to the first quarter as first quarter last year. And the underlying businesses, if you take a look at that, you can see that there is a strong performance from the property development operation in Skanska, especially in the first quarter.
Here, I would just want to point out the businesses that we have in residential development, very strong performance there. Then, of course, the gain that we have got when we have divested the A1 highway in Poland, which was a concession that was sold. We have a strong focus on the construction operation and also restore the profitability on, in the underperforming units, to turn them around. And here I'm talking about Poland and a part of the U.S. operation. I will come a little bit more into the details further on into my presentation. And here you can also see that the earnings per share is up, compared to first quarter last year. And, it's a little bit...
The reason for that is that we have a different composition of the tax rate. Peter will dwell upon it and explain it a little bit further. So despite the fact that we have a lower operating income, the EPS is higher due to lower tax rate. Strong order backlog, this is record high for Skanska, SEK 200 billion. I have not seen a, an, a number starting with a two here, during my time in, in Skanska. And of course, that's a good situation for us going forward. And a big part of the backlog we find in the US market. And we can also see that we have a very good return on the property development operations in Skanska.
Strong balance sheet, and I think that the strong balance sheet that we have, that is the, that is a foundation, so we can continue to grow the Project Development operation, which is the strategy that we have lined out in Skanska, and we have had it for several years. If you go back in time, you can see that we have expanded it, increased operation, and that is exactly what we plan for the future. Moving into construction, the revenue slightly up, and the order bookings, as I mentioned, was very strong compared to the first quarter last year, especially in the Nordics and in the U.S., where we have had a good order intake. The book-to-bill here is 128%.
Just to make sure that the book- to- bill here is now rolling on a rolling 12-month basis. Operating income slightly below what we had the first quarter last year. The underlying performance differs between the various business units. Sweden is very strong, and I think that here we have a unit operating in, of course, in a good market, but it's a unit with a lot of project in a very good shape. It's like in a machine that is running, and that is very healthy for our business. We have had a further write-down in the Polish operation with SEK 100 million in the quarter.
We had turned every stone and looked at all the various projects, and we found that it was right to take down the project with around SEK 100 million. One thing which I think is important to mention here is that the backlog that we have in Poland is quite short, if you talk about duration. So at the end of the year, most of the backlog will be gone and be replaced by new projects. And that is differs if we talk about the other challenging unit that we have in Skanska, in USA Civil, where the backlog is completely different. Big project, long, and long duration of the projects, which means that it's gonna take much longer time before we see a new backlog that have replaced the existing one.
So we're working hard to stabilize and making sure that we have the right numbers and also the right performance in those businesses. But beside that, we all the other units, including the other part in the U.S., the USA Building operation, and the other European and Nordics, Nordic units, they are stable and in good shape. Moving over to residential development, as I just mentioned, you can see here that we are performing in a very good way. Revenue is up, despite that, the homes sold is basically the same as first quarter last year, which means that the value per unit is higher. It's a little bit of a composition of the projects that is more high-end type of projects here in the portfolio, but also, we're also taking advantage of a good market situation.
Operating margin 13%, over and well over the 10% target that we have for the business. Here we also see that the main contribution on the profit here is coming from Sweden. It's a very good market, it's an underlying demand that is there, and we think that that will continue. We are not afraid of a bubble in the Swedish market. We have got a lot of questions around regarding that, but we see that there is an underlying demand that will continue for the future, and it's gonna take some time before Skanska and other place in the market has really filled up with the supply to the demand there.
You can see that the return on capital employed is very impressive and well above the 10% that we have as a target. Commercial development, where we design, build, invest in offices, we lease them, and then sell them to investors. We have lower activity in this stream if you talk about divestments during the quarter. In the comparable period last year, we sold the big Seaport project in Boston and with a very nice gain that you can see in the brackets there, that came out. But the activity, the underlying activity in the stream is actually higher than before. We have 46 ongoing projects with a total investment value at completion of around SEK 27 billion.
That is the highest value if you add all the 46 ongoing projects together. Which means that we are gradually building the businesses up here for growth there. The market value that for the SEK 26 billion-SEK 27 billion investment of the projects is around SEK 33 billion at completion. The leasing rate and the completion ratio that you see here, that is something that we follow very closely, and you can see that we have quite a young stock of ongoing projects because we have started several projects during the last quarter. You can see five here, and several of them have been quite large. Then, of course, it's important that the leasing continues with the investment there.
So that is the two things that we are looking very hard on, and you can see the numbers here that we that we did during the quarter. Infrastructure development, the divestments here are more lumpy, because there are fewer fewer projects that we will sell. So in the first quarter, we sold the A1 motorway highway in Poland with a very good profit. You can see over and above the market value that we have disclosed in the in in our report.
And you can also see that, we also go out with the net present value of the existing portfolio, the market value that we see here of SEK 3.2 billion, that here, which is a cautious valuation, that we disclose to the market. And of course, when you make a transaction like this, the return on capital employed goes up, and you can see the numbers here. Moving over to the order situation in construction, and you can, if you take a look at the two lines there that is going over the various bars, the bars is the order backlog each quarter.
And you can see here that it's hitting the SEK 200 billion bar for the Q1. But the two lines that you see, the dark blue and the light blue, they show the revenue versus the order intake. And you can see that the dark blue is much higher over and above the revenue, which means that we're building up the backlog there. So if you compare it with the first quarter last year, where you see that this diverse order between the two lines in Q1 2016, we were actually eating out of the backlog as the book-to-bill ratio was below. But now you can see that we are building it up for the future.
Here you have a breakdown of the order backlog and order intake for the various areas within construction. You can see that all the numbers, if you looked at the book-to-bill ratio, which is the key ratio that you should focus upon, they are all over 100%, which means that we are building up the pipeline for the future. So with that, I hand over to Peter, and you're gonna go over the details.
All the details. Thank you, Johan. So let's start with construction, as we normally do. We shouldn't rock the boat, right? Revenue SEK 32 billion, 3% up in local currencies. And based on what Johan has said about the backlog, you can clearly understand that we will have continuous growth on the revenue side and good support there. Gross margin, SEK 2.1 billion, and an operating income of SEK 1.4 billion. First quarter in the Northern Hemisphere type of construction business is the toughest quarter because of season, as you know. So, in addition to that, of course, we have taken a hit of SEK 100 million in Poland. So the gross margin is a notch lower compared to last year.
We are maintaining selling and admin, despite the fact that we're incurring quite a lot of costs relating to ERP implementations in Sweden and in the U.S. civil business. So the operating margin is standing here at 1.2%, a number which we are not pleased with, and the margin target remains at 3.5%, for the full-year basis. So digging in a little bit into the areas here, very strong performance in the Nordics, about Northern Hemisphere. They actually work in this part despite winter. And Sweden is, of course, having a very strong margin at 3.4%. Europe is the biggest negative, of course, backing out SEK 100 million, you can see that we are trending on the same level as...
Czech and Polish business are very much have a very low start of the year because of really historical reasons and the winter impact there. Whereas U.K. is the other part of Europe. In Skanska, they are still part of Europe, are stable. The U.S. businesses, Building and Civil, are doing a somewhat lower margin, as Johan alluded to, stable within building and still hampered on the operating margin side in civil, due to the fact that we are still negotiating the design changes and also this ERP implementation. That's the 1.2% operating margin for the stream.
Going over to residential development, continues good and strong performance, 26% up in revenues, all of that due to price mix, where we are essentially at the same volume as last year. Gross margin is close to 18% across the markets, which is a very good gross margin. And we are maintaining the selling and admin at around 5%, thus giving the 13.1% operating margin. And that is only the development profit. Construction is reported in the construction stream. So going into the various market, the Nordics are doing quite good. And of course, engine is Sweden, but performance is also good in Norway and also trending up in Finland. So Nordics overall strong. Europe, as you can see, looks like a drop compared to last year.
It is a drop compared to last year, but only because last year we saw the last land gains relating to the UK residential part. So underlying, we are improving the performance here. In Prague and Warsaw, which is really the markets where we're, where we are in, you can see that we are trending on, on a sort of maintained level, just below 5,000. And, and, we have started roughly 900 homes. So started, sold, or in tandem. And homes in construction, just over 7,000 units, very high sale, presale rate in, in the portfolio, close to 80%.... which is far too high.
But we are not starting projects until we are ready to launch them into the marketplace, because the track record with good growth is, of course, also due to good market, but predominantly it's also due to good execution, keeping the cost. The number of unsold completed is very low compared to the overall, so I will not even comment that. And then you have CD. Strong start of the year, even though it's a tough comparison compared to last year when we sold 101 Seaport in Boston. And we have already started to divest properties into the second quarter, as you have seen from the press releases. Operating income SEK 300 million in the quarter.
And if we look into the to the sales, we posted a 31% margin, if you compare capital gain to the sales proceeds. So that is, of course, continues to be very, very good and very high. And the outlook for continuing the good activity in this stream, you can see from the next slide, where the bars representing the ongoing projects and completed projects. And you can see that we have quite a good base to continue to divest from. So it continues to look good in the commercial stream. This is underpinned by leasing. We are maintaining leasing on a rolling 12-month basis, and you can also see that we have good, continue to do good leasing in the second quarter.
So this all bodes well for continuous good value creation in this stream. Last but not least, ID. And here, the A1 sale was executed into the first quarter. Good sale, quite a bit over and above the internal market value we had before putting it out on the marketplace, and we are happy with the proceeds. If you'd look on both the ID stream and the CD stream, because of us selling mature projects, you should expect that to be very low in terms of net operating income from mature projects. So the gains are made from divestments, and when we sell a mature project, we lose the income on that project.
Sounds easy, but if I look on the various reports out there in market, it doesn't seem to be the case in the forecasts. Just a heads-up. If you look on the portfolio, now we are at 3.2 in net present value, and I would say that we carried this at quite conservative valuations compared to what we are seeing sometimes out in the marketplace. Pulling it all together, knocking down with the central costs and elimination, we get that SEK 1.8 billion in operating income. So two factors that gives an EPS improvement, despite the fact that EBIT operating income is lower compared to last year, is number one, extraordinarily good cash management, I would like to say, from our units in our Skanska Financial Services. Great job.
So we end at the positive financial items. And the other part being taxes being a bit lower because we are selling A1 in form of shares. So we have a 14% average tax rate compared to 21% last year. So that's SEK 3.90 per share. And cash flow first quarter leaves the balance sheet when it comes to the construction stream. Recall, at the back end of last year, we sold M25 in the ID stream. Those proceeds were booked as a receivable, and the money was received in the beginning of this year, thus also giving a strong working capital improvement. So net-net, we are positive in working capital change, which is a bit unusual for the Q1.
We are continuing to invest money and plunk in money into investment streams, so we are very pleased with this cash flow for the first quarter. We are continuing the trend of a very good free working capital movement. You can see we are moving sequentially up, quarter compared to quarter, and on the green line compared to the revenue. We are, again, over and above 14% now. If we look at the development streams and on the investments, you can see that we are a bit lower compared to year-end. If you look on the ID line, you can see that that is the fact that we have gotten the proceeds from both A1 and M25 in the first quarter, so that knocks down the capital employed in the ID stream.
You should expect this to continue to increase, the capital employed in the development streams, because we are increasing the activity in the stream. You saw the strong movements of start of ongoing projects in the CD stream, for example. So with that, looking into the financial position, strong, very strong financial position, which gives us a lot of leeway when it comes to taking good decision and good calls of starting up projects. In April, we also dividended out the SEK 8.25 per share in dividend for the year 2016. We are continuing investments here, but we are foreseeing a continued strong financial position.
You can see the 12.6 billion we had in the way we are measuring our financial capacity here is far greater compared to last year, despite the fact that we have continued the investments into Project Development. And again, we have done that with a very good use of our funds and good cash management. Equity, also very strong, compared to last year. And here, you can also see that the effects and the long-term interest rates and their impact on pension is creating movements there as well. Again, this is before dividending out the SEK 8.25 to the shareholders. Johan?
So let's wrap up here with some comments regarding the market conditions before we open up for Q&A. And you can see here that overall the market is very good and stable and going forward. And there is no change since the last quarter. So it continue to be a good market with basically the same conditions as we discussed last time we met here. Very strong situation in Sweden. Talk about the market here, we see demand for residential, for infrastructure, for public buildings, and a lot of different things here. So it's the whole sector, and we can see also that there is also stable situation in Finland and in Norway. Some comments maybe I should make regarding the UK.
We have a Brexit coming. Nobody knows exactly what the rules gonna be, and that has hampered a little bit the activities on the private side for private investors. But on the other hand, we can see that the politicians in the U.K. have boosted the markets a little bit on the infrastructure side with more public spendings. And that has, for us, been a wash between the two sectors there. A lot of people ask me, "Well, what do you see in the U.S.? Do you see any projects coming out from the administration, from the White House?" No, we have not seen any projects yet coming from them. It's a lot of talk, a lot of discussions, and of course, there's a lot of need here, in especially on the infrastructure side.
We expect, though, that it will be something coming out. Exactly when and how it's gonna look like, nobody knows, but that is something that we follow very closely. But what they have said is that they will come out with something that's gonna be funded by federal money, and they also expect that's gonna be some sort of a private investments in the infrastructure project will come to the market. And we read that as it's gonna be an opening for even more PPP or P3 projects there. But this is a market that we follow. On the other hand, we see a lot of activities on the local state levels, so there is a strong pipeline of projects overall.
I would say, especially on the infrastructure, there's a lot of airports that need to be rebuilt and so on. Residential market, the Nordics, extremely strong, including, and I would say Sweden is in the lead there. And we expect that that will continue. And on the commercial property, property side, we see huge demand for our assets once they are, once they are completed and filled with tenants. Due to the low interest rate in the market, the properties that we come up with for divestment, there's a lot of buyers out there, and we see opportunities now to continue to sell them with, with good profitable levels.
And the other market we operate in, the leasing market, which is the base for value creation, is also quite a strong market in most of the places where we have operations. And the PPPs, that's basically in the U.S., we see projects coming, and that's where we have the biggest focus. But where, if and when it's gonna come projects to the market in Europe, in the construction markets where we operate, that is, of course, different, the type of project that we are interested to take part in and try to see if we can and get the contract for. So with that, I think it's André, maybe time for-
Yes.
- some Q&A here.
Thank you, Johan and Peter. Let's open up for questions, and we'll start with the live audience here, and then we will move over to the phone. I see already Mr. Höglund is waving his arm, so let's get him started.
Yes, good morning. Good morning, Niclas Höglund, Nordea. If we can start, may start with the construction in the U.S. market. Well, we are sort of, we don't get as much details as we used to. I was wondering if you could help us a little bit on the underlying profitability. Is building also coming down year-over-year? Is the sort of these like lower margins that we're seeing right now all linked to the civil market? And also, if you could have a comment on the U.S., on the sort of debt volume magnitude and also maybe profitability in the very strong backlog? Thank you.
The two units that kind of, that, that's, consists of the US operation that consists of the two units, you can see a little bit of a difference performance there between the two. USA building is performing according to the expectation. It's in a very good shape, and the increased cost and the lower profitability is on some of the infrastructure projects there. Commenting the debt volume, if you should call it like that, is that it takes time before all the mega projects have been completed. Long duration, several years, and the dialogue and discussions and claim discussions with the client take time, especially on this infrastructure project.
Because this is something that you should be aware of regarding an infrastructure project. There are always a public agency behind or an authority. And when you talk about big numbers that needs to be settled, then it very often has to go up to the political level. So it's that's one of the reasons why it takes quite a long time to have those discussions.
So, a follow-up on that. Now, with your very strong backlog, when are you seeing that... Assuming that the situation is not deteriorating, of course, when will you see the, well, less dilution from these, well, mega projects that are more or less break even? And also if you may comment on the sort of profitability in the backlog.
The dilution of those projects will of course decrease over time. I don't have any numbers or specific for specific years there.
Yeah. Okay, and then if I may continue to Sweden, I mean, extremely strong profitability in the first quarter. Could you help us out a little bit on how we should think for maybe as an underlying profitability for the Sweden operation? Are we seeing a very strong contribution from new Nya Karolinska project already in this quarter? Has it been extremely mild winter? Well, it's been mild, but not that mild, I guess. Help us out here. Thank you.
We don't comment on any specific project, but I think that I can give you some hint here, and that is the profitability from Skanska Sweden is coming across the board. We have hundreds of projects. It's a very well-run machine, and there is a good market, not only in the big cities, but also all over Sweden. So this is a contribution from, I would say, the whole business. Strong performance in the first quarter, and the way you should think about it is it is a good... It's a well-run machine in a good market.
Okay, and then my final question, and I'll maybe be back. We're seeing a new taxation coming in in the market or related to taxation of development gain, this sort of packaging. What's your view on has this had it put a pressure on prices in commercial projects? And maybe you also can comment a little bit on your thoughts on U.S. taxes, if that will sort of delay the divestment of your current projects, that mainly, well, the Boston, very profitable ones that still exist. Thank you.
That was a lot of questions regarding tax, and that's a tough area, as you all know. If we start with the property taxation, which is now going through the full process, so we don't know exactly where it's going to end. But it has for sure sort of been part of all the discussion that is ongoing right now of divestitures. And I'm sure it could have a limiting impact of the transaction volume. The money is still out there searching returns, and that could actually lead also to the market prices actually increasing because of limited supply. So we've, it's early days. We have seen some indications of that it's having an impact, but it's far too early to say anything yet.
When it comes to the US, we are reading the papers, we are looking at TV, same as you. I think that there is a very long way before we even know the details of how this tax should be viewed, how it should be structured, et cetera. But of course, because of the big US proportion of Skanska business, it could be positive.
A follow-up then. Looking at the taxes in the quarter, of course, it's helped by the divestments. You have 14% now, which is pretty low, but it also could be helped by, well, less U.S., both divestments and earnings. Is that a good estimate for the full year, or what are your thoughts on taxes?
I think it's a good long term for 2017, yes.
Thank you.
All right, continue then, Erik Granström with Carnegie. I'll try to continue with some questions then that we haven't gotten to yet. If I look at CD, then, you show the very strong development of the number of projects under projection, obviously, but it seems to me, at least in the quarter, that the leasing and the buildup of projects start to diverge a little bit. Basically, that leasing isn't keeping up with the project starts. Is that a quarterly thing that we're seeing here? Or is it simply that you guys feel that the market is so strong, you might as well start on speculation without any anchor tenants?
I think it's a little bit. The underlying reason is that the composition of the project that we have started during the quarter. And we have started several big ones that takes maybe three, maybe up to three, 3.5 years until completion. And when you have big projects like that in a market that's really good, we think it's right not to go for an anchor tenant and have a pre-lease. It's very hard to find a pre-lease for a project that's gonna be completed three years out. And several of those projects are high-rise buildings, and in a high-rise building, you have a smaller footprint on every floor. And when you have a building like that, that's gonna be very often be multi-tenants.
And these multi-, the smaller companies, they don't sign up a lease three years out. They have a much shorter timeframe when they think. So composition of the various project, that's, I would say, that's one of the reasons why you can see that the numbers are diverging or something here. Nothing that we are worried about, because this is a, we are, we have a very strong focus. We know exactly what we do. And that's, that's in the plan. I also want to add here that, first, if you look at the leasing in the quarters and you go back in time, first quarter is always the slowest one, and the last quarter is always the strongest one. So you have a little bit of a, of a seasonal thing, in, in the numbers as well.
Okay, very good. And then going back to construction, you mentioned in the report that in civil, you had some higher costs related to some projects in the quarter. Could you specify what that is? What has caused costs to increase? Are these costs related specifically to these projects, or is it a sort of a general cost pressure situation within civil?
No, it's more related to specific projects where we see increased cost overrun on certain items, a certain part of the project. And when you have that, then, of course, we have to adjust the profitability on those projects accordingly. So it has been a little bit up and down, and a bit in the project, but overall, it has been like in a, not a, not as a big movement, so which means that we have to disclose the number.
Okay, and then my final question is regarding Poland. You mentioned that the backlog in Poland is basically running on, on a yearly basis. Does that mean that the projects that you took writedowns in Q1 will they be completed by the end of this year?
Most of them will.
And what is most of... How many are there, and what are most of them? Is it, like, nine out of 10, or is it four out of-
More like nine out of 10 that are gonna be completed. I'm not talking about the whole backlog there. It's a very short duration of the backlog in Poland.
Okay. All right, thank you.
Right. Any more questions? No, no more questions from the audience. Then we will move over to the telephone conference.
Thank you very much, ladies and gentlemen. As a reminder, please press zero one on your telephone keypad if you wish to ask a question, zero one. Our next question comes from the line of Tobias Loskamp, HSBC. Please go ahead. Your line is open.
Yes, good morning. Four, I would say, fairly short questions, please. First one is, if you comment on whether you expect a strong financial management in the quarter, is that something that you would expect to continue, or will you move back to, let's say, a higher cash financial cost outflow again? Second question is on the infrastructure development. If you look at your portfolio of PPP projects that is currently under construction, which would be the next asset or next bigger asset that could be ready to be sold, and when do you expect completion of construction here? And then two questions on the U.S.
One is, if you could disclose what kind of tax rate you're currently paying in the U.S., particularly also for your construction activities, and whether you are already benefiting from, you know, tax deductibility outside the, the, let's say, the regular tax rate. So this is more in line, maybe more in line with group level, or whether this is really at a 35%-40% level in the U.S. for the construction activities. And finally, we're hearing that more activity is returning to the Houston market. Can you comment, can you give us an update on your, whether you're seeing that in your commercial development activities as well? Thank you.
This is definitely a bunch of questions for the CFO. It's good when you can complement each other.
Yes.
Yes. Yeah. Hello, Tobias, it's Peter here. I picked up four questions, but I didn't get the last one. So let me start with the ones I actually got. The first question was relating to very good cash management into the first quarter. Do I expect my teams to be lazy in the second part of the year? No, I continue to see very good cash management. Given where we are in the cycle of investments, though-
... we will sort of run down the cash that we have and invest that. So of course, that should come at some kind of financial expense. But I continue, I expect to continue to be very efficient on that matter. Then you asked on sales of when will the next ID project be sold? And as we alluded to in the presentation, we have a very immature portfolio of projects, a lot of them under construction. And one of the things you should bear in mind that when you achieve global completion, when you have completed a project, in most cases, you are prohibited as an investor to sell under until two years after global completion. So that in itself creates stickiness. So it will not be anything more this year.
Your third question was relating to tax rate in construction. Right now, we have an average U.S. tax rate for all the businesses in the U.S. of around 40%. President Trump has alluded to knocking that down to 15%, but the way going there has been alluded to. It could go in various shapes and forms of restricting deductibility of interest rates and of foreign acquired goods. How that will pan out is - it's still a mystery for us. So, we will continue to inform you as we understand the implications ourselves. Then you had a fourth question, which I didn't get. Could you-
I think I heard it.
You heard it?
Yeah. It's, it was about level of divestments in commercial developments going forward.
I think, that, we are on a good streak, and could continue to be over and above SEK 10 billion in divestment volume.
Yeah. Actually, the question was more about the Houston market-
The Houston market
Commercial development, because you have taken write-down in the past, but I've heard now is that the market is reviving again. Can you give us an update?
Yeah. Okay. Houston market. You have to differentiate between the CBD in Houston, where we started a project now with the pre-lease of—so, and the Houston CBD market has much more stability to it. We still see that the market outside, in the Energy Corridor, where all the oil and gas companies and the consultants and everything is working, is still very volatile and weak.
Okay. And then just one follow-up question on the ID. I mean, it's clear that it takes time after completion to get the project or to potentially sell a project. But can you remind us the Midtown Tunnel, I think, is the next bigger project that will completed at some point in time, and then theoretically, could come... could, should also come up for sale. When is the construction of that one completed?
I think the global completion of Midtown Tunnel is back end of this year, beginning of 2018. And I get a nodding approval from my head of controlling, so I'm very happy with getting that right. And one note, you should also make, that when you have availability-based project where you are providing a service, it is easier to go after the two-year rule. Midtown Tunnel is a traffic risk project, so you must also safeguard that you're hitting the optimal tax revenues for traffic and costs of managing the road as well, and that could take more than two years.
Yes, sure. All right. Thanks a lot.
Thank you very much. No further questions in queue. If you wish to ask a question, please press zero one on your telephone keypad. Please stand by for any next question.
Thank you. All right. No more questions?
There are no more questions, no.
Thought so. All right. Thank you very much for your attention, and enjoy this Friday and the weekend. Thank you.