Hello and welcome to the Studsvik Q3 2022 call. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Camilla Hoflund, to begin today's conference. Thank you.
Thank you very much, Laura. Ladies and gentlemen, welcome to the Studsvik interim report for the third quarter 2022. Let me introduce myself. My name is Camilla Hoflund, the CEO of Studsvik, and with me on the call today, I have the CFO, Niklas Karlsson. We will present the result of Studsvik Group for the third quarter. Next page, please. There are important global drivers within our industry, and Studsvik supports the customer with our products and services with a worldwide footprint. Example of important key drivers for the nuclear energy that are both on an international and national agenda are the climate change. The negative trend is continuing and the world needs to reduce the carbon dioxide emissions, CO2. We all hear daily about the extreme weather situations all around the world, and it's not improving, rather the opposite, it's getting worse. The energy needs and shortage.
The debates about the reliable and predictable energy supply is on the agenda for the industries that are dependent on clean energy to meet the climate targets. Also in Sweden, the energy supply, including nuclear power, is very much on the agenda among the politics. Some industries, as well as smaller businesses, may consider shutting down due to the price of the electricity. The geopolitical situation. Due to the unstable geopolitical situation, many countries are aiming to be more self-sufficient or having multiple or independent supply chains. This is also applicable to the nuclear industry and several nations have their own concepts, for example, for the small modular reactors and advanced reactors. In this context, nuclear power is an energy source that today is more and more accepted as a key in the mix of the energy portfolio.
Also, the European Parliament announced that they support certain nuclear activities within the taxonomy for the European Union. In the light of the global situation, Studsvik is an independent organization with a vision innovating nuclear sustainability. We support the world with safe and efficient solutions. Our customers are power producers, fuel vendors, authorities, and research and development organizations within the nuclear industry, from new reactor build and operational support for existing reactors to decommissioning of nuclear power plants, including radioactive waste solutions for environmental and safe final disposal. Next page, please. In summary, the same operating profits and margins for the group have increased in the third quarter compared to last year. The operating margin, excluding the sale of land, affecting both 2021 and 2022, improved both in the quarter and nine months. The quarter three this year shows a stronger operating profit compared to previous years.
Usually, the license fees of Studsvik do not occur until quarter four. This year, we have license fees within the business area, Scandpower, in quarter three that had a positive impact on the result. Business area, Fuel and Materials Technology, established a long-term partnership with a new customer. The first orders of it, SEK 40 million, will be delivered this year and 2023. Studsvik has exercised its option to acquire all shares from minority shareholder at Scandpower. This gives us a better control to set the strategic direction and develop the business area in the future. Next page, please. Decommissioning and Radiation Protection Services. As expected and earlier communicated, 2022 is a decline compared to 2021 due to the reduction of refueling and maintenance activities in both Switzerland and Germany.
This year, the refueling and maintenance services in Germany were limited as the utilities were planning to phase out the reactors from the grid at year-end. However, it is decided to prolong the operation of three reactors in Germany, and consequently, next year there will be also a need for refueling and maintenance services, although not on the same level as before. At the end of the quarter, the sickness absence increased compared to half year, and that had also a slightly negative impact of the operating profits. We consider 2022 as a transition year and for the future, more focus on the operations will be in the decommissioning area within both Germany and nearby countries. Next page, please. Fuel and Materials Technology. In the quarter and year to date, the sales have increased due to a stronger performance in the facilities.
Excluding the profits from the sale of land from last year, that impacted both 2021 and 2022, the operating profits and margin increased both during the quarter and year to date. The new long-term partnership that has been established with the German customers within the material standpoint studies is an example of a strategic pillar expansion of services within the decommissioning area. The first order amounts to SEK 640 million and will be carried out in 2022 and 2023, and the project has already started. Next page, please. Scandpower. Recently, we had to release the news that Rob Whittle, that joined the group in 2021 as president of Scandpower business area, suddenly passed away. He contributed with new perspectives to the business area, despite his very short time within the business area. Art Wharton has been appointed as acting president of the Scandpower business area.
Mr. Wharton has been in the nuclear industry for more than 15 years and has previous positions both within technical, strategic, and commercial areas. The business area had an increased license base in the quarter. Usually, the license base of the software do not occur until quarter four. Studsvik has exercised its option to acquire all shares from minority shareholder in Scandpower. The price of the shares will be determined in arbitration proceedings. Next page, please. Waste Management Technology. The sales growth consists mainly of advisory services within waste management. As for these services, we are using subcontractors. The business gives lower margins compared license sales and associated engineering services. However, this is a service that can open up for potential license opportunities. Last year, we had a profit share payout of SEK 6 million from UK Nuclear Waste Management, LLW Repository, an agreement that expired in June 2021.
We had no license sales in the quarter. Next page, please. The group. The negative cash flow is mainly due to increased working capital, tied up in ongoing customer projects within Fuel and Materials Technology. There are activities ongoing to improve the efficiency to reach milestones in our larger projects, especially within Fuel and Materials Technology. We will report the progress in the upcoming quarters. The investment level was high last year due to capacity increase within Fuel and Materials Technology, as well as the need to upgrade good supporting infrastructure for the sites. This year will see a slowdown compared to 2021. Next page, please. The outlook. As expected, the refueling and maintenance services was lower down this year compared to last year.
However, it will not be phased out at year-end after the decision to continue operation of the 3 German nuclear power plants in 2023. There is a continuous focus on increasing the services in Germany and nearby countries, mainly within the decommissioning area. Fuel and Materials Technology is expected to continue to deliver on the strong backlog. The order from a new customer in Germany is an important achievement in broadening the customer base for new and existing markets.
For Scandpower, the direction moving forward is the same as reported last quarter. Focus on development of the software portfolio with both internal research and development efforts, as well as through partnerships to gain time and effort. Focus is also to enter new markets. For Waste Management Technology, the focus is to sign a license agreement in some of the ongoing opportunities in Europe and North America. Next page, please. Thank you so much for listening in to Studsvik Q3 report. Now I hand over to the operator to invite for the Q&A session. Thank you.
Thank you, Camilla. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll pause for just a moment while waiting for them to queue for question. Thank you. Right. We've got our first question. We'll take our first question from Stefan of ABG. Your line is open, please go ahead.
Thank you. First, I would like to send my condolences for the horrible news about Rob. Obviously not great to read about that. If we start off with Scandpower, I can see that his legacy is shown in the number with a huge license deal here in the quarter. Can you just elaborate a bit about the license deal, and was it that it was taken in Q3 instead of Q4, or can we expect further license deal if we look ahead?
Thank you, Stefan, for that analysis and also for the question. The same strength that we had in Q3 was partly expected to come in Q4. Partly it was a little bit ahead of the timeline, so to speak. But of course, I want to address that we always have opportunities as we are working on and focusing on. With that said, we never give any forecast, and it's always difficult to know the timelines, but I hope that answer your question.
Okay, perfect. If you look to the decommissioning business area, I mean, we saw a decrease in number of employees this quarter. Is this what you expect, a slow ramp down as Germany has closed down the majority of their power plants? Or how should we view the outlook for decommissioning?
I think we have to agree with like this year is a little bit of a transition year. I think over time that we will see of course a slow down in refueling and maintenance work. We will also see, for at least for us, a ramp up for nearby countries, but also in the decommissioning area. I think you might remember that we said that this year will probably be a transition year for us. It's always when you have big movements on the market, things happen, and you have to adjust to that.
Okay, perfect. If we go into the more positive news about the development in the fuel material business area with the deal in Germany, can you talk more about the volume in that contract that you closed? Also, if we are to look at the potential for the total German market, and, is it? I mean, is this still connected to the shutdowns, and, who are you competing with for the rest of the business that will come from Germany?
Yeah. This is a specific customer in Germany that Fuel and Materials Technology have worked for quite a long time to close this deal, and this deal is SEK 40 million, as we mentioned. But it's the first phase, and we foresee that when we start to do the testing this year and next year, we have good opportunities to prolong with more testing in this area. This has partly to do with decommissioning, phasing out reactors in Germany because this is in the field of final disposal of spent fuel and research within that area.
Okay, perfect. A further question on Norway, because I saw that Norway is preparing for final disposal of their nuclear fuel. Can you mention anything about how you view that transitioning from to the MNK, and any info there?
No, we actually don't have any new information. I think we are positioned as before, we have some options and some possibilities to be part of this future project. But we have no any further information to share right now at this point of time.
Okay, perfect. My last question is only regarding Sweden. We saw a U-turn here from the new government in Sweden regarding nuclear going forward. Can you just elaborate? Will it affect you in a way or how should you view it if you discuss it shortly?
Yes. It's of course a very positive news also for us as we are part of the nuclear industry in Sweden. However, we think it's a little bit too early to understand. We think it will impact us positive, but it's a little bit too early to understand how much and when, because that probably comes a little bit depending on the big utilities in Sweden on how and if they are ramping up their activities into new reactors and developments and R&D activities. For a longer period, for a longer term, it will for sure be a positive impact also for us.
Okay, perfect. Thank you very much, Camilla, for your answers.
Thank you, Stefan.
Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We currently have no question coming through. If you'd like to ask a question, press star one. Thank you.
Okay. We say thank you, ladies and gentlemen, for calling in today. Bye-bye.
Thank you. Thanks for joining today's call. You may now disconnect.