Afry Ab

Good morning and welcome to AFRI's presentation of our results for the second quarter of 2026. I am Linda Pålsson, I am CEO of AFRI, and as always, I will begin by sharing my perspective on the quarter before handing over to our CFO Bo Sandström, who will take you through the financial results in more detail. Following the presentation, we will open up for questions. So let's begin. In the second quarter, we have continued to make progress in the execution of our strategy. As a result, we strengthened the order backlog further. It increased 8% year over year and now amounts to 22.4 billion SEK. We also continue to improve the utilization rate. And after 14 consecutive quarters of decline, we have now delivered three quarters with consistent improvement. This is a strong validation of the actions we have taken. In the quarter, we completed our restructuring agenda aimed at optimizing our portfolio and adjust capacity. Total sales was minus 2.4% and the organic sales growth adjusted for calendar effect was minus 5.3%. This reflects the strategic capacity adjustments we have implemented over the past year. EBITDA margin excluding items affecting comparability was in line with last year and amounted to 6.7%. It is evident that our progress is not yet reflected in our financial results. We are now shifting focus to organic growth to capture profitability uplift from the actions we have taken. And we have reached several important milestones during this quarter that will improve efficiency and support organic growth going forward. And I will come back to this later in the presentation. But first, let me take you through how our division performed during the quarter, and we will start with energy. The overall energy market remains strong. It's driven by the global energy transition and the increase in electrification of society. Reflecting the high level of demand and the strong offering that we have in all our segments, we reported a record high order backlog in energy division this quarter. In light of the geopolitical developments, the focus on energy security and reducing dependence on fossil fuels continues, which further strengthen demand for our solutions. Profitability remained at solid high levels, while growth was impacted by the facing of execution in larger projects. But it is encouraging to see the market momentum and order backlog that we have in this division. And our full focus going forward is on delivering on the backlog and to drive growth. If we then turn to industry, the market conditions here are broadly in line with the recent quarters. We see strong demand in areas such as defence, mining and metals, while sectors like pulp and paper and automotive are softer. We also see that a longer period of lower demand is contributing to weak price development in parts of the business, such as within the automotive industry. The acquisition of AMC within mining and metal segments, which I highlighted last quarter, contributed positively to sales this quarter. And it is encouraging to see how the addition of this type of high quality business is already strengthening the division, enhancing our offering and reinforcing our position within this segment. The decrease in sales we saw was primarily a result of implemented capacity adjustments and profitability was impacted by the low sales volumes combined with weak price development in parts of the division. We move to transportation and places. We continue to see solid demand in transport infrastructure. The real estate market continues to be challenging with weak price development, although we are seeing strong momentum in some of our selected focus areas, such as data centers, defense and health care. The effects of the restructuring and other changes that we addressed in Q1 are starting to phase out. The EBITDA margin remained at a stable level year over year, while sales volumes are lower, much due to the strategic capacity adjustment. Then moving over to projects. One example of the growth opportunities in the infrastructure sector, I would like to highlight a key contract we in during the quarter within our places segment. It's the new hospital in Helsingborg in southern Sweden. This is one of the largest hospital projects in Sweden in decades. And AFRI has been entrusted with a key role. It's built on our expertise in complex health care environments. and health care infrastructure is a strategic growth area for us. We see significant market opportunities and we hold a strong position here. We have also been selected by energy company Asilene Renewables to provide project services for its new biofuel plant in Brazil. The facility will produce renewable fuels, including green diesel and sustainable aviation fuel. So this is a great opportunity for AFRI to leverage on our chemical and biorefinery expertise while supporting the decarbonization of transport and aviation sectors. And finally, we signed a framework agreement with Elevio, one of Sweden's largest power distributors. As demand for electrification continues to grow, significant investments are being made to strengthen and modernize the grid infrastructure. With our long track record in the energy sector, AFRE will provide technical consulting services across a wide range of disciplines to Elevio. I would now like to take a moment to highlight another area where we are currently seeing strong momentum and where AFRE has a competitive and comprehensive offering, naming data centers. The demand for data center is growing rapidly, driven by cloud adaptation, digitalization and investments in infrastructure around the world. And according to our estimates, the market for engineering, project management and advisory services that are related to data centers is expected to grow by more than 20 percent annually through 2030. What makes this particularly exciting for us is the breadth of our offering in this area, where we have the competence to support clients across the full data center lifecycle. It draws on expertise from across AFRI, combining advisory, architecture, engineering and infrastructure capabilities. And with our new structure and way of working across safety, we are very well positioned to deliver integrated data center solutions on a global scale and across the full lifecycle. And I would like to highlight that our capabilities are particularly strong in areas such as site selection, localization, building design, combined with the deep expertise that we have in power supply and grid infrastructure. We also help clients to improve their sustainability performance through leading solutions for energy efficiency and for heat recovery. So to summarize, AFRA are well positioned to capture growth opportunities related to data centers going forward. It is a market with strong structural growth and a clear strategic fit and one where we see opportunities to create value for our clients in the years ahead. And as I mentioned, the key driver behind data center expansion is the accelerating adaptation of AI. So let me give you a short update on our work in this area. Because for us, AI is not about isolated tools or initiatives. It's about systematically redesigning how we operate across the business. A3 strength lies in our deep sector expertise, our strong references and our proven product delivery capabilities. and by combining this strength with AI, we see significant potential to improve productivity, quality and speed in our delivers. And our priorities are focused on two dimensions. It's the client delivery and it's in the internal efficiency. So in addition to supporting our clients to realize the value of AI and data in their businesses, we are designing an engineering delivery platform that connects our employees with tools and data to deliver projects more efficiently. Through standardized solutions and secure data architecture, we are establishing the foundation required to scale the adaptation of AI and future technologies. We are also working with selected partners to explore new delivery models for scalable productivity, and we have several pilot initiatives on the way. Then when it comes to our own operation, we are increasingly using AI to improve efficiency in bid management, as well as automating routine tasks through AI agents and self-service analytics. because with the right implementation, AI can free up capacity from repetitive and low risk work, enabling our engineers to focus more on advanced assessments, problem solving and closer client dialogue. And as AI continues to evolve, we build the capabilities, platforms and ways of working needed to capture the full potential over time. It's important area for us. And with that, I would like to hand over to you, Bo, to take us through the financials.

Thank you, Linda. So I will cover the financials for Q2 2026, and I'll start with the overview. Quarter two showed net sales of 6.5 billion and EBITDA excluding ISE of 434 million. Adjusted organic growth remains in negative territory around minus 5%. On rolling 12 months, we're currently at 25.2 billion on net sales. Rolling 12 month EBITDA margin remains at 7.3%. The order backlog continued to develop favorably and is reported at 22.4 billion, an improvement of 8% to last year and 4.2% sequentially. Again, the order backlog is the highest ever reported. All divisions improve sequentially and year over year. The majority of the sequential improvement stems from the industry division, with some good wins in the quarter and also supported by the AMC acquisition as their order backlog is now included in our reported numbers. The backlog for the energy division now surpassed seven billion, leading to an 18% increase year over year. The division is now well set for increasing the growth pace in the upcoming quarters. In Q2, with a net sales of 6.5 billion, we reported total growth of minus 2.4% and adjusted organic growth of negative 5.3%. Whereas the organic growth continues to be pressured by our restructuring agenda, total growth has turned the trend following the AMC acquisition. The market price pressure in some segments seen since the latter part of 2025 is still clearly visible in Q2. This is particularly evident for some segments within industry and transportation and places. Structural effects in Q2 relate to the acquisitions of Reta during Q3 2025 and AMC completed in May 2026. Net of smaller non-core divestments completed in the beginning of this year. The negative adjusted organic growth in Q2 was somewhat lower than last quarter's with small sequential movements in respective division. Global division energy again show low but positive organic growth. Adjusted organic growth for the industry division remain in the minus 6 to 8% territory reflecting a continued challenging market in parts and capacity adjustments during the last 24 months. Total growth for the division is minus 2.1%, with the AMC acquisition as the main structural contributor. Transportation and places remained at minus 5.4% in Q2 as a consequence of capacity adjustments in the end of 2025, combined with a continued weak real estate market. We report a utilization of 73.5% for Q2, close to a percentage point higher than Q2 last year. Again, we see improved year-over-year utilizations for all divisions. This is then the third consecutive quarter where we report an improvement to last year, and it is a continued important step for our strategic efforts to improve operational efficiency in AFRI. We will continue our focus on improving this metric to be one of the main drivers of profitability improvement over time. Since the low mark of 72% on rolling 12 a year ago, we are now at 72.6% and well on our way to 74% being the set ambition in the 2028 roadmap. EBITDA excluding ISE is reported at 434 million with positive calendar effects of 27 million. The EBITDA margin was at 6.7%, reasonably in line with last year reported and calendar adjusted. With the business margin pressured by lower sales volumes, group costs were lower than last year as we're now starting to see effects of the restructuring efforts related to support functions. Looking at the EBITDA margin development by division, they are in general in line with last year. Energy, supported by improved utilization and strong backlog development, continue to report a strong EBITDA margin. Global division industry continues to improve utilization, but it's pressured by significantly lower volumes and weak price development in some of its market segments. In addition, the division carried 15 million of transaction costs for the AMC acquisitions in the quarter. The margin in transportation and places remain pressured from restructuring effects and the soft real estate markets. That said, in Q2, we clearly see the restructuring effects that we experienced in Q1 starts to fade out, and we expect those to be fully phased out in the second half of the year. We report 54 million restructuring costs as items affecting comparability in Q2 and close our restructuring program fully in line with our guidance given throughout. During the program, we made significant progress in our efforts to reshape the portfolio, and we have in addition made good progress on addressing the cost base. This we will continue to do despite closing the program. We see effects of the increased cost effectiveness from the program on the group costs and increased utilization in accordance with our expectations. But from a full run rate perspective, effects are still offset by lower gross margin contribution given the currently lower sales volumes. Following a moderate cash flow in Q1, the second quarter showed a very strong operational cash flow, close to 500 million better than Q2 last year. We managed to release significant working capital outside what we normally experience in Q2. On a rolling 12-month perspective, the operational cash flow is exceptionally strong, as part of the strong cash collection seen in Q2 is normally seen in Q4. Available liquidity decreased to 4.3 billion and net debt increased to 4.7 billion as we distributed dividend and closed the AMC acquisition during Q2. Our financial position remains strong. With a strong operational cash flow in Q2, we managed to keep our leverage including restructuring costs at three times closing the restructuring program. We expect leverage to remain around this level for Q3 and then to close the year at or below our financial target as significant restructuring costs are facing out of the EBITDA component, particularly in Q4. With that, I leave back to you, Linda.

Thank you, Bo. So let me now provide you with an update on our strategy execution. So there. Our unlocking a free strategy sets the direction towards our 2028 targets with a focus on leading position in selected segments, deeper client relationships across the full lifecycle, expand our presence also beyond the Nordics and an improved efficiency through harmonization and simplification. And over this past year, we have been driving significant change at the high pace to position a free for profitable growth and long term competitiveness. As you know, we have introduced a new group structure. It's supported by a clear roadmap with concrete initiatives and actions. We have executed an extensive restructuring agenda, which we now have completed. We have divested or exited non-core business. And we have completed two strategic acquisitions in mining and metals, one of our key growth areas. And we are well underway with the integration. And in addition, we have launched a new resource management platform. As we now move forward, we shift focus to organic growth combined with cost discipline to capture the profitability uplift from the measures already implemented. Our priorities also include further implementation of the resource management platform towards a more consistent, transparent and connected way of working across the group. We are also gradually scaling our global delivery center capabilities to strengthen project execution, improve access to skilled resource and enable a greater cost efficiency. These efforts will be key to realizing the full benefits of our strategy and to drive profitable growth towards our 2028 targets. And with that, we would like to open up for questions.

Great. Thank you, Linda and Bo. We will now open up the Q&A session. So please raise your hand if you have a question. And first in line, we have Don Heimer from SCB. Please go ahead.

Yes. Hi, Linda, Bo and Johanna. Hope you can hear me well. Seems like it. So that's good. maybe start with a question on profitability and you're taking now close to 300 million restructuring cost. I think you said 12 months payback on that and your billing rate is up. But the beta margin just 7.3 now on our LTM base. It's only marginally up versus a year ago. So help me first to understand why it's not following the improvements in the efficiency where sort of sort of the slack in the system, so to speak.

Yeah, I think it's of course a multifaceted question and answer to that. I think the simple answer is that with the quite pressured organic growth that we see, the decline in the sense in gross margin contribution from that volume that we have in a sense deliberately taken out, is done in a sense compensating for the efficiency effects that we see both on the utilization effect and as a consequence of the restructuring program. I think that's the that's the simple answer to the question. Then, of course, it's not easier, you know, kind of experiencing a bit of market pressure, a price pressure on top of that also affecting it. But the main aspect is is practically the very suppressed organic growth.

understand maybe a follow-up on that since now you seem to have a plan to accelerate organic growth from these levels at least and you have the order book in place so just how do you ensure that sort of the ramp up in organic growth lead to the anticipated improvements in profitability because looking at you know 21 to 23 it was a special period but you had relatively high organic growth back then and your margins did not follow so Yeah, just help me to understand why it's different this time when you probably need to ramp up recruitment as well, which initially could be margin diluted.

Now, but exactly is it exactly as you said historically, our growth has always come with the higher costs. So we haven't sort of fully get the benefit of scale through a free now with the very sort of necessary and structured approach that we have had. We have deliberately taken out volume. We have done a lot of cost implemented measures, very structured. But I suppose that we do need now the organic growth to get the full benefit. So we have pushed down costs. We will continue to push down costs. But now we have a systematic approach of keeping it that when we have the growth then coming here on top. And as you said, I mean, we are the growth is supported by the strong order backlog. The timing, of course, of the projects in the backlog is a bit different. It varies from very small to two extremely long projects over a period of maybe 10 years. So it will be a bit of a different facing in this. But we do see within our strong areas such as energy, defense, some part metal and mining, that the growth will come towards the end of this period.

and add to that since you also referred to the 21 to 23 in a sense growth that we had that that growth was primarily then driven by acquired growth and then not in the same not to the same efficient platform that we are currently kind of moving into a much more harmonized and efficient platform to to add the organic growth to also reaping the benefits of that growth from scale.

Okay, perfect. Makes sense. Maybe just two clarification questions from my side as well. But then the facing and energy of large projects, are you referring to a negative impact in this quarter that you expect to catch up? Or how should I read that comment and also the 50 million transaction costs in for the MC that's not included in items affecting comparability, right?

I'll start with the last. No, it's not included in items affecting comparability. It's included in the industry divisions EBITDA for the quarter. And to your first question, yes, in that sense, negative-facing effects on the sales side, also looking at the relative low growth in the specific quarter for the energy division.

Perfect. I think that was all from my side right now. So thank you very much, Linda.

Thank you, Don. And then we have the next question from Adela Dashian from Jefferies.

Thank you, Johanna. Good morning. Firstly, on the pricing pressure that you're experiencing, do you see any signs that this is stabilizing anytime soon? Or do you have any proactive measures to, I guess, get past that?

Should I start? Yeah. Yeah, as we reported now, we have seen some of the parts of the market where we have had pressure over a long time or softer market over a long time leading to overcapacity in general. And we see that in the price development, especially in automotive and to some extent also in the building part. To address that, we are going into pockets where we see growth and where we have a strong position. To be concrete, when we come to places and buildings, for us, that means going even more into the hospital side of it, going even more into data centres, going more into defence-related sectors. buildings. So so we are going to the parts of the building business where we are relevant and where we can find the right margins for for a free going forward.

Okay, thank you. And then on the backlog, nice to see the improvement in the quarter. And you did mention that you have a combination of larger and smaller orders. But Does it differ a lot from previous cycles? I think one of the efforts earlier on when you joined was to, to some extent, increase your visibility with the orders.

Yeah, we have seen some some changes. We have seen a larger part of sizable projects in our backlog, which is good, but they are also converted over a longer period of time. But we do see a shift towards even more project and more sizable projects in our backlog. And we're very comfortable with the margins of those projects.

That's good to hear. And then last on industry in pulp and paper. What can we get in market update on that specifically?

Yes, on pulp and paper, we have reported also that it has been a weak global market and especially Europe has been weak. We don't see any big shifts on the capex side on the European market. We do see continuous improvement of the operation on the existing facilities. and there we continue to be very well positioned, but we don't see the big volume uptick on pulp and paper, especially not in Europe yet.

Great, that's all for me. Thank you.

Thank you, Adela. Next question is from Julia Sundvall from ABG.

Yes, hi and good morning. Just a first question on the order book again. We see the revenues falling, but how should I think about the timing in the order backlog as it is growing that much as 8%? You say it's longer than before, but is it like 2027 heavy or 2028 or just some more flavor? How we should think about the order backlog and revenue together?

Yeah, I can start with the backlog and development. So yes, you are right. It is spread in time more than maybe we have seen before. That means that the impact is still ahead of us. We do see parts of the backlog already in position to start accelerate. We find them within energy. We find them within especially transmission distribution part of energy. We do find it within mining methods and we do find it within defense. So so the sequence is a bit different for our different segments, but we do have a couple that are ready to to start converting this year. But then the majority you will see going forward.

and and and to you know to build on that on the latter part of your question the facing is then of the backlog is very different by division some being much more you know kind of long long cycle in nature but as a as a rule of thumb if you look at a free overall you could estimate that you know in the next 12 months you know then we will then we will carry approximately 50% of the of the backlog as revenue then it can differ a bit between the divisions so the majority of the backlog is to be delivered before end of 2027 from where we are then with the continuous fill up and take out of the you know from the backlog

Yeah, perfect. That's a good answer. Thank you. And on the organic growth or decline. Could you give us some some flavor? How much of the decline is due to capital capacity reductions? And how much is like end market softness? Or how? Yeah, I think you understand the question.

Yeah, I'll start on that. If you look at the negative organic 5% in the quarter, the vast majority of that is volume driven. So we don't have a positive effect from pricing in the quarter. So the vast majority of the decline is volume driven. then then I would say that the volume the volume reduction that we've done is practically practically a part of the strategic reductions that we've done throughout throughout the last year the big majority of that is related to to to our own decided efforts they are of course looking at the different segments on our attractiveness in relation to it. So there's a market relation to it, but it's still a conscious choice of reducing our capacity in those segments. So it's difficult to distinguish between, in a sense, market-driven and strategic capacity because they go into each other.

Yeah, yeah. Yes, I see. And a follow up on that one. The number of FTEs is still down quarter of a quarter, mostly in the corporate and support function, but also some in transportation and places. How should we think about net recruitment from now on? You say you want to focus on the organic growth, but how should you think about net recruitment?

Yes, so we're now shifting focus even more on the organic growth part. And with that comes naturally also a higher recruitment pace. Just want to emphasize that we have welcomed 1,500 new AFRE employees this year, and we will increase that pace even further going forward. So you're fully right. We are now accelerating our initiatives to recruit.

And from a OK, from a from a divisional perspective, I mean, I would not I would not expect the group functions after to to increase, but I would rather to decrease. But then from a divisional perspective, typically the energy division is the division which is the most geared for growth in a sense. So in terms of distribution between the divisions, that's where I would expect the most ramp up over the upcoming year.

Perfect. That was all from my side. Thank you.

Thank you, Julia. Then we have Johan Sundén from DNB Carnegie.

Thank you for taking my questions. I stopped a little bit on the kind of organic growth discussion we've had here. Can you just help us bridge how and how long it will take for you to start grow organically again? Because if you just look at the number FD that you report here at the end of Q2 and compared to what you had in H2 last year, you are still at some four, three, 4% below that level. Uh, when in, say, 2027, will you be able to start grow organically again? Is it before midsummer 27 or is it earlier than that?

I mean, it's a good observation, Johan, and of course, looking at the looking at the in a sense, the facing of the FTE development over the last 18 months or so, then you see that the biggest decline was at the later part of of 2025. In a sense, so from that perspective, we will throughout this year always meet, in a sense, a bit higher comparables from a year over year perspective. then going into going into next year then we won't have that comparison in a sense anymore of course organic growth would then be a combination of being successful in the market on on pricing but also then just putting the capacity there from a year-over-year perspective in terms of FTEs because the order backlog we have in that sense so already going into next year, we have much a better starting point for actually being in positive territory next year. But it will be much more difficult throughout this year, just based on the facing of the structural takeouts that we've done.

And you mentioned 1,500 newly recruited people. How has any comment on kind of employee turnover over the last quarter?

Yes, I mean, in a business like ours, it's a people business. It's absolutely crucial that we are an attractive employer and that we are working with the right type of projects and that we're driving the development in the direction that we want. I think that is that is shown in our ability to also attract and recruit people. But in the business like this, also people are leaving us. So we are basically net zero so far. Looking over the year, we are seeing a positive trend from Q2 going forward. and we will accelerate that, as we said. But our general attrition level is on a healthy level and in line with how it has been historically going forward as well. So no big shifts in our attrition curve.

It was very stable in Q2.

Thanks for the clarification. I had a couple of questions on the AMC acquisition as well. Do you expect significant synergy potential on either revenue or cost that we should be aware of?

I would rather go. We are expecting synergies from that acquisition. It links and matches very well into our metal mining segment from a global perspective. I think I think it is a very it's a very complementary acquisition in that segment for us. So we will have some synergies both on the revenue side, strengthening our life cycle offering across across metals and mining, and we will have some on the cost side. but but a good balance you know kind of in between but the overall perspective on the AMC acquisition is that it's a really it's a really good company it has a very good strategic match for us and it complements our offering in a good way so it should be a good synergy case but not the material part being either on the revenue or the cost side a bit from both

I can give some kind of indication. What kind of post synergy multiple you have paid? Because when I read the kind of acquisition analysis, it seems like a pretty rich multiple for the revenue level and it beat us off as it is today.

I mean you you I think I think we I mean it's always a very successful company you know kind of we go good growth opportunities then you pay a bit of higher multiples than a turnaround you know then you would for a turnaround case but I don't see that we paid any elevated multiples for the AMC acquisition

and the kind of priorities on capital allocation as of now, going for buying AMC for, from my perspective, rich multiple versus buying back shares. How has those discussions developed or been?

I mean, I think we said, you know, kind of all the way through that we we will be careful in making acquisitions. But when we find the right target, even though we are in a in a phase of focusing very much on the creating the the basis for profitability uplift, then we will do that acquisition. And AMC was just that example, a very good fit into the company. Then I think you can always make that balance in between, but the M&A side of things is that, you know, kind of when you really find the attractive target, then you have to act on it in a sense, otherwise it will pass.

clear enough thanks a lot for answers I get back in line thank you Johan then we have Fredrik Littell from Handelsbanken please go ahead thank you very much thank you for taking my questions as well I'm coming back to the to the backlog a little bit what's the actually what's the definition of the backlog because if you say it's Growing 8% year over year and the growth is improving. But if the duration of the backlog is pushed out in time, it's a little bit weakening that number. So is there a duration stop? Or could it be that the 8% growth is sort of contracts you will deliver on five years from now, all of a sudden? Or how should we think about that? I understand, Bo, you said that, you know, think about 50% of it. within the next 12 months. But But what's the definition?

The definition is project sold, not yet delivered. So that is the definition for us. And for a framework agreement, it's not booked into the backlog until we have an actual signed call-off from the framework agreement. So that's how we work with it. then as you said rule of thumbs we we have a clear ambition that to support our growth ambition we will continue to increase our order backlog we have said that we want to push it towards 30 billion in this strategy period the mix healthy mix but we will guide even further on the conversion rate but but rule of thumb still half of it in the next year But the more we push it up, the more we have to.

Yeah, but but still to give you some guidance, you know, kind of indirectly on the question, you know, the the the eight percent year over year increase is, you know, it's an actual increase of the order backlog. It's not compensated by just pushing the backlog out in time, even though that's a you know, that's a bit of a part of it. But we don't have a time stop on the backlog. So we can practically be a 20 year project. even though that's you know quite uncommon but but practically it can be.

Okay that's very clear thank you and then a question on on sort of the non-billable FTEs and what you have done there and what you have done with your sort of the structural capital so far the last 12 months and how much you feel then sort of the new platforms you're moving on top of and and and and so on how much more of efficiencies you can reap out of that in terms of sort of non-billables and lower costs for platforms and so on going forward

Yeah, I mean, I think we we we made we made a lot of efforts during the last during the last year. And then with that said, there's still a lot still some way to go. What we're practically doing is that we we're doing what many, many companies have done over a very long period of time. We're doing that in a significantly shorter period of time. But what we have done is that we've organized ourselves structurally in the in a sense, the functional support domains, both from a group function perspective, but also in the business in a sense, and then started to work much more on harmonizing processes and finding efficiencies throughout. at the same time we are pursuing a lot of kind of platform investments that we've done over a long period of time working with ERP transitions process process harmonization you know diving into in towards you know kind of utilizing AI in those in those processes at the same time those things will over time take you know they will take a bit of time so we progress quite a bit but there's still a significant potential for us to move forward in the in practically in the in in the couple of years to come so that will that will sort of lead to that the the non-billable staff and and other types of costs will be a lower share of

of your total revenue going forward for the coming two years. We see a decline in that going forward.

It's two very different parts of the non-billable part. It's the more pure support part and it's a non-billable part that is then connected to the business as such. Those are quite different in their nature. One which is much more sales and delivery oriented and one which is much more support oriented. But we are expecting to further decrease those costs, particularly as a share of revenue in a sense to actually get the scale effects that we haven't been able to get previously to actually get that this time around as we are now shifting towards driving organic growth.

And just a final one, Linda, you talk about the resource platform that has been in place now since the 1st of June, I think it is. We talked about this on smaller mid-cap seminar we had. Can you give some sort of feedback on how it's progressing and how do you see any effects from it this very early in?

Yeah, I mean, the fact we have been working with the implementation now for for some time, and I mean, the early effect you actually see in the improvement of our utilization rate, because this is part of our tool to visualize and enable understanding of where we have the projects, where we utilize our resources. So so that's the first I would say sign that you see is the improved utilization rate. then moving forward adding more and more intelligence and AI on this platform we will be much more efficient in our tender work but much more efficient in the staffing of our projects so there you will see over time an uptick both in in lower cost as we talked about but also in higher project margins over time. So it's three dimension that we look. The first one is related to utilization rate, then we have the bid side of it, and then we have the execution side, sales side of it, and then we have the execution side of it, where we will see impacts in all three over time.

Very clear. Thank you very much.

Thank you, Fredrik. Then the next question comes from Johan Dahl from Danske Bank. Yes, good morning, everyone.

Just two brief questions. Firstly, on the on the order backlog, Linda, you talked about, you know, good profitability in the order backlog, and a fairly sort of swift. Yeah, swift invoicing half of the backlog being invoiced in 12 months, but but I mean, just trying to understand what's your visibility of that profitability, because if you look on the restructuring that they free has done now, you know, several KPIs moving in the right direction. such as billing ratio, so group common cost. But now you talk about price pressure. So I'm just thinking, you know, everything indicates that the backlog you're starting to invoice on, especially in industry, is perhaps, you know, deteriorating profitability. But why is that the wrong way of looking at it?

I can start because the weaker price development we see is very much connected to the parts of the market where it has been challenging for a long period of time. It's very much connected to automotive. We know that that business is going through a transformative change. we also have seen it in the building so so it is the short-term conversion of conversion projects related to those parts of our business so it's not a general price pressure it is quite connected to parts of our portfolio

And just to add to it, you know, kind of for your understanding, when we talk about price pressure, it's it's mostly seen than in the very short cycle business. The short is short projects or even ranging towards the professional services business. Whereas what goes into the order backlog is then primarily projects and projects of longer characteristics. and there we have you know kind of very meticulous in a sense profitability checks particularly the bigger the project is the more we require in terms of securing that the profitability margin of that project is at the right level.

So where in the business are you seeing internally sort of that the order backlog is sort of contributing to profitability in A3 you know Is it happening in energy in certain places or where do you actually see it?

So we see it in energy. We see it in especially, I would say, in hydro and nuclear parts of energy so far. We expect it in transmission and distribution as well. But I would say that it's most evident in hydro and in nuclear so far.

gotcha. Just a final question. But we talked about the facing of restructuring in in buildings, as that would sort of impact the second I wasn't sure I followed you there. What exactly did you mean?

I'm not not sure what you refer to, actually.

We'll take that offline later. Thanks.

Okay, thank you. That was all the questions we had for today.

OK. Then we would like to thank you all for listening in today and we wish you a wonderful summer. Thank you.

Thank you.