Afry AB

Dear all, a warm welcome to this quarter three presentation from AFRI. My name is Jonas Gustavsson, CEO at AFRI, and I will always start off with some summarizing slides and then it will be followed by Bo Sandström, our CFO, who will take you through the financials and then we will have a Q&A. So let's start up with a summarizing slide as we have in the headline. For us, it's been a quarter with strong growth, but also a challenging quarter. Sales came in at six billion and we see the market is mixed. We have sectors doing very well and strong, like energy sector, and then we have some more volatility and mixed in other segments. I will get back to that on the next slide. Growth was strong in the quarter and we have a solid order stock. However, we can now see that sequentially both the order stock growth and sales growth are a bit lower. And again, Bo will show you some graphs on that. The result was lower than we hoped for. And of course, this is not a level that we want to be or we expect us to be. And the result was impacted by, first of all, we have a negative calendar effect and we have seen some volatility in the segment. I mean, we knew that the real estate segment was weak, but what we noted in the quarter was increased volatility in some industrial sectors. And that impacted the utilization that also then impacted the result. However, in three of our divisions, process industry, energy and management consulting, which are our international global divisions that are in the middle of the green transition, they continue to deliver solid growth and also very good results. We had weak performance in infrastructure in industrial and digital solution and AFREX. I'll get back to that because you have also seen that we today then published some information that we are expanding the improvement program related to infrastructure. We have in the quarter changed two of our divisional heads, and I'm very happy and pleased about that. And we'll get back to that also. And as I said, we have also extended the improvement program in infrastructure, and we have also in the quarter restructured AFREX. So that's the summarizing slide and just moving over to the market and starting with the industrial sector. And this is where we see some more mixed between segments. So in general, there is a solid underlying demand driven from the whole green transition. So when you look on some of the process industrial related segments continue to be strong. Even though, as we said before, some of the bigger capex projects, for example, in pulp and paper segment, we have some delays in the decision. And what we noted in some of the segments also in the more Swedish related industrial business, we saw project or smaller assignments that was postponed that also impacted utilization in the quarter. So that was maybe a change from quarter three that we saw this bit more mixed in the industrial segment. On the other hand, we see segments like automotive or defense continue to be very solid. Energy, I will just say that it continues to be very strong, of course, driven from all the investment into the energy segment. And in the infrastructure, the real estate segment continues to be very weak for us, and we are quite exposed to that in Sweden and Finland. So quite a big portion of the real program that we're expanding is also to adjust even more on the capacity side. However, public's investment in infrastructure railroad continue to be on a stable level, so a bit more mixed on the market. Looking at divisions again, Bo will get a bit more in the details, but you could easily see here that we have three divisions continuing to deliver solid and good result and good growth. Process industries, energy and managed consulting together roughly a bit more than 40% of AFRI. all these three divisions are you know really global divisions and they are in the middle of the green transition continue even in the calendar week quarter to deliver good margin and solid growth then infrastructure for sure that's one area that we are not pleased or happy of course and we have seen that for a longer time so now we are expanding the program in infrastructure and we have a new divisional head robert larson who is now driving that in a very good way and we are expanding it. I'll get back to that. A4X, well we took a decision in the third quarter to actually dismantle the division and those business units in A4X have now been integrated in other divisions and by doing that we have also taken some 45 full-time employees down and further activities will be done during the fourth quarter. So what was maybe a bit for us then was that industrial and digital solution, they had this effect where some of the smaller assignments in the quarter were postponed and that led to a bit lower utilization in the quarter affecting the result of industrial and digital solutions. There's a lot of activities to bring that back, so a lot of good plans under the new division that had Martin Öhman. But that's the summary. Three divisions doing very well, and we have three divisions then not doing as good, and here we have plans to work on that. Well, we are bringing in good projects. These are three examples. We have a tram project in Tammerfors in Finland. As one, we have a wind power project in the Baltics, and we are also in a future mill in Metse Tissue in Mariestad in Sweden. Of course, as Bo will say, the order stock remains stable and solid, and we are bringing in a lot of new good projects into Eifri. Just highlighting what we already communicated, that we have two new divisional heads. I'm very pleased that Robert Larsson then, who has been with us for some five years with a long experience in AB before he joined us and he has done a lot of good things in the industrial and digital solution, has now taken over infrastructure with a very clear mandate to execute and drive the improvement program. You know, we are pleased that the program is now expanded and this is both to handle capacity, but also to improve profitability. And Martin Öhman is now taking over, has taken over industrial and digital solution. He has also a very, very good background and been with us for a few years. So both these two division heads have joined new positions and again, very pleased to have them in their new roles. Finally, before I give it to Bo, just a summary of the improvement program that we delivered in the quarter. We have then extended the improvement program in infrastructure and we have restructured AFIX. So in infrastructure, we are now, a lot of actions of course, but we are now adjusting full-time positions with some 300. We are 150 in the fourth quarter and then another 150 planned for the beginning of 2024. These are partly to adjust capacity due to the weaker market and partly also to do structural improvement to improve profitability. The estimated restructuring cost for the first leg of that in quarter four will be 50 million. And we are on top of that in the program, two very important things, strengthening, improving our commercial management and resource planning. So basically ensuring that the volume product that we are bringing into AFRI have the profitability level. So we are steering the structure around that in a new way and Robert and the team is working heavily with that including of course that we have a good balance on the resource planning. And then we have intensified our portfolio review across infrastructure at AFRI. At A4X, we have decided then in the quarter to dismantle the divisions. So those business units that was in A4X have now been integrated in Norway, Finland and Sweden. And when we did that, we did some restructuring, taking out some 45 employees, full-time employees to reduce cost and increase efficiency. That was one of 16 million in the third quarter. And further activities will be done in the fourth quarter to tune that business, bringing it up to profitability there it should be. So we are pleased on expanding this program. And again, Robert is taking on that with high pace in the infrastructure division. With that, I will invite Bo Sandström, our CFO, to take you through the financial numbers. Give it to you, Bo. Thank you, Jonas.

So I will cover the main financials for Q3. And Q3 is, as you are aware, is our seasonally weakest quarter and also the quarter with the lowest volumes. In a sense, due to vacations. Looking at sales for the quarter, it was, as Jonas said, it was 6.1 billion, some 750 million higher than last year, corresponding then to a total growth of approximately 14%. On a rolling 12-month perspective, we have now surpassed 26.5 billion. And with a 14% total growth, we report 9% adjusted organic growth in the quarter. Growth was driven by high demand across most of our segments, supported by price increases in the quarter of approximately 5.5%. We see growth of 8% on the order stock in the quarter, which remains high at 20 billion. In terms of growth over the last number of quarters, looking then at adjusted organic growth, growth remains at a high level in the quarter, as you could see, at 9%. But sequentially, adjusted organic growth is now clearly fading from the peak levels that we saw in the beginning of the year, Q1 being the most imminent quarter. and it's actually now below 10% for the first time since beginning of 2022. Order stock growth year over year increased 8%, where approximately half relate to FX effects. Sequentially, sequential trend show a similar pattern, as you can see on the net sales development, where order stock growth was 14% last two quarters, and then, as I said, 8% this quarter. EBITDA came in at 326 million, which is 15% lower than last year. EBITDA margin ended at 5.4%, a decline from 7.3% in the corresponding quarter last year. The decline in utilization and the negative calendar effect, which is estimated at one percentage point, Again, more than explains the difference to last year. Despite the more cautious approach to recruitment, with attrition still coming down and pockets of quickly changing market conditions, most imminent in some industrial segments in the quarter, utilization was again affected and overall lower than last year. On EBITDA rolling 12 months, we remain above 2 billion, and the negative movement last two quarters is mainly related to calendar effects. Year to date and compared to previous years, we maintain a clear upwards trend from the 1.7 billion level in 2021. We report one negative project one-off in the quarter of close to 20 million Swedish, which is affecting year-over-year comparisons in the infrastructure division. Finally, this was the last quarter reporting A3X as a division, and cost for that restructuring was reported as IIC in the quarter. Effect of the restructuring can be expected immediately in the receiving divisions. And we estimate payback of the restructuring in approximately two quarters. Looking at development by division, we still see positive adjusted organic growth in all divisions, although sequentially as for A3 in total, sequentially it's also coming down in all divisions. Only the management consulting division now remain above 10% in adjusted organic growth for the quarter. Margin development, as Jonas said, very mixed in the quarter. Process industries, energy and management consulting continue to deliver strong results. Noteworthy, both energy and process industry managed to increase their respective EBITDA margin despite a negative calendar effect in the quarter. Industrial and digital solutions was the division most clearly impacted by lower utilization for parts of the business in the quarter, and that in combination with the calendar effects accounts for the margin dilution compared to last year. Infrastructure margin was down 3.2 percentage points compared to last year, still affected by the weak real estate market. And additionally, as said before, besides the calendar effect, we have a negative one of item related to a finalized project affecting the quarter. A free X margin was as in Q2 significantly pressured by low utilization. So some words on operating cash flow, financial net debt and available liquidity. Cash flow from operating activities was again stronger than last year. In the quarter, we did increase working capital, but in line with growth. Financial net debt decreased somewhat sequentially and available liquidity remains strong currently at 3.8 billion. Finally then, an update on financial targets on a rolling 12-month perspective. Growth is at the end of Q3 at 18%, marginally starting to come down, but well above the 10% target. EBITDA margin rolling 12 is affected by the negative calendar effect in the quarter and is now at 7.6%. The margin adjusted for calendar effects year to date is estimated at 7.9% in line with full year of 2022. and improving the margin remain our key focus area for this and upcoming years. Finally, leverage increased marginally in the quarter sequentially to 2.7 times despite the lower net debt. Calendar effects on the EBITDA is then the driver to the sequential increase. Typically, net of any acquisitions, Q4 is historically a strong cash flow quarter and we expected the leverage until end of the year. With that, I leave back to you, Jonas.

Thank you, Bo. I will just make one summary slide before Bo is back for the Q&A. Looking ahead now, you could box our priorities into three areas for sure. to now execute and drive the whole extended improvement program and infrastructure is one of our priorities. We have been working with infrastructure, as you know, for quite some time. But I will say now with the new leadership with Robert and the extended program and the activities we are building up, we are spending a lot of time in doing that. So that's one. Second one is, of course, to continue to take the opportunities we have in those part of the business that is doing well. As Bo said, and I also said before, three of our divisions are doing very well. Energy, process industry and infrastructure. And we have also focus in the industrial part in Sweden that we see good demand like automotive and defense. And we will of course grab all the opportunities we have there. But the third one I would say is also for the whole companies to continue to build up further resilience and flexibility because what we have noted is that the market in sub-pocket sub-segment could be and has been a bit more volatile. So for us to be a bit ahead of that, to be able to adjust is key for us moving forward. because in general, we believe there is strong underlying demand driven from the green transition in some segment, but we also expect some segments like real estate continue to be weaker and we need quickly to adjust to that. So these are the three areas of priorities in general for us moving forward. So with that said, I will invite Bo back here and we can open up for Q&As.

Some of you missed the first part of the presentation. We had some issue with a link somewhere, but you can of course, we recorded the presentation and you can look at it at the website later on. We take the first question from Johan Sundén at Carnegie. Please go ahead.

Thank you. Thank you for taking my question. I think we should start off on the infra segment given the news today with the upcoming restructuring initiatives and just to have your thoughts and how you compare these kind of initiatives with your initial plans. You had this slide on the capital marketing in March this year where you guided that Vardin should trend up towards 9-11%, 24-25%. How much of a help can this be for bridging that margin gap compared to where we are today?

Thank you. Well, first of all, I think when we had the meeting in March, for sure we have seen some of the real estate segment being much weaker. So I would say you are right that what we are doing now is a real strong add-on to a lot of activities already ongoing. But clearly we have seen then that what we have in the plan so far has not been strong enough. So we are gearing up. So what we are saying now is that what we are doing now then with the first 150 in the quarter is partly to address the weaker market sweden finland real estate and partly it is to do structural improvement cost improvement to support the margin so and then on top of that as we said we have implementing different processes on commercial steering and as we also talked about how we are balancing hiring basically the capacity and we continue to do the portfolio review So I think the plan for us to improve the margin and to reach 9 to 11% for infra remains. So I don't think we have, we have not changed that per se. And if I remember correctly, we said within three years when we had the capital market stay. So that remains, but I would say what we are doing now is partly to get better balance in the capacity, but also to execute on the program to improve the margins.

Has there been any kind of facing of your view of how quickly the margin corridor can be reached or

it is still the kind of set out time frame yeah yeah i think the time frame remains but what we have said internally for us it's so important that we start to break the trend i mean you you know what we know with that if you look back a few quarters we're not happy with the general infrastructure margin development in fact it's been a declining trend so for us it is so important that we now break the trend and start to trade in the other direction and then i think The target to go to 9 to 11 remains for infrastructure. And I still think that when we look on N2025, something like that, we should be on that corridor. But of course, now we also need to adjust to the fact that for us, at least in the real estate segment, it's been weaker and we need to adjust to that. But for us right now, coming quarter, it is so important to have a trend shift on the margin development.

Looking at utilization, Now Q year to date is at, say, 73.5. Full year 22 was at 74.7. How much of an help on utilization can this initiative be?

No, I mean, a lot of the activities that we do in infrastructure is related to utilization. And we do believe that turning that negative trend that you relate to in that sense, that will be key for us to achieve the margin improvement that we strive for in that sense. So not putting the full improvement plan on the utilization level, but it's still a vital part in achieving that. So that is, in that sense, indirectly, that is something that we really try to close the gap and then turn the trend also on the utilization side.

Will it be, from your perspective, Is it likely or unlikely that you will be back at the 2022 levels in 2024-2025 on utilization?

At least that's our ambition. And then, of course, we have an external market that we don't really know where it will go. But for sure, Johan, as Bo said, we know that utilization is so essential for us and as a consultant as a company. So there is a lot of focus in all divisions really to work on utilization, not the least now for infrastructure, but also if you look on the industrial and digital solution, we also saw utilization drop in the third quarter. So our ambition is clearly that we need to improve utilization. That's why we also need to find a way to have a better balance by recruiting attrition and the demand side. But it's clearly for us that utilization has been weak in some areas and that's where we need to improve moving forward.

Okay, thanks for those answers. Questions also on the process industries area. We saw order intake, order backlog being down quite a bit, quarter to quarter. How should we read that development? Should we be scared that the kind of utilization in that segment takes a clear step down during 24, given the order situation currently?

I think we should not be scared, but for sure we have also highlighted that when you look on the pulp and paper segment as one, we all know that there has been a lot of, you know, where some of our clients have highlighted that CapEx project might be postponed or delayed a bit so that we are looking at carefully. We still have a lot of projects ongoing. but then we have to remember in process industry we are into batteries we are into hydrogen we are into a lot of other areas mining and metals to make sure that we are broadening our exposure so that is ongoing so i don't think we should be scared but for us we are now growing in other segments than than for example pulp and paper but we have seen that there are some more discussions related to delaying capex products so now quarter three we will always have order intake a bit more with the timing effect between the quarters so we are not scared but we are very very close to our clients to adjust also here how tough is it to

move around resources in the various kind of pockets of that segment?

Yeah, I think there is there is, of course, specialist into pulp and paper that you that you have in that segment. But then in process technology, there is also opportunities to move competence between like piping or any of these specialists. So we have opportunity. I think the division under Nikolas is doing it very well because we are also working in a global business here. So for many of the projects we are using offices from Sao Paulo, from Finland, from Sweden. together and then you can balance and mix between not only segments, but also between geographies in a different way than we have in other segments. So they are doing it in a very, very good way. And that way of working is improving quarter by quarter. So we have different way to mitigate if one segment goes down by leveraging between different offices in a way that we do not have to the same extent in some other areas.

Just one final follow-up to Bo on the kind of infra segment in the quarter. There was some problem with the link, so I think I didn't catch that. Did you say there was some 20 million in kind of one-off in the infra segment this quarter that did not was adjusted for?

Yes, we had a project one-off in the infrastructure division, close to 20 million.

And was there any kind of restructuring initiatives in the infrastructure baked into the reported EBITDA as well, or was it just... No material effects in quarter three. Perfect, very clear. Thanks, I get back in line.

Thank you.

Okay, so we take the next question from Fredrik Littell at Handelsbanken. Please go ahead.

Thank you very much. Thank you for taking my questions as well. I'm going to keep myself to two questions. You discussed a little bit during the call on small assignments that have been a bit softer and some specific pockets within industry, for example. do you feel that these are sort of early indicators for that the large type of projects are pushed or delayed or something like that as well so it's just an indicator on that the market will turn tougher so that's the first one and then secondly uh you had some earn out considerations in the quarter uh do you have more of those kind of earn out structures in earlier acquisitions that might

create the need to pay out more cash and thereby hold back your possibilities to gear down just just a detail thank you right i will take the first one well you are right that in the industrial area and here we talk more about sweden where industrial and digital solutions are more exposed we saw that in i would say the more generic manufacturing industries where we do a lot of different assignments, we saw assignments in the quarter being postponed and delayed, smaller project and different assignment that affected utilization. So there were a bit more volatility in the industrial segments. At the same time, some of our verticals like automotive driven from the electrification or defense industry mentioning too, they continue to be rock solid in the quarter. So, of course, we don't really know where it will go. We will be very close and those business unit who had that drop they are getting very close now because it came for them in a way that we were not able to adjust it quick enough. Are these early signals? I don't know, and I don't really believe it. But for sure, we will be very close to those where we saw that drop to understand and adjust moving forward. But again, I want to highlight then that I think the automotive industry for us continue to be very solid. And of course, we are very much exposed in the whole electrification, new automotive or platforms. And here we see a continued solid demand to our clients. So a long answer on the first one.

And on the earn-out side, we continuously have those considerations going forward, but you should not expect any material in the upcoming quarters in that sense that will affect cash flow.

That's very clear. Thank you. Thank you.

So we take the next question from Stefan Knutsson at ABG. Please go ahead. Stefan, don't forget to unmute yourself if you have a question.

Sorry about that. Hello, everyone. Just a question on the infrastructure business and the order situation there. I think you mentioned last quarter that you increased the threshold for profitability from that point. I guess you have to work through the current order book before we see any improvements in the mix there. Is that correct?

That's correct. I mean, we have an order of stock in infra, which is mixed profitability level. And then, of course, with an infrastructure, even though we do some of this larger product, we have a lot big volume of smaller project or assignments. And I think what Robert and the team is doing now is to tweaking and ensuring that in the decentralized structure we are working, that we also have good control of the order intake on smaller assignments to make sure that we have the profitability level. But you are correct that all the stock that we have, we need to work through. But we are now ensuring a lot that we have a different commercial view, I would say improved commercial view on the order intake from now on moving forward.

Perfect, very clear. And then also on the restructuring that you do in the infra business, Do you have a rough guide on the utilization rate of the people that you let go, just to get an understanding of what kind of potential it will have for the group?

We don't have a number. I mean, Robert now and the whole team in Infra look in, as we said then on the Swedish and Finnish real estate market, where we have seen that over the last quarters, the market have gone down and we started to adjust during spring, but clearly not enough. So I think it's a mixture of, you know, employees not having assignments at all, all the way to employees that have, you know, half time filling the half of the time with assignments. So, of course, now we are with 150 that we have now communicated. we believe that we will take the first step to be in balance and then we have with all the activities we are planning also pruning the portfolio improvement activities we are seeing a potential 150 additional in the beginning of next year where we of course have more tools to adjust than this first 150. so i don't have a number of utilization but clearly this should will be driving utilization in those two countries, Sweden and Finland.

Okay. Thank you very much. That was all for me. Thank you.

We take the next question from Raymond at Nordea. Please go ahead.

Yes. Hi. A few from me. First one, a more general question about sub-consultants. Do you see your current level of deployment of sub-consultants as a barrier in any way to your path towards your long-term margin goal?

I think we have a model, and I think we're not unique in that, that we use sub-consultant, expert consultant, and sometimes we're even teaming up with medium-sized or other companies to take on bigger assignments. I think you're onto something, and that is, if anything, and that goes into the commercial steering and infrastructure, for example, that we fully steer and drive the sub-consultant to support our margin development. So in the total, you know, improvement plan in infrastructure, that is one area that we are looking at. Then we are using sub-consultant also in other divisions at AFRI, but since infra has been on too low margins, that is one area where Robert Larsson now and the team are looking deeply into. And here we think, I mean, Robert has been in industrial and data solution. They use subconsultant. They have done it in a very structured, a good way. So a lot of learning from that Robert is bringing into now address or improve that process and infrastructure. But you are correct. That's one part of our business model.

And if I just amend a bit to it, because I share Jonas' view, I look at it more as an opportunity than a barrier. But back to Stefan's question on the backlog, that's where it could be a barrier, where we have backlog assignments with subcontractors attached to that. That's the only barrier, as I can see it.

All right. Then the question on sort of your hybrid way of working. Do you feel that it's hindering building cultures? And is this something that you are sticking to or? Yeah, elaborate on that.

Good question. I would say that we are evaluating the hybrid work model as we go. We know that to be in the office or meeting each other, it's important to build culture. Now, we also believe that the hybrid work model that we have done basically since the pandemic, beginning of 2020, is not per se bad. We don't see big operational or utilization drop due to the hybrid work model, but I think it's a constant, I would say, optimization of the model to find the perfect balance by leveraging from hybrid work model and building culture. so i don't think we will change it dramatically but we will for sure fine-tune it a lot moving forward we are we are taking a lot of inspiration from other companies and of course there's a lot of opinions if it's bad or not bad but i think for a3s per se it works then it's also we need to remember that we are operating in we have offices in 40 countries and it is very different also from the kind of country culture how you should think about it But we are tweaking it, optimizing it, moving forward because you are onto something, building culture. You need to meet each other for sure.

All right. Thanks so much, guys. Thank you. I'll get back in line.

We take the next question from Johan Dahl at Danske Bank. Please go ahead.

Thank you. Good morning. Just a question on this improvement program. I mean, you talk about strengthening commercial and operational governance. Can you be a bit more tangible there in terms of actions, what that actually means in the coming 12-month period? Also, this portfolio revision that you sort of talk about, have you identified sort of issues here in the portfolio? What should we read into that statement in the press release?

Yeah, thank you. I think when it comes to commercial governance, I would say that when we talk about the infrastructure specifically, we have we have, I would say, good control of the larger projects in general with thresholds and how we are viewing and understanding the margin from each of these projects. But we also know that in infrastructure, depend a bit in Sweden and Finland, for example, it's a very decentralized model. And I think it's more about improving and ensuring that all these thresholds we have of bringing in small assignments, mid-size assignments, are targeting the right profitability level. There's a lot of detail into that that we are working on. Some of them are purely process oriented, but some of them are more operational, how we are steering the whole infrastructure division. So I know that Robert and the team are looking at it. We are using best practice from other divisions to implement it in the infrastructure. And we are targeting those units where we have had, I would say, the biggest profitability gaps. So I don't want to go into more specifics into that now, but it is for sure one big lever because for sure we have the cost base and we have utilization, which is really important. But in the other hand, we also need to make sure that we are not bringing in products that from beginning have too low margin when we are, and that's where we are, have seen as a need to improve that process. That was the first, do you have one more, Johan? Portfolio review?

Yeah. This portfolio revision, what was that sort of?

And I can say when you start a portfolio revision, you probably should read into the fact that we are not super happy everywhere. And as you know, we have since 10, 15 years at AFRE when we started to invest into infrastructure, specifically in Sweden, very much organically driven. But when you go outside Sweden also, we have basically acquired companies leading to having different positions in different countries. So to simplify it, I mean, we're basically looking on our position, competitors, market, pricing, performance across the whole infrastructure division and assessing where are we strong and where can we make a turnaround Where is it a utilization and where do we potentially have a positional problem where we, for example, are not strong enough to bring in the sizable products, et cetera, et cetera. And we are doing it across the whole infrastructure portfolio. We started it up during spring, but we have accelerated now with Robert. And that's a part of the program. And that will lead to further tweaking portfolio prunings moving forward. And that's a part of

um part of the bridge uh bringing us up to the to the margin that we expect from the infra division all right just the final one on the i saw ft's decline slightly sequentially on a group level still you know grow organic growth is good the orders seem to be coming in uh to what extent is that and you also i think you also said attrition was coming down To what extent is this sort of a desirable sequence of events for you guys? Or is this an issue for you that you're unable to recruit?

No, I wouldn't say that at all, actually. I mean, attrition coming down is generically a positive thing, and we don't experience... I mean, recruitment as such has always been difficult in our line of business, and it remains so, but we still believe that we can recruit in a good way. But of course, as we have discussed over the last few quarters, balancing growth with profitability development, also going into a more volatile market, then we are determined to be a bit more cautious on the FTE side than we were in the last couple of years, I would say. And you should see that more as a kind of natural sequential effect rather than a long term shift as such.

Thank you.

Thank you.

We have a follow up question from Raymond. Please go ahead.

yes just one more question that i came up with so related to for example um understanding what projects are not profitable and keeping small and medium-sized projects at the profitable level i recall a year ago there was still quite a lot of talk about the erp system rollout and how this was supposed to help in this regard to have a better overview and compare project could you tell Just remind us a bit where you are on that front and how these two are connected at the current state of things.

Yeah, I'll take that. Practically, we don't have any news particularly on the ERP side. That implementation and that ambition is still ongoing and it will continue for a number of years. But you're, in that sense, correct in most ways that with a non-unified ERP landscape, it's always extremely much more difficult for us to control and to steer in a unified way. So the entire ambition in that sense with the ERP journey that we embarked on a number of years back is to create a good foundation for us moving forward, allowing us to better steer and have more transparency in the different parts of the business. Okay. Thank you very much.

Thank you.

We also have a follow-up question from Fredrik Littell. Please go ahead.

Thank you very much. Maybe one housekeeping. Should we expect more EU charges in 2024 on the second phase of the infra redundancies? You have 150 in Q3 and then 150 later on. Is there more EU to expect? That's the first one. The second is, coming back to Johan's discussion on the backlog that is at standstill quarter over quarter, 4% growth if we exclude FX more or less, year over year. Is that in line with what you sort of expected ahead of the quarter? It was the first one. is it enormous seasonality i mean q3 is the small quarter and there is a lot of vacation so should we see this as a seasonality behavior thank you

Thank you.

I can start with the second one. In a sense, I would... Growth in all aspects, in that sense, is following an expected trend related to the season, in that sense, I would say. And on the first one, of course, we're communicating our expectation on reductions also in the first half of the year. I wouldn't say that there will not be any EO effects, but it's not entirely sure that they are similar in size and so for next year. So it's a bit, you know, kind of in between. We will be able to, you know, coming into those quarters, we will be able to be, you know, quite a bit more precise on how they will actually be executed. But I wouldn't disregard it for sure.

Okay, perfect. Thank you.

Yeah, we don't have any more questions, so...

Okay, so then thank you from our side. Thank you for taking part of this webcast and looking forward to see you soon again and have a nice Friday and a nice weekend. Thank you.

Thank you.