Skanska AB (publ)

Good morning everyone this is Andrea Lövgren Senior Vice President Investor Relations of Skanska speaking and welcome to the presentation of Skanska's three-month report for 2021. The presentation will be held by CEO Anders Danielsson and also our CFO Magnus Persson. After the presentation you will be able to ask questions and with that over to you Anders.

Thank you Andrea And before we jump into the figures, I want you to look at the picture here on the screen. It's our project Epic in Malmö, Sweden. It's our own development, project development, completed, fully left and very green and healthy building. So success. Let's go into the figures and the highlights here. We have a three months report. We have had a very strong start of the year. All our operations deliver. We can see that construction is steadily improving. We have a very strong performance on residential developments. Both volumes and profitability are strong. And a good quarter in commercial property development. Very attractive levels of the divestment we have made in the quarter. Operating margin in construction improves to 2.5% in the single quarter compared to last 1.6. And capital employee development are above our target of 10% on a rolling 12-month basis. Return on equity rolling 12, 24%. And we continue to have a very strong financial position. We're coming back to that, of course. But let's go into each stream, starting with construction. The revenue decreased with 12% in local currencies. What we can see here is mainly driven by the COVID-19 impact for the last year here. And the decision, we also see decision by clients to postpone the ramp up of new projects. And also we see some remaining impact of the strategic action we have had for a couple of years now to focus operations and be more selective in order to improve profitability. Order bookings, 35 billion Swedish. We have a book to build on a rolling 12-month basis of 107. So the order backlog is on a healthy level, 193 billion Swedish. Operating income, 722 million, corresponding to 2.5% margin, which is strong, very good performance there all over. So all business units improve the profitability if you look at the margin. And the strategic focus remains here in the construction. We're going for a project where we can see that we have a competitive advantage, we have the right team in place, And we have a good history and track record of similar projects in order to reduce the risk in the portfolio and improve the profitability going forward. And residential development. We have a very strong quarter. We improved or increased the number of sold homes. We also increased the number of started homes. We have an operating income of 669 million, corresponding to operating margin of 14.8%, well above our target of 10%. And we also have a very strong return on the capital employed of 14.3% on a rolling 12-month basis. Very high activity and profitability improving from already strong levels. We have a solid land bank in our market to meet the demand. We can see that the demand for larger apartments or larger homes has been a very strong trend during the pandemic since people are working from home and need more spaces. On the longer term, we believe on a stable market, more normalized market. The concern is, of course, what will happen with economy what will happen with the unemployment rates but the structural short dates of homes in our markets is still there and we also have low interest rates so and we believe in a stable market going forward commercial property development a good quarter gain of sale of 1.2 billion Swedish and quite tough comparison though if you recall we divested Solna united Very, very strong profit last year in Q1. But we have made some very good divestments during the quarter. So very high profitability percentage-wise in those projects. The investor market is still very strong. And return on capital employed 9%, rolling 12, slightly below our target of 10%. We have 33 ongoing projects corresponding to close to 18 billion upon completion. The occupancy rate and completion rate are well in line. I would say 44 versus 48%. And we started seven new projects during the first quarter. The challenge here is still the leasing activities, which has been slow during the pandemic. So was the first quarter as well. I expect that to continue during the pandemic. On the other hand, we can see strong, good dialogue with potential tenants. So I strongly believe in this market. We can also see, especially in the US, also in the UK, where the vaccination has come much further than in the rest of Europe. And that we can see that more and more companies prepare to get people back to work and get people back to the office. And the employees also want to get back. Divestment at very attractive levels during the first quarter. Uncertainty, as I say, in the leasing market. But the solid property investor appetite. They really want to go for quality building, environmental friendly, healthy building. in a good location. If I go back to construction stream and look at the order situation, as I said, we have a book to build of 107%. You can see how that has developed over the years. You can also see the revenue, the light blue line here on a rolling 12-month basis. Going down, as I said, mainly driven by COVID, but also some strategic action. And if I look at the order backlog, 193, I think that's a comfortable level. So we're in a good position. And we can go into each market and look at the order bookings. The order bookings on a rolling 12-month basis book to build are quite strong in the Nordics, a bit lower than 100% in Sweden and U.S., But the book to build in the first quarter was really strong. So I think I'm confident with the level we have. We have 17 months of production, and that's historically on a healthy level. And the overall 107% good book to build is also on a good level. So with that, I leave it to Magnus to go through the figures more in detail.

Thank you, Anders. So we go to the next page with the construction income statement. What you can see is that revenue wise, we declined revenue with 18%, but volumes as Anders pointed out is down 12%. So fairly significant effects effect there in the numbers. And we've had, of course, especially January and February were slower months. We can see at the end of the quarter that the activity is is picking up a bit here so that that's positive the biggest decline in revenue in the quarter to the comparison quarter we could see in the us and as we have said before it's mainly projects that have been slipping in time so it's the game here so to speak is to get the ramp up of the projects that we have in our backlog to get them into production we have a very good backlog as already said there the backlog have in fact been growing in all our markets if we compare it to year end so we think we have a good and sort of solid base to work from but it's about getting the work into the ground if we look at gross margin you can see it comes up to 7.2 percent that's a very good number for us comparison quarter it's a full percent higher than the comparison quarter and also better than the full year of 2020. S&A we continue to improve S&A 1.4 billion in the quarter down from 1.6 on a percentage basis S&A is a bit up down to minus 4.8 percent Q1 is a low volume quarter and of course we have seen this revenue decline so that drives up the S&A percentage Coming down then to a very good operating margin for construction in the Q1 of 2.5%. It's actually the strongest Q1 margin we've had for 10 years in the group. It's a very solid result. It's a result of a few years of hard work with the portfolio. We've also reduced our exposure to Central European markets where we historically have had a more higher base of fixed costs that have been hurting the profitability in the first quarter. If we move to the different geographies on the next slide, we can see that the margins are improving to the comparison quarters in all different geographies. Sweden had a good quarter, 2.3%. up from 2.0 and we do notice here and can clearly see that the profitability in Sweden the couple of issues that we've had there they are stabilized and we see that the performance is gradually improving there. Also note Europe not negative in the first quarter and the US margin is also improving We're still, of course, working to complete the couple of difficult projects we've had there and that we have been talking about for quite a few times, the old legacy jobs. But the portfolio that is newer and that we have been taking in over the last, say, three years is really, really performing at a very good level. If we move on to residential development, we can see that revenues, they are up 30%. driven mainly by the Swedish residential business and not at least the sale of one rental property that we did in the Swedish business for 700 million at the end of February. That was a very good addition here. Very strong margins in the first quarter. If you look at the gross margin of 18.6%, that is a very solid level up a full 2% from the comparison quarter. And of course, it is a good market. throughout the first full quarter and we've also been very successful in our project level risk management activities been able to deal with the production and market risks in a very good way that contributes to the profitability. S&A over revenue is down as you can see 3.7% very low number of course driven down by the high revenue here if you look at the nominal levels we have roughly the same cost base you can say on the overhead in the organization as we did in the comparison quarter if we look at the different geographies also here all different geographies show strong margins Nordics with 14.2 percent Sweden 15.3 and then our European residential business close to 21% margin. This is what I alluded to before. We have been very successful in dealing with both market and operational risks in a number of projects. During the quarter, we have closed out a few of those projects in our Central European residential development business. When you do that in a portfolio that is not so big, this has a very positive impact on on the margin but it is not a one-off nor is it a non-operational item this is true profitability of the project but it is sometimes a bit lumpy when it comes out in the P&L if we move to the next slide you can see homes that are or have been started and have been sold during the quarter where we increase both number of homes started and the number of homes sold very strong sales as you can see with the 1362 units sold of which 220 then pertains to the rental project in the Swedish business area so even if we were to exclude from that and only look at co-ops we are still increasing the sales at a very good pace here we're also happy to be able to deliver higher number of homes started with the high sales pace that we have it is important that we can start and ramp up new project to backfill the portfolio here and we do have a good investment pace in residential development at the moment it is roughly at the same pace as in the comparable quarter if you go to the next slide you can see the number of homes we have in production at the end of Q1 we had 7100 units that we had in production we had Sales rate of 77%, which is at a very high level. You can say from a commercial perspective, it's almost too high. 60 to 70% is sort of a better level. You don't want to run out of units to sell to the consumers, of course, to our customers here. So it is important that we can start and we are starting more projects to backfill portfolio unsold completed homes 186 still at a very low and comfortable level we have a good churn in the unsold completed there are no concentrations to any specific sub markets or projects and this so it's not of any concern to us if we go to commercial property development then we sold during the quarter four projects and The biggest one was an office building in Copenhagen, which we sold for 1.3 billion with a very, very healthy profit. Total gain on sale, 1.2 billion Swedish kronor in the quarter, representing a development margin of 50%, which is the same level as we had in Q1 last year. And as Anders already pointed out, it's a very, very tough comparison quarter here, of course, where we divested the Sona United property last year in the first quarter but as you know every quarter starts from zero so this is a very good commercial development quarter. If you go to the next slide then we show you here the unrealized gains that we have in our portfolio and how that tracks with our realization of gains over the P&L and end of quarter we had 6.3 billion in estimated unrealized gains that we have in the portfolio 3.7 of those were related to the ongoing projects and two to the completed projects we have essentially no change here since the fourth quarter despite the fact that we realized 1.2 billion in value in Q1 so that gives you a fairly solid indication of the current pace we have in value creation in commercial development. If you go to the next slide you can see our total portfolio of the ongoing and unsold projects in commercial development and the bars here they represent the total investment at completion for the projects. and the date represent the date when we estimate that the projects will be completed from a production perspective and the greenish line represents the current leasing rate of those projects so if we look at the overview here we can say we have a solid leasing rate in the projects that completed in Q1 and Q2 this year and then in Q3 we don't expect to complete anything very little in Q4 and then we have a little bit more than in the first part and also the third quarter of 2022 with the two projects that are to be completed Q1-22 a very good leasing rate and then Q2 next year it comes down a bit and so on but it's very far out in time So overall, let's say we have a good profile here of the ongoing unsold projects right now. We've also started seven projects during the quarter with a total investment value of 3.1 billion. If you look at the far left of the chart, you can see the orange bar. That represents the projects that are completed and unsold with then a leasing rate, an average leasing rate of 63%. And of course, many of these projects have a very good leasing rate. Then we have a couple of them that we are sort of struggling a little bit more with, which we have reported also before. Essentially a couple of projects that are underperforming from a leasing perspective. But generally speaking, the leasing has been very challenging, as you are very well aware of over the last year or so. We also have here of course as we have pointed out the very strong ambition to continue to start new projects and backfill this portfolio with new starts. If we go to the next slide you can see leasing obviously a weak leasing year and the Q1 was not a strong quarter in terms of leasing either. We've been very successful I'd say in controlling our exposure to the situation though. We always aim to have a completion rate in the portfolio roughly in line with the leasing rate of the portfolio represented by the two lines in the chart. And as you can see, they do track each other very, very well. And despite the fact that Q1 was a slow leasing quarter, we increased activity. There are more discussions and overall, say we feel that the market is moving in the right direction at least. So that's quite positive. I also want to comment on that it's still Too early for us to send you a firm indication on how we see the future office market, how that will look. There's really no strong consensus among tenants or prospective tenants on changes in demand here. And of course we have a lot of these discussions ongoing. So we pick up signals very early, but we do not get the uniform picture on that. what we do expect this fly to call it in terms of property properties that are well located have low costs for sort of maintaining and operating them have a high sustainability stand and generally good installation and a good indoors environment that is what we think is what will be in demand going into the future if we go to next slide we have the group income state Obviously the operating income from all the different business, the central costs down somewhat from the comparable quarter. Yes, down to an operating income then of 2.3 billion. Net financials, no change since the comparable quarter. We have a tax rate of 17% in the quarter and a profit for the period of 1.9 billion. If you go to the next slide, we see cash flow. The cash flow in the quote, normal for Q1, I'll say, and the numbers are to look sort of a bit high. It looks very positive, but that is the booking the dividend in the first quarter after the decision from the young, but booking it before the payout, because the payout happened in the second quarter, which creates then a positive impact in net working capital in the central stream. so the cash flow needs to be read from that point of view and of course last year we did not have this effect so that's why the comparison to last quarter to the comparable quarter might be a bit yeah you need to take that into account if we go to next slide you can see the free working capital in the construction business then and the remains of the very very high level in terms of revenue we had 19% free working capital over revenue which is a very high level from a volume perspective of course as the volume has declined a bit in construction we do have a negative cash flow contribution from a working capital in the quarter of a little bit more than But that's entirely volume driven and we still have a strong focus on capital management and the sort of payment terms in our construction operations and we continue to deliver on this in a very successful way from our projects. If we move to the next slide you can see our investments, divestments and the capital employed over time. quite clear here that we're still in this net divestment territory if you look at the green line on the chart on top but we do now start to see an increase in our invested capital again if you look in the table at the bottom you can see here that both for residential development and for commercial development while we have seen capital employed go down a little bit it's now starting to increase very much in line with our intentions and as previously also announced there. If you move to the next slide you can get an overview of the available funds in our central funding that we have in the group. Total in the quarter we had 23 billion Swedish kronas available of which six and a half billion were constituted by credit facilities that were not drawn upon. We had two credit commitments that matured during the first quarter. And as you can see in the bar chart here, we have one loan that matures this year. That is in the second quarter. And then we have nothing that matures up until 2023, giving a very solid funding position for the group. If you go to the next slide, which is an overview of our total financial position, we had total assets 129 billion, an equity position of 38 and a half. And of course, the equity is shown here with the dividend that has already been separated from the equity. But the dividend had not been separated from the cash position at the end of the quarter. equity to assets ratio of 30% so very very solid balance sheet overall and this is an important enabler for many good and opportunistic deals for Skanska. It's very important to keep this strong financial position going forward. With that Anders I hand over to you.

Yes I will address the market outlook now starting with the construction We can see a continued weak demand in commercial office building in the construction. However, we can see improvement for other non-residential building. And we can see that some private clients, their uncertainty has decreased. And we can also see improvement in the outlook for residential construction in all markets. which is encouraging and we can all and the non-residential construction especially improvements in the United Kingdom and USA and also in Sweden and as I said that we can see clear trends especially in US and UK where the vaccination is going on the faster pace and the ambitious infrastructure investment plans that we can see in all markets. It's very encouraging, of course, in the longer term. Having said that, we expect quite some lead time before the project hits the market. In the US, for example, we can see these federal programs with thousands of billions of dollars. in the longer term very very very good for the market and for us and we can but we still expect that in a more short term that the the infrastructure investment will still be funded by the states different states residential development limited number of new developments overall in the market but we can see also that the activities is increasing and so we believe in a stable market continuous stable market and we can see one concern is of course what will happen with the economy what will happen with the unemployment rate that's in the downside but in the positive side here is of course we can see low interest rate policies and we also have in all markets an underlying shortage of homes which will contribute to stronger market going forward. And on the commercial property development, investor market is solid. We have low interest rates, stable credit markets, where we can prove it with a very attractive divestment during this quarter as well. But as said, tenants are still hesitant and they expect that to continue during the pandemic. And to summarize this, and before open up for q a strong performance across our operations strong financial positions we can see continue to see improvements in the construction market outlook which is good we can see also improvement in profitability going as planned strong quarter there and our long-term focus remains to grow the product development We should be the leading residential developer in our markets. We also want to grow the commercial property development operations in a responsible way in line with the market development. We continue to focus on health and safety. That is the first priority for us. We also have good development when it comes to carbon emissions. Last year when we summarized it we have reduced the carbon emission by 34% compared to our baseline in 2015. With that I'll leave it to Andrea to open up the Q&A.

Perfect. Thank you very much Anders and Magnus. As Anders said it's time for the Q&A so please listen and follow the instructions from the operator. Thank you.

Thank you. If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Our first question comes from the line of Simon Mortison from DMV Markets. Please go ahead, your line is open.

thank you so much i have a few questions i was thinking about starting off with actually one on each segment especially when it comes to the margins in the construction this quarter it is as you said very very strong but you also meant gave some comments that you haven't been able to start so many projects and has been like some delays in the order book from what i hear and understand from this sector before is that The maturity profile of projects could significantly impact the profitability you have in margins. And my question is, is those delays now impacting the margins you're now reporting into one, given the very strong margins we're now seeing here in construction?

I can comment on that, Anders. No, not really. It's impacting the order booking somewhat in markets. We can see COVID impact, especially in the US and Europe. So the order booking is impacting the revenue, but we have been able, and the organization has worked really good with the cost control. So we have been able to reduce the cost in line with the revenue decrease. So the margin is holding up.

So I think with the profile, it's actually three cost savings. And that's quite good, actually. My other question goes to the residential development segment. And of course, you have a huge sale here of 720 million of rental apartments. How much are the margins in that deal impacting the figures we see this quarter? Because we see the margins in residential development is very high and also how is the pricing in the market going? What's driving these margins? Is it that transaction or is it the pricing of homes for sale?

The margin we see in the first quarter, that's basically due to that we have been very successful in controlling the risk in ongoing projects and projects that we are completing now, have completed now in the first quarter. So we have been taking provisions earlier for market risk and so on, but it hasn't materialized. We get it to the bottom line instead. Very encouraging and a proof that we have the operations under control, the risk management works as we expect. And when it comes to pricing, of course, we adjust the prices in all projects in line with what people are willing to pay for it. So we do very careful market analysis before we have a commercial launch and start to sell projects. and we also try to have a step phases. We divide the projects in different phases to be able to adjust the prices in line with the market development.

I also have a question on the commercial development. I've just digged into the footnotes and into the footnotes you can see how much of your revenues and EBIT is made from divestments and especially when I look into the Nordics it's almost 1.7 billion with a divestment profit of 963. which means that in the Nordics you have had EBIT margins on those divestments of almost 57%. Could you please tell us how you have achieved that and how representative that is and what kind of projects? Is it the Copenhagen project? Is it the Stockholm project? And what has actually made this 67% EBIT margin in the Nordic divestments?

Hi, Simon Magnus here. It's essentially a super good project. That's the basis of this and I mean projects that we started some time back and then with the sort of recent years development in terms of investor appetite for these projects fully let as we said many times with exactly the right micro locations, you know good facilities in the projects and high up on in terms of sustainability and the facilities internally as well. then investors want to pay a lot. We make these super profits in certain projects. That is essentially what is behind it. There's nothing else there, really.

It was very good. Congratulations. The other one is on the valuation. You said you showed us the commercial property development and the completion pipeline of unsold projects, etc. Just in terms of the 8 billion you have completed and it seems to be the book value here. But how are you in the report? You also give some market value estimates of those, which is my calculation here should be close to 10. How are you evaluating the market valuation based on your rental assumptions? Because you stated that you had had some delays and some issues with the rental of commercial assets and second of all, are those still in Houston?

Simon, this is Magnus here. Correct, I mean it's the total investment that you can see in those bars and that's essentially the the book value for those projects because they are because they are completed and the market values that we show in the in the quarterly report that you can then connect with the chart share that this the market value when these properties are leased and you know the issues in the rental market how much of that in Houston and what do you see elsewhere also I'm sorry could you repeat that

Some of these assets are in Houston, aren't they, in the energy corridor, the completed assets? But that's still the most difficult market, if I'm correct.

Yeah, the energy corridor in Houston is one of these sub-markets that is really challenging at the moment. It has been so for a while. That's correct.

Thank you. I should let the other guy in. Thank you for taking my questions. Thank you.

Thank you. Our next question comes from the line of Anastasia Solonitsyna from UBS. Please go ahead, your line is open.

Hello, thanks for the presentation. I've got a few questions just to follow up on the residential. One of your peers reported results this week with operating margins below last year, and you have a very solid improvement this quarter on an already strong basis. Could you please maybe somehow break down what is due to the favorable mix, geography, and what's due to reversal of provisions? And do you expect moderating margins from here? And basically, whether you see a return on equity on capital employment lending this year and development from here? Thank you.

Hi, Anastasia. This is Magnus. I'll try to answer your questions in order. Remind me if I miss some of it. In terms of what our competitors are reporting, we're not going to comment on that, but our profitability improvement is very solid, and it comes from betterments in our underlying operations. There's very, very little, if anything, material at all in terms of... non-operational items or release of risk reserves that comes straight out and impacts the result as such. As you can see also when we go through that we'll have betterments in all different geographies both in the construction business and in the residential development business and in the commercial development business we had a very strong quarter even if the comparable quarter is better for obvious reasons here. So I think that was part one of your question. And then you had a question on capital employed. If you may repeat that.

Yeah, I just wonder how your outlook for capital employed develops from here, considering that you're already far ahead of your kind of targets. And do you see some moderation from this level? Or do you think that we can even sustain higher returns for like mid-term?

Yeah, so in terms of the return on capital employed, we don't sort of provide any forecast where we think that will go. We have a solid target of where we should be, which is above 10% roles for both residential and development business. Then, as we have said on many occasions, we have the ambition to grow our project development operation. And of course, when you do that, the first thing you need to do is to invest in land and you need to develop the land. You need to start a project. And all of this, of course, before you make the divestment. So we do expect that in terms of capital employed, that we can sort of continue to grow that business, and that would lead to an increase in capital employed.

Okay, thank you. And my question is on commercial margins. So you've had very strong margins on divestments, and you alluded to that there were some high-quality projects, and My question is, have you sort of sold the high-quality projects or is there, you see still some, like, investor appetite and some good projects to sell during the next quarter or so? And do you see margins normalizing from this level and returning back to historical, let's say, averages, or do you think that you can sustain, like, higher margin performance compared to the previous period? Thank you.

What I can say, we don't give any forecast for when we will divest or comment on the margins going forward. But we have our targets. I'm comfortable that we will be able to deliver in the future as well. And we also have a good pipeline. We have high quality offices in different markets. both completed one, but we also have a good pipeline in the ongoing. And for the future, we have, during the last year, made some really good investments in building rights. One example we bought just before year end, building rights in the center of Back Bay in Boston, really interesting area, very few competing projects in that area. I'm confident that we will be able to contribute to the profitability in the future as well.

Okay, great. Thank you.

Our next question comes from the line of Stefan Anderson from SED. Please go ahead. Your line is open.

Thank you. Two questions from me. Sorry if I missed, if you already touched it. First, on the CD and the stars, your balance sheet is very, very strong. You have the ambition to increase your portfolio. It's been shrinking here for a while. I'm a little bit curious on how forward-leaning you could be. Are you willing to start without pre-leasing or should we monitor the market when it comes to the leasing side to understand how quickly you can ramp up that side of the business?

Hi Stefan, this is Magnus here. That's almost impossible to give you a general answer to that because every property and every opportunity, product opportunity is unique. So we do make that assessment on a project by project basis. We have a have some sub markets that are really good today and then we have some sub markets that are sort of weaker in terms of leasing so those are things that we need to take into account when we make that assessment on a project by project basis but of course the slower leasing overall that's not necessarily something that makes you accelerate the project start but we do have the balance sheet for it and we do have the risk appetite to sort of believe that we can we can handle a slightly weaker leasing market as we have as well. So our ambition to grow the investment in commercial development, that is definitely still here. And we have to recall also that we started seven projects in the first quarter. So we're definitely not inactive in this. We do see quite a lot of opportunities and we act on them. These seven projects then contribute with around three billion in total investment that we add to our portfolio.

And then connected to that, on the land side, how do you see opportunities there price-wise, both residential and CD? I mean, residential, I guess, hasn't eased the demand, but on the commercial side, do you see great opportunities to find new stocks? You mentioned the one you did just before year-end, but how does the market look right now?

I think the market is not bad for that. Of course, land prices have gone up. There's been a trend over quite a few years, which is why it is so important to have the stable financial situation that we have as a group with our balance sheet and the strong funding that is secured to the group, because that gives us the ability to really take opportunities that seldom come out on the market and when they do sort of we can be there and we can be a serious player and sellers can trust us that you know we have the capacity to fulfill the deals so I think this situation here has created a few opportunities for us that we have acted on and that's of course doesn't show in the P&L today I'm very convinced it will show in the P&L out in the future

Okay, great. Thank you. And then the second part of the question, or the second question, looking more to the Nordic market, I guess, but just trying to get some sense of your competitive situation. When we're looking at the bigger players in the Nordics, PR, BC, EU, Vedek, if we should include Sarnak here, I don't know, but I mean, seeing that on the construction side, you've all been moving in the same direction in the last few years, saying, okay, we should avoid the big, complicated projects and guard our margins, you know, stay away. I guess we've seen some local media announcements in Sweden where there's been some road projects where there weren't even tenders handed in. So my question is, and this is for Nordic primarily, Has this dynamic changed the pricing in any way? Have you seen that pricing is becoming better in the tenders? And the second part of this question is, of course, has the international players instead taken that gap and therefore the situation has not improved?

I would say that the competition is still fierce, especially on the civil side where we see more international competition. But we also see fierce competition on the building side. I think that has been for a while, quite many years. That's nothing new. And if I talk about our strategy, we're not afraid of large, complex projects. That's not it. But it has to be the right risk balance in the project, the risk balance between us as a contractor and the client. So we're working with that and we're prioritizing projects where we can see the right risk balance. And so we're not afraid. That's our conclusion. And we're going for quite large projects in the Nordic as well. So that's both sailing in civil and building. And the key for success here is to prioritize the project where we can see that we have a competitive advantage. It could be that we have a strong team, we have a good track record. in that type of project and that's the number one key for success and then that you of course have the right contract and the right client as well okay so my understanding of your answer is that no real change in price really it's still competitive

And then a follow-up, sorry, on that as well. On the raw material side, the input side, we see some movements here on the raw material side, as you know. Is that something that could have an impact, or are you handling that in a good way?

Yeah, I think we're handling that in a good way. We have seen price increases on steel and timber, for example, but the We're mitigating that in the ongoing project, of course, that we secure the prices as early as possible in the project. And now we are also very careful when we bid for new ones that we secure the prices before we even bid for the project. So I think so far we have been able to mitigate that in a good way.

Thank you.

Thank you. I remind you that if you do wish to ask a question, please press 01 on your keypad. If you then wish to withdraw your question, you may do so by pressing 02 to cancel. There will now be a brief pause while questions are being registered. And there are no further questions, so I'll hand back to the speakers.

Great, then we wrap it up. Thank you very much for your attention and enjoy the rest of the day. Thank you.