Skanska AB (publ)

Good morning and a warm welcome to the presentation of Skanska's third quarter report for 2025. For those of you that don't know me, I'm Antonia Junlilind. I'm the senior vice president for Skanska's investor relations. And here on stage in our studio today, I've got president and CEO Anders Danielsson and CFO Jonas Rickberg. We're going to follow the typical structure of these press conferences. We will start by walking through the past quarter to provide you with a business, financial and market development update. And after that initial presentation, we will move over to questions. There are two ways in which you can ask questions. If you're watching online, then I encourage you to use the telephone conference number or the HD audio link, and you can just follow the instructions by our operator, George, and he will guide you through. If you are here in the room with us, then you can, of course, just ask questions by raising your hand. We will bring a microphone to you and we will take it from there. But yes, I will no longer hold you off. We'll take you through the third quarter. Anders.

Thank you, Antonija. Good to see everyone. Before we jump into the figures, I want you to look at the picture here on the slide. That's called The Eight, one of our project development office buildings in Bellevue, part of the greater Seattle area in the United States. And it's actually a Class A building, one of the biggest or the biggest commercial investment we have had. And we're also proud to be able to announce in a couple of years back that we have the greatest, the biggest lease here as well. And today, the office building is leased more than 80%. So it's a great, great building. I'm happy to say that we're going to host the Capital Market Day in a few weeks in the same building. So I look forward to seeing everyone who will show up there. And we will also have a deep dive, of course, of the US operation at the time, together with a commercial direction forward for the group. But now, the third quarter. It's a solid quarter. Solid third quarter. The construction is performing very well in all geographies, and we have strong market generated by a solid project portfolio. In residential development, we have very strong sales and margin in our central European business, so very high performance there. The Nordic market remains weak, which impacts both the sales and the profitability level. Commercial property development, we have two large lease contracts signed in the quarter and I will come back to the profitability level here. Investment properties, stable performance, stable cash flow and a stable leasing ratio. Operating margin in construction is 4.2%, very high level, very high compared to last year, 3.6%, and well above our target, as you know. Return on capital employed in product development, 1.4%, and that's on the low level, below our target, but it's driven by a slow market in different parts of our operation. Return on capital employed in investment property is 4.7%. Stable performance there on a rolling 12. Return on equity 10% on a rolling 12 months basis. And we continue to have a solid performance on the financial position. And that's very important for us, of course, and a competitive advantage going forward. and we also managed to continue to reduce the carbon emission and now we are at 64 reduction compared to our baseline year in 2015. so i will go into each and every stream starting with the construction Revenue increase in local currencies, 7%, which is good. Order bookings is around 40 billion. And we do have book-to-bill rates over 100% on a rolling 12-month basis. So we have a very good position when it comes to order backlog. I will come back to that, but it is on historically high levels. And operating income close to 1.8 billion. Increase from last year, 1.5. And again, the operating margin is very strong here, 4.2%. So strong result and high margin across all geographies. And that's very encouraging and also proof that we have kept our discipline and we have been successful in the strategic direction here. And we have a rolling 12 months group operating margin of 3.9%. Solid order intake for the group and a strong backlog. Moving on to residential development. Revenue is pretty much in line with last year. We have sold 383 homes and we have increased the started homes, mainly driven by the Central European operation, 572 started homes. And we have an operating income of 131 million, representing a return on capital employed on 5.9% on rolling 12. very strong sales and result in central europe we have started two new projects and we have a with a very good pre-sale level which drives of course the sales in the in the quarter the nordic housing market remains some weaker and nordic businesses recorded very very small loss here but the Overall, it's driven by a weak market. We can see some signs of improvement in the Norwegian operation here, but overall quite slow. Commercial property development operating income is minus 397, which is driven by write-downs in impairments, write-downs in few projects in the US properties. We'll come back to that. But we also have a gain on sale of 377 in the quarter. Return on capital employed is zero, rolling 12. We do have 15 ongoing projects representing 15 billion in investment upon completion of those projects. And we have 22 completed projects representing 18 billion in total investment. The leasing ratio in those completed projects is fairly good. We are at 77% leased. So we have a good position there, giving us a positive cash flow. Three project investments and one internal land transfer in the quarter. The result includes these impairment charges, of course, in the US. And we have two large lease contracts signed in the same quarter. Investment properties, operating income stable, 143 million. And we do have a stable occupancy rate of 83%. It was the same as last quarter. The total property values continue to be on the same level, 8.2 billion. If I go back to the construction stream now and look at the order bookings, and here you can see over time for the last five years, the order backlog, the bars, the blue bars here. You can also see the rolling 12 order bookings, the light gray line and the order bookings per quarter the orange and also the revenue the green rolling 12 which you can see is has had a slow increasing trend the last few years and that's thanks of course that we have been successful in increasing the order backlog which again is on historically high level And you can see the yellow line, the book-to-bill ratio over 12 months. So I think it's important here to look at the rolling 12-month trend, because when it comes to order bookings, it can fluctuate quite a lot between a single quarter. And that you can see also when you look at the order intake in the quarter, which is down from 50 billion to around 40 billion. And we'll come back to each and every geography here. But we are in a very good position. And if I look at the order bookings per geographies, you can see here that Overall, we have a book-to-build ratio of 106%, and we have over, well above, in the Nordic and European operation, slightly below in the US operation on a rolling 12-month basis. But look at the months of production, 19 months in overall, and I'm very confident that we have a very good position. So we can continue to be selective, going for projects that we see we have... competitive advantage and that we have a good track record as well for the future. So with that, I hand over to Jonas to go through the financials.

Thank you, Anders. And we'll continue here with the construction side. And as you can see, the revenue is fairly flat here in SEK, but it's actually up then with 7% in local currency. The green line, we're actually then having a gross margin that has increased to 8% in the quarter, which really emphasizes the great quality that we have in the order book. We continue to have a strong and good cost control within the stream, and that is then generating, that you can see over the line there, but that is also then showing here with a good result in the operating margin of 4.2%. Operating income of 1.8 billion, an increase with 22% versus last year. Worth mentioning again, I would say, is the rolling 12 of 3.9% in operating margin. Looking here on the geographies, we still see that we have a solid delivery for all the areas, Nordic Europe and US. That sticks out a little bit on the positive side here is actually Sweden with 4.9. That is building up from a strong portfolio right now. And it's very clear natural trends within the quarter and so on. So if we summarize the construction line here, the construction stream, we can see that we have a strong performance in all geographies right now. We have actually a five-year track record here on margins that are on or above our target of 3.5%, which is strong. And of course, as you said, Anders, we have 264 billion here in our order book that we can harvest from, and that is a real strength going forward. Moving on then to residential development. Here we can see the income statement, and of course, you can see that half of the revenue actually comes from Central Europe, which is really a strength from that delivery point of view. We started two new projects in Central Europe, in Prague and Krakow, and that had a really good pre-sales level as well. We have reduced S&A significantly over the years, and right now we have an organization that is set for higher volumes going forward to really get the leverage here on the S&A going forward. Also, please note that we have the upward trend on the Roebling 12 operating margin at 8% here, which is strong. Looking at the operating income or income statement biographies, you can see here very clear that Europe of 159 million, that is really lifting or keeping up the strong performance here in the stream on a margin of 17.5%. Secondly, here you can see that Nordic is a little bit on the weaker side, and that is mainly driven by low revenue, actually low sales, few units sold, and also it confirms a trend here that we have said before that buyers really would like to buy close to completion, and that we are selling mostly from produce that will lead a bit weaker margin that is reflected here. Moving on to home started, you can see that we have out of the 572 units, we have 430 that is coming from Central Europe, and then 142 in Nordic here, and that is actually that we have started places here in Oslo and Uppsala and Öresund. And looking at the homes sold of the 383, you can see that 240 is actually then coming from pre-sales started in Central Europe and 141 from the Nordic areas here. Rolling 12 lines, you can see that we are very balanced when it comes to the sold and started homes, I would say. If we turn into our stock situation, you can see that we have the homes in production actually then ticking up to a level of almost 2,900 homes in production, and that is up since Q2. Unsold completed homes is also coming down from Q2 level of 486, which is good as well. If you summarize the residential development area, we can see that we have a good performance, despite we have a challenging situation in the Nordic, but it's really lifted up from the central European unit here. And also that we are preparing here good projects within pipeline for start when the market condition is in a better place as well. If we move to commercial development, you can see here that revenue side, there are three divestments, one in Poland and two in Sweden. And also we have the internal sales of land in Europe here. Impacting the operating income is actually the gain from sales, mostly related from a situation of 234 million here in the gain of sales. Also, as we were into, we had an asset impairment in US of 658 million. And as we have mentioned earlier, it's low transaction volume in US and it's very slow there. So the visibility is hard to compare there. So it's a few units only. The impairment has done, of course, to really ensure that we are having the right balance, the assets value in the balance sheet. And we are doing this continuously over quarters. And it's very clear that it has no cash flow impact. And it's then representing a little bit more than 3% of the book value of total US portfolio. Moving on to unrealized and realized gains. Here we can see that we had 5 billion in the quarter, and it's an upward trend, which is good. And that is then a sign, actually, of the fact that we are starting to see the positive impact of slowly starting new projects here with profitable and solid business cases. We have a situation, we have a good land bank in attractive locations that we really would like to build and harvest from going forward and actually making sure that we have solid business case for this going forward. In the portfolio, we have unrealized gains of 10% here in Q3. And as we have said many times before, it's very, very quite much in the portfolio between the different regions of started and older, more as new product versus older product and so on. If we move on here to the completion profile of all the commercial development properties that we have, we have 18 billion of already completed and 22 projects. And as we can see here, it's on the purple line, it's 77% in leasing and that is up from 74% last year. So it's a good trend there. Also, if you look into the green dots, and if you are very particular comparing them to the last quarter, they all have moved up. And that is a real strength here that we are leasing more with ongoing projects. And in Q3, we also made sure that we are having a better outlook here for Central Europe and Nordics when it comes to the commercial property. And it's very much based on the fact that we can see that there's better access to depth as well as the pricing on depth and so on. And that is driving a little bit the market here. And that is, of course, very encouraging to see. Focus even more here when it comes to the leasing part of commercial operation. We can see that we have in the bar there to the blue, last right, you can see 77,000 square meters let, and that is actually then coming from two big leases, H2 offices in Budapest, as well as Sonalink that we have started there. Also, we can see, I'm very glad also that we have a trend shift here. Average leasing ratio of the ongoing produce is 64% versus then compared to completion of 55%. And that is a strength, of course, that we are increasing the leasing versus then the completion that we have. To sum up, we have a strong leasing activity in the quarter, and of course, we see the importance here to turning all the completed assets that we have and translate them going forward, and also being able to make sure that we have solid business case to start with when the market is ready and so on. We have a lot of things to sell, but we're also very cautious about how... We have a very patience and good value for the... We really would like to capture the good value that we have created over the years. So very good patience here to sell the good things that we have, obviously. When it comes to the investment properties, it's stable operational and financial performance within the stream. Operational income is possibly impacted by a reassessment of the property value of some units here, and it's actually then 53 million up. And that is also a sign that we can see that we have better outlook here for the Nordic markets real estate as well. Moving into the income statement, here I would like to take the focus a little bit on the central items, that is 58 million, and that is actually then coming from a positive effect from release of provision of the asset management business related to some milestones in the projects there. Also, we can see that cost varies between quarters and so on. And as I said last quarter too, we are on the level that we are representing more or less the first half year of this year for the full year. And we are seeing a little bit higher cost here due to the fact that we have outsourced IT infrastructure that is impacting this year. But of course, it will be better here going forward once we can see these synergies. Also, looking at the elimination line there, you can see that that is then connected to the internal transfer, that of 234 million recognized in the commercial development area. And no swings really in the financial net, and we actually then recorded a profit of 1.3 billion and an earnings per share increase by 36% versus last quarter. Moving into group cash flow, we can see that we had a zero cash flow for the quarter and that was a result of that we are in a net investment for residential and construction stream right now. If we lift ourselves a little bit more and look into the bigger trend of rolling 12, we can see that we have a really good underlying cash flow from the business operation and we can see good and continue to have good level of negative working capital as we will come into soon as well. And also we can see that we continue being a net divestment cycle that we really would like to be and releasing more cash and so on. Focusing on the construction and the free working capital, you can see it's fairly flat there between the Q2 and Q3. And we are quite comfortable with these levels as we have right now and so on. Also worth mentioning here is that the higher bars here last year, quarter three and quarter four, are not representing really because it was very much connected to mobilization of some milestones in big projects that we have an advantage of. And of course, we have 18.2% here in relation to revenue, which is strong. Moving on to the investment side, as mentioned, the quarter we had net investment for the group, but rolling 12 period, we remain on the net divestment territory here. This means that we are taking down the capital employed level within residential and commercial development here, as you can see in the bottom from 64 billion then to 62 billion and so on. Looking ahead, of course, as I said, we have a few assets on the balance sheet that we really would like to transfer and making ready for divestments. We are starting and preparing new products with really good solid business case as well. But the timing of these flows are of essential that the market and the demand and supply are meeting. Then, of course, we will shoot off these. uh for sure once we see that we are secure as succeeding here with the divestments we're making sure that we will then invest more going forward If we look into the liquidity point here, we can see that we have a good liquidity situation of 28.1 billion here. And that is then a super strong position. And we have a loan portfolio that have a balanced maturity profile as well. Finishing off here with the financial position, which is very, very strong, as you know, who has followed us. We have an equity of 60 billion, and that is almost a level of 38% equity ratio. We have an adjusted net cash of 9.3 billion. And as you were into Anders, it's a good situation to be in and also good for all our customers that are really relying on us and making sure and trusting us in the fact that we are here to complete the projects no matter what. So we have the financial strength to do that, I would say. And by that, handing over to you, Anders.

Sure. I will go through the market outlook before we summarize and start the Q&A. Market outlook for construction is pretty much unchanged from the last quarter. We have a strong civil market in the U.S. and we can see we are in a more traditional infrastructure operation in the U.S. So we can see a strong pipeline and we don't see any slowdown here. And there are still existing federal funding programs running over time here. The civil market in Europe is more stable. It's strong in Sweden due to the, we can see that there's a lot of investments in infrastructure. We can see defense and also waste water and that kind of facility coming out. So that's a good opportunity for us. And the building market is stable in the US, continue to be stable, and more weaker, especially in the Nordic, due to the slow residential and commercial construction market. But in Central Europe, it's more stable, both on civil and building. Residential development, good activity as we've been talking about in Central Europe, great market and driven by a lot of people moving into the capital cities and the largest university cities. And the lower than normal market in the Nordic housing market, even though we can see some signs, the underlying need for residentials is there in the market we are operating in. The lower interest rates helps, of course, but I think we need to see some economic growth, GDP growth, in the different markets in the Nordic to really see that people are getting back the confidence and buying homes. But we do have an underlying need. Commercial property development, we're increasing the outlook in Central Europe and in the Nordics. We can see higher leasing activity in both Central Europe and Nordic. We can also see that the investor market, the transaction market, they are more active, especially in Central Europe, but we can see signs of improvement also in the Nordics. So we are increasing into a stable market in those geographies. Investment properties, here we can see, continue to be stable market outlook. There's a strong demand for high-quality buildings, office buildings in the right location with good train connection and so on. We can offer that. So we can see it's a polarized market, definitely. But we are in the right location there. And we expect the rents to be mostly stable here. So if I summarize the third quarter, construction, strong margin generated by the solid project portfolio. We have great performance in residential development in Central Europe, weaker in Nordic. Commercial property development, two large lease contracts signed here in Nordic and Central Europe. And again, the investment property is very stable and very important. We are maintaining a solid financial position, which is a competitive advantage. So with that, I hand over to Antonia to open up the Q&A.

Very good. So yes, now we will open up for your questions. And if you're watching us online, then you can use the HD audio link or the telephone conference number and you will be provided with instructions by an operator. And if you just follow them, they will put you through to us here in the studio. But I will actually start by turning to the room to see if we have any questions here. If you have a question, then just please raise your hand. We will bring a microphone and we'll ask you to please start by stating your name and organization. I have a question here in the front.

Stefan Hansson, Danske Bank. A couple of quick ones. First, the margins in the construction division. It's a major jump year on year. Looks good quarter on quarter as well. We're not really used to that kind of jump up. We can see the drops sometimes, but rarely such jumps up. Could you maybe elaborate on two questions? What's behind that? Are you getting rid of problem projects and therefore the good ones are seen? Second question on that, is this a new level that we could be comfortable calculating also for the future?

I can take that question. Hi, Stefan. Yes, we have a very strong performance in the construction stream, and I can say that we have been able to, by good discipline, avoid loss-making projects. And that's a real key to be successful here. And also, we should not look at the single quarter, I said it before, so you should look more on the rolling 12 months. We don't have any positive one-offs in the quarter, so it's a very good performance. And the key here is all geographies performing, and that's also quite unusual, even though we have been on a good level for some years now. So right now, everyone is performing, and of course, that boosts up the underlying margin. And I also see that in a single quarter, it can fluctuate because sometimes we are completing large projects, profitable projects, and then since we have a conservative profit to take during the construction, we can have a boost when we complete the project. look more over time what we expect of the future i always expect to reach our targets and be above our targets which we have been for some time now and i no other view on the future definitely

That's good. That's enough. Thank you. I don't know what it is. When listening to you, you're talking a lot about the role in 12 months and don't look at the quarter and all that. But 2024 was extremely good with large orders. Should I interpret you as the level in 2024 to be a normal year or should I continue to believe that it was a very, very good year, unusually good year?

It was an unusually good year. If you look at the third quarter now in the US, because you can see the Nordic and European is actually increasing. But the US, if you look at the current year, we are on a five-year, ten-year average. And again, we have a rolling book to build, a rolling 12, that it's very close to 100% in the US. So that's how we should look at it.

And then the final question on IP, you talk about the stable situation with the occupancy there, 83%, it's 80% in Stockholm, Gothenburg. To me, if you're not in Kyrgyzstan with new stuff, it's actually a low level and it's not improving. So just wondering a little bit, is this specific property studies a problem or is it just a general spread out issue?

I would say the leasing market is somewhat impacted by slow economic growth. We see, as I said, some signs of improvement, but it takes time, and it's a very polarised market. So if you have a Class A building in the right location, it's much more attractive. But you're right, it's on the same level for a couple of quarters.

Is there specific properties that are really poor?

No, I wouldn't say so. It's quite even spread.

Thank you.

So we're going to continue with a question here in the room.

I had a question on the financial position and you made a comment about a level where the customers are happy and they can trust you at the same time you have financial targets that would allow you for substantially more debt which I guess also is tied back to the commercial property activities and so forth but what kind of levels do you need to be in order to have the customers to be sort of happy with you and is there anything to read into where we're in the cycle now that makes you want to operate with a higher net cash maybe than what you theoretically could?

But of course, I mean, we are in a business that is very cyclical. And of course, we really would like to be able to take advantage of things and be opportunistic when things are possible to do be that. So we are not really guiding how much we need and so going forward, but we are comfortable with the situation we are right now. Definitely.

And my second and final question is, when it comes to your investment plans, and so forth, because obviously, your invested capital has come down a bit now, year to date, given what's happening on the office side, and so on recently, what would take you to to get the investments up now, let's say over the next 12 months?

No, but as we said, we can see that we have a good leasing traction and so on, and also that the market is here in Central Europe as well as in Nordic, it's starting to meet and so on. And of course, if we are successful here with the 18 billion as we have in the balance sheet of 22 ready projects, and if we can make them fly here, and of course, then we are a little bit more appetite for the things that we have prepared, of course. So really looking forward to things to move here.

I can add to that that we will start project and are starting project in geographies that we see that there is more activity, better activity. We announced the start in Poland the other day as one example.

Thank you. Very good. So we will then move over to the online audience and I will ask you, please, operator, can you put through the first caller?

Absolutely. And on to what's the question, we'll press star and one. Our first question comes from Graham Hunt with Jefferies. Please go ahead.

Yeah, thank you very much. I've just got two questions, please. First one is on the US commercial impairments. So you only have a handful of assets in the U.S. So I just wondered if you could give any more color on where that impairment has been taken or what kind of assets it's been taken on region-wise, type of building-wise. Just any more color on the breakdown of that impairment would be helpful. And then second question also on the U.S. construction business. Last year, you had quite a lot of order intake related to data centers, but that seems to have dropped off quite significantly in 2025. Is there anything that we should read into that as to your offering in data centers, or is that just typical lumpiness in the market? Any comments around that would be helpful. Thank you.

Sure, Graham. Thank you for the question. We'll start with the U.S. seed operation. We have an operation in four cities in the U.S., as you know, and we haven't announced where. We have said it's a few projects. And again, to Jonna's point, the value of this breakdown represents just about 3% of the total value. So I don't see any drama in that. If you look at the US portfolio overall, the main part is office building in those four cities. But we also have high-end rental residential in the different cities as well. We also have some small life science, but the main part is office building. And again, we have a good leasing ratio here, so we do get a good cash flow from them. But we have looked into this internally, external help, and we see due to the slow market, very few transactions, so we have to take this right in the single quarter. On the construction data centers, I don't think you should look in a single quarter. It can be quite lumpy. We have a healthy backlog with data centers, a lot of strong international players who invest in data centers, and we can see that continues. We haven't seen any cancellation, and we can see that the strong pipeline, our expectation, it will materialize going forward.

Okay, thank you very much.

Our next question comes from Arnold Liebman with Bank of America. Please go ahead.

Thank you very much, and good morning to everybody. A couple of questions on my side. Firstly, just following up on U.S. construction, have you seen any implication from the recent government shutdown uh we hear in the press about some projects being potentially cancelled so either in terms of order intakes or delays in payments or anything happening there in in u.s construction please that would be helpful and and secondly i appreciate it it's more part of your business but coming back on on uh residential in the nordics you mentioned the weakness um can you give us a bit of color of why that is the case when You know, rates have been coming down a little bit. And do you see at one point potential improvement into 2026? Thank you very much.

Thank you, Arnold. If I start with the U.S. construction operation and the government shut, we haven't seen any impact on our project. And we haven't seen any cancellation either or late payment whatsoever. Most of our clients in U.S. operations are states, cities, institutions, large players on the data center side. We are having a close look at it, of course, but so far we haven't seen any impact. And on the Nordics, yes, as I said earlier, the underlying need for homes in the Nordics are there, definitely. And we are on a very low level if you look at the whole market and new units coming out. And the rates help, of course. Interest rates cut, it helps. But we need to see consumer confidence coming back. We saw it dropped quite a lot in the first quarter this year, and we also saw the impact on the sales. So I think we need to see some economic growth in the different geographies. there's a lot of now initiative in sweden as one example from the government to boost the growth economic growth and if that materialize i'm sure we will see a different outlook in the future but right now we think it will take some time thank you very much as a reminder if you wish to register for a question you may press star and one

Our next question comes from Ivan Silvanpour with SAB. Please go ahead.

Good morning. I have two questions on CED. The first is that you lifted your outlook for the Nordics and Europe in Q3. What are your expectations on divestments going forward? Are you maybe optimistic for making some transactions before the end of the year?

Okay. And as you all know, we don't guide here going forward. And right now, of course, we can see signs that, as I said earlier, when it comes to the leasing activities, that is coming up. And also that the transaction market is a little bit better with international players as well. It is coming in and interesting to use the capital, so to say. So that was the main things why we are actually then increasing the outlook for the CD business here in Europe, as well as in Nordic, I would say.

Okay. And then my second question is related to the unrealized gains. First of all, the complete project that you have, you have unrealized gains, which is about 5%. And then for the ongoing projects, you have unrealized gains, which is about 20%. Could you maybe elaborate the difference?

Sorry, once again, if you said that the unrealized gains

Yeah, unrealized gains for the completed project is equivalent to 5%, but the unrealized gains for completed projects or ongoing projects is at 20%. Why is there such a difference?

And that's, as I said, I mean, we had here the average of 10%, and that is then correlated to the fact that you're pointing out that we have a little bit older properties, we lower, and then more new ones that is stable when it comes to the business cases and so on that is generated the higher portfolio value there.

Okay, so just maybe a follow-up. So I assume that divestments that may occur from completed projects will potentially have quite low margins, potentially single digits, if I interpret that correctly, based on that valuation.

No, and as I said, I mean, we have the average here of 10%, and that is where we are communicating at the level right now.

Okay, thanks. Those are my questions. Our last question over the phone comes from Nicolas Mora with Morgan Stanley. Please go ahead.

Yes, good morning, gentlemen. Just a couple of questions coming back on the US. First one on the order intake. you still seem to be struggling a little bit with the smaller projects, the one you're going for below 300 million SEC. Is the market still soft there? There's just no real pickup in these small projects from either on the public side or the public side? That would be the first question. Second, on margins, So another very strong performance. All your peers are also doing better, especially, for example, in U.S. civil works. But the Nordics peers as well have reported very strong results. Since everybody's being more disciplined, why not think about increasing the medium-term margin trend? You're getting very close to 4% now.

Yeah, thank you for that question. If I start with the U.S. order intake, the average size in the U.S. are larger than compared to Europe. So we're more proportionate, communicate more orders there compared to Europe. Again, I would not look at a single quarter compared to last year. Last year was significantly higher, unusually higher, and you should look more over time, and also we are still on a five years average, and I think that we have a very strong order backlog in the U.S. as well. So I'm confident in that, and I can also see a strong pipeline So I'm not worried about the situation. We can continue to be selective and go for projects where we can see competitive advantage and we can go for higher margin. That's what we've been doing for several years now, and that's paying off, obviously. So that... And if I look at the margin, then, yes, we can see that it's increasing not only in the US, we can see good margins in Europe as well. And we definitely have been on the target level or above for some time now. But the target is, as you know, 3.5% or above. And of course, I have no other... other view on it that we should maximize the profit from from the from the operation so but the target is still relevant okay and if if I may just following up on uh on the question data centers I think you

Obviously, these orders are lumpy. We should look at it over at least a 12-month basis. But indeed, if we look on a 12-month basis, it's really been a dearth of projects in the US, in your sweet spots, regionally and in terms of size. Do you have an issue with your main customer or is... It's just basically bad luck on timing and things will pick up. I mean, you say strong pipeline, but it's been five, six quarters with not much in terms of strong order intake.

Yeah, but we have also communicated the last few quarters that it's coming in new data centers that needs to be cool and require more cooling. So sometimes the client needs to design the facilities to water cooling instead of air cooling, and of course that delays some of the projects. So I haven't seen any cancellation. I have seen that some clients are postponing some projects due to the need for redesign. So I'm still confident in that.

Okay. Thank you very much.

Very good. Then as far as I can see, there are no more questions from our online audience. Can you confirm that?

George? That's correct. We have no more questions.

Perfect. And no more raised hands in the audience. Or Stefan, you have one more question? Yeah, sure.

Just a follow up there on the earlier question from SEB about the margin in the completed. When it comes to the projects that you over the last two years in the US have written down the value on, I would imagine if you sell them to what you think is the market value, you wouldn't have any margin on those. So that's part of the explanation of the low margin or do I misinterpret that?

No, but as I said earlier here, sorry to repeat myself, I mean, it's a full portfolio view we are looking into here. And there is differences here between the older project and the new ones that he started and so on. And we don't give any guidance really for specific markets where we have the profitability, so to say.

I fully understand that, but put it this way. When you write down the property value, you write it down so you don't have any margin if you sell it what you think you could get for it. I mean, you don't write down and get the margin. Yes, correct.

Thank you. Correct.

Very good. So that was then the final question. Thank you, Anders, Jonas, for your presentations and answers here today. And thank you, everyone, big audience in the room today. Thank you for coming here and joining us here today. And for those of you that have been watching, thank you so much for tuning in for this webcast and press conference. We will naturally be back with a new report in the fourth quarter. And even before then, as Anders mentioned here earlier, we are hosting our Capital Markets Day on November 18. So it will take place in Seattle. And if you can't join us there, we will also live stream part of the day on our webpage. So turn into our IR pages there and you will find the link or reach out to myself or anyone else in the IR team. Thank you so much for watching. Have a lovely day.