Afry AB

STO:AFRY

Earnings Call Transcript 2020-Q2

[Jonas Gustavsson, President & CEO]

So then I would like to welcome all of you to this quarter 2 presentation from AFRY, from ÅF Pöyry. My name is Jonas Gustavsson. I'm the CEO of AFRY and we also have Juuso Pajunen, our CFO, who will participate and present a few slides to all of you. So again, very much welcome to this presentation.Let's jump into it and I will start with the first slide, which is the overview slide. And as you see the headline as we have chosen is: Stable results in a challenging quarter, because for sure, the quarter was challenging. You have seen that the top line, our sales came in at SEK 4.8 billion, which is minus 11% compared to the same period last year. With a lot of activities and a lot of cost mitigation activities, we were able to keep the margin at 8%, equal to SEK 383 million. We will cover a bit what we have done in mitigation activities, on cost savings, of course, later in the presentation.And then you can see the first 6 months then we are still on positive growth of 3%. EBIT after 6 months SEK 858 million and EBITA margin after first 6 months of 8.5%. But I have to say that, that pretty fast decline that we had to absorb in the quarter was -- I don't think that this company has seen such a quick decline for many, many years. And it was driven very much from the automotive segment, where actually, the volume was down 40%. I think it was even 43% in the quarter. I think you all know the background to that as the large Swedish clients actually stopped the complete operations during the second quarter and they also have announced layoffs, and they are overlooking their R&D portfolio, et cetera. So that was the single one most important segment where we saw a big decline.But as we said, we saw a stable result due to extensive cost mitigation activities and also good and stable development within Infrastructure, Process Industries and Energy. Very positive is that the cash flow has been very strong during the quarter. That enabled us to strengthen the balance sheet and Juuso will cover that even more in detail. As a consequence, but also starting before, we have started now really repositioning of the automotive segment to really see where will we play. So of course, we are now acting as a consequence of large automotive client changing, but we also want to take our destiny in our own hands. So we are overlooking where do we want to play moving forward, to make sure that we are positioning ourselves to the clients to provide long-term value to move up in the value chain and deliver more projects and value to our clients.We have seen end of the quarter, I would say, a slight recovery and stabilization in general. But of course, as you all know, there is a big uncertainty how the market will develop in remaining 2020, very much depending how the pandemic will develop. But if you just look on the business side, what we have seen, we have seen that during the quarter, we saw recovery in the end of the quarter, still uncertainty, among others, in the automotive segment.We took a lot of measures, if you look on the slide, saying, "Extensive measures in response to COVID-19", starting up early in quarter 1, actually. And of course, we already had announced a cost-saving program end of last year, a continuation of the program that we delivered last year with integration of ÅF Pöyry. But what we had to do was very quickly to change the way of working and that we talked about when we presented also quarter 1, that we actually, in a short time period, could take some 17,000 employees to working from home using digital platforms. And it's been working very well. I'm very impressed how quickly our organization could respond to that. It shows also that we and our clients have a high digital kind of maturity. And we have actually not only been able to have a lot of customer and client dialogues, we have also been able to deliver commissioning work, et cetera, by using digital platforms.We have had some 1,900 employees on short-term work during the second quarter, very much driven from the automotive segment. From this 1,900, we have -- we are in the process of laying off permanent some 200 employees as a consequence of the reduction we have seen in automotive. Of course, we took a reduction on basically all cost spending. Some of them have been very natural, like traveling and exhibitions, stuff like that.We are increasing the pace of the ongoing efficiency program that we already announced of SEK 120 million. But still now, we are focusing a lot on mitigating the market turmoil, especially, for example, in the Industrial segment. So the total costs that we have reduced during the quarter, with a mixture of short term and long term, has been SEK 500 million, SEK 0.5 billion. And of that, SEK 87 million was from the state subsidies to support our employees due to the short-term work allowance. So that's an overview of the cost spending. Juuso will cover it a bit more how it was affecting us.And this is basically what we saw then. We reduced the top line, if you look on Slide #4, of some 11% reduction. And we could then, with all kinds of mitigation activities, reduce our cost base with SEK 500 million roughly, which I think is a great achievement. And I'm very positive how our organization have reacted across all divisions and all countries,, that everybody was very quickly into driving actions both to serve our clients, but also to mitigate cost. And I would say that energy and the momentum in our company, I would say, is stronger than ever. So even though it's been a challenging quarter, I'm quite pleased how the organization have responded to this challenge that we have had during the second quarter.Slide 5, the market update. I mean of course, we saw the major impact of COVID-19 in the automotive segment. Of course, there was a spread also broader -- it was a lot, especially in the beginning of the quarter, with a lot of uncertainty in other segments as well. But I would say automotive took the immediate hit, where, as you know, then the big clients in Sweden actually stopped their operation, the production, but also their kind of whole R&D operation for some weeks during the quarter. And now when getting back, our clients are really looking into the R&D portfolio, what to continue to drive, and they have announced layoffs. And of course, part of our portfolio to the lower end, more professional-like, we have seen volume reductions that will remain. I will get back to that in a second.Infrastructure, I would say, continued strong. In the Nordics really strong and we have seen some more impact in Central Europe. In different segments, rail and road, transport segments, more on the public side, very strong. We have also seen that the facility side has been quite okay, a bit more, I would say, impacted from the private side. But also here, we saw some, I would say, positive development during the quarter -- end of the quarter. So in general, I would say Infrastructure segment, especially in the Nordics, holds up quite good.On Industrial & Digital Solutions, of course, now we are in that division very much impacted from the automotive segment in Sweden, which is a huge segment and related supply chain and manufacturing structure. Here, we saw volume reductions during the second quarter. At the same time, I would like to highlight Food & Pharma. Food & Pharma was a segment that went very well for us during the quarter. So there has been also bright spots in the Industrial segment in the Nordics during the second quarter. But again, it was kind of overshadowed with 40% reduction in 1 quarter in a big segment.Process Industries, solid demand. We could see, of course, that some decisions took some longer time. But I would say, on the CapEx side continued as before, maybe a bit more impacted on the OpEx side, but I would say, strong stability in the Process Industries, also driven from the fact that we have a world-leading position, especially in Pulp & Paper.Stable demand in the Energy business and we could even note that there was some increased activity by end of the quarter. And I also want to say that our repositioning work that we started within the Energy business continued really according to plan. And I'm very pleased to see that, of course, we have a shrinking top line driven also from the fact that we have 1 EPC product less this year and also the fact that we have started that repositioning. But when we see the margin development and the way our Energy business is geared up towards kind of the future energy market, I'm very pleased with that development.And then Management Consulting, strong demand in the energy consulting. There's some continued impact on the transaction-related service. So it is a mixed bag. But end of the day -- by end of the quarter, it's more optimism in the view we see the market than still uncertainty in the automotive segment.Then moving over to the -- just showing the Industry segment portfolio. Normally, the way we present our portfolio, we are a broad company. We don't see big changes in this segment during -- between quarter, but this was a quarter with -- driven, of course, from the big decline in the automotive segment that relatively, the automotive segment have been shrinking within AFRY portfolio. So went from some 9% down to 7% just in 1 quarter. At the same time, we saw growth in Food & Pharma, stable business in Infrastructure, stable business in Process Industries. That means that the portfolio for AFRY is geared even more towards Infrastructure, towards Process Industries, towards Energy.Of course, when we acquired Pöyry, bringing ÅF and Pöyry together, Pöyry coming in with Process Industries, coming in with Infrastructure and Energy, already that company, AFRY, was geared more toward that Process Industries and Infrastructure. And then the decline of automotive in the second quarter is pushing us even more towards those segments. And of course, this is something that we are bringing into our strategic plans and we will see how we can leverage on that even more moving forward. Because 1 segment, I will highlight it again, Food & Pharma, very interesting segment for us. Not a super big segment is today, but something that we will explore more moving forward.New projects. We were signing a lot of interesting projects during the quarter. And I would say that order stock in general is as good now compared to 1 year back. So even though we have gone through a rough period now, a challenging quarter, the order intake that also picked up by end of the quarter is stable and we took some very interesting assignments during the quarter. And you can see some of them here in the slides.So I will say that, especially in Process Industries, Energy, but also Infrastructure and also the Food & Pharma segment in Industry, we were able to book some very interesting order in Sweden, but also in different countries like the last one here, the production line for Oatly in Singapore, very interesting new contract for Largo Resources in Brazil. We took order in Pakistan, in Norway and so on. So I will say that despite the uncertainty in the market, we saw actually a good order intake.Before I leave it over to Juuso to talk about Slide #8 that was impacted from the automotive segment, just a few words of what we are doing then in the automotive segment. In general, our kind of analysis of the automotive business started even before the COVID-19 pandemic. And if you remember, even a year back -- more than a year back, I would say, in the beginning of 2019, we saw that some of our automotive clients started to change their behavior and we saw some volume reductions. And that started up a process on our place to see where do we want to play in the automotive segment, especially on the R&D side, because we deliver also to the automotive segment manufacturing lines that's fully automated manufacturing lines on their operational side. That continues as before.But if you look on where we deliver R&D services, we are now using this opportunity to really think where do we want to play. We believe that some of the professional service-like business, especially on the mechanical part, in lower part of the value chain, which is more professional service like business, that volume have gone away during the quarter. That's part of this 40% reduction. And we will not regain all of that. And also on top of that, we don't want to fight back that volume because we see price pressure. And some of that business also probably will disappear due to the shift to more electrified vehicles.So our ambition is to climb the value chain to deliver more projects up in the value chain. That will remain a smaller automotive business in the near term, but we are really having an ambition to have a higher profitability and more stability into that business. That process is ongoing. And we are, of course, keeping quite good dialogue with our key clients. And step-by-step, we will get a position that is sustainable in the automotive segment.So that's basically what we can say right now. So of course, now we are driven from the reactive mode, from the quick ramp down from automotive place, but we are also using that as a kind of opportunity to repositioning ourselves into automotive.So with that said, I want to leave it over to Juuso, who will talk a bit about the growth in general and also how we are acting. So Juuso, please go ahead.

[Juuso Pajunen, Chief Financial Officer]

Thank you, Jonas. So now we are on Slide 8, on the Growth mainly impacted by the automotive segment. So basically, what we can see is that total growth is minus 11% and the underlying adjusted organic growth is minus 9.8%. So in between, we can see that we have had some divestment impact, then FX impact and then slightly positive calendar, meaning roughly 3 hours more compared to previous year. Our biggest component in the growth -- basically decline has been the demand in the automotive, where we have seen slightly over 40% decline in revenues. As you then saw, we have been -- also been able to mitigate that decline with the reduction of the expenses, both from project-related expenses and then on the employee-related expenses.Then on top of the automotive segment, we have the repositioning of Energy Division, where we have made a divestment earlier this year. And then we don't have the EPC project in the implementation phase anymore, which also reduces our expenses.So all in all, not fully happy on the revenue development, but we have the market situation like it is and I'm pretty proud how we have been able to react to that one.Then if we see the positive signs we have, like Jonas mentioned, Food & Pharma. We have positive adjusted organic growth also in Process Industries and in Management Consulting. So from the market perspective, we have also quite good places to be in and segments that we are happy to see enough growth and continued positive activity in the market, despite the pandemic we are facing in the world.Going forward to Page 9, stable result despite decline in volume. So as said earlier, basically, we have been fighting well the cost part. And while losing SEK 600 million of revenue, we have lost only SEK 100 million of EBITA and we can deliver a solid 8% margin. That is 90 basis points below previous year, but I would say that given the circumstances, it's a good performance. We have had the automotive impacted. But then on the mitigating part, we have the efficiency program. We have the -- also general cost savings, when you have travel freezes all over the world, obviously, you have certain cost buckets that you simply don't spend in. So all in all, all of the actions taken amount to roughly SEK 500 million in cost savings during the quarter.At the same time, we can say that from EBIT perspective, we have solid development in Infrastructure, Process Industries and Energy, also from EBITA perspective, given the circumstances.If we then go to the divisional performance on Slide 10, what we can see is that the biggest driver in our decline is the Industrial & Digital Solutions. They are SEK 69 million down. But then we see also in other divisions, impact. Infrastructure had SEK 18 million down compared to previous year. There are some impacts coming from COVID, especially in the building sector. And then we have noticed weaker performance in the Central Europe during the quarter compared to previous year.Process Industries, I would call this one stable, SEK 4 million down. What we can say is that basically, the CapEx part of the business is going forward. There are still new CapEx announced. There are ongoing projects and so on. And the OpEx part of the business has been impacted, not as severely as in automotive, but also in the industrial side of Process Industries, there have been some shorter shutdowns or lower production volumes that have impacted our OpEx part of the business.Energy is the success story, SEK 4 million actually up. This is not driven by the market, but I would say that it has been driven by the great performance of the Energy Division and Richard Pinnock leading that one. We have been taking our repositioning activities, which have positively impacted the cost structure, but also made our delivery more efficient than earlier and that is now seen on the bottom line.Management Consulting is below previous year. This is mainly driven by the short-term cycle of the business. When asset transactions are not happening, that has an impact, both from the success fee perspective on the advisory side of the business, but then also the due diligence and similar type of services. So all in all, with these impacts, we are basically going down from SEK 481 million to SEK 383 million. But as said, I would say that it has been a positive performance from circumstances perspective.So then going to Slide 11, Growth and profitability. Basically, what we can see is that we have Management Consulting and Process Industries growing on an adjusted basis; while Infrastructure, minor reduction; Industrial & Digital Solutions, heavy reduction driven by the automotive. And then in Energy, basically, we can say that we chose this type of reduction. And then we can see the positive impact on the EBITA margins. So all in all, I would say that in the difficult markets, we have been faring quite well.If we then talk about my favorite topic on Slide 12, it's the cash. I'm a strong believer in cash. In weaker times, cash is your insurance. And then you can use it a bit as a fuel to grasp opportunities. In these times, it is the fuel that boost your acceleration that helps you to grow. During the second quarter, we have had really strong operating cash flow that has been pushing our net debt-to-EBITDA on an adjusted basis, 2.0. And this basically means that we are [ turning ] 0.5x EBITDA below our financial target and we are solid from a balance sheet perspective. When we then add up this to our unutilized credit lines, we have roughly SEK 4 billion of liquidity, which under the current circumstances is a very strong position to be in.How the strong operating cash flow was coming? It is from the reduction in net working capital. So we have been successful in net working capital management, but then also, it is fair to say that when your revenues decline, that releases net working capital. And obviously, when you go back on the growth track, then you tie more net working capital and then some of this cash is spent back on the growth.But all in all, it has been a great success for us during the second quarter on securing our balance sheet and making sure that we are well equipped for whatever comes in the future. So I'm very happy with our liquidity position at the moment.Handing back over to you, Jonas, to Slide 13.

[Jonas Gustavsson, President & CEO]

Thanks a lot, Juuso, for that. And then I basically only have the kind of summary slide. And this is the same slide as we were presenting to you when we closed quarter 1 and this is also the plan we are following. And if anything, we are following the plan as we were setting it out. Of course, the immediate focus in the quarter -- end of quarter 1 and quarter 2 has been to react and adjust to the current circumstances. We had to deal with a big decline driven in automotive. We were implementing cost savings across, focusing a lot on cash and you can see the effect of that, and really focusing on all the operational efficiency, adjusting also investments. We are happy that we have continued with the kind of important part of implementing a new ERP system and this system implementations as we have informed you about before. So that is continuing. So that's been quarter 1 and quarter 2.But now we are moving into the quarter 2, 3, where it's all about creating sustainable savings and also creating a lean organization. So based on the already started SEK 120 million program that we launched even end of last year, we are now continuing with that, but also ramping up that. So everything that we have learned and seen during the second quarter in short-term savings, et cetera, that we can transform into long-term savings, we are right now acting on. So we know that there's uncertainty moving also into the second half year. And we need now to see how much of the short-term saving can we transform into long-term savings using that SEK 120 million program as the kind of the base program.So what -- how can we increase our efficiency further? How can we increase flexibility? We are, of course, now reviewing our strategy and the scenarios, where to play and how to win in the new normal. And as we have highlighted to you that the shift we are getting gradually into some of our core segment, we will, of course, see how can we gain from that even moving forward. We know that the Infrastructure segment over time looks very interesting, of course. We have 40% -- close to -- basically 40% of the AFRY portfolio[Audio Gap]How can we accelerate our growth into that segment? We know that there will be quite a lot of public spend in that segment also moving forward. The Process Industries with the whole bio-economy and need for sustainable packaging solutions. How can you use fiber in a better way to replace plastic? That's also very interesting. The whole energy landscape. We know now that they talk even in the European Union about how can we kick-start the recovery with money spending to clean energy. Of course, we are extremely well positioned into that. Everything from the high-end management consulting advisory service all the way to our execution capability into energy is really, really interesting. And then, of course, we have really interesting spots like Food & Pharma in the Industry segment. And also, we are dealing with automotive segment.So I feel kind of comfortable that also the current pandemic have fast-forward a few of our strategic questions. And we will, of course, use that opportunity to position ourselves into those segments that we believe will continue to grow where we really can add value, because we believe that the need for sustainable solutions will increase.And then moving into the later part of the year, as Juuso said, we want to be a strong company, to also have a strong balance sheet that we can be offensive also when it comes to potential acquisitions down the road. So -- and then how can we even leverage more from a flexible structure? So we have a clear ambition to be a company that really have a lean and efficient operational model. We want to position ourselves even more to those attractive segments. We have a tremendous base of competent employees that also have a big heart for the AFRY brand. And then, of course, key things like sustainability and digitalization are areas that we also now will see how can we leverage further.During the quarter, besides fighting the negative growth in some segments, we also launched -- effectively, we have joined The 1.5°C Business Playbook framework, as you know, then to reduce emission from large corporation, to even further drive the sustainability agenda. We also have launched a cooperation with Gapminder. We think that's important that we will also work together with Gapminder on how to promote a more fact-based view on the world. I think everybody listening in on this conference agrees to the fact that I think it's more a need now than ever that you have control of facts. There are so many information floating around about the COVID-19 crisis, about the climate crisis, I think everything we can do to let people understand what is what and what is fact. So we are joining forces with Gapminder.Another thing I just want to highlight positively is that in a survey in Sweden among researchers, AFRY was seen as the #1 company where researchers want to start to work at and it was actually the AFRY brand. So we are also happy that the AFRY brand is taking off. So there are also been quite a lot of positive things during the quarter. And I also want to say that the mood in our organization is very, very good. So with that said, I will open up for questions or comments from any of you. So with that, we open up for questions.

[Operator]

[Operator Instructions] And our first question comes from the line of Johan Dahl of Danske Bank.

[Johan Dahl, Analyst]

A couple of questions, please. Just can you explain a bit, Jonas, how the quarter progressed in terms of the furloughs. I think you explained in the Q1 report, you talked about some 1,600 people. How much was that towards the end of the quarter?

[Jonas Gustavsson, President & CEO]

Short-term work allowance, Johan?

[Johan Dahl, Analyst]

Yes.

[Jonas Gustavsson, President & CEO]

Yes. I will say that we were probably -- we had the peak of that in the middle of the quarter also related to when basically the big automotive players completely closed their operation. As you remember then, all 3 of the big ones in Sweden, Scania, Volvo Trucks and Volvo Cars, all of them stopped basically at the same date. So in that period, when that was basically closed, we also had a peak on the number of employees. Then it has reduced gradually through end of the quarter, but still on a higher level. But because 1 reason is that we are laying off people also permanent. So of this 1,900, as we have communicated, 200 actually are moved into permanent layoff. So that is also the activity we are doing on the automotive segment mainly then that we need to readjust our volume into that.And now we expect during the third quarter, of course, that step-by-step, we need to implement long-term structures that reduces the need of having this short-term work allowance structures.

[Johan Dahl, Analyst]

But sort of the end balance there in terms of short-term work allowance, where was that approximately? Just to get a feeling for where you're sort of starting in the third quarter.

[Jonas Gustavsson, President & CEO]

Well, I...

[Juuso Pajunen, Chief Financial Officer]

Basically, we have stated that -- if you may, Jonas [indiscernible].

[Jonas Gustavsson, President & CEO]

Yes. Yes.

[Juuso Pajunen, Chief Financial Officer]

So we have stated that we have roughly 1,900 impacted, out of which 200 included in that one have been permanently laid off. So we are starting the balance, 1,900 employees, on various kind of short-term working allowances. At the same time, we need to note that the percentages have been varying. So in FTE perspective, we are slightly below that one. So we have seen the peak on short-term allowances, no matter how you evaluate it, in latter part of May and now we are little by little improving from that.

[Johan Dahl, Analyst]

Okay. Just on this repositioning in automotive, can you -- I appreciate your analysis page, but what are the sort of potential financial effects of this, if you look at potential write-downs, potential asset sales, working capital effects? Can you say anything there?

[Jonas Gustavsson, President & CEO]

Yes. I think it's -- and Juuso, we're -- basically, you are right that we are in an analysis phase, but we're also in an implementation because as we also highlighted, SEK 23 million was taken as a restructuring cost for the automotive segment. And we are reducing 200 employees mainly in the automotive. There is not so much risk into that, Johan, because what we see is that step-by-step, we will then, together with our clients, find the right balance also where we want to play. Because a big volume has been the kind of lower-end professional service-like business. And we can see now, as always, when these clients ends up in cost-saving mode, the easiest thing for them immediately is to kind of reduce that kind of business where we are acting more supporting their own operations and not talk more about the R&D service.But there are projects and areas where we deliver to the clients what they cannot do themselves. And here, it's not so easy for them to easily adjust. And that's exactly what we're doing in Process Industries or Infrastructure. So for us, to find that balance will be key moving forward. We know that the volume will be less, that I'm prepared to bet on. Of course, not 40%, because 40% was the kind of hit from short-term cutting costs immediately.Now we are finding the balance, but we are not just willing to run back to every volume. We want to make sure that the automotive business that remains, also for us, drives value. So that's the kind of dialogue we have, Johan. So I can't guide you more right now. But we are using the COVID-19 crisis to fast-forward a bit our position into the automotive segment.

[Juuso Pajunen, Chief Financial Officer]

And maybe then to complement a bit on that one. So write-offs and such, we have do the valuations. You can see from our annual report, we have very solid headroom in those ones and I would not be worried on that part. I would rather take the analogy from the Energy repositioning, where we are choosing where to play, how to play and when to play. And it means that we are redirecting many of the existing resources into places where they are -- they can provide higher value added. But even the portfolio, as Jonas explained, we want to probably be a bit less on the lowest level of the ladder on professional services and that may lead into further reduction of employees that may come at a cost, but this is highly dependent on how we manage the transition, but also on how the market is operating. So there are various different variables in that situation at the moment.

[Johan Dahl, Analyst]

All right. Just before getting back in line here, the savings you realized, I guess it was some SEK 400 million in the quarter, excluding these furloughs. To what extent are those sustainable? I presume you're sort of pulling the emergency break in some instances. But can you elaborate on that a little bit?

[Jonas Gustavsson, President & CEO]

So Juuso, if you want to go ahead?

[Juuso Pajunen, Chief Financial Officer]

Yes. Yes, I can take this one. So basically, the roughly SEK 500 million of cost savings, yes, there is the furlough component, but then we need to, first of all, understand that should we have not had state subsidies, our measures would have been the same. And in a way, we have just passed on the state money to the employees. So from my perspective, the cost mitigation has been SEK 0.5 billion.But at the same time, it is coming from various different sources. We have the permanent components in there, especially when it comes to the permanent layoffs, as you have seen in the automotive, that it includes both consulting and some support function employees. Then on top of that one, we have learned how -- a bit better how we can operate remotely. So there's a certain type of cost consciousness that I believe that speaks quite well also going forward. And then we have taken some further actions within our efficiency, so basically, the back office administration management layer that has also a permanent component. But we are not yet in the phase to put our finger on what fully, fully, fully sticks in the future. So at the moment, out of that SEK 0.5 billion mix, you saw that SEK 244 million is materials and project-related. Many of the components are still of the temporary nature.

[Operator]

Our next question comes from the line of Ola Soedermark of Kepler Cheuvreux.

[Ola Soedermark, Equity Research Analyst]

Yes. I think you mentioned during the call that the order backlog is as good now as 1 year ago, driven by Infra, Process Industries and Energy. Can you elaborate a little bit on how the order backlog has developed? I suppose the most order have catch up in the latter part of the quarter. And what you are seeing in the 2 weeks we have seen in July, with the slower summer month?

[Jonas Gustavsson, President & CEO]

Yes. I mean thanks for that question. I think in general, it was a bit of a strange quarter, of course, that -- of course, in the mid of the quarter, maybe when the pandemic was peaking, especially in Sweden, that there was, of course, an uncertainty and some of these final decisions were postponed a few weeks, but we felt pretty quickly in the later part of the quarter that kind of larger CapEx projects or larger projects related to both Infrastructure, Process Industries and Energy, but also segments within the kind of Industrial & Digital Solutions division were starting to come to closure. And as you noted maybe from the few examples, we took a few very interesting orders -- some interesting orders in the Food & Pharma segment. So when everything is summarized and we are getting better and better in following our order stock as more we are merging our system landscape together, the clear view we have on the order stock is that it is as strong now as we have seen 1 year back.So I don't know if you want to comment that further, Juuso, but that's what we see right now.

[Juuso Pajunen, Chief Financial Officer]

No, basically, what you're saying is absolutely accurate. But on the timing of the order stock, I would say is that actually, it has been fairly stable during April, May and June. What we can then note on the stability is that the underlying composition of the order stock has been a bit more aligned, meaning that, for example, in Industrial & Digital Services -- or Digital Solutions, the short-term order stock related to some of the core clients has obviously gone down, while maybe the CapEx-related offering has gone up and so on.So even though we're on absolute terms, pretty much on the same number either at the end of June previous year, the composition has been a bit more aligned both among the Industrial segment, but then also within the Industrial segment, on what type of growth is included in the orders of customers. So even though absolute numbers are same, it doesn't mean that it is exactly equal.

[Ola Soedermark, Equity Research Analyst]

So would you say that the [indiscernible] or the mix is actually slightly better, if it's CapEx and -- or maybe project-driven?

[Juuso Pajunen, Chief Financial Officer]

From many perspective, I'm happy with the composition, then it is in a way a bit how you prefer. I always prefer to have a balanced order stock. Now we have more CapEx in there, which, of course, from margin contribution perspective, is quite positive. But at the same time, the OpEx part brings stability. So I'd, of course, prefer to see both of them.

[Jonas Gustavsson, President & CEO]

And I -- as complement to Juuso, so I agree with Juuso. But then I have to say that, of course, the volume reduction we have seen in automotive have been challenging for us and it also impacted our profit and everything. But of course now, if you look a bit on a longer-term perspective, where this company is heading, to use to combine knowledge and competence at AFRY, of course, in areas like Process Industries, Infrastructure, Energy and also related segment like Food & Pharma, that's where we really can play the best. And then we will also selectively play in the automotive segment where we really feel that we can make a difference.And then you could say that at least on the CapEx side, the orders that we are taking are kind of proving that the composition of AFRY, the former ÅF and former Pöyry, has given us exactly what we want. Because many of those projects that we are now taking, we are doing, thanks to the combined knowledge of the former Pöyry and former ÅF.

[Operator]

Our next question comes from the line of Dan Johansson of SEB.

[Dan Johansson, Equity Research Analyst]

Two additional questions from me, if I may. On Energy, I noticed the strong margin delivery again following the repositioning. Is the 9% EBITA margin sort of normal in this segment? Or should we still expect some volatility in the 7% to 10% EBITA margin corridor you have talked about earlier?

[Jonas Gustavsson, President & CEO]

Yes. Thanks. Good question. I think we have actually even communicated through also Richard that we are targeting the corridor 8% to 10%. So obviously, 9% is pretty much in the middle of that corridor. We are also having a clear strategy to also expand into this -- to kind of the operational service part, to always balance a bit the big CapEx projects. At the same time, we see a solid order backlog as we talked about on CapEx projects. And then if you include the fact that energy question starts to be a big thing. I mean, just look on Sweden on the themes now on the energy, the need of reinvesting into the energy, both distribution but also the power generation. So I have a good feeling that we will be able, and that's our clear ambition, to stay on that corridor and also then step-by-step go back to growth. So of course, you can't promise, but we are doing this repositioning to stay in the corridor.

[Juuso Pajunen, Chief Financial Officer]

Yes. This is now third quarter in a row in that corridor. Obviously, then statistician says that 3 is not yet a trend in the overall context of delivering 9% always throughout the decade. But I would say this is a very solid start for that type of [ report ].

[Dan Johansson, Equity Research Analyst]

Yes. Great. And last one for me. On Infrastructure, did you see support from increased public budgets already now in Q2 or is that more of something we'll see mainly in Q4 perhaps, maybe somewhat in Q3 as well, although it's a seasonally slow quarter, of course?

[Jonas Gustavsson, President & CEO]

I think, in general, if you look down the road, I think it's very promising and positive that we have seen those signals. At the same time, I think it starts to be a supply/demand question that we also know that the Infrastructure segment across the Nordics was going on pretty high pace also before the COVID-19. And it's a very, how to say, slow-moving segment, especially on the large infrastructure projects. So maybe we will not see a big impact because it was already going high. But I think on the medium term, it is very promising and we believe that, that segment will continue to have a very good underlying growth, high demand also because it's basically an underlying need.If you then add sustainability and digitalization as a part of that, I mean we have talked for quite a few years now about the transport segment starts to be heavily integrated in city solutions, in city infrastructure, electrification, the 5G, et cetera. So of course, with all that said, we believe also that Infrastructure will be a tremendously interesting segment. And now 40% of our portfolio is geared toward that. Of course, we have no other ambition to be an even stronger fighter and gain market shares in that segment. We believe that we have that kind of industrial heritage to be kind of a good challenger to even be bigger in infrastructure.

[Juuso Pajunen, Chief Financial Officer]

And then basically, if we just take the numbers perspective at the moment, there's a lot of discussion, lot of talks. But if we take order stock or we take the number -- request for proposal, order stock is stable, request for proposal are somewhat stable, maybe a bit incline -- maybe a bit in increasing mode. But at the same time, there's volatility between countries and between segments. But transportation, for example, looks quite good at the moment, especially in Nordics. But in my experience, it takes still a further while from talk to request for proposals and from request for proposals to actual orders. So let's see.

[Dan Johansson, Equity Research Analyst]

Very clear. Maybe a last one, if I may. I mean you talk about the strong liquidity position you have, and you had quite good improvements in net working capital, though. I think if I calculate correctly, you have around SEK 4.2 billion in cash and credit lines now available. Are you getting sort of -- are you going to use it or will it still be more of safeguarding your operations now going into H2? Or could we perhaps see some smaller M&A coming up here during the fall?

[Jonas Gustavsson, President & CEO]

I think, of course, as Juuso also said, and you can complement that, Juuso, but we are having a clear ambition to be an offensive player. We know that acquisition has been part of the game, is part of the game. So for sure, step-by-step, when we see stability, we will be very open to good acquisitions. But of course, right now, as you all know, there is a big uncertainty, what will happen in the second half year. It's very much depending on how the pandemic will develop, of course.I feel that having 75% of our business in the Nordics, of course, in the way, I will say, even including Sweden have handled the pandemic. If you take Norway, Denmark, Finland, Sweden, it feels like there is a kind of a control, even though Swedes are not that welcome in some countries, I think still that the market seems stable. But let's see. So I think before we have seen that we have a clear stability, we are happy that we can continue to strengthen the balance sheet.I don't know, Juuso, if you want to add on to that.

[Juuso Pajunen, Chief Financial Officer]

No. I think that fully matches how I feel and what we've been talking about. Basically, what I may add to there is that I highly admire how ÅF and Pöyry, other almost as great Swedish companies, reacted after financial crisis and accelerated heavily starting maybe from 2009, 2010. And that is obviously something that our balance sheet gives room to and we would be happy to see the opportunities. But at the same time, I would not be happy to overly, overly rush in. There needs to be a good opportunity and then we have balance sheet to react to that one. So that's basically how it works from our perspective.

[Operator]

Our next question comes from the line of Erik Elander of Handelsbanken.

[Erik Elander, Research Analyst]

So one question for me then. You talk about different market conditions in the Nordics and also in the Central European market in relation to the Infrastructure segment. I mean first of all, what's the difference? And second of all, how big is the Infrastructure business actually for AFRY in Central Europe compared to the Nordic, i.e., percentage-wise in terms of sales? That's my 2 questions.

[Jonas Gustavsson, President & CEO]

Yes. I mean I think -- thanks for those questions, Erik. I think the way you perform is always a kind of consequence how you are positioned also. We know that in Sweden and then the kind of Nordic, that we are strong. And through acquisitions, we have gained a strong competence in Norway, for example, on project management through Advansia business, and we are also having a strong position in Denmark. And of course, with the acquisition of Pöyry, a strong position in Finland.Now through ÅF Toscano that we acquired a few years back and also joining forces with Pöyry, we have then also a very interesting Infra business in, for example, Switzerland and related countries. But I would say, if you look on the kind of volume and performance, we are, of course, having a longer legacy in Sweden and the Nordics. So I think that also answers a bit that if you talk about position then.And then in relation to -- I don't know, Juuso, do you have those numbers in the head about the split in the Central Europe on Infrastructure?

[Juuso Pajunen, Chief Financial Officer]

Yes, we have roughly 1/4 out of Infra division sales out of Nordics, roughly 1/4. So that's in a way the balance. And then we have 2 different components in there. The market, as such, are slightly different, but also then the operating portfolio is slightly different from total composition perspective. Our big Central European countries, Switzerland, where we have both transportation and buildings, also some water and environment in there, but buildings have been quite heavy in there; and then we have the Germany and Austria components; and Czech operations, of course, on the Infra side. But the compositions are slightly different and different V-shapes have been reacting differently, but then also different countries have had different impacts during the pandemic. So all of these ones combined and then adding to the fact that already from earlier time, Central Europe was below portfolio within in Infra profitability. Those add up now in the second quarter on Central Europe being behind compared to previous year.

[Jonas Gustavsson, President & CEO]

So I think, Erik, also the fact that we are, in that respect, relatively new then, since it was only -- not so long ago since we were actually combining ÅF and Pöyry, especially on the Infra side. So I would say that, of course, you can always wish for more when it comes to performance. But I can promise you that a lot of time is now spent to see how can we actually gear up the operations in Central Europe, but also in the Nordic when it comes to Infrastructure. But of course, as a company, AFRY, we are -- we only have a bit more than a year jointly together. And the portfolio looks a bit different in Central Europe than it does in the Nordic. But I promise you that we are spending some time on how can we further improve that.

[Erik Elander, Research Analyst]

Right. So just a follow-up on that, because I know that we talked about this before and you mentioned, I think it was in Q1, you mentioned that you're not diluting market share in Infrastructure in Sweden in the Nordic, which I bet you don't do, because you have a very strong position, as you mentioned. But then the Central European market must be very, very weak, since the Infrastructure segment actually grew organically by minus 1%. How weak is it actually?

[Jonas Gustavsson, President & CEO]

Well, I will say that it's very, very weak. For sure, as you also said, Switzerland -- well, I think we have a strong position in Switzerland, especially on some of the rail and road business, but also promising and in the building side. Then, of course, if you look in Germany and also some of the countries around, we are still a smaller player. So there, we need then and as Juuso said, there is a legacy of maybe not having always the super strongest performance. And here, we are step-by-step getting our operation up and running in a better mood. But I would not say, as you said, it's very, very weak. But that's your statement. But for sure, we want to do more and that's what we are looking for.

[Juuso Pajunen, Chief Financial Officer]

Yes. Yes, I would exactly agree with what Jonas is saying. And then just a slight correction, we have actually slightly below 20% in the Central European market side, quickly, in the [ Excel ] omitted 1 of the 5 Nordic countries and transferred that one [indiscernible], transfer that one. So slightly below 20%.

[Jonas Gustavsson, President & CEO]

I want to add the point that, yes, we understand where we are coming from AFRY and then ÅF Pöyry. If you go back 10 years, we were a small player, basically a really small player in infrastructure because the ÅF legacy and -- goes back on the industrial side. Then step-by-step, we were building up, I would say, a challenging position -- challenger position in Sweden, taking a strong position. And then over the last years, we have been growing in the Nordic with acquisitions in Norway, in Denmark, one in Switzerland and then also joining forces with Pöyry. So of course, we are in some of these relatively newer in infrastructure on large-scale operations. So if you consider that, that we are then -- I would say that, of course, we always want to have more, but I feel extremely confident that we will step-by-step improve performance also in Central Europe and take market shares in the Nordics.

[Operator]

[Operator Instructions] And there are no further questions. Please go ahead, speakers.

[Jonas Gustavsson, President & CEO]

Okay. Then I really would like to thank everybody for participating today on the call and I would like to remind you that you are all very much welcome to a planned Capital Markets Day on November 24. Of course, our ambition is to have that a physical meeting, but you never know. But November 24, you can make a small reminder in your calendar.And with all that said, I really wish all of you a great summer, and stay safe. I'm looking forward to meet you either digitally or physically after the summer. Thanks a lot and have a nice summer.