Alimak Group AB (publ)

STO:ALIG

Earnings Call Transcript 2018-Q2

[Operator]

Ladies and gentlemen, welcome to the Alimak Group Q2 Report 2018. Today, I am pleased to present CEO, Tormod Gunleiksrud; and CFO, Stefan Rinaldo. [Operator Instructions] I will now hand the call over to Tormod Gunleiksrud. Please go ahead with your meeting.

[Tormod Gunleiksrud, President & CEO]

Thank you for that, and welcome to those of you who have dialed into today's Q2 conference call 2018, and I think we just move straightaway into the presentation.So if you all move to Page 2 in the presentation. Just for the sake of good order, acquisitions are still affecting the year-to-date comparisons, while quarter 2 comparisons would be like-for-like against Q2 2017. Avanti Wind Systems was consolidated from 1st of February 2017, while Facade Access Group was consolidated as of 1st of March 2017.Moving down to next page, Page #3, few highlights of the quarter, of the Q2. We have said that it was a solid quarter in most business areas, and we believe it will stop with the 2 exceptions. That was the margin on the industrial side or for the business area, Industrial Equipment, and also the cash flow that was somehow disappointing on the quarter. I understand that it is easy to have a 2.7% margin on the Industrial Equipment side to overshadow some of the other businesses, but I would like to spend some time on what I thought was strong and positive in the quarter.Starting on the construction side. I'm happy to see that there is a continued strong or high activity within the construction sector as a whole, and I think when I look at the combination of rental and construction and looking at the quarters on the order side, I think it is -- or it is the second strongest quarter we have had in our history, and it means that we are taking a volume share of that market. So in comparison to Q2 last year, where sort of all stars were aligned in a good way for Alimak, I still believe that. Looking a little bit beyond those comparisons, it was a good and strong quarter, both on construction as well as on rental.Another highlight, I would say, carrying high activity was on After Sales. Really pleased to see that orders continue to kick in a little bit on revenues, but I'm very pleased, again, to see orders are still increasing. And of course, high margin tells me that we are on the right track. I would even say that margins were probably a little bit higher than what I was expecting because margins on [ 29 ] after this consolidation of the acquired businesses is also into the After Sales. And [indiscernible], it still came in on the slightly higher side than I would have expected for the quarter. So I would still say that After Sales made a very strong quarter.I think it is important to understand that although disappointing margin level on the Industrial side, the challenges that we have in our business, it’s so related to one part of the industrial equipment. It laid very much with the BMU side. And it could be easy to see that or say that the industrial side makes up 50% of the group, but where we have the issues that we have written about in the report this quarter is really very much related to the BMU side. We identified it in Q1. We said at the time that we were putting measures in place. We've been doing that. It's ongoing. But there is a certain backlog that are attached with cancel of projects that we -- or where we identified the issues. That backlog would lead out throughout 2018, and that is also why we have said that it will also have some impact on the Q4 reporters. But all in all, I think we have been able to identify, in a good way, what the issues are, and I also believe that we have everything -- the right measures in place in order to deal with them.So all in all, I still feel that we are en route to our midterm financial targets, that with the integration progressing as had planned and also activities implemented to improve profitability within the business area industrial equipment and product, bring the margin back to sort of that normal level where we should expect that margin to be.Moving down to next page, Page #4, takes us to Construction Equipment, and I already touched upon a few things that I consider being good for construction in the quarter. As I said, and I won't [ push that ] much going forward, but the comparison versus Q2 2017, it was, as I said, a quarter where almost all stars were aligned. So if I look at the sequence after Q4, I think we are showing a good development. We came in at SEK 226 million on the order side for the quarter, which I still consider being a good level. Also on the revenue side, sequentially, we are improving, ended up at SEK 185 million, and of course, measured up against Q2 is a very tough one.Also very happy to see a strong margin coming out of the quarter, 16.5% is probably on the high side. It has all to do with geographies, product mix, and of course, when we are at the margin -- or revenue levels like we had in the quarter, we get a good leverage on any revenue that comes out that is sort of above a budgeted level. That gives a solid contribution to the market. So I have to say all in all, on construction, I'm quite pleased with how the quarter ended up and how we are developing again after, let's say, sort of a bit disappointing Q4 when it comes to the order cycle.Moving on to next page takes us into the industrial side, and starting with orders, orders down at 6%. I think we just have to get used to orders on the industrial side with a fairly large level of orders coming in from the BMU side. Those tend to be big in size, so you will see some volatility in the Industrial Equipment. You can probably add to this that some of the measures that we have put in to fix the BMU business is also putting a different target on what margins we are [ selling ] at, what [ rate ] we are accepting. So I think going back to the presentation we did in February of 2017 where we said that profitability is more important to us that volume, I think it is also a little bit of an effect coming out of that because at the end of the day, margin is priority #1 to the group.Looking at the revenue side, you know, relatively stable year-on-year, so I don't think we shall put too much more time on that. That takes us into EBITDA and the margins.We ended up at SEK 14 million versus last year at SEK 27 million, and as I said, a margin of 2.7% is for sure not acceptable. And this is really coming out of delays that we had on the BMU side, some technical challenges that [indiscernible] on a handful of projects that were identified early in Q1. This is a backlog in our project that they have been [indiscernible] now in the factory. They are order underway to [indiscernible], or they are being installed and under commission, and that backlog will bleed out throughout 2018. And at the same time, we are putting, as we said, measures in place to make sure that this is a business that will improve going forward.Adding to this, we've also been addressing the SG&A part of the business, so we are doing -- or we have been putting measures in place, also, to address the SG&A level for that overall business. This is also results that we will see coming through in the coming quarters. So all in all, [indiscernible], happy with the result that came up after Q2, but I'm comfortable that we are doing the right things when it comes to addressing the issues and make sure that we can bring those to [ bed ] so that we can prepare ourselves for a better '19 at least, although it will have some effect on '18.Moving on to next page, Page #6 takes us into After Sales. Group order intake, we ended up at SEK 303 million, which is [indiscernible], but continued positive development on After Sales. We see good signs that markets that have been sort of stagnant over the last 3 years are starting to come back. I think, honestly, there is some pent-up demand that will come through as an effect of maintenance being kept at an absolute minimum in certain markets; oil and gas is for sure one of them. So I'm quite positive, both from where the quarter ended up as well as what I see going forward. Organically, on the revenue side, we had a small decrease with 3%, but all in all, of the top line, I'm quite pleased with what came out of the quarter.Margin [indiscernible] already also said that I was quite happy with the 29% margin that we ended up in for the quarter. It was actually on the high side of what I was expecting. Of course, it's good when it comes through, and I think it proves that we are on a good trajectory also when it comes to After Sales and include acquired businesses and also start to gain momentum from what comes out of these businesses. So again, I think After Sales did a solid quarter.Moving down to next page, Page #7 takes us into Rental, organically had a growth on orders with [indiscernible], so I think they did a very strong quarter on the order side. Also on the revenue side, they had organic growth of 9%, so all in all, on the top line, I think Rental had a very good quarter margin-wise, made 14% margin. I think that is very strong because I think the 15.9% we compare with Q2 2017 was really on the high side. So all in all, I think the 14% was good for Rental in the quarter, so also here, I would say that Rental had a strong quarter. And as I already said, if you combine both rental and construction, look at the top line, the second strongest quarter in our history. I think all in all, it is a good performance in the construction sector for quarter 2.Moving on to next page, and we will look into the group numbers. Stefan will take us through how it looks at the group level, and I hand that over to you, Stefan.

[Stefan Rinaldo, COO & Senior VP]

Thank you, Tormod. As Tormod already pointed out, if we look at the quarter, I think it's exactly fair the description of the naming as a stable and good quarter on the top line, both order and revenue side on the group, taking in consideration the [indiscernible] the movement in the [indiscernible]. We should be aware that we are meeting an all-time high quarter in 2017, so it was the best quarter ever in the group's history. And also, if you look from a pro forma perspective, it's basically the same. We had a Q2 that was extremely strong. Actually, the first half of last year had a very good momentum, so the first half of 2018 is meeting a very tough comparable.With that said, I think still, it's been a very strong [indiscernible], and we can all see in the quarter that revenue issues that we reported on in Q1 when we first funded [indiscernible] and looked at the [ project ] business in the BMU side has been resolved, so we have [indiscernible] development [indiscernible] revenue [indiscernible] conducted in the quarter. It's starting to move [indiscernible] good from the revenue recognition perspective. [Indiscernible] in terms of the EBITDA and EBITDA margins, we have very good and strong After Sale margins in construction, After Sales, and Rental, so that part of the business is doing very well. We still have, and we will have I think -- said it before -- quarters will vary a little bit in revenue recognition still. We still have quite a significant part of the business that is linked -- where the revenue recognition is linked to physical delivery from the factory. We have [indiscernible] business after BMU as well, where we use over time, especially for recognizing revenue. And when you look at the -- we have, of course, the disappointing levels in industrial, no doubt about that, but the actions that have been put in place and that are ongoing will address that, so that's going to come up. But the revenue recognition model I [indiscernible] put in place with over time recognition means that these projects have been identified. Although action taken, we still have a lower margin level on them, on these projects now, and that's going to come out as the revenue recognition continues over the rest of the year for these. And the remaining, as I said, affect the remaining quarters over the years. Looking at what's going to happen of course, as Tormod said, they are being finished in factory, being shipped or doing installation, and [indiscernible] revenue-generating activities for the recognition.Turning to the next page, Page 9. The other second issue that was identified and that we are not happy with in the quarter was the cash flow. It is very much linked to the reported issues in the Industrial Equipment and the BMU part, where we can see that there is a negative cash flow in the quarter. This comes from the fact that we have, although recognized revenue, being able to ship the products now, reached the milestones that are required to also invoice the customers for it, but still not collected it. That ties up capital also in Q2. With the progress in these projects and the actions taken, we expect this to be solved in the coming quarters. But still, it was negative in the quarter, [ tying ] up capital in the BMU projects and Wind, and also some [ timing ] in the physical deliveries of equipment out from factories latter part of the quarter.That, of course, created an increase down in the net debt. We had during the quarter a dividend payment, which, together with the not favorable cash flow in the quarter, has increased the net debt compared to the end of 2017, and also sequentially, compared to quarter 1. The leverages are still on 2.16, improvement from last year, but a little bit sequentially up. Still, I don't see this as a big issue right now because we have a very strong financial position for the group as it is, and we expect that the cash flow situation, as I've said, will solve this and improve these key numbers going forward.Page #10, please. Looking at tax, 2018 year-to-date, the [indiscernible] tax rate is 28%. We had 29% in the quarter. We are working, as we have reported before, on integration activities that are addressing both [indiscernible] structures in the defined countries. That is very much linked to tax footprint, but also an alignment of group [ transfer ] pricing policies and all the necessary documentation to make sure that the group combines, becomes one, and not 3 subgroups [indiscernible] set up for 2017. And that work is undergoing and is expected to be completed by the end of this year, with maybe some integration [ part ] or some formal things spilling over in the beginning of 2019, as there is quite a lot of legal and paperwork included as well.Page #11, EPS. The margin, as you see, and the result in the quarter, a little bit it improved compared to Q2, so we have an improvement in the earnings per share from SEK 5.43 to SEK 5.44 on [ rolling ] basis, SEK 1.46 versus SEK 1.45 on a quarterly basis.Page 12, the integration plan. I think I've shown this slide a number of times. This concludes that the baseline was 12% in 2016 from a pro forma level. We've been working with procurement and manufacturing organization operationals of the sales, of course, what's and still is appropriate for us, and the transformation is planned and is all going to be ready by 2019. We have 15 cross-functioning work teams working, and a number of these have been closed down since they are of more enabling character and doing investigation and coming up with a suggestion on the [indiscernible] implementing structures and sales channels, et cetera. But the main ones are remaining active, and they are of course addressing things like After Sales and [ FEM ] procurement issues and operation issues.We have an early estimate of SEK 110 million in [ nonrecurring ]. We still remain at that level, with [indiscernible] million last year, and we [indiscernible] now around half year, we have SEK 30 million spent in 2018, so we are on track, and we expect to be able to keep within this for this year. And most of it will be spent this year.Page #13, on the update on where are we says that we are on track, yes. And what we are working and continuing to work with right now is that we have rolled out already a joint [indiscernible] service organization in U.S., in Brazil, in U.K., and Singapore that's finished. The remaining major countries are ongoing. We are in different levels of different [ ready states ] [indiscernible] these countries in terms of merging people and making sure that the back-end system work. Procurement integration systems [ which we end up ] working with has continued. We have realized quite a number of savings that we initially investigated and also identified, and we also have an ongoing, I would say 3 continued renegotiation with suppliers to look at getting more out of commonalities in our supply. Also, some reengineering and redesign that will be [indiscernible], and also offset the price [indiscernible] that we have seen coming from the development of market prices on raw material. Focus has also gone into the continued the streamlining of sales and the footprint. So if you look at where we are actively working today, putting most of the efforts, it's actually After Sales [indiscernible] operational, and of course SG&A and structure. These are the 3 main areas where we are focusing our efforts in the integration work [ now due ] in 2018. And the reason we do this, Page 14, is our terminal [indiscernible] midterm financial targets. We still aim for 6% organic growth versus in the midterm. We are aiming for the 15% EBITDA margin. We are on track from that [indiscernible] identified issues in Industrial Equipment and BMU especially, and also aiming for the leverage target or around 2 in leverage. We are at 2.16 at the quarter, so we are fairly close to being on that. But the other 2 are still work on the progress, but we feel confident that these are still valid targets and we are aiming and going the right way to achieve them.And with that, I think I hand back to you, Tormod.

[Tormod Gunleiksrud, President & CEO]

Thank you for that, Stefan, and I think [indiscernible] turn over to the next page in the presentation, Page #15, I will give a summary of the quarter the way that at least we see it in the management of Alimak. We've been through the reasons why we think it's a solid quarter [indiscernible] Industrial Equipment or Industrial Equipment margin, and also the cash flow from the [indiscernible]. I think Stefan touched upon the cash flow and the impact of projects being delayed, and thereby, inventories being tipping, and that, of course, will spill over to receivables or trade [ receivables ] that should come in from the Group, and that's had an effect on Q2.We do, with the measures that we put in place, expect it to normalize going forward, so we certainly expect a faster pickup on the cash side. We already addressed why we are on the margin level that we delivered now on Q2 on the Industrial Equipment side. But again, do not let that completely overshadow those other businesses that are actually delivering, at least in our view, strong or solid quarters, both on top line as well as on the margin side. So we'll fix what is wrong, and it's, again, going to continue to have better results for the overall group.Happy to see the activity that takes place in the local construction sectors, and for sure, also what is going on within After Sales. High level of activity, good momentum also coming from the acquired businesses. Very happy, and I probably didn't mention that going through industrials, but I'm actually very happy to see how Wind was doing in the quarter. [Indiscernible] great quarter on the order side that delivered strong results, so Wind has had a good first half 2018, and I see a continuous strong market also on that side. So all in all, if I look at the other businesses, I have to say that yes, we know what we have to work on. There are strong, good opportunities in the other areas of business that we are active. We have a solid backlog in [indiscernible], so I'm quite positive, except for the [indiscernible] mentioning it being related to the BMU side, and again, those are a handful of projects. So that is also what I see when I say that we are en route to our midterm targets with the integration, as Stefan just presented it, progressing according to plan, and with the activities that we have undertaken now being implemented in order to improve the profitability within Industrial Equipment.So all in all, yes, we were definitely not happy with the 2.7% margin on the industrial side, but again, there are certainly other businesses that are doing very well, and we just want to build on those and rectify what is not so good. By that, I think I have summarized the quarter the way I see it, and we will open up for questions for those that dialed in to the conference. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Mattias Holmberg from DNB Markets.

[Mattias Holmberg, Analyst]

On the Industrial Equipment margin, you say that you have taken measures to improve the cost structure which will gradually come into effect during the remainder of this year, while at the same time, you say that the issues that have pushed down the margin in the past quarters will also continue to affect the next 2 quarters, so I have 2 questions relating to this. First, how should we think about the margin in industrial for the rest of the year, as the 2 statements that I just made are quite contradictory? And second, could you please be a bit more specific about the issues that you've had in the affected BMU projects to help us understand a bit more what has gone wrong? Thank you.

[Tormod Gunleiksrud, President & CEO]

Yes, thank you for that. I think I should start trying to maybe bring sort of some more light on why we say it will impact, while it will also improve towards the end of the year. First of all, as I said, we have a handful of projects that will impact the margin also for the remaining 2 quarters, where this backlog will bleed out. So they will have an impact, but that [Audio Gap] projects that do have a better margin. So the impact -- or the ratio coming from the projects that are impacted will be lowered during the remainder months of the year, if that was [indiscernible].So I mean, we identified the issues pretty early in Q1 and have been putting measures in place to deal with it, but we cannot change the backlog that is in there with projects that need to go out. We can only make sure that we are putting measures in place that are dealing with the new projects that we are being awarded and that [ they are done ], so the part in the backlog that contains the sort of, if I should call it, the sick projects, are getting smaller, while the fresh and the healthy projects, the way we see them, are getting larger. So that is why I say that it will bleed out but still have impact because they will not be completely gone until we are actually finished of the year. So that is the margin picture and why we are saying it will have an impact, while it will also improve.Now what specific measures are we putting in place? First of all, I think it is extremely important that we have a good governance on the [ machine ] that we have in place when it comes to accrued orders that are coming in and being subject to orders received, i.e., scrutinize more the commercial [ cadencies ] that we do have in the contracts that normally the customer is issuing. Then I think it is clearly understand to make sure that we have fully understand the technical specifications that applies to the delivery. We have to take any contractual text at face value. So when it says that racks or rails are going to painted, it doesn't really matter whether we think it's not such a good idea to paint it, but take issues like that up front, just as an example. So it is all about sound technical understanding of what we actually promise to deliver, make sure it is doable to actually deliver as it's written, and overall, have more sound project and contract management throughout the lifetime of a project, meaning from we start to [ send ] it until we actually have it over to the customer and then [indiscernible] it off to them. So those are the areas that we are focusing on when it comes to the selling and execution of the projects.

[Mattias Holmberg, Analyst]

Great. That was very clear. Could you just give any example of what has gone wrong? And you mentioned that you've had issues in sort of BMU projects. Do you have any sort of concrete example to just help us understand a bit?

[Tormod Gunleiksrud, President & CEO]

Yes, we are in some -- I already -- I probably won't mention the project because there is the customer on the other side as well, but in certain projects, we have started to use new technology. I think in some cases, new technology needs to be introduced. But kind of the projects that we've been suffering on, it's certainly new technology. We have started to use laser guiding for some of the BMUs in where we have challenging architecture. I think before we actually use it, I think we probably have to do more in-house testing on pilots before starting to implement on large projects.We've had issues with other buildings where the architecture has been of such a character that we've been operating on limits when it comes to finding out whether we can do all the bends and the movements that are needed in order to reach out to all part of the buildings. These are also mobiles that we need to -- or based on mobiles that we need to improve in order to fully understand the ramification of all the forces that are normally working on applications like this. So I think, all in all, we have to do more base engineering that our solutions are founded on when we're actually going out and operate. So there, we have to reduce the number of unknowns in our base engineering and what we are basing our offering on. I think that is also what we are doing now on the -- are addressing within the group. Yes, and I think it has shown that it is needed.

[Mattias Holmberg, Analyst]

Great. That was very helpful. Just one more question before I step back in line, and it's on the organic growth in the Construction division. I've asked this in previous quarters, just to sort of get back to your statement earlier that you believe despite the very tough comparable figures for the first half of this year, which we've seen, that you believe that the organic growth for the full year will be positive. Do you still stand by this view? Or has the view for the full year changed at all?

[Tormod Gunleiksrud, President & CEO]

No, we -- it will be wrong to say that I hope, but we still aim at delivering a black number on those numbers.

[Operator]

And next question is from the line of Johan Dahl from SEB.

[Johan Dahl, Analyst]

A couple of questions. Just back to the BMU problems, can you just refer to your risk assessment of other projects, i.e., not the ones you've identified now but the remainder, the part of the order book when the company was acquired? When will all orders which you acquired at that stage have been delivered?

[Tormod Gunleiksrud, President & CEO]

The vast majority of those orders will be out, more or less, by the end of this year. But I think we have fairly good visibility on all the orders that are sitting in there. So -- and I feel that, at least today, that we have a good view on having identified the issues. And it would form that there is sort of a forest of projects that, you know, are having all these issues, but it's not really; it's a handful. But of course, if those issues are large enough, they certainly have their impact, and that is what we have seen now being material in Q1, Q2. So I think we have reached, with the 2.7%, I think we have reached a low point, probably, I should say, in respect to that.

[Johan Dahl, Analyst]

Okay, but to get the big picture, looking at 2019 for example, is it fair to assume sort of, let's say, 50% of orders delivered next year will be sort of new orders, and the rest old orders that you acquired?

[Tormod Gunleiksrud, President & CEO]

Oh, the vast majority 2019 will be based on orders that have had, let's say, maybe a [ statement ] regime in place when it comes to taking orders.

[Johan Dahl, Analyst]

Got you. Just on group order intake, just read into your comments, and given the fact that it's now an apples-to-apples comparison, is it correct that BMUs were sort of dragging down order intake and sort of [indiscernible] the real order intake?

[Tormod Gunleiksrud, President & CEO]

Yes, that was probably the case.

[Johan Dahl, Analyst]

As you start to review [ terminal debt ] do you expect the sort of group construction order intake to grow in this year, still?

[Tormod Gunleiksrud, President & CEO]

Yes, I think I already answered that question from DNB. As I said, I still believe in delivering a black number on the growth figure for the year, so that is what we are aiming at. I am not saying that this is an easy walk because we have a lot of orders that need to go out of the door before the 31st of December, but that is what we are aiming at.

[Johan Dahl, Analyst]

Good. Finally, can you just give an -- also, but it's [indiscernible] comparison now, but could you just help us bridge result compared to last year, what's happening under the hood in Alimak in terms of foreign exchange impact on results? Also, how much savings were realized in the quarter, the programs related to the BMU side? Can you just help us understand the magnitude of those issues?

[Stefan Rinaldo, COO & Senior VP]

No, I think what we have shown [indiscernible] I think you've seen the effects. There's no doubt in my mind that we have seen the effects, I mean, the work in the integration through the cost savings that we have put in place through operational measures, the [ FCM ], is coming out, and also, the SG&A reductions are coming out and getting [ their ] structure together. That's also [ speaking ] to the strong margin development in the quarter.But it's taken down, of course, from what we have seen in industrial. We don't provide [indiscernible] because we haven't split, so to say, the integration savings as a total or even by quarter, so it is part of what we can see in results. But if you would normalize, I made my own analysis, and of course we normalized the industrial and look at what one could, so to say, have expect, looking at the progress from last year, looking at the volume development and the business mix. Wind is doing good. We have identified the issues, basically on BMU, and with that underlying, I would say the trajectory is still giving good comfort in saying that, these problems excluded, we will be well in line with what we expect to have in order to reach what we have targeted for midterm.

[Johan Dahl, Analyst]

Got you. Just on the raw material and price, are you sort of neutral on that [ net ] in second quarter? I mean, you're a huge buyer, still. Did you receive compensation for that?

[Tormod Gunleiksrud, President & CEO]

I would probably say that we have seen -- we have been able to fend off most of the raw material price increases, either by giving them to the customer or fending it off by renegotiation of supply contracts. One of the downsides, of course, with this integration activity, when you realign volumes and you start negotiating, you basically -- you're back to suppliers where you have already an existing agreement running for 6 or 12 or 24 months, and you renegotiate. And at that time, of course, they also take upon themselves to try to compensate for price adjustments or raw material adjustments that they normally would not have been able to pass through to us until maybe after 6 or 12 months.So we have seen some negative effects on that. I believe, however, that we have been able to fend it off. So I would say slight negative impact on the quarter in the margin from the raw material developments stemming from the last 6 to 12 months. But as we have said before, we have a tendency of going into agreements, [indiscernible] long-term agreements, 12 months, 6 months agreements, where we don't do price adjustments over, so to say, short-term raw material increases. So we only allow and enter into agreements with suppliers where we do adjustments on raw material movements for the part directly related to raw material within -- when it moves beyond within the 6-month period 5% to 6% unit up, then of course it triggers a [ caution ] for some kind of adjustments either up or down. The rest is locked in.

[Operator]

And next question is from the line of Kenneth Toll Johansson from Carnegie.

[Kenneth Toll Johansson, Financial Analyst]

So a question on the After Sales division, maybe. The margin was quite good, but organic sales fell a bit. Do you feel that you lose sales when you're doing this integration of service organizations? Could that be an explanation why organic sales was a little bit lower this year?

[Tormod Gunleiksrud, President & CEO]

I think if you look at the quarterly data for After Sales, you will find that Q2 comparison in 2017 was SEK 325 million. That was an exceptionally high revenue quarter, and it also included some part of, I would say, reallocation between what was forecasted by it as part of the Wind, for example, which was [indiscernible] industrial in the first quarter. It's a very high comparable, so it's difficult to compare. I would say in that in my books, the order intake as well as the revenue this quarter was actually on a very good level.

[Kenneth Toll Johansson, Financial Analyst]

And that also means that you don't see a slowdown or any negative effects from being more internally focused or anything like that, really.

[Tormod Gunleiksrud, President & CEO]

No, on the contrary, I think the [indiscernible] for everybody else for end of last year was to use the pilot as a learning example, start focusing not only on getting the infrastructure in place, but actually also getting more people on board, having more hands on deck, and being out meeting customers. So After Sales growth is, of course, something we are pushing very hard.

[Operator]

And next question is a follow-up from Mattias Holmberg from DNB.

[Mattias Holmberg, Analyst]

On the same subject, actually, on the After Sales division, I sense that you feel that the margin is on the higher end in this quarter, and I was trying to understand the comment that you made here about moving some of the wind business that has been reallocated from the After Sales to the Industrial Equipment division. How much of the margin improvement is driven by that reclassification? Given your comments about the margin being in the higher end of your expectations, should we not expect this level to remain in the coming quarters, or how should we think about that?

[Tormod Gunleiksrud, President & CEO]

Okay, so let's talk first. Q2 last year as a comparable I said is quite high. We had SEK 325 million in turnover in After Sales, and that was a very high quarter volume coming in. That included some adjustment, where we moved business that was previously, in the first quarter report, in Industrial Equipment wrongly, and we reallocated that in Q2. Not huge, but it's affected the revenue number. If you look at this quarter, this year, the high volume comes of course from a very favorable mix. We have [ conclude ] the investigation that we started by the end of 2017, where we could see that we had a very negative development of After Sales in Q4. The analysis showed that we were still attracting some noise in that result coming from the downturns in the Wind, especially the Wind installation business. So we've gone through and made sure that we have specified and clarified out, and streamlined it and tried to [ detach ] it as much as possible. We want to have After Sales as an independent business that is not really directly, at least short term, linked to investment levels, of CapEx.So we have done that in the quarter. I don't think it has made any significant change, actually, to our numbers. If there would be any effect here, I would say it's probably in the 0.1, 0.2 regime, somewhere around there. What has happened is that we have had a good outflow, and also a good mix, of some refurbishment and [indiscernible] in this quarter, as well as some very good development in some of the markets. As [indiscernible] of what we expect going forward, I would say to jump up to 29% in one single quarter might be achievable. I do not believe that we have established ourselves in all the markets that we [indiscernible] operate on that level. So I think we said last quarter we are expecting that we should move in between the 27% and 28% span of the -- you know, not to say it's for the [indiscernible] going forward there in what we do in integration.

[Operator]

And next question is an additional follow-up from Johan Dahl from SEB.

[Johan Dahl, Analyst]

Tormod, you alluded to the fact, you know, that we should respect volatility in the new [indiscernible], then you also talked about the potential effect of focusing on profitability in this unit. Can you just explain, when you analyze awarded contracts in this global business for the last couple of quarters, how does this acquired business stand? I.e., are you defending market share? And secondly, what is the sort of price sensitivity in this business, in your view?

[Tormod Gunleiksrud, President & CEO]

I still believe that we are [ deciding ] our market share, market position. I'm absolutely -- I'm quite convinced on that. I think maybe we have been too much focused on the landmark [indiscernible], i.e., you know, building stuff that are [ eye catching] in all aspects, and it gives some status to deliver to those. I think there is certainly a market of buildings also underneath there, where there is maybe less price sensitivity. Because when you are chasing some of these landmark buildings, then sometimes customers think that your [indiscernible], you know, contributes to being the one delivering solutions to such famous landmarks or buildings.I think there is some price sensitivity, at least to the vast majority of the markets where we have been active. I think we probably need to explore a little bit beyond that one and not only go after the [indiscernible] that's part of the markets. But other than that, I think we have good plans on our side now to look into a common platform, both for [indiscernible] and for [indiscernible], so that we can build or base our portfolio more on kind of a [ Lego ] system going forward that would allow us to get more synergies from the 2 brands, creating a platform that they both could use. That's of course also taking up some significant base cost in the organization, but all the product costing as well. So all in all, I think we are in a good position. It starts really to make sure that what we are selling is sound, that we are [indiscernible] can deliver it. And we have set a new acceptance level of margin that we are approving, and you know, normally, with some time, this normally works out and people find ways to make sure that they are able to sell these solutions. I think that is the way to move forward.

[Operator]

And there are currently no further questions registered, so I'll hand the call back to the speakers. Please go ahead.

[Tormod Gunleiksrud, President & CEO]

Well, in that case, I can only say thank you to all of you that dialed in to follow this quarter 2 2018 conference call, and it's not -- Q3 is not that far away, so I guess it's not that long until we meet again. And as I said, thanks for dialing in, and by that, I call the conference [indiscernible] ended. Thank you.

[Operator]

And this now concludes the conference call. Thank you all for attending. You may now disconnect your lines.