Ncc AB

STO:NCC B

Earnings Call Transcript 2021-Q3

[Tomas Carlsson, President & CEO]

Good morning, and welcome to this presentation of the third quarter earnings for the NCC Group. My name is Tomas Carlsson, and I'm the CEO of the company. And with me here today, I have Susanne Lithander.

[Susanne Lithander]

Hi. I'm Susanne Lithander, CFO.

[Tomas Carlsson, President & CEO]

I will give you an overview of the quarter, and then Susanne will come back and provide all the details of the report.The things to remember from this quarter is this; this was strong quarter, continuing on the improvements that we have been working with for 3 years now. We see strong earnings in the Contracting business. All business areas are improving earnings and the margins. We have profit from Property Development contributing from 3 sold and profit recognized projects.We experienced good demand in all our countries and all business areas. Industry is fundamentally stable, but have a negative impact from Asphalt Finland. And finally, we have strong cash flow, and at the end of this quarter, we have a net positive cash position. Those are the main things to remember from the quarter, and I will get back to all of them in a little while.If we look at the earnings numbers in brief for the quarter, the improvement compared to quarter 3 last year is 55% or SEK 310 million, 6% margin. Of course, that has a contribution from Property Development. But if we look at year-to-date, we see the same development with improving earnings, ending at a little bit over SEK 1.2 billion EBIT for the first 9 months compared to SEK 981 million last year.Another way of looking at -- is like this, grouped by our business logics. Comparing Q3 this year with 2020, we see clear improvement on -- from the Contracting business areas, that is Infrastructure, Building Nordics and Building Sweden, continuing on the improvements that we've seen over the last couple of years.We see PD, SEK 288 million better than last year. Industry, negative impact of SEK 117 million, primarily driven by Asphalt Finland and then a positive effect from other eliminations. And then an EBIT earnings for -- on SEK 877 million for the quarter.Let's talk about the different business logics and start with Contracting. Improved earnings from what was already a relatively good level a year ago, but it's 37% up. All business areas are improving their margins and their earnings. And it looks like this.A long trajectory going up, most notably is Building Nordics coming up from 3.2% to 3.7% and overachieving on our internal target of 3.5% for contracting units. So strong margins and strong earnings from the Contracting business.Looking at Property Development, 3 projects recognized in this quarter compared to none in 2020. That meant that we came from a situation where PD had a negative earning in Q3 2020. And as you know, we recognize profits in PD on completed projects, which means that we have to have sold the project, we have to let it, we have to have handed it over, and we have to be paid before we recognize the profits.Last year, we had our big sale in the first quarter with K11, the project -- the office where I'm standing right now. Now, in the third quarter, we have recognized projects from Hatsina Office 1 in Helsinki. K11, that's the neighboring building to this one in Solna and Omega in Copenhagen. Most of the profits comes from K11 and Hatsina.Looking into future quarters. We have 13 ongoing projects. We have previously announced that we will recognize the profits from Frederiks Plads 2 and next in quarter 4, and that's what we're planning for.We have also previously communicated that we would recognize Bettorp in Q4. We have moved that for purely administrative reasons to Q1 next year. It's a relatively small project, so it has no significant impact on the earnings. And then we have also announced that -- we previously announced that we will sell Kineum and MIMO, Platzer in Goteborg. We have a number of projects that are ongoing, and we will get back to them as soon as we have sold them.And then finally, Industry, fundamentally a stable performer, but negative impact from Asphalt Finland. So look at that -- so let's look at that from a couple of different perspectives. First of all, the overall business areas.Stone materials business stable and delivering strong results. Asphalt business in Sweden, Norway and Denmark performing well, but the big issue here is Asphalt Finland. So let's talk about Asphalt Finland.We announced in November 2020, a year ago, that we intended to divest our Finnish asphalt business, and that's -- we have now signed a contract on that. The rationale behind that was several years of loss-making business. We've been through -- we had been through several unsuccessful turnarounds, and we had no strategic fit with the rest of NCC in Finland, i.e., we don't have civil engineering infrastructure business and only a small fit to the stone business. We've sold the company or sold the assets to a Finnish company Asfalttikallio, and we expect to close the business before the end of this year.There will be a onetime negative effect of SEK 180 million in the fourth quarter. That is, of course, the effect of the sales price that we were paid, minus the book value of the assets, but also provisions for guarantees, provisions for remaining contractual obligation and transaction costs to actually make this happen.I think it's worthwhile pointing out that there will be a positive cash flow effect from the sales of Asphalt Finland. But -- and I want everybody to understand this, we will account for the earnings or the losses in Finland for the full year. And I will shortly go into that in some -- a little bit more detail.If we look at the Finnish asphalt business over a 10-year period, I think there's 2 questions that needs to be answered. The first one is, why didn't we do anything with this 2018, when we did all the other turnaround write downs? And the second question is, why is minus SEK 180 million, a good decision?Let me try to explain that. First of all, in the middle of 2018, when we were conducting the review of the business, we knew that we had 3 consecutive loss making years just -- in the recent history, but we also knew that we had, had years with profits in Asphalt Finland. We did some write downs of a one-off nature in Asphalt Finland in 2018, but most of the earnings of minus EUR 93 million was actually the ongoing operations.But what the organization in industry and asphalt had was also what I considered to be a credible turnaround plan going into 2019. So the decision was to continue with this business and to execute on the turnaround plan. That turnaround plan for 2019 was obviously not successful, and we ended the year of 2019 on approximately the same level as the year before. At this point, the organization presented a new, and I still have to say, I thought it was credible turnaround plan for 2020, and we started to execute on that.You have to remember that this type of business is accounted for, to a large degree on percentage of completion accounting. So forecasts are key. And in the beginning of 2020, the forecasts were pretty positive on the outlook of success for the turnaround plan.So the third quarter was actually positive in Asphalt Finland. That turned out to be not correct forecast from the organization. So we ended out with a really negative earnings in the fourth quarter and also the effect that you see this year with a large difference between this year and last year, because we're comparing a negative earnings with positive earnings last year.At this point, turnaround plans were not really credible anymore, and we didn't see a bright future ahead for the Finnish asphalt business, not at least the way that we operate it. And we decided to divest the business.Now the first 9 months of this year has even larger losses than what we've seen before. There are 3 drivers behind that. First of all, the asphalt market in Finland is down. So we see lower volumes and lower prices.Second, we see that there's been an impact on the process of divesting the business, of uncertainty in the organization, what will happen, and I hope that, that will -- that is more clear now, and we have a higher degree of certainty of what will happen with the organization, but particularly in the beginning of the year that was a large degree of uncertainty.And then we've had a more prudent approach on assessing forecasts for the business. So my assessment now is that we have seen most of the losses for the rest of the year, but we have still one quarter to go. But my assessment is that, we have had a more prudent approach to asphalt forecasts this year.So looking at the history, we thought that we had credible turnaround plans, that didn't turn out to be true. So we changed our mind and made the right decision in 2020, and now we've executed on that. And then the sum of the earnings for the last year, I think that pretty clearly motivates that even having a pretty steep onetime loss motivates our action here. That's enough of Industry and Asphalt Finland, and let's move on to the rest of the third quarter.Orders received, on par with last year. I've said it many times, but I will repeat it again. The orders received in an individual quarter or actually a couple of successive quarters is not a good indicator on the market. In this type of business with large projects, you can have large differences from quarter-to-quarter. We had really good orders received in the second quarter this year, and we experienced good demand in all markets, in all countries, and in all business areas. And I think that's important to remember.And that is reflected in our order backlog. And order backlog remains strong, and if we compare it to net sales and if we use the metric book-to-bill, i.e., how -- what's the size of the order backlog compared to rolling 12 earnings, we can see that we now are at 10% above one year net sales, and that's a good level where we want to be, and it's on historical good level to develop the company.So remaining backlog is strong. Individual quarters on orders received can -- it doesn't really say anything about the market. What we experienced is a strong demand in all countries or business areas.We've seen net sales go up in this quarter. It is, to a large extent, driven by profit recognition in PD. But also, we see that Building Sweden has started to grow in the quarter on the back of good orders received last year.And then, finally, we've -- let's look at the same type of numbers, but for the 9-year period, up until the end of September. Same trend, Contracting, improving over last year. PD has not yet caught up with the earnings from last year, but we have one quarter left with 2 planned -- closings of 2 sales.Industry, I think it's worthwhile noting that the difference between last year is not as large as it was in the quarter. And again, that's a question -- that's a combination of good underlying performance in the rest of the business and a more prudent profit recognition in Asphalt Finland. And then other and elimination, which seems to be really high, and that's the effect of the sale and leaseback effect that we had last year and that we don't have this year. So, overall, a good quarter and a good first 9 months.There are 2 potential risks that I would like to mention -- would like to highlight, though, first of all, it supplies of cement in Sweden. We're monitoring the situation and preparing for different scenarios, and you can make a thousand different scenarios. We're in close contact with our suppliers, and we're preparing our organization and our technical solutions to mitigate any possible effects.I think it's important to say that this is not primarily an NCC question. This is a question for the Swedish economy and for the construction industry. I hope that all good forces will make this come to a positive conclusion.And then, finally, price increases in supply chain evident for us. Everybody is talking about it. I'm pretty sure that all projects have had their challenges with price increases. But what I think is more important is that they dealt with it, and we've seen individual solutions with maintaining prices on an acceptable level, but also increasing prices to customers. So we can see no material impact on the group from price increases so far.And with that, I hand over to Susanne Lithander.

[Susanne Lithander]

Thank you, Tomas. Our business area Infrastructure continues to improve on earnings and margin. They have an orders received of SEK 2.9 billion in the quarter, which is a bit lower than last year, but they have, over the year, built a very strong backlog that is now up to SEK 20 billion. And for the 9-month period they have grown their orders received with approximately SEK 4 billion or 34%, and their book-to-bill for the year is 1.3%. The increase comes from all units, but Norway is the strongest contributor.Net sales is SEK 3.8 billion, which is down compared -- or decline compared to last year, driven by the lower order intake from last year. And as we can see, Norway and Denmark are now equal in size compared over 9 months, and Sweden has grown its share of sales to 78%. Earnings is SEK 123 million. And in spite of the lower volumes, so the improvement is driven by improved project margins. The margin is 3.2% in the quarter.Business area, Building Sweden also continues on their improvement trend with growth in both sales and earnings. Orders received was SEK 3.3 billion (sic) [ SEK 2.3 billion ], slightly down compared to last year, but they have a very strong backlog, reaching SEK 17.8 billion, which is up compared to last year. The net sales is almost SEK 3 billion, and it's a growth in the quarter of 9%, and we -- they also show growth over the 9-month period. Earnings is SEK 100 million, and that's driven by both volume increases and improved margins in the project portfolio. The margin in the quarter was 3.4%, and on a 12-month rolling and 9-month, it's 3.3%.Building Sweden's residential orders was a bit above average. The average line is here, the red line, slightly above for the quarter and 44% of that was rentals.Building Nordics had strong earnings in the quarter, and they were exceeding the targets for earnings, both in the quarter and on rolling 12 months. Orders received SEK 1.8 billion is an increase compared to last year. However, on a pretty low level, and the increase come basically from 2 major projects in Norway and Denmark. The backlog continues to be quite strong, SEK 14 billion.Net sales is on par with previous year. And as you can see, Norway and Finland are declining, while Denmark is growing. And earnings is SEK 111 million, which is more than double than last year's third quarter, and that is driven by improved project margins on the back of having no growth in sales. And the margin was 4% in the quarter and 3.7% on the rolling 12 months.The volumes in our asphalt -- in our Industry business remains stable. As we can see here, the stone material to the left on the graph is up slightly, and the asphalt volumes are slightly down, and that's driven by the Finnish operations. Net sales 3 -- basically on the same level as last year. There are some differences between the divisions. However, we have increases from stone, primarily from Sweden and Denmark, and we have declines in the asphalt business driven by the Finnish operations primarily.Earnings is down to SEK 273 million. And as you have heard from Tomas already, driven to the large extent by the Finnish operations. The drop is SEK 117 million and SEK 73 million of that is explained by the Finnish asphalt business. And the remaining part is also within asphalt and it constitutes of volume variation, primarily in Denmark and also claims resolutions that we've had during the quarter.What could be noted is that the stone material business had been very stable, and they show also improving earnings over the 9-month period, driven by Denmark and Sweden. Operating margin is down to 7.2%. And with the low earnings, they, of course, are not close to their 12% target of return on capital employed.Property Development, had 3 projects recognized to sales and profit, giving them SEK 2.072 billion in net sales and SEK 277 million in earnings. Tomas has already been through the projects that were sold, and the decline from last year is explained by the fact that we've had no projects recognized last year.Looking at our project portfolio within Property Development instead. We have started one project in Sweden, Project Nova, right next door to our head offices here. And as we have sold 3 projects, we now have 13 projects in our portfolio. A 65% of that is in Sweden, and we have around 230,000 square meters lettable space. During the quarter, we also sold MIMO to be delivered during -- or expected to be delivered in Q4 2024.The letting can vary a lot between the quarters. And the previous quarter in Q2, we had a very strong letting. While we, in this third quarter had quite low letting, 6 contracts, 6,000 square meters. However, we see a very strong demand and strong interest in the good market we have, good interest for our products. And we are really not that concerned about the quarterly dip in letting.And as letting and completion ratios, even if the gap between them have decreased or -- and is smaller now, we still have a balance between the letting ratio and the completion ratio with a letting ratio of 56% and completion ratio of 55%.That brings us to the last unit after the business areas. We have other end elimination. And this area is usually have a substantial negative impact on our earnings. This quarter, it had less negative impact due to the fact that we sold the 3 Property Development projects and reversed the eliminations that we do in the construction phase in those projects, giving us a positive effect on internal gains compared to last year where we had no sold projects, only building, giving us negative impact with eliminations on this row. So that's the big swinger in other and elimination.Financial net improving or lower due to the fact that we have much lower financing needs. And our net profit ended on SEK 706 million, and our earnings per share was SEK 12.9 on rolling 12.We had a very strong cash flow in the quarter, driven by both earnings in our operations and the 3 -- the sales of the 3 property projects, as you can see. We have a slight -- or we have a negative impact in the quarter from working capital and that's working off of prepayments in some of our mega projects, primarily. And we have low investments being made in CapEx during the quarter. Cash flow ending on SEK 1.389 billion before financing.Our net debt has decreased from SEK 5.1 billion, down to SEK 3.2 billion. And as you can see, we have a corporate net debt that is now a corporate net cash position of SEK 500 million. A big swing here is also in the pension liability where we have actuarial changes primarily from changing or increasing the discount rates. And as we have net cash position, our net debt-to-EBITDA target is within target level. So with that Tomas, I hand it over to you again.

[Tomas Carlsson, President & CEO]

Thank you very much, Susanne. I will give you a couple of other pieces of information, and then I will wrap up. First of all, an update on our financial targets. As you know, our target for 2023 is EPS SEK 16, and we're now at just short of SEK 13, moving towards that target.Net debt, as Susanne pointed out, we don't have that. So it's actually a positive cash position. And then dividend policy, the AGM decided in spring that we would have a SEK 5 dividend, and that's 43% of profit paid out in 2 installments. And I'd like to remind everybody that the record date for the second installment is November 9, and then it will be paid a couple of days later.We have targets for sustainability or ESG targets. For us, we have picked CO2 emissions and health and safety that we think is the most important for our business. We are, since a couple of years back, measuring Scope 1 and 2 CO2 emissions. And we've set the target until 2030 of minus 60% reductions of Scope 1 and 2. We are, for the first half year now, at minus 46% moving towards that target. We have also decided to measure Scope 3 for 4 important areas where we have the most impact from Scope 3, concrete, steel, transportation and asphalt, the target is 50%. We're setting the roadmaps right now and we'll start reporting during next year.And then health and safety, we have a target of LTIF long term -- Lost Time Injury Frequency 4 days of 3.0 by the third quarter this year. We're now at 3.3. So I'm hopeful that we will reach that target going forward.So sum it up, this was strong quarter for NCC, despite the fact that there are a lot of impact from Asphalt Finland, uncertainty regarding the cement supply and pricing increases that we've managed to mitigate to date. But the overall message is that we see good demand in all countries and all business areas. We see a strong order backlog, as Susanne pointed out in all the business areas. We have 3 property projects that we have recognized profit from. Earnings and margins improving in all the contracting units and an underlying stable business from industry and a strong cash flow from NCC.And with that, operator, we open up for questions. Welcome back, Susanne.

[Susanne Lithander]

Thank you.

[Operator]

[Operator Instructions] Our first question comes from the line of Stefan Andersson from SEB.

[Stefan E. Andersson, Analyst]

Few questions from me. Starting off with Industry there. I don't think you've given the Finnish loss before. I think you talked about the loss in Q2. And now it's -- for the 9 months is SEK 116 million. Could you maybe help out a little bit with the loss in the quarter? I mean, I would imagine it's a very seasonal business. And you have losses in Q1 normally. So I'm just trying to understand what kind of impact that had in the quarter in the Industry?

[Tomas Carlsson, President & CEO]

That's correct. It's a very seasonal business. And the way that we account for it means that we are recognizing a lot of cost for maintenance and other fixed costs in the beginning of the year, and we fundamentally don't have any production. But it's also a business that is accounted for in the paving business with percentage of completion. And there's a link between the volumes that we produced and the volumes that we pave, which means that we are really dependent on forecasts from the organization on what kind of volumes should we expect at year-end.What was clear during the 2 turnaround processes that we had in 2019 and 2020 was that the forecasts were overoptimistic on the volumes. So, for example, in the third quarter 2020, there were still a lot of optimism regarding how the year would end. That turnout not to be correct, and we had large losses in the third quarter. This year, on the back of the decision of divesting and also realizing that there had been a certain amount of optimism in the forecasting from the organization, we've had a much more prudent profit recognition. And acknowledging that the volumes last year wasn't enough to get to -- and the prices to get to a profit, we see even lower prices this year, we see lower volumes, even though we're defending our position on the Finnish market.So my assessment right now is that we have larger losses, that's true for the 3 reasons that I talked about, but this is a more prudent profit recognition at the position that we are right now. I don't know if you'd like to add something to that, Susanne?

[Susanne Lithander]

No, I think you got it all.

[Tomas Carlsson, President & CEO]

Was that understandable, Stefan?

[Stefan E. Andersson, Analyst]

Well, not really. But yes, it was understandable. But I was trying to understand if that business had a loss in the quarter or it was just that it was way, way below what it should have been in profit to make up for the start of the year?

[Tomas Carlsson, President & CEO]

It was a loss in the quarter.

[Stefan E. Andersson, Analyst]

Okay.

[Tomas Carlsson, President & CEO]

Cumulative first 9-month it's a loss, and it was a loss also in quarter -- in the third quarter, where it should have been in -- if you look what -- if we look at what good looks like for asphalt business, third quarter should be good. That was not the case. Last year, they recognized actually a profit in the third quarter, that turned out to be a far too optimistic forecast. And that explains the big delta between Q3 in the industry, most of the -- in the delta in Q3.

[Stefan E. Andersson, Analyst]

And then maybe -- or maybe I should have known this. But the SEK 160 million you get in Q4 in repayment from Alfa, I guess, that's going to be distributed out in the -- on the different divisions, more or less in line with the number of employees? Or how should I look on those from an accounting perspective?

[Susanne Lithander]

Yes. Actually, it's not going to be distributed out completely. To some extent, it will. About SEK 120 million will -- we will book on other and elimination, and the rest will be distributed.

[Stefan E. Andersson, Analyst]

And then looking at the construction divisions, all 3 of them really, more or less, a very strong margin in the quarter. And I mean -- and I guess, you had a good Q2 as well. But just to take away any worries, is this the underlying development. There's no positive one-offs that we should know about. I mean, you haven't written anything about it, so I just wanted to double check.

[Susanne Lithander]

No. It's underlying margins in our project portfolio that makes up for this.

[Stefan E. Andersson, Analyst]

And then on the cement question, I guess, it's all going to sort out itself one way or another. But I guess from my perspective, I guess, it would be -- the end of this will be that most it's likely, it's more costly to buy cement than it has been historically. In that case, how are you thinking? Are you preparing yourselves and customers with such an impact in the long run or what's your thinking?

[Tomas Carlsson, President & CEO]

Well, there's probably a thousand scenarios on what will happen. But, I mean, it's not an unrealistic assessment. If you have a shortage of something or uncertainty that, that will have a price effect. Not -- perhaps not as -- that is perhaps not as important as -- if we have a significant shortage of amount, that will have a more material impact on the business. Think about it like this. For a house, cement and hence, concrete is important to actually make the house to build it. But it's a relatively small part of the cost of the building -- relatively small part of the cost of the building. But if we can't get it, the cost impact is devastating. So I'm not that concerned about the cost increases, but I think it's -- I know it's a fair assessment that you're having.

[Stefan E. Andersson, Analyst]

And then on the -- final question on the order intake. It's been very strong in the last couple of quarters, and this one was okay-ish, I guess, from my perspective at least. You're talking about the very strong demand, could you maybe elaborate a little bit on where you see that? Is it large orders or is there a big demand of smaller ones? Which areas are we talking about?

[Tomas Carlsson, President & CEO]

We're talking about early involvement projects that we are having lots of discussions with our customers, but we want to have them -- we want to get to a high degree of certainty with them before we announce. But we see a lots of requests for all types of projects in the quarter, and I hope that we can announce some of them pretty soon. We can -- I can give you an example, because we have communicated this. We have communicated building of prisons in Sweden, but we haven't communicated the full order value, because we're still working on that, and that's an example. Or we have communicated the extension of the harbor in Gothenburg, but we haven't communicated the order value, because that's still being developed. And so that's the way we think about it.

[Operator]

And the next question comes from the line of Erik Granström from Carnegie.

[Erik Granström, Financial Analyst]

I have a few questions as well. The first one is regarding the asphalt operations in Finland. Could you give us some sort of guidance as to the size of -- in terms of volumes how big this business is that is now being divested just as we get a sense on that. You've guided quite substantially on the results effect, but I was just looking at sort of the top line effects.

[Tomas Carlsson, President & CEO]

It's relatively small -- it's small. It's well short of SEK 1 billion.

[Erik Granström, Financial Analyst]

Well, well short of SEK 1 billion. All right. And then my other question is actually regarding your view of the balance sheet. You now report a net debt-to-EBITDA, which is negative, if we look at the corporate net debt situation or the adjusted one. At the same time, you are now running return on capital employed for Property Development, I believe, was it 8% for last year and now on a rolling 12-month basis it's around 7%, which is okay, but it's not that impressive given the very strong market. How do you view your opportunities in creating returns from investing in Property Development versus the fact that you are now quite overcapitalized, at least according to your own debt targets?

[Tomas Carlsson, President & CEO]

Well, we think it's a good thing that we have a strong balance sheet. That has not always been the case. We're happy with strong cash flow. And it's true, return on capital employed for PD is right now not stellar, and we're working on to improve that. But it takes some time, because once you have the projects, you have to end them and those are long processes. But we see good opportunities for Property Development going forward.

[Erik Granström, Financial Analyst]

Okay. But you -- so you do believe that the balance sheet is actually needed in order to increase investments in Property Development and that it shouldn't be, for example, redistributed to shareholders.

[Tomas Carlsson, President & CEO]

There's a lot of opportunities we can use the capital we have, and we will get back to that once we made the decision.

[Erik Granström, Financial Analyst]

That sounds fair enough.

[Operator]

And we have one more audio question from the line of Markus Henriksson from ABG.

[Markus Henriksson, Analyst]

Just a follow-up here on the asphalt operations as well. I just want to highlight you showed the SEK 116 million accumulated for Q1 to Q3, and on Page 26, you also mentioned EUR 73 million. Is that in the quarter, so then we have the figures to impact. Just want to.

[Tomas Carlsson, President & CEO]

Susanne?

[Susanne Lithander]

Yes, that is in the quarter.

[Markus Henriksson, Analyst]

Then a little bit on the leasing market. I saw that you leased up to PwC, for example, how is your overall feeling for Q4 and for your projects?

[Tomas Carlsson, President & CEO]

The organization is reporting lots of activity and lots of interest for -- to let office space.

[Markus Henriksson, Analyst]

Could you also comment something on the Bromma Blocks project? That one is getting closer to completion. Could you highlight something for that project?

[Tomas Carlsson, President & CEO]

Yes. There's still some way to go, but we're getting closer to completion. We're now getting close to 60% of the area let, and we have lots of interest in that project now. It's a rather large project. It tends to be office space for smaller companies, and they tend to make the decision on new office, not that long before they can move in.

[Operator]

And as there are no further audio questions, I will hand it back to the speakers.

[Susanne Lithander]

Okay. We have a couple of web questions, mainly from Simen Mortensen. The first one on the balance sheet. Will you use your balance sheet mostly on PD or M&A? Getting back to that question, what is most appealing, Susanne?I think we already had an answer to that question from Tomas.

[Tomas Carlsson, President & CEO]

I think -- I mean, we have the same opportunities to do it as other companies in our business. We'll get back to that once we've decided.

[Susanne Lithander]

And then another question. There are a lot of orders in residential, but do we see any trends in tendering for nonresidential for the office market?

[Tomas Carlsson, President & CEO]

Not that we really would like to comment.

[Susanne Lithander]

And then a final question on cement. In Norway, the cement prices have been hiking based on Heidelberg by communicating their investment needs. Have we seen any of the same arguments being used here for the cement price going up in order to support investment needs?

[Tomas Carlsson, President & CEO]

Not -- that has not been a big issue. There are other more pressing issues that we're dealing with right now.

[Susanne Lithander]

That's it.

[Tomas Carlsson, President & CEO]

Thank you. No further questions?

[Operator]

There are no further audio questions now.

[Tomas Carlsson, President & CEO]

If not, then thank you for listening in. Remember, this was a great quarter. We had improving earnings from all our contracting business, both earnings and margin. We had 3 profit recognition from 3 projects in PD. A good demand in all markets, in all countries and all business areas.Industry fundamentally is stable, but negatively impacted by Asphalt Finland and then a good cash flow and a net cash position for the group at the end of the quarter. So thank you all, and see you around. Thank you.

[Susanne Lithander]

Thank you.