Sweco AB (publ)

STO:SWEC B

Earnings Call Transcript 2018-Q1

[Åsa Bergman, President & CEO]

Welcome, everyone. It's great to be here, and I'm honored and proud to take on the role as President and CEO of Sweco.And for you who doesn't know me, I've been in the company for 27 years, and I've had basically all management positions within the company. The last one was as CEO of Sweco Sweden. And during that time, we doubled the number of employees, and we doubled the revenue. And Sweco has really a strong track record, and we will execute on the strategy going forward. And my leadership style is that I like to be in a strong team. I really like to work and build strong relationships with customer and with employees.And with that said, I will also take my time to really understand the different countries and the different circumstances connected to the market, understand the customer and the project in all countries. And I will work closely with the executive team to really understand and prioritize the strategy going forward.And with that said, to the main topic for today. It's a positive start. Once again we see a first quarter of solid growth, 4% adjusted for the calendar, related to the Easter. And I would like to highlight the Netherlands. The Netherlands is contributing month-by-month positively, and they are contributing this quarter with an EBITA level of 8.1, which is a record for them and very good. Also, Western Europe and Central Europe is contributing with a stellar growth of 20%. But also worth mention is that Sweden and Denmark are contributing this first quarter. And the growth is mainly driven by new colleagues joining us and positive price development. And I think it's important to emphasize that this is actually 2 areas that we have been working on for a time now and focus on, and we can now see the -- start to see the result of that work.And of course, there is areas that -- of improvement. Norway and Finland had a weak start, and that is mainly due to in Finland project in a certain division. We have made changes, and we have implemented an action plan. So we will see improvements going forward. And Norway is also the same. It's one division, energy, where we have -- we made changes, and we are currently doing changes to see improvements.And it's also -- I'm very glad to welcome 280 new employees into the company. We acquired Årstiderne Architects the first quarter, one of Denmark's leading architectural firms. And with that, we established the first combined architectural and technical offering in Denmark, which is according to our strategy an important step. We also acquired BML, a German engineering company in the Frankfurt area, and also Royal HaskoningDHV, which strengthened our position on the Belgian market. So overall, good markets with a positive outlook.And now we will look at some projects won during Q1. And I would like to start to state that at Sweco every project is important. And some of you have heard it before, but big or small, this is actually how we are supporting and can be able to support our customer independent on what kind of project size there is. And it's also because of the core of our project portfolio is small or midsized projects, we can secure that we have high-billing ratio in our divisions and units over time, and it also makes us less vulnerable when it comes to market fluctuation.With that said, I will show you some big projects that we won this quarter. First, the Swedish Transport Administration is -- have chosen Sweco to plan and design the double track -- upgrade of the double-track railway between Ängelholm and Helsingborg in Sweden. We have been chosen to work in Germany with -- as adviser when planning a new -- the new A-Nord DC connection power cable in Germany. That is a large-scale project where we -- that is part of the shift to renewable energy in Germany. And we have also been chosen to plan and design 4 new hospitals in Finland, Belgium, Germany and Norway. And we won those because of our combined architectural expertise and the technical expertise and the in-depth knowledge of complex health care operations. So these projects.And with that, I hand over to Jonas.

[Jonas Dahlberg, Chief Financial Officer]

Thank you. So there are a lot of positive things to be said about the quarter, most notably we're back to growth, and it's solid and sustainable organic growth as we see it.Just starting with the revenue numbers. We're now at 4.1 -- sorry, SEK 4.6 billion revenues net sales in the quarter, and we're rolling at SEK 17.1 billion. So it's the first time we're above the SEK 17 billion mark on a rolling 12-month basis.If you look at the sales, that's an increase of 5%, of which 2 percentage points are acquired, 2% is currency effect and 1% is organic. Now 1% may sound a little bit weak, but you need to understand the Easter and the -- the effect of the Easter holiday not being in Q2, as it was last year, but in Q1. And that has an impact of 16 available working hours and a revenue impact of SEK 113 million and also on profit.So it's -- adjusted for calendar effect, we have an organic growth which is actually at 4%, which is strong. About half of that increase is from increased capacity, more staff joining us. We're successfully recruiting, as we were positive net recruiting. 200 people have joined us since the turn of the year. And if you compare it to last year, it's more than 400 in the same period of time. And the other half comes from improved pricing. So roughly half-half.And I'd like to spend a bit more time on organic growth so you understand the dynamics of this. And I'd like to go back in history. So if you look at the organic growth we had '17, it looked weak. That's true. But what you need to understand about organic growth '17 was the actions we did to restructure Denmark and Netherlands following the Grontmij acquisition. We downsized both units with about 10%, focusing on more profitable business, focusing on core business aligned with Sweco strategy. And that alone has a significant impact on organic growth during '17.Also, it is quite clear with the strong Sweco momentum we had ahead of the acquisition, we moved into integration in '15 and '16 focusing on capturing the synergies out of the Grontmij-Sweco combination. That was very successful, as you know, but it also meant that we had less of a focus on recruiting and growing. Now this was a little bit of a delay. The integration was complete more than 1 year back, but it takes time to build this momentum. The organic growth you see now, the net recruiting you see now is due to efforts we started already 6 to 12 months back.So we're in a solid and positive organic growth territory now. Also important to say this is backed up by strong increase in order backlog. We have a double-digit increase of order backlog in, essentially, all our markets. So it's also backed up by the customers.In addition, we're gaining -- acquired momentum, acquired growth momentum. Åsa mentioned the 3 acquisitions we've done. This is the types of acquisitions you can expect from us going forward. This is building on the footprint we now have in Northern Europe. We are top 3 in 6 out of our 8 core markets, and we like to be in the market-leading position. Still 2/3 of our revenues are still in the sort of Sweco classic countries. We have less than 1% market share in Europe. In the non-Sweco classic countries, no one has more than 5% market share. So the strategy is clear, to build market-leading positions in the markets where we are present. We see an enormous opportunity. We will continue to grow both organically and with these types of bolt-on acquisitions.These 3 acquisitions will contribute with some SEK 340 million in revenues on full year basis, about SEK 40 million in EBITA, looking at the historical performance. In the quarter, they contributed with SEK 36 million and about SEK 2 million in EBITA. Now not maybe that large acquisitions, but this is what we're aiming at going forward to build on the footprint we have.Moving over to the profit side of things. EBITA, delivering SEK 409 million in EBITA at an 8.8% margin. That is impacted by a significant calendar effect, as I mentioned, SEK 113 million. If we adjust for the calendar also on business area level, we see significant improvement in 5 out of our 7 business areas.Starting from the top. Sweden is improving with SEK 19 million due to improved pricing and also due to the growth of Sweden. Looking at Denmark. There is a matter of billing ratio and fees contributing positively. Netherlands, same story, billing ratio, fees, but also lower overhead costs. Western Europe and Central Europe, stellar organic growth, about 20%, most notably the U.K. growing about 20% organically. So we don't see any Brexit effect there.So very positive. The negatives we have in the quarter are about Norway. It's a continuation of what we saw in Q4. It's the energy division, particular the Trondheim office in the energy division. So it's isolated. And then we have some project write-downs in our structural design business in Finland, and that is -- has a negative impact on the quarter.Moving on to cash flow. Solid operating cash flow. A little bit less earnings than last year. Higher taxes paid, but we're not tieing up as much working capital, essentially more or less the same operating cash flow as last year.What I would like to do is spend a little bit more time on working capital. This is a bit of on educational nature but to preempt any potential concerns there may be on working capital. We have a seasonality in working capital, which has an impact on cash flow. Typically, we build working capital throughout the year, and then we have a cash release at the end of year, and this is what we see also this year. This is very normal. So that is of a temporary nature. There is one more effect. As you can see from this chart, the line represents historical averages, and the bars are the last quarters. We've been under the averages when it comes to working capital. Since Q3, we're slightly above in working capital.This effect is mainly about Sweden. It is mainly about change in ERP system were made. And since we haven't fully made all processes operational yet, the invoicing is slightly slower than what it used to be. Very important, this is -- there is nothing structural here. This is operational, and we expect to solve this within the next quarters. We're obviously working on it, but we're not concerned, and we want to take it step by step and we will succeed.So moving over to net debt and financial position. Net debt in absolute terms is increasing partly due to the build up in working capital, but also due to acquisitions and share buybacks. And then there's a currency translation effect here of euro-denominated debt. This euro-denominated debt is due to acquisitions in assets with euro as the working currency. So it's a natural hedge, and this is -- so to some extent, this is a good thing. Net debt to EBITDA, 1.2x, a solid position. We are ready to make acquisitions if needed.And with that, I hand it back to Åsa. Please, take us through the markets.

[Åsa Bergman, President & CEO]

Okay. Thank you. Overall, a good market situation. I will not walk through all markets in detail, but I think we should start where we actually stand right now in Sweden. It's a good and stable market. We see good demand of all our services. And the general construction market in Sweden, the real estate market is strong. And as you all know, the housing -- the residential housing market in Sweden is slowing down, but we don't see an effect of that in our result. And the order backlog and the demand for our services in that area is still good. And it's also important to emphasize that we have not that huge volume towards that market if we look at Sweco. It's about 5% direct and indirect towards the Swedish residential market. And as I said, the other segments are strong, and the demand for the services is good. So I'm not that concerned. But of course, we look at that market closely and follow what is happening.The infrastructure market in Sweden is strong, backed up of the public investments, as you know. Also, the water and energy segment is strong. The industry is developing well. We could actually say that, that market is strong. The power transmission market is also strong. It's energy generation that is still challenging. So that is Sweden.And going to Norway. That is -- that market is good and stable, but there is some regional differences. And I would say that the greater Oslo area is strong, and there is big demand in all our areas. There is a bit of a slowdown when it comes to residential and housing in the Oslo area. The northern part of Oslo is a bit more challenging but still okay. And the southern and the western part of Norway is -- they are experienced a bit of a challenge, but it's developing in a positive way. So Norway overall, good and stable.And then I actually would like to jump to U.K. And as Jonas mentioned, the demand for services in U.K. is good, and also we are growing in U.K. So the market is good, and the demand for our services is good. What we see is that it differs a bit between different sectors, and we could see a bit of uncertainty connected to the question around how the market will develop connected to Brexit. But we don't see an effect connected to Sweden in that sense.Yes, so in overall, good market with a positive outlook all over our country.And as I started with, the strategy for Sweco is set, and the direction is there. And I fully support it as I've been part of the company for a very long time and been part of the executive team that has set this strategy. We will continue to execute on this going forward, and it's about taking on market-leading position in all our countries step by step. But as I said -- and that we will do by relentlessly focusing on our customers, ensure that we actually in every situation are able to deliver towards their demands, whatever expertise they need, and to ensure, which is a very important question connected to the challenging question around architects and engineers in our countries, to always be the first choice for potential employees, to work to attract the best people. So strengthen customer relationships and being the first choice for the best people in every country is how we're actually going to do that. And we're going to grow organically, as we have shown in Q1, with continue to recruit and to do acquisitions.And -- but again, I have been in this role for about 2 weeks. So I need some time to really understand the different markets. I need to understand the customer and the project. But as I said in the beginning, I've been in this company for 27 years, so I know the market, and I know the business in -- that we have. So from that, we will start to work going forward.And to summarize, positive start, solid organic growth, 4%, adjusted for the calendar, driven by improved pricing and recruitment, new colleagues joining us, and 280 new colleagues acquired into Sweco, 3 important acquisitions and an overall positive market and a positive outlook going forward.So with that, we open up for questions. Viktor?

[Viktor Lindeberg, Financial Analyst]

Viktor Lindeberg from Carnegie. Starting with a question on organic growth. It's improved sequentially from the trends we saw in Q4. Can you comment if there is an element of project completions or sub-consultants ramping up in this quarter and how that may have affected the growth rates?

[Jonas Dahlberg, Chief Financial Officer]

Yes, there's a positive contribution of about 1% on -- from sub-consultants in the quarter, but there is also a negative 1% of increased absence mainly due to holidays and vacation. But there was also increased sick leave in this quarter due to a pretty bad season of influenza that has struck us. So those 2 evens out. So the core organic growth drivers, being pricing and [ SGD ] growth, that's 4%.

[Viktor Lindeberg, Financial Analyst]

Okay. That's good. You mentioned some project adjustments, positive ones, within Sweden this quarter. Is it possible to quantify that? Is it material or...

[Jonas Dahlberg, Chief Financial Officer]

It's single-digit millions.

[Viktor Lindeberg, Financial Analyst]

Single-digits, okay. And then one final one from me before I hand over the mic. We know that there is inflation in salaries and it's hard to recruit. But looking at indirect costs for you, such as rental agreements, I think at least in Sweden, which is your turf also, you've benefited from good rental agreements here in Stockholm, I think, in the past couple of years. But I think those rental agreements are soon up for renegotiation. Is that something we should think about? And how might this affect the cost base in Sweden as such?

[Åsa Bergman, President & CEO]

If I start with the salary part, I think it's important that -- to say that the focus for us is to be very attractive. And we work with the salaries to develop salaries towards the market. We don't want to rush into a salary raise on the market because that's not sustainable. When it comes to the changes of our rental agreements, they will not come at the same time. So it will be step by step. And as we always do, we do -- try to do the best negotiations we can. So I shouldn't worry that much around that.

[Viktor Lindeberg, Financial Analyst]

So it's not going to be a big step change any time soon in that sense?

[Åsa Bergman, President & CEO]

No.

[Jonas Dahlberg, Chief Financial Officer]

No, for the head office in [ Laderbage ], where we have 2,000 staff, that's several years in the future.

[Unknown Analyst]

[ Tobias Aurelius ] from [indiscernible]. How about the pricing on acquisitions, the multiples you paid? Can you elaborate something there?

[Jonas Dahlberg, Chief Financial Officer]

We've looked into this, and over time, we don't see any clear trend in increased multiples. I think for larger targets, given the market situation, people are talking about higher multiples. For the small bolt-on that we showed here, we don't see any major increase or no increase at all. Then the multiples are quite [ individual for the LATAM ]. What our focus is to see that we have sustainable value creation coming out of that specific target, and that's how we think about the valuations.

[Ola Soedermark, Equity Research Analyst]

Ola Soedermark, Kepler Cheuvreux. It was a quite impressive development in the Netherlands. What should we see in the future there and what should we calculate? If it's 8% margin, what's the improvement potential?

[Åsa Bergman, President & CEO]

We work with the Netherlands. There is good market, and we work step by step by securing that we have everything in place. All from the right people in place, the right managers, work towards the market to really ensure that we have good relationships with all customers. And it's more of taking a step-by-step approach to secure a good improvement. So...

[Ola Soedermark, Equity Research Analyst]

It sounds a lot of potential.

[Jonas Dahlberg, Chief Financial Officer]

Long term, we don't see any structural difference in profit potential between our market. I would like to emphasize the word long term because it's driven by the operations we have and also the market position. And it's only in Sweden we have such a strong market position and the long track record of operations. But all the time, we don't see any reasons to be -- there that should be a difference. Now when it comes to Netherlands, yes, this is a good quarter. We delivered a lot in the Netherlands. But I wouldn't extrapolate 8% because it may be a bumpy ride. We saw this with Denmark last year, who developed positively, and then they had a bad quarter. And that's the nature of this type of turnaround. But we're patient. We think the trend is definitely in the right direction. So we're very positive about Netherlands in long term.

[Åsa Bergman, President & CEO]

And again, it's important for us to work step by step with the right activities to ensure our market position going forward.

[Erik Elander, Research Analyst]

Erik Elander from Handelsbanken. So first of all, I was wondering, the number of employees at the parent company grew quite much year-over-year and also quarter-to-quarter. Why was that?

[Jonas Dahlberg, Chief Financial Officer]

It's because we have moved some activities from subsidiaries into the parent company. I can assure you we're not growing the overhead. It's basically an internal reorganization of some activities.

[Erik Elander, Research Analyst]

And also, you had 2% volume growth. Where are these people coming from? Is it the universities? Is it clients? Is it competitors? Or how should we see the recruitment that you have done during this quarter?

[Åsa Bergman, President & CEO]

It's from all over. The basics for how we actually recruit is that we need experienced and senior experts at the same time as we need young engineers and architects. So it's a spread, I would say. And so, of course, the youngsters is often coming from the universities, and the others could come from colleagues in the market or from our customer side and -- yes. So it's a spread.

[Erik Elander, Research Analyst]

Okay. And also in terms of net recruitment, is it mostly good development in gross recruitment for you? Or is it also a combination of lower personnel turnover?

[Åsa Bergman, President & CEO]

It's mainly driven by -- and now, again, I've been in this role like 2 weeks. So when I speak, I speak mainly about Sweden. But in that sense, Sweden is the biggest unit. We have grown fast, and we have during the last period of time really focused on recruiting to ensure that we have a capability of recruiting the right people. So in that sense, I'm very positive. Still there is a demand when it comes to -- but everyone wants to recruit from us. So we are attractive. We have the capability, but we also are good -- a strong source in the market to recruit from. And we work hard with trying to really retain people so they really want to stay and develop in Sweco. So we work with both the recruitment and the retain of people. But still, the personnel turnover is, in my view, too high. So we work with that also.

[Jonas Dahlberg, Chief Financial Officer]

Just to further elaborate on this. If you go back to 2017 and look at what we did, we basically recruited as many people as we wanted, but we have an increased turnover. And that's -- obviously, we want to keep our people, and we're working on that. But also what we're doing now is we have rolled up our sleeves to work even harder on the recruiting. So it's a little bit too early to tell about the turnover, but we're definitely increasing the recruiting, and that goes for all countries.

[Erik Elander, Research Analyst]

Okay. And just the last question then regarding Norway and Finland. Norway had decreased a bit year-over-year even when you took away the calendar effect. How should we look at Norway and Finland going into Q2?

[Jonas Dahlberg, Chief Financial Officer]

Well, I think Norway and Finland are 2 countries which has solid track record. They have some issues in particular parts of the business. I think we can't say that it will be solved immediately in the next quarter. So a gradual improvement, and we're working systematically with improving the performance in the specific units where we have issues.

[Johan Dahl, Analyst]

Johan Dahl at SEB. I was just wondering what is the sequence of events here, having assumed the CEO position. Will you make some sort of strategic review in the group currently to be presented later on? Or is it most of it already set? And I was also wanted to just pick your brain on what you expected your sort of long-term footprint on this CEO role.

[Åsa Bergman, President & CEO]

As I said before, the strategy is set by the group executive team, and I've been part of that strategy. And of course, I'm here connected to that, so that is one part of the answer, that is the strategy and the direction that we have. I believe in it. And I have a strong view of what to focus on. As I've been in the company, I have been responsible for Sweden. So I have the recipe in my hands. But I think it's too early for me to really go into prioritization or -- because I don't know and I don't have the deep understanding of each country. That's why I'm quiet when you asked about Norway and Finland and Jonas is talking. So yes, going forward I will be more specific in detail. But to be clear, again, the strategy is something that I believe in, and I think it's right for Sweco, and you will not see any big changes.

[Johan Dahl, Analyst]

Okay. Secondly, just on the billing ratio. I'm not exactly sure how you calculate that. But can you just comment, Jonas, how the flu season, Easter, [ Great Sabbath ] impacted the billing ratio which you present? I'm not sure whether that's included or not.

[Jonas Dahlberg, Chief Financial Officer]

No. It doesn't impact it because the billing ratio is the number of hours billed to the client divided by the number of hours present at the workplace. So if you're sick, you're both out of the numerator and denominator in that equation.

[Johan Dahl, Analyst]

Okay. And were you happy with it in Q1, with the billing ratio?

[Jonas Dahlberg, Chief Financial Officer]

It's essentially stable. There is more potential for sure. I mean, in the benchmark, it's good, but there is more potential.

[Johan Dahl, Analyst]

Okay. And Jonas, you talked about pricing being sort of an effect of events that you carried out 12 months ago. Can you sort of describe where you are in this realizing those actions that you took some time ago? Are we still in the early phase? Or are we sort of -- is this peaking now? Do you have any view there?

[Jonas Dahlberg, Chief Financial Officer]

My comment was mainly on recruiting and related to the folks we have on the Grontmij acquisition. Now since roughly 1 year back or 6 to 12 months back, we started to intensify the work on recruiting across the group, and that's now paying off. In terms of pricing, that's continuous effort, and we need to try to harvest the opportunities of a good market in pricing. And we're working -- I would say it's a differentiated approach by business area. Some business areas are really focusing on pricing, and some have other priorities.

[Johan Dahl, Analyst]

Would you say that all the new geographies that came with the Grontmij acquisition are they now ready? So have they earned their right to grow by acquisitions? Or are they still geographies that you believe sort of need to prove themselves?

[Jonas Dahlberg, Chief Financial Officer]

Most of them are quite ready, not in all areas, but we're looking at acquisitions in our entire footprint.

[Johan Dahl, Analyst]

And finally, I'll just -- you talked about the slowing market residential Sweden. Is that a sort of a top-down view that you have? Or where in your business do you actually see it? And can you also sort of elaborate a little bit, especially on architects? What's the status there now towards the [ other quarter of ] the development?

[Åsa Bergman, President & CEO]

I would say that when I talk about the slowdown in the residential housing market, it's the same voice that you hear from the outside. So when we look inside Sweco, if we look at the performance and the billing ratio of our architects and the demand from those services, we don't see any shift, or we don't see any decreasing levels or something like. So no effects inside Sweco. And we also have -- I think it's important to -- when we're talking about the architects, we're talking about building service systems. We're talking about structural engineering and some other small areas. I think it's important to -- if you compare us with others, to understand that we have the real estate area. We have the hospitals. We have the schools. We have so many other segments that is strong around this. So even if we see a slowdown, we are able to use our architects in different areas now.

[Jonas Dahlberg, Chief Financial Officer]

I think this is quite important. I mean, if you're an architectural boutique focusing on luxury residential homes in Stockholm, you probably have problems at this point. But that's not Sweco. We have a broad base of customers and markets that we're exposed to, and residential homes is a minor part of what we're doing. And in a broader context, I mean, we don't see a synchronized slow down of the economy. And actually what we see -- mainland Europe -- European economy is quite strong. And combined with a weak krona, the export industry is doing quite well, and we see strong demand there. So we're able to shift.

[Unknown Analyst]

[indiscernible] Capital. I'm interested to know a little bit more about how the [indiscernible] on the public sector compared to the private sector overall and in main countries.

[Jonas Dahlberg, Chief Financial Officer]

So if I start, the exposure is basically 60% public and 50% private sector. That's the exposure of Sweco.

[Åsa Bergman, President & CEO]

In an overall perspective. And if you ask about the biggest market, as I can talk about Sweden more in depth, the public sector is -- we're exposed more to the public sector than the private sector. It's around 60-something, above 60.

[Viktor Lindeberg, Financial Analyst]

Viktor from Carnegie. Two questions, I think, for Jonas. On the financial net, minus SEK 4 million in the quarter, how much benefit or positives did you have from, I guess, hedge revaluations in this number, so we understand what is the underlying?

[Jonas Dahlberg, Chief Financial Officer]

There's a currency effect of about SEK 6 million. It's not only related to hedges. There are some other effects, but that's currency revaluation effects.

[Viktor Lindeberg, Financial Analyst]

Okay. That was easy. Then a bit more complex. IFRS 16 they are kicking in one year from now. Can you elaborate on how this will affect the balance sheet of yours and maybe, more importantly, the net debt and how we should think about that? Or how you think about that from a reporting perspective given that you have quite substantial lease agreements, rental agreements?

[Jonas Dahlberg, Chief Financial Officer]

Yes, this is an interesting topic. We're working hard on it. We can go in depth at this, but I think everyone has to reschedule their calendar. I think -- a couple different comments on this. It will have a quite substantial impact on what the financial statements will look like. In reality, nothing has happened. This is very important. The numbers will look different. In reality, nothing has happened. You will see an impact on the balance sheet for sure. What about net debt? Well, it depends on how you define net debt. It depends on how our financing banks thinks about net debt. I don't see it as being part of net debt. So I think this entire area will be explored jointly with corporates and financial market systems throughout the year. The important thing is nothing has happened in real life. It happen in the accounts.

[Viktor Lindeberg, Financial Analyst]

Okay. But will it potentially affect how your -- maybe cash flow metrics will become more important given that accounting will look a bit more peculiar. Would you consider looking more into providing more details on the cash flow statements? For instance, it's very condensed today? It's a very hard readout?

[Jonas Dahlberg, Chief Financial Officer]

Yes, I think this is what will happen for everyone. We will need to provide more disclosures so we can get a good cash flow proxy of the earnings, and I anticipate you will see a couple more lines in the P&L for most companies because there will be some more artificial effects from IFRS 16 in the P&L, yes.

[Viktor Lindeberg, Financial Analyst]

Okay. And final question then from my side, going back to the operations and the fundamentals. Looking at competition in both Norway and in Sweden, I think in Sweden there has been an intensified price pressure on some infrastructure tenders. And also in Norway, I wouldn't say that you are suffering given that you have healthy margins. But we know that both Rejler, ÅF, Multiconsult and more, they are suffering from quite poor market it seems, even though demand trends are quite different. Can you just comment a bit on Norway, how you think about that? What is the main reason for why market players don't make more money or more margins? And also then on Sweden on infrastructure, if that is something that has changed?

[Åsa Bergman, President & CEO]

I can start in Sweden.

[Jonas Dahlberg, Chief Financial Officer]

And then I'll take Norway.

[Åsa Bergman, President & CEO]

And then you take Norway. If I go back to the focus we have on pricing, parts of that program and parts of what we are focusing on is to ensure that we make the right choices on the market. And I think that is one of the most important things, that we actually choose to bid or we choose to -- set the right prices connected to our services. The same view as when it comes to salaries. Don't -- we don't put in too low prices because we're going to live with those projects, especially the big ones, in the long run. So that is my view. It's -- and it's -- in this kind of decentralized organization, that is a hard one. It needs -- we need strong management to support that kind of choices. So I would say, as yourself -- you said it, you don't see that in our margins, and that is connected to a strategy that we have that we don't go in too low. We rather choose to work with something else then, or we try to have a setup in the project that makes us efficient and to ensure that we use resources from our colleagues in the other countries to have good focus on the price levels and the margins in the projects.

[Viktor Lindeberg, Financial Analyst]

Would you say that the win ratio has dropped significantly now, let's say, the past 12 months?

[Åsa Bergman, President & CEO]

No. No. We are better at doing the right choice on the market. And to Norway, Jonas needs to -- Norway, I can't...

[Jonas Dahlberg, Chief Financial Officer]

Norway, I mean, it's true. You see several companies who have reported problems: Multiconsult, NCC, ÅF acquisition of [ Braninsan ] looking at [ cases ] we have had. I don't really see a pattern on that. I see a series of self-inflicted wounds. Multiconsult, they talk about a failed ERP project. NCC has one particular project -- [ common ] project. And ÅF acquired [ Braninsan ], didn't work out perfectly. And we had the situation the energy division in Trondheim.No clear pattern. As I say, the market is good. If anything, what Norway as a country has to adjust to is obviously that the heydays are over. It's more becoming a normal country. It's going from a superstrong market to a good market. And with that, you need to adjust. I don't think that that's what we're seeing. I think we're seeing a number of individual events, but we'll see going forward.

[Unknown Analyst]

Fred [ Maloof ], AFA Insurance. I have an easy question. I'm curious about the acquisition of [ Orseedenal ]. It's technical and architectural, and I noticed that you made 4 successful deals with hospitals last year or this quarter or whatever. Is [ Orseedenal ] and this type of acquisition, is this a strategic new way to go for you? Is this important? Or is this just another bolt-on acquisition?

[Åsa Bergman, President & CEO]

It's not a new strategy. It's more of in line with the strategy that we have to ensure that we could -- we work towards a market -- as a market -- towards a market-leading position in each country. And if we have the opportunity and we see the [ try ] to acquire an architectural firm in a specific country and we got the opportunity, and with [ Orseedenal ] that is -- it's very good because the combination of the architects and the engineers is actually part of our success. So -- and in that combination, we can compete in a very strong way.

[Jonas Dahlberg, Chief Financial Officer]

Then you need to remember that Sweco was founded in 1968 as an architecture company by Johan Nordström and his colleagues, and it used to be an architecture firm for a long period of time and then expanded into engineering. So architecture is in our DNA. We truly believe in the combination of architecture and engineering, and we want to have that offering in all our markets, and that is a competitive advantage.Well, if there are no further questions...

[Åsa Bergman, President & CEO]

Thank you.

[Jonas Dahlberg, Chief Financial Officer]

Thank you.