{"segments": [{"speakerId": "S1", "sentences": [{"start": 0, "end": 5, "text": "Welcome to this webcast presentation of Etteplan's Q3 results for 2024."}, {"start": 5, "end": 6, "text": "I'm Juha Näkki."}, {"start": 6, "end": 7, "text": "I'm the president and CEO."}, {"start": 7, "end": 16, "text": "And after the presentation, there will be a Q&A session where you will be able to ask questions of myself and also our CFO, Helena Kukkonen."}, {"start": 18, "end": 20, "text": "Looking at the contents of the presentation."}, {"start": 20, "end": 23, "text": "We'll go through in a similar manner as before."}, {"start": 23, "end": 25, "text": "So we'll look at the highlights of the quarter.<br /><br />"}, {"start": 26, "end": 32, "text": "Operating environment, financial development, looking at how we did against our targets."}, {"start": 32, "end": 38, "text": "And then conclude with the financial guidance for the year and the Q&A session.<br /><br />"}, {"start": 40, "end": 45, "text": "But starting with the highlights of the quarter, or lowlights if you would like to call them that."}, {"start": 45, "end": 49, "text": "This was a very difficult quarter for us."}, {"start": 49, "end": 63, "text": "We had difficulty estimating the market demand, and as a result, we had to lower our guidance for this quarter twice, which was not good."}, {"start": 63, "end": 68, "text": "And it was very, very difficult to really see what was happening."}, {"start": 68, "end": 74, "text": "Overall, the market conditions were very difficult and extremely challenging to predict."}, {"start": 74, "end": 82, "text": "On a positive note, we did manage to retain the same level of revenue as we saw last year."}, {"start": 82, "end": 95, "text": "This was, of course, helped by acquisitions, but still in the difficult situation, we were able to get to the same levels which we think is still an okay achievement."}, {"start": 95, "end": 99, "text": "We also continued our investments into our business."}, {"start": 100, "end": 102, "text": "Despite the fact that the market is difficult."}, {"start": 102, "end": 106, "text": "We do need to continue to develop and renew our service offering."}, {"start": 106, "end": 111, "text": "For example, related to AI, we did win new business again."}, {"start": 111, "end": 115, "text": "And there seems to be a good demand for these types of services."}, {"start": 115, "end": 120, "text": "And we are making continuous progress in this front, also outside our market areas."}, {"start": 120, "end": 146, "text": "China was developing quite favorably in Q3, not necessarily the Chinese market as a whole, but the trend of purchasing services or using partners was developing favorably, thus increasing the need for different kinds of services, which drove the demand during the quarter."}, {"start": 146, "end": 153, "text": "And also, we managed to significantly increase the number of hours that we sold to the Chinese local market."}, {"start": 154, "end": 157, "text": "Then on the negative side, of course, the market was difficult."}, {"start": 157, "end": 168, "text": "The market situation was very challenging and even more challenging than we had anticipated, which led to the two profit warnings that we had to issue, making it a very unfortunate situation."}, {"start": 168, "end": 176, "text": "Of course, due to the difficult situation, our efficiency was not as good as we had hoped and would have liked."}, {"start": 176, "end": 186, "text": "So of course, we needed to continue with various adaptation measures to bring our organization and operations in balance with the current demand."}, {"start": 186, "end": 199, "text": "And this, of course, had an impact on our business, and it also had an impact on our finances, as there were significant costs related to these activities."}, {"start": 200, "end": 208, "text": "We also are seeing that the market is not going to be developing favorably even during the rest of the year."}, {"start": 208, "end": 217, "text": "Unfortunately, with the current turbulence in the world, the sort of geopolitical tension that is increasing all the time."}, {"start": 217, "end": 224, "text": "We do not believe that the market will develop positively for the rest of the year."}, {"start": 224, "end": 227, "text": "And of course, we are still hopeful for next year."}, {"start": 227, "end": 233, "text": "But during this year, we don't expect to see any positive development."}, {"start": 234, "end": 237, "text": "And again, I said the guidance was lowered."}, {"start": 239, "end": 242, "text": "If you look a bit more into the operating environment."}, {"start": 242, "end": 262, "text": "So, of course, the conflict in the Middle East and the escalation of the crisis have increased geopolitical tensions and created even more uncertainty in the market, which is then affecting our customers' decision-making and the markets overall."}, {"start": 263, "end": 277, "text": "Um, we have been discussing the interest rates earlier, and we had been hoping that with the decreasing interest rates, our customers would have the courage to invest more into their businesses going forward."}, {"start": 277, "end": 279, "text": "But, unfortunately, this has not happened."}, {"start": 279, "end": 288, "text": "Even if the interest rates have started to decline, the pace of decline is slower than expected."}, {"start": 288, "end": 296, "text": "And as of yet, our customers do not have the confidence to really start investments at the top for the time being."}, {"start": 297, "end": 303, "text": "And also, if we look at the order backlogs of our customers."}, {"start": 303, "end": 309, "text": "So, our customers are not receiving as many orders as they are delivering."}, {"start": 309, "end": 315, "text": "So the order backlogs are declining for the majority of our customers today."}, {"start": 315, "end": 321, "text": "And that is also having an impact on their willingness to invest going forward."}, {"start": 321, "end": 327, "text": "So right now, there's very little activity on the investment front in many industries."}, {"start": 327, "end": 331, "text": "The positive industry today and at this time is the defense sector."}, {"start": 331, "end": 334, "text": "And there we still see very good demand."}, {"start": 334, "end": 340, "text": "And there is also an increase, or let's say, opportunities to expand our business."}, {"start": 340, "end": 343, "text": "And we have been able to capitalize on that opportunity."}, {"start": 343, "end": 351, "text": "But unfortunately, the volumes are not big enough to compensate for the sort of organic loss on the other side."}, {"start": 352, "end": 357, "text": "We have been talking about positive and good development in the energy sector."}, {"start": 357, "end": 361, "text": "This continues, but not as strong as it has been."}, {"start": 361, "end": 370, "text": "Green transition, which had previously shown positive development, is also somewhat on hold now."}, {"start": 370, "end": 372, "text": "So sustainability continues to be important."}, {"start": 372, "end": 378, "text": "But the investments related to these areas are a little bit on hold at the moment as well."}, {"start": 378, "end": 384, "text": "So, there is very little positive sentiment in the market currently."}, {"start": 385, "end": 400, "text": "If we then look at the country-level aspects, or different operating environments or markets where we operate, in Europe it has been particularly difficult and the market demand has declined during the third quarter."}, {"start": 400, "end": 410, "text": "Finland and Germany being the most difficult markets for us, maybe due to the industrial structure of these two countries."}, {"start": 410, "end": 421, "text": "As I mentioned earlier, China has been the one market where we have seen clearly positive development, not necessarily driven by the market demand itself."}, {"start": 421, "end": 430, "text": "There are still relatively low investment levels from Western companies operating in China, which has been our traditional customer base."}, {"start": 430, "end": 442, "text": "But now the trend of purchasing services is continuing and is developing favorably, and we are seeing a lot more Chinese customers also starting to buy more services."}, {"start": 442, "end": 446, "text": "And this is helping us to grow our business in China."}, {"start": 446, "end": 452, "text": "And as I said, we were able to substantially increase the hours we sold in the Chinese market during the quarter."}, {"start": 455, "end": 457, "text": "We then took a closer look at the figures."}, {"start": 457, "end": 459, "text": "As I mentioned, the revenue remained unchanged."}, {"start": 459, "end": 462, "text": "We saw the biggest drop in engineering solutions."}, {"start": 462, "end": 469, "text": "The other two were growing a little, but not enough to make the whole company grow."}, {"start": 469, "end": 472, "text": "So we were on par with last year."}, {"start": 472, "end": 473, "text": "If we look at the EBITA."}, {"start": 473, "end": 487, "text": "There was, of course, a significant drop, the biggest being in engineering solutions; all service areas were dropping and significant costs affected the results in this quarter."}, {"start": 487, "end": 490, "text": "I'll return to that later on in the presentation."}, {"start": 492, "end": 503, "text": "If we look at the revenue and personnel split, Engineering Solutions was at 52%, software and embedded solutions at 27%, and technical communication solutions at 20% of our revenues."}, {"start": 504, "end": 506, "text": "Revenue by areas: Finland 47%."}, {"start": 506, "end": 508, "text": "Scandinavia 26%."}, {"start": 508, "end": 516, "text": "So, increasing compared to last year mainly due to the strong acquisition that we did at the beginning of the year in Denmark."}, {"start": 516, "end": 521, "text": "Central Europe 23% and then China 4%."}, {"start": 521, "end": 524, "text": "Personnel by areas: Finland 50%."}, {"start": 524, "end": 525, "text": "Scandinavia 19%."}, {"start": 525, "end": 528, "text": "Central Europe 21% and China 10%."}, {"start": 530, "end": 533, "text": "And if we look at the revenue by customer segment."}, {"start": 533, "end": 541, "text": "Energy is still growing proportionately a little bit, and there's still quite decent demand, though not as good as we've seen earlier."}, {"start": 541, "end": 548, "text": "So the investment levels are lower also here but in relative terms, it's still a good development."}, {"start": 548, "end": 554, "text": "Automotive still continues with electrification as a strong trend in the car industry."}, {"start": 554, "end": 556, "text": "There is still demand."}, {"start": 556, "end": 561, "text": "And we see that the car industry and car manufacturers really do need to invest in this area."}, {"start": 561, "end": 567, "text": "And for that reason, the development activity remains on a fairly high level."}, {"start": 567, "end": 570, "text": "However, the more traditional industries,"}, {"start": 570, "end": 580, "text": "Industrial machinery, forest industry, metal, and mining there, the orders are down and also as a proportion of our business, the volumes are coming down."}, {"start": 580, "end": 583, "text": "Of course, on a positive note, the defense industry now accounts for 5%."}, {"start": 583, "end": 587, "text": "Aerospace is actually lower compared to the previous year."}, {"start": 587, "end": 589, "text": "Defense, however, is quite strong."}, {"start": 589, "end": 592, "text": "So, the overall aerospace and defense segment is growing."}, {"start": 592, "end": 595, "text": "And we still see a lot of potential in this area."}, {"start": 595, "end": 598, "text": "And we're working hard to capitalize on this opportunity."}, {"start": 601, "end": 605, "text": "If we then look at the finances more in detail for Q3."}, {"start": 605, "end": 613, "text": "Overall, the development was quite negative, and we were very disappointed with these results."}, {"start": 613, "end": 625, "text": "But we decided in the quarter that, given the weak outlook, we will undertake reorganizations and other initiatives to ensure that our business improves going forward."}, {"start": 625, "end": 627, "text": "And this is also very visible in these numbers."}, {"start": 627, "end": 631, "text": "But all the key figures are declining compared to last year."}, {"start": 631, "end": 637, "text": "And this is disappointing on the revenue side: 80 million."}, {"start": 637, "end": 648, "text": "It's on par with last year, but still, organic growth was -4.2% and the comparable exchange rate was -4.5%."}, {"start": 648, "end": 653, "text": "So, not good, reflecting the current market situation."}, {"start": 653, "end": 656, "text": "And for the first half of the year, a slight growth."}, {"start": 656, "end": 665, "text": "So, +1.9% but still organic -3.8% or at comparable exchange rates -4% down from last year."}, {"start": 665, "end": 671, "text": "And, of course, the difficult market has resulted in these figures."}, {"start": 672, "end": 675, "text": "Revenue from key accounts has decreased by more than 10%."}, {"start": 675, "end": 682, "text": "And this kind of shows where our customers' current demand has weakened."}, {"start": 682, "end": 689, "text": "Of course, during the quarter, decision-making was very slow, and there were very few new investments starting."}, {"start": 689, "end": 695, "text": "And this was, of course, the story for most of our operations during this quarter.<br /><br />"}, {"start": 695, "end": 702, "text": "Acquisitions, of course, helped to maintain the same level of revenue, but overall the development was very, very negative."}, {"start": 704, "end": 705, "text": "In EBITA."}, {"start": 705, "end": 709, "text": "We had a much weaker result than last year."}, {"start": 709, "end": 720, "text": "So at €2.9 million and 3.7%, which is very, very disappointing for us, -53.8% compared to last year."}, {"start": 720, "end": 724, "text": "But of course, there were significant costs in this."}, {"start": 724, "end": 731, "text": "In this quarter we had restructuring and other one-time non-recurring costs of about 1.4 million."}, {"start": 731, "end": 742, "text": "And then on top of that, we had an unfortunate, very unfortunate error in our accounting in Sweden related to salaries, which had an impact of 0.8 million."}, {"start": 742, "end": 755, "text": "So overall, a 2.2 million burden from these kinds of one-offs for this particular quarter, that on top of the weaker market conditions, led to this kind of results."}, {"start": 755, "end": 757, "text": "And of course, we cannot be happy with this."}, {"start": 760, "end": 777, "text": "EBIT was at 1.4 million, and amortizations were at 1.5 million for the quarter, and the amortization for the full year was at 4.5 million, so increasing slightly compared to last year due to the recent acquisitions that we have made."}, {"start": 779, "end": 780, "text": "Earnings per share and dividend."}, {"start": 780, "end": 787, "text": "Earnings per share was at zero for the quarter, which is extremely disappointing."}, {"start": 787, "end": 789, "text": "And last year, it was better."}, {"start": 789, "end": 794, "text": "And for the full year, it's 0.293, 32.6% down from last year."}, {"start": 794, "end": 797, "text": "So again, a disappointing figure."}, {"start": 798, "end": 808, "text": "Of course, we had higher financial expenses this quarter, which are having an impact on EPS."}, {"start": 810, "end": 814, "text": "Cash flow was also weak this quarter."}, {"start": 814, "end": 827, "text": "Of course, we did have quite a lot of these kinds of non-recurring costs, which had a burden on the cash flow, but also our accounts receivables were increasing, and we did see a little bit of a change in our customers' paying behavior."}, {"start": 827, "end": 839, "text": "And this had led to decreased operating cash flow for the quarter and an increase in our accounts receivable, which I will show you later."}, {"start": 842, "end": 848, "text": "Personnel numbered 3870, with an average of 3871."}, {"start": 849, "end": 855, "text": "And compared to the end of September 23rd, the number is down by 3.5%."}, {"start": 855, "end": 861, "text": "Of course, in these prevailing market conditions, we have slowed down our recruitment."}, {"start": 861, "end": 870, "text": "And also, we have had to take measures to adapt our capacity to the prevailing market conditions, which has had an impact on these figures as well."}, {"start": 871, "end": 884, "text": "With the restructuring, we have also been using temporary layoffs in Finland, and currently, at the end of the quarter, we had a total of 158 employees temporarily laid off in Finland."}, {"start": 887, "end": 899, "text": "If we examine the income statement a bit, the financial expenses were at 1.4 million, slightly better than last year, but still high and having a burden on our EPS."}, {"start": 900, "end": 910, "text": "And if we look at the balance sheet, the trade and other receivables increased by almost 5 million."}, {"start": 910, "end": 914, "text": "This is one of the explanations for the weaker cash flow."}, {"start": 914, "end": 921, "text": "So clearly, our trade and other receivables are increasing despite the fact that our revenue has stayed the same."}, {"start": 921, "end": 928, "text": "A little bit of impact from the customer mix, but also a heavy impact from our customers delaying payments."}, {"start": 928, "end": 932, "text": "We do not see a risk that our customers will not pay."}, {"start": 932, "end": 934, "text": "Our customer base is very solid."}, {"start": 935, "end": 936, "text": "Big customers."}, {"start": 936, "end": 939, "text": "Known customers who are leaders in their own fields."}, {"start": 939, "end": 940, "text": "So?"}, {"start": 940, "end": 942, "text": "So we don't see a credit risk increasing."}, {"start": 942, "end": 943, "text": "But."}, {"start": 943, "end": 952, "text": "But still, with this kind of change in the purchasing behavior, this number has changed and impacted our cash flow slightly."}, {"start": 952, "end": 953, "text": "Unfortunately."}, {"start": 956, "end": 959, "text": "If we then look a bit more closely at the service areas, in more detail."}, {"start": 959, "end": 961, "text": "Starting with the engineering solutions."}, {"start": 961, "end": 977, "text": "So here, clearly the sort of order volumes for investments, and also the lowering demand for project deliveries as our customers' order books are declining, started to show in the revenue development, and revenue was decreasing by 6.9%."}, {"start": 978, "end": 988, "text": "In the difficult market conditions, particularly in Germany, we implemented restructuring measures and continued with those efforts."}, {"start": 988, "end": 1017, "text": "And also we decided to discontinue the building technologies business in Germany, which also then resulted in certain non-recurring items or non-recurring costs for this service area. All the measures taken, plus the proportion of the accounting error in Sweden, meant the service area was burdened by 1.7 million of different kinds of non-recurring costs and items."}, {"start": 1020, "end": 1022, "text": "If we then move to software and embedded solutions."}, {"start": 1022, "end": 1025, "text": "So here we did have growth of 13%."}, {"start": 1025, "end": 1027, "text": "The revenue was at 21.7 million."}, {"start": 1027, "end": 1038, "text": "This is mainly related to the acquisitions completed so far in Sweden and also strongest in Denmark, having a positive impact on the revenue."}, {"start": 1038, "end": 1041, "text": "Organically, the development was negative."}, {"start": 1041, "end": 1043, "text": "Also in the service area."}, {"start": 1043, "end": 1050, "text": "The service area is, of course, more heavily impacted by the R&D investment decisions of our customers."}, {"start": 1050, "end": 1057, "text": "And still today, we see very little activity or very low levels of activity in R&D within our customers."}, {"start": 1057, "end": 1059, "text": "So we had a difficult market situation."}, {"start": 1059, "end": 1065, "text": "And also here, we needed to implement additional adaptation measures to adapt to the weak market conditions."}, {"start": 1065, "end": 1076, "text": "The non-recurring costs in this service area, which were similar to those in engineering solutions by nature, had an impact of €0.2 million."}, {"start": 1078, "end": 1100, "text": "On the technical communication solutions side, we achieved a slight growth of 4.6%, but this was against a relatively weak comparison period from last year. However, profitability remained somewhat low, and there was a €0.3 million burden on the results due to non-recurring items."}, {"start": 1100, "end": 1112, "text": "And also here, due to the weaker market, we needed to implement more adaptation measures, which had a bit of an impact on the business as well."}, {"start": 1113, "end": 1118, "text": "On the positive side, this is the service area where we have continued to expand across all areas."}, {"start": 1118, "end": 1127, "text": "We have continued to develop our offering, but this is the service area where we have seen the first deals coming out of our AI development."}, {"start": 1127, "end": 1129, "text": "And this is, of course, very promising."}, {"start": 1129, "end": 1132, "text": "So this is something that we will continue to invest in."}, {"start": 1132, "end": 1143, "text": "And now that we are working with our strategy for next year, we will also see some new things in this service area when we are introducing the service area strategy as well."}, {"start": 1143, "end": 1143, "text": "So."}, {"start": 1143, "end": 1147, "text": "So this will be out in December next year."}, {"start": 1148, "end": 1149, "text": "Sorry, this year."}, {"start": 1153, "end": 1157, "text": "And if we then look at how we did against our financial targets for this year."}, {"start": 1157, "end": 1162, "text": "Of course, we had set a revenue target of 500 million already in Q2."}, {"start": 1162, "end": 1166, "text": "We said that we will not meet this target, given the prevailing market conditions."}, {"start": 1167, "end": 1169, "text": "It is impossible to grow like this."}, {"start": 1169, "end": 1171, "text": "Of course, now we have one quarter left, so?"}, {"start": 1171, "end": 1172, "text": "So we will be behind."}, {"start": 1173, "end": 1176, "text": "Currently, the rolling 12 months is at 3.65."}, {"start": 1176, "end": 1178, "text": "Revenue outside Finland."}, {"start": 1178, "end": 1181, "text": "This is something that we have made progress on against our target."}, {"start": 1181, "end": 1182, "text": "The target is 55."}, {"start": 1182, "end": 1185, "text": "We are currently at 54%."}, {"start": 1185, "end": 1188, "text": "So this is according to our strategy."}, {"start": 1188, "end": 1194, "text": "We have been able to grow outside Finland and reduce the associated risk of relying solely on Finland as a country."}, {"start": 1194, "end": 1195, "text": "And this is positive."}, {"start": 1195, "end": 1202, "text": "We do want to continue growing in Finland as well, but we do want to accelerate our growth more in other countries."}, {"start": 1202, "end": 1207, "text": "So this is a positive development, and we feel that we are in a good position here.<br /><br />"}, {"start": 1207, "end": 1212, "text": "Managed services revenue is now slightly lower at 65%."}, {"start": 1212, "end": 1217, "text": "But right now, given the prevailing market conditions, there are very few larger projects."}, {"start": 1217, "end": 1234, "text": "And also, our sort of outsourcing model businesses are a little bit down on revenue as our customers have lower levels of deliveries. Whatever new we come up with involves very small assignments, and some of it is more consultancy-based."}, {"start": 1234, "end": 1248, "text": "So for this reason, this has been also slightly dropping in the current market conditions and on the operating profit EBITDA side, 6.6% for the year, now burdened heavily by this particular quarter."}, {"start": 1248, "end": 1260, "text": "And of course, this is a level that we cannot be happy with and are very much working hard to improve on that going forward, already in the fourth quarter, but then in particular next year and onwards."}, {"start": 1263, "end": 1270, "text": "And of course, the financial guidance, unfortunately, we did need to lower that twice during the quarter."}, {"start": 1270, "end": 1277, "text": "So now we expect the revenue to be between 355 to 370 million."}, {"start": 1277, "end": 1282, "text": "And the EBIT is expected to be between 18 and 22 million."}, {"start": 1283, "end": 1289, "text": "And, well, the outlook we have already discussed; it is difficult out there currently."}, {"start": 1289, "end": 1294, "text": "It's very difficult to predict changes in demand due to the prevailing uncertainty."}, {"start": 1294, "end": 1302, "text": "The increasing geopolitical tension is really not helping our customers make decisions currently."}, {"start": 1302, "end": 1322, "text": "And for this reason, we do see now that during the rest of the year, the market will remain challenging and we just need to battle hard and fight it out in the market to win whatever opportunities we can to come out with a decent ending for the year."}, {"start": 1322, "end": 1336, "text": "But it will be difficult during this year, hopefully next year the market will start to change for the better and we have seen some signs of that, but we don't have any confidence that there will be any major improvement during this year."}, {"start": 1339, "end": 1342, "text": "So that concludes the report for the time being."}, {"start": 1342, "end": 1344, "text": "So, not very positive at the moment."}, {"start": 1344, "end": 1347, "text": "And the result is disappointing for us."}, {"start": 1347, "end": 1357, "text": "But in a difficult market, in a difficult situation, we have now taken measures to ensure that we can return to better levels going forward."}, {"start": 1357, "end": 1360, "text": "And that is evident in this particular quarter."}, {"start": 1360, "end": 1362, "text": "But now is the time for questions."}, {"start": 1362, "end": 1367, "text": "So, I would now open the lines for any questions that you may have."}, {"start": 1367, "end": 1368, "text": "Thank you."}]}, {"speakerId": "S2", "sentences": [{"start": 1370, "end": 1377, "text": "If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue."}, {"start": 1377, "end": 1384, "text": "If you wish to withdraw your question, please dial Pound Key six on your telephone keypad."}, {"start": 1388, "end": 1391, "text": "The next question comes from Acuatica from Evie."}, {"start": 1392, "end": 1393, "text": "Please go ahead."}]}, {"speakerId": "S3", "sentences": [{"start": 1395, "end": 1397, "text": "This question is from Evelyn."}, {"start": 1397, "end": 1401, "text": "Thank you for the presentation and for taking my questions."}, {"start": 1401, "end": 1409, "text": "First, could you give us a bit more information on what was behind the salary entry-related accounting in Sweden?"}]}, {"speakerId": "S1", "sentences": [{"start": 1409, "end": 1416, "text": "Well, it is basically that we have booked too little in salaries during the year."}, {"start": 1416, "end": 1421, "text": "It was an unfortunate mistake made by our Swedish accounting team."}, {"start": 1422, "end": 1425, "text": "And as a result, we have now booked the correct balance of salaries."}, {"start": 1425, "end": 1426, "text": "What we have paid out."}, {"start": 1426, "end": 1435, "text": "So unfortunately, this is what happened—an unfortunate error, but it had a major impact in this particular quarter."}, {"start": 1435, "end": 1436, "text": "Now it's on the right level."}, {"start": 1436, "end": 1445, "text": "But of course, if we had known this was the case, some of the decisions we made throughout the year would have been completely different."}, {"start": 1445, "end": 1448, "text": "But unfortunately, that is the case."}, {"start": 1448, "end": 1452, "text": "Unfortunately, it happened, but now it's corrected, and we know what to do."}]}, {"speakerId": "S3", "sentences": [{"start": 1455, "end": 1455, "text": "Okay, thanks."}, {"start": 1456, "end": 1463, "text": "Then, on the key accounts, revenues were down 10% year-on-year in Q3, and they have been down throughout the year."}, {"start": 1464, "end": 1471, "text": "Could you provide us with more details about the number of accounts included in this key account group?"}, {"start": 1471, "end": 1478, "text": "And has the revenue decline been steady across different sectors, or has it been more focused on certain industries or companies?"}]}, {"speakerId": "S1", "sentences": [{"start": 1480, "end": 1482, "text": "Well, there are, of course, some customers."}, {"start": 1483, "end": 1493, "text": "There are some customers that are really down, and we are not disclosing the exact number of key accounts, but it's a substantial part of our revenue."}, {"start": 1493, "end": 1500, "text": "And I would say that some key accounts that we have in the defense sector are really strong."}, {"start": 1500, "end": 1506, "text": "But then, in the rest of the industries, it's a similar story all over."}, {"start": 1506, "end": 1509, "text": "So, the energy sector is a little bit better."}, {"start": 1509, "end": 1511, "text": "So there, we have positive inroads."}, {"start": 1511, "end": 1517, "text": "And there, the demand situation and level of investment have been somewhat better throughout the year."}, {"start": 1517, "end": 1525, "text": "But then, if you look at all the other industries, the investment levels are really low, which is then visible in our development there as well."}, {"start": 1525, "end": 1535, "text": "We have not lost any major key account, nor have we been forced to change any of these key accounts during the year."}, {"start": 1535, "end": 1542, "text": "So it's a relatively comparable figure, but I guess it just shows how our bigger customers are doing."}, {"start": 1542, "end": 1548, "text": "And then, this also has a similar impact on our business."}]}, {"speakerId": "S3", "sentences": [{"start": 1551, "end": 1552, "text": "Okay."}, {"start": 1552, "end": 1562, "text": "You noted that the market outlook indicates that investments related to energy efficiency and green transition are now slightly down."}, {"start": 1563, "end": 1575, "text": "Do you see this as a part of the demand decrease across the sectors, or do you believe there has been some overinvestment in these sectors?"}]}, {"speakerId": "S1", "sentences": [{"start": 1577, "end": 1581, "text": "I would say that there hasn't been overinvestment."}, {"start": 1581, "end": 1592, "text": "I would just say that our customers, when they have declining order books, which do not go well for everyone, but across the majority of our key and main customers."}, {"start": 1592, "end": 1592, "text": "So."}, {"start": 1592, "end": 1596, "text": "So then they are just cautious for the time being."}, {"start": 1596, "end": 1603, "text": "They are making efforts to protect their own results, which most of our customers have done fairly successfully."}, {"start": 1603, "end": 1614, "text": "But this also means they are reducing their investment levels and undertaking various similar measures that we are taking to adjust our organizations to fit the current market."}, {"start": 1614, "end": 1629, "text": "And in these conditions, certain investments, even if there is a genuine interest to invest more into sustainability, are not moving forward, and the investment decisions are postponed."}, {"start": 1630, "end": 1632, "text": "I wouldn't say that they will be stopping."}, {"start": 1632, "end": 1643, "text": "I just think that they are on hold for the time being until our customers start to have a sort of better belief in the market developing favorably in the future."}]}, {"speakerId": "S3", "sentences": [{"start": 1646, "end": 1647, "text": "Okay."}, {"start": 1647, "end": 1647, "text": "Thank you."}, {"start": 1647, "end": 1649, "text": "That's final from me."}, {"start": 1649, "end": 1659, "text": "Uh, how has the competitive landscape and pricing environment evolved during the quarter, as the market environment has been so difficult?"}]}, {"speakerId": "S1", "sentences": [{"start": 1660, "end": 1663, "text": "Well, of course, there are."}, {"start": 1663, "end": 1666, "text": "When you have projects and there are quotations."}, {"start": 1666, "end": 1668, "text": "So of course, there is pricing pressure."}, {"start": 1668, "end": 1676, "text": "And, our customers are, of course, having these kinds of competitive rounds for any of their purchases."}, {"start": 1676, "end": 1694, "text": "But, I would say that we have been doing relatively well in this respect, and our nearshoring solutions from Poland and offshoring solutions from China are really helping us to win the little business that is out there."}, {"start": 1694, "end": 1708, "text": "I would say that these kinds of strategic investments that we have made in the past, and the operating model where we are able to utilize resources from different parts of the world to create a lower cost level."}, {"start": 1708, "end": 1712, "text": "This strategy has paid off well for us in this challenging market."}, {"start": 1712, "end": 1720, "text": "And this is also a means for us to work with the kind of price competition that currently exists in the market."}]}, {"speakerId": "S3", "sentences": [{"start": 1722, "end": 1723, "text": "Okay."}, {"start": 1723, "end": 1724, "text": "That's all from me."}, {"start": 1724, "end": 1724, "text": "Thank you."}, {"start": 1724, "end": 1725, "text": "Thank you."}]}, {"speakerId": "S2", "sentences": [{"start": 1730, "end": 1733, "text": "The next question comes from Juha from Kinnunen."}, {"start": 1733, "end": 1735, "text": "Please go ahead."}]}, {"speakerId": "S4", "sentences": [{"start": 1737, "end": 1737, "text": "Yes."}, {"start": 1737, "end": 1739, "text": "This is your gentleman of interest."}, {"start": 1740, "end": 1744, "text": "Uh, I will start with an annoying question."}, {"start": 1744, "end": 1749, "text": "Etteplan has been behind the curve this year in estimating demand."}, {"start": 1749, "end": 1753, "text": "Could you just analyze a little bit what went wrong?"}, {"start": 1753, "end": 1761, "text": "Is it that the clients were too optimistic about their own demand, and that's why you were lagging and relying on them?"}, {"start": 1762, "end": 1763, "text": "Or did something else happen?"}, {"start": 1763, "end": 1764, "text": "Does that explain this?"}]}, {"speakerId": "S1", "sentences": [{"start": 1766, "end": 1772, "text": "Well, I guess it's fair to say that we were sort of overoptimistic."}, {"start": 1772, "end": 1777, "text": "We were hoping that the market would change for the better."}, {"start": 1777, "end": 1801, "text": "We had hoped that, according to the financial sector's estimates, the decline in interest rates and lower inflation would accelerate business activities and increase the willingness to invest in new projects and ventures."}, {"start": 1801, "end": 1805, "text": "But this has not happened."}, {"start": 1805, "end": 1818, "text": "We have had this dialogue with our customers, and they have also been anticipating that things would turn better, at which pace has been a big question mark for everyone."}, {"start": 1818, "end": 1827, "text": "But, um, I guess we have, uh, overestimated the development in the market in our line of business."}, {"start": 1827, "end": 1830, "text": "When the market starts to turn for the better."}, {"start": 1830, "end": 1834, "text": "Then, normally, these investments start from R&D."}, {"start": 1834, "end": 1845, "text": "So our customers prepare themselves for the future and for future demand by improving their products and enhancing their competitiveness by investing in various aspects."}, {"start": 1846, "end": 1852, "text": "And when this happens, our business usually develops quite favorably in the beginning."}, {"start": 1852, "end": 1861, "text": "So we have good acceleration in the beginning as our customers are normally not investing in their own organization, but they rather use partners."}, {"start": 1861, "end": 1865, "text": "In the beginning, when the sort of upturn starts to come."}, {"start": 1865, "end": 1870, "text": "So our business normally benefits fairly fast from this kind of market shift."}, {"start": 1870, "end": 1877, "text": "We had hoped that this market shift would happen first in the second quarter, then during the third quarter."}, {"start": 1877, "end": 1883, "text": "But now, we have sort of recognized and realized the fact that it's not really happening."}, {"start": 1883, "end": 1887, "text": "And we don't believe that it will happen during the rest of the year."}, {"start": 1887, "end": 1891, "text": "So I guess that to summarize, we were overoptimistic."}, {"start": 1891, "end": 1892, "text": "And that's very, very unfortunate."}, {"start": 1892, "end": 1894, "text": "But that's how it is."}, {"start": 1894, "end": 1903, "text": "And, we just need to ensure that we are more to the point in the future going forward."}]}, {"speakerId": "S4", "sentences": [{"start": 1906, "end": 1909, "text": "I understood and you were not the only one who was too optimistic."}, {"start": 1909, "end": 1912, "text": "So no blame there."}, {"start": 1912, "end": 1920, "text": "Uh, but question about relating to the same issue, what kind of market environment are you preparing for now?"}, {"start": 1920, "end": 1924, "text": "I mean, do you expect it to be at least steady and then start improving?"}, {"start": 1924, "end": 1929, "text": "Or do you think that this level will continue for a longer while?"}]}, {"speakerId": "S1", "sentences": [{"start": 1929, "end": 1941, "text": "Well, we think that currently there are certain areas where we still see customers dropping and other areas where we see continued decline."}, {"start": 1941, "end": 1945, "text": "But then there are also other areas where we see some positive signs."}, {"start": 1945, "end": 1955, "text": "So we are hopeful that the market will maintain this kind of low demand level, yet not decline further during this year."}, {"start": 1955, "end": 1960, "text": "So we hope that we are now hitting what might be considered the bottom."}, {"start": 1960, "end": 1968, "text": "And if that is the case, then with the measures that we've taken, maybe we do need to take some, and we are prepared to take additional measures as well if needed."}, {"start": 1968, "end": 1973, "text": "But still, with the measures taken and possibly some further actions."}, {"start": 1973, "end": 1977, "text": "So, we would be able to manage the situation with this level of demand."}, {"start": 1977, "end": 1991, "text": "And now we see that consumption is starting to increase with the lowering interest rates and with lower inflation, people have a bit more money at hand to spend on buying goods, traveling, or whatever."}, {"start": 1992, "end": 1998, "text": "When consumption starts to increase, further investments will have to commence at some point."}, {"start": 1998, "end": 2004, "text": "And for that reason, we believe that there will be some kind of positive development during next year."}, {"start": 2004, "end": 2007, "text": "But when exactly that will be?"}, {"start": 2007, "end": 2012, "text": "That is, of course, as difficult a question as this year has been."}]}, {"speakerId": "S4", "sentences": [{"start": 2015, "end": 2015, "text": "Yeah."}, {"start": 2015, "end": 2016, "text": "Understood."}, {"start": 2016, "end": 2032, "text": "And finally, have you seen some kind of a change in customer behavior, meaning that maybe because I think that outsourcing levels have generally increased over the past decade or so."}, {"start": 2032, "end": 2035, "text": "Do you think it's possible that they kind of, uh."}, {"start": 2038, "end": 2049, "text": "Use that buffer more nowadays, perhaps because we haven't seen major layoffs for a while in your customer segment."}, {"start": 2049, "end": 2056, "text": "And so they are defending their profitability very effectively in general, but your demand is really lacking."}, {"start": 2056, "end": 2061, "text": "So, I'm wondering if you have seen any changes in customer behavior in general."}]}, {"speakerId": "S1", "sentences": [{"start": 2062, "end": 2064, "text": "Um, not really."}, {"start": 2064, "end": 2066, "text": "Of course, there are."}, {"start": 2066, "end": 2072, "text": "Some of our customers have taken measures and prepared for worse times as well."}, {"start": 2072, "end": 2079, "text": "But, I wouldn't say that there is a major change in our customer behavior."}, {"start": 2079, "end": 2082, "text": "Still, I mean, every day you need to prove your value to your customer."}, {"start": 2082, "end": 2086, "text": "And if you can come up with new things and good solutions for them."}, {"start": 2086, "end": 2090, "text": "There is a sort of good opportunity for us as well."}, {"start": 2090, "end": 2095, "text": "The problem right now is that all decision-making is very, very slow on new investments."}, {"start": 2095, "end": 2099, "text": "And for that reason, things are not moving."}, {"start": 2100, "end": 2102, "text": "We see a lot of opportunity."}, {"start": 2102, "end": 2111, "text": "We have quite a lot of discussions out there with customers about good things, good development projects, etc."}, {"start": 2111, "end": 2116, "text": "But the decisions are not taken at the moment, and hopefully that trend will change going forward."}, {"start": 2116, "end": 2132, "text": "Overall, is there a change wherein they would use fewer partners, or alter the way they currently engage with partners? We have not observed any such changes and do not anticipate that happening, at least in the near term."}]}, {"speakerId": "S4", "sentences": [{"start": 2134, "end": 2134, "text": "All right.<br /><br />"}, {"start": 2134, "end": 2138, "text": "So no structural changes, so to speak."}]}, {"speakerId": "S1", "sentences": [{"start": 2139, "end": 2142, "text": "Not in the, in the, in the sort of bigger picture."}, {"start": 2142, "end": 2145, "text": "I would say that, of course, a single customer may change."}, {"start": 2145, "end": 2147, "text": "It's always a make or buy decision."}, {"start": 2147, "end": 2150, "text": "Strategies of different customers change."}, {"start": 2150, "end": 2155, "text": "But in the big picture, I wouldn't say that there's a major change."}, {"start": 2155, "end": 2155, "text": "Yes."}]}, {"speakerId": "S4", "sentences": [{"start": 2158, "end": 2158, "text": "Thank you."}, {"start": 2158, "end": 2159, "text": "All right."}, {"start": 2159, "end": 2159, "text": "Thank you very much."}, {"start": 2159, "end": 2160, "text": "That's all from me.<br /><br />"}]}, {"speakerId": "S1", "sentences": [{"start": 2160, "end": 2162, "text": "Thank you very much."}]}, {"speakerId": "S2", "sentences": [{"start": 2167, "end": 2174, "text": "As a reminder, if you wish to ask a question, please dial Pound Key five on your telephone keypad."}, {"start": 2178, "end": 2182, "text": "The next question comes from Emily Aymonin from Carnegie."}, {"start": 2182, "end": 2184, "text": "Please go ahead."}]}, {"speakerId": "S5", "sentences": [{"start": 2186, "end": 2187, "text": "Hi."}, {"start": 2187, "end": 2189, "text": "Thanks for taking my questions."}, {"start": 2189, "end": 2192, "text": "Just to go back a bit on the accounting errors."}, {"start": 2192, "end": 2195, "text": "This is the second time this year that it has happened."}, {"start": 2195, "end": 2200, "text": "You issued a profit warning earlier in the year and then also commented on the accounting error."}, {"start": 2200, "end": 2202, "text": "So how should we now think about it?"}, {"start": 2202, "end": 2206, "text": "What exactly are you doing to ensure that these issues don't become recurring for you?"}]}, {"speakerId": "S1", "sentences": [{"start": 2207, "end": 2210, "text": "Well, we are evaluating our processes."}, {"start": 2210, "end": 2211, "text": "We are evaluating."}, {"start": 2211, "end": 2214, "text": "There have already been changes involving certain individuals."}, {"start": 2214, "end": 2219, "text": "We will evaluate the entire supply chain."}, {"start": 2219, "end": 2228, "text": "But we will need to ensure and make sure that we have better internal controls, better overall controls in the business so that this does not happen again."}, {"start": 2228, "end": 2230, "text": "This is not good.<br /><br />"}, {"start": 2230, "end": 2236, "text": "We really need to work hard to ensure that these issues do not occur in the future again."}]}, {"speakerId": "S5", "sentences": [{"start": 2240, "end": 2240, "text": "Okay."}, {"start": 2240, "end": 2243, "text": "And have you gone through any historical records?"}, {"start": 2243, "end": 2247, "text": "Are there any potential issues there, or what is the situation?"}]}, {"speakerId": "S6", "sentences": [{"start": 2248, "end": 2250, "text": "No, we don't have."}]}, {"speakerId": "S1", "sentences": [{"start": 2250, "end": 2253, "text": "We have not gone through historical data."}, {"start": 2253, "end": 2257, "text": "There are clear reasons behind these errors."}, {"start": 2257, "end": 2261, "text": "They are related to the performance of people."}, {"start": 2261, "end": 2263, "text": "We have already made changes."}, {"start": 2263, "end": 2266, "text": "There are certain process issues that we are working on."}, {"start": 2266, "end": 2276, "text": "And with these measures that we are taking and will be taking going forward, we are confident that we will eliminate this kind of errors."}]}, {"speakerId": "S5", "sentences": [{"start": 2279, "end": 2279, "text": "Okay."}, {"start": 2279, "end": 2280, "text": "Excellent."}, {"start": 2281, "end": 2287, "text": "Continuing on the salary issue, there are ongoing negotiations in Finland with unions right now.<br /><br />"}, {"start": 2287, "end": 2288, "text": "Can you comment on that?"}, {"start": 2288, "end": 2292, "text": "What kind of salary increases should we expect for next year?"}]}, {"speakerId": "S1", "sentences": [{"start": 2292, "end": 2304, "text": "Well, I cannot really comment on that, being a part of these negotiations, I am not in a position to comment publicly."}]}, {"speakerId": "S7", "sentences": [{"start": 2307, "end": 2307, "text": "Okay."}]}, {"speakerId": "S5", "sentences": [{"start": 2309, "end": 2315, "text": "But I assume the negotiations have still been pretty difficult and ongoing for quite a while now."}]}, {"speakerId": "S1", "sentences": [{"start": 2316, "end": 2319, "text": "This is, of course, true and visible from the press as well."}, {"start": 2319, "end": 2321, "text": "So, of course, it's a difficult situation."}, {"start": 2321, "end": 2323, "text": "And, negotiations are difficult."}, {"start": 2323, "end": 2332, "text": "But, as I said, I don't want to comment on that. I think there are other people who have commented on that in public."}, {"start": 2332, "end": 2332, "text": "So."}, {"start": 2332, "end": 2334, "text": "So I'd prefer to have it like that."}]}, {"speakerId": "S5", "sentences": [{"start": 2336, "end": 2337, "text": "Okay."}, {"start": 2337, "end": 2337, "text": "Thank you."}, {"start": 2337, "end": 2340, "text": "Then just to go on, maybe some lighter subjects."}, {"start": 2340, "end": 2346, "text": "The current market environment is difficult for you, but it's also difficult for everyone else, I would imagine."}, {"start": 2347, "end": 2351, "text": "Does this create any opportunities, for example, in terms of pursuing acquisitions going forward?"}]}, {"speakerId": "S1", "sentences": [{"start": 2352, "end": 2355, "text": "Well, of course there are opportunities."}, {"start": 2355, "end": 2360, "text": "There have been and there continue to be opportunities in this respect."}, {"start": 2360, "end": 2369, "text": "And of course, now with this kind of market, perhaps the valuations are sort of more realistic."}, {"start": 2369, "end": 2371, "text": "So yes, there are opportunities."}, {"start": 2371, "end": 2373, "text": "And we are also evaluating possibilities."}, {"start": 2373, "end": 2376, "text": "So we will see what happens going forward. <br /><br />"}]}, {"speakerId": "S5", "sentences": [{"start": 2378, "end": 2379, "text": "Great."}, {"start": 2379, "end": 2380, "text": "That's all from me."}, {"start": 2380, "end": 2380, "text": "Thank you."}, {"start": 2380, "end": 2380, "text": "Thank you, Johan."}]}, {"speakerId": "S1", "sentences": [{"start": 2381, "end": 2382, "text": "Thank you."}]}, {"speakerId": "S2", "sentences": [{"start": 2387, "end": 2392, "text": "There are no more questions at this time, so I hand the conference back to the speakers.<br /><br />"}]}, {"speakerId": "S1", "sentences": [{"start": 2395, "end": 2395, "text": "Okay."}, {"start": 2395, "end": 2396, "text": "Thank you very much."}, {"start": 2396, "end": 2401, "text": "And to conclude, I mean, it was a difficult quarter."}, {"start": 2401, "end": 2404, "text": "The operating environment was really difficult."}, {"start": 2404, "end": 2406, "text": "Difficult to predict."}, {"start": 2406, "end": 2410, "text": "And with that, we experienced a decline in demand."}, {"start": 2410, "end": 2414, "text": "And with that, we needed to take measures to adapt our business to the circumstances."}, {"start": 2414, "end": 2428, "text": "But I think that now, with the measures we have taken and the willingness to implement even further measures, I do believe that we are now in a position to change our business for the better."}, {"start": 2428, "end": 2439, "text": "We do expect a considerable improvement for Q4 already in terms of figures, and also then for next year, I think that we are in a good position."}, {"start": 2439, "end": 2442, "text": "The sense of urgency is high within the organization to take action."}, {"start": 2442, "end": 2455, "text": "And with the opportunities that we see, we do see a clear opportunity for us to return to the sort of profitable growth path that we have been on in the past and will continue to be going forward."}, {"start": 2455, "end": 2469, "text": "But we sincerely hope that the market gives us some support in this respect, and the decision-making and investments start to take place, which we feel will occur next year."}, {"start": 2469, "end": 2470, "text": "We're confident about that."}, {"start": 2470, "end": 2477, "text": "But when exactly, that's the big question, which we will now evaluate and give our view in our Q4 report."}, {"start": 2477, "end": 2493, "text": "Then, as always, if you have any questions, please feel free to contact us at Etteplan or Outi Torniainen, our SVP for Marketing and Communications, our CFO, Helena Kukkonen, or myself for any questions that you may have."}, {"start": 2495, "end": 2498, "text": "Thank you very much for listening in and have a great day."}, {"start": 2498, "end": 2499, "text": "Thanks."}]}], "speakers": [{"speakerId": "S1", "name": "Juha Näkki"}, {"speakerId": "S2", "name": "Operator"}, {"speakerId": "S3", "name": "Unknown 1"}, {"speakerId": "S4", "name": "Unknown 2"}, {"speakerId": "S5", "name": "Emily Aymonin"}, {"speakerId": "S6", "name": "Unknown 3"}, {"speakerId": "S7", "name": "Unknown 4"}], "id": "67238f3addb6a3830b84f24c", "createdAt": "2024-10-31T14:07:54.410Z", "updatedAt": "2024-10-31T14:07:54.410Z", "langCode": "en", "transcriptType": "ENHANCED", "amberscriptJobId": null, "speechmaticsJobId": "8q7371vxc5", "eventId": "6710cc228efba726c5b43974"}