Terveystalo Oyj (TTALO) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Terveystalo's Half Year 2022 Results Webcast and Conference Call. Today as usual, our CEO, Ville Iho; and our CFO sadly today for the last time, Ilkka Laurila, will present the results. We'll follow that with a Q&A and we'll take questions from the phone lines as well as the webcast today. Without further ado, over to you, Ville.

Thank you, Kati, and good morning from my behalf. Let's jump directly into the highlights of Q2. Main headlines for this quarter sort of a medium sweet quarter from Terveystalo point of view. Very positive thing is that Terveystalo is growing, 15.6% growth rate during Q2 and the whole H1 has been rapid growth for Terveystalo. Also very positive is that underlying demand for all of our services is remaining high and continues to remain high for foreseeable future. Then on the other hand on flip side, supply challenges are restricting the organic growth right now. The main part of the growth during this quarter was driven by a few good M&A activities. Our supply grew only by 3%, which is a low number compared to our targets. And doctor appointment booking rate, which tells the supply and demand balance, was at 95% which is too high and we are spilling demand as we speak. However, strong business fundamentals exist. As I said, demand drivers are strong for short term, midterm, and long term. Our market position has been developing positively. Employee satisfaction, which is paramount for this type of business we are in and for future growth, is on record high level as is the customer satisfaction. Also we are still able to scale our digital capabilities. Digital visits still grew by impressive 28% year-on-year. And Sweden, which is sort of a growth rocket for Terveystalo at present, is progressing according to plan and we have a very positive view on Sweden as we speak. What this environment means for Terveystalo is that there will be slightly shift of focus from growth to margin for the coming months and couple of quarters. The environment with the tight labor market and some inflatory pressures is different than it has been for last quarters and it's obviously something new for each and every business. Cost base is in our own hands so there are multiple things that we can do to shift the focus and I will come back to those in later stage of the presentation. Key numbers again from Q2. So growth, a nice 15.6%. EBITA level down from last year at 24.1% pressed down by supply restrictions and some cost increases mainly driven by personnel and then M&A. Digital appointments grew nicely, as I said, 28% from last year at 317,000, which as we have said many times, it's already mainstream and continues to be mainstream of health care delivery for coming years. And we are leading the industry in this field and we continue to invest in this area. Customer satisfaction still record high 83 measured with NPS. And as I said also, employee satisfaction at 30, which is record high for Terveystalo as well. Doctor appointment booking rate in Q2 too high, as I said, 95%. So I said already many times, we are spilling demand and this continues to be a key focus for us for coming months and quarters still ramping up the supply. M&A activity was high during Q2 and has been high during H1. There's a list of different acquisitions conducted during H1. In Finland, the priorities has been and continue to be strengthening our scalable capabilities, growing market adjacencies and growth in new services; especially the second one has been active during H1. There's a list of target entities that we have been acquiring during H1. There's a certain effect on the cost base from this one and from the fact that growth this time around has been driven mainly by M&A not by organic growth and reason for that one, as I said, is restricted supply. Then in Sweden, the story line remains the same. We focus on growing scale and expanding the portfolio into new services in the coming quarters. And then the runway for bolt-on acquisitions looks still nice and we have been able to conduct multiple bolt-on acquisitions as well as Namndemansgarden, which we reported already last time when we had the Q1 results presentation. Supply, which has been mentioned already 5x I guess during the presentation, is a key focus for Terveystalo without a frontline supply increase. Of course the rest of the business cannot develop in the way that we want and that was evident during Q2. There are multiple avenues through which we are pushing the supply up and we have this traditional funnel model, which we have presented a couple of times externally as well. To start with, obviously we continue investing in customer steering and revenue management in the first contract whenever a customer comes in and that intelligent customer steering is of course key for coming development as well. Then even that one doesn't help if we don't have supply to cater for the overall demand and to improve that one. Obviously for physical visits, we continue recruitment even though Q2 supply was only up by 3%. Actually, our recruitment numbers look -- they look very good. Over the past couple of months we have been able to recruit double-digit numbers of -- double-digit percentages of professionals, but there's a fairly long tail until we can see the numbers in actual supply. Then we continue investing in digital visits and digital appointments and efficiency in those appointments. So to help the health care professionals to conduct their duties as efficiently as smoothly as possible will be a focus. There are still things that we can do in that step that will increase supply and improve the access to care for customers. Also when it comes to physical appointments, there are tools that we'll implement and continue implementing that will make also the physical appointments from a professional point of view more efficient and smooth and fast and hence strengthen the supply. Very important and paramount for this one to work obviously is, as I said, to be the employer of choice for employees. And to sort of indicate the success in this field is the NPS number at 30%, which is a high number for this industry, and it's been developing steadily through last 2.5 years. Digital visits continue to scale up nicely so a 28% increase year-on-year and this is, as I said, we have been saying that one many times, this mainstream continues to be mainstream. This is not something that will evaporate once the pandemic situation is totally off from health care reality. This will improve efficiency, this will increase supply and this will improve access to care, and hence we continue investing in the area. There are multiple benefits from this one and the ability for the professional and also for the customers to decide the channel that they wish to use has positive customer service implication, but even more importantly, access to care implications. I mentioned tight labor market. This is a reality in the field of health care in Finland currently and it puts some pressure on the labor cost also for Terveystalo. This is something that we need to keep a very close eye on during coming months and quarters. There's some positive news also from this field. Those who are Finns know at least that there has been a fierce discussion inside industry and in the labor market around nurse CLA and this nurse CLA, actually their expectations were I would say sky high from the union point of view and quite high percentage numbers were floated during the discussion. But now we have CLA in place and it's, I would say, mainstream CLA contract in Finland, first year increase 2% and then second year -- it's a 2-year contract, second year increase according to market benchmark and benchmark will be tied to biggest expert industry unions. So a quite satisfactory result from this end. But as I said, a tight labor market. This is something that is a reality in Finnish health care. It's both good and bad. Of course we need to tackle that one. But really the tight labor market is something that we have ability to maneuver with. We are masters in supply/demand and hence this also creates a lot of business opportunities especially next year when the public demand is expected to rise when the new health care districts have been able to organize themselves. Sweden continues to be a good news story for Terveystalo. So we have the plan intact for Sweden. Currently we concentrate on perfecting the occupational health care offering for Swedish customers with our processes, our tools and also bolt-on acquisitions to gain scale and that's going according to the plan. Then we start introducing -- and first step was acquisition of Namndemansgarden. We start introducing new value-adding services, new services to our portfolio and that's going to be our next focus. And as well next focus will be implementing the Occupational Health Care Digital Suite to Sweden. There's a project in place for that one and H2 will be very active in doing that one. With that one, actually I will hand over to Ilkka Laurila.

Good morning on my behalf as well. And as usually then, we will go through some financial results during the Q2 2022. Starting with the summary. Like Ville already explained, strong growth continued during the second quarter of the year, 15.6% year-on-year growth. Of which, Feelgood contributed this time that 9.2%. Remaining 6.4% Finnish growth is roughly split in both organic -- evenly split in both organic and inorganic growth. Then on the other hand, like Ville explained, the margin pressure due to changes in operating environment weakened the profitability during the second quarter. Biggest drivers were threefold you could say. The first one is the supply challenges. With the current cost structure, we would be able to cater higher growth rates. Then on the other hand, we faced changes in the sales mix, we will come back to that one as well. And then thirdly, we had an increased cost level which is driven by those proactive -- as an example those proactive recruiting that Ville explained you earlier. Then on the other hand, our balance sheet is still strong so whatever sort of opportunities arise in the market, we have possibilities to take over those opportunities and go with those. Gross CapEx, excluding the M&A, was now at 4.7% of the revenue. Then a bit deeper look on the revenue split, of which now that roughly 8% is actually coming already from Sweden. In second quarter maybe highlighting the fact that our biggest customer segment corporate had a further nice 8% growth. Comparing to the market, I think it's clear that we are taking share on there. Then on the other hand the sort of the flip side of the coin is that, as Ville explained, because these customers are contracted, they have to choose us if you want to put it that way. That sort of then makes it more difficult for the private customers to have appropriate time slot for their services and that sort of hinders the private customer group growth, which still was that nice 5% in the second quarter. Half year growth in total that 17%, 10% in corporate segment and 5% continues to be the growth rate in private customer groups. Then a bit closer look on the testing volumes in COVID testing, how that has developed. In the graph you can actually see now how the sort of the seasonality has been during the past 3 years with the COVID testing. Obviously during the summer months, the volumes have always been lower level. It is on a low level now as you can see compared to '21 testing volumes, but it's still on a higher level versus 2020. But obviously the pricing has also declined quite significantly compared to both '20 and '21 years. It's actually interesting to see how that will develop further when we are getting closer to schools opening and people coming back from the holidays. You can all see how that happened in '20 and '21, but I think nobody knows what will happen this year. On the other hand, that has had an impact for the so-called normal underlying diagnostics during the pandemic. These volumes of the underlying diagnostics have recovered and the increase of that diagnostic volume is quite significant if you compare to '21. But then on the other hand, it's still significantly below 2019 and earlier periods and that growth has actually been slower than we anticipated when we were phasing this year and that is one of the, I would say, key reasons of the weakening sales mix during the second quarter of this year and that had an impact on our profitability. So it is growing, but it's growing slower than we anticipated. But we can clearly see during the last couple of months, you could say, that it is sort of getting closer and closer sort of the pre-pandemic levels and I think we believe that it will come back, but it takes some time before we can get the normal diagnostics activity in our business. And that is maybe a key sort of change in the sales mix. On the other hand, we also had more appointments and acute care, which is also having impact for the diagnostics because the appointments and acute care have not typically so much referrals for the diagnostic as a secondary care and to that kind of long-term diseases. Longer-term quarterly development, you can see on this slide, so the story is pretty much the same as in the previous slides. The profitability was impacted by the sales mix and the larger share of the appointments and relatively lower share of the diagnostics and a higher cost as explained earlier. And then if we take a bit closer look on the cost structure and the cost development. Maybe highlighting one cost element there is the employee benefit expenses, which has increased at 32.3% during the second quarter EUR 29 million compared to 15.6% growth in the top line. A clear majority of that is actually coming from the M&A cost, maybe without saying that obviously Feelgood was not consolidated to our numbers during second quarter in '21. And another sort of driver is those smaller activities that we carried out during the first half of the year. And it should also take into account that even though that in these kind of M&A activities that we carried out in the first half of year, which were mainly adjacent type of M&A, the synergies are not that high. But still obviously all the synergies have not yet realized to our P&L. So clear majority is coming from the Swedish business and the Finnish M&A. Then on the other hand, we have invested quite a lot to those projects and priorities at the group level, which will further cater our digital development and future sort of the long-term growth prospects in there. And then on the other hand, like Ville explained, we have proactively recruited people to our network. We have not yet fully seen impact of that in our P&L. So with that kind of sort of cost structure in our network, we should be able to cater further growth if and when we are able to improve the supply situation. Same actually applies to other operating expenses. So clear majority obviously is driven by the M&A. Then on the other hand, we have put more money on marketing as well as obviously the software services and other that kind of sort of development expenses have increased and putting more money to digital development. Then this sort of growth sector so to speak. So strong trend in well-being sales and as well as in digital visits continued like Ville already explained. I think we have been sort of discussing and debating that whether digital visit growth will continue going forward, but 28% growth for the reference period is still very strong and the growth seems to continue. So it is interesting to see how that develops in the future even though that we are already in quite a post-pandemic situation. Cash flow slightly weakening even though tariffs is still strong. We had EUR 59 million gross CapEx, as explained earlier, and our leverage ratio is still strong 2.7% and 2.5% if you would exclude IFRS 16. So in that sense and also compared to the historical levels, we have a strong balance sheet and well below our financial targets and other sort of targeted levels. Same applies to net debt, equity ratio and gearing, slightly weakening during -- weakened during the second quarter of the year, but still on a strong level and strong balance sheet. And I think that we have financial outlook for the next 6 months. And I think in this case, it would be better that if Ville will go through the financial outlook for the next 6 months.

Thank you, Ilkka. So as I said earlier, the underlying demand for health care services both in Finland and Sweden continues to be strong. Even though there has been a sentiment shift among the consumers, but really the underlying unrestricted demand is so high that we have not seen a glimpse of that one impacting the actual demand of the services. So our view is that the market environment continues to be similar. Demand will be very, very high for corporates, private and public sector. Also in Sweden, we have seen pent-up demand coming through and that should continue for the next 6 months as well. For public, as I said in the presentation, public sector or public organizations are fairly silent when it comes to new openings in the marketplace as we speak due to the fact that they are organizing their own play in new social and health care districts. But we expect that once they have their organization in place and have the playbook, there will be new openings for private sector to provide our services. The demand for COVID-related services will decrease. It's difficult to predict how that one will go, but it's not going to be in the center of our business more probably during H2. The labor market continues to be fairly tight. And as said many times in the presentation, that's going to be with the cost -- curbing the cost increase will be the main focus and really putting more focus on the margin instead of growth, which continues to be high for Terveystalo. So with that one, I think I will invite Kati back to the stage.

Thank you, Ville and Ilkka. We welcome your questions at this point. And do we have any questions from the phone lines?

[Operator Instructions] Our first question comes from Sami Sarkamies from Danske Bank.

Okay. I have a couple of questions starting from the weak operating leverage that you discussed also in the presentation. If we look at the trends, adjusted EBITDA margin was down by about 2 percentage points in Q1, now it was down by about 3 percentage points from last year. If we compare to 2019 levels, in Q1 you were slightly below 2019 level, but now you were about 2.5 percentage points below. Can you still try to break it down to the main components that, I guess, COVID testing volumes, that's one component. You talked about cost inflation and you have also added sort of new employees quite heavily during Q2. So maybe if you can talk about the relative importance of those factors when thinking about the margin development.

If I start and Ville can then continue. I think the most important thing is still that we are having a different kind of sales mix than we used to have in 2019 and especially in '21. So like said, the specialty sort of sickness related diagnostics is well below normal levels. But as explained, I think we have a sort of clear underlying trend that it will grow and most likely it will bounce back in the future. There's no reason why that should not come back in the future. That is maybe the most important element. I think the second most important element is exactly like you referred to is the sort of the recruitment levels in the -- or the, let's say, higher costs in the network and in the operations and then on the other hand, also in the group functions. So we have put more effort on development and internal priorities and group level development, which obviously had an impact for the group level costs. And like said, the cost level should cater higher growth rates if and when we are able to improve the supply situation. So in that sense, the operating leverage is there and with the current cost structure, we should be able to also handle higher growth rates and further growth.

Yes. And if we were to isolate the COVID testing when it comes to sales mix, how important factor was that when we think about the margin decrease from last year.

I think it's -- as a single element, I think it's maybe a most important one. But obviously there's other smaller drivers, which on a combined level is bigger. But as a single line item, it's obviously a big item.

Yes. And then maybe a follow-up question. You mentioned...

Yes. Because not that it's -- sorry, Sami, if I continued. You can see how the volume development has been versus the last year, but also it should be taken into account that the price trend in COVID testing has also been sort of declining as we all know and all understand. So it's both price and volume that has declined. And like discussed earlier, the COVID testing as well is a volume game and as we start losing or start to have lower volume levels, at some point of time in certain locations you'll start phasing sort of your cost structure and lower gross margin levels.

Yes. And I mean just comparing to 2019 margins in Q2, you were more than 2 basis points below. I mean COVID testing is obviously not a factor if we think about that comparison. So how would you then sort of justify the margin development? Which factors have impacted the most?

It is sort of -- like I explained earlier so it's the underline diagnostics especially when it comes to the sickness care is not on a level of 2019. And then on the other hand, we have higher personnel amounts and the cost structure in both network and core plan.

Yes. If I shortly continue on your question. So really comparing to 2019, the high margin business, and in our case as we have said many times is diagnostics, that has not recovered to the level of 2019. On the other hand, supply also restricts higher margin businesses especially split between corporate customers and consumer customers. Consumer customers are the higher margin customers and when we have this contracted customer base, which has grown nicely which is of course a good thing, it restricts access for the consumer. So that's one thing. The cost base obviously is built for higher frontline supply and we are currently during Q2 slightly off the target with supply.

Yes. And then you mentioned in the prepared remarks that you're planning to focus more on profitability in the coming quarters. Does that mean that you will be like freezing the cost increases due to current level that for example you may not have to add group costs for some time or are you even contemplating cost cuts?

Well, it is a sort of a mix of different things that we can do. As I said in the presentation of course cost creeps are not nice, but they are controllable and that's obviously a good thing. We have built, as I said, the orchestra for larger operations so group cost should not increase. We can live with the current orchestra with higher supply, as I said earlier. Then also refocusing means scrutinizing the project portfolio also that only those which have a fairly short-term positive impact on the EBITDA stays. Of course we continue still investing in long-term growth initiatives and scaling our digital suite up. But there's always things that you can do in that area and yes, it's a bag of different things. As I said, it's controllable and it can be done and will be done.

Okay. Finally, when looking at the public segment growth, it came down quite materially from Q1 when it was 13% and now I think 6%. Is this driven by the decrease in COVID testing or something else?

Yes, that is a main driver for that one. On the other hand, as I said, the market is at present fairly silent even though the growth prospects in long term are positive. The new freshly put up districts are not very active in the marketplace right now. So new business is coming in slowly right now and COVID testing is going down.

Do we have any other questions from the phone lines?

Our next question comes from Jon Berggren from Kepler Cheuvreux.

I have 2. So first, I was wondering what the increase was for employee benefit expense if you exclude the impact from M&A? And the second one, if you could elaborate a little bit on the next steps for Sweden long term. So I mean the corporate market segment is very small in Sweden and might be hard to keep up with the activity we had in the last year long term. So apart from the deal you have with Norbotten, do you see any other opportunities outside the corporate segment in Sweden?

So Ilkka, if you start and then I continue with Sweden.

I'm not quite sure if I clearly heard what the first question, but if it was related to M&A impact on the profitability and the first one.

I shall repeat. So employee benefit expenses, if you exclude the impact you mentioned from M&A.

Yes. So roughly -- let me do the math. It's roughly 40% of the increase is coming from other sources than M&A. That's the rough split. 60% is driven by M&A and 40% is driven by other activities.

Yes. And then maybe continuing on Sweden. We have this 3-stage rocket for Sweden as said in the presentation so building further the occupational health care service offering. Strengthening that one is the first phase. Then going after new services, expanding service portfolio and that is what I think you are asking. For expanding the service portfolio further, obviously there needs to be an acquisition. We did one with Namndemansgarden, but that's fairly close to current occupational health care services space. But in midterm we are looking at integrating new services in specialty care or even in primary care into the Feelgood platform and hopefully that's going to happen fairly soon. But when it comes to M&A, you never know when you are able to materialize on your plans. But there's clear playbook which we are following and there are multiple prospects in Swedish market. Then final stage will be more closely integrated company across different health care services as we do have in Finland.

Do we have still further questions from the phone lines.

The last question comes from Joni Sandvall from Nordea.

A couple of questions from me. Maybe a follow-up on the sales mix. I'm just wondering could you open up a bit sequential development during the Q2 and when are you now expecting to reach the pre-pandemic levels in diagnostics?

So sort of forecasting the sales mix and diagnostics sales, it's not trivial. But as Ilkka explained earlier, we have seen positive development during H1 already. It has been steady. We have not reached the pre-pandemic levels yet. On the other hand, we don't see any reason why the development should not continue during H2 for that one. To fully materialize, we still need to get the supply in better shape so that we are not restricting sort of the true demand especially from consumer customers coming through because that's really one of the key elements for getting the higher margin diagnostics going. But we expect H2 continue the positive development that we have seen during H1 for the underlying diagnostic business.

Okay. And then the second one relating to the pricing and I'm just thinking how is actually the competitive environment currently? I think not so bad when the supply side is so restricted. But when can you start raising prices for example towards your corporate customers?

Yes. Pricing environment obviously is quite different than it has been during my time in Terveystalo actually in any business because for the first time for many of us, we are seeing inflatory environment and you could say that this is a golden opportunity to increase prices and change some of the principles also in the agreements for consumers as we have come through in earlier presentations. It's straightforward, we can do it basically not with the snap our fingers, but it is a short process. If we decide to raise prices, then it will take 2 weeks or so and then they are in the market. For corporates obviously it's a different ballgame because we have some 25,000 different contracts and ripple effect of price increases is a series of renegotiation processes and we cannot of course handle 25,000 contracts and renewing those at least many times a year. So there's sort of a physical restriction doing that. Typically we have raised prices for corporate customers or changed pricing for corporate customers once a year. Start of the year has been marked for that one. Of course we are now looking at the situation and considering some new elements. We need to take sort of a first and fastest activity in the ECS to look at the agreement portfolio and especially look at the worst profitabilities among the stack and start terminating those. That then creates new agreement negotiation and with that one, we can either exit the contract or then renew that one with the higher prices. So there's a process ongoing. We are screening the agreement stack and doing what needs to be done. But for corporates, the latest date for us to increase prices will be the end of the year. We might be doing something even earlier this year. Then for public, similar kind of processes ongoing as with corporates going through the agreements and what needs to be done and what can be done for each individual contract. We are in an environment where we are sold out all the time so any bad contract should not have a place in the portfolio.

Okay. Maybe final question regarding the recruitment. You said that you have increased practitioners by 10%. So when should we expect supply to improve from this side?

Well, we were expecting that one to improve during Q2 and we are slightly off the mark with that or compared to our targets. As I said, when we are recruiting a private practitioner, there's a tail until we can see real numbers in supply. Typically, private practitioners start with a fairly low availability of hours initially, then they start building up the supply. So for sure during H2, it's difficult to say exact time line when we are seeing the supply picking up materially.

We have another question from Iiris Theman from Carnegie.

This is Iiris from Carnegie. I have 2 questions, please. So firstly, can you quantify how much your additional costs were in Q2 and perhaps how much those increased from Q1 and what should we expect for the second half?

For that kind of math, we haven't kind of done what is the sort of split for costs so to speak. But I think I have to refer to the earlier answer that roughly speaking if you take a look at the other operating expenses as well as the personnel expenses, roughly 60:40 is the split between -- versus last year the split between the M&A and sort of the additional expenses. Versus the first quarter, it's a bit more trickier questions for Tervey. I don't have an exact number in my head.

Okay. And then secondly, just still in terms of the sales mix. So basically is it fair to expect that your sales mix should improve quarter-over-quarter in the second half and that should mean that your margins also should improve -- I mean the development year-over-year?

So the expectation is that if we compare from pre-pandemic level 2019, we have been closing the gap between sort of the normal level and current level with the diagnostics business and diagnostics sales and that development should continue. There's no reason why it should stop here. So reaching 2019 levels with the normal diagnostic share of our sales should happen during H2.

And I assume that was the last one from the phone lines, if I'm correct. Then we have some questions from the webcast. Maybe just for the benefit of recapping the mix effect and the specific components. There were a couple of things that affected the margin on that side. So first of all, that COVID testing volumes as well as the prices were declining. There was heavily weighted mix on the appointment side with less diagnostics and less higher value longer care change. And then thirdly, the supply was going to lower margin corporate business instead of consumers who typically pay a higher price. Then Jutta has a question on the supply challenges. So does it equal that the supply challenges mean margin pressure or does the margin pressure in Q2 link to risen costs rather than capacity utilization? And I guess it's both.

It is both. It is a mixed bag and you cannot really take one without the other. We have been increasing costs and building, as said earlier, the orchestra for higher supply and bigger business and now we are trailing from our own internal supply targets. As I said during the presentation, only 3% up with the supply during Q2 with 95% utilization rate. That's not where we should be.

Yes. Then a question from Grace Lee, Jefferies. With the continued inflatory headwinds, how much can you offset via price increases especially given your sales mix is challenge for private customer limited with contracted corporate customers?

So I think we went through the pricing dynamics earlier. So for consumers, as said earlier, it's straightforward. We can compensate and overcompensate for any inflatory pressures with the consumer pricing and that is the first one also to execute. As said, in this environment we are selling everything we have. We are sold out all the time. In sort of business world, that means that the prices are too low. For corporates, as I said earlier, it's a longer process. But even there, as everybody knows in any business, the pricing environment is totally different than it used to be and we are working on that one. For public, it takes even longer time than for the corporates, but we are going through the agreement stack with the public customers as well and have been to certain extent already successful in highering the prices.

Yes. Then a second question. With the shift change that we discussed from growth to margin, what does it mean in practical terms and will we be tempering with the acquisitions, CapEx spend, for example?

Well, there are multiple things that need to be adjusted slightly. There's so much positive in the market environment, i.e. the demand and our market position so we'll not jeopardize that one obviously. We continue investing in growth. We continue investing in scalable digital elements in our business. We continue investing in Sweden growth and strengthening our core business in Finland. But there are certain adjustments that we can do and should do. The biggest area is pricing and what type of agreement, what type of bidding processes are we going in and taking part. There's always sort of an individual decision involved when we are either taking part or bidding for a contract and we are not only looking at pricing. We are now also looking at the term. We are also looking at the termination clauses and the freedom for us inside that contract to higher prices. So criteria for different type of B2B and B2C agreements will shift and I think that's natural and even expected from our customers. Then when it comes to our project portfolio, we'll limit the number of projects and direct them more towards EBITDA impact projects rather than some more strategic ones that will be more sort of waiting for their turn and we'll implement the EBITDA projects to full extent and then continue with the rest. That's one thing. For the M&A, we have been disciplined in pricing and in evaluating the assets that we have acquired. There's no need for material changes in that area. But even with M&A, some criteria needs to be scrutinized what is the sort of forecast and prospect for the target entity and what type of risks it contains when it comes to for example pricing and agreement that it holds inside the portfolio. So slight changes there as well. Then everybody knows that there are also things that you can do with the cost when it comes to centralized functions.

Great. Then at least one more question from Jutta, SEB. We don't guide for profits, but could we give some help in understanding the H2 EBITDA outlook by discussing it a little bit? Is it possible that we do see a decrease in EBITDA year-on-year also in the second half of the year?

Well, looking at the year-on-year EBITDA and profitability, yes, it is possible that we see that one to answer your question.

Do you want to give some flavor on what we see in the market dynamic or the expectation on the sales mix?

Well, I think we have discussed sales mix, we have discussed supply, we have discussed the pressures quite a bit during the session. And the issues that we have, they will not go away with a snap of our fingers. On the other hand, we know what to do and we are doing the right things at our end. But I would not like to give any sort of firm guidance as we are not guiding the results. We might start doing that one, but not during this year.

Great. We don't see any further questions from the webcast. So we thank you for your time and wish you a happy and entertaining summertime before autumn begins.

Thank you.

Thank you.