Magnus Ahlqvist: Good morning, everyone, and welcome to our Q3 report that Matteo and I are presenting from Stockholm this morning. Let's go straight to the performance highlights. This is a quarter with some clear positive developments, but also a few areas with some weakness. The adjusted sales growth was 3%, and at a high level, North America contributed with solid Technology & Solutions growth, but Europe was weaker. The real sales growth in Technology & Solutions improved sequentially to 6%, and this was supported by the performance in technology in North America. Similar to the last couple of quarters, the installations order entry growth was very strong in the technology business. We had record level order entry in North America and Ibero-America. From a strategy execution perspective, I am very pleased with the fact that we are increasing the share of Technology & Solutions across all segments.
Magnus Ahlqvist: The adjusted operating margin was 8.2%, and this was supported by the highest Q3 margin to date in North America, so a very good development. Aviation in Europe had a very negative impact, and if you look at the underlying business performance, that means when we exclude European aviation, the operating margin for the group is at 8.4%, so 20 basis points impact. I will go through the main reasons in the European section, but given the poor performance, our team has initiated actions to ensure that the aviation performance returns to acceptable levels. Looking at the earnings growth, the aviation issues in Europe burdened, and we recorded a flat operating margin in the quarter. EPS improvement is 6% in the first 9 months of the year. The cash flow was healthy at 82%.
Magnus Ahlqvist: As previously commented, the active portfolio management activities in Europe and Ibero-America were finalized in Q2, but we expect a continued negative top-line impact from the terminated contracts during the coming quarters. The quality of the portfolio is now significantly stronger today as we transition to driving profitable growth. Related to SCIS, the transfer of the last remaining contracts with the federal government is expected to be concluded by the end of October, this month. This means that there is no further government-related revenue recognized in that business, but as previously communicated, we keep the commercial cleared business. We are very glad to have this concluded a few months before the targeted end date, and it also means that we can focus on the core business. Let's then move to the performance in the business lines and the segments.
Magnus Ahlqvist: As a result of the technology momentum, the share of Technology & Solutions reached 35% in the quarter. The real sales growth in Technology & Solutions was 6%, as I mentioned before, and North America Technology & Solutions contributed together with very strong T&S performance in Ibero-America. The real sales growth in Security Services was 1% in the quarter when excluding the impact of the government business closed down in North America. We had decent growth in North America, but the main negative drivers were aviation and the impact of active portfolio management in Europe and Ibero-America. When I look across the different segments, our Security Services offering continues to be well-received in segments such as data centers, Defense, and pharmaceuticals, where long-term partnerships and high-quality Security Services offerings are highly valued.
Magnus Ahlqvist: In certain markets and client segments, demand trends remain somewhat more cautious, and this is resulting in more selective purchasing behavior with an emphasis on price and also with longer decision cycles. We are managing this dynamic effectively in North America, while market conditions in Europe and Ibero-America remain somewhat more fragmented. This is also then something that has impacted the top-line growth in the quarter. We then move to the segments and we start with North America, where we recorded a continued sequential sales growth increase and margin improvement. The organic growth of 3% was driven by both the technology and the guarding business lines. Technology installation sales were strong with continued record level order intake and backlog growth. Strong commercial momentum and good portfolio new sales also supported the organic sales growth in guarding.
Magnus Ahlqvist: The Pinkerton business is smaller, as you know, but continued to hamper the North America growth as a result of the termination of a large temporary contract. That contract, I can mention we have until the end of this year in the comparatives. The recent divestment of the GEG Aviation business also had a negative impact on the real change in operating results in the quarter. With good commercial momentum, the sales growth in Technology & Solutions increased to 7%. The operating margin improved 20 basis points despite the weakness in Pinkerton. All in all, very good delivery by our North America team. We then move to Europe, where the total performance was below our expectations, primarily as a result of negative impact from the airport security business. The organic sales growth was 2%, supported by price increases in Turkey.
Magnus Ahlqvist: In the services business, as I mentioned before, active portfolio management had a negative impact on the growth, but we recorded improved new sales activity in the quarter. Real sales growth in Technology & Solutions was also below expectations at 3%, with decent growth in technology, but lower than expected in solutions, where we had some terminated contracts. The operating margin in Europe was 8.1% in the quarter. This represents a 30 basis point decline versus a very strong comparative, and the main issue was the airport security business with negative impact on the profitability. Just to give some better understanding of this, because this is somewhat of a surprise and definitely disappointment, also from my perspective, there are three main factors behind the poor performance in aviation when comparing to Q3 last year.
Magnus Ahlqvist: As we commented last year, it was also a very strong Q3 in aviation. The first one is the situation in the Middle East, that burdened with reduced number of flights and similar to last quarter, approximately 20% demand reduction in key markets like Germany. Second, some contracts were converted last year in Germany from price per passenger to fixed hourly contracts. The changes were implemented at the beginning of this year, but the biggest impact of these changes happened during the summer season, which is the peak traveling season. With the demand picture changing in combination with the new contracts, this had a significant negative impact on the profitability and associated negative leverage in Q3. The third issue is related to very challenging startup period of a new major contract in the Netherlands.
Magnus Ahlqvist: It goes without saying, this performance is disappointing and well below our expectations, but our team is now taking actions to drive improvement in aviation during the coming quarters. All in all, weaker development in Europe in Q3, but as stated, actions are underway to improve. We then shift to Ibero-America, where we had stable development of the business. Sales growth was 5%, and this was driven by very strong growth in Technology & Solutions and price increases in security services. Similar to last quarter, there is a negative impact on the growth from active portfolio management, but our team are driving good conversions and new sales of Technology & Solutions, and the real sales growth in Technology & Solutions was very strong at 14%. The operating margin was stable at 7.9%.
Magnus Ahlqvist: Strong growth in Technology & Solutions contributed, but overall margin was held back by negative leverage on the cost base in security services. Overall, solid results from our Ibero-America team, despite some of the near-term headwinds. If we then look at the totality, we are driving disciplined execution of our strategy and looking at Q3 as a whole, we are very pleased with North America, with increasing sequential growth, continued margin improvement. Ibero-America was solid, and we delivered below expectations in Europe, but primarily related to the very significant impact from aviation. Similar to previous quarters, we recorded very good growth and margin development in the AMEA business, which is reported in the other segment. As commented earlier, we increased the share of Technology & Solutions to 35%. Client retention is stable around 90. With that, we turn to the finance section and welcome Matteo.
Matteo Dall'Ora: Thank you, Magnus. Good morning, all. As usual, we start with the income statement. Reported organic sales growth was 0%, and the operating margin improved by 10 basis points to 8.2%. Adjusted for this SCIS government business being closed down, organic sales growth was 3%, while the adjusted operating margin was 8.2%, 10 basis points below last year. Operating income was flat in real terms in the quarter and increased by 4% over the first 9 months. Looking below operating results, there are no material developments in amortization of acquisition-related intangible, nor any acquisition related costs. Item affecting comparability was SEK 36 million in the quarter. Compared with last year, the year-on-year comparison is heavily impacted by the SCIS Paragon closed down of SEK 1.5 billion, reporting in Q3 2025.
Matteo Dall'Ora: Excluding the divesture of the SCIS closed down, item affecting comparability amounted to SEK 46 million in the quarter, compared with SEK 65 million in the corresponding period last year. The cost in the quarter were related to our transformation program in Europe and in line with our plans. We continue to expect total cost for 2026, excluding the capital gain for the divestment, to be in the range of SEK 225 million to SEK 250 million. We are currently adjusting the phasing of some element of the European transformation program. This is expected to result in a lower activity level and lower program related spend in Q4. However, during Q4, we expect to utilize part of the remaining amounts for additional restructuring and optimization action across the groups that qualify as item affecting comparability.
Matteo Dall'Ora: Year to date, IAC remains positive at SEK 102 million, due to the capital gain of SEK 223 million, resulting mainly from the divestment of Global Elite Group in the US in Q1. Our finance net was SEK 364 million, a reduction of SEK 55 million compared to last year. We continued the positive trends of reducing finance cost and interest rate, and our debt leverage is decreasing. Consistent with our previous communication, we expect finance net for 2026 to continue to improve and come below SEK 1.6 billion, compared to the SEK 1.8 billion for the full year 2025. Going forward, the year-on-year benefit is expected to moderate each quarter as leverage normalize and comparative become tougher. Now moving to tax, I want to start with some good news. The Supreme Court in Spain has ruled in our favor in the tax case, which date back many years ago.
Matteo Dall'Ora: While this is non-cash item, it had a positive impact on our net income in the quarter through the reversal of the related tax provision. For the full year, we now forecasted a tax rate of 27.9%, excluding the capital gain from the divestment of Global Elite Group and the reversal of the Spanish tax provision. This is slightly above our previous forecast of 27.5%, mainly due to the higher tax cost in the US. EPS benefited in the quarter from both the lower finance net and the reversal of the Spanish tax provision, which was treated as IAC. Earning per share before item affecting comparability amounted to SEK 3.28, and the real EPS declined by 3% compared with last year.
Matteo Dall'Ora: While we continue to see benefit from a lower finance net, this was more than offset by a higher tax charge in the quarter, with operating income remaining flat in real terms. For the first 9 months of 2026, our currency adjusted EPS, excluding IAC, increased 6% compared to last year. Now moving to the effects in the quarter. Currency had a positive translation effect on reported operating income in the quarter, while the real change was flat. Turning now to cash flow. We deliver another solid quarter, ending at SEK 2.6 billion, corresponding to 82% of operating income. For the first 9 months, as Magnus Ahlqvist said, cash generation is slightly below last year at 71% versus 74%. The cash flow in Q3 was slower than last year, primarily due to higher CapEx and change in operating payables.
Matteo Dall'Ora: Trade receivable improved compared with Q2, although the improvement was partially offset by continuous strong installation sales. We remain well-positioned to achieve our full-year cash flow at 80% to 90% of operating income before amortization. As mentioned, the CapEx was higher than last year at 2.9%, but remained below our target. The free cash flow ended at SEK 2 billion, and year to date improved by SEK 94 million compared to last year.
Magnus Ahlqvist: I apologize, the presentation froze here, so we are not showing the cash flow slide properly.
Magnus Ahlqvist: Did we? Okay.
Matteo Dall'Ora: Perfect. We then move, and we look at our net debt, which was SEK 31.5 billion at the end of the quarter. This is a decrease of SEK 1.2 billion compared to Q2 this year, despite SEK 702 million negative currency translation effect. Item affecting comparability remain according to the plan, and as anticipated during Q1, we are forecasting a cash flow for the full year 2026 in the range between SEK 850 million and SEK 880 million. Looking at the right-hand side, our net debt to EBITDA is now at 2.1x, which is an improvement of 0.1x compared to Q3 last year. We are below our target net debt to EBITDA of less than 2.5x and expect to continue to deleverage our balance sheet in the short term.
Matteo Dall'Ora: Looking at our financing and financing position, we continue to have a strong balance sheet, strong liquidity, and we remain without any financial covenants in our debt facilities. Looking at the maturity chart, SEK 1.5 billion maturity was repaid in full at the beginning of October, leaving no further refinancing needs in 2026. We continue to focus to amortize debt supported by a strong free cash flow generation. Finally, a further confirmation of our stronger financial position was the S&P upgrade of our long-term credit rating from BBB to BBB+. With that, Magnus, I hand it over back to you.
Magnus Ahlqvist: Thanks a lot, Matteo. Before we open the Q&A, just a few words regarding the longer-term development, and I also wanted to share some feedback on our strategy from our clients. I just need to confirm that we are now on the right page here. Okay. A few months ago, we shared the new financial targets for the next phase. We decided to make our targets sharper and more ambitious, and we are fully committed to delivering on these numbers in the coming years. One important change was the introduction of the target of 10% average EPS growth. The 10% comes from three main drivers. The first one is about growth, and we aim to grow organically by 4% to 6% per year, which would allow us to increase market share. Today, we have all the components required to deliver intelligence-led security at scale.
Magnus Ahlqvist: Second, margin improvement is another important part of the mix, and we aim to expand margins by 20 to 30 basis points per year, driven by efficiency and mix. Across an upsell opportunity between our business units, as well as the possibility to sell more integrated services will improve our mix and therefore also the margins. Third, disciplined capital allocation, deleveraging and value accretive M&A. On the M&A theme, we have been focused on building a quality pipeline during the last 12 months and now looking at attractive electronic security bolt-on targets that represent aggregate sales around SEK 2 billion. Since launching our strategy this summer, I met with clients across three continents, and the response has been very positive with both existing and prospective clients recognizing the value of our ambition to become the trusted partner in intelligence-led security.
Magnus Ahlqvist: Our clients see compelling value in our emphasis on quality and in a more dynamic intelligence-led approach. While this represents a shift from established industry practices, there is also strong support for the direction. Clients increasingly recognize Securitas' unique ability to leverage AI, automation, and actionable risk intelligence to deliver greater value. We are already beginning to see early signs of a shift in buying behavior towards intelligence-led security. As I have said before, I am expecting more change during the coming years in our industry compared to the last 25. We are encouraged by the positive feedback and expectations on the partnership from a number of leading companies around the world.
Magnus Ahlqvist: To ensure that we deliver highest possible value to our clients and to our shareholders, we are also doubling down on strengthening our ability to win together with the clients, simplified and enhanced incentive systems, how we are enhancing the coordination and the account management, and also then leveraging the full range of capabilities that we have externally and together with our clients. We are clearly on the right path to achieve our wanted position as the trusted partner in intelligence-led security and to deliver on our targets. With that, let us open up the Q&A session.
Operator: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Zach Al-Qaryooti from Morgan Stanley. Please go ahead.
Zach Al-Qaryooti: Good morning. I have three questions, please. Firstly, just digging a little bit deeper on the margins, given it was down year-over-year when excluding SCIS. You called out most of that was driven by aviation. Do you expect a similar impact from that business on the group margin development in Q4? Or should it be less of a drag given the tougher comp you called out last year? Then just as a follow-up to that one, you noted you are taking some actions to improve the performance there. Could you please share some further details on that? Secondly, you called out some impacts from active portfolio management. My understanding was the vast majority of that had completed by now. Is there any further impact expected over the remainder of the year or perhaps into next year?
Zach Al-Qaryooti: Then third question, just more broadly when we look at the group organic growth profile, it still remains a little bit below the 4% to 6% medium-term ambition. Could you help us better understand just the bridge to get to that guidance and what needs to improve from here to accelerate towards that range? I know you called out better T&S momentum that you are seeing, but are there any more positive signals maybe in the manned guarding business that can help or in some of your data center exposure? Thank you.
Magnus Ahlqvist: Thank you, Zach Al-Khairy. On the three questions, the impact for the entire group was 0.2 on the margin from aviation, and it is essentially related to two countries in Europe, as I highlighted. Our team is, they are taking actions. My view is that we are going to see improvement during the coming quarters. But some of the operational issues and the challenges that we have, we are also not solving overnight. So, very high attention, but taking actions to ensure that we are driving steady improvements, but over the coming quarters, as stated. If you look at the active portfolio management, this was more of a strategic program for us that we were driving over a number of years to ensure that all the portfolio is in good shape across the company. We will, obviously, with our business, we will continuously be evaluating, assessing all contracts.
Magnus Ahlqvist: That is just good leadership and good management. But if you are looking at the impact, and the reason that I say that there is an impact now and also in the coming quarters, is that while we finalize that work, looking at Europe and Ibero-America, numbers will be in the comparatives from Q2 for 12 months, essentially. So that is why we are highlighting that there is some impact. And the important thing that we need to do there, of course, is that we are also then taking out costs so that we are not suffering, if you will, from negative cost leverage in that type of a process. On the growth, we remain fully committed and also believing that we are going to be able to grow at 4% to 6% organically. If you are looking at the different parts, Technology & Solutions, as highlighted, 6%.
Magnus Ahlqvist: That is a good sequential improvement the last couple of quarters. Order book as order entry and also backlog on the technology side, especially North America and Ibero-America, very strong. Continued very strong, and that is obviously important when we are looking at the next couple of quarters. And I am also very glad about that because we invested a lot in technology. We have done great work in terms of building capabilities, and there I am also seeing that we are really building good traction. So I think that is the main part on the technology side and broader Technology & Solutions. On solutions and specifically, there it is more a matter of also leveraging the different capabilities that we have. And we had very good growth in North America, continued very strong growth in Ibero-America when looking at the third quarter.
Magnus Ahlqvist: There we have a very strong offering, stronger than anyone else in the market because we have that capability to combine. Like I said as well, Matteo and I also shared that during the Capital Markets Day, we are also enhancing incentive systems and things like that to ensure that we are really aligning with what is good for the client is also good for Securitas and our shareholders. If you then look at the guarding part of the business, here, we have been suffering for quite a number of years from the active portfolio management on the top line. But we have done that based on conviction that it is good for us to build a quality portfolio.
Magnus Ahlqvist: There will, like I said, be some impact in the next couple of quarters, but the idea here is obviously that we are stabilizing this part of the business so that we are winning and retaining very healthy part of the business so that we can also then get back to positive volume development. Always then with very clear profitability thresholds to ensure that it is sustainable business. There we had some good development, like I highlighted in North America. There was some portfolio volume growth also driving the improvement in North America, and that is obviously the ambition, more broadly speaking, across the group. I think those are the main points. I hope that is helpful to your question, in terms of how we are also then improving the growth rate.
Magnus Ahlqvist: Because right now it feels like we are a bit in a transition between the last period, which was very much about operating profit margin improvement, which was the right thing to do, and now then shifting focus towards profitable growth.
Zach Al-Qaryooti: Great. Thank you very much.
Operator: The next question comes from Andy Grobler from BNP Paribas. Please go ahead.
Andy Grobler: Hi, good morning. Three from me as well, if I may. Firstly, just on the cash flow payables were weaker in the period. Could you just talk through the drivers of that and whether you expect it to reverse? Secondly, around France and some of the issues that are going on in the country, have you seen any impact on your pretty large business in that country, and what are your expectations through the rest of this year? Then thirdly, Magnus Ahlqvist, you talked about some clients pushing harder on price, and the impact that was having on margins and growth, especially in Europe. Can you just give a bit more depth to that commentary. What is changed? How are you dealing with it? Do you think that is going to persist through the coming quarters? Thank you very much.
Matteo Dall'Ora: So maybe I can start, Magnus Ahlqvist. Good morning, Andy Grobler. About the cash flow, and the payables related question. If you look a bit, the quarter, yes, is impacted by the change negatively in operating payables. This is mainly relative between the two quarter, Q2 and Q3. As you can see in the first 9 months, our position on operating payable is still very positive and very good. There is also maybe another point to raise, and this is related to the GEG Aviation close down as well. It was negatively impacted by on the operating payables because of the acceleration that we are having in Q3. As Magnus Ahlqvist said, the positive news is that, we are almost at the end of this, and we see that by the end of October that we are going to transfer the last contracts. So these are the two main issues.
Matteo Dall'Ora: So the timing issue between Q2 and Q3 and the GEG Aviation acceleration closed down.
Magnus Ahlqvist: Andy Grobler, on the last two questions on France. We have fairly significant business in France, but I would say it is a marginal impact from these really unfortunate riots and the situation that we have seen. What I would highlight though is that if we kind of lift the perspective a little bit, from my viewpoint, there is more focus on security, there is more focus on risk, more broadly speaking, in society. So I think that the security is higher up on the agenda. But that is not driving immediate demand. But one area where I see this is also what we are creating with the third area of our business security risk management is that there is also an increasing appetite and demand to really better understand and manage risk in a more structured, but also more dynamic way.
Magnus Ahlqvist: But to the question about France, I would say marginal impact from a revenue perspective. Then on the last question, we did highlight that, and I think also we've had that discussion with some of you in the last 6 months as well. We have continuously said that we're very well positioned in a number of segments that are growing, such as a lot of the tech companies, a lot of data center business, same thing in defense, pharmaceuticals, et cetera. What I see is that it's a bit of a diverging picture in terms of the type of dialogue that we see. Part of it you can explain, kind of see patterns between different vertical segments. Then it's also partly how progressive or conservative some of the clients are in their purchasing approach.
Magnus Ahlqvist: I think where we have the best traction is typically where security and quality security is really emphasized and prioritized. We also have the best traction with clients who are seeing that the future of security is a combination of people and technology and how you leverage data and intelligence. While in procurement-led processes where it's just kind of we want to buy X number of hours, when it just becomes kind of lowest price at any cost, there we obviously then not as successful. I think that's just the pattern that we have seen for a couple of years now. But my interpretation to your question is that in some of the European markets, like in Germany for example, it feels like there is quite a lot of uncertainty in the general economic environment and some of the clients and companies are struggling.
Magnus Ahlqvist: Short-term priority, just think about how do we tactically kind of reduce costs. While my belief is that when we engage in a really good way with any client, given that we have very strong leg in our guarding capabilities with the presence that we have on site, same thing with the technology and also security risk management. We can actually help clients and build better security equation, but in many cases, also at the lower cost, which means that the value for money is improving. But the kind of the view here, between more progressive and somewhat more traditional, there we're seeing some differences. But there it's obviously extremely important that our teams are really on top of these trends. I feel good and confident because we are getting so good feedback on the strategy and how we're thinking about the next phase.
Magnus Ahlqvist: I think everyone is also recognizing that Securitas is standing out as quite unique, given that all the competitors are either in the kind of the systems integration space or more in the traditional guarding space. So, I hope that gives some flavor, Andy, to the question.
Andy Grobler: It does. Can I just ask one quick follow-up? Is there a risk there that some of those more traditional clients, particularly in some of the struggling industries in Germany and across Europe, become the next leg of portfolio management? If you are not able to shift them to your strategy and vision that margins just get eroded and we see that pressure continue on organic growth in the guarding business.
Magnus Ahlqvist: Yeah. We have seen these patterns, like I said, in the last couple of years. When we communicate to the financial targets, Matteo and myself, we do those based on genuine belief that we are going to be able to grow at that type of a pace organically, and that obviously means that when you look at the total picture, that we are able to manage in a good way. Because we are also seeing underlying growth in some of the other segments where we are really successful, which is also quite strong. So that should obviously then help and also compensate. I think in the long term, it is always the best value proposition and the best value for money that will win. There I feel that we are very well-positioned to manage the totality in a good way.
Andy Grobler: Okay. Thank you very much.
Operator: The next question comes from Harshita Bhatter from Goldman Sachs. Please go ahead.
Harshita Bhatter: Hi. Good morning. This is Harshita Bhatter on behalf of Suhasini from Goldman Sachs. Two questions from our side, please. Firstly, you mentioned in North America that commercial momentum in global technology business remains healthy with record high installation order intakes in both North America and Ibero-America. At what point can we expect this to translate to higher growth? Is it Q4, or will it take a few quarters? The second one, just quickly on M&A pipeline, could you comment on how it is looking? Which regions, verticals are you focused on for your expansion? Thank you.
Magnus Ahlqvist: Thank you, Harshita Bhatter. On the first question, we feel really good about the order entry and also the back and the backlog. When you look at the conversion time, it does differ a little bit, but if you were to indicate averages, quite a lot of it in the next four to six months. Some order entry is also stretching well into 2027. The good thing, of course, here is that if you are looking sequentially from Q1, Q2, and Q3, it has been a good growth development overall. I think that is obviously a very important starting point, but that is the typical timeline. It does also differ a little bit depending on which client segment and what type of project as well.
Magnus Ahlqvist: A lot of our business is consisting of smaller projects, but we also have some fairly large and more complex ones that we are managing, and there the lead time will typically be significantly longer as well. If you look at the acquisition pipeline, we have obviously been very focused on deleveraging after the Stanley acquisition. We have done that successfully, and we have started to build up the pipeline to look selectively more at electronic security. So technology bolt-on acquisitions, and that is the vast majority of the SEK 2 billion that we are currently looking at as a quality pipeline. Those are mostly bolt-on electronic security acquisitions. The important thing there is that we are now one of the largest players within systems design integration, and if you look at how we help clients and also operate technology around the world.
Magnus Ahlqvist: There is also real benefit of continuing to strengthen the coverage in the markets where we have a presence, but also to build more depth and density. Because the depth and the density, it gives significant advantages in terms of the service level that we can bring to the client, in terms of SLA fulfillment on turnaround times, et cetera. It also gives significant economies of scale and financial benefits. We are continuously then looking, but can also now afford to be quite disciplined because we already have a pretty good footprint. I think that is why we also highlight that these are mostly kind of bolt-on acquisition profiles.
Harshita Bhatter: All right. Thank you.
Operator: The next question comes from Geoffroy Michalet from Oddo BHF. Please go ahead.
Geoffroy Michalet: Thank you, gentlemen, for taking my question. I have one actually regarding the security service business. Would you be able to help us quantify a bit the impact of the different buckets that led to this -5% growth? Thank you very much.
Magnus Ahlqvist: Yes. Thank you. If you look at the security services business, the main impact here is the close down of the SCIS business in North America. When you adjust for that, we are looking at 1% growth on a year-on-year basis. I think the 1% is the relevant number because we announced the close down of that business more than a year ago, and then it has just been. We are glad that we are now concluding that a little bit earlier, a couple of months earlier than previously planned. That is having a very significant impact from one down to -5% on the unadjusted number. But if you look then at the 1% adjusted figure, it is a little bit of a different picture there, because there North America, like I highlighted, we had some volume portfolio growth, which is good.
Magnus Ahlqvist: That is not mostly only price increase. In Europe, I think we had majority of the growth is price-related and also some impact from Turkey. Those are the two major units. I think also relating to Andy Grobler's question before, there obviously the active portfolio management in Europe and Ibero-America is having an impact in Q3 and will have an impact also in the coming quarters on the growth. When that is out of the comparatives, then the ambition is obviously that we then have a higher quality portfolio and that we can return to more normal growth numbers again based on the strength of our offering. I hope that gives a flavor at the high level.
Geoffroy Michalet: Yeah, thank you. Just rebounding, would you be able to give us some hint on the magnitude of the portfolio management impact this quarter or, and in the following quarter as well?
Magnus Ahlqvist: Yeah, we haven't broken that out. I have on previous occasions said that we are talking percentage points and not basis points when you look at that. That has been the case. It's been quite significant, but everything done then based on making that type of shift once and for all, that all the business that we have is healthy business and sustainable business. That is the work that we have then concluded in Q2 of this year.
Geoffroy Michalet: Thank you very much.
Operator: The next question comes from Nicole Manion from UBS. Please go ahead.
Nicole Manion: Hi. Good morning. Just one from me, please. Can you talk a bit more about the trends within Solutions in T&S? It looks like obviously there has been a slight improvement in the past couple of quarters, but maybe more from the installations piece and maybe a bit more mixed in Solutions. I think you called out some terminations in Europe. Can you comment a bit more on the terminations and then just maybe give a bit of detail on the types of clients in terms of size and segment where you are seeing maybe better traction on the Solutions side? Thank you.
Magnus Ahlqvist: Yeah. Thank you, Nicole. If you look at North America, Technology and Solutions, and I should just remind everyone because some of you know very well how we define these ones. Technology is essentially the design integration and then how we help and operate, where we then also have remote services for monitoring and service and maintenance. Solutions, that is where we are combining different capabilities and in a simple way you can say combining people and technology into an integrated offering to the client. If you look at North America, we had very good growth in Solutions, very healthy growth also in Technology. I think that is the North America view. If you look at Europe, the Technology growth was decent. Solutions were a little bit lower than my expectation, and that was mostly related to a few larger Solutions terminations in a few markets.
Magnus Ahlqvist: That pulled down a little bit, the Solutions figures in Europe in Q3. If you look at Ibero-America, the 14% of growth, that is a combination of very strong Technology and Solutions. Both of them were performing in a very good way. That is really the breakdown. Then I think to your question, we are able to help many clients with integration options. It is not so segment specific. What you can say is that if you look at a lot of, talking about Technology and some segments, it is a bit more installation, higher emphasis on installations in the early phase. We obviously always work to then try to ensure that we are also building and offering recurring services. Those are, we are then picking up on a more recurring basis afterwards, essentially.
Magnus Ahlqvist: But there is applicability and we are leveraging regarding the technology and the security risk management capabilities to the benefit of the client and how we help them optimize the security equation into an integrated offering.
Nicole Manion: Great. Thank you.
Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Tomas Canick from Thomson Reuters. Please go ahead.
Tomas Canick: Hello, and thank you for finding the time. My question relates to the recent disruptions at the European airports that have been caused by drone-related activities. Have you seen a measurable increase in customer demand for drone detection and other solutions in that respect? Can you quantify the trend in any way? Has there been a shift in customer priorities following these incidents? Are airports becoming more willing to invest in drone detection systems, more willing than they were a couple of years ago? Thank you.
Magnus Ahlqvist: Yeah. It is a very important question, and in the dialogue that we are having and also dialogue that I have been directly involved with in the last couple of years, there is a very strong demand for leveraging drone detection. The other question is obviously also what are you then able to do based on local law in terms of the drones that you are identifying? I would say if I simplify it, I would say that there is very strong interest, there is very strong demand. If you look at the amount of activity that we are driving here, we have been at some sites in Germany, for example, been operating drones for quite a number of years. The demand is significantly stronger than services that are currently being delivered, and it is coming down to legislation.
Magnus Ahlqvist: The demand is very strong, and it is not only for critical infrastructure, it is also for many clients who are also looking at what is critical or critical sites for them, like more advanced R&D labs, for example, and test tracks within the automotive space and those types of things. The challenge is the legislation because it is very slow. I think that is the one thing that still has to be figured out across a number of countries. In a lot of the discussion that I am involved with, this is constantly an issue that I am bringing top of the agenda to the politicians and also legislators because it is needed. There is very significant demand. Because it is very early, it is difficult to quantify any impact.
Magnus Ahlqvist: I think the entire strategy that we have been building and what we also shared at the Capital Markets Day, we believe in a future where the integration capability and then the operational capability to first then integrate different types of technology. Here we are then going outside of traditional access control alarm system and intrusion and video cameras. When we then talk about drones, or if we talk about robotics and other things, that type of capability that we have and that we have been building together with how we then leverage our people that we have on site, we are very well positioned to be able to leverage and to do that work very efficiently for our clients. When it comes to drones specifically, it is very much held back by slow regulation.
Magnus Ahlqvist: That is something that it would be helpful if that is being sped up in the next couple of quarters.
Operator: There are no more questions at this time. I hand the conference back to the President and CEO, Magnus Ahlqvist, for any closing comments.
Magnus Ahlqvist: Okay. Thanks a lot, everyone, for your continued interest and engagement. Wishing all of you a good weekend when it comes. Thank you.
Operator: The host has ended this call. Goodbye.
