Ladies and gentlemen, welcome to the NKT A/S Q1 report 2016. Speakers, please go ahead.
Thank you, operator, and good morning, and also welcome from my side to the NKT webcast covering the first quarter of 2016. We released the result this morning. My name is Michael Lyng, CEO in NKT Cables and Group Executive Director in NKT Holding, and today's presenters are unchanged compared to last time. So with me today, I have Jonas Persson, President and CEO in Nilfisk, and Basil Garabet, President and CEO in NKT Photonics. Together, the three of us will cover the development for the group during the first quarter. Let's look into the agenda on slide number four. First, I will cover some highlights for the first quarter of 2016, and then we will go into the different business units where Jonas will cover Nilfisk, I will cover NKT Cables, and then last but not least, Basil will cover NKT Photonics.
Then we jointly end with the Q&A session. If we turn to slide number five and look at the highlights for the first quarter, this is of course, the first quarter being a relatively short quarter. It ended one month after releasing the annual report. So many of the developments have already been taken into account when communicating in the annual report, including guidance for the year. It's overall a quarter in line with our expectations. First, I'm glad to report that we see a pickup in margins from 8.1% the first quarter last year to now 9%. That is despite the fact that we have realized some negative organic growth with 12%, mainly driven by NKT Cables. I'm not at all concerned about that, and I will later on in the presentation explain why.
We also, on the base of this, maintain our outlook for the year. So we are still looking into a consolidated flat organic growth for the full group, and we are maintaining the operational EBITDA margin of approximately 9.4%, which is on par with 2015 for the overall group. Also the underlying planning assumptions are overall still valid, but let's come back to that later on in the presentation or in the Q&A. In Nilfisk, we also are satisfied with margins. We saw a pickup of 0.6 percentage point up to now 10.7% in the quarter. That is despite the fact that organic growth is still relatively neutral. It's - 1%, but it's fueled good with impact from acquisitions. So if we look at it from a nominal point of view, we are reporting a nominal growth of 6%.
And it is also supported by price increases that we normally do in the first quarter, repeated this year, but Jonas Persson will cover more on that when he does the Nilfisk part. In NKT Cables, we also saw some okay growth in Central Europe, continuing some of the positive development we saw in the fourth quarter last year. But that is, of course, more than offset by negative growth of more than 50% in the project business. As said before, it is not a concern. I will explain why later on in the presentation. So it is fully under control.
We, during the quarter, announced the Hornsea offshore order with a value of EUR 139 million, a very important milestone for the management agenda for 2016, securing good visibility into 2017. Also in the product business, we have secured a frame contract with one of the larger utility players in Sweden, Ellevio.
That also gives good visibility in that part of the business. We are in this quarter announcing a new organizational structure, and it is what I call a divisional structure with a functional substructure, and I will cover more on that when we go into the presentation about the cables. For NKT Photonics, we again saw a good organic growth of 11% driven by all the segments. Also looking into the next coming quarters, we have realized a very strong order intake, and thereby we have good visibility and a good backlog in that business as well. Also in this business, we did an acquisition of Fianium. We communicated that to the market early on, but that is, of course, strengthening the global market position, and Basil Garabet will explain more about that when he does the Photonics presentation.
Let us look at some of the numbers for Q1. I already touched on the revenue, but the organic growth split of the - 12% is Nilfisk with - 1%, NKT Cables with - 24%, and then positive growth of 11% in Photonics. As said before, operational EBITDA margin is slightly up from 8.1% to 9%, so a nice development despite the negative growth, and we see increased margins in more or less all the segments. We also here mention the EBITDA after one-offs, because we did have quite a lot of one-off Cost in cables last year, and this year they will be significantly less. So quarter after quarter, we also will see some nice improvements in the EBITDA number. Working capital, cash flow, free cash flow, net interest-bearing debt. You can see the numbers here.
There is not a lot to report on that, and I will come back to the development on the next slides. We started up the share buyback program, and that have amounted to EUR 4.7 million in Q1. If we look at it end of April, the number is 9.5% out of a total program size of communicated EUR 74 million. As said before, 2016 outlook maintained, so we do not have a specific slide for that in this presentation. We are maintaining fair organic consolidated growth and operational EBITDA margin of approximately 9.4%. That is also, if we turn to slide seven, the level that we are at. We are reporting here a 9.6%, which is very much in line with full year guidance.
We expect to be trending on that level a little bit down in Q2 because of a very strong Q2 last year, so please be aware of that. But then we will catch up in second half 2016 and end at the level of last year full year. If we then turn into slide number eight, a lot of numbers again, P&L structure for Q1, and you can also see full year 2015. Here you can see the revenue decrease of EUR 73 million. There are some impact from metal prices because the metal market is pretty volatile these days. So it has a negative impact of EUR 32 million. Small FX changes and then of course, a positive impact from acquisitions in this quarter, mainly coming from Nilfisk, before we then come down to the - 12% organic growth. Operational EBITDA in the box number two.
Good to see that Nilfisk is improving margins from 10.1% to 10.7% in Q1 this year, and that is contributing with EUR 2.9 million. Also in NKT Cables we see improved margins, but because of the negative growth, it has a diluting impact on nominal earnings with EUR 2.3 million. But I am still satisfied with the improvements we see in the underlying margins up from 6.7% last year to now 7.4%. This slide you can also see we do not talk a lot about CapEx sometimes, but here you can see the numbers both in property, plant and equipment and also in tangible assets.
We are investing more in the business both in NKT Cables and Nilfisk, and that is why you see a pickup in CapEx from EUR 13 million last year to now EUR 17.6 million. If you look at the working capital development, there is actually not a lot to report here.
We are significantly down, compared to end of first quarter 2015, where we ended at EUR 356 million. Now we are at EUR 308 million, and that is, of course, bringing down the LTM growth, the LTM percentage development down from 17.2% to 15.8%. Out of that, Nilfisk is pretty much flattish. Then we have seen a very nice improvement in NKT Cables, where we are now down to 11.6%. You can slightly also see on this slide here that now we start to be more flattish in NKT Cables. The composition of the build-up in working capital, if we compare these numbers to end of 2015, you can see in the blue box we have built it up working capital or increased working capital with just below EUR 40 million, which is very normal.
It is a seasonal impact both in Nilfisk with EUR 21 million and in NKT Cables with EUR 16 million, and then NKT Photonics is more or less flat. Looking at cash flow, slide 10, not a lot to report here. We are looking at free cash flow, of course, hugely negative, but it is entirely impacted by acquisition of businesses with EUR 53 million. You can see the composition of that. It relates to Fianium with EUR 25 million in NKT Photonics and then the acquisition of Pressure-Pro in Nilfisk with a value of EUR 28 million. If you take that aside, then line by line, it is pretty much in line with the first quarter last year. Although we are seeing a slightly higher build-up in working capital the first quarter this year, compared to first quarter 2015.
As a result of that, we see a pickup in the debt level, up from DKK 90 million end of 2015 to now DKK 159 million. Still at a very low level compared to earnings. We are at 0.9x operational EBITDA. Still a lot of firepower to support and further strengthen the business, doing the right acquisitions both in Photonics and Nilfisk, and if something interesting is popping up in cables as well. We have financial resources of EUR 532 million, no covenants and unchanged capital structure targets. With that, I would actually like to hand over to Jonas to make a deep dive into the development in the Nilfisk business in first quarter 2016. Jonas, please take it from here.
Thank you very much, Michael. Then I'd like to jump directly to page 14 and look at the growth. We ended up, or lack of growth, I should say, - 1% in a quarter, very much due to Eastern, or at least we have an Eastern effect, but we also had an effect of a very cold spring, especially then in Europe, where we saw that the DIY growth didn't come as expected. We didn't have a decline in the DIYs or do-it-yourself channels, but we absolutely didn't see the growth that we expected for the first quarter. So in May, I ended up with - 1% affected by the Eastern and affected by the very cold spring, and therefore also delayed DIY season. We also had a slightly effect of Eastern Europe and Middle East, a slowdown in the quarter.
But having said that, we had a very nice picking up in the mid-market and have a very nice growth in initiatives we have done in the mid-market. We then go to Americas. It's - 1%, and once again, we are suffering when it comes to U.S. floor care, also in quarter one. But we had some nice pickup in Latin America, and we are growing there. APAC ended up with - 3% affected by China. We still see a weak economy in China, and that is absolutely affecting us. But what is positive is to see that the consumer sales in Pacific is picking up. We have been struggling with that during 2015, but now we really see the pickup and coming back in that field. So what is the effect then when we go into the earnings? Earnings improved very much due to the gross margin.
I will come back to that. We also had some effect of, we still have, of course, running slightly high when it comes to overhead, very much due to the front-end investments. But let's jump right into the next page, going a little bit more into the details when it comes to the earnings. Gross margin came up to 40.6% from 40.4% end of 2015. Very much helped by the price management and initiatives we are doing there, but also the price increases here from 1st of January. We also have had some savings within procurement in the quarter, and also worked very hard with the controlling of the warranty cost and obsolesce, and that we also see a good effect of here in quarter one.
What is going in the wrong direction is the inflation, the annual inflation, but we also have FX effects that is going in the wrong direction in the quarter, and that is also affecting us. All in all, an improved gross margin, not as much as we wanted, but still going very much in the right direction. Next page, then looking into the overhead. Distribution costs start to flat out. We still aim to come down when it comes to distribution costs this year, significantly, and we start to see that trend. What is still going up in the quarter is very much the selling cost, and that is not because we are continued to drive so much investment in the front end.
We only do more selective investments now when it comes to hiring more salespeople and so on, and we only invest in the countries that where we see that we have the effect of the investments we have done previous year. Of course, we also see an effect of the investment we did last year, going into this year, and that is also what we are seeing when we look at the selling cost. The total overhead is going up, but we have a good control over administration costs that is still tracking in the right direction, and it is actually lowering also in the quarter. Of course, when we look at the percentage, the lack of sales is also affecting us when it comes to the overhead percentage. On a positive note, we are now pushing a lot of products.
I already said last quarter that we have a huge range of new products coming out, and we also got a very nice award here, the Red Dot award for the best product design by coming out with products with low energy consumption and a very silenced product. The VP600 is very, very nice product. That also is one part of the range of product we have for the Hero Launch campaign. This Hero campaign is actually launched this week at the big European fair, ISSA, in Amsterdam. The response so far have been extremely positive. So we look forward to see what that also can give us in the front end. To sum up, for the quarter, we see growth, they are flattish or slightly down, and operating margin is improving, very much due to the gross margin.
Commercial Excellence continue to roll out, and we also have the rollout of the 2.0, which is an update to Commercial Excellence now in Q2. We start to see good effects of the new product that is launched here, 2016. Thank you very much. I hand over to Michael.
Thank you, Jonas. Let's continue with a deep dive into the NKT Cables development on slide 21. This is the normal slide where you can see the composition of the organic growth, the -24% divided into the different segments. Out of the -24%, projects is down with 55%. I will explain the reason for that on the next slide, but it should, of course, be seen on the back of +52% first quarter 2015, where we were positively impacted one-off by a change in completion calculation for larger projects. I will come back to that. In the product business, we have reported 1% growth, so we are continuing the trend we saw last year, although a little bit lower than fourth quarter last year.
Underlying the 1% growth, we continue to see good development in Central Europe, in all markets in Central Europe, in all product segments in Central Europe. We also continue to see a good growth in the specialty segments, which is underlying that is the railway business and the accessory business. Nordic is here illustrated as being flattish. Under that is actually a good growth in the product business, medium voltage, low voltage building wires in all markets, in particular in Sweden, growing very nicely. That is offset by one specialty product we have to the telecom industry, acquired from the Ericsson business that are not doing as it should, and thereby diluting the underlying good development in the product business. All in all, satisfied with that development. Turning to APAC, continues to be tough.
I have said it many times before, this is not somehow illustrating the market development, but more illustrating our appetite for taking orders. We do not want to have loss-making orders. We do not want to have orders where customers are not paying us, and that is why we see this significant negative organic growth of 43%. I would like to spend a little bit time on explaining why we were down with the -55% growth in the product business. Here you can see a bridge. Last year we decided to change our accounting policies in the way that we calculate completion ratio on the larger contracts. All in all, it had no impact in 2015, but it had a positive impact in first quarter 2015. We also communicated that in first quarter announcement 2015, last year.
That is somehow impacting this year or taking away EUR 16 million if we compare Q1 2015 with Q1 2016. Last year, we also finalized a lot of offshore projects during first quarter, and thereby we had a lot of civil works in our backlog. This year, we do not have any civil work, but as you also know, civil work is somehow a little bit empty turnover that is passing through our P&L. That diluted the top line with EUR 15 million year-over-year. We have a negative impact of EUR 8 million, which is actually underlying organic growth, reflecting the capacity in the market, reflecting that we are executing a project at lower prices this year compared to last year, negative impacting with EUR 8 million.
Then we communicated and also talked a lot about the supply quality issue that we saw end of last year and beginning of this year. When we communicated around that in the annual report of 2015 back in February, it was still a topic that we did not fully have under control. Potentially it could turn out to be a huge issue for us. I am now happy to announce and communicate that we fully have our arms around the problem, and it has turned out to be less of an issue for us, although it will impact our top line negatively in first quarter here illustrated with the DKK 6 million, and similar amount will impact Q2 negatively on top line.
From a P&L point of view, we still expect to be fully compensated from the sub-supplier. So we do not expect any significant negative impact on EBITDAs for the year.
That is also why we are maintaining the 2016 outlook. So this slide is just somehow, hopefully it gives you some transparency into the underlying development so you do not get concerned about the huge negative number. Of course, moving forward, we will see a significantly higher growth rates. If we then comment a little bit on the development in each of the segments, we already touched on the Hornsea project, the project we won back in April. That is of course a very important milestone for us because it gives full visibility until end of 2017. Underlying profitability level from that order is also supporting our longer term vision of increasing return on capital employed significantly. The trends in the market continues to be promising. We see a lot of tenders in the offshore market.
But now we of course are focusing on the orders that will be executed in 2018 and onwards in the offshore markets. Then we are of course also focusing a lot on the promising DC market where we day by day, or day after day, are getting more and more confident that the DC onshore market in Germany will develop positively impacting the market maybe from 2019 and onwards. But that also means that already now we need somehow to make sure that we will have the right product for the customers a couple of years down the road. On the onshore market, it continues somehow to be under pressure, and that is the challenging part of the project business. Margins are flattish, but still at a relatively low level compared to the past.
In the product business, I already mentioned the three-year frame contract with Ellevio being Sweden's not largest, but second-largest utility player, and that is giving good visibility. It is a frame contract that we got 100%, which is very nice because it is a huge market, the Swedish market, and it has a value of more than EUR 50 million. We also saw good growth in Central Europe and partly also in some of the segments in Nordic. The trends in the market is somehow moderate to positive. We continue to see good development in Central Europe, where we also have pretty good pricing power. Then we see somehow still good, okay development in Nordic, but at a slightly lower pace. The railway market continued to be good with a lot of opportunities in Europe.
Also within that segment, we won a large frame contract with Banedanmark in Denmark, where we are participating in the electrification of the railway system in Denmark. APAC, I already touched on, so not a lot more to add there. If we then turn into margins, we saw a margin pick up from 9% to 9.3%. If we look at it, LTM, nominally EUR 12 million. First quarter is always one of the weaker quarter in the business, so it should be seen in light of that. Then it is of course a little bit down compared to first quarter last year. If we look into slide number 25, this is a slide I also showed you last time, and it is just illustrating what is happening in the project business versus the product business.
Until now, we are fully in line with forecast and budget, and we actually do slightly better in the project business, as also illustrated here. We expect to continue to see positive development in products quarter after quarter to improve profitability coming from pricing, coming from full year impact of drive, et cetera. Then we have the development in project where we need to execute on the Race Bank, and that is diluting our margins until mid of this year, third quarter this year, before we then start to see better margins. Going into 2017, Hornsea should then fuel a positive development in the project business as well. That is also illustrated here on the slide 26.
What are we currently executing in the offshore segment now? Race Bank Galloper is filling up full capacity utilization in 2016, before we then start to move into the Hornsea in 2017, filling up the entire capacity in 2017. Here you can just see in the boxes some kilometers on each project, 150 km, three core cables, 220 kW in Race Bank, 94 km of 132 kW in Galloper. That is what is to be executed this year. Then we move into the 170 km of 220 kW, by the way, the world's first gigawatt-scale offshore wind farm in providing more electricity to more than a million homes in U.K. So good visibility and very good project wins here. Then I would like to turn to slide 27, looking at the newly launched organizational structure. This is a structure that are defined by a divisional structure with a functional substructure.
I think probably we should just step back a little bit. Last year, we announced the EXCELLENCE 2020 strategy, and first strategy, then organization. One of the four must-win battles in the strategy plan is about a more lean and efficient organization. Number two was excellence in whatever we do, for example, production excellence or Commercial Excellence. The third one was product and material development, and the last one, digitalization. Instead of just starting executing on these four must-win battles, we turned into the organization, looked at the organization, analyzed how do we best organize us in order to optimize the likelihood of win these four must-win battles. This one is actually tying directly into getting a more lean, agile, efficient organization. We will be organized in the future in operation being one box where we consolidate all European plants.
We focus on lean, we focus on supply chain, and of course, health, quality, safety, and environment. That is a kind of a COO position. By the way, a position that is not filled up by a person yet. We are searching to find the right person to take full responsibility as COO. Then we have three divisions being front-end-focused. One solution, which is very much what is today called project, that is sales and development of high voltage on and offshore projects, cables, and it is project management, it is engineering, and it is also a group R&D. Then we have the application product line, which is very much what we do in the product business today. But here we consolidate everything what we do in the front end in order also to drive Commercial Excellence to optimize product development, et cetera.
Last but not least, we maintain the specialty area where we already today have accessories and railway, but also are integrating the APAC business. To support all this, the back end and the three front-end lines, we of course have finance and HR. All these blue boxes will in the future form the group management. So it will be a journey to reach this. We will execute this in waves during this year, three different ways. Finally, it will be fully implemented by beginning of 2017, where we will then, of course, also start to communicate and report to you, in this new structure. It is of course, also a structure that should drive efficiency.
It will over time impact quite a lot of people in the cable organization, everything from the result of being more efficient, more lean, but also focusing on moving from high-cost countries to low-cost countries are initiatives under this umbrella. Good. If we then turn to slide 28 to sum up. I already mentioned part of the numbers here, but good visibility both in the project business and in the product business, as a result of good order wins. We talked about the negative impact on the top line in first quarter, an isolated impact in first quarter that will be less significant in the coming quarters. Supplier quality issue fully under control, although impacting the revenue in Q1 and Q2 is slightly negative. Then I touch on the new organization.
With that, I would like to hand over to Basil, to do the same deep dive for the Photonics.
Good morning. I'm Basil Garabet. We'll start on page 30. We'll start off with the acquisition of Fianium, which we completed at the end of the quarter. Fianium is a U.K.-based global supplier of ultrafast lasers, with a very good and great reputation in the industry. We were very glad to close that acquisition, which went very smoothly. Both NKT Photonics and Fianium have similar cultures, and the integration is moving very well on that. Fianium have a very complementary geographic coverage over the world. What we also get out of the Fianium acquisition is a manufacturing facility in Southampton, which is a very important location for ultrafast fiber lasers. The product portfolios, both our scientific and OEM customers, are very similar. We again, expect that the acquisition and the integration move well.
What it does, it strengthens our global market position in the two segments of imaging and metrology and in material processing. If we move to the next page. The quarter, we realized a growth of 11%, based on all three segments that we're in, which is the imaging and metrology, sensing energy, and material processing. The imaging and metrology area is one of our focus growth areas, and that's where Fianium will play a lot of roles going forward. We had good growth in the quarter. It was driven by a number of long-term contracts, in industrial metrology applications. That segment, in 2015, was about 45% of our revenue. The sensing and energy segment, we've done very well in the quarter as well. We've got good growth in many areas and many geographical areas. We're very pleased with the way that segment is going.
It's an established segment for us, so we are keeping an eye on how to grow that, and it's been very stable for us in the last three quarters. The last segment, which is material processing, is probably the most interesting. It's a new growth area for us, and it's growing relatively fast. We have significant new orders in the quarter, and we expect that area to start growing faster also throughout the year and the coming years. If you move to the next page. Just going through numbers here. The revenue was EUR 7.2 million, which is 11%, as we mentioned, over the same quarter the year before. The operational EBITDA was slightly negative. It actually would've been slightly positive, but for the one-offs with the acquisition. Full-time employees actually reflects, which is 239, reflects the number of employees we gained from the Fianium acquisition.
Just to wrap up, a good quarter for us, 11% growth. Good orders in all the segments that we have been in. The acquisition is going well. We're very pleased with that. We also, in the process, as I mentioned before in the last quarter, of integrating our division in Germany, LIOS. That's going really well as well. The continued synergies are actually more than we expected. So we're using that as a template with the acquisition of Fianium as well. With that, I will pass on to Michael.
Thank you, Basil. With that, we have finalized our business unit review, and we are ready to take any questions that you might have. Operator, please take over from here.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad. The first question comes from the line of Claus Almer from Carnegie. Please go ahead. Your line is open.
Thank you. Yes. I would like to start out with a few questions about Nilfisk and its margin trends. The overhead cost ratio increased by 1.3 percentage points, as you described, is partly driven by higher marketing spend, but also M&A. What should we expect going forward as a level? That would be the first question.
I think we will see a slight down when it comes to overhead absolute number. Of course, margin such is also affected about the growth, but the absolute cost will go down going forward.
Is that EUR 2 million? Is it EUR 5 million? More just in ballpark to what to expect.
I would very much like to say that it will go down, but exact numbers I don't want to go into right now, actually, Claus Almer.
Okay. That's fair enough. No doubt your margin in Q1 was a positive trend. When you look at your strategy, have you adjusted the strategy to be more focused on the cost, as revenue growth seems to be not picking up as one could have hoped at least?
Absolutely. What we do is, and we also described before, Claus, is that we are more restrictive when it comes to investment. We like to see first of all the payback of the investments that we already have done. Of course, we also see, we are operating in a lot of countries, 60, 70 countries. Of course, we see countries where we have good response of the investment we have done. There we like to continue to invest. Overall, we are more restrictive when it comes to front-end investments, based on that we don't really see the growth globally as we wanted.
Okay.
If I can just add, we also decided because of the development on top line to adjust the cost base a little bit in the back end of last year. That is also impacting it.
Sure. Then, keeping it at Nilfisk and moving up to the revenue. If you are going to adjust your organic growth rates with the early Easter holiday, what would that have been then?
For the whole quarter, we are talking about two less working days. That is one part, and that is roughly on a quarter base, an effect of 2%, Claus. Then of course, you also have an effect of the cold weather. It is hard to believe now when you look out the window, but that is the case. Of course, that has also delayed the DIY season slightly. But I would say two, 2.5% effect roughly.
So just as a concept, when we move into Q2, and you are not going to guide, of course, on that quarter yet, but would it be fair to say, okay, you made -1% in Q1, then we should add a couple of percentage point from the Easter and then some port strike on top of that will be the run rate?
I would say when it comes to the Easter effect, of course we should see some effect of that. But of the cold weather, we will get back because the season will come back. But we will not completely regain because the season is also shortening because of the cold weather. We will absolutely see some positive effect from it, but not maybe fully the 2%.
Right. Okay. Just the final question, this is with your strategy in the U.S. market, maybe you could give some flavor on where are you with Commercial Excellence in the U.S. and the growth prospects in this important market?
It is an extremely important market, and that is absolutely dragging us as well. Commercial Excellence is rolled out in U.S. But we are also struggling with how we go to market there, where we have a very much an indirect model where we are very dependent on dealers in U.S., which is, of course, a total different situation in Europe, for example. That is something that takes a little bit longer time to change. When the whole Commercial Excellence program, of course, have effects, and we see actually quite good effects here in quarter one when it comes to direct sales. But our direct sales is fairly small compared with the total.
Therefore, we are also taking a new or changing slightly the Commercial Excellence also to drive the dealer part of it, which is harder to influence the behaviors of the dealers and the share of the dealers.
Okay. Thank you.
As a reminder, ladies and gentlemen, please press zero one on your telephone keypad if you wish to ask a question. We have a question from the line of Fasial Ahmad from SEB. Please go ahead. Your line is open.
Yeah, gentlemen. Fasial Ahmad from SEB. A couple of questions from my side. Firstly, on Nilfisk and just to follow up on the gross margins. Did mix by any ways help your gross margins in Q1? My question is really, is the Q1 margin trend really sustainable and can we read that across to the coming quarters also? That's the first question, please.
Yeah, we'll try to answer that. The mix effect, DIY, of course, if we had a big DIY growth, we would have a dilution of the gross margin, but the DIY is fairly flat compared with last year. We expected that we should grow in the DIY segment, but we didn't. So of course, we don't have really a mix effect here. How going forward when it comes to mix effect, if I knew that, I would be very, very happy. But it's very hard to predict the mix effect going forward, actually.
Okay. The only mix effect you had in Q1, that was DIY and nothing else than that?
Say that the mix effect in Q1 was very limited because the DIY were fairly flat compared with last year's same quarter. We expected higher growth, but it was fairly flat.
Okay. Regarding your price increases, competitors have made similar kind of price increases in Q1?
Of course, we have multiple competitors. We have seen both. In some countries, they have absolutely followed us. In some countries, they have done less. In some countries, they have done more. It's very hard to give a full picture of what exactly the net effect of their price increases have done, what they have done.
Okay. Just a couple of questions on cables. The organization changes you are doing in cables. You indicated during the call that it will have an efficiency effect. Can you try and just quantify the effects from that?
The main purpose of this organizational change is really to support the execution of the EXCELLENCE 2020 plan. Part of that is, as you know, to increase return on capital employed from current level of 8% or 9%- 15%. This will also assist that journey. I do not want to put a number on it yet. We will probably do that a little bit further down the road. There is quite a lot of prerequisites that we need to deal with before we can speed up the implementation of this work here. For example, we need to have a different IT system really to support this structure, to facilitate that we can move into low-cost countries, having shared service centers, et cetera.
There is a nice profitability pick up from this journey that of course, also linked into other elements of the strategy plan that we are working on. But right now, I cannot and will not give you a number, Fasial.
Okay. But this is a significant part of the journey to reaching your plus your ROCE targets?
No, it is not a significant part. It is one major element out of the plan.
Okay, perfect. That is all from my side.
As there are no further questions registered at this moment in time, I hand the call back to you speakers.
Thank you. That was a short Q&A session, but that is fine. We are actually finished for today and can close off the call. If we look at the financial calendar, then we will be back on 18th of August with the second quarter announcement. Until then, enjoy the nice weather. Thank you and goodbye.