Earnings Call: Q3 2020

Oct 22, 2020

Welcome to this news conference regarding Cargotex Q3 twenty twenty results. I kindly ask you to pay special attention to disclaimer. This call is to discuss Cargotex Q3 twenty twenty results. Securities laws in The United States and in other jurisdictions restrict CargoTech from discussing or disclosing information with respect to the contemplated merger with Konecranes. Information regarding the contemplated merger can be found at sustainablematerialflow.com. Until the completion of the merger, CargoTech and Konecranes will carry out their respective businesses as separate and independent companies. The information contained in this presentation concerns only Cargotec. The merger and the merger consideration securities have not been and will not be registered under U. S. Securities Act and may not be offered, sold or delivered within or into United States except pursuant to the applicable amount of or in transaction not subject to the U. S. Securities Act. Then moving to actual Q3 report. Mika will start with group level development and after that our CFO, Mikka Polakka, will continue with business areas and finances. Please, Mikka. Thank you, Haenden. Good afternoon from my behalf as well, and thank you for joining the Cargatec Q3 presentation. Overall, I'm satisfied with our performance in quarter three considering the market situation. The recovery in our businesses continued throughout the Q3 and especially demand in HAYAB and in Kalmar mobile equipment developed well throughout the quarter. The services have stayed stable throughout this crisis and are actually down only 4% year on year or year to date and that decline is primarily coming from Kalmar crane upgrade projects and high up installations. The core services have actually fared very well throughout this crisis. Our relative operating margin stayed actually at the same level as last year. This is primarily thanks to the savings, primarily just temporary savings that we have put in place and those temporary savings are now more and more moving towards the permanent savings as we move towards the Q4. Also, the good margin development in all of our businesses continued and this is thanks to the sourcing activities we have been able to do throughout 2019 and 2020 as well as the pricing efforts we have done in all of our businesses. Also, the stability of our core services, maintenance and spare parts has helped to maintain the profitability at a good level. This also shows that we are able to manage the company throughout the crisis without sacrificing too much of our profitability. I am also very happy to see MacGregor back in numbers and the great effort that has been done by the MacGregor team heading towards the profitable business again. Despite the many savings we have done to ensure our profitability, it is good to note that we have continued to invest into our R and D and our R and D expenses are up again year on year in driving our eco efficient product portfolio, electrification, robotics and automation. It is also good to note that despite the decline in many of our product areas, our eco efficient product portfolio has actually grown more than 8% this year. As said, the relative operating profit stayed at last year very well and we have seen a good profitability development continuing throughout this year. The coronavirus pandemic impact was clearly less significant already for us during the Q3. The temporary savings have continued throughout the Q3 and to a large extent will continue also throughout the Q4. And also, we are moving from more temporary savings to more permanent cost savings in many of our businesses. Also behind the good result is the continuous productivity improvements we are doing in all of our businesses and our headcount has declined so far year to date with more than 800 persons. We see a good demand recovery happening, especially in HAYAB and in CALMAR mobile equipment. Customers are still clearly cautious about the larger investments such as the port automation. And our delivery situation is back to almost normal situation with no major issues with our component suppliers nor our own manufacturing units. In terms of the activity, today obviously, we have a very large number of connected equipment that gives us a real time online visibility on the activities in the different sectors of the logistics. The activity increase has continued throughout the Q3 and in many areas, we are today close to the pre COVID crisis. The red balloon here shows the CALMAR mobile equipment activity level and the blue, the high up crane activity and truck activity in these areas. And as you can see, the development has continued. We are still overall somewhat short from the pre COVID crisis and last year levels, but that varies from one sector to another and country to another. In some areas, we are already over the activity levels that we had pre COVID and in certain areas, we are still well below those activities. So quite a lot of variation in that activity level, but overall, direction is clearly up in all of these areas. In terms of the market environment, obviously, the Q3 was still a difficult one in many areas. The number of containers handled and the container flow was still obviously down in Q3, but is expected to increase already in Q4 and the estimates are that the next year container traffic volumes will grow roughly seven percentage points. Obviously, also construction activity has been down, but is now we are seeing signs of turning and for example, in U. S, the housing market index in September was at the record high level. In Europe, the construction activities are fairly mixed back today with the large variation between different countries. The market environment in MacGregor continued to be difficult one and we have seen almost record low number of new ships ordered so far. However, the market is expected to start to recover with Clarkson estimating about 900 ship orders next year, which is still well below our normal year level. The orders received have bottomed out during the Q2 and especially good development we have seen in Hayab, especially towards the September, which was a strong order month as well as in Kalmar mobile equipment. And the recovery have we also started to see clearly in U. S, especially during the September, where we had a good order intake happening both in as well as in Hayab, also in The U. S. Market. Also good to note that Hayab order backlog has now actually turned back to growth. In Kalmar, the mobile equipment order intake has developed well, but we have seen postponements in the larger investments, primarily around the Port Automation. However, the backlog and the pipeline in Port Automation is solid. We have not seen any cancellations on those ones, but we have seen slowdown in post moments in some of those decisions with the buildup in the pipeline happening as we speak. And in MacGregor, obviously, the low market situation has caused the backlog to go down, but we still have more than one year delivery of equipment in the backlog in MacGregor as well. As said, operating profit trend has been good. We have seen clear absolute operating profit improvement quarter on quarter this year and we've been able to maintain a comparable operating profit margin at the same level as last year. The service business has been very resilient throughout this one and even though we have seen some decline in there, in Kalmar that decline has almost solely come from larger crane upgrade projects and the core services have actually maintained their good level in there as well. Also in High Up, the service decline has primarily come from the installation and ancillaries, which are related to the new equipment and truck deliveries as well and the core services have maintained a good level in there. We have seen decline in MacGregor services and this is primarily related to the access for the ships and the capability to maintain them as well as the low level of the dry docking activities there as well. However, overall, the services and software have maintained a good level. We saw some decline in software sales. This was primarily related to large license deals in Navis and the timing of them where we actually saw a number of relatively large deals in Q3 last year and this year, we didn't land any, but we see good opportunities to actually close some of the license agreements throughout the Q4 this year. With that one, I'd like to hand over to Mikko Polakka, who will cover the business areas. Thank you, Mikko, and also good afternoon from my side to all you on the lines. Let's go first to CALMAR, where the mobile equipment was nicely supporting the overall CALMAR financial performance. CALMAR orders were down by 17% year on year. This was mostly coming from Automation and Projects division where customers were holding back bigger investment decisions. As Mika mentioned, no order cancellations, but customers cautious in making big investment decisions. Looking CALMAR orders further, so in mobile equipment, we saw actually very small decline in the orders and actually the mobile equipment orders were improving nicely from the low quarter two levels. Calmar sales were down by 14%. The Automation and Project division sales grew very much supported by the orders which we have won in 2019 and which we are now delivering. The sales in mobile equipment services and software declined, but also a bit like in orders, also in those businesses sales, the decline was clearly smaller in quarter three compared to quarter two. So also there an improvement visible. The Kalmar absolute comparable operating profit declined very much driven by the sales decline of EUR60 million. And then we had some costs related to the Kalmar Automation and Project Division operating model reorganization. But when we look at comparable operating profit margin in Kalmar, it was almost 9% and very much supported by the strong mobile equipment performance in quarter three and then also the continuous productivity improvements what we have done in CALMAR as well as the cost reductions. Then looking high up, also there, order decline, but again very similarly to Kalmar, the order decline in quarter three was much smaller what we experienced in the second quarter. In the second quarter, the orders went down by some 30%, now 11%. Sales were declining 17%, but also here in HighUp's case, the decline was clearly smaller than what we saw in the second quarter year on year comparison. HyAP delivered a strong comparable operating profit despite a EUR 53,000,000 sales decline, only EUR 3,000,000 decline in the comparable operating profit. And also the comparable operating profit margin clearly increasing from last year's levels to 12.22%. The comparable operating profit margin improvement is very much coming from the continuous productivity improvements also in as well as cost reductions. And currently, we have approximately 480% smaller headcount in High High Up compared to last year's situation. Then looking at MacRegor where the heavy actions what we have done in DTS integration as well as overall MacRegor restructuring are bearing fruit. Markets like Mika showed earlier are already still weak. Customers are optimizing their cash, which is very much visible in the orders as well as in sales. The bright spot in MacGregor is clearly the comparable operating profit, which is now EUR 2,000,000 for the third quarter and also there very much coming from the heavy actions restructuring TTS integration. We have approximately three forty persons smaller headcount in Magrecor compared to the situation twelve months ago. The TTS integration and the restructuring is progressing actually better than what we anticipated in the beginning of the year. And due to this, we have increased the savings target for this year from the original EUR 15,000,000 to EUR 20,000,000. And out of this EUR 20,000,000, we have now already so far delivered EUR 14,000,000 in the first nine months. Few words about our key figures. Our sales total sales, $777,000,000 for the third quarter. This is €124,000,000 lower than year on year ago. This kind of sales decrease has led to approximately €40,000,000 lower gross profit. To kind of offset this gross profit and sales decline, we have then reduced our SG and A costs by EUR24 million. And this has enabled us to maintain the comparable operating profit more or less on the same level compared to last year's quarter three, 7.3%. We had EUR11 million of items affecting comparability. These are mainly related to the previously mentioned restructuring programs in MacGregor, in Highup and in Kalmar. Our net income despite €124,000,000 sales decline, net income was almost on last year's level, 27,000,000 and earnings per share was €0.41 per share. Cash flow was strong in quarter three, very much supported by the good performance both in High Up as well as in Kalmar, especially in the mobile equipment. And in addition to that, we have been able to reduce the net working capital from the quarter two levels, especially in inventories as well as in receivables. Our financial position is strong and liquidity is on a good level. Our gearing was 66%. This is 12% units higher than at the end of last year. Roughly 9% of this increase is coming from the dividend payments what we have done during this year. And the liquidity is at EUR $830,000,000, so very strong for the good current situation. No major changes in our debt portfolio. If we look our outstanding debt maturities, we don't have any debt repayments coming up in the next eighteen months' time. And then our outlook, if we consider the current market environment as well as the supply situation, we expect that the second half comparable operating profit increases from the first half when it was €82,900,000 And I hand over to Hanna Maria. Thank you, Micha, and thank you, Micha, for the presentation. Now there is a possibility to ask questions. And as a general reminder, this event is not to discuss the merger with Conagres. Handing over to the operator, please. Thank you. We will now take our first question. This is Antti from SEB. Firstly, kind of the demand trends you're seeing in higher than calmer mobile. Sorry, there's a bit of an echo on the room, so bear with me. Could you comment kind of the demand improvement where you ended up end of Q3, start of Q3? And how should one think about the near term demand considering kind of the seasonality, the recent virus outbreaks? And is this driven by robust underlying demand or some kind of a pent up after a slight weak springtime? Just a bit more color on the demand recovery. Sure, Antti. Maybe I start, and Mikko, if you have anything to add on that one. So starting with higher band, we saw kind of a month on month improvement. Actually, the same trend that we saw on Q2 continued throughout the Q3 as well. Actually, it sort of accelerated towards the end. So September was already strong month for us. No large individual orders, so it comes from the sort of fairly normal activity. The difference between the previous months and then towards the end of quarter was that we saw The U. S. Activity starting to pick up actually surprisingly well as towards the end of the quarter as well. So we see both the European and U. S. Market actually showing now good signs of demand, whether it's a sort of bounce back from Q2. And obviously, it's hard to sort of point out specifically where it comes from. But if I look at the high end equipment activity levels, for example, in the main markets, they actually are surprisingly strong in many of The U. S. Markets. For example, the truck activity index is actually at the same level or in some cases up from that one. My guess, what we sort of look into the data is that the construction activity has sort of re picked on that one. Now obviously, the low interest rates and stimulus packages, etcetera, are partly probably driving that one as well. In CALMAC mobile equipment, we actually seen a solid demand there as well in terminals, e commerce, sort of logistics obviously has been pretty hot throughout the quarter as well. And again, same thing as in High Up, we have seen a strength in demand towards throughout the quarter in U. S. Market, where, for example, the terminal tractor activity was at very low level on Q2. It has started to pick up again on Q3, and we have seen destocking happening by the dealers and new orders coming in on that one. Okay. Thanks. And maybe a follow-up on the Calmar Mobile side. Could you remind about the situation regarding the electrification of your product portfolio, kind of where you stand today? And and how do you think this will evolve going forward when you when you will be selling mostly electric equipment on that side? It has gone well, and we haven't slowed down. As I said, we further accelerated still our R and D investments, and we have announced that all of CALMARK mobile equipment will be available next year, if I remember correctly, on electric format as well. The major demand we see today is around the forklift trucks, those who are operating maybe in the warehouse or logistics yard environment as well increasingly so in the terminal tractor side and really led by probably key customers where the efforts are to focus on sustainability is pretty high, partly also driven by the regulation there to sort of the import areas, for example, the diesel engine usage is to be banned in many of the areas as well. So I think we obviously, we will see diesel engines in many of the developing countries in some other areas where the lack of grade will be a key issue for years to come. But we have seen the pickup on and the demand actually continuing strong and strengthening continuously in the electric vehicle side. I would perhaps add there that if we look the overall CargoTech level, our eco efficient or the share of eco efficient sales has increased from last year's 20% to 24% now. Okay. And then lastly from me. Looking at the backlog decline and duration in the more project heavy divisions, Kalmar and MacGregor, how should we think about it? When we are bigger issues regarding workload and kind of the length of the backlog, and then maybe will the upcoming merger with Konecranes have any impact on what type of savings programs or restructuring are you prepared or planning to do with Karma project if that demand doesn't come back in the next few quarters? When I look at the backlog on that one and let me start with the MacGregor, there, obviously, backlog is down. But it's good to remember that when you look at the MacGregor revenue, so much of that one is now services. So effectively, let's say, simplify that the MacGregor revenue would be at €600,000,000 level on annual basis, $250,000,000 of that one is services today. So that leaves you an equipment revenue of roughly €350,000,000 So today, the backlog extends well into the 2022. So there is no short term issues regarding that one. We do expect that ship order recovery starts throughout the next year. We have seen record low levels today and the Clarkson estimates now that we should go up to roughly 900 vessels next year, really driven by just simply by the replacement cycle. One additional point on the ship market, one sort of positive thing that we have seen throughout this year is that the shipping lines have been, I would say, extraordinary profitable this year and it's good always when your customers are making money as well. So hopefully, that gives some encouragement on that area as well. Regarding then the CALMAR, obviously, the mobile equipment, we see now the demand returning well. So I'm not worried about that one. The larger automation projects, we have a backlog and the revenues that extend into the sort of mid-twenty twenty one. We do need to start to see some of these orders finally realizing by summer next year if we want to maintain roughly the current revenue levels. There is a very solid backlog in there and these projects that we've been sort of entertaining for quite a while have not gone anywhere, but very clearly, the customer decision making has been disappointingly slow on that area. Will take next question. Please go ahead. Your line is now open. Good afternoon. Thank you very much for taking my questions. It's Arce from Credit Suisse. My first question is around your comments on cost savings and maybe moving now more of the temporary cost savings to a permanent bucket. Could you maybe give us some color how much of the temporary savings you did in Q3? How much you expect for Q4? And out of the temporary savings this year, how much do you think could be retained next year? So we have made roughly EUR 10,000,000 per month with the temporary cost savings. The main months have been July and August. We have lifted some of the reduced work time savings now in September. There are still some personnel groups, which are having the shorter work time. So I would estimate that in quarter three, more than EUR 20,000,000 are coming from the temporary cost savings. What comes to the more kind of permanent savings, we have done already during the last twelve months' time continuous product improvement. And as mentioned already during my part in the presentation, in Kalmar, we have roughly 220% lower headcount compared to twelve months ago situation, in high up almost four eighty and in Macregor three forty. So we have been continuously doing productivity improvement, no kind of major restructuring program, but here and there improving the operations, which has been then contributing to these relative comparable operating profit levels in our three businesses. Thank you. Just to confirm, for Q4, do you still expect the savings to remain at €20,000,000 per quarter? Some of the temporary cost savings we are converting into permanent cost savings. We continue some temporary savings. For example, our traveling activity is almost zero at the moment. We are minimizing our external services usage. We have used in the past also external persons to kind of compensate workload or kind of additional cover the additional workload. Now when the volumes are lower, we are doing that work by ourselves. So some of these savings continue also in quarter four, but we don't disclose the exact amount for that. Sure. Thank you very much. And my last question is about CALMAR margins. Could you maybe talk a little bit about the impact of reorganization of supply chain on margins and whether it was a one off impact in Q3 or whether we should expect any further headwind in the future? The as Mikko was saying, first of all, the mobile equipment business margin was at a very good level in there. When we are reorganizing the supply chain, some of that is one off type of costs, some of that is caused by the COVID situation. And a practical example on that one, for example, is that some of the project implementation was estimated to be done partly by visiting Chinese personnel from our joint venture operations. And now due to the COVID situation, we actually have to compensate for that labor with the sort of hiring local subcontracting in places like U. S. And Australia. And that obviously has increased the cost. And while those travel restrictions are placed, some of the project costs are higher than we initially estimated. So some of that will linger into the Q4 as well. But the good news from my point of view that if you look at our profitability development so far, we have done that against a sort of negative mix. So the proportional part of the MacRegor and CalMag project business has actually increased as a part of our revenue when the revenue in high up and mobile equipment declined faster throughout Q2 and partly Q3. And what we now see in order development is actually a sort of faster rebounds of the higher where the order backlog is already higher and a good recovery of order intake in mobile equipment. So we actually see that mix now turning back to more favorable for us. But just would it be possible to quantify the impacts of those incremental costs? Not into detail, no. Okay. Thank you very much. Thank you. We will now take our next question. Please go ahead. The line is now. Hi, Nicky and Nico, Hannah Magnus here from UBS. Just a couple of follow ups for me. If we could look at the growth progression in HEAP specifically, did you grow orders in September at all in any region? Yes. Actually, the September order intake in HEAP was stronger even year on year. So we had a better order intake in twenty September than we had in twenty nineteen September. Thank you so much. Would you favor us with the number there? Is it 5% higher, 10%? Yes. It was a very healthy growth, good growth. But it's been fairly steady growth as well. I mean all the way from sort of April, it was the low point. We have seen steady month on month improvement even throughout the holiday seasons. And obviously, then September being kind of back to normal, you saw a higher number, but the number was even higher than it was a year ago. So good strong development there. Excellent. Thank you so much. And I mean, with volumes coming back also, I think, faster than anticipated on the terminal throughputs globally, think you commented on a 7% growth in 2021. What do you expect on the quotation activity? Have you seen any picket there? Or is it sort of still very muted on that side as well? On the larger terminal projects, the backlog is solid in a way that we have not seen anything disappearing on that one. But obviously, a disappointment for us is that some of the projects that are kind of already beyond the quotation phase have not been we haven't been just able to close them with the some reasons are quite practical due to the COVID and travel bans. Some of them are just of careful decision making process from the customer side. But as such, there is a if I look at the existing sort of deals that are on the table at the moment and I look at the prospects going into 2021, that there is still a solid sort of prospect list on those ones available. Okay. Got it. And then another follow-up on the calamari and the mix there. Did you say you expect the mix to improve into Q4? Not necessarily into Q4, but on the moving if this development continues, we should expect to see the mobile equipment ratio to increase moving into the 21%. Okay. Got it. And would you be possible to quantify the impact you had on that in Q3 specifically? No. No. I I'm not sure. I never I would be able to, I mean, if I know. I can try. That was good. Thank you so much. We will now move to our next question. Please go ahead. It's Jerk from Indres. My questions have already been mostly answered. But anyway, coming back to your guidance, it's relatively loose. You would need only EUR 26,000,000 of EBIT in Q4 to reach the low end of the guidance. Why is that? And where do you see the biggest risks now in Q4, absolute operating profit? Yes. I mean, this was a consideration from us. We see it at this stage, we see things actually moving along quite well. But obviously, the COVID situation is quite unpredictable. And I could see risk, for example, with the cluster of infections in one of our manufacturing facilities that could stop production potentially up to two weeks or so and that could impact. And we have taken those risks into consideration in a sense that we wanted to sort of give you guidance that we are comfortable on even in the case of certain negative surprises. We have not seen any of that one happening at the moment and the underlying trend is quite strong. But obviously, there are still risks available due to the COVID situation within the Q4. And those risks, I think, are primarily related to the sort of sudden interruptions in the supply chain. Okay. Thank you. And then coming back to Q4 gross margin, the calmer question was already published, but how about Hyatt? Will the improving Hyatt demand already show in Q4 gross margin? Not necessarily. I mean, it's good to remember that regarding to Q4, that Q2 and Q3 beginning order intake was lower. And obviously, now we have seen September coming back quite stronger. So that will have a certain impact on the Q4 there as well. Okay. Thanks so much. We will now take our next question. Please go ahead. Hi, hello. It's Aurelio from Morgan Stanley. Thanks for taking my questions. I've got a couple, if I may, please. So the first one is more kind of bigger picture. Now that we've seen MacGregor turn into black again, what do we need in terms of sales to see the business doing, let's say, 5% margins? I think you if I remember well, you mentioned that you would need north of €1,000,000,000 of sales to kind of see 10% margins back in that business. I guess, what's next from here? I think next from here, obviously, first of all, the savings activities and productivity activities we have seen are flowing through. So some of that is fully visible only next year. So that certainly helps us even in the relatively low situation. So even with the low sort of ship order activity, I'm still pretty comfortable with the macro situation, primarily driven right now by the cost saving activities. And if we now assume, and I think that, that's almost sort of clear that ship orders can only go one way, which is up from here, and nobody knows the speed of the recovery scale of the recovery, but we are able to manage that one. What we have said in the past is that with the roughly €1,000,000,000 of revenues, we should be in the double digit operating margin situation. I have my view on that one has not changed. But the speed of the recovery obviously is a question mark, but we are in a much more comfortable situation now that we are back in the black numbers and we can manage the end of business and cost levels depending on the demand. And I guess the second question is around some of the different dynamics that you've seen in construction. I think you mentioned that September was already quite strong in The U. S, and we've been getting, I would say, mixed messages from The U. S, especially where the resi side is very, very strong, but we are starting to see a sharp deceleration in non resi. I guess, do you see any impact from that or any risk from that? Or are you more heavily skewed towards resi? We are more heavily skewed towards the residential and building than the commercial side on that one. Typically, the applications of Hyab are more applicable for the residential build out on that one. Great. Thank you. We will now take our next question. Please go ahead. Hi. This is Johan at Kepler Cheuvreux. I think we or you promised us when we spoke the last time an update on the Navios divestment now in the quarter. I might have missed it, but could you give a what's happening with the Navios divestments? Are you still having interest? And what sort of price levels are we talking about? What we said, I think, October 1, if I remember correctly, we issued a separate release saying that we have restarted the process with Navios. So we are now in the middle of the looking at the different options for the business as well, and that process is ongoing as we speak. Then depending on what the conclusions of that process are and where we end up, we will then update you when we have more information. The interest towards the Navis overall from the market has been exceptionally high. Okay. Thank you very much. We will now move to our next question. Please go Just on FX, I think the recent devaluation of dollar, could you maybe give us some comfort on the fact that shall the rates stay where they are at the moment that he will not see any material negative FX transactional revaluations on EBIT? I mean, of course, we don't have the crystal ball how the U. S. Dollar euro develops. But so far during this first nine months or in quarter three, the U. S. Dollar euro impact on IAP results was, I would say, single millions, EUR 1,000,000 to 2,000,000 at the maximum. So no major impacts from there. Okay. Thank you. And my second question was about TTS savings. Could I just check, please, that €20,000,000 target for this year. Is this just acceleration of the overall program or that's an increase to overall targets over the next three years? The overall target stays as it is, but we have been able to execute the savings in a faster speed than originally anticipated. Okay. And my last question, I guess, you mentioned you you you wouldn't like to discuss the merge, but I'll still try it. With the with the ports business, I guess my question is, could you maybe talk a little bit about where the overlaps with Konecranes are and where the market should be concerned about Tesla and truck issues? Like I said earlier, in this call, we cannot discuss any topics related to the merger with Konecranes. So we we cannot, unfortunately, ask questions. Thank you. We will now take our next question. Please go ahead. This is Tommy from DNB. Unfortunately, my line was cut off. So I have to come back to the guidance comments, which I missed, unfortunately. So was there something specifically weak you are guiding for the fourth quarter as you are just referring to the second half being above the first half? Just a little bit of clarity on that, please. I mean, what I said is that we just wanted to kind of be comfortable then that we that there are risks obviously related to Q4 that are primarily around the potential disruptions in supply chain. Let's say that we would, for example, have an infection cluster in one of our manufacturing units or one of our key suppliers would have a similar situation. And And we wanted to sort of give a guidance that we would feel comfortable, would be able to take some of these hits. None of that is visible at the moment. Actually, the development has been solid so far. But obviously, with the sort of continuously moving COVID situation and the risks are still there. But the guidance, let's say, who knows what is the level of improvement. But are you, let's say, trying to say that the fourth quarter could be below the third quarter level? Or is it more likely that it is flat or up compared to the third quarter? As we said, it's the second half is better. You can so I'm sure you've already done the math regarding that one. And as said, there are sort of the risks related primarily on the supply chain side. We have not seen any of those risks in or we don't have any of those in sight at the moment. And overall, the underlying development has been good. But you never know, I mean, there aren't too much left here and much can happen as we have seen. And for example, also in quarter three, we have been quite successfully been able to advance the project. So some of the commissioning persons have been able to travel. Should there be more kind of restrictions again for travel or entry to the country that can also impact our top line. So that's why we have the guidance what we have given. Yes. I mean, we agree that it's a cautious guidance, but it's a high risk environment at this stage, and we just wanted to make sure that the guidance would also cover the potential risks in there. Okay. Thank you. There are currently no further questions. Okay. Then it's time to thank you for active discussion. Our financial statements review will be published on February 4. Stay safe and healthy. Thank you. Thank you.