Very good morning from sunny Helsinki, and welcome to follow the webcast presentation of Relais Group PLC 2021 results. My name is Arni Ekholm. I'm the CEO of the company. Presenting today is, as per usual, our eminent CFO, Mr. Pekka Raatikainen.
Good morning.
The presentation will take roughly 30-35 minutes, and you will at all times during the presentation have a chance to make questions online by pushing the Ask a Question button and then writing your question and then submitting it to us, and we will have the chance to entertain the questions then at the end of the presentation. Before taking a look at the contents of the presentation, when I presented the results for one year ago, we had 350 professionals working in the company, and now last year we have gained 600 more family members, professionals into this team, and I want to thank you all, almost 1,000 people working at Relais Group, for your big efforts during last year. I mean, without you, this would have not been possible to reach these results.
also want to thank our customers, business partners, shareholders, for the trust that you place in us, and as I said the last time, we will do our utmost to earn that trust every day, also moving forward. I think there might be many people following the webcast who do not yet know what kind of animal Relais Group is, and I have the pleasure to walk you through some let's say slides that I showed already in the last presentation. As you know, repetition is the mother of all studies, and our strategy is very clear, and I want to explain also how we operate and what kind of market is where we are going to compete and win.
A short look at the group companies, and then we will have a recap of what happened last year, and then financial review for 2021. Right. When we made the IPO in 2019, when we listed the company on the First North Growth Market, our latest pro forma turnover at that stage was EUR 190 million, and I think the EBITDA was EUR 16.7 million. We made a strategic goal for ourselves in 2019 to double the turnover in five years. The number I'm showing you now, the reported net sales of full year 2021 is EUR 237.9 million, so it's exactly the double turnover from the 2019 level.
I will talk about the new performance bar that we have set to ourselves. I think all of us should tap ourselves on the shoulder. I mean, we reached the goal much sooner than we anticipated. We said 5 years, we actually did it in 2 years. What is Relais Group Plc? We are a leading Nordic consolidator in the vehicle aftermarket, and we have a sector focus in this market, and I will explain what the sector focus means on the vehicle and mobility aftermarket after a few slides. As a difference to private equity companies, we have basically a perpetual ownership perspective. We do not buy companies to sell them after that we have development.
We develop the companies, but the idea is not to sell them, and we serve as a growth platform for the companies that we own. The EBITDA reported last year was EUR 31.0 million, which is a growth of 62%, and I also have to mention that the reported net sales growth was 84.5% versus the reported 2020. Then EBITDA almost EUR 30 million, EUR 29.3 million, which is a growth of 56.4%. All in all, a very strong growth and also a solid organic growth behind the numbers, not only acquisitions. I will also come back to that a little bit later. What is our strategy and long-term target? We have communicated this before, but it well deserves to be repeated.
We aim to grow through acquisitions. We are a buy and build company. That is in the core of our strategy. We are an active consolidator, or some would even call as a compounder in the Nordic vehicle and mobility aftermarket. Not only growth through acquisition is important, it's also important to grow organically, and we aim to grow faster than the markets in average, and I will also come back to the average growth and our growth. How do we envision to grow faster than the market is by utilizing the sector synergies that we have. Since we operate in one sector, we have a bigger chance to draw synergies between the companies, cross-selling of our own products and utilizing the e-commerce solutions.
Digitality is and has been for many years in the heart of our business model. I mean, for the companies that belong to Relais Group, quite many of them are wholesale companies, and for them, the interface to their customers is really important to be top of the line for the people, for the customers to be able to choose the right product. Finding the right spare part product is not always very easy without a very good digital search engine or catalog that we have developed for most of our companies. We feel that we have a competitive advantage with very highly developed digital solutions.
As we have communicated last summer. When we did a small recalibration of our strategy, we set the new performance bar of reaching EUR 500 million pro forma by the end of 2026. We are really speeding up as well on the growth and have high ambition level for future. What does our value creation model look like? I have shown this before. Many of you haven't seen this though. We are a buy and build company. I mean, of course, we also strive for organic growth. That is important. In the heart of our strategy is to find good companies and consolidate the market, create value, and also have a strong earnings growth and a good, healthy, strong cash conversion ratio.
We are fairly picky when we choose the companies to acquire. We need to have a healthy core in the company. We are not looking for distressed companies, because that would then require that in order to get the return on capital deployed, we would have to invest quite a lot in the companies that are distressed. Having said that, we have done a couple of acquisitions with the companies that have had a recent turnaround process, but also, in the due diligence process, we need to be reassured that the turnaround process has really been done and the profitability is on a sustainable level moving forward.
The value creation potential comes usually from, let's say, the future market vision that we have for that company or the ability to draw synergies between the existing and the acquired companies. It might be a new distribution channel for our own products or then going into a totally new business sector within the aftermarket. The sector focus I was mentioning in the beginning is really important for us. We are. I sometimes use the word sector believers as opposed to sector agnostic companies who buy companies in different business sectors. Why is it so important? It is also because we know the market very well. We know the people, we know the companies, and we can also add value to the companies we acquire.
That is the primary, let's say, benefit of having the sector focus by the deep knowledge and understanding that we have and also the synergy potential that we have. Building the great businesses, I mean, usually, not always, but many of the companies are run by independent entrepreneurs who have done a fantastic job by making the company grow to a certain level. The next step would require a lot of investment in management resources and systems. That is quite a natural phase for us to come in and to help the company to grow and also to professionalize the running of the acquired companies. Again, having said that, this does not imply that the companies that we have acquired have not already been on a professional level.
Many of them have been on a very superbly professional level, and we can also do some benchmarking studies between the companies within the same sector and develop the business. It is kind of reinforcing a cycle of development here. The beauty of this model is also that we can do add-on acquisitions by acquiring companies. New doors open all the time and Trucknik AB in Sweden, north of Sweden is a very good example of our first acquiring TD Tunga Delar and then expanding our distribution in northern Sweden by an add-on acquisition. More examples hopefully will emerge in the future.
From a capital market point of view, the buy and build model and the consolidator compounder model also creates value by getting smaller independent companies into a bigger listed company. From a valuation point of view, that has some advantages when you go from privately owned to a public company and get access also to capital. From a de-risking point of view, risk management wise, the sector of aftermarket is so diversified and broad that we are not putting all the eggs in one basket, if you will. There is a fair chance to de-risk because the different sector categories have different cyclicality and seasonality, so that they even each other out from that perspective.
A little looking back on the journey that we have had since 2010 when Relais Group was founded, you can see that there's quite a lot of milestones. I mean, 2019 being of course one of the big milestone of ABR and Huzells joining the group and then us going public, so to speak. If you look at the reported growth from 2020 to 2021, it is really big. We have also accelerated the pace of acquisitions by doing 5 acquisitions in Sweden and Finland in the last year.
This is really a huge growth and, as we said, the next target, the strategic long-term target is the turnover of EUR 500 million. Also at the same time, I would say that our profitability has remained on a good level. It's always the challenge to combine very strong growth by maintaining the profitability as well. Good. One slide about our operating model. We are not a centralized company. We basically only centralize certain functions where we see there's a benefit. And naturally from an administration point of view, I mean, the top administration and finance and control units and everything like that is centralized. As a public company, we need to be able to produce reliable data as well.
From a local perspective, we value local, let's say, entrepreneurship and taking ownership and accountability of the business. I mean, we do not have a huge headquarters function that could control all the units and make operational decisions on their behalf. We do, of course, make sure that the strategies are followed from the big picture. All of the executive management team members are participating in the local boards and they are by no means kind of a purely administrative boards. They are really operational boards. We call them like a business review teams where we go through 4 to 5 to 6 times a year for the companies.
We go through the plans and see how they have realized the plans and have we really reached the synergies that we have been planning between the companies. We have some group level initiatives where we will do more, let's say, joint work together, product information management and information exchange between the companies and also range decisions between the wholesale companies. We can really draw benefit of that. One focal point is the purchasing function where we negotiate with all the major global suppliers with one voice. I mean, Relais is the partner to talk with and there we can agree the, let's say, the terms and pricing.
When we look at our volumes, we are a prominent player in this market in the Nordic region. Of course, being a public company, all the key policies are the same for everybody, code of ethics and some ESG policies and so forth. It's a balance between when to centralize, when not to centralize, but I would say it's a hybrid model. You should not misunderstand. It's not some kind of a laissez-faire type of strategy. It's more like to have a good balance between central and decentralized functions. One picture about the vehicle aftermarket, it's about 90 million vehicles. We call the core of our focus area lifecycle enhancement.
Basically anything that happens to the vehicle after it has been imported and resold to the customer or even before reselling it. In some of these sectors, if you think about customizing and equipping, we are operating ourselves and in or through our customers. I mean, we do not equip the lorry with nice lighting solutions, but we have customers who do it for us, and we sell the lighting. I would say most of our companies fall into the box of import and wholesale of parts and equipment. We did a lot of strategy work last year when we really dug deeper in each of these sectors.
We don't have the time to go through that today, but we really made a deep dive in looking at the subcategories of each sector. How does it look like in the Nordic markets, and what kind of business opportunities are there? That lays the foundation for our acquisitions moving forward. I mean, we know fairly exactly what type of companies they are and what kind of value creation potential there is. We did some openings last year. We went into the service and repair sector for the heavy commercial vehicles, which is now one of the support pillars of our company. We are strong on lighting. About one-fourth of our business is coming from lighting products which are mainly our own brands.
If we think about the market size, even a cautious estimate of the aftermarket takes us to EUR 20 billion in the Nordic markets. There's of course always the question whether you include the so-called OE market, the vehicle importer market or just the independent market. Looking from the helicopter perspective, we ended up in a management estimate about EUR 20 billion. If you think about our turnover, we still have loads of chances to consolidate in a profitable way in this market. One thing I would also like to point out in this picture is that the weight of the commercial vehicles is really big. I mean, it's about two-thirds of our business in one way or another comes from the.
Let's say if you think about the end use of the product, it comes from commercial vehicles. I would not be surprised if that number then actually after the recent acquisitions also increases this year. The market trends, the big trends are there. I mean, if we think about the last time we were presenting the quarter three results, not really lot has changed on the big underlying trends of what's happening in the mobility. A lot is happening of course, in the economy and the geopolitical situation. I will come back to that later. The basic needs and the basic market is there. The underlying market is very stable. It's growing steadily.
The aging of vehicles has one effect on this, but also, let's say, the complexity of the components, if we think about the price of and the cost of the components and the spare parts moving forward in this market. I mean, the electrification is imminent is going to happen. We see it as a potential and a huge business opportunity. At the end of the day, a very small amount of our business comes from internal combustion engine passenger car parts, which is the sector that is going to be affected. Let's say we estimate maybe a few percentage points per year moving forward.
Then again, it's offset by the price of the components and spare parts and the value and complexity that will go up. Basically, the people have a need to move from A to B and so do also the goods have a need to go from A to B also in the future. In that respect, we also say that the market has fairly strong defensive characteristics in different type of economic times. Right. Just one page summing up our group companies after the latest acquisitions. On the top, the companies that are concentrating on commercial vehicle spare parts and equipment, I mean, wholesale.
As you will see, Startax is in quite many areas here because they are, say, a multiple company, not only focusing on one area. The only purely passenger car-focused and partly light commercial vehicle-focused companies, AB R, Arberis, Ardel are in Sweden, and then also Startax provides spare parts for passenger cars. Raskone and STS, Raskone I have told about already before. We bought roughly one year ago 19 or 18 workshops at the moment. STS, 15 workshops, joined the company in November. Warm welcome to all STS people if you are listening. It really complements the picture that we are now the biggest independent heavy commercial vehicle repair chain in the Nordics with over 30 outlets and workshops.
Our strong lighting, power management, and equipment division with Strands, Awimex, SEC, and Startax. Strands is growing very rapidly, also, very warm welcome to the Strands people. I mean, you've done an amazing job last year, and I will get back to that one as well. Also, I'm happy, I mean, as I said, we welcomed 600 people last year to this group. I want to also say welcome to the Lumise and DSM people and the Trucknik people because we clearly can see, I mean, if you look at this chart, we have certain focus areas where we really see a big potential in the future.
I mean, lighting is obviously one of them with our own brands, and then the e-commerce where we see global potential. We start to have a very, very good coverage on this business. Right. Two pictures of last year in brief. I already mentioned that we grew with 84.5% compared to last year. It was a combination of successful acquisitions and overall the market situation was positive. The 2020 market was affected by COVID-19, the big picture, and I think 2021 meant a kind of rebound from 2020 numbers.
I would say in the most markets we saw, although there's not a lot of reliable statistics, but our own estimate is that the markets grew anywhere between 4%-6% in our main markets and we were able to produce a low double-digit organic growth. We grew faster than the market, and that was driven by the synergy benefits and cross sales especially in the lighting segment, but not only there. I would say also the cold winter, both in quarter one and quarter four, helped certain product groups, the kind of what we call the winter products, to give a boost for the market. COVID-19 hasn't really affected. I have to be cautious with what I say.
Of course, it has affected and we have had people who have had COVID-19, but not a serious version of it. In some cases, I think the workshops have suffered from lack of manpower at some stages. All in all, from a demand perspective, the markets have been stable when it comes to COVID-19. The big part here is of course the delayed deliveries from mainly Asia, longer delivery times and the disturbances on the logistics chain, which has also then led to us to make a, let's say, conscious decision to invest in working capital, that is inventories, to make sure that we can help our customers also in the future. This is a situation that will normalize.
Although when in the current situation, world political situation, it's really hard to say anything about when the component supply issues will normalize and nobody knows to be fair. We are well-positioned with our inventory levels at the moment and have a close dialogue with the providers of these products every day, I would say. Right. I already stated that the impact of the acquisition was a major factor in our growth combined with organic growth. Just to give one good example, I mean, the Strands Group is really fast growing company and has succeeded in exports and in Germany and Canada and New Zealand and so forth.
This has been a strategic acquisition that has also strengthened the weight of our own brands, and that is of course very important and we are very happy for that. We are working on synergy benefits when it comes to spare parts procurement with both Raskone and STS. One of the main drivers for the strategy of going, let's say, further in the value chain of the commercial vehicles was that we can cater these companies to a fairly large ratio with our own imported spare parts. That is of course, then we can get a bigger part of the value chain.
Of course, this means that we will still have partners also helping Raskone and STS, but this is a clear synergy, the benefit. Webshop sales for Lumise grew strongly, especially in the Swedish market, and by acquiring Lumise, we have gained very valuable, let's say, competence in the e-commerce sector that we intend to capitalize in the future, also on a global marketplace. STS, as I mentioned, a very good complement to our heavy commercial vehicle repair chain in the Nordics and important strategic step in our expansion. Right.
Then as I mentioned as an example of bolt-on acquisitions, Trucknik. Northern Sweden is experiencing a huge boom by the Northvolt battery factory and also by the mining industry is booming and we predict that there's a good need for commercial vehicle repair also in that region, and hence we went there with Trucknik. Right. A few words about sustainability. For us, it's practical and meaningful everyday actions. I mean, we take good care of our employees, customers, business partners and the environment. As I told the last time, we have clear ESG related criteria for our suppliers. During the COVID-19, it has not been possible to make audits in the factories in Asia.
That is of course something that we ramp up when it's possible again, and as I have told before, quite a big part of our spare parts are included in refund and recycling systems. From a circular economy point of view, there's a certain yeah relevance and big relevance here as well. When it comes to electrification of vehicles, I mean I think I said also in the last presentation that we did a quick check of how many spare parts we already today can supply to, for instance, the Tesla Model S, and I think we ended up somewhere between, let's say EUR 3,500-EUR 4,000 value of spare parts.
People usually have this misconception that full electric vehicles don't need any spare parts, but that's of course not true, and they need maintenance and repair, just to mention air conditioning and heating and that kind of product suspension and brakes and lights. There's a big potential also there. We're also ramping up our ability to repair electric vehicles, commercial vehicles, both in Finland and Sweden for Raskone and STS are already doing that. We will set clear targets for reducing our carbon dioxide footprint during 2020. I will get back to that later when we are ready to communicate. I will hand over to my colleague, Pekka, here.
There's a lot of numbers here, but I'm sure you will be able to choose the right ones from there.
Thank you. Thank you, Arni, and luckily, most of the highlights of the last year have already been mentioned by your analysis and presentation, but let's take another look behind the scenes in a way. This year we're facing a very significant growth. It was mainly driven by the acquisitions, but also a very good performance in terms of organic growth in basically every market area and group company. The weather circumstances that are not the whole game, but part of the game were favorable both in first quarter and during the fourth as the winter came early. It gave a certain boost in sales figures. And as once again mentioned before, lighting sales, very good progress in them and success of Strands Group were a significant part of the organic growth.
Actually, Strands represents inorganic growth as well, but some of the companies contribute on both sides in this respect. Profitability can be described as solid when it comes to EBITDA. There are no drastic changes in recurring costs. It's natural that the development of the governance and group structure is affected by certain non-recurring costs which we don't separate here, but companies are running on a very solid cost base when it comes to the operating expenses. On balance sheet, we can clearly see the impact of acquisitions, both on assets and equity and liability side. The last year was very intensive on the area of acquisition, and it can easily be seen here.
The acquisitions are or were mainly financed by raising new senior debt, but partly also by issuing shares in terms of directed issues for the sellers. As an end result, we saw an increase in equity and of course in net debt and gross debt as well, and gearing. Cash assets were significantly decreased during this year. Very big part of it was the measures taken to ensure the delivery capacity by increasing inventories drastically. It was a good decision to make as it made it possible to enable the organic growth. In normal circumstances, the cash position at the end of the year would have been significantly better or the cash assets higher. Part of the acquisitions to mention were also financed by cash assets.
If I summarize, roughly, half of the change in cash assets was due to the inventory and another half due to the acquisition or cash considerations not financed by debt. This slide demonstrates the intensity of acquisition. Cash flow from investments was almost EUR 62 million compared to last year. It was a significant growth, and as mentioned, it was financed partly by debt financing and partly by equity and cash, so that the cash flow from financing is roughly a half of the financing of investments. Earnings per share. This was the first year that the EPS excluding amortization of goodwill exceeded EUR 1. It was 1.17 and is the basis of dividend policy and dividend calculation. That's the figure we are focusing on in these considerations.
Now we are back.
Yes.
To the section, Arni takes over once again. Many thanks.
Thank you, Pekka. Yeah, again, recapping the long-term financial targets and dividend policy, as I said, our long-term financial target is to reach sales of EUR 500 million by the end of 2026 in pro forma terms. The dividend policy, as we have stated in 2019, stays the same. We are targeting to pay annual dividends that exceed 30% of the average comparable profit of the group. Now, in the box down you can see that the board of directors proposes to the AGM that the dividend to be paid would be 0.36 EUR compared to last year's 0.30 EUR. That highlights the kind of following the policy that we strive to do every year.
Looking at 2022, a few words about 2022. We feel we are well-positioned as we can with our own actions. We don't know what's going on in the outer world. I mean, there's a lot happening at the moment, unfortunately. The tragedy in Ukraine is of course something that is very difficult to foresee how it will affect the markets. We have done what we have been able to do by ramping up the inventories, so we are in solid position to deliver to our customers. That was a constant conscious decision to make. M&A activities will continue. It's hard to say exactly when and how many, but we have a good, healthy pipeline. We are working very hard on that one and broadened even our scope.
Again, we are critical, so it's not always the quantity, it's the quality. That is the decisive point here, and we need to make sure that, let's say, the capital we invest gives return for the shareholders. We also announced earlier this week that we have now concluded based on the study that we made regarding the transfer to main list that we announced last year, that we now strive to make this main list transfer no earlier than the second half of 2022, and we see a lot of positives by doing that step as we have also communicated before.
I mean, it's like gives better access to financing and also probably will, as we believe, make Relais more known within the investment committee also in the Nordic perspective and give us a better chance to use our own share as a means of payment in the future acquisitions. We will get back to that once we have more decisions made on the timing. We do not give a numeric guidance for 2022. As a big part of our strategy anyhow are the acquisitions, so it's impossible to estimate exactly when they are going to happen and how they will affect the financial performance of the company.
I think everybody's aware of the global situation at the moment and the difficulties that already now existed in the global supply chains, and now the geopolitical situation has made the vision much more fuzzy at the moment. We retain in not saying and not giving a numeric guidance for this year. I mean, energy prices can also affect some of our customers, so it is all in all no numeric guidance for 2022. The long-term perspective remains the same. As I have stated, I think, a few times already during this presentation, is the EUR 500 million turnover by the end of 2026. Thanks for bearing with me. I'm doing 5 minutes over the time I promised.
The last slide, what is Relais? I mean, as an investment, if you think as an investor either having Relais shares or planning to invest in Relais, we are an active sector-focused consolidator. You saw the track record that we have been able to produce when it comes to successful actions in the Nordic and Baltic regions. We have a strong cash flow and profitability historically. We have a growing and strong underlying market in the vehicles, 20 million, EUR 20 billion estimate. Our lighting business is growing. I said it's about one-fourth of our business, and it's mainly own brands, and we also have own brands in other product groups. It's really a good solid base for future growth.
E-commerce solutions, we have now in-house knowledge of how to operate a web shop, and I think we will have good use of that knowledge moving into the future. Our operating model is not slowing us down because it's decentralized and fairly light and effective. All in all, this is how I would like to describe Relais as an investment. Now I think, Rosa, you have, I hope, some questions that the audience has submitted. Now we would be ready to answer the questions. Please go ahead.
Yes. Good morning. I have a couple of questions here. First one comes from Joni Sandvall. Staff expenses increased clearly year-over-year. Was there any extra cost related to the acquisition?
Thank you, Joni, for the question. Basically the staff cost increase is purely a result of the acquisitions. When it comes to Pekka, you can correct me if I'm wrong, but then again in the 2020 numbers, there were some alleviation from the governments regarding the COVID-19 pandemic that then were not there in 2021. This is how I would state it.
Exactly right, yes.
Yes. Thank you. We have a next question also from Joni Sandvall. You mentioned that you grew clearly above market. Can you elaborate on organic growth pace during Q4 and 2020 to 2021, sorry?
Yeah. That's a correct observation. As I said, we grew clearly faster than the market. I mean, we estimated the markets to have grown roughly 4%-6%. As I said, we have a, say, low double-digit growth, organic last year. It was mostly focusing on quarter one, but also quarter two, we managed to grow faster than the market. It's evenly distributed across the year, but main focus on quarter one and quarter four, partly because of the cold winter, but also the very successful launches of new lighting products, starting from quarter two, quarter three to quarter four.
Joni Sandvall continues. Inventory continued to increase. Have you seen any easing in supply chain? Can you comment on your freight costs and contracts?
I think we have not really seen an improvement during the last months. I mean, the signals we get from—and to explain, I mean, mostly this is a question at the moment or in the last back half of last year has been mostly Asian suppliers, where we source quite a lot of the lighting and equipment products, not so much for the European suppliers of spare parts. Although also there have been some delays. But the most, it's coming from Asia. I think the signals we have been receiving is that the expected delivery times rather have grown than gone down, I would say.
The freight costs have really soared in quarter three, quarter four, but I would say there's a slight decline what we have sensed at the moment. Probably the situation in China has improved slightly. Then when it comes to the freight cost, we try to push it forward into the product price. It's a constant, of course, dialogue with the customers and the freight companies. Now it's impossible to say with the energy prices and oil prices. I mean, nobody knows. I mean, I think the indication, they are rather going up than down.
Thank you. Next question comes from Jan. "What is the sweet spot regarding size of acquisition?
Sweet spot what size?
Size.
I would say it depends. If we look at bolt-on acquisitions, they may be of course smaller, but the. When it comes to realistically speaking, I would say if we think about turnover-wise, between EUR 10 million to even maybe EUR 100 million, but EUR 10 million-EUR 30 million probably are where we find the most interesting companies. It's really hard to give an accurate rule about this, but it's somewhere there, I would say, if I understood Jan's comment correctly.
We have a question from Joni Sandvall again. "Can you comment on possible synergies from Raskone and STS acquisitions, and when these should be fully visible?
Yes, I can comment. It is. I would say the synergies between the two companies are mostly operational, where we can benchmark between the two companies, how they are run and make it even more efficient. When it comes to spare part deliveries, of course, the synergies come from us being able to be a bigger buyer towards the heavy commercial vehicle spare part producers and the suppliers. So that comes from there. I think our learning from the synergies is that it takes time to realize them because, I mean, changing the product assortment and everything, it takes time. I mean, we usually see that the first year you learn to walk, and then the next year is stronger.
The third year, I would say, is the heyday of the synergies in any acquisition.
We have another question from Jan. "I suppose net debt do not include off balance sheet items as leasing, correct? What would the effects be if included?
This is.
Yes, that's.
a question to Pekka.
A correct assumption. The off-balance sheet items are not included, and once we, as announced, by the end of the year 2020, we'll transfer the IFRS. We will restate these liabilities according to IFRS 16. It's unfortunately too early to comment that.
Thank you. We have a question from Jarno. "Can you compensate rising costs through price increases, and how long is the delay before the price increases become effective?
Thank you, Jarno, for the question. The answer is yes and no. Of course, we do our best, and we have managed to raise prices. It's not always possible to do short-term because of long contracts with some of the customers with guaranteed net prices. With time moving, we will, and can, and have been able to include the price increases. Of course, there's competition as well, and we need to monitor very closely that we are competitive in each of the product groups. It's not always a mathematical exercise that you just shift the cost forward because there's a pressure also coming from the competition.
I would say so far we have managed fairly well to include those in the prices, and, but it's not happening just by us sending an email to the customers. It's also the question of negotiation when it comes to longer contracts.
Thank you. We have another question from Jarno. "What is your exposure to Russia and Ukraine sales percentages and any supply from those regions?
Thank you, Jarno. A good question, and a very, let's say, burning at the moment. We have minimal exposure when it comes to direct business. We actually have no direct business to either Russia or Ukraine. We have a customer who has a customer in the Baltics who is supplying to Russia, but that is now stopped, and it's like, from our turnover, we are talking about a 0.0 something %. Ukraine, we do not have a business or supply directly, from Ukraine as far as I know. I have to say that the these disturbances in the global supply chains can affect us indirectly.
We have one more question. Okay, two more questions just come in. Jan is asking, "How is the cost inflation, for example, increase of raw material prices, metals, et cetera, affecting you at the moment?
F or the question. I mean, of course, it is affecting, although it is not always pushed forward by our suppliers either directly. There are differences between the product groups. I mean, when it comes to starter batteries, the producers were very quick to increase the prices when lead prices went up and so on and so forth. It is a mixture of different timings, but we see it all across the line that the prices are increasing, some more dramatically, some a little less, depending on the security stock of the suppliers. But it is a mixture. It is hard to give one exact number of how much, but they are affecting of course.
Jan is asking also, "What risks do you see in supply chain if airspace, train roads, et cetera, continues to be closed due to Russia-Ukraine crisis?
Again, I have to be careful, but basically, we try to avoid air freight because of the price of the freight. So most of our goods are, if we are thinking about the Asian-produced goods, are coming on sea transfer. Currently there's no indication that that part would be affected. I mean, we have tested the train connection from Russia in a minimal scale. We, as I said, only transport something with air freight if we really need to. But it's not, at the moment, as far as we know and we see, we do not see the airspace restrictions or railroad restrictions to affect us.
No further questions.
Thank you very much for being active, and thanks for all who made the questions, and thanks for following the presentation. I wish everybody a good March month. All the best. Thank you very much.
Thank you.