Morning, ladies and gentlemen, and Welcome to the Alfa Laval Q4 Report Conference Call. At this time, all participants are in listen-only mode until we conduct the question and answer session, and instructions will be given at that time. If anyone should require assistance during the conference, please press star followed by zero on your telephone. Just to remind you, this conference call is being recorded. I would now like to hand over to the Chairperson, your CEO, Lars Renström. Please begin your meeting, and I'll be standing by.
Thank you very much. Most welcome to the presentation of the fourth quarter report. I will start by giving you my three highlights. Order intake in the quarter increased by 6% to SEK 6.8 billion. In total, 2011 was a successful year where orders increased 20% and invoicing with 16%, and the operating result reached SEK 5.3 billion, an increase of 13%. The second highlight is sequentially, order intake dropped 15% from the all-time high- level. The vast majority of the drop came from marine capital sales due to lower contracting at the yards and wait-and-see mode regarding large contracts. The good news is that the aftermarket and base business, excluding marine, was unchanged. Finally, sales increased 14% to SEK 8.1 billion with an operating margin of 17%.
The margin was influenced by adjustment to lower capacity in some plants, a higher portion of wide-scope contracts, and increased resources in the BRIC countries. We continue to invest in the BRIC countries despite the present macroeconomic uncertainty. Let's take a look at the key figures. Order intake rose by 6% to SEK 6.8 billion, and sales increased 14% to SEK 8.1 billion. Adjusted EBITDA was up 4% to SEK 1.4 billion, and EBITDA margin reached 17%. For the full year, orders received rose by 20% to SEK 28.7 billion. Adjusted EBITDA was up 13% to SEK 5.3 billion, and the EBITDA margin reached 18.5%. We move over to the next slide where we find that the Board of Directors proposes a dividend of SEK 3.25, an increase of 8%.
A mandate to buy back up to 5% of the number of outstanding shares is also proposed with the intention to cancel the shares. Next slide. You find that orders received on rolling 12 months rose to SEK 28.7 billion. The increase in order intake was 9% year-on-year at constant exchange rates. On the following slide, you find from the order analysis that acquisitions contributed with 11 percentage units and negative currency effects with 2.5 percentage units. The organic growth was -2%. When we compare with the all-time high third quarter, the organic growth was -16%, where large orders and marine capital sales stood for 60% of the drop. Moving over to the next slide, we find that in the quarter, we reached an operating margin of 17%, and the operating result was SEK 1.4 billion. Now, let's take a look at the highlights in the quarter.
From Indonesia, we received an order of SEK 85 million for a process line for edible oil refining. From Versailles, we received an order of $65 million for equipment to a power plant in the Dominican Republic. From Russia, we received an order of $70 million for waste heat recovery in a refinery. On the next slide, you find that 2011 was an excellent year for large orders. From this comprehensive summary, you find that the vast majority of the orders came from fast-moving markets where we benefit from our strong local presence. The orders cover a wide variety of industries. The next slide is quite interesting. It's our top 10 ranking for 2011. There you see Korea advancing to fourth place thanks to our strong local presence at the Korean shipyards and EPC contractors. Brazil advanced to eighth place, partly helped by products that came from the Aalborg acquisition.
India fell back due to fewer large orders. You see that all BRIC countries are in the top 10. For the full year, 50% of order intake came from emerging markets. That is an increase of 4% year-on-year. Now we move on to development per segment. In the quarter, we had -2% organic growth year-on-year. Marine and diesel and industrial equipment were in positive territory, and parts and service was stable. The rest had negative growth. Moving on to the next slide. Now we move to sequential comparison for the divisions. In the process technology division, there was a stable development for base business and parts and service, which is encouraging. Energy was down due to non-repeat large orders, but environment was lifted by strong development for base business. Food was down. Still, we had continued growth for vegetable oil in Asia. Next slide.
Sequentially, in the equipment division, sanitary rose on demand in Western Europe and North America. Marine and diesel capital sales were down significantly, following lower contracting levels at the yards. Industrial equipment was somewhat lower due to the seasonality for certain applications. Next slide. For the full year, all segments except one delivered growth. I will now give some forward-looking comments for the next quarter. The first one, we expect the high- activity level in oil and gas exploration to continue. The second statement is that we expect the lower level of capital sales to the shipyards to continue, given the contracting at the yards in 2011. Finally, we expect that more large contracts will materialize into orders than in the fourth quarter. Now we move on to the geographical developments. All regions delivered growth year-on-year except Western Europe that was unchanged.
There was solid growth of 20%+ in Latin America, Central and Eastern Europe, and Nordic. On the next slide, we see that sequentially, Asia declined with 34%, and Central and Eastern Europe grew with 28% from the all-time high level of the third quarter. Let's take a closer look at the development per region. Sequentially, in North America, order intake was down 9%, affected by non-repeat large orders. It was positive that base business was unchanged. In Latin America, order intake was down 9% due to non-repeats in Process Technology division. Energy and Environment still showed good growth, as did Equipment division. On the following slide, we find that Western Europe was down 11%, whereas Nordic was stable. A dip in large orders had a negative impact. It was encouraging that we had continued growth for the base business.
In Central and Eastern Europe, we grew 28%, boosted by the Process Technology division. Both Russia and Turkey reported solid growth. On the following slide, we find that in Asia, orders dropped 34% due to the decline in marine and diesel and also non-repeat large orders in Process Technology. Due to monetary tightening and macroeconomic uncertainty, there was a wait-and-see mode for projects in China and India. Finally, for the full year, all regions delivered substantial growth, with Asia, Latin America, and Central and Eastern Europe standing out. Now it's time for the financial part.
Good morning, all of you. Let's take a somewhat deeper look into our financials for quarter four as well as for the full year 2011. Let's move on to the slide with the headline highlights. Lars has covered the orders in depth, so let's move on to sales.
In the quarter, we realized sales of SEK 8.815 billion, which is slightly more than we anticipated ourselves. Sales were organically up some 9.2% over quarter four, 2010. Including acquisitions of another 8% and then a negative FX effect of 3.4%, we had an absolute increase of 13.7%. Sales were also up compared to quarter three of 2011, but that is to a large extent explained by seasonality as we have more of revenue recognition on contract-based sales in quarter four. That's typical for the quarter four, I would say. If we move on to the next slide dealing with gross profit margin, gross profit margin for the quarter ended 37.8% compared to 38.3% in quarter three. I would then like to remind you what I said with the third quarter report. I said you should expect near-term negative mix and currency effects.
No further positives from load or from price. The only positive may be lower metal prices. The actuals for quarter four, giving a lower margin with 0.5% compared to the third quarter, came out as predicted with the third quarter report. Mix gave a negative of approximately 0.2%. Currency about as negative in terms of transaction effects as in the third quarter. We had an adverse impact from load in our factories because of demand for certain product groups and inventory reduction. That is to the tune of 0.7%. In addition, we also had an adverse impact from margins in contract-based sales. That is lower margins compared to the revenue recognized in the third quarter. Finally, we had support to the margin from the lower metal prices during the quarter. Let me give you the first forward-looking statement.
In the near term, we do not see conditions being much different other than that mix will likely be slightly positive sequentially. I repeat, in the near term, we do not see conditions being much different other than that mix will likely be slightly positive sequentially. If we move on to the next slide, let's talk a bit about the overhead costs. We can report the following. R&D ended at SEK 648 million for the full year, which is an increase of 3.3% like- for- like, representing 2.3% in relation to our sales. Sales and admin for the full year amounted to just over SEK 5 billion, representing an increase like- for- like of 11.4%. This is an increase coming from a generally very high level of activity throughout the year and even more so towards the very end of the year.
Of course, specifically a continued build-up of our organization in emerging markets. That is an extended BRIC, if you like. If we look at sales and admin in relation to sales, we had a somewhat higher level of sales and admin in relation to sales in the fourth quarter. We were at 18.2%. If we look at the average for the full year, we had 17.5%, and that is to be compared with 17.7% in 2010. So 0.2% lower for the full year sales and admin in relation to sales. Above comments give an EBITDA margin for the quarter of 17%, which is then down 1.6% compared to the fourth quarter of 2010. On the slide, you find a line saying structural costs for savings measures. If you look in our P&L account, you find a non-recurring charge of SEK 90 million in the quarter.
This is estimated cost for capacity adjustments or cost reductions in certain factories, and it's also due to efficiency improvements in sales companies, and that is mainly in Western Europe. This is estimated to affect some 250 permanent employees in the organization and, in addition, some 225 temporary personnel in our manufacturing activities. A total of 475 people. The split between cost of goods-related personnel and sales and administrative personnel is approximately 350 in cost of goods and approximately 125 in sales and administrative. We estimate savings in sales and administrative to be SEK 200 million set following the personnel reduction I just talked about and other measures combined.
Looking at profit before tax, I would just like to point out that this line in the P&L was positively influenced by exchange rate variations in the financial net in the quarter to an amount of SEK 223 million and accumulated SEK 115 million for the full year. Profit before tax was, as a consequence of, on the one hand, the positive exchange variations, on the other hand, the one-time charge, SEK 1,381,000,000 , an increase still of 8% over last year. If we move on to the next slide, earnings per share, I mean, looking at the slide, you find that irrespective of how we look at it, we've seen an increase in EPS over last year in the quarter as well as full year before step-up and including step-up. Let me then just repeat what Lars said to begin with.
The Board intends to propose a dividend to the AGM of SEK 3.25 per share. This level of dividend represents a payout in relation to adjusted EPS of 39%. We have a defined dividend policy saying that the payout range should be 40%- 50% of adjusted EPS, so just on the border of this range. Moving on. Before leaving, the P&L taxes ended with a charge of SEK 447 million in the quarter and SEK 1,425,000,000 for the full year, respectively, which is a tax rate of 32% and 30.5%, respectively. Our guidance remains 30% taxes based on profit before tax. The somewhat higher level in the quarter is particularly to be referred to the charges for the savings activities that will only be tax deductible as they are implemented during the course of 2012.
Cash flow from operating activities, SEK 1.3 billion in the quarter and SEK 3.4 billion for the full year. I'll get back to the cash flow in a moment. Moving on to return on capital employed, we reached 31.3% for the full year 2011, which is a reduction of some 6% from the 37.4% reached in 2010. This is, of course, mainly influenced by the value coming from the purchase of Onboy. We have all of the capital, but only eight months of revenues and profits. Looking at return on equity, we reached almost 23%, which is quite close to the 24.4% we achieved in 2010. Moving on to the cash flow statement on the next slide, we generated a free cash flow in the quarter of almost SEK 1 billion, to be exact, SEK 983 million.
For the full year, we generated free cash flow of just under SEK 3 billion, SEK 2,979,000,000 . I think it's fair to say that it was another good year in terms of cash generation for Alfa Laval. Let me give you an update on our attempt to increase ownership and eventually delist Alfa Laval India, our listed subsidiary in India. A couple of months ago, mid-November, we passed the first hurdle. We got acceptance of a delisting process from two-thirds of the minority. The marketing activities have been ongoing for quite a while now, and the book-building process for minority shareholders to tender their shares is estimated to open on February 15. The results of this book-building process are expected to be known by the end of February. We launched what we call an indicative offer price a couple of weeks back, a price of INR 2,850 per share.
All of the outstanding minority shares, that is to say just over 2 million shares, that would mean a cash out of around three-quarters of a billion SEK. If we move on to the next slide, this is just to give you a sense of the actuals for 2011 according to the new structure with three selling divisions. Compared to the numbers presented at the Capital Market Day mid-November, the following should be noted. The information is not pro forma, including the first four months of the year for Onboy. This is as we present the numbers in the full year report. In terms of EBIT margin, the Process Technology division ended just over the level presented at the Capital Market Day, thanks to a higher sales volume. The Equipment division was negatively influenced by the lower value added in factories because of demand combined with inventory reduction.
That is as the Equipment division is the main seller of the products where we experienced this change in load. Finally, the Marine and Diesel division came out somewhat better than we presented at the Capital Market Day, particularly thanks to good performance in the Allboy Industries activities. Let's move on to FX effects. FX effects ended with a negative SEK 80 million in the quarter, which is slightly worse than we anticipated after quarter three. The reason being that translation effects were still marginally negative in the fourth quarter rather than what we expected, a slight positive translation effect. For 2012, assuming a EUR/SEK of 9 and a EUR/USD of 1.28, we anticipate a marginal, a very marginal net FX effect of an adverse SEK 5 million. I guess the only thing we can say about that is that it will be wrong at the end of the year.
Anyway, that's as it stands right now. Please note that includes an adverse transaction effect of some SEK 110 million. Let's jump to the next picture, dealing with our order backlog as per end of 2011 and 2009 and 2010 for reference. We had a total order backlog as per the end of last year of SEK 13.7 billion, representing some 5.6 months of LTM sales. If we look into the details of this order backlog, you find that SEK 11.3 billion are to be shipped or are estimated to be shipped in this year, 2012. This also means that on a like-for-like basis, i.e., excluding the acquired entities during 2011, we have an order backlog for shipment in the coming year, which is some SEK 300 million lower than at the end of 2010. This is important. Please have that in mind. SEK 300 million lower.
With that as a base, let's move on to the next slide where we will take a look at a summary of the known and the unknown parameters for sales in 2012. Starting with the full year sales SEK 28.7 billion. Again, we have a like-for-like order backlog, which is SEK 300 million lower. That is a deduction of SEK 300 million. Based on the current assumptions for exchange rates, we talked in detail about the U.S. dollar and the euro. Applying the closing rates for all other currencies, we estimate a positive translation effect of some SEK 500 million, giving a subtotal of SEK 28.9 billion. We only had Aalborg Industries for eight months in 2011. We must add four months of sales from Aalborg, of course. As an indication, let's add the net of whole year orders for 2011 and eight months of sales in 2011.
That gives an additional SEK 800 million. To the unknowns. As always, it's up to you to form an opinion on demand for the full year, which would give you a base for estimating infra-out orders in 2012. The number for infra-out orders, like-for-like, that is exclusive of acquisitions, was about SEK 13.7 billion in 2011. Let me say that that was in a year with a very strong demand situation in the first nine months. That is important in a year with a very strong demand situation in the first nine months. Finally, with regard to price, let me just say the following. Prices for metals have been going down for a while with the exception of the last few weeks. We have adjusted prices as we typically do as per the beginning of the year.
These adjustments, and that is, of course, for standard products or configured standard products, have been very limited. With that, I give the word back to Lars for the outlook and the closing remarks.
The outlook is as follows. We expect that demand during the first quarter of 2012 will be in line with or somewhat higher than the fourth quarter of 2011. To be more precise, we expect base business and parts and service to be on about the same level and a better outcome of large orders. By that, we have completed our presentation, and now we hand over to the operator for the Q&A session.
Thank you, sir. Ladies and gentlemen, if you do have a question at this time, please press star one on your telephone keypad. To cancel your question, please press the hash or pound key. Once again, that's star one to register a question and the hash or pound key to cancel. Our first question comes from the line of [Guillermo Pena] from Morgan Stanley. Please go ahead, sir.
Good morning. It's [Guillermo Pena] from Morgan Stanley. I have three questions. First, regarding your administration costs, they jumped from SEK 300 million to around SEK 660 million in Q4. I was wondering, I know you highlighted this in your comments, but I was wondering more about how you expect that to move throughout 2012? If the savings that you are aiming at, the SEK 200 million, is savings that are actually concerning for 2012 and specifically regarding this particular side of the cost lines? Maybe I do another question afterwards. Thank you.
Okay, Guillermo. As I pointed out in my presentation, we were somewhat higher in quarter four than in quarter three. If you look over the last several years, you find that quarter four tends to be somewhat higher than the other quarters during the year. Generally speaking, the activity level was very high, and we continued to build the organization, as I said. If we look at the savings in 2012, what I commented on was specifically sales and admin. For the full year 2012, we estimate to save SEK 200 million in sales and admin due to a combination of personnel reduction and other savings measures.
Thank you. Regarding marine, can I ask whether the large orders that we saw awarded to yards from Maersk last year have they been already placed in the market or they're still pending?
The press release that we sent out in January, where we received an order of EUR 25 million for waste heat recovery units, that was for Maersk, the container ships that Maersk ordered last year.
That's basically your share of the number of ships that Maersk is building, right? Or that these ships just are building?
There are more orders to be placed.
Okay.
EUR 25 million was only for the waste heat recovery.
Okay.
There is more coming in the funnels.
Thank you.
Our next question comes from the line of Colin Gibson from HSBC. Please go ahead, sir.
Hello. Morning, gentlemen. Again, three quick questions, if I can. On page four of your press release, you have some comments regarding the mix in Q4. I wondered if there's any amplification you can give on those comments. You talk about a lower share of parts and service sales. Anything you can tell us to help us understand the magnitude of how much lower that was? The second question just regards the other line in the divisional operating income breakdown you have on page nine of the press release. Other items in that breakdown, that's the middle table on that page, SEK - 200 million. I think the market was looking for a number more in line with a year ago, SEK - 103 million, perhaps a little higher than that, but probably not as high as SEK - 200 million. I'm wondering were there any exceptional items that formed part of that SEK - 200 million there?
Lastly, on restructuring charges that you've posted in Q4, should we expect any further restructuring charges in 2012? Can you give us some indication of the timing of the cash flow impact of those restructuring charges? Thank you.
Okay. If we start off with the mix, I think I mentioned when I elaborated on gross profit margin that the mix, the product mix itself, gave an adverse effect to the tune of 0.2% sequentially. In addition to that, an adverse effect from lower margins in revenue recognition in contracts. If we look at the other line of a - 200, I mentioned before that we have had a very high level of activity in the company, and that includes certain projects, for instance, in the IT area, to develop our way of operating. That is one of the elements that has given a higher other line in the P&L. If we look at any exceptionals included, there could be the odd non-recurring element in this, but nothing in particular to talk about. Further restructuring, there is, of course, nothing at this juncture.
We have established this program in order to adjust to the conditions, the trading conditions that we see at this juncture. When it comes to the cash out, it's basically the SEK 90 million because it deals with a very, to a very large majority, personnel reduction that will come in during the first two quarters. The savings will gradually build throughout the year.
It's just a very quick follow-on there. The SEK 200 million then on the other line, would you expect that to normalize, if I can say that, already in Q1, or would you see a more gradual return to normal levels there?
We will normalize our line. That is our expectation, yes.
Our next question comes from the line of Ben Maslin from Bank of America. Please go ahead, sir.
Good morning, everyone. It's Ben from Merrill Lynch. Two questions, please. Firstly, on the marine and diesel, the new split you give in the presentation, the book-to-bill is still below 100%. I guess you're burning the backlog you have in that business. If orders carry on at this level, which I guess is what you're guiding for, how long does that backlog support you before your loading in marine and diesel starts to get hit? I guess just mix-wise going forward, if we're seeing a stable development in the other businesses and marine delivery is falling, I guess that's negative for your overall mix. That's the first question.
Secondly, more general, on the gross margin slide you put up, the gross margin of 37.8% looks to be back at kind of 2009 lows, despite the fact that sales are much higher than back then, and the Albo business came in delivering a higher margin. Can you talk about, because what's changed over that time period? Why are gross margins normally structurally lower? Is that the marine business backlog unwinding? Is there something else going on in the group that we've missed? Just talk around that, please. Thank you.
To start off with, book-to-bill from Marine in the quarter was just under 0.8.
Okay.
If we look at the backlog as per the end of the year 2011 for the Marine and Diesel division, we're looking at SEK 5.5 billion. If we look at the mix implications of a change in composition, Marine and Diesel to the rest, no, that does not necessarily mean an adverse effect to the mix. Contract-based sales comes about in the Process Technology division as well as in the Marine and Diesel division. Looking at the gross profit margin, as commented, we had a lower margin on revenue recognition in sales contracts. That is, contracts where we deliver a wider scope. There we had a lower margin than we had in the third quarter. That is the explanation.
Okay. Maybe just following up on the marine point. I mean, on your divisional split, Marine and Diesel is doing 24.3% margins and Process is 20.7% and Equipment is down at 14%. Yet the book-to-bill development seems to be worse in Marine and Diesel. If you get declining sales in Marine from here, surely that does have a negative impact on the mix of the business.
Let me remind you of the split between capital sales and aftermarket sales that we presented in the Capital Market Day. I think you have to go back and look at that composition, that split for the three divisions. I think that will give you a sense of what can possibly happen.
Okay, thank you.
Ladies and gentlemen, once again, that's star one to register a question and the hash or pound key to cancel. The next question comes from the line of Sven Weier from UBS. Please go ahead.
Yeah, good morning. Three questions from my side, please. First one, could you just elaborate how the diesel share within marine has developed more recently? Given that Wärtsilä has been reporting quite a strong uptick in big tickets there, when would you expect the first positive impact on that for your orders? Second question is on the marine environment. Also, Wärtsilä seemed to have quite a success on their scrubber and quite upbeat on their pipeline of projects. I was just wondering if you could generally elaborate a bit on your marine environment pipeline from here. Thirdly and lastly, on the sequential margin development in Q1, you said you had a negative impact from inventory reduction. You haven't mentioned any specific impact from that sequentially. Does that mean this reduction is going on or how should we look at inventories? Thank you.
Thank you. To start off with the diesel part. The diesel part has had a positive development during 2011 for Alfa Laval, and we have the widest and best offering in the industry for the land-based diesel power industry. Order intake last year was around EUR 100 million for that industry. It makes up around 12% of the total of the marine and diesel division. We have a positive view also on land-based diesel power going forward. When it comes to the environmental part in marine, we share Wärtsilä's positive view on scrubbers for SOX elimination. We foresee that is a market that is most interesting, and we are investing significant amounts to build a good product offering. When it comes to ballast water treatment, another important product in the environment offering, we see a good growth in that business.
It developed very nicely in 2011, and it will continue to grow in 2012. We foresee a positive development for the environmental applications in 2012. That is not enough to even out the lower intake to the yards. Finally, Sven, your question on sequential margin. You wondered what was going to happen with the inventory reduction impact in our gross profit margin. Let me put it like this. We believe, looking at the current demand situation, that we have done the bulk of the inventory reduction, but still there are remainders to be completed. Let me again stress what I said about the conditions for gross profit margin in the near term. We do not see these conditions to be materially different. The only change in individual parameters is that we will likely get a positive mix effect sequentially.
Can I just ask you to follow up on the exhaust gas cleaning products you saw sold to Maersk? I mean, would you still consider that quite an exception what Maersk is doing there, or do you look over a pipeline of various projects in that specific product line?
It will be a growing market. When Maersk have decided to build these huge container ships, they are building them for the lowest possible cost of operating. There it is a great opportunity, having the waste heat recovery that generates all the electricity needed on board the ship. It will grow. It will grow gradually. It is not a one-off.
Sounds good. Thank you.
The next question comes from the line of Glen Liddy from JP Morgan. Please go ahead, sir.
Good morning. Two questions. On pricing, could you give us an update if you're seeing aggressive pricing in any particular product segments or end markets? The second question was, you say there may be a small positive mix effect in Q1. Which are the areas where you see that sort of positive opportunity?
When it comes to pricing, in the fourth quarter, there was no change in the pricing environment compared to what we have anticipated earlier in the year. When it comes to the mix effect and our reasons for believing in a positive product mix effect quarter one over quarter four, that is simply on the basis that we tend to have a higher portion of aftermarket sales to capital sales in the first quarter compared to the fourth quarter. That is pretty much the situation every year. That's the main element. Of course, there are movements within individual products in the capital sales area as well.
Okay. On pricing, are you expecting it to be unchanged this year, or are you expecting tougher pricing?
We have nothing else to say. We take one quarter at a time.
Okay, thank you.
The next question comes from the line of Joakim H ög lund from Carnegie. Please go ahead, sir.
Good morning. I would like to come back to the administration cost once again. I know we touched upon it, but I can't really understand sort of the magnitude of it if you relate it to sales and then also growth year- over- year. We have almost 70% growth year- over- year, and it's about more than 8% of sales this quarter. The last time this was the case, it was in 2002. You said you had high activity, but we have gone through periods where we have had more than 15%, 20% organic growth in the last upturn where admin costs did not go above 5% or 6%.
Can you please more in detail make us understand if this is something we should expect going forward, maybe not SEK 660 million, but still an 8% share of total sales or how we should look upon it because it is a bit strange?
As I have commented on a couple of instances already this morning, we've had a very high level of activity, and we have been working on changing the way of operating through developing new solutions for our handling of components business in particular. We've had a very high level of activity as opposed to quotations and all of that. Of course, comparing year on year, I have to remind you that Allboy has come into the organization, which is a substantial addition to Alfa Laval from 2010.
Absolutely. That's correct, of course. It goes from 5.5% of sales to 8.1% in the quarter. My question is really, should we expect a higher share of sales in the admin cost going forward compared to the last 10 years?
What I'm saying, Joakim, is that we had 18.2% sales and admin of sales in the fourth quarter. We had 17.5% for the full year. We are taking a variety of measures to adjust the cost level in sales and admin. One element is, of course, making certain colleagues redundant, particularly in the West European organization. It is also a matter of stopping certain projects, finalizing certain projects that have been ongoing for quite some time.
Okay, we should rather look at the old level than this level as a part of the.
Joakim, I think that we have gone through the various elements of the reasons a couple of times now.
Okay. Thank you.
We have no further questions registered at this time. I'll hand the conference back to you.
Thank you very much. Thank you for attending our conference and your attention. I am looking forward to speaking to you latest in one quarter's time. Thank you very much and have a good day.
Ladies and gentlemen, thank you for your participation. This concludes today's conference, and you may now disconnect.