Earnings Call: Q4 2016

Feb 2, 2017

Welcome to Assa Bloy and the 4th quarter reporting. We have a solid quarter in front of us, where I feel very good about. All four division out of 5 are performing very strongly. I think you can guess that APAC was a little bit troublesome in this quarter, just like in the previous quarters. So turning now to the numbers. The financial highlight, we saw some solid underlying development in the Q4 throughout the group, a good growth in Entrance Systems and EMEA and growth in Americas and Global Tech. And here we have very high comps from last year. We saw negative growth in APAC, and that was mainly due to China. Sales improved by 6% to SEK 19,500,000,000, 1% organic, 3% acquired, 1% divested and 3% currency. EBIT improved declined, sorry, we normally we have always improved, declined by 4% to SEK 2,900,000,000 excluding APAC and write off, we had 6% improvement. So it follows pretty much the sales as we normally have it. And earnings per share improved by declined by minus 2%. I'm not used to decline, so sorry for that. Then turning to the full year, at least now I can use improved. And it was a good year despite a challenging market with strong growth in Americas, good growth in EMEA, Global Tech and Entrance Systems and negative growth in APAC, just like we had also the year before. Improved sales by 5% to SEK 71,300,000,000 with 2% organic, 4% acquired, 1% divested and currency was flat for the year. Also on profitability, it was flat more or less. Profitability improved by 2% to EUR 11,300,000,000 including China write down, mine which was EUR 300,000,000, EBIT improved by 4% in the quarter, and earnings per share improved by 2% to EUR 7.9 On the market side, thank you, I forgot, I'm not synchro. 2 computers is not easy. The market highlights, a lot of exciting things happen. It's always difficult to choose what to share with you. We saw strong digital sales in Europe in this quarter. We saw strong sales in other parts as well, but in particular in Europe. And in fact, we are growing in all parts. Digital door locks are doing very well, especially in the Scandinavian region, but also in other markets now start to catch on. And the innovation pipeline as well is strong, so we will have a lot of new things coming into market. So I feel very good about this. And in Europe right now, more than 30% of sales is coming from electronic products. So it continues to grow as a share of our sales. On the HIDC side, system integrators are now more and more adopting our virtual keys, and they're becoming very popular. Only in December, a but it passed and it has a high pace of growth and it passed $10,000,000,000 in we are ready. We have a little bit of technical malleur here. We have the computer breaking down just when we're starting. So my excuse is for a little bit of late start. Welcome to Assa Abloy and the 4th quarter reporting. We have a solid quarter in front of us, where I feel very good about. All four division out of 5 are performing very strongly. I think you can guess that APAC was a little bit troublesome in this quarter, just like in the previous quarters. So turning now to the numbers. The financial highlight, we saw some solid underlying development in the Q4 throughout the group, with good growth in Entrance Systems and EMEA and growth in Americas and Global Tech. And here we have very high comps from last year. We saw negative growth in APAC, and that was mainly due to China. Sales improved by 6% to SEK 19,500,000,000 1% organic, 3% acquired, 1% divested and 3% currency. EBIT improved declined sorry, we normally we have always improved, declined by 4% to SEK 2,900,000,000 excluding APAC and write off, we had 6% improvement. So it follows pretty much the sales as we normally have it. And earnings per share improved by declined by minus 2%. I'm not used to decline, so sorry for that. Then turning to the full year, at least now I can use improved. And it was a good year, despite a challenging market with strong growth in Americas, good growth in EMEA, Global Tech and Entrance Systems and negative growth in APAC, just like we had also the year before improved sales by 5% to SEK 71,300,000,000 with 2% organic, 4% acquired, 1% divested and currency was flat for the year. Also on profitability, it was flat more or less. Profitability improved by 2% to EUR 11,300,000,000, including China write down, mine which was EUR 300,000,000, EBIT improved by 4% in the quarter and earnings per share improved by 2% to EUR 7.9. On the market side, thank you. I forgot, I'm not synchro. 2 computers are not easy. The market highlights, a lot of exciting things happen. It's always difficult to choose what to share with you. We saw strong digital sales in Europe in this quarter. We saw strong sales in other parts as well, but in particular in Europe. And in fact, we are growing in all parts. Digitor door locks are doing very well, especially in the Scandinavian region, but also in other markets now start to catch on. And the innovation pipeline as well is strong, so we will have a lot of new things coming into market. So I feel very good about this. And in Europe right now, more than 30% of sales is coming from electronic products. So it continues to grow as a share of our sales. On the HRDC side, system integrators are now more and more adopting our virtual keys, and they're becoming very popular. Only in December, we have more than 100 companies joining, and we have 600 companies now that have joined virtual keying. It's still a small business, but it passed and it has a high pace of growth and it passed $10,000,000 during last year from more or less very small numbers in the beginning of the year. We also see system integrators to our Yore are starting to see the value of this. So they start to integrate it in their apps to manage buildings. And in this case, I have an example from Hahnewells Vector, they call it. It's a sort of P people flow system and also building management system where virtual keys is one of the important cornerstones. On the entrance side, more and more business is done direct sales and service with service technicians. In Europe, we have far more than 2,000 technicians with Vant. We have more than 1,000,000 service contracts. We have developed now kits, conversion kits for major all major competitors. That means that we can take any total building and maintain and manage the doors for the customers, and this is happening at higher and higher frequency. And we also do offer to e service maintenance to our customers, is, in fact, nothing more than that they can have it online, what is happening to the door environment, also become very popular. So in very short period of time, we have sold more than 50,000 of those contracts. So a very good evolution, I would say. Turning now to And I can say that North America continued in a solid way for us throughout the year. If we had not had this AT and T order, which was very big in Q4 last year, America grew by 4% organically. So I would say Q4 was a normal quarter for us also there. Organically, for the whole year, it was plus 5%. In South America, it was also plus 5% organically. In Europe, +4. So Europe was very strong, I would say, throughout the year with 4% organic. This is a combination of all divisions. And Africa was also plus 4%. Pacific was weaker, minus 1%, and this was mainly driven by Australia, where New Zealand was positive. And Asia was minus 6% organically, where China was minus 11% during the year. So China is really the one that pulls us down. And this has also an effect on emerging markets for us. The share of emerging markets went down from 26% to 24% of total sales. So still close to onefour of our total sales coming from emerging markets. I think that is very important in the future that this continues to grow since 85% of the world population live in those countries. Looking to sales growth, we have passed SEK 71,000,000,000 total turnover for the group. We had a real growth for the year of percent, a little bit less than we are used to. If we go as my favorite looking a little bit longer perspective, since 20 10, we have more than doubled our sales, so very positive evolution. And you can see the combination of the blue, which is organic and the yellow, which is acquired, how powerful that is for growth. It continues to add and add and add. So and I see no reason why and we will see later on why not we could continue to have growth and acquire acquisitions going forward. Organic growth, I'd like you to note also has been positive ever since the financial crisis. So this industry is a growing industry despite that it might be a difficult surrounding world that we are living in right now. Looking to operating margin, very firm on between 16% and 17%. We have as you can see here, it was 16.2% in the last 12 months, 16.3% in the previous 12 months. We said that currency would be 0 at the end of the year. It was negative in the first half of the year, positive in the other half of the year, and it ended up 0. And we have the dilution from acquisitions by 0.2%. So a pretty normal year. The only thing that was not normal was that we have a dilution from APAC by total of 1%, which will persist during 2017 due to the weakness of the Chinese market, but that we already said last quarter. Looking to profitability in absolute numbers, and here it gets very exciting in a way because here we can see that profit has more than doubled during this year. And it's going from a SEK 4,500,000,000 to SEK 11,500,000,000. So a good evolution. And last year was one of the weakest years, only 4% improvement, but still in the right direction. So a good evolution altogether. Am I not yes, no, I'm in tune. Looking at the manufacturing footprint. We launched, as we said, in the manufacturing footprint, we became a little bit higher than we said. We said SEK 1500,000,000 but currency has changed a little bit. So it was almost SEK 1,600,000,000. 2,500 people will leave the company, 10 factors closed and 40, the sales offices will be consolidated or other offices will be consolidated throughout the group. 50 acquisitions since we did this last time, so no wonder that we had some pent up demand and a very good return. I was surprised when I saw it myself that we will have a €700,000,000 return over the next 3 years from this program. We closed some 76 factories and converted pretty much what we have as a manufacturing into assembly units across the globe. So very good consolidation, I would say, throughout the group has taken place during the last 7, 8 years. SEK 1,600,000,000 is still in the balance sheet for to do this to implement this program. On the margin side, excluding now the write down in the quarter, 16.5%, 16.6%. But remember, here, we have a 0.2% dilution from APAC in addition here. So we have a good evolution despite that we had only 1% organic growth. So all divisions, but APAC had a good leverage. And I've already mentioned the currency and acquisition impact. Currency was positive in this quarter. Acquisitions. We have rarely seen so many things in the air when it comes to acquisitions. So it's quite a lot of activity in this field. We made 15 acquisitions in the last year. It's pretty much what we normally do and 4 in the last quarter and one today in this morning, by the way. And we had 4% added turnover. We have never left so many acquisitions possibilities as we did in the last year. And the reason for that is sometimes the prices, as you probably know, are rather exaggerated. So we are a little bit careful to pay 13, 14, 15 times that sometimes is the price for assets because the return will be rather low. So we are selective, I would say, in where we go. Still, we have for the then that it might be a difficult surrounding world that we are living in right now. Looking to operating margin, very firm on between 16% and 17%. We have as you can see here, the it was 16.2% in the last 12 months, 16.3% in the previous 12 months. We said that currency would be 0 at the end of the year. It was negative in the first half of the year, positive in the other half of the year, and it ended up 0. And we had the dilution from acquisitions by 0.2%. So a pretty normal year. The only thing that was not normal was that we have a dilution from APAC by 2 percent of a percent, which will persist during 2017 due to the weakness of the Chinese market, but that we already said last quarter. Looking to profitability in absolute numbers, and here it gets very exciting in a way because here we can see that profit has more than doubled during this year. So and it's going from a SEK 4,500,000,000 to SEK 11,500,000,000, so a good evolution. And last year was one of the weakest years, only 4% improvement, but still in the right direction. So a good evolution altogether. Am I not? Yes, no, I mean, I'm in tune. Looking down to manufacturing footprint. We launched, as we said, in the manufacturing footprint, we became a little bit higher than we said. We said SEK 1500,000,000 but currency has changed a little bit. So it was almost SEK 1,600,000,000 2,500 people will leave the company, 10 factories closed and 40 BSEIS offices will be consolidated or other offices will be consolidated throughout the group. 50 acquisitions as we did this last time, so no wonder that we had some pent up demand and a very good return. I'm not surprised when I saw it myself that we will have a €700,000,000 return over the next 3 years from this program. We closed some 76 factories and converted pretty much what we have as a manufacturing into assembly units across the globe. So very good consolidation, I would say, throughout the group has taken place during the last 7, 8 years. SEK 1,600,000,000 is still in the balance sheet for to do this to implement this program. On the margin side, excluding now the APAC write down in the quarter, 16.5%, 16.6%. But remember, here, we have a 0.2% dilution from APAC in addition here. So we have a good evolution despite that we had only 1% organic growth. So all divisions, but APAC had a good leverage. And I've already mentioned the currency and acquisition impact. Currency was positive in this quarter. Acquisitions. We have rarely seen so many things in the air when it comes to acquisitions. So it's quite a lot of activity in this field. We made 15 acquisitions in the last year. It's pretty much what we normally do and 4 in the last quarter, 1 today in this morning, by the way. And we had 4% added turnover. We have never left so many acquisitions possibilities as we did in the last year. And the reason for that is sometimes the prices, as you probably know, are rather exaggerated. So we are a little bit careful to pay 13, 14, 15 times that sometimes is the price for assets because the return will be rather low. So we are selective, I would say, in where we go. Still, we had 4% added sales, and we will continue to see a good addition going forward. And if the prices come down, I can promise you there is there are many targets out there that would be attractive to us. So I'm not worried, I would say, because I get the question quite often, why is it only 4 and not 5 or 6? And that is the answer, in fact. We divested also car locks that was not a core asset for us during the year. Looking then to the acquisitions, a little bit highlight of a few of them. I will not go through all 4. Construction Specialties, perfect acquisition for us. Doors and Dockings, a leader in Mexico with 80 service technicians. This is a small market for industrial doors today, but it's growing quite strongly. And so this was a very attractive asset for us, ABLOY, to add to our North American direct sales and service operation. BlueVision, a tech company. Here, of course, multiples are difficult to talk about, but it's expensive. But it's a very interesting company because this adds to our access control and our advantage and access management to partial of HID, the ability to triangulate people. So imagine a hospital where you then offer this kind of solution where you know then all the time real time where is the doctor. That is sometimes very crucial to know. Or an airport where you like to know are the entrepreneurs that might be 10,000 people coming and going during the day, are they where they're supposed to be? Meaning then that you don't need to put up walls or fences or other things. You can see from the system, and it tells you whether someone is trespassing or moving in the wrong direction. We think these kind of things together in access control systems are going to fly in the future. So that's why we went into this direction, a very exciting addition. It's neutral to earnings per share, so we it's not going to dilute this. LOB Poland, why are we buying Dahl Locking Companies? You could ask yourselves. But they are not they're very exciting, to be honest. This is a market leader in Poland, and this puts us in a position where with our electronic locks because we are electronic lockings, the market leader in Poland with electronic lockings, puts us in a position where we can offer the total building in the Polish market. We also own door companies in Poland. So altogether, for the non res market, puts us a blow with a complete portfolio in the Polish market and as the declared market leader. So very, very attractive move for us. Turning now to the divisions. EMEA's margin improved from improved from 16% to 60.8% on the back of 3% organic. Here, we had unusually 0.5% positive dilution or accretion in this case, and this is coming by the face of Carlogs. Carlogs had a very bad Q4 last year, so that is why you see this. But also that we had good leverage in EMEA. And just as before, the northern part of Europe is doing quite well. Germany, Benelux, while we still see France, Italy and also the Middle East. The Middle East was quite weak in Q4. We think it's going to continue weak. We see that the number of projects are diminishing in the Middle East, unfortunately, but that is Oil prices are low, and so they're lacking funds more and more. I also put on material cost here. And the material cost is, of course, going up tremendously when it comes to steel. So we're into the now our 3rd percent added sales, and we will continue to see a good addition going forward. And if the prices come down, I can promise you there is there are many targets out there that would be attractive to us. So I'm not worried, I would say, because I get the question quite often, why is it only 4 and not 5 or 6? And that is the answer, in fact. We divested also car locks that it was not a core asset for us during the year. Looking then to the acquisitions, a little bit highlight of a few of them. I will not go through all 4. Construction specialties, perfect acquisition for us, doors and dockings, a leader in Mexico with 80 service technicians. This is a small market for industrial doors today, but it's growing quite strongly. And so this was a very attractive asset for us, ABLOY, to add to our North American direct sales and service operation. BlueVision, a tech company. Here, of course, multiples are difficult to talk about, but it's expensive. But it's a very interesting company because this adds to our access control and our advantage and access management to partial of HIV, the ability to triangulate people. So imagine a hospital where you then offer this kind of solution where you know then all the time real time where is the doctor. That is sometimes very crucial to know. Or an airport where you like to know are the entrepreneurs that might be 10,000 people coming and going during the day, are they where they're supposed to be? Meaning then that you don't need to put up walls or fences or other things. You can see from the system, and it tells you whether someone is trespassing or moving in the wrong direction. We think these kind of things together with access control systems are going to fly in the future. So that's why we went into this direction, a very exciting addition. It's neutral to earnings per share, so we it's not going to dilute us. LOB Poland, why are we buying Dahl Locking Companies? You could ask yourself. But they are not Dahl, they're very exciting, to be honest. This is a market leader in Poland, and this puts us in a position where with our electronic locks, because we are electronic lockings, the market leader in Poland with electronic lockings, puts us in a position where we can offer the total building in the Polish market. We also own door companies in Poland. So altogether, for the non res market, puts us a blow with the complete portfolio in the Polish market and as the clear market leader. So very, very attractive move for us. Turning now to the divisions. EMEA's margin improved from improved from 16% to 16.8% on the back of 3% organic. Here, we had unusually 0.5% positive dilution or accretion in this case, and this is coming by the face of Carlogs. Carlogs had a very bad Q4 last year, so that is why you see this. But also that we had good leverage in EMEA. And just as before, the northern part of Europe is doing quite well, Germany, Benelux, while we still see France, Italy and also the Middle East. The Middle East was quite weak in Q4. We think it's going to continue weak. We see that the number of projects are diminishing in the Middle East, unfortunately, but that is life. Oil prices are low, and so they're lacking funds more and more. I also put on material cost here. And the material cost is, of course, going up tremendously when it comes to steel. So we're into the now our 3rd round on price increases, and we are trying to catch up. It's 38 percent or 40% and sometimes even more price increase on steel. And those of you that know us is that steel is one something that is abundant in our products. So we need to compensate in the marketplace. So we are busy with this in all parts. Same in Americas, you see material costs there as well. America, good profitability, 20.8%, dilution by 2%, but you can see then from Brazil that we have quite some dilution from acquisitions. So with only 1% organic growth, Americas margin kept up. So I think it was a very strong score from them. Growth in Mexico and gold growth in most other parts. You see architecture hardware here, negative, hasn't been in my time before. And this is because AT and T was so big last year that when that fell out now, it became negative. Underlying, we are growing in America in a good pace. So it was 4% in North America. So it's a positive evolution underlying, order last year Q4. So a pleasing picture from America. And the same in Asia Pacific almost. Here, we have 10.4% underlying profitability. So it's not so that we pull the drain in APAC. The markets most markets are doing quite well, China not. And as you can see here, we are adjusting quite a bit, minus 12% adjustment. But South Asia is negative this time, has to do with India. And they took away all the currency or the floating currency, the cash in the market. So October, November became a market where we saw a drop. We saw just a hole on the ground. And December, the sales returned again, and it looks normal in January. So I think it was a temporary thing, but there was no money in the economy simply. So we couldn't do much about that. So altogether, we took also this write off of SEK 300,000,000 and Karina and me will come back to it later on. So I will tell you. But here, I think I'd like to also to warn for the material costs, China is depressed market. So here, we'll take more time to cover up for the raw material increases on steel. So our estimation is that we will have a tough time in the 1st 6 months this year to compensate for the steel cost increases. Global Tech, very good evolution. Physical access control with the virtual keys is doing very well. Identity and Access Management maybe added 50 or in fact, more than 50 new engineers 2, 3 years back. The new products are catching on in a very nice way. And the inlay business, which is related to the Gal business in part, is also doing quite well. Secure issues, which are printers, they sell a lot in Middle East and the Middle East was weak. So this quarter was not the best. It was only good growth. While project sales, where we had $20,000,000 order last year in Q4 was not repeated in the same magnitude this year. So we, in fact, the negative that it was only 1% organic growth was related very much to the Gawa ID, but mainly the project sales that did not materialize in China this year. Hospitality continues strong. We see there also a very strong pickup of our mobile keys in the hotel world. All on price increases, and we are trying to catch up. It's 38% or 40% and sometimes even more price increase on steel. And those of you that know us is that steel is one something that is abundant in our products. So we need to compensate in the marketplace. So we are busy with this in all parts. Same in Americas, you see material costs there as well. America, good profitability, 20.8%, dilution by 2%, but you can see then from Brazil that we have quite some dilution on from acquisitions. So with only 1% organic growth, Americas margin kept up. So I think it was a very strong score from them. Growth in Mexico and good growth in most other parts. You see Architectural Hardware here, negative, hasn't been in my time before. And this is because AT and T was so big last year that when that fell out now, it became negative. Underlying, we are growing in America in a good pace. So it was 4% in North America. So it's a positive evolution underlying, but AT and T had a very big order last year Q4. So a pleasing picture from America and the same in Asia Pacific, almost. Here, we have 10.4% underlying profitability. So it's not so that we pull the drain in APAC. The market most markets are doing quite well, China not. And as you can see here, we are adjusting quite a bit, minus 12% adjustment. The South Asia is negative this time, has to do with India. And they took away all the currency or the floating currency, the cash in the market. So October, November became a market where we sort of dropped we saw just a hole on the ground. And December, we said to return again, and it looks normal in January. So I think it was a temporary thing, but there was no money in the economy simply. So we couldn't do much about that. So altogether, we took also this write off of SEK 300,000,000 and Karina and me will come back to it later on. So I will carry on. But here, I think I'd like to also to warn for the material costs, China is depressed market. So here, we'll take more time to cover up for the raw material increases on steel. So our estimation is that we will have a tough time in the 1st 6 months this year to compensate for the steel cost increases. Global Tech, very good evolution. Physical access control with the virtual keys is doing very well. Identity and Access Management, maybe added 50 or in fact, more than 50 new engineers 2, 3 years back. The new products are catching on in a very nice way. And the inlay business, which is related to the government business in part, is also doing quite well. Secure issuance, which are printers, they sell a lot in Middle East and the Middle East was weak. So this quarter was not the best. It was only good growth. While project sales where we had $20,000,000 order last year in Q4 was not repeated in same magnitude this year. So we, in fact, the negative that it was only 1% organic growth was related very much to the Gava ID, but mainly the project sales that did not materialize in China this year. Hospitality continues strong. We see there also a very strong pick of our mobile keys in the hotel world. All hotel groups are preparing for the shift to offer all their customers a virtual key. So this is very beneficial to the Assafruit Group. Margins increased from 18.4% to 18.6% with only 1% organic, but this has to do then with the mix we see up in HID. And we had a very heavy continued heavy dilution here, mainly from BlueVision and a few others, but 0.3% and still the margin expanded. So a very positive evolution. And Entrance Systems continues to consolidate its business, doing well on door automatics where we have new products. Our sliding doors are growing very strong. And U. S. Is also doing well on the industrial side, so very positive evolution. Consolidation continues, so we have very positive effect of that and margin improved from 15.1% to 15.4% in the quarter. So a pleasing picture. And you can see here the size of Entrance is now is 30%. So it's almost past SEK 20,000,000,000. And as you know, our target is now set for go for SEK 30,000,000,000. So there will be more acquisitions here. That concludes my overview, and I would like to invite Carolina now. Thank you, Johan. Good morning, everybody. Another year ended, and it ended in a solid way for Assaf Loy. I will start by looking at the financials and the highlights. Starting, as usual, with a very important organic growth. In the quarter, we had 1% organic growth. We estimate that to be 1% price increase and flat volumes. And if we look at the divisions, I would say the trend is similar to the Q3 on the growth side. We do have very strong comps for both Americas and Global Tech, and therefore, the growth on top of that was a bit lower. On the other hand, we have Americas sorry, we have EMEA and Entrance Systems, more Europe based, which had good growth in the quarter, slightly positively helped by the effect of some more working days in December. We should remember Christmas time, though, doesn't make that much difference with the working days because they're in the middle of holidays. And then we have Elpac, which continued to go down in the quarter. Acquired growth, 2% net, I would say. We commented on that during the whole 2016 because we had a divestment of car locks. So gross, it was 3% and net then 2%. And for the full year, we are on net 3%. And looking at what we've already acquired during 2016, we do have a carryover effect of around 2% acquired growth already in the books for 2017. Currency. Another interesting one, which you can't steer very much. For us in the quarter, we saw positive plus 3, first time we have positive this year. And therefore, the full year on currency is 0 on the top line. And here, just assuming the currency rates still the way they are, we will have a carryover effect on 17% of around 2% on the top line. That said, we are in well, in February, that's very early on in the year. So I think we have to wait and see the development on the currency. And in total, top line growth of 6% and an EBIT of minus 4%. And then adjusted for the China write down, it's plus 6%. So it's really in line with the top line growth. And here, we have 4 out of 5 divisions having good to strong drop through from the organic side. So happy with that development. Cash flow. Well, 4th quarter is strong on cash flow for us, and it was this year as well. Very strong, euros 4,600,000,000 in operating cash flow. So good number here coming from the profit, but also good control over the working capital. Finally, earnings per share, minus €2,000,000 And here, it's less down than the EBIT and the difference really is that we have a lower financial net in the 4th quarter than we had last year. And that really is due to some FX changes that we've had. So minus 2 on earnings per share in the quarter and for the full year, plus 2. From the highlights down into the details. Here we have the bridge, and I will start with the organic column, plus 1 on the organic side. And here, we saw Americas and Global Tech with only 1% organic growth, but still good and strong drop through on the margin. Americas, 30 basis points and actually up to 50 on Global Tech, also due to a nice mix in Global Tech that Johan mentioned. We have EMEA and Entrance Systems, both with good organic growth and good results from the efficiency measures and the existing manufacturing footprints and therefore, also a good drop through here. And then we have APAC. And here, we have separated the write down. So what you see in the organic column is the like for like comparison on the business. And with the drop of minus 4% on the organic side, of course, it's tough with the margin, and we do have a dilution from APAC on the margin here. Currency, 3% top line, I would say as expected or at least as communicated. And here, you can see that we did have a positive effect on the margin of 20 basis points. And we flagged for that, that the first half of the year was negative on the margin, the second half was positive. So for the full year, we are flat when it comes to margin development due to currency. Acquisitions, the net 2% that I talked about, as you can see, only 10 basis points dilution from acquisitions, and that is also thanks to the divestment, which was low in margin. And then before I go into the P and L from a different perspective, I will make a little bit of a detail around APAC. So this slide only shows the APAC. And we explained last quarter that we've had overstated sales, mainly in 2015 beginning of 2016, and therefore, the comparable numbers are too high. So what you can see here is that if you look at it like for like, Q4 in 2016, we are on minus 4% organically for EdTech compared to the reported minus 8%. Percent. And for the full year, you will have the effect of minus 5% being the underlying organic growth or rather decline for APAC when reported is 9%. And overall difference for the full year on the sales line is then SEK 380,000,000 on the difference. And then back to the P and L as components of sales. And here, we have the perspective of the full year and the like for like comparison. You can see, like we've seen during the year, the direct material has gone down significantly during the year, and we have 70 basis points improvement on that side. I would say that a part of it, from the half, really comes from the mix and the other half of it comes from lower raw materials underlying. That said, you have to remember we have a time lag because of our inventory times from when we purchased and then we actually have it in the 2nd L. And as Johan commented, we all know that during 2016, most of the major raw materials that are related to us went up significantly. So unfortunately, I would say this looks very good now, but we have to be very careful going into 2017. And we have already started with significant price increases in many of the places where that is needed. Conversion costs, stable. Gross margin, nice improvement then for the year, whole 60 basis points. And then we have the SG and A. And here we have I would say half of that is really the opposite effect from the mix. And then the other half is investment in front end sales people, R and D, but also in IT. So like for like for the year, the margin is up 10 basis points and then we have the dilution from acquisitions of 20 basis points, and we understand the 16.2 dollars Cash flow. I have to say, 4th quarter in Finnstern, where we had this very high cash flow of over SEK 4,500,000,000, I was very happy. And I was a little bit worried this year if we would manage to have as high cash flow in the Q4 as we did then. But we did. So very happy to say that we managed to have operating cash flow over SEK 4,500,000,000. And that really brings the full year to a 5% interest on operating cash flow. And part of that, of course, comes from the increased profits but also because we have very good control over the working capital. And here, we have the DUSOs that are down to 50 DUS and the DTOs that are down well, are 60, which means we have a very nice gap between the 2,000,000 and the 2. On material throughput side, we're actually up 5 bps, but it's not necessarily volume. But here, we do start to see the increased raw material prices that will start to creep into the inventories then. So overall, very good cash flow development also in 2016. Good cash flow, low debt. We ended the year with a little bit above SEK 23,000,000,000 in debt. If you compare that with about a year ago, it's only about SEK 1,000,000,000 higher. And actually, only the revaluation of the debt due to FX is higher than that differs. So we have, during the year, managed through our cash flow to both finance the dividend and all the acquisitions that we've done through the year. And therefore, we also have a net debt EBITDA that is on a low 1.8%. So good development here as well. Another year ends, and here we are. If you see for the full year, the EPS is now SEK 7.9. And with that, we have also dividend proposal that is increased to SEK 3, and that's a full 13% increase on the dividend. And on that positive note, I give back to you, Johan, for the conclusions. To the P and L as components of sales. And here, we have the perspective of the full year and the like for like comparison. You can see like we've seen during the year, the direct material has gone down significantly during the year, and we have 70 basis points improvement on backside. I would say that a part of it, of the half, really comes from the mix and the other half of it comes from lower raw materials underlying. That said, you have to remember we have a time lag because of our inventory times from when we purchased and then we actually have it in the Tranel. And as Johan commented, we all know that during 2016, most of the major raw materials that are related to us went up significantly. So unfortunately, I would say this looks very good now, but we have to be very careful going into 2017. And we have already started with significant price increases in many of the places where that is needed. Conversion cost, stable. Gross margin, nice improvement then for the year, whole 60 basis points. And then we have the SG and A. And here we have I would say half of that is really the opposite effect from the mix. And then the other half is investment in front end sales people, R and D, but also in IT. So like for like for the year, the margin is up 10 basis points and then we have the dilution from acquisitions of 20 basis points and we understand the 16.2 Cash flow. I have to say, 4th quarter in Finnstern, where we had this very high cash flow of over SEK 4,500,000,000, I was very happy. And I was a little bit worried this year if we would manage to have as high cash flow in the Q4 as we did then. But we did. So very happy to say that we managed to have operating cash flow over SEK 4,500,000,000. And that really brings the full year to a 5% interest on operating cash flow. And part of that, of course, comes from the increased profits, but also because we have very good control over the working capital. And here, we have the DUSOs that are down to 50 DUS and the DTOs that are down well, are 60, which means we have a very nice gap between the DTOs and the DTO. On the material throughput side, we're actually up 5 bps, but that's not necessarily volume. But here, we do start to see the increased raw material prices that will start to creep into the inventories then. Overall, very good cash flow development also in 2016. Good cash flow, low debt. We ended the year with a little bit above SEK 23,000,000,000 in debt. If you compare that with about a year ago, it's only about SEK 1,000,000,000 higher and actually only the revaluation of the debt due to FX is higher than that difference. So we have, during the year, managed through our cash flow to both finance the dividend and all the acquisitions that we've done through the year. And therefore, we also have a net debt EBITDA that is on the low 1.8%. So good development here as well. Another year ends, and here we are. If you see for the full year, the EPS is now SEK 7.9. And with that, we have also a dividend proposal that is increased to SEK 3, and that's a full 13% increase on the dividend. And on that positive note, I give back to you, Johan, for the conclusions. Thank you, Carolina. So the conclusions for the quarter is that we had 6% growth, where of 3% was real term or nominal growth, you could call it, which is acquisitions and organic. Good growth in Entrance Systems and EMEA. Decline in China continued and stable underlying profit or EBIT development throughout the group in 4 divisions very strong and APACO costs, as we saw, not that strong. And very good cash flow and also the Board has decided then to propose 13% in dividend increase. So with those words, I'd like now to invite for Q and A, and Matthias also will help us. But before I let Matthias open up, I'd like to clarify a little bit about China as well, because I'm sure you have a lot of questions and I try to sort of help you out as best as I could can. What has happened in China then in Q3, as you probably remember, we had the flawless behavior in 8 of our facilities in China. We went in then for obvious reasons and laid off more than 50 people. All pretty much all management in those areas were left the company very quickly. We brought in auditors to help us out to sort out how things were. We saw then that the sales was exaggerated by some SEK 400,000,000. So that is what Carolina showed on this slide. We did rectify that in last quarter. Orders have continued to work now in this quarter. And one of the things that we asked them to do was really to check for the substance is the assets are the assets in the company as they should be. The conclusion was not in every case. So we have concluded that the majority of what is missing is some receivables, but primarily it is inventory. So we took a €300,000,000 one off in this quarter to rectify that. We have hired new people. Most many of those are in or and if not all, but most of them are also on their way in. So we're going to be in this year with not full team, but at least a good team, so I would say. So from that point of view, I would say we opened up 2017 with the rectified books, and we have also checked the other we have 22 units. Other 14 units, we also went in with orders to check. They could not find any missing subs and so it looks good. So that means it was isolated to these 8 units. And we're going now into 2017 with corrected books and looking forward to continue to develop sales and rather focus on that and to run around trying to tighten leaps. We've also reinforced a lot in the administrative field. Carolina has been very busy in working on that. So we have a split division of what people can do and cannot do, meaning that no one can do the same task like payment and receivable. Either you invoice, but you don't receive money and sort of can handle the bank at the same time. So we don't risk that anything for this can occur again, even though we can never guarantee 100%, right? But at least we have undertaken a lot of measures and you cannot pay the suppliers without different people doing it. So we feel good that we have done what we can do and that we start on a new page in 2017. So with those words, I open up then for Matthias to lead us in Q and A. Thank you, Johan. Thank you also Carolina. As Johan said, my name is Matthias Olson. I head the Investor Relations team here at ASSA, and I will facilitate the Q and A session today. As usual, I ask you to please ask only one question, so to allow for as many people as possible to ask questions. And I will also ask the operator to please repeat instructions to how to ask questions before we kick off. Thank you. Now we will begin the question and and I will start out with asking Johan a question. You say in the report that global economic development is relatively weak, but you also see positive trends in some markets in Americas and Europe. So how has 2017 kicked off, Johan? I just don't end last year. October, November were the weak months. December was a good month. And January looks also pretty good. We should remember there is January has one more working day, but we don't think the impact of that day is that strong. So it looks pretty good. And I'd like also to underline here that Q1 will have an Easter effect in a positive sense. So April and March will Easter will shift place between March April. So this year, we will have a full March and Easter will be in April. So that means that we will have a positive mainly in European arenas, since it's there where we celebrate Easter. But altogether, a positive picture. Start on Solvency One. I am also the moderator, so I have the privilege. I will also ask Carolina a question. We just launched the 6 manufacturing footprint program. Johan says it looks good from the savings point of view. Could you tell us what to what about the program and what to expect in terms of savings also this year and then maybe 2018, please? Yes. We have launched a new manufacturing footprint program. The one off charge is around SEK 1 point 6,000,000,000. The savings after 2019, the run rate will be EUR 700,000,000. And out of that, in 2017, we expect to see EUR 300,000,000 in 2018, we expect to see EUR 250,000,000 and then in 'nineteen, dollars 150,000,000 in service profile. Okay. Thank you, Carolina. So we will kick off the Q and A session here in Stockholm. So please, Peter? Yes. Thank you. Peter Frieden, Handelsbanken Capital Markets. My question will be related to China, and there might be some small sub questions in that question. But if we look at the run rate in Q4 and assume that all books are cleared, If that run rate were to persist during the course of 'seventeen, what organic growth should we then have purely mathematically? And tied to that, if you were sort of complete in the marketplace in the sense that all managers are in place, you're back on track. Do you sense that, that will capture some market shares back again that you could add to that figure? Yes, please. Well, the run rate was minus 11% for the year, like it was for APAC as a whole for China. As I have said before, our footprint is not sort of general China. It's very much North. And North of China has been very weak for us, while regions like Chengdu, Shansai, and so they're in fact growing. So it's not a uniform downslide that we have. We have a number of units despite then the decline that are growing, while the northern part has declined heavily. So will we then recover market share? Difficult to tell. We are market share? Difficult to tell. We are launching now some 20 new door models in the various entities. We have put in quite some new engineers to really reinforce our stance there. It looks good. We start we launched most of them in Q4. So it's not so that we don't have competent people, but we had fruitless people. So we can't work with those. So we have to take sort of a step back and say, this is something we cannot accept as a company. We need to have be clean and everything. So in a way, you hurt yourself, but long term, we do the right thing. I cannot really answer whether we will regain market share, but I would say I have good hope we do the right things at least. So again, on the level, just to understand the mathematics here because since the inflated books were in 2015, that effect is gone consequently in 2016. So if Q4 volumes daily rates were to persist, what would that mean for organic growth in 2017, probably mathematically? I hope really it will not persist because it was minus 14. So that was worse in the Q4. I think personally, we see a leveling out of beer because we are very related to the Chinese leakage of the economy also. The economy has turned down quite a bit on the construction. We saw that Volvo, for instance, they had very big, let's say, some excavators now in China. So you start by digging a hole normally before you put up the building. So hopefully, and we see also that there are more square meters coming out in the market. So I would be surprised, even though I might be surprised, but I would be surprised if the market continue to decline like this. Thank you. Okay. Thank you, Peter. Any more questions in Stockholm? Great, please. Operator, we have a question from the telephone conference. Yes. The first question we've received from the line is from Andreas Willey, JPMorgan. My question is on price versus raw material. Maybe you could help us there a bit more in terms of understanding the dynamics. As you had 1% price in Q4, Was that enough to offset the raw material impact overall for the group in Q4? And if you look into 2017 in terms of what's in the pipeline on the raw materials, do you expect that to be immediately offset by the price increases? Or do you expect a time lag? Basically, what I'm trying to figure out is if you look at price versus cost for 2016 and you compare price versus cost for 2017, what should we pencil in, in terms of the bridge? I know that longer term, higher raw materials is a positive, allows you to raise prices. But more from a shorter term perspective, should we be worried for the first half of '17 that this could be a negative rather than maybe a positive like we've had it in the past times? Thank you. I think when it comes to locks, yes, we will be able to compensate like always because there, the raw material content is limited. On the door side, like always, it will take a lag and the lag will be different for different regions. We think Europe will not have a lag when it comes to EMEA. We think in America, it will there will be a lag. We have the impression that some of our competitors have hedged. We never hedge. So that means that we probably cannot take the full price increase because they haven't reacted there in the way we normally do when you have raw material price increases. So there, we will have a lag in our price increase in Americas then. On in APAC, in China, due to this market situation, we estimate that we will also have a lag. But I would say the majority, we will be able to compensate for. And on Entrance Systems side, we are now into because we saw this early, so we're into the 3rd round of price increases. So we think we will be close to cover the raw material increase because there you have a heavy impact. There's a lot of steel in industrial door. But altogether, I'm rather optimistic. And if we have a lag, we talk about the short ones. So I'm not worried about it. Thank you very much. And maybe as a follow-up on you gave guidance for FX and M and A on the top line for 2017. On the margin, is there anything to note there in terms of dilution accretion from FX or M and A at current levels? The way it looks now, on the FX, of course, there will be a bit higher FX effect in the beginning of the year and then panning out towards the end of the year since we are comparing with the previous year's increase towards the end. In the beginning, on the margin side, on the FX, I would say slightly positive in the beginning of the year, but then really flat and for the full year, flat. When it comes to the acquisitions, around 2% that we have in the books for 'seventeen, they do have dilution, I would say, as usual. But since it's only 2%, it's probably 20 basis points from that. Thank you very much. The next question we've received is from Lars Porsen, Barclays. Your line is now open. Hi, thanks. Good morning Johan, Karlene. I want to just return to organic growth and you're talking about 4% underlying growth there. Obviously, in your comments, you point to growth in all other markets than the U. S. I wonder whether you felt there was anything unusual in the quarter given the U. S. Election we've heard from some others at least that there was an uncertainty adversely impacting their businesses more so perhaps on the larger project. And then for the group as a whole, I think this time last year, you gave an indication for growth for the full year, I. E. The 2% to 4% range we've talked about. I wonder whether you would offer up a view on 2017 at this point? No. I think we stay with 2% to 4% because we don't know about China. China is a big drag for us. It has at least for the year that passed, the drag was down by more than 1%. And it's very difficult for us to really estimate that. We I think when it comes apart from China, I think we are growing at a good pace. Exact number, I cannot really say, but look to Europe, look to Entrance, it's not bad what we have, at least not in my opinion. On the U. S, it was a little bit difficult to hear about the growth there, but AT and T was indeed 3% affecting us. And we see we saw October, November were slower months than we normally see or at least saw the year before. Why was that? I don't know. But there was an election in the U. S, perhaps that had an influence, but we really don't know. December became came back in the good force, and it looks and our quotes continue to grow all the time. So it's not so that the activity with the customers took away and ABI index went up 5% in or from 50% to 55% in December. So we don't have a feeling that the U. S. Is sort of cooling off right now at least. If I can push your hand on the 2% to 4%, how much of that do you expect to be pricing? Well, probably a little bit more than usual, but 1.5 percent perhaps. We haven't really forecasted it. Do you have an idea, I think? No. It usually turns out to be a net one, but it's going to be different price increases due to if it's doors or if it's on the lock side. So it depends also on the mix of the group. You heard me mention about China that we're launching a lot of new doors. That is one way to increase price. And then it's difficult to say how much more price you got because you launch a new series of doors at a different price level. And then you can't sort of put that in your price increase. That's a new door. So I think there are more than one way to increase the price when you have problems. That's helpful. Secondly and finally, if I could just be allowed on your U. S. Business, can you remind us how much of the U. S. Business or the components into U. S. Is imported? And specifically, how much from Mexico, China? And maybe secondly, to your U. S. Business, can you help us understand your effective tax rate in the U. S? It's not clear to us how much you utilize transfer pricing to lower tax jurisdiction. Can it be helpful to get a sense for how much you might potentially benefit from a U. S. Tax reform? Scott? Yes. Thanks, Ravi. So I can do the tax part. Well, if you look at the group as a whole, around 35% of our sales are in the U. S. That said, that is not only Americas. It's also now the big part of Entrance Systems that is in the U. S. So what I'm saying is that they are very different when it comes to margin. But the tax rate in the U. S. On corporate is 38%. So of course, with a lower tax rate, whatever that may be and how it pans out, that would benefit us as a group on tax. But how much and when and what I think we have to wait until it's implemented? When it comes to imported content to the U. S, the in Americas, we have an intact manufacturing base. So we estimate that it doesn't take us that much time to re in source what we have outsourced. Part of it is coming today, I don't know the exact percent, part is coming from China, but an increasing part has been moved to Mexico because Mexico has become more beneficial when it comes to sourcing. But it we don't know about China. China is a big drag for us. It has at least for the year that passed, the drag was down by more than 1%. And it's very difficult for us to really estimate that. We I think when it comes apart from China, I think we are growing at a good pace. Exact number, I cannot really say, but look to Europe, look to Entrance, it's not bad what we have, at least not in my opinion. On the U. S, it was a little bit difficult to hear about the growth there, but AT and T was indeed 3% affecting us. And we see we saw October, November were slower months than we normally see or at least saw the year before. Why was that? I don't know. But there was an election in the U. S, perhaps that had an influence, but we really don't know. December became came back in a good force, and it looks and our quotes continue to grow all the time. So it's not so that the activity with the customers took away and ABI index went up 5% in from 50% to 55% in December. So we don't have a feeling that the U. S. Is sort of cooling off right now at least. If I can push your hand on the 2% to 4%, how much of that do you expect to be pricing? Well, probably a little bit more than usual, but 1.5 perhaps. We haven't really forecasted it. Do you have an idea, I think? No. It usually turns out to be a net one, but it's going to be different price increases due to if it's doors or if it's on the lock side. So it depends also on the mix of the group. You heard me mention about China that we're launching a lot of new doors. That is one way to increase price. And then it's difficult to say how much more price you got because you launch a new series of doors at a different price level. And then you can't sort of put that in your price increase. That's a new door. So I think there are more than one way to increase the price when you have problems. Secondly and finally, if I could just be allowed on your U. S. Business. Can you remind us how much of the U. S. Business or the components into U. S. Is And specifically, how much from Mexico, China? And maybe secondly, to your U. S. Business, Kaldi, can you help us understand your effective tax rate in the U. S? It's not clear to us how much you utilize transfer pricing to lower tax jurisdictions. So can it be helpful to get a sense how much you might potentially benefit from a U. S. Tax reform? Scott? Yes. Tax rate? So I can do the tax part. Well, if you look at the group as a whole, around 35% of our sales are in the U. S. That said, that is not only Americas. It's also now that's not a big part of Entrance Systems that is in the U. S. So what I'm saying is that they are very different when it comes to margin. But the tax rate in the U. S. On corporate is 38%. So of course, with a lower tax rate, whatever that may be, how it pans out, that would benefit us as a group on tax. But how much and when and what I think we have to wait until it's implemented? When it comes to imported content to the U. S, the in Americas, we have an intact manufacturing base. So we estimate that it doesn't take us that much time to re in source what we have outsourced. Part of it is coming today, I don't know the exact percent, part is coming from China, but an increasing part has been moved to Mexico because Mexico has become more beneficial when it comes to sourcing. But we do final assembly in the U. S, while the pre assembly is done in low cost markets. So I don't see on a temporary basis, this will, of course, be difficult. But on a longer term, we can easily move back into the U. S, at least in our estimation. In HID, it's mainly software. Otherwise, it's a plastic componentry and a final assembly. All the Intel deals is held in our stores, so to speak, in our secure vault. It's not really a problem, but it's going to be a temporary thing in that case. On an entrance systems, the value add is more or less 100% U. S. A. So except pedestrian doors that are that have high European content and some Asian content as well. That's helpful. Thanks. I remind everyone that we limit ourselves to one question. So let's continue on the conference call, please. The next question we have received is from Andre Kukhnian, Credit Suisse. Your line is now open. Yes, good morning. It's Andre from Credit Suisse. Thanks for taking my question. Can I just confirm on China, have we really drawn the line underneath that? Can we say that you've done all the digging and that's kind of the final result? And just secondly on that, were there any extra costs associated with that, that you took some P and L like the extra auditors consultants, the kind of laying off, rehiring? And if so, was that significant? I think it's for you, Carolina. We have gone through all the entities. First, the ones that were fraudulent already in the Q3, but now we've looked and finished the audits in all of the companies. And what you saw in the Q4, the 300,000,000 is what we have found, and we've taken all of that in the Q4. It is related to the same age that we saw in the Q3. So for now, we are all done in China. When you ask about extra cost for auditors and hiring and firing, that is not part of the one off. So that is part of the sort of the APAC run rate. So yes, it's part of that. But how significant it is, I think, we see that as part of our doing business now. Got it. And if I may just follow-up on the quarter result. The Central Line seemed to be around 2 times of what it was in the last couple of years. Could you shed some light on what sort of went on there? And what would be the right level to think of as kind of maybe normalized level for 2017? Currently at the beginning of the question, the what? So the eliminations line of minus €269,000,000 in Q4 was looks abnormally high compared to the last couple of years. Well, I think that sort of changes a little bit over the years, but it is on a normalized line. Right. So the 2016 run rate is representative. Okay. Thank you, Andre. Next question please. The next question we've received is from Ben Maslin, Morgan Stanley. Your line is now open. Thank you. Good morning, Johan. Good morning, Carolina. Can you just put a bit more color around the Middle East? And how large is that business now as a percentage EMEA sales? And how We do final assembly in the U. S, while the pre assembly is done in low cost markets. So I don't see on a temporary basis, this will, of course, be difficult. But on a longer term, we can easily move back into the U. S. At least in our estimation. In HID, it's mainly software. Otherwise, it's a plastic componentry and a final assembly. All the Intel deals is held in our stores, so to speak, in our secure vault. It's not really a problem, but it's going to be a temporary thing in that case. On an entrance systems, the value add is more or less 100% U. S. A. So except pedestrian doors that are that have high European content and some Asian content as well. That's helpful. Thanks. I remind everyone that we limit ourselves to one question. So let's continue on the conference call, please. The next question we have received is from Andre Kukhnian of Credit Suisse. Your line is now open. Yes, good morning. It's Andre from Credit Suisse. Thanks for taking my question. Can I just confirm on China, have we really drawn the line underneath that? Can we say that you've done all the digging and that's kind of the final result? And just secondly on that, were there any extra costs associated with that, that you took to P and L, like the extra auditors consultants, the kind of laying off, rehiring? And if so, was that significant? Yes. I think it's for you, Carolina. We have gone through all the entities. First, the ones that were fraudulent already in the Q3, but now we've looked and finished the orders in all of the companies. And what you see in the Q4, the 300,000,000 is what we have found, and we've taken all of that in the Q4. It is related to the same age that we saw in the Q3. So for now, we are all done in China. When you ask about extra cost for auditors and hiring and firing, that is not part of the one off. So that is part of the sort of the APAC run rate. So yes, it's part of that. But how significant it is, I think we see that as part of our doing business now. Got it. And if I may just follow-up on the quarter result. The central line seems to be sort of around 2x of what it was in the last couple of years. Could you shed some light on what sort of went on there? And what would be the right level to think of as kind of maybe normalized level or level for 2017? I think here at the beginning of the question, the what? So the eliminations line of minus €269,000,000 in Q4 was looks abnormally high compared to the last couple of years. Well, I think that sort of changes a little bit over the years, but it is on a normalized line. Right. So the 2016 run rate is representative. Okay. Thank you, Andre. Next question please. The next question we've received is from Ben Maslin, Morgan Stanley. Your line is now open. Thank you. Good morning, Johan. Good morning, Carolina. Can you just put a bit more color around the Middle East and how large is that business now as a percentage of EMEA sales? And how steep are the declines? And I know it's been you flagged the weakness now for a couple of quarters. When do your comparative starts get easier as you look through 2017? I don't have in my head the exact number, but it is not extremely significant. It has grown quite a bit in the last few years. We have been very successful in the Middle East. I don't dare to give you a number, but we can provide you with a number later. And do you have a number for that? Yes, around SEK 500,000,000. But we already I can we saw it coming. So we have already taken out quite some people. So we have reduced our footprint, not in size, but we have reduced our footprint in when it comes to number of people. So we feel, of course, not good when things go down, but we are prepared. And then if I can just a clarification. So if think, Johan, you can do 2% to 4% growth for this year is a reasonable starting point. I mean, within that, what would you expect from Americas this year? You did about 5% growth from 2016. Is that a realistic assumption for 2017? Thanks. You probably know that better than me, but it looks good. That's all I can say. I don't want to give a number. We don't give forecasts. Our quotes are up quite a bit. And maybe I can add on the Middle East. It's about 2% of ours and your sales if you look at the group. Okay, got it. Thanks, Matias. Maybe we'll take a question from the Stockholm here, please. It's Peter again, a follow-up. If we look at last year, we saw an organic growth of 2%, say, free without China. If we could look at it from a product point of view instead of geographies and divisions, if the electronic and electromechanical is now 30 plus percent maybe, what was the growth of the old mechanical locks? And how has that affected your mix in terms of profitability, all else equals? Profit wise, electronics is good. So because you have also the aftermarket. And the more electronics you sell, the more aftermarket you get. And as you know, also the lifetime goes down. So the more we sell, the better it becomes. And could you repeat the first question? I don't think I missed that one. No. But if we do the very, very simplified and divide your products into old skole and new skole And basically looking at the mature parts of your offering and exclude China and that, they ought to be flat at best? Well, I think we should remember that we always have cannibalization. Every electronic lock is a mechanical lock, but with an electronic interface. So it's very hard that you're certainly not fair if you say look to how mechanic is not growing, because every mechanical, electronic lock has a mechanical content. So in a way, you're transferring some of your business from pool 1 to pool B. So it's so I wouldn't say, but if you look only purely on the mechanical locks, in a longer perspective, it has doubled since 2,005, but the term has 6 doubled on the electronics. So you can have the sort of move between two buckets. Deep of the declines. And I know it's been you flagged a weakness now for a couple of quarters. When do your comparative starts get easier as you look through 20 17? I don't have in my head the exact number, but it is not extremely significant. It has grown quite a bit in the last few years. We have been very successful in the Middle East. I don't dare to give you a number, but we can provide you with a number, right, Leighton. Do you have a number for that? Yes, around SEK 500,000,000. But we already I can we saw it coming. So we have already taken out quite some people. So we have reduced our footprint, not in size, but we have reduced our footprint in when it comes to number of people. So we feel, of course, not good when things go down, but we are prepared. Thank you. And then if I can just a clarification. So if you think, Johan, you can do 2% to 4 percent growth for this year is a reasonable starting point. I mean, within that, what would you expect from Americas this year? You did about 5% growth from 2016. Is that a realistic assumption for 2017? You probably know that better than me, but it looks good. That's all I can say. I don't want to give a number. We don't give forecasts. Our quotes are up quite a bit. Maybe I can add on the Middle East. It's about 2% of our annual sales if you look at the group. Okay, got it. Thanks, Matias. Maybe we'll take a question from Stockholm here, please. It's Piotr again, a follow-up. If we look at last year, we saw an organic growth of 2%, say, 3% without China. If we could look at it from a product point of view instead of geographies and divisions, if the electronic and electromechanical part is now 30 plus percent maybe, what was the growth of the old mechanical locks? And how has that affected your mix in terms of profitability, all else equals? Profit wise, electronics is good. So because you have also the aftermarket. And the more electronics you sell, the more aftermarket you get. And as you know, also the lifetime goes down. So the more we sell, the better it becomes. And could you repeat the first question? I think I missed that one. No. But if we do the very, very simplified and divide your products into old school and new school. And basically looking at the mature parts of your offering and exclude China and that, they ought to be flat at best. Well, I think we should remember that we always have cannibalization. Every electronic lock is a mechanical lock, but with an electronic interface. So it's very hard that you're certainly not fair if you say look to how mechanic is not growing, because every mechanical electronic lock has a mechanical content. So in a way, you're transferring some of your business from pool 1 to pool B. So it's so I wouldn't say, but if you look only purely on the mechanical locks, in a longer perspective, it has doubled since 2,005, but the term has 6 doubled on electronics. So you can have the sort of move between those 2 buckets. And of course, the fixed doubling has eaten a lot from the one that doubled only. Part of that is acquisitions, but it's growing still, but not at a very high pace. Okay. Thank you. Okay. So we return to the telephone conference. Yes. The next question we've received is from Guillermo Fenure, UBS. Your line is now open. Thank you. Good morning. Hi, Carolina. Hi, Johan. A couple of questions, actually one question and one follow-up regarding tough comps. Can I just ask whether this tough comp situation is something that will in a way, hamper organic growth through the first half twenty seventeen? I see tough comps emerging in Europe. I see the U. S. A. Was actually having a good first half as well. I was wondering about that. Yes, there is. Yes. We have good start of last year and a weaker second half. That's a fact. I'm still not negative. I think at least looking to quotes and activity in the market, I'm not negative what we look upon going forward into the Q1 at least. We don't as you know, many of our orders are delivered in the same month. It's very, very hard really to say. But coating levels are good, also in Europe. Thank you. And then a question to Carolina. Can you quantify the raw materials increase or give us any information about how diluted that movement is so we can play around your pricing? Thank you. We can play around in your spreadsheets, okay. Well, I would have to say that we try to look forward, but if I go back then to the Q4 of 2016, we still had a positive effect towards most of that quarter. That's why you can't really take the quarter. And you could see from my slide that we did have significantly lower direct material also as a percentage. What we do see and where we see it is that on the inventory side and already, as Johan mentioned, already in China, we've seen strong increases. So it's not possible to quantify it like that. I think you have to look at the increase of the raw materials and then knowing that around onethree of our total direct material is related to raw materials, sort of look at that increase and take probably 0.5 year's lag of the increases of raw materials in the world. Thank you. That gives me enough. Thank you. Okay. Maybe we're coming to an end here. Maybe we'll take one last question from the telephone conference, please. Yes. The last question will be from Mr. James Moore, Redburn. Your line is now open. Yes. Good morning, everyone. Hi Carolina, hi Johan. Maybe I could ask about your comment about the Asia Pacific margin and the China raw material and potentially given the market development that could be tougher to recoup. Can you help us a little bit with your thoughts on how the full year 2017 Asia Pac margin might develop? Yes. Just looking at where we are now and sort of taking away the one offs that are related to historical periods, what we could say in the Q4 was that the margin was around 10% compared to almost 15% the previous year. 4th quarter is a very strong quarter for FX though. If we look at the run rate for the full year in 2016, we can see that. And of course, the fixed doubling has eaten a lot from the one that doubled only. Part of that is acquisitions, but it's growing still, but not at a very high pace. Okay. Thank you. Okay. So we return to the telephone conference. Yes. The next question we've received is from Guillermo Peigneurs, UBS. Your line is now open. Thank you. Good morning. Hi, Carolina. Hi, Johan. A couple of questions, actually one question and one follow-up. Regarding tough comps. Can I just ask whether this tough comp situation is something that will in a way, hamper organic growth through the first half twenty seventeen? I see tough comps emerging in Europe. I see the U. S. A. Was actually having a good first half as well. I was wondering about that. Yes, there is. We had good start of last year and a weak second half. That's a fact. I'm still not negative. I think at least looking to quotes and activity in the market, I'm not negative what we look upon going forward into the Q1 at least. We don't as you know, many of our orders are delivered in the same bounce. It's very, very hard really to say, but coating levels are good, also in Europe. Thank you. And then a question to Carolina. Can you quantify the raw materials increase or give us any information about how diluted that movement is so we can play around your pricing? Thank you. We can play around in your spreadsheets, okay. Well, I would have to say that we try to look forward. But if I go back then to the Q4 of 2016, we still had a positive effect towards most of that quarter. That's why you can't really take the quarter. And you could see from my slide that we did have significantly lower direct material also as a percentage. What we do see and where we see it is that on the inventory side and already, as Johan mentioned, already in China, we've seen strong increases. So it's not possible to quantify it like I think you have to look at the increase of the raw materials and then knowing that around onethree of our total direct material is related to raw materials, sort of look at that increase and take probably 0.5 year's lag of the increases of raw materials in the world. Thank you. That gives me enough. Thank you. The next Okay. Maybe we're coming to an end here. Maybe we'll take one last question from the telephone conference, please. Yes. The last question will be from Mr. James Moore, Redburn. Your line is now open. Yes. Good morning, everyone. Hi Carolina. Hi Johan. Maybe I could ask about your comment about the Asia Pacific margin and the China raw material and potentially given the market development that could be tougher to recoup. Could you help us a little bit with your thoughts on how the full year 2017 Asia Pac margin might develop? Yes. Just looking at where we are now and sort of taking away the one offs that are related to historical periods, what we could say in the Q4 was that the margin was around 10% compared to almost 15% the previous year. 4th quarter is a very strong quarter for Eltek though. So if we look at the run rate for the full year in 2016, we can see that assuming the same effect, it's around 20 basis points dilution then for us in 2017 due to the change in margin in APAC. Okay. Thank you. And maybe if I could just follow-up a complete aside basically, that's the second question, sorry. Dormakaba buying Stanley, any thoughts on that? Well, not much. It was not us. It was them. We are already rather large in the U. S. A. So antitrust has probably not been easy for us if we had gone in that direction. I guess the same was valid for Allegion. So it was probably a safe bet that the dormakaba would be the ones acquiring. That's very helpful. Thanks. Okay. It's 11 so I think we can conclude there. Would you like to say some last words, Johan? Well, I feel good about the year that passed, another strong year for Assa Abloy. We continue to develop our business, a lot of very exciting products in the pipeline. And as I mentioned, also a lot of acquisitions are going on. However, we're a little bit hesitant when it comes to pricing. And looking to 2017, at least, it looks positive from an altogether from a total picture. So I feel good. So thank you very much for coming and following us on the next.