Earnings Call: Q4 2020

Jan 28, 2021

Everyone. Bertrand here. And we will Maria and I will try to take you through the Q4 report. And I will also mention which slide I'm talking to, so everyone can follow it clearly. I think that I, 1st of all, would like to comment the press release yesterday. I think many of you have read it, I have announced my resignation during this year. This is no drama at all. I have been thinking of this in my mind for 1.5 years and I make decision together with my family that during 2021 sometime I will leave the position of CEO of this company. And today, it was also clear with EQT. We have they have understood it. I think and I believe but they had wanted me to stay for another year, but they know my age. I would be 64 this summer. And so it's quite normal that you have a successor at that time. What will happen now is that I will stay on board until we have to recruit a new one. And the work to find a new one will start today. And I will personally be very much to hold this together with people from EPT, mainly from EPT, we will find a successor. And quite likely, it will take some time. 1st of all, we should find someone and then we should negotiate and then there are termination time, etcetera, etcetera. It's quite likely that it should renew my successor, a man or a woman, will come be appointed and can start work likely after the summer break. This is what I believe today. If you have further questions on semi resignation, I can tell we can take that afterwards. But again, this is absolutely my own decision. It's a decision that I have been in my mind for a long time. And I will also say it is for me, it's a very emotional decision. I've been in this company for a long time. I have follow it and grow it together with both people working in it. And we have also a very nice culture. And so it's for me like a family member. So it's very emotional for me to finally take this step, but this is the case. So let's go on to tell you a little about the market. So we will do like this. I will tell you some general things first, then Maria will take you through the Q4 report and also give you some small my our opinion about our outlook for this year. So if we go to Slide 4, And you see it for the moment at the glance, this is then, of course, 12 months with SEK 14,100,000,000 that was less than last year. And you know, 2 big impacts here. We'll come to that later. It is the COVID situation and it is price decrease in refrigerants. I will show you more on that later on. Nowadays, we are 4,000 people. We have announced that we acquired Sinclair in Q4. And yesterday, we also released in our acquisition in Australia. So including these people, we are around 4,000 people now, and we added also with the Sinclair brand, a new market, and that was Croatia in Europe. And also the number of branches has increased. So if we move on to Slide 5. So what has happened during Q4? I think the most important is, of course, that our old principal shareholder carrier decided to quit. And I think also that I have it is their decision, of course, but I have many times got the question what I believe Carrier how they look at the they arrest assets in their balance sheet. And my answer had always been, I believe that this is something that will be under investigation and most probably they will divest. And the reason for that is, of course, that carriers has been off from UTC, United Technologies, And they also have in their balance sheet around USD 11,500,000,000 in borrowings, And the revenue is around USD 16,000,000,000 So they had to clean up their balance sheet, and this was quite clear when we sold this balance sheet in April last year. And we also saw the behavior just before and right after that race had some placing of Bay of Ash shares. So during this autumn, there have been different possible bias to this stake. And we, in the company and the shareholder, are very happy that finally, I did that with EQT. We have so far very good cooperation with EQT. We think they will contribute with a lot. They have a very aggressive acquisition agenda. So if we could fulfill their requirements, it's not unlikely, but the acquisition pace will speed up in the future, they have a lot of know how in digitalization. This is one of our focus areas, which we can support as well. They have similar companies like us, not in refrigeration, but the same structure with a decentralized organization and the branch this work, we can do a lot of benchmarking between them. So we are very, very positive to have EGT as new principal shareholder. We think they will contribute to this fantastic company even more. And you can also see we have done 3 acquisitions in Q4 or year to date. Fenergy in Denmark, this is a small one. It's start up, but it's a very exciting one because these guys here, they haven't done it before. They have built up a fantastic company, Advancer, one of our major competitors in green environmental friendly technology and to produce power racks for supermarkets all over the world. It's a fantastic company. And you see the guy next to me, Kiv, he was the founder and owner of that company before. Now we want to do it with same with industrial heat pumps based on the environmental friendly technology CO2. And so we have invested in this company together with him and we will have also an option to be majority and be sole shareholder in the future. We believe this market is very exciting and could be a new the industrial market for power acts, environmental friendly technology, very exciting promising green technology. Our next also in acquisition, Sinclair, also 100 sent in line with our strategy. Sinclair is based in Czech Republic and has a very good position in many Ethiopian countries, but also, for something in Germany, in Austria. And this brand is a private label brand. And that is was in our strategy that we should launch a private brand, we have also branded already, I think I mentioned before to you, we have a Fred Ott's brand. But now when we acquired this company and we owned this brand, we will continue to launch this brand in many more markets. So already this year, we will launch the Sinclair brand in the big markets around the Mediterranean, Africa, etcetera, etcetera. So we are a lot of optimism that we can grow this business very much. And of course, when you have a private label brand, it's your old brand and there are also good better margin in this business when you are only distributed for for a brand. The Fredriks brand will remain for us as BayRef's own, but that will be on components mainly for refrigeration business. So now we have 2 private label brands, 1 for air condition, that's a Sinclair, and then we have Fredox for fittings and components. And finally, what we presented yesterday, this is also in the APAC region, Australia, a company, we have incorporated a lot. They are producing ducted air condition solutions. So they are both a distributor and And we have bought a lot from them before. And this redacted solutions is very common in Australia and Asia. So we think also through our network, we bring it on much more branches in Matlab business we have down there, so we can also develop this. All right, if we proceed to Slide 6. Just to show you about first of all, you can see here that EQT nowadays is the biggest shareholder and our principal shareholder. You could also see my name as number 3, and I can give you this. I have no intention to sell due to my resignation. I will keep my shareholding, and I will also join the direct board and see if I can contribute to develop this company also in the future. We also really good sign for the market and a good sign what we believe about the future. We think we should increase the dividend. And last year, we said we should have perhaps we should have an additional EGM meeting to have another dividend. We didn't have that as a compensation last year, but we didn't have that. So we did an extra SEK 0.50 of dividend this year. And it's also in line with our objectives, we have to say we should distribute more than 30% of earnings per share. If we continue to next slide, this is also how it looks right now. Our global reach is dominating in Europe right now. But I think after the acquisition we have done, maybe Europe will be even stronger due to the Sinclair acquisition, but also Asia Pacific is growing and take more part of the total stake. Next slide. And here we have the megatrends for okay, you see the megatrends. I think this megatrends, you know, all these 5 megatrend is giving us tailwind. I will talk more about that later on, especially the it stays out, scheme for refrigeration. Sorry, I was a little yes, please take next. Here it comes. I think many of you have seen these phase outs there before. But just as you can see, now we are 2021. So the allowed volume of the market will actually go down from 63% a positive 12% down to 45% plus January this year. All of you remember what happened in 2018. It was a price move, and it was also the market was really demanding more and more refrigerants because the phase out scheme of the old traditional installation still needed old traditional HFC gas. I don't expect the same dramatic development this year, but we think it not have an impact on also the development for prices this year. And if we go to the next slide, here is the development of the price development for refrigerants, 2 important ones. And as you know, we have been suffering from decreasing prices on refrigerant for a long time. I think 10 quarters in a row. And last year, it was on the revenue compared to prices and volume had been the same as 2019, it was around SEK 450,000,000 on top line and around SEK 250,000,000 on profit. So it as really we have been suffering for this long time. We expect we will continue to suffer this year in the beginning of this year, I'll come back to that later, but not at all in the same size as we have done. I think you see good signs here in the future. Coming back a little bit on my last slide. If we take the next slide. And if we look here, you could see what happened last year. We believe that of our drop in sales that there were figureands. Approximately, it was SEK 450,000,000 as I said before when we had an organic negative growth of SEK 440,000,000 and that is the main part of that, I think more than SEK 500,000,000, it's would admit it's very difficult to calculate is due to the COVID-nineteen, the lockdowns in Europe. And then on top of that, we have growth organic growth on the HVAC business. So next year, if we don't sorry, this year, if we don't have any COVID-nineteen lockdowns as we had Q2 last year, but gave us a big hit, negativity, if the refrigerants will stop falling down and if we continue to have organic growth on the HVAC, we could see that we will not have this negative impact on the sales. In addition to that, you could also see we have a net savings in our expenses, SEK 300,000,000 last year. Out of this, I think SEK 50,000,000 more more than SEK 50,000,000 was subsidies from countries due to the lockdown, but the real saving was SEK 250,000,000 Some of it is very easy because you can't travel you can't have exhibitions, etcetera, etcetera. So the net savings we will carry forward into this year will not be SEK 250,000,000, but I think we'll be coming in with net savings this year, more than SEK 100,000,000 comparing last year. And finally, before I hand over to Maria, I will just give you some thoughts why I am optimistic for the future. First of all, refrigerants prices, as I said, has gone down 10 quarters in a row. Expectation, we will lose also in Q1 next year. But maybe then we could have even and on top of that, we could also have some gains in the end of the year due to the prices increases is we could see signs. I saw actually today, this morning, some signs on price increases is ongoing right now. So we believe that this this suffering, we have been for 10, 11 quarters, will end up this year. So that is, of course, positive. We also believe that maybe for we have a positive Brexit impact here because it would be we believe it could be more difficult to take in to smuggle refrigerants into the Dubai market after Brexit. And that could mean that the prices will be even higher in UK than in the rest of Europe. We are hopeful and we are optimistic that the vaccination will make sense and the COVID-nineteen impact will disappear coming this year. We have now 2 acquisitions with ANK who will be consolidated in Q1. That will have a positive impact. Sinclair, the main earnings for Sinclair is during Q2 and Q3, but we also will contribute in Q1 and Q4. And we have straightened 1 is very season top season in Q4 and Q1. We as I said before, we come into this year with lower expenses, so we're coming in with the cost structure, which is lower than last year. There is an underlying growth in the HVAC business, and this is we saw last year. We had an organic growth last year, and we have we believe it. I can give you a fantastic example also here that I wrote in my comments for the Q4 report. We have a company in Holland, it's called KruMark. And they increased they are doing both refrigeration and HVAC, but main business is HVAC. They had an organic growth last year of 14% and profit increased 50%. So when we can have this organic growth, we have a really nice drop through. As I mentioned before, we have a phase out in the phase out steam, 30% this year, but with probably a nice impact. And we think also or I think personally, there is a pent up need for people to go to restaurants to start travel again. We can see in Sweden, for example, that chartered trips to the Mediterranean area this summer is already travel agencies are booking a lot of them already. People are really, really longing for go to restaurant if they want to go out traveling again. That will also, of course, make sense for our business because it's a part of our important end customers for us. We have also a new President in U. S. And one of the first things he signed was to agree and to join the Paris pledge. And that is, of course, if a big country like U. S, also we follow the F as the regulation we have in Europe, that will also make sense outside the U. S. And we will have huge impact over the world, and that could also be beneficial for us. So I have a lot of good signs in the market. But of course, there could also be some negative signs. One negative is, of course, that the pandemic will continue and we have lockdowns in the societies. That is, of course, a threat for us. Another threat that could be some concerns for us is, I think you read about, there is a shortage of containers in the world. And the reason for this is that Mr. Trump, he implemented tariffs valid from 1st January this year. So all big part of all containers in the world are just now heading or are based in U. S. So that is difficult to find them, and it's expensive. The prices are increasing for the moment. But I hope it will be sorted out during the spring. There is also opportunities to take these goods, if it would be difficult to find containers, through trade from Russia. This is something we're also working with right now. So this is the outlook. And I think that was my last slide. And now, Marina, I will take you through the financials. Thank you, Per. I will go through the financials for Q4 and also end up with the full year 2020. So as Per said, due to that we have had markets with lockdowns and also that we have seasonality for the Q4, Vanco stayed at minus 0.8 is not too bad under these circumstances. We have some positive things here, and that is the acquisition of ACD Trade in Australia that we performed 1st of Feb 2020. And they have contributed well to our sales with the SEK 5.54 Swedish kronor. And that is really much more than they performed in the stand alone case. We have some FX impact of minus SEK 6.2 and that is due to the stronger Swiss krona. We have sales in the most important currencies are euro. And of course, we have some tailwind also on the expenses here. So this is only showing the sales impacts. And all in all, the organic growth was minus 0.6. EBITDA, we will highlight that. Also moving forward, we have in our report 10.8 And it's a little bit lower than last year. Otherwise, the return on base is a little bit better then last year, so we have been able to manage the EBIT results for the quarter. And I think that is a good message to the market. We have a strong balance sheet. Our equity ratio is 39%. Of course, it's also due to that we didn't do a full dividend last year. But we will also start earning new money from the 1st Jan. So we estimate that we the equity ratio will be around 38% to 39%. If we turn into Page 15, you can see that we have a good mix of our different product segments. 50% is commercial refrigeration, and it's a little bit lower than last year. It was 54%. And the reduction is mainly due to refrigerants. So we are less dependent to refrigerants. Refrigerant is about 8% of total sales for 2020. HVAC and OEM, we believe strongly in and they will increase and have a higher growth rate moving forward when the markets will be back. So HVAC has increased in Q4, mainly that is also due to the acquisition, of course, in ACV trace. It was 35% last year. Now it's 40%, so an increase there. And on the OEM side, Per talked about that. We also are happy to say that we will do move to our new production facilities in Q1 this year. If we look into or sorry, when it comes to the organic growth, you can see it's minus 0.6 And it's an increase of HVAC, positive 3.4%. And then you can also see that within commercial refrigeration, if we take out the refrigerants, it's actually a +2 in organic growth. And I think that is a strong message also that we see growth in commercial refrigeration. That is 50% of our business. If we look into the financials per region in Q4, we can see that Nordic, it's not the biggest region, but it's the most profitable region. And they have been able to increase the margins during this Q4. Reason for that is, of course, that we have a strong position and also that it's a high cost region that goes for everything. Within Central Europe, as Per mentioned, we also have been able to increase the margins and that is also related to increased HVAC sales in the Netherlands and also increased profit here. So we will have nice drop through when we increase sales in HVAC because that doesn't require the branch network in the same way as in Commercial Refrigeration. Southern Europe is our biggest market, you know that, 31%. And they have pretty low margin in Q4 in general. So they were able to increase this a bit compared with last year. And you also know that they got the hits on when they had a virus attack there in France. Eastern Europe, the smallest region, but also And this size or the region will increase double its size due to the acquisition of Sinclair, which is very good for us. And they have had a good start as well. Africa, 9% in the quarter. So they have also suffered from the pandemic and also the business recession. So I think the reason for the lower margin here is the fact that yes, it got hit by the pandemic. Asia Pacific is 25%, which is more than on the full year. And they have also been able to increase the margin. And that was the case when we acquired Heathcrest that during 3 years that we are to improve the margins year over year. And that is actually what has happened. Still some restructuring to do. They will move into one facility in Australia. And we will also try to increase the volume moving forward. Good thing is that Asia Pacific has their strongest quarters in Q4 and in Q1. And that heads up and that's why they are 25% out of the tilted sales in Q4. Okay. If I look into the Q4, as I said, lighter quarters than the rest, we have high seasonality even though it evens out with Africa and APAC. We have rolling 12% of 14.1 percent and EBIT of that is a little bit lower. But we have been able also to manage the EBIT result due to the hit here. As Per mentioned before, we have done savings, and we have managed the challenges that the year has brought us into us. You can see also that, of course, the pandemic goes over all regions. And apart from Asia Pacific, that's made the acquisition here. So they have an increase in sales. What is good that is that we managed to EBIT, as I said before, apart from maybe Africa and also that Asia Pacific has an acquisition here. But otherwise, I think we did a great job in management managing the EBIT results in the Q4. Cash flow is also positive. And we have a very strong balance sheet and we also have headroom to do acquisitions. Net liability is down. So our net debt, if it's down, is SEK 1.4 billion. And if one include the IFRS, it's SEK 2.6 billion. So we have headroom for the additional acquisition. Looking into the cash flow, normally we have seasonality in the cash flow as well. We tie up capital first half and really second. But during 2020, the trend has been a little bit differently. We put in some actions very early out in April, And that has paid off during the year actually. And we have also been able to reduce our inventory levels, which is very good. Organic growth, you see the big hits in Q2 and I think a recovery Both in Q3 and Q4. And hopefully, we'll be back on track this year starting. Now I'm on Page '22, the full year. So all in all, change in sales of minus 5 percentage, EBITDA of SEK 10,500,000 and also a ROC of SEK 7,400,000,000 and earnings per share is SEK 5.71 and last year it was SEK 6.82. And as Per mentioned, we will do a dividend here of SEK 3 in 2 installments, 1 in April and 1 in October. We have said and we believe very strongly that we will come out stronger out from prices and that prices also can give opportunities. And we see an inflow of requests, and we're also looking actively to increase the M and A activities. So this M and A is really a part of our DNA. And we are like an M and A machine as well. So we are working very hard for that. And even though due to the pandemic, we have been able to do 4 acquisitions here during the past year. So we believe that is a strong message as well. And you can see that at the IT crisis, we did restructuring and we did a focused business model for Bayer they rest. And then during the financial crisis, we did some good deals and were able to kick off the growth journey here. So that was all from us. So we are ready and prepared to answer any questions. Thank you. Our first question comes from the line of Karl Rangestam of Nordea. Please go ahead. Your line is Good morning. It's Karl Eine Stamm here from Nordea. I have a few questions. First of all, you mentioned in the report that during Q4 saw on significant order intake growth for your OEM business. So I wonder whether you can give some flavor on the Magnitude of the order intake growth and also if you could give any flavor on which region that is driving the growth and also when we could expect the orders to be delivered. Yes, hi, Karl. I can tell you that when we looked at this Q4 report, there's one a thing that was a little disappointing. It was the organic and the negative growth in the OEM business. So we really looked through it and went through, and we understood that there have we believe that some investments have been pushed 1 or 2 quarters into the future. But then we went out and see how our all our factories and our are doing the order intake and we came up with but we have a very strong order intake in especially in Italy, double digit growth in the order intake, and we have also a strong order book. And Italy is most important for us because there we do this green environmental friendly technology. But I also checked with China, for example, that's an important one. And also there, it looks quite good. Remember, the Chinese factory was actually closed in February last year. So of course, that will be a growth due to that. But today, I think we have had the highest order intake ever for us during Q4. So it's very optimistic. And we also we will open up our new capacity for the green production area for the green products will more be doubled. And so I'm quite confident with the AON business for the future. So do we see it as you expect Is that at least some deliveries in Q1? Or is it more Q2, Q3 thing? No, I expect Q1. That we should expect. I expect already in Q1, yes. Okay. Perfect. And also Could you give some comments on your ramp up of the Italian production and when you expect to reach full capacity utilization? When I in my diary, I canceled in the inauguration in I think it's 10th May, if I can travel. But I think we will start to produce even before that. And I think in the end of Q2, we'll have moved everything into that factory. So we have 100% move. But we are already now starting to move the part of the production. But I think end of Q2, we are 100% in production. Everything is moved to that factory. Perfect. And in the chart you presented, we saw that the refrigerant prices are flattening out quite nicely. But you also said that you didn't expect the 2018 scenario to happen again. But so far, since the step down in Implementation in January. What have you seen in terms of refrigerant prices? I thought maybe you touched upon it, but could you please give us a flavor of that again if you have? I think we are measuring our buying price and our selling price. It's clear that the buying price is increasing. And it's clear we will increase our prices, and we have already increased our prices a bit. The question is always how successful you are to implement the selling prices on the market when you have buying prices. But looking into the history, when you are a trader and you get price increases from your purchasing. We try always to gain some small additional percentage or probably extra when you do your own price increases. So I'm optimistic that these pricing increases from our side will be implemented in the market. I think also that the competitors will do the same. I know it's much tougher order controls now, and it's much more penalties and fees if you are smuggling over and you are cashed. And also the volume will go down. So for me, I believe when we sum up 2021, maybe we have had some tailwind on this business. But it's you know, I'm always optimistic, and I thought this before. So I'm not sure. But there are a lot of signs. And maybe the quarter it's the last quarter when we had headwind on this. But this headwind in Q1 will be much less than what we had during 20 Okay. Perfect. And probably the final one for me here. For Yes. I mean, we saw quite nice organic growth. Although it was a sequential slowdown compared from Q3, I mean, would you say that it's an effect of new restrictions or lockdown measures? Or was it more a fact that you have worked through your I mean, a fair amount of the pent up demand that came from the summer period, I guess, in Q3. No, I think this is a normal seasonality for us, especially the HVAC business is booming for us in Q2 and Q3 in the Northern Hemisphere. Then we take Africa and APAC business is the opposite. They have their APAC this is booming in Q4 and Q1. So this is quite normal. It's always a bigger demand during some season. Okay, perfect. Sorry, one final one for me. Regarding the phase out the opportunities it might give your OEM business. Would you say that it is a bit problematic that you sell big ticket items or CapEx driven products, I mean, for the for instance, smaller grocery stores in Europe and that you might need to look into leasing model order to speed up the penetration. Also, in order to not be, I mean, fully being reliant Done on the EU subsidies supporting the small store owners or how do you look at that? Well, it was a difficult question. But I think that we are not following the actual speed EU wants us to do on the phase out scheme. We are behind. I'm not sure if there will be any subsidies. We are not giving subsidies to phase out, but they're doing the opposite. They give penalties if you keep your own system. So that will be pushed from Egypt to phase out this business product for sure. And I think also this pent up demand. We can give it a push when the vaccination has been affected. So many of you know, it's a lot of in Europe, all over the world, but are closed to restaurants everywhere. And I think when vaccination has been implemented and people can start throughout again, there is a real pent up demand. It belongs to restaurants, etcetera, but could be the push because all these closed restaurants shall reopen and maybe also refurbished and implemented. But if you do that in the restaurant, of course, we go for a new environmental friendly or a compliant solution instead of the old system. So I don't know if that was answer on your question, Karl? Yes. To some extent, in terms of the leasing model, are you considering that? Yes, we have looked into it. Yes. Yes. So we have looked into a lead model to convert CapEx to operational costs. And your conclusions so far? I think there is more to investigate, but it's a little bit complicated to do a list of what do you call it, pipes and everything, an air condition, solution for a cooling system because it's fixed in the building, so to say. Okay. Perfect. Yes. It would be a potential, so I will not say definitely no to it. Okay, perfect. Thank you. Thank you. Our next question comes from The line of Andreas Bloch of Koelijk. Please go ahead. Your line is open. Thank you. First of all, Per, thank you so much for that introduction where you say you told us why you're resigning. And I think I speak for all of us that we understand your decision, but we are you're going to be missed. Let's put it like that. Thank you. Thank you. Now onto my two questions. As a long term investor, long term holder, when you think about organic growth going forward over the next 3 to 4 years, do you think there is more organic growth opportunity in the refrigeration business or the HVAC business. And then my second question is, when it Tim, when it now comes to acquisitions and Carrier stepping out as a shareholder, does this mean that you can actually start doing acquisitions in the U. S. As well, thank you. All right. First, thank you. Secondly, talking about the organic growth. You know I'm a solid optimist, and I always see the good side of opportunities. If we talk our 3 business areas, which we share to the market is refrigeration, HVAC and OEM Business. If you notice now in Q4, the refrigeration, if you take out the refrigerant that is including in the refrigeration business, if you take out this one, you could see the traditional distribution business, lots of different components had a growth, organic growth in Q4. And that was a very good sign for us. It's products, we sell a lot of. It's a big part of our full trade, and it's also linked. And depending on the phase out, And it's also a good margin on this business. So that was the Q1 where we could see we had growth in this area. And in addition to this, as I mentioned before, we talked about the cadence. It seems that we maybe can have even a growth on this one. So I believe that this segment that is approximately 50 the total business, we're having good chances to have organic growth now. We had during Q4, we had it with all apart from the refrigerants, and you know we've talked about refrigerants. And if you take this together also with this pent up demand for things like this, I see that this traditional old business that is impacted of the F Gas Resolution will continue and go on and move on. Talking about the HVAC business, so we have had double digit growth for a long time. We still believe that this I gave you an example for our Dutch company that is really, really involved in this 14%. And we think this is a trend in the market where that will remain. So in our internal scenarios, we believe that this will have a higher growth than the refrigeration business for the future. And we know the penetration in Europe is still very low. And we are very, very optimistic about the Sinclair acquisition we did we could see, such big opportunities to take this private label and launch it into other markets with a good margin. The second the first segment, also the OEM business that is more and more dedicated to the green environmental friendly client business, there is also very nice opportunities to grow the business because we know it's so much to do in this segment. We could also see it. We talked about the earlier order intake in order books, and we should have growth. So in summary, I have I'm optimistic about organic growth in all three segments for next year. Coming into your next question, U. S. A. I will not say during the period time that we were prevented to going to U. S. The reason, I think where we didn't go is that there are some big players in U. S. And you know that I personally know these guys myself, And we have discussed a lot of different opportunities together. And during that discussions, we don't think we want you to be a competitor with a good friend. That is one reason why we haven't established in use. Another reason is that we have had opportunities coming up that we feel was very exciting, especially then in Australia, New Zealand region and Asia also Europe and Africa, of course. So we have seen the opportunities and have put our efforts to do fulfill these opportunities. But now when we can see you, Biden, has already announced that U. S. Will have much harder policies and rules regarding this. And we know that could be some opportunities with EQT. There could be some opportunities also from our sources and who knows what Kari will do in the future. So I think our focus on America has increased the last year. And that is absolutely on the target list someday in the future, that we will also enter the U. S. Market. Fascinating because it seems that there is a consolidation opportunity in the Refrigeration business, Not on the HR, but on the refrigeration system. Well, thank you so much. I'll get back in line. Thank you. Thank you. Thank you. And we have a further question from the line of Victor hi. Thanks for taking my question. I was just a bit curious on in terms of profitability. You mentioned that you should have a higher drop through on the HVAC business compared to the others, Melby. Just looking looking into the drop through historically, you have had around 20% drop through. And given your outlook for SWAC, does that sort of imply that we should think of a higher drop through going forward? Or how should we think about that? No, Victor. I think you should think I don't think no matter if it's refrigeration or HVAC business, but drop through is there. It's just an example that we have some good growth in Holland, for example, but the 2 thirds is a good example. But the thing is if we can increase organic growth on top line and increase our revenues, our expenses will remain. We don't increase because it's not the salespeople, office people, etcetera, warehouse people. So we don't need to be followed by increased expenses. So for that reason, when we have organic growth, we have nice drop through. And no matter refrigeration or HVAC business. Okay. That's clear. And also just in terms of your resignation, Per, very sad to hear, obviously. But yes, lucky the guy who can follow in your footsteps. Just thinking about what sort of attributes you will be looking or are you looking both internally and externally, maybe for someone internally that knows the business knows the entrepreneurs down your branches? Or should we sort of expect an M and A oriented successor? Well, first, Victor, and to all of you listening, I got so many, many nice messages. So I think thank you to all of you who sent me this. That is very appreciated. So thank you. Well, my successor, it could we have no second guy in the organization now. So we have there is no natural internal. It it could be internal. We have to also investigate and see if of course, we have very skilled people in the organization, so that could be an opportunity for us. But it's also said that myself, I will be very much involved to find my successor together with EQT, And we have started also to talk to some recruiting firms to see what we could find out on the market. My impact on this, I will really go for what should be to keep the Bayourette culture, to keep our decentralized organization and also some people that, of course, must be a man or a woman who can understand this business without being as an expert because we have so many experts. I have so many experts in this organization who's much better than I am in Refrigeration Technology, etcetera. So we have really a lot of expertise in that field. Technology, etcetera. So we have really a lot of expertise in that field. But we must have a leader who can talk to people, who can be accept it and then can keep the culture and also talk to you, all investors, of course. So that is important. So we will this is and I will also be very much in law to find this person. Okay. That's clear. Thank you guys. Thanks a lot. Thank you. Thank you. Okay. There seems to be no further questions at this time, so I'll hand back to our speakers for the closing comments. Okay? Okay. Thank you. Thank you.