Earnings Call: Q1 2021

Apr 22, 2021

Yes. Hello. Pat Bartelon here and Maria is with me. And I would say welcome to all of you to our webcast and our presentation of Q1 report. I think in front of you, you can follow the presentation through the webcast or for our website. We will go through the presentation, and I would like to start to talk about Slide number 4, at a glance including acquisitions. If we look at this one now, you could See that the net sales for the moment are SEK 14,700,000,000 and that is including the acquisitions and rolling 12. But I will underline that if we keep current speed for the rest of the year, it's quite likely that We will end up with around SEK 16,000,000,000 in revenues without any new acquisitions. And of course, we hope we'll talk more about that later on, but we hope, of course, we can do more acquisitions in the future. If we flip to next Slide number 5, you could Also see now our global reach that we have a little more in Asia Pacific, and that is Two reasons for that. First of all, the Southern Hemisphere is the high peak seasons is Q4 and Q1. And we have also some additional acquisition in this area. So I think if we keep current situation, but Europe and Africa will catch up during the year. Next slide, what has happened, Slide number 6. I think one thing that happened recently that was very will which will have a big impact on our future. And we feel it's very interesting is that we could see that you, U. S. A. And China, signed the Kigali amid commitment. And that will, Of course, make an impact, I think, on all over the world, especially the world outside Europe because the Kigali Amendment is more or less the Same regulation as we have in Europe, but it's more years. So I think when Europe will be ready, following current plans 2,030, rest of the world around 2,050. A nice thing we saw in our Q1 is that our we have not so much in China. We have a factory, and There is a change in the trend in this. First of all, we have a really nice growth, of course. And second, we could also see that a main part of deliveries is domestic demand. In the past, normally this factory has supplied our business in New Zealand and Australia. And this domestic demand is, of course, interesting for the future. And if China now also have signed with Kigali and really seriously looking to replace current systems. We are there. We have already delivered to Beijing, the Olympic Games in Beijing 2022, where they have said all ice wings, etcetera, that has the refrigeration to do should be with environmental friendly solutions. We think that is very exciting for us. Other things that has been disturbing during the First quarter, you know the short term of containers. I will say that was it was very concern a big concern for us in the beginning of the quarter, But it seems right now the prices are more or less coming back, so that we can see a normalization for the container business. Also a concern for us was when the vessel was on ground in the Suez channel, but even here, in U. S. Canada. But also here, we could see now that there will probably be, in some cases, delays of 2 to 3 weeks, but we see it as This will not have a big impact on our future. And then also our own principal shareholder, Carrier, has via the factory in China. And it's more of interest to see that they will really go for the acquisition business, especially with VRF and light commercial. And remember, what we do mainly is residential and light commercial. If we flip to next slide, And I will talk about refrigerants, of course. But first, I really want to mention for you The refrigerant business is important for us, but it's only 8% of the total business. So the remaining 92% is much more important for us. But this quarter, As the 10th quarter before, so we had 11th quarter in a row, now with declining prices. That there is a clear change in the market now because we see increases on our purchase price prices. And this for sure, there is a stabilization. For example, we lost money here, I think, in the quarter SEK 5,000,000 to SEK 10,000,000 Profit and around €30,000,000 €40,000,000 in revenues. The interesting and good things is that We had actually a profit in March. And that profit was not due to price increase, it was mainly due to volume. But We believe that during Q2, the market the prices will stabilize even more. And best estimate from our side now is that we will have hailing from the prices in Q3 and Q4. Having said that, We hope that this 11th quarter could be the last quarter and we suffers from declining prices on refrigerants. You could also see something that makes sense for us. We don't talk so much about the copper prices, but You can see also here, we have an increase. And we believe that this increase will give us a positive impact in the forward future, not so big, but It's additional opportunities and possibilities for us. Next Slide, number 8. And I think I'm not mentioned so many times for you, but it's interesting and you should know that the Horeca business, hotels, restaurants, catering, they are around. Best estimate, it's very difficult because we do business to business and this is our end customers. We think it could be around 13% to 14% our ORECA business, and that is mainly in the refrigeration business. But here are all over Europe, I would say all over the world, a lot of restaurants, coffee shops, whatever it is closed today. And if the vaccination We'll be successful, and we can open up again restaurants. I'm sure there is a pent up need in many, many markets that we expect could give us additional business in Q2 and Q3 if this happens. So remember, in this quarter, we'll have 7% organic growth. We have still suffering a little from COVID-nineteen, and this is especially in this area. We move on to Slide number 9. We have a new principal shareholder, you know, in PC, and that is Very exciting for us. And I think the biggest difference you will see from before, we always been a company who are doing acquisitions, but I think we will do even more acquisitions now with EQT as principal shareholder. And you could also see in the Q1, we were successful to do 3 acquisitions, 1 in Australia and 2 in Europe. I would especially mention the Sinclair 1 because that is interesting 100% in line with our strategy to implement and introduce and own private label brand global worldwide. And Sinclair is our own brand, And it's a well known brand in many countries in East Europe and in Germany today. This year, we will at least launch it in 7 of our other markets. Embiid's strategy is, of course, to launch this private label brand in all of our markets. What is also interesting with this brand is that if you have a private label brand, you have a higher margin. And remember, in Q1, we had an organic growth of around 15 on this air condition business. Okay. We flip to Slide number 10. Other things that is worth to mention for you, we have agreed with new partnership with very important suppliers to us, Bitzer and Tecumseh. It's the most important compressor manufacturers, And we have very good relations, and we are keen to do more business with them in the future. So that's very good news for us. And you could also see on the right, as you can mentioned before, in our OEM business, we have invested in a complete new factory, and this Turin now is up and running, and we are now starting to build new green boosters. And the boosters, as you know, all of you, it's the at Green Environmental Friendly Power Racks for especially for supermarkets or other refrigeration applications. Next slide, number 11. And if you remember, we did also a very small acquisition and maybe one of the first startups we ever have invested in. We have invested in this company Fenergy And we are today our minority shareholders, but we have an opportunity to acquire it 100% in the future. The interesting with this company is that they are doing industrial application for heat pumps and industrial refrigeration with really big machines on CO2 environmental friendly technology. And this investment we did this Investment last autumn and just 1 week ago, we had the first order ever. And that was for us The confirmation that we have a deal in the right, and we know that there are a lot of quotations out in the market right now. And it's big. One order here is around €1,500,000 to €2,000,000 So it's a big difference. Next slide. You could also see the e commerce sales that is one of our focus areas, how it increased and it's increasing. Remember, 2019, it was around 1%, and you could see last year, it was close to 6 And now in Q1, it's close to 9%. This is increasing for us heavily, and that's two reasons for that. We think the pandemic make an impact here. And we also, of course, that we launch it more in market by market. This is a centralized project going global with the same centralized system. I must also say this is not Some of this business is new business, but it's also cannibalization of our current business. That's a new way to do it. And we are quite convinced that this will continue to increase in the future. We have also a target here, we should reach 20% of sales in e commerce 2023. And I think that is Sigveberg. Next slide, number 13. I will just mention something. You. I think all of you know that I have will resign and I have not so much to tell, but there is a process ongoing. We have some really, really good candidates. And hopefully, we can announce that we will sign up someone in Q2. And then after the summer season, I will be a new CEO in place. But as said before, I will remain a CEO until everything is sorted out. And as you know, I will remain also in the Board and I will keep my shareholding in the company because I believe so much in this company that it will come for the future. All right. Number 14, Slide number 14. We talked a lot about these megatrends before, and I will not talk so much about it. You could see the utilization is increasing heavily for us Legislation now with USA and China on board, It will make a huge global impact for our business that gives also the acquisition opportunities we have outside Europe, very exciting and very interesting. And the growing middle class is a good example of the air condition business, 15% organic growth for the moment. So and the environmental also now with It's very quick that we can do environmental friendly solutions. So I think a lot of megatrends gives us and very good opportunities for the future. And the focus areas we talked about is the Same is the next slide, Slide number 15. And we will continue to go deep into these focus areas and work more. And one of there will be even more attention to acquisitions. And as you could see, we have already done pre acquisition this year, and I strongly believe more will come during current year. And then I hand over from Slide number 16 to Maria, who will go through the financials for you. Thank you, Per. And moving on to Page 17. We We have a strong organic growth here in Q1, and that also happened to be the organic Growth as well, 7.3%. Strategy for Bayer is to grow both organically, of course, and through acquisitions, as Per has mentioned before. We also have a nice drop through in the results. So EBITDA is about have gone from SEK 309,000,000 So SEK377,000,000 which is a nice increase here and a ratio of 10.1%. Of course, we have for last year, we had COVID impact for at least 2 weeks. And We will have the yield comparables for the coming months as well. So but What is good with this report is that we are back on 2019 levels. Also on return on sales, it's an increase with 7%. And also in a historic perspective, that is rather good. EPS has increased with 35%, Which is a strong message. So if we hand over to Page 18, you can see that the split, we have 3 different product and group that we showed. And that is the HVAC and Commercial Refrigeration is on par, 45%. And you can see the change from last year in brackets. We believe that the HVAC is a little bit stronger than the full year figures here. So but somewhere between 40% 45% because they have a very double digit growth. And you can also see that the demand for air conditioning is increasing all over. We have seen that in the Nordics and also in Central Europe And of course, for the Southern Europe, where we have a strong presence. The OEM business is 10%, on par with last year. Now we'll talk a little bit more about that. So this is the total split of our sales to the left. And if you look into The right, you can see only the organic growth. And as I said before, 7.3% overall with double digits on the HVAC And OEM side. So if you recall, in Q4, we said we had a little bit lower intake. So we had like a COVID impact from last year, but now we have seen that it has materialized in sales. You can see also the commercial refrigeration shows plus 1% and that ties up More product groups, Per has mentioned refrigerants, a small decrease there And copper has increased, so they are all included here in the 1%. Okay. If we go to Page 19, you can see the split of our geographic segments. And normally Q1 is a light 40 for us, but we have seen increased margins in all regions, and I think that is A very strong message. Net sales, I will show you the split here, but net sales has increased also apart from the Nordics And Africa. And you can see that Africa is suffering more from a macro perspective and also Still some COVID impact. The Nordics, we have an impact on the order intake, as I mentioned before, on the OEM side. So a small decrease in sales for the Nordics, but on the other hand, improved margins, Improve RAS margins in all regions. Okay. And what is also positive to mention here is that Asia Pacific has increased the margins also through some own health or some actions, but also through some acquisitions, so 8.2%. And it's also worth to mention here that Q1 for Asia Pacific is their summer quarter. Okay. Looking at Page 20, you can see quarter 1 in a row. You can see 5 years and you can see that It is the best Q1 ever for BRF. And you can also see that we have surpassed or we are So pass the 2019 figures because the 2020 figures are impacted by COVID. Looking on the EBIT side, We also see an increase, and we have margins of 7%, I said before, an increase from 5.7% last year. On Page 21, you can see the bridges. And we compare you can see that we have a positive impact Of the acquisition, of course, of 5.1%. We have some negative FX, unfortunately, but we recover some of that On the EBIT side, we have cost as well. And then we have a nice organic growth with drop through on the EBIT as well. Okay. Moving to 2022, I think I have already mentioned that, that we can see growth in all regions compared with last year apart from Africa and the Nordics. And I said before, Africa is more related to the macro economy. And the Nordic is, of course, higher comparable because we have We also had very limited impact last year, but then also on the backlog side, as I mentioned before. Okay. On Page 23, you can see the EBIT and you can also see the Nordics. Despite lower sales, they have Increased their profit and also increased their margins. And Africa, they have a decrease of 2%. So it's more around things, I would say. So improved margin in all regions. And of course, it's very happy to see that Southern Europe, which is our biggest region, they are back. Looking into 2024, you can see that the EBITDA and also the cash flow, We have had a very nice cash flow during the quarter and also the trend if you look into other first quarters. I think we managed or I believe we managed the cash flow very well during the COVID situation. And during In Q1, we have also had issues with the containers and also with the Swedish channel. So there have been Challenges, but we have managed them in a very good way. So cash flow SEK 337,000,000 versus SEK 197,000,000 last year, A good improvement. Looking into the net debt on Page 25, you can see, actually have Two lines here with the net debt EBITDA, both excluding IFRS and including. And including IFRS is What you can see externally in our report, so it's pretty unchanged. It's 2.04 And it's unchanged from year end, and it's lower than last year, SEK 2.14 billion. And the other one, Building IFRS, that is really what we show for the banks. We don't have it as a strict covenant, but we measure it and we get the price Favorable reduction, we have a low net debt issue. And Our total net debt has also decreased due to the cash flow. We have a little bit too much of cash sitting on our balance sheet, but we will Offload that, we will get some dividends from our subsidiaries and pay off our debt. So all in all, good cash flow pays off, Lower net debt, ready to take on additional acquisitions. And not worth to mention that we have managed the acquisitions within These figures as well. Okay. Now I think I hand over to Per, who will see that we are back on the organic growth. Yes, I come back to Slide number 26, my favorite slide. And if we go back many, many years, there is always organic growth. And you know that we suffered a lot during last year due to the COVID situation and especially Q2, but of course, we will be very Heavy this quarter, but the most exciting one is to see that we now are growing organic 7.3%. And remember, Around as I said before, around 14% of our end customer is suffering a lot, hotels, restaurants, etcetera. And when also the day will up and running again, I'm optimistic for the future. Move on to Slide 27. We have said during the year, but and we have historical experienced Arctic Christ direct orders will come out stronger. And I personally very much convinced this will happen also, this. We see very good ScienceNOW, we have a strong market. We have a lot of opportunities to acquire a business, and we have a market that is growing organic, and we have also some legal help with the legislations. So I think for the future, I must say, I'm optimistic. Next slide, number 28. And also just a little about the dividend. Last year, 4, We were cautious. We reduced the dividend due to the COVID situation. This year, We said we should have an ordinary dividend of SEK 2.50 and then we give additional SEK 2.50 for as a compensation for for reduced dividend last year. And you could also see that we have a very nice growth on the purchase price of a share. And I hope with all opportunities, actions, We will do that. We will continue this growth journey in the future. Number 29, Q and A. Thank you for me and Maria, anyone who has questions. Thank you. Our first question is from Erik Kessel from ABG. Please go ahead. Hey, good morning, everyone. So yes, my first question is on price increases from your suppliers. I noted that, for example, Carrier talks about multiple price increases this year. Have you had any indications what sort of magnitude of Price increases we could be seeing and how much of the increase do you expect to be able to move over to your customers? And is there a potential Short term margin effect here. Yes. We have heard some price increases, not at all in the size what you heard from Carrier. I would say between from CERO and actually in some cases also reduced price up to 4. I think that the highest price increases is around 5%. But the highest price increases is on aircon, and that will be for deliveries coming in after the on the season. So it more or less will not impact this year or at the end or in that case, at the end of the year. But you also know, Erik, that we are fighting back very much. When you hear about price increases, that is Try for many to really be successful to have prices increases on the market. But one thing is to say it and tell the customers, but another thing is to really to implement it. So we are fighting back. So we think it will be quite moderate price increases from our suppliers. And you know, we like to have price increases from refrigerant suppliers, which we welcome very much. But you are the one with like that. And I think it's not a problem to pass it out to the market. We will be we are very, very open and look at this. Good answer, Parekh. Thank you. You also mentioned that you see pent up demand. Is that something you've seen also in order intake? Or is it more of General assessment. I would say when I talk about pent up demand, I'm thinking about the Hureka business. And that is more a general assessment, but it's also an assessment that we have experience from many years in the back. We can always See, when you have a lot of seasonality in our business, you have a lot of restaurants open up at the beaches and then the summer places during the summer resort or the opposite than on winter resorts. And we have always seen restaurants who have been closed during The low season and open up always need a pent up demand. And now I think so big pent up demand all over the world, I would say, who closed the restaurants. There should be that is the annual assessment, but I would be very, very surprised if it doesn't happen, if the vaccination will be fully implemented and the market will open up at the end, fully open up. Okay. Good. And then so refrigerant prices has increased slightly sequentially. But I assume that it's mostly you offsetting price increases From your suppliers. So I would assume no significant margin impact here. No. We you. We are working very much to increase our margin right now. We think if we could increase volume, we will increase margin. We have private label, we could increase margin. And we could also, with our big purchase power we have, also neutralize price increases between different markets. So if we do it in the right way and we do it in a successful way, we will gain a margin instead of or at least carry the pricing Crisis out to our customers. Okay. And then you also mentioned supply chain issues mainly affecting HVAC. Are you seeing those problems kind of in the past in Q1? Or do you expect them to have a large effect in Q2 and might And maybe even Q3 as well. Well, I think I can answer like this. We had in Q1 15%. We had What we think now, we have a large inventory for Aircom Business, especially this is mainly for Aircom Business. We have a large inventory, so we can continue to sell and have a good growth organic growth. That's I'm convinced. But If we have opportunity to buy more or if you haven't had this disturbance, we could sell even more. So I think it will come out quite well, but it could have been even better if we had these problems on the market. Okay. And last question for me, And just so I got it right, I think you said in the beginning that you think you will reach SEK 16,000,000,000 in sales during 2021. And if that was correct, what kind of assumptions go into that number in terms of, say, growth in different areas? In different areas, I can't answer right now, but I think when we look on our current Acquisitions done and current speed we have right now, I think we will come close to €16,000,000,000 But Of course, I want to do more acquisitions that could do that we could exceed that one. Perfect. Thanks very much. That's all for me. Thank you. And our next question is from Karl Langnerstern from Nordea. Please go ahead. Hi, it's Karl here from Nordea. So of course, quite strong numbers from your HVAC segments. Could you explain whether this might be also here a bit of pent up demand given that COVID did hit Southern Europe in the middle of the high seas last year. Well, I don't know if I can add so much, but as I said to Erik before, it's his A general assessment call that we believe that this assessment is coming from our experience in the past of seasonality and close hotels, close to restaurants during low season in resort places. That we know, when you start up again, after the closing for the low season, that's always demand for service. That could be a demand for spare parts or even by need to replace some of the refrigeration units with you. And this is what how we believe when we go and see. Many restaurants are bankruptcy and you need to have new owners of this. We think This is also a general assessment, but people when people can go out to restaurant again and eat, there will be truly booked restaurants all over. I can give you a good example. The Danish, Denmark opened up opportunity to go to restaurant Again, there are many restrictions. You do not need to be more than, I think, 8 people or something, and they close very early, and it's limited open times. But when you had these booking sites, they was totally overlooked with people who booked. So of course, I'm optimistic on that one. But it's very difficult to mention any numbers. It's more experience. Okay. Perfect. And also with the face down, the new face down being implemented in almost 4 months, When you talk to clients, what can you hear there? Are they hesitant to make investments or and they may might postpone them late To late this year or what do you hear regarding the new step down? You know, I will say all our end customers, apart from the OREITA, is running very well. You see on the OEM business, we are doing double digit growth. On the air condition business, we do double digit growth. And we have only 1 on the refrigeration right now, but remember, we have the Roreca business in this segment, and we have also refrigerant that's still is going down. No, I think when talking to clients and all over that, it's a quite positive view for the future. I think it's a general positive picture we could see in front of us. And also with all the new regulations coming up, I think U. S. And China, Italy, that will, of course, not make sense next quarter. But I believe in the long term It's very exciting. Also very exciting for us to see now the development in China. The Chinese factory now has a domestic demand instead of selling to export and increased, I think it's which is around 70% in Q1 in China. It's a small business for us still, but it's growing. And of course, it's been tapping to have and Bill is to produce this green unit in domestic in China. That is, of course, very Exciting for us in the future perspective. Yes. And on China here, I mean, you have a quite limited operation in China today. It's like, I I think we said SEK 350,000,000 or so. First of all, what is your capacity? And secondly, how well you position And yourself, I mean, in the longer term, in order to enjoy some of the potential market growth there, is it organically or just through M and A, which is Might be easier. I didn't really recognize what you said. We are around EUR 300,000,000, maybe you said that's what Yes, I understand. Yes. Historically, this factory was for producing small condensing units and heating changes for our own choose Indioga in Australia and New Zealand. But now when we see that we are selling more domestic when we do an export, We, of course, are rethinking in our strategy here. And now we have we can see this nice domestic organic growth. And I mean, you'd be big in China. It's, of course, exciting to acquire. So to be really big, we should acquire. But as in many other markets, I think a combination It's quite likely we will continue to grow organic. The production capacity, I can't really answer on that one, but I think we are able to increase for a couple of years still we can increase production in China, absolutely. So but we will I think we will grow both organic and hopefully, for acquisitions in the future. Perfect. Very helpful. And on the e commerce side, you're, of course, growing that quite nicely as well, and you have your target of 20%. Firstly, could you describe the margin profile of your e commerce sales? And also secondly, How will you get to the 20% in just a few years' time? The margin profile is actually slightly better than the same business through traditional channels. And the reason for that is we have 450 or 230 branches all over the world, meaning It's over the counter to buy spare parts, to buy copper chips, to buy refrigerants. And you know the installer, who is our customer and our branch manager, which they are probably good friends. And it's very, very easy to give an additional percentage in discount when you come over and you talk to a friend. When you buy on e commerce, you have to click tick in the box, and that is now this additional percentage. So therefore, I think we can in the lab because we are not at lower prices, not at all on e commerce. This is another source. And you'd have a tick in the box and there is no discount. So therefore, I think we can slightly improve the margins for the e commerce business in the long run. And how to do it? I think it's we are doing it centralized. We have this PMI system with all our products, Codification. And we have the same team system and it's the same cloud based system where you pick up all the products. And Just by launching it country by country, I think we will increase this that is one thing. We will increase it in more countries. 2nd, each country is increasing due to I think the customers will be younger and younger, which is a normal way to do business comparing to the owners who want to go today. So I think it will not be difficult to reach that target. Okay. Perfect. And the final one from my side. You're obviously quite optimistic in terms of M and A. You have Done nicely year to date. Could you just discuss quite briefly on your shortlist, how many targets have you identified? What is the focus areas? And with your new owners in place, have your M and A approach Changed since or compared to before? We have always seen us as a very M and A oriented company and done a lot of transactions. But After EQT came in, I think we will be even more focused on M and A. And Well, the shortlist perhaps I can hand over to Maria. She has started in her head in a bit than I. But We have a couple of companies in the shortlist. Some of them are even hot. That is not the same as a close deal, but we had hot discussions, we had warm discussions and we have in long list that is as long as you can see with your eyes. Maria, perhaps you want to add something here? Yes. So I think as Per mentioned as well before is that we have added full time resources. So M and A is really and has been before as well, a strategic area for us. So we are working with different M and A activities in parallel. And we have also built a database, as Per mentioned, from a very long list of 400 targets down to like 5 that we really have ongoing and due diligence discussions. So more structured, focused way and also maybe that we look into different where we have gaps and I have direct contact with these. You can also see that there have been transactions in the market from other manufacturers. And also you saw Carrier going into this. So there are a lot of activities in the market right now. And also I can add to this, we have implemented an M and A department. We were very focused on M and A before, but now we have focus. Because we have a real M and A department in our organization. And how many FTEs do you have in that M and A department currently? Well, it's difficult how to calculate it because we have had people all around the world that It's been partly involved in M and A. That is the way we have done it in the past. We have had some M and A in France. We have some French people involved. We have a headquarter people that are working. We have one OEM ahead of M and A, 100% dedicated, but he has contact with all these people. So if you take to have 1 quarter by 1 quarter by 1 half. So it would be a couple of people all in all. And do you think you need to incentivize Branch managers or country heads, in order to really push the M and A pace even more? Well, I don't think we need that because M and A is always something that everyone is like to do and are encouraged to do. And So this is coming up, but we have a very we have incentivized growth and sales mainly, but of course, profit also. So I think people are working a lot, particularly. If we get to pick up it from France or from Italy or Czech Republic or whatever it comes from. The people are involved in this, and we'll come to that territory when we measure the results and the operations in the future. Okay, perfect. Yes. I can all address that we have the incentives already in place for this. Okay. Perfect. Thank you very much. And our next question is from Andreas Brock from Cowley. Please go ahead. Hi, thank you. Just a follow-up there on the Are you still interested in pursuing acquisitions in the U. S? Absolutely. I think that could also be a difference from before that, Yes, I would say EQT is encouraging U. S. More than with our previous principal shareholders. So I would say we were interested before, but maybe we have even more focus now with HT as principal shareholders. So yes, it's answering that question. Fair enough. Thank you so much. And our next question is from Robert Wieden from Carnegie. Please go ahead. Yes. Hi. A couple of questions, if I may. So on those refrigerant prices, the communicated price increases from the lows, how big are those? I think I've seen one price hike of 10%, 20% communicated, but there has been another one, right? And also total accumulated price hikes communicated from the lows on the refrigerants. We have very low voice, but if I I understood the question correct, Robert. So you asked about communicated price increases. And refrigerants, Yes. There has been one. I have seen one from your Yes. We have. I've seen companies that have been funny. There's been another one. Yes, there are at least 2 this season, but we could also see it partly on the spot market, but the prices are increasing. But again, now the prices are increasing. That is our incoming prices. And now we should also we measure both incoming and our outgoing prices. And still, the outgoing prices is on a lower level than 1 year ago. So Still, we suffer from the difference. But as I said before, I think the losses we had in Q1 was between to, I think, SEK 5,000,000 or SEK 10,000,000 if you take out the FX impact, etcetera, something between SEK 5,000,000 10,000,000. And remember, the 10 quarters before, we have around SEK 50,000,000 each quarter in losses. So it's much lower. And we had actually profit none of the profit we had a profit on everything, of course, but we had an increased profit in March as a single month on our feedstock prices. So what we are doing now, we are increasing our prices out on the market and Carry forward all these price increases we get from the market. And then officially, I hope that was your question. I think officially it's our 2 pricing issues coming in from our suppliers in the first quarter. And there are the magnitude of 10%, 20% each? Well around 10%. I think one was 20% and one is 10%. That's correct. But you know it comes from different suppliers also. So it's not always It's not the same supplier. They follow each other also. Okay, great. But if you should have a general Assessment or assumption on our Refrigerant business, take in mind, it's around 8% of the total business. I said we lost on top line €35,000,000 €40,000,000 this year and 5 to early quarter and €5,000,000 to €10,000,000 in profit. We believe it will be equal next quarter and no impact, and we believe we will have a positive impact during the autumn. We also believe if we continue to grow business through our acquisitions, but maybe 7% could be less 8% of the total affair could be even less in the future. Right, right, right. Yes, I mean it's a boring thing, but you were on copper also. I mean, looking at copper prices, I mean, If you compare them to a year ago level, they're up 100% or something like that. Is that a couple of percentage of sales in because the copper is so big that it can make an impact on group organic growth for a couple of quarters? Yes, as I would say, around 7% also is copper. So that has an impact on our business, but not all the same impact as a refugee man. But we could see an opportunity here to grow due to price increases, of course, because copper is very we follow our price increases very close to LME price increases. Yeah. Okay. Cool. And also just if I heard it correctly, I mean, there was 15% organic growth in HVAC. Was there any trend during Q1? I think you said that you could have grown more had it not been for supply chain issues, but for an accelerating trend throughout Q1? Well, I'm not sure about Q1, but I say I think we will have a nice growth also here, continue nice growth in the rest of the year. And maybe we could go even more in the future growth without disturbances. But I don't see them as big. I hear some complaints about the deliveries and delayed deliveries. But we had the big inventories, as I've said. So if it should have an impact, it will have an impact in the end of the year during the autumn. Okay. And the new factory, finally for me, the new factory in Padua. Is the capacity up and running? Has the start up worked well and so on? And would you say OEM could grow fast now that the capacity is here? Or is it more an investment for the future? No, absolutely. It started well. And I think your order intake is on a very high level, and it's nice to see that produced. And this factory in Padua is mainly producing almost only producing boosters in green technology. And especially in this area, we could see the nice growth. So It seems that this investment was will be very good for us. All right. Perfect. Sounds good. Thanks for answering my questions. Thank you so much, Faire. Thank you. Our next question is from Victor Trondzir from DNB. Please go ahead. Yes. Thank you, operator, and good morning, Per Marira. Good morning. Yes, Maybe you have mentioned it, I called in a bit later, but could you just remind us a bit on the difference in margins between the different segments? You know, it's we are not disclosing gross margin. And if we talk about the profit margin, it's not so easy because we do the five Segments normally with the same SG and A costs, we share them. So for us, when we measure it ourselves, we normally We look at the gross margin and then we have a common shared costs for all these businesses. But I can say, in general, Refrigeration has higher gross margin than a condition business. Okay. Yes, I guess what I'm after is sort of any mix effect given the difference in growth And for the moment, if OEM and EDGAR continues to outgrow, if that could have any positive or negative impact on margins in the coming year? I could say all growth we have have a positive impact on the profit margin because if we have organic growth, we are not increasing our costs. So that will be a drop through. Okay. Of course, we have a real high margin growth on refrigeration, but we'll have a higher drop on air condition. It is a nice go through on air condition as well. And on the topic, in terms of the margin contribution from increasing volumes, I think you had 25 for some organic growth through now in Q1, which is above the historical level that we raised. Is that what are the level we should expect going forward also? Which you said You said drop through. Yes, of 25% if we exclude M and L and FX. You mean by the drop through effect. I think it's difficult to answer that, but One thing, also our SG and A costs are lower level right now. And that is two reasons for that. One reason is that you know all cost reduction program we took last year. And that is some of these costs are sustainable, but because people have to go and we have renegotiated the lease agreement, etcetera, etcetera. Travis. But of course, we have Today, we are not traveling. There are no trade shows, etcetera. So I think these costs will probably increase when the market opens up again. So Maybe, if I should be negative, it could be minor, minor higher costs in in the second half of the CNG, if this could start to run the business as normal. But on the other hand, if we can run the business as normal, we could also probably and more avenues. Okay. No, that's clear. That's everything from me. Thank you very much. Thank you. Keep that now. And there are currently no further audio questions. I will hand We're back to the speakers for any final comments. No, I say thank you very much to everyone. And I can say, Maria and I, we are Pivko Reselt. We think we are it's a relief to see that the market is coming back so strong as it is. We see we have a lot of opportunities for the future and we see a nice organic growth. So and I Will and I will hand over to my successor. I can do it with a warm hand and with huge opportunities for the future. Thank you. Thank you.