Earnings Call: Q2 2021

Jul 15, 2021

Welcome to the Beijerive Audiocast with Teleconference Q2 2021. Throughout the call, all participants will be in listen only mode. And afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present CEO, Per Perpant and CFO, Maria Oribe. Please go ahead with your meeting. Okay. Good morning, everyone, and nice to So to you, this will be my last call, at least my last call after a quarterly report. And it's with Great. Proud and happiness. I can now tell you about our best quarter ever in terms of revenue, in terms of profit, In terms of growth and also I think to guide you that we have a quite positive outlook for Asia. So Maria and I will take you through the presentation. So if we go to Slide number 3 at a glance, You could see how this is as it looks right now, it will be 12 months. I just want to Comments on the sales numbers. As you can see, we are 6 months, 8.2, 8.3 something. So if you take that, we will reach and exceed, I would say, 16 point 5 in terms of 12 months, possible outcome, P and J already paid. Also take in mind that we yesterday announced A new baronite acquisition. I will tell you more about this acquisition later on. But that one will probably Consolidated from Q4 this year and could also add to the revenues this year around SEK 150,000,000. Swedish krafts. So that is the target pace. We will do so much as we can to exceed it, of course. And there could be more also acquisition opportunities. There are, but acquisition opportunities, but we don't know if we can be more acquisitions this year, And we are working with that, of course. All right. If we continue, so I will give you some update what happens on the environment and what happens on our market. If you remember, in the beginning of the year, we had some complaints about the shortage of containers and the very high prices For containers, that makes it difficult to buy, especially from Asia. And the reason for that was that all the containers at that time went to America due to new implemented tariffs valid from 1st January this year. But that was in after Capital amounts, we saw it much better because containers came back to Asia and they were available to Europe as well. So the prices went down, looks very good. But now again, I think maybe due to the Huge demand worldwide. We've had in all different industries. The prices has increased a lot again. So I think they are even on a higher level Today, and they were in the beginning of the year. And now it's not America we can blame. I think now it's mainly Europe and other parts of the world that are asking for these containers. However, for us, we have been able To get access to containers, but of course that will have an impact on the prices. I think Latest I heard is around USD 16,000 for container now. And of course, That's a minor problem. I think the shortage of components that also is in especially in Europe It's not a problem, but can be a problem during the autumn if our suppliers are not able to supply. We have not been affected yet in our business, and we are quite confident for this quarter. We have a lot of this in stock, so we can deliver. And but only in some cases for our OEM business, what we are waiting for maybe 1 or 2 2 parts to fulfill. So in our Outgoing deliveries, we are have much more to deliver right now. We're just waiting for some small components Then it's a bit to be ready with it. The COVID situation is also in good shape now. I was Gus, I was myself in Italy last week, so we could see that open up. It was nice to see that Europe It's more and more opening up and we this has for sure a positive impact on our business and I think we'll talk more about that later. One concern also you see this slide, I tell you now that is, let's say, the threat. So our concerns For the future, the rest of the slides will tell you more about that we are positive and we'll see the opportunities. But also, I think everyone has I see that there are some riots in South Africa. I took and I had a call this morning, just half an hour ago, with our MD in South Africa Listen to him about the situation right now. We have 57 branches in South Africa and we have closed 7, all of these 7 are in the German area that is where Ryan is ongoing. If you see that, I told you also I was in Italy last week and then we see all these restaurants Open. We see all these restaurants open in Sweden right now. The people are allowed to go to restaurants in the evening. That makes This is also visible for us. We could see that the demand is increasing here. And Still are many close and still are is it not truly people are concerned to travel by concern to outdoor restaurants. I'll also give you an example from this hotel in Italy in Venice. I asked about how it was reservation. And I told it was around It's a presentation when I was there, but they said from July 15, it was almost fully booked. So they were also in a very good shape and very optimistic for the future. Maybe I just could ask the Operator, is the sound okay for all of you? Yes. You're coming through loud and clear on my side. Okay. All right. Then I proceed. On 1st, also on this slide, you could also see this Long story about refrigerants. And this quarter is the 1st quarter out of the last 14 quarters, I think. But we actually had a small gain comparing quarter to quarter on the trading with refrigerants. So this is we think we have reached The turning point we've talked about for a long time. We don't expect that this very high impact in the future, but it will make sense. But it's much better Remind you, today it's I think it's around 7% of the total business. So it's not so important for pay rep as it used to be in the past. If we continue to Slide number 6, you can see what we have done in Q2. I will start with Fenergy. You remember Fenergy, we is a company, it's a start up company doing Environmental friendly industrial heat pumps mainly based on CO2 technology. And this is the same technology as we do with commercial racks for supermarkets, etcetera, but this is for much bigger applications. What we have done now, we have invested more in this company and the reason we have done it is that It has started much better than expected. We thought this 1st year should be just a year of costs and Trying to find some business, we are quite I think already we are around SEK 30,000,000 in revenues And that is exceeding over the plans we have. And we could also see the Quotation list we have. So for next year, we are very positive with this business. So it's growing much faster than expected and that is by needing more working capital in the company. And this is the reason why we invested more. We want to speed it up. And also we took and we will concentrate now From July 1, we have 51% in the company. And we have also the call option to acquire the remaining 49 Looks very promising. And it's also a new business for us with industrial heat pumps. In Australia, we took a small company industrial integration components only SEK 20,000,000. That is a good Profitability and it's a complementary business to our current business in Australia. It's an asset team, so this will be incorporated in our Cowen business. And yesterday, maybe you could see that we have announced We have acquired one of the leaders in Greece. Greece has been a white box for us on the map. We haven't seen that before. Inventor, it's a brand. Actually, coincidentally, I saw it when I was on Energia Ganten in Sweden They are doing convertible mobile FM users. But I don't think it's a big brand in Sweden, but It's a big brand in Greece. It's a big brand in Romania. They are also distributing from Amazon. And so that is also a new distribution channel for us. That will be exciting to see what we can do. Good profitability and the sales, euros 600,000,000 is increasing this year. We don't know the outcome this year. But I would say the good profitability is double digit and a little north of that. Probably, we will take over this 80% in 1st around October beginning of October. We are waiting for the March control in Romania and that is mandatory. We have to go through that procedure, but we don't see any problem with It's very low limits to but you are required to do this in Romania. So probably this will happen in Beginning of October or end September. The remaining 20%, we have The current management will remain and work and run the company together with us in the future. And also if you see here, this year, we have Acquired revenues full revenues for €1,400,000,000 and our €800,000,000 of this will have an impact This year in terms of revenue. All right. Internally, We I said that was in Italy, and that was to the inauguration of our new OEM plant. And this plant is Dedicated to do a sustainable environmental friendly CO2 business. And it's really fully loaded. And with this one, we've doubled the Capacity for producing this kind of items. And it was very nice to go into a factory and see all these Equipment and all these orders and what is really full mouth loaded with the work. And also to our Italian staff, so happy that they have had this new factory. That will give us a lot of new business in the future. We have signed agreements with important suppliers, if you see Emerson and Tecumseh, and that will be more of a piece. But This is ongoing business as we always do. All right. Next slide. E commerce sales, Slide number 8. This is also amazing to see how much and how fast This e commerce is developing. It's now 10% of our total business. This is There are parts of new business here, but you must also remember that is also some cannibalism that we are moving Distribution from ordinary businesses to e commerce units set. But we are building it up, That will continue to grow. We have a target, 23,000,000 that we think we will receive. How much was it? Well, I think we will exceed our e commerce target 23 anyway, Which is the pace we have right now. And then Slide 9. Also, as I said in the beginning, that for me, it's a privilege to have this latest report with all time highs on all lines in the P and L. Kristofer will start here Monday, 1st August, but he has already been here many times and he has met all the people. He has met the Board And he will also work together with the Sam 1 week in August. He's very keen and he's already very, very much trained with Direct and he's also having Already a huge knowledge of our business and our industry. Coming from us, ABLOY, very used to do acquisition, very used to decentralized organization. It seems that we really have found a good successor, and I'm very hopeful that the PayRec journey will continue in the fast speeds or even faster, we press over. All right. And this is the Megatrends ReNova And it's the same as usual, but they are giving us tailwind. The new tailwind is now that we also with refrigerant prices Due to the pay out scheme, it will maybe support us in the coming quarters instead of Punish us. And I will also underline that with So volume warming or I think we have warm summer, also even impact on the air condition business Maria will tell you about the figures later on. But this support us and also about the legislation. Remember the Kigali Amendment, what we are doing in Europe, more than 100 countries in the world All we think to do the same before 2022. So this will go on for a long time. All right, slide number 11, My favorite, and it's nice to see that we have organic growth again. And as you know, it was 30% to 4 In Q2, of course, it was a very easy comparison due to the COVID-nineteen, a tougher situation that impacted us negative last Yes. But also remember, if we compare to Q2 2019, it was 14% growth. So we have This organic growth we have in Q2 is, 1st of all, of course, it's a normalization due to the last year's COVID Closed down all those societies, but there is also additional real growing business for the moment. And this was what I have. So now we're coming to Slide 12. And first, then the financials, and Maria will take you through. Thank you, Per. So this quarter is our best quarter ever. Normally, Q2 is a very strong quarter for us, And we believe so this quarter as well. We have had a nice growth there, as I mentioned, sales up with 37% And we're up 34% in organic growth. We have acquisition impact of 6.4 And a negative FX of minus 3.5. The FX impact is less than the 1st quarter, Where we have the COVID impact. But if you also compare with 2019, which was all time high when it comes to sales and results, We are about that, well above with 13%. EBITDA, the change in result, and EBITDA margin is 9.4 And that is also an increase from Q2 2020 when it was 7.6%. And Comparing with 2019, that is also an increase of about 14%. Net debt, It is that. You have seen the figures before, and we used to show them for you. These are including IFRS, which is what we report. It's 2.1, and that is also the same as last year. And for if we look back into 2019, it's Reduction because then it was 2.5. So we have good headroom for doing new acquisitions, and we are working continuously With that and with our bank partners. Earnings per share also paid off and the result is higher. So EPS is up 81% compared to last year and also above the 2019 figure. So a lot of And also a solid growth here. If we look into Page 14, we can now see that HVAC is growing and is now 50% of the business. Year to date figure 47,000,000,000, maybe that is the recurring figure. But Q2 is the very strong HVAC quarter due to, of course, the summer season and the heat waves. So I think it's good that we have 2 strong business areas of HVAC and also the commercial refrigeration, Which also includes refrigerant and copper components. And the OEM business is 9% out of the total business. But the plan is, of course, to grow our OEM business. And as Per mentioned, we have to now double the capacity. So looking in the Page 14, which I have, we can see the organic growth. We have organic growth in all product segments, and that is very Prominently. And that goes also for the refrigerants. We have had quarters of where we had ZYN reduced refrigerant prices, but now it's a turn point here. So all our product segments showed good organic growth. And that is what we have communicated later. And you can see also that OEM and HVAC are growing very nicely. Yes. Page 15, I said it before, from Q2 ever. And you can also see the ROEUR twelve figures, what we are targeted for when it comes to EBIT was about SEK 1,300,000,000. And also the margin, the EBIT margin for this quarter was 9.2 Compared with SEK 7,600,000,000 and SEK 4.19, it was SEK 9,300,000,000. But it's also so when we see the volumes Increasing sales are increasing. We get a nice drop through. And you can see that on next slide, on Page 16. We have nice good contribution from our acquisition this year. And if you recall, we acquired Sinclair at the end of last year, and they have contributed nicely to the profit and altitude margin. And FX, as I said, on the result, it's an impact of SEK 9,000,000, so not too bad in that regard. And also a nice drop through on the organic, which is mainly driven by the volume. Looking into the our segments, our geography, one can see that all regions have increased. And we can see that also, EUR 7,000,000 is increasing most, and that is also our biggest region. And they contribute well both on sales and EBIT. We can also see that East Europe where we have The Sinclair acquisition has grown nicely and also increased the margins. Africa, as I mentioned they got a big hit last year from the COVID. And of course, the situation is challenging, but we still believe in Africa and that They will come back. And before the COVID, they were actually booming us in terms of margin. Asia Pacific, we have done some good acquisitions, increasing the margins, but also some good efforts in cost control. You know, Africa and Asia Pacific, they are more into winter season now. So despite that, we see nice Profit improvement in Asia Pacific. You can see the Nordics is not increasing so much on the sales And a little reduction in EBIT. We can see that we the Nordics didn't get so much Spanish from the COVID last year. And we also have pretty high comparables when it comes to the OEM business beginning 2020 that we didn't have In the beginning of 2021. So we don't feel too worried about that, and we will recover from that as well. Cash flow, a nice cash flow and an increase here. You can see on the Page 18 that the normal seasonality for the rest Cash flow is that we tie up capital first half and release second. And I would say that 2020 was a very challenging year where we stopped On delivery, both. So we were able to actually have a positive cash flow in Q2. So I would say 2021 is more back to normal. And it's related to that we have increased sales, so increased assets Because actually our inventory term has increased. So the main reason for that we tie up or we have negative working capital is And net debt, it's pretty stable. You can see that on Page 19 and that we have reduced this From 2019 as well, when it was about SEK 2,500,000,000 an ounce down to SEK 2,100,000,000, as said before. We have also this Yes, on Page 19. On Page 20, we have some nice information from the business paper, Here in Sweden, and they have done a comparison about the share development of some large cap Industry companies. And so the OEMX was 100, and we were on number 4 here, So EUR 161,000,000. And the rationale behind this really, you can see a link here between if you have a good A nice organic growth year over year, which we have had. It also pays off in the steady stock Return. And our return has been 29% over the last 10 years. And it also, of course, impacts The price per earnings valuation here. So some good data, which we are very proud of. And finally, before we let you in for Q and A, maybe you would wonder now what is the DNA of ARF and when Ferri is leaving and handing over to Kristoff Norbisch, we have We are under a market that is growing, and we get some tailwind from the green technology and the shift in technology and also some Strong legislation here. And we as a company have had a clear focus and a clear strategy over the years. And that has made us to stay focused and also focus on what we are good at. And when it comes to the employees, we have a very strong corporate culture, and we get responsibilities since we are a very decentralized organization, Meaning that business is local and the MDs are responsible for taking care of all the customers Out there, and then we have our synergies on the purchasing side. And last but not least, if we perform, we also get freedom, And that pays off in a stable return. And I would say that's also been the value of having a strong owner base, both an Industrial owner and now EQT that focus on growing the business and also making it better. So I think the R and O, the future is green. And we are here to Further develop the business. Okay. Thank you, Maria. So Maria and I, we are ready for questions. If anyone want to ask us something. Our first question comes from the line of Carlo Anastas of Nordea. Please go ahead. Your line is open. Good morning. It's Karl here from Nordea. A couple of questions from my side. First of all, of course, a strong report. But Looking at the drop through, I think in the quarter, it was 13%, 14%. And it seems a bit muted, especially Looking at previous quarters, for instance, Q1, 25%. And could you perhaps give some flavor on that? I mean, you should be benefiting a bit from low selling and marketing expenses, cost savings, easing refrigerant headwinds and so on. So what is happening with the drop through in the quarter? Thank you. I I think there are some things you should take into consideration here. Everything you said is correct. But also, you can see here on the growth that the part the main part of the growth, not the main part, but the most important is on air condition. And Air Condition, as we said many times before, it's slightly lower gross margin when we had on the refrigeration. So this is one reason for drop through. 2nd reason is that something we have not I'm not sure if we disclosed this in the report or not, but you should be aware we have had some one timers in Q2. 1st of all, we have our MT program that has and we have also had all these recruitment costs, etcetera. So I would say all in all, We have one time costs in Q2 of more than SEK 20,000,000 or just around SEK 20,000,000 that should is due to these extraordinary items. Okay. Very helpful. Yes. Okay. So we should expect the drop through to normalize more in the coming quarters, I guess? Well, yes, I'm not sure you could expect the same level as in Q1. Also the comparison, last year, we had a lot of other subsidiaries in especially in April May. This will we're not having the Q2. But you should I think maybe it's more Well, it's I think it should be something between Q1 and Q2, you should expect. Okay. Perfect. Okay. And also regarding COVID-nineteen, we have We've seen tightening restrictions in parts of Asia. We've seen it in Australia as well. Have you seen any impact on the Current trading in the specific geographies? Well, I think you can see in Asia, where we have the main part is we see an impact. But it is in Relatively small market. Malaysia, Thailand, we for sure see a negative impact. We could see it Partly in Australia, but I think Australia is running quite well for us without this. So it's The impact is mainly in Taiwan, Malaysia, and that is not so big countries for us. So It's limited on the moment. Okay. Perfect. Good to hear. And on the acquisition yesterday, it looks like, of course, a nice company with good margins. But do you see possibilities for purchasing and selling synergies? And also, we know that Christoffer's legacy is being active with price increases. Is it fair to assume that you have the intention to do the same with this acquisition as well? Yes. Every acquisition we do, we've always seen synergies. I would say, we may be in general, we have more When we buy on the refrigeration side, when we buy on the air condition side. But this indenture, it's they take that product From China's factory and the same Chinese factory, we're doing a lot of G Suite in other countries. We sell more or less the Same products with other labels in other markets. And this is coming up to be one of our Core suppliers, very important suppliers. There's a very, for sure, one synergy in Romania. We are already. We could see some synergies. And we also think that this could this is not decided, but this is an opportunity, a synergy opportunity that this could also be a platform For us to start with refrigeration business in Greece, now we are doing air condition within Benoit. So yes, we see synergies. Okay. Perfect. And also one more question here. I mean, looking Looking at the e commerce growth, it's the share is growing nicely, as I said before. What costs are allocated to this project? And does it have material earnings impact? You mean the cost To implement the e commerce? Yes, to drive e commerce growth, exactly. I don't have that in my mind right now, Karl. Of course, it's not free of charge because we have hired a new CIO. We have people working with this on full time. It's a huge work. But I think I mean, it's not so much additional cost. I think the most important here is that When you sell on the web, you have fixed prices. If you sell through a branch, The branch manager or the sales guy could always give you one additional percent if you are a frequent customer. That'd be possible to do. So I think there is an improvement on gross improvement opportunity on the gross margin. And also that could be when we can scale it even more, it could be some Cost reductions, we think, in the future. Not sure, Maria, if you Yes. So I think, I mean, It's not the biggest part is really to do the product categorization here, and that has been done over the years. And Launching the e commerce, we have a standout program for that. So that is taken in the current P and L. That's the biggest portion has been here to map all the products within the group, the PIM system. Okay, perfect. Sorry, one final one from my side. Could you also give some flavor on the sales development sequentially or year So the year over year, if you like. For the Orica segment, you touched upon it a bit, but if you could be more specific. Well, again, I think I've said it many times, it's very difficult for us to really, really know What is the Eureka segment? Because we are doing business to business. And we in most of the cases, we don't know the end customers. As we know, of course, which sector our end customers are in general, but specific sites we don't know. But we know when it's coming up, As we have seen now in Q2, we resolved the commodities, line components and maintenance products, but that is belonging in a quite big It's going to the Horeca segment, but it's very difficult to give numbers. But we can confirm that the pent up need that we have talked about has started. That means that The Horeca segment is opening up again and that gives us, of course, additional business. Okay. Thank you very much. Thank you. Our next question comes from the line of Erik Castle at So my first question is on pricing. And you mentioned that you have been able to handle price increases from suppliers very well. So any info on how much you have increased your prices on average That would be helpful. It's a very difficult question, Erik. We have so many suppliers. But I would say A massive range between, I think, 0, up to 8%, 9%. And I would say, if you take an average of a median, it's less than 4.5%. I would say, Let's say, on average, 3% to 4%, something like that. Okay. So is that sort of neutral on margins? Or has it created some kind of headroom for further price increases from a supplier. So do you expect to increase prices going forward as well? We have seen slightly growing margin for us. We are measuring gross margin very important for us even if we don't disclose it. But what we said, the message and what we are really pushing now because with this environment, With this demand in the market and also in some cases from especially from our competitors with shortage of products, this is an Opportunity to increase prices that never have been we have not seen in the last 10 years. So we are pushing for price increases and we want to The strategy is, of course, to compensate in addition to what the price increases we have because we're also pushing back on all price increases we get from farm But this is always, this is a battlefield. Sometimes you are successful, and sometimes you are not so successful. And sometimes you have a delay. The good thing here is, of course, when we can push our price increase From our suppliers who say we are not accepting that before 3 or 4 months from now, but then we could always Try to come out and compensate with our price increases in advance. That is an opportunity for us. But we are really pushing for price increase I think we do it by plan. The target is to improve, of course. But As I said, it's a pattern fee, it's a market and we have competitors on the market as well. Okay, very good. Do you think this is sort of a temporary Margin boost? Or could you defend prices going forward as well? Well, I think our margin is Quite stable and what we know, we're not suffering so much as we have done in the past If we do more in the air condition feed, of course, we grow with EBIT margin, but we don't grow the gross margin Of course, we have so much more volume there, so it will be good for the EBIT margin in the long run. But all in all, always On as a focus area to see what we can do to improve margin. The e commerce could also support that in the future, as I said before. So yes, we think we can grow the margin, absolutely. And this is what we always work. But we have also And competitive market outside. So sometimes even if we are market leader in many cases and there are many followers, there are always Could be a competitor who dumped prices. That is what's always happened also. Okay. Very good. But so HVAC demand was obviously very high this quarter. But do you think volumes have been pulled forward in any way from Q3 due to customers perhaps being scared of shortages going forward? Well, I think no, I don't think so. The last free fee it's a seasonality product In many cases, Sweden, you sell a lot in Q2 and Q3. Warm weather is always supporting us. And I think that most people have learned from the last summer But it's nice to have air conditioned units and they want to buy air conditioned units. I don't think that Customers really understand the shortage. And you know also, even if we are selling more than one brand In that condition. We are dealing with Toshiba. We're dealing with MHRA, Mitsubishi. We are dealing with our own brands, now Sinclair. But I can also Telia has been a success for us. It's our own brand, our own private label that is launched in many markets since we took over. But when you are dealing with more brands, even if you run out of 1 brand, you can sell another brand. So I think we can handle that quite good. And I also believe we can do it during the autumn, even if that could be some start as soon as it delivers. Okay. Thank you. And then on margins, as Karl highlighted, I also would have assumed you would be able to reach a higher margin with The sort of drop through as the volumes were so high. But then you had 10% EBIT margins in Q2 2018 when Refrigeration grew a lot. So Is it possible to have those sort of margins through HVAC growth as well? Or is this primarily from refrigeration? Yes. I think that is even if the gross margin is lower on HVAC, I would say that the EBIT margin is higher Because we have so much more volume. And we have double digit margin in many, many markets. Now we have additional costs, but we have a negative impact On the margin, but we could also see that you acquired a company. I said it's normal for 10%, I mentioned for you in vendor. We have more opportunities to buy companies that have higher margin. And In general, we have higher EBIT or EBIT up margin in HVAC because it's not It doesn't require so much cost. It doesn't require so many people working in the SG and A cost. So absolutely. I think if we continue to acquire companies Combined with a nice organic growth, it's more likely that we will have more HVAC business in the future sorry, air condition business in the future when we're integration. So it's much more to buy in that field. And the good news is that if you buy companies in that field, that's also higher EBIT margin. Okay, perfect. And it's also very higher growth rate until the moment, so it's a very high growth rate. Yes, exactly. And then the last one for me. You talked about a high level of order intake last quarter, particularly for OEM. Have you seen similar order intakes throughout Q2 and perhaps the 1st 2 weeks of Q3 as well? Or has there been any issues in demand? Do you mean order intake in or delivery now in Q3? Yes, we have had Nice. You know now in July and in 1, 2 weeks in August, there is vacation holiday that is always. So For the moment, we our order backlog was good. And also, Maria mentioned About the Nordics was not so good as you remember in Q2. I can tell you the backlog in Nordics is bigger, much bigger than it was 1 year ago. So yes, we have a good backdrop and whatever it takes. Okay, perfect. Thank you very much, Our next question comes from the line of Victor Trollsdon of DNB. Please go ahead. Your line is open. Thank you, operator, and good morning, Tara and Marisa. I hope all is well. Looking at the M and L contribution, it looks like a very healthy EBIT margin of 16%. And you touched Tom, that with the Sinclair acquisition with own brands having good profitability and so forth, but could you expand a bit Is that the sort of target you are looking for going forward as well with higher profitability? Then Are the 5% EBIT margin you have talked about as the classic characteristics historically? So basically, should we expect a smaller dilutive effect on margins from M and S going forward versus historically? That was a good question. When we have learned that it's Much more interesting to acquire a company with high profitability than a low profitability. And we have not we have seen so much more confidence with high profitability and higher margin. Now when we look more into the air condition business also because it's higher, no doubt about that. If you go on refrigeration, it's normal Private companies, it's, let's say, around 5%, 6% companies because it requires more people. But Also you know all the synergies we can implement, so we can increase that to have the double digit also, but then we It's much more work for us. So I think it's also where we look into what we have in our Pipeline, you know, but this is something I think mentioned before what has happened since We have a new principal shareholder from EQT instead of carrier that we are working much more focused now on acquisition. We have always been working with You should know that now we have a pipeline and we have a long list, we have a short list, we have a hot list, we have Possibilities, etcetera, etcetera, on possible targets. And we could see also that there are many, many targets that Also deliver more than 10% profit. I mean 10% of that digit is something that is leveled for us. So the answer is yes. Okay. That is clear and interesting. And just an observation on that. And looking at the Sinclair acquisition, it seems you are able to maintain the cell multiples you pay for those sort of targets despite Higher profitability. Are you confident that are the M and A multiples will remain at a certain level? Well, I think if you compare what that could be different Multiples and different negotiations. That's for sure different markets, but it's in that level. So we think it's very easy to make the M and On the EBIT, that's no doubt about that. And of course, if we could like, one asked me about the synergy now with Inventor. Inventor is also a private label owned brand like Sinclair. Now we will go for Sinclair International, but I think We could also utilize Inventor in that area around Greece because it's very well known brand in that area. So That is for sure a synergy. And as I also said, Sinclair, we could when we launched it in the big markets like France, Italy and Spain, It's improved margin, of course, when you do it on with your own private label. And we believe we as I said about Sinclair, That is has been that's not a little slow, but now it has been exceeded our expectation. And We are very, very keen to continue to launch it even more markets in the future and develop that plant. And that did also happen with Inventor. Okay. That's clear. And then just final for me, Inventor brand, does that have the same sort of margins like Sinclair, are you at 16% or? Well, I think, as Per mentioned that before, it is double digits in the higher range. Well, in Vantor today, it's a double digit Company, and that's it, even north of the double digits. Okay. So fantastic. It's a profitable company. That's helpful. Thank you very much, guys, and I'll step back in line. Thank you. Thank you. Our next question comes from the line of Andreas Bok of Credit Suisse. Please go ahead. Your line is open. Thank you. Hi. I only have one big picture question and the other questions have been answered. And it's when I think about all these heatwave. So heatwave in Europe, heatwave in the U. S, the planet is getting hotter and hotter. Is there any Is there any way that have you done any analysis that if the number of air conditionings in France increased to 50% of what they are in Spain or potentially if air conditioning spreads because of the global warming? Well, not market by market. But I can We have looked once, I think I mentioned, in the penetration of a installed air condition units, Residential. We have seen one investigation. If you compare U. S. With Europe, And that was around 25% of all installed residential units in the world is in U. S. That is the population around 330,000,000. And Europe's €450,000,000 €500,000,000 represents here 6%. So that is one investigation we have done. But we could also see how the penetration is Increasing now in Europe. We think that is one of the factors that we perceive the growth now. But Europeans I've learned to understand how convenient it is to have air condition and how convenient and also now when the heat wave is coming, that has Start the boom and now today we have a heat I think we have a heatwave in Spain again close to 50 degrees in South Spain. In Greece, it's 35 degrees. And all of you have been in this heat wave. We have also 30 degrees in Sweden Right now, when you have learned to understand the convenience to have air conditioner to shield down, It had wings on the water. So we strongly believe we have not done that on air country by country. But you can just go to your own home. I can go to my wife. And you know, we have air condition in our house as normal Swedish people, but it's running During the summertime always. So you get used to it. So it's our conviction that the penetration will continue. I'm not sure if it's fully answer you, Andreas, your question, but this is what we can say, I think, in this field right now. No, but it makes sense. I've The biggest investment thesis I have and strongest case I have of Bay of Risk beyond acquisitions and excellent management and all that is that it's the HVAC business that I'm interested in. And you're basically saying that if Europe becomes half of what the U. S. Is over time, I'm thinking 15, 20 at a time, The whole business could double. It's just a very strong tailwind. So thank you very much. All the best. And I look forward to meeting up On the other side. Thank you so much, Ka. Yes. Thank you. Thank you. And the last question in the queue so far. The last question in the queue so far is from the line of Robert Reddyne of Carnegie. Please go ahead. Your line is open. Yes. Just a few follow ups. Just the nonrecurring items in the quarter, did you say they were EUR 20,000,000, 20? Yes. Yes. Cool. And then now on the price increases you talked about, I think you said TRO to 8%, 9%. Were those the procurement pricing cases? Or were they your pricing business towards customized? Sorry, Rob. I'm not sure what happened. We are difficult to hear your question. Okay. I was asking about those Price increases you talked about earlier. You said something about 0% to 8%, 9% price increases, maybe on average 3%, 4%. Were those price increases that your suppliers have communicated towards you? Or were those your price increases towards customers? No, I think that was what the suppliers communicated to us. And but as You know how it works in our industry. When they announce price increases, we put out Our full army to have a counter attack. So if they announce 8% or 6%, it will never end up so much Because there is always a long hard negotiation before we find a level that also we accept as customers. So of course, but that was also But I think, Maria, you said that the organic growth in Q2 was mostly volume. So this sort of needed or necessary price hikes, are they more of a Q3, Q4 Ben or was there already a secondhandling and price hikes baked into Q2? I think the price if I answer first, Moria, you can add. So I think the price increases mainly come now in mid end of Q2. No, but we had a shortage that started. So we could see it from May, I would say. Right. So more of a full quarter effect next quarter then? And you have price increase, But you cannot be affected here for after 3 or 4 months or something like that. Exactly. That was what I was after that The organic growth in Q2 was mostly driven by volume versus while price could be more of a component in Q2, before? Yes. But we in Q2, we didn't have any price increases really. Perfect. And then on M and A, I mean, it sounds positive, your comments, that's my final question. But you've done 1,400,000,000 Acquisitions were SEK 1,400,000,000 so far year to date, but that's sort of 10% for your 2020 sales. So you bought a lot of companies in your M and A pipeline. So is the M and A pipeline still strengthening or next? Or have you Have you bought off a lot from the buyback? No. We are evaluating charges all the time, as you know. And we have also allocated more resources to the M and A activities. So maybe we have speeded up a little bit here. But there are still many companies. So in the past, we have a lot of companies that we are evaluating and also new markets, Etcetera. So there are more to come. Perfect. Perfect. Okay. Thanks. Those were my questions. Thank you. And as there are currently no further questions in the queue, I'll hand back to our speakers for the closing comments. Okay. Thanks to all. Maria and I will have another internal call now to organizations. So