Earnings Call: Q1 2021

Apr 27, 2021

Good morning, and welcome to Electrolux Professional Q1 Presentation. My name is Jacob Pabrubaj, Head of Investor Relations. With me today, I have Fabio Saplerlan, our CFO and Alberto Sonata, our CEO. So I will start with handing over to Alberto. Please go ahead, Alberto. We had an already weakening industry in 2020. But during the last part of March, We had a completely different trend with basically all businesses in a positive Improvement in every region. This is both for what concern the net sales And even more important, the incoming order. Despite this trend during the 2nd part of March, we have to say that profitability declined And the sales declined double digit. And profitability declined clearly because of the missing volumes And also because in the month, we had some negative currency headwinds in addition to the competition of Spending for the factory in Rayong. If we move to the geography, the trend that we experienced in the geography, We see that what we experienced in Q4 is still there also during the Q1 of 2021. So Yes. But the Asia Pacific region is more or less on the same level of Q1 Last year, with China, Australia, New Zealand, Singapore continuing the recovery and in the growth of the business, while still the Southeast Asian countries that are the one that are still locking the borders, that are still countries where most of the business is Generated by international tourists and international travelers that are not in these days allowed to enter declining. If we want to look at the different dynamics inside of the other countries, In some way, Europe still, the South European countries are suffering more than the Nordic one. In general, Still food and beverage declining throughout all the countries, while laundry, for instance, in Europe, are growing Growing somewhat. The big difference that we noticed in Q1 2021 It's recognized in the Americas, where while Latin America is basically there is no business these days, We recognize the growth of the Food and Beverage business in the United States. United States in some ways is ahead of the European countries for what concern vaccination, for what concern reopening of the business. And this is clearly seen with the restart of the activities also for what concern Our industry. That was very good. It was an healthy growth. Obviously, for us, United States is for the metric business is a relatively Small business compared to the rest, but it was very positive. The laundry business in the United States, I believe it's following the trend of the food and beverage, but for us, the comparison was tough because last year, during In the Q1 of the year and in particular in March, we have been building the stock to face the pandemic, the challenging of the pandemic during the remaining part of the year. With this said, we're not specifically in the 2 the analysis of the 2 segments, starting from the Food and Beverage. Food and Beverage, as I already anticipated, the business Food and Beverage is suffering more Dan De Londe. So this is confirmed also during the quarter, the Q1. But the good thing is that during the month of March, comparing With the amount of the proposal really partially impacted by the pandemic last year, but the sales increased versus last year. This is the first time after more than 12 months. So it is a positive sign even if We have always looked at that one more in relation to the previous month than to last year. April May will be As mentioned last year, there were terrible months, so the comparison with last year will obviously be positive. It is even more important to look at how the trend is evolving compared to previous months. And I have to say that in March as well as during the 1st part of April, Sales increase and in particular, the order intake increase. This is valid throughout All the countries, Europe included. We have to say that during the month of March also Profitability, that declined clearly in the quarter due to the low volume, but in the month of March Most positive for Food and Beverage. If we move to Laundry, so to the other segments, Laundry is confirming That it is a resilient business declining and in particular declining because of compared to last year because The comparison with the Americas or with the United States, remember that last year we built a large Stock during the quarter, in particular in March. So the comparison is challenging for that one. Other than that, our largest market in Europe was somewhat positive compared to the previous year. But what is Important thing, normally, we have to underline that the margin is in the double digit despite The negative effect of our currency and we have also a cost of the new factory that we have been building at Rayong. So Lundry continue to be a good business match positive during the coming quarter. We will not have anymore the comparison or the effect of the building stock in the United States, which is A positive, profitable part of the business that we have. Having said so, I would let Fabio comment on the financials. Thank you, Fabio. Thank you, Alberto, and good morning to everybody. As anticipated by Alberto, the EBITA margin in the quarter was 6.2%. We have been observing in the quarter as somehow along 2020 Different dynamics between the two segments. Laundry confirm very Solid profitability double digit profitability despite somehow lower sales and onetime cost That that mentioned related to the buildup of the new type factory. If we exclude this one time cost and the currency Transaction impact, the profitability of laundry percentage wise was even better than quarter 1 last year. The situation in Food and Beverage is somehow different. As you have seen, we have a low single digit profitability because of the large In the group common cost, there is substantially no change in term of cost year over year. When we look at the group overall, the reduction of EBITDA value and margin was driven mainly by 2 factors: Lower sales and production volume and negative currency. Contribution from price was positive, In particular, having long term beverage. And we did continue in quarter 1 the cost containment Action. That overall mitigated significantly the impact on volume compensating Close to 40% of the negative impact from the volumes. When reading through the P and L, what we can see is that gross margin declined over 3 percentage points year over year, Means the tractor were, as I mentioned earlier, the negative volumes development and the currency. Productivity and logistic cost somehow need negatively impact the margin as well. When it comes to the development of raw material, I have to say that In spite of what is happening these days in the market, raw material did not impact The profit and loss of the group. But there are risks that If the situation stays as it is, we may face negative impact, I would say, starting more on Quarter 3 of this year, considering that we have a pretty good coverage for the 1st 2 quarters. When it comes to the selling administrative expenses, As overall cost, we declined year over year whilst the weight of sales administration expense On net sales, somehow increased due to the reduced sales in the quarter. Now let me give you also an update for what concerns the structural cost reduction initiative. As you know, in the last 18 months, we have launched 2 restructuring plan. The first one is September 2019 to compensate the increasing cost as a listed company. That was expect prepared to deliver a full impact from quarter 3 last year, a full year impact of SEK 100,000,000. The 2nd restructuring we launched in September last year that is expected to provide We have a saving of SEK 110,000,000 already from the quarter 2 of this year. I'm reporting now that the execution of 2019 plan is now completed And the 1st of 2020 is absolutely on schedule. As you see from this chart, The 2 restructuring plan did provide EUR 100,000,000 savings in 2020, fully compensating the emerging cost that we had as a listed company. And looking into the future, in particular in 20 21, additional EUR 100,000,000 of cost reduction of structural cost reduction I respect it from this 2 restructuring plan. Now few words about the cost in quarter 1. Overall, the cost reduction reported both in gross profit and SG and A was around SEK 60,000,000 For roughly 6% reduction of our cost base. Around €30,000,000 half of EBITDA Our structural cost reduction coming from the restructuring plant I mentioned earlier. We had no material cost variation in term of stand alone Listed company. And the remaining SEK 30,000,000 are what we call short term savings. This amount of SEK 30,000,000 includes both roughly SEK 15,000,000 additional government Subsidies, we enjoyed this quarter roughly EUR 20,000,000 government This contribution, we had more or less SEK 5,000,000 in quarter 1 last year and roughly SEK 10,000,000 of onetime cost Related to the factory in Thailand. Market demand It's improving Alberto mentioned about order intake that is improving. We will we have monitored carefully the situation, the development, and we will still continue to be somehow Discipline in terms of cost management. Also in the months to come in order to secure that together with the sales Recovery. We have also a profitability recover. This said, when we will look into the development of cost in quarter 2, I would expect an increase of cost in the Q2 of this year compared to the Q2 of last year. And this is because we had a pretty low comparable last year when we reduced the activities to the mix. Operating working capital, A few words here, I would say, pretty positive development also here. At the end of March, Operating working capital in absolute term was down close to 20% compared to last year, the same currency. Operating working capital as a percentage of sales decreased to 19.4% Compared to the peak we reached in September last year that was over 20%, 22%. And this improvement comes from reduced receivable in comparison to sales as well as longer payment term with the supplier. We are working also on the inventory. And If we take the picture at the end of March of this year compared with the same period of last year, same currency, inventory is down 13% as well. Our overall financial position remain Pretty solid. Net debt at the end of March were SEK 546,000,000 SEC in line with the level of December and let me say half of the level we had in March 2020. Meaning that we have been able during the last 4 quarters, despite the difficult market condition, to Generate good cash flow and repay half of the debt that we have. Overall, the situation in terms of liquidity of the group is confirmed very solid. We have cash for SEK 630 1,000,000 and a revolving credit facility That is now over €175,000,000 in term of availability. Credit facility that is overall over €200,000,000 and that in the Q1 of this year, we took also the decision to prolong by an Last word on the development of the cash flow. Cash flow in the quarter was SEK 23,000,000 compared to roughly SEK 16,000,000 we delivered in quarter 1 last year. We have been able to deliver this cash flow despite an EBITDA that was significantly behind last year. And this was achieved thanks to reduced increase in term of working capital as well as reduced capital expenditure. When it comes to particular to the capital expenditure, €34,000,000 was expensed in the quarter with majority of it close to around €20,000,000 related to the buildup of the new production facility in Thailand. Production facility Construction that is expected to be completed overall in term of spending in the Q2 of this year. Once this initiative will be over, as we anticipated in the previous calls, I expect that the CapEx Of this group compared to sales, we'll go back to more the historical level around 2% on the sales. When it comes to the cash flow and the monitor of the The liquidity of the group, I would add the last comment that we have Strictly monitor the development of the financial capabilities and capacity of our customers and our supplier Because we want to continue to preserve the solidity and the quality of the balance sheet also going forward as well as the availability of our supplier base after a long period of business slowdown. And with that, back to you, Alberto. Thank you, Fabio. Thanks a lot. And let me spend a couple of words on the things that we are bringing In Q1, we started the production of the we completed, let's say, the Land 6 1,000 washer and dryer range. This is a very successful line of our washer and dryer that Gave us the possibility to perform well in 2020. With this competition, we are Increasing the features for what concern the connectivity, the digitalization of the appliances that is far ahead In the laundry, you remember that our target is that by next year, we will have more than 90% of The longer product that will be connectable, a large portion is also connected, we have to say, particularly in the United We have this larger coin shops and it's performing, I would say, very well. The second product that we have been launching is the line of The frozen beverage dispenser, this is good for the season, good for the recovery. We have also to say that during the month of March, We finally saw a change of the trend at least in this part of the business. For sure, new products are helping in this recovery. And this is a product besides giving more quality of the drinks that are served It's also ensuring that higher hygiene and safety. This is the idea to add the UV lamps for the sanitization Of these appliances, it is something that came up during the Innovation Challenge last year when During the pandemic, we involved all our people to generate innovative idea. And I'm very proud to say that our people came up with a lot of good Innovative solution that now we are bringing to market to become a unique selling proposition. In addition to this one, we have to say that Fabio already mentioned and I did so that during the month of March, we freed the old factory, the old laundry factory. All of the laundry lines are inside of the new factory in Rayong. And during the month of April, we started to move also the Beverage lines into the new factory, and we are going to complete this move by the middle of May. So we will be ready the 1st June to do the official opening of this new factory. We will not be able to do this in person because of the travel restrictions that are in place. For sure, we will connect with our team and we are very proud of that. They've been able to complete SEK 220,000,000 investment that is, If not the largest one of the largest investments that we did on time and respecting the cost despite All the challenges that the pandemic poses to us. So very happy for that because this is an important investment not only because we have been able to concentrate to factor into 1 because this could become the house of many new products that we are going to distribute globally. On the positive side, I want also to spend a couple of words on the trade show for the first time after Roughly a year, I would say. There have been 2 physical events in our industry, 1 in China, 1 in Dubai, Well, we attended and customers came and visited our group as well, obviously, the others. In this event, we took also the opportunity. They all happened in March. We took also the opportunity To introduce the new ovens, also the Skyline ovens that we launched just 2 years ago, but is already in the second Release. Most of the innovation are related to, again, connected features. All the investments, I believe, will be in this area. And not only our investments, but investments in this industry to provide customer with connected Solutions for the product, but even more for the entire kitchen and laundry operations. So very proud for this product that again at the right time now to give us the possibility to be even stronger during the recovery. With this said, I would like some way to summarize the Q1 in few words. Sales improved in March, and this improvement continues now in April. Also the order intake It was relatively good in March. When I mean relatively, I mean improving compared to the previous month, It's still obviously lower to the level that we had in 2019. The other positive sign is that the order intake was higher than the net sales. So this means that we restarted to build the order stock. Majority of the stock on the stock is in a relatively short term in the meaning that we see that the market that is recovering means Mainly the replacements. So operators that are reopening that during this month and they are looking for simple products to replace Projects that are down, that broke down or that are completing already existing installation, there are still This kind of trend, so both for the not sales order intake and order stock applied to food and beverage and laundry. I have to say that And it is normal, I would say. The recovery is faster and it is expected to be or better higher In the food and beverage market because it was the business that was suffering the most. During April May, partially June, the Food and Beverage business was dramatically down. Less than half of the business was away. This recovery in general, we see this sign of recovery that are applying that to Most of the geography, even if we clearly see that United States is faster than the European market To recover while Asian countries, Oceania, are confirming the positive trend already initiated during the last quarter over last year. On the cost side, structural costs are coming in place and that is Good. At the same time, and I believe Fabio was pretty clear with that chart, all the temporary costs or Majority of the temporary costs that gave us the possibility to maintain a profitable level last year are fading away. Clearly, with the reopening of the activities, we will also reduce the number of government subsidies, Obviously, and at the same time also, the working term reduction of this kind of activities, traveling, all other things, We'll discuss we'll restart already in Q2. We are continuing to invest. I was talking about the product, I'm talking about the factory. During the Q2, we will complete the move of the beverage line and the factory in Thailand. We will roll After the new IT system, the first one was in the French factory. We will have the second one in the beverage Italian factory. We will add we will continue to add the connected features to our product, in particular the Skyline, and we will continue to bring also add that product to market in addition to the one that I just mentioned. This is what is going to happen. And Before closing, I also want to take another opportunity to inform you that since we have been listed A year ago, March 23, 2020, we didn't have the possibility to travel, to visit and to meet with you all with the financial community in general. And this is the reason why we are thinking We organized at the Capital Market Day in September in Ljungvik, That is the place where we have our laundry factory. I believe it's a great place where we can see and we can give To whoever wants to join us in that place, an important idea of what the Laundry business is, Why Londres business has been resilient, so much resilient during this very challenging past year, But also why we believe that we have we are leading the market through innovation and through the solution that we are offering to our customers. With this said, thanks a lot. And Jakob, we are back to possible questions. Thank you. Our first question is from Lucy Collier of Morgan Stanley. Please go ahead. Good morning. Good morning, gentlemen, and thanks for taking my question. I have three questions, and I would go one at a time. The first one, I wanted to come back to the comments you've made on March and the fact that March was growing in Food and Beverages. You said that the trends were still quite positive in April, but I was hoping you can maybe help us understand the Sequential trend between April March, whether you were seeing an acceleration or whether the year on year acceleration was maybe more due to the comp effects. Just for us to be able to calibrate maybe a little bit better the magnitude of the recovery. Yes. So thanks for asking first. I'm talking about comparing to the previous months, So more than comparing to last year where you rightly said that the percentages are becoming bigger in these days because if I look at the And that says in April compared to last year, we can be in some way yes, Let me say, we can be mislead considering that the business last year was Really low during the month of April May. I was talking mainly compared to the previous months, so compared to the Beginning of March, January February, we see a slight increase of the net sales And even more, an increase of the order intake. So the order that we are receiving, that is what is going to come in the following month. So that is the sign of recovery that I'm saying. I'm not only comparing that to last year because it would be a little bit misleading, I believe. Thank you very much for that color. I was hoping maybe you could also give a little bit more I think you did, but the sound was not So apologies if it's a reiteration. But I was hoping you could maybe give us some indication about the nature of the recovery you are seeing. So is it Equipment, is it maintenance where you are seeing an acceleration? Is it kind of upgrading Same setting. And also do you see that across all of your markets in food and beverage? Or is it focused maybe on some specific Part of the market or some product type as well maybe? Yes. So first, What we call customer care that is the maintenance, what you described as maintenance, that in March declined less than the face of product. That is a very good sign because until now we had customer care declining more than the sales of the product because our customers You can't allow us to enter the site. Their operation were closed. Also this one, you can consider a sign of the coming recovery because This also means that many customers started to prepare to restart up their kitchen or their laundry operations. So Customer Care, in particular in March, recovered still not on the level of 2019, But we saw sign of recovery for this one. For what concerns the product, I said clearly food and beverage are Recovering more than laundry, but that is not because of the differences because food and beverage had a sharp decline during the past month and the past year. I don't see major differences among the different categories. Clearly, where we see We have new product, Skyline Ovens and the Glass Chill, the Line 6000 and Laundry. This new frozen beverage product, Yes, you have something more to say to our customers, something more to say in the market, and this is making easier to have something to say, an opportunity to talk to customers. There is one area that is suffering More than any other, it's still suffering quite heavily. It is the higher of the coffee. But this is more related To the fact that we are unbalanced towards France in particular and a specific roster that is operating in France, So it is our customer that is really suffering. And as a consequence, our business It's significantly down. It's the only one where sign of recovery are much weaker than in all the other businesses. Other than that, I would say that in general, we see a pretty flat and well distributed Recovery of the business. I mentioned United States and there's a concept of the product that are addressed The chain customers, during the past year, I mentioned more than once that this kind of segment I was suffering because they were putting on all the investments and they were not allowing us to visit even the press sites. Then we started that during the fall. This went on during the winter, and now they are coming to the Cision. So there will be an acceleration over there. Thank you very much for that. And I guess my last question to Fabio, please, on the savings. Thanks for the helpful table you included on Slide 7. I just I was hoping you could remind us, you had EUR 60,000,000 of savings in the Q1. Based on that, how much do you expect for the rest of the year? And will you expect a different type of phasing As we go into 2021, I. E, with some quarters having higher savings than others. Okay. Here, Let me talk about I expect that to happen in the remaining part of the year. As I mentioned earlier, Because of the restructuring plan that we launched in 2019 2020, structurally, we are going to reduce Our fixed cost base going forward. At the same time, when comparing starting from quarter 2 Last year, I expect overall the group cost to increase quarter on quarter Because we are comparing with a pretty low, I would say, the historical low level in quarter to last year. What will happen in the remaining part of the year? In the remaining part of the year, as we did in the last quarter, we will continue to monitor Briefly, the cost of development. But as I would say that if as we See the market recovering, we will restart investing because our goal is To profitable grow this business. So we will monitor the situation. We have a reduced fixed Cost base that I will say it has been an important move to reduce the breakeven point of this group. But for the future, I would look more into What we are going to invest to profitable grow this business. Okay. Thank you. Thank you. Our next question is from Matthias Polari of DNB. Please go ahead. Hi, thank you. Mathias Homburg from DNB here. I have one question perhaps on the proposed Combination of Mittel being well built, how do you see this changing the market dynamics? And I recall you talking a lot about part of your strategy being to become a sort of Recognized U. S. Player, if you see any obstacles or opportunities from these 2 players combining. Okay. First, I would say that it is Quite early to comment about that one in the meaning that as it is clear, they have to go through the The DOJ's approvals and all the other process that are normal in this kind of things. For what concerns our position in the United States, obviously, it's not impacting the laundry one. For what concerns the food and beverage, We have a sort of pretty focus approach in the United States, this one. We are not going to The market we are not serving the market with a full portfolio as we do in Europe or in Asia or Cianna. We have a pretty selected number of products that are targeting specific customer segments. And In this case, I would not say I would say that it is not changing so much. It will not change our approach To the customers, this kind of merge. There could be impact then related to what is happening According to regulation, according to the dynamic of the distribution, surely, yes. But in this moment, I would say that it's relatively Too early to comment about that. Great. That's a clear answer. And one follow-up. You discussed a bit about the sales decline in Laundry, and you talked about The comps effect from last year where you had a customer who did some pre buying or stocked up, Can you, first of all, make any comment on if that comparable effect is Isolated to Q1? Or could we see any of that in Q2 as well? And also, if you could clarify the 45% sales decline that you had In Americas and Laundry, is that entirely related to that specific effect? Or is there anything else in that? Okay. So first, last year, just after the let me say, the first Sign in Asia of the spread of the virus, together with our distributor in the United States, It was decided to build up stock in the United States. Remember that in February March, United States was Not affected from the virus or at least they were not the effects were not so clear in the United States as they were Coming to be clear, at least in the South European countries. So with this said, there was everybody was afraid about Lack of component, lack of product coming from Asia, from China. With us having a factory in Thailand, it was a conscious decision to build up a stock in the United States To face the demand of this product in case there were disruption during the Supply Chain. Destruction, but in reality, it even happened honestly, but it is what it is. And during, in particular, the month of March, and it was Pretty minimal, I would say, found in April, if I remember well. So we didn't have so much in April. We built up The stock in the United States, the stock that in the United States we have been in some way depleting because then from then we keep the United States. So after the end of the month, the United Significantly, also in Laundry. So we have been using this stock for a quite long period of time. This is the reason why we are saying that our performance in laundry in the United States Quite significantly impacted. So we reported a drop because last year, we ended this peak. So we should see this not happening in Q2 and Q3 and so on. Secondly, the drop in the loan rate in the quarter is mainly due to the United States. It's not entirely because in Europe, in reality, in somewhat we have been growing the laundry. In Asia Pac, in Some countries, we have been growing the laundry business still. We have Thailand, all the seats, Southeast Europe, Asian country. That's an important market, by the way, for us. Thailand, Indonesia, Philippines, they are good market for laundry. Malaysia, those markets are still Very low levels because I think I mentioned earlier, these are markets where the business is going around international Strong travelers. And in this moment, you cannot enter this market. So other than that, I would say the laundry business was somewhat better than last year. But with this tough comparison with the United States, we reported a decline. Thanks for that clarification. That's all for me. Thank you. Our next Question is from Gustus Hagee of SEB. Please go ahead. Thanks. Good morning, guys. Thanks for taking my questions. I'm wondering, I think you previously stated that sort of input costs and raw material costs is not a major factor to you this year because you If I understood you correctly, you have agreed to terms on those in podcast at an attractive level. But I understand it's a difficult question, but if you were to try to look into 2022 and assume that Raw material and impact costs were flat from here. What roughly would be the impact to earnings As you see from those items in 2022. Thank you. I believe Fabio, you can I can give some flavor of how we see the First of all, I confirm what I anticipated earlier? When we look into quarter 1, raw material Price development in the market did not affect the profitability of the group nor I expect that this would happen And this is because we have, let me say, covered our purchasing in the 1st part of this year. In this exactly these days, we are working with the supplier to negotiate new conditions for the 2nd part of the year. And I will say that somehow today is too early to give an overview even on the 2nd part of the year. I would let me say bring this topic in term of to give you more color on the quarter I would say that in these days, it's too early to make an assessment even on the 2nd part of the year. It's clear that if price remain at this level, they will have an impact In the business, in the profitability of the group, all the rest equal, I will say, not really material overall for the P and L of based on what we know today. Okay. And thank you for the table For the temporary and structural cost savings overview, that's super helpful. Could you try to assess So the share of the temporary costs that our government support, how do you see that? Do you see that unwinding in H2 or in Q2? Or Is your preliminary assessment that, that's going to be something that you could probably maintain throughout the year? Or if you could give a little bit of color on that, that would be Helpful too. Thanks. Yes. Okay. Let me develop further more around it. So We have let me divide our cost bucket into 3 parts. We have from one side The structural cost that are coming from the 2 restructuring plan and The execution of this initiative is according to plan, and I expect overall in 2021, Additional EUR 100,000,000 compared to what we had in 2020. That was another EUR 100,000,000. We have the second piece that is the government subsidies. Government subsidies that contributed roughly €95,000,000 in 2020. We report we have had €20,000,000 in quarter 1, compared to EUR 5,000,000 in quarter 1 last year. I have to say that I hope They will decrease in the incoming quarter, but because this means that the market in our business We'll go back more towards the normalized level. So to answer to the second piece, I expect government subsidies to decrease as long as we increase the capacity of utilization of our factories. The 3rd leg that is related to the discretionary spending, as I mentioned, we have a low comparable In the quarter 2020, where most of the activities were putting on hold and expect that this discretionary spending to increase already in the Q2. Going forward, it's clear our duty to strictly monitor the development and investment in the discretionary spending are covered into the order intake development. I believe we have demonstrated a longer 2020, But also in this Q1 that cost management is a top priority of this group. Okay. Thank you. If I could just add one final question relating what we previously discussed on the merger happening, at least seemingly happening in the U. S. Then, They explained in the rationale for combining the 2 companies That they aim to increase R and D investments or innovation investments in specifically in So digital and IoT solutions as well as ventless ovens. Could you talk of Stokes, could you talk a little bit about if you feel that there's a pressure on increased investments in those areas stemming out of this The coalition potentially whether or not you feel comfortable that you will be sort of top end and be in front of The market in these areas also a year from now, if the merger is actually happening. Okay. So first, I would say that both companies, Middleby and Welded, already increased investment In the IoT solution, they are the only 2 companies that at least for the cooking side of the kitchen, We're already trying to provide customer with a system approach. Even if I have to say, I didn't see so many Installation, but it's normal because we are at the beginning of this stage. So we already did this one. And I'm pretty sure that as well as other companies, There will increase investment in IoT. So I would say we know that. I believe we have to think to ourselves, to what we can invest and how fast we can do this investment and bring them to market. The thing that is positive on our thinking is that we have been approaching the market as one company Already for many years and as a consequence also in terms of architecture, structure and design, they are in some way already Standardized, we are not there yet, but we are already in that path, let me say. But it's surely important to have a critical mass and to create solutions that are really adding value to the customer. Not only we are linking to this, to the program of Ascension that we call Ascension, so that is our customer care program. At least this is but it's not my opinion. It is our opinion. We make a big difference when we will talk about creating value for the customers. Okay. Can I just take in one final question? We talked a little bit before with your German competitor about Some initial indications of price pressure, in particular, perhaps regarding Combi ovens. Do you still see that? Or is that Fading now as markets are similarly improving? Let's say, I'll be talking about pressure in general. Even if contribution from price was positive in Q1, so we We still have a positive contribution from price in Q1. What we see is that And I think I mentioned that in this moment, we see more replacement. So single U. S. Markets more than the full project. Full projects are Not so many. They are coming, but they are not so many. What we clearly see that being a few, everybody wants to get them. And as a consequence, competition price competition on the project is much higher than what it was a year ago. That is what we see. So when we talk about project in general, the overall price of the entire Laundry or kitchen solution that is compared to alternative So it's not specific on one product, but I would say that it's quite It is more related to the kind of business, let me say, and it is because of the current situation. Okay. Thank you for taking all those questions. I appreciate that, guys. Welcome. Yes. Jacob Brubay here. We have a question from Stefan Nordea, also coming back to raw material. Actually, three questions. Are we able to compensate raw material with price? That's the first question. The second one, how large will the extra cost for the factory in Thailand be in Q2? And the third question, when do you expect sales to be back to 2019 levels? What's your best guess? Okay. So I would let Fabio comment about the raw material and the cost In the tile factory, I can give a comment about the trend of the sales. Sales are still Below 2019 level, it is I believe the next the coming months will be Very important because they will show us how fast the recovery can be. If I look at the market research that have been published a Few months ago, I believe, middle of March, they are all showed they are still working on a double scenario. So they are all working on a Scenario where we already have a recovery on the beginning of next year and there are some others a little bit later. One thing in my opinion is clear is that the speed in the different region will be different in the meaning that I believe the Asia Pacific market, if we exclude so Asia and Oceania, Most probably, we will be back to the 2019 level end of this year, beginning of next year. United States could be on that similar level considering the speed of the recovery during The past week, but I would say that it's too early to say that one. In some ways, Europe that is lagging behind In terms of recovery, we are also talking about stimulus. U. S. Government put a lot of money to Timo, the investments in the food industry. We are also looking at What could happen in the European market in order to help our customer, not Nazzan, but our customer To restart doing investment, we have always to remember that this is a business where our customers, they have to make investments To renovate a kitchen, to renovate a laundry operation, to open new installations during the coming weeks. Fabio? Yes. On the two questions, as I anticipated earlier, for what concern raw material, Discussion are going on exactly in these hours in these days with our supplier base. I confirm what anticipated earlier. So we will not see any material Impact in the 1st part of this year. I expect if Price will remain at the market price will remain at this level also in the quarters To come to have an impact starting from quarter 3 this year and in quarter 4, But I will say it's somehow too early to give you an order of magnitude because if from one side, There are requests from our supplier base. On the other side, we have strongly negotiated to Keep the cost increase to the bare minimum. During, I believe, Q2 call, We will be in condition to give you more flavor on what it means in term of Impact in term of profitability that I expect will be all the rest equal, Negative, but I would say not material for 2021 profit level of the group. For what concern instead the Thailand initiative Two information, the initiative will be completed by quarter 2. In quarter 2, we are going to have roughly Remaining CapEx of around SEK 20,000,000. And as I mentioned earlier, once this initiative is completed, CapEx level will be back around 2% of sales going forward. For what concern instead the Onetime cost that will affect the P and L, I expect it to have more or less the same level of cost that we had in quarter 1 That was SEK 10,000,000 in quarter 2. And SEK 10,000,000, I would say, from a negative one cost impact, the initiative He's, I would call it, completed, and we should start to see the benefit coming out from the consolidation from Thank you. Our next question is from Ewan Elliott of Kepler Cheuvreux. Please go ahead. Yes. Hi, this is Johan Eliason. Just a short question coming back on your comparison with your German oven here that's sort of guiding for a minus 10% decrease in Q1. I have to see what it ends up at. But You ended up obviously at minus 21%. You talked about beverage being very weak. But how about your event, the Skylands? Are are sort of performing in line with this? Or do you think someone is gaining share on the back of new products introduced? So if I look at the single category Of the VeoBank in general, I would say that at least during the past quarter, so we are We've been performing in line with the competitors. So I would not say that we have been Losing market share. Again, on the opposite, as I think I mentioned earlier, with the new things Bringing to market, we want to gain market share. There is also difference between the geographical Differences, clearly, we are pretty strong on the South European market. Our European market Competitors have a pretty large share of sales also in the United States that is recovering faster. So If I look at the past results, again, we are very similar following in some way The market trending of the product. And then if I may, you At the Capital Markets Day now 2 years ago, you talked about this new skyline offering integrating ovens with glass chiller. Have you sort of seen a good take up of this combined offering also during this Ambritton market? Yes, yes. Brass Chillers are doing very well also because their adoptions of the Brass Chillers is increasing. So this means not in every kitchen where ovens are used that there is a blast chiller, but the increase there are More and more operators that are looking for both the oven and the blast chiller. We are the one offering and you Rightly remember that 2 years ago presentation when we have been talking about the tower, We call it where there was the oven on top of a blast chiller and we had the 2 products that were connected and you could operate Both products from 1 panel only. And this is doing very, very well. So we are very happy about that. I'm really looking for the reopening of the market because this could be a very compact, saving space in the kitchen And high performing solution for many customers. Okay. Thank you very much. That was all for me. Welcome. Our next question is from Karri Rintok of Handelsbanken. Please go ahead. Yes, thank you. Thank you for taking my questions. 2, if I may. Firstly, if we look at Laundry Europe, you had 1% growth In the Q1, and I think you also had growth in the Q1 of 2020. So the question is that is there any reason to expect You wouldn't see growth in Laundry Europe for the whole of 2021. And then secondly, do you have any other sort of pockets where we Actually, Mike, the 2021 sales higher than 2019. That's my first question. Okay. So Laundry, overall, Compared to 2019, we were not clearly on the same level. So we will see an improvement of Laundry. Yes. Laundry business, we are also bringing new product to the market. So the Laundry business will increase. I don't see a reason why this trend should change. I think I mentioned also the effect on the U. S. Where we We were relatively we were weak during the Q2 with the Laundry U. S, while this year We should have a positive trend in this area. One comment, and I think it's important to make this reasoning is If you look at our year end result, the portion of the business from laundry Became in relative term to the overall Professional business much larger than the food and beverage, Not fifty-fifty, but we were very close to the sixty-forty, something like that. With the coming months and the coming quarters, we are expecting that there will be a recovering on laundry, There will be a much higher recovery on Food and Beverage because in the previous year, the decline was sharp. So I'm expecting also that already in Q2, we will have a gradual rebalance Okay. But specifically for Laundry Europe, is there any reason to believe that, that part wouldn't be up 2021 compared to 2019? There are no reason to see change of the trend, let me say, but It is still something that I will not comment so long along the Yes. All right. Fair enough. Thanks. And then secondly, if you compare your pipeline of potential acquisition Targets right now and if you compare that to the pre COVID times, what can you say about the Maybe about the number of potential targets and if you have done any reprioritization between those, maybe between different geographies, between Categories and so forth. I would say that there are no major differences compared to the pre COVID or post COVID pipeline. I think I mentioned already in the past that since August September, we restarted the discussion With all the contacts that we had, in particular in United States, because that's the area where we are clearly having a focus Not only because there are opportunities to create value adding profitable operations to our businesses. We are Obviously, looking at them. So no major differences and no major changes, I would say. And then finally, the project business that you have mentioned a few times, in which geographies should we expect that to Start first, is it in the Asian markets and then maybe followed by the U. S. And then the last one would then be Europe? How should we expect that part of the market to recover? You said it in the meaning that the Asian The market is probably the first one that is already ahead of the curve. More than U. S, where I think I mentioned that our approach is more focused on single solutions, so targeting a single solution, particular, the chain ones, I would say, Europe. In Europe, There are discussions about projects. So again, Asian first and then hopefully also the European market, then we move back to the project Asian Middle East, sorry for not that. So that is the area where we see The project business moving faster than in the other regions. All right. Thank you. That's all my questions. Welcome. Thank you. Our final question is from Frederic Moragard of Pareto Securities. Please go ahead. Thank you very much, operator. So just thinking about what has happened over the past year with obviously a lot of restaurants, hotels and so on having struggled with some bankruptcies and perhaps some change of ownership for a lot of those operators. Just thinking about the reopening here, do you think there's a potential for new ownerships wanting to upgrade hotels, wanting to upgrade restaurants, perhaps Redesign menus and so on, that could actually be sort of an opportunity for you? Or could you just share your thoughts on potential development in that direction? Okay. There are many different trends. But yes, in the meaning that we saw already that, in particular, in the chain Business, there have been aggregation, so some change buying different brands that were struggling because of the pandemic. They've been incorporating some of these brands. I'm not talking about the big ones that are well known all around the world, in Particular, the regional ones that probably have been suffering more than the others. They have been aggregating or collecting this brand And thanks to the Between Bracket's economy of scales that the chain is able to create, they are clearly ready to relaunch. In South Africa, India and in France, we saw this that they are investing that to We launched the brand and sometimes it's changing also the menu. This is creating opportunity. The other opportunity is In many cases, this multiunit operator are looking for I think you heard this Definition more than 1, they call it a dark kitchen. So they are kitchen that in some way are producing With the 4 different brands. So in this case, they are refurbishing kitchens that were for one Kind of food production only to make it more flexible, to produce different kind of things, to Exactly only the delivery. Delivery will not disappear. This was an EBITDA that All of us in I think it was already in place in many geographies, but it became more, let me say, Adopted by many other people, and I don't think this will disappear at all. We'll continue to be one of the way of Doing business for many of the catering operators. So there will be changes, yes. There will be reopening. In many cases, they will reuse what is left in the kitchen of the restaurant, but this will create for sure business for maintenance, Customer Care and for what I was mentioning earlier in the meeting, unit sales, meaning that you take over, I don't know an Italian restaurant, but then you want to convert it into a steakhouse, so you clearly need also different appliances. This is just an example. Please don't take it And just thinking about such Development, is that something that you actually started to see some trends coming through in your order book? Or is this sort of still on a philosophical level? Sorry, can you repeat to the question? Sure. So is this something that you're actually starting to see coming through in your order book Great. These sort of I said, yes, the order intake we call it order intake. So the orders that we are collecting Since the, I would say, 2nd or 3rd week of March started to increase compared to The previous weeks are more than compared also to last year, and it is higher than the net sales. And that is It is still lower than 2019, no question about that. But that is the signal that we are getting that Operators in some way are relooking at the business. They are preparing in some cases. The speed is still to be defined. I don't think it will be full speed at Q2, but it is something that we clearly Yes, as assigned. Sure. That's very clear Roberto. Thank you. You're welcome. Thank you. There are no further questions, so I'll hand back over to our speakers for any closing remarks. So thank you very much for listening and then asking questions. I think this was it for now, and I wish you a good day and speak to you next time. Thank you, and goodbye.