Hello, everyone, Welcome to the Presentation of Fagerhult Group's Q1 Interim Report. My name is Michael Brüer, responsible for strategy and communications here at Fagerhult Group. I will be the moderator here today. On the call today, we have our President and CEO, Bodil Sonesson, our CFO, Michael Wood. Compared to our last call in February, we have outlined the presentation a little bit different this time.
Bodil will start with a brief update of the Q1 numbers and then spend some time on what we see happening on the market, the trends we see for the future, and how we are positioned to benefit from these opportunities going forward. Michael will then give you more details about the financials for the group and our business areas. Finally, Bodil will conclude with a brief overview of a few key initiatives. Afterwards, we will open up for questions. We'll first allow questions from the conference call, and then we will allow questions from the webcast.
The questions posted in the webcast will be read up by me for Bodil and Michael here in the audio call. Before we start, let me also remind you that today's session is recorded and will be available on our homepage later today. With that, I hand over to Bodil. Please go ahead.
Okay. Thank you, Michael, and thank you to all of you that's present on this webcast today. As Michael said, I will start with a brief overview of the numbers and then look into what we see happening in the market. First, let's look at the quarter. We continue to see progress in the market, even though we all know COVID is still around us. I would say that the geographies that had a tough path last year, like Southern Europe and the U.K., are recovering. We have, for example, seen no negative effect of Brexit in the U.K., rather the opposite, where the clarity of direction seems to be helping in decision making.
We were very happy to see an improving operating margin to 9.1% as a result of an okay sales level, a good GP margin, and a reduced cost base. You know we had focus on this all year, and we continue to have very good cost control. In beginning of April, we acquired the remaining 80% shares in Seneco. We have been collaborating the last five, six years and acquired a 20% minority stake in 2017, and I will come back to some more details about that later in my presentation.
Also, as reported last time, we continue our group projects on core values and sustainability, and they continued with good progress in the quarter. Like everyone, we have a strong focus on the current supply chain challenges in the market. We have not seen any negative effects on the sales in Q1. We see the situation is going to be continuously challenging. All of the group companies are working together in a very good way. We are quick in decision making. We also have a strong long-term relationship with our key suppliers, which helps us in handling the situation.
Q1 in 2021 in figures. You see some key numbers for the quarter and also comparison to last year. We had a comparable decline in order intake of 7.4%. The steady trend continues back on track. Also Q1 2020 was quite a good quarter from an order intake perspective, as COVID began to impact only at the end of the quarter for comparison reasons. We did net sales were an organic growth of 6.6% compared to last year, and we reached SEK 1.678 billion. Operating profit was SEK 152.9 million with no adjustments.
This, as I said, was a big improvement to the last year's results with our operating margin of 9.1% this year. Earnings per share was SEK 0.53, and Michael will come back to you with a few more details when he looks more on the numbers. Looking into what's happening on the market, I'm not going to go back to our development in 2020, but I wanted to show you a brief overview of the latest market statistics from the research institute that we're using called CSIL, that was released last week for the European market for 2020.
The European market for lighting last year on the professional side declined with 11%, which is in line with our development. There was a big difference in both geographical markets and application areas, which is also in line what we reported all last year. The market where harder restrictions and lockdowns were implemented, if you look in Southern Europe and U.K., saw a higher decline last year, and numbers were better in Northern Europe. The most difficult application areas last year was retail and culture, traditional retail, whereas industrial applications performed much better.
If we look into a little bit beyond the COVID-19 pandemic, and what we see as a market potential is, of course, increased interest in sustainable and energy-efficient solutions. Across many markets and regions, the new regulations and initiative to drive sustainable change. For example, we all know the EU Green Deal with the Renovation Wave initiative, and we also see similar initiatives, for example, in the U.K. If you look at the worldwide numbers, lighting is estimated to account for up to 15% of the global energy consumption in the world. The impact of energy-efficient lighting is significant.
Our offer here is to focus on high-quality lighting that reduces energy consumption and, at the same time, increases people's wellbeing and safety. We believe that this will be an important part of the solution. The illustration you see here shows the potential energy savings brought by new technology. The change from conventional lighting to LED that started 10 years ago brought significant energy savings. Now we add on also new connectivity solutions to the installation. The energy consumption will be further reduced.
I will explain to you how we see that happening and the reasons behind it. As I said, the change from conventional to LED lighting started about 10 years ago, and regarding sales volume, LED luminaire quickly took over, but in the market there is still a large installed base to be changed. Looking at the installed base, it's on average 30% LED lighting installed across the European markets that you can see illustrated here how it's changing. The situation in North America shows an even lower rate of installed LED luminaire.
Here again, the installed base varies from higher shares in retail and outdoor applications to lower in office and healthcare applications. There is a similar trend in geographies where the installed base of LED luminaire is higher in North and Central Europe and lower in Southern and Eastern Europe. In order to accelerate the change, we need more renovation. With the ongoing upcoming sustainability initiative, this brings a good opportunity for the coming years, both from a market opportunity perspective, but also for us to contribute to a more sustainable environment.
Besides focusing on energy savings, we also aim to provide our lighting solutions in a sustainable way. You know our new vision statement from last year that highlights our ambition, "Together, we innovate to deliver professional lighting solutions that are circular and climate positive and contribute to better life." We already today only manufacture and sell LED luminaire with high energy efficiency. In the market, we also see an increasing demand from our customers to better understand how and where our products are manufactured. As you know, we have 17 factories all close to our customers.
To make sure we capture the opportunity and to have the right attention and focus in the organization, we have appointed a chief sustainability officer to further develop the group's sustainability agenda. On the right-hand side of the picture, you can see three positive examples from the group. Two of our brands are EcoVadis Silver awarded since last year, which is an external recognition of their sustainability efforts. As I mentioned last time, Whitecroft Lighting has launched a group circular product on a new circular product platform called Vitality, and where many more products will follow.
Also across the group, there are multiple initiatives to reduce our carbon footprint. As examples, on the picture you can see solar panels on a manufacturing, and this is from our original Fagerhult factory in Habo, and we installed those solar panels last summer. The LED technology also brings new possibilities for smart connected lighting control solutions. We call it connectivity solutions. There are multiple benefits with good connectivity solutions. It brings significant energy savings, up to 70% with presence detection and motion control.
For outdoor environments, remote monitoring can also help lower the maintenance cost. Besides energy savings, connectivity solutions brings new features for increased wellbeing by adopting light, space, and preferences or adjusting for daylight levels. In outdoor environments, a properly lit area also helps increase safety for people by adopting light levels. Beyond lighting, there is new business opportunities together with partners in the building ecosystem. This includes using our luminaire sensors and sensor data for new user cases and integrating with other systems.
So far, as you look in the market, the adaptation is rather low. We estimate that only 10% of applicable projects to be delivered with full connectivity solution, as you can see and described above. This is a good opportunity for the coming years, and we also already see a very good increase for our dynamic response solutions, where we sold approximately 80% more units last year compared to the year before.
We go back to Seneco, and within the group, we have two in-house connectivity solutions, one for indoor, Organic Response, and one for outdoor, which is Seneco. And those systems have the same basic principles. They are based on presence detection, which brings significant energy savings because the light is only on when you need it. Both systems work standalone, but by connecting them, the user gets access to additional features and functionality.
Both systems are also based on open architecture to make it easy for integrations and partnerships with other building and city management systems. We continued our investments in the connectivity area in 2020. We opened a new competence center for Organic Response in Linköping, a complement to their headquarter, which is based in Melbourne. Beginning of April, we also acquired the remaining 80% shares in Seneco, where we have collaborated for the last five-six years. The Seneco solution is already in use or in development by all the brands in the groups that are selling outdoor lighting.
That ends the part of my presentation, which was more market-oriented, and I will hand over to Michael for more financial numbers. I would do that with this stunning picture, which is from London, and it's the Royal Wharf Pier, and it's lighting from LED Linear. Please, Michael, if you can give us some more numbers.
Okay. Thank you, Bodil, and thank you, Michael, and good afternoon, everybody, from me. Welcome to our second webcast. Hope you enjoy the rest of the show. First of all, looking at the first quarter, the results for the first quarter clearly demonstrate that the group continues to make a steady, good progress in overcoming the challenges from COVID-19. At SEK 1,678 million, quarter-on-quarter sales were marginally adverse to 2020. You see them -0.7%, comparable sales growth was good, positive 6.6%.
Many geographies and many product segments delivered good growth. At SEK 97 million, the currency headwinds remain strong, and the SEK 24 million divestments relates to the sales of Lighting Innovations and contracts from late last year and earlier this year. The operating profit of SEK 153 million delivers a 9.1% operating margin, and this results strongly from a 1.8 percentage point increase in industrial margin. As reported last quarter, we continue the reduction in fixed costs, so both of those GP increase and fixed cost control contributing to the 9.1% in good measure.
Now, operating cash flow is positive again at SEK 59, slightly worse than SEK 88, I will explain that a little bit later on. Operating cash flow has been positive now for each of the last 11 quarters. Okay. Looking at the longer-term sales development. Last time, I covered the development of the six-year net sales levels. For this quarter, we concentrate simply on the quarter where we see a leveling off of the negative impact due to COVID. That's what you see from the net sales level reported earlier on, a leveling off, but also, from a comparable sales level, we see almost seven percentage points growth in net sales.
Operating margin. Firstly, a reminder that for Q2, Q3 and Q4 last year, you can see the light gray bars in the right-hand side of the screen. They were adjusted due to the cost of the exit from our business in South Africa. Turning to the first quarter, at 9.1% there, we see 9.1% is at a good level compared to the market. This, as we say, is driven by operational efficiencies and cost savings. Taking each of the four business areas now one by one.
Business area collection delivered a much improved first quarter compared to last year, with all entities contributing positively to the turnaround, and the turnaround operating margin closed at 7.8% for the quarter. The result in our Italian entity was good in that first quarter. We continue to see the negative effects of COVID, however, particularly for those entities with a global reach and a global operation. As Bodil said earlier on, these effects are reducing. The order intake trend overall is positive, and the gap on the comparable order intake statistic, the trend remains positive.
Focus and collaboration examples where we see good level of current and future opportunity are working more closely with international specifiers in our high-end brands here in Business Area Collection , and our Swedish entity in the south of Sweden, Ateljé Lyktan , working well with the iGuzzini distribution network, firstly in Denmark and in Italy. Good activities we see taking place there. Looking at Business Area Premium . Business Area Premium , as we know, is concentrated in Europe, and where the countries are developing at different rates from the initial COVID-19 impacts.
In the U.K., we see increased activity, whereas Bodil mentioned the certainty of Brexit gives clarity and the vaccination rollout program makes good progress. Contrast this position with what we see in the Nordic region, where we see a slightly lower level of activity as the current wave of the pandemic remains stubborn. The restructuring programs completed during the second half of 2020 result in a lower cost base, and despite the slightly lower sales level, the increased operating margin moves up to 11.4% from 7% a year ago.
Here we see specific opportunities in the DACH region for our indoor brands, and the address in the retail segment is of prime importance for us. Professional, the third of our four business areas. The entities in Professional business area combined to deliver a strong start to the year. Each of the metrics is positively ahead. The 20% organic growth in order intake was strongest in the U.K. Likewise, strongest in the U.K. for the 34% growth in net sales.
Whitecroft Lighting experienced a good market response to their circular product platform, Vitality, as Bodil mentioned earlier on, where the portfolio now continues to grow. Late last year, there was the launch of the first Vitality Cradle to Cradle certified luminaire, and now there's two luminaires in that portfolio and working on a third. The response from the market has been very good. A good level of operating consistency is anticipated as Australia and the U.K. make good progress in dealing with the pandemic.
Business area Infrastructure. In Infrastructure, the numbers for the first quarter do not look so good. I'll explain a little bit as to why. First of all, the first quarter of last year was very active. A very high level of activity, particularly in our Dutch-based business, where they were embraced in several large projects in the e-commerce segment. I think we reported on that in our Q1 report last year. The e-commerce segment continues to grow, one now where we see increased level of competition due to its attractiveness.
In the business area, we see the U.K. entity performing well, a factor that is consistent for the group's businesses in Britain, and a steady growth also coming through in our Finnish business even now. Coming back to cash flow. The group has got very strong cash generating capabilities and abilities. The decentralized model works well here, and here we see that for the last 11 quarters, we see a positive cash flow across each of those quarters.
The resulting rolling 12-month cash flow, which is the line that you see, has been now above SEK 1 billion for each of the last 18 months, so at a good level of cash generation. We continue our focus, of course, in this area, and it's a focus that is well managed. Net debt development. Again, a reminder that what you're looking at here is different than what we report in the report. First of all, it's a reminder that the net debt is stated here without the impact of IFRS 16, and the chart for net debt EBITDA ratio is also adjusted for IFRS 16 and acquisitions and disposals.
Again, the history on the chart was covered in some detail last time we met, so I'll report only on the closing quarter with a net debt EBITDA ratio of 2.37, which is the lowest ratio we've had since the end of 2018. Liquidity in the group is at a good level and continues to grow. My last slide. Another reminder, it seems as though I'm doing lots of reminding today, but it does need reminding when you look at the Q4 EPS number there, Q4 from last year. The Q4 EPS from last year benefited, if we recall, from the new Italian tax decree that the group took advantage of in Q4 last year.
I'll refer you to Q4 report for details of that, and also refer you to the Q4 report to recalculate that EPS measure based without the impact of the Italian tax decree. Turning to the current quarter one 2021, we report a steady SEK 0.53 per share. Not yet at the level of our ambitions, of course, but for the first quarter in 2021, we suggest it's a good step in the right direction and a step forward from where we were during 2020.
I'm going to close now with leaving you with an image of the Red Dot Design Award-winning new Superrail and Robin spotlight from iGuzzini, as I hand back to Bodil on for a few slides of recap and closing.
Great. Thank you, Michael. It's quite amazing what you can do with light. It's almost a piece of art. It's not so strange that we have a lot of passion for light within the group. Back to conclusions and recap. When we look into Q4 and what we said before is that we saw an organic sales growth in the quarter and an improved profit margin of 9.1%. This is a result of both good margin development and the strict cost control with all the measures we took last year. We are quite pleased to see these results.
In addition to that, we are continuing to work on a group strategic initiative, including strengthening our outdoor connectivity solutions with the acquisition of Seneco. We also see, as Michael said, increased collaboration activity within the different business areas where activity level is high. I think that's a positive effect of the new structure that we launched last year, and also quite promising for the future. As presented last time, we have four key focus areas on a group level that we will continue to work with, and we will take steps forward in all of these areas, and I will continue to report on them.
On our core values, we have asked all our employees about feedback on the proposed direction, and with their feedback, we will now finalize that work and start the implementation. Very high on the feedback list is what I said before, is passion for light, which might not be a surprise, taking into consideration where we come from and our big knowledge in the lighting solutions.
Within sustainability, the focus from the group's perspective is on the materiality analysis with stakeholder interviews, and this will be an important background material for the sustainability strategy and target setting that we continue to work on. On the connectivity side, I've already told you about the Seneco acquisition. I will end this presentation by giving you an example of cooperation within the connectivity field to show you what we can do even beyond lighting. Our collaboration with Securitas is an example of the extended ecosystem.
We have been working together with Securitas for a few years, and in April we launched an extended partnership where we use our Organic Response sensors that are integrated in our lighting solutions, and then they communicate with the Securitas alarm system. The systems can support the alarm equipment to localize, for example, if you have a building that you need in a critical situation and you need to detect people that are not supposed to be there, as a part of a burglar alarm.
In this way, we bring added value for the customers with a better overview for the property owners of their buildings in a very efficient way, as we use the wide capillarity of lighting. I think it's a solution which is beneficial for both the customers of Securitas and the customers of Fagerhult. This is also a very good example why it's so important to work with open systems that are easy to integrate with. We are looking forward for more partnerships to come in these kind of areas. With that, I will end the presentation and I will hand over to Michael and see if we can open up for questions.
Ladies and gentlemen, if you're on the audio line and you'd like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. And when preparing to ask your question, please ensure your phone is unmuted locally. Alternatively, for those asking on the webcast, you can do so by clicking the questions tab on the top of your webcast page. We have a question from Mats Liss of Kepler Cheuvreux. Mats, the line is yours.
Yeah. Hi, thank you, and congrats on a good quarter. I had a couple of questions. First. Can you hear me? Sorry.
Yes, we can.
Yeah, great. First, I guess the order intake improved here sequentially quite a lot, and I was just wondering how business activity have been during the quarter? The fourth quarter last year, you had a considerably lower order intake. Still, sales is sort of picking up here in the first quarter. Have you seen a pretty good activity in sort of in-for-out orders during the quarter, or could you say something about that?
Thank you, Mats. I will direct this question to Bodil.
Thank you, Michael. Yes, I think if you see in general, I think what we said is that we're getting more and more used to work in the current situation. I would say yes, we've had an increased activity level in the first quarter. That's what you can see, that's reflected in the results. The very simple answer to that is yes.
Yeah.
I think we've also seen when you look upon it's a trend that we saw all the way through last year, but I would say it has been taking one step up in the first quarter.
Yeah. Just to get a feel also, raw materials and components seem to have risen in price in other business areas. Have you experienced the same thing? Just to get a feel for how much is price and what is volume in this sequential improvement. Michael, maybe you can give a perspective on the price levels and the components shortage there.
Sure. We touched a little bit on this last time, Mats, so you're right to follow the question up with a second question this quarter around. As Bodil mentioned in her opening slide, I think everybody is aware of disruption in the supply chain. We see that disruption manifest itself in lead times that you can, and we are protecting against, with increased inventories. One of the reasons for the less than last year cashflow in that first quarter. The other disruption effects and impact that we see is costs and cost pressures coming through. We see this on a few different items.
Some of them can be a significant percentage, but on a low percentage share of the mix of luminaires. At the moment, it's not troubling us too much. We do want to ensure consistency of delivery, so we are taking measures to, one, we're working well with our supply chain. Two, we're providing long-term forecasts of demand levels to our supply chain. Three, we are providing call off orders, not just now for May and June, but for also now for July and August into September, because that helps on the lead time protection and service to our customers level.
Four, we are having some price discussions with our supply chain, but also as it is a global situation, it's not one of our own making, we do seek and we are currently turning to our customer base, and there will be some selected areas for recovery of those pricing in the marketplace. It's a situation, as I say, that's manifested itself outside of our control, and it's a situation that's facing not only lighting, not only construction, but many different industries across the globe.
I think, Mats, we're resorting it well. I think we're doing everything that we need to do. How long will this last for? Well, some people put Q3 on it, some people put Q4 on it. Some of the more pessimistic people put Q1 on it. Your guess is probably as good as mine when it comes to how long that will last.
Yeah. It seems you're managing your own right. I just wonder about semiconductors. Is that an issue in this industry as well for you?
The demand of semiconductors from automotive has an impact on the fab plants, so where the semiconductors are produced. Those producers from the fab plants, they also have customers within the lighting industry that make the LED electronics. We have good relationships with our larger suppliers of LED electronics. We have good inventories. For our two largest suppliers, we are category AAA customer to them.
Whilst at the moment we are taking measures to increase our inventories and work closer together, I would say in the odd, one or two across all of our 17 factories, the odd one or two instances so far of outages, it's largely been covered with the relationships that we have, the inventories that we hold and the high categorization of the Fagerhult Group accounts from those two large supply chains.
Okay, great. I was just wondering about sales in the first quarter. I guess looking back, the first quarter had been sort of the seasonally slow part of the year. Should we see it that way now also, or have the structure changed through the acquisition of iGuzzini so it is more of leveled out throughout the year? It is similar. Could you say something there? Maybe Bodil continue on your first answer there.
I can start. I think what we've said in the past, when you look upon it, where there is a seasonality effect is on the outdoor and indoor side of things. Indoor is all year round, outdoor is more in the summer season. When you look into iGuzzini, they have both. They both have outdoor products and indoor.
I would say there are no big changes compared to how it's been before on the seasonality side. It's been more when you look into the past year, it's been more the COVID-19 that has been affecting that side of it. I will assume we will see the same patterns. No major changes, I would say. I don't know if you've anything to add, Michael, from your side?
I just think a little bit of clarity for Mats on the iGuzzini comment there. Bodil's talked earlier on about organic like for like order intake in Q1 of -7.4% comparing to 2020. We have to remember that 2020 was quite a strong 7.1% organic growth on order intake. If you skip over 2020, the order intake at the organic level in 2021 was at the same level as it was in 2019, bar 0.3 percentage points. We see that continued trend recovering quite well. It moved through the quarter.
The exposure that we have, the traditional exposure that we had to our seasonality is less because of the geographical spread that we now have, and also the product spread that we now have: indoor, outdoor, northern and southern hemisphere. I think that works quite well for us, and we look forward to moving forward through the rest of the year.
Hopefully these trends continue. We don't see the new waves of the pandemic, as Bodil was mentioned, we don't see those as significantly damaging our performance, because people are learning how to cope and learning how to deal with the new ways of working. That's been part of the secret to our success in this first quarter, learning from the challenges last year into new ways and delivering the 6.6% growth organic net sales.
Then also in addition to that, I think you can always make a difference yourself. There is, from that side also, very high activity level within the different entities in what they're doing now, that we maybe weren't able to do a year ago. There are a lot of digital I think we mentioned it in report, there is a lot of digital product demonstrations going on, for example, that we weren't able to do just a year ago. That makes a difference, a new way of working together with our partners.
Yeah. Also, Bodil, we are working and delivering upon many different things within the business.
Yeah
....on today's quarterly results, which of course is important.
No
To get right. We have a long list of activities that we are going through and ticking off that will do us good for next quarter, the quarter after, the one after that, and also for the future. We are busy at the moment delivering on many different fronts.
Great.
Yes, that's true.
Okay. Thank you. I step back in line.
Thank you, Mats.
Thanks, Mats, for your kind words when you opened your question.
We have no further questions via the phone lines.
Thank you, Mario. We will continue with questions from the web audience, we have a question regarding our margin outlook. I will direct this one to you, Bodil. Are you happy with your margins, or where are we going in terms of profitability if the growth continues?
I think you're never happy with your margins, are you? You always want more. I think what we said before when opening, I think that the 9.1% is a good operating margin where we are today. We also know that we have had higher levels in the past. Of course we would like to get back to those levels that we have seen. I think for our part, it is very much connected to the sales volume because we are good on the GP margin side.
We have been working very actively on the cost side. The whole part is to make sure we continue the order intake and the growth on the organic side, which is important to us. I don't know if you want to add anything to that, Michael?
Yes. We are happy with the 9.1%. It's a historical backwards-looking margin. To have recovered from where we were a year ago, and also I reported at the last webcast an average of just over 8% for Q2, Q3, and Q4 last year on the adjusted basis, to come to Q1 2021 with a 9.1% clean unadjusted margin. Yeah, I think we are quite happy with that.
Does it mean that we'll be happy with that going forward, like my earnings per share comment? No. We have ambitions for higher. We do want to return to where we were, a strongly double-digit margin. We've made a good start to the year, and we continue to work hard in all of those areas. Bodil's right, the volume going through our factories is a key indicator of margin delivery. As the volumes return, that should benefit the future levels.
Good. Thank you, Michael. I think we have covered the other questions that came in from the web audience in the earlier discussions and response to Mats' questions there. I think we should consider ourselves to be done with the questions here, and maybe just before we end, if you, Bodil, want to add some last reflections from your side?
We have received a follow-up question from Mats of Kepler Cheuvreux.
Yeah.
Please
Mats, the line is yours.
Thank you, Mario . I will now let go. I just wonder about the cost have been on hold during last year in traveling and marketing and so on. Do you expect them to reappear gradually now, or have you implemented cost savings that you don't need to see that? Could you say something about that?
Maybe Michael, if you take that one?
Sure. Absolutely. It'd be good to end on not a cost question, Michael, but I'll gladly take the question. What we did last year, Mats, we worked hard at our cost base. Obviously, there were some natural cost reductions through COVID and traveling, and then we worked hard in many other areas. What we have successfully done is that we focused our cost areas on the strategic forward-looking areas, and that's been important for us to do. We haven't taken the same approach with each type of cost spend. That's been a key tone to our discussions.
We've prioritized current and future activities, of course we have. When you then talk about some of the traveling returning, yeah, people are going to get back to traveling at some point. Some of that will come back to the organization. A reminder that for the first quarter, SEK 107 million reduction in selling and administration costs compared to Q1 last year.
A similar number in Q4 last year. Lesser numbers in Q2 and Q3 last year. All in all, close to SEK 450 million of cost reduction. In fairness and being honest, to generate the future, we can afford to do a little bit more traveling going forward. Although given the digital media, it probably won't be anywhere like at the level that it used to be in the past.
Great. I just was a bit curious about the competition in the sort of, while you have this targeted or the cooperation with Securitas. What is your competitive position there? Are you ahead of competitors or do you meet the similar ones, Signify and so on out there?
Bodil, can you please go ahead there?
Yes, I'm not 100% sure I understood your question. You meant more on the connected side, if we see similar types of competitors as we do on the lighting side?
Yeah, I think it was-
Yep.
More targeted, I think from Mats, with regard to the Securitas relationship and agreement that we have.
Yeah, I answered your question as more general, though, than related to the Securitas relationship. Yeah.
Yeah, probably. You're right there. Yeah.
I think that what I said before, I would say it's still very early days. As I said, it's 10% of the projects today might be connected. I think it will be quite a lot of a changing landscape. When you look into it, where I think it's interesting for us, I would say that it's competition, I would rather say that probably the biggest competition is the ignorance. Meaning, still lack of knowledge in the market about how do you do this, than it's really competition, which is the big question. Maybe if you ask me that question in a few years, I will have a different word on it.
What we're doing is that we are taking very much steps in a direction, and I think one of the very strong elements of our side is that we're going for open systems. I think that's a choice to do that, because that makes it that you can work more with ecosystems. I don't see everybody taking that same approach. I see some people working more in closed environments. I think we're making some early choices that will benefit us going along, but we are still in very early days.
Also, if you look upon it, I think questions we need to ask ourselves is, we look into cities, how many cities do we think will be smart in 10 years? Also when you look the same, you can ask yourself the same question about buildings. How many smart buildings we'll have in 10 years? There, I think there's been a lot of things happening the last year, because we look upon the office, we look upon the building in a completely different way now than we did a year ago. I think that is more to me, it's more important that side of it than the competitive side of it, actually.
Yeah. What about the revenue split between you and Securitas? It is sort of, while you install their equipment and they have some sort of service fee as they usually have, or how do you?
Yes. As I mean, we have our own go-to-market part because we install our sensors that then can integrate into the system thanks to our Organic Response. Then Securitas will work with their normal way of working from a service perspective, yes.
Yeah, okay.
We use our normal go-to-market routes.
Great. Just finally about the financial, I mean, as you said, you haven't been this low on net debt since the fourth quarter, but before the iGuzzini acquisition. I guess it seems that you are prepared to make a move. I guess you've made an acquisition here of Seneco, but it seems you are in good position to make further moves as well. Do you have any list there of further acquisitions, or should we see iGuzzini as, well, it was a step change and you don't need to make more. We always have a list.
I think what you need to see there as well is that there is a little bit of With the new four business areas, I think we're looking more targeted from the needs of the different business areas. There you might see a difference in the future. We always have our eyes open, but it also needs to be interesting enough.
Yeah. Thank you. Okay, thanks a lot.
Thank you, Mats.
We have no further questions on the phone lines, so I'll hand back.
Yeah, no further questions from the webcast that we have not covered. Again, Bodil, any last reflections from your side, or should we go to closing?
No, two words maybe. I think summarizing what we've said and also summarizing your questions in that sense, I think we look upon the future, we're cautiously optimistic. I think there's been a lot of movement in the last quarter, which is all positive. One of the things we highlighted last time was that we were very happy that when we saw COVID-19 happening last year, we'd just introduced a new strategy. One of the decisions that we took, which Michael highlighted before, we were saying we're not going to stop these initiatives, we're going to move forward.
We have done that all last year, and also we are continuing, and I think we're starting to see the results of that in small steps, and they will continue to be small steps moving in the right direction. I think I'm happy with that. I'm cautiously happy with the results, and I'm also happy with all the steps we're taking in the right direction. That might be an ending comment.
Yeah. Thank you everyone for joining today's conference call and presentation. Of course, we hope to see you again at our Q2 presentation, which will be after summer on August 23rd. Again, thank you for listening today.
Thank you from Michael as well.