Earnings Call: Q3 2020

Nov 12, 2020

Please begin. All right. Hello. This is Lars Korneliussen here and welcome to this presentation of our Q3 results. And as you can see on Slide 2, we had a record result and strong cash flow. In Russia and CIS, we saw strong unit sales growth despite the lower markets. And overall, we had an organic sales growth that was partly hidden by a weaker ruble. Solid operating profit due to revenue mix and cost control, continued cost control. In Germany, unit sales was flat compared to Q2 as the market remained weak. As we had strong cash flow of SEK 100,000,000 and lower net debt. And AGM approved a dividend payout of SEK 4.25 per share. Turning numbers, it's a 17% revenue increase, 1% operating profit decline, 9.5% operating margin, but a 9% increase in EPS and our highest net profit ever in our 10 years history. So if we move to Slide 3, some highlights for the group, where revenue then was up 17% to SEK 1,129,000,000 Due to headwind on the ruble, Russia decreased 7%, but then adding consolidating German operations added 24%. As you can see, again, Russia total revenue Russia CIS, which is our total revenue, minus 7% in Swedish kroner, but 15% in ruble equipment. And after equipment down 7%, but plus 15% and aftermarket minus 8% in sectors, 14% of rubles. Contracts and services revenue were largely flat in kroner, but more than 20% growth in rubles. German revenue, minus 6% quarter on quarter to NOK 229,000,000 and the mix is that 59% was from truck sales, 31% aftermarket and 10% other. Operating profit was on par more or less with last year at NOK 107,000,000. In Russian CIS, we had a record high operating profit, which grew 14% year on year. Again, this is revenue mix and good cost control. Obviously, the group operating profit decreased due to a negative contribution from Germany. And we had an operating margin of 9.5%, which is above financial targets. Our net profit was NOK 81,000,000, which is a 9% increase. And we have lower working capital and net debt. We turn to Slide 2, Slide 4, some operational highlights from Russia and CIS. The market for our main product groups declined 12% year on year. This is a decline, but it's a much smaller decline than it was in quarter 2. We saw some market recovery Q on Q as operational restriction eased, uncertainty decreased and due to pent up demand. At the same time, our new construction equipment unit sales grew 21% to 92 machines year on year. And we saw again that our customer base continued to demonstrate resilience in their operations and maintaining their investment programs. As we increase the share of sales of excavators and backhaul orders and decreased the share of articulated haulers in our portfolio. That resulted in a 27%, 10% in ruble year on year lower average sale price. Aftermarket revenue share at 24%, which was more or less unchanged, while Contracting Services increased the share in our sales to 13%. We go to Slide 5, Germany. Operational highlights. In Q3, German market for heavy trucks declined by 15% year on year. This decline is also much less than it was in Q2. We should, however, remember that last year, there was a pre buy effect in Q2 and the market dropped in the second half of the year. And therefore, the number is more or less flat compared to Q2. We saw, however, a late quarter recovery quarter on quarter, which was driven mainly by the Tractor segment. Our sales area is approximately 20% of Germany and moved in line with the total market. So we sold roughly the same amount in Q3 as we did in Q2, 151 units. Aftermarket sales more stable and grew 4% as truck utilization showed signs of recovery and started to come in a bit more often in our workshops. We saw better gross margin, but lower operating results, partly then due to restructuring costs. We are restructuring. We are building up our organization and business in Germany as we have planned. Obviously, overall, we keep focused on customer and employee health and safety, while continuing to deliver great customer service. Moving to Slide 6, a bit more on business development in Germany. We are, as I said, we are restructuring the sales organization, the processes, the systems, work review underway. We are intending to increase our share of the aftermarket business in our region. And I think we are on a good track to do the restructuring in Germany. For Russia CIS, we had we're talking about contracting services. We performed well in very challenging conditions, continuous lockdowns on sites and problems obviously with COVID. We then announced that we are going in as general contractor for a palladium future mine site in Norilsk in northern parts of Russia, where we then are now a general contractor. That includes flow construction, drilling and blasting, over burn removal and site preparation. For a future palladium mine site, where we are preparing the site and we're preparing for the building of a processing plant on the sites. And this is also interesting because we are subcontracting a a number of players to perform these services. One also exciting news is that we are actually expanding our machine and component rebuild center in Ekaterinburg. You might remember that we opened it late last year, early this year, and we see good demand. And therefore, we are expanding our capacity in the center, where we are rebuilding basically recycling machines and components, gearboxes, engines for reuse and back into the market again. Another thing that we saw during the quarter was that there was increased activities and tendering for the national projects. The much talked about national projects in Marchand, we now see activities actually going on and tenders being awarded to contractors that would logically give effect going forward in next year on machine sales as well. So that's by that, I hand over to Erik for economic developments. Thank you very much, Lars. Yes, moving then to Slide 7 to get an overview of what the macroeconomic conditions and situation look like. It should come as no surprise that the economies where we are operating our markets have been affected significantly by the COVID crisis. And in terms of Russia CIF, also by the reaction to that in terms of the oil price, given still a meaningful part of these economies depending on oil price. If we look 9 months of 2020 at Russia, we can see that we're down 3.5%. Looking at the full year, IMF believes that we'll see a decline of 4.1%. Russian Ministry of Economics, slightly more positive, minus 3.9%. Looking at next year, however, there is a consensus that we will see a recovery. So IMF there at 2.8, the Russian Ministry of Economy at 3.3. Percent. If we look at monetary conditions, we have seen inflation easing. We were at 3.7% in September and are looking for a full year somewhere in the range, 3.7 percent to 4.2 percent versus a slightly higher level in 2019. So a slight decline in inflation is expected and that partly is reflected in the interest rate environment, but more so, of course, the lowering of interest rates, a measure in Raja as in other markets to ease monetary conditions for companies in the light of the strains that comes with the COVID crisis or COVID situation. Russian Central Bank has lowered key rates by 300 basis points year on year to 4.25. In this quarter, however, there was one move in the beginning of the quarter, down 25 basis points. The ruble has moved significantly, and that is partly reflected in our results, which I will get to shortly. Year to date, we see a 32% decline if we look at 31 December to 30 September, so 9 months. And that is driven by this economic uncertainty. There is a risk off. And then again, the oil price reacting to the macroeconomic situation and the uncertainties surrounding the macroeconomic outlook. Kazakhstan, a similar situation, down to 0.8% in 9 months, 2.7% expected decline for the full year and then a recovery next year. And Germany in 3Q, lower than was expected, that's a preliminary estimate, but a decline of 3.1%. Still, IMF is looking for minus 6% in full year 2020 and then a bigger recovery in next year as we hopefully emerge from the pandemic situation. If we turn to Slide 8 to look at the longer term market situation and how we have performed in it, You will see, for those who follow our company, a familiar slide there with 3 lines, the lower black line being the market, the black line at the bottom. And what we can see is still a market that, in our view, has a lot of potential. We are still around half of where we were 2011, 'twelve. So we believe that there is not only a higher normal market in Russia, CIS, but also a series of years where there has been underinvestment in the machine park and therefore a lingering pent up demand. And as Lars mentioned, we have also seen an additional impetus from the national projects starting to be implemented more slowly than maybe was expected at first, but now we're seeing some actual tendering going on there. So we do believe that longer term, there is a lot of potential in this market. But even where we are now with the market that, again, around half the level of where we were in 2011, 'twelve, our revenue is around 50% higher, 51%. And our operating profit even more so 3x higher or 3 25% as we have really leveraged both our business and our position in this market that we still believe has a lot of room to grow. With that, I would turn into the financials to give you an overview of that. So I turn to next Slide 9. And I think it's important again here to put in context the movement in the currency. The average rate is used over 3Q to convert the income statements from the Russia and CIS, there is the Kazakh Tengi, but it moved in a similar way. And then we had a 23 percent depreciation on the average rate year on year. When we turn to the balance sheet even more so, there is a 33%, if you would look year on year. But there, we should also look quarter on quarter, which was 16% decline. Looking overview on the income statement, total revenue of a bit more than SEK 1 100,000,000. Kronas, that's again an increase of 17%. But then Russia showing a slight decline in Swedish krona, an increase in organic in rubles and with the addition of Germany. So 20% of the revenue made up of Germany in the Q3. Looking at the revenue mix, we had 62% of equipment and trucks. So that's new and used machines in Russia and Germany, Russia CIS and Germany, 26% coming from the aftermarket, that's higher by about 2 percentage points both in the Q2 and last year and then 11% coming from Contracting Services. That's on a group level in the Russia mix. Contracting Services was up at 13%, 1%, 3%. We saw a slight decline in gross margin, mainly based on the consolidation of Germany, as you can see to your left, meaningfully lower gross profit there, about half of what we have in Russia. So that obviously fits into a lower consolidated gross margin. SG and A in Russia declined meaningfully year on year, almost 20% at 19% and slightly quarter on quarter. Of course, the ruble is an important factor there. But I remind you here also that the revenue in ruble terms were up 15%, and you would expect some of that G and A to follow that up. So it's still good cost control as we see it as we hold on to some of the cost savings we implemented in the second quarter. On a group level, we are slightly higher, and that's again as a result of consolidating Germany Operating margin at 9.5%, that's above our financial objectives. And that despite the negative contribution from Germany of minus 7.3% in the 3rd quarter. Operating profit, more or less flat year on year. And that's again the balance of a record result of SEK 124 €1,000,000 in Russia and a minus €17,000,000 in Germany. We did pay down loans. As you may recall, we did consciously build a liquidity buffer end of 1Q and through Q2, and we did reverse that. And that is partly reflected in lower interest costs. And that helped us from then being flat on an operating profit level to reach a record net income at SEK 81,000,000, which is up 9% versus last year. If we turn at and look at longer term trends on Slide 10, what we can see is starting looking at revenue is that we have a slight decline in Russia CIS when we look at last 12 months rolling And that is, of course, much driven by that 23% depreciation in this quarter average of the ruble. Otherwise, again, the ruble revenue was up 15% in the quarter. On the other hand then, we have the contribution of revenue from the German operations at €229,000,000 in the Q3 and about €750,000,000 in 9 months, which is, of course, still lower than expected due to the COVID situation that has impacted all our markets, but the German markets in some ways more than Russia and CIS. When it comes to margins, we can see that we're about back at our more historical levels. If we look at the graphs, you see to your right, the trend and that's then a combination of a higher margin in Russia CIS and then consolidating that lower margin from Germany. Similar when it comes to operating margin also at historical levels on a group basis, which is the combination of a strong operating margin in Russia of 13.8%, but offset by a negative margin from the German business at this point as we continue to implement new processes and organization in Germany. We did have a restructuring cost that impacted the margin in Germany in the 3rd quarter of SEK 4,700,000 as you'll see in the report. If we move to Slide 11, we have there the longer term cost trends and return on capital. Starting on the cost situation, slight increase again when we look on a group basis. That's why Russia and CIS has declined, but then seeing a higher contribution from Germany, 16,800,000 in the 3rd quarter, as mentioned, partly an effect of the restructuring. That is a natural effect of the changes that we are implementing to improve the networking organization in Germany. When we look at return on capital employed, also an improvement. And that's then a high profitability in Russia and CIS that is driving that when we compare year on year. Of course, the capital tied up and the negative operating profit that we see coming from Germany at this point, drags down the consolidated level somewhat. If we move on to Slide 12 and look at cash flows, then we can see a slight increase when we look year on year in cash growth from €95,000,000 to €100,000,000 That's a result of the operating profit growth that we saw in Russia. We also had lower interest and tax expenses. In Germany, we also had lower operating net operating capital, which contributed to the positive cash flows that we see. And across the group, again, lower interest, as I mentioned, financing costs and tax expenses. CapEx decreased year on year when we look at the CapEx line. I make a footnote there that we disclosed that partly this is an effect of machines that have been in inventory being transferred to the contracting services from inventory to PPE. And this is a non cash movement. So this is, you could argue, a cash flow that should be reflected in CapEx rather than in that then sit in as a decrease of inventory noncash. So that was SEK 20,000,000 in the Q3, as you will see in the report as well. In financing activities, you can see the effect of us paying down debt, as I mentioned. And then as Lars said, we have approved the dividend payment by the EGM, and that's something that will come through quite shortly. That's not a Q3 event, but will be paid out currently. As a matter of fact, today is the expected payment date on that dividend. Quickly on the balance sheet. Overview, next Slide 13, Bring your attention again to the fact of the Russian ruble year to date, a 32% decline quarter on quarter, 16%, which is also a significant movement. And that has had an effect clearly when we look at the property, plant and equipment. There is not only a depreciation effect that we have. A big part of the PPE is now machines in the park of contracting services, and those are being depreciated. But here, we also have a meaningful foreign exchange effect, whether you compare year on year, year to date or quarter on quarter. Similarly, when we look at working capital, there is a big decline in Russia. That is partly a decrease in inventory that we're seeing, but there is also there a foreign exchange effect. And we did see positive cash flow in Russia, and that's reflected also in the net debt that we attribute to Russia CIS. As you see, we have a net cash position that has gone from €47,000,000 to €205,000,000 at the end of the Q3. Germany, also some decline there in working capital, a slight increase in net debt as we had a negative operating result. We did carry interest costs And there was actually quarter on quarter a slight strengthening of the euro when you look at the end of period rates. Working capital now for the group standing at 8% of last 12 month revenue, and that's annualized then for Germany. And that has released of course cash for us in the 9 months of this year. Last year, same period, we were at 18% and we were as high as 20% net working capital to revenue at the end of last year on 31 December. The increase in working capital was driven partly by us taking over importation from Volvo. So rather than buying equipment and parts in Russia, We started last year buying them from the sites of production. And that was part of the reason why working capital grew and that situation has now normalized. As a result, partly of that working capital release and the strong cash flows that we've seen, net debt has declined further to SEK 83,000,000 and net EBITDA at 0.2x, which is well within our financial targets. If we turn then on that note to the financial targets, On Slide 14, then we currently when it comes to our revenue target over tripling our Russian CIS revenue from 2016. By 2021, we're at 2 point 2 times. So somewhere still to go as we enter next year. When it comes to operating margin, we have an objective of 6% to 8%, where last 12 months at 8.1%. But I reminded them that that's 1 quarter the Q4 of last year that is excluding Germany. If we look at 9 months of this year, as maybe more indicative, we're at 7.6%, so in that range. And then again, netted to EBITDA at the moment at 0.2%, which is well, of course, at the lower end of the objectives that we set ourselves. And with that, I hand back to you, Lars, to say something about the outlook and before we open up for questions. Yes. Thank you. Well, obviously, the COVID situation and the measures to contain the spread of it has caused, as we all know, many uncertainties across our markets. And we might face for the rest of 2020 2021 again, various degrees of disruption in supply demand and customer interfacing. What we've seen in October is that the business trends from Q3 have continued. I think our business have adapted very well to the challenges related to COVID-nineteen. But as cases are again picking up, restrictions are reintroduced, we fully recognize that the future is uncertain and visibility is low. However, currently, we expect the markets in Russia, CIS and Germany to start to recover next year. And obviously, in a longer perspective, we are positive as we believe the underlying fundamentals, business opportunities in our markets are strong. We're building on a great team. We have strong brands. And we see long term very strong and good opportunities for market growth in our markets. So that's about the outlook. And then maybe we should summarize just again. It was a record net result and strong cash flow. Strong unit sales growth despite the lower markets in Russia and CIS, organic sales growth partly hidden by weaker ruble, Solid operating profit, our highest operating profit ever in Russia due to revenue mix and cost control. Unit sales in Germany, flat quarter on quarter, market remained weak. Strong cash flow and loan net debt and approval of a SEK 4.25 dividend, SEK 4 per share being paid today actually. So I suppose then we open up for question and answers. Thank you. Our first question is from Karl Bockstest of ABG. So three questions, I think, to begin with. The first of all is, from the Russian government when it comes to these larger infrastructure programs or spending that things are moving? Yes, we have. And in Q3, we actually saw contracts being awarded for road construction. And it is starting. It is not in the magnitude that was initially planned, but we do see contracts being awarded for the national projects, which is a positive sign obviously and which should then result in equipment sales in next year. And just a follow-up on that. When you mentioned not in the same magnitude, is there particular area of the bigger program where you see a less spending than initially expected, perhaps if we look at affordable housing or infrastructure or those kinds of areas? I think it's the national project in general are being implemented slower than was anticipated schedule has been prolonged, which I think is a reasonable and realistic time schedule rather than having them all finished by 2024. It has now moved up to 2028. And for instance, one of the roads now that have been tendered is the new highway between Moscow and Kazan, which is 700 kilometers. And it's not realistic to build such a road in 3 years. So we but in general, there is no brake being put on it more than speed, if I put it that way. So this is positive. And we've been obviously waiting for a more broader scale implementation, which we see happening now actually. And my second question has to do with working capital. This has been a topic over the past quarters. And you're making very, very steady progress, and you're now down at the kind of high single digit percentage in relation to sales numbers that you guided for might be a realistic long term level. So do you think that, let's say, that markets start to recover from next year onwards, could we see a bit of perhaps a short term inventory buildup again? But overall, you're confident that you can now maintain this level and keep it in line with your long term ambitions? You want to take that, Erik? Sure. I can take it. I think, I mean, we're now back at the situation that we would qualify as more normal. I think if we see a pickup in markets, a recovery following this crisis, then we would need to build up inventory and take on more. But that said, Karl, I mean, we would expect that to be accompanied by increased sales. So I wouldn't expect that per se to lead to a higher as a percentage of sales working capital. It's a lot about how quickly we can turn the inventory we carry. And I remind you of sort of the different dynamics there with Germany to a greater extent being customer driven, but therefore partly therefore also us having shorter payment terms there. Whereas in Russia, we need to carry bigger inventory to meet customer needs. And then it's a bit more looking forward and taking cautious steps to build inventory to capture the market as we see it developing. And then it depends again on how that market paints out. So I think it is a natural part of our business that we will have some variability in the total working capital. But again, the kind of swings that we had before that would at least partly related to this structural change in us taking over importation. So in a business as usual and growth situation, I would not expect that to reoccur. Understood. And third question is more of a long term one. And I think maybe you it's up to you to say if it's more on the bookings up to the Board or up to management here. But I mean, you continue to have a very, very strong return on capital. And just it will be interesting to hear your thoughts over the coming 3 year to 5 year in terms of how you view your capital allocation strategy when it comes to continued growth expansion, dividends. So of course, you have a dividend target, but share buybacks and things like that, given that you well, just hearing your thoughts in terms of how you would like to allocate capital going forward, given that you have already undertaken quite a lot of expansion activities in the last year or so? Yes. Lars, you start right. Well, I mean, from a strategic point of view, we start with that. We have an intention to continue to grow and we want to grow in related areas of business in adding products to our portfolio. We want to continue to grow geographically, but these strategic objectives have not changed. Obviously, we have a lot of things to do still in Russia. We are investing more into contracting services. We're building up our rebuild center. We have Kazakhstan that is in the initial phase of its expansion. And obviously, we have a Germany, which is underinvested and needs improved network to be able to increase customer satisfaction and market share. So from a strategic point of view, that's what we're doing now. But clearly, we want to grow further. But I think for the time being, we need to deliver on the commitments and to our ourselves and to our shareholders and to Volvo what we are taking on and then take the next steps later on. So that's from a strategic point of view. From a capital allocation, I'll leave it I'll hand it over to you, Erik. Yes. So just maybe building on that because obviously, the capital allocation will follow the strategy of the business. I mean, we have growth ambitions in the markets where we're currently at. We're developing in Kazakhstan. Russia, as we've stated, I mean, we see much potential to grow further. And that's across our business areas. So there is potential there to invest more capital, the contracting services and the core business as well. There will be need for that. At the same time, we are in a situation where developing Germany. There is need to invest in the network there as we have communicated. So those are priorities to us, and we think they will deliver good returns to shareholders. And that's the current trajectory we're on. And then in addition to that, we are continuously looking for new markets, as you know, and potential new business areas as well that are related closely related to what we're currently doing. And that's maybe then not on the current trajectory, but something for the future. And besides that, Carl, I mean, the dividend policy is at least 25%. That's how we put it. To the extent we generate good cash flows and have a strong balance sheet and we don't see high return opportunities that we believe will deliver more value to investors, then there is room for making higher dividend payouts. But we put these guidance and we communicate our targets for the markets to know what we're aiming for basically. So yes, that's what I would say. I hope that answers your question to some extent. Yes, sure. I'm excited. Thank you. Our next question is from Kenneth Towe of Carnegie. Couple of questions. First, you grew the aftermarket sales by very high numbers. What's happened there? How did you manage to grow so much? And do you think those growth rates are sustainable? Well, I think if you look on our aftermarket sales for a number of years, it doesn't stick out particularly this quarter. We have good traction in the they purchase our services and parts in the market. And we believe that we can there is still room to grow the market share, as we call it, and penetration in our own fleet in the market. So that is in the core of our business that we're basing it on aftermarket. Of course, it gets more difficult for every year to grow your market share, but we still see opportunities to grow there, Kennen. Okay, great. And also Germany, you took some restructuring costs. So can you talk a bit on where you are in the German operations compared to where you wanted to be at this time initially? How much there is left to do? And yes, a bit around Germany, please, on the change process there? Yes. I mean, it is a big, big task. It is we're changing the organization. We're putting in new systems, new processes, maybe trying to put in a new way of thinking a little, putting customer in the center. The pandemic has, to a certain extent, made slowed it a bit compared to where we wanted to be at this stage. But we feel confident that we can catch up really. And our initial thoughts on where we should be in the end of next year haven't changed. So I think we feel that we're moving in the right direction and creating a great team and a great and also building out the network as we have planned, so that we should see contribution from Germany also on the bottom line towards end of next year. Okay, great. And then I'm wondering your EBIT margins are really strong in Russia now. You're growing profitable businesses significantly, which add to this. But is there also an effect of less traveling that brings down sales costs, for example, that could if things normalize after the coronavirus disappears, could those costs sort of jump up back again? Or yes, do you have some temporary effects affecting margins in Russia, please? Well, on the cost side, I think we've made a great job in taking down the cost. But for sure, some of them will come back once the situation normalized. And it we're talking mainly, as you say, traveling costs and also marketing costs that will come back, yes. Okay, Great. Good. And those national projects that are awarded now, When you see what companies that are awarded those contracts, or is it companies that It's a mix, but they're awarding mainly contracts to general contractors. So there will be our customers working in there. And there's quite a lot the projects are so big, so there are many, many companies that are being awarded this contract. So for sure, I mean, we are strong in road construction in Russia. We have a very strong market share there. So not usually, when somebody is awarded a contract, it's a high probability that it's already a customer Good. That's all for me. Thank you. Thank you. Our next question I'm wondering if you could provide some flavor on why gross margins bounced so significantly sequentially and why margins specifically increased on new trucks sales, as you mentioned in the report? Thank you. I can start, Lars, maybe. I mean, there is if you look at the Russia CIS part, there is always a product mix effect, Victor, that will be, I think, for the market relatively hard to anticipate that has an impact. Currency can also have an impact when it moves, given that our balance sheet in the functional currency in the Russian part of the business is in rubles. And we also have as an effect that some of our competitors price in hard currency, which can give more room to for us to also move our margins a bit. In Germany, similar thing. We had slightly higher sales. We had sales with slightly more value added on. So when you put on super structures on trucks and you do special, how do we say, preparations of the trucks before you sell them. So you in a way get aftermarket effect into the truck sales. And that also helped us to expand the aftermarket part, which the previous question also alluded to, we had bigger aftermarket share and that also drives the gross margin. And then lastly, I would mention Victor also, if you look sequentially even, you will see that Contracting Services is up quarter on quarter, not only year on year, but quarter on quarter also. And there, the margins are also different than from the wider core business. So when you see that movement, it will also tend to have a positive effect on the overall gross margins. Okay. And restructuring costs in Germany that you touched upon already, is this related to layoffs or something else? And should we expect more to come? These specific costs that we disclosed now are predominantly layoffs, so restructurings and changes in the organization. There are some other costs there as well, but really the major part of that is. There may be some further restructuring costs coming, but not something that we give guidance on. But I think we've done a lot of work in terms of changing the organization. And we will continue to optimize it. But we're obviously trying to move as quickly as we can in these conditions. Okay. And the final question, a housekeeping one. So the lower tax rate of 17%, is this due to losses in Germany? Or how should we think about that? Let me take that one, too. Yes, I think you will see differences always, Victor, when you look at the group consolidated IFRS tax versus what we pay in the local markets, given the differences in the tax accounting that we do, Russian standards, German standards. So that's one factor. You will have these differences even without any consolidation of Germany, you would have that before. But you are correct that we actually have given that we're loss making in Germany at this point, we actually get tax credits for that. So we that lowers the overall tax rate, yes. Okay. Thank you very much. That's all for me. Our next question is from Karl Vokshest of ABG. Please go ahead. Yes. Good morning again. So just a final question here from my end. Volvo, during its Capital Markets Day, spent a lot of time talking about electrification and how they were about to roll out electric version so most of their trucks. I'm just interested in hearing your thoughts on electrification within the construction equipment market and what kind of feedback you expect to receive or have received from your customers also? Well, Volvo Construction Equipment has launched in compact electric machines. They will be start to be sold now in some markets in Europe. As a whole, I think this is very exciting. And certainly, some customers are already thinking about it. And I think this is a very, very positive and exciting and potentially very prosperous business for us. It will probably come a bit slower on the new heavy machines. But as you saw, there is a rollout plan for also for construction equipment when it comes to electrification. Understood. That's all for me. Thanks. Thank you. There are no further questions at this time. Please go ahead, speakers. All right. So thank you very much for listening in and for your questions. And wish you a very good day and speak to you during the next quarterly report. Thank you. Thank you very much.