So ladies and gentlemen, a big thank you for joining us today. It's a moment that you waited for, maybe too long. It's also a moment that's, I would say very, very important and special for me. I hope you'll think it's a moment worth waiting for when we present a new direction for the Getinge Group. It's also a special place for me. I'm very customer-oriented, and it's a special place to be at the Karolinska, which is both in terms of research, a very important customer for us. Actually, we're a supplier, both in terms of service and equipment, to Karolinska Institute, which is here.
And even more so, the New Karolinska Hospital, which is around the corner, or across the street, where we're involved in more than 20 operating rooms. We have a new central sterilization unit we've installed. And the best thing I would say about that relationship is we're beginning to discuss innovation together, and it's my, I would say, real vision to do innovation in the future with a lot of customer input early in the process. So that's a bit more philosophical. So I would say the place is also, I'm very happy to be able to host it, and I'm very grateful also for Karolinska letting us be here today. So back to the capital market state.
I have a transformation to present, and I'll be talking a bit about a transformation of the group. It's not a from one day to the next exercise. It's a 3-4-year plan that we're presenting. In my five months, I would say, at the office, I haven't been able to solve all the world's problems or Getinge's problems, but I do have a clear vision and direction for the company that I'm hoping I can present today, and I hope we'll also be presenting a very clear plan on the first steps of this journey. I'm sure you'll have a lot of questions, and we're gonna have a Q&A session. Both Ulf and I will be very open and susceptible to any kind of questions you have.
I would prefer if you would save them to the last Q&A session so we can show you the totality, but if there are also burning issues, we're open to, let's say, interrupt and have a discussion around that. But the setup is we'll have ample time at the end for a good Q&A session together. So the transformation, if I would start to describe it in a more simple way, Getinge has had a fantastic legacy. It's been a growth company, a growth engine, and it's been a company that has grown substantially over time through acquisitions. And actually, we're in a phase now where the industry is also changing, where the industry has changed quite dramatically in the last few years.
It's my firm belief that Getinge also needs to change in order to reflect the change in the industry. That's what I'm proposing and working with today, including a new structure for the company. We've had a couple of years that have been challenging. We've been challenged on our margins, on our performance, and I do believe that we can get back on track, but in order to do that, we have to have a very clear plan and a very clear change agenda. That's the starting point.
It is a transformation, and one, Getinge is also one of the major messages here that we want to go from being a company, let's call it a disaggregated federation of companies, to really a one global company operating as one global company, and I'll take you also through that journey. So in my first five months, I've been quite busy. I would say I've been working on two things. One is listening a lot, and the other is analyzing a lot, and I've tried to do those two things in parallel. On the listening part, I've listened to more or less all management layers within Getinge. I've actually listened a lot on management layers, a couple layers below me, because that's often where both the truth is and where the solutions are in the company.
Through middle management, actually, we selected about 20 talented middle managers, and we asked them to interview their colleagues and interview also customers. So we have more than 170 interviews documented, both external and internal, telling us what the external world and also what the internal world believe Getinge is about, but also what challenges we're facing and what we should be doing about them. Then, I've done a lot of numbers crunching, also both internal and external. We've benchmarked against external companies. We've benchmarked also internally, and I'll tell you the story of the three companies that are operating, let's say, independently today. There's a lot of internal benchmarking we can do to find a better way of doing things also within ourselves.
I looked at the strategy and also the plans that were in place when I came, and a lot of them, I would say, are still in place in the new plan, but we have a new plan that also contains a lot of new elements in it and a lot of large new elements versus earlier. So I did quite a lot, I would say, to get a 360 view of the company. And I believe there is a direction, and again, it's a direction we can build on for the next few years that I'll be showing you. So I'll jump to my conclusions, and then I'll go back and explain what's behind them. One of my key conclusions was that I do believe that Getinge has a sound strategy.
We built the company on a sound strategy. I was also participating in the strategic development when I was here, I would say, last time, in 2012, 2013, in my previous role, when I was here during five years. And I do believe we have a sound strategy that addresses the future of the healthcare industry, but we haven't been able to execute on it, and I think this is very much about executing on a sound strategy. We have a lot of passionate people. I would say there are few companies that have so much passion on every level than Getinge, and I hope you also see that in me. That was one of my jerk reactions, let's say, when I got the offer to come back. I really wanted to come back to Getinge.
But we have an organization where these passionate people, I would say, cannot cascade directions, and especially when you're asking the organization to change. So I do believe we do have a complex organization. We have a margin challenge, there's no doubt about that, and I believe the key to, let's say, returning back on margins is to have a very, very specific and tangible action plan, and not a general action plan, but a very tangible action plan. And finally, I do believe there are opportunities and potential for the company, and I believe we can do a lot with what we have today, but I also believe we need acquisitions to, let's say, strengthen our size going forward.
What I'm going to be talking today about is much more what can we do with what we have, and I think it's a huge amount we can do. Then on top of that, we can discuss how we can grow further. I believe there's a step, a structural step change to be made, and maybe the biggest difference versus what I thought I would have, let's say, seen in Getinge and what I actually saw, was the need for change actually became much, much more evident for me in my five months with the company. It's not the potential, but it's the need to change and, and the need to get the company, let's say, on a turning point and, and a tipping point into another, into another direction.
So the highlights of today's presentation is, comes in three components. One component is very much focused on margin and profitability improvement, and we're presenting a plan which we believe has potential, and I believe has potential of delivering 2.5-3 billion SEK in a four-year period, so by 2019. I'll go into that plan more in detail, in the coming section. I do believe in a Getinge that offers the total portfolio to the customer in a much more customer-focused and more process-focused way. And I'll also show you that, how to align the organization in order to be more aligned with customer needs going forward.
And finally, I'll be announcing a new management team, a new global management team, which is a reflection of the two above points, and I'll get back to all these three. And I'm very convinced that, you know, when we're here in a few years' time, Getinge is a company that actually provides a lot more opportunities for its employees, it offers a lot of more opportunities for its customers, and, we're also a much healthier company, in terms of, profitability and also growth, potential, for us to be able to grow and to have also very satisfied shareholders. So that's what I'm hoping, I can show you in the next, half an hour or so. So I'll start with today and then move through, the storyline.
Getinge today, I'm very proud to have been part of the story, growth story of Getinge. Getinge has had a fantastic legacy of growth, very much focused on top-line growth, but also focused on acquisition growth. Over the 20-plus years that Getinge has operated, more than 70 acquisitions have been, let's say, carried through. These are some of the bigger ones, and the more transformative. They're much more volatile than they used to be. And then on the challenge side, we do have a customer base that is consolidating. Hospitals are buying each other and one another, especially in the U.S. We have a lot of budget pressure in Europe, and we do have a much, much higher competitive environment.
And I would say this is here to stay, and I think it's actually healthy for the business that we have that, but it reminds also of other businesses and other industries that have gone from, let's say, being a pure growth industry to being a bit more, let's say, challenged and pressured by price factors and also competition factors. And in a way, what I'm proposing now, and what I think is the right way for Getinge, is to translate that into what does that mean for us? Just quickly on the strategy, and I'll go much more into action a little bit later, but we have a strategy which is a six-point strategy. It's very well positioned to, let's say, guide us into the future.
Three of the cornerstones are based on organic growth, two are based on efficiency agenda, and the final one, the sixth one, is about acquisitions. As a base, we've gone through a lot of, I would say, internal focus on two e-elements. One is getting a common value base throughout the company globally, rolling out values and, and ethics, I would say policies and programs, and also getting quality on a group agenda, which I believe is extremely important for the company going forward. In a way, we've had to, somewhat pay the price in terms of the Consent Decree, in not having had a more holistic approach on, quality systems. The products have always been great and saved many lives, but the systems have, let's say, lagged behind in, in terms of, what we should have been doing.
So if I take you through a bit overall, the strategy, one is, focusing more on innovation, making sure that the innovation is customer driven through understanding the customer in a much better way, but also delivering on economic value. This is a point where today, I need to buy more time, I would say, to come back with what are we actually doing there, what can we do? But it is a big, I would say, focus area for me, also in the long-term perspective of the company. The second one is adapting a sales structure to the customer reality and the customer needs. I think you'll see some, beginnings of that in the organizational structure today. And the final one is the emerging market portfolio, where I believe we need to broaden our scope in emerging markets.
We have good positions, but there's much more we can do in terms of portfolio and what portfolio we offer to our customers in emerging markets. The second part is supply chain, where I see the strategy is clear. We want a supply chain that, I would say, creates a much more competitive Getinge. I don't think we have gotten that yet, and that's part of the plan going forward. I do think we have a future where quality comes first, but then we have to be much more efficient in how we deliver our portfolio. And finally, on the, let's call it the back end, the backbone of the business, I think we can do much more to leverage the company structure.
That's one of the points where I believe we have to change also the organizational structure in order to be able to deliver on this. The final point then is on acquisition, and there, what I would like to say is, acquisition is still a strong part of the strategy, but I don't want to create a strategy where we're only dependent on our acquisition skills. I believe there's much more we can do as one Getinge, leveraging what we have, and then on top of that, I'm fully behind a continued acquisition strategy. I believe Getinge needs to grow also through acquisitions.
And there we will continue, let's say, to have the same appetite as before with acquisitions, but making sure that we have, let's say, our home has to be healthy in order to add new parts to the company. I believe that's what we need to do in the short term, is to focus and get the base right. When I look at our performance, I can say our strategy is sound, but we just have not delivered on the performance part. We haven't grown as we should have been growing, I would say, not only from external expectations, but also internal expectations. I believe we should be growing lower single digit, which I'll come back to also later in the presentation.
Our biggest, let's say, sore point has been our margin dropping by 400 percentage points in four years, for many different reasons. But at the end of the day, we do have a, I would say, a negative performance there. And on top of that, we've had the regulatory and the FDA, let's say, pressures. So we've had a strategy, but we haven't delivered on it, and we haven't been performing up to par. And a lot of the plan is to return back to, let's say, the performance that we're used to delivering. One of my findings, again, I mentioned in the first five months, and you know, Alex, what did you find where that you hadn't really considered going forward?
I would say again, the need for change translated into an organizational structure that can deliver change. And here, so in self-reflection and a lot of the messages coming from within the company, were that we're not in a position today in order to execute on priorities that come, in a way, from the top, because we're so decentralized and disaggregated. And we're not structured today in a way where we can leverage the scale that we have. So we're still, in a way, operating, as I would say, a small fish in a big pond, and three individual fish, which are the three individual business areas. And again, I'll have some answers to that during the day. So now coming to the meat of the presentation, perhaps.
I'm presenting a three-point plan, and it's a plan that I would say is well-balanced on three very important components for the company. Number one, we've called the Big five, and it's purely focused on, let's say, profitability recovery, where we have five very specific projects that we're going to initiate. Customer centricity is really the center and the heart of our long-term success. And I'm presenting again, five themes, of which two we're delivering today, and three more are yet to come in, the customer centricity plan. And then I do believe once you know, the journey with the customer and the journey with, let's call it the, the improvement plan, you need a delivery model, which for me is the organization.
So the organizational change is just the result of what we believe we, we need to do in the next, in the next few years. It's not for the sake of changing and reorganizing. So I'll take you through each one of these. The Big five. One of them is actually bigger than the rest, and it is, something which we've called lean support and administration. And I'll talk a bit more in detail about that. The other two are, I, I would say more on how to organize around how we buy things on the procurement side, looking at both indirect spend and also direct spend, so it's very much a procurement. We have direct spend and also portfolio simplification, which are enablers for supply chain to begin to deliver.
And then we have a theme which is more customer, let's say, focused, but also efficiency on how can we prioritize and make sure we're giving the right value to the customers at the right pricing as well. So I'll take you through each one of the Big five and explain a bit behind it. So the first one is about a Getinge that has operated as three individual companies with full company structures in every single market. So we've had 40 markets globally, where we're actually operating three companies in 40 markets. This has created, I would say, in a way, a closeness to the customer, but it's very much legacy built. It's built on all the acquisitions we've done.
And, there's a lot, I would say, of complexity in that system because we're running actually three parallel companies under, in a way, a holding company. So, we're gonna initiate now something called One Getinge, which essentially means, we're going to migrate from three individual, fully-fledged companies to a one company structure. We're gonna look at the layers of the organization, I would say, on all layers. So this is not just about the top or the bottom layers, it's about looking through the whole organizational structure. We're going to consolidate the backbone, so all, let's say, functions that are support functions, will, let's say, be consolidated into one company structure. We're gonna look at processes and IT systems and migrate towards one common, I would say, platform.
And we're also, which we've communicated earlier, gonna look at shared services, on putting shared services on a more regional level, where we can, and move as much as we can to the shared services. So this is a big transformation. And I should also say that this transformation, in this transformation, we will not touch the field. So the field is untouched. They are our customer interface. This is all about Getinge becoming more efficient behind the field organization. And we'll start doing this country by country and in a very, I would say, structured way, because at the end of the day, I believe there are different starting points in different markets, but we have to move to a much more one company structure. And it will have consequences. I also want to be transparent.
We're in the beginning of the process. We don't know exactly where we'll end up, but it is a consequence of three companies, I would say, migrating to one structure. We believe we have to do this market by market. We believe there it could be about 1,000 positions and roles on a global basis that might be affected by this. But at the same time, it's early stages, and that's about 6% of the, I would say, the company. I mentioned the 16,000 employees, so about 6%. But it is something that I believe we're early in the process. I want to be transparent, and I want to be also very structured in the approach that we do.
And it is a market-by-market approach and not, let's say, a global, a global umbrella project. So this is a very Big one and a very fundamental one. It's not only an efficiency exercise, but it's actually the way Getinge works, so it's a cultural exercise as well. The next one is a bit more focused on indirect spend, where here, Getinge has been buying, I would say indirect, which is anything from cars, travel, external services. We've been doing that in a very disaggregated way, fragmented way. Here, the vision is to centralize, to bring people on board that can negotiate from a Getinge group perspective and also manage the demand behavior. So it's a pure, let's call it, centralization of buying power for the internal spend.
We want to do the same thing with direct spend, which is associated to supply chain. Again, this can be done if everything is under one hat, I should say, which is also part of the organizational structure. We believe there's potential in consolidating more, moving more of our buying power, and buying to low-cost country environments. Today, we have about 20% of our components, let's say, being sourced from low-cost countries. I believe that number should be double, so that should be a vision that we have. And again, we also need to reduce complexity in order to, let's say, leverage our size. So this is a third cornerstone. The fourth one is about the portfolio overview.
Looking at profitability of the different parts of the portfolio, maybe discontinuing parts where we don't feel we can add the value, the necessary value, and again, simplify the portfolio in order to, again, continue to provide value to customers, but maybe discontinue parts of the portfolio that, that isn't adding, especially, the value that, that we wish it to, to add. So again, a simplification process on the portfolio side. The final one is what we call commercial excellence. I would say this is partly a, let's say, an optimization of looking, segmenting our customers, and actually prioritizing within customer groups going forward, optimizing the service and the sales mix that we offer our customers.
I think that optimization can be done on a completely different level if we act as one company rather than three individual companies. We'll also look at discount structures and let's say take a more structured approach to pricing and to the way we offer our products to our customers. All those five together is, I would say there is a potential of SEK 2.5 billion-SEK 3 billion regarding the effect over a 4-year period. The actual, let's say, scope of the exercise is on a scope of about SEK 20 billion . What I've explained up until now, the spend on SG&A, the indirect spend, the direct spend is SEK 20 billion .
So let's say that's the scope, and we believe we can find SEK 2.5 billion-SEK 3 billion in the next four years. And again, it's not only an efficiency exercise, it's a company transformation exercise, which I believe will give also a lot of customer value. So that's what we call the Big five, and there is, let's say, a potential Big sixth that we've been discussing. But here I should say that transformation within supply chain, I believe, can be delivered, but the Big five we can deliver within, let's say, a three-to-four-year scope. The Big sixth will come and deliver within a three-to-five-year scope.
So I would say this is more, more to come and more opportunities, but we do need a much more structured way to come back to that. And now I have an organization, which I'll present later, that we can start looking at supply chain holistically. So the theme is supply chain and our global footprint with number of factories. We have 28 today, globally, and the three business areas have had three different, let's say, types of journeys here for different reasons as well. The extended care journey, I must say I was there during that journey, and I was leading extended care, was a journey where we felt it was, let's say, a sound long-term strategy to have fewer, bigger factories and also located in the right places.
We had a journey where we went from 15 factories to five factories over a five-year period. It was, I would say, relatively to the others, the products are more assembly-oriented, so it's not a journey that I'm just transferring now to the other business areas. But it was, let's say, a vision of saying, we want to have fewer but bigger entities, and the bigger ones we can, we can get critical mass and also develop our employees within. Infection Control, we have 10 factories today, and we do have a plan that has been communicated, I would say, from my predecessor. My job here has been to make sure we're starting to implement that plan, and we announced the closure of Rochester as one example of that.
We're investing more in Poznań, in Poland, so we're moving, I would say, the footprint more towards Poland. And there is a plan that we have that has been communicated earlier, and I'll make sure, let's say, it gets delivered. Medical systems, there, we have 13 factories, and I would say we currently do not have a plan, but I will. I have signaled to, let's say, the new supply chain head in the new organization that we have to start looking at that. We also are under a consent decree, which I think we have to respect, and we have to make sure quality is first, processes are second, and then we can look at the efficiency agenda also within supply chain.
So what I feel here, instead of putting that into a bucket in the Big five, this is something that we'll begin to look at. Extended Care, I would say, is there. Infection Control is moving along a plan, and Maquet Medical Systems, we're starting the process and really looking over the footprint. And I believe one of the key success points here is that the future organization will have a holistic approach to all 28 sites, rather than having a, let's say, a segmented approach, where each one has, let's say, fewer entities within. So I think that was a lot of offloading on what we call the Big five.
I do believe it's a very tangible plan, and it's necessary that we change also the structure in order to deliver that. But I'm very convinced that this is the right way for the company, not only from an efficiency standpoint, but also from a competitive long-term standpoint of being a global player. So with that, I think we'll give you a bit of a, let's say, a moving space, and I'll be back with the next section of my presentation. Thank you very much.
Thank you, Alex, for a good introduction and really interesting presentation of the Big five and the potential number six. So now it's time for a short break, five minutes to check email, stretch some legs and other things you find urgent. So see you back, seven, eight minutes past. Thank you very much.
We're ready? Yeah. Okay, great. All right, we can move over to the second component of the new direction, which is customer centricity, and how we can create more value for our customers. This will be as the Big five, let's say, get established, and there's a lot we need to do in the Big five. Of course, my focus will be more and more focused on the customer. And I have, let's say, joined Getinge at a point in time where we've been challenged on the margin side, and I do believe we need, I would say, to address that in a very quick and concise way.
I hope you feel the Big five reflects that sense of urgency, but also a need for change. Over time, I think the customer will be more and more important in my role. So the first 100 days, I would say, have been more about understanding the business stabilizing situation. Part of my 100 days have also been spent on two of these areas, which is trying to see how the customers, what the customers look like, how they are seeing their, let's say, their flows, their processes, and also bringing things under one Getinge hat again. So I'll focus a lot on the first two and tell you a bit about the thinking there.
The other three are by no means under represented or undervalued in the strategy. It's just that there, what I'm asking for is more time to look through, and I can give you my, my initial thoughts around those areas. But, there, my ambition is to be just as crisp and concise as the Big five in the future discussion about where is Getinge going to in terms of, the growth agenda and, and the product portfolio. So the first, has been we've had a lot of discussions, and here I must say I've included a lot of the talent in the company. We have a talent pool, that have gone through a, a talent, development process, and, and I really use them. They're very close to the customer, understand.
They're often, let's say, two, maybe three levels below me, but very much closer to the customer. And, we do have an opportunity as Getinge to when we put everything under one hat and, and be able to offer that to our customer, we can come actually very close to what the customer is trying to do, or a hospital. And at the end of the day, 80% of our business is in the hospital environment. So we have a portfolio, which I would say is unique, and, the combination of the portfolio makes Getinge actually a very unique company. Because we're involved, I would say, before, during, and after phase within, let's say, a hospital process. And, we're there in the very beginning, even before the patient is there.
We're there to enable surgeries to happen in an efficient way, a safe way, and we're there during the treatment with several of our products. We're saving lives, we're keeping, I would say, life support. We're keeping patients alive during, I would say, life-threatening situations, and we treat them. And we're also there on, let's call it, their way out in hopefully a healthy way, so we're there during recovery. And this combination is actually very unique to Getinge. And I would say if we can leverage that combination and leverage that flow towards our customers and offer it in a holistic way, I think we've come a long way. And today, our offering, I would say, is very much product-oriented.
We're meeting the customer, not from a process perspective, but we're meeting the customer from a product perspective, and very much because of legacy acquisitions. So the new, let's say, inspiration for the new structure has come very much directly from a more of a continuum of care type of approach, looking at what the customer does in terms of process. And that's where Getinge is, and I believe we can leverage that in a much better way. So, what we're going to be doing from the first of January 2016, is, I would say, reorganizing into three business category units.
Not full-fledged companies, but categories, looking at the categories, where we will look at enabling surgeries, looking at surgical workflows from a holistic way, and also looking at the end customer call point, as we call it. And organize ourselves to support the customer in these, let's say, three flows, and value chains, enabling, treating, and caring for recovery. This will mean a slight, let's say, reorganization on our side and parts of what products go where, but it's very much customer-centric, and at the end of the day, we want to be able to offer that as one company, not as three separate companies coming, let's say, with their separate parts of the portfolio. The first one will be surgical workflows, where we're actually combining actually four different business units.
Infection Control had its own IT solutions, let's call it company within the company. Maquet also had surgical workflows with also IT solutions. So what we're doing now is combining forces, looking at it as a common process, where we're here to enable efficiency within the surgical environment. These processes are often long-term. It's big projects, big tenders. It's a lot about infrastructure and equipment. So they're very, very common, I would say. There's a common thread, which is this is a kind of a big project and a big offering to prepare, let's say, for an efficient operation environment. This will be about 35% of group revenue, and we'll continue to work with our brands.
So what used to be Getinge Infection Control will continue to be Getinge, and what used to be Maquet products will continue to be Maquet. But what we're doing now is saying we're putting them into a customer perspective, where we have several brands that we're, let's say, developing and continuing to develop together with the customer. But we're seeing it from a holistic perspective. The second one is, let's say, during, this was before. During is much more about therapies. We are also have a, I would say, a unique portfolio of therapies that are very closely associated to cardiac, pulmonary, and vascular areas. Again, I would say in old terms, this would be a combination of the cardiovascular part of our business, but also critical care.
And this was very much focused to the operating room and ICU environments. So here, we'll also create, in a way, one common entity. And today, if we look at the way we're organized today, I would say this is probably represented by five different entities today. So when we look within Getinge, we're going from five to one as a holistic approach. But again, the products and the brands will be very, very similar. And here you see again, it's going to represent 40% of the group. And finally, probably the area where there's going to be least change in terms of portfolio, we've had a business area called Extended Care, and that will more or less stay the same.
But what we'd like to do is to have the continuum of care very clearly, I would say, offered to the customer. And there, we'll be focusing on, recovery, on, mobility, and on hygiene. And that goes both into the acute care, or let's say, post-acute situation within hospitals, but also post-acute in terms of elderly care, and we'll continue with that. And again, there, the brand will be ArjoHuntleigh. So the brands will continue, but the way we're organized, let's say, will be different and will reflect more the, the customer, pathways, customer value pathways. You'll see this more clearly also in, when I come to the organizational structure, you'll see this reflected in the organizational structure. Then what we want to do in the, in the markets, so I mentioned today we have 40 markets, about.
Each market, we have three sales companies approaching the customer in three different ways. What our ambition is to do is to go to one setup, under one regional setup, to mirror the, the value pathways in the three different, areas, but also to start a much more ambitious key account management structure. And of course, when we can put everything together, we can leverage, let's say, the, the totality of our portfolio, and we become a very important player, towards our customers. And actually, in some markets, we go from being, I would say, three minor players to being one of the big, let's say, suppliers to, to individual hospitals. So this will reflect, let's say, a national, organization, where today, again, we're approaching it as three small fish.
Now we'll come and we'll become, let's say, one supplier that can offer solutions throughout the continuum of care. Then on the three other areas, I'm a firm believer in innovation, and innovation being a driving force within the industry. I'm not over, let's say, reliant on innovation, because I also believe there's a core business that needs to be healthy. I do believe in our 4-5-year plan, and we actually do have, let's say, factored in an increase of innovation resources. I do believe there is a lot of expansion we can do as a company in the U.S. and in emerging markets. And I also have mentioned before, the continued aspiration to acquire.
So within these three areas, what I'd like to leave you with is, one, let's say, a promise that I will be looking, and I've already started, but evaluating what we have in the pipeline. All our companies have very, very strong innovation pipeline. But before I stand here and say, "This, this is the right innovation pipeline," I need time to evaluate it. We will continue with all the projects we have now. We have a lot of, I would say, quite ambitious launches coming up for the next year, but I would like to review and do a holistic review of our whole, let's say, way of innovating and, and how we do it. And I do believe the customer has a very important part within that, let's say, innovation.
And here I come from an industry, maybe you know, that my background is from the consumer industry, 22 years, and I can tell you the, the customer and customer insights were really a driving force in, in how, we innovated. And, and I believe, a lot of that, could be applied also, to a much more technologically advanced industry. But I think customer, no matter how advanced you are, understanding the customer is, is always, let's say, valid, no matter, what industry you're in. I believe Getinge, should invest more in, the U.S. and also in emerging markets. We've done a mapping, I would say, quantitatively, where we think the growth will come from in the next, 5-6-year period.
And it's clear that we see potential in the U.S., and also, even though it's been volatile in emerging markets, there is a continued growth potential in emerging markets. And we're well positioned, but I believe we, we might be looking at a situation where we want to put more resources out in the field, because I would say in relation to Europe, we're in a way, underrepresented in the resources we're putting into those, geographies. And the final one, again, I mentioned that, I'm not, I would say, departing on a new acquisition, strategy. I believe the strategy has been right. It has been an acquisition strategy also of margin improvement, moving into therapies, and moving more into, I would say, recurring revenues. I'm fully supportive in that .
But what I want to do, instead of having three business areas in a way, doing their own M&A strategies, I'd like to do it from a Getinge perspective. What's best for Getinge, and what do we prioritize? Up until now, the structure, also, I was in that structure myself, and I did some acquisitions myself. And maybe they weren't from the group perspective, I would say, the most optimal ones. I want to do it from a more holistic perspective, where we as a team get together and decide what the strategy is going to be. So that was the second and very important element. And the third one is the delivery model, and I really believe that organizations have to change in order to deliver what needs to be delivered in the coming period.
Organizations should not be there forever, because they're there to reflect what we would like to do. If you'd like to do something different, I believe, then the organization has to do something different. I think we're there at the moment. What we've been debating a lot, what got us here, won't get us there, has been kind of one of the internal slogans, which I believe is very true. It's in no way criticizing the past, because we've had a fantastic success story. But I do believe it's time to move into a new, a new direction regarding the organization.
So the concept I've been working with a lot, and here I must say, I've been talking to boards, I've been talking to Carl as the major shareholder. I've even been talking to Johan, my predecessor, for many, many years. So I would say this has been well debated and crunched and, and there's an alignment. And even hearing Johan Malmquist tell me, "Alex, this is the right, this is the right way to go." There you can get a sense of, I would say, a bit of an alignment of the legacy and the future on a new structure.
I believe this structure that we're coming from, which is, let's call it the holding company structure. I believe it works very well in good times when growth comes, I would say, relatively easy, maybe, or growth is never easy, but let's say in more growth times. But I believe it's a very difficult model to get change. When you want change, and a different direction, when you want to prioritize, when you want to align behind a strategy, I think it's a very, very difficult model to manage. I believe more that the model of, let's call it a more functional model and a more holistic model, is easier to manage and to get change, real change.
And it's also a model where you can create more of a team rather than, let's say, individuals, individual positions. So we're proposing from the 1st of January, and it's important for me, 2015, we'll continue exactly in the model we're in now. We'll continue all our meetings, all our processes, exactly like we're doing now, and we'll give ourselves time to organize ourselves for the 1st of January, so the new team is up and going by 1st of January. So this is something that's valid from the 1st of January 2016. It's about a supply chain with a holistic approach on the total supply chain. It's about an alignment of the business categories, as we call them, to a customer flow and value creation.
And the final one, it's about sales being able to offer the whole portfolio to the customer. And these are the three fundamental changes, I would say, from where we're coming from and where we're going towards. So with that, I have, let's say I'm presenting a supply chain, which will drive a different agenda on the cost synergies. It's very difficult to drive a supply chain agenda, globally, when actually organizationally, you have it under, I would say, somewhere between three and six hats, and now we're putting it under one, one hat. Business category units I've talked about, so it's reflecting the, the customer flows. And finally, the sales regions, having the whole portfolio and being able to, to manage the whole portfolio.
We've given these individuals and these organizations mandates, and I won't go through every mandate or every section. There's a lot of, I would say, mandate and clarification of the roles being done and have been done. But my message here is that I believe that each one of these areas should have both an efficiency agenda and also a growth agenda. So supply chain is also supporting growth, but they have to drive, let's say, the synergies and the cost leadership. The business category units have to work much more on customer-driven innovation and customer-focused innovation in R&D. And the sales units have to have a holistic approach. But also, I've mentioned again, we have three sales companies in every country, so even the sales units have to have, let's call it, a Big five agenda, which is an efficiency agenda.
So all roles will be, let's say, running on double agendas, and not only the sales are just doing the growth and the supply chain, just the efficiency. We have to find, let's say, a dual approach to this. So now is a very proud moment for me. I must say I've never done this before after five months, but I do. Here I'm using a lot of my previous experience. I know the company. I've met a lot of the talent, and I'm in a position to present something that's internally recruited. Getinge has also done a lot of external recruitment over the years. Not always have been successful, I should say. So this is a signal from me to the organization that I believe the talent is within.
There is a lot of talent, a lot of passion, but the structure has to be changed in order to let the talent perform. So I'm very proud to introduce a different type of structure. It's a very diverse group. Here, it's actually we have 6 Swedes, 3 Germans, 2 Americans, and 1 Australian in the team. And even that, I would say you have me, who is a Greek, Greek American Swedish. I have a Cuban American also on the team, and I have a Colombian American also on the team, and I have a German living in Spain for 20 years. And I also have a German that has lived in India and China.
So we're a very diverse group, and we also have a good balance between the male and the female, which I think is also extremely important for well-performing teams. So this is the new team. You've seen the structure, and all but one are here today, and I would like them to stand up, and I'll give you a short introduction of the new global management team. We call it GET, so the Getinge Executive Team. Starting with actually a well-known face from Maquet. And Reinhard has been the CFO of Maquet for several years. He's also been responsible for part of the supply chain strategy and also logistics, and has had a fantastic transformation within Maquet. So Reinhard Mayer, I'm very pleased that you're on board.
A lot of the Maquet continuity will also come from there, but also the challenge on the supply chain. Again, very finance driven. I would say there's gonna be a very much KPI-driven type of approach, and below, we have a lot of very, very strong specialists that I'm also hoping will get together and will develop, let's say, a common global supply chain strategy. So, welcome, Reinhard. Then, moving over to the business category units, again, a well-known name. Joacim has been with Getinge Infection Control for many, many years and was recently promoted to CEO of Getinge Infection Control. His role is changing, but I must say, Joacim has been extremely passionate about this customer value proposition with bringing together Infection control and surgical workflows.
So what I'm hoping is, one, Joacim, you'll get your dream job and be able to, let's say, push that transformation, 'cause it is a transformation, but also bring the continuity from Infection control. So, Joacim, also very much welcome to the team. Another, well-known, I would say, face in the Getinge Group is Heinz Jacqui, CEO for Maquet for a few years now. A background in both Dräger and Olympus, so I would say also big transformational journeys. Heinz took over Maquet in a turbulent period, where we got our FDA and consent decree issues. But I would say there, often leadership is often shown in difficult times rather than easy times.
I would say Heinz has taken us, I would say, through a very, very turbulent period. Also, always focusing on the customer, but making sure we're doing the right thing. Again, the passion is in acute care therapies, so also Heinz, in a way, is getting something that he's really burning to work with in a positive way, and also to drive continuously, also drive our, let's say, scouting within that area on acquisitions. So, Heinz, also welcome. The third is actually not here today. His name is Felix Lara. He has an operation within his family, within his near family. There's a surgery, so I thought it was better, actually, for him to stay home with his family.
But he is actually listening in. He's US-based, and Felix again has much of an external, let's say, background. Has a lot of good strategic skills and has been with extended care, more or less in the role that he has today. So there we'll get continuity from the extended care, but with R&D coming within him. And again, Felix is an American, but he also has roots in Colombia and has also, let's call it, an emerging market experience, as I will show you one more person also with that coming up. Then over to the regions, so Carsten Blecker. Carsten is today Maquet responsible for basically the same region, Europe, Middle East, and Africa.
And Carsten now is gonna have the totality of the portfolio in that region, and it is gonna be, I would say, that and the North America, which I'll present in a minute, are the two main regions going forward. So what Carsten also brings with him is an experience from outside of Getinge experience, which I think is very valuable in these types of transformations. And coming also from Biomet, I've heard a lot of similar stories, I would say, on the transformation that was done there. Next is Raul Quintero, also from Maquet, and today responsible for North America. And what I'm doing is adding South America as well.
Raul has a background from Boston Scientific, but has been part of the journey, the Maquet journey, which is, I would say, a growth journey, bringing in new acquisitions and actually putting them under one sales force, and this is a very similar exercise to that. So I welcome him. I've also, let's say, we've also discussed South America and Latin America, which is also a little bit of your background. In the early career years, Raul came from Cuba, and a lot of his, your early career was actually establishing companies in Latin America for other companies. So I think we have a good background as well for that. Then Paul, Asia Pacific. Paul worked for me in ArjoHuntleigh, also with Asia Pacific.
Paul has, since then, I would say, turned around the UK within ArjoHuntleigh and is now working with emerging markets. European-based, but we're discussing with Paul now, he'll move back to Asia. Australian, from the beginning, so he adds a bit of the Aussie flavor in the group, which I always think is good to have. And again, having that role in the Asia Pacific region. Andreas, who has been with us. Again, I worked with Andreas in the ArjoHuntleigh days, and Andreas has human resources and also sustainability, which is an increasingly important issue for us.
Again, not a change in his role versus before, but I would say his mandate now becomes very different since we're going through a transformation, a company transformation, which will require a lot, I would say, from, from, from his role. Ulf, my anchor. Positive anchor. I think we do need an anchor to the past, and I, I've been part of getting it also before. He's really my, my right, right-hand man in, in, in many ways. We've worked extremely well together in the last five months, and we know each other from before.
I'm very dependent also on Ulf telling me that I'm going in the right direction, and he has the past, so he can always give me a few reflections on whether this is this is the right way or if this is a bit more of a scary, scary way. But it's worked very, very well, and I'm happy to see Ulf continuing in that role. Quality and regulatory. Here, one of my early decisions, I made this decision already three months ago to bring Lena up to a group function. I believe with all the Consent Decree and the FDA focus that we've had, we are a company that needs to act globally on the on the compliance. And I do believe in in
I would say that's, that's an area where I don't believe entrepreneurship is the leading, let's say, guideline for that area. I believe it has to be structured. We have to take this seriously and, and, really live, I would say, the regulatory environment, not only because FDA tells us to, but, but also because that makes us a better company. And last but not least, Kornelia, whose function is also the same, but I believe it's an important function and important enough to bring it to a, a group level. And again, communication is gonna be a very important part of this journey. It's not from one day to the next, but it is a, it is a journey we, we have to take.
Kornelia, you're very welcome to continue and help me communicating the many things we will have to communicate in the years to come. So that's the third component of today. And again, just to give you a sense, we're going from a, let's call it a decentralized, disaggregated company of many small companies, and a strategy that was very much acquisition-driven. Today is today, and the new organization won't be valid until the beginning of next year. But what I really believe in is that we're gonna create a profitable company, a healthy company from the base. We're gonna have an offering that is unique and I would say more accessible in a better way towards our customers.
I believe innovation is a key component and also the emerging market growth that's coming. And finally, again, I do believe we need M&A to become, let's say, even bigger than we are today. But I'm also choosing not to give any numbers of how big we need to be, but I do think Getinge needs to have a substantially larger size for us to compete globally in the longer term, and that's still part of the ambition. So finally, before I give over, or before Ulf will come in, and we'll take a break also in the meantime. The roadmap, it's one simple slide, and I didn't want to go into details on when the different projects are coming.
Ulf will also give you an a perspective of when we think we can deliver. But it is a transformation, and I'd like to position it as it's a roadmap that we start today, but the Big five will, I would say, will deliver in chunks over the next four years. Ulf will show you how, how big the chunks are and when they will come. The customer centricity is an ongoing process, and we're starting today with a reorganization, but it's gonna have a big effect going forward in the way we work. And finally, the organization. We're starting with a global team. We're working now with regional team setups, and then we'll look at the national setup.
So that is gonna be a process that is transparent, and I would say, more based on the case-by-case basis, and we will start, let's say, cascading it down. So next year will also be a, let's call it a transformation within the countries, the individual countries. While, let's say, before the end of this year, it's gonna be more that we're preparing the organization, the organizational setup. So it is a transition, and 2016 will be a transitional year. We're getting a kind of goes from the existing structure to the new structure, and then, we'll be, I would say, gaining the fruits of that exercise more and more in 2017 and 2018.
And here, just to show you, we're not just talking and waiting until the first of January. We started already many of the activities. We started, let's say, recruiting and are working with the indirect sourcing from a central perspective. We have commercial excellence activities in several of the key markets, and we've also started shared services in Europe, in Kraków, where we moved 20 of the legal entities over to Europe, and we're planning now to do the same in Costa Rica, in San José, starting next year. So a lot has already been started. Emerging markets, we've moved to the one company structure, so now we're working on the plans of how do we grow from that structure, when we have the portfolio under one.
And here you've seen again, an example of the new management team, and we're beginning Each one of them has a mandate, and each one of them is looking now to form the next level down, what is their team going to look like? And that's a process which will be an ongoing process . So then financial targets, but we should take a break before, correct? We can. Oh, oh, yeah, that's, that's right. Sorry about that. I'm, I'm, eager to get Ulf on the stage, but, this is my contribution to the financial targets, and Ulf will take you in a much more detailed level. Our ambition, and again, we're, we're presenting an organic, an organic context, not with acquisitions, so we haven't included acquisitions in this.
I know that Ulf and Johan have previously included, let's say, baked everything together in an organic and acquisitions. And this is actually quite an ambitious plan on purely the organic part. And Ulf will also a bit give you some comparisons to that versus earlier. I believe organically we can grow 2%-4%. The different business areas will have different trajectories, but I think that's a growth rate which we can deliver on. And I don't want to end up in a situation of, let's say, overpromising and under-delivering on what we ourselves think we can do. Our ambition is to grow the EBITA by at least 10%, and that will vary.
I would say this is an annual number, but that will vary quite a lot throughout the years. And again, I mentioned there that we need some time to deliver 2017 and 2018. There are a lot of the deliverables will come as well, but our ambition is to at least perform at a 10% return on equity, again, at least 15% or more than 15%, during that period on return on equity. And the final one, the cash conversion, is also a KPI, where we're increasing, let's say, the ambition level. And we also have an ambition to deleverage the company also during this period, which also Ulf will talk about.
And again, this is purely organic, and what I'm asking is regarding acquisitions, the strategy is still there, but I would like a more holistic approach to what Getinge should be doing on the acquisition side. And if anything comes up in the meantime, we're of course, we'll be interested and active in participating in processes that we believe have a good fit with the group. The final element is an element we discussed with the board of directors, and it's really in light of the strategy that we presented. We're presenting a transformational strategy. It's gonna be a transition year next year, and the years allocated, if you see it during the four-year period, we will be delivering in different doses, so to speak, over the four-year period.
So we've adapted the dividend policy to aim for 30%-50% of net income, which is an adjustment versus before. And I would say it reflects the transition and the transformation that we want to implement within Getinge. So with that, and before Ulf comes on, we'll give you a break. Now you've seen the, let's say, 3-point transformation plan, and you can take over.
Thank you, Alex. Thank you for giving us such a clear picture of what you're planning to do within these three areas. Now it's time for a 15 minutes break, and then we have the chance to listen to Ulf presenting the financial aspects of this transformation, and that will be interesting, I promise you. So let's see each other in 15 minutes. Thank you.
Could I have your attention, please? First of all, I would like to thank Alex for making such tremendous good introduction of me, and I also would like to say I'm extremely encouraged to be a part of your future team. Good afternoon, ladies and gentlemen. It is a pleasure to be here today and have the opportunity to present more details regarding our future financial plan. Some of you probably remember,
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Could I have your attention, please? First of all, I would like to thank Alex for making such tremendous good introduction of me, and I also would like to say I'm extremely encouraged to be a part of your future team. Good afternoon, ladies and gentlemen. It is a pleasure to be here today and have the opportunity to present more details regarding our future financial plan. Some of you probably remember, a couple of years ago when I started my presentation, everything went black, and I couldn't do my presentation, but it seems today that the technology is also with me. So if we move in to the financials and take a look again on our new financial targets. Alex started to very detail tell you that this is excluding acquisition.
If we take a look on the top line growth of 2%-4%, that is excluding any sort of currency impact or any sort of impact of acquisitions. When we go to the EBITDA result, we are talking about EBITDA before acquisition and before restructuring cost, and that will then grow more than 10%. The same goes for return of equity. That will increase more than 15%, and that will happen within the period. And then finally, our cash conversion will also come up on a higher level, above 70%. And you maybe recall that our last target on cash conversion was that we were said that we were going to stay within the range of 60%-70%, and now we are taking another step to say that we will be better than 70%.
You also may recall that we had a target in the past where we said that pre-tax profit was going to grow with 15%, and that included acquisition. Half of that, 50%, was said to come out of acquisition. If I then make a step to see how will the Big five activities, which Alex have presented earlier today, how will they contribute to the improvement of SEK 2.5 billion-SEK 3 billion? The main part, actually 50%, will come from the lean support and administration. That savings or profit improvement will hit the selling and administrative expense line. You—we could say that it is a journey, which Alex said, that today we have three different companies, and we actually have three different companies, more or less, in each geographical area.
Those three companies, we are going to merge to have one company in each country. Also, we have been talking about our shared service activity, and we have also been talking a little bit about numbers there. They are now included in this 50% of the SEK 2.5 billion-SEK 3 billion. If we then go to the indirect spend, that will account for approximately 15% of the total, and that will give us improvement on selling and admin expense, but also on COGS. We are talking about here, like travel, vehicles, IT, consultant, and legal costs. Before each business area have done their own sort of, say, negotiation with supplier. Now, when we take out the scale, we will be in a much better position to negotiate better prices.
That goes also more or less for the direct spend, and we, as Alex also have presented, that will now be put under one leadership, Reinhard Mayer, who is a good friend to me, as he's been the CFO in our group, and I spent a lot of time together with him. And, so I think that is also a very achievable number. We have not put any number on the portfolio simplification, and there is so to say, a value in that because it will enable for the supply chain to drive efficiency improvement within that part of the business. And then finally, we'll also 15% will come out from the commercial excellence. And that is, as Alex said, we will try to optimize and the mix of sales and service, and we will also improve our customer segmentation.
When we have done our plan, we have also taken into consideration that it will be a price erosion of approximately 1%. We have also taken a look on the currency situation when we are talking about our hedging activity, and in 2016, which we have already hedged, and which is already completed, we could see that we will have an improvement of SEK 200 million, which will improve the group's gross profit and gross margin. When we take a look on 2017, we have not started the hedging activity, a small part I could say, but I see a good potential there that we could also have a good improvement in the hedging activity. If we then turn to how will we realize, how will we deliver on the Big five improvements?
We will already start to get some impact in 2016, which is approximately 10%, and then you could see by yourself how we gradually will go up to have the 100% in 2019. Maybe you ask yourself, how will you really get so 10% already next year? We have already started some activities as far to shared service. We have also started on indirect sourcing, so we, we already are, so to say, could get some what we call quick wins in those areas. And also, I believe that we could get some very quick wins within the commercial excellence. What do we need to invest in order to get this sort of profit improvement?
We will spend some restructuring costs, and we have already guided on what the cost will be this year, it's SEK 540 million, and we will pay SEK 800 million this year. In 2016 and 2017, we will have a high portion of restructuring charge coming through our P&L. A main part of that is relating to the Big five. Approximately SEK 750 million is relating to those activity. If we also take a look on another major part of the restructuring, is that we are going to align our ERP system. Today, we have more or less three different ERP system within the three business areas, and we will align them, and we will align to SAP.
The reason why that, is because I believe that the SAP is a very good system, but also that our main part of our group, Medical Systems, already have SAP as their platform. In order to show you a little bit how this comes out, we have put together this summary of key ratios. You could see that we will, and this represent average of two years, you could see that the cash conversion will improve. You will also see that the net debt in relation to EBITDA will come down, and that is something which our board and also group management have come together, and we have a target that we will be below three times EBITDA at the end of 2017, or maybe even earlier.
I will come back later on to give you, so to say, how that will impact our funding cost in the future. You could also see that our earnings per share is improving quite significantly from an average between 2013 and 2015. And by doing that, we have also estimated what we believe the tax rate will be, and we believe that we are, and could maybe, on the level of 27% as the tax charge going into this period. Quickly to summarize the currency, we have not changed our guidance for this year. Translation, giving us a huge profit of SEK 230 million. Hedging is negative this year, but as I said, already 2016, we're going to have a pledge on our hedging activities.
Also, as I started to say, I still believe also that 2017, there is a great potential that we will have another positive amount. But it's a little bit too early to give you a final amount, as we have not really started the hedging activity. CapEx is another important area where we will be through this period. We will be around 3% of revenues, and that includes a large investment into our IT and IS environment. We will spend approximately SEK 1 billion, starting this year, all the way up to 2020. And that is to align our, as I said, our ERP platform, which is in very important to make this happen when we are going to put together the group in a new way, as Alex have explained.
Another of my favorable areas is working capital. Then we will also have an improvement, and then again, I put my big effort into Reinhard Mayer, who is going to lead the supply chain and also the logistics, and also going to make sure that we are going to reduce inventory with something around SEK 100-150 million every year within this period. There is a big focus on the logistics within our group today already, but I think under one leadership, it will be more faster and could also start to pay off. You could also see on this slide the cash conversion, that we will be above 70%, but we will not go very much above that, but still we will be above that and even better.
The journey, you probably understand that, you will remember that we will take quite a large restructuring payment, and therefore, we will not see coming up on the level of 70% until we have paid those major amount. If we then start talking about how should we finance this, and what sort of funding portfolio do we have today, and how is that maturity profile? In 2015, we have what we call the commercial papers, and we have been very successful throughout this year to refinance those commercial papers, and we do not foresee any other, so to say, risk with that for the rest of the year, as we have been very successful, and it's been not difficult for us to refinance that in the market.
Today here, you probably have seen on the list that we are having some very good representatives from our banks, and I would like to say that we have a very strong bank group who have supported us over the years. I believe they will still support us when we come up to 2018, where we are going to refinance our syndicated loan. I could see some smiling faces here down from SEB, but I still believe that we will have a great support from them, and I don't believe that will be any problem with that, because I think we also will be on a good leverage level below three times net debt to EBITDA. In order to make that more visible Okay, let's see what's happening here. Oh, there have been a small addition on slides, but anyhow, it's always something happened with my presentations.
But you could see on this slide how things will develop over the years, how we will reduce our net debt, improve our key ratio, net debt to EBITDA, how we will also reduce our average interest rate, and you could also see what we already have hedged, and also what it will turn out in the financial net. I believe that we will probably, even at the later part of 2018 and early 2019, I think we could probably see even a lower average interest rate, as I believe that we probably, during 2017 or 2018, have refined our syndicated loan, and we have probably, at that point of time, done a rating exercise, and hopefully, we will have an investment-grade classification. I'm actually looking at my treasury manager, Peter Hjalmarsson there, who is saying yes on that.
So if we turn again to a summary, I think I've, in this part of my presentation, I have tried to openly show you the support for the new financial targets. We will, during this period, improve our profitability, we will have a stronger cash flow, and we will deliver, deliver, deleverage our balance sheet. Finally, I would like to present our thoughts about how we would like to present the new group structure into the stock market. We did a benchmark, and our solution from that was to take a pragmatic solution, which means that we are going to present the three business category units, which Alex have presented, surgical workflows, Acute Care Therapies, Patient and Post-Acute Care, in the same way as we have presented today our business area. The difference is that we are not going to allocate corporate function cost into those.
We're going to keep them separate and also show them separate in our interim report and in our annual report. When it comes to order intake, we will follow the new structure to present how we are growing organically in EMEA, Americas, APAC, and Pacific. We will, in our report, make comments if we have had a very good growth in a separate country or if maybe we have not had so good growth in a country. We will make those comments. We will try very hard to give the stock market restated figures, because I think you need that, and we will try to have that ready in the first quarter of 2016. That, that is our aim. I know that it's very tough. I count on my organization that we will work very hard to get that ready.
I also like to show you an example. We have not really finalized this, but we will try to show this in a way so you could also see how it ends up in the total group, and have the three different categories shown separately, and also have the corporate function separate. After 23 fantastic years within the Getinge Group, I must admit, this is an extremely exciting journey we are embarking. This is absolutely the right, the right way forward for the group. Thank you. Alex?
Thank you, Ulf. Okay, I'll do a little bit of summing up, talk a bit about the next steps. This is a really a transformational journey, and we're going to be, I would say, announcing it also internally. So our, our internal journey starts tonight, more or less. You're the first to know, in a way, from an external perspective about this journey and also the management, the new management structure. So it's a, it's a big, let's say, moment in our company history. What we'll do now in the next quarter, the last quarter, of course, the signal internally has been a continuous focus on the customer, deliver the fourth quarter, which is extremely important in the medical device industry, as you all know. We have an ambitious plan for the fourth quarter.
We're looking now to the organization and focus on the organization design. Each one in the management team has gotten mandates to create, I would say, the next level down, and also create it in a way that's lean and not overlapping. We'll continue that cascading down, and have a, let's say, a full plan by the beginning of next year. We're gonna secure customer focus during this time, and I'll say it many times internally, but I also want to say it to you, that the field organization will not be reduced in any way during this exercise. Maybe there are new capabilities we need in the field organization, but we're going to keep the field, I would say, stable in this transformation exercise.
I believe there might even be upsides if we can present our total portfolio, also in the short term. So a continued customer focus and securing implementation for the rest of the year. We have also an outlook which we're not changing. We haven't changed this outlook since the beginning of the year, and I should say we are following a plan that Getinge has had from the very beginning of this year. But we do have a very, let's say, a lot to deliver in the fourth quarter, so we're very much focused on that. But we're not changing the outlook for the year, today as well, let's say. So we've kept this, I would say, from first and second quarter.
So finally, if I would summarize the overall plan, I really want to reiterate that the strategy is right. I think we have the right company and strategic initiatives for the company going forward. I was part of that process in my earlier job, and I really genuinely believe that if we do what we say we do, we're really well positioned for the future. I believe in One Getinge. It's two very simple words, and maybe not so revolutionary for you, but I would say for us, this is a truly transformational journey. And again, going from three companies in 40 countries and also with three headquarters and I would say three of everything, we're going to one company structure.
It is a transformation. It doesn't happen in one day, and it will be a transformation during the next three-year period. But we will do it as quickly and efficiently as possible. I really believe that the customer is key, and again, this is just five months in my job, but I can assure you, I'll be very customer-focused. I'll and I'll be very much focusing on the growth part of the agenda and the customer part of the agenda. I believe now we have an organization that reflects also how the customers are working, and we can offer them the full Getinge portfolio. But once again, it is a transformation, and I've done this before. I did it at ArjoHuntleigh.
I started with margins that were around 14% and ended with margins that were around 21%. But it did take 5 years. And also we transformed the company from, let's say, a multiple company structure to a more global company structure and a functional structure. So I know it can be done. I've also done it in earlier jobs, but I also have a high respect for the amount of transformation, communication, and also alignment that needs to be done within the company.
So what I'm very proud and confident we'll deliver on the 3-4-year plan, but we will be delivering it in chunks, and next year will be a bit of a transformational year for us, where we get things aligned, and get the organization in place. So with that, I hope you feel, I would say my personal belief, this is a very important journey for me as well, personally. I feel I have the backing of the board. My chairman has been very, very supportive in this, 'cause it is also a transformation versus before. I've also involved and surprised my predecessor with discussions on what I would like to do with Getinge, and even, let's say, his input has been very valuable.
So I'm carrying with me as much as I can of history, but I really think we need to change as quickly and preferably faster than our customers are changing. And they're changing very, very quickly, with a lot of new demands being set on us. I have a great team. I really believe in it. I call this my dream job, even though I knew it was a tough situation to take over. Now, I also have a dream team, and we're very, I would say, passionate about this company, and we'll be translating, let's say, this passion down into the organization, and there is a lot of base passion in the organization already today. But it is a big transformation for us.
So with that, I'd like to thank you for your attention and for being here, and with that, I'll close my section, and then we'll go into Q&A section. Thank you very much. Thank you.
Thank you, Alex, and thank you, Ulf, very much. Really interesting to listen to you. Now, we will have a Q&A session, as you all know, and I guess there's a lot of questions, but I take the chance to ask the first question, and I direct it to you, Alex. There's no doubt this is a big transformation that you have presented here today, and you've been working intensively with this for five months. Could you please pinpoint or elaborate on the whys? You have told us what to do, but the whys. Why do you actually do this?
I mean, the why is, for me, it's the customer always, and I think if the customer's, going through a transformation and the whole industry, then I think we need to transform. So I've translated very much what is happening with the customer and, and our industry to what Getinge needs to do. So I would say, the why is because the healthcare industry is changing and, and has completely different, let's say, pressures and, and opportunities, today than it did 5, 6 years ago. Then another one is an internal one, I think, with the Getinge, almost everyone that comes from outside of Getinge, when they join Getinge, within the month, they're asking a fundamental question, which is: Why don't we cooperate more?
And I asked that question myself when I came in, and after one month, you get assimilated, let's say, to the three company structure, and it becomes part of you. But that's a key point that everybody internally also talks about. And I think right now what we're doing is releasing, let's say, the obvious in a way, what we need to do, but I also know it's a major transformation.
Yes. I had to add one question: If we stand here in five years, will we recognize Getinge as it is today in some way?
Yeah, I think you will recognize it. I think, in many ways, we will be one company and acting as one company, so in that respect, we'll be different. We will have the same values. We have five values that we've cascaded and we've created. The central one is passion, the other one is collaboration, the other one is ownership. And I believe we're gonna be living a lot with those values, and cooperating much more than before. And then I think you'll see the company growing through acquisitions as well as organic.
Good. Thank you. So, ladies and gentlemen, now it's time for your questions, and we have three microphones, one for that section, one for that section, and one for that section. So who will be the first? I think it was over here. Yes. All right, there one. And please, ask the questions in English.
Okay. Thank you. Annette, Lübecke Handelsbanken. You talked a lot about acquisitions and, but as we can see here on the, on your plan for the three divisions, the patient and the post-acute care seems to be something that you would like to continue as it is or more or less as the same, I think, was the wording you used. Are there gonna be any divestments of Getinge?
Yeah, I don't wanna say at this point if or if not, but what I'd like to do is to look at the strategic value and the profitability of different categories, and then there might be some some divestments once we get the answer from from that. But I think it's too early to say yes, and and where in in in that sense.
A follow-up question would be, if you have to sort of expand the activity or areas where you're in, where would you feel a greater need to get new sort of products or services into your existing portfolio?
Yeah, I would say, again, within the cardiovascular space, so the one unit that was in the middle, which was the acute therapies, I think there we should continue being active and looking to broaden our portfolio. I think the other two portfolios, the surgical workflows, I would say it's more of a complete portfolio that we have to optimize. And again, I'm open to look if there are opportunities coming up that will, what should I say? Strengthen their current positions globally, I would be looking at that.
Now it's time for this section.
gentleman, yeah.
Hans Mahler with Nordea Markets. I have two questions, if I may. First, how sensitive is your EBITA improvement in terms of revenue growth? What if growth on average is 2% versus 4%, how much will that impact? And secondly, I also would like to ask what has been the outcome? I know this is not the subject of the day, but what has been the outcome of the recent inspections in Hudson? Thank you.
Okay, good points. I can answer from my side, and maybe, Ulf, you can also take over the sensitivity part. But I should say the EBITA margin. This plan is much less dependent on top line than earlier plans. And it's based on a series of initiatives that were very carefully, I would say, identified. And then I think there's more potential also, as I said, on the supply chain, once we get that strategy going. So I would say it's less sensitive than the earlier plans and less, let's say, dependent on the top line growth. And also, the top line growth is a little bit, let's say, less aggressive in this plan.
So we feel much more comfortable with this plan versus earlier plans, because a lot has to do with our internal We deliver with our own, let's say, we're not dependent on external factors. So that's the sensitivity. Maybe Ulf, you can comment a bit more, I would say, on the overall sensitivity. Maybe you should do that now, and I can take the FDA question later.
Yeah, no, but we have this range of 2%-4% organic growth, and in that range, as Alex said, we have been very cautious. And the improvement in the plan is relating to the Big five. And we are not, so to say, counting on that we will grow faster than within this range, with a cautious perspective on that. So it's all about really realizing the Big five and get that improvement.
I should also say that beyond the Big five, there are a lot of initiatives, I would say, that they're bottom up. I mentioned when I came in, I, I reviewed. So actually, there are another, 30 projects that are, I would say, identifiable initiatives, so not dependent on top line. So beyond, let's say, the Big five, there, there are other things that we're going to be doing, maybe not focusing so much on from a, from a top perspective. So again, it's very much initiative-driven and less, top line-driven as a, as a three- to four-year plan. Then your question on the, the FDA and the Consent Decree, I would say we're following the plan there.
We've again, Quintiles has done inspections in Merrimack, in Hudson and in Wayne. And I would say the reports have been sent to the FDA with some observations that we believe are surmountable and, let's say, part of the process. So we don't have, in any way, warning signals that what has been found is not part of, let's say, an improvement process. Now, the next milestone there is they visit Hechingen in Germany, in October, I believe. Yeah. End of September? Yeah. So that's the next milestone. We're again following a plan and reports are, I would say, being sent to the FDA and then simultaneously to us.
So we have no, I would say, other news than that, and I would describe it as so far, so good. I don't know, Heinz, if you That's an accurate description.
Absolutely, and there's not much to add.
Yeah.
The only thing is, you know, this is an independent third-party audit, what we have done in Hudson and Merrimack and so on. We received the report. We think this is a good result. Anyhow, this is somehow submitted to the FDA, and we need to see how the FDA is reacting on-
Yes
this, report.
Yeah. Yeah.
Thank you very much for that. Now it's time for this section. This one, yes.
Swedbank Markets. Thanks for taking the questions. Yeah, the first question is on sales, then, as you're moving into this transformative year in 2016. The market is pretty slow, and you have some pockets of, well, rental and capital goods. How should we view the 2%-4% organic growth? Is that challenging or confident you can reach that during the transformative year? And, on the flip side, then, on the cost and earnings guidance to reach 10% improvement, then, on 2016 with all these changes, how confident are you on that side?
Interesting question. Okay. No, that's a very, that's a very good question. I would say we don't have a change in our outlook for next year. So I would say I feel more comfortable. It's gonna be within range. I feel more comfortable at the lower part of the range for the first years and the upper part in the next year. So I would say that's my personal view. And also that reflects a little bit the plan, the phasing of the plan, I should say. But we're gonna do everything to make sure that the field is not affected in any way by this.
Because that is, of course, a relevant issue to take up. How will the customers be affected of this transformation in the short term?
Yeah, in the short term, they shouldn't be affected at all, I would say, in transactions. They're still meeting the salespeople and we'll front them as the business areas today. I would say, and we don't have any plans in the overall to really, let's say, reshuffle too much in the field, so I don't see that happening. We might have a discussion on competencies, and I think on the service, we have a lot of recurring revenues from service. I think there should be advantages of putting together, let's say, our service offering. So I don't think in the short term, it's gonna be, let's say, a negative consequence.
I do believe in the longer term we will have a better offering, so I think we'll be better at our offering. Again, in the long term, things don't change from one day to the next. I would say that's also something that maybe the customers in two years' time say, "Ah, you know, Getinge is much better or, you know, has changed." It always takes time, let's say, to reflect. And then I forgot the second part of your question. Sorry about that.
On the earnings side then, with all these changes, you, I think you mentioned SEK 800 million in restructuring and, of course, that brings about some changes in the organization, and to deliver 10% increase on profit at the same time seems tough.
Yeah, it is tough, but I mean, that is our ambition, and we'll try and do the processes effectively as possible. But-
Do you have a project organization?
Yeah, we have a project. I should mention that actually, we're putting together a project management organization-
Yeah
that'll follow The Big five, and also separately follow the SG&A transformation. And it's Nicolas is sitting right here in the group, so he's reporting directly to me, not part of the management team, but I think equally important. So we're going to be following this very, very closely. And again, we're not touching the field, so that will be I would say that's the basic principle in that. So-
Thank you.
Thank you. Now we move on to this section.
Is this on? Yeah. Hi, this is Thomas White at Wells Fargo. My question is around obtaining perhaps deeper line of sight into the customer segmentation process that you're undergoing across these businesses. So from your perspective today, and with all due respect, you've been in the job for five months, and I'm trying to make the question as open-ended as possible to reflect that, Alex. But just holistically, how much R&D and CapEx do you think you're gonna--is gonna be required, however you wish to measure it, to stay ahead of the competitive curve in these businesses? And as you make that evaluation and drive your businesses forward, how will you measure the performance in various lines of business, i.e., are you looking at return on capital employed, return on assets, EBITDA?
Lastly, as you define that differentiated value add in your various businesses, how do you go about making that happen in the context of protecting your IP, your intellectual property? Thank you.
Okay, that's a very important question, and again, you phrased it right. At five months in the job, I can't give, let's say, all the answers on the whole R&D perspective. We're investing around 4% today, I should say, as at net sales, and I think we should be strategically investing more than that. So I'm very open to increasing that, maybe by a percentage point, maybe more, but I really have to see what's in the pipeline. Then I believe we're different parts of the three areas, the part which is, let's say, the acute care, that I believe needs higher percentages, and then I think the other two probably can develop at lower percentages.
I think we're, we need to, in a way, disaggregate and not talk only on the group level, but say, how much do we need in the three separate entities? And right now, I believe Maquet is quite high. And the other two business areas are lower, let's say, in percentages. So I need to get back to you at that, but I'm very, let's say, innovation and customer focused, and I'm willing to invest in it. But at the same time, I don't want to put money ahead of, let's say, the Just in terms of increasing the percentages. I really need to see what the content is.
I think also you had a question regarding how we're going to measure-
Yeah
the different people in the management team. They will have a separate P&L all the way down to EBITA, before restructuring, and they will. Those who also have some sort of working capital, we will follow, so to say, the days and see what sort. And then on group level, we will follow all the targets and present that, but they, as individual, will have also separate P&L. And then, the category business units, as we have presented, will have a separate P&L, and every one of them who's contributed to that will also have, so to say, accountability for that. So it will both be separate P&L and consolidated P&L for the three category units and a total P&L for the group. So it will be measured in very much into details.
If I may, just one follow-up to all of that, and it, it ties into protecting your IP and your, your expansive manufacturing footprint today. How will that be balanced in the Getinge Group, in terms of protecting your IP and going after growth markets, i.e., in the Far East?
Yeah, I mean, it has to be—it's not going to be a one-sided decision. I mean, the management team together, I believe we actually have a better setup in the future to take those types of decisions holistically, while we've done them in silos before. But I would say the ultimate decision will be us as a management team, and I would say, in a way, me deciding kind of which direction. But I think what I think supply chain needs to do, which we haven't done, is to start looking at it from a supply chain perspective globally. And then we have to do it in conjunction with the business, the business areas.
So I would say, it's a combination of a supply chain proposing what the most effective and efficient setup is, but the business category units, I would say, having veto right and having the right to, strategically, let's say, make sure we end up in the right place. I would say up until now, supply chain has been, in a way, very much under, let's say, under the influence of many other functions, let's put it that way. So what I'm doing now is lifting, let's say, the supply chain to a, to an equal, level of influence.
I would also like to say that we have a good focus on IP in our group, because within my legal team, I have a legal team, there are some people in my legal team who are following the IP and protecting them. But they are working, so to say, on direction, so to say, from the business, how to do. But we are up on the top of our IP, that I would like to say.
Thank you very much. Now it's time for the middle section here. Up there, please. Can we get the microphone over there? Thank you.
Hi, Patrick from Morgan Stanley. Just a couple of questions from me. The first is SEK 2.5 billion-SEK 3 billion in savings. Should we expect that to fall all the way down to the EBIT level, or should we expect some kind of reinvestment maybe to drive the top line? How should we think about that? The dividend payout, should we be thinking about that pre or post the restructuring costs associated with the savings program? And then I guess the final question really is, you've got a fair amount of debt that you're paying down over this time period, but you've got a fair amount of cash restructuring costs, associated, and then the savings from those are sort of back-end loaded. How important are savings and things like working capital in order to pay down that debt going forward?
How should we think about that?
I can take the first one, and maybe you want to take the other one.
Sure, absolutely.
Okay, so whether the 3 billion, 2.5 drops all the way down, I would say from those initiatives, we believe that that's what they can deliver. Then what we haven't factored in here, of course, there's a positive factors is the growth, so the growth will come, but we also have price pressure, which we factored in. And then we have investments, and I've already signaled in our plan, we've put in a higher R&D investment and higher investments in the field in certain regions. So I mentioned US and emerging markets. So I would say those would be reinvestment factors. So I think you should just see this as an initiative, a series of initiatives, but then the totality will be different.
So you won't see the, let's say, one-to-one trickle-down effect of these. But this is what we believe these initiatives can deliver. But there will be investments, there will be downsides on price pressure. And there will be upsides in terms of, let's say, if we outgrow, but I'd rather be careful on that one and not be over-dependent on the growth story to deliver.
So, yeah, if I remember the two last question, I think it was about cash flow and how much should come from working capital. As I said, it is quite a small part because we have calculated that we will grow, and that will also increase our working capital. But as I said, that there is a big potential to reduce our inventory. As I said, also, that we will focus more on the logistics and see how we could put inventory together. So I think there is a potential, which I said was around SEK 150-200 million annually, which is quite a small part, I should say, of the cash flow. And then the whole deleverage process, everything about the restructuring cost is included in our plan.
So it really comes out in, as I said, at the end of 2017, early 2018, we should be at the leverage below 3, and including everything I presented when we pay out the restructuring cost.
Payout ratio, in terms of, is that pre or post the restructuring costs?
W-
And then, sorry, one other thing would be, would you, would you tell us what your assumptions of price compression are within the plan?
Yeah, so the first question was how much?
Yeah, so, so the payout ratio of 30%-50%, is that on a cleaner net income figure?
Absolutely.
Is that after the restructuring?
No, no. It's net income in the P&L with no adjustment. And then the final question was, I'm sorry-
Would you tell us what the pricing compression you've assumed in that?
Yeah, I, I actually said that, 1%. That is what we have included.
Thank you. Now, we have a gentleman over there.
Richard from Kepler Cheuvreux. When you expect to grow 2%-4% on top line, do you believe that you will be then underperforming the market, or do you believe that the market has shifted down in terms of growth?
We would believe on an aggregated level that we're on par with the markets we're competing in. Then we have different growth assumptions within the different business areas, the business category units. So some are growing above that, and some are growing slightly below that. So we think we're on par with comparative, let's say, comps in our markets.
My next question is, as I understand it, you will be spending in restructuring costs over this period. You will spend about SEK 1.5 billion to improve earnings by about SEK 2.5 billion. Why is it still useful for us to look at the earnings before restructuring costs, et cetera, when you keep on having these quite large amounts of restructuring costs every year?
Yeah, if I may step in, when we have done this sort of change, the restructuring costs will come down. We will not, in the future, have that sort of amount. There is two big items in the restructuring cost, as I said in my presentation. It is when we start to do this lean support of the administration, that is accounting for SEK 750 million. Alex said, we are going to take out a great er of people.
And the other thing is that we have now to align our ERP platform, and you could say that maybe it was a bad decision that we invested in 3 different ERP system in the past, but that is where we are, and we have to take this restructuring in order to put together the new structure within our group. And those are the big items, and they will not be in the future. Then maybe when we take a look on the factory footprint, maybe we will have, but on this level, we will never have the same amount of restructuring cost.
Gentleman over there, please.
Thank you. Thank you, Kristofer Liljeberg from Carnegie. Three questions. First, on the EPS average level you're giving for the different years, is that on a reported basis, i.e., including restructuring costs and amortizations?
Correct.
Yes. Okay. And then coming back to this SEK 2.5 billion-SEK 3 billion saving target, did you say that that includes assumption of price pressure of 1% per year, or was that only in the EBITDA growth target?
When we have done, so to say, our plan, we have put in the SEK 2.5 billion-SEK 3 billion into our plan, but at the same time, we have made an assumption that our price erosion will be 1%. So it is gross, so to say, both on the savings and also. But it's included when we finally have put together the whole plan.
Exactly. It's included in the EBITDA growth target, but not in the SEK 2.5 billion-SEK 3 billion.
Correct. You could-
Okay. I don't know if this is possible to answer, but then if you look at all other factors, you have organic growth, organic improvements on top of that, while you have some negatives. You think that other factors net will be positive or negative?
That's, I would say, that's difficult to say. I'm hoping, and my ambition is that there will be upsides and that positive, but I think it's there, we need to do the individual annual planning, let's say, process for each year.
Okay. And just the SEK 2.5 billion-SEK 3 billion, that doesn't include anything from reducing the number of factories, et cetera?
Correct. Correct.
On the outlook for this year, 2015, your previous is that you expect a rather slow third quarter and then—
Yeah
Pick up in the fourth quarter. Is that still how you see it? And again, have you got any better visibility for that pickup in Q4?
Yeah, I mean, I also mentioned that, I should say, so it's not only my predecessor, but I think that's an accurate description of our plan, yeah. Then I'm very also aware that the fourth quarter is very important for us, and I'm launching a transformational program. And so, we have a plan, we're sticking to it, and I'm not, let's say, changing on that. And we do have a visibility, let's say, on the plan going forward for the fourth quarter. At the same time, you know, we took a decision that it's important to get this transformation also going, rather than wait to do that. So that's an element, let's say, that we've added on that the organization isn't aware of until today.
Thank you. Now it's time for a gentleman over here.
Thank you. So Scott Bardo from Berenberg Bank, and I have four questions, please. So first question, just actually follows on a little bit from Richard's. I mean, we've had an awful lot of restructuring costs for Getinge the last many years, and unfortunately, now what happened with margins continued to decline, and now we have some relatively big restructuring costs that you've just delivered today. So I guess it'd be interesting from a general perspective to understand, where do you think the organization went wrong in the previous restructuring attempts? Were they futile? And why are these restructuring measures gonna be so materially different? That's question number one, please.
Second question just relates to the FDA, and I appreciate there's a limited amount that you can say here, but clearly, we've seen quite a lot of volatility and impacts to your P&L this year through some of these injuncted products stemming from the Atrium facility. So can you please comment a little bit about how you see those injuncted products coming back to the market, and how that could impact your P&L? I understand here, if I'm right, that some of the metrics you give here don't include the currency, the transactional benefits that you're likely to enjoy next year. But I'd also like to understand, do they include some of the return of this, say, $50 million of lost revenues and profits that you're enduring this year? That's question number two. Probably, I should follow up in a second to after those answers.
Okay. That's a good idea. Thank you. Hard to keep track of 4 questions. Okay, again, if I don't want to comment a bit on the past. What I can say is that some of the restructuring did deliver quite a lot. So I mean, I was responsible for a business area that improved margins from 14 to 21 because of the, let's say, the restructuring we did on actually both the sales side and the supply chain. I believe, on the supply chain side, we haven't delivered on plan, so we actually didn't do the activities we were supposed to do, and now we have a new leadership, and I think on the Infection Control, we will get back on track.
And my care, I would say that we need to start going forward. So in a way, my comment, I can't comment too much on the past because I wasn't part of that. I can comment on my own part of the past, which did give that effect. Then I should say that the margin pressure is, if you don't take into account that there is a price pressure in the market, then all your assumptions are always, let's say, wrong. And we've taken in this plan an active assumption to have a negative, say, price pressure into our calculations. So I'm hoping that the that focus will change going forward.
And then there are also, I would say, other, other major factors on margin dilution. One was in ArjoHuntleigh, where we, we acquired TSS, which gave a negative, let's say, product mix, and then we've had currency effects also, let's say, working against us. So there have been several factors, but again, I don't want to, I would say, comment or criticize, what was not delivered. All I can say now is in this plan, this is, as you see, it's focusing much more on the SG&A part of the equation and not that much on the factory part. And I think there's more tangibility in those kind of plans, while it's more difficult, when you do, let's say, footprint, movement of, factories around the world.
I still believe it's more, it's closer within our hands to deliver rather than a factory.
Was on the FDA. When do the injunctive products come back?
Yeah.
Can you see those through your P&L?
The FDA, I would say our assumption is that the current FDA situation regarding commercially out in the market will probably continue to affect us in the first half of next year as well. So I see it affecting us going forward, purely commercially. And then we have to see the injunction and when that will change. I think that -- we can't answer that, I would say, until the FDA decides. And again, Heinz, I don't know if you have more insight on that.
I'll add a little bit more-
Yeah
insight to that. You know, we in Atrium, based on the Consent Decree, we were on a shutdown on 2 product lines, let's say, portfolios, the biosurgery and the graft. Biosurgery, already we moved up to Merrimack, to our new facility, and there we got a green light from the FDA that we released the product again back to the market starting May this year already. Also for the grafts, we have concrete plans, and everything is working well. If everything works out as we think, we will be back also on the market in autumn this year.
Thank you.
Just to understand, actually, the, the, these sort of earnings, average earnings that you provide, within one of the, all slides, actually, is that the sort of earnings that one would expect from this restructuring program, or do these include then the transactional benefits that you're likely to face next year? Just running through, there's SEK 400 million or so impact to your bottom line this year from infection products. You mentioned around a 10% or so of this SEK 2.5 billion savings going through next year, and SEK 200 million on the gross margin level, maybe through transactional effects. So that's SEK 800 or so million of profitability that we, we should expect into next year. I'm just trying to reconcile that with this near-term number.
Perhaps if you can just help us understand that.
No, but I think you are summarizing it very well, Scott. I—you are right. There is a part of the Big five will be, as I said, also that we have already started the shared service activity. We have already started activities with indirect sourcing, and that will contribute, but not a lot. And then we have this improvement of currency of SEK 200 million, and then we have to see where we end up. Actually, we still believe that the impact could be around SEK 500 million, but I guess you took away the fee we are paying to the government, which is around SEK 100 million. But we have to see where we end up, really, at the end of the day on this SEK 400 million.
But we still believe that, you know, we incurred SEK 175 after the two first quarters, and let's see where we end up before we say that this is not going to happen next year.
Thank you. So just very last question for me, please. The EBITA guidance that you give, am I correct in saying that's according to the historic definition, so adjusted EBITA, excluding acquired amortization, that's the metric that you're guiding on here? And also, just to understand, historically, the previous management team, and apologies for bringing this up, but had highlighted an aspiration to take group margins north of 22%. Am I correctly understanding that within the presentation today, we're now shying away from those targets, or that's not an attainable target for Getinge anymore?
That's a relevant question.
Yeah, that's a good question.
Yeah.
I think the giving a magic number like 22, I think for me, it's to do the math now on the plan that we have. I would say it, the ambition is a considerable margin improvement during this period, but I don't want to mention magic numbers, because then they become kind of carved in stone, and then things happen going forward. So I think if you do the math from, let's say, different sensitivities, it is quite an ambitious margin improvement plan. So I'm not shying away from it. I just don't want to, let's say, get married to a magic number that becomes a bit, let's say, it kind of takes over everything we need to do.
But it is gonna be a significant margin improvement in the start.
Are you satisfied with that answer? Good.
Yeah.
Scott is never satisfied.
All right. I have to learn that.
Then we move over here to the gentleman over there.
Can I ask about the EBITDA target with 10% growth? Is that a target you commit to every year throughout the period? And you seem to be much more bullish about year-over-year earnings growth in 2017 versus 2016. Is this a target we should count on for each of these four years?
First of all, we say better than 10% EBITDA growth. Again, I don't like to give any guidance on 2016, but the more we get in You remember I showed this picture, how quickly this realization of the SEK 2.5 billion-SEK 3 billion is going to happen. We have a small portion in 2016, and so let's wait and see a little bit where we end up in 2016. But the coming year, I'm very confident that we will reach that level.
If you would be as explicit for 2015 as you are for 2017 and beyon
What would that mean for EBITA growth this year?
Yeah, I mean, I think there, again, you know, I just want to reiterate, I don't want to change the guidance that we're giving. And I feel it's important not to throw out any assumptions, because, again, we're launching a major transformational program, and we have B ig fourth quarter. So, I don't want to make any, let's say, further comments on the outlook there on 15.
Are you confident with the outlook for this year?
I'm confident we have a plan, and again, I've also signaled a strong, fourth quarter, so I'm very dependent on that being delivered. And that's a bottom-up exercise. And the fourth quarter, again, we're signaling an improvement versus the year before, which will be, let's say, the first time we've done that for quite a while. So, I think other than that, I don't want to, let's say, commit to any kind of a specific number in light of the transformation that we're launching more or less today.
Can I just ask, what's the reason for announcing this program externally first and then internally, I guess, from tonight and onwards?
Well, we have. Let's put it this way, a lot of people have been involved in this, in the actual plan, but the and parts of the program, like shared services, have been there. But the whole new management team structure, we're under regulation that we have to do it in this way. And I would say the conclusion that the plan means a one company structure, that was the result of, you know, I called it the 100-day plan. And that we concluded in early August with the board. It was concluded on the. Not even early, it was 19th of August, where I got, let's say, the board approval. So this has gone quite quickly, and it's quite fundamental.
It's built up on many sub-projects. Let's say, the one company structure, that's something that has emerged as a necessary result of the 100-day, let's say, process.
The internal perspective here is important, of course. How do you look at your going forward when it comes to internal perspective?
I mean, internally, this is a big transformation, but I would say there's a lot of almost expectation that this needs to happen at some point in time. So I've just decided now is the right point in time. So there's a lot of alignment that the change is necessary. I would say I've talked to many in two-level management below, and they're wondering, "Why haven't we done this before, earlier?" So I think there's a lot of inherent buy-in in the necessity. But I think at the end of the day, you know, the leader has to decide to do it, otherwise it doesn't get done. So that's the point where we've come to.
But I don't think it'll be a surprise, and I don't think it'll be a question, "Why are we doing this?" It's more, but it will be, "Okay, this affects me, and what happens with me?" I think it's gonna be more of that type of reaction. But up until now, the reactions I've gotten also from this gang and selectively, I think it's gonna be, you know, getting, "I should have done this a few years ago," and then we would have been in a different place today. But so that's. It's gonna be a big transformation. Yeah.
Over here. Yeah.
Thomas White again at Wells Fargo. One more question, if I may. How important is emerging markets growth for your company as you look at the next 3-4 years? And how much of that was factored in as you made your projections for this presentation, vis-a-vis the more developed markets of Northern Europe, the United States, et cetera? Thank you.
Emerging markets is factored in. I would say we're being realistic on the growth, so it's a higher growth than both North America and Europe. It has been factored in. If I would give some relationships, I would say Europe has a lower growth rate compared to the 2-4. The U.S. is kind of in that range, and then emerging markets is a bit above that range. We're not talking kind of a double-digit factoring in in the plan. Then we have internal plans, because now we're going to one company structure. The belief is that we can, I would say we can overperform versus that plan now that we're given the, let's say, the access to the whole portfolio.
So it is, it is factored in, but I would say at a realistic, at a realistic level and not an overambitious, and definitely not a historical, let's say, percentages.
Gentleman over here, please. Can we have a microphone over here?
Thanks a lot. Andreas Berger from Nordea Credit Research. I have a few questions centering on the debt leverage target and debt leverage. It's pleasant as a credit analyst to see that you're actually communicating a debt leverage target. Not every company is doing that. But my question is, did you ever consider to put it as a firm target like the other financial targets? And how should we see the leverage target of 3x by 2017 in relation to, for instance, the dividend target?
First of all, I would like to say that it has been a discussion in our board, and the board have, so to say, decided that this is the level to And Alex is a part of the board, and therefore, I think it is a firm target we have. And then when it comes, at least what I understand what the board discussed, is that this is top priority But it's very difficult for me to say if the board is going to go away from this target because of the dividend policy or not.
But, my full understanding is that the board are 110% committed to bring down the level, and they have really put me to say that we should do that. So, I don't see, and also when we have talked about acquisition, future acquisition, we will always—I should say, we will do share issue in order to make sure that we stay on this level long term. So I think there is a clear commitment from the board, from top management to stay on this level. So I think why we didn't put it up as a target, financial target, is more that we focus, so to say, more on the operation-
Operation.
I should say, on that. But it's still as firm as those financial target as we have presented.
I have a follow-up question on the 1.5 level that you expect by 2019. I mean, doing the math, you are at 5 now, SEK 5 billion EBITDA. 1.5, that implies an EBITDA level of SEK 10 billion by 2019. SEK 3 billion, I understand, comes from the Big five projects. But where are the rest, the other SEK 2 billion coming from? If I translate it into the SBA growth of about 10%, it implies that they have to grow by closer to 20% per year, year-on-year.
I have done the math more detailed than you are doing now. I know that we are going to get to that level. Because we have done a very detailed plan with a very detailed cash flow, and the balance sheets, so I'm very confident in that.
Thank you.
Can you elaborate on that, or is it-
We will go into very much more details.
All right.
And I think it is not the right time to do that. I think it's more that I could reassure the audience here that we, the plan is such, in such a detailed way. So therefore, I feel very confident that we will reach that level. And that is for what I could say for the time being.
Thank you. Gentlemen, over here.
Tony, it's Associate General. The growth potential of emerging markets has been mentioned on a number of occasions this afternoon. Emerging markets is quite a general term. Are you able to give any specific clarity on priority areas or specific initiatives within emerging markets for us?
Yeah, I would say priority areas. I mean, we are already very active in China, Brazil, and India, so of course, those continue to be also priority areas for us. We're also increasing our exposure in non-BRIC countries, and I think we have several projects that we're looking at and seeing what can we do in non-BRIC countries, especially in Asia and Middle East. The discussion we're having, which is the strategic one, is how do we develop our portfolio to capture more of the market need, which is, let's call it the mid-segment, as we've called it. Again, we have a series of projects ongoing that will be launched in the near future.
Then I will initiate, let's say, more a bigger overview on what do we really mean by that and how can we get mid-market portfolios, including maybe looking at some acquisition objects and you know other types of, let's say, strategies for emerging market. But that's something that's starting today, and again, to be realistic, there's some things we deliver within 3-4 years, and some things we deliver between 3-5 years. I think that type of discussion comes a bit later. But so we see emerging markets absolutely as a focus here, and I think our starting point is very, very good.
But I would say minus the R, the BRIC minus the R, and then looking to compensate, let's say, for that, in other non-BRIC emerging markets.
Thank you. Ah, you were faster. Good.
Hello, John Hernander from Nodea Asset Management. Two questions, both on first on the portfolio management that you highlight. I mean, you don't give out any details or not any savings or potential here right now. But when you look at return variance in your portfolio, can you elaborate a little bit, I mean, how wide that actually is? And what do you mean by increased transparency on profitability? Does that mean more allocate cost further out in the organization? And you'd also mention shutting down unprofitable product lines. So can you give an indication on sort of the barriers that you have in the portfolio? Where do you expect the actions to be taken, and when we can see some kind of potential or clarification around that area? That's the first area.
The second is that you give a very clear roadmap here. It's impressive to see that, but sometimes the market becomes pretty impatient with delivery, et cetera. How will you report this going forward in terms of, you know, the projects that you have realized, the savings that you have done, et cetera, so we can see that you're on the right track? Thank you.
Yeah, if I take the first question on the simplifying the portfolio, I'm just signaling a start of a direction, so I don't have the conclusions on that, actually. And also, we didn't factor in anything as, as you've seen it. So I think it's, it's the right point in time where, where now where we can look holistically and see what's the profitability of the different product categories and start to make calls, let's say, on getting a group level. Before, it's been kind of each silo had its own, let's say, profitability, transparency. And I'm willing to say, okay, if, if we don't have, if we can't create value within some categories, we might, we might divest from them or, or we might, just stop that.
So, but it's too early to say. I don't want, and I haven't committed any value on that, also for that reason. And that, so I would say that would be my conclusion on that, but I do believe we need a transparency, let's say, exercise. It's not that we don't have it, but right now I can—now I can suddenly compare Maquet Medical Systems to ArjoHuntleigh in a completely different way, and we can do it as a management team, so there's less, let's say, of defense on that. Then the initiatives, I think, we'll have to get back to you on how we should follow up towards you. All I can say is I'm following up with a PMO.
We have a PMO organization, and I don't know if some of you are familiar with the way private equity runs these types of projects with kind of PMO deliverables and phasing of the projects. So we'll do it in a similar fashion internally. And then I think we need to get back to you exactly on how we should, let's say, report back on the Big five in a transparent way. But I also need to signal we have other projects, and, you know, the totality is not only the Big five. But we'll give you We'll get back to you on, let's say, a reasonable level of transparency, so we don't end up in also too detailed, let's say, discussions on which ones are the Big five.
But internally, we will be following it up as, let's say, a project, through a project management office. And again, the structure will be Big five, but then one of the Big five is the biggest one. That'll be a special project, let's say. So we have a lean SG&A as one project stream, and then a Big five, including that. So that's the way we're structuring. And we have not only Nicholas, but a team below Nicholas, helping us follow up on that.
Thank you. Scott, gentleman over here. Thank you.
Sorry, thanks very much for taking up my, my follow-up questions. I appreciate there's been, obviously, a lot to get through today, so I'm perhaps not surprised. But, I was hoping to have a reminder about the strengths of Getinge as a business. So obviously, there's been a lot of focus on pressures and cost-saving measures, but it certainly feels to me that the equity market analysts, the communication has been somewhat overlooking the various strengths of the various subsegments that Getinge have built up over the many years. So is it very possible at least to give us an indication of how you see your strengths? What are the stronger businesses, how the barriers of markets are for your areas? Are you seeing facets and pockets of competition that you didn't see before?
Just a bit of a discussion about the business rather than the costs would be, would be helpful also. Second question, just on R&D, actually. I know historically the organization has been very optimistic about internal innovation potential. It seems that that's been quite disappointing over years and not really launching the sort of products that we were expecting and communicated. How do you expect to rattle the R&D organization to start delivering upon that? How do you see the R&D ratio trending for the organization or the gross expenditure and delivering from that? Last point, actually, specifically for Ulf, and a very technical one, apologies. A lot of investment going into IT systems, SAP systems. It feels to me at least that these are more capital investments rather than restructuring costs.
So why is it that these are P&L-based expense items rather than something you would see on a cash flow statement under CapEx? Thank you.
Okay, I can take the first one, and, I would say maybe it's an apology that I didn't focus on that, but again, we couldn't focus on everything at the same time. So I hope we focused on a directional and transformational, let's say, area. We are very strong in. Again, if I would split out the different, categories, we have, probably 12 categories, where we have market-leading positions in nine to 10 of those, and now, I mean, we're, we're top two, top three. If we look at the new business areas, I would say we're definitely in a global leading position on the the new surgical workflows, where I think we have a very, very strong proposition.
And I think we need to look at more of the, on the IT side, what we do there. But I think basically, the surgical workflows, combined with Infection Control, is definitely, let's say, in a leading global position. And I think we can do more when we combine forces. If I take the right-hand side, which was the Extended Care or the Patient and Post-Acute Care division, there we have a globally market leading position as a totality, as a business on, let's say, patient care and post-acute care, including the mobility and the, let's call it the elderly care. So that's a global strong position. And in the middle, if we take that, which is a bit our. I would say that's also our growth journey.
There, I feel we have a strong positions on individual therapies, but we need to strengthen the totality more. So there, probably the picture I'm showing you is I can show you therapies where we have leading position, also in stents, and we acquired Atrium because it had a very strong position. But I would say there, portfolio-wise, we need probably to strengthen the overall portfolio offering. But since it's therapies, I believe still there, you can still, let's say, be globally competitive within the individual, let's call it subunits, and don't have to have the totality in place as yet. So there I feel we're still competitively very, very strong company.
But again, I want to point out the three together. I think that as we're Getinge makes a big, big difference versus other companies. It's up to us a bit, how do we leverage that? Because that is our point of uniqueness, and I think there are very few companies that could, let's say, show the totality in that respect. But you will get much more from me going forward, I would say, talking about the strength of the company, because I do believe we have a very, very strong position. And I would say, especially our exposure in the emerging markets is also a unique aspect of Getinge. We have a very good geographic balance.
The R&D perspective?
Yeah, R&D, yeah, we're going, I wouldn't call it a shake-up of R&D, but I'd like to look at how our R&D functions. And I would say now in the new structure, R&D, we're gonna be combining R&D within the three areas. So what was before maybe, you know, five individual silos, will become much more one common R&D strategy. So I think that's gonna be a result of this exercise. And I think we're in a good position now that each one of us does a transparency analysis of, you know, what's in the pipeline and what does it give? And I think as a result of that, we're gonna have more KPIs in R&D, so we'll be measuring R&D with internal KPIs in a different way than before.
I believe in measurements saying, you know, how much of the portfolio is less than three years old? You know, how many on-time launches do we have? So there are a series of KPIs that, that I'm used to working with, that I'll be implementing. And, and I do believe over time, we will be investing more in R&D. But again, before I promise, I want to analyze what the current situation is.
Okay, Scott, thank you for bringing that question up. If we look back, we had the three different business area, and each business area were investing, so to say, in their own ERP system. So two out of the three had no SIP system. Those two, or which includes a number of different companies and factories and so on, are on a different ERP platform. Now, when we do this work with the reorganization, and we could also call it as a restructuring, then we have to write off the investment, and that is coming through the restructuring cost, but has no cash flow impact. The cash flow impact is the investment we are going to do by SEK 1 billion, as I said, which will come through the CapEx. And that is the SEK 1 billion, which is coming through the CapEx, starting already this year.
We have already started an investment into that and will go up, up to 2020. So that is the logic behind that. Does that answer your question, Scott?
Thank you. Just to understand, so the SEK 750 million restructuring that you outlined, that is a cash-relevant restructuring number?
Correct.
But this SEK 450 million or so restructuring, you're suggesting that's a non-cash related restructuring charge?
Correct.
But then the CapEx, it sucks into CapEx investments going forward.
The CapEx of the new ERP system is going to be SEK 1 billion over from 2015 up to 2020, when we bring in ERP in all our operating units.
Okay, thanks. That's helpful. And then that just last brings us to this last point then. Why, why is it that the cash paid out in restructuring charges, as you outline it, is significantly higher than the P&L expenses per year? It seems that the cash paid out seems to be higher if you, if you aggregate all of those sums.
I think there is still some old restructuring activity. And also, if you have, starting this year, SEK 540 million, which we have this year, and a part goes in, so to say, because when we take the charge, it's probably a year time different, so to say, when it actually is paid out. And so that—those SEK 750 is going to come, so to say, later on, so to say. Some of them come straight away, I should also say. But it's a timing difference between the charge and the paid.
Thank you. Over there, lady.
Hi, Inez from Bank of America. Just three quick questions for me, please. The first one, in terms of your, the numbers you provided for net debt to EBITDA, how should we think about that if acquisitions come? So versus your ambition of acquisitions, would these targets change, and how would they change? Second question, emerging markets growth is an important part of your ambition, and it also seems that working capital is an important part for you to achieve your cash conversion ambition. Given that usually emerging markets are more demanding in terms of receivables and therefore working capital consumption, could you comment a little bit on the risks that are here? Just a third very quick question.
Could you share with us how is the capacity utilization of your plants as of now, and what would be ideal when you consolidate everything you would like to consolidate? Thank you.
Thank you very much.
Should I start, Alex?
Yeah, you can start with the first two. I can take the last one.
Okay. As I previously said, actually, is that if we make an acquisition, the board have already said that we will probably do a right issue, in connection with an acquisition to stay on this long-term target, to be net debt to EBITDA, to be below 3. And that is a comment which has been already made by the board. And when it comes to, to, improving working capital, I haven't mentioned that we will, in a great, amount, improve our cash collection. I think we are doing quite a good job, and, and as we are collecting our receivables in the foreign, in the emerging market, that will probably not change a lot due to this sort of change of organization. And we have not, so to say, included anything of that into our, working capital improvement.
The most of the working capital improvement is coming out of inventory, and no major impact from cash collection of our accounts receivable.
Thank you
Yeah, on the supply chain side, I don't want to go into individual kind of utilization and numbers and figures, but the snapshot that I've had is we do have a utilization that's too low in the individual factories, and that's part of why we need to take the journey of having fewer bigger factories, and preferably located more in low-cost country environments than before. Again, ArjoHuntleigh did the journey, and I think now we have a plan for Infection Control, and I need to initiate that also for medical systems. So we—again, we can get back to you with more information on that when the homework is done.
But, I can say as a starting point, that is one of the starting points, as to say, the utilization is too low, and in essence, we have too many factories in too many different places.
When it comes to low-cost countries, can you give us some information on where you stand today and the potential?
Yeah, I mentioned again, that's the production facilities in low-cost countries. I mentioned a ratio which is 20% of our components-
Yes.
come from low-cost countries, and in some cases, we produce also in the low-cost country. In the other case, they're produced in other places of the world. So we have 20% today, and the ambition is to double that to 40%. Also part of the strategy is, and I think you've seen that already, and it's gonna be more of that, is that we have a hub in Europe, in Poland. We're actually moving a lot of our, let's say, production towards Poland as a hub, and we have a potential hub also in Asia. So there, I'm also a proponent of saying it's regional hubs rather than producing things also in Asia and then shipping them to Europe.
I think it's on a case-by-case basis. I see us using more of the hubs that we already have, and then maybe looking at other opportunities as well.
Thank you. And question number three. Could you-
Follow up.
Yeah, of course. Yes.
Just on the working capital, on the inventory side, how that work with your ambition to grow? Could you just give us some color on how you're going to decrease inventory level?
Yeah, as in our plan, we have two items, so to say. Inventory will grow, by all means, but those amount, it's not, so to say, it's not the net. We will have whatever we grow. Let's say, if we grow 2%, I believe that inventory will probably grow 2%, but also, we have included in the plan that we will be able to reduce inventory of that range, I've said. But still, also, it will grow because of the growth of our top line. So that is included. Both impacts are included in our plan.
But, surely, if you are entering other markets, you will have to build up some inventory, or is this not correct to assume?
It could be, absolutely. And, as I said, we have included that, so to say, by using more or less the growth, what we are growing, we also believe that inventory will grow. And as the growth also include that we are entering into new market, it's also included in a possible build-up of inventory.
Thank you.
Thank you very much. Do we have some further questions over here? Gentleman over there.
Thanks. Yeah, just a question regarding Lars Sandström, SEB. Just a question regarding the product portfolio review. Can you say anything about whether you expect divestments in the years ahead that would be significant enough for you to adjust for these adjustments in the organic growth development?
Too early to say. No, so my answer would be I don't know that at the moment until we've done the review. So this includes what we have today. Let's say that's-
Is there a threshold for divestments where you will adjust for them or not? I mean, in terms of sold revenues or profits or whatever.
We haven't talked about that. I think when we get there and start discussing actively divestments, so there, I must say that hasn't been part of my first five months. I think then we'll get to those kind of those kind of answers. But right now, I'm more, let's say, doing the transparency, and then I do see some areas where maybe strategically we don't have an interest to be there in the long term. And then there's, let's say, a profitability aspect. So again, it's too early to say. We haven't actually had any active or structured discussions around divestment at the moment.
Thank you. Scott.
Thank you.
This is the last question for you.
Okay. Yeah, I, my understanding was previously that the management board were incentivized, aligned with the earnings projections of the company at the time, so 15% bottom line growth, so there was an alignment of that within the compensation of the management board. Can you talk a little bit about how senior management are incentivized under the new structure? Is there a hard 2018, 2019 target? Is it annual double-digit earnings growth, or is there some stock consideration that we might consider? Just a little bit of color on how management keep incentivized to deliver this plan.
. Yeah, I will say there are three components to the discussion, and I'll. The two are gonna be the same as before. Right now, I'm also talking, let's say, having discussions with the board and remuneration committee and chairman on what the long-term plan is. But if I take the, let's say, the short-term incentive is very much skewed to EBITDA, I would say. Deliverables, I would say a big component of that, partly working capital for the roles that can affect working capital. So that's how we'll be incentivized on annual basis on the short-term bonus. Then I'm proposing to the chairman at the moment, or we're discussing together, possible ways of having long-term plan, which will be on a three-year perspective.
And there, again, I have discussions ongoing, and we'll hopefully be concluding in the next weeks or month in order to have a long-term plan, incentive plan, which is aligned, let's say, with this plan. So that's in discussion, but not concluded.
Thank you very much. We have time for one more question. Who is going to be the lucky one? All right, then I-
Good timing.
Yeah, good timing for the last person. I'll leave it to you, Alex, to sum it up.
Okay, yeah, I would say we I went through my summing up and, what I wanted to say is, one is, thank you for participating. The questions were extremely valuable also to us. Again, I'll reiterate again, it is a journey, it is a transformation. And as Ulf said, actually, there's a lot of detailed planning behind this plan. And what I would like to also hear from Ulf, that I hear sometimes, it's more detailed plan than we used to do, and that's the discussion we've had. So I'm very, very confident that we have a lot of tangible activities.
So my role is now, I would say, executing on the plan, getting the management team in place, and we have a very, very motivated management team, and starting to cascade the plan. I hope I gave you clarity on the direction, and I know I haven't answered all the questions, but I hope also to have you understanding that all questions cannot be answered in a five month period. So I tried to take them, I would say, segment them, and I really believe that the three-point plan we presented today will get Getinge back, back on track.
And we'll have a transitional year next year, where my pure real ambition is to, in a way, keep the customer out of our transition, so not let the customer feel what we're going through internally, but actually to do a transformation internally within the company. I do believe in Getinge, and I do believe we have a very, very, very interesting global position to play in the long term. I do see Getinge very much like my predecessor, saying there's gotta be some bigger players out there to get Getinge also to a transformationally bigger size than we have today.
But my focus is making sure that the base is healthy, and I do believe that on this type of strategy, we can add acquisitions on in a more, let's say, long-term view, rather than a bolt-on type strategy, where you're adding acquisitions and you don't really know where the totality is going. So thank you very much. I hope we answered some of your questions in a relevant way, and I look forward to keeping you all updated on progress. So thank you for coming. Thank you.