Good day, welcome to the Hexagon interim Q3 2014 report conference call. At this time, I would like to turn the conference over to President and CEO, Ola Rollén. Please go ahead.
Thank you. Good morning. Good afternoon, everyone, welcome to this Q3 interim report from Hexagon. If you turn to slide four, we have an overview of the third quarter. Organic growth amounted to 8%, was primarily driven by Metrology. Geosystems organic growth slowed down despite strong development in North America and certain parts of the EMEA regions. This weakness stems from the Chinese construction industry as well as the mining sector in Australia. Overall strong profitability, gross margin of 58%, and an EBIT margin of 22% for the group in the quarter. If we go to slide five, I'd like to highlight that we've now detected and confirmed a change in our seasonality and profit. This has to do with our increased exposure to South America and Asia.
From now on, we're going to state that Q1 is our weakest quarter, followed by Q3, whilst Q2 and Q4 are our strongest quarters. Slide six, key numbers in the third quarter. Net sales amounted to EUR 648.6 million. It's important to remember that we have a revenue haircut of EUR 1.8 million in the quarter in these numbers stemming from the acquisition of Mintec and Vero Software. Operating earnings amount to EUR 140.7 million, corresponding to an EBIT margin of 21.7%. Earnings before taxes, excluding non-recurring items amount to EUR 132 million, which is a 20% increase over the corresponding period last year. This corresponds to an earnings per share of EUR 0.25, or excluding non-recurring items, EUR 0.29 in the quarter. Key figures for the first nine months. Net sales now amount to EUR 1.879 billion, which is a 6% increase organically over the corresponding period last year.
Our operating margin for the first nine months is now at 21.5%. Slide eight, cash flow. Cash flow from operations, before taxes paid and interest received, amounted to EUR 177 million. If we look at cash flow from operations, including taxes paid and interest payments, interest cost, we actually have an increase of roughly 26% in the running operating cash flow. The big negative in the quarter compared to the previous Q3 in 2013 is really what's highlighted here, it's the change in working capital, where with this organic growth, we simply have to invest in working capital. Ordinary investments is also highlighted, it's just to highlight that we have EUR 7 million for the new campus in Huntsville, Alabama, where we yesterday inaugurated the premises. That's EUR 5 million more than the corresponding period for 2013.
If we exclude and we back out the investment cost for the campus in Huntsville, we actually have a declining investment activity. Working capital, slide nine. In spite of the negative number in the cash flow statement as a relation to sales, we still have a positive trend where it is trending downwards, and it is significantly below 20% for the quarter. Slide 10, just to highlight that we refinanced the group in the third quarter. We have a new EUR 2 billion RCF financing in place as from Q3 2014. The average cost for that new facility is roughly 1%, and it represents 62% of our borrowings. Another thing I would like to stress and highlight in this slide is the bond loan, which expires in the fourth quarter of 2014. That is to be replaced with cheaper financing going forward. Slide 11, currency impacts in the third quarter.
We saw EBIT being reduced by EUR 3.2 million in the quarter and sales EUR 1.4 million. The reason why the EBIT is larger than the sales reduction is simply because of the Swiss franc that was strengthened during the quarter. For the nine months, we can see the corresponding numbers are EUR 24 million negative for the EBIT and EUR 51 million for sales. From here on, we expect that in the fourth quarter, we will have a slight positive effect from currency going forward. If we summarize from an operational point of view, the extraordinary financial events in the third quarter, we should go to Slide 12, where we can see the third quarter as reported, operating earnings and net sales. The so-called haircut impact is -EUR 1.8 million on sales and a corresponding -EUR 1.8 million on earnings, resulting in a negative EBIT margin impact of 1.2 percentage points.
You have the FX impact that in the quarter was -EUR 1.4 million for sales and -EUR 3.2 million for earnings, which had a negative 0.5% impact on operating margin. If we back these two effects out, we could have reported a 22.4% EBIT margin as a going concern. For the half year, it would have been 22.2% rather than 21.5%. We will have haircut impacts even in the fourth quarter, as from Q1 of 2015, these haircut impacts stemming from Vero Software and Mintec will be taken. Moving to Slide 13. What did the sales mix look like in the third quarter geographically? North America expanded its share to 30%. Western Europe reduced its share to 29%, and all the other regions, but Asia, excluding China, were flat. Slide 14, analysis of organic growth per geographic region.
We can see that North America, China, South America, Middle East and Africa, Southeast Asia all grew above 8% organic growth in the quarter. Western Europe, single-digit growth, Russia, slight negative growth in the quarter, and we have highlighted the UAV market and Australia. The UAV market for military applications contracted in the quarter, and so did Australia. The market was simply reduced because of lack of demand from the Australian mining market. Slide 15, an overview of segments and geographic regions, where if we first look at the regions, we can see that North America is now growing above 8%, and China is once again growing at double-digit growth. Actually, North America also grew double digit in the quarter. Those are the two positive trends. Then we see Asia, a yellow arrow, which represents 0%-8% growth, Asia without China.
If we look at the segments, we can see strong activity backing up the Metrology numbers at the bottom, automotive manufacturing, and aerospace and defense. If we move to Slide 16, EMEA, Western Europe recorded low single-digit growth, 3% organic growth in the quarter. Italy and Spain, however, saw double-digit growth rates from low levels, where we can see the Italian and Spanish markets starting to grow again, but still below the 2008 levels. Demand in Western Europe was primarily driven by automotive and aerospace. Infrastructure-related activities slowed down, partly due to the strong development seen in the third quarter of 2013. Russia weakened significantly, going from strong double-digit growth in the second quarter to slight negative growth in the third quarter. Eastern Europe and Middle East continued to see double-digit growth in the quarter.
That is the oil and gas activities in Middle East continuing, as well as automotive manufacturers and other engineering companies in Western Europe investing in their Eastern European plants. Africa recorded strong growth in the quarter, partly due to a large project order in South Africa. Asia, Slide 17, 12% organic growth in China, driven by primarily the automotive and electronics and power and energy sectors in the Chinese market. Surveying recorded another weak quarter due to the slowdown in infrastructure and construction. Southeast Asia, solid growth, primarily driven by Indonesia, Singapore, and Vietnam. Growth was held back in the region by Australia, which saw another weak quarter due to poor demand in mining. Americas, Slide 18. Growth was driven by continued strength in the construction and infrastructure sectors in North America and strong demand in automotive and aerospace in the engineering sectors.
Activity increased in the defense segment, apart from the earlier mentioned UAV-related business, which is conducted by NovAtel. South America, strong double-digit quarter. Another strong quarter for South America and for more or less all our businesses in the region. Slide 19 will give you an overview of the organic growth since the financial crisis, third quarter of 2008. We can see that all regions are now above the pre-crisis levels of 2008, and Asia is already 60% larger than the previous peak in 2008. Organic growth by application area, Slide 20. We can see the acceleration in growth in technology and Metrology again, and the slowdown in Geosystems related to the mining and the Chinese construction sectors. Growth margin, Slide 21. The nine-month number is now 58% growth margin, and that is one percentage point higher than the corresponding period last year.
If we move to Slide 22, we have the 12-month rolling, which is, of course, a very rigid curve when we now add quarters. The 12-month rolling operating margin is now 23% for measurement technologies. Mergers and acquisitions, orders, and product releases. It was a big quarter for mergers and acquisitions. We consolidated Vero Software and Mintec, and we're going to come back to that. Let's turn to orders. We got an order from the Crossrail project, a new order. This is Europe's largest infrastructural project, and it's an automated monitoring system for Paddington Station in London. We also maintain GNSS positioning in challenging locations via a partnership with Locata Corporation. It's an ideal combination where we use this technology in so-called GNSS-denied environments, such as deep pits and against high walls. It was implemented in Chile and Australia in the quarter. Slide 26.
The first bathymetry underwater solution is now sold in China. Little more than a year ago, we acquired Airborne Hydrography in Sweden, and we've now launched the next generation, so-called LiDAR system that can detect underwater structures and activities. The new product is called Chiroptera 2. We launched that, and it's now installed in the Fujian province in China. Maybe something for the Swedish Navy. Slide 27. Hexagon helped Georgia, U.S. to expand its road network. It's an $840-million investment in the so-called Northwest Corridor in the state of Georgia in the U.S. Slide 28. We're also supporting Brazil's infrastructure. We've installed high-technology monitoring and imaging sensors in the São Paulo Metro over the quarter. It's the 65 stations and four million passengers per day.
CES, which is another Brazilian high-technology company, installed our sensors to monitor the Paulo Afonso Dam in the state of Bahia in Brazil. Slide 29. We also supported tectonic monitoring in southern Italy. It was an installation that was performed in the quarter in collaboration with the National Institute of Geophysics and Volcanology. What this system will do is simply creating alerts for civil protection in case of movements or any worsening of the conditions in the volcano. Slide 30. Hexagon's airborne cameras are flying high. This is the launch where we combine with our partner Swissdrones, the Dragon 50 UAV with the Leica RCA30 camera. We've sold several of these systems to JUPEM in Malaysia for mapping and emergency response services. We also got an order from the government of Trinidad and Tobago for mapping and special projects in the Caribbean.
I think this is a must-have. Slide 31. SmartPlant gives further competitive edge to EPCs in China. We continue our expansion in the Chinese design and CAD market with our SmartPlant suite of products. This time it was China Chengda Engineering, which is the leading EPC in China that renewed its strategic alliance with the Intergraph Corporation. Slide 32. ST Topografia is a Brazilian-based engineering company that offers services and is consulting the infrastructure, shipbuilding, and offshore industries in Brazil. We have signed an agreement to provide them with the Smart Modular Assembly, which is a new product for us. This software process will enable accurate verification of dimensional deviations during the manufacturing and assembly process of these large structural projects, such as shipbuilding, infrastructure, and offshore constructions. Slide 33. Two solutions to analyze traffic accidents in the quarter.
New Zealand Transport Agency, NZTA, has bought a system where we provide crash analysis systems to manage, map, and analyze traffic collisions in New Zealand. Mississippi Department of Transportation bought a similar system that will manage a 100,000-mile road network, averaging 125-plus accidents per day. Slide 32. Evonik looks to Hexagon for industrial security solutions. This is a security installation and software system, which was installed in Evonik's facilities in Darmstadt, Weiterstadt, and Worms in Germany in the quarter. Slide 35. We also helped Lesotho in Africa to prepare for the 2016 census, where we combine sensors and geospatial software and a so-called smart client solution, where we work with the Lesotho Bureau of Statistics to basically tally up the population of Lesotho. Slide 36. Hexagon Metrology got an order from its strategic partner, Zimmer.
The goal is to scan and measure knee replacement joints. It's a collaboration with Zimmer Orthopedics in Ireland. They installed several of our systems just to make sure that they don't compromise the quality in these implants. Slide 37. GeoMax X-PAD for Google Glass was a new so-called wearable technology that we launched in connection to the GeoMax X-PAD product. It will allow a surveyor to do a stakeout and survey operation via hands-free voice commands rather than do it physically. The information is directly visible on the screen in the glass. It's a super cool application. Slide 38. New sensor series leverage the newly acquired company, Veripos, that we acquired. We launched a land-based positioning service called TerraStar, and we're now launching the hardware to go with this subscription service in the third quarter. An update on Hexagon's so-called Smart Content Program, content as a service.
We've received strong interest and strong growth in the quarter, financial growth in this service in the quarter. We received an award from a non-disclosed client in the consumer space to collect aerial images from countries in Europe and the entire U.S. We started invoicing that account in the third quarter. We also received an order from a U.S.-based governmental organization with a multi-year subscription contract to utilize this data that we're collecting for decision-making processes. We've completed more than 3 million sq km of data capture by the end of 2014. A huge expansion and a promising project for us. Slide 40. SIMS 360 had two successful installations in the third quarter. We deployed the technology within the Volkswagen Group. We also delivered a multi-cell installation in North America with an additional OEM that wants to remain anonymous. Slide 42.
We've come to the summary. Hexagon reports yet another strong quarter, 8% organic growth. Metrology and Intergraph PP&M is showing strong development in the quarter. Group gross margins amount to 58% on the gross margin and 22% EBIT margin. Strong cash flow generation enables pursuit of attractive acquisition targets. Thank you very much. We've concluded the presentation. I'm now open to take any questions from the listeners. Thank you.
Thank you. If you would like to ask a question at this time, please press the star or asterisk key followed by the digit 1 on your telephone. Please ensure that the mute function on your phone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will now take the first question from Stacy Mera. Sorry, from Gerardus Vos, Barclays. Please go ahead. Your line is open.
Hi, thanks for taking my question. It is Gerardus from Barclays. Just two questions, if I may. First of all, I think you have bamboozled quite a few people in the market with a very strong quarter, so congratulations on that. I was just wondering, what do you see out there? You have a very wide exposure, both from a regional and from a vertical exposure. What do you see there from a macro perspective, and how do you see that evolving in Q4 and in 2015? Secondly, on the margin, very strong margin development despite the good growth in metrology, which is the lower kind of margin business. Could you just perhaps give us a bit more granularity? What was driving that kind of leverage during the quarter? Thank you.
Thank you, thanks for the congrats. That is a pretty tough question you are asking. What do we see in Q4 and 2015? Let me take a step back and try to make sense of the slides we have just reviewed. What we see is continuous good growth in America related to housing. U.S. housing starts continue to be in positive territory, we see the construction sector here in North America expanding. We also see this continuous trend that we first started seeing early in 2013, that jobs are coming back, manufacturing jobs are coming back to America, we have seen an increased interest in investing in productivity tools for the manufacturing sector in North America. If we move to South America, we are heavily related to the investments that companies like Vale and Petrobras in Brazil are committed to do in spite of the downturn, which is beneficial for us.
The automotive sector is actually on quite high investment levels in Brazil, still doing well for us. The Brazilian auto industry has invested heavily, we believe that to continue into the next year. If we move to Western Europe, we see a slow but steady improvement in the big five economies of the European Union, primarily U.K. We are a bit concerned with France, we do see a positive trend in Italy, Spain, and Germany. Scandinavia, a bit slower. Eastern Europe is benefiting from companies such as Airbus, Volkswagen Group, and others, either outsourcing to sub-suppliers in the Eastern European Union or investing in capacity and productivity in their plants in Eastern Europe. If we move to Asia, we think Southeast Asia right now is quite exciting with countries like Indonesia, Malaysia, Vietnam. We see good growth prospects going into 2015 in those areas.
We have seen a bit of a slowdown in Korea and Japan, I do not think it is anything dramatic. The big giant in Asia for us is obviously China, where we see good growth from aerospace, manufacturing, electronics, and automotive. We see double-digit negative growth for the fourth consecutive quarter from the infrastructure and construction industries. We think that we have reached the bottom for the Chinese infrastructure investments, gradually we could see a slow but steady improvement from these low levels going into 2015. When it comes to mining, which is a big drag on our growth in Asia, I am now thinking about Australia, we believe that with the newly formed Hexagon Mining division and with the products that we are launching early in 2015, we should see a return to growth for our mining-related business. Is that a good overview?
That's fantastic. Thanks for the granularity.
If we then move to your margin question, Metrology is improving its margins. From having the weakest margins in the group, they're now closing up on Geosystems and technology margin-wise. That's actually improvement margin-wise. We had really good growth from PP&M with 9% organic growth, and that's also always helpful. The underlying trend, moving from more hardware-related to software-related products is once again proving to lift the margins.
Okay, thanks for the clarity. Thank you.
Thanks.
Sorry, we will now take our next question from Stacy Mera, Morgan Stanley. Please go ahead. Your line is open.
Great. Thank you very much for taking the question. I'd just like to come back a little bit on the metrology business. The growth there was really stellar, and I guess when we think about some of the performance in the industrial space, this growth comes as somewhat of a surprise. Firstly on metrology, just some extra granularity on what's going on there, and then potentially on the sustainability of that level of growth would be very interesting. Secondly, on technology within PP&M, you reported again another quarter of very solid growth there. This again comes as a pretty strong contrast to your main competitor in the space. Could you talk about what you're seeing there? Do you think this is an effect of market share gains, or do you just not see the demand environment as weak as the competition is flagging? Thank you very much.
Thank you. We will start with metrology. All of you that participated in our capital markets day saw the product launches that we did in the metrology field with the fiber optical probe and 360° SIMS and so forth. It's fair to say that a large chunk of the organic growth in metrology is stemming from new products now gaining traction in the market. Another trend is that in 2008, we acquired a technology to move into electronics, or more specifically, tablet computers, wearables, and smartphones. We've gained traction. We've developed this technology, and we've now gained traction with several large OEMs in that space. If you know the slightest about the wearable technologies and the smartphone growth, you know that it's strong double-digit growth for both products.
If that is sustainable, I think that's very much a question for yourselves to say, do you think wearables will go away, or will they be further developed? Will smartphones go away? We think it's a new third leg for Hexagon Metrology, alongside with aerospace and automotive. If I move on to PP&M, we're watching the oil price like everybody else carefully, but up till now, we haven't seen a slowdown from our customers, underscored by the 9% organic growth that we report. We think we're in a good space where we, last year, launched SmartPlant Fusion, we launched SmartPlant Cloud, we launched a set of new products and technologies which excite our customer base. We will see for the future, but right now, we feel that we had a really good quarter.
Great. Thank you very much.
Thanks.
We will now take our next question from Guilherme Pelez from UBS. Please go ahead. Your line is open.
Hi, good afternoon, everyone. I was wondering whether you could help me in terms of acquisitions for the fourth quarter. Is it fair to assume that Vero should actually contribute more than it contributed in the third quarter? I will ask more questions afterwards.
That is a fair statement, since Vero was consolidated two out of three months. We were lacking one month of Vero sales in the third quarter.
Thank you. Veripos, is it fair to assume that the contribution was a little bit weaker than in previous quarter?
No. The opposite, stronger.
Okay. In terms of operating leverage, obviously, I think around 40%, is it fair to assume that continues? Is there any investments that you're going to put in place to continue to grow at this level?
We're always putting investments in place, you can assume almost whatever you want. It's your prerogative.
Okay. In connection to previous question, would you say that the difference between you and your competitors in the oil and gas markets, if you could give a little bit more color, your resilience and your growth is mostly driven by new products? Or it's just basically haven't seen it on your overall operations?
I think what we see right now, first of all, we don't run our company looking at our competition. We look at the market and our customers. What we've managed to do is, I think we've managed to launch a set of products recently that is gaining traction from our customers, and they really see the need to invest in this technology in spite of a somewhat slower CapEx cycle in the sector.
Thank you. Thank you very much.
Thank you.
We will now take our next question from Mohammed Moawalla from Goldman Sachs. Please go ahead. Your line is open.
Thank you very much, and well done on a good quarter, Ola. Two questions, if I may. Number one, your performance in Brazil and Latin America in more general, it seems to really stand out, especially given some of the performances we have seen by your competitors, but broader software companies. There were concerns clearly with the elections in the quarter, but do you feel that this is all share gain or company specific to Hexagon? Can you give us a sense of when could you expect this market to further accelerate? Secondly, on Smart Solutions, can you remind us what the contribution to growth was in Q3? I believe it was about a point in Q2. When should we expect that to really accelerate as the products are rolled out? Thanks.
Let's start with solutions. It was another percent contribution to organic growth in the third quarter. When it comes to our Brazilian business, I think it would be hard to accelerate growth from the levels where we are at. We are not reporting Brazil specifically, but we grew by 23% organic growth. I can't promise you that we can accelerate from that level. We have a broad-based demand from several groups and customer groups in Brazilian market, where we span from automotive, aerospace, engineering, power, utilities, oil and gas, and so forth. I think we have a really good position in South America, not just Brazil. I am positive about our future development in the South American market.
Okay, that's great. Thank you.
Thanks.
We will now take our next question from Stacy Pollard, J.P. Morgan. Please go ahead. Your line is open.
Hi. Thank you. Can you just give us an update on new product areas? I think you've mentioned a few, but maybe a bit more detail. Cloud, Smart Solutions, a little bit more on what kind of traction you're seeing on HxGN Content Program and maybe 360° SIMS. That's the first question. The second one would be, can you give us the recurring revenues by division? What the differentials would be between Hexagon Geosystems, Hexagon Metrology, and Technology. Finally, a quick one, what percentage is Russia?
Let's start with Russia, because the other questions are much more difficult. Russia was 3% of sales in the third quarter. New products that are contributing to growth is definitely HxGN Content Program in the Hexagon Geosystems space. We're actually beginning to see traction for our new mining solutions. The Leica MS50 is continuing to grow in Hexagon Geosystems. If we move to Hexagon Metrology, it's the fiber optical probe, it's the 360° SIMS, it's our new PLM product, MMS, that is gaining traction with Chinese customers in the quarter. If we then talk about recurring revenues, Technology is roughly at 70%, Hexagon Geosystems 20%, and Hexagon Metrology 35%.
Okay. Thank you for that.
Thanks.
We will now take our next question from Björn Enarsson, Danske Bank. Please go ahead. Your line is open.
Yes, thank you. Looking a little bit into Technology and SGI and NovAtel, could you give an update on what you're seeing right there? I guess NovAtel should have had pretty tough comps also in Q3. Could you give us some color on that? Thank you.
NovAtel had negative growth in the quarter, that stems from the comments I made on UAVs, the UAV orders not coming in. Whether that's short-term or long-term is yet to be determined. When it comes to SGI, we've turned a corner, we report 2% organic growth in the quarter. We see a slow but steady improvement in both margins and growth for SGI.
Are NovAtel making losses right now?
No, it's above 20% EBIT margin.
SGI is close to that level, I guess, now?
20, you mean?
Yeah.
No, SGI is still in its teens.
Still in-
It still has to grow up.
Okay. NovAtel, is that continues to slide, or are we at a low level, stabilizing, or any trends there?
The trend, if we talk about longer-term trends for NovAtel had roughly 70%-80% of its business with the surveying community selling to companies like Geosystems and so forth. That market has, over the past six, seven years, been under price pressure, even though it's been growing in terms of volume. We made a strategic shift in NovAtel, which looks very promising, and we're now launching products for two new segments. I think we're at the bottom when it comes to NovAtel's top-line growth, and that from here on, we're hopefully having two quite exciting years ahead of us, where we will see NovAtel coming back and excelling again.
Okay, thank you. You've been pretty clear on Metrology, but could you say anything about the backlog there?
The backlog is at all-time high, and the book-to-bill ratio was positive.
Thank you.
Thanks.
We will now take our next question from Daniel Djurberg, SEB. Please go ahead. Your line is open.
Yes, hello. Good afternoon. I just wanted to know, on the technology side, could you say anything about the pickup in revenues coming from the Shell contract in Q3, and also what we should expect in the coming quarters? Start with that.
The planned ramp-up is that Shell would introduce three projects to our cloud-based solutions, and that's been done, and we see a gradual ramp-up in activity using the cloud. What we should expect is the continued growth in our cloud-based business. We have great expectations for that business.
Can you say anything about the Eni and Fluor contract, when that's going to be online in terms of revenues for you guys, and then how much could that be by quarter in 2015, you think?
We don't disclose the numbers by quarter. I'm not sure if we will start to see activity in Q4 or early in Q1 from Eni.
Okay. If you look at the Shell contribution in Q3, it was marginal, but it will move up from here, basically. Is that what you're saying?
Yes.
Yeah. Okay, good. The second question on the 360° SIMS. You said you had three installations in Q3 and one was anonymous. What kind of line up in terms of potential customers do you see in your work with selling this product? How much installations or how much growth do you expect in the coming year or so?
Going from zero, we expect exponential growth, of course.
Yeah
The interest we've seen so far has been fantastic. In the fourth quarter, we launched the next generation SIMS, and I don't want to spoil the show. I want to be able to talk about something come February. All the major auto manufacturers have now viewed this new technology and they are excited. We are excited since they are excited.
Yeah. Okay, interesting. Thank you so much.
Thank you.
As a reminder, to ask a question, please press star one on your telephone keypad. We will now take our next question from Ben Maslen from Bank of America. Please go ahead. Your line is open.
Yeah, thank you. Hi, Ola. A couple from me, please. Firstly, on Geosystems, can you give us a sense on how machine control is developing within Geosystems compared to traditional surveying? Is there any difference in the outlook or the growth rates? Just coming back to the Metrology growth, how does that growth break down across the key different verticals, auto, aerospace, and electronics? Any big difference or is it fairly similar across those end markets? Thank you.
To start with machine control. Machine control is roughly growing at double the rate of traditional surveying. We are mostly focused in Europe, so of course, we suffer a bit from the lack of activity in the European market, but still double-digit growth. What is happening in the longer term with machine control is that it is becoming more and more of an OEM-based game, where it is important to land a few strong and prominent OEMs, then it becomes an aftermarket service business for us. I think we are doing that trend shift fairly well. If we then move to Metrology, the big shift for Metrology in terms of exposure to end markets is that electronics, which was a fairly small market for us last year, is now growing to represent roughly 10% at the moment of total sales.
We expect that to continue to grow as a share of total sales within Metrology. What's driving this is my previous comment, it's wearables and it's smartphones. Otherwise, I think auto and aero is fairly stable.
Got it. Would you give us a figure on just how fast electronics is growing within Metrology?
Coming from nothing, you can do the math yourself. It was 3% last year and it's 10% at the moment.
Got it. Okay.