Ladies and gentlemen, welcome to the presentation of the Hexagon European Report 2011. Today, I'm pleased to present Ola Rollén, President and CEO, and Håkan Hållén, CFO. For the first part of this call, all participants will be in listen-only mode, and afterwards, there will be a question and answer session. Mr. Rollén, please begin.
Thank you. Good morning and welcome, everyone. If you have the PowerPoint presentation, I suggest we go to slide number four, overview Q4 2011. Organic growth for the group amounted to 6% in the quarter, and the growth came primarily from the ongoing recovery in the mature markets, as well as strong demand from primarily automotive, aerospace, power, and energy sectors. Excluding the lack of investments that we've been talking about for the past 12 months in the high-speed rail network in China, Geosystems would have reported a 4% organic growth, global growth. We report strong double-digit growth in metrology, PP&M, and those are really the shining stars of the quarter. SG&I, the other division in Integra, is improving but still reports slight negative growth in the quarter.
Strong gross profit and EBIT margins in measurement technologies, in spite of a strong negative currency headwind from primarily the Swiss franc against the euro in the quarter. This quarter last year, I think the exchange rate was around 1.32, 1.33, and it was 1.20 for the quarter. In spite of that, gross margins came in at 54% and EBIT margins at 21%. Had we not had this currency effect in the fourth quarter and the Swiss franc would have been where it was back in October, we would have reported a 23% EBIT margin. Operating cash flow, however, increased by 26%. Slide five, just to remind you of our seasonal pattern. It's still valid even though we can see a less accentuated pattern with Integra's earnings profile. Slide six, key figures and the P&L statement for the fourth quarter.
Operating net sales now are equal to recorded net sales, and this is basically because the so-called revenue haircut was concluded as of the second quarter of the year. Net sales amounted to EUR 692 million. Operating earnings, EUR 122 million, which corresponds to an EBIT margin of roughly 21%. Earnings before taxes landed at EUR 107 million, and that corresponds to an earnings per share of EUR 0.24. Slide seven, the full-year numbers. Operating net sales amounted to EUR 2,177 million, and that is up some 46% recorded growth and 12% organic growth over 2010. EBIT came in at EUR 440 million, which is 61% more than the corresponding period last year. The EBIT margin improved by roughly two percentage points to 20.2%, and earnings before taxes, excluding non-recurring items, amounted to EUR 381 million, which corresponds to an earnings per share of EUR 0.85.
Cash flow, and it's important to remember that our cash flow is changing in its structure as we grow our software business. What I mean by that is the typical setup when you sell software is that you get prepayments, which affects the working capital in a positive way, whilst when you sell hardware, you tend to build an inventory, you invoice, and then eventually you get paid. Our traditional business would boost the line cash flow from operations before changes in working capital, whilst Integra's business would reduce the changes in working capital. When you blend these two businesses, the ratio to measure really, which is really interesting, is cash flow from operations, i.e., including changes in working capital. Cash flow from operations came in at EUR 113.3 million for the corresponding period last year, where it amounted to EUR 81 million.
Ordinary investment activities, we had a strong investment activity in the fourth quarter, slightly above normal and what we project for 2012, EUR 42.7 million, which means that operating cash flow came in at EUR 71 million. Cash flow from operations increased by 40% in the quarter and operating cash flow by 26%. If we move on to slide nine, currency impacts and effects in the fourth quarter, and we're obviously comparing euros, Swiss francs to euros, renminbis and dollars to euros. We had a positive top line impact in the quarter due to the weakening of the euro against the Chinese renminbi and the U.S. dollar. From an EBIT point of view, unfortunately, the Swiss franc continued to appreciate, which squeezed our EBIT margins, and we report thus a negative effect on the EBIT of minus EUR 5.3 million.
For the full year, the negative impact primarily on the EBIT line stemming from the Swiss franc appreciation for the year is EUR 21 million. Market development, if we move on to slide 11, our sales mix per geographic region has changed a bit over the year compared to Q4 2010. North America has grown by two percentage points, South America by 50%, one percentage point. Western Europe is shrinking by three percentage points, and the other regions remain more or less the same share of total sales. Slide 12, fairly busy slide, but is intended to give you an overview of what we saw in the fourth quarter. Green arrows represent growth above market, long-term market growth, i.e., above 8%. Yellow arrows, 0%- 8% growth, and red arrows, negative growth.
If we look at surveying, which has shrunk from 24%- 22% of total sales, we see moderate single-digit growth in the mature markets, Western Europe and North America. We do see significant growth, however, in emerging regions like Middle East, Africa, South America, and Asia-Pacific. The negative red arrow represents high-speed rail in China plus some infrastructural projects. Power and energy has had a really good year with strong double-digit growth, except for two regions. In the fourth quarter, we had single-digit growth in Western Europe and North America, but strong double-digit growth continued in the Middle East, South America, China, and Asia-Pacific. Aerospace and defense has had a good year, and we expect an even better year in 2012. All regions, it's a fairly small customer group. You get a good overview, and all customers active in this segment expect activity increases in 2012.
Construction, fairly mixed outlook and input for the fourth quarter. Still, single-digit growth in Western Europe, North America, driven by some significant projects in both regions, like the Crossrail in London, for example, in Western Europe. South America, strong growth, negative growth in China due to the cooling off measures that the Chinese authorities implemented this summer or past summer. Asia-Pacific, single-digit growth. Public safety and security, the segment most prone to government funding, we've seen negative growth in the quarter overall, and sales were negative in Europe and Asia-Pacific. Order intake has been positive in the quarter, and we have a record backlog going into 2012 for this segment. We do see increased activity for public safety and security in China, and I will talk about that later. Automotive, record year.
Automotive manufacturing numbers are now back to pre-crisis levels, around 75 million vehicles worldwide, but with a very different geographic mix to what we saw pre the crisis. We do expect to have a fairly good automotive year going into 2012, not as significant as in 2011, but continuous growth primarily from the emerging regions and North America, whilst we do expect a slight downturn in Western Europe. Manufacturing spans across a variety of industries: electronics, general manufacturing, metalworking, plastics, and so forth. We've had a good demand from this segment in the fourth quarter. All in all, we basically assign a yellow arrow for the quarter as such. If we move on to slide 13, we can see these segments and how they've changed as a percentage of total sales for Hexagon.
We can see that surveying lost 2% points, going from 24% of sales to 22%, whilst power and energy grew its share of sales. Aerospace and defense shrunk by 1%. Construction grew by 1%. Safety and security shrunk by 1%. Automotive, fairly flat. Manufacturing gained 2% points year-on-year. Slide 14, trends per market. EMEA, organic growth for the group, 4%. For measurement technologies, 5%. Growth comes primarily from increased activity levels in major markets in Northwestern Europe, i.e., Germany, Scandinavia, the UK. Improved demand for measurement solutions used in connection to automotive manufacturing, aerospace, as well as equipment used for so-called mobile mapping, which is called, for example, Street View and so on. Increased levels of investment in enterprise engineering, construction, and data management software in the region. We see increased activity in Africa and the Middle East for these products.
Strong order intake but delayed shipments for SG&I, i.e., security and government installations in Europe. Since we had fairly significant negative growth in sales, the region excluding SG&I would have grown at 7%. Eastern Europe, Russia, and the Middle East continue to grow, but Southern Europe remains weak. Moving on to Americas, slide 15. Third consecutive quarter of growth in the United States. Seems that our market has turned a corner and a fairly optimistic and positive outlook. Automotive, aerospace, and general engineering is growing. We see the big three in Detroit investing for the first time in seven years. We are linked to a few infrastructural projects that are growing: Geosystems top line in NAFTA. Defense and security products, negative sales growth but positive order intake in the quarter.
We still see a continuous strong demand from the natural resources sector in Canada in connection to the so-called oil sand fields. South America has been the shining star in the quarter, and activity levels increased at virtually all end markets for Hexagon in South America, spanning from automotive, aerospace, infrastructure, energy sector, oil exploration, natural resources, and so forth. We are happy to say and welcome our newly acquired Brazilian subsidiary, Syscross. We do believe that we have a fantastic 2012 ahead of us in South America. Asia, slide 16. Organic growth, 6%. Excluding high-speed rail in China, organic growth for the region would have been 10%. All businesses grew in Asia, except for Geosystems, which obviously has to do with the lack of activity in the high-speed rail sector.
We also saw a slowdown, with the Chinese government taking action to stem and curb inflation in the construction sector, and that started in September. We do see, if you follow the official statistics, that inflation rates are coming down in China, and we might see some positive news in connection to construction going into 2012. Integra grew by 7% in China in the quarter. We're now fully utilizing Hexagon's network and customer relationships in the country, and that is strengthening Integra's presence and penetration of the end markets day by day. Slide 17, a graphic way of describing what I've just taken you through. We're more or less still back to normal levels when it comes to organic growth. Segment information, slide 19. Measurement Technologies reports a top line of EUR 575 million in the quarter.
We ended the year at EUR 2.1 billion, and our operating earnings came in at EUR 450 million, which corresponds to an EBIT margin of 21.3%. That is almost two percentage points better than 2010. Slide 20. Gross margin ended at 54% compared to 53% for the previous year. We had a dampening effect due to the Swiss franc in the fourth quarter, and had we not seen the Swiss franc appreciate, we would have ended the year at 55%. EBIT came in at 21%, and we're now above our target level of 20% for the year 2011. Slide 22. I really don't know who the men are in the picture, but I'm now going to talk about orders and product releases.
If we move to slide 23, we released a new product stemming from the acquisition we did last year called Augusta, which is a software company combining or connecting all sorts of sensors to our software products in Integra. We released the Edge Front Gear 6.0, which will enable us to reduce the complexity in installing these safety and control systems for our customers. Slide 24. We have several geospatial software releases in the fourth quarter coming from primarily the SG&I division in Integra. Slide 25. We also have a dedicated product release which combines sensors and software to do metro inspection in the Chinese market for Chinese metropolitan areas. Slide 26. We've now enabled our total stations to measure and display the measurements in the camera and in the images that you take with the total station. Slide 27.
In our ambition to have a full product portfolio for all segments, we're now launching the GeoMax Zenith, which is the second product launch in 2011 for the GeoMax brand. Similar story behind slide 28. We're launching from the brand Seven Ocean in China, a new series of video measuring machines for the electronics and medical sectors. Slide 29. Crossrail, Europe's largest civil engineering construction project, chooses systems and software from Hexagon Geosystems to be used to monitor the tunnel construction works that are ongoing in London. Going to build an 11.9-kilometer twin tunnel underneath the city of London. Slide 30. This is not Q4, but you might have heard of Costa Concordia, and Hexagon delivered a security monitoring system to monitor any motion and movement of the hull as rescue teams entered the hull to save people. Slide 31. Landslide monitoring by HydroChina, Guangdong Engineering.
We've deployed our system in the region, and it's in connection to the Kala Hydropower Station. Slide 32. We've had several large orders for our high-definition scanning software in the United States in connection to designs and upgrades of refineries as well as mining activities. Slide 33. Caterpillar chose the Leica Absolute Tracker to enhance and improve productivity on the shop floor. Slide 34. We had several breakthrough orders from the Chinese auto industry, foreign joint ventures, as well as local manufacturers in the quarter, and we do see an increased capacity buildup in the Chinese market. Slide 35. NovAtel formed a partnership with the Brazilian company Stara to develop agricultural solutions using GPS to basically guide and monitor the agricultural equipment. Slide 36. We had significant enterprise software wins in the quarter with leading energy companies and EPCs for our PP&M division in Integra. Slide 37.
We won the order for Baltimore Washington International Airport, a security and safety system to be installed in 2012. Slide 38. We also won a contract with the Central Groundwater Board, Ministry of Water Resources in India, to monitor water resources. Slide 39. Integra is now expanding in China, and the growth in the quarter was 70% for Integra organic growth. We feel that we're gaining momentum with leading energy and EPC companies on the PP&M side and leading customers on the government side for SG&I. It's going to be an interesting year, 2012, for Integra in China. Going forward, slide 41. We propose a dividend of EUR 0.17, which is a 13% increase over 2010. Dividend corresponds roughly to 20% of net earnings, and the dividend can be paid in euros or Swedish krona, depending on what the shareholders' wishes are.
The reason for this dividend, which actually is below our dividend policy, is we prioritize deleveraging Hexagon to be able to capitalize on the opportunities we see arise later this year. Slide 42. We are going to host a Capital Markets Day for Hexagon on the 5th of June in Las Vegas, United States. It is in connection to our international conference, Hexagon 2012, an event where we expect more than 3,000 attendees. We will display new technologies and new market trends at the Capital Markets Day. You will find shortly more information about how to participate in this Capital Markets Day on Hexagon's website. Slide 43. If we summarize 2011, sales grew by 46%, out of which 12% were organic growth. We have record gross margins going into 2012, and we had a 21% EBIT margin in spite of currency headwinds in measurement technologies.
Operating cash flow increased by 35%, and we do see a successful integration of Integra and R&D projects stemming from the two organizations in combination. We are ahead of plan. With that, I leave the forum open for questions if there are any questions from the listeners. Thank you.
I remind you that if you have a question for the speakers, please press zero one on your telephone keypad. The first question comes from Mr. Lars Brorson from DNB NOR. Please go ahead, sir.
Yes, thank you. Good morning. It's Lars Brorson from DNB. I had a couple of questions, if I could. First, on margins, can you give us a sense for how substantial the margin impact has been in Q4 from mix shift, particularly between metrology and Geosystems?
I don't think the mix shift is as dramatic to the margins as the impact of the Swiss franc, which basically went from 130 in the first half of 2011 to 120.
Would it be fair to assume at current volumes and capacity utilization rates to suggest a 2- 3 percentage points differential in operating margin between metrology and Geosystems?
No, I think they're closer than that due to the Swiss franc pressure on the Geosystems margin and the improved margins that we see in metrology due to the volume growth.
That's clear, all the thanks. Separately on margins, can you give us a sense for the margin recovery in SG&I in 2011 and how you expect that to evolve in 2012?
We're focusing on SG&I's margins. That's a special project, and we see good potential to improve margins. Margins are in the teens, but it's not at group average. We do see, we intend to use 2012 to restructure that business so that we can lift margins going forward.
To be clear on that, do you think by end of 2012, on a run rate basis, you can get SG&I to group margins?
I think we can get fairly close. If not at group margins, we will definitely close the gap for SG&I.
That's useful. Thank you. Secondly, on Geosystems in China, specifically the surveying segment, how has the pricing environment developed in 2011 as volumes have declined?
Prices have been flat or in local currency, but the renminbi has strengthened against the euro. We have actually had a favorable pricing climate in China. Having said that, we haven't seen much sales since the market collapsed, and our high-end products primarily went to these monitoring applications like high-speed rail and so forth.
Could I ask you to elaborate on what you describe as new business initiatives for Geosystems in China in your report, in addition to the rollout of GeoMax?
If you buy a ticket and you bring yourself to Las Vegas in June, I will be happy to do that, but not now.
Okay, maybe just to that, what has been your early experiences in terms of adverse impact, if anything, on your higher end from the rollout of GeoMax ?
Nothing. It's two separate markets, so they don't really compete.
Thank you.
Thanks.
The next question comes from Mr. Mikael Laséen from Carnegie. Please go ahead, sir.
Hi. It would be interesting to hear your comments on order intake per segment or region and the book-to-bill that you had in the fourth quarter.
We had a positive book-to-bill, and good regions. You could say Western Europe was roughly one to one, while the other regions had a positive book-to-bill.
Okay. Segments-wise?
Fairly similar situation. I mean, order intake isn't that interesting when you look at Geosystems since they virtually have no backlog. The backlog grew for important backlog businesses like metrology, PP&M, and SG&I.
Okay, great. Thanks. The question on SG&I also, you said in the third quarter that you had good order intake also during that period and also the same situation now. What's going on there with sales? It's lagging orders. Could you explain that?
It's a huge project running over four years, and individual quarters can be very challenging to meet deadlines. It is basically a joint project between us and our customers. Since we follow a percentage of completion, that means that you need the acceptance from the customer to be able to invoice the next step in that project. We've been late, as simple as that, in several large projects.
Okay. Given the order intake then and the book-to-bill in that segment, should we expect more flatish sales trends or more delays in the first quarter or second quarter?
For the year 2012, we expect an increase in top line over 2011 for SG&I. We obviously need to start invoice the backlog.
Okay. Grand.
The next question comes from Mr. Ben Maslen from Bank of America. Please go ahead, sir.
Yeah, morning, gentlemen. A couple of questions, please. Firstly, on the PP&M business, you said it's a very big year for them in China. Do you have to do a lot of kind of upfront investment to drive that growth that perhaps weighs on the margin? Or you can kind of invest as you grow, basically, and it doesn't really impact it? I guess what are margins doing in PP&M is kind of related to that. That's the first question.
I think you're on to something, even though I would say that it's fairly marginal investments we do. Maybe not in terms of activity, but in terms of money in China and in South America, which are our growth markets in 2011 for PP&M. We do invest in resources, in local salespeople, local service people, and so forth. I guess the single largest investment we did was Integra.
Is the PP&M margin just, it was obviously a very high level to start with. Is it coming down because of that investment, or is it relatively stable?
It's stable, and we're best in class. I won't tell you anything more, but we have a good margin on that business.
Great. Okay. Can I ask about your—you mentioned the Hydro China Hua Dong project. Talk a bit more about that. Is that a one-off project, or could it be rolled out to more kind of Chinese dams and power installations? Just maybe how big do you think that could be over the medium term?
I think that hydropower could be a very interesting business for Hexagon going forward. Buy an airline ticket and come over to America, and I'll tell you all about it.
Oh, already bought it.
Oh, great.
Okay. Maybe one more, just on currency. It's obviously difficult to model, and the Swiss franc has moved around a lot. I wondered if you've done any calculation of what the currency impact would be on your 2012 EBIT if currency rates stay where they are, because I guess the Swiss franc has probably come back in your favor a little bit.
I don't know. I mean, 120 was the average for the fourth quarter. Isn't it hovering around 120 right now?
Okay.
It is very difficult to say what the Swiss franc will do. I guess if you do see a stabilizing macro environment in Europe, you will have a weakening Swiss franc. If you get new shocks, like we saw from Greece and so forth, the Central Bank in Switzerland has said that it's going to defend the 1.20 exchange rate.
Yeah.
Anything could happen, I guess.
Okay. So 120 is fairly stable. Makes sense. Okay.
Yeah.
Thanks, Ola.
Thanks. Thanks.
The next question comes from Mr. Jon Hyltner from Handelsbanken. Please go ahead, sir.
Thank you. Can you hear me?
We can hear you loud and clear.
Great. I'd like to start off with margins. Of course, you have an ambitious margin target, but if you look near term for this year and maybe the next, where do you strive to make the best improvements? Is it in improving gross margins due to higher software sales, or is it by improving some operations that are below group average in margin? How should we look at this in the nearer term?
I think it's a combination of the two activities you just mentioned. We do see that our software-related businesses are growing faster than group average, and that gives you an automatic gross margin improvement. On the other hand, we do have activities like SG&I where we want to improve margins, and we're working actively with that. We're also working actively with what we call the franc project, which is related to the Swiss franc, and we need to reduce our exposure cost-wise to the Swiss franc.
Okay. Good. On working capital, the business model that you mentioned is changing a bit with Integra. If you look at the old Hexagon business, are you happy with the development on inventories and other working capital measures, or are you striving to improve that in 2012?
We're not happy. I mean, it was an improvement, and we measured days outstanding on receivables, payables, and inventories. We've made an improvement, but it's still not good enough. We do want to reduce inventory a bit further. We would like to see payables grow a bit, and we would like to see receivables coming down from an average of roughly 85 days for the businesses that do have receivables down to maybe 80.
Okay. Maybe there is something you can improve this year to improve cash flow even further. Great. I was kind of curious on the order you talked about to Caterpillar on the absolute tracker. Is this sales that goes directly to CAT?
Yeah, it's directly to Caterpillar.
Is this a change of strategy? Will you, for example, look at other machine control products and start selling to the OEMs instead of selling directly to the end customer?
This is not machine control.
I know, but it's.
It's metrology. It's used in Caterpillar's manufacturing.
Okay. It is not a shift in any way in how you target the market?
No, we could discuss that strategy that you're mentioning, and that's something we're looking into as well for machine control.
How is that discussion progressing?
It's progressing.
Okay. My final question on SG&I. At times, you get fairly big orders, I believe, to big arrangements like Olympics, etc. Typically, how are margins in these bigger projects? Are they below or above group average?
SG&I as such is below group average in EBIT.
I meant below the normal SG&I.
No, it depends on the implementation of the project. The larger the project, the more can go wrong. That's a good rule of thumb. We've been fairly successful with project sports events. It seems to be a good discipline for us. We've had less successful implementations in other projects. No one mentioned, no one forgotten.
Okay, thank you. That's it.
Thank you.
The next question comes from Mr. Andreas Dahl from Cheuvreux. Please go ahead, sir.
Morning. I have two questions, if I may. Firstly, I was wondering if you could indicate what proportion of your business in China that is related to the construction sector. We might start with that, actually.
I would say that roughly 85% of the total business in China is still the old Hexagon business, and half of it is metrology, and the other half is Geosystems. So 42% of our business is roughly Geosystems, 40, 42 maybe last year. It shrunk a bit. Most of the sales are directly or indirectly related to construction in a broader sense. We do not target house building, but if you have motorways, airports, harbors, infrastructure in general. If you call that construction, I would say roughly 30, 40% of our sales in China are related to some kind of construction activity.
Perfect. Just one more question. Given your relatively high exposure to government spending, could you walk us through what you're seeing there at the moment? In other words, any sequential changes in the demand picture?
If we take the various government sectors, in the defense-related sector, we see a slowdown in primarily the U.S., and it's more for what we could call hardware, i.e., fighter jets and so forth, ammunition and so on. We do see growth for intelligence systems such as surveillance systems, GIS systems, guiding systems, and so forth. We see an increase for defense-related spending in countries like China and India. It's not a clear picture what defense expenses are doing right now. We then move to general government sector, i.e., public safety and so on. We haven't really seen a slowdown in orders received, and it's more internal efficiency that has reduced our top line in 2011 than the market itself.
Thank you.
The next question comes from Mr. John King, RBS. Please go ahead, sir.
All right. Thanks very much for taking the question. Just one question, actually, on Brazil, if I can. The statement I think makes reference to opportunities in offshore oil projects in Brazil, and I wonder whether you could just talk about whether that's mainly PP&M opportunities, or is it a bit broader than that? I suppose following up, my understanding is PP&M's perhaps been more on the onshore side. Whether there's been any change in the competitive dynamics that is allowing you to perhaps go through some of the offshore opportunities more so than perhaps in the past. Thanks.
I can definitely tell you that there has been a change, and we do see lots of offshore opportunities in Brazil in connection to Petrobras investments in the next coming few years. We've gained market share there, and the opportunities in Brazil in connection to the buildout of the offshore oil sector is primarily in 2012 PP&M, but we do see additional opportunities for Geosystems and maybe even metrology as the buildout evolves.
Great. Thank you.
Thanks.
The next question comes from Mr. Jon Hyltner from Handelsbanken. Please go ahead, sir.
Thank you. Some follow-ups. I thought a new flash you commented on the start of the year, and I didn't read it. Could you just please elaborate a bit more on what you've seen in the start of this year?
We haven't seen the end of the civilized world, so it's nothing significant, but the year has started well and we're all alive and sound and safe.
Okay. On the auto part of your business, you talk about capacity buildout. It looks like it is mainly in China. Is visibility good here for you? Is it hard orders that you have for projects that you really know will start, or is it the expectations of these capacity buildouts to come through during the year?
I mean, it's a difficult question to answer. We do know that the capacity is going to be built out. We know who's going to build the capacity and what kind of products they're going to launch. However, we can obviously not guarantee 100% that we will get the order in connection to that capacity buildout. The global automotive industry is expected to grow from 75 million to almost 80 million vehicles, and the buildout is not happening in Europe since Europe is expected to contract. All the other regions are actually expected to grow.
On the metrology business and CMMs, are you happy with the product assortment you have? I saw some launches from Renishaw that they were very optimistic about some new technologies. Are you at all worried about competition in this field?
No, not really. Renishaw is also a big supplier to us. It doesn't necessarily mean that it's bad that they launch new technology.
All right. Final question. On taxes, it seems like you're around 20% now, if I've done the math right. Have you seen any breakthrough on taxes?
What do you mean by breakthrough?
Maybe you've seen some, you explained that you will target to take the tax down, of course, and it's something that you've been very good at doing in the past. Maybe you are optimistic about getting through with some projects during this year, perhaps.
We roughly expect a 1% improvement in the effective tax rate for the group, and that stems from more and more development work being moved to Switzerland from other regions.
Okay. So 1% point improvement to 2012 versus 2011?
Correct.
Thank you very much. That's all.
Thank you.
We have a question from Mr. Daniel Schmidt from SUB in Enskilda. Please go ahead, sir.
Hello. Good morning. I just wanted to ask you about the thing you said about Integra and China, and they were growing by 70% organically. Would it be fair to say that you are running ahead of plan in terms of top line synergies when it comes to Integra like you've been doing on the cost side? Where are we in that case? Also, could you give us some sort of baseline in terms of where Integra sales are coming from in China, and how should we sort of relate to these 70%?
I think it wouldn't be fair to say that we're ahead of plan because we have ambitious plans for Integra in China. I don't want to ease the pressure on the organization. We're happy with the development, but we expect more from China in relation to Integra.
I think you touched upon in terms of where Integra sales were when you said, I think you said 85% of sales in China sort of relates to old Hexagon. Would that imply that the remaining is Integra, or how do you view NovAtel and sort of how should we view what you said there?
Oh, yeah, I would include that in the old Hexagon. Maybe 15% of total sales on an annualized pace going out of the fourth quarter would be Integra sales.
It sounds like you have quite big hopes when it comes to projects that you already started in 2011 to generate good top line in 2012, especially when it comes to the things that you discussed previously, like dams and so on. Is that correct?
That's correct.
Okay, thank you.
Thank you.
There are no further questions at this time. Please go ahead, speakers.