Husqvarna AB (publ) (STO:HUSQ.B)

CMD 2013

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Feb 14, 2013

Welcome everyone to Husqvarna Group's Capital Markets Day. Really nice to see a crowded room here today. I'm Tobias Narby. I head the group's Investor Relations department, and we really hope we have an exciting afternoon for you all here today. Just a few reminders before we start. Mobile phones, great stuff, but please turn off the ring signals. Questions to the speakers, we will have 3 Q and A sessions during the day. So please save your questions for those sessions. We will have a couple of coffee breaks. Coffee will be outside to the right where you had a light lunch. I would also like to say that this event is being recorded, will be posted on our website, so you can access it as of tomorrow. And those of you who have signed up for the dinner, the dinner will be inside this building somewhere, but it's a couple of minutes walk. So I suggest after the last presentation, we will gather outside and we will walk there together. And with those few words, I would like to welcome Mr. Hans Sinneron, our President and CEO. Thank you to Beas. And once again welcome to all of you. I'm very pleased to see so many people attending this meeting we have here today here and present who's going to going forward. And I will start taking you through a little bit where we are after 2012 to start with. The group now have close to SEK 31,000,000,000 in net sales here. Are there some birds out? Can we close the door? Even if you're an outdoor company maybe should see if you can do that. And EBIT of SEK1.9 billion, a little bit better than last year, but not at a level at all here and SEK0.42 billion when it comes to equity vis a vis assets. We are about 15,000 people employed everywhere across the whole world And we have 22 major factories in the group. In North America 4, Latin America, 1 in Brazil and then we have in Europe, 12. The main factors is in Sweden, Czech Republic, Germany and Belgium and we have even 1 in Norway. And then we have rest of the world 5 factories mainly in China and Japan. Then if we look upon the sales per business units, Europe still the biggest 50% of the total sales Americas 40%. If we then take out U. S. Or the Americas, it's near 90%. If you look upon then Latin South America has a lot of opportunities for us. Then construction 10%. If we then look at Poly EBIT, still EuropeAsiaPacific contributed the biggest part of the result. Americas still negative in improvement. We are on the way, come back to that later on. Construction had a very good development 2012 close to SEK 260,000,000. Some reflection on the financial, if we look back, if we take 2012, it started up very well for us. We had the weather with us, 1st quarter both in Americas as well as in Europe. This macroeconomic situation was mainly in the beginning in the Latin countries Italy, Spain. But then later on quarter 2 in the garden season it started to rain a lot in Europe as you remember, not good for our watering business at all, high margin segment. And then in U. S, we had the biggest dry boat for the last 50 years. It continued the whole season. Of course, that was not good at all when it comes to our business. Then we have worked a lot with cost improvement program here. And you know that we announced in November the big restructuring program that's underway. We are a little bit ahead of that program both when it comes to savings as well as cost one time costs. Then of course we need to continue to do this here and we continue to work with efficiency all over the place, not only in the production facilities even when it comes to sales and admin. So when we look back, a lot of negative things happened for us last year. And what we have done now, we leave that behind us. But a little bit of reflection when it comes to 12% here. And you know the Q4 here, which we presented yesterday. So I'll leave that a little bit here to Ulf when he comes back here to do that presentation. Then going forward, how do we look upon our financial targets? The main priority in the next coming 3 years will be operating margin to be over 10%. So here you see a change from the previous strategic plan. We will not go for growth. Before we had organic growth of more than 10 5%. That will not be our main target in the next coming years. We will then not have growth, yes, but we will have that in more selective ways. As an example, emerging markets, then we will have growth. And we will have some growth when it comes to some channels. We will continue to have more growth in the dealer channel, not only in U. S, even in Europe. So, of course, there will be more selective growth than we've had before. So that's important change here. We want to go for profitability. And when it comes to growth, it has to be profitable growth. We might even step out when it comes to some segments or product categories or subcategories going forward where we don't see that there are any money going forward. Then of course that is too remains when it comes to the scenario adjusted net debt versus EBITDA less than 2.5 percent and we still have the dividend as before. So the main the change we have done going forward is growth, profitable growth in selective areas and focus on EBIT margin more than ever. This company has a very good platform as starting point. We have our strong brands. We have the Husqvarna brand, our premium global brand. We have the Gardena, maybe not a global, but a premium brand. And we have McCulloch, mainly in the retail channel. And then of course we have a lot of other what you call retail and tactical brand. As an example, Flymo, market leader in U. K. There we will concentrate on Flymo together with Husqvarna. Zenoa in Japan, market leader. Of course, we'll continue to use Zenoa mainly in Japan together with Husqvarna. And in construction, diamond board will be used as a premium brand besides Husqvarna. But we will look upon all small brands you need to face them out to reduce complexity. We have an efficient global distribution network. We have the dealer channel. We have the retail channel. Of course, we will continue to focus on both, but of course, we want to shift more focus over to the most profitable channel, the dealer channel, not only in U. S, that goes in Europe as well and the rest of the world. We will come back later on to go through the product portfolio we have in this group. We have a broad product portfolio. Some people say too many products. Yes, we agree. We will focus more on complexity reduction. We will reduce a number of platforms and SKUs going forward. We don't need all these products. We will concentrate on products which we have the highest margin that might be as I said areas where we even will stop and phase out. Flexible supply chain, I'm proud to stand up here and say, we have a flexible supply chain. All our factories up and running in a very good way, high productivity and with good quality when it comes to everything we are doing there in our factories. Today, I'm proud to stand up and say, we have a flexible supply chain. Some reflections. Of course, we have done a lot of good things in the past. We have 20% reduction when it comes to our factories, 40% reduction of our warehouse, both central, regional and local warehouses. We have reduced our supplies by 25%, maybe still too many, over 2,400, if I remember right. We have increased our low cost country sourcing with 65%. That was a target to be above 30%. We will change that going forward. We will not concentrate on low cost countries going forward. We will focus on low cost supplies. So that will not be targeted as go to China or East Europe. We will look upon more low cost supplies, cost landed cost more than component cost. North America on back on track. As I said, we have good flexibility in our supply chain sold everywhere. We have been very successful to attract through our nice products the dealers. The goal is the dealer channel. And we have outlined a roadmap going forward. We come back to that later on here. Operating cash flow, we are back on track. Then we have a lot of good products which have been launched here. And we have focused a lot on launching a complete new range of professional chainsaws here during the year. And we have launched a new generation of robotic lawnmowers, what we normally call auto mowers here. And we are the 1st one in this business to launch and start to sell a 4 wheel walk behind lawnmower. And a lot more, I could be here and standing for 2 hours to talk about our products, but just these couple of examples. And then if you look upon going forward, Of course, we have this more concern when it comes to macroeconomic situation. We will take more conservative midterm market outlook. We will be prepared. If it goes worse then we have action to act if that goes or the opposite as well here. And that's mainly in Europe. And as I said, focus on margin. That means that we need to focus on cost and quality. Quality is not only product quality, it's in everything we are doing, efficiency in everything. And then we have a lot of opportunities to continue to reduce the flexibility. I mentioned, we will face out some small local brands. We will look upon to phase out some product platforms and SKUs or P and Cs whatever you want to call it and even maybe some other customers but we don't see that there are any future and possibilities to earn money. Of course, short term, we will focus on this year. And then, of course, what we did here in November this program is ongoing here. We have looked together with 50 people out in the organization having activities here to look upon focus areas going forward. We identified 5 focus areas where we will have dedicated people to really run these activities. We went from group management which I will present later on here are the sponsor. And then of course this project will be accountable that they deliver. We will have monthly follow-up. We haven't been good in the past to always follow-up the activities here. But now we have a lot of good systems that we are able to do that in a more controlled way than ever. Then looking for the priorities, of course, we want to secure the foundation first. That will be the first we own the right way. We've done a lot of things here to be prepared for this year. As I said, quality in everything we do is one area, reduced product cost and the range of complexity. We continue to look upon optimize our footprint both when it comes to factories as well as warehouses and then drive channel management both in U. S. As well as in Europe. Then of course that doesn't mean that we will not look upon activities a little more long term. Of course, we will continue to also look upon product cost and complexity reduction. That's something you need to do all the time. We haven't been good when we launch a new product to phase out the old one. I used to say that if we had been Volvo Marcellus then they might have done as we are doing here keep old products. There might be a lot of cost from the '70s out in the road. So we need to look upon that when we introduce a new chainsaw, the old one has to be phased out. That's one way how to reduce the inventories as well here, focus on that. And then of course, we need to continue to invest in technology. And I think that's important. That's the reason which I come back to later on the announcement yesterday. And now when we secure that platform, we will start to focus again on acquisitions in a controlled way. And then I said, we focus more on margin, not on growth. But of course there are growth possibilities for us. Emerging markets is one example that we will focus more. That's the reason why we started up a company in Kuala Lumpur to take care of that area. And then we will grow online, the modern way to distribute products. It's something we really want to continue to develop. And then the 4 strategic pillars remains as before. Strong global brands, the distribution network, the product range and a flexible supply chain. No change when it comes to our 4 strategic pillars. If you look upon some targets here, as I said, improved gross margin, key for us. We set up 20% reduction in platforms. That's a target to do that. That might for you sounds not ambition at all, but it is I can believe that that's a tough journey to look upon the person who will be responsible for that. Of course, further look upon costs, not only product cost, everything what we are doing. And we will continue to look upon our footprint when it comes to warehouse as well as factories. Lead time, we need to reduce lead time. And I might be well known for a commentary a year ago of this 5%. There's no way that I regret what I said when it comes to these 5 more than 5% in Americas. That's where we aim for and we are on the way to be there. And then you see that we can further improve the profitability in the retailer channel in Europe. There are more to do that when it comes to profitability. Have to say I'm very proud of this announcement. It might not it was not a big deal here in Stockholm. I can tell you it was a lot of positive things down in Husqvarna that we got this approval from the Board to do these huge investments both when it comes to chains as well as when it comes to invest to in source more of the cylinders. So we will invest more than €1,000,000,000 next coming 3 years in our manufacturing area. The chain will be produced down in Husqvarna. That might be why not in a low cost country, why in Sweden, why in Husqvarna. We have looked upon a lot of possibilities where should we set up a factory. But the more you dig into this here, the knowledge, the technology when it comes to chainsaws sits in Husqvarna in Sweden. And we have our own locations there, good factory. So there's a lot of positive things who talks to actually Sweden. And this will be very high automatic factory. So the labor costs have not such a big impact here. But it's more that we have the technology. This is the key when it comes to cutting performance on a chain saw. And we don't have had control over the chains before here. Then we come to cylinders. Of course, that's even core for us, more control over the cylinders. There are very few suppliers available. That's the reason we said we want to, of course, invest in this as well here. That's the reason why we said we want to in source more of the cylinders and that investment will be in U. S. In Nashville in that factory who produce chainsaws there. Of course, we will continue to source cylinders from suppliers as well, but we want to have more of what we call the core competence in manufacturing in house going forward. That means that we will continue to have the possibility to keep our leadership when it comes to chainsaws, to be in front when it comes to chainsaws, due to that's a little bit core for us under the Husqvarna brand. There is another reason why we won't have control over the chain. The replacement market is very big when it comes to chains with chainsaw and very, very high margin. And we want to have the full margin in house not share that with a supplier. And there are in that profitable segment a potential to grow more for us going forward. And there is just 2 main supplies when it comes to change today. We have more or less 90% of that. But we want to be a major player in that replacement market going forward as well here and not miss that high margin segment with a huge potential of growth going forward. So we are very pleased that we got this approval to do this investment here. Of course, that means a lot of activities going forward, dedicated people to work with this year. And then, of course, to implement this strategic plan, you will see more the deal at this segment by segment later on here during the day here. Of course, we need to have an organization. We have changed a little bit the group management how we want to work here. And when I go through this, I will take the possibility to present my colleagues as well here. When it comes to the finance and IT and investor relationship, it's Ulf Liljals, our CFO. You know him since before, I think most of you. He might be among you are the most well known person who keep control over what we are doing. And then we have another person who keep control of us as well here. That's our legal affairs, general counsel, Ole Vallien. So we follow all the legal things in the company here, call of conduct and a lot of other things, very important. And then we have people and organization and communication here, what we normally call HR or that's a pari axon. We make sure that we have the right people going forward. And then we have a new function up at this level in the organization quality. We've had that built in the organization before, but we have lifted up that. If you want to be up in a high end segment here with high repetition with good quality of products, you need to of course have that focus on quality. So then we have a quality Francesco Franz Cyr. He's not present here today due to he will start 1st March. If you then look upon the business units, we have our 3 business units today. We will remain to report 3 business units. But internally, we will split up Europe Asia Pacific within EMEA to focus on that. And heading up EMEA is Frida Northern Sands, Frida, principally heading up the Nordic region in Europe. Then we have Asia Pacific, Nicolas Anos. He is actually back in Kuala Lumpur. He will be based in Kuala Lumpur. Why do we want the base and the hub for Asia Pacific in Kuala Lumpur? That's in the middle. Yeah. He will take care of China, Japan, Australia, New Zealand and of course all these countries Vietnam, Cambodia, Indonesia, India in that region to avoid travel too much. That's the reason why we have this office now established in Kuala Lumpur. Then we have Americas as before heading up with Erl Bennett as acting. He will come back and present himself later on. And then Anasturbi Construction. So that's the star functions and the business units. And I repeat, we will continue to report 3 business units, EuropeAsia Pacific, Americas and Construction. Then we have what we call process functions who go across these business units. Then we have brand management and global marketing heading up by Sofia Akesson. She is not present here. No, she's not here. That's a function we have lifted up as well here, Mi Global, to take care and make sure that we execute what we said when it comes to reducing the number of brands and have more synergies when it comes to all marketing activities. Then we are manufacturing logistics, soccer mengies. Then we have global purchasing heading up by Martin Ostermann, very important area going forward for us when it comes to reduced costs. And then we have product management and development, Another key, I have been a long time in the company. There are no people who have been less than a year in group management and there are some people who have been in the group for more than 35 years, I guess. 33. 33, yes. That's close to 35. For CFO, it's 33. So that's widespread when it comes to age and experience from this company. But all of them will be up here on the stage here when it comes to business related areas here. Then we have done a little bit change as well here when it comes to our 5 product categories here. Before we have 2 when it comes to wheels, both ride on and walk behind low. We have merged them together in a category what we call wheeled due to have more synergies between the cutting technology. And then there will be more and more focus in our business as well on battery products and electronic and control. Then we have created then one category to focus on all product both wheel and handle related to battery electronic both corded and non corded products here. Handled petrol will remain as before here except from what I said when it comes to battery products here. That's important. That's both chain stores, blowers, trimmers and brush cutters, hedge trimmers. And then we have merged into watering hand tools as well, all these secateurs and that kind of stuff. And accessories, a very important high margin business. We concentrated mainly on accessories as well the replacement market for the chain. Then we took out hand tools more related to watering here. So that's one change going forward here to be more focused on different product categories and where we see huge potential and what's happening in this business going forward. So summing up this year, first of all, the picture that I hope the season will be to start with very dry, so we can use all this high margin product for watering. We have a strong starting point in this group, very, very strong starting point. But we know all of us, the market are out there. Hopefully we will be better out when it comes to weather in the season this year. And as I said, we want to go for margin more than growth. But I will be selected as where we will grow. Of course, we want to execute the oriented strategy, focus on securing the foundation. So that's the starting point. That's what we want to do. Have the right to grow and then do acquisitions. Of course, to do acquisition and grow, we need to have good profitability to reinvest in all this activity as where we want to be acting into going forward here. So with that, I hand over to Ulf to take care of all these figures which are very important going forward as well. Thank you, Hans, and good morning, everyone. I have a terrible cold, so I hope my voice will hold here, but with some good water, I hope that will help. So allow me to first actually take you on a bit of a recap. And if we look at our sales development over the last 5 years and here we are a bit harsh because 2,008 that is really the benchmark was a very good year for the group. We excelled in all areas actually. Europe had a very good first half as well as the others here. 2,009, Europe as well as construction was hurt by the debt crisis, no doubt. We did gain back some momentum in 2010 as well as to some extent 2011. 2012 that we closed with the hearing that we had yesterday, you have heard about for those of you who listen in, we did in Europe face quite some challenges when it came both related to the macro environment as well as to the weather as you have heard from Hans here this morning. And that area was down some 6%. Construction, however, continued to grow and very much based on a strong product platform as well as we did gain shares in America. So construction continued actually a quite nice growth journey. They also have struggled in Europe and Anders will tell you more about that later on here. But despite that a good growth in 2012 based on the circumstances. America has also, as you heard from Hans here, picked up quite nicely in the beginning of the year. We had an early spring that took off quite well. We put targets, as you know, based on the history, we came with a debacle in Orangeburg 2011. We put high priorities and said to our customers that we must live up to your expectations when it comes to punctual deliveries as well as to secure that we live up to your expectations. And we did. We even excelled because based on an early spring, we actually came beyond expectations when it came to deliveries in 20 2012. But all in all, as you may see, if we take the 5 years approach here, the company has been flat or slightly down over a 5 years period. If we take the same approach and same time distance when it comes to the EBIT development, I mean, you have heard from Hans this morning that the long term financial goal when it comes to EBIT margin remains. We shall reach a 10% or more than 10% EBIT margin over a business cycle. During the last 5 years, you may see that this target has not been met. A lot related to that we have had a deterioration in America. So of course, a shrinking market has contributed not reaching the levels that we desired. And then we all know what happened in 2011. Construction, however, came back quite nicely after 2,009 and have continued their journey now up to double digit margin. EuropeAsia Pacific normally a business above 14% with the exception of 2012 where we have, as said before, faced challenges both from a macro perspective as well as from a weather perspective. But important to confirm, the 10% EBIT margin or more than 10% EBIT1 over a business cycle remains. And now the question comes, of course, what is now different towards the efforts we have put in prior years? Well, let's take a stance in the group cost structure. You can see that we split it up this way. You can see that the majority of our cost resides in purchased goods or components. 55% is related to that. And if we look at our products primarily in Forest and Garden, the value add is quite tiny, which means that sourcing and efficient sourcing is essential. Another aspect to take into consideration is that based on that we want to reach a decent profitability in the retail business. It is a prerequisite to excel in sourcing. Going forward, it is also key as you have heard from Hans this morning and you will hear more from my colleagues later on today, key for reducing purchasing cost is to reduce complexity. And that is in terms of reducing the number of product categories as well as reducing the number of SKUs. Also important and where you will also hear more emphasize put on later on in the other presentation is that we connect R and D much closer with purchasing going forward here. Purchasing must be early in the product development cycle, securing that we have a better design for manufacturing and sourcing. You will also hear from Martin Elstermann later on that we also move more from low cost country sourcing to best cost country sourcing or as Hans mentioned here low cost suppliers, meaning we don't take only the cost into perspective. We need to take other parameters like logistic cost, payment terms as well as quality into account. It is landed cost that counts and we have improvement potentials here for sure. That said, it is of course continuously important to obtain better efficiency when it comes to our cost to serve. And there are activities put in place for that as well. So managing those cost parameters. And I mean this is not science. I mean this is about some quite hard work, but it is definitely a focus area that we put in place now that maybe we have not had that clearly put out in the past. But having those cost parameters, it is of course also important to drive the product and channel mix as well as pricing going forward in order to reach our overall EBIT margin targets here. The 2 latter ones you will hear more from my colleagues later on here when it comes to driving the mix as well as our pricing efforts. One important element with the Husqvarna Group and especially the Forest and Garden business is the pronounced seasonality. The majority of our demand in the industry resides in the Northern Hemisphere. I mean you know that, that goes for Europe, it goes for North America. And the majority of the Forest and Garden products are related to the summer season as well as the spring season. And if you take this picture that is taken the 5 last years, you may see that the 1st and second quarter has accounted for take the sales figure, more than 65% of our sales and the EBIT is more than 90% of the calendar year. That means that the 3rd and the 4th quarter are quite tiny from that perspective. However, this is, of course, also to be seen as an opportunity based on if we can find growing opportunities in the areas that actually match better or concentrate more to this to the 3rd Q4, As you can imagine, I mean, that can put tremendous leverage on the 3rd and the 4th quarter where we don't have the majority of our business as of today. Cash flow. You saw that from the recap of Hans. And to those of you who do not know Husqvarna that well, I mean, our cash conversion cycle over a calendar year is normally that we draw cash the Q1, we even out during the second breakeven at the end of the second quarter and then we generate cash in the 3rd Q4. Looking at the years back in time here, I mean, we can see that 2012, we are definitely back on track. We generated accumulated some SEK 1,100,000,000 in cash. And compare that with last year that actually was a negative close to SEK500,000,000. We are quite proud to confirm that we are now back on track here. That said, there are still, of course, further improvements to be made here and very much related to lowering the working capital. A lot is related to that that you also will hear more about both from Sascha Menges as well as from Henrik and Martin when it comes to increase the flexibility as well as to reduce the complexity because that is really the key to success here in how we manage, especially our seasonality in a better way, that will, of course, have quite significant impact on our cash generation going forward here. It is a challenge, but we believe we have the measures to take care of that going forward. CapEx and depreciation. Well, yesterday, you heard about the announcement of a SEK 1,000,000,000 investment in Core Technologies when it comes to chain as well as cylinders. And as you may see from this chart here, I mean, in 2013, we will quite heavily exceed the planned depreciation related to this investment here. However, then as you may see, I mean, further on into 2015, we should then be back on normal levels here. But this is a heavy investment that we will take care of the next couple of years. We will also, during this period, see some additional investments in IT as well as in product development. Group funding. As you may see from this one, this is the maturity profile here for the next coming years. I mean, the group funding sorry, the group has got a strong funding profile, as you may see here. The latest funds that we successfully raised was as late as in November. We went on to the corporate bond market and were quite successful in corporate bond market with quite some success, which we are very satisfied with. We could confirm that the Nordic accounts took over 80% of an oversubscribed book. And that put actually a quite good profiling when it comes to 2017 from a maturity profile mentioned that on top of this, we also have a SEK 6,000,000,000 and utilized syndicator revolver that is very much to be managed during the seasonality here. Our net debt position versus equity. As you also saw from the long term financial targets, the ambition is to have a capital structure that shall meet a BBB rating or at least a BBB I. E. In investments grade. And that means that we shall not exceed a multiple of 2.5% when it comes to EBITDA net debt versus EBITDA. Looking at where we have been with net debt to equity, we ended up end of 12% at €0.59 versus last year €0.56 We did have some quite heavy headwind when it comes to translation effects that lowered our equity with some €800,000,000 or close to €800,000,000 that had an impact on the ratio here. When it comes to the net debt to EBITDA, we ended up close to SEK 2,800,000,000 at the year end of 20 12. Some words about IT because we have been and for those of you who follow us, you have heard that we have been holding back to some extent when it comes to IT investments, especially during 2012 and to some extent 2011 for good reasons. But here, it is important that in the strategy period here, we have laid out an ERP road map and it's twofold actually. We have both to secure the foundation by means of investing in ERP systems in order to improve the efficiency and the effectiveness supporting the business needs. That we want to combine also with that securing a growth platform. And you heard Hans touching upon it. You will hear my colleagues talking about that more. And that relates very much to the online channel. And that is, of course, to support both the business to consumer channel as well as the business to business side. And those 2 are the ones where we'll have the main focus area going forward here. So both, let's say, securing the foundation for the administrative setup as well as being on the front end when it comes to supporting the online channel going forward here. So to summarize, mainly to reach our EBIT margin, as you have understood, is the focus for the next coming years as well as to make room, of course, for further development of the company. They are to reduce cost and complexity and the combination of the 2 lower cost to serve, I. E, improve the efficiency optimize product and channel mix as well as improve their pricing practices. Good afternoon. My name is Earl Bennett. I'm going to present with respect to my business unit, the Americas. The Americas at a glance. We've got sales of approximately SEK12.5 billion. Sales are heavily weighted towards North America. Latin America contributes about 10% of a little less than 10% of total sales. And our retail market channels are much heavier than in Europe. In the dealer channel in North and South America the retail channels predominate. Among our the retail channels predominate. Among our competitors and looking at the second half of this chart, among our competitors, we're the only full line wheeled and handheld petrol product line. That's significant because it facilitates our development of the dealer channel. Despite the 2011 product disturbance, which affected quality, delivery and our overall product production. In 2012, we retained strong market shares and we retained our customer base. Margin improvement remains a primary focus and a priority for us. Part of the one of the important levers to deal with margin improvement is product and logistic cost out activities. My colleagues and I will talk about that during this presentation and later. And we'll continue to invest in Latin America. Latin America is the fastest growing region in the Americas. It's important because it has substantial opportunity for growth. It's also important because it represents a high margin target. We think we are optimistic about the macro economy in North America. Housing is an important indicator we think of economic activity. And if you look at this chart, you can see since 2011 housing starts, housing sales have trended upward. If you look at the chart on the right, you'll notice that that chart which shows U. S. Petrol shipments of handheld and wheeled equipment closely parallels it. You can see the downward trend through 2010 and then a slight downturn in 2010 and then since 2011 an upturn in both, petrol equipment sales as well as in housing starts. And the trend in housing, we think should bode well for us. So we think the macroeconomics of North America will be helpful to us and provide a prosperous and beneficial environment. I mentioned 2011, which was an aberration. And despite that, we retained a strong market share in our core areas. You can take a look in the U. S. Our chainsaw market share is 47% for all group brands. Tractors, we retained a 34% market share. Walk behind mowers, we retained a 34% market share. And among all other handheld product lines, we had a strong 27% share position. This is an important business and a critical foundation to facilitate our relationships to better advance ourselves in the mass channel market. This chart reflects our diversification in 2 respects. 1, to high margin channels and secondly, and this is important I think, to rediversify our and rebalance our emphasis on core customer areas. The left hand channel the left hand side of this chart shows arrows, which reflect growth or decline in total equipment volumes. By the dealer channel and then below that the retail channels, the major customers Home Depot, Sears, Lowe's, Walmart and all others. The right hand side of the chart shows directionally, our growth or decline of sales within a particular channel or within particular customers. The first point and I think there's 4 points to be derived from this chart. First point is among independent dealers, which retained stability in the overall business marketplace. And that's been true year over year for many years that the dealer channel has remained a stable place. And by contrast, Husqvarna has grown its sales in the dealer market by approximately twofold since 2,009. And this is a series of trends since 2,009 through 2012. So we are growing in the right channel where we've got the best opportunity for margin growth. 2nd point, which I think is important here, you'll see that Sears which slightly declined in terms of its total volume of shipments. And I must note that Sears retains a vigorous and important position and important market share of the outdoor power equipment business. But what's interesting, I think and important is you'll note that our shares of sales at Sears declined. It's relevant because in 2,009 as much as 80% of our retail channel business was directed towards Sears. By 2012 and going forward, you'll see that our sales at Lowe's have increased dramatically. Our sales at Sears have declined. And in 2012, our sales in those 2 particular mass channel partners were approximately equal. And that rebalancing better advances us in terms of our ability to be competitive and adjust and adapt to market changes. 3rd point, which I think is relevant that's shown by this chart is the fact that at Lowe's, we go to market using our brand. At Sears, we use the private label Craftsman primarily and it's relevant because it facilitates brand development, which will enhance our ability to develop premium pricing. 4th point I think that's relevant here is if you look at all of the mass channel players in the U. S. Marketplace Home Depot, Sears, Lowe's and Walmart, among our competitors, we are the only company that really is a major player at all of them. We retain our strong commercial relationship with all of them and that's relevant because it facilitates our ability to adapt to market changes. This is this chart shows 2 facts I think which are relevant. One of which is it emphasizes the size of the U. S. Marketplace SEK 80,000,000,000 is the size of the outdoor power equipment industry in the U. S, huge marketplace. Canada and Latin America are smaller, but this chart shows a second and important fact, which is that Latin America is growing at the rate of 3 times that of the more mature Canada and U. S. Marketplaces. The North American marketplace is consolidated, 6 primary players and in addition to ourselves. And it's important because within our competitive landscape, there are really only these 6 players who are really significant major players. Let me allow me to add a few noteworthy observations about each of these competitors. Toro, it's a wheeled product company. It limits its distribution in the mass channel to the Home Depot. It has a strong vibrant commercial presence. 2, Cub Cadet and Troy Bilt are brands of the MTD company. It is a it's a very competitive company in the mass channel, has a strong after sales support system. Craftsman is the brand of the Sears is brand of a subsidiary of the Sears Holding Company primarily goes to market through Sears and its related or former affiliates, Sears Canada and Hometown Stores. It retains strong position in the marketplace. And what is noteworthy I think is are its efforts to externalize the brand in other channels other than itself. And number 2, its efforts to use methods other than brick and mortar for purposes of advancing its sales. Echo is a handheld company. It limits its distribution to the Home Depot. So it actually has an exclusive arrangement with Home Depot. It's a handheld company, as I said, with the longest warranty in the marketplace. Stihl is of course a handheld company. It has 2 it has a strong dealer message and a strong dealer proposition. And it retains a strong position in the commercial lawn and garden. Deere, of course, is a global company. Among our competitors, it's it distinguishes itself because lawn and garden and forestry is not a core area of its activities as it is with us and our other competitors. Has a strong lawn and garden presence and goes to market through 2 mass market channels. Let me talk a little bit about our brand portfolio in the Americas. Our core brand of course is Husqvarna, which we position as a premium brand in the dealer channel. And it's important to note in the mass retail channel that after 2012 we'll limit the use of Husqvarna in the retail channel and we think that will better align it with its premium position in the dealer channel. We also go to market using the Gardena brand in the mass retail channel in Canada. It's again another premium brand. Tactical brands include Pullen and Pullen Pro at the middle price point and Weed Eater at the opening price point. Weed Eater is an extremely well known brand as is Poulin, important tactical brands. We use them both in the dealer as well as in the mass retail accounts. Redmax and John Sarad are important brands to us because they represent premium brand opportunities, which facilitate a strategy of permitting us to go to market where dealer conflict where there could be channel conflict between particular customer and another customer. Bluebird is basically a specialty brand. It's noteworthy that Dixon is largely a regional brand used in our Midwest in the tractor side of the business. John Sarad is used in both the dealer and the mass retail channel for tactical reasons to contend with conflict. Let me move on. As Hans noted, our strategic priorities include driving channel management in the United States. Channel management is going to be managed in a number of different ways and it's important for a number of different ways. So let me spend a little bit of time on that. We've got to refocus our portfolio of mass partnerships. That's important to better align our brand in the retail as well as the dealer channels to facilitate premium pricing. It's important to maintain a balance and that balance between retail customers will help us address market changes. And the 3rd area 3rd important aspect is, it permits us to maintain scale where scale benefits us. Increasing the share of our dealers and distributors are important to us, because it permits us to grow that channel where which frankly is an area that's most favorable to margin enhancement. We've increased our share dramatically. In the last two years, we've increased our dealers 500 a year year over year. We've done that in a number of different ways. We've invested in human resources to focus on specifically dealer identification and selection and recruitment, so that we had and we are growing what we think will become a very strong aspect of this company, a strong vibrant dealer network to sell premium priced product. It's also important because it permits us to balance our overall portfolio in a way that enhances Husqvarna and at the same time permits us to go to market in the MPP and OPP price points. Price increases are obviously a focus and priority for us. And our levers include price. Price is going to be made possible through 3 different aspects. 1, we've got to leverage our key relationships. We've got to leverage them both in terms of the mass channel and we do that through brand and product and that is going to be a critical component of our strategy. 2nd of which is we've got to leverage innovation. As my colleague Henrik will talk about, innovation is a pillar of the company. And we see it on a regular basis and we see it take form in any number of different ways. And I could some of the more potent examples are the Fast Tractor, which we introduced in 2012. It took off. We probably sold 35,000 units in 2012 alone, almost exclusively through one channel, the retail channel at Lowe's. That product was advantaged and advanced dramatically through a series of advertisements by Jimmy Johnson, the renowned NASCAR racer in America through advertisements which were made available through our relationship with Lowe's. So that kind of synergy facilitated an extremely good relationship. It facilitated the sale of a high margin product and it advanced our image as a source of innovative cool products. This year, we will we've got 2 products again in the walk category. 1 is the all wheel drive lawnmower, which is going to be extremely well specified and offered at a price point that's probably the highest among the walk behind category that we've ever done. As good as that product is, it may be eclipsed by the braid blade excuse me, blade brake clutch product, which is going to be really important in the marketplace. It permits people to have a safe operating unit and its price point is going to be positioned below the all wheel drive. It is going to be a winner. These are 2 products that we're around which there's extreme excitement in the U. S. Mass retail channel. And I think it's going to be a successful product in the dealer channel. These are margin accretive activities as well. And these are products that will permit us to get high margin and that is going to translate we think in terms of brand awareness and which will facilitate premium price point in other products. Henrik will talk about other products as well. And I don't want to eclipse I don't want to suggest that the handheld innovations are eclipsed by the wheeled innovations. The contrary is true. We've got tremendous handheld innovations being generated throughout the marketplace. 3rd point, focus on high margin products. We've got to focus on products where we can historically generate, develop high margins and that includes the Z turn product. We'll sell that through both the mass channel, which will be we'll have probably the best placement in the mass channel through our Z turn product at Lowe's. We'll also have great products in the dealer channel. We've got professional Z turns and we've got residential Z turns. Evidence of strength of that effort is that 2011 our residential Z turn market share was about 6%, 2012 had grown to 20% and we think we're going to grow it more. Let's talk about a little bit about product cost and complexity. These four aspects are important and we're going to drive this through cross functional teamwork. We've got a of course, this is these kinds of activities don't occur without strong tactical planning, strong teamwork and depth execution. We think we're going to be able to accomplish that. Brand and product complexity reduction, step 1. Step 2, product and conversion cost reduction. Our productivity measured by cost conversion was dramatic in 2012. We probably drove out tens of 1,000,000 of dollars of waste in cost conversion alone. This is an area where we have a lot of opportunity. We've got flexible factories and to be able to drive out waste in cost conversion is critical and it's also critical that we do it through cross functional teamwork. 3rd area, reduce cost to serve. We have defined projects to reduce cost to serve. That means optimizing warehouse location, optimizing freight activities and that will facilitate higher margin and it's important and critical for us. Let me move on. Let me just emphasize the distinct channel strategies between the retail and the dealer channel. Mix pricing cost reductions are critical for margin improvement. Mix involves not only products like the Z term, but also involves a renewed focus on core activities like parts and accessories, high margin areas, great opportunity for growth, really a function of attention to detail, setting priorities correctly, execution. It's also necessary to facilitate our growth in the commercial lawn and garden business. It's a foundation for that. So it accomplishes 2 tasks and we're going to give that renewed attention this year. Our dealer profiling investment is has paid off. We've invested in over 1,000 dealers in the last few years in merchandising. So we've gone in, remerchandised most of our dealers. It's facilitated an extremely first class professional environment for our dealers, which have enhanced our premium reputation for our brand. I mentioned dealer growth and that's been that will continue. We expect as a goal we have this goal of 500 new dealers a year that's going to continue. We're going to continue to invest in operational improvements. I mentioned the activities in logistics and warehousing, but we've got other activities in B2B, B2C world and that's going to be important. And then finally on the dealer side, leveraging new product offerings. I talked about the innovation. I talked about the products and I talked about parts. On the retail side, we've got we're going to continue to invest in the Husqvarna brand. I mentioned the fact that we're going to limit the Husqvarna brand going forward in the retail channel to try to better align itself with the dealer channel as a premium brand. That's going to be a critical strategy. We're going to drive mix through innovation, features and marketing. That's a critical objective. We have to execute cost out programs and we have to do it not only to reduce cost to serve and cost of goods serve, but we're going to do it through cross functional teamwork. You're going to hear my colleagues Sasha and you're going to hear Martin talk about those kinds of activities today and they are occurring and they occur within the 3 factories, the 3 primary factories that are in the forest and garden world of North America and they are ongoing. We also have to improve our pricing practices. We have to be strategic and make sure that we are thinking clearly about how we're going to market and sell our products. Our strategic priorities obviously include accelerating emerging market growth in Latin America. We've got a strong platform there. Latin American sales have been up 20% year over year since 2,009. We've got sales in the neighborhood of SEK0.75 billion excuse me. So it's an established marketplace. In Brazil, we've got a 20% market share and Brazil represents 70% of our sales within the Latin American marketplace. We've got a priority to expand distribution there and we're going to do it through increasing emphasis on dealer development. It's been working and we think we can accelerate that activity. Finally, it's important and Henrik will talk about this. We will tailor an assortment of products to better compete in Latin America. It's noteworthy that we have a factory in Brazil and we'll continue to invest there. It gives us the ability to provide local products and to create market efficiencies using our manufacturing presence there. Summary. Margin improvement is going to occur through product reducing product cost and cost to serve. We've got to improve our mix. We've got a strategy to get there and we've got to do it through price realization. The negative trend of 2011 has been corrected. 2012 was a stabilized year. So with that, I'll end. Thank you very much. Thank you, Erl. So let's open up for questions from the audience please. And Erl, Hans Hof? So please state your name and company. Yes. Hi there. Good afternoon. Thank you. It's Arne Evusine here from Goldman Sachs. I was curious and I'm not sure who should answer it, but maybe Johan. Just on your new targets, you're emphasizing margin expansion over growth, I guess, which is encouraging. But I'm curious to understand why you haven't introduced any returns target, in particular in light of the fact that it seems to me that 2 of your main strategies to grow your margins is in sourcing through amongst other things building this factory, but also high margin M and A I assume very capital intensive decisions, which presumably should drive up more margins relatively automatically. So what's the thinking here? Thank you. You start with M and A. Yes. I mean, we can start saying that, that doesn't I mean, based on we have not communicated any return on capital employed or return on net asset targets externally doesn't take away that we have those internally. But it is a conscious decision. We have not chosen to communicate any of those externally. What you have heard from what we are talking today, I mean, we imply a lot about that how much we also focus on our cash generation going forward here. So there should be exist no doubt in that return on capital employed is high on the agenda internally. But again, we have chosen not to communicate any of those targets externally. When it comes to then to start to invest and in source a lot of things here, of course, I didn't mention that there are what we call make versus buy as well. There might be some things which we produce or do in house which will be outsourced as well here. So that's not that we stop to do that, but there will be more focus on to in source what we think is core to the technology and what is core for us to produce and secure that we have the capacity in house and not rely only on some suppliers. So that's one of the reasons why we do this here. But of course, we will continue to own those things as well, which are not core for us. Thank you very much. Can I just one quick follow-up just on your investment? It's just a very short one. Are you planning to sell externally these chains or chains and cylinders? Or are you only producing for yourself? And will you cover can you give us any idea of what proportion of your own demand you will be covering so to speak? We will not sell this. It will just be for in house. And then over the years, we will have everything when it comes to change in house when it comes to change. But that's a little more long term going during these 3 years here. But when it comes to cylinders, we will never have all the capacity in house. That will be a combination in house as well as rely on some suppliers. But change we will have full control over the years, but no OEM sales can't change at all. Yes. Hi. Rasmus Henningberg with Handelsbanken. I just wanted to start with a very basic question. It seems as though in the presentation that the targets are to be achieved in 2016. Could you just say whether that is correct or if you have any comments on when you will start to do in excess of 10% margin? It's over a business cycle. Okay. But you did say didn't you say a couple of years ago that you were going to take your or maybe I'm mistaken? Okay. We always said here 10% of our business cycles here. But then of course, we want to come up about 10% as quick as possible. But we of course need to realize the facts as well. But we've all said over business cycle. Okay. And the second question is, do you think that the 10% margin can be achieved with €31,000,000,000 in sales? And if not, how much are you prepared to sacrifice of unprofitable sales to get there? I think it's 2 way how to do the cost. You can increase the sales and keep the margin where we are today here. But what we have said here that we'll go more to focus on margin that we will be more selective when it comes to where we see that we have a high margin product and we have some where we have really, really low margin. We have even some sub products or categories where we actually lose money. And we will investigate if we could continue this what we call investigate the future of some product categories here or subcategories here. That's one way how to do it, but it's a combination. So of course we will continue to grow, but we will do it more selective here. And that means that we focus on some areas and some customers and some product categories as well. But you can go 2 ways. We can take down and only focus on high margin products and go down to SEK 25,000,000,000 the money. But that's not what we want to do here. We want to continue to grow the company, but not as we have said in the past here. That's one way to do it. As someone has said, just exit U. S. Then you're there. But that's not what we want to do. We want to continue. We believe that we are able to come above 5% in U. S. Here. So the understanding then is that it's going to be achieved with some growth from here organically? Yes. Organically when it comes to selective, but focus on margin. But not only that we want to take market share. We are not going for market share as you can do here. There has to be profitable growth. Yes. And Ola here at Pensobank. A question to Earl with regards to you talked about your U. S. Competitors. How would you describe your relative cost position in the U. S? You showed some impressive market share, specifically profitability at Slaussee. Can you talk about how the rest of the industry is developing? And also we've seen some changes to the offering in the mass markets. We've heard about Briggs taking away products in the mass market for example and some other competitors as well. Has that in any way impacted season? That's a number of different questions. Let me address the first one. One. We don't have access to the internal cost to serve or cost of goods sold of our competitors. So it's difficult to assess how we stand relative to our competitors on cost and cost out activities. Griggs is in fact exiting certain marketplaces with products both on the walk behind as well as on the ride side. We think it does offer us opportunities and will give us an ability to secure business in various channels specifically mass retail. And so we think it's an opportunity. Okay. Just a follow-up on that. You mentioned there that you were accepting to leave both categories and customers to improve profitability going into the next season. So when we hear you talk now about the When we hear you talk now about the listings for next season, you say it's satisfactory and you're not being very explicit with regards to is it up or down? And what's the price impact going into next year? Could it be is there anything else you can add to that to back up what you're saying with regards to customers and categories? When it comes to pricing here all over here, we will not give you exactly the price increases due to that we doesn't want to get public here. But there will be price increases and we have already done that here for 13 here both in Europe Asia Pacific as well as in Americas when it comes to price increases. So we go more for price increases. That goes back a little bit again to on behalf of sometimes volume in some areas. But we are more selective even when it comes to price increases. We don't go as before average. We go market by market, brand by brand and category by category. That varies ups and downs when it comes to some categories where we can see price increase. We have a complete new pricing model here where we look upon price revenue and what we call price waterfall as well here. So we look upon net price increases. You can increase prices with 5%, 6%, 7% even more, but then you give away that. That's the reason why in this new pricing model we look upon the net what we give away later on here. So there's a change here and more selective than before here. Hi, Andrew Strep from SEB. Two questions please. First, how will you make sure that your supply of saw chains will continue on a satisfactory quality and price level during the period when you're building up your own capacity? I guess your supplier is not very happy about this. No, I might not be too happy, but of course I talked to the CEO of our supplier when it comes to change earlier this week. But we will continue to have a good relationship with them due to we saw some other products from them which we'll continue to do here and that will be over time. So we have an open discussion with them here. And of course, they are public company as well and you saw maybe the fact of that announcement in that company. And his task is the same as me to do the best for his company. Of course, he was not satisfied. But we have a long term contract, which he need to fulfill, of course. So that's actually a good balance here in these 3 years. We have a long contract with him. So it's a good balance to phase out and phase in these activities here. Okay. The second question is regarding your market shares in the U. S. If you could sort of give that if you look on your own brands only and not the private label included? On an overall basis, the Husqvarna brand has a 10% market share in 2012. That reflects a 4% increase since 2,009. Is that helpful? Very good. Yes. I'm David Helden from UBS. So in your 3 year strategic ambition, you mentioned that you want to further consolidate the footprint. And you have right now 22 manufacturing sites as you mentioned of which 12 are in Europe. You're right now moving volumes to Poland etcetera. So I was just wondering if you could I mean what can be done on the footprint when you talk about consolidation? Because right now we're talking about investments, which of course are expected to be value added, but what can be done on concentration? Of course, we always will look upon the manufacturing footprint here. And what we call we always investigate the future of some sites here and we'll continue to do that. And as I said here, of course, that's another focus area to look upon the footprint both when it comes to the number of factories we have here in the company as well as the number of warehouses here. That's something we will continue to look upon here going forward. More than that I can't comment when it comes to that part of course. There are some restrictions where how much I can talk about that. And how much of your components today or what you produce is being shipped overseas, so to speak? For instance, you have if it's 1 or 2 in Latin America on the production sites. And I'm just thinking, when you talk about how to take cost out of the production chain, if there's a geographic element in that as well on freight costs? Sure. The freight cost is very important. We see transportation cost is going up a lot. That's the reason why we look upon where we have our major factors here. We concentrate professional products into Husqvarna Sweden and then more professional into Nashville and when it comes to the low end into China. I can't really answer that question. You might know that Sascha. Couldn't we save that question until we have the presentation and then we can come back to you because there will be a Q and A after Sascha's presentation. So I really don't know how much we ship between the factories. That's okay. We can save it. Thanks. Then he might have the opportunity to check that if he doesn't know. Thank you. Tom Bennett from RBS. A quick question regarding M and A. I see coming back on the agenda in 2014, 2015. What are your plans around that in terms of amounts you want to spend and kind of focus areas for the M and A activity? I have no comments to that. That's all. We will look upon what's available out there, looking deeply into what makes sense for us to do. But we look very deeply what's available for us and makes sense. More than that I don't want to comment when it comes to that part. That's fine. But it's generally more smaller add on transactions rather than bigger transactions. No comment? Can we move? It's Christian Meiningrad from DNB. 2 short questions. Firstly, on the chain saw the chain aftermarket, how big market is that roughly do you think? I don't know exactly the big market is here in percentage here. But when it comes to replacement for a chainsaw, of course, the chain is a major part of that segment here. When you use all of you have used a chainsaw and you hit the stone and you know that you can't use the chainsaw anymore here. You need to change the chain immediately. So I think it's a big part of that segment here. I don't know exactly, but it might be 70%, 80% when it comes to the replacement market all over. Which in kroner means? I don't know. We can come back to that question here. And secondly, when I looked at the presentation, you talked about securing the foundation in 2013. Does that mean that 2013 again will be a year of investment and the EBIT margin improvement will come in 2014, 2015? Or should we see that already in 2013? I think the plan is that we will see an EBIT margin going up 13 here. And then of course, it's a lot of factors which we can't control. Weather, if we have a good weather, I can go back to the reference 2010. If we have the same weather then you will see of course a complete different EBIT margin 13 visavis12 definitely. And then of course we have some effect of this restructuring program coming into 2013 here. Then we take a more conservative way than in the past what we got and promised here when it comes to savings from all activities here. We will not promise more than we can deliver. So we are a little bit more conservative to give numbers when it comes to savings for different activities. But of course, if the weather is with us, we see a complete different situation, especially the Q2 of the year. That's key for us. And we will see whether this takes us here already beginning of end beginning of February. Just an example here how it works when it comes to garden business. I will use U. K. As an example. The Easter is key in U. K. When it comes to garden seasons. The 2 1st week before Easter has to be fine and nice weather and then the Easter has to be nice weather. And the 3rd the week after is important as well in U. K. If this 4, 5, 6 weeks are with us, then we can see immediately U. K. Will perform good. If not, then we can see the garden season in U. K. Is gone. Just an example in a country like U. K. Where they're so focused on the Easter when they come to Garden business, all this weather can change very rapidly. Just an example for a market and that's key for our main brand Flymo cost due to that's a garden. Yeah, who fast it can change. Yes. One final question. And Eastern is early this year by the way. Just a final question. You're talking about margins around 10%. Historically, your margin range before 2008 was extremely stable between 9% 11%. What kind of margin range should we expect going forward when you talk about around 10%? Is that 13.7% or is it Well, there is actually a small greater than sign before the 10%. So that is what you should have. We don't put any range. We just say it should be more than 10% over a business cycle. Bjornyna, Scharndanske Bank. A question on how we look upon the market growth development that we have seen in the past and if you see that there's different characteristics going forward in the overall market in Europe and the U. S? I think we can take U. S. And then we save the European after we had the European presentation. But you can take the Then we take the U. S. Yes. We think the market is going we have an optimistic view of the market. If you take a look at the broadbands underlying the outdoor power equipment sales and if you took a look at that chart, which I showed which showed growth slightly up climbing through after 2011, we think that's going to continue. If you took broadbands by product category underneath there and you looked at for example chainsaws, other handheld equipment, tractors and lawnmowers, you'd see a reasonably stable band throughout all those categories. There hasn't been substantial change with one possible exception and that is that there's been slightly declining sales in the walk and the ride mower category. And we think that that probably indicates that individuals are not renewing products. And I think the industry takes the view that that should eventually lead to an exploration of life of equipment. So it should create an opportunity. Is that response? Yes. That's fine. I've also heard that comment that there's been some longer times before replacements. But you're seeing that as potential catch up for effects, yes. And then if you apart from volumes, looking at pricemix, will we see a bigger impact from pricemix going forward given the presentation that you've held here on focusing on margins, etcetera? And that goes for Europe as well. In America, we think we should see improved price and mix through reemphasis on the Husqvarna brand and away from private labels. And we should we think we should see it through refocused efforts and specific categories where we should be able to generate higher margin specifically as an example parts accessories Z turn products and renewed emphasis on our core brands where our sweet spot chainsaws. For Europe, we say that part that's for Fried as well. And then on the U. S. Last question on U. S. Daily channel measures that you have taken the last couple of years. When that program was announced, you obviously said that it comes along with quite a lot of costs in penetrating that market and it would take some years before you had reached a sufficient penetration for having a positive net result from some of those investments. Where are you there right now? I mean Yes. To clarify, I'm not sure when restate your proposition, so I can make sure I got it. I think that you said when you launched that program that you are about to increase the exposure to U. S. Dealer channels that it is quite costly in ramping up those new distribution channels, logistics and marketing, etcetera. It's relevant to note that we've been engaged in the profiling activities, the enhanced profiling activities year over year since 2010. And we think we've profiled over 1,000 dealers. We'll continue that pace. It will be about consistent with our past activities. So the amount of increased investment will be consistent with what we've done in the past. And we've achieved a lot of traction as evidenced by the fact that sales in the dealer channel have nearly doubled since 2,009 on a measured by a period U. S. Dollars. So we're getting traction that's measurable. And our investment hasn't been hasn't pays off very, very quickly. It's a quick repayment cycle. On the efforts to grow dealers and just our goal of $500 a year, which we did in 2011, 2012 that again is has a quick repayment cycle. Is it fair to assume that it takes 1 year for new dealers to be profitable? Yes. But that's fair. Thank you. Hi, Johan, Elias and Shuvreux. Just coming back to these dealers adding 500 per annum, you have 25,000 in total. How does that number stack up in the U. S? We have a we probably have 3,500 dealers above a size that we consider optimal. Probably have another 2,000 dealers. And the challenge is of course to grow dealers who are have a sweet spot of size and that's going to vary by marketplace. It varies town to town. But to make sure we've got the right dealers in the right locations is principle And to make sure that we've got dealers at the right size to minimize our cost to serve and to achieve economic efficiencies is the goal. So there's no particular objective in terms of a certain number of but the idea of growing 500 a year is a function of our own perception that market penetration gives us that kind of opportunity going forward. And then I didn't quite understand your comments regarding the Husqvarna brand in the U. S. Retail channel. Could you say in a simpler way to Sure. Yes. We will limit our the use of the Husqvarna brand in the retail channel to 1 mass channel partner after 2012. And the goal is to enhance its premium status. And it stands for all product categories? Right now. I think that's not the secret here that we shift more and more over to Luz because of this color brand. Thank you. My name is Ole Orenson. I'm here from Davids Industry. Firstly, I'd like to ask you're now you have this 10% margin goal for the EBIT and you say it's over a business cycle. Could you clarify what you mean by over a business cycle? It's a $1,000,000 question. Well, we don't have a good definition of a business cycle. I mean, I doubt that we can actually explain it in a number of years. But I mean we see it from a downturn in the business cycle as to an upturn in the business cycle and it's a number of years. So that doesn't put that much essence into the word business cycle really when it comes to numbers. A number of years. It's a number of years. Yes. Okay. A second question to Hans actually. I'm just curious, I believe you can if you want, you can retire at 62, but how long are you planning to stay on as a CEO? Do you want to have an honest answer? Yes. Yes. That's not my decision. It's up to the Board. Yes. But if it's up to you, but it isn't obviously, but how long do you want to stay on? It's up to the Board. Okay. Thank you. Okay. I don't think we have any further questions right now. So let's have a leg stretch and some coffee outside and get back here in about 20 minutes at half past 2 and coffee is served out to the right. Okay. So welcome back everyone and welcome on stage Frieda who will take us through our operations in the EMEA region. I'm actually not just going to talk about EMEA. I'm going to talk about Asia Pacific as well because as Hans mentioned earlier today, we do report Europe Asia Pacific as one unit even though we internally have Sales was slightly down, euros 2012, euros 15,400,000,000 mainly due to weather. We had a very wet year, which is not good for our watering business in Europe. It's not good either for the people going out in the forest trying to cut down trees. If it's too wet, you can't get the trees out. The business unit consists of mature markets France, Germany, Japan, Australia semi mature markets, Eastern Europe and emerging markets where we also include Russia. Split between emerging and mature, roughly 90% is mature business. We see a clear growth potential on emerging markets. Opposite the U. S, which my colleague Earl went through earlier, 60 5% of our business is done in dealer channel. If you look at the market split in Europe, Asia Pacific between dealer and retail, the dealer market is approximately 60% of the market. Our sales is 65% of our sales And it is quite stable that way. If anything, the dealer business for us is growing. One of our key strengths is our closeness to early adapters. With that, I mean the 1st movers on any given market, the people that are willing to try new things, new innovations. Roughly 15% of the market, but the mass market will follow these people. We are very good in talking to those people. I'll come back to that. We have strong brands. We have roughly 30% market share with our brands in Europe, Asia Pacific. We have been able to grow the dealer channel. We will continue to grow the dealer channel. And we have increased our focus on emerging markets. The guy over there is Alexander Sokolov. It is not a coincidence that the 4 top positions at the World Championships in logging in 2012 all used Husqvarna chainsaws. The winner used the same saw as you see over there. These are the first movers when it comes to professional people, the Eusqvarna. We are also going into commercial lawn and garden more and more also professional users, 1st movers there. When it comes to the end consumer, 1st movers, the robotic, where we are the clear market leader. We have been doing robotics for the last 20 years. Now is when we see competition trying to enter that segment. A bit on markets. Red ones, mature markets blue ones emerging markets. If we start with the mature markets, what you can see is that many of the mature markets are actually flat. The 3 major mature markets Germany, France, Japan 40% of the market value on mature markets relatively flat. That does not mean that we don't have growth opportunities in these markets. It means that we have some segments that are growing. For example, the robotics, for example, within handheld, we do also have segments which is actually declining. One example there is, for example, we can see that in Europe petrol lawn movers are actually declining a bit. What we see over here are actually some mature markets that are actually growing, but they are about 15% of the market value and that's mainly in Eastern Europe and South Africa. If you look at the emerging markets, the by far largest market is actually Russia. Sticking to the BRIC definition, we treated as emerging. We have a very good footprint in Russia. Russia is growing. Might not be growing double digit in 2013, but definitely above 5%. We have ASEAN, which also which can be translated into Southeastern Asia. Again, Hans spoke earlier about that we're setting up an office in Kuala Lumpur. So a lot of opportunities in China, Southeast Asia, India, which we want to be able to capture early. Those markets require an early entry. We were early in Russia. We have been in China for years. You have to be among the 1st movers and we have to capture the professional users on these markets. If you look at Africa, we are building up our competence in Uganda, Kenya, Nigeria, countries that will grow significantly over the coming years. Channel wise, and I'm coming back to that a little bit later on, mature markets that's where you have retail. If you look at emerging markets, retail is very, very limited. You can see it in Russia, but still very much towards the cold open markets. But otherwise, it's dealer channel. One of the key things with the dealer channel is that it's very fragmented. You have loads and loads and loads of small to medium sized customers out there. You need to be present. You need to have a service offering because they expect you to service them so they can serve their end consumers. Their end consumers are usually more demanding than in retail. And in order to really capture, for example, in emerging market, you need to very early build up this after sales offering. We're actually very good at that. Looking a bit at our competitive landscape. What we can see is that loads and loads of our competition are trying to play both channels. If you remember the Americas quite consolidated base of competition. This is quite scattered. A lot of our retail competition is trying to come into the dealer channel because it's more profitable, it's more higher end. But again, very fragmented customer base and it requires that you do have the right service level towards your dealers and the dealers towards the market. You need to have a service network. Some of these on the dealer channel like Tanaka, Shindaiwa, Asia Pacific only, but quite strong there. If you look in our retail channel, we have something down there called private label. What we can see is that a lot of the retail chains are actually building what were earlier referred to as private label into private brands where they actually invest in their brands. That means in the retail channel now that there are more brands than ever competing for the same space. What is interesting also to note with Husqvarna is that we have a very strong position on our home market Sweden. We also have strong positions on all the surrounding markets. And we also have strong positions on the markets surrounding Germany where Steele is based. We are also growing in Germany. So again scattered landscape, but really it is not that easy to enter the dealer channel. If I then move into Europe, Middle East, Africa's brand portfolio, we focus on 3 core brands. We have Husqvarna as a dealer only brand. We invest in our dealers. They invest in us. We have a selective distribution agreement with our dealers to ensure that the service levels and the professionalism of the brand is kept. Gardena, the leading water brand in Europe, We also use it in the dealer channel. In mass retail, we have Gardena again. We also have full range of battery electric products under Gardena brand within handheld. We also have our growing retail brand McCulloch recently launched a couple of years actually only a little over a year ago. It's growing. We can see that it captionized market shares on important retail markets such as France or Germany. We use Jonseriel in a tactical way. Jonseriel is a dealer brand. It's very limited in mass retail, but we have it in a couple of at a couple of customers. Klippo is Nordic. It's lawnmowers, high endpetrolprofessional lawnmowers. Flymo is U. K. And it's one of the best recognized brands in the U. K. If we then go to Asia Pacific brand portfolio. As I said Asia Pacific, you have the mature markets and you have a lot of emerging markets. Husqvarna is our dealer brand and it's dealer only. Gardena and McCulloch are present mainly in Australia, New Zealand. We have a little bit of Gardena and McCulloch in Southeast Asia in our dealers because there is no retail present there. And then we have Zenoa, which is the strongest brand in Japan and is also present in Southeast Asia. Going into our strategic priorities, channel management in Europe. Over the last few years, we've been running what we call the daily business development program with the objective to increase further our dealer sales. If you remember 60% of the market is dealer, 65% of our sales goes through the dealer channel. We want to increase that further. When we see competition trying to enter, we want to be closer to our dealers than ever. Again, we invest in them, they invest in us. We want to have the right dealers and have the right incentives for dealers to grow with us. One of our key things coming back to commercial lawn and garden. As I said, we're very good in forest. We are growing what you call commercial lawn and garden. We are focusing on making sure that we capture all the professional users landscapers, arborists, etcetera. We upgrade our dealer base constantly, make sure that our dealers can make a good living together with Husqvarna long term. We also focus a lot on developing our after sales offering. We do service business training. We have Husqvarna University. We have we focus a lot on spare parts, accessories, very high margin profitable segment for us. We also start up with what we call shop profiling. We are currently offering our dealers shop profiling 2.0 And we have put it into a number of shops so far across Europe. And what we can see immediately because of that changes the layout of the shop, also enables us to go in and actually work with the dealer to see how can we optimize your shop floor. And we can see an instant payback in increased sales where we do this. Will we be able to do it in every shop? Well, it will take some time because the dealer also needs to invest in program. This is not Husqvarna going in. It's actually a mutual investment from both sides. Pricing model. We have a very transparent pricing model being rolled out across Europe, where we want to ensure that our dealers see a transparency that they see that they make money and we make money. The second part of this is that we want to optimize our retail margin. A bit earlier I spoke about the fact that we have also competition now from our own customers in retail through their private brands. We want to improve our retail profitability. It's not bad. We want it to be better. We want to be closer to our key accounts using the definition of a key account that there is a mutual interest to grow together. And we need to address that private brand business is actually growing. It's a very small part of our European business. We only do private label if it enables us to do more branded business. What you actually see on the picture here is a sneak preview. With 1 of our major key accounts, we are actually doing category management on petrol handheld. The figures you see the numbers you see there somebody is wondering why is the numbers over there. It's actually this is actually taken from their internal training material for their shops. This is being rolled out as we sit here. That's one example of how we can work together with the retail key accounts. They gain, we gain. We work a lot more with shop floor management merchandising. We put a lot of focus on watering, petrol, handheld and battery. And I know my colleague Henrik will come back a bit on battery. We also constantly strive to reduce our cost to serve. With that I mean our logistic costs, our admin costs. We're also running a sales performance program to make sure that our sales guys we can get basically the best possible output of our sales guys. Emerging Markets Growth. We want to expand selectively in Emerging Markets. Key priorities: Russia, China, Southeast Asia and Africa. Africa is vast. We want to focus on Southeastern Africa moving across to the western part. Foot more focused on the Husqvarna brand. Remember this is dealer more or less only. We focus a lot on handheld and tailers. Henrik will come back to the emerging markets assortment. And we want to accelerate further in Russia. Russia is a huge country. It's fast growing, very, very long transportation sometimes from one end to the other, which is also why we want to invest more in our warehouses over there. We do see that we need to close a couple of gaps in Asia and Africa, finding the right distributors. And in some cases, we will set up our own sales companies. We need to strengthen the dealer base. What is interesting here is that we also need to educate them when it comes to safety, how to use accessories. Basically, we have to help them to grow the aftersales market, which also requires that you have a lot of knowledge in this area, which Husqvarna has. We also work constantly on strengthening our people in our organization. We work a lot through local presence, local people. Interesting here is just a very quick story from India. We sent 1 of the former logging champions, again a guy using Husqvarna on a 2 week road trip in September last year around India, actually only covering 2 states. India is also a big country. He did 35 stops together with our one of our Indian distributors. They reached over 100,000 people during those 2 weeks. So we see that by very small means we can reach a lot of people in these markets. So to sum up, I believe we have a strong starting point. We have a focus on the dealer channel to grow it further and also then our aftersales offering. We want to optimize our retail margins by working closer together with our customers. And we want to accelerate growth in emerging markets. Thank you. I'd like to take you through the construction business. And to start, I'd like to describe what our construction business is, because the denomination construction is a very wide range of businesses. We can divide our construction business actually in 2 business areas. The one we talk about construction and the other one we talk stone. In the construction business, we are focused on sawing, drilling and grinding, machinery for sawing, drilling and grinding and all consumable diamond tools to support those products. Then in addition, we also have developed a product range of remote controlled demolition robots, which is very high linked to our sawing and drilling because many times our wire and wall saws are used for demolition work and it's the same contractors that mainly procure this type of light demolition work today. All these construction business, we do in 1 single brand Husqvarna and it's a very global business. The second business area is our diamond tool for the stone market, the stone. And here the brand is DiamondBot, a leading brand in the diamond tool for the stone industry. We don't sell any machinery, but we provide diamond tools for the machinery that exists in the market, the kind of industrial sales, selling direct to Coris and the processing industry. Both these brands are today the leading brands in its industry. Looking at the market trends that in the market that we work in. The value of our market is roughly SEK 20,000,000,000 and we can split that. It's about SEK 16,500,000,000 for the construction and SEK 3,500,000,000 for diamond tool for the stone industry. These two markets are totally different. As we are operating in highly sophisticated product methods, The construction market that we work in is very much focused on the Western markets, North America and Europe. That's a majority of those markets. The rest of the world is less than 1 third of our market. And in those rest of the world, Australia and Japan is the dominating markets. And I can take an example. The sawing and drilling contractor business in China, for example, is less than the Scandinavian market today, because our products are not that much used in new construction. It's mainly used in renovation, rebuilding and repair. So the future opportunities in China is of course huge. It's just a question how soon is that market really triggering. But it's growing, but it's still small. Looking at the stone market, it has changed rapidly in the last 10 years. The key market there is the emerging markets. That's where the quarries and the processing mainly take place. Europe used to be more than 50%, but it has changed. The European market is focusing on the quality products today, the high end quality natural stone products. And of course, with the change in the Southern Europe, there's been there's been a lot of that business that have been lost lately. And U. S. Is more of a stable market and is depending on the residential market development. Development trends of the market here in 2012, the construction market still contracting in Europe as well as stone, heavily in stone. We see a recovery that started in North America, which was a big portion of our growth in 2012 and our sales growth came from North America. And of course, we see a clear and steady growth in the Merlin markets. However, those markets are still small. So it's absolutely key for us to maintain a sustainable growth that our Western world market is recovering and provide that growth we're looking forward to. Market drivers, as I said repair, rebuilding and renovation. We see that markets with a rental with a well established rental distribution have a higher penetration of our products than markets without. And we see that the rental distribution do develop in the markets, which is a benefit to us. And then increased labor cost is also very important, because our products are normally competing with low cost labor in the emerging market. So increasing labor cost provide opportunities for our product systems. Major competitors, none of our competitors really trading today in the total product range that we are providing. But Hilt is today our biggest competitor in terms of the global market. Tour Elite used to be, but they're losing grounds, but also a global competitor. And Saint Gobain, mainly in the distribution side, rental and distribution, not in what we call the contracted direct sales business. Steel, of course, our major competitor on power cutters, but strictly in that product areas. And then in Diamond Tools, we have 2 Korean companies that are our largest competitors today EVA and Shinhan from Korea, but only in Diamond Tools. And then there is a number of small and local competitors, fragmented market companies in many in most of our markets. And based on the market situation, of course, our sales is also split. This is 2012 sales due to the growth in United States. North America is today our biggest selling regions, but Europe falling very close. And Latin America growing for us, specifically Brazil. That is a booming market right now for our type of activities. And then we have, of course, Asia and Pacific, but there Australia and Japan is the major market, but China is growing, of course. Africa is mainly South Africa, which is a market for our product today. If we look at the manufacturing footprint of construction, we have today very well balanced manufacturing setup. We have 8 specific factories for the construction products, specifically located where they are due to the product they manufacture. And then we have, of course, the Husqvarna main factories, an important supplier of power cutters and electric products. We have 2 factories in China, 1 for equipment and 1 for diamond tools. That's our low cost factory for, let's say, the distribution products mainly. And then we have 1 diamond tool factory for construction in Europe and 1 in United States, which basically do the same thing. It's for the professional products that need high service, short service time to those 2 factories, 1 for the segments and 1 for assembly. Segments in Portugal and assembly in segment in Belgium and assembly in Portugal Keystone Factories. So well balanced for the need to service our key markets. Construction growth track record for those who haven't followed. This is the development we have. And as you can see, construction business was heavily affected by the recession that started already in 2,008 and we dropped more than 30 percent of our sales and business with, of course, a tremendous impact of our profit margin due to that fast drop. Since then, we have secured our foundation and we now are really focused on growth and coming back because we are a double digit profitable business and should be in that range. We are now up to 8.7% in 20 12, but we also have if we compare have to understand that we are spending more in R and D today, about 2% more than we did in 2,006 and 2,007. And we also, due to the investment the group do in IT, have about 1% higher IT cost compare. So we have to have that in mind when we compare EBIT margin back in the 2000. But double digit level that's the type of business we should be in double figure. So to sum up, we can say we have in construction gone through a consolidation journey. We consolidated the brand portfolio very early from our acquisitions. 2 brands Husqvarna in the construction, Diamond Boat in the stone business. We made significant restructuring during the recession time here in 2009, closing factories, consolidating sales organization with the Forest and Garden with the coming back office in many markets to reduce cost and also trimmed our sales organization where we lost markets like South of Europe. But we also fully integrated those acquisition in terms of organizations, brands, products, manufacturing. And all our acquisitions that we made are fully integrated according to those plans and strategies we had. That with being part of a strong mother and being able to maintain a high R and D and product development investment during this time have actually really strengthened our competitive position during this period. And right now, we further move products and manufacturing volumes to our low cost factories. So about half of the machinery or the equipment that we develop is developed to be produced in our GMN factory and a lot of our diamond tool business that are volume related are manufactured or transferred to our China diamond tool operation. Product leadership is key for us. We have the strongest product portfolio today of our competitors. And we have the Husqvarna heritage behind us. We focus on performance. We focus on economic design. And we focus on improving the operator's environment and saving time for our customers. Very few of our customers own our products. They normally employ to use our products. And efficiency and time saving is key in our product development. That's how we would like to lead and change our industry. And I'm not going to go through this. Some example, every year we have a selectively strong product launch. And for 2013, we take our diamond tool further with the DIAdrip II technology, where we improve efficiency up to 30% by being able to control position of the diamond in the diamond tool. Speed is key, becoming more and more important on diamond tool instead of cost. We also launched our biggest R and D investment, the high frequency product range in handheld. It's a total new platform that provide a number of products that are being launched now 2013 with the aim to replace our hydraulic products. There's a clear trend to replace hydraulic products with high frequency electric products going forward. And then our strong diesel floor saw program will be replaced this year due to the Tier 4 emission regulation for off road machines that come in place here in 2013. So construction have a strong platform to leverage growth. So growth is key going forward. We are clear market leader, leading brand positions, as I said, global strong global sales and service organization. Service is key. And very important, we have a very strong profitable North American business to capture on when this market now recover further, which we expect in 2013. We have a well balanced manufacturing footprint with a low cost Diamond Tool, which was a joint venture, which we acquired the remaining 20% here in mid-twenty 12. So today, this is 100% owned operation in China. And a continued strong R and D investment, which will give us promising profitable product launches as we go ahead. So our strategy is that we have secured our foundation. Now it's act for long term success in terms of growth. That's the key in our focus. So priorities ambition. Of course, we are depending on the Western markets recovery. And here, when they recover, we need to take leverage and take advantage of our foundational products, because there is clearly opportunities, even if there is not growth to take market shares, specifically focused on Central Europe on the contracted direct sales where we have good market share growth opportunities. We have the growing floor grinding business, which is the fastest growing construction business in our product areas and we continue to focus to take advantage of that growth and invest and then take full advantage on our low cost diamond tool both for stone and construction to grow our diamond tool business, which follow the machinery. Focus on emerging markets. We have invested and grow the organization in Brazil, Russia, China. And now we continue with Mexico and other markets where we have our own sales organizations. So these are key market areas to capture the market when it's coming now as repair and renovation is increasing in these markets. And then we will continue to maintain our sustainable R and D investment to continue to provide innovative products to drive are We have worked with our account receivable. We can further improve our inventory situation by improving the flexibility, improve our forecasting and the supply chain to reduce our inventory level. So to summarize, secured foundation. We have a market leading brand and product portfolio. Focus is and priority is growth. Thanks. Thank you, Anders. So then we open up for questions from the audience for Friede and Anders. Ulf, you can also come on stage. Hi, there. Thank you. Just a quick question on construction actually. You've had obviously very impressive growth for a few quarters. I was just curious to ask you 2 things. 1, if you look into 2013 on the European sort of renovation construction market, we've heard plenty of companies saying that the weakness has sort of spread north. Where do you see sort of the biggest risks for disappointment and potential biggest potential for positive surprises in 2013 if you look in Europe? And secondly, I was just wondering, you had negative organics in the Q4. I'm not sure if that suggests that we should expect that to continue going into next year or if that was just because of the very strong growth experienced earlier in the year? Thank you. I mean, who can predict the European market? I wish I could. But in general, of course, we expect Europe to be challenging as we go forward. South, I mean, we don't see any recoveries. We see continued drop actually in this in South of Europe. But I don't think the Northern Europe will get worse. I mean and we have market share opportunities. So even with the stable market, but it's clear there is no projection of bigger growth in Europe in 2013. It's fairly flat market situation. And if you on your question about the Q4, we have to remember we had a very big order last year to Saudi Arabia in 2011. So we were actually a little bit up. But it's clear, it was the European market situation in the Q4 that gave a lower growth for us in the Q4 of 2012. You wouldn't be wanting to single out France or Germany or Italy or any of those markets seeing slightly different trends from each other? No. Actually, the positive for us in the Q4 was that France and rental was actually recovering in the Q4. And that was a good trend for us. Thank you. I had a question to Filda with regards to if you look on the European market and especially within the electrical segment, which is now a specific category, could you what's your what's the growth in that particular category compared to the other categories? What's your market share in that space? And how do you aim to grow this going forward? Okay. If we start with the overall market on battery and electric, it's the battery part is still fairly small. The corded part is quite large, especially actually in U. K. Where we have significantly smaller gardens. We see a growth starting with the professional users. That's why we want to capture them and that's why we're focusing the Husqvarna brand now to more professional products. Henrik will cover that more in detail. When it comes to market share, we have a good position on the professional side and also on the consumer side also within retail. I'm not commenting specifically on market share there. Okay. Also on your mass retail exposure in Europe, are you what lessons are you learning from the U. S. Developments? And could you also give us some guidance on profitability in mass retail versus dealer channel and what the trend is in mass retail? Well, we have never in Europe been as exposed as the U. S. Has been to mass retail. Overall, the retail channel is smaller in Europe than the dealer channel and we don't see a change there. We see that dealer continue to grow. We are as I said, we are focusing a lot on the dealer channel. We are present we have a strong presence too in retail, but we are avoiding the lowest segments. We are focusing on the middle to high segments in retail. And yes, we are profitable, but we can see we can twist it further. Hi there. Johan at Sverre. Coming back to the battery products. In general, how big is electrical products of your portfolio? And specifically on batteries, are those products profitable yet for you? Yes, they are. When it comes to the exact size of the portfolio, I'm going to have to ask you to wait till Henrik can probably answer that better than me. It's on Europe and the dealer channels. Where do you see the largest potential in Europe? You have a fairly high share of your own sales today in the dealer channels. And what kind of market shares do you see in different subregions within Europe? And where do you see that the largest potential going forward? Actually, we see the dealer channel growing across most of the mature markets in Europe and also into Eastern Europe. We also include Russia into as an emerging market in Europe. So we see a good spread actually of the growth. We obviously see a lot of growth in our core areas such as handheld. And as I said, we see also growth starting up now in battery. So dealer growth is or and has been higher than the mass retail for some time? Well, I think the mass retail might be more affected in Southern Europe of the market conditions. Dealer is a little bit more high end and it's more demanding customers plus the professional users. And especially the professionals they need to renew their products. Plus that when it comes to mass retail, again, we are not that exposed to those parts of mass retail that are mostly affected by the crisis. So should we expect that your exposure to dealer channels will increase also going forward? Yes. And when looking at emerging markets for including Russia then, when it comes to profitability, I understand that for the group as a whole, the profitability, the mix is a little bit weaker in emerging markets. Is it the same for the dealer channels? No. Well, emerging markets is basically only dealer. It's not it's a very different assortment. In emerging markets, you have primarily handheld and wheeled. And Henrik will come back to that, but we do have a specific focus on those products into emerging markets because you need to be you need to have a bit of a different assortment there. And expansion into emerging markets, will that be enhancing to margins? Or will it be negative? Well, it should be good for the margins. Christoph Meinigold from DNB. A question on Europe. It seems that Cretan will acquire GDP. Is that something that should change the environment in Europe at all? First of all, we don't know that. It was just a speculation in the newspapers. But if that happened, it's just you shift an ownership here. And for us, it doesn't mean anything here when it comes to shift ownership here. There might be if there will be new owner that might go more for volume. But we never know. But we don't see any volume if it's a Triton or 25 banks own GDP. Okay. Secondly, when it comes to Asian competition in Europe, how has that developed over the last years? Have you started to see more Asian competition coming into Europe? Or are they still not present except for the low end categories? We you can see them in some low end categories, typically with a single product or a couple of products. But it's not a full offering. And it is even in mass retail, you do need to have some kind of service offering. And if you don't have that, you might be in for 1 year, maybe 2 years, but then you're out again because you can't offer the service needed to the products. So we see them, yes, but very limited so far. Okay. And the final question on the construction. It's been something that we have discussed over the last couple of years whether construction really fits into the Husqvarna Group or not. We can once again talk about the synergies. Are the synergies Do you see you earlier talked about whether construction should grow a lot to really have a meaningful impact on the Husqvarna Group. So do you see any acquisitions for instance within this category? First I want to answer. Contracting fits into the group here and there is no intention at all that that's for sale. I repeat that several times. It's not for sale. I'll do that once again here. Then when it comes to synergies, you can comment that because that's more in the technology area. I mean, construction have been part of the group since 19 58, if you go back and Diamond 2 since 'eighty 7. So I mean, it's a long and close history. And then I have to say also one 25% of our business is power cutters, I mean, with very close synergies in technology, 2 cycle engines, etcetera. And that's the most profitable part of our business. So it's a key part. And the way of doing business, the service is very, very similar, if not exactly the same as a servicing dealer business as we talk about. And also the product development on ergonomics and low weight efficiency. So I think the whole methodology and construction fits and works. And if we look at the group, we all cut something, cutting grass, cutting brushes, cutting trees and we cut hard materials. So it's a good fit. You can just look upon these two products. 1 with this cutting equipment and this is another cutting equipment. Basically under the skin is the same product. And we took the early step of focus on diamond tools, the cutting equipment. And I'm happy to see that the group do that now for the chainsaw, because it's an important part, the combination between the power head and the cutting equipment going forward to get an efficient product. It's not just power head. It's a combination that is key today. Yes. I had a question on Europe. If you can explain a little bit how you see the differences in the decline in demand in Q2, Q3 and Q4. Is it weather? Is it the cycle? Or where do we stand right now in your business as you see it? In 2013? From 2012. 2012. Well, as I said, it was a very wet 2012 and that impacted in mass retail, of course, our sales of watering. And it also has an impact on the people, the forestry workers and also the hobby users going out into the forest. Otherwise, I mean, we also saw I mean, 2011, we had an extremely strong snow year towards the end of 2011. And we did not have the same kind of sales out of snow products in 2012. But you haven't sorry, you haven't seen any sort of cyclical downturn. I think there were some comments about that yesterday in the European market in later in the year. Well sorry, no go ahead. No, we haven't seen that any shifts here. But then coming back to Snow here to comment that a little bit here. That was planned already in the beginning when we did the budget for this year. We said that snow will go down. We said after all these strong winters because we fill up all the consumers is now frozen. So that was a decision we took, of course, affected a lot quarter 4 and even a little bit quarter 3 of course, yes. A shift I will not see that we have seen. But definitely some tougher macro. Tougher macro, yes. Of course, we see that. That has affected us. As I said here I think in the beginning here, we were not seeing so much in the beginning of the year. It was mainly down in Italy and Spain. I think you commented a little bit that Spain for stone was affected a lot. But then lately 3rd and especially the 4th quarter we saw a change going north here. And that has a big impact in the Q4 that our customer while it is more lay back here and wait and see The orders are very good. But then of course they need to have a call off. The scene that are waiting what's happened. More relative what's happened and they are cautious with their inventories as well and with their customers. That has been a shift in end quarter 3, but definitely during quarter 4. Then we of course we can't predict what will happen here. But normally, if we see good weather when it comes to professional products, we are not so much effective of what's happening in the economic environment here normally if you look backwards here. But of course, the more consumer oriented we are, of course, you more will be affected on that in that segment. Just a detail maybe. The chart that show the size of the markets and the growth rates 13% to 15%, is that your forecasted growth for the markets in 13% to 15% or is it someone else's? And or is that what your base are planning on? Well, it is we do use market research companies on all the major markets. Some markets are very difficult to predict. And it's very difficult to predict how big is really the OPP segment of some markets like Russia for example. It's not an absolute science. It's the best estimates we have to base our market. We do believe though that it's as correct as it can be. We do put a lot of emphasis into Business or Market Intelligence. I noticed that most of the West European markets were at 0 level for the average 13% to 15% growth rate, if I read it correctly. Would it be correct to assume that the pattern would be down in the beginning of this period, 13% to 15% and up a bit later in the period? I think most of these Western European markets have been flat for quite some years. They are mature. And so I don't think that has changed much. I think, of course, as Anders was saying, we can't predict how Europe will develop, unfortunately. But as Hans also was saying, the orders look good this year. So All right. Thank you. Okay. If we have no more questions, then it's time for another break. So let's be back here at around quarter to 4. Okay. So welcome back everyone. And let's start with the last session of the day. And please Hendrik Anderson on stage. Okay. Now we will talk about products here for the next 20 minutes or so. We have market leading positions in most of the segments where we participate today. And of course that provides a solid foundation for the group strategic pillar having a competitive product offer. And here we for sure have benefits being a global player and being active in many technology fields because there are real synergies to be had sometimes on product level, but on component level, technology level, concept level between different areas. Just taking a very trivial example, if you want to step into battery powered chainsaws, if you're then into battery powered products like robotic mowers and you're into chainsaws, you will have a lot of synergies and a much easier journey as a very trivial example. To have market leading positions, you have to consistently outperform competition. You can of course do this in many different ways. The first one that comes to mind is of course in terms of product, product performance etcetera. And a challenge we have and a challenge any organization have when it comes to product development is that you need to make decisions today that will be judged 2 to 5 years later when the customer will go and buy something and choose your product at that time versus what the competition have there at that time. So that's the real trick. And to make that even more interesting at least that's my perspective is that the customer preference might be different at that time than it is today. So something that is very important to us is to live extremely close to our applications and to our customers to really understand what are all the factors in that affects how you cut a tree or how you cut grass to understand all those different things and also understand what happens with technology. What can technology do for us in that application 3, 5 years from now when technology might come down in price to be readily available? We also need to make sure that we truly understand what's going on in the competitive landscape, what goes on in terms of demographics, what goes on with regulations, etcetera, etcetera. So this is an absolute core area for us to be really good at this. And I believe that we are really good at this as well. This product that we show here on the slide is one example where we launched a new professional chainsaw that has unmatched power and acceleration in its class. Nobody's even close. That of course we accomplished by doing many different things. But the example I'm trying to make now is that part of that is that we have an autotune system, which is electronics that optimize performance of the machine. There we applied for our first patents over 15 years ago. Just to show I mean how important it is to be active to work long term to understand where things are going and when technology is ready, when the market is ready, then it's time to put it into the market. So that's just one little example. And I believe we have proven over the years that we have a strong record of innovation. And of course over the last 3 years we have launched much more products than what is up on the screen here. But these are a few examples of major launches or that were very innovative one way or the other. And I will not take the time to go through them all here. I would rather focus on a few that will come for this year here now for 2013. One example or one product that's coming is the new professional trimmer family, the 525. And here just like for the chainsaw, we're delivering unmatched performance. Nobody else is even close to the performance that you get out of this product. At the same time, we have reduced emissions and fuel consumption and we have reduced complexity. As an example in terms of complexity, here we're going from 7 platforms down to 2. So it's part of platform reduction. I mentioned the chainsaw before. We have a top handle chainsaw that we will be launching during 2013 as well. We'll also deliver unmatched power versus competition, etcetera, so there's several on this theme. And it's really our continued strive for perfection. A lot of specifically the professional products is really chasing perfection to give that extra that little bit of extra performance every time when we come out with a new product. Hans mentioned this one. Earl mentioned this one, which is the all wheel drive lawnmower, which is an example of another kind of innovations. This is more where we innovate for consumers. Then it's very important that we identify true customer needs. We can that we translate into something where we can offer a benefit and we pack it as a feature that we can show it very clearly what it is. The customer understands what it does to them and they can put a value on it. The all wheel drive is a great example. It is basically a standard lawnmower, but we add this feature of 4 wheel drive. That way we can differentiate in a very, I would say, commoditized market segment. And by doing that, we can both drive sales, but we can also improve our margins. Earl mentioned a couple of other ones that we did in 2012, the fast tractor. I think you missed the tight turn tractor that we also did. You talked about the BBC. Another one that will come during 2013 is the rapid release blades. Most of you know how cumbersome it is to replace a blade on a lawnmower, especially on a tractor, because you need the tools and you need to be down there, etcetera. And here we can do this without a tool. So it's a latching mechanism. And that way consumers can actually replace the blades much more often. And of course all consumers see that as a benefit. For us it has even further benefits because customers will most likely replace the blades more often which is a good thing from an aftermarket perspective. They will be more happy with it lower because the result will be better. And then on top of that to fit our lashing system you actually need a unique blade. And that way we also might be able to benefit from we can also benefit from that from an aftermarket perspective. So these are a few different kinds of innovations that we're doing to really try to target the consumer market. Another kind of innovation is when you truly change the market. And of course, we're not changing the market right now in that sense. The innovation here came earlier where we basically went from selling lawnmowers to basically selling a service of a maintained yard all the time, which is something entirely different and that is truly innovative. And here we started that work 20 years ago. And now 20 years later, this market is really taking off and growing really fast and has done that for a few years. And now more and more people are stepping into this market segment. So what we do here for 2013 is that we launch our 3rd generation of robotic mowers. 4th has included the 1st solar mower. And here we now take the new step in terms of performance and reliability, because a lot of what we sell when it comes to robotic motors is really that service that this should work every time. It should never be that you come home after your vacation and it's stuck somewhere. So a lot of the refinement in this segment is really to make sure it works all the time. So here we're making a new step change to make the machines even smarter. So we can secure that it can handle more complex yards and be even more reliable. And of course, it's key that we stay ahead here. So the new generation, we update mechanics, we update hardware, we update software. Everything is new. It's a new platform and where we actually can build on in the future, because new technology will come and we need to make sure that we are prepared so we can accommodate them on our products. That's a little bit on our the position we have. Then if you look at the future here and our strategic priorities, there are 2 main areas that my organization will focus on. One is the reduced product cost and complexity very much together with Martin and Sascha that will come up here later on. And the other one is to continue to invest into the right product platforms and make sure that we are staying innovative. And I will touch on that a little bit later on. Talking about product complexity. This is not rocket science, but it's a lot of hard work and it's a lot of hard disciplined work. And we will have a lot of activities that can give us results immediately and there will other activities that will take a bit longer. If we start to the left here, it's really where we can get results quick. It's basically range management. How can we reduce the number of SKUs that we sell between different markets, but also in the market? How can we do that just being better structured, organized and make sure that we do not lose sales in the process? The next thing that gives even bigger impact is if you can consolidate platforms. It takes a little bit longer time, but that's something we can do. And then we have what Hans mentioned in the beginning, we also need to deselect a few things. Do we need to be in all the little small segments where we are today? Or should we streamline it a little bit? So here we have a few things where we can get fairly quick results. A little bit more medium term so to speak is standardization. That is to make sure that we within platforms across platforms use the same parts every time instead of inventing something new every time. And this also creates some we need some discipline and but it takes a bit longer because you really need to design it in. And it also requires that you have the same R and D solutions and also you have the same manufacturing processes and things like that. The next step that gives even bigger impact, but takes even longer time is true modularization. It's basically Legos where you create subsystems and you put them together in a smart way. That way you drive down complexity all the way through the supply chain. But that takes clearly longer time before you see the results. And here we have a few projects on the way already. But I mean before we see real impact here it will take a while. So this is really a journey that we need to embark on. Ultimately, the goal is which Hans also mentioned is to reduce the number of platforms by 20% here by the end of this 3 year period. Reducing cost. Complexity really plays into this one as well, not just because you get greater volumes when you purchase or nothing goes out and source, but also for return on investment in R and D. The R and D effort to reduce cost in a product if we sell €1,000,000 or €1,000,000 doesn't really matter. It's the same effort. So of course with less complexity, we get much better return on investment when we do the cost out activities. So there is a clear link between complexity reduction and cost. Then we have value engineering, which is somewhat of a fancy term. But I mean, in the end of the day, that is also just discipline and hard work. The top level of that is really to make sure that we feature the products right for what the consumer actually is willing to pay for. So we do not have features in there that they're not really paying in full for. Really to have a more structured approach where you evaluate your features and if you get paid for them or not. So that's something that we need to do in a more structured way going forward. The other extreme if I go to the bottom is pure cost out. You challenge an R and D team together with manufacturing engineers and purchasing people and maybe the supplier themselves and basically task them to deliver the same thing, but at a lower cost. And this is a lot of it's basically just a lot of hard work. And here we have come pretty far getting this up to speed in the U. S, primarily now supporting Earl's business and in the retail business. This is where we come the furthest. And here we're even testing a new IT tool that actually helps. It links with our CAD systems where we can actually simulate different manufacturing methods. We can even simulate doing it in house or source or if it's worthwhile going to low cost countries versus being closed by, etcetera. It's of course not as a system 100% accurate, but it gives guidance to the engineers very quick. So they actually review more options before they lock in a solution. And this is something that we are still very early, but where we have some positive results. And then in the middle is, of course, to make sure that we review specifications, materials, but also platforms. I mean, on down? Okay. The other thing this is cost and complexity. The other thing is then investing into select areas targeted areas. And then I talked about trends a little bit before. I mean there are so many things we need to make sure we all the time stay on top of. So we make good decisions when our products are out there we are well positioned. And a few things. I mean, we have a long list of course. This is a very high level summary. But we can see we have an aging population. It puts more requirements on ease of use, on services, etcetera. We see changes in buying behaviors. Customers are much more Internet informed and will transition more and more into even purchasing over the Internet. That actually have an impact on products. Because if we want to ship those products direct, etcetera, then we need to make sure that the products are ready to be shipped direct, etcetera. Not saying that we will in this time frame, but we need to make sure that the products are ready when we are ready to go to the market that way. We also see that gardens are changing. In heavily densed areas, I mean gardens are getting smaller and smaller and requires different kinds of machines. We see gardens moving up on roofs. We see gardens being vertical on walls. Finding green areas in the cities takes new shapes. And here it's important also we stay on top of that to understand what implications do that have on our products. Frida mentioned Erl mentioned commercial lawn and garden is a big opportunity for us. That is a segment that is growing. We need to make sure that we have available products. Frieda particularly talked about increasing competition in retail and also the trade brands and a little bit about supplies coming from China and so on. This is something we need to be prepared for. We have the growing emerging markets. I'll come back to that later on. And then we have new technologies. And just a couple of obvious examples with battery and robotics that of course are here to stay and is something that will grow. So on one hand, we will really step up our activities in cost out activities and in reducing complexity. At the same time, of course, we cannot lose our edge when it comes to innovation. To make this work, we need to be make that we are very clear on where we spend our resources and to be very disciplined in when we execute. So the key now is we have revised our product strategy a little bit to be much more precise what are the core areas where we should really put the additional attention from an innovation perspective. And are there certain business areas where we should increase the activity? I mean one example could be emerging markets. Another one could be battery and robotic. There are several of these where for business reasons we need to make sure that we're aligned and make sure we really put the efforts in where we need them. And then the 3rd bucket here is the real long term work. As I said before with the auto tune, we had worked with it for 15 years before we put it into the product. I'm not saying we worked all the time for 15 years, but sometimes we have to wait for next step in technology to happen and so on. But to make sure that we are very disciplined on in what technologies are core to the company, which are the ones where we really need to stay at the forefront. And in this area over this period of time, I will spend more money and resources than we did in the past to make sure that we secure the leadership in our core technology areas. 1 just to use a picture, one obvious area is then in technology for handheld products. Of course, we have to make sure that we always are leading edge here. There are a bunch of others of these that we also have here on the list that we need to make sure that we have a long term approach and we make sure that we're always in forefront from a technology perspective. Then if you take a couple of specific areas. We have battery. There was a question before how big was the electrical business of the total. I mean today it's still less than 10% of our sales as a category. But the pieces of that business that is growing very fast. And as I think Frieda said, I mean, the corded part of that business is fairly stable or even somewhat for us declining it and it becomes more and more commoditized and so on. But then we have the robotic that is really taken off and in several markets is now a true category on its own. It has become a big part of the total lawn mowing market. And we see this coming now in many different markets. And then we of course have our new I didn't have one of those here unfortunately. They're out at the other place with our new battery powered handheld products. That market is still extremely small, but growing and we know it's coming. And what's driving this is of course ease of use, low noise and the environmental awareness etcetera. So there are a lot of reasons to believe that the battery part will grow in the future. And technology will become cheaper and cheaper. So this is an area that's growing. So we need to make sure that we are 100% engaged in this segment and make sure that we are part of it. Even though short term on the handheld side, we should have very reasonable expectations. It will take a while and it will be different from one application to the other. In the robotic area, we are the clear market leader. I mean, we started out with 100% market share. And now, of course, the key is to make sure that we keep it as high as we can when more and more people step in. So here we are of course investing a lot and making sure that we are staying in the lead. On the battery products, particularly the handheld products, just one thing that could be important to know is that we need to go pretty wide from the beginning in terms of the products, because in this segment the customer buy more of a system. When you have invested into 1 battery pack, you tend to buy your next product. And I mean if you bought a chainsaw, when you buy the trimmer, you will most likely buy the trimmer from the same manufacturer. So we need fairly quick to get up with a wide range to make sure that we are system supplier here. So it's a little bit different than from the petrol side where the mentality is a little bit different. Emerging markets. Again, both Frieda and Ol talked about that as well. These markets have a big growth opportunity for us. And in these markets, handheld products will for sure lead the way and even professional products will lead the way. And as time go we will complement that with some wheeled products and then primarily we are looking into the tillers. One strategy we have that we will accelerate here going forward is that when we launch new chainsaw for instance, when we launched the new that I showed on the picture before then there's a it's a smart move to take the product that one replaced the proven product that we are phasing out and actually move that to a factory close to the main market if that is to Brazil or to China and make sure that that proven product that is actually better suitable for that market with less complexity in terms of electronics and those kinds of things and use them for the emerging markets. So this is something that has been done in many different industries. We have done it and we just need to make sure we're accelerating this. So basically taking proven handheld professional products and when we are retiring them so to speak in the developed markets, we move them to the emerging markets. That's one thing. Second thing is we need to make sure that we adapt these products better. Here I think we have been a little bit too stubborn if I reflect a little bit and we need to do more adaptations to fit the market. And adaptations can be simple things like decaling or tweaking of products. It's not major design things. Or we need to design for specific applications. Just like in the developed world markets, we think about cutting trees and so on. In a lot of these markets, they are working with coffee or tea or palm oil and a lot of applications and that are big applications that we are not traditionally into. And here we need to make sure that we also pick the ones there that are important to be a player on those critical markets. So there will be some dedicated product development for specific applications. And then as I said before, then we need to make sure that we can add some wheeled products to go along with this offering. But it's really the pro handle that will lead the way and then the other things will come as we go. Some enablers or just things that are important for success. Time to market is absolutely key. I mean not just for innovation that everybody thinks about, but also when it comes to complexity and cost, because ultimately that means return on investment to make sure that we keep the pace up in what we do and that we have a robust process and that every time we run the cycle that we do it better than we did the last time. Second thing is primary development. It's a little bit what I said before about these core technologies and the long term work that's outside our generation plans that's really looking for the future, but also for the really innovative or technically challenging things to be a little bit more disciplined to lift them out, take them to a proven concept before we move them into projects and make sure that we do that in a more robust way. Because when we don't the experience is that our time to market is not what it's supposed to be. 3rd thing product differentiation always key and especially when we start to reduce platforms. Because in the end of the day, we need to make sure that whatever our offering is, it needs to be relevant to the consumer we are targeting and the brand that we are selling. So here it's very important that we become even better and smarter in how we differentiate between different brands channels and for different consumers. And the last piece is industrial design. That our products look good is very important. It doesn't matter if it's for consumer or homeowner for professionals. So attractive design is important. But even more important is that they look right. And look right I mean, for instance, if you want to sell the most powerful chainsaw, ideally it should look like the most powerful chainsaw. If you want to sell the most lightweight chainsaw, it should probably look like the most lightweight chainsaw. If you want to sell an all wheel drive lawnmower Earl then we want it to look like something that's 4 wheel and all terrain, right? So design is more than making it look attractive. It's very much to make them look right to help us to sell the right thing and to convey the value the product have to the consumer. And then the 3rd component is of course to make sure that we are consistent across the brands we have. So that's why I would like to emphasize the design here. That's a key thing for us. Summary, three points. Starting point is actually good. We have strong positions market leadership positions in most of our segments. We will continue with a high rate of innovative product development. We will be very disciplined though and selective where to push this. And the third thing is that we will step up our activities in terms of reducing product cost and product complexity. I think that's what I have. Thank you. Okay. We've shared a lot and you've heard a lot about our customers, about how we address the markets, about the products that we are producing in order to serve the markets. And I will talk about how do we actually get this to the customers. So I'll talk about manufacturing and logistics. We talked about the footprint, so I don't think we need to talk about this map further, but perhaps a little bit more information around our sites and how they are split. We talked about the left side. This is Forest and Garden now. If we look at the share of FTEs, meaning employees, we see that the majority of the employees or half of the employees, I should say, sits in the U. S, in the North American sites. We have the 4 sites in Asia plus Brazil, which operate with around 1500 employees FTEs. And then Europe is around onethree of the employees versus twothree of the sites. So you see that this average size of the factories in Europe is, of course, smaller also given the different product mix we have. Remember, we have watering sales largely in Europe. We don't have that to that extent in the U. S. And clearly no manufacturing of that in the U. S, etcetera. To give some numbers, we are operating a footprint which produces around 8,000,000 units of handheld products every year, around 4,000,000 units of wheat products every year. And watering, now it's not so easy to I mean, this is a wide range of products. I'll come back to that, but it's around 40,000,000 products every year that we send into the market. So it's obviously quite an operation we are operating here. So what's the challenge here? What maybe you may say what keeps me awake at night in order to operate this footprint? And some of the themes that I come to here have been explained, but give me please a couple of minutes to also explain what that means for manufacturing. And the first one is clearly around seasonality. It's been mentioned a couple of times today. And what we see in the financial development and the overall sales development, etcetera, is of course even more amplified within the factory specifically if we're focused on a specific segment. We have the majority of our operation of our phase in Q1 and Q2. That means we are ramping up production towards the end of the calendar year and then it's the high season really also in Q1 and Q2. That in itself is not that much of a challenge that is different to other seasonal businesses you may say. But I think a key challenge that we have compared to somebody who's producing Santa Clauses and chocolate for Christmas for example is that at least they know that it's every time December 24 that is the key date. We don't know that to that extent because and that leads me to the second point, we have the weather influence in it. And the weather is largely influencing when the season for a certain product category starts, how long the season is going to be and how amplified or how strong the season is going to be. A couple an example that's been mentioned, but let me reiterate. If we have very dry season, we need a lot of watering products. So we've got lots of work ongoing in the factories doing the watering products. But obviously, grass is growing slower because it's very dry. That means we need less cutting equipment. And you can continue that story further. So we need to make find a way and we believe that we have a good to respond to that flexibly. And I think we've got a decent setup, as Hans explained earlier, on flexibility. But also we believe that's the next step we need to take to even drive that further into the next dimension. And I'll come back to that later. And then lastly, the 3rd challenge is a quite wide product arrangement product assortment product range, sorry. So we're talking if you wish from a small shovel for the garden up to a car like tractor or a robotic mower or a combustion engine where we are pretty vertically integrated and really produce those engines ourselves because this is a core competence we need to own and want to own and will own. So it's a wide assortment that we're operating in those factories. And that means, of course, that each factory has a different focus and different challenges and opportunities for that sake. So that said, what does that mean for Manufacturing Logistics in terms of supporting the strategic priorities of this group? It's, of course, to further optimize the footprint and that has been discussed earlier. I'll come back to that. We've done a lot in the past and of course it will continue. But even more so it's about how do we use the base that we have now even more intelligently in order to balance the mix between local, regional and global production and hence increase flexibility. But let me come to that in a little bit more detail here. As for any business from a manufacturing or a supply chain point of view, product availability is key. So how do we get the products to the customers when they need it? In my opinion and or in our opinion, it's even more important in a seasonal business because you have a short window, right? And it's quite unforgiven. If you're not there and the season's over, there's no demand. So having the right product at the right time where the customer picks it up or wants to pick it up is key to be successful. And excuse a little theory around it, but of course there's theoretically 3 levers to get there. 1 is we drive inventories up. If we have in theory infinite inventory, we have infinite product availability. I would say that's theory because practical, I don't think that is the case. But even more, we don't want that. And I trust you don't want that. So our answer cannot be more inventory. It's more about having the right inventory and rather less inventory. But this is not the solution. If Frieda or Earl for that sake could tell us from the manufacturing side exactly what they're going to sell Monday morning in 2 months from now, it would also be pretty simple for us we can say. But of course in a seasonal business as I described it earlier forecast accuracy from also from an operational point of view is very challenging. So whilst we see jointly a lot of improvement potential still in this, It's nothing that will make the trick eventually. We'll never be at 100% or even at a normal consumer goods company forecast accuracy that is just worrying about campaign activities and so on. It's the weather that drives a lot. So then there's only one answer. If it's not inventory and it's not the forecasting, we can only drive the reactivity of the chain or the flexibility of the chain. And there's a couple of levers we can pull. And some of them have been mentioned already and some I'll go into a little bit more detail now. 1 is the footprint and you've heard me saying that already before. It's about how we balance what we produce where. So similar to what we said about sourcing, it's not about the low cost country per se. It's about the best cost sourcing. It's similar you can make the same total cost argument of course for our own production and where do we allocate which product in order to respond in the best way with the least inventory. I'll come back to that. Warehouse consolidation is a key driver, and we've driven a lot in the past around, of course, reducing cost, also reducing inventories. But the even bigger impact from my point of view is in a seasonal business, we need to keep the stock as long as possible central in order to decide whether to have a late decision point whether to send the merchandise to, for that example, Southern Europe or Northern Europe or whatever. So warehouse consolidation helps. Supply chain integration, it's not just the factories. And then of course within this footprint, you have the factories themselves that need to be flexible and quick in changing over products and so on. But I would say that this is normal homework of a factory that we are driving. But then the second one is it's not just the factory, it's the supply chain integration. So how do we make sure that our factories are well and better connected to what's happening on the market and what's and towards the suppliers? It's about information flow. So how quickly do we get signals from the markets through our factories to our suppliers and the ones in front of them? But also how can we make sure that we've got good oversight of the physical strengthen our ERP setup and that will be also a vital element in that respect in order to increase transparency and process integration. And lead times. If you're running an operation, which are a seasonal business, which has a month season, if I take a trimmer, for example, I'll come back to such an to that example later, 3, 4 month season, you cannot operate that with a component flow of 6 months, right? So there's a mismatch. So the shorter we can reduce lead times, the more we can strengthen product availability whilst not doing it with inventory, but actually flexibly. And that is something that we need to do inside the factories, but also, course, moving towards the suppliers. And Martin will come to that later as well. And then lastly, complexity. I will not go into a lot of detail because Henrik has explained it, but of course that is a key driver in order to increase flexibility. If we have more sales on fewer SKUs, it allows to be much more flexible in terms of safety stocks and positioning of our merchandise. So range reduction will be key, but also later product variation and we're taking nice inroads in order to create products more for manufacturing and making sure that we can decide on which variant is going to be as late as possible in the process. In an ideal world, as late as in the final warehouse. So footprint is not a new story and has been also the initiative of the last years. And quite some as I mentioned earlier, quite some has happened. So we've reduced factories by 20% over the last 3, 4 years. Same with warehouses or even more with warehouses, we've reduced by 40%, specifically in Europe reducing a lot of national warehouses and consolidating them in fewer regional centers. For example, out of Ulm, we're serving by now all Southern Europe up to, of course, the German speaking regions, up to Belgium, Netherlands, but also down to Sevilla and Sicily. And that helps to of course increase seasonality flexibility for a seasonal business. Both are journeys that we believe need to continue. But obviously, I would also say the big steps we have taken. Coming back to the factory, there's 2 factories that are high on the mines, I would say, at least I guess. So I pick them out. 1 is Orangeburg. And as we mentioned also earlier by Earl. And I think it's good to say that we are back on track and have a very well running factory as we speak. And a lot of the issues that we were facing 18 months ago are far behind us. A key area of improvement in this has been the whole setup of the material flow and the warehousing within the factory. Now mind you, Orangeburg is our biggest facility producing tractors, which is really like an automotive manufacturing. So it's huge volumes coming in. I mean, we're talking hundreds of loads every day going in and also going out. So having said that in season, of course. So having said that, managing the material is key. And there's been quite some upgrades to number 1 increase include all the raw materials and components into the facility and site management ensuring that there is much more seamless product flow. Secondly, we upgraded the whole material tracking with barcoding and scanning systems, which is what you obviously do in these kinds of environments, but it helps us to manage much better the material flow. And we also we manage our trailers and other improvements. So big step forward there. But also from the capacity and capability view, we've significantly upgraded. As you remember, we've moved the 0 turns from Beatrice into the Orangeburg facility. We have now a setup where we really have a good match with capacity as it relates to welding, as it relates to painting to support the seasonal business, but also in terms of dedicated lines for key products specifically separating the really complex professional products from the less complex products. And it's working very fine. Productivity and throughput are up again and back on track. We've reduced the raw material holdings and component stock compared to where we were. And we're also looking forward it's too early to announce of course, but we're looking forward to also getting the ISO certification for quality first time during the Q1 of this year. Another facility closer to where we sit right now, Poland, our factory in Mielec. The intent of that facility is to be a wheel top for Europe and it's up and running and running well with high delivery performance, high quality. We have a very good rider assembly line where we do all the riders that used to be in Sweden eventually in Poland. And we've got a very state of the art assembly system that supports the complexity of the range by also allowing a 1 piece flow, but also supporting, of course, the kind of workforce we're getting in Poland, specifically around temporary workers to make sure we get this in a good balance between in terms of what's quality here. 2nd, an assembly line for the walk behinds, which is pretty straightforward, but it's combining all the weed products sorry, walkbehind products. We moved there, Clipper brand as an example, and running also very well. Well integrated, something which may seem obvious, but if you create a new factory with a new team and lots of new people, we need to make sure it's integrated well into the chain, into supply chain of the rest of the HealthKuana Group. That is working very well. And we will be completing that transfer by the end of 2013 with the final move from Sweden. So that on 2 factories. So how do we continue to think now about the footprint going forward? And I mentioned that earlier, we believe and I'm convinced that it's about balancing the need for flexibility and efficiency, further optimizing total cost and inventory whilst improving delivery performance further. To take an example, let me take that example of the trimmer that you see up there in the middle. A trimmer, as I mentioned earlier, as an example is quite a seasonal product. So we have a short season and relatively unpredictable. So for that product, it's of course much and actually it's not very nice to transport because it's very difficult to package, right? So doing such a product, we are much better of doing it close to where the market is rather than doing it far away with 8 to 10 weeks lead time in between and lots of risk around stockholding or product availability. So that is a product where we would like to be much more flexible and much more in the direction made to order our business, pull but it's the direction and the pull thinking of a factory that we're implementing here. If you take the other extreme, where we can go for more global efficiencies of products that are more predictable, that are less complex or less bulky to transport, that have less variance. Example here is an entry level chainsaw. Chainsaw is a seasonal product as well. Don't get me wrong. But on the other hand, it also has 2 seasons. There's a spring season and a fall season that helps us. So the risks are reduced and we can go even more for efficiency. And then there's many other products that lend themselves to that. And then there's some in between where we may not be as local, but and of course, we need also efficiency of combining volumes into a region serving many markets. And that may be here more the example of tractors. And I think also the and riders, the Millett Factory is an example of that. But that said, our aim is to further rebalance that setup. So making sure that we serve our markets even better with less inventory and still being in a better total cost situation by taking those effects into account. And we know these potentials are there and we see good developments already. On components, it's the same thing obviously. So obviously, doing the components, you can even say it's a little bit less risky to do them far away. That's the same thing specifically if there's not the same amount of standardization and a lot of complexity. So those initiatives will help. But even more so, it's about make versus buy. And Hans alluded to that earlier as well. We believe that there's a couple of areas where we need to even strengthen our manufacturing footprint because manufacturing is a key element of how we create value and how we protect also our competence and stay ahead of competition. And of course, saw chains and cylinders that were announced yesterday is a prime example of this, which I will not go into more detail here now. But on the other hand, there are some where we can also afford to be less integrated, you may say, and rather use the global sourcing markets than doing it ourselves. And that will lead to some shifts as well. So the future direction is we will rebalance what we do where. And that may mean that we move some products from one factory to the other and vice versa. But of course also it means as we realize more potentials to consolidate we will do so as well. But then talking about the footprint is only that much of the equation of course. That's a structural element of it and it's key for us from a cost and a flexibility reason. But of course, manufacturing is also about what's happening in the 4 walls of the factory. And I will not bore you now with lots of details around what we're running internally, but it's clear some of the initiatives that Henrik has mentioned and were mentioned earlier also by Earl around reducing cost. Manufacturing is a key part in it and we are supporting that, but also to drive flexibility. You may recall the ones in here who follow us a little bit longer is that we launched a lean production system or our way of lean production a couple of years ago end of 2009 which we call HUS, the Husqvarna operating system. And I'm proud to say that this program has really gained very nice traction across the sites and is delivering nice results, driving improvements within the 4 walls the factory. That is the initial focus, whether it's cost quality or flexibility, which is, I think, a key differentiator also to other lean production systems that our flexibility issue is so dominant in our seasonal business. But we've also rolled out HUS by now to logistics because where we need to do the same thing, specifically in our own warehouses, of course, in terms of driving waste out and getting flexibility up. But we also and had first pilots also with suppliers, and Martin may come back to that, to also drive with the HUS concept the total cost optimization between us and them. So good work ongoing and I'm looking forward to further drive that and it will deliver further benefits. That said, what is the summary? In our view, the consolidation of the factory and warehouse footprint is well underway. It's not over. It's never over. But also the big step is taken. It's now the further need to balance the further need is to balance the mix of global, local and regional production and make sure that we further optimize the total cost. Lead time reduction is a key element in this in order to drive flexibility and hence also decrease inventories whilst maintaining and increasing further delivery promises. And lastly, HUS as a key umbrella to drive operational improvements within the four walls of the factories, but as said also moving out. Moving out to suppliers as well. And with that said, I hand over to you Maarten. Yes. Thank you, Sascha. My name is Maarten Ostermann and I'm responsible for group Global Sourcing. And of course, that is the topic I'm going to talk about. The first part of my presentation is give you some update on some exposure. And in the second part, I think my colleagues related already to that a couple of times is the big cost reduction project we are running in the group. You've seen that already from Hans. So a couple of big achievements. These were 2 of our key KPIs in the group. 1 was the reduced supplier base. You remember that a couple of years ago Husqvarna had a lot of acquisitions. Besides Gardena, it was Zenoa in Japan, it was Jenfeng. And of course, when you buy companies and you add a complete new supply chain to your supplier base and we worked this supply base down more than 25%. And you have to know even the gross number was much higher. We moved a lot of production to Poland as we have also localized suppliers there. We moved a lot of production to China and then we also had to create new supply base. And we got a lot of new technologies such as battery or electrical motors. So the gross number in our supply reduction is even more than 35% if we add these developments into new countries or new technologies, but the net number is still more than 25%. And this of course when we talk about complexity, supplier alignment, supplier management, this is key for us to drive further and have a better focus on these key suppliers. The other element, low cost country sourcing. Hans talked already briefly about this that we will change the agenda here a bit. Of course, this was a common trend in all the industries that everyone said, okay, we now need to go to China. We can save 20%, 30%. Of course, we did this exercise as well. We could increase significantly with 65% as a part year of the low cost country sourcing. When we go to the next page, you see on the right side, these are where the suppliers are located in terms of spend and then the order is in falling magnitude of the spend. So there you see that emerging countries such as China, Eastern Europe, Taiwan and India are now on our list. China is, of course, obvious. We have plans there. We have own purchasing organization there. So we know the market pretty much. And it was more or less an easy start there in China to get the localization. And nowadays, we not only serve the Chinese factories, of course, we have a lot of export from Chinese supplier into the European supply base or the American supply base. Eastern Europe was a bit left behind in the group, but we took big initiatives once we decided to start the production in Myles or even before. Now also we could say after 2 years, I think production on Mylets that we have localized more than 30% of the purchase volume of the assessable purchase volume now in Poland. And by end of this year, we will be above 50%. But the journey will continue, especially in the mechanical areas such as metal parts, plastic parts and aluminum casting parts. And then you see Taiwan and India. We also have a purchasing office in India where we mainly buy casting parts such as cylinders or gearboxes and other parts. But beside that, you also see that we are still in our big sourcing countries where our factories are, so U. S, Sweden, Germany and Japan. The left side shows you a bit our raw material exposure. This is not our purchase exposure as such, so it's a raw material exposure and that includes direct raw material purchases as well through our suppliers. And you see that by far the steel exposure is the biggest with 37%. Partly we buy the steel ourselves for the factories in America and Orangeburg McRae. But we also buy lots of steel through our suppliers. So we don't buy the steel as such. We buy stem parts or turn parts or fasteners or these kind of things. Number 2nd is plastic. We also buy some plastic materials ourselves, but very low. The majority is brought via plastic parts through our suppliers. That's another big area. Then we have aluminum. Why aluminum? In every engine, you find a lot of aluminum. So the gearboxes and the houses, the cylinders, pistons are all out of aluminum. Again, we don't buy aluminum ourselves. We buy it through our suppliers. And then we have a couple of smaller areas such as oil, copper, lead for our motors or the lead batteries for the tractors, liner boards for this packaging and a lot of other diverse material also such as rare earth material, palladium for the mufflers, etcetera. When we have a short look into our purchasing cycle, maybe it's interesting for you as well, how do we work? First of all, as in the group, we work on a 3 year strategy. So what is inside a 3 year strategy? It's more or less the KPIs, the headlines, what do we want to drive, what are our priorities in terms of supplier footprint, in terms of material consolidation, standardization as well. And then we turn this into a commodity strategy, how we call it. We have about 30 significant commodity areas such as engine is the biggest one or cylinders or pistons. So we have 30 of these. And then we make an explicit commodity strategy for this specific area. And there we talk about activities, supplier development, do we need more SCC suppliers or more localization? Or what are the needs for a period of 3 years now? Then we have when we have done this, then of course we get into the annual cycle and that typically starts for us in September when we do the price agreements with the suppliers for the following year. We need to make sure that all components are available, that the quality is right, set up for the season, which then typically starts in November, December with the first production. So that is basically how our activities are linked. And then I said, I will talk to the last piece here of our strategic activities and that is the product cost. You have seen this already from Henrik and I want to emphasize once more how important this is for production and also purchasing, especially the first piece. As said, we want to take out 20% of our range and we want to invest in standardization and modularization. Why do we want to do that? One piece, as Henrik mentioned, is utilization, right? If we have equipment also with suppliers, if we order 20,000 a year, you also have a depreciation in the piece price. If you can lift this volume up to 40,000 then of course immediately depreciation goes down and you can get the prices and the cost down. And this of course also goes in further automation. If you have higher volume, you can concentrate more and buy more equipment or new modern equipment to run the process much more efficient and get the cost down. That's why midterm and long term like Henrik said this left side is also so important and one of the biggest levers we have in purchasing to get the cost down. Henrik talked about the middle piece and I will give a couple of examples on that as well. And then where do we see it? You have to see this really as a linked model, but also we of course take activities on top of these and you see these indirect material cost reduction, the conversion cost that's mainly our production cost and the logistic cost where we also have programs to reduce it. You have seen this chart from Ulf earlier this morning. So our COGS stands for 72% of our sales. And the biggest piece there is either direct material or raw material, which is 55%. The conversion cost sits as 16%, 17%. And in the conversion cost, we also have the inbound freight, whereas the outbound freight and the warehousing sits here in SG and A. So that means, okay, if we want to get costs down, we basically also have to concentrate on the material. And here you see again the different elements, the direct material, the conversion cost and logistics. So how do we want now to drive this cost reduction program? And I want to take one after the other here. 1st, direct material. Again, the biggest piece, 55% of the COGS. We will start in 2 weeks from now, we will start a big supplier program. We have a big supplier day in Husqvarna, where we want to address a significant message also to our suppliers. In the past, we were pretty much focused on, okay, what do we do next month, what do we do in 3 months and what do we do in 1 year. That was a bit the focus we were working on. We're addressing a significant expectation to our suppliers. It goes for cost, goes for quality, it goes for delivery. Sascha mentioned how important delivery is in our very seasonal environment. And it, of course, also goes to technology. We need the supplier to support our new products. And we are not just talking about 1% or 2% price reduction. It's more. We're not just talking about 10% quality improvement or delivery. It's much more. So we will have very ambitious targets there. But the message to the suppliers is as well, we want to work on a 3 years program with you like we have said here, right? So if you invest now in the relation to Husqvarna, you don't need to risk that after 1 year we take away the business from you and then you have lost it and the investment you have done in our relation is gone. Now it's different. If the suppliers commit to our program, then they will get in return, they will get a 3 years agreement from that. So that's significantly different to what we have done before. And part of that agreement is also that we want to do a complete value stream mapping with our suppliers. So that starts going with the team. We have done that already a couple of times, going with the team to the supplier, see how the material flows through its production, how the material gets into our plant, where do we keep stocks and do we have the right stock levels at each point? Or can we improve the whole system? And we definitely think and we have some proven projects here that there is a significant potential in that area. Then like Henrik said already, we have these value engineering and product cost comparison also product teardown. So then you really put the product apart. You take also some competitors' product and see okay, what can we learn from others? Where are we better or where the competitors are other and better? And where can we get further cost reductions? Then Sascha shared already localization inbound, outbound or in sourcing. Outsourcing, we will reflect our situation once more. And as we said already, we will invest in cylinder production. We will invest in chain production. But there will be other areas also where we will do some outsourcing because the leverage is better either outside or inside our company. Then cost versus quality. We in the past, we didn't have really a good assessment. We took also some risk moving some parts or some technologies to China. And then we found out the quality costs we had later were much higher than what we could save before. So we have to have a more solid quality assessment program with our suppliers and that is now in place that we have a clear assessment on this topic. The other element is conversion costs. So that typically sits in the factory area with Sascha. Here we talk about lean manufacturing, the HOS, the HOS, what Sascha talked about. It's capacity utilization. We know now all factories are not utilized to the best degree. So when we move some products around, we think we can do much better. It's about line rates, balancing the lines as such. It's about, of course, overhead reduction, waste, scrap, usage and material flow and flexibility. So we see that also here. Even if we have this HOS program already since 2 years, 3 years, still significant potential. And another area is logistics. Just as an example, if we have now maybe 2 suppliers north in Sweden, they ship to our plant in Husqvarna. Do we make sure that they use the same truck that the same truck is completely loaded because a truck from North Sweden to Husqvarna is the same cost if it is fully loaded or half loaded, not in all cases today. So we have significant potentially in terms of truck utilization or container utilization when it comes from America or from China. Also the whole piece of the supply chain management in terms of material planning, warehouse planning, inventory, supplier inventory and rates, we still see lots of potential in our company. You may ask now the question, okay, isn't that what I read there? Isn't that state of the art, what companies do already for years? And I would say, yes. We do also some of these elements already since a couple of years. But what was missing a bit in the past was also complete alignment with our teams, with our agendas. Just a couple of examples here, which come to my mind when I speak about that. In the past, it could have happened that R and D was working on a new project and was looking for new technology and purchasing was surprised that something like this comes up. So R and D complained about sourcing. But then sourcing came back from suppliers that have brilliant ideas how to reduce the cost. They went back to R and D. They say, okay, I don't have any time for you. I have to carry my new product launch. Or maybe we have moved a supplier to India and purchasing felt very great because they had a 10% piece price reduction. And then in the factory that part was missing. And at the end of the day, we had to fly in that part and maybe even have cost more cost than before. This is of course a bit overstressed that situation, but I want to make sure that alignment on these activities is absolutely essential. And we now have a structure in place where Sascha, Henrik, myself, we are driving these activities and all the people below us are working in cost teams to get the costs out. It's around products or it's around suppliers or it's around processes. And this teamwork and alignment should really make the difference here. And also how we steer that project, right? We have a very clear project ownership. We have the people working on it. And we have ambitious targets like to really get the MAX out of this. And we are fully committed for this program and we think it's not out of range. It's possible, right, to run this program. And also imagine we have 15,000 people in Husqvarna. And probably we have another I don't know exactly, of course, but roughly another 15,000, 20000 people at suppliers, which permanently work for us. So just imagine all of these people have just one idea every year, how much cost or improvement you can drive out of that. And the organization will make sure that this will happen this year and the next 2 years. So then short example on a couple of value engineer things we did in the recently in the last year you also get a bit of feeling where is the money. Going from the left, here you see a chainsaw. We could drive the cost down for a muffler because we took it from black coating to aluminum casted part here. Or we redesigned the cylinder for this product to make it better manufacturable. And here we got a 10% to 15% cost reduction. Or a very intelligent way, of course, is in the middle on the top. We wanted to add a feature to the product, which was easy start. But beside that, we could take out some products and we even have now a new feature on the product and the product is 10 sec less dysfunction, right? Or the low one is of course a very impressive one. We introduced an optimized clutch designed for lower spec products. So we took up a low spec clutch into a higher spec product and could save with that more than 50% of the cost. Or the Automower was also mentioned a couple of times. Today, you have around that area where you want to mow you have a boundary wire and that in the past was out of copper. But we found out that also a mix between copper and aluminum will work perfectly as well. And aluminum is only 20% of the cost what copper is. So you can imagine there was a significant cost reduction behind this as well. So when it comes to sourcing in summary, we continue with our supplier programs, the reductions and also the link together, the alignment with our suppliers and what I sometimes say we need to work is a gearbox that we have gears with our suppliers which really turn into each other and have good momentum to run. Then we see large opportunities what's said before in these value stream mapping, value engineering. We will of course also like I said before improve our purchasing practices going forward initially with the Supplier Day in 2 weeks from now. And we will continue to improve on quality, flexibility and risk management with our suppliers. Thank you. So then give back to B. S. Right. Thank you, Martin, Sascha and Henrik. And now we open up for questions from the audience please. Thank you. Jochenne from Sanddansky Bank. Getting back to your EBIT margin target there. When you did your math and ended up at 10% target or at least 10%, could you comment a little bit on how big we should look at sourcing or plant consolidation or mix or phasing out old products or etcetera. If you can quantify that a little bit how we end up at 10% or how you have thought about that? Oerf, you want to answer that question. You are in line and work together. Maybe in Ulf, this is You bring your notes. There's my Thank you. Well, as you have seen, I mean, this is, of course, a significant part of reaching the EBIT model. But I think, again, you have to see it in the combination. As I mentioned and as you have heard here all day, I mean, we talk about pricing, we talk about the cost of goods sold as such, We talk about the cost to serve and we talk about driving the mix. And all 4 are as relevant, of course. But if you look into our cost structure, you can also see that the 55% is related to raw material and components. Of course, a significant part should come out of that. And again, to have in mind and as you have heard now from Henrik and from Martin, important is to see not just driving the cost down per se. It is important to have the cooperation between R and D and purchasing to really get the next level and the next benefits out of this corporation. And that's where we see the potential. So have you done when you have looked at it, have you looked at the different measures from a certain EBIT margins like the average recent years of 5%, 6% and that certain measures would take it to at least some 10%. Well, we have made pretty, let's say, serious evaluation based on what the activities you have heard here today, but I'm not prepared to go in and exactly specify what it is. Thank you. And second question is on we touched upon that before. It was about the Asian competition. And I think that the answer was that it was important to have a service network or some aftermarket aftermarket activity to defend against the Asian competition, is it possible to quantify how big share of sales could be related to aftermarket business, where you think that it kind of safeguarded against such low cost competition? When it comes to aftermarket here, of course, we need to have a setup in all these regions here. And then when it comes to aftermarket in these areas in China, for example, of course, we need to look at what the competitions we have there as well. And then when it comes to aftermarket then we have components used to supplies as well here. And there is competition as well here, of course, when it comes to pirates and all the here. And that's, of course, a challenge when it comes to that. I don't know specific numbers. I don't know if you have that. No. I get that a certain percent of your sales is sold to clients or customers that don't really ask for aftermarket service, sort of mass market really? No. I think most of them or customers both in the retailer and actually in the dealer channel have spare parts or accessories as well here. There are maybe very, very few who take care of that by themselves here, but mostly work with us when it comes to that part here. Thank you. Maybe a handful which do it by themselves. Yes. Hi, there. It's Anna Witsen from Goldman Sachs. I've got a couple of questions for Henrik actually. And I was just trying to understand a little bit on sort of this shift or shift, but this launch of electric products. And first of all, do you make your own motors in the same way as you as far as I understand make a lot of your own engines and have a lot of core technologies there? And then related to that, I was just curious to hear your development towards more battery driven products that you can see some of the power tool makers or traditionally sort of strong electric battery driven handheld suppliers moving into your area? And finally, if you could just give some thoughts on you mentioned reduced complexity with the risk of being wrong here. But if I compare it to maybe the powertrain or something like that from the auto side, it seems to me that you're now running multiple platforms so to speak on the powertrain with electric. Then you have the robotics with a lot of software and then you obviously have your traditional petrol drivetrain? Okay. You have to help me if I don't remember all the three questions now. But if I start from the beginning, if we make our own motors and for the most part we do not, but we are actively part of the design of them. Because one of the key things for us going forward of course is that when we transition or when we offer a battery powered product, we need to secure that the performance and experience from that battery product is what we believe it should be on a chainsaw or trimmer and so on. And then of course the motor is a critical part. So we are heavily involved into the design of it, but not necessarily manufacturing. Help me with the second question now. Just if you see a risk that some of the sort of power toolmakers will make it into that your traditional stronghold? I mean, it's always a risk that anyone steps in of course. And the important for us is to really focusing on the application, because what we bring to the table is that we know everything there is to know about how to use a chainsaw, how to use a trimmer, how to use a hedge trimmer. So we need to make sure that we play to our strength and that we leverage the heck out of that we know the application better than anyone else. And that's where we put our focus. Then if others step in, they might come in with some scale advantage on electronics, but they start with a real uphill battle on application as such. So there's always a risk, but I haven't seen those indications. I can add a bit. So let's take the motor in our battery products, right? We have done a very good engineering job here together with a supplier and we have some patent agreements with that supplier etcetera. And the motor performs that strong that all our competitors now coming back to us can we buy that motor, right? So that also shows a bit that the strength should sit in engineering and not so much in the production itself. But also the volume is quite low for us now. Maybe at the later stage when the volume comes up, we also decide to produce motor ourselves. So that is not finally decided what we do. But actually it's too low volume to do it. So can they buy the motor? In discussion, yes. And the last question was about platforms and drivetrains. Yeah. Just complexity. I mean, you were talking about reduced complexity. To me it sounds that on one level there's an increased complexity and implications for D. And just like Martin described here on supplier reduction, there has been a gross number that has been much greater. And then certain things we have done has forced us to increase. And it will be the same thing here that, of course, some of our efforts into battery will increase complexity. Also some of the things we want to do for emerging markets will increase complexity. But we need to make sure that we reduce complexity overall, because there's so much to be done with existing business and that's where we need to focus to bring that down. And when we can, we need to make sure that we use the same components and those things between petrol and battery when it's appropriate. Thank you very much. Christian Meinbergard from DNB. A question to you, Henrik. On you talked about, what was it, range management, standardization, modularization, short term, medium term and long term. How long term is long term? How many years away is that? And the scary thing in the R and D world long term can be very long term, right? No. No. We have projects already in the works in terms that will be modular. So I mean it is in the works. It's just that before that have impact in the bigger sense that I would say that modularity will really not have an impact within the 3 years that we're talking about. I've asked the same questions every time. So thanks for the help. So the key efforts will be to make sure we really do a good job on the range management and the standardization. That's what's going to give us the results in the 3 year period. And then we need to start the journey, so we have a good development outside this 3 year journey as well. Secondly, this program looks relatively similar to Electrolux Global Operation Program, which saves roughly 3.5% of sales. Any comments on that? You might know that I'm coming from a Lexus. That's my comment to that. It happens to be like that. So the size of the program long term could be as big or how should we see it? But coming back to a little bit your first question when it comes to here, we will focus more on what we call primary development. That means that we will have a generation plan for long term maybe some components feature will be on the market maybe from 5, 7, 10 years ahead. So it's a little bit more long term here. We haven't focused so much on that. We call it primary development here. We have more B and D with next coming 3 years. But that is something we have to focus more on. And that's coming from Electrolux as well. So that will cause a lot of things which we have brought in from Electrolux. It's natural we were part of Electrolux for I think 20, 25 years. So of course we have used good things from Electrolux as well. Finally just on that you're bringing all the suppliers to Husqvarna. You talked about price cuts by more than 1%, 2%. Will that come into force already this year? Or is that for the next 3 years? How should we see that? The total program, as I said, should be 3 years. We have a target behind that. And of course, the 1st year as we started now will be lower value and it will be escalated then in the 2nd and third year in our program. Yes. But we should see something of that this year. Thanks. Question on product innovation. How you talked about your ambitions for product development and innovation. How much money are you putting into that process as a in absolute terms or percentage of sales? And how has that developed during the last couple of years? And as you benchmark that against your competitors, what's your conclusion there for the Husqvarna Group? If I remember the numbers correct me if I'm wrong it would be around 2.8% or something like that percent? It's actually up to 3%. And we have been hovering on that average for quite some years. So that one has been fairly stable. Are you below or above the average in your perspective? And what's the key KPIs to measure innovation? First question, I think it is very difficult to compare with any competitor because we have a much wider range than anyone else. So then we have to try to carve out handheld and then compare to steel and that's not public. And so it becomes very difficult. But my opinion is that we are not obviously, we are well balanced. I don't have any reason to say that we are either ahead or behind. I think we are well balanced. I think the challenge going forward here now or that we need to do is to make sure that we're much more disciplined so we can free up resources to go after cost and complexity reduction without losing innovation. And that's why we need to really be disciplined in what segments that we want to focus and what segments we either want to downplay or even exit. On the reduction in or the increased low cost country sourcing and reduction of suppliers, how much have you actually saved during the last couple of years procurement savings? Obviously, it has been offset by something else given the group's results. But just if you do just look on the procurement map, have you been successful or not? Yes. We have been successful. But on the other hand, you gave already the point we had the last 3, 4 years, we had significant increases in headwind from the raw material areas. We also had to face issues out of China because there has been a big increase in labor rates. And also exchange rates out of China was also pretty much unfavorable. So we had to use all these saving activities to more or less offset these external threat. But going forward, you may ask, okay, don't you have the same situation in the future? We actually think that raw materials will stabilize throughout the next 2 or 3 years so that we won't have that situation again what we had the last 2 or 3 years. That's very interesting to hear that net on procurement that you haven't actually realized much then as of today. Is that correctly understood? Yeah. Karl Johan Bonnovy with JRS Securities. Sitting in the equity market, you always know that when a company starts to talk about new ERP solutions, it's a dead company for quite a long time. How are you going to handle that in practice rolling this out? How far reaching is your rollout? And what's the key days for it? Do you want to take that or Ulf take it? Well, as you saw from my presentation, I mean, we talked about 2 parts of it. 1 is to secure the foundation. And I mean, we don't talk about the big bang implementation here. We see it over a number of years. I don't give you exactly how many years. We took a halt in 2012 for good reason as well as end of 2011 because we were in a strange position here. But we will roll it out and that will be beyond this strategy period as well. Who is your partner in it? Well, I don't we have many partners in that. So how many systems are you running today? And what's the target to how many platforms are you looking to have in the future? Well, we go for at least to consolidate down to 2 or max 3 platforms. But it's hard I mean depending on what you ask upon. I mean we talk about admin systems. We talk about customer facing systems. We talk about supporting Sascha in production optimization systems. So I mean, we have a number of platforms today and they will definitely consolidate to say a handful. I have a question on earlier in the presentation today you talked about increased investments in online sales, maybe not so much in the 3 year period. But still, I wonder what is driving your idea about that? I guess, it's changed consumer behavior and consumer buying patterns. I also wonder if that is partially that sort of decision is partly driven by the emerging, how should I say, threat from private brands? And finally also, what kind of logistical challenges will it mean with increased online sales with you sort of in the middle? First question here, the online here. I think it's important for us to be online more than we have been in the past. We see more and more that's coming up here. And we see more and more of our dealers online as well. So we said that we prefer now to be prepared and when this really take off to be there to not just sit and wait if this take off or not. So we decided to spend a lot of money and invest in online here due to IT systems. So to be prepared when this really takes off both when it comes to U. S. As well as in Europe here. So I think that's important for us to be prepared there. And then the second question was, I'd say, like Henrik now. I was just wondering if that has increased investment No, that was not the No, that was not the reason why we took that decision to be there. But of course, we need to prepare for that as well. Yes, sir. No, we need to take that huge investment to be prepared to be up and running when always really takes off here. Even to them, we will be behind our competitors. So that's a little bit investment for the future as well here. So let's say, of course, that's a lot of money into that when it comes to investments. Does it also mean you need to invest in a change to different logistical system to if you're going to serve customers yourself or end customers yourself? Depends, of course. Of course, the online business is a different business than sending pallets to retailers. It's no question. But of course, it also depends on what is the final strategy we're choosing in terms of what are the intermediaries or is it a final direct system. As well, I would say that in a couple of our warehouses, we actually have quite good, I would not say sufficient, but quite good base facilities. You think about spare parts business, it's a 1z and 2z business as well that goes to customers on very short order lead times. But of course, the scale is a different one. Federica, if just a question on Orangeburg. And when you say it's back on track, what does that really mean? Are you as efficient as you were 3 years ago including the efficiency gains you were targeting or If we are as efficient as we were for 3 years ago, I would say no. We are better than we were for 3 years ago when it comes to Oresberg. Oresberg for us is maybe the state of art. What's good when something like that happens, you focus on that and you see how we've been able to fix that. Then you transfer all these good things over to other factories as well. So I have to say for us internally, we don't talk about Orensburg, right? We have just one good factory among all other factories here. So I think that's a little bit to say so. And you are all welcome when you are in U. S. Call earlier then we can show the factory number. We're very pleased to do that. It's we bring a lot of customers down that we showed this is actually up and running here. And we have even proven that when it comes to deliveries here. So you're welcome. Call out when you're in U. S. Thank you. Coming back to the EBIT margin target again. Should we look at this program at continued incremental savings each year until we have once you are done with the measures that you have presented here today? Meaning you want to see it as a linear development or? Linear or not, but is it a continued improvement that we should expect for a couple of years? Well, say like this, the whole idea with what we are presenting now is based on continuous improvement. So I mean, this is what we say now will be focused for the next 3 years. But I mean there will be other initiatives pairing up with that as well. But this is what we want to lift out and present to you as of today. Thank you. And then we touched upon this before, but if you look at history and the typical range between trough margins and peak margins, and I guess the intention is also to narrow those. Is it possible to give your idea of what the typical cycle what kind of range we would have on EBIT margins? You mean when we are in the top as well as in the bottom? No, I won't give you any I mean, again, it comes back to we gave you the blend of more than 10% EBIT margin over a business cycle. Thanks. Okay. No more questions. Then please some final words from Hans. So summing up this here, first of all, I think it has been a lot of good questions here. And I think with all these questions, of course, we have learned a couple of things by ourselves as well when we listen to each other here. It is always good to have some questions from outside as well here. It is normally discussed a lot internally. So it's but have been very helpful for us as well here. To repeat here, yes, we want to secure the foundation and high quality that's key for us in everything we are doing here. And then of course reduce product cost. You heard it several times. That's key. We need to be in front of when it comes to the cost and increase our margin there. We know that it's a tough environment out in the market here. And of course, we go for price increases as well here more selective way than ever. But of course, we need to do both. And we see there are more possibilities when it comes to reduce flexibility and costs increase the margin on that way. That having said that we of course need to do price increases as well here and that's what we are doing even for this year. And then we will continue with the footprint. I think that's key to optimize all the factories here and maybe in the future reduce the number of factories. That's something we always look into here. Then drive channel mix. We will continue to focus to dealer segments. I repeat not only in U. S, we will do that even in Europe. But that will not be on behalf that we will not continue to look and develop the retailer business here. Then of course, we need to look a little more long term as well here. Of course, we need to continue always to work with continuous improvements in all areas here. That goes as well here. Normally we are focused a lot in the production to be have more lean manufacturing, more increased productivity. But that goes as well in admin, in sales. We have a huge program going on. I think you Frieda mentioned the sales performance program that we look upon that have more efficiency out of our sales force. So that's more or less the same way we look upon what we have done in the last maybe 30, 40 years in the manufacturing part to look upon how can we be more efficient in the sales area as well with new tools, MIP system and so forth here as well as see that this gentleman out on the routes can visit more customer than I have done in the past. Then of course we need to invest. Henneke have been through here all this new technology here. Of course, we need to invest more in our new products and new features. We really look into what's happening. That's the reason why we had already indicated now one category to a little bit the future when it comes to battery products as well as electronic and control. There will be in our products more and more of this kind of stuff electronic and controls than we had in the past. We will start to look more than we have done in the past when it comes to what's potential out there. Is there any companies which can be acquired both when it comes to new technology areas or that can be in the aftermarket segment. So we are open for everything here. So we start to look upon dedicated people for that as well here going forward. Then we said that we will go for focus more on margins than growth. That having said it, we will not look upon growth. We will do that in a selective way. We mentioned in emerging markets, but that can be in some product segment as well. Of course, in the robotic area, we will continue to grow that business here. And we have been many people ask us, what about watering in U. S. Due to this growth we had last year? Is it possible? Yes, but not in U. S. We need to look for U. S. A little bit different way. There might be some states where we can use that. That's of course what we are looking for. That's the same when it comes to robotic movers. There are maybe possibilities even if U. S. To sell this kind of product. But I think then we look upon some regions, some states in U. S. Not look upon U. S. That one it's one country. So of course there are possibilities for us to grow our business here in a selective way. And then, talking about online, that's a little bit where we need to focus to be here. So we will invest a lot in this online. There of course we need a lot more investment in IT. That's what we have decided to do here to be prepared when this really takes off here. Then of course what remains which we will not change and be consistent that's when it comes to our 4 strategic pillars. We want to continue to use our strong brands, well known brands as we have in the company here. That remains the 3 brands which are primary for us here. But then of course we have primary local brands as well which have been mentioned here both from Earl and Frieda. If it's in Global Distribution Network, yes, I think the next 5, 10 years we will see in this business dealers as well as retail. If you go back to other consumer products brown and white goods, there have been a shift more towards a lot of big retailers. In our industry, it's not the same. We see more and more that there will come new dealers popping up. Next generation want to modernize even the dealer channel. So in this business it has been a little bit different and I think it will be the next coming years as well. We will not see the same change and shift from independent dealer to big buying of retailers as we have seen in brown and white coat. That's the reason why we want to spend and invest more in dealers. That goes as well for Europe as well as in U. S. Then if you take what you call a money market or in Asia, it's more or less 100 percent the dealers to start with. Yeah. The products is key of course to have good products here. And there might be that we will exit some products as well going forward. The portfolio we have is too wide. We have too many products. And we will use and look upon the complexity of reduction. We will phase out during these 3 years a couple small, small brands which we don't need. We can't have 20 brands. We will reduce that. But that takes time. We need to do that step by step when you change from 1 brand and focus on our primary brands. Of course, we need to do that. Then of course that will help us to be more flexible in the supply chain. In this business, seasonalities and all these weathers can shift from one week to another. Of course, we need to have a more flexible supply chain. But that means that we need to be more flexible even in the front end. That means our sales force has to be more trained to when they make contract with our customers and the whole forecasting system. And that goes as well back to our suppliers. They need to be more flexible as well here. And that's a little bit what we will talk about when we have this supply day as well. We want them to be more flexible. So I think these 4 strategic pillars remains as before here. Of course, 20% reduction in platform that might not sound much, but it is more than you believe 20%. Reduction in product cost is key for us. Maybe these 3 gentlemen here maybe not in full agreement when I start to push them for this Hans. It's too high targets you set up internally. But then when we start to look into this, yes, maybe that's doable. And sometimes I say make the impossible possible. If you are committed and work together, you can do more than you believe. Of course, we continue as I said several times here, Sasha, we look upon when it comes to the footprint here. Lead times, we need to be much faster in the future. And we are on a way to have more than 5% EBIT margin in Americas. That's our ambitions here and there's no question for us to change that target. Then I think it's very important to further improve the Europe Retailer Profitability this year. We are very profitable watering products in Germany and German speaking countries here. But then we need to focus to be even more profitable in some other product categories as well here and look into that. That's the reason why we sell further improved Europe profitability. That's not only in U. S, it goes as well here into the European area. That's a little bit of Frida's target as well. Then of course, we have dedicated as I said earlier people to 4, 5 focus areas who will dedicate their resources and will be measured on this here and are accountable that we reach our targets we set up here. The difference with this strategic plan and before, it's not just that we have presented that for the Board and then finally put that file behind us. We will now start activities to support this strategic plan and have dedicated people which we will measure ourselves. And we from group management each of us are sponsored for all these activities here. So every month when we are group management we will follow-up where we are both when it comes to time what we have said, when it comes to cost to do this year and saving. Of course, there will be some cost involved to do all these focus areas here. So I think that's a little bit what I want to bring here. That's a little bit different way how we look upon strategic plan today than in the past. We want to have an activity both from leases where a lot of companies. I've done that by myself several times. I don't know how many strategic plans I should have if I look backwards here, just sit there and dust collect dust. That's a little bit what we want to do now here. And that's maybe the biggest change compared with what we have done in the past as well that we want to go for growth and we don't promise more than we actually can deliver. It's very easy here to come up with a lot of nice figures here, but we want to stay here year after year. And this is what we said and we have delivered. I prefer to deliver more than less. So that's a little bit how we look upon going forward here. And then very key for Ulf and his team to really follow-up this year that we do this year. Another area which is important going forward, you see there's more and more things going on when it comes to code of conduct. That's the reason why we have ULE involved in this as well that we learn all of us when it comes to behave in a good manner. Due to more you go into East European countries or China because you need to learn how to work in these different countries here. So we need to have a follow-up on that as well here from group management to hold way down here. So that's a little bit what's going on here. And what's happened now when we have done this year, we're happy now. Then we will collect special what you call top management people to really now roll out this year. We had a team session here. I think it was in December where we went through a lot of different areas with this team here. And then now we have started this team will now do these activities and then we have a person who will be climbing all these people's back, what you call a PMU head, which will follow-up all these activities here going forward here. And hopefully, when we see each other after quarter 1 and quarter 2 that you can see a lot of improvements. But we need in this company a little bit luck as well. And you know that is the weather. So of course we hope now for a very early spring a little bit the same as last year because but then we hope that the quarter 2 will be more in favor of us than last year. Then I think that will be a good result in this company here. But I think we need Frieda and a little bit luck there out in the marketplace here when it comes to weather. So with that, I hand over to you and thank you all for coming here. And then you Tobias go through what's happened now. Thank you very much, Hans. So with that, we conclude the presentations for today. And those of you who are joining the dinner, let us meet outside the auditorium in a few minutes and there will be some staff showing you the way to the dinner area. Please do bring with you all your belongings, coats and bags whatever because you will not go back here afterwards. And we also have some small gifts for you outside that we urge you to take home and enjoy. So with that, thank you very much. Thank you for coming and hope to see you soon.

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