Earnings Call: Q4 2020

Feb 3, 2021

Everyone, and welcome to the presentation of Husqvarna Group's report for the full year of 2020. My name is Johan Andersson, responsible for Investor Relations at Husqvarna Group, and I will be the moderator here today. On the call, we have Henrik Andersson, our President and CEO and our CFO, Glen Instow. Henrik and Glenn will present the report, and afterwards, we will open up for questions. Let me also remind you that this session is recorded and will be later published on our homepage. So with that, I hand over to Henrik. Thank you, Johan, And good morning, everyone, and also a warm welcome from my side, and thank you very much for joining us this morning. Looking at the quarter and looking at the year, I think we, all in all, have managed to effectively navigate through a Challenging here in a very good way. We have ultimately reached all our financial targets, 6% in growth, 10.7% operating margin, 10.4% capital efficiency. And this is ultimately the result of many years of dedicated work of executing our strategy, transforming and strengthening the group. We have during the year advanced our market positions. Yes, it has been a strong market, but in that strong market we have taken market share. And we have secured a very good momentum going into 2021. And I'm very proud of the entire team and the way we have managed to deliver the results in the midst of a pandemic. Looking at the quarter, our net sales are up 13% adjusted. The growth was particularly strong in robotics, battery and also handheld products. And I would say that in the quarter, Both the Husqvarna and Gardena divisions benefited from an extended season. As you might all recall, I mean, we Many of us were still mowing our launch in October, which is normally not always the case. We also benefited from a COVID related stay at home trend. But I think it's also important to note that we have taken market shares in a strong market. So It's not just because of external factors here. Sales for the year are up 6% adjusted, which is also indicating that we during the year have had a shift in sales volumes between quarters. I mean, we were up 13% in the quarter, 6% for the year. So it's important when we throughout 2021 compared to prior year, Remember that COVID, for various reasons, really reshifted volumes around between quarters in a somewhat artificial way. Moving on to the operating income up to the right, we improved it by SEK 181,000,000 in the quarter, And we are up 15% for the full year. And this is largely due to the leverage we have on our growth, favorable mix And also good cost control. Another strength, moving down to the left on the slide here, is that we have improved our direct operating cash flow. We ultimately generated SEK 6,100,000,000 in the year versus SEK 3,800,000,000 prior year. And our financial position is strong with net debt decreasing by 43%. Our Board will propose a SEK2 for the share dividend. Finally, down to the right, as you recall, We have the strategic KPI. We have several of them, but we have picked one for these presentations, which is how we grow our robotics and battery a share of total sales. And as you can see, this one is up again. When we started this earlier this year, it was So 15%, now we are 17%, indicating that we have had strong double digit growth for these categories during the year. If we then move on again and trying to put the quarter and the year a little bit into context, I think it's important to stress that our 2020 performance is largely the result from us executing a strategy to build a stronger Husqvarna Group. We have, over the years, decisively invested into attractive segments. And equally decisively we have exited segments that are less attractive to us. And this has ultimately shifted up our profitability. And it has enabled us to reach the 10% margin target, and it should also allow us to operate above this level going forward. So just with a brief introduction, strong quarter, strong year, reaching all the targets And putting it a little bit into context that this is the result of hard, diligent work for several years. I would like to hand over to Glenn to go through our divisions and some of the numbers a bit more detailed here. Thank you, Henrik, and welcome to you all. I hope you're staying safe and healthy in these times. So if I drill a little deep into the divisional views right now, as Henrik alluded to, a very strong Q4, particularly for the Husqvarna division, where we had a sales growth of 19%, adjusting for currency. The real strong growth came from the core categories, notably handheld products, both gas powered and battery powered, as well as the associated accessories and also we saw a growth in robotic products. The gardening season was somewhat extended this year into Q4. As Henrik said, of course, we were mowing our lawns much later than normal, and that warmer weather certainly supported a favorable sales development. It's very we're very pleased to say that the division delivered a positive margin in the quarter from a loss making Q4 in 2019 to a positive Q4 in 2020. So we're very pleased with that. Zooming out to the full year, Then the division actually had a sales growth of 5%, and that is adjusted for both currency and also the consumer brand exits. For the Husqvarna division, those exits represent approximately SEK 1,900,000,000. The periodization changes due to COVID Most notable in the Husqvarna division, and I'll come back to that in a coming slide. But mainly worth pointing out, the second half of the year, we We had a sales growth of 23% in the division versus a sales decline in the first half of the year of minus 4. Full year EBIT, pleasing to say, increased with some SEK 250,000,000, resulting in a margin above 10%, which means we have all 3 of our divisions operating above 10% now. So 10.1% versus prior year 8.8%. So a great performance from the Husqvarna division. Moving on to the Gardena division. And it's a very easy division to talk about looking at the figures you see there. Q4 is by far the most seasonally smallest quarter for the Gardena division representing about 8% to 10% of annual sales. The division managed a 13% sales increase in the 4th quarter, very strong growth actually in the categories of watering and hand tools. And certainly, you could say we saw a prolonged gardening season supporting that growth into Q4. It is a loss making quarter for the division, but pleased to say that we reduced the loss by some SEK 50,000,000 from roughly 350,000,000 to roughly 295,000,000. Zooming out to the full year, then I think The best word to describe the performance is it's been a truly stellar year for the division with a 17% sales growth. And that is adjusting for FX and also adjusting for approximately SEK 300,000,000 in exited consumer brand business. Actually, all the regions showed a positive development during 2020. And as mentioned earlier, standout performance in both Categories of Watering and Hand Tools. The EBIT margin there on the bottom right hand side, we actually surpassed 15%, 15.2% versus a prior year 10.2%. So in absolute terms, an increase in earnings Approximately 70%. Moving over to the Construction division. The division, I would say, is most negatively impacted by the effects of COVID-nineteen. However, Q4 ended at minus 2%. We did see a growth in Europe and a decline in North America. The margin was lower in the 4th quarter at 8.9% versus 10.5%, which is mainly the result of negative FX effect, the stronger Swedish krona versus the weaker U. S. Dollar. And that's approximately SEK 30,000,000, which is most of the delta there in the Q4 for the division. We also took some legal integration costs Associated with the recent Blast Track acquisition, that was approximately $10,000,000 second in the quarter. Full year sales Actually declined with some 6%. However, I do want to point out that H1 was minus 12% and H2 was plus So we have seen a clear recovery in the second half of the year for the construction division and we're pleased to see that. Margin has deteriorated 13.2% full year down to SEK 10.8 million. FX is contributing with approximately SEK 20,000,000 of that. And of course, we see a headwind from the reduced volumes impacting the absorption rates in our factories. Pleased to say that we did complete the acquisition of Blastrack during the quarter, and that will bring on approximately SEK 600,000,000 of annual sales. And we take with that approximately 380 full time employees. And Henrik will talk a little bit more about that Acquisition and the complementary play we'll have for our group going forward. Moving over, Maybe zooming out to the full income statement for the group and give a bit more flavor on the different lines. I think we've talked sufficiently on the net sales that we had a Plus 13 there in the 4th quarter. But If we zoom then into the gross margin and what's really driving the movement there from 23.5 up to 26.1. FX was negative in the quarter. When I look at the gross margin impact, it's approximately SEK 140,000,000, about a 2.3% margin hit coming from FX, So an even stronger underlying gross margin improvement. Very small impact from strategic initiatives in the gross margin in the quarter, Really, we saw a continued positive price development, generating roughly 1% in the quarter. And then we had a tailwind from raw materials of approximately SEK 50,000,000 in the quarter, 0.7%. And that really leaves close to 3 percentage points Improvement coming from the improved mix, the strong efficiency programs that we've been driving and to some extent the cost avoidance that we've been driving throughout the course of the year. On the SG and A side, in the quarter, we moved down in absolute terms from just over SEK 2,000,000,000 to just below SEK 1,900,000,000 2nd spend, positive leverage effect from the sales improvement, generating an SG and A rate of 28.1. Where I called out a negative effect from FX in the gross margin, we actually have a positive effect from translation in SG and A. That's just over SEK 100,000,000. So it's a net SEK 40,000,000 in the quarter, negative SEK 140,000,000 in the gross margin and a positive SEK 100,000,000 in the SG and A. If we take away that, then it still leaves a combination of about 1.5% of improvement that is coming from our cost savings And our volume benefits into the gross SG and A line. Just I'll stay on the quarter for a little bit there. We did, of course, in Q3 call out that we would have one time costs associated with the efficiency program of approximately 8.80 We've booked just over €800,000,000 in Q4 and the remainder will come in the first half of twenty twenty one. Finance net was lower in the quarter due to lower net debt levels and lower interest rates, of course. And that rate that you see of approximately SEK 74,000,000 would seem a reasonable property going forward, so we could gauge on SEK 75,000,000 to SEK 100,000,000 per quarter. So SEK 300,000,000 to SEK 400,000,000 going forward full year. The tax rate was about 30% in the quarter, and I'll come back to that in the full year context, which I think makes more sense. So in the full year context, we were up 6%, As Henrik said, which was great to see. And then if we look at really what's driving, we see an SG and A Going up from 29 sorry, gross margin percentage going from 29.9 up to 31.2. We had a negative FX of approximately EUR 220,000,000 in there, representing a negative 0.5%. The strategic investments into SG and A were relatively small at SEK 50,000,000 with a positive price development in the full year of just less than SEK 300,000,000, representing 0.7% margin improvement. We had a tailwind from raw materials and tariffs of approximately SEK 200,000,000, representing approximately 0.5%. The residual now being the improvement from the mix on the volume and the efficiency programs just over EUR 200,000,000. Same for SG and A on the full year that we had a positive effect coming from FX approximately SEK 140,000,000 or 0.3 percent and then the strategic investments in the SG and A We're about SEK 100,000,000 on the full year. Taking both GP and SG and A SIs, it was SEK 150,000,000 of 0.3%. And then you really see the benefit of the efficiency programs and the cost avoidance coming through into both selling and administration costs. The tax rate full year, we came in with a full year tax rate of 25%, and we think that's more or less in line with what we've been guiding at 23% plus or minus 2%. And that seems a reasonable guidance going forward as well. So summing it all up, earnings per share in line with prior year Despite a large item affecting comparability that we booked at SEK 815,000,000. Moving on, I just want to put a little bit of flavor onto the quarters and the periodization effect that COVID had To the group. I think it's fair to say the gray bars here representing really the average Have a 5 year period from 2015 to 2019 and the blue bars representing 2020. And what's important is We had a higher sales, and I think it's really the sales in Q3 that stands out in 2020, which is really the catch up effect from H1. So much higher sales and then we saw the leverage of that higher sales coming into the earnings in Q3. On an average year, we've actually seen over 90% of our operating income coming in the first half year, whereas 2020, we saw Approximately 80% of our earnings coming in the first half year. So a much stronger second half, largely the result of that stronger demand, The carryover effect from the lower demand in H1 due to COVID. And I think it's important we take this with us into The 2021 phasing. I'm happy to take some questions on that later in the presentation. Good. Moving over to cash flow, if we can, Johan, please. And pleased to say, we had a great cash flow performance. We really Prepared for the worst and hope for the best. We really managed our cash flow in a really strong way. What I mean by that is we When COVID hit, of course, we took additional financing. But really from a direct operating cash flow perspective, we've managed very well from an inventory perspective, from a receivables perspective and also from a paywalls perspective. Most of the positive effect actually, of course, we have over SEK 700,000,000 coming from EBITDA. We have SEK 200,000,000 coming from reduced CapEx and the rest of the improvement actually largely comes from an increased payables year over year. What is worth pointing out is at the end of the year, we did accelerate our production rates. So inventory went up versus what we were showing at the end of Q3. And that then fed through into increased payables, Which also supported. So we did increase the inventory levels. We had the offset in payables. Okay. Moving forward, if we can, Johan. Capital efficiency, we did it. We got down to below 25%, which we're really pleased with. Of course, A large benefit coming from increased sales. We should accept that. But also we had some support there Coming from the continued work that we've done with the working capital. If we equate this into actual days, which we often do internally, it's actually an Over a 12 day improvement we've seen during the course of the year. So we're really pleased that we've done this. And of course, now we need to continue with step change improvements going forward and our working capital. Moving ahead and add a little bit of flavor on the balance sheet. I'm pleased to say that we've continued to consolidate our improved inventory position. You will see on the balance sheet that we actually show a SEK 1,100,000,000 improvement on inventories. However, approximately SEK 900,000,000 It's attributable to FX, so only SEK 200,000,000 real improvement year on year. That's really, as I mentioned, We did press the accelerator in the 4th quarter, had more preproduction ready for 2021 season. And it's actually our 6th consecutive quarter of inventory improvement versus the prior year. Receivables At a lower level despite the higher sales, we're pleased with that. The past due also very solid. We've increased improved the past due position by some SEK 400,000,000. You will see this in the annual report for approximately SEK 200,000,000 of past due only versus over SEK 650,000,000 prior year. I mentioned the improvement on the payables, which is really the result of the increased production levels in the 4th quarter. Moving over to net debt before I hand back to Henrik. Again, a solid improvement on our net debt to EBITDA, now down to 1.2%. Net debt improved by some 43%, Major increase or improvement coming from the cash flow from operations. Of course, then we had an improved cash flow from financing, A small effect coming from the pension effect, the discount rates there and the pensions and a small positive effect actually coming overall from currency. And we did, as you know, pay a dividend in the Q4 in 2020 relating to year 2019, representing SEK 1,300,000,000. As Henrik mentioned, the Board will propose a dividend of SEK 2.4 for the year 2020, And the plan is to pay that in 2 tranches, I. E. 1 after AGM in April and twothree At that, I would like to pass back to Henrik. Thank you very much, Glen. And now we will shift gears a little bit, leave the Numbers behind us a little bit and look ahead. And as you know, Sustaino8 is our program where we Combine our commitment to sustainability on one hand with our innovation capability on the other. And back in 2016, we set A bold ambition for 2020. And now at year end, we shall close the books on the Sustainability 2020 program. And We have ultimately achieved 4 out of our 5 targets: carbon, team, safety and community. We also made good progress on the remaining one. But due to COVID-nineteen implications, we experienced a slight delay in completing our supply order program. Especially, we're wanting to see is, which you can see on that chart to the right, is that we have managed to Couple business growth from CO2, which is something that we are very proud of. Possibly even more important than reaching our targets is But we have managed to really integrate sustainability deeper into our business over this time frame and also to engage our organization on this very important topic. But since we then closed the books on the 2020 program, we are now embarking On the next leg on that journey, which is our Sustain Rate 2025. And we have just kicked this off with a new set of ambitious targets. We continue to focus on carbon, of course. And What we do is that when we set our toys on carbon, of course, we look at our entire value chain, which is important to mention also products Because that is where we have the biggest impact, so to speak. So we're looking at it end to end. And we have set a target that is in line with the 1.5 degree scenario, and the target is also officially approved by the science based target initiative. So continued focus on carbon, but then you can see 2 new kinds of targets, so to speak, that's quite different from the first Leg of the journey. And it's about circularity and it's about people. Circularity It's going to become more and more important, and then it's simply important that we've reduced the demand of virgin materials, so of material in general, Clearly, in general, by sharing more, by repairing more, by recycling, etcetera. And we want to again connect our passion for Resource Smart Customer Experiences with our passion for innovation. So our target here is to launch 50 new circular innovations by 2020 type. Then the people dimension. I mean, in the end of the day, Our sustainable future is all in the hands of people. And we want to play a bigger role in empowering people to make sustainable choices. And we have set a target of 5,000,000 people. So that is our new Sustainability 2025 program. It's an integral part of our strategy and who we are and something that is very, very important to us. If we move on, Glenn mentioned our program here to, on one hand, accelerate our growth initiatives and, on the other hand, improve our efficiency, something that we launched here in conjunction with our Q3 report. And high level, we can say that everything here is on track, but Let me give a little bit more flavor to it. One key thing is, of course, that given our strong financial position, We now want to lean a little bit further forward. We want to step up these strategic investments. And as we then said at the Q3 report was that we will increase by SEK SEK 250,000,000 a year, which is about another 50% in terms of strategic investments. And we target those On to the core value creation drivers of our business like robotics, battery, pro products or water main products. And we do it primarily either in the go to market dimension in terms of our brands and our commercial activities or in the product development dimension. So this is very important to us, and we now have concrete sands in place, and we will step this up already in the year of 2021. The other side of this program, as we announced, is Also how we increase our competitiveness in our supply chain, particularly when it comes to handheld products, but that is bigger than that. And here we have a number of priorities. But if we focus on Handel, for instance, it's about Increasing capacity of battery products, it's about moving assembly closer to our customers to make sure that we increase our customer service, It's about increasing automation, and it's about streamlining manufacturing of engine components. So there are many aspects to it. And if you look at the content, it's not a formal restructuring program. It's there's also a forward leaning aspect of this When we invest more and become more forward leaning. We also announced a further decentralized organizational structure, and that is fully implemented and it's fully operational. All in all, all of this will amount to a saving of SEK 500,000,000 annually when fully implemented in 2023. And of course, there's a net effect then together with the increased investments of SEK 250,000,000 And as I said at the beginning, the program is progressing according to plan. So So if we then shift gears again, as you know, we are approaching the 2021 Big peak season for lawn and garden products. And as usual, we have a pipeline of new exciting product introductions. It looks like we ended up on last track here on the slide, which was a little bit of a surprise. But let's talk Talk about the product introductions first. And we have a lot of good things coming here for consumers. We are launching New robotic mowers, both in the Husqvarna and the Gardena brands. We are expanding our smart systems with new sensors and new applications. We are enhancing our watering systems for Gardena with new host reels, etcetera. So a lot of interesting things there. For the Professional Markets or customer segments, we have a lot of interesting things as well. You remember Ecos, the Professional robotic mower with virtual boundary wires. We had a pilot launch in 2020, now It's a full scale launch in 2021. And of course, we have the SIORA, which is an entirely new platform targeting the professional space up to 50,000 square meters. You can have systematic mowing, you have the EPOS Technology with the virtual boundary wise, etcetera. Here we clearly have the ambition to transform the professional market just like we have been transforming the consumer segment before. We're launching new professional chainsaw in the 90cc class. We are enhancing our power cutters in the Construction Division. And in terms of floor grinders, we are transitioning the HCC brand into Husqvarna. So a lot of exciting things here. And if we then go back to blast track and tie that a little bit to the thing with Flowgrind this year. At the end of last year, we completed the acquisition of Blastrack. Blastrack is the market leader of the complementary surface preparation methods. As you know, we have for A period of time, I would say 4, 5 years, built a second core in our construction business And we're in our Construction Division and centered around concrete surfaces and floors. And here, Floor grinders are one of the most important products. And these products are used to either level a concrete floor or take The surface of, so to speak, so you can install a new surface. And here, blast comes into play, which is the market leader of alternative methods to flow grinders. You can shot blast, you can scarify, you can scrape And a few others as well. And Blasberg is clearly the market leader in these segments. So by combining this, We basically become the market leader in all these different segments, and we can offer the right solution for any kind of job out there. So we are very excited about this acquisition. So then if we go to the last and final slide here, Let me summarize a bit the main messages this morning before we open up for questions. All in all, we have delivered a strong Q4 and a strong full year of 2020. We have We strengthened our market positions in a good market, and we have really improved our financial performance, ultimately achieving all our financial targets. At the same time, I think it's important to put all of this into this bigger context. We have, for a number of years, purposely built a stronger Husqvarna Group by investing into attractive segments and exited others. On one hand, shift up the profitability of the group, so we sustainably can operate above the 10%, while on the other hand, we have Also position us right for a successful future. So I think it's important to put the quarter and the year into this a little bit bigger context. Looking into 2021, there's, of course, a degree of uncertainty with COVID and things like that. But Ultimately, we are well positioned. We have good momentum, and we can also say that the trade inventory levels are lower than normal. And ultimately, we're off to a good start in 2021 as well. So we are looking forward to 2021. And I think Yes. Maybe let's end on that note. Thank you for your time, and we are now happy to So I hand it back over to you, Johan, I guess. Thank you very much, Henrik and Glenn. So With that, we will start the Q and A session. So please, operator, do we have any questions in the line? Thank you. And we have a few questions lined up so far. The First is from the line of Christoph Magnagard of DNB Markets. Please go ahead. Your line is open. Hi, there. First question is on IAS FX and raw material guidance for 2021, if you can provide us with anything on that. And also, Which division that will be hit the hardest from these effects? Absolutely. So we expect, especially with the relatively strong Swedish kron versus the U. S. Dollar, which is where most of the headwinds come from right now, We're expecting somewhere between SEK 300,000,000 SEK 400,000,000 of FX headwind for the coming year. And then we also see a headwind coming from raw materials, particularly coming from the base metals, of course, oil impacting plastics and lumber pricing. So we think around about SEK 150,000,000 on raw materials headwind. And actually probably more of that In the second half of the year, given that we've had a strong tailwind this year in the second half of the year. When it comes to divisions, we think all three divisions will actually be impacted By this, but the most impacted in absolute terms will come from Construction Division, given that they have a larger Exposure of products going from Eurozone into U. S, particularly Swedish kron into U. S. So construction is impacted the most. A follow-up on construction. You mentioned in the report The division had a negative impact from the COVID restrictions in Q4. Given that we have seen even more restrictions in Q1, Would we see a larger effect on that division here in the beginning of the year? I don't necessarily think so, Christa. I think the Q4 was marginally down and we know why it was down. I don't think it was necessarily COVID related. We had some shifting of orders between quarters. So the second half of the year being positive gives us a strong Momentum into 2021 and as things hopefully start reopening and also, of course, have the U. S. Presidential election situation In North America, which has had some impact, we feel. We're pretty confident there should be positive signs into 2021 for construction. And then on the robotic lawnwares, what kind of growth did you see for the market in 2020? And How much did you grow? And if you can talk about market shares? We always talk about robotics and battery combined. And we did grow that segment by double digits. And we believe we grow a little bit More than the market, meaning that we took some shares. And for 2021, Can we expect a similar trend as well? I mean it's very difficult to predict next year, of course. But We come into 2021 feeling that we're winning in 2020, and we are adding Quite a few interesting new products into the mix. So we are pretty optimistic for 2021. Thanks. I think it's worth adding, Christa, to that. Just to add Christa on that, I think when it comes to robotics, of course, The 2 key months when we were restricted by COVID of March April, that's when a lot of the installations are taking place People weren't going into homes to install, meaning 3rd party installers. So we were impacted in the 2 key lawn mowing months. So therefore, we should have a reasonable comp for 2021 in the main 2 months. Thanks. Then the final question on working capital. The positive effects from the release in working capital from exiting Consumer Brands, Is that all in the numbers now? Or do we still have some more release left? No, it's pretty much through. It was such a small amount of exited sales in the Q3 that I feel it's more or less through. The exits from 2018, of course, were well and truly through and the working capital that was supporting those exits in 2019 2020, which It's been about SEK 2,600,000,000 of exits putting the 2 years together. That should have fell through. So that benefit He's in the working capital figure now. Thanks. Thank you. Our next question comes from the line of Stefagias of SEP. Please go ahead. Your line is open. Thanks, operator. Good morning, guys. A few questions, if I may. Firstly, Glenn, I didn't fully hear the raw material headwind guidance. So that SEK 100,000,000, SEK 150,000,000, if you could confirm that? And secondly, does that include also yes, okay, perfect. And does that also include freight costs from Asia and other places? Or is that on top of that? And if you can That does not include the increased freight burden. Increased freight burden would be outside of that. But of course, we did have increased freight burdens also during the course of 2020. So yes, it's high at the moment, but we've also run 9, 10 months of increased freight during 2020 as well. Okay. So the year over year impact is very limited, you think, at current spot price? I think Q1 will be year on year And then the rest of the year, we should have your new benefits for the current outlook. And could you also I'm sorry if I missed this, but the temporary cost of orders that you saw from 2020, how much was that? And is that is any of that carrying into 2021? Or what's the bridge The cost avoidance that we took during the course of the year was approximately SEK 300,000,000 And with purpose, you called out cost avoidance so that they don't come over as being structural savings. We really put the brakes on. It was €50,000,000 in the Q4, by the way, just for that purpose. We expect, of course, we're still in COVID time, so it's not like we just suddenly released the €300,000,000 But assuming we start to normalize, then we'd expect to carry over savings of approximately SEK 100,000,000 and reverse around about SEK 200,000,000. But the more delayed we are getting back to normality, then of course, the more of those savings we'll take with us, notably things like travel. But Conferences, that will be the main savings, but then of course we should start again with a lot of the customer facing spend. Maybe we paused During 2020. Great. Great. That's very clear. And lastly, in terms of expanding Gardena Geographically, if you could talk a little bit, if you have plans for that this year and if you could perhaps quantify a little bit of where you see points of sales For Gardena products going year over year or over the next years, that would be helpful. I mean, Gedina has as part of its strategy, of course, to expand geographically, And that's something that we are working on and something that we also want to step up. But at the same time, we and I should say that we have a Good development there also in 2020. But I think we also need to be a little bit cautious in Factoring that in too quickly, I mean, that we are ramping that up now. It takes a while until you develop a new market. But That's clearly an ambition. We had good traction in 2020. We will continue in 2021. And we hope that in the years to come that we will be able to even set it up further. So I think that is kind of the bigger picture when it comes to the Gardena effort there. And if I understand you right, when it comes to the point of sale, I mean, we have had Basically a strong year for Gedienna throughout. And we would say that the inventory levels now Lower than normal in the trade. And that right now, we're more in the Phase of the year where we, together with the trade partners, are filling up and preparing for the next season to come, but From a lower level of trade inventory than before. Thank you for taking my questions guys. Thank you. Our next question comes from the line of Johan Andersson at Danske Bank. Please go ahead. Your line is open. Johan, Danske Bank. Hello? Okay. We can hear you now. Okay. It's Johan Andersson. Sorry, all the headwinds that you are Mentioning, I mean, raw material and increased spending on growing in the business and FX and freight, etcetera. Are your ambition to offset those through price and mix in total or some of it? Or what are your Good morning, Johan. Yes, it's very much our ambition to offset at least offset it. And we'd expect a net increase, of course. Pricing was very positive during 2020. And we I think we stuck our neck out a little bit to say that we'll continue that into 2021. And then, of course, the strong mix that we expect from the range we have The volume increases should offset those headwinds that we've talked about. And of course, beyond something we don't necessarily talk about Quantifies, we do have an internal efficiency program we run. And whilst we don't quantify that, of course, that program will continue. Great. And that takes us to your financial targets. When presented, What's it sounded a little bit like a target for 2020, especially on the margin side. What do you think about that? I mean, are you planning to get back to the market In terms of that during the year? Or do you have any comments on growth and margin targets? I mean, in the end of the day, I mean, our target is to grow 2% faster than the market, and our target is To be about 10% from an operating margin perspective. And I mean, that is clearly our target, and that's where we're going to be. Whether it's time to revise the targets or not, that's ultimately a question for our Board. But our target is clearly to grow faster than the market and to continue to be above 10%. That's very clear. Thank you. Thank you. Thank you. Our next question comes from the line of Karri Linta of Handelsbanken. Please go ahead. Your line is open. Yes. Thank you. Firstly, I was a bit curious about The U. S. Market and what did you do in 2020 in terms of if we look at your go to market strategy And the way you operate in the U. S. And if you have some specifics that you can share about what you plan to do going forward, both in terms of go to market as well as the way you're operated and your structure in the U. S. That's my first question. Okay. Maybe I start and feel free to chime in, Glenn. Most of the things that In 2020, it was more of the same, so to speak. We tried to become better in all aspects of the business. We try to drive good price, try to drive good mix and etcetera. I think the more The bigger shifts in the go to market is still ahead of us, and that was part of The program we launched here in conjunction with the Q3, where we basically say that we will focus much Harder on the professional side of the business, the handheld side of the business and on building that robotics market. And that we will start to pivot the business more towards those segments. But I would say that most of those changes are still ahead of us Where we really start to focus and invest in those segments. And I don't know, Glenn, if you have more color to add here. I think you described it well, Henrik. I think the cost, Bjorn Sorry, Kari. I think we need to recall that the exits that we took in North America, they were quite large. It was SEK 1,900,000,000 And exits belonged in North America there, which is very much the plan. So we are strategically, of course, exiting Segments that we talked about and putting more focus on the core, the profitable core. And maybe to say that I think we are very happy with how we have executed these big exits because it's not a given That you do that in this controlled way. We have really exited SEK 4,500,000,000 or so in total over 3 years, The majority of that in the U. S. And be able to do that, still be relevant to your customers And year over year increase of profitability. I think we have executed this pretty well. But I think the forward leaning activities in pivoting the business furthermore to handle And robotics, that's still, to a large degree, ahead of us here in front of us, I should say. All right. And my second question was actually related to that. So You're saying that most of this pivoting is still ahead of you. And I think you mentioned earlier that this is not a restructuring program as such. But once you are sort of well on your way in terms of where you want to be in terms of this, so what kind of Implications should we expect on your manufacturing road map not road map, but your manufacturing footprint And maybe your outsourcing rate and so forth. Ultimately, how should we think about your fixed costs In a few years' time, especially those related to manufacturing operations. I think we have taken some of those Decisions already, I mean, we've exited the lawnmower business. We did some. A part of that this is part of the handset optimization And particularly when it comes to the engine component manufacturing, where we either would outsource, let's call it, noncritical components And or consolidating where we are making the core components, so to speak. So elements of this is already, let's say, at least financially behind us, even though some of the execution on the handheld side Still left to be done. Then we are more thinking about it as what we're going to do more of. How do we start to redeploy Funding and resources towards truly driving the right mix To drive the Hansel business, to drive the robotics business. So that is the plan. We do not have in the cards any other restructuring measures. There's nothing planned. At the same time, just to be clear, we will never shy away from taking the necessary actions to make the group successful. We will continuously evaluate segments and markets. And if we see that we are better off focusing in one segment than another, we will never shy away I'm taking the right actions. But there's nothing planned other than what we have announced. All right, fair enough. Very helpful. Thank you. Thank you. And we have one final question In the queue, that's from the line of Karl Oskar Breidingen of Berenberg. Please go ahead. Your line is open. Hi, good morning, everyone. Just wanted to check a little bit on the market because you state that you have been taking market Chair this year, and obviously, it's been an outstanding year for you as well as we can see with a lot of the other dyu producers and anyone in the Home Gardening and Improvement segment. Can you talk a little bit about the drivers of the market in general? Because previously you've been stating that this is approximately a €20,000,000,000 market or SEK 200,000,000 or SEK 1,000,000,000 market and then you have some 15% market share of this. Can you talk a little bit about where you see your current market share Of the wider market? And that's my first question really. As you can imagine, it's hard to talk about market shares In total, since we are in so many different segments and we don't quite have competitors That goes across so it becomes very difficult to talk about in general. But I would say that the total market has If you talk about the lawn and garden side of the business, has from a consumer's perspective benefited from a stay at home trend this year, And we hope that quite a lot of that will stick over time, that people maintain the interest for gardening. So the market has, in that sense, been growing in 2020. I think in The Professional segment, that has not been the case because the stay at home trend actually have the opposite effect in the Pro segment of our business. Then from a weather perspective, I think that extended season, Meaning that we were mowing lawns in October benefited the market as such, so the market grew a little bit. Then what makes it difficult is, of course, this timing element as we talked about before. The industry got hit by COVID in its peak season. And really, the main trade partners were shut down, not closed in the peak of the season. And then that kind of shifted volumes out. So it becomes a bit difficult to isolate the effects of the different things. But I think in general, when you look at the year, you can see it has been a Strong market in 2020 in general and that we in the core categories have taken shares in that strong market. However, I think it's important that you all remember when we look at everybody's reporting here in the second half of the year With big percentages, that's still in the quarters that was fairly small. And there is an artificial Push out of volumes from H1 to H2 due to COVID. So it's hard to predict, but In the end of the day, a stronger market than normal in 2020, and we managed to take shares. Okay. And if we're looking at Q1 so far, how are the sort of January comps compared to year over year? You mentioned that you got hit the hardest obviously in the peak month in March April with installation, but if we're looking on January isolated and trying to look at the comps for Q1 this year, are we To a better start, are you seeing any change in demand? Is there any pent up demand for gardening products that people didn't buy last year, so they want to get ahead of the season? Or How should we look on the beginning of the quarter on a year over year basis? I think it's safe to say that we're off to a good start, But it doesn't have so much to do with consumer the consumer sentiment, so to speak. I don't think it At this time of the year, it's more that our trade partners are preparing for the upcoming season, and the trade inventories All lower than normal. And I think everybody is anticipating a good season. So It's more preparation rather than a tell where the consumer is at this point in time. But Longer or short is that we're off to a good start. Okay. Thank you. And just one last question. So You mentioned in terms of the strategy, as you mentioned a little bit earlier in North America and your go to strategy. We did hear a lot about the iRobot Terra launch, and it was sort of Some expectations that their strong push into the market by offering a robotic lawnmower would give the U. S. Consumer a more Broader mind to, I would say, to embracing robotic floor mowers, assuming that a relatively household product like iRobot would come out and take a stand and say that this is a product that works and that we've anticipated that should have a positive read across for you. We haven't really heard anything about the iRobotera And according to various sources, it seems to be a discontinued product for the time being, and we don't hear anything about the launch. Is this a reflection of consumers not really embracing the product category or simply that you guys beat it Or beat them to it with delivering the 1st Boundaryless robotic lawnmower. Can you talk a little bit about I understand it's difficult to talk directly about your competitors, but how the Adoption strategy for robotics in U. S. Are in relation to that? As you say, it's hard for us to speculate And how they reason around this. But our firm belief is that there is a huge robotic opportunity in the U. S. The market is all markets are slightly different, but there are also a lot of We believe that's a huge opportunity for robotics in the U. S. At the same time, we shouldn't underestimate the time to transform a new market. I mean, it took us well over 10, 15 years on the first market in Sweden Starting in 1995 until that became Almost like a commodity, something that everybody knows what it is. Everybody wants 1 kind of idea. And then, of course, as we have built more and more markets in Europe, we it has taken time, but each time it takes a little bit less time. We become we learn, We get faster. And I think also with how society develops with, I mean, communication and digital tools and social media and so on, It makes things these transformations go faster. So I think what I'm trying to say is that there is an opportunity in the U. S. We are committed to develop and transform that market. But I think we all need to have a little bit respect before that. It takes A while to change the perceptions of consumers in our market and to basically build a whole new category. Okay. That's very clear, Henrik. Thank you. That's all for me. Thank you. And as there are no further questions on On the line at this time, I'll hand back to our speakers for the closing comments. So thank you, Marj, for everyone joining the call today and to listen in to our full year report. And if you have any further questions or comments, just reach out to the Investor Relations team. And if not before, we will talk to you then on the 22nd April when we report the Q1 of 2021. So thank you very much for today.