Earnings Call: Q1 2019

Apr 24, 2019

Morning, everyone, and welcome to Husqvarna Group's presentation of the Q1 of 2019. My name is Johan Andersson, responsible for Investor Relations and will be the moderator here today. In Stockholm, we have Kai Wern, our President and CEO and Glen Instone, CFO. So we will start with a presentation by Kai and Glen and then afterwards have a Q and A session. So with that, I'll welcome you everyone and little word to Kai. Awesome. From my side, welcome to the Q1 report. We're quite pleased with the start of the year. Let me be clear, it's a start of the year, but Q1 is a selling quarter. It's not really saying that much about the sell through. But so far so good, I think, is a very clear message from our side. And we were particularly clear, I think end of last year that we are looking for a margin improvement in this year. And we can say that we are actually on plan in this quarter on that margin improvement trajectory as we have set out to reach. The highlights as we see it, let's start with sales. Actually, we have a better sell in to the trade partners than one could potentially have expected. So we have plus 4% net sales, F currency adjusted. And then please bear in mind that you need to deduct then 3% on the group level from exited businesses, which affects actually then 2 of the 3 divisions, Ascon and Gardena, but not construction. So that's positive. All core categories in the divisions are in plus, which is also important. So that's really satisfactory. And a good very good leverage, 23% operating income on those 4% of net sales increase. And if you try to read what that is constituted by, of course, volume, it's price, it's mix. It is efficiency program savings and it's also delivery from the restructuring program that we took one off cost for during last year and actually a little bit some few bits and pieces also in Q1 and Glenn will revert back to that. We have had a fair bit of raw material headwinds in this quarter and actually they were higher than expected currency positive gains that we got. So all in all, a net negative from the 2. But so I think that's it's not the currency that helped us make this quarter in that sense despite being better. So and we and it's worth mentioning that we continue to invest in the strategic initiatives. We are determined to maintain the technology leadership we have built up and there is no compromising around that actually in these numbers. So we're building on our strengths. So all in all, I think this is a sign of strength in the quarter. But remember, it's a start of the year. So looking at the growth, we now split that up a bit because this is the old structure and the division as they were reported rolling 12 months and now we just looked at the quarter 1 in the new structures. We don't want to combine them because that would have been confusing for you. So in the new, you have the group at 4, as I mentioned, you have Husqvarna on 5, construction on 5% and Gardena on 2%. Then you should be aware of that Husqvarna and Gardena respectively are burning with 4% of exited business in those numbers. So 2% for Gardena actually is a 6% in the old structure to be clear about it and Husqvarna plus 5 equivalent would be plus 9. So, good start. And we see now in this curve that we have reverted back to throughout quite some few quarters back that we are taking a little bit of a rebound up jump up and that is, of course, all in line with how we have communicated. The way we talked about the expectation for this year is that at least 9.6%. We were a bit cautious to say that we were going to reach the 10% target we have set out given the point of departure at 7.9% for 2018, which were a little bit lower than actually what we would have thought by beginning of last year. So it's a bit tougher starting point for the recovery, but we are somewhere in that interval of the 9.6% to 10%. Of course, we are aiming to get to 10%. I think you just need to bear with me in respect that I don't have the visibility of how that will play out eventually, But be sure that we are aiming at the 10%, but it's not at all any promise from my side. That's definitely an ambition. What we are clear about is we want to be seeing 2019 as the best year that we have had in absolute terms and hopefully then also from a margin perspective and 'seventeen was 9.6%. Just to put that back and about a bit higher than SEK3.7 billion in operating income. Looking at the divisions, Husqvarna SEK9.5 billion, 5% currency adjusted, you heard me mention that 12.9% EBIT margin, particularly noteworthy, I would say, the sell into North America, where some of the trade partners choose to load in the season a bit earlier than they did last year. So all regions in growth, but particularly I like to call out North America who choose to go a bit heavier early than they did last year, which is a comment. Johannes mentioned the 4% of exited consumer business and the operating income then increasing by 18% for the Husqvarna division. Volume, of course, supporting that price and savings from the efficiency program as well as restructuring. So just like we talked about the restructuring program, it is delivering according to what we have set out to do and Glenn will make some comments more specifically in his part coming. Just like for the group, Husqvarna bears the lion's share of the raw materials and tariffs and they were then higher than the positive currency contribution. And we are stemming ahead with the strategic initiatives. And actually, what we have done since some few years back starting actually in 2016 and then consecutively kept is we are utilizing those efficiency improvements we are doing to actually invest into a more forward leaning cost structure. So it's a shift of the cost structure to become more growth oriented. That's what's ongoing since 2016 and not only for Husqvarna, but for all three divisions actually. So moving over to Gardena. We have yet again a good sell in and I would like to emphasize in this case the watering particularly and that's not very surprising I guess for you. You know that the last season was exceptionally favorable for Gardena. So the inventories in the trade were under average leaving the season. And you should bear in mind that quarter 1 2018 for Gardena was actually up 15% versus 'seventeen. So the reference was really tough comp and there were some channel filling in new channel filling, I should formulate, going on at the time. So the plus 6 percent then if we forget about the exited business of the integrated consumer parts is actually a very strong sign in that respect. And there is clear volume contribution, price and mix and I would also emphasize the restructuring part particularly here for Gardena. Moving to construction, plus 5% currency adjusted, good growth, particularly in Europe actually. North America decreased somewhat, a little bit slow start of the quarter. Some key accounts also adjusting inventories, but the underlying market is actually solid and we haven't seen any real sign of weakness in North America. So I don't think you should extrapolate that actually too much. The operating income grew 12% and again volume price, but mind you, North America is an over average profitable region in the construction space for us, which is not the case in forest and garden, but it is here. So that was a negative geography mix. In this case, actually, the currency is outbalancing the raw materials and tariffs. But we're pressing ahead with the strategic initiatives and some further integration steps of the 3 acquisitions we made during the last 3 years. To talk about some of the technology introductions we have done in the quarter, it's hard to avoid this nice little piece, the all wheel drive robotics. And we made a little bit of a different approach launching this product. Actually, we launched it in connection to the Mobile World Conference in Barcelona, and which was a new approach from us and which really rendered some good and yielded some good results. And let's start by looking at a short video clip. It's a 32nd clip, it shouldn't be too long, from Barcelona. He has to give an ID. And World War by Congress. Welcome to the collaborative and competitive new field of play for us. And of course, it's a reflection of our intention to move into even more technology leading edge in digitalization, various types of applications. I think we've done a lot. We will continue to deliver a lot more on that side, but actually we had a fantastic reach. We had more than 80,000,000 people and subscribers to media that actually interviewed us and there were 2,500,000 types of people sharing content from that after this exhibition. So it was an interesting experience for us and a positive touch. Construction also had a very important exhibition down at Bauma in Munich, which is every 3rd year, which is actually the largest exhibition, all kinds in the construction space. We introduced the fleet services, which we also apply in the Husqvarna division for the commercial lawn and garden space. They introduced new battery powered products and there was a lot of traffic actually in the booth. So also a very good experience from that side. Just to jump over to the next little topic here, Gardena actually was elected to one of the top brands in Germany, all categories, not outdoor power equipment, but all categories together with the most famous ones. And that was, of course, very prestigious. And I think we see that as a reflection of the strength that has built up over some quite some few years actually of innovation and Gardena is very proactively also going ahead and they're already in the discussion with their channel partners about next season and the innovations for next season. So that's looking good. There are awards also from the red dots for design, which are prestigious. There are tests ongoing what we call experimentation where we also going to sell flowers with a select retail partner to see whether the brand can be expanded and stretched into new categories. We also do have cooperation with UNICEF about water watering and everybody is well aware about the scarcity of water. And of course, Gardena offers solutions for optimizing the use of water for passionate gardeners, may that be the smart garden system, micro drip or new nozzle technology to do this in the right way. And eventually, this is about biodiversity, which we think is an important piece. So really need to make sure that it is optimized in the right way. This co op then, of course, also supports important projects that UNICEF is providing in some of the emerging countries relating to water, which is important for us. Just some topics to quickly mention here before I leave to Glenn now to talk more about the details of the P and L. Glenn, please. Thank you. Good morning. So a little bit more detail to the P and L or the income statement. So as Kai said, the revenue increased by some 11% as reported or 4% currency adjusted and that included a 3% burden from the exited sales, so 7% in like for like terms. The acquisition effect in Q1 was very small, I. E, what we acquired last year in the construction space that's roughly SEK50 1,000,000. So still 4% currency organic growth, as we would call it. Moving down into the gross income line, a nice improvement from SEK28.8 billion to SEK30.1 billion. It actually also includes the SEK42 1,000,000 of items affecting comparability in that line. So if you take that out, the items, it's actually SEK 30.4 million. So moving from SEK 28.8 million to SEK 30.4 million. Of course, sitting in the gross margin, we have the burden that Kai talked about of the continued tariffs and raw materials. As we went into this year, we guided on roughly SEK 500,000,000 burden there. In Q1, it's been a SEK 200,000,000 burden of that magnitude hitting the GP negative effect. It does appear it is somewhat easing, I would say, particularly on the commodity side and also the impact of a lower List 3 tariffs in the U. S. So we'd guide more like the SEK400 1,000,000 level as opposed to the previous SEK500 1,000,000 guidance. I think if you then look at that and say we've had an increase in the margin of SEK550 1,000,000 including the items Mollek 600 1,000,000, and then you can see we have a burden in there of some SEK200 1,000,000. It shows that the true gross margin is coming up magnitude SEK800 1,000,000. Within that, of course, we have a positive FX effect. So FX is really sitting in 2 places in the gross margin, a positive and a negative effect into the SG and A. But we have a positive effect into the gross margin. And along with that comes the positive price, volume, mix and the efficiency programs that Kai mentioned earlier. So, so far, on track when it comes to the gross margin. Moving through to the SG and A, that moved up slightly, magnitude SEK 2 80,000,000. Again, if you look at that, a negative FX effect, roughly 40% will be FX into that. And the rest, I would call strategic initiatives or the volume impact of shipping more products. So very much in line with our expectations on the SG and A. As said, items affecting comparability, we took the lion's share of the restructuring last year and we said we had roughly SEK 50,000,000 still to take in this year. So there's SEK 42,000,000 already taken into Q1, leaving roughly SEK 5,000,000 to SEK 10,000,000 left to take. So very small. We're pretty much through with the restructuring. Moving further down the P and L, finance net that moved up from 1.37 to 1.60. The real constituents into the change, a slight cost for IFRS 16, roughly SEK6 1,000,000 and the remaining SEK17 1,000,000 would be higher interest charges actually hitting the finance net. So again, pretty much comparable to prior year. On the tax line, again, the full year guidance is 23%. We're sitting at 23% during Q1, and that's comping to a prior year of 24% on the tax rate. Again, we'd stay at that guidance for the full year, so 23%. Moving over to the how the cash flow looks. This is actually pretty flat to prior year. We see an upside from the operations, some SEK400 1,000,000 improvement on the EBITDA line. Of course, the higher sales brings higher receivables. We have a higher build upon the receivables of roughly SEK600 1,000,000, a slight improvement on the inventory buildup and a slight improvement on the accounts payable. So pretty much flat at minus SEK1.8 billion. This chart is one we've had for some time now and it's really how efficient we've been in our working capital. We said in the last quarterly report that we expected actually a buildup during Q1. As we said, this is very much a preparation quarter. We're selling into the trade and we're preparing for the season. So we are higher than we would like to be, no doubt about it. We're still planning for 25%. That is still the target we have. And we expect now during Q2 that this starts to take the curve back down, but very much burdened by the higher inventory levels, which I'll come on to on the next slide. And as said, slightly higher receivables, of course, driven from higher sales. So on the balance sheet, let's there's a few lines stand out in here, I believe. If we start off at the top and look at the non current assets, somewhat higher, and that is where we're seeing now the burden of the new IFRS 16 lease liabilities, roughly SEK 1,500,000,000 on the asset side, and we see the same on the liability side. So if you consider both we have SEK 1.5 billion sitting in here and SEK 1.5 billion in the noncurrent assets, which is the again, the lease the change in the lease accounting that we see. Inventory, as said, we are significantly higher than prior year and we saw that coming out of the year as well. So of the buildup of roughly SEK1.4 billion there, I would say SEK0.5 billion would be FX. So if we just translate last year into this year, it would be more like SEK 10,800,000,000 and then SEK 10,800,000,000 up to SEK 11,700,000,000 is really the result of our season preparation. We talked about the Brexit preparation that we have continued during Q1, preparing for the worst case scenario of a hard Brexit. And of course, we've also been preparing for the watering season that hopefully is starting right now looking outside. On the net debt side, that also increased significantly SEK13.5 billion from SEK9.2 billion. Again, you need to factor in the IFRS impact into that, roughly SEK1.5 billion. We had the higher dividend payment or the dividend payout of roughly SEK1.3 billion as well. Then the rest would be the higher interest and FX rates that are flowing through there into the net debt, which takes me on to the next slide. And this, of course, is a ratio we're using and keeping a close eye on, net debt to EBITDA. It is slightly up. It's at 1.9. We have a guidance of below 2.5. We're still well within that. And I would really I would guide that we are still well within that as well. Of course, IFRS in itself will have a slight impact on this ratio, probably 0.3 on the calculation if we look at it. But this is still again rolling EBITDA roughly 5.2 percent and the average net debt giving us a 1.9 percent ratio here. And at that, I will hand over to Kai to close before we open up for questions. Thanks, Ken. So summing up, to 2 areas. The first area being our continued focus on the levers, which are important for the margin improvement trajectory. And then they talk particularly about the price discipline, about the efficiency program and the restructuring to do that. And so that's one thing. The other one is, of course, to continue to build on the technology positions and the innovations we're working on to bring to market, build on the strength of our core brands, Husqvarna and Gardena, and to sort of say safeguard our position, really pushing this industry forward in terms of technology and applications in various respects. So I think these are the 2 major comments I'd like to make and we feel good at this stage about both of them. Right. With that, I think we Johan, please. Yes. Thank you very much, Kai and Helane. And with that, we are ready for the questions. And we will start here in the floor in Stockholm. So do we have any questions? Yes, here. Hi. My name is Clara Johnson. I'm from SEB. And I have a question about pricing. You previously guided for that you would raise prices this year by about 1.4% for the whole portfolio, if I'm not wrong. Could you tell us about how price increases have progressed in Q1? And if you feel comfortable with this guidance of around 1.4% for the full year, especially since we've heard talks about competitors raising price a bit more. The reference you make into 1.4%, I don't particularly recall, but what I recall is that we said with the price increases will well cover the raw material and tariff increases. So we're going to be on the right side of that, which is I can imagine, even a bit more. But it is an important parameter for us and we are still executing it with discipline. And I would say the previous statements hold nothing has changed actually and I think that also reflects the expectations for the remainder of the year. So not only what we see so far, but also what we expect. I interpret that as that decision has started good for pricing. Good and good. I think we were very clear about the need to compensate. You have to remember, we absorbed a lot of increases of costs last year that we didn't compensate for in the right place. So we needed to rebalance to some degree this year. I think it was very clear. So it was not that optional. It was just a necessity to make that happen. And then remember, it's not equal on all product categories. This is a huge variation between categories and geographies. So behind that aggregated statement, there's a lot of variation, of course, that's going on. Okay. Thank you. The next question is about the inventory. And you had a little bit of buildup, as you talked about, in Q1. You talked about this being partly due to Brexit and then watering buildup. Could you give us an idea of how much is actually Gardena and watering and how much is Brexit? And I mean, the Gardena part, should we interpret that as a trend going forward as well that you will have to increase inventory as you know end markets are becoming a bit more volatile? Maybe we start with the Gardena part. Last season, we were clearly caught, let me call it that way, when the season started and we had a lot of supply costs added to our supply chain. So we got a dis synergy or a disleverage. So we purposely built up ahead of season and that's what we will intend to do going forward on the Gardena side for sure. I won't guide on exact figures for Brexit, how much were built up other than say it's very much in line with our plan. And most of those units are actually sitting now in our European market warehouses, ready for shipment and trade partners. The only little thing I can add to that is that over time, Gavriana has had several consecutive years of very strong growth in the watering category. And of course, what used to be a good margin of excess production capacity diminishes and then you need to take another step, etcetera. And before you've taken that step, you need to deal with it in the way we dealt with it going into this season. But you hear what I'm saying. I mean, it's in a constant adjustment and if that excess capacity is smaller, you need to produce and that's one comment. The other comment is, course, the great season last year, which really led us to expect that there was going to be a lot of early demand. Thank you. Okay. I think we have one question there in the back. So Christian Meingaard from DNB. A couple of questions. To start with on consumer brands, Sorry, the old consumer brands. You exited the Economist by calculations about SEK 370,000,000 of sales in the quarter. A bit more actually, but it's more of a difference. Okay. Annualized I mean, given that Q1 is a seasonally quite big quarter for that division, Are we on track with a SEK 1,500,000,000 to SEK 2,000,000,000 cut in contracts for this year? Yes. That still holds. And I think I said already at Q4 that we are rather closer to the lower interval. So 1.5 ish is probably which leads, of course, to the conclusion that there will be a little bit higher rates most likely than in Q2. And then the second question on Husqvarna division in North America, where you said you had quite strong growth due to the good sell in. Is it sell in of traditional Husqvarna products or is it robotic lawn mowers that actually start to sell in now in Q1? We wish most robotics that may be a big difference, but we're not there yet. I would rather say in the big numbers, looking at the big numbers, it's more the traditional categories that make up that selling. But of course, there is a component of robotics in that supporting, yes, you're right. But the big number is really more traditional categories. And those traditional categories have historically been negative for margins when North America is strong for Husqvarna. Was that the case also this time? You're right in the respect that it's under average margins in those because this is particularly a lot of wheeled. So even though we have exited the least attractive parts of it, it's still wheeled categories, which is below average. So there is an element of that, Kristi. Yes, correct. But it's higher. Remember, for example, on the tractor side, we exited lower price points. So we have kept specifications, which are more defendable and more strategically correct to have. And then the final question on retail inventories. You said that sell in has been good. I guess that some categories had quite high inventories after last year's season. So can you comment on the retail and the dealer inventories that we have today? And maybe also given the warm April this far, if you can comment anything on what you have seen in the sell through? If you look at you asked about Robert, and I guess that question is going to come sooner or later here. So how are we doing now with robots, for example, with inventories? And my statement the last few years has been we have been having seen a growth rate of well above 20%. We are not well above we're double digit. We're not well above 20 quarter 1 for the combination of robotics and battery products that we refer to. But we still expect that for the year to be well above 20%. So there is an effect to some extent of that other average inventory in that category. In general, I don't want to emphasize inventory levels as an issue for Husqvarna division. And Gardena is rather coming from the other side with unreverage. So I would say it's a non issue as we move forward. Then as to your comment about the Easter and the current state, I still see that as positive. So, so far Easter is a very important break of the season for Husqvarna traditionally and the weather has been nice during Easter. But then it soon would enter to see some rain, for example, in the Nordics. But so far, it's rather a plus than anything else of what's seen of April. Thank you. Did we have another question here? Yes. Good morning. Henry Christensen from Carnegie. I have a question on the restructuring program and the impact in the Q1. I'm not sure I've seen that number anywhere. But could you give a could you quantify how much that had an impact in the Q1? Yes. If we look at the restructuring, I would say it's on track. We guided across by 2020, it will be a full effect SEK 250,000,000 lion's share to come this year. And of course, we've seen a sizable impact during Q1. I won't quantify it exactly, but it's sizable in Q1, of course. Great. And then a follow-up on the pricing as well, which we had before. I mean, previously you said you would increase prices, you would more than offset tariffs and raw materials. And now you're guiding for lower raw materials. Does that mean that the net effect will be bigger? Or have you adjusted pricing down to take into account that tariffs are pushed forward? I'll start. No, I think that's a net improvement, of course, everything else same. But then it remains to be seen whether that holds true as we progress through the season. A lot of things will unfold, which we don't have visibility into at this stage. But as per now, everything else is same. That's a positive, of course. Great. Thank you. I think we had another question here at the front. Bjorn? Thank you. Bjorn, Ignacio Bank. One more question on robotics and how that is supposed to play out given your growth comments for the year. So that is predominantly something that we will see also in a sell in situation in Q2. Or did I miss under What I said was that the growth rates will be higher reasonably from an expectation point of view in Q2 versus Q1. Yes, correct. In terms of selling? Sell through. Sell through. Okay. And in total sales numbers. Yes. Good. Then given the changes to the structures last few years and what you have and where you have been growing, etcetera, can you update us a little bit on your FX flows now with production in North America and Europe? Sure. Of course, our main flows are in U. S. Dollars and euro, Japanese yen to some extent as well and Canadian dollars. That's where our main flows intersect would be. And we've had a positive effect from FX so far, particularly the weak Swedish krona, of course, translating back from USD in that respect. So we had a much stronger FX impact during Q1 than I first anticipated, actually SEK165,000,000 of positive FX effects sitting in there. If we take the outlook, we previously said 100 to 200. I'd probably say it's more like 200 to 300 looking ahead now for the year. So another positive effect from what we're looking at. And the U. S. Dollar flows or euro flows into the U. S, has that decreased a lot? Or is No, the euro in the U. S. Has not decreased significantly. It will be more the U. S. Dollar into euro land or SEKTLAND, which is decreasing on the back of some of our exited business. But the products were moving from Europe into U. S, that wouldn't be decreasing, no. Okay. Clear. Thanks. Thank you very much. Do we have any other question here on the floor in Stockholm? Let's see if we have any questions on the telephone conference. We don't have any We now have a couple of questions. Okay. So let's go. Your first question comes from the line from Johan Eliason from Kepler Cheuvreux. Please go ahead. Your line is open. Yes. This is Johan Eliason at Kepler Cheuvreux. I was wondering, first of all, this Gardena build up to have better delivery performance in Q2. I mean, Q2 last year was a difficult quarter for you being very cold late and then suddenly very warm. And then margins at the end didn't turn out to be very good or at least below expectations. How do you see the margins panning out with the actions you have taken now? Obviously, you don't know how the season will exactly look like. But what type of magnitude should we think that this inventory buildup will help you in your delivery performance in terms of margin development? Any views on that? Johan, if anything, of course, we try to learn from the rough experience of last year Q2, which was, as you rightly point out, nothing, nothing and then everything during May and then scaling back fairly quick in general terms with penalties amongst others in logistics and transportation as one consequence and some other enforcement cost to expedite those volumes. So there should be a positive element coming from that in Q2. No, you're right, yes. And then if I may, on U. S. Robotics again. I've been at Lowe's homepage, and you seem to be they seem to be selling your Discone robotic movers at $15.99 and $17.99 including installation, which I understand is done by the local servicing dealer. How does this fairly impact your profit margins on those robotics considering that it seems like the installation is including in this price point, which looks lower than is what we have seen for the Husqvarna brand in Europe? First of all, it's a rather large engagement we have with Loews in U. S, and this comprises rather some 800, 900 point of sales where we actually do promote it and where there will be particular displays outside of those department stores. So I think that's the first comment to be made. At this stage, I can't really say much about the season and the sell through. It's simply too early. If we would have had this, call it, 1 month later or 1.5 months later, I could give you a fairly good indication. I can't give that. And then as to your question then about margins, we still have a pretty good margin consolidated in that offering for that particular product. So it's not a concern for us. But I think the important point to make is that we have a unique strength through the dealer structure that we have built up with some 5,000 dealers in North America and how can we combine those strength from the dealer being close to the customers with the mass consumer experience of a retailer like Lowe's. So and that's what we're trying to build. And U. S. Is much more of a service market than Europe generally is. So it's a very natural step to take. So it's a test. And of course, we like to transfer as much of opportunities over also to the dealer channel to utilize their closeness, intimacy with the customers as well. So building on that combination of strength is a natural thing to do. Those levels are not a concern at this stage, Johan, for those types of products. Okay. And then just on this IFRS 16, I saw depreciation go up in the quarter. Could you just quantify the impact also on the depreciation line from the IFRS 16? Thank you. Absolutely. That was roughly SEK100 1,000,000 in the quarter. So full year, I would guide at roughly SEK400 1,000,000 on the depreciation line from IFRS 16. Excellent. Many thanks. Okay. I think we have one more question from the telephone conference, do we? We do. We will now take the next question. Please go ahead. Your line is now open. It's Olof with ABG. Can you hear me? Yes. Yes, perfect. I wasn't sure if I was getting the question. So going back to Gardena, I think that was the best spot, in my view, at least, very strong margin and improvement. Is it possible to split up sort of the or give us an indication of an EBIT bridge here year over year? Was the product mix the main driver of the higher margin? And what is sustainable? What is not sustainable, if any thing? Olof, yes, if we look at Gardena, of course, it was a very solid quarter. The lion's share coming from, let's call it, market driven improvements or mix improvements. What I would say is we need to then really split that into 2, half of it coming from traditional Gardena, particularly the watering products, but then also the restructuring measures for Consumer Brands Europe, where we've seen also a strong margin improvement if we look at that in isolation. So it's pretty much fifty-fifty between the 2 in the Gardena division. Does that answer your question? That helps. And then I have a follow-up on construction as well. Thierry, you spoke about good market demand and so forth. But the let's say, the organic organic growth, excluding M and A, has been fairly flattish now for some time. Will we see this number go back to the 4%, 5% we were accustomed to a while back? Or have we reached sort of a plateau for 2019? I think if you ask me about the expectation, we should see a rebound upwards. We don't see any reason talking about the market demand, for example, now North America, which was the issue in quarter 1, why we should be pessimistic about that. As I commented upon, there was a bit of a weak start of the quarter due to actually cold weather, wet weather. So the season for them was maybe more impacted by that situation. You may recall the northern part of U. S. Being extremely cold and then it was fairly wet. So there was an element of that for sure, but I don't see that we need to extrapolate that. And I also commented upon the adjustment of the inventories by some of the key accounts that took place. So when that is all said and done, which we would expect it to be very soon, we should see growth rates revert to the levels that you indicated. Perfect. Thank you very much. Thank you. And let's see, I think we have did we have a final question here in the floor and Stockholm. Do we have any more questions on the telephone conference? No further questions at the moment. Okay. I think with that, if we don't have any further questions here in Stockholm, we thank you all very much for joining us, and let's meet again when we report Q2 in June July. Thank you. Thank you. Thank you.