Earnings Call: Q3 2017

Oct 20, 2017

Good morning, everybody, and welcome to the quarter 3 result announcement of Husqvarna Group. And I would say, quarter 3 is by and large a very good quarter, but there are also aspects, which of course relate to the press release we made earlier this week that you might have interest to get covered. You will get hopefully all the answers you need on both sides, all the good stuff and all the things we need to work on as well. Now let's look at the summary of the group. And first of all, I think we should conclude that operating performance has improved. We have taken €50,000,000 of restructuring to the construction division relating to the acquisitions. There were some misunderstandings this morning whether that was related to consumer, but it is related to construction. I specifically want to point that out. If we look at the 3 divisions in profitable growth mode, Husqvarna, Gardena Construction, they have increasing rates of sales, top line growth. We will look at that specifically. We are continuing the investments in the profitable growth activities, meaning we add costs for activities aiming at driving top line growth. So of course, that is a burden. And if you have a seasonally smaller quarter like we have quarter 3, which we will also see in quarter 4, That means a lower leverage on the operating income as such. We have taken then the decision moving over to the consumer space to leave one of the big retailers. And actually that very much relates to, of course, the future prospects to the commercial terms and the credit aspects of the customer. And altogether, that didn't make any sense for us. So it's a little bit like toothache and we choose to pull it out and took a very proactive decision on that side. But I think the most important thing for Husqvarna being so seasonal is to look at the year to date actually and how are we looking compared to last year. And you will see that we are doing actually pretty, pretty well in this respect. Let me move on. Looking at rolling 12 month EBIT respectively, the margin, you will see we are at 9.6. However, that or actually you can say €9,800,000,000 if we exclude the €50,000,000 restructuring here and the restructuring we took some €40,000,000 related to the consumer space in quarter 3, the rightsizing of the Nashville plant. So excluding those 2 one off items, we are 9.8, but we have reported 9.6. So you see a steady development and you typically see the steps being taken in quarter 1, quarter 2 of the respective years with a little bit the exception here where we had huge currency headwinds that we were fending off. So the music plays, as you know, in the first half of the year for Husqvarna, but still this is a pretty proud development and some 2016 to 2017 consecutive quarters of improvements. I would like to de dramatize also its 10% target. We are committed to it, we have said we will reach it in 2017 latest 2018 that stands firm. But I also would like to de dramatize it in the respect that if we would exclude our investments in the profitable growth activities, we would be closer to 11% already today. So we make a very active decision to prioritize a forward leaning stance with the consequence that it is a shorter term burden on the operating margin. So I mentioned the growth. So if you look at 2016, the full year, we had 3.3% of these 3 divisions that I'm referring to, Hauskonekodena Construction. Now we are at 5.4% rolling 12 month numbers. So it's a little bit happens with peers here, but it shows the increase of the rate of the sales. And this is important, because our impression is we have proved the ability to increase the profitability between 2013 2016 and the task now for us as we sit is to prove that we can also grow profitably, but with a higher emphasis on the growth. So this is a nice step upwards. And if anything, I think it's a good proxy for what you can expect if you would look into yet another time period year or so. Okay. Looking at the financial highlights. So you will see we have 4% growth in the quarter and we have actually fairly flattish operating income then, including the restructuring burden of the SEK 50,000,000. Why we we are a little bit cautious when we talk about the result development here. And one of the reasons is also that the acquisitions are supporting in this period of time. So they're doing quite nicely actually and I'll come back to that when I talk about construction. I think you heard the first couple of bullets here. You heard me commenting upon already. What I didn't say so far is that we are also improving the operating working capital versus the sales as a ratio. So that's doing fine. If you look at then the year to date sales up 7%, operating income up 16% and a fairly solid cash flow improvement that Jan will come back to and describe more in detail. So all those parameters are actually looking pretty good and we are pleased with them. Moving over to the Husqvarna division, 2% in the quarter, pretty much related to this quarter driven by North America and wheel products that did better. To some extent, this is also explained by some product introductions last year that were relating mostly to Europe, which brought a high reference in Europe, to mention one comment about it. There are positive volume and currency impacts, but then the geographical mix here with North America and the wheel category is a little bit of a burden for us. Investments in the growth activities continue at a high rate. So if you're looking then on the year to date, 7% up, remembering you looked at it rolling 12 months just before and operating income then is 17%, so a pretty good leverage still on that. The picture actually shows the new 570 and that the ProChain swap for 70 cc, which is being launched broadly into next year and which has really proven to be a great product in terms of performance and ergonomics. And we are very positive and optimistic about what that product can do. There are, by the way, a whole range of products being introduced into the next season, which gives faith also on that side. Beyond other aspects from the growth initiatives relating to robotics, I'll say a couple of more words about that on the next slide, battery products, commercial lawn and garden space and also the forestry space. So quite a lot of good stuff. What's happening now with robotics is that we are moving it into more commercial applications. The commercial lawn and garden space has been target for us for some period of time. We used the battery products. We used what we call the fleet service tools, which actually tracks the use of it, looks at the productivity, the needs for service. So actually helps the CNG operators to be much more efficient and improve their profitability. And now we expand that to also encompass robotics. So we take the first steps into commercial on a go on and with robots in parallel, of course, to the professional range of petrol products and the battery products we have had. And I would also like to point out that what being done in the division that we increasingly also build up resources, which are dedicated for this space to support this space. So it's a very nice case. There are some 100 of these software systems already out there. And at this point in time, we are at least ahead of the competition. These things change. So that's good news. Moving over to Gardena and actually maybe starting the other way around, talking products first. This is another expansion of the robotics space, where we look into smaller robots for what we call city gardens. A lot of the gardens down in Continental Europe are actually smaller and they don't need the surface coverage that the larger units do provide. So there would be a City Sileno launch, which is, of course, compatible with the whole smart system, which is then and containing or entailing then the automatic irrigation and pumps and batteries and other parts, which are connected into the system. And the smart system is really providing a lot of success this year as well along with many other categories. Now coming from the product side, which is looking very positive for Nexia then into the financials, 3% for the quarter of top line growth, good development of the watering. You might recall that we had a very strong end of quarter 2 and a good beginning of quarter 3 in terms of ordering, which abruptly ended end of July, but at least that supported the growth quite nicely. No other division is as sensitive to the seasonal variation as Kardena. Kardena really is in the midst of it. And you see that, of course, with the SEK 1,000,000,000 now and year to date of SEK 5,000,000,000. So SEK 50,000,000 became 62, 5%, the increase to 6% operating margin, good development. And if you look at the year to date, pretty nice development then with a 9% on one hand and EBIT level then increasing 21%, margin wise also pretty good improvement as you will see quite nicely. And beyond then reverting back a little bit to forward looking statements, Beyond the product side, we also press ahead with the geographic expansion. We have went into U. K. This year. We are also continuing on that path from the retail space into the garden centers to with an increasing pace. We are also looking into Eastern Europe and expanding that as a couple of examples. So there are many components here, also some channel aspects, which do play into the cards, which makes us upbeat also about the prospect for next year. Consumer, a little bit disappointing top line 9%, but not really related to North America, but rather to European space. This time, we normally talk a lot about North America, but now we talk about Europe. A little bit disappointing, I would say that a quite cautious retail stocking pattern during the quarter in Continental Europe. And that was the geographical mix didn't play pay us well into the cards with Europe taking that hit. With the volume of 9% loss, we actually had a little bit of a deterioration on the operating income from minus 80% to -94. So the cost reductions that we are undertaking and efficiency improvements did not fully balance that. And there is also some raw material pressure that starts to makes its enrolled into the consumer space. The U. S. Space continues really to remain competitive. So Monday morning, we made the release about stepping back from 1 of the big retailers, SEK 1,000,000,000 of sales. And of course, that has an impact on us for next year. So if we look at the rolling 12 month of minus €89,000,000 here, that might be a proxy also for what could be realistic next year. So sideways moves is probably realistic for us, because it is tough to compensate even though that might not be a high margin account, it is still, of course, a loss of contribution and you will need to take action to adjust to that. So if things are going well, a sideways move, it could be a slight decline towards 2017, where the rolling 12 month can be seen as a proxy. I hope I'm reasonably clear on that. From that point onwards, we revert back to the statements of a yearly improvement 1 to 1.5 percentage points. But I also want to be clear here, this is cash accretive. We are not burning cash with this. And we have taken all this margin improvement of the group despite not having any contribution from the consumer brands division from an EBIT point of view. So I don't think you should really look upon this as a problem for us to reach the margin target of the group of 10%. Want to be clear on that. But it is nevertheless, of course, a disappointment for us that operating income improvement trajectory is being delayed. That's not beat around the bush about that. That's, of course, the case. All right. New products, quite some few actually that's coming into the market as Listix next year. We're talking about the weed eater products, McCullough, Poland, Pru, which is pretty much same thing, but in different regions. We are putting battery based products onto the Jons Red brand and we are extending the Flymo range. Also quite satisfactory for us was that we got an innovation award at the Lowe's a couple of weeks ago, which we are quite glad to see, of course. So some good stuff on the way in. We'll let revolutionize the situation for Next Gen? No, as you heard, but it is important that we actually bring in innovation to these brands and fill them with life to a larger extent. That's the only way we can succeed over time. So I think the message is clear. Moving over to construction, a good story. Sales up 25%, that very much driven by Pullman, Ermator and HTC, but the underlying organic growth being some 5% here. A fairly broad geographical and product category expansion of the sales. And also we see pretty good results development and by remembering the €50,000,000 that we have burdened the EBIT with here. So excluding that would be €193,000,000 versus the last year of €155,000,000 Good year to date numbers, 19% as sales increase, currency adjusted and some 22%, including the restructuring would be 34%, if we would exclude the restructuring on the operating income line here. So we are quite glad to see that and it really proves that our ability to develop the surface prep area with our own capabilities with Polman and HTC in a combination. Good. With those comments, I'll leave it to Jan to go through the financials into more detail. Okay. Thank you, Kai. Some number crunching then. Starting up with income statement of the Group. As Kai pointed out, we have a seasonally weak half year and that in combination with the fact that we have been investing for profitable growth and added on our cost base gradually in the last years makes it, of course, difficult to show substantial financial performance improvements in a limited quarter such as the 3rd quarter. We had an operating income of SEK433 million, which was in line with what we saw last year, where we saw increased volume, positive FX effects of some SEK 40,000,000 and efficiency improvements impacting positively, but those were offset by restructuring costs, the €50,000,000 we talked about for construction, higher cost for profitable growth investments and then a negative raw material effect of EUR 30,000,000 and that's if you have been following quarter by quarter, you can see that that is starting to impact more substantially now. Operating margin, 5.8%, that is more in line with last year as well. Net sales for the group in the 3rd quarter improved slightly in nominal terms, but were up 4% currency adjusted, where we saw then all 3 divisions in profitable growth improving their net sales, supported then also by the sales from our required businesses in Construction division, whereas the lower sales in consumer as you heard was related to mainly then Europe. For the 1st three quarters, we see a more pronounced increase of currency adjusted sales, some 7%, Strong organic improvements once again then in our profitable growth divisions and sales in local currencies for consumer brands more in line with last year. Gross income, if we move further down in the income statement, gross income improved some SEK 85,000,000 in the quarter, mainly then related to positive volume effect and also the fact that we have done a persistent work of improving our product quality and we see lower quality costs impacting positively also here in the Q3. And this was to some extent as relates to gross income impacted negatively then by the higher R and D cost, which is part of our profitable growth investments. FX had in this quarter limited effect on the gross income. For the first three quarters, we see then an improvement of some SEK1.2 billion of gross income, where volume being the biggest contributor to that improvement, together also then with a substantial positive impact from FX. And furthermore, as relates to gross income, we see more limited, but positive development and contribution from the acquisition of Pullman, Hermator and HTC, a positive impact from product mix, improved product quality, which we were into when we talked about the Q3 and also then the efficiency improvements that we have going since many years also then contributing positively to the gross income. And also when we talk about the 1st few quarters, we have R and D cost increasing. That is part of our profitable growth investments. If we move over to SG and A, the selling and administrative expenses, they were up SEK 80,000,000 in the quarter, where half of that once again was related to profitable growth initiatives and activities and the other half was the €50,000,000 restructuring cost we took for construction as well as the SG and A we have added on with that acquired companies as such. FX on SG and A in the quarter was positive, in decreasing then the SG and A. When we go to year to date, we see an improvement or increase of the SG and A cost of some SEK 700,000,000. Once again, big part of that is additional cost for profitable growth investments. But here, we also have a negative FX and if we take a look on the year to date numbers. And also then another big part is the construction restructuring as well as the add on of more SG and A costs when we have been buying these 2 businesses in construction. Also somewhat higher logistic cost, of course, as a consequence of higher volume and inventory levels. So coming down to operating income, once again, 3rd quarter in line with last year, but a substantial improvement, SEK535,000,000 if we talk about the year to date figures to SEK 3,860,000,000, where we had currency impacted positively. And as you can see, a margin of 11.6% compared to 11% last year. Financial net, somewhat lower than last year or better, less negative, so to say, and that's related to currency effects. And if we take a look on the 1st 3 quarters, we have higher or worse financial net and that is related to more average net debt in combination to interest rate differences on financial instruments. Net income for the quarter in line with last year, SEK 210,000,000, but for the full year, we see an improvement of some SEK 375,000,000 to SEK 2,600,000,000, giving a net margin of 7.8% and earnings per share of SEK 4.52. Moving over to the balance sheet. Now we are that was partly offset by a decrease in consumer brands reflecting their lower demand. Trade receivables similar level in local currencies as last year negatively affected acquired businesses once again, but now we start to see an improvement of our capital efficiency impacting trade receivables. So that's why they were more or less at the same level as last year and trade payable some SEK475,000,000 higher than last year, reflecting the higher volumes than in profitable growth divisions. That meant that our net debt was slightly over SEK6.4 billion, which is the same level as we saw in September last year. We made 2 acquisitions of SEK 1,600,000,000 together and that has then been compensated by the improved cash flow for the 1st 3 quarters. We have lower net pension liabilities and also we have an FX effect on the net debt related to dollar. In the Q3, net debt decreased by close to SEK 1,200,000,000 and that is sort of the normal seasonal pattern. If we move over to operating working capital and start to talk about our key ratio operating working capital in related to net sales, which is one of our 3 financial targets that should be under 25% of net sales measured at year end. We see an improvement here in the 3rd quarter, down to 26%, reflecting then the combination of somewhat lower operating working capital and higher sales during the quarter. And if we move over to the cash flow, You see which you already have seen the seasonality pattern we have, where we unwind the working capital from the Q1 in the second and in the third quarter. For these first three quarters, we had an operating cash flow adjusted for acquired businesses and investments in financial assets that was over SEK2.6 billion, that is an improvement of SEK600 1,000,000 compared to last year, mainly then related to the improved earnings and also to somewhat improved operating working capital efficiency, whereas the somewhat higher CapEx reflecting then our investments in the profitable growth initiatives impacted the cash flow negatively. And in the Q3, we had a cash flow of above slightly over SEK1.1 billion. That meant also that one of our key ratios that we are following to be able to fulfill the ambition to have an investment grade company, the net debt to EBITDA improved. And it was rewarding to see that we were able to actually absorb the acquisition of the SEK 1,600,000,000 construction division, maintaining the net debt at SEK1.6 billion. And of course, this key ratio with improved earnings becomes better. So we have been moving it from 1.7 times in September last year to 1.5 times this year. And of course, also the effect of the improved earnings are impacting our profitability measures and ratios here. Both return on capital employed and return on equity are improving with 1.5% to 2 percentage units compared to September last year. And all financial key performance indicators are moving in the right direction. But if we impact of the increased sales. So if we then start to look at the capital efficiency as such, we can see that we have been improving and we have been decreasing the number of CTC days, the cash conversion days with 4 days more or less here in 2017. And we are now down to slightly over 95 days. And ending with the average number of employees, we can see with acquisitions with increased volume and higher ambitions, we are now starting to see the turn of the curve, so to say. We have experienced reductions, but now we see increases of full time employees. We were over 500 full time employees more compared to the 1st 9 months last year. With that Kjell and the number crunching session. Okay, Jan. So summing up, what we think is by and large a good quarter and definitely a very strong development in the year to date. And I'll leave it open for the Q and A session with those brief statements. So let's open up for questions from the floor here in Stockholm first, if we have any. Stefan Hahn on Nordea. A question related to long term growth initiatives. Going into next year, do you see the level continued new to go up? Or are you at a level you want to stay at now? I mean, we are, of course, always subject to seasonal and weather impacts, business cycle impacts, etcetera. But the run rate increase we have of the rolling 12% or the 5.4% for the profitable growth divisions where we actually assign these cost additions to grow quicker. We expect I think it's a good I said it briefly. I think it's a good level we are at now, the 5.4% is a good proxy for also 'eighteen year, always with variations. But I mean, we have increased the pace. I don't see given all the good stuff that is underway that we have reason to be pessimistic about that. Actually, we are optimistic about taking the top line for those divisions. And another question on raw material. At current rates, what kind of impact do you see on EBIT for next year? Well, we as you can see in the report, we are talking both FX and raw materials. And as I said, we have seen a continued increase or negative impact of raw material that will continue into 2018. We will see a slightly positive impact from FX and a more substantial impact from raw materials. So the best guidance we are saying today based on what we see right now, of course, is around €100,000,000 to SEK200 1,000,000 of negative effect. But of course, that is with the current prices, etcetera, that could change. Okay. Johan Eliason, Kepler Cheuvreux. The last time you lost the big volumes like this in the CB division, which wasn't CB at the time, it sort of equated around 20 5% of the turnover and it took you many years until you sort of got back to breakeven, which was basically in 2016. Now you lose another 10% of this volume. Is this equation still valid that this sort of division is giving scale benefits for the other divisions? Shouldn't I mean, from an XLR calculation point of view, just keeping the rest, you would have a group margin target of 15% rather than 10%. But sort of have you are you doing that calculation again? Do you still need the upscale benefits of the consumer brands division? Fundamentally, we the reasons are the same. There are synergies. There are scale advantages. I mean, from a strategic point of view, it's also an important thing to be active in the retail space and taking the fight in the retail space with some of the competitors. So strategically, the rationale has not changed. Operationally, I don't think we need many years for it to get back. But of course, we have a 1 year move now sideways, which could actually and I also need to be clear, it could be slightly negative versus 2017 due to that fairly large volume, because we don't see realistically that we have an opportunity to compensate that €1,000,000,000 in the shorter period of time with other customers. So it is a bit troublesome, yes, but fundamentally, we will fix it. It takes more time than we expected and or ideally would like to see. So we have the sideways move and then we have the gradual improvement from 2018 onwards. And I think also the statement about the increased pace of innovation being pushed into this division and the product range to increase the competitiveness, given that we also worked quite hard now on the cost side of the more traditional product categories like the tractors, etcetera. You mentioned that this would sort of be cash positive for you, but shouldn't we expect some sort of restructuring charge coming because of this volume drop? Or will you just sort of improve? Let me put it this way. I think by the announcement quarter 4 latest, we will know all the details about that. At this point in time, I have a bit of a difficulty to say that it will be there or it will not be there. What I can always see right now is we believe we can do without one off costs adding to it or burdening it for 2018. But I cannot be perfectly confident in that statement yet. I need some more time to go through the alternative volume developments and that we need that quarter pretty much to be clear in there in response to your question, Johan. Yes. And then just a final question on this topic. You're also in the Board of Electrolux and you talked about credit being one of the issues with this client. Shouldn't Electrolux take the same decision? I have no opinion or reason to talk. I mean, I have no reason to talk about Electrolux here now. I mean, what I said was three things. I said the future prospect, our commercial firms, I. E, prices and credit aspects, that in total didn't play out for Husqvarna. That's the only thing I can talk about. I think you realize that one. Good. Then just coming back to the details. I understand you're positive to the positive to the placings on Husqvarna Gardena. How about pricing versus this headwind from currencies and raw materials? What do you I really didn't understand the question, sorry. How does the pricing development look visavis the headwinds are facing from raw material? You mean out on the market? For you in the following season, how do you see that? If I kick off and you might jump in there. I would say we normally talk about that we have a stable pricing, meaning interpreting that as a flat or slightly improving price over time. I think that's true for the Husqvarna brand division. I think it's true for Gardena and Construction. Consumer has a tougher time in the short term phase. So then it might be one component, which we need to offset with other efficiency measures. Robotics, you have talked Robotics, you had talked about how big your share of the Husqvarna division, getting another division was it in this season? I think what I said before was a group number. I said that the battery based and the robotics pretty much represented 10% of the group revenues. I think that was the statement I made. And if you add that with another statement I made, which is growing with well about 20%, you realize that 10% is changing to something which is 12% or better. So I think that's the way I can explain it and refer to it, I think, with the best relevance. I don't want to be more granular into the specific divisions. But what you heard me say here is, we are expanding the ranges into new applications like the commercial lawn and garden. We are also targeting the smaller gardens. And you will see further expansion of robotics. There's no reason to expect neither robotics nor the battery based products to have a diminishing growth rate for the next years to come, but rather expect something similar. Operator, can we open up for questions from the telephone audience, please? Thank you. We have two questions on the line. Your first question comes from the line of Rasmus Ingot of Handelsbanken. I wanted to ask you first about something haven't talked about in a while, the chainsaw chain factory. How sort of how much sales does that contribute to for you now? And is it sort of a profitable business yet? Or how does that look? The chains are actually doing quite well in one aspect. I think what we have brought to the market has top performance. I think it has been recognized among the professionals for that. So great performance, I wouldn't say superior, but really great performance. And we are adding new chains, introductions during the course of 'eighteen into the market. So I think what people perceive here, what they actually get in respect of products is high class, top notch. I wouldn't overstate that the profitability addition from the chains yet. We need to scale up volumes further before that actually becomes the case we expect it to be. So in the numbers you've seen, it's not you cannot really add any EBIT increment from the chain factory yet and the chain manufacturing. It will come eventually, but I think you need to have patience with us for another couple of years when we have expanded the range and the total quantities a couple of notches further. We are really categoric about not compromising around the quality. So that's where we are. Yes. And then just short term, I mean, Q4, of course, is a tiny quarter for you. And given the costs for the growth initiatives that are at least, I guess, partly fixed, we should expect the margin to be down also in the 4th quarter, right? Is that what you're saying? I think we had a quite good development in quarter 4 actually over the 3, 4, 5 years now, 5 years. And I think it was down to minus SEK108 1,000,000 last year on some give and take. Yes, slightly over 1, yes. Yes. And I think that's the rough expectation would be that we are moving more like sideways versus last year due to this high investment pace. And then actually the interesting quarter for us, as you know, Rasmus, will be then quarter 1 and 2, where the next is expected to take place, I would say. Absolutely. Yes. And then just finally, this business that you're stepping away from, was that loss making as the division is? Or was it actually having a slight profit? Or how should we think about the business that you actually are stepping away from? I would say it wasn't one of the best profitability accounts we had. But it was scale, but it wasn't profitability as such. All right. Thank you. Thank you. And your next question comes from the line of Johan Dahl from SEB. Thank you. Please ask your question. Yes. Good morning. Johan Dahl here. I was just wondering on the consumer products, certainly appreciate the comments regarding the full year development potentially focusing on products next year in the light of this scale down. But I was just wondering, have you heard any response yet from other trade partners due to these decisions that you've taken? And also, do you expect any response in your other channels from that decision? Secondly, I was wondering, would it be possible to highlight in terms of at what part of the year you're seeing the major challenges in terms of cost absorption from the decline in consumer products? Is that a Q4, Q1 issue or is it a full year issue at least? Thanks. Starting with the first question, the response from other trade partners. No, there hasn't been any reactions that are impacting the business as such. So that's no change actually from that respect. I think potentially even some of them might see that we can have a bigger commitment towards them, if anything. So I could foresee that turning into something positive for us. Then as to the distribution of the impact, I would and you can add to that Jan, but I would say pretty much relating to the season and how that develops, but actually even including a small element into quarter 4. Might be there, yes. But as you're right, since we are producing in the 4th and especially 1st and second quarter, of course, that's when and selling it out. It's the sales that are actually driving the cost, which will then if we are unsuccessful in mitigating that will result in a higher cost per unit. And we should say not only for consumer brands, because we have shared factories with Husqvarna division as well. So of course, if we are unable to mitigate this, it will also have an impact on Husqvarna Division. And that's coming back to how we are put together. So I mean, this is not only a consumer brand problem to handle. It's, of course, a group problem. Okay. Thank you very much. Can I just ask Kai also on you talked about the growth in your growth divisions for the long term? To what extent do you believe the strong season in 2017 is a sort of a comp challenge for the group? What was is it do you consider it exceptionally strong or normal? And second, I was wondering on the Construction division, what sort of payback do you expect on these charges you're taking in Q4? Okay. If I take this, Ceeson, and I'll let Jan take other question. I would say 2017 as a reference for 2018 is nothing particular. I wouldn't overstate the season. Yes, Gardena had a bit of a very strong end of quarter 2 and a good start to quarter 3, but that normally they will have a good peak somewhere throughout the seasons. I wouldn't overstate it as a reference, neither for Gardena nor for Husqvarna brand division actually. Yes. We I think we have said 18 to 24 months of pay off and payback on that restructuring. But of course, you have nothing to compare to because we didn't have HTC and Pullman before, but that is how we have seen the NOK 50,000,000. If I may add to that, I think we're doing that restructuring, of course, to create an efficient back end to be able to accelerate the growth. And you have seen already that they are doing excellent. So I think we have a very good strategic fit with this acquisition. Now we create the operational conditions for bringing efficiency into this going ahead. So we are, I think, very upbeat about even the payback of those restructuring costs. Thank you very much. Thank you. And your next question comes from the line of Jorn Ensign of Danske Bank. Thank you. Please ask your question. Yes. Hi, Bjorn Ensign. I came a little bit late into the call. But on the lost contract, was that the decision you took? Or did you lose the contract as such? No, I would describe this as a proactive decision where we didn't show the interest to participate to the conditions suggested. And you also touched upon the potential impact on Husqvarna division. Have you quantified that in any way or talked about how what kind of magnitude that could have short term? We haven't quantified the impact on the Husqvarna division. What I said is that we will need to have the time period until the announcement of quarter 4 to fully see through all the details. But I don't think you should worry too much about that for the Husqvarna brand division. If I would give you a directional statement right now, don't put in any big numbers in your Excel estimates here for that part. But there might be something, but I'm not sure you will even detect that actually. Okay. Thank you. Then a follow-up on your core division or the growth divisions and you mentioned that we shouldn't expect slowing growth momentum from batteries and robotics as an example. Is that driven by new launches of products, categories or individual products? Or is it a continuation of increasing the regional reach for products? I think that it's a combination of many aspects, One being support from increasing amount of SKUs to this field. So we are actually adding quite a lot. I think I showed at some earlier announcements how we have increased the SKU numbers with 75% in about 2 years period of time. And that pace of new product introduction might not be exactly up to that speed, but still being quite impressive. Of course, we also increasing the penetration, the knowledge of how the benefits these type of products bring for the end users, may that be professionals or consumers. So I think it's a maturity curve as well, where more people actually realize how powerful these products are today. And we've seen that in many regions, subregions and countries, etcetera. And could you shed some light on France, which is, of course, a market where you have been in terms of robotics for some time? And maybe we should see or have seen a big improvement there. Yes. So two perspectives on France and robotics. First of all, it's still fairly immature as a robotics country. So the absolute level is fairly low, but the improvement rate is very high. We had a great year in France in terms of robotics amongst others relating to social media campaigns in the rollout. So and some ambassador type of not a great achievement this year, maybe even twice if I'm referring to the 20% growth rate there, maybe you need a factor or 2 or something to be more accurate. But still, from a penetration point of view of the total market, it's still low. All right. With that, I'd like to say thank you for your attention and wish you all a good day. Thanks.