Good morning, and welcome to the quarter 4 announcement as well as the full year report. You will all be well aware that quarter 4 is the seasonally smallest quarter, and in that respect, not necessarily spectacular, but we think we have some good things to talk about in the next time to come here. I'll jump right into what we think is a relevant summary of the situation. First of all, we have managed to reduce the seasonal loss to half. Reduced it with 50% from SEK 212 million to SEK 108 million. That's a good achievement in itself, but I think more than that, 2016 has been a little bit eye of the needle for us. We had huge currency headwinds, as you're well aware of, and we wanted to take a step change in respect of adding cost to drive growth initiatives.
At the same time, we were making the statement, we will go at least sideways from a result point of view. We were quite challenged, I think it's fair to say, throughout 2016 with it, but we actually did that quite well as you will have noticed, and we managed to consecutively improve the margins year-on-year, as well as in absolute terms, as you will see. Also a milestone for us is the fact that the Consumer Brands Division ended up on a plus for the full year. Well done. We've been battling with this turnaround now for some few years, so this has been quite important to us, and this allows us now to change a little bit the tone and the attitude going forward, being a bit more forward-leaning.
You will get the chance within short to listen to a video recording with Jeff Hohler, who's the President of the Consumer Brands Division. He has to give a more direct flavor than I might be able to radiate to you. Another interesting observation is that the three divisions that are in profitable growth mode, Husqvarna, Gardena, and Construction, actually ended up on +3.3% for the total year. We are in the range that we have defined, which is 3%-5% for those divisions. The board actually suggests to the annual general meeting to increase the dividend to SEK 1.95 per share from SEK 1.65, which is of course a signal that they recognized the good profitability and earnings development. Looking at that, this is the rolling four development since 2013.
You will see the margins having gone from about 5%-8.9% in this period of time. You will see that the absolute levels of the rolling 12 is improving, and you will be aware that these four quarters then are burdened with more than SEK 400 million of currency headwinds. So we are quite pleased with this progress in this period of time. Looking at the financials altogether, we have on the top line for the quarter -3%, not necessarily impressive in any way. You will hear some comments about the winter season kicking in a bit late in North America, as well as sell-in for Husqvarna Division. But again, I wouldn't really spend too much energy on that -3% for the quarter. Much more important is how we see this going ahead.
Staying within 2016, you can then see, excluding the items affecting comparability, the -SEK 212 million becoming -SEK 108 million, which we think is a good step. To the large extent driven by cost and efficiency improvements as such. The full year came out on the top line flat-ish. Of course then with the big mix then between the Consumer Brands being in a negative territory due to a couple of different aspects that we come back to, and other divisions being in +3%. Altogether, again, excluding items affecting comparability from last year, Q4, the close to SEK 3 billion became SEK 3.2 billion EBIT. Good step ahead, which we are very pleased with given the reasons I mentioned with the FX and the step change in cost additions to drive growth activities.
Husqvarna Division had a good stable quarter in Europe, offset by a decrease in North America. Again, I would say the winters kicked in late, but also the sell-in for the season of 2017 was a bit delayed, so -5% for the quarter. Let me be very clear. We have no reason to extrapolate that beyond the Q4. We are in good faith that for all three divisions here, Husqvarna, Gardena, and Husqvarna Construction, that we will be in the span of +3%-5% that we were communicating at the Capital Markets Day in September. Still, the earnings was okay and again, driven by efficiency improvements. Actually, the FX turned positive. Jan can come back to that a bit, but it turned positive in Q4. Still we had some burden, of course, from the growth initiatives as such.
I would like to draw your attention to the fact that on the year basis, +2% on the top line, result-wise, pretty much a wash, but then having absorbed SEK 250 million of currency headwinds. From that perspective and the growth activities, we are quite pleased with the development. We talk a lot about robotics, normally during the springtime, but I think it's worth mentioning also that we are reinforcing our cordless range, the battery-based product. There has been a lot of launches done actually throughout the year. For the whole group, if I look at it, we have increased amounts of SKUs being at the shelf of our customers and dealers with about 50%. It's quite a significant increase of that product range throughout 2016. That will continue that pace of adding new products to the cordless area. Very strategic.
The most significant one, I think short term that's going to come is a consumer-based series, the 100 Series, that will be launched at Lowe's later this spring. Gardena, -1%, and again, this is a very small quarter, it's 10% of the yearly sales, don't get too distracted. I would say it's a wash the quarter as such. A bit burdened again by a lot of the ambitions we have connected to the geographic/channel expansion and the huge R&D efforts that we are putting in there in the quarter as such. If you look at the full year, I think that's a relevant number to look at, is +8% top line. It's a very good year. I would say also, considering it's an average weather in the peak season, you will recall that 2015 was a fantastic year weather-wise with an extended season.
We didn't see that in 2016. Actually, the end of the season was fairly weak, which meant that the inventories in the trade were pretty high going out. That will also have a knock-on effect into quarter one for Gardena. Again, we are upbeat and optimistic about the full year, again, for 2017 for Gardena, but quarter one might look a bit flattish because of the fact that the end of the season was weak. There's a lot of expansion going on, both in terms of products as well as channel penetration and geography, for that sake. We feel comfortable about that as well. Gardena absorbed some SEK 70 million of FX headwinds in that number. Don't forget that when it looks pretty much flattish, that's a good achievement given all the rest that they have done.
A lot of, I think there are some 60 new products being launched for this season, so high pace of product innovation and new products to the market.
I'm Jeff Hohler, President of Consumer Brands Division at Husqvarna.
Yeah, kick off.
I'm Jeff Hohler, President of Consumer Brands Division of the Husqvarna Group, I will spend just a couple minutes talking to you about both 2016 results as well as 2017 updated projection. In 2016, I'm proud to announce that the division found its way into the black relative to EBIT profitability on the heels really of three things. One of those was our continued emphasis in profitability gain out of cost out initiatives and operational excellence. The second one was better than expected profit improvement out of our European business unit on the heels of many broad-based profit improvement efforts. The third one is a bit of an extended season in the second half of 2016, which helped us get better than expected profit improvement in the second half as well. This puts us in a good position relative to how we jump into 2017.
We continue to emphasize as a division the concept of value over volume, the business now becomes a bit more forward-leaning relative to at least an expectation that we will start to see some profitable growth come back to the business in 2017. We believe that we can generate low single-digit net sales growth in 2017 and then accelerate that top-line growth in 2018. In 2017, we've got a few initiatives underway ready for launch that we believe will start to contribute to our return to growth. One of those is the launch of the McCulloch ROB, which is the division's first robotic mower launch in Europe. We have several cordless battery initiatives underway ready for launch in 2017 in the spring season, as well as an emphasis on regaining share in the zero-turn mower market, especially in North America.
We think these things will lead us to that return to growth and beginning to kind of lean in on the business again in 2017. What that brings us to is a better overall EBIT profit projection for 2017. Starting from a better than expected jumping off point than what we were projecting in the fall of 2016, we feel like the business is still on track to achieve its 5% stretch EBIT goal by the end of 2018 and now has to lean in to that pivot towards profitable growth. Thank you.
Give some flavor how Jeff talks about the situation looking at the standardized slide here. The quarter as such, minus five. Top line-wise, still a very healthy reduction of the seasonal loss, as he pointed out, the plus on the full year. This is an important milestone for us because it allows us now to put the turnaround behind us. Even though value over volume, of course, in some way remains a paradigm, it is in a different way. We are not shrinking to the profitable core anymore. That phase is behind us. You heard Jeff talking about low single digits of growth as his expectation for the year. We expect we will continue the good pace of the operational improvements, still, I want to emphasize that the 5% target is there.
It is a stretch target for 2018, but we still find it relevant to maintain, just like we communicated at the Capital Markets Day. -10% for the full year top line, still having improved the result with that much, considering SEK 160 million of FX headwind to it is quite an achievement, we think. I would say very well done, and this allows, as Jeff emphasized, for us to become more forward-leaning then going forward. Not that much of product introductions in the broader sense for 2017. Some good ones, may that be cordless, may that be the robot that was mentioned, but there is going to be a lot more for 2018 coming. Stepwise, we will become more aggressive in the market. Husqvarna Construction had a good quarter, +5%, driven very much by North America.
This is despite the stone industry being still in double-digit negative, which is probably in the magnitude of a 1 percentage point at least for the division. Maybe artificially high improvement of the result, and I want to emphasize we had a good guy, as you could formulate it, in this one-off non-recurring item of pension. I don't know if you're coming back to that or not, but I think you should not put that in the comparison, really, but rather take that off. Still, a very healthy quarter driven by that sales volume, of course, and still we are adding resources for the market and sales penetration. Full year, +4% top line, and of course, a very strong improvement altogether, being close to 14% now. If you look at excluding the items affecting comparability, 2 percentage points of improvement for the full year.
Quite a satisfactory level as such. I'd like to draw your attention to the acquisition that we now closed during the course of January, of Pullman Ermator. It's a sales of SEK 300 million magnitude. With their profitability-wise over the Husqvarna Construction average. We will come back with more details in connection to the Q1. This is a strategic acquisition for us. I think that's how you should look upon it, because we are producing a lot of dust and slurry with our products, may that be the grinding equipment, may that be the power cutters or other things. With this capability of Pullman, we can develop solutions for the whole thing here, including the dust and the slurry part. Regulations for working environments are getting a lot stricter. There is a good macro support here for us going ahead.
It's a bit of match in heaven in the sense that this is a market leader, a product leader in this area, in the high-performance part of the market, just like we are in the high performance. If you look at the whole Husqvarna Construction space, it's fairly fragmented still, and it really favors high-technology, high-performance actors like us. We think we can grow the Husqvarna Construction business and really give it over time now a higher share in the Husqvarna Group as such, and where we can utilize the strengths we have. Obvious synergies, of course, in terms of product range, as I mentioned, but also equally the opportunity to utilize the reach we have in our sales network. Remembering this is a small organization, so they can expand the reach quite significantly through our task ownership.
We are already at the World of Concrete, which is the largest exhibition within the construction space here for concrete, that was held in Las Vegas beginning of the year, and demonstrated some new five Husqvarna products that we have developed in a short period of time together with Pullman. We are going with dual product lines to expand that the quickest way we can. It is usually important for the surface preparation area, where you actually grind and polish concrete floors that previously have been painted with epoxy and other things. More efficient, consuming a lot of diamond tools, by the way, which we also provide. It actually adds up very nicely, and that's an over average growth area of the construction product space as such. We think there are going to be very tangible synergies in this area.
With that, I will leave to Jan to make some comments on the financials more in detail.
Thank you, Kai. Yet another quarter, as Kai said, that was better than the corresponding quarter last year. From a currency perspective, quite a turbulent quarter with U.S. presidential elections and the aftermath of that actually putting pressure on the Swedish krona and depreciating in general the Swedish krona and an appreciation of the dollar. As a result then, and a consequence of the weaker Swedish krona, the forecasted negative currency impact for this fourth quarter was actually turned to a positive one, a small positive one of some SEK 15 million. Of course, supported the underlying improvement of some SEK 100 million, going from minus SEK 212 million, excluding items affecting comparability, to minus SEK 108 million of loss for this quarter. Net sales, -2%, but currency adjusted, local currency, it was actually -3% in the quarter and flat-ish in net sales for the full year.
Gross income in the quarter continued its path of improvement, increased some SEK 275 million compared to last year. This time, then positively impacted by the currency on gross income, and a continued focus on efficiency improvement and cost out activities that affected both direct material and value added in manufacturing production in this fourth quarter. That was partly offset in gross income of our ambitions, our high ambitions that impacted R&D costs negatively. For the full year, we are talking about a gross income improvement of some SEK 800 million. Once again, the big contributor there being the efficiency improvements, and for the full year, it's more related to direct material. The mix was positive, as we see the profitable growth divisions, the three divisions in profitable growth, increasing with some 3% currency adjusted, with higher margins than average.
Consumer Brands unfortunately losing 10% of their demand, doing an excellent job, due to the fact that we get this mix effect, this is contributing positively on gross income. Product mix impacted positively as well for full year, related to the robotic mower sales and the improvement we've seen there. Price also impacting positively on gross income, these improvements were partly offset by the currency headwind when we talk about the full year. SG&A for the quarter, up some SEK 175 million due to FX currency and additional costs for growth activities that we have loaded into the income statement here during the whole 2016.
If we take a look on the full year, we're talking about an increase of SG&A cost of some SEK 500 million, the same explanation, more or less half of it to FX and the other half of these additional costs that we are putting in for growth activities. Operating loss minus SEK 108 million, looking at the operating income, it's a plus of slightly over SEK 3.2 billion, an increase of close to SEK 240 million compared to last year if we take the line excluding items affecting comparability, which was SEK 2,980 million. Giving an operating margin of 8.9%, 0.7 percentage units better than last year, currency, as Kai mentioned, impacted here in the full year of some minus SEK 430 million. Financial net continue its path of deteriorating.
It was minus SEK 15 million higher this fourth quarter than last year with the same explanations we have been talking about the whole year, i.e., that it's a higher interest cost reflecting the higher interest rates, mainly related to the USD. That is the same explanation if we take a look on the full year, where it's SEK 80 million higher than last year to minus SEK 422 million. That is both related to interest cost on our borrowings, also on the interest rate differences on financial instruments. This leaves us with a net loss for the quarter of minus SEK 121 million, a plus of SEK 2.1 billion for the full year, a net margin of 5.8%, that is 0.6 percentage units better than last year.
Moving over to the balance sheet, of course, what happened in the fourth quarter, we did that depreciation of the SEK. By that, we got an inflated balance sheet in SEK. Non-current assets, i.e. fixed asset and immaterial assets, increased as a consequence of real estate investments in the supply chain. We're talking about Kawagoe in Japan, Mielec in Poland, as was seen also on the slide from Consumer, Orangeburg. In total, we're talking about investments of SEK 500 million in those three countries, whereof a substantial part happened here in the fourth quarter, which affected both balance sheet and cash flow in the quarter. Investments of four profitable growth initiatives added also to these numbers, currency impacted on non-current assets with SEK 600 million.
If we take a look on inventory, adjusted for currency, we see an increase of some SEK 850 million compared to December last year, partly related to our new production concept in the U.S., you saw it in the slide in Consumer as well. I was talking about earlier start of pre-season production. We have increased the number of fixed employees and decreased the number of temporary employees to have an earlier, longer, and slower ramp-up for the season, and thereby also a lower volume at production peak. That is to get more stable situation around the factories and the workforce, and thereby an improved quality and productivity. Of course, that impacted the inventory here in the end of the year, but also impacted accounts payables, of course.
We also saw a somewhat high pre-bill for the season 2017 outside of the U.S. The inventory was also to some extent affected by the sluggish snow sales in Husqvarna and Consumer. Construction Division decreased their inventory of some 5% after a very successful and very focused year on stock reductions, which was good. Trade receivables ended the year slightly below last year, currency impacting here with SEK 225 million, that was a reflection of the lower demand in the U.S. Accounts payables, I was mentioning that they are, of course, also affected by this new production concept in the U.S. Currency impacted here with SEK 150 million. Net debt for us increased by SEK 450 million to SEK 6.8 billion, being also a consequence of higher provision for pensions, up some SEK 325 million related to the lower discount rates.
Also, of course, net debt were affected by the weakest Swedish krona. Relating to this construction, SEK 25 million of positive impact in their EBIT in this quarter. It was related to IFRS calculation, I will spare you the details and technicalities around that, but it was related to an operation that was sold during 2016, where we, when we calculated the persons involved in the scheme for pension, according to IFRS, we got a positive effect when they left the company. Moving over to cash flow. Normal seasonal pattern as we see every year, so to say, where we have a start of a build-up in Q4 and a strong build-up in Q1, winding of the working capital during second and third quarter, that was valid for this year as well.
It was for full year, close to SEK 1.7 billion of operating cash flow or cash flow. Despite the higher CapEx, we were into that with some SEK 500 million more than last year. Some SEK 200 million was related to our Orangeburg footprint project, those were actually forecasted to impact the beginning of 2017, but impacted now in the end of 2016 instead. That's why we're deviating a little from the forecast we have said earlier, SEK 1.6 billion is more one, like SEK 1.8 billion of CapEx this year. It was good because it meant we were earlier on, and we could actually start to use the facilities and the logistics center earlier. Higher CapEx was compensated by somewhat lower increase in working capital, despite the negative impact of the new production concept in the U.S., that was due to also the better earnings.
Higher financial net and taxes impacted negatively as well. Our ambition is to have financials reflecting an investment grade-rated company. One important parameter to fulfill that ambition is to have strong earnings and cash flow from operations in relation then to our net debt for the group. We have, since 2014, a target stating that we should be below 2.5 times, and that we have achieved the last years. As the earnings then have improved and the net debt been decreasing, of course, the ratio has been better, and we are right now just below 1.7. Of course, for us to have this margin to indebt ourselves is important now when we are entering into a phase of growth in three out of our four division.
Talking about rating and ambition of investment grade, after running a rating process, we have now got an official rating with S&P, which have also been made public yesterday. By that, our ambition to have an investment grade rating gets an immediate benchmark also with an outlook, that creates a higher transparency around the company and also a higher certainty around the company. We have been assigned a BBB- rating with stable outlook by S&P, where the stable outlook then reflects the expectations of at least maintain current level of profitability and continued generation of positive free operating cash flow over the cycle, all according to S&P. Key ratios. We can generally say that all financial key ratios related to earnings are showing positive trends, such as return on capital employed or return on equity.
Our challenges are more related to the capital efficiency and especially to our operating working capital efficiency. With stable net sales, the capital efficiency of operating working capital expressed as we use it internally as CCC, cash conversion days, have actually increased two days during 2016 to around 100 days, which is of course a deviation from our ambitions and definitely an improvement area that we are addressing and we'll be even more focused on that in 2017 and onwards as this is one of the three financial targets we have for 2017 and the coming years. The decreasing trend of less average number of employees continued. We were close to 900 less full-time employees at this year-end compared to year-end 2015, and that was mainly a consequence of structure measures that we were taking during the second half of 2015, and also the lower demand in U.S.
By that, Kai, talking about targets and ambitions.
Let us shortly move over to another area of ambitions for us. We have committed to scientific-based targets. This is an initiative of United Nations Global Compact, aims at demonstrating companies' ambitions to share in the green path to maintain the temperature increase below 2 degrees of humankind impact. You can say it's our share of that. The 2 targets we have actually set up is -10% versus 2015 in terms of intensity of CO2. In absolute terms, 33% reduction of CO2 equivalents by 2035. These are the 2 targets we have committed to, and we are talking about reductions throughout the entire value chain, from the suppliers to the use of the products. You will realize that including the use of the products also means we are actually living with the product ranges we have.
That's also why we have an intensity target in the shorter period of time and an absolute target for the longer range here. This is going to impact, of course, throughout the company, and it's a change that is not necessarily new, but it's really important that we bring this to consistency throughout the whole company. It will have an impact, may that be in terms of product developments. You heard me talk about the battery ranges we are expanding. Actually, I want to emphasize, we are accelerating that a lot. That will help, but also the petrol-based products are undergoing new technology to reduce emissions in various ways. Transportation, of course, an important area.
Just to stay with the example which is very relevant right now, the Orangeburg warehouse, we are actually reducing 7 warehouses in the region to 1 adjacent to the plant. We're taking out, to give you a figure, some 330,000 kilometer of transportation with trucks. Just to give a magnitude of what's going on with 1 single change there. We are making also more regional production in order to support it to reduce transportation, and the packaging as such can also be more volume efficient and optimized. Manufacturing, increase of renewable energy sources, and solar being introduced at some sites. Sourcing, including and embedding our suppliers into this. We're starting to audit their efforts because they need to share in here with our endeavors and ambitions. It's a couple of tough targets. We don't hesitate.
We think it's important, as a company with a lot of petrol legacy, we need to take our share of this and stay to the green path. It's a journey. It's very aspirational. We have good activities, but we will need to define a lot more going ahead. With that, I think it's time to sum up the highlights again. The reduction of the seasonal loss to half. The success of 2016, given the headwinds of the currency and the step change of the cost divisions. The Consumer Brands Division being in break even and plus. The 3 divisions in profitable growth. Let me just remind you of what we mean with profitable growth. We're talking about growing 1 to 2 percentage point ahead of the market. That's the aspiration when we talk about profitable growth.
They were at 3. I would say they weren't fully there. I haven't seen the consolidated market data for 2016 yet. That's too early. I wouldn't expect 3% to be fully there. I think it would be on the lower side. It's not fully there, but it's on the way into that range. You have heard me talk about the expectation that we are moving into that range for 2017, 3%-5%. The board supporting the increase of the dividends up to SEK 195. In general, we are confident to take yet another step during 2017 in terms of earnings improvement. I think that's the short version. I guess with that, we open up for Q&A.
Yes. We will start with questions from the floor here in Stockholm. Thank you. Question on currencies. I guess you, as normal, have locked in a lot of your exposure for 2017. You should have a slight positive on 2017. Is that correct? Is the first question. If you can say anything of the recent weakening currency movements for your perspective for 2018, if we would have the same kind of FX situation in a couple of months' time.
Slight positive on currency, yes. I think it's important to understand the 2 effects here. We're talking about still a stronger dollar, even though the dollar has depreciated somewhat the last weeks. Still a stronger dollar than we have experienced in 2016. We have a weaker Swedish krona. We are saved by the general weak Swedish krona, so to say. That is affecting a lot of transaction exposure, but also a lot of translation exposure, since we are translating results and flows in different currencies into Swedish krona.
All in all, you're right, slightly positive. That is where we are right now. Of course, a weakening dollar is good, but the strengthening Swedish krona is bad. We have seen sort of the mix of the both from end of year.
Maybe you can include material.
Yeah, of course the next question will come about raw material and we can say that's a negative, slight negative. We're saying slight negative on raw materials, slight positive on currency, what is the net? Slight positive. It's a little more on currency than it's down on raw material.
2018 is too early to or if-
Well, we have not locked in 2018. We're just starting with that, I would be stupid to say anything about it. Let's see how this play out, because I think we will have a lot of turbulence around currency in this year.
Yeah.
Chris Domingo from DNB. I have a couple questions. First, we can start with Consumer Brands. You said that you started the production a bit earlier than expected. Did that have any effect on the earnings in Q4? How will this affect the profitability in 2017 in terms of seasonality?
Well, we started to produce earlier, and that was not sort of a direct connection with the Orangeburg footprint. It's the new concept we have for working. We would like to have more stability around the workforce. That means that we will have a longer and slower ramp and not a peak as big as we have had to improve quality, to improve productivity. As you know, we are producing a lot and putting in stock, and you cannot realize any of those gains until you sell. That we are doing this first quarter. Of course, we expect this to be a good business case. We expect this to be good on costs and good on quality as well. On the negative side, we will have, in certain occasions, higher working capital as we have at year-end.
No fixed cost absorption effect in Q4?
No, because we are putting those in stock, so we are not selling them.
Yeah. On cost savings. You made a very good job in 2016 offsetting the FX headwinds and also the investment for growth. What are you seeing for 2017?
If I kick off. We made a great job, actually, of improving the efficiency and the cost reductions throughout 2016. That was the base for being capable to balance the cost additions for the growth initiatives and the effects. We expect to maintain a good momentum, not fully as strong as we saw in 2016, but still being very strong. I'm not very specific in that statement, but it gives you a flavor. Nevertheless, we have had some few years now since the start of the AIP program, with the first full year of 2014, 2015, and then into 2016, maybe 2016 being the highest impact on a single year. Somewhat lower, but still at a very satisfactory level.
Part of the lower is, of course, that we have been helped to some extent with raw material this year, and we will have a headwind next year. On this year, actually, 2017.
The growth target for the three divisions of 3%-5%. You seem quite confident that you will achieve this in 2017. Is that supported by listings or that you're optimistic about your development in the market?
What we see fundamentally right now is fairly positive market situation in the shorter term. It's a bit paradox with the political uncertainty that's kind of characterizing the year. Still, it seems to be a fairly good market for the season in general. If we are more specific, there's a lot of those growth initiatives that should support driving that top line, of course. Then on the other hand, as you heard, we are a bit more modest when we're talking about the Consumer Brands. Flat to a couple of percentage points plus. That's the expectation. Yeah, we will continue to, let me be clear about this, we will continue to add costs to support growth initiatives on top of what we did last year.
We will probably be in the magnitude of the same increase this year as a year-on-year effect as we took last year. All with the purpose to really be capable to outperform the market as an average. 3%-5%, as we talked about at the Capital Markets Day, seems to be a reasonable range. Maybe we have reason to be a bit more optimistic about the fundamentals in the construction space, which seems to be strong, not the least in North America.
I think we should add, don't get the hiccup for the first quarter of Gardena. It was an extreme quarter when we start in 2017 here.
Yeah.
It's a tough comparison quarter for them.
I think that's a good comment to make. In the shorter horizon of quarter one, Gardena, that's a load-in type of selling quarter. Given the above average inventory levels in trade, they will probably be fairly flattish in the quarter.
Just a final question. The acquisitions you made, do you have more acquisitions in the pipeline of construction products? You haven't done any acquisitions in quite some time.
In the area of construction, we made the acquisition of DTS a bit more than a year ago. It's a resin bond diamond tools polishing manufacturer, which fits perfectly well together with the Pullman Ermator and the surface preparation area. It adds to the focus we are putting on that, and the momentum we are building for the surface preparation area. Above average growth profitability. That looks pretty good. Of course, we are trying to expand the M&A activity, but again, we don't have the magnitude of the pipeline such that I want to stand here and talk about it. Of course, there are objects in that pipeline, but you need a fair bit to talk confidently about it in a position like this. We don't have that magnitude.
Just to add, CAGR 3%-5% is organic, it's currency adjusted. This is not a growth plan via M&As.
Yep, that's an important point.
Excellent.
Per Lundin. Regarding Gardena, what are your ambitions in North America this year? Organic growth or acquisitions or something else?
Actually, we are working a lot with the geographic expansion for Gardena, but North America is not a priority. We are present through distributors, but not to any magnitude. There will be no step change in terms of their presence. What's more important is actually that we are putting quite some energy into getting into the U.K. this year, which is a bit of a weak spot for Gardena historically. We said we cannot stay out of that important, passionate gardening market, so we need to make some focused efforts over some years to actually build a position there and parity to what we have around the Western Europe for the rest, the continental European position. More of the Latin countries, more penetration up in Scandinavia, and the U.K. is rather on the focus for us with Gardena than the U.S., actually.
Back to the story of different standards being prevailing and dominant there. We can't really get the leverage fully with the core mobile watering strength of Gardena in North America as we can for the rest.
Operator, can we open for questions from the telephone audience, please?
There are no questions over the phone at the moment. If you wish to ask a question, that is star and one, and the hash key if you would like to cancel the request. We have one question from the line of Anders Roslund.
Yes. Hello. Unfortunately, nobody of us on the phone heard anything from the Q&A. I don't want you to important you mentioned here, nobody has heard that. Okay. That was my question.
Maybe we can put something out on the webpage.
Let's see if we can do that, yeah.
There will be a transcript of everything published on our website later.
Okay.
Sorry.
Sorry for that mishap, yeah.
Okay. No questions. No further questions from my part.
Okay.
Excuse me, sir, this is the operator. We are unable to hear you clearly.
Hello. Can you hear me now?
I was able to hear the last thing you said, sir.
Okay.
Then we-
I was saying we will publish a transcript of this conference on our website later.
My apologies, sir. Sorry for cracking.
Okay.
We are unable to understand you.
Okay.
Okay, I guess if that's the situation, if there are no further questions from the floor, say thanks for your attention. Thank you very much.
Thank you.