Earnings Call: Q3 2016

Oct 20, 2016

Just about increasing our emphasis on profitable growth and for 3 other 4 divisions, and that will be the theme for the next years to come. Starting talking about the quarter. So the first commentary and bullet is pretty obviously the continued trend of improvements that may be applicable and valid for the margin as well as for the absolute result levels. If by then because everybody will be also aware that quarter 3 is not a significant quarter from the absolute size. It's that's quarter 12 pretty much that where the music plays for us. And then 3, a little bit positive and quarter 4, maybe a little bit negative. But if you look at the full year, I should say, you have to correct that year to date of the 3 quarters, we have actually managed to outbalance the complete FX headwinds of SEK 450,000,000 give and take and outbalance the additional cost for profitable growth investments and still improve the results. I think that's a pretty good achievement. And at least we are pleased with that. We have also seen for the year to date that the season so far has been positive in respect of priority areas such as robotics, battery based products, smart garden launch in Continental Europe, which will be expanded later on into other geographies. And we talked about at the Capital Market base new financial targets that will be applicable moving into that profitable growth phase. Now looking at the margin, which has been the theme for us during the last few years, we have said profitability first and then profitable growth. We can now conclude that we are up on the rolling 12 months at 8.7%. And this period normally is a little bit flattish, quarter 3, quarter 4. And then normally, we would have the larger result lifts coming into quarter 12. But it's a continuation of the margin improvement that we have talked about and set out as our number one overarching priority. Financially, sales, pretty much flattish, I would say, and still then SEK431,000,000 versus SEK 405,000,000 previous year, equivalent to 5.9% EBIT margin versus 5.5 percent last year. On the year to date, that leaves us with about margin of 11% versus 10.5% last year, EUR 3,300,000,000 versus about EUR 3.2 ish last year. So that's what we talked about. We talked very much about that we will move sideways result wise for this year given the big headwinds and given the investments we are taking in additional cost for profitable growth investments. Actually, the piece. You see the 8.7% here, last 12 months, and you will see also the gross margin improvements. So not only, I should say, both for the quarter as well as for the year to date, you will see gross margin improvements, which are significant. If you look at operating income then, what has affected that the most? Well, it is mix. That's supporting its efficiency improvements, and I would emphasize efficiency improvements in this quarter. Cost for profitable growth activities is burdened like the FX that I mentioned previously. Husqvarna, very much being driven by the good progress in the European markets. So we see that. We are quite pleased to again, we mentioned it at the Capital Markets Day. But to reiterate that we have introduced now the new saw chain, the X cut, which is started up end of August. So it's early days, but it's important for us to optimize the complete same store market and the performance of the system overall. On their side, Husqvarna division, we have a higher EBIT, and we will see it's about EUR 50,000,000 magnitude, driven then, of course, by the volume of 5% comparable currencies improvement for the quarter. And you will see that, that has an impact, of course. And then there also impact also had to balance some reasonably high cost for the growth initiatives. On the year to date, the other comparable currencies up 4%. So it's a fairly solid situation here. Also fitting quite nicely into the range of what we are talking about when we talk profitable growth. Currency is still impacting the result here for the Husqvarna division. So I think it's a strength indication here of the underlying improvement we are doing here. Gardena, we have indicated previously, and it was pretty clear that we had a tough reference. Quarter 3 last year was more or less optimal weather conditions in Continental Europe. So that would be a tough reference to deal with. We are coming in minus 6%. Also, that's still pretty good, and it became better as the quarter went along. And we've managed to outbalance the strength of last year through introduction of new secateurs, hand tools as well as an innovation which we call the fruit collector, which actually has a lot of appeal in the market. And we have sold more than 3x what we actually initially thought we would do. And we were campaigning this product quite intensively done in around Germany. That was very encouraging to see the results of that campaign. Of course, the EBIT for the quarter is burdened by the volume, but also investments then, I should say, additional costs on the profitability growth initiatives. But I think the relevant figure here is to look at year to date on the sales, which is plus 9%, and you will see also that the result is positive on the year to date. So I think we are taking yet another important step ahead, and you see also the margins being pretty strong. If you look at the last 12 months, we are around 12% level, which is pretty good. Consumer had a very tough quarter, too. As you will recall, we were a little bit unlucky in the sense that the weather was turning bad in North America during the peak months of the season, April May. And that caused, of course, a cautious type of behavior from the big box retailers that sit with them on a bit of excess inventory. So they've been reducing the inventories, and we see that the number minus 10 is not necessarily that fantastic, but we saw progressive improvement throughout the quarter. So the weather in the quarter, etcetera, was actually pretty good in North America. So there's nothing to talk about. But rather than we should read it as a reduction of the inventory levels of the big box people, which we also indicated that we expected to happen. Again, they continue the story about improving the result despite the volume decline and the currency headwind. So quarter is minus 80% versus 119% last year, and we think that's pretty good. So margin wise, minus 5.2% versus minus 7%. And that leaves us for the year to date with a margin of 1.7% versus 0.6% last year. And if you look at the last 12 months, you will see minus 0.4 here as a reference. We are approaching the breakeven on the last 12 months, but it's not a given amount to fully get there for this calendar year. It has been the goal, a bit burdened by the season if we might be a little bit off, but not significantly. I think the important thing is that from an activity point of view, we are still progressing in the turnaround according to plan. And we there's nothing that has changed with the direction of being valued before volume, and it's a wide range of cost and efficiency measures that is supporting the improvement. Construction came in maybe a little bit weaker than what we have seen in the last few quarters, adjusted plus 1 on the sales side. North America continued to be the driver of the locomotive of the sales, but at a somewhat lower growth rate. Still in good shape, but it has been extremely strong. So I would say very strong to strong would be an attempt to give some relative proportions to it. What is difficult though for us, that is the stone industry, and particularly Middle East, Latin America is weak. And it's burdening probably the top line here with 2 to 3 percentage units. So that takes its toll. But again, we have improved the result margin wise, 14.9 percent versus 14.1 percent. And leaving us with a year to date now of sales plus 3% and the margin being 13.6% versus 12.2%. So you see a good continuous improvement of what we do, and we're quite pleased with that. We also see that one of the areas that is growing is the surface preparation, which has a lot of advantages in the way that more and more people also choose just to grind the floors instead of putting epoxy on or painting them. So new methods here that fits us very well will support a good demand situation. And the relatively small acquisition we did of DTS, a little bit well, give and take a year ago, has actually reinforced our abilities to provide resin bonds for diamond tools, which helps us do this in an efficient way. Same story when it comes to the operating income and margins or the efficiency improvements supporting the profitability growth initiatives. And we have used the profitability growth initiatives also to reinforce the penetration on the sales in many of these markets. So it's not necessarily new geographies, but rather penetration game as such. With that, I'll leave to Jan to make some comments to the finances. Okay. Thank you. Thank you, Kai. So as Kai went into, yet another quarter much in line with our expectation and as we have seen in your forecast, your expectations as well with the same trends as we have seen all through the years so far, I. E, our operational and efficiency improvements are more than offsetting the currency headwinds and our costs for growth or profitable growth initiatives. So as a CFO, I'm actually happy that this was once again a pretty boring quarter. Net sales for the group, as we said, around 0, flat in the Q3, where we also, this time, increases in Husqvarna division and part loss in construction, taking out the negative impacts from the divisions that were decreasing as Cairo into consumer with a relative start, tough start of the Q3 coming in from the Q2 with unfavorable weather and also the bad value over volume strategy that we have and also by the end of the difficult comparison quarter, the Q3 last year. So all in all then, flat on top line and also for the 1st 3 quarters, flat more or less on top line if we exclude currency or if we just talk about Swedish krona. And once again, in year to date numbers, the 3 divisions in profitable growth are then being offset by the loss of sales in consumer. Gross income in the quarter improved with more than SEK 200,000,000, being then an effect of continued focus on efficiency and cost plus activities, affecting both indirect material and our value added cost in the manufacturing sites. And we also got a continued positive effect from the divisional mix, I. E, we are growing in Husqvarna and Construction with high margins, and we are decreasing sales in consumer brands. But we must also recognize that consumer brands have improved their margins and their gross income gradually during the year and also that we got some positive effect also this quarter from prices. For the 4th to 3 quarters, we have improved gross income of around SEK 500,000,000 despite currency headwinds with more or less the same explanation as I said for the Q3. SG and A in the 3rd quarter, up around SEK 150,000,000 being in effect of currencies and costs for or additional costs for our profitable growth initiatives. And when we take a look at the full year, we are up around SEK 375,000,000 with the same two explanations. So coming down to operating income for the quarter, plus around SEK 25,000,000 compared to last year, up to SEK 431,000,000, up 0.4 percentage units to SEK 5.9 million in this Q3 compared to last year. And when we take a look on the full year, I should say that we have SEK 60,000,000 of negative currency impact from in the Q3 compared to 3rd quarter last year. And we take a look on the 1st 3 quarters, SEK 3,326,000,000,000. That is an improvement to SEK 135,000,000,000. And here, we have currency against us with around SEK 450,000,000. Financial net was higher in the quarter than the Q3 last year being in effect of both currency effects and interest costs. Interest costs mainly then related to interest rates, I. E, for us, they're mainly related to dollar where we have seen an increased cost for us. And when we take a look at the financial net for the full year, the increase is purely related to interest costs. So we have differences volatility related to currency, but when we come to the longer period, it's more or less netted out, which was the same effect as we had last year. Going down to net income, slightly over SEK 200,000,000, an improvement of SEK 10,000,000 compared to last year, giving a net margin of 2.8 percent, full year, to slightly over SEK 2,200,000,000, an improvement of SEK 100,000,000 compared to last year, SEK 3.87 as earnings per share. Moving over to the balance sheet. Currency impact is rather limited compared to last year. When you take a look at September last year, noncurrent assets and excluding currencies is more or less on the same level where we have higher CapEx than last year and also higher CapEx than depreciation, but that is being offset by the payment of Chinese factory that we saw during the second part of 2015. Inventory is increasing. If we eliminate currency, it's increasing around EUR 250,000,000, and we saw increases in all divisions except construction where they had the reduction. And of course, Consumer division is they are negatively impacted by the slow demand, lower than expected demand we had both in the second and in the third quarter and also a slow start of the so called snow season, where we have not sold more or less nothing so far. Going over to receivables, slightly up compared to last year, it excludes currency, whereas trade payables are more or less in local currencies on the same level as last year. Net debt for us between some SEK 200,000,000 compared to last year, being in effect to SEK 6,500,000,000 being on effect then of a positive cash flow being offset by higher pension liabilities and also a currency effect of around EUR 300,000,000 EUR 250,000,000 compared to last year being in effect then of the revaluation or the valuation of our debt. And if we take a look on the net debt development from the start of the year, we have a negative impact of currency around SEK 350,000,000 and of course, dividend being paid and also higher pension liabilities from year end, but that was partly then offset by the cash flow. And talking about cash flow, moving over to that. You can see that the seasonality pattern of a buildup of working capital in the Q1 and release in that in the second and third quarter is also valid, of course, this year as well. Operating cash flow adjusted then for diluted assets were close to or slightly over SEK 2,000,000,000 this first three quarters, and that was an improvement of some SEK 500,000,000 compared to last year. And this was related to improved earnings and also decreased working decreased need of working capital, whereas we saw also the somewhat higher pace of capital expenditures and that we expected for the full year 2016. It's happening, and that is reflecting our profitable growth initiatives. Our ambition is to have financials that are representing or reflecting an investment grade rated company. And one important parameter to actually fulfill that ambition is to have strong earnings, the cash flow from operations and, of course, have a net debt that is decreasing. And by that, of course, have the trend you see in the picture. We have a target on this. It was launched in 2014. It is at least should be less than 2 point 5 times net related to EBITDA. We have been that 42 last year, and presently, we are down to 1.7% and of course, being in effect of improving earnings and reduction of net debt, the combination of that. And of course, to have this margin, it's important for us because it means that we can invest ourselves when we are now moving into more of growth phase for 3 out of our 4 divisions. Key ratios, you can see also here the impact and effect of improved earnings and that will continue to improve and impact our profitability in general positively, both return on capital employed and return on equity are improving with 2% and 1 percentage units, respectively, since September last year. All financial key performance indicators are showing positive trends, except operating working capital, which has increased since last year. And with a stable net sales, the capital efficiency of the operating working capital as we used to we are using internally, expressed as CCC based, the number of days to turn the total operating working capital around, onetime, has increased now with 2 days in fixed fee currencies. We are now close to 100 days. And this is a deviation and, of course, also an improvement area that has to be addressed, not at least as we intend to grow. It's also part, as you know, of our newly established financial targets for 2017 and onwards. And last, down here in the column, you have the average number of employees. And as you can see, we have a trend of decreasing number of employees, full time employees, and that continued. We were some 1,000 less full time employees this September than September last year, and that is mainly as a consequence of the structure measures we took in the second part of last year and also then, of course, reflecting the demand we had in the U. S. By that, Kai, I think it's time for you again. Yes. Thank you, Jan. So just very briefly going to a little bit the key message from the Capital Market Day. We talked about profitable growth being our next step, and we made a little bit summary along the lines of, yes, we have, in fact, delivered significant profitability improvements the last year. Yes, we actually have a customer focused organization, an empowered organization and approval concept now being installed since 2 years. And you have heard about the 3 divisions being in profitable growth, respectively, consumer billing as a profitable core. And we have actually taken quite some significant costs supporting this, injecting the momentum to actually get this going. And it's also our intention to continue doing so for 2017. So we foresee that we will have the strength from operational improvements to again put another level of, let's say, profitable growth investments on top of what we have done this year, next year and still take a significant step ahead with the results. And of course, as we do move into profitable growth, innovation will become even more important for us as a team going forward. So we have worked with the profitability first, and now we are at the turning point moving into profitable growth. And how do we define that then? Well, actually, we are saying that we want to outgrow the market with 1 to 2 percentage points, and the market as an average is 2% to 3%, with huge variations. So I need to be clear on that. I mean, if you look at walk down in petrol lawn mover, there is very small growth numbers. But if you look at battery based products or robotics, you will have fairly high numbers. So huge spend, but the averages are a bit lukewarm, and they look like they do. So market 2% to 3%, and we say outgrowing that. And as a consequence of that, we expect to have a continuous improvement of the EBIT margin. That's the definition. And if you look at the targets then as the last slide before opening up for questions, we talk about margin being equal or larger to 10% for the coming years, not being specific about whether we are talking about 2 or 3 years, but in the next period of time. We're talking about growth for the profitable growth divisions according to definition I just mentioned being 3 to 5. And we heard Jan talking about the capital efficiency being the 3rd target being more important moving into this phase now. So with those comments, I'll leave it open for questions. And we will start with questions from the audience here in Stockholm. Bjorn, Yanas from Nasty Bank. Questions on discuss this at the CMB, of course, but if you can give some your view on your continuous investments and how we should look upon investments in terms of sales? Should that decrease if we look ahead a few quarters or in the next season, or do you see that it continues to expand with sales or even at a higher sales? If you look at CapEx, I think we are not making any larger changes. In that respect, what we're talking about investment is rather in terms of cost additions. I mean, OpEx. OpEx, correct. So that's what will happen. We will probably see additions of significant absolute numbers like we have had this year, but being counterbalanced by the efficiency measures. So what you see here is, of course, the net change for those 2 combined. And we don't as I said before, we don't want to be explicit about any other because we feel we get too deep into the details, if we do. But basically, if you're seeing continued margin gross margin expansion and higher Yes. I think that's a fair expectation. And if you can shed some lights on the launches that you're planning for consumer brands. Are consumer brands back to growth? So still some volume? So then the overall expectation for consumer brands is that we will level off, We will take the curve, we think, during 2017, so a fairly flattish type of expectation on the top line, whereas we expect growth to come rather in 'eighteen. And that will be supported amongst others than by product introductions, to some extent, taking place next year, to a larger extent, being supported by introductions into the early season of 'eighteen. And we are in the consumer space working with the yearly cycle. So very much the scene for 'seventeen is set. But there are new battery introductions already for 'seventeen. Yes, there is a robot Nova being introduced. However, for the 1st year, we don't see that being significant in the overall numbers. But it will start to give a clear more clear contribution into 'eighteen and beyond. More selective launches. I would say, we will launch it at quite some few places, but still it takes time to gain the traction with a new brand in this space. We see Gardena has made a fantastic journey on the robotics movers and is, I would say, ahead of the market growth the last couple of years. But you need to build the momentum. The exponential curve is a bit slow at the beginning. Then final question on the ex cathode or the chain, source chain. Did you say it was a little bit too early to really get the feeling for how that launch is developing? Or what did you say? I think what I tried to articulate, maybe not fully successfully, is that the launch is a success from a performance point of view. The performance is good on the chain. However, limited quantities and I'm seeing we actually have launched 1 in a select geography, a chain type. So it's first step in a journey of many, so to say. And hence, I don't want to leave anybody with the impression that what we have done so far is really going to turn anything around on a larger scale on the P and L aggregated level. So but it's a contribution that will help us move into a positive development over a period of some years. Will there be a major launch? Or we should be a little bit afraid about saphen when volumes hit the plant? No. It would be a very successful ramp up, an addition of more chain types, increased pace of the plant. But I'd rather de dramatize it. That's what I'm trying to articulate here. So it will kind of move its way into the P and L and give contribution, but from modest levels to start with. Thank you. Thank you so much for taking the question. Actually, Salvema from Carnegie. I have 3 of them. First on the stone segment in your construction division and that segment has been quite weak for the past 3 quarters. Why are you in the cycle to the field? Is it still dropping quite heavily sequentially? Or are you levering off sequentially? Just understanding. So the store market is a burden for us, as I mentioned, very much and driven then by the situation in the Middle East where demand has decreased radically, Latin America and Brazil, same story. And that's where we are suffering the most. And beyond that, we are actually a little bit potentially, I should say, mispositioned with the customerization we have had in Latin America, exporting up to American market, which is still healthy, that has shifted somewhat. So we are trying to expand our customer coverage for that part. So that's a little bit the demand situation. So has it bottomed out yet Sequential, as you ask. I hope so. I hope that it really has. But I don't see a sign of an imminent recovery either. So I would rather than, if anything, project this being a slow recovery over some period of time. But against that stands still a healthy American North American market. Even though less impressive in absolute numbers, it's still a very healthy growth rate. And we have some other geographies which we expect to improve as well. So by and large, we think this is the 1% you saw on the top line in the question on the Husqvarna division. The robot lawn movers is not a large category season wise in the Q3. And as you mentioned, the snow products haven't really picked up. So could you just predict which products or models are making this good growth story right now? I will say it's still robotics. It's supporting to some degree, but the quarter is more a selling of the handheld products for the winter season and normally snow products. Whereas as you pointed out and I have already understood, snow products are weak so far. We haven't seen the demand. And that goes from both the consumer brands division as well as the Husqvarna division. So a little bit of disappointment of the sell in to the season. And let's see whether it picks up, and we hope for some cold weather here in quarter 4, preferably before Christmas time. So people really feel like this is going to be a long and ugly winter, so I better get some support to deal with it. But it's a weak start. But the emphasis I give is actually on the selling of the handheld. That's an important piece of this quarter in normal terms. What we can add also is, of course, we talked about it at the Capital Markets Day. We talked about weather. And of course, we are weather hedged to some extent in Europe. What I'm referring to is that the Q3 last year, we were having a good Gardena sales. But of course, with the warm and dry weather in Europe, it was also negative effect on his final division. Not that big, but it's also, of course, new products are better due to that because now it's a more normal Q3. Thank you. And just about the question. Thank you. On the capital allocation, you mentioned that the net EBITDA is slightly below, might be where you want to have it right now. But going forward, you'll probably we'll probably see a continued sliding down of this ratio. Where in your kind of priority line when you have look at growth and dividends and buybacks? Where are the buybacks when you discuss it? First of all, I mean, the capital structure is a decision and a discussion with the Board and in the Board. It's not something you should have here. Of course, I'm a finance manager. I would have liked a very low net debt, but there is, of course, a balance. And we have talked about the growth being one of these things that will, over the time, be something that will require more capital. We are trying to balance that with better capital efficiency. And of course, in the end, it could also impact the next step. The other question, as I started, we did something that is, of course, up for the board to decide. A question on pardon the Quest Web Banks. A question on the FX headwinds. It's obviously been significant this year. I assume that is in relation to transaction exposure export from the U. S? Or the translation impact, shouldn't that be something positive with translating the foreign income or the foreign revenues into that switch kroner? You're right. But we have also seen the swing during the year, especially now towards the end or actually since spring, we have seen once again a weaker kroner, stronger dollar and stronger euro. The main thing is, of course, the transaction as you read to how the dollar is related to the euro especially because we have inflow, with inflow in euros and a quite substantial outflow in dollars. So I mean translation, you're right, but I mean that transaction is the thing. Operator, can we open up for questions from the telephone And your first question comes from the line of Christer Magnergard. Hi there. Three questions. First, if you can talk about the listing for next year, if you have any details on that, especially when it comes to market share gains potential. Chris, the listings and with that, I think you refer primarily, I guess, to Gardena and Consumer. Gardena is working on the channel expansion, and it's looking, again, I would say, fairly good for next season, just like it has for this year. Consumer, there are no significant important listings. There are some strategically important product category aspects of it that I wouldn't say anything that changes overall top line numbers in a significant way, but a little bit of shift where we expect to have introduced, for example, also the robotics mover in North America at one specific retailer and also brought that very same retailer with a battery range of products. So a little bit shift into new categories, but the overall number not being significantly impacted in that respect from the consumer side. Gardena pressing on with a more clear expansion agenda on the listing side. And that goes fairly broadly throughout the categories. And of course, one good example of that is the smart garden, which is now going to find its way into Scandinavia as well. So you will see that up here. And we think that's a very interesting concept going ahead where we, as I mentioned before, combine the automated irrigation with automated robot moving. So you can really start to talk about automating the garden space. So that's one example of that. I'll leave it there, Christian. Then 2 financial questions. Firstly, on to come back on the working capital development. This has been a big part for you obviously, and the development has not been satisfactory yet. You gave some explanations, but can you maybe give us some more color on it? And when should we expect a release in working capital? Is it happening already next year? Or is it more a couple of years out in time? Well, working capital is very much about behaviors, how we are handling payments, how we're handling our stocks, etcetera, and also about structure, our logistic structure. The handle takes time. I mean, this is nothing you fix simple way. You could, of course, start to sell off your receivables, etcetera, but that, I mean, you have to pay for that. So this is about how we can shorten payment terms to our customers. And of course, also, most importantly, because that's the big part of our working capital, how we can work with our inventory, both the finished goods but also inside our factory. So this is definitely what you may call a continuous improvement exercise. It's nothing we should expect being happening from the 1st day. But as you have seen, we have a capital efficiency target for 2017 2019. And if we were to come there to less than 25% of net sales, it is an improvement of some 10% from where we are today, and that is what we are aiming for. But it will not happen, as I see it, in 'seventeen, but we have plans to make it happen for the period of 'seventeen and the coming years. So should I read a more like a gradual improvement then for the next year? So not back in Good summary. I should have done that myself. Then finally, on depreciation. I wish I've seen moved up a bit here in Q3? I don't know if that was currency related or if there's a new level on depreciation going forward. If you can give some guidance for next year on that, Andy? As you have seen, CapEx is moving on, has done so the last years. Of course, that is turning into depreciation. Then, of course, from time to time, and I assume that you're referring to depreciation and amortization, You also have to accelerate some of other amortizations of immaterial assets as well, and that is what you're seeing right in this quarter. There's nothing dramatic. Yes. Hi. I guess that was me, Johan Elias on Kepler Cheuvreux. Coming back to the outlook into 2017, you talked a bit about the listings. How about what do you foresee for the raw materials visavis the pricing development in the following season? Jan, I think the raw materials will be a little bit of a burden for us, but it's not going to be significant. It shouldn't change the overall trajectory we are on of significant improvement. On the other hand, maybe there could be a slight positive impact on the FX next year. So those might end up balancing each other to some fair degree. So I don't think you should put in any larger numbers in your assessment, sir. And pricing this year, obviously, up on the back of the FX moves, what do you foresee for next year? We I think I'm normally talking fairly cautious about price. And I think the terminology is the stable pricing, and I continue on that track. I think that's what you should see. There are new products which we can maybe improve through put the level right from the beginning. But I think you shouldn't expect much of a price difference on the existing product range, so to say. I think it's going to be fairly flattish, but it shouldn't be negative either. Okay. Good. Then just detail on the financial net. It seems to be quite a volatile number. I guess it's partly because of the FX and then you talked about this increasing rates. Could you split this, I guess, it's FX hedging and the underlying interest rate cost and maybe give some view on where interest rate cost will go, going forward? First of all, I think we the big picture is that FX is very small for the 1st few quarters. It was very little in the 1st three quarters last year as well. No impact for the 1st three quarters on FX. It is the interest net and it is related to interest rates, I. E, for us due to our big operation and investments we have in dollars mainly. And that is something I expect us to see going forward as well because I don't see that the U. S. Dollar will 'seventeen as relates interest rates. I might have the wrong assumption, but that is what we should calculate with. And that means that we will have a higher financial this year than we had last year. So we have a difference of around, I think, it's around SEK 60,000,000 right now for the 1st 3 quarters, and I expect that to be more or less where we will end the year as well compared to the full year 2015. And for next year, I mean, your debt is coming down. Do you still expect this number to go up? Or Well, that is, of course, where we have the money. And normally, you have the money at the head office, which means basically in Swedish, stronger. So we will still have the depth out in the different countries, I. E, in different currencies. So it's very much about what is happening with the interest rates in those foreign countries where we have our big operations. Okay. And then just now when you have the season, could you just remind me the share of robotics and electrical handhelds for the season? I think we talked about 10% of the forest our forest and garden sales. It's a number, I think, which you should apply. In total for those 2? Yes. The total of those 2 compared to the Forest and Garden space, excluding construction. Yes. Excellent. Thank you. And your next question comes from the line of Auguste Milbert. Hello. This is Auguste Milbert from Downstate Credit Research. Just a quick question here on your financial targets. So you just to clarify, you mentioned a net debt to EBITDA target of 2.5 times in the presentation, but that's not included among your new financial targets. So how should we see that? Well, these targets we the 3 targets we were talking about in the end of the presentation are averaged to coming year as from 2017. We had targets or we had targets launched in 'fourteen, valid up to 'sixteen end of 'sixteen, where net debt to EBITDA was one of those targets. So when we are moving in now to the profitable growth phase, we are shifting. We are not forgetting. We still have the ambition to have financials reflecting an investment grade rated company, but we are focusing on margin growth and capital efficiency with the financial targets as from 2017. Is there anyone on the line? Hello? Can you hear me? Yes. Hi. This is Rasmus from Handelsbanken. Hi. Hi. I had I was didn't hear any announcement. But can I ask you with regards to the recall that was announced yesterday, how does such a thing impact the numbers, if it does in any way? First of all, I mean, it was a pretty big number of products that were having defects that it was something that we have gone out to our customers and asked them to make a self assessment of these products. We expect around 1% maybe to have that effect. In relation to the that number and also how big the repair is of that effect. It is more numbers as we know it today, and it is, of course, covered with our normal warranty provisions. Okay. And then the second question. There was some speculation I read on the screen about Craftsman. I struggle to see Craftsman being a high margin growing business. So am I correct in thinking that Husqvarna, it doesn't fit very well with Husqvarna's strategy at the moment? I don't want to comment too much on speculations, but let me say that Craftsman has, from a brand equity point of view, strengths. I think that we should be clear upon. The independent service of brand equities show that pretty clear. So it's the brand equity is not bad in any sense. Husqvarna has historically been part of supporting this particular retailer to build the strength of that brand through significant shipments over the years, that much I can say. I'll leave it there because otherwise I start to get into speculations, and it won't take us anywhere. All right. Very good. Thank you. Your next question comes from the line of Eric Gunnarson. I actually think all my questions were covered. So sorry for that. Thank you. Okay. With that, it seems like the questions are terminated. And I would like to thank you for your attention and for coming in.