Good afternoon, everyone, and welcome to Husqvarna's Year-End Report Conference Call Presentation. We will follow the usual procedure. Our President and CEO, Mr. Hans Linnarson, will start with an overview of the business, and then our CFO, Mr. Ulf Liljedahl, will take us through the financials before we open up for questions. With that, I would like to hand over to you, Hans.
Okay. And once again, welcome to all of you here for the presentation of the Husqvarna Fourth Quarter R esults for 2011. As you all know, the fourth quarter is the smallest quarter for us in terms of sales and earnings here. For the fourth quarter, it is to a large extent about preparing for the season that we have ahead of us here. Sales for the group had a good development in the fourth quarter. We increased actually 5%, adjusting for currency effects. Sales were high in all business areas. We started up the quarter a little bit weak, but then actually in the end of the quarter, we ended up actually very strong, especially in November and December. The operating income for the quarter was lower than last year, particularly due to non-recurring items and currency effects.
To summarize the full year briefly, I'm very pleased to conclude that the group sales increased. We maintain our market position for forest and garden products, and we improved them for construction products, despite the production disturbances we had in one of our major factories during the year. We entered into 2012 with unchanged retail listings as well as pre-orders for the dealers. In the fourth quarter, we also refinanced the group's funding, and the mitigation of the production disturbances continued. We are now ramping up production for the next season. All our factories performed very good. That includes actually the Orangeburg factory down in the southern part of the U.S. The board has decided to propose a dividend of SEK 1.5 per share for 2011, which are unchanged vis-à-vis last year.
To enter the financial highlights here, as I just said, sales were very good in the fourth quarter for all business areas. The operating income adjusted for increased for the Europe, Asia, Pacific, and for construction, while in Americas it decreased. The group EBIT was negatively impacted by cost for mitigation of the production disturbances in the U.S., with a SEK 30 million, as we guided here earlier on here last year, as well as several non-recurring items. Our CFO, Mr. Liljedahl, will continue going through this more in a moment here. That means that we are to the negative effect of minus SEK 55 million for the quarter. For the full year, adjusted sales were higher, but EBIT lower. Negative impact from currency and production disturbances and non-recurring items, as well as increased marketing and product development activities during the year and for the quarter.
If we then enter into the different business units here, and start with Europe, Asia Pacific here, the sales were up in the quarter here 2% adjusted for currency. The increase is mainly attributed to snow products, despite a late and warm winter in Europe. The operating income for the business areas increased, mainly as a result of higher sales and improved pricing. Note that it includes a positive non-recurring item of SEK 53 million related to a closure of a pension scheme. For the full year, adjusted sales grew with 3%, and the operating margin remained on a high level, almost 14%. Overall, we maintain our market position in these regions. In some key areas, we increased the sales here, and that is mainly within the riders, what we normally call the front-motor riders produced in Sweden here, and the robotic mowers, what you normally call automowers.
You should also remember that the costs were higher during the year, as we decided to invest more in marketing and product development to further reinforce our strong position we have within Europe, Asia Pacific markets. Going over to Americas. For Americas, the sales were up 9% adjusted for currency. The increase is mainly attributed to the ride-on products and chainsaws. The ride-on products here are the tractors coming from the Orangeburg factories here, which actually is good that we have proven now that actually that factory is up and running here now, that we've been able to deliver according to the plan in the fourth quarter. The increase in ride-on lawnmowers is especially pleasing due to the manufacturing disturbance that we had in Orangeburg here, as I said.
We have spent a lot of time and resources to investigate to avoid all these disturbances we've had during the earlier part of the year 2011 here. We see here that it continues to be approaching very well, and we enable to have a good development for ride-on sales in quarter four here. Production capacity is running according to plan, actually a little bit above plan as well. In Americas, the weather was favorable for chainsaws due to a lot of storm within the fourth quarter. That's mainly actually in the U.S. rather than in the South and Latin America. For the fourth quarter, it includes several non-recurring items, as you can see on slide five. One of them is cost for staff reduction that we have taken in the fourth quarter, SEK 90 million that should generate annual savings of SEK 30 million already as of 2012. The U.S.
market is very competitive, and it's necessary for us to initiate measures that also will reduce our cost base within the U.S. For the full year, market demand once again was down. Husqvarna sales also decreased as a result of the weaker demand and production disturbances. Nevertheless, we managed to maintain our overall marketing position also in this region. We lost some share for the ride-on products where we had production disturbances, while we gained shares elsewhere, for example, walk-behind and lawnmowers. Operating income for the business is for the full year naturally lower than the previous year, particularly due to the cost for production disturbances amounting to SEK 348 million and negative impact of currency of - SEK 230 million, but also due to higher costs in other areas.
Of course, the Americas, as you see, was not a good year for us in 2011, and that's mainly due to the U.S. Going over to construction. Construction continued its positive development here. Sales for the fourth quarter increased 11%. Despite some lower construction activity in some markets, there is still a pent-up demand for new construction equipment in the sales and rental channels. We had during the years launched a lot of new products during the years here in this area. These have contributed strongly to increase the market share for the Husqvarna branded products. Adjusted EBIT for the quarter is up. As you can see on slide six, currency had a negative impact, and we took some cost for staff reduction in this area as well here of SEK 40 million and annual savings of also SEK 40 million as for 2012 impact.
For the full year, performance was very good. Sales increased 12%. Market share was increased. EBIT and EBIT margin recovered, mainly as a result of higher sales, and that's, of course, due to a very strong portfolio of new products as well here. With that, I will hand over to our CFO, Ulf Liljedahl, here to go through this more in detail for you.
Thank you, Hans, and good afternoon, everyone. I will now take you through the income statement to start with here. As presented by Hans, we have, as you have seen, declared for the Q4 an increase of sales of 5% adjusted for currencies. I'll leave that and then move down to the gross operating income. As you can see in the fourth quarter, it actually decreased by some SEK 28 million to SEK 1,386 million, versus last year SEK 1.4 billion, roughly. There is also a decrease in our gross margin from 29.5% last year to 27.8% this quarter. If you then move to the next slide, the gross profit margin development, you can see that if we compare the quarters, you should take into consideration that in the fourth quarter 2011, we did have some numbers of non-recurring items. Orangeburg attracted some 0.5 percentage points.
We had the remediation of the VAT Brazil that attracted some 0.6 percentage points. What has been allocated to cost of goods sold in terms of restructuring Charlton attracted some 0.4 percentage points. All in all, when you look at the gap between the quarters, you should take this into consideration, meaning that you have 1.5 percentage points explained by those three items here. If we adjust for those, I mean, we are roughly on the same level as we were last year. We also did have some headwind of the currencies that explained the residual. If we then look back again to the income statement and continue and have a look at the selling and admin expenses, you can see that adjusting for currencies, we had roughly SEK 140 million higher SG&A compared to last year.
Also, the SG&A did include some non-recurring items net totaling some -SEK 10 million . The residual there in the higher cost is primarily related to higher transportation costs, and those are, of course, driven by the higher volumes very much related to the U.S. We also had the back end of the IT costs that we continuously have been investing in during the year of 2011, and they were then also higher in the last quarter here. Finally, as Hans also mentioned here, we do have higher costs for marketing and brand building, conscious investments that we have made during 2011 in order to be prepared for the season of 2012. As an example, we have the McCulloch launch, also the new products that we have mentioned in the Q3.
If we then look at the EBIT and compare the quarters here, we then ended up with a minus or a -SEK 236 million compared to last year's - SEK 63 million. Again, you need to have in mind that included some one-time impacts of SEK 85 million, consisting of what we have defined as organizational adjustments/restructuring costs of SEK 44 million. Orangeburg is SEK 30 million as predicted. Environmental remediation in the U.S. of SEK 31 million, VAT in Brazil of SEK 33 million. We had a positive impact from closing a pension plan of SEK 53 million. All in all, SEK 85 million of one-off items did have an impact in the Q4 results. Adjusting for them, we are on a level of SEK 151 million, and that corresponds to a negative SEK 151 million, corresponding to a negative EBIT margin of roughly 3%.
If we also move further down and look at the financial net, ending up on minus SEK 127 million in the quarter versus minus SEK 136 million last year, slightly lower, mainly due to lower interest rates. If you look at the going rate, if you compare with Q3, it came out higher, and that is related to primarily that we, as you have seen in the report, have refinanced the company, signed up for a new revolver, and the previously activated costs for the old revolver we have taken to the P&L. That together with reevaluation of a forward contract that had a negative FX and interest rate impact explains that we are on a higher, let's say, going rate than if you compare with the prior quarters in 2011.
Tax amounted to + SEK 140 million, and as we have guided you in the past year, if you look at the year-to-date, we are coming in on the level that we said. If you look at the pre-tax profit for the year of some SEK 1.1 billion and apply 29%, and then we have the financing setup with our Belgian company, we are on the level that we have guided you on before, attracting some minus SEK 150 million in taxes for the year. If we then move to slide nine and have a look at the restructuring costs and just giving you some input on the staff cutbacks that we have made, it then took some SEK 44 million in cost in the fourth quarter, and as you can see, primarily related to Americas and construction, and then some in Europe and some on a group level.
These restructuring are then to generate annual savings of some SEK 50 million in 2012, and they will come gradually as we go. We talked about approximately 100 employees that we have laid off, and they are roughly 50 are related to COGS and 50 are related to SG&A. The cash out of this will come during the first and second quarter. If we then move to the balance sheet, the main attraction there is, of course, the inventories. As you can see, we did close the year with a delta of the inventories of roughly SEK 1 billion compared to last year.
If you recall that since Q2, we have had this deviation, and I must say we are satisfied from the point that we have been able to keep that deviation on SEK 1 billion, although, of course, now the work is to, during 2012, come down to normalized levels as we go. The reason for this deviation, as has been previously referred to, are mainly three reasons. We have the relocation of factories that we consciously took positions in at the beginning of the year, mainly related to the move from Sweden to Poland. As you know, we have done the pre-build for the 2012 season in Americas. There was some inventory remaining from the earlier interrupted season end of June that will carry over to 2012.
What I can say and what we have seen is that the composition of the delta of SEK 1 billion has changed, meaning that we now have more of the pre-build for the season of 2012. That has gone in accordance with our plan, which is very positive. Trade receivables, not much to mention. We can see that our days of sales outstanding have improved. We are slightly two days better or have improved compared to last year. I would like to move to the next slide, and we look at our net debt and equity. You can see that the ratio is on a level of 0.56. This is on a level based on that we have actually had a worse cash flow, and I will come to that later on here.
To mention here is also that we have said in the report, we have now a refinanced backup facility of SEK 6 billion, and it's a five-year maturity on that. We have also, in connection with that, made a refinancing of some bank loans as well as some midterm notes going forward here. At this stage, we are in good shape from a financing perspective. Moving to the next slide, we have the operating cash flow, and I have shown you this one before. As you know, who follow us, this company normally has a cash out the first two quarters of the year where we draw cash, and then we are generating cash at the end of the year. This was not the case as of 2011, as you also see from the curve.
We have had a negative cash flow close to SEK 0.5 billion compared to normalized levels of SEK 1 billion or even above SEK 1 billion if we look at prior years. Main explanations are, of course, the bad result or the low result, as well as the higher inventory levels that we have attracted in 2011. Moving over to key figures, I will not go into each one of those here, just to mention, as we guided you, you can see that the CapEx have been below SEK 1 billion, and that, of course, helped some of the cash flow in the fourth quarter that was slightly better than last year, although still negative for the year. If we also take a look at the average number of employees, because there I know we had some questions last time.
To clarify, you can see that those have increased year to date, and that is related to that average number of employees are defined as full-time equivalents. That means that we count the number of hours, and based on that, we have had a lot of overtime and additional shifts very much in the beginning of the year related to the Orangeburg factory. We have a higher level here in this type of definition. If we look at the number of heads per year-end, they are roughly on the same level as we were closing 2010. Finally, I would like to give you some guidance ahead now for 2012. Starting with CapEx, we see that CapEx will be in line with our depreciations, meaning roughly SEK 1.1 billion. Tax, we take the same approach for 2012 as we have done in 2011.
You shall use approximately 29%, apply that to the pre-tax profit, and then you may add back roughly SEK 180 million related to our Belgian financing setup. If we then take the currencies, we see a year-over-year effect for 2012 estimated positive of some SEK 50 million-SEK 70 million. This is, of course, based on the forecasted FX exposure and the exchange rate situation as per end of December 2011, as well as the outstanding hedge contracts that we had end of December 2011. With that, I leave over to Hans for the outlook.
Thank you, Ulf. A few words about the outlook for the next quarter, what you can see on slide 14 here. Like we had communicated earlier, our retail listings for 2012 are estimated to be unchanged compared with 2011 here. That goes as well, as I mentioned before here, when it comes to what we call the pre-orders for the dealers here. Slightly, we are actually a little bit better mixed than last year. Our assessment of the inventory levels in the trade at the end of 2011 is that they were slightly higher than what we regard as a normal level. The production in our factories is up to speed now and prepared to deliver for the season, which actually starts here soon. To sum up all these things here, coming back to the last slide here, 16. Group sales adjusted for currency increased.
We maintain our strong market position for forest and garden products, and we strengthen them for construction products. The production disturbances have been mitigated, and production is now being ramped up for the coming garden season. We are delivering on our priorities for this year. High service level and delivery reliability has been the key focus here during the autumn here to have that up and running, not only in Orangeburg, even outside in all factories. The group's funding was refinanced, and the board proposed an unchanged dividend payment of SEK 1.5 per share for 2011. We entered 2012 with unchanged retail listing compared with 2011. We also have many exciting new product launches that will reach the market this year. We have a complete new McCulloch range. We have a new Gardena robotic mower, which will be sold into the retail channel here.
We have also launched the Husqvarna battery-powered range of products, both handheld as well as ride-on products. That's just to mention a few new launches we have done here for 2012. Finally, I think we can then conclude that we are prepared to meet the demand for 2012, and we've been prepared for that actually during quarter four as well. With that, we can open up for questions.
Thank you, sir. If you do have a question at this time, please press star one on your telephone keypad. If you can't see your question, please press the hash or pound key. The first question comes from the line of Joseph Peter from JP Morgan. Please go ahead with your question.
Good afternoon. It's Andreas from JP Morgan here. I have three questions, please. The first one is you indicated that inventories in the channel are slightly higher in Q1. If you take the inventory issue away, what would you expect the sell-out to be in Q1 relative to last year? Second question, do you expect any disruptions for your business from some of the restructuring that's going on at Sears in the U.S. in terms of their ambition to reduce the inventory they normally carry? The last question, you ramped up production earlier this year. What was the positive impact of basically the factory load and the profitability in Q4? Thank you.
I'm back to the sales here with the impact of that actually. I can't really give it more comment than I said when it comes to that. We have good listings for the quarter here, and we are prepared to deliver. When it comes to the impact of Sears' problem here, actually, we can't really see any real impact so far here. Of course, we follow up what's going on within Sears' financial problems here very, very carefully here. So far, we don't see any need to take any actions here for the first part of 2012 here. The third question was regarding the ramp-up of the factory.
As I mentioned to you, if you look at the gross profit, I mean, if you take out the non-recurring items, we are roughly on par with last year, and that is something that we are satisfied with. We also need to remind you that what we have done now in terms of ramping up Orangeburg, we still do not have any of the savings that previously have been declared, and they will not take place in 2012 either.
There wasn't a benefit to your numbers. If you hadn't ramped up production earlier this year, we would not have seen a stronger weekly EBIT in Q4?
I mean, compared with last year, neither more nor less.
Thank you.
The next question comes from the line of Björn Enarson from Danske Bank. Please go ahead with your question.
Yes, thank you. Question on production efficiency. When do you expect to get back to normal production efficiency in Europe as well as in North America? That's the first question. The second one concerns your efforts to expand sales in the dealer channel in Americas. Where are you in that process, and when do you expect that effort to have a positive contribution on operating profit in the U.S.? Thank you.
When it comes to production efficiency here, if you look upon the factories in Europe, they are running with a very good productivity and efficiency level already here. Of course, I guess you meant now the Miele factory, which we are starting up to ramp up here. The startup in Miele, the Polish factory for riders, actually is running very well here. As we have said earlier here during the quarter three report, we will continue for this season to produce parallel with the Miele factory some high-end riders in the Swedish factory, and both are running very well here. That goes as well for our chainsaw factories here. When it comes to our factory in the U.S. for tractors here, we see now actually we are coming up able to produce according to the plan, as I said earlier, even a little bit above the plans here.
We need to really see now here during the first quarter and the rest of the year how we can actually speed up the efficiency in this factory in Orangeburg here. There is, of course, more to do here when it comes to that. Otherwise, I think all factories are running very well for the moment.
Okay. Thank you. You mean that the U.S. efficiency will remain a little bit below full potential for a quarter or two or for the season?
For the season, of course, yes.
Got it. On the production, on the dealer channel investments in the U.S. as well. Thanks.
The dealer channel in the U.S., we have increased the sales under the Husqvarna brand into the dealer channel here as well. Of course, we have been even in that channel affected by the problems we've had with Orangeburg as well here. When we look upon the dealer channel and the number of dealers we have in the U.S. have increased and actually continue to do that. We are going on running rather well actually in that channel in the U.S. here.
How many dealers have you now approached?
I don't have the number exactly how many we have actually approached, but that is a lot of them which we have approached here as new dealers.
When would you expect, I guess, you have some startup cost or startup investments related to this. When do you expect a positive contribution bottom line?
When it comes to the startup for the dealers, actually, we really don't have any really startup things when it comes to the sales more than normal marketing activities, what we are doing to promote our Husqvarna brand. That's a little bit what you normally do when it comes to brand building here to support the dealers in their marketing activities.
Thank you.
The next question comes from the line of Johan Dyle from Pensa. Please go ahead with your question.
Thank you. I have a question relating to the U.S., the earnings performance in the U.S. If you could just help me bridge the earnings delta here in the fourth quarter last year compared to this year. If you fix the results for all the one-offs that you talked about, the production disturbances, et cetera, still SEK 150 million lower despite the volume growth. I am also in connection with that question. Does it have something to do with the, you said that the excess inventories, the composition of that had changed significantly in the quarter. Have you discounted products in the fourth quarter and also updated us on the current status of the excess inventories? What's your comfortability in selling those here in the season?
The answer on your latter question is no. That is not the rationale or the reason. What we have seen is based on the growth we have achieved in the U.S. I mean, we have a disproportion in mix versus last year. We have a lot more of the pre-produced riders that, of course, does not give the contribution that we desire here. Although we have declared some costs related to Orangeburg of the SEK 30 million, there is still, of course, in the quarter, not the level of efficiency that we desire. Here comes also into play that we need to, as Hans said here, we will during 2012 continue work with the continuous improvements. We have now declared that we have a production facility that is able to deliver and deliver at a decent quality.
We are still not happy with that the level of cost is on the level it is. This is something we will work during 2012 with.
Yeah, it just appears as if the more tractors you're selling, the wider the loss. That can't be right, is it?
Let's say like this. We are not happy with the leverage of the sales of Americas in the fourth quarter.
Okay. Secondly, could you say what was the net interest in the fourth quarter? Is that a good level that we could look at for 2012 in terms of the new financing arrangements?
You can, I would say like this. You shall take the going rate roughly if you look at the Q3 as a more, let's say, relevant proportion in terms of finance net. I'm not prepared to go in and exactly declare the finance cost that we have as such. As I mentioned to you, in the Q4, we did have two components that were, let's say, one-off items in the finance net. That was the bank charges related to the RCF, the old one, as well as we had a higher proportion or reevaluation of forward contracts that did have a hit in the finance net in the Q4.
Okay. Finally, we've touched on the issue of cost absorption in the fourth quarter. If you look ahead to the first quarter and disregard all the Orangeburg factors, but on a like-for-like comparison, is the cost absorption going to be lower here in the first quarter? I mean, it should be, I guess, if you've pre-produced in the fourth quarter.
We don't give any projections into the Q1 of that type.
Finally, on the marketing and IT spend, what's the delta you see there in 2012 versus 2011? I mean, that cost increased significantly in 2011. Is that going to be significantly lower in the current year?
I mean, IT, as we have mentioned before, of course, we have spent money due to that we have changed the infrastructure quite drastically in the group in 2011. That will not be repeated when we move into 2012. When you come to branding and marketing, I mean, we will continue to develop products. We will continue to launch products. That will, of course, attract spend also in 2012.
Thanks.
The next question comes from the line of Kenneth Tall from Carnegie in Stockholm. Please go ahead with your question.
Thank you. I have three short questions. First, when you now ship more in Q4 already to your customers, and that has increased sales in the U.S., do you have to discount your prices when you do that?
No, we have actually not discounted any prices here. We actually normally don't do that when it comes to a range. When we phase out products, then we can do that. That's not the case. No, we haven't.
Okay. Why haven't you shipped products earlier before then in order to smoothen out the production?
Due to that, actually, that goes back a little bit to the forecast from our customers here. Due to that, it doesn't want the products early here. We need to follow, of course, the demand and the request from our customers here.
Okay. You were extra good in convincing them to take products early this year?
No, that's actually a little bit normal here. When it comes to the US here, the demand in the market increased actually more than the previous year, especially the end of the quarter here.
Okay.
What was good, I can commit to repeat that. We were actually able to do this here in spite of all these problems we've had here. I think that's good and confirm that actually this factory is up and running and can deliver the requests and the listings we have going into this year. It's just a confirmation.
Okay. Good.
We can call it the stress test of the factory.
Good. Two smaller things. There is this pension accounting change coming in 2013 when they change the IAS 19. Will that have a severe effect on your net debt or equity or something?
As we have stated in the report, you can see that at the end, I believe, page nine, you can see that we have at this stage, we have then a recognition of then the unrecognized actuarial losses of some SEK 600 million that will then, of course, increase the liability and decrease the equity. However, there will be a portion of deferred taxes that should be taken into account as well. The gross figure is SEK 600 million.
Okay, great. Finally, on those SEK 50 million in cost savings that we will see gradually, when do you think we will have the full run rate of those? Is it mid this year or?
Say mid-year, third quarter.
Okay, excellent. That's all. Thank you.
The next question comes from the line of Rasmus Engeberg from Handelsbanken. Go ahead with your question.
Yes, hi. I had a couple of questions. Starting out with your guidance for flatter shipments, how does that break down by your divisions, especially with regards to Europe and the U.S.?
I think it's equal between them vis-à-vis last year when it comes to shipments. That's the only comment I want to do when it comes to that.
Are both expected to be flat, is that what you're saying?
Yes.
Okay. With regards to the mix effects that you experienced last year, should we see them reversing or at least reverse significantly in the U.S.?
When it comes to the mix effect, we see actually in Europe a better mix effect going into 2012. When it comes to the U.S., we see actually more or less the same.
Okay.
A little bit better in the U.S., but more or less the same in the U.S.
I just wanted to ask you also one more question with regards to you have a very significant outflow of cash sharing from working capital last year. How should we think about this this year, assuming you have flat sales for the year?
As I mentioned here, the delta, and if we focus then on the inventory, because that is the major piece that, of course, has affected the cash flow, the delta SEK 1 billion should be seen from the three perspectives that I mentioned here previously: the interrupted season, the pre-build primarily, and of course, we might decide to pre-build next year as well. This year, I would say it has been to a larger extent. The background is, of course, the debacle of Orangeburg and also that this was a good way to convince our customers that we are serious with meeting up with their requirements for the season of 2012. There are now, as I said, activities to come down on more normalized levels in terms of inventory during the pace of 2012.
During 2012 already?
Yes.
Okay, all right. Thank you.
The next question comes from the line of Stefan Cederberg from SEB Stockholm. Please go ahead with your question.
Did you gain market share in the ride-ons in the end of the quarter in the U.S.?
Yes, we did.
Has that continued also in 2012?
I don't comment on that.
Okay. Your expectation on the overall IT spending, marketing spending, and product development, will that be on par with last year or will it be higher or lower?
I think it will be more or less on par with last year.
Okay. Finally, regarding prices, I think you raised prices in 2011. Will you be able also to raise prices this year to balance changes in input costs such as raw material and transports?
Yes, we have already done that. Normally, that's the activities we do during the fall here, actually. All the prices, all this is already done both for the retail channel as well as for the dealer channel here.
Okay.
It's just not working for what we call the line review and the price for 2013.
Okay. On the question on marketing and on the dealer, can you somewhat quantify what kind of impact in the growth in dealer throughout the company have had? Have you gained a lot of new dealers or is it just a minor increase?
I think when it comes to the dealers all over for the group, actually, it's not minor.
Okay, so.
I comment for both the Europe, Asia, Pacific, and Americas.
Okay. You will have a positive impact from the investment you have made in 2011 on your sales this year?
Hopefully so, yes.
Yeah, okay. Thank you.
The next question comes from the line of Stefan Lucht from Deutsche Bank. Please go ahead with your question.
Hi guys, Stefan Lick at Deutsche. Three quick questions. Just to clarify, it says in the presentation that you had negative absorption effects in the fourth quarter. Why is that?
Based on what we have said, we are still not having the setup in our factories to the extent we want. That goes both for what we said previously on the move of our factory down to Poland. I mean, we did not move the whole lot, so that is not, let's say, up to the efficiency level. Also, with the American factories, we did not have the level of efficiency, and that is what we have said. We are then coming into 2012 with and having high on the agenda to now work with efficiency. Now we have secured that we are able to deliver, and we are delivering with a good quality. Now comes into play how to secure that we can drive the continuous improvements as well as then look into what savings that we can see beyond 2012.
You understood. When it comes to sort of the new pension accounting, what kind of impact will that have on the P&L?
I think that's quite detailed. Can I ask you to please read what we have stated in the paragraph on page nine where you can see that some will actually be moved from the operational level and then down to the finance net?
Absolutely. Final question. On FX, you mentioned SEK 50 million-SEK 70 million, all else equal. I guess that's the EBIT impact, right?
That's the year-over-year EBIT impact, yes.
What is the impact from hedges in that roughly?
I don't go in and disclose exactly what we have there. Let's say like this, the headwind we had in 2011 was, of course, very much based on that we came in with worse hedges into 2011. You can see yourself based on the development of the FX. Of course, we are in a better position when we move into 2012, and that is, of course, explaining some of the upside that we foresee.
Okay, any thanks.
We have no further questions, sir. I hand the conference back to you.
Thank you, everyone, for calling in. Just a reminder, we report our first quarter results on the 26th of April. Speak to all of you then. Thank you.
Thank you very much.
Thank you.
Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may now disconnect.