Earnings Call: Q4 2017

Feb 13, 2018

Ladies and gentlemen, welcome to the presentation of the Indu Trade AB Q4 Report 2017. Today, I'm pleased to present Mr. Bo Andrik, CEO and Mr. Jan Ormond, CFO. Speakers, please begin. Thank you so much, and good morning. This is Bo Handvik, and I will start the presentation initially with a summary of 2017, as you can see here. And I can happily say that we have another successful year for Indo Trade, again, a year with record high sales and earnings. Our overall objective is to achieve profitable growth, and now we can kick this off in terms of 2017 in a good way. We have had favorable market conditions, which is obviously beneficial. But also, I would say that not least, we have good business development activity from a clear majority of all our companies. In addition to that, we have made 12 acquisitions during the year and added about SEK 1,300,000,000 in structural growth. I will elaborate a bit more on this later on in the presentation, but it's clearly so that we keep high pace in terms of acquisitions. Our net sales rose with 15% and totaled up to SEK 14,847,000,000, and our order intake was about the same level, plus 16%. So all in all, I would say very good and high level in terms of sales increase and order intake increase. As we had, I would say, an extraordinary restructuring activity during the year, We present now an adjusted EBITA of 11.8%, a very good level, I would say, and an improvement over last year, which ended at 11.5%. So we are improving over 2016. Excluding the extraordinary restructuring, EBITDA rose 9% and ended at SEK 1.6 13,000,000. And our EBITDA margin came in at 10.9%, which is still higher than our financial objective at 10%. So it's a good, I would say, achievement to come in over 10% still with a major restructuring included. Our earnings per share rose to 9% or rose with 9% to SEK8.54, an increase over the SEK7.80 we had a year ago. And our Board of Directors will propose a dividend at SEK3.75, which is a good increase of 17%. And if you adjust our if you adjust for the extraordinary restructuring on a per share basis, this represents 40% of our net profit. Towards the end of the year, we also started to work with a new organization structure. So we have worked with our business model, and that remains firm. It's very much built on decentralization and entrepreneurship and also built on that we develop our portfolio companies and we complement with acquisitions. So it's an evolutionary direction going forward. And when that was sort of confirmed, we felt that we could restructure a bit and complement the team. And I will elaborate also on this towards the end of the presentation. If we look more specifically at the 4th quarter, I can say that we have had positive momentum in most operations by far with good growth, with good order intake in sales and also in earnings. We are in a positive business cycle. It seems like the cycle will continue in terms of what we see right now, but we are also cautious in terms of capacity increases that have more focus on productivity improvement and I would say continuous improvement, small steps in general. In terms of geographies, we have a beneficial climate in the Nordic countries, also in the Benelux and Germany, perhaps a bit slower in certain senses in the U. K. And in Switzerland. And I will also talk about that a bit more. We are becoming more and more international as a company. I think during 2018, we will, perhaps for the 1st year, show higher invoicing outside the Nordics than within the Nordics. So step by step, we are building an international business in a successful way. We have had, on a relative basis, lower performance in one of our companies, one of our larger companies within power generation, and that has quite substantial impact on our earnings and EBITA margin. This specific company had, I would say, good benefit from megaprojects during 2015 2016, and those type of very substantial large projects are not present in the marketplace anymore. And this is, I would say, to a large extent, linked to higher or lower oil prices and lower investments in that sector. But there are still investments, and we see that the order intake are improving or is improving for this company in a good way. This company is still a very successful company, and the EBITA margin level is well above our group average. So this is not sort of a problem in that sense. It's more on a relative basis. We have lost some both in terms of sales and EBITA margin level. We have also concluded a restructuring of the Sandre Maisons Group in the Marine segment. This is something we should probably have started a bit earlier than what we did since the problem have been in the company for quite some time. But now we have taken decisions to restructure this, and this includes site closures and general downsizing, and we are shrinking this group to a more manageable cost structure. And first of all, we want to reach a breakeven, which we will do during this year and step by step build from a more sound platform to improve this business in a better way. So I would say that this is going in accordance with plan, and we will see, as I said, improvements during 2018 in a good way. In addition to that, we have a handful of companies with, I would say, performance issues. And also in those companies, we have clear ambitions and targets and plans to improve those businesses during the year here. As I said, we have made 12 acquisitions during the year, but I would say the acquisition of the company, Innova Tools, in Germany stands out a bit in a specific way. It's a fairly sizable company for Indo Trade, and it's a really great company, and it's also another stepping stone for our continued growth in Germany. Inwatools, it's very similar in terms of Indo Trade, in terms of culture. A perfect company in terms of entrepreneurship, 3 strong owners still very much engaged in the company, working close to their customers with products range expansion. They have a very efficient production setup with close to 100 CNC machines in their different facilities in one big site. And now they are working on further geographical expansion of this company. So it's great to welcome them into the group here and continue to work with them now during 2018 and expand that company. And by these acquisitions, we are more recognized in Germany. We see that the inflow of different proposals from strategic market for us. There's a huge level of what you can say Mittelstand type of companies, privately owned companies, which would fit the intertrade model very well. And we will step by step hopefully be able to acquire more companies in Germany during this year and further on as well. If we then turn page and look at the financial summary for the Q4, I would say that order intake was healthy, came in at 13% and net sales at 12%. So there was no issue in terms of revenue growth or the underlying market in quarter 4. It was on a good strong level, I would say. We took the restructuring cost of SEK 132,000,000. This is obviously extraordinary, and this is not something you should expect to be common for Intertrade in the quarters to come. I don't see any need for anything like this in our current portfolio. So this was clearly an extraordinary activity for us. And excluding the restructuring costs, EBITA rose 10% to SEK431,000,000, and that corresponded to an EBITA margin of 11%. I'm not completely satisfied with that level. However, I'm not worried either. I'm still optimistic for the next coming quarters and the year. So I base that on that revenue stream. The order intake was still good also during the Q4, and this was more related to, I would say, cost issues than any revenue related issue. 4 out of 6 business areas improved also in profitability perspective, And the business area called Fluid and Mechanical Solutions overall had also good performance in quarter 4, but a very few number of companies had issues there, and I will iterate a bit more on that when we come to the business areas. Apart from Fluid and Mechanical Solutions, also special products had some issues, and I will explain some more linked to that down the line here. But I think it's important for you to know that, as I said, I'm not worried for 2018 based on this. We have good order intake in the quarter and a healthy start of the year, I would say, also. Apart from the restructuring cost or excluding the restructuring cost, EBITA then declined 24% to SEK299,000,000, and we came in at an EBITA margin of 7.6%. Then if we look at the market conditions in a geographical perspective, not so much different from previous quarter or what you have seen probably from other companies. We have a good situation, I would say, in Sweden and Finland. Part of Denmark is more towards the stable side. And Norway, we point out being stable here. But I would say that oil and gas is definitely showing some improvements linked to the somewhat higher oil price. So I think you have also seen that companies like Statoil and others are showing very good results for quarter 4, and we also see that and this is benefiting some of our companies in that sector. Of our geographical scope in Europe. I would say the export oriented part of the U. K. Is still doing quite good, to some extent, benefiting from the pound. Perhaps the domestic part of UK is not showing the same strong improvement. I'm not worried about K, and they are still performing well. And I'm optimistic about their performance in the year 20 18 here. Benelux and especially Holon for our sake, Golden Lenses is doing well. We see good development in our portfolio there. And you have also seen a healthy activity in terms of acquisitions in that region during 2017. I think that we will see good continued performance from us in 2018 in the Benelux. Switzerland, however, is more stable, a bit more sort of lack of growth. The currency is very strong, and that is hindering, I would say, some of the, at least, importing trading companies to develop very strongly. But again, we have good companies in Switzerland, and I still see that we will have stable performance also there going forward. Germany, good level of activity, also forecasted to have good level of activity. And now we know more about Germany via our acquisitions of Max Vision and in Inowattu. We spend more time in Germany, both myself and part of the management team. So we have focus on Germany, and we'll, I hope, benefit a lot from that going forward. Our activity in North America is not so important. We have some companies with the business there. We'll see how that develops. Still looks good for our businesses in North America. And Asia is still positive overall in an industry perspective. So all in all, I would say favorable market conditions and no signs for us in terms that this is declining or weakening as we see it right now. If we look at the order intake a bit more specifically, you see here bar diagrams for both quarter 4 and the full year. And as I said, for the full year at the bottom there, you see in total order intake increased by 16% and a good 6% on the organic side and 9% from acquisitions. Currency had a very minor effect, plus 1% on a full year basis. And a similar pattern for the 4th quarter, up plus 13% in total and organically 16% and acquisitions generated 8% and currency slightly negative in the quarter. So I would say all the 3 months in the quarter performed quite well, October, November December. So again, as I've said, not really a market related issue in quarter 4. And if we look at the net sales development, it follows basically the order intake in a very similar pattern. The full year improved or increased by 15% and organically a strong 5% for us and acquisitions another 9%. Also here, currency, very minor effects. And in quarter 4, the total was plus 12%, organically the same level at 5%, and acquisitions added another 8%. This 5% is a good organic growth level for Indo Trade. In our portfolio, we have a fairly sizable number of technical trading companies. They are performing at large very well. But organically, it's a bit more difficult to grow these companies. They usually have a strong market share in their home markets. Many of them are in Scandinavia, and it's difficult to grow into another geographic market. So they need to work with increasing their market share via innovation and product range extensions and so on and so forth. But they also, over time, have seen some competition increase from the East in different ways. And sometimes, some of our suppliers have decided to go direct and so on and so forth. This is nothing new. This has been the same Ingo Trade for many, many years. So again, I would say that, that 5% organic growth, good performance for us. If we then look at the profitability and specifically the EBITA development, same basis, full year results at the bottom in the graph and then quarter 4 at the top there. We improved 9% in total, +8% organically and 10% via acquisitions. And then the restructuring was sort of impacting with 9% in the year. And if you look at the quarter, including the restructuring, minus 24% and restructuring in itself, minus 34% organically improvement, 4% and acquisitions, 7%. But I want to reinforce here that we came in at 11%. I'm not fully satisfied with that even if we then in that number exclude the restructuring. But most of this could be explained by in a relative sense, lower result for this power generation related company. Again, this is a successful company, but in relative perspective, they had considerably lower result in quarter 4. We also had a bit higher costs in the quarter than planned. Part of this was acquisition related, and part of that would be explained by Innovative Tools, which was a bit more complex acquisition than what we traditionally see. And then several of our companies had smaller cost increases in December. And as I said, that was not gross profit related. It was further down in the P and L. And I'm not worried about this going forward. Most of our companies performed very well on a full year basis, and I think they're set for good performance in quarter 1 and for 2018 based on the market situation we see here. So I'm optimistic and positive in that sense. I have already, I think, explained all of the other numbers on this slide. So we can go ahead and look at the growth bridge for 2017. Again, just reiterating what I have said here. If we start on a full year basis, order intake grow organically 6%, net sales grow 5% and EBITA plus 8%. Those are my primary focus or this is my primary focus area, I would say, organic growth. I think this is demonstrating our underlying performance as a company. Then part of our business model is acquisitions. So we have also focused on debt, but I'm keen on following our organic growth very important sort of KPI for us as a company. In quarter 4, organic order intake growth, 6% and net sales increased organically 5% and EBITA, 4%. We have already been through these numbers. Then if we talk about acquisitions a bit more, here you see a list of the 12 companies we acquired during the year. It's a strong performance here, and it's all good companies. I feel very positively about this list of companies. You see it's a good geographic spread, 3 companies from the Netherlands, 3 from the U. K, 2 from Germany and 3 within Scandinavia. And it basically, I would say, shows that we are growing a bit further outside Scandinavia. We will absolutely still see acquisitions in Scandinavia assume during 2018 and onwards. But as we are becoming more of a well known company in these other companies or countries outside Scandinavia, we get more recognition for being a good owner. The activity level is increasing step by step, and this is also what we will see hopefully more in Germany, as I said. From a technology perspective, these are a broad base of technologies. We have measurement and sensor companies here. We have mechanical engineering related companies. We have instrumentation related companies. We have an interesting area of lightning control, which I think will grow as a sector going forward. And it's also a good mix of technical trading companies and for acquisitions to come. And we have a good reputation by the brokers, and we have great ambassadors, I would say, in persons who have divested their companies to Indu acquisitions going forward. And some quicker comments for our business areas. Start with Engineering and Equipment. We have a new name for this business area going forward being Finland since all, I would say, companies in that business area are located in Finland. Finland has represented strong performance improvement for us during 2017. The underlying development for corporate Finland has been very good, and we have also from that. But also, our companies are by far doing very well. We have a good set of companies in Finland. I don't think we will see the same increase in 2018 as 'seventeen, but it looks positive and stable going forward. If we look at Flow Technology, our biggest business area going forward is if you exclude the restructuring activity within the Saint Germain Group doing well as a business area, I would say, they had an organic growth of 4%. They had another company in that area with extremely high order intake and sales during 2016. So, the comparative numbers have been a bit demanding in that sense. But overall, the business area is performing well. We are we have appointed now a new head of this business area, which I will come back to, and I'm very optimistic about Flow Technology going forward. On a European basis, Indo Trade is actually a sizable player in this sector overall. So we have very, I would say, high competence, good experience in this area. We are respected by the suppliers and also the customer base. So it's a very strong platform we have in Flow Technology as a company. If we look at Fluid and Mechanical Solutions, a high performing business area on a high level for Indo Trade for many years, strong management of the business area. The weaker performance in quarter 4, as I said before, is really explained by higher costs in a very few number of units and predominantly linked to a larger e commerce project within 1 company, which had sort of assuming sizable but very limited revenue stream there. So that accounts for a large part of the relative decrease on an EBITA margin level there. This business area, as I said, is well managed, stable and will perform well during 2018 as well. Industrial Components, primarily Scandinavian Technology Trading Companies, large number of companies in this area, performed very well, I would say, in 2017. We have a fairly new head of this business area who have engaged strongly with the companies in the area and is now up to speed, has an agenda and step by step is, I would say, delivering on this agenda in a good way. Strong demand in Sweden and Norway and positive EBITA margin improvement up to 11.6%. So good performance in Industrial Components. Measurement and Sensor Technology is very interesting, absolutely well positioned in today's digitalization era, one can say. Most companies are looking for different ways to have more intelligent products, And we are one supplier of sensors and measurement equipment to help facilitate this. So we are, I would say, very well positioned here. And now we have a strong portfolio of companies in this area and some of them with benefiting from being together and learning from each other in a positive sense. Healthy margins here. I still think they can improve further, but they are on a good journey. And the ambition is that, that journey will continue also going forward. And this is also obviously an area where we are keen to make more acquisitions going forward. Then special products has been the largest business area, and we are splitting up special products, which I will come back to. And this is where we had the bigger, I would say, negative sort of performance during the Q4. You can see there that the business came in at 11.3 percent EBITA margin versus 13.8% a year ago. And most of this is explained by lower volumes and lower EBITA margin for this power generation company, I have already spoken about. Again, that company is a good company and above average in terms of the EBITA margin. In addition to that, the UK business is primarily in special Products and also the business we have in Switzerland. So a bit lower performance from those two markets. And there were also some higher cost levels not sort of linked to gross margins, but lower in the P and L within some of the companies in Special Products. Again, I am optimistic again, I am optimistic and positive. I'm not worried about this going forward. We are seeing better order intake for this power generation company, and the relative situation will be easier to manage in that perspective. And I think we will see well performing companies in this portfolio going forward here. So even if I'm absolutely not satisfied with quarter 4, I am optimistic that this will improve going forward. Then we have a earnings per share slide. You see that we are overall performing well year to date plus 9%, ending at DKK8.54. And as I've already said, the Board is proposing a dividend on DKK 3.75, which is +17percentversus a year ago. If we look at our overall financial targets, we are delivering above targets in terms of growth. We are delivering above targets in terms of EBITA margin despite the restructuring costs we have included here. We are just below our target in terms of return on operating capital. Again, this is largely due to the restructuring cost, so I'm not worried about that going forward either. And we have a very healthy balance sheet and a net debt to equity ratio of 74%. So overall, stable, good performance from Indo Trade, a successful 2017. I will jump over these more detailed slides in terms of the income statement, the balance sheet and the financial key data here. I think we have already discussed that in quite some detail, and I think you are well aware of the numbers from our report. On Slide 19 here, you can see our gross profit development and our gross margin level. And here, I think it's important to point out that we have a stable situation at 33%. And this is no worry in terms of the costs we had in December quarter 4 here. The gross profit level is still stable, and I assume that will be on a stable level also going forward. Then towards the end here, I just want to take some minutes to explain why we have reorganized and the benefits of that. As I said, I wouldn't have reorganized if I wasn't very clear in terms of the strategic direction and the business model. But we spent a lot of I spent a lot of time with the management team to sort of analyze our portfolio and draw conclusions from that during the 1st 6 months. And I would say based on that, it's quite easy to confirm that our direction going forward is going to be very evolutionary and build on the business model. As I said, no changes in terms of having this decentralized approach with a high degree of entrepreneurship. We will keep developing our portfolio companies, perhaps taking that one step forward going forward and then add accretive good acquisitions as well. We had 6 business areas during 2017. 1 of them was, by far, the bigger one, Special Products, And most of our structural growth came out of special products since most of the, I would say, companies outside the Nordic region was placed in special products. So this created a bit of an imbalance, and that would have been even bigger if we would have kept this structure. My predecessor was the Head of Special Products in a successful way. I assume that role and have worked with that business area. Below myself in that role, there have been successful persons having geographical responsibilities reporting into me, and they have been in those roles for quite some time. So there was a head of U. K. There was a head of the Benelux region. There was a head of Switzerland and Austria. So we basically took away the special products an organization and have now lifted up these 3 geographical areas into the management team and with perhaps a small change that we have now also included Germany into that Switzerland, Austria cluster, and we now call that DACH instead. As I said, we during 2018, we will have more sales outside the Nordic geography than so more than 50% of our sales will be outside Nordic. And this means also that we need more international managers in the management team. And when I came on board, we were all Swedes apart from one from Finland. And now we are making the team more international, and we will benefit from that when we work as a management team and try to expand the business internationally. Here, you now see the new product and technology commonalities. And that's product and technology commonalities. And that's the flow group, as I said before, in the trade is a sizable player within Flow Technology in Europe. And the companies we have in that group are benefiting from, I would say, knowledge synergies in a positive way. It is the same for measurement and sensor technology. Several of these companies are closely related in terms of technology knowledge and understanding and can benefit from each other and being in the same business areas. Also, when we do acquisitions going forward, even if we buy flow companies and measurement companies in different geographies, we will, to a large extent, place them in these business areas, so the new companies will benefit from that environment. We have Fluids and Mechanical Solutions and Industrial Components. These are mainly, I would say, Scandinavian in scope. Fluids and mechanical solutions, a bit more industrial oriented and industrial components more focused towards technical trading companies. And apart from those, we have now geographic clusters being Finland, Benelux, DACH and the U. K. Would say, Indotrade's acquisition strategy is broad based and, to some extent, opportunity based. And the commonality then is the geography, and we are benefiting from keeping that geography together in some perspectives. And now we have very capable persons heading this up. Special products was then basically split into 3, Benelux, Stac and U. K. We also had some companies which were flow related. So we have had a couple of larger companies, which are now accounted for in the Flow business area. And the last slides in terms of the reorganization. Here, you see the new setup with 8 business areas. I think we can manage this in a good way. I feel very optimistic about this. It's a good team, as I've said, and it's good to have a flat structure within the trade since we are all about decentralization. So this works well, and now we have a good team with a lot of international skill. And with this space, I don't foresee that we need to reorganize anytime soon. We can go several years now with this structure and add potentially a large number of acquired companies into this structure. And we also have capabilities and resources to keep developing the portfolio of companies we already have in a good way. In the trade, it's overall about profitability. We manage as a group and as an individual portfolio company linked to profitability levels. We are agile, and we try to adjust for higher raw material salary increases. And we work very closely to our customers and, by all of this, manage our profitability in a very strong sense. As many of you know, I have been in quite a few different companies during my career, and I have never ever experienced culture where the accountability for profitability is as strong as within Indu Trade very, very positively, I wouldn't say surprised by positive perspective on this. We also want to see growth. Our philosophy is that a company which is not growing can stagnate in a number of different ways. So it is positive to develop companies and grow companies, and a competitive company can sort of regain in terms of market share. So we want to see a growth agenda, but the growth is all about profitable growth. We don't want to see growth going forward, which will have impact on our margin level and having declining margin levels. It's crystal crystal clear within our group that profitability comes first and first. And then we obviously want to see growth, but we want to see profitable growth. And the 3rd dimension in terms of our overall objectives is sustainability. We are working with this both long term and short term and on a day to day basis. And I would say InduTrades business model is very much about sustainability. First of all, we are sustainable in the sense that we are stable in our performance, and we don't want growth which is not sustainable. We want stable growth over time. And the best, I would say, receipt on that is when you look at the Indo Trade performance in 2,009 when the Lotte businesses had very difficult times, industry went from approximately a margin level of 12% down to 9%, so very stable performance in a difficult market environment. But we are also working on sustainability in a broader perspective, and that's also, I would say, close to our heart and part of our culture in a natural way within the trade. So by that, I will end my presentation, and we will open up for questions. Thank you. First question comes from Marcus Amrud from Kepler Cheuvreux. Please go ahead. Your line is now open. Hi, Markus Amrud from Kepler Cheuvreux here. A couple of questions, if I may. The first one, if you could just elaborate a little bit on the underlying growth. You say that you're seeing good markets, but if you can just talk a little bit about daily sales rate, would you say that it's stable? Or is it accelerating or decelerating if we talk about growth, not just levels? That's my first question. My second question, the company within Power Generation, which is suffering from the level of low projects or no projects and have, hence, a whole lower profitability level. Should that profitability level, since there are no big projects any longer, be stable at these levels? Or will it go back up? Good questions. In terms of the overall growth, I definitely see no decline. I see stable growth if I talk about intertrade in total. Some markets will be a bit better than others, but overall, I would say a stable performance going forward, not worried about that. If I talk about the power generation company, we will remain at the level where we are now, I think, so no further decline. And the level we are at is a good level. So perhaps you misunderstood me or rather I was a bit unclear. There is quite a lot of market activity in this sector or segment, and there is quite a lot of project. But the projects are a bit smaller than these mega projects we saw during 2015 2016. So there is a healthy market activity, and we have a competitive company. So we also now see, as I said, better order intake since a couple of months. But we will not come back anytime soon to those very, very high profitability levels we had partly during 2015 2016. Thank you. Our next question comes from the line of Johan Dahl from SEB. Please go ahead. Your line is now open. Thank you. Hi, Bo and Jan. Can you just confirm to me how the revaluation of earn outs impacted your earnings before interest tax and amortization in the Q4? So one is Johan here. As you mentioned, you're perfectly right. We had reevaluation of earn outs, which had a positive impact on the earnings in the Q4. In total, OJ was basically on the same level, but relative to the same quarter last year was a little bit more of a positive effect from that sense. So that has helped early. So again, coming back to that the cost side that Paul talked about, despite this help from the so called earn outs that didn't happen, I mean, we still had a high cost in the quarter. So you're perfectly right on that. Yes. Because that's what I'm getting at. If you had that would give it a delta of +16 on earn outs versus last year. And you also you provided us kindly with the addition from acquisitions to earnings. But the I mean, what you arrive at basically, if I've done the math correctly, is that there's basically no positive impact on earnings from your organic growth. So I was just wondering, can you please be a bit more specific on the cost creep you're seeing in the business below gross result, as you mentioned? And how that how you're addressing that and how that's looking for 2018, please? I think, I mean, again, the beauty of the industry portfolio is when you have roughly 200 companies, it's a sum of things. But as Bo mentioned, I think we should keep in mind that the big part of the cost deviation is related to this company and the power generation. That's the big material one. Upon that, as Joel also has said, is that there are smaller type of one off and small type of cost deviations that if you take them individually, they might not be material. But if you add them up, there are, I mean, quite some, and that explains the second part of that kind of deviation on the total basis. One of that is, for example, that's why the Fluid and Mechanical Solutions, where you see the margin drop gives you an idea about the increased cost during the quarter. And on top of that, we had some transaction costs that were related to Inova Tools. So again, it was not just, I mean, 1 or 2 costings. It was from an SG and A perspective, we saw that, and we were not happy with SG and A development in the Q4. So again, not one item, but a couple smaller ones adding up to the rest of that sum. And I think you have a pretty good view of the total kind of deviation where we're off. And so I think yes, but again, the big one was the outcome in power generation business. Yes. Sorry to dwell on this, but am I correct in assuming that it's now €40,000,000 €50,000,000 negative in the quarter? And also, I like can you please talk a little bit how you're addressing this in 2018? Is that sort of something you expect to we'll see in the coming quarters as well? I think when we talk first about the number by itself, we'll take that part of the question. I think we talked about the costs were somewhere in between the €30,000,000 €40,000,000 kind of range. That's kind of the duration was. All right. Thanks. Okay. Thank you. Our next question comes from the line of Robert Reddin from Carnegie. Please go ahead. Your line is now open. Yes, hi. So if I could ask on the HP valves business, if you think you're going to be stable at this level going forward, how are comps now for Q1, Q2? How was Q1, Q2 last year in this business? Do you think you'll be expanding earnings year over year or declining? No, it's going to be relatively better better pack behind us, I would say now. All right. On the Marine business, the restructuring you did in Flotek, I mean, we've seen some positive market signs here and there in the marine market, right? So has this been sort of a market demand problem in that business or sort of homegrown cost problems? You are right in terms of that the Marine segment globally is seeing improvements. I think in quarter 4, there were a number of tank vessels or that type of activity has improved. There are a lot of cruising ships being built in Europe and so on and so forth. But I would say that we have had more of a management problem with this company, and we haven't been fit for fight in a number of dimensions. So we have not been able to benefit from a more positive segment due to weak performance from our side in terms of the product range, in terms of the cost structure and things like that. So it's now we are restructuring the company, and we are we have a new management in the company. We are step by step, we will improve our product range the way we go to market a bit and so on. So there will be some larger cost steps taken, as I said, linked to site closures and downsizing, things like that. And in parallel to that to this, we are trying to become more of a relevant partner to the customer base in a number of different ways. So and that will take some time before you see significant improvements there. But that's how I would explain the situation there. Okay. And this business, it contributed with a significant loss in 2017, is that right, excluding the restructuring? Yes, yes, absolutely. Would you want to comment on how much that was? And do you have a sense of what the improvement potential is? I think we remain to this policy to not sort of comment on individual companies from in that perspective. So I don't do that, no. All right. Final question from me on the M and A pipeline. So you've changed this the organization structure a bit and have worked a bit But with that, have you sort of lost pace at all in the M and A pipeline work? Or is it do you feel it's stronger than 6 months ago, say? Or how would you comment on the M and A pipeline sort of maturity and strength? No. I'm very optimistic in terms of the M and A pipeline. We my take is that we have finalized now 12 during 2017, and it's and I came on board in April. So I don't think we have lost any pace. And the recognition of Indo trade is increasing for every month, I would say, in the countries outside Sweden. So the level of interest is improving, and so optimistic in terms of M and A. Okay, perfect. I should also say that our new Head of M and A is extremely experienced. So even if he came on board now 8th January, he is so experienced. So that is not meaning any lost momentum. And our old head of M and A is still with us, and they work closely together. So there is a very well planned, I would say, succession in that sense. Thank you. Our next question comes from Christian Hellman from Nordea. Please go ahead. Your line is now open. Hi, thanks. Well, to answer most of my questions have already been answered. But I do have a question on the earn outs or the restatement of the earn outs that were discussed earlier. Can you elaborate a bit on in what business areas these restated earnouts relate to? And just to give a sense performance in these business areas. Yes. As you can I mean, just by knowing that most of the acquisitions that have been made in the past years are related and I think basically in special products, We can say that quite a substantial part of the earnouts or part of that has been within special products? Besides that, you can find these earnouts. And again, this is a sum of the cost of not earnouts that has not taken place. So I would say there's no material ones per se. It's a couple of small ones, and you can find them actually in both in a small one in Flow Technology. You also have to a certain extent you have it in special products and you have someone also in industrial components as well. But again, they're not matured by themselves. But if you add them up, then it's the sum. Okay. And then a more broad based question on the strategy going forward in terms of expanding into new markets. Just wondering if you could say something about how you view, for example, North America or other regions going forward for Intertrade, perhaps not this year, but in the medium term? Yes. I would say short term, we are focused on where we are now. We are open to potentially add companies in the northern part of Italy to our geographical cluster. We have started to talk about North America, analyze North America, but we're not close to any deliberate decision in terms of North America yet. So this one, I will have to come back to later on. So short, medium term, it's the geography where we are plus, I would say, Northern Italy as well. And as there appear to be no further questions, I return the conference to you. Okay. Then I thank you for participating, and please feel free to contact us after the call here if you have follow-up questions. Thank you so much for today. Bye bye. Thank you. This now concludes our conference call. Thank you for attending. 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