Ladies and gentlemen, welcome to the Inwido Q2 Teleconference 2020. Today, I'm pleased to present Henrik Hjalmarsson and CFO Peter Welin. For the first part of this call, all participants will be in listen mode only, and afterwards, there'll be a question and answer session. Speakers, please begin your session.
Good morning, everybody. My name is Henrik Hjalmarsson. I am President and CEO of Inwido. With me, I have Peter Welin, CFO and Deputy CEO. We will go through Inwido's second quarter 2020 report. I will start by going through a brief summary, an overview of the numbers, short summary by Business Area. A few words on the outlook. Peter will then go through the detailed financials. There will be plenty of time for questions at the end. Next page, please. Page two. Just a very brief introduction to Inwido, for those of you who might be new. We are the largest window group in Europe and a leading door manufacturer. Clear market leader in the Nordic region, with a strong presence in the U.K. and Ireland. A challenger position in Poland and Germany.
2019, we had net sales of SEK 6.6 billion and an operating EBITDA margin of 9.7%. We've got roughly 4,400 employees in 12 countries. We market and sell all the spectacular brands you can see at the bottom of this page. Next page, please. Page three. I just thought I'd take the opportunity to briefly mention our approach to ESG, given that we don't take enough time to talk about our contribution to sustainable living, particularly then in the form of energy-saving windows, but also sustainable window production. Our view on this is our own developed Inwido sustainability compass, which consists of three legs. The first one being to be an environmental friend, meaning not only that we'll obviously reduce our carbon emissions, our waste generation, but also, for example, that we will increase our usage of wood from sustainable sources.
The second one is to be a good place to work, obviously being a safe and healthy work environment, but also developing our employees, for example. The third leg is to be a responsible business, contributing to a responsible and sustainable business society, but also contributing to society overall, not the least in the locations where we are active. Next page, please. Page four. If we look at the summary of the second quarter, overall, I'd say that we're satisfied with the quarter. Happy to report the fifth consecutive quarter with strength in margins and a strong cash flow. In the quarter, we've obviously seen pockets of COVID-19 impact. I'll come back to that in a little bit, but from a group perspective, overall, it's been limited to date. We saw increased order intake and then stronger order backlog at the end of the quarter.
We saw, in general, positive consumer markets with some variation, which I'll come back to, with industry markets being fairly stable, but a bit more cautious. Really pleasing to see that our long-term investments for growth in e-commerce are paying off as we see 44% growth in e-commerce and a strong order intake, which means that now e-commerce in the quarter was 13% of total sales. Next page, please. Page five. If we look at the numbers then, sales grew to 1.719 billion SEK organically. That was a 1% growth. The operating EBITDA strengthened to 202 million SEK versus SEK 187 million last year, which means that the operating EBITDA margin strengthened by 0.9 percentage points to 11.8%. Order intake grew by 2%, which means that the order backlog at the end of the quarter was 12% stronger than the same time last year.
Good operating cash flow again at SEK 482 million, considerably improved versus last year's SEK 163 million. That means that our net debt versus operating EBITDA came in at 1.7 times, considerably better than the 2.8 times from last year and also well below our target. Next page, please. Page six. In terms of one of our key concerns this spring, COVID-19, overall, as I mentioned, we've seen a limited operational and financial impact in total as a group. I'm really pleased, given that one of our key priorities has been to protect our employees and keep them safe and healthy, that we have very few employees who've been sick enough to be forced to seek medical attention and hence be confirmed infected.
As we mentioned briefly after quarter one, we were forced at the back end of quarter one to shut down the activity in the U.K. and Ireland, which then obviously has impacted the customer activity there. We've also seen an impact on the direct sales with installation model in Finland, given restrictions in how and under what circumstances we could visit consumers in their homes. After the Q1 lockdown in the U.K., going in then to the beginning of Q2, we've successfully opened up, not yet back at full activity, but getting there slowly. We've seen some operational disturbances in the supply chain backwards in sourcing, and also from sick leave in our factories, partly then impacting our efficiency, particularly in Sweden. In terms of support packages, we have temporary deferral of taxes and fees of SEK 68 million. That's included in this. Peter will come back to that.
We have government supports of a total SEK 16 million in the quarter, and that's mainly related to furlough or temporary leave in the U.K., and compensation to employees for that. In terms of the long-term impact of COVID-19, I would say it's hard to predict at the moment. We have stayed very close to the situation, and we've got detailed plans to take out costs rapidly if needed. Next page, please. Page seven. If we summarize then the first half of 2020, we've seen sales growth to SEK 3.167 billion, organically just shy growth. Operating EBITDA strengthening to SEK 251 million, which means that the operating EBITDA margin has strengthened by 0.6 percentage points to 7.9%. Again, strong operating cash flow the first half of the year at SEK 515 million versus SEK 230 million last year. Next page, please. Page eight.
If we look at the performance by business areas. Business Area South, we saw overall good growth and strong order backlog. Not the least driven by e-commerce, which had 44% growth, as I mentioned, and a strong order intake, +37% in the quarter. We've seen continued strong delivery in the larger Danish units. U.K. and Ireland obviously impacted by the shutdowns through the quarter, as I said, successfully opening up. Not back in full swing yet, that's on their way. Development in Poland in the quarter was stable. Which means that sales was 3% up to SEK 711 million. Operating EBITDA margin strengthened considerably to 19.3%. The order backlog at the end of the quarter 29% up versus the same time last year. Next page, please. Page nine.
Looking at the Business Area North, we saw overall positive underlying consumer demand, particularly in Sweden and Norway. However, as I mentioned, in the direct sales with installation model in Finland, we were impacted negatively due to the restrictions imposed by the government. Industry markets overall relatively stable but still cautious in the quarter. As I also mentioned previously, we had some operational disturbances in the sourcing supply chain and also with high sick leave impacting efficiency negative. Reported sales slightly down to SEK 970 million, with an operating EBITDA margin at 7.6% versus 7.8% same period last year. The order backlog at the end of the quarter, 2% up versus last year. Next page, please. Page 10. Looking at the market outlook overall, it's still uncertain due to the COVID-19 development.
It's obviously pleasing to see that we enter quarter three with a stronger order backlog versus last year, which will support our near-term delivery. However, in the medium to long term, we see consumer demand being impacted potentially by negative factors such as higher unemployment and potentially reduced home prices, but also potential positive factors such as government stimuli packages, which there are discussions of in a couple of geographies we're active in, and also potential changes in behavior. The industry market response after COVID-19, both in terms of how permit processes but also building processes are impacted, is a bit uncertain. We clearly see underlying demand in Ireland and the U.K., which creates a market potential, but again, the exact form and timing for that is a bit too early to tell. The e-commerce segment, as you've seen in the quarter, is obviously doing really well.
The question is if that's an accelerated step change or if it's a COVID-19 impact. Next page, please. Page 11. If we look at our focus in the near term, that remains largely the same, which is to get our way through the COVID-19 development in a robust and resolute way, but also obviously preparing for a time beyond. We want to continue to strengthen our positions in the key geographies in this dynamic market, utilizing the opportunities that we see. We want to continue proactive and aggressive cost management, both to meet changes in demand, but also to support our margin delivery. We will continue our investment in e-commerce growth. We will also continue to work to strengthen the balance sheet to create resilience, but also strategic flexibility for when the time is right.
Lastly, continue our actions to drive growth and capitalize on the market opportunity. Next page, please. Page 12. I'll hand over to Peter to take us through the financials.
Thank you so much, Henrik. Then we go to the next page. Page number 13, please. On this page, we can see the income statement. To the left, you can see Q2. In the middle, you can see year to date, Q1 and Q2. To the right, we can see rolling 12 months as well as 2019. If we start with Q2, sales was up +1%. Adjusted for currency, meaning organic growth, was also +1%. Somewhat lower gross margin too, due to the COVID-19 impact in U.K., Ireland, and Finland. In addition, we have also production disturbances, particularly in Sweden. We also have a negative mix impact. This has then been compensated by lower overhead costs, and thereby operating EBITDA has been improved from SEK 107 million to SEK 202 million. Inwido has received government subsidies related to COVID-19 of SEK 16 million in a quarter.
These subsidies have been booked at reduced costs and mainly impacted gross profit. The margin, operating EBITDA margin, has improved from 10.9% to 11.8%. Thanks to the improved margin latest five quarters, operating EBITDA margin for latest 12 months is now up to 10%. Inwido has in the quarter restructuring costs of SEK 8 million related to write-down of central projects and also restructuring costs related to COVID-19. Further down the income statement, we can see that earnings per share was +20% compared to last year, and also profit after tax is also +20%. Inwido had some positive currency impact in the quarter due to stronger Swedish krona. Earnings per share has been improved from SEK 2.05 to SEK 2.46 in the quarter. Looking at year-to-date, sales is more or less on the same level as last year. Gross margin is below last year.
Once again, we have been compensated lower gross margin with lower overhead costs, thereby operating EBITDA has been improved from SEK 232 million to SEK 251 million this year, improvement by 8%. If also here look further down the income statement, we can see that earnings per share is somewhat below last year, mainly due to negative exchange rate impact from Q1. On a rolling 12-month basis, sales is up to SEK 6,644 million. Operating EBITDA, SEK 664 million, giving an operating EBITDA margin of 10%, and earnings per share is now on SEK 7.41. If we then turn page, we go to page number 14, and this page is showing sales and order take for Q2. You can see sales to the left and order take to the right. You can see 2018, 2019, and 2020.
As we said before, sales was +1% in the quarter. Also organically, it's also +1%. North was on the same level as last year in the quarter when it comes to sales. South was +3%. COVID-19 had a negative impact on the direct sales model in Finland. Also negative impact in Ireland and in Great Britain. In South, e-commerce has been compensated the lower sales in U.K. and Ireland. E-commerce had a growth of 44% in the quarter and now stands for 13% of the total sales of the group in the quarter. You can see the order take to the right. The order take was +2% compared to last year, North -4% and South +11%. Here, e-commerce has an increase of 29% in the quarter when it comes to order take.
The order take was plus 2% compared to last year and somewhat below the level of 2018. If we turn page, we go to page 15. This page shows the backlog from Q2 2015 until Q2 2020. For Q2 2020, we started with higher backlogs in the quarter compared to last year, then the order take grew by 2%, where sales was plus 1% in the quarter. Thereby, the backlog continued to grow in the quarter and was end of the quarter plus 12% compared to last year, equal to SEK 1 billion 262. SEK 135 million higher backlog this year compared to last year. A backlog of SEK 1.2 billion-SEK 1.3 billion is the highest backlog ever for Inwido end of a quarter. If we go to next page, we go to page 16. This page shows the operating EBITDA margin and also operating EBITDA.
To the left, you can see Q2, and to the right, you can see year-to-date, January to June. You can see 2018, 2019, as well as 2020. If we start with the quarter, the margin has been improved from 10.9% to 11.8% in this year, and we're also above the level of 2018 of 10.6%. Comparing to the last two years, gross margin has been lower compared to last year. This has been compensated by low overhead costs and thereby improved the operating EBITDA margin. The operating EBITDA margin of SEK 202 million, that is above SEK 200 million. That is the second time that Inwido have a result above SEK 200 million in the second quarter. Looking at year-to-date, we can also see improvements. The margin has been improved from 7.3% to 7.9% this year. Looking at 2018 was 7.7%. Also on year-to-date, we have the same tendency.
Lower gross profits or gross margin, and then it has been compensated by lower overhead costs and improved the margin compared to previous years. If we then turn page, we go to page number 17. This page is showing the net debt versus operating EBITDA to the left, and to the right, you can see the cash flows from operating activity. Net debt has decreased in the quarter and was end of the quarter SEK 1.33 billion, a reduction of SEK 895 million compared to last year. Inwido has, during the last two years, reduced the net debt by more than SEK 1 billion, SEK 1.056 billion if we compare to June 2018. Looking at net debt versus EBITDA, it has been reduced from 2.8 to 1.7 when we exclude the IFRS 16 impact. If we compare that to 2018, it was around 3.2.
A reduction from 3.2 2018 to 2.8 2019, and now 1.7 in 2020. Inwido has deferral of taxes and fees of SEK 68 million in the quarter. If these would have been paid in Q2, the net debts versus the EBITDA would instead have been 1.8 and not 1.7. If we include IFRS 16, the net debts would increase by SEK 371 million, and the net debt versus the EBITDA would have been 1.9 instead of 1.7. If we look to the right, we can see the cash flows from operating activities. The cash flow has been strong in Q2 or in 2020. The graph illustrates cash flows from operating activities, January to June 2017 to 2020. Please note that 2017 and 2018 are excluding IFRS 16, whereas 2019 and 2020 are including IFRS 16.
The operating cash flows have been improved thanks to improved results when we exclude the negative currency impacts, less tax payments compared to last year, and then improved working capital. The main contributor has been increase in operating liabilities, and this includes the deferral of taxes and fees of SEK 68 million, which will be paid in Q3. We've had a negative impact of this SEK 68 million in Q3 when it comes to cash flows. I now hand over back to Henrik. He will make a short summary before we open up for questions.
Next page, please. Page 18. If we summarize the second quarter, we saw overall good consumer activity, and particularly a strong e-commerce performance. We've seen the fifth consecutive quarter of strength in margins with continued good cash flow development. As I mentioned, COVID-19 impact on the customer side, mainly in the U.K. and Ireland and in the direct-to-consumer sales in Finland, but also some operational disturbances impacting efficiency. We've got detailed plans to take out costs if and when we need to to face any fluctuation in demand, but we're also ready to capture opportunities in segments that are growing. We enter the third quarter with a stronger order backlog than same time last year, but the long-term consequences are still difficult to predict. Next page, please. Page 19. That was all from us. With that, we open up for questions.
Back to the operator, please.
Thank you. If you do wish to ask an audio question, you can do so by pressing 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. There's going to be a brief pause while questions are registered. First question comes from Adela Dashian, Handelsbanken. The floor is now open to you.
Hi. Good morning. First of all, I'd like to congratulate you on a very strong report by challenged times. That's very impressive. For my questions, firstly, I'd like to ask about the e-commerce platform. You experienced solid growth in Q2. What are your expectations for this segment going forward? If you could please give us an indication of what level of growth or portion of total sales that's sustainable for Inwido as it relates to e-commerce?
Yeah. Thank you very much, Adela. To answer that question, I think in the near term, obviously, we've got a strong order backlog in e-commerce as we close the quarter, and we had a good order intake in the quarter. In the near term, we expect to see healthy growth. In the longer term, our ambitions that we signaled at the Capital Markets Day last year was without a specific timeframe. We said we have an ambition to double that business, and that will require considerable growth. We want to maintain considerable growth. Whether it's sustainable to maintain that at the 44% level, I think it's maybe over time questionable, but we're targeting considerable continued growth.
Okay, great. Secondly, you were able to bring down the net debt to EBITDA level quite dramatically in the quarter. Do you feel like you're in a better position to act on potential acquisition targets today than you were in the beginning of the year, despite COVID-19? Essentially, I'm asking how the M&A market is holding up for you.
Yeah. Obviously, we are in a situation with even better strategic flexibility given that the net debt situation is even further improved and the balance sheet is stronger. There's a lot of interesting opportunities, and we continue to have dialogue, but the exact timing of, as we've said, M&A is a clear strategic intent for us and a clear part of our strategic agenda. Exactly when that will happen, I think it's a little bit too early to say.
Okay. Thirdly, if I could please also ask about the industrial market? It's clear from your comments today that the consumer market is performing better at this point. What are your expectations for the industrial market going forward?
I think from our perspective, that's maybe the area where it's most difficult to have clear expectations, given that there are a lot of factors impacting, let's say, the desire for new homes, as well as logistics in the construction process. Underlying, we do see in all our core markets a long-term underlying demand for new homes. The timing, I think is very difficult to say. There are factors, I would say, pointing in a more positive direction, but there are also factors pointing in a more negative direction. It's really an area where we're preparing for any scenario, to be quite honest.
Okay, great. That's all for me. Thank you very much.
Thank you. Our next question comes from Karl Vikén of Nordea. The floor is now open to you.
Hi, it's Karl from Nordea. I have a few questions. First of all, if you could comment on the ramp-up in U.K. and Ireland, and what production pace you are currently running at roughly, if you compare it to a normalized level or?
Yeah. I would say we're roughly at, on average, we have three producing units over there, and it's roughly at 75%. Ireland a bit more. Ireland is almost up at 100%, and U.K. around 75%.
In terms of consumer demand in these markets, is it still healthy or is it more uncertainty, or what do you see there?
Yeah, I think consumer demand also I would say that those markets are actually still in the process of reopening up to some extent. Consumer demand has been healthy as that has started up and it's been good. Whether that's sort of a backlog from the shutdown or whether that's a more permanent positive trend is a bit too early to say. Initial indications as we've opened up has been quite positive.
Okay, perfect. Your order intake growth in the South was 44%, if I remember correctly. Could you perhaps try to split it between the markets, Denmark, U.K., and I think you gave the number for e-commerce.
E-commerce order intake growth was around that. It was just below 40. The overall order intake growth was +11% in Business Area South. The key driver of that is obviously e-commerce, but also strong performance in the Danish units. Order intake is actually down still on a total level in the U.K., but obviously in the process of recovering as we kick back up fully. The key drivers of that is e-commerce in Denmark.
Okay, perfect. You also mentioned that you had operational disruptions in Sweden and Finland. Was it primarily in the first few months in the quarter, or do you still see or experience such effects in your production units in these countries?
No, it was predominantly linked to the earlier part of this. Parts actually was to a large extent driven by logistics issues, timing. As most of you are aware, we do basically just-in-time production of tailor-made window, and the supply chain lead times are critical to ensure full efficiency. We had to add some extra buffers, which impacted efficiency, and then secondly, then reinforced by some increased sick leave in some of the geographies.
Okay, perfect. The final one for me, if I may. If you could update us on the competitive landscape, whether you have seen any particular changes now after or now we have had COVID-19 impact for a few months.
In the Nordic region, it's actually relatively stable. I would say there is, on a local level, some dynamics, but relatively stable as a whole. The most dynamic has actually been in the U.K., where two of the major players in the installer segment or competitors of ours then have actually gone through either administration or bankruptcy, and are on their way, either in the midst of that or on their way out of that right now. That's been more dynamic, and I think we've been obviously as a big player, relatively stable through that process. That's where we've seen the most radical change.
Okay, perfect. Thank you.
Thank you.
Thank you. Just as a reminder, if you do wish to ask a question, it is 01 on your telephone keypad. Our next question comes from Kenneth Toll of Carnegie. The floor is now open to you.
Yeah. Thank you. You talked a bit about both lower gross margins, also lower overhead costs that mitigated this. I guess that the lower gross margins are partly a reason for the COVID-19 disturbances, maybe the lower overhead costs have also been a result of this. I imagine that maybe salespeople may have not been able to travel as much as they used to do and so on. How sustainable are both the lower gross margins but also the lower overhead costs once the COVID-19 effects disappear?
We're not planning for the lower gross margins to be sustainable. We expect that you're right in the sense that there are some production disturbances and also the shutdowns that we've had have impacted gross margins negatively. We should be able to recover those again as we see businesses coming back into full swing. You're also right in the sense that we've had temporary benefits on the overhead side, as for example, we've had furloughs in Finland and the U.K. due to limited activity on the customer side on, for example, sales costs and administration costs. As we get back into full activity again, some of that cost will come back again. Your summary is in that sense basically correct.
Okay. I wonder when we talk about Finland, you said that you had some disturbances in the direct sales model, but were you able to have any workarounds there? Did sales just stop completely or could you find other ways to reach your customers and keep sales volumes decent?
For a short period there, a couple of weeks, we were almost at a standstill, I would say. Successively, we found other ways to approach, both to generate leads and to approach customers to kick back up. Now successively, as it's opened back, they're obviously going back to normal. I would say there were a couple of weeks in late March where it was almost at a standstill as obviously there was, as in many markets, a large uncertainty also in terms of what was actually allowed and what wasn't allowed.
Okay. Finally, you have very, very good growth in the e-commerce that we talked about earlier on the call. Do you find that you have production capacity enough to cater for this strong growth? Are there logistic challenges, or how easy is it to grow so much, so to say?
In that sense, we've been fortunate that we've had a very clear plan to drive considerable growth in this business. Hence we've made continuous investments. We did a quite substantial CapEx in 2018, 2019, expanding the capacity in one of the plants in Estonia to enable growth, and we're now capitalizing. I think the fact that we've gone from, I guess we've been averaging in the range of 10%-15% growth in the past quarters. Now it was considerably more than that, but it was still part of a plan to grow. We have expanded our footprint to cater for that.
Great. Then, I think that you mentioned that we should maybe not expect working capital to go even lower after the first quarter, since you have managed to take out quite a lot of working capital. Still, you still have a very good performance. Is this how low the working capital can go, or were there any sort of unusual effects at the end of the quarter that brought down working capital?
We obviously have the SEK 68 million of tax and fee deferrals, which is sort of synthetic improvement. I think, to be quite honest, it was positive in terms of how quickly we could do more. I would say in the short to medium term, we're not expecting to maintain this pace of improvement. In the very long term, we will continue to do structural activities to be more cash efficient, but in the near term, this improvement rate is not going to be sustainable. We will maintain and slowly try to improve this level, but not at the rate that we've seen in the past couple of quarters. I don't think that would be too much of a challenge for us.
Okay. A final question. Do you have any sort of lockdowns or obstacles in your production right now, or has everything sort of opened up?
Yeah. The only area where there is a structural COVID-19 reason not to run full capacity is actually the U.K., where we're still working the process of reopening, as I said. In the other locations, all plants are running, and we're going to right circumstances also with regards to supply chains in the vast majority of our places to get to full operation.
Your delivery time should not increase, although you have a very strong order book now in the third quarter?
There might be pockets of increased lead times in certain segments, in certain geographies, but as a whole, no.
Okay, great. Thank you very much.
Thank you.
Thank you. Our next question comes from Julius Verbelis, SEB. The floor is now open to you.
Yes, good morning, and thanks for taking my question. Just one quick question from my side regarding potential future M&A. Do you have any particular segment or country that you're interested to expand in? E-commerce, or are you planning to expand into Europe, Germany, for instance? Thank you.
Yeah. I think in terms of that, our key priorities from our overall M&A priorities still stand in the sense that the dialogues we have are either in the Nordics, in the U.K., or in the German-speaking regions of Europe, basically. That's where we're also focusing our efforts. We see, as we've said before, long-term interesting potential in the U.K. market. We see in some pockets further opportunity to consolidate in the market in the Nordics, and then we see a lot of interesting links and opportunities between our current operations and the German market. That's where we're targeting the dialogues that we're having, and that's where we're going to target our future activity.
All right, perfect. Thanks.
Thanks.
Thank you. Our next question comes from Roland Tjeerdsma, Value Holdings. The floor is now open to you.
Yes, good morning from my side. Thanks for taking my questions. Most of them has already been answered. Just one question is left. It's an add-on question on the government subsidies of the SEK 16 million. Could you please elaborate a bit on how much of the lost earnings are compensated with these subsidies?
It's hard to say that given the complexity of the operation, so I can't really give you a straight answer on that. What we can say is this is compensation for furloughing mainly production employees, but also white-collar employees. It's been supportive in the sense that otherwise we would have had to do permanent staff reductions to take out the cost during this period. It's mainly U.K. is the absolute majority of it. Exactly how much of the potential income this compensates for isn't an answer I could say in straight off the bat. I don't know if you want to add anything to that, Peter.
Even though we received these subsidies, we still made a loss in the U.K. in the quarter, and last year we made a positive result in the quarter.
Okay, thanks. Fair enough. Congrats for the Q2 results again.
Thank you, Roland.
Thanks so much.
Thank you. Our next question comes from Carl Ragnerstam , Nordea. The floor is now open to you.
Hi, it's Karl from Nordea again. I just have one more from my side. Regarding the Green Deal, we have seen several different messages for Europe. We saw one communication in the U.K. Can you comment how this will or could potentially impact you and your business? It's obviously quite difficult for you to say right now, I guess, but do you feel that you have the right product assortment and so on in order to capitalize on these programs?
I think overall, without speculating in exactly when and how anything like this might happen, if it happens, I think we're in a good situation to capitalize that in basically all our geographies. We will continue to monitor that. I think in all the geographies where there's dialogue around this, we will continue to monitor it closely. Those programs are a bit different by different geographies. Some of them are clearly targeting window replacement because it's a good way to save energy in your home. Others are more targeting general improvements and can therefore be used for heat pumps and roof, whatever else things you might do. We're staying really close to it, and we feel that we're in a good position to capitalize on it if it happens.
Okay, perfect. Thank you.
Thank you. There appears to be no other questions. I'll hand back to the speakers now for any other remarks.
Yeah, we have actually two other questions that come in via email. The first one being e-commerce and the e-commerce increasing them to 13% of sales. The question is what the margins are like within e-commerce comparing to the rest of the business? The e-commerce margins continue to stay above the average of the group, which is obviously pleasing to say. The growth in that sense in the quarter has not been at the expense of margins, but actually growing. If anything, margins are actually increasing in the quarter. There was also one more question, which was relating to the sustainability or the ESG slide and about being a good place to work and how we measure that. We do employee satisfaction measurements in all our business units on a regular basis.
The last one we did was in November of last year, and that's pleasingly then showed a quite considerable improvement versus the one we did before. We measure that, and we actually incentivize managing directors to continuously work with employee satisfaction, and they have part of their variable compensation based on that, actually. Those were the questions we have via email. No further questions, operator?
No, there appears to be no other further questions.
Okay. We close this call, and we thank you very much for your attention, and wish you all a great summer. Thank you very much