Earnings Call: Q4 2019

Feb 5, 2020

Ladies and gentlemen, welcome to the Envido Q4 Report 2019. Today, I'm pleased to present CEO, Henrik Jarmensen and CFO, Peter Whelan. For the first part of this call, all participants will be in a listen only mode and afterwards, there will be a question and answer session. Speakers, please begin. Thank you. Good morning, everybody. Welcome to this presentation of Inveido's Q4 and Full Year Results 2019. I am Henrik Gjallmerfon, President and CEO and with me, I have Pietro Verhein, CFO and Deputy CEO. I will spend the coming 10 to 15 minutes giving some highlights on the development in the quarter, talking a little bit of a market update and going through some of our key priorities for the near future. Peter will then take over and go through some of the detailed financials, and there will be plenty of time at the end for questions. Next page, please, Page 2. Just a very brief summary for those of you who are new to us. Envido is the largest window group in Europe and one of the leading door players. We have a clear market leader position in the Nordic countries, a strong position in the UK and Ireland and a niche position in Poland as well as an emerging position in Germany. We have approximately 4,400 employees across 13 countries in Northern and Central Europe. The bottom part of the slide, you'll see the brands under which we operate in our geographies and primarily Northern Europe. Next please, Page 3. I just wanted to take the opportunity to do a brief reminder and summary of our value creation model or our wheel of fortune, if you will. These are five elements that are the basis for our value creation model. They ensure that we create long term customer as well as employee value and hence, long term shareholder value. The 5 pillars are efficiency synergies through sourcing and technology. We've shown clearly over time over the past 20 plus years as a group that we've delivered substantial sourcing synergies across our businesses. We run a decentralized, highly accountable business with focus, leadership, drive and not the least substantial customer focus throughout our 28 business units. We have strong performance pressure with clear performance management and KPI structure, driving the right behaviors to all our businesses to deliver long term improvements. We have high focus on capital efficiency and capital allocation, and we optimize how we use that capital in value creating M and A as well as investing in our businesses for future growth. Next page, please, Page 4. I also just wanted to briefly take the opportunity to highlight our updated M and A strategy. As many of you know, Envido has been built on over 50 acquisitions over the past 20 plus years. We believe M and A to be a long term value driver and a substantial growth opportunity for the group. These are the 8 key criteria of our M and A model to ensure that we drive long term acquisition growth. And the steps effectively are we validate that our potential targets meet these criteria to make sure that we can deliver value from acquiring and integrating them. If we go ahead with an acquisition, we make sure that we deliver swift sourcing synergies to get efficiencies out quickly. We have a strong and robust integration and business progression plan. And very importantly, we put high focus on management continuity and management succession. We run a strong delivery of business improvements from the operating model that I mentioned on the previous page. And lastly, but very importantly, we ensure strong cash generation from the get go to, in a sense, amortize the EV consideration and make room for new M and A. Next page, please, Page 4. So looking at Q4 2019, in summary, we saw a quarter of strength in margins and continued good cash flows. For the sake of clarity, all the numbers on this slide are including IFRS 16, with the exception of the net debt number. Sales in the quarter was 3% down to SEK1.813 billion, organically down 4%. Our operating EBITA came in slightly lower than previous year at SEK211,000,000, but the operating EBITA margin strengthened marginally to 11.6 percent from 11.5% last year. We took restructuring costs in the quarter. These are linked to a write down of central product and IT investments initiated prior to the Simplify strategy. Order intake in the quarter was down 1%, and the order book at the end of the quarter was 3% down versus the same time last year. If we look at the relative performance in a year over year comparison versus quarter 3, that's a slightly better position than at the end of quarter 3. We had improved operating cash flow in the quarter of SEK393,000,000 versus SEK291,000,000 at the end of last sorry, in the Q4 last year. And all in all, this means that our net debt to EBITDA has improved to 2.2x from 2.7x last year. Next page, please, Page 6. Looking at some of the highlights in the quarter. As I mentioned, we strengthened the margin despite some partly challenging markets, particularly in Business Area North, and I'll come back to that, with continued good price discipline and some cost mitigation actions in the softer markets. As you saw on the previous slide, we've had continued strong cash flows, and we have positive impact from a number of working capital initiatives. The larger units in Sweden and Finland have been impacted by softer industrial markets, and we've taken continuous cost initiatives to mitigate that volume development and protect the margin. Our good performance in the larger Danish units has continued. E Commerce, the e Commerce business unit is compared to a very strong quarter 4 in 2018. Despite that, we have good continued growth in most geographies, but a decline in the largest market in Denmark. However, the order backlog at the end of the quarter for the e commerce business unit is considerably stronger than the same period last year. Next page, please, Page 7. If we look at the full year 2019 in summary, we are basically on the plan that we set, considering the softer markets we're facing, particularly in Business Area North, and we've delivered solid margins and strong cash flow. Again, all the numbers on this page include the IFRS 16 impact except for the net debt number. Sales for the full year amounted to SEK6.631 billion, which is slightly down, 1% down from last year's SEK667 billion and organically, that's minus 4%. Our operating EBITDA is down SEK11 1,000,000 from last year to SEK6.46 million, and the operating EBITA margin comes in at 9.7% versus 9.9% last year. I want to highlight that we've been able to improve our operating EBITA margin in the last three quarters of the year. The reason for the weaker full year beta margin is quarter 1 due to the normal lower activity in the consumer market in the winter season and the lower cyclical demand of industrial markets in the Q1 of 2019. We've shown really strong operating cash flows of SEK925,000,000 versus SEK434,000,000 last year. And again, to reiterate, it means that we closed the year with a net debt to EBITDA ratio of 2.2 versus 2.7 last year. To summarize the year, I'd say that we've had overall good execution in what's generally on average somewhat softer markets. We have capitalized well on robust consumer market development, particularly in Denmark, and we've had continuous and active cost mitigation actions in the softer markets, particularly in Sweden and Finland. We have seen good result turnaround in the UK units and in Norway and a very strong development in Ireland. I want to say that we've seen positive impact from the simplified strategy, both in the business units development, but also in the overall group development. As I mentioned before, we've seen continued good impact from the cash flow focus and all the working capital initiatives throughout the year. And in summary, this means that the Board of Directors are proposing a dividend of SEK0.035 per share versus SEK0.225 per share from the prior year. Next page, please, Page 8. Apologies. If we look at the market development then, overall, we've seen a soft market across the Nordics and the UK. Sweden and Finland, as I mentioned before, is in slight decline, mainly due to the lower newbuild activity in these geographies. The consumer market has been more stable. We've seen some early tendencies of a somewhat flattening industry market development in quarter 4, but it's still too early to say whether this will be a sustained recovery, and I'll come back to that. Denmark has had a flat development. Norway has been in slight decline. UK has continued to be impacted by Brexit, despite the somewhat increasing clarity around the political landscape at the back end of the quarter. And in summary, the Polish, Irish and German markets show modest to moderate growth. Next page, please, Page 9. If we look then at Business Area South, we've seen continued profitable growth in the quarter. If we look at the ring chart on the right hand side on this page, we see that we have the vast majority of our segment exposure in the consumer segment. We've done a good job capitalizing on a robust consumer market. And as you can see in the chart on the top right hand side, this means that we've been able to grow our top line. And as you can see on the bottom right hand side, then also strengthen our profitability over the period. The larger Danish units continue to deliver very well. We've seen stable performance in both the U. K. And Polish operations in the quarter with improved profits, and our Irish business is delivering strong results. E Commerce is down 4% in the quarter versus a very strong Q4 last year. As I mentioned, we've been able to grow in most of our core geographies, but a slight decline than in our biggest geography in Denmark. However, the order intake in the quarter is good, and we closed the quarter with an order backlog of 16% up versus the same period last year. The reported sales for Business Area South is 2% up to SEK747 1,000,000. The operating EBITA margin is 60 basis points higher at 19.7 percent and the order backlog at the end of the quarter is 14% up versus last year. Next page, please, Page 10. If we look at Business Area North, we see we are still impacted by the softer industrial markets. As you can see in the rain chart on the right hand side, we have considerable industry market exposure in North and particularly then in Sweden and Finland. These challenging markets in these geographies have impacted our volumes and our net sales development, as you can see in the chart on the top right hand side. And despite good continued efficiency measures and cost mitigation actions, we haven't fully been able to protect our operating EBITA margin, you can see in the chart on the bottom right hand side. However, we obviously continue with these actions to deliver continuous profit protection and obviously improvement. In the quarter, the consumer direct sales model has been slightly challenged by consumer sentiment, and we've seen continued profitable development in our Norwegian business operation. Sales in the quarter was 6% down to SEK1.0 27,000,000,000. The operating EBITA margin came in at 7.3% versus 8.2% last year, and the order backlog at the end of the quarter was 11% down year over year. Next page, please, Page 11. If we look at the market outlook, it's generally a mixed outlook. Consumer demand in general is still at a decent level, but there are geographical variations. We've seen a somewhat softer development in Sweden, but with stronger than expected development in the Danish geography. Overall, we should remember that the consumer market is more stable in an economic cycle than the industry market. The industry market is still soft, in particular Sweden and Finland. We've seen some early signs of flattening development, as I mentioned, but basically all the forecasts for newbuild activity are still negative. We see the possibility for a rebound in the U. K. Markets with some increasing certainty around Brexit and some political certainty, and we expect Ireland to remain strong. We, as in many other categories, expect the e commerce momentum to continue to be strong. And I also want to highlight that as we step into and are now in the midst of Q1, we are in a quarter where the consumer demand is normally seasonally lower due to the winter season. Next page, please, Page 12. If we then look at some of the key focus for the short term, we will obviously continue our active cost and margin control in the softer markets. We will continue our ongoing investments for e commerce growth. We will continue to strengthen our balance sheet to enable further acquisitions in line with our M and A strategy. We will continue to secure the positive impact from Simplify that we've had and make sure that we maintain that momentum going forward. And we will make sure that we invest in products and concepts to drive future growth across our core geographies. Next page, please, Page 13. And with that, I will hand over to Peter, who will take you through some of the detailed financials. Thank you, Thomas Henrik. And then we go to Page number 14, please. On this page, you can see the income statement. To the left, you can see the income statement for Q4 and to the right, you can see the income statement for the full year. Sales ended at €1,813,000,000 minus 3% compared to last year, and adjusted for currency impact, sales was minus 4%. Gross margin, slightly improvement compared to last year, mainly due to mix. And we can see that operating EBITDA was EUR 211,000,000 compared to EUR 250,000,000 last year, and the margin was improved from 11.5 percent to 11.6%. EBITDA was SEK186 1,000,000 and the difference between operating EBITDA and EBITDA, the SEK25 1,000,000 is write down of central Product and IT Investments. Further down in the income statement, we can see that earnings per share was 1% behind last year. We had some positive currency impact in Q4 due to strengthened Swedish krona in end of the quarter. The full year sales was minus 1%, and also for the full year, organic sales was minus 4% when we adjust for currency as well as acquisition. Operating EBITDA was €646,000,000 minus 2% compared to last year. And if we go further down the income statement, we can see that earnings per share was slightly above last year, NOK 7.48 compared to NOK 7.47, it's NOK 1 better than last year. If we go to the next page, we go to Page number 15. On this page, we can see the development in Q4 when it comes to sales to the left and the order intake to the right. We can see that sales was minus 3% and again, it was minus 4% in the quarter. We have declined in North, mainly driven by Sweden and Finland. And North had sales decline of 6% in total. And if we adjust for currency, sales was minus 7% for North. In South, we had an increase by 2%, mainly driven by Ireland. And if we adjust sales in North with the currency, sales was more or less on the same level as last year. If we go to the next page, we go to Page 16. On this page, we can see the order backlog. We can see the order backlog end of each quarter from Q4 2014 until Q4 2019. And here we can see quite large deviations between a quarter due to the seasonality. Envida has large seasonality or this business has large seasonality, and the order backlog is always at its lowest level in Q4. Q4 this year, the order backlog ended at 770,000,000 dollars minus 3% compared to last year or minus $23,000,000 compared to last year, somewhat better compared to Q3 because in Q3, we were minus 5% compared to last year. The backlog was plus 14% for South and minus 11% for North, meaning North will have a tougher start beginning of 2020 compared to beginning of 2019. And most of the backlog will be delivered in Q1, And the backlog is quite short for Enviro. We have a visibility of about 6 weeks when it comes to our backlog. If we then turn page, we go to Page 17. On this page, we can see operating in beta and operating in beta margin for Q4 to the left and for the full year to the right. We can see that margin has been improved later 2 years in Q4. It was 11.3% in 2017, increased to 11.5% in 2018 and then increased further to 11 point 6% in 2016. And we have been able to improve the margin in this quarter in 2019 compared to last year, even though sales declined by 4% organically. Looking at the full year, we can see the sales have declined and also the margin has declined from 9.9% in 2018 to 9.7% in 2019. We have been able to improve the margin the latest three quarters. Q2, Q3 as well as Q4 had better margins compared to last year. However, the Q1 was lower compared to last year due to quite low winter, and this means that the full year we had a lower margin compared to last year. If we then turn page, we go to Page 18. This page is showing the development when it comes to operating cash flows. We said already in the beginning of the year that we were going to work with the balance sheet, we were going to work with working capital and we initiated several actions and activities when it comes to working capital, and we have reduced working capital during the year. We have regained the increase from 2017 2018, and we've also been able to reduce even further looking at percentage of sales in constant working capital. The operating cash flow, excluding IFRS 16, was SEK 847,000,000 this year compared to SEK 434,000,000 last year. And as you can see on this page, it was mainly driven by improvements when it comes to working capital. Lower inventory, lower accounts receivables, higher accounts payables and also mix we have in the year and working capital has then improved. We also paid less tax in 2019 compared to 2018 due to the fact we paid a bit too much taxes in 2018 and thereby it was lower tax payment in 2019. Return page, we go to Page 19. This page is showing the net debt. And thanks to stable profits and reduced working capital, we have been able to reduce the net debt and we have all been able to reduce net debt versus EBITDA from 2.7 down to 2.2 excluding IFRS 16. If we include IFRS 16 in the calculations for 2019, net debt plus EBITDA is down to 2.4. The net debt has been reduced by €430,000,000 during the year and ended at €1711,000,000 and we are now below the target of 2.5. Indeed, that's a target of 2.5 net debt versus EBITDA, excluding IFRS 16, and we are now down on 2.2 percent. And to the right, you can see that one of the main driver behind improved cash flows is the working capital. Here, working capital is defined as inventory plus trade receivables minus trade payables. You can see the development in SAIC has been introduced and also when you take it working capital in relations to sales. Now I hand over to Henrik once again. He will make a short summary, and then we'll open up for questions. Next page, please, Page 20. So in summary, Q4 saw improved margins and a strong continued cash flow. If we look at 2019 in total, we delivered basically the plan that we set out, given the softer markets. We've had overall good execution against that, capitalizing on more robust development in particularly the Danish consumer market and managed the decline in the industrial markets in Business Area North in a good way. We've strengthened our balance sheet, and that starts to make room for acquisitions going forward. We've we plan to we have and we plan to continue investments in e commerce growth. And the Board of Directors proposed a dividend of SEK3.5 per share versus SEK2.5 in the prior year. Next page, please, Page 21. With that, we thank you for your attention, and we open up for questions. Operator, please? Our first question comes from the line of Adela Darshan from Handelsbanken. Please go ahead. Hi, good morning. I have a couple of questions. First of all, how comfortable are you with keeping the current operating margin for AUMITA South at such high levels? And then also on the flip side, what's your outlook for AUMITA North? Do you see an improvement in the consumer renovation market in Sweden, Finland that could possibly bring the operating margin in that segment up? So hi, Henrik here. Let me start by I think in general, the we've done a lot of good work to build the position that we have in Business Area South. It's built both on a strong development, continued development in our Danish operation, but let's also remember some of the key work that we've done in turning around an unprofitable UK operation to profitability, for example, which is also considerably to the strengthening margins. And we feel that the positions that we've built and the good work we've done developing those businesses vouchers for us to keep to maintain strong margins going forward. So structurally, I don't see any reason why we shouldn't be able to maintain that. Then obviously, we are, as we are in each and every geography, exposed to the market development. So if there are considerable developments in the overall market, that will also have an impact to us. If we look at North, in general, as I said, we saw tendencies of a somewhat recovering industry market in the quarter. We believe that to be temporary, and most of the official forecast around newbuild activity continues to be negative. When it comes to consumer demand, our view is that there is an underlying somehow built up consumer market demand. Exactly when that materializes is very difficult to say. However, it depends on the obviously, on the overall global economy and the Swedish economy, the Finnish economy, but also partly on subsidies and other So what we're trying to do is to make sure that we're prepared to capture that opportunity when that comes up. Okay, great. Thank you. And then I would also like to obviously congratulate you on the improved balance sheet and reduced debt levels, which signals to us that you're moving 1 step closer to gearing up for another acquisition. So could you please give us a rundown of what your top priorities are at the moment for capital deployment? And if that involves M and A, what are the top areas of focus right now? Yes. I mean, we're quite strict in terms of sticking to strategy effectively, which means that we are continuously investing, and I want to underline that, we're continuously investing healthy amount into developing the businesses that we run, like the continuing to invest behind e commerce growth, but also in strong and very efficient manufacturing operations. But obviously, we are in line with our M and A strategy preparing for M and A growth at the right time. We want to make sure that we are we continue to monitor the situation. We maintain a continuous outlook in terms of what we think the market is going to do and obviously, how much risk we won't to take in relation to our net debt with regards to that. And then we have a continuous dialogue with a number of potential targets. And they're all there are a lot of let me phrase it like this. If we look at the 8 M and A criteria that we've set up, we feel that there is at least a handful and potentially more interesting targets out there that could fit that would fit those eight criteria and could potentially be available for a transaction. Exact timing for that, very difficult to say. Some of these transactions take time. And again, we want to make sure that we take a very balanced view on the business and balance sheet risk versus obviously the upside of an acquisition. Right. But do you feel comfortable with the current net debt levels? Or do you feel like there's further work to do to bring those down even more? Yes. I mean, as long as we don't state anything else, our objective and aim is to maintain a net debt level in line with or below 2.5. We are there now. Then obviously, the exact impact of an acquisition on net debt would depend on the multiple as well as the size. And so it depends a bit on what type of targets we're looking at when we feel that we'd be able to do that. But as a basis for where we are now, we are comfortably below our 2.5 target level. So that would send the signal that we're happy with the current debt level. Okay, great. Thank you so much. The next question comes from the line of Karl Rahnerstam from Nordea. Please go ahead. Hi, guys. I missed parts of the call, so I might repeat some questions. But first of all, you mentioned that you saw stronger development in Denmark. But in the Q4 report, I mean, you commented that it declined. So do you mean that you see stronger development going forward that you're implying that Q4 was be the one off? Or do you mean that you saw stronger development in terms of profitability in Denmark for the quarter? Thank you. Yes. So just to be clear in that, I think what we mean is that the overall consumer market in the quarter was somewhat more robust than we'd expected. The total market, including projects and industrial market, is has been flattish or even in potentially in slight, slight, slight decline. But the we are heavily exposed, as you know from our charts here, to the consumer market, and that consumer market was slightly stronger than we expected in the quarter, which we've capitalized well on. Okay. But your sales in Denmark was down in the quarter, right? That's correct? Including e commerce sales, that's correct, yes. Okay. Including e commerce. Okay. So that's okay, perfect. Yes, that's correct, including the e commerce. So in the Danish geography, including it was slightly in decline, and that's mainly driven by the decline in e commerce sales year over year. And we should remember there that e commerce had a very, very strong quarter 4 in 2018 in the Danish geography. Okay. And if we look at the order backlog at the end of the quarter, it was up 14%, I think in Q4 for South. How much of that was from e commerce and how much of that was from Denmark, if you can try to say that? Yes. So a slightly bigger share comes from e commerce. E commerce is 16% up. And one key driver that we shouldn't forget there is actually the Irish business, which is developing in a strong market, but developing very nicely. That's helping contribute that. The Danish larger units is in the upper single digit span in terms of order backlog year over year improvement. Okay, perfect. And the final one for me. I mean, I think you made the machinery new machinery investments, expected to install it in Q1 2020. Is it expected to install it in Q1 2020. Is it up and running now? Or and has it caused any production and services in the quarter? No, the plan is still to do the actual installation in Q1, but the actual operational inauguration of it, so to say, and the operational impact of it will not be until in Q2. Installation is planned to be Q1 and the operational impact is expected to be in quarter 2. Okay. So you expect a negative operation impact from the installation? No, absolutely not negative. We expect a long term positive impact. Okay, look. But we won't see any of that positive impact come through in quarter 1. And obviously, it will be, what I would say, growing operational impact as it always is when you commence new machinery. So we will start to see some emerging impact later in this year, I would Okay, perfect. Thank you. The next question comes from the line of Cano Toole from Carnegie. Please go ahead. You're right in the report that you are investing in the e commerce business. So can you tell us a little bit more about that if you're entering new markets or what's happening, please? Yes, absolutely. I mean, there are I would say there are 2 key dimensions to that actually. Number 1 is we're investing in increased geographical presence, and particularly, it's expanding the presence in the German market, but also growing further in some of the key markets outside of Denmark, like, for example, Sweden and Norway. That means mainly investments in marketing, potentially also partly footprint. As you know, we in some geographies, we don't have a, what I would say, a pure play online transaction model, but also physical showrooms in some geographies. But we're also investing in new products to make sure that we have the right assortment in all the key geographies with as we know it, this is a very local market with differences in assortment. So that means investments in product development for some of the key geographies. And lastly, I would also say we're actually investing in the manufacturing footprint for the e commerce business to continue the growth rates we've been at and to accelerate that even further going forward. We need to make sure that we have a supply chain that supports that growth rate. So we're making first, just as an example, we've recently made a considerable expansion of the manufacturing sites in Estonia to being able to supply the larger volumes into the Nordic, particularly in the Nordic countries. Sounds great. You also talk about stabilizing demand in the Nordic Industrial segments. Is that what you hear from your customers? Or what kind of signs are those? We've I mean, in this case, it's actually more an observation in terms of some short term demand development and order development on our side That's resulted in that comment. From the overall expectation in dialogues with customers and also, let's say, different authorities on the market development, the outlook is still negative. So it was more a short term development. And in our view, the most likely explanation for that is facing in terms of demand. That's the perspective we have on it. I guess we will see how the development continues in quarters 12. And then also you mentioned that Q1 last year, it was quite a severe winter weather in the Nordics, at least. And now, for a large part of the Nordics, there is no winter. So do you think that will have a positive year over year effect for Q1? I want to say that it's, in a sense, still too early to tell. That soft versus harder winter impact is actually normally visible later in the winter season as orders placed for the first half of Q1 is basically those orders are basically placed before the winter season really starts. So I think the jury is still out on that one. We should remember that the order backlog at the end of quarter was considerably softer in Business Area North, however, then stronger in South. But the overall question to your answer is sorry, the overall answer to your question is that we'll just have to wait and see the development in the coming months or so. Great. And then, I mean, when you comment about the development for the different units, like the UK and Poland and Ireland and so on. Some of those units were really poor performers a couple of years ago, but now they seem to do better. So would you say that when you look at the units you have, do you still have units that are significantly underperforming or that are in losses and you need to take dramatic actions to improve them? Or have you seen that the differences between the different units in the group are have come down? So I mean, as a very general note, obviously, we have high ambitions for developing this group going forward. So there is always opportunity to improve. Hence, there is always underperformance in some way, shape or form. But in general, the simplified strategy has helped us a lot from a group management perspective to put focus on the key hotspots and develop those. And at the moment, I would say that we have what I would consider to be 1 to 2 sort of proper hotspots that we need to take continued action. So we've had improvements in many of the many of those areas. But we have a couple left where we need to take more let's say, put more severe action plans in place and put even more pressure behind those. And again, I think the simplified strategy has really helped us to put focus on that and will help us going forward to maintain pressure performance pressure in terms of that. Great. And then a final detailed question maybe. You have this net debt to EBITDA target of 2.5. But when you talk, you talk a lot about net debt to EBITDA excluding IFRS 16. So when we sort of try to judge your opportunities for doing acquisitions. We should more look at the excluding IFRS 16 effects, right? Yes. So our perspective on the net tested versus EBITDA development against the target is based on a pre IFRS 16 basis, mainly because actually the target was set with a very similar capital structure, but it was set before 2016. So that's why we should look at that in that perspective. So hence, the 2.2 in my mind then is sort of the proper comparable to the 2.5 target. And when you had discussions with your banks on lending and in terms of covenants and so on, it's more the old way of looking at it that is more relevant rather than including IFRS 16 then? Yes, that's correct. Okay, great. That's all for me. We have received one question from an e mail, and I will read a question. It comes from Roland Kohnen in Germany. And he has 2 questions. The first question is, do we see risk for further restructuring measures or impairment in Nordic, especially if the weak development deteriorate further? Yes. So in the short to medium term, we don't see that development. However, obviously, that depends partly on the long term development of the market. And should there be substantial deterioration in some geographies or some parts of geographies, we may have to take more drastic measures, in which case, we will then potentially need to utilize restructuring. In terms of impairment related to goodwill or otherwise, there is headroom in all the in all those tests, and that's also obviously validated with the auditors. So there is no such risks at this moment. And the second question from Rod and Kemen is, are there higher chances or chances for acquisitions in 2020? And the straight answer to that is obviously yes, given that the net debt level is now below our 2.5 target, and we will obviously continue the good work we've done with working capital, although we can't expect to see that strong development continue that we've had this year. We see that we have opportunity to make acquisitions, but obviously, when the time and the targets and the circumstances are right. Any further questions? There are no further questions from the phone lines at the moment. Okay. Then let's close this one. Peter and I thank you very much for your attention, and let we close this conference now. Thank you very much.