Earnings Call: Q1 2018

Apr 26, 2018

Ladies and gentlemen, thank you all for standing by and welcome to today's InVideo Q1 Report Conference Call. At this time, all participants are in a listen only mode. I must advise you all that this conference is being recorded today, Thursday, April 26, 2018. I would now like to hand the conference over to your first speaker for today, Mr. Hakan Jepsen. Please go ahead, sir. Thank you very much, and good morning to you all out there. My name is Hakan Jepsen. I'm the CEO of IMIDO. And together with me here is Peter Wallin, our CFO. And we will guide you through this slightly complicated quarter with all the winter effects coming up. So let's turn to Slide 2 and talk a little bit about the highlights in the quarter. I would first like to say that strategically, our actions are overall in line with our plans. And I would say that we continue to do what we say in our plan and in our strategy and what has been communicated before. First of all, we are glad to see that we're holding up sales in a difficult low season. I mean, normally, the Q1 is low season, as always, and much, much lower quarter than the other quarters of the year, of course. But the long, harsh and late winter, of course, caused us some challenges in this quarter. But I'm also glad to say that Enviro has never been bigger as a company. And after quarter 1 of 2018, we have reached our biggest level ever according to sales. But there is a winter effect both on sales and order intake and we are coming back to that of course. We launched efficiency programs late last year in Q3 and Q4 and they are running according to plan. So we are aiming at saving from various activities around SEK 100,000,000. We are taking the last restructuring cost in this quarter of that program around SEK 19,000,000 for closure of 1 of the factories in Sweden. I'm also glad to say that we have launched a lot of new products with big potential in several of our markets. Actually, I don't think that during my time we have had so many product launches coming up, both in windows, doors and also for the smart home. And basically, all our markets are included in the launches. New Zealand dimensions, more energy efficient products and more digital solutions also for the more efficient and comfortable homes. We are consolidating our leading e commerce with the acquisition of Best and Bilix BNB. We closed it per April 1. So from Q2 of 2018, you will also we will also include figures for that company. And we have also taken full control during February of our acquisition Altrub in Denmark. That has been in our figures a couple of years, but we have now complete ownership of the company since February. The winter caused a rather unfavorable segment mix. New build increased. New build is more steady over the year. The construction companies continue to build also during the wintertime, whereas consumers are normally more hesitant during December, January, February. And they are always or normally at least waiting for spring and this happened also this year. We also see as we have also guided on before some unrest I would say in raw material markets And I've seen that also from other companies reporting the last couple of days that there is very high capacity utilization in many areas. And we can also see the first signs of inflation when it comes to raw material. What normally is not a big challenge for us, we have a trend of passing the raw material price increases on to our customers normally. Turning to Slide 3, talking about the market development. You will hear the words late winter and probably also the words cold and long several times during this presentation, and we have seen those effects in all our markets. It seems to be all over Europe, a colder winter than normal. And the big problem for us is that the winter came late. I mean, it's not a big problem for us when we have winter in December or January, February, but when winter is turning up rather late in March and even beginning of April when our season is due, it's a bigger challenge for us to plan production and to get the orders in. So it has been tougher than usual. And we must also remember that the winters, the last couple of years in also in Northern Europe has been rather mild and that has also been very Europe. So the adverse weather conditions affect both volumes and competition and prices. Lower volumes, lower order intake in general, I would say. It doesn't mean that, that is a change in real underlying demand, but because of the cold times we get less orders in because customers and consumers are waiting. This also costs harder competition and lower prices to a great extent because we see more campaigns from competitors and from customers to fill up production and sales. And we have seen more winter price campaigns than I think I've ever seen during my 9 years in the company. So it's been a harder competition to get business. And therefore, I'm still glad that we have been able to hold up sales as well as we have been during the quarter. Consumer confidence seems to be leveling out or dropping a little bit. It's still on a high level in general, but it's especially in Sweden, I would say, impacted by the real estate markets probably. And of course, as earlier also in U. K. And all the Brexit effects that we don't have more energy to talk about any longer, I guess. But the other markets are unstable, but not increasing anymore, but standing on high levels. As stated, raw material prices in an upward trend, we are looking at aluminum. We're looking at glass, timber to some extent. And we have seen very high prices for aluminum in the London Metal Exchange as high as around US2,500 dollars per tonne during last week. Because of the Russian sanctions, of course, and also the threat of trade wars and tariffs for sending material to U. S. Has also caused some unrest in the raw material markets. And it's also impacted by the strong economic cycle where capacity utilization is very, very high in many industries and creating some bottlenecks. But I think we have it under control, and I will come back to that later. So some winter effect and some supply effects right now in the market development, but at the same time, very high GDP growth in general. We see strong economies. Real income is increasing, very low interest rates, low unemployment rate, and it seems like house owners are very well off right now in most markets. So the healthy underlying demand still exists. There is lack of dwellings. There is need for renovation and there is high wish for new smart solutions and better and more well designed houses out there. So we don't see a shift in the healthy underlying demand at this stage. Turning to Slide 4, talking about our performance in Q1, again affected by the long, late and cold winter, holding up sales plus 2% only, I would say, minus 2% organically, including all currency effects. So we have never been a larger company. And actually, Envido has grown by almost 50% since the Q1 2014. So the steady development becoming a bigger and more profitable company continues also during very tough conditions. It was also a, as usual these days, a quarter where the months have differed quite substantially where January was okay, February started off rather well and with the harsh winter, there was a downturn at the second half of the quarter and especially in the month of March. Quarter 1 2018 was actually the 2nd best quarter ever for Envido with an operating EBITDA of SEK 56,000,000. And this was still impacted by a weaker and a worse segment in customer mix for us. I would say too much industry sales still holding up sales and consumers very hesitant, especially I would say in Sweden and Finland. This created also lower volumes than expected and also what we have or had anticipated and what we had capacity for. And this also put some pressure on our margins. On top of that, we got tougher competition and some price pressure as I talked about before. And then on top of all this, there is also this Easter effect. Last year, we had Easter in Q2 and this year, we had Easter in Q1. And that also is something you have to take into consideration when you compare figures and also looking into sales in the quarter, but also order intake for the coming quarter. Still, I think that we have strengthened our position in the Nordics and also in U. K. During the quarter. We haven't all the figures yet, but in the markets where we can see the overall market development, it's quite clear that Enviro is a stronger company and more well positioned today than 1 or 2 quarters ago. Order intake, minus 6%, organically, minus 10%, must be seen in the light of the very late and hard winter, of course. Denmark continues the positive development, very strong market there. We are strong, and we think that 2018 will continue in that way in Denmark. Also very positive with Emerging Business Europe with e commerce business unit heading, the business area AB improves both sales and earnings development. And we can see that the cost savings and restructuring is paying off in several of the markets there. And we actually reach breakeven for the first time in a Q1 in EBE and that is something that tends to come in Q2 normally. And e commerce continues to grow by 10% in the quarter and is now almost 7% of total group sales including the newest acquisition. So we are absolutely the leading player in e commerce in our industry in Europe. Going through the business areas, turning to Slide 5, talking about Sweden Norway, where I think we have seen challenges, of course, and the difficult times from the weather perspective created a changed segment and customer mix and affected our margins negatively. And actually, our consumer share in the individual market Sweden was as low as below 50% in Q1 because of the hesitance from the consumers. And we expect that to come back in the quarters to come of course. Consumer confidence, however, is declining somewhat. Consumers are hesitant from all restrictions. They have been they have seen in the last couple of years when it comes to lower subsidies, demand for amortizations and lending restrictions, of course. New build seems to be easing off a little bit. We see from all official statistics that there will be fewer dwellings built in the coming years. But House Manufacturers still very positive and have a good order intake and full order books for at least 2018. So all in all, it seems like the market is more or less the same situation as it has been the last couple of years. Again, mix prices and order intake in the wrong direction to some extent because of the weather. We could also see that the Construction Material went down in the retail segment in the full market of Sweden by 10% in the month of March, meant that Q1 was more or less 0% for all materials in the Q1 in the Swedish market. So it was a weakening demand towards the end of the quarter there. Norway, we see with a positive profitability trend. The new organization, more slim one and combined with the Swedish administration is now paying off and that is, of course, very positive. And we are hopeful that this will continue over the year. Reported sales with Norway minus 3%, same figure organically. Order backlog per end of quarter minus 18%. And of course, this is affected by the lower order intake, especially in month of March. So we expect order intake in consumers to come back with spring coming around the corner. Turning to Slide 6, looking into Finland, where we have seen sales growth, but in less margin favorable channels, it's more or less the same development as we have seen in Sweden and Sweden Norway and a much lower consumer share of total sales actually far below 70% and that is not something we are used to in the Finnish market. Still GDP development and consumer confidence is still on a high level in Finland and the Finnish economy seems to be very strong. So no worries there. The higher share of industry sales, of course, affected our margins and our profitability negatively in the period. And we have expectations that we will regain strength and higher margins with also milder weather in Finland. Very, very tough competition in Finland, I would say, to get orders. Price pressure because of the also in Finland, much, much tougher winter than normal put pressure on our gross margins. Actually in January February there were 6 to 7 days all in all where we could do no installation at all because of the very, very low temperatures and that is rather unusual. Actually the output in the Finnish window industry in the Q1 was as low as minus 18%. And this is, I would say, only because of the tough weather conditions. Some competitors in Finland in financial distress, and that also means that some of them are chasing orders rather hard. And we have to be very, very put some attention to this and protect the market shares that we do have. And I think that we have been able to protect our market shares also both in Q4 and in Q1 of 2018. Reported sales, plus 7%, a lot of currency effect in that, 2% organically adjusted for currency and positive that we have been able to grow even though the growth has come from new built and industry sales mostly. Order backlog per end of quarter plus 1% at the end of March. Turning to Slide 7, looking at Denmark, the bright star that we do have in our company, it had a good quarter again in a stable market. Consumer share is very high. It's almost 100% in Denmark. We see strong market indicators and very high and unchanged consumer confidence in Denmark. But also here, the long late and cold winter affected volumes, we had less snow in Denmark, but unusually cold. But we could also see that orders are very fast picking up in April when the temperature started to rise. So we have no worries about the Danish development this year. So continued positive margin development also in the quarter. Our Danish operation is very efficient and with some extra new effects from the restructuring efficiency program that we launched and are now implementing, we could also see that, that is paying off on our margins. Reported sales, minus 3% organically and including currency effects, minus 7%. I would say nothing to worry about from that respect. It's because of the low figures in March. Order backlog per end of quarter minus 16%. Also because of that, Tough comparable figures when you compare to 2017, but with shorter delivery times there, I'm not worried about that figure at all at this stage. Turning to Slide 8, talking about EBE. EBE, Emerging Business Europe, all the business outside the Nordics and including the e commerce, we had a reasonable start of the year and our e commerce business continues to grow in a profitable way. Actually, e commerce grew by 10% in the quarter in a falling market to be noted. And with the latest acquisition of BNB, as I said, we are approaching a more than 7% of total group sales pro form a. So we are really happy about that development, even though we can see that competition is also sharpening in the e trade channel at this stage. More players are, of course, coming. We are not alone seeing the development in that channel as it is in many other industries, of course. We have seen the efficiency measures in U. K. And in Austria paying off and they are coming according to plan. So breakeven in Q1 is positive. We can also see good development in the lower priced window market in U. K. Where we sell our PVC windows. It's developing in a positive way. Ireland is very strong. Poland is a strong market, and we have developed there quite positively the last couple of years, and this continues in the Q1. However, as I said consumer confidence to some extent in U. K. Not surprisingly is turning down a bit and you could not expect otherwise. Reported sales, plus 4%, more or less unchanged sales organically and currency adjusted in the Q1 and order backlog per end of quarter also minus 12% affected by the same things, same weather effects that we have seen in all other markets during late February March. So Slide 9, looking into the outlook, we still see that the underlying conditions are very healthy. The need for our products we feel is strong. There is a need for new developed dwellings. There is a need for a lot of renovation in many markets and many segments. And people wish for new designs, new concepts for a more healthy and comfortable home and living. And hopefully, and we expect this to turn into healthy demand going forward also in 2018. Enviro is very well positioned also within digital. We have a lot of new smart home and connected products, and we're also implementing digital solutions internally and also in the cooperation with our partners, both up and downstream, the value chain. So we are comfortable in that we are on the right path there also. We are the clear market leader in e commerce in Europe, and we continue to grow in a profitable way. And that is something we have the absolute ambition to continue to do going forward. As I said before, many new products launched in many markets for new designs, for digital solutions, lower energy values and it goes for Sweden, Norway, Finland, Denmark, Poland and we're also soon launching some new interesting products in the U. K. Market. So we are well positioned when it comes to the product launches and concept launches going forward. Challenges we've seen is, of course, the late winter. And I hope that the late and harsh and cold winter is now over, but it will be impacting the beginning and part of Q2 because we got too few orders too late. It's not a change in the underlying demand, but it's just because customers and consumers waited too long. And of course, with 4 to 5 to 6 weeks of lead time producing the made to order product, it will have an impact on the Q2 sales, especially in the beginning of the quarter, even if we can see that order intake clearly is picking up in April, of course, with the warmer and more sunny weather that we are now seeing. There are more uncertainty in some markets than last few quarters. It's not a huge shift or a huge change, but Sweden, Norway, U. K, we can see that the house market discussions and the discussions and debate about the real estate sector, house prices, etcetera, is to some extent impacting the consumers. And then of course, as all other companies in all other industries, we see the same financial and political risks. And to some extent also, right now, rather highly valued stock markets that could also that could also be a risk that share prices will come down to low levels and that could impact consumers to some extent. Uncertainty in some raw material supplies could impact our product cost in the coming quarters. There is some bottlenecks in supply chain in general right now, not in Invedo, but we can clearly see that we have to be on our toes towards our big partners within timber, glass, aluminum, coating, etcetera, so that we secure our lead times and our production efficiency. And we are right now not in any trouble at all, but we see that there are many companies reporting bottlenecks in various parts of the economy. When it comes to aluminum, what is the biggest share of our products right now and continuously increasing? We have secured our supplies over at least Q2 and we think we are really well positioned there. But of course with the great movements we have seen in that market, we have to continue to be very alert and make sure that we handle the aluminum supplies in a good way also for the fall. Going to slide 10, talking about the focus areas near term. Obviously, the pricing and the segment mix is very important for us. We have to make sure that we compensate ourselves for those potential raw material price increases that we see. We would like to bring in more consumer sales going forward. And it's very clearly that we very clear that we prioritize profitability before volume to make sure that we have the right profitable gross margins also going forward that we have seen over the last couple of years within the Enviro system. We would continue to consolidate and normalize the supply chain after some of the challenges we had last year. And we are glad that we are now back on track, but we should also continue to improve continuously the efficiency, the lead times and the security in our deliveries can always be improved so that we meet our customers' expectations in a good way. A very clear target for us is to continue to create organic and acquisition based growth. We continue to work on the target list when it comes to further acquisitions to be able to, to some extent, consolidate European very fragmented landscape within windows and doors. And we have a very focused work with this within this also going forward. Right now, we spend a lot of time on that issue, of course. Number 4, efficiency and cost improvements. We have our program running. We now should make sure to generate those effects that we have promised ourselves and the market, but also to improve competitiveness going forward, of course. And we see that program coming on very well right now. And the 5th focus area is, of course, to continue to launch interesting attractive products, concepts, but also processes to improve efficiency. And this goes especially within what we call E. That goes for internal production, supply chain processes, digital products for consumers and customers, but also the interaction with partners up and downstream, the value chain, where we can continuously, of course, improve. And we spend time, effort and money to improve ourselves there. By that, I hand over to Petter, so he can guide you through the figures of the Q1 2018. Thank you, Hakan. And then we turn to Page and we go to Page number 12. On this page, Page number 12, you can see the results for Q1 2018 to the left as well as the results for Q1 2017. As Helkon said before, sales was up 2% in reported figures and adjusted for currency as well as for acquisitions, sales were down 2%. So organic growth in the quarter was negative by 2%. Gross margin declined due to a higher degree of interest in sales. The longer winter affected mainly consumer sales, whereas the industry sales had a positive growth in the quarter. And higher degree of industry sales means negative impact on gross margin as well as on operating margin in the quarter. Operating EBITDA ended at NOK56 1,000,000 compared to NOK83 1,000,000 last year, a deviation of 33%. Enviro had a restructuring cost of SEK90 1,000,000 in the Q1. And this SEK90 1,000,000 was communicated in the Q4 report and the NOK90 1,000,000 is then connected to a closure in Sweden and of a factory in Sweden and is included in the cost saving program that was launched in last year. We had also positive net financial effects due to positive currency impacts on our loans, reducing the differences compared to last year on profit after tax. So profit after tax was SEK3 1,000,000 in the quarter compared to SEK45 1,000,000 last year, a deviation of 27%. If we then turn to Page 13. On this page, you can see to the left reported sales for 2016, 2017, 2018 in Q1. And to your right, you can see the order intake for 2016, 2017 2018. As I said before, reported sales was plus 2% compared to 2017, and adjusted for currency and acquisitions, sales was down by 2%. The order intake was minus 6% in the reported figures, and it was adjusted for currency, the order intake was minus 10%. The order intake was, as well as sales, had a positive growth in January. So the year started well. Also the first weeks in February was good, but then the longer and colder winter affected especially the order intake in February March. The deviation was as most in March, but also Eastern had a negative impact when comparing to last year. If we then turn page to Page 14. On this page, you can see the result in Q1 for operating in beta result in Q1 for 2013 to 2018. You can also see the gross operating in beta margin for Q1 during this year. Q1 last year was a historic strong quarter with high degree of consumer sales, 72%, and there was no Easter impact in the Q1 of 2017. Due to the seasonality within this business, the Q1 result is always the lowest result for Enviro and normally the result margin is breakeven of close to 3%. As you can see on this chart, you can see that we had a negative result in 2013. In 2014, we had a breakeven. And then in 2015, 2016, we were just on a margin around 3%. And if you go further down into the history, we can see the same results. So last year was a really strong result with a SEK83 1,000,000 in profits and a margin close to about 6%. And this year, you can see that the result for Q1 this year is above the average for the last year. And the main reason behind the margin decline compared to last year is lower degree of consumer sales in Sweden and Norway and also in Finland. The total consumer share dropped from 72% in Q1 last year to 69% this year. If we then turn to Page 15. This page shows the order backlog end of each quarter from 2013 Q1 until Q1 2018. As I said before, the year started well with a positive order intake in January. And then the order intake declined, especially in the second half of February March, and therefore the backlog declined as a consequence. The backlog is 8% behind last year in Swedish krona. And if we adjust it for a currency impact, the backlog is 12% behind last year. The lower backlog end of March will have a negative impact on sales in the beginning of Q2 when comparing to last year due to our lead times in our productions. Still, the backlog is above 2016 and in a historic perspective, it's still a strong backlog compared if we're not only comparing to 2017. If we then turn page to Page 16. On this page, you can see operating EBITDA and an operating EBITDA margin for Q1 2016, 2017 2018. As I said before, the result this year was NOK 56,000,000 compared to NOK 83,000,000 and the margin was 4% compared to 6.1% last year. And as I said before, the longer winter, lower degree of consumer sales has made an impact when it comes to margins and a lower volume has also then impacted the margin when comparing to 2017. However, when compared to 2016, we can see positive development when it comes to operating EBITDA in Swedish krona as well as on the margin, 4% this year compared to 3.5% 2016. If we then turn page to the last page before we open up for questions to Page 17. This page shows net debt for each quarter and also net debt versus operating EBITDA rolling 12 months. The net debt has increased in Q1 compared to Q4, and this is normal due to our seasonality. We have always increasing net debt in Q1 compared to Q4. However, this year has increased a bit more due to the currency. We have several loans in other currencies than Swedish kronor, and this means that when consolidating, we have a higher degree of net debt due to the weaker Swedish kronor end of March compared to end of December. We have also increased the working capital in Q1, especially inventory. We have today a little bit higher safety inventory as a consequence of the production disturbances we had last year, so a little more safety inventory in our factories and also somewhat lower higher inventory due to lower volume than expected end of the Q1. So the net debt was EBITDA ended at SEK 2.5 percent rolling 12 months. This was the presentation and we now open up for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer Your first question comes from the line of Fredrik Savinovic. Your line is now open. Please ask your question. Thank you very much. Could you talk a little bit more about the backlog and what we should expect in Q2? Is it only winter sales effect? Could we see some catch up effect or timing effect here where you regain some lost business? And also maybe the order intake, is that a good representation on where we should see sort of the organic level for Q2? [SPEAKER JACQUES VAN DEN BROEK:] I think obviously, we will regain some business that was not done in the towards the end of quarter 1. To talk about catch up effects, I don't know if you should talk about catch up effects, but we can clearly see that orders are now coming with the mild weather or the milder weather. It's cold today in Stockholm, I guess, but the milder weather. I mean, the time is to some extent our enemy. I mean, when we get the orders and if we get too many orders at the same time, we have the capacity, we have short term, so to regain everything. So you should expect that there could be an impact on top line in the Q2 because of the late, so to speak, order intake. If we get orders now in mid April or second half of April because what happened earlier, then of course, it will be difficult then to get back fully on track in the Q2. I don't see that as being a shift in the market though. So it will be more a time effect for us. Okay. And speaking of the order intake again, could you maybe give us some hint as to how Q2 has started so far? [SPEAKER STEPHEN ROBERT BINNIE:] I think I did give a hint. It's there is a mix between the markets. They're all in plus, of course, but you also have to remember that when we have winter effects or Easter effects, there is a short term effect or mid term effect both on sales and on order intake. And last year, we had Easter, if I remember it right, in the middle of April. So the comparison figures for us now is quite weak. So we see very good development in some markets and they're all in a positive mode right now without exception. So we are coming back on track. It's very, very hard to predict exactly how this will, I mean, be fulfilled through the whole quarter. But right now, it looks good. Right. You have talked about improving consumer sales, especially in Sweden, I think. But yet, I mean, newbuilding seems to be increasing every quarter. And could you just maybe tell us a bit more on the strategy going forward as to how to increase the consumer share of sales? Yes. I think we do a lot of different things. We have strengthened the organization. We have launched a lot of new products in several markets also in Sweden and Norway. We are coming closer to the customers and consumers in various ways. And I think the towards the end of Q4, but especially in Q1, is more related to only the winter effect, I would say. I can't see that we are continuing to losing out on the consumer side for more structural reasons. It's about the weather. But we should also remember that competition has sharpened, that some of our big retail customers have more suppliers. So competition is also tougher for us. And it's quite clear that for us, a general rule is always profitability before volume. So we are not chasing volumes in the consumer sector just to get orders in our factories. So but it's a combination of a lot of measures, and there will be more measures going forward. And I'm quite optimistic that we will come back on track. And especially now with the winter gone, we can clearly see that orders are now coming back in the consumer sector much, much more than they are in the industry sector. Okay. In the report, you're also right that you had some increased market shares in 2017. Could you give us just an update on where you stand here in the respective countries right now? [SPEAKER JACQUES VAN DEN BROEK:] Yes. I think we are we increased market share dramatically, I would say, in Norway, but that was not so difficult. We came from a low level. We are more or less even in Sweden, I would say. Finland is increasing dramatically. We have never been in a stronger position than right now in Finland. And when it comes to Denmark, we have continuously over the last, I would say, 6 to 7 years strengthened our market shares even organically, but also with the acquisitions we have done. So all in all, in the Nordic region, I think we are in a stronger position right now. It's not I mean, it's not giant leaps we're taking, but we are we have consolidated our position, and we are stronger now than we used to be at least 1 year ago. So it looks optimistic. When it comes to the European markets, the statistics are not that valid and it's hard to measure, but I'm quite sure that we have increased our position in the medium to low priced segment in U. K. With the PVC where we are continuously growing. And we have also strengthened our position in the timber segment in Poland for sure. So right now, it looks positive also in Europe, but it's, of course, very, very tiny figures we have in the European markets and with not very, very secure statistics to lean on. Okay. Thank you very much. [SPEAKER JEAN FRANCOIS LABADIE:] Thank you. Your next question comes from the line of Johan Dahl. Your line is now open. Please ask your question. Thanks. Hi, Hakan and Peter. Hakan, you talked about increased price competition. I think you mentioned Sweden and Finland, for example. To what extent do you believe that is sort of driven by the temporary winter effects? And to what extent is it sort of structural as you face in some of these markets probably slowing demand? [SPEAKER JACQUES VAN DEN BROEK:] I think it's actually both. I think but the extended price pressure and the harder competition we see we always see that clearly in the winter season because of the winter campaigns. And there are many, many of our competitors running out of orders, and they try to fill up the factories to just make them run. And with this harsh winter, we have clearly seen that much more than normal, I would say. And also, we see some of the competitors in some of our markets, I would say, especially Finland, struggling a little bit financially. And we have seen that many times before that when you are struggling, you have a tendency that you go even lower to secure money into the company and orders into the factory. So clearly, most of what we have seen in the Q1 has been winter effects, I would say, and to some extent, structural effects also in Finland, not negative for us, but for some of the other players, I would say. But long term, there has been an increased general competition, I would say, in the Nordic region. And I would say, especially in Sweden, the Swedish market has over the last 6 to 7 years actually, we have seen increasing amount of so called bigger players trying to create stronger positions and being more active and more aggressive in some of the key segments. We can also see clearly that the big retail chains within Construction Material today also work with more suppliers in our area, and that also means that we face more competition also in our some of our core channels. So it's both. I think the shift or the change that you see in this report is not that the structural competition has increased further. It's much more or basically only connected to the late and cold winter. Got you. Did you mention that you're rolling out a number of innovations, I think you mentioned. Can you put any sort of numbers to that? And what do you expect the impact to be for the group due to that? No, I won't give you any impact on that. It's very hard to calculate. I think we have some years back, I mean, we almost had no sales of new developed products, and we measure this very clearly now. I think we at the latest report, we had between 7% 8% of total sales was actually newly launched products and increasing very, very fast. And this is a high figure in our industry and we have a clear target there. And that does not really include the newest launches. So I expect that figure to increase quite dramatically going forward. So this looks very positive. It's taken some years to come there, but now we clearly roll out much more interesting products for the markets, and that will have an impact. To measure that and to give you a forecast on that or to guide you on that is not something we will do. All right. Just on production in Sweden Norway, how concerned should we be that you repeat sort of the problems you had last year as orders are now pushed in late for delivery in Q2? And do you have the strain which you talked about in the supply chain? Yes, could you just elaborate a bit on how you look on that? Yes, I'm quite sure that some of the mistakes we did on our own, we will not repeat. That I'm quite sure of. What happens in the supply markets with the big materials is something that we, of course, try to prevent from happening. There are clearly some risks that there will be bottlenecks within the big material supplier because they deliver to many different industries a lot of materials. And with the economic boom that we see right now in many industries, of course, we cannot guarantee that we are not affected by that. But right now, it looks quite promising. Our production is running smooth and fine. And I can't really foresee that we should run into dramatic problems this year again. That is what we can see for now. And our factories is actually now back on track and with very or rather good figures from all aspects when it comes to lead time, delivering the right amount on time, etcetera, etcetera. So I'm right now more I'm quite calm from that perspective. But it can change quickly, of course. Yes. But the factories that had problems last year, are they currently in full swing? Or Yes. No, the problems are not in full swing, I hope. The problems are more or less gone. But we are made to order. We make a couple of 1,000,000 windows and doors every year in 29 or today, I would say 31 factories with the 2 newest acquisitions. And of course, with made to order, you have to be very humble and follow the situation very, very carefully. This is not a steel mill or anything else running. This is very made to order and you plan your orders and your production with a lot of different models every, every day. So but right now, it's working as it has before has done before the challenges that we had in Q2 and Q3 last year. So I'm I sleep well at night. Just finally, the SEK 100,000,000 savings program, could you just update us where you stand on that progress you're making and confidence in realizing it? We are rather confident. We are realizing the savings. We are following the program. And I am today rather sure that we will fulfill that program completely with the full year 2019 as we have promised before. Thanks. Thank you. Your next question comes from the line of Emmanuel Des. Your line is now open. Please ask your question. Good morning. This is Emmanuel from LVV Asset Management. I really just had a question on the aluminum and input prices. Can you because of what's happening to aluminum, can you just help us a little bit with some sensitivity? So namely, how much is aluminum costs in your production base? And if the aluminum prices stay elevated for longer, basically would we start seeing some pressure in your margins in the second half? Yes. Thank you. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Yes. We work very closely to the big players in aluminum. Of the raw material cost, aluminum is 10% of the total cost. So it's a minor impact, and that means that it's around 5% of the sales cost. So it's, of course, and it's increasing because aluminum is more and more put on our products in most markets. So it's increasing. We are securing the aluminum supply and the price is a couple of quarters ahead. So we are secured now for the first half and the second quarter and partly also already in the third quarter. So we have always time to adjust. But of course, if there continue to be such, I mean, dramatic volatility as we have seen, you cannot rule out that we will be, to some extent, impacted. And then, of course, we have to push price increases or cost increases to our customers. But right now, it seems like the situation is rather under control. And since they one of the Russian guys with this company, rural, he was off the list or he actually left control of that business. You could also see that he could be off the list maybe from the sanctions or not impacting at least the aluminum market, and that also meant that prices came down. But there is some unrest in the aluminum market right now and for various reasons. So we have to be very, very on our toes to make sure that we handle it in a good way. Okay. And just a follow-up on that. So since listing 2014, you've consistently had an EBITDA margin in excess of 13%. Commented in information we have today and in April to think that in 2018 we can go back to the, let's say, 13% plus EBITDA margin on a full year basis? We don't give usually any forecast. We try to guide on what we're doing and how we see the market develops. But I mean, I think what I've just said about our position in our key markets that has been strengthened the last couple of years and our efficiency improvements in our factories except with the exception of the, I mean, extraordinary challenges we had last year for various reasons. I think there is reason to believe that we will continue to deliver very good results. Then, of course, it depends on how the channels, how the segments develop. The general demand will, of course, have an impact on what kind of margin we can take out. But we don't see a dramatic shift this year in comparison to 2016 and 2017 from other aspects than those that we have discussed earlier in this call. Okay. Thank you. No further questions at this time. Please continue, sir. Okay. Then we think this conference call is over, and we wish everybody a happy day, happy week and happy life. Thank you very much. Okay. That does conclude our conference for today. Thank you all for participating. You may all disconnect.