Earnings Call: Q4 2017

Feb 1, 2018

Morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Envido Fourth Quarter Report. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today, Thursday, 1st February, 2018. I would now like to hand the conference over to your first speaker today, Hakan Jepsen. Please go ahead. Yes. Thank you very much and good morning to you all and welcome to the year end report for Enviro with myself, Jorge Napsen and Peter Weline. And as stated, there will be a presentation. And as usual, we will open up for questions afterwards. So let's turn to Slide 2, where I give an executive summary of the development for the group. I would like to say and to start with that we are absolutely following our strategic plan. We have a good sales growth that continue. We have year to date a 12% growth, and the company has never been larger than we are today. Even in Q4, we grew by 4% and organically by 3%. And you can say that all business areas grow organically in the quarter as well. So we are satisfied with the growth development, even though it can, of course, always be better. The supply chain is now back on track. We have handled all the distortions that we had during Q2 and Q3, and we are more or less ready towards the end of the Q4. It's been hard work, of course, in the Swedish factories and in the component supply area, but we are now back on track and that is satisfactory for us. The efficiency improvements is according to plan, and we are working with the SEK 100,000,000 program. It's, of course, very early. We have, yes, started the program, but we see it as being fully on track so far. 2 acquisitions in 2017, both based in Denmark, that we have closed during the summer. And Best and BILIXT will be added to our e commerce portfolio, and that will be as it seems during February, hopefully. And these two acquisitions will add at least SEK 200,000,000 of turnover to the group. Finally, I would also like to conclude that we invest rather heavily when it comes to e based products and processes, both connectable products, e trade solutions, business to business and business to consumer and also internally in digital processes. And we have taken rather large steps in the area during 2017. Turning to Slide 3, talking about the market development. The summary would be that the markets are still strong and as always some question marks, of course. And I think there will be no time in the future either where you live without any question mark at all. But we see, as you all see, high GDP growth in generally. It's basically all over the world, good growth with some minor exceptions. We can also luckily see stable to increased consumer confidence in more or less all markets. Some hesitance, of course, in U. K. With the Brexit discussions, but the adjustment downwards in confidence in U. K. Is still rather small actually. So it looks not that bad in U. K. Either so far. We see strong demand for new houses and for dwellings, and this is a debate we have in Sweden about the lack of dwellings. But it's not only in Sweden, of course. We have the same discussion in many markets. And that also means that a lot of the markets where we operate are also driven by newbuild at this stage. The raw material prices are, again, after several years of stable or lower prices increasing. You can also see that as a good sign to some extent that we are in a good market situation. So some inflation seemed to be back, and that is not always negative. And we are normally quite good at compensating for raw material price increases that would also enhance our margins in the best of worlds. We see sharper competition in some markets. Sweden, we have stated that for some years now. UK, of course, with the situation there and some struggle also in the Finnish market that we have handled well so well so far. So despite the strong demand, I would say, as always, there is some price pressure and price decreases overall in the markets. Nothing serious, nothing we can't handle. We have a good margin development, but that's a fact. I mean the big question marks for us is, of course, the development in the housing and real estate markets in Scandinavia and how that will impact consumers. We have seen a more or less a weaker demand in Scandinavia from the consumer side, meaning that we have not seen the growth figures that we saw in 'fourteen and 'fifteen since early 'sixteen actually. And so we now see a more stable consumer demand in the Scandinavian markets, especially Sweden and Norway, while Denmark is a bit stronger. And of course, the financial restrictions for consumer lending from the banks could also have some impact on the temperature when it comes to the consumers. If they have to amortize more, how much can consumers borrow? And we have also seen some 24 months back a worse subsidiary program in Sweden, of course. But all in all, good stable markets with less growth than some years ago when it comes to especially Sweden and Norway. Going to Slide 4, talking about our performance in quarter 4. We are not completely pleased, but we are pleased that we see good growth and a stabilized profitability development. Actually, it's the 2nd best quarter forever, and it's only the 4th time in history that Enviro has passed an operating EBITA in a quarter more than SEK 200,000,000. So it's absolutely a step in the right direction with some of our historic problems adjusting. We grew by 4%, 3% organically, and all markets actually grow except the Norwegian market that where we have also increased prices quite dramatically to enhance our margins, and that have had some impact in combination with a slightly weaker second half year of the Norwegian market. Order intake still positive, plus 2%, one percent or 1.5% organically. All BAs business areas are growing except Sweden, Norway, and that is to some extent because we also restricted capacity a little bit to make sure that we could handle the customers we had. EBE, the European business is growing by 10% order intake, e commerce plus 20%, and Finland is back on track also after some of the challenges they saw in especially in Q2 last year with the sales organization. So again, a very good operating EBITDA in Q4, more than $200,000,000 We have to remember that 2017 was exceptional as we see it with maximum deliveries and a very fortunate calendar. So now we see that EBITA is stabilizing, and we do in Q4 the best quarter also of 2017. Denmark is still a top performer with a solid margin, more than 20% operating. That is, of course, very, very strong and incomparable, I would say, in the industry. And we see that continue in 2018. E Commerce, the business unit selling directly to consumers in several European markets is growing fast, more than 20% full year 2017. And as I said also with the same order intake organically in Q4 with more than 20% increase. So it looks as a stable and very positive development for us in that concept. Supply chain disturbances have been resolved after lots of efforts, and now it's important for us to consolidate. I state that disturbances are behind us. Efficiency measure as minute per produced window or door is not completely back on track since we have taken such so many extra measures to handle the disturbances. So you couldn't expect more. And I see that we normalize efficiency completely during Q1. It's not a big deviance, but we see that we have some more improvements to do to be fully back on track when it comes to our efficiency in that sense, not something that will impact us dramatically in the Q1 of 2018. Consumer sales share a bit too low at around 70% in the quarter. And we will be working on the mix, especially in the Swedish, to some extent, the Finnish markets going forward. Turning to Slide 5 and summarizing the full 2017. So it's a good sales development. And of course, if you take the full year into account, the profit level is below our expectations, but as I stated, now back on track. Dollars 6,400,000,000 of sales, the highest ever for the group. We have an order backlog of +5 percent at year end, the highest backlog we've ever had in the group. The operating EBIT at SEK 649,000,000 slightly less than 2016 because of the extraordinary operational costs that we've had, especially in Sweden, Norway to handle the situation. Operating EBITDA still for our industry on a very high level at 10.2%, but obviously down in comparison to 2016. Two acquisitions made. The pipeline is okay. But as I have stated many times before, we are mostly negotiating with family owned companies, and the processes are not always very easy to prepare and to predict how they will end. But I would be, of course, disappointed if we couldn't close more acquisitions during the year. It's absolutely one of our core targets for the year. Several digital products and concepts launched for the smart homes and as working efficiency improvement tools for installers and retailers in most markets, and we see that continuously ongoing into the future. The board proposes a dividend of the NOK 3.50 It's same as last year, and that also gives us a very good headroom for further development and not the least, further acquisitions in the coming years. Turning to Slide 6 and then going through the business areas, starting with the biggest ones, Sweden Norway, business area combined since 1st July 2017. We still had some effects of the supply chain disturbances in the quarter, much less than before, and we have concluded and solved the problems towards year end. Consumer confidence on a healthy level. Still, I must say that the consumer market, the renovation market is not growing fast. It's high. It's stable. It's a good market, but there are, of course, some uncertainties when it comes to all the measures that the authorities might take when it comes to consumer lending and amortizations. Disturbances have been handled. They were not higher than expected, and they were resolved. And we are now working very, very hard to come back to the maximum efficiency. If you can ever measure maximum efficiency, we would always like to improve, of course, efficiency continuously. The segment mix in Sweden Norway is still less favorable than wanted. It dropped a little bit during 2017, and that is, of course, because market is driven and has been driven by new build and we see that being restored to a more healthy mix during 2018 if our measures will bite as we expect them to. Total sales still, despite the fact that we restricted capacity a little bit to handle the customers we have, total sales were still plus 3% in the quarter, and the order backlog is still on the same level, high level that we had towards the end of 2016. The Norwegian market, though, has been slightly weaker than earlier and has actually been negative during the second half of twenty seventeen. It's not impacting us extremely much since we have a minor share in Norway, and it's a minor part of the business area and the group as a whole. Slide 7, coming into Finland, where we see a normalization and a strong improvement with strong order intake in all sales channels. It's a competitive market, but many of our core competitors are struggling actually, and we can take advantage of that. Finnish economy seems to be back on track with good GDP development and very high consumer confidence. The consumer confidence is actually higher than before the financial crisis, and that is very promising for our growing Finnish business. Our sales organizations, especially the consumer ones, are more or less back on track, and we are fully recruited as it seems. And we can also see that in the order intake figure and sales figures also for the quarter. So it looks promising. High share of industry sales also in Finland. Actually, the newbuild market has not dropped substantially during the tough years in Finland. So our mix has been slightly negatively impacted, and the activity level in construction sector is still high in Finland. Total sales, plus 3% in the quarter, and the backlog is actually 21% higher than last year. So it's promising for us going into 2018, of course. The star in our books, Denmark, in Slide 8, had a very strong year and ended with a strong quarter also, another record quarter for the in vitro company in Denmark. We also see continued strong market indicators with high consumer confidence. And general demand has been good in Denmark, and we have no reason to believe that it will drop substantially in 2018 either. It looks stable. We have seen positive development in all our sales channels. And you have to remember that we have very little industrial sales in the Danish market. So it's we're talking about different consumer channels actually. So good segment mix with almost 95%, 96% consumer share. Total sales were 10% -plus in the 4th quarter. The backlog might look a bit scary. I think you shouldn't be too afraid of that, minus 23% at year end. We had extremely high order book with some big, big orders that we had into 2017. So I sleep calmly at night despite the fact that the order book might look a bit lower than that could be expected. The order intake in Denmark in Q4 was actually plus 6% also. So it means that we have good pace in our sales in Denmark still. Finally, around the business area, Slide 9. For EBE, Emerging Business Europe, including the business unit e Commerce, continued strong growth for e Commerce and good or stable growth in all markets except partly U. K. Obviously, there are probably some Brexit effects, but we don't really see them. I think some of the challenges we have are more connected to our wood window business in U. K, where we had some struggle with structure organization and the supply chain there, while our PVC business for consumers is going really, really well and with few signs of the upcoming Brexit 1 year from now. As I said before, e commerce order intake growth of 20%, and we are planning for introduction to more markets going forward. The only thing we have to be sure of is that we have the right capacity to also deliver products to new e commerce markets around Europe. With the fast growth, we've had some challenges to ramp up capacity, especially in our Polish factory, as fast as we would have wanted. But it's only a matter of time, and we are investing in that factory to increase capacity rapidly. We have some heavy efficiency measures ongoing in U. K. And Austria with restructuring to improve cost efficiency and competitiveness, and we see those actions going as planned. And that will also improve performance in EBE in 2018 and onwards. Total sales in the quarter, minus 2%. And organically, sales were actually plusminus0 in the quarter. Total order backlog, much because of U. K. And to some extent, Ireland is minus 1% at year end. Turning to Slide 10. Taking a look at the outlook. I must say that I feel Envido having very good prerequisites going into the New Year, and we are absolutely looking forward to this year and this season with some of the major disturbances behind us. The need for our products still good, as I said, in general, in most markets. Markets are overall rather positive with high consumer confidence. The underlying performance of Invito, if you disregard the extra cost we had to take for handling suppliers and supply chain distribution matters, especially Sweden and Norway, is very good. And so coming back to normal, that will also impose a good development in 2018. We are very well positioned within all the e connected and digital processes and concepts. We are actually the clear market leader in Europe when it comes to e commerce for windows and doors. And we will continue to develop that strategy forward. And as I said, also supply chain now back on track also gives us good grounds for some optimism in the New Year. Challenges, yes, getting the right and enough competence. I mean, unemployment rates are very low. We are operating in some very small villages and cities. And to some extent, there could be challenges to find the right amount of skilled people and to even find people overall. And of course, the political and financial uncertainties that you're always facing. I think the biggest challenge might be what happened with the good and profitable business around consumers in Sweden, and we talked about that before. And it's a good market, but house owners are facing some short term challenges with house prices, mortgages and lending boring money. Final remark for quarter 1 is, of course, also that everybody should remember that the Q1 of 2017 was extremely strong with all the stars looking in the right direction. And also, to a great extent, that was also because Easter was in the Q2 2017, while Easter will start in the Q1 of 2018. So some tough comparison figures for the Q1. To conclude, the focus areas short term on Slide 11. I mean, our overall plan is unchanged. We have the absolute ambition to, on average, improve operating EBITA by at least 10% yearly. And to do that, I think there are 5 areas where we have to focus very, very hard in the coming period and during 2018. That is, of course, a consolidated, normalized supply chain with good quality control and to create absolute right stability that we would like to have in our big factories. The pricing and segment mix to have a slightly better and improving mix of consumer and industry sales that we would like to have, especially in Sweden and Finland. And then also compensate completely for the raw material price increases during the year. Don't have a delay on that, and that is something we're already working very focused on in our businesses. Thirdly, organic and acquisition based growth. We would like to create more structural growth. I mean, we have more or less grown the business with 50% in the last 4 to 5 years, and we would like to continue that structural growth and substantial growth both in the Nordic region but also in the European continent. And we are working actively with the pipeline of potential acquisitions as we speak. Fourthly, efficiency and cost improvements, always important in our type of business, and we have launched SEK 100,000,000 program, and we should now make sure that we secure the effects of the program, and it looks promising in the start of the year. Finally, continue to launch e products, concepts and processes. We must always be relevant for customers and consumers, and the smart home is out there. And it's a big opportunity for us. But digitalization is also very good way of improving the operational efficiency, and we will continue to invest in smarter processes internally in our factories and in our administration going forward. So that concludes the presentation of the situation. Now I will hand over to Petter, and he will give you an overview of figures for Q4 and full year 2017. Thank you so much. Then we go to Page number 13. On Page number 13, you can see to the left the income statement for Q4. And to the right, you can see the full year 2017 as well as 2016. For Q4, as Hakan said, sales grew by 4%, and adjusted for currency as well acquisitions, sales was up 3%. Operating EBITDA ended at $201,000,000 compared to $227,000,000 last year. And as Helkin also said, it was the 2nd best Q4 result ever in Mido had. During the quarter, we had some production disturbances. And as we said, in October, we're going to have cost for $10,000,000 to $15,000,000 in Q4, and that was also the state. We had about $15,000,000 extra cost in Q4 connected to the services. Then we have a negative mix effect, sales mix effect. However, the sales efficiency that we have problems in Q2 and Q3, they have been solved and has not affected the Q4 results. Further down in the income statement, we have restructuring cost of $112,000,000 in the quarter, dollars 10,000,000 connected to transaction costs and the SEK 63,000,000 is connected to the cost saving program. I will come back later to the cost saving program. Then we have Altrub, and that has affected us by SEK 39,000,000 in Q4. And when it comes to Altrub, Altrub was a company in Denmark that we acquired during the summer of 2016. At that time, we acquired about 25 or we acquired 25% the shares and the remaining 75% shall be acquired in 20 eighteentwenty 19 based on a fixed multiple. And we have, from the summer of 2016, booked the expected purchase price for remaining shares in the balance sheet. However, the company has performed better than planned, especially now late in 20 17. And this means that the purchase price for remaining shares has thereby increased. And the increase is €39,000,000 and we have to book this €39,000,000 increase as a cost in over the income statement, and that has affected EBITDA for the quarter. We also agreed with the seller that we are going to acquire the remaining parts now in February 2018. So further down the income statement, we can see that profit after tax ended at SEK 34,000,000 and earnings per share SEK 0.38 compared to just above SEK 2 last year. And if we adjust the earnings per share with the restructuring cost and also with amortizations, The earnings per share ended at $2,030,000 compared to $2,050,000 last year. The full year results, sales plus 12% and organically, meaning adjusted for currency as well as acquisitions, sales grew by 4%. And operating EBITDA ended at $649,000,000 compared to $673,000,000 last year. If we then turn page to Page number 14. On Page number 14, you can see to the left the sales in Q4 for 2015, 2016 and 2017. And to the right, you can see the order intake for Q4 the same years. The order intake is lower than the sales in the quarter, and that is due to the fact of the seasonality. Sales was plus 4% in Q4 compared to last year, and organically, it's plus 3%. All units but EBE had a positive growth, and EBE had about the same sales organically as last year in Q4. If we look at the order intake, the order intake is plus 2% and adjusted for acquisitions and order intake is plus 1%. And here is all units but Sweden and Norway positive with a positive order intake compared to last year. Sweden Norway was negative due to lower capacity in Q4 due to the fact of the disturbances that we had during the autumn. However, the order backlog end of December for Norway Sweden is in the same level as last year. If we then turn to Page 15, we can see the order backlog for the whole group. The order backlog ended at SEK 855,000,000 in Q4 2017 compared to SEK 8 $50,000,000 last year, an increase by 5%. And adjusted for acquisitions, the increase is plus 4%. So we have the highest order backlog ever for Q4 end of 2017. The order backlog is always at lowest level in Q4, and that is due to the fact of our seasonality. All units but Denmark has higher order backlog compared to last year, and the deviation in Denmark is explained by extraordinary high order backlog end of last year and shortened lead and delivery times during autumn 2017. If we then turn to Page 16. On Page 16, you can see to the left a beta and a beta margin, operating in beta and operating in beta margins. And to the right, you can see the full year. To the left is a quarter and to the right is the full year. Operating in beta, as I said before, ended at $201,000,000 compared to $227,000,000 last year, a margin of 11.3% compared to 13.3% last year. Denmark had a very positive development in the quarter, and Finland and EBE were in about the same level as last year, meaning that Finland is back on track. The problems we had in Finland before with sales efficiency is solved and has not affected Q4. The negative deviation is mainly related to Sweden and Norway due to mix and the production disturbances of about SEK 15,000,000 extra cost in Q4 connected to last year. And to the right, you can then see the full year and operating EBITDA then ends at SEK 6 49,000,000 equal to an EBITDA margin of 10.2% compared to 11.9% last year. If we turn to Page 17, and that is regarding the efficiency program that we have launched in Q4. The program is running according to plan. We are we have identified savings of about SEK 100,000,000. We have onetime restructuring cost of SEK 82,000,000, where we have taken SEK 63,000,000 now in Q4. And of this SEK 63,000,000, SEK 42,000,000 is a write down of fixed assets. Then we have additional write down of other assets, including the €63,000,000 and that is write down when it comes to inventories, meaning the cash effect from the restructuring costs are quite limited. We're going to have further SEK 90,000,000 to be booked now in Q1, and this SEK 90,000,000 cost is connected to Vero back. We are going to close down the factory in Verebakken, Sweden. The negotiations started now in January and has also ended now in January, and the cost will be taken in Q1 2018. When it comes to the effects, the full effect will start from 2019, but we will see some effect now also in the first half of twenty eighteen. And then there, they will gradually increase and have full effect, as I said, from January 2019. If we turn to Page 18, this last page, this shows net debt and net debt versus EBITDA. Net debt versus EBITDA ended at 2.1 after Q4, and net debt has been a little higher than expected due to the fact of this outlook because the adjustments for the purchase price for remaining shares of Altrupp has been rebooked as net debt. So the net debt has been increased by €39,000,000 and net debt to EBITDA ended at €2,100,000,000 And you can see that net debt has been reduced during this quarter quarters, and we are generating cash flows more or less as predicted. This was the presentation, and we open up now for questions. Thank Our first question comes from the line of Johan Dahl. Your line is open. Yes, hi. Can you hear me? Yes. Yes. Just a question on the segment mix. You talked about Hakan, your priority to improve that. What do you see in the order book with regards to the segment mix as we go into 2018? Also, the various initiatives that you're driving in Consumer and in Project, is that reason to believe the mix will change in any way? Yes. I think we will get some help from the market. I think there is reason to believe going forward that the new build cannot stay on that level maybe for the full 2018 and not at least for 2019. We see in our order book in Sweden that there is a slightly positive mix effect already going into 2018. Okay. Got you. Secondly, if you just look on the Danish operations, you talked about you're sleeping well on that topic of the order book. What gives you that confidence in the Danish operations? Well, we have an increase in sales in the quarter 4. We have an order intake plus. And we have been able to decrease delivery times in Denmark further, and that also makes means that we can also deliver the orders faster, meaning that we dispatch more orders in the current quarter, so to speak. So the order backlog exactly at the quarter end will not be as important. And we see good confidence and good demand in the Danish market going forward. Therefore, I feel rather optimistic. And we had some extraordinary bigger orders actually for some of the projects in Denmark when we ended 2016. And so therefore, I'm optimistic still. All right. Could you also address what complexities does the increase in raw material cost and freight cost cause you? Have you taken sort of orders on previous price levels that may pressure margins as we go into 2018? Is there a time lag sort of from when you expect to receive compensation for higher raw material costs? No, not really. We have historically never had any huge problems with the raw material prices. Actually, we see it very often as a good thing because we can also as a big player, we can get lower price increases than some of our competitors, and it's also a good way of compensating and actually increasing margins a little bit when raw material prices are going up. And there is very little or actually no time lag since we are selling made to order, and we create the offered prices day by day with the new raw material prices at hand. So there is no negative effect, I would say, overall at all. Okay. Just a final question before I get back in line. What you talked about uncertainties, mainly Sweden, Norway. What contingency plans do you have at the moment? Should stuff hit the fan and things turn more sour than you expect today? We don't have I mean, we have normal contingency plans. Right now, we have launched a SEK 100,000,000 program. I think that is a contingency plan good enough to continue to improve efficiency and be prepared. We don't see the fan being hit, so to speak, yet. And I think right now, it's more important for us to consolidate the customers and the orders we have and make sure that we satisfy our customers completely this year that we, to some extent, didn't do in 2017. If things happen, we have shown earlier that we are rather flexible in adjusting capacity and cost levels. So I'm not so worried about that. Thanks. Thank you. The next question comes from the line of Friedrich Sveninovich. Your line is open. Thank you very much. On Finland, could you maybe just comment a bit more on the competitive situation there? Is there a status quo with your major competitor there and their production potential? And if so, no? Not really. Number 2 in Finland actually more or less went bankrupt during fall, and they were acquired 80% by one of the bigger players in Europe, IFN, from Austria. We haven't seen the full activity from that competitor yet, but they have been struggling. We have the number 3 in the market has also been struggling. Number 4 has also been struggling. And that means when they struggle in this industry, unfortunately, it very often, especially in Finland, leads to that you try to increase order intake very, very fast to fill up your factories, putting some pressure on the prices. So far, we have gained market share. We have restored some gross margin, and we have actually, to some extent, also increased prices in the Finnish market. So we are not hit or hurt yet. But we can see that the struggling delivers some price pressure at certain projects, absolutely. Okay. So to expect that you would have some kind of accelerated growth for an extended time, that's not something we should assume in that case? We expect to grow in Finland in 2018, of course. And we feel really strong in the Finnish market right now with the organization we have and what we see from major competitors actually. All right. On Norway, you stated that you increased prices quite substantially. You had a weaker performance on the top line. But what is the profitability like for Norway now if you isolate that country? Is it on plus now? It's still in red to some extent because we took some cost also. We have had some restructuring cost in the Norwegian organization there. And we're absolutely not satisfied with the Norwegian development, but it was necessary to increase prices and to restore and improve margins there. Whether that will hurt our sales or not, that is something we have to do. And short term, that hurt our order intake and our sales a little bit in Norway. But I think we are on the right track. But Norway is still a question mark where we, in the combined Norway Sweden business area, have some further initiatives to take to be on track completely. Okay. And could you maybe let us know what the respective growth levels are in Sweden or on an organic level instead of just the grouping them up? Sweden was growing in the 4th quarter by 3%, and Norway was negative by around 2% organically. So and that, I think, is a combination of the increased prices and also that the Norwegian market in the second half year has been rather negative actually. I think the Norwegian market fell 8% volume wise in quarter 3 and another 1% or 2% in quarter 4, probably linked also to the housing challenges that they've had there. But Sweden has continued to be positive, and we see good growth in Sweden actually, and it continued also in Q4. Okay. And one final one for me. If e commerce is growing quite fast still, makes us question a bit on what kind of shape the other business in EBE is like. If you can maybe give us some comments there if you would exclude e commerce to know what kind of trending we see there at the moment? Yes. It's a mixed picture. I think the real problem child we have in EBE is the UK, and that should not be very much linked to Brexit or anything like that. We run into some big challenges in our so called old U. K. Business, and that is dragging down the result quite substantially. We have taken out substantial amount of people and restructured the whole U. K. Business. And of course, when you do that, you also lose top line because people are more concerned about what is happening internally in the organization, etcetera. So Ireland is doing fantastically. E Commerce is doing great. Poland is now in black figures and partly the U. K. Is negative for us. Order intake is very strong and grew by 10% in the Q4. So we are looking ahead towards a better 2018 2017 in EBE also. Okay. And just one last one. You say the demand for building cheaper is increasing. I think on the C and D, you mentioned that you have some possibility to raise prices, I'm guessing, then in the consumer channel. But then given your comments on the Finnish market now, the industrial side in Sweden, I mean, what kind of effect should we expect here? Yes. I think for some reason to substantially raise prices in the newbuild sector, in the industrial sector is not that easy. I think we will absolutely compensate for the raw material price increases. We're right now in negotiations with some of the big builders, and of course, we'll see what happens there. The consumer side is completely different when you invest and build for yourself and for your own house. You look up on pricing and equipment in a completely different way. So it will be tougher in the industry side, but I'm absolutely confident that we will at least compensate for the raw material price increases. We have also seen profitability underlying profitability increases and margin increases in both Finland and Sweden for newbuild sector in the last couple of years. So it actually looks rather promising there. And with a better mix, I think the underlying margin will also come up in the next couple of quarters. All right. Many thanks. Thank you. We have a question from the line of Marcella Klang. Your line is open. Hi. A couple of questions from me. You mentioned organic growth in Sweden of around 3% in the Q4. Is it mainly coming from the consumer channel or renovation? And what is happening with the industrial channel? It was the growth was more from industry in the Q4, but we're talking about the order books. Consumer looks more promising going into 2018 in the Swedish market. So there seems to be a little bit of a mix shift for us, and we have been working also on that in the last couple of quarters. So we should see that happen. So if I understand you correctly, you expect the consumer channel to grow in 2018? That is our absolute ambition, and we would very much like to see that happen. Where is the segment mix in Sweden for you right now? And where would you like it to go? Because on the group level, you have some 70% share of consumers. From there, what is the situation in Sweden? Swedish consumer sales is 55% to 56%. We were a couple of years ago when we had a better situation, we were plus 60%, and we would like to come back on that level. And I think that will happen no matter what we do because as I stated to some earlier question here, I think the newbuild sector will not keep this level that we have seen in the last couple of years, and that will help us to also restore the mix. But we will actively work to come back to at least 60 plus in the next phase, and that will help us a lot. And we have actually seen already in Q4 a margin a gross margin improvement also in the Swedish business, and that looks promising. Thank you. Then another question on your M and A efforts. Have you increased your efforts compared to 2,007 when you managed to close only 2 acquisitions? Only 2. Thank you for that. Well, we acquired 4 companies in 2016, I guess, a couple of companies in 2015 and 2 in 2017. And I think yes, I think I would say, to some extent, we have increased activity level, and we are concentrating a lot on that now, especially when the concentrating a lot on that now, especially when the supply chain disturbances are more or less over. We can also concentrate from the top level more on the acquisition. And we are working with the pipeline we have, and we spent a lot of time on this. But it's time consuming, and it's the processes are rather, as I've stated many times, uncertain. But I really hope that we will pull a couple of acquisitions off during the year or in the beginning of next year. Thank you. And then a follow-up question on the supply chain disturbances. Have you changed anything? Have you got any backup suppliers? Or is it mostly below season helping you now? No. I would say that we have obviously, it's rather hard to change completely processes when you're in the middle of challenges where you have to think about your customers and consumers. So and that is why it costs so much money to handle. But of course, as long as the especially the quarter 4 has commenced, we have also been able to work through capacity planning, forecasting, much more transparent processes with our core suppliers. We have also exchanged or increased the amount of suppliers in some areas. And we have, to be honest, also exchanged a couple of people in some of the key positions. So we have done many things to stabilize and improve the processes absolutely. And we will see effects from that in 2018, for sure. And the final question from me regarding the cost cutting programs you have launched. You mentioned writing down as assets, closing down the factory in Sweden and targeting efficiency improvements in the U. K. And in Austria. Anything else where you are targeting your cost savings? It's also connected to Denmark. We had some and also in Finland. In Denmark, we had some products and some some products that were not profitable that we have been closing down. Thank you. That's all from me. Thank you. We have another question from the line of Pritik Savinovich. Your line is open. Thank you. A follow-up for me. Some questions that another analyst had. What kind of margin impact could we see in the case that new build doesn't keep up? I mean, given utilization rates for factories going down in Sweden, etcetera, even in spite of mix improving, could we still see negative impacts? While listening to you, it feels like you would rather expect the opposite? I expect the opposite. I expect margins to strengthen in Sweden for efficiency reasons, of course, for extra costs going away, but also that we get a more favorable mix and that we also work even better with the different customer channels and the pricing we have for them. So there are many activities and initiatives being driven in the Swedish market that should support better margins going forward. Okay. Thank you. Thank you. We currently have no other questions. Okay. Thank you, everybody, for listening in, and have a good day. Thank you. Bye bye. Thank you. This does conclude our conference for today. Thank you for participating. You may now all disconnect.