Earnings Call: Q1 2016

May 3, 2016

Morning, everyone, and most welcome here to the Q1 report from Loomis. Very delighted. We have an agenda for the meeting today, of course, go through some highlights, talk about the segments and the financials, brief presentation around those, then some Q and A. And at the end, I'd like to introduce our new CEO and President, Patrick Anderson. We will come back to that at the end of this meeting here. Highlights. Let me start with the highlights for the Q1 2016. It's one of the best quarters actually which we have presented at least as long as I have been the CEO here. We have the organic growth of 5%, which is, as a matter of fact, the highest organic growth which we have had in any quarter since we were listed 2,008 here. We see that we have in U. S. Organic growth of 14%. And again, that is also by far the highest organic growth we ever have had in that company actually even before listing. And then we have also continued positive development in Spain and Turkey and Argentina. I will come back and talk more about the details here around that later on. Operating margin is continuing to increasing. Of course, the product mix and the growth in the U. S. Is contributing to that. And also, as I almost always say here, we continued with our efficiency work. And again, it has been effective also this quarter. The EPS is up 16%. And as said, we have a new President and CEO, Patrick Anderson, who I will introduce here at the end of the meeting. So this graph is have almost always been with us here in these presentations, and it continues to grow. And if I put it this way instead, you can see that we continue in the Q1, also 2016. And you can see that the trend continues. A little bit of a margin improvement quarter by quarter. This quarter, it's 0.3. The Q4 in 2015, it was 1.1. So there is not a it's not a linear relationship, but it's still a continuous improvement in the margin here. If we look upon the branches, and I think this is maybe one of the most important slides, at least, when running the company, is to see that these improvements which we see on the operating margin is not something which is not related to the real business or the real operation. In this quarter, we actually took, I will say, a giant leap here in terms of better performing branches. We went from 21% in 2015 for the Q1 to 16% in the Q1 2016, which is, of course, also the best wish we have ever had since we were listed. You can see now we're down from the 32% at the time of the IPO in 2,008. So we're down to half of that right now. That leap of 5 percentage points there between 'fifteen and '16, that is mainly or it's contributed by France, 8 branches, 7 branches U. K. And the remaining branches is coming out of U. S. So it's not just one country. It's not just one branch. It's across the border where we see this margin improvement continue in the company. So let's talk about Europe a bit of a more detail. So we have an organic growth 1%, which is better than last year for the Q1. We have a positive organic growth in Spain, despite Spain actually had one day less of invoicing in the Q1 this year due to Easter, the way Easter came. Despite that, they have positive organic growth. So that and it's stronger than it has been in many, many years, I would say. We continue also in Turkey and in Argentina where we talk about 50% organic growth. Of course, some of that is driven by inflation, But there is also real growth in those countries as well. And we're gaining new contracts. We're gaining new business there. This has been partly offset by a slight decline in the Nordic countries. We continue to see a 2% to 4% negative organic growth in Finland, Norway, Sweden, while Denmark was more or less flat at this time. So that is a trend which we talked about for a couple of quarters now and that is continuing. The real growth, we did an acquisition of Catronix, which came in, in July. So the real growth is somewhat higher than the organic. And then when we look upon the operating margin, we can see that we have those efficiency improvements, which I talked about initially. We have seen those mainly in Southern Europe. Actually, France is the country where we have seen the best improvements in the margin together with U. K. And of course, for us to see that U. K. Is somewhat recovering, we have had some issues there since the onboarding of this new contract with Cardtronics. We also took on the big Tesco contract here about a year ago, and that has also impacted the operating margin. But now finally, it looks like we're not out of the woods, but it's surely going in the right direction there. So France and U. K. Positive in terms of operating margin. We have seen some negative impact on the margin from some of the Scandinavian countries. Sweden is flat. Norway, Finland is the 2 countries which sticks out during this quarter. One of them in Finland, we are taking on a big contract, which is then, of course, taking some time before we get efficiency out of that or get the efficiency into that, I should rather say. And in Norway, we have also, which we talked about before, a pretty healthy FX business, foreign exchange. And without having any numbers of the traveling for Norwegians, I assume that with the lower economical growth in Norway that there has been some lack of traveling there. Anyway, we have seen a downturn in the FX business in Norway. And of course, that is a business which we where it's a lot of fixed costs, so it is difficult to take out. But overall, operating margin is up 0.1% in the European segment. If we look upon U. S, organic growth 14%, as I said, which is something we've never been close to even before. It is actually 15% if we put back the adjustment for the fuel fee here. And I think it's also encouraging there that is across the board. That is a combination of price increases. It is a combination of Safewent revenue. It is a combination of CMS revenue, the big contracts with Bank of America and others which we talked about before. And it is also gaining market share. I mean, we're gaining quite a market share in the U. S. Right now. We signed a big contract in North Carolina with the state employee credit union there, which is then rolling out. It's not fully rolled out in the Q1, but it's really affected it anyway. So overall, a very, very good development on the organic growth in the U. S. We also acquired the Dunbar here, as you are aware, in November, and that is having an impact on the real growth, of course. Operating margin. And I think here it needs to be said around U. S. That, of course, when you try to grow or when you grow actually with 14%, 15%, that puts some pressure on your organization. One of the biggest issues we have right now in the U. S. Is just to find employees, is to hire and train people at the speed that we are taking on business here. So with that said, we have by no means seen the potential in the operating margin, which there is in the U. S. From these volumes. Of course, the different product mix here with CMS, the save point, that is driving the margin. But I think from an efficiency point of view, there's definitely more to be gained there. Anyway, we are up 0.9%, which is significantly better than last year. Safepoint continues to grow 23% in growth in the Q1 versus the previous quarter previous year's Q1. And as you can see, we are now up almost 16,000 installed safes where we have sold this service, which is today serviced, not just installed, but also serviced, close to 2,000 customers. And we continue to add a few banks also who are giving us the provisional credit. But I think maybe this slide is more representative. And these are all the installments which has been made since 20 10 is this. And you can see that we have been having a pretty flat development. We didn't have the right focus. We didn't have the right product. We didn't have the right sales efforts to it. Since we changed those things here in 2014, I think we've seen things take a nice turn upwards. And we surely think that actually it's more or less a question of being able to install and to get the product more than having orders right now. That is the challenge for us just like it is to get people to our operation here. When we look upon CMS, being responsible for U. S, it's quite encouraging to see that we are now almost or we are at par with Europe now actually. As you know, the growth in Europe in recent years has been in countries with CIT like Turkey and Argentina and so where CIT is dominating. So we are catching up. So we have gone from 2,008, 17%. We're up now to 33% in terms of CMS. And there is still a bit which hasn't been rolled out and I think we still affect those numbers just by the existing contract here. So a good development also there. I used to show you a couple of slides of branches and how they are developing. And as you can see here, this is the branch in Baltimore. This is part of the Bank of America contract. This is the biggest vault which we took on. We built a completely new facility in order to take on this volume. We went from 15 tellers to more than 100 tellers just to process the cash here. And I put this slide the last time I had a branch called Pansocket, but I think we agreed or at least I agreed that, that was already doing so well that it's just we were through the post rollout. So I put here Baltimore instead. And you can see that we still have challenges there. Didn't have a lot of margin. We moved to a new facility. We took on a lot of volumes. We had a lot of negative margin impact during some months there. And we're still losing money there. And this is our biggest vault, which we took on from Bank of America. So we still got a lot of work to do. But I like to see it as a potential because we know how to do it. It's just that we need to get also this size of operation in the right place. The other one, which I showed you a couple of times, is Rochester up in Upstate New York, where which was rolled out a few months earlier than Baltimore. And it was also a smaller operation. This is about 40 to 45 towers. But you can see there, again, there is a margin impact for roughly, in this case, for the CMS operation of about 6 months before we get it up again. And this is the margin. So this is then, of course, more dollars on the bottom line here as the volume has increased in that operation. So that is also when talked about other rollouts and particularly where we are right now with 14% organic growth, it takes some time before you get the efficiency into the operation here. International Service had our 3rd somewhat smaller like had an organic negative organic growth of 9%. And we had different reasons for it, as always, and decline of precious metals in transportation. We had also a strike in India, which impacted the deliveries of gold out of Switzerland, particularly. And there was also and that is also, again, in Switzerland, fewer art exhibitions. However, I mean, we have so far not been successful in getting the synergies on the sales side from ViaMat becoming Loomis International Service in our operations. That is something which that potentially is still there. We just haven't cracked the code to do that yet. And this is more or less the existing business which we had when we bought Via Math. And the operating margin is of course, there's a lot of fixed cost in an operation like this. So that is negatively affected by the lower volumes there. So just to repeat, the organic growth is 5%. Again, it's the best organic growth which we have ever had in since we were a listed company. We have an operating margin improvement of 0.3 percent versus last year's Q1. And we have also a 16% improvement on the EPS here. Just to finalize the presentation here is to recap on the financial targets. I did that more thoroughly yesterday. We had the Annual Shareholders Meeting then and actually ticked the boxes for all of these. We have a plan of revenue at €17,000,000,000 by 2017. We are on track for that mainly because we have had a very strong organic as I said several times here. Where we are lagging a little bit behind is in the acquisitions. And if we're going to be able to reach this target, we need to do some acquisitions, there's no doubt about that, in the coming 18 months here. On the margin, that development is in place. We are running at the pace which we are expected in order to be in that span. And you know what we also said for the 10%, we that was probably closer to 10% if we would do some acquisitions in new countries where we don't have any synergies, closer to 12% if we do acquisitions in markets where we have operations, where we have synergies Or worst case of all, of course, if we don't do any acquisitions, we should also be able to be in that range then. The debt gearing is 1.6, 1.57. So there is a very there's a lot of firing power if we go to if we start to make acquisitions here. And also the dividend, as you saw yesterday, was the Annual Shareholders Meeting decided that to be SEK7. So to conclude, all the financial targets are on track. We had a very good first quarter, record in the organic growth and also margin improvement as we are supposed to do. With that, I was planning to open up for questions. I mean, just to clarify that, Patrick is starting his tomorrow. So I think it's fair for him also to get some chance to get to know the business a bit also. Fair enough. Let me ask you about the weak cash flow then. I mean, the cash flow before investment was down 35%. Meanwhile, the EBITA was up 9% year over year. Also worth noting is that cash conversion, also before investment, has been on a downward slope over the last four quarters. Could you please explain why that is and how we should look at that going forward? Yes. I might ask Anders to comment also. Let me start off here. I mean, when you look upon the cash flow in the Q1 is always a weak. I mean, we had an exceptionally high cash flow last year with 85%. If you look upon the average, the last 5, 6 years, most of those years have been around between 5% 40%. So it was when you compare it to last year's cash flow, that was exceptionally good. Q1, we always have a lot of payments for insurance. Some of the CapEx is rolling over and so on. So I think it's when you compare the for a couple of 1st quarters, you will see that there's nothing unusual with this quarter. However, when you ask what is the trend going forward, that is going to be I mean, we normally have an improvement quarter by quarter in the cash flow. Anders, do you want to comment? I can just add. Do I need to turn this on or I can just add a comment on SafePoint. I mean, it's really the expansion on SafePoint sales in the U. S. That has been driving the or impacting the cash flow as well over the last four quarters, as you mentioned. Just considering that we're now basically installing 5,000 plus saves per year. That has a big impact. And but what we also done is we put the leasing line in place that will be an alternative, and that will definitely have an impact on the cash conversion as well going forward. But I still really don't understand because looking at cash flow from operating activity before investments or before the cost associated with SafePoint growth. Comparing that to the EBITA level, that has trended down. If you look at the rolling four quarters that has been trending down over the last year. Is there any good explanation to that? I think I mean, it's we still we don't have a cash commercial target, but still I would expect that we will be in the 8% to 5% range on the long term because we're not we have not taken any decisions that we should build start building up working capital for expansion purposes or anything like that. It's not in the current business plan. So I think it has a lot more to do with the swings in the working capital, what you see in the balance sheet. Okay. Another question on the U. S, obviously, very strong growth there. And as I understand, 2 to 3 percentage points came from price increases, roughly the same from SafePoint. You have 2 percentage points roughly from calendar effects. And then, of course, also continued support from the Bank of America contract, which will likely fade away going forward. All this combined, what is a reasonable full year organic growth range in the U. S. This year, 5% to 10%, 10% to 15%? Well, I think I said in the interview yesterday, it was about 5% to 10%, probably closer to 10% underlying long term organic growth. But it's something like as you saw, we were posting that we won this contract from the credit union, which is not fully rolled out. So we'll come in. There's a couple of others. We'll be I mean, some of the big contracts. So it is difficult to give you an exact number. But if I look upon the trends in the market and the things we're doing and the price increases, so yes, something around 10% is what I would expect us to do. Okay. Thank you. I'll stop there for now. Henrik Knutsen from Nordea Markets. On the review by the Spanish competition authorities, when did this come to your attention? And have you got any estimate or any more flavor you can give us on this at this point? I think the first time it was communicated or published on the CNMSC, I think it's called, the Spanish authorities, was in April 'fifteen. That was the first time when they started an investigation. I mean nothing really have happened. They have 18 months to come back and to give some kind of a decision on that. I saw also that Fosugo was writing that about that in their annual report. I mean, that is all we know at the moment. I don't have anything more to add to that at the moment here. Okay. Thank you. And on you mentioned the negative margin impact from the Nordic countries. Historically, it's my perception that you've been able to fairly compensate fully for the declines in the Nordics. Is this changing now? And if so, why? No. As I said, there was a couple of specific reasons, which we I talked about Finland and Norway, new contract accepted FX business, which is very difficult to cut cost out of. Sweden, on the other hand, that was we were doing exactly what we're compensating for the to maintain the same margin level. I mean, our ambition is that, that be the case also going forward. But it is also, I mean, something when volumes are going down, you cannot just instantly take away cost. I mean sometimes it takes a little bit of time to get a route out or negotiate about staff reduction and things like that. So it's not like you volume goes down and then you immediately can take the cost up. There might be some kind of a delay in it. But in this case, it was mainly the Finland and Norway. And the ambition going forward is to compensate, yes. Okay. And you mentioned also market share gains in the U. S. Are these market share gains from winning a larger share of, should I call it, virgin contracts? Or are you also winning more of your competitors' existing contracts? That is what I consider that to be, is to be when we're winning existing business from our competitors. I think we are definitely the one who has the strongest performance right now in terms of winning contracts and so on. So it is that is winning from our competitors. Mikael on Danske. I'm not sure I heard you correct, but was it April 2015 this Spain issue came up? And what was the trigger for writing it now in this report 1 year later? Well, I guess, there's nothing particular as a trigger. Maybe we should have done it in an earlier phase when it was published that there was a dawn rate, but this is the time when we did it. And I cannot say why that is right now. But I mean nothing has been there's something will be communicated by 6, 18 months, so it's probably October, November or something like that before that period. Okay. I also have a follow-up on the early question regarding the how much working capital that is tied up in the business. If you look at the really long term trends, I mean, not just the latest 4 quarters, there has been an increase in working capital over time. Is there that this shift to more CMS revenues, for example, in the U. S, is that driving more of more working capital basically? Is that the reason and or what could it be? I think the main shift happened when we bought Via Marte back in 2014. I don't think that we have any sort of better payment terms when it comes to new customers on the U. S. Side, either on the CMS side or in the SafePoint side. I think it's just a reflection over time that we're actually we're increasing the business and we are growing and that ties more working capital. But when it comes to the quarterly shifts, it's entirely the swings, the normal swings that you have in the balance sheet. And we had an outflow we had a negative outflow working capital of I think it was more than €300,000,000 in Q1 compared to negative €150,000,000 Q1 back in 2015. So it has an effect on the rolling 4 quarters, yes. But I'm also fairly optimistic that it will come back in during the later part of the year. And going back as well to the explanations that Lars had that there are some natural payments like insurance premiums that comes in during the early part of the year and that most CapEx projects are initiated on the second half of the year that gets paid during Q1 and Q2. So that's why we have this seasonality in the flows. But I was more interested in the I mean the long term trend basically since the IPO that has been a trend shift upwards in how much of percentage working capital the business ties out? I think, I mean, today, we have roughly €300,000,000 €400,000,000 tied up in working capital. At those days, I think it was around very close to 0. So yes, it is more working capital, but it's still not a significant number considering the size of the business. Victor Lindebe from Carnegie. A couple of questions if I may. And starting up with the funding side of your business, you mentioned now that you had a higher cost of funding driving interest expense. Can you comment on that, why that is the case? And also how you view funding going forward? I guess that's a question for you, Anders. Maybe you should stay up there. Yes. We had a better and that was an acquisition of CHF 200,000,000. Usually, what you put in place is a temporary credit line, which is much cheaper because it's not committed. And at the next phase, that was rolled into a medium term bond program, which is more expensive than what you can get if you have a short term credit line from your supporting banks. Okay. So it's more about that mix shift. Yes. Okay. Thanks. And also then looking at I should stay up. I think so, yes. This is on the U. K. Business. Okay. And you mentioned you had the margin improvement. I don't know if you mean sequentially or if it's year over year, but still can you help us understand the dynamics more on how much of a margin driver this potentially could turn out to be going forward now? Are you close to breakeven levels? Or what should we expect going forward? Is this something you can bring up to European margin level in a couple of years? Or and how should we think about that? I mean, when it comes to U. K, that was breakeven business 1 year ago. I compared year over year, quarter over quarter. And we said that we have issues with the onboarding. We had issues with the quality, which then resulted in customer complaints. And it's resulted also in we had to pay claims and penalties and so on. And now we're making a margin there. I mean, I always said that the U. K. Business is about 90% CIT. And that means that when you compare that to the European business, it will never I mean, as long as we have that ratio, it would be very difficult to get that up to. I said that several times. If we can get the U. K. Up to 7%, 8%, 9%, that is, I think, a realistic level for almost all CIT operation. And I mean, the Q1 was certainly a step in that direction. I'd like to emphasize where I mean we said before that U. K. Is okay now. U. K. Is okay, but then it dropped down again. So I think it's a good start, but we're not done by no means. If you look at the business mix, as you mentioned, 90% CIT, there's call it JV, voltek between the banks. Sometimes we hear that it's up for grabs that it's being outsourced. Have you heard anything more about that? No, we also hear that it's for sale sometimes. But there is no I mean, that is as you know, that is our old what we called LCM in those days and the luminous cash management. And that is I mean, that is something which was part of us, then it was separated. I think it's not top of the list really right now. I mean, there's a lot of thoughts around that, how we did it last time wasn't very successful. So I think that's but of course, I mean the fit is there. There's no doubt about it. Okay. Thank you. But not right now. Moving to the U. S. And looking at the Safepoint units, you mentioned that you want to exceed at least a rollout of 5,000 units. And I think you commented yesterday that 6,000 might be a bit optimistic, given what we know today and the bottlenecks in rolling out and everything behind that. But if we look beyond 2016, do you think 5,000 is a good number to be targeting? Or you think how should we I mean, our ambition is much, much higher than that. So we should not view 2016 as being a peak rollout year in anything? No. I mean, that is from everything I see and I know now and I see the interest there, I mean, we estimated in a estimate of really true opportunities about 300,000, which is quick service restaurants or something which has late openings hours, which has a lot of cash, which is maybe in areas where security is an issue, which is at least 5 entities in the same chain or so, not single stores. Then we got to 300,000 places where we think we can. And today, there is about maybe 45,000 safes out there. So I mean, we think there's a ginormous potential there. Of course, it needs to be managed also. But I think the potential is there. And we will certainly our plans are certainly much higher than that. Well, you have to do you think you have to move the price point in order to drive growth? Or is it close to US4.50 dollars per month? Yes. I mean, we are between US4 $104.50 We stick to that level also now when we look upon the sales which we are putting out there now. No, I don't think it is a pricing issue. I think it is a very good solution also from a retailer perspective. And that's not the way how we're going to grow by lowering the prices by no means. And final two questions for me now. Looking at the vaults, you mentioned that I think the Baltimore was one of the biggest one in the U. S. Can you remind us how many vaults you have today in the business in the U. S? And also how many are you refurbishing in 2016? Well, we have I think 90 vaulted facilities, about 95, 98, keep lose track of that, where we have a vault, where we also have some kind of CMS operation. Baltimore is the biggest one, which is also the most complex one, of course. We will this year, we will refurbish 6 or 7. And of course, those are we don't refurbish the small ones. These are major ones where we refurbish. Okay. Thanks a lot. Okay. Stefan from SEB. Follow-up there on the SafePoints in the U. S. So what you're saying is that you have 30% of the market. And if you say 300,000 potential, should I then think that maybe 100,000 is what you can grab or how did you come up here? Is the $300,000 30 percent of the total market? No, the $300,000 I think when you look upon points of sales, it's about $1,500,000 or $2,000,000 somewhere in there between in the U. S. It's difficult to count all of that. The 300,000 was just where we think this is a place for Safeway. I mean, some places it's not. Either they are too small for us to call upon and try to sell it to or they are maybe too big like a Walmart or so they probably need other solutions. So the 300,000 is really where we think we can sell those. I mean, today, I think we the most of the safes which are put out there is from us, is the safe point. I don't see any of our competitors being close to that development, which we have in terms of the product there. So now how fast can this be implemented into the marketplace? But our ambition is definitely to have a bigger market share than what we have today. Thank you. Then Via Math. Yes, I hear your arguments about what's happening in the surrounding world, but still it's a rather recent acquisition, it's a big acquisition and it's very dependent on the people who work there and relations because you have to get the contracts and the business every day. So of course, when I see double digit decline organic for a couple of quarters here, I get a little bit concerned. So is there are you happy with the business? Otherwise, is there anything internally that you're concerned about at all? Is it all relating to things that you can't control? It's a very good question. Let's start with that. I'd also like to remind you, the Via Mart acquisition was half of that was the Swiss business, which is the integration has been flawless. It works very well. We've got a good market position. We've got a good profitability out of that business. So that we need to consider that is very successful. Where I think we have failed a bit, if I'd be a bit critical, is on the international business, where the idea was that we would then utilize our presence in the U. S, our presence in France, our presence in other places and by that gain volume into the international. And there we have failed. We have not and that is an internal issue. So the full potential, I think, is definitely related to the failure to gain that potential. It's definitely an internal failure. I still believe I still like to believe that the reasons why we see like minus 9% now in organic growth is more related to external issues. I see that there is a strike in India. I know that. I know that there's less gold going there. To some extent, I must excuse myself, I don't know exactly all about that business. So we will see, I would say. I mean, we have a tremendous opportunity there to really I mean, we didn't buy it just to utilize what was there when we bought it. The idea is definitely to combine it with our existing and that we still have to do. And the final question then to I don't know how you can you can't give prognosis, so we have to go back. If I look back Q1, I don't have an idea about the organic growth or if it was growth or decline. Q2 was a double digit drop, it looks, if I try to calculate backwards into your 1% group level and then was flat in Q3 and then drop in Q4 of 12% and now 9%. So it seems like if it wasn't a big drop in Q1, it's actually very easy comps that you have now going into Q2. So that what I'm fishing for is, if it is easy comps or not, it helps us to do the estimates given we don't know anything about Q1 'fifteen? It is a difficult question. I mean, we don't do prognosis. And I mean, it is a spot business. That strike is gone and we immediately start shipping. It's not like when we get a contract from Bank of America, we're going to pound on for 5 years in that direction. This is difficult. I don't dare to guess on that. Thank you. Thank you. Henrik Nielsen from Nordea Markets again. On the leasing agreement in Safe Point, judging by the pace of installations, this is roughly 1 year of covers 1 year of installation, I suppose. Should we assume that you will sign more contracts each year going forward on leasing agreements or lease sign new frame leasing agreements to cover future CapEx as well? Yes. Do you want to come? Yes. I think that's a reasonable assumption. Mean, we're going to have to look at the total picture when it comes to financing cost of the lease agreements and considering everything. But it isn't it is depending on the success as well that we have with Safepoint, but the way it looks now, I think that's a reasonable assumption that we will probably have a combination of buying the safes and utilizing leasing possibilities. Okay. Thank you. And how does this leasing setup impact the profitability of the SafePoint? I think you can disregard that because now with very low interest rates, leasing financing is not that expensive and that's why we actually were attractive. But if it would hurt our profitability on the product and it's much cheaper to finance SafePoint expansion by utilizing bank loans or bond loans or something. That's the way we would go. Okay. Thank you. And one last question, if I may. If you coming back to Via Math, I guess if you look historically, our organic growth swings of negative 10% or so, is that in line with the historical lumpiness? Or does it stick out from a historical perspective? I don't know. Via mat, the swings? Hey, you can stay here. Could you repeat that question, Henrik? Yes. If you look historically on the organic growth swings in Viamat, just to get a picture of the lumpiness over time in this that business, does these 12%, 9% in the past 2 quarters stick out? I mean, my experience that, that business is very related to the volatility in the precious metals market. I mean, the more volatility you have, the more business there is on the gold exchange in London and New York, the more movement you get in the underlying volumes because these positions needs to be covered and that gives us more business when it comes to shipping. And as well and then when we see occurrences like the one we have in India now when they pretty much close the country from imports and being the 2nd largest importer in the world, it has a significant impact on our business. So I haven't seen when going back and looking at the numbers, we've not seen this volatility as we've or sort of the negative decline in growth numbers as we have experienced over the last year. So I'm still optimistic that this is going to come back. Thank you, Anders. Stefan Oberg, Handelsbanken again. One more question. You previously stated that the Cardtronics acquisition would support the European margin from Q1 and onwards, and we didn't really see that materializing this quarter. Why is that? And how is the integration process proceeding? You're talking about U. K. Now? Yes. I mean, cardholders is a huge client for us in the U. S. As well on ATMs. But I mean, that is I think that you in the U. K, as I said, we have been behind in terms of profitability there. I mean, 1 year ago, we didn't have any profit. And I would say even in during the whole of last year, it was very slim improvements that we would I don't know when we have mentioned or I have said that, that would be impacting the Q1 positively on the European margin. I guess it was the former CEO. I can blame him, yes. Smart move. I think that is unlikely that, that would happen. And we're not there anyway. I mean, this is the whole issue with U. K. Onboarding quality. Now we're seeing it happen. Isolated, I don't know exactly how that business would impact and when it would contribute to the margin there. It will surely the thing I know is that we've got U. K. We did some changes there. U. K. Is moving in the right direction. But it will U. K. As a country, as I said before, will never positively impact the European margin. I mean, that is CIT market and that's low margin. Thank you. Victor from Carnegie again. Touching upon the question from Stefan here on the equation in Europe on profitability because as I say, basically you have a slight tailwind coming from U. K. Now improving margins. You have Spain growing where you should have higher margins given that it's a fifty-fifty CIT and CMS business. You have a slight decline in the Nordics, as you mentioned. But can you help us understand why you're flat on the margins? Because is it Turkey or Argentina that is operating with lower margins than the European average given the good growth that you've seen? Or is the big fall in profitability now that we see in the Nordics? Just to understand the bits and pieces of the equation. No. It is I mean, you have to realize, 1st of all, the profit improvement, the margin improvement in U. K. On the group has a very marginal effect. I mean those are it's not like it's going from 0 to 10 or something like that. It is we talk about small numbers there. And I mean the same in Spain. There is a couple of percentage in growth. It is a high margin market, but when you do that math, it's not that many dollars to the bottom line or I was going to say euros to the bottom line. I mean, the drop in what we saw in the Q1 here in the Nordics, I mean, as I said, that is related to a couple of instances. It's not a major thing. And France is flat. Turkey and Argentina is also pretty flat. I mean, they're growing like crazy, but it's still not a lot of dollars or euros at the bottom line. So I think it's there's no mysterious or no I think the math adds together when we look upon it. Okay. And on the on looking at the growth in France and Spain, can you give us some details on what numbers you're seeing there in terms of growth? No. In Spain, we have said before we were almost at a reverse as of the Scandinavia or the Nordics, I mean, 2% to 4%. And that is one day less. France, I did not say that that was growing. The margin was improving. No, just asking what kind of growth you saw in France? No, it's flat. It's flat. It's flat. Back in Q4 basically? Yes. Okay. And final for me now, looking at U. S. Again outsourcing contract potential, can you give us some more flavor on what is still left to be outsourced? What is up for grabs? What is the practical potential to say? Well, if I recall back to when we had the Capital Market Day 20 14 in September, I had a slide presentation. That was about $700,000,000 out of $2,000,000,000 I mean the total CMS market we estimated to be something around €200,000,000 I mean it is a very rough number, but something like that. That is to as I said, €700,000,000 we think is today outsourced. That means that so let's say that, that is up to 0.9 perhaps now, so half of it. It's a lot left. But some of it will take a long time. Credit unions, very conservative, it's going to take forever before that comes. Yes, that's what I'm thinking because the theoretical and the practical number might be a very big discrepancy between those. But there is a significant piece only with a couple of the other I mean, Bank of America, obviously, as you know, took a decision to outsource everything. No one else of the big banks, really big banks, have taken that decision. They have kept all their really big vaults internally. Okay. And that is something you see potential for opening up now in I hate to speak for those big banks. I think that but I think that at least they're looking at what is happening, how this is what is the impact on service level financial for Bank of America and make some decisions out of that. I'm sure they are watching. All right. Thanks a lot. Okay. Then let's move on to the teleconference operator. Do you have any questions? Your first question comes from the line of Peter Testa. Do you have someone there? Can you hear me? No. Now I can hear you. Now can you hear me? Yes. Okay. Yes. It's Riccardo Romiani from One Investment actually. I have two questions. The first one is on Europe. Do you see increased efficiency coming through in the next quarters? And can you please help me understand in which countries this efficiency will come compared to Q1? The second one is in the past you were trying to give us a view on the opportunity for SafePoint in Europe. Is that still the case? And the last one is just on cash flow, if the timing of Easter had an impact on cash flow in Q1. Thank you. So let's start with so Europe, where do we see a margin improvement? I would say almost everywhere. I mean that is I think our strength as a company that we have been able to increase efficiency in almost all places. The places I think of continuing most is, of course, U. K, where we have the potential as that margin is has been lower than expected the previous year. So I think U. K. Is one area. Certainly, we have some of the Nordic countries also. And France was also showing good development during the Q1 here. So I expect those to be the main targets for that. The other question was SafePoint in Europe. We had the best sales ever from SafePoint in Europe, but the numbers are still very small compared to U. S. At least. We had a lot of we have a lot of new initiatives in terms of SafePoint in Europe, when it's in terms of product development, in terms of financing of the funds. And but I mean compared to U. S, it's still a small number. So we have decided not yet to quote any numbers around that and the development, but we'll get back as we get as it becomes really a business to talk about. But there is a potential. We have a product and we're also making some headway some ways into those markets now. And the final thing was the Easter and cash flow. And I'm looking at Anders now. Don't come up again. It was no, yes? It's no. Yes. There's no significant impact of Easter, yes. Okay. Thanks. Anyone And it looks like no further questions. Okay. And no further questions here. So let me then finish off here. Thank you for being here, listening to us. And then I'd like to leave the word to our new CEO and President, Patrick Handelssoff. Thanks, Lars. Thank you. Thank you, Lars, for this presentation. I just want to take the opportunity to introduce myself. My name is Patrick Anderson, as I said, and I started this week, but I take over officially on tomorrow actually. So I have some things to learn still. So my background is that I've been working in consumer goods in the consumer goods industry for many years, So different positions, also different CEO positions. I've been CEO and President for a Norwegian traded company on the Oslo Stock Exchange for some years. Recently, I've been CEO for Procordia. It's a food business, the biggest food business in Sweden. And I've been working a lot with these some of the customers when you talk about the big retail chains and so forth. So they have been my customers for many, many years. I'm really looking forward to start here. I've been waiting for 6 months or more than that. So I'm really looking forward to it and it's going to be an exciting time, I think, and I have great hopes for the future for the business. And there are a lot of things happening, a lot of possibilities. So I'm really happy to work with Lars and many other people here in the Loomis business. So that was a short presentation. I'll get back at the end of July with the Q2 presentation. Thank you very much.