Earnings Call: Q4 2018

Feb 14, 2019

Good morning and welcome to the year ended for January 2018. My name is Anna and I will be your coordinator for today's conference. During this call, you will be on listening, Andy. However, in the end of the presentation, you will have opportunity to ask questions. I will now hand you over to CEO, Per Oskarson, your host for this call. Thank you. Thank you, and welcome, everybody, to this presentation of the year end report for 2018. With me on the side here is also Silenius also, our CFO, who will help me through this presentation. Let me start just with some comments from my side around the year 2018. It was quite a year with both, I would say, huge success with the large acquisitions that we made. But also honestly, I have to say that I'm a little bit disappointed that we didn't succeed to grow the core business in the old markets in Sweden and Norway. That core business is a very profitable business and growth in that area is very helpful for the company's growth. With that said, we have also taking a decision of a cost saving program, which we will come back to a little bit later, but that is also to be a little bit more flexible for the future for changes in the market and to be able to increase the profit in the core business. I will probably be back on more details later. So I will hand over to Ossa to talk us through some numbers. Yes. Hello, everybody. Economic growth in the fourth quarter, as you know, the large acquisition of ExtraSet and InterTEAM made group revenue change dramatically up to nearly 4% almost doubled our revenue from 1,507,000,000 to $2,922,000,000 in this quarter. As we communicated in January 2017, we have an EBIT of $57,000,000 compared to $96,000,000 last year the same quarter, but we have $53,000,000 in items affecting comparability in this quarter. For like for like EBIT excluding those items affecting comparability, Q4 EBIT is 110,000,000 compared to EUR 103,000,000. I will come back to those number on the next page. We have also been asked from the market to present also EBITDA since we have customer related goodwill that we now amortize on. So we also present those figures in this report and EBITDA excluding items affecting comparability amounts to 160,000,000 for the quarter compared to $132,000,000 last year. Back a little bit to sales. We had an underlying sales growth of 5% in the quarter excluding Episept and Intertin. But with that said, looking at the growth in comparable units could say that's core Mekonomen Group, we had a decrease of 1% and Per will come back to that. And that decrease has of course impact EBIT for the quarter together with high Euro Sik exchange rate and also results EBIT from newly acquired businesses with no or low EBIT. I'll go to the next page, the bridge between EBIT 2017 to EBIT this year of Q4. The first three you have F2C and Interteam, they had a result of $61,000,000 in the quarter, but they were affecting our integration cost of €25,000,000 We have communicated that we could have up to €60,000,000 in integration cost. We now have taken 25,000,000 of those costs and we are expecting some more integration costs during 2019, but not up to €60,000,000 that will be lower. And we also have the additional amortization from the Efteset and Intertek acquisition. So altogether, this makes a plus 16. Mekonomen has adjusted EBIT of $7,000,000 It's lower due to lower sales in the quarter. We have one off items affecting comparability of 28 from the return on frames as described in the press release January 17. And we also had items affecting comparability last year in the quarter. Sorry, I forgot Mirka. Mirka has an EBIT on the same level as last year. And Sorensen and Belgium, they have a better EBIT if we take away the DUB write down of stock, we did no. No. Sorry. Sorry. Sales on the margin is minus two as a total. And then we come to other segments, it's minus 23 compared to last year and there we have the non core businesses and the newly acquired smaller businesses. As Per said in the CEO words and we'll come back to you as well, well has diluted our EBIT this quarter. On the next page, I will guess you will ask questions about this as well, but a little bit details what Per said here in his introduction about what we are doing right now and we'll do to increase EBIT during the year. We will increase efficiency and adjust our cost structure throughout the group and that goes for Old Metronorman Group as well as the newly acquired F2S and Inter team. We have already launched an efficiency and cost saving program to reduce costs by $65,000,000 on a yearly basis, whereof $30,000,000 will be achieved already from Q3 this year with full effect from Q4 this year. We have already launched the program and the savings will ramp up through the quarters. Our organization will prioritize among the projects we are currently running to be able to focus on core projects as the warehouse catalog etcetera. And we will also act on the unprofitable business mostly in the segment others as you saw in the bridge. Price increases has already been made from the beginning of this year to compensate for the higher purchasing costs due to the strong Europe in Norway and in Sweden. And we also have the upcoming synergies in the purchasing area that will increase our profitability during the year. We will see synergies already this year, but they will fully implement in 2021. Next slide, some updates about the reporting from Q1 this year and onwards. We had the IFRS implemented and we have calculated the effects on the balance sheet and expect the right of use assets to amount to approximately SEK2 billion and the same at the liability side for the leasing commitments. Equity will not be affected and the group will not restate comparable figures for historic periods. We will report in four segments starting at the fourth quarter this year. We will report Efteset as a segment, Interteam as a segment, Meka Meka Norman as a segment and also Sorensen and Obalsha. So there will be four segments going forward to adjust to the new structure of the group. Over to you, Per. Thank you. Then we'll move on to look a little bit deeper into the different segments. And I am on Page eight, where we started Efteset, the Danish operation, which we have had four months in 2018. We had a small decline in sales, about 1%, and that's affected by the weak market, which was the autumn in Denmark. Of course, we have integration costs, which affect this segment, and that's SEK 80,000,000, which is related to that. And just the short about Efteset after the acquisitions, I would say that I have I'm still very impressed in what I see. The management is intact, and we have also very motivated and committed management in Denmark. So I have very good faith in the future for them. Let me move on to Interteam. That's our Polish business, also included four months of the year, where we have an increase in sales, about 5%. Poland is a growing market, which we haven't said before, but it's also a market with very high competition, which leads to weak gross margins. But the Polish divisions also have quite a large part, which is in export, where they export to countries around Poland and the rest of Europe. And that export business also was growing during last year. Zero EBIT margin. But again, as we have said before, the Polish business has an interesting future because we know that it will be a consolidation somewhere along the road and which normally leads to better margins and it's a very growing market and interesting in Norway. Merca had quite good sales trend despite the weak market, which is mostly because of some minor acquisitions. Unfortunately, acquisitions doesn't give the same EBIT. So it on the EBIT side, Merkel is quite stable even though the sales is positive, but still stable operations both in Sweden and Norway. Mekonomen was both in Sweden and Norway was affected by this effect of the €28,000,000 related to the frames, which we need to take as a one off costs, which was also included in the press release earlier this year. Otherwise, I would say that we have a small decline. We have not done any acquisitions. So this is probably more reflecting how the market looks. Still if we compare EBIT adjusted, I would say that we have a very good positive development. And for you remember the years with especially with Macanorman in Sweden and the challenges which we have, I can still repeat that we feel that the last years now has been stable. Organization is working very well, and it's also very I'm very confident with that part of the company. Service and Balchem, we're on Page 12 now. They for the full year, of course, very affected by the very strong drop in sales in dubbed products compared to 2017. They also we also had on the full year effect, we the write down in the inventory of double products. But they have starts to besides the DAB, the sales are in a positive trend now. And this is a company with very efficient cost control and a strong EBIT margin. Yes. And then we will move on to market and market trends on Page 14. And it will be interesting now to see in the future. We have had a very strong sales of new cars a couple of years, which dropped in Sweden and partly Norway after the summer, especially in Sweden, it was very dramatic. It's just the prognosis for this year 2019 is still that it will be a high a good year for the car sales. Have since we have had that a couple of years, we believe that those cars starts to move into our target customer groups and that is when they reached the age of five years and older. So there should be a possible potential in market increase in the future when we look at those numbers. It's also interesting as a reflection that we I think that one of the reasons for low car sales coming up is especially in Sweden related to political decisions where it has created a very, I would say, hesitation among the car buyers. And yes, that could lead to that they keep the old cars a bit longer and an old car that's getting all the needs service that's good for the economic business. You can also see on this chart, we have added now Poland, which has a strong increase in new cars the last couple of years. But if you look on the chart on the right side, you can also see in the age structure of the Polish cars that they have a very large amount, which is eight years and older. So it's definitely a very interesting market in that perspective. If we look at the number of branches and affiliated workshops, I would say that we have some variations when it comes to workshops. We have declined in number of workshops in the old, let's say, American Economic and Business. However, when we look into the sales through that channels, we have increased that. And the reason for that combination is very simple and that is that the smaller workshops are by one or other reason leaving the concepts. And when we recruit new workshops, it's larger one with more mechanics. So that means that it's maybe more interesting to look the capacity in terms of number of mechanics instead of number of workshops. We have had that trend in the last couple of years in Sweden and Norway, and it seems to continue in the future as well. The number of branches, of course, increased by the acquisitions. But if you look in the old group, we are approximately on the same number. It will as I have said before, it will decrease slowly over the years, but it's not very dramatic. We need a footprint because the local branches is a very important part of the logistics change in order to serve the workshops with daily deliveries. Then just a couple of words about the synergies from the coming from those acquisitions, which we've made. Most of the synergies is from purchasing synergies and that work started already in the same week as we had closing in September. This work is going well and according to plan. So we are very confident that we would be able to deliver on that goal. We have two central warehouses in Sweden, which we're merging into one. And it's the warehouse in Stringnes who had during the last couple of years been rebuilt and now is automated system. We took started to use that in the summer and we have ramped it up. So now it's for distribution in the Mekonomen channel. It's I would say it's up and running. Next step in this project will be during the third quarter, we will start to put this this is start to distribute to mega branches as well. And then we somewhere in next year, we will be able to get rid of the cost for the old warehouse in Mecca system and that will give us $50,000,000 of savings as from 2020 and forward. I also wanted to talk a little bit about aftermarket when especially when we talk about electric and hybrid cars, which is a development which we can see is very strong in Norway and almost non existing in Poland. And then we have the countries on between the Sweden and Denmark. That gives us just that fact gives us a good possibility to learn a lot from Norway, which we can adopt into other markets when we see the same development in the other countries. But our intention and goal is, of course, to reach the same level of market shares on these cars as we have on the current fleet. We have started to see some changes in the market in Norway, where we have the largest amount of electrical cars. It's not clear that it's definitely in total, it will be a lower market, but it's definitely another structure when we don't have the service parts in the same way, but we have reparations in the other end who might compensate something about that. But we're learning. We have in the Nordic countries also mostly developed from Norway, of course, technician training. And we have also expanded our assortment with spare parts and accessories also for the electric cars as long as the demand increases. We in Norway, Meacke has implemented an electric car certification. And in the next quarter, we expect that about half of the Mecca car service workshops in Norway will have that certification and by that be fully equipped in dealing with those cars as well. I'm on Page 19 and workshop and technician development. We informed the door that in Norway, they are changing the way of how car inspection should be done and what kind of education those inspectors should have. Norway is a bit special compared to other countries because the car inspection is done by regular workshops, not like we have in Sweden where it's a separate industry. However, they need to be trained and they need to have a certificate. And we are one our ProMaster Academy is one of the largest training act we have and with a very large market share. It's during the end of last year, it was 120 inspectors that got the certification and three sixty of those was educated in our ProMaiser Academy. In Sweden, we started upper secondary school for which is called Promise Fodon two years ago. And now we also have introduced an employment guarantee after graduation as a way of getting more young people to want to go to the school, but it's also that we really need more mechanics. So it's a win win concept. Sweden has also a new industry standard called Buchen Bielbergsta, which we think is very good in order to make sure that we have the right quality towards the consumer. And the economics in Biedzak and Mogulah was the first economic workshop that was approved in that system early. And then a little bit about the future and focus 2019 will, of course, be we will focus on the customer value always, that's to have the right quality, the right concept services, develop online booking, e commerce and customer service. But I would say that this year will be very much focused on profitability that we improve the sales efficiency and cost controls. We have synergies which we can leverage on and best practice from different markets. We have as Orsut said, we have launched this cost saving program and we will definitely already acting on unprofitable businesses. And by unprofitable businesses, would say that that's more or less businesses, which is outside the core business. The core business is in many ways very healthy. But we have some acquisitions and some startups and some other things which we need to act on urgently to either improve the probability or find other ways to control that. And of course, we also want to grow. We believe that there's good possibilities to leverage on the initiated strategic investments, which we have done last couple of years can be business systems, spare part capital, the warehouse augmentations and acquisitions, which is made earlier. And we also believe that with increasing the focus on the customer value, we should be able to have a good organic growth in the future also. But the main focus 2019 will be profitability. All right. Wasa, did I forget something? No, I don't think so, but there will be more questions asked. Yes. So then we will hand over for questions. Hello. And the first question comes from Niklas Pham from SFA Equity. Please go ahead. Your line is now open. Thanks, operator, and good morning to you. My first question would be if you could give us I know you don't announce or disclose the results in the Meconomen segment between Sweden and Norway. But if you make some assumptions, it looks like Meconomics Sweden may be particularly weak in this quarter compared to Q4 twenty seventeen. And sorry if I'm missing the first five minutes of the call, but could you revert and tell us a bit more of profitability in Economics Sweden in your core business, please? Just a moment. Now, is when we look in Macron and Sweden and Norway, this is the same development in both countries. So there is no significant in Macron and Sweden. I would almost say opposite when you compare those that if it's some of the countries that is a little bit weaker, it's actually Norway. Okay. Okay. Thanks for caring that. Can I also ask you, mean, even so, Mekonoma Sweden has had, you know, issues, for a few years now? You've been trying to cope for by by by by, some restructuring programs, etcetera, etcetera. Where where are we now on in your plan for 2019? Do actually contemplate that the economics we then will revert to profit growth in this year or we're still for various reasons a bit far from that still? We don't make prognosis like that, but I would say that Mekonomen Sweden has an organization and the business model and the concept is well prepared for 2019. So I have the same expectations on them as the others. So there is nothing if you remember the big problems, which we had 2016 and 2017, which was the rollout with the store data system. It was the sales organizations. It was that we removed part ownership shift and so on. And we had an organization which was little bit messy. All those things is no longer a problem in Macron's view. I can also comment on the adjusted EBIT for the full year from Economy, which you have in the presentation on Page 11. There you can see that adjusted EBIT for the full year is $331,000,000 compared to EUR $317,000,000 last year. So we have a profit growth in the Mekonomen segment for the full year. Sure. Another way to ask the question, how will you distribute the cost reductions of $65,000,000 between the different business areas? Where will you reduce costs? In all the areas and it will be in operating sales companies, it will be in overhead and center functions and it will be in all the countries and all the but then exactly how much, where and when is information which we don't disclose. Are these cost reductions mainly relating to staff costs? And will there be any costs to achieve this savings? No, we don't expect any costs for achieving this part. And it is for my first question, yes, there is one part which is staff reduction, but it's also other costs. So it's a mix, but we don't see any structuring costs to achieve this. Okay. That's all for me right now. Maybe I can come back later in the call. Thank you. Okay. There is no questions at the moment. Did get a quick reply and it's Miguel Lebdahl from Carnegie. Please go ahead. Your line is now open. Yes, hi. First, could you perhaps specify the acquisitions in Mecca? How much did they contribute to sales growth on a year on year basis? I think we need to come back on We have it, but not with us here in the presentation. Okay. But then on the same topic, when you do the numbers and then come up with the growth accounting for both currency and workdays and so on, you have different numbers from Page 15, you typically have. But I struggle to see where you come from underlying growth of 5.2 to a negative of 0.9% when you include sort of all the I guess, the only difference between those numbers is the acquisitions in Miekka? Or is there something I'm missing? Sales growth in comparable units minus 0.9% and underlying increase for the old businesses, which is 5.2 So what is your actual your organic Yes, it is. It's underlying sales is adjusted for currency and number of workdays. This is point is not adjusted for for those items, but adjusted for all the acquisitions, after you said Interteam and all the other acquisitions also in Mecca? Yes, they are. I guess we need to come back with this one. But there is not yes, we will be back on the exact definition. But it's acquisitions that are excluded, but it's not only in Mecca because some of those acquisition we will find in the segment others. Other. Most of them. And actually it's most in others. But let us come back with a clear definition between those. But on a group level, if you look at the company excluding FTSE and Interteam, did sales adjusting for FX and calendar effects, did sales actually decline in Q4 year on year? Yes. In comparable units, yes. Okay. So that means that there's a percent on a group level, 5% impact from Mecca's acquisitions. That's quite big. But okay. Maybe you can go back to Yeah. But in under yeah. We can sort this out, but in underlying sales, you also reduced number of workdays and also currency. Yeah. I know. I know. Let us come back on this one. So I think we can't sort it out. I don't think you can take those two measures and just compare them, but we will be back. Otherwise, in if you look at the FTSD and the entity, is there any other costs or any other extraordinaries in the quarter? Or is the only thing the integration costs that we should be aware of? Yes. I think it's a difficult quarter because both Efteset and Interteam are changing their financial year. They had financial year from June to May. So of course there are things that could be extraordinary in the quarter, but not as far as we But we have an effect from slower sales in EFDCET in the quarter impacting EBIT. And then as you know also integration costs. But otherwise, we do not see that. Okay. And in or going forward then, of the you guided for 60,000,000 in integration costs, you took EUR 25 now, so that leaves us with EUR 35,000,000. But you hinted after the profit warning that EUR 60,000,000 might be on the high side. Do you have any new guidance on how much it will be? And also going forward then, will those costs as in this quarter be taken directly in, as you said, and in the team and not on sort of the other line or something like that as an No. They are taken locally and we stand by we won't have $60,000,000 in integration costs. It's hard to say exactly, but we won't have 25,000,000 again in this quarter in Q1. Will have some costs. These costs will they last into 2020 or will they be taken in 2019? 2019, I would say. And we will have some minor amounts during Q1 for we have now taken over also Nordic Forum Holdings January 11. So there will be minor costs to liquidate that company. Otherwise, it's as we see smaller amounts. Another question on the financials. The other financial items minus 22 in this quarter, what is that exactly? Are you look what page are you looking on in the report? Oh, on the on the p the p and l. And we have other financial items minus 22,000,000. Just a minute. And you have interest income, you have interest expenses, and then you have other. Oh, that's the calculation of loan in foreign currency, most of it. Okay. So that's a pure FX impact. So assuming FX You see for the full year, it's a positive of 117,000,000. Yes. But that was another extraordinary in Q3. Yes. But are also included there the sort of write off of the costs for the new loans. I guess you write that off on in, what is it, three years or so, 5,000,000 a year or if I'm right, five years maybe? Yes. Included in the 22,000,000 Okay. Yes. Okay. Good. Otherwise, if you look at the market development now in so far this year, and if you also add to that your price increases, should that be seen sort of on top of if you're saying that the market is back to growing by 1%, 2% or so, what about the price increases that you have also implemented? Should that be on top of that growth? That's very difficult because if we I think there will be a mix in the end. So I think I don't think that you can put all the price increases on top of the market growth because within when we talk about market growth of one percent to 2%, there is also that we see, let's say, a general inflation on the price of the products on a longer term basis. For example, that spare parts tends to be more complicated and by that more expensive. And it's it's difficult to say. I would say that we hope that most of this price increase will be on top, but that's more to see in the future. It will probably be a mix. And the savings from centralizing the warehouses, will there be any savings already in 2019? Or will everything coming in 2020? It will be coming in 2020 and nothing in 2019. We still don't know from where from when in 2020, it will we'll start to see that effect. And that's very simple because we need to the absolutely most important in this project is that we keep up the availability and the delivery rates for the customers. So now when we start to distribute to Merca, we need to take that carefully and we don't know exactly when we can close down. So that's one parameter. And then we have the close down costs for SKStyvina. So probably starting from some point in 2020, we'll see that effect. Okay. And from a CapEx point of view, I guess, most is taken on the CapEx side? Yes. Regarding the dividend or rather no dividend, from your point of view, do you think this was I guess, it's a Board decision, but was it driven by the banks? Or was it driven by what you saw in Q4? Or could you say something about the dividend? From a management point of view, we look primarily in what would be best for the company. So then the Board has to take in, of course, other parameters in the decision. But we believe that it's since we just recently made the right issue and gotten in money from the shareholders, we don't see any logic in paying back already five months later. We think it's better to use the money in paying down debts and securing the balance sheet for the future. So that's a lot different from our point of view. It's not been driven by the banks and covenants? No. You never considered to actually mention with the rights issue and the transaction that there will be no dividend paid for 2018. Yes, you see what the share price is doing right now. Obviously, people are concerned about this item and might have been better to communicate it earlier perhaps? Well, the Board stands by the long term financial goal of paying dividend of 50%. And so that's the long term goal. They are each year looking at what is best for the company and try to find balance between reducing leverage and pay dividend. So that's the decided recommendation from the Board. Per and I think we stand behind that. Final question from me. You are merging Mecca and the MeccaNomium business areas now as of Q1. Will we get any form of figures? Or is it just simply to add those two together, nothing else will sort of change by that? No, nothing else would change. And it's that governance model we now have in the group running this company as four segments. So Old Metconorman Group excluding SOAPI is one segment and SOAPI one and the acquired businesses two additional. So it's the way we run the business and we look upon the segments also in the light of the new warehouse where Mecca and Economen will be more tightly connected. Yes. But you're right that you should be able just to put it together and to get the comparability on there might be some changes between others and into the segments, but we will comment that if we do such transfers. Okay. Thank you. We have a couple of more questions coming through. The next question is again from Nicolas Stam from SAB Equities. Please go ahead. Your line is now open. Thanks again, operator. Can I ask you on, FTC, because I guess the Interteam is is sort of a breakeven business, for the time being? But would would you care to give us some idea of what they made in EBIT in Q4 a year ago? This was pretty much the same level. And pretty much Okay. Excluding, of course, the integration costs. Yes. Also they also had a 1% decline in sales of course, affecting EBIT, but otherwise in line. But it's a complicated quarter when they adjusting to Merkel Norman Group financial year and new accounts principles, integration costs, but in line with last year. Okay. Okay. Thank you. Can I also ask you what could you try to give us some updates on trading so far in Q1 in terms of the market development for you? As you said in the press release, we are expecting a more stable market. And don't want to make any more comments But what's the visibility there, Per? I mean, I'm sure you expected the same in Q4 at some point. And obviously, that was not the case. So is there any particular reason for why you're actually are experiencing a more stable market so far? Yes. The reasons which we that's several reasons. There is some trends which we follow with our European colleagues where we can see that they see the same thing. We have the growing fleet of older cars, which are helping us. We also see that since we are quite often blaming the weather, at least when it's negative, I don't see any possibility that the weather could be affecting us negatively actually this year because we had the worst case scenario last year. So even if it's right now plus five in Stockholm, I'm not worried because it was the same last year. So it's we kind of hit the rock bottom in those areas. May I also ask you on IFRS 16, is it fairly correct to assume that you will increase both the asset and the debt side of the balance sheet by about 2,000,000,000 Swedish krona? And what ish. Yeah? Sorry. And and then Yes. It's correct. Yeah. Yep. And and what, all else equal, will be the, impact on, EBITA margins or EBIT margins, in 2019 from purely apples to apples from this change in accounting, please? You are correct in the February. It would be both on on both sides, but we do not communicate the EBITDA impact yet. But it would be positively impacted, of course, on EBITDA level. Even take the same on EBIT. But today, I didn't communicate that number. Alright. And final question. I have I have to go back to the issue with other financial costs because I was under the impression that somewhere in 02/2018, you would take a total of 27,000,000 in acquisition related financial costs. Now I don't I have no idea how much of that you you have taken, but in q four financial net, how much of that is actually referring to acquisition related financial costs, please? We have several types of financial acquisition costs. Some of them go directly to equity and some go over the P and L. So it's a mixture, but I must come back with the exact amount, but not all of those are hitting the P and L, some goes directly to equity. Okay. Most of them go directly to equity, but I can come back with the exact figures. Yes, please. Yes, please. Because if you when you read the prospectus, sounds at least like there will be a $27,000,000 cost charge impacting the P and L, but obviously that's not the case. Thank you. That's all for me. The next questions come from Matt Liss from Kepler Cheuvreux. Please go ahead. Your line is now open. Yes. Hi. Thank you. Two questions, please. First, just coming back on the IFRS 16 question that Nicolas asked about. And I just want to confirm that the net debt, what would that impact be? The asset and liability side will both be 2,000 million dollars in the balance sheet. So the net debt that you presented will be unchanged? Yes. Great. And then about Denmark then, FTSD performance was down 1%, but was it due to, well, tougher market conditions or do you experience somewhat, well, changes in the competitive environment as well? Could you say something there? No. I'm very confident there's no changes in the competitive landscape in Denmark, no new actors, no new concepts from the existing competitors and so on. So and as I said, our management is intact and we also have very good commitment in the organization. So this decline of 1% is 100% related to a weaker market due to weather and maybe some other factors, but it's no lost market shares. And well, just a final one about price increases. How do you implement them? What time frame do you see? Are they sort of half year, semiannual? Or could you sort of well, them work immediately? Or could you give us a flavor about that? From a decision to change the prices, we have approximately six to eight weeks until it's implemented. And that because there's needs it's quite a big job because it's affect assortment with 100,000, 150,000 SKUs. We normally cannot just put an effect on all the prices because we need to go at least into the different product groups. And so when we talk about price increase of x percent, it's always a mix where it can be both up and down. And then we have also some in some markets, have contracts with the customers or the workshops that we need to tell one month before it's implemented so they have time change their prices. We do it regularly in Denmark and Poland as an annual, let's say, ordinary thing to do every year. But in Norway and Sweden, the tradition has been more driven by currency than it happens. And if it's no changes in the purchasing prices, then the prices is more or less flat. So that's a tradition in the market. So it's not our tradition. It's how the competitors work as well. Yes. Okay. Thank you. Ladies and gentlemen, there's nobody in the queue at the moment. This is the last one to be able to ask a question. And we do have one from Mikael and then afterwards, Johan Setypal. But I will now transfer Mikael Laval from Carnegie. Please go ahead. Your line is now open. Yes. Hi. Just two more from me. First of all, if you could say something about if you look at the FTSE and entity, more particularly FTSE and what they performed for the full year, you have that on Page 18 in the report. So their margin for the full year was above 10%, if you would have integrated them on January 1. That number is very good compared to the four months that you have had the companies integrated, obviously. Is there anything in the seasonality that we should be aware of and consider when we try to estimate the impact from FG7 now in the first especially the first half of twenty nineteen, where the margin is much, much higher in the first half compared to the second half. I know that the second half was probably weaker than you had expected, but anyway. And on sort of that topic also, if you look at your sales number in Q4, just looking at the difference, and I'm coming a bit back to this, what is organic growth or not. But for me, I think the sales number as such doesn't really explain the weakness on the earnings in this quarter, the sort of earnings collapse in Q4. It's difficult to actually see where that is coming from if you only look at the pace development and the gross margin. So there's a huge increase in OpEx as well, obviously, coming from the acquisitions. But on a quarter to quarter basis, there's a quite sharp increase in OpEx. Is there anything here you can tell why that is? Yes. But I would say that as at least one explanation, if you look at the old group, the core business, we don't have any organic growth. All the sales growth which you see there is acquired and it's also with a very low profitability. So it's diluted EBIT margin. So it's as we say, sales growth in comparable units is even down. And then, of course, we so that's the reason why you can't see the sales increase in the EBIT. Then we do have as I mentioned also, we do have some areas. I can point out some of them as an example, but we have the workshop equipment company, Prekas, which is reported under the segment Others, which we acquired a couple of years ago, who had an extremely tough year last year with huge losses. So that's also kind of hits the EBIT margins. So if you instead have had all this growth in the core business selling car parts to warehouses, then we would have the same EBIT margin. That's but that wasn't the case. And then you had some questions about after set and yes, there might be some seasonal effects. There's definitely effects about since they come into our kind of financial reports, there is an effect that their financial year is not used to be what we have now. And since the profit level which they have had is of course what we are expecting for the future. We are expecting We don't see that just that they should be having lower EBIT margins in the future. No. As you see at page 18 in the report, we are expecting them to perform, of course, as they did last year and calculation we did when we acquired the company. And we see no reason why they shouldn't. Already in 2019? Yes. And the seasonality then because obviously the first half must have been much, much stronger than the second half twenty eighteen. But I think the seasonality is not that strong if you look at it year by year. This is also I believe it's a since had a weak market in Denmark in the autumn and that was mainly weather effect. So then if we could read this the same weather as last year, then you will have the same seasonal pattern. But that's I can't predict the weather going forward. You have mean, don't see any sorry. As reported, don't have the numbers for Q1 and Q3 to compare with, and we won't get those numbers either in the coming report. No. No. For 2018, I That's great. Okay, thanks. And we only have one question, sir, and that's from Johan Sverdrupal from Market Cap Group. Please go ahead. Your line is now open. Good morning. This is a slightly different question. I'm thinking about Mecanon Sweden. And you talked about some tough times in 2016, 2017. I wonder what has been the what would you say about the leadership? What is the leadership you have has been the driving forces that has been so that you have been able to make those changes that where you are now, taking care of the, as you said, some messy things back back. What is really the strength in the leadership, you would say, in the Swedish organization of Mekonoma? The leadership. I think that you should understand that Mekonoma Swedish is also part of a matrix organization where they have huge dependency on the wholesaling company and the central functions in different areas. We have a leadership now and an organization, so who's focusing very much on the small details out in the stores, making sure that we have the right costs every week, every day and every hour. And that we also have a large focus on of course, on the customers, both the consumers and the workshops. That in combination with the help from the central functions is what makes it stable now. With that said, it's I don't blame the leadership in the past, but it was when we have these messy years, it was also very complicated communication between all these central functions and the stores and the sales persons. Okay. So you're also working much better cross functionally, I understand what you're saying. Thank you very much. Thank you. There is no questions coming through. So I will hand the call back to you. Thank you. All right. Then we will end here. Thank you everybody for listening and thank you for the good questions. Have a nice day. Thank you for joining today's conference. You may now replace your handset to end this call. Thank you.