Good day, and thank you for standing by. Welcome to the Mips Interim Report Q1 2025. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one and one on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, you may submit your questions via the webcast. Please be advised that today's conference is being recorded. Now, I'd like to hand the conference over to your speaker today, Max Strandwitz, CEO. Please go ahead.
Thank you, Operator, and good morning, everyone. My name is Max Strandwitz, and I am the CEO of Mips. With me today, I also have our CFO, Karin Rosenthal, and we will take you through the presentation of the Q1 2025 Interim Report. If we start with the key highlights of the quarter, first of all, performance. We did see a continuation of the last quarter performance and growth patterns with strong performance in the quarter of 42%, of course, organic growth. We saw good development in all the three categories we operate in and good growth in most geographies. We do see strong sales to European customers, fueled by improving consumer markets. Good growth also in the U.S., despite a much more careful consumer spending versus before.
Our assessment is that the near-term sales development to our customers will be more uncertain due to the lack of full understanding of the effects and implications of the implementation of tariffs. We did see a strong improvement in the quarter, with 78% improvement, mainly driven by the strong net sales improvement. This was partly offset by legal costs relating to a customer's legal IP dispute. Mips are not part of the process, but have decided to step in since Mips has an interest in the IP-related areas. We remain confident in our long-term strategy and our financial targets. If we look at the current situation and expected impact from tariffs, I think it is very important to spend some time in that area to explain what we mean.
The rapid implementation of tariffs has brought a lot of uncertainty to our industry, and that is valid for all the three categories that we operate in, and it is valid for the U.S. market. Our customers' main uncertainty is, of course, what is actually the right cost of the product. Most customers today they do not know how much their product will cost in one month from now when it lands somewhere in the port in the U.S. Of course, that creates a lot of uncertainty. If you do not know the cost of your product, it is also very difficult to assume or assess what is the right level of pricing to protect your margin and cost, and what you need to take in terms of covering that part. The third one, if you price, how do you actually know that it is the right level of pricing?
How will that affect your competitive position? Of course, in the long run, also the consumer demand. I think that's a question that everyone in the industry sits with at the moment, and we believe that that will create a lot of uncertainty. What happened last time this happened? In 2019, Q3, we actually saw a similar type of impact when the bike industry, all of a sudden, was hit by tariffs, which they had previously been exempted from. We saw a little bit of a standstill to the U.S. market for one to two months. After that, people took pricing and everything normalized. We do expect a similar type of situation also this time. Just also to clarify that in 2024, 53% of Mips' net sales is to U.S.-based brands. This is, of course, also visible in our annual report.
Those brands are then distributing the products all over the world. Of course, we have other brands, especially in Europe, that are then exporting to Europe. If we make a net-net calculation on our estimate on how much that actually lands in the U.S. market when it comes to volume, it is a bit more than 50%. We do expect short-term demand swings from the implementation of tariffs. Hopefully, that clarifies a bit in that area. If we then go into the first category and Sports, in Sports, the good progress continues. We saw strong performance in Sport with 40% net sales growth. Inventory is back at healthy levels. Market conditions in Europe are improving. U.S. consumer market is a little bit more uncertain. This also fueled a bit what happened in the implementation of tariffs.
We have a very strong position on the market, and we are confident on the long-term outlook of the Sports category, also in the U.S. market. If we then look at Moto, we saw strong growth there, and really good to see Moto getting back on track. Good performance in the quarter with 32% net sales growth. Situation is much more normalized, but it is, of course, a very tough market out there. We have also seen a very successful rollout of Integra TX product, which is our fabric solution. To support that rollout, we also have a very strong retail activation program, which is also working very well. Also here, no change to our long-term outlook. Good opportunity to continue to grow in the category. If we look at Safety, we continue to see good development.
It was actually the largest quarter so far, despite that the Q1 is normally not the biggest quarter. That was actually the biggest quarter in Safety to date in the Mips history. 60% growth in the quarter. We did rollout or continue to rollout new helmet models. Of course, also last year, we had a strong rollout program. Of course, we start to see that those models are starting to generate a lot of demand. We are also very positive on the outlook of this category. Of course, also here, short-term demand could be impacted by the implementation of tariffs. If we then look at the development and summary of the development in our different categories in Sports, good performance with 40% net sales growth, a bit better if you adjust for Forex effect. We see a continued strong performance.
Also good to see that we were growing strongly in bike, but also in snow, we showed an improvement of 20% net sales growth in the quarter, which is, of course, great to see despite the fact that it has been quite a challenging snow season. Motorcycles also continued to develop well with 32% growth in the quarter. Safety, the largest quarter so far. Here, of course, we continue to see a lot of traction. With that, I hand over to Karin.
Yes. Good morning, everyone. I'm Karin Rosenthal, CFO of Mips, and I will take you through the financial part of the presentation. We saw strong development in the Q1 with an increase in net sales of 40% and adjusting for FX due to a strong SEK versus USD. Net sales increased with 42% organically. Gross profit increased with 46% and a gross margin of 72.1% versus 69.4% last year. The increase is mainly due to the increase in net sales. In OpEx, we were negatively impacted by legal costs of SEK 9 million based on what Max presented earlier. We also continued to invest in our strategic priorities, R&D, and marketing in the quarter. EBIT was up 78% to SEK 24 million versus SEK 14 million last year. EBIT margin improved by 4.5 percentage points to 20.9% versus 16.5% last year.
We saw a strong operating cash flow in the quarter with SEK 36 million versus minus SEK 10 million last year. If we look at the financial KPIs, 42% organic growth, 21% EBIT margin, and SEK 36 million in operating cash flow. If we then turn to the next page and look at the balance sheet and cash flow, we have a strong cash position with cash and cash equivalents of SEK 408 million. Just to remind you that we do not hold any loans. The board proposes a dividend of SEK 6.5 per share versus SEK 6 per share last year. That corresponds to 122% of net earnings. Operating cash flow in the quarter amounted to SEK 36 million, and we have an equity ratio of 87%. Over to you, Max.
Yes. Thank you, Karin. If we then summarize the Q1 , good start of the year with 42% organic growth. Good performance in all our three categories, strong increase in market share, and penetration in the market. Inventory situation is fully normalized. Our current assessment is that near-term sales development to our customers will be a bit more uncertain due to the lack of understanding of the effects and implications of the implementation of tariffs. We remain positive on the long-term outlook and the delivery of our financial targets. With that, we open up for questions.
Thank you. If you would like to ask a question over the phone lines, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please type it into the box and click submit. Please stand by while we compile the Q&A roster. We will start with questions over the phone lines. First question is from Adela Dashian from Jefferies. Please go ahead.
Good morning, Max and Karin. A couple of questions from me. If we could please start with the legal dispute affecting one of your customers, are you able to share any more information regarding this? Particularly as it relates to yourself, is it fair to assume that we will see additional legal costs throughout the remainder of the year? Maybe a timeline on the legal aspects of the dispute would be good as well. Start there, please.
Yeah, of course, this is on the confidentiality. There are some things we can share and some things we can't share. Of course, the part relating to us, we try to be as transparent as possible. We had SEK 9 million of cost in the quarter. That's very much preparatory cost, which you normally have when it comes to these things. We assume that we will have a similar type of cost also going forward, at least in the beginning, as you prepare for these types of costs or cases. The more you spend, the better prepared you are. For us, this is a very important area. We take this always very seriously. I think it's also very important to understand that Mips patents is not part of this. Mips IP is not part of this.
This is about someone else's rights and what they could claim on the market. As we are extremely adamant and focused on our own brand, our brand position, our IP, and our technology, of course, we also want to make sure that we have the right rights on the market, but also that someone else can't claim this. When we announced our targets in 2022, a lot of people questioned why we don't have an ambition higher than 50%. We said then that we assume that we will have legal costs like this going forward. That's also why we don't adjust for these types of costs, but we have them under the normal operating cost. It is part of our business model. It looks a little bit more dramatic, of course, than it is because Q1 is the smallest quarter of the year.
Of course, proportionally, it becomes a bigger part of the total result. As we go forward, and of course, long-term, costs like these are assumed to be within the budget and, of course, not impacting our long-term ability to hit our financial target. For us, this is more of a cost issue rather than something else. Of course, when it comes to these types of things, we always want to do the right thing. We want to make sure that we have the best position on the market. That is why we take a decision to become active in cases like this.
That's very good color. Thanks. Maybe just a follow-up. I guess I'm trying to wrap my head around if it's not Mips patents that are at risk here. I guess what are you protecting yourself against? What's the worst outcome out of this, let's say? Is the plaintiff, is it a consumer-related lawsuit? It doesn't really sound like it's any patent infringement -related. Yeah.
No, I think when it comes to what Mips is protecting is, of course, if someone else comes in, and of course, especially since they do not have any products on the market, they could claim that they have the rights in certain areas, which Mips also have the rights, of course, and patents are normally very specific. We want to make sure that our freedom to operate is as big as possible. We do not want that other IP could be very close to our product or questionable for our products. That is why we want to be very specific on the actions we take. IP is, of course, a very complicated matter because a lot of things or discussions like this is normally about products infringing because a patent can, of course, never infringe because without a product, there is nothing to infringe about.
It is more of making sure that other IP is not close or in areas where we believe that we have very strong rights.
Got it. Got it. It is about a patent infringement and not the safety hazard of the IP.
No, exactly.
Okay. Perfect. That makes perfect sense. Thank you. If we follow on your comments regarding tariffs, I appreciate the commentary around what you expect for the bike market and so on. Could you maybe touch a bit more on the Safety segment? I mean, we had great hopes that 2025 would be the year where volume would ramp up quite materially in the segment. I do know that the U.S. is also important, or maybe just as important as it is for the rest of the group, for construction helmets. What is the, I mean, are you still sticking with your guidance of a doubling every 6-12 months, or do you think that we could even see with construction helmets delays?
No, I think when it comes to, I think, first of all, to outline what we are saying, we do not expect it yet to have a material effect on the full year, more of a refacing of sales. Our full-term guidance, what we said on Safety, remains. Of course, it is more of short-term issues that the customer does not know what pricing they should take, what actions they should take, and so on. That is impacting all our three categories. Yet, we do not consider it to be lost sales, more refacing of sales, and that everyone is trying to delay their decisions as long as possible. There is very erratic behavior at the moment when it comes to the implementation of tariffs. No one knows what they expect.
That's what everyone appreciates at the moment, to have a little bit more time to take more informed decisions. That's why we talk about an uncertainty and not the long-term impact.
Got it. All right. If we think about the bike helmet category, I mean, could we assume that you're somewhat protected? It might not be the right word, but just from seasonality variations, the fact that you produce or your customers produce bike helmets in the second half of the year, and now it's more about sell-through to the retailers and the end users. As long as we do not end up in a situation like post-pandemic, where inventories were elevated post this spring and summer season, I do not know. I'm just trying to think about how we should, I guess, the second half of the year could be potentially still okay-ish despite all the uncertainties.
Yeah, I think first of all, it's important that, of course, we see an impact in the U.S. We don't see an impact in Europe. Europe is actually tracking very well. You see that also in the Q1. We believe that also will continue, of course. When it comes to where the impact will be, you're right that bicycle helmets have been produced, and a lot of the volume has been produced. What will be impacted is repeat orders, of course, if no one produces. That should normally land on the U.S. market late July, beginning of August, especially when you have a lot of back-to-school campaigns and so on. I think that is the volume that is really at risk.
We believe that the production for next year, which will happen in Q3 and Q4, will not have a significant impact, of course, all depending on what the levels of tariff is and so on. There, we expect it to be much more normalized. The other part that is a little bit at risk, depending on how long this will take, is, of course, the snow category. The snow category normally produces a lot of helmets during Q2. Those should then land in the U.S. market at the retailers mid-September, beginning of October. That, of course, is the window that you need to hit. There, of course, they need to take a decision at some point, when is the right time to produce to still make that window? Because no one will accept that you have a winter helmet coming after the season.
I think that's what everyone is preparing for. We have, of course, very active dialogues with all our brands. Everyone is in the same position. It's more about uncertainty rather than consumer demand. And as you also see, I mean, we have great traction and momentum on the market, but this is something else. Of course, we need to treat it as an exceptional event. That's why we communicate the way we do. I think there are a lot of people that will tell you exactly what will happen at the moment. For me, they're only guessing because there is very erratic behavior. That's why also we want to really explain this as we see it. It's more around uncertainty.
Makes sense. Lastly, if I may, I mean, I fully understand the fact that you're not directly, so to say, impacted by the trade tariffs, but that your customers will have to increase prices to offset that. Could this be a situation where you potentially can end up being a bit opportunistic and then also increase your prices? Because it's been quite stable since inception, really, on your end.
Yeah. I mean, we have a little bit of a different pricing strategy. I think long-term, you deserve or you get the price you deserve on the market. We manage our pricing mainly through innovation, bringing better product on the market. That, I think, is a much more attractive way. For me, using tariffs to be opportunistic, I do not think that is our right approach. Especially since normally tariffs can go both ways. Of course, you end up in quite a complicated discussion. I think for us, we stick to our current strategy, which is, of course, to innovate ourselves to better products and better pricing and so on. That has worked really, really well so far. That is what we want to stick to.
Sounds fair. All right. I'll step back in the queue. Thank you.
Thank you. We'll take our next question. This is from Carl Deijenberg from Carnegie. Please go ahead.
Thank you very much. Good morning. A couple of questions from me. First, coming back to the Q1 numbers, I just want to make sure here, but I guess there have not been any patterns of pre-buys in your numbers, given the pace of the implementations and the long delivery cycles, right? Nothing of that in Q1, right?
No. I think now we hear from a lot of customers that they wish they had done pre-buys and so on. No, we cannot distill in any direction. People ask us if there is pre-buys, not to a bigger extent. People also ask if we saw a lot of delays in the end of Q1 due to the uncertainty of tariffs, and it is the same way. No, we cannot distill any impacts or either direction.
Very clear. Secondly, I wanted to come back a little bit on the underlying market. I mean, I appreciate the color, and let's say the increased uncertainty in the U.S. Recalling from Q4, you were actually talking about underlying market growth on bike in Q4 on the sell-out side. I just wanted to hear because I guess the statement here for Q1 is a little bit more vague, at least relating to the U.S. Any more color, just Q1, Q development, underlying market would be appreciated as well.
The market development number and market share numbers for Q1 is available from next week onwards. There is always a bit of lead time. Of course, if we talk about overall assessment from the industry, the market was sort of flattish in the U.S. market. Of course, we had a lot better performance than that since we grew 35% with our sales to the U.S. market. Best assessment is somewhere around flattish. If you look at the European market, we actually saw quite good development. You have probably seen also that on reports announcement from both Halfords, Bike.de, and others that they are quite optimistic of the European market. We see that development. We see that the European market is improving.
It is also worth to mention that it is from lower levels because the European market has been a lot more depressed. Therefore, any upbeat in terms of consumer sentiment will, of course, have a positive effect. Europe seems to be tracking quite well.
Very well. I just wanted to come back a little bit also here on Q1. I mean, looking at the reported numbers, as you disclosed, the sales of goods, I guess the pure volumes and the service, or, let's say, yeah, implementation invoicing. I'm noticing that it's taking both on a year-on-year basis, a step down, and also sequentially here from Q4 down to 3 million on the service side versus, let's say, 7, 6, Q3, Q4. Yeah. Any more color on that? Has, let's say, the implementation or interest been a little bit lower from the brands here, or anything specific behind that?
No. If you actually look at the total number of running projects and so on, we still are on a historic high. What we have been doing the last two quarters is that we see a big increase of our fabric solution, which is also in line with our strategy. Those solutions do not require the same type of tooling, especially not injection-molded tools and so on, which is normally quite expensive. In terms of project momentum, no change is more relating to a mix and phasing of projects as such. No change in momentum, no change in customer interest. Good to see, of course, that the fabric solutions are coming out, especially the Air Node solution and also our Integra TX, which is, of course, a higher-priced solution where we deliver more of the product. We also see a great reception on the market of those products.
Very well. Just finally, from my side, I wanted to hear, I mean, reading some articles here and there and coming back to the price situation. I mean, I appreciate the color that you gave on your pricing strategy. Have you seen what your customers have been doing? I mean, we see some bike manufacturers have been talking about price hikes of around 50% to offset this effect. I do not know if that has actually been materializing or not. Have you seen any material price adjustments upwards on the helmet side in the U.S. already, or is it?
Yeah. The first movers, we have started to see them acting. We have not seen anything close to 50%. One big manufacturer they increased price with 10%. Another one with 8%. So far, 8%-10% is what we have seen. Bicycles could be a little bit more because, of course, they are more impacted by tariffs at the moment because, first of all, you have the general tariffs, but then you also have material tariffs that impact the products. There, some speak about more like 15% increase. From what we have seen, first movers are somewhere around 8%-10%. It all, of course, depends on what will happen on the tariffs. I think the general assumption is that no one believes that the levels of tariffs that we see at the moment are the ones that will stay over time.
Therefore, also brands are a little bit more careful of initiating really aggressive pricing, with, of course, the potential impact of that. Also, the goods that have landed so far have not been impacted by tariffs. It is more the goods that will be shipped in coming months. Of course, the argumentation around that. I think also the U.S. market starts to understand. If you look at Walmart or Target, the U.S. government now understands also how reliant they are on Chinese and Vietnamese goods. That you will have empty shelves if this continues. Over time, I think everyone expected it to be less dramatic than it is now, but it is just anyone's guess.
Okay. Very well. Thank you very much, guys. I'll get back in line.
Thank you. Next question is from Emanuel Jansson from Danske Bank. Please go ahead.
Good morning, everyone. Thank you, Max and Karl, for taking my questions. Just jumping quickly back to the tariff situation. I think you mentioned that you expect to maybe see a similar situation as you saw in 2019. Just looking back at those numbers, I think we saw a negative organic growth in Q3 around 6%, and then in Q4, it jumped back to 30%. Obviously, at the moment, I think the tariff situation is more severe than last time. Do you think that the—or do you experience that the OEMs or the manufacturers have more experience this time regarding this situation, or is it a completely new situation for them?
Yeah, they are much more prepared. I think no one was prepared for the levels of tariffs that they saw at the moment. We started the discussion with our customers already in October last year to understand what their position was, how they're going to act, and so on. Of course, it's important to understand. I think everyone is taken a bit by surprise by this ping-pong negotiation that we saw between the U.S. and China, of course, and how it escalated. You're right. They are much more prepared. They saw this coming. Of course, every one of them has a pricing strategy linked to that. I think everyone is just waiting for the dust to settle to really understand what's in front of them and, of course, what the future looks like in terms of the right level of pricing.
I think for everyone at the moment, it's more like wait and see.
Yeah. Thank you. That's clear. Regarding these U.S. brands, then, do you think there is opportunity or maybe a potential scenario where they will focus more near-term on the European markets, which will maybe drive your penetration faster, maybe?
No. I think in the end, we, of course, already have great traction in Europe. Last quarter, we saw 100%. This quarter, we saw 51% growth. Of course, we still see a good momentum and so on. I think it is very important to distinguish what happens when it comes to sourcing, which is where the focus is on the brands, and what happens on the consumer market. Because at the moment, everyone is still as active when it comes to the consumer market. One and a half weeks ago, we were at Sea Otter, which is a consumer event where we participated. We saw a very upbeat consumer. Of course, that is the sweet spot for Mips because there is a lot of mountain bikers, there is a lot of gravel riders, and so on. They were very optimistic on the market.
I think this is not yet a consumer discussion. It's more of a sourcing discussion. I don't think anyone will change their short-term strategy on that and not reallocate resources because everyone is still trying to win on the market. I don't expect one or two months of uncertainty will change that. It is more like relating to where to produce. There is a lot of pressure to produce in Vietnam at the moment. There are factories planned to open up in other areas. Of course, relocating production takes normally a bit of time. We will, of course, follow the customer wherever they go. We can move our tooling in a couple of weeks. Whatever the consumer or our brands decide to produce, we will follow them. It is more of a sourcing discussion rather than a strategy discussion, at least for now.
Yeah. Great. That's clear. Can you just remind us on the construction or safety helmet side? Is the majority of production in China, or how is it distributed?
No. I mean, it's a bit of a mix. The more advanced helmets that require a little bit more of manual work and adjustments, and so on are normally manufactured in China. A lot of the Type II helmets and so on. When it comes to simpler helmet models, since transport cost is the big part of the total cost, they are normally produced in the country which they are sold. Europe for Europe and U.S. for U.S. When it comes to a little bit more sophisticated product, it's still heavily reliant on Asia. We expect that to change over time, but at least for now.
Yeah. Great. The last question from my side here, just going back to this lawsuit situation. Do you think that this type of case will become more common in the future going forward?
I mean, we have seen last time, but then, of course, Mips was a party, and then we were the ones that were very active on the market. That was in 2018. This time, it was started by someone else. It does not mean that we did not decide to be active, of course. Lawsuits, like you see, SEK 9 million in a quarter can be quite expensive. There are not a lot of companies that actually can run a case like this. No, I do not expect it to happen a lot, but it could happen. That is why we also assumed it in our long-term budget that sometimes if someone gets rights that we do not think they should have, or they are overlapping in the areas where we have rights, then, of course, we will be active. It is part of our business model.
We have a couple of priorities, and that is, of course, to make sure that we have the highest awareness when it comes to our brand. We have the best technology out in the market, really important for us. Of course, where we can, also to have good protection around our products. That will always remain a key part of our strategy and a key priority for us.
Great. That's very clear, Max. Thank you very much. That was all my questions for now. Thank you very much.
Thank you, Emanuel.
Thank you. Next question is from the line of Alexander Siljeström from Pareto Securities. Please go ahead.
Good morning, guys. One follow-up here. If you could talk a bit about the start to Q1 in terms of growth, given the tariff situation.
Do you mean Q2 or Q1? Because.
I'm sorry, Q2.
Q2. Like I said, we have seen the uncertainty directly from the start of the implementation of tariffs. We said that we expect it at least to remain for one or two months. Yes, we have seen uncertainty from U.S.-based brands.
Yeah. Thanks. On sort of the snow sales in Q2 and the possibility to recoup that sales in Q3 and still get it ahead of the season, what's sort of the outlook there in terms of timing?
No. I think, I mean, if we now face one or two months' delay, nothing happened with the tariffs. Still, when we hit June and July, there will be a lot of factories running with high capacity to make sure that they catch up. No one can wait longer than that. We have not heard that any brand wants to wait longer than that. Like I said also in the beginning, consumer demand is there. Great demand for Mips product continues to increase market share. Our brands want to have our product, but what they ask for at the moment is a little bit more time to take the right decision. It is more of a timing issue rather than a long-term issue as we see it now.
I believe when we hit June and July, the factories need to be really running a lot of production of snow helmets to be able to hit the market.
Yeah. Got it. Can you talk a bit about the inventory situation in the snow segment now, post the season? Is it healthy?
It has actually not been a fantastic season when it comes to winter Sports and so on. Last quarter of Q1, we grew about 20%, which we were very happy about. If you talk to the industry as in general, there were a little bit more careful consumer spending, especially when it comes to clothes and other accessories, and so on. The good thing, at least from a helmet point of view, is that no one went into the season with a lot of stock. If we look at pre-season orders, still very positive, and we see good momentum also there. Nothing in terms of what we see at the moment that will hurt us in the season. Good interest still in snow.
Thanks. Maybe just a last question on the partnership with Pyramex in Safety. If you could give us some color on the size of Pyramex.
Yeah. Pyramex is mainly active in the U.S., but of course, they have sales, I think, in 63 different countries. Also good presence around the world. Medium-sized player. The medium-sized player is normally between 1-10 million in Mips terms and so on. Quite a decent-sized player on the market and someone that I think can help us to drive a lot of growth around the world.
Perfect. Thanks. That's it for me.
Thank you.
Thank you. No further questions on the phones at the moment. I will now hand back to the company to check for any questions via the web.
Yeah. We have one question that came from one investor, which is about the legal dispute that will ask us why we do not treat the legal cost as a one-off expense, and also if there could be a legal one-off gain coming out of the disputes. First of all, like I said also and explained before, we see this part of our business model: protecting our IP, making sure that we have the right protection. For me, to put something into adjustment, or call it adjustment or adjusted EBIT, EBIT needs to be for really the right reasons. If you have things that can come and go, then, of course, it is important to treat them under your operating results. I think that is cleaner. That is a lot less complex and also much more transparent.
We are treating it under running cost because, of course, these things can always come and go. When it comes to one-off gains, I think especially for the U.S. market, the way that it works, it's very difficult to get any money back from a lawsuit, and we will not count on that. The second question is also around legal cost is that someone asked if we will incur SEK 9 million per quarter or SEK 18 million for the year. Of course, this is something that you really don't know exactly how much cost there will be. Like I said, proportion of the total result, of course, will be a lot smaller since quarter normally will be bigger. The running cost that you saw in Q1 could, of course, continue for a couple of quarters because we are still very much in a preparatory phase.
We get the question: what is the magnitude of price increases that your customers could pass according to the discussion you have with the brands? Like I said before, so far, we have seen 8%-10% that has been put forward to retail. It all depends on where the tariffs will land. If they stay at 145%, of course, that will not be enough. I think the assumption from everyone is that they will be significantly lower. That is why everyone started more like 8%-10%. Sales in Asia and Australia lower than last year. How do you see demand in this area? We had had a fantastic development in Asia. We see really good sales in that region. Now it is the low season in the Asian market, and there, of course, you do not have a long shipping time.
We expect that to pick up over time. It used historically to be only like 3%-4% of our sales. Last year, I think we landed on somewhere around 13%. It has become a much bigger part. We still see a lot of interest in especially the Chinese market. We are a little bit careful on who we team up with because, of course, we are still building a brand. We always do, as we do in Mips, we start with the premium brands. We start to build a lot of awareness. Where we see the opportunity, then we can start reaching down. That strategy has worked well, served us well, and I think it will work also well in China. There was the question in Q2 last year. You talked about increasing project hires for project engineers.
Like I said, we are still on a historic high momentum. We still have a lot of recruitments out there for even more engineers because, of course, we see a lot of good momentum in this area. Even though we have recruited, we still do not have enough people to manage the workload that we have at the moment. If you are an implementation engineer, you are always welcome to apply. With that, I think we have answered all the questions in the call. Thank you, everyone, for listening in, and speak to you again next quarter. Stay safe out there. Thank you.
Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Speakers, please stand by.