Ratos AB (publ) (STO:RATO.B)

CMD 2019

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Nov 13, 2019

Okay. So let's start with RATUS at a glance, how it looks right now or how it looked the 30th September. So we're 12,300 people in the group. We have a turnover of 36,000,000,000 and an EBITDA on 1.6. That goes for the companies. If we then look at our shareholding in these companies, we end up to the numbers with this which is within parenthesis. We have a 2% margin in Construction and Services and 6% EBITA margin in the other business areas. If we take a deeper look into the Q3 rolling 12 months results, This slide shows a lot. It shows the main contributors. Abel is such 1, and I'm not going to take Mads. He's going to present later on why it is this way, but I can tell you he's a great CEO. He can't say that himself, I think, but he is. Then we have Airtim, which has a decent profitability and is growing in Denmark, challenging in Sweden. We have Hent, who has a negative result due to bad operations in a few projects that hit the Q2 and Q4 numbers last year or Q2 this year. Then we have speed, also have a negative number. But behind this is really good restructuring measures, both in OpEx and in customer projects and customer contracts. So that number will look different as well. Coming into consumer and tech, Biznode, an important EBITDA but also cash generator for the group. KVD, who is improving results significantly, still a small company. OAIS, who have had our smallest company, have had significant problems in the manufacturing of a brand new product line, which has hurt the numbers a lot. I do think that all the costs that the company and we have taken for this is well spent money, although, of course, we would never want you to spend them. But they and we are very keen on keeping the strong brand and the customers' perception. So we have been very eager to do that, and that has costed a lot of money. But the problems are solved, and we look forward to a better year next year. Plantation, better numbers this year than last year, still much too low numbers. I'm not going to have a Plantation presentation today, but it's about gross margins and it's about OpEx, because Plantarsen is in a market that is growing, and Plantarsen is the leading player in this market. They have all the reasons and possibilities to come back to a decent profitability. About this number other than that you know that we had a lot of restructuring last Q4, which hurts the rolling 12 months numbers. I can say for sure that we also have a great CEO in Diab because Tobias can't say that himself, right? No. We also have a great CEO in HL Display, who will also present why the profitability has increased so much. They've been great in operational efficiency, but many other things as well. So we're looking forward to this presentation. L'Adeel is our most profitable company, but we are not satisfied with the way profitability develops and not either how the sales is developing. So here, we have a new CEO coming in. Last, TFS. TFS has been a company acting or are a company acting in a great market, but have had great problems with the profitability due to the focus solely on growth and new market penetration, acquisitions, all the things you shouldn't do before you have stability and profitability. But as you saw in the Q3 report, we are gradually improving profitability in TFS. Now I said I would look back to a few slides I showed last time we met. I talked about hard, harder and hardest. I spent 8 years in U. S. Companies, and I learned this mantra there. It's hard to change the structure in the company. It's even harder to change processes and systems, and it takes a long time to change the culture. But if you have the right culture, you can almost have any structure. It should be decentralized, but the culture is what counts the most. But when you transform a company in a turnaround, which I've had the privilege to do in many companies, actually, you have to start with the structure, work with the structure. After that, don't run into ERP systems or CRM systems and believe that they will solve the problems. Run into your processes and get support for the processes in easy to use systems. That's I'm not going to preach on this too much today. Culture, again, is about our core values, It's about transparency, accountability, and very much to have fun at work and work hard, of course. Work hard and have, how do you put that in English, have holidays hard as well or relax on holidays. You know what I mean. Holidays are very important, and I have great respect for them. But at work, you should work hard and have a lot of fun. We have, during this turnaround process, had a mantra about stability comes first. You need to have a management team that can have an ability to forecast the near future. You need to have a management team who has a business plan to take this company up to profitability. One could argue, and many does, that some companies' growth is more important than profit. It could be a start up in a fast growing market, and that is true. It's not true for any of the Ratatos companies. So we are going for stability, first, profitability and growth. And as a matter of fact, when you focus on profitability, you start to think what are the I'm coming back to this now, but you look on what's profitable. And when you focus on that, growth quite often comes. And that we have seen in numbers. Also, the governance model start with the overall government, with the board and then management, then down into the hard details. Unfortunately, there is no smart strategy or smart thinking that could change a company significantly. It's a lot of hard work. I said that there was nothing more important for us in Ratatos or for owner to have the best CEO in the company. To have great CEOs is the most important. Why? Is it a 1 man show? CEO is far I mean, to turn a company around is never a 1 man show, but the CEO is responsible for getting a great heterogeneous team together, which in their turn get great heterogeneity team all the way through the P and L chain downwards. Heterogenic, by the way, is not for me gender or nationality or religion. It could be, but the important thing is that you have a team that can see problems or opportunities from different angles. It's not bad to have a risk taker and someone that never wants to take the risk in the same team, etcetera. I said strong execution, 80%, strategy, 20%. That is not saying that strategy is not important, but you shouldn't spend too much time on strategy. Strategy is important, but execution is important every day of the year. And again, it has to be a great place to work. So what has this resulted in from if you sit in a helicopter, what's happened with the Ratatos government? Well, we governance. We have changed 5 CEOs. We have changed 9 chairmans of the companies. The chairman is quite often a Ratus person, And the chairman, together with Ratatos and myself, is selecting the CEOs and interviewing the CEOs to come into the position of the companies. Then we have done some structural changes. We divested Jotel very early in January last year. I can't take the honor for that, although I was part of the last few weeks. That was a company that had lost a lot of money for Atos. We divested Gildren and Kurian not because it was a bad company, but basically because we as an owner couldn't really add much value there. We increased the ownership in TFS from 60% to 100% of one reason only. We wanted to have control over the company. There was so much to do, so there was not time to sit and discuss with another shareholder on what to or what not to do. That has started to yield results, actually. Then in many companies, we have divested an operation in Spira. We have acquired in Airteam, etcetera. But I choose to pick up one thing that has happened in our companies, and that is the divestment of Spira because it's about a very big and important company for Atos Plantation. Spira costed us SEK 100,000,000 for 18 months of being part of our plantation. So it's great news and good news that Spira is not longer any part of Plantarsen. We will take a 30,000,000 hit or so in the Q4 P and L for Ratatos, but that's a well invested €30,000,000 Now this has resulted in, I think, a very good key ratio in the sense that 10 out of 12 companies are performing better than 1 year ago. And when I had my first quarter as the CEO of Ratatos, there were 2 out of 13 that performed better than 1 year ago, and that's in a good business cycle. Right? So I think that's the most important. The EBITDA number for Q3 was much better than the EBITDA number 2018 Q3. Now someone says, well, that was a very easy quarter to hit. Yes, but we hit the quarter we beat, maybe you say, the quarter also in 2017 for Q3. So we were quite happy with that quarter. The revenue growth was actually 70%. 'sixteen was organic. There was no FX effect. And if we just take a glance on the year to date numbers, in spite of all the restructuring we have done in companies and the poor performance in projects in Hent, we still grow year to date EBITDA with 13%, and last year, that number was negative. Spera, I talked about I think that the 2 most important events in the quarter was the fact that Olav quick started on Plantarsen as the new CEO. That is very, very important. It's the 1st CEO who is recruited to a Plantation of the current team in Ratus. And we also recruited a new CEO in the deal, which we believe is very good, and he will join sometime later this year in December. I talked a lot about EBITDA. I haven't talked so much about cash flow. But what I mean, a CFO is always an important person or position in a management team. But I think in a company like Ratatos, with a capital structure we have, it's he's because it's a he. He's even more important than a normal CEO. And what we want in the end is not high EBITDA, it's high yield and return to our shareholders, cash. So therefore, Peter, I want to for you to say a few words about that. Very nice introduction, by the way. So by going over and looking on the dividend policy that the Board of Ratatos established in conjunction with the AGM this year. And this is to define the profits that trickle down to the bottom line at the run rate level. So we have perhaps this fantastic picture of this beetle bus. And the Board has stated that the Ratatos share should be characterized by steadily increasing dividends and that the Board of Directors make the assessment of 30% to 50% of profit after tax belonging to the shareholders of the parent companies should safeguard that condition. So with that, let me just allude a little bit to what Jonas said regarding the focus on EBITDA. So EBITDA is a very important part on how we measure and track our company's performance. Then of course, you drill down into the earnings before tax and a big chunk of what you have there is interest and financial cost. Then you have the tax and then you have the minority share. And that's the true bottom line. And if we can improve EBITDA, which I hope that we can show you and what our 3 fantastic CEOs will show you, then we have an even bigger opportunity to increase EBT and net profit. So on that topic, let me take you through some of the portfolio and the big chunk of financial cost. So as Jonas said, we focus a lot on cash flow from operations, and we also focus a lot on capital employed. Profit and cash is the foundation of running the business. That's the oxygen of running a business. And we have improved cash flow over the past 9 months. And it's also lowered the gearing in 10 out of 12 companies, as 10 out of the 12 in terms of profit, 10 out of 12 in terms of gearing. And when we look at gearing, we look at the quota between net debt and EBITDA. And it's important to understand that the net debt can move and the EBITDA can move, thus changing the quota. And if I would like to say something about what would you view as sort of a normal long term reasonable leverage in a company, I would say between 2 to 3x, meaning that we are on an investment grade level, meaning that the company can thrive and develop the business in a very good and healthy way. And we have actually 7 out of our 12 companies that are satisfying this condition. Now let me comment some of the outliers somewhat. If we start with the job, as Jonas has alluded to, in Q4, we took quite a bit of charges relating to restructuring the business, and Tobias will talk more about that later. And in Q1, as of this year, we also injected more cash into the jab. And you can see that it was it's going to 3.6x. And with adding a very hopefully, a very healthy quarter to that number and taking a bad quarter out of the equation, you're going to see a much more improved and healthy situation. So that's one company. The other company, which Jonas also has commented upon, is Speed. And in Speed, we took a restructuring charge and restructured the business in Q2 as of this year. And we have also taken a lot of initiatives to improve profitability in speed. So speed will correct itself as we go along. When we talk about Air Team, you can see that we have used the coloring amber in Air Team. And we are not at a very high leverage ratio, but just to mark that we have made an accretive acquisition in Airtim, and this increases the leverage. As we go along and go forward with the type of asset light and very high cash generating business, this will correct itself. When it comes to the Plantarsen and Weiss, these are standing out. Plantarsen, we are looking and assessing the long term capital structure in Plantarsen. Again reminding you that it's all about the combination of profitability and net debt. And lastly, as Jonas had stated, we have detected and identified the quality issues, and they should be on track to perform. With that, Jonas, I hand over back to you. Thank you, Peter. So now let's look into our new Ratas and what can be better than to start with a picture on the old Ratas or all the old Ratoses that has been around? I mean, Ratos is now 153 years. I'm looking nervously here at some Ratus representatives, but I think that's the case. Ratatos has really shifted its business operations many times during these years. Now our new Ratatos, which I'm going to present, then we leave the private equity area, definitely. And I want to comment more on that area. So our new Ratatos, who are they? Who are we? Well, we are a business group. We are a business group that enables midsized companies, like for instance, Diab and HL, be independent, helvstandig in Swedish. The CEO is responsible for the complete P and L, for the complete balance sheet. Peter and I will have some saying about the capital structure, but you're really running a company. And that's important. That's the way we get the best CEOs, right? But they develop and excels by being part of something larger. I will dig into this a little bit in the coming slides, but Doratos is a business group. Our mission, what are we doing? We are acquiring and we are developing these midsized companies with a headquarter in Nordics. We love international and global companies, but we do think, like before, by the way, having headquarter in Nordics has been a part of Rathe's strategy for a long time. But we want the companies in our portfolio to either be or to become a market leader. And when I say market leader is to be typically number 1 or number 2 on a market. Markets can look very different. They can be very fragmented or the top 3 players have a big chunk. In any case, we should be a number 1 or number 2 player in the market that the company is acting on. So how does this Ratas Business Group looks, and how does it differentiate from other business groups? Only on the Stockholm Stock Exchange, there is a few conglomerates, typically consisting of a large number of small companies. The Ratus Business Group is a limited number of mid sized companies, a little bit larger companies. I will talk about why later. We invest in the companies that are or can become market leading, that are or can become the leading profitability player in the sector. That is how we measure results from now on. A good result is not 8% or 15% or 22%. It is the leading profit margin in the sector where the company operates. You compare with peers. Good cash generation. You have to have a size to be able to do buy and build. We love strong brands, and we want them to take the benefits from their Atos network. What is their Atos network? The Atos network has is here today, and we develop it. We started to develop it last year already. We have Eratost Business Council. That's the presidents of our companies and myself. As a matter of fact, both Mats and Tobias and Nina is part of that. We discuss how we operate in the group and what we can do more about networking, etcetera, etcetera. We have initiated a business executive and leadership program where 2 to 3 people from the management teams of the company meet 3 days, 4 times a year under Stockholm School of Economics and IFL Leadership Education, they not only become better leaders and better businessmen and better businesswomen in these classes, they create a network. They work with live learning projects, real projects in our companies, and they get to know each other. Suddenly happens the great ideas I had about synergies between some companies in production, etcetera, that was listened to, and yes, maybe that's interesting, etcetera. When they meet and discuss these things, things are happening. It's great to see. We have initiated a network for other areas like purchasing, IT, HR. I talked to HR's HR HR HR manager about this network. And she said, well, it's great. I don't I I don't have so much in common with those and those company. With these companies, I have a lot of common, and we can actually save costs and we can share experiences, etcetera, etcetera. The idea is that we initiate the network, and then we leave it over to 1 of the companies. If it dies, it's not a good network. Then we end that and find other networks. The responsible person for the Ratatos executive network is Per Magnusson, who sits up here at Ratatos. And you have been in business for a long time. And we also have now, in March, our 1st Ratas Summit, where all the management teams from all the companies are coming together with Ratas, Ratas boards and the chairmans of the companies, etcetera, etcetera. This is really creating value, and it's nothing I've seen so much about in other conglomerates. So that's the Ratatos network. Now when is Ratatos a business group? It is a transformation journey. We are have been in stage number 1, as I promised we should be last time we met. We will continue to work to improve the beta. But as per today, we are planning for step 2, which is structural changes in the portfolio. So all the companies in the portfolio today will not be a part of the Reuters Group. And I'm sure I'm going to get the question, which companies are you going to divest? When will that happen? And I will be even more boring than a politician, because I'm going to say, I will not answer that question. They usually answer another question, but we will not answer that question. It will take some time. We will do it in a good way, and Ratus Business Group will successfully come in place during the next few years. The way we operate in the Ratatos Group starts immediately. And our core values is the foundation for that. We love simplicity. We believe that it's much more important to know 4 KPIs than to have 25 KPIs that no one knows. We love short text reports from the CEOs and CFOs. We like to see more numbers. What I talk about? We hate bureaucracy. We hate to sit in the office and produce a lot of strategy material, etcetera. Speed is quite closely connected with simplicity, because if it's simple, it goes faster. We don't want to wait till the next board meeting by taking a decision. We love telephones. We love site visits, etcetera. Speed is very, very important. One should never decide a thing in a company, we take a decision, we should do this, if we not at the same time know when and how we should execute it. It's a mistake, I think, many management teams do. Today, we have taken 8 decisions. But never take more decision than you can execute. Speed, it creates trust and confidence also in the company. Last but not least, it's all about people. I got actually my first CEO job, or CEO that was maybe too high title. I got my first managing director job in a subsidiary wholly owned of Subscania when I was 29. Since then, although I dreamt of becoming a great engineer, I've had these positions. If it's not something I've learned, it is that people make the difference. People create strong teams. You talk about business to business, but it's people when you talk about selling things, But companies doesn't sell things to other companies, or they sell to other people. People sell to people. So nothing is more important than people. We talk about a rule book on how to operate companies. Again, our mantra with profitability before growth, a good result is the result that is better than the peers. We want to have a decentralized structure as far down in the organization. It's possible. It differs a bit if you're a process industry or if you're a service company. But it's very, very important that all managers know their own contribution to the profit. If you ask for a KPI, there should be a question or an answer, who is responsible for this KPI? We don't want to have matrix organizations when someone can blame the other line for not delivering. That's why my results are bad. We want to minimize board work. We're not saying boards are not needed, but we want as few board meetings as possible. I think it's reasonable to have a strategy meeting in the board once time a year, to go through the budget one time, maybe to take a deep dive in HR, three meetings. Differs, of course, where the company is. But our way to act as an owner, the majority comes outside the board. I'm coming back to that. Our principles, again, you're seeing this now, so you get tired. We do believe that a management team in a company should the majority should consist of line managers. Why? Why not staff functions in majority? Well, the line managers, they are closer to the customer. The line manager, if the company is properly structured, they will put a pressure on central costs in a company. So I very often, as the CEO for companies, try to defend the fact that we need marketing, we need employer branding, we need good HR, etcetera, because the line managers, they're so interested in their profit, and that balance is very important to have in a company. What is measured will be done better, but again, don't make it simple. Don't measure too much. Build on your strengths. This sounds like a management class, but it's just experience. I think it's a human reaction to when something is bad, you want to fix it. So you spend a lot of time on things that are bad as a manager. But I'm sure very, very often or normally, it's you get more profit from something you're happy with. I mean, they do good results. It's easier to make them to do even better results than to make the bad results decent. You understand what I mean? It's very often, Nitin. You fell in love with products. You want to have a complete offering. There are many, many arguments for taking care of the babies that are not performing well, and not put all your management effort into what really can be something big. We started a few minutes late. OpEx can always be improved. I had a lunch with 1 of the CFOs for 1 of the greatest largest companies in Sweden. Early in his career, he was CFO for a smaller company that runs into liquidity problem, and he told me that years ago, I couldn't dream on how much OpEx we could save and still operate almost as good as we did before. And very few have been in that position, right? Pricing can always be improved. I think pricing is a strategic area. It's an area I talked about delegation, delegate. I don't think one should delegate pricing because the closer you get to the client, the lower price you want to have. Salespeople want to have low prices, and it's normally much easier to negotiate with your own company than with the customer. So I think in Ratatos, we haven't put enough focus, and all the successful companies are really working hard with strategic pricing. Benchmarking is fantastic. Within the company, between companies, you get all the objections because people are clever. It takes time to get down to really, yes, but your lease costs are higher or your whatever is higher. You should also and that is one thing we haven't really had time to do yet among the Ratatos companies, but that is something we should focus a lot in, and we will hear a lot of objections. But after a while, things will happen. Customer talk, we listen, could have been a core value. I mean, the customers are the one who pays our salaries and our operations. It's also good, I've been a salesman, and I know the best sales meeting was when I shut up and listened to the customer. But that's not what I'm talking about here. It's all the input you get from clients about your products. So have a connection between sales and R and D is extremely important. It was important when I worked in Scania because the salespeople hear what's going on, on logistics, on support or whatever. So listen to the customers. And again, organic growth is extremely value creating. But if you have tangible synergies in buy and build, you can create a lot of value. And tangible synergies are normally cost synergies. So you will see a smaller Atos. Joakim told me 3 years ago, we were 50 people in Atos. We're less than 20 today. There will be more larger companies, but also more power in the companies doing things that Ratus does today. We'll have less board meetings. We'll have more business reviews. We have founded or implemented in April, I think, was the first one. We do business reviews each month with a CFO and CEO for each company. We sit down, we go through the P and L, we go through the balance sheet. And I think this is appreciated also by the companies nowadays. You don't dare to say anything else here. But I think that's better. And between that, we have a lot of phone calls and meetings, etcetera, etcetera. So more phone calls, more site visits and more fun. And you know what? I believe that is what is going to drive shareholder value in Ratus. Thank you so much. Behind me on the photo here is a beautiful piece of engineering art called the Dvalin gas module that was delivered to our customers this summer and is currently being hooked up on an existing oil platform in the Norwegian Sea and will produce gas from autumn next year and it's a classical example of a typical job that Able is well set to do. We call it a large modification job. And this is a particular market where Able has a leading role in the Norwegian continental shelf. I've had the pleasure of working in this the oilfield service space since late 1980s and have had the privilege of heading up Able for the last 3 years. I've been through some up cycles, down cycles. It's been a great journey. And what I will talk to you about today is what has taken place over the recent years, where we are now and a little bit about what we're planning to do for the future. But before that, some wise person has said that a picture can show can tell more than a 1,000 words. So I thought I'd introduce this session showing a small movie clip about Able, who we are and what we do. So we'll find that off. Abel's roots date back more than a century. We have played an important role in the development of the upstream oil and gas industry. We are a forward looking and leading supplier of services related to oil, gas and offshore wind industries. We have an annual turnover of around €1,000,000,000 and our 4,000 skilled workers makes us one of the largest employers in Norway. Able is privately owned by Norwegian family company Ferd and Ratos, which are stock listed in Stockholm, together with the Swedish 6th AP Fund. Abel is a signatory of UN Global Compact and we are committed to balance the company's economic sustainability alongside our social and environmental responsibilities. Our employees' health and safety is a first priority and we invest considerably into improving all aspects of our operation to reach our vision of 0 harm to people and the environment. In our award winning apprentice scheme, we accept 40 new apprentices every year. Many of these build a long lasting career in our company, both onshore and offshore. In Able, we stay close to our customers and we have offices in several locations in Norway, where oil companies are located, as well as in Southeast Asia. We are also present on half of the offshore installations on the Norwegian continental shelf, as well as 5 onshore terminals. Abel delivers the full scope of services within modifications, yard services, field development and offshore wind. From preliminary studies, engineering, procurement and construction all the way through to decommissioning. In many ways, our yard in Haugesund is a corner stone in our history and the company today. Here we construct new platforms and topsides. This is also where we construct modules and equipment for many of our maintenance and modification projects for onshore and offshore facilities. We also provide yard stay services and our yard has the largest dry dock in Northern Europe as well as one of the largest indoor assembly facilities in Norway. Our international fabrication and delivery model allows us to work effectively on a wide range of projects around the globe. Our yard in Thailand is a world class construction site for platform and FPSO modules. And our team in Thailand collaborates with Abel in Norway and Singapore on large EPC contracts. Throughout the years, Abel has successfully delivered a large number of new topsides and large modules for field development projects on the Norwegian continental shelf. Recent projects include Godren, Dwalin and the Johan Sverdrup drilling platform. These projects have paved the way for our largest project to date, the Johan Sverdrup P2 Process Platform, which is operated by Equinor. The platform is constructed in Thailand and Haugesund and is scheduled to be transported to the field in January 2022. The gigantic Johan Sverdrup field is the all the way from Haugs Nasser to the field. Next is Phase 2, which includes construction of another converter station. The offshore wind market is growing and Abel has delivered several successful projects within this segment for years. Based on our past offshore and wind successes, Able and Keppel FELS were awarded a contract to build an HVTC platform and a land based converter unit for the Dalvin 5 Wind Farm cluster. Our plan is to expand with both existing and new markets by creating partnerships with leading companies, keeping our concepts cost effective and making sure our international delivery model stays competitive. We also have an ambition to take a leading position in the digitalization of the Norwegian continental shelf. And we work closely with several customers to realize the potential in this space. Our digital initiatives will improve both the quality of our deliveries and safety of our employees. Going digital will benefit Able as well as our partners, suppliers and clients. In Able, we aim to be visionary, open, responsible and flexible. We truly hope that you will recognize us for these core values, whether you're a customer, a supplier, partner or in any way acquainted with April and our employees. As you probably are all aware of the oil and gas industry has been through a turmoil since about 2014. And that down cycle hit us also in the Norwegian space. This resulted in a very abrupt loss of revenues for many of the oilfield service players, particularly hard the ones that were the ones that are asset heavy were particularly hard hit and some of them are still struggling as you're probably aware of. In Able, we quickly adapted to the new market situation. We took down direct cost and in our case we're capital light. This is a lot to do with people. We had to let 1300 own people go. But we managed to do that while the revenues were dropping. Also we addressed all parts of cost of our operation. The indirect spend was addressed in particular, and we managed to bring that down with about 40% from 2014 to 2018. Equally important, we embarked together with our customers and our own supply chain, we embarked on a journey to bring down the cost of developing oil and gas fields. And over a 2, 3 year period, the whole industry integrated working together managed to bring back bring down development costs from 2,030 up to 50%. That then resulted that some of the new developments that were scheduled to come but were stopped intermittently, they were put back and were sanctioned. And instead of looking at $50 to $90 breakeven for oil, you were looking at maybe $30 to $50 per barrel. Some fields, large fields were even looking at less than $20 breakeven per barrel. And one of these fields was discovered by the Swedish independent Lundin. And as you saw in the movie clip, it was the Johan Sverdrup field where in a mature area in the North Sea and it's considered almost impossible, they discovered a new field with 2,700,000,000 barrels of oil in place. The development of this gigantic field was sanctioned in 2015, and I can tell you that there was a lot of companies that put their eyes on the possible contracts for this field at that time. The concept was evolving around 5 different platforms. And what we did enable was we developed a concept, which was kind of 3 pieces. We put these platforms in together, 3 pieces. One of these or the largest piece we managed to manufacture in Thailand, which gives a very good cost profile on the project. Furthermore, we put these pieces together, large pieces together and put them alongside the key of the Haugusun yard, which you saw on the movie here, and we finalized the whole platform key side. And that gives a huge cost benefit compared to doing or finalizing the hookup of the platform offshore. And just a rule of thumb is that 1 hour offshore equals 4 hours onshore in terms of cost. So this was a very efficient way of producing an oil platform. And a long story short, EIVEL was rewarded the drilling platform for the Johan Sverdrup field at NOK 8,000,000,000. You can see that part of that revenue come through then in 2016 2017, easing up a little bit on our revenue profile. The project was very successful. It was delivered on time with the highest standard for health and safety environment and quality and pave way for a second order or award last year, the P2 platform or 2nd production platform for the field, now with extra orders sitting at SEK 10,000,000,000. So rapid adaption of capacity, successful reduction of indirect cost and being able to develop competitive solution for the Johan Sverdrup field were important factors for us in order to remain profitable through this down cycle as you can see on the yellow line there. Our backlog now sits just south of NOK 17,000,000,000 at the end of the Q3, which is pretty much the same level end of last year. So we've been able to maintain our backlog and again, just benchmarking ourselves like Jonas alluded to earlier today with our main competitors, we're doing pretty well on the backlog and building the backlog. Also mentioned earlier today by Jonas, our ambition remains to deliver superior margins, and we've been doing we're coming up that scale now over the past 2 years. And our ambition, of course, is to remain at that level. Cash flow is not shown on the slide, but roughly speaking over the last 5 years, we've been generating NOK 2,700,000,000 in cash in April. And we have very often, we're running with a significant negative working capital. Abel embarked on a strategic journey 8 to 10 years ago, where a goal was set to see if we could diversify our business into renewable energy sectors. And pretty quickly, one clear opportunity came about within the offshore wind segment. And when offshore wind farms are built and there's a small illustration there to the left behind me, the electricity is gathered into small hubs, shown as a red dot here, before transported onshore. When these windmill parks get big, you have to introduce a technology which is called an HVDC station. And basically what this is, is a gigantic transformer station, HVDC high voltage direct current, and you're just ramping up the voltage. You're making it direct current and sending it onshore. A little bit technical, but the whole point here is to avoid losses of electricity when transporting it onshore. This technology is typically needed when you have windmill farms, say from 100 kilometers, 130, 150 and when they become large up to when you start reaching levels of towards a gigawatt, this is a technology that's needed in order to reduce the losses. So already back in 2019, 2010, we started discussing opportunities with the Dutch German grid operator called Tenet, who are responsible for the power from the HVDC stations onshore. And together with ABB's power grid division, we managed to get a contract in 2011 for the Dalvin Vita platform that you saw on the film here. That platform is now operating Helgoland, Germany. It was in 2015, the largest HVDC station, 9 60 Megawatts of power, more than 1,000,000 homes being powered from this station. And these HVDC stations, they have similar characteristics and requirements as oil and gas platforms. Firstly, they are governed by the strictest requirements on safety, environment, quality and they are major multi discipline integrated turnkey projects just like an old platform. They require design, engineering, construction and you even have to be able to install these things. They also have extreme requirements for uptime or system availability. The option of not being able to send power is not an option. And this platform is going to stand in a very harsh environment in the North Sea for many decades, just like an old platform. So these are characteristics that enable we know how to deal with. As you saw in the movie clip, Able is also delivering onshore power stations that are actually sending renewable energy from the grid onshore offshore to oil production platforms. And the whole idea is to replace gas turbines on the platforms with renewable energy. And oil production and gas production in itself is very energy demanding. And just on the Johan Sverdrup field that we talked about earlier, by doing this, by sending power from onshore, offshore, they are taking down the CO2 emissions annually at 620,000 tons. So this is very considerable in light that Norway is emitting about 50,000,000 tons a year. And electrification of offshore oil and gas fields is a major part of Norway's ambition to meet the Paris agreement. Technically, they are similar to the HVDC platform, somewhat smaller. And the main difference is that the electricity goes the other way. Our strategy and focus on the HVDC platform segment has really paid off this year. We have taken on board around EUR 800,000,000 of contracts. Firstly, we took the we were awarded the Dalvin 5 from Tenet, the second one, and we assume they were happy with the first delivery. And this one, as you also heard on the movie, we've joined force with Keppel FELS in Singapore and they will fabricate it. And we've done that in order to make sure that we have capacity to take on new contracts in our own tile and yard. And we just weeks ago, we signed up for 2 more platforms for the Dagr Bank project that is going to be run about run with SSE and Equinor. That is the world's largest offshore wind farm development with an investment frame of around 9,000,000,000 And we're incredibly proud to be awarded these 2 platforms with another option of another platform. And again, these 3 different platforms are going to supply the UK consumers with 3.6 gigawatts of power, again 4,500,000 homes. So this is really contributing into making the UK more carbon neutral. And as I mentioned, this platform, the last two ones, the one that you see on the picture here will be built in our own factory in Thailand. One of the strengths that we have within this segment is that we have over years very closely and intimately been working with the ABB Power Grid division to make and create integrated joint solutions that are very effective and also very cost effective to make. We have been able to take down the weight of the platform. We've been able to position the equipment in such a way that it's becoming very efficient. And this has resulted in lighter solutions, more efficient solution and it all cooks down to cost at the end. Also for Tenet in Germany, we've been very successful. That delivery will be what's known as a gravity based structure. Won't go into details, but it's a patented solution that Ebla made where the whole platform sits at the seabed and it gives more stability and less vibrations. Another big selling point has been, of course, Abel's track record of executing complex projects in the North Sea. And finally, our international delivery model with utilizing our presence in Asia has been important for winning these contracts. And just on the bottom of the slide here, it says Abel was also a leading supplier to Equinor's Highwind Scotland Offshore Floating Wind Project. And again, this is just to distinguish what we're doing in the UK and Germany that sits on the seabed. This is 10 to 40 meters depth. There is also certainly a big notion now on offshore floating width for deeper waters. That is a early or immature market. It's coming. And so far we've done the only project that's in production now, which is called Equinor's Highway in Scotland project. So we will be ready for that market when it matures. Just a few words on the market and the market outlook, the way we see it. If we look at the, let's call it, core market that has been, we're looking at the oil and gas offshore industry in Norway. There are few prospects in the pipeline of sizes like Johan Casberg or Johan Sverdrup, 2 of the giants now being executed. However, what we're seeing is that there are plenty of opportunities in the new greenfield space. We're working closely with customers on creating unmanned platforms, which will certainly be a solution for the future. And again, these are 10 digit Norwegian kroner contracts for us. So the market is changing, and we are probably going to have a leading role there to come too. The other part is that the brownfield market or the maintenance modification market is still strong and it's driven by 2 or 3 factors, one of them being that there are a lot of small discoveries in the North Sea that are being tied back to existing infrastructure. And every time an old company does that, we'll be on their platforms modifying it, maybe producing a module like you saw on the video clip. So that's a good steady business for us. Another one is electrification. We talked about electrification of the Johan Sverdrup field, but we are also working now on 3, 4 studies for electrifying other fields and they as they mature, these can turn into nice contracts for Abel a year or 2 from now. If we look at the Oil and Gas International, again on the move you saw that we are delivering what's known as FPSO topside. So what this is, is basically process equipment like we do in the North Sea, but these are for ship shaped vessels that are typically used in deep waters, West Africa, Brazil, also in the North Sea. That market has been pretty much dead since 2014, 2015. And what we see now is that it's coming back. There are projects in motion and we're working on studies now and usually studies turn into something bigger if projects are sanctioned. So again, we're excited about that part of our business. But the most perhaps the most exciting part is the offshore wind have 30% renewable energy in 2,030 and offshore wind seems to be one of the viable and competitive solutions for achieving that. And we've got some market information. This is then Europe well, this is the world without China because China will be a similar scale as you see here. And as you see, analysts, they are looking at maybe tripling the installed capacity in Europe over the next decade. The yellow line signals which projects will require HVDC technology and we're very excited to see that curve. So again, we believe there will be ample opportunities going forward, particularly the UK, Germany, and we'll be looking forward to stay to be the leading provider of those HVDC stations. Again, offshore floating wind, immature, we're looking at concepts, it'll be 5 to 10 years from now. It's still too expensive. And then just knowing that I'm probably the only person between yourself and a good coffee break, I'll just wrap this session off with just sharing a couple of items from our strategy. First of all, the oil and gas market is still growing oil production by 1.5 percent each year. And despite all the headwind that we're seeing in the industry and we understand that, it's still a growth market and there's lots of investments and lots of projects that need to be sanctioned to keep up the supply. So we're going to continue to work from our position both in the North Sea and certainly on the international arena. But of course, the taking a position in the energy transformation in Europe is becoming more and more important part of our business. So we're now continuing to work closely and exclusively with ABB to create next generation solutions. These things are getting bigger, more powerful. We're at 1.4 gigawatt now. We're looking at 1.82. This takes innovation. This takes technology. And we're going to pave the way with ABB on that space. And finally, and as Jonas alluded to earlier today, this is all about people. Able is a classical people driven business and we spend a lot of time and effort in making sure that we're developing organizational skills, we're developing competence in the people. We're going to transfer from a pure oil and gas player into a more renewable player that does something to the competence in the company. And we're driving that actively as we're moving our strategy going forward. Lot to do, if you have engaged people, all of our ambitions within the 2 divisions we work in will come to light. So with those few words, thank you very much. Someone stole my balsa or balsa. I had a balsa piece here. If you're a little into this market, you know Bolsa is the real shortage market now. I can't find it, so if you find it, give it back. I will talk about the market. DIA being short, I will talk a little about what we did the last 12, 13 months. I will cover the wind market in particular, and I will round off with our next couple of steps because we are not done by any means, and actually present a couple of financial targets that we aim to meet within a few years already. So UMA, in short, quite old, like Jonas from exam from KTH here in Stockholm. Many years ago, I actually attended a big party on Saturday night in Stadt, Suset. It was fun as well, a lot of old guys. Started my career in asylum or ITT Industries, as it was called in those days, for 17 years in a lot of different management positions, everything from R and D to General Management and in my last 5 years as the Managing Director of their U. S. Subsidiary in the yes, 10, 11 years ago. Moved into Atas Copco, hired by Mats Ramstrom to replace him when he grow his first step to the next level. Headed 3 different divisions during those 10 years, typical size like Dieab or slightly bigger actually. Joined Diab September 1, 2018, and I have to admit, I tried to do quite a lot of due diligence on the financials before I started. I don't know what it tells you about my financial analyst skills, But here I am. So what is DIAB doing? This is supposed to look like an eye, beam of steel to the right turning over to a sandwich beam. So what we are doing, we are supplying not the beam or the sandwich, we're actually only supplying the some the core material to the beam. As you know, if you have only the skin, you can bend it, you can actually break it easy, but with the core material in between, very hard. You know what this is. Oops, harder. So that's what we do. So we are only doing the core material for this sandwich design. We are basically only doing 2 or 3, the missing one as well. So this is 3 core materials: PVC, PET and Borlsa somewhere. PVC, we do in big numbers. Total capacity for our 3 PVC capacity is around 150,000, 160,000 cubic meters. PT is our kind of small product so far, I would say, and I will come back to that. This is the little more exclusive material. Some would say it's a little more over engineered at times. This is more the volume for volume applications, half the price, half the cost compared to this for the same mechanical properties. Borse is the 3rd one that I will not show then, and we actually have a 4th one, which is PES, also a PET or PES material, which is a thermo what do you call it, thermoformable, thermoset and thermoplastic. Then especially with the we do a lot of different types of grades, so with different densities, with different properties related to fire properties, mechanical strength, shear stress, compression, whatever. That's what we do. What segments do we go to? I think all of you know, we are a big supplier to the wind industry. We are supplying material then to the design and the production of wind industries. Our typical customer in the industry is maybe not the Vestas and the Siemens. It could be, but more often, it's actually the Kitter, the ones who kind of cut our sheets in pieces and then deliver them to a blade manufacturer, who then delivers it to Vestas. Now Vestas and Siemens and the big ones, they have their own blade production. So I would say 50% of our material goes then directly to them, but much of the material goes to Tier 1, you can say, in this market, if you compare it to the automotive market. We don't only sell to Turbine Blades, we also sell to nacelles, which is the house in the middle of the rotor. The big driver now in the mid market is size. I think a couple of years ago, the average blade length was 30, 40 meters. Today, it's 60, 70. Longest blade now is or last year was 110, made by GE. I think now the longest blades are in the ratio, 120, 130 meter, meaning that the whole diameter of the whole rotor is almost as tall or long as the Afen tower, demanding a lot of core material. It could be balsa, it could be PVC or PET. We also supply quite a lot of volumes to the marine market, both military, minesweepers, submarines, commercial military boats, but maybe the biggest market is the leisure boats. And then primarily to the little larger luxury yachts because they demand a small nimbus of 6 feet or 6 meter doesn't really demand a sandwich. So there, we are not present there. But as long as it's above, I would say, 20 feet or 25, 30 feet above that is a sandwich design and consequently, they use a sandwich and very often a core material. DIAB is today number 1 in this market. Primarily, we sell the PVC to the hulls. That's where the most mechanically demanding applications are. We will also sell to the deck, top cover, fly bridges, applications, which where PVC is not maybe it's a little over engineered, so we can over engineered, so we can sell PT, we can sell even balsa to some boats. Industry transport, 50% of our turnover train, train doors, interiors in the train. Automotive, automotive is not so big yet, but we clearly see now signs in the market that within a couple of years, automotive will be the next wind to some extent. Primarily in the design, the automotive business is also driven by weight reduction to decrease the emission or prolong the driving distance for the electrical car. We already now see projects in the making with very big volumes, and we are present with many of those Tier 1s. Aerospace, smaller but very profitable segment for us. We sell not so much on the structural side. We sell more interiors. It's a structure, but it's not the wings, it's not the body of the plane. It's more like trolleys, interiors, ceilings, seating. If you are flying business in some of the major airlines today, it's very likely that you're sitting in seats, which where it is covered or something else, but then in the core, it's a DAB core material. So if we look at the core material market, it's a fast growing market. This is from one of many sources where it says that it's a constant high growth market, about 5%, 7%, I see here, dominated by a couple of key segments. Aerospace is definitely the biggest. Why are we not bigger than the 10% of our turnover? The aerospace is so far dominated by Honeycomb. So the Honeycomb structure, which is very, very light, not so durable, but very light and very old in the Aerospace business, has been used for 60, 70 years. We are gradually transforming this market to a foam based core material with our PS material or even with our PVC material. They will not use PET. The wind, however, 25% of the total market, we are one of the dominant players. I'll come back to workplace, but we are all our materials are sold into the wind industry, marine, PVC, some PET and some Bolsa, but PVC is the main core material in the Marine business. Transportation, a lot of trucks, the floors or the walls or the everything in order to make the truck lighter to decrease the weight or increase the load capacity of the truck. So 2 different drivers here. Then construction, we are actually involved also in construction. We are not the most competitive with our PVC, but with PET, we sell quite a lot to Southern European Companies in the Construction Business. So in the marine market, I show this for two reasons. First of all, I would want to say, it's been a flat market overall, but actually, DZ has been growing in the last couple of years. And despite the troubles we had last year or for a couple of years maybe, Marine business has always been very profitable for DGAB. Marine has been growing and at very good profitable levels, so absolutely no problem. We have been kind of taken down by the wind, not by the Marine. Last year, 2018, which was our annuals horrible, we had a record year in marine sales. The wind market. This is from Wood Mackenzie, one of the leading analyst firms on the wind industry. We're seeing a huge growth this year, and we see also very big growth next year. Somehow the Greta effect, but also the subsidy effect. There are 2 markets that are currently driven more by subsidies. It's the U. S. Market where the subsidies will end next year. And there is the China market where the onshore market will end 2020 end of 2020 and the offshore market will end 2021. Is that good or bad? It's putting a complex scenario because now everyone tried to preorder. In China, it's even so if you start to design a wind turbine park, you get the subsea. So currently, it's a huge drive. I'm very hesitant that they will actually manage to get all the things in place because there is a lack of many things in the supply chain, but maybe the worst lack is the core material. It is a constant flying of balsa material from Ecuador, from Papua New Guinea, not from us necessarily, but partly from us, but also from our main competitors because the world is totally sold out to Balsz at the moment. The other material that is also sold out is PT or PET, which is the main material for companies like Vestas, but also for Siemens to some extent and GE. But mainly Vestas and a couple of the smaller are totally drying out the market for PET. So it will be a little dip after 2021, 2022. When I talk to the OEMs, they are not particularly worried. They say at least not the big ones. The big ones are telling me this will open up for consolidation, especially in China. There will be much fewer. I think already now, there's the top 10 players have 80%, 90% of the market. I think there will be more or less 5 players that has 80% in a few years, Siemens, Vestas, GE for sure and then 1 or 2 Chinese, that's it. The rest will disappear or be consolidated into the bigger ones. I think the whole market is quite in harmony. Then over the next several years, we see a constant growth. So this is annually this is not accumulated. This is annual installed capacity, onshore and offshore. And as Mats were alluding to, the offshore markets will grow much faster than the onshore. Offshore is starting from a low level now, but they will grow 15% to 20% is the expectation in the next couple of years. One of the reasons is less problems with permits from landowners, etcetera, etcetera, but also that when you go offshore, you can actually the levelized cost of the energy once you install a big park is much lower than onshore. So the competitiveness of offshore will long term be much, much better than onshore. That's what partly driving the market. This is a little shorter time span, but we analyze. This is our own internal because we get a lot of RFQs, request for quotation, into our books, and we are asked to quote on kits and on blades. And we see a clear pattern. PVC, our main material, will not grow that much. It will be grow a little. We actually 1 year ago, we actually thought it should decrease much faster. Now when we look at the bill of materials for the blades, it actually looks constant despite the growth. Bolsa, same situation. I think now the last couple of months, the Bolsa the design out of the Bolsa has even accelerated to some extent. But in the middle, most important here, the PET PET is growing very, very fast. And currently, there is a total lack of PET in the market. And many of the manufacturers or the OEMs or blade manufacturers that were using Bolsa or PVC or PET, they even have to go back to PVC, even if they design out PVC or Bolsa. So focus on PET that will be the dominating not yet, now it's 3rd. PVC is bigger in than PET today, but within a couple of years, PET will be much bigger than PVC and Bolsa. If you look at our competitor, maybe we are number 2. This is Joakim's slide. I would say that I would like to be number 1. Maybe we're number 2 in wind. We are definitely number 1 in marine. We are number 2 in aerospace. Our closest competitor are not really active in Aerospace. It's more the Honeycomb guys that are our competitors there or we have different materials. I would be very disappointed if we in 18 months are not number 1 in wind. That's my it's not my only my wish, so only what I can see on the market given the investments and the contracts that we recently have signed. Where is the jab? It's light, but it's also bulky. So you want to try to build it local where you produce it. So we have factories in all regions, not for PVC, not for PET yet. If we start with DeSoto, Texas, it's we used to have PVC production, closed it a couple of years ago. Last week, we started up our first PET extruder to produce this Vestas approved material, almost only for the Vestas factory for that factory. We will start another extruder in March. Guayaquil, we produce we don't produce balsa, we take balsa wood and we convert it to blocks or sheets, you can say. Dieab, maybe once upon a time, nowadays, we don't own any forests, but we buy greenwood, as we call it. We dry it, convert into a block and send it. In Europe, we have our Lahorn factory, the original factory, roughly 30% of our PVC capacity, 200 people. We have a kitting facility in Lithuania making kits for the marine industry and for the wind industry to some extent. We have a large factory in Longaron, Italy. When you go from Venice up to Cortina, right in the middle, take a coffee break and say hello to Tidab, if you have your ways. Changshan Gang, we started this factory in 2016. It's a PVC factory, Had a lot of startup problems with fires and things like that. So in 1 month after we cut the ribbon, it was a fire year, and we had 1 year of more or less non production, not because the fire destroyed so much because the permits had to be resubmitted. So a big, big problem. We're all out of that. So then you wonder, I went into this company, we did a lot of stuff. So what happened? This is the Q3 2018 and the Q3 2019 delta EBITA. So we had a big negative in Q3 2018. Now for 2019, we had a big positive. So what did we do? Jonas sometimes tells me that even in a hurricane, even a Turkey can fly. I would say, yes, there's little of a hurricane, and we grow 27%. Maybe that is not so much. But in volume, we didn't grow that much. There are other factors why we grow so much. So volume, absolutely, it has a small it has a it's not the main reason, I would say. We are sold out. We are not going to we cannot supply 1 more piece of bolsa PVC, PET for the next 18 months. Our biggest hinder for growth at the moment is capacity. I'll come back to that. Restructuring, we took out SEK 30,000,000 roughly in cost during Q4 last year. We had, okay, an unlock with raw material cost. 1 of our key ingredients in the PVC increased 100% or 150% at times. It's not yet back on the levels it was back in 2016. But we made some chemical we changed the chemical recipe in our PT or PVC to some extent. So we come down in cost, saved you a few 1,000,000, but we are not at all back to the old numbers. Maybe the most important, focus on profitable customers. When I joined DNOB, we actually were sold out as well. We couldn't produce so much more, a little more we could sell. So I come to a company where everyone was fully occupied and we didn't earn a dime. So what did we do? We took out all the nonprofitable customers or all the most profitable the most nonprofitable customers we took out, replaced with new customers, different prices, different grades, different type of products, made a huge impact. Stability in operations, consolidation, we did consolidation in China where we put 2 factors into 1: reduced cost, got the operations profitable. China, prior to December 2018, was always a big loss for Diab. Now it's our most profitable unit. Great success, and we are increasing the margins month by month. Back to core, I will come back to that a little bit. DIAB in its tries to get the bigger market expanded its scope of supply. We need to go we need to do add value add, we talked about. But what I learned from my previous company and previous previous company, don't expand your scope into competence areas or capability areas that you can't where you're not good or you can't control. I think that's exactly what they did. We focused to grasp a larger share of the wallet, but in the wrong way. So we lost money because we were into areas where we didn't know how to do it. So now we scoped back. We are covering a much smaller part of the market, but we sell more and we sell it much more profitable. China, as I said, I talked about the consolidation. So the operations went profitable. Also, in Dieppe in general, but maybe China in particular, we had a, I would say, culture of volume before profitability. So we have all our sales guys incentivized by volume and not by price or EBIT. We had to clean out a large part of the organization or we cut half of the organization because they didn't make any money, put in a new sales manager in we just went out of all the contracts, signed new contracts, much higher prices in China because there, we were giving away money. Organization model, I come back to that. It's about incentive between the units. New customer contracts, we have been working a lot, as I said, with new contracts. On the organization model, Jonas talked about decentralization. In my world, yes, you should decentralize, but you have to decentralize in the right way. When I came, there was 3 regions with separate P and Ls. And when I say 3 regions, it's P and Ls from operations to sales, etcetera. In my company before this, it's a total different model. It's a decentralized model, but you have total different incentives for the different parts of the company. So the sales unit, we incentivize by profit margin and to some extent volume, but they have a base price. They shouldn't care where they buy the product. If they buy it from Americas or from Europe or China, you have to take into consideration the transportation cost, of course, but they should just aim for profitable customers and the right volume. On the production side, I have forbidden the organization on the operation side to talk about EBIT. When a plant manager calls me and say he has made a record EBIT, and I said then I say, I don't care. I want to know what operational efficiency did you have. Are you operating at a sustainable level? Are you operating at the budgeted level on the standard cost of a particular product? EBIT is more a legal thing. It's more a matter of how you what price you sell to the sales unit, you can say. So we want to decentralize, and we want to decentralize in the right way. So the result of all this is this. We went from a terrible Q3 to a quite nice development in year to date. We will continue, I think, on this path. I see no worries regarding the EBITDA development. We're going to aim higher, of course. Currently, we are limited by the capacity. So way forward. We are going to continue to focus on our main segments. As I said initially, Marine has always been very profitable. Aerospace, very profitable. Transport Industry, it's more of a lot of niche markets, but we are only going to focus where we actually can add value. Wind has been our up and down. Given the volume of wind and the importance of wind that has kind of governed the whole company. So when we say what are we going to focus on, we are going to be number 1 in Structural Core. We are very close. I will be very disappointed if we are not number 1 in Structural Core within 18 months, including Bossa. Profitability before volume, we don't allow our sales guys to give away volume just to fill the factory. That was the mantra. We totally changed it around. We talk about profit. And if we can't sell it, we need to adapt our capacity, especially on the PVC side. Back to core, I mentioned it, we need to scope down so that our scope of supply is aligned with our core capabilities, core competencies. Global footprint, there are, as I said, 2, 3 other competitors on the European market in particular, a lot of local Chinese. We are the absolutely the most global company of those companies. We are the one that could or that can go to the global accounts and have an attractive offer in terms of technical support, production in all regions, geographical regions and with then also a good support locally in the regions. People, we always have been the company in this business that has this little extra technical support. And we know how to engineer a sandwich. We don't want to produce a sandwich, but we know how to engineer and support our customers how to produce a sandwich. There's a couple of main focus areas we will focus on the next 3, 4 years. As you saw initially, we are very weak in capacity on the PET. PET made of exactly the same material as the PET bottle that you may have your water when you run. This is foamed, is extruded. Market leader has been 3a, I would say. We are catching up as we speak. So shorter yes, next generation PVC, it's the next generation of PVC product. It's a little more complicated produce, but it's actually much more easy to do different grades for very, very special applications. We will focus to sell the PVC to the more high engineered applications to make sure we get paid for it. Kit to profit, we are doing some kitting. When I say kitting, I mean, we take the material, the core material, the sheet, and we cut it into jigsaw puzzles and we sell it. We do it with mixed success today. We are analyzing it. And if we're going to be in this market, we have to make money. Otherwise, we're going to exit this market. SmarterDLab has been underinvested in some areas. We have to create a production and sales body that is much more agile, meaning when the market goes down, we need to make sure that we can maintain our profitability in bad times as well as in good times. Couple of things that happens on the wind side then. This extreme shortage of material allows us now to, the first time ever, go in and negotiate very long contracts on the core material. So the recent 5 year agreement we signed with Vestas that we put out in the press release is the first time ever that Deab or anyone else has signed a 5 year agreement. Why do we want a 5 year agreement? We want to secure that our investments that we need to do in conjunction with the contract that we get paid and actually have a good profitability within the contract, but also when the contract ends. Vestas is one example. I can't tell you today other, but we are in negotiation with a handful of other wind OEMs on long term contracts with in some cases with co investments in new capacity linked to a long contract and linked to investment support from these OEMs. So as you saw from one of the slides, strong demand in pet capacity. There is a shortage of PT. We are currently then investing in 4 PT Extruders, as I said. 1 went up last week. We had one in Italy before. 1 is going up in March. A third one is going up in October. And we are we yesterday, I signed an agreement with a partner in India that will co invest with us for the Indian market for an equally big extruder as in Sweden as we're going to put in. This will add another plus SEK 800,000,000 per year just in PET with good profitability. So all those activities, these quite major investments that we are doing, where does it lead us financially? We will be stronger, lighter, smarter. We will absolutely be number 1 in structural core. I think we are maybe already there, dependent how you define it. We will, 2022, minimum have SEK 2,500,000,000 in revenue, profitable growth. We will have a much more balanced set of core materials. We will have an EBITDA of more than SEK 400,000,000. I would be very disappointed if we don't reach it as well. That will equate roughly to an EBITDA of more than 15% over the cycle. Ambitious targets. If you read the financial reports, we are already at 11%, 12%, and then we have a lot of more things to do. We are quite confident. We have a very motivated organization that is working hard as we speak. Our biggest problems now is capacity. We can't sell more. We could sell much, much more. So did you taste candy that was out there? It was in our beans. So I hope that before you go, take some candy with you so that we don't need to take that back to the office. It's all fresh, and you can also take the popcorn out there. So remember that. So a little bit about HL Display. So first about me. I've been the CEO since 2016, and I started my career with Procter and I ICA. I was in various commercial positions in different markets and now with HL, which is present in 70 markets globally. So what is HL Display? So we sell to 70 different markets. We have 20 owned subsidies and then we have SEK 1,500,000,000 in turnover. We have 4 factories: 1 in U. K, which is our largest market our 2nd largest market in France thereafter comes Sweden, where we have one factory in Sundsvall, where we do the data strip, which is kind of like our base product that we started the company with. We do one lap around the world data list every year. And then we also have Benelux, one of the largest markets. So those markets that I just mentioned is 50% of our business. And then we also have factor in China and also in Poland. Now which are our customers? Who are we selling to? So we are selling to grocery retail. So this is very important. It's not retail overall. It's grocery retail. And we also sell to the brand manufacturers like Coca Cola, L'Oreal and so on. But most of our products end up in the grocery retail store, and the grocery retail is growing. It's not growing rapidly, but it's growing every year, in line with the population growth. And we are dealing since we are at the 70 markets, we are dealing with all the global retailers in the world. We are even dealing in China with Alibaba that has started opening some stores. And I just read this week that Amazon is actually that Amazon bought Whole Foods, but they're going to open some grocery stores with a traditional checkout, and they're going to open the 1st store in L. A. Early 2020. So we are really proud that we are we have our products in 295,000 stores globally. There is no other player in our industry that has this presence globally. And when I was here 2 years ago, 2017, in the Ratatos Capital Market Day, the numbers was 30,000 less. So we have increased our presence in 30,000 stores in the last 2 years. And why is this important? Yes, because the important is the implementation. Many of our peer companies, our competitors, have problems implementing in the different markets. And that's why normally our competition is very local. It's small companies that operate in 1 or 2 markets. And they don't have the muscle to implement internationally. Now what are we selling? So Asia has the broadest offering in the market. So 42% of our sales in store communications. So this is everything around the shelf where you have the pricing information. You can have a top sign. You can have some signs coming out of the shelf, everything around the shelf. That's 42% of our sales and it's growing. Now category merchandising is the next sector, which was 2 years ago 30%. Now it's 40%, percent, and it's growing with 16% year to year. And what is category solutions? So it's products like that you see here on the stage. So you have a fresh solution. That's like a category solution. So it's not only just a data strip or a divider or a sign. It's like a solution for the whole category. So there you have a category solution for fresh or you have a category solution for food that you sell in loose you have the category solution that you have the candy out there. So that's a category solution. And then we have some other sectors as well. Why is this important to have a broad assortment? When we talk to Lidl, the head buyer of Lidl, he says that he needs to deal with 74 suppliers on these type of products just to renew a store, to make some sections, make them new. And do they want to deal with 74 suppliers? No, they don't. They have already many suppliers supplying all the food and so on into their stores. So our strategy is to continue increasing the number of the categories that we cover for the grocery stores. So what are we promising our retailers with our products? So we're promising that they will make more profit and grow the sales when we put our solutions into the store. And this is really important. We have a lot of data on this. This is a key selling argument. And it's also more inspiring. So if you think about that fresh solution, for instance, it's more inspiring. You feel that you are kind of like on an Italian open market instead of being in a warehouse type of a store where everything is in boxes. It's also important to drive automation because the highest cost for the retailer is the store personnel. So if the store personnel can do something else instead of just stacking the product on the shelf, if they can, for instance, help the customers to buy more, that is important. So our products, for instance, pushing products to be front feeded, drive the automation in stores so the store personnel can do other things than just manual work. And finally, reducing waste. So there's a huge discussion about waste. So 1 third about all food is being thrown away every year, And it's thrown away at home, it's thrown away at the store level, but also, of course, in the production and so on. And if we put more products where, for instance, loose merchandising is there, the consumers can pick the right amount of product and then you'll bring less product to home and you will have less There's also a lot of waste at the retail store. So I'm sure when you have been buying some fresh produce, for instance, not all the apples look great and so on. And if the apple doesn't look great, the retailer will have to throw it away. So where are we? We are mostly in Europe. So most of our market is in Europe. About over 80% is in the European market through the retailers, then something about 7% through the branded players that I mentioned and then about 10% in Asia. And then we also entered U. S. Where we have a little sales. So this is what we believe is our penetration in the market. So in the dark blue areas, those are our largest markets where there are lots of our products in each of the stores. And then the light blue ones, there's less. So what you can see is that we have a lot of opportunity there. And most of our competition are small players, and we are much, much bigger than our competition. So we are 2x to 3x bigger than our competition. Then in U. S, there are 2 big players, and they have tried to enter Europe, but Europe is a bit complicated market. All the retail is normally very local. So the retailers are most successful in their home country. Every time they try to launch outside their own market, they normally get in trouble. I mean, for instance, in Sweden here, ICA has been very successful. In Sweden, when they went to Norway, it was more difficult. This is the kind of the same scenario for Carrefour or Tesco or any other of the retailer that have expanded globally. Right. So moving on. Looking at the grocery retail store, it's no more like a warehouse. So this is how it looked like in the early beginning. It's not very inspiring. And what the grocery retailers are trying to do is to make this place a more inspirational place, but also to save time for the shoppers. Because in the early days when this came, it was very inspirational to walk around there. But now we know that you only want to spend maximum 20 minutes to do all your shopping and then you want to exit the store. So there is a lot of pressure for the retailers to develop this. So what are they doing? They're focusing on the categories that are most important for the consumer. So the fresh, the meat, the cheese and so on, to try to make it more inspirational. Then they're also getting into this click and collect and online. So all the big retailers, all our customers are investing this not to leave room for small competition to enter here. And what we have seen, for instance, here in Sweden, there are a lot of small players that are entering through different solutions, being it like a grocery basket or being just for online sales. And this has been proven quite difficult. And also, the restaurants, when the VAT was taken down and there has been lots of help in various markets for the restaurant business, The grocery retailers start seeing they also want to sell breakfast, lunch and dinner. So what you can see now at all the retailers are wanting to play the game together with the restaurants so that you pick up your dinner there instead of going to the restaurant. So how does the market look like in Europe in our main market? So what we can see is that there is growth in all the different segments. It's 3% on an annual basis. And the winners are the discounters, the kind of little type of stores and also the convenience stores and online. So convenience store being like a 711 where you can pick up everything what you want, but you don't have a very wide assortment and then you have online. Now the supermarket and hypermarkets are also growing, but they are there doing a lot of things trying to change the kind of like the model, putting a restaurant, looking in what assortment they really should have and so on. Now a couple of words about the online because there's a lot of a lot on the grocery will be somewhere around 25%. Well, that's not where we are today, and it's growing much, much lower. So in our largest market, U. K, the grocery online share is 7%. In France, it's 6%. Here in Sweden, it's 2%. In U. S, it's 3%. So a little bit different picture, and it's growing. But the challenge there is that the consumers are not really loyal because they are not always happy with the service. So if you think about when you're ordering a computer or a book, the seller just throws it in a box, in a brown box and send it to you and you're all happy and it comes very, very quickly. A grocery online order is generally about 52 items, And it maybe needs at best 3 different temperature zones to be packaged. So you don't want the ice cream to melt, you don't want the milk to be warm, and you don't want to crush the avocado or something like that. So it's very complicated, the whole logistics chain. And many of the consumers are not very happy with the service that they get when they get the food because of the things maybe are out of stock and it's food and you can't just quickly go to the store if everything wasn't like you wanted. And this is the challenge for the growth. Now so online continues to grow. It was 15% and that is the prediction, but the pace is not what was predicted. And the shopper's planning horizon is also much shorter. So you don't want to plan for the whole week. And if you're buying something online, you'll benefit from having a very big shop and people are not longer stacking as much product at home. So retailers are under pressure to make their store more inspirational, and the Biggs Box retailers are really there to think how on earth will they bring all the consumers into the store. The Carrefour's and the Tesco's, our biggest customers are really having to invest quite a lot in the store to make it more inspirational. And we like that because then we come with our solutions. We tell them, look, renew your fresh section, bring the reduced waste thing into the store and so on. So this is good for HL. And the merge of the physical and online drives this click and collect because the retailers know that the best customers are the ones that are ordering a lot online and then they're coming into the store and then they're buying even more there because they forgot a lot of things that they didn't remember to order. Right. So the HL transformation journey, what have we done in the last 3 years? So first of all, we have I've invested a lot in the new organization, into people that have worked in an international environment, that have the kind of like the knowledge how to build a global brand and how to operate in a commercial environment in the different countries. So we have invested a lot to build a decentralized commercial organization that has a P and L responsibility at very low level, so everybody has the same KPIs. And then we have invested in the innovation and offering expansions of the categories. Just 2 years ago, we didn't have all that offering that is out there today. And that has been very successful given we are increasing the category merchandising category with 16%. And then also the sales value increase, I'll show you in a sec what I mean with that. And then finally, we have 4 factories and a quite important logistic service to our customers because some of the customers want the kind of like the products almost in the same day. And this has been the kind of like our competitors, our local competitors' stronghold that they can deliver very, very quickly. So we have worked really hard with our factories and our logistics chain to build kind of like each area around the factory to be able to deliver very quickly to our customers and also brought scale there and taken out cost in the system. And then we have also reduced complexity. I think we have had like something like 100,000 items and because there is no standardization at the retail. So all the countries, all the different retailers have different shelves, different measures. There is no standard. So that means that many of our products are customized to each customer, and obviously, that drives complexity. And then finally, we have done marketing acceleration. So we want to we want all our buyers at the retailers know about the the old ones do. They don't always want to meet face to face our organization. So we have started to communicate heavily at LinkedIn. So the new buyers we had, for instance, in our largest market, U. K, lots of young buyers contacting us when they saw what solutions we put through LinkedIn. So the new generation is searching information more online, and we need to be there. And finally, building a company that professionals are proud to be part of. So this is what I mean with the sales value increase. So the first two boxes are kind of like the store communication offer. So if you buy a lot of data list like that what you can see in IKEA, it costs about SEK100 a section. And then you add a little bit dividers and some communication and so on. So you maybe increase the SEK1000. This is all store communication. And then you move on the ladder where you can see that then you have the merchandising solutions that are category solutions and you increase the value per each section. So this is what we are doing. So we are growing continuing to grow the base misters and offering that to all our customers, and we are very efficient there. I'm very proud of our Sundsvall factory. They are world's best in producing the data strip. I think there's one person who is operating 3 different production lines. It's very automated, and we produce 1 lap around the world data strip every year. But we need to move, create new categories and also create the growth solutions which we are doing today. And the key areas where we're going to continue innovating is on the fresh solutions, on the automation, on the packaging free. But also, we started a project with the Royal School of Technology here in Stockholm 2 years ago to develop future material for retail. So we have developed, together with Corteho, a bioplastic material and also a recycled material that works together with a food product because there are, like, real important criteria there. So for instance, the beans that you see there with the popcorn, those beans are produced in recycled plastic. So today, 37% of our portfolio is available in either bioplastic or recycled material, and we are very proud of that. And we will continue our collaboration with Coteho to develop future materials. So when the retailers will come to us and say, look, we are not interested in plastic. Want you to have environmentally friendly materials. We will have that. And we will have all that also in Sundsvall for our data strip that's already in place. And this was the marketing acceleration. So these are the number of LinkedIn followers that we have built in last 2 years, plus 86%. And we are posting articles and our commercial organization is posting everywhere around the world and connecting and finding new customers online. Finally, it's important for us to be able to be easy to do business with. So I told you about the customized assortment and the complexity there. So many times, our customers don't really know what product they ordered because the people are changing in the retail stores all the time. So there is no statistics. So what we are doing is that we are building online order sites that are customer specific for our customers. So for instance, to Intermacher, we just launched a site where they have all our assortment that fits into their stores. It's available online. They can push the order, and they know exactly that it will fit, and we get the order online. Or we have like this kind of sales portals that when the sales personnel enter the customer, they have already online the assortment that fits the customer, and it will be much, much easier to do business with us. And this will continue developing. It's a huge project for us, and we really believe that this will enable us to win in the marketplace. So how are we doing? These are our financial results. So in the last year, we increased the EBITDA by 74%, and we increased with the same amount, the same cash conversion the year and then the year before 40%. And on a rolling 12 month basis, our EBIT percentage is now 8%, and we will continue to improve that, Jonas. All right. So capturing the future growth, we want to win with the biggest retailers and the brands. We know that the retailer is very local. So in each of the countries, there is going to be a big there is a big retailer, and we want to work with them. We will expand the geographical reach in the white spots that you saw on the map. We will cover more categories to be more relevant. So we will tell the Lidl, a global buyer, that he doesn't need to deal with 74 suppliers. It's enough that they deal with us and a couple of more. And we want to become the number one sustainable merchandising solution provider. And we already are the best because we know that our competition is nowhere near there where we are. So our vision is to be the preferred partner for our customers. And our strategic choices, as I said, is to be leaders on the innovation, to be easy to do business with, to have best in class cost efficiency, building scale in our production and logistics and then finally, develop the capabilities to drive growth in order to expand both to deliver the organic growth and also combined with the acquisitions in the white spots that we currently have because there are lots of companies that have been in the different markets for a very, very long time and that is much more efficient way for us to deliver growth to do the acquisitions there. So thank you.

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