Welcome, everybody. Good afternoon, and welcome to you and also to you who are linked to us by phone to SKF's presentation of its full year result, 2013. And for the next hour, there will be information and also an opportunity to give questions, first from you who are here on the floor, and then for those who are linked by phone. I would like to present those of us from SKF, our President and CEO, Tom Johnstone, our Executive Vice President and CFO, Henrik Lange, and Inga-Lill Östman, our Senior Vice President of Group Communication, and myself, Marita Björk, Head of Investor Relations. So please, the floor is yours.
Thank you. Thank you very, very much, Marita, and good afternoon, everybody, either here or on the telephone, or good morning for those calling in from the States. It's good to have a chance to say a few words about what's happening within the SKF Group just now, and especially what's happened in the fourth quarter in 2013, and also how we see the outlook for 2014. So let me take the opportunity to go through some slides for you as to see how we see how things are developing. 2013 actually was a very good year for the SKF Group. A lot of activities underway. We made two important acquisitions with BVI at the start of last year, and Kaydon, as you know, which we completed in the fourth quarter.
We divested our metallics rod business during the year. We opened a number of new operations, lubrication centers, gear box manufacturing centers, and in total, 6 new SKF solution factories, bringing our total worldwide to 27. And they're really becoming a very important way in how we can better support our customers by being able to do reconditioning, remanufacturing, monitoring of equipment, and also customization and small lot production closer to our customers. And we'll continue to build on our solution factories going forward. Probably something between 6 and 9 new ones this year, up to a total somewhere close to 50 within the next 3 years, to give us a presence much, much closer to our, to our customers. One of the key drivers of SKF is how can we save money for our customers?
What can we do to help them reduce their cost of operation? And last year, our RSS team, Regional Sales and Service team, recorded SEK 4 billion in savings for our customers. That is where our customers signed off, that we, SKF, had saved them 4 billion Swedish krona. To put that in perspective, that's about 16% of the turnover of that business area, in total. So that shows a major way of how we are able to save money, for our customers and reduce their costs and improve their efficiency there. And now we're up to over SEK 27 billion, in total.
One of the key elements of how we go to market is our distributors, and as you know, we have the SKF Distributor College, and we're proud that last year, right at the end of last year, we had our 200,000th certificate by this gentleman here in, from the Shandong Province, in China. And we've really got, we've got about 42 courses now in our SKF Distributor College, and they're available in 21 different languages, for our, for our distributors. So it's really developing well. Environment, environmental care, what we can do better to support the environment is important. As you know, we have a policy in SKF to build our facilities to LEED standards. Two of our new, newest factories in Ahmedabad and Dalian in China, received the LEED certificate.
We are in the FTSE4Good index for the 13th year and the Dow Jones for the 14th year in succession, which I think is a major achievement and shows that the activities we've got in this area are really working in giving us a benefit. A lot of new orders during the year. In the fourth quarter alone, we were very successful at getting new orders for bearings for the new Volvo vehicle that's made in China. We announced recently the new Hyundai order for MacPherson strut bearing, SEK 370 million. Some very interesting technology projects for the Lee Tunnel project for London is important. Strengthening our business within the railway business in China has been very important for us.
If you go back a few years, we were predominantly a supplier to the freight car industry, and we've been working actively to build our business outside the freight car industry with high-speed rail, but with normal locomotives, with metro, et cetera. Two good orders, there, during the year, building on orders we've taken previously, there. And also, we've gained some important lubrication business in Peru, which is important for us also, because as you know, I've talked a lot about the service business in Latin America being an important element of our growth down there, and it continues that way. These are some orders for the fourth quarter, and they build on lots of orders, which I won't go through, and you'll see in the presentation, that we've taken, during the year.
I would say last year was a very successful year for us in gaining new orders, in gaining new business from our customers. In addition, we focused a lot to continue to invest in our research and development. Research and development, we brought up to 2.9% of sales last year from 2.5% of sales. That's 0.4 impact on our margin, but we're seeing the benefit of that with more and more products coming to the market. We recorded 468 first-time patents last year. That's more than 10% up on the previous year. It means we're fairly close to two patents every working day that we're recording, which I think is a major step forward that we're doing, and shows that the investments we're making in innovation is bringing new products to the market.
We'll see the benefit of that in the years ahead in terms of new sales and our business. There was many new important ones, and one of the ones we put right in the middle, SKF Insight, where we've developed a self-powered wireless sensor to help it become the, not only the heart of the machine, but the brain of the machine, and to use that with our software, and test and the work we've got underway in the key industries we've focused on for SKF Insight is, are developing very, very well in total... Now let's move on a little bit to some of the figures. Of course, with the one-offs that we took in the fourth quarter, it's, it may be a little difficult to get your arms around the figures.
So I will walk you through, in this page, the growth and how we saw the growth development for the fourth quarter. Then I'll go for the full year, but then I'll go in and try to do a reconciliation of profitability so we can see it. If you look at growth in total, our volume was up 7% in the quarter, in total for us. That's a good positive element, is that it's the largest single quarterly growth we've had since the third quarter, 2011. So it's a good development there, that we saw there. And if you look at that, though, the mix was very, very interesting. In the automotive was even stronger than we expected going into the quarter.
So even though the overall volume was not dramatically different, automotive was much stronger and the aftermarket business, and industrial, our SI was stronger, and the aftermarket parts of the business were not so strong. And I can talk about that a little bit later on, when I look at the geographical map and try to explain that a little bit more. You see Asia, strong, strong growth in Asia, 15%, and a very strong growth we had in China in the fourth quarter. And again, I'll come back to that a little bit later when I look at the geographical coverage. But even Europe, North America, so all regions of the world in growth for us, which I think is a very positive development there.
If you look at the full year, you can see that Latin America held up 10%, and Asia moved back into growth from being negative after three quarters, but Europe and North America are still just a little bit down in total. For the full year, you can see our growth or our development of our business was driven by the automotive, which grew, whereas both regional sales and service and strategic industries were down a little bit. Over the full year, our sales volume was relatively unchanged, and our manufacturing was relatively unchanged year on year.
So when you then look back up and see, look back up to the profit, you can see that if I exclude all the one-offs for the year, our operating margin was fairly similar in 2013, 11.9% versus 12% in 2012. And that was despite the heavy currency headwind that we faced in our business, which I think was an important one. The increased spend in research and development and, of course, the increased spend in our SAP systems. That was offset by our cost reduction programs and our purchasing activities that we've put into the market there. So I think we were able to offset the headwinds in a good way during the year in total, if I exclude all the one-offs there in total.
Now let's try to reconcile the profit from what was reported back to let's say the operational reality. Take the fourth quarter, minus SEK 1.547 billion, which is a 9.4% operating margin negative. We then took the provision, as you know, which we announced in the twentieth of December for the European Commission, our expected fine there of SEK 3 billion. Kaydon, we had one-off costs of SEK 260 million. That was roughly about SEK 60 million for the acquisition costs, legal fees, other fees, et cetera, to do it, and SEK 200 million, where we wrote up the inventory, which you've got to do under IFRS. But we took the full amount in the fourth quarter, which means that Kaydon will operate from first of January, clean.
We don't have any things to do with inventory changes in the first quarter or more. So Kaydon will operate clean now. We decided we could do that, and we decided to take all that to get it away in the fourth quarter. We have some other one-off costs, of which roughly SEK 50 million was related to a restructuring program, and others, the majority of the rest was related to a fire which we had in one of our factories. That's sort of our cost for the fire. The cost was much, much greater than our aerospace plant fire. So a whopping SEK 3.35 billion one-off cost in the fourth quarter.
If you clean that out, then it means the operating profit was around 1.8 billion SEK for the group, which means an operating margin of around 11%. And again, for the full year, you clean the same amount out, because before we also had already SEK 525 million SEK one-off cost. You get a full year cost of SEK 3.875 billion, which means a profit of SEK 7.568 billion clean, when you do the figures there. So it's important to try and reconcile when you have such of these, these, these numbers there.
The operating profit was from my viewpoint, if you look at it, what we said when we went into the fourth quarter, is we expected the fourth quarter to be somewhat similar to the third quarter, which was a clean operating profit of around SEK 2 billion, if you remember, when you take away the one-offs there. So what's the difference between the two? First of all, we've got the positive from Kaydon, which is in there, which is good. But roughly, if you say roughly of the difference is about SEK 300 million. And if you look at that SEK 300 million difference, what was it? Roughly one third of that was due to us reducing inventory in our manufacturing. Roughly one third was due to the mix, which I'll talk about a little bit more in a second or two.
Roughly one third was due to the difference in timing between ERP and IRP, which you will see there with it. Okay. And we also, of course, bringing Kaydon in and taking the one-off for the expected EU fine, impacts a lot of the other ratios. So if you take inventories, for example, we have a reported 21.5% of inventories, but if we clean out for Kaydon, then it's 20.9%. And why do we need to clean that out? It's because we have the full inventories in for Kaydon, but we only have 2.5 months of sales, so we take that away to clean it out there. Similarly, when you look at net working capital, it's 30.6% for the group.
Net working capital being, as you know, inventories plus accounts receivables minus accounts payable, is 30.6 when you clean it for Kaydon. If you clean for the EC, the European Union provision, the SEK 3 billion, you can see it has quite an impact on our ROCE, return on equity gearing, et cetera, et cetera. I've got to say also, Kaydon had an impact on that because again, because we have the assets in, but not the full sales and profit of roughly 1.5 percentage points. So clean, that was roughly close to 15%, the return on capital employed. Organic sales growth. You can see in this that we've gone from, as I say, way back in the third quarter when we had our last stronger growth of 2011.
We've gone through, in total, 5 quarters declining, started a little bit of growth in the third quarter this year, and then a little bit more growth in the fourth quarter, this year in total. If I look geographically, and let's talk a little bit about what's happened, in the world. In Asia Pacific, we had very strong growth in China. Very, very strong growth, in China in the fourth quarter, driven by 3 specific businesses. Generally, our business was okay, but 3 specific businesses. Renewable energy, we saw a good recovery. Remember, in renewable energy, we'd gone through a couple of years of very low business in China, and so there was some sort, restatement because there'd been a lot of destocking taking place there.
So we had some recovery in that, partly due to the end of destocking and partly due to the market. We had railway, very strong railway business. Again, we had the freight car tender, which came out in the September timeframe last year, and we delivered that in the fourth quarter there. And that was a slightly larger tender than you normally get in the second half of the year, because if you remember, there wasn't a tender in the first half of the year. So we had double that benefit there, and that made very strong growth in our railway business in Asia. And the third one was automotive. The car business, particularly in China, was very, very, very strong. The general market was okay for us, but these three areas really pushed, pulled our business up.
Elsewhere in Asia, South Korea was good for us. Indonesia was good, two-wheelers, of course, driving that. Thailand's held up very, very well, despite all the things happening there. And India was back into slight growth for us. Car business down in India, truck business down in India, but the general industry, just a little bit better for us in India. But again, remember, India's been down for some time, so it's not great growth, it's just a little bit more positive growth. Let's move to Latin America. In Latin America, automotive in Brazil, very big drop-off in our business there. Really, the car business, the truck business was not good for us in Brazil. Trucks is small for us.
We more supply that through the European market, but the car business was a big, big decline for us down there in Brazil. But other areas of the service business are, and what with industrial distribution in Latin America, as we've had in previous quarters, continued pretty well there. You'll see in the outlook, well, we have some concerns for Latin America going forward because of some of the things that's happened recently, and I can come back to that. In North America, a very good car business. We grew ahead of the marketplace in North America in the fourth quarter. We also saw an improving actual renewable energy business, even though it's down year-on-year, as we went through the year.
Farming forestry was down for us in the fourth quarter in total, but also mining and construction was down in that timeframe. Distribution, relatively unchanged in total in North America. So very much an automotive-driven and specific car-driven growth there. Into the European market, exceptionally strong business for trucks in the fourth quarter. And the truck business continued all the way through the quarter. Whereas we thought there would be some ease off before the year, it continued all the way through the quarter. Good, good growth in that area. We had good growth to the car industry, a bit ahead of production growth there in total. So that was a good development for us. We still don't see the full traction in some of the other.
Aerospace was good for us in total in the European market, as well. Yep, and then I don't need to talk too much about the full year there. If you look at the components and net sales, you can see in total that we've moved back into volume growth, as I said, 7.1% in the fourth quarter. Price mix was somewhat negative. We had a positive price mix in each of the three business areas, and we expected it to be slightly positive this quarter, and it wasn't. And why was that? Because if I take each of the three businesses, automotive. Automotive was, had a good growth, as you saw, but the automotive growth was driven much more by the OEM business, by the car business, and by the heavy truck business.
The vehicle service market actually dropped in ratio as a total percentage of the automotive sales in the fourth quarter. That had an impact, that had a negative mix impact in the automotive. And you see that if you look at their operating margin. They had a negative impact by the fact that it was OEM business that was doing well, not the vehicle service market in the fourth quarter. If I also look at the RSS business there in total, the industrial distribution didn't have as strong a growth as we would like to have seen, especially in the European market and in the North American market in total.
Then for the strategic industries, yes, they had strong growth driven a lot by their Asian business, which was very, very strong for them there. And of course, that there had a little impact from a mix viewpoint in them in total. So that gave us a negative price mix. Maybe this is a good point to tell you that we have already, one week ago, announced price increases in the SKF Group. We have put in price increases, announced them in Europe, North America, and in parts of Asia. And of course, of around 3% to our list prices. And that's the first step. We will see that coming in end of the first quarter, let's say second quarter, you'll start to see the impact as we go through the second quarter.
So the price increases have been announced. By us. In addition, we are taking steps in markets like Latin America because of what's happening in currency down there, to move the prices on a much more regular basis. And by that, we're not talking months, we're talking weeks and much more frequently. You have to do that with what's happening in the currency down there. So growth in local currency, yeah, slightly positive for the year in total, but we must remember that's driven by, by structure, not by, by volume, because the volume is down 0.7% there.
Operating profit, as reported, was down a lot in the fourth quarter, but again, as I've shown earlier, when you clean it away for the one-offs, we're around SEK 1.8 billion in operating profit, 11% margin for the full year, 11.9% clean margin versus 12% there. And then we're going to look at the three business areas operating margins. Let me start from the bottom. Automotive. Automotive had a drop-off in the fourth quarter. They had something like, if I did my calculation right, 42% or so of their profit in the second half of the year, 50 in the first half. And I thought it would be around about 55, 45, which was what I gave, I told you earlier, I thought it should be.
So it was a little bit lower in the fourth quarter, and that was due to the fact that in the fourth quarter, we took in fixed currencies around 400 million SEK out of inventory in the group. Roughly half of that is finished goods, and about 40% of the total was in the automotive. So they had an impact of that in their manufacturing there, and they had also an impact due to the mix, as I mentioned earlier, with trucks and cars being somewhat better, and the VSM being somewhat worse. And that's what impacted them in the fourth quarter. Underlying, the operation is still developing in the right way. And I've got to say, we've done a good step up in their operating margin to 4.3% for the full year clean. Strategic industries, again, impacted.
They had the inventory impact as well on them, because if we took roughly 40% of the inventory out, of the SEK 400 million out in automotive, the other 60% was predominantly within the Strategic Industries. So we broke our production fairly hard at the end of the year in Strategic Industries. In addition, they take, as you know, 60% of the currency hit, which was a little bit harder, higher, sorry, than we thought it would be. And of course, they were affected by, as I mentioned earlier, the mix of the business. Regional Sales and Service actually held up very well due to the good service business they had. Very good service business, good Latin American business, that they had in total.
If I look at inventories, I mentioned that we took SEK 400 million out, so actually, we came down to 20.9%, not the 21.5% that's reported, but it's still up 1 percentage point year on year. Of that 1 percentage point up year on year, roughly 0.3 is volume, 0.7 is currency. Roughly in that area there when we bring it back there. And the 0.3 in volume is raw material components that we still have. As you remember, in both the second and third quarter, we put raw material components in. We still have some of them to work our way through in total.
The return on capital employed, as I mentioned, 15.1% when I adjust for all the elements there, which brings me into our new targets there. I've been talking to you now for about 6-9 months to say, return on capital employed is something that we're going to need to address with the group, because we set the target of 27% way back in 2010, October 2010. That was before we made, I'd say, 3 big acquisitions for 3 important acquisitions for us, which was or 4, I should say, which was Lincoln at the end of 2010, Kaydon, of course, recently, BVI and General Bearings.
What that's done is taking goodwill and intangibles in the SKF Group's balance sheet from around 3.5, 3.4 billion SEK way back in 2010, before we made the acquisition, around 19 billion SEK just now. When we factor that in to a return on capital employed, even with a 15% operating margin and even growing our business around 8%, then the return on capital employed target, we cannot hit 27% carrying that goodwill and intangibles. So we restated that to 20% as a target for us as total. We think that still is a good, it's still an aggressive target, it's still a good return on capital employed return on capital employed target there, and it's more realistic with the shape of the business we now have.
If not, I would spend the next 3 years keeping talking, or hopefully the next 3 years, keeping talking to you about the fact that we can't hit the target because of the goodwill and intangibles. So we felt it was right to address the target at this point in time. And then we've introduced this new target, net working capital of sales, 27%. If I look at that, here, we showed these figures at the Capital Market Day in September, how we've been very good at bringing down our plant and property as a percent of sales over a long period of time, 8 percentage points down over the last 11 years. Whereas, basically, if we're kind, we could say our net working capital, which is inventories plus accounts receivables minus account payables, has stayed relatively flat if we're kind, at 29%.
Actually, as I said, it went up to 30.6%, although some of that was currency impacted there. We need to bring that down. The net working capital is high in focus. So we have three elements we're working on. One, from an inventory viewpoint, getting better flexibility in our manufacturing, which also means better input from our sub-customers and better support from our suppliers. We have specific programs in place to do that. Secondly, we are working on our accounts receivables. We have specific programs that we're working on in accounts receivable. We can come back to, even more so we can improve the collection on that, and there's activities underway under Henrik's drive. And thirdly, to accounts payable. With the new purchasing organization we have in place, we have opportunities.
to do more in that area, and that's a high focus point for us there. So we want to set that new target as being 27% net working capital to sales as being the target we will drive, and we expect to achieve that in the maximum 3 to 4 years, maximum timeframe. That should release constant terms and conditions, some SEK 3 billion worth of cash to the SKF Group over the time in the next 3 to 4 years. Cash flow, I think we've covered it.
We can say very clearly that we had a positive cash flow, two, four ones dropped out here of about 1.177 billion SEK in cash flow in the fourth quarter, excluding the acquisition of Kaydon and some 3.1, 3.2 billion over the full year, in, in total. Debt structure. Moving on to debt structure. We took in the... Just after the Kaydon acquisition, we took a, a EUR 750 million bond, basically. A good rate, 2.37%, which was a good work by Henrik and the team to do that there. And we've got a fairly good, I think, debt structure.
Now, we've EUR 100 million to pay this year, but then we have a fairly good debt structure going forward for the SKF Group. And remember also, that in addition, we have three available credit facilities of EUR 500 million with a group of banks, and then EUR 3 billion with one bank and EUR 3 billion with another bank that we can call on. So we have good, I think, good debt structure and good financing possibilities in total. I think I've covered most issues in the, the results there as well. Then let's go into the demand outlook there, because I think that's the one that's important to look at going forward. We expect to see Europe improve a little bit.
If I can talk about countries in Europe that we've seen so far doing well for us, Sweden has been good for us. Germany has been moving okay for us in total. Spain, little signs of up, and Italy, little signs of up. France, weak for us, still going down. In East Europe, a good development in Russia, Poland, Czech Republic, good development into Turkey, which is in that area there. And we expect it to be just a little bit better sequentially in the European market for us, and that will mean it up a little bit year-on-year. We expect a little bit better in the regional sales and service business and a little bit better in the automotive. Automotive will be driven by car, where car production will be up a bit, driven by the vehicle service market. Why?
Because they then take business in, before the summer, in total, there. So a little bit up there. Asia Pacific, we keep flat from the level. We've had a good development. You saw the strong growth in the fourth quarter. We keep it flat for a couple of reasons. One is because the railway contract we had in China, which was an important business, was in the fourth quarter, and we don't have that in the first quarter. The likelihood is that new freight contract will not come out, or tender will not come out, at least until the end of the first quarter, or at least not impact us if one comes in the first half of the year until the second quarter.
Linked to that also, renewable energy, we felt there was a little bit of a catch-up from the destocking that was taking place, so we don't expect that to continue with the same rate. And also, the Chinese New Year is becoming an increasingly important impact on the Chinese business. What went from being, some years ago, being one week, has sped out to being two weeks and more like two and a half weeks, in terms of impact there. So we think that means it will still have, sequentially, somewhat lower, a somewhat level business. We won't see the same, momentum, but we will see good growth in Asia year-on-year, because the level we're at now is, at a higher level than where we were one year ago. North America, a little bit better. Car business will be better for us.
Vehicle Service Market will be better for us, but we also see some signs of a general, little bit better industrial. In addition, if you look at it, there's been a lot of destocking taking place. I think one big customer commented that yesterday of significant destocking that they have made there. And even if they don't grow, once you get to the end of the destocking, demand will go up a little bit in that area as well. Latin America, we are a little bit more concerned with. We've seen a very weak automotive business in the fourth quarter. We think it will be weak also in the first quarter, both in cars and trucks. We also think what's happening now with currencies in Argentina, and that puts some more uncertainty in that area.
So we expect that the Latin America is one of the faster developing economies that we think will have a little bit of a challenge in the first quarter. So we expect that to be somewhat weaker for us. In total, though, we expect to be up a little bit sequentially and up just a little bit year-on-year. Within the three business areas, it's gonna be regional sales and service and automotive that's going to be up a little bit better for us in total there and automotive up a bit more year-on-year.
You may say, "With trucks being off, why do you see that?" And that's because of the good business we've got in the car side and the vehicle service market driving, which can offset the truck business going down. And when I look then from it, from an industry viewpoint, then we expect sequentially positive, a little bit more positive in industrial distribution. And one element of that, I must say, and which helps RSS, is the fact that we have price increases coming in at the end of the first quarter, beginning of the second quarter. There is a possibility that you could get some pre-buy before the price increases, so that should have a little bit there for us.
Car and light vehicles, production should be up, vehicle service market, and as I said, the general industry a little bit better. The bigger industries, energy, heavy aerospace, et cetera, relatively unchanged. Railway down due to the tender issue in Asia, and trucks, we expect to be down, lower or significantly lower, we expect, first quarter versus fourth quarter due to the pre-buy we saw in the European market and also due to the fact the Indian economy isn't as strong from a truck business. And as you know, we don't have a big North American truck business. The financial guidance around 30% for tax level. Financial net SEK 250, a little bit higher than we guided before. Part of that is related also to what we see in Latin America there.
Currency will still be a headwind after SEK 660 million headwind in 2013, another SEK 90 million this year. We'll keep patent property under SEK 90 million in the first quarter, SEK 300 million in the full year. We'll keep patent property relatively in line with depreciation in total. Based on our outlook and based on how the group or the board sees the performance of the group just now, the board proposes, will propose to the shareholders meeting end of March, keep the dividend unchanged at SEK 5.50. However, I can comment that the board also decided today as well, that they will not ask for the mandate to repurchase shares. We previously had a mandate to repurchase shares. We will not ask for a mandate to repurchase shares.
The board still sees that as an important tool for managing the balance sheet, but at this moment in time, after the Kaydon acquisition, with the financial position we have just now, to be quite honest, we would not use that in the next couple of years. So therefore, it's not worth having it. We're not going to use it there. But I think going forward, that is something that's important for the board, but not, but not, not at this stage. Priorities for us. Our priorities don't change, and I won't spend time going through them. I spent time on these at the capital market day. It's about sustainable, profitable growth and the elements we've got to drive that and to utilize our technology platform, to utilize innovation, tech and brand, and acquisitions to drive that.
It's about investments and innovation. I've talked a lot about how we're stepping up the number of solution factories. We're stepping up our spend in research and development. We announced just a couple of weeks ago that we will establish two new technical centers for the group, one in Sweden and one in Holland, bringing in about 150 new people there. And of course, we have the IT systems. We will still focus on cost reduction. I'll come back to that in a second, right now. And of course, capital efficiency with the addition of the new working capital target. These are our priorities that we'll keep driving there. Cost reduction program. You know the program we launched fourth quarter 2012, which had three big elements to it. Manufacturing, restructuring, and footprint, overhead costs in our operations, and thirdly, purchasing.
And if you remember, it was SEK 1.5 billion for the first two, SEK 1.5 billion for the purchasing, in total, with a target that by the end of 2015, we should be at a SEK 3 billion saving rate, which we will get in 2016. However, as we've talked many times, we won't keep all of that, but we expect to keep the majority, more than half of that there in total. How does it look in total with what we've done? Well, let me talk about the restructuring part in total. So far for the restructuring, we... Of the money we would take, we've taken out SEK 700 million, with a full year saving, when fully implemented, of SEK 375 million, affecting around 1,400 people.
Last year alone, we announced about SEK 500 million in one-off costs, with SEK 225 million full year savings and 875 people. What did we achieve last year? So in our results, what was actually booked in our results? Roughly around SEK 200 million from the restructuring came into our results. So not so far away from what we announced last year, roughly around 200. That was SEK 75 million a quarter in this third and fourth quarters, and around 50 from the first two quarters. A little bit lower in the first quarter, a little bit in the second quarter, so around 200. In addition, we had our savings on S&A from the overhead of around SEK 200 million, which we got, and we got most of that in the first three quarters, or let's say 50 per quarter in the first three quarters.
We got the saving in the fourth quarter, but we've added some other costs, and we said we wouldn't keep all of it. So something there. So we've got, if you look at that, roughly 200 from the restructuring program, if I go back one slide from the first one, from the optimization administration there, roughly around the, the 200 there. And in purchasing as well, we've made a few hundred million SEK in saving in purchasing already. So if you look at the total 3 billion SEK, we are roughly 25%-30% along the way of getting that into SKF, roughly in that area, already in our figures there. We expect a somewhat similar rate during this year, there, and also then again during 2015.
So with that, as a summary, how can I say the fourth quarter? Clearly, from a volume viewpoint, it was broadly in line with what we expected. It was good. As I said earlier, the mix was negative for us. The mix wasn't what we were looking for in total, but broadly in line with us there. I think behind that, as a backdrop, and the steps that we took to reduce inventory in our operations, we delivered a solid result in the fourth quarter. Of course, though, a lot influenced by all these one-offs of SEK 3.3 billion in the fourth quarter.
Going forward, outlook sequentially a little bit better, and year on year, a little bit better for the group in total, driven by Europe and North America in a sequential viewpoint. With that, Marita, back to you and open to questions.
Thank you very much, Tom. Now it's time for the Q&A session, and we have around 20 minutes. 10 minutes first for you who are here on the floor. The first question?
Hi, it's Guillermo Peigneux from UBS. I have three questions, but I'll probably make them one by one, let others ask questions. But regarding the outlook statement for year-over-year growth, I'm still a bit surprised that it's only 1+ and not 2+, given the fact that first quarter 2020 was super weak. So can you elaborate on what you see there-
Yeah.
And why it's not a little bit bigger?
Yeah, it's a good question there with the... It's a judgment call in the ratios of the gaps between the bands we put between the one plus and the two pluses and the one arrow, et cetera, there. I think it's at the upper end of the one plus.
... And then second question is regarding this one third, one third, one third.
Yeah.
How much of this actually you see carrying forward?
Mm-hmm.
as a headwind? And do you feel that in one year into the restructuring savings program, it feels that the margins have not actually really moved anywhere.
Mm.
I'm just wondering whether you feel that you're a bit far away from reaching just 15% EBIT margin target, and you need to actually put on additional measures to actually get there?
I mean, you've got to look at, though, I mean, we held the margin round about, a clean margin, round about 12%, 11.9% last year, despite the fact that we wiped roughly 1.5%. So we actually, starting point was 10.5, if you take away currency and what we invested in R&D. So the cost saving programs, programs kicked in for us. Of course, we've got a little bit of currency headwind of about 0.5%, 0.4% this year. R&D will not step up significantly from the levels that we've got. A little bit, but not significantly there. And so we should get more benefit of the saving programs through. So I think we're in the right, right direction there, really.
When it comes to how much we'll carry over of the three ones, the one that's the more difficult to answer is the IRP, ERP. That famous figure that's always between the internal package and the external package, and we're looking at that there. I think the inventory reduction, well, that will not carry over, because we don't expect in the first quarter to see any big change in the inventory in the SKF Group. The mix will still be a little bit of a headwind for us year-on-year, a little bit in the first quarter. The only thing that could offset that, and I say could, is the fact that with the price increases announced, potential pre-buy could change that a little bit. Yeah.
Thank you.
Yeah. Other questions from here? Yeah.
Andreas Koski from Nordea. I have a question regarding the gross margin.
Yeah.
It dropped by almost 300 basis points quarter-over-quarter.
Okay.
I suppose the provision due to the European Commission provision was not in the gross margin.
Was not in the gross margin.
Can you please elaborate what happened with the gross margin quarter-on-quarter?
Yeah, it was, it was currency mix and the, and the breaking of manufacturing that hit in the quarter.
How much did the manufacturing impact the gross margin?
As I said, roughly one, roughly one third of the 300 difference was out in there, so.
Thank you.
Sure. Maybe take some from the phone.
Yeah. If there are no more questions here, we go to take questions from the phone.
Our first question comes from Mr. Andre Kukhnin from Credit Suisse. Please, go ahead.
Yes, Andre Kukhnin from Credit Suisse. Thank you for taking my questions. Firstly, on the 3% price increase, what sort of materialization ratio should we put on that, in terms of actually coming through to your numbers? And then secondly, just to follow up on the sequential margin development, and maybe looking at the clean EBIT level, the 200 bips decline. In terms of mix, it doesn't sound, it doesn't look like it's got worse sequentially. It's still negative point two, as you had in the Q3 and a bit better, I think, than Q2. So what got worse in the mix sequentially, and how could that be such a big impact?
And then just in terms of the inventory reduction, I think there was about SEK 360, if we look from Q3 to Q4, adjusting for SEK 800 of Kaydon. But am I right to think that Kaydon inventory was written down by SEK 200, as well in Q4, which was taken as one-off? Or am I getting the wrong end of the stick on that?
If I start at the end there, SEK 200 million was written down on inventory for Kaydon. That was taken when we did the write-up there. The actual in the fixed currencies, the inventory went down about SEK 400 million in fixed currencies there. If I go back to the other two questions, the first question of the 3%, roughly one third, we expect to come through, roughly in that area of that. And we'll see that as we go through the second quarter there in total. Then when you go to mix between the... The 0.2 that you get there is a mix which compares the mix of Q4 this year with Q4 last year. It does not compare the mix of Q4 this year with Q3 this year there.
So the mix that was a little bit, negative for us was within the automotive area and was regionally as well, with a lot more OEM, industrial OEM business, much more in the Asian region. So when I look at the mix within the three business areas, that was a negative impact. So they did have a negative impact on us, the mix between the two quarters. But the other thing that impacted us between the two quarters was manufacturing. The manufacturing was slightly lower in the fourth quarter versus the third quarter, and that's what hit through. The combination of these two, plus the fact, as I mentioned there, the ERP, IRP difference. If you go back to the third quarter, from my memory, went something like +100 in the third quarter.
And I think in the addition to the IRP reporting, which gave us the ERP result, in the fourth quarter, I think it was something like minus 30 or so, there. So there's, there's about 130 there. So I'd say roughly one third for each of these three points.
Got it. Thank you very much.
You're welcome.
Next question, please.
Our next question comes from Mr. Marcus Almerud, from Morgan Stanley. Please go ahead.
My first question is on industrial demand in Europe. If you could break it down, give us maybe a little bit more of a feel in which areas in Europe are you seeing improvement in end markets? And also, what was the industrial markets in line with what you thought coming into the quarter, or did it surprise you? Secondly, on the 10% organic growth in automotive, how much of that was down to trucks?
... and secondly, thirdly, if you could talk a little bit about the outlook for the, for the aftermarket, and if, if you see that mix changing going into next year? Thank you.
Yeah, if I start with the last one, the outlook for the aftermarket, I think, we see both VSM and industrial distribution going a little bit better sequentially for us. So we see that that should improve a little bit as we go through at least the first part of this year, and definitely in the first quarter there. So that, that's moving a little bit in our favor there. In terms of the truck growth, the truck business for us is predominantly a European business and an Indian business, to put it, that's the majority of the truck business. Some of the European business goes down to Brazil, but it's mainly European and India for us.
In total, our growth in the truck business was in the European market roughly double what we saw for the automotive in total. That really was very, very strong indeed. Of course, that has a negative mix impact when you look at the automotive business in total. Then if I look at the European market from an industrial viewpoint, the drives business was okay in Europe for us in total. Renewable energy actually was down a lot year-on-year, but sequentially was a little bit better for us. Railway, I think, was a little bit better for us in total, but we still didn't see a great development in the heavy industry in the European market, from my memory.
Okay. Thank you.
Welcome.
Thank you, Marcus. The next question, please. Our next question comes from Erik Golrang from ABG Sundal Collier. Please, go ahead.
Thank you. I have two questions. The first one, Tom, is on the vehicle service market business and the cyclicality of that. It seems like there's a few micro cycles on its own there within each business cycle. What's the driver behind that?
Yeah.
Yeah, you may guess out there.
Okay, I'll tell you, the vehicle service market. Vehicle service market is especially in the Northern Hemisphere, by that I mean Europe and North America, is a very, is a more seasonal business. It's not as seasonal as, for example, outdoor goods or anything like that. But what you normally see is that the first, second and into the third quarter are the strongest quarters. Then there's an easing off in the fourth quarter, normally, and then it goes back into the first, second and third. And that's due to the, the replacement rate and also the use of the, when people repair their cars, et cetera, and the usage of the cars.
Okay, thank you. Then the second question, you talked about some restocking, if I understood you correctly, in Q4, that could swing into Q1. And then just a clarification on an earlier question. Did you say that it was sort of a close call between slightly higher demand year-on-year and higher demand year-on-year? Thank you.
I said that it would be... No, it was slightly higher, clear, but it was at the upper end of a slightly higher band, but it was slightly higher. There was no call between slightly or higher. It was slightly higher, but it was at the upper end of slightly higher, to be clear on that. With it, the first one was?
You talked about restocking at the moment in the fourth quarter.
Not restocking. End of destocking.
Okay.
We saw some end of destocking, and I think that's an important difference, is that when customers have been doing significant destocking and then start to buy again, to us, it doesn't mean to say they're restocking. It can be just that they've ended the destocking. And if you take that, as I mentioned, that I heard a lot of talks on the, one of the big construction equipment companies yesterday, who talked about taking a huge amount of inventory out. At some point in time, you don't take the inventory out, you just have to rebuy in line with your demand. Yeah, so that means you end destocking, but it doesn't mean to say you restock.
In a specific area?
Yeah. The one I mentioned specifically was in the renewable energy area in Asia. That was the one where we saw it primarily, and that's what boosted our sales a little bit in the renewable energy in China.
Thank you.
Thank you.
Thank you. Next question, please. Our next question comes from Mr. Peder Fröléen from Handelsbanken Capital Markets . Please, go ahead.
Yes, thank you. Good afternoon. Tom, you mentioned all the savings on purchasing in addition to the 400 sort of other savings. A couple of hundred million, was that correct? So in total, we're talking about SEK 600 million. Is that a fair assumption to begin with?
Yeah, I said a few hundred million SEK, and I said in total, if you take the total, it's something around 25%-30% of the target of the SEK 3 billion. So you're a little bit more than that, Peter.
Perfect. And then you mentioned the other non-recurring of SEK 90 million. Fire, where was that?
It was in one of our aerospace plants in France. It was in-
That was in,
Sorry?
Which division is that?
A, SI.
Yeah, and the other 50?
Oh, it was restructuring, some in automotive and some in SI, a little bit in RSS.
Okay, that's fair. And finally, on the outlook, it's sequentially up, and I guess January has given you some confidence in that. So, how was January, if you compare that to the fourth quarter?
January is in line with our outlook.
Okay. And my final question, you answered this a couple of times, but I still, I still can't get my head around this. You talk about SEK 400 million in inventory out in, in-
Yes
... currency in next cadence, but still you talk about sequential inventory impact of around one-third of the SEK 300 million.
Yes.
So for me, the, it sounds like the leverage on the inventory reduction is quite low, which, which,
... I can clarify that, Peter. It wasn't just finished goods that went out, there. If you actually look at it, it was roughly a close to half was finished goods, close to half of the 400 was raw material components. Sorry.
Okay, so 50% leverage on the finished goods. So that, that, that's more like it. Okay, thanks a lot.
Thank you.
Thanks.
Thank you, Peter. Next question, please.
Our next question comes from Mr. Ben Maslen from Bank of America. Please, go ahead.
Yeah, thank you. Hi, Tom. A couple of questions, please. Firstly, just for the guidance for the improvement in demand in the first quarter. Is that an underlying improvement, or have you taken into account the kind of, maybe a pre-buy ahead of the price increases? Or I think there are more working days in the first quarter than last year due to the timing of Easter. Is that part of your math?
Both are.
Uh.
Both are part of the math, absolutely.
Okay. And then, given those tailwinds, you know, on top of the cycle, I mean, would you- can you give us any help with the growth you'd expect? I mean, presumably, given an easy comp, you would still expect, you know, an acceleration in your growth rate through Q1.
That's a good question. I think, let's see how we get through Q1, Ben. I think that what we've tried to do is give you our best call that we can see at the moment. Let's see how we do when we go through it.
Okay, thanks. And then on, just on your market areas for the first quarter, I guess we've got cars and light vehicles up, VSM up, general industrial up, railway softer, and then energy and aerospace flat. It seems like you're still getting the kind of the pickup in the lower margin parts of your business. So will you have negative mix effects running through the first half of 2014 as well? Thank you.
Yeah, yeah. Through the first quarter, we said that if you actually look at the total there, and you look at a year-on-year comparison, you do see a little bit negative in terms of the mix there, because automotive will do a little bit better than the other ones. Having said that, part of the automotive doing better is a vehicle service market. The only thing that could impact that is depending on exactly what type of pre-buy potential little pre-buy you get.
Okay. Okay, and so on, on that, I mean, in previous years, you know, when you've done, you know, price increases like that, has it been, has it been material, like, noticeable in terms of the overall group?
Yeah. It hasn't been that significant, but it has been... There's been something, but it's been a little bit to boost the RSS. But in the total group, it's not a big impact, but it does have an impact on the RSS, which is why we put it in the industrial distribution. And the reason why I'm a little bit more cautious as to what if it will be important or not important, I think there'll be something there. But why I'm a little bit cautious, and the reason being is that within the industrial distribution arena, there is, it's not just about the price anymore, it's about cash and cash flow.
So therefore, if they can't get access to funds to be able to do these things, then they might say: Yeah, okay, there's a price movement of 3%, but, you know, it's better to keep the money in my bank or, or not to borrow money to do that, et cetera, from a financing. So the exact impact may be a little bit different. We do expect something, but exactly how much it will be is difficult to judge.
Got it. Thanks, Tom.
You're welcome.
Thank you, Ben. Are there any more questions?
We have a question from Mr. James Moore from Redburn. Please go ahead.
Yeah. Hi, everyone. Hi, Tom.
Hi, James.
Pure price, with the Japanese yen having fallen so much, and now the EU fine, have you seen any pricing pressure in the standard bearings market, and do you expect any? On the auto business, with the Euro Six fallow phase coming, how do we see organic sales growth versus the eleven and the margin with all of the mix and that? You know, it's been bobbling around. It's quite difficult to forecast that business at the moment. If you could do anything more on the numbers to help, that would be great.
Within the pricing arena, I would say that I'd say the Asian pricing environment is quite a tough pricing environment just now. I think that's the area we see the sort of a tougher price competition. That's generally broad-based across the Asian environment. How much of that is driven by, has been driven by the yen? Or how much of that has been driven by the fact that there has been... I mean, we've got good growth in the fourth quarter, but if you actually look at many companies, they've not seen good growth in the Asian region. So much of that is just driven by the general economy, not being good growth is very difficult for me to judge there.
I would say that the Asian area is the area that's a little bit more a tougher pricing environment at this moment in time, there. The other question, I mean, do you want me to give you a margin forecast for the group? I didn't understand really fully the second question.
Obviously, that would be ideal for all of us, Tom. But I'm looking at the way in which margins rolled around the 5% level and dropped to 2, and you've explained the mix very well.
Yeah.
But it feels to me like the mix is going to reverse on trucks as we go from lots of truck business to little, but there are other factors going on, notably the good growth in cars. So does that mean we just fly back up to five-ish again, I suppose, is what I'm trying to get my head around?
Yeah, I mean, of course, I don't like forecasting margins for business, et cetera. But your elements you put in place there were right in the fact that as we go into the first quarter, when you look at it, it's car and VSM, that's going to be a better part, and trucks, it's going to be down. So that, and in addition, we don't intend to reduce inventories in the first quarter within our automotive business. So the two headwinds you had in the fourth quarter should not be there in the first quarter.
That's very helpful. Just finally, Kaydon. The margin in Kaydon is going to step up? Should step up, but including the ongoing PPA, what sort of margin do we run that at?
Yeah, sure. That's a good question. I mean, what I can say a few words about Kaydon. First of all, Kaydon had a very good fourth quarter. If I clean, clean Kaydon before we get all the accounting issues, a good fourth quarter, good sales development, a good clean operating margins, so we're very happy with that. As we look at 2014, one of the big elements we've got is a cost reduction program. If you remember, we said we should reduce cost by $50 million. I would say we are in 2014, 35%-40% way through that already, this year, which is important step for us in terms of cost saving.
So if I put that in, and then I take out the PPA impact of the balance sheet, their margins will just be a little bit shy of the group margins, even after a PPA, because of the cost reductions that we've put in. They're a little bit shy of the group margins. So- and then if I could maybe just comment there, and some of you may have seen that in the report, that one of the things we're going to do from this quarter, for end of the first quarter going forward, is we're going to group all the businesses outside of the three business areas into a specialty business area. So you will get the combination of Kaydon, Lincoln, General Bearings and Logistics with the same sales, external sales, operating sales as a group.
Or, external sales, total sales, operating profit, operating margin, assets, people, quarter by quarter. We will give you that so that you can add the 4 business areas up and get the group figures there, which you can't do just now because it's so big an area. So we will do that for the first quarter, and probably in the next, I would imagine, 3-4 weeks, we will give you these figures historically. So you can then put them back in historically. So you've got the 2012, 2013 figures, and then you can look at the 2014 going forward.
Brilliant. Thanks.
Thank you.
Thank you, James. The next question, please? Our next question comes from Mr. William Ashbrook from J.P. Morgan. Please go ahead.
Yeah, good afternoon, Tom. Hi, Marita. It's Alex Weiss at J.P. Morgan. I've just got two questions left, please. Firstly, just a clarification, if I could, on how you expect manufacturing in the industrial business to run relative to sales in Q1. Do you expect a sort of further inventory reduction there? And then the second question was a little bit more detail on how you're seeing the trucks business developing in Europe as we move through January. Do you get the sense that this is going to be just a Q1 issue, or do you think it could persist for a longer period, or is it just too early to say?
Yeah, I think the second one is a little bit too early to say. I think it will depend very much as to the acceptance of Euro Six in the market, there, and how that gets going forward, whether, you know, they move into the new Euro Six vehicle and how they move into that. I think I'll listen very carefully to Scania, I think, report tomorrow and Volvo, et cetera, to see that. My judgment, though, as you... is my feeling is from what I've read from external people, as you go through the year, truck business, you'll have an impact in the first quarter, but it should be in the second half a little bit better than what you see at the start.
But to be honest, I'm not an expert, and I don't want to forecast that business. In terms of SI, we will run manufacturing burden in line with sales. In total, as a group, we don't see big changes in inventory in the first quarter for us. I mean, that could mean up 100 or that, but it's not big changes. It's not significant changes that we're looking at in the first quarter.
Sure.
That applies to both automotive and SI.
Got it. Thanks very much, Tom.
Welcome.
Thank you, Alex. Next question, please. Our next question comes from Joakim Höglund from Kepler Cheuvreux. Please go ahead.
Hi, this is Joakim. I have a question regarding prices. Some, a year ago or so, we were talking about prices and the effects from yen, and you said that that would not have an effect on prices. And now we're talking about sort of a tough pricing environment in Asia, and it could sort of come from the yen situation. Has anything changed from then? Or, is that just some new information, so to speak? And secondly, I wonder, when it comes to your outlook, and when listening to you at the end of last year, I think it's quite a big difference between sort of your message a month ago and now.
I wonder, has things turned to the better so much over the last month? Or is it just sort of the perception of the same information that might be different? Thank you so much.
I think it's your second point, perception of the same information. I don't think we've changed much, to be quite honest, Joakim, because we talked when we came out at the end of last year, on the twentieth of December, we came out and we talked very much about the mix in the fourth quarter area. So nothing much has changed in that. And we did say that things were developing broadly in line from a total viewpoint, but of course, the mix in between. So I don't see any big change in that at all. Regarding the pricing in the Asian environment, I think I already indicated even a quarter ago that it was starting to move a little bit tougher in the Asian region.
Again, as I said, my comment was, how much of that is to do with the yen? I'm not sure, to be quite honest. I just see it as a little bit tougher pricing environment in the Asian region at the moment.
Okay, thank you.
Welcome, Joakim.
Thank you, Joakim. Are there any more questions? We have another question from Mr. Alexander Berger from Berenberg. Please go ahead.
Hi, yeah, thanks very much for taking my questions. Just a quick, quite a couple ones, please. One, on, the savings, Tom, I wondered if you wouldn't mind just reiterating the details there. I couldn't quite keep up with all the, with all the numbers. And then the second one, just on trucks.... You mentioned, I think, that you had, hadn't seen, production tail off into the end of the year as you'd anticipated. So, given you've obviously got, quite a significant reduction expected in Q1, I'm wondering how you've seen that transition run through, you know, the end of the year and into the beginning of the year?
No, we've seen the run rate in our truck business. We've seen that drop off in our truck business at the start of this year. And of course, it's always very difficult to judge that, but we do see that drop off in the truck business immediately. If I go back to the savings program, so if I walk it through, there are three elements in this savings program. The first element is the restructuring. For the restructuring, we spent around SEK 700 million. That should give us full year savings of SEK 375 million when fully implemented.
Last year, we got from that program, that specific program, around SEK 200 million, which was SEK 150 in the second half, split roughly 75 for the two quarters and about 50 over the first two quarters of last year. So that's around 200 there. Then in terms of the second element, which was the central costs and other savings and other things that we're working on, then we already said we would get roughly 50 per quarter last year, and that we got. Although I did comment that in the fourth quarter, and you'll see that in our S&A, you'll see a kick-up a little bit. We had some other investments that we've put in an S&A in that area, so which offset some of that.
From a savings program, you've got the couple of hundred there. In terms of these two together, you got around 400 last year. In addition, we had savings from the purchasing element there of a few hundred. If you add all that together, then of the SEK 3 billion savings, we were roughly at the 25%-30% rate of the 300, which means SEK 750 plus there as the sort of savings rate we are at, versus the SEK 3 billion.
Gotcha. Perfect. Thank you very much.
Welcome. No problem.
Thank you, Alexander. And, the next question, please. Our next question comes from Mr. Sébastien Gruter from Société Générale. Please, go ahead.
Hi, good afternoon. I had two questions, if I may. The, the first one is just to come back to your outlook for Q1, and when you explain the, drivers of the margin, underlying margin decline in Q1, in Q4 versus Q3, I just wonder, what is, out of the three drivers you mentioned, which, driver should reverse in Q1? And what are the headwinds and tailwinds you, you foresee for this quarter in terms of margin performance? And a second question would be on China. What was the organic growth rate for SKF in China in, 2013 and more specifically in Q4? And how does that, compare to the overall market, if you have some view about your, market share performance, in China? Thank you.
Yeah. I mean, I will take China first. China, we grew very well. I don't want to give the exact figure for China, but we grew very well last year, but it was a second half-loaded growth. And in the fourth quarter, China was a little bit better than the Asian region in total for us, there, without giving the exact figures. When I look at the figures regarding which of the things should reverse in the first quarter versus the fourth quarter, I think manufacturing should reverse. The mix will be a little bit better, but I would say, as I mentioned, that it won't fully, but it depends on the pre-buy or impact on the industrial area.
The difference between external and internal, I don't know, not well at this stage.
Okay.
What was the first question, Sebastian? What was the first one?
What are the other headwinds and tailwinds we should think about when we think about the margin in Q1, you know?
Yeah. I mean, the headwinds, of course, are currency. That, I think that's the major impact we should see is a headwind. The tailwind... And of course, remember that, as I said, the mix is a little bit on the negative to us there. I don't see a big change in dramatic change in R&D there compared to it. Tailwinds is that the volume will be a little bit better.
Okay. So I mean, just to be clear, I mean, if we compare the Q4 margin performance and what you achieved in Q3, what you're thinking about Q1, you know, between the 12.9 on the underlying and the 11% in Q4. I know you don't want to give precise margin guidance, but just there is such a range and such volatility in the margin difficult for us.
I mean, there's a number of factors you can put, and as you say, Sebastian, I don't want to give a margin guidance.
Yeah. Okay. Thank you.
Thank you.
Thank you, Sebastian. That took us to the end of this presentation and Q&A.
Okay.
Thank you very much for participating.
Okay.
If you have further questions, you could email me, Marita.
Okay. Thank you, everybody-
Thank you very much.
For the phone, and thank you, everybody here. Thank you very much.
Now it will be media questions for Tom.