Earnings Call: Q4 2020

Feb 10, 2021

Great. Thanks. Welcome to all of you to this presentation of our year end report, but of course focusing particularly on the performance in quarter 4 of 2020. As usual, I'm going to start off with some general comments and also some comments on our business areas before handing over to Ulf to guide you through the financial pages, before I'm getting back again and doing a summary, before opening up for a Q and A session. And as usual as well, we're going to use for this presentation the deck that you can find on our homepage, where we're kind of highlighting the main topics in our report. So that's what I'm going to refer to and get back to that. Moving then to Page 2 in this presentation, the equity agenda. As already stated, starting with the highlights, some business areas by me. Financials, you're going to be guided by Ulf on that. And then some summary and some comments on the outlook for the running quarter and then finishing off with a Q and A session. So then Turning to Page 3, heading for our report, strong end to the year toward a better 2021. We're going to talk more about that, but that is the way we feel it overall when we are reporting this quarter and also looking into the running year. Sales decreased quite a lot, 10% organically by 3%, which is a sequential improvement, but we had a substantial negative currency in the quarter, pushed down the sales in Swedish kronas by 7%. EBIT came in at a little bit north of SEK 1,100,000,000, which is then corresponding to a margin of 30.6%, which is actually the best ever EBIT for Trelleborg in Q4 and also the best ever margin for Trolleborg in Q4. Items affecting incomparability came in slightly lower than our guidance, which we also guided for that we did expect it to be lower than earlier guidance. And Ulf will get back and comment a little bit more on this All of it is kind of related to earlier announced actions. Cash flow, very strong in the quarter. We managed to course assisted by a strong EBITA and also with the good management of CapEx and also maybe we're particularly happy with good management also working capital. In the quarter, We continue to lower inventory and continue to manage the account receivables in a good way. So the cash flow individually, let's say, in this quarter alone is actually the best ever quarter for Fotrelleborg in all aspects when we look at the operating cash flow. Cash conversion then, let's say, consequentially very high at 125%, which, of course, not sustainable, but very happy to deliver this cash flow in such a, let's say, difficult year at 2020, which we think also show that we have strong operational control, not only on the cost and EBIT, but also on the cash. Dividend proposed for the AGM coming up in April is SEK 5 per share, which is on the kind of the higher end of our policy, we said 30% to 50% of net profit, but we feel this is well motivated by strong balance sheet and also with taking into perspective that we didn't pay any dividend in 2020. Also to note, Post Q4, we also announced a separate press release was sent out with a new climate target, what we call 50 by 25, which means that we should, let's say, half our CO2 emissions from now and up until 2025. We also give a guidance that we should be fully carbon neutral by 2,035. And this is a work which, of course, has been running for some time, which will now be intensified and we'll get back and comment more on this later in 2021 when we will give more details of what is really what we're going to do here and what this means for our operations. But we'll get back to that later, but no more comments on this in this call. Shifting then to Page 4. On the organic sales, overall, as you see, there is a strong Difference here, I mean, when we say in this individual quarter, we have 10% growth basically, what we call Asia and other markets and also what we call Central Eastern Europe and also Southern Other Americas where we're running at 10% organic growth, Western Europe, as we're still separating out This market is flattish, while we have a strong negative in North America. So very strong in Asia, Europe getting flattish and then North America still negative. Here, we see maybe some over performance in Asia. We see improvements if you comment a little bit going forward. We see continued improvements in Western Europe, and we see also Americas getting better here as we moving into this quarter. So this is kind of the overall geographical development. Then turning to Page 5, back to the agenda and touching on the business areas. Quickly moving to Page 6, talking about Industrial Solutions. Very strong Operational performance in the quarter by Industrial Solutions, still negative organically, main push on aerospace, even though a small part of Industrial Solutions, but it's impacting. So basically half of the negative organic sales is actually coming from the drop that we see in the Aerospace, where we still are adjusting. We have been adjusting very well here to This drop, which you see in the margins, I feel, as I highlight some areas developing better in the quarter, construction getting better. And we also see, of course, like everybody else, a very strong bounce back in light vehicles, automotive in the quarter, even though we look in the small parts of the BA, but still, of course, impacting in a positive way. EBIT and EBIT margin increased to an all time high for this the business area, very strong cost control and also, which is to say, a very positive sales mix in the quarter and already now commenting on that this EBIT margin of 15%, you should not see as a guidance for the next running quarter. We believe that this is kind of an extraordinary quarter, and we're going to get back closer to our target margin for Industrial Solutions as we move forward when the target margin is then, let's say, 12%. So that is really what we see going forward here. Once again, strong sales mix here pushed especially by some good project orders in the quarter related both to railway, to some oil and gas projects and also to what we call marine construction, which means, let's say, building and mooring products, all of them, let's say, delivering good extraordinary good performance in the quarter, which then pushed up the margin to this 15%, which, of course, we are very happy to deliver. Turning to Page 7, talking about Sealing Solutions. Heading improving sequentially, but Aerospace still tough. And that is, as we said before, Aerospace, we do not expect, let's say, any actually an immediate improvement. But we are now also had already commented on that. We are now feeling comfortable that we get to adjusting our cost base as we move forward. So with lease, it will not be seen in the margin, even though it will continue to impact organic sales for Sealing Solutions in the next coming quarter. Yellow industry getting better, especially in Europe and Asia, and is also improving our kind of mix. Going forward, we still have a fairly strong negative here in North America, where we also see some lights in the tunnel, even though we do expect that it's going to take some time to get back to kind of back to where we before, before, let's say, the COVID impact in North America. But once again, it's going to we expect it to be better quarter on quarter. Light vehicle here, of course, even though it's not kind of a very major part of this one, but also as already commented on Industrial Solutions, this of course also strong positive push in the quarter. We margin, EBIT, I mean, we are dropping. We are still impacted, as I already commented, on the Aerospace. But we move forward, we believe we're going to get back on the margin side closer to where we were before, even though once again that we do expect continued kind of negative impact in the organic sales in the next few quarters from this Aerospace in Sealing. But overall, also in this area, we are satisfied with the performance, and we feel that we have everything very well under control going forward. Then moving to the Wheel Systems on Page 8, very good agri in the quarter, as I guess several of you have noticed from these kind of different indicators following agri. Although, I mean, we should also say we still have, let's say, a 2 digit negative organic growth coming from the Material Handling year on year, and that is where we still, of course, see signals here as well as getting better, but we should be open to tell that in the quarter, we still had a very strong negative coming material handling comparing year on year. Organic sales, although overall positive at 8%, which is then kind of stopped buyback exchange rates. So overall, we're ending up more or less flattish on net sales. But overall, of course, these extra volumes also in combination with some cost continued cost discipline and price discipline in the quarter. And also, we should note here also, we continue to see benefits from the structural improvements, structural investment that we've been doing for a few years in this area. We now saw benefits from the moving production, especially into our Serbian factory and also partly on the reallocation that is ongoing among our Czech Republic Factories is also assisting us to get a better efficiency and a better profit, and we're happy to deliver a 2 digit EBIT margin on this one, although we also note that still, if this is a better, but all of you know as well from a seasonal point of view, Q4 is always the lowest quarter for Wheel System, and that's, of course, also impacting the overall margin in the quarter. We also let's say, just to be fair, also to say a year ago, 4.4% is not really that we had a margin. EBIT margin last year not really the normal running rate last year. We did major inventory adjustment and did some underproduction in the quarter. We did pushed down the margin in that quarter alone. But also going forward, positive agri sentiment, while we're still waiting a little bit for the material handling getting back and fully on track. Turning to Page 9. Business is under development. Strong negative organic sales coming which we already also guided for before that we saw offshore oil and gas pushing down. I mean, actually, the order book in Oil and Gas is quite good. I mean, year on year, it's actually slightly up compared to a year ago, but we see that several of the projects being delayed. And also here, we still have an impact from the COVID where we can we have difficulties doing site installations, which is then pushing some of the sales forward, and that's, of course, impacting in the quarter. We also see a slight lower deliveries in the other parts with Sprinting blacking and technical rubber here, although the Offshore is the major kind of negative in the quarter in looking at sales. But although with this very strong negative organic sales, we still managed to improve the margin and more double the margin actually and also, let's say, increased the profit substantially coming from a general very good cost control and cost in the quarter and also some structural improvements in the Czech operations where we had also telling about for that we have been moving around some assets in Czech operations and also adjusting for overall lower sales. We also want to comment in this quarter in this quarterly report that we are well on the way of achieving our overall guidance to get this sorted and decided how to manage it forward. All of the businesses within Business Underdevelopment will be managed in 2021, and we are in several, what we call, advanced discussions with external stakeholders for some of the businesses in this area. And hopefully, some of that can be concluded fairly soon and all of that being kind of managed well within 2021. So that is the comments on the areas. Turning to the new business areas. Turning over to the agenda, financials, Page 10, and then quickly handing over to Page 11 and Ulf to guide us through the financials. Okay. Thank you, Peter. So let me take you through the consolidated group numbers. On my first slide, Page 11, Sales Development, you can see that organic development in the quarter was a negative 3%, which sequentially was an improvement versus the Q3 organic development of negative of 7%. Our core business reported organic development of negative 1% versus Q3 organic development of negative 8%. All Business Areas reported a sequential improvement in quarter 4, and I want to highlight Business Area 12 Boy Wheel Systems organic growth in the quarter of +8%, despite the fact that material handling and construction tires are still down year on year. Business Under Development reported organic development of minus 16%, impacted by fewer project deliveries within offshore. Next slide, Page 12, describes the historical performance of our organic growth. On Slide 13, you will find the reported sales development per quarter as well as rolling 12 months. On Slide 14, percent our EBIT development. Our EBIT reached SEK 1,106,000,000 in the quarter and with an EBIT margin of 13.6%. The EBIT margin improvement shows the strength of our flexible cost base. Our core business reports an EBIT margin of 14.4 percent and I want to highlight Business Area Industrial Solutions EBIT margin of 15% in the quarter. Cost adjustments and a positive sales mix is behind this strong margin. Business under development continued to improve and report Better EBIT and EBIT margin versus the same period a year ago, despite having a negative 16% organic growth. Quite a tough currency headwind in the quarter, translation impact to EBIT with a negative SEK 96,000,000. Slide 15 percent EBITDA margin on a rolling 12 month basis, a stable EBIT margin looking over the period despite Having exposure to many tough market conditions throughout this time frame. And again, this slide shows how agile our cost base is. On a rolling 1 month basis, we are currently at 13% EBIT margin for the group and with core business at 13.8. The next slide 16 presents the profit and loss statement for the total group. Items affecting comparability consist of the restructuring cost and came in below our Annual guidance guideline of SEK 700,000,000 Some SEK 300,000,000 of last year's non utilized restructuring costs will then roll over to 2021 to be placed on the top of the normal €200,000,000 for 2021. So about €500,000,000 restructuring cost in 2021. And however, don't forget that we also will have a real estate capital gain of approximately SEK145,000,000 to be booked in quarter 1. Financial net is impacted positively by a lower net debt, but with a slightly higher interest compared with same period a year ago. The tax rate was 24% in quarter. Our guidance of an underlying tax rate of 25% still stands. Slide 17 percent earnings per share, adjusted for comparability items, which was up 16% to SEK290. Slide 18 describes the development of our operating cash flow, the best cash flow in a single quarter. CapEx spending is well managed by the business areas and came in accordance with our full year guidance of SEK 1,200,000,000. The strong focus on working capital continues to develop positively, even though the release in the quarter is lower than previous year due to a higher activity in the quarter. Slide 19 presents the rolling 12 months operating cash flow and the cash conversion. The business areas have handled this cash flow very, very well. And Slide 20 shows our leverage and gearing developments. Strong operational cash flow, no dividend payout and no acquisitions have strengthened the group's Balance sheet and readiness. Net debt was positively impacted by FX movements of SEK 732,000,000 year to date. Slide 21 describes the return on equity, where the long term target is 12%, including items affecting comparability. And then finally, on Page 22, I want to finish off this part of the presentation by repeating our financial guidelines for the full year 2021. So as I said, CapEx will be then €1,400,000,000 The restructuring costs will then be €500,000,000 which is then, as I said earlier, the €300,000,000 spillover from 2020. We would have a real estate capital gain of approximately €140,000,000 to €150,000,000 in quarter 1 2021. The underlying tax rate, that will be 25%. It's estimated 25%. And then we have amortization of intangible assets around SEK 400,000,000. So Peter, back to you. Yes. Thanks, Ulf. Turning to the agenda, Page 23 for a summary and some comments on the running outlook. Quickly then turning to Page 24, strong end of the year toward a better 2021. I mean, I think we We are happy with the management of the business within Q4, and we also believe or feel comfortable that we created a very good foundation going into 2021 with both a lower cost base and also some structural improvements. And then with a slight uptick on the demand, we will see benefits from this better base. I mean, individually, let's say, we're looking Back again to the quarter, 4 sales down by 10%, but 7% currency and 3% from organic, EBIT and margin at the highest level ever for Strelleborg in the quarter four. Items affecting comparability, slightly lower than the guidance, ending up at SEK 166,000,000 already committed By Ulf on that, what we see looking forward, cash flow, best ever quarter for Votrelleborg in terms of cash flow, which is then, of course, strengthening the balance sheet and creating, let's say, a good foundation also for potential structural improvements going forward, cash conversion then consequentially very high at NOK 125,000,000 and thereby with this strengthened balance sheet and kind of no dividend in 2020, we propose an increase of the dividend up to NOK 5, which is NOK 25 up in relation to the dividend paid in 2019. And we also comment here that after the quarter, we also announced new climate targets, which we're going to get back and comment more on that during this year. Turning then to Page 25. On our agenda, we, of course, still impacted by the market conditions on COVID. We'll be although getting more manageable, we'll be still impact. So for instance, sitting here today, we used to have 2 factories in China, which actually closed down by the authorities, which is then still, of course, impacting us. And we have to be very open for this, continue to focus on our employees and making sure that we keep a very safe environment for everybody, while still doing our best to kind of comply with our comply with our customers' request and make sure that we support them in the best possible way. Still very high on the agenda. Comments and also this review of Business Underdevelopment, we feel comfortable that we're going to manage this within 2021 as our kind of guidance was when this was gathered in this unit. We have ongoing, call it structural discussions, and we feel that the overall environment for this kind of discussion is good, which is then a little bit limiting us on this, what we call, continue portfolio management. We feel that the valuations for M and A at the moment is actually quite high, and we need to be careful. We're going to continue to work on M and A, but that's going to be focused on deals, which is creating substantial synergies as we feel that the overall valuations is very high, which is then, of course, benefiting us on the other side as we're looking for these structural IDs for Business and Development. So this is something we're watching carefully. We continue to have a very focus on operational efficiency, efficiency measures Yes. So footprint optimization, we feel comfortable that we have a good methods for this and well under Control, which I think also shown in Q4 or throughout 2020. Good under control also commented by Ulf before. Of course, At the other side, we continue to invest in innovation, customer integration and using new technologies in order to Great foundations for more kind of recurring income from several of our operations. That is still high on the agenda. And we're still working on integration of some acquisitions. Even though we have not done any acquisition this year, we still see some benefits kicking in from earlier acquisitions. So this is something our priority is for 2021. And then turning for 26, and commenting a little more specific on the outlook for Q1, we feel that we have a sequentially a better demand in Q1 compared to Q4. We have a strong yes, so strong growth of the order book in Q4, which is then creating comfort going into Q1, although we need to comment also that we still have very negative year on year comparisons for Aerospace, and we expect that also for Oil and Gas. So we have a few segments which are going to be substantially down overall in Q1 compared to a year ago, which means that, I mean, we shouldn't read this into that we For CE, we are going to be expecting a few percentage points better organic growth, but not really any major changes going into this quarter compared to the previous quarter. So this is the way you should read the outlook. And then turning to Page 27, the final agenda point Q and A, and then turning to Page 28 and then opening up for questions from the from all of you listening in. So please go ahead. Thank Our first question comes from the line of Les Baolint from Citi. Please go ahead. Yes. Hi, Peter Nulfitz. It's Lars at Citi. So The first one is on wind systems and ag recovery. And it's now very broad based, which is good to see. So I wanted to ask you on the aftermarket, Peter, and Europe specifically. We are through our contacts, we're hearing on an imminent replacement cycle in the higher horsepower segments. And Are you seeing Europe accelerating now on the aftermarket side? Or is that yet to come through in a big way? And I guess such recovery would be good for mix If that happens, I'll start, James. Yes. No, I mean, it's correct. I mean, it is a recovery in the aftermarket, but also in the OE, and that is always a balance. I mean, we will have some or the market is probably asking for more tires than is available at the moment, and there will always be a balance in order to keep this. I mean, long term, we will get more we feel that we get more benefits of supplying the AOVs to get our targets, let's say, fitted on the real equipment. At the same time, we want to get, let's say, the maximum margins by selling into the aftermarket. So it's a balance. But I mean, there is, let's say, a growing demand in both channels, and that is something that we're working on more or less daily in order to get that balanced between, let's say, short term, long term. So there is definitely an uptick in yes, there is, let's say, a firm uptick in all channels. All right. Very good. My second one is on the margin in Wind Systems. And so how much So the savings at group level, would you say will fall into wheels this year? I understand that most of the structural savings will be targeting areas such as aerospace. But I think there are structural savings synergies. You have the capacity expansion in wheat as well, if we could get some sort of number there. And I guess on price cost, I guess you should be able to keep it relatively stable when growth is still solid, right? I don't know because it's kind of I mean, the immediate savings that we're initiating throughout the year has been mainly kicking into Industrial Solutions and Sealing Solutions. While in wheel systems, it's more long term structural improvement. As you know, we've been in volumes into Serbia. We are now in the middle of a, let's say, major reshuffling of capacity within Czech Republic actually, I mean, we announced the closure of 1 of the factories there in Slin and moving the majority of that volume in Todor Covec. So we're in the middle of that. So I should say, we still have some kind of structural improvements. And this project in Czech Republic will run up to quarter 1, I think, 2022. That that's another year running before we kind of are finished with that. And that is another yes, another couple of 1,000,000 of euros which is kicking in from that one. So I don't say that for Wheel Systems, we feel comfortable that we have more kind of structural savings kicking in. And on top of that, as you already said, good demand from the agri segment. What we're a little bit surprised to be negatively surprised is, of course, material handling, where we did expect that to get back closer, we still see good kind of signals from the OEs on demand on that one. I mean, now as the overall industrial demand is growing, we usually also see a growing demand for the aftermarket for forklifts and material handling, but that is not yet in the figures for Q4, but we do see an improvement in that area also going forward. Very good. My finally one quick one is on portfolio optimization and business under development. You said discussions have intensified. You said several discussions, Peter. Are we talking about the entire portfolio being looked at? Or is it just offshore oil and gas, just to understand the scope better? No, no. We're working on all aspects, but it might not be that we are not looking at the clean-cut and sell everything to 1 party. It's going to be, let's say, in bits and pieces and some of it is also being restructured. Smaller parts of it, just to not misinterpret that, smaller parts it is also being adjusted to maybe, let's say, be managed more long term and then moving back to core business. But that is when it's showing, let's say, good prospects and good profitability. So we also have some of that ongoing. So we'll be commenting here. The majority of the business is probably to be sold. The vast majority of the business is to be sold, and that is the way we will manage it. And there is not one process, it's several processes. Thank you. And the next question comes from the line of Robert Davies from Morgan Stanley. Please go ahead. Yes. Thank you. Good morning. You for taking my questions. The first was just maybe if you could give us a little more color on just what you're seeing from a kind of monthly development perspective within North America. I know you called out that Region has been a sort of particular area of weakness through the 4th quarter. Just the interest in sort of some monthly development is my first question. Thank you. No, I mean, as I already commented, we have seen an improvement throughout Q4, that's a meaningful improvement. And I said at the ending of the quarter was much better than the beginning of the quarter. So I don't really want to say that there is kind of a meaningful improvement. So of course, we do not have we said minus 15% in this, we do not all expect that to be on that level in Q1. Thank you. And then just, I guess, on the aerospace side, you mentioned sort of down 50% or so coming to the Q4. Are you hearing anything on that side that's getting better? Or is that just sort of down at a low level and sort of trending sideways now? In a way, are trending sideways. But while we still do have some slight improvement, but I mean, we're talking about individual percentage points here on some inventory reductions ending and doing that. But I mean, overall, we do expect still, let's say, on this 50% level. So we don't see any and that is what we are adjusting for and what we are kind of doing. While said that also for Trollorboard perspective, we do have some new platforms kicking in. We could improve that a little bit. But I mean, overall, we do not expect any kind of changes in the overall demand. Understood. Thank you. And then just my final question, you meant you sort of alluded to the material handling that within wheel systems having not come back as well as you sort of hoped. Through 2021, what are you expecting to that business in terms of development through the year? We do expect a substantial improvement. I don't want to see a percentage on that one. But as I said, we have been running also in Q4 by 10% plus negative organic growth. And of course, I mean, if we can get back to par or something, then that's a substantial improvement. But honestly, the indications, if you look at the market, that actually this should get even better. So we're of course planning for that, but we have to adjust to reality. But there's good indications, as probably you know as well, following Caterpillar and Hyster and whatever. And they are kind of talking positive, but we don't really see it in the figures yet. But we do expect kind a substantial improvement compared to what we saw in Q4. Understood. Thank you. That was all my questions. Thanks very much. Our next question comes from the line of Neszka Bilina from Nordea. Please go ahead. Thank you. So I would like to start with Industrial Solutions. If you could elaborate on the sales mix in the quarter and the reasons for the Kind of good margin performance. And then also, if you could remind us what's behind the kind of margin target that you have for the division. I appreciate the fact that you have it at 12%, but my understanding is that it was based on the kind of old structure without the coated business in it, which had better profitability. So if you could just explain what you're thinking behind it. Okay. Then for Free Industrial Solutions, as I said before, we had an extraordinary good quarter in the kind of the Marine business where we sell into ports and harbors and, let's say, ship monitoring. And that was kind of very good quarter where we had a few individual projects. We also had a few good projects for railway, also impacting and overall also in our kind of house business where we do have some not call it oil and gas, but we have some LNG transfer and some kind of liquid natural gas transfer, which also delivered good. So that was overall, I you say, luck. But I mean, it was everything was kind of aligned and it got good. And on top of that, I mean, Industrial Solutions has been very well pushing down the cost. And then when the sales came in slightly better than the kind of expectations, we had a very strong drop through on some extra sales. So that is something which was a little bit too good and then talking about the 12%. It might be that we should revise that in the future, but we want to deliver a solid 12 percent plus before we kind of start to discuss about some new target setting or some adjustment of that. But of course, seeing 15% in Q4. Then of course, that is something which is also internally creating some discussions on what is really the long term potential of this business. Thank you. And then just on your outlook, you expect slightly better demand sequentially in Q1, what's your thinking there? And then also, I was a bit surprised by your comment that you expect only kind of few percentage points Improvement on the organic growth. Given the fact that you get much easier comparisons In Q1, your growth organically in Q1 last year was minus 8% versus growth of Minus 1% in Q4 2019. So comparisons are getting much easier. So just help us with how you think about that. Yes, but we still I mean, for Q1, we do expect Aerospace to be substantially down year on year. So that is kind of one of the major dips where we kind of, I don't know, half the sales or something like that compared to a year ago. We do also expect oil and gas, which was actually fairly strong a year ago, to also go negative. And then basically all the other segments to improve. So if we end up at kind of a few percentage points better. We think overall that, that indicates that the industrial businesses will do substantially better, less automotive will be substantially better, while we see tens of percent or maybe half sales for Oil and Gas and Aerospace. And overall, that mix it is pushing down the sales. But that's of course not we do expect an improvement on the margin. We do expect improvement on the profitability as we kind of get are better mix, and we also are getting to adjusting the cost base, especially for Aerospace in So that is kind of the way we look at it at the moment, Andreas Kjaer. And that is the way we see it once again being pushed down dramatically by Aerospace and Oil and Gas, while basically all other areas is improving. Great. Thank you. And just the last one for me. On the Aerospace business, I recall that you said that for the full 2021, you would expect that business to be probably slightly up 5%, 10%. Is it still your thinking? Obviously, it's very early days and very uncertain situation, but is it something that you expect, Steve? Yes. That is still we see it, let's say, as it's going to be strong negative in Q1, and we expect it actually to be small positive year on year improvements for Q2, Q3 and Q4. And overall, we do expect if that falls out, it's still going to be, let's say, a small growth overall for the Aerospace activity. Thank you. And we have one more question from the line of Karl Boakliss from ABG. Please go ahead. Thank you and good morning. So my first one may be difficult to answer, but let's try it anyway. So What is your thinking when it comes to the second half of the year in terms of somewhat normalizing costs and maybe somewhat higher discretionary standing if we put it in relation to what you are doing When it comes to structural savings efforts? No, we have a structural improvements kicking in. We do expect kind of, let's say, higher discretionary spending. And we also, which we have not commented, of course, I mean, this improvement in overall kind of economy will, of course, also push up the raw material. So there will be, let's say, of cost inflation hitting us definitely. But we also expect kind of a strong volume improvement on that. And if the volume improvement is not coming, then of course, the cost will not escalate and the raw materials will not go up. But overall, we feel that overall this equation is well under control and we feel comfortable that we will be able to manage these kind of expected cost increases year on year cost increases, yes, for the full 2021. Understood. And turning to Industrial Solutions. Is it possible to get a form of a hint As to how large share marine was roughly in the quarter or if this has improved compared to a year ago? I don't know if I have these figures at the moment. I mean, you probably have to get back on that one. I mean, I don't really have it in front of me. But I mean, it's not really I'm looking at Christophe sitting next also to me. I don't know if Christophe want to sum it on that. Yes. So the margin in Marine in Q4 was well above double digit and that was much due to the project business Peter referred to before. And Unfortunately, we will have not the same kind of project businesses in Q1, which is why we expect The margin to come down from the 15% to a more normal level. 12 ish. Of 12 ish in Q1. So That is the biggest explanation for why we cannot keep 15%, which is, by the way, the highest we have ever seen in the quarter for Industrial Solutions. All right. Understood. And just one question on Wheels. Could you give us In your business, did you see the strongest growth in North American Ag or European Ag? European Ag. All right. Thank you. And one final question from Hampus Engeler from Hellespangen. Please go ahead. Thank you very much. Two questions from me. I'm sorry if I'm coming back again on Aerospace and CECL and CECL in particular. But Would it be possible for you to maybe discuss a little bit all the measures you're taking in the Aerospace business within Sealy? And also, given how we see aviation going forward, what happens on About structure lower activity, we're planning for more normalized levels, I think, of course, maybe less business traveling and all of that. Then last question, again coming back, sorry for this, on the business development. As you highlighted, Sreedhar, that Minor businesses are going through restructuring like we kept within the group. Is that solely on the back of business development and adding to the group going forward? Or is it also price issue here? I I'm trying to search for it, is that is it price that is the main reason here? Or how should we think about Thoughts that might be still remain in the group. That's all my question. Thanks. Just talking about the Aerospace, we do not expect, let's in the foreseeable future, the aerospace to get back to where it was before. But it's still kind of an interesting business. The high spec business, you have a long, let's say, aftermarket cycles. So we think if we look at overall on the, call it contribution margin or gross margin business, what remains within Aerospace is still a very attractive business. So that is so overall, we are adjusting kind of our cost base to work on kind of the half business on that. But on that half, let's say, following these changes that has been doing, which is mainly related to kind of factory moves. And I mean, we have been Shifting factories, I think I highlighted that before. It takes time to get these approvals done. We now have some of these approvals, and we now are able to shift manufacturing among our factories and thereby kind of solving a few of these overall cost issues. But we do not I mean, we expect us to get back to the, let's say, margins that we had before, even though the sales will be half or something compared to before. And from the base, we do expect that there is kind of possibilities to grow as we still have some consolidation efforts ongoing. We see possibilities to widen our offering within aerospace and to grow from a new base. So we still see this as an attractive business. We still feel that we have very good overall positions is simply that it took us a few quarters to adjust the cost base to this new reality of kind of a business being, yes, basically 50% of what it was before. So that is the way we look at Aerospace. It's still an attractive business, still a high spec business. It's still kind of highly engineered products, still a lot of safety focus on it. So even though with the sales going forward, it's only half of what it was before, it's still a very in business, we simply have to adjust our cost base and primarily then related to kind of our manufacturing footprint. Second question, sorry, was that but I mean, on this remaining, it's still that we have some interesting bits and pieces on in the offshore area, especially where it's not really oil and gas related, but more related to other business segments, which is still interesting for us to keep, which fits fairly well together with some other businesses in Tralborg in the way that they are kind of approaching the same market segments and the same. So the reason for reallocating some businesses is not that we are not able to sell it. It's good performing businesses where we feel that we will be able to develop them in light in the new areas. And then of course, I mean, you shouldn't over read this. I mean, what we're discussing about reallocating back is a fairly small part of overall business under development. And that is niche products on some lightweight composite materials where we could use that into signature management. We have some interesting businesses, for instance, for, say, offshore windmills and stuff like that, where it's, let's say, using similar technologies as we are doing in the offshore areas, and we have been reallocating that among the businesses within this offshore area in order to more focus on that. We have some other areas which is more related to, kind of, load bearings, as we call it, on some anti vibration components, which is targeting, let's say, oil and gas, which is still going to be very good, let's say, add on to our businesses within industrial anti vibration and it's simply kind of an extra arm on that. And then we can use that technology for some kind of other anti vibration activities. So this is kind of a strategic rationale behind us, Keeping it in is definitely not an area that we are not able to sell it or we're not able to find a good value for it. It's simply that we believe it's a good business to keep because we believe that we could, After this kind of reallocation of responsibilities and sorting out some of these factory splits, We feel this is a good business to keep, which will be kind of adding value to the remaining business of Tralborg. So once again, so we feel Very comfortable that this solution that we're going for Business and Development will be a very good solution. Thank you. And as there are no further questions, I'll hand it back to the speakers for closing remarks. Good. Thank you. Thanks again all of you for listening in on this. I mean delivering, Trailaborg, as we said, the heading, It's a good ending of the year and a good kind of setting for moving into 2021. We feel comfortable that 2021 will be better that in 2020 and on top of that also we feel now more comfortable than before. I mean, we always been comfortable, but more comfortable before that we also get out of this Business Under Development and we get into a more solid structure of Trelleborg, so we can more start to build on the future. And of course, when this is done, we need to get back to all of you and be better outlining on how we want to develop Trelleborg further beyond this kind of activity that has been the focus both with the COVID year and also with this business and developments. We're going to get happy to get back to you and discuss that in the next few quarters. So thanks again. And I mean, if you have any further questions, I'm sure that Christophe is happy to support and as always available, of course. So please contact Christophe, and Christophe will then call on me or Ulf if there is any need for further clarifications. So meanwhile, take care, stay safe and hopefully see you soon. Thank you.