Earnings Call: Q4 2020

Feb 11, 2021

And gentlemen, thank you all for standing by and welcome to today's presentation Q4 Report for 2020. At this time, all participants' lines will be in a listen only mode. There will be a presentation followed by a question and answer session. I must This advice to all of this conference is being recorded today, Thursday, February 11, 2021. Without any further delay, I would like to hand the conference over to our speaker for today, Mr. Thomas Wittgen, please go ahead, sir. Thank you, and thank you for all for listening in. I will try as usual to Present on our latest quarter, what has happened and what perhaps not has happened also for Truist Group AB. And as usual, I will follow then the short presentation that we normally are presenting, which you will find on our own homepage, on the Truax homepage, and you will find it under Investors. And on the Investors, you will then find presentations. And on the presentations, hopefully, you will find a presentation for the Q4 Stated off today. And I'll start then with the introduction, talking about them that, as you know, Truax is The world leading company, and our vision is to help the world, so speak, to become more safe. So we have a motto, which is called safer worldwide. And besides having safety in every aspect, you probably remember that If you go to Page 3, that we are working a lot with 3 different segments. The first one is called machine guarding, Which is the biggest one, approximately 60%, 65%. And as you can see from the picture, those of you who are Looking into that picture, some of you have seen it before. It's normally then something connected with different production lines where we, of course, safeguard and people who are Working done in this sort of environment, making, in other words, a hazardous or a possible hazardous environment into a safe one. I go to the next page, talking briefly about the second segment that we have, which is Cora warehouse partitioning. It's also, of course, safe handling, but it's more than obviously from a warehouse point of view, where you also can have a lot of moving objects like you have in this Picture here, you have a lot of forklift trucks or other things, but it's normally then based on some sort of warehouse where you have pellet racks or some sort of The basis of it. A variant of this I will come to in the second quarter on automated warehouse. As I said, this is maybe 20%, 25% of our turnover. Last and actually least, but nevertheless quite important for us is what we call property protection And it's more of what I call static safety. You don't Take care of people who are working in this environment, but you take care of your own bicycles, luggage, whatever kind of gear that you want to protect it from burglars. Is There are different sort of burglar, let's say, levels that can withstand burglars, Which you can buy from us, but basically, you're talking about the case that which is normally installed in a cellar or in some cases in the attic. We call it storage solutions then In addition to property protection, we're talking here about some 15% of our turnover, something like that. Then I come to what we don't have yet at least as a segment. It's a combination of what we're doing in the Machine guarding and also in the warehouse part, and we call it automated warehouse. And actually, in the last 2, 3 years, this is the one which has been growing most So organically. And it's, of course, combined by a lot of the drive coming from e commerce. This was existing long before COVID was Perhaps invented, but it will, of course, be even stressed even more now with COVID because of obvious then Change of purchasing behavior from people like you and me who today are buying a lot of the goods that we used to buy in stores, we buy today through the e commerce channel. And this is something which for us is quite important. And especially We in the Q4 of last year, we got a lot of very good interesting orders in this sector. A little bit about Trucking Brief. For 2020, then if you look at the lower left corner of the next page, We had quite a good orders received, especially then in the Q4, which I will come to in a second. So So despite the problems we've been having during 2020 with the COVID effects, we actually we got an organic growth of 6%, which we think is Quite a good achievement. Whereas on the sales side, it was not on that level. So we actually received a 3% decrease, which of course is nothing which we should be proud of. But I think that based on The general development in the world with COVID and customers not working or at least postponing investment, this is not actually a bad development at all. Due to the fact that we had a little bit lower sales for 2020, this also created a slightly lower operating profit. I wouldn't say that there are anything extraordinary in this. It's just combined with that the volume stand didn't increase in the way where, Of course, we hope it to do. And that means also that operating margin is slightly lower than last year, coming up to a level of Almost 90% or 18.8% to be exact. Earnings per share, slightly lower in the same way as last year. Where I send the dividend, the proposal to the Annual General Meeting is, of course, to increase that substantially since, As you might remember, we took a rather cautious approach to dividend during 2020 and paid out 50% of what is normally our goals, which was 50% of the ordinary 50% we have as a target. And this proposal is now 50% of the net profit for 2020. If you go to the right, you see then The different sales for the different regions, nothing there's not a lot that has changed during this year. So You can say that the new markets are going in the right way, albeit still on small figures. And it's probably where we Still need a lot of work in the coming years. Otherwise, it was relatively stable during the year compared with the year before. And again, if you look at and as I said, this division between the different segments, you see that for 2020, machine learning was 65% productivity projection, 14% and warehouse positioning, 21%. So slight change, but not a lot. Next page, then we have also included then the full year 2020. And you see then that We are normally a growth company. We've had quite a good growth organically over many years. But in the last years, It's been a little bit of, I would say, weaker market development, which, of course, has certain impact also on us. So we hope, of course, that when the COVID is over or at least starting to get over with, we will come back to The organic growth that we are used to and that we also are aiming for obvious reasons. We still have a very good position in the value chain and approximately 30% or onethree of our people are working in sales. And in this niche market, which is not a huge market, we talk about €1,000,000,000 or something like that, we are the global market leader of what we call the indoor permitus protection or in other words, mesh panel solutions. Going to the next page, we talk about The financial targets and those of you who have been around before, you recognize it very well. We have not, as regards to sales growth, put up a Specific figure, but we are saying that we should exceed the growth that the market is growing. And since we are saying then that the market over a business cycle under normal circumstances Should increase with 46% per year. And then on top of that, we have a target of increasing our market share. We should have a figure then of maybe something which has been similar to what we've been growing historically, which has been somewhere in the range of 8%, 9%, depending on how you calculate it. So for 2020, the organic growth in sales was not actually negative, But we still think that we've been taking some market share here and there since we believe that the total market has been going down More than this due to the obvious COVID influence. And then we had a slight positive The influence on the M and A side in the last 2 months because we bought on a company called Naitom Logistics in Poland, which I will come back to, And that was consolidated from November 1, 2020. Regarding profitability, Our target is to have an operating model in excess of 20%. And we are at 18.8%, so we're close, but not close enough. So obviously, We want to get in excess of that for the future. For the capital structure, we have quite a Balance sheet, I would say. So we have a target of being below 2.5 in the relationship between net debt compared to EBITDA. We have at the end of 2020, excluding the new IFRS rules, a relationship of only 1 point 4, which shows that we have a stable situation. And this also includes then the purchase Value of nayton to a big extent. So I would say that this is, again, as I call it, a stable situation. Regarding dividend, we have suggested 52% of the net profit last year. So we are following then the dividend policy as explained before. Going to next page, I want to introduce Philippe and to some comments for Q4 and a few comments, of course, on the year also. But in summary, of the quarter 4, you can say that it was a much more stable quarter. There were increases in many areas, especially then from order point of view, not so much the sales point of view. And we did end This interesting acquisition in November. So I think we've taken another step down towards further Organic growth with this kind of improvement. We reached a nevertheless similar EBIT result margin in quarter 4 of 2020, despite still some negative effects, of course, of the coronavirus, we still had Number of countries maybe were not shut down during quarter 4, but they were at least shut down to a certain extent, and this obviously had a certain effect on Nevertheless, I would say that have been a good face level or you would probably say word levels In some markets, and as I would point out in what we call the new markets, which, for instance, actually includes China, Well, we have said some improvement actually during the year, and we have seen some improvement of the market activities, Which is quite positive, even if, of course, so that they were probably the first to go into the COVID problems I'm the 1st to go out of the COVID problems if they have if that's now is the case, that means also then that There are some possibilities also for other regions, of course, to come back to more market activities as soon as the COVID disappears or at least gets substantially improved. Generally speaking, in the market from the Q3 2020, we have seen a continued reduction of the market activities, Especially towards them, so we're right here, the smaller and medium sized customers. And it's probably so then that the bigger customers, They've had their investment plans, and they've been trying to pursue this regardless of the COVID effects, at least what's been possible to do. So I think In some cases, you could say that we have been, let's call it, lucky because we've been able to continue down with a number of these Investment products, which, of course, has had a healthy impact on our orders during the year. Earnings per share for the quarter was On the same level as last year, and we can also go to directly to the next issue, which is falling on. The improvement process, as we call it, Has been continuing also in quarter 4 and result for the whole year of 2020 has now been substantially improved compared to 2019, Even if it's still not on to the level where we think it can be. So we still have some upside, of course, during 2021 to reach an even improved figure, but it's been quite improved during 2020. Regarding working capital, it's on the expected level. The inventory part is a little bit increased to handle Both the negative effects of the coronavirus, meaning that lead times are Longer, especially than on the raw material side. And to a certain extent, also we've had to increase the inventory because of the effect Brexit implications, which we now see in quarter 1. So we have been preparing for that by increasing the inventory to a certain extent. Generally speaking, regarding investments, they are working according to plan. And The biggest part of the already communicated investments are in principle finalized or at least in the finalization phase. And I would say that there are no nothing to communicate to Ehrabant, which is not more or less following the plans. A part of this investment is, of course, what we call a new factory in Italy, a bit outside of Milan, and it's continuing to run very well. They've done quite a good job during 2020 to not only to get started, to run-in a quite difficult period When there was COVID all over the place in Italy, but we've been continuing to run that in an improved way during the year. So I would say that They're on a very good standard now when we are exiting 2020. The factory in Chicago, which we got when we bought Solengor, It's also improving efficiency and output, but they have a little bit more been hit by some absence due to corona in the 4th quarter And also, I've had some problems with deliveries of steel, which a little bit has had some effect. Financially, I wouldn't say that, that is To be, but we can see a certain impact of that in the Q4. The ongoing story about automotive is the same. Unfortunately, it's continuing to be a weak segment, and it's been also for quite a long time. We've had some small orders, and I think we're expecting that it will improve somewhat during 2021, but I don't think we will start to take off next quarter, but it would take some time. But I said it already last year, and I probably had to Realized and that COVID has had, of course, a deteriorating effect on this. But right now, we see that automotive and demand for automotive Vehicles are increasing. So there should be a potential for us to come back to quarters in these segments. As I said, not in maybe in the next quarter, but over the end of 2021 and certainly into 2022. When we then talk about the good things in the Q4, I would say that it's mainly coming from what we call the Automated Warehouse business, which, as I said, is a combination of Products which are both supplied from what we call machine guarding and also from the warehouse part, but it's perhaps more from a Customer point of view seem to be more connected with the moving objects, which we normally call machine guarding. And that's been very good During Q4, we've had a number of both smaller, but mainly bigger orders from very renowned and important customers that we have been working with for quite a long time. And these are projects which have been going on for a long time. So I think that the COVID, if anything, will help further in this longer term, but not directly, I think, has had an impact on this during the Q4. But it's clearly then, as I said, connected with the changing of the purchasing and also distribution pattern That the customers are investing a lot more heavily than in trying to make the warehouse activities with pick and pack it and distribution Much more automated compared with before. So again, this has been very positive in the Q4. And I don't think that we might expect this kind of order intake every quarter in the coming quarters. So Without giving any gloomy forecast in any way, so I would just like to say that this kind of development you can't expect every quarter. Then I'll jump to Poland, where we acquired this Natone Logistics. It was acquired as per 1st November. And they're not really a competitor of us. I would say that they add more of, as we write here, a complementary product range to us. And they will actually be utilized as some sort of manufacturing unit long term, whereas then we see that The product ranges we sold will be sold both through the existing NATOM distribution channel, which is mainly Connected with European customers, but also will, of course, be utilized through the Truax sales units. So we will see how fast that will go, but it's a good opportunity for further growth. The turnover of this acquisition was approximately EUR 20,000,000 And there were 180, 190, maybe something like this, split over 2 physical units In the vicinity, so speak of Poznan in the western port of Poland. I go to the next page, you see the results, which you Probably have looked into before. And I've talked a little bit about it before. So we've had, as we said, very good Increase of the order intake. If you exclude then the acquired company in Eitel, we are still on a Rather healthy 22%, I think, increase of orders. So it was nevertheless, regardless of the acquisition, a very good order intake. Sales was on same level more or less same level as last year, same with gross profit and margin. And I already got a question on the margin. And I would say that it's quite a stable development. We've had good utilization in most of our factories, which, of course, means then that we get good coverage of fixed costs. Of course, that We'll have a certain positive impact on the gross margin. So operating margin in the quarter was more or less similar To last year, slightly lower, EUR 19,200,000 compared to EUR 19,600,000. And as you see on the in the middle there, you see then the full year of 12 months 2020, where we reached earning sales $163,000,000 $178,000,000 in orders And the operating profit of €31,000,000 which unfortunately is slightly lower than last year. Then I think we continue to the next page. You see then the regional development of the order intake and sales. And as I normally say, Don't take too much or don't read in too much of the figures for 1 single quarter because I think you have to look at Truax a little bit longer period Drew, any conclusions? But nevertheless, you can see here that it was a very, very strong order intake in, especially in United Kingdom and in North America. Yes. And they were I would say that especially in U. K, it's of course connected a lot with The e commerce business, whereas in North America, it's not only e commerce, it's also connected partly actually there with Automotive, but also in some cases with some other Customer segment, so it's very strong there in this quarter. Also in the new markets, we've had slight improvement even, of course, as you see the figures are Substantially lower level than the others. A bit weak in Continental Europe, which I would say partly is connected with automotive, but of course also Connected to that, especially in South Europe, you will see then that the market activity were a bit lower in quarter 4, Primarily, I would say, because of the COVID situation. So totally, 22% up. And then we have the acquisition. So technically, then or mathematically, we're issuing or intake, which is, I would say quite extraordinary figure of plus 39% compared with the year before. On the sales side, You don't have this effect. You see more than the effect of the COVID on the normal sales. So it's a much more, I would say normal market development figure you see here were minus 6% in sales, which, of course, influenced then by the lower sales in The Nordic region and United Kingdom as well as actually North America and positive in new markets. But since we have a very good Order book, so to speak, to take us into the quarter 1 of 2021. These figures will, of course, be improved also in sales invoice, mainly in quarter 1, but also partly spilling over into quarter 2 with what we know today. So if you look at the whole year of 2020, The 12 months, you can then see that there is a certain reduction in Continental Europe. I would say it's the same conclusion as I told you before. Nordic region, very stable in orders. U. K. And North American orders, very, very strong. And actually, also in new markets, we are Improving, quite good, at least from a percentage point of view. Whereas in sales, it's still so that With the exclusion of new markets in North America, I would say that this shows more than how the market development is has been Developing during 2020. All right. That was a try to explain a little bit the regional development. Now we come to some sort of what we call conclusion. And then afterwards, as usual, you will have the opportunity. Also, I've gone through a few more slides. You will have the opportunity, of course, as normal to put questions. But a few more conclusions. I would like to comment again, it was a rather stable market in the Q4, especially when compared with the expectations that we had during the COVID quarter of quarter 2, I wouldn't say it was a good quarter from the market point of view and far from it, but I think it was rather stable. And In a stable market, it's, of course, easier to pursue than different activities. But again, as I already said, especially small and midsized customers A little bit waiting, I think, to commit to new orders. Continued load amount from Automotive, but on the other hand, was very positive in the During the quarter from what we call on the Automated Warehouse business. In North America, both the Truax Inc, which is the Truax brand and also the Falling Guard brand were continuing to develop well and showed a continued improved result, both of them. There has been a stable but somewhat lower activity in Continental Europe and Norway compared to the same quarter last year, But very strong then, as I said and was noted, especially in Great Britain and North America. All factories in the group, I would say, were developing well, maybe with a Small. A small deviation somewhere. And there were obviously no support whatsoever Anywhere in this quarter, we did the acquisition done as I said 1st November. And I would say that in total, it was a stable development with a similar result as in 2019. I go to the next page where you will find a few description of this nature. Don't forget those of you who have not Listen to me regarding this before. I would say that this EUR 20,000,000 is split up in these kind of markets, which you see here on the map As in primarily what we called previously U. S. European countries with the addition and of course of Poland. And the major part of their sales is actually outside of Poland, and we think it's going to continue like that for the coming year. They are quite a good provider of e commerce, let's say, products. Maybe the products are not That's advanced. We're talking about mesh shelves and rack protectors and barriers of different sorts, but they are done in a very good way, very efficiently, Cost efficient with a good very good design. So for the customers, I think that they have the reason why they bought a lot And hopefully, we'll continue to buy. Eastern, that is a good combination of the specification, the safety, the price, the delivery terms And accessibility, which, of course, hopefully, will be even better now when the TRO XL channel will be made available to the NACON products. So the products that you see here on these photos are mainly the ones that that Neitom is producing. Then let's say the core of the production. Growth factors for us, you heard it before. It's Sir, regardless of COVID, it's the increased industrial automation. And regardless, I would say, when COVID will go out, The automation will continue. And if anything, I think we'll increase even further. So I'm quite positive over this. And the next one is number 3 on This list is growth in e commerce, which I think will remain for a number of years. We have not seen the peak of this yet. The other things which are still having a good effect on the market like on shoring of manufacturing, taking home manufacturing to Europe or United States from other countries, Safety, awareness and regulation are also, to a certain extent, important. But if you compare with Industrial Automation and the growth in e commerce, they are far behind, so to speak, in importance. In this market, you've seen before, we haven't really been able to evaluate if there has been any major changes during 2020. So These figures you have seen before. I think that our judgment so far is that there has not been a big change in this During 2020, there might have been small here and there since I'm claiming that Truax has continued to take some market share. So Generally speaking, we still think we have some 25% market share in Europe and some maybe 15% worldwide. And some assessment, next page of the competitive situation. I won't go through this because I don't think it has changed a lot during 2020. On the production units, we've added them as you see to the right, we've added them Poland. And They have a capacity, which is utilized to a rather high extent. So we do intend to increase the investment there to a certain extent, Just like we've been doing for some time in the Truax and Sartek and the Falling Guard plants in order to increase the machine capacity. So that means that there will be a continuous load of some investment going off into the manufacturing in Poland. Otherwise, not a lot has changed in this picture compared to what we have shown you before. In our group, obviously, we work together for a safer world For a safer tomorrow. And talking about safer tomorrow, what we focus on is, of course, a lot about the environment and also other things Connected with ESG. So we work a lot just to pick out a few then, a lot with Climate compensation program for the transportations. We tried to continuously decrease the energy consumption, At least 2% per year. And we are quite happy to say we reached that in the main unit in Sweden for 2020. We will continue to work with this. To go a little bit further down, I think the main part otherwise, Which has become more and more clear for us is that we have to work even more with getting the purchase of steel from recycled steel. We're saying we should have minimum 30%, and that's absolutely something which we have where we have to increase the target in the Yes, Cam, because we see when we calculate the impact on the, for instance, the CO2 that what our products and our manufacturing is doing, The major part is coming from the purchased steel, and that's, of course, then something which we, to a certain extent, can influence, but it will probably take some time for us to get it where we want to. And then, of course, we are also proud to say that in the new investment we did in The Italian factory is starting 1 year ago. We have invested also solar panels on the roof. So actually 50% approximately All covered then in the energy consumption of these solar panels. We're working on the innovation center with R and D. Next page. And I will show you very briefly, very quickly, just a few examples of that, which was introduced last year. That was what we call a SmartPost. Just one example where we have integrated control and push buttons, which, of course, makes it not only A more stylish and nice design for customers who doesn't want to have a lot of cables running around, but it's also more, I would say, secure Installation for the customers. Next one is what we call small supplies. In some cases, where we'd have to do then, we have to build and the fence is higher up. Then of course, we have to extend Both the panels and the post and we have done, I would say, clever solution so that When we can do some splicing for Tor Post, we have actually a patent pending for this, which simplifies high assembly. And that is very good for the customer because it's significantly faster, easier and stronger. During, I think, Q4 also, we released a complete new RapidFix, which is one of our connectors or Our coding system, which especially allows quick maintenance access, and this not only is then introduced In such a way, which where it increases on the assembly or rather decreases the assembly time for the customer, But it also increases then the impact value when we do testing. So it's a stronger assembly. It will be a stronger assembly, And it will also be quicker compared to before. This is, I would say, quite a good achievement. We continue to be certified in order For the processes to be not only to access it a certain way, we say also then that what we release is Being certified so that the customer can trust that we are not failing with this. And I think that, that is quite a good thing for the customers that They don't have to rely only on Truax. Next page, I'm coming to Dan now for those of you who wants to put questions. You see here the main factory, still main factory in Sweden, where we have done a lot of extensions in the last years and we put in new lines and Also now working with improving the flow as regards the internal transport and picking and packing. Right now, we have a lot of snow here, but otherwise, it looks similar to what you see on the page. And we have Been the original since 1955, and we intend to keep the flag high towards the customer And utilize, of course, the strengths that we have all over the world. So with this, I want to end by saying we continue to make your world safe. And with that, I would like to introduce Dan go back to the operator and ask him then to introduce you to put some questions to me. Thank you. We have a couple of questions that came in. First question comes from the line of Kenneth Carl, the line is now open. Please go ahead, Ian. Yes. Thank you. I was surprised to see the very, very strong order intake in the 4th quarter, Which is nice, of course. And you said that quite a lot of them, those orders came for automated warehouses. So I was wondering when deliveries of those are expected. I mean, generally, you have a shorter Yes, water time, but for those, you should have somewhat longer. So is it the first half year or? It's basically, Gunnar, this first half year. I would say that what we have got in so far in this by the end of December, To be a chunk of that we believe from March, March, April, May, I would say, will be the heavy months from Invoicing and delivering point of view. Okay. And then the steel prices are going up quite shortly right now. Historically, you have managed to increase your prices to compensate for this. And Is that the plan at this time as well? It's absolutely so. We are right now increasing prices, unfortunately. Unfortunately, meaning that there is a lot of turbulence in the market, so it's difficult to assess what the end price increase has to be. So But we are right now, during February, increasing our pricing in order to compensate for the steel price. But it's so turbulent that We don't exactly know what's going to happen in Q2. So you don't know if we have to go out in Q2 with maybe another change of pricing. But We are doing right now the compensation in the same way as we have been doing before. But of course, it is so that just because we're increasing prices right now, it still means, of course, that the orders which were in the backlog, They will come with a slightly lower margin of obvious reasons because we can't go back And renegotiate already taken orders. Great. And then for the Maytham acquisition, The TROWAK business is depending very much on a direct sales model. Correct. NATAM, Do they have a similar model? Or do they rely more on distribution? Or Not really distribution. They have a Similar model in the way that they don't have so many salesman, obviously, but they do go direct to customers. And I think The customers that we're talking about, which are mainly bigger customers in the warehouse integration field, I think the value and The direct contact with the producer like Nathan. So we intend to continue with that. And over time, you might sort of trim the product range that they offer and combine it more with your products. Yes. Correct. Yes, absolutely. Yes. Okay, great. But your balance sheet is still very strong even though you paid for this acquisition in Q4. So if there were another acquisition Coming by during 2021, do you think you would be prepared to act on that one? Yes. I would say that the integration of Natam is not considered at all to be in the same sort of, let's say, Difficulties like we experienced with Follinger. This is much more of an addition to what we were already doing. So we don't expect this kind Of long stretched improvement time. So from that respect, we are clearly prepared to do it. And as you've already said, from Financial point of view, we are fully prepared to do that. So if something interesting comes up, We are surely interested in to pursue that. Okay, great. Thanks a lot. Thanks, Kennen. Thank you. Your next question comes from the line of Hermann Ericsson. Please go ahead. Hi, Thomas. Thank you for the presentation. So I just have some short questions regarding the strong order intake. So first of all, can you say anything about The customers behind the strong demand in e commerce. And also, can we expect higher order intake going forward? Or do you expect It could be more in line with your historical numbers. I'm not giving out any forecast, but to answer your Christian Armintuso speak. We already indicated that we think that the order level in the Q4 are perhaps You shouldn't call it extraordinary, but it's on a very high level that you can't expect to get every quarter. So in other words, I'm saying that There will be, I would say, during 2021. Under normal conditions, there will be a more normal order development. If nothing like this occurs again, which might happen, but you should calculate with a more No more than I can think in the coming quarters. Regarding the first question with customers, In some cases, we are it's not possible for us to give this out externally. We have promised to keep this secret. But I can say that we are working with most of the world's biggest customers in this respect. So you will all No, but you read about them in the newspapers. And I guess that's what I can say at this very moment. Great. Thank you. And then just looking at the income statement, you can see that your admin expenses have increased quite a lot during the quarter. So I was just wondering, is all of this related to the acquisition of Natoom? Or is there something else in those numbers? There are a few other things in those numbers. You're absolutely right with this. We are investing, for instance, in Depreciation to a certain extent, and we continue to do that. And there are, of course, some acquisition costs for Natom and then you have Natom in itself. So there are a few things like that. So I would say that's also from this costing in the Q4. If you now want to calculate for the future, These are a little bit higher, I would say, and not representing perhaps a normal development in administrative costs over a full year. Great. Thank you very much. That's all for me. Thank you. Thank you. Your next question comes from the line of John Hightner. Your line is now open. Please go ahead. Hello, Thomas. Yoon here. Hope you can hear me. Hi, Yoon. Hi, Yoon. I can hear you, Yoon. Thank you. Super. I was just wondering around the order intake that you just mentioned was a bit high and not Supposed to be expected each quarter, but were those orders on a few number of customers, perhaps 1 or 2 big orders? Or were they spread out across several? They were spread out Both among several customers. And within those several customers, they're also spread out among several projects. So it's not 1 or 2 Really big product. It's more like, I would say, for us, it's quite substantial amounts. We're talking here about products of €300,000, €500,000, €500,000, which for us is quite big. But it's as you can understand, I know we talk about a number of those projects to, Of course, to pile up to this kind of order intake that we're showing now for the Q4. Okay. And given that orders are a bit bigger than usual, I guess that they will come with a bit lower gross margin, But perhaps the same EBIT margin as on group level or perhaps even better, Do you care to comment any on the margins level there? Right now, it's a bit difficult since we have this issue, as we mentioned before, on the steel pricing. So it's It's a bit difficult to see how this will influence now during quarter 1. But I would say that generally speaking, not referring to what might come out in quarter 1. But otherwise, you're right, June, that you might expect slightly lower gross margin. But since the sales costs are also a little bit lower, we don't expect any Major negative figures in when you come down to the EBIT level. So when you get these type of bigger orders, you will be able to keep the EBIT margin level more or less on the normal average due to the lower SG and A in relation to the sales. That is how we are, let's say, planning it, yes, correct. Super. And then it seems like orders were good and you mentioned warehousing in particular. Can you say anything about the auto industry in addition to what you wrote in the report, but is anything happening in that industry? Yes. We see now that they have come over a lot of the main problems they're having last year with a lot of restructuring and Layoffs of people, etcetera, and now they look forward to improvement. We'll start to do a lot of CapExes again because There is a need for a lot of CapExes. We saw during quarter 4 also that the demand and the purchase of costs were starting to get up again. So I think that The Industry Day, even if it's still rather squeezed, I would say, from a CapEx point of view or seeing some sort of light in the tunnel, At least as far as we can see from our point of view. So I would expect that the CapEx and the investments from them We'll continue to grow from now on, even if, as I said for us, I don't expect maybe major Orders coming in during the first half year, at least. And just a final one on the auto industry. Do you See any signs of that the automakers are even more working on building cars on the same platforms and then perhaps they can Increase the number of models, but stay on the same production line and that perhaps would lead to lower demand For your fences as they don't need to change them as much? Or do you think the normal pattern will come back as soon as they start investing in new production lines? I think in itself, the patent, the normal patent will come back, but perhaps not to the same extent as before Because obviously, a bigger percentage of what's coming tomorrow will be electrical cars or at least hybrid cars. And those will not demand, to the same extent, safety in the same way as the traditional engine because there are less Lot less moving parts. So there will be a slight reduction, I would say, in the demand, generally speaking, for our type of product because of this change in, Let's say customer demand, but it's not a significant change. Okay, good. Thank you. That's all. Thank you. Thank you. Next question comes from the line of Adolf Lara Dirie, your line is now open. Please go ahead, sir. Hi, Carlos. How are you? Hi. How are you? Hi. How are you? Hi. How are you? Hi. Thank you. Just a question. It will be a follow-up from John, Question on the auto sector. Can you just remind us what was the size of the market when It was at the top for you, something like I expect to say like 2016, 2017? No, it was in 2015. It was at the top because that's when we went to Stock exchange and also it was above 30% on our turnover which was coming from Automotive and last not last year, 2019, we will recalculate this figure now for the annual report. But For 2019, we said officially it was between 10% 15%. And my guess is that for 2020, it will be in a lower figure. Okay. And just a comment regarding FallingGuard and the spread between FallingGuard and Turax Margin, can you give us a little bit more details on it or We don't it's still clearly below what the Truax But as I said, it has substantially improved compared with before. So it's somewhere in between, if you see my point. Yes. And does it mean that you need more volume from the automotive industry to get back to It's, of course, quite helpful. But I would say that with the continuous improvement we are still working on, We will be able also with the present volume or at least a normal volume development to further increase the profitability during 2021. We still won't come up to the TROAC level because there are some structural differences between Follinor and TROACs, if I generalize. But nevertheless, there is a clear potential for improvement during 2021 regardless of automotive or not. Okay. And then Just final question on China. I noticed that you were slightly positive on China even if it's still low volumes. Yes. Is it European players are asking you to To work with them? Or is it more local players? And then you see that you are taking market share from small local players? It's a very good question. Unfortunately, so there is it's still mainly European or international players, which is the Core of our business in China, we still have a much too little turnover Into the Chinese distribution network. They still think that our products are too good. And obviously, indirectly, they are saying it's too expensive. So I think that's That's still a matter in China. Yes, great. Thank you for that. Bye. Thank you, Alfred. Thank you. No further questions at this time. Please continue, sir. Okay then. Thank you very much, and I appreciate your Questions, etcetera, we like to hear that you're, of course, interested. With this, I'd like to end this and say that I look forward to Talk to you or together with you in April, where we have the Annual General Meeting. And in connection with that, we will have this kind of Telephone conversation again. I think it's the 26th April or something like that. So thank you very much for listening in and Thank you. That concludes our conference for today, sir. Please standby, participants, you may all disconnect. Thank you all for joining. Stay safe, everyone.