Ladies and gentlemen, thank you for standing by and welcome to today's presentation, quarter three report 2020 conference call. At this time all participants are in a listen-only mode. After a speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and then one on your telephone. Please be advised that today's conference is being recorded. I Would like to hand the conference now to your first speaker today, Mr. Thomas Widstrand. Please go ahead, sir.
Thank you, very welcome to Troax Group presentation of the third quarter result development. As you heard, you will be able to have the Q&A session after I've made a short presentation of what we have achieved during the third quarter. As usual, I will more or less follow the presentation that we have already downloaded on our webpage. For those of you who are interested to follow more or less what I'm saying, you can go to the troax.com webpage. On the top of the left-hand side, you will find a sign for the menu, i f you push that and go see on the menu, the next page you will find a headline which is called Investor on the left-hand side. If you push that, y ou will then have to go to the right-hand side and push the button for Financial Reports.
In Financial Reports, you will find presentations on the right-hand side. That's where I will start now with the presentation of today, 28th October. As you see here, for those who are following, we normally have some introductory pages, for those who might be new to Troax, I will not dwell a long time on these pages, I will just make a brief introduction that Troax is. As most of you know, only involved in the safety business and mainly in mesh panel or perimeter guarding, aimed both in protecting people, processes, and also property in certain cases. We try to have safety in every aspect, we are actually trying then to split our business in three different customer segments. The main ones from a turnover point of view is called Machine Guarding, 60%-65% of our turnover. It was then related at least to 2019.
As you can see from the picture, this is a typical picture then of where you see that our guarding is installed. A large production line, c an also be small production, obviously, but these are typical examples. Next one is what we call Warehouse Partitioning. From the past, this was very much traditional warehouses where you needed protection to prevent people working in this area or forklift drivers to be hit by falling objects, coming down from the different shelves or the pallet racks above them. This is approximately a quarter of our turnover, and 14% is what we call Property Protection, which is mainly then products and the customers which are on the northern part of Europe. Not only the Nordic or Scandinavian countries, but also in Germany, et cetera. There is a certain market for this.
I normally also, since one year or so, try to communicate also that we don't have a segment which is called automated warehouse, but in this page, which I'm trying now to look at, which is the next page here. We are combining them products coming from the Machine Guarding and also from the warehouse part. In some cases then when it comes to moving objects, then the customer needs products which are actually aimed for then more the machine guarding type of fence. This segment, or I would say then part of a segment, which goes to these other two segments which I was referring to, that is really something which is growing a lot at the moment and have been doing so for a couple of years.
Our understanding, and we are convinced that it's going to continue to develop very positively for many years to come. I'll come back to this a little bit later. For those who are interested in roughly our split from a geographical point of view, we have in the next page the year in brief summary, which is referring to 2019. As you know, we are not a really big company. We had last year turnover of EUR 168 million. Euro is our denominator from currency. From that, roughly 53% was coming from mainland Europe, w e had 16% turnover from the Nordics, 15% in North America, 20% in U.K. New markets, which is of course, the region where we aim long-term to substantially increase our presence was 4%.
We are a growth company by definition, so to speak, because we're working in a market which over time is growing. All be it right now, it's difficult to grow with the pandemic consequences from the COVID, which I'll come back to and comment a little bit later. Over time, we are supposed to grow with something which is based on that the market is growing with 4%-6% per year, and on top of that, we should continue to take market shares. I'll jump very quickly into the next page first, if you are following me, and that is called Financial Targets. We have these four targets that we are communicating externally.
First one is sales growth. We don't really communicate an explicit figure, but as I said just now, we expect the market growth to be 4%-6% per year under normal circumstances over a business cycle. We have historically been growing with some 8%, 9%, 10%, depending on how you are measuring it. I would say, without giving any forecast, that this is probably a good indicator of what could be possible to achieve also in the future if the market then develop in the way that we have expected it to be. Right now then, for the third quarter, we didn't have any organic growth at all. Cumulative, we are, I think now 4% of the last year being hit then, of course, by the COVID decrease in the second quarter.
Regarding profitability, we have a target to have an operating margin of 20% or in excess of that, and we are right now, after three quarters at 18.7%, which I think under the circumstances is an acceptable figure. Regarding capital structure, our target is to have a net debt in relation to EBITDA, which should be lower than 2.5 x, and we have a rather, I would say, stable situation at the moment of 1.1x, which means, of course, that we have good financial abilities to continue to grow, both organically and also with acquisition, if that possibility would come up. On the dividend, which is the last target I'm referring to here, we normally have the target to pay approximately 50% of the net profit in dividends.
Due to the rather, I would say, extraordinary circumstances this year, we decided to be a little bit cautious and pay roughly half of what is normally expected. In July then we paid approximately 24% of the 2019's net income. Now coming into Q3, as a summary, you can say that Q3 was a much more stable quarter, especially then if we see it from where all the turbulence were coming from the beginning of the second quarter, or at least in this period of March, April, maybe May, a fter that, it was starting to stabilize. I would say that Q3 was more stable. We have achieved a similar EBIT result and margin in Q3 2020 compared to last year.
Despite that, of course, we have some negative effects of the coronavirus, specifically relating then to that the market demand is still lower than what it was last year. We see that have been during Q3, good sales levels in most areas, and we are quite pleased to see that it is a good development in the Nordic area and o n top of that North America. Maybe North America is especially rewarding since we've had some struggling period there to integrate our, since a couple of years acquired company, Folding Guard. We've seen now in the last quarters that they have developed much more stable, and actually then, as I will come back to and comment a little bit later, we've had a substantial improvement both in the efficiency and the result development in this area than in the last quarters.
Regarding the market, there is a general comment which I had already in quarter two, which is still valid in quarter three, t hat probably means something, especially from a pandemic point of view, that is we see still a reduction of market activities, specifically towards then the small- and medium-sized customers. The bigger ones they seem to continue with their investment plans. Of course that has an impact, of course, also on their sub-suppliers, which could be small or medium-sized. It's not so that it suddenly disappears, but we have seen a reduction of activities still during the third quarter, [all be it], maybe this has improved somewhat during the third quarter. Earnings per share was the same as last year, I would say that this is also confirmation that it was a rather stable quarter.
I already mentioned that Folding Guard was continuing in a very good way during Q3, and as I said, I can confirm then that the results have been substantially improved compared to 2019. Even if those of you who read our figures in the correct way, so to speak, will find then that during Q2 we received a subsidy from the American government in order then to prevent us from making a lot of people redundant in our manufacturing unit in Chicago. That was disappearing during Q2. In Q3, we have not seen any of those subsidies. The result is still on a good level, I would say, in Q3.
Which is a good measurement, hopefully for the future, even if I think that we still have to get confirmation on these sort of levels for a number of quarters still until I personally, at least, is going to say that now we have a very good situation in Folding Guard. We still have some room for improvement there. Working capital is on expected level, even if the inventory is still a little bit on the high side to handle the negative effects of the coronavirus. Regarding our investments, they are ongoing according to plan, and the latest investments that has been ongoing now for, let's say a period of two years, they are now in the finalization phase.
The new factory in Italy is more or less finished and is running in a good way despite, of course, that we have some lack of volumes also in the third quarter because of some lack of market demand due to the COVID consequences, as far as we can judge. The factory has been producing during the whole period, I mean, in Q3, and the same goes for the main production plant in Sweden, Hillerstorp, and also our unit in Chicago, United States. That's also something, of course, which has a good contribution for our results, that our manufacturing units have been running in a good way despite then, of course, the volume could be even better during Q3.
Talking a little bit about the different sub-segments that we're working with, of course, automotive is still important for us, even if it's much of lower importance today than it was a couple of years ago. It actually sort of continuing to be a weak segment. We read, I think all of us in the newspapers, that the automotive is starting to become at least a better segment or the car sales are increasing. There have been some smaller orders during the third quarter, which is clearly not dead. I would say that from an investment point of view, they are still way behind, I think, expectation from before. Now, I'm convinced that we will see more positive figures coming in from the automotive part, but clearly it won't be then really short term. I would be very happy if it start again in 2021.
My gut feeling is it might be so it might take even longer than from a purely investment point of view. Let's see. What on the other has been quite positive for us, which you already understood probably, is that we've had very good business from the, what we call the automated warehouse businesses, driven, of course then, by the continuous demand from e-commerce, which was started a couple of years ago. I would say from this respect, actually, the COVID problem is not really negative because if anything, we have seen during this COVID time period that these sort of companies who are working with this, either as an integrator or as a big end user, that their interest for creating these kind of the warehouses, fully automated or at least semi-automated, is actually increasing even further.
Probably the COVID is pushing then these sort of investments even further, I would say short term. We have also said in the comments then that we expect a continued decrease demand in Q4 compared with last year, because we still see then some negative impact of the coronavirus. If you compare with the activities during Q2, Q3, you shouldn't read it as it will be a continued decrease because we are more or less just saying then that if you compare with the demand in Q4 last year, you probably have to expect then a certain reduction in market activities in Q4. Let's see how good we can do it.
There could, of course, be some good orders coming in. Generally speaking, I would expect the Q4 without giving any real forecast to be a little bit on the lower level compared with Q4 last year. Some financial highlights you will see on the next page. If you read already, you will find that on the order intake, we were a few percentages lower than last year, whereas the sales invoice were on the more or less exactly the same level as third quarter last year. You have to remember then that we had a reasonably good build-up of bigger project orders during Q1, and actually, despite the COVID problem, we had a few build-ups of that also during Q2, which has been to a certain extent been invoiced during Q3.
Obviously from an invoicing point of view, these are good figures, partly coming in from previous quarter. The order intake, I think, is more representative of the market activity during this period. Gross margin is stable, I would say, not exactly to the same level as last year. There are no really big deviation as a combination of geographical mix, product mix, and a little bit lower volume than in certain areas. No major impact, n o strange things I would say have been happening there. On the operating profit side, we are slightly lower than last year for the quarter. The main part, I would say, of this deviation of EUR 500, 000 coming down from the currency development since same quarter last year, we had a positive currency development mainly connected with the US dollar. This year it's actually negative.
If you see the US dollar development, you probably understand what I'm talking about. Obviously we can't say that this is not affecting us. I'm just saying then that when you analyze it, you can see that it's a rather stable quarter because with the same type of volumes, the same type of sales invoice, similar gross margin, we get a very similar operating profit. Then we have the earnings per share, which I already said, is similar. I'll then discuss a little bit nine months, the cumulative figures, which obviously then are a little bit lower, especially on orders and sales side. We talk about 4%, 5% cumulative lower, which is not something which we of course like. It has also a certain influence, as you can see on the margin side, even if it's not substantial.
There are still some room for improvement here, I think, when the volume will return a little bit better. Cumulative, we have an operating profit of 22.2%, which is EUR 2 million below last year. If you look at the margin, we are at nine months, down 0.9% lower in operating margin, which I would say personally, at least my opinion, is that this is quite acceptable bearing in mind and that the situation we had just a couple of months ago. Right. I think I continue to the regional development, next page, order intake and sales, and like to point out then, especially for the quarter, a few interesting things. Of course, then the continental Europe is hit a little bit with a lower activity, mainly I would say based on the COVID side.
We have not seen any other negative development and certainly we have not lost any market share. I'm rather convinced that we have increased. You see there is a positive development in Nordic region and it's negative in United Kingdom. I normally say that U.K., you can clearly see that there is a lowering of demand, generally speaking. Now we're approaching another Brexit activity, which we, of course, are a little bit wondering where it's going to be. We have also some other activities, some export activities from our U.K. region. It's a bit difficult to say that this 22% for this quarter is representative. I would say that last year we had some very good project orders in order intake, whereas this year we didn't have to the same extent. I don't think the 22% should be seen as representative for the market development.
Clearly the real U.K. marketing is still decreasing compared with 2019. Very positive is next one, North America, with close to 20% in euros, which is good figure. We can see that we are actually then growing in both brands, both sales channels. Both Troax and [Falmec has done quite well, I would say, during the third quarter. Totally we are then -4% or -5%, depending how you see it with the currency. On sales side, we are ±0 for the quarter with a similar figure, negative in continental Europe, and a much smaller figure than negative in United Kingdom, whereas the rest are positive. Also new markets, which is for us still a rather small one, is increasing. Looks very good in percentages, but the absolute increase is perhaps not so impressive.
We still have some way to go there before we have, I would say, a decent figure that we can say, "Now we've really achieved something." On the financial point side, we are -5% , so it's a similar page, or similar figure, sorry. Nothing, I would say, which is extraordinary compared to the comments I had before. On the sales side, it's also a similar picture as you will see. Obviously, we expect the North American figures to improve further during the remaining quarter as the order intake has been rather good in the third quarter. Right. I go to what I call conclusion.
Compared with the very weak activity we noted in the second quarter, which obviously was substantially influenced by the COVID, we have seen a substantially better activity during the third quarter, not being still on the level that you might see then in, so to speak, a normal quarter or a normal level, but it was still substantially better. Could have been somewhat we call catch-up effect from that customers were putting in some orders in Q3, which normally should have come in in quarter two and was delayed then for whatever reason. Nevertheless, we got a number of, I would say, good project orders. Generally speaking, the activity level was reasonable, I would say, for quarter three.
Still, some small and midsize customers were hesitant to commit to new orders. We expect when things are stabilizing, which it will, I'm convinced sooner or later, of course, this will slowly come back to us and of course to others. As I said, without exaggerating it, we still expect that the market activity will be compared with last year, a little bit weaker during the fourth quarter. Continued low demand from the automotive industry; d on't expect any short-term real improvements there. Positive was in the quarter was still the automated warehouse business. We do expect that to continue. No real negative signs there as far as we can see today. Regarding the U.S., both the Troax Inc. and also the Folding Guard operations were continuing developing well. They both show the continued improved results, which I'm quite pleased with.
We see a stable but somewhat lower activity in continental Europe and also in the home market of the Great Britain compared with the same quarter last year. Remember then that I said with the Great Britain you have to see it a little bit more, I would say long-term, because we sometimes get some bigger product orders which are influencing then the figures, positive or negatively. All factories in the Troax Group, with maybe one exception, were continuing to develop very well, which of course gave a good coverage of our fixed cost, no governmental support. In total, I would say there were a stable development in the quarter with a similar result as in 2019. I normally comment also a bit in the next page on the growth factors. They are still remaining.
If you look at these bullet points that we have there with the increased industrial automation. If anything, I would say that the COVID is probably stressing the fact that the companies have to do even more there in order to be competitive. I think a number of companies, could be both customers of us or could be potential customers, have realized that having suppliers far away could be detrimental for the delivery performance of their own company than if this sort of problem will occur. I think we're going to see what we have written since a long time ago, this onshoring of manufacturing, or that people take back then some manufacturing from faraway countries. This will continue.
On top of this, we have, of course the growth in e-commerce, which has now been growing very good in the last couple of years, and I'm convinced that this will continue to grow for a number of years to come. The other things lower down on this list are, of course, important longer term, but they are actually of much smaller importance for us short-term. It's primarily the three first one which are important for us. In this market, we are clearly a market leader, w e still have some older figures there of 2018 and 2019. We think we have some 25% market share in Europe and close to 15% worldwide. This is, of course, a little bit difficult to assess because there are no formal figures that we can achieve, but this is our best assessment.
You will find in the next page, where we have the competitive situation. You can see the best assessment of our competitive situation in 2019. Our production units, we have increased in the last couple of years, substantially, the machine capacity. Right now it's actually the phase which is the weak sector, if I can call it like this. We are continuing to invest for a safe tomorrow, where, for instance, we are putting in a lot of effort of increasing the recycled steels in our products. We try to increase the solar panels, especially when we do new investments. Of course, we try to utilize the fact that our products are, by definition, made of more or less 100% recyclable steel.
On the Troax innovation side, we just put in one example there that we have these more clever buttons, Smart Post, we call it, where you then directly can build in these sort of smart contactors into the post, and then you get a connection directly with the locks. Or you could have it connected directly with the robots or whatever machine you have which you are protecting. Just an example of that. Thank you for this. We try to continue to build a good, safe environment for our customers, which is really the key, what is driving us. We try to make your world safe, obviously. With this, I'd like to stop my presentation and take a breath of water here to clear my throat. I wait for your questions in the meantime. Thank you for listening so far.
Okay.
Q&A? Yes.
Yes. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. Our first question comes from the line of Jacob Edler. Your line is now open.
Hi, first of all, big congratulations on a strong Q3 report. I'm here with Herman as well from Handelsbanken.
Yeah, t hank you.
When you talk about North America and describe that you have had better efficiency there, does it primarily derive from gross or operating levels? Have you had efficiency both in Troax and Folding Guard in NA, in North America?
Impressively, yes. When I talk about efficiency, it's of course mainly related to the manufacturing and logistic part. We've seen a good improvement in productivity from a manufacturing point of view, also from a logistic point of view, raw materials and what have you. I would say that from a financial point, that is the main part. Of course, since the order intake now is growing both in Troax and in Folding Guard, obviously, you get a, you know, better KPI on the sales side as well. There we have not really changed anything. I would say it's more that we get now some profit from a lot of hard work we put in the preceding years. It's hitting us now positively in Q3. Financially, it's mainly coming from the manufacturing and supply chain point of view.
Okay, t hank you. My second question is regarding recently we've seen some increased risks for secondary lockdowns, primarily in continental Europe.
Yes.
Given that this is 50% of your sales, roughly.
Yes
Do you see any big operating risks if these European countries would go into lockdown again?
It's a very good question, and obviously, which everyone understands, very difficult for me to give you a proper answer. We came through during the second quarter, which was rather difficult. I would still say in a good way, because we are living in a good world, so to speak, because we are late in the investment phase. Even if there will be lockdowns, I'm pretty sure that a number of customers would then pursue still investment programs. I think that obviously if there is a more major lockdown, it will of course hurt our business negatively. You can look at the second quarter figures and probably see what kind of impact that will give.
I would say that if countries then in continental Europe continue to strive to keep the industry open and so forth, I don't see a major negative impact on our figures even. Of course, there will be a certain impact of negative nature. That's clear. What we see today, we are not so concerned, but it could change, as you know, dramatically just during next week.
Yeah, exactly. Thank you so much, t hat was all for me. Thank you.
Okay. Our next question comes from the line of Kenneth Toll.
Yeah, thank you. I'm a little bit curious about the development in North America. You say that the profitability has come up now and has improved in both the Folding Guard and the Troax businesses. Are you planning to add more salespeople now in order to push harder for market shares?
Under normal circumstances, we should have done that, Kenneth. Your question is absolutely relevant. I think to be honest, right now, with the present development in the United States with the COVID and presidential election, we wait a little bit. Otherwise, you're absolutely right. It's a very good timing for us to use this, let's say, better base to go from to continue to invest on the sales side. Short term, we're going to be a bit prudent, unfortunately.
You're happy now with the quality levels of the products and delivery precision and so on as well?
Yes, please. Yeah. I think we will still have some upside if I compare it with what we do in Europe, but according to the American levels, it's quite acceptable now. So we have a good base, a firm base that we can now continue to improve on.
Okay. Also, you have a very strong balance sheet, you said that you have the strength to do acquisition if an opportunity would arise. Would it be possible to do acquisitions now? Do you have any more active processes?
We have a few ones. I think I already said before the COVID came up that we saw that there was some more activity then, at least some preliminary activity coming up then on the M&A side. Obviously there was a certain stop in those activities due to the pandemic situation. We are, of course, not forgetting about these activities, so we will come back to those either short term or longer term. There are clearly some possibilities. As you know, there are not so many in our type of business, but there are a few ones, and those we are clearly going to pursue.
You also say that you are coming to an end in the investment phase, where you have invested both in the U.S., in Sweden, and in Italy. Do you think that the annual CapEx levels will come down in 2021, 2022?
Yes. The simple answer is yes, because right now we have good machine capacity, which will be okay under normal circumstances for at least three, four years to go before we start looking into maybe a new extension. If we are forced to invest quicker than that, then I'm very happy because it means then that sales is driving this sort of development, which is not negative for us or for the business or for our shareholders. To calculate, I would say with what you know today, yes, clearly there will be low investments in 2021 and 2022.
Sounds good. Okay, t hat's all for me. Thank you.
Thank you, Kenneth.
Okay. Once again, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced.
Okay. It seems to be [crosstalk]
I think we have
Okay, good.
We have Kenneth Toll.
Yeah.
Your line's now open.
Yeah, thank you. Just to follow up. You see the softer demand in the U.K. and continental Europe, but are you doing anything to change your cost base to prepare for somewhat softer demand, o r do you think that demand will come back soon?
I think demand will come.
Yeah.
Yes. If you don't get these major shutdowns now of COVID and so forth, I think demand will continue to stabilize, and over time, come back, whether we talk about one month or one year, it's a little bit difficult to assess, but it's clearly coming back. We are a little bit cautious to reducing cost too much. Of course, the more variable part of the cost structure, we are very cautious about right now, and we are actually reducing in some markets where we see then that the change in the sales processes drives maybe a slightly different type of a way of going to market. In some markets, we have reduced a little bit of the external sales people, are waiting then to see how the situation will stabilize.
On the automotive side that have been weak for so long, isn't the automotive industry getting closer to large launches of electric vehicles and so on?
Correct.
I think that, yeah, in 2022, there would be higher volumes...
Yeah.
...produced of electric vehicles and so on. When do you think you will get orders for such r ebuilding of manufacturing systems and so on?
I think we're going to get some during 2021, but I don't think it will be any major turnaround, so to speak. I think especially during the second half of 2021, I would expect everything else equal, so to speak, to get a reasonable amount of orders from this kind of customer. That's absolutely correct.
Okay, s ounds good. Yeah, t hat's all from me. Thank you.
Thank you.
Okay, sir, our next question comes from the line of Stefan Alb, your line is open
Yeah, thank you for taking the question. My question's on currencies, and the Swedish krona has been pretty strong. Obviously, the US dollar has been pretty weak. There's been a dramatic shift, Q2, Q3, and obviously, if we stay here, you have headwinds instead of tailwinds. Can you talk about your hedging strategies or...
Yeah.
...the impacts on top and bottom line? Is there a good rule of thumb for every percent move, SEK dollar or SEK British pound or SEK euro, you get X percent moves?
Yeah, we used to have that, but because we have changed the structure substantially, we don't use those old rules anymore because in a number of years, we've been trying to decrease then our dependency on the currencies, partly by purchasing more in euros, which is typically then our safe sales currency, so we get a better balance. We're also hedging, generally speaking, not the balances, but we trade the operating flow of currencies in and out, 18-24 months ahead, we cover ourselves. I think it's 70%, 80% of the flow we try to cover that way. It's indeed so, as you say, that when you get bigger fluctuations in the currency, it will of course have a certain impact on us. Firstly, it's much reduced compared with a number of years before.
Of course, we get some time to adjust to it positively or negative just because we are covered then for 18- 24 months. Of course, I think because United States then is growing in importance for us, I think we have to reevaluate maybe a little bit this because now we have this conversion from a profit then in United States, which has a negative impact on when you convert to euros. I think we still have some changes to do before we say, now we have adapted to this sort of situation. This is how it looks today. From a total group point of view, it is not so that just because the currency changes, we get a completely different picture.
Of course, the currency conversion will change then when we convert everything to euros, especially then from the dollar, where we get more and more dependent on.
Second question I have. When you look at the consensus for 2021 and 2022, t hey have 10% top-line growth for you. Is that realistic? D o you have the orders in hand? Do you have the visibility to say...
No.
...it will be double digit? Because you have the currency headwind on top of that, and as you said, there's a lot of question marks about what the impacts are going to be post the elections in the U.S. I'm here in the U.S., and it's a real challenge forecasting things.
Yeah, y ou're absolutely right in both of what you're saying. Firstly, we obviously don't have these orders on hand, and we can't see very much further than one month or maybe even two months ahead. We can't see that from the figures. We more or less then judge our basis, what I'm saying, from the operation side, forgetting about currency for a second, on what our customers are saying and what kind of plans they are at least putting forward right now. Of course, this could change dramatically because of the COVID or the presidential election or maybe other things. We have to base our plans on a certain relatively stable situation. Otherwise, you end up in, I think taking not so good business decisions.
On top of this, we still have a rather low in North America, a rather low market share, even if it's growing now nicely in the last year or so. This means, of course, that even during a more tougher period in the U.S., we are supposed to be able to grow because the American companies have now realized that they need; A, better safety systems and especially Troax, less Folding Guard, but especially Troax can supply this to American customers who understand this. B, we have still a vast amount of potential customers to go and talk about and show them how good solutions we deliver. Without saying that this is a piece of cake because it's far away from that, but there are still good potential for us in North America.
Going to the currency, as you say, we have now production in the United States also for Troax since what is now two years back. From an operational point of view or pricing point of view, we are now following how the American market is developing. Whether it goes up and down there, it doesn't matter so much. What you have is this, what I talk about currency conversion when we convert and the profitability in the US dollars to euros since we are then reporting euro. That of course we will have and let's see what we can do there further to at least smoothen out a little bit these ups and downs that you will get. There's no doubt about that.
Have you considered the CapEx cycle for companies? What's likely to be the case, if you believe the polls, there's going to be a blue wave. That means corporate tax rates will be basically increased significantly from 21%- 28%. There's a direct impact on your U.S. subsidiary, theoretically. More importantly on your clients, there will be less cash flow for clients. On top of that, all the e-commerce players, that might not be paying anything in taxes now, there's going to be a minimum 20% across the board that they will have to pay based on that. There could be a very big slowdown in CapEx spending as corporates retrench in 2021 or 2022.
Yeah.
What do you think about that?
I don't disagree at all what you're saying. I think there's a likelihood of that. I'm still coming back to the same answer I gave you before that seeing the automated warehouse side, it's a long-term trend. It's a mega trend that will continue regardless who is the president in the United States because the customers are demanding more e-commerce, so there will have to be more investments there. Of course, there could be a delay investment because there will be increased taxes. I fully buy that. Over time, this will still be a very interesting market with a lot of demand where we, and others of course, we will fight to take our share, and I'm convinced that the Troax has very good opportunities to continue to take good market shares in the market, which will continue to grow.
Generally speaking, you're absolutely right over the overall economy and the taxes, and I'm sure there could be some dips in demand, which we have had historically and we're going to see in coming quarters also. We are not in this business for one or two quarters of next year. We're into this long-term to continue to grow market share and to continue to grow the turnover and profitability of our customers, for the sake of our shareholders, blah. We just have to adopt the situation and as I said, we still have a big market share to gain in the United States over time. We can talk about this during next year, how it develops. I'm sure we're going to have quarters which are good and some quarters which are worse because of exactly the same reason you were talking about.
Longer term, I'm convinced that Troax is going to develop positively also in North America, despite these negative things you're talking about.
One last quick question from me. I saw that there were some insider sales, but they're a little unusual in the sense that they're really from Handelsbanken Fonder. Is that because Handelsbanken Fonder is on your board or because you yourself have shares in a fund that automatically sells shares? It's almost like perfect timing for the recent sale.
I can't comment on that because firstly, I can say that Handelsbanken is not on our board, so they don't have any inside information. We are not involved into their funds to that extent that I would so to speak, take any consideration to that. I think it's a question you have to put to Handelsbanken and ask them to explain why they did this. I have no information I can share with you.
You have not sold any shares recently...
No, I have not sold.
...or last year?
No, I've not sold any shares.
Okay, great. That's clear, t hank you very much.
Okay, once again, if you wish to ask a question, please press star and one.
That's interesting. I got some good questions here. If there may be a last one before we close, I'm happy to receive that. Oh, okay. If no one else is coming, I'd like to thank you very sincerely and for your interest and for your questions and interest in listening to me and our development. I look forward to talk to you again sometime in February when we of course, then inform about the fourth quarter and the full year situation. I'm sure we'll come back to some of the questions that have been addressed here today. Thank you very much and talk to you then. Bye-bye.
Okay, that does conclude our conference for today, t hank you for participating. You may all disconnect.