Leading the fashion and low carbon life is the goal of new energy

edited transcript of nibe b.st earnings conference call or presentation 14-may-19 9:00am gmt

by:NULITE     2019-09-23
2019 Nibe Industrier AB earnings in the first quarter of May 15, 2019 (
Thomson StreetEvents)--
Edit text: Conference call or speech for profit by industry AB, may 14, 2019 9:00:00 am GMTTEXT new Transcript = = = Name Enterprise = = = * Gerteric LindquistNIBE Industrier AB (publ)-
CEO, general manager and director, Hans buckmanibé Industrialpubl)-
Chief Financial Officer = = = conference call attendee = = = * Carl RagnerstamNordea Market Research Office,
Douglas Linda Kepler, research analyst
Analyst * Carl bockvestab sandal Colliers Holdings research unit ASA-
Analyst * Clara JonssonSEB, research,
Research analyst of research department * Marcela klanghandbanken capital market AB-
Analyst * stock research on the largest FrydenDanske banking market
Analyst introduction--------------------------------------------------------------------------------Operator [1]--------------------------------------------------------------------------------
Ladies and gentlemen, welcome to the NIBE Q1 results conference.
Today, I am very happy to introduce the CEO lindst.
And Chief Financial Officer Hans Buckman. Mr.
Mr. lindst and
Please start. --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [2]--------------------------------------------------------------------------------
Thank you very much.
Good Morning, everyone.
There is a certain quality of this special record here, because today we still have the annual general meeting.
So what we\'re introducing this morning, of course, will also be introduced later at 5: 00, and we always have a board meeting here.
So still, we think we have to finish this call by 12: 00 or by 12: 00.
But we hope that this will not deprive quality in any way.
If I start like we usually organize, Hans and I, I think the title describes the year, it\'s a very good start,, the demand between different segments and between the different business units we have has been changing.
Growth is good.
Of course, it\'s not a secret that we got official help from Sweden, but organic growth is very impressive.
So we are satisfied with that.
Of course, the results of operations also grow with growth.
Due to the slightly lower operating margin of components and stoves, the operating margin is slightly lower.
When it comes to acquisitions, we have nothing to report [sure]
We are having many discussions.
Unlike in the past, we have just recently started the stripping process of Schulthess Maschinen AG in Switzerland.
Of course, as we say, this does not happen very often in our camp.
The only company we sold before was in 1992, when we sold a small company in France.
We regret it today.
Of course, Schulthess was never--
Within the NIBE Group.
However, we are always committed to being a good boss and investing in--
Full investment.
We can now say that when we finally find an institution that we think is decent for the future, we will also hand over to a company that is in a very good state and ready for growth.
Of course, as a soft one, I should say that during the transition period, we will be the masters of most people in the next 36 months.
Then Helvetica Capital enters and takes over the leadership and we continue to spin off the remaining 25% in a row as a smaller shareholder.
We believe this is quite consistent with what we preach, and you should always be a serious long-term-term owner.
Even if a company joins a company that does not match our profile, it should not be considered a foster child or something like that.
It should be treated like our own subsidiary.
But in the end, when the time is up, you should be ready to peel it off in an organized way.
We are also confident that now participating in management will also fulfill the promise that this company in Switzerland has a very substantial profit and we have not been able to grow significantly since we took over.
But this is also an important advantage of ownership, that management is an important part of future ownership.
So on that side.
Of course, if you just look at the numbers, they correspond almost to what I said when I was 18 years old. 5% growth.
Of course, the growth is mainly due to some acquisitions.
Last year, for example, Rhoss, and some of the elements, were only 5%, slightly better.
Of course, most of the remaining 13% are still organic growth, but a large part of organic growth is currency.
As you know, we don\'t necessarily describe in detail what the currency is and what the real organic growth is.
Because we also know that in the days to come,-
Go another way.
We just have to fight any situation.
Now, it is favorable, it may be a fairly unfavorable day in the future, but we as management have to fulfill our--
Your expectations, the expectations of our shareholders, regardless.
So, of course, operating margins are much higher, almost 16%.
But it\'s also 2 percentage units or 0.
2 percentage units--
Less than last year.
Again, because the expected profit margin for elements and stoves is slightly lower.
If we only look at the traditional charts, we have a look at both sales and post-financial profit.
They follow the same pattern, the first quarter is usually the weakest, followed by 2 quite good, then of course 4, mainly the strongest.
So in our--
In terms of sales, in this regard.
The same is true of our income.
This was the strongest performance in the fourth quarter.
In the first quarter, we usually have about 20%, 21% if you look at it from a historical perspective.
So this is a very good trend.
Then turn to climate solutions.
Of course, as we said before, in a sustainable area, it is a pleasure that heat pumps are now highly valued among customers.
Of course, there is nothing in the market or no one can not be touched by this information, that is, there are some changes in the climate, how should you solve this problem.
We believe that the solution to climate change, they have proposed some feasible solutions.
This, of course, represents substantial growth here.
We also believe that in the years to come, we should be able to convey the same message in terms of commercial buildings, not only like separate villas and smaller apartments, that\'s why we bought rose before the real remaining £ 55% earlier this year.
Of course, with our organic growth in North America and Europe, we already have almost good markets.
We should improve our operating profit margin, which is what we have done and the natural result of the operation.
Then swing very quickly to such a result.
We are now about 3 Swedish crowns.
In the first quarter alone, it was 5 billion. Operating profit naturally increased sharply, and operating profit margin increased by three percentages compared with last year.
Again, this is the weakest quarter of our demand.
So, of course, if everything is done, we hope we have to look forward to a better quarter.
The NIBE element also has good organic growth, but we see in the report that we have a lot of positive prospects in terms of sustainability and climate solutions.
For example, in the white appliance and semiconductor industry, it is smaller in size.
Of course, this also affects our operating profit margin.
That\'s why we\'re talking about relatively high labor costs ---
We used to call low-cost countries.
I think we have to rename it soon because it\'s not that low cost anymore.
But when it comes to our classification, the underlying, of course, is the positivism or optimism, following the trend of the market ---
Very sustainable in all areas, and when it comes to trains, the automotive industry, wind power, commercial vehicles, everything today is in a sustainable direction.
We feel that we are in a very favorable position in their development.
So I don\'t think we should take this as a trend in the case of a slightly weaker margin.
The result we\'re seeing here is a big increase in sales and revenue, a rise in operating profit, but not enough to achieve the same operating profit margin, or I mean, we\'re talking about a percentage here ---
Of course, we are not completely satisfied with this, but this is the current market situation.
We are geographically ready, so it\'s just that some of the pieces are a little bit weaker and we have to keep hitting that.
Of course, there are more areas that are expected to be profitable compared to other areas, but for example, this is difficult to solve, it is a problem in the semiconductor industry, in this part, it is a relatively decent profit, as we all know, it\'s been weak for about three quarters now.
Then go to the stove and we can say it was a pretty good performance there too.
In North America the situation is a little bit better and we think this is partly due to bad weather-
Their winter is much worse than ours.
Of course, in Europe, we also see a big change in wood, or a little less growth in wood now, more like wood particles and gas.
This has always been a trend in North America.
Here we have launched several new products, so our R & D and marketing costs have increased a bit.
On top of that, as we can see on the next slide, operating margins are quite consistent with the previous year.
Growth was good this quarter and operating profit rose slightly, but of course operating margins were slightly lower than last year, but were more or less at the same level.
If we just make some comparisons to the cost, we can say that when we look at this pie chart, it\'s almost the same as what we \'ve seen in the last few quarters, with climate solutions steadily higher than 60%, the elements are just under 30% and the rest are the stove.
When it comes to the profit line, it\'s a bit different due to the difference in profit margins, and of course, the operating profit could be 65%, which is now down 27% for Climate Solutions and elements, and the furnace down 8%.
Geographically, we have almost maintained the same distribution as before, and we have found that distribution to be very healthy, and the Nordic countries are now a quarter of our total revenue and sales.
The rest of Europe is now 40% and North America, almost 30% and 5% outside of these core markets, which of course is the dominant factor in the Asian market, they are more than the other two business units.
So, I think this is a very quick summary of the first quarter.
I think I will give the numbers to Hans in order to show them more accurately.
After that, of course, we were open to all kinds of issues.
But I don\'t think we should drag too much.
So, thank you very much. --------------------------------------------------------------------------------
Hans Buckman of Nibi Industrial Corporation (publ)-CFO [3]--------------------------------------------------------------------------------Thanks, Eric.
OK, before moving into the personal business area, I would like to comment on the impact of the IFRS and the impact of the Schulthess group being partially stripped.
I mean, it\'s in the report, so you may have seen it already.
The impact of IFRS on us is very limited, especially in terms of the income statement.
I mean, since we don\'t like airplanes or something like that, the main thing that\'s already capitalized on the balance sheet right now is the normal lease agreement.
Of course, you also have the corresponding responsibility.
So of course the interest has increased, on the contrary, the cost of rent has been taken out, so the EBITDA that is not shown here is certainly a little better.
However, the net impact on operating profit is like the 6 million Swedish krone in the first quarter. the result after the financial method is basically a zero-sum game, so the profit has just moved 0. 1, [one]unit.
On the balance sheet, I mean, it certainly adds about 0. 8 billion Swedish crowns, but it\'s quite limited given the size of our balance sheet today.
Then to clarify perhaps or just make it clear that at this point in time, our transactions with the shuertes group have no significant impact on our income statement and balance sheet.
From the IFRS point of view, even if we sell the whole company and buy a new company, we sell a small number of companies, which means we are continuing to consolidate our business.
So there is no profit or similar gain at this point in time.
In addition, the balance sheet remains roughly the same.
Of course, we will merge the new code that has been capitalized, so the balance sheet has grown slightly, but there is no real impact after this transaction.
Of course, minority groups will be deducted on the income statement and balance sheet, but the impact is small.
Just to illustrate this.
And then, if we turn to business, climate solutions.
As Eric mentioned, we have had a very good organic growth in this business area, and you can say that we have a good development in the green area and in all regions.
Good North America;
If you like it, Europe, continental Europe;
Northern Europe has always been strong.
Then, as mentioned in the report, we have joined Rhoss, which gives us full flexibility and you can say that we can develop the business ourselves as most owners.
At this time, of course, the company\'s profit margin is low. So we\'re --
Over the next 18 to 24 months, we will try to raise this level to a decent level.
Overall, the growth rate of climate solutions is slightly higher than 20%, with almost 7% coming from acquisitions and most of the rest being organic currencies.
But the organic part is the main contribution to growth, which is very gratifying.
Thankfully, our profit growth outweighs sales, which of course shows that there is a strong organization behind us.
But as Eric mentioned, it\'s a seasonal business, it\'s the beginning of the year, and it can be said that we\'re going to do more in the months and quarters ahead.
Geographically, the strong and good developments I mentioned on the continent of Europe are shown to some extent in the pie chart here, although not seen,, if you take out the corresponding pie chart from last year, sales in Europe will reach 38% and have now grown to 41%.
As a result, while northern Europe and North America are also well developed, they are growing slightly more than northern Europe and North America.
If we continue to focus on the elements, it is also a good organic growth, growing by about 15%, well above SEK 1.
Sales of 7 billion.
A fairly small part comes from the acquisition there, then good organic growth, and of course there is also the help of currency here, in which case the currency is a little more than the organic part.
But, of course, that\'s where we \'ve been fighting, the previous low-
Cost countries, we have seen some big raises and raises in several of them, and we have seen fluctuations in demand in each sector.
As a result, the product structure has changed, resulting in a slight decline in gross profit margin.
Operating profit margins also fell by 1%. It\'s been --
Mainly engaged in semiconductor business;
The performance of white goods is slightly worse than last year.
Of course, cars are going through a huge change, moving from diesel and gasoline to electric cars, though not yet, so that\'s a big change.
There are also a lot of interesting pieces that Eric mentioned before.
But I think what we can see is that the world is becoming more electronic, so it\'s very interesting to continue to develop.
Geographically, it is very stable compared to the previous quarters, with the Nordic countries around 20%, Europe just over 1/3, and North America is still the largest.
Then, compared to other business areas, there is a considerable business in Asia. -
It\'s also in Australia and that part of the world.
So it spread very, very well on a global scale.
Last but not least, we have our cooktop business district. It’s --
I think Eric said it was a good show and I think it was actually very stable.
It moves horizontally to some extent.
But this is a very stable development, or very stable and developed as we have seen in the past few quarters.
The latest focus on R & D and marketing has led to our operating margins being slightly lower than last year, but we are hovering at the same level as last year.
In fact, our operating margins may be around 2%, 3%, and 4% in the first and second quarters.
Now we have reached 8% because basically everything happened in the second half of this year.
Geographically, it is 21% North America due to FPI in Canada, serving Canada and North America or the United StatesS. ;
Nordic 1/3, the rest of Europe.
Then quickly enter the balance sheet and don\'t think too much about it, but just mention it.
That is the impact that we see in IFRS 16, particularly with respect to tangible assets, because it can be said that this is where we started the lease agreement, about 0. 8 billion Swedish crowns.
Then, of course, Rose also boarded the plane, which also had a small impact. And on the non-
Financial liquid assets, due to accounts receivable and inventory in December 31, you will see the growth there, and we are now approaching a growth period again, and we will produce more products for the coming seasons.
This is long term in terms of responsibility
Regular liabilities, interest-bearing liabilities and short-term liabilities
The interest-bearing period corresponding to the lease is retained from another page.
I mean, of course, they have to be separated according to the duration of the contract.
That\'s why these numbers have increased.
From the cash flow point of view, the IFRS 16 also had a slight impact, slightly below the 60 million Swedish krone, which was then again noted in the financing activities that introduced IFRS 16.
But, on top of that, we created very good cash flow in the first quarter, with an increase of about 0. 8 billion from last year\'s 0. 492 billion.
The negative we get from changing working capital is a little bit less, we built more last year, you can say, as I just mentioned, we are still building this year, but not that much
We then continue to invest in our current business in expanding our business. So all-in-
Our cash flow is very good.
I would say that our depreciation is still below or even slightly below our depreciation.
Just look at some key financial data.
Of course, they are also affected by the International Financial Reporting Standards.
Now, the first one is the investment there, which seems to be much lower than last year.
This is certainly related to last year, and they include the acquisition that Eric originally mentioned, especially in the elemental business area of BriskHeat and [MI Heating]
Those were acquired.
But in terms of interest
Liabilities related to equity.
This has had a slight impact on IFRS 16 and a net debt to EBITDA would also be 1.
If we don\'t have this change, the equity asset ratio will be 48, interest-
Take responsibility, they will be 57.
So from the change of accounting principles, this is just pure mathematics.
You can say that working capital is an area of constant concern, and to some extent it sits on the wall and our level is basically the same as last year.
And starting this year.
Ending around 20% is a good number and it always gets better if you ask the chief financial officer.
Yes, and then the last number, so we asked some questions as well.
Return on capital use of 12% per cent;
Stock returns 13.
6%, there was no change due to the impact of IFRS.
Net profit per share rose from SEK 0.
Full 67-
This year was slightly affected by the minority equity deducted from the shuertes business, but as we now estimate, it\'s like a half percentage.
Of course, this will be affected by the actual performance of money and business.
I think it\'s like going fast.
Figures on balance sheets and areas of business.
Let\'s see how clear we are. --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [4]--------------------------------------------------------------------------------All right.
Let me get the horn.
So, I think we will ask questions?
Questions and Answers--------------------------------------------------------------------------------Operator [1]--------------------------------------------------------------------------------(
Operator instructions).
We now have the first question from Carl Ragnerstam from Nordea. --------------------------------------------------------------------------------
Carl Ragnerstam, Nordea market research department-Analyst [2]--------------------------------------------------------------------------------
I have a few questions.
Can you please talk about the wage inflation situation first and what you are doing to offset this, especially in the element section?
Can you also make a little comment on the weaknesses of the semiconductor industry and the automotive industry?
Can we expect to enter Q2 from these sections? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [3]--------------------------------------------------------------------------------
Obviously, for salary, if I understand a problem, in (inaudible).
I mean, how do you deal with this situation when there is a sudden raise?
I think we have to continue to automate and, of course, we may have to shift production in some cases.
That is why it is so advantageous that a production base has been established.
From one month to another, you won\'t do that.
However, we have considerable experience in dealing with salary increases through automated, automated processes.
If that\'s not enough, of course, we\'ll have to move some parts.
This is what we have been doing in the past. But there was --when you have --
When you get double
For example, in the Czech Republic, even in Mexico, the numbers are growing, and of course, that\'s not something you can heal overnight.
So I think that\'s the answer to your first question.
If you don\'t mind, do you know what the second and third are? --------------------------------------------------------------------------------
Carl Ragnerstam, Nordea market research department-Analyst [4]--------------------------------------------------------------------------------
The second is about the semiconductor industry and the automotive industry? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [5]--------------------------------------------------------------------------------
Yes, semiconductor. ---------------------------------------------------------------------------------
Carl Ragnerstam, Nordea market research department-Analyst [6]--------------------------------------------------------------------------------
If you see an improvement, or if you----------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [7]--------------------------------------------------------------------------------
I mean, prediction. -
This is certainly not allowed.
But I think we \'ve been told in the past year that this is a cyclical industry because it\'s very expensive to invest in new factories.
Of course, we are now more active in market research. And we [were]
Fully understand the cost of building a new plant of about $11 billion.
Of course, if the phone manufacturer or whatever, if they see a question mark in the demand, they will slow down in the investment process.
So I think we have to follow suit. we can\'t change this industry.
Of course, we must be more cautious about our costs.
We can\'t get us out of this situation with a hammer. -
We have to follow the market ourselves.
As a sub-supplier of sub-suppliers, we do not--
Because we supply machinery companies in this industry.
So I guess we just have to follow suit there and be cautious about the cost as we know it will always come back and we just realize the cyclical nature of the industry.
The third question is coming again? --------------------------------------------------------------------------------
Carl Ragnerstam, Nordea market research department-Analyst [8]--------------------------------------------------------------------------------
No, this is not the third question, but it is related to it.
We should expect to increase the level of capital expenditure due to optimization of manufacturing footprint, automation, etc, or should we follow the Q1 level or how we should look at this. --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [9]--------------------------------------------------------------------------------
Well, I think the depreciation rate is almost where you should get guidance from the group. I think that --
We are right there.
Of course, automating a specific industry or a specific segment is--
Of course, it doesn\'t cost you 100 million Swedish crowns, but I don\'t think we can foresee dramatic growth, just sticking to the derogatory rate. --------------------------------------------------------------------------------
Hans Buckman of Nibi Industrial Corporation (publ)-CFO [10]--------------------------------------------------------------------------------
In the past few years, it will actually be a little lower than this level for many years, but just a little lower, and now we will be around it, so there is no significant change. --------------------------------------------------------------------------------
Carl Ragnerstam, Nordea market research department-Analyst [11]--------------------------------------------------------------------------------
If you can, do it again.
Taking into account the integration of Roth this quarter, the profit margin is quite low compared to the market segment.
I mean the project\'s climate solutions EBIT margins are very good and that\'s the reason behind the year of improvement --over-
Have you seen or seen improvements in acquisition units such as CCG and Enertech?
Can you turn them around? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [12]--------------------------------------------------------------------------------
Well, I think that if you don\'t give you the exact number, so we usually give it to you, I think it\'s harmful to give you 18 now, 24 months is usually what we think is reasonable. it can be raised to about 10%. So when we --
I think the Enertech we got on, they\'re there right now.
Of course, it\'s not enough, if you want to roll, of course, there\'s a fight between 13%, 13% and 14%.
The same is true for CCG, but that\'s the direct goal they get.
While they always get to 15% or 20%, it\'s not necessarily 10%, it\'s like the elements, the stove, it\'s where you have to get ---
A good period.
So now we have given Rhodes a precise goal.
We have a new management, a very experienced person from the industry.
He gathered a good team around him.
So we are very confident that we will solve this problem, but nothing in a quarter.
Our experience is that in the last 6 to 7 years we have made 18 to 24 months of acquisitions.
We would be very disappointed if we could not get there in two years. --------------------------------------------------------------------------------Operator [13]--------------------------------------------------------------------------------
Our next question is from the Douglas Lindal line at Kepler Cheuvreux. --------------------------------------------------------------------------------
Kepler huffreus Douglas Lindal, Research DepartmentAnalyst [14]--------------------------------------------------------------------------------
I have three questions here.
If you want to break the drivers of organic growth in European climate solutions, we are now seeing organic growth in the future from new building structures, and what will be the change or phasing out of the currently installed fossil heating equipment, replacing it with a heat pump, will you say? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [15]--------------------------------------------------------------------------------
What I want to say is that the main driver right now is that you are replacing old equipment and that countries are going through a different period of time, they are more organized to replace old equipment on fossil fuels because they want to build new buildings forever.
I mean, the industry in Sweden is slowing down, which is no longer a secret.
However, in a similar information situation, we have been forecasting the situation last year, and we believe that changes to the refurbishment or from one system to another will be the main driving force.
So I think this is the question and this is the answer to the first question. --------------------------------------------------------------------------------
Kepler huffreus Douglas Lindal, Research DepartmentAnalyst [16]--------------------------------------------------------------------------------And now --
You mention now that you are starting to launch new heat pump products.
Can you comment on the gross margin level here compared to the past short and long term levels, how should we look at this? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [17]--------------------------------------------------------------------------------
Do you want to accurately predict quarterly or just----------------------------------------------------------------------------------
Kepler huffreus Douglas Lindal, Research DepartmentAnalyst [18]--------------------------------------------------------------------------------No.
Is there basically a material shock? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [19]--------------------------------------------------------------------------------No, I am --so of course.
No, they will launch a new generation at the end of this quarter and in the countries that follow --by-
Of course, this is a classification that we look at very, very positively.
I think some of you may have seen the S series in Germany earlier this year and we are now fully connected.
I think this is what the customer has been asking.
Of course, the cosmetic design is also wise, but I think its connection is excellent, and that\'s what we can judge now, beyond industry standards.
We therefore look forward to this very positively.
When we launched a new product-
All in all, I mean, we\'re always-
For them, it might be better to come up with at least the same margin as the previous level.
But when you release a new product, you also have to consider that, of course, it will take a few quarters before you release ---
Really streamlined everything.
So even if the profit margin is considered to be slightly higher, the pressure model of course has the profit margin that we have been polishing, polishing and polishing, and the new generation will appear.
So I don\'t think we should have much change in the above situation. --------------------------------------------------------------------------------
Kepler huffreus Douglas Lindal, Research DepartmentAnalyst [20]--------------------------------------------------------------------------------
The last question on my side
I would like to see if you have made any price adjustments for the Climate Solutions business area this quarter? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [21]--------------------------------------------------------------------------------
I think this is the smaller one at the beginning of this year. --------------------------------------------------------------------------------Operator [22]--------------------------------------------------------------------------------
The next question comes from Max Fryden\'s line at Dansk bank. --------------------------------------------------------------------------------
Max Fryden, a Danish bank market stock research firmAnalyst [23]--------------------------------------------------------------------------------
So I have a longer term problem with climate solutions and the best commercial products.
You have rose on board now, you have a climate control team in the United States. S.
You have a small company [Air Site]
You\'re in Alpha-
InnoTec if I\'m not mistaken.
So looking into the future, do you still need to do bigger M & A deals in order to reach your goals? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [24]--------------------------------------------------------------------------------Well I --
We want to be bigger, of course, but it\'s always a question of civilization.
I\'m cool now if I can use that expression.
But if you\'re under pressure, I mean, we have enough cash for a massive acquisition, which is a great location.
I think it should also be monitored to know that we are entering a new market segment.
Of course, we want to see that we have now achieved our goals in terms of profit margins and market penetration.
So we know that we shouldn\'t find too many surprises once we get a bigger piece.
So in a sense, I don\'t think we have any pressure.
Of course, we would like to have some goals to join, but as we say in the movie now, Tango takes 2 points.
So I think that\'s all. in-
We are ready for the acquisition, but we have no pressure and we will do it right.
We are most respectful and commercial in changing our company.
We see how many years it took us to fully live and roll out like we do now.
We know we need further acquisitions.
Maybe it\'s more of a 2 or 3 half size than a huge one to get the right geographic location to get the right set up product.
To be frank, it is also to reduce risk.
If something goes wrong, if you buy a big chunk in our relatively new area, you will certainly increase the risk.
So I think you will find all the aspects [need this]
Personality grows here in the future. --------------------------------------------------------------------------------
Max Fryden, a Danish bank market stock research firmAnalyst [25]--------------------------------------------------------------------------------
Given the deal you made recently, I think you have started [test]
The commercial custom base, maybe different, if so, how is the response? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [26]--------------------------------------------------------------------------------Hello?
What happened to the line over there? --------------------------------------------------------------------------------
Max Fryden, a Danish bank market stock research firmAnalyst [27]--------------------------------------------------------------------------------Can you hear me? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [28]--------------------------------------------------------------------------------
Now we hear it again. --------------------------------------------------------------------------------
Max Fryden, a Danish bank market stock research firmAnalyst [29]--------------------------------------------------------------------------------
Can you hear me again?
Yes, I just wanted to know that first of all you have been on the ship for a while, although it\'s a bit difficult for the company and you have--you\'ve been --
The business risks you already have in the underlying company sample.
So talk about opportunities for organic growth.
Because I think you have different marketing methods compared to traditional residential products, you have to analyze the business customer base in different ways. --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [30]--------------------------------------------------------------------------------Yes. --------------------------------------------------------------------------------
Max Fryden, a Danish bank market stock research firmAnalyst [31]--------------------------------------------------------------------------------
Next, how is the reaction? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [32]--------------------------------------------------------------------------------
Well, I think it\'s right that when we buy a company, we usually focus on management.
Let\'s see what they did in the past?
Do they match our character and other things?
Once we feel comfortable there, we move on.
On the Rhodes side, of course, part of the reason for our hesitation is their development advantage, but some of them are not too cruel to the management. they are more administrative than commercial management.
Now that the new management is in, now we dare to start integrating. Now we have --
You can say we started the game now.
So I mean, it\'s just a quarterly business.
But life, vitality and its--
Of course, it\'s completely different from these new people on board ---
I don\'t like to swear to anyone, but it\'s not as powerful as we are now. --------------------------------------------------------------------------------
Max Fryden, a Danish bank market stock research firmAnalyst [33]--------------------------------------------------------------------------------
Okay, but didn\'t you set up a business department or something in the organization? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [34]--------------------------------------------------------------------------------
Yes, that\'s right.
I mean-
Of course, the people of Rhodes are all for this.
It is very different from selling homes in Italy and southern Europe, as it is here.
It\'s not a wholesale business. it\'s a project.
Business-oriented things-
You have to build in the building base and in the building--
In the construction industry.
This is something you have to get people to do and it\'s familiar. --------------------------------------------------------------------------------
Max Fryden, a Danish bank market stock research firmAnalyst [35]--------------------------------------------------------------------------------
But the last one, thanks for the answer about the elements, but if you look at your--
Most of the risk exposure and the market looks like it\'s actually falling sharply, and you seem to be ignoring the growth of the market.
You said other things like railways, aerospace, etc.
Is that why you are growing up in the new market? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [36]--------------------------------------------------------------------------------
I don\'t know if I fully understand the problem.
Sometimes we are very strong on the railway, such as gears, or heat the switch on the Railway Road.
Now, for some reason, maintenance has been low in 3 or 4 countries where we usually see completely different needs.
We do not see this as a concerted action.
We believe--
It is more or less a coincidence, because at the same time, every politician in the world or at least in Europe is talking about the importance of railways.
So I think they are relaxing there and they will come back both in one quarter and two, it\'s more of a coincidence.
If this is the answer to one of your questions.
Of course, we must increase where we succeed.
There, there is no doubt that the climate solution side is certainly not sold to the NIBE climate solution, but in the area and in terms of sustainability.
Of course, we have to hire more people and we have to track the requirements more aggressively because now we see that the potential needs are very large and very good and we have to follow that.
But at the same time, protect those parts that are now slightly weaker becauseinaudible)
If we take it as a whole market.
I mean, customers in Europe and around the world are scared because for a year now we are facing a recession when we talk about rising interest rates.
Politicians and forecasters have been gobbling up for a year.
Of course, it is not surprising that people are worried.
Now, when the Fed comes out and says, \"Well, maybe we shouldn\'t raise interest rates so much.
\"We hope so, and we also feel like the customer will say,\" Well, maybe I dare to buy my house and my dishwasher.
\"So I think those crying wolves, too, should be blamed for the negativity that exists in the world.
I don\'t know if I answered some of your questions.
Philosophy-ing. --------------------------------------------------------------------------------
Max Fryden, a Danish bank market stock research firmAnalyst [37]--------------------------------------------------------------------------------Not really.
The problem is--
I mean, you mentioned the drop in the market in the whole statement, and if we look at cars and white goods, that\'s most of the drop in your sales.
If I adjust the currency, you seem to have a chance to grow by about 8%.
I just wanted to figure it out. ---------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [38]--------------------------------------------------------------------------------Okay.
Then I think we--
You read it wrong or we have to rewrite the report.
We are not saying that all departments are falling.
What we\'re talking about is that the automotive industry is at the forefront of the transition from the traditional automotive industry to electric and hybrid vehicles.
There, we saw hesitation from the customer\'s point of view: What will I invest in?
Is it a hybrid, is it an electric car, or is it like a fuel cell car?
Of course, when it comes to the field, as we mentioned several times, the market is amazing when you walk into the field of the market.
Because you have cameras and sensors that have to be heated.
So I think the world is now collapsing and the report should not be read as saying.
But we should not give too many beautiful pictures at the same time.
Of course, the part we mentioned here is that their needs are weak or flat.
But not now--
The world is now collapsing. --------------------------------------------------------------------------------
Hans Buckman of Nibi Industrial Corporation (publ)-CFO [39]--------------------------------------------------------------------------------
I think the reason we are experiencing a downturn in the semiconductor industry is that we are now in it.
This is a very interesting industry for us.
One year to one yearand-
We haven\'t been in half a month ago.
So I mean there\'s a lot of potential in the future.
Fluctuations occur. --------------------------------------------------------------------------------Operator [40]--------------------------------------------------------------------------------
Our next question comes from Klara Jonsson from SEB. --------------------------------------------------------------------------------
Clara Jonson, cyber, research,
Research analyst [41]--------------------------------------------------------------------------------I have a following.
A question from Max\'s last question.
You talked about the increasing demand for commercial properties in Europe and the United States. S.
In the report, I think the same part is driving your growth now.
Can you explain how much this affects you?
I mean, how much of the total calculation is commercial now?
I really didn\'t catch it if you answered it before. --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [42]--------------------------------------------------------------------------------
I don\'t think we will give those numbers if you look at them.
But what I mean is [Air Site]
When we get less than 50 million Swedish grams.
Of course, Rose was not a secret either, and when we bought the company they were there about 0. 77 billion Swedish crowns.
So it\'s like 0. 75 billion Swedish crowns.
Of course, in the climate control group, I don\'t know where ---
We have no points at this point.
This is another part of SEK 2.
5 billion and most are over 50.
Of course, in the case of a climate solution with a turnover of 16 billion Swedish crowns, you will say that it has exceeded 10%.
But it\'s not like 30%.
But it\'s like a rough number. --------------------------------------------------------------------------------
Clara Jonson, cyber, research,
Research analyst [43]--------------------------------------------------------------------------------
So the organic growth of 8%, 7% is basically commercial in climate solutions ---
Or sorry for the residence (inaudible)
Whether in northern Europe or the United StatesS. , correct? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [44]--------------------------------------------------------------------------------
No, I think--
I don\'t know if we heard we had a chance to grow 7%, but I thinkin-all had some ----------------------------------------------------------------------------------
Clara Jonson, cyber, research,
Research analyst [45]--------------------------------------------------------------------------------
I mean, exclude. -
In currency, of course. --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [46]--------------------------------------------------------------------------------
Yes, I understand.
A little more than this.
But no, I think it\'s the overall growth. -
This is not to say that business activity is slowing.
But as we have so much contact with housing and the changes are very obvious, the private decision, \"I will seek a more sustainable solution. \" That is --
So we are very fast, but I also saw the growth of commercial advertising.
Maybe you should clarify and report that I don\'t know,--
No contraction. --------------------------------------------------------------------------------
Clara Jonson, cyber, research,
Research analyst [47]--------------------------------------------------------------------------------
Then I have a problem with the other thing you wrote in the report.
This is the efficiency measures you take in climate solutions where you can save costs.
Has this helped the profit of Q1 or will it ---
It\'s growing all year round, can you talk about your expectations for this? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [48]--------------------------------------------------------------------------------
Well, I mean, we have an engineering team that we send out to new acquired companies and companies that we want to see more efficient.
This is usually a process that takes from 6 months to 18 months to see the outcome of such a thing.
This is a very obvious first stage where you take something out and then when you find it you have a period that is more like sandpaper ---
Or you file it in a very good shape.
So I think this is the span of time that you will see when talking about this.
It\'s no secret that we try to use our time.
In most countries we pay 8 hours and we like to get the job done in 8 hours.
You don\'t have to work hard every hour, but you have to work at those times.
I think this is a phenomenon in the Western world. this is a phenomenon in the world where we don\'t work for 8 hours.
I don\'t think it\'s any of our criteria, our symbol.
So I think you see this little thing all over the world and we have to see the same thing.
We are so addicted to the phone that it is no different from the office and the workplace.
We try to get people to work for 8 hours.
If they like to smoke, they have to punch in.
If they like to use the phone, they should do it at different times of the day, or they have to punch in and chat and then they will come back again.
So that\'s what we call efficiency, and you might say it\'s out of date.
But I think-with --
For the survival of the Western world-
I hope I am no longer a philosophical person.
I think we have to go back to the old way of working full time.
I think this is a wrong path because there is no full-time job and half the time.
So this is where we work together. -
Efficient means. --------------------------------------------------------------------------------
Clara Jonson, cyber, research,
Research analyst [49]--------------------------------------------------------------------------------
The last question about elements.
There are many problems with this element.
You mentioned that you saw an increase in the uncertainty of global customers, and you also mentioned that it was carried out (inaudible)
About this and all the industries, but I mean, look at your organic growth and we haven\'t seen any risks yet.
So, if that\'s the case, all these weaknesses that we\'re talking about-
Will this happen in the second quarter?
Or when are we going to see it? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [50]--------------------------------------------------------------------------------
No, we\'re talking about demand--
It has not been so beneficial.
Let\'s say we continue to grow in areas where demand is relatively weak.
Of course, we see some more flat demand in better-margin segments.
For example, I talked about the railway. our growth is very good and our profits are very good.
Of course, if this situation is shrinking or shrinking, it will hurt the profit margin and will not drop significantly because of your growth in a segment with a lower profit margin.
I answered the question before, let\'s say, well, the heat pump comes from manufacturers like NIBE, and of course we\'re trying to make the same profit.
But we are talking about different companies here.
For example, one company supplies switch heaters from one company and the other may be another mainland that supplies components that demand very good, but their margin settings are completely different.
So that answers a question, and of course, you see a summary when you see our profit margin of 10% or 11% last year.
Of course, we have different margins in these companies.
This is not exactly the same company.
We are working hard for 10%.
But some people, who have not yet fully arrived there, have gone far beyond that.
So if they start-
If demand starts to shift between the two, though overall income is still increasing.
I mean, it affects your profit.
This is the math behind it. --------------------------------------------------------------------------------
Clara Jonson, cyber, research,
Research analyst [51]--------------------------------------------------------------------------------
All in all, we may see sustained growth in the future, but margins will still decline. ---------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [52]--------------------------------------------------------------------------------Well, that\'s --
This is not their goal of lower margins. --------------------------------------------------------------------------------Operator [53]--------------------------------------------------------------------------------
Our next question is from Marcela Klang of the Swedish commercial bank. --------------------------------------------------------------------------------
Marcela Klang, AB research department, capital market, commercial bank-Analyst [54]--------------------------------------------------------------------------------
My question has been answered, but I still have two questions.
One of the things you mentioned is obviously that wage inflation and raw material prices are causing problems, but do you expect more problems in the coming quarters, or will raw material prices stabilize?
After we have risen slightly this year, is there any room for your price to rise? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [55]--------------------------------------------------------------------------------
Okay, I\'m trying to fix this.
When it comes to the price of raw materials, I think we have seen some-
It\'s dangerous to say that,-
We have to say, I think, some stability.
When it comes to direct labor, we don\'t know that this is politically driven, of course, when they have raised their wages by 15% now, say in the Czech Republic.
We don\'t know what this means for the next few years.
We also know that this is a political decision in Mexico, as well as in Poland.
We must accept this.
We have to deal with this with the responses we give and the other companies they are active in, and I think it may be difficult for politicians to push these issues harder in the future, because I think this could lead to the transfer of industry to other countries.
So I think they are also very sensitive about it.
But I can only guess in this regard.
So I don\'t know if I answered both of your questions. --------------------------------------------------------------------------------
Marcela Klang, AB research department, capital market, commercial bank-Analyst [56]--------------------------------------------------------------------------------
Do you have more room for price increases for your customers? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [57]--------------------------------------------------------------------------------
Well, I think, as we have said in the past, we are always cautious about rising prices.
I think we also have to crack down on suppliers who have brought us unfair growth in some cases.
We also have to protect our customers, our end customers.
So when the price of our products is too high and this can also be an obstacle to growth, we don\'t get ridiculous.
So it\'s a delicate balance.
But we don\'t have any direct thoughts on this, but instead counter it with the measurement method we explained here earlier today. --------------------------------------------------------------------------------
Marcela Klang, AB research department, capital market, commercial bank-Analyst [58]--------------------------------------------------------------------------------
And my last question.
You mentioned the shift to a greener refrigerant. I know that [Systemer]
New products are being developed in cooperation with Panasonic.
Are you also developing your own refrigerant, or are you basically testing which refrigerant you can switch to with your product or how do you deal with this? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [59]--------------------------------------------------------------------------------
No, I mean, we are too small to produce our own chemicals, which is far beyond our size.
However, we strive to be independent in terms of refrigerant.
There are a few, of course, the ultimate goal we are trying to achieve is to use propane or R-
290 as with chemical identification, because of course there are flammable disadvantages, but it has very good properties in heating, cooling and producing tap water, and the GWP is also very low, potential factors of global warming.
So I think, if I can say, that\'s what we\'re trying to fight for, rather than relying on chemical companies again.
Because today all the refrigerant is produced by the chemical giant we have to say. And we try to --
Propane, which is quite easy to produce and easy to handle for the time being-
Except for flammable things.
So this is our goal to get there. --------------------------------------------------------------------------------
Marcela Klang, AB research department, capital market, commercial bank-Analyst [60]--------------------------------------------------------------------------------
Does this shift to a greener refrigerant also mean that you need to choose a more expensive refrigerant, does that mean that the price of your raw materials will rise? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [61]--------------------------------------------------------------------------------
Well, we don\'t. -
I mean, normally, if not too technical, it\'s a very sustainable oil issue in terms of protecting moving parts in bearings and compressors from wear and tear.
Of course, in the past people knew that propane needed some kind of oil, but we had a good experience with propane.
Now I\'m starting technology again because we \'ve been using it for 20 years in some heat pumps.
We had some initial problems but they were cured and we were very happy with that.
More of a flammable side, but when the authorities say you can only use so much per unit, we have a problem and we think it\'s ridiculous, considering that natural gas was pumped into most houses in Europe in cubic meters, they tried to limit the use of XXX cubic meters per unit, and we tried to limit the use of 50 grams per unit about propane.
So in Denmark, as Hamlet says, something is rotten. --------------------------------------------------------------------------------Operator [62]--------------------------------------------------------------------------------
Our next question is from Karl Bokvist of ABG Sundal Collier and one line. --------------------------------------------------------------------------------
Karl Bokvist of ABG Sundal Collier, ASA holding company-Analyst [63]--------------------------------------------------------------------------------
I have two very quick questions.
I mean, do you think there would be a risk for the tariff increase?
If you mentioned this at the beginning of the speech, I am sorry. --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [64]--------------------------------------------------------------------------------A risk of what? --------------------------------------------------------------------------------
Hans Buckman of Nibi Industrial Corporation (publ)-CFO [65]--------------------------------------------------------------------------------
Increase tariffs? --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [66]--------------------------------------------------------------------------------Tariffs. --------------------------------------------------------------------------------
Karl Bokvist of ABG Sundal Collier, ASA holding company-Analyst [67]--------------------------------------------------------------------------------Yes, tariffs. --------------------------------------------------------------------------------
Gerteric lindquest (NIBE industrial company (publ)-
President and Director [68]--------------------------------------------------------------------------------Okay.
Well, I mean it\'s hard to predict, I guess I try not to be politically, but the whole idea that we need to build doesn\'t depend on a production site and a currency.
Therefore, we feel that we have expanded our capabilities as much as possible because we have our facilities in Europe.
Of course, some components will come from other continents.
Of course, we produce in North America.
We produce elements in Asia. If we come --
It came to a standstill.
I mean, it\'s like a power outage because you can\'t foresee the consequences.
But what I want to say is that we already have quite good equipment in terms of fighting against money, if I can use the word, because we are too scattered and cause some production difficulties, or scattered in Europe, North America and Asia in terms of elements. --------------------------------------------------------------------------------
Karl Bokvist of ABG Sundal Collier, ASA holding company-Analyst [69]--------------------------------------------------------------------------------Okay.
Then the last one.
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