Electrolux Professional publ AB

F:4KK1

Earnings Call Transcript 2020-Q1

[Jacob Broberg]

Welcome to Electrolux Professional Q1 Results Presentation. My name is Jacob Broberg, I'm Head of Investor Relations here at Electrolux Professional. With me today, I have Alberto Zanata, President and CEO; and also Fabio Zarpellon, CFO. And I start with handing over to Alberto. Please go ahead, Alberto.

[Alberto Zanata, President & CEO]

Thank you, Jacob. Good morning to everybody. We closed Q1 with several highlights and several things happening to this company. The first one is that we completed the listing clearly. We completed the listing according to the time. And since March 23, we are listed at the NASDAQ in Stockholm. The second one important is despite all the things happening during the last month of the quarter, all of our operations are up and running. We are able to operate in all our factories with the ones in Italy, the ones in France, in United States, in Asia. Not all of them are currently operating at full capacity, but we are in the condition to produce -- develop, produce and ship the products. Key things -- key highlights in this quarter. The first one, the comment about the development of the sales. The market is clearly affected by the spread of the coronavirus, in particular, starting from the end of February, March, clearly. And our sales organically went down 13.7%. We have also to consider that the comparison is done with the first quarter of 2019 when we had the Subway rollout in the same period. And the difference between the 2 is roughly 1/3. So 1/3 of this gap is because of the Subway rollout. The other one is related to the decline of the demand that increased the speed of -- the magnitude of this decline increased clearly during the month of March. The second element is the margin profit. The missing volume determinate the decline of the margin. We have been able to compensate this decline of the margin and the full impact of the corporate cost that we had in Q1 with activities on cost. We've been able to mitigate this negative impact, not completely eliminating it. Tightly, the EBITA is still over 10%. The third element is the cash flow. Cash flow in the quarter is SEK 16 million, is lower compared to the first quarter of last year, in particular because of 2 elements: the increase of credits and the increase of the inventory. The increase of inventory is something that we consciously did -- decided to have because we decided to increase the inventory, in particular, in the satellite warehouse to make available product for the replacement business. The increase of the credit is related to the fact that, in many cases, customers had to postpone not only the delivery of the product, the shipment of the product but also the payment. These are things that we are managing. Cash is king these days. So we are daily managing the relation with the customers, staying close to them, helping them and clearly looking and monitoring how this element is developing. As I mentioned, the market is affected by the COVID and is in particularly affected the segment related to restaurants and hotels, that is accounting for roughly 50% of our business. We see that other customers, they are suffering much less. In particular, I'm saying the hospital, the care segment, in general, the operations where we sell laundry appliances. This is the reason why when we will see food and beverage businesses, we will see that the decline of the business is more evident with the Food & Beverage segment than the Laundry one. I already mentioned that all of our operations are up and running. And this is also related to the fact that we took, already in February, actions to ensure the safety and the health of all our people. In all our operations around the world, we had less -- 10 people infected. We have in place crisis team to make sure that we guarantee continuity, particular for what concern the supply chain that is currently working and providing the condition to operate to our -- to all our factories. As I mentioned, the decline of the sales accelerated during the last of March. And during that month, the decline accounted for roughly 25% less sales compared to the same month of last year. The general market, the uncertainty is so high in the general market, so significant that it is not possible to make a forecast for the financial development also because we do not have clear indication of how the pandemic will continue when the lockdown will be lifted and so on. If we look at the geographies, before talking about the segments, the area -- the most affected area is North America, where we had both Laundry and Food business is down -- Food & Beverage and Laundry business is down. Also because last year, in particular for Food & Beverage, we were comparing the current performance with the performance of last year when we added the Subway rollout. Also in the Asia Pac region, we have a decline of sales of both Laundry and Food. And in this case, it's because of the impact of the spread of the coronavirus came first and in particular, affected countries like Japan, Korea, where we have a large presence in the Laundry segment. In Europe, that is, as you all know, 2/3 of our business. Food & Beverage was down while Laundry in the quarter was up. Now a couple of words about the businesses, Food & Beverage and in Laundry. Starting from Food & Beverage, sales were down close to 15%, 14.6% to be precise, and the margin went down. And here, clearly, again, we have the comparison with the rollout that we had last year on one side. On the other side, organically, we were even more than 14.6% because we are 20.4% down because we reported that the sales of the UNIC company that we acquired in the second quarter of 2019. The decline of the margin is mainly related to the missing volumes in our factories. If we move to Laundry, the picture here is different because you see that the net sales are basically flat. In Europe, we said we had an increase of sales, a small decline in the U.S., while the decline is also substantial in the APAC because of the spread of the virus affected the first of those countries. The margin in this case is higher than the one reported in the first quarter of last year, is above 17%. And this is related to the fact that the impact of the volume, clearly, we don't have it Laundry or marginally. But at the same time, the actions to reduce cost that we put in place for the entire company clearly had a positive effect on the Laundry business. At the same time, in the first quarter of last year, we had the peak of the investment to introduce the new product, the Line 6000 that we didn't have this cost in the first quarter of this year. Having said so, I will let Fabio comment for the financials.

[Fabio Zarpellon, Chief Financial Officer]

Thank you, Alberto, and good morning to everybody. Let me start with the sales bridge. As you see in the slide, the sales overall declined 9% in the quarter. Currency transition had a positive effect, roughly close to 3 percentage points due to the weakening of SEK versus most of our sales currency, particular U.S. dollar and euro. Acquisition contributed close to 2% and this refers to the UNIC, the coffee espresso company we bought in April last year. Organically, the business declined close to 14% or roughly SEK 330 million. Laundry, as anticipated by Alberto, was slightly declined 2% compared to quarter 1, 2019. And so far, somehow confirming the larger resilience of the customer segment served by our Laundry segment. And this is somehow a good news because as you have seen, Laundry in quarter 1 was back to the historical good level of profitability, 17.7% was the margin in quarter 1. In Food & Beverage, the decline was close to 20%. And as Alberto mentioned, roughly 1/3 was related to the large Subway rollout in quarter 1 last year. If we exclude this larger rollout, when we look into the geography, U.S., was somehow flattish on quarter 1 last year. Whilst the Europe and APAC decline, somehow APAC faster than Europe because starting from China, it was earlier affected by the coronavirus business consequences. When it comes to the financial overview, we reported 10.6% EBITA margin in the quarter, roughly SEK 100 million below last year. The main driver, as Alberto anticipated, was due to lower sales and production volumes that accounted roughly for SEK 170 million in EBITA. The efficiency measure that we put in place compensated this lower contribution from sales and production for roughly 1/3. And we find this benefit both in the reduction of the lending cost but also reduction of SG&A. And this overall 1/3 of cost mitigation is including also the additional cost to operate as a stand-alone company. But let me also take the opportunity to give you an update about 2 pillars of our margin expansion. First, the restructuring plan that we launched in September last year is proceeding according to plan. And as anticipated during previous investor call, we expect that in quarter 3 this year, the benefit from the restructuring will fully compensate the merging cost to operate as a stand-alone company. On the continuous improvement, when we focus into January and February, definitely, we have been able to deliver according to plan on the productivity in our factories as well as on the direct material cost reduction. R&D, as Alberto already mentioned, we had the peak last year due to the large effort to introduce new product in the market, and we have seen a considerable reduction along the fourth quarter. Additional measures have also put in place within the product cost, but also SG&A to reduce the running costs, both for what concern the labor cost, releasing temporary people, reducing -- canceling overtime, asking the people to consume previous year holidays as much as putting on hold the majority, I would say, of the external spending. Overall, in the quarter, currency contributed positively, both translation and the translation in the comparison. When it comes to operating working capital, reported operating working capital increased roughly 5% year-on-year. This increase is due mainly to about 2 facts. First, the weakening of SEK, boost in SEK, the value of operating working capital. And secondly, we have in the perimeter this year UNIC. The beverage -- the coffee beverage company we acquired April last year. In comparable perimeter, meaning excluding from one side of the currency translation impact and the UNIC operating working capital in absolute term at the end of March was roughly 9% below the same level of March 2019. When it comes to average of operating working capital and sales, instead it increased to 18.2% in -- at the end of March. And this is due to the combination of the acquired businesses that have higher operating working capital weight on sales. And overall, an increase of the average inventory during particular last year due to the overlapping of the phasing of result of new products. Lower sales also include negative effect to the KPI. On a net debt, we have reached SEK 1,088 million at the end of March, roughly SEK 60 million higher than December, ending up 1 -- with a ratio, net debt on EBITDA, below 1, confirming a strong point of the company that we are a pretty low leverage company. In Q1, as anticipated, we have put in place a long-term loan for SEK 600 million and a revolving credit facility for EUR 250 million. We have repaid the loan to Electrolux Group, the financial loan for roughly SEK 1.2 billion. And at the end of March, Electrolux Professional Group had in cash SEK 643 million, and additional available revolving credit facility for EUR 190 million. Cash flow in quarter 1 was SEK 16 million, roughly SEK 200 million below last year. Alberto touched about -- already about EBITA that was first ingredient roughly SEK 100 million lower than quarter 1 last year. He mentioned already about the development of inventory. Let me elaborate more around CapEx. CapEx in the quarter was 70 -- was SEK 100 million. SEK 70 million is referring to the finalization of the acquisition of the production side of SPM. SPM is the cold beverage company that we bought in 2018. And in quarter 1, we finalized the acquisition of the real estate that we consider a key location for the future development of the cold beverage within the group. When it comes to the investment in Thailand, its continuing according to plan. The Thai investment is a major investment that we are running this year, is about the buildup of a new production facility in Thailand, where we are going to consolidate the existing manufacturing operation of Laundry and Beverage into a UNIC site, where we are going to implement the state-of-art for what concern manufacturing with a clear expected benefit both in terms of service level of -- to the customer and reducing the running cost. The project, as anticipated, is proceeding according to plan and is expected to be finalized in quarter 1 next year. Once this project is completed, we expect that the level of CapEx on sales will be back at the historical level. Having said so, let me also touch about specification that we are taking in this moment to preserve the balance sheet and cash in this difficult environment. Alberto already mentioned about what we are doing on receivable, we are strictly monitoring the development of the receivables, both of what concern the collection activities as much as continue to review our customer assessment. We are reviewing the planning for what concern the inventory level to secure from one side the prompt availability of the products but also monitoring the development and driving the development of the inventory value. Last but not least, we are taking action to reduce not only the running cost, but also the level of CapEx for this year. And management has decided to keep few strategic projects. One is the ones related to Thailand and a few selected projects, the development projects. This is key for us because we want, at the same time, to reserve back cash short time because cash is really important short time, but also continue to bet on a few selected strategic initiatives for the future.

[Alberto Zanata, President & CEO]

Thank you, Fabio. And before summarizing the point that we presented during this call and opening for questions, let me talk about also the opportunity that we have as a company not only to get business, but also to contribute positively to what is happening around us all around the world. In particular, I would focus on the Laundry solution that we already offer, but we are also developing to address the increasing demand of hygiene, sanitization that we find clearly in the health care segment, in the hospital not only, this is going to happen everywhere. You already saw that the Laundry business during the first quarter was flattish compared to last year. And this is because we have been able to react very quickly to increase demand coming from hospital for solution that are providing laundry installation with a high level of hygiene. Here, I'm giving you a couple of examples, Moscow and Turkey, Montenegro and France and Germany, Dominican Republic. So as you see basically all around the world, where in a very short time, typically, a hospital project as a layout of some months. Here, we received the request that we deliver, we answered to the request in some weeks. This is also because of the increase of the availability of product that I mentioned at the beginning. This is -- again, as I said is a business. In the case of Laundry, is also profitable business, but it's also a way to help all these operations to address in an efficient way a problem that is clearly affecting all of us. So summary. During the first quarter, we experienced a decline of the sales. Decline accelerated during the month of March. Decline that initially touched the Asian region, the APAC region, but then basically spread all around the world. The 2 segments were affected differently because of the customers that are using this product. Laundry was stable compared to the first quarter of last year, while Food also with a tough -- also because of a tough comparison with a quarter where we added a Subway rollout, a decline around 20% organically. Laundry not only was stable in sales but also improved the margin, thanks of the volume that we had, but also to the -- thanks to that, the cost to launch the new product that we had last year were not present in the first quarter of this year. Action to strictly control the costs are in place. We control the cost, all the discretionary spending, all the investments. And clearly, we are strictly monitoring the cash both for what concern the outstanding credit but also for the incoming orders that we receive. The first point is that the uncertainty in the market is high. There are sign of -- that are showing that the lockdown is going to be lifted, but the uncertainty remain. And for this reason, we don't see possible to make a financial result -- a financial forecast. The last point of that was underlined by Fabio. We have a strong financial position that I think is very relevant these days that can give us the possibility to handle a longer period of downturn. With this said, Jacob, I would turn to you again to open for Q&A.

[Jacob Broberg]

Thank you, Alberto. Now we open up for questions. [Operator Instructions] So I leave it to the operator. Please go ahead, operator.

[Operator]

[Operator Instructions] So our first question, Lucie Carrier from Morgan Stanley.

[Lucie Anne Lise Carrier, Executive Director]

I have a couple, I will go one at a time. The first one is around the current trading. Thanks for providing us with a 25% number for March. Are you able to maybe qualify a little bit how that 25% was split between Laundry and Food & Beverage? And more specifically as we were in April, and we just ended the month of April, can you maybe quantify your -- or at least comment qualitatively on how April has compared versus March? So that's my first question.

[Alberto Zanata, President & CEO]

As we said, due to the uncertainty that is in the market, we do not provide any forecast related to the quarter -- to the coming quarter, to the quarter 2. For what concern in March, the acceleration of the decline with different levels, with different effects, but affected all the geographies and all the businesses.

[Lucie Anne Lise Carrier, Executive Director]

Okay. All right. Well, I was asking about April because this is already behind us, but fair enough if you cannot provide an indication. On the savings side of things, you said that you've started different measures in terms of cost savings last September. Can you maybe help us to understand which magnitude of savings you are targeting? What's the cadence in terms of the savings to come through? And are you able to provide how much savings you benefited from in the first quarter, please?

[Fabio Zarpellon, Chief Financial Officer]

Fabio speaking. First of all, less distinguished 2 lines of action. The first one is about the benefit of the restructuring plan that we launched in September last year, that was foreseen a reduction in the group of over 130 people. As I mentioned earlier, the execution is going according to plan. For overall this year, we expected close to SEK 100 million benefit coming out to -- from this plan. And as I mentioned, from quarter 3, we expect the benefit to compensate the additional cost as a stand-alone company. Secondly, for what concern the other action that management has taken to reduce the running cost, we already provide earlier an order of magnitude out of SEK 170 million lower contribution for volumes in quarter 1, roughly 1/3 has been compensated through a reduction of running cost, either related to labor cost or related to external spending.

[Lucie Anne Lise Carrier, Executive Director]

And can you -- maybe then in this case, can you remind us the overall size of the program that you said you provided data for earlier?

[Fabio Zarpellon, Chief Financial Officer]

You mean about the restructuring program?

[Lucie Anne Lise Carrier, Executive Director]

I mean about the newly launched initiative to compensate from the effect of COVID and so on?

[Fabio Zarpellon, Chief Financial Officer]

Okay. I mean, the initiative that we put in place to compensate the impact of the COVID-19, the first to running cost and the further to liquidity. On the running cost, we act on the labor cost, meaning we release temporary people. We stop overtime, we ask the people to consume holidays, so to reduce the running labor cost. We have a hiring freeze in place. For what concern the external spending, we put on hold the majority of marketing, external spending. We have stopped consultancy activities. So we work also on this line. The second layer is about the balance sheet and the cash flow. And here, I mentioned before the activity that we are doing of focus on credit collection as well as the revised CapEx. When it comes to amount, as I mentioned, in quarter 1, overall, these activities for the P&L, the impact roughly around SEK 60 million, SEK 70 million. And we find it both in the lending cost and in the SG&A.

[Lucie Anne Lise Carrier, Executive Director]

So shall we assume that the SEK 60 million to SEK 70 million of savings is a reasonable run rate for the rest of the year in terms of the savings?

[Fabio Zarpellon, Chief Financial Officer]

I mean we are not going to give a forward look to about saving on the quarters to come. It's clear that in the current environment, management is taking action that has at best compensating the impact on the volume. But we are not going to disclose how much are the expectation for cost reduction on the coming quarters. What we can confirm is that the action that we have put in place in quarter 1 will continue until we see a recovery in the market.

[Lucie Anne Lise Carrier, Executive Director]

Okay. And my last question, I guess, was around the receivables. And I understand that there are some pressure here, I'm assuming mostly coming maybe from your Food & Beverage customer. How -- I mean, can you maybe comment on how -- what are the leverage you have to actually get paid? And how much visibility you have on the credit situation of your customer, whether this is the distributors maybe or some of your largest customer in the Food & Beverage sector?

[Alberto Zanata, President & CEO]

Okay. Let me say, I believe that, first of all, is somehow pretty early to judge customer behaviors. But what we started already to see in March and somehow also in April is that customers are keen for adding prolonged payment terms. This is somehow the learning that we are having so far. We are considering the request for customers. We are reviewing and assessing case-by-case new payment conditions at best continue to protect the balance sheet and the guarantee that we have in place. Let me add in this respect that historically, Electrolux Professional has a large majority of the receivables that have some sort of protection. What I mean is that we have, in most of our countries, the credit insurance in place. And part of our customer base is government or legislate related. So in terms of impact in the P&L of the situation, we may have some attention, but I would repeat it that a large portion of our receivable is protected.

[Jacob Broberg]

Jacob here. I have 2 questions from the web. The first one is from Johan Eliason of Kepler Cheuvreux. It's on secondhand market. How much of our sales and competition will be the secondhand market? And how do you think this will play out in the coming years, I mean, when products might be flooding the market of used products? That's the first question. The second, I guess, as I fall back to. The second one is on administrative expenses that are up SEK 46 million year-on-year. What is driving the increase of administrative expenses? Is there any one-offs in relation to the listing? And when should we expect cost for the new corporate functions to be fully offset? Those were 2 questions from the web.

[Alberto Zanata, President & CEO]

Okay. So I can take the first one. We hear a lot about this segment market of lively use appliances that should flood the market. Our experience is that, in general, the secondhand market is relatively limited because of the user that is made of the appliances. Normally, if there is an operations going out of business or a restaurant closing and not reopening, the new operator is taking over the appliances that are there. If you want to consider this a secondhand market, yes, there is. How we can work on this one? The thing that we are doing is to be prepared, for instance, for what concern the customer care business. That is an important element of our business, both in terms of net sales and in terms of margin. During the past weeks, the locations were locked down. So there was not even the possibility to access this location. But we are expecting that with the reopening of the activities, there will be an increased demand of maintenance, service, repair and other things. Even more in cases these appliances are used by other customers than the original owners. We are preparing a specific program that is offered to everybody for what concern exactly the restart of the different operations.Fabio?

[Fabio Zarpellon, Chief Financial Officer]

Yes. One, when it comes to the development of the administrative expenses year-over-year. First, from the presentation as on sales, also here, we have an impact of the currency translation. But let me park it for a while. The majority of this SEK 46 million increase is related to the stand-alone cost as a corporation, meaning we have created new functions that we did not have before. Like, for example, legal, investor relation, tax that we were receiving from the group. Then a second piece of the increase is related to UNIC that was not part of the perimeter of Electrolux Professional in the first quarter of last year. When it comes, you asked about any specific costs related to the quotation, yes, there are some -- but is, I would say, is not really material into that increase.

[Jacob Broberg]

Okay. Then we open up for more questions from -- please go ahead, operator.

[Operator]

All right. Sure. Next question from Mattias Holmberg, DNB Markets. Our next question from Gustav Sandström from SEB.

[Gustav Hagéus, Research Analyst]

Gustav Sandström with SEB. Was this my question?

[Jacob Broberg]

Yes.

[Gustav Hagéus, Research Analyst]

Okay. So this is Gustav Sandström with SEB. I have a few questions, if I may. Firstly, if you could give us a reminder about the phasing of the Subway contract into Q2 about an indication of roughly share of sales last year for Food & Beverage, would be very helpful.

[Alberto Zanata, President & CEO]

Do you want the answer immediately, or do you want to make all your questions?

[Gustav Hagéus, Research Analyst]

No, let's start with this one.

[Alberto Zanata, President & CEO]

I can take it. I mean, Subway rollout actually started in quarter 3, 2018 and ended up in quarter 2, 2019. In quarter 1 last year, Subway rollout was in order of magnitude around SEK 100 million. And it was completed in quarter 2 last year. And the impact in quarter 2 was somehow lower than quarter 1.

[Gustav Hagéus, Research Analyst]

That's very helpful. And also, if you could give us a rough indication of the organic decline you saw in March, 25%. To what extent that relates to price mix or if it all relates to volume?

[Alberto Zanata, President & CEO]

I can take it. I mean, what I would say that majority, I would say, the decline is related to volumes. So far, we have been able to continue to stick on the pricing overall. And if I look into the quarter 1, price to customer positive contributed to the development of the EBITA.

[Gustav Hagéus, Research Analyst]

Okay. And alluding to a previous question, the 25% decline in March. Is it a fair assumption that it was a bit stronger in the beginning of March rather than the end when there was more of a full closedown in your key markets?

[Alberto Zanata, President & CEO]

I would say that when we look into the development of the month of March, somehow we saw an acceleration of the sales decline in the second part of the month due to what is happening in the major countries where the lockdown was extensive to more and more countries in a much more stricter way.

[Gustav Hagéus, Research Analyst]

Great. So would you say that sort of the first half of March was more similar to the first month of the quarter and the main share of that drop related to Q2 or second half? Or was it more of a smooth transition between the weeks in March?

[Alberto Zanata, President & CEO]

Let's say that, it changes geography by geography. The meaning that end of February, we already had the impact in China during the month of -- sorry, end of January. During the month of February, we have an acceleration of the decline in Japan, Korea that are important markets for us in particular, on the laundry side. Then at the end of the month of February, beginning of March, we added the South European countries. Then gradually, the spread of the virus and the initiative to lockdown operations was extended to all the European countries and also in United States. So it was a gradual acceleration of the decline of the demand related also to the evolution of this -- of the pandemic. At the same time, in March, we already started to experience a reopening of some operations in China. So they've been clearly -- it's hard to compensate the situation in the European market with what it was happening in China. But the dynamics are so different in the different geography, and they are changing really, by the day. That's the reason at the end where we decided not to provide any forecasting in some way.

[Gustav Hagéus, Research Analyst]

Okay. That's very helpful. Lastly, from me, on the inventory side, a bit higher in the quarter. But could you also remind us to what extent there are additional intermediate inventories in channels outside of your balance sheet at suppliers or dealers or similar entities? And if you could assess how big of a share they are of the total sort of market inventory and the development of those in the quarter?

[Alberto Zanata, President & CEO]

No. But in general, nowadays, the dealer, in particular, the dealer of Europe in the large market where we have really local presence with our organization, with the local warehouses and so on, they don't hold product in stock. So they rely on the stock that is provided by the -- that is managed by the operators. That is the reason why at the beginning, I said we moved -- we took the conscious decision already in February to move from the 2 central labs that we have in Italy and Sweden, at least in Europe because then we have the 1 in the United States and 1 in Asia. But out of the 2 European options, we decided consciously to move to the local warehouses, most of this product, to be present, to be local, to be close to them. We have the 2 hubs in North America and Asia that are obviously relevant. And I would say, a significant inventory that is held by -- not by us, but by our partner is the one of laundry in North America, where we are working with a long-term partnership with a company. And that company in that case is holding the stock for the local market. The increase of the inventory, if I can elaborate a little bit more is related to: one, the conscious decision that we took to make the product available, this so-called classic product, the product that are normally used for replacement. But secondly, also because we started to receive beginning of March, end of February, a lot of request of postponement of projects and delivery. And that is clearly related to the decision that the governments are taking to lockdown operations. So as a consequence, we couldn't believe the product or our customer were clearly not able to receive the product, but they had to postpone the delivery. And in this case, in a scenario where clearly, we don't know so much, at least the things that I can say is that we did not receive order cancellation of any significance. So the order, at least until now, orders have not been canceled by -- some, yes, but very, very -- in a very limited amount, but they been postponed.

[Operator]

Next question from Mattias Holmberg, DNB market.

[Mattias Holmberg, Analyst]

Can you hear me this time?

[Jacob Broberg]

Yes.

[Mattias Holmberg, Analyst]

Perfect. So actually, just one question on the Laundry segment, where you mentioned in the report that mobility restrictions in Japan and South Korea, in particular, had a negative impact on the consumer-operated laundry. So just looking at your Laundry business in Europe and North America. I'm curious if the, say, the consumer-operated laundry is not a significant part of the mix here. Or how would you explain that you didn't see the same phenomenon in these regions?

[Alberto Zanata, President & CEO]

Okay. So let's divide. In Europe, a significant part of our laundry business is the multi-housing, more than the coin shops or the laundry operated -- the customer -- consumer-operated installations. The multi-housing are the laundry operations that you can find in the basement of apartment house. And as a consequence, is not related to the limitation of the such. In the United States, the large portion of our business, of our Laundry business is in the consumer-operated installation, the coin shops or laundromat. The limitation of the freedom to move is clearly impacted also these operations. The lockdown has clearly impacted this business, meaning that our customers didn't operate their operations, their shops. But it's also true that this is a business that we believe could recover relatively quickly as soon as the lockdown is lifted because it is a business that is generating cash, and meaning that when the customer they go there, they pay immediately. And secondly, the investments for whoever is opening a coin shop is normally a very good investment because the return of investment is relatively short.

[Operator]

Next question from Johan Eliason, Kepler Cheuvreux.

[Johan Eliason, Analyst]

This is Johan Eliason of Kepler Cheuvreux. Just coming back to this question about the secondhand market. When we look at the financial crisis a decade ago, you showed negative organic growth for the initially, but then also for consecutive 3 years. Was that because you saw some impact from secondhand taking away your opportunity? Or was it just that there were fewer sort of projects available for your project business at that time? Secondly, also taking some lessons from that time. You actually managed to see a pretty decent margin development during these years with negative organic growth. How -- were there any specific actions you took at the time to make sure that your margin stayed this solid? And input on that would be very appreciated.

[Alberto Zanata, President & CEO]

Yes. So obviously, we are trying to learn as much as possible from the past in the meaning that, that was the previous period -- the previous cycle when we had a -- we experienced a decline. Even if it is a quite different situation in the meaning that on that time it was a financially-driven, here it is driven by people behavior, I would say. So we have also to regain the confidence of the people to go out, to travel and to do all these kind of things. But let me answer to your question. First one, we had a decline in 2009, like probably every company around the world. Then 2010, we had a rebounce. And this rebounce was driven by financially -- by the incentives that all the countries gave to the operator to restart businesses. Then we reported again a couple of years, consecutive year of decline differently. For instance, from what other company -- our company in other geographies like United States, because of the financial situation of the European markets and in particular, the South European markets. Those were the year where -- that was a financial crisis that affected, in particular, some countries and Europe in general, much more than other geographies. So that is the reason why of the year. For sure, not the secondhand market. If I base -- if I think about what happened during this year, and I try to replicate this experience in this one, I would say that the secondhand market did not significantly impacted our business. The second question was about the margin. And in this case, I would say, is very similar to what we are currently doing. So during those years, we immediately put in place actions to reduce the spendings, the daily spendings, the run rate spendings the same way that Fabio described. We also reprioritized investments, giving priority to the projects that can deliver short-term return, but also the strategic line, never stopping strategic activities because otherwise, they are blocking when everything restart. I would say that we are replicating the same actions here. In addition to that, we are clearly also preparing, as we did, by the way, on that time even for the worst, in the meaning that the current activities, they have an impact -- immediately impact. And you saw this -- Fabio was mentioning the SEK 60 million to SEK 70 million of savings are generated in the quarter. But we are also preparing to make sure that -- preparing action to make sure that we are prepared even for the worst.

[Johan Eliason, Analyst]

Just coming back to your comment about the reason for the weak growth was that Europe remained lower for longer. I mean your German competitor Rational also saw a drop in 2008, '09. But then they saw a positive organic growth. And I think they had a pretty Europe -- big European expansion -- exposure as well. I understand they are claiming that there was a penetration game going on for them with their [indiscernible] taking share from traditional alliance, which allowed them to have an organic growth also during this period. Do you see any sort of drivers similar to that one that could be a sort of an offsetting factor for you in the coming years, some sort of technology that could imply that your new products will be in demand over old products? And then secondly, in the financial crisis, your focus was clearly not on acquisitions. And you only really started acquisition game in 2015 and forward. How do you consider M&A right now? Obviously, time being, cash preservation is the key. But in a year's time, do you think there will be an acceleration of M&A potential for you?

[Alberto Zanata, President & CEO]

Okay. First question, without doing any competition with other company, obviously, but I can tell you that in those years, the percentage of sales coming from Europe was much higher than what it is right now. Already now, we are 66% of our sales coming from Europe. On that time, it was much larger than what it is today. And as a consequence, we were really unbalanced towards this part -- this large -- our home in some way. The second one, product-wise, for sure on that time, the segment, the specific segment of the [indiscernible] was unsaturated. There were markets where there were many kitchens without those products and that gradually replaced the other -- let me say, older technology with new one because of the efficiency. We also participated in this. We enjoyed this change of the market because we are one of the leading company also with this kind of technology. But to see a technology today that could have a similar impact -- I would say in the Laundry, we see that there is an increased demand of appliances that can guarantee hygienic solution, also in the kitchen, by the way. So this is very, very important. We see an increase of demand, for instance, of dishwashers because clearly, you can guarantee a better sanitization of the items that are used in the restaurants thanks to well-operated dishwasher. This is for sure with the start of a reopening of the operation will increase. In terms of new technology, we are starting and monitoring what is happening. For instance, there is a significant increase of restaurateurs who convert themselves to takeaway activities. So restaurant that never had or never provided takeaway services or delivery services that are now doing this. Together with this increase option that they are giving to the customer, there are also -- they are famous or [indiscernible] kitchen. So the kitchen that are used by the delivery operators that are growing significantly. In this case, probably different technology, probably. We know that different technologies are used. There are more base of high frequency instead of batch production. And as a consequence, our product ranges has to adapt and to evolve in that direction. The last part was about acquisitions. So the third part of your question is about acquisitions. Acquisitions are still part of our strategy. The strategic pillar, the strategic direction are not changing. Whatever we said in terms of priority for us to grow the business, we believe are still the same, still valid. The customer care is still valid. The innovation, the technology is still valid. The expansion, the geographical expansion to rebalance our presence. And clearly, it is still valid that the acquisition that can help to accelerate our growth. During these days, it's difficult honestly to talk about acquisitions because of the valuation of the company. But for sure, we are -- the subject is on the table, and we'll be ready if there are opportunities.

[Jacob Broberg]

I think we'll take the last question now for today, it's from the web. It's Stefan Stjernholm from Nordea. He says, can you give some color to your service business? I mean, I guess, customer care, how that developed in Q1? And he also says that I understand that you do not want to give any figures for April, but your competitor Rational stated their order intake was down 30% in March and 60% lower in April. Have you seen the same kind of month-over-month drop? Those were the 2 final questions for the call today.

[Alberto Zanata, President & CEO]

Okay. So the first one is about -- the second -- the first one was about the service. The second is about April. Again, I'll repeat what I said, we don't give guidance for what concern in the quarter. So I will not comment on that one. If I comment about service. Service during the first -- during the month -- the month of March, presented several challenges, new challenges for us, honestly, because during the time, one of you was mentioning or comparing the present time to 2008 or 2009. During those years, service went up significantly because of people are trying to repair product and keep them going. Taking in the month of March, in many cases, we were not even allowed to enter the site. So we put in place actions like remote monitoring of the appliances, thanks to the fact that a large portion of our appliances is connected. We put in place what we call a double pair of eyes. So this means that in many installations like hospital or in case, lab installation, they have internal technicians, and we have been able to guide them with our expert working remotely. I think I mentioned that we are expecting that as soon as the lockdown is lifted, many customers will need to have the product, let me say, maintained and put in place or put in action again. But that was pretty new for us in March, and it is also explaining why the 2 kind of crisis are pretty different and difficult to compare one with the other.

[Jacob Broberg]

Thank you, Alberto and Fabio. With that, I would like to round off today's call. Thank you for listening in. This will also be available as a recorded version on our website afterwards. So thank you for today and speak to you next time. Thank you, and goodbye.