Beijer Ref AB (publ)

STO:BEIJ B

Earnings Call Transcript 2022-Q3

[Operator]

Hello and welcome to Beijer Ref Q3 Report 2022. [Operator Instructions]

Today, I am pleased to present CEO, Christopher Norbye; and CFO, Ulf Berghult. Please go ahead.

[Christopher Norbye, executive]

Welcome, everyone. Christopher and Ulf here. I think we'll get started right away with the presentation. So if we can start on Slide 3 where usually we go over the rolling 12 and it's now SEK 21 billion, so we continue, as you know, to grow very well, both on organic side and on the acquisition side, so we're happy on that. We're continuing to add companies and countries and we're now up to 4,500 employees. So all-in-all, in the rolling 12 months, we continue to have a very good trend in the business.

If we move on to the next slide, Slide# 4, the highlights. Of course, it's strong sales here in Q3. As you know, our high season for the majority of business is Q2 and Q3, and here we can see a total growth of almost 40%, organic 19% and also very good growth in all our acquisition and growing 12% for us and even better on organic growth and acquisition. That will continue to have a positive impact, mainly euro to SEK and plus 7%.

Also here on the EBITDA, very good organic drop-through on our growth, and we're also happy to see that we're having double-digit margins here in Q3, as well as we did in Q2 and growing the profit almost 70%. So profitable growth, good drop-through and we'll come back a little bit later on the regions and the different segments.

Also happy to see positive cash flow. Of course, we can see now the AR or the customer payments coming in, so plus SEK 307 million. We still have inventory buildup and we'll come back a little bit later in the presentation. And as I said, very satisfied with acquisitions. We had also HVAC, Northern in Europe had a strong Q2 as expected. And all-in-all, growing the EPS over 70%. So of course, we're extremely both happy and proud of the performance in Q3 for Beijer Ref.

If we move on to the next slide, Slide# 5. We can see that the underlying demand has continued to remain strong here to Q3 and you can see both in the HVAC growing 26% and OEM 28%. We'll try and break that down a little bit. The HVAC, we had a very warm summer in Europe and we know we talked about it, it drives extra demand, a lot of our market is replacement. And of course, people really want to replace things, break more when it's warm.

So all over Europe was a warm summer and that's also why it carried in here in, I would say more in Q3 and driving a very strong demand especially in our Southern Europe and also Eastern Europe regions on the cooling side. So very positive development, continued strong and HVAC growing at these levels and also is coming in here and we'll talk about that also. Adding more and more on the heat pump side for heating and what we see here in Nordics and Northern Europe is more on the air-to-air type of solution that's growing a lot.

And then we'll continue focus on air to water. So the HVAC segment continue to develop very well into Q3, driven by both the warmer summer, strong replacement market and also the heat pumps side, both on the air-to-air and air-to-water that's driven demand in the quarter.

On the OEM side, plus 28%, if you recall, we have talked about that a couple of times. That growth has been limited due to constraints in the supply chain and also the closure in China. What we saw here in Q3 was a little bit of a catch-up effect, getting more parts, could ship more products, underlying demand continues to be strong. So I would say that Q3 caught up a little bit of the other quarters and we grew 28% plus, but China is starting to come back as well in the mix as factories are open and demand is starting to pick up. So also very satisfied on the OEM side and then you have Ref components at stable, commercial industrial cooling at stable, good development during the quarter.

And I think if you look at the regions, all regions positive. So good trend in Southern Europe, good trend in Nordics, very strong trend in Eastern Europe, both on their growth and also having drop-through on the growth and you can see that on the margin. Also happy to see that Africa is starting to come back after a couple of tough years and APAC continues to grow strongly and of course, both APAC and Africa is now moving into their summer season and of course in Europe, we're moving now to lower season in Q4.

And then we also made acquisitions in the quarter. I would say, fairly strategic acquisition, just trying to summarize it. AAD, one of the leading wholesalers of HVAC in Australia, perfect complement to the geographical setup we have and the supply base. So we're very happy that we could buy this company. We're also moving into EID, which is a smaller company, but also strategic, based in France that do just complementary product to HVACs. It's a product portfolio we can expand into the rest of our business and then Transport Cooling in South Africa, the possibility to move into a new segment for us. So we're very happy with the acquisition we did here in Q3 to build on the growth for next year.

Okay, next slide. We continue and see, of course, as you all do, what's happening in the world. We have inflation, macro-environment. So I would say that we continue to be very close to the market. We do have a strong decentralized model, but we also work together to coordinate what's happening in the market. So I believe we've proven before that we have a flexible business model as mainly being a distributor and wholesaler. So it's a concern and it's something we keep on looking at the temperature of our business, as you of course know, we can see most of our business running on a daily basis. So we have very good internal capabilities to be aware of the situation, also act when needed, but as I said this morning, it continues to be an active market for us here as we move into Q4.

US, Kigali, we're not present in the US, but we follow it closely. We do talk to companies here about CO2 type of solutions is more interested in electrification and other things. It's very interesting segment for us in the future.

And then finally, we were at Chillventa, the biggest cooling fair, I would say, in the world and it was fantastic to show our new technologies in CO2 and also remember also we acquired this company, Fenagy, does industrial heat pumps. We're also looking into commercial heat pumps through our own capabilities. So very positive activities for us during the Chillventa.

And then finally, we signed an agreement with one of the biggest supplier, Danfoss, and I think what is cool in this agreement, we're actually aligning on sustainability where we will have a program for picking up and repairing products through our network together with one of our biggest suppliers, because of course we have 450 branches. So it's a common project on sustainability, which is one of the keys for the agreement that we did together until 2025, I believe.

Okay, next slide. Moving a little bit to the financial, sales growth 38%, 19% from organic, EBITDA grew 70%, and as I said, good organic growth driving a very good drop-through plus of course, good development in our acquisition and also good development initiatives we have on driving margin where we get a very good drop-through and 70% growth. And of course, that translates into a strong EPS growth.

Next slide. And here you see the bridge and I went over the organic, then we continue to have a strong tailwind on the FX, 7% as I said euro to SEK, and then M&A, we grew 12% and also our M&A companies were growing at the same pace as organic growth. So we're also very, very happy with our execution according to over and above our plans that we had for acquisition that we've done over the past year, which gives us almost SEK 6 billion of sales in Q3.

Next slide. On Slide 10, of course, I would say a very positive trend that we're in here since COVID and we've been able to continue on the double-digit on the organic, adding good acquisitions and we're very, very proud of being able in the last 6 quarters having a very positive development and of course, Q3 came in at a strong pace, even outpacing the last couple of quarters. So I would say a very, very good trend that they're representing.

Next slide, Slide 11. I think also the positive here is that is the strength in all our regions. So we're also happy with development on both on organic side and acquisition side. Of course, Nordics mostly organic having a good development, driven also by CO2, but also heat pump side and then the normal business. Central Europe also positive on HVAC and driven by good development in heat pumps. South Europe, as you know, a very warm summer. Very good activities in all other countries, Spain, Italy, France, et cetera, growing very well during Q3. East Europe continues to be strong development for us and has over the year. And as said, also both Africa and APAC had a strong growth. So I would say in all regions, we're very satisfied with both organic development and acquisition development.

Moving on to next slide, Slide 12. Yes, so EBITDA of SEK 622 million and a margin of 10.4%. We're also like, I mean, we are working hard with our margin development and also having a double-digit margin here in Q3 that I believe we never had, building on the Q2 double-digit margin. And so it's very good both on the sales and on the margin side.

Moving on to the next slide, Slide 13. And there you see a similar bridge that's on the sales, so we can see that the margin over the year has developed in a good trend versus last year and then also especially good pick-up here in Q2 and then even higher in Q3. So we continue and believe that we're in a good position here both on the sales and on the margin side. So we're very happy with the development here.

On Slide 14. I mean, this is the connection between, of course, the sales and the EBIT, but you also see in all our regions, we're doing well connecting the EBIT. We have the Nordics continuing and always been a strong EBIT market for us, but also Central Europe is picking up, South Europe had a good quarter and double digit there and that's an ambition we had. Eastern Europe continues to drive very well based on their volumes. Africa step by step improving and then also on the APAC side, we have continued to improve the business step-by-step and especially driving margin in the acquisitions that we've done over the years. So of course, all of this adds up to a very good Q3 on both the sales and EBIT in all our regions and areas.

So with that, I'll hand over to Ulf to go over the financials.

[Ulf Berghult, executive]

Thank you. Thank you, Christopher. So yes, thank you. I'm on page 15. So that is summarized P&L for the Group. Christopher went through down to the EBITDA, so below on EBIT, we are on 71% up with net financial income and expense, but is slightly higher than the last year, was minus SEK 40 million, which was then impacted by, of course, a higher debt due to the acquisitions, but we have done and also done the working capital buildup that we have had for the last 12 months and also slightly an impact of negative by FX. The tax in the current quarter is minus SEK 137 million, which is then equivalent to a tax rate of 24.2% versus then last year of 25.1%. So it's in line with overall expectation. And also then for the rolling 12 months, we have then an EBITDA improvement of 41% and we then have return on sales on EBITDA on 9.4% versus last year of 8.3%.

So if we then turn over to page number 16, you can see then earnings per share. Christopher went through that. So in the quarter, we have an improvement with 72% coming from SEK 0.65 to SEK 1.12 and on a full year rolling 12-month basis, we are on SEK 3.55 which is then 39% up versus than full-year 2021.

If we then go over to page 17, then we have our cash flow. As Christopher mentioned earlier, we have a positive cash flow. We had positive cash flow Q3 '21 with SEK 182 million. So we have better underlying operational performance of EBITDA with SEK 273 million. We still have a negative impact on working capital, even though that we are slowing down. And also, as we mentioned in the report that we are now starting then to normalize the working capital or inventory into a normal seasonal pattern, but it will take some time, but again it is one step forward. CapEx is slightly lower than the previous quarter. Leasing is also basically in line than others. So we ended up with plus SEK 125 million versus Q3 '21, so in total, SEK 307 million.

Next page, then you can see the development, page 18. You can see then that we have had 3 quarters with negative cash flow and then now with a positive cash flow in Q3 2022.

If I then turn over to page 19, we have our net debt situation. So then we have net debt of SEK 6.4 billion closing balance end of Q3 '22 versus last year of SEK 3.754 billion and it's of course impacted by both increased M&A activity, but also then as we mentioned couple of times now deliberately increase of the inventory in order to have a better service level. But then if you look on the net debt-EBITDA, the leverage it is 2.6, it's slightly down than versus Q2 2022 and of course, it is higher than Q3 '21 due to high activity. So it's all line, so it looks overall good.

So then I'll turn over then to Christopher to conclude it on page number 20.

[Christopher Norbye, executive]

Thank you, Ulf. So in conclusion, the same message, an extremely good quarter. As I said, very good growth in all areas and acquisition, very strong organic growth of almost 19% and also we can see it flowing through to the bottom line. I think it's a very strong proof of our business model and the initiatives that we're doing and also good performance on the margin side of our acquisitions. So everything in Q3 fell in line in a positive way for us, which I would say that fantastic result of growing of the EBIT percentage with 200 basis point and 70% growth in EBITDA altogether. As I've said on the regions, double digits in all of them. So we're very pleased that everyone is performing in the company right now.

Also picking up on the cash flow, finally turning it around and as Ulf said, now we're seeing some trends where we can be a little bit more aggressive on inventory as lead times are coming down, not everywhere, but in some areas, and we expect fortunately in Q4 that, that we will continue to be positive on the cash flow side.

As I said, acquisition is very good and also acquisition we made in the quarter, very strategic for us to complement product, expanding our footprint and strengthen our market position. So very good execution there in Q3. We do manage the inflation process as we've done over -- since we started, we do see a less pressure right now and from our supply base on this and more structured discussions around it. Of course, it's very high level and we need to manage that in our business as we've done over the last 2 years.

And as I said, we'll continue to monitor on a daily basis the development per country per region, per product area and also making sure that we have the plans if needed to adjust the business, but as said, right now we're still in a positive business for us, but as we all know, it's an uncertain world out there in the future, but I think we're very well positioned to manage that as well.

I think with that, we're finished with presentation and let's move on to any calls or questions from the audience.

[Operator]

[Operator Instructions] And our first question comes from the line of Carl Ragnerstam from Nordea.

[Carl Ragnerstam, analyst]

It's Carl here from Nordea. A few questions. Firstly on sort of HVAC, you said it's maybe partly driven by the warm summer, but I'm a bit curious to know if you haven't seen any sure signs from a weakening consumer where be it replacing an air-to-air or air-to-water systems might be a bit high CapEx bump in this inflationary environment for the consumer and could you perhaps also or could it be a spillover effect from the warm summer since lead times giving sort of the boost into Q4 as well or how should we look at that sort of demand in the short-term here?

[Christopher Norbye, executive]

Yes. I think the first question, I mean, I'm being very upfront now, we don't see that. We see more that we are fairly comfortable as we have said many times that we still see a strong replacement market. We're still very convinced in Southern part of Europe, cooling is like it is for heating for us, so you do replace -- you focus on replacing these type of products, it's a break and of course, we had a positive trend based on a warm summer.

But we see also it continue through Q3 and a good start here on Q4. We're seeing some countries, you are making a lot of shifts on I mean, in countries like Sweden, if you have direct electricity today, you're trying to get air-to-air heat pumps to manage the situation, the same in countries in Netherlands, et cetera. So all-in-all, we see good development in these areas.

And as I said, we'll continue to keep an eye on it, but we don't see any weakening on some consumer. I think it's a very focused area now, because if you make these types of investments, even replacing your old equipment with newer one, you get 30% to 50% more energy efficiency out of these systems.

So you also have very strong incentive to replace products that's still working because with the business case today and energy prices, it's also driving demand. So I think we have a lot of structural areas driving this growth plus very honest, a strong warm summer we don't quantify it, but of course, it's also a boost to the demand also for the product.

[Carl Ragnerstam, analyst]

Okay, very clear. And also a bit on the OEM side, they clearly improved as you said, component supply improved as well. I mean, have you seen a more stabilized sourcing situation or is it still volatile between the month or has it improved, do you think for second half and into next year as well or will it still be a bit volatile or what do you see?

[Christopher Norbye, executive]

I think it will be volatile, but seeing now that we are catching up some of the other quarters where we couldn't ship some products where we have specific products missing. So I would say it's more stable on 80% of the product and then you still have in areas 20% that still have longer lead times or uncertainty on delivery, which of course affects this business, but all-in-all, and we talked to all our suppliers and the critical technical suppliers, they're all also adding capacity that will come online here in Q1, Q2 next year. So it will continue to be volatile, but we've seen an improvement and also working and talking to all our suppliers that we did spend a lot of time in Chillventa that we do see that they're moving a little bit from saying it to also doing it. So all-in-all, it is an improved supply chain, but there is still issues in it and it is not running on full speed yet but in Q3, we could catch up some of our late deliveries and we're also working on to reducing our lead time to the market as it improves over the next year.

[Carl Ragnerstam, analyst]

And historically, you've made some comments on the backlog for OEM, how is the backlog looking currently for OEM? I mean, obviously, you had pretty strong deliveries in the quarter, how is backlog and order intake looking currently?

[Christopher Norbye, executive]

It's looking good, it continues to be positive. So it's the high activity, double on the CO2-based system, which is the majority of that. So we continue to be bullish on the demand moving into next year. A lot of replacement and a lot of project continues to be ongoing on the OEM side. So we continue to still see a positive trend there.

[Carl Ragnerstam, analyst]

And have you seen any changes in your customers' behavior, I mean, with the potential tightening of the F-gas regulation coming here, I mean, are they sort of fast-forwarding some of the decisions or have you seen any changes in their behavior?

[Christopher Norbye, executive]

I'll probably answer this way, I'm not sure how aware an end customer are of these type of changes, but what we do see is that because of the energy prices and the changes, it's that if you replace your existing system with a CO2-based system, your energy cost improves dramatically and you're actually getting a better and better business case. So we see and believe we are at high activity level based on more on that, that it is getting more and more affordable and payback is much faster and you get more acceptance also of the technology more and more, at least on the retail and food chain is doing it. So I think they're more moving because of that type of direction. And then trying to understand if the tightening means more for them or less. I think when it happens, then you'll get another trigger point that people will accelerate it, but I don't think that's the accelerator yet in the market.

[Carl Ragnerstam, analyst]

Okay, very good. And the final one from me is, maybe for you, Ulf. I mean, inventory still building up inventory. I mean, you mentioned that sort of taking down inventory will take some time. Is it possible to quantify it in anyway or?

[Ulf Berghult, executive]

No. At this time, we don't want to do that. So what we're trying to do is then to get into kind of a normalized. And as you know, then we have Q2 and Q3 is slightly higher. So you will not see we are building up season then into -- for main season in 2023, but that's why we're trying to be connected to the seasonality and also the message internally is not, we don't want to whiplash. So it's kind of gradually than to nice and easily then to bring it down into a normalized level because it's still a lost sale is more hurting than some extra inventories. So we are slightly cautious in that, but the overall message is out there that we need to normalize and getting into a normal seasonal pattern because that is what we see now that we have the best improvement from the delivery promises or delivery conditions from our suppliers.

[Operator]

Our next question comes from the line of Douglas Lindahl from DNB Markets.

[Douglas Lindahl, analyst]

I wanted to start off by asking on the organic growth side. Is it possible to break out how much is pricing versus volume, not in detail, maybe sort of relative magnitude?

[Christopher Norbye, executive]

Yes. So I think we continue to see and what we said last couple of quarters that in the numbers here, the majority is still volume. So if I will give some guiding here, I will say on the commercial industrial Ref side, that's growing 9%. You have a strong price component in that well on OEM and HVAC, the majority is clearly organic. So I think the price component is higher to manage the inflation type, but I also said in the past that we haven't seen this 10%, 20%, 30% price increases from our suppliers. So the majority, quite a lot on the OEM and HVAC is for us volume and then on the Ref components, it's a little bit more of an even mix between volume and price.

[Douglas Lindahl, analyst]

And just a clarification question. In your sort of CEO comments, you mentioned that you are optimistic about HVAC growth accelerating going forward or HVAC demand accelerating going forward. Is that a general comment or is that more sort of a seasonality comment, meaning Southern hemisphere is entering the high season, how should we interpret that?

[Christopher Norbye, executive]

Yes. I think I highlighted that just to interpreting both. We are still seasonality type of business. So we don't forget that, which means that by far in Europe Q2 and now we had also a nice spillover into Q3 on the HVAC side and of course in Europe, Q4 goes down, it's a different activity level, especially on the cooling side. Now we try to compensate that on the heating side, but it's still lower activity levels. I would read that as of course now in South Africa and Australia and New Zealand, they move into summer times. So I would just more highlight that they will then accelerate their growth compared to Europe. So that's how I would read it.

[Douglas Lindahl, analyst]

Okay, very clear. So it's more seasonality and regional comment then. And on the component shortage. I appreciate your comments from a cash flow impact and it will take some time for that to normalize. But is it possible to give some sort of additional comments on the pace of the normalization on components, meaning, has it improved significantly in the short-term or has it been a sort of a gradual improvement during the quarter or any comments on that would be useful.

[Christopher Norbye, executive]

Yes. I think it would be hard to [indiscernible] go into more in a number side, but it's not a significant improvement. But what you do see is a more stabilized flow and you get more clearer lead times from the suppliers on when to deliver. And then also I think not to forget that the whole trade situation has stabilized like 6, 9 months ago, you didn't even know when to get a container, you didn't even know how long it will take to get it over. All those things are stabilizing in the sense that we can now together with our Company is more step by step decide how we want to drive inventories versus I would say, over the last year it's more okay. Just get a hold of what you can and make sure we don't run out of products in the market. So I would say it's not a stop and go situation, but at least it starts giving us clear idea to plan and work with inventory and Ulf, please comment further.

[Ulf Berghult, executive]

No. But as we say, but still we are struggling, but we are seeing the light in the tunnel, but again, I am going to emphasize that this is something that we want to gradually learn to improve and make sure that we -- again, the cost of losing a sale is much, much more expensive. So we want to gradually learn to normalize it.

[Operator]

Our next question comes from the line of Karl Bokvist from ABG Sundal Collier.

[Karl Bokvist, analyst]

First, more technical one, just to start-off with that and then the broader ones later. I noticed that you have a positive item in other operating income of SEK 100 million and usually it's a far lower number compared to previous quarter. So just if possible, what does that relate to because it seems to be entirely reversed in the cash flow as well.

[Ulf Berghult, executive]

Unfortunately, that is an accounting error that we discovered this morning actually. So I'm sorry about that, but it doesn't improve [indiscernible] change the cash flow, change the EBIT, is actually reclassification between fixed expenses and other income. That is one of us, Karl, our subsidiaries that put it wrongly. So it is reclassification. You should take away basically the SEK 100 million and then reduce the fixed expenses with SEK 100 million. So sorry for that.

[Karl Bokvist, analyst]

All right. So the average income item is [Technical Difficulty]

[Ulf Berghult, executive]

A restatement, so it is a movement between 2 lines within the P&L statement. But it doesn't change the EBIT and it doesn't change the cash flows and overall conclusions. It's only unfortunately reclassification error done by one of our subsidiaries.

[Karl Bokvist, analyst]

Then the other one, I apologize if I missed a comment on this during the call, but the refrigerant business that you have now, I believe one comment in Q2 when we listened to the news is that prices for these are broadly speaking still up quite a lot year-over-year. Is that still the case and how large share of business is it now?

[Christopher Norbye, executive]

Yes. So they have been very stable, I would say, through Q2 and Q3, so not any movement if you compare quarter-over-quarter. So it's the same trend compared to last year and now it's a stable level higher than last year and I would say still it's around 5% to 6% of sales, but it's been -- as you follow it in the past, it picked up there starting over last year at Q3, Q4 and then since Q1, Q2 and Q3, it's been stable on the same level.

[Karl Bokvist, analyst]

Understood. And have you been able to -- or could you perhaps be able to share some further light on your current exposure to heat pump sales if that is possible?

[Christopher Norbye, executive]

Yes, we will and we're actually reclassifying our products through our systems. So it's a little bit of an exercise to back-date it and move it forward. So our ambition is that when we're going to next year, we'll be more clearer on what those segments are in the heat pump, both on the air-to-air, air-to-water and et cetera. So we still as we said before, we will be more quantifying it as we get through the system next year, so you get a better feeling, but it is as I said, it's growing and continues and will be a bigger part of our business as we move into the future, but we'll come back to that Karl.

[Karl Bokvist, analyst]

Okay. And my final one is just on, I think last year, you mentioned that you have the ambition to increase the share of what you would call eco-friendly products. But the growth in the other segment also was very, very strong there but the share might not have increased as much, but so far this year, do you feel that, that transition is still ongoing in the right direction?

[Christopher Norbye, executive]

Yes, it's picking up. So I think we'll also start showing that on a quarterly basis next year but how to make this is hard, because we are having tremendous growth in the European side and in Europe, it's 95% CO2-based solution. Our mix is moving more towards that we expect to continue. So we'll in the next year have it on a quarterly basis. So the percentage of sales with natural refrigerants is growing much faster than the other type of solutions.

[Operator]

Our next question comes from the line of Andreas Brock from Coeli Global.

[Andreas Brock;Coeli Global, analyst]

So I want to change focus a bit and just speak a bit about ESG. We come up towards the end of the year and in January, you are doing a great job on ESG with your moving products 50% eco-friendly products and we noticed that you have now Kerstin Lindvall on your Board of Directors and she is a member of UN Global Compact and something we would love for you to sign. My question is, now going forward, for next year, do you think that we will see more ESG goals from your end on how you can reduce your R&D greenhouse gas emissions tonnes, CO2 by Beijer employee et cetera. Is this something that you are working on, on setting up more ESG goals?

[Christopher Norbye, executive]

I can answer that. So what we do now is that we have together with an external consultant, we are then reviewing the whole landscape of getting the base ready. So we understand the base, has been a big job during the summer, and then the fall and to collect all the data. So we are ready now and we are analyzing it, making sure and then the target is then to apply for the science-based targets. So based on more factual base and then also setting the targets, we will learn how, then of course, then we need to then implement actions and also then we will improve the reporting actually for sales next year going forward.

[Operator]

[Operator Instructions] Our next question comes from the line of Aline Ghatan from Carnegie.

[Aline Ghatan, analyst]

I wonder if you could talk little bit about the components of EBITDA growth? How much is acquired growth and how much is the organic? And from the organic, is it price or volume?

[Christopher Norbye, executive]

Sorry, I missed the first part of the question. Which part?

[Aline Ghatan, analyst]

The components of EBITDA growth, if you can elaborate a little bit about this? How much is acquired and how much is organic?

[Christopher Norbye, executive]

On the component?

[Aline Ghatan, analyst]

Yes, the EBITDA growth, how much is driving the EBITDA growth, if you look from acquisition and how much is organic?

[Christopher Norbye, executive]

Okay. Just in general, I would say that the majority is coming on the profit side, on the organic growth and then I would say all of our acquisition having double-digit EBIT as well here during Q3. So I would say it's a strong development on there, but the majority of course is still running through the organic improvement in there, but all the acquisitions are adding margin to the business, so it's very positive trend from the acquisitions as well.

[Operator]

And as there are no further questions at this time, I will hand the word back to the speakers for any final comments. Please go ahead.

[Christopher Norbye, executive]

Thank you. Thank you all for listening in. Thank you for the good questions. And of course, we are available for further clarification here and then from me, nothing further. Ulf, anything more from you?

[Ulf Berghult, executive]

No, I'm all done here. So thank you very much.

[Christopher Norbye, executive]

Thank you all. Have a good day.

[Ulf Berghult, executive]

Okay, thank you.

[Operator]

This now concludes today's conference call. Thank you all for attending. You may now disconnect your lines.