Beijer Ref AB (publ)

STO:BEIJ B

Earnings Call Transcript 2022-Q4

[Operator]

Good morning, and welcome to the Beijer Ref Q4 Report 2022.

[Operator Instructions]

Please note that this event is being recorded. I would now like to turn the conference over to CEO, Chris Norbye; and CFO Ulf Berghult. Go ahead.

[Christopher Norbye, executive]

Hi, everyone. Chris Norbye sitting together with Ulf, so welcome to our call. I think we'll dive straight to it starting with Slide 3. Of course, this is a slide we have every quarter, and it continues to go up the rolling 12 months, and we keep, of course, adding people and also in more countries and branches. So we continue to grow both organic and through acquisition. And of course, we'll come back to that here on -- if we move on to Slide #4.

So the highlights for the quarter, I would say, another very strong quarter for us. Sales of SEK 5.8 billion, an increase of 36%. Organic sales continue to grow at a high pace, 18%, and we'll come back with the main drivers of that continued strong growth. We continue to have a very good performance also in an acquisition, growing at 9% and continue to accelerate as to be part of that -- the Beijer Ref family for us. And then FX continues to be at a high level on the euro side.

On the EBITA, we had a good -- continued good development on the margin, of course, and it's, of course, also driving the growth. So almost 69% growth on the profit back on continued development on the margins, as you see throughout the year quarter-by-quarter driving margin as we drive growth as well through our organic growth, through our acquisition and also our strategic initiatives. So we're very satisfied with development we've been succeeding on the margin to drive that as well during the year.

As we informed, when we did the Heritage acquisition, we did take SEK 245 million of transaction costs. So we are now done with all the transaction costs related to the acquisition. So that's part of the underlying numbers. Also a very good cash flow, plus SEK 633 million. We still have work to do here, of course, on the back of very continued strong growth. We do have an inventory component to support that. But we also see that lead times will start coming down in the quarters ahead. We'll have a normal seasonality effect. But I feel very strongly about a good cash flow generation throughout 2023, becoming mainly after the summer season.

I said the acquisition continued to do well. The recent one HC, we closed in Australia very, very well and the other ones continue to create a lot of value to us. We'll come back on the EPS plus 47% and also a dividend improvement related to a very strong 2022 results. So we, from Beijer Ref and our team are extremely happy, both from the growth perspective, the margin development and also the cash flow generation of Q4. So we would like to summarize the good -- a strong finish to a great year for us.

So moving on to Page #5. You can see there that HVAC continues to develop very good for us. I would say, in all regions, we see drivers here on Q4 and here on heat pumps, of course, being more in season now and as we continue to transition more and more into that type of solutions for us. It has a positive effect on the HVAC, but also good development across all our regions. On the OEM side, we did have a better supply chain that has picked up some of the backlog, so the backlog continues to support good growth, and we see good continued activities on transition continue into the natural refrigerants here in Europe, but also in -- in countries -- in Australia and also starting into New Zealand. So I'm very satisfied with that. And then the commercial cooling, I would say, is stable finish to the year, but also a very good full year.

As you know, we are a seasonal business. Where Q2, Q3, our biggest quarter related to mainly Europe, 17% of our sales. But HVAC now, it's in summer season. And that started well, and they're going to continue that throughout here in the summer season through Q1. And then, of course, EMEA goes into high season starting in Q2. I can also very happily say that we have closed the Heritage acquisition as planned. So we did close in January 20. So now starting -- last week, we have started to consolidate the business into our numbers. And of course, they will be part of 2 months here -- part of Q1. And we already, of course, have meetings met with the people and continue to work on our plan to get us with them. And then we also have a rights issue process is progressing according to plan, and we'll have more details, I would say, in the next 2 to 3 weeks. But it's gone exactly to plan. And as we also said before, we were very confident of how we're going to close the acquisition. So it's more of driving all the workflows in there the next month, I would say.

And moving on to Slide 6. Just a short update on how we see some of the trends in the business. We do see supply chain easing up. A lot of our strategic supplier has actually expanded capacity, and we see that coming through. We see less freight time from our Southeast Asia partners and also lead times started coming down, we would say, June 2023. We don't see the lead times yet in orders, but we're getting very strong signals that they will start coming down and balancing out here during 2023. So it's a positive development on the supply chain.

We'll see continued drive on the sustainability. As you know, that's a very strong driver of our business, both on the transition into natural refrigerants, but also the electrification and energy efficiency that we've seen also drive on the AC and heat pump side where we have, as you know, the best suppliers to also take advantage of that trend. And you can see that in a number, obviously. They continue to discuss revision of F-gas that we follow very closely. There's no new decision, but we believe where we are in the journey now is positive for us. And if they would decide to an even more aggressive solution, we will be able to manage that in a positive way.

And then finally, you can see on the picture, we have glasses on. We met with a full team of heritage that we acquire all branch managers and key people a couple of weeks ago. So a fantastic opportunity for us to kick off the cooperation with Heritage and the team and the people driving the business. So we feel very good with the acquisition and the possibilities going forward.

Moving on to Slide 8. A little summary of the sales growth, as I said, 36% total. So it's a very good organic 18%, 70% growth in EBITA related to that we continue and have a stronger margin development, as I said in the beginning, and then EPS growth of almost 50% in the quarter.

Next slide, you see a bridge on there. You see the FX is still very positive for us as we translate the euros mainly into SEK then organic, as said, it's 418%. So this translates almost to over SEK 5.8 billion for Q4. So for us, a very good finish to the year.

On Slide 10, I think you see very in our mind, an aggressive growth that we have now for quite some time. This is, of course, adding both the acquisition and also organic the currency, but below, you can also see the organic growth or been very positive in '21 and '22. So that's what we are very proud of. But also very proud of how we've been managing growing to a very strategic acquisition for us to further strengthen our model and also part of supporting growth and margin development for us.

On the region, again, good development in all our regions. Nordic continued to develop well. A lot of activities on the OEM business in the Nordic. Central Europe, good development and also driving a lot of the heat pump side on in the region. South Europe continued to develop well and East Europe, extremely strong through the acquisitions that we have made, but also the activities on, I would say, on the heat pump side has continued to accelerate in Eastern Europe. And then Africa starting to pick up as, I would say, hopefully, business continued to normalize and also more and more tourism moving over there. And APAC, we talked about, I would say, positive development in most of the regions. We also expect as we go through the finishing of the Chinese New Year, the higher activity in China as the country is opening up. I would say we're very happy in all our regions and development we have.

We did over the EBITA almost 70% growth. I mean you can see on the right side at a margin of 9.8% versus 7.9%. So we continue to developed the company in a good way on our strategic initiatives and also leveraging the organic growth that we have and also continue to have good development in acquisition. So this is something we are proud of be able to do the margin improvement we've done here during 2022.

And then you see the trend on the margins. You can see in '22, we have made a step change to the business, which has been our plan. And as I said, we were proud of seeing execution on the margin side for our business as well.

And then you have per region as well, good growth in all our regions on the back of strong sales and of course, translates into very well executed in all our regions where, I would say, the 2 regions -- I mean, almost all regions standing out in a very positive way.

Next slide, I will hand it over to Ulf, Slide 15.

[Ulf Berghult, executive]

Then we have Page 15 that is the summary of the group the P&L. So we have more go through the stage development, but any you can give out you see then items are taking comparability with you SEK 9 million. That is part of the SEK 700 million that we announced in connection with the Heritage acquisition. So these SEK 2.5 million that is connected to the acquisitions, the labor costs. And then if you look at the net financial income expense is slightly higher than it is higher than previous year. Of course, that is the third and by that we have been more active on acquisition. And also, we have, as you know, a more proactive approach on the balance sheet, even though we now looking forward to down to more normal season. So there's a high debt and also then, of course, the interest margin have an impact, and then there was also some FX impact in the [indiscernible]. And PAT is also slightly then it is higher to the SEK 245 million. So if I exclude SEK 245 million items affecting comparability, you will have the underlying tax rate in the quarter of 26%. .

So if I then turn over to Page 16. Earnings per share then excluding items affecting comparability in quarter, we had 0.96 that is 48% increase compared to Q4 '21. And then for the full year, we have 3.86 versus the 2.56 that increase with more than 50%.

If I then turn to Page 17 on the cash flow. So I walk from the left to the right. To the left there you have what we reported in Q4 '21 SEK 313 million. We had positive EBITDA impact versus last year. And then if you then go back into working capital, of course, there was a negative working capital with a component in 2021 Q4. And now we have [indiscernible] management and to release some working capital in the quarter so that's a delta plus SEK 707 million. Slight increase in CapEx for SEK 28 million and then leasing in SEK 19 million, and then agree noncash items is SEK 30 million. So overall, we ended up with SEK 633 million for the quarter.

And then if you then go back to -- roll to the next page, Page 18, you see the operating cash flow for the quarter, you can see the end of the Q4 was minus SEK 313 million and now we have SEK 633 million positive [indiscernible].

Then go turn to the Page 19, net debt development. So this is then excluding items affecting comparability, and then also then, so if you look at we have net debt including attention, leasing and financial interest-bearing debt of both totaling SEK 7.2 billion, and we have an EBITDA of SEK 2.7 billion, so that is a net debt EBITDA of SEK 2.7 billion. And if I then in the reported that is 2.5, so excluding affecting comparability to SEK 2.7 million. So then I hand it over to Christopher to do the closing.

[Christopher Norbye, executive]

Yes. So on Slide 21, conclusions. We have gone over this, but of course, a continued very strong quarter in all our asset areas or segments and finishing on the 67% growth and also an EBITDA growth of 69%. And also continue to have cash flow positive and a good development here in Q4, and we also see that the full 2023 so some time to compete and line inventory. But of course, continue to have good growth, which means that we'll continue to invest to be able to support the drive that.

Summarizing 2022, 34% growth with 16% organic, 11% acquisition, EBITA up 57%, driven by, of course, the growth but also, I would say, a strong margin improvement during the year through our initiatives, as I said. Continues to be active on strategic acquisitions. As I said, they continue to perform very well, and the strategic importance for us to consolidate our market with leading companies continue to be strategic.

And then also, as you know, entering the North American market with a platform acquisition that we feel very strongly about in all areas on the business mix. Their positioning and the team, and we also look very much forward to start integrating working with them and trading value in 2023 together with that. So we want to conclude the year that we continue to see tailwinds and support our business. And of course, that's why we're also growing well on sustainability, electrification, I would say, acceleration and continued regulation to reduce the greenhouse effects that we are part of with natural refrigerant, but also our solution in heat pumps and AC, that's all driving energy efficiency and also moving away from gas and all the other type of solutions.

And in North America, I mentioned, it's a fantastic opportunity for us and also a very, very good company, I would say, one of the leading companies in the U.S. on growth. Margin, product portfolio and also positioning in the market. So we have a fantastic platform that will continue and develop and we'll start now in our numbers here in Q1. And they will continue a good pipeline, good discussions to continue our growth going forward on the acquisition as well. So all in all, the good happening to a fantastic year. And of course, we continue to keep our eyes and ears open to trend in the market, as you can see in our numbers, it hasn't affected that. But of course, we're very aware of the situation out there in the world, and we're going to make sure that we are on top of things, and I feel very strongly about our business model that we can work in any environment. But for now, we continue to see good development in our segments.

So with that, I think we'll finish off the report and open it up for any questions that you might have. Thank you very much for listening.

[Operator]

[Operator Instructions]

The first question we have is from Carl Ragnerstam from Nordea.

[Carl Ragnerstam, analyst]

It's Carl from Nordea. A few questions. Firstly in terms of your organic growth in OEM, 24%. Could you maybe shed some light on the individual drivers in the segment in the quarter, I guess, SCNC and Guanzon? And also a bit curious to know more about the order intake during the quarter, I mean, obviously, the easing supply chain situation is, of course, I guess, partly a booster of their organic growth in the quarter, and therefore, you could deliver in your at least historically good backlog? So yes, we'll start there.

[Christopher Norbye, executive]

Yes. No, I'll start with usually the main drivers -- they are SCM Frigo on driving and be able to deliver some of the backlog, which has an effect, of course, in the quarter. But we all see good activities on their backlog that's quite a bit higher than in that same period last year. So you continue to see good orders into the business. And that's a business we track the backlog mostly because it's a relevant KPI for that type of business.

And then you also have energy that continue to build backlog and also continue to deliver project in a smaller scale, of course, SCM Frigo, but also growing at a very high pace. And we expect with the backlog we have, that this will continue moving into 2023 as well. But of course, you have some effect there on the backlog release in Q4, but we see good development here in those segments also in 2023 as backlog looks right now.

[Carl Ragnerstam, analyst]

Okay. Very good. And also on HVAC continued good organic growth I mean how much of that -- I know that you maybe are not super fan of comment on the heat pump side of the business. But could you shed some light on the growth in the heat pump or what portion of organic growth for the segment that comes from heat pumps? And also, I mean, obviously, we see a weakening consumer sentiment. Have you seen any impact on the demand as of late Q4 entering Q1, perhaps? Or would you say that the energy efficiency trend boosted by subsidies in some countries is offsetting it?

[Christopher Norbye, executive]

Yes. I mean right now, as you said, you read all the macro data and all the information that we do as well. We don't see any effect on our business. We see a couple of things are happening on the HVAC side. And as you asked before, and we are mapping up, so we will get more clear on the heat pump side as we move through this year. But I would say a couple of things happening that the cost of the heat pump side here now in driving in Q4 and Q1, which are more low season for heating, of course, in Europe, we have a stronger segment now I would say the opposite, that it's a heating season or a cooling season. So we've seen a good impact on being able to deliver heat pumps.

We're getting okay supply in this region through our partners. So it's driving a lot of growth. And also what we're seeing in our other businesses in the Central Europe and Nordic is people are buying AC splits for heating as well. I think historically, we saw that most as a cooling because it's a very energy-efficient solution and you're replacing both direct electricity in countries like Netherlands, if you install an air tier split, you'll also reduce your gas quite a lot. So we have a lot of business cases where it makes a lot of sense to use this type of solution that you historical use their cooling that you also now use for heating. So a lot of these trends that affected us positive here in Q4 and continue into Q1.

So at this moment, we don't have any signals. But of course, we're keeping our ears to the ground. We are very -- we're in 42 countries now and also entering the U.S. as a 43 country. So we have a lot of data information around there. But it's continued to be high activity as we see it in the market.

[Carl Ragnerstam, analyst]

Okay. Very good. And also the margin side. I mean what portion would you say of the close to 200 basis points margin uplift, EBITDA margin uplift in the quarter is driven by sort of volume drop-through versus, I guess, mix effect with OEMs growing slightly stronger and maybe also your own share or own product push as well?

[Christopher Norbye, executive]

Now to disclose the direct ratios. We, of course, know it and we'll track it. I would say that we, of course, expect a drop to an increase sales, you leverage your fixed cost. But you can also see on our gross margin that it continues to improve, and that's related to being successful in driving especially private label in HVAC that's going very well for us. And then we have opportunities to drive the margin. So it's a mix in gross margin improvement, especially on the HVAC side. And also then the volume drop to continue to support the margin improvement. So it's a very healthy mix, I would say that this margin development we have.

[Carl Ragnerstam, analyst]

Okay. Perfect. And the final one from my side. Could you give any time frame on sort of when we should expect you to sort of expand with [indiscernible] going into the U.S.? Also a bit if you can comment on launching your own brand in the U.S.? And also if you have looked into purchasing synergies a bit between Heritage and the former Beijer Ref business?

[Christopher Norbye, executive]

The short answer to will be no. I will not. But we have started the discussions around it. We're in the U.S. again next week. And -- but we're also aligning there's quite a lot of good activities already ongoing in the platform that we bought to both drive sales and margin. So right now, we are more putting people together and mapping up the activities and how it would make sense. So it will be too early for me to externally comment that well, of course, an internal platform. And then we feel very good about it that both, as I said before, I think the possibilities within the platform and also adding this type of solution. But I won't disclose it externally at this moment.

[Operator]

Our next question we have is from Robert Redin from Carnegie.

[Robert Redin, analyst]

Yes. There were a lot of good things in the support, but I have to come back to that HVAC organic growth of 29%. Could you say something more about the drivers of that, I mean, I imagine that is cost is a driver to that higher organic growth? Or would you say that AC and other product lines have been going at a familiar rates? That would be 1 question. And the other would be if you could say something about the price impact in that organic cash pricing sort of [indiscernible]?

[Christopher Norbye, executive]

Yes, I'll start with the first 1 and a little bit of disclosed on Carl's question is if you see it's across all our regions, and it's a mix, right? It's heat pumps. We're selling quite a high growth rate from smaller numbers, but it's starting to become numbers that affect the growth rates in the HVAC segment. So that will continue now with in Q1 as we get the supply chain even better. And then also on our AC, what you see, and it's a little bit 2 trends that the rate we've seen in the Nordics and Central Europe and these countries have has not really been considered for heating. It's a very efficient heating tool as well, especially if you can't convert your whole house or your apartment there to water, you can put in a split for heating and will reduce your electricity bill quite a lot. So we see a lot of activities on that type of solution that we normally historically haven't seen in this type of quarters because that accelerates into Q2, Q3, but we see continued strong demand on these products because people are converting it to heating.

Then you have another thing that we see in our numbers is that if you -- historically, when you have this type of AC or other solution, you replace it when it breaks. But now you have also a trend when people are accelerating and changing this because energy efficiency. So if you buy today a new AC for heating, it's 30% to 40% more energy efficient than the 1 you bought 10 years ago. So if you have these trends that's been supporting our business here as the whole trend around electrification has happened and also moving away from gas and oil that moves in more electric solution, both on the AC splits and on the air tool type of solution.

So yes, you have the trends affecting our numbers and driving supporting the sales here in the quarter. And of course, it makes a larger effect there in Q4 and Q1, which is usually more low season. And here, you get a high boost on the HVAC side because it's lower comps and when you have a cold season in Europe. So I would say those things are the main drivers in there.

And of course, price. We don't disclose the exact price. The price component, as I said before, the majority here is volume. But you have a price component that's been higher than normal, but it's still in the single-digit side on all the components. We haven't had, I would say, I've not used the word crazy price increases. It's been still in a controlled way, but higher than normal in our components. And that's what I said earlier also that as we're moving now to 2023, the price component will still continue to go up, but not at the same levels that we saw in 2022.

[Robert Redin, analyst]

Okay. Perfect. And just a housekeeping question on those extraordinary items for the Heritage acquisition. The remainder, will they all be booked in Q1? And where will they be look to the P&L will they be over the same quarter a combination of financials?

[Ulf Berghult, executive]

Well, as we know, the other 2 components is that the financing costs that we now use in the bridge until we get rights issue in place. Those costs connected to the financing will be [indiscernible] in Q1. And then the costs associated to the rights issue, that will be reduced on the proceeds that we would get. But I will not hit the P&L. So that will hit the equities straightaway. So that will be a reduction on the SEK 14 billion.

[Christopher Norbye, executive]

So I'll separate that so the transaction costs are down. So that's been taken now in Q4, and there's no more of that. And then you have the second component, which is the interest rate we're paying on the bridge loan until we have the right issue done. And then the proceeds or the cost of the right issue will go through to equity and upward in the P&L.

[Operator]

[Operator Instructions]

The next question we have is from Andreas Brock from Cole Global.

[Andreas Brock, analyst]

and thank you for a wonderful report. I danced all the way to work today when I read it. Thank you so much, amazing.

[Christopher Norbye, executive]

We do that every quarter, I guess.

[Andreas Brock, analyst]

Well, when it comes to you, it's been every quarter for quite a while. 2 questions. First on the sustainability. I really like that you've signed this letter commitment to science-based target initiative. And you also right that you have renewed your Partnership with [indiscernible] et cetera. Could you just talk a little bit more about that way on the reducing CO2, where in your business do you think you have the greatest potential to do that?

[Christopher Norbye, executive]

Yes, I'll start with and I'll also back into that, the type of science base that's more related to that you reduce your impact within your company. And I'll start with that. Of course, we think it's more critical on the products that we make, and that's something we'll disclose a little bit more clear in the future that all the natural refrigerant solution that we sell has a huge impact on the CO2 and the refrigerants that we use and being replaced. So we're focused very much on the product portfolio. And of course, now when we have the HVAC heat pumps and other type of solution that replacing the gas and all because you have a lot of countries now, as you know, in Europe that in the next 5 years, they will not burn anything related to gas at all and that's driving a huge demand on that type of product. So I think that's the DNA of Beijer, right? If you look on the sustainability, the major impact we can do is on the products that we make and train our installers, train our customers inform them and replacing these type of solutions. We.

See it, of course, in Europe because we have regulation driving it. So by 2030, all these type of products will be replaced because there won't be any access to these type of very harmful refrigerants. And also, I would add to that, we're also looking into now in the U.S. that's going in the same direction and phasing out by 2036. So their rep and we'll be clear about that in the future on how much our products are actually helping this transition. So that's something we're working on to mapping up a little bit clearer on there because it's a huge part of our DNA. And then I'll let maybe also on the internal side, what we can do on our [indiscernible].

[Ulf Berghult, executive]

Not only what we did is just to update you. We are workhorse named in 2022 in order to get the base correct. And then as you rightfully said then are we are aiming them to have a formal [indiscernible] end of Q1 or in Q2. And then from the emission point of view, we have to say that the largest we have more scope 3. Scope 1 and Scope 2 for us is very limited. But when we have a working plan then how to reduce that and how we committed that. And then -- but then also then the largest we had in Scope 3, which we then add [indiscernible] sell, we can have make a big difference.

[Andreas Brock, analyst]

Excellent. My second and final question, I'm so happy that you closed the acquisition is already closed the big one, Heritage. We now have the right issue in AGM on 17th of February. Could you give some kind of guidance or when you do the math yourself, what kind of net debt to EBITDA or the company will have after the rights issue, some sort of?

[Ulf Berghult, executive]

We are not allowed to do any -- as you know, we -- you need to have to respect that we are working with the prospectus and we're working with [indiscernible]. So we're progressing quite well. And in the near future, we will come up with a -- come out with an updated time table. So you can all see where we're headed. But we can't make any comments. But on other side, you can do your calculation you said as well because, of course, we will strengthen the balance sheet on the leverage because we are getting in there, which is official than the run rate that we mentioned in the press release. So with that, we'll have a strength on the leverage.

[Christopher Norbye, executive]

I think if you -- as we can disclose it, I think is fairly simple. We have disclosed the trailing 12 month EBITDA, of $95 million. And looking at that with equity in pro forma or your net debt, I think it will be significant, of course, strengthen the balance sheet and yes. If you want to [indiscernible].

[Operator]

[Operator Instructions]

The final question now is from Karl Bokvist ABG.

[Karl Bokvist, analyst]

First one on Heritage. Should we assume that in connection to a prospectus, we might get some more details on the financials of Heritage below the EBITDA line, possibly?

[Ulf Berghult, executive]

Yes. Yes. We need to have U.S. GAAP into IFRS and they need to be on a pro forma basis and it needs to be on a continued basis. So it's a lot of things that need to be done according to the rules and regulations of the perspectives, but you will get more information in the perspective.

[Christopher Norbye, executive]

You'll get that and also the full year figures, of course, of the of Heritage in the prospectus there.

[Karl Bokvist, analyst]

Understood. And just to go back to something, I believe you recent you said, but when you're the near future, so it's possible we could get those details ahead of the 17?

[Ulf Berghult, executive]

In the near future, Yes, the perspective will not be issued on the 17th. Because the 17 will be basically done at the Board that AGM will give the mandate to the Board and to set the terms on the shared vision. So steps normally comes prior to the 17.

[Christopher Norbye, executive]

I think what we meant was misunderstanding in the near-term future, we'll clarify the time line of all the steps in the process. And as what we can say now, we're following a very tight time line, and we don't see any so far, there hasn't been any disruption to that time line to get the perspective and moving on and have respect into that to the right issue.

[Karl Bokvist, analyst]

Is it possible to give some indication? I understand you just closed it, but some indication of if -- or if Heritage has delivered also continued growth now in the recent period?

[Christopher Norbye, executive]

Yes. No, it's not possible say that way, but we have the trailing 12 months in the prospective and they continue to develop according to the plan. And our plan is, of course, a good development. So we feel very good about they're trending as we closed the transaction and before that in Q4 as well. There's no issues on the horizon.

[Karl Bokvist, analyst]

Okay. And then 2 more questions, if I may. I realize in the third quarter report, you did give some flavor on organic growth in the regions. So I was wondering if it would be possible for you to do the same in Q4?

[Christopher Norbye, executive]

We haven't indicated -- we have taken away that we don't disclose the organic growth of regions. So we only disclose the total revenue growth. So that is nothing that we discussed. But again, as you can see the number on the overall. So of course, the -- you can see where we have the growth and then we have a good organic growth in all regions.

[Karl Bokvist, analyst]

Understood. My final one is just on the cooling and refrigeration side, more of a stable development and still positive organic growth, of course, but slightly down from a kind of double-digit level we've seen recently. Have you seen any changes in the market environment here? Or is it more that you're starting to face tougher comparable numbers?

[Christopher Norbye, executive]

Yes. I would say top of comments. And I think I said I would love our rough component business to grow 10% for the quarter. That's not really our ambition. It's a very stable business. We continue to develop well there. But to me, it's more normal comps that's catching up and it should continue to grow at a stable rate as we move forward.

[Operator]

Thank you, sir. Ladies and gentlemen, this concludes our question-and-answer session. I would now like to turn the conference over back to management for any closing remarks. Christopher?

[Christopher Norbye, executive]

Yes. Thank you. I think, good [indiscernible] think that enough times. So we had a fantastic finish to the year, and we continue to look positive and also very happy that heritage has been closed, and we'll start to work with them. We feel very good about the new development of RF also in the U.S. that will make a big impact both items, but also our numbers going forward. So thank you very much for listening. And of course, if there's any more clarification, we can take as we go through this week. So thank you very much, and have a good day.

[Ulf Berghult, executive]

Thank you. Bye-bye.

[Operator]

Thank you, sir. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.